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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 23, 2006 Le 23 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
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
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 23, 2006 Le 23 février 2006
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PHASE I (cont.)
PRESENTATION BY / PRÉSENTATION PAR:
Harvard Broadcasting Inc. 731 / 4832
Newcap Inc. 823 / 5386
Tiessen Media Inc. 918 / 5896
Golden West Broadcasting Inc. 976 / 6300
Newcap Inc. 1020 / 6619
Calgary Alberta / Calgary (Alberta)
‑‑‑ Upon resuming on Thursday, February 23, 2006
at 0820 / L'audience reprend le jeudi
23 fevrier 2006 à 0820
4825 THE CHAIRPERSON: Order, please.
4826 Madam le sécretaire.
4827 THE SECRETARY: Thank you, Mr. Chairman.
4828 We will begin this morning with item 9 on the agenda, which is an application by Harvard Broadcasting Inc. for a licence to operate an English language FM commercial programming undertaking in Calgary.
4829 The new station would operate on frequency 92.9 MHz, channel 225C1, with an average effective radiated power of 45,000 watts, maximum effective radiated power of 100,000 watts, antenna height of 160 metres.
4830 Appearing for the applicant is Mr. Bruce Cowie, who will introduce his colleagues.
4831 Mr. Cowie, you will have 20 minutes for your presentation.
PRESENTATION / PRÉSENTATION
4832 MR. COWIE: Thank you, Madam Secretary.
4833 Good morning, Mr. Chairman, members of the Commission.
4834 This is a journey that began in June of 2004, and we hope will be the beginning of another journey once this hearing is concluded.
4835 I'm delighted to be here in the city where I live and to introduce a very strong group of people who have been working on this application for some time and are delighted, as I am, to be here.
4836 Seated on my left is Michael Olstrom. Michael is the Harvard Station Group manager.
4837 On Michael's left is Jennifer Strain. Jennifer is currently employed in Calgary's booming oil patch, but has significant experience in the broadcast sector and before the Commission, having served as vice‑president, Corporate and Regulatory Affairs, for Craig Media. Jennifer is acting in a senior advisory role to Harvard's radio operations, contributing in particular to the planned expansion of Harvard Broadcasting throughout western Canada.
4838 On my far left is Garry McGowan. Garry has spent over 20 years in the radio and music business in major markets throughout Alberta as an on‑air personality, program director, club owner, and concert promoter. Garry has also served as a member of FACTOR's national advisory board and is a member of the board of directors of the Alberta Recording Industry Association. Garry, who led our in‑market, street‑level research on the demand for an alternative rock station in Calgary, brings a wealth of experience to our team, having lived and worked within the genre.
4839 On my right is Karen Broderick, Harvard's national sales manager. Karen will tell you about the demand among advertisers for a radio station that serves Calgary's youth audience.
4840 In the back row, seated on the far left, is Paul Hill, president and CEO of Harvard Developments. Mr. Hill is one of Canada's business leaders and operates a family‑owned diversified company that has just celebrated 103 years of doing business in western Canada. The success of the Hill companies has been built on two principles, caring and commitment, and these principles guide not only the Hill's business operations, but also the sense of caring and commitment within the communities the Hill family serves.
4841 Next to Paul is Tina Svedahl, vice‑president, Investments, for Harvard Developments Inc., our parent company.
4842 Seated next to Tina is Debra McLaughlin, of Strategic Inc., the company that did our feasibility and consumer demand studies.
4843 And finally, seated next to Debra, is Rob Malcolmson, a partner at Goodman's LLP, our legal counsel.
4844 Paul will speak first to you about why Harvard has chosen to apply for a new station in Calgary and how Xtreme FM fits into our regional growth strategy; Debra will then give an overview of the Calgary market and demand for the format; and next Garry and Michael will speak to the specifics of the proposed station: what it is, its target and the kind of programming we are proposing; and finally, I will present our locally focused, artist‑based CTD package, an initiative that will invest in local artists through three distinct development phases: discovery, exposure and support.
