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:

 

Metropolitan Conference               Centre de conférence

Centre                 Métropolitain

333 Fourth Avenue South West                 333, Fourth Avenue Sud‑Ouest

Calgary, Alberta                 Calgary (Alberta)

 

February 21, 2006           Le 21 février 2006

 

 

 

 

 

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:

 

Michel Arpin           Chairperson / Président

Helen del Val           Commissioner / Conseillère

Elizabeth Duncan           Commissioner / Conseillère

Ronald Williams           Commissioner / Conseillier

Stuart Langford           Commissioner / Conseillier

 

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet     Secretary / Secrétaire

Leanne Bennett           Legal Counsel /

Conseillère juridique

Steve Parker           Hearing Manager /

Gérant de l'audience

 

 

 

HELD AT:           TENUE À:

 

Metropolitan Conference           Centre de conférence

Centre           Métropolitain

333 Fourth Avenue South West              333, Fourth Avenue Sud‑Ouest

Calgary, Alberta              Calgary (Alberta)

 

February 21, 2006           Le 21 février 2006

 

 

TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

    PAGE / PARA

 

PHASE I

 

 

PRESENTATION BY / PRÉSENTATION PAR:

 

Touch Canada Broadcasting Inc. 6 /   33

 

CHUM Limited 81 /  527

 

1182743 Alberta Ltd. 192 / 1211

 

Evanov Radio Group Inc. (OBCI) 261 / 1672

 

 

 

  Calgary, Alberta / Calgary (Alberta)

‑‑‑ Upon commencing on Tuesday, February 21, 2006

    at 0930 / L'audience débute le Mardi

    21 février 2006 à 0930

1     THE CHAIRPERSON:  Please be seated.  We will start the hearing shortly.

2     Thank you.

‑‑‑ Pause

3     THE CHAIRPERSON:  Order, please.

4     Good morning ladies and gentlemen and welcome to this public hearing.  My name is Michel Arpin and I am the Vice‑Chair for the Broadcasting for the CRTC.  I will be presiding over this hearing.

5     Joining me today on the Panel are my colleagues.  On my right, Helen del Val, Regional Commissioner for British Colombia and the Yukon.  Then, on my immediate left, is Elizabeth Duncan, Regional Commissioner for the Atlantic.  To my extreme right is Ronald Williams, Regional Commissioner for Alberta and the Northwest Territories.  And to my extreme left is Stuart Langford, National Commissioner.

6     The Commission team assisting us includes Hearing Manager Steve Parker, Senior Broadcasting Analyst and Legal Counsel Leanne Bennett, as well as Chantal Boulet, Hearing Secretary.  Please speak with her if you have any questions with regard to hearing procedures.

7     You may see me through the hearing wearing this headset.  It is not because I am listening to the translation, it is because I want to hear you.  I have a small hearing problem, so I will be listening to the floor sound.

8     At this hearing, we will study 13 applications to operate a new commercial radio station in the Calgary market, more specifically in the cities of Calgary and Airdrie.

9     Then, for the Lethbridge market, we will look at an application to acquire the assets of specialty radio station CJTS‑FM and to change its frequency and power, as well as four applications to operate a new English‑language commercial FM radio station in that market.

10     The Panel will examine the applications in the order of Items 1 to 18 presented in Broadcasting Notice of Public Hearing CRTC 2005‑11.

11     Some applications will be competing technically for the use of the same frequencies in the Calgary and Lethbridge market.  The Panel will study the proposals to operate a new radio station in light of the cultural, economic and social objectives defined in the Broadcasting Act and the Regulations flowing from it.

12     The Panel will base its decision on several criteria, including the state of competition and the diversity of editorial voices in the market, as well as the quality of the application.

13     It will also look at the ability of the market to support new radio stations, the financial resources of each applicant and proposed initiatives for the development of Canadian talent.

14     I will now invite the Secretary, Mrs. Chantal Boulet, to explain the procedures we will be following.

15     Mrs. Boulet?

16     THE SECRETARY:  Thank you, Mr. Chairman.

17     Good morning everyone.  Before we begin, I would like to go over a few housekeeping matters to ensure the proper conduct of this hearing.

18     When you are in the hearing room, we would appreciate if you would please turn off your cell phones, beepers, Blackberries, or other text messaging devices as they are unwelcome distractions for participants and Commissioners, and they cause interference on the internal communications system used by our translators.  We would appreciate your cooperation in this regard throughout the hearing.

19     We expect the hearing to take approximately one week and a half.  We will begin each morning, starting tomorrow, at 8:30 a.m. and finish approximately around 6:00 p.m.  We will let you know of any schedule changes that may occur.

20     The Strand/Tivoli Room, which is located on the second floor up the stairs as you come out of the hearing room, will serve as the examination room where you can examine the public files of the applications being considered at this hearing.

21     As indicated on page 1 of the Agenda, the telephone number of the examination room is (403) 205‑4965.

22     There is a verbatim transcript of this hearing being taken by the court reporter at the table in front of me.  If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break.  Please note that the full transcript will be made available on the Commission's website shortly after the conclusion of the hearing.

23     As indicated earlier, we will begin this week by considering the competing applications for the Calgary‑Airdrie market, followed by the competing applications for the Lethbridge market.

24     We will be proceeding with the four phase process as follows:

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

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

27     In Phase III, other parties, either the public, will appear in the order set out in the Agenda to present their appearing intervention and 10 minutes is allowed for the presentation.  Again, questions may follow by the Commission.

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

29     THE SECRETARY:  Now, Mr. Chairman, we will proceed with Item 1 on the agenda which is an application by Touch Canada Broadcasting Inc. for a license to operate an English‑language AM commercial religious radio programming undertaking in Calgary.

30     The new station would operate on frequency 700 kHz, with a transmitter power of 50,000 watts daytime and 20,000 watts nighttime.

31     Appearing for the applicant is Mr. Alan Hunsperger who will introduce his colleagues.  You will then have 20 minutes for your presentation.

32     Mr. Hunsperger...?

PRESENTATION / PRÉSENTATION

33     MR. HUNSPERGER:  Thank you, Madam Secretary.

34     Good morning Mr. Chairman, members of the CRTC and Commission staff.

35     As the first applicant before you in this hearing, I would like to take the time to welcome you to our wonderful city, Calgary, and hopefully you have a good stay and you enjoy the weather.

36     My next part of the presentation was according to the set up of four people and then people behind, so I'm going to have to ad lib a little bit of my introduction of our panel.

37     First of all, myself.  I am the founder of Touch Canada Broadcasting Inc., TCB as we will refer to it from now on.  I have been involved in radio broadcasting for 34 years.  I presented TCB's first application for a new commercial FM gospel music radio station to you back in 1996.

38     To my right is Bev Gilespie, who holds a Bachelor of Management Degree and serves as our business manager.  She has been with us for four years.

39     To her right is Mr. Richard Burrows, who is our sales manager of 88.9 Shine FM here in Calgary.  He has been with us for nine years and has many more years of experience selling in Calgary and western Canada.

40     To my left is Mr. Malcolm Hunt.  He is TCB's network program manager.  Malcolm has been in radio for 15 years, 10 of them with us.

41     Next to Malcolm is Holly Taylor who is our afternoon drive host of 105.9 Shine FM in Edmonton.  As a NAIT graduate in broadcasting, she came to us four years ago and has made herself an indispensable member of our team.

42     Next to Holly is Lana Lambert, who has worked with us for five years and has assisted me in the preparation of our applications for new stations.

43     We are here today to present our proposal for a new and distinct format for Calgarians, a southern gospel music format, a specialty station with all of its music from subcategory 35.

44     In our presentation today, we will tell you about TCB, it's present operations, the southern gospel music format, the research demonstrating its popularity in the Calgary market, and a description of what the proposed station will sound like.

45     TCB first became involved in radio in Alberta when we acquired the assets of CJCA in 1994.  CJCA was Edmonton's first radio station.  It had fallen on hard times and had in fact gone off the air when we acquired it and re‑launched it as a gospel music radio station.

46     Two years later, in 1996, the Commission approved our application for a gospel music radio station in Calgary and CJSI was launched as 88.9 Shine FM, a contemporary gospel music radio station.

47     While CJCA became quite popular with Edmonton audiences, we found fairly quickly that there were really two audiences for gospel music, those who preferred contemporary gospel, and those who preferred southern gospel.  Generally, those who like one really don't like the other.  Those who prefer the more contemporary sound are younger, while the fans of the older style tend to be over 45.  So a station trying to play both kinds of music is sort of like a station playing both alternative rock and big band.

48     We again applied to the Commission for a new commercial gospel FM station, this time in Edmonton, which the Commission approved in 2003.

49     Once we launched the new FM with the contemporary music format, we changed the AM format to southern gospel.  Our younger audience switched over to the new FM station and we acquired a new listening audience with the AM.

50     We received an incredible number of calls thanking us for the southern gospel music radio station.  Now, for the most part, moms, dads, kids and grandparents are happy with the opportunity to hear their favourite kind of gospel music.

51     I would like our network program manager, Malcolm Hunt, to describe to you the southern gospel and contemporary gospel sound.

52     MR. HUNT:  Thank you, Alan, and good morning Commissioners.

53     While the formats of Shine FM and The Light both fall into subcategory 35, specialty music, they can both be labelled gospel.

54     Having said that, they are as different from each other as soft rock is from heavy metal rock.  The name may be the same, but the sound is very different.

55     The contemporary gospel music of Shine FM has more in common with the pop and rock played on commercial CHR, hot AC and rock formats than it does with southern gospel.

56     What is common between the two gospel formats is that the lyrics are inspirational and uplifting, focusing on positive messages.

57     To illustrate, the songs of Frank Sinatra and those of Bono may both be about love and life, but the audiences that they attract are very different.

58     Shine's contemporary gospel music features artists such as Switchfoot, Michael W. Smith and Casting Crowns, playing a mixture of contemporary rock and today's pop.  By the way, there is a growing body of Canadian music in this area, with artists like Janelle, Greg Sczebel and Starfield.

59     The southern gospel sound is more rooted in the past, with very melodic sounds and often seems like a cross between barbershop, choir, country and bluegrass.  Some of its most prominent performers are Bill Gaither, Lauren Talley and the group Gold City.

60     While there may not be as many Canadian performers as of yet, Andrew Martin, Freedom and the New Hope Trio lead the way in this area.

61     I could go on listing artists that reflect southern gospel, the formats, but if you are not familiar with the genre it won't be very meaningful.

62     I should also mention that gospel music continues to see considerable growth.  In fact, it experienced a 16 percent increase in 2004.  We have prepared a short recording that shows first the contemporary music as played on Shine FM and, second, the southern gospel sound heard on AM 930 The Light in Edmonton.  This will show you the clear difference in sound.

‑‑‑ Audio clip / Clip audio

63     MR. HUNT:  Of course everybody at this table hopes that you have good news for us.

64     Now to speak to how we decided that this would work in Calgary, I turn it back to Alan.

65     MR. HUNSPERGER:  Thank you, Malcolm.

66     As I mentioned earlier, when we launched the southern gospel music format in Edmonton the reaction was overwhelming.  We knew that there was a demand for this type of music because of the popularity of the program called "Gospel Greats".  Heard on over 200 stations in North America, our existing stations consistently ranked among the top 10 percent.  This past year, we ranked number nine in North America.

67     Further to the success of the Gospel Great programs, here are a couple more examples that illustrate the popularity of southern gospel music.

68     When Bill Gaither brings his Homecoming gospel series to Edmonton and Calgary, ticket sales are almost twice what they are for the contemporary gospel concerts.  His Homecoming gospel series videos are the number one sellers across North America.

69     Alberta has also been the home of the Canadian version of the National Quartet Convention, held ever year in Red Deer, Alberta.  This draws southern gospel music lovers from British Columbia though to the Ontario border, north as far as the Northwest Territories and south into the United States with people coming as far as the State of California.

70     To prove that the market does exist, we request Ipsos Reid to do a survey of the Calgary market.  While Ipsos Reid typically uses random sample respondents, we wished to test two things:  the willingness to listen among the general population, as well as the intensity of interest amongst southern gospel music fans.

71     So the 300‑person sample was made up of 189 randomly drawn respondents from the general public, and 121 respondents provided to us by Calgary's biggest promoter of southern gospel music.

72     The results were very encouraging.  A full 20 percent of the random sample indicated it was clear it was likely that they would listen to the proposed station, while 98 percent of southern gospel music gospel fans said they wanted the southern gospel music radio station in Calgary.

73     Many of Ipsos Reid's findings reflect what we already knew.  We believe that we can attract a small but very loyal audience who cannot find what they want anywhere else on the radio, including Shine FM.

74     To talk about our sales strategy for the proposed southern gospel radio station is our sales manager, Richard Burrows.

75     MR. BURROWS:  Thank you, Alan.

76     My experience in selling radio in Calgary tells me that we can draw reasonable revenues with this format.  While the research tells us that the household incomes are lower than the average, because of their age we believe that their disposable income is substantial.  This is the generation that has paid off their mortgages and has seen their children educated and started on their own careers and are now able to spend on themselves and their grandchildren.

77     Because of their loyalty to the format and the sound, this is an audience that will support advertisers on their favourite radio station.  They have made it clear that they will do business with their advertisers, as they want this music to stay on the air.

78     As indicated in our application and correspondence that we expect 65 percent of our revenues to come from new advertisers, and we believe that we can be successful in expanding the radio pie in a number of ways.

79     First, there are a number of smaller businesses that have not traditionally been able to afford commercial radio rates.  Given our relatively low cost structure, and the small but intense audience that we will attract, our rates will be quite affordable.

80     And, as we have done in Edmonton, we have developed a number of vehicles that allow advertisers to use radio at an affordable rate.

81     For example, we provide what we call the business card bulletin.  This is an opportunity where three advertisers are billboarded in a 60‑second commercial, substantially reducing the cost for each client.

82     Second, the proposed station will be a very effective medium for those wishing to reach our demographic, such as retirement homes, RV outlets and travel agencies.  We can deliver the audience that they want at a reasonable cost.

83     Third, we provide a more extensive service package for what others call remotes.  Most stations operates remotes from their studio with occasional cut‑ins from an announcer at the client's premise.  We create a live broadcast on‑site, attracting listeners who want to see a live radio show.  This gives more value for both the client and the listener.

84     Fourth, there are advertisers who want to be with us because of the nature of our programming.  Quite simply, they want to be identified with family friendly programming that celebrates inspirational messages and a positive approach to life.

85     We took the research, our experience in Edmonton with this format, and our experience in Calgary with gospel music programming and incorporated it into our business plan, which Bev Gilespie will now share with you.

86     Bev...?

87     MS GILESPIE:  Thank you, Richard.

88     The revenue projections that we provided are based significantly on our experience with CJCA in Edmonton tempered by the reality of the Calgary market.

89     Before going further, I would like to draw your attention to the amended Schedule 4.1 which we have attached at the end of our remarks.  When we were preparing for this hearing, we realized that we had only specified $8,000 for the Canadian Talent Development, even though we propose to spend $16,000 annually.  This schedule has been adjusted accordingly, as well as for the identification of the spoken word programming revenues previously categorized as network revenue.

90     We do expect to have the following revenue streams.

91     First, our local revenues will be comprised of the sale of advertising.  These have been calculated using the number of advertisers and our approximation of their annual spending with us.  We also crosscheck this against what we anticipate will be the number of spots we would sell a year, with an average per spot.

92     The amounts we have provided are conservative.  We preferred to project a bit lower and be pleasantly surprised rather than the reverse.

93     As briefly mentioned above, what was recorded in network revenue is in fact the sale of time from spoken word programming, such as "Insight for Living", "Love Worth Finding", "Turning Point", and others.

94     The amount provided is much less than what we are currently doing in Edmonton, but we believe we will start slowing since some of the programs are already in the market.

95     You will also see that we expect a fairly quick increase of this revenue stream for the first few years as these annual contracts are secured.

96     On the expense side, we tailored our needs based on the previous Edmonton AM/FM model.  There is a significant savings we benefit from when sharing a building, staff and other costs with the existing FM station.

97     In addition, we have programming synergies with all three of the existing stations in most areas of operation.  This relatively conservative approach is the most economical way this kind of niche format can be presented.

98     We have talked about the music sound, our rationale behind our application and our business model.  Now I would like to ask Malcolm Hunt to talk about some of our other services we will provide.

99     MR. HUNSPERGER:  Thank you, Bev.

100     In addition to the best of southern gospel music, we will provide a number of other types of programming to our audience.

101     The new AM station will be live and local during morning drive, with two hosts producing a program featuring music, newscasts prepared in our studios, along with weather, traffic, sports, entertainment and other topical information.

102     For much of the rest of the day we will use a voice tracking system, using some of our on‑air staff from Edmonton and from 88.9 Shine FM.  However, the advantage of collocating with the FM station, which is live and local for most of the broadcast day, is that we always have someone in the studio who can provide important breaking news as needed.

103     The proposed station will also broadcast a number of syndicated programs, including Dr. Laura, Gospel Greats and the Gaither homecoming radio show, hosted by Bill Gaither.  This program includes many live performances by the industry's best artists.

104     I will now ask Holly Taylor to share about her on‑air experiences and describe our community fund‑raising involvement.

105     MS TAYLOR:  Thanks, Malcolm.

106     As mentioned earlier, I am the afternoon drive announcer for 105.9 Shine FM and have been with TCB for the past four years.  I have seen the before and after results of just how beneficial two different gospel stations in the same market can be.

107     I field many listener calls in my daily five‑hour show and I have access to listeners at live on locations and at remotes.  The launch of 105.9 Shine FM freed up 930 CJCA The Light to play southern gospel music as well as the talk programs.

108     With the launch of 105.9 Shine FM, I had many first‑time listeners call in surprised that our contemporary gospel format had such a variety of songs and artists, Canadian and otherwise.

109     The split between the two gospel stations has created more satisfied and loyal listeners, listeners that are willing now more than ever to support our clients, our events and, most importantly, our fund‑raising efforts.  Raising funds for community non‑profit organizations is extremely important to TCB.

110     It is also important for me as an announcer and for our listeners to know that there is now a radio station that stands behind their community.  We are committed to continuing to do our part in serving the community through these fund‑raising efforts, and our energy has not been in vain.

111     Our focus is on three to four charities annually and results have been very rewarding.  Just this year alone we are over $1.1 million raised between all three stations.

112     We teamed up with Kid's Cottage 12 years ago, even before they became an association.  TCB expressed a need and our listeners jumped on board.  Kid's Cottage is a 24/7 facility that helps prevent child abuse and neglect.

113     Another organization we work with is The MustardSeed.  The Seed works with those in the inner city.  It offers them food, clothing, shelter and a place for them to feel they belong, like they matter, which is always good for the soul.

114     Year‑to‑date 88.9 Shine FM has raised $650,000 for The Seed with the local businesses and, of course, our listeners.

115     We also work with Compassion Canada, which is an international child sponsor program.  We primarily use a radiothon format to raise for our charities.  We sometimes joke around the station that we make more money for our charities than we do for our shareholders.

116     With a brief wrap up, here is Alan Hunsperger.

117     MR. HUNSPERGER:  Thank you, Holly.

118     Mr. Chairman, we believe that our application deserves to be licensed.  The Commission has enunciated a number of criteria that it uses to evaluate new stations and we believe that we meet them well.

119     Calgary is a growing market of about $70 million in radio revenues.  It can easily sustain new ratio stations, particularly one with modest revenue requirements that will not compete with anyone for revenues.

120     Number two, licensing us does not create a competitive imbalance.  In fact, with only one station in a market where several large broadcasters have three or four stations, you are helping us to be more viable.

121     Number three, we have a strong and realistic business plan grounded in our 12 years of experience in gospel music programming.  We have lived through lean years and have found a way to sustain a business model.

122     Number four, our proposed format is in demand and will serve a significant group of people.

123     Number five, we have consistently exceeded the Canadian content requirement of our format.  In fact, our performance is 1.5 times what the Radio Regulations call for.

124     Number six, we will provide double the required spending for Canadian Talent Development and direct it to developing artists in a neglected area of Canadian music, gospel music.

125     Mr. Chairman, licensing this station will not only serve the gospel music listeners of Calgary, but because of the extent of the AM signal we provide a listening alternative to Red Deer and much of central and southern Alberta.

