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Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience.

 

 

 

 

 

 

 

TRANSCRIPT OF PROCEEDINGS BEFORE

      THE CANADIAN RADIO‑TELEVISION AND

TELECOMMUNICATIONS COMMISSION

 

 

 

 

TRANSCRIPTION DES AUDIENCES AVANT

  CONSEIL DE LA RADIODIFFUSION

   ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

SUBJECT:

 

 

 

VARIOUS BROADCAST APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

 

 

 

 

 

 

 

 

 

 

 

 

 

HELD AT:             TENUE À:

 

Fairmont Hotel Vancouver             Fairmont Hotel Vancouver

900 West Georgia Street             900, rue Georgia O.

Vancouver, British Columbia             Vancouver (C.-B.)

 

 

March 3, 2005          Le 3 mars 2005

 


 

 

 

 

Transcripts

 

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

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

and staff attending the public hearings, and the Table of

Contents.

 

However, the aforementioned publication is the recorded

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

either of the official languages, depending on the language

spoken by the participant at the public hearing.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

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

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

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

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

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.


Canadian Radio‑television and

Telecommunications Commission

 

  Conseil de la radiodiffusion et des

télécommunications canadiennes

 

 

Transcript / Transcription

 

 

        

  VARIOUS BROADCAST APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

        

 

 

 

 

BEFORE / DEVANT:

 

Charles Dalfen          Chairperson / Président

Andrée Wylie          Commissioner / Conseillère

Ronald Williams          Commissioner / Conseillier

Joan Pennefather          Commissioner / Conseillère

Stuart Langford          Commissioner / Conseillier

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Pierre Lebel     Secretary / Secrétaire

 

Alistair Stewart          Legal Counsel /

Conseillers juridiques

 

Joe Aguiar          Hearing Manager /

Gérant de l'audience

 

 

 

HELD AT:          TENUE À:

 

Fairmont Hotel Vancouver          Fairmont Hotel Vancouver

900 West Georgia Street          900, rue Georgia O.

Vancouver, British Columbia          Vancouver (C.-B.)

 

 

March 3, 2005          Le 3 mars 2005

 


TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

   PAGE / PARA

 

PHASE I

 

PRESENTATION BY / PRÉSENTATION PAR:

 

Rogers Broadcasting Limited    929 / 5640

 

 

PHASE II

 

INTERVENTION BY / INTERVENTION PAR:

 

Multivan Broadcast   1084 / 6716

 

Dr. John Burns 1110 / 6859

 

Irene Chu   1116 / 6910

 

Reginald W. Bibby   1119 / 6930

 

Darrell Peregrym   1128 / 6978

 

Aboriginal Peoples Television Network   1134 / 7010

 

Global Television Network   1141 / 7052

 

CHUM Limited   1149 / 7092

 

 

PHASE III

 

REPLY BY / RÉPLIQUE PAR:

 

Rogers Broadcasting Limited   1164 / 7174

 

 

PHASE I

 

PRESENTATION BY / PRÉSENTATION PAR:

 

Standard Radio Inc. 1181 / 7288

 

Evanov Radio Group Inc. 1244 / 7687


Vancouver, B.C. / Vancouver (C.‑B.)

‑‑‑ Upon resuming on Thursday, March 3, 2004

    at 0835 / L'audience reprend le jeudi

    3 mars 2005 à 0835

5637     THE CHAIRPERSON:  Order, please.  A l'ordre, s'il vous plaît.  Good morning, everyone.

5638     MR. LEBEL:  The next item on the agenda are applications by Rogers Broadcasting Limited to acquire the assets of the English‑language television programming undertakings CHNU‑TV Fraser Valley, British Columbia from NOWTV British Columbia Inc. (NOWTV BC) and CIIT‑TV Winnipeg, Manitoba Inc. (NOWTV Manitoba).  The latter station is not yet in operation.

5639     Appearing for the applicant, Mr. Rael Merson.  He will be introducing his colleagues.  You have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION


5640     MR. MERSON:  Good morning, Mr. Chair, Madam Vice‑Chair, Members of the Commission.  I am Rael Merson, President of Rogers Broadcasting.  It is our pleasure to appear before you today to present our applications to acquire assets of CHNU‑TV, serving the Fraser Valley and CIIT‑TV, Winnipeg, and for authority to establish a rebroadcast transmitter for CHNU‑TV in Victoria.

5641     With me today are Leslie Sole, CEO, Television for Rogers Broadcasting' Madeline Ziniak, Vice‑President and General Manager, OMNI Television; Jeff Thiessen, Senior Vice‑President, Trinity Television; and Alain Strati, Vice‑President, Business and Regulatory Affairs.

5642     At the next table we have Albert Lo, Vice‑President Corporate Affairs and Director of Balanced Programming for NOWTV; Willard Thiessen, President and CEO, Trinity Television' Tony Viner, President and CEO, Rogers Media; Laura Nixon, Vice‑President Finance and CFO, Rogers Media' and Malcolm Dunlop, Vice‑President Programming and Marking for OMNI Television.

5643     As well, a number of additional people are available to answer any questions, including Tim Smith, Vice‑President of Programming for NOWTV; Kelly Colasante, Vice‑President, Operations and Engineering for OMNI Television; Terry Mahoney, Station Manager for NOWTV; Tom Ellie, Vice‑President, Finance for OMNI Television; and Gloria Thiessen, Director of Human Resources for NOWTV.


5644     In our presentation today we are going to describe to you why, given our experience and expertise as a niche broadcaster, we believe we are the most appropriate owners of NOWTV and why the approval of this transaction is in the public interest.

5645     But first I am going to ask Jeff to describe the sequence of events which have lead Trinity Television to this point.

5646     MR. J. THIESSEN:  Good morning, Commissioners.

5647     In 1976 my parents, Willard and Betty Thiessen, launched Canada's first Christian television talk show "It's A New Day" on CKND in Winnipeg.  This show was and still is a huge success.  It is available on conventional television stations in western Canada and across the country on Vision TV.

5648     From that solid base, the Trinity Television Ministry expanded to include Christian programming for children, first with the program "Follow Me" and then, in 1986, with "Sunshiny Day", which continues to air in many countries around the world.


5649     In 2000 we were granted a licence for a new religious television station in the Fraser Valley.  We launched NOWTV in September 2001 and are immensely proud of what we have accomplished since then.  From day one our objective was to present viewers with a message of hope and faith by offering a wide variety of spiritual, moral and value‑based programming.

5650     Our program schedule is built around a solid core of Christian programming, programs like "It's A New Day", "LifeLine" from the Miracle Channel in Lethbridge and "FreeTV" from the "FreedomEyes" in Toronto.  These programs provide a forum for the discussion of Christian values and beliefs in our modern society.

5651     Our schedule also includes programs which more specifically examine morals and values in today's relationships.  One example is "Pure Sex and Relationships" hosted by John and Helen Burns, two Pastors from a local Church in the Fraser Valley.  We complement that programming with almost 20 hours of balanced programming each week including:  issues‑oriented programs such as "Online", our call‑in viewer input and feedback program, and faith‑specific programs such as "Muslim Faith" and "Aaradhna", examining the values, beliefs and teachings of non‑Christian religions.


5652     Our schedule also includes entertaining comedies and dramas that use storytelling and illustration to demonstrate some of the challenges faced by modern families and individuals.  While these programs in and of themselves address moral and ethical issues, we also produce interstitial segments to provide additional context and perspective to the issues and dilemmas raised by these programs.

5653     We were honoured in 2002 when the Commission granted us a licence for a religious station in Winnipeg, my family's home town.  We intended to launch that station expeditiously, as we did with NOWTV, but unfortunately financial challenges intervened.  The cost of operating NOWTV has far exceeded our expectations.  As a not‑for‑profit organization, we have found it impossible to raise the capital necessary to cover our on‑going losses and, at the same time, finance the start‑up of our new station in Winnipeg.


5654     We have tried to resolve these problems in various ways.  We obtained the CRTC approval for a corporate reorganization to make it easier for us as a for‑profit corporation to raise capital from institutional sources.  We also filed an application for a rebroadcast transmitter in Victoria to put ourselves on an equal footing with our competitors.  But the fact is, we ran out of time and we ran out of money.  After careful consideration we came to the very, very difficult conclusion that we had no choice or option but to sell NOWTV.

5655     After engaging the services of an investment banker and undertaking a complete offering to any interested parties, we are very pleased to enter into an agreement with Rogers.  Rogers' size and financial stability was critical to give our creditors the comfort necessary to allow us to continue to operate NOWTV while these applications were being considered.  Rogers has the resources necessary to improve the performance of NOWTV and to launch NOWTV in Manitoba.  They have the experience and expertise in niche broadcasting, which will be an important asset for the future success and development of NOWTV.

5656     Most importantly Rogers has committed unequivocally to continue the mandate we started with NOWTV, which means that while we have to give up our ownership position, we do not have to give up on our original objective.

5657     In addition, my family and I will have the opportunity to continue to play a meaningful role in the religious television broadcasting industry in Canada.  We are pleased that our agreement with Rogers provides for that.

5658     Rael...?


5659     MR. MERSON:  We are proposing to acquire the assets that Trinity uses to operate NOWTV, as well as the rights that Trinity holds in the broadcasting licence to operate a religious television station in Winnipeg.

5660     The purchase price for the two undertakings is $13 million, of which $12.25 million has been allocated to the purchase of NOWTV, with the remaining $750,000 allocated to the assets of NOWTV Manitoba.  We derived the valuation of NOWTV by present valuing the financial forecasts for that television station, plus an estimated residual value.  NOWTV Manitoba was valued in accordance with the costs incurred to date.

5661     Our agreement also provides for the continuing involvement of the Thiessen family in the operation of NOWTV.  Willard Thiessen will be offered the position of Chair of the Local Advisory Board in Winnipeg; Jeff and Gloria Thiessen will be retained as consultants for ongoing projects and initiatives at NOWTV.


5662     We have also committed to a production agreement, enabling us to continue to access their experience and expertise in Canadian religious programming.  Taken together we believe these agreements will assist us in our efforts to establish and strengthen NOWTV and religious programming in Canada.

5663     Rogers is the logical purchaser for the NOWTV television stations.  Like ethnic broadcasting, religious broadcasting is about serving a specific under served segment of the viewing audience.  Over‑the‑air religious and ethic television stations are governed by stringent policy requirements, and both are based on challenging business models.

5664     We acquired CFMT‑TV in 1986 after that station had experienced many years of financial difficulties and was facing insolvency.  At the time many questioned our motives for buying the station and suspected that we would operate it as much more of a mainstream station.

5665     We did not do that.  Instead, we rebuilt the station from top to bottom, making substantial investments in CFMT's ethnic programming, its studio and production facilities, and in the management and operation of the station.


5666     After a number of years, CFMT turned the corner and became a viable television station.  In 2002, with your approval, we expanded our service to other ethnic communities in Toronto for the launch of a second ethic station.

5667     Throughout our 18 years of ownership of CFMT we have not only remained true to its core mandate of ethnic broadcasting, but have gone further to establish the station as an internationally recognized provider of award‑winning programming, with a proven commitment to ensuring the highest standard of self expression for ethnic and linguistic communities.

5668     Our two stations now serve at least 40 different ethnocultural groups each month in at least 33 different languages.  We have also committed $48 million to specific initiatives for the development and production of Canadian ethnic programming, establishing the only source in Canada for the funding of Canadian ethnic documentaries and dramas.

5669     With NOWTV we are faced with a situation very similar to that of CFMT almost 20 years ago.  We believe we are ideally suited to take on the challenge of serving the community of religious communities in the Fraser Valley and in Winnipeg.


5670     Much like we have with CFMT, we are determined to invest the programming and financial resources necessary not only to establish a sound financial foundation for NOWTV, but also to use that foundation to develop and produce the very best in Canadian religious programming.

5671     Leslie.

5672     MR. SOLE:  We have committed unequivocally to maintain the NOWTV religious television mandate, operating fully within the requirements of the religious broadcasting policy.  We are not seeking any relaxation of the existing conditions of license for these stations.  In fact, we have proposed two additional conditions.

5673     First, to allay any concerns that we might seek to use the NOWTV stations as vehicle to focus on ethnic programming we have proposed that the Commission attach a condition of license to limit the amount of third language programming on these stations to 5 per cent of the broadcast schedule.

5674     Second, in our reply to an intervention we reaffirmed our commitments to Canadian balanced programming and proposed additional conditions that the Commission could attach to the NOWTV licences.  These conditions would require us to broadcast greater amounts of Canadian balanced programming in prime time.  We would be pleased to discuss those proposed conditions in greater detail.


5675     One of the most significant benefits to the NOWTV stations will be their ability to access OMNI's highly experienced national sales force.

5676     The more evident benefit relates simply to the lower costs of sales based on NOWTV using OMNI's in‑house resources.  However, another important benefit relates more directly to the sales team, one that has already faced the challenges of convincing advertisers of the benefits offered by niche broadcasters.

5677     Canadian religious television stations rely on appropriate entertainment programming to address the interests and demands of their viewers.  For those programs that meet its religious policy programming criteria, NOWTV will also benefit from available programming synergies with the OMNI stations, allowing them to offer high quality entertaining programming at a reasonable cost.

5678     MS ZINIAK:  Balanced programming is a cornerstone of the religious broadcasting policy and is the defining element of the Canadian approach to religious television programming.  This is an area in particular where we believe we have much to offer.


5679     We understand that the reflection of diversity in television programming, whether it is religious or ethnic in nature, requires a detailed understanding of local issues and concerns, as well as strong, positive working relationships with local community groups and leaders.  We will use our experience with the OMNI stations to build on and enhance the relationships NOWTV has established with local faith groups in the Fraser Valley and throughout the Vancouver area.

5680     NOWTV also has working relationships with local independent producers.  We will expand and enhance those relationships through a strong, community‑based program development process similar to that employed by the OMNI stations.

5681     At OMNI we have shown that it is possible to produce excellent programming for many smaller ethnic and linguistic groups by building strong relationships with them and by working closely with community‑based independent producers.  We will take that same approach at NOWTV for the development of balanced programming for a diversity of larger and smaller faith groups.


5682     Local independent producers representing faith groups from throughout the community will have the opportunity to submit program proposals.  We will work with them to develop programming concepts that meet the needs of their communities and which comply with our broadcast quality standards.  We will help them identify and access the programming and economic infrastructure necessary to support their programs.  A portion of the benefits we have proposed is specifically earmarked to support this type of project development.

5683     We will expand the NOWTV Program Balance Committee to incorporate all of the community advisory functions of the very successful OMNI Television Community Advisory Board, while at the same time ensuring that NOWTV Board continues to address program balance issues.

5684     We will establish a similar advisory board for NOWTV in Winnipeg.  Based on our experience with OMNI, we understand the important role that advisory communities play in ensuring that a diversity of voices from within the community is heard and that their concerns are addressed.

5685     Alain...?

5686     MR. STRATI:  We believe the approval of our application will result in significant and unequivocal tangible and intangible benefits for viewers in the Fraser Valley and Vancouver, and in Winnipeg, for Canadian independent producers of religious television programming and for the Canadian broadcasting system as a whole.


5687     We have proposed a comprehensive package of six tangible benefit initiatives worth a total value of $1.3 million over the license term.  They include:

5688     $450,000 to establish the NOWTV Documentary Fund for the independent production of Canadian religious and faith‑based documentaries;

5689     $300,000 in license fees for a four‑part series examining the history of aboriginal faith and spirituality in Canada with APTN as the executive producer and first window broadcaster;

5690     $150,000 in development grants for the production of religious television programming by independent producers in British Columbia and Manitoba;

5691     $200,000 for Canadian independent production projects developed in collaboration with Vision TV;

5692     $100,000 in scholarship awards at the British Columbia Institute of Technology in Vancouver and the Red River College in Winnipeg; and, finally,

5693     $100,000 to support comparative religious seminars in collaboration with Regent College and Trinity Western University.


5694     The approval of this application will also result in significant intangible benefits.  They include:

5695     the long‑term viability of NOWTV will be assured and a new religious television station in Winnipeg will be launched;

5696     NOWTV and the Canadian religious broadcasting industry as a whole will continue to benefit from the experience and expertise of members of the Thiessen family;

5697     NOWTV staff have been offered continued employment at the station and will also benefit from the increased job training and career advancement opportunities that a large broadcasting company has to offer.

5698     Rael...?

5699     MR. MERSON:  We have applied for a licence to establish a NOWTV rebroadcast transmitter in Victoria.  The approval of that application will ensure that residents of Victoria have access to a religious station that is freely available to viewers elsewhere in the market.  In addition, it will ensure that NOWTV is placed on equal competitive footing with all of the other television broadcasters operating in the Vancouver/Victoria market.


5700     As part of the rebroadcast transmitter application we have proposed additional tangible benefits including:

5701     first, $250,000 to the NOWTV Documentary Fund; and

5702     second, $100,000 for development grants to local independent producers based in Victoria and on Vancouver Island.

5703     We have also committed to produce local religious programming for Victoria specifically reflecting the faith and spiritual communities of that community.

5704     We believe the approval of our applications will have no material economic impact on other local television broadcasters in the Vancouver/Victoria or Winnipeg markets.  Experience in the Toronto market clearly shows that there is sufficient programming available to allow all mainstream ethnic and religious stations to offer attractive program schedules consistent with their respective mandates.


5705     Vancouver/Victoria is the country's fastest growing television market and is likely to continue to experience a strong growth for the foreseeable future.  The evidence clearly suggests that the national advertising revenues from our rebroadcast transmitter in Victoria can easily be accommodated within natural market growth.

5706     Television broadcasters in Winnipeg as a group have experienced increasing profitability over the past five years.  NOWTV Manitoba is unlikely to change that trend.  The launch of NOWTV Manitoba will provide a valuable new outlet for advertisers who are seeking an independent local market alternative to the national television broadcast groups.

5707     Winnipeg is one of the few major markets in this country without an independent television station.

5708     Mr. Chair, Madam Vice‑Chair, Members of the Commission, we believe the approval of our applications would be in the public interest for the following reasons:

5709     first, the proposed transaction will ensure the continued operation of a failing religious television station in the Fraser Valley and will ensure the launch of a religious television station in Winnipeg;


5710     second, the approval of a NOWTV rebroadcast transmitter in Victoria will provide residents of that community with access to a religious television station and will place NOWTV on an equal competitive footing with other broadcasters in the market;

5711     third, we are the logical purchaser of the NOWTV television stations.  We have proven expertise in niche television broadcasting.  We understand the significance of balance and reflection and have demonstrated our ability to offer high quality programming that addresses the needs of a diversity of local groups and communities;

5712     fourth, as further evidence of our commitment to Canadian balanced programming, we have proposed conditions of license that would require the NOWTV stations to provide more of that programming in prime time; and finally,

5713     we have proposed a comprehensive package of significant and unequivocal tangible benefits and plan to undertake other programming enhancements that will result in a material increase in the choice, diversity and quality of Canadian religious programming.

5714     We believe all of these programming and operational commitments will be to the benefit of the Canadian broadcasting system and contribute to the continued growth and development of Canadian religious programming.


5715     That concludes our presentation.  We thank you for your time and attention and would be pleased to answer any questions that you may have.       Thank you.

5716     CHAIRPERSON:  Thank you.

5717     Vice‑Chair Wylie...?

5718     COMMISSIONER WYLIE:  Thank you, Mr. Chairman.

5719     Good morning ladies and gentlemen.

5720     I will have programming questions for you.  The Chairman will then have financial and licensing issues that he will discuss with you.  So they are obviously not complete silos, but I am focusing on the programming.

5721     In your application at Part 1.6, which you filed under cover of letter 24 November 2004 ‑‑ before the Commission asked for it because you notice that you had not filled that part ‑‑ you accepted that your application will be operated under the same terms and conditions as the current licence.  That is also repeated in your supplementary brief at more than one place.


5722     This morning you also said, at page 10, that you are not seeking any relaxation of the existing conditions of license.  You are proposing an additional one with regard to ethnic programming and what you call an additional condition which we can discuss that you raised in reply and that is, in my view, an alteration of a condition that exists now.

5723     Can you confirm first whether in filing that completed page, 1.6 of the application form, and making the commitments you made at various parts of your supplementary brief, your point of reference was the CRTC decisions related to NOWTV BC and NOWTV Winnipeg rather than what is on the air now, what the programming schedules are?

5724     MR. STRATI:  Yes, that is correct.

5725     COMMISSIONER WYLIE:  What is your understanding of the phrase "terms and conditions" that you are prepared to accept?

5726     For example, does it include conditions of license only or the commitments that were made at licensing originally and referred to in the related Commission decisions?

5727     MR. STRATI:  The terms and conditions would be the terms in terms of, for example, the 100 per cent religious programming, terms from the religious policy as well the specific conditions of license.


5728     COMMISSIONER WYLIE:  Only the specific conditions of license?  You see that as the terms and conditions?

5729     MR. STRATI:  That's correct.

5730     COMMISSIONER WYLIE:  Maybe we can speed up the process about what it is that you are committing to when you say you will continue these services as they were licensed.

5731     We could go through the conditions of license, as well as the commitments that are in the decision, and see what your view is of whether they will be the commitments and conditions that you will be operating under and, if not, why not?

5732     Do you have the decisions with you, because that will be quicker.  It will be faster than ‑‑ you have the initial decisions, 218 for Fraser Valley and 229.

5733     MR. STRATI:  Yes.  Yes, we do.  Yes, we do, Madam Chair.

5734     COMMISSIONER WYLIE:  So No. 1, 100 per cent religious, you have agreed.

5735     MR. STRATI:  Yes, Madam.

5736     COMMISSIONER WYLIE:  Then under 2(a), 18 hours of balanced programming.  That is Winnipeg, sorry.  Let's go back.


5737     The Fraser Valley one first.  Eighteen hours of balanced programming a week, of which 12.5 hours between 7:00 to 11:00 and 15.5 original first run programming.

5738     I do have a copy of your reply and at pages 4 and 5 you raise different options for balanced programming.

5739     I guess to my question would you accept to abide by this condition of license, 18 hours of balanced programming of which 12.5 hours between 7:00 to 11:00 and 15.5 original first run programming, is not what you would accept as a condition of license.

5740     MR. MERSON:  We would absolutely accept it as a condition of license.  We believe the terms we proposed are in addition to that, but we would absolutely accept that as a condition.

5741     COMMISSIONER WYLIE:  Your proposal on page 5 of the reply is option 2, which would be a minimum of 12 hours of Canadian balanced programming from 6:00 to 11:00 as opposed to 7:00 to 11:00?

5742     MR. SOLE:  Yes, that's correct.

5743     COMMISSIONER WYLIE:  What is your understanding of the change between that and the condition of license?


5744     MR. MERSON:  Madam Vice‑Chair, the change is an attempt by us to introduce more Canadian balanced programming into prime time, while at the same time trying to maintain a sufficient window to allow for the broadcast of Christian programming in prime time.

5745     So we were looking for the ability to find a way to continue to do effectively two hours of balanced programming in prime time, while still doing at least an hours' worth of Christian programming in prime time.

5746     COMMISSIONER WYLIE:  So it would be reduced from ‑‑ you would still do 18 hours of balance programming?

5747     MR. MERSON:  Absolutely.

5748     COMMISSIONER WYLIE:  Of which 12 hours instead of 12.5 would be between 6:00 to 11:00.  And 15.5 would be original first run programming, but 12 hours would be Canadian?

5749     MR. MERSON:  Absolutely.  We seem to have one ‑‑ let me check with Alain quickly.

5750     For some reason we had thought the balance commitment in prime time was 12 hours, not 12.5, but perhaps we can confirm that at a later point.

5751     COMMISSIONER WYLIE:  Are you speaking about your alteration of the condition or the one that was attached?


5752     MR. MERSON:  The one that is in the licence.  Perhaps it is just a misunderstanding on our part, but we will clarify it.

5753     COMMISSIONER WYLIE:  I may have made a mistake.

5754     MR. STRATI:  That's fine, Madam Chair.  It is just a quick clarification.  The current condition of license is 12 hours.

5755     COMMISSIONER WYLIE:  Is 12 hours.

5756     MR. STRATI:  Correct.  It is 15.5 originally.

5757     COMMISSIONER WYLIE:  My apologies.  Twelve hours between 7:00 to 11:00.

5758     MR. STRATI:  So the same number of hours, just that it would be Canadian now.

5759     COMMISSIONER WYLIE:  Same number, an hour more, and Canadian.

5760     MR. STRATI:  That's right.

5761     COMMISSIONER WYLIE:  So those are the conditions that were attached to the Fraser Valley.

5762     There were also commitments that the Commission chose to pick up in the decision as one of the reasons why it was awarding the licence I guess.


5763     At paragraph 14, 7.5 hours of the 18 hours of faith‑specific programming would be produced by non‑Christian groups and broadcast ‑‑ that is paragraph 14 ‑‑ weekdays between 9:30 and 10:00 and Saturday from 8:30 to 1:30.

5764     MR. MERSON:  We would absolutely commit to that.

5765     COMMISSIONER WYLIE:  Okay.  At paragraph 19, 80 per cent Canadian content between 7:00 and 11:00.

5766     MR. STRATI:  Just to clarify, Madam Chair, there was a subsequent decision that clarified that it wasn't 80 per cent.  It was going to be, I believe, 50 per cent from 7:00 to 11:00.

5767     COMMISSIONER WYLIE:  Do you have a number for that decision?

5768     MR. STRATI:  Yes, it is the same decision just ‑1.

5769     COMMISSIONER WYLIE:  ‑1 was a correction.

5770     MR. STRATI:  That's correct.

5771     COMMISSIONER WYLIE:  Thank you.

5772     At paragraph 20, 40 per cent of annual growth revenues would be spent on Cancon, of which $100,000 on script and content development.

5773     MR. MERSON:  No, that would be a commitment we could not meet.

5774     COMMISSIONER WYLIE:  Why not?


5775     MR. MERSON:  I have to think through the financing of the operation, but it would be just difficult for us to meet.  It is a number that we know the specialty channels are comfortable with.  But I don't really know ‑‑ and perhaps I ask Leslie for what a relative number would be for an over‑the‑air broadcaster, but I think it's a far lower number.  My guess would be around 20 per cent.

5776     MR. SOLE:  Yes.  We haven't used this in conventional broadcasting since the policy review, but my recollection is that conventional over‑the‑air broadcasters could be anywhere from 16 to 24 per cent.  I have not looked at any current numbers, but from our own experience that the relationship between Canadian content spending and gross revenue would be under 25 per cent in most cases.

5777     COMMISSIONER WYLIE:  Do you have a substitute number for that then, or is it your intention to just abandon paragraph 20?

5778     MR. MERSON:  No, we do not, but perhaps we could come back with ‑‑

5779     COMMISSIONER WYLIE:  Yes, good idea.

5780     MR. MERSON:  We could caucus about it a ‑‑


5781     COMMISSIONER WYLIE:  And see how it can be.

5782     MR. MERSON:  ‑‑ and see what we can come up with.

5783     Again, it is a number that is a difficult number to meet as an over‑the‑air broadcaster, but let us caucus and we will come back with something.

5784     COMMISSIONER WYLIE:  Would it also be difficult to spend $100,000 on script and content development over the term of the licence?

5785     MR. MERSON:  No, that would not be difficult.  In fact ‑‑

5786     COMMISSIONER WYLIE:  That is okay.  So you will come back to us about the percentage.

5787     MR. MERSON:  Yes.

5788     COMMISSIONER WYLIE:  At paragraph 22, 6.5 hours per week to children 2 to 11, and 8.5 for 12 to 17.

5789     MR. MERSON:  Absolutely.

5790     COMMISSIONER WYLIE:  Now if we go to the other decision ‑‑ I think it's quicker to do it this way.

5791     If you go to the 229 Decision, the Winnipeg one, you are accepting 100 per cent religious?

5792     MR. MERSON:  Yes.


5793     COMMISSIONER WYLIE:  I think I left out there was also a paragraph ‑‑ yes, 21‑22 hours per week ‑‑

5794     I'm back to the Fraser Valley one, paragraph 21.  Twenty‑two hours a week of programming would come from Winnipeg, which I assume at the time meant the production facilities of Trinity?  Because this was before ‑‑ this was when Fraser Valley was licensed.

5795     Do you have paragraph 22?

5796     MR. MERSON:  I'm just looking at 21.  Twenty‑two hours a week.  Can I interpret that as local programming, locally produced programming?

5797     COMMISSIONER WYLIE:  Oh, I'm sorry.  You are right.  Paragraph 21, excuse me.

5798     MR. MERSON:  If we can interpret that as locally produced programming, absolutely.

5799     COMMISSIONER WYLIE:  But locally produced ‑‑

5800     MR. MERSON:  In either Winnipeg ‑‑

5801     COMMISSIONER WYLIE:  ‑‑ in Winnipeg or the Fraser Valley?

5802     MR. MERSON:  No.  In the Fraser Valley for the Fraser Valley and in Winnipeg for Winnipeg.


5803     COMMISSIONER WYLIE:  Because at the time you didn't have ‑‑ there was Winnipeg station.  What do you understand this to be?

5804     MR. MERSON:  I understood this to be a commitment by the Thiessens to produce programming locally in Winnipeg that would serve the Fraser Valley market.  We would prefer to interpret that as programming produced in the Fraser Valley to serve the Fraser Valley market.

5805     If you are okay with that, we would absolutely do it.

5806     COMMISSIONER WYLIE:  Is there a connection between that and the commitment you have with Trinity for, is it $500,000?

5807     MR. MERSON:  No, there is no connection between the two.  We will engage the Thiessens ‑‑

5808     COMMISSIONER WYLIE:  But would it be some of that programming that would be produced?

5809     MR. MERSON:  Possibly to the extent it was produced in the Fraser Valley, but if it was produced in Winnipeg, not at all.  So we interpret this as a local programming commitment and we are comfortable with it as a local programming commitment.


5810     COMMISSIONER WYLIE:  We can discuss a bit later the issue of local programming.

5811     So Winnipeg then 100 per cent religious, 18 hours of balanced programming a week of which 12 hours ‑‑ I think I have it right this time ‑‑ is to be Canadian original content and of 2.5 original locally produced Canadian content from a faith‑specific non‑Christian's perspective.

5812     I'm looking at 2(a) of the attached conditions of license.  Is your intention to discuss the different proposal you have made in your reply to this one as well?

5813     MR. MERSON:  Absolutely.

5814     COMMISSIONER WYLIE:  So would you alter 2(a) as you propose it for me?

5815     MR. MERSON:  Yes, Madam, we would do that.

5816     COMMISSIONER WYLIE:  Can you do that now?

5817     MR. MERSON:  Verbally?  Absolutely.

5818     COMMISSIONER WYLIE:  Yes.

5819     MR. MERSON:  Our proposal, if I can lay my hands on it, is to adopt either one of two options and that is to ‑‑

5820     COMMISSIONER WYLIE:  Well, your option 2 is the preferred one, so let's discuss that.


5821     MR. MERSON:  So talk about only option 2.

5822     Option 2 is an option that is the condition of license currently that Crossroads Television has in Toronto and it is to expand the definition of prime time from 7:00 to 11:00 to 6:00 to 11:00, but to require all the balance that occurs between 6:00 to 11:00 to be Canadian.

5823     This is something we would like to do.  Over and above that, the reason for doing it that way is to ensure that we had sufficient opportunity in prime time or in that period of time to continue to do Christian programming as well.

5824     COMMISSIONER WYLIE:  Now, in both the British Columbia and Winnipeg stations it is 18 hours of programming of which some is in prime time.

5825     Am I to understand that instead of 18 hours of balanced programming a week you would do 12 hours?

5826     MR. MERSON:  I'm sorry, Alain.

5827     MR. STRATI:  Madam Chair, just to clarify, it is 18 hours in both instances for balanced programming.  In Winnipeg there are 12 hours of original.


5828     In terms of the 7:00 to 11:00 slot, the current requirement is 7.5 of Canadian original.  So, as we have talked about for the expansion from 6:00 to 11:00, we have talked about 12 hours of Canadian balanced being within that time.

5829     So the overall hours per week is still at 18 hours.

5830     COMMISSIONER WYLIE:  The 18 hours is the same?

5831     MR. STRATI:  That's correct.

5832     COMMISSIONER WYLIE:  The 12 hours remains the same.

5833     MR. STRATI:  That's correct.

5834     COMMISSIONER WYLIE:  But if you look at the condition of license attached to Winnipeg it says that 12 hours shall be original Canadian programming.

5835     MR. STRATI:  That's correct, so perhaps the ‑‑

5836     COMMISSIONER WYLIE:  So what you are doing is, you are keeping the same number of hours, but expanding by one hour the timeframe in which it is to be broadcast.

5837     Is that correct?


5838     MR. STRATI:  The 12 hours of Canadian balance ‑‑ of original hours ‑‑ it would be at any time during the broadcast week.  The 7:00 to 11:00 is currently seven and half hours of Canadian original, so within that there is of course the ability to do 4.5 hours outside of that 7:00 to 11:00.

5839     So if we go from 7:00 to 11:00 to 6:00 to 11:00, what we are doing is actually increasing the number of Canadian balanced hours from 6:00 to 11:00.

5840     COMMISSIONER WYLIE:  And expanding by one hour the timeframe in which it can be placed ‑‑

5841     MR. STRATI:  That's correct.

5842     COMMISSIONER WYLIE:  ‑‑ as a quid pro quo.

5843     Now, 2(b) is 7.5 hours of the 18 hours of balanced programming to be broadcast between 7:00 and 11:00 is where the change comes.  Right?

5844     MR. STRATI:  That is correct.  To 12.

5845     COMMISSIONER WYLIE:  No. 3, to report at the end of each broadcast year about how you are performing with regard to the No. 2 condition of license.

5846     That is acceptable?

5847     MR. MERSON:  Absolutely.


5848     COMMISSIONER WYLIE:  The commitments in Winnipeg, at paragraph 13, 26 movies a year as part of balanced programming.

5849     Any comment?

5850     MR. MERSON:  No.  We would like to continue to have that option.

5851     COMMISSIONER WYLIE:  At paragraphs 25, 26 and 31 the Commission, in the Winnipeg decision, addresses the purchase of rights ‑‑ I just point out to you that is something that we will get back to ‑‑ that the expectation when the Winnipeg licence was granted was that the purchase of rights for programming would not alter the relationships of the other broadcasters in the market for the purchase of rights.

5852     Can you focus on those, because I will get back to that.

5853     At paragraph 26, for example, where it says:


"Trinity stated that it had no intention of competing with conventional local Winnipeg television stations in the acquisition of programming and the applicant indicated that it would be prepared to wait until all other players in the market had put together their program schedules before purchasing rights for any programs that fit it's programming vision."  (As read)

5854     Do you have an initial comment about whether this commitment is one that you would abide by?

5855     MR. MERSON:  We would absolutely abide it.  It is a reflection of the reality of buying program rights in the Canadian marketplace in the sense that they are three very strong national broadcast networks that invariably, simply because of their buying power, tend to buy first.

5856     Absolutely we would abide by it, but I think it would be forced on us more than we would abide by it ‑‑ more than we would need to have to formally abide by it.

5857     COMMISSIONER WYLIE:  At paragraph 31 ‑‑ because we will get back to that as well ‑‑ as I read from paragraph 31:


"As regards the intervenor's concern with respect to potential competition by Trinity for acquisition of popular foreign programming, the Commission is of the view that Trinity's business plan for Winnipeg clearly demonstrates that Trinity will not have the resources to compete with existing television licensees in that regard."  (As read)

5858     Is it your view that paragraph 31 could be put in a decision approving this application?

5859     MR. MERSON:  Absolutely.  Rogers clearly has the resources to buy television programming when it needs.  The reality is simply that the program suppliers will fulfil the requirements of the major buyers before they even chat with us.

5860     So it isn't as much a question of resources as it is a question of buying power or bargaining power and we lack the bargaining power with program suppliers.  And nothing in any of these decisions will change the balance of power within the Canadian television marketplace.


5861     COMMISSIONER WYLIE:  Paragraph 37, The Commission expects Trinity to adhere to the commitment to broadcast 19.5 hours per week of programming devoted to children and youth and maintain this level for the entire term of license.

5862     Comments about your intentions?

5863     MR. MERSON:  Our intentions are to adhere to it completely.

5864     COMMISSIONER WYLIE:  And then spend $4.1 million on the production and distribution of priority Canadian programming over the license term.

5865     MR. MERSON:  Absolutely.

5866     COMMISSIONER WYLIE:  And $105,000 to support the Manitoba independent production industry.

5867     MR. MERSON:  Absolutely.

‑‑‑ Pause

5868     MR. MERSON:  Sorry.  Perhaps, Madam Chair, Alain has just sort of tweaked me to a point I might have overstepped on.

5869     MR. STRATI:  Sorry, Madam Chair.  I just want to clarify in terms of priority programming.

5870     NOWTV is not required to do priority programming because it doesn't have, as you know, the distribution across the country in terms of meeting that.


5871     So certainly I think if we look at the programming commitments we have made in terms of Canadian balanced programming and what we would do with programming on NOWTV, I think there is an interest in increasing the quality and certainly increasing the Canadian programming content on the stations, but I don't think that it would be a specific expenditure commitment to Canadian priority programming.

5872     Certainly we could, as we have discussed before about in terms of the first licence for Vancouver in terms of Canadian programming expenditures, I think we could discuss in the same way and come back to you in Phase III and talk about a commitment for Canadian programming for Winnipeg.

5873     COMMISSIONER WYLIE:  So you will address later the commitments in paragraph 37?

5874     MR. STRATI:  We will do so for both stations.

5875     COMMISSIONER WYLIE:  And to what extent you would abide by them or have some other proposal.

5876     MR. STRATI:  That's correct.

5877     COMMISSIONER WYLIE:  So I will leave it to you at the next stage.  You will have had an opportunity to think about it.

5878     Because you have addressed or proposed to have 100 per cent religious programming, can we have your understanding of what is religious programming according to the Commission's policy?


5879     MR. MERSON:  I will hopefully give you a quick introduction and then ask Leslie ‑‑ or Jeff perhaps first and then Leslie just to elaborate.

5880     Our understanding is, as the definition provides, that every program that appears on the air on this channel needs to be 100 per cent religious.  A definition is ‑‑ the one that is provided that describes programs that deal with moral, ethical or spiritual issues or religious services.

5881     But over and above that, over the past four years of the running the station, Jeff and his team have developed a set of criteria and a set of exclusions that really give them, to a greater degree, a framework that describes what it is that they would find acceptable on the station and what would not.

5882     We have spent a bit of time thinking as well about what absolutely would not fit on a religious television station.

5883     I am going to ask Jeff just to add his comments.

5884     MR. J. THIESSEN:  Thank you, Rael.


5885     One of the things that we wanted to do when we were licensed for this market was to create a service that would really meet the religious needs of the community and to find innovate ways to really discuss topics that haven't been discussed on any other station.  We worked through the policy very carefully, worked through the decisions that have happened with Vision and CTS over the past, and developed a framework during our Winnipeg process that really articulated how we do programming at NOWTV very clearly.

5886     What we did was, we created a criteria that was a framework that we would have to get through to determine whether a program is religious or not.  It was based entirely on the policies of 93‑78.

5887     Perhaps it would be okay if I just go through that criteria list now so we are ‑‑

5888     COMMISSIONER WYLIE:  Yes.  And we will  expect one of the applicants to explain what their understanding is.

5889     MR. MERSON:  Of their ‑‑ of course.

5890     COMMISSIONER WYLIE:  Or do they now.  Since it will be the purchaser who will be operating this licence, it may be better to see what their understanding is of how you have done it and why they will continue or why it fits the policy.

5891     I don't want to prevent you, Mr. Thiessen, but we want to make sure that the purchaser also understands.


5892     MR. MERSON:  We would be happy to do that.

5893     COMMISSIONER WYLIE:  So perhaps you can tell us to what extent you agree with what Mr. Thiessen ‑‑

5894     MR. MERSON:  Perhaps we can simply ask Leslie to do the information.

5895     COMMISSIONER WYLIE:  Of course I am well aware that the Thiessen family will have an ongoing relationship with the purchaser, so as long as the two of you understand what it is you are going to be doing and confirm that that is what will continue however you want to address it.

5896     MR. SOLE:  You can imagine that there were a number of discussions about this because of the Thiessen family maintaining an interest and consulting us in the future.  We have agreed, in fact.  I will be delivering to you the things that Jeff and I and other programming and management people have agreed to.

5897     The six criterion start with an initial criterion that asks:  Does the program raise and specifically address issues or questions which are spiritual, moral, ethical or religious in nature?


5898     The second distinction is:  The program is constructive and positive in its portrayal of moral or ethical issues, religious ideas, dogma and traditions.

5899     The third one:  The program enhances freedom of religious expression.

5900     Fourth:  The program promotes understanding and respect of religious differences.

5901     Five:  The program presents religious teachings, music, services or events.

5902     Or, in the sixth:  The program tells stories dealing with religious or spiritual themes events, morals or characters.

5903     That is the first layer of identifying programs that may be suitable for a religious television station.  The supplemental review that we have agreed to use, and we found effective in the hypothetical, is we have decided that any program that glorifies socially reprehensible or questionable behaviour in three specific areas, sexuality and sexual themes, violence, and then the third one, hate crime and illegality.

5904     We think that most programming, acquired programming and foreign programming, and even domestic programming, need to pass through these screens to be part ‑‑ a useful part of a religious television station, Madam Vice‑Chair.


5905     COMMISSIONER WYLIE:  I have read, like you, those six principles which are found in your supplementary brief at paragraph 31.  Perhaps a more helpful discussion would be to look at the program schedule and pick a program that is not obviously fitting within these criteria and explain to us your understanding of why it would fit within the religious policy and how it is handled to perhaps increase its ability to fall under religious in the coding.

5906     If you look at the NOWTV Vancouver fall schedule, "Fresh Prince of Bel Air", "Everybody Loves Raymond", "Leave It to Beaver", pick one of these programs and fit it within the six criteria you read, both in your understanding of how they are religious and, second, how they are handled by Trinity at the moment and how you would handle them.

5907     MR. SOLE:  If we could use the term "situation comedy", does that capture the ones you have just described?

5908     COMMISSIONER WYLIE:  Pick one of these because they are on the schedule for the fall that you have provided us.

5909     MR. SOLE:  We could be very specific, and I shall pick one of them.


5910     COMMISSIONER WYLIE:  Pick the one that the intervenors focused on.  Then we will know we have the one that is the most difficult to fit within your six criteria.

5911     MR. SOLE:  If we want to get into the actual content of the program, if that is the exercise, I would be happy to do that.

5912     COMMISSIONER WYLIE:  You know what the exercise is.  We want to know what is your understanding of a religious program, how programs that may not appear to be religious at first glance may become religious and may fit the Commission's definition.  You are going to be the licensee so we want to see what you understand.

5913     MR. SOLE:  Those particular programs are storytelling, and that storytelling invariably has spiritual, moral and ethical challenges and resolutions in almost every single episode.

5914     MS ZINIAK:  I would also add that I think what NOWTV has begun, which we would continue and actually OMNI has had experience in doing, is also having interstitials that would bookcase the program which actually would contextualize and actually enhance the relationship of spirituality and religion with the actual program.


