ARCHIVÉ -  Transcription

 

 

 

 

 

 

              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:

 

Best Western Charlottetown            Best Western Charlottetown

238 Grafton Street                    238, rue Grafton

Charlottetown, PEI                    Charlottetown (Î.-P.-É.)

 

 

October 3, 2005                       Le 3 octobre 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:

 

Stuart Langford                   Chairperson / Président

Andrée Noël                       Commissioner / Conseillère

Elizabeth Duncan                  Commissioner / Conseillère

Rita Cugini                       Commissioner / Conseillère

Barbara Cram                      Commissioner / Conseillère

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet                    Secretary / Secrétaire

 

Anne-Marie Murphy                 Legal Counsel /

                                  Conseiller juridique

 

Joe Aguiar                        Hearing Manager /

                                  Gérant de l'audience

 

 

 

 

 

 

 

HELD AT:                          TENUE À:

 

Best Western Charlottetown        Best Western Charlottetown

238 Grafton Street                238, rue Grafton

Charlottetown, PEI                Charlottetown (Î.-P.-É.)

 

 

October 3, 2005                   Le 3 octobre 2005

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

PHASE I

 

 

PRÉSENTATION PAR / PRESENTATION BY:

 

Newcap Inc.                                         8 /   47

 

Martime Broadcasting System Limited               133 /  879

 

Coast Broadcasting Limited                        212 / 1470

 

 

 

PHASE II

 

 

INTERVENTION BY / INTERVENTION PAR:

 

Martime Broadcasting System Limited               278 / 1842

 

 

 

        Charlottetown, PEI / Charlottetown (Î.‑P.‑É.)

‑‑‑ Upon commencing on Monday, October 3, 2005

    at 0930 / L'audience débute le lundi

    3 octobre 2005 à 0930

1                THE CHAIRPERSON:  Okay.  Are we ready, Madame la secretaire?

2                Good morning, ladies and gentlemen.  Welcome to this public hearing.  Bonjour, mesdames et messieurs.  Bienvenue a cette audience publique.  C'est une grande plaisir pour moi et mes collègues d'être ici à Charlottetown.

3                My name is Stuart Langford ‑‑ I have to check that on the script to make sure I have that right ‑‑ and I am a National Commissioner of the CRTC and I will be chairing this hearing.

4                I am joined on this Panel by my colleague Elizabeth Duncan, beside me on my right ‑‑ no, my left.  My right, your left.  Your left, my right.  I can't wait to see this transcript.  Stage left, audience right.  In the pink beside me is Elizabeth Duncan, Regional Commissioner for the Atlantic provinces.

5                Beside her, her colleague and mine, Andrée Noël, Regional Commissioner for Québec.

6                On my other side, Rita Cugini, Regional Commissioner for Ontario.

7                Beside Rita, Barb Cram, who is the Regional Commissioner for Saskatchewan and Manitoba.

8                I am going to introduce some of the Commission team to you, because you will be working with them very closely.

9                Our Hearing Manager is Joe Aguiar, who you will see here in the front row in the grey suit.

10               Beside him is our Hearing Secretary, Chantal Boulet.  You can speak with Ms Boulet if you have any questions or if you are wondering maybe when you should bring your intervenors or if we are going to finish a certain phase today.  Chantal knows all those answers.

11               Beside Joe is Anne‑Marie Murphy, our Legal Counsel.

12               Beside Anne‑Marie we have Donna Shewfelt who is with our Maritime Office and is fairly cognizant with the way things work in this part of the world and can help you with some of these questions as well.

13               In the second row we have Steve Harroun and Carole Douglas who are file analysts on this hearing and are very cognizant of the different aspects of the file.

14               Somewhere at the back of the room ‑‑there he is at the door ‑‑ is Claude Perrier who is here to offer technical support.  He can help you with that sort of thing.

15               In our examination room, our file room, a young woman by the name Jade Roy who will help you with anything you need to see in the way of information that has been filed either on your file or someone else's.

16               This hearing will deal with radio applications.  We are going to have four applications to operate new English‑language FM radio stations in the Charlottetown market.  To of those will be to convert existing AM radio stations CFCY and CHTN to the FM band.

17               When we finish that, which I suspect we may finish today with any luck, we will see, we will move on to four other applications to operate an FM radio station in New Glasgow, Nova Scotia.  Included there is one application to convert and existing radio station CKEC to the FM band.

18               For the Charlottetown market, we will first hear two applications presented by Newcap Inc., the group that we have at the presenter's table.  Then we will review the applications from Maritime Broadcasting Systems and Coast Broadcasting Ltd., the two of which are competing for the use of the 95.1 MHz frequency.

19               For the New Glasgow market, we will begin with the application from Astral Media Radio Atlantic Inc., followed by those of Atlantic Broadcasters Ltd. and Acadia Broadcasting Ltd., and finishing up with the application from Hector Broadcasting Company Ltd.  That is the station that wants to flip their frequency to the FM band.

20               All of those four applications are competing for the same 94.1 MHz frequency, so obviously they can't all be successful.  Christmas will not come to all of those applicants this week.

21               This Panel will study the proposals to operate a new FM station in light of the cultural, economic and social objectives defined in the Broadcasting Act and the regulations flowing from it.

22               criteria, including the level of competition and the diversity of voices in the market, as well as the quality or the applications.

23               It will also look at the capacity of the market to support new radio stations, the financial resources of each applicant, and proposed initiatives for the development of Canadian talent.  We expect the hearing to take three days.  We may surprise ourselves.  "Productivity", I read in the Globe and Mail, is the new watchword.

24               We will begin each morning at 9:30, although depending on how today goes I may change that to 9 o'clock just to see how things fit.  I hope to wind up each afternoon no later than 6:00.  I think productivity definitely begins to dwindle after that point.  So we will let you know of any schedule changes that could occur.

25               While you are in the hearing room, the old plea, please turn off your cell phones, your beepers ‑‑ not your pacemakers, leave those on ‑‑ because these phones and the beepers are an unwelcome distraction.  I don't know whether the Blackberries beep or not, but maybe you can put them on that vibrating mode or whatever.  We thank you for your cooperation.

26               I am now going to ask our Hearing Secretary, Chantal Boulet, to explain the processes we will be following and then we will get on with the first applicant.

27               Chantal...?

28               THE SECRETARY:  Thank you, Mr. Chairman.

29               Before we begin, as usual I would just like to go over a few housekeeping matters.

30               The Commission's examination room is located in the Cavendish‑Bradley Room, which is down the hall from the hearing room.  You can examine the applications being studied at this hearing in the examination room.

31               There is a telephone number to reach the room, which is (902)566‑8664, which is also indicated in the agenda.

32               Second, there is a verbatim transcript of this hearing being taken by the court reporter at the table behind me.  If you have any questions on how to obtain a copy of part of the transcript or a full transcript, please approach the court reporter during the break for information.

33               As you mentioned, Mr.  Chairman, we will now proceed with the applications for the Charlottetown market, followed by the applications for the New Glasgow market.

34               Given that all applications in each market are competing, we will proceed as follows:

35               First, we will hear each applicant in the Agenda order.  Each applicant will be granted 20 minutes to make their presentation.  Questions from the Commission will follow each presentation.

36               In Phase II, the applicants reappear in the same order to intervene on the competing applications if they wish.  Ten minutes are allowed for this purpose and questions from the Commission may follow each intervention.

37               In Phase III, the parties will appear in the order set out in the agenda to present their appearing intervention.  Again, questions from the Commission may follow.

38               Finally, in Phase IV, it provides an opportunity for each applicant to reply to all the interventions submitted on their application.  Applicants appear in reverse order and 10 minutes are allowed for this reply and again questions may follow.

39               Now, Mr. Chairman, we will proceed with items 1 and 2 on the agenda, which are two applications by Newcap Inc.

40               The first application is for a licence to operate an English‑language commercial FM radio programming undertaking in Charlottetown.

41               The new station would operate on frequency 89.9 MHz, Channel 210 C1) with an effective radiated power of 100,000 watts.

42               The second application is to convert radio station CHTN Charlottetown from the AM band to the FM band.

43               The new station would operate on frequency 100.3 MHz, Channel 262 C1) with an average effective radiated power of 33,000 watts.

44               Appearing for the applicant is Mr. Rob Steele.  Mr.  Steele will introduce his colleagues.

45               As agreed, you will have 30 minutes to make your presentation on both applications.

46               Mr.  Steele...?

PRESENTATION / PRÉSENTATION

47               MR STEELE:  Thank you very much.

48               Good morning, Mr. Chair, Members of the Commission and Commission staff, I am Rob Steele, President and Chief Executive Officer of Newcap Radio.

49               Before we begin our presentation, I would like to introduce our team.  Seated in the front row, to my left, is Jennifer Evans, the General Manager of CHTN‑AM here in Charlottetown.  While Jennifer is a newcomer to Newcap, joining us in May of this year, she has many years of experience in PEI radio.

50               Next to Jennifer is Mark Maheu, Executive Vice President and Chief Operating Officer of Newcap Radio.

51               To Mark's left is Gerard Murphy, CHTN's Program Director, who has 20 years of broadcasting experience in Prince Edward Island.

52               In the second row, directly behind me is Dave Murray, Vice‑President of Operations for Newcap Radio.

53               Next to David is Scott Chapman, CHTN's News Director.  Scott brings 15 years of news experience here in Charlottetown to CHTN.

54               We appear before you today with two proposals which, taken together, will ensure that Charlottetown and, in fact, PEI, benefits from two strong competitors, three strong news voices and two dynamic new music choices.  We believe that the approval of both our applications will enhance radio service to Charlottetown through an increase in local and provincial news coverage and music choices.  This is an important market for Newcap Radio.  It is where our involvement in radio all began in 1986 when we purchased CHTN‑AM from Northumberland Broadcasting.

55               CHTN began broadcasting on Christmas day of 1974.  The radio station has a rich history in Charlottetown and over the years it has become a treasured listening choice for many Islanders through its music and its connection to the community at large.

56               When we purchased the station, it had not been profitable for some time.  In spite of our best efforts, the station continued to be unprofitable until it entered into a Local Management Agreement with Maritime Broadcasting in the mid‑1990's.  This LMA provided the usual economies of scale and a combined sales offering to compete more effectively with newspaper and television.  The result was increased revenue, lower costs and the first profits in the station's history.

57               The days of LMAs are now over and CHTN has moved on to better compete with radio, TV and newspaper here in Charlottetown.  We are asking for the opportunity to compete in a fair and equitable manner, while providing new service to the city and province.

58               Since May of this year, Newcap has made extensive investments in the operation of CHIN.  These improvements include significant capital expenditures on state‑of‑the‑art facilities, the hiring of top‑flight staff, increased promotional spending and a renewed emphasis on local service to the community.

59               Our General Manager, Jennifer Evans, is here to tell you more.

60               MS EVANS:  Good morning.  Since mid‑May it has been a busy and exciting time for 720 CHTN.  First of all, we moved into the most technologically advanced building in Atlantic Canada, the Atlantic Technology Centre here in downtown Charlottetown.

61               This location allows us to have a storefront studio, providing Island listeners with access to a medium that has always operated behind closed doors.  Broadcasting from the ATC has also allowed us to become the first and the only radio station in PEI to broadcast on‑line.

62               Before our move, we were extremely busy hiring the new team needed to operate truly on our own.  Under the LMA, CHTN did not have its own sales team, traffic division or office administration.  Over the past number of months, we have hired many new staff members in sales, administration and community service.

63               We knew that in order to compete with the power of MBS radio offerings in this market, we had to develop a new and distinct personality.  The key to developing a strong sales presence in an unrated market is to be an integral part of the community.

64               We have marketed 720 CHTN as  "Your Community Radio Station".  This has meant a very active summer for the entire 720 CHTN team.  Some of the events that we have been part of over the last four months include:  Rendez Vous Rustico, where CHTN was the exclusive radio sponsor of this celebration of Acadian culture on PEI, providing on‑location reports and MCs for some of their concerts.

65               Our Community Cruiser has been attending community events and festivals since mid‑June and is available 12 months of the year to community organizers.

66               Since June we have covered events all over Prince Edward Island from the Irish Moss Festival in Tignish to the Souris Regatta in eastern PEI.

67               The entire CHTN team is very proud of our most recent fundraiser for the local food bank.  The food bank issued a news release stating they were in a crisis situation with near empty shelves.  Our morning show team of Kirk MacKinnon and Kerri‑Wynne MacLeod came to me and said, "We need to do something to help."  So they volunteered to lock themselves in our new storefront studio until the studio was filled with donations for the food bank.  CHTN listeners and Islanders province‑wide responded quickly and we were able to fill seven trucks with food donations, as well as raising over $3,500 in cash in just 27 hours.

68               CHTN has also been supportive of the local business community.  We are particularly proud of our partnership with the PEI Business Women's Association by supporting the annual Women in Business Symposium.

69               We won't stop there.  We have a very busy fall schedule lined up, with a fundraiser for the Autism Foundation in October, a much needed seatbelt awareness campaign for the late fall and winter, sponsorship of IODE's school food program and coverage and sponsorship of the upcoming PEI Music Awards in November.

70               Since June 1st, 720 CHTN has many good news stories to share on the promotional side of our business.  Unfortunately. revenues and profits have not followed.  We have found that MBS provides strong competition to a standalone AM station.  MBS has a distinct competitive advantage.  They operate three stations that cover Charlottetown.  With a less comprehensive advertising offering, CHTN is less competitive with both MBS and, perhaps more importantly, the local newspaper, CBC Television and ATV.

71               With the increased expenses of separate operations, the profitability in this market is not the same as in years past.  For the broadcast year ending August 2004, CHTN posted an operating margin of 41 percent, and in the first three months of 2005 the margin was 41 percent.  In the first three months of independent operation our operating margin plunged to minus 76 percent.  You can certainly see the difference that being a standalone station can make,

72               At the same time, the over 139,000 people across PEI deserve the diversity of local service offerings available to other Canadians living in similar size markets.  We believe that the best way to do this is to ensure that Newcap, a strong and proven operator, can compete with MBS, providing a second strong, private news voice and a diverse programming offering that complements MBS's stations.

73               We propose two new formats for this market, Classic Hits and a Mainstream Rock format, combining the best of Classic Rock and today's rock.

74               I would now like to call upon our Program Director, Gerard Murphy, to outline the music formats that we propose to bring to Charlottetown.

75               MR. MURPHY:  Thank you, Jennifer.

76               At present PEI is served by four commercial radio stations.  MBS operates two country stations, one a more modern country from Summerside appealing to a relatively younger audience, and the other the more traditional full service CFCY, which is strong in all demographic groups and particularly with older audiences.  MBS also operates a Hot AC FM station, Magic 93, which provides a combination of Top 40 and Adult Contemporary music, dominating the listening in the market.

77               Our own CHTN‑AM provides an Oldies format based upon hits from the late '50s, '60s and '70s and attracts an older audience.  The choice of formats for CHTN‑FM was a relatively easy one to make.  The FM hit requirements do not allow for an Oldies format.  The Classic Hits format can be operated in complete compliance and appeals to much of the same audience.  In fact, CHTN‑FM will be a hybrid Classic Hits/Oldies station.  We aim to transition the station in a manner that appeals to existing listeners while having the opportunity to attract new ones.

78               When we decided to apply for a second FM, which we are calling Island FM, we commissioned research from Mark Kassof & Co. to identify the format opportunity.  We discovered that while older demographic groups were 76 percent satisfied with PEI radio, 18 to 24 year olds only averaged 58 percent satisfaction, with men in the group even lower at 52 percent.

79               While 75 percent of all respondents indicated they could find exactly the kind of programming they want on FM, only 39 percent of men 18 to 24 agreed with this.

80               Those least satisfied with Charlottetown radio were Rock fans, fans of Classic Rock and those of Active Rock were only 64 percent, the lowest satisfaction rating for any format sampled.  This may account for the relative success of C‑103 from Moncton and Astral's CKTO from Truro, both of which provide Rock formats even though they do not aim to serve Island residents.

81               It is clear that there is a large disenfranchised group of listeners in Charlottetown, to which we can also add the thousands of UPEI and Holland College students.

82               Kassof tested the interest in nine different radio formats and also the perception of correspondents as to whether the format was available in Charlottetown.  With the results of these two questions, Kassof developed what they call the percentage of format void, which is the percentage of respondents that have positive interest in the format and cannot identify a station playing that kind of music.

83               The results were very revealing:  the highest percentage of format void was Classic Hits at 13 percent, followed closely by Classic Rock at 12 percent.

84               In a large market with multiple stations, our choice for the new station would have been the same as Astral's, pure Classic Rock.  In Charlottetown, with only the MBS FM stations, we believe we can serve more people by putting together compatible music groupings.  Combining Classic Rock and compatible Active Rock will serve a significant number of people and, in particular, males 18 to 34, with a strong showing among men 35‑54.

85               This bears out our experience with our Rock stations in Moncton and Halifax, both combining Classic Rock and Active Rock.  This format is also friendlier to developing Canadian rock artists than a pure Classic Rock format.

86               So what will these stations sound like and how will they be different?

87               Put very simply, CHTN‑FM will play the music that was on the top 40/pop charts during the '70s, the '80s and the '90s, with a sprinkling of '60s.  Island FM, our Rock station, will play the harder edged Rock from the same era mixed with compatible Rock from today.

88               The Classic Hits format is relatively new in Canada.  It is focussed on Rock, but avoids the harsher musical edges of Classic Rock and the greater sonic intensity of Modern Rock. There are many variants of the format across the country, with Bob, Jack, Dave and Joe‑FM, as well as stations calling themselves purely Classic Hits.

89               On CHTN‑FM listeners will hear artists like Fleetwood Mac, The Steve Miller Band, The Eagles, Doobie Brothers, The Guess Who, Elton John, Rod Stewart, Neil Young, Bachman Turner Overdrive and the Stampeders.  They will hear their hits without lesser‑known album cuts that you would hear on our Rock radio proposal.

90               The audience for CHTN Classic Hits will be older and slightly more female than the audience for the Island.  The Classic Hits audience will be about 55 percent female, with the strongest individual age group being 35 to 54.

91               The station will feature a number of music programs that focus in on our listeners' favourite music as outlined in our application.  In particular, I would like to point out "CHTN Presents", an hour‑long program that will feature PEI artists and their music, with interviews and possible live "acoustic" performances in our storefront studios.  It will also serve as a showcase for the East Coast Music Award's, ECMA, Battle of the Bands, to which we are providing a financial contribution through our Canadian Talent Development program.

92               The Island will have a harder edge than CHTN‑FM, playing Canadian Classic Rock artists like Bryan Adams. Rush, Trooper and PEI's own Haywire, along with international artists like Led Zeppelin, The Who, U2, AC/DC and Aerosmith.  We will also play the best of New Rock from these and other Classic Rock artists like the Tragically Hip, the Rolling Stones. Bruce Springsteen and Maritime artists like Sloan.  Of course new Canadian rock acts like Nickelback, Nova Scotia's the Trews, Montreal's Sam Roberts and PEI's The Rude Mechanicals will be the mainstays on Island FM.

93               About two‑thirds of its hours tuned will come from men, with the strongest age group being 18 to 34.

94               Island FM will offer a variety of specialty music shows.  Each week we will showcase Atlantic Canadian Rock, on "Rockin' the Island" with the emphasis on PEI music first and foremost.  The program will be similar to those featured on our Moncton, Halifax, St. John's and Fredericton stations.  Our objective is to give exposure across Atlantic Canada to artists from all four provinces.  Each week a one hour program "Sonic Source" will feature the newest rock releases, with Canadian Content.  Of course, both of our stations will be all over the PEI Music Awards and the ECMA'S activities.  While there may be some overlap between the stations, we think that the audiences to both stations will want to know about their own artists.

95               I would now like to ask Scott Chapman, CTN's News Director, to talk about our news, information and community events.

96               MR. CHAPMAN:  Chapman  Thanks, Gerard and good morning, Commissioners.

97               Since joining Newcap, I have been very active in improving our news department and expanding our local news coverage.  We provide 82 newscasts per week, with longer news packages in the morning and afternoon drive periods all seven days per week, and shorter bulletins at other times, almost six hours of news, weather and sports per week.  In keeping with our wish to be "Your Community Radio Station", 75 percent of our newscasts are devoted to local stories.

98               We also provide input to the daily "Capital Report" currently broadcast in Fredericton and St. John's, which airs three daily updates on the events in the four Atlantic capitals.  We plan to add this show to our schedule soon.

99               CHTN also airs a full range of regular community information, with twice hourly weather and travel updates 24 hours per day, PSAs every hour of the day, and other community announcements throughout the day.  Of course, our community cruiser is everywhere on the Island, providing regular reports from events throughout the province.  Then there is our seasonal coverage of events throughout PEI and our various charitable initiatives.  In all, we total about 12 and one half hours per week of spoken word.  All of this will continue on CHTN‑FM.

100              What is especially exciting to us is the addition of a new set of journalists if Island FM is approved.  We will add three new people to our existing newsroom of three, broadening and deepening cur news coverage.  Clearly both stations will not each send a reporter to cover a fire or Provincial Legislature or Charlottetown Council, rather we will split up these duties, allowing us to assign one reporter to regularly cover federal events affecting the province, another to cover the Legislature, and others to agriculture, tourism and fishing industry.

101              Each station will choose from the stories filed to our computerized news system to ensure that its newscasts will be shaped to the needs and interests of the audience.  Clearly, many of the stories will be the same.  If a provincial election is called or gas prices increase yet again, this is news to all of us.  But treatment will be different for some stories and others may be of greater interest to one audience.

102              The additions to our newsroom will allow us to expand our news and information on CHTN‑FM.  For example, we will be able to produce a month in review news special, expand our election coverage and add new features that our current staffing does not allow.

103              Island FM will also provide comprehensive news for a new demographic, many of whom listen to out‑of‑province stations and don't have access to local news.  We will air 53 newscasts with three and a half hours of news per week, 75 percent of which will be local.  Each day our major newscasts will feature "Island Cause", focussing on the efforts of a charity in the community; and a one‑minute public affairs feature, "Charlottetown Today", will air eight times per day.  Our daily entertainment feature, "PEI Rocks", will provide the day's and week's concert listings, theatre and other performances.

104              With the resources of two stations in the market, we will be a major force for the coverage and promotion of Charlottetown and PEI's social, community and cultural life.

105              Now to talk about our Canadian Talent Development efforts, here is Mark Maheu.

106              MR. MAHEU:  Thanks, Scott.

107              Mr. Chair, Members of the Commission, Ncwcap is proposing a comprehensive package of Canadian Talent Development initiatives.  The current requirement under the CAB plan for CHTN is $400 per year.  We propose to exceed that requirement by devoting $6,000 each year to Prince Edward Island initiatives.

108              We intend to provide all of that money to the East Coast Music Awards Association, the (ECMA).  The ECMA has developed a strong reputation over the past few years and Newcap has been heavily involved with its evolution.  The ECMA will use the money for its Battle of the Bands right here in PEI, which results in prizes, including studio time and equipment, as well as the recording of a new single.  We are proud to be associated with that endeavour.

109              We have a much larger contribution planned for Island FM, recognizing the increased value of a second FM licence.  We propose to provide fully  $1 million over the course of a seven‑year licence term to the development of Canadian Talent.

110              $70,000 each year, or a total of $490,000 over the term, will be devoted to the Canadian Radio Starmaker Fund.  The fund aims to bet on success, helping emerging artists go up to the next level through promotional, tour and marketing support.

111              $279,000 of our Canadian Talent Development monies will go to the artist development and education activities at the PEI Music Awards Association and the ECMA Association.  The money will have two focuses, more established artists and new and emerging artists, but all will go to PEI artists.

112              The PEI Music Awards Association will receive about $20,000 each year to create and manage a PEI music showcase and to support new and emerging artists in touring.  Our contribution will help new artists hone their performance skills and give them a showcase at an industry event.

113              The ECMA will receive $20,000 each year to develop more established artists by providing education to them and their managers as to how to market themselves nationally and internationally.  In addition, it will provide tour support for national and international tours.  We believe that this will help more established PEI artists to break through into new markets.

114              Canadian artists like Kathleen Edwards, Sarah Harmer and Ron Sexsmith from central Canada are getting airplay and exposure throughout the U.S. through new forms of marketing and on radio formats not available here in Canada.  The success of Halifax‑based bands, both nationally and internationally, and the interest in east coast music means that our artists just need a nudge to get up to the next level.

115              Finally, we are providing a significant contribution to the music program of the University of Prince Edward Island.  With a small but excellent faculty, UPEI's music department is only lacking cash to help develop more young classical musicians.  Our contribution of $231,000 will support visiting artists who provide master classes, fund UPEI faculty recitals around the province and underwrite a music recital series featuring new performers and provide three bursaries for studies at summer programs.  We know that UPEI believes that this contribution will be key in helping it to develop an even better program and reputation.

116              On the business front, here in Charlottetown there is a perception that this market is a very profitable one.  The reality is that since the unwinding of the agreement between Newcap and Maritime the overall profitability in Charlottetown has fallen.  CHTN has gone from being a profitable radio station inside of the local marketing agreement to being significantly unprofitable as a stand‑alone.

117              The research conducted by Newcap is confirmed also by the research conducted by Astral in their application.  There was a large demand for a Rock station here in PEI, whether it is our broader format or Astral's pure Classic Rock proposal.

118              Astral's research indicates that the average hours tuned in Charlottetown are lower than the national average and declining.  This is particularly true with men age 25 to 54.

119              The tuning to out‑of‑province stations, like our own Moncton radio station C‑103 or Astral's Truro radio station, the "Big Dog", demonstrates the appetite for Rock even though those signals are not local and the services are not aimed at the people of Charlottetown or Prince Edward Island.  Between them, they draw about 10 percent of their tuning by adults 25 to54.

120              We project that a significant amount of our tuning is going to come from Rock stations in Moncton and Truro.  Our research also indicates that the core listeners for our new proposed station are:

121              One, less satisfied with PEI radio than the average listener;

122              Two, listen to radio fewer hours per day than the average Charlottetown listener; and

123              Three, spend more time listening to other audio sources.

124              We believe that the arrival of a Rock radio station will bring listeners back to radio and specifically back to PEI radio.

125              In trying to develop local awareness and support for our new station proposal, we launched a website called "Island FM" which provided a four‑hour music sample of what we thought the radio station would sound like if we were licensed.

126              Media monitoring services do not track Charlottetown stations, so we compared our music sample that we played on the internet to music played by other stations programming a similar format to what MBS is doing here with Magic 93.  These stations share few artists and even fewer songs in what we would play on the Island FM.

127              To conclude, we believe that approval of our two proposals is in the public interest for the following, specific reasons:

128              Two exciting new formats would be launched, both of which research clearly shows strong demand by Charlottetown radio listeners.  Our FM Rock proposal will bring a rock‑music based format to Charlottetown for the very first time.

129              The launch of new FM stereo services, both through conversions from the FM band and through the launch of our new Rock station, will create such excitement in Charlottetown that it will enhance radio listenership and increase the value proposition of our medium.

130              Newcap will provide over $1 million in Canadian Talent Development funds.  These funds will serve to continue the development of new, emerging Canadian artists from Prince Edward Island and the Maritimes.

131              Finally, Newcap has a strong tie to this city and the people of Charlottetown.  This is the birthplace of our company as we know it today.  We are ready, willing and anxious to invest the working capital, the time, the patience and the people power to create exciting, innovative and great sounding radio in this great City.

132              We thank you for your time and attention this morning.  We would be pleased to answer any questions you may have about our proposals.

133              THE CHAIRPERSON:  Thank you very much.

134              Commissioner Cram...?

135              COMMISSIONER CRAM:  Thank you and good morning.

136              It is nice to see, Ms Evans, that women are getting somewhere in the radio ranks in Newcap.

137              I want to start off first by talking about CHTN as it was before mid‑may, because it seems there have been some substantial changes.

138              My first question is:  When was your research conducted?

139              MR. MAHEU:  The research for the conversion?

140              COMMISSIONER CRAM:  Yes.

141              MR. MAHEU:  It was in late 2004.

142              COMMISSIONER CRAM:  So that was before CHTN went through its conversion?

143              MR. MAHEU:  That is correct.  The research was conducted for the conversion in the market before we were out of the agreement with Maritime.

144              COMMISSIONER CRAM:  You say at page 3 of today's opening remarks, that you have added your own sales team, traffic division and office administration, or at least you had to deal with that.

145              You have hired, you say, many new members in sales, administration and community service.

146              Can you tell me how many people you have added May‑Jun‑ish?  Well, since the Mark Kassof research?

147              MR. MAHEU:  Sure.  We began the process of dismantling the LMA right after the public notice came out at the end of January 2005 and it gave a deadline of the end of May.  So we had that time, a rather short period of time, to begin to transition.

148              That  involves a number of things Commissioner Cram, including finding our own place to set up shop, so to speak.  So that, combined with identifying who we would need to add to our staff was a pretty big job in very short order.

149              Being in the LMA meant that going forward we had to find out own sales staff, administration staff, traffic and accounting and folks like that, and when we talked about community service it really plays into a bigger area.

150              When we separated we were effectively a standalone AM radio station, so we had to, from a strategic point of view, start to rethink our proposition to both listeners and advertisers.  Since we were going to be on our own, we had to discover how we were going to be different, how we were going to be unique and generate a large enough audience on our own to be able to monetize that.

151              The real key to that, as Scott mentioned in his remarks, was the area of news and community service.  We felt that we really needed to beef that area up in order to be able to stand out and compete.  We weren't on the FM band, we were not going to be able to compete effectively necessarily for a music audience, but in spoken word and community involvement we thought, regardless of being an AM or an FM station, we would have a shot at that and be able to go out and find a new audience and build the one we had.

152              So we started to look for B I will let Jennifer talk in just a second here about some of the specific things we did, but strategically we wanted to add more news people, which we did.  We went up to three news people on CHTN.

153              COMMISSIONER CRAM:  From?

154              MR. MAHEU:  I believe we had two and we are proposing more with our second application.

155              But we also set out and embarked upon a very ambitious program throughout the summer, a community cruiser program, and we hired some folks to do that for us as well, to get out throughout Charlottetown and into some of the smaller communities and be visible, report on their activities, a lot of them charity and community endeavours.

156              If I may, I will just ask Jennifer to kind of fill you in on that a little bit because she was a big part of it.

157              COMMISSIONER CRAM:  :  Just tell me how many people, though, you added?

158              MR. MAHEU:  In terms of...?

159              COMMISSIONER CRAM:  Community service, in addition to the news staff.

160              MR. MAHEU:  Jennifer, go ahead.

161              MS EVANS:  Certainly.

162              In the area of community service we hired one full‑time promotions director in addition to a part‑time summer staff person.

163              The interesting thing with that is that when you are operating a standalone small station everyone is part of the community service team.  When we first got together as a team at the end of May, we held a strategic planning session as a group and I said, "Okay, folks, what are we going to do here to be different?  We know that the cards are stacked against us.  As one standalone A station it is going to be a tough road.  What can we do to be different and to make a difference in this marketplace?"

164              The answer cam back pretty resoundingly clear as we have to work together as a team and we have to get connected with the community once again.  That is what radio's biggest strength is, part of he community, and that is our key to success.

165              This summer, although on paper it was our promotions director and our summer student who was ultimately responsible for delivering community service, it was really each and every one of us who did charity barbeques on our sidewalk during the month of June, each and every one of us who went to old home week and helped with the delivery of reports there every day for a 12‑day event.

166              This really has been a team effort and we are fortunate with a small staff that we can take that approach and we have had a lot of fun in the last four months.

167              COMMISSIONER CRAM:    So what other staff members have you added in sales and administration?

168              MS EVANS:  We now have a staff of 17, 16 full‑one, 1 part‑time.  In our sales division, we have a total of four sales members, and we have two on our administrative side.

169              COMMISSIONER CRAM:  Just tell me how many you have added.

170              MS EVANS:  We have added eight.

171              COMMISSIONER CRAM:  You had added eight, including the new staff, the part‑time summer promotions and the full‑time promotions?

172              MS EVANS:  And sales.  Correct.

173              COMMISSIONER CRAM:  And sales.

174              So if I have it right, if you have added eight, you have added essentially six salespeople?

175              MS EVANS:  We have added four salespeople.

176              COMMISSIONER CRAM:  Four sales?

177              MS EVANS:  Correct

178              COMMISSIONER CRAM:  So I have one news staff, I have one full‑time promotions, four sales, and then the rest are admin?

179              MS EVANS:  Yes.  Our receptionist, our accounting position and our on‑air positions.  Correct.

180              COMMISSIONER CRAM:  Okay.  Do I take it, and indeed just what you have said, Ms Evans, that before you did not have a community cruiser?  You just finished saying:  We decided we had to connect with the community once again.

181              MS EVANS:  Under the LMA there certainly was a community presence for all three stations which existed under the LMA.  Our strategy in operating as a standalone is we had to ramp that up considerably in order to gain listeners and gain the appreciation of the advertising community as well.

182              So there has been a considerable increase in the focus of reconnecting with the community.

183              COMMISSIONER CRAM:  So there wasn't a dedicated community.  CHTN didn't have a dedicated community cruiser before?

184              MS EVANS:  It did, however the promotional side was shared among all three stations.

185              COMMISSIONER CRAM:  You didn't have these strategic relationships or associations or partnerships with things such as the PEI Business Women's Association?

186              MS EVANS:  Not to the extent that we do today, no.

187              COMMISSIONER CRAM:  You talk about revenues and profits not having followed.  So I understand we are talking about the three months of June, July and August that you are talking about?