4845 I will now ask Paul to begin our presentation.
4846 MR. HILL: Thank you, Bruce.
4847 Harvard is a regional broadcaster based in Saskatchewan. We have been in the broadcasting business since 1976 and have been serving the residents of Regina and southern Saskatchewan ever since. Our family was drawn to the radio business because of its ability to provide local community service. Being in radio in Regina all these years has allowed us to be heavily involved in the local community, as Bruce noted as a guiding principle behind our family's approach to the business.
4848 We would like to do more in radio business and seek your approval to contribute to the local community here in Calgary. In particular, we are passionate about becoming a significant contributor to Canada talent development in all markets we are privileged to serve.
4849 We believe there is a place for mid‑sized regional broadcasters within the Canadian broadcasting system. To that end, Harvard applied for new stations in Calgary and Vancouver in 2000, and in Edmonton in 2003. We have not given up. We are learning, and we believe that this application, along with those applications pending in other western Canadian markets, meets the needs of the local communities, as well as contributes to the development of the industry.
4850 Calgary is the linchpin of our growth strategy. It's the largest radio market in western Canada, after Vancouver, and it's growing at an exceptional rate. A station in Calgary will strengthen Harvard's ability to provide strong, regionally based and locally focused radio services in markets of varying sizes across the west.
4851 I should also say that, while our head office is in Regina, we have been in business in Calgary for over 50 years. I am personally, and through others in our organization, actively involved in the Calgary community and other markets in Alberta. Bruce Cowie lives here full time. We know the city well and we believe we can bring a fresh, youth‑oriented station to this market and support it with our personal active involvement.
4852 We hope the Commission will endorse our regional growth strategy, recognize the role that we can play in adding diversity of ownership and editorial voices, and allow Harvard to extend its tradition of community service to Calgary.
4854 MS McLAUGHLIN: A quick look at the key economic indicators show that Calgary is booming. In 2004, retail sales, a key predictor of radio advertising revenue, grew by over 10 percent. Personal income is 29 percent higher than the national average. And Calgary is one of the strongest radio markets in Canada when it comes to PBIT margins.
4855 This is also a young market, with fully 50 percent of the population under the age of 35, yet, despite the recent introduction of new stations, the youth and young adult audience remains underserved.
4856 BBM data show that tuning among 12‑ to 17‑year‑olds has declined from 12.1 hours per week in fall 2002 to 9.7 hours per week in fall 2005. Tuning among 18‑ to 24‑year‑olds has also dropped from 20.2 hours per week in fall 2002 to 15.8 in fall 2005.
4857 We studied the market extensively to determine what was missing, and the answer was clear. Our research showed that almost 80 per cent of the 15 to 24 age group and 70 percent of the 25‑34‑year‑olds would listen to a new alternative rock service.
4858 MR. McGOWAN: Thanks, Debra.
4859 Let me start by saying I have been working in Calgary for almost two years assessing the viability of our format. I have talked to a lot of club owners, advertisers, and, most importantly, young people. I can confirm the results of our formal research. There is a very high level of interest for an alternative rock station in Calgary, both from the underserved youth audience and from advertisers seeking to reach them.
4860 Alternative rock is one of the top 10 radio formats in Canada and the U.S., but it's completely missing from the city's radio spectrum, despite the fact that Calgary's youth represents a greater proportion of the population than any other major market in the country.
4861 Alternative rock tracks are just not receiving significant airplay on existing stations. In fact, our analysis, using CFNY‑FM Toronto as a proxy, shows that, on average, based on seven weeks of data, only 21.1 percent of the alternative rock songs being played on CFNY are getting any airplay today. This means that of the 150 top alternative spins, 118, or almost 80 percent, are not on the air in Calgary. Xtreme FM will fill this void in the programming spectrum.
4862 In fact, the level of duplication between Xtreme FM and existing stations will be even lower than this. Our playlist will be targeted to Calgary's 12‑ to 24‑year‑olds, and will therefore play a larger amount of newly released, independent and uncharted tracks than one would hear on an alternative rock station like CFNY.