5915     NOWTV has been doing this, OMNI also has been doing this in another way, but we find very effective and does contextualize and bring further meaning and spirituality or religious values to the program.

5916     COMMISSIONER WYLIE:  Mr. Thiessen, at the moment do you have interstitials?  Do you have introduction to this programming that enhances its ability to fit within the six criteria Mr. Sole was reading?

5917     MR. J. THIESSEN:  Sorry.  Go ahead.

5918     COMMISSIONER WYLIE:  Either of you.  Both of you preferably.

5919     MR. J. THIESSEN:  Perhaps I could start.

5920     COMMISSIONER WYLIE:  Because presumably you will be proving some programming.

5921     MR. J. THIESSEN:  We are going to, absolutely.

5922     COMMISSIONER WYLIE:  Rogers will either accept it or not, depending on where it fits.  Because you know this is raised all the time:  What is a religious program?  Is a program that is not religious on one station religious on the other?

5923     Tell us what your understanding is.


5924     MR. SOLE:  But there will be local production that contextualizes these programs hosted by people from various faiths and their reflections between these programs.

5925     As Maddie said, we do it on Ontario, but Trinity Television is doing it ‑‑ has been doing it for quite some time.

5926     Maybe I disappointed the answer a little bit by not mentioning that, but in between these situation comedies there are a Canadian spiritual reflection and now I should say of a spiritual moral or ethical nature.

5927     COMMISSIONER WYLIE:  Normally the panels before us give answers to questions we didn't ask.  Now I have to prod you.

‑‑‑ Laughter / Rires

5928     COMMISSIONER WYLIE:  Perhaps one way of doing it, Mr. Sole, is to look at your six criteria and tell us what kind of a situation comedy would not be acceptable because it would breach or violate one of the six criteria?

5929     MR. SOLE:  I am far more comfortable with those examples.  Situation comedies, "Sex and the City", "Drew Carey", "Coupling".

5930     COMMISSIONER WYLIE:  What criteria would they violate?


5931     MR. SOLE:  They would be in the second layering where the sexuality or the language was glorified or used in a way that had no relation to enhancing the actual challenges and resolution of the story.  They would be not necessary and therefore ‑‑ we don't want to use violence or sex or hate and crime as a source of entertainment, but at the same time they are quite legitimate in a discussion with resolution.  Where Drew Carey tells a lot of just off‑colour jokes and that is a certain kind of show, it would not suit our channel.

5932     I have as many more examples if you would like them, Madam Vice‑Chair.

5933     COMMISSIONER WYLIE:  Of course, I don't think that the purchaser has focused on religion as much in the last five years as they have in the last two months.

5934     Would that be fair?

‑‑‑ Laughter / Rires

5935     MR. SOLE:  Yes.

5936     COMMISSIONER WYLIE:  Yes.  So we are testing your understanding of this.


5937     MR. MERSON:  I think it's fair to say we have wrestled with this issue.  We understand the need to find a way to really ‑‑ I won't say circumscribe, but build a framework to allow us to deal with the issue of what is religious and what isn't religious.  So we have developed this sort of set of criteria that run over and above what we think is in the policy to really, as much as anything else, guide us into making these decisions.

5938     Just to refer to the interstitials as well, I think we feel strongly that no amount of interstitials can turn a non‑religious program into a religious program.  It has to qualify as a religious program first, and then if the context and the detail are not self‑explanatory you need to ensure that the context and the detail are explained thereafter.

5939     So it is just as we go through the filters and the screens it is the sequence of events.

5940     COMMISSIONER WYLIE:  Mr. Thiessen, at the moment how many of the programs that are scheduled in prime time actually are the subject of interstitial introduction?

5941     MR. J. THIESSEN:  So how many programs in prime time do we have interstitials with?

5942     COMMISSIONER WYLIE:  Yes.

5943     MR. J. THIESSEN:  Anything that is not overtly religious.

5944     COMMISSIONER WYLIE:  So what would be a ballpark figure between 7:00 and 11:00?


5945     MR. J. THIESSEN:  Something like "60 Minutes" would always have a discussion, call‑in discussion afterwards.

5946     COMMISSIONER WYLIE:  No, I'm talking about the type of situation comedy that we have been discussing.

5947     MR. J. THIESSEN:  Those, 100 per cent of ‑‑

5948     COMMISSIONER WYLIE:  How common is it have an introduction?

5949     MR. J. THIESSEN:  One hundred per cent.

5950     COMMISSIONER WYLIE:  Is that what you plan as well, Mr. Sole?

5951     MR. SOLE:  Yes.  It's our intention to put these interstitials together with specific episodes for long periods of time so they would become part of the presentation.

5952     COMMISSIONER WYLIE:   So that they are contextualized.

5953     MR. SOLE:  Right, and so that the interstitial is actually connected to the episode as opposed to the program in general.


5954     COMMISSIONER WYLIE:  When you were asked by the Commission in a deficiency letter to identify what changes you would make to the programming schedules, your answer was ‑‑ that would be on page 23 of the first deficiency response which is December 10, 2004.

5955     Question 33, page 23.  You answered:

"It's very difficult for us to provide further specificity as to the changes, if any, we might make to the NOWTV programming schedule."  (As read)

5956     Later, at the top of paragraph 24:

"As a result, we are not in a position to provide the Commission with suggested changes we would make to the current NOWTV schedule, nor to file a proposed programming schedule for the station."  (As read)

5957     This application is based on an asset purchase so therefore you are applying for new licences.

5958     What is the term you are applying for?


5959     MR. MERSON:  Perhaps Alain could answer that?

5960     MR. STRATI:  We would be seeking a full license term.  However, given the circumstances and certainly that NOWTV is up for renewal in, I believe, 18 months, we would be willing to come back for a shorter term and discuss what our programming has become and our programming plans and how they have developed.

5961     COMMISSIONER WYLIE:  You are getting ahead of me.

5962     MR. STRATI:  Sorry.

‑‑‑ Laughter / Rires

5963     COMMISSIONER WYLIE:  I was only going to ask you why it wasn't fair to ask for programming schedules when you are applying for new licences of seven years and they expire on the 31st of August.

5964     So what you offering now is a term of 18 months?

5965     MR. STRATI:  The current licence ‑‑

5966     COMMISSIONER WYLIE:  Yes, but they will be new licences.

5967     MR. STRATI:  Yes, I agree.


5968     COMMISSIONER WYLIE:  Well, what is your ‑‑ it is very odd to say we are not filing programming schedules.  The Commission always wants them to get a feel for ‑‑

5969     The Winnipeg programming schedule was filed in 2001 and never implemented.  So you prefer an 18 month and then you will come with a programming schedule or prepare one for us now?

5970     MR. STRATI:  We would ‑‑

5971     COMMISSIONER WYLIE:  I am accommodating.

5972     MR. STRATI:  Sure, I agree.

5973     At the time we were discussing just because of the current scheduling it was difficult for us to sort of develop a new schedule.  Certainly we would be ‑‑ there are some people here ‑‑

5974     COMMISSIONER WYLIE:  Why?  I don't understand.

5975     MR. STRATI:  Understand, there are plenty of here, we would be glad to do that.

5976     COMMISSIONER WYLIE:  Why is it difficult to develop a schedule for Winnipeg?  The schedule was 2001.  Would you like us to say, "This is what you have to abide by"?

5977     I understand that schedules are just an indication, one indication, a helpful one for the Commission to understand what the intentions are.


5978     MR. STRATI:  Parts of the schedule would be similar in terms of some of the available programming, but there would be certainly some local programming from Winnipeg.

5979     If Commission deems it appropriate, we would be glad to provide a schedule that would provide further detail in terms of the programming from Winnipeg.  Some of it may not have specific titles, but they would certainly be an indication of the genre of programming, the type of programming that would be in the schedule.

5980     MR. MERSON:  Perhaps we ‑‑

5981     COMMISSIONER WYLIE:  And how it would be scheduled.

5982     MR. MERSON:  Perhaps we weren't sufficiently clear in the response to the intervention.

5983     What we had intended to say is essentially the programming blocks that you see on NOWTV in the Fraser Valley now is what we would program into and adopt largely as a schedule.

5984     We obviously don't have programming because we couldn't fit in titles, but contextually the program schedules would be the same with the possible adjust of Canadian balanced programming in prime time.


5985     COMMISSIONER WYLIE:  Have you examined, Mr. Strati, the Winnipeg schedule that was filed with the application in 2001?

5986     Is that what you would want us to refer to at renewal time, however late or short your term of license is?

5987     MR. STRATI:  I do have the Winnipeg schedule.

5988     I think, as Rael mentioned, the Winnipeg schedule would be much sort of along the same lines in terms of the current Vancouver/Fraser Valley schedule, in terms of the development of that schedule would be much more along the lines of what the Winnipeg station would ‑‑ how it would program its schedule.

5989     COMMISSIONER WYLIE:  Well, I leave it to you to discuss further.

5990     This is an asset purchase.  I did see in your ‑‑ you have talked about ‑‑ at least in your CTT, in your tangible benefit commitments, seven year term so I assumed you wanted a seven year term.  You would be getting new licences.

5991     I leave it to you to see whether you want to file your own programming schedules, which would be the case if you were applying for a licence, abide by the ones that are there or, as Mr. Strati suggested, have these licences we would give you expire at the end of 2006.


5992     MR. MERSON:  Thank you for pointing that out.

5993     That was something that wasn't obvious to us and absolutely we will do that.

5994     COMMISSIONER WYLIE:  Because we are trying to determine, as are the other parties participating in this, what are your intentions and what it is that one would look at to see whether you are abiding by what you proposed when you applied, and also what you will end up with in a decision if these were to be approved.

5995     Let me go now to the synergies in programming that would flow from these applications if they were approved.

5996     You have addressed them in a number of places.  Some of them are obvious administrative overhead and obviously, as the Chairman will probably discuss, also sales where there will be an advantage because you would have a station in Winnipeg, one in Vancouver and two in Toronto, with rebroads in Ottawa and ‑‑ London, is it?  And London.  That would be a very different force from what we now have.


5997     I would like to look at those synergies as between the NOWTV Vancouver and Winnipeg, as between the NOWTV stations and the OMNI stations and the effect on programming rights, both with ‑‑ in relation to what programming will end up on the screen and obviously that it probably will have revenue repercussions in the market, although you already have intimated that that is not your conclusion.

5998     Let's look at Vancouver and Winnipeg.

5999     Could you clarify, in a general fashion, the symmetry or lack of symmetry that there would be between the programming schedules of the two NOWTV stations if you were the licensee of both?

6000     MR. MERSON:  Thank you.

6001     We do think there would be tremendous synergies on the programming side between NOWTV in Vancouver and in Winnipeg.

6002     I will ask Leslie just to elaborate a little bit further.

6003     COMMISSIONER WYLIE:  That is obviously what one could see more easily if one had two programming schedules based on the assumptions that you have made.

6004     MR. SOLE:  We will undertake to provide you with the Winnipeg schedule before the day is over, Madam Vice‑Chair.

6005     COMMISSIONER WYLIE:  And also indicate ‑‑


6006     MR. SOLE:  The similarities.

6007     COMMISSIONER WYLIE:  Oh, probably file a schedule of your own unless it is exactly the one that is in place now.

6008     MR. SOLE:  It will be in relation to this question and illustrate the similarities between ‑‑ what our plans would be.

6009     The synergies between NOW Vancouver and NOW Winnipeg go back to the origins of the licences.  We think that a market like Winnipeg will need the substantial backing of a market like Vancouver in program production and program development and the purchase of technology.

6010     We think that in multi‑faith or inter‑faith broadcasting that there is an ability to reach a broader audience outside of geography and so there would be portability for talent, there would be portability for programming ideas that would work in both markets.

6011     On the purchase of specific entertainment programming, it would be a sum game, it would be our ability to buy Ontario, Manitoba and Vancouver.  On a very specific religious program like "The Ten Commandments", we would be able to buy Vancouver and Winnipeg.


6012     But we have commonality in systems, we have commonality in sales and marketing, we have commonality in technological innovation and growth, commonality in training that we would be able to offer these employees.  So we think Winnipeg and Vancouver are one fit.

6013     The big thing when you put NOWTV with the multi‑ethnic or the multilingual channels is that the synergies become even larger.

6014     We own a national sales organization that is on the Lakeshore in Toronto with 15 people.  NOWTV in Winnipeg and NOWTV in Vancouver will have a very substantial saving in the cost of advertising sales.  I mentioned that earlier.  But even more importantly, because we are there and because we are with the agencies on a regular basis, these channels will have more of an opportunity to sell the programming to the advertisers that they are meeting.

6015     So cooperative production, cooperative acquisition and cooperative development.

6016     COMMISSIONER WYLIE:  Would you focus on the financial ‑‑ the assumptions that were filed with the Winnipeg projections?

6017     MR. MERSON:  I'm sorry?


6018     COMMISSIONER WYLIE:  You filed with the Winnipeg financial projections a page of assumptions that were used to construct them.

‑‑‑ Pause

6019     COMMISSIONER WYLIE:  I may not have it in my binder at the same place as you do.

6020     MR. MERSON:  Ah, too much paper.

6021     COMMISSIONER WYLIE:  Annex D were the projections, but attached to them was financial projections.

6022     Do you have that?

6023     MR. MERSON:  Yes.

6024     COMMISSIONER WYLIE:  Financial assumptions, rather.

6025     At the top it says:

"Much of the same programming costs already included in CHNU's projections would run on the Winnipeg station."  (As read)

6026     How much of this programming would be the same?  "Much of the same programming".  What would be the level of programming that would run on the same station ‑‑ on the two stations, excuse me?

6027     MR. MERSON:  Perhaps I can ask Laura just what her assumption was at that point, if it is a financial question.


6028     As a programming question ‑‑

6029     COMMISSIONER WYLIE:  I'm trying to look at it would seem to me that is one way of asking the question about what the programming will look like, because it says "Much of the same programming" would be included in Winnipeg and in Vancouver and that is why we constructed the projections in that fashion with regard to incrementalism only.

6030     All costs assumed to be incremental, much of the same programming.  So from a programming perspective it raises the question of just how much of the programming will be the same.

6031     MR. MERSON:  Perhaps I could address the question from a little bit of a different angle, and that is to answer the question sort of as in terms of local programming.

6032     We have assumed we would produce between 20 and 22 hours worth of original local programming weekly in Winnipeg.

6033     COMMISSIONER WYLIE:  Okay.

6034     MR. MERSON:  Does that help?

6035     COMMISSIONER WYLIE:  Yes.  It all helps because it certainly isn't there.

6036     MR. MERSON:  Absolutely.


6037     COMMISSIONER WYLIE:  How much of the balanced programming will be there too?  How much of the programming between 7:00 and 11:00 will be the same?  What is going?

6038     What would those two schedules look like when you file them?

6039     MR. MERSON:  Could we get back to you on that point ‑‑

6040     COMMISSIONER WYLIE:  Yes.

6041     MR. MERSON:  ‑‑ and identify all of those as part of the schedule?

6042     COMMISSIONER WYLIE:  Yes, and perhaps then give an answer, because here it says "Much of the same programming".  There is nothing, unless you point it to me, in the application that I saw that gave me a sense of how much these two stations would be the same.

6043     MR. STRATI:  I agree.

6044     COMMISSIONER WYLIE:  Thank you.

6045     MR. STRATI:  Just on the ‑‑ it did mention ‑‑ I know they had the example of the Thiessen contract and its balanced programming, so there would still be ‑‑ the COL is still 12 hours of original so it would be Winnipeg.  There may be opportunities for some of the Fraser Valley, but I understand.


6046     The same programming was to be a limited amount of programming, but I understand we haven't clarified that and we will.

6047     COMMISSIONER WYLIE:  Yes.  Presumably if one is to rely on the financial projections, and I hope you will, you have some idea where the savings will be, the synergies will be, and for us perhaps where the sameness will be between the two.  You will get back to us.

6048     At the bottom of the same page, close to the bottom, it is"

"All programming will be coordinated through Toronto and Vancouver, with input by local program station manager." (As read)

6049     Are you expecting to have an independent station manager in Winnipeg?

6050     MR. SOLE:  Yes.

6051     COMMISSIONER WYLIE:  An autonomous programming manager in Winnipeg?

6052     MR. SOLE:  I would say in the case as described it would be the same person, Commissioner Wylie.


6053     COMMISSIONER WYLIE:  In the second deficiency letter, the one that was filed ‑‑ response rather, that was filled on 23 December 2004, at page 2, we were asked to explain this:

"All programming would be coordinated through Toronto and Vancouver, with input by local program station manager."   (As read)

6054     I expect that would be the station manager in Vancouver as well as Winnipeg?

6055     MR. SOLE:  Yes.

6056     COMMISSIONER WYLIE:  In Vancouver would you have a programming manager separate from the station manager?

6057     MR. SOLE:  Yes.

6058     COMMISSIONER WYLIE:  And not in Winnipeg?

6059     MR. SOLE:  Not in Winnipeg.

6060     COMMISSIONER WYLIE:  At the bottom of the answer there to Question 2, Part (b), you say:


"Of course, as a local television station the programming manager at NOWTV in Winnipeg will be responsible for the production of the local programming that reflects the interest and demands of local Winnipeg viewers."  (As read)

6061     Will that be the extent of the involvement of the manager in Winnipeg?  You say programming manager, but you now say it is going to be a station manager.

6062     MR. SOLE:  Yes.  I could get into the evolution, but television sales and administration, as I said, is somewhat centralized so the station manager and the program manager many times become the same.

6063     There is more than just that person.  We are going to have an advisory board in Winnipeg and in Vancouver, as we do in Ontario, that would help any of the programmers at any time deal with editorial or contentious programming acquisitions or scheduling.

6064     COMMISSIONER WYLIE:  Yes, problems, contentious advice, et cetera.  But I am focusing more on the ongoing operation of the station in Winnipeg and the extent to which it will be autonomous.

6065     MR. MERSON:  Perhaps I can just point out why it is ‑‑

6066     COMMISSIONER WYLIE:  Which will not be your advisory committee.

6067     MR. MERSON:  Perhaps I can just point out the structure that NOWTV currently has in place.


6068     It has a station manager in the Fraser Valley and its Vice‑President of programming, Tim Smith who is here, operates out of Winnipeg.  These stations work together.  One programming manager would be more than enough to oversee programming for both stations.

6069     Does that help at all?

6070     COMMISSIONER WYLIE:  The local programming, how much would be only Winnipeg and how much will be Vancouver?

6071     Address for me the tendency to delocalize if you have two stations that are the same, that are under the same ownership and the same type of station.

6072     MR. MERSON:  I can deal with it in the general terms.  Maybe Leslie can do some of the specifics.

6073     I think business people look for synergies and so wherever they tend to find them they tend to look for them.

6074     On the other hand, the offsetting force is the need to be relevant to the local communities and somewhere between the two, obviously at a general level, is a happy medium.


6075     When you look at NOW's programming requirements, including the requirements for original programming and balance and the constraints of working within the religious policy, you can see a natural tendency to find a way to ensure that as much religious programming is possible so it would operate on both stations.  I think it's fair to say that to the degree you could find those synergies, you would look for them.

6076     Unlike sort of a conventional television station that has a requirement to local news, or has local news and local current reflection as a fundamental part of its core programming, a religious television station tends to have programming and values and content that is more applicable to sort of a broader audience.  We see that in the broadcast world in general.  The more niche the programming tends to be, the more your requirement to find a larger audience to distribute it over.

6077     So somewhere there is a happy medium.  Perhaps in terms of specific numbers, when we present the program schedule for Winnipeg we can highlight exactly which one each of those will be.

6078     COMMISSIONER WYLIE:  In the first deficiency letter, the response to December 10, 2004, at page 24, Question 34, you say there:


"In a typical broadcast week we would expect that as much as 20 per cent of the programming schedule for NOWTV Vancouver would consist of local programs serving the local television viewers."  (As read)

6079     And although you are still developing the plans for NOWTV, which you will continue doing for us, Winnipeg, we would expect it to offer 10 per cent of local programming.

6080     So those are numbers.  They are more specific.

6081     What is the overlap between the two that you are expecting, or is that something you are going to tell us later?

6082     Because I presume even the religious community is not the same here as it is in Winnipeg, so local programming of a religious nature or of any nature presumably would be different.  What will be the overlap?

6083     Have you thought about that?  Because that also has a revenue implication, doesn't it, certainly an expense implication if you can air the programming on both stations and call it local programming in either case.


6084     MR. MERSON:  Absolutely.  I think our intention here was to ensure ‑‑ was to commit to 20 per cent local programming in the Fraser Valley and 10 per cent in Winnipeg.

6085     COMMISSIONER WYLIE:  And that is the per cent of...?

6086     MR. MERSON:  Of the broadcast week.  In terms of actual we have not had a discussion about what the overlap might actually be between the two, but perhaps we can address it and present it as part of the program schedule.

6087     COMMISSIONER WYLIE:  Mr. Sole, in your view is programming produced in Winnipeg and identified as local programming to meet a condition of license or a commitment, can it also be in Vancouver to meet the same condition of license or commitment?

6088     MR. SOLE:  It could be in Vancouver, but it would no longer be local.  It would be original Canadian.  That's my understanding.  Market of origin is the only place where a channel ‑‑

6089     COMMISSIONER WYLIE:  So you can address, then, the overlap, because it may well be that it is local in Winnipeg, but it is an acceptable program in Vancouver.


6090     So they are two different questions, I agree with you.

6091     Lets' talk about exchanges and sharing between NOWTV and the OMNI stations.

6092     If you look at your deficiency response of 23 December at pages 2 and 3 ‑‑ and that is also in your financial projections ‑‑ assumptions, rather.  You talk about six hours of programming per week from the Rogers Television properties would be made available at no incremental cost.

6093     It continues on the following page.  The last sentence is:

"We have assumed that a relatively small amount of that kind of programming would be made available to NOWTV at no incremental cost."  (As read)

6094     What type of programming is that, those six hours?

6095     MR. MERSON:  Perhaps I can ask ‑‑

6096     COMMISSIONER WYLIE:  They are, I think I am correct, referred to in your financial assumptions?

6097     MR. MERSON:  Yes, it is in the financial assumptions.


6098     COMMISSIONER WYLIE:  Yes, in the financial assumptions for the construction of your Vancouver stations.  Correct?  Yes.

6099     MR. MERSON:  That is correct.

6100     COMMISSIONER WYLIE:  Yes.

"Six hours of programming per week from Rogers at no incremental cost."  (As read)

6101     What will be those six hours?

6102     MR. MERSON:  Perhaps I can ask Maddie to describe the program.

6103     MS ZINIAK:  Thanks, Rael.

6104     I think there are some definite synergies where indeed OMNI does sometimes and is producing multilingual programs that would be considered balance that are taking a look at faith programmings or celebrations.  That's just one example.

6105     Also, we have had the wonderful opportunity of producing documentaries in third language because of our benefit with OMNI and we have had some proposals not only coming from Ontario, and in fact also from British Columbia and Manitoba.  An example of that would be a program called "My Jihad" that looks at a woman's discovery of her own Muslim faith.


6106     Also to talk about something that we are very excited about and feel is very meaningful and that is our partnership with APTN.  As part of our benefits we suggested some series as far as aboriginal spirituality goes.

6107     So this is just some of the things that we are looking at.  I would be happy to give you more detail, but when we take a look at perhaps ethnicity and multilingual programming, there are some occasions where there are celebrations of ethnocultural faith demonstrated in issues as well as celebrations as far as church services, et cetera.

6108     COMMISSIONER WYLIE:  These six hours, then, would not be foreign programming, would they, or could they be foreign programming, those six hours?

6109     MR. SOLE:  They would be local ‑‑ they would be original Canadian productions.

6110     COMMISSIONER WYLIE:  Can we add these words to the six hours ‑‑

6111     MR. SOLE:  Yes.

6112     COMMISSIONER WYLIE:  ‑‑ so that it would say, "six hours of Canadian" ‑‑"

6113     MR. SOLE:  An average of six hours per week of original Canadian production.

6114     COMMISSIONER WYLIE:  Okay.


6115     In the deficiency letter response at page 22 you address the ‑‑ you have already made a commitment that there would be 5 per cent only of third language programming on either of these stations.

6116     Is that correct?

6117     MR. MERSON:  That is correct.

6118     COMMISSIONER WYLIE:  I think you ‑‑ well, I don't think you do address at page 22 at the bottom in response to Question 32(c), that of course anyone is allowed to have up to 15 per cent of ethnic programming without any special permission, but that you would do far less than 15 per cent.

6119     How much less?

6120     MR. MERSON:  We don't have a specific number for it.  We wanted to sort of give you the confidence to ensure that we were comfortable with the 15 per cent ethnic limit.

6121     Do you have any more information, Les?

6122     MR. SOLE:  Again, I think we were highlighting the flexibility in all television stations to do 15 per cent and it said in all likelihood we would do less.


6123     If you wanted us to quantify that, I could give you something like 10 per cent now, but I would like to talk to the other people before we gave you that percentage.

6124     COMMISSIONER WYLIE:  Yes.  You helped me.  I was going to ask you, since you would be doing far less would you accept 12 hours, which is 10 per cent?

6125     You want to come back?

6126     MR. MERSON:  Yes, absolutely.

6127     MR. SOLE:  That's fine.

6128     MR. MERSON:  Ten per cent would be fine.

6129     COMMISSIONER WYLIE:  Would that 10 per cent of ethnic programs include the 5 per cent in third language?

6130     MR. MERSON:  Yes, it would.

6131     COMMISSIONER WYLIE:  Would you accept six hours so that we wouldn't have to calculate 6.6 and a half hours of third language?

6132     MR. MERSON:  Absolutely.

6133     MR. SOLE:  Yes, we would.

6134     COMMISSIONER WYLIE:  You can confirm what you are prepared to live with when you come back with the other answers.

6135     In the first deficiency letter again at page 26 you talk about the possibility of religious programming on OMNI.


6136     How many hours are there currently of what could be called religious programming on OMNI?  You may not have ‑‑

6137     MR. MERSON:  I'm going to ask Madeline to address the issue, but I think it's hit and miss and I think she wanted to point out that it was sort of a hit and miss process.

6138     COMMISSIONER WYLIE:  A ballpark figure obviously.  I can't expect you to have calculated that.

6139     MR. MERSON:  Madeline, any ‑‑

6140     COMMISSIONER WYLIE:  I'm more interested in how much more would there be if you were granted these two licences.

6141     MS ZINIAK:  I would say generally that one cannot say it is the norm for OMNI to be producing as a public affairs a new station religious programming, but indeed there are occasions where there are special celebrations like Baisakhi for the Sikh community, the ordination of Deacons and Priests for the Greek Orthodox Church, installations of Bishops, that we would cover and we would do specials on.


6142     It would be a guess to say how much throughout the year, but there is an intrinsic value in celebrating faith leaders in the ethno‑specific communities that indeed during the course of what we do at OMNI we would cover.  We would see this as something that certainly would enhance balanced programming on NOWTV and would certainly be relevant to the ethnocultural communities across Canada.

6143     We have also seen quite an interest from other audiences in exactly what are some of the religious values and celebrations of these communities?

6144     COMMISSIONER WYLIE:  In order to ensure that NOWTV remains a religious station and OMNI directed to the ethnic community, do you see any possibility of accepting a limitation of the percentage of Canadian programs that would be shared between NOWTV and OMNI?

6145     The aim would be to ensure that those two stations, which have very different formats, or are supposed to have a different format ‑‑

6146     MR. SOLE:  Could I just ask one point of clarification?

6147     COMMISSIONER WYLIE:  ‑‑ and are not in the same cities, that there isn't a temptation ‑‑ now that you are in religious programming you can talk about temptation ‑‑ to move away from their particular format or their particular audiences.


6148     MR. MERSON:  Could I just chat with Alain quickly?

‑‑‑ Pause

6149     COMMISSIONER WYLIE:  You can get back on that too.

6150     MR. MERSON:  Yes.

6151     COMMISSIONER WYLIE:  We are just trying to frame this so that it will be what you say it will be and what we want it to be.

6152     So would there be an appropriate limit of the Canadian programming that would be on both stations, on both sets of stations, the OMNI station and ‑‑

6153     MR. MERSON:  I have to admit, we have not thought about it.

6154     COMMISSIONER WYLIE:  You are looking very puzzled.

6155     MR. MERSON:  Yes.  No, we ‑‑

6156     COMMISSIONER WYLIE:  An ethnic station and a religious station, if they end up looking the same, may have steered away a bit from their initial vein.

6157     MR. MERSON:  That is obviously not our intent, but I have to admit we haven't thought about it.  If you give us the time, we would be happy to respond.


6158     COMMISSIONER WYLIE:  I hope somebody is keeping track of all this homework.  When there is a lot of homework it is because there are a lot of things missing.  That is what the nuns used to tell me.  And they were religious, so heaven knows.  They must have had it right.

‑‑‑ Laughter / Rires

6159     COMMISSIONER WYLIE:  Let's talk now about the acquisition of program rights.

6160     In the first deficiency response at page 25 ‑‑ and you talked about that again today, that there would obviously be synergies despite that fact that it will be 100 per cent religious programming.

6161     There will obviously be a desire ‑‑ well, an obvious potential to purchase program rights, foreign and Canadian, that are possible on both the OMNI stations and the NOWTV station.

6162     Is Rogers currently providing programs to NOWTV?

6163     MR. MERSON:  Yes, we have in the past.

6164     COMMISSIONER WYLIE:  Would those be foreign, Canadian or both?

6165     MR. MERSON:  I believe both is the answer, but I will double check with Maddie.


6166     COMMISSIONER WYLIE:  Your financial projections show that in year one there will be $3.5 million spent on foreign programming; year three $4,2 million; year five $5 million; year seven $5.8 million.

6167     How does that compare with what is being spent on foreign programming now?  It is not broken down, if I recall, in the 2003 return that we have for NOWTV.  Those would obviously be confidential because they are historical, but do you have a sense of what the difference is?

6168     MR. MERSON:  Perhaps I could ask Tim Smith if he could give us ‑‑

6169     COMMISSIONER WYLIE:  We intend to respect, obviously, the confidentiality of the 2003 returns.  The Chairman will get with you why we don't have the 2004 returns, but perhaps you can give us some level of at least ballpark difference or lack thereof between 2004 foreign programming as opposed to the figures that I have just picked up from the financial projections filed by Rogers.

6170     MR. MERSON:  Could we get you that number and submit it?

6171     Tim, do you have it?


6172     COMMISSIONER WYLIE:  Obviously ballpark figures because they are confidential.

6173     MR. SMITH:  Just for my clarification ‑‑

6174     COMMISSIONER WYLIE:   I'm trying to see what is the difference of what is proposed in expenditures for foreign programming compared to what is currently being spent on foreign programming.

6175     MR. SMITH:  I'm going to say that we are roughly 25 per cent less.

6176     COMMISSIONER WYLIE:  That's good enough.

6177     And that would be true for 2004, because we don't have these figures.

6178     MR. SMITH:  That is correct.

6179     COMMISSIONER WYLIE:  Thank you.

6180     In your financial assumptions again you say that:

"Programming acquisition costs will be coordinated in Toronto where national rights are involved."  (As read)

6181     That will be four ‑‑ is that correct?  I think that's in your financial assumptions for Vancouver.


6182     Will that be true for both Vancouver and Winnipeg?

6183     MR. MERSON:  Yes, that would be the case.

‑‑‑ Pause

6184     COMMISSIONER WYLIE:  Talking about the synergies related to foreign acquisition, by national advertising agency ‑‑ "natural advertising synergies" do you mean airing the same program in the schedule of all four stations and selling national advertising across all four stations for the program concerned?

6185     MR. MERSON:  No.  It would be impossible to coordinate all those schedules.

6186     What we meant is when our buyers ‑‑ when the advertising agencies call for pictures, our sellers go in and explain what it is we have.  They are generally looking for audience demographics that they can fulfil and we will simply have the ability to pitch to them a broader range of offerings than what we currently have.

6187     COMMISSIONER WYLIE:  Do you see it as possibly happening though?

6188     MR. MERSON:  Absolutely.

6189     COMMISSIONER WYLIE:  That all four stations would show the same program?


6190     MR. MERSON:  Oh, no.

6191     Leslie should speak to it.

6192     MR. SOLE:  It would be very rare.

6193     The four stations could, in some cases, use the same programming, but there is clearly two different program mandates.  There are two different ‑‑ in this case there are many different local markets.

6194     We also don't think that ‑‑ we only think a percentage of these acquisitions will apply to all four channels.  So on the occasion where ‑‑ I could give you one, if there was a live Papal broadcast from Rome, that would be an exception where that might happen.  Otherwise we would program these stations locally and directed towards the religious mandate in Manitoba and B.C. and the ethnocultural mandate in Toronto, Ottawa and London.

6195     COMMISSIONER WYLIE:  You are talking here about a program, a special program, a Papal broadcast, not ‑‑

6196     MR. SOLE:  Yes.  I get ‑‑ we have no intention of networking these stations, Madam Vice‑Chair.


6197     COMMISSIONER WYLIE:  Would you be comfortable, then, with a limitation on the percentage of foreign program?  We are talking about the acquisition of program rights and the concern obviously of those who already have stations in these markets.  You have read the interventions as well as I have.  You will hear from them as well.

6198     Would you be comfortable with a percentage limitation of the number of the foreign programs that would be shared between the OMNI television stations and the NOWTV television station?

6199     MR. MERSON:  Could we think about it?

6200     COMMISSIONER WYLIE:  Yes.

6201     Mr. Strati, I hope you have your list.  You guys are going to have a busy lunch.

6202     Do you currently sell regional rights of non‑Canadian programs you purchase nationally to Channel M?

6203     MR. SOLE:  We do sell programming to Channel M.  I'm not sure it's of the description ‑‑ did you ‑‑ foreign?

6204     COMMISSIONER WYLIE:  Perhaps you can tell us what you sell to Channel M?

6205     MR. SOLE:  Malcolm...?

6206     MR. DUNLOP:  Thanks, Leslie.


6207     Presently we sell Channel M a show called "Canada:  A Peoples History".  We sell it to them in seven languages.  It's the 31‑part series that CBC produced that we translate into seven languages.

‑‑‑ Pause

6208     MR. DUNLOP:  Last year we also sold them some English programming.  We sold them "King of the Hill", but that contract ended, I believe August of last year.

6209     COMMISSIONER WYLIE:  We discussed briefly paragraph 26 of the Winnipeg decision regarding the acquisition of rights.  You briefly explained that that situation would not change if you were to be the licensee of these stations.

6210     Can you expand on that?  I'm looking at the extent to which the ability of Trinity, the current licensee, to purchase foreign programs and the ability of Rogers, with all the stations they have, to purchase foreign programming are, to me, fairly apparently different, at least unless their difference is explained away, which is what you did this morning.

6211     Paragraph 26. Do you recall we have discussed briefly where the Commission, one of the reasons for it licensing Winnipeg was the belief that despite the interventions at the time it was not going to have an impact.


6212     MR. MERSON:  The television landscape in Winnipeg really has shifted dramatically in the last couple of years with the acquisition of Craig by CHUM.  So when you look at the television broadcast landscape in Winnipeg they are essentially ‑‑ all three large commercial networks have outlets in Winnipeg.  Winnipeg, in fact, at this point is one of the only markets that doesn't have an independent television player.

6213     Nothing we could do in Winnipeg would move us up the pecking order relative to those national networks and we could not ‑‑ the landscape, which is the pecking order in terms of buying foreign programming would not change at all.

6214     COMMISSIONER WYLIE:  If the concern was to ensure that these stations remain religious stations, do you think that one way to ensure that would be to impose a limit on the amount of U.S.‑produced programs aired during prime time?


6215     I have the impression with the changes we are making to the balanced programming, the one you have suggested, by adding an hour you would have more opportunity ‑‑ the balanced programming spread between 6:00 to 11:00 instead of 7:00 to 11:00 would give you more flexibility ‑‑ am I correct in reading that ‑‑ to air possibly foreign programming, popular foreign programming?  And is that likely to detract from the niche format of this station and should it be limited?

6216     MR. MERSON:  We don't believe it should be limited.  Very similar to ‑‑ from two perspectives.

6217     The first perspective is ‑‑ and Jeff speaks passionately about this, so I might ask him just to sort of speak to it as well.

6218     COMMISSIONER WYLIE:  But he won't be in charge.

6219     MR. MERSON:  No, I understand.  But he speaks passionately and we believe it to be true as well that a lot ‑‑

6220     COMMISSIONER WYLIE:  You have to be passionate about it.

‑‑‑ Laughter / Rires

6221     MR. MERSON:  ‑‑ that a number of the morals and ethics and lessons that are to be taught that occur within a religious framework really are told best in the nature of storytelling and in lessons.


6222     Jeff is more eloquent on the topic than I am about how it is.  History has really built storytelling as a ‑‑ the best religious leaders were the best storytellers.  So we do believe we need a significant component of storytelling within the schedule to make all the lessons that the station seeks to tell evident.

6223     But more so than that or equal to that is the need to provide a reasonable financial framework into which these stations can operate.  The model that is currently being followed, which is a model of mixed ‑‑ three different areas of religious types of programming really hasn't been a success.  It hasn't broken through over here at all and it would be a difficult model to sustain in Winnipeg.  It will take some time to build these stations, but to impose more conditions that might actually limit the attractiveness or the desirability of the programs to viewers I think would be very difficult.

6224     COMMISSIONER WYLIE:  If the Commission disagreed with you and felt that it was necessary to impose a limit on the broadcast of U.S.‑produced programs during prime time and, secondarily, on the amount of simulcast of popular U.S.‑produced programs during prime time, would you think of what the limits could be and get back to us?

6225     I understand you don't want any limits, but should we impose them at least you can go upwards from zero to what would be an acceptable limit.


6226     What would be the impact ‑‑ you addressed it a little, the impact on NOWTV if the Commission felt it necessary to impose the conditions?  What would be the financial impact, the extent of the financial impact?

6227     In other words, what have you relied on in building your financial projections?  I'm sure you have decided just how much of your revenues would come from simulcast opportunities from airing U.S. popular programming, so if you back it out now you can tell us what the impact would be of removing some of that flexibility that you have built into the model.

6228     MR. MERSON:  Perhaps I can ask Malcolm just to take us through how the model was built and the degree of reliance on that type of programming.

6229     MR. DUNLOP:  Thanks, Rael.

6230     COMMISSIONER WYLIE:  From the programming perspective.  The Chairman will look at revenues and expenses.  Just connect it to the questions I ask.


6231     MR. DUNLOP:  With any lost U.S. programming our revenue model would decrease, depending upon what the restrictions were.  For example, if an hour were to be taken way in prime time you would be looking at somewhere around $800,000 to $900,000 a year in lost revenue.

6232     COMMISSIONER WYLIE:  Thank you.

6233     I would like to look now at the consulting agreement and the programming agreement with the Thiessen family.

6234     You filed a programming supply agreement with Trinity according to which you will pay $500,000 in licence fees per year for exclusive rights to first run original programming eligible for complementary funding.

6235     Is that correct?

6236     MR. MERSON:  That is correct.

6237     COMMISSIONER WYLIE:  That will be religious programming?

6238     MR. MERSON:  Yes.

6239     COMMISSIONER WYLIE:  Will that programming be intended for airing on both OMNI and NOW?

6240     MR. MERSON:  Potentially, yes.

6241     COMMISSIONER WYLIE:  Is that ‑‑

6242     MR. MERSON:  Oh, I'm sorry.  You said OMNI and NOW.  I thought you said both NOWs.

6243     No, not at all.  Directed only for the NOW stations.


6244     COMMISSIONER WYLIE:  Could it not be that in some cases it would be possible to air the same program on the OMNI station?  Or you intention is to have that air on the NOWTV stations only?

6245     MR. MERSON:  That is our intention.  It is possible, but it is not our intention to have them air on both stations.

6246     COMMISSIONER WYLIE:  Is this arrangement ‑‑ the Chairman may get back to this, but from a programming perspective, is that part of the purchase and sale agreement?  In other words, but for that you wouldn't have purchased those assets?

6247     MR. MERSON:  Not at all.  We don't know religious programming, as it has been pointed out to us, and the Thiessen's have a long and proud history in producing religious programming that predates NOW by a significant number of years.

6248     We wanted them.  You might argue this is a contract that is more to our benefit than necessarily to theirs.  We want some continuing involvement by the Thiessens in the ongoing operations of the business.


6249     You will note that some of the other clauses beyond ‑‑ as you get into the consulting arrangements, they go beyond normal consulting arrangements which simply speak for services rendered and payments to be made.  They really speak to the success of the stations going forward.  We want to keep them involved in the stations in every possible way.

6250     COMMISSIONER WYLIE:  What is the meaning of Clause 3 of that agreement, Mr. Thiessen?  Most Favoured Nation clause in non‑legalistic language, what is in the intention, or the other parties as well?

6251     This is the agreement that you filed.

6252     By the way, what I have is unsigned.  Is that an agreement that has been executed?

6253     MR. MERSON:  Yes, it has.

6254     COMMISSIONER WYLIE:  Has it been executed exactly the same as it was filed in draft form with us?

6255     MR. STRATI:  Yes, it's the same agreement.  I just filed it for the purposes of filing it electronically so it would be available electronically, but we certainly have the hard copy.

6256     COMMISSIONER WYLIE:  The one I have is November 15, 2004.

6257     MR. STRATI:  Yes.

6258     COMMISSIONER WYLIE:  Clause 3, just explain to me what is the intention?


6259     MR. MERSON:  Trinity Television produces a showed called "New Day Ministries" ‑‑ I'm sorry, called "It's A New Day" and part of what it was that Trinity required from Rogers was in the event that we became the owners of the station they would have some ability to continue "It's A New Day" on NOWTV.

6260     We, because we hadn't finalized the schedule, really couldn't find a place to guarantee to them that we might find a home for "It's A New Day" on NOWTV, so we came up with a clause that essentially said if we decide to open up time on the station for brokered programming we agree that you will have an opportunity to bid for that time and that we will not charge ‑‑ we will not sell the same time to anybody at a lesser price than the opportunity that you have to buy it from us.

6261     COMMISSIONER WYLIE:  Is that your understanding, Mr. Thiessen, as well?

6262     MR. J. THIESSEN:  Yes.

6263     COMMISSIONER WYLIE:  What percentage of Trinity's production yearly will this represent, this $500,000?

6264     I assume that eligible for complementary funding means from existing funds in Canada that the programming would be acceptable for.

6265     Is that the intention?


6266     MR. MERSON:  Perhaps I can ask Jeff.  This is a clause he wanted.

6267     MR. J. THIESSEN:  Thank you.

6268     Yes, indeed we are looking to develop greater abilities in programming and when we discussed the program arrangement we really wanted to find ways of using that as seed money.

6269     Right now currently our cost of production is about $2 million.  This is a significant amount of more money to include in programming.  We would love to work with Rogers and other groups to apply for CTF, or any other funding opportunity to create great religious programming.

6270     COMMISSIONER WYLIE:  If you were unsuccessful in getting complementary funding from Canadian sources, would that have an effect on the $500,000 yearly in license fees?

6271     MR. MERSON:  It would have no effect from our perspective.  We are committed to $500,000.

6272     The reason we were a little oblique about the nature of the programming is Jeff would like to use this, as he said, as seed money.  So we didn't commit to numbers or hours, we merely committed to doing this on sort of normal commercial terms.