188              MS EVANS:  Correct.

189              COMMISSIONER CRAM:  You talk about the operating margin plunging.  How did you record the moving expenses, the capital, the recruitments costs, and all the other one‑time costs.  Did you inject them into that quarter?

190              MS EVANS:  I am actually going to allow David Murray to handle those questions.

191              COMMISSIONER CRAM:  Thank you.

192              MR. MURRAY:  All of those costs were capitalized, so we are talking strictly operating costs.

193              COMMISSIONER CRAM:  So they were all capitalized?  There were none of them that were injected, even recruitment costs?

194              MR. MURRAY:  None of them.  Everything was capitalized.

195              COMMISSIONER CRAM:  Okay.  So we are talking strict gross revenues, minus operating, which would include the eight new staff?

196              MR. MURRAY:  Yes.  The comparison between the three months prior to the LMA, March, April and May, and the three months following the LMA, June, July and August, are completely apples and apples and the margin was 41 percent for the three months just prior and the operating loss for the three months just after was 76 percent negative.

197              COMMISSIONER CRAM:  So there was a decrease in revenues, was there ‑‑

198              MR. MURRAY:  Yes.

199              COMMISSIONER CRAM:  ‑‑ or was it just an increase in expenses?

200              MR. MURRAY:  Revenues decreased 61 percent.

201              COMMISSIONER CRAM:  61 percent.  Expenses increased...?

202              MR. MURRAY:  I didn't do the percentage; $130,000.

203              COMMISSIONER CRAM:  $130,000, is that primarily staff?

204              MR. MURRAY:  Expenses increased 82 percent.

205              COMMISSIONER CRAM:  I didn't hear that, I'm sorry.

206              MR. MURRAY:  Expenses increased 83 percent.  You can't really compare the operations before and after because in the LMA, which you are probably aware, we were sharing 25 percent of virtually everything, so there was a ‑‑ we did our own programming and news, but we were in one building, there was a sharing of revenues and there was a sharing of expenses.

207              COMMISSIONER CRAM:  The LMA, then, was simply a percentage of gross, was it?

208              MR. MURRAY:  Correct.

209              COMMISSIONER CRAM:  In terms of staffing, did CHTN have its actual staff or again were they all shared?

210              MR. MURRAY:  No, CHTN had its own programming and news staff, but Maritime was responsible for administration, sales and general management.

211              COMMISSIONER CRAM:  Okay.  If I can quote Ms Evans again, you had to connect with the community once again.

212              Would you expect, after three months, to end up at a positive ‑‑ at a similar margin as you had before, or how long would you expect to recuperate?

213              MR. MURRAY:  No, we certainly didn't expect a positive margin operating independently, because ‑‑ before the main difference was we had 25 percent of the total revenues of the three stations and now we knew we were only going to have the revenue of CHTN‑AM, which was a very small percentage of the total revenue.

214              So we were expecting a loss and we have a loss.

215              COMMISSIONER CRAM:  But surly with all of the ramping up you have done, you would expect to be doing better?

216              MR. MURRAY:  Probably not.

217              Go ahead, Mark.

218              COMMISSIONER CRAM:  Really, you expect that after this huge impetus of adding the community cruiser, adding promotions people, adding new staff, that after a year or two you wouldn't expect to be in a relatively good position?

219              MR. MAHEU:  Commissioner Cram, if I may, we are doing all the things we are doing now for two reasons.

220              Number one, they are the right thing to do.

221              Second, it is absolutely what is necessary to even give us a fighting chance to be competitive on the revenue side of things.

222              It's not that we do a bad job that we are losing money.  I think we do a fabulous job here and provide great service.  Jennifer and her crew have just done yeoman's work on making it happen.

223              The fact is, what is holding us back from being able to monetize all of that good work and the effort is the simple fact that we are broadcasting an amplitude modulation at 720 on the AM band.  That is the equivalent in a high‑speed world of being a 14.4 dial‑up modem in a satellite‑driven broadband world.  It is not that people don't like what we do, it is just very difficult for them to hear us.  It is very difficult for them to listen.

224              The minimum threshold now in many cases is stereo quality sound.  Even the cheapest television you can buy today, the cheapest VCR, are all stereo capable.

225              It is kind of the standard that most entertainment users, radio listeners, expect.  Most of the AM stations across Canada, there are very, very few radio stations on the AM band still playing music.  We are one of them.  Most of them are doing spoken word, news talk, or whatever.

226              For instance, in government offices here in Charlottetown, in you are in a provincial or government office or any office building, like any AM radio station we are very difficult to receive because of the structural steel in the building, and that combined with computers now in most offices that cause interference.  The personal computers cause a great deal of interference when they are near AM radio.  So you will find that most of these offices either don't have radios or cannot get AM reception.

227              So we just have a difficult time generating listenership, not because the product isn't good, it is just very, very hard to listen to.  Thus, why we are before you today is what we are really looking for is an opportunity to take what we are doing now and continue to do it, but do it with a delivery mechanism that will allow more people to hear it and benefit from it.

228              COMMISSIONER CRAM:  Mr. Chapman, were you the news director before?

229              MR. CHAPMAN:  I was the news director on CFCY and Magic 93.

230              COMMISSIONER CRAM:  Okay.  So now you are the news director for CHTN?

231              MR. CHAPMAN:  Yes.

232              COMMISSIONER CRAM:  You talk about improving your news department and expanding your local coverage.

233              You now provide 82 newscasts per week.  How many did you provide before?  How many did CHTN provide before?

234              MR. CHAPMAN:  When I joined CHTN, CHTN was running 57 newscasts per week, and with a conversation with Jennifer and Gerard we felt one avenue that we needed to improve to become a community information station was to increase our number of newscasts.  We added a 10 o'clock newscast, an 11 o'clock newscast, and 1 o'clock and 2 o'clock and 3 o'clock on weekdays.

235              That upped the total to 82 newscasts per week.  That is over 5 hours and 25 minutes of news per week.  With a 75 percent local content that we strive for, that is over 4 hours of news locally per week.

236              COMMISSIONER CRAM:  So how many hours of news, weather and sports was it before, before the LMA?

237              MR. CHAPMAN:  Before the LMA it was ‑‑ during the LMA there were not the hourly newscasts that we now have.  There were half hour newscasts between 6:00 and 9:00 a.m. and then there was a noon and then there was a 4 o'clock and a 5 o'clock.

238              Since we came out of the MLA ‑‑

239              COMMISSIONER CRAM:  LMA.

240              MR. CHAPMAN:  LMA.

241              COMMISSIONER CRAM:  You are not a member of the legislature yet.

242              MR. CHAPMAN:  I am not a member of the legislature, no.

‑‑‑ Laughter / Rires

243              MR. CHAPMAN:  You tend to say that a bit in the news.

244              COMMISSIONER CRAM:  When you are in the news, I understand.

245              MR. CHAPMAN:  LMA.

246              Since then we have added the hourly newscasts because we feel that is important.

247              COMMISSIONER CRAM:  It is now at 6 hours.  What was it before?

248              MR. CHAPMAN:   Before it was 57 newscasts per week, 10 per day during the LMA, yes.  I don't have an hourly total for you, but it was approximately 10 newscasts per weekday after the LMA and we are talking about 10 per day during the LMA.

249              COMMISSIONER CRAM:  Ten.  How long were they?

250              MR. CHAPMAN:  They were 4 minutes in total.

251              COMMISSIONER CRAM:  All news, weather, sports?

252              MR. CHAPMAN:  All news, weather sports, yes.

253              COMMISSIONER CRAM:  Now that we have an idea of what has changed between December 2004 and now, I want to start asking questions about the flip, the flip in and of itself.

254              Your format, you are going from Golden Oldies to Classic Hits, the >70s to today.  The change really is because the format, the Golden Oldies, you can't flip to FM and this is essentially the closest you can find.

255              Is that right?

256              MR. MAHEU:  That is correct.

257              COMMISSIONER CRAM:  The target demographic, can you give it to me in ages?

258              It is primarily women, isn't it?  Skewing towards women, let's put it that way.

259              MR. MAHEU:  Very similar to what we see in other markets for the format.  The format generally does very well with adults 35 to 54, more women than men.  Slightly more, but more.

260              COMMISSIONER CRAM:  Yes.

261              MR. MAHEU:  The real sweet spot, if I could say it, is the 35 to 44 year old demographic.

262              COMMISSIONER CRAM:  What is that as a percentage of the population of PEI?

263              Start with 35 to 44.

264              MR. MAHEU:  I don't think we have that, Commissioner, but I would guess if it is close to what StatsCan would do, it would be probably in the neighbourhood of the mid‑20 percent range, 25 or 26.

265              COMMISSIONER CRAM:  In the supplementary brief you talked about 20 percent being from the >70s, 40 percent being from the >80s, 20 percent from the 90s and the rest up to now.

266              Yet today I got a different feeling of what you were going to play.  There was more of Top 40 pop charts during the >70s, >80s and >90s, with a sprinkling of the >60s.

267              Am I right?

268              MR. MAHEU:  That is correct.

269              COMMISSIONER CRAM:  So what happened here?  Have I gone a little crazy with Air Canada losing my luggage or what?

‑‑‑ Laughter / Rires

270              MR. MAHEU:  No.  We are looking at what the best opportunity here is.  If we were coming into the market today with no presence here at all and we were just looking at the Classic Hits format and saying what is the best recipe for success for the Classic Hits format, it would very likely follow the tried and true formula for Classic Hits, about 20 percent >70s, 40 percent >80s, 30 percent >90s and 10 percent today.

271              What we are trying to do is to really  transition one audience from one band to the next.  Right now what we have found with CHTN is that as an oldies station we do have an audience out there and there are folks who really enjoy the music from the >60s.  If we do have the opportunity to move to the FM band, we are going to have to change some things, obviously, to comply with the rules, but we would like to try to manage that change and still hang on to the folks who enjoy music from the >60s.

272              The interesting thing about the research, when we looked at it, is that there ‑‑ I think it is party because of CHTN's success here ‑‑ is that there is an oldies market here and we can find a way to make some of that >60s music work with the Classic Hits format.  It will help transition the people who are listening to us and enjoying us now, because the last think we want to do is really get approved for a new FM signal and then move the station over to the FM and then basically abandon all the folks who were enjoying us while we were on the AM band.

273              We felt we owed them that transition, so we think we have found a way to do that.  But the >60s will not be a major part of our sound, but there will be a flavour of it there.

274              COMMISSIONER CRAM:  Can you give me numbers on how many in the >70s, >80s and >90s, or do you know?

275              MR. MAHEU:  It would basically work out to be, in round figures, about 10 percent >60s, it is in that 20 to 30 percent >70s, 20 to 30 percent >80s, about 20 percent >90s and some today.

276              COMMISSIONER CRAM:  It does seem that this is almost identical to the flip that actually happened with CKY in Winnipeg in terms of going from the oldies to the Classic Hits.

277              Are you aware of how that has fared?

278              MR. MAHEU:  Are you talking about their conversion of CKY‑AM to FM, not the clear FM?

279              COMMISSIONER CRAM:  No, no.

280              MR. MAHEU:  No, okay.

281              No, I'm not really familiar with that.  It is always difficult because it is, in effect, a small format change.  It is not a total format change, but it is a format modification and it is very, very difficult to do.

282              But we feel that given what the research is showing us here in terms of the opportunity for Classic Hits is rather large and the compatibility with that format to Oldies should make it a smoother transition than just blowing up one thing and starting something new the next day.

283              We also want to keep the same name and the same identity, and so on, so that it is just a nice, natural progression, but I'm not familiar with how well Rogers has fared with that.

284              COMMISSIONER CRAM:  If memory serves, it wasn't that well.

285              MR. MAHEU:  Right.

286              COMMISSIONER CRAM:  The heritage station with the Oldies format that everybody loved moving on to FM and going into, if memory  serves, at least initially was not a terrifically wonderful change.

287              MR. MAHEU:  Would it possible, not to put it in a bad light, but maybe some of that has to do with execution.

288              COMMISSIONER CRAM:  I hear you.  Nothing against Rogers, if you are listening.

289              MR. MAHEU:  No problem.  Sorry, Gary.

290              THE CHAIRPERSON:  They are always listening.

‑‑‑ Laughter / Rires

291              COMMISSIONER CRAM:  I guess, given that my luggage was lost and the taxi driver and I had a fairly long time going to the drug store and picking things up, we had a good conversation, I kind of want to talk about the repeat factor.

292              What would be the highest repeat factor that you would be planning when you are programming your new Top 40 of the >70s, >80s and >90s?

293              MR. MAHEU:  On the Classic Hits format?

294              COMMISSIONER CRAM:  No, no, on the CHTN one.

295              MR. MAHEU:  Yes, the Classic Hits format.

296              COMMISSIONER CRAM:  Yes, you are right.

297              MR. MAHEU:  Yes.

298              Going into the future, the proposed repeat factors would be rather low relative to some more contemporary formats.

299              Traditionally we would certainly conduct some music research before we did the conversion.  Traditionally, high testing songs, or songs that people do enjoy and want to hear a lot would probably be spun probably no more than five times a week.  That is the most popular stuff, it would be a day and a quarter.

300              So much of what is fun about Classic Hits is all the songs that people forgot were out there, some great oldies that don't get a lot of airplay, and you will find the libraries in these formats tend to be a lot larger than normal.

301              But there will be some music that will be spun a little more than five times a week and that would be probably some more current‑based or recurrent Canadian music.

302              One of the things about this format is it tends to play and rely on the music of the past, but people do want to live in today.

303              Part of the component of Classic Hits is obviously we have Canadian content to deal with and if you are focussing on just Canadian Gold, the stuff from the past, The Stampeders and April Wine and stuff like that, there are some great songs there, but the burn on them tends to be very high because so many stations have played them so much.

304              So what you try to do to keep listenership up, and at the same time it kind of helps out on the Canadian talent side, is that you can find some new emerging Canadian music that will work with this format and it will probably get a little more play than five times a week per spin.

305              COMMISSIONER CRAM:  I don't know how to distinguish between what you have proposed in your supplementary brief and what you are proposing today, but with today's proposal on the flip format can you tell me what is different between today's proposal and Coast's Adult Pop?

306              MR. MAHEU:  Sure.  Obviously, we have looked at all the proposals and obviously we have a pretty good understanding of what we want to do and where we think the opportunity is.

307              In the Coast proposal, the format that they are proposing tends to mirror or be a lot closer, in our professional opinion, to what is happening in the market already on Magic 93.  Magic 93 is kind of a hybrid Top 40 Adult Contemporary radio station.  Some call it an adult CHR.  There are lots of different names for it, but the idea is it is basically a fairly wide contemporary‑based, current‑based music choice.

308              In the Coast proposal I believe they are calling it "Pop Adult".

309              COMMISSIONER CRAM:  Adult Pop, yes.

310              MR. MAHEU:  Adult Pop, Pop Adult.  It would encompass and engender many of the same types of songs and artists that are presently being played on Magic 93, from what we can see and hear, and those types of formats tend to be more current than gold‑based.

311              What distinguishes us from that proposal, at least on CHTN specifically, is the vast majority of our music on CHTN is going to be from the past.  Well over 60 percent of this music is going to be basically pre‑1990.  In an Adult Pop or Pop Adult format, most of the successful ones anyhow across the country, tend to be a lot more current‑based than that.

312              So that starts to lead it into competing with the Top 40 AC hybrid that is already on the air here in the market.

313              COMMISSIONER CRAM:  Coast talks about the years of Pop being >80s, >90s and today.

314              What do you think the duplication would be between yourselves as proposed today and Coast?

315              MR. MAHEU:  Duplication, Commissioner Cram, between what they are proposing and what we are proposing today would likely be in the range of ‑‑ of the music that we would share, the >80 and >90s, if they are going to do Pop Adult or Adult Pop the way it should be done and we are doing Classic Hits the way it should be done, likely the music that falls into the >80s and >90s there could be duplication above 70 percent in that music, because many of the songs are the same.

316              COMMISSIONER CRAM:  What about duplication, with your proposal today for CHTN versus CHLQ?

317              That is Magic 93, isn't it?

318              MR. MAHEU:  Yes.

319              COMMISSIONER CRAM:  Yes.

320              MR. MAHEU:  It tends to be more current.

321              Interesting listening to the radio station, I guess there is going to be some overlap obviously with popular music from the >90s, although the >90s is a small part of what the Classic Hits format is going to do, roughly around 20 percent.  Much of the music on Magic is in the >90s or from the past 15 years, today back to about 1990.  So we don't see a lot of duplication there.

322              We are also bringing the majority of the music that we are proposing for CHTN‑FM in the Classic Hits format is coming from the >70s and >80s genre and some from the >60s.  So the vast majority of the music we are going to play will not overlap or compete with anything that Magic plays.

323              Then, where we do have some overlap in terms of era, 1990 for instance, I would say less than a third in terms of song overlap there.

324              COMMISSIONER CRAM:  Okay.  So one third of...?

325              MR. MAHEU:  Twenty percent.

326              COMMISSIONER CRAM:  Twenty percent?

327              MR. MAHEU:  Yes, 25 percent tops.  Very little.

328              COMMISSIONER CRAM:  Thank you.

329              If we refuse the flip, are you planning on staying with your Oldies or would you change to something else?  Join up with Rogers in their talk stations throughout the Maritimes?

330              MR. MAHEU:  Well, that would be a last resort but it is an interesting idea.

‑‑‑ Laughter / Rires

331              MR. MAHEU:  Obviously, we certainly don't want to contemplate the possibility that our conversion application wouldn't be approved, but obviously we do have to make long‑term plans.  There could always be a worst‑case scenario.

332              We made a commitment in Charlottetown when we purchased CHTN back in 1986.  It has been a long road.  It has been very difficult to make money as a standalone.

333              But we are a big company and we understand what our responsibilities are.  If we have to compete as an AM standalone here, then we will compete and we will fight the good fight.  We will find a way.  We are not ‑‑ it will be a long time before the station achieves any level of profitability because it is a people‑intensive business and we are going to need to have people like Jennifer and her team, and Scott and Gerard and our on‑air folks and our news commitment to get out there and at least have an opportunity to do some business.

334              Because our proposition to listeners and clients is based on what kind of value we bring.  So we wouldn't turn it into a jukebox or warehouse it, we are just going to have to find creative ways to come up with product that people are going to listen to on a deficient band.

335              That is really what the issue is.  It is not a matter of they don't like the product, it is just very difficult for them to spend any amount of time listening to it, especially when you have other options on the FM band.

336              It kind of gets back to much like on television if you have two channels side‑by‑side and they are both playing relatively contemporary programming, if one only broadcasts in black and white and the other one broadcasts in colour and you have a choice, you are going to watch the programs that are in colour and have good sound.

337              In the radio business we are kind of in the same position.  So it is a sound quality issue, but we will do what we have to do, Commissioner Cram, to make it work.

338              COMMISSIONER CRAM:  Thank you.

339              I'm going to move on to your local and spoken word.

340              What would be the ratio between your music and spoken word on the new CHTN as proposed?

341              MR. MAHEU:  I believe, Gerard, we are offering ‑‑ how many hours is it, 13?

342              MR. MURPHY:  Thirteen hours of spoken word, including our news, on CHTN‑AM, and we will maintain that level on CHTN‑FM.

343              COMMISSIONER CRAM:  That is 2 percent; 126 hours broadcast a week.

344              MR. MAHEU:  It is 10 percent.

345              COMMISSIONER CRAM:  Ten percent.  Math was not my ‑‑ we are not going to go there.

‑‑‑ Laughter / Rires

346              COMMISSIONER CRAM:  In your application you talked about having 53 local newscasts.  You are now giving 82 and I'm assuming you are going to continue that.

347              MR. MAHEU:  Yes, that is our intention.  As Scott mentioned earlier, we did that after he joined to beef up the competitiveness of the station.

348              By the way, we apologize if there are some changes in there.

349              We put this application in last November, so it is about a year ago now, and that was before we had any word on sales agreements in the LMAs.  That didn't come out until January.  So some of what you see there was addressed in deficiency and some of it is just old information that may not be as relevant today as it was.

350              COMMISSIONER CRAM:  Yes.  That is 82 newscasts, news, weather, sports, each consisting of four minutes each?

351              Mr. Chapman?

352              MR. CHAPMAN:  That is correct.

353              COMMISSIONER CRAM:  Can you give us the hours again, just for the record, so we get it all down?

354              MR. CHAPMAN:  CHTN‑FM would be 5 hours and 25 minutes of news per week.  That is the current situation on CHTN‑AM.

355              COMMISSIONER CRAM:  Okay.  Just when  would it be?  When would they be?  Seven o'clock...?

356              MR. CHAPMAN:  They would be 6 o'clock, 6:30, 7 o'clock, 7:30, 8 o'clock, 8:30 and 9 o'clock.  We have added 10 o'clock, 11 o'clock, there has always been a 12 o'clock, and we added 1 o'clock, 2 o'clock, 3 o'clock, and then there has been a 4 o'clock and a 5 o'clock.

357              COMMISSIONER CRAM:  Okay.

358              THE CHAIRPERSON:  It sounds like an old Bill Haley song, doesn't it?

‑‑‑ Laughter / Rires

359              COMMISSIONER CRAM:  This also happens on the weekends?

360              MR. CHAPMAN:  On the weekends CHTN‑AM currently has news at 8:00, 9:00, 12:00 and 5:00 on both Saturday and Sunday.

361              COMMISSIONER CRAM:  Four minutes?

362              MR. CHAPMAN:  Four minutes, yes.

363              COMMISSIONER CRAM:  How much of these four minutes are news?

364              MR. CHAPMAN:  News is 3 minutes, then we have roughly half a minute of sports and another half minute of weather.

365              COMMISSIONER CRAM:  In both the supplementary brief and here you talk of 75 percent local ‑‑ where did I find that ‑‑ "Local", yes, page 10 ‑‑ 75 percent of which will be local.

366              So we are talking about the 3‑minute news and 75 percent of that will be local?

367              MR. CHAPMAN:  Yes, 75 percent of that will be local as well as sports.  We try to focus on local sports as well.

368              COMMISSIONER CRAM:  So 75 percent of the sports also will be local?

369              MR. CHAPMAN:  Well, 75 percent of the news will be local.  There is not a 75 percent commitment to sports, but in terms of the 4‑minute package 75 percent will be local.

370              COMMISSIONER CRAM:  Okay.  So of the total 4‑minute package ‑‑

371              MR. CHAPMAN:  Of the total 4‑minute package ‑‑

372              COMMISSIONER CRAM:  ‑‑ news, weather and sports ‑‑

373              MR. CHAPMAN:  If you break it down to the number of stories, 75 percent of our stories will be local stories.

374              COMMISSIONER CRAM:  Including weather?

375              MR. CHAPMAN:  No, not including the weather.

376              75 percent of our stories in the news will be local.

377              COMMISSIONER CRAM:  News alone, excluding sports.

378              MR. CHAPMAN:  News alone, yes.  And already are local.

379              COMMISSIONER CRAM:  Okay.  So of that 75 percent that you say is local, what does "local" mean?

380              MR. CHAPMAN:  "Local" in Prince Edward Island means all of Prince Edward Island.  It is a very unique place because it is 140,000, 139,000 people so many people in PEI have relatives all over the Island.  An event, maybe we will say an accident, a fatality in western PEI may affect a number of people in eastern PEI because they have family in eastern PEI.

381              A federal initiative announced in eastern PEI affects all of the economy in Prince Edward Island.

382              COMMISSIONER CRAM:  So you would agree to a COL that 75 percent of your news, excluding weather and sports, would be local, "local" being defined as relating to all of Prince Edward Island?

383              MR. CHAPMAN:  All of Prince Edward Island, yes.

384              COMMISSIONER CRAM:  Thank you.  That is what you do presently, you say?

385              MR. CHAPMAN:  That is currently what we do, yes.

386              COMMISSIONER CRAM:  Okay.  You have done this since June of this year?

387              MR. CHAPMAN:  Since June.

388              COMMISSIONER CRAM:  Is that fair to say?

389              MR. CHAPMAN:  Yes.

390              COMMISSIONER CRAM:  With the one additional news staff and yourself, or how many news people do you have?

391              MR. CHAPMAN:  We currently have three positions in the newsroom, yes.

392              COMMISSIONER CRAM:  Including yourself, Mr. Chapman?

393              MR. CHAPMAN:  Including myself.

394              COMMISSIONER CRAM:  Okay.  Thank you.

395              On CTD you are talking about $6,000 a year to the East Coast Music Awards and the PEI Music Awards Association.

396              Are those two separate associations?

397              Ms Evans is nodding.

398              MR. MAHEU:  Yes, they are two separate organizations.

399              COMMISSIONER CRAM:  I'm looking at page 11, the bottom paragraph, you say:

                      "The money will have two focuses of today, more established artists and new and emerging artists."

400              If I have it right, then you are going to divide the money into ‑‑ I'm getting mixed up here.

401              I had initially $6,000 a year in my notes to the East Coast Music Awards, but you are really talking about $20,000 a year, are you?

402              MR. MAHEU:  In the other proposal, yes.

403              COMMISSIONER CRAM:  In the other proposal?

404              MR. MAHEU:  Yes.  In the CHTN proposal it is $6,000 a year.

405              COMMISSIONER CRAM:  Oh, good.  Okay.  Then I have not gone ‑‑ okay.

406              In this one it goes to the East Coast Music Awards for the "Sound‑Off"?

407              MR. MAHEU:  Yes.

408              MR. MURPHY:  Battle of the Bands.

409              COMMISSIONER CRAM:  Battle of the Bands, okay.

410              The Battle of the Bands, that is 100 percent to the East Coast Music Awards for Battle of the Bands?

411              MR. MURPHY:  That is correct, of the $6,000 annually.

412              COMMISSIONER CRAM:  Yes.  It used to be I had "Sound‑Off", which was provincial for high school bands.

413              Is that the same thing we are talking about?

414              MR. MURPHY:  No, no.  The  ECMA Battle of the Bands is a process where they ‑‑ well, I'm not actually quite sure where the bands come from, to tell you the truth ‑‑ I think Jennifer may have more details, or Scott has more details on that ‑‑ but it comes down to five bands at the ECMAs and they have a sound‑off and then one is selected as the top band for that ECMA year.

415              COMMISSIONER CRAM:  Okay.  So it may or may not have anything to do with PEI artists?

416              MR. MAHEU:  Go ahead, Jennifer.

417              COMMISSIONER CRAM:  It does, Ms Evans says.

418              MR. MAHEU:  Yes.

419              MS EVANS:  Yes, it does.  Actually, the program you are referring to sounds very similar.  Perhaps it has been a name change for the ECMA.  This is a program that involves high school bands competing across the Province of PEI because we are the host province this year for East Coast Music Awards.  Then the top five bands which are selected have an opportunity to showcase on stage during the East Coast Music Awards held here in February.

420              So it is sounding similar, but this is exclusively for PEI.

421              COMMISSIONER CRAM:  Okay.  So in a year when PEI does not host the East Coast Music Awards, the $6,000 would go to, again, a PEI competition?

422              MS EVANS:  That money is dedicated for Prince Edward Island, so in a year that it is not our turn to host then we will be certainly establishing a new competition process to try to provide this level of band with exposure at the ECMAs.

423              COMMISSIONER CRAM:  Okay.

424              MR. MAHEU:  This year it happens to be Battle of the Bands.  That's what we get to call it because we are the host province.  Next year we will call it something else, but it will be the same process.

425              COMMISSIONER CRAM:  But you will then administer the funds?  When the ECMA is not in Prince Edward Island, you would then administer the funds and have this kind of competition?

426              MS EVANS:  The money is dedicated for the East Coast Music Awards Association.  We are fortunate that their head office is also here in Charlottetown so we can work quite closely with them.  Obviously this year it is a process that will be similar to what happened last year in Cape Breton.  Next year, certainly with our guidance, but it is their funds to execute.

427              MR. MAHEU:  Basically, if I may add, Jennifer ‑‑

428              MS EVANS:  Sure.

429              MR. MAHEU:   ‑‑ that money, that $6,000 is going to the ECMA.  For years, as you say, when the awards ceremonies are held somewhere else throughout the Maritimes we are going to do some sort of Battle of the Bands format in PEI to find one band to be able to export over to the ECMAs and appear.

430              That $6,000 in years where it is not in PEI is going to be used to get the band there and make sure that they have what they need to showcase their talents properly.

431              But leading up to it, if there were five bands and there is a competition and costs and promotion and all that kind of stuff, that would be part of what we would call station promotion, that would be on our nickel and we would come up and do some sort of elimination process to get that one band that is going to head off to Halifax or Moncton or St. John's or wherever the ECMAs are that year.

432              That $6,000 that has been earmarked for the ECMA, they are going to use that money to support that one winning band, whether it is travel and getting a venue and getting the Music Press or whomever, radio, out to see them, promotion of them, or whatever it is.

433              So that is the way it would work.

434              COMMISSIONER CRAM:  Okay.  So you are going to give, as a part of your CTD, $6,000 to the East Coast Music Awards for them to have their Battle of the Bands in whichever province the ECMA awards are happening for the next seven years?

435              MR. MURPHY:  No...

436              COMMISSIONER CRAM:  Correct?

437              MR. MURPHY:  The ECMAs have committed that this $6,000 is going to go to Prince Edward Island bands ever year.  That is one of the commitments they have to make when they get it.

438              The ECMAs have many programs regardless of where they are showcased for that year.  They will have a rock thing which we sponsor, but the $6,000 will go to Prince Edward Island bands every year.

439              COMMISSIONER CRAM:  Okay.  So the money is going to the ECMA and you are going to have the equivalent of ‑‑ for them to have a program equivalent to the Battle of the Bands each year in PEI and it won't be on your nickel, it will be on the ECMA's nickel.

440              Do I have that right now?

441              MR. MURPHY:  Yes.

442              MR. MAHEU:  If it goes over and above that in years where ‑‑ it is less expensive when it happens when the ECMAs are here, because everything is here, but if the $6,000 when it is in other markets is not enough, the ECMA still has that $6,000 to do whatever they need to do to make this a success, but in terms of the local ramp up to it, if it is going to be happening in Moncton or whatever and we are holding competitions throughout the Island for a few weeks or a few months leading up to the ECMAs, that will be station promotion.

443              That would be expense that we would do as a matter of course as part of what we are doing.  It wouldn't come out of the $6,000 that the ECMAs have earmarked for the PEI bands.  It would be over and above.

444              COMMISSIONER CRAM:  So then you do a have a letter from the ECMA saying that they will use the $6,000 for the equivalent of a PEI provincial competition annually?

445              MR. MURPHY:  It's an e‑mail.  I don't think there is a letter in the application, but I could get one.

446              COMMISSIONER CRAM:  This money is incremental, clearly, to anything else?

447              MR. MURPHY:  Absolutely.

448              COMMISSIONER CRAM:  Sorry.  I must have  myself fairly confused.

449              I want to talk about your financial projections now.  I know it is all in an LMA context, but it seems the Oldies were sort of financially rewarding for you.  They, by the way, also appear to have been in other places.

450              Why would you change the format and flip?

451              MR. MAHEU:  I'm going to let Dave speak to some of the specifics in a moment on the finances.

452              The financial success of CHTN inside the LMA had very little to do with the format that it was in and it had a lot to do with a combined sales offering in a marketplace, a consolidated media offering from radio to clients competing effectively against other mediums like newspaper and television.

453              The profitability had a great  deal to do with economies of scale that can be achieved when broadcasters joined together, as was the case in the LMA.

454              So it wasn't driven largely by the format, it was driven largely by the consolidated sales offering and a reduction in expenses.

455              As a standalone, we are obviously seeing the impact of that now.  When you are on your own you are going to have higher expenses, and when you are competing now, where we weren't competing with those radio stations for revenue anymore, it was complementary, now we are competing not only with those radio stations for revenue, but from other advertising media like newspapers and television.

456              So not a lot to do with the format.

457              COMMISSIONER CRAM:  It seems to, at least the projections that we have. ‑‑ this is in your application.  Help me, Mr. Maheu, this would have been dated November/December of 2004.

458              So the expenses were projected to be consistent with the expenses you had when you had the LMA?

459              MR. MAHEU:  When we put together the application in November 2004 they were based upon ‑‑ David, I am correct in saying they were based upon us still being in the LMA, because we didn't know at the time what the outcome of the deliberations of the Commission were going to be.

460              COMMISSIONER CRAM:  Okay.  Were they also predicated on getting the new FM also?

461              MR. MAHEU:  No.  At the time of the originally filing for the conversion we had not applied for a second FM.  That came later.

462              COMMISSIONER CRAM:  Your application, then, for the new FM, the financial projections there are based on obtaining both the flip and the FM?

463              MR. MAHEU:  I will let Dave comment on that, but I believe we got to that in deficiency when that came up.

464              COMMISSIONER CRAM:  All right.  Okay.

465              MR. MAHEU:  Go ahead, Dave.

466              MR. MURRAY:  Yes.  To clarify, the 4.1 filed in November was assumed that we would remain in either a sales agreement or a Local Management Agreement with Maritime, and then the 4.1 filed with the new FM, The Island, the Rock station, that was filed independently.  The 4.2 that represented CHTN actually assumed CHTN would be flipped to an FM.

467              COMMISSIONER CRAM:  Okay.  So right now how much voice‑tracking is there on CHTN?

468              MR. MAHEU:  Gerard, do you want to handle that?

469              MR. MURPHY:  Sure.  Clearly on CHTN‑AM we are live from 6:00 until 6:00 p.m. Monday through Friday ‑‑ actually, seven days a week.  We have voice‑tracking from 6:00 p.m. until 6:00 a.m. the next morning.  So 12 hours a day.