4863 The sound of Xtreme FM will be edgy, innovative and progressive, featuring Indie rock and post‑punk revival artists, such as Modest Mouse and Franz Ferdinand, and Canadian acts, such as Alexis On Fire, Metric and Broken Social Scene. There's also renewed interest among alternative rock fans in such classic bands as New Order, The Cure, Violent Femmes and Sonic Youth, to name just a few. It's this mix of alternative rock tracks that Xtreme FM will bring to Calgary.
4864 One of the most interesting features of the format is its durability over time. This is due, in large part, to the evolutionary nature of the format, which is constantly reinventing itself to keep pace with the youthful audience it serves.
4866 MR. OLSTROM: Xtreme FM will address declining tuning levels by making radio relevant to young Calgarians. Our goals is to act as a portal or platform for Calgary's disenfranchised youth audience, an audience that is currently listening to alternative rock tracks on the Internet, MP3 players and iPods, but not local radio.
4867 By combining the alternative music our audience wants with local and feature programming that speaks to Calgary youth, Xtreme FM will reach out to our target group in a way that no other local radio station does.
4868 Xtreme FM will showcase local Canadian talent, we will offer 40 percent Canadian content, and launch four new innovative programs, the "Indie Show", the "New Rock Show", "Punkorama" and the "Xtreme Spotlight".
4869 The "Xtreme Spotlight" will consist of a short biography or interview with a new Canadian artist and will feature one of the artist's songs. It will be mixed into the regular flow of programming six times every day, seven days a week, providing continual exposure of new Canadian alternative rock artists.
4870 One of the ways we will reach out to Calgary's youth is through podcasting. Xtreme FM will make all of its feature programming and the Canadian music spotlight available on the web via podcast, giving our audience access to Xtreme FM on demand.
4871 The availability of Xtreme FM's programming on podcast will be an important tool in the ongoing promotion and marketing of the station to our core audience.
4872 Today's youth want programming that speaks to them. Calgary's youth want to hear people of their own generation talking about things that matter to them most, presented in a way that will engage, challenge and stimulate their interests. It is these principles that will guide Xtreme FM's news and spoken‑word programming.
4874 MS BRODERICK: As the growth of the Calgary population continues to outpace the Canadian average, so too does the growth of the younger demographic Xtreme FM will serve. As a result, we see more products and services geared to the youth market, with the corresponding increase in advertising dollars at both the local and national level.
4875 We have talked to numerous local advertisers seeking to reach the city's youth audience, and I can tell you that the level of pent‑up demand is substantial and growing.
4877 MR. COWIE: Thank you, Karen.
4878 Mr. Chairman, members of the Commission, our CTD package is focused on three distinctive phases in an artist's development: discovery, exposure and support. Our total investment will be more than $4 million over seven years. This intensely local CTD package, which we will call "Xtreme Exposure", is designed to act as a platform for the careers of new alternative music artists in Calgary.
4879 We know from our involvement in the Calgary market that the artists see real benefit from this CTD initiative. Let's hear what they had to say.
‑‑‑ Video presentation / Présentation vidéo
4880 MR. McGOWAN: The artists you have just seen are on the cutting edge of Calgary's alternative and Indie rock scene and the locations we took you to in the video are just a few examples of this city's vibrant club life, Broken City, The Palomino Club, and the Liberty Lounge in Mount Royal College.
4881 Chad Van Galen is rapidly emerging as a force on the alternative rock scene and has just signed on with Sup Pop, an Indie label affiliated with Warner Music. Hot Little Rocket is well‑known on the club and concert scene and internationally, but does not get airplay in Calgary. You also heard from the Fake Cops, a local band which is beginning to establish a strong fan base with the release of an edgy new EP. And finally, Danielle Haberstock, who has just signed a recording deal with Snag, an aboriginal Indie label, and is generating significant interest among alternative fans and within the aboriginal community.
4882 Despite the success of these artists, they are not well‑known to Calgary radio audience. Xtreme FM aims to change all this, on‑air and through our ground‑breaking "Xtreme Exposure" CTD initiative.
4883 MR. COWIE: Finding new talent, being discovered, is the critical first step in putting an artist before a mass audience. We propose an annual high‑profile talent search in the Calgary area. We will invite groups and solo artists to submit two recordings to a panel of expert judges, who will select 15 from that group. All 15 artists will receive frequent airplay on Xtreme FM during the contest and we will engage our audience by having them vote for the five finalists.