6273     If it turns out that he can in fact engage one of the funding sources to help with the programming we think we can produce something that would be more interesting than something that we might be able to do if we can't engage some of the other funding sources.

6274     COMMISSIONER WYLIE:  In this contract, in Section 1 where programming is described for the purpose of the contract, I haven't seen the word "religious" anywhere there.

6275     Mr. Thiessen, is all the programming you produce religious programming?

6276     MR. J. THIESSEN:  It would in fact be religious.  That was only an omission because it was taken for granted it would be religious.

6277     COMMISSIONER WYLIE:  Yes, but is all the programming that you produce ‑‑ is this produced through New Day Ministries or through Trinity production?  What is ‑‑

6278     MR. J. THIESSEN:  It's actually through ‑‑ the contract is with Trinity Television, but we are able to delegate that to any of the other organizations we are involved with.

6279     COMMISSIONER WYLIE:  Yes.  Would all your production satisfy a definition of religious programming?

6280     MR. J. THIESSEN:  Yes, it would.


6281     COMMISSIONER WYLIE:  What percentage of Trinity's production would that likely represent?

6282     I'm looking at page 8 of the first deficiency response, the one December 10.  At page 8, you provide there under Question 12:

"The production expenses accounted for by programming that was produced by Trinity for year one, year two and an estimate for year three..."  (As read)

6283     The numbers are there.  I don't think confidentiality was requested for it.

6284     Is that what the body with which you have the contract ‑‑ is that the amount of production, or does that represent local production via the television station as a opposed to the production entity.

6285     I'm trying to get a fix on how much of the programming produced by Mr. Thiessen's company would $500,000 a year represent.

6286     MR. MERSON:  As you can tell, it is a little difficult to determine.  Currently I think what Trinity does for NOWTV is fairly simple talk‑formatted type programming.


6287     We contemplated that we might do something a little different with this programming.  It is the reason we haven't been specific in the programming agreement about how many hours that might be produced, because Jeff wanted to go back and see if we could perhaps build something a little bigger with the funding.  Obviously we thought it would be a good idea and we wanted to encourage him to do that.

6288     Is your question:  If the worst comes to the worst and what you end up producing is a talk show of some sort, how many hours might that represent?

6289     COMMISSIONER WYLIE:  So some of these license fees may not end up in a program that would be on the stations.

6290     MR. MERSON:  I'm sorry, I misunderstood the question.

6291     COMMISSIONER WYLIE:  The $500,000 is license fees per year, then presumably there would be other funding and a program eventually produced that is satisfactory or not for putting on the air.

6292     MR. MERSON:  We wanted to leave Jeff that flexibility, yes.


6293     MR. J. THIESSEN:  But I think just to confirm to you, it was paid out as a licence fee, which means they would be licensing it from us to be aired on NOWTV.

6294     COMMISSIONER WYLIE:  Yes.

6295     MR. J. THIESSEN:  Specifically as a license fee means we would be airing it.

6296     COMMISSIONER WYLIE:  Likely end up ‑‑

6297     MR. J. THIESSEN:  Yes, absolutely on NOWTV.

6298     COMMISSIONER WYLIE:  ‑‑ broadcast.

6299     MR. J. THIESSEN:  Correct.

6300     COMMISSIONER WYLIE:  There is also a contract with Mr. Thiessen and his wife Gloria Thiessen, with you and your wife.  You were retained in a consulting role for $155,000 per year.

6301     Was that contract filed with us?  I don't have it in my file.

6302     MR. MERSON:  Pardon?

6303     Madam Chair, in the response to deficiencies we did highlight sort of in summary what the contract entails.  Though we didn't file the agreement we certainly have it and would be glad to file it as well.

6304     COMMISSIONER WYLIE:  Fine.  Since I only have the summary and not the contract, would you expand on the role of Mr. and Mrs. Thiessen as it affects programming?


6305     MR. MERSON:  The contract with the Thiessens is for $155,000 per anum.

6306     The two major roles that we want to engage them in, the first really is the launch of the Winnipeg television station.  We do think it will take up a substantial portion of their time for the first at least two years of the contract.

6307     Over and above that, we wanted them to essentially ‑‑ we wanted Jeff to act as a sounding board and Jeff to act as a liaison with the religious communities to allow us to really engage them in what it is that we are trying to build.

6308     As I mentioned earlier, the contract isn't a simple consulting agreement and I apologize, I didn't realize it wasn't filed.  But it has a term in it as well that is essentially success based, that if the Winnipeg station turns out to be a successful station there is a residual payment that is due to them as well.  We want to engage them in the success of building the Winnipeg station.  It's the primary responsibility and function of the contract.

6309     COMMISSIONER WYLIE:  I will leave it to the Chairman to see whether that contract should be filed.  It appears ‑‑


6310     THE CHAIRPERSON:  I think you can ‑‑ I have taken it that we would like to see it filed.

6311     MR. MERSON:  Absolutely.  We would be happy to do that.

6312     COMMISSIONER WYLIE:  Yes, because it has an impact obviously on ‑‑

6313     I have a few questions about your tangible benefits.

6314     You have, on page 3 of the second deficiency letter ‑‑ I think it is, if I recall, dated 23 December, 2004.  You have talk here about a minimum of $75,000 of the $1.3 million would be directed to NOWTV Winnipeg; $50,000 would be accounted for by the original Red River scholarship; and a minimum of $25,000 specifically directed to independent producers based in Manitoba through the pilot development grants for independent producers and NOWTV Documentary Fund.

6315     How much of the $25,000 will come from the NOWTV Documentary Fund and how much from the pilot development grants for independent producers?

6316     MR. MERSON:  Perhaps I can ask Alain.

6317     COMMISSIONER WYLIE:  In other words, what is the likeliest split of this $25,000 taken from these two different tangible benefits?


6318     MR. STRATI:  Given the dollar amounts involved it is probably more likely that it would come from a development grant to support the production.  Unfortunately, it probably is not enough to support a licence, a specific documentary licence.

6319     COMMISSIONER WYLIE:  Are you prepared to suggest what this split would be?

6320     MR. STRATI:  I wouldn't hesitate to say 100 per cent, but I think a very high proportion of the $25,000 would be towards pilot development and that the documentary fund would be more towards Vancouver.

6321     COMMISSIONER WYLIE:  Okay, thank you.

6322     You have proposed a comparative religious studies conference, $100,000.  Will this be one conference consisting of multiple seminars or a series of seminars?  Expand a little on what this will be.

6323     MR. STRATI:  Sure, I would be glad to.  This is a great initiative.  It's something we have also done with Rogers Sportsnet in terms that we developed a workshop with four different schools regionally, and basically what it is is an opportunity ‑‑ we would be looking for a one or two‑day seminar to discuss comparative religious issues, and certainly at Regent College and Trinity Western.


6324     So we were looking at an ongoing process that would be interchangeable between the schools.  For example one year we would have it at Regent College, the subsequent year at Trinity Western, and vice versa.

6325     In terms of how often we would do it, the Sportsnet workshops, we currently have budgets of about $20‑$25,000 for those and they have been quite successful.  Given that, we would be probably looking at about four total seminars in the seven year timeframe.  So two at each of the two universities.

6326     COMMISSIONER WYLIE:  So not necessarily once a year.

6327     MR. STRATI:  That's correct.

6328     COMMISSIONER WYLIE:  Is the participation going to be limited to the students at those colleges, at those institutions?

6329     MR. STRATI:  Certainly that would be the focus of it.  I don't think it would be limited.  For example at the schools for Sportsnet, we have expanded it to ‑‑ for example it is held at BCIT here in Vancouver and it is by no means limited to BCIT students.  The seminar workshop on sports programming, sports broadcasting is open to other students as well as others who are interested in sports broadcasting.


6330     COMMISSIONER WYLIE:  Is Rogers participation in that just money or is the staff involved as well in the organization, et cetera, or simply money that you give these institutions.  Would you organize, have a hands‑on role in organizing?

6331     MR. STRATI:  Sure We have found that the success comes from both.  In planning, for example, the Sportsnet seminar here in Vancouver they actually work with BCIT to schedule it so that when ‑‑ they do cover the Vancouver Canucks for example, so they try to make sure that Jim Hughson for example is here and a lot of others are here in Vancouver at the time of the seminar so that it can access the resources of Sportsnet talent and staff and producers to discuss  the elements that go into the production.

6332     COMMISSIONER WYLIE:  So you are going to use a similar approach ‑‑

6333     MR. STRATI:  Absolutely.  I think it is more engaging for the students and they appreciate it.

6334     COMMISSIONER WYLIE:  ‑‑ for comparative religious studies instead of hockey.  That could be turned into a labour problem now instead of hockey.  Right?

‑‑‑ Laughter / Rires

6335     COMMISSIONER WYLIE:  The Vision TV, it is discussed in your supplementary brief at page 16.


6336     How is the Vision TV Foundation managed?  Is there a separate management board from the Vision TV Management Board?

6337     MR. STRATI:  Yes.  As I understand it, with the Vision TV Foundation there is an independent board that oversees the production decisions.

6338     COMMISSIONER WYLIE:  As a result of the money that you put into this, would you have a seat on that board, on the board of that foundation?

6339     MR. STRATI:  No, we would not.

6340     COMMISSIONER WYLIE:  So it would be more a financial contribution ending up with some programming.  Right?

6341     MR. STRATI:  That's correct.  Actually it is specifically ‑‑

6342     COMMISSIONER WYLIE:  What kind of programming?  Drama?  Documentary?


6343     MR. STRATI:  It can be either, probably more likely for documentaries.  In discussing with Vision, they discussed a couple of projects as examples that they are working on and have ‑‑ are working on in that they have the projects in front of them, the project proposals, and they would see the opportunity for additional license fees in order to meet the budgets in order to trigger those productions and make those productions happen.

6344     In terms of discussing it, that was the opportunity.  Given not only number of projects but also the licence fees involved, we would be probably talking about some documentaries.

6345     COMMISSIONER WYLIE:  In your tangible benefits you have added $350,000 if the Commission approved your application for the transmitter in Victoria.

6346     How did you arrive at that amount?  Why is it not $250,000?  What was the ‑‑ how did you arrive at the amount?

6347     MR. STRATI:  I believe ‑‑ maybe someone can ‑‑ in terms of the projections, I believe it represents 10 per cent of the additional revenue from Victoria.

6348     COMMISSIONER WYLIE:  Of the additional revenues you project.

6349     MR. STRATI:  That's correct.

6350     COMMISSIONER WYLIE:  Captioning and described video.  What are your intentions in that regard?


6351     Confirm whether or not you would accept as a condition of licence to close caption 90 per cent of all of the Fraser Valley and Winnipeg stations programming beginning the first year of operation?

6352     MR. MERSON:  Yes, we would.

6353     COMMISSIONER WYLIE:  Okay.  And described video.  The Commission has now a requirement for descriptive video imposed on the CTV stations, the Global stations, the CHUM stations and I guess on OMNI.2 as well.

6354     Comment on the appropriateness of a similar condition of license on the Winnipeg NOWTV and the Vancouver NOWTV.

6355     MR. MERSON:  Perhaps I can ask Alain to address the issue and Kelly to describe what we do at OMNI.

6356     MR. STRATI:  Sure, I think that would be ‑‑ certainly Kelly can talk about described video we do currently at OMNI, but we do feel that would be appropriate.

6357     COMMISSIONER WYLIE:  The same conditions.

6358     MR. STRATI:  That's correct.


6359     COMMISSIONER WYLIE:  Diversity.  You  mentioned at page 18 I think of the first deficiency letter at some length your corporate cultural diversity plans for 2002 and 2003 and that 2004 would be submitted at the end of January 2005 ‑‑ the 2004 plan rather.  Has that been submitted?

6360     MR. STRATI:  Yes, it has, Madam Chair.

6361     COMMISSIONER WYLIE:  Would you confirm that you would include these two stations, should you be licensed to operate them, into your corporate plan?

6362     MR. STRATI:  Sure.  Absolutely.

6363     COMMISSIONER WYLIE:  Thank you, Mr. Chairman.  Those are my questions.

6364     Thank you ladies and gentlemen and good luck with the homework.

6365     THE CHAIRPERSON:  Thank you very much.

6366     Would it be possible to get a copy of that consulting agreement before we resume?

6367     MR. MERSON:  Absolutely.  We can give it over right now.

6368     THE CHAIRPERSON:  Good.  We will resume in 15 minutes.  Nous reprendrons dans 15 minutes.

‑‑‑ Upon recessing at 10:45 a.m. /

    Suspension à 10 h 45


‑‑‑ Upon resuming at 11:05 a.m. /

    Reprise à 11 h 05

6369     THE CHAIRPERSON:  Order, please.  A l'ordre, s'il vous plaît.

6370     Mr. Merson and ladies and gentlemen, we will proceed with the questioning.  I am going to basically cover three areas with you:  the value of the transaction, both properties; the impact of what the granting of the application would be on the markets involved; and a general question about the integrity of the licensing process related to the Winnipeg facility.

6371     Those will be the general areas and the order will be intermittent.

6372     First of all, on the filing of your 2004 numbers, the date is November 30th.  This is for CHNU.  The date was November 30th and they have not been filed.

6373     MR. J. THIESSEN:  We have just recently filed those.

6374     THE CHAIRPERSON:  Like a minute, a day?

6375     MR. J. THIESSEN:  I believe we did last week.

6376     THE CHAIRPERSON:  Have we received those?  Not to our knowledge.


6377     So the answer is you have filed them.  Okay.  We will have to have a look at them.

6378     I won't go over the confidential figures of the file, but in the application there were financial statements for Trinity Television and those had 2004 numbers in them, as well as 2003 numbers.  So that underlined my question as to why we hadn't received the filings for 2004.  We will use these as rough estimates without divulging the numbers since we did grant confidentiality.

6379     When I look at the 2003 figures ‑‑ again without mentioning the specific numbers ‑‑ they don't reconcile with the financial summaries that are public that we issued based on Trinity Television's results.  They are off by annoyingly small amounts, but off.

6380     So I wonder whether you could ensure when you file that you compare with staff what the discrepancies are, and also look at the 2004 year in the same light and see what it is.  I think we have the general drift for 2004 based on these filings.

6381     MR. J. THIESSEN:  We would be pleased to do that.  We waited until filing to make sure we had audited statements to ensure that they would be correct this time.


6382     THE CHAIRPERSON:  So these statements in your application are not audited?

6383     MR. J. THIESSEN:  That is correct.

6384     THE CHAIRPERSON:  Okay.  But they were filed in November I assume and so the 2003 figures should have reconciled with the year old figures that the Commission had published in its financial summaries, but they don't.

6385     MR. J. THIESSEN:  I'm sorry.

6386     THE CHAIRPERSON:  Okay.  So you want to check into that.

6387     I haven't had a chance to review your consulting agreement.  I think I have your own copy of it.  A quick read I think suggests that the description did not do it justice, that there is more in that consulting agreement than is described in the response to Question 9 in the deficiency letter.

6388     As you noted earlier, Mr. Merson, there are incentives and lump sum payments, and so forth, that I haven't had a chance to digest in the few minutes, but I guess the numbers in the deficiency are pretty well the bottom number, the lowest conceivable numbers?


6389     MR. MERSON:  That is correct.  They could increase, depending on the profitability of the Winnipeg station.

6390     THE CHAIRPERSON:  Right.  So most of them appear to be contingent on getting other licences, and so forth, and success.

6391     I don't know, have you done an analysis of what, based on various sensitivities, you feel that that contract is worth?

6392     MR. MERSON:  We have.  We thought the kicker, for lack of a better work, might be worth something up to $500,000 in our estimation.

6393     The contract is a response to Jeff's request to really stay involved with the station and our desire to keep him involved in the operation of the Winnipeg stations.  He has a vision for what NOWTV might become which he wanted to sort of remain true to, including applying for a licence in Alberta, should that make sense.

6394     This is something he believes in and really wants to advance and wants to stay involved with the business.  So this was our attempt to find a way to ensure that he retained an interest in the business continuing forward.

6395     But it depends.  Not only are they contingent, but they are contingent upon future activities.


6396     THE CHAIRPERSON:  Right.  I understand that.

6397     I guess there is a present value of the guaranteed flow and I suppose some estimate of the contingencies that you think you have.  Where this bites of course is on the value of the transaction because, as you know, the definition of "transaction value", that is a commonly used definition, one is from the International Business Brokers' Association, would deem it to be the total of all considerations, including consulting agreements and future considerations.

6398     So you have valued this transaction at $13 million, $12 and a quarter for the Vancouver assets.  The question we have to decided is:  Is that the real value or should it be topped up by the value of these consulting agreements?

6399     Perhaps I could have your views on that first.

6400     Second, if the Commission did deem the value to be increased by the value of those considerations, what number should the Commission us.

6401     Third, what additional tangible benefits would you be prepared to offer?


6402     So it is a three‑part question and perhaps you can take them in order.

6403     MR. MERSON:  As to the valuation question, the key for us are the future services that are to be rendered by Jeff, Laura and Willard in the continuing evolution of the business.  As I said, this is something we wanted and demanded more than they necessarily pushed us to do.

6404     So to some degree from the valuation perspective, the consulting agreements, as I'm sure you know, really were in respect of services that were going to be rendered that clearly are incidental to the transaction and should be added to the transaction.

6405     We will extract every iota of value for $155,000 out of Jeff and Gloria.  We don't know this business and are determined to learn it and be as good as we possibly can at it.

6406     So to some degree we really believe the service is going to be rendered, so it is an issue and it is the reason we divorced it from the transaction itself.  In fact, it took a lot longer to negotiate the consulting agreement and the programming agreement then it did the basic agreement.  It was done.  The consulting agreements and the programming agreements were done over a period of time thereafter.


6407     The second part of your question I think is:  How do we get a sense of what the value of the kicker might be?

6408     The kicker really is dependent on the last few years of the contracts.

6409     If you look at the Winnipeg projections ‑‑ and I'm trying to find them

6410     THE CHAIRPERSON:  Section 6.

6411     MR. MERSON:  What you would see in your 6 and 7 is around ‑‑ in fact it is an average of years 5, 6 and 7.  You would see around $3‑$3.2 million worth of, let's say, EBITDA as it is defined.  The Thiessen's percentage of that would be 12 per cent.  Multiplied by the multiplier, so 12 per cent would be ‑‑ my math is terrible ‑‑ $320‑$350,000 roughly, multiplied by 10, which would be $3.5 million, present value of that today.

6412     THE CHAIRPERSON:  That is from the consulting agreement.

6413     MR. MERSON:  That is from the consulting.  That is the additional sort of value that might be attributed to the kicker if you did the calculation.

6414     THE CHAIRPERSON:  Would that be a fair number, in your view, to add to the value of the transaction?


6415     MR. MERSON:  I think it would be an aggressive number, but I think it would be fair.  It certainly is one we contemplated.  And if you thought benefits would be 10 per cent of that number, it might be 10 per cent of the $3 million present value back to day one.

6416     THE CHAIRPERSON:  So you would be prepared to commit to that level of ‑‑

6417     MR. MERSON:  Absolutely.  If it was deemed to be an additional part of the transaction.  As I say, we feel strongly we will make them work for this, but that is your determination.

6418     THE CHAIRPERSON:  I want to give you an opportunity to make the case that it shouldn't or do simply agree that it should?

6419     MR. MERSON:  No, in my opinion it absolutely should not.  It is a completely separate agreement.  It was one, as I say, we negotiated over a period of time.  We asked ourselves:  Who do we have who could launch a Winnipeg station for us?  We didn't have anybody.  Jeff and Gloria were there, they knew the community, they are committed to religious broadcasting and wanted to play a part in the evolution of the business.


6420     So I believe it is an entirely different agreement.  If you had said to us in retrospect:  If you thought this was going to be an issue and for an additional $300,000 worth of benefits would you have included it as part of the original transaction?  Absolutely would have.  It was something we would have done.  But I think it is a completely separate issue.

6421     THE CHAIRPERSON:  I can see that the motivations could have been quite different and normally every transaction is unique in some ways and has its own motivation, but wouldn't you agree that it is often the case that senior officers, key personnel, are kept on as part of a consideration for a transaction, whatever the motivations.

6422     MR. MERSON:  Absolutely.  Non‑compete agreements.  We have seen some evidence of those.

6423     THE CHAIRPERSON:  If, pursuing that line, you were to add another $300‑$350,000 of benefits, what would they likely be?

6424     MR. MERSON:  Could we think about it?

6425     THE CHAIRPERSON:  Yes.  You can think about it, yes.

6426     MR. MERSON:  Thank you.


6427     THE CHAIRPERSON:  Let's look at the programming agreement now.  Again, I have a number of questions about it.  This we do have.

6428     I note that the programming, Section 1 of this agreement, provides for at least $500,000 for programming during each year of the term, representing, it says:

"...up to $3.5 million of license fees over the seven‑year term."  (As read)

6429     MR. MERSON:  That is correct.

6430     THE CHAIRPERSON:  Right.  But I guess when I read it with paragraph (d), the last sentence in paragraph (d) says:

"If the purchaser pays license fees of more than $500,000 for programming during the year of the term, the purchaser's commitment for future years will not be reduced."  (As read)

6431     So it is the words "up to $3.5 million".  This could actually exceed $3.5 million, couldn't it?


6432     MR. MERSON:  I think what we were trying to do with that clause is just allow Jeff the flexibility to ‑‑ depending on when the contracts are made for production of programs ‑‑ to slide between.  But the agreement is only ‑‑

6433     THE CHAIRPERSON:  So even though it doesn't say "subject to paragraph (b)", which would put a cap on it ‑‑ caps are very timely ‑‑

6434     MR. MERSON:  Oh, I apologize.  It was clearly intended to be a cap.

6435     THE CHAIRPERSON:  It was a cap?

6436     MR. MERSON:  It was clearly intended to be a cap.

6437     MR. J. THIESSEN:  Not necessarily on my side, but on his side.

6438     THE CHAIRPERSON:  His side.  But that is how you understand it, Mr. Thiessen ‑‑

6439     MR. J. THIESSEN:  Yes.

6440     THE CHAIRPERSON:  ‑‑ that there is a cap there?  Okay.  Thank you.

6441     I appreciate from your deficiency response that you have been doing approximately $1.2 million of programming with your production facility, at least that is what you have booked over the last three years, and this represents less than half that.  So you are in a comfort zone, Mr. Merson, I suppose.


6442     MR. MERSON:  Absolutely.  And it reflects what we think might be a little bit of a shift in our Canadian production to balance in a way from Christian programming.

6443     THE CHAIRPERSON:  Okay.  I have that.

6444     So now let's again discuss whether this is a consideration that you formed prior the purchase price?  What is your view?

6445     MR. MERSON:  Absolutely not.  It is a programming agreement.  We would engage somebody to do it for us.  The terms, the normal commercial terms ‑‑ the only reason it isn't as specific as a traditional programming agreement might be, which essentially refers to hours of production and dollars related to that production is we wanted to give Jeff the flexibility to retain the copyright to the shows and that we would only license the rights to broadcast the shows on the various NOWTV stations.

6446     So once you go down this path ‑‑ I'm not a lawyer, but as we started working down this path of how it is you describe this transaction in general terms rather than specific just to allow him the flexibility to go and look for additional sources of funding and come to us with proposals, we ended up in an agreement that is a little atypical of a traditional programming agreement, only because it doesn't say hours and dollars directly.


6447     THE CHAIRPERSON:  So it is your position and your evidence here, I guess, that this was not intended, nor should it be regarded as, part of the consideration of the overall transaction?

6448     MR. MERSON:  That is correct.

6449     THE CHAIRPERSON:  Is that your view, Mr. Thiessen?

6450     MR. J. THIESSEN:  As I understand it, Rael is going to make me work for every dollar of that, and so because of that, we are providing them, it is not actually dollars that are given, it is dollars worked for.

6451     THE CHAIRPERSON:  I'm talking about the licensing of the programm.

6452     MR. J. THIESSEN:  That is correct.

6453     THE CHAIRPERSON:  Where do you draw the line between the consulting services and the programming services?

6454     MR. J. THIESSEN:  Where do I draw the line between then?

6455     THE CHAIRPERSON:  Because you are going to have to work under both I gather.


6456     MR. J. THIESSEN:  That is correct.  Because it's not ‑‑ like $500,000 is an awful lot of money to produce programs, but it isn't, I guess, as much as I would dream to have for producing programs.  So the money that would be in this particular contract for programming would be applied directly to the programming amount, not according to my salary.

6457     MR. MERSON:  The other thing I would point out, and I don't have the programming agreement in front of me so I say this with just the recollection of hindsight, but the programming agreement, as I recall, is with Trinity Television and the consulting agreement I believe is with the principals ‑‑ not the principals of Trinity.  Trinity is a registered charity and the consulting agreement is with the Thiessen's themselves.

6458     THE CHAIRPERSON:  Yes, that is what it says.  I believe you are correct.  I think I have your views on that.

6459     Just a question on brokered time sales.  It was difficult for us to determine where those were accounted for in your annual returns to the Commission since they don't appear to be on those returns and they don't appear to be either in the financial statements you filed.

6460     Where did you account for those brokered time sales?


6461     MR. J. THIESSEN:  Brokered time sales.

6462     The first year I think we did approximately half a million of brokered sales, then it went up to about $900,000, then I think the third year we did about $1.1 million I believe.

6463     THE CHAIRPERSON:  We have those numbers at least in the ‑‑ $419,000 in 2002; $936,000 in 2003; and $1.178 million in 2004.

6464     My question is, where in your returns, in which line of the returns were they accounted for?

6465     MR. J. THIESSEN:  I can refer this to Tim for clarification, but I believe that those would be under advertising revenue.

6466     THE CHAIRPERSON:  Local?  National?

6467     MR. J. THIESSEN:  National.

6468     THE CHAIRPERSON:  You are certain?

6469     MR. J. THIESSEN:  It would not be local.

6470     THE CHAIRPERSON:  As I say, your file of Trinity Television ‑‑ unaudited as I now understand ‑‑ financial statements or your returns have that line in them.

6471     So you are saying that we should find them in the national airtime sales line?


6472     MR. J. THIESSEN:  Yes.  That is actually sold by our national agency directly, so it would be under their line, out of their revenue.

6473     THE CHAIRPERSON:  Okay.  By the way, I have been passed a note that your annual return has not, as of today, been received at the Commission, so if you filed it last week it is still not with us.

6474     MR. J. THIESSEN:  I will ensure that ‑‑ there is probably somebody listening at the office right now who will check that for me.

6475     THE CHAIRPERSON:  Let me move now to the issue of simultaneous substitution on your programming, on the revenues that flowed from them.

6476     I know Commissioner Wylie had a dialogue with ‑‑ let me get the chart ‑‑ Sole.  No, it wasn't with Mr. Sole, the gentleman in the back ‑‑ Dunlop, yes ‑‑ on that.

6477     What numbers do simultaneous substitution currently represent would you estimate in your revenues?

6478     MR. DUNLOP:  Are you talking now to me?

6479     THE CHAIRPERSON:  Yes.


6480     MR. DUNLOP:  When I estimated the revenue projections I did not differentiate whether they would be simultaneous substitution or not.  I just projected the revenue based on what we felt we could achieve in a rating point in the market.

6481     THE CHAIRPERSON:  Using roughly the same schedule as we see in the November 2004 for now?

6482     MR. DUNLOP:  Basically for 2004, yes.

6483     THE CHAIRPERSON:  How many programs are simulcast currently?

6484     MR. DUNLOP:  Tim would know that.

6485     MR. SMITH:  There are currently two programs.

6486     THE CHAIRPERSON:  Which are those?

6487     MR. SMITH:  "60 Minutes" on Wednesday evenings at eight o'clock and "48 Hours" Saturdays at 10:00.

6488     THE CHAIRPERSON:  How do you work the interstitials in with that?

6489     MR. SMITH:  Those two programs actually carry a full one‑hour open‑line program that follows the program to discuss the issues presented in the program.

6490     THE CHAIRPERSON:  I see.  So there are two currently, those two.  Do you have plans to increase the number of programs that will be simulcast?


6491     MR. DUNLOP:  It would always be our intent as much as possible if we can get simultaneous substitution that we would, particularly in our strip programming with some of the U.S. stations that come into the market.

6492     THE CHAIRPERSON:  Right.  I know in the Winnipeg proceeding you were licensed.  I think it was Mr. Thiessen who indicated that he didn't think that you would have the Vancouver rights for a number of these programs going forward but you seem to have been able to acquire those rights.  I think in our decision we had indicated that testimony.

6493     So I guess you are going to try to get more is what you are telling us?

6494     MR. DUNLOP:  Yes, we dill

6495     THE CHAIRPERSON:  This goes to impact now, Mr. Merson.  You are projecting revenues of course which when compared with the original projections for the Vancouver Fraser Valley station which are considerably higher than they were then.  I can give you the magnitudes but you probably have seen them.

6496     Currently there is a projection for CHNU seven‑year total of $87 million versus $21 million in the original projections of the seven‑year total, and that going up to the $93 million with Victoria.

6497     MR. MERSON:  Yes.


6498     THE CHAIRPERSON:  So naturally the question of impact arises on the market.  I note in your deficiency response you have provided an answer to that, but I wonder whether you can summarize that answer for me here as well.

6499     What impact CHNU‑TV as NOWTV would have on the Vancouver television market?

6500     MR. MERSON:  Vancouver, Victoria, the Fraser Valley is far and away the fastest growing television market in the country.  It grew by around 11 per cent last year.  The market size at the end of last year I think was $370 million.  So we are forecasting that the business would grow by approximately $10 million worth of revenue over the period of the next seven years; $12 million with the inclusion of Victoria as well.

6501     So our contextual take on what the market impact might be was, you know, if you assume that the market might grow by the rate of around 4 per cent per annum over the next seven‑year period of time, it will grow by approximately 30 per cent over the seven years, and 30 per cent of $370 million is around $120 million.


6502     So the $10 million is a very small proportion of just the growth of the marketplace, less than 10 per cent of simply the estimated growth, and that is if the market slows down and calms down.

6503     In absolute terms, if we hit $16 million in sales in this business, it would be less than 1 per cent of the size of the market.

6504     My mistake.  My math is off.  It would be $16 million over approximately $500 million if that was the case, so less than around 3 per cent of the entire market size in absolute terms.  But even in growth terms it will account for less than 10 per cent of the growth of the market.

6505     If we look at the market, nothing goes up in straight lines we know and last year was a phenomenal year for the Vancouver‑Victoria marketplace, but it literally grew by the size of two stations the size of NOWTV in one year.

6506     THE CHAIRPERSON:  Right.

6507     MR. MERSON:  So we can't imagine we are going to have much impact on the growth of the market.


6508     THE CHAIRPERSON:  It is interesting that the numbers that we show in our financial summaries are growths in revenues for the market ‑‑ I think I better begin by saying that we are a little puzzled as to where you get the $369 million, because when we look at our returns for the conventional market six television stations ‑‑ we didn't have CHNU so we couldn't do a seventh ‑‑ the revenues in the market are just under $250 million.  That includes Lower Mainland and Victoria.

6509     So how does it get grossed up to $370 million?

6510     MR. MERSON:  The difference between the two is the impact of network revenues on the marketplace.  The numbers we have Malcolm can elaborate on where they come from.

6511     MR. DUNLOP:  Certainly.  As Rael said, they were included in the network.  Even if we look at the spot market itself it is about $260 million approximately.  I think $259 million was the number.

6512     THE CHAIRPERSON:  $250‑plus?

6513     MR. DUNLOP:  $259 million in the spot market, plus network, I'm sorry.  $121 million for network, equalling $380 million.

6514     THE CHAIRPERSON:  When you say "network" you mean what?

6515     MR. DUNLOP:  We would mean CBC, CTV, specialty, digital, and so on.

6516     THE CHAIRPERSON:  You are including the specialty services?


6517     MR. DUNLOP:  That would be under "network", yes.

6518     THE CHAIRPERSON:  I see.  And you are including the CBC?

6519     MR. DUNLOP:  Yes, we are.

6520     THE CHAIRPERSON:  Are you included CBUT or the network allocation for ‑‑

6521     MR. DUNLOP:  These are funny numbers sometimes because we get them from the TV Bureau.  So some of it I believe is spot and some of it is network for the CBC for example.

6522     THE CHAIRPERSON:  You are going to build on those numbers.

6523     Could you help me out with a reconciliation of your numbers with what you see in our annual summaries, including convention and specialty, just to show me how again hopefully these numbers ‑‑ because there is a fair gap.  In fact, if we remove ‑‑ you see, we have for network payments a number that is currently zero and it used to be, back in 2000‑2001 a number of $4 million plugged in for those and then it went down to zero because of ‑‑ don't ask me why, but it did.


6524     Then there were infomercials and syndication production which ‑‑ but if you take only national and local you get a number of about $240,000, as you will see.

6525     So if you could do a comparative chart that builds from this and shows us how we get to the $370 million, that would be very helpful.

6526     You might as well file that at the beginning.

6527     So now looking at your projections for Vancouver that you whizzed the numbers by me unfortunately, Mr. Merson, so I didn't quite follow.  You can do it either way.  I see where you go the $16 million, that is year six and year seven revenues for your station.  But could you do it either on the basis of the seven‑year total or some average so that we can do a bit of apples to apples, and building in your assumptions indicate how ‑‑ I guess your point is that $87 million will be a lot smaller than the growth in the market.

6528     MR. MERSON:  Absolutely.  Could we present those numbers together with the reconciliation that you have requested?

6529     THE CHAIRPERSON:  Okay.  That would be helpful.

‑‑‑ Pause


6530     THE CHAIRPERSON:  Have you done a calculation as to ‑‑ I don't believe I saw it ‑‑ the percentage of your projected revenues that will come from existing stations?

6531     MR. MERSON:  We have not done that.  It is unlikely that much of it would come, just the market growth is strong enough to ensure that there is more than adequate revenue to go around.

6532     THE CHAIRPERSON:  But you have to assume their growth ‑‑ they would grow as well, right, with our without NOW?

6533     MR. MERSON:  Absolutely there would.  Again the numbers, even if you use just the spot market as against the local television station and you are using the number ‑‑ I think it is $260 or $270 million, just spot.  And how much did it grow?

6534     MR. DUNLOP:  It grew 6.88 per cent.

6535     MR. MERSON:  It grew 6.88 per cent.

6536     THE CHAIRPERSON:  When you say "spot", do you mean national and local?

6537     MR. MERSON:  National and local, but none of the network revenues and none of the specialty revenues.  So $260 million ‑‑ I'm doing this in my head ‑‑ at 7 per cent would be around close to $20 million annually.


6538     THE CHAIRPERSON:  Right.  Again, our charts ‑‑ and these are public ‑‑ show a lot smaller numbers than that.  They do show a big leap in 2003 over 2002 of 34 per cent in national sales, but for 2004 over 2003 we just show 2.8 per cent growth for national sales and then 8.3 per cent for local, but given the ratios would be a lot closer to 2.8 per cent than to 6 per cent, based on this chart.

6539     MR. MERSON:  Based on that chart.

6540     THE CHAIRPERSON:  Yes.

6541     MR. MERSON:  Perhaps we can submit the same reconciliation at the same time.

6542     THE CHAIRPERSON:  If you could do that as well that would be helpful.

6543     If you could then, based on that, give me an estimate of what you think you would draw from other stations?

6544     MR. MERSON:  The cannibalization would be.

6545     THE CHAIRPERSON:  It may be that I would just save a lot of questioning by asking you to do the same for the Winnipeg market?

6546     MR. MERSON:  Absolutely.  Happy to do it.

6547     THE CHAIRPERSON:  Thank you.


6548     I would like to move over to that market.  In Winnipeg of course the station has not launched.  I guess I was having a little trouble figuring out what exactly is being acquired by Rogers.  What are the assets that are in effect being acquired in Winnipeg.

6549     MR. MERSON:  The only asset would be the broadcasting licence, subject to your approval.

6550     THE CHAIRPERSON:  Is that an asset?  Have you consulted Mr. Engelhart on that?

6551     MR. MERSON:  No.  No assets then, if that is the case.

6552     THE CHAIRPERSON:  It is $750,000 being allocated for we are not sure what.  I think we have your answer, but ‑‑

6553     MR. MERSON:  $750,000 was simply the cost that was sunk into the application, plus some accumulated obligations that Trinity has entered into, lease of transmitter site, those types of things, in anticipation of launching a licence that haven't yet been dealt with so the accountants keep them on the balance sheet.  In real terms they are sunk.


6554     THE CHAIRPERSON:  Right.  But it seems to be a notional figure because it is hard to relate it to anything.  You did, for example, in the Vancouver station, file an investment analysis which included license application.

6555     I didn't see one for Winnipeg.  Was there any reason that wasn't filed?  The last page of the financials for ‑‑ you did one for ‑‑ it was Appendix E.

6556     MR. MERSON:  We certainly have that number which is the reason I'm sort of hesitating.  We did go through and calculate the costs that had been spent on acquiring the Winnipeg licence and sort of costs that had been incurred on programming to date and the transmitter.

6557     So we absolutely have it.  I apologize if it wasn't filed, but we will certainly file it.

6558     THE CHAIRPERSON:  Again, I think it would complete the record.  I'm not sure how useful it would be because again I think you probably just did an allocation based on an estimate.

6559     Is that correct?

6560     MR. MERSON:  No, it was based on sort of hard costs that were incurred to acquire the licence.

6561     THE CHAIRPERSON:  Okay, then it will be helpful.  So you would identify the costs incurred and describe what it is that that covers.


6562     We do have, in your deficiencies, an indication that launch is going to be costing another $1.2 million.  These are entirely new costs in addition to the sunk costs that you have already incurred that are under the umbrella of the $750,000 is what you are saying?

6563     MR. MERSON:  I must admit, sort of reading the $1.2 million number when I saw the financial and asking Alain what it related to, but the launch of Winnipeg will cost more than $1.2 million.  $1.2 million is our estimate of the pre‑operating costs just to get the station on the air in terms of sort of the organizational activities that we have to engage in, commitments we have to make.

6564     Over and above that, we have budgeted for $3.3 million as the cost of acquiring the assets necessary to launch the station, the hard costs.

6565     THE CHAIRPERSON:  Okay.  Perhaps it will flesh out a bit better when we have the investment analysis.


6566     We talked about market impact in Vancouver and I guess there is a similar issue in Winnipeg.  It goes to the nature of the stations that were licensed and the component of revenues for example that would come from donations and other.  So the image of the stations at licensing were certainly originally in Vancouver and Winnipeg were religious stations which were going to have a large component of brokered programming and a large component of donations and would not be powered by a strong multiple ownership group.

6567     So in addition to the numbers, do you think that is a legitimate concern of people, that this is in effect a transformation and raises concerns that almost go back to the notion of should there be a call for a new licence in Winnipeg?

6568     MR. MERSON:  Clearly not as robust a market as Vancouver‑Victoria is.  It has all three conventional networks in place.  By our calculation the market has actually been fairly stagnant over the last few years, but profitability of the business has dramatically increased.


6569     The questions we ask ourselves as business people is:  Does the demand exist for this type of service?  Would more competitors stimulate the market or would they necessarily cannibalize the other players in the marketplace?  Because we know there is some notion of activity in the marketplace actually stimulating a market.  Winnipeg is the only ‑‑ I say "the only", it is one of the only major markets that doesn't have an independent broadcaster of any sort.

6570     If you would look across the country there is some evidence that suggests an independent operator can actually stimulate some activity in the marketplace.

6571     So it is a reasonable business opportunity.  It isn't a slam‑dunk and it's the reason we think it really works best with NOWTV Vancouver in place.

6572     As to the prior question, which is:  Has the station evolved, perhaps Jeff could take you through the history of how it is and why it is they felt it necessary to evolve the way they program in Vancouver, but sort of as I understand it they have tried both models.  They found the revenues simply didn't exist, particularly as it related to Canadian religious programming.

6573     So I don't want to put words in Jeff's mouth, but that is how it was explained to me how the models evolved.

6574     Do you want to add anything?


6575     THE CHAIRPERSON:  I don't mean to cut Mr. Thiessen off, but that really isn't my question.  I think we have read that and you have documented that very well as to why you needed to move in the direction you did and Vice‑Chair Wylie has been through the programming questions.

6576     I suppose if the acquisition were by another religious organization or faith‑based organization seeking to acquire this asset and make a go of it I wouldn't be asking these questions, but I think that from the point of view of the perception in the marketplace my question is:  Is it legitimate to say that the ownership of this enterprise by Rogers Broadcasting is a very different kettle of fish from a religious organization and therefore raises issues of competitive fairness in terms of licensing and so on?

6577     MR. MERSON:  This is a licence that has many facets and requires sort of a complicated schedule.  Every single program on the air has to be religious and if the context isn't obvious ‑‑ we have committed to ensuring that the context of the programming is obvious.

6578     Over and above that, we have an obligation to sort of 60 per cent Canadian content in Winnipeg, 12 hours worth of balanced in prime time, including sort of a large proportion of that sort of being locally produced.  The opportunity evolve the channels with something much more mainstream doesn't exist.


6579     The requirements of having to deal with the different constraints in building the program schedule essentially limit the amount that you really can do with the station to do anything much more different from what it is that Jeff and the Thiessen's have done with it with Vancouver currently.

6580     Leslie and Malcolm have worked on the schedule, I don't know if you wanted to add anything.

6581     MR. SOLE:  I would just add that one of the material differences between Rogers owning the Winnipeg licence and the plan that was forwarded by Trinity is that we are a corporation that is traded on the stock exchange and we are not in the business of collecting or calculating donations directly from viewers.  So we are very naturally pushed to the advertising model.

6582     THE CHAIRPERSON:  Okay.

6583     MR. MERSON:  But we are tied up in knots.  There is very limited opportunity to ‑‑


6584     THE CHAIRPERSON:  I take that point.  I guess it is really ‑‑ it goes to the integrity of the licensing process.  If you like Part A is the nature of the transition and Part B is what used to be called trafficking and may still be in some quarters.  The idea that a licence issued and not launched should not be put out for call is I guess the issue you have to address.

6585     MR. MERSON:  Perhaps I can just ask Alain for a little perspective on it.

6586     MR. STRATI:  Sure, I would be glad to.

6587     Mr. Chair, I think we have looked at certainly other issues and other precedence in terms of other transactions in terms of what are the issues that were discussed.  To specifically address the issue you have mentioned of course is to ensure the integrity of the licensing process is maintained.

6588     I think in terms of the licence trafficking issue there has been a couple of specific points that have been raised in terms of issues such as the reasonability of any financial gain, if there is one.  Certainly there is the issue of financial distress, if the station is in financial distress and the ability of someone to come in and retain the viability of the station.


6589     More specifically, on issues of unlaunched stations, there have been other instances I can think of.  You may remember the Télémedia transaction.  There was a station in Calgary, an FM station that was licensed.  At that point in time there was a discussion in terms of value, there was a discussion in terms of sunk costs, costs that had already been incurred by the licensee.  So there had been investments that had been made in terms of an effort to launch the station.

6590     I think there was also discussion in terms of the benefits, in terms of the industry benefits, the Canadian broadcasting benefits.  So from our perspective we are looking at the overall transaction in terms of financial gain which would incorporate both licences certainly.