126     At present CJCA reaches Red Deer in the day, but must pull out after dark.  We hear regularly from residents of Red Deer and of rural Alberta that they want to have our sound available.  Our AM application to serve Calgary and rural southern and central Alberta is a part of our plan to build a service that reaches other markets, including Lethbridge, as you will hear later.

127     We hope you will share in our wish to provide additional diversity in music programming to our province.

128     Thank you for your patience and attention, and we would be pleased to answer your questions.

129     THE CHAIRPERSON:  Thank you, Mr. Hunsperger.

130     I will have Mr. Langford ask you the questions, but I have one of clarification to Mr. Hunt.

131     On the bottom of page 3 of your oral presentation you say:

"I should also mention gospel music continues to see considerable growth.  In fact it experienced a 16% increase in 2004."

132     Sixteen percent of what, of music production or an index or international music, Canadian music?

133     MR. HUNT:  It's of its of own growth.  Yes, music sales.  Correct.

134     THE CHAIRPERSON:  Thank you.

135     I am asking Mr. Langford.

136     COMMISSIONER LANGFORD:  Well, that pretty well wrapped up all my questions.  I think we can go home now.

‑‑‑ Laughter / Rires

137     COMMISSIONER LANGFORD:  I do have a few more.  Welcome to Calgary.

138     I want to talk to you about a few areas, your choice of delivery mode, if I can call it that, your choice of format; some specific questions on your spoken word programming.  Then we will take a little closer look at the business plan and then some miscellaneous things like codes of ethics and equal opportunity codes and that sort of thing.

139     So starting essentially with an application for an AM station.

140     I know that there is a more viable business plan to be made for AM in the west and whatnot, but still it seems odd in this day and age that somebody would be jumping into the AM world.

141     Can you give me some idea why you didn't apply for an FM station?

142     MR. HUNSPERGER:  Yes, I can.

143     Basically we looked at, you know, particularly as we had mentioned before, not only serving Calgary but servicing the rural areas.  When you look at the footprint that the 700 signal puts on the province, you know that we pretty well will be able to cover the central and southern parts of Alberta.  Even the signal goes up as high as Edmonton, especially during the daytime.

144     We also are aware that in the format that we are proposing with the southern gospel music and spoken programming, that is an AM and works very well on the AM model.

145     The third aspect that we have looked at is the new technologies that is coming down the road.  It is already being tested.  I'm not the guru on this, however Mr. Henke(ph) is here and he could address that issue.

146     But there are new technologies coming for AM signals that is going to digitize ‑‑ my understanding of it and I could be here wrong when I'm saying this ‑‑ but digitize the signal and make it much higher quality.  In fact, testing is going on in the United States with this as well.  We believe with some of the research that we have done, is that that technology is not far away.  That will even give more of a quality sound than what the AM signal does right now.

147     COMMISSIONER LANGFORD:  Well, just dealing with what we have today, because that is what we have to license.  We have seen technologies come and technologies go and a lot people have invested in the new, next greatest level and barely lived to tell the tale.  So let's hope it happens for you.

148     But dealing with what we have today, why is the quality of AM good enough for the type of music you want to do?  Don't your audience members want to hear the best they can get?

149     Why does southern gospel music work on AM when Beethoven doesn't?

150     MR. HUNSPERGER:  I'm not sure I can really answer that to your full satisfaction.

151     The only thing I can tell you is this:  When we were on the AM and only had the AM we always heard from our listeners on the contemporary gospel music side, "I can't stand it on AM and I can hardly wait until you get FM".  I mean we had that ‑‑ I'm sure Mr. Hunt can verify that ‑‑ over and over again.

152     Correct me if I'm wrong, Malcolm, but our AM, when we changed CJCA up in Edmonton to the southern gospel format, I do not believe we have had one comment from our audience, and we have been broadcasting now over a year ‑‑ not one comment of saying, "I sure wish you guys were on FM".

153     It seems that the older demographic is an AM demographic.  They are listening to the AM versus the FM, where the younger demographic doesn't even know that the AM band actually exists.  So it seems that the baby‑boomer kind of audience that loves this kind of music, they are the people who don't mind AM and don't really understand what all the fuss is about with FM and all the other stuff.

154     COMMISSIONER LANGFORD:  We are going deaf is what you are trying to say.

‑‑‑ Laughter

155     COMMISSIONER LANGFORD:  Good enough, I suppose.  Maybe we just notice, it's as simple as that.

156     What about the cost of AM?  Isn't it expensive?  You have to put these towers up, you have to have this big kind of wired field or whatever.

157     I'm looking at your projections, and you filed new ones this morning.  I'm trying to figure out where the costs are, because you have yourself starting to make a profit on year three.  So have you picked up a kind of used AM service somewhere or how are you managing this?

158     MR. HUNSPERGER:  I'm sorry, I didn't understand the last part of your question.

159     COMMISSIONER LANGFORD:  Well, I will just simplify it:  How much is this going to cost to go fresh into AM in Calgary?

160     MR. HUNSPERGER:  We believe it's going to cost us about $1.5 million, especially in building the towers.

161     We are looking at the long‑term of these new technologies, plus we are looking at ‑‑ when we look at our overall operation, our AM operation was most successful this last year, even more successful than our two FMs.

162     We are reaching a market that no one else is reaching.  We are tapping into something that had been very successful.  We believe that even though our payment back of our investment is going to take a longer period of time, we are banking that that is going to happen not only because of the large audience we are reaching with the large signal, but we also believe that that is going to happen hopefully with this new technology.

163     COMMISSIONER LANGFORD:  Is that $1.5 million everything?  I mean the land costs, the towers, the engineering costs?  Everything, $1.5 million?

164     MR. HUNSPERGER:  Yes, sir.

165     COMMISSIONER LANGFORD:  You must really know where to buy land around here.  I'm seeing some prices that are pretty shocking.  But I won't make you give that away, it's probably the only piece of land that you can get at that price within 200 miles.

166     Okay.  Moving along.

167     I want to talk a little bit about format and why you chose it.

168     I'm not going to bring you over the information that you explained this morning.  I don't need to repeat that, the difference between the southern gospel and the more contemporary gospel.  That was pretty clear from the samples you played for us.

169     But what I don't quite understand is why you have the confidence that there is a market for this.  It's one thing to get people phoning you or stopping you on the street and saying, "Gosh, you know, Granny would sure like some southern, but don't give up on contemporary because the kids will raise a fuss."  But that is not a very scientific approach, it would seem to me, to spending $1.5 million on towers and hiring people and whatever.

170     So I went to your Ipsos Reid survey that you referred to today again in your opening remarks.  To be frank with you, I had trouble concluding that that survey told me anything.  It certainly didn't make me confident enough that you are onto a sure thing here.

171     So I would like to go over it with you.  I don't know if you have someone from Ipsos Reid here with you today or whether you have someone who feels comfortable digging into it a little bit with me?

172     MR. HUNSPERGER:  We can go through it.  I mean, we don't have anyone here with Ipsos Reid today and we are sorry about that.  However, any questions that we run up against that we can't answer here this morning, we will definitely get it to you before the end of the week.

173     COMMISSIONER LANGFORD:  Well, the best you can do is always good enough.

174     Let me see if I understand the way you conducted this survey.

175     Oh, and I want to clear one thing up, one small point.

176     At the bottom of page 4 of your opening remarks today you said the:

"... sample was made up of 189 randomly drawn ..."

177     But in the Ipsos Reid survey that I read it said 179.  That's only 10 people, but which one is correct?

‑‑‑ Pause

178     COMMISSIONER LANGFORD:  I think if it's 300 it has to be 179.

179     MR. HUNSPERGER:  You are right.  It's 179, I'm sorry.

180     COMMISSIONER LANGFORD:  Okay.  so here is what I don't understand.  I don't understand where these 121 came from.  Just for the benefit of people who haven't read as much as we have on this, I will just give  a small precis.

181     If I understand correctly, what Ipsos Reid did here was to survey 300 people, a 300‑person sample; 179 of those were drawn randomly in a normal surveying fashion, but 121 of the respondents were sort of hand‑selected in some way from a group that I think you typify as either parishioners or somehow connected through business to your enterprise.

182     I would like to focus a little bit on that 121, because I am not a surveyor myself ‑‑ I don't do primary research ‑‑ but it seems to me that you defeat the whole purpose of a survey if you start hand‑selecting the people who are going to answer it.  But I may be wrong.

183     Can you, first of all, tell me more about where you got this 121, this smaller group?

184     MR. HUNSPERGER:  I will be more than happy to.

185     We got the smaller group from the Southern Gospel Reimer Promotions who have been promoting southern gospel in this area for over 13 years.  In fact, Mr. and Mrs. Reimer are one of the interveners for support of what we are doing here.

186     They basically have had a list of people, e‑mails that they send out of all what's going on with southern gospel, and we asked if they would send out a notice to their e‑mail to just say, "We would like to have Ipsos Reid call them up.  Would they be willing to receive such a call?".  So we kind of went in that direction.

187     If I can just make a comment here, I will agree with you that what we did here in Calgary we will not do again.

188     COMMISSIONER LANGFORD:  I'm not the point the fickle finger of blame here, but I do want to try to assess with you just how much credibility we should put on those figures.

189     But I agree, you shouldn't do it again.

‑‑‑ Laughter / Rires

190     MR. HUNSPERGER:  Thank you.

191     What we believe, according to Ipsos Reid ‑‑ and I just talked with Chris again this morning to go through this one more time.  He is the man that really ran this whole ‑‑ gave this whole presentation to us.

192     He felt that the hundred ‑‑ well, first of all, he felt that the 179 respondents was good enough, that with the margin of error of about 7.1 he said to me this morning ‑‑ which is a little different than he has here ‑‑ but he said, "With 7.1 you have a good analysis that the general public somewhere in the vicinity of 20 percent does want your music station."

193     And, of course, the other one, you know we found it out to be very successful.

194     The reason why we will probably not do this is again is because we have always got a hold of Ipsos Reid to do us a marketing study on further applications that we have in to the CRTC, and we have found out that the random calling gives us even a higher percentage then what we have even with this Ipsos Reid survey.

195     COMMISSIONER LANGFORD:  Well, that's not the way I read this.

196     Again, I am not a really sophisticated reader of statistics, but if I read the results of this survey correctly, you got very encouraging results from the hand‑selected crowd.  Overall about, I think, 70 percent or so thought they would listen to it or would really, really listen to it.

197     But with the other group, 179, the number dropped to 20 percent.

198     So if that is the real assessment of the market ‑‑ and we can get to business plans later ‑‑ but, generally speaking, is that a good base on which to choose a format and build a business plan; 20 percent?

199     Given your last statement, that there may be a margin of error there of 7 or more percent, we could be looking at 14 percent.  We could be looking at 27 too, but we could be looking at 14.  That would give me the willies if I were an investor.

200     MR HUNSPERGER:  If we got 14 percent of this market, sir, we would be jumping out of our skin.  We would be very happy.  Because our audience is really small.  I mean, we get about a 2 or a 3 percent when we actually have measured our audiences with our radio stations.

201     COMMISSIONER LANGFORD:  I'm sorry to interrupt but, Mr. Hunsperger, surely you can't equate a 14 or 20 percent return on a randomly dialled survey, telephone survey, of 179 people living in a metropolitan area of over a million people.

202     You can't equate and straightline that with your share of audience three years down the road.  Surely not.

203     Do you?

204     MR. HUNSPERGER:  Well, we felt very good about it.  We felt the 20 percent was very good.

205     COMMISSIONER LANGFORD:  Okay.  Well, that's your answer.  Thank you very much.  I think I will just move on to another area.

206     I can't help wondering if David Emerson in Vancouver hasn't done a survey like that though, you know.  He has gone down to some Tory headquarters and found 25 people who said they will back him next time around.

‑‑‑ Laughter / Rires

207     COMMISSIONER LANGFORD:  But, you know, it is not quite empirical, I don't think, that type of approach.  But anyway, we will see how it goes.

208     Let me talk about this new mix.

209     You were very clear on it today and I learned a lot in your opening statement and I'm grateful for that and I thank you for that, the difference of what you are going to do.

210     Let me make sure I have it right.  You are going to shift over to the new AM station the sort of southern side.  Right now you are trying to run a kind of split personality station.  Leave on the FM station the contemporary side.

211     Can you give me a breakdown, kind of in the sense of how much music, how much spoken word, what type of music ‑‑ well, you were pretty clear on that today, what type,so you don't need to be very long in that ‑‑ what type of spoken word in the sense of news, weather, brokered programming?

212     How will it break down between your two entities, should you be successful in obtaining this new licence?

213     MR. HUNT:  Well, I mean the majority of it obviously is going to be the southern gospel format, but we have 45.17 hours of spoken word, which is basically all of what you mentioned, the brokered time, the news and basically All of the talk components.  That is basically the mix between music and spoken word.

214     COMMISSIONER LANGFORD:  that will be the mix on both stations?

215     MR. HUNT:  No.  No, just on the AM station, on the station we have applied for.

216     COMMISSIONER LANGFORD:  This red light district we are running here is not as much fun as I thought it might be.  Somehow I'm hitting the button at the wrong time and I apologize for that.

217     What I was wondering, though, is:  Can you give me a kind of sense on the breakdown of both of them?  In other words, I know you are going to have 47.17 hours of spoken word on your new station and the rest will music.

218     What will you have on the existing station one it is reformatted, as it were, to be pure contemporary gospel?

219     MR. HUNT:  Exactly that.  We will play nothing but music and some syndicated programming that we are currently running on that radio station on the FM, and basically all of the ‑‑ other than the required news and whatnot that we have already, basically the news that we are currently running, all of that extra brokered time would go to our AM station.

220     And on the AM, the ratio is basically we play the 45.17 and the rest will be music and syndicated programming, which is music‑based.

221     COMMISSIONER LANGFORD:  So almost 100 percent music on the FM station, but for news, weather, drive information?

222     MR. HUNT:  Right.

223     COMMISSIONER LANGFORD:  Now, for the new one, you speak about 10 percent Canadian content.

224     But I noticed that this morning you were pretty enthusiastic in a couple of places in your opening remarks about just how much more possibility there was.

225     You were saying even now you are doing ‑‑ let me get the number right ‑‑ I think you said one and a half times that on a regular basis.  Then, in summing up ‑‑ yes, that was it, point 5 on page 10, you said:

"We have consistently exceeded the Canadian content requirements for our format.  In fact, our performance is one and a half times what the Radio Regulations call for."

226     At another point I was interested to hear you say that this Bill Gaither homecoming concert series really draws in the folks.  There was a point where you said ‑‑ I think you specifically mentioned some Canadian content.  I'm just looking for that on page 4 of your introductory remarks.

227     At any rate, I will keep looking.

228     MR. HUNT:  It's on page 5, I think.

‑‑‑ Pause

229     COMMISSIONER LANGFORD:  Yes, okay.  Thank you very much.

230     So the question is:  Why not offer us more, because we love Canadian content?

231     MR. HUNT: And so do we.

232     I mean, bottom line is, the industry of southern gospel, because there are just a few ‑‑ like we are talking less than ‑‑

233     MR. HUNSPERGER:  One.

234     MR. HUNT:  There is one basically, and that's in Edmonton.  So it is difficult to create a really overpowering industry, a strong industry in Canada with one radio station powering the music.

235     Obviously the roots of this particular product, of southern gospel music, are rooted much deeper.  A lot of concerts.  And obviously a lot of this comes from the States.  That is generally the market it seems to be where we draw a lot of this music from.  But, again, because we are at 10 percent, that is what we are supposed to play, we consistently exceed that because the music is that good right now.  I think with more radio stations it would get even better and that number could go higher.

236     COMMISSIONER LANGFORD:  Well, you know, the commercial radio stations are supposed to play 35, that is the rule, and if you review most of the applications here today you will see they are at 40.  We are very pushy on this, because we like to support.

237     I mean, I heard that twangy West Virginia sound you had there, and I guess if you are living in West Virginia that would make you feel all warm and comfy, but Wayne Gretzky may be looking for a new career soon and it would be nice to have him here singing.  Nice to give the boy a chance.

238     I wonder whether we couldn't induce you to go higher on that.  You are consistently beating it now.  I mean, would you feel comfortable at 15 percent?

239     MR. HUNSPERGER:  Here is our problem, Mr. Commissioner, and that is that what we have found ‑‑ and Malcolm can even speak more to this if you would like ‑‑ the distribution of southern gospel, because it is so new in Canada, is very poor.

240     I mean, we are playing music even from Canadian artists that are not in the book stores and are not anywhere to get.  And even we work very closely with music outlets to provide this music and they are pulling their hair out as well in this whole area of distribution.

241     So I would say that the southern gospel music format needs a few more years of trying to get their act together on this distribution.

242     We have heard some encouraging reports of companies in the retail outlet for music looking at getting involved in distribution, which, as you know, is a huge market, and we go from there.

243     I don't know if Mr. Hunt wants to add anything more to that, but that is our problem.

244     MR. HUNT:  And it is a problem, you know.  The book stores have difficulty stocking the stuff that we are playing.

245     We obviously have connections with record labels even before the one main distribution outlet, which is CMC distribution out of Ontario.  They don't even carry the majority of the stuff that we get.  We get our stuff sent to us directly by those labels.

246     In terms of Canadian content, it is a lot of just family ‑‑ families basically that are singing.  And they are supporting themselves by travelling all over the country.  Often they have a difficult time of that because, I mean, outside of the one market where they can come and know that there is strong radio, I mean they basically are going from venue to venue and trying their best to make a go of it.

247     I think if we had more of this type of radio offered to them, I am more than positive that the industry would grow in Canada and the more quality talent as well.

248     COMMISSIONER LANGFORD:  Still, you tease us, don't you?  You tell us you are doing one and a half times and kind of hold it out there.

249     Okay, I have your answer on that.

250     Let me see if I can approach the music side of your life from one other little kind of direction.

251     There are no rules on AM radios with regard to guarantees, but on FM ‑‑ if this were an FM channel, the station you were applying for ‑‑ you would have to guarantee that 95 percent of your format, non‑classical religious format ‑‑ or 95 percent of your content would comply with your format.  On AM there is no rule that says that.

252     Would you be prepared to apply that rule to your AM station, should you be successful in getting it, the same rule you have on your FM now?

253     MR. HUNSPERGER:  Is that rule talking about keeping the same music on the AM format?

254     Is that what you are saying?

255     COMMISSIONER LANGFORD:  Yes.  In other words, not switching your format to ‑‑ right now sort of the world is open to you because there isn't the same strict rule on AM as there is on FM with regard to format.

256     MR. HUNSPERGER:  We are the only broadcaster, if I am correct in making this bold statement ‑‑ we are the only broadcaster in this room that has stuck to the same format for 12 years.

257     COMMISSIONER LANGFORD:  I think Mr. Evanov may challenge you on that.  He is pretty proud of his reputation in that area too, but I will let you duke it out at the break.

‑‑‑ Laughter / Rires

258     COMMISSIONER LANGFORD:  So what you are telling me is you are happy to accept a COL to stick with that format, the format you have proposed, the same sort of rule you would have if it were an FM station?

259     MR. HUNSPERGER:  If that would make the difference of whether we get our licence or not, we would strongly consider it.

260     Here is our problem, sir:  As you know, the huge investment we are making on this station, we have not flipped formats, we are not intending to flip formats.  You know, we want to continue to even get into other areas where we continue to bring in the gospel music into other locations across this country.

261     COMMISSIONER LANGFORD:  So, if I understand, your answer is you are of good faith, but you would rather not have a COL?

262     MR. HUNSPERGER:  That is probably correct.

263     COMMISSIONER LANGFORD:  Okay.  Let's get into spoken word.

264     45.17 hours a day, 7.17 hours ‑‑ if I have anything wrong, by the way, jump in and correct me ‑‑ 17.17 hours would be news weather, et cetera.

265     I will get back to that, but what will the other 38 be?  I'm not as clear on that.

266     MR. HUNSPERGER:  Most of that is going to be what we would call "paid spoken word programming".  As we had mentioned in our opening statements, like "Love Worth Finding", "Turning Point", those kinds of programs.