470              COMMISSIONER CRAM:  Your financial projections for CHTN‑FM, how much voice‑tracking are you planning on?

471              MR. MURPHY:  We were planning on proposing to be live from 6:00 a.m. Monday through Friday until ‑‑ actually, 5:00 Monday through Friday until midnight.

472              COMMISSIONER CRAM:  Sorry.  Can you run it by me again?  I missed it.

473              MR. MURPHY:  We are proposing to be live from 5:00 a.m. until midnight Monday through Friday.

474              COMMISSIONER CRAM:  Monday to Friday.  Then on ‑‑

475              MR. MURPHY:  The weekends, probably from 6:00 a.m. until 6:00 p.m.

476              COMMISSIONER CRAM:  Are you planning on any additional staff if you receive only the flip?

477              MR. MAHEU:  Just the conversion of CHTN from AM to FM?

478              COMMISSIONER CRAM:  Yes.

479              MR. MAHEU:  Not likely.

480              COMMISSIONER CRAM:  In terms of if you receive only the conversion from AM to FM, would you plan on reducing staff?

481              MR. MAHEU:  No.  I think we addressed that a little bit earlier, that we are going to have to tough it out and we are going to have to do what we have to do.

482              COMMISSIONER CRAM:  We have talked about being live.  How much of it will be locally produced?

483              What I'm trying to get at here is, clearly you are going to be obtaining part programming or parts of programming from other stations belonging to you in the Maritime provinces.  There was one here that I saw where I think you were talking about a news ‑‑

484              MR. MAHEU:  "Capital report"?

485              COMMISSIONER CRAM:  Yes.

486              MR. MAHEU:  Yes.  That is a cooperative news feature that all of our stations participate in.  In other words, we have stations in many of the provincial capitals in the Maritimes and Atlantic Canada and they all contribute a news story every day and we have created this program called "Capital Report".  It airs in Fredericton, it airs in St. John's right now in Newfoundland.  It is going to start airing at CHTN as well.

487              So it is cooperative programming rather than supplied.  We contribute to it and part we get to export our story to those other markets as well, but that is really the bulk of what we would be doing.

488              In terms of the voice‑tracking, any voice‑tracking that we do on the radio station is going to be done by people who work here, who live here.  We don't bicycle voice‑tracks or other programs from other markets between any of the Newcap stations.

489              COMMISSIONER CRAM:  I thought there was one on music from the Maritimes.

490              MR. MAHEU:  I think that was in the Island FM proposal.

491              COMMISSIONER CRAM:  Yes.

492              MR. MAHEU:  I think you may have had that impression only because we mentioned that it will be like programs that air in our other markets.  But it will not be the program that airs in other markets, it will be similar to.  But we will create it ourselves here.

493              COMMISSIONER CRAM:  So save and excepting cooperative efforts amongst all of your stations in the Atlantic provinces, all live broadcasting will be locally produced?

494              MR. MAHEU:  That's correct.  The midday woman in Fredericton won't be doing the voice‑track on the all night show here.  Nothing like that.

495              COMMISSIONER CRAM:  So are there any other synergies with your other stations ‑‑ I'm trying not to say "in your other Maritime stations" to get us mixed up with Maritime Broadcasting ‑‑ but are there any other synergies with your other stations in the Atlantic provinces that you would be having?

496              MR. MAHEU:  There may be some promotional synergies where we could work together with a major client or a major advertiser to do some things together, because we can bring reach and scale to some of those endeavours.

497              I think there are probably going to be the sharing of some ideas on best practices, whether it be sales or programming or whatever between our stations, as there are now, but the one thing we try to foster at Newcap and what has helped make us successful is a pretty fierce independence.

498              Jennifer is the General Manager in Charlottetown and Jennifer's mandate is to run this operation like she owns it.  A bit of her personality and her style goes into it, as it should.  That is the same in all of our markets.

499              So we try, with a great degree of caution, of imposing anything on markets.  We suggest it is available as a resource.  If you choose as a manager to implement it, that's up to you, if it makes sense for your market.  But most of our managers are very independent and they have their own ideas and they are quite autonomous.

500              So there is no pressure and there is no need for them to look to other markets to do their work for them.  We staff our radio stations across our group in such a way that they are able to live up to their commitments on their own.  If they need help, they can ask for it, but they rarely need help.

501              COMMISSIONER CRAM:  Thank you.

502              I was going to be asking the Chair for a break, but I'm going to give you some homework.  After the break if you will come back with what you view as the impact on Newcap if:

503              One, we approve both applications;

504              Two, we grant the new FM but refuse the flip;

505              Three, if we deny both, and;

506              Four, if we give the flip and deny the new FM.

507              THE CHAIRPERSON:  I'm sure you wouldn't have thought of any of those scenarios on your own.

‑‑‑ Laughter / Rires

508              THE CHAIRPERSON:  We will break for 15 minutes.  By my watch, at 11:15 we will be back.

509              Thank you very much.

‑‑‑ Upon recessing at 1059 / Suspension à 1059

‑‑‑ Upon resuming at 1119 / Reprise à 1119

510              THE CHAIRPERSON:  We are just about to start.

511              I want to say if there are any interveners here, we are just at the cusp.  We have the interventions scheduled for tomorrow morning, but if someone is here and wants to go ahead this afternoon, we are not going to send you home and drag you all the way back.  If someone is here and wants to intervene, speak to the Secretary and we can fit you in towards the end of the afternoon.  It will be no trouble.

512              That means you can have some time to go to the used book store on Queen Street.  It looks like a good used book store.  Or you can go over to the Confederation Art Gallery, give you something to do, and we will fit you in this afternoon.  If not, we will certainly have you on first thing tomorrow morning.

513              Commissioner Cram, away you go.

514              COMMISSIONER CRAM:  Thank you, Mr. Chair.

515              So to your homework, gentlemen and Ms Evans.

516              The first one was approve both applications.

517              MR. MAHEU:  We think that's an excellent idea.  That came in first, actually.

‑‑‑ Laughter / Rires

518              MR. MAHEU:  Obviously the approval of both of our applications and our proposals we see would provide the greatest benefit to the community at large here in Charlottetown and Prince Edward Island.  We were the only applicant to apply for a Rock format, which the research clearly shows is one that is wanted and needed.  We think the public would be well served with the new service of a Rock‑FM in the marketplace.

519              We also believe that the community would be well served by the good things that CHTN does, that it does today, but being able to do it on the FM band will give that radio station the potential to have a larger and wider audience and be heard.  We believe that is a best case scenario, not only for ourselves but particularly for the listeners in Charlottetown and Prince Edward Island, that both of those proposals be approved.

520              COMMISSIONER CRAM:  And there will  certainly be no need for an LMA or an LSA or anything like that.

521              MR. MAHEU:  No.  I think as Rob mentioned earlier in our opening remarks, the days of LMAs and sales agreements are largely over, and the Commission stated pretty clearly that they will only entertain thoughts of those in situations where economic hardships exist.  We believe the market can support two operators and five radio stations.

522              COMMISSIONER CRAM:  What if we granted the new FM but not the flip?

523              MR. MAHEU:  Well, that would certainly be good news for fans of Rock because they would finally get an FM Rock station in the market, which again the research clearly shows is one they need and want.  It would be good for the community that there would be a new service available to them.

524              The downside of that for Newcap is that CHTN is effectively marginalized as a standalone AM radio station doing what it can.  It is not that this doesn't happen in some other markets where operators have AM and FM operations.  Unfortunately, in a market the size of Charlottetown with the economic realities, we wouldn't have the option that maybe some AM operators have in larger markets where they could possibly convert the station to a News or a News/Talk format and have a potential market size large enough to support it.  With the CBC doing a pretty good job in this market, that would be virtually impossible as an AM signal competing there.

525              Approving the new FM without converting CHTN is positive news for Rock fans but is certainly bad news for those who enjoy CHTN, and they would not have a Classic Hits format to listen to in the market on FM.

526              COMMISSIONER CRAM:  And what if both applications were denied?

527              MR. MAHEU:  That would be unfortunate, for the most part, for everybody in the community.  The Island itself is under‑radioed to some degree, and denying both of our proposals, both of our applications, would deny the Island of the number one format that they are calling for right now.  And that is a Rock format.

528              The Island and Charlottetown in particular waited a lot of years.  This is the last market of this size without some sort of Rock and Roll on the radio.  They want it so much that they are willing to listen to stations in Moncton and Truro, the picket fencing and the interference, just to have something on the radio that plays what they enjoy.

529              We would see that as being an opportunity lost in terms of being able to service the community.

530              Again on the CHTN side, denying that application, we would be left with a standalone AM radio station doing its best to survive in a consolidated radio market with other owners broadcasting on the FM band.

531              COMMISSIONER CRAM:  You would nonetheless persevere?

532              MR. MAHEU:  A promise made is a promise kept.  We don't give up.  Obviously, we would like to be fighting in a battle that we absolutely have an opportunity to win at some point down the road, but we don't turn in the keys and we don't run away.

533              We are employing a number of people right now at CHTN, and many of their livelihoods obviously depend on our long‑term success.  We want to grow.  We want to make capital investment in the community.  We want to be here for a long time.

534              Our proposal before you today for the conversion and the new FM we believe gives us the best prospect to do that.

535              COMMISSIONER CRAM:  And what if we approved the flip and denied the FM?

536              MR. MAHEU:  That would be good news for CHTN and its listeners and those that like Classic Hits, because that would be available on the FM band finally.  We would be able to somewhat compete a little more effectively, but it would still be one radio station versus three.  And that is not even taking into account if you licensed anybody else.  The bad news on that scenario is that people in Charlottetown and Prince Edward Island are still going to have to tune to Moncton and Truro and get pretty sophisticated antennas for their radios to be able to listen to Rock on the radio in this marketplace.

537              Again, the research shows pretty clearly that that is a gigantic hole and a format opportunity that people want that is not being served, and we were the only ones to apply for it.

538              COMMISSIONER CRAM:  But you are not married to the format you have chosen.  If you only get the flip, you could go to a Rock format, couldn't you?

539              MR. MAHEU:  We could.  That possibility does exist.  When you look at the research, there is really room for both and both are quite compatible.

540              It gets back to the competitive environment in the marketplace where with MBS having three radio stations on the Island and we have one, there is very much a competitive imbalance in the marketplace.  Even if we were to be upgraded to an FM as a standalone, it is still three versus one and that is not taking into account any other operators that you would consider licensing.

541              What we were trying to do with our proposal and our application ‑‑ and then I will stop talking ‑‑ is to really bring some competitive balance to the marketplace so that we as an operator have at least the opportunity to compete in a fair and equitable manner to get whatever fair share of revenue we feel we can generate in a market that we see can support two operators if there is some balancing taking place.

542              We also did it in a way that would provide some new service and new formats that were wanted by the listeners of Charlottetown.

543              COMMISSIONER CRAM:  If you say the Island is so under‑Rocked, probably if you only got the flip ‑‑ you are smart operators ‑‑ that is probably where you would go.

544              Is that right?

545              MR. MAHEU:  Not necessarily.  You can make more money doing Classic Hits.  The opportunities for Classic Hits and Rock are about the same.  They are pretty sizable.  In terms of demographic and advertiser appeal, Classic Hits is a better choice.

546              If you only had one and you had to compete in a consolidated marketplace, as a smart operator we would likely look at the format that could provide the best opportunity for us to generate some revenue on a three‑versus‑one basis.  So that would not include Rock.

547              COMMISSIONER CRAM:  Can you give us your revised financial projections for the flip alone?  The projections we had were based on being in an LMA.

548              MR. MAHEU:  Sure.  Could we forward that to the staff as quickly as we can?

549              COMMISSIONER CRAM:  Yes.

550              Ms Murphy will help you with the dates on that.

551              MR. MAHEU:  All right.

552              COMMISSIONER CRAM:  Let's go on to the new FM.  This is the guys' station; skewed male.  This demographic you chose, would it be because of the balance in the other one or because it was most under‑served?

553              MR. MAHEU:  The targeting for the new FM, Island FM, is really based on the research target.  We asked listeners in Charlottetown about a lot of different formats, and when it came to the Rock format we found the big opportunity in Rock was largely it is more male than female, although women do listen to the Rock station, there is no question.  It follows the pretty traditional path of being two‑thirds male and one‑third female in its appeal.

554              Demographically the ratio station's strength is in the younger end, 18‑to‑34, but it still does relatively well 35‑to‑54.  The real big core of the radio station's heart and soul and its largest appeal is going to be in that 25‑to‑34 area, a little bit 35‑to‑54.

555              COMMISSIONER CRAM:  And this is going to be a Bob, Jack, Dave, Joe kind of format, is it?

556              MR. MAHEU:  No.

557              COMMISSIONER CRAM:  No?

558              MR. MAHEU:  That is what CHTN is going to be.

559              COMMISSIONER CRAM:  Okay.

560              MR. MAHEU:  Island FM is going to be a Rock station in the best tradition of Rock stations.

561              The research that we conducted and also the research that Astral did when they were looking to come into this market were strikingly similar.  There is a big hole for a Classic Rock radio station in this market.  A Classic Rock radio station is defined largely as a Rock station that plays mostly gold music, mostly older music, very little current music, if any at all.  There are some Classic Rocks that play no current music.

562              When we got looking at the research a little further in, looking at the size of the market ‑‑ this is in Toronto or even Edmonton; it is just a little over a hundred thousand people ‑‑ we felt that if we went right by the book on the research and just did Classic Rock that that might be a little narrow for this marketplace and not satisfy those folks who like current based Rock.

563              What we found for the research is that there is some compatibility between the tastes, the needs and the wants of the different groups, the Classic Rock fans and the Active Rock fans.  We put together what we call a hybrid format.  The format is part Classic Rock and part Active Rock.

564              There are radio stations like this across Canada in a lot of different sized markets.  The music draws the best from the Classic Rock library while playing some of the new, more popular Rock songs of today.

565              It is really a combination of old Rock and new Rock together.

566              COMMISSIONER CRAM:  In your programming what percentage would be classic and what percentage would be new?

567              MR. MAHEU:  It is pretty much 50:50.

568              COMMISSIONER CRAM:  50:50?

569              MR. MAHEU:  Yes.  And new meaning stuff out in the last three years, from today to three years old.

570              COMMISSIONER CRAM:  What degree of duplication do you see with any of the present stations in the market now?

571              MR. MAHEU:  Very little.  Very little duplication on the Rock side at all.  There is the possibility of a small amount of duplication with CHTN when you get into some songs by some artists, but that is less than 10 percent.  As it relates to MBS' radio stations, two of them are Country, so there is zero duplication.  The only station with the potential of any duplication would be Magic 93, and we anticipate the duplication there to be in the range of 10 percent or less.

572              The songs that we are going to play on Island FM are a lot harder in nature than what they generally play.

573              A great example, just driving in yesterday over the bridge and into town and listening to Magic 93, they played "Angel" by Aerosmith, which is kind of a power ballad by a Rock band.  That is not the kind of song we would play on the Island, but we will play a lot of Aerosmith.  So while Magic might play "Angel" by Aerosmith, we are going to be playing "Sweet Emotion", "Walk This Way" and "Dude (Looks Like a Lady)", and stuff like that.  It is much harder and songs that you may not recognize but they certainly would not play.

‑‑‑ Laughter / Rires

574              COMMISSIONER CRAM: Commissioner Cugini may recognize it but I may not.

575              MR. MAHEU:  Some of you may recognize it, yes.

576              COMMISSIONER CRAM:  I want to know, for my taxi driver, what are we talking about as a repeat factor, maximum repeat factor?

577              MR. MAHEU:  It is very similar to Classic Hits.  On the gold music we would play on Island FM, the top spin on a gold song is probably going to be five spins a week.  You are going to have some music that will get 25 or 30 spins a week, and most of it is the top current Rock music that is just out, just released, and top new Canadian Rock music that is just out and just released.  It will get the most play.  Top spins are likely in that 25 to 30 spins a week, which would represent four to five times a day play.

578              COMMISSIONER CRAM:  This demographic ‑‑ and forgive me if I don't understand this demographic ‑‑ what kind of spoken word do they want, the one that skews primarily male?   MR. MAHEU:  We touched on it a little in our opening remarks.  There is some perception that listeners of Rock stations don't enjoy Talk and they don't want any News, and those types of things, and that has just not been our experience.  We program Rock stations across the country in a lot of different markets and a lot of different forms, some Classic, some hybrid Classic and Active Rock radio stations.

579              What we found is that Rock listeners are very much and very similar to radio listeners in other formats.  They are really interested in relevant Talk from our personalities and from the news that we do.  In other words, we need to do a good job.  They expect us to be more than just a juke box.  They expect to be entertained.  They expect to be informed.

580              How you go about doing that on a Rock radio station is a little bit different than how you would go about it on an Adult Contemporary station or a Country station.

581              As part of our plan for the Island, we are still doing 50‑plus newscasts a week.  As Scott mentioned earlier on, how we treat that news and the types of stories that we cover on the radio station may be a little different because of the demographic difference and the gender difference, but news is the news and what is topical is what is topical with everybody.  Our treatment of it and how we handle it will be a little bit different.

582              Also, one of the other areas of spoken word that is very important on a Rock station is talk about the music.  Rock fans tend to be active consumers of music and they are interested in what is going on.  They are interested about the artist.  They are interested in who is in the studio, who is recording, who is on tour.

583              The Rolling Stones are out on a tour right now, as is U2 and Paul McCartney.  Some big names are out there touring.  Every time that happens, that brings the interest to the forefront of what is going on in music, and we need to be talking about those kinds of things.

584              We have outlined a number of special feature programs we are going to do in certain parts of the day, but largely our personalities and our staff on the air throughout the day are going to be talking about the music, talking about the lifestyle of what is relevant to the people that are listening to the radio station.

585              That goes beyond music.  It could be money, cars, gadgets, relationships, all sorts of things.

586              COMMISSIONER CRAM:  This Island FM will have 53 newscasts.  When are they going to be scheduled?

587              MR. MAHEU:  Scott, would you like to take a crack at filling Commissioner Cram in?

588              MR. CHAPMAN:  With Island FM, as you mentioned, we would have 53 newscasts per week and we would have nine newscasts each weekday.  Those newscasts would be at 6:00, 6:30, 7:00, 7:30, 8:00, 8:30, 12:00, 4:00 and 5:00.  Then on the weekends we would have newscasts on each day at 8:00, 9:00, 12:00 and 3:00.

589              That would give us three and a half hours of news per week.  There would be 75 percent local content in the news portion itself, and that would be over two and a half hours of local news content.

590              COMMISSIONER CRAM:  Mr. Chapman, this is news, or news, sports and weather?

591              MR. CHAPMAN: All of the packages would be news, sports and weather.  The 75 percent would be the actual news portion of it.

592              COMMISSIONER CRAM:  News only.

593              So news of the three and a half hours will be how much?

594              MR. CHAPMAN:  There will be local content of two and a half hours.  So the news content of three and a half hours would be roughly three hours.

595              MR. MAHEU:  I think, to be most accurate, it would be based on what we said before: 75 percent of three and a half hours would be news.

596              COMMISSIONER CRAM:  Okay.

597              MR. MAHEU:  Scott was mentioning of the four‑minute newscasts, three minutes is news.  There is 30 seconds of sports and 30 seconds of weather.

598              COMMISSIONER CRAM:  So we are back at 75 percent of three minutes.

599              MR. CHAPMAN:  Which would be 2.6.

600              COMMISSIONER CRAM:  That would be local?

601              MR. MAHEU:  Yes.  That was just talking about news in total form.  You asked about how much of that news would be ‑‑ how much of the spoken word news would be news.

602              COMMISSIONER CRAM:  Okay.

603              MR. MAHEU:  So 75 percent of the hourly total will be news.

604              COMMISSIONER CRAM:  Of the three and a half hours, 75 percent will be news.

605              MR. MAHEU:  And 25 percent would be sports and weather.

606              COMMISSIONER CRAM:  Yes.  And of that 75 percent, 75 percent yet again will be local, being defined as provincial.

607              MR. CHAPMAN:  Provincial, that is correct.

608              COMMISSIONER CRAM:  And you will agree to a COL that you will provide 75 percent local news out of the totality of news.

609              MR. CHAPMAN:  Yes.

610              MR. MAHEU:  That is correct.

611              COMMISSIONER CRAM:  Your brief says you will be hiring a news director and two full‑time reporters.  Essentially you, Mr. Chapman, will then be news director for one or the other?

612              MR. CHAPMAN:  I will let Mr. Maheu address the staffing issue.

613              MR. MAHEU:  Since we put our supplementary brief together, we are still going to have six people between the two radio stations if they are both approved.

614              In looking back at that, it doesn't make sense at this point now, now that we have had the benefit of filing this, to have two news directors.  We are still going to have six people, but Scott would be the news director of both the Island and CHTN.

615              It just makes sense that there is one news director overseeing the news operations of two radio stations.

616              However, as Scott mentioned earlier, it is very important that each radio station do a good job for its own target audience.  That is going to mean some similarities of stories that are covered on both, but it doesn't make sense to have a separate news director for each radio station.  What does make sense is that one person has a good oversight of our news gathering and news reporting capabilities and that both radio stations are being well served.

617              The total number of news people, including the news director, remains the same.  That will also allow us to reassign what was going to be a news director that might be in the office a lot more out in the field and on the air.

618              COMMISSIONER CRAM:  This one, I believe, had a lot more, if I can call it, editorial ‑‑ or at least as proposed was going to have a lot more sort of editorial minutes, at least if I understood correctly.

619              Who will have editorial control over the news on either one of the stations?

620              MR. MAHEU:  Well, the news director is the first line of defence and oversight on a radio station's news broadcast and newscast.  The news director recruits and hires and oversees the folks in the newsroom on a daily basis.

621              Editorial control over the news ‑‑ news is part of the overall programming of a radio station, and in most radio stations the news director reports to the program director, who is in charge of the total sound and the total scope of the radio operations of the radio stations.

622              I guess in terms of the editorial control or who is responsible, the program director is responsible for all the content on a radio station.  That is where it would end.

623              The news director's responsibilities are pretty clear:  to oversee and supervise based on what the goals and objectives of the radio stations are as they relate to news.

624              COMMISSIONER CRAM:  Thank you.

625              I want to go into your financial projections.  First, we had better get the dating right.

626              This application was filed after you knew you had to discontinue the LMA.  Is that correct?

627              MR. MAHEU:  That is correct.

628              COMMISSIONER CRAM:  So in your financial projections you have stated you believe only 30 percent of your revenue will come from the incumbents.

629              The others are projecting up to 65 percent.

630              Do you have any reason why you are so low or they are so high?

631              MR. MAHEU:  The biggest reason that our financial projections may differ from others is the fact that we are proposing a brand new format that has not been on the air here before.

632              We know through the research we have done that there are many listeners going out of province to hear Rock music on the radio.

633              As an advertiser in Charlottetown, and albeit Prince Edward Island, if you want to reach a Rock audience, you cannot do it right now on radio.  You have to find other ways to do it.  You either have to spend on the internet, advertise in magazines, do direct mail, buy some television, get creative and do stuff door to door, outside events, sampling or whatever.

634              So we believe and we understand that there are a number of clients right now that would love to reach the audience that would listen to Rock, but that money is being spent in other mediums right now, or not being spent at all.

635              We believe that bringing a new format like this one into the marketplace is going to free up some dollars from some other areas that presently isn't going into radio right now.

636              I can't say for sure but I can only surmise that other applications that have a higher amount of the revenue coming from other radio stations may be because there is more duplication there, and there is going to be audience erosion or audience transfer between other broadcasters which may account for why many of their revenues, or most of them, are going to come from existing broadcasters.

637              COMMISSIONER CRAM:  The synergies you would have from a second station would be similar, I would assume, if CHTN were flipped or not flipped?

638              MR. MAHEU:  We will get economies of scale.  What changes there is if CHTN is not approved and converted to FM, it will still be marginalized as an AM radio station and will not achieve its revenue potential, which will impact profits.

639              In terms of expenses and shared economies of scale across the board, yes, that will exist, but the upside on the AM is capped and rather limited.

640              That will affect the overall profitability of the two‑station cluster.

641              COMMISSIONER CRAM:  Again, some synergies with stations in the Atlantic, including Newfoundland.  I have been told when I use the term "Maritime", I am wrong because it excludes Newfoundland.

642              MR. MAHEU:  That is Atlantic Canada.

643              COMMISSIONER CRAM:  Atlantic Canada.

644              So there would be the same synergies with Atlantic Canada:  some back office with very little else?

645              MR. MAHEU:  In terms of the synergies between the two stations here?

646              COMMISSIONER CRAM:  And all of the stations in Atlantic Canada.

647              MR. MAHEU:  Each of our operations throughout the Maritimes and Atlantic Canada stand on their own.  We don't share resources.

648              The only resources we do share are head office resources, payroll and payables and things like that, that many companies do.

649              In terms of the business operations, the programming operations, the news operations on a day to day basis in all of our markets are conducted in the markets by the people in the market.

650              There are no synergies or sharing in terms of we can't get St. John's to do our traffic for us and cut a couple of positions.  We don't do that.

651              COMMISSIONER CRAM:  The end of the LMA, aside from the administration and operational changes that you have already referred to, are there any others?

652              MR. MAHEU:  I'm not sure I understand the question, Commissioner; I'm sorry.

653              COMMISSIONER CRAM:  As a consequence of the end of the LMA, you talked about adding eight new staff.

654              MR. MAHEU:  Yes.

655              COMMISSIONER CRAM:  The capital.  You had to inject a fair bit of capital, and then you moved to the new storefront building, if I can call it that.

656              Are there any other admin and operational changes?

657              Or what didn't change?

658              MR. MAHEU:  Pretty much everything changed.  It is very akin to the launching of a new radio station.

659              I will get Jennifer to tell you a little bit about that.

660              When we ended the LMA, we had to move out.  We had to move to a new location and we had to build new studios.  We are pretty proud of it actually, on University Avenue.

661              From that day forward when we started out, everything was new and everything was different.  We moved out of the place we were in.  We had to hire our own sales department.  We had to go out and sell our own merits.  We improved the product.

662              Jennifer, feel free to chip in.

663              I know it was an awfully big deal.

664              MS EVANS:  Well, it has been quite an adventure for the last four months.  There is no question about that.

665              What we have seen happen is we really have put together what I feel very confident in, the best broadcasting team here in PEI.  We have some very well‑known experienced broadcasters on our team.  We have a sales team that is very well connected to the community.  We are in the best location that we could possibly broadcast from, really, in Atlantic Canada.  We have a lot of good things on our side.  We have had a lot of good news stories from our community service.

666              At the end of the day what we are hearing from our clients and from our listeners is: "When are you going to be FM?  Tell me more about when you are going to be FM.  I can't wait to do business with you when you are FM."

667              I have never seen so much excitement or buzz about radio in a really long time.  People are talking about this medium like they haven't done for a number of years, and that has been a really refreshing thing to see in this industry.

668              People are interested.  I can tell you I am sure by the end of today we will have a lot of phone calls to return with people wanting to know:  How did you make out?  Are you going to get that Rock station?

669              When we did the sampling of the Island FM through the website, we drove traffic to that website and as a result of that over 1300 letters were generated from listeners that had absolutely no stake in this process other than we want a Rock radio station in PEI.

670              We had listeners calling me and e‑mailing Mark and saying:  Can I do anything to make that happen?  Do you want to give me some postcards?   Do you want to give me a T‑shirt and I'll go out and I'll talk about it?

671              We had two open houses to explain where our business was going and to show people our new storefront studio.  Over 300 people came out to see and hear about what our plans are.

672              There has been some real excitement again about radio in this marketplace, and that is very exciting to be part of.

673              At the same time, we are pretty realistic in knowing that they want FM quality sound.  Our listeners want it.  Our clients want it.  That is what we are up against currently.

674              COMMISSIONER CRAM:  I think you said, Mr. Murphy, a 61 percent reduction in revenue?

675              MR. MURPHY:  Yes.  For the three months just prior to the end of the LMA, compared to the three months just after, a 61 percent reduction.

676              COMMISSIONER CRAM:  Coast Broadcasting said in their supplementary brief that ‑‑ and I believe it is over the period of the LMA:

                      "It is interesting to note that the radio sales have dropped in the market by half a million dollars, yet profit has gone up half a million to $1.5 million."

677              It being, I guess, the assertion that the resources put into radio in Charlottetown were reduced as a result of the LMA and that the revenues received from radio were reduced as a result of the reduced programming quality.

678              Do you think it is possible that your revenues could go up as a result of the increase in the coverage and quality of CHTN?

679              MR. MURPHY:  Well, our revenue as CHTN‑AM has not really changed very much before or after the LMA.  Remember, we were recording 25 percent of the total revenue in the market, 25 percent of the expenses and 25 percent of the bottom line.

680              CHTN never really sold very much.  We never made money when CHTN was AM.  So from 1986 to 1994 we never made a penny.  We made money during the LMA years from 1994 to 2005, and now we are back into the standalone and we are not making money.

681              Things will improve somewhat.  I don't know when or if we will make money with CHTN‑AM.

682              COMMISSIONER CRAM:  Are you essentially saying that as a consequence of the LMA, your revenues were higher than the share CHTN would get as a standalone?

683              MR. MURPHY:  Absolutely.

684              COMMISSIONER CRAM:  What can you tell me about the competitiveness of the market since the end of the LMA?

685              MR. MAHEU:  I think that Jennifer can give you an update on that.

686              MS EVANS:  As I talked about just a moment ago, there is real excitement in this marketplace now, especially among our advertisers.

687              They are excited for two reasons.   People like to see competition.  There is no question about that.  They like to have a choice in who they do business with, so they are excited about that prospect.  Then they are also very excited about the new formats that we are proposing to bring to Charlottetown.

688              That has made things very interesting in the short term, but at the same time I have been very fortunate that this is a small operation.  So the general manager is the sales manager and goes out on a lot of sales calls with our sales team.

689              I have been on the front line with our sales team and we have great discussions with these clients.  They are excited about what we are doing and the team we have gathered together, but the last statement is:  "When are you going FM?  I will do business with you when you are FM."

690              That is just the reality that we are facing.  We are an optimistic team.  We have been working very hard over the last four months, and will continue to do so, to make this operation as successful as we possibly can.  However, at the end of the day after being on the front lines for the last four months and meeting with all of these clients and being quite involved in the business community, that is the message that we are hearing.  I don't see that changing.

691              We have put a lot of resources towards CHTN‑AM.  I don't know how much more we can really do as an AM station in order to possibly get to a break‑even point, if ever get to turning a small profit.

692              The FM is a crucial element to giving us a product that our clients and our listeners really are demanding.

693              COMMISSIONER CRAM:  Tough to compete with colleagues of nine years.

694              MS EVANS:  Absolutely.  It is pretty hard to deny.  I have been out of the radio business for the last five years but worked certainly with many of the folks that we are now calling after or calling in between appointments.  We all shared the same roof for nine years and it is pretty tough to all of a sudden be saying okay, now you are the competition.

695              I think we are both approaching it from a very friendly, competitive nature.  It is a small town.  We have to be very aware of the fact that it is a small town, and people don't want to hear negativity about competition.  That is certainly not the way that we operate in our business at Newcap.  That has been our approach.

696              We are focussed on what Newcap Charlottetown is doing and what we can do to possibly be successful.

697              COMMISSIONER CRAM:  Have the costs of advertising spots gone up or down since the end of the LMA?

698              MS EVANS:  We have maintained the rate for the benefit of our clients.  It certainly is no fault of theirs that we have to pay for rent and additional staff and all the overhead that has come along with the end of the LMA.  So we have made that commitment to our clients that they would not incur those additional costs in the short term.  They have been very receptive and respectful of the fact that we have been respectful of their budgets.  Just because in the middle of the year we changed our business operations, certainly they can't change and increase their advertising budgets.

699              COMMISSIONER CRAM:  Voice tracking.

700              I think this is you, Mr. Murphy.

701              When is that proposed, live ‑‑

702              MR. MURPHY:  We propose to do 15 hours live Monday through Friday.

703              COMMISSIONER CRAM:  From?

704              MR. MURPHY:  From 5:00 a.m. until 8;00 pm.  And then on the weekends, from 6:00 a.m. to 6:00 p.m., which would be 12 hours.

705              COMMISSIONER CRAM:  And again maybe cooperative efforts on programming with the rest of the Atlantic stations, but everything else would be locally produced.

706              MR. MURPHY:  Yes.

707              COMMISSIONER CRAM:  I want to talk about your CTD just a little.

708              You are talking about giving $70,000 a year to Starmaker, and I recall hearing a briefing from the head of the Starmaker Fund and noticed that of the money going out, 50 percent of it went to broadcasters.  In other words, broadcasters put money into the Starmaker Fund and 50 percent of it went back to broadcasters.

709              On average, how much money do you get back from the Starmaker Fund per annum as a percentage of how much you put in?

710              MR. MAHEU:  I will tell you, as God is my witness, I am not aware of us receiving any money back from Starmaker.  But now that I know about this, this is wonderful news.

‑‑‑ Laughter / Rires

711              MR. MAHEU:  I know that Starmaker, to their credit, is using radio where it is appropriate in terms of marketing and advertising, and that makes sense.  This isn't radio with its hand back out, and I am not going to be an apologist for Starmaker.

712              I do know a little bit about the organization.  They are in the business of promoting and marketing music and tomorrow's stars, music stars, exporting Canadian talent.