6591     The financial distress of NOWTV in terms of where they are at, in terms of the need to sell both stations, but perhaps a bit more specifically on Winnipeg, is that investments have been made.  In terms of the integrity of the licensing process, we have talked a little bit about program acquisition rights and the fact that at the time there was a lot of discussion about acquisition rights.  In fact, I think it was one of the specific elements of discussion.


6592     Given the fact of the nature currently, there is three national players in Winnipeg, they will purchase programming by and large for multiplicity markets including Winnipeg.  NOWTV will likely be very different, in that quite apart from its religious programming mandate there will also be de facto that it will not buy nationally.  It may buy from Vancouver and Winnipeg, it may buy for Winnipeg.

6593     So from a rights perspective we feel that the same issues are discussed here and there is not a significant difference in terms of what NOWTV was discussed then as what it would be now.

6594     The revenue Rael has discussed in terms of the fact ‑‑ and I think Leslie mentioned as well in terms of the advertising revenue certainly a much greater part of it because of it.

6595     But the Thiessen family has made an investment in the station, there have been some costs, there is a significant effort and we do think that launching the station in Winnipeg would benefit the industry not only because there is a new station in Winnipeg that there has been a strong demand there for quite a long time, but also because of the ability of NOWTV in Vancouver and NOWTV in Winnipeg which would provide a robust two‑station accommodation.


6596     THE CHAIRPERSON:  I have your answer.  Our rule is that we are very suspicious of any transfer of licence in the first term of a licence.  That goes back to the beginning of the Commission.  There are individual cases where, as you say ‑‑ and there are others we could name ‑‑ where the Commission has nevertheless approved transactions either because they were part of a package or because of distress situations.  You are saying that this is one such case when exception should be made to that rule.

6597     MR. STRATI:  That's correct.  I think some of the similar circumstances where these issues have been discussed are also present here as well.

6598     THE CHAIRPERSON:  Right.  Let me take you to the doomsday scenario, though, Mr. Merson.

6599     Assuming that the Commission were inclined not to approve this part of the transaction but were inclined to approve the Vancouver part ‑‑ and we will get to Victoria in a moment ‑‑ but if Vancouver were approved and Winnipeg were not, would you proceed with the closing?

6600     MR. MERSON:  We would proceed with the closing.  We continue to believe we would be the best owners and NOWTV Vancouver would be ‑‑ Fraser Valley would be the natural partner to NOW Winnipeg.  We believe the demand exists.

6601     We are not sure this is a great idea, but absolutely we would proceed.


6602     THE CHAIRPERSON:  Perhaps I overlooked it in reading the purchase and sale agreement that that contingency was addressed where you would get approval for one and not the other, in which case what would happen to the purchase price?

6603     MR. MERSON:  You have me there.  I can't recall.  I know we discussed it.  I can't recall whether it is in the agreement itself.

6604     THE CHAIRPERSON:  Mr. Strati, did I miss it?  Is it in the agreement itself?

6605     MR. STRATI:  I can check quickly.

6606     THE CHAIRPERSON:  I didn't recall seeing it.

6607     MR. VINER:  I would be surprised if it didn't say subject to terms and conditions that were ‑‑

6608     MR. STRATI:  Yes, it does obviously refer to CRTC approval.  I would just verify quickly whether it is contingent on the either/or scenario like you mentioned.

6609     THE CHAIRPERSON:  You can get back to us on that and, if you like, what the price would be.  Would it remain $13 million or not?


6610     MR. MERSON:  No, the price would be reduced by the $750,000.  That is the recollection that comes back to me, that we had a discussion at the time about the relative values and what they might be.  What I can't recall is whether the agreement directly addresses the ability to proceed on one without the other.  We will check that.

6611     THE CHAIRPERSON:  That is what I can't recall either.  Thank you.

6612     Would that scenario in any way affect your Vancouver business plan, as far as you can see?

6613     MR. MERSON:  It would absolutely affect the business plan.

6614     As Madam Vice‑Chair was sort of discussing with us, there are some natural synergies in the programming between the two stations so it would affect it to some degree.  But perhaps we can sort of quantify how that would work in response to her question.

6615     THE CHAIRPERSON:  That would be fine, if you could do that.

6616     Let's turn to Victoria.  What growth would you see in your revenues?  I guess the total is, what, $6 million over seven years.  Right?  It goes from a total of $87 million without Victoria and $93 million with Victoria, so that is the measure of that.

6617     MR. MERSON:  That is correct.


6618     THE CHAIRPERSON:  What would be your view ‑‑ you have probably read the interventions and we will hear the intervenors so I don't want to preempt that discussion, but what in your view would be the effect of us granting you the Victoria transmitter on the revenues of CHET‑TV and CIVI‑TV?

6619     MR. MERSON:  Again, we can't imagine it will have a material impact.  Our projection in year seven is that the gross revenues of the station would be $2 million more.  So this is over a period of seven years.  At the end of the seven years we think Victoria might add an incremental $2 million to the business.

6620     This again is in a market that is growing fairly rapidly.

6621     We know the demand exists.  This is religious programming.  Victoria is a market that is part of the Greater Vancouver marketplace.  The advertisers, when they look to buy, don't differentiate.  They do not distinguish between Victoria and the rest of the marketplace.  They expect that when they but they will receive coverage in the entire Fraser Valley, downtown Vancouver and Victoria as well.


6622     As well, the program suppliers.  When you buy rights to the Vancouver marketplace automatically sell rights to Victoria as well.  So it is very much one economic market, much in the way that sort of Hamilton and Toronto are one economic market.

6623     So in answer to your question:  Do we think this will have much impact?  We really don't think it will have much impact, simply based on the absolute value and number of the dollars in the marketplace.

6624     We think the demand exists and Jeff has tons of anecdotal evidence to suggest that the demand exists.  This is something that would simply put the business on an equal competitive footing.

6625     Jeff, as he analyzed why it was the business wasn't succeeding as well as he might have hoped, really focused on it as being one of the major issues he had to deal with.  It was the reason they applied to the Commission a couple of years ‑‑ I forget when the initial application was, about a year back ‑‑ to add the Victoria rebroadcaster.

6626     THE CHAIRPERSON:  Could you detail that, Mr. Thiessen, as to that view that Mr. Merson just expressed that you held?


6627     MR. J. THIESSEN:  As soon as we launched NOWTV in Fraser Valley there was an immediate response from Victoria, pastors calling up saying "What is going on here?  We don't get it on our channel service."

6628     Since that time there have been e‑mails and phone records and people calling up.  When I realized that it was imperative for us to get going in Victoria I called up some dear pastor friends out that way and they were saying, "You know what, it is going to be very, very important."

6629     I also know Mr. Low is here as well and he has had some of our independent producers who produce other types of religious programs and they themselves have wanted an expression into Victoria and Vancouver Island as well.

6630     So it is not just from the Christians who have called me, but it has also been other faith groups expressing a desire to ‑‑ there are pockets of those faith groups in that area that are lacking a religious service and we think that NOWTV is the best service.

6631     THE CHAIRPERSON:  So that is on the service front.

6632     What have advertisers told you?

6633     MR. J. THIESSEN:  Local advertising.  We didn't actually in our application have any local advertising.


6634     THE CHAIRPERSON:  No, I understand that.

6635     MR. J. THIESSEN:  Sorry.

6636     MR. MERSON:  The limitation of not having Victoria.

6637     MR. J. THIESSEN:  Oh, from the national point of view?  Oh, I can't express the difficulty we have had both from the nationally ‑‑ us being the last on the list for sure and then having us not having the opportunity of pitching Victoria.

6638     One of the biggest problems we have is even locally here there are opportunities where our local sales people have four Subway franchises, say, to pitch, and because we have franchises in Victoria and Vancouver that goes into a common pot for advertising, we just simply don't get any of those buys.

6639     So there is significant difficulties for anyone who is not in Victoria and I think that it is one of those things that just is very, very important going forward.


6640     MR. W. THIESSEN:  If I could just add one point here, even in the area of religious brokered programming we have had a number of people that wanted the Victoria market and we missed the buy on brokered religious programming because we didn't have the Victoria marketplace.  So it has hit us not only on national sales but even on the brokered market side.

6641     THE CHAIRPERSON:  I may have missed your answer to Madam Wylie's questions, but are you planning to do brokered programming?

6642     MR. MERSON:  Yes, we are.  Limited amounts.

6643     THE CHAIRPERSON:  Limited amounts.  Again, you didn't show those in your projections, did you?

6644     COMMISSIONER WYLIE:  $100,000.

6645     THE CHAIRPERSON:  $100,000.

6646     MR. MERSON:  Yes, we did.

6647     THE CHAIRPERSON:  That is the other.  It says "barter", but is that ‑‑

6648     MR. MERSON:  Same thing.

6649     THE CHAIRPERSON:  Same thing.  So that represents then ‑‑

6650     MR. MERSON:  No.  I think it's under paid programs.  It is under paid programs I think.

6651     THE CHAIRPERSON:  Sorry?

6652     MR. SOLE:  Infomercial.  There are infomercials and paid programs.

6653     THE CHAIRPERSON:  Again, there are many financial pages.


6654     I see $100,000 in the Winnipeg lines throughout.  I don't see any in the Vancouver with or without Victoria projections.

6655     I will go back to your original.  This is our copy of that.

‑‑‑ Pause

6656     MR. STRATI:  Mr. Chair, I am looking at the ‑‑

6657     THE CHAIRPERSON:  Oh, infomercials, paid programs.

6658     MR STRATI:  ‑‑ and paid programs.  That's correct.  The first year is $842,000.

6659     THE CHAIRPERSON:  I'm sorry, you are quite right.  So that represents ‑‑ that doesn't change with Victoria.  So that is six of 87 ‑‑ or six and half of 87 or six and a half of 93.

6660     Mr. Thiessen, they are not showing any Victoria brokered programming here.  Do you think that is an untapped opportunity?

6661     MR. W. THIESSEN:  There is a great opportunity there.

6662     THE CHAIRPERSON:  Right.  In Winnipeg you have the $100,000 of barter in addition to the infomercials.  A much higher percentage in Winnipeg than in Vancouver.


6663     Is that correct?  I'm looking at seven year totals, four of 27.  What's that?  More than a quarter?

6664     MR. MERSON:  I am going to ask Malcolm just quickly for that assumption and what the basis of it was.

6665     MR. DUNLOP:  When I put the paid programming estimates together I based it on the following:  In Vancouver I based it on 10 hours of American and 15 hours of Canada, and I based the same in Winnipeg and the same hours in both markets.

6666     THE CHAIRPERSON:  The same absolute hours?

6667     MR. DUNLOP:  Yes, basically the same hours in terms of for estimating.

6668     THE CHAIRPERSON:  I see.  The difference between the $6.5 million and the $4.1 million is what the Vancouver market will be able to achieve for you?

6669     MR. DUNLOP:  Yes.

6670     THE CHAIRPERSON:  All right.  Okay.  Thank you.

‑‑‑ Pause

6671     THE CHAIRPERSON:  Let me just review this to see whether I have covered everything I wanted to.  I believe I have covered most of it.


‑‑‑ Pause

6672     THE CHAIRPERSON:  There are a number of questions that you will be addressing in reply and I may, when I have seen the filings that I hope we will be able to get as soon as possible.

6673     Do you believe that you will have ‑‑ how much of that filed material do you think you will have before the final phase of the proceeding, which will be today?

6674     MR. MERSON:  We hope virtually all of it.  My sense is there is some information that is more rapidly needed than others, particularly the program schedule and the stuff we went over earlier this morning.  So if we could focus on that first, we will present all that stuff as quickly as we can, hopefully by the end of lunch, just to give you the opportunity of just looking through and spend some time with us.

6675     Then ensure the stuff that isn't going to arise ‑‑ hopefully will not arise again, we will file hopefully by the end of the day.

6676     THE CHAIRPERSON:  Thank you.  Those are my questions.

6677     Vice‑Chair Wylie.


6678     COMMISSIONER WYLIE:  Following the Chairman's question about the possible dissociation of the two, I understand your response to his request that in coming back to us with programming you will also address the possibility that that would be just for Vancouver, to the extent that it has any impact?

6679     MR. MERSON:  Absolutely.

6680     COMMISSIONER WYLIE:  As well as whether it is the two stations.

6681     MR. MERSON:  Absolutely.

6682     COMMISSIONER WYLIE:  Thank you.

6683     COMMISSIONER WILLIAMS:  Mr. Viner, would it be fair to characterize this application as a bailout of a troubled licensee, that due to your size and scope of your organization you may be able to make successful if you had all the pieces?

6684     MR. VINER:  I wouldn't characterize it as just that, Commissioner Williams.

6685     At Rogers Media we would like to grow and we would like to grow in television, although we would like to grow in a way which matches our core competencies.  So there are a number of reasons why we are interested.

6686     The first is, this is a robust market in which we do not find ourselves.


6687     Second is that niche broadcasting, as we have perhaps boringly repeated, is a core competency of our company skill that we built over the last 20 years at OMNI, and we really believe that we can bring some very positive ‑‑ make very positive contributions to the system, and we can make this profitable because we know how to make these things profitable, not wildly so, but nonetheless we can provide the financial stability and the skill‑set necessary to make them profitable.

6688     So yes we are bailing the Thiessen's out.  They are in financial stress and it is a fit with our skills.

6689     COMMISSIONER WILLIAMS:  Thank you.  I had four other questions, but our very able Chair covered them so I won't ask them again.

6690     THE CHAIRPERSON:  Thank you.

6691     Counsel...?

6692     MR. STEWART:  Merci, monsieur le président.

6693     Just a quick question of clarification.  The agreement of purchase and sale that was filed doesn't appear to have been an executed one, but it may have been for the same reason that was given previously with respect to the consulting contract that what we got was the electronic version.


6694     But can you confirm that there is an executed agreement and the date of that agreement?

6695     MR. STRATI:  Absolutely.  We do have it.  In fact, we may have a copy here.  If not, we will get a copy shortly.  But it is the same agreement.

6696     MR. STEWART:  Thank you.  Thank you, Mr. Chairman.

6697     THE CHAIRPERSON:  Thank you very much for your presentation.  You answered the questions very directly and helpfully.  Thank you.

6698     Mr. Secretary...?

6699     MR. LEBEL:  Thank you, Mr. Chairman.

6700     We shall now hear the appearing intervention.

‑‑‑ Pause

6701     MR. LEBEL:  For the record, I would like to indicate that Crossroads Television System has withdrawn its intervention.

6702     So the first appearing intervention will be presented by Multivan Broadcast.

‑‑‑ Pause


6703     MR. KANE:  Mr. Chairman, Members of the Commission, we are prepared to go on, but it would be very helpful if we could consider our intervention over the lunch hour in light of a number of things that were said this morning.  We think we could be of more benefit to the Commission if that opportunity was provided.

6704     THE CHAIRPERSON:  I have no problem with that, provided that the next person in line wishes to go on now because I think we want to keep on schedule given the heavy number of items we have today and tomorrow.

6705     I don't know whether the next person on the list ‑‑ Dr. John Burns has withdrawn, did you say?

6706     MR. LEBEL:  No.  I said Crossroads Television System has withdrawn.

6707     THE CHAIRPERSON:  You know what, I think probably it might be best if we just adjourned for lunch and resumed in an hour, at 1:15.

6708     Would that be helpful, Mr. Kane?

6709     MR. KANE:  That is very helpful, Mr. Chairman.  Thank you.

6710     THE CHAIRPERSON:  Great.

‑‑‑ Upon recessing at 12:15 p.m. /

    Suspension à 12 h 15

‑‑‑ Upon resuming at 1315 / Reprise à 1315

6711     THE CHAIRPERSON:  Order, please.  A l'ordre, s'il vous plaît.

6712     Mr. Secretary.


6713     MR. LeBEL:  Thank you, Mr. Chairman.

6714     We will now hear the intervention by Multivan Broadcast.

6715     You have ten minutes to make your presentation.

INTERVENTION

6716     MR. REITMAYER:  Mr. Chairman, Members of the Commission and staff, my name is Art Reitmayer, and I am the President and CEO of Channel M Television, a role which I have had the pleasure of holding since the Commission granted Multivan Broadcast Corp., Channel M's parent company, the right to launch a multicultural broadcast station in 2002.

6717     I am joined at the table today by, to my left, Johnny Michel, our Vice‑President, Programming, Production and Promotion; and to my right, Greg Kane, Channel M's legal counsel.

6718     In addition, we would like to note the presence in the audience today of Dianne Collins, our News Director; Farnaz Riahi, our Director of Finance; Peter Gillespie, our Vice‑President of Engineering and Operations; Bruce Hamlin, our Vice‑President of Sales; as well, our Chair, Robert Lee; Directors, Douglas Holtby, James Ho and representing the Segal family, Gary Segal.


6719     I will now begin our intervention.

6720     In appearing before you today, it is our intention to outline Channel M's concerns with respect to the transaction proposed by Rogers Broadcasting Ltd. to acquire the assets of Trinity Television.  These are the concerns of a truly independent broadcaster that was granted a licence to serve the ethnic communities of Vancouver one and a half years ago.

6721     That licence, issued when we commenced broadcast, imposed on the station a number of conditions designed to ensure what we proposed ultimately made it onto our schedule.  Provisions of the Ethnic Broadcasting Policy also ensured that the service launched by Channel M reflected the needs of Vancouver's multicultural and multiracial communities.

6722     The licence mandate of Channel M is a complex one.  The station is required to broadcast 50 per cent of its programming in languages other than English, French or Aboriginal, must broadcast at least 22 different languages each month, and is also required to be 100 per cent ethnic between 8:00 and 10:00 p.m.


6723     By the very nature of the service and due to the variety of language and ethnic groups that Channel M serves, the Commission has long recognized that in order for the operation to be sustainable, it must cross‑subsidize some of its programming with revenues generated by English‑language foreign programs ‑‑ typically from the U.S.

6724     When the ownership group of Channel M applied for a multicultural licence to serve Vancouver, they applied with an understanding of how to sustain their service, given the competition in the market as then existed.  The group assumed willingly the significant investment required to build a state‑of‑the‑art, over‑the‑air television station that would provide the unserved ethnic communities with a service that they could call their own and be proud to welcome into their homes.

6725     The market conditions that Channel M faced when it filed its licence application in June of 2001 were comprised of a number of long‑term stations in transition and the imminent launch of a new commercial service in Victoria, as well as NOWTV in the Fraser Valley.


6726     The licensing of VTV in 1997 and The NewVI in 2000 dramatically increased the commercial inventory available in the market, but the competitive landscape for programming and commercial advertisers did not include the Trinity Television service.  NOWTV's mandate was to be 100 per cent religious and therefore it was not foreseen by other broadcasters or the Commission that the station would be a factor in terms of competition for programming or market revenues.

6727     In responding to Channel M's written intervention, Rogers commented that Channel M was trying to portray the Vancouver market in more bleak terms than was in fact the case.  Nothing could be further from the truth.  What we provided was a realistic overview of the market using the same figures as submitted by Rogers with some added context.

6728     The suggestion that overall market growth in revenue would allow for NOWTV's increased focus on spot television sales ignores the reality of stations already in the market with a commercial mandate.


6729     Television spot sales in the Vancouver market have been in decline since the late 1990s.  Fiscal 2003 saw the first true increase in a number of years with total spot revenues returning to the same level as realized in 1998.  Market spot revenue for fiscal 2004 was up 3.7 per cent, with 2005 having a relatively strong first quarter, with noticeable slowing as we move through the second and into the third.

6730     Channel M is one and a half years into its licence term and, to date, has not achieved the level of revenues originally projected.  It would be very difficult for Channel M and the important service it provides to realize its objectives should the Commission see fit to change the landscape and approve Rogers' submission as filed.

6731     The revenue growth projected by Rogers of in excess of $10 million, excluding Victoria, can only come at the expense of other broadcasters in the market.

6732     MR. MICHEL:  Three of the conditions proposed by Channel M are with respect to programming on NOWTV.  The first condition seeks to ensure that NOWTV complies with the Religious Broadcast Policy by airing religious and only religious programming.

6733     Rogers, in response to our intervention, make it apparent that their definition of religious programming includes flexibility to air programs that address spiritual, moral and ethical interests.  While we don't dispute that religious programs can be spiritual or moral or ethical, it does not follow that spiritual, moral and ethical programs are, de facto, religious programs.


6734     The Religious Broadcasting Policy clearly states that a religious program is defined as:

"...one that deals with a religious theme, including programs that expound religious practices and beliefs or present a religious ceremony, service or other similar event."

6735     Under this definition we fail to understand how news and information programming, such as "48 Hours", "Dateline" and "60 Minutes", as well as the U.S. syndicated comedy shows such as "Everybody Loves Raymond" and "The Fresh Prince of Bel Air" qualify as religious programming.

6736     If these programs were to run on other services in the market, one would not expect the station to classify them as religious programs.  Why then is it appropriate for NOWTV?

6737     We also submit that a condition should be put on NOWTV to ensure they fulfil their promise to contribute to their local market by producing local programming that falls within their religious mandate.

6738     In their original licence submission, NOWTV committed to:


"...reflect the local community of the Fraser Valley and contribute to the development of a distinct balanced religious television industry."

6739     To our observance, this commitment has never been met.

6740     With respect to our request for a "balanced programming" condition of licence, we were encouraged to see that Rogers has agreed to provide no less than 12 hours of access in prime time to non‑Christian religious groups.  It is important to note, however, that our intervention was not only concerned with reinforcing this condition, but with ensuring that the definition of "balanced programming" was unambiguous.

6741     In Rogers' response to our intervention, they claim that we erred in our calculation of "balanced" programming because we analyzed the station's launch schedule rather than the station's current schedule.  Further, they argued that acquired news‑oriented programming and the locally‑produced "Online" talk show should be included as part of the "balanced" hours.

6742     We disagree with these arguments.


6743     First, in examining the current schedule on their website, the station lists only 2.5 hours of balanced programming in prime time.

6744     Second, to portray "60 Minutes", "Dateline" and "20/20" as programming that provides a religious perspective different from the station's primary Christian orientation is questionable.  The balanced programming concept was meant to provide non‑Christian religious groups with access to the station's schedule.

6745     Third, as the content of NOWTV's locally produced talk show "Online" primarily deals with themes that do not have a Christian focus or deal with any type of religious theme at all, the show certainly could not be regarded as providing an outlet for non‑Christian religious perspectives.

6746     MR. REITMAYER:  In their submission to acquire the assets of NOWTV, Rogers has applied to have the coverage area of the Fraser Valley service extended to include southern Vancouver Island and Victoria.


6747     We ask that the Commission deny the requested extension.  It is our belief that the applicant has not fulfilled its original service mandate to the communities of the Fraser Valley, nor has it proven in any tangible way there is demand in Victoria for its religious programming.

6748     To allow the extension of a service for the singular purpose of levelling the playing field would be a significant change in market dynamics, given that the licence was not to be competitive with other market stations.

6749     Rogers throughout its written submission would have us believe that NOWTV was granted a mandate for the Fraser Valley and Vancouver.  However, NOWTV applied for and was granted a licence to primarily serve the communities of the Fraser Valley, as reflected in the Commission's decision of July 2000.

6750     The issue of extending the reach of NOWTV into Victoria is about advertising, not service.  Rogers explains in their intervention how national advertising is sold and that NOWTV is currently at a disadvantage due to its lack of carriage in Victoria.


6751     However, NOWTV was never licensed with a mandate to compete for national advertisers.  As outlined in their licensing decision, the service was to have nominal impact on the Vancouver market and, more importantly, be non‑competitive and not affect the financial viability of other commercial television stations.  Only a small portion of the station's revenue was to come from advertising sales as it was to rely heavily on donations and payments from producers.

6752     To suggest that the Victoria extension is needed to give NOWTV an equal footing in the battle for advertisers is completely counter to the station's mandate and reveals the true intention is the further exploitation of U.S. syndicated product that has found its way onto the station's schedule.

6753     As Channel M is a stand‑alone Vancouver‑based station, we will restrict our comments on the matter of the Winnipeg service to those filed with our written submission and request that the Commission deny the precedent‑setting transfer.

6754     In conclusion, we respectfully submit that in order to ensure the integrity of the broadcasting regulatory process, the stability of the Vancouver broadcast market, and to restore balance to our competitive landscape, that the NOWTV broadcast licence be returned to its original Religious mandate: a mandate that by the very nature of the station's narrow focus must carry appropriate restrictions to ensure that it does not stray from its premise.


6755     As such, we propose that in the event the Commission approves the proposed acquisition, the following six conditions of licence be incorporated to ensure:

6756     (1) the Religious broadcasting mandate is adhered to;

6757     (2) the station operates the licence to serve the community for which it was originally approved;

6758     (3) NOWTV does not compete for mainstream U.S. syndicated or Canadian entertainment programming;

6759     (4) local programming dollars are spent on local programs produced by NOWTV, for the residents of the Fraser Valley;

6760     (5) the balanced programming licence requirements originally imposed are complied with; and

6761     (6) third language programming on NOWTV is limited to "no more than 5 per cent of the station's programming schedule each broadcast week", as proposed by Rogers.

6762     We thank you for the opportunity to present our intervention and respectfully ask that you impose the conditions we have recommended on this sale and that you deny the applications to extend the NOWTV service into Victoria and sale of the Winnipeg licence.

6763     We would be pleased to answer any questions.


6764     THE CHAIRPERSON:  Thank you.

6765     Commissioner Pennefather.

6766     COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

6767     Good afternoon, gentlemen.

6768     I want to ask you some questions that come out of today's presentation, so forgive me if they jump around a little bit.

6769     Going in, I had of course your very extensive intervention.  As you note, it is quite thorough.

6770     Perhaps I could start with it, though, to try to get a little bit more of a framework for my questions ‑‑ not that there are that many of them.  It is just a couple of key things I think I would like some more thoughts on.

6771     You were here this morning for the discussion, I think, with the applicant.  There was a discussion with both Vice‑Chair Wylie and the Chairman, particularly the Chairman, regarding the impact on the market.

6772     You certainly reflect on that and you are bringing that back today in your presentation.


6773     Considering this morning's discussion and the previous comments in reply and in application by Rogers on the Vancouver market, its growth, its size, their indication this morning that they didn't see a major impact considering the nature of the religious programming service, do you have any further comments on that discussion and your further comments in this presentation of the impact on Channel M of this application?

6774     MR. REITMAYER:  Thank you.

6775     When you look at the Vancouver market, I think you have to take into consideration not just the one year where you saw a significant lift, which was 2003.  I think people have looked at that and said the market is back on track.  We went through a number of years post the launch of VTV in Vancouver where the market was virtually flat to down.  With respect to other stations in the market, it is not that expenses and everything else that go into the operation of an enterprise have gone down.  So everybody continues to try and take that portion of the money.

6776     So when you are looking at a market, if it goes up 2 or 3 per cent, which it did last year in 2004, to assume that that money can all go to one player would assume that the other players are not looking to get any kind of return given that their expenses have also gone up.


6777     To my experience, so far I haven't seen a lot of the companies willing to see a decrease in their bottom line with respect to their operations.  So they are fighting harder to get a share of that increase as well.

6778     From Channel M's perspective we, a station that was launched a year and a half ago and still having to try and meet our objectives, have to fight even harder to get those dollars.  So if  you add another station into that mix, it is just more stations trying to fight to find profitability.

6779     That profitability, whether it is profit or break‑even, is really what is required just for us to provide the services that we do.

6780     So to suggest that that money can be taken with no impact on other stations is not quite the case.  We are not seeing that kind of growth.  We are not in the 20 per cent days any more.

6781     Like I say, we have seen one year in probably the past eight where we have maybe been slightly over 10 per cent.  The majority of the growth in air time sales is what you have seen, on the specialty side, and there continues to be a shift with respect to those dollars.  So you are seeing significant growth.


6782     That is the number that shows up under Network.  When you were talking with Mr. Merson this morning, he was talking with respect to TVB numbers.  We see both the spot sales and the specialty or network numbers ‑‑ and those network numbers actually include specialty.  We have seen a significant shift, and we are still continuing to fight that battle on the conventional side.  Stations that don't have that mix have to fight all that much harder.

6783     COMMISSIONER PENNEFATHER:  When you say this afternoon television spot sales in the Vancouver market have been declined since the late 1990s, is that what you are referring to?

6784     What is the specific cause of that in your view?

6785     MR. REITMAYER:  When you look at the amount of inventory that has been brought into the market, I think that had some role to play in it.  There have been significant stations licensed into the Vancouver market since 1997.


6786     The other factor, I think, is what is being experienced right across the country right now, which is there is a shift in how advertisers are placing their dollars.  Specialty is a factor along with all the other options that are out there with respect to Internet.

6787     As we were talking the other day, you can walk into any washroom in the city and there is advertising there now.  It is taking some of those dollars.

6788     COMMISSIONER PENNEFATHER:  Let's focus in a little bit more specifically on Channel M.

6789     I think you indicate obviously in this discussion the U.S. programming component of your financial portrait and its importance.  You focus in, as you do in your intervention, that NOWTV B.C. is currently affecting the financial viability of commercial stations in the Vancouver market.

6790     What I am looking at when I am discussing that is the current schedule.

6791     I understand your point about the previous decision and evolution, but when you make that statement could you clarify for us on what basis you make that statement that you made in your intervention that NOWTV B.C. is currently affecting the financial viability of commercial stations.

6792     What is the cause of that?

6793     MR. REITMAYER:  I think there are two reasons.  One is the competition for programming.


6794     As we have submitted before with respect to acquisition of programming, a service that was to be non‑competitive in programming was seeking to acquire a program that Channel M looked to to put on its schedule when it first launched, that competition for programming drove up the cost to us close to $900,000.  That, to me, is a direct impact.

6795     The other part is when you look at the market dollars, if you have U.S. programming on a schedule where you wouldn't have normally anticipated it, it is going to take some of the market dollars from advertisers for that programming.

6796     To a large extent, what Mr. Merson said earlier and other members of the Rogers' panel, it is based on ratings success in the market.  The ratings success in the market right now is on the U.S. syndicated programming that is running on that schedule.

6797     COMMISSIONER PENNEFATHER:  If I may, one could interpret your concern about mandate of the service going forward is really focused on this  syndicated U.S. programming and the ability to carry that as understood by the applicant.


6798     Do you have a sense from looking at the revenue projections that the applicant has tabled on the public record of how that revenue projection is related to this issue of U.S. programming?

6799     What does that tell you?

6800     MR. REITMAYER:  All of the revenue that they would have there, I think the easiest question is to go back.  If that U.S. syndicated programming wasn't on the schedule, I think you would find that the revenues that would be on the station would look more like what was originally filed by NOWTV when it sought to obtain the licence in the Vancouver market.

6801     You were looking at a service that was significantly lower in revenues because the nature of the programming ‑‑ and again, their individual that was on the panel at that time said that the appeal from an advertiser point of view for religious programming is not as high as it is for commercial programming, the nature of the U.S. syndicated product.

6802     COMMISSIONER PENNEFATHER:  As you say, you were using the current schedule of NOWTV to look at this.  I am curious too about your comment this afternoon on page 5:


"We also submit that a condition should be put on NOWTV to ensure they fulfil their promise to contribute to their local market by producing local programming..."

6803     Clarify for me the connection between local programming and what I assumed from your intervention was your concern for a condition which relates to the religious programming.

6804     You seemed here to be putting the emphasis on local programming.

6805     MR. REITMAYER:  Are you speaking to item 4 or item 5?  Sorry.

6806     COMMISSIONER PENNEFATHER:  I am on page 5 actually.  I am not on your list at this point.  I am in the narrative at page 5, second paragraph.

6807     MR. REITMAYER:  Thank you.

6808     COMMISSIONER PENNEFATHER:  And it comes up in your interpretation obviously of the programming mandate.

6809     Here as a solution I think you are proposing a condition which focuses on local programming.


6810     MR. REITMAYER:  It all goes back to again we looked back to the licence application as it was originally submitted by the Thiessen family and looked to see what they were looking to accomplish with the service.  If you looked at that programming schedule and the commitments that were made, there was a significant amount of programming that was to originate and reflect the Fraser Valley.

6811     To date, we have not seen that on the schedule and we feel it is important that if the station is going to be sold and it is going to be the service that it was actually approved for, that those types of conditions should be put in place.

6812     COMMISSIONER PENNEFATHER:  So again it comes down to what you see as the evolution of the programming as we see it now.  As was discussed this morning, we don't have a schedule going forward.

6813     In your intervention you do in fact say ‑‑ I don't have the quote right in front of me, but you do see this transformation continuing.  Am I correct?

6814     And on what do you base that assumption that the transformation, as you call it, would continue?


6815     MR. REITMAYER:  As you have noted, we didn't receive a programming schedule going forward.  The easiest determinant of that programming schedule maintaining what it is and going forward, there were a number of comments today at the table with respect to the types of programming that under the Rogers ownership the station would look to pursue.  And simultaneous programming is indicative of U.S.

6816     To my knowledge, there isn't a religious service across the border to simulcast with, so I suspect that would be U.S. syndicated.

6817     When you look at the revenue numbers that Rogers projects going forward, those would also be indicative of a schedule that is populated with U.S. syndicated programs as opposed to local Fraser Valley based programs or religious programs that are brokered.

6818     COMMISSIONER PENNEFATHER:  One final question just to clarify.

6819     On page 6 of your remarks this afternoon you say in the last sentence of the first paragraph:

"... given that the licence was not to be competitive with other market stations..."

6820     In terms of the Vancouver licence, what do you base that comment on?  In the licensing decision?

6821     MR. REITMAYER:  Yes.  It is actually in the licensing decision.

6822     COMMISSIONER PENNEFATHER:  Can you point us to what exactly you are referring to?


6823     MR. REITMAYER:  If you give me a second, yes, I can.

‑‑‑ Pause

6824     MR. REITMAYER:  If you look on page 2 of 6 of the original decision, at paragraph 6 ‑‑ it starts actually on page 1 on my printout anyway.  It reads through and the last part of it says:

"...and which projects modest audience levels and advertising revenues will not affect the financial viability of the commercial television stations operating in the market."

6825     And the preamble to that actually gets into the fact that there would be little advertising and the majority of the dollars would come from brokered programming.

6826     COMMISSIONER PENNEFATHER:  As has been indicated to you before, it is less a limitation let's say that you cannot be competitive; it is more an understanding of the nature of the programming as originally submitted.

6827     Am I correct?  I think that is an opinion that has been presented to you before.


6828     In other words, as you say later, it is an assumption based on the fact of donations and the projections going to the licensee.

6829     MR. REITMAYER:  Sorry, I missed the opening part.

6830     COMMISSIONER PENNEFATHER:  What I am saying is that, from my understanding, it is less a specific prohibition on being commercial and competitive ‑‑ I don't see that as such ‑‑ but rather your interpretation and what is said here in this paragraph of the nature of the donations component of the revenues and the nature of the service programming.

6831     MR. REITMAYER:  I think it is a combination of all of that.

6832     The competition, if it's to come, should come from some semblance of a programming schedule with respect to what was actually filed to obtain the licence.

6833     What you are looking at today bears no resemblance to that.  Like I say, it was licensed as 100 per cent religious service, and that is not the case of what we are seeing here.

6834     COMMISSIONER PENNEFATHER:  Thank you very much.

6835     Those are my questions, Mr. Chairman.


6836     THE CHAIRPERSON:  Commissioner Williams.

6837     COMMISSIONER WILLIAMS:  Good afternoon, Mr. Reitmayer.

6838     Let's talk about the proposed broadcast transmitter in Victoria.

6839     I note in your remarks you say:

"The issue of extending the reach of NOWTV into Victoria is about advertising, not service."

6840     Are you suggesting there is no demand for religious programming in the Greater Victoria Area?

6841     MR. REITMAYER:  What I am suggesting is that barring a clear definition of religious programming, I certainly don't see that the applicant has proven what would normally be expected: that there is demand for its programming.

6842     We filed with our intervention ratings numbers that you do see for the religious programming currently.  If those are the only numbers we have to go on ‑‑ again, Rogers in their submission suggested that based on ratings, there would be demand in that market.  If you actually take the religious component of that schedule and look at the ratings that it is achieving, I am not sure that you could conclude that there is a large amount of demand in that market.


6843     And again, they didn't file any market research to back that up.  Anecdotal phone calls, we all receive those.

6844     COMMISSIONER WILLIAMS:  Do you also believe there is no need similarly for the Winnipeg market then?

6845     MR. REITMAYER:  Again, I am not sure that it has been proven.  I think what we see with respect to Winnipeg is the fact that the authority to launch was granted to Trinity Television.  That was granted a number of years ago.  There has been no stride toward launching that service and to ensure the integrity of the entire process, the licence authority should be returned.

6846     If there is still a sense that the market can support and has the desire for the service, then a new hearing should be convened based on applicants.

6847     COMMISSIONER WILLIAMS:  Thank you, Mr. Reitmayer.

6848     I have no further questions, Mr. Chairman.

6849     THE CHAIRPERSON:  Thank you.


6850     MR. KANE:  Mr. Chairman, before we complete our intervention, there will be a considerable amount of information filed by the applicant in response to requests by the Commission in the questioning this morning.  In fairness, we would like an opportunity to review that and have the opportunity as well to make written submissions on it.

6851     It goes to fundamental issues, Mr. Chairman, relative to the application.  There are some significant parts of what otherwise would be in an application that will be in the material to be filed.

6852     We submit that, in fairness, we should be given that opportunity.

6853     THE CHAIRPERSON:  Why don't we do it this way.  When you have reviewed those, if you wish to bring that matter to our attention and request the ability to reply, we can deal with it at that point rather at this stage, not having seen it, trying to rule on something that remains somewhat hypothetical.

6854     MR. KANE:  That is acceptable; thank you.

6855     THE CHAIRPERSON:  Thank you.

6856     Mr. Secretary, please.

6857     MR. LeBEL:  Thank you, Mr. Chairman.

6858     The next appearing intervention will be prevented by Dr. John Burns.

INTERVENTION


6859     DR. BURNS:  Mr. Chairman, Commission staff, thank you for this opportunity to speak on behalf of NOWTV and thank you for awarding the licence to NOWTV.

6860     I am not here as a business person.  I am a pastor.  I was born and raised in Vancouver and I graduated as a dentist from UBC, and over the next few years I just got more involved in trying to help people and I ended up becoming a pastor in 1986.

6861     I say all that just to say my only purpose is to serve people.

6862     I have actually been on television in our nation since 1986, first as a pastor trying to do the best I could and ending up trying to purchase air time to say something that would help people.

6863     I must admit over the last 19 years I have learned a lot.  I think I have done almost everything that the religious sector has done.

6864     When NOWTV started they approached my wife Helen and I to host a new program with a very interesting title: "Pure Sex and Relationships".  At first, what in the world do I want to do something like this for?  You set yourself up for everybody that sees you on the street saying:  "There's the sex people".  It's maybe not the most comfortable place.


6865     But I look at our nation and I look at what is needed.  I have grandchildren and someone needs to just put hopefully some moral commonsense out there.

6866     So when they approached us, we took it and we started this program "Pure Sex and Relationships", different from any religious program I have ever done and any that I know of.  I think that NOWTV and what you have been listening to, the philosophy behind NOWTV, is ingenious.

6867     When I was on television as a pastor preaching from a bible, telling everybody what I believed, very few people wanted to listen and very few people would actually be impacted by it.  But when we started our program with one goal, and that was just to answer people's questions about the whole moral relationship spectrum, it is amazing the people that watch the program, the numbers of people that watch it, and across every boundary that watches it.

6868     We go throughout our city and we are recognized by everyone.  I don't know if I have ever had anybody come up and say a negative word, but I have had an awful lot of positive from an awful lot of people other than just Christians.


6869     We have Muslims that love our program, Sikhs that love our program, and I could go on.

6870     What I am saying is that NOWTV and their philosophy of religious broadcasting isn't narrow‑minded.  I think narrow‑minded doesn't serve anybody's purpose.

6871     I think what you are hearing also in that it is a story‑telling ministry is really true.  It has to be something that touches everybody in every facet of their lives.  To have someone stand up and just preach a very narrow‑minded this is the way it is, it is not really going to affect our society.

6872     I am on television for one purpose: my grandchildren.  It's not about me.  I don't need to be on.  But I have found that it has been very valuable in our society, what we are doing today.

6873     I just want to add my hope that it continues.  I want to thank you and congratulate you for the licence.  Even watching today, I have been very impressed.  I feel very safe that you are actually protecting and ensuring that we are going to continue to have programming that is going to meet the needs of the generations to come.

6874     I believe, because of the financial situation, that this transaction is a good transaction.


6875     Thank you.

6876     THE CHAIRPERSON:  Thank you.

6877     Commissioner Wylie.

6878     COMMISSIONER WYLIE:  Good afternoon, Dr. Burns.

6879     Is NOWTV the only station on which you appear?

6880     DR. BURNS:  Right now we are.  We have been on other stations and never anywhere close to prime time or anything where there would be a lot of people watching, basically because to pay the dollars ‑‑ you are slotted in a pay‑per‑view thing and to pay those dollars for the normal church that is not just realistic.

6881     COMMISSIONER WYLIE:  Are you on the air now on the basis of brokerage?

6882     DR. BURNS:  No.  I am on the air on the basis of people watching it.  There is enough people watching it, I guess.  The ratings are good enough, I guess, that it proves that people want to watch something that we have to say, but it also helps me do what I want to do.

6883     COMMISSIONER WYLIE:  You get paid by the station?


6884     DR. BURNS:  No.  What they are doing is bartering and giving us air time that we would normally have to pay for.  We have a program that we produce called "Family Success", which is all about the same thing.  We would normally have to purchase air time.  So instead, they put that program on and we do the other program.

6885     No, we don't get paid for it.

6886     COMMISSIONER WYLIE:  All I can say, Dr. Burns, is if people say "there's the sex people", that's better than "there's the dentist".

‑‑‑ Laughter / Rires

6887     DR. BURNS:  Thank you.

6888     COMMISSIONER WYLIE:  Thank you for your appearance.

6889     THE CHAIRPERSON:  Thank you.

6890     Commissioner Langford.

6891     COMMISSIONER LANGFORD:  You must have heard the intervenor that was on before you.

6892     DR. BURNS:  Yes.

6893     COMMISSIONER LANGFORD:  Because you obviously must watch, I assume, NOWTV; not just your own show but you must watch NOWTV.

6894     DR. BURNS:  Yes.


6895     COMMISSIONER LANGFORD:  The intervenor before you made a number of points, but one of the points made by that team was that they could not quite understand how anybody could include shows like "Andy Griffith", "Dick Van Dyke", "Leave it to Beaver", "60 Minutes", "Everybody Loves Raymond", "Dateline", and a number of others in a religious broadcasting service.

6896     DR. BURNS:  I just wonder if any one of those men have a purpose like I do, which is to communicate to people values.  If you did, you would realize that those shows are some of the best communicators.

6897     I think if Jesus was alive today, he would be a movie producer or a television producer, because it is the medium of communicating values.

6898     I am thrilled for what they have done in that arena.

6899     COMMISSIONER LANGFORD:  You would take umbrage with that position.  You see these as having religious value, as being in keeping with the spirit and the vision of a religious broadcasting service.