267     Our budget at this point says that we are really only going to put about 25 hours.  From a budget point of view we have actually just included 25 hours.  But we are asking, obviously, for the opportunity to put more hours if the need is there, that we could add that because it is a revenue source.

‑‑‑ Pause

268     COMMISSIONER LANGFORD:  So mostly sold time to other program producers, creators.

269     MR. HUNSPERGER:  That is correct.

270     COMMISSIONER LANGFORD:  So that brings me to a few other questions.

271     I'm going to bounce around a little bit on this, but on the economics side, how does that affect your revenue?

272     When you sell a half an hour of time to another program creator, an independent program creator, who gets the advertising revenue for that?

273     Do you sell it?  Is it a gross sale, whatever it is for that half hour, and they get the advertising time, or do you insert advertising in that programming?

274     MR. HUNSPERGER:  No, it's a gross sale and they get the advertising in that time.

275     COMMISSIONER LANGFORD:  All right.

276     Now, content.

277     How do you control the content and the appropriateness of this type of purchased and inserted programming?

278     MR. HUNSPERGER:  Well, any buyer who wants to come onto the station must send a pilot of the program.  We then of course listen to it to make sure that it would be the kind of a program that would be quality as far as radio and the kind of program that we would accept, which would be things like it is not a program that ‑‑ what we would accept is that it is a program positive initiatives, helping people, these kind of things, versus any kind of negative types of programming.  Those types of programming we turn down.

279     What we have done over the last 12 years up at CJCA, we have had this type of programming on basically from 6 o'clock at night until about 11 o'clock at night where commercial revenue isn't that high anyway.

280     The other thing, that over the 12‑year period that we have been broadcasting these programs, we have never received a complaint, nor have you from the Commission received a complaint.

281     COMMISSIONER LANGFORD:  After you get the pilot and you approve it, then it starts to come in typically sort of in half hour segments once a week?

282     Would that be typical?

283     MR. HUNT:  That's correct.  Yes.

284     COMMISSIONER LANGFORD:  Then what do you do?  Do you pre‑screen each half hour or do you just assume, "Well, I have done the pilot and this is acceptable and we have had 12 years, you know, and everything is fine" and play it, or do you screen it?

285     How do you deal with it?

286     MR. HUNSPERGER:  The theme of each of the programs usually comes in on a cue sheet so we know exactly the theme of what they are talking about.  And of course if anything alerts us to something that we wouldn't air, we would of course review it and then make a decision.

287     COMMISSIONER LANGFORD:  So you read the kind of table of contents, if I can use a literary term, borrow a literary term, and then as long as it doesn't offend the smell meter, I guess is about all we can say, the smell test, then you go with it?

288     MR. HUNSPERGER:  That's correct.  And sometimes, like, for example, you know, if something is played that we felt was not what we want on the station, we will alert the producer and say, "You know, that last program", or that program a week ago or whatever, "was bordering on something that we would not prefer to run."

289     COMMISSIONER LANGFORD:  Now, where do most of these programs come from, Canada or the United States or the world?

290     You have had a lot of experience.  Where do you get them?

291     MR. HUNSPERGER:  The United States.

292     We are doing our level best to try to get Canadians, and particularly ‑‑ we are obviously in Alberta ‑‑ trying to get Albertans to start producing programs.  We continue to encourage that.  The problem is that as soon as they find out there is a cost to it, that's when most of them back down.

293     However, we, for example this last year, have been producing out of our station a program on diabetes.  This lady had started this program and it is aired every Sunday night at 9 o'clock on CJCA.  It is an encouragement for us to see a local person grab a hold of an idea and now has supporters with the Diabetes Association and that kind of thing behind her.  She is starting to be kind of a pilot Canadian program that hopefully we can encourage more to get involved with.

294     COMMISSIONER LANGFORD:  What is the breakdown between kind of Christian‑theme, religious‑theme programming that you are buying and wellness, the sort of diabetes, health, wellness lifestyle?

295     Can you give me some sense of how the programming breaks down as to themes and content?

296     MR. HUNSPERGER:  Ninety‑five percent would be from a religious theme and the other 5 percent (off microphone).

297     COMMISSIONER LANGFORD:  So this 95 percent, how do you guarantee the kind of balance that we insist on here in Canada if it is being produced by people who don't have the same code that we have?

298     How do you work with that?

299     MR. HUNSPERGER:  First of all, they are well aware of our code.

300     COMMISSIONER LANGFORD:  I think it's me who is doing this.  I'm not touching it.

301     Hello?  Whoever is in charge of the light, I'm not touching mine any more so you can turn it on, or off if you like.

‑‑‑ Laughter / Rires

302     MR. HUNSPERGER:  If I can get my thought here again.

303     All of the programming ‑‑ I should say 96‑97 percent of the programming that we play all have Canadian offices, all have Canadian presidents and boards and offices located either in Montreal or Ontario, or some of them out in the British Columbia area.

304     We work with these people on a regular basis.  They of course are a subconnection to the main ministry that is in the States, and they really regulate themselves by keeping their home ministry, if you want to say, down in the States, very alert to what happens here.

305     Sorry, I don't know who shut that off.

306     COMMISSIONER LANGFORD:  It wasn't me that time.  My evil twin.

307     I think we may not quite be talking about the same thing, though, because it IS one thing to have an acceptable sort of content in the sense that it doesn't offend people, but I think it is quite another to have content that is both inoffensive and balanced.

308     I'm trying to find the place in your supplementary brief where you spoke of balanced programming.  I had difficulty with it, because your explanation ‑‑ I'm going by memory here, but I'm almost certain I'm right ‑‑ your explanation of balance was that you are prepared to sell commercially available time on your radio station to other groups if they want it.

309     But if you will permit me to say so, that doesn't quite cut it with our religious balance policy here in Canada.  Each program doesn't necessarily have to be a balanced little jewel in and of itself, but overall your programming has to show a balance.

310     So let's take a very simple example.  If you are going to do some sort of programming on this whole Danish cartoon situation and it will be on freedom of speech, it will be on religious freedom, it will be on the sense of freedoms being offended, it wouldn't be appropriate under our policy to simply be drawing all of your information, or even 95 percent of it from Christian‑based programmers.

311     There would also have to be a sense that the other sides of these stories were represented.  The obvious sides one can think of, of course, are Muslim approaches to it, Israeli approaches to it, Judaic historic approaches to these sorts of questions.

312     When I  read your supplementary brief, when I hear you here this morning, I don't see where you can get this kind of balance when in fact what you are doing is accepting programming that may not be offensive, but has nothing on the other side in the sense of a complete coverage of thoughts and beliefs.

313     I'm sorry to have gone on so long, but I do have some trouble finding that in your application and in your supplementary brief and in what you have said to me today.  I don't find that piece of the pie.

314     MR. HUNSPERGER:  First of all, when it comes to matters of balance and matters of public concern we have absolutely no problem in accepting the Commission's regulation on balance, that if an issue comes up of matters of public concern either we will get someone else in to explain the opposite side of the equation, or we ourselves, our on‑air staff members or whatever, will explain the opposite side to make sure that everybody knows that there is two sides to this matter of public concern.

315     What I think you are talking about here is the Regulations when you view yourself as a religious broadcaster.

316     We do not view ourselves as a religious broadcaster.  We view ourselves as a commercial broadcaster reaching out to a segment of the culture that likes this niche format.  In the same way that a modern rock station would reach out to their modern rock fans or whatever, we are trying to do the same thing.  That's why we do not enter into that area of then providing all other religions on there, because we don't view ourselves in that regard.

317     However, I want to underline again that if there was ever an issue of public concern, a matter of public issue, we would definitely make sure that the balance is broadcast.

318     COMMISSIONER LANGFORD:  Well, I don't approach this ‑‑ and it will be up to myself and all my colleagues to review the transcript and the record of this proceeding and I may be standing alone on this, but we have ample staff and we have legal assistance and whatnot.

319     But my approach to the Broadcasting Act is very different than my approach to the Income Tax Act for example.  And I mean that.  I don't see it as something that if you can avoid it, that's okay.  If you can find another way to view yourself, as you say it, that's okay.

320     We are dealing with some pretty broad policy objectives here and it would be my understanding ‑‑ and I may be corrected by legal staff or by my colleagues later ‑‑ but it would be my understanding that if you are in fact playing the amount of religious spoken word programming ‑‑ it would be different if you were all music, I grant you that ‑‑ but the amount of religious‑based spoken word programming that you are playing, then I think your duty is much broader than what you have described to me here today.

321     I believe that your duty is ‑‑ and perhaps I shouldn't be giving legal opinions from the bench, I will probably be glowing bright red to learn later that I am incorrect ‑‑ but I think that there is a general duty to comply with the policy guidelines, and that because you don't declare yourself to be a religious program, I don't know if that would be enough.

322     But we will all have benefit ‑‑ and I certainly encourage you or your counsel, if you have counsel here, to speak with Ms Bennett, our legal counsel, to exchange views at the break and that sort of thing.  And if there are questions you have that you may want to clarify later, there are different phases coming up here.

323     But speaking only for myself now, I don't think that the approach that you have described here today quite makes it.  Once you get into the realm of spoken word and brokered programming and dealing with religious themes, it is my understanding that our policy directs you to have a much more balanced approach.

324     Now we having another policy ‑‑ moving right along ‑‑ and I'm sorry to have taken so long with this ‑‑ that we talk about ethics as well.  I'm sure you understand what that is all about.

325     One of our key concerns, of course, is in programs, spoken word programs, appealing for donations.

326     Now, any of the programs that are on in your six hours of programming now, do any of these brokered programmers, the hosts of these religious programmers, make appeals for donations?

327     MR. HUNSPERGER:  No, sir.

328     For the most part, they usually offer premiums, what we call premiums, or books or whatever, and if people want this book they can send in money to get the book.

329     COMMISSIONER LANGFORD:  But they are not asking people to sit down and write a cheque.

330     MR. HUNSPERGER:  Mostly not.

331     COMMISSIONER LANGFORD:  Mostly not.

332     Some are then?

333     MR. HUNSPERGER:  Well, we have had the odd commercial at the end of the year where the programmer would say ‑‑ it's at the end of the year, we have had some difficult times, if you can help us, please send it in.

334     But it is usually a separate commercial that they buy versus in their program.

335     COMMISSIONER LANGFORD:  You are aware of our policy regarding alarming people and the ethical duty that broadcasters have to ensure that, you know, the sort ‑‑ many of the people who listen to these are people who are, even by your own admission, in the last ‑‑ how can I put this kindly ‑‑ the last demographic slice, you know, section, and they maybe feel more vulnerable and are more easily persuaded to do something that perhaps 10 years earlier they might not have done, in the sense of signing over a good deal of money they can ill afford.

336     You are aware of our prohibition on that sort of fund‑raising.

337     MR. HUNSPERGER:  Yes, sir.

338     COMMISSIONER LANGFORD:  Thank you very much.

339     I wanted to ask you very quickly about revenues and money.

340     Good old money always comes into it.  The reason we get into is because we want to see whether the business plan that you have put before us warrants the Commission assigning to you some frequency, publicly owned frequency, and will it be used and will it be used successfully.

341     Because we may be a little harsh in our questioning here, but the point of it is if you get though it we want you to succeed.  So obviously if your financial plans don't seem to make it, we are concerned about that.

342     I noticed one thing.  I have a number of question on that, not too many.  We have had a long morning already.

343     But I noticed in the information you handed out here today ‑‑ excuse me for one second.

‑‑‑ Pause

344     COMMISSIONER LANGFORD:  I'm just doing a time check there, which I seem to have misplaced and I need.

345     Do you have today's handout, Elizabeth?  Yes.  I don't know what I did with mine.  Oh, here it is.  I have it.  Sorry.  Too much paper.  Too many heads under my hat.

346     You handed to us today a revised account of your financial operations, the last page appended to your remarks today.  In that you cleared up the matter of the 16,000 versus 8,000 CTD, and I am very grateful for that.  Thank you.

347     I think we can take it as given now that the 16 number was right and the 8,000 was a mistake.

348     But then, when I go to "Administration and General Expenses" I notice that it is quite a bit lower than on the original version of this chart that you handed to us.

349     I wonder if you could explain why that is.  I mean, really a lot lower.

350     MS GILESPIE:  Yes, correct.

351     The original Excel spreadsheets that were originally sent in with the application have the correct numbers which are reflected in this sheet that you have right here, other than the 8,000.

352     Our consultant, when they transposed the Excel spreadsheet into the Schedule 4.1 that was originally put in had the errors.

353     COMMISSIONER LANGFORD:  I see.  So this one is accurate.  This is the one.

354     MS GILESPIE:  This is the accurate one, yes.

355     COMMISSIONER LANGFORD:  Okay.

356     Now, when I look at the programming expenses, they don't look huge to me.  Is it because you are almost doing no programming on your own, that it is mostly voice track and then purchased spoken word programming?

357     MS GILESPIE:  In regards to the staffing, I can address that to Malcolm,

358     But mostly, primarily we share a lot of the expenses, the operational expenses, with the other three stations.

359     COMMISSIONER LANGFORD:  With the other three?

360     MS GILESPIE:  Yes.

361     COMMISSIONER LANGFORD:  Which brings me ‑‑

362     MS GILESPIE:  It would be the other three stations and, depending on the type of duties that are performed, some would be divided between three stations, being our production and that kind of stuff, and divided between two stations if the staff was on‑air.

363     COMMISSIONER LANGFORD:  I see.

364     So let's get back to news, weather and drive time stuff, which I said I would put off for a while.  It is time to look at it, because in the sense of these projections how many people are you going to have dedicated to this station, this AM station?

365     How many person‑years will be dedicated to this station versus the existing FM?

366     MS GILESPIE:  Okay.  I will let Malcolm address that one with his staff.

367     MR. HUNT:  This particular station will have two people basically that we will bring on and the rest of it will be synergized with our other station.  We will be utilizing the people that we already have to take care of the rest of it.

368     I mean, we are in the same building as our FM station ‑‑ or we would be in the same building as our FM station.

369     COMMISSIONER LANGFORD:  What will the two new people be?  What kinds of jobs will they have?

370     MR. HUNT:  Basically mornings would be ‑‑ obviously the first person would be our morning show host.  They would also input a variety of programs.

371     The other person would primarily be co‑hosting and many of the other programming duties that are specific to that station, and compiling any of the local news items that we need as well.

372     COMMISSIONER LANGFORD:  What about the drive time returning home from work?

373     MR. HUNT:  Voice track initially.

374     COMMISSIONER LANGFORD:  Really?

375     MR. HUNT:  Yes.  But we will have live weather and live traffic as well during those times.

376     COMMISSIONER LANGFORD:  So essentially are you going to play the same news on your FM as on your AM?

377     MR. HUNT:  No, they are customized differently.

378     COMMISSIONER LANGFORD:  The same people reading it, though, I suppose?  Same journalists?

379     MR. HUNT:  Yes.

380     COMMISSIONER LANGFORD:  So why would you change it?  Just because you are trying to ‑‑ your signal goes out farther, you want more regional input?

381     MR. HUNT:  Why would we change it?

382     COMMISSIONER LANGFORD:  Yes.  Why would you have it different?  Why not just play the same, one is on the FM and the other is on the AM?

383     MR. HUNT:  Well, we have to customize them different because the names are different, but I mean ‑‑

384     COMMISSIONER LANGFORD:  Oh, that's the only difference.

385     MR. HUNT:  Yes.  I mean the content will be the same.

386     COMMISSIONER LANGFORD:  Exactly the same content.

387     MR. HUNT:  Essentially.

388     COMMISSIONER LANGFORD:  So even though your signal goes way out farther, miles and miles and miles across this lovely prairie that we have depicted behind us here, you wouldn't change it?  You wouldn't bring in more rural and more regional news and events of more rural and regional interest?

389     MR. HUNT:  It is regional now.

390     COMMISSIONER LANGFORD:  It is?

391     MR. HUNT:  Yes.

392     COMMISSIONER LANGFORD:  But surely the FM signal in the sense of contour doesn't hold a candle to this AM one.

393     MR. HUNT:  No.

394     COMMISSIONER LANGFORD:  But still no changes?

395     MR. HUNT:  No.

396     MR. HUNSPERGER:  If I could just comment?

397     There is a bit of a change.  For example, the on‑air FM people make their own news to the local aspect of Calgary.  Right?  So there is a bit of a difference compared to what happens with the AM.

398     COMMISSIONER LANGFORD:  These are the morning hosts you mean.

399     MR. HUNSPERGER:  Yes, sir.

400     COMMISSIONER LANGFORD:  I don't want to denigrate it, but are we just talking about the happy talk here between the host and hostess, or the two hosts, the two hostesses, or are we talking about something substantial like an arts report or something, or whatever passes for an arts report in the world of gospel?  I guess it would be ‑‑ well, I don't know, some sort of show I suppose that's in town.

401     MR. HUNT:  Obviously the differences between the formats have a different type of entertainment news that they would carry.

402     COMMISSIONER LANGFORD:  Oh, it's entertainment news and that sort of thing?

403     MR. HUNT:  That would be some, yes.

404     COMMISSIONER LANGFORD:  Okay.

405     I just want to ask you, in one of your ‑‑ I have so many pieces of paper in front of me now I'm beginning to look like an income tax lawyer I suppose, or an Enron executive, one or the other.

‑‑‑ Laughter / Rires

406     COMMISSIONER LANGFORD:  When I was looking at one of your revenue spreadsheets there was a category called "Other" in brackets "Contra".

407     Can you explain what that is all about, because it Is quite a lot of money over seven years?  What is "Contra"?

408     MS GILESPIE:  "Contra" is the exchange of goods and services for advertising.  It is heavier in the first couple of years primarily because we use that in exchange for media advertising and promotional advertising when we start up.

409     COMMISSIONER LANGFORD:  So give me some examples.

410     MS GILESPIE:  Newspaper ads, billboards, any kind of promotional activity that we would give them advertising on our station in exchange for advertising.

411     COMMISSIONER LANGFORD:  So it's not getting the wall‑to‑wall carpeting put in or something like that?

‑‑‑ Laughter / Rires

412     MS GILESPIE:  That would be nice, but no.

413     COMMISSIONER LANGFORD:  Okay.

414     What type of advertisers are you getting?  Because I'm just not quite sure how you measure you audience, because you don't have the normal measurement facilities available to you, and services.

415     So how do you go to an advertiser and say, "Well, we think our audience is `X' so we think our rate card should be `Y', so how would you like to buy some time?"

416     How does that work?

417     MR. BURROWS:  Well, with this new application we have an older demographic, as we mentioned earlier, and so I think for that demographic, such as myself, you know, I am buying a different type of product.  I think I mentioned the RV travel, situations where people of my age group are more interested in.  Those are the people we would be going for.

418     COMMISSIONER LANGFORD:  But you are not the only one going for that demographic in this city.  I have reviewed the formats of all of the other radio stations and I have reviewed the formats of some of the other applicants here.  Assuming we licensed more than one you are going to be fighting it out.  They can go to the advertisers and say, "Here is our rating this month in the last period.  These are the viewers we have.  We have empirical data.  So our rates are" so many dollars per minute or per half minute, however you do it.

419     How do you do that?

420     MR. HUNSPERGER:  If I could answer that question for you?

421     The interesting thing that we had already said was:  First of all, we have a loyal listening audience.  The thing that has amazed us over the years is that there are times that we do a live on location, for example, and we can sell as many cars or more cars then some of the bigger stations within the market that have the big numbers.

422     It is partly because of the way we do it.  We bring a live show on there versus a cut‑in, 60‑second cut‑in, and that kind of thing.

423     The other thing is that our audiences are very loyal.  They recognize that it is the advertiser on our station that is allowing them to have their favourite kind of music come to the market.

424     Believe it or not, they go to our advertisers and say, "I'm here purchasing a product from you because you advertise on my favourite radio station".  Most businesses that have commented to us about that have said this is the first time that they have heard that kind of comment from a potential buyer.

425     COMMISSIONER LANGFORD:  The Chairman has asked me if we could all take a break now.  I think he is a kind man and he thinks everybody should have a comfort break, and I will do that.

426     I do have just a few more questions along this same line.  Just to give you something to think about while we are all not thinking, I am interested in this loyal audience in the sense that it can't be measured accurately, and in the sense that you are about to cut it in two, so it is going to be smaller, at least for a while, on each station, and how that impacts on the kind of revenue projections that I see in front of me here, which are, you know, fairly rosy.