713              We would be a little disingenuous as an industry if we said you should spend all that money on TV because that is the best way to reach people.  It is not.  In the music business radio is still the most effective way that people discover new music and find out about new bands, and so on.

714              To take those bands to the next level, radio should certainly be part of the media mix.

715              We do not get a lot of business from Starmaker, and that is not why we give them money.  We give them money so that they can continue the good work they are doing.  We believe that the money we spend with Starmaker is well spent in positioning the next new crop of stars to get to the next level, whether it is the Avril Lavignes or the Nickelbacks, or whoever else become international stars.  It reflects well on Canada and it reflects well on our business, and we think in the end it reflects well on our company.

716              So that is why we are giving money to Starmaker.

717              COMMISSIONER CRAM:  You haven't answered my question.

718              MR. MAHEU:  The answer to your question is:  To my knowledge, we have not put our hand in their pocket for a nickel.

719              COMMISSIONER CRAM:  Thank you.  Subject to further notice and ‑‑

720              MR. MAHEU:  Yes, subject to further review, but I am not aware that that generally goes on with us.

721              COMMISSIONER CRAM:  And then there is the money ‑‑ and now I'm on track with this one ‑‑ the money going to the PEI Music Awards Association and the ECMA.

722              If I have it right, it is $40,000 a year and it is $20,000 to each one.

723              MR. MAHEU:  Correct.

724              COMMISSIONER CRAM:  I guess the money that is going to the ECMA is for established artists, providing education, their managers, tour support.

725              I am asking myself:  What is the difference between that and the Starmaker Fund?

726              MR. MAHEU:  In terms of what they do or what they offer?

727              COMMISSIONER CRAM:  Yes.  It seems that there is really a nuance on ‑‑

728              MR. MAHEU:   There are some similarities there too, very much so, Commissioner Cram.  I think the real difference is with Starmaker they have the flexibility to buy advertising and buy marketing materials, et cetera.  The money we are giving to the ECMA is really more educational and hands on, for their managers and so on, to make them a little more effective in what they do.

729              Both our Starmaker plans and our ECMA plans are PEI‑specific.  With Starmaker we don't put any strings saying you can't buy advertising, because that is a lot of what they do.  The ECMA money doesn't involve buying any advertising or buying newspaper/television.  It is practical hands on education and help.

730              COMMISSIONER CRAM:  Then you say that Starmaker ‑‑ did I misunderstand you?  Did you say that Starmaker is dedicated solely to PEI artists?

731              MR. MAHEU:  We are asking Starmaker that the money we are giving to the Starmaker Fund be devoted, if possible ‑‑ if there are PEI artists that qualify, that they get first crack at that money.

732              There isn't always a PEI artist or band that is ready to go to the next level that will qualify for Starmaker funding.  What we are asking the Starmaker Fund to do is if there is an emerging PEI artist, and as a fallback position a Maritime artist if there is no PEI artist ‑‑

733              COMMISSIONER CRAM:  An Atlantic artist.

734              MR. MAHEU:  Then we go to the Atlantic.  Anywhere out in this part of the world, if there is nobody from PEI specifically, these folks have first crack and are in line for our money.

735              We want our money at Starmaker to be focussed on artists from this area.

736              COMMISSIONER CRAM:  Is the Starmaker Fund like FACTOR, in that the money is allocated to a certain region or area and if it is not spent in that year, then it goes into the general funding?

737              MR. MAHEU:  I'm not sure about that. I would have to check on that.

738              My understanding with Starmaker is they have no shortage of folks lined up to take advantage of the funding.  The way the Canadian music industry is right now, it is rather buoyant and there are a lot of emerging stars that are kind of on the cusp ready to take the next step.

739              So I don't see that as being an issue.  If it was a concern for the Commission, we would certainly find out.

740              Our preference would be that it doesn't go into general revenues; that it is reserved aside and accrues.  So if there is nothing going on in Maritimes and Atlantic Canada one year, that money be set aside so that when somebody does come along, there is an even greater pool of money for them to take advantage of.

741              COMMISSIONER CRAM:  And that the money would be incremental to that otherwise allocated to PEI.

742              MR. MAHEU:  That is correct, yes.

743              COMMISSIONER CRAM:  Can you ascertain exactly how Starmaker is going to handle those monies?

744              MR. MAHEU:  We will find out and file it.

745              COMMISSIONER CRAM:  Whether it will be incremental and whether the allocation would simply remain until a PEI or a Maritime or an Atlantic ‑‑

746              MR. MAHEU:  We will be happy to do that and we will file it with staff.

747              COMMISSIONER CRAM:  And the money going to the PEI Music Awards is for a showcase.  This is its own association.  Do they have a showcase at present?

748              MR. MAHEU:  Dave Murray, do you want to touch on that?

749              MR. MURRAY:  My understanding is that they don't and that they need these funds to create the showcase.

750              The organization is helped by the ECMAs.  It contributes to the ECMAs, but it is not  very active.  They are having difficulty raising funds now.

751              COMMISSIONER CRAM:  Is it just going to be a showcase that is going to cost $20,000?

752              MS EVANS:  The PEI Music Awards Association is relatively new to Prince Edward Island, so they are in the formative struggling years.  Currently they have an annual music awards which happens in November of each year.  It has probably taken place for the last four years.  720 CHTN is the sponsor of this year's awards program.

753              Their vision is not to become a duplicate of the ECMAs but certainly provide those resources to PEI artists, similar to what the East Coast Music Awards Association does on an Atlantic basis but have a core area of contact for PEI musicians and artists.  So that is their vision.

754              They are really in an expansionary role right now and looking for additional funds to make it more of a full‑time presence instead of it being a standalone event once a year.

755              COMMISSIONER CRAM:  The $20,000 is for that standalone showcase?

756              MS EVANS:  No.  It is to go to the Music Awards Association to continue with their efforts of expanding.

757              The music awards in November is part of their activities, but they are also looking at offering additional activities beyond the awards showcase itself.

758              COMMISSIONER CRAM:  Then it is really just $20,000 as general funds for the PEI Music Awards Association.

759              MR. MURPHY:  There is a specific budget in our reply to deficiency that they have provided for us.

760              COMMISSIONER CRAM:  Then the ECMA already are holding these seminars and workshops, if I noticed.  There was one for February 17th.  I think it was something that was given to us.

761              This is incremental money so they can have more.  Is that the idea?

762              MR. MURPHY:  That is correct.

763              COMMISSIONER CRAM:  Have they committed to having one more, two more a year?

764              MR. MURPHY:  I didn't get into that level of detail, to be honest.  The ECMAs are very active.  As Mark indicated, there is no shortage of Maritime and Atlantic Canadian artists.  We do partner with them in many of our stations and we contribute in many ways.  We give them countless amounts of promotional airtime, et cetera, to support their groups.

765              I am not quite sure of the answer to that question.

766              COMMISSIONER CRAM:  They are a very successful organization, I must say.

767              MR. MURPHY:  Yes.

768              COMMISSIONER CRAM:  Thank you.  I think those are all of my questions, except for the last one:  Why is yours the best use of the frequency?

769              THE CHAIRPERSON:  Perhaps if I may, since that is your chance to hit a home run, we will see if there are other questions from my colleagues or from staff, and then in summing up we will give you the chance to be the local Sultan of Swat here and knock that one out of the park.

770              Commissioner Cugini.

771              COMMISSIONER CUGINI:  Good morning.

772              Perhaps, Mr. Maheu, you and I can have a Battle of the Bands a little later on.

773              MR. MAHEU:  Sure.

774              COMMISSIONER CUGINI:  You had a discussion with Commissioner Cram about the duplication in the market should Island FM be licensed.

775              I would like to know, in your ideal scenario, if both the flip is approved and the new FM is approved, what duplication is there going to be between those two services?

776              Is the Joshua Tree going to be on CHTN‑FM and the new U2 album on Island FM?

777              MR. MAHEU:  That is a good question.  The duplication between the Classic Hits format we are proposing for CHTN‑FM and our proposed Island FM station is rather small, less than 15 percent.  They are going to share some artists but they are not going to share a lot of songs.

778              For instance, on a Classic Hits station you might play "Hungry Heart" by Bruce Springsteen because it was a great hit in the 1980s but that song likely wouldn't get play on the Rock station.  We would be playing different Springsteen tracks.

779              The same with John Mellencamp and all that kind of stuff.  To be fair, there is some duplication because there are some songs that crossed over and were big Top 40 hits and big Rock hits; some Bon Jovi stuff.  There is some Def Leppard music, some Mellencamp songs, but largely the actual song duplication between the two stations will be less than 15 percent.

780              COMMISSIONER CUGINI:  With some artists they could qualify on both.

781              MR. MAHEU:  That's right.

782              COMMISSIONER CUGINI:  For both formats.

783              MR. MAHEU:  They do.

784              To use your example of U2, for instance, the Island FM would be deep into U2, very deep into a lot of albums, where I am trying to think off the top of my head, there might be one, possibly two songs that you might hear on the Classic Hit station: "Mysterious Ways" and maybe "I Still Haven't Found What I'm Looking For", probably.  Those appear on a lot of Classic Hit stations.

785              You might hear those two songs on the Island once in a while, but you would be a lot deeper, dozens of U2 cuts deep on the Island.

786              COMMISSIONER CUGINI:  You talked about "CHTN Presents", an hour‑long program that will feature PEI artists and their music, with interviews and possible live acoustic performances in our storefront.

787              Is this a program that exists currently on your AM station?

788              MR. MURPHY:  No, it doesn't.

789              COMMISSIONER CUGINI:  So this would be a new initiative.

790              MR. MURPHY:  Yes, it would.

791              COMMISSIONER CUGINI:  Would these be new and emerging artists or established artists?

792              MR. MURPHY:  They would be both, I would imagine.  We would feature both up‑and‑coming artists and those that are just starting out, or artists that are currently in the music industry and those that are moving up as well.

793              COMMISSIONER CUGINI:  I suppose to new and emerging, we should also add the word "unsigned".

794              MR. MURPHY:  Yes.

795              COMMISSIONER CUGINI:  So is there a policy or an objective that you would have in giving unsigned artists some airtime?

796              MR. MAHEU:  Yes.  Really this is one of those rare occasions where a radio station will break its format.  There are going to be times where we are not going to play Classic Hits, and this is going to be one of those times where ‑‑ our preference always is to try to give these new emerging acts a helping hand up instead of a handout.

797              A lot of them just want some notoriety.  There are some bands that play in markets like Charlottetown where these folks have full‑time jobs and they may never sign a recording contract.  They play on weekends at clubs and bars and they play at weddings and things like that, and they are looking for some exposure.  Sometimes they write new material and they are very proud of it.

798              As a local radio station this is an opportunity for us to be a bit of an outlet so that people can hear about them and discover them.  It helps their profile.  It helps get them noticed a little bit.  Sometimes it never amounts to very much.  They may never be on their way to a gold record, but as a percentage very few do.

799              "CHTN Presents" is really an opportunity to showcase some Island talent.  As Gerard mentioned in our opening remarks, we have that storefront studio now that faces out on University Avenue.  It is a great venue for people to be able to walk by and see it and hear it, and people want to be part of it.

800              That is really what we are trying to do with "CHTN Presents".

801              COMMISSIONER CUGINI:  And some, of course, would argue that if you never give them airplay, we will never know if they will become ‑‑

802              MR. MAHEU:  Yes, that's right.

803              COMMISSIONER CUGINI:  Along those same lines for Island FM you talked about "Sonic Source", "Rockin' the Island".  Again, are we talking about established artists or new emerging and unsigned?

804              MR. MAHEU:  A combination of both.   It is going to be not only focussed on PEI but the maritimes in general, east coast music, with obviously preference given to new emerging artists.

805              We see these programs as an opportunity to kind of solicit some demos and tapes and MP3s from bands.  They are looking for exposure.  It is not hard.  Once the word gets out, stuff travels pretty fast on the internet.  When they know there is an FM station that is doing a weekend show and they are featuring unsigned artists and acts, in come the MP3s.  So we have lots to choose from.

806              You never know what you are going to find.  That is the other thing.  The next big thing might be coming into your in‑box by e‑mail, and you listen to it and you go "wow, this is pretty good".  That is what these shows are all about.

807              Again, with Island FM, going back to the type of people that listen to Rock radio, they are interested in what is new, what is bubbling under and what is emerging.  From a programming point of view, every radio station takes a certain amount of pride in being the radio station or the music director or the program director that discovered the next Nickelback and the next Avril Lavigne.  So they are always on the lookout out there.  I think these types of shows are great to give that kind of showcase and profile.

808              COMMISSIONER CUGINI:  Do you have an idea yet when they would be scheduled?

809              MR. MAHEU:  Those types of programs tend to be scheduled in the early evening or on the weekends.  I think if we get enough reaction to those types of shows ‑‑ and, again, it will be up to the local folks ‑‑ they can be run multiple times too, where you might run something every Thursday night at 7:00 and then repeat it again on Saturday morning at 6:00 and Sunday afternoon, because people don't always necessarily make an appointment to listen at those particular times.  If the shows are good enough and there is enough material, we can move it around a little bit.

810              COMMISSIONER CUGINI:  Just one last question:  When did the Tragically Hip cross over to Classic Rock?

811              You don't have to answer that.  Thank you.

‑‑‑ Laughter / Rires

812              THE CHAIRPERSON:  I have two very short questions, after which we will go to the lawyers and then we will let you hit your home run.

813              I wanted to follow up on the homework that Commissioner Cram gave you:  what if you could have this, what if you could have that, what if this scenario, what if that?

814              I want to put a final question to you, just in a very, very simple way.  It is not going to be a question that will make you happy but think of it only as a hypothetical.

815              What if you had to choose?  You could have one of your applications but you couldn't have both.  Which one would you take?

816              MR. MAHEU:  Both.

‑‑‑ Laughter / Rires

817              MR. MAHEU:  If we had to choose between one of the proposals.  That is a very difficult question to answer.

818              THE CHAIRPERSON:  If I knew the answer, I wouldn't waste your time.

819              MR. MAHEU:  And if we knew we could choose, we probably would have prepared an answer.

820              Regardless of what happens, regardless of which one we would choose, having one and only one radio station is a very difficult position to be in, in this particular market.

821              THE CHAIRPERSON:  Well, if you choose the new FM, you would have two.

822              MR. MAHEU:  We would, but it would be the equivalent of having a station and a half, because the potential of CHTN to generate the size of audience necessarily to be financially successful is very, very limited.  The market is of a size that it would be very difficult to program News/Talk, which is people who are predisposed to AM radio want Talk.

823              THE CHAIRPERSON:  Suppose I just push you in a corner and say we still want an answer, which one would you take?

824              Maybe we should go to Mr. Steele on this one.  I don't know.

825              Assuming in our deliberations, hearing all the other applications and looking at what the market can bear, we somehow come to a conclusion where you could get one but you couldn't have both ‑‑

826              MR. MAHEU:  We would want the new FM.

827              THE CHAIRPERSON:  You would want the new FM?

828              MR. MAHEU:  And keep CHTN.  Who knows what is going to happen down the road?  There may be a technological breakthrough tomorrow that makes AM sound as good as FM.  Who knows with digital radio policy, et cetera.

829              THE CHAIRPERSON:  At least you are growing, one step at a time.

830              MR. MAHEU:  You can certainly move some economies of scale on cost, but I do have to caution you that in saying that, I am answering the question because you asked it.

831              THE CHAIRPERSON:  Absolutely.  These are hypothetical questions.

832              MR. MAHEU:  It would be a hardship.  It would certainly eliminate some of the potential service that the market, we feel, deserves and wants.

833              THE CHAIRPERSON:  We have heard everything that you have said today, and I don't want you to think that I have somehow reduced this to a coin toss or something.  It just seemed to me to be one extra question in the list that Commissioner Cram had that maybe would be useful.

834              Finally, you have looked at this market pretty carefully, and you have been in it now in a number of incarnations under an LMA and now on your own.  How many licences could we issue?  What will the market stand?

835              MR. MAHEU:  You just said it.  I  think what the market will stand is the important question.

836              In terms of service to the community, I think Islanders would want as many radio stations as you could possibly license.  Whatever spectrum is available, license it and let people have as much choice as they possibly could have or want.  That, I think, is the public's feeling.

837              That always has to be balanced with the financial reality of what can be supported in a market like this.  We believe that the public deserves as much choice as the market can possibly afford to provide them.

838              We know right now, as a standalone AM, we are losing money and will continue to lose money as long as we are a standalone AM, in spite of Jennifer and her crew's great efforts.  That is just the realities of being an AM radio station.

839              On the other side of the coin, the other operator in the market, MBS, has three stations, two FMs and an AM.  Their AM is a heritage station, on the air since 1924.  It has a big signal and a large enough audience that it does very well.

840              Could the marketplace in your question, Mr. Chair, support multiple owners more than what it has now?  That is the very difficult question to answer.  Our considered opinion, given what we know about the market and given what we know about expenses and costs, is that it would be very difficult for this market to support a third operator, especially an operator that will come in as a standalone, enjoying no economies of scale on cost, having to start up and build goodwill from ground zero against a consolidated MBS, and even a standalone Newcap.  We have been here for 20 years, almost 20 years now, and we do have some goodwill and good things happening in the market.

841              Financially, the impact it would have on the other two operators, although we haven't seen any rate reductions thus far in the market, a third operator would likely mean the potential of that happening.  Right now this market is unrated.  It is not rated by BBM.  We would see that a third operator in the market means the market is likely to be rated, which then moves radio away from a results‑oriented sale to a rating and share sale, which normally is followed by spiralling and declining rates, higher expenses for promotion and marketing and costs of research and costs of BBM, and that results in declining profitability.

842              THE CHAIRPERSON:  We have just come out of a week where all the telephone companies are telling us:  Let the market go.  Let the market go.  Maybe we want to experiment.

843              MR. MAHEU:  Yes.

844              THE CHAIRPERSON:  I don't want to get you alarmed.

845              I have your answer on that, and I am grateful for it.

846              Ms Murphy.

847              MS MURPHY:  Thank you, Mr. Chair.

848              I would like to review the undertakings that I have noted.  I have three.

849              First, confirmation in writing from the East Coast Music Association, the ECMA, with respect to your proposed contribution of $6,000 per year, as set out in your application, to convert CHTN.

850              Second, revised financial projections for the proposed conversion of CHTN‑FM, to reflect the termination of the LMA.

851              Third, details as to how your contribution to Starmaker will be allocated to artists, as proposed in your application for the new FM station.

852              Would you be willing to provide all three submissions by Wednesday, October 12^th, taking into consideration that it is Thanksgiving weekend next weekend?

853              MR. MAHEU:  A week should be more than enough time.

854              MS MURPHY:  Thank you

855              That is all, Mr. Chair.

856              THE CHAIRPERSON:  I guess it is your turn, then, to take a couple of minutes and tell us why you should have what you desire.

857              MR. MAHEU:  Thank you, Mr. Chair.  It won't even take that likely.  We have been through a lot of ground this morning.  Thank you for your attention and your time and some excellent questions.

858              I think we have indicated over our discussion and our presentation this morning that Newcap would very much like to be the licensee of CHTN‑FM, and we would also like to be the company that brings a new service to the market of Charlottetown.

859              What it boils down to is:  Why us when you have other choices and other options in the market?

860              Very simply ‑‑ this may sound a little repetitive but we absolutely believe it to be true ‑‑ approval of our proposal will bring two exciting new listening choices to the Charlottetown and Prince Edward Island area, two choices that the research indicates very clearly are needed and wanted by Charlottetown radio listeners.

861              Approval of our applications will also result in another editorial news voice on the air available to listeners who presently are listening out of market and out of province right now to get their news and information and their rock music.

862              We are also ready, willing and able to put a million dollars of Canadian Talent Development money over seven years on the table to some of the initiatives that we discussed earlier this morning.  That money could have a real impact for area artists, emerging artists, both in PEI and other parts of the Maritimes to help them get a leg up and take the next step.

863              We have a long and rich tradition in this market of service, not only throughout the Maritimes but in Charlottetown in particular.  As Rob mentioned earlier, as we began the day, we purchased CHTN in 1986, so it is coming up on its 20^th year anniversary as a Newcap radio station.  We see the post LMA days here as a new opportunity and a new day in broadcasting for us.

864              This company is under new management and has been since Rob became the CEO a few years back.  I joined the company less than two years ago.  We have a new approach and a new outlook on things.

865              We are proudly and fiercely independent and we are going to remain that way.  We would really love the opportunity to roll up our sleeves and get to work on bringing two new FM services to Charlottetown.  We know it is a sacred trust.  We will put the money, the capital and the people behind it, and we will put great product on the air.  We will make it work, and we will make you proud of your decision.

866              We thank you very much.

867              THE CHAIRPERSON:  Thank you very much.

868              That concludes this morning's proceedings.  We will break until 2 o'clock for lunch.

869              At 2 o'clock ‑‑ and I would be very grateful if we could get started at 2:00.  It gives us enough time, I think, to find a hot dog vendor out there somewhere.

870              At 2 o'clock we will hear from Maritime Broadcasting and the questions will be by my colleague Commissioner Cugini.

871              Thank you very much.

‑‑‑ Upon recessing at 1230 / Suspension à 1230

‑‑‑ Upon resuming at 1400 / Reprise à 1400

872              THE CHAIRPERSON:  Madam Secretary.

873              THE SECRETARY:  Thank you, Mr. Chairman.

874              We will now proceed with Item 3 on the agenda, which is an application by Maritime Broadcasting System Limited to convert Radio Station CFCY Charlottetown from the AM band to the FM band.

875              The new station would operate on Frequency 95.1 Mhz, Channel 236‑C1, with an average effective radiated power of 73,300 watts.

876              Appearing for the Applicant is Mr. Robert Pace, and Mr. Pace will introduce his colleagues.

877              You will have 20 minutes to make your presentation.

878              Thank you.

PRESENTATION / PRÉSENTATION

879              MR. PACE:  Thank you.

880              Good afternoon, Chairman Langford, Commissioner Duncan, Commissioner Cram, Commissioner Cugini, Commissioner Noël, and staff.  I am Robert Pace, the owner of Maritime Broadcasting Systems Limited.  I would like to welcome you to Charlottetown, the birthplace of Confederation.

881              It is worthy to note that the framework and foundation of our great country was debated and confirmed just a few short blocks from this room in September 1864.

882              Coming to Charlottetown, either with my family or on business, always gives me a great sense of pride that our company plays such an important role in the city where Canada first established its roots.

883              While on the subject of roots, I would like to welcome Commissioner Duncan, a fellow Nova Scotian, to our first public hearing in the maritimes.  We are certain that your knowledge and broadcast‑related experience will be sound counsel in the decisions to be made resulting from this public hearing.

884              Mr. Chairman, I also feel certain that Mrs. Duncan can steer yourself and fellow commissioners in the right direction for a great feed of P.E.I. lobster.

885              We are pleased to be here today to discuss an exciting proposal for radio in Charlottetown.  Let me begin by introducing my panel.

886              To my right is Owen Barnhill, our Chief Financial Officer.  To my left is Heather Tedford, our General Sales Manager for CFCY and CHLQ here in Charlottetown.

887              Seated behind me, to my right, is Dan Barton, Director of Programming.  Next to him is Mike Maxwell, Director of Technical Services, and Rebecca Black, our Morning Show Host at CFCY AM.

888              We are here today to make our case to convert CFCY AM, with 80‑plus years of service on Prince Edward Island, to the FM frequency 95.1, while maintaining our country music format, a music format that is not currently available on the FM dial here in Charlottetown, and for which no other party has made application at this hearing.   

889              We will start by asking Heather to provide an overview of MBS' history in the maritimes and our regional mandate.

890              MS TEDFORD:  Thank you very much, Robert.

891              Originally established in 1969 as Eastern Broadcasting Limited, our maritime‑owned company is built on the tradition of community service, faithfully providing broadcast services in Prince Edward Island, Nova Scotia and New Brunswick.

892              From its beginnings in Campbellton, New Brunswick, MBS has evolved into a truly regional broadcaster, operating 24 stations in markets as large as Halifax, with a population of over 350,000, to Digby, Nova Scotia, with a total population of just over 2,000 people.

893              In addition to high quality radio services in every market in which MBS operates, we have provided human and financial resources, programming expertise, state‑of‑the‑art equipment, modern facilities and a longstanding commitment to the communities we are privileged to serve.

894              For over 80 years our most senior heritage station, CFCY AM, has played a vital role in the lives of the residents of Prince Edward Island, a province with a solid foundation of country music.

895              CFCY AM was the original host station for Don Messer and his Islanders, and in later years was instrumental in the music careers of island residents, Stompin' Tom Connors, and the late Gene MacLellan.

896              With the approval of this application, we will continue to embrace these traditions, including the weekly Saturday night "Hoedown" program.  This three‑hour program has been part of island listeners' lives for nearly 50 years and will continue to be a Saturday night staple on CFCY FM.

897              The "Hoedown" reflects the island audience by being interactive, with listener requests welcomed each and every week.

898              Other program features will include our Wednesday night, one‑hour "Bluegrass Island" program, hosted by local bluegrass musicians and P.E.I. music award winners Charlie Hanson and Serge Bernard.

899              Also included will be the one‑hour Sunday night "Country Roots" program, which pays tribute to the artists who first brought country music to audiences.

900              CFCY has long demonstrated its commitment to local and regional artists through regular airplay for maritime artists, as well as within its long‑running "Homegrown Country" program.

901              As the advantages of improved technology become available to the island's newest artists, such as Richard Wood, Lennie Gallant, Ninth Hour, Jericho Road, Cynthia McLeod and Kim Albert, there has been an increased demand for a better method of delivering their music.  Thus our application for conversion to the FM band.

902              The country music fans in Charlottetown deserve to hear their favourite music in the superior technical quality that broadcasting on the FM band can deliver.

903              Dan.

‑‑‑ Pause

904              THE CHAIRPERSON:  There seem to be some difficulties with the microphones, so we will take a five‑minute adjournment while we settle the problem.

905              I apologize, and if you want to start again at any point, that is fine with us.

‑‑‑ Upon recessing at 1410 / Suspension à 1410

‑‑‑ Upon resuming at 1420 / Reprise à 1420

906              THE CHAIRPERSON:  All right.  Let's start again.  You folks can start precisely where you are most comfortable.

907              MR. BARTON:  That's great.  Thank you.

908              I actually found this quite reminiscent of our challenges dealing with AM technology, so maybe it is apropos.

909              As the Commission is aware, AM stations have faced considerable economic difficulties in recent years.  Listeners now have a multitude of choices from which to obtain information and entertainment:  television, newspaper, and the internet.

910              The recent approval of satellite radio licences in Canada has paved the way for a variety of listening options with high quality digital signal, but without the same content restrictions as commercial radio stations.

911              When a listener decides that local radio is their choice for entertainment and information, listening is done on the FM band.  It is a continuing struggle for CFCY to attract and maintain both listeners and advertisers.

912              With the majority of listeners ‑‑ 25 to 54 ‑‑ expecting to find their music choice on the FM band, demographics most sought by advertisers do not turn to AM music stations.  Despite the creative and dedicated efforts of the programming and sales team at CFCY, we firmly believe that the long‑term viability of CFCY depends on a transition to FM.  The FM band simply provides better technical quality, better reach and less chance of signal interruption.

913              The most recent Bohn & Associates "Ranking the Formats" report showed a two‑year growth trend in the country format, citing it as the most listened to format in Edmonton and London, Ontario.  Country music continues to satisfy its established fan base, but it is also reaching younger listeners.

914              Country music has a long and proud history on Prince Edward Island.  When CFCY was the only signal originating from Charlottetown, it provided a wide variety of musical styles, including Don Messer and his Islanders, Stompin' Tom and other country favourites.

915              Fast forward to today.  The country music format is enjoying a resurgence in popularity across North America, thanks not only to a new crop of American artists, but to the rise of Canadian stars like George Canyon, Erin Purget and Derek Rattan, and the continued success of Terri Clark and Shania Twain.

916              As the only Applicant at this hearing seeking to bring the country format to the FM band, CFCY wishes to secure the future of country music in Charlottetown.

917              Rebecca.

918              MS BLACK:  Thank you, Dan.

919              Good afternoon.  I am proud to be part of 630 CFCY, the friendly voice of the maritimes.  We continue an 80‑year tradition of presenting information and entertainment to the people of Prince Edward Island.

920              We show our commitment through on‑air support of local talent and various service organizations, in their efforts to better their community.

921              At CFCY we take pride in our ability to partner with our community.  For instance, the Queen Elizabeth Hospital Foundation and CFCY held a radio‑thon and raised over $100,000 for the hospital's first CAT scan during the "Back the Cat" campaign.

922              CFCY recently assisted Hurricane Katrina relief efforts by offering our listeners the opportunity to promote their fundraising events on the air.

923              We have been proud to support Anderson House, a safe and supportive shelter for women and their children who have been physically or emotionally abused, or who live in constant fear of abuse.

924              630 CFCY has contributed to this worthy cause with on‑air promotional support and by emceeing the Anderson House annual variety show.

925              CFCY is passionate in its support for the CIBC "Run for the Cure", the Salvation Army Red Shield Campaign, and the P.E.I. Literacy Alliance.

926              Of course, we are passionate about our own CFCY Christmas Miracle.  Each year we ensure a happier Christmas for hundreds of less fortunate island children.

927              Our support for non‑profit organizations ranges from the advertising that CFCY provides to Mothers Against Drunk Driving to our involvement with the Canadian Cancer Society's "Relay for Life", which has included promotional airtime, emcees for the event, as well as entering our own teams in the race.

928              From the Island Rotary Clubs to the P.E.I. Women's Institute, CFCY helps island service groups by offering promotional support in their fundraising efforts.

929              CFCY understands the importance of promoting our community festivals and events, which attract countless tourists and provide economic sustainability and growth in each community.  From the Charlottetown Gay and Lesbian Pride Festival and the Souris Regatta to Charlottetown's 150th birthday celebrations, CFCY has proudly kept islanders informed about their community festivals.

930              The East Coast Music Awards, which will be returning to our island in 2006, rely on our support to promote local talent.

931              CFCY has and will continue to offer valuable support to the ECMAs with live venue broadcasts.

932              CFCY has been instrumental in growing and nurturing local talent.  The Performers' Support Program is offered to artists in our listening area who are releasing new CDs.

933              In addition to providing airplay with shows such as "Homegrown" and the Saturday night "Hoedown", CFCY provides local artists with 25 30‑second commercials on the station at no charge.

934              Some of the local talent that has been showcased on CFCY includes Roger Dorion, Fiddler's Son, Jericho Road, Janet McGarry and the Queen's County Fiddlers.

935              When it comes to local news, CFCY's listeners have come to expect news stories with integrity and a sense of urgency.  When a breaking story hits, islanders trust and immediately set their dials to 630 CFCY for the latest coverage of Prince Edward Island news.

936              From covering the arrival of Hurricane Juan, the opening of the Confederation Bridge, or the largest Terry Fox run in Canada, with over 14,000 participants, to providing the latest information on school and work closures, power outages and severe weather storm conditions, CFCY is there.

937              Owen.

938              MR. BARNHILL:  Thank you, Rebecca.

939              With regards to Canadian talent development, CFCY AM has embraced the role as the heritage radio station in Prince Edward Island for over 80 years.  Two cornerstones of the station's legacy are the music and the creative writing that have given CFCY its roots.

940              The future success of a new era of CFCY FM will heavily depend on these two vital areas of creativity.

941              In co‑operation and agreement with the University of Prince Edward Island, MBS will enter into a seven‑year direct financial commitment of $100,000.  This important initiative has two main thrusts:  scholarships and the new P.E.I. music archives.

942              The preparation of news, surveillance information and commercial writing all require strong basic groundwork that has to be learned in an appropriate environment.  To that end, scholarships totalling $77,000 will be awarded by an independent selection committee to first‑year Bachelor or Applied Arts and Print Journalism students who have exhibited excellence in writing.  The creative process, which is fundamental to the success of any broadcast endeavour, will prosper under this initiative.

943              The University of Prince Edward Island music archives program is designed to archive P.E.I.'s music history and to preserve the rich musical heritage of Prince Edward Island.

944              Well‑known Canadian entrepreneur Sam Sniderman, also known as "Sam the Record Man", has initiated and is financially assisting UPEI to build an archive of Prince Edward Island music at the university.  Our donation to the UPEI music library, in the amount of $23,000, will help the island's musical heritage for the future.  With over 80 years of service to Prince Edward Island, Maritime Broadcasting, partnering with the University of Prince Edward Island, will ensure that these two vital components of Canadian talent are both enriched and preserved.

945              Michael.

946              MR. MAXWELL:  Thank you, Owen.

947              In the technical portion of our application we identify Channel 236 95.1 Mhz as our frequency of choice.  We are confident that our technical proposal offers the most optimized use of the frequency in Charlottetown.  Our proposed operation maximizes the effective radiated power for the station at 100,000 watts, which is 40 percent greater than the other application vying for this frequency.

948              In addition, if 95.1 Mhz was licensed in Charlottetown, there exists the potential for unpredicted interference with MBS station CKWM FM, broadcasting at 94.9 Mhz in Kentville, Nova Scotia.

949              In the event that this unpredicted interference presents itself, MBS would be in a better position to manage it as the licensee of both of these frequencies.

950              Owen.

951              MR. BARNHILL:  As the Commission is aware, MBS Radio and Newfoundland Capital were operating under a Local Management Agreement until these regulations were revised, effective May 31st, 2005.  The dissolution of the LMA has drastically changed the competitive landscape in Charlottetown, to the detriment of operating margins in the market.