4884 The finalists will perform at a local venue on the last night of the contest, where the winners will be announced and the cash prizes awarded. The final performance will be broadcast live on Xtreme FM.
4885 The second step is exposure. Xtreme FM will build on the success of its talent contest by producing a studio CD each year featuring two tracks from each of the five finalists. The CD will be professionally produced and heavily promoted locally, and copies will be provided to each artist. Any profits from the sale of CDs will be returned to the artists.
4886 Finally, we have a plan to support artists through one of their toughest stages of development, exposure beyond their own local market. The travel assistance plan will be administered by ARIA, and will provide financial support to help artists without out‑of‑province travel expenses and to gain wider exposure in the rest of Canada.
4887 Harvard will also support artists through industry associations FACTOR and the CAB's Radio Starmaker Fund, with sponsorships for educational programs at Mount Royal College and the Southern Alberta Institute of Technology, and support the training of Calgary‑based volunteers for voice print.
4889 MR. OLSTROM: Over and above our CTD package, Harvard has an agreement with the Aboriginal Peoples Television Network to provide a news mentoring program. The APTN new mentoring program is put forward in recognition of the growth and importance of our indigenous people, a group that represents over 22,000 people in Calgary alone. We look forward to discussing the program with you today.
4890 MR. COWIE: Mr. Chairman, members of the Commission, that concludes our presentation‑in‑chief. In closing, I would like to summarize why we believe Xtreme FM fulfils the Commission's licensing criteria.
4891 First, Harvard is a well‑established and well‑resourced company, with a solid base for this new service. Xtreme FM will supply an alternative rock format that is completely absent from the market, geared to a youth demographic that remains underserved despite its rapid and ongoing growth.
4892 We have committed to 40 percent Canadian content throughout the broadcast day and week. We will promote the development of Canadian talent both on‑air and off through a substantial and locally focused CTD package of more than $4 million. This package will serve as a platform for the discovery, exposure and ongoing support of local artists, as they launch their careers.
4893 In addition, our partnership with APTN will help train a new generation of aboriginal reporters. Harvard will bring a new editorial voice and diversity of ownership to a market dominated by a few large players, most of whom own more than one station in Calgary already.
4894 Granting our application will improve the competitive balance in the market, strengthen an independent broadcaster with deep roots in western Canada, and support Harvard's regional growth strategy.
4895 Members of the Commission, our goal with this application is to make radio a larger part of the life of Calgary's youth by increasing the time they spend with us. In the past few years, the Commission has recognized the importance of repatriating young audiences to radio by licensing youth‑oriented services in Ottawa‑Gatineau, Edmonton, Halifax, and Kitchener‑Waterloo. The same need for a youth‑oriented radio station exists in Calgary, and with your approval Harvard will meet this demand.
4896 We thank you for your attention to our presentation and I would ask that you direct your questions through our quarterback, Michael Olstrom, through the next phase.
4897 Thank you.
4898 THE CHAIRMAN: Thank you, Mr. Cowie.
4899 I'm asking Mrs. Elizabeth Duncan to put the questions to your team.
4900 MR. COWIE: Thank you.
4901 COMMISSIONER DUNCAN: Good morning.
4902 MR. OLSTROM: Good morning.
4903 COMMISSIONER DUNCAN: I'm going to start off first on programming.
4904 Based on findings in your market research, you indicate your target audience of youth and young adults 12 to 34 are underserved in the current Calgary market, and we certainly heard that this morning in your presentation.
4905 The fall 2005 BBM numbers suggest that the 18‑to‑24 and 25‑to‑34 age groups are tuning in in significant numbers to the incumbent stations CIBK, which is a CHR format, CFGQ, with its classic rock format, and CJAY, with is album‑oriented rock. Also the fall BBMs indicate that CKIS‑FM, the market class of KISS stations, also does well in the 25‑to‑34 age group.
` So with that in mind, could you elaborate on why you feel youth and young adults are underserved in the existing Calgary market?