6900     DR. BURNS:  Absolutely, especially when they take it and they have commentators that are on talking about those values.  We have done that.


6901     "Everybody Loves Raymond" is one of the best shows to bring to light different topics that our world is really dealing with.  It is not a religious narrow‑minded topic.  It is a real world topic.

6902     But our value system, which is what we call religion, has to apply to those.  So it is a great way to do it.

6903     COMMISSIONER LANGFORD:  Thank you very much.  That is my question.

6904     Thank you, sir.

6905     THE CHAIRPERSON:  Thank you, Dr. Burns.

6906     DR. BURNS:  Thank you.

6907     THE CHAIRPERSON:  Mr. Secretary.

6908     MR. LeBEL:  Thank you, Mr. Chairman.

6909     The next appearing intervention will be presented by Irene Chu.

INTERVENTION

6910     MS CHU:  Mr. Chairman, Madam Vice‑Chair, Members of the Commission, thank you for allowing me to appear before you today.


6911     My name is Irene Chu.  I have been in Canada for over 40 years.  In that span of time I have been privileged to serve as a Canadian Citizenship Court judge, as well as a member of the Immigration and Refugee Board.  At present I am on the Board of Governors for George Brown, the Toronto city college which is one of the most ethnically diverse learning institutions in Toronto.

6912     As well, I am the Vice‑Chair of the Hong Fook Mental Health Foundation, which serves the Cambodian, Thai, Vietnamese, Korean and Chinese communities.

6913     Also, I am the Vice‑Chair of the Advisory Board to Rogers Media OMNI Television.

6914     When the Advisory Board was made aware of Rogers Broadcasting's intention to acquire the religious channels, the board members were absolutely positive in their support for this initiative and encouraged management to move forward with the proposal.

6915     Most of us have been advisors for the past 15, 16 years and we are totally certain of the capabilities of the applicant.


6916     The applicant consists of a group of award‑winning innovative broadcasters who are socially responsible and forward‑thinking Canadians.  They are known for their thoughtfulness, their principles of fairness and balance, and their dedication to the under‑served.  They are also the same people who reinvented, reinvested and turned OMNI Television into the exemplary multilingual TV that not only ethnic Canadians like myself but all Canadians are proud to call their own.

6917     We know that the applicant can and will bring new and exciting ideas to the Religious Channel, but we also know they will respect the traditions and be mindful of the sensibility and sensitivity of the diverse viewership.

6918     Mr. Sorbara, the board Chair, is unable to attend today because he is out of the country, but he asked me to specifically emphasize on the substantive investment that the applicant has pledged toward this project, both in terms of advanced training technology and in invaluable human resources, both of which would no doubt bring NOWTV to the same level as other major networks.


6919     Mr. Chairman, Madam Vice‑Chair and Members, I know that you can depend on the applicant to follow regulations and to take the mandate of NOWTV with earnesty and sincerity.  We implore that you approve this application.  In so doing, you will be approving experience, fairness and financial stability.  And more than other things, you will be granting an opportunity for NOWTV to look forward with hope and confidence toward a promising and productive future.  That surely will contribute to the Canadian broadcasting system in a unique and meaningful way.

6920     Thank you.

6921     THE CHAIRPERSON:  Thank you very much, Ms Chu.

6922     As I said yesterday to intervenors, the fact that we don't ask you questions only means that your written and oral presentations were very clear.

6923     MS CHU:  Thank you.

6924     THE CHAIRPERSON:  Thank you.

6925     Mr. Secretary, please.

6926     MR. LeBEL:  Thank you, Mr. Chairman.

6927     The next appearing intervention will be presented by the OMNI Television Advisory Board.

6928     Mr. Chairman, Madam Chu was appearing for both of these intervenors.

6929     The next one will be presented by Reginald. W. Bibby.

INTERVENTION

6930     DR. BIBBY:  Good afternoon, Commissioners.


6931     My name is Reginald Bibby.  I am a sociologist.  I hold the Board of Governors Research Chair in the Department of Sociology at the University of Lethbridge in Alberta.

6932     I very much appreciate having the opportunity to appear before the Commission.

6933     For three decades I have been studying religious developments in Canada through a series of well‑known national surveys of adults and youth.  These surveys have been monitoring social trends with a strong emphasis on religion and quality of life.  The findings have been disseminated through 12 books, some 70 articles and many presentations in academic settings.

6934     The dissemination has also included extensive media coverage and an extremely large number of personal presentations in a variety of settings across the country.

6935     I have reviewed and discussed the plans of Rogers Broadcasting to enter into religious telecasting, and I am pleased to support Rogers' application to acquire NOWTV with plans to extend service to Winnipeg and Victoria.


6936     My support is tied directly to my research findings.  The research to date shows that Canadians have significant interests and needs relating to spirituality and personal life and relationships.  Let me briefly elaborate.

6937     The majority of adults and teenagers explicitly acknowledge that they have spiritual needs, with their conceptions of spirituality varying considerably from fairly conventional to highly individualistic expressions.

6938     The survey findings remind us that all Canadians know what it is to have times of personal need.  We sometimes find life difficult for any number of reasons: concerns about our health or the health of a loved one; a problem with a child or a parent; anxiety about our finances and perhaps our careers; from time to time experiencing loneliness, a sense that we should be getting more out of life, with some people experiencing depression and even despair.

6939     The surveys also document the fact that there is nothing that Canadians, young and old, value more than relationships.  Teenagers report that number one on their value rankings list is friendship, followed closely by being loved.


6940     Adults tell us that there is nothing more important to them than family life, their children, their parents, their partners.  Without question, the research findings document the reality that spirituality, personal needs and the desire for good relationships are centrally important to Canadians.

6941     It is highly significant that these three themes are also three central themes and goals of religious groups: spiritual nourishment, helping people live life, enhancing interpersonal life at the individual, community, national and global levels.

6942     Consequently, religious groups are in a position to make an important contribution to all three of these areas.

6943     As I have noted from time to time, it seems like a match made in heaven.  The net result of religious groups responding would be a considerable enhancement of personal and social life in Canada.

6944     However, my research and that of others suggests that to date such an apparent perfect match, like all perfect matches, is not without its glitches.  For one thing, religious groups frequently are not doing a perfect job of addressing spiritual, personal and relational needs.  But even if they were, their ministries are not touching everybody.


6945     It is true that a noteworthy proportion of Canadians, about four in ten, have contact with religious groups at least once a month.  However, the flip side of that figure is that six in ten Canadians have little or no involvement, even though most of them claim to identify with specific religious traditions.

6946     I have spent a fair amount of my life trying to encourage Canada's religious groups to give much higher priority to locating those six in ten people and responding to their interests and needs.  My research over time has also reminded me that I have had limited success.  The failure of groups to locate and minister to the six in ten has not merely resulted in groups failing to put more people in the pews, but more seriously large numbers of Canadians who could have benefited from good ministry have been largely untouched by the country's religious bodies.

6947     This brings me back to the Rogers application.

6948     The collective failure of religious groups could well open up an extremely important opportunity for religious television.  The market is there.


6949     As I have been emphasizing, some 60 per cent of Canadians who readily acknowledge spiritual, personal, relational needs are not being served very well by religious organizations.  Our data suggest that television programming that effectively responds to such interests and needs is programming that potentially has a sizable market.  It also is programming that could elevate personal and collective life in Canada.

6950     Such a possibility of course is also not without its glitches.  Presently viewers of religious programs tend to be individuals who are actively involved in religious groups.  Our surveys show that 8 per cent of Canadians currently watch religious programs at least once a week.  They are comprised of about 25 per cent of those who attend services every week but only 2 per cent of the six in ten Canadians who are not active in groups.

6951     The inability of current religious programming to appeal to more inactives appears to be linked to some fairly clear factors.  Those factors include: limited financial and human resources; symbiotic ties with fairly narrow audiences; and, I think, the lack of explicit recognition of the six in ten market that exists.


6952     It also needs to be pointed out that to the extent existing programming attempts to provide resources for religious leaders, an additional shortcoming is that the resources are heavily American, excessively southern evangelical, and typically oblivious to the Canadian context.

6953     In my opinion, Rogers Communications has the credibility, the expertise, financial resources and commitment necessary to make a significant contribution to religious broadcasting in British Columbia, Manitoba and beyond.  Rogers has the potential to enhance and complement the activities of religious groups, with explicit consciousness of the Canadian context, thereby contributing to stronger and healthier organizations and better served memberships.

6954     That in itself would be a major contribution.  But Rogers also has the potential to do much more.  It has the proverbial wherewithal to access and serve people who have little or no interest in religious group involvement.

6955     Further, its sensitivity to the diversity of the population and its experience and success in multicultural broadcasting with OMNI 1 and OMNI 2 makes Rogers ideal for serving the religiously diversified populations of B.C.'s Lower Mainland, as well as a city such as Winnipeg.


6956     What this all adds up to in my mind is the unique and intriguing possibility of a well‑run, well‑respected and well‑funded religious television service contributing significantly to Canadian lives and to Canadian life.

6957     I hope that the Commission will recognize and endorse that possibility.

6958     I thank you very much for allowing me to express my support for these applications filed by Rogers Broadcasting.

6959     THE CHAIRPERSON:  Thank you.

6960     Commissioner Williams.

6961     COMMISSIONER WILLIAMS:  Dr. Bibby, I was intrigued by some of your remarks on the demographics of the typical Christian television viewer.

6962     Do you have any information on the age distribution?  Are they targeted to younger or older?

6963     DR. BIBBY:  Our analyses have suggested over the years we have been charting that, going back to 1975, disproportionately old.

6964     COMMISSIONER WILLIAMS:  Disproportionately old.

6965     DR. BIBBY:  Disproportionately old, actively involved in religious groups and specifically evangelical groups.


6966     COMMISSIONER WILLIAMS:  So I guess areas of retirement, like the southern portion of Vancouver Island, the service may in fact have some appeal there then.

6967     DR. BIBBY:  Presumably, again particularly if these people are actively involved in groups.

6968     Of course, what I am trying to stress so much, as should be obvious to all through the presentation, is that apart from the kinds of success that religion on television is having right now, there is this remarkable untapped market that I think simply represents remarkable potential as far as what, not a Christian station as such but a religious station could do.

6969     COMMISSIONER WILLIAMS:  So the religious stations are kind of here and there, I guess.  In Canada do you see an opportunity for a network, for example, of Christian services across the country?

6970     DR. BIBBY:  I think this market that I am talking about in terms of the six in ten is so pervasive across the whole country.  It is certainly not obviously something that is located in one particular region.


6971     My own hope is if in fact the kind of model that we are talking about could actually get off the ground and have some of the impact that we are talking about, it could be something.  It certainly goes well beyond a region, well beyond Manitoba, ideally perhaps right across the whole country.

6972     COMMISSIONER WILLIAMS:  Thank you very much.

6973     I have no further questions.

6974     THE CHAIRPERSON:  Thank you very much, Dr. Bibby.

6975     Mr. Secretary, please.

6976     MR. LeBEL:  Thank you, Mr. Chairman.

6977     The next appearing intervention will be presented by Mr. Darrell Peregrym.

INTERVENTION

6978     MR. PEREGRYM:  Mr. Chair, Madam Vice‑Chair, Members of the Commission, ladies and gentlemen, thank you for the opportunity to present today on behalf of Rogers and NOWTV.

6979     I am here with regard to predominantly being the elected Chair of the Balanced Programming Committee for NOWTV, which is in compliance with the CRTC recommendations and requirements when NOWTV originally was presented with its licence.


6980     Before you I have given you a copy of five different thoughts I will present: a unique product; a unique approach; the challenge; the opportunity; and then my concluding challenge.

6981     NOWTV has provided a very unique product to the Fraser Valley over the last few years, very religious, a very unique religious approach compared to a number of religious programs and/or stations in other areas, which meets a very real and relevant spiritual component and sector of our Canadian society.

6982     Spirituality is a very important component of the human make‑up that the Balanced Programming Committee has recognized and has always tried to keep as a part of our focus when we met.

6983     NOWTV is also a religious broadcast service which has been a positive contributor to the multicultural reality of Canada as well, where faith is also an important component of most cultures represented in this country.  We believe it is effectively applying it there.

6984     It also promotes a positive cross‑religious dialogue and increased understanding.  I will clarify that a little more as I talk about my experience with the Balanced Program Committee.


6985     We have also found that it has reduced silent tension or begrudging tolerance which we often see within our organization, or facility I mean, and rather promotes respect and openness to communication.

6986     Because of its unique approach of having a Balanced Programming Committee, which consists of five major faith groups at the moment, which are Jewish, or Judaism, Sikh, Hindu, Muslim and Christian, we have seen an increased relationship built just amongst even the members who represent their respective cultures and/or faiths.

6987     We have seen a very positive, supportive and respectful interaction.  I personally have found I have gained a great deal of understanding by communicating and working with these gentlemen and lady from the other faiths and have also found that because of our communication and expectations with the programming as we have checked the programming that has been put out by all the different faith groups to meet the criteria that has been put forward by the CRTC, we have been able to eliminate stereotyping, eliminate marginalization, eliminate curtailing of different religious openness toward one another.


6988     One such example of collaboration and creativeness has been in December of this past year, 2004, we put on an online program which dealt with the concept of "merry Christmas" and the political correctness of that term.  We found that we had four guests on the program representing Christian ‑‑ well, actually all five of the faiths.  And all of them, to a person, indicated that their feeling was that "merry Christmas", for example, was not something that was intolerable or offensive to them; that it wasn't their faiths that were finding that that should be pushed forward but it was a different issue.

6989     Because of the discussion and the phone calls that came in and the feedback from it, we have found that through this type of programming and the programming that NOWTV presents, we are finding that all of the faiths are having a greater understanding, finding a better openness to one another.

6990     And even through the dialogue that is happening at the Balanced Programming Committee, we are finding an increasing response to one another with different events and religious celebrations that take place around our respective communities, to the point where they would like to see us do some programming that would involve some of these other religious celebrations as well.


6991     The challenge has been that Trinity Television has operated NOWTV and produces a quality product with limited financial resources, and the costs continue to be a severe challenge.

6992     Our concern at the Balanced Programming Committee is we would hate to see this program and this whole focus of NOWTV be eliminated.  The limited budget has prevented also the station from reaching its full potential.

6993     Because of that, we and I as the elected Chair of the Balanced Programming Committee speak for the committee when I say we are very pleased and impressed, first of all, with the calibre of the leadership of NOWTV and their commitment to serve the community, to respect the various faith groups and comply with the balanced requirements as set out by the CRTC.

6994     We are pleased also that Rogers Broadcasting has made that same commitment to honour the focus and mission of NOWTV, stayed true to the conditions and terms of the CRTC licence and to continue NOWTV operations under the same terms and conditions as at present.

6995     This commitment ensures the continuity and success of a very unique and balanced religious broadcast service in the marketplace.


6996     Rogers' ability to provide increased funding and financial investment would also provide for the NOWTV potential to be fully realized.

6997     Our conclusion, and my conclusion personally based on my personal experience with NOWTV and with the Balanced Programming Committee, the positive collective experience that we have felt as a committee, both in the community and our experience with the station, the positive service that NOWTV is providing to the community at large, and Rogers Broadcasting Limited's ability to ensure continued success, I very strongly recommend that the CRTC approve Rogers' application now before you with regard to NOWTV.

6998     Thank you very much.

6999     THE CHAIRPERSON:  Thank you, Reverend Peregrym.

7000     Commissioner Williams.

7001     COMMISSIONER WILLIAMS:  Good afternoon, Reverend.

7002     Does NOWTV, the current NOWTV, reach out to all demographic groups in the area that they serve?


7003     MR. PEREGRYM:  We have found that to be so.  Part of our role when we would get together as a committee is they would provide us with some of the samples of the programming, some of the samples of the complaints that would come in, the positive observations and some of the demographics.  And we have found that it has been respective and inclusive of all the different faiths that we were able to track, and especially of those that were on the committee.

7004     We also found that it was affecting a number of the different age groups as well.

7005     COMMISSIONER WILLIAMS:  Thank you.

7006     THE CHAIRPERSON:  Thank you very much.

7007     Mr. Secretary, please.

7008     MR. LeBEL:  Thank you, Mr. Chairman.

7009     The next appearing intervention will be presented by the Aboriginal Peoples Television Network.

INTERVENTION

7010     MR. LaROSE:  Qwe, Mr. Chair, Madam Vice‑Chair, Commissioners.

7011     I appreciate the opportunity to speak to you today on the proposed acquisition of NOWTV by Rogers Media.

7012     Mon nom est Jean LaRose.  Je suis un citoyen abenaki de la première nation d'odanak situé au Québec.


7013     As the CEO of APTN, I am keenly aware of the need of our network to reach out to all Canadians, not only through our own network and our programming, but also through partnerships with other key players in the industry.

7014     This year we celebrate our fifth anniversary in great part thanks to the Commission, which had the vision and courage to recognize that Aboriginal peoples in Canada needed an outlet to share their stories amongst themselves but also with all Canadians.

7015     We are living up to our commitment to share our stories with all Canadians in ways that are now transcending our network.

7016     Over the past few years we have sought to build bridges with other major broadcasters to widen the reach of our story‑tellers.  One of the bridges we have worked hard to build was with a component of Rogers Media, OMNI Television.


7017     Our common vision over a year ago was to find a way to allow our story‑tellers to tell new stories that would reach into the homes of recent and not‑so‑recent newcomers to our land.  Our partnership is seeing ten programs being produced jointly by APTN and OMNI, programs that APTN on its own could not afford.

7018     The producers are First Nations, Inuit and Métis.  They will see their stories told, not only in some of our rich languages, as well as either English or French, but also in some of the languages of newcomers to our land.

7019     These stories will be versioned in other languages, such as Polish, Mandarin, Italian or Portuguese, for example.

7020     They will be aired by APTN in either our languages or in English or French, and also by OMNI in the languages of their audiences.

7021     To us at APTN this is an incredible opportunity to reach into the hearts and minds of new audiences and let them share our stories.  We have a history that reaches into time, languages and cultures that echo and breathe life into our beings and make us the unique peoples that we are.  Our alliance with OMNI allows us to share this with new Canadians in a new and innovative way.  They will hear our stories through our words, our perspective and from our hearts, but in their language so they can understand in their own words who we are and where we come from.


7022     Too often the images they see of our peoples are only an incomplete, biased and unfair portrayal that is reflected through news clips that do not tell the whole story.  We need to break that cycle of stereotypes that is perpetuated all too easily.  This is one way of doing it.

7023     In our proposal before you Rogers Media and OMNI are proposing to purchase NOWTV.  As part of that purchase they will offer APTN and its producers the opportunity to produce a series on Aboriginal spirituality.

7024     This is one area that holds much mystery and interest with non‑Aboriginal people.  We will now have the opportunity to let Canadians understand a bit more about the spirituality that lies deep within the reality of First Nations, Inuit and Métis peoples in Canada.

7025     It will allow us to chip away at the misunderstanding that is too often the root of the mistrust that Canadians have of our peoples.  Mistrust is a byproduct of ignorance, not mean‑spirited ignorance necessarily, just a lack of knowledge about who we are and what makes us unique and different from others.


7026     Sharing our stories with all Canadians is one of the key components of our mission which the Commission so readily and strongly endorsed in 1999.  Since then we have been working hard to allow our producers the opportunity to tell the stories of our peoples from coast to coast to coast, amongst ourselves and also with all Canadians.

7027     Now we are going beyond that and reaching to new Canadians who know very little, if anything, about who we are.

7028     APTN is certain that the relationship that it has developed with Rogers and OMNI will continue to evolve.  It is based on mutual respect, their support of diversity and inclusiveness and a strong desire to allow Aboriginal peoples greater opportunities in telling their stories and reaching out to all audiences.

7029     Rogers has always delivered on their commitment to APTN, whether it was through the Rogers' Fund For New Productions, through management sharing experiences by allowing the senior management team at APTN to attend their strategic planning retreat, or by providing APTN with space to develop its sales opportunities in Toronto.


7030     Rogers and OMNI have always walked the talk.  We are confident that this new venture will further strengthen the relationship and that the commitments made by Rogers and OMNI will not only be fully respected but will lead to new opportunities for APTN and Aboriginal peoples in Canada.

7031     APTN and OMNI face the same challenges in reaching their audiences since the measurement systems used by the industry do not make justice to our actual reach.  We believe that by joining forces in specific endeavours such as this we can start to demonstrate that there are many more individuals out there who are not only watching us but are seeing themselves in the programming we put forward.  And that is a richness that is specific to APTN and OMNI to reach their audiences in languages and with the people who are part of the cultural diversity of this country.

7032     I can only hope that the Commission will recognize this opportunity as another milestone in our continuing and expanding search to build understanding and goodwill amongst ourselves and all Canadians.

7033     I am certain that if this transaction meets with the Commission's approval, the stories of Aboriginal peoples in Canada will continue to reach into more and more homes and hearts across this land.

7034     Thank you.


7035     LE PRÉSIDENT:  Merci, Monsieur LaRose.

7036     Madame Wylie.

7037     COMMISSIONER WYLIE:  Bonjour, Monsieur LaRose.

7038     Do you have a relationship with the OMNI stations at the moment?

7039     MR. LaROSE:  Yes, we do.  We struck an alliance over a year ago, in which the purpose of it was to allow us to produce ten new shows that at the time APTN could not afford to produce, shows that will be aired by APTN in either the Aboriginal language or French or English‑language that it was produced, and will also be versioned by OMNI in other languages to be shown on OMNI either as a simulcast or at a later date.

7040     COMMISSIONER WYLIE:  So the $300,000 proposed for the Aboriginal faith and spirituality series is another series altogether?

7041     MR. LaROSE:  It is a completely different proposal, yes.

7042     COMMISSIONER WYLIE:  Do you have a relationship with the NOWTV station at the moment?

7043     MR. LaROSE:  No.

7044     COMMISSIONER WYLIE:  Have you ever attempted to develop one?

7045     MR. LaROSE:  No, not with NOWTV.


7046     COMMISSIONER WYLIE:  These are our questions.  Merci beaucoup.

7047     M. LaROSE:  Merci beaucoup.

7048     THE CHAIRPERSON:  Thank you very much.

7049     Mr. Secretary, please.

7050     MR. LeBEL:  Thank you, Mr. Chairman.

7051     The next appearing intervention will be presented by the Global Television Network.

INTERVENTION

7052     MS BELL:  Good afternoon, Chairman Dalfen, Madam Vice‑Chair, Commissioners and Commission staff.

7053     My name is Charlotte Bell, and I am Vice‑President of Regulatory Affairs, Television and Radio, for CanWest MediaWorks.

7054     With me today, starting at my immediate left, is ‑‑ sorry, they have all moved around ‑‑ Ron Eberle.  To my immediate right is Chris McGinley and to my far right is Brett Manlove.

7055     First and foremost, we would like to thank the Commission for the opportunity to appear before you today in order to discuss this important transaction.


7056     Commissioners, you may be wondering why one of Canada's largest broadcasters is concerned about the purchase and expansion of religious television stations in B.C. and Manitoba.  Our concerns are twofold: first, the service you licensed in Fraser Valley known as NOWTV, in our view, has already deviated from its original mandate to provide a purely religious broadcasting service that complies with the Commission's religious broadcast policy, in spirit and in practice ‑‑ that is, to provide, as Mr. Thiessen told you in February 2000, a service dedicated to airing "religious programs that meet the criteria of religious programming set out by the CRTC", and as confirmed in the Commission's decision ‑‑ and I quote:

"... establishing a television station that would broadcast only religious programming."

7057     Second, the potential buyer has already confirmed that it intends to continue operating this station in the same manner; that it plans to expand its reach into Victoria and launch a similar service in Manitoba; and that it sees this acquisition as an opportunity to increase its foreign program buying power.


7058     In our view, this transaction raises a number of competitive and public policy considerations.

7059     We have yet to see a detailed programming plan from Rogers though Commission policy requires that applicants for religious programming services provide detailed programming plans outlining the religious programming they propose to air.

7060     But as we've said, Trinity is already offering a wide range of mainstream U.S. entertainment programming that competes directly with incumbents in the Vancouver market.  In fact, according to their website today, 50 per cent of their prime time schedule includes mainstream programming that is not, or never would be considered to be religious programming by conventional or specialty broadcasters.

7061     As discussed this morning, programs such as "Everybody Loves Raymond", "Fresh Prince of Bel Air", "60 Minutes" and "Leave it to Beaver" make up half of their prime time schedule.  NOWTV rationalizes the airing of such programs by broadcasting interstitials with hosts who discuss the content of these shows within a moral or ethical context.


7062     This morning Rogers stated that violent programs and certain sitcoms such as "The Drew Carey Show" would not find a place on their schedule due to the questionable language or content of such programs.  But let's face it, virtually all mainstream programs deal with issues that could be placed in a moral or ethical context.

7063     Therefore, the definition of "religious" seems far and wide.

7064     We must then ask ourselves where the line is: first, in terms of what is appropriate mainstream content within the religious policy; and secondly whether limits should be imposed on the amount of mainstream content permitted on religious stations.

7065     In the absence of any limits, theoretically the station could provide significant amounts of mainstream programming because the only other restriction on the licence is to broadcast 18 hours of balance programming per week.

7066     So far, the impact on CanWest has not been significant simply because Trinity, or NOWTV, as a stand‑alone has not been in a position to cross‑promote and increase its viewing share, nor has it been in a position to aggressively compete for broadcast rights.  It also has not expanded its reach beyond the Vancouver/Fraser Valley area.


7067     But this may change under Rogers ownership.  When one of the largest media conglomerates in Canada purchases a religious broadcasting service that has begun to morph into a mainstream programming service, it raises certain competitive and policy issues.

7068     As the Commission knows, we filed a detailed written intervention that focused on a number of concerns.  I would now ask Chris McGinley to discuss the economic ramifications of this transaction.

7069     MS McGINLEY:  Commissioners, this morning you heard from Rogers that the B.C. television market is the fastest growing market in Canada.  However, based on TVB numbers over the last six years, the market has been flat or in decline and only this past year returned to revenue levels of 1998.  At the same time, programming, sales and promotion expenses have continued to rise sharply, resulting in significant declines in profitability.

7070     While B.C., and in particular Vancouver, remains a major economic driver for the television sector, second only to Ontario, it plays a vital role in our continued ability to subsidize small and medium market stations across Canada.

7071     With the addition of Rogers as a major bidder for program rights, prices will continue to rise.


7072     Furthermore, NOWTV could become more attractive to mainstream viewers and have the ability to garner larger audiences.  As a result, revenues will become increasingly fragmented, thus impacting not only the local market but the system overall, given the role of B.C. in subsidizing markets throughout Canada.

7073     In terms of Winnipeg, as stated in our written intervention, the market continues to lag behind the Canadian average in all key economic indicators.  It is also worth noting that home station share percentage in the Winnipeg market, including the CBC, has already fallen from 56.1 per cent in Fall 1997 to 37.4 per cent in Fall 2004.

7074     While the Commission was well aware of the financial state of this market when it originally licensed Trinity to serve Winnipeg, it did so on the basis that Trinity's business plan contemplated a large portion of its revenues being generated from donations as opposed to advertising.  The Commission also noted in its decision that Trinity did not have the resources to compete with existing licensees for the acquisition of popular foreign programming.

7075     In our view, under Rogers' ownership, the Commission's rationale for licensing in Winnipeg is no longer valid.


7076     MR. MANLOVE:  In terms of sales, it is important to note that the Vancouver/Victoria market has experienced slow to stagnant growth over the last six years.  In fact, since 1998, four new stations were added to the market, resulting in fragmented viewing and revenues.

7077     Since national advertising is by far the dominant revenue source for broadcasters in B.C., representing 74 per cent of revenues, the protection Rogers proposed in Victoria to abstain from soliciting local advertising is of little help to the overall financial picture.

7078     Furthermore, with the addition of a transmitter in Victoria, NOWTV will be in a position to significantly increase its national revenues, thus further fragmenting our main source of revenue.

7079     As a result, while we maintain our opposition to the addition of a transmitter in Victoria, should the Commission decide to approve that request, we would ask that a condition be imposed to disallow the solicitation and acceptance of local advertising in Victoria.


7080     MR. EBERLE:  In conclusion, we believe that the Rogers proposal as filed raises concerns in terms of Commission policy for religious broadcasting.  We further believe that approval of this application in its entirety could have a negative and unintended consequence on the broadcasting system as well as on local incumbents in the markets where it plans to operate.

7081     As a result, we continue to oppose the addition of a transmitter in Victoria, as well as the launch of NOWTV in Winnipeg as stated in our intervention.

7082     In addition, in order to address the potential for this service to morph into an increasingly mainstream service, we would ask the Commission to impose a 10 per cent limit on the amount of mainstream programming that Rogers could broadcast on NOWTV.  We would define mainstream programming as anything that would not be categorized at 040 by any conventional television broadcaster.

7083     We would further recommend that the programming within that 10 per cent comply with the religious policy definition of religious programming.

7084     We appreciate your attention and we are ready to answer any questions.

7085     THE CHAIRPERSON:  Thank you very much.


7086     This is truly a case where your written and oral presentation need no clarification.  I think we perfectly understand your position and your points are made well.

7087     So thank you very kindly.

7088     MR. EBERLE:  Thank you.

7089     THE CHAIRPERSON:  Mr. Secretary, please.

7090     MR. LeBEL:  Thank you, Mr. Chairman.

7091     The last appearing intervention will be presented by CHUM Limited.

INTERVENTION

7092     MR. SWITZER:  Good afternoon, Mr. Chair, Madam Vice‑Chair, Members of the Commission.

7093     For the record, my name is Jay Switzer, and I am President and CEO of CHUM Limited.

7094     Before we begin our presentation, I would like to take a moment to introduce my colleagues here.

7095     To my left, your right, is Brad Phillips, Vice‑President and General Manager of our B.C. based local television stations, Citytv Vancouver and The NewVI in Victoria.

7096     To my right is Peter Miller, Vice‑President, Planning and Regulatory Affairs for CHUM.


7097     Our presentation today will follow the format of our February 3rd written intervention which dealt with these three areas:  the overall impact of this transaction; why Rogers' proposal to add a rebroadcast transmitter at Victoria should be denied; and why Rogers' proposal to acquire NOWTV Manitoba, licensee of the unlaunched station CIIT‑TV Winnipeg, should be denied.

7098     CHUM has not opposed Rogers' proposed acquisition of CHNU‑TV Fraser Valley.  We do, however, believe it is important to highlight that this transaction will result in CHNU becoming a fundamentally different station than was licensed less than five years ago, from both a programming perspective and in terms of its potential sources of revenue.

7099     As they discussed with you this morning, Rogers interprets a religious program to encompass a wide range of programming, including entertaining and engaging programming that addresses issues and themes that are spiritual, moral or religious in nature.

7100     We believe this definition is extremely broad.


7101     As M Channel noted earlier today and in its intervention, this is not how religious programming is defined under the Commission's Religious Broadcasting Policy, which defines the concept more narrowly.

7102     CHNU already pushes the envelope with respect to what it considers to be religious programming.  Rogers will take this even further.

7103     Given what Rogers stated earlier today about the application of their religious program criteria, it is clear that they essentially want to define religious programming to mean family programming: the bread and butter of The NewVI and other NewNet stations programming and a significant profitable part of our programming on CHMI in Winnipeg.

7104     That puts Rogers/NOWTV head to head with CHUM on many U.S. programming acquisitions, and Rogers' comments this morning about increasing simulcast programming only amplify that impact.


7105     With Rogers' financial muscle behind it, CHNU will much more closely resemble a mainstream over‑the‑air station once this transaction is completed.  Rogers has confirmed that the station will continue to air and increase the amount and quality of entertainment programming, such as sitcoms, dramas, made‑for‑television movies, as well as theatrical releases.

7106     The massive increase in revenues Rogers is projecting for the station, from just over $6 million annually to almost $17 million, cannot be done without such a major change in the nature of the service.  This will have a strong negative impact on incumbents, especially given the flat conventional television market.

7107     We recognize that NOWTV British Columbia is in financial trouble and that the Commission needs to be pragmatic when licensees experience such circumstances.  Moreover, we understand that there are tradeoffs in the regulatory system: that the Commission may make decisions that have benefits for the system but perhaps disadvantages for certain licensees.

7108     Rogers' acquisition of CHNU will ensure that CHNU is viable going forward.  It will also give Rogers a foothold in Canada's two largest English‑language markets.  More importantly it will give Rogers an additional platform across which to amortize the cost of the programming it acquires for its important Toronto‑based OMNI stations.


7109     These latter two developments will impact the conventional television sector and CHUM specifically at a time when conventional television is at a crossroads.

7110     Revenues for the sector are flat and PBIT is in decline.  Moreover, as the Commission is well aware, our conventional television division at CHUM continues to struggle with average PBIT levels well below industry average.

7111     A stronger Rogers will put greater pressure on our stations in British Columbia, Manitoba and Ontario.

7112     Based on the foregoing, we wholeheartedly agree with M Channel that the Commission should require Rogers‑owned CHNU to fully comply with the Religious Broadcasting Policy, therefore fulfilling the station's original mandate, as opposed to allowing the station to morph into a family programming station.

7113     Moreover, given that this is an asset transaction, it would be fully appropriate in our opinion, and we believe within the Commission's power, to impose conditions of licence to this end.


7114     MR. PHILLIPS:  As Jay noted, Rogers has applied to add a transmitter in Victoria that will rebroadcast the signal of CHNU to residents on Vancouver Island.  Rogers has suggested that this transmitter is essential to put CHNU on equal footing with the other players in the Vancouver‑Victoria extended market with respect to national sales.

7115     CHNU was licensed five years ago as a niche religious broadcaster.  The bulk of the station's revenue was to be derived from charitable donations and payments from producers.  Revenue from national sales was not a major part of the equation.

7116     While the station is considered part of the Vancouver‑Victoria extended market and is therefore entitled to cable carriage on the mainland, it was to be first and foremost a Fraser Valley station.  Rogers is now arguing that CHNU needs a rebroadcast transmitter on Vancouver Island to put it on equal footing with the other stations in the market.

7117     With respect, CHNU was never supposed to be on equal footing with the other stations in the market.  To get into this market, CHUM invested over $180 million to acquire one station and launch another.  These stations remain unprofitable.  Both have significant requirements relating to local programming.


7118     CHNU does not have such requirements.  It has limited requirements related to balance programming.  In effect, Rogers wants a Vancouver Island transmitter to help get as much as possible out of the top‑rated mainstream programming it intends to air on CHNU.

7119     Rogers has suggested that a transmitter on Vancouver Island will result in an increase of 10 per cent in the station's revenue.  This is likely accurate.  However, this is not a small number: an additional $500,000 in year two, growing to $1.2 million by year seven.

7120     On their own these amounts would result in CHUM's The NewVI going from unprofitable to profitable.

7121     In addition, Rogers has understated CHNU's revenue potential with a schedule full of popular family programming.  This will impact all the stations in the market but will have a disproportionate impact on those stations like CHUM that also air the types of programming Rogers can be expected to go after, in particular profitable U.S. strips.

7122     At the end of the day Rogers is almost treating CHNU as a traditional over‑the‑air station.  It is not.  As we have discussed, Rogers should be required to return CHNU to its original mandate of religious programming, not the even more mainstream schedule that Rogers will bring.


7123     Traditional religious programming tends not to attract national advertisers.  Therefore, a rebroadcast transmitter is unnecessary.

7124     MR. SWITZER:  The final aspect of our intervention this afternoon relates to Rogers' proposal to acquire CIIT‑TV Winnipeg.  The station was licensed in 2002 but is not yet launched.

7125     At the time the initial application for the station was considered, the broadcasters in the Winnipeg market opposed its licensing, arguing that it would compete with them for programming.  The Commission did not accept this argument at that time, concluding that it was unlikely that NOWTV would compete with the incumbent broadcasters for program rights.  This would clearly not be the case with Rogers.

7126     The Winnipeg market is a challenging market.  Since the Commission's consideration of the NOWTV application, the market has experienced below average PBIT levels and flat growth.  Over the last two years CHUM's station CHMI‑TV in Manitoba has experienced significant declines in revenue and PBIT.


7127     Rogers has filed aggressive revenue projections for NOWTV Manitoba which would have the station growing from effectively zero to $6.6 million, not far off the revenues of our Winnipeg station.  The only way they will be able to achieve these numbers is if they intend to air programming that competes directly with the programming on the existing stations in the market.  As the market is not growing and the programming they will be able to acquire will be similar to what we air, the bulk of their revenues we believe will come from our station.

7128     In their reply to our intervention Rogers suggested that their acquisition of the station would have no impact on the programming decisions of the other stations in the market as those decisions are made elsewhere.

7129     Rogers conveniently misses the point.  The fact that Rogers, CHUM and others may make some programming decisions in Toronto is irrelevant.  However, another station for them will mean another opportunity to amortize programming costs and hence more opportunity for even more aggressive purchasing decisions on their part.

7130     Our submissions relating to Rogers' programming plans are not just speculative.  In recent years we have been outbid by Rogers for a number of programs, and they have also bid on programs that we have wanted to hold onto or acquire.


7131     For example, OMNI in Toronto airs "Inside Edition", which was formerly a solid prime time performer for our NewNet stations and a program we tried to keep.

7132     In addition to this program, Rogers has acquired, or bid against others and acquired, syndication rights to shows such as "Friends", "Frasier", "Simpsons", "Law and Order Special Victims Unit", to name a few.

7133     CHUM's increased reach resulting from your approval of the Craig transaction means that we can and do find ourselves of course outbidding OMNI on occasion.  However, our 85 per cent audience reach, which translates into about a 75 per cent economic reach, does not enable us to compete fully with global and CTV for top tier programming.

7134     Rogers is the real threat to us in the programming environment that we operate.  Rogers' aggressive buying tactics, their smart operators, will now only increase and it will result in millions of dollars of additional U.S. programming costs for us and the system.

7135     Given these concerns and the fact that CIIT‑TV has not yet launched, we submit that this part of the Rogers application should not be approved.


7136     In conclusion, Rogers' acquisition of CHNU will ensure the long‑term viability of a local television station.  However, Rogers should not be allowed to use the proposed acquisition of a religious broadcaster as a back door to convert itself into a national television player with drastic results for CHUM, Multivan and others, particularly without the commensurate offsetting benefits and safeguards that the Commission might expect.

7137     We would like to thank the Commission for this opportunity and of course we would be happy to answer your questions.

7138     THE CHAIRPERSON:  Thank you.

7139     Vice‑Chair Wylie.

7140     COMMISSIONER WYLIE:  Good afternoon.

7141     Your written intervention, as well as your presentation this afternoon, is clear but for one aspect of it.

7142     Do you have the written one with you, at page 4, the first full paragraph?

7143     You believe that it would be inappropriate in these circumstances to allow Trinity to transfer the licence to Rogers, and you submit that if Trinity does not want to operate NOWTV the licence for the station should be revoked.


7144     I am wondering what is intended by that since in the initial decision, at paragraph 46, the Commission said:

"The licence for this undertaking will only be issued when the licensee has informed the Commission in writing that it is prepared to commence operations."

7145     This sentence in almost the same terms was repeated in Decision 2004‑481, which approved the corporate reorganization of Trinity into NOWTV Manitoba and NOWTV British Columbia, as well as in Decision 2004‑279, which extended the deadline to commence operations to the benefit of Trinity Television to 30 November 2005.

7146     So I have difficulty understanding the need for revocation or the comment about Trinity transferring the licence.

7147     MR. MILLER:  I would suggest our wording was perhaps less than what it should have been.  I think given what we have learned since we have written this intervention, the mere not issuing of the licence is perhaps the better route.

7148     COMMISSIONER WYLIE:  Thank you, Mr. Chairman.

7149     Thank you, gentlemen.


7150     THE CHAIRPERSON:  Mr. Switzer, it is ironic, I suppose, but I recall being at a hearing where you were seeking the renewal of your educational service in Alberta.  Was it a year or two ago?

7151     That, too, is a niche service and I believe you have a condition of licence that requires you to do only educational programming.  There was a discussion about movies that you carried and a number of intervenors suggested how can ‑‑ the name escapes me.  I don't think it was "The Texas Chain Saw Massacre"; it was something else that clearly one would not normally find in the educational category.

7152     The answer that you gave was that it was introduced by I think a professor and there was a discussion that followed.  In the end, the Commission showed some flexibility, I suppose, and said that's fine.  The condition stays as it was written, and yet these films with their wraparound are deemed to be okay.

7153     Today the applicants are making a similar kind of point regarding religious programming, and you are holding their feet to the fire of the strict definition.


7154     MR. SWITZER:  Mr. Chair, of course that is a fair question, and we had that discussion not very many years ago.

7155     I think, if memory serves ‑‑ I would have to check the transcript ‑‑ it was an action/adventure film or a fantasy film, and it was "Athabaska".  The university in Athabaska had created a course around it with the professor that introduced it.

7156     I think it has to do with performance.  I think it has to do with the finances.  I think the record ‑‑ we are now ten years operating in Alberta successfully.  It has remained a very small business.

7157     Others have noted that we have not been able to ‑‑ let me put it another way.  The revenues have been appropriate to the niche service.  It has not grown, neither with its original decision nor in its renewal, nor in the past year.  It remains a focused, dedicated and specific niche service where revenues have not grown.

7158     The difference here is that we see from the applicant a model that specifically has a huge expected and forecast and discussed increase in revenues and an admission that the program schedule, as confirmed today, will become more American and more simulcast, if possible.  That is the difference for us.


7159     THE CHAIRPERSON:  So it is less a definitional issue than it is an overall nature of service.

7160     MR. SWITZER:  Yes, sir.

7161     THE CHAIRPERSON:  Thank you.

7162     Mr. Secretary, please.

7163     MR. LeBEL:  Thank you, Mr. Chairman.

7164     This completes Phase II of the hearing of this application.

7165     THE CHAIRPERSON:  If the applicants wish to have a break, I will be happy to call one now.

7166     We will resume in 15 minutes with the Reply by Rogers.

7167     Thank you.

‑‑‑ Upon recessing at 1500 / Suspension à 1500

‑‑‑ Upon resuming at 1520 / Reprise à 1520

7168     THE CHAIRPERSON:  May we have order, please.

7169     Mr. Secretary, please.

7170     MR. LeBEL:  Thank you, Mr. Chairman.

7171     We will now ask Rogers Broadcasting Limited to respond at this time.

7172     You have 10 minutes to make your response.

7173     THE CHAIRPERSON:  Could we have order, please.  Thank you.


REPLY / RÉPLIQUE

7174     MR. MERSON:  Thank you, Mr. Chair, Madam Vice‑Chair, Commissioners.

7175     I have been listening to the interventions and I have tried to extract from the various interventions the key issues raised by intervenors.  There seems to be two major issues raised with Rogers' potential ownership of the NOWTV stations.

7176     The first is that the competitive dynamics in the television marketplace will be upset by this transaction.  That is simply not the case.

7177     The major networks are the only companies that can afford to compete for the national rights for popular U.S. programming.  Without their reach and ability to manage their schedules to maximize the value of that schedule of any acquired programming, it would be economic suicide to compete for major simulcast programming.

7178     Every once in a while, as was mentioned, OMNI does come into competition with some of the local broadcasters, particular in Toronto, but only in the case of syndicated second run programming for the local marketplace.