952              It is our belief that the recent withdrawal of the Astral Charlottetown application is indicative of the economic realities that now face us in a new competitive environment.

953              Although several applicants have quoted the Charlottetown PBIT as exceeding the national average, historic figures are not predictive of the present market.

954              The effects of competition on the market must stabilize before a true PBIT figure can be quoted, a fact that should be considered when granting new licences.

955              MR. PACE:  Mr. Chairman and Commissioners, in summary, we are confident that our application to convert CFCY AM to an FM frequency meets and exceeds the criteria as set out by the CRTC.  The quality of our application presents a strong business plan for CFCY FM.  Our application carries on and strengthens an 80‑plus year heritage of public service, fulfils a very meaningful commitment to the development of Canadian talent, seeks to improve the diversity and distinctiveness of Prince Edward Island, and provides a country format on the FM dial not currently available.

956              Our application maintains diversity of news voices in the marketplace and strengthens our coverage to the conversion from AM to FM.

957              Granting CFCY AM the ability to broadcast on the FM dial will not create any financial hardship on existing stations and will not cause a competitive imbalance in the Charlottetown market.

958              We sincerely believe that CFCY AM, with its country music format and 80‑plus years of service, deserves to be heard on the FM frequency band.

959              Mr. Chairman, Members of the Commission, and staff, we thank you for your attention to this very important matter and we are prepared to take any questions you might have.

960              THE CHAIRPERSON:  Thank you very much.

961              Commissioner Cugini.

962              COMMISSIONER CUGINI:  Good afternoon.  My first set of questions will focus very much on the format of the station, both in terms of what format you currently have on the AM dial and how you propose to change it, if you are proposing to change it, if we do approve your flip to FM.

963              How would you describe the country format that you currently broadcast on your AM station?  Is it traditional or modern country?

964              MR. PACE:  I will ask Dan Barton to speak to that.

965              MR. BARTON:  Thank you, Robert.

966              Madam Commissioner, our current CFCY AM calls itself the "Island's Country Favourites".  What it presents in terms of format is a 50 percent current/recurrent‑driven country music format which pays service to the country hits of today and to the music of up‑and‑coming country artists like Derek Rattan, Gretchen Wilson and Keith Urban.

967              It has a 35 percent gold base of the 1990s and early 2000s, if you will.  Ten percent of the format would come from gold from the 1980s, and 5 percent would be classic country, which would go from the 1970s back.

968              Regarding what we intend to do with this format in the flip to FM, we do not intend to change that.  What we intend to do is to bring this format to a greater audience by bringing it to the FM band.

969              COMMISSIONER CUGINI:  And your station out of Summerside is also received here in Charlottetown.  What is its format and how does it differ, or how is it the same as what you propose to offer?

970              MR. PACE:  That was mentioned by a previous applicant, and let me be very clear.  We look upon Charlottetown as Charlottetown and Summerside as Summerside.  We bought that station approximately five years ago and we made a commitment at that time to the residents of Summerside.  I met with the mayor and the council at that time, and that is a format that we have lived with in that community, and we look upon Summerside as independently programmed and independently operated.  It has a separate news voice,  it has a separate sales force and separate management.

971              We look at them as two distinctive radio stations.

972              COMMISSIONER CUGINI:  Is it your position that while there may be duplication in terms of the music, the fact is that the local programming from Summerside is completely devoted to that community, whereas this is to Charlottetown?

973              MR. PACE:  Correct.

974              COMMISSIONER CUGINI:  Thank you.

975              Spoken word programming.  You mentioned some of the programs in your brief today.  Are these all programs that you currently produce and broadcast on your AM station?

976              MR. BARTON:  Yes, Madam Commissioner. They are, in fact, programs that we currently carry on AM, and we do intend to carry them to FM.

977              COMMISSIONER CUGINI:  Are there any new initiatives, if we approve the flip, in the area of spoken word programming?

978              MR. BARTON:  In terms of spoken word commitment, the difference would be in our frequency of newscasts.  We have added two newscasts in the afternoon drive show on our new FM, but that would be the only difference in spoken word commitment.

979              COMMISSIONER CUGINI:  How many hours in total would you have of news programming, and does that encompass news, weather and sports?

980              MR. BARTON:  When we did the breakdown we included only news and sports, and I will tell you the logic behind that.  Weather is important to islanders, not just in newscasts but throughout the day.  We included our weather as part of our overall spoken word, as opposed to just our news content.

981              I will give you the quick breakdown of news.  We have them on the half hour in breakfast ‑‑ and this will be on the new FM ‑‑ from 6:00 to 9:00 a.m., and on the half hour in afternoon drive from 4:00 to 5:30 p.m.  We will also have them hourly during the day, for a total of 17 per day on weekdays.

982              On Saturday and Sunday they will be hourly from 7:00 a.m. to noon, inclusive, for a total of six per day on the weekend.

983              What that gives us is a total of 97 newscasts over the week, at three minutes each, and that includes sports, for a total of 291 minutes.

984              COMMISSIONER CUGINI:  And of those 291 minutes, how much is local news, as opposed to national or regional or international?

985              MR. BARTON:  Our mandate with CFCY over our long history has always been to have local news first, and we include that in our mandate of collecting international and regional news.  The only reason to air it on CFCY is because it has some pertinence to the local community.  Let's use Hurricane Katrina as an example.

986              When it was coming up to the southern U.S., the first question on islanders' minds was:  Will it come close to us?  That is the angle of our news story.

987              After Hurricane Katrina hit and relief efforts were required, the question on islanders' minds was:  How can I help out?  What are other islanders doing to help?  That's the tack we take with our news.  We localize everything we do.

988              COMMISSIONER CUGINI:  Thank you for not using Hurricane Rita as the example.

‑‑‑ Laughter / Rires

989              COMMISSIONER CUGINI:  Can you break it down as to how many hours of local news?

990              MR. BARTON:  Again, I guess because we consider the entire thing local ‑‑

991              COMMISSIONER CUGINI:  So you do not do regional, national or international news?

992              MR. BARTON:  We do, but, again, we always do it with an eye on the local impact.

993              COMMISSIONER CUGINI:  Okay.  Fair enough.

994              I noted in your presentation this afternoon that you did talk quite a bit about your commitment to new and emerging artists, certainly in the sponsorship of events that showcase them.  What is your commitment to airplay of these new and emerging ‑‑ and I added "unsigned" artists this morning.

995              MR. PACE:  I can call upon Dan to give some information on that, as well as Rebecca, as she was involved in a recent event.

996              MR. BARTON:  I would like to start by recognizing the fact that we have a program which airs on Sunday evenings called "Homegrown", which is exclusively to up‑and‑coming unsigned talent.

997              We have also made a commitment with this new FM application that 15 percent of our Canadian content will be devoted to maritime artists.

998              The 25 30‑second commercial campaign that we have for local artists to present their new releases, I think, is a wonderful program.  It is one that we have had a long history with.

999              Rebecca can actually tell us about a recent CD launch that she was part of.

1000             MS BLACK:  Yes.  Thanks, Dan.

1001             Just last week we invited Erin Crosby, who is a P.E.I. singer/songwriter, to come into the station.  She is launching her very first CD.  She is a country singer.

1002             She came into the station in the morning.  We had her on the morning show and we interviewed her, and she sang a couple of songs live on the air.  We played two of her songs on the air that morning from her CD.  Then we were at her CD launch that evening to help show our support.

1003             COMMISSIONER CUGINI:  I am glad you raised the 15 percent of Canadian music selections from maritime artists.

1004             Are you prepared to accept that as a condition of licence?

1005             MR. PACE:  Yes.

1006             COMMISSIONER CUGINI:  Thank you.

1007             In keeping with the sponsorship or promotion of new and emerging artists as part of your CTD plans, one of your proposals involves the contribution to UPEI.  I am wondering if you could elaborate a bit more for us on this project and tell us why you think it complies with the CTD requirements.

1008             MR. PACE:  I will speak to it initially, and then I will ask Owen Barnhill for further clarification.

1009             This project came about essentially ‑‑ I was approached by Norman Webster, of the Webster Foundation, who was the past chancellor of UPEI.  He came to us and he said, "Can we start working together?"

1010             He put me together with the President and CEO of the university, and I said that one of the challenges in our business today, whether it is in print, radio or television ‑‑ and I am a little familiar with this because my daughter is in her third year of Journalism at Carleton University.  So I am getting the feedback of these people coming up through.

1011             The real challenge is, it is great to hire people to come into the newsroom, and they can look at what is on the computer monitor and what is on Broadcast News, but then they have to go out and search for local stories and come back very quickly and write them up in a very concise way.

1012             We came to the conclusion that if we could work together on this, to sort of foster it at the university level, it would be effective for the university, but also for the broadcasting industry as a whole.

1013             So it is a news ‑‑ it is a creative writing initiative.

1014             I understand, under CRTC regulations, that scholarships are clearly defined, and journalism is acceptable for CTDI.

1015             Owen, do you want to comment further?

1016             MR. BARNHILL:  Sure.  Thank you, Robert.

1017             There are two facets that I would like to speak to, scholarships and music archives.

1018             It is important to say that the premier has recently launched an initiative here in the province promoting literacy.  I think this ties into that very nicely.

1019             And all of our contributions are direct.  So it isn't a round‑about way of funding, they are direct.

1020             There are four scholarships of $2,750 per year.

1021             The music archives, we think, is a natural fit with CFCY, as it has 80 years of heritage. It is to promote and collect, catalogue and preserve some of the musical history that sometimes is taken for granted.  We are a society nowadays that records over our history, so this initiative really takes that, and I think that CFCY, with its 80 years of heritage, really is a great flagship for that.

1022             COMMISSIONER CUGINI:  As far as the music archive itself, where will this be housed and who will manage it on an ongoing basis?

1023             MR. BARNHILL:  At the university, UPEI.

1024             COMMISSIONER CUGINI:  Given your 80‑year history ‑‑ and you have been in this market for all that time, and you have operated in this market quite successfully ‑‑ why do you project that only 65 percent of your projected Year 1 revenues will be generated from incumbent radio broadcasters?

1025             MR. PACE:  I will ask Owen to answer that question.

1026             MR. BARNHILL:  I will start, and then I will throw it over to Dan, because there is a programming component which he can speak to.

1027             In our deficiency letter of June 21st, I think we said that 65 percent would come from existing broadcasters, and I would say that 55 percent of that is CFCY's existing revenue base.  We would say that approximately 7 percent would come from CHLQ, our sister station, and half of that from CHTN, 3 percent.

1028             So 55 and 7 and 3 would come up to 65.

1029             I think I will throw it to Dan now, to speak to the programming and how that impacts the existing market.

1030             MR. BARTON:  Thank you, Owen.

1031             Madam Commissioner, one of the challenges we face with this AM radio station is that we know that country is a very popular format on the island, but we also know that listeners more and more will not look for it on the AM band.

1032             We know that by transitioning that format, intact, to FM, we will be able to generate new listenership, repatriate some out‑of‑market tuning, and actually grow the station that way, by taking a tried and true format and by taking a heritage radio station and making it more available and, by virtue of the fact that is on FM with better sound quality, more palatable to our audience.

1033             COMMISSIONER CUGINI:  But the trouble I am having with this is, I would think that your conversion to FM would allow you to maintain your advertising base, and then, of course, give you more growth.

1034             I am assuming that is why you want to convert to FM.

1035             Could you reconcile these things for me and tell me what you are projecting in terms of growth, once you flip over to FM, if approved?

1036             MR. BARNHILL:  I think, from our financial model, that our growth was fairly modest.  I believe it was, on average, 2.3 percent over the seven years, and most of that was consistent with our inflationary factor of 2 percent.

1037             Really, we have modest growth, not necessarily through sell‑out rate, but perhaps just through rate in the market.  An average rate increase of 2 percent per year would probably be consistent with inflationary factors that would affect expenses as well.

1038             That is really where the growth would be.  It is a fairly mature market.  We have been here 80 years and we are not changing the format, so I think that is where the growth would come, a fairly modest 2 percent.

1039             COMMISSIONER CUGINI:  Perhaps this would be a good time to ask, what are the challenges that you would face if we denied the application?

1040             If we were to say that you are doing okay as an AM station and we think you can continue in the market in that format, what would be the ongoing challenges that you would face?

1041             MR. PACE:  I think what we have to look at is the size of this market.  I think we have to go back, as well, and be very careful that we don't repeat history, because prior to 1994 in this market we had two AMs and an FM.  Those two AMs ‑‑ and you have this information in your records ‑‑ between 1990 and 1994, those were not great years for CFCY and CHTN.

1042             But that whole question was right across the country.  Consequently, the CRTC looked at this, I believe, and it came up with two solutions.  One was a different ownership policy, but also the advent of LMAs.

1043             During that period we were able to work with NewCap in an LMA, and that had some benefits, not only financial.  The other benefit was that you didn't have two broadcasters competing against each other with the same format, so you had diversity in the marketplace.  We could say that we had an oldies, a country and an adult contemporary.

1044             Those were all positives.  But I think now, when we have been only 120 days into this new environment, which is quite challenging ‑‑ and we heard that this morning.  Heather is on the ground, she knows the results of this.

1045             I think we have to be careful and prudent.  I think that you people, as regulators, want to be prudent.  I think that we, as private broadcasters, want to be prudent.

1046             You have to look at the size of the market.  If you approve too many, then we will be back to the pre‑1994 situation, where we are going to have a problem and you are going to have to revisit it.

1047             We can go through those different options, but I think those are some of the challenges.

1048             The other challenge that is in front of all of us right now as Canadians is that economically things are a little unstable.  We had a rising Canadian dollar last week.  P.E.I. is heavily dependent on tourism, and it is heavily dependent on farming and fishing.  The minute you have a rising Canadian dollar, that will have a serious impact on the farming and fishing export business.

1049             I know from Nova Scotia, but also in P.E.I., that our tourism numbers for the last two years have been declining, and they are not declining by 3 or 4 percent, as some people would say.  If you talk to some people outside Charlottetown, coming across the bridge, they are down by 10 or 20 percent.

1050             That doesn't have an effect on us right today, but going down the road, next year ‑‑ and that is when these kinds of decisions that you are making will affect us or impact us.

1051             I think that we are in unchartered waters and we should be prudent.

1052             COMMISSIONER CUGINI:  Let me go at this in another way.  The things you have just listed are challenges that you would face regardless.  If we approve the flip to FM, the size of the market won't change, the realities of the LMA are what they are, and the economy is what it is.

1053             How will the flip to FM help you face these challenges in a more advantageous manner?

1054             MR. PACE:  Better quality of signal.  We will be able to play ‑‑ Dan can add to this in terms of the programming side, but there are those benefits of being on the FM dial.

1055             I guess the fact that we have been here 80 years, serving the community well ‑‑ it is the oldest heritage station in the maritimes.  If there is one station that should be flipped in the maritimes, I would think that CFCY should be a prime candidate.

1056             I would ask Dan to add something to that.

1057             MR. BARTON:  The challenge, Madam Commissioner, that we face with listeners trying to find country on FM certainly applies to advertisers as well.  We have advertisers in the community who want to be part of a country radio station, but don't necessarily want to purchase FM.

1058             So, in addition to repatriating some listeners, we hope to repatriate some clients to the country format as well.

1059             MR. BARNHILL:  If I might jump in, I think this may be illustrated, also, in the financial projections.

1060             You asked in a deficiency letter if we could submit financial projections if we had the AM or FM, as well.

1061             COMMISSIONER CUGINI:  You are anticipating my next question.  Please go ahead.

1062             MR. BARNHILL:  I think that if we compare or contrast the two sets of financial projections, the single biggest thing was the revenue growth, just the amount that you can charge for an FM signal.  I think, from an expense perspective, there is very little difference, but the differences between the two sets of financial projections ‑‑ whether it is from national or local ‑‑ the rate that you can charge for an FM signal ‑‑ were better quality and better reach.

1063             COMMISSIONER CUGINI:  Mr. Pace, you began to talk about the LMA, and you heard the people from NewCap tell us today about what effect the termination of the LMA has had on their business.

1064             I am wondering if you could elaborate a bit further for us on what effect that has had on you.

1065             MR. PACE:  The primary effect of living in an LMA for 10 years for us was that during that period, about three years ago, we built a state‑of‑the‑art facility in a historic district, right down on the waterfront, to house three radio stations.  We now only have two.  We had the same heating expense for three radio stations, but we had to ‑‑

1066             That is the real challenge, and it is a single‑purpose building.  It is not as if, because CHTN moved out, we can lease out the studio.

1067             You will see this in the financial statements.  We have higher general administrative costs because of that.

1068             So that, off the top, is a challenge.

1069             NewCap alluded to challenges in the marketplace.  Maybe, Heather, you could give your feel of what is going on in the market.

1070             MS TEDFORD:  I had the advantage of coming into radio pre‑LMA and actually working for the third station in a three‑station market rather than through the LMA, and now back again.  I must say that one of the greatest things during the LMA was, when you were talking to clients ‑‑ I am a marketer at heart ‑‑ we were promoting the medium.  Once you got into "This one is better; that one is better", what have you, we were able to talk radio to the clients, but, more importantly, we were able to spend our time with them talking about their businesses and how we could use radio to help them grow.

1071             I must say, over those last few years it was very rare that we would get the "Radio doesn't work" thing, which I thought was a chronic cry in my early days in radio.

1072             I think the reason was that the three stations were there and we were able to put people on the station that was best suited to them, and we were able to protect those things.

1073             As we say, it is what it is.  We don't have that any more.  Therefore, one of the first things that I noticed was, when you are talking to your clients, when you have some face‑time with clients, we are right back to discussing radio:  This is better.  That is better.  Which station is going to be best?  That sort of thing.

1074             I think these are very early days.  We are only 120 days in, but that is the thing that stands out most to me.  It is going to take some time for that to settle.  We are probably going to run into it more, as opposed to less.

1075             It has kind of changed the way we have been able to do business.

1076             Some of our people were involved pre‑LMA and have been through the same thing, so it is an adjustment, and we will learn.  Others came into radio when we were in that ‑‑ let's call it what it was, a somewhat protected environment, which helped radio grow.  I think that is why radio is still so strong on Prince Edward Island.

1077             Of course, during that part of it we lost some of our people, so that made a change as well.

1078             COMMISSIONER CUGINI:  You lost some of your staff or some of your advertising base?

1079             MS TEDFORD:  Some of our staff, through the LMA split.

1080             COMMISSIONER CUGINI:  Through the LMA split you lost some staff.

1081             What is your head count now?

1082             MR. BARTON:  Our head count now, Madam Commissioner, is very much the same as it was before the dissolution of the LMA.  We have managed to rehire all of our positions.  But at the time ‑‑ this all came to a head in May, I guess ‑‑ that was when we lost staff.

1083             So we have maintained the same staff base for the two radio stations.

1084             COMMISSIONER CUGINI:  Do you plan on hiring any additional staff if we approve the flip to FM?

1085             MR. BARTON:  We do, in fact.

1086             One change we have made, in addition, already, facing this new competitive environment ‑‑ only 120 days in ‑‑ is that we have hired an additional daytime announcer for CFCY AM.  If this application is approved, we intend to hire an additional evening announcer, as well as two additional news people.

1087             COMMISSIONER CUGINI:  So you haven't had to hire additional sales staff.

1088             MR. BARTON:  Oh, yes, to replace.

1089             COMMISSIONER CUGINI:  To replace...?

1090             MR. BARTON:  To replace sales staff that had left.

1091             COMMISSIONER CUGINI:  But your head count has netted out the same.

1092             MR. BARTON:  Correct.

1093             COMMISSIONER CUGINI:  Which is a total of how many people?

1094             MR. BARTON:  I am going to go to the front table for that figure.

1095             MR. PACE:  I don't have that with me, but I can provide it.

1096             COMMISSIONER CUGINI:  That's fine.  Thank you.

1097             What do you believe the impact of a new service on Maritime Broadcasting would be under a scenario where the Commission approves your application for a second FM in the market, and, alternatively, where the Commission does not grant your application for conversion to FM, that is, the status quo, one FM and one AM in the market?

1098             MR. PACE:  I am a little confused with the question, I'm sorry.

1099             COMMISSIONER CUGINI:  What do you believe will be the impact on this market if there is the scenario where we approve your application for the flip to FM, or we simply maintain the status quo?

1100             MR. PACE:  The status quo in the marketplace right now?

1101             COMMISSIONER CUGINI:  Yes.

1102             MR. PACE:  I think I would have to be realistic.  The status quo ‑‑ we heard from NewCap today, and for them to operate an AM prior to 1994 was tough.  It was tough to operate our AM, as well, prior to the LMA.

1103             So if you left the status quo, I think it would be a tough go, both for our AM and their AM.

1104             One of the things that recently came out ‑‑ and I will provide the Commission with a copy ‑‑ is that in June 2005 the provincial government came out with statistics on growth in population, and there is a significant decline in the younger population and a significant increase in the adult population, more so than in any other maritime province.  So those are issues that, I think, have to be taken into account.

1105             That probably wouldn't hurt CHTN on the existing oldies format, nor on our country format, but one would have to question whether a rock format with a younger demographic would be suitable in this market when you have a decline of ‑‑

1106             I will read this to you, if I am allowed.

                      "The island's population distribution during the period 1971 to 2004 clearly illustrates the aging of the population.  The proportion of young people (zero to 14 years) declined from 31.5 percent in 1971 to 23 percent in 2004, while the share of elderly persons (65 and over) rose from 11 percent to near 18 percent."  (As read)

1107             Those are demographics that we have to live with today, but that is what the future is providing.  We are getting a snapshot of it.

1108             So the status quo would be tough.  Does that sum up the answer?

1109             COMMISSIONER CUGINI:  That is pretty succinct.

1110             What if we introduced one other FM station in the market and left Maritime Broadcasting with the status quo?  What would that do to your station?

1111             MR. PACE:  You would see a decline in our AM, because there would be more listeners going to the new FM.

1112             If you are really asking me what you should do ‑‑

‑‑‑ Laughter / Rires

1113             MR. PACE:  We are eventually getting there; right?  I can see it coming.

1114             THE CHAIRPERSON:  I don't think she is looking for guidance, I think she is just testing your theory.

1115             MR. PACE:  I think that another FM ‑‑ if you flipped, for instance, CHTD, and left CFCY AM, it would decline over time.

1116             COMMISSIONER CUGINI:  In your opinion, can the market sustain two new FM stations?

1117             MR. PACE:  Yes.

1118             COMMISSIONER CUGINI:  Direct.  That's good.

1119             On the frequency question, you have applied for 95.1, and you have identified 90.1 as an alternative frequency.

1120             MR. PACE:  That is out of my league, so I will ask Mike to answer that question.

1121             MR. MAXWELL:  Certainly 95.1 is our frequency of choice, but if we were asked to pursue another option, we would certainly consider it.

1122             COMMISSIONER CUGINI:  I'm sorry, I had the Chair whispering here.

1123             You said that 95.1 would be your preferred frequency.

1124             MR. MAXWELL:  Yes.

1125             COMMISSIONER CUGINI:  Would use of the alternative frequency, however, compromise your business plan for the proposed FM station in any way at all?

1126             MR. MAXWELL:  No, it would not.

1127             COMMISSIONER CUGINI:  Thank you very much.

1128             Mr. Chair, those are my questions.

1129             THE CHAIRPERSON:  Thank you, Commissioner Cugini.  We will give you a chance to hit the home run once we are finished other Commissioners' questions and questions from counsel.

1130             Commissioner Noël.

1131             COMMISSIONER NOËL:  I have a clarification question.  You just said yes, that the market would be able to sustain two new FM stations.  Am I to understand that this means the two flips, or is it able to sustain the two flips plus a new FM?

1132             MR. PACE:  My answer would be two flips.

1133             I think if you look at the financial statements of the flip of NewCap, in a seven‑year period they make more money than any of the other applicants.

1134             So using their own financial results, that would suggest that they will be successful in that market, and we would be successful with our flip as well.

1135             Does that answer your question?

1136             COMMISSIONER NOËL:  I'm not sure.

1137             MR. PACE:  Okay, we will try it again.

1138             COMMISSIONER NOËL:  My question is, is the market able to sustain the conversion of the two AM stations to two FM stations, which would enlarge your audience because people prefer FM, or do you think that the market could do the two flips, the NewCap flip and your flip, plus an additional FM?

1139             MR. PACE:  No, that is where I don't agree.

1140             I don't think the market can sustain two flips and another FM.

1141             COMMISSIONER NOËL:  You were mentioning that it was because NewCap's plans are quite enthusiastic.  Is the other Applicant's plan less ‑‑ it is Coast's application.

1142             If we were to agree to the two flips plus the Coast application, what would it do to your market?

1143             MR. PACE:  The Coast application is a duplication of our present format, so you wouldn't be adding diversity to the marketplace.  That would be a duplication of what we are already offering.

1144             COMMISSIONER NOËL:  It depends on what you call diversity.  It would be a new voice in the market, not diversity of format.

1145             MR. PACE:  Yes, correct.

1146             COMMISSIONER NOËL:  Thank you.

1147             THE CHAIRPERSON:  Commissioner Cram.

1148             COMMISSIONER CRAM:  Thank you.

1149             I wanted to get a little more into the issues of the LMA and what has happened in 120 days.

1150             You said in your presentation, at pages 10 and 11, starting at the bottom line of page 10:  "The dissolution of the LMA has drastically changed the competitive landscape in Charlottetown."

1151             It sounds, Ms Tedford, like there was no competitive landscape before.

1152             You didn't get complaints about, the word was ‑‑ I have got to get rid of that mic ‑‑ the word was, you didn't get arguments about radio doesn't when you had the LMA.

1153             So there was no competition then?

1154             MS TEDFORD:  There certainly was competition, but it was not radio on radio.  The competition was radio positioned against television, radio positioned against print, and against to a lesser degree the internet.

1155             COMMISSIONER CRAM:  Yes.

1156             And so, as far as I understand, after the LMA was gone you have added one daytime announcer.

1157             MR. PACE:  That is correct.  Yes.

1158             COMMISSIONER CRAM:  And have the rates changed?  Have your rates changes?

1159             MS TEDFORD:  No, the rates haven't changed.

1160             COMMISSIONER CRAM:  Have your listening shares gone up or down?

1161             MS TEDFORD:  We are not a BBM‑rated market.  So at this point we really couldn't say with any degree of certainty if they have or not.

1162             COMMISSIONER CRAM:  So, are you telling me that you don't know the position of your two stations in the marketplace?

1163             MS TEDFORD:  We know our position based on  ‑‑ the closest thing we can use or that I have been using ‑‑ Stats Can publishes one a year a kind of a précis of the BBM information.

1164             And here on Prince Edward Island we are actually able to use that to some degree because, like what they do is they talk about the share of formats, and we are able to use that because if it is CBC it is CBC, and if it is oldies it is oldies, and country it is country.

1165             Now admittedly, you know, there might be, you know, Cap countries coming in a little bit out of Nova Scotia that might be involved, but it gives us a little bit of a guideline.

1166             COMMISSIONER CRAM:  And is it far to say that country Hot AC have been number one and two in the market?

1167             MS TEDFORD:  Yes.

1168             COMMISSIONER CRAM:  For the last few years? 

1169             MS TEDFORD:  Yes, they have.

1170             COMMISSIONER CRAM:  And that is your formats?

1171             MS TEDFORD:  Yes, they are.

1172             COMMISSIONER CRAM:  Yes.

1173             So the only other thing I can ascertain in terms of how your bottom line ‑‑ maybe not the competitive landscape ‑‑ has been drastically changed.  How your bottom line has changed is, Mr. Pace, you are sitting with empty space?

1174             MR. PACE:  Large, empty space.

1175             COMMISSIONER CRAM:  Yes.

1176             And, Mr. Pace, you said you did that three years ago.

1177             MR. PACE:  Hm‑hmm.  Yes. 

1178             COMMISSIONER CRAM:  Help me, Mr. Pace, I have been on the Commission for seven years, and I am feeling like a veteran, especially without my work clothes.

‑‑‑ Laughter / Rires

1179             COMMISSIONER CRAM:  And I know that since 2000 the Commission has been saying LMAs have to go.

1180             So that is five years ago.  And we were pretty clear about that.  In fact, I thought we were fairly clear in the radio policy in >98.

1181             So why would you make plans for a huge capital expansion, planning to have an LMA continuing when we pretty well have been giving hints >98, >99, 2000, 2001?

1182             Wouldn't you factor that into your risk when you are looking at that ‑‑

1183             MR. PACE:  Sure.  We factored it into the risk, but maybe those hints were given, but we didn't pick them up as strongly as perhaps the people sitting up there were aware of.

1184             I mean ‑‑ I mean, we went to the hearings in June ‑‑

1185             COMMISSIONER CRAM:  2004.

1186             MR. PACE:  2004. And at that time, I wasn't sure which way it was going to go, to tell you the truth.

1187             And I am not certain really today whether all LMAs in Canada are over.  Because, in Halifax, just as an example, I am not sure how you can dissolve an LMA when you have one station in that market owned 50 per cent by two different companies:  Newcap and CHUM.

1188             I haven't quite figured out the semantics of that.  But ...

1189             COMMISSIONER CRAM:  So, you are not aware of what we have said on the radio policy about LMAs?

1190             MR. PACE:  Yes, I am.

1191             COMMISSIONER CRAM:  And you are aware of what we said ‑‑ I remember sitting around that table in >99 and saying it had to be exceptional, extraordinary conditions.

1192             And so it came out and we made a regulation saying that.

1193             And you thought in 2001, 2002, with the PBITs you had in this market that that was an exceptional situation, when the PBITs were pretty darn good?

1194             MR. PACE:  Oh, I am not questioning that they weren't, but we had a situation.  We were in a building, it was in my opinion, severely run down. We had to make a choice.

1195             Our lease was coming due.  And it was either to renew in the same kind of facilities ‑‑ and I think if you had visited those facilities you would agree with me that it wasn't a place conducive to professional broadcasting.

1196             So, you know, we took that risk, and I accept the risk.

1197             COMMISSIONER CRAM:  Hm‑hmm. Okay.

1198             MR. PACE:  But it is something that doesn't go away.  It is ‑‑ it is there.

1199             COMMISSIONER CRAM:  Hm‑hmm.

1200             So I guess you will have to do some renovations and make it into a dual‑purpose building?

1201             MR. PACE:  It is not that easy.

1202             COMMISSIONER CRAM:  Tell me, and I didn't hear an answer to my colleague, Commission Cugini's question, there will be duplication between the formats you are choosing for your proposed FM and the Summerside FM formula?

1203             MR. PACE:  I will ask Dan to answer that question.

1204             MR. BARTON:  Yes, absolutely.  There will be.

1205             There exists a duplication in format between the two radio stations now.  And because we intend to put the exact same format on FM, yes there will be duplication. 

1206             COMMISSIONER CRAM:  Okay.  So, what is the percentage of duplication?

1207             MR. BARTON:  As high as 80 per cent musical duplication on the two radio stations.

1208             COMMISSIONER CRAM:  And it exists today?

1209             MR. BARTON:  Correct.

1210             COMMISSIONER CRAM:  Okay.

1211             And yet the Summerside FM seems to have some share in Charlottetown.

1212             MR. BARTON:  It does.  It does have a minor share in Charlottetown.

1213             By virtue of the fact, I believe, that it is a country FM signal.  It certainly doesn't have huge penetration in Charlottetown.

1214             But it does have some market share in Charlottetown, yes.

1215             COMMISSIONER CRAM:  Hm‑hmm.

1216             And so, the fact that you are then even going to be sort of more cannibalizing the Summerside share. that is a matter of some indifference because the play list will be 100 per cent the same.

1217             MR. BARTON:  And because Summerside is a radio station for Summerside.  It is ‑‑ the reason it doesn't have penetration into Charlottetown is because it is not designed to.

1218             It is a radio station specifically for Summerside.  Charlottetown radio station is specifically for Charlottetown.

1219             Not only is that our policy, but Robert can tell you, when it came time to purchase the radio station it was made very clear to him that that is what the citizens of Summerside wanted.

1220             COMMISSIONER CRAM:  Hm‑hmm.  And the play list in Summerside is 100 per cent identical.  What about the number of hours of talk in Summerside?

1221             MR. BARTON:  And just to clarify, it is about 80 per cent similarity.

1222             COMMISSIONER CRAM:  I am sorry ‑‑

1223             MR. BARTON:  No, no.  No problem.  I just wanted to clarify.

1224             In terms of spoken word content, they are drastically different.  CFCY, because it maintains its heritage with spoken‑word programs, with news content, also with its logo music programs and the Saturday night Hoedown ‑‑ I mean it has been a staple in Charlottetown for 50 years, and it is very unique to Charlottetown.  And we want that uniqueness to continue.

1225             COMMISSIONER CRAM:  I just wanted the number of hours of spoken word in each of the centres ‑‑ Summerside versus ‑‑

1226             MR. BARTON:  I have them at my fingertips for Charlottetown.  I would have to get them for you for Summerside unfortunately.

1227             COMMISSIONER CRAM:  They would be somewhat the same though?

1228             MR. BARTON:  They would actually be a bit less for Summerside.  And I will give you a couple of examples.

1229             We have a feature that we run on CFCY called Backstage Pass.  And what Backstage Pass is, is a 30‑second feature that runs five times a day Monday through Friday which we use to provide more information  and foreground on specific artists.