427     You see yourself in the black by year three.  Even some of the experienced commercial operators don't have that kind of a positive projection.  So maybe we can have a very short discussion after the break.

428     Mr. Chairman, how long do you want to give them?

429     THE CHAIRPERSON:  Thank you, Stuart.

430     We will resume in 15 minutes.

‑‑‑ Upon recessing at 1040 / Suspension à 1040

‑‑‑ Upon resuming 1115  / Reprise à 1115

431     THE CHAIRPERSON:  Order, please.  A l'ordre, si'l vous plaît.

432     Mr. Langford, for the continuation of this item.

433     COMMISSIONER LANGFORD:  Yes.  I have almost completed my questions.  I just really wanted to return to the notion of how precisely you sell and the kind of obstacles you foresee and how you will get around them.

434     I do notice, as we talked before, that a good deal of your revenue comes from brokered programming, so that is pretty well a sure thing and I understand that.

435     This "Contra" has been explained now and I see that revenue stream.

436     But I do have some concerns about the local advertising in the sense, as I said before the break, that the moment you launch this station you have effectively split your audience.  I don't know how you foresee ‑‑ maybe that is a good place to start.

437     What will the split be?  What percentage of your audience will travel immediately over to your new AM station?

438     MR. HUNSPERGER:  The split, we are not splitting our audience.  As we had mentioned before in our opening comment, the people who like southern gospel do not like contemporary and therefore are not listening to our station.  Those who like contemporary do not like southern gospel.

439     I will give you an illustration.  I had lunch last week with a man who is a businessman, has his own business, and he is a loyal listener of our AM southern gospel music station up in Edmonton.  We do a crossover promotion where we say ‑‑ in effect the promotion says, "Maybe you know somebody who likes this music", and we play some contemporary music and then tell them about our sister station on the FM.  He says to me, "I don't know anybody that would like that kind of music."

440     So we have learned from our Edmonton example.  We are not splitting our audience with FM.  We are, in essence, creating a whole new audience.

441     COMMISSIONER LANGFORD:  Ah, well that is very helpful.  Thank you.

442     Now that you have repeated it, I do recall that you said that in your opening statement.  So that is another good reason why you shouldn't prepare your questions in advance I suppose.

‑‑‑ Laughter / Rires

443     COMMISSIONER LANGFORD:  How deep are your advertiser's pockets?

444     I'm going by some experience at a Kitchener, Ontario hearing we had, and some other hearings, where we have had some applications for Christian music and it was pretty clear from those applicants ‑‑ and if this doesn't apply in your world I'm confident you will tell me.

445     It was clear from those applicants that they recognized they had a limited number of advertisers.  They weren't going to get any national advertising to begin with.  They weren't going to get the biggest advertisers in town.  But they could, on the other side, be sure they would get the Christian book store and some other small business people, entrepreneurs who had very deep Christian beliefs and very much wanted to support this station, very much wanted their children listening to this kind of music rather than to Eminem or something like that, and felt about those stations almost about the way some people feel about public broadcasting in the United States, they were willing to reach into their pocket and support it and change their advertising strategies to do so.

446     But you have to ask yourself how deep their pockets are.  If they are supporting one of your stations now, are they deep enough that they will support two, financially?

447     MR. HUNSPERGER:  What we have found in the Edmonton ‑‑ here again, thank the Good Lord we can look to our Edmonton situation.  Our Edmonton situation picks up new advertisers in the same way that our FM picked up new advertisers.

448     And we are finding that even though we don't necessarily get all of the traditional advertisers that other broadcasters do, we are starting to see a light at the end of the tunnel.

449     I will give you an example.  Because of the growth in gospel music, people like Wal‑Mart are starting to put a huge segment in their store for gospel music.  We have actually had, a couple of times, Wal‑Mart ads that encourage people to go pick up Michael W. Smith at Wal‑Mart.  We are beginning to see that.

450     We know what is happening down in the United States, where all the big advertisers are advertising on the gospel music radio stations, and we kind of patterned ourselves after the Dallas station, an FM Dallas station which brings in about $15 million profit every year.

451     But we look at them and we see that there is light at the end of the tunnel and we begin to see that little by little here, although we still know that the major agencies are located in areas that we are not yet located.

452     When members of those agencies come out to Alberta and they hear our station, which is different than many of the low‑powered FM stations ‑‑ our programming is way different and when they hear ours they go "Oh, this is great.  We should have this in Toronto", or whatever.

453     So we believe that as we continue and are able to extend this, that pie starts opening up a little more to us.  But, in the meantime, we get very loyal people and we do get the major advertisers once in a while as well.

454     COMMISSIONER LANGFORD:  Thank you for that.

455     Just a couple of more quickies on other very small areas ‑‑ not small in importance, but small in the sense of the amount of time we have to spend on them.

456     There are a number of other elements to owning a scarce public ‑‑ or at least renting, using, having to write to ‑‑ a scarce public resource like the airwaves that this Commission generally encourages broadcasters to embrace, and to embrace in a very positive and meaningful spirit, even though we don't necessarily go around policing small broadcasters and whatnot.

457     I'm talking about reflecting cultural and equitable diversity in your hiring practices and in your promoting practices.

458     When I read your responses, in the supplementary brief and the interrogatories, to some earlier questions on that in the paper part of this process, the strongest statement I could find ‑‑ and there may be others, but the strongest one I could find was that you would hire the best qualified people for jobs.

459     I would suggest to you that everybody, of course, wants the best qualified person in every job but, at the same time, if we are going to help women and visible minority groups and the handicapped, sometimes you have to take another approach to it.  I don't want to call it "second best", because it isn't.  I don't want to appear to be preaching a sermon, because I am not qualified, but I did find that in your responses in that area I wasn't quite clear what your strategy would be.

460     As you have three stations already, maybe you can just give me a sense of whether you are reaching out into other communities in your hiring practices and in your promotion practices?

461     MR. HUNSPERGER:  I will talk to that.

462     COMMISSIONER LANGFORD:  I certainly see a lot of women at the table, so you are off to a good start there.  We are on a 50:50 balance.

463     How about the other side of the equation?

464     MR. HUNSPERGER:  Like announcers and ‑‑

465     COMMISSIONER LANGFORD:  Anybody.  You know, do you have any aboriginal people on your staff?  Do you have any visible minorities?  Do you have any handicapped people on any of your payrolls anywhere?

466     MR. HUNSPERGER:  We do have visible minorities on our payroll.

‑‑‑ Laughter / Rires

467     MR. HUNSPERGER:  Holly is waving her hand.  But we have other staff members as well.

468     Handicapped, not at this moment, no, we don't have anybody that would be what you would consider handicapped.

469     COMMISSIONER LANGFORD:  Are you aware of the Commission policies in this area?

470     MR. HUNSPERGER:  Yes, and we have no problem with them whatsoever.

471     COMMISSIONER LANGFORD:  You support them?

472     MR. HUNSPERGER:  Absolutely.

473     COMMISSIONER LANGFORD:  Thank you very much.

474     Those are my questions, Mr. Chair.

475     THE CHAIRPERSON:  Thank you, Mr. Langford.

476     Commissioners...?

477     Legal counsel...?

478     MS BENNETT:  Thank you, Mr. Chairman.

479     I just have two small matters to follow up on.

480     During his discussion with you Mr. Langford talked about the guidelines on ethics which are set out in the Commission's religious programming policy.  I just wanted to follow up on that point.

481     As you are probably aware, the Commission generally expects licensees who broadcast religious programming to adhere to those guidelines.

482     I would just like to ask you to comment on the possibility of the Commission imposing that adherence as a condition of licence.

483     MR. HUNSPERGER:  We have no problem with the Code of Ethics.

484     MS BENNETT:  And you would be willing to operate under those ethics as a condition of licence?

485     MR. HUNSPERGER:  Yes.

486     MS BENNETT:  Okay.  Thank you.

487     The last thing I just wanted to mention is, for all interested parties it touches, amended Schedule 4.1 that was filed this morning will be placed on the top of the public file in the Commission's public exam room.

488     MR. HUNSPERGER:  Thank you.

489     MS BENNETT:  Those are my questions.  Thank you.

490     THE CHAIRPERSON:  Thank you, counsel.

491     Just before we close, in your own words could you briefly give us the reasons why the Commission should retain your application?

492     You can also use this opportunity to tell us what we should know and what we haven't asked for.

493     So it is up to you.

494     MR. HUNSPERGER:  Thank you, Mr. Chairman.

495     I would like to go back just a little.  We had our little huddle in the break and I just wanted to clarify a couple of things that we had gone over with Mr. Langford in our closing remarks.

496     First, about the research.

497     When it comes down to the 20 percent of the random respondents who said they would like our kind of radio station, you know if you go on this 7 percent plus or minus you have about a 12.9 versus a 27.1 either way.

498     The interesting thing that we look at is what is happening in our other markets here in Alberta as well.  We have done an Ipsos Reid survey in Lethbridge, 27 per cent of the random respondents.  We have done one, for example, in Fort McMurray, 33 percent of the random respondents.

499     So we know that the 20 percent is a good mark.

500     We also wanted to say that even if it goes as low as 12 percent and we view ourselves as a niche broadcaster, I'm sure that there are other broadcasters in this room this morning that if they could get 12 percent on a random survey within the market that they want to receive, they would be ecstatic.

501     We do translate that 20 percent into being a 2 to 3 percent share of the market.  You know, we are trying to do that in a very realistic way.

502     The other item, on the Cancon that was mentioned.

503     We mentioned in our statement that we are doing more than 10 percent.

504     If you look back at the decision that the CRTC gave us when you gave us the FM radio station in Edmonton, the CRTC encouraged us to do more than 10 percent.  We have done that.  We seriously look onto doing that and, as we said, we are now at 15 percent.

505     No, we would like to keep the requirement at 10 percent but, as we have shown in the past, we would continue to exceed that and we would like to be on the happy side of the situation versus on the negative side of it.

506     I did not understand, Mr. Langford, your questioning on the 95 percent, committed to that as a condition of licence for the category of music in the subcategory.

507     We would absolutely accept that as a condition of licence.

508     And I am sorry, Mr. Hunt didn't know whether he should kick me in the shins when I was answering you.  I have told him next time kick me in the shins, tell me to shut up and he would answer that question.  So I'm sorry about that.

509     COMMISSIONER LANGFORD:  I may not have asked the question very clearly, but I'm grateful to have your clarification on the answer.  Thank you.

510     MR. HUNSPERGER:  Thank you.

511     I think that's all that we have to say, other than to say that we are doing it in Edmonton, it has been successful.  We are relying on what we are doing in Edmonton.  We believe because of the growing market in Calgary the same thing is going to happen in Calgary.

512     We have an investor who is a very astute businessman and he would not be supporting this if he did not think otherwise.

513     So we thank you so much for allowing us to be in front of you and we are sorry for our nervousness and whatever, but you have been very gracious and thank you.

514     THE CHAIRPERSON:  Thank you, Mr. Hunsperger, and thank you to your colleagues.

515     Ms Secretary, we will move to the next item.  We will hear the oral presentation before breaking for lunch.

516     THE SECRETARY:  Thank you, Mr. Chairman.

517     If we could perhaps take a couple of minutes for the set up of the second applicant.

518     Thank you.

519     THE CHAIRPERSON:  All right.  So we will take a five‑minute break.

‑‑‑ Upon recessing at 1125 / Suspension à 1125

‑‑‑ Upon resuming at 1130 / Reprise à 1130

520     THE CHAIRPERSON:  Order, please.  A l'ordre, si'l vous plaît.

521     Ms Secretary...?

522     THE SECRETARY:  Thank you, Mr. Chairman.

523     We will now go on to proceeding with Item 2 on the Agenda, which is an Application by CHUM Limited for a licence to operate an English‑language FM commercial radio programming undertaking in Calgary.

524     The new station would operate on frequency 90.3 MHz (channel 212C1) with an average effective radiated power of 100,000 watts, non‑directional antenna height of 298.5 metres.

525     Appearing for the applicant is Mr. Paul Ski, who will introduce his colleagues, and then you will have 20 minutes for your presentation.

526     Mr. Ski...?

PRESENTATION / PRÉSENTATION

527     MR. SKI:  Thank you very much.

528     Good morning, Mr. Vice‑Chair and Members of the Commission and welcome to Calgary.

529     We are very pleased to be here today to present CHUM's application for a new Calgary radio station, Energy FM.

530     My name is Paul Ski and I am Executive Vice‑President, Radio, for CHUM Limited.  In this role, I oversee the operations of our 33 radio stations from Halifax to Victoria.

531     Before we begin our formal presentation, I would like to take this opportunity to introduce the members of our Panel.

532     To my right, your left, is Rob Farina, Program Director for CHUM FM, Canada's highest rated commercial radio station.  Rob will help us explain the Hot AC format we are proposing and why we think this format will be of benefit to both the Calgary community and Canadian artists.

533     To Rob's right is Duff Roman, Vice‑President of Industry Affairs for CHUM Radio.  Duff's expertise in the radio industry spans over five decades and we are all very proud that in two weeks he will be inducted into the Canadian Music Industry Hall of Fame in recognition of his lifetime of supporting the Canadian music industry.

534     Duff is here to help outline and discuss the extensive series of Canadian Talent Development initiatives that we are proposing today.

535     To my left, your right, is Kerry French, Director of Research for CHUM's radio stations, who is here to speak to our research on the Calgary market.

536     In the back row, starting on the far left, your right, is Jay Switzer, CHUM Limited's President and CEO.

537     To Jay's right is Kevin Goldstein, CHUM's Director of Regulatory Affairs, who is here to address any regulatory questions arising from our application.

538     To his right is Larry Leblanc, one of Canada's foremost music industry journalists who prepared a report for our application concerning the benefits of the initiatives we are proposing for emerging independent Canadian artists.

539     Next to Larry, the other Goldstein, Ken Goldstein, President of Communications Management Inc., who conducted the economic research for our application.

540     I would also like to note the presence in the audience today of CHUM Chairman, Jim Waters, and Vice‑Chairman, Ron Waters, as well as long‑time CHUM board member Fred Sherratt.

541     I would like to now to turn to Jay to begin our formal presentation.

542     Jay...?

543     MR. SWITZER:  Thank you and good morning, everyone, Mr. Vice‑Chair, Members of the Commission.

544     I would like to just add what a privilege it is for us here today to appear before you, this your first hearing, Mr. Vice‑Chair Arpin, in our home town ‑‑ in my home town.  We congratulate you on your new responsibilities and wish you every success.

545     On behalf of CHUM Limited it gives me great pleasure to be here today proposing what we believe will be an important addition to the local Calgary radio market.  As a native Calgarian, I must say, I am truly excited at the possibility of launching a new FM radio station in this great city.

546     Calgary is a community that is not just growing economically, but one that is becoming increasingly diverse and has emerged as a centre of artistic excellence.  All over this city live music venues like the Hi Fi Club, Ironwood and the Rusty Cage are showcasing the best Calgary has to offer.

547     Local clubs like the Mint, Melrose on 17th, The Living Room and The Mercury all flourish in and around 17th Avenue, known here as the "Red Mile", the centre of the universe for die‑hard Flames fans.  The scene here is brimming with musical talent, with scores of emerging Canadian bands looking for their next big break.

548     Energy FM will become a new voice for this vibrant city, and together with our local television station CityTV, we will create a centre for excellence in downtown Calgary for the promotion of local talent and local groups looking for exposure.

549     Last Friday night we celebrated the first anniversary of the launch of our newest radio station 91.7 The Bounce in Edmonton.

550     For those of you who have not been to Edmonton recently, we have helped revitalize Jasper Avenue with our investment in a state‑of‑the‑art media centre that houses CityTV, Access Media Group and 91.7 The Bounce.  It has become a focal point for local organizations and young Edmontonians.

551     We want to create the same kind of excitement and success here in Calgary.

552     Paul and his team will now take you through our plans for the Calgary radio market and the initiatives that will not only help create success here in Calgary, but also provide support to artists from coast to coast to coast.

553     MR. SKI:  As part of the creation of this application, we spoke to hundreds of Calgarians, ranging from local community, political and business leaders, ethno‑cultural groups, aboriginal groups, to those involved in the independent music scene.  We wanted to know what Calgarians wanted from a new Calgary radio station.

554     Along with our formal research, this direct community input was very important as we crafted our application and we were pleased that in response we received hundreds of supporting interventions.

555     This application is built on our long history of serving communities in western Canada, like Winnipeg and Vancouver where I was the local manager of our stations for over 20 years.

556     We attribute our success in these and other markets across the country to our rejection of cookie‑cutter programming.  Instead, we take a market‑specific approach, where local management drives research and programming to create a service tailored for each individual market.

557     That is why our proposed station for Calgary is, and will be, uniquely suited to this market.  We build it from the ground up.

558     As we drafted this application, we believed it was important to answer three questions.

559     One:  Can the Calgary market support a new radio station?

560     Two:  What are Calgarians missing on the local radio dial?

561     Three:  What kind of CTD initiatives would represent the best benefit to Calgary and the system as a whole.

562     Our response is Energy FM.

563     The word "Energy" not only reflects the Hot Adult Contemporary format, but it also describes Calgary's vibrant and optimistic nature.  One of Canada's fastest growing cities, Calgary has a young and increasingly diverse population.

564     This application was developed to demonstrate CHUM's commitment to both the local Calgary scene and the system as a whole.  The result is a Canadian Talent Development CTD package of $13 million in direct and indirect benefits that will support Canadian artists on a local, regional and national level.

565     As well, it will facilitate the launch of Aboriginal Voices Radio, Canada's first national aboriginal radio network.

566     While I have spoken about our community consultation, Kerry French will now tell you a bit about the qualitative research that helped guide our proposal for Energy FM.

567     Kerry...?

568     MS FRENCH:  The first step in preparing our application was to analyze Calgary's economy to determine whether the market could sustain a new entrant onto the radio landscape without unduly impacting the existing players.

569     As all of the applicants will likely tell you, Calgary is robust by all economic indicators, including the health of local radio.

570     Both census and market research show Calgary to be a cosmopolitan city of over one million which is growing rapidly and drawing people from all over Canada and around the world.

571     Driven by the success of the energy sector, Calgary's diverse economy is firing on all cylinders.  Growth in real GDP is expected to rank second in the country for 2006, while retail sales growth continues to be strong.

572     The Calgary radio market currently consists of 15 commercial stations and is extremely profitable.  In fact, over the last five years profit before interest and taxes, PBIT, has outpaced the national average by 73 percent.

573     Between 2000 and 2004, Calgary radio revenue increased over 31 percent.  The December 2005 trend reports an 8.2 percent increase in the first four months of this broadcast year.  Advertising investment in Calgary radio shows every indication of continued positive growth.

574     Given the strength of both the Calgary economy and healthy radio revenue growth in the market, CHUM believes, and the economic report we commissioned from Communications Management Inc. confirms, licensing a new FM service designed to reflect the youth, energy, vibrancy and rich culture of Calgary will have limited financial impact on the existing radio stations in the market.

575     Our next step in preparing our application was commissioning a research study to determine what, if any, format opportunities exist in Calgary.  We wanted to know what types of music listeners are interested in hearing and whether they currently have access to that music on the radio dial.

576     We tested a number of formats, and what the Calgary radio audience told us very clearly is that despite the number of stations serving the market, they do not have access to the same variety of formats as are present in other large markets.

577     Moreover, the research study prepared by Audience Research International showed that the most under served music choice was Hot AC and that no station was operating in that format.  41 percent of the 18 to 49 year old survey respondents said that they would list to Hot AC.  60 percent of those said it would be their favourite radio station.

578     Our research clearly demonstrates that there is a hole in the radio market in Calgary and that hole is Hot AC.  Energy FM was designed to fill this void and give Calgarians a radio station that reflects their needs, their choices and their city.

579     Rob...?

580     MR. FARINA:  Thanks, Kerry.

581     The hole in the Calgary market that Kerry just outlined is not only a loss for Calgary music fans but for the host of Canadian artists who receive little or no airplay in the market, as many of Canada's top emerging artists fall into the Hot AC format.