7179     In order to give additional comfort that we would never compete for simulcast programming, we have a proposal that we will introduce in one second to limit and effectively eliminate our ability to run simulcast programming between 8 o'clock at night and 10 o'clock at night on NOWTV.

7180     Alain will explain our proposal a little further.

7181     The second major issue raised by intervenors is the notion that Rogers cannot be trusted and will morph NOWTV into something entirely different.

7182     First, I would point out that we have described a set of criteria and a framework for analyzing programming that would severely limit what it is that we would be able to run on NOWTV and find acceptable.  That, combined with the conditions of licence that we currently have to carry balanced programming, the limitation on non‑Canadian programming in prime time, really would not allow NOWTV to become a viable competitor in the time blocks that were described.


7183     Secondly, and more importantly, we really stand on our record at OMNI Television.  Eighteen years ago when we acquired OMNI Television, or what was CFMT at the time, many people thought it was only a short matter of time before we evolved the station into something entirely different.  We haven't done any of that.  We have remained true to the mandate.  We remained true to the mandate because it is a good business proposition for us.  It is a mandate we believe in, and it is a business model that has equipped us well to deal with the issues we would face at NOWTV.

7184     So more than anything else, our record at OMNI Television we believe really speaks to what it is we would do and how it is we would manage NOWTV.

7185     I am going to ask Alain to address some of the issues that were left over from the morning's presentation.

7186     MR. STRATI:  Thanks, Rael.

7187     Commissioners, you have in front of you a list of responses.  I understand they are brief, but I think some of them will respond to many of the issues that we discussed this morning.

7188     There are two issues which we have agreed with counsel and staff that we would provide further after this presentation, but we will try and discuss that issue as well.

7189     I will start with No. 1.


7190     In terms of local programming and Canadian program expenditures, we are prepared to commit to 25 hours of local Canadian programming for NOWTV in the Fraser Valley and 12.5 hours of local for NOWTV in Winnipeg.

7191     Just to put that in terms of Canadian programming expenditures, we would expect the hours to amount to approximately 25 per cent of gross revenues.

7192     In terms of the $4.1 million commitment for priority programming, as we discussed this morning, as a stand‑alone station NOWTV is not required to provide priority programming.  The commitment was made at the time because programming produced in Winnipeg would qualify as a regionally produced program.

7193     In terms of the NOWTV schedule for Winnipeg, we will file a revised schedule for Winnipeg.  Unfortunately, we were not able to get the format for the schedule in order to provide that, but we will do so very shortly.


7194     However, there seemed to be a misunderstanding this morning about our programming schedule.  The schedule was filed with our application and it is NOWTV's current schedule.  It is a schedule that we intend to stay with over the licence term, with a very few exceptions; most notably an increase of Canadian balance programming and some changes to the U.S. family oriented programming.

7195     We apologize for not filing a schedule for NOWTV Winnipeg.  It is our intention, if approved, that the schedule for Winnipeg would reflect the Vancouver schedule.  The difference in the two would largely be issues such as local programming in each market and certainly some different acquisitions for each of those two markets.

7196     In terms of the local programming overlap between NOWTV in Vancouver and NOWTV in Winnipeg, we have said that there will be no local programming overlap in terms of meeting the requirements for local programming.

7197     It was also discussed in terms of a limit on ethnic programming of 10 per cent.  We are willing to agree to that.  That 10 per cent would be approximately 12 hours per week.

7198     We also discussed the total of six hours for third language programming, or 5 per cent, which would amount to six hours per week.


7199     In terms of a limitation on foreign programming in prime time, we are willing to commit to a minimum of 50 per cent Canadian content in the peak prime time period of 7:00 to 11:00.  To put it another way, that is a maximum of 50 per cent foreign programming.

7200     In terms of simulcast programming, as Rael mentioned, we are prepared to agree to no simulcast between the peak prime time hours of 8:00 to 10:00 p.m. with a maximum of 2.5 hours per week in the total evening broadcast period from 6:00 to midnight.

7201     In terms of the Canadian content share between OMNI and NOWTV, as we have discussed, six hours per week.  I think we discussed it this morning in terms of some of our assumptions that were provided, given that this amount would be the maximum amount of programming from OMNI that we feel would fit potentially in any given week within the religious program mandated on NOWTV.

7202     In terms of restrictions on the sharing of foreign programming acquired, we believe the restrictions are provided by the different programming mandates and requirements for both stations.  To the extent that we can, we would purchase foreign programming that could be carried on both stations.  A restriction will require us to purchase separate programming for each station, resulting in increased programming and acquisition costs for broadcasters in the markets.


7203     I also mentioned that that is also dealing with simulcast restriction which I talked about.

7204     In terms of the Thiessen Consulting Agreement, we did file one earlier today.

7205     In terms of any Canadian Talent Development initiatives or additional benefits accruing from the increased value of the transaction, any additional benefits should be directed to the NOWTV Documentary Fund.

7206     In terms of the reconciliation of the CRTC numbers with the numbers that we had in terms of the market size, I would ask Malcolm Dunlop to elaborate on that.

7207     MR. DUNLOP:  Thanks, Alain.

7208     When we give numbers, we give TVB numbers, which we will file with you later on today.

7209     We understand that you are using the recently published financial summaries for conventional television.  Vancouver network, according to the TVB reports, includes CTV, CBC, Specialty and Digital, which we understand is not included in the CRTC summaries.

7210     CTV and CBC in the TVB reports, are broken out with what is booked national and what is booked as selective sales.


7211     For specialty television, TVB for network allocates the dollars based on the hours tuned into the marketplace.  Digital is the same as specialty.  When we talk about the spot market or selective market, the selective markets in the station reported are CBUT, CHAN, CHEK, CKVU, CKVI, CHNU, Channel M and KBOS.

7212     According to TVB, the rolling 12‑month spot market is $259 million.  The network total is $121 million; totalling $380 million.

7213     Thank you.

7214     MR. STRATI:  Thanks, Malcolm.

7215     For the question on the investment analysis for the costs incurred to date for the unlaunched Winnipeg station, after reviewing the investment analysis we had filed, it did include a small line item for Winnipeg.  What we have done is we have revised the analysis to show costs for both.  So it is split.

7216     I have it here with me and I will file it.


7217     There was a question on the price reduction in content or program acquisition rights if there was severability between Winnipeg and Vancouver, the Fraser Valley.  For those foreign programs where we are able to purchase national rights, the availability of a station in Winnipeg we believe would reduce the overall rights costs for the Vancouver station by about 5 per cent.

7218     For those foreign programs where we were able to purchase rights at the Vancouver and Winnipeg markets, in essence there is no market as each station would have to pay market rates for those rights.

7219     Rights cost reductions occur as a result of national rights and national distribution.

7220     I also have, as requested, an executive copy of the Agreement of Purchase and Sale that we will file as well.

7221     There was also a question on the financial impact on Vancouver in terms of severability for the Winnipeg station.  Again, much like the programming schedule for Winnipeg, we will undertake to revise our financial projections as need be, and we are prepared to file them as quickly as possible.

7222     I hope that takes care of many of the questions.


7223     THE CHAIRPERSON:  On that point, you did have the application costs for NOWTV Manitoba, but you didn't have the impact of interest on cash outlays, and so forth.

7224     So you didn't have the full financial picture other than those two figures for 2003 and 2004 for NOWTV Manitoba in that investment analysis.  Right?

7225     Because you then combined the figures for the rest of your analysis ‑‑ and the discussion had been focusing on what the 750 represents.

7226     MR. STRATI:  That is laid out there.  It is put into that context.

7227     I would like to turn it over to Tony.

7228     MR. VINER:  I would like to finish off, and I am sure the Commission has questions.

7229     In response to a question posed by Commissioner Williams this morning about why we were here, why we were interested in buying the station, I talked about our desire to grow in niche television broadcasting, which is a core competency.  I talked about how exciting it would be to be here in Vancouver.  Vancouver is the fastest growing television market in Canada, and it is the second‑largest English‑language television market.


7230     I guess I didn't impress upon ‑‑ the elephant in the corner is that this is a failing station.  This is a failing station.  I must say, when I heard the litany of my competitors come before you, I truly wish I struck fear into their hearts in the same way that they described to you.  I was unaware of my influence.

7231     They are asking you to further reduce the programming flexibility for this station which is already failing.  Their idea is to throw a drowning man an anchor.  We believe that our application complies in every respect with the Religious Policy.  It has been exhaustively examined by the Commission, both today and at other times.

7232     I want to tell you that we are enthusiastic about this.  We are optimistic but we are also realistic about our prospects.  It is something that we believe we can do a good job at, and we have demonstrated that we can do a good job.

7233     I just wanted to leave you with that single thought.  We would be delighted to answer any questions that you may have.

7234     THE CHAIRPERSON:  Thank you.

7235     To pick up on your last point on the issue of definitions and flexibility, I think while I take your point, we run into a regulatory integrity kind of issue here if indeed in one of the intervenor's points ‑‑ I don't know whether you have it or not.  I will just read the line and get your reaction to it.


7236     This is page 5 of the intervention of Multivan.  They show the definition of religious programming and then say under this definition they fail to understand how "60 Minutes" and "Everybody Loves Raymond" qualify.

7237     And here is the sentence.  They say:

"If these programs were to run on other services in the market, one would not expect the station to classify them as religious programs.  Why then is it appropriate for NOWTV?"

7238     I think that is a valid question in terms of the integrity of the process.

7239     You have a condition or requirement that says all religious programming.  If you code this as religious programming, as I suppose you must to qualify with your condition, if it were on another station, would it ever get coded that way?  If not, Houston, we have a problem.

7240     I would like your reaction to that and how you see a way through this so that people can rely on definitions and conditions that are imposed.

7241     MR. VINER:  This is Rael's hearing, not mine, but I will answer anyway.


7242     The definition of religious programming is programming that deals with moral, ethical or spiritual issues.  We believe that that kind of programming does deal with exactly those issues.

7243     I think it is important to understand the context.  It is in the context of NOWTV and a religious television station.  But it is also, I think as Jeff described, and we said we would continue to do, is that we agreed to put those kinds of programs in context and we agreed that we would continue that practice, which follows that kind of programming, with a discussion of the issues raised.

7244     I would further point out that those kinds of programs, we understand what the difficulty is.  It is one of the reasons why we proposed we advance to but we clearly are interested in providing balanced programming from 6:00 to 11:00 in the numbers as described.

7245     I would respond that it fits the definition because I think that this has been a subject of prior discussion.  We believe it fits it, for the reasons that I mentioned, plus the context.  I think the problem might go away if the second of our two proposals related to balanced programming were adopted.


7246     THE CHAIRPERSON:  I have your answer.  Thank you very much, gentleman.

7247     I should make a procedural point here.

7248     The remaining documents that you are required to file, you have left some blanks: no. 13, no. 16, and so forth.

7249     When do you think you will be able to file those?

7250     MR. STRATI:  We discussed either later this week, but we were told probably early next week would be probably appropriate.

7251     THE CHAIRPERSON:  Shall we say by end of business Tuesday.

7252     We therefore can't adjourn this hearing at this point.  What will follow is you will file those.  The Commission may wish to examine them and have further interrogatories on the additional filings.

7253     If not, we will let parties know; whether we do or we don't, we will let parties know, and setting out a timetable for replies if there are interrogatories and then for intervenor comments and reply.


7254     That will all be set out in a letter to the appearing intervenors and yourselves, once we have the documentation next Tuesday.  Then we will just have to take it from there.

7255     I would add that the interventions, as will the interrogatories, we all have to discipline ourselves to only address the issues that emerge as a result of the additional filings and not to rehash or re‑debate issues that we have already heard fairly fulsomely.

7256     I hope I can count on everyone's cooperation for that.

7257     Thank you very much.

7258     MR. STEWART:  Mr. Chairman, I have two questions, if I may.

7259     THE CHAIRPERSON:  Go ahead.

7260     MR. STEWART:  Thank you.

7261     For the record, the piece of paper that you have filed entitled "Responses to the CRTC Questions", to the extent that they deal with commitments, I take it that you would be prepared to accept these commitments as conditions of licence?

7262     MR. MERSON:  Yes, we would.

7263     MR. STEWART:  Thank you.


7264     This question has already been put to you, but again if you could confirm for the record:  Would you proceed with the transaction if the application for the Victoria transmitter were denied?

7265     MR. MERSON:  Yes, we would.

7266     MR. STEWART:  All right; thank you.

7267     Thank you, Mr. Chairman.

7268     THE CHAIRPERSON:  Thank you.

7269     We will not adjourn but what is the other word that you would use, Mr. Viner?

7270     MR. VINER:  I don't know.  I am not nearly the word sniff that you are, Mr. Chairman.

7271     Before we do, let me thank you very much for your time and attention to this.  We appreciate it.

7272     THE CHAIRPERSON:  Discontinued?

7273     Thank you.

‑‑‑ Pause

7274     THE CHAIRPERSON:  Order, please.  A l'ordre, s'il vous plaît.

7275     Mr. Secretary, would you announce the next item.

7276     MR. LeBEL:  Thank you, Mr. Chairman.

7277     THE CHAIRPERSON:  Excuse me.  The troops are little restive this afternoon.

7278     MR. LeBEL:  Mr. Chairman, we will now proceed with items 10, 11 and 12 on the agenda.


7279     These items are competing applications to operate English‑language commercial FM radio programming undertakings in Kamloops.  We will therefore proceed as follows.

7280     First, we will hear each applicant in the agenda order, and each applicant will be granted 20 minutes to make his presentation.  Questions from the Commission will follow each presentation.

7281     In Phase II the applicants re‑appear in the same order to intervene on the competing applicatoins, if they wish.  Ten minutes are allowed for this purpose.  Questions from the Commission may follow each intervention.

7282     In Phase III other parties will appear in the order set out in the agenda to present their appearing intervention.  Again questions from the Commission may follow.

7283     In Phase IV we provide an opportunity for each applicant to reply to all of the interventions submitted on their application and applicants appear in reverse order.  Ten minutes are allowed for this reply.  Again, questions may follow.


7284     Mr. Chairman, we will proceed with Item 10 on the agenda, which is an applicatoin by Standard Radio Inc., for a licence to operate an English‑language commercial FM radio programming undertaking in Kamloops.

7285     The new station would operate on frequency 95.9 MHz (channel 240B1) with an effective radiated power of 5,000 watts.

7286     The applicant proposes a new country music format.

7287     Appearing for the applicant is Mr. Don Shafer, and Mr. Shafer will introduce his colleagues.  You have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION

7288     MR. SHAFER:  Thank you.

7289     Good afternoon, Mr. Chairman, Madam Vice‑Chair, Members of the Commission and staff.  My name is Don Shafer and I am the Vice‑President and General Manager of Standard's radio and television stations within the interior of British Columbia.

7290     Our President and CEO Gary Slaight is unable to be with us today.  Tonight he is being inducted into the Canadian Music Industry Hall of Fame for his contributions to Canadian music and to his commitment to developing Canadian talent at this year's Annual Canadian Music Week Conference.

7291     He has asked that I send his regrets.


7292     Before we begin our presentation, I would like to introduce you to the members of our team who have played an integral role in developing our application for a new FM station in Kamloops.

7293     To my right is Betty Selin, our Regional News Director who assists and supervises our Kelowna news staff as well the news directors at our B.C. stations.

7294     To Betty's right is Roy McKenzie, the Regional Sales Manager for our group, who has over 20 years of experience in retail radio sales.  Roy specializes in sales training and developing sales strategies throughout the markets in British Columbia.

7295     To my left if Tom Tompkins, a Senior Programming Consultant with Standard Radio.  Tom is a past president of the Canadian Country Music Association and one of Canada's most respected country music programmers, with over 35 years of experience.

7296     To Tom's left is Reeny Chew, our Regional Finance Manager and Comptroller.  Reeny is responsible for all of Standard's radio and television properties within the B.C. Interior.


7297     In the row behind me, on the far right is Joan Phillip, the Penticton Indian Band Lands Administrator and board member of the En'Owkin Centre, who is the first member of our Kamloops station's advisory board.  Joan has also agreed to work with Standard Radio in collaboration with other First Nations Groups to develop various initiatives at all of our stations in British Columbia.

7298     To Joan's left is Dr. Gordon Tarzwell, a Professor of Economics at Thompson River University, which was formally UCC.  Dr. Tarzwell was commissioned by Standard Radio to assess the economic indicators in Kamloops and to determine the market's viability.

7299     To Gordon's left is John Yerxa, the President and CEO of John Yerxa Research Inc., who was commissioned by Standard Radio to conduct audience format and sales research in the Kamloops market.  John has first‑hand knowledge of Kamloops, as his father was the former owner and operator of CHRK, which is now known as The River.

7300     John has been conducting independent market research studies since the mid‑1980s, and he is also recognized as a country music expert within the broadcast community.

7301     Beside John is Lori Pierson‑Mataj, our Human Resources Manager and the key administrator of our employment equity program and training for the B.C. Interior.


7302     Next to Lori is Kerry Pelser for DEM Allen & Associates, who developed our technical brief.

7303     This is the team that dreamed up Kamloops Country, and we are now ready to begin our oral presentation.

7304     We are here today to apply for a new FM country station.  Country music is one of the richest formats in North America, with increasing popularity in cities all across Canada.

7305     Unfortunately, this format is missing in Kamloops.

7306     We understand that this is a difficult decision for you to make.  However, we believe that our application will be the most beneficial to Kamloops, and it will have a minimal impact on the current broadcasters in the market.

7307     Standard Radio is a family owned and operated business and a leading Canadian broadcaster.  We have been providing high quality radio services for nearly eight decades.  With 51 radio stations, almost half of which are in British Columbia, we have a history of public and community service.  We also fully understand the importance of local radio in smaller communities.


7308     Over the past three years Standard Radio has made a significant effort building and developing B.C.'s interior radio system.  We operate 21 radio stations that employ 225 staff in small and medium sized markets in this province.

7309     Since Standard's purchase of the Telemedia properties in 2002, we have been dedicated to improving the quality of radio in the Interior.  To this end, we have invested over $4 million in capital to improve infrastructure.  We have hired more staff to improve the quality of our services, and we have converted a half dozen tired AM stations to dynamic FM stations.

7310     Our proposal for Kamloops is part of Standard Radio's strategy to improve and enhance the radio services in communities in British Columbia.  Should the Commission approve our application, this licence will allow us to provide better continuity throughout the B.C. Interior.


7311     We are very excited about our country music proposal and know that it will succeed in Kamloops.  Country music is one of Canada's and indeed one of North America's most popular formats.  In fact, the latest ratings in Canada and the U.S. show country music stations with significant increases in popularity and hours of tuning.  With more music, new and old, country resonates with its heartfelt approach and is reaching more audiences than ever before.

7312     In preparing our application, we evaluated and applied all of our experience and the lessons we have learned in the B.C. Interior to develop a comprehensive, viable and realistic business plan.  We commissioned extensive research to determine the format most appropriate for a new radio station in the Kamloops market, and we developed an application that will make a significant contribution to the system and to the residents of Kamloops.

7313     I will now ask other members of our team to speak to the individual areas of our application in which they are most knowledgeable and passionate.

7314     I will first ask John Yerxa to speak to you about our research.

7315     MR. YERXA:  Mr. Chairman and Members of the Commission, John Yerxa Research carried out an extensive audience survey for Standard Radio in Kamloops last summer.  The purpose of the study was to identify the most appropriate format for a new station to serve Kamloops.


7316     The results of our study were impressive.  Country music received the second highest support of all formats selected by Kamloops listeners 18 years of age and older.  Not only did approximately one‑quarter of all adult radio listeners select country as the type of music they would like to listen to most, but equally impressive was our discovery that country's appeal extends right across the age spectrum.

7317     Our research demonstrated that this significant demand for country is not now being served.  Fully 73 per cent of country respondents indicated that they were unable to find a local FM radio station that plays country music in Kamloops.  Suffice it to say that from a research standpoint, this desire for country music in Kamloops represents one of the most glaring holes that I have witnessed in a market study in some time.

7318     Consequently, I have concluded that there is significant opportunity for a new country radio station in Kamloops, B.C.

7319     I would now ask Tom Tompkins to talk about the sound of Kamloops Country.

7320     MR. TOMPKINS:  Thank you, John.


7321     Mr. Chairman and Members of the Commission, I am extremely pleased to have this opportunity to talk to you today about our exciting programming ideas.  As Don said earlier, I have not only been programming the country music format for many years, but I have also been involved in the Canadian country music industry for just as long.

7322     What we propose for Kamloops is exciting because it takes place at a time when country music is starting to make a refreshing comeback.

7323     The programming on Kamloops Country will be unique to the Kamloops market.  At present no other station programs country, neither in Kamloops itself nor in the area.  Our blend of country music will feature the newest country music of today with the best of the past.  With our commitment of 40 per cent Canadian content, we will get the opportunity to play Canadian country music at a time when it has never been more popular.

7324     With a new country station in Kamloops, we have committed to finally give a much needed opportunity to Kamloops and regional artists, something they currently do not have.

7325     Canadian artists that will be showcased on our station include the likes of George  Canyon, Lisa Brokop, Aaron Pritchett, Deric Ruttan, Doc Walker, Corb Lund, and of course our international stars such as Shania, Terri Clark, Carolyn Dawn Johnson, Michelle Wright and Paul Brandt.


7326     It is a very impressive list, and that is why we are more than comfortable with our 40 per cent Canadian content commitment.

7327     Specialty and feature programming will also be an integral part of our station's schedule.  We will have something for all types of country music fans, from our "Canadian Top Ten" and the highly rated "American Country Countdown", which both feature the top songs of today, to the more rootsy and traditional shows of "Country A to Z" and "Spirit of the West".

7328     We will also provide programming and features that will allow for local reflection to help our station develop a personality unique to Kamloops.  I am very enthused about the opportunity of programming this station.

7329     Our research tell us that Kamloops desperately wants and needs a new country music station.

7330     Along with our aggressive approach to music and developing Canadian talent, news is going to be an integral part of our programming plans, and our B.C. Regional News Director, Betty Selin, would like to talk to you about that.

7331     MS SELIN:  Thank you, Tom.


7332     Mr. Chairman and Members of the Commission, our application offers an opportunity for diversity in the market, bringing a new news voice to the region.  With the availability of information from so many mediums, our focus is on local news with a goa of 70 per cent local stories.

7333     Our Kamloops news centre will be able to reach into almost every region of the province, with our newsrooms in the north, Peace, Kootenay, Shushwap and Okanagan.  We can show regional stories that are important to Kamloops listeners like no other applicant.

7334     This news station would offer diversity of voice and a new outlet for the community's issues.  We plan to give the underserved, those people in the community that are not heard, access.

7335     Our plan includes 78 live newscasts per week.  Our news centre will also provide traffic and road information, sports, weather, business and agricultural reports.  Our news component consists of six hours per week.  We will also make available on a weekly basis one hour for community programming, designed specifically for those who currently don't have a voice.


7336     Standard's commitment to information in the B.C. southern Interior can best be demonstrated by our coverage during the devastating Okanagan Mountain Park wild fire in Kelowna in August 2003.  Our two music intensive stations dropped all programming and went to 24‑hour news and information.  With almost 30,000 people under evacuation order and more than 230 homes destroyed, radio was their only connection to what was happening.

7337     We were able to bring our staff to Kelowna from throughout B.C., with people coming from Terrace, Vancouver, Salmon Arm, Vernon, Penticton and Trail.  While I hope it never happens in this region again, we could draw on that expertise should a disaster hit the area.

7338     Our peers have recognized our efforts during the fire.  We received a B.C. and two national Radio‑Television News Directors Association awards, as well as the Canadian Association of Broadcasters Gold Ribbon Award for Breaking News.

7339     These four awards are the latest in more than 30 news awards our B.C. stations have received in the past ten years.


7340     By awarding this new licence to Kamloops Country, the Commission will be giving radio listeners a new news option, with the most experienced and best news people in the B.C. Interior.

7341     We would like to share our passion for broadcasting with the residents and businesses of the North Thompson region.  It is our belief the strongest option for bringing diversity to the Kamloops market is a third voice, Standard Radio's Kamloops Country.

7342     Our B.C. Interior Sales Manager, Roy McKenzie, will now speak to you about sales.

7343     MR. McKENZIE:  Thank you, Betty.

7344     Mr. Chairman and Members of the Commission, for the past 20 years I have been selling radio advertising in markets just like Kamloops.  Of all the cities in our province, Kamloops is one of the most vibrant.  I am certain it can support the licensing of a new Country FM.

7345     Data provided by Venture Kamloops, The Financial Post and the local Chamber of Commerce confirm that the Kamloops economy is doing very well.  Retail spending, population growth, building permits, housing starts and new business licences show steady increases year over year.


7346     We know from other communities that when you add a new format that is not available, the whole market benefits because of increased in‑market tuning and decreased out‑of‑market tuning.

7347     Our knowledge in the B.C. Interior, with 21 stations in 17 different communities and over 60 sales representatives, gives us an excellent perspective when it comes to radio advertising.

7348     In preparing our application we conducted sales research and I also met with a number of national advertising agencies and media buyers, and without exception they were very supportive of a new country music station in Kamloops.

7349     Our research and analysis also show that approval of our application will have minimal impact on existing stations.  We project that our new Kamloops station will attain a 13 per cent market share of tuning.  Of that 13 per cent, 9.4 per cent will come from new and repatriated tuning to local radio.  The remaining 3.6 per cent of our new Kamloops station's audience will come equally from the existing four stations in the market.

7350     Our revenue projections for the station are conservative.  They are realistic and achievable.

7351     Lori Pierson‑Mataj will now talk to you regarding our human resource practices.

7352     MS PIERSON‑MATAJ:  Thank you, Roy.


7353     Mr. Chairman and Members of the Commission, I am excited to be associated with Standard Radio, an organization that while large in a national sense operates their B.C. market stations in an independent, entrepreneurial manner with respect to operations and managing resources, particularly our human resources: our people.

7354     Standard is committed to its diversity plan, which is very specific.  It has six key points encompassing recruitment, selection and hiring, training and development, promotion, retention, accommodation, plus short and long‑term numerical goals.  Each of these areas has defined procedures and policies.

7355     We will implement these policies in Kamloops and plan to work with all members of the community we serve to ensure our workforce is representative of the public we serve.

7356     I would like to introduce Joan Phillip, who is here to represent our advisory board.

7357     MS PHILLIP:  (Native language spoken / Langue autochtone parlée)

7358     I would like to first thank my Coast Salish relatives for the opportunity to speak within their territory.  Thank you, Lori.


7359     Mr. Chairman and Members of the Commission, I am a member of the Penticton Indian Band, which is a part of the Okanagan Nation.  I am very pleased to be with you here today.

7360     For many years I have worked to help support and empower Aboriginal communities in British Columbia.  While the situation is improving, there continues to be a great need for more outreach initiatives to Aboriginal people and in particular to our Aboriginal youth in this province.

7361     This proposal by Standard Radio I believe is a step in the right direction to provide support for my people on radio.  Standard is committed to working with Aboriginal groups in order to attract Aboriginal youth to broadcasting.

7362     It also has proposed a number of important Canadian Talent Development initiatives that will provide strong support to Aboriginal artists and students over the course of a seven‑year period, if licensed in Kamloops.


7363     As a member of the Kamloops Country's Advisory Board, I will be working with Standard to ensure that Aboriginal talent have a voice in the station.  I also look forward to providing the station with insight into the needs and issues that our communities face on a daily basis.  This station will provide a much needed outlet that is welcoming to Aboriginal people in the B.C. Interior.

7364     I would like to now hand the floor over to Don Shafer.

7365     MR. SHAFER:  Thank you, Joan.

7366     We have presented what we consider to be a well thought‑out application that makes a significant contribution to the system and in particular makes a significant contribution to the community of Kamloops.

7367     Our proposal for Kamloops is an important part of Standard's strategy to build bridges between the communities we serve.  By licensing Standard, you will allow us to provide more unique services to residents of Kamloops than any other applicant.

7368     We commissioned research in the market.  We used our experience in other B.C. Interior markets to ensure our assumptions were right.  We built a business plan that we know is realistic and achievable, and we chose a format that was missing in the market that would have the least impact on existing radio stations.


7369     Standard Radio currently operates seven country music stations across Canada.  This expertise and many years of experience in the country format will allow us to build a new station in Kamloops on a strong foundation.  We will do it right and we will not abandon the format.

7370     Our level of no less than 40 per cent Canadian content shows our commitment to showcasing and supporting Canadian country artists on our country station.  In addition to bringing a new voice to the market and providing unique and informative programming, Kamloops Country will also provide extensive support for the development of Canadian country music artists.

7371     Standard has proposed a benefits package that is unmatched within this proceeding.  As part of our application we have committed to contributing $1 million over the seven‑year licence term to the development of Canadian country music.  It's a big number.  But it is what we determined we needed to do if we were going to make a significant impact developing Canadian country music.

7372     $860,000 has been targeted to local initiatives while $140,000 will assist regional and national organizations.


7373     The key component of our benefits package is our Developing Country Stars Initiative.  This initiative will support a live concert series, the production and distribution of a compilation CD, as well as touring and recording opportunities for a winning country artist each year for seven years.

7374     Other initiatives include support for the Merritt Mountain Music Festival, an important country music festival in the region; a scholarship program for Aboriginal youth; funding for our Designated Group Fund; as well as support to FACTOR and Canadian Music Week.

7375     Standard Radio also proposes to contribute major non‑cash benefits valued at over $1 million over the licence term to support various initiatives.  These initiatives include support for Standard's Country Music Ad Plan, our Public Service Announcements Program and our Standard Cares Initiatives.

7376     To ensure our commitment to diversity and local reflection, our new station will create an advisory board to meet the needs of the Kamloops community.  Joan Phillip is a key member of this board and will also assist us with other Standard stations throughout the Interior.


7377     We would like to thank the mayors, Chambers of Commerce, charitable organizations and residents of Kamloops for their endorsement and over 170 letters of support for our application.

7378     Please allow me to quote from a few of these supportive letters.

7379     First is a quote from Venture Kamloops Business Development's Executive Director Mary Jane Cousins:

"Venture Kamloops supports the Standard Radio application for Kamloops Country.  Their particular commitments to developing country music stars from the Kamloops area and to community fund raising efforts are especially important to a growing community such as ours."

7380     Next is a quote from Paul Brandt, a Canadian country music artist:


"Standard Radio has put forward a plan to be extremely involved and supportive of a local hospital in the area and of the local community.  They have a wonderful track record of doing this in other markets and would clearly be an incredible asset to the wellbeing and future enhancement of the Kamloops area.  I applaud Kamloops Country and Standard for their foresight and sense of community and responsibility."

7381     Next is a quote from Kelowna‑Mission MLA, Sindi Hawkins:

"The Standard radio stations throughout the Okanagan have demonstrated the best of local and regional associations in good times, as well as with crises like the fires in Salmon Arm and Kelowna.  They have demonstrated repeatedly how useful this connectivity can be, making valuable information available to the communities they serve and assisting communities, organizations and our citizens throughout the valley."


7382     Finally, this last quote is from Samantha Canonns, a radio listener from Kamloops, who would very much like to see us licensed in this market:

"I have read and experienced Standard Radio's amazing ability to start something from nothing and make it huge.  I believe that Standard Radio is the only answer to Kamloops' problem of not being able to attain a permanent country radio station."

7383     In conclusion, the time is right for the Commission to license a new country radio station in Kamloops.  It has been over 20 years since a new station was licensed in this market.

7384     Our application makes sense as there are already two strong broadcasters in the city.  It is natural to add a new voice.

7385     There is room in the Kamloops radio market for a new station, and our proposed service will have a minimal impact, if any, on existing Kamloops radio stations.  Our proposal will make a significant contribution to the broadcasting system and to the Kamloops community.


7386     Standard's application meets the objectives of the Broadcasting Act, and our application addresses the issues of diversity of editorial voices, ability of the market to support a new station, and initiatives for Canadian Talent Development.

7387     We appreciate the opportunity to answer any questions you may have about our application.

7388     Thank you very much.

7389     THE CHAIRPERSON:  Thank you.

7390     Commissioner Langford.

7391     COMMISSIONER LANGFORD:  Thank you, Mr. Chairman.

7392     Good afternoon, folks.  I want to start ‑‑ and I am sure everybody would join me in this ‑‑ by sending our congratulations to Gary Slaight for the honour that is being bestowed on him today.  We will miss him at the table, but his team is here.

7393     So congratulations to him.

7394     We also have to congratulate Commissioner Williams, who is a year older today.  It is his birthday.

‑‑‑ Applause / Applaudissements

7395     COMMISSIONER LANGFORD:  He didn't have a grey hair on his head when he started here.


7396     COMMISSIONER WILLIAMS:  I would suggest that Gary Slaight's achievement is a far loftier one than just becoming a year older.

7397     COMMISSIONER LANGFORD:  I don't know, Ron.  Anybody who knows you well, just staying alive this long is quite an achievement.

‑‑‑ Laughter / Rires

7398     COMMISSIONER LANGFORD:  Your remarks today helped fill in some of the questions I had.  Your application is very clear.  Standard knows how to make a radio application.  You have been at this for a long time.

7399     But I do have some questions.  I don't think we will be very long this afternoon, but I have a couple of questions in two or three areas.

7400     I want to look a little more closely at the Kamloops radio market with you.  I want to get a few more answers, probably from Tom Tompkins, on this type of programming that you plan to do.  And I think I will probably end up having a short discussion with Betty Selin about news.  There were some answers today, of 78 broadcasts and six hours, but I still have a few more; not too many.


7401     Let me start with the Kamloops radio market generally.  You are enthusiastic about it.  You are enthusiastic here this afternoon, and you were enthusiastic in your supplementary brief, where you say on page 3‑7:

"The Kamloops radio market and revenue base is robust and strong."

7402     Unfortunately, when we look at the PBIT performances in Kamloops over the last four years, that becomes a debatable point, in my view.  So I want to get some of your input on that.

7403     I take your point that the community itself may be strong and robust, but sometimes that doesn't transfer to every industry's health on the bottom line.

7404     I would just throw out to you a couple of numbers that concern me.

7405     The 2003 PBIT margin for Kamloops radio market was 9.53 per cent, and that was the highest it had been in four years.  At the same time, the Canadian average for that same year was 19.3.  The 2004 PBIT for Kamloops radio market dropped over a per cent, to 8.02.


7406     A one percentage drop doesn't mean necessarily Apocalypse but it is not going in the right direction.  I guess I would just like to have an in‑depth discussion with you on this notion that this is a robust and strong radio market when it really doesn't appear to be.

7407     MR. SHAFER:  Thank you for the opportunity to answer that question.

7408     In the absence of having financial data for that market, for the radio market, we have had to make our assumption based on what we know.  We didn't have those figures.

7409     I can't comment on how the other operators run their businesses.  We can talk to how we operate our business.  But based on what we know about the economy and what radio should be earning, they should be more profitable than that from our account.

7410     I may ask Dr. Tarzwell to help shed some light on that.

7411     DR. TARZWELL:  I would just like to speak to the strength of the Kamloops economy.

7412     My role here was to see and to explore the strength of the Kamloops economy, and I was very pleased to see that in fact in the important areas that you need to look at to see where the economy is growing, the Kamloops economy is certainly growing and it is growing fairly strongly.


7413     There certainly was a bit of a downturn that occurred in the 1990s, but we have been growing quite strongly since 2001.  The major indicators are certainly reflective of the fact that it is going to continue in that direction.

7414     I am confident that these values that have been presented in the report dealing with the retail sales, I would say that those are on the low side.  Actually, I have seen some data that has been presented since then that actually have larger values than those.

7415     So the growth of the Kamloops economy is certainly there.  The size of it is substantial, and there is no emphasis or view at this particular instance that it is going to slow down.

7416     COMMISSIONER LANGFORD:  And yet the figures are clear.  I have access to confidential returns of all of the players, which of course I can't share with you.  I'm sorry to tantalize you with that.  But I can tell you some of them are grim.  Grim is the word.

7417     MR. SHAFER:  We would like to see them.

7418     COMMISSIONER LANGFORD:  Grim is the word.  And maybe even you wouldn't want to see them.  They are just not a pretty sight, some of them.


7419     We are dealing with experienced broadcasters in the community now who know the community.  They didn't just drop in from another planet.  And they seem to be having a hard, hard slog of it.

7420     When I see you project revenues of over $6 million over seven years and then make the statement in your supplementary brief, at page 6, that there will be relatively little impact on existing stations, it just seems hard to believe when you see the condition they are in.

7421     I don't know how you can comfort me with the notion that somehow you can extract from what may be a robust market revenues and not put at risk stations that at this point some of which are not in a position to lose a penny more.

7422     How do you do that?

7423     MR. SHAFER:  Commissioner Langford, if you assume that our assumptions are correct with regard to what the radio market is worth ‑‑


7424     COMMISSIONER LANGFORD:  I don't.  I assume that your assumptions may be correct about the strength of the Kamloops economy.  It may be a bustling town and a great place to live and full of people who go shopping a lot and therefore should inspire advertising.  But I am not seeing that in the statistics transferring to the radio market for some reason.

7425     I wonder whether you have a formula that would convince us that somehow you could kick‑start a whole bunch of new radio revenue because taking it from the existing players, even the 4 per cent you are talking about, might be a dangerous formula.

7426     MR. SHAFER:  I might try giving you some comfort with John Yerxa, who might be able to give you what you are looking for.

7427     MR. YERXA:  I am going to try and provide a few answers here but prior to doing so, I would like to give you a quick background.

7428     In 1977, 25 years ago, I began my career in radio at CFCW, which was Canada's first country and western fulltime radio station founded by my father.  What I would like to do here is first outline a couple of reasons why I think country didn't work for Pattison, because that obviously impacts the performance of those radio stations in the near term, and then I want to give you a couple of reasons why I think that the format would work very well.


7429     At the outset, let me just say that given my background, one of the things that I have learned is that country music, like most other formats, tends to go through about eight to ten‑year life cycles.  Country is certainly no exception.

7430     At around the time of the exit from Pattison of the country format, they were actually in the doldrums phase of this music cycle which, as other clients of mine can attest to, made things a lot tougher in that time period.

7431     Having said that, I think the truth of the matter is ‑‑ and this also impacts on the performance of these radio stations at that time ‑‑ that if the truth be known, that station was not really a pure country radio station.  In fact, at the time, B100 was actually delivering a whole hodgepodge of music ranging from country to rock, all types of different genres, and consequently, if you are speaking as a country radio station, would not have been performing as a pure country station at that time.


7432     While we should not doubt Pattison's commitment in other radio markets, in my view this hybrid experiment did not succeed very well.  That is because the loyalty shown by country listeners to their format is rarely seen in any other music format if you give them what they want, which is precisely what Standard is proposing to do.

7433     I guess to wrap this up, what I would say is to be able to provide a distinct alternative in the market to access a group of listeners that are up until now disenfranchised, the most important thing is that a majority of the radio advertisers whom I contacted and interviewed would be delighted to see a pure country radio station in the market.  In fact, two‑thirds of the people that I contacted and interviewed indicated that they would actually spend more on radio advertising than they do now if the CRTC goes ahead and licenses a country FM in the market.

7434     That may help to shed some light on the potential of this format and the success or lack of success of the existing stations in the market up until now.


7435     COMMISSIONER LANGFORD:  You have built a strong case on country.  You have built it in your application and you have built it here today.  But then you put in a kind of alternative proposition that you build into your supplementary brief at page 6‑2 where you say basically that we recognize that country has such a big hold on the market that somebody might grab it before we get there.  And if they do, we will do something else.  You just refer to it as an alternative.

7436     Well, that's logical.  You would have to do something else, wouldn't you.

7437     But you don't say what it is, so I don't have any idea what No. 2 is and whether it has the same legs for financial success as you believe country does.  It must, I guess, because you commit to all the same commitments on this unknown alternative.  You say we will do the million dollars and all the same spending on the mystery alternative format.

7438     I am not trying to be sarcastic here in any way.  I understand the problem you have.  One of the existing players could grab that format, could look at your research and say:  "Holy mackerel, let's grab it."

7439     I just wonder whether it is realistic.  If country really is the answer, if country is the missing hole here, the missing format, is it realistic for us to believe that not only can a reasonably fragile radio market take a new player at this time but take a player that doesn't have access to the country format?


7440     MR. SHAFER:  Commissioner Langford, I want to close the door on your first question.  We are absolutely confident that the market is large enough to support a fifth station based on our experience across B.C. and the markets that we operate in every day.  We can't see how the other four stations frankly are not more profitable.

7441     With regard to an alternate format, in the event that one of the other players would in fact change format, John Yerxa has done sufficient research to determine what the next format would be.  Perhaps he would speak to that.

7442     MR. YERXA:  Once again, let's be clear that country music is really what this market needs, as our market research indicates.

7443     My recommendation, however, is that if the CRTC denies this application, then I would ask Standard to consider a soft AC station as my research also reveals that there is a significant percentage of those partisans who feel that no local FM stations adequately serves their needs.

7444     Given Standard's tremendous experience with the soft AC format, coupled with what I believe will be the same financial commitment that they have made in the country application, this would be a tremendous addition to the Kamloops airwaves.

7445     COMMISSIONER LANGFORD:  Let me try another scenario on you.


7446     What if we approve your format, you convince us and we approve it and we license you, but before you launch somebody switches what they have now to country and steals it out from under you.  Would you go then with the soft AC or would you stick with country and go head‑to‑head with them?

7447     MR. SHAFER:  I think we would have to see or we would have to know what the competitor's format was.  If it was exactly the same as what we were proposing, we would obviously have to move to another format.

7448     COMMISSIONER LANGFORD:  All right.  That's an answer.

7449     Let's look at the format.  You call it New Country, but some of the names you listed today are not new to me.  Perhaps you could give me some guidance on what New Country means.

7450     MR. SHAFER:  I will ask Tom Tompkins to answer that.

7451     MR. TOMPKINS:  That is probably the best question in country radio and country music over the last 15 years.  I think it kind of got misguided and kind of got off the rails as it went along throughout the 1990s.


7452     At the very beginning of the 1990s actually New Country wasn't really a type of music or a type of format.  New Country was meant to be a marketing term to try and get a younger demographic to listen to country music radio, because it had the stigma of being an older skewed demo format.

7453     However, what happened is when a lot of the new artists starting coming out in the 1990s all of a sudden that kind of music that was coming out in the 1990s became known as New Country when actually I have been working in country radio now for 25 years, in country music for just as long, and I kind of have the same question you have about New Country:  What is New Country?

7454     To me New Country is more of a marketing term to try and change the impression that some people still tend to call it country and western.

7455     I have a bit of an adage that I like to say: that western died when they stuffed Trigger.  And that's kind of what ‑‑ sorry.

‑‑‑ Laughter / Rires

7456     COMMISSIONER LANGFORD:  Maybe we should just wrap this up.  There is never going to be a better line this afternoon.


7457     MR. TOMPKINS:  But that is a fact.  There aren't any country and western radio stations any more, and there haven't been any country and western radio stations for a number of years.  It was country and western, then it became town and country, and then it became just country, and that's what it is today.

7458     So in terms of what is New Country, I guess you could say pretty well every artist from the last 15 years since the beginning of ‑‑ well, I could even say 20 years now, since the advent of Randy Travis and his popularity in the mid‑1980s.  Everything since then people have tended to lump in as New Country.