1230             We have a Women's Institute program, which runs on CFCY in Charlottetown, a two and a half minute program which runs once per day Monday through Friday.

1231             That is our radio station giving the women's institute their platform for whatever it is they want to talk about for two and a half minutes a day.

1232             Again, unique to Charlottetown.

1233             Our Agriculture Today report is a two‑minute report that airs during lunch hour once per day Monday to Friday.  Unique to Charlottetown.

1234             So all of these spoken words programs that we have for Charlottetown have not and will not be duplicated in Summerside.

1235             COMMISSIONER CRAM:  Thank you.

1236             And then I heard you talk about 15 per cent of you 35 per cent would Maritime artists.  Is that what I ‑‑ I heard that correctly?

1237             MR. BARTON:  That is correct.

1238             COMMISSIONER CRAM:  Yes.  So from something I learned today, that means, not including artists from Newfoundland?

1239             Because otherwise that would be Atlantic artists.  Have I got that right?

1240             MR. BARTON:  That is correct.  That is Maritime artists.

1241             COMMISSIONER CRAM:  Okay.

1242             So it is only the three Maritime provinces, as us silly Westerners know them ‑‑

1243             MR. BARTON:  Well, we will be happy to leave the door open to Newfoundland artists to make up part of the rest of the 35 per cent.

1244             COMMISSIONER CRAM:  I see.  Okay.

1245             Just wanted to make that absolutely clear.

1246             And how much voice tracking are you doing presently on CFCY?

1247             MR. BARTON:  Currently, in terms of voice tracking, on CFCY, we voice track 6:00 to midnight through the week, and on weekends we are live six hours on Saturday, six hours on Sunday, and we are also live during our Hoedown program, which airs from 6:00 p.m. to 9:00 p.m.

1248             COMMISSIONER CRAM:  And the new FM station, what would you propose to do about live versus voice tracking.

1249             MR. BARTON:  It would again be exactly the same.  The one change we would make is the evening show would become live.

1250             So that would keep us live 6:00 a.m. to midnight Monday through Friday.

1251             COMMISSIONER CRAM:  Okay.

1252             Now, I guess my concern here is, from our perspective, and we have to look at the market, the Charlottetown market, which it seems Newcap believes local is PEI.  So to some extent we have to consider Prince Edward Island.

1253             If at the end of the day both yourselves and Newcap had Santa come to their door ‑‑ and don't think the decision is going to be out by Christmas ‑‑ it would mean that Newcap would have two FMs in PEI and Maritime would have three.

1254             It seems that would, even though your Summerside you say is a Summerside market or a Summerside frequency, it does come into here ‑‑ it would seem that the frequencies from here go into Summerside.

1255             So we are looking at a competitive imbalance with Newcap, and three FMS is sure better than two.

1256             So should we use Newcap's numbers, and if they have got their two FMS leave you with your half station, the AM, and leave you with the FM here and the FM in Summerside?

1257             And why shouldn't we ‑‑ and I will shut up now.

‑‑‑ Laughter / Rires

1258             MR. PACE:  You have got it covered.

1259             I think in the deficiency letter, I believe it was June 12^th, I think we deal very clearly with the Summerside issue.

1260             And the issue is whether Summerside and PEI can reasonably consider the same market.  And according to the CRTC regulations, the term "market" is defined, and I quote:

                      "In the case of an FM station, the FM three‑millivolt contour of the central area as defined by the Bureau of Broadcast Management (BBM), whichever is smaller.  And as the Commission acknowledges and imposes in this question the three millivolt contour of the station in Summerside does not encompass the Charlottetown market."

1261             So we just follow ‑‑ that is what we would like to do ‑‑ the CRTC rules.  It doesn't apply and they are looked upon ‑‑ when you look at the BBM cells ‑‑ as two.  Because the cell for Summerside is 1030 under the BBM measurement, and in Charlottetown is 1020.

1262             So it is pretty clear for us.  But I guess when you look at it ‑‑ I mean, the way that we have looked at it, and we have been very consistent to this over the last five years, it could have been convenient for us to flip one of those formats.

1263             But we have stayed loyal to those listeners in Summerside, and before we owned the station it was made very clear to us that they wanted their country format.

1264             And aside from what people say, we do not have a strong signal that Heather can sell in Charlottetown.  I mean, the ‑‑

1265             COMMISSIONER CRAM:  In ‑‑ 

1266             MR. PACE:  Yes.

1267             COMMISSIONER CRAM:  In Summerside.

1268             MR. PACE:  Yes.  It has got to ‑‑ it can't be one of these signals that comes in and you pick it up in your car Sundays and you can't pick it up on other days.

1269             So I think it is clear that we look upon ‑‑ and I think the Commission, if they follow the rules in how they define market clearly, they are two distinct communities, and they are 65 kilometers apart.

1270             COMMISSIONER CRAM:  There is the problem though of we have what is called out‑of‑market tuning ‑‑

1271             MR. PACE:  Correct.

1272             COMMISSIONER CRAM:  ‑‑ and a lot of people talking when they make their applications of repatriating tuning.

1273             It seems to me that, when we have out‑of‑market tuning and it is from a station that is owned by an incumbent in the original, we have to look at that as, essentially as receiving share.

1274             And relatively speaking they are not bad share perhaps.  Then it seems to me we have to consider that out‑of‑market tuning.

1275             MR. PACE:  But I think we have also got to look ‑‑ and I will let Dan speak to this from a programming point ‑‑ but we have also got to look at it from a financial point of view.

1276             I mean, when we bought the station in Summerside, the station was losing money.  And I don't mind saying because you have the information there.  The market in Summerside is between 550‑600 thousand dollars, total.

1277             Less than five or six per cent of our Summerside revenue comes from Charlottetown.  And let me be more precise.

1278             That five or six per cent is typically companies that own Tim Horton's that have multiple locations or Subway that have multiple locations on the island or in Summerside, but they are headquartered in Charlottetown.  So the Summerside person has to come to Charlottetown to get the order.

1279             That is ‑‑ we are not talking a large amount of money here, when you look at the Charlottetown market, which was 4.4 million.

1280             Now I know Newcap, in their research, they said it was 5 to 6 million ‑‑ and that concerns me.  I spoke to my CFO.  I said, Well, where did we miss this?  We are in the MLA, or the LMA.

1281             So, you know, that is what the market is.  So it is less than 15 per cent of the total Charlottetown market.

1282             MR. BARNHILL:  I think that is the important point, is that you did mention share, but I don't think that translates necessarily into advertising dollars.  And that is what would impact Newcap.

1283             Less than five to seven per cent of Summerside's revenue is derived from Charlottetown.  So really Summerside isn't pulling a lot out of Charlottetown, and the converse is true as well.

1284             So I am not sure that that, you know, as share may come in, I am not sure that ‑‑ we don't cross‑sell.

1285             We have a sales force in Summerside.  As Robert said, they come in to Charlottetown once a week to get the Tim Horton's buy and the Subway buy and they go home.

1286             So I am not sure that that share necessarily translates to revenue which would adversely impact Newcap.   

1287             MR. BARTON:  If I could just add quickly, we are talking about two communities that do not want to be represented by each other.  And I can say from recent memory we are talking about two communities that fought with each other about who would get the Canada games.

1288             So I don't think it is realistic for us to say that we are going to be able to address Charlottetown from a Summerside radio station or vice versa.

1289             COMMISSIONER CRAM:  Thank you.

1290             Thank you, Mr. Chair.

1291             THE CHAIRPERSON:  Commissioner Duncan.

1292             COMMISSIONER DUNCAN:  Thank you.  Just a couple of quick questions.

1293             I was just wondering, just to clarify, on your financial projections that were filed, were they filed post‑LMA or before?  I notice Newcap originally filed theirs in November before the LMA was dissolved.

1294             MR. BARTON:  They were filed in contemplation of the dissolution of the LMA.

1295             COMMISSIONER DUNCAN:  They were?

1296             MR. BARTON:  Yes.

1297             COMMISSIONER DUNCAN:  Thank you.  I just wanted ‑‑

1298             MR. BARTON:  We had two sets that were filed, and they were both under the same assumption.

1299             COMMISSIONER DUNCAN:  Now, I hate to ask you to repeat this, but I don't quite think I have got the distinction that you are making between the program I would receive as a resident of Summerside versus what I would receive in Charlottetown.

1300             If you just wouldn't mind, I made a note there that it was 80 per cent music duplication ‑‑ and I just didn't want to have it that wrong in my mind, if you don't mind just explaining that again.

1301             MR. PACE:  Okay.  I will call upon Dan to clarify that for you.

1302             COMMISSIONER DUNCAN:  Sure.  Thank you.

1303             MR. BARTON:  Thanks, Robert.

1304             Madam Commissioner, what the duplication boils down to essentially ‑‑ I am sorry I can't quite see around Mr. Barnhill's head.

1305             COMMISSIONER DUNCAN:  I can hear you.

‑‑‑ Laughter / Rires

1306             MR. BARTON:  What it boils down to is a country hit is a country hit.  So musically, yes, they will remain very similar.

1307             The difference is in the unique voice.  The difference is in the diversity of voices from the programming staff.  The difference is in our spoken word commitment and our unique community programs that are available only from the Charlottetown radio station.

1308             I can give you another example of the uniqueness of Summerside in that it is very much a sports‑minded town.  They are very much into their local hockey team.

1309             Again, not that we don't support them in Charlottetown, but Summerside just has a completely different mentality when you listen to the two radio stations.

1310             COMMISSIONER DUNCAN:  So you are talking this difference is in the 20 per cent then, and I appreciate that you are making a distinction ‑‑

1311             MR. BARTON:  Musically, yes.

1312             COMMISSIONER DUNCAN:  ‑‑ in that the residents consider that it is distinct.

1313             Okay.  Thank you very much.  That is it.

1314             THE CHAIRPERSON:  Thank you, Commissioner Duncan.

1315             Could I beat this thing to death?  This Summerside‑Charlottetown distinction?  Because I am looking at your contour maps, and I am not an engineer.  So I am probably getting something wrong.

1316             But you have supplied two contour maps with your application.  It may be one map that is blown up in different ways.  But I have two maps, both prepared by Bag Donawitz Consulting Engineering Incorporated.

1317             One is called Figure 11.  I don't know if that helps.  And it has only two contours on it, showing a little bit of overlap at the bottom.

1318             And the smaller three‑millimeter vector contour clearly encircles Summerside, if this map is correct.  I mean, with lots to spare.

1319             So is that the correct map?  Or should I be looking at the more complicated one, which is headed Figure 12, also by Bag Donawitz, which has ‑‑ well, it has more circles on it than a square dance. 

‑‑‑ Laughter / Rires

1320             THE CHAIRPERSON:  You know, how to learn square dancing in the privacy of your own home type of pattern, but I gather this is trying to show where your existing AM nighttime and daytime contours are, and where your proposed FM contours will be.

1321             But if I read it correctly, the proposed FM contour here is identical to the one in Figure 11.

1322             Am I right?

1323             MR. PACE:  I will ask Mike to answer that, Mr. Chairman.

1324             MR. MAXWELL:  Yes, the contours in the Figure 11 map are just the three millivolt per meter and the .5.  That is for the proposed FM.

1325             And then the other one with the square dancing is the comparative contours between the AM, existing AM, and the new FM.

1326             THE CHAIRPERSON:  So let us go to Figure 11 then for a moment, which is the simpler one, because that is what you would like to be, and tell me again why we should regard country coming out Summerside and country coming out of Charlottetown as not being somehow in the same market.

1327             I don't understand the distinction.

1328             MR. PACE:  I will just intro it, but all we did is referred clearly to what the CRTC defines the term "market" as, and we put that in our deficiency letter.

1329             There are two or three other clear examples where the same situation has occurred.  It is in the Woodstock/Fredericton area, and I believe it is standard broadcasting in St. Catharines and Hamilton.  So there is ‑‑ there is two other examples of this in the country.

1330             But all we did was follow the term as what the CRTC defined as "market".

1331             THE CHAIRPERSON:  Did you follow it starting ‑‑ did you follow it using this contour or using the three contour of your Summerside station?  Which isn't on here.

1332             MR. PACE:  Well, Mike will answer the detailed technical question.

1333             MR. MAXWELL:  Yes, Mr. Commissioner.  It would be ‑‑ we would be using more the 3‑millivolt contour for the Summerside station.

1334             Are you asking if these new, I am sorry, these proposed contours for CFCY FM creates an ownership issue in Summerside?

1335             THE CHAIRPERSON:  Well, first tell me, does this Summerside contour cover Charlottetown.

1336             MR. MAXWELL:  No, sir.  It does not.

1337             THE CHAIRPERSON:  So which way is it skewed in a sense to not do so?

1338             MR. MAXWELL:  It would actually ‑‑ it is a directional antenna.  So the actual ‑‑ the actual contour looks like almost a key hole.

1339             We would like to ‑‑ we could provide that actually, to you.  But it is more like a key going out towards the Summerside market.  It does not include Charlottetown.

1340             THE CHAIRPERSON:  Maybe if you would provide that if you have got a copy.  Don't bring in the engineers.  I mean, I don't want to put through a huge expense, but if you have got it I think it would be helpful because, I mean, it is clear, you are experienced broadcasters, and it is clear to you that one of the things that we are trying to do is maximize the diversity for listeners for very, very scarce spectrum, which is public property.

1341             I don't want to get my violin out and start doing my public interest routine here, but I mean, it is something that we take very, very seriously.  And it is passing strange in a sense to look at your toolbox, if I can put it that way, and we see that you already have three stations, but your notion of diversity is to use two of them for precisely the same musical format with an 80 per cent overlap, so you tell us today, both of which could be heard already in each other's market.

1342             Maybe not perfectly in the case of Summerside, but both of which could probably be heard.  Certainly, if this contour is correct, the Charlottetown one will be easily heard in Summerside.

1343             And I just wonder why you wouldn't come up with something more creative.  Maybe increasing the power of the Summerside one.  Changing the format of ‑‑ I mean, it just seems strange to me, when we have such a scarce commodity as these frequencies, and 65 kilometers apart, that this is ‑‑

1344             I don't want to sound negative, but is this the best you can come up with in terms of a creative way of using three very scarce commodities like this?

‑‑‑ Off microphone / Hors microphone

1345             THE CHAIRPERSON:  Commissioner Noël?

1346             COMMISSIONER NOËL:  I don't have a question.

1347             THE CHAIRPERSON:  Okay. Fine. Could you answer that question?

1348             MR. PACE:  I think it is very important to realize that we, in the broadcasting business, we are a reflection of the community.  The service we provide is a reflection of the communities we serve.

1349             And we have had a heritage of 80 years at CFCY AM, and those people here have been loyal country listeners.

1350             It is not indifferent than when about five years ago, Summerside, and it might have been, you know, from our point of view, from a selfish point of view, it might have been better to flip that format, but I mean, the mayor, the council, you know, the residents of Summerside clearly wanted ‑‑ and it was promised to them ‑‑ they clearly wanted their own country station because CFCY can't get all the way up to Tignish in Prince County.

1351             So we weren't prepared to abandon those loyal listeners in that community in Summerside.  And they are very distinct communities.

1352             THE CHAIRPERSON:  Well, we have your answer, Where ‑‑ who is going to be left out, if anyone, if ‑‑ because I recall very clearly when you were in Halifax looking for a third station a couple of years ago, as Mr. Colville's last meeting that he chaired.

1353             One of the questions that Mr. Colville asked you at that time is, Why aren't you making better use ‑‑ exactly the question I am asking you here as such ‑‑ Why aren't you making better use of the assets you have?  Why don't you do something with that AM?  Flip it to FM and utilize it?

1354             At that time, you said, We don't want to abandon our AM listeners.  I think you have since recovered from that position, but at that point, you very strongly said, We don't want to abandon these AM listeners.

1355             So now I am going to ask you how many AM listeners you might be abandoning here.  Will there be any people who can now get you on AM in this confusing contour map that won't be able to get you on FM?

1356             MR. PACE:  I think that my comments, and I remember them very clearly, that was part of my response, but the actual context was simply this, we had an AM and an FM in Halifax, and we were up against an LMA of five stations:  three FMS and two AMs.

1357             And I said to Mr. Colville, If you were playing hockey and you were on the ice, how many players would you want on your side?

1358             I prefer to have three against five than two against five.

1359             THE CHAIRPERSON:  Hm‑hmm.

1360             MR. PACE:  Same analogy, I think my former partner Merv Russells(ph) made a curling analogy.

1361             THE CHAIRPERSON:  But you were very eloquent about not wanting to abandon the AM listeners who have been so faithful to you over the years.  So what I am asking you here ‑‑ I don't want a relive Halifax.  I am sure you don't either.

1362             MR. PACE:  Certain aspects, I could.

‑‑‑ Laughter / Rires

1363             THE CHAIRPERSON:  But how many AM listeners, if any, will not be able to hear you if you move to FM?

1364             MR. PACE:  I don't think ‑‑ I don't think there would be very many at all.  I think our AM listeners, whether it is listeners or our clients, are desperately wanting to hear CFCY AM on the FM band.

1365             But Dan do you want to comment on that?

1366             MR. BARTON:  First, I am going to ask Mike just to offer a little clarification on the contour.

1367             MR. MAXWELL:  Yes, on the comparative contour maps, you will kind of see that the proposed FM contours do match up quite comfortably with the AM contours.

1368             So we are feeling that that is the best possible match that we could get to make sure we do not leave anybody unable to hear CFCY.

1369             THE CHAIRPERSON:  Once the, if we look at Figure 12 and you look over the side where it shows the ‑‑ you, it is 40 kilometers to the ‑‑ it probably won't be the edge.  It will probably be, I don't know, five centimeters or something.

1370             There is a dotted line going through the 20 there.  What is that dotted line?  Do you know?

1371             MR. MAXWELL:  Unfortunately, I don't think that I have the contour in front of me.

1372             THE CHAIRPERSON:  None of you have a copy of this?  Could you give it to him then, Mr. McGuire, or Madam Secretary?

1373             There is a faint dotted line.  It maybe the lobster fishing grounds or something.  I am not sure, but ...

1374             MR. MAXWELL:  The one that is labeled "Proposed 54 DBU Contour"?

1375             THE CHAIRPERSON:  No, farther over to the right.  It goes right through the number 20.  See? 

1376             MR. MAXWELL:  Oh, that is a fairy line or something from the map.  That is not a technical representation.

1377             THE CHAIRPERSON:  Oh, okay.  All right.

1378             Well, there are so many lines on that map.  It is just ‑‑

1379             MR. MAXWELL:  It does go to the Magdalen Islands.

‑‑‑ Laughter / Rires

1380             THE CHAIRPERSON:  Okay, excellent.

1381             Well, we don't have jurisdiction over fairy lines yet.

‑‑‑ Laughter / Rires

1382             THE CHAIRPERSON:  But if we stay here long enough we may figure out a way.

1383             Okay, very quickly ‑‑ sorry to be so long on that ‑‑ we have your answer ‑‑ that 15 per cent of 35 per cent for new and emerging artists, that is 15 per cent of the 35, is it?

1384             MR. BARTON:  That is correct.

1385             THE CHAIRPERSON:  Have you done the math on that?  What does that come up to?  About five per cent? 

1386             MR. BARTON:  Oh, you are going to make me calculate, aren't you?  I am going to trust the one with the calculator.

1387             Five and a quarter per cent.

1388             THE CHAIRPERSON:  Five and a quarter per cent.  Do you have any idea how many spins that is per hour, per day, per week, from your knowledge as radio programmers?

1389             MR. BARTON:  Again, you are asking me to do math.  If that were to represent 240 songs per day, still looking Owen to hammer away on that calculator, that is about a dozen spins.

1390             THE CHAIRPERSON:  Out of?

1391             MR. BARTON:  That's right.

1392             THE CHAIRPERSON:  And are you going to, is your plan to even that out?  In other words, to give 12 artists a day a spin each?  Or are you going to find one artist you like and do them twelve times?

1393             MR. BARTON:  No, the whole purpose of that initiative is to give exposure to as many artists as possible.

1394             And I would like to point out this is above and beyond our Homegrown country program as well.  This is just part of our regular program.

1395             THE CHAIRPERSON:  Right, we are very keen on new and emerging artists.

1396             MR. BARTON:  So are we.

1397             THE CHAIRPERSON:  So, we will remember that, come licence renewal time.  Thank you very much.

1398             I think I do have ‑‑ no, those are my questions.

1399             Thank you very much.

1400             Counsel do you have questions?

1401             Oh, I am sorry.  Commissioner Noël.

1402             COMMISSIONER NOËL:  Just a complementary question, and I think, Mr. Maxwell, you may be the one to answer.  But, Mr. Pace, you may be the one who wants to take the pole on that.

1403             You replied on the 95.1 for the flip may hurt, and you identified as an alternate frequency 90.1.

1404             In your opinion is there a scarcity of frequency in the Charlottetown market at the present time?

1405             MR. PACE:  I will ask Mike to respond to that.

1406             MR. MAXWELL:  I certainly won't comment on whether there is a scarcity, but I know that based on the initial four applications for these proceedings each one ‑‑ or there were actually four frequencies that were offered all in the class C range.

1407             COMMISSIONER NOËL:  But are you aware of additional frequencies available in the market?

1408             MR. MAXWELL:  I believe that there is one additional one.  So we will bring it up to five.  So I would say it is not like a Halifax market where there really isn't any clear allotments.

1409             COMMISSIONER NOËL:  Thank you very much.

1410             THE CHAIRPERSON:  Now, do you have questions for this, because I must give you a bit of a warning here, how we are going to proceed.  I am stealing the secretary's thunder.

1411             I think what we are going to do, if I have got this right, and counsel will correct me very quickly if I have got it wrong, counsel will have questions for you, specific questions. Then you will get your chance to do your two‑minute why‑we‑are‑the‑berries speech.  Then counsel will have a little speech.  He wants to give some direction about process, generally, for the whole hearing, arising from some undertakings this morning.  And then we will take our break.

1412             Have I got that right?

1413             MS MURPHY:  That is correct.

1414             THE CHAIRPERSON:  Counsel?

1415             MS MURPHY:  My first question relates to clarifications requested by Commission staff.

1416             You noted, in questioning with Commissioner Cugini, that your staffing levels were consistent with the level prior to this discontinuance of the LMA.

1417             Commission information on file would indicate that your total staff complement would be approximately 24 for both stations combined.

1418             Is that figure accurate?

1419             MR. PACE:  I can get clarification on that and I can provide it to the Commission.

1420             MS MURPHY:  That is fine.

1421             Secondly, you undertook to provide the Summerside contour map.  When would you be able to provide this to the Commission?

1422             MR. MAXWELL:  Certainly before the end of the proceedings this week.  By Wednesday.

1423             MS MURPHY:  That is fine.

1424             And the confirmation for the staff level would also be provided before the end of the proceedings?

1425             MR. PACE:  At the latest, the end of the week.  But, yes, end of proceedings.

1426             MS MURPHY:  Thank you very much.

1427             Those are my questions.

1428             THE CHAIRPERSON:  Thank you, Counsel.  This is your chance to regain the momentum here and to tell us why we should licence your proposal.

1429             MR. PACE:  Thank you, Mr. Chairman, Commissioners, staff.

1430             We believe that the heritage of this station of 80 plus years of dedicated service deserves to be heard on the FM band for our listeners.

1431             We believe that this application meets the objectives of the Broadcasting Act.  It is a high‑quality, innovative, distinctive programming that we are offering here in the local community.  We want to enhance that on the FM signal.

1432             And the increased signal penetration, the FM, will improve our exposure for emerging artists and Canadian musical performers.

1433             I think we have a significant and innovative CTDI package offered here in Charlottetown.

1434             And I think it is important to note we are the only applicant that is looking to apply for a country format.  So diversity will be enhanced.

1435             We are very proud of the Blue Grass Island and Hoedown that we provide here, and we want to enhance that as well on the FM signal.

1436             And we are adding to the news function and evening hours in terms of programming, and we think that that will be an additional benefit to the community in Charlottetown.

1437             The issues that we have discussed with respect to the LMA, my only suggestion is that I think we should use some prudence and caution, and not get us into a situation where we were pre‑1994 where this a problem market and it had to be resolved.

1438             And we know this market.  We know this will work.  And we are proud to be here as the senior broadcaster in the city.

1439             And we hope you will give us every consideration.

1440             Thank you.

1441             THE CHAIRPERSON:  Thank you very much.

1442             Now, Madam Counsel, can you take us through the labyrinth of process.

‑‑‑ Laughter / Rires

1443             THE CHAIRPERSON:  Thank you.

1444             MS MURPHY:  It is very simple.

1445             Following the undertakings to file additional information by Newcap this morning, we were advised by applicants that they would like to have the opportunity to comment on these additional submissions.

1446             Accordingly, we would ask that all applicants that are required to file additional submissions, please copy or serve copies of th those submissions on the other applicants, and we ask that the applicants ‑‑ and accordingly, applicants may then file comments on those submissions no latter than October 19^th.

1447             Thank you.

1448             THE CHAIRPERSON:  Thank you, Counsel.

1449             I think that that brings us to our break, Madam Secretary.  We will break for 15 minutes, after which we will hear from Coast Broadcasting, who promises us a sound and light show, I think, or at least a PowerPoint.  And they will be questioned by Commissioner Duncan.

1450             Thank you.

‑‑‑ Upon receessing at 1539 / Suspension à 1539

‑‑‑ Upon resuming at 1559 / Reprise à 1559

1451             THE CHAIRPERSON:  Okay, are we ready?  We have Mr. Aguire who is coming.

1452             Before we introduce this panel, Madam Secretary, our counsel, Madam Counsel, Madam Commissioners ‑‑ I am beginning to see a trend here ‑‑

‑‑‑ Laughter / Rires

1453             THE CHAIRPERSON:  I am not so sure I like it.

1454             COMMISSIONER CUGINI:  We do.

1455             THE CHAIRPERSON:  I know, my daughters do.  So...

1456             Madam Counsel, you have one more bit you want to add to the on‑going process debate.

1457             MS MURPHY:  Yes.  So following our announcement relating to process and the opportunity to provide comments to any additional submissions, an applicant has requested a right to reply to the comments.

1458             So I will just review the process.

1459             All applicants who are required to file additional submissions shall serve copies of their submissions on other applicants.  Other applicants will have the opportunity to file comments on those submissions, serving copies on other applicants no later than October 19^th.  The applicants whose submissions are being commented upon may then file reply comments no later than October 24^th, serving copies on other parties.

1460             And that is ‑‑

1461             THE CHAIRPERSON:  And at that point we definitely cut it off. 

1462             MS MURPHY:  Yes.

1463             THE CHAIRPERSON:  Madam Secretary?

1464             THE SECRETARY:  Thank you, Mr. Chairman.

1465             We will now proceed with item 4 on the agenda, which is an application by Coast Broadcasting Ltd. for a licence to operate an English‑language FM commercial radio programming undertaking in Charlottetown.

1466             The new station would operate on frequency 95.1 MHz (channel 236 C1) with an average effective radiated power of 17,900 watts.

1467             Appearing for the applicant is Mr. Andrew Bell.

1468             Mr. Bell will introduce his colleagues, after which you will have 20 minutes to make your presentation.

1469             Thank you.

PRESENTATION / PRÉSENTATION

1470             MR. BELL:  Thank you.

1471             THE CHAIRPERSON:  Could I interrupt you before you start?

1472             If there is someone who ‑‑ anyone in the audience who desperately wants to see this PowerPoint, I am not sure how well you can see it, there are a few more seats back there.

1473             I am sure the applicants wouldn't mind if you have a note taker or somebody who wants to sit behind ‑‑

1474             MR. BELL:  No, no.  We have a small team.  We would actually let a few more members just to get us some critical mass.

‑‑‑ Laughter / Rires

1475             THE CHAIRPERSON:  Okay. So, if there is anybody who really wants to see this and they can't see it ‑‑ otherwise we will have copies and you can look at them afterwards.

1476             Sorry for the interruption.  Please, proceed.

1477             MR. BELL:  As for your previous comments, the pyrotechnics display was cancelled this afternoon due to lack of fire marshall approval.

1478             In any event, good afternoon, Commission Chair Langford, Commissioner Noël, Commissioner Duncan, Commissioner Cugini and Commissioner Cram.

1479             Welcome to Charlottetown PEI, and thank you for your time in advance.

1480             We understand the importance of format.  However, we believe in this case one person to assess demographics and the fact that the 35‑54 demographic is currently being under‑served in the Charlottetown market.

1481             One then needs to look at the format that best serves this demographic, the highest spending demographic retail, I might add, which is the 35 to 54 bracket, which we believe is adult contemporary, one of the hottest formats currently being offered in radio.

1482             Our application is one of ownership diversification in an industry of contracting ownership, with the effort to further enhance a competitive environment in the Charlottetown marketplace.

1483             The application.  The application is a category 2 FM broadcasting licence.  The company is Coast Broadcasting, serving the greater Charlottetown area with an adult pop format targeting adults 35 to 54.

1484             I think it is important, where we were a new company to this industry two years ago, that we first introduce who Coast Broadcasting is to the Commission and the commissioners who have not previously met us.

1485             My name is Andrew Bell, and this is Andy Newman, my partner.  And to the far left is Scott Graham, an Atlantic independent musician and a founding member of Celtic Connection.

1486             I personally have over 20 years business experience, been a past president of a Rotary Club and looking after community service, past director of St. John's Board of Trade ‑‑ and St. John's Newfoundland obviously ‑‑ graduate at Queen's University executive program, currently own and operate multiple business units involved in broadcasting, retail, wholesale, industrial supply and real estate developments throughout Atlantic Canada, employ and manage in excess of 400 employees in Atlantic Canada.

1487             I have won national sales awards for international companies.  I have received national recognition for marketing initiatives and strategies.  And appeared on the cover of national publications for winning marketing campaigns.  And all throughout that time fit 14 years media buying experience.

1488             My partner, Mr. Newman, has 23 years in broadcasting, working for six radio stations, three tv operations in three provinces.  He is angrily raised over two million dollars for charity, produces large community, cultural and sporting events.

1489             He is a partner in many successful media campaigns for several ad agencies.  Created the brand and product for Coast 101.1.  Highly‑rated on‑air talent.  Track record of programming success over many formats.  And mentored dozens of successful broadcasters in the country.

1490             The question today is, Can Charlottetown support another operator?

1491             I think it is important, and we think it is important, that we should review the facts.

1492             Population counts for census.  This the entire island of Prince Edward Island.  One hundred and forty thousand (140,000) just shy of those, slightly skewed female.

1493             Yes, you can see Charlottetown makes up the orange, which is about 60,000 people of that total population, and again, female slightly dominant over male.

1494             The census population by age and gender, which is also important.  If you look, the biggest segment of that is 25‑54; 35‑54 is what we believe is currently under‑served.  The 35‑54 specifically accounts for 33 per cent of the population.

1495             If you look at Charlottetown again ‑‑that was Prince Edward Island.  This is Charlottetown on its own.  Again, the large demographic.

1496             Retail sales in Prince Edward Island, trending slightly up over the last number of years with the evolution of big box retailers and power sanctuaries that we now even see here in Charlottetown, and projections for 2005, 2007 and 2010.  One can see some nice retail sales growth in this marketplace.

1497             Review of the Charlottetown radio market.  And will turn that over to my partner, Randy Newman.

1498             MR. NEWMAN:  Before, we could ascertain whether or not we would be successful in even doing an application before the Commission, we had to take a look and see what was existing.

1499             And having the opportunity to know that there were other parties that were interested gave us a little bit of an insight as to where they may go with some of their applications.

1500             So we review the commercial markets currently, or the commercial formats currently in the Charlottetown area.

1501             CFCY is a country station targeting primarily adults 30‑60.

1502             CHTN obviously in its current incarnation is an oldies station.  They are proposing a classic hits format for their FM.  That is primarily a male 25‑54 year old format.

1503             CHLQ, there is a bit of a bone of contention over what hot AC means.  And there is obviously some concern where we are proposing a popular contemporary format that we may in fact cross paths on more than one occasion in terms of duplication of music, and we are going to show you later on in our proposal that that really isn't the case, that we are really splitting some fine hairs by what is in a name of a format.

1504             And I think it is important that while you have the opportunity to be here in Charlottetown you actually get a chance to listen to see what Maritimes version of hot AC is.  And we will show you that our version of adult pop in fact is not a duplication of their format.

1505             And of course there was initially a proposal by Astral for a rock station.  Newcap has maintained that they will do a rock station if they are successful, and primarily that will cover the male 18 to 34 year olds.

1506             What is missing?

1507             Well, obviously it requires a little more than some dial tuning.  So we did do some market research just in the month of March in 2005.

1508             We choose to go with a little larger sample seize:  414 18‑54 year olds were polled through a phone survey.  The respondents were representative of the demographic make up of the marketplace.  In other words, it was skewed larger to the 25‑54s.

1509             Twenty‑nine(29) per cent of those who responded, listened to radio four hours or more a week.  Sixty‑three(63) per cent of those who responded were female.  You guys have our research.

1510             What we found out was that:  about 60 per cent listen to Majic 93.1; about 30 per cent listen to CBC (I am sure that number is a little different today); 22 per cent listen to CFCY; 20 per cent are currently listening to CHTN; the most scary number of this is that 28 per cent of the respondents to our survey listen not only out of market, but out of province.

1511             It was a no‑brainer for us that classic rock and rock were the number one holes.  But we also had a good idea that the incumbents were going to ask for that.  So we knew that we needed to go a little bit deeper into our research.

1512             So we did some cluster analysis to determine the format holes and the true taste of those who we were asking.  We broke these down by age.