582     In data collected from Mediabase for the week of January 19, 2006, we found no significant airplay of current singles from Canadian emerging artists such as The Arcade Fire, Daniel Powter, Tomi Swick, Andy Stochansky, Matthew Barber, Low Millions, Carl Henry, and many, many others.  During this same period these artists were enjoying widespread airplay across Canada.

583     At present, the majority of Calgary's radio landscape is inhabited by Gold‑based music stations.  The Hot AC format is a vibrant music format that targets adult radio listeners who enjoy cutting edge new music.  This format provides a high energy music mix while being relevant to an adult sensibility.

584     One of the keys to this format's success is the musical variety it offers, artists as diverse as Esthero, James Blunt, Coldplay, Feist and Mary J. Blige all fit on a Hot AC format.

585     Research from the Bureau of Broadcast Measurement shows that Hot AC listeners like to attend concerts, live theatre and cultural events.  They like to dine out and they participate in the nightlife their city has to offer.  Energy FM will be the Calgary radio station that speaks directly to that lifestyle.

586     Energy FM will provide listeners with a minimum of 7 hours of spoken word programming weekly, consisting of a mix of news, weather and sports, surveillance information and a cultural calendar feature which will promote the many cultural and community events occurring in and around Calgary.

587     In addition, Energy FM will air a weekly one‑hour show entitled the "CUE Review", standing for "Cultural Urban Essence".  In partnership with the successful Calgary on‑line magazine of the same name, this program will feature local cultural news, a weekly review of Calgary cuisine, club news, music reviews, and coverage of local events, as well as in‑depth interviews with representatives from various cultural groups and musical artists.

588     While we clearly believe there is a hole in the market that is denying Calgarians a great format and Canadian artists a place to be heard, we are also excited about how the proposed benefits in our application, developed in consultation with the independent recording sector, will impact Canadian emerging artists here and across Canada.

589     The CHUM emerging Indie artist initiative is a first in Canadian radio, both in terms of its size and its scope.  The initiative will pool CHUM's resources from across the country and focus them on emerging independent artists to provide airplay, marketing and prominent retail rack space in 10 key markets across the country.

590     Each month CHUM's programmers will choose a song from an emerging independent Canadian artist to be featured on our radio stations in Victoria, Vancouver, Calgary, Winnipeg, London, Toronto, Kitchener, Windsor, Ottawa and Halifax.  Each station will air the song a minimum of 15 times per week for a minimum period of four weeks.  Each time the song plays the artist will be identified as "the hot pick of the month".

591     This concentrated effort by 10 radio stations will ensure that that song makes it onto the Top 40 Hot AC Chart in Canada within one week of play.  This momentum in turn will give independent labels a great story to tell and will provide sufficient leverage to garner airplay on other Hot AC stations across Canada.

592     At this point, we would like to play a short video which shows how Energy FM will bring much needed diversity to Calgary and how this initiative will benefit emerging independent artists across Canada.

‑‑‑ Video presentation / Présentation vidéo

593     MR. FARINA:  It is important to note that CHUM's support does not stop with airplay.  CHUM has partnered with HMV, who will be giving prominent rack space to Indie artists.  HMV stores across Canada will feature a rack branded as the local CHUM station's Hot Indie Rack and will include that month's featured artists, as well as approximately 20 more independent releases from the past year.

594     To promote record sales of the emerging Indie artist of the month, CHUM will create and air 30‑second commercials promoting the artist.  All CHUM radio stations taking part in this initiative will air these commercials free of charge on a minimum of 10 occasions per station each week.

595     That airtime support of this component is currently worth almost $4 million over the course of the license term.

596     The final component of the CHUM emerging Indie artist initiative is a yearly compilation CD of emerging independent Canadian artists.  As part of our agreement with HMV, the CD will be given away free of charge with any purchase of a full‑length Indie CD featured on the CHUM Hot Indie Rack.

597     This CD will allow music fans to discover new Canadian artists while driving sales of independent music.  The CD will also be promoted on the air.

598     The Energy FM audience and listeners to other Hot AC stations want to hear new music, so emerging talent is integral to the success of this format.  We believe that the emerging Indie artist initiative, along with the other music initiatives outlined in our application, will be of great benefit for Calgary and for the Canadian music industry as a whole.

599     Now I will turn it over to Duff to talk about some of our other CTD commitments.

600     MR. ROMAN:  In addition to the substantial music‑related CTD initiatives Rob has discussed, CHUM will make a significant contribution to aboriginal broadcasting through our commitment to over $4.5 million to support Aboriginal Voices Radio.

601     The Commission is aware of CHUM's long‑standing commitment to cultural diversity.  We believe that this support for AVR expresses that commitment in a most tangible way, and will provide diversity not only here in Calgary, but Edmonton, Vancouver and other cities where AVR currently is licensed.

602     In a number of recent licensing decisions, the Commission has stated that support for AVR represents a significant and meaningful contribution to the fulfilment of the objectives of subsection 3(1)(o) of the Broadcasting Act and therefore is beneficial to the broadcasting system as a whole.

603     Most notably, in Decision CRTC 2001‑172, the Commission said that in its view:

".. the development of native broadcasting services across Canada is an endeavour particularly deserving of financial and other assistance, and it encourages all commercial broadcasters to provide such support."

604     In that statement, the Commission called on private broadcasters to step up to the plate and help make AVR a reality.  This initiative answers that call.

605     Given AVR's immediate financial need, CHUM has agreed to accelerate our benefits by providing a first instalment of $645,000 to AVR 90 days from the date of the CRTC's decision to license Energy FM.

606     We believe AVR has now assembled the right team and they have a blueprint for success.  So now it's time to make the dream of a national aboriginal urban radio network a reality.

607     MR. SKI:  Mr. Vice‑Chair, Members of the Commission, we trust in the time that has been allocated to us this morning we have been able to give you a sense of the depth and breath of our commitment to Calgary.  We have proposed a strong local radio station that will fill a programming void and reflect Calgary's energy, diversity and vibrancy, while presenting a series of significant benefits to the system at both the local and national level.

608     We look forward to building on our experience in Edmonton by creating a centre of promotional excellence for local artists and community groups, breathing increased excitement into Calgary's downtown core.

609     We set out early in this process to answer some key questions.  We believe we have demonstrated that:

610     One, the Calgary market is economically robust enough for a new radio station.

611     Two, Calgary is the only major market in Canada without a Hot AC station, denying many Canadian artists much needed airplay.

612     Three, that we have honed our CTD initiatives to advance the development, support and promotion of Canadian independent artists here and across the country, while adding diversity to the system by enabling the launch of AVR.

613     We hope to leave you today having demonstrated that we have answered your call and that Energy FM is the best proposal for you.

614     We thank you for your time and we look forward to answering your questions.

615     Thank you very much.

616     THE CHAIRPERSON:  Thank you, Mr. Ski.

617     We will break at this point and will resume the hearing at 1 o'clock.

618     Thank you.

‑‑‑ Upon recessing at 1155 / Suspension à 1155

‑‑‑ Upon resuming at 1300 / Reprise à 1300

619     THE CHAIRPERSON:  Order, please.  A l'ordre, si'l vous plaît.

620     We will now continue with the CHUM application.  I am asking Mr. Ron Williams to ask the questions.

621     Ron...?

622     COMMISSIONER WILLIAMS:  Good afternoon, CHUM panellists.

623     Mr. Ski, I guess just for ease of questioning I will direct all my questions to you and you can answer them or have they have answered as you wish.

624     MR. SKI:  Thank you.

625     I have a couple of questions from your remarks and half a dozen or so from your supplementary brief, so it will seem like we are moving around in many different directions for the first little while and then I will move into some themed area of questions.  I have a series of questions on four or five themes as well.

626     So I will begin with a question from your opening remarks.

627     On page 4 you talk about the profitability of:

"The Calgary radio market currently consists of 15 commercial stations and is extremely profitable."

628     These are your words:

"In fact, over the last five years, profit before interest and taxes (PBIT) has outpaced the national average by 73%."

629     With your own experience and with your consultants you have researched the Calgary marketplace, and given the financial exuberance currently being experienced in Calgary, how many new stations could this marketplace support, in your opinion?

630     MR. SKI:  Commissioner Williams, we think that the Calgary market could probably handle one in addition to ours, so that would, I guess, be two in total.

631     I think that is more ‑‑ I know there may be more frequencies available, but we believe that in terms of new entrants into the marketplace that there should be some kind of a staggered development of FM stations, just to give everybody a chance to, I guess, solidify their programming, solidify their position in the market.  So we would say two FMs.

632     COMMISSIONER WILLIAMS:  Okay.  Thank you.

633     I am just quoting you again from page 5 now:

"Our research clearly demonstrates that there is a hole in the radio market in Calgary and that hole is Hot AC."

634     What other format holes exist in Calgary?

635     MR. SKI:  Commissioner Williams, I might just refer to our research for that and just maybe give you some idea of how we approach a new market or an application of this nature.

636     Given our experience in radio with CHUM across the country, what we normally do first is we come into the market and we listen to the market itself and listen to find out whether or not there are any formats that seem like they are supposedly no‑brainers, or formats that are missing that are in most markets.

637     That's what we found here.  We found that unlike most major markets across the country there was no Hot AC radio station in the market, so our first thought was that there was a Hot AC opportunity, and that was just anecdotally we figured that was the case, given our experience.

638     Sometimes you can be surprised and when you get into the research part of it that doesn't necessarily confirm your initial thoughts.  In this case, however, it certainly did.

639     We found that there was a tremendous opportunity for Hot AC, more so than some of the other formats that we thought might be available.  I will maybe ask Kerry to get into some of the details of the research that talks about a couple of those formats.

640     MS FRENCH:  Thanks, Paul.

641     When we tested the other formats there were kind of two ways that we look at this.

642     First of all, what is the potential for listeners to consider a particular format type of radio station their favourite radio station.

643     The second part of it looks at whether even though they love that particular type of music are they satisfied with what they are getting on the dial?  Do they identify any given radio station in the market as serving them that music?

644     When we looked at Hot AC we found that 25 percent of the market would consider this kind of music to be their favourite radio station.  That is a pretty big hole.

645     The other part of that is that they didn't identify any particular radio station in the market as giving them the music that would fit on a Hot AC radio station.

646     With the other formats, however, there was some interest in both Country and Modern Rock, but in both of those cases ‑‑ in the case of Country, 92 percent of the respondents said they identified a radio station in the market that played that kind of music.

647     With Modern Rock, 87 percent of them identified a particular radio station as giving them that particular music.

648     In the case of the Hot AC it was less than 50 percent, which is a really low number in this kind of research study.  So that gave us certain confidence that the format that would be most successful would be Hot AC.

649     MR. SKI:  I might mention, too, Commissioner Williams, that what we look for in the research that we do ‑‑ and we have done research since the early '80s and do a considerable amount of it within the CHUM group ‑‑ what we are looking for is not whether or not a person would just listen to the radio station, either somewhat or often.

650     What we are looking for is passion, meaning would this station be their favourite radio station.  Because most radio station's audience is based on a core audience, what we call preferentials or P1s.  So it is the 80:20 rule, 80 percent of that audience ‑‑ that particular audience, sorry, the P1s make up about 80 percent of the tuning.

651     So that is why it is so important to any radio station to have passion, and we find you get the passion by asking someone, not if they would listen to it, necessary just that, but could this radio station or would this radio station be their favourite radio station.  We are asking them to make a commitment.

652     MR. FARINA:  If I could just add to that, which isn't further to the research but the anecdotal data that we got when we talked to the music industry, and as exemplified by the positive letters of support we have in regards to this application from major labels, Indie labels, independent promoters, artists managers and artists, there was a clear consensus that this was a big hole in the Calgary market by the big fact that these formats are incredibly successful in Canada and operate in every major market in this country.

653     COMMISSIONER WILLIAMS:  Okay.  So if the Hot AC was already being served in the Calgary marketplace, what would be the second choice for CHUM, from a format point of view?

654     MR. SKI:  Well, we think the opportunity is so large that would probably be our second choice, too.  But I might ‑‑

‑‑‑ Laughter / Rires

655     MR. SKI:  But I might ask Kerry maybe to comment on that.

656     It is hard for us at this point to say.  I mean, we could give it some thought to figure out what the second opportunity might be, but ‑‑

657     COMMISSIONER WILLIAMS:  If it would be your second choice as well, as you earlier answered, I can live with that..

658     MR. SKI:  I think it might be.  It's just because the opportunity here for Hot AC is so profound I think it might be our first and second choice.  That does happen in certain markets, where certain markets can handle two formats that are somewhat similar.  Here again, unlike most markets, major markets across the country, there isn't even one.

659     COMMISSIONER WILLIAMS:  I want to talk a little bit about your support for aboriginal broadcasting.

660     In your supplementary brief, beginning at page 20 you talk about the significance and importance of the aboriginal communities in Calgary and Alberta generally.  You state that:

"It may be understood in academic and political circles, but for most Calgarians the Calgary Stampede and other cultural events represent the extent of their exposure."

661     Then you quote some census data that:

"The Province of Alberta has the largest concentration of aboriginal peoples in the prairies and the Calgary CMA is home to over 22,000 aboriginal Canadians, representing the third largest identifiable group in the city."

662     This is all information that you provided, building your case to put together the contribution of $4.5 million to Aboriginal Voices Radio over the 7 year licence term.

663     How did you establish the $4.5 million figure?

664     Have you played a part in establishing, I guess, the budget or the implementation of these monies or is this just a sum that's given to AVR for them to manage as they see fit?

665     MR. SKI:  Commissioner Williams, I will ask Duff Roman to give you a little bit more insight into the $4.5 million commitment to AVR.

666     But we found out a while ago that their need was a certain funding for expansion, and certainly into the west, to Calgary, Edmonton and Vancouver.  So the funds that we are talking about here are really for that expansion, transmitter sites and things of that nature.

667     Duff can give you a little bit more detail of the various elements, which I believe is what you are asking about and where those funds will go.

668     MR. ROMAN:  As you can appreciate, Commissioner Williams, we have had an extended conversation with our colleagues at AVR in an attempt to determine, as Paul says, what the funding requirements would be for a specific period of time, i.e. the 7‑year traditional licence term, and in a joint consultation we determined that about $4.5 million would work quite well in the beginning stages of rolling out the services in those areas where they have already received licences.

669     As you know, they have been licensed to Calgary, to Edmonton, to Vancouver, Kitchener, to Ottawa and to Montreal.

670     Now, in the case of this hearing for Calgary, we are committing to spend the first year of the commitment, $645,000, to make that available to them within 90 days of successful approval of this application.  That will go for the launch of Calgary and will make a decent start on the launch of Edmonton.  Then that will continue to be applied in the successive years of the 7‑year commitment.

671     COMMISSIONER WILLIAMS:  Is that $645,000 sufficient to launch Calgary?  Is that the total amount required?

672     MR. ROMAN:  It is more than sufficient for Calgary.  I can give you a general idea of the costs of launching in Calgary.

673     COMMISSIONER WILLIAMS:  Okay.

674     MR. ROMAN:  We think the technical plant, the transmitter, 20 kilowatt transmitter, the combiners, the modules, the standby systems, the installation costs, are in the range of about $350,000.

675     At this point we are not talking about a live studio commitment to Calgary.  We are talking about a way of picking up the AVR network from Toronto.  So those costs we have also worked out, but in the first round they will come as a second phase as we roll out the Calgary, hopefully Edmonton and perhaps some of the other markets.

676     But in addition to that, there would be some installation costs, there would be some maintenance costs, some tower space costs, for another $115,000, $110,000.  That would get the jump‑start of the AVR initiative in that first 90 days.

677     But we are committed to making this project work.  We think that our intentions of getting the money out quickly like this would allow us to see how the rest of the business plan shapes up.

678     We think that there are areas where others will come to the party.  We do not discourage private sponsorships, we don't discourage going to public sources with regard to helping AVR.

679     But we have seen their business plan.  It is very stabilized.  They have had a new Board of Directors, they have some governance issues nailed down, and we are very confident that AVR has been put on a very stable footing and we are prepared to work with them in the long term.

680     COMMISSIONER WILLIAMS:  There have been a lot of questions in industry, and even within our organization, about reasons by AVR hasn't been able to launch in all their licensed marketplaces yet.

681     What, in your company's opinion, is the major reason AVR is not on the air in all of its licensed marketplaces within a year or so of being licensed, or two years?

682     MR. ROMAN:  I think there may be others in these policy areas at our table that might wish to comment, but really I think that there has been somewhat of a piecemeal approach to the needs of AVR.

683     Our discussions with AVR were really about the idea of getting to a long‑term relationship, basically laying out what their needs would be.

684     We have talked with their Chair, Jamie Hill, with Lewis Cardinal on the board, with their consultants, and what we think we have here is a realistic plan to get them moving quickly in the first instance with Calgary, but then as the other annual instalments of $645,000 come on board, we are very confident that we can get the networked stations out.

685     Local service costs a little bit more money and will be part of a second phase.  But I think that, probably in all good intentions, various broadcasters have worked with AVR and I think the approach hasn't been as holistic and I don't think in a sense that there has been this desire to form a true partnership where we are open with each other.

686     We have many consultations with AVR in an attempt to really make this work this time, because we realized the history.

687     So from that aspect, I think ‑‑ and we may get into it later ‑‑ just as we have taken a very large, global holistic approach to independent artist initiatives, we felt with AVR we would do a similar approach.  We think that that will make a big difference.

688     We bring a lot of expertise, a lot of experience in broadcasting, and we put that on the table as well as the dollars.

689     COMMISSIONER WILLIAMS:  Is this contribution in the nature of cash or is it cash and consulting services or cash and consulting services and equipment?

690     What is the nature of it and what types of controls or strings do you have to the cash to make sure it is allocated in such a way as this network could get established in the manner that you envision?

691     MR. ROMAN:  Well, certainly for the initial commitment of $645,000 we do have a letter that we will file with the Commission in terms of our understanding of the arrangement.  That is the only agreement we have at this time.

692     But from a standpoint of where this commitment will be spent and how it will be spent, we have asked AVR to give us their needs.  They have provided us essentially with some of the budget figures that I presented to you.  We think that they basically have organized themselves very well, and from that standpoint I think we are in pretty good shape.

693     MR. SKI:  Commissioner Williams, if I could, the $4.5 million is a cash contribution.

694     COMMISSIONER WILLIAMS:  Cash contribution. okay.

695     The AVR management team, I guess what you are telling us, is you are convinced that they are experienced and capable and they should be able to launch if they give financial assistance such as what you are proposing?

696     MR. ROMAN:  Yes, we think so.  They have a very experienced radio executive in Roy Hennessy who is managing their day‑to‑day operations.  We certainly know that at the board level with Jamie Hill and some of the consultants that they have on board that they are very serious about it.

697     And we are very impressed, by the way, with how they have managed to operate with some very restrictive circumstances in the Toronto area.  We have been to their studios.  There seems to be a real "can‑do" attitude and they certainly have the attitude that they will not be defeated in this area.  We are very impressed with that.

698     We think the people who have been exposed to them are also rallying around the idea that we should have an AVR national broadcasting system in this country and we feel confident that they have that in place.

699     COMMISSIONER WILLIAMS:  Okay.  Moving a little ways along from there, in your supplementary brief you talked about CHUM:

"...being prepared to commit that you would specifically hire an aboriginal Canadian for an on‑air position for your new radio station in Calgary and that CHUM would work with AVR to mentor young aboriginal Canadians who are interested in such positions in broadcasting."

700     What level of discussions have you had with AVR and do you anticipate any difficulty in finding people of aboriginal ancestry that are trained and able to work in a large CHUM radio station in Calgary?

701     MR. ROMAN:  No, I don't think so.  I think that given the opportunity to be trained and to work within a professional system like CHUM I think is something to be aspired to.  I really don't feel that there will be any difficulty with that.  We made that commitment.

702     A lot of our discussion has been about the intangibles.  We are not putting a list of indirect benefits here, as Paul has mentioned.  The $4.515 million is cash, but a lot of our discussions about whether or not there may be a way of sharing facilities for instance in those markets where we have up‑and‑running radio stations, would we lend assistance with technical support for instance, would we be prepared to take on interns and part‑timers and other staff who could be developed into progressively better and better situations.