7459     That is about as close as I can give to you as a definition of New Country.

7460     COMMISSIONER LANGFORD:  But you are going to put in some pretty old country too, bluegrass and Acadian music and Legends of the Depression and Legends of Canada.

7461     How does that work with New Country?

7462     MR. TOMPKINS:  That is simply because we feel that a New Country format is not all totally new music.

7463     COMMISSIONER LANGFORD:  Will that be played in the regular rotation, or is it going to be special shows for that?

7464     MR. TOMPKINS:  They will be totally special shows for music of going to the past.


7465     COMMISSIONER LANGFORD:  When will we see those?  When will we listen to those?

7466     Sorry, we have been doing television today.  I have to switch back to listening.

7467     MR. TOMPKINS:  If you refer to our program schedule, most of those types of special shows will be on the weekends.

7468     Part of the concert series on Saturday nights, half of those concerts are going to be the concerts that we have proposed under our Canadian Talent Development banner.  The other will be archived concerts, such as "The Road", that is still available, and our shows that have been in the can recorded for quite some time.

7469     Our "Spirit of the West" is Hugh McLennan, who is a local Kamloops fellow who we have spoken to and he has agreed that if we do get this station, we can speak to him about playing his show, which deals very much in the old traditions of country and is played on a number of stations throughout Canada.


7470     And our "Country A to Z" show is a show that is going to feature more of the roots of country music, everything from what you consider alternative country, to bluegrass to more of the traditions of country music and how we got to where we are today.

7471     COMMISSIONER LANGFORD:  Back when everybody was called "Hank", I think.  They all seemed to be called "Hank".

7472     MR. TOMPKINS:  Either that or "Bubba".

7473     COMMISSIONER LANGFORD:  I think that is more urban.

7474     Excuse me.  Somebody just passed me a note, so I might as well do them the courtesy of reading it.

‑‑‑ Pause

7475     COMMISSIONER LANGFORD:  While we are on this program, I will just jump ahead a little.  I like to be nimble when I can.

7476     You said that some of this programming was going to be a product of Canadian Talent Development.  Which one of these would that be, which ones?

7477     MR. TOMPKINS:  The concert series ‑‑

7478     COMMISSIONER LANGFORD:  Where it says concert?


7479     MR. TOMPKINS:  Where you see concert on Saturday nights, that is going to be the result of our 26 concerts that we are proposing to do under CTD.

7480     COMMISSIONER LANGFORD:  And nothing else?

7481     MR. TOMPKINS:  In that show?

7482     COMMISSIONER LANGFORD:  No.  Anything else coming out of CTD?  Any of these other shows coming out of CTD?

7483     MR. TOMPKINS:  In there, no.

7484     COMMISSIONER LANGFORD:  Then you said we have some of these in the can.  So I guess this is stuff you have recorded for other radio stations or whatever?

7485     MR. TOMPKINS:  That's right.

7486     COMMISSIONER LANGFORD:  Which shows would those be?

7487     MR. TOMPKINS:  Are you talking about concerts or are you talking about other programs?

7488     COMMISSIONER LANGFORD:  Some of the programming as you went through the list, on one of them you said we have a lot of that in the can.

7489     MR. TOMPKINS:  I don't recall.

7490     COMMISSIONER LANGFORD:  Well, we can't get the transcript typed that fast.

7491     MR. TOMPKINS:  Where we said we had it in the can?


7492     COMMISSIONER LANGFORD:  Isn't that an old news expression for sort of a program that you have had lying around for a while?

7493     MR. TOMPKINS:  Yes, prerecorded.

7494     COMMISSIONER LANGFORD:  Yes.  Are some of these shows already done?

7495     MR. TOMPKINS:  No, none of them have been done.

7496     COMMISSIONER LANGFORD:  This will all be brand new.

7497     MR. TOMPKINS:  Oh, "The Road", which is also part of the concert series.

7498     I'm sorry, I just misunderstood you.

7499     COMMISSIONER LANGFORD:  "The Road".

7500     MR. TOMPKINS:  You see, 26 weeks are going to be taken up in the concert series by the live concert series we have proposed under CTD.

7501     COMMISSIONER LANGFORD:  Yes.

7502     MR. TOMPKINS:  The other shows will be shows such as "The Road", which is a concert series that is available and have been prerecorded.

7503     COMMISSIONER LANGFORD:  So those are in the can, as we say.

7504     MR. TOMPKINS:  Yes, they are; sorry.


7505     COMMISSIONER LANGFORD:  That's all right.  It's a good thing I'm not hearing things.

7506     I will get back to that CTD thing a little later.  It is good to have that pointed out.

7507     With regard to these Bluegrass, Legends of the Depression, Acadian music, would any of this be Category 3 music?

7508     MR. TOMPKINS:  I don't believe so.

7509     COMMISSIONER LANGFORD:  Not at all?

7510     MR. TOMPKINS:  No.

7511     COMMISSIONER LANGFORD:  All right.  It's a little different than the other stuff, so I wasn't quite sure.  If it was, we would like to know how much and track it, and that sort of thing.

7512     Again, all of this will be special shows.  I won't be driving home one day and hear anybody named "Hank".

7513     MR. TOMPKINS:  You might hear Hank Williams Junior.

7514     COMMISSIONER LANGFORD:  I see.  But not Hank Snow.

7515     MR. TOMPKINS:  You won't hear Hank Snow, that's for sure.


7516     COMMISSIONER LANGFORD:  You make a statement on programming.  You say that 40 per cent of all your Category 2 will be Canadian, and you made it here again.

7517     I just want to know how you are going to count that.  Does this 40 per cent commitment apply both overall and to the Monday‑to‑Friday between 6:00 a.m. to 6:00 p.m. slot as well?

7518     MR. TOMPKINS:  Definitely.

7519     COMMISSIONER LANGFORD:  Thanks very much.

7520     One last question on this format, if I can go back to it.

7521     There are other applicants who are looking at this country format.  Does your differ in any way from theirs?

7522     MR. TOMPKINS:  I don't think it is going to differ a whole lot.  We will be playing predominantly most of our music from the last 20 years, as I said, with the advent of Randy Travis and since.  We will be basically a 55:45 current to gold rotation with 40 per cent Canadian content.  Much of the Canadian are acts that have been developed and have become popular within the last 15 to 20 years.

7523     COMMISSIONER LANGFORD:  Thank you.

7524     Can we move on to spoken word.  Why don't we start with news.


7525     You did fill in a couple of stats, as I said earlier.  I now know that you are going to have 78 newscasts, and I now know that you are going to have six hours total a week.

7526     What I don't know is how many hours per weekday and how many hours per weekend day.

7527     This may be on this schedule that you filed today.

7528     MS SELIN:  We did provide you with a news schedule.  There will be 14 casts on each weekday and four on each weekend.  So that is where we get our six total hours per week of news.

7529     COMMISSIONER LANGFORD:  Did you just provide that today or did I have it earlier?

7530     MS SELIN:  No.  It was provided with your package today.

7531     COMMISSIONER LANGFORD:  Excellent; thank you.

7532     MS SELIN:  It looks like this.

7533     COMMISSIONER LANGFORD:  Right.  I think that covers everything I need in terms of numbers.

7534     Staff can look it over while I am asking you other questions, and if they have something more they can ask it themselves.


7535     Let's talk about your pledge to kind of local coverage, regional coverage, part of which is news, part of which is information.  I want to know a little more about how you are going to gather it, how many reporters you will have, and that sort of thing.

7536     MS SELIN:  All right.  Our news room will have a news director, who we anticipate will be the morning news anchor.  It will also have an afternoon anchor, a fulltime reporter and then a part‑time producer/weekend news person.

7537     In news these days everybody does double duty.  You pull an anchor shift and you produce two or three stories.

7538     Most of them will be produced in‑house.  One of the advantages that we do have is that we have news centres throughout other areas of the province.  One of the benefits of technology, I guess, is that you can see what the other news rooms are doing.

7539     For example, we will be able to go into our news room for system and see what stories are created in Salmon Arm or Kelowna or down in Trail or Nelson.  So we will be able to see what kind of stories might be of interest to Kamloops listeners and either use them directly or maybe find what we would call a Kamloops angle to that story.


7540     COMMISSIONER LANGFORD:  As you know, we are very keen on local and regional at the Commission.

7541     MS SELIN:  And so am I.

7542     COMMISSIONER LANGFORD:  And yet what I am hearing from you seems to be somewhat in conflict.  You have a very lean news staff, and it is easy for me to spend your money, so that's fine.  You are talking about a couple of announcers who are also going to read the news.  And you have one reporter, did you say?

7543     MS SELIN:  One fulltime reporter, yes.

7544     COMMISSIONER LANGFORD:  One fulltime reporter.  You have a lot of newscasts.  That is local.  But then you are filling it, it seems, or could be filling it with a lot of stuff from other Standard stations.  I don't question the quality, but I wonder whether that then does take away from the local and give it just a kind of B.C. flavour.

7545     MS SELIN:  I'm sorry, I have misled you there.  It was more of an idea generation or if a story would be of interest to Kamloops.


7546     I guess I am just really good at hiring news people.  The folks who work for me just tend to generate a lot of stories.  We really get into communities.  We develop contacts.  We cover school boards and council meetings.  At one council meeting you can walk out of there with ten stories in a good week.

7547     Really our focus will be local, as it is in all of our other stations.

7548     COMMISSIONER LANGFORD:  Can you give me any idea of how many non‑Kamloops created news stories might be running in a newscast?  Will you actually be bringing them in from other stations at all?

7549     Will you go to "we'll now take you to reporter X in Nanaimo".

7550     MS SELIN:  If it was a really big story would be the only time we would do that.

7551     COMMISSIONER LANGFORD:  More fires or something.

7552     MS SELIN:  Absolutely.  If it was more fires or maybe if it was a forestry‑related story that made sense in Kamloops.  It would have to make sense to those listeners because that is one of the criteria that we base our newsroom on.

7553     COMMISSIONER LANGFORD:  You are lean; you are not mean.

7554     MS SELIN:  We are always lean.


7555     COMMISSIONER LANGFORD:  I have a question about your programming expenses, which seem in comparison to the other applicants very low.  They are certainly the lowest, and they are very low compared to some of the others.

7556     I am looking at a year two expense of $139,900 that you have.  Newcap is not with us any more, but their application came in at $381,000.  The Evanov application is $438,900, and NL Broadcasting is $245,500‑and‑a‑bit.

7557     Why are yours so low?  This is what got me thinking, if you want to know.  I thought maybe you were borrowing programming from somewhere else, from some of your other stations.

7558     MR. SHAFER:  Commissioner Langford, if you know my boss and our owner, you will understand why they are less.  We also figure that is what we need to do.

7559     This model that you have in front of you is modelled over other stations that we have in B.C.  So we know it works and we know the costs are accurate.

7560     I can ask Reeny Chew to walk you through the programming expenditures.


7561     COMMISSIONER LANGFORD:  If you could give me some idea.  We don't have to go to every nickel and dime.

7562     As I say, I am just looking at them in comparison.  I don't have the experience you have of hands‑on running a station in Kamloops or a city like Kamloops, but I do have questions that arise when you see such a large gap among the different applications.

7563     MS CHEW:  We have our announcers in the budgets, but as well as in the programming budgets some of these announcers would have other responsibilities.  So we would assign their salary, allocate it to the other departments, such as promotions.

7564     The news people are in the programming budget, and the news director, as this is considered management, shows up under our administration budget.

7565     COMMISSIONER LANGFORD:  So if you were to plunk him into the programming, the news director ‑‑

7566     MS CHEW:  It would probably be consistent with the other applicants.


7567     COMMISSIONER LANGFORD:  At least perhaps with NL, unless it's a career opportunity we should all be thinking about.  I don't think that is going to bring you up to $438,000.

7568     That is helpful.  I just couldn't help but notice that discrepancy.

7569     Finally, in the area of Canadian Talent Development, most of what you have given us is very clear and it is very impressive but I have a few questions.

7570     One them actually comes out of our earlier discussion on this live concert.

7571     It is difficult to know ‑‑ and I don't want to diminish the value of getting your concert played and all that sort of thing.  But it is difficult to know whether this is Canadian Talent Development or simply the price of buying some programming for your station.

7572     Maybe you could respond to that difficulty I am having.

7573     MR. TOMPKINS:  This is not going to be anything really that is existing in one way or another.  It is going to be a very difficult task ‑‑ we are not saying it is not ‑‑ to go out and record, in one way or another, 26 concerts a year.  But that is what we are going to do.


7574     We have discussed at length in terms of how we are actually going to achieve it.  What we are going to do is we are going to go to various venues throughout Kamloops, the region, the Mountain Music Festival, and we are also going to have acts that are in the radio station that we will also record live as well which would fall under this criteria.

7575     We have done some research in the Kamloops area and we have talked to a number of the promoters, and we have come up with about six or seven different venues that are available in the area that would suffice quite well in terms of doing our concert series.

7576     We realize it won't be exactly every other week for one year, for 26 weeks, there will be an act to record.  In some times of the year there will be more groups than others, specifically in the summer when bands and groups and artists tend to tour more than in the winter.

7577     We are going to be a little bit behind on how we gather it, but we have all intentions of making them all brand new concerts and running every other week.

7578     COMMISSIONER LANGFORD:  So what is the $30,000 going to be spent on?


7579     MR. TOMPKINS:  The $30,000 is basically going to be spent on production of the concerts.  Occasionally there are going to be some talent fees based on whether it is going to be an existing show that we just go in and record, for instance in a club, or it could be a concert that we have to produce on our own; in other words, bring in the talent on our own.

7580     COMMISSIONER LANGFORD:  I must say I find it a little tough.  Nobody can overestimate the chance to be heard and the chance to be recorded and to get some play time, but I wonder how we define that as talent development.

7581     They will enjoy it and they will be glad you are doing it.  But essentially you go out with a truck and you record a concert, or you bring them in and you record it.

7582     MR. TOMPKINS:  I think the talent development aspect of it, first of all, is that they get airplay on the radio.  Of those 26 concerts, we then take the best ten songs of those 26 concerts and produce our annual CD compilation.  We get that annual CD compilation distributed by Maple Music.  It is distributed across Canada.  We have a promo schedule on the air promoting the compilation, and it becomes available for sale.


7583     Then the overall winner of those ten tracks we take into the studio to record a full‑fledged CD project.  We work on a tour for them.  We have distribution set up for them, through Maple Music once again, and we also have a promo schedule for them as well.  Merritt Music have agreed to book that act for the Merritt Mountain Music Festival.

7584     So they get a chance to go into the studio, record, get airplay and tour.  They get a chance to do interviews.

7585     To us, we figure that is pretty good Canadian Talent Development.

7586     COMMISSIONER LANGFORD:  Before you jump in, Mr. Shafer -- I am finding it harder and harder to keep things in my mind these days -- the point you have made is interesting, Mr. Tompkins, but that is another $35,000, which is great for the people getting it.

7587     MR. TOMPKINS:  Yes.

7588     COMMISSIONER LANGFORD:  I want to get back to the original $30,000, where you are actually doing this live country series.  It is that one that I don't quite see as talent development.


7589     I see the value of it.  I am not trying to minimize its value.  I just wonder whether it fits within the parameters of actual talent development.

7590     MR. SHAFER:  Commissioner Langford, I would like to try answering that question.

7591     Radio stations have been doing this for the last hundred years, back to the early days when live programming was all that they ran.  In the last 20 to 30 years more and more radio stations and markets across North America have created platforms or battle of the bands or showcases for new emerging talent in their own markets.

7592     I note in the intervention by CIRPA that they question the value of those contests or those showcases.

7593     COMMISSIONER LANGFORD:  Not all my ideas are original here.

7594     MR. SHAFER:  But having seen them work in so many markets across Canada and across the United States, those showcases and those platforms create an opportunity for talent to at least step forward and try their material and be heard and hopefully through the competition move forward.

7595     So I think it is a very valuable first stage in that process.

7596     COMMISSIONER LANGFORD:  Okay.  That's your answer and we will look at it; thank you.


7597     To jump back now to the $35,000, you say that will be spent on CD costs and touring.

7598     Will there be a cash prize as well for that?

7599     MR. TOMPKINS:  No, there won't be a cash prize.  Would you like me to break down the $35,000?

7600     COMMISSIONER LANGFORD:  Sure.  Why not.

7601     MR. TOMPKINS:  Of the $35,000, we have gone out and we have estimated that $24,000 of that will be used for the production of the CD: going into the recording studio and the cost of doing same.  The talent and musician costs are going to cost approximately $5,000.  The mastering of the project is going to be $2,000; the art work, $2,500.  Then it is going to cost us about $1,500 to manufacture 1,500 CDs under an initial release.

7602     COMMISSIONER LANGFORD:  What are you going to do with those CDs?  You say Maple Music is going to distribute them.  Where do you see them going?


7603     MR. TOMPKINS:  Of the 1,500 that we will initially manufacture, 100 will go to the artist to do as they wish.  The additional 1,400 will go to Maple Music to be used to distribute for promotion and sales.

7604     COMMISSIONER LANGFORD:  You will be able to at least get them on 51 stations around Canada, I assume.

7605     MR. TOMPKINS:  No.  We only have seven country stations.

7606     COMMISSIONER LANGFORD:  You could stretch it.

7607     Why does the $35,000 jump to $55,000 in year seven?  Just inflation?

7608     MR. TOMPKINS:  We were just trying to get the number to round out to a million dollars at that point.

7609     COMMISSIONER LANGFORD:  So there would just be more promotion, whatever.

7610     How do you pick the winner here?  What are the criteria?  Where do you get your judges?  How do they judge?  The nicest cowboy boots, shiniest guitar?  What are we looking at here?

7611     MR. SHAFER:  Tom has quite an elaborate schedule here.


7612     MR. TOMPKINS:  A good portion of our advisory board is going to be made up music‑related professionals.  These people, along with the music and programming staff of the radio station, will be involved with the selection process.

7613     The only criteria ‑‑ and this is for the compilation at least ‑‑ will be that at least 80 per cent of the final ten tracks must be local or B.C. artists and that it must be considered country music.

7614     COMMISSIONER LANGFORD:  I have a couple of quick follow‑ups on a couple of other initiatives.

7615     The $15,000 to the Merritt Mountain Music Festival, how do you ensure that it goes to talent development and not to the cost of putting up a tent or something like that?

7616     MR. TOMPKINS:  Actually, we have been meeting with the Merritt Mountain Music Festival people, and we are discussing various initiatives actually, as we talk.  Merritt Mountain will be appearing before you in the intervention process, and they will probably elaborate a little bit more.


7617     They came to us actually, and they don't like the idea of us just giving them $15,000 to go towards the payment of Canadian acts at Merritt.  They would like to get much more creative about it, and it looks like we are discussing the possibilities of doing a talent contest through Merritt at Merritt annually.

7618     COMMISSIONER LANGFORD:  And you will keep us posted on that, or they will.

7619     MR. TOMPKINS:  Certainly.

7620     COMMISSIONER LANGFORD:  The Designated Group Fund, I am not entirely sure what the cost breakdown on that is: what you are going to allocate to scholarships or technical assistance or promotion assistance, that sort of thing.

7621     MR. SHAFER:  I would like to answer that.

7622     The idea we had in mind with the two scholarships -- the $10,000 a year towards the Aboriginal scholarship for Thompson River University was seen as a mechanism to attract Aboriginal youth into journalism and hopefully at some point into broadcasting.

7623     The Designated Group Fund is pretty straightforward in that we saw that as money being allocated to the designated groups, assisted by the advisory board to help determine what kinds of music programs we could initiate in the community.


7624     Sprott‑Shaw College and a number of schools have music programs that we thought would be appropriate to attract the designated groups or some of those members into those programs.

7625     COMMISSIONER LANGFORD:  You don't have a focus on what sort of activities they might be using that money to further?

7626     MR. SHAFER:  We could come up with some parameters and some ideas.  But no, honestly, we thought again the advisory board would offer us a fresh perspective on what would be best in those communities.

7627     Part of our mandate for the advisory board would be to have at least two members of each designated group on the board.

7628     COMMISSIONER LANGFORD:  I don't mean to sound pessimistic about any of your initiatives, but this is a fairly standard question.  As a process of evaluating and analyzing everything you have given us, if we feel that we had to reject one of the initiatives for some reason, it just didn't qualify as talent development, would you be willing to redirect it to some other source?

7629     MR. SHAFER:  Yes, we would.

7630     COMMISSIONER LANGFORD:  Thank you very much.


7631     My final question ‑‑ my colleagues may have others ‑‑ is about cultural diversity.  You speak very eloquently about it in your supplementary brief, about the inclusive perspectives of Kamloops Country.  But I would like you to flesh it out a little.  I would like to know how your cultural diversity plans are going to be captured maybe in news, music, promotion of artists.  Put a little more flesh on the bones, if you could.

7632     MR. SHAFER:  I think to answer the question we have to look at going to the very beginning of the station before it goes to air in terms of how we hire.

7633     Lori may care to comment on the hiring practices, but it is a fairly extensive process that would make sure we reach into the community and reflect it appropriately so that those voices are heard on the air to talk about the different communities.

7634     That is pretty common throughout our group in terms of how we hire and how we ensure diversity or local reflection.

7635     We have a couple of unique initiatives that I would like Betty to talk to with regard to how do we make sure that that comes through in our music programming, what is in between the songs, and what does the news sound like.

7636     MS SELIN:  Thanks, Don.


7637     One of the things that we talked about was we would like to develop some specialty programming with regard to news and public information.  The idea that we came up with is a one‑hour program that would air every Sunday morning, and we are going to call it "In The Loop".  We thought that was very clever, actually.

7638     Basically it is a one‑hour program that we would make available to local groups, certainly in the four designated areas and any other community groups that might want to have a voice.  It would be prerecorded, not live, interviews.  It could be if there was a big news story that week, we might have both sides to discuss it.  It could be a huge community event.

7639     It is just wanting to make available air time to groups who right now maybe don't feel that they have an opportunity for that.  It would be kind of a really local, rootsy feeling kind of show is what I visualize or hear in my head anyway.

7640     COMMISSIONER LANGFORD:  Do you have a policy of trying to kind of make the sounds of the news more reflective of your community?


7641     In other words, you can always go to Lawyer Sam for a legal comment, but maybe it would be good to go to Lawyer Barbara once in a while, or something like that, so people hear a woman lawyer on the news giving the clip, or whatever.

7642     Do you build that into your programming policies?

7643     MS SELIN:  Absolutely.  We have a fairly substantial newsroom guidebook that every new employee reads that has everything from use of a scanner to gender‑neutral language.

7644     I have been at this for a long time, and I think I am pretty careful to make sure that we do reflect the community.  Our contacts are extensive.  We might not just have one contact say at a women's centre but we would have two or three people there that could comment on child care programs in the budget, that kind of thing.

7645     I personally make a very special effort to make sure that those kinds of contacts are within our contact file so that all of our news people have access to that.

7646     COMMISSIONER LANGFORD:  Those are my questions, unless you have further comments.  Perhaps some of my colleagues will have questions.  I am not sure.

7647     Thank you very, very much.

7648     THE CHAIRPERSON:  Thank you.


7649     Commissioner Pennefather.

7650     COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

7651     Just a quick question on the programming schedule that came with the presentation today to make sure I am reading it correctly.

7652     Monday to Friday, 7:00 to midnight is "Voice Track"?

7653     MR. TOMPKINS:  Yes, it is.

7654     COMMISSIONER PENNEFATHER:  The ACC, "American Country Countdown", where is that from?  That is a syndicated program obviously.

7655     MR. TOMPKINS:  That is a syndicated program; yes, it is.

7656     COMMISSIONER PENNEFATHER:  From...?  Is it American?

7657     MR. TOMPKINS:  From Los Angeles.

7658     COMMISSIONER PENNEFATHER:  Sort of like a Casey Kasem.

7659     MR. TOMPKINS:  It is like a Casey Kasem.

7660     It is the highest rated Country Countdown show in Canada.

7661     COMMISSIONER PENNEFATHER:  The "Voice Track" programming is done where?


7662     MR. TOMPKINS:  It will all be done locally.

7663     COMMISSIONER PENNEFATHER:  Thank you.

7664     THE CHAIRPERSON:  Thank you.

7665     Counsel.

7666     Me STEWART:  Merci, Monsieur le Président.

7667     I have just one quick question.

7668     Can you provide for the Commission a cost breakdown for the annual $30,000 live concert series, the first item in your CTD commitment?

7669     MR. SHAFER:  Yes, we can.

7670     Just give us a minute and we will get it for you.

‑‑‑ Pause

7671     MR. TOMPKINS:  It was difficult for us to come up with a cost breakdown for each concert, because each one is going to be so different.  We have averaged it out to $1,153 per show minimum.  However, some shows won't cost us next to anything.  And we will take money from that to use against shows that will cost more, because there will be certain shows where we are going to have to pay the talent and there will be some shows where we won't have to pay the talent.  It depends on the type of show that we go in and record.


7672     It could be somebody doing a live show from our own studios where there is going to be no payment of talent at all.

7673     MR. STEWART:  The concern really is whether this money is going to a third party as distinct from being seen as more part of your regular programming expense.

7674     Can you provide an example of the breakdown of the costs ‑‑ I realize it is a fluid thing ‑‑ to reassure the Commission on that point?

7675     MR. TOMPKINS:  The breakdown will be either talent, production or recording costs.  They will be the three areas that we will be spending the money on.

7676     MR. STEWART:  Those recording costs would be paid to a third party?

7677     MR. TOMPKINS:  To a recording company from Kamloops.

7678     MR. STEWART:  Thank you.

7679     Thank you, Mr. Chairman.

7680     THE CHAIRPERSON:  Thank you very much, ladies and gentlemen.  Those are our questions.

7681     Mr. Secretary, the next item, please.

7682     MR. LeBEL:  Thank you, Mr. Chairman.


7683     Item 11 on the agenda is an application by Evanov Radio Group Inc. for a licence to operate an English‑language commercial FM radio programming undertaking in Kamloops.

7684     The new station will operate on frequency 92.5 MHz (channel 223A) with an effective radiated power of 1,860 watts.

7685     Mr. Chairman, Mr. Bill Evanov will introduce his colleagues.

7686     You have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION

7687     MR. EVANOV:  I have been in Vancouver for three days now, and the last two hours is the only time I have been out of bed, due to a heavy cold and flu, and I think it has spread to some our staff here who also have it.  So I am not sure what condition we are in, but we are going to do the best we can.  If I sort of sound hollow from time to time, please tell me.

7688     COMMISSIONER WYLIE:  You have obviously been together too much.

7689     COMMISSIONER LANGFORD:  You get extra points if you don't give us the bug.

‑‑‑ Laughter / Rires

7690     MR. W. EVANOV:  I would like to introduce my panel before we begin our presentation.


7691     Mr. Chairman, Madam Vice‑Chair, Commissioners and Commission staff, my name is Bill Evanov and I am President of the Evanov Radio Group.

7692     To my left is Carmela Laurignano, Vice‑President and Radio Group Manager.  To my right is Ky Joseph, Vice‑President of Sales; to her right, Paul Evanov, Vice‑President of Programming and responsible for the launch of our Halifax FM station.

7693     In the second row, to my left, is Mike Kilbride, our VP Finance; Debra McLaughlin, President of Strategic Inc., the author of our Demand Study; Gary Gamble, News and Spoken Word Programs; Natasha Marchewka, our Music Programmer; and Stuart Robertson, our legal counsel.

7694     We are an independent broadcaster operating three radio stations in the Toronto CMA: CIAO‑AM, an ethnic radio station; CIDC‑FM, a CHR dance format; and CKDX Foxy FM, a station which programs a format created by us, which is an updated version of the easy listening format.


7695     This format blends a large variety of soft melodic musical genres.  We are proposing a similar format for Kamloops.  It will blend of pop‑classics, adult standards and instrumental music which will include some light classical, jazz and folk roots based music.  We call this format Today's New Easy Listening format.

7696     In fact, it is uplifting, it is fresh and it is definitely foreground.  It is music that endures, that evokes passion and is exciting.  Our blending of several music genres will produce a melodic, easy listening sound that will appeal to the 45‑64 age demo, with lyrics that might be meaningful to that age demo or lyrics that would touch something within that person in terms of either memory or lifestyle.

7697     Our programmers promote it as music with class because we play great music.

7698     The Jewel will not be locked into any single time period but rather will present the very best musical recordings from the past four or five decades, but always with an emphasis on the new soft melodic music of today.

7699     Over 40 per cent of our music will be new or relatively new, meaning released following 2000; and 25 per cent will be from the 1980s and 1990s; and 33 per cent will be pre‑1980s, which includes our classic crooners.


7700     Of the Canadian music played, we are proud to say that 70 to 80 per cent of the selections will be new or relatively new.

7701     The Jewel in Kamloops will also give greater weight and airplay spins to new and emerging Canadian recording artists.  Our format is both a blend of music styles and music eras.

7702     As we mentioned in Ottawa to you when designing the playlist ‑‑ you are all here and you will all remember; Mr. Dalfen wasn't ‑‑ we took to heart Frank Sinatra's advice to Tony Bennett on how to have longevity with a musical career.  According to Tony Bennett, Frank Sinatra said:  Only sing great songs and don't sing to a single narrow demographic.

7703     Our format will have longevity because we play only great songs and we broadened our audience base by playing a large variety of music genres.

7704     These assertions are supported by our Research and Demand Study in Kamloops and by the real market testing of CKDX Foxy in Newmarket.  There, restricted by a signal that only reaches 16 per cent of its market, CKDX Foxy in the BBM released after the Ottawa hearings showed an increase in audience by 37 per cent, from 148,000 listeners to 203,000 listeners.


7705     Equally important, its revenue also increased by 49 per cent in the last fiscal.  Foxy is now on a strong upswing with listenership and revenue.  We made it work in Toronto and we can make it work in Kamloops.

7706     MR. P. EVANOV:  Instrumental music is a major component of our format.  Today's new easy listening format on The Jewel will program 35 per cent from this genre.

7707     During the 1980s the availability of instrumental music decreased due to an increase in production costs and the fact that radio stations started to target younger audiences.  Instrumental music disappeared from radio.  Since that time, the majority of Canadian instrumental artists have had to work within a cottage industry.  They produce, they market and they sell their recordings themselves via the Internet, flea markets, small concerts and word of mouth.

7708     Instrumental music is very much alive and in demand.


7709     You will find in these artists performing at hundreds of Ukranian and Italian weddings.  You will find instrumental artists performing in lounges, nightclubs and live theatre, but commercial radio today does not give support, nor airplay, to instrumental artists.  The slight exception is jazz and smooth jazz artists.

7710     The Jewel believes that the vast majority of instrumental artists also need a broadcast platform.  Our experience on CKDX‑FM in Newmarket, and our research in both Ottawa and Kamloops, confirm a demand for instrumental music.

7711     MS McLAUGHLIN:  The Jewel is an excellent fit for Kamloops.  The market is growing at a steady pace, but it is not attracting substantial youth migration.  As a result, the market is slightly older.  The median age is 38.4 compared to the national average of 37.6.  Almost half of the 15‑plus population is over 45 years of age.

7712     Our view of the market indicated two critically important facts.  The three existing FM stations are most efficient in the younger demographics and the CBC from Vancouver is one of the predominant stations for the mature listener in the market.  When you combine these market statistics with the profile of the audience for The Jewel, it is easy to see where the format fits.


7713     One of the notable findings of the Demand Study is the popularity of the styles of the music that make up The Jewel playlist: crooners, timeless standards and instrumental music scored almost as high as the most popular music format in Canadian radio, adult contemporary, in terms of reported frequency of listening.

7714     This is a clear indication of the potential for a service providing access to this type of music.  Most telling, however, was the overwhelmingly positive response that was given when the respondents were asked the likelihood of them listening to The Jewel if it were licensed.  The survey of the 45‑plus demographic was conducted in August and an impressive 83 per cent of our sample felt that they would definitely or probably listen to the service.

7715     Interest in this proposal grew proportionate to age.  In the 55‑plus demographic well over 80 per cent stated that they would definitely or probably listen.  Interest was only somewhat less in the 45‑to‑54‑year‑old demo, with 70 per cent stating that they would definitely or probably listen.

7716     The demand study showed that the people of Kamloops who want to hear the music the Jewel offers must seek other sources like the Internet, CDs or tune to several out‑of‑market services.


7717     To a demographic where local news is critically important, this is a tough choice to make.  Do you listen to the music you love or the news and the information that you require?

7718     The proposal for The Jewel resolves this conflict by offering both on a local station.

7719     MS MARCHEWKA:  The Jewel is today's easy listening, including soft and melodic vocal and instrumental music.  The Jewel will blend standards, pop classics and easy pop with light classical, crossover and smooth jazz, folk roots and instrumental into a single sound.

7720     The demand and appeal for the vocal music we are presenting with The Jewel is clear by the recent popularity of the new or newly recorded adult standards and classic pop selections by such artists as Rod Stewart, Michael Buble, Harry Connick Jr. and Renee Olstead.  And the demand for this music has renewed the popularity of classic performers such as Frank Sinatra, Tony Bennett, Nat King Cole and Bobby Darren.

7721     Examples of standards that The Jewel will play are "As Time Goes By", "La Vie en Rose", and "It Had To Be You".  Pop classics could include Joni Mitchell's "Big Yellow Taxi" and Amy Sky singing "We've Only Just Begun" or Bette Midler performing The Beatles classic "In My Life".


7722     We would also play new easy pop selections like Marc Anthony's "I Need You" or Norah Jones' "Sunrise".

7723     Also included in the music mix will be duets from such class acts as Ray Charles and KD Lang, groups such as Chicago and Abba, show tunes and film soundtracks from "Beauty and the Beast" to "West Side Story", "Shall We Dance" to "Breakfast at Tiffany's".

7724     The mix will include songs or artists that may be considered a crossover into pop from several genres, including light classical performers like Andrea Bocelli, jazz artists like Ella Fitzgerald, smooth jazz artists like Diana Krall and R&B's Tony Brackston.

7725     As earlier stated, The Jewel will play 35 per cent instrumental music.  This is blended throughout the broadcast day and also includes block programming in the evenings.  The majority of instrumental music will be derived from pop music, as well as light classical and smooth jazz.  The selections come from a number of sources, including instrumental renditions of recently composed music, within the past decade, familiar popular music, and music composed hundreds of years ago by the great masters.


7726     These instrumental selections will represent a wide variety of music genres that will engage the listener, evoke passion and emotion.  This broad variety of instrumental music could include a Strauss waltz performed by Andre Rieu, or "Penny Lane" performed by the Boston Pops.  It could be a Canadian pianist John Arpen's rendition of "Call Me Irresponsible" or a version of Offenbach's "Barcarolle" performed by Richard Abel.

7727     Our proposal provides 40 per cent Canadian content each broadcast day.  Specialty Canadian programs will air on Saturdays and Sundays.  They will include a Canadian Spotlight program that will run twice on weekends.

7728     Following Canadian Spotlight will be a two‑hour folk and roots feature that will include artists that are known as local talent in the region but seldom, if ever, are heard on radio.

7729     Rarely heard artists include British Columbia's Guy Langlois, Jay Hines and Kamloops' own Peter Soberlak and Jack Rea.

7730     What separates our new easy listening from traditional easy listening is that we will go further into the repertoires of artists playing their uncharted songs, as well as their familiar selections.


7731     Further, The Jewel will also air newly released music and new artists, predominantly new Canadian artists.

7732     Our company has a history of seeking out emerging talent, interviewing local and regional artists and posting artist information on our website.  Clearly there is a resurgence of interest in this music that has never really gone away:  the softer side of popular vocal musical styles that listeners connect with no matter what the era.

7733     The Jewel's music makes listeners say "I haven't heard this song in so long" or "I've never heard that song before but I love it" or "I haven't heard that version before".

7734     MR. GAMBLE:  The Jewel will make a significant commitment to news.  We recognize the opportunity and obligation inherent in being a new voice in this market.  To that end and to meet the interests of our target market, we will provide regularly scheduled newscasts 13 times per day, Monday through Friday, focusing heavily on local news in the city of Kamloops.


7735     On the weekends our focus will shift slightly towards more music and we will schedule fewer but longer news breaks with our announcers ready to provide rolling talk on an informal basis, keeping our listeners aware of happenings within the community.

7736     We will also provide an extensive information package.  During the week we will air daily business reports with reference to the Vancouver Stock Exchange, along with major business stories, and a healthwatch segment, spotlighting the latest breakthroughs in health related issues.

7737     Since our core audience has moved beyond the young family stage and will be finding more time for leisurely pursuits in life, The Jewel will keep them up on conditions that affect their outdoor activities.  Several times daily throughout the week The Jewel will update its active listeners on ski, marine or golf conditions.

7738     Similarly, the Community Calendar will feature happenings in and around Kamloops, and our daily Theatre and Arts report will provide information on cultural events and entertainment, such as the Western Canada Theatre and the Kamloops Theatre.


7739     Twice weekly our Book of the Week feature will spotlight Canadian authors and their works.  Through this program we hope to expand our listeners' knowledge of new releases by providing reviews, as well as inviting listeners to make suggestions on books to be reviewed.

7740     MS JOSEPH:  The strength of radio advertising is based on the strength of the local retail market, and in Kamloops the market is very impressive.  Retail sales, according to FP Markets, was 36 per cent above that of the national average in 2004.  The older skew in the market suggests that while incomes may not be as high as in other markets, disposal income is much higher.  This creates an opportunity for retailers to develop and sell products and services that target an older, more mature, consumer.

7741     In North America, according to a report in the Globe and Mail in June 2004, another baby boomer celebrates his or her 50th birthday every 8.5 seconds.  It is estimated that by 2010 the spending of the 50‑plus demographic will be a trillion dollars more than that of the 18‑to‑44‑year‑old demographic, arguably the current focus of many radio stations.

7742     With this kind of spending power, there is no doubt that what the economists predict will happen in North America will be reflected on the market level.


7743     Kamloops is already showing the signs of this shift in consumer power, and The Jewel can be a service to this consumer base without unduly impacted existing services.

7744     Recently we were in the market and received great support from several local retailers and other businesses, including Michael Ungrin, owner of Marjon Jewellers in the Aberdeen Mall, who agrees that he has no radio station to target the older end of his consumer market; or Phil Askin of Kamloops Mazda, who tells us that reaching the 40‑plus demographic is a challenge and that The Jewel will be a welcome addition to Kamloops.

7745     MS LAURIGNANO:  In all our commitments to Canadian Talent Development, regardless of the market, Evanov Radio Group has specific criteria for CTD development.  They are that each initiative is substantive and appropriate for the local market; that each fits with the format and can benefit from inclusion in our promotional plans; and that each can be sustained through our business plan.


7746     In Kamloops we are proposing that the largest portion of our commitment be invested in an annual concert.  This event will showcase Canadian talent, both established and emerging.  Similar to The Jewel format, instrumental music will be included along with vocal performances.  We envision four to five acts with at least one well‑known headliner.

7747     Our first emphasis will be in recruiting acts from the Kamloops region, such as Peter Soberlak and Roxanne Pall.  Second, we will broaden our search throughout B.C. and beyond.

7748     Our first priority, however, is to give exposure to local and regional musicians.

7749     Over 80 per cent of the funds we have set aside for this initiative will go directly to the artist.  We will use The Jewel and other traditional media to promote the concerts so that the artists we bring to Kamloops will have the greatest opportunity to expand their audiences.

7750     We expect that this 100 per cent locally‑planned and produced concert will be very popular and will grow year after year, attesting to both the talent of the artist and Kamloops' appetite for this style of music.

7751     In Ottawa, by way of introducing The Jewel format, we provided you with a first‑hand taste of some great Canadian instrumental music.  Instrumentalist Richard Bell ‑‑ who, by the way, sends his regards.  He is on tour in Florida as we speak.  He would have come to perform, but he was getting paid out of the country, so he felt he had to take that gig.


7752     COMMISSIONER WYLIE:  Not in the casino.

7753     MS LAURIGNANO:  No.  He is doing that in the afternoon when he wakes up after the concert.

7754     Instrumentalist Richard Bell is just one of dozens of Canadian artists who are internationally and regionally renowned for their artistry and musical genius.  And yet, as he submitted to you in his intervention, Richard is largely ignored on radio.  He told you that, to the best of his knowledge, the only station in English Canada that has played his work is our own Foxy 88.5 in Newmarket.

7755     Because instrumental music has not been promoted, and indeed almost abandoned by Canadian programmers, it could be argued that it is less popular than other music styles.  Remarkably, despite being ignored, artists such as Richard Bell, Leona Boyd and Pablo, sell out their concerts wherever they tour, and some of them sell sufficient CDs to warrant distribution with major record stores.

7756     This just simply ignores the very real power of the medium in providing consumers with introductions to new music and new artists.


7757     We believe more sales would be possible if the medium most noted as being the source for new music, radio, took a hand in promoting these talented Canadians.  We applaud their success abroad but feel quite strongly that is Canada that should be giving them the most support.  The Jewel will.

7758     We have also set aside an amount in support of an initiative we announced in Ottawa: that is the Catalogue of Canadian Instrumental Music.  We believe in the necessity of this catalogue.  In a country as vast and diverse as ours, sourcing Canadian instrumental artists is no small task.

7759     The Catalogue of Canadian Instrumental Music will be a national resource that will benefit, first and foremost, the artist and will also benefit the industry, such as music and video producers, promoters, publications, writers and editors ‑‑ and yes, even radio programmers.

7760     The catalogue would house as well as take the burden out of sourcing and accessing one of the most underserved music styles and its performers.  Our annual contribution for Kamloops, and we hope other markets and from other broadcasters in future years, in addition to the full seed and funding provided in Ottawa by us, will help enhance the coffers of the Catalogue of Canadian Instrumental Music.


7761     MR. W. EVANOV:  The Jewel is an easy listening format that is by all accounts a new programming paradigm.  What is remarkable is that despite being new, it will have a very quick acceptance by audiences.  It is the blending of recognizable melodies or titles which are outstanding with new and current recordings that give the listeners an instant sense of connection.  The consumer demand test and our real market experience attest to this.

7762     Our proposal for Kamloops meets all the criteria set out by the Commission.  We will further the objectives of the Broadcasting Act through:

7763     (1) bringing diversity into the market by offering a new and unique format and providing a relevant lifestyle spoken word service to an underserved 45‑plus demographic;

7764     (2) offering a comprehensive news package which will increase the diversity of voice and perspective in the market;

7765     (3) investing the bulk of our Canadian Talent Development Funds into the local market and region;

7766     (4) addressing consumer demand for a style of music that cannot be found in the Kamloops radio market; and


7767     (5) providing exposure for a group of talented Canadians, instrumental artists whose body of work reflect Canadian culture to its fullest on a medium that has not recently given them any support.

7768     For all these reasons and the arguments articulated in our filed application, we urge the Commission to license The Jewel in Kamloops.