1513             In persons aged 35 to 54, 36 per cent of those who responded want current adult pop, and these are artists similar to John Mayer, Elton John, Céline Dion.  They are not Beyonce, Eminem.

1514             Fifty‑seven(57) per cent want some adult gold, like Rod Stewart, The Eagles, Fleetwood Mac.  Not AC/DC, not Black Sabbath.

1515             So what is missing in Charlottetown?  By our estimations and our research, an adult pop station designed for the largest demographic in the region, that is currently under‑served.

1516             Majic 93.1 is a bit of a hybrid format.  They can be, because they are the only show in town.

1517             And I think that once, you know, if your Santa Claus comes, as you said earlier, Newcap gets theirs, we get ours, I think everyone really has to look at their formats very carefully.

1518             They are a bit of an anomaly currently, and I think they have some concerns that we are going to come in and try to be exactly what they are.

1519             They reality is that they are trying to be all things to all people.  We propose serving this demographic with a specific set of music that is designed for the adult 35 to 54.

1520             Here is our plan.  Now in fairness to the incumbents, when we did this presentation, heavy automation existed in this market.  I am very pleased to say that they have reversed that trend here and they have woken up and they have put some live announcers back on the air.  So kudos to the incumbents.

1521             We do plan to utilize live‑to‑air announcers during key‑day parts and the weekends.  We will be providing current and relevant information to a demographic that is looking for a little bit more out of their radio than just an iPod on shuffle.

1522             We are proposing 5.6 hours minimum of locally produced news weekly, and that is news and sports.  A development of news stringers.  We will obviously be bringing a distinct editorial voice to the airwaves.  Bringing live community service events.  We will be broadcasting live from many events.

1523             And we will be offering entertaining in relevant topics to the key demographic.  In other words, we are not interested in stepping on anyone else's toes.

1524             It is important to notice that with our current Coast 101.1 in St. John's our levels of Canadian content to local content are pretty much in balance.

1525             Our local artists are not segregated to certain day parts.  They are mixed in.  And the local artists play with the same frequency and the same spins as a Céline Dion or a Brian Adams.

1526             We are proposing a performance area for live musicians, the adult pop format.  It means a broader exposure to a wide variety of local artists.

1527             Internships for the next generation of broadcasters.  We had a little phase in the >80s and >90s where we ate our young.  With automation there was no opportunity for the next Howard Stern to come along.

1528             Reliable, high‑quality transmission facility, we will be sharing our transmission facility with the CBC.  I should tell you that in 18 months our downtime has been less than three hours.

1529             We propose to be active in the community and the industry because it makes sense, not because we have to.

1530             And we have a commitment to Canadian talent development and employment equity.

1531             Our business plan is predicated on the exciting changes in Prince Edward Island radio.  I mean, it is quite conceivable that the landscape here is going to be completely turned upside down.

1532             It is very exciting.  There are a lot of people excited about it.  It should bring new listeners, new advertisers.  That will bring new revenues.

1533             If you take a look at our expenses, we have got conservative revenues with realistic increases, liberal expenses based on similar‑sized operations.  And we don't expect to have an impact, an appreciable impact, on existing operators.  For us to say we will have no impact would be out‑and‑out a lie.

1534             Currently, according to the last public numbers available, Charlottetown's radio revenues at 4.4 million, that is down about a half a million dollars when you trend it.

1535             Yet the profits are up a half a million dollars.  That is directly a result of the LMA.  It is unfortunate.  And it is the last public number that we have.

1536             A new player at the break of the LMA will stimulate interest in radio in this market, but we do expect that the bulk of our revenue is going to come from new advertisers.

1537             And we estimate that just under $240,000 will come from the existing incumbents, or roughly six per cent of the existing market.

1538             Our Canadian talent development is pretty clear.  It is pretty simple.

1539             Currently this market requires $400 cash to be given to a third‑party donation.  We are predicting that we would like to see $5,000 as a minimum.

1540             A daily broadcast of the entertainment guide to promote all facets of the arts, not just music.

1541             Again, a live space for open‑air performances.

1542             And we do foresee that we can reasonably produce two Island music CDs over the licence term, and that would give the opportunity for artists who are unsigned to have real radio play, real distribution and an opportunity to participate in an actual CD project.

1543             Our total commitment of indirect and direct donations totaled just under $792,000, and more importantly our commitment, a continuation of our commitment of playing local stars in the same rotations as the national artists.

1544             I would like to now turn things over to Mr. Scott Graham to talk about our level of commitment.  He is a founding member of the group Celtic Connection.  He has recorded and released regional and national CDs.  He has represented our country in Tokyo twice.  And he speaks to our commitment as an independent artist.

1545             Scott?

1546             MR. GRAHAM:  Thank you, Andy.

1547             Since Coast came along ‑‑ sorry.

1548             THE CHAIRPERSON:  I am just not sure that mic is working.

1549             MR. GRAHAM:  No.  The light doesn't work. 

1550             THE CHAIRPERSON:  But the mic is working.

1551             MR. GRAHAM:  Yes.

1552             THE CHAIRPERSON:  Good.  Thank you.  Sorry to interrupt.

1553             MR. GRAHAM:  No problem.

1554             Since Coast came to St. John's it has been a breath of fresh air to local musicians.

1555             Basically they have given the opportunity for live air performances.  As well, it is very easy to play the big name Canadian acts, and I have been both a signed act.  I have been an unsigned act.  I have toured back and forth across the country on numerous occasions.  And as Andy mentioned, I have to Japan a couple of times.

1556             They play the no names.  They play the Jason Greelys, the Janet Calds, Dr. Zeus, Stereotype.  Bands that really wouldn't have had an opportunity before these people came along.

1557             And I am here today.  I would love to see the same opportunity in Charlottetown as has been presented to the musicians in Newfoundland.

1558             So basically Canadian content ‑‑ it was mentioned earlier ‑‑ 35 per cent, and I don't know the full licencing.  But as Andy mentioned Coast splits  it up that it is probably 50 per cent local or you can ‑‑

1559             MR. NEWMAN:  60‑40

1560             MR. GRAHAM:  ‑‑ 40 per cent local, as well as the Great Big Seas and the Barenaked Ladies.

1561             But also ‑‑ and I will call myself a no name ‑‑ no names are given the opportunity to have their music presented to a greater audience.

1562             Thank you.

1563             MR. NEWMAN:  Thanks Scott.

1564             We have done live to air performances in our first 18 months, and I have had one of our announcers put together a little list for us.  And there are some no names.  There are some big names.

1565             We were behind the Rex Goudies of the world long before he was Canadian idol.  The Dwain Andrews of the world we in our studios long before he won awards at the ECMAs.  The Gordy Sampsons have been by.  The Kelly Ann Evans is a voice that you will hear, guaranteed in the next few years.  Brothers in Stereo.  We have personally, and I mean personally funded Andrew Ledrew's latest project with some help from others.  Sandy Morris is a musical icon having written the soundtrack and rewritten the soundtrack for the CBC Land and Sea show.  The Lenny Gallants.  The Liz Picards.  And some of the performing artists as well.

1566             I think the big issue that Maritime and Newcap has with us, is that we are going to come in and step on their toes musically and that there is going to be duplication of service.

1567             I think it is important that we now get a 90‑second snapshot of what Coast will sound like in Charlottetown.

‑‑‑ Audio presentation / Présentation audio

1568             MR. NEWMAN:  I would like to thank Tourism PEI for providing me some wonderful images and, for me, having worked in this market back in the late 1980s, a few memories as well.

1569             Just to wrap‑up the presentation, and I am sure you have many questions, we are offering a proven track record on delivering our commitment to the CRTC.  A strong commitment to Canadian talent development, a distinct editorial voice, a phrase that Andrew coined while doing this, continuous improvement of programming. I think that is somewhat important because it speaks to the fact that we are not about to just put it on the air and let it go. 

1570             We have delivered our commitments to the CRTC, we have delivered, as well, a desired product in our previous incarnations, we have delivered market‑leading results in St. John's, we have delivered results for our advertisers.  We have delivered and received support for our community.  More importantly, we have delivered some respect to ourselves from our listeners and our peers.

1571             We are proposing a local service for the City of Charlottetown and the greater surrounding area and we are forecasting some wonderful success with your permission.

1572             THE CHAIRPERSON:  Thank you very much.  Commissioner Duncan.

1573             COMMISSIONER DUNCAN:  Thank you.  That was a great presentation.  Thank you very much.  In terms of the music format proposals, because we are all interested in that, Newcap is offering classic hits, I am wondering ‑‑ and probably redundant in view of the presentation ‑‑ but how your adult pop music format will differ from the other proposals.  In terms of music style and program orientation, can you demonstrate the difference?

1574             MR. NEWMAN:  Well, I think the big difference ‑‑ and a lot of time we spent this morning discussing era mixes, balances of the 1980s to the 1990s and today ‑‑ the reality is that a lot of radio stations share the same artists.  Newcap in their conversations this morning discussed the U2 situation.  Whereas one of their stations may play some album cuts from their earlier tracks, the heavier station may play some of the heavier cuts from the current music.  When you talk about playing the Doobie Brothers I don't think it is necessarily China Grove, it may be Black Water on our station.  When it is Fleetwood Mac ‑‑ probably not a good example, because there probably would be duplication in an artist like a Fleetwood Mac.  But not necessarily would it be the Eagles' Heart Ache Tonight, it would probably be New Kid in Town or maybe Seven Bridges Road. 

1575             In terms of our contemporary music and our new music, again, our version of adult pop is what you just heard.  CHEZ, which I am sure would be difficult to count, since one is from PEI and two are from Newfoundland, but it is more of a softer tone, it is something in one of the phrases that we use in St. John's is it is a station you can turn on and leave on.  So there isn't a big jarring difference from song to song.

1576             COMMISSIONER DUNCAN:  You also indicate in your application that CHLQ‑FM in Charlottetown was advertising great lite rock hits but maintaining over 60 percent current contemporary hits.  How much of an overlap in play lists would there be between your proposed station and CHLQ?

1577             MR. NEWMAN:  When I was in the market on a family vacation back in June, and obviously did some button pushing and did a little bit of math while I was here and that is when that number was arrived at.  On our way into the hearings last evening we spent sometime doing some listening as well and I don't hear a market change in those numbers.  I think that it is an issue where maybe 20 percent of the current top 40 songs are possibly crossover songs between adult contemporary and what would be termed hot AC, so it is a very small amount.

1578             COMMISSIONER DUNCAN:  In looking at the radio formats, and you touched on that as well in your presentation, I understand that this demographic, 25 to 54 years old, is general skewed to a female audience and that you have characterized your adult pop as appealing to a broad 30 to 50 demographic.  I am just wondering if you could identify your core demographic group either by age or sex and if you could provide us with a description of the format's core audience within the broad 25 to 54 age group and explain from a programming perspective your reasons for targeting this audience?

1579             MR. NEWMAN:  If I could paint a picture of a an ideal listener, which is a great programming tool, it is a female, she drives a Subaru but she would like to drive a Volvo, she is intelligent, it is ‑‑

1580             COMMISSIONER DUNCAN:  Commissioner Noël's already on your side, she drives a Volvo and she is very intelligent.  You are going for it, keep going.

1581             MR. BELL:  And she is only 35, don't forget that part.

1582             THE CHAIRPERSON:  And every once in while we get lucky.

1583             MR. NEWMAN:  And I bet you buy some furniture too.  It is an educated female that may or may not work outside the home, but certainly has the capability to do so.  Her male counterpart which fits the rest of the picture is overworked, probably works 55 to 60 hours a week, again, is educated, they have children, they have the means to enjoy their lives, but not the time.  They don't have time to enjoy the world report necessarily on CBC, but they do try to.  They do like to know what is going on in their backyard, but more so from a community standpoint rather than a hard news standpoint.  I think that is the key in reaching that sweet spot, to quote Mr. Maheu from earlier this morning, is to do probably some more in‑depth market research and then broaden the format out from there. 

1584             Obviously, in a market the size of Charlottetown you can appreciate there aren't a great deal of people who meet that very finite criteria I just lined out, so you do have to broaden that out afterwards with some research.  But the key is to not lose sight of who those two very important individuals are and make sure that your conversation and your music is targeted directly to them.

1585             COMMISSIONER DUNCAN:  In summing up the format discussion, why do you believe that the adult pop format would provide Charlottetown listeners with the greatest degree of diversity and why it represents the best choice of format for the panel to choose?

1586             MR. NEWMAN:  The reality of musical choices is that you cannot serve everyone.  Currently, CHLQ is attempting to do that.  And again, by virtue of the simple fact that they are the only, you know, currently the only FM show in town they receive 60 percent of the market share.  Because they get 60 percent doesn't mean that all 60 percent are thrilled with their choice or listen to them exclusively.  I think what you find when listening to the existing, the incumbent, is that they will have smatterings of what we do, sandwiched amid Nickelback, Green Day that I heard at breakfast time at 8:55 ‑‑ which I had to actually remind myself what I was listening, what station I was listening to ‑‑ and then catering to the younger audience, which would bring in the hip‑hop trend that is currently so huge in the States and, in fact, wildly popular with the 12 to 24 year olds in our country.  So it becomes a bit of a dance for CHLQ to continue on down that road.  I think bringing us into the market gives us the opportunity to clearly segment the adults from CHLQ and the ones that possibly are listening to CBC some of the time, that when they're not listening to CBC they would go to their CD player ‑‑ we wouldn't mind being a good second choice to CBC ‑‑ and let CHLQ focus on the real hot AC target that they have said that they want to serve.

1587             COMMISSIONER DUNCAN:  Thank you.  I am just going to switch to some of the more specific details.  I notice in your ‑‑ it is probably in your response to the interrogatories ‑‑ I notice that you mention that 5.6 hours of local news and sports broadcast per week, but in your presentation this afternoon you are referring to as 5.6 hours of news?

1588             MR. NEWMAN:  News and sports, and I think I clarified that when I did the verbage on the slide ‑‑

1589             COMMISSIONER DUNCAN:  Okay.

1590             MR. NEWMAN:  ‑‑ but it is news and sports.  Three minutes of news and a minute of sports.

1591             COMMISSION DUNCAN:  Okay, that is my next question.  What percentage of your news, or portion, would be devoted to local news and what percentage regional?

1592             MR. NEWMAN:  The reality of having a strong news voice like CBC in the market and when you take a look at the, you know, albeit with BBM not rating this market, our rudimentary research and everyone else's, they are pulling in a great share in this market and they do a super job of taking care of regional and national matters and international matters in fact.

1593             We are being exceptionally successful in St. John's with covering almost 100 percent of our newscast being local.  Now obviously, with situations as we have just had in the southern U.S. and in fact in southeast Asia during the Tsunami where we had, you know, in fact a Newfoundlander clung to a raft or a piece of driftwood for many hours garnered a little bit more attention than it would.  But we are currently ‑‑ and can't see why, based on the make‑up of our listener, that we wouldn't strive for 100 percent locally here in Charlottetown as well.

1594             COMMISSIONER DUNCAN:  So would you be presenting newscasts on the weekend, during the weekend?

1595             MR. NEWMAN:  Yes.

1596             COMMISSIONER DUNCAN:  So when would they be scheduled then?

1597             MR. NEWMAN:  They would be scheduled the same as the weekday.

1598             COMMISSIONER DUNCAN:  Oh yes, okay.  The provision of local oriented and information programming was identified as being very important to your target audience.  The definition of local programming set out in a commercial radio policy provides that licensees must include spoken word material of direct and particular relevance to the communities served, such as local news, weather, sports and the promotion of local events and activities.  Can you please explain how you intend to meet this policy?

1599             MR. NEWMAN:  Certainly.

1600             COMMISSIONER DUNCAN:  It is almost like you have the questions first.  Go ahead.

1601             MR. NEWMAN:  That is okay.  The reality is is that market to market this particular segment of the audience that we are looking for doesn't really change that much.  First and foremost is that local news component and I wouldn't want to trivialize it by saying that it is news lite, but it is not hard, deep, investigative reports on councils' misspending.  It is whether or not a school is being demolished or rebuilt, if there is some rezoning in the downtown that is currently residential that is being changed to commercial.  It is of that nature, a little more directly impacting. 

1602             We have the advantage of being in Charlottetown where the government seats sit, so obviously the legislature is an ongoing issue.  We currently are proposing that we would do community matters initiatives on an hourly basis, roughly 60 seconds of each where we would give the opportunity for non‑profit organizations to promote their community events.  We would also be taking our community cruiser out when requested.  Obviously, that is primarily a summer initiative and generally equates itself in just about every radio station to an intern, but we have had some success in doing this pretty much throughout the entire year, whether or not that is staffed by a part‑time person or one of our existing staff.

1603             COMMISSIONER DUNCAN:  As a new entrant into Charlottetown you would be faced with competing, obviously, with Maritime and Newcap.  What would distinguish your spoken word programs from what has been offered by these incumbent stations both currently and in your proposed applications?

1604             MR. NEWMAN:  If you take a look and a listen to CFCY ‑‑ and it is pleasing that in the time that I was in this market back in the 1980s and to today they haven't changed their news philosophy, they are more of a news‑driven organization, they were then and they seem to continue to be now and, from the indications in Mr. Pace's presentation, they plan to continue to be.  Newcap has obviously recognized this and is putting some extra resources into their news department.  It seems, from the presentations this morning and from what we have had a chance to listen to in the marketplace, that there seems to be a little more emphasis on regional news and a little more of the investigative news than we are prepared to offer.  We are more interested in reporting the facts.  If the very nature of our listener is that if they want more information they also tend to be very plugged into technology and they will go seek it out.  The Guardian is a great source of investigative reporting and Transcontinental hasn't certainly done a bad job in this market.

1605             So we plan to be ‑‑ I guess to answer your question directly ‑‑ news lite.

1606             COMMISSIONER DUNCAN:  So what would be the minimum hours of news and other spoken word programming per week?

1607             MR. NEWMAN:  We are looking at 10 percent.

1608             COMMISSIONER DUNCAN:  Now, just turning to the CTD commitments.  You were proposing to devote $65,000 in direct expenditures over the licence term.  I would like to get some clarification and additional information on the initiatives that you proposed.  You indicated in your application that an island music compilation CD will be released twice during the seven‑year term for a total of $30,000 in total expenditures to be expended in two amounts of $15,000.  Could you provide us with details related to the CD production?  Will it be triggered by talent contests and, if so, what the criteria for the contest might be?

1609             MR. NEWMAN:  The CD initiative isn't a completely thought out process at this point in terms of getting it to that stage.  Obviously in consultation with our local operators, as Mr. Maheu alluded to earlier, once word goes out that you are doing local music the amount of material that comes in electronically is truly amazing and the ability to do a demo very cost‑effectively now certainly exists.  So we will be opening up the airwaves for applicants to send in their material.  We will put a review panel on that would include our local program director and operations people.  In terms of musical criteria, anything goes.  If it is worthy of getting some attention ‑‑ to put 15 tracks onto a CD ‑‑ if a couple of them aren't directly within our format then, you know, that is really irrelevant, then we are still, you know, we are getting the message out.

1610             COMMISSIONER DUNCAN:  What would you anticipate would be the cost breakdown on the $30,000 in terms of production costs and cash awards?

1611             MR. NEWMAN:  Well, there would be no cash awards.  The award would be to appear on the CD and then, of course, distribution, any airtime to promote the sale of the CD and all profits would go back to the artists.  There is a formula obviously from a royalty standpoint that would be followed.  This is a great opportunity for the unsigned acts to get distribution and ultimately hopefully airplay and maybe get their CD into ‑‑ their track ‑‑ into the hands of a record agent.

1612             COMMISSIONER DUNCAN:  What would you estimate the cost of a single CD would be to produce?

1613             MR. NEWMAN:  We feel that we can put this together for the price of about $15,000 each. 

1614             COMMISSIONER DUNCAN:  Would that include the promotion or the ‑‑

1615             MR. NEWMAN:  No.

1616             COMMISSIONER DUNCAN:  ‑‑ promotion is over and above?

1617             MR. NEWMAN:  Yes.

1618             COMMISSIONER DUNCAN:  You also propose to make third party donations in the amount of $5,000 a year.  We are just wondering if you could identify the third parties that these expenditures will be directed to and if the funds will remain in Charlottetown or if they could also be Atlantic based?

1619             MR. NEWMAN:  One of the most interesting things that came out of this process when we received our deficiency request, with the facts, came along a very helpful list of what was considered direct and indirect and, in fact, up to that point I had received several requests for funding directly from artists, artists who I would call deserving.  But, of course, to make a direct contribution to the artist does not count as a Canadian talent development initiative.  However, the fact sheet that came along was very clear that we could in fact cover the cost of some of the productions, some of the duplication costs and the information that was contained on the fact sheet was very helpful.  We don't think it serves, with the amount of money we are talking about, to take that money and to put it into a national fund.  Quite frankly the ‑‑ and I did receive the comments from CIRPA about our application in the Starmaker Fund ‑‑ with regards to putting the money towards factor, quite frankly, I think Tom Cochrane can afford to produce his next album but he is as eligible for factor funding as the Celtic Connection are or the next Tara MacLean who we don't know yet.

1620             I think with the amount of money that we are talking about it is really an insignificant amount of money and I would like to have that directed to Charlottetown, Prince Edward Island artists exclusively.

1621             COMMISSIONER DUNCAN:  If it is determined that some portions of the CD funding do not qualify as eligible CTD, would you be willing to redirect these funds to support initiative that the Commission ‑‑

1622             MR. NEWMAN:  Absolutely.

1623             COMMISSIONER DUNCAN:  ‑‑ would find acceptable?  Your seven‑year financial project includes a line dedicated to CTD that identifies the annual $5,000 third party budget under operating expenses, but it is not immediately clear where the $30,000 CD budget shows and we are just wondering if you could point us to that?

1624             MR. NEWMAN:  Sure.

1625             COMMISSIONER DUNCAN:  And again, actually the island CD was factored into our promotional budget rather than our Canadian talent development.

1626             MR. NEWMAN:  Yes.

1627             We would be willing to amend our financials to include that.

1628             COMMISSIONER DUNCAN:  So it is in there, it is just in a different line?

1629             MR. NEWMAN:  Yes.

1630             COMMISSIONER DUNCAN:  Okay, thank you.  That is great, thanks.

1631             The Commission notes that you have projected only 30 percent of your year one revenues would be derived from the incumbent services market.  We thought perhaps that seemed low in view of at least one of the other applicant's projections that theirs would come 65 percent.

1632             MR. BELL:  The reality of retailers and being a retailer is that if you don't have a format in radio and to advertise into your target market you will find other means, ie. newspaper or TV, direct mail, something along those lines.  We believe that 35 to 54 is ‑‑ well, we know 34 to 54, females specifically, is the largest spanning demographic that exists and we believe that there are retailers out there that will target more dollars towards radio when they are given an alternative that does target that demographic. 

1633             COMMISSIONER DUNCAN:  So you see that as your target for advertising dollars, as opposed to the incumbent's?

1634             MR. NEWMAN:  There was at one point ‑‑

1635             COMMISSIONER DUNCAN:  I see you have 35 percent.

1636             MR. NEWMAN:  ‑‑ in the market there was, prior to 2004, there was a half million dollars that has disappeared from radio revenues.  If we could find that underneath a rock somewhere that would be wonderful, but the reality is we are going to have to go and look for that and to dig it up.  We have proven that this is a segment of the market that advertisers live and we will find the extra budget.

1637             COMMISSIONER DUNCAN:  I appreciate your comments.  I just wanted to be sure that I didn't mislead you on that first part of the question.  The incumbent stations, you had broken down that you expected to take away 30 percent of their revenues?

1638             MR. NEWMAN:  No, I believe it was 30 percent of our revenues ‑‑

1639             COMMISSIONER DUNCAN:  Yes, was going to come from that source?

1640             MR. NEWMAN:  ‑‑ were going to come from that source.

1641             COMMISSIONER DUNCAN:  Yes.

1642             MR. NEWMAN:  Which equates to just under $240,000.

1643             COMMISSIONER DUNCAN:  One of the other applicants was estimating 65 percent.

1644             MR. NEWMAN:  I think they were also considering themselves in that.  I believe that was Maritime and they were expecting that that would come from the existing revenue that existed from CFCY‑AM, some of that would actually be converted to CFCY‑FM, for lack of a better phrase.

1645             COMMISSIONER DUNCAN:  So I am just curious to know what you think the impact would be on your business plan if your projections aren't as robust, if the actual doesn't turn out to be as robust as you are projecting and wondering do you have the financial capacity to weather a less optimistic entry into this market?

1646             MR. NEWMAN:  We have a very liberal expense line.  We also have a very conservative ‑‑ and when you look at Astral and Newcap's financial projections we all seem to be fairly close.  I realize Astral is not on this docket ‑‑

1647             COMMISSIONER DUNCAN:  They have withdrawn.

1648             MR. NEWMAN: ‑‑ that they have withdrawn.  We all seem to be fairly close.  So we are fairly confident, obviously the they are as well, that the revenue projections are solid and that extra half million dollars exists.  The other thing to consider is that we do have a fairly healthy bit of television advertising that is spent in the Charlottetown market ‑‑ that may change with CBC's current state unfortunately but, you know, there was a significant amount of local advertising dollars spent on CBC television in this market in historics.  In Transcontinental's newspaper it continues to make a significant impact on the advertising spending and we think that it is a great opportunity for the new listeners to create some hype about radio in the market and to take some of those newspaper dollars away. 

1649             So I guess to answer your question, we are going to target, you know, the newspaper.

1650             COMMISSIONER DUNCAN:  So what I hear you saying is that there is ‑‑ that you are very confident that you are going to be able to deliver on your projections.  But just if you weren't able ‑‑

1651             MR. NEWMAN:  To answer your question that ‑‑

1652             COMMISSIONER DUNCAN:  ‑‑ to have the financial ‑‑

1653             MR. NEWMAN:  Go ahead, Andrew.

1654             MR. BELL:  No, we have a group of companies as well that has written a letter to the CRTC that is willing to provide the financial support should need be.

1655             COMMISSIONER DUNCAN:  And that is even ‑‑ I know, I saw the letter with respect to the initial funding, but on an ongoing basis as well?

1656             MR. BELL:   Absolutely.  We believe we have been very conservative in our projections.  We were asked the same questions in St. John's a couple of years ago and took a conservative approach.  Chairman Langford asked us a number of detailed questions along that and I think we have, you know, the track record speaks for itself, but certainly we are willing to step to plate if need be.

1657             COMMISSIONER DUNCAN:  I notice in your supplementary brief that you mention you are going to use relationships with the Atlantic Media Institute in Halifax and Kingstec in Kentville and you say:

                      "...in addition to other journalism and broadcasting schools."

1658             I just wonder how that translates into the Charlottetown market because, you know, are you going to bring people over or are you ‑‑

1659             MR. NEWMAN:  Ultimately, where there are being centrally located training facilities Charlottetown people would have to travel to Halifax to get training or to travel to some of the other schools, whether that be Kingstec or, you know, in fact travel off to Ryerson.  We have been exceptionally successful in ‑‑ I hate to use the word that was used, but ‑‑ repatriating individuals, you know, back into Newfoundland and I can't see why that model won't work in Charlottetown.

1660             COMMISSIONER DUNCAN:  I guess when I read it I was thinking that you were intending to give them an opportunity while they were studying or from practical experience.

1661             MR. NEWMAN:  Absolutely.  If you are from Charlottetown and you are attending school and part of your curriculum includes some hands‑on experience it would make sense that we would welcome a Charlottetown student back into town.

1662             COMMISSIONER DUNCAN:  I am just wondering ‑‑ I read here, and this was in your supplementary brief as well.  Currently, "The existing operations use..." and I am quoting you here, "...use automation extensively, this has resulted in a reduction in the number of distinct news and programming voices in the market."  In fact, Maritime Broadcasting utilizes out‑of‑province talent to voice track many hours during the week.  How many hours of voice tracking, if any, do you intend to use?

1663             MR. NEWMAN:  In fairness to Mr. Pace, and he and I spoke briefly this morning, that was a misunderstanding.  In fact, the individual in fact performed some duties from Charlottetown for some of the other MBS stations and not the other way around, and I did promise I would clarify that.  And I did clarify, in fact, that when the application was written there was excessive automation.  So to answer your question, we intend to be live from 6:00 in the morning until 7:00 at night and then use automation in the off hours.

1664             COMMISSIONER DUNCAN:  Okay.

1665             MR. NEWMAN:  Unless, of course, there is a reason for us to remain live.

1666             COMMISSIONER DUNCAN:  What, in your view, are the compelling reasons to grant you the requested frequency, the 95.1?

1667             MR. NEWMAN:  I would like to take ‑‑ and thank you for asking ‑‑ one of the things that we endeavour to do in our deficiencies when it became obvious that Maritime or, we weren't aware that it was Maritime, but one of the other applicants had requested the same frequency, we challenged our engineering firm to go back out and find us another frequency.  I did notice through your conversations this morning you had some concern over the 95.1 frequency bleeding into another market. 

1668             There are at least two other frequencies available with Astral's removal from the docket and we do have another frequency, 96.7, that is available to us that doesn't quite reach into Summerside.  So there is certainly an opportunity for us to work with the other applicants to ensure that the best use of the spectrum is available.  And whether that is granting us 95.1 and allowing us the full 100,000 watts, which I see Mr. Langford is grinning and as this went through ‑‑ it did go through my head that it was something to offer‑up.  But 96.7 is also a very acceptable frequency to cover the greater Charlottetown area and in fact most of Prince Edward Island, it just doesn't get the contour into Summerside.

1669             So we have endeavoured to go out and mitigate that on the optimism that you may be exceptionally gracious and offer us all the frequency.

1670             COMMISSIONER DUNCAN:  In what way does your proposal constitute the best use of the frequency spectrum?

1671             MR. NEWMAN:  Well, the answer to that is a distinct voice, a distinct ownership model and a model of operation that is predicated on everything that is local.  We have received several applications for employment opportunity from people who are currently employed in the marketplace.  We have a gentleman who has expressed an interest in becoming our operations manager who brings with him an incredible amount of history in radio in the province.  Obviously, he is gainfully employed somewhere else, so we won't be mentioning his name.  But it is an operation that will be run by local people.  Mr. Bell and I have many things to be doing and we are not interested in being heavy handed with programming decisions or editorial decisions.  We are not political by our nature, that is I guess to best answer your question.

1672             MR. BELL:  The other thing is ‑‑ if I may add ‑‑ is I think it is really important for the industry that you look at ownership diversification and to keep competition true in this marketplace as well as the rest of Atlantic Canada and I believe that is of paramount importance for your goals as a CRTC and we are all trying to achieve.

1673             COMMISSIONER DUNCAN:  Thank you, I appreciate that and I noted that when you said it before as well, thanks.

1674             The alternate frequency that you would be willing to consider, would that have any impact on your business projections or ‑‑

1675             MR. NEWMAN:  Not at all.  Our consulting engineer, Mr. Sawyer, was instructed to give us a model based on sharing the CBC transmission site at Bonshaw, so it was based on the same antenna height.  We have been informed by CBC that if all the applicants are granted whoever goes in last will have to spend the most, as the combiner module will be required to handle that much more power, but other than that it is not an issue.

1676             COMMISSIONER DUNCAN:  On the indirect costs, again on your responses to deficiencies, the indirect costs, the entertainment guide $459,900.  I just wondered if you could just elaborate for me on what exactly that ‑‑

1677             MR. NEWMAN:  Sure, that is three times a day, roughly 60 seconds, that is an airtime value based on 2005 rates, it is not adjusted up as we go through the seven‑year cycle.  That is historical for what the airtime is worth.

1678             COMMISSIONER DUNCAN:  So these amounts don't factor into your projected income statement then?

1679             MR. NEWMAN:  No, they don't.

1680             COMMISSIONER DUNCAN:  Okay, alright that is fine. 

1681             I had one other question, Mr. Chairman, if it comes to me I will ask it.  But if the others want to ‑‑

1682             THE CHAIRPERSON:  I will tell you what I will do.  Thank you, Commissioner Duncan, I will put your name back on my list just in case it comes to you.  We have a number of other commissioners who wish to ask you some questions beginning with Commissioner Cugini.

1683             COMMISSIONER CUGINI:  Thank you.  What format do you currently operate in St. John's?  I do apologize, I should know this.

1684             MR. NEWMAN:  No, that is all right.  As a broadcaster ‑‑ if I could just say ‑‑ I have a whole problem with putting handles on formats, because it is what is hot AC in St. John's, what is hot AC in Halifax, what is hot AC in Ottawa for that matter?  But to answer your question directly having, you know, made a farce, a large swath of a comment, I guess you could term it adult pop.

1685             COMMISSIONER CUGINI:  Top 40s, that kind of thing?

1686             MR. NEWMAN:  No, we would be playing ‑‑ primarily it is a recurrent to gold‑based format.  We play about 15 to 20 percent current and those are cherrypicked from the adult contemporary charts.

1687             COMMISSIONER CUGINI:  And of the list that you provided us in your presentation are these, for the most part, artists that were not featured on any other radio station before Coast came along?  I mean, Glass Tiger, but ‑‑

1688             MR. NEWMAN:  Well, yes.  I would endeavour to pull the slide up and go directly but, yes, the Janet Callband, for example, were possibly featured on Radio Newfoundland.  But in terms of regular airplay, no, not played anywhere else.

1689             COMMISSIONER CUGINI:  And in your research of this market, have you been able to identify a similar list or as robust a list of artists that are in the market but don't currently get airplay?