703     That seems to be as attractive to them in a sense as perhaps the cash allotments.

704     COMMISSIONER WILLIAMS:  Okay.

705     In your supplementary brief again you refer to:

"Senior CHUM managers are founding and active members of the Strategic Alliance of Broadcasters for Aboriginal Reflection known as SABAR."

706     Could you please describe some of the work that this group does and has been done in this area in the last couple of years?

707     MR. SKI:  I might start, Commissioner Williams, and have Duff add a little bit.

708     As you may know, we are a founding member of the Strategic Alliance for Broadcasters and Aboriginal Reflection and Sarah Crawford is one of the people who sits on that particular board.

709     A number of the things that we look at is certainly on our reflection, which is important, and I know that it is somewhat more difficult with stations that are mature stations in the market where it is a little bit more challenging, but certainly with our new stations that we have, like The Bounce for instance in Edmonton, they have become quite diverse.

710     One of the full‑time employees is aboriginal and I'm proud to say that nine of our 25 staff members are visible minorities.  That is about 36 percent.  The on‑air staff, four of the nine are visible minorities and 75 percent of the staff are female.  So we are quite proud of that record, especially of new stations that are in a start‑up phase.

711     MR. ROMAN:  I just only add that we are not new to the development of relationships with aboriginal broadcasters.  Just for the record, in the late '60s CHUM Radio was the first private organization to partner with aboriginal radio in Tuktoyaktuk.

712     COMMISSIONER WILLIAMS:  I actually lived in the Mackenzie Delta within 60 miles of that radio station when you helped them, yes..

713     MR. ROMAN:  I think you remember Radiotuk it was called.

714     COMMISSIONER WILLIAMS:  Or TBS.

715     MR. ROMAN:  Yes, sir.

716     COMMISSIONER WILLIAMS:  Tuk Broadcasting Society or something.

717     Let's talk about Calgary now.

718     The Calgary Cafe series.  You talk about:

"... showcasing talent staged in prominent downtown locations free of charge."

719     You would:

"... be staging five lunchtime concerts in several downtown locations."

720     What locations in Calgary have you identified as being a good venue for this Calgary Cafe series?

721     MR. FARINA:  What we thought, Commissioner, would be that as our audience are young adult and predominantly females that it would be important that we be able to cover the business district and not the same location all the time but a roaming location.

722     If I could correct the record, it is actually 12 events which happen each Friday over the course of the months of June, July ‑‑

723     COMMISSIONER WILLIAMS:  So that is 12 rather than the five stated in your supplementary brief?

724     MR. FARINA:  It is 12, yes.

725     The events feature Alberta artists, that could be a combination of signed and unsigned.  To support the events, the artists are going to be invited into the radio station morning shows to be able to perform which, as everybody is aware, is peak tuning for radio, so a great way to get exposure.

726     The events also allow us to chat up the entire week about the performance to engage listeners to come down and see, which in turn provides great promotion for the artist.

727     MR. SKI:  Commissioner Williams, one of the people that we talked to when we were putting together the application was Richard White, who is head of the Downtown Merchant's Association for Calgary ‑‑ like we have done I guess in other markets like Edmonton in particular, trying to revitalize Jasper Avenue ‑‑ he certainly felt that the Cafe series and other initiatives that we have that would bring local live talent to downtown Calgary would be certainly an added bonus to the city.

728     COMMISSIONER WILLIAMS:  Okay.

729     You indicate your Hot AC would target a broad 25 to 44 year old listener.

730     These next few questions ‑‑ maybe I will just give you a bit of preamble and then I will go back to that ‑‑ is to help us gain a better understanding of your proposed demographic and how it differs from the demographic proposed by Harvard, and also to examine why you believe your proposed format would provide the best programming diversity to the 25 to 44 age group.

731     The first question is:  You indicate your Hot AC would target a broad 25 to 44 year old listener.  However, format qualifiers to just Hot generally don't denote from a programming perspective a more focused approach to attracting audience.

732     As a Hot AC, would your programming and music mix target the younger 25 to 35 year old segment of the broadly defined market or would it be skewed to attract the older 35 to 44 segment?

733     I guess what I'm trying to get is, I'm trying to get a feel for what your core demographic target it.

734     MR. SKI:  Certainly, Commissioner Williams, I will start then have Kerry and Rob jump in.

735     I think, first of all, the term "Hot" is a term that we use for a lot of things I guess, and one of them is radio formats, Hot AC.  But today most radio formats, given the fragmentation that we have in most markets, need to be focused, some of them more laser focused than others.  So while Hot AC may seem to be more focused in one particular area, there is a sense of focus with all formats now.  They have to be.

736     Not only with, as I say, the local fragmentation in the marketplace, but also the other audio technologies that we are having to deal with, certainly the ones we currently have to deal with and certain impending technologies.

737     So we take great pride in making sure that when we research a format that we get good and valuable information.  There are sort of three parts of it.

738     One is doing the research itself, which is the questionnaire development.  We see that as 25 percent of the process.

739     The next 25 percent of it is the interpretation.

740     Those two elements are obviously very important, but 50 percent of that entire process is really the execution of the format.  If we miss on any of those we will probably miss somewhat or the other, but the big miss can be on the execution part.

741     Let me let Kerry talk a little bit about the demo and the broadness or the focus of that that came out of the research.

742     MS FRENCH:  Thanks, Paul.

743     We don't necessarily define what the target of the radio station is.  The listeners actually define it.  When we did the research study, it came back that the core would be 25 to 34.  There would also be a reasonably large audience in 18 to 24 and then again on the other side in 35 to 44.  Those are the people who told us they would listen to this radio station and it would be their favourite radio station.

744     So we are not really deciding that we are going to pick that part of it.  We are hopefully going to get some partisans in each of those demos.

745     COMMISSIONER WILLIAMS:  So it is not a specific focus on the younger listeners or the older listeners, it is ‑‑

746     MS FRENCH:  No, it is actually the audience that defines it for us.

747     When you look at BBM numbers, in Hot AC formats across the country 49 percent of listeners are in that 25 to 44 area and 63 percent are in the 18 to 49 area.  When you look at other types of formats, for example the Modern Rock format, it is 56 percent 12 to 34, so it is a much younger format.

748     The stat that differentiates them most specifically is that 60 percent of the tuning to Hot AC stations is by females, whereas 68 percent of the tuning to modern rock stations comes from males.

749     So the actual age demos overlap a bit, but certainly they are very different in their taste.

750     MR. SKI:  Commissioner Williams, too we have to remember that a format normally is a group of tastes inside a demographic.  It is a group of tastes inside that demo, whether it is 25‑34 or whether it is 25‑44.  Certainly most of us on this panel think that is fairly young, but maybe Rob, who programs a Hot AC radio station, one of the top ones in the country, might comment on the target audience.

751     MR. FARINA:  Yes.  The narrow target of the radio station ‑‑ and although there are variances in market‑to‑market ‑‑ is generally 25 to 34 for this format and it is predominantly female skewed.

752     You mentioned Harvard.  In their application they make several comparisons to CFNY in Toronto.  The thing to keep in mind with the Toronto market is, unlike the Calgary market there is an album‑oriented radio station that playlists a segment of the Alternative or New Rock music.

753     Also, further to what Kerry said, I think another differentiation with the demo comes down to sustainability.  We run an Alternative Rock station in Windsor and based on what we are seeing in the new launches in the markets of Ottawa and Edmonton, it is a very tough demo to sell to advertisers as opposed to the 25 to 34 target which Toronto's example where we run a stand‑alone FM with CHUM FM and we are very successful with that.

754     COMMISSIONER WILLIAMS:  Could you tell us, who is this demographic listening to now.  Are they tuned into CIBK offering CHR or CHFM offering an AC, or Classic Rock or AOR or Classic Hits?  Who is this demographic being entertained by now?

755     MR. SKI:  Commissioner Williams, I will let Kerry give you some of the exact details, but maybe just a bit of perspective.

756     If there is a lack of a particular format, especially one that has this kind of opportunity in a market, a couple of things happen.

757     One is that radio stations in the market can be broader in their scope.  So a station that might be a CHR station for instance could be a little bit broader, because there is really nobody, if I could say, on top of them in that particular format.  So they can be broad in their scope to begin with.

758     Are they super serving that Hot AC core audience?  No, they are not.  Normally a great deal of the listening that they have to that station won't be extremely significant.  People will tune into the station, but they won't spend a lot of time listening to that radio station because of the fact that they are not getting enough of their favourite music enough of the time, but it does allow those stations that in a market where there is the lack of this kind of a format to get additional tuning to their station because there isn't an alternative.

759     Kerry...?

760     MS FRENCH:  Thanks, Paul.

761     That core demo of female 25 to 34 in Calgary, they are splitting their tuning basically between five radio stations.  The number one radio station, with 21.7 per cent market share ‑‑ that is in the latest BBM S4 survey, which is the equivalent of a regular fall survey ‑‑ is JACK FM, which is a Classic Hits radio station, a very popular station, but generally Classic Hits are slightly more male‑based and they are Rock‑based and Gold‑based radio stations.  So it is unusual to have this core demo listen to Classic Hits as their number one station.

762     They also tune to the Vibe, which is the Top 40 urban station, CHFM, which is a softer, more mainstream version of AC.  The Country station, Country 105, and another Rock station .

763     So Energy FM would actually take tuning away from all five of those radio stations because we would be giving them the kind of music that they really do want to hear.

764     COMMISSIONER WILLIAMS:  To what degree do you think you would draw away from each of the existing stations?

765     MS FRENCH:  Well, Commissioner Williams, because the tuning is so split I don't think we would impact any one particular radio station to any great extent.  Our estimate suggests that between 5 and 7 percent of their tuning would move over to our radio station because we would be supplying the kind of music that these people want to hear.  So it wouldn't be a terrific impact on any one radio station.

766     MR. SKI:  I think too, if I could add, we should remember that the people who are tuning to these stations right now, although they may be tuning to the stations, they are not spending a great deal of time with them, just because they are not fulfilled from that particular experience.

767     It is really by default, I would say, that they are listening to these stations or they are listening to their own CD collections or their iPod or whatever, because they are just not being fulfilled by any one of those particular stations.  We see this a lot where there is a tremendous spread across a spectrum of radio stations.  That normally happens when there is not one station that is fulfilling that particular need.

768     MS FRENCH:  If I can just add another point?

769     In our research the people who identify themselves as Hot AC partisans or people who would have a Hot AC radio station as their favourite radio station, in Calgary they are listening to between 2.5 and 3.5 hours of radio less than partisans to other formats.  We believe the reason for that is that they don't have the choice of radio station that they want to hear on the dial.

770     MR. SKI:  I think, too, on page 4 of our research project is where those particular numbers are that Kerry had referenced.  And also the fact that since there is no one station that dominates their listening, they are not listening for as many hours.  That was the point I was trying to make.  But that is quantified on page 4 of the ARI study.

771     COMMISSIONER WILLIAMS:  Thank you.

772     Harvard is also applying to operate an Alternative Rock music format which, like your Hot AC, would provide a service to the 25 to 34 year old young adult listener.

773     Why, in your opinion, would your Hot AC format proposal be a better choice than Harvard's alternative rock proposal to provide programming diversity to the Calgary marketplace, and specifically to the 25 to 34 year old young adult listener?

774     MR. ROMAN:  There are a couple of reasons.

775     First off, when you look at the Calgary market there are three radio stations in the Rock genre, a Classic Hits station, which is predominantly Classic Rock based, a Classic Rock station, and an album orientated Rock station, whereas there is no radio station targeting a young adult female audience directly in the market.

776     Further to that, I refer to later and I see in several instances in the Harvard applications comparisons to CFNY with their demographics.

777     If I could be so bold, I think it is a little bit different to compare CFNY with any other Modern Rock in Canada.  CFNY has a huge history of being an Alternative music station operating since the '70s, and because of that they are able to build a heritage with listeners, as opposed to our experience in Windsor and what we are seeing in markets like Ottawa and Edmonton with the Alt Rock stations that have launched there.

778     It is a very male‑based and a very 12 to 24 format.  So we actually don't see any sharing of audiences between the two.

779     Further to that, I took a look at a comparison of titles between Hot ACs and CFNY, that being the real comparative station in the Harvard application, and out of 176 titles only eight of the same songs appeared on both of those playlists, that being the Hot AC and Alternative Rock.

780     COMMISSIONER WILLIAMS:  I didn't quite get why you feel that your offering would be better than theirs.

781     MR. FARINA:  I feel our offering will be better than theirs because there is a complete void in the market now for this format.

782     COMMISSIONER WILLIAMS:  Okay.  Because they are not being served.

783     MR. FARINA:  The format has had a wider appeal in terms of the amount of people who are drawn to a Hot AC format versus the amount of people who are traditionally drawn to an Alternative Rock format.

784     MR. SKI:  Rob may want to comment on the diversity of artist representation, that again you are not getting in this market the number of artists that are Hot AC artists that really aren't being played in this market in Calgary at the present time.

785     Rob...?

786     MR. FARINA:  Thanks, Paul.

787     Hot AC is also referred to as Adult CHR.  The reason it is is because it is an audience that has grown up listening to teen radio stations, but with people living longer, leading more active lives, people still want to be plugged into what is new and what is happening, but obviously within an adult sensibility.

788     One of the things about the Hot AC format that allows it to be as popular is because the music is so diverse.  It borrows from Adult Rock, Pop, urban, Soft Hits, and not only does the radio station contain great diversity in the music, but I think because of that it is why, in the audience make‑up that our radio stations attract, it really attracts a real diverse audience make‑up, obviously very centred around a predominantly female and predominantly 24 to 34 skew.

789     COMMISSIONER WILLIAMS:  Okay.

790     Can we talk a little bit about your local programming initiatives of spoken word and news.

791     In response to some of our deficiency questions, you indicated that you would provide around 10 hours per week of local reflections spoken word programming, which would include 3.5 hours devoted to news, one hour to related surveillance programming, and earlier I noted that a number of incumbent stations already attract a high level of tuning in this age demographic.

792     Perhaps you could elaborate on what would differentiate your treatment of local news from that being offered by the incumbent stations that are currently attracting your target listeners?

793     MR. SKI:  Commissioner Williams, I will have Rob give you a bit of a perspective of the audience itself, I think, which would help to give you some comfort in the kind of news, the kind of information, the kind of spoken word that we are going to be offering.

794     I should mention, too, that when CHUM builds a radio station we build it from the ground up.  So we go to those audiences to determine what type of information they require, what are their ‑‑ I guess what are their information needs.  Because the last thing that we want to do is duplicate what someone else is doing.  There are certain news stories you can only do so many ways.

795     But, by and large, the other information parts of our application, a lot of which refer to the artists, et cetera, in certain types of the programs would be different than what other stations are currently doing, but to the point that we will get feedback from the community and try to reflect what is happening in Calgary, mirror the community and mirror what the listeners to a Hot AC format want to hear.

796     Rob?...

797     COMMISSIONER WILLIAMS:  As part of that answer maybe if you can elaborate a little bit on what you have just said and how your approach would play an important role in attracting listeners to your new station, your approach to the spoken word.

798     MR. FARINA:  Gladly.

799     MR SKI:  Certainly.

800     MR. FARINA:  Commissioner, if you could indulge me for a second, there were a couple of omissions in the deficiencies.

801     We want to clarify that the 8:30 a.m. newscast on weekdays was omitted, which adds an additional 25 minutes of news, and there was a mathematical error in the calculation of weather and traffic which should have read an hour and 40 minutes.

802     So the breakdown ‑‑ and we will obviously supply this ‑‑ there are over four hours of minutes of news, weather and traffic accounts, for an hour and 38 minutes Monday to Sunday; there is a cultural calendar that airs 5 times a day, 7 days a week; and a one hour weekly cultural affairs show, bringing the total spoken word to 7 hours, 15 minutes and 30 seconds.

803     Which does not include, obviously, what we refer to as interstitial talk or DJ banter.  Part of that is in our emerging Indie artist initiative.  With our Calgary station, there is a minute of, let's call it foreground programming for lack of a better term, which gives the DJs an opportunity to kind of tell the story about the artist and familiarize the audience with the artist.

804     In terms of differentiation of our spoken word in the market, because there is no radio station targeting that young adult predominantly female audience, there is really no outlet that is relevant to the demographic in terms of super serving them.  As well, because the format is inherently diverse, covering many musical genres, as I said, the audience is equally as diverse, both culturally and socially.

805     So the types of stories we would cover more in depth in our news and information programming and long form programming bring more diversity to the market.  Listeners to this format would be more interested in information about dating and relationship issues, child rearing, family events, social issues, health issues, wellness, beauty and fashion.

806     I think we are also bringing to the market the only daily feature solely focused on Calgary cultural events and a weekly one‑hour show dedicated specifically to cultural issues in Calgary.

807     COMMISSIONER WILLIAMS:  How many programming staff would be employed by the station, including your dedicated news staff and on‑air talent?

808     In asking this question, I'm trying to get a feel for the amount of time you would offer live‑to‑air programming rather than voice‑tracked prerecorded programming.

809     MR: SKI:  Commissioner Williams, the total number of staff is 27.  That is a number that is similar to our Edmonton station, for instance, and similar to a number of our standalone FM stations.  Of that number, 11 of those staff come under the programming heading of program director, announcers, et cetera, and three of the people ‑‑ three additional on top of the 11 ‑‑ are news people.  There is a news director and two news people.

810     So the total programming staff in programming itself and in news is a total of 14.

811     COMMISSIONER WILLIAMS:  Would there be any synergies with other media properties you have in Calgary?

812     MR. SKI:  There would be some.

813     I didn't really answer the other part of your question and I apologize for that, but we expect that this station will be live 24/7.  There might be vacations obviously and other sickness, et cetera, that may require some voice tracking, and if there is any voice tracking that voice tracking would be done locally here in Calgary.

814     But one of the things that we think is really important for us with new technologies coming along, is the fact that if radio is going to sustain its position that it has to be live and local and relevant.

815     So that means that we have to also be bringing people along within our industry.  One of the ways to do that is to obviously have live announcers during time periods where you might not normally have them.  That would be the all night show, which is actually where I started and I think a few on this panel may have started on the all night show, and if there hadn't of been an all night show we might have had a difficult time starting in mornings.  Fortunately enough, there was that opportunity for us.

816     So we believe that to help to insulate ourselves in the future from these other technologies that we have to bring people along.  We have to do a little bit more mentoring, a little bit more training than maybe we have done in the past.  That is going to become much more important than maybe it has been with the increased fragmentation.

817     MR. FARINA:  Maybe I could add further to that in terms of the synergies.

818     One of the things that would work well, not only for CHUM but I think for the market as a whole, is now with the potential of a Hot AC radio station in the market, it gives record companies reason to fund artist promotional trips into the market, which would help other stations in the market that may be supporting the artist.

819     Our Edmonton station and the Vibe in Calgary, we probably share about 10 to 15 percent of the titles, so maybe those artists are artists that record labels may be able to rationalize the value of bringing artists into the market for promotional tours.

820     As well as that, there is a real ‑‑ because there is currently no outlet in the market for concerts and events and bringing these listeners in, that is one of the things that we may be able to bring to the table by having this outlet in Calgary.

821     COMMISSIONER WILLIAMS:  I had a question prepared earlier here that was to ask if you could elaborate on why your projected programming expenses are so much higher than some of the other applicants and they were producing spoken word programming, but I think your clarification and some of the errors in your spoken word programming may preempt that question.

822     MR. SKI:  Certainly.  If I could add, we have always believed ‑‑ and I think the ratings show this ‑‑ that it is very important for us to invest in programming.  We prefer to go the quality route rather than the quantity route and quality tends to cost a little bit more than just quantity.

823     I mean it's going to be, as I say, not to repeat myself, but the local elements of this radio station, or any others, are really going to be what differentiates us from other impending audio technologies.  We believe that this is more an investment than it is a cost.

824     COMMISSIONER WILLIAMS:  Okay.  I am going to now move into an area regarding your proposed initiatives.

825     You indicate that you will devote $62,000 a year to support the emerging Indie CD series.

826     Could you provide details on how these artists will be chosen?

827     I see no mention of a specific Calgary talent or Alberta talent search in your plans.  Are the artists to be featured on the CD chosen as part of another CHUM CTD initiative, either corporate or specific to an individual station?

