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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES AVANT
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
VARIOUS BROADCAST APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
HELD AT: TENUE À:
Metropolitan Conference Centre de conférence
333 Fourth Avenue South West 333, Fourth Avenue Sud‑Ouest
Calgary, Alberta Calgary (Alberta)
February 21, 2006 Le 21 février 2006
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
However, the aforementioned publication is the recorded
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either of the official languages, depending on the language
spoken by the participant at the public hearing.
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
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Canadian Radio‑television and
Conseil de la radiodiffusion et des
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 /
Steve Parker Hearing Manager /
Gérant de l'audience
HELD AT: TENUE À:
Metropolitan Conference Centre de conférence
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
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.