7769     Thank you for your attention, and we welcome your questions.

7770     THE CHAIRPERSON:  Thank you very much.

7771     Vice‑Chair Wylie.

7772     COMMISSIONER WYLIE:  Thank you, Mr. Chairman.

7773     Good evening, ladies and gentlemen.

7774     MR. W. EVANOV:  Good evening.

7775     COMMISSIONER WYLIE:  I take it this is an identical schedule to the one that I have in the application?

7776     MS LAURIGNANO:  Yes.  We wanted to provide a colour copy because in the last hearing somebody made black and white copies and they were not legible.


7777     COMMISSIONER WYLIE:  I stomped my feet until I got a coloured copy as well, because all your Canadian content had somehow disappeared into a black hole.

7778     The music format that you are proposing is described by you today and also at page 3 of your supplementary brief as a broad set of musical styles, including crooners, standard ballads, love songs, contemporary hits, music from current and past eras, from charts such as AC, smooth jazz and uncharted styles such as folk, world music, instrumental and soundtracks.

7779     It is also described at page 1 as more mature radio, more romantic, more melodic, softer and somewhat like Foxy in Newmarket, which has been a success for you.

7780     You also have, in response to a deficiency question, said that it would be 90 per cent Category 2 and 10 per cent Category 3.

7781     Is that still correct?

7782     MS LAURIGNANO:  That is correct.

7783     COMMISSIONER WYLIE:  How different will that style be from CHNL‑AM which is adult contemporary and showed a 27 per cent share in Kamloops, I think in the BBMs of the spring, and 28 per cent in the BBMs of the fall; or from CKBZ‑FM, which is also adult contemporary, which had a 16 per cent share in the spring and down to 14 in the fall?


7784     How different will this sound be from these stations which are adult contemporary ‑‑ and we can get into that later, but especially in the case of CHNL appears to me to attract a fair interest from your target demographic?

7785     MR. W. EVANOV:  CHNL‑AM is predominantly a news-sports-talk radio station with some music.  We on the other hand would be music intensive.

7786     When we looked at the market last September, we looked at BDS reports and then we looked again in January.  There were BDS reports for the FM stations but not the AM stations, so we monitored the AM station.

7787     I am going to ask Gary Gamble to walk you through the research.

7788     MR. GAMBLE:  Thanks, Bill.

7789     In terms of duplication of the existing stations already within the market, the three FM stations we had access to BDS reports.  We took two samples, one from last September and the other from the beginning of February.


7790     Duplication, first of all, within two of the stations which were a rock format, it was a zero per cent.  With CKBZ‑FM, which is more of a hot AC format, there was a 5 per cent duplication.  As it matches our Foxy library, what we play in Newmarket, that is what we measured it against.

7791     When it comes to CHNL, news talk gold station, we monitored that, as Bill said, by listening to it at various hours and found that they are more of a news, information, talk format.  When we listened to it, it was less than 10 per cent music duplication.

7792     When they are playing music, it is more of a rock and roll oldies type format.  We are more of a softer format.  So the duplication, when it comes to CHNL, was less than 10 per cent.

7793     COMMISSIONER WYLIE:  How much music is on CHNL, since you monitored it?  You gave me the duplication, but how much music compared to spoken word?

7794     MR. GAMBLE:  For example, in a morning drive that we listened to on a Friday, between 8 o'clock and 9:00 on CHNL, there were five music selections.  The rest was either a news‑sports feature, a "Don Cherry Grapevine" or a "Paul Harvey" talk format type of thing, rolling through about 18, 19 minutes in there along with commercial time.


7795     So in the first half hour there would be two music selections and then back at the bottom of the hour a news sweep again for about 15, 16 minutes and then about three selections at the top of hour.  Whereas at The Jewel, we would be playing approximately 12 selections in there, with also our spoken word packages.

7796     COMMISSIONER WYLIE:  And CKBZ is music mostly.

7797     MR. GAMBLE:  Yes, it is.

7798     COMMISSIONER WYLIE:  And the duplication there was also ‑‑ I think you have that attached here.

7799     MR. GAMBLE:  We have that on the chart, yes, on the last page of the chart.

7800     MS LAURIGNANO:  It's 5.5 per cent.  It's a hot AC format.

7801     Madam Chair, if I could just add one thing, the description of the adult contemporary format that we included as being what CHNL was doing came from publications and things, and we sort of took it at face value at the time.  When we actually did an analysis of it, we would question whether it is an adult contemporary, although it does target an older type of audience than CKBZ or CIFM‑FM.


7802     COMMISSIONER WYLIE:  One of the premises underlying your application is that that older target demographic, which you describe as 45‑to‑64 in your assumptions, is underserved in the market.

7803     I would like some explanation of some of the tables that are in Strategic Inc.'s Consumer Demand Study.

7804     For example, if I go to page 10 and I look at the table, this was as a result of questions that were asked.  Why can't I conclude that CHNL is doing fairly well in that target, in radio stations listened to in the last week?

7805     You conclude from this that it is not appealing to that demographic.  I think you said somewhere today or somewhere in your application that people have to listen to the CBC.  I assume that that is CBCV, is it?

7806     MR. W. EVANOV:  CBC out of Vancouver.

7807     COMMISSIONER WYLIE:  Yes, which has a fairly lower response to "listened to last week" by that demographic than CHNL.

7808     MR. W. EVANOV:  I will ask the author of our research ‑‑

7809     COMMISSIONER WYLIE:  And then explain to me also in that table what "other" is.  What are these other stations that the 45‑to‑65‑plus demographic listens to?


7810     I may not be reading this properly.  Help me if I am not.

7811     MS McLAUGHLIN:  The two tables on page 10 refer to two different types of measures.

7812     One was "did you listen to it last week".  It doesn't speak to any time spent, which is of course crucial when determining if there is service in the market.  So the first is an indicator.

7813     As I mentioned in the text that accompanied it, it was a peculiar finding in that it was directly in opposition in some cases to what the BBM was reporting.

7814     If you go down to the next table, it sort of supported the fact that CHNL was the one that most time was spent listening to.

7815     When you start looking at these demographics, it splits out over a lot of stations as opposed to being a clear favourite.

7816     But it wasn't only these charts.  It wasn't this information that determined whether there was a hole in the market.  It actually goes back to an earlier page in the report that charts what the average hours per capita were in these demographics two years ago as opposed to what they are now.  And it shows a decline.


7817     Our contention is that in a radio market ‑‑ and I am not speaking about Kamloops specifically; I am speaking about the industry at large ‑‑ that is challenged by a lot of listening options, radio is under threat.  The most stable of the demographics tends to be the 35‑plus because they have grown up with radio.  It's a medium that they are familiar with.

7818     When we see declines in that area, it becomes more problematic.  It is not because they are actually choosing to get their information as much off the Internet as you would from a younger demographic.  That is our basis, not these charts per se, that there was a hole in the market.

7819     COMMISSIONER WYLIE:  And 39 per cent of the population is in that demographic in Kamloops, or 38‑point‑something?  Am I correct?

7820     MS McLAUGHLIN:  Something in that area.

7821     COMMISSIONER WYLIE:  Look at page 6 and the second table there.  Is the 12‑plus Kamloops spring 2004?

7822     MS McLAUGHLIN:  Yes.

7823     COMMISSIONER WYLIE:  And these are the demographics of the whole of Kamloops.


7824     MS McLAUGHLIN:  It's the full measured market, the 12‑plus.

7825     COMMISSIONER WYLIE:  So what am I supposed to read from that with regard to CHNL's 27 per cent share?

7826     MS McLAUGHLIN:  This is a 12‑plus number.

7827     COMMISSIONER WYLIE:  Yes.

7828     MS McLAUGHLIN:  The tag line ‑‑ and I am probably going to get this wrong for CHNL.  I just today received an information kit from them.  It is the first news.  I think it is very critical that you understand that that is an excellent brand to have in a small market like that.

7829     They do play music but their marketing piece is a news brand.  So I would expect that they would have a share just as you see, a share in other markets for a predominantly news service.

7830     COMMISSIONER WYLIE:  Suppose you were licensed and you started The Jewel, Mr. Evanov put The Jewel on air, what would prevent CHNL from putting more music on and increase its popularity with that demographic?


7831     MR. W. EVANOV:  I am not sure what they would program.  It would seem to me if it's an AM station, they would program very much oldies, rock and roll oldies, or very older type ‑‑

7832     COMMISSIONER WYLIE:  Unless they read your application.

7833     MR. W. EVANOV:  Unless they read the application or came down to the Newmarket area and tuned into Foxy.

7834     We think we have hit on a formula that is wonderful, that is very good.  It is a blending of new and the past, something elegant to it.

7835     They would probably do well with the format, but we don't think they are going to switch.

7836     COMMISSIONER WYLIE:  The reason for these questions obviously is, as Commissioner Langford was discussing with the previous applicant as well, is the relatively unappealing level of PBIT in this market and the fact that you are counting on serving an underserved demographic and also the fact that any of these three applicants, if licensed, would face a combo in the market from both of the incumbents with one station only.

7837     MR. W. EVANOV:  Yes.  That can be good and I will tell you why.

7838     Here is a problem with PBIT ‑‑ and I have been in the business for many years.


7839     If you have a market and you have two ownership groups in that market, after a period of time it becomes like two people in a sandbox.  Things are sort of sorted out, and everybody knows where their areas are, et cetera.  If you want to create dynamics and change the whole dynamics, then you put a third person in the sandbox and you are going to get a lot of activity.

7840     It's a true story.  We believe that the advertising pool ‑‑

7841     COMMISSIONER WYLIE:  Sand in your eyes.

‑‑‑ Laughter / Rires

7842     MR. W. EVANOV:  I know I'm sick but...

7843     We believe that if you license one station, the advertising pool will grow.  If you even license a second station, we still think the advertising pool will grow.  And the activity would make the radio station PBIT catch up to what retail sales are in that area.

7844     As Ky mentioned when she was giving her speech, I think it is 36 per cent of the Canadian average or something like that.  That's incredible.


7845     I am not knocking the broadcasters there.  I am sure they are doing a good job.  But sometimes you get into a situation in a market where there is only two, you need a third to get things motivated.

7846     MS LAURIGNANO:  With regard to the other issue of what could be a possible concern about any existing broadcaster flipping format and getting there before, unfortunately it is a standard fear in all applications that have come forward and in all licensing decisions.  Anybody can do it.  It is something that we have looked at and we are prepared to handle.

7847     We think we are the best applicant for this particular format.  In the case of NL, we think they are doing a phenomenal job with what they are doing right now and they have their area.  We are looking to attract those almost 40 per cent of our core demographic who are tuning out of market back to Kamloops.

7848     If we can force revenue into broadcasting, everybody will win.

7849     MR. W. EVANOV:  Could I just ask Ky to comment quickly.


7850     MS JOSEPH:  When you asked the question about basically can you make money in this market when you looked at the PBIT information that you have, when we looked at all the research, we believed that the only format that can make money in this market is one that targets the 45‑to‑64 demographic.

7851     A healthy retail market is a good indicator for us that radio sales exists.  Kamloops' index is 36 per cent, as I had mentioned earlier, above the national average for retail sales, and that makes for a very healthy retail market.

7852     Combine the fact that almost half the population are mature in age, and that 83 per cent of all of respondents in our survey said that they would definitely or probably listen to The Jewel is a good indicator.

7853     As well, in any small market, smaller markets tend to be more retail‑driven.  This is one of our company's biggest strengths.  When you look at our financials, you will see that 75 per cent of our revenues are generated from new business.

7854     COMMISSIONER WYLIE:  Ms McLaughlin, at page 6 I think of your market study, what does this mean at the bottom: target demographic efficiency?

7855     When I look at the success, for example, of CHNL in that demographic, what does "efficiency" mean here?


7856     MS McLAUGHLIN:  When our radio station designs a programming grid, they are doing it with a specific demographic in mind typically, whether it is female or male or it's a social economic statement.

7857     In this case I have simply taken the age groups and this is taken directly from BBM runs and it shows how a station indexes within a particular group vis‑à‑vis the distribution within the population.  So if a radio station was serving the entire market, what this would say right across the board, and they were doing it proportionate to the market, would be a hundred.

7858     Anything below a hundred is under‑serving; anything over a hundred is over‑serving.

7859     I have updated these charts.  Just by way of explaining what has happened here, in fact CHNL has become even more efficient in the older demographics since we applied, whereas two of the other stations have become more efficient in the younger demographics, which is expected after you file.

7860     COMMISSIONER WYLIE:  I was going to ask you whether I had understood what you are driving at if I said that CHNL was very efficient in reaching the older demographic.


7861     MS McLAUGHLIN:  Yes.  And that has to do with their brand of news as opposed to the music.

7862     To your point about could they shift, they could but they would harm what is arguably the most valuable brand to have for this demographic simply because news is so critically important.

7863     So yes, they could, but I don't know from a business perspective that it would make lot of sense.  I would leave them to answer, but this would be a desirable brand to keep.

7864     COMMISSIONER WYLIE:  In your supplementary brief, at page 7, you told us what the music mix would be like in the evening, in the programming after 9:00.

7865     What will be the mix during the day?  Will you also have programming blocks of this sort?

7866     MR. W. EVANOV:  No.  In day from 6:00A to 7:00P, 77 per cent of the music we air will be vocal selections and 23 per cent will be instrumental selections.  As well, blended in there will be our 40 per cent Canadian content.

7867     Then we get to the specialized programs after 7:00 p.m.

7868     COMMISSIONER WYLIE:  So during the day there will be no block comparable to after nine.


7869     MR. W. EVANOV:  There is no block.  It is a total blending of the music styles that that we propose.

7870     COMMISSIONER WYLIE:  To the extent that CHNL has music on, do they have blocks of music or is it interspersed with the spoken word?

7871     MR. W. EVANOV:  I think it is at random when there is time for it.

7872     To us, when we did listen to them ‑‑ and we have been in Kamloops many, many times ‑‑ they are basically a very good news‑talk‑sports program.  They carry live hockey games.  I have a listing of everything they carry here.

7873     They carry the play‑by‑play for the Kamloops Blazers, the Vancouver Canucks, the B.C. Lions; their sports talk Open Line show.  There is a number of talk programs.

7874     Our format is very different because we are on FM and it is very music‑intensive versus the spoken word content.

7875     COMMISSIONER WYLIE:  Yes.  Which leads me to ask you what is approximately the level of music?  Am I supposed to take your spoken word and deduct that from 126 and say once I have ascertained the spoken word, the rest is music?


7876     MR. W. EVANOV:  I will give you the exact answer, or Gary Gamble will.

7877     COMMISSIONER WYLIE:  Minus, of course, the ads, et cetera.

7878     MR. GAMBLE:  Yes.  Spoken word totals 13.2 per cent of the program schedule.  I will give you a rundown as to how we, being a music‑intensive station, do our newscasts and how we come to that.

7879     In the "Morning Drive", for example, we are running three‑minute newscasts at the top of the hour, a 90‑second update at the bottom ‑‑

7880     COMMISSIONER WYLIE:  Three minutes?

7881     MR. GAMBLE:  A three‑minute newscast.

7882     COMMISSIONER WYLIE:  If you want to speak about spoken word, that's fine.  I was looking at your supplementary brief, at page 8, where you talk about 90‑second update formats, 13 times a day, Monday to Friday, and expanded three‑minute features.

7883     Tell me what you arrive at and how from what you have told us on the supplementary brief at page 8.  It is difficult to make this calculation from the schedule.

7884     MR. GAMBLE:  I will break it down for you.


7885     We have a little over three hours of news, 189 minutes, or 74 newscasts per week.  How that is broken down is:  Morning Drive, we provide a three‑minute newscast at the top of the hour; a 90‑second update at the bottom of the hour, telling our listeners what we are working on for the top.

7886     Also a noon newscast.  This is Monday to Friday.  In the afternoons a three‑minute newscast at the top of the hour.

7887     We also run eight newscasts on the weekends on Saturdays and Sundays, four per day.

7888     Also, our news is broken down from 50 per cent local, 30 per cent national and 20 per cent international.

7889     Besides that, our daily features also include ski and golf reports as one of the major areas for golf is of course Kamloops.  We are running 19 one‑minute segments, whether that be seasonally, if it's ski or if it's golf.

7890     Community Calendar reports letting people know what is going on within the Kamloops area, if it's charity events or special events, events for the family, or whatever.  There are 21 of those spread throughout the week according to the program schedule.


7891     Business Reports are run Monday through Friday, one in the morning, one in the afternoon, specifically in the 9 o'clock and the 4 o'clock hours.  Those Business Reports are two minutes in length.

7892     Theatre and Arts Report, we will focus on entertainment, things that are happening in the Kamloops Theatre, the Western Canadian Theatre, or anything new that is coming to the area in that specific block.  There are 11 of those reports, one minute each.

7893     And a Book of the Week format that we run twice per week on the weekends that lets our listeners know what is new when it comes to authors, what the latest releases are, and a little bit about those authors also within that two‑minute feature.

7894     And of course there is our Healthwatch feature.  We found people in this specific demographic are extremely concerned about what is happening with health issues, how it affects their life, and anything new that might be emerging.  We felt that was important.  There are seven of those and they are 90 seconds.


7895     The total of that is 13.2 per cent of those features and news along with surveillance.  The news and news updates, surveillance, those features that I just talked about total 13.2 per cent of the week.

7896     COMMISSIONER WYLIE:  Now tell me how ‑‑ unless the Chairman can do it ‑‑ of 126 hours how much time is 13.2 per cent?

7897     MR. GAMBLE:  16.7 hours.

7898     COMMISSIONER WYLIE:  Good.  Of spoken word.

7899     MR. GAMBLE:  Yes.

7900     COMMISSIONER WYLIE:  All these are the programs described at page 9 of your supplementary brief, these lifestyle features.  What you have added here is when and the length of time that they will be.

7901     MS LAURIGNANO:  At pages 9 and 10.

7902     COMMISSIONER WYLIE:  They will be spread in the schedule; right?

7903     I find this difficult to read.

7904     Or will they be after the news, around the news, the features?

7905     MR. GAMBLE:  The features are spread throughout the day, not necessarily within the news.  The news package itself, a news, weather and sports package is simply that.


7906     These features, for example, the Business Report is a self‑contained report which will run in the 9 o'clock and 4 o'clock hour.  The Community Calendar reports once again are outside of that and would run, for example, at 7:45 in the morning and then again at 1:30 in the afternoon, seven days a week.

7907     COMMISSIONER WYLIE:  So someone who is looking for them would know when to tune in if it was helpful to them.

7908     MR. GAMBLE:  Yes.

7909     COMMISSIONER WYLIE:  I am impressed that you didn't seem to be reading all of that, so obviously you don't have the flu.  You seemed to be able to tell us without reading it off.

7910     Category 2 and Category 3 music, it's 90:10 per cent, and you have confirmed that.

7911     Will that be spread throughout the day?

7912     MS LAURIGNANO:  Yes, it will be.  It will be blended in all day parts as all the music genres that we have identified.  In addition to that, we will also dedicate a special program, the "Folk and Roots" program which airs on the weekends.  That will be exclusively a Category 3 program.

7913     But that does not account for the full 10 per cent.  It is a one‑hour block twice per week on the weekends.


7914     COMMISSIONER WYLIE:  Which one is that?

7915     MS LAURIGNANO:  The "Folk and Roots".

7916     COMMISSIONER WYLIE:  The "Folk and Roots"; okay.

7917     MS LAURIGNANO:  There is an exclusive program there, and then there is a blend of some Category 3, including "Folk and Roots", throughout the broadcast week.

7918     COMMISSIONER WYLIE:  "Canadian Spotlight" would be devoted to?

7919     MS LAURIGNANO:  "Canadian Spotlight" is a container, is a show that will feature artists on a weekly basis.  It could be one.  It could be two.

7920     COMMISSIONER WYLIE:  It's a showcase type of thing.

7921     MS LAURIGNANO:  Yes, it's a showcase.

7922     COMMISSIONER WYLIE:  So it will vary.

7923     MS LAURIGNANO:  That's right.

7924     COMMISSIONER WYLIE:  It could be someone who is Category 3.

7925     MS LAURIGNANO:  Right.  And there will be some information, perhaps information on tours, interviews, that kind of thing.

7926     COMMISSIONER WYLIE:  It's more intended to showcase.


7927     MS LAURIGNANO:  Exactly.

7928     COMMISSIONER WYLIE:  You say at page 10 of your supplementary brief that this will be a format which is close to Foxy in Newmarket.

7929     Will there be some sharing of programming between the two stations?

7930     MR. W. EVANOV:  No, there won't be.  There may be in terms of some content.  In other words, if there is a good book, in the book reports we may share information; or on the health issues we will definitely share information.  But each station will program and produce their own programs.

7931     COMMISSIONER WYLIE:  Are you convinced, seeing your state of discomfort, that the diseases on the west coast are the same as in Newmarket?

7932     MR. W. EVANOV:  It is restricted to the west coast right now.

7933     MS LAURIGNANO:  Don't let him fool you.  He is playing the sympathy card.

7934     COMMISSIONER WYLIE:  Mrs. Laurignano is going to settle him down.


7935     Other than the health issues and so on, to what extent have you researched to date what is more likely to be appealing to Kamloops citizens as opposed to Newmarket citizens, especially with regard to the lifestyle features, which is a lot of your spoken word programming?

7936     MR. W. EVANOV:  Well, Newmarket is one area.  There is a greater emphasis on skiing in this particular area.  In Kamloops ‑‑ and we know it fairly well because we have friends here; we have been to Kamloops dozens of times.  So we know the market to a large extent.

7937     Services we would provide that are unique to Kamloops.

7938     I guess in terms of music, once you go on the air then you get the feedback from the audience.  When we launched Foxy, we had no crooners program; we had no instrumental program.  We just played the odd instrumental, whether it was Henry Mancini, or this or that, but suddenly we started getting phone calls and people starting asking for this type of music.  We put more on the air and then we expanded the numbers of hours we were doing it.

7939     Then we met the various different instrumental performers who would come to the door, who would phone us up.


7940     So I think once you go on the air in a market, you will get instant feedback from the people you are trying to serve and what their preferences are or how you will weigh things.

7941     MS LAURIGNANO:  I was just going to say that generally speaking what we found too is that it is a different community in terms of activities and how they spend their free time.  There is more likelihood that they will be outdoors doing things like hiking, fishing, golf and ski, as Bill said.

7942     We found that there is a bit more of an active lifestyle over there.  It is not to say anything against Foxy, but it seems to be a more vigorous, active type of community.

7943     Also, it is very different in terms of local in that of course it lives around certain other areas but it is not part of a big metropolis in a CMA.  So there are things that will have to be extremely different in terms of really localizing it, both in terms of its geography and its distance to the large cities.

7944     For example, travel, we found that most people would travel down the coast and head to perhaps California versus Florida from Newmarket, that kind of thing.

7945     COMMISSIONER WYLIE:  All this spoken word programming will be produced locally.


7946     MR. W. EVANOV:  It will be produced locally by local staff.  All our staff will be local.  They will be people from the area.  And the spoken word will definitely reflect Kamloops.

7947     COMMISSIONER WYLIE:  The interests of Kamloops.

7948     MR. W. EVANOV:  Yes.

7949     COMMISSIONER WYLIE:  What are your means of getting feedback once you go on the air?  Hopefully you have guessed it right to begin with, what are your means of getting feedback?

7950     MR. W. EVANOV:  To begin with, we have already formed an advisory board or an advisory committee, consisting of six so far Kamloops residents.  We have already had our first meeting with them back in January, during a major snowstorm in the city there.  They had more snow in those three days than they did all last winter.

7951     That is one sense of feedback, and we are going to enlarge that committee and we are going to meet with them regularly.

7952     They have a lot of input and we are going to share ideas and thoughts.


7953     MS LAURIGNANO:  Besides that, we intend to hire staff, sufficient staff to help us gather, not only gather but establish the contacts that we will have the information flowing to the station as well as us going out.

7954     The other thing is we found that our success in the past has always been that of marketing from the street up and just being there.  It is a pretty small town in comparison to CMA.  They will know where we are and how to get hold of us, including access through the Internet, telephone lines, faxes and that sort of thing.

7955     COMMISSIONER WYLIE:  After today's sunny weather, Ms Laurignano, are you planning to come and spend some months here and test it out?

7956     MS LAURIGNANO:  I intend to go between Halifax, Ottawa and Kamloops.

7957     COMMISSIONER WYLIE:  Yes, I have noticed you are turning into a coast‑to‑coast lady.

7958     MS LAURIGNANO:  They call me the "A&P lady" now; Atlantic and Pacific.

7959     COMMISSIONER WYLIE:  As long as you don't ask us to turn Lake Ontario around, which I think you did a few years ago, to my dismay, so that your signal would reach better.


7960     In your supplementary brief, at page 10, you said that you would commit to a Canadian content level of 40 per cent, which is 5 per cent more than the regulation.

7961     You would be prepared to accept this as a condition of licence?

7962     MS LAURIGNANO:  Yes, we would.

7963     COMMISSIONER WYLIE:  What is your success with the 45‑plus demographic in Newmarket?

7964     MR. W. EVANOV:  The problem is the measurement.  Newmarket is measured as part of the Toronto CMA in BBM, but yet the Newmarket signal only covers 16 per cent of the Toronto CMA.

7965     COMMISSIONER WYLIE:  That's where the lake comes in.

7966     MR. W. EVANOV:  No, the lake is even farther.

7967     MS LAURIGNANO:  And that was CIDC.

7968     COMMISSIONER WYLIE:  That was Orangeville.

7969     MR. W. EVANOV:  But whatever numbers you get in BBM, you then have to project and extrapolate over the total population of the Toronto CMA.


7970     So I have, overall, a 1.5 share in the Toronto CMA.  I don't even reach 80 per cent of it.  Therefore, the numbers I am attaining in my own area where the signal is are very good.  But it puts a station like ours at a disadvantage.  Remember this is a radio station that lost money for 12‑15 years, when through a dozen ownerships, or half a dozen.

7971     COMMISSIONER WYLIE:  I knew your cold would get better if you started talking about that.

‑‑‑ Laughter / Rires

7972     MR. W. EVANOV:  You hit the right button.

7973     COMMISSIONER WYLIE:  But you do get feedback.  You have some sense of how well you are doing.

7974     MR. W. EVANOV:  We get feedback.  I am going to ask Gary Gamble to make one comment.

7975     There are two things that people say to me and to my announcers when they see us at remotes, at promotions, at charity events, or whatever.  They come up and they say, number one: "I love the music you play.  Don't change the format."  And number two:  "When are you going to get a better signal?"

7976     Gary, could you please comment on your experience as a broadcaster in terms of really a type of passionate response.


7977     MR. GAMBLE:  I have worked, done morning shows or whatever for five or six different formats now, and the latest of course being this format we have at 88.5 in Newmarket.  Never before have I seen people get so passionate.

7978     If we are presenting a concert or we are doing a live remote broadcast, people come out just to say:  "I just wanted to meet you guys and thank you for putting this music on the air.  We don't get to hear it anywhere else.  And we've got you on all the time.  It's not that we go back and forth.  We have you on in the morning and you are on at night when we go to bed."

7979     And these people would just come out, not to win something but just to say:  "I really want to thank you for putting this format on.  I've never see on any other type of format."

7980     MS LAURIGNANO:  The other thing that we do in terms of financial success is we don't rely on or we couldn't live on the share that we had at the beginning with this radio station.  If we just sat back and waited for national buys to come in or went to some advertiser who had a budget committed somewhere else and they are covering Newmarket anyway through their CMA, they would just slam the door in our face.


7981     What we do is we knock on doors.  We identify who the supporters are.  Often it is the advertisers who like the station themselves and say put it on.  And from there you build relationships.  It is a growing process.

7982     Again, it is from the street up and it is going door to door and making it happen.

7983     COMMISSIONER WYLIE:  In your application at 7.3 you talk about cultural diversity and your intention to focus on it and to focus on issues that are important to the Kamloops multiracial multi‑ethnic communities.  You obviously operate at CHOW so you have some experience.

7984     How will you go about assessing the extent to which that type of coverage here is different from Newmarket?

7985     MS LAURIGNANO:  There are some basic guidelines and indicators, such as Statistics Canada.  We know, for example, that the largest mother tongue in ethnic groups tend to be German.  There is some Dutch.  Whereas say in Toronto there might be Chinese, East Indian type of population.

7986     We are sensitive as to the ethnic composition there what the mother tongue is.

7987     Members of our advisory committee will be representative of the community and the designated groups.


7988     We have also identified a number of organizations and individuals, community leaders, in the market that we intend to work with and get feedback from them, advice, consultation, as well as our hiring process; that the staff itself will be reflective of the community by encouraging the applications of the designated groups.

7989     COMMISSIONER WYLIE:  I have a few questions on your CTD although you have given us more information today.

7990     So it will be $150,000 over the period.

7991     MS LAURIGNANO:  Yes.

7992     COMMISSIONER WYLIE:  Basically there are some details in today's presentation and the rest is at pages 17 and 18 of your supplementary brief.

7993     MS LAURIGNANO:  Right.

7994     COMMISSIONER WYLIE:  I have just a few details.

7995     The Jewel Concerts, you have devoted $136,000 to it over seven years.

7996     MS LAURIGNANO:  Yes.

7997     COMMISSIONER WYLIE:  That will be an annual showcase for established and developing artists.


7998     Can you tell us more about this initiative and how you will spend this $136,000.

7999     If I recall, you have given a breakdown of what percentage of that money will go where.

8000     MS LAURIGNANO:  Yes.  Of that, approximately 80 per cent will be directed to the artists themselves for appearance fees.  And 10 per cent we expect for the venue, for the engagement of the venue, and 10 per cent to the staging and the lighting of the concert.

8001     There will be other costs we anticipate, but we intend to offset those through exchange of promotion and strategic partners, which we do on a regular basis with other such initiatives in other markets.

8002     COMMISSIONER WYLIE:  These percentages will be the same over the period: 80‑10‑10.

8003     MS LAURIGNANO:  We hope to make the 80 higher.  If we can engage a venue and we can engage staging and lighting on a trade basis, then 100 per cent would be devoted.


8004     That is something that we have done very successfully with our other things.  If you look at our returns, for example, for last year for some of the stations, we doubled our commitment through such ways.

8005     COMMISSIONER WYLIE:  The other initiative is the Catalogue of Canadian Instrumental Music for which you have given us some more information.

8006     In the response to deficiency questions, at Question 3, you have said that it was based on whether you received the licence in Ottawa.

8007     MS LAURIGNANO:  Right.

8008     COMMISSIONER WYLIE:  So is developing this conditional on you having a licence in Ottawa as well?

8009     MS LAURIGNANO:  Yes, it is, for the simple reason that it is a very ambitious project.  It requires an investment of about $1 million to start it, to run it, to make sure it is in peak shape for at least seven years and then beyond.  So it would be foolish of us to think we could do that with this sort of commitment.

8010     COMMISSIONER WYLIE:  Where is the million dollars going to come from?

8011     MS LAURIGNANO:  That would be from the Ottawa commitment.

8012     COMMISSIONER WYLIE:  I see.  I have a better idea now of you would go about this.


8013     My understanding is if you didn't get Ottawa, this money would go to the Canadian Ethnic Recording.

8014     MS LAURIGNANO:  Yes, it would.  The reason for that, as you know, we are very happy with the progress of that and it would help with the diversity across the country.  It is not just something for ethnic broadcasters; it is something for everybody.

8015     COMMISSIONER WYLIE:  How successful is the other one, the Ethnic Recording?

8016     MS LAURIGNANO:  It is very successful.  We have identified to date over 4,000 titles, artists, record labels.  It is a work in progress.  We are extremely happy.

8017     As some of you know, it was an initiative of the Ontario arm of the CAB and after that it has been adopted by a number of new licensees, including the Ottawa one, the ethnic one, including the one that was licensed subsequent to that in Vancouver.

8018     I note as well that all the applicants for the Vancouver ethnic, with the exception of one, all committed at least a minimum commitment, if not more.

8019     COMMISSIONER WYLIE:  And this is useful, as far as you know.


8020     MS LAURIGNANO:  Yes.  And I might as well add that there was a minimum commitment for three years for the founding members, but we have all chosen to voluntarily contribute to it above and beyond that.  So we are doing that.

8021     COMMISSIONER WYLIE:  If I look at your financial projections, we see that you would spend $21,400 from year one to year six and then, to round it off, $21,600 in year seven.

8022     Would you accept a condition of licence that there be this minimum amount per year rather than a ballooning ‑‑

8023     MS LAURIGNANO:  I'm sorry?

8024     COMMISSIONER WYLIE:  I think your financial projections show that your Canadian Talent Development will be at least spread $21,400 in year six and then $21,600 in year seven.

8025     MS LAURIGNANO:  Yes.

8026     COMMISSIONER WYLIE:  Would you be prepared to accept that this is something you would be bound by to avoid a ballooning?

8027     MS LAURIGNANO:  Absolutely.  We can accept that.  We do accept that.


8028     COMMISSIONER WYLIE:  And you would accept a condition of licence or requirement that there be a minimum of this amount spent per year.

8029     MS LAURIGNANO:  Yes.

8030     COMMISSIONER WYLIE:  Let's look at your projected shares.

8031     In your underlying assumptions for the preparation of your projections you have 16.3 per cent in year five, and I gather then your projected revenues have been built according to these shares, your projected revenue.

8032     MS JOSEPH:  Yes, they have.

8033     COMMISSIONER WYLIE:  Is that the same 16.3 per cent that is in year three in the study, Ms McLaughlin, at page 4?

8034     MS McLAUGHLIN:  Yes, it is.

8035     COMMISSIONER WYLIE:  Why did Strategic Inc. say you would reach that in year three and you have it in year five instead?

8036     Presumably year five is the applicant's choice.  Correct?

8037     MS McLAUGHLIN:  It is the applicant's choice in consultation with Strategic Inc.


8038     As you noted yourself, CHNL has a very strong brand image.  It is reflected in their share and it is reflected in their reach, and particularly reflected in their last week tuning.  That is where these charts make an impact.

8039     The 8.2, for example, in year one is 50 per cent of the projected maximum reach.  This is a group that has some fairly established tuning habits and it is going to take a while to pull them over.  No matter how you market, they are established and it will take a while to change their listening patterns.

8040     So unlike a youth format where you would have 60 or 70 per cent of the achievable reach based on what you have in the survey happening within two years, this is a lower rate.

8041     Why this application differs in terms of how they put it together because there has been, as this has evolved ‑‑ post supplying this study to the applicant there were discussions about what the brand meant, and it was their decision that it would take a little bit longer, given that they were not going to be news intensive and they could not hope to replace CHNL's role in the listener's life.

8042     COMMISSIONER WYLIE:  So the shares on the financial assumptions is what was used to project the revenue.  Right?

8043     MS JOSEPH:  That is only one of the ways that we would project revenue.


8044     COMMISSIONER WYLIE:  To the extent that the expected share was used, it was the year five instead.

8045     MS JOSEPH:  That's correct.

8046     COMMISSIONER WYLIE:  Let's have a look at your revenues.

8047     In your assumptions on page 8 you have your 60‑second rate, which is lower than the other applicants, which I am sure you have noticed.  You probably looked at the other applications.

8048     Why the lower rates?

8049     MS JOSEPH:  When we determine what our spot rate is going to be, we look at all of the retail rate cards of the other stations in the market.  Realistically, what we do is we look at the lower end of their grid and then the higher end of their grid.

8050     What we also do is we are clients and we call the radio stations and we say:  We are interested in advertising and could you send us some packages.

8051     You will notice, as with a lot of radio stations, that perhaps if a published would be $60, at the end of the day when you divide your spots out it works out to be $20.

8052     So a published rate and an actual rate are two different things.


8053     We felt $22 was within the market norm for a new radio station.  Yes, it is a little bit low as an initial start‑up, but we are going to be selling with absolutely no ratings.  We are going in specifically with projections, like any new radio station would.

8054     Not only that but when we were out talking to the advertisers who do not currently use radio, they felt that $22 would be a realistic entry level rate for them to try radio and feel comfortable with this marketing medium.

8055     COMMISSIONER WYLIE:  On the same page of your financial assumption, you have your expected revenue sources and only 25 per cent from local radio stations.  The impact will be only 25 per cent.

8056     What stations in particular do you expect it from?

8057     MS JOSEPH:  The quick answer is CHNL and CKBZ will have impact, and CHNL will have the most impact.  It is also important to note that the best way to identify impact is to find out who your listeners are going to be and then ask them who they currently listen to.


8058     The interesting thing is the fact that 39 per cent of all respondents in our survey indicated that they listed to "Other" as a category, and that would include Internet or spill market radio stations.

8059     Equally interesting is the fact that only 26 per cent of the core demographic, being 45‑to‑64, reported even listening to a Kamloops station frequently.

8060     Yes, listeners of CHNL said that they would listen to The Jewel, and out of that I think it was 29 per cent, it is unrealistic for us to believe or for them to believe that just because they said that they would definitely or probably listen that they are going to automatically abandon CHNL.

8061     There will be some sharing of reach, yes.  We estimate it will be 10 per cent, so it is minimal: $163,000 to be exact.

8062     MS LAURIGNANO:  If I might just add, the other 75 per cent is going to come from other sources other than local radio stations.

8063     One of the big benefits of us going into the market is that we are going to bring new advertisers.  So while CHNL may feel a bit of an impact at the beginning, we can expect that they are going to knock on the doors of some of the advertisers that we will bring to radio who are going to be new to radio.


8064     It is our intention to increase the PBIT so the pie is going to get a little bigger if we get the licence.

8065     COMMISSIONER WYLIE:  One last question, as a follow‑up on Commissioner Langford's question about the ability of this market to absorb a new station, or more.  There are three frequencies involved here.  So two formats I guess are head‑on competitive.  Yours is not.

8066     What is your view about the Commission licensing one and I suppose ‑‑ and I don't want Mr. Evanov to faint ‑‑ more.  In other words, in your view, are those three applications mutually exclusive despite the fact that they are not on a frequency basis?

8067     MR. W. EVANOV:  If you decide to license one station, we think it should be a format that has not been in the market before; that we have shown through our research there is a demand for in the market.  And that would be our format.


8068     If you decide to also license another station, a country station, we would expect that there would be impact.  It is not going to put us out of business, and we don't believe it is going to put any of the existing broadcasters out of business.  It might take us a little bit longer to get to where we are going, but I think we have the financial resources to stay the course.  I think Standard must have the same and NL, because they are there, must have the same to stay the course.

8069     Those who would benefit the most would be the listeners of Kamloops.  They would end up with two formats in addition to what is in the market now.

8070     COMMISSIONER WYLIE:  So you are positive enough that even that would not dissuade you?

8071     MR. W. EVANOV:  No.  We would have to work harder.  We would have to be a little more creative.  But we have done this before.

8072     COMMISSIONER WYLIE:  And this is despite, as Commissioner Langford pointed out, the relatively PBIT average compared to the average PBIT for Canada in this market.

8073     MR. W. EVANOV:  I think if you put a third person into the sand box, the dynamics change drastically.  I have seen it happen before.

8074     COMMISSIONER WYLIE:  When I did that with my children, all I had was trouble.

‑‑‑ Laughter / Rires


8075     MR. W. EVANOV:  There can be a complacency with only two there and they are there for years and years and years.  Maybe the listener will benefit more by maybe more, that's all, and maybe more activity.

8076     COMMISSIONER WYLIE:  One last question.  A lot is made of the fact that the retail numbers here are higher.  Is that only in the last year or has that been a phenomenon over time?

8077     MS JOSEPH:  You are talking about the retail numbers in the market?

8078     COMMISSIONER WYLIE:  Yes, the retail power of the market that we often use to try to project how much advertising there would be.

8079     MS JOSEPH:  As the Commission knows, advertising revenues for Kamloops are not published. What we are also aware of is that radio sales are not contained in a vacuum.

8080     What I mean by that is advertising sales are directly related to a healthy retail market.  That would be Kamloops.


8081     We looked at other markets with published ad sales, and we took into account retail sales in those markets and reviewed those.  We took several samples of markets in western Canada, as well as markets in B.C.  And finally, to be on the conservative side, we chose a western market with the lowest ad sales versus retail sales as a ratio.  We applied that as an indicator.  We used actually Kelowna.

8082     We established revenues to be roughly at around $8 million in our first year of start‑up.

8083     COMMISSIONER WYLIE:  My question was more:  Is this a phenomenon that is recent or did you test that out for a few of the past years?

8084     The reason I am asking is I had lunch with my colleague Commissioner Williams, who raised an interesting question: that with the unfortunate disasters in this area with the recent fires, there could have been more retail activity to replace lost goods, et cetera.

8085     Do you have it for years back, the fact that it is higher; just that Kamloops people shop more?

8086     MS LAURIGNANO:  First of all, I hope you paid for lunch.  It was his birthday.

8087     I believe Debra has ‑‑

8088     COMMISSIONER WYLIE:  He didn't tell me until after he paid the bill.

8089     MS LAURIGNANO:  I think you have to buy him dinner now.


8090     MS McLAUGHLIN:  Actually, Commissioner Wylie, there is a relationship here because, as we mentioned in the presentation, this is an older market.  If you look at the average incomes, they are somewhat lower than the national average.  So it sort of begs the question:  How do the retail sales get that high?

8091     It is a phenomenon you tend to find in communities where there is an aging population, because in fact they don't have the expenses.  So while their income isn't as high, they can spend more on durable goods and other like products.

8092     It isn't something that has happened this year.  It is something that has been trending.  And with the forecast for this market in terms of the aging population, we expect it to hold.

8093     COMMISSIONER WYLIE:  Thank you, ladies and gentlemen.

8094     Mr. Evanov, if I have your cold, you're in trouble.

--- Laughter / Rires

8095     MR. W. EVANOV:  I would like to thank you for your time.

8096     I'm sorry, are there more questions?

8097     THE CHAIRPERSON:  Counsel.


8098     Me STEWART:  Merci, monsieur le Président.

8099     I have just a very quick question. Will you accept as a COL your commitment to play a minimum of 35 per cent instrumental music?

8100     MR. W. EVANOV:  Yes, we would.

8101     MR. STEWART:  Thank you.

8102     Thank you, Mr. Chairman.

8103     THE CHAIRPERSON:  Thank you very much, ladies and gentlemen.

8104     MR. W. EVANOV:  Mr. Chairman, before we go, I just have a last comment.

8105     THE CHAIRPERSON:  Go ahead.

8106     MR. W. EVANOV:  We are a company that will persevere and overcome any obstacle to come to a hearing.  I want to mention that, aside from three of us having terrible colds, Ky became a mother in January and the baby is at our meetings at the hotel room.  In four months our music director, Natasha, will be a mother.

8107     So really we don't stop at any event, and neither do you by the length of your hearings.

8108     MS LAURIGNANO:  We are going to populate Kamloops ourselves.

8109     MR. W. EVANOV:  Thank you very much.


8110     THE CHAIRPERSON:  In our budget for next year at the Commission, there is a little child care corner at the hearing room.

8111     MR. W. EVANOV:  And a sand box.

8112     THE CHAIRPERSON:  And a sandbox, right.

‑‑‑ Laughter / Rires

8113     THE CHAIRPERSON:  Thank you very much.  That concludes today's proceeding.  We will resume at 8:30 tomorrow morning with the NL application.

‑‑‑ Whereupon the hearing adjourned at 1825, to resume

    on Friday, March 4, 2005 at 0830 / L'audience

    est ajournée à 1825, pour reprendre le vendredi

    4 mars 2005 à 0830

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