828     How will Calgary artists be represented in this project?

829     MR. FARINA:  Thank you.

830     If I could maybe answer your question, Commissioner, by taking a step back and explaining how the artists are going to be chosen month‑to‑month to be the emerging Indie artist of the month.

831     COMMISSIONER WILLIAMS:  Yes.

832     MR. FARINA:  If we take it to ground level of our local radio stations, each week our program director and music director and some of the announce staff have a weekly meeting where they review the playlist to find out what has become tired on the playlist or what record isn't working out on the playlist or getting a lot of complaints, and through that we realize how many slots we have.

833     Then we look at listener research, which we do weekly, we look at national charts, we listen to all the music, and based on all the facts at hand we make the best choice of which record goes on to the playlist.

834     The emerging Indie artist initiative works sort of the same way, except it is on a national level.  So the committee is chaired by our Calgary program director, who has a committee consisting of representation from each of the 10 radio stations participating.

835     CHUM is working on building a website infrastructure to be a housing depot for Indie artists so we could put all the MP3s on it.  Each of the program directors or music directors are required to go through all the material and, further, we have an option that we open up to our listeners that are the taste‑makers of the audience.

836     In every radio station there is a segment of the audience that are hyper consumers of music and want to be very involved in the selection of music and we invite them throughout the month, we send out e‑mail invites for them to come onto the site, review the titles and vote on them for us.

837     So once we get all that information, the program director in Calgary chair's a call and we do a democratic vote on which record basically gets the highest amount of votes and is the best suited to be the eligible artist of that month.

838     For the Indie CD, we put a lot of thought in this and what we thought was, rather than put all 12 of the previous years' artists on the CD, it may be a good way to build cache for the CD by putting half of the artists we had already supported that we have helped build a name brand for and allow another six new artists that may not have made it into the Indie artist of the month but are still great pieces of music and eligible for exposure, and obviously may have, you know, made it onto the playlists of our radio stations regardless.

839     The CD is chaired and overseen by our Calgary program director to ensure that a predominance of the CD will feature Calgary and Alberta recording artists.

840     The other thing we did with this CD is, we have noticed that a lot of the times when these CD samplers are done, because they are given away free the artist signs away their royalties for use of the CD.

841     We know we are dealing with emerging artists and we know the challenges that emerging artists face in Canada, so we made sure that what we built into the cost was actually not only the publishing royalties but artist and record royalties.

842     Again, I want to reiterate that these CDs are given free of charge at HMVs across Canada with any purchase of a full‑length Canadian independent CD.

843     COMMISSIONER WILLIAMS:  How many of these CDs are you making?

844     MR. FARINA:  Fifteen thousand.

845     COMMISSIONER WILLIAMS:  Is that a sufficient number to meet that type of objective of giving them away with each purchase?

846     MR. FARINA:  When you look at the record sales in Canada in the time of year that we are planning to do this, which is going to be around the January/February mark, it seems to be a healthy amount.  Obviously, this is something that we may be able to re‑look at.

847     Part of the reason of having so few is to create a real demand for them.  You know, it is almost better to have ‑‑

848     COMMISSIONER WILLIAMS:  Not enough.

849     MR. FARINA:  ‑‑ too few than too many.  It diminishes the value of the actual product.

850     COMMISSIONER WILLIAMS:  With respect to publishing royalties and artist record royalties, are you talking about money that is directed to SOCAN and CMRRA or some other rights association?

851     MR. SKI:  Commissioner Williams, I will ask Kevin Goldstein to comment.

852     MR. KEVIN GOLDSTEIN:  Thanks, Paul.

853     Generally when you are producing a CD you need to clear the sync right or the mechanical right.  Generally there is publishing royalties involved as well as royalties to the label or performer.

854     As Rob indicated, there is an allocation in there to pay for that.  Usually when you are dealing with an independent artist they tend to control their own copyright, but we would clear all necessary rights.

855     COMMISSIONER WILLIAMS:  Yes.  You provided us with a detailed cost breakdown of the $62,000.  There was $27,000 for packaging and $15,000 for publishing and artist record royalties, and $5,000 for marketing material, for a total of $62,000.

856     Will contributing Indie artists benefit financially from participating in this project and, if so, how?

857     How will they benefit?

858     MR. FARINA:  On a couple of different levels, Commissioner.

859     First of all is promotion of the Indie Cd series.  They will benefit through promotional airtime on the air promoting the series.

860     As well, the launch of the series involves a live in‑store remote in an HMV.  That is one of the things that we are working on with HMV now.

861     They will also benefit financially.  The use of their work will be paid for.

862     I think, you know, the most important benefit of all is the ability to get their music on to people and turn people on to their music.

863     COMMISSIONER WILLIAMS:  Will they be participating in the Calgary Cafe series, for example, or some of them?

864     MR. FARINA:  The Calgary Cafe series is actually meant to be for unsigned artists and developing artists more at a grassroots level.  We imagine that some of the artists from the ‑‑

865     COMMISSIONER WILLIAMS:  So they would grow from there.

866     MR. FARINA:  Absolutely.

867     One of things with the Calgary Cafe series is it is really specific to Calgary artists that we want to showcase and promote here.

868     COMMISSIONER WILLIAMS:  Okay.

869     Back to your budget breakdown on the $62,000 for this initiative.

870     Regarding packaging, does this $27,000 include manufacturing and mastering?

871     MR. FARINA:  Yes, Commissioner.

872     COMMISSIONER WILLIAMS:  Regarding the marketing material allocation of $5,000, will it be paid out to the third party and what type of marketing material are we talking about?

873     I ask, because on page 16 of your supplementary brief you state that:

"The CD will be promoted on‑air as part of the marketing and promotion initiative discussed above."

874     MR. FARINA:  In our agreement with HMV, we have agreed that because each market is going to be customized with the local CHUM station's logo that we would handle the price of making those placards that sit on top of the racks.  So this would be specific to this initiative to pay for the placards across Canada, and also for postering inside the HMV locations.

875     MR. SKI:  Commissioner Williams, these are third party costs.  What you referred to in the supplementary brief, which is part of the advertising campaign or the additional $4 million, obviously is what is on the air and what we calculate the value of the commercials on all of our radio stations.  But the marketing material, no, is a third party cost.

876     MR. FARINA:  Just to clarify that a little further, the $4 million that Paul just alluded to, that is directly to the emerging Indie artist of the month.  We won't be using this airtime to promote the CD as part of the other initiative, because obviously the artist of that month would be shortchanged.

877     COMMISSIONER WILLIAMS:  Okay.

878     You state that you will give $105,000 or $15,000 a year to Alberta's own independent music festival.

879     Could you please provide details on how these funds will be directed?

880     What type of agreement do you have with the Festival that will ensure that the funds are used as you direct?  Has the Festival agreed to this in writing?

881     And in the event the Festival is not willing to sign on, are you willing to redirect these funds?

882     MR. SKI:  Commissioner Williams, I will have Duff give you some insight into that.

883     Certainly if these funds aren't used as directed by CHUM and they are not eligible CTD benefits, we would of course come up with another plan.

884     We don't think that will be the case because the Alberta Showcase has been really a great part of certainly this province, just down the road at Sylvan Lake for quite some time, and we are pretty excited about that particular initiative.

885     Duff will give you a bit more information.

886     MR. ROMAN:  Commissioner Williams, are you talking about the Festival or about the Alberta Showcase?

887     COMMISSIONER WILLIAMS:  Alberta's Own Indie Music Festival.  This is the one that was at the Benalto Rodeo Fairgrounds in Sylvan Lake.

888     MR. FARINA:  I can answer that, Commissioner.

889     That Festival is now in its third year and has been growing quickly.  One of the problems the organizers have is actually handling, because of the popularity of the Festival, paying for the production of the Festival.  So our funds are going directly to the staging and production of the show.

890     COMMISSIONER WILLIAMS:  Why I am asking these questions is in a deficiency you stated that you would forward the funds once you agreed in writing that the funds would be used as directed by CHUM.

891     Has a written agreement been developed?

892     MR. FARINA:  We are in the process of drafting a written agreement with Alberta's Own, and we have every confidence in the world that we will be able to reach that agreement with them.

893     MR. SKI:  For many years, Commissioner Williams, CHUM has done things on a handshake.

894     COMMISSIONER WILLIAMS:  Yes.

895     MR. SKI:  And I know that doesn't always work.

896     Certainly we initially have done that, and we do have agreements in principle.  Certainly we will have more formal documents in due course.

897     COMMISSIONER WILLIAMS:  You state that you will give $200,000 a year to the Canadian Academy of Recording Arts and Sciences' ‑‑ CARAS ‑‑ music education program.

898     Could you provide details on how these funds would be directed, the type of agreement that you have with CARAS to ensure, again, that these funds are used as you direct.

899     Has CARAS agreed in writing?

900     It is basically a similar question, just with a different group.

901     MR. SKI:  Duff?

902     MR. ROMAN:  Yes.  As probably everyone is aware, CARAS is the Canadian Academy of Recording Arts and Sciences, the same wonderful folks who give us one of the best shows on television, The Junos.  We are very pleased to be in ‑‑

903     COMMISSIONER WILLIAMS:  Which I understand sold out within a couple of days.

904     MR. ROMAN:  Yes, the hottest ticket in Atlantic Canada, without a doubt.

905     Will we see you there, Mr. Commissioner?

906     COMMISSIONER WILLIAMS:  You might.

907     MR. ROMAN:  That's good.

908     We will be providing $200,000 annually, for a total of $1,400,000, to CARAS in support of their music education program.  That also goes under the name "BAND AID".  That will go toward music seminars, toward the purchase of musical instruments and to facilitate the in‑person appearance and lectures of some of Canada's brightest musical stars.

909     We are very excited that in the past Susan Aglukark, Keshia Chanté, Jan Arden, Remy Shand have all participated in this program.

910     You also asked about whether or not we had an agreement.  We have a draft agreement, sir, and we expect it to be signed shortly.

911     We also maintain a very strong relationship over the years with CARAS.  I have been a past director.  I believe Rob might in fact be involved with CARAS today.

912     And we have a senior CHUM Limited executive, Sarah Crawford, who is on the board of CARAS.

913     So we will make sure that that $200,000 a year is spent correctly.

914     COMMISSIONER WILLIAMS:  All right.

915     You indicated that you would give $645,000 a year, or a little over $4.5 million over seven years, to Aboriginal Voices Radio.

916     In your deficiency response you state that whether the Commission defines this contribution as a contribution to talent development per se or another type of acceptable initiative, you intend to honour this commitment.

917     Traditionally, although the Commission has accepted AVR funding for start‑up and infrastructure costs as a benefit to the broadcasting system, this type of funding has not qualified as eligible CTD.

918     I note you intend to honour this commitment whether or not it is deemed eligible CTD.  However, if disqualified, would your overall CTD package be reduced by $4.5 million or would CHUM redirect its funding to eligible CTD initiatives on top of maintaining its AVRN commitment as a benefit to the broadcasting system?

919     MR. SKI:  Commissioner Williams, we are hoping that the Commission will see this as beneficial to the broadcasting system as a whole.  Certainly we know the Commission has encouraged this type of development and use of funds.

920     To answer your question, no, we would not increase our CTD by $4.5 million.  The CTD amount would remain what it is, and we would still contribute that amount of $4.5 million.

921     COMMISSIONER WILLIAMS:  The CTD would remain at approximately $4.5 million and you would have this additional $4.5 million AVR initiative.

922     MR. SKI:  That's correct.

923     COMMISSIONER WILLIAMS:  Further to your stated commitment to honour your funding to AVR, whether eligible for CTD or not, I would draw your attention to Broadcasting Public Notice CRTC 2005‑118.  Published as part of this notice is an application by AVR for an extension of time limit to commence the operation of a number of its native Type B radio programming undertakings and its transmitters in various locations across Canada.

924     The Commission may or may not decide to grant an extension of time to AVR, especially in light of the numerous time extensions already requested by AVR and approved by the Commission.

925     In the event that an extension time is not granted to AVRN, how would CHUM respond?  Would you redirect the $4.5 million in funding to some other type of initiative; and if so, what type of initiative would you be looking at?

926     MR. SKI:  Well, we are certainly hoping that that is not the case, obviously.  As Duff mentioned earlier, we have had these ongoing discussions with AVR and we are quite optimistic now that they have a fairly good plan.

927     Duff may want to comment further on it.

928     If that should happen, unfortunately, as you say, we would redirect those funds, the $4.5 million, to eligible CTD.

929     COMMISSIONER WILLIAMS:  Do you have any possible eligible CTD targets that are on the list that you are willing to share with us now?  Or maybe you haven't considered that.

930     MR. SKI:  We haven't considered that.  As I say, we feel very positive about this.

931     Certainly we could review our application with CTD and in reply possibly provide some information to you with regard to how we would re‑apply those funds.

932     I would imagine we would increase what we are doing now in terms of the other CTD for emerging new artists, because we feel very strongly about that too.

933     Duff may have a further comment.

934     MR. ROMAN:  Just to say that hopefully before that unfortunate event would happen, our continuing contact and dialogue with AVR would allow us to consult with AVR and to consult with the Commission.

935     As Paul has said, we would be very loathe to abandon this initiative.

936     COMMISSIONER WILLIAMS:  Like format, this is also your second choice, as well as being your first choice.

937     MR. ROMAN:  That's right.  There is no Plan B.

938     COMMISSIONER WILLIAMS:  You have a vibrant station in Edmonton.  Are there any synergies between this proposed station and your Edmonton station; and if so, what would these be?

939     MR. SKI:  Commissioner Williams, Rob referred to some of the advantages of having a station in Edmonton and a station in Calgary, and I will let him talk about that in a little bit more detail.

940     I wanted to re‑emphasize that there are very few synergies for us from a radio station to radio station standpoint just because of the fact that we see our radio stations as small businesses operating quite autonomously in markets across the country.  That has been part of our model, our format model.

941     Our economic model has been to have a great deal of autonomy placed within the local markets.  We feel that is the best way to do local radio, obviously with the local managers ‑‑ of which I was one just a very short time ago.

942     We figure that is the best way to do good radio.  The local managers, the local program directors, the local sales managers, they know best how to run those radio stations.

943     In terms of synergies, and especially where the formats are quite different, these stations pretty well operate on their own.

944     There are synergies, though, that we have despite the fact that these are small businesses because of the size of CHUM, and that relates to things such as sales training, our CHUM client solutions, which we are quite proud of, which is a different way to look at the sales process and has been very important for us in terms of ensuring certain levels of sales and revenue in various markets that we have.

945     So there is that type of situation.

946     There is also mentoring.  There is also payroll, some of the back office things that we do.

947     In terms of the on‑air product, the format, the on‑air product, we feel that is best done locally and live.

948     Where there are benefits, though, is Rob referred to earlier where there are artists that might cross over and there are opportunities for promotion amongst the radio stations.

949     For instance, an artist that recently won our talent contest in Edmonton, Krisha Turner.  What a great opportunity for us if we had a Calgary radio station to also feature Krisha Turner here.  She is one that some of her selections, some of her music, crosses over both formats.

950     Rob.

951     MR. FARINA:  I think another example of that ‑‑ and the formats are very different between the Hot AC and the Urban CHR we have in Edmonton.  But there is probably about 15 percent crossover in not so much titles but artists.

952     Maybe an example is an artist like Alisha Keyes.  It is very problematic to get an artist that big into Alberta.  Historically when record companies bring big artists in, they bring them into Toronto to do promo.  And if Canada is lucky, they get into Vancouver.

953     By having two radio stations that they could wrap a promotion around, this allows more leverage for them to bring the artist into the Calgary or the Alberta market, and it gives us the opportunity to do a live show with the artist.  If we can't get the artist stopping in both markets, we are allowed to do a contest where winners from one radio station can visit the other market and are able to take place in a live music format, which we obviously distribute that across the country with the CHUM radio network.

954     So the synergies again happen mostly on the back end in the areas of training, but there are a little bit of synergies on the programming front where it works right with the right artist.

955     COMMISSIONER WILLIAMS:  Are there any synergies with your television property?

956     MR. SKI:  There are some synergies but very few, just because of the fact that we operate differently.

957     To my previous point, we operate independently.  We co‑operate competitively wherever we can.

958     To give you an example, I think the primary synergies that we have in Edmonton, for instance, and some of our other markets, such as Ottawa and London, we have a receptionist, for instance, that is the receptionist for both stations.

959     COMMISSIONER WILLIAMS:  This proposed radio station would be located in the same building as your TV property, then?

960     MR. SKI:  That's our plan, yes.

961     In terms of other synergies, those synergies relate to, as Rob mentioned, really if we have artists that are appearing in town.

962     I think in Edmonton recently we had Julie Black perform at a party that was held for our television station in Edmonton and also for our radio station in Edmonton.

963     The promotion of talent is one of the prime synergies, but in terms of back office we really don't do too much, other than again, as I say, possibly some payroll or things of that nature.

964     COMMISSIONER WILLIAMS:  I want to talk a bit about the linkages between your marketing study and your financial projections.

965     It is the last question I have before turning your fate over to my colleagues and legal counsel.

966     It is unclear how the results of the marketing demand study were used to establish your projected revenues.

967     Could you please walk us through that, as to how your projections were arrived at.

968     MR. SKI:  Certainly.  I should mention that when we look at a market like Calgary, we come at it in a couple of different ways.

969     First of all, because we do have Hot AC radio stations across the country and other radio stations, we first look at the opportunities, depending on where we are with the developmental lifecycle of that particular radio station.  That is the first thing.

970     We can look at information that we have in terms of revenues and say:  Does this really make sense?  If it makes sense, we have certainly an anecdotal idea of really maybe where the number might be.

971     What I will do is I will have Kerry maybe take you through the bottom‑up approach that we take, which takes our audience research and develops the revenue figures out of that.  Then maybe Ken Goldstein can look at it from a top‑down approach.

972     So we come at it a number of different ways to try to get obviously the most reliable figures that we possibly can.

973     Kerry.

974     MS FRENCH:  Thanks, Paul.

975     It does start with the research.  On page 5 of the ARI Study, it says that 41 percent of our respondents said that they would be interested in the Hot AC format; 60 percent of that 41 percent said that it could be their favourite radio station.

976     That translates to a figure of 25 percent of the market.  That is a pretty big fishing hole.  It is a matter of catching the fish and how many of those fish you catch.

977     Our experience is that we can convert between 35 and 40 percent of those people, which means that the potential for a radio station really is a 10 percent share.

978     The path to reaching that potential takes a lot of effort and a lot of time.

979     First you have to craft a really great radio station.  You have to promote it with great marketing campaigns.  You form a connection with your audience, and you grow your share of tuning over time.

980     CHUM has a great deal of experience in doing this, and we have lots of top‑rated radio stations across the country.

981     So initially to determine what a realistic share of that 10 percent potential is in the first year, we look at three basic things.

982     First of all:  What current radio stations have the tuning that will come to us and how much of that tuning will we take from them?

983     Is there tuning to out‑of‑market radio stations because the Hot AC format isn't available in the market?  And how much of that can we repatriate?

984     And the third things is:  Will the radio station create new tuning, brand new tuning in the market?

985     The research study told us that the Hot AC partisans are currently listening to several radio stations in the Calgary market.  This tuning is spread out over stations like:  the Vibe; the Top 40 station; CHFM Lite 96, which is an AC station; JACK FM, a Classic Hit station; and CJAY92, which is a Classic Rock station.

986     They listen to these stations by default because there is no station delivering the kind of music that they want to hear.  It is not available in the market.  When we offer the music that they want to hear, we assume that some of that tuning will migrate to us.

987     Based on our experience and our judgment of having done this before and having top rated radio stations across the country, we are estimating that we will take between 5 and 7 percent of the tuning away from these radio stations.  And it is a relatively minimal amount.

988     We will also have a minor impact on Country 105.  If you look at BBM numbers across the country, you see that Hot AC stations share audience or duplicate with Country stations.  Country is also slightly female directed, so it is understandable that we will affect them to a small degree; once again, 5 percent.

989     We also estimate that we will repatriate approximately 10 percent of the out‑of‑market tuning in Calgary.

990     Going back again to the research, the study told us that Hot AC partisans listen to between two and a half and three and a half hours less than partisans to other formats.  So we think that giving them what they need will bring that tuning back into the market.