4906 MR. OLSTROM: We would be happy to let you know why we believe that they are being underserved.
4907 The youth market, as we have mentioned, is growing, and there is some youth tuning, in particular to two radio stations, The Vibe being with their core demographic, which would overlap with ours, with the 12‑to‑24 demographic, and CJ, as well, to some extent, but not any part of their core demographic.
4908 I would like to turn to Debra McLaughlin to speak a little bit about that.
4909 MS McLAUGHLIN: Our research using BBM shows that, despite some tuning to incumbent stations, the average hour per capita is declining. I would note that when we looked at it, the two most efficient ‑‑ and we get that from looking at their distribution of hours tuned across the various demographics ‑‑ would be The Vibe and CJ. Only 40 percent of the tuning in the market between 12 to 34 was done to those two stations. That contrasts to Ottawa, for example, where close to 80 percent was being tuned to younger stations, where they were both targeting and affected in that demographic.
4910 But I think the key point here is not whether youth are using radio to some degree in the market and find some stations, but how they are using radio overall, and those indexes are declining. It's not a one‑survey decline, by my tracking it's now into its sixth year of decline, and I think that is a fairly strong indicator that we have not, at least not in this station currently, or in this market currently, any stations completely focused on that youth demographic.
4911 COMMISSIONER DUNCAN: Thank you, that's very helpful.
4912 In your supplementary brief, you identified two sub age groups within the 12‑to‑34 target demo, the 12 to 24 and the 25 to 34. Could you explain how you would approach programming to appeal to both of these groups, youth and young adults? Would there be an emphasis in your programming on one group over the other?
4913 MR. OLSTROM: The emphasis of our programming is the 12‑to‑24 underserved demographic.
4914 I would like to turn to Garry McGowan to speak a little bit about the programming and how we would approach that.
4915 MR. McGOWAN: Commissioner, we have a two‑fold strategy to programming to this group, because we know from our work in the market and some of the fine research that's been done, that we have to go to where they are right now because in large numbers they are not on the radio dial. So we are looking at some unique approaches to programming, and in particular an online outreach program. I want to share a little story with you by way of illustration off the top.
4916 We, for a few months now, in order to facilitate all the work I have been doing in Calgary, had established a little storefront office over in the Eau Claire Market, which is just a few blocks from here, and that allowed people who were hearing about our proposal, through some of the flyering and postering we have done and the references to the website that we put up ‑‑ it contained information about the station and a music sample ‑‑ to come and talk to us one‑on‑one and also if they wanted to actually fill out one of our support cards, quite a number of which we filed with the Commission, that they could use that method as an expression of their support.
4917 On the very last day, a great 20‑something couple came into the office and they struck up a conversation and the woman said to me, "You know", she said, "I've been listening to your radio station online", because I believe our music sample is about 120 minutes worth of proposed tracks that we would play, and she said, "The other day I got in the car and I couldn't get you. So, I guess, does that mean that you're not on air yet?". And I said, "Yeah". So I went on to explain there's quite a process involved in that, and I thanked her for listening to this point and said we will see what happens. I think that story really illustrates how this audience consumes audio currently.
4918 As Debra had mentioned, there's a declining amount of tuning to existing Calgary radio stations. If you give people a little bit of something, there's chances are they will sample it to some degree, but they are not going to spend significant time with it. Instead, they are going where they live, which, in large part, is on the Internet.
4919 So what I'm saying we are proposing to do is that website that's available right now, obviously, will get a lot bigger post‑licensing, and we are going to use it as part of our on‑air service. It's going to be part of the total package, which is to create a real portal of youth opportunity in Calgary.
4920 We are going to use things like the speakers' platform, so that youth can voice their opinions and share information, both with us and with their peers. We will offer up things like online music samples from the independent artists we play and reviews and have an online gallery so that youth can share things like their creative writing and visual art.
4921 We will have a monitored chatroom, so that the station's program director can get some immediate feedback as to what the radio station is doing against the people, because that's where they are going to tell you whether they like you or whether they are happy with what you are doing or not.
4922 We are, of course, going to use the standard website features like links to the artists websites that we play and places they can go to hear newly released material.