1690             MR. NEWMAN:  We actually didn't have a list when we started and when we fired things up and put the word out to the local musicians that we were open for business and open for their business they were very quick to start bringing their product and knock on our doors and we think that, in this market especially where you are fairly limited in your choices, that we are going to see a lot more of the artists that possibly are only featured on CBC come out and get mainstream airplay.

1691             COMMISSIONER CUGINI:  I just wanted to also follow‑up a little bit on the question of duplication with CHLQ here in the market.  Unlike the other applicants, you don't identify any decades from which you are going to make your music selections.  Can you just tell me why you do that or, I mean, how broadly are you going to go with selecting your music?

1692             MR. NEWMAN:  I jotted down a few notes as things were going, because it became apparent the advantage of going last was to see what went before.  We are looking at about 10 percent of our format to come out of the 1970s and, as I said, that is the Black Water of the Doobie Brothers and the New Kid in Town of the Eagles.  Forty‑five percent of our music would be from the 1980s and that is based on the generation of your life concept where you take the 35 or 40 year old and back them up to when they were teenagers.  Twenty‑five percent would be from the 1990s and about 20 percent would be what we would call a current track.  But even those current tracks wouldn't be necessarily what CHLQ is playing.  Again, it is ‑‑ you know, yes, they will probably play John Mayer, Daughters because it is a cross format hit.  But we won't be playing Eminem, or Beyonce or, you know, we are not playing the current Nickelback track because it is just a little too tough.  So we wouldn't be into that genre.

1693             COMMISSIONER CUGINI:  You were very specific when you described your 35 year old female ideal listener.  How is she different from CHLQ's ideal listener?

1694             MR. NEWMAN:  It would be rude of me to come in and, pompous in fact, to come in and suggest how Maritime operate their station.  Again, I think, given the marketplace and the history and the fact that the market hasn't been competitive because of the LMA has allowed them to have some carte blanche of doing just about whatever they want to do.  I think when you take a look at Maritime's programming philosophy in markets where there is more competition their stations are a lot better focused. 

1695             COMMISSIONER CUGINI:  You have obviously looked at the market and in identifying this 35 to 54 year old demographic as the demographic that is lacking some focus, you therefore have identified which demographic is being served.  So I guess that is really the question.  What demographic do you feel is currently being served in the market?

1696             MR. NEWMAN:  I think it is the 18 to 34 year olds that are primarily being served.  If you take a look at the current trend in music it would ‑‑ it is probably even difficult for CHLQ to reach the 12 to 24 year olds.  So it is probably the 18 to 34 year olds that are being served in this market.  When I say served in this market, I include in that the bleeding in of the signals from Truro and the other markets.

1697             COMMISSIONER CUGINI:  Thank you.  Those are all my questions.

1698             THE CHAIRPERSON:  Thank you, Commissioner.  Commissioner Noël.

1699             COMMISSIONER NOEL:  Just a little question.  I see you are all sitting today and did you change your modus operandi from the hearing in St. John's?

1700             MR. NEWMAN:  I think it would be fair to say that when you first met us the situation was a little bit different and the flamboyance of the other applicant that would come after us was certainly well‑known and we knew that we had to put on a show as Mr. Sterling would. 

1701             COMMISSIONER NOEL:  You mean you don't lack Captain Canada being around?

1702             MR. NEWMAN:  I think if I could have a tenth of Mr. Sterling's vision I would be a very successful man.

1703             THE CHAIRPERSON:  You take his vision, I will take his money.  Commissioner Cram.

1704             COMMISSIONER NOEL:  And he doesn't drive a Volvo either.

1705             THE CHAIRPERSON:  Commissioner Cram.

1706             COMMISSIONER CRAM:  Thank you.  I don't understand and maybe I will start with what your role is in the St. John's station.  Mr. Newman, are you the equivalent of a program director or ‑‑

1707             MR. NEWMAN:  Yes.

1708             COMMISSIONER CRAM:  And you actively are doing that in the St. John's station?

1709             MR. NEWMAN:  Yes.

1710             COMMISSIONER CRAM:  And would do it if you were licensed here, is that the idea?

1711             MR. NEWMAN:  No, absolutely not.

1712             COMMISSIONER CRAM:  No?

1713             MR. NEWMAN:  The goal here in Charlottetown is to expand the organization.  We currently have a program director in title in St. John's.  I guess for lack of better title, I am the Vice‑President of Operations, which is sort of an all‑encompassing chief cook and bottle washer role as you can imagine.  But we are grooming a program director to replace me in that role in St. John's and would hand pick a team for Charlottetown as well.

1714             MR. BELL:  Just to elaborate on that, when we got into this, first, we wanted to make sure we did it right and I looked after the sales and marketing side of the business and kept a hands‑on approach to that in the early going.  Andy looked after the operations side, he has now put some people in place where or he had them in place but trained them to takeover that role to the point that we are very comfortable where it is and have added some more people as we have gone forward.  I personally don't work for the business on a day to day, Andy is the only one that does.

1715             COMMISSIONER CRAM:  I then wanted to move onto what you think happened here and I am looking at page 1 of your supplementary brief.  During LMA times ‑‑ and that is in the fifth paragraph of your first page of the supplementary brief ‑‑ you talked about the radio sales dropping in the market by half a million dollars and profit going up a half a million to 1.5.  Is this from 1996 to 2004?

1716             MR. NEWMAN:  That was based on the last public figures that were available from the radio revenue projections or radio revenue report from 2004 and that was the trending that was available on that report, yes, that is where those numbers were taken from.

1717             COMMISSIONER CRAM:  Okay.  And that ‑‑

1718             MR. NEWMAN:  In fairness, that as during the LMA, yes.

1719             COMMISSIONER CRAM:  And so, that was over the period of 1996 to 2004?

1720             MR. NEWMAN:  I believe, without having the spreadsheet in front of me that the drop didn't take that long between 1996 ‑‑ to drop the half million dollars and the profits to go up.  I believe the timeframe was shorter.  I could get that from your website and have another look at it.

1721             COMMISSIONER CRAM:  Okay.  And in normal life one would have expected instead of dropping it would have gone up.

1722             MR. NEWMAN:  Yes.

1723             COMMISSIONER CRAM:  Have you made any comparisons between what trend there was in between 1996 and 2004?

1724             MR. NEWMAN:  I think the ‑‑ and I use the word apathy ‑‑ the reality is you had three radio stations selling at $54 for all three.  By its very nature it suddenly became cost‑effective without discounting they were discounting, because you could buy all three for the same, you know, for one price.  There were advertisers and our sales manager for NBS spoke about radio not working.  I think there were probably occasions where advertisers didn't feel that radio was working, but they didn't have to spend as much in radio to get the same effect, because you could buy all three stations and, you know, saturate the market.  So I think the actual radio budgets were directed to other resources such as television or newspaper.

1725             COMMISSIONER CRAM:  Okay.  And if I understand what Mr. Pace said, he was talking this morning about radio revenue marketing being somewhere 4 ‑‑

1726             MR. NEWMAN:  4.4 million, yes.

1727             COMMISSIONER CRAM:  ‑‑ 4.4 million.  And yet in your next paragraph you talk about CBC TV's sales force with limited inventory selling 2 million annually. 

1728             MR. NEWMAN:  For their television.  It was radio that was the 4.4 million.

1729             COMMISSIONER CRAM:  Yes I hear you, yes.  And CBC television ‑‑ I don't necessarily know if they have only ‑‑ well they probably do only have 30 minutes of local programming, but their advertising inventory would be larger ‑‑

1730             MR. NEWMAN:  Yes.

1731             COMMISSIONER CRAM:  ‑‑ than just that 30 minutes.

1732             MR. NEWMAN:  But that would have been their flagship compass program that, if you were an islander, you were watching.

1733             COMMISSIONER CRAM:  And this 2 million a year, where did you obtain that number?

1734             MR. NEWMAN:  That number is available by chatting very briefly with the local sales representatives from CBC television.

1735             COMMISSIONER CRAM:  Okay.

1736             MR. NEWMAN:  It is available anecdotally, but it is their budgets.

1737             COMMISSIONER CRAM:  Okay.  So are you aware of any other market where the TV market is one half of the total radio market in gross revenue?

1738             MR. NEWMAN:  I am thinking possibly Saskatoon would come probably to be a challenging market where you have CBC and then only one private operator.  In Newfoundland the television market is probably in the $12 to $13 million range, where as the overall Newfoundland provincial radio budget is around $15 million, the St. John's market is worth about $9 million, $9 million to $10 million.  So it is excessive, yes, they are very successful.  If you take a look at the history of the compass they had at some point a 45 share for their time block.

1739             COMMISSIONER CRAM:  Okay.

1740             MR. NEWMAN:  They were a dominant player prior to their cutbacks.

1741             COMMISSIONER CRAM:  So now with the LMA gone, what ‑‑ and without anything happening at this hearing ‑‑ what would you expect to happen?

1742             MR. NEWMAN:  What would I expect to happen with nothing happening in this market, just the status quo with ‑‑

1743             COMMISSIONER CRAM:  Yes.

1744             MR. NEWMAN:  ‑‑ MBS having what they have and Newcap?  I think in all fairness that Newcap will suffer as a standalone AM.  I think that is ‑‑ you don't have to be a rocket scientist to figure that one out.  That is going to be suffering for them to not at least be able to compete with MBS on a level playing field.  I think long‑term, and Mr. Maheu made, you know, a very passionate commitment to maintaining CHTN and its current incarnation, reality would tell me that that can't continue as they are a publicly traded company and the shareholders will absolutely go mad and at some point they are going to have to rein in the expenses if they can't increase their revenue.

1745             COMMISSIONER CRAM:  So can the ‑‑

1746             MR. NEWMAN:  Baring ‑‑ sorry ‑‑ barring then a sale to MBS, because I believe MBS would be permitted under the radio regulations to operate three licences in the market.  So barring a sale and putting it all under one umbrella, that is what I would expect.  Didn't mean to cut you off.

1747             COMMISSIONER CRAM:  And you talked about their increasing commitments, that there was heavy automation in March when you did your research and that it has gotten better since.  Given the extent of the betterness or the less automation can this market even sustain the status quo right now with less automation?

1748             MR. NEWMAN:  With two AMs and one FM?

1749             COMMISSIONER CRAM:  Yes.

1750             MR. NEWMAN:  I think the status quo ‑‑ it depends on your definition of sustainment.  Under the LMA obviously it was very profitable, but I think if I were Newcap I would be nervous that I was going to have to maintain the AM station as a standalone AM.  I have to be quite blunt, simply given the technical disadvantage that they would have.  I think the only saving grace would be, you know, possibly some inband digital down the road which we have been hearing about as broadcasters for so many years.  No, it is not exactly the most positive story we could tell.

1751             COMMISSIONER CRAM:  So the increase in actual programming as opposed to voice tracking in this market may be a temporary trend?

1752             MR. NEWMAN:  I think it is, from a go forward standpoint ‑‑ and I don't think it can continue unless the revenues happen to come up.  And with the technical disadvantage that they have, no listeners, no revenue, no live announcers.  It almost becomes a moot point, why put someone there to be live when no one is listening?  It is, I hate to be blunt, but as an operator I think that is a reality.

1753             COMMISSIONER CRAM:  So if Santa delivered for ‑‑

1754             MR. NEWMAN:  You don't think it will be ready by Christmas?

1755             COMMISSIONER CRAM:  Christmas ‑‑

1756             THE CHAIRPERSON:  HO HO HO.

1757             COMMISSIONER CRAM:  Christmas I don't think is on, but you never know, maybe some tooth fairy or somebody can do something.

1758             MR. NEWMAN:  Could they find your luggage?

1759             COMMISSIONER CRAM:  Not yet.  No tooth fairies for me, I will tell you.

1760             If everybody got their wish in this application, in this hearing, if Newcap got a new FM, if Newcap got its flip, if Maritime got its flip, could the market sustain you?

1761             MR. NEWMAN:  I think if I could put forth a proposal that ‑‑ you know, we have been blunt in our previous application and we didn't make many friends in the industry because of our honesty ‑‑ I think if I could make the suggestion that the best case scenario would be Newcap get their flip, give MBS what they want, we will take the standalone licence and as long as we all program it the way that we are supposed to we will all make a dollar, the marketplace will have some great radio and you guys will be heroes.  I think if we ‑‑ again, that doesn't make me very popular on either Windmill Road or Sackville Street, but I think that is ‑‑ that is how we envision it that, you know, Newcap and Maritime are both pretty sharp operators and they will do what they have to do from a programming standpoint to get the market share that they need. 

1762             It think it is fair to say to, you know, to Mr. Steele and to Mr. Pace that, yes, they do have a technical disadvantage with their AMs and I think, given the tradition of the Commission to take those technical disadvantages away to say they deserve their FMs might be a bit of a strong word, but I think if you were to do it that way everyone would come out a winner as long as we played nice.

1763             COMMISSIONER CRAM:  And in terms of playing nice, let us say we did give you what you wanted, everybody got their flips and you got a new station, as much as I love PEI I can't see it growing measurably within the next decade, so you would be a standalone for a decade.

1764             MR. NEWMAN:  If you take a look at Mr. Pace's numbers, which were just recently released that we are going to go dig up, he spoke to the aging population which bodes well for a format like ours.  So I think we and possibly CFCY as a heritage country station would end up being the winners in this.

1765             COMMISSIONER CRAM:  Thank you.  Thank you very much.  Thank you, Mr. Chair.

1766             THE CHAIRMAN:  Commissioner Duncan.

1767             COMMISSIONER DUNCAN:  Just one last question.  I was wondering when you were coming to the hearing and you were considering your financial projections because, you know, you are actually projecting a positive cash flow in the first year and you are going to look like you are going to have all your initial debt repaid by year six, before the end of year six.  I am just wondering when you gave thought to the applications that were here today if you were still interested in proceeding, if you still thought there was a business case if the two flips were approved and the two FM licences were granted?

1768             MR. NEWMAN:  One of the conversations that were had in this very building back in June with an interested party, shall we say, was the what ifs and I said, you have to look at this as if it is going to be operated as a standalone in a worst case situation.  We had a very realistic look when we went into St. John's up against two absolute giants with very deep pockets and we looked at it and said, what will we need to do to survive, what are the worst case scenarios?  Well, we projected a worst case scenario to the Commission.  The Charlottetown application isn't predicated on MBS or Newcap getting their flip.  I don't think it will have an appreciable impact on us because of the uniqueness of the format and the uniqueness of the format that MBS and Newcap are going for.

1769             I think when we had Astral into the mix and they were proposing virtually identical format it was a different conversation.  I do have a concern that Newcap's two station request represents a little more duplication in format and target.  I do understand their math and their logic and complimentary formats, but I think it would certainly make more sense to aid in the diversity to let us have the additional frequency.

1770             COMMISSIONER DUNCAN:  But your business case though, would you be able to survive?  I mean, is there a business case for you if you ‑‑

1771             MR. NEWMAN:  Absolutely, because the size of the demographic, which is the largest in the market, and our market share.  If you do a simple math calculation of our market share versus the market value you come to the number that we arrived at and we are not sure of, I mean, I have seen some pretty convoluted ways to come up with revenue projections but we think that one is pretty simple and pretty safe.

1772             COMMISSIONER DUNCAN:  So it is doable if ‑‑

1773             MR. NEWMAN:  Absolutely.

1774             COMMISSIONER DUNCAN:  All right.

1775             MR. BELL:  I think we need to clarify something, just quickly if I may too.

1776             COMMISSIONER DUNCAN:  Sure.

1777             MR. BELL:  When Andy here referred to the situation of, you know, in an ideal world where everyone behaved there is something called reality and I think that what would we like to see ideally, I think it ideally comes down to, you know, Newcap it is reasonable to assume a flip and ourselves getting the new licence and then reviewing in two years' time or three years' time or five what PEI can sustain.  That, to me, becomes realistic or that, to us, becomes more realistic along the lines of what we are talking about here.  And also, just as the competitive piece, because Maritime maintains their two FMs and the one AM, Steele is able to compete with an FM station as opposed to AM and then we bring competition to the market and diversification of ownership through ourselves getting a new licence.

1778             COMMISSIONER DUNCAN:  I guess I am still trying to just be clear and I think I understood Mr. Newman to say there would still be a case for proceeding, if it wasn't quite what you wanted and it wasn't a two‑year delay, I mean ‑‑

1779             MR. NEWMAN:  No, I think that is correct.  One of the concerns that, you know, Mr. Maheu spoke about BBM obviously coming to this market and thus rates will be determined more on market share rather than relationship, I have seen and worked with Newcap in several communities.  They are very good at rate integrity.  One of our commitments in our previous application was to not sell anything less than what the floor was.  In fact, we have seen some of our competitors go out and sell for less and we have maintained our rate integrity.  It is good to see that Newcap has based their island FM model on a $35 spot, we based our revenue projections not on a spot cost, but on a percentage of the total market.  So I think $35 is a great spot to start in Charlottetown for sure.

1780             COMMISSIONER DUNCAN:  Thank you.  Mr. Chairman, those are my questions.

1781             THE CHAIRPERSON:  Thank you very much, Commissioner Duncan.  One question ‑‑ there is not much left on the tree for me to harvest here, but there is one question that I would like to try to nail down with you if I understood what you said correctly.

1782             You talked, when Mr. Graham was giving his praise of what you are doing for new artists and the number 40 percent sort of came up.  Am I to gather that that is 40 percent of 35 percent on your Newfoundland station are new Canadians, is that the way it works?

1783             MR. NEWMAN:  On a given basis, that is a fairly accurate number, yes.  It is not part of our commitment here today and wasn't part of our commitment in St. John's on that particular day, but ‑‑

1784             THE CHAIRPERSON:  Right.

1785             MR. NEWMAN:  ‑‑ it does suit our needs and bodes well for us.

1786             THE CHAIRPERSON:  Have you got similar plans here then?

1787             MR. NEWMAN:  Absolutely.

1788             THE CHAIRPERSON:  And is there a number ‑‑ we love condition to licence, you know, but we don't like failure ‑‑

1789             MR. NEWMAN:  No.

1790             THE CHAIRPERSON:  ‑‑ so we don't want to give you a condition of licence that would be difficult and give you trouble, so we would prefer not to.  But is there a number that you would feel so comfortable with, you know, a percentage of 35 percent that you would feel so comfortable with that at this point you could commit to a COL?

1791             MR. NEWMAN:  Mr. Barton's figure of 12 spins per day seemed like a number that was more than reasonable and fairly easy to attain, 15 percent of the 35 percent which, based on ‑‑

1792             THE CHAIRPERSON:  You would be happy to ‑‑

1793             MR. NEWMAN:  ‑‑ albeit someone else's math, equated to about 12 ‑‑ and I would like to confirm that before I committed to it you can appreciate.

‑‑‑ Laughter / Rires

1794             THE CHAIRPERSON:  Right.

1795             MR. NEWMAN:  It worked out to be about 12 spins a day.

1796             THE CHAIRPERSON:  Well we are not asking you to ‑‑

1797             MR. NEWMAN:  I would say we are exceeding that on a daily basis, definitely.

1798             THE CHAIRPERSON:  Well, we are not asking you to make programming policy on the fly, but you may want to give that some thought between now and Phase IV, the final stage where you get to give a reply.

1799             We are also not keen on changing applications on the fly so that we turned it into a bidding contest, but I was kind of interested on what your plans were if this kind of high number like 40 percent is working.  It is just interesting to see what you were going to transport here to Charlottetown.

1800             MR. NEWMAN:  It works, Mr. Langford, when the product is there and you go through dry spells when you are dipping into the third cut on the Janet Cull album Janet Cull album or the Barry Canning CD, which fortunately for us are strong tracks, but when the crop is fresh, as it were ‑‑

1801             THE CHAIRPERSON:  Unlike the crop I'm dealing with.

1802             I think that brings us to end of the questions.

1803             No, wait.  No, it doesn't.  Before you get to hit your home run, Madam Counsel has a couple of questions for you.

1804             MS MURPHY:  Just some clarifications.

1805             The last discussion on the 15 percent of the 35 percent, is this with respect to local artists ‑‑

1806             MR. NEWMAN:  Yes.

1807             MS MURPHY:  ‑‑ that is Charlottetown, PEI or new artists?

1808             MR. NEWMAN:  This is with respect to local artists, yes.

1809             MS MURPHY:  Thank you.

1810             MR. NEWMAN:  Specifically Prince Edward Island rather than Charlottetown specifically.

1811             MS MURPHY:  Very good.

1812             The second question:  You indicated that 100 percent of your news would be local news.  In the event the Commission would impose such a requirement by condition of licence, what are your views as to this level?

1813             MR. NEWMAN:  I think that to say 100 percent is a very, very difficult number to attain given the dynamic of the very issue of news.

1814             Without sounding negative, I would have to say I wouldn't be in agreement for that.

1815             MS MURPHY:  What would be an appropriate level?

1816             MR. NEWMAN:  I think Newcap's position of 75 percent is a very reasonable number and we would be more than comfortable to match that.

1817             MS MURPHY:  Thank you.

1818             Those are my questions, Mr. Chair.

1819             THE CHAIRPERSON:  We always like to leave you enough leeway to tell listeners when World War breaks out.  We think that is important.

‑‑‑ Laughter / Rires

1820             THE CHAIRPERSON:  Gentlemen, if you could give us a minute or two, something upbeat on why we should choose you for an early Christmas present, or perhaps a late one.

1821             MR. NEWMAN:  Valentine's would be okay.  That's no problem.  Red works well for us.  Orange preferably.

1822             When you look at the criteria that the CRTC sets out for choosing new licences and you take a look back at our track record, albeit short but passionate, and you take a look at some of the things you have been looking at here in Charlottetown, one of the key things that comes up is diversity.  Whether that is in musical programming or whether that is in ownership, we have both of that.  I think that is one of our strongest selling points.

1823             The fact that we will operate this with local operators, we will put local talent on the ground, we will develop local artists, and we will give the local stars the opportunity to have their star shine as brightly as the national artists.

1824             We are a small organization that has fairly good attention to detail.  We are on top of things.  I liken this to a speedboat versus a supertanker.  If we need to change a direction, whether that be financially or on a programming standpoint, we can without it taking a long time to turn it.

1825             So I think it is an opportunity for you to continued the trend that you set out for us and the challenge that you set out for us just over two years ago in St. John's and allow us to take our shot at hitting a home run programming‑wise and radio‑wise here in Charlottetown.

1826             THE CHAIRPERSON:  Thank you very much, gentlemen.

1827             That concludes, I assume, Madam Secretary?

1828             THE SECRETARY:  Yes.

1829             THE CHAIRPERSON:  Before you move us on to Phase II, though, I did ask earlier, just for your guidance, whether there were any intervenors who wished to go this evening rather than tomorrow morning.  If there are, maybe you could waive or jump up and down, or do whatever intervenors do when they really want to get to a microphone.

1830             There are not.  That will give us some guidance for the rest of the afternoon.

1831             Madam Secretary?

1832             THE SECRETARY:  Yes, Mr. Chairman.  That does complete Phase I of the consideration of Items 1 to 4 of the agenda.

1833             One applicant has already indicated, Newcap, that they will not be appearing in Phase II where applicants appear in the same order to intervene on competing applications.

1834             I do need to maybe speak with the other two applicants to determine if they will appear.

1835             THE CHAIRPERSON:  Perhaps we could take a 5‑minute break and any of the other two, Maritime or Coast, who wish to intervene against what they have heard in Phase I could speak with the Secretary.  We will reconvene in five minutes and we will see where we are going from there.

1836             Thank you.

‑‑‑ Upon recessing at 1625 / Suspension à 1625

‑‑‑ Upon resuming at 1635 / Reprise à 1635

PHASE II

1837             THE CHAIRPERSON:  Madam Secretary.

1838             THE SECRETARY:  Thank you, Mr. Chairman.

1839             As I mentioned, Newcap Inc.  and Coast Broadcasting have indicated that they will not be appearing in Phase II.

1840             Therefore, I would now ask Maritime Broadcasting to intervene on the competing applications.

1841             You have 10 minutes for your presentation.

INTERVENTION

1842             MR. PACE:  Thank you.

1843             Mr. Chairman, I have two members with me, Dan Barton to my right, Director of Programming; and to my left, Mike Maxwell, Head of Technical Services.

1844             Earlier today we were asked to submit our staffing numbers in Charlottetown.  As you know from this morning, there have been a number of staff movements in the last little while, so I chatted with our HR people and I confirm to you that now, as of last Friday's payroll, our staff was made up of 24 people.  I just wanted to have that on the record now.

1845             Mr. Chairman, just minutes earlier you alluded to that we shouldn't make program changes on the fly.  May I suggest that we should not change radio regulations on the fly.

1846             When we are discussing the term "market" as it is defined in section 2 of the CRTC regulations, it clearly states that in the case of an FM station, the FM 3 millivolt contour of the central area has defined the broadcast measurement which is smaller.

1847             So I would just like to reinforce.  I made that comment earlier, but I think it is particularly relevant in discussing Summerside and Charlottetown.

1848             We are very concerned about the Commission's and Newcap's comments concerning Maritime's formats into Charlottetown and Summerside as it pertains to diversity.  Charlottetown and Summerside are two distinctly different markets.  They are in separate counties, they have separate BBM cells, they are separately incorporated cities.  Summerside and Charlottetown each have their own unique culture, which manifests itself into a healthy competitive environment.

1849             Despite the perception that this is a small province, this is a very long province.  You cannot look at PEI as one market.  It should be noted that not one country signal will cover all of PEI  CFCY‑AM, the proposed CFCY‑FM and our present CJRW‑FM Summerside do not and will not provide full coverage.

1850             The residents of Summerside take pride in their community.  There are Summerside people with deep roots.  The fact that our proposed FM coverage will include Summerside does not mean that the Summerside listener's needs will be fully met.  They will be listening to an out‑of‑market station from Charlottetown.

1851             Based on the questions and comments raised by the Commission this afternoon regarding format diversity, we don't think that it is fair that the people of Summerside face a potential loss of their country station because of our proposed flip of CFCY to FM country.  Nor do we feel it is fair to the people of Charlottetown that they be forced to continue to hear their country music in black and white.

1852             Country music is a popular format.  Its listenership is growing all over Canada and North America.  In radio, the one thing that we know that is critical to our success is local, local, local and we must continue to reflect our local communities, particularly with the advent of satellite radio on the horizon.

1853             Anyone can play Shania Twain.  It is how you reflect the local community on the air that attracts loyalty.  MBS continues to operate CJRW‑FM in Summerside independent from its stations in Charlottetown, respecting the diversity of the two markets, recognizing the importance of local reflection, we maintain separate news departments, preserving the diversity of voices; we maintain separate local management, independent physical facilities and separate sales forces.

1854             As a true testament to the distinction between the two markets, both CJRW‑FM in Summerside and CFCY‑AM in Charlottetown are programmed with a country music format.  Certainly if both stations were serving the same market we would program them more strategically.

1855             Mr. Chairman, I know these markets and I ask you to trust me to realize that there is a clear distinction between Summerside and Charlottetown.

1856             Thank you.

1857             THE CHAIRPERSON:  Thank you, Mr. Pace.

1858             I think I would like to respond to that, if I may.  It may help clarify something, because if I misstated myself then of course I apologize.

1859             I didn't think that I was commenting on Summerside's liability to, as you used the word, "lose" their country station.  I don't think I ever spoke about that.

1860             My question to you ‑‑ the question I thought I was asking, and if I put it badly I of course again apologize ‑‑ but what I thought I was asking you was this:  Since Summerside's signal doesn't come into Charlottetown, or not very strongly anyway, but the Charlottetown signal would go very strongly into Summerside, the new FM, is it the most creative use of your three resources, assuming you were given the FM flip that you seek?  Is it the most creative use of that resource to employ a largely duplicative format?

1861             That was it.  It wasn't trying to deprive Summerside of their signal, but the question was:  Is it the most creative use to send them another one in a sense ‑‑ other people as well, but to send them another one.

1862             That was my question.

1863             MR. PACE:  Okay.

1864             THE CHAIRPERSON:  If I didn't ask it well and if I alarmed you, it certainly wasn't a comment, it was a question.

1865             MR. PACE:  Well, no.  I got alarmed because, I tell you, if that happened to Summerside you and I might not get off the Island.  They are very passionate about their country format in Summerside.

1866             THE CHAIRPERSON:  I have to go over and take a look at these people.  You are describing something here.

‑‑‑ Laughter / Rires

1867             MR. PACE:  I face the council so I'm very ‑‑

1868             THE CHAIRPERSON:  That was my question.  Never did I ‑‑ I don't think, I will check the transcript when it comes out, but I don't think I once recommended, to use your word, that Summerside lose their station.

1869             My question was:  Is it the most creative use of three formats, if I can call it that, to duplicate one with your new FM, assuming you got it.

1870             MR. PACE:  I think the distinction and the clarification that I think is important, if you look ‑‑ and I am not expert on the technical engineering parameters, but essentially our AM signal and our proposed new FM signal is identical, or very close to being identical.  So all we are asking is that the listeners that are now listening to the AM signal will have the benefit of the preferred choice of listening to it on FM.  We are not going to disadvantage any listeners, we are basically going to cover the same number of people.

1871             THE CHAIRPERSON:  In search for creative solutions and getting the most value out of scarce public resources, had you considered the notation of increasing the power in Summerside to get that country out to a bigger audience and then doing something different with your third FM format, should you have one?

1872             MR. PACE:  The engineers tell me the challenge with that ‑‑ and that is why I made the comment I did ‑‑ because of the length of the Province of Prince Edward Island, not necessarily the size, but there is not one FM signal that we can apply for at the highest power available that will provide that full country coverage in Prince Edward Island.  Prince Edward Islanders are passionate about their country music.  It is the Don Messer Show, it is Stompin' Tom.  I mean, there is passion here.

1873             THE CHAIRPERSON:  Look, I don't doubt that for a moment.

1874             I want to make one more.  My colleagues may have questions.

1875             You alluded to the regulations.  I will allude to the legislation which mandates what we do here.  Diversity is a key and diversity is set out in every public notice that we have.

1876             I think that not only is a good idea that we ask about diversity, and when we get that kind of 80 percent duplication that we have to ask about it, and that if we didn't we would be missing the boat.

1877             So in no way were we again trying to comment or push, but we were ‑‑ I was, and I felt I should, trying to probe this 80 per cent duplication and to see whether there wasn't a more creative solution for it.

1878             You say "trust us".  I was a lawyer once.  I always was suspicious of those lawyers who said "trust me", but we will trust you on this one, it is your application.

1879             Commissioner Noël has a question and some others.

1880             COMMISSIONER NOËL:  Just to follow up on what you just said, Mr. Pace, I have a map of PEI in front of me, Summerside being over here, quite close to New Brunswick, actually about 15K from New Brunswick, birdseye view.  Would it interfere with New Brunswick stations if you were to increase the power in Summerside to try to reach further to the east, it would at the same time reach further to the south and create some interference?

1881             MR. PACE:  Right.

1882             COMMISSIONER NOËL:  Thank you.

1883             MR. PACE:  But the key point is, the engineering fraternity has informed me that there is not one FM signal that we could have that would provide total coverage for all the country listeners in PEI  The one we are proposing, as well as the FM that is in Summerside, still would not cover the whole Island.

1884             THE CHAIRPERSON:  So it's iPods for the folks in Tignish no matter what.  Right?

1885             Commissioner Cram?

1886             COMMISSIONER CRAM:  I confess that when I leave this job I, like my colleague, Commissioner Duncan's predecessor, want something out of it and I want an engineering ring, whereas Commissioner Colville wanted a legal degree.

1887             Have you considered the possibility of rebroads in order to get that all‑province coverage of the Summerside station so you could use the Charlottetown station for, as the Chair says, another type of format or in order to sort of look to another demographic?

1888             MR. PACE:  No.

1889             COMMISSIONER CRAM:  No?

1890             MR. PACE:  No.  I think after 80‑plus years providing pretty good service with this station that delivering what the people want on the FM signal in that format is something that should be pretty entertaining.

1891             COMMISSIONER CRAM:  Thank you, Mr. Pace.

1892             MR. PACE:  Thank you.

1893             THE CHAIRPERSON:  Thank you very much, gentlemen.  Those are our questions.

1894             I think the Secretary is going to wrap this up.

1895             THE SECRETARY:  Yes, Mr. Chairman.

1896             This completes Phase II and we can proceed with Phase III in the morning, if you wish.

1897             THE CHAIRPERSON:  Yes.

1898             I think I would like to say, if I may, we will go to Phase III, which will be interventions, in the morning.  I suspect we will have very few.

1899             We will be starting at 9:30.

1900             I also suspect Phase IV will move reasonably quickly, as it often does, sometimes with the speed of light.

1901             So I would suggest that the first two New Glasgow applicants, Astral and Atlantic, really be ready to go by 9:30 tomorrow.  It may be 10:00 before you get going, but you should be ready to go tomorrow, first thing.  We will see you then.

1902             Thank you very much.

‑‑‑ Whereupon the hearing adjourned at 1649,

    to resume on Tuesday, October 4, 2005

    at 0930 / L'audience est ajournée à 1649,

    pour reprendre le mardi 4 octobre 2005 à 0930

 

 

  

  

 

                      REPORTERS

 

 

 

                         

 

____________________      ____________________

Richard Johansson            Kristin Johansson

 

 

 

 

____________________      ____________________

Jean Desaulniers          Fiona Potvin

 

 

                         

                         

____________________      ____________________

Susan Villeneuve          Johanne Morin

 

     

Date de modification :

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