991     When you add all of these bits of tuning up, you reach a total of approximately 914,000 hours of tuning, and that translates to 5.2 percent of total tuning in the market.

992     We then look at an average TSL, or time spent listening, across the Hot AC stations in major markets in Canada.  That is about 7.2 hours per week.  That is an average 7.2.  Some listeners will listen 25 hours; some listeners will listen two.  But that averages to 7.2.

993     We can then calculate what the actual average quarter hour reach and rating figures are for various demographics.

994     Radio is generally priced based on a cost per point model on the major buying demographic of adults 25 to 54.  CPP, or cost per point, is the cost of reaching 1 percent of the market or one rating point.

995     Calgary has seen huge growth in the CPP for the market in the last several years, and that explains some of the great increases in radio revenue that you have seen over the past several years.  Because Calgary has been such a high demand market in radio, the local stations have been able to raise their rates quite significantly over the past five years.

996     The market currently trades at about $55 to $60 cost per point.  A new entrant in the market can't demand the same level of rate or cost per point that the existing stations do.  So we know that our starting cost per point would be less than that.

997     We can then, based on that cost per point, calculate what our rate card would look like and what kinds of rates we would be able to charge.

998     Once again going back to our experience in other markets, we know what our sell‑out factors would be, how much of our inventory we would sell over time, over the first year and second year, and how that would grow.  That is how we determine very mathematically what our potential revenue would be over the first year and subsequent years.

999     I know that sounds like a long path to get from one to the other, but it really is a series of mathematical calculations.

1000     COMMISSIONER WILLIAMS:  In your experience in other markets ‑‑ like you say, you just recently launched in Edmonton a year ago ‑‑ how close were your projections in that example?

1001     MR SKI:  Actually, our projections are somewhat close.  We had a few challenges, one of which was we got started later than we would have normally started.

1002     Since that time, also, another radio station launched that was licensed.  So whenever that happens, it slows down.  We had great momentum and it slows down your momentum a little bit.  We are now in the process of catching up.

1003     Also, one of our other competitors in the market recently changed format.

1004     So we got off to a bit of a slow start, a little slower than we had wanted to.  But we are starting to catch up now.  We think that probably by the end of this fiscal year we will be almost on target or very close, at least midway through the second year.

1005     COMMISSIONER WILLIAMS:  So in your historical experience, these projections are fairly accurate?

1006     MR. SKI:  We think so.  I might ask Ken to give you that sort of top‑down approach.

1007     COMMISSIONER WILLIAMS:  All right.

1008     MR. KEN GOLDSTEIN:  Thank you, Paul.

1009     The exercise that Kerry described is truly a bottom‑up approach.  It puts all of the pieces together and multiplies by the appropriate rates, and so on.

1010     We came at it on a market approach, top‑down approach.  We first projected the market, related those projections to retail trade so it's not some arbitrary "let's take a percentage here, percentage there".  You have to check back with retail trade projections, which we got from the Conference Board, and it has to be within a range of reasonableness.

1011     We then applied the market share and worked out our own curve, if you will, of how the market share would translate into revenue.

1012     The curve in this case, the pattern of the relationship between revenue and share, it is lower initially.  Then, of course, as the station matures, you start to get into the same range, and then here by the seventh year you are actually getting a revenue share slightly higher than the audience share.

1013     It acts as a reality check.

1014     The two together give you confidence that this is on the right track.

1015     COMMISSIONER WILLIAMS:  Thank you very much, Mr. Switzer and Mr. Ski.

1016     That concludes my questions for the CHUM panel.

1017     MR. SKI:  Thank you.

1018     THE CHAIRPERSON:  Thank you.

1019     I will ask Mr. Langford now, who has a question for you.

1020     COMMISSIONER LANGFORD:  Thank you, Mr. Chairman.

1021     I will try not to keep you.  You have given us a lot of words and a lot of information, and we are grateful.

1022     There is just a couple of areas where I might want to test this new positive CHUM attitude here which has come to Calgary.

1023     I looked at your application and I looked at your supplementary brief, and I listened to you this morning, at page 11, bemoaning that there is not a Hot AC here and the effect is "denying many Canadian artists much needed airplay".

1024     Of course, I agree.  Anything that denies Canadian artists much needed airplay is a bad thing.  If you're coming into town in a white hat on a white horse to do something about that, that makes me a happy guy.

1025     I kept reviewing it, though, because there was something that was bothering me, and I finally hit it.

1026     If you want to do all this for Canadian artists, why is your Cancon level only 35 percent?

1027     MR. SKI:  That's a good question.

1028     COMMISSIONER LANGFORD:  Good.

1029     MR. SKI:  Not that there are ever any bad questions.

1030     COMMISSIONER LANGFORD:  I bet that's not what you say later.

‑‑‑ Laughter

1031     MR. SKI:  No.  We have thought long and hard about that, as you can appreciate.  This is a format that relies a little bit more, quite a bit more, on current music.  We felt that the best way to help the development of Canadian talent ‑‑ and I will have Rob get into a little bit on the details of the artists.

1032     Our feeling was the best way to help Canadian artists was not necessarily to have a 40 percent number but to keep it at 35 percent and do other things: other things that we felt were more important to the artist.

1033     We are not going to be able to rely on that much gold.  If we could default ‑‑ which we could ‑‑ default to 40 percent or default to a station or a format where we had more emphasis on gold music as opposed to current music, it really defeats the purpose of helping emerging indie artists and emerging artists.  It really defeats the purpose.

1034     And we think that might be the only way to remain competitive, if we were at 40 percent.

1035     As a result, we thought rather than that, let's go in at 35 percent.  We feel very comfortable with that.  That is certainly the existing regulation, is 35 percent.  So we thought we fell into line there.

1036     We thought the better way to approach it was with our other Canadian Talent Development initiatives.

1037     I will ask Rob to comment further, as a programmer of a radio station.

1038     MR. FARINA:  First of all, I want to say that all Hot AC stations in Canada are operating at 35 percent.  It is a meaningful 35 percent, and let me explain what that means.

1039     What that means is that what the industry has seen in the last couple of years is a move from current based radio station to gold based radio stations to help fulfil their Canadian content commitment.  What that means is they are able to fulfil that commitment based on many different decades of already proven hit songs, which really I don't think fulfils the goal that Canadian content should fulfil, which is to focus on building new and emerging artists and building a star system for our artists.

1040     I want to quote from one of our positive intervenors.  There is a lot of thoughtful letters, but there is a line here from Gregg Terrence from the Canadian Independent Recording Artists Association, which says:

"The CIRAA believes that smarter Cancon is better than simply more Cancon.  As we have seen since the increase to 35 percent in 1998, radio has simply lengthened the period of time it spins a Canadian track.  In our view, this has not contributed to more development and discovery of Canadian emerging artists."

1041     One of the things with this format is that so much of the format is comprised of emerging artists and specifically the Canadian content component is comprised of emerging artists.  An increase from that puts us in a position where we need to play more gold titles, and what we are finding on the operational level on radio stations is a lot of those gold titles have become very burned out on the listener front.

1042     That is why great Canadian artist like Amanda Marshall can't get a record deal right now, because her music has been so burned.  Jan Arden suffers the same thing; Shania Twain, Sarah Mclachlan.

1043     This format, because it is focused on emerging artists, I think provides a more meaningful benefit to the system.

1044     As well as that are the benefits that this application has on the table with our Emerging Indie Artist Initiative, which will see up to 12 new artists gain national exposure through concentrated airplay, promotion, marketing and rack space, as well as our focused promotion on the Calgary music scene.

1045     COMMISSIONER LANGFORD:  Well, you may not have liked the satellite radio decision, but it looks like you learned something from it anyway.

1046     I want to see if I can help you push up that 35 percent number.  At first I thought you might be going to tell me it was a typo.  That can happen with word processors, you know.  You just have the number in there and it just keeps appearing and everybody is comfortable with it and nobody thinks to change it.  But of course if it were a typo, there would be nothing we could do about it, because you are bound by it.

1047     You have an interesting answer about less gold and more new, and smarter rather than more.  That is interesting.

1048     So let me see if there isn't a way we could push this up without getting in an unseemly bidding war.  So your answers will be interesting to my next few questions.

1049     I want to look at this initiative for the emerging artists which gives them 15 spins per week here in Calgary, and other places too.  But let's just focus on Calgary and the 35 percent.

1050     Would those 15 spins a week be above and beyond the 35 percent Canadian content?  Is that extra Canadian content or is that part of the 35 percent Canadian content?

1051     MR. SKI:  At the current time that is part of the 35 percent Canadian content.

1052     COMMISSIONER LANGFORD:  It is?  Well, I've got to give you marks for honesty because I thought you might jump on that one.

1053     The Demo Depot, one hour per week, as I read it, of Canadians ‑‑ I assume they are Canadians, aren't they, in the Demo Depot?

1054     MR. FARINA:  That's correct.  Yes, Canadian independent ‑‑

1055     COMMISSIONER LANGFORD:  Is that above and beyond the 35 percent, or might that be a little more?

1056     MR. SKI:  That is part of the 35 percent too.

1057     COMMISSIONER LANGFORD:  I'm getting nowhere.  I am trying to help you and I'm getting nowhere.

1058     Promoting the CDs on air.  Is that part of the 35 percent or would that be extra?

1059     MR. SKI:  Are you talking about the commercial ‑‑

1060     COMMISSIONER LANGFORD:  Well, I thought you were going to play them a bit too, wouldn't you?

1061     MR. SKI:  Those are the spins.

1062     COMMISSIONER LANGFORD:  Oh, those are the spins.  But there are more people.  You said there were going to be six extra artists on the CDs.

1063     Would you be playing some of their stuff too?

1064     MR. SKI:  Yes, we would.

1065     COMMISSIONER LANGFORD:  And would that be part of the 35?

1066     MR. SKI:  Yes, it would.

1067     COMMISSIONER LANGFORD:  I'm doing my best.  I am giving you every opportunity.

1068     I think you should give that some thought.  There will be other phases here.

1069     Assuming they were not part of the 35 just for a moment ‑‑ although you are very clear now that they are.  If you take ‑‑ and I know this would be rough math, but you guys know how to run a radio station.

1070     If you take 15 extra Canadian spins a week, if you take an hour ‑‑ and I don't know how many spins there would be during that hour, but you would know.  If you take the spins that would be in that Demo Depot hour and any extra promotional spins for your CDs, do you have any idea how far that might push up your Cancon?

1071     MR. SKI:  I'm not sure that we have a number.  We can certainly calculate that number and certainly in reply come back and give you a number.

1072     This is, I guess, one of those ‑‑ we had not thought of the things that you are talking about.

1073     Like a few of the other initiatives that we had mentioned earlier, we had a first and a second choice, and they were both the same.

1074     COMMISSIONER LANGFORD:  Right.

1075     MR. SKI:  You are probably coming to realize that now.

1076     But certainly we can look at the options that you are suggesting here and see in fact what difference that makes ‑‑

1077     COMMISSIONER LANGFORD:  It would be interesting to know, to see whether we couldn't inspire you to move in that direction a little bit.

1078     I will leave that with you on reply.

1079     On another subject ‑‑ and I'm almost done.

1080     I listened very carefully to your discussions in conversation with my colleague Mr. Williams, but I don't think I heard ‑‑ and I am moving now to the AVR commitment.  Sorry, I should have introduced this.

1081     Outside of the fact that there will be a letter, I don't think I actually heard what kind of controls you envisage having in place here.

1082     Are you essentially just going to hand over a cheque for $642,000 or do you have some sort of auditor general role on this as well?

1083     MR. SKI:  Commissioner Langford, I will Duff to comment on that.

1084     As he mentioned, we have had several discussions with AVR on how these funds would be spent, but Duff will provide a little bit more insight.

1085     MR. ROMAN:  Well, beyond the letter that we have submitted to you, dated July 26th, in which CHUM and Jamie Hill agree to the nature of the $4,515,000 being spent, we don't have any due process or governance procedures spelled out at this point.

1086     We have a way of getting them up and running rapidly with the first instalment of $645,000.  We have continued our dialogue with them with regard to how important it is that our relationship be for the long term.

1087     We have offered to provide them with in‑kind services not reflected in the $4,515,000.

1088     I think there is an understanding, Commissioner Langford, that with us as in a sense their principal banker, they relate very much to the kinds of guidelines and good business practices that we hope to bring in our partnership to AVR.

1089     The short answer is the agreement we have with them at this point is embodied in that letter of July 26th.

1090     MR. SKI:  Commissioner Langford, I might ask Jay Switzer to comment.

1091     MR. SWITZER:  Commissioner Langford, that is a very reasonable and clearly important question.

1092     These are significant funds.  This is a very important project for us; we think a very worthy project for the Canadian broadcasting system.  There will be appropriate contracts in place, and we would of course be happy to file with the Commission those copies.

1093     We share the same concerns:  that the funds are used exactly as intended for this project.  And you can rest assured that will happen.

1094     COMMISSIONER LANGFORD:  We are always happy to take your paper, as they say.  And that's fine.  I appreciate that.

1095     I don't want to sound negative here.  You folks know me as a positive guy.  Ask Fred Sherratt.  He'll tell you.

1096     Let's take something beyond everybody's control.  I am not trying to in any way imply that anybody would misappropriate anything or use something incorrectly, but let me build a very quick scenario.

1097     You put out the 642,000 bucks, which is supposed to be earmarked Calgary first and then maybe Edmonton, as you painted, and then maybe Vancouver or something.  Then there is an emergency in Toronto.  Just an emergency.  All hell breaks loose.  Somewhere equipment fails.  Who knows?  And being human, people respond to emergencies and before you know it, most of your $642,000, which you thought was going to Calgary, Edmonton and other points west, has gone to Toronto for perfectly understandable reasons.  But all of a sudden you have a problem again here in Calgary.

1098     Those are the sorts of controls I was wondering about.

1099     I don't know if you have given any thought to that.  It is a lot of money.  I know there is a new team there and everybody is pretty inspired by them, but still they are an unknown quantity at this point.

1100     How would you respond to a scenario like that?

1101     MR. SWITZER:  We have great confidence that the team in place will get the job done.  However, it is a fair question.

1102     We are convinced that they will do all the things, build and grow and launch as expected, but we are a company that also has to make sure that the monies that we spend are spent exactly; that we have the protections and checks and balances in place not to get in their business, not to be part of their management, but to ensure that the monies we give them, that we have protections along the way that they are doing the things they say they are going to do.

1103     We have to report, not only to you but to our own shareholders.  We are a publicly traded company.

1104     We are convinced that their plan is valid and strong and that our monies are going to go toward what needs to be done.

1105     COMMISSIONER LANGFORD:  Thank you.  I think that is as much as you can probably say, but I personally would be interested to see some of this paper, just to see how it folds out should you be successful here at this application stage.

1106     I have one last question.  It is a bit philosophical, and it may lead to another question but it is the last sort of issue.  Again it is on AVR.

1107     Generally, I am trying to assess in my own mind ‑‑ and I have been since I read your proposal and the way you fleshed it out in the supplementary brief.

1108     I am trying to assess in my own mind precisely how we should regard this expenditure of $4.5 million to AVR.  I will tell you what I mean.

1109     I can't for the life of me figure out whether it is a good precedent or a bad precedent, and this is the trouble I have with it ‑‑ not trouble, it's a difficulty.  I don't want to use a negative connotation at all.  It's a personal difficulty I have trying to assess this.

1110     I know how to assess 40 percent Canadian content versus 35.  It is theoretically better unless you have come up with a good reason why it shouldn't be.  I know how to assess higher CTD versus lower.  More is always better but, as you know, sometimes the Commission looks at other aspects of an application and says:  Okay, for other reasons, even though it's lower CTD, we are going to pick applicant B over A.

1111     We still have a sense of how we assess this, how we regard it.

1112     I am looking at something here which in this particular instance is very much tied to the broadcasting industry.  So it has a certain strength.  It has a nexus.  It has a connection.

1113     I wonder what would happen if six months from now we receive an application where some commercial enterprise like your own says:  We are going to give $4.5 million to breast cancer research or the Heart and Stroke Fund, or something like that.  That is a really good thing to do from a public service perspective, but how do we regard it?

1114     Is this a precedent for a move in that direction?

1115     I told you it would be philosophical, but it does interest me.  I don't know about my colleagues.  It is something that I have been playing in my mind.

1116     MR. SKI:  Commissioner Langford, I will make a comment and also ask Kevin Goldstein.

1117     We know that in a number of radio licence decisions over the last few years the Commission has recognized that support for AVR contributes to fulfilment of the objectives of the Act.  That is why we thought it was appropriate in this particular case.

1118     Breast cancer is obviously a very good case too, but it is maybe not quite as appropriate as it relates to the Act.

1119     I think the Commission itself has said that these types of contributions are beneficial to the broadcasting system as a whole.

1120     So that is where we see, I think, the differentiation maybe between the two: between whether it might be fund raising for cancer or some other initiative.

1121     MR. SWITZER:  Commissioner Langford, if I might add, we do understand this is a special situation.  As Paul just said, we are trying to respond to a particular situation that has been recognized as a priority for the Commission, or certainly eligible as an important part of the system and a priority for the system.

1122     We do understand there is a special situation as to how to deal with this contribution.  What we tried to be clear on today was whether it is part of and defined as an eligible CTD inclusion or whether or not we stand here before you fully prepared to be accountable and transparent and to make it part of a condition of licence, however you may choose to define it.

1123     COMMISSIONER LANGFORD:  I think that's enough.  I think I understand the general spirit in which this is done.  I find your point, Mr. Ski, to be probably right on.  I am a little embarrassed that I didn't think of it myself.

1124     That does tie it, doesn't it.  It is not just doing good.  It is doing good within the terms of section 3 of the Broadcasting Act.

1125     Thanks very much.

1126     Those are my questions, Mr. Chair.

1127     THE CHAIRPERSON:  Thank you, Mr. Langford.

1128     I have Madam del Val next.

1129     COMMISSIONER del VAL:  I am just trying to understand your revenue projections a little bit better.

1130     I am looking at your seven‑year projections and I think you are probably ranking No. 2, with an annual average increase of I think 22 percent over the seven years.  I think only the Jim Pattison Group is higher than your projections.

1131     I also recognize that your Conference Board retail sales growth projection is about the same as the numbers I have; about 5.1 percent.

1132     Then my Calgary radio ad revenues actual growth from 1994 to 2005 is about 8.3 percent.  I think that might differ from yours a bit.

1133     I would like to hear your comments on whether you feel that your projections are aggressive, conservative or bang on.

1134     MR. SKI:  Well, I'll say that they are bang on.  That is normally the way we like to do projections.

1135     I will have Kerry run through the projections a little bit with you.

1136     As we mentioned earlier, we come to these revenue projections in three different ways.  That is why they are not too hot, not too cold.  We think they are pretty bang on, or the best we can do given the fact that this particular radio station is not currently on the air.

1137     But given our experience and given all of the other mathematical calculations, certainly it is our best guestimate.  We can't really speak to the others, but certainly from our standpoint.

1138     COMMISSIONER WILLIAMS:  Not too hot and not too cold; just hot with AC.

1139     MR. SKI:  That's right.  Cold AC isn't a format as yet.

1140     MS FRENCH:  I think from our point of view, from our experience, it tells us that when you are putting on a new radio station the biggest growth years from a percentage standpoint are usually the second, third and fourth years.

1141     It is a matter of now a radio station matures.

1142     I think Ken Goldstein referred to it earlier, about the ratio between your share of tuning and share of revenue in the market.  We call that a power ratio.

1143     Generally some formats have higher power ratios than other formats.  Hot AC generally has a very positive power ratio, but it takes a while to grow to get there when we are starting out at about a .5 power ratio in the first year and growing over seven years to more of a one‑to‑one ratio.

1144     That is what our experience tells us in our other Hot AC markets as to how that growth curve builds.

1145     I think it depends also where you start, where your first year projection is, how those percentages roll out over seven years.  That is why you might see differences in the other applicants.

1146     COMMISSIONER del VAL:  I guess the question I should have asked is you sound quite reasoned in how you looked at your financials and yet you come out the second highest in your revenue projections.

1147     I am sure you have looked at the financial projections of the other applicants.