4923 Podcasting is a key part of marketing to this group, as Michael mentioned in our initial presentation, making our feature programs and the independent shows available to people so that they can listen in their timeframes. Many of them work, obviously, they go to school, their hours are not necessarily the traditional radio hours. That's again very crucial.
4924 I would share another quick story with you. Often I get requests to go speak to broadcast school courses, and at one point when I was discussing this with somebody I was always struck by ‑‑ there was one gentleman in a little seminar group and when I explained to him that we had a concept to make radio available on his time, his face just lit up. He said, "Really. You mean, if I miss that show that features the music that I like because I had to study or work, I could hear it later?", and I said, "Yeah, yeah, that's what we want to do", and it was just like a revelation. Because, again, I think the medium has suffered a little bit from a certain traditional stodgy view of it, as opposed to, you know, the three‑dimensional portal that it can be.
4925 So, again, the website part of it is very crucial.
4926 On the on‑air side, of course, first and foremost, we are going to be offering them music that they don't hear in the market right now. Certainly, our duplication analysis indicates that 80 percent of the music we will put on the air post‑sign‑on will be music that is not currently available in Calgary, period, on any radio station, and I think that's going to be an immediate trigger for this demo to listen to this radio station.
4927 And certainly, also, we intend to present issues and have a perspective that reflects the concerns of the 12‑24s and 12‑34s. We are not going to be a mainstream media outlet. Certainly headlines are headlines are headlines, but it's where you go from there. It's how you view the issues that make or break, I think, your relationship with your audience, and our relationship is going to be a very strong one with our demographic.
4928 COMMISSIONER DUNCAN: Thank you, Mr. McGowan. Your enthusiasm is certainly coming across.
4929 I'm just curious, then ‑‑ we will go back to this a little later, but just a couple of questions, quick questions on you have said.
4930 How much music would then be available on the website, like what percentage of the time?
4931 MR. McGOWAN: Well, certainly we would stream the radio station, first and foremost, so, I mean, it's available, I guess, 24/7, on the basis that you can receive streaming audio.
4932 I think, Commissioner, I'm sure you are aware of how many kids, if you want to use that word, walk around and live on their laptop. I mean, in many cases the music comes from my space and they talk to their friends on MSN and it's just ‑‑ we want them to do their homework, as it were, or sit at work with us on the streaming spectrum.
4933 COMMISSIONER DUNCAN: So if I'm an advertiser, then, and obviously that's the key, that's the revenue, am I going to have my ads, then, as well, on the website?
4934 MR. McGOWAN: Well, certainly on the streaming audio portion. Beyond that ‑‑ are you referencing the podcast portion of it or ‑‑
4935 COMMISSIONER DUNCAN: Just in general.
4936 MR. McGOWAN: Yeah, again, there's no prohibition to putting ‑‑
4937 COMMISSIONER DUNCAN: But it would a plus in selling to the advertiser.
4938 MR. McGOWAN: Absolutely. And I think, again, there's a lot of interest within the advertising community in reaching this group of people, and they know ‑‑ and they do a lot of research on that ‑‑ that it can be a difficult group to access.
4939 COMMISSIONER DUNCAN: I don't want to show my age here, but, obviously, I'm not doing this on the Internet.
‑‑‑ Laughter / Rires
4940 MR. McGOWAN: You can still listen the old‑fashioned way.
4941 COMMISSIONER DUNCAN: So if I might add something, I listen to music. Yes, that's right.
4942 So just going back to my other questions here, but we will come back to this, as mentioned, a number of the incumbent stations do well attracting listeners to the ages 18‑to‑34 group, so if licensed, how much of your projected audience do you expect to garner from existing stations ‑‑ and I know we have some information on that ‑‑ and what percentage of your audience would represent youth and young adult listeners coming back to radio?
4943 MR. OLSTROM: Yes, Commissioner Duncan, I would like to go to Debra McLaughlin to speak to that.
4944 MS McLAUGHLIN: We looked at this from two angles. We looked at the impact or how much would come from other stations, from the analysis of music being currently played in the market and, as Garry had mentioned, there's less than ‑‑ or there's about 21 percent being played currently in the market.
4945 When we drill down to find out where that was played, largely the station covering any portion ‑‑ and it's a small portion at that ‑‑ of the alternative charts is CJ. This was substantiated in our research. When we asked our core audience ‑‑ well, we asked all respondents what they are currently listening to in the market, 40 percent of the people who said they would definitely listen to Xtreme FM said they are currently listening to CJ. So that means 60 percent of our core audience is coming from the other stations and the Internet.
4946 COMMISSIONER DUNCAN: So do you have some estimate of how much you think is going to be as a result of repatriation?
4947 MR. COWIE: If I may drop in here, Commissioner, we have from the beginning believed that an unknown amount of that listening to those radio stations was by default. Youth has not walked away from radio completely. They have wandered away from it, and hopefully we can get them back. And we are beginning to see some proof of that.
4948 In the latest BBM from Edmonton, where Sonic has now, I think, had two books in the Edmonton market, and is paired, as this market might be in the future, with a CHR urban station on one side and a modern rock or alternative rock on the other, in the early going it appears that tuning to the 12‑24 group has increased by just over 4 percent, 4‑and‑a‑half to 5 percent. And in tandem with that, while it is not large, it appears that there already is a slight reduction in time spent with the Internet.
4949 So we have talked throughout our application about repatriation of this youth audience, so we are seeing a bit of each of those in the early going. They were getting some alternative tracks on these stations, but, clearly, when asked if they would listen to their own station that played their own music, that whole genre group, they clearly would vote for that.
4950 COMMISSIONER DUNCAN: Thank you.
4951 CHUM is applying, as you know, for a Hot AC format, and they did an excellent presentation here the other day. They are proposing to serve the 25‑ to 34‑year‑old young adult listener.
4952 Why do you feel your alternative rock format is a better choice to provide additional program diversity in the Calgary market?
4953 MR. OLSTROM: Well, first of all, we believe that we are serving an underserved demographic. We are targeting a different demographic as our core for the radio station, the 12 to 24s. We also skew more male with the alternative rock format, where theirs would skew more female.
4954 I will turn to Jennifer to speak a little bit about that.
4955 MS STRAIN: Well, first of all, with respect to CHUM, I think that there's some research that shows that a Hot AC format tends to skew quite a bit older, in the 35‑to‑44 range.
4956 But having said that, when we approached this market and the research we were going to do, we suspected that the gaps were going to be in the lower ends of the demographic spectrum. We did the research, which Debra has spoken a little bit about already, which confirmed overwhelming that the 12‑to‑24 demographic was the preferred format for this market.
4957 That was confirmed further when we looked at the population statistics for Calgary. Recent Financial Post data, for instance, indicates that the proportion of the population, the 12‑to‑24 segment of the population, is approaching 20 percent, which is one of the highest of the major markets in the country, and represents a population of over 200,000 kids, young adults, in that age range, 12 to 24.
4958 And then we have talked about the youth tuning. We looked at that as well, the tuning data, that said there's been a significant decline, and we saw an opportunity there to repatriate some of that. And, of course, the Commission has, I think, indicated in its commercial radio policy it's identified that as a challenge, as well.
4959 Then, finally, as we have mentioned in our oral, and here again, as well, we did the duplication analysis that indicated that there would only be about 21 percent of the tracks, the alternative rock tracks, are getting any airplay here in Calgary at all, so that confirmed again for us that this was the format for this market and that this market, given its demographic make‑up, is the most likely to embrace it.
4960 COMMISSIONER DUNCAN: Thank you.
4961 MR. OLSTROM: I would also like to turn to Debra McLaughlin to speak a little bit about the consumer demand.
4962 MS McLAUGHLIN: We did our research in several stages, and, as mentioned in the opening presentation, this group has been here before and when we applied before it was in the Hot AC format. So it wasn't something that wasn't considered when we came to the market this time. And before we did any consumer research at all, we looked at BDF, and we found that there was, at that time, in 2004, a fairly high duplication between the Hot AC being played in other markets, like Toronto and Vancouver, and that which was being picked up in the stations here.
4963 We did, again, look at it post the filing and prior to this hearing, and we noted that using Mediabase just to look at the top songs that are being played, it ranges, if you look at the Hot AC stations in Toronto and Vancouver, from 45 percent duplication already in the market to 65 percent.
4964 I mean, that's a small subsample, and it's only based on four weeks, but, in terms of speaking to diversity, a large portion of that music is already here in some form on one of the stations.
4965 COMMISSIONER DUNCAN: Thank you.
4966 I'm going to turn now to news and related spoken word.
4967 At recent radio hearings the Commission heard varying opinions from broadcasters regarding the relevance of offering news and other types of spoken word programming to a youth and young adult audience. Some say it's not an important element, that youth‑oriented formats must be highly music‑driven, with a minimum amount of spoken word. Other broadcasters have stressed the opposite, suggesting that quality and relevant spoken‑word material is important and necessary to successfully program to a youth and young adult market.
4968 With that in mind, as part of the Xtreme's overall programming strategy, what role will local reflection, spoken‑word programming play as a programming element ‑‑ this is on‑air, not necessarily on the website ‑‑
4969 MR. OLSTROM: Right.
4970 COMMISSIONER DUNCAN: ‑‑ do you consider it a minor component or an important element of your format?
4971 MR. OLSTROM: Commissioner Duncan, it is a very important component of our programming. Yes, the format is a music‑driven format, and that's what draws them to the radio station; however, the spoken word, news and information that we deliver to this demographic is of vital importance, that is reaching them and speaking to them.
4972 A lot of times, you will listen to youth stations ‑‑ and I have done it in this market, in our time here ‑‑ and it's the same flavour, if that's how you want to refer to it. You need to talk about the stories that relate to them and the things that impact them.
4973 Maybe I could have Garry McGowan step in on this.
4974 MR. McGOWAN: When I was speaking earlier, Commissioner Duncan, about perspective, I thought, "What could I use to illustrate that?", because sometimes, once again, a story or an illustration is better than speaking in the abstract.
4975 There's a wonderful strip in Calgary, down on 1st Street, where a number of sort of key clubs have existed for a long time. There's one called The Night Gallery, that recently closed, but presented a lot of great artists over the years, and there's another place called The Castle, and there's a bunch of them in a row. For a lot of years, for the 18‑pluses in our demo, this was a place you would go to socialize, almost, in a British sense, your local, where you would go to have that pint and meet your friends, and so on and so forth.
4976 Earlier this year there was a shooting and a stabbing on the block, and if it was in our newscast, and I think on anybody else's newscast in the marketplace, the top line would be the same. These are terrible things, they are regrettably often a function of our growing urban centres in the country. Usually, what happens is they are reported, and then you move on, because tomorrow there could be another one in a different part of the city.
4977 But if you are speaking to a specific community, this is one of the areas, 17th Avenue, Kensington, these are places in the city where they gather, it's a much larger story than that. You have to go deeper. You have to speak within the terms of reference where why I suddenly, perhaps as a 28‑year‑old who regularly goes down there on Friday and Saturday would suddenly say, "What's going on in my community?".
4978 And there's many different perspectives. If I'm the six o'clock news/talk reporter, maybe all I want to know is: is this the eighth time this has happened in the second month of the year? This is terrible, Mr. Police Spokesman, what are you doing about it?
4979 Whereas, I think our question might be ‑‑ I understand from the reaction, the feedback we have getting on our website and on our phone lines, that at one point in time there were beat cops walking in that area or you had a cruiser parked there Friday and Saturday and this tended to chill any negatives that were happening. Now, you have stopped doing that.
4980 Is that a function of: is the service's resources stretched, I mean, are you unable to offer what you would like to offer? Or is it a function of the people who are operating the venues? There's a deeper story. But again the perspective is, it's not just about these things happen and it's terrible and I'm glad I live somewhere else, it's about what can we do about it, because it's affecting our community? I think that's the approach we intend to take with it.
4981 MR. OLSTROM: I would like to have Debra McLaughlin, as well, talk about our consumer demand and what the youth are looking for.
4982 MS McLAUGHLIN: Just to put some numbers to what Garry has been telling you, there is a strong interest, it's 89 percent. It, in fact, outranks ‑‑ or is almost equal to the variety of music.
4983 And I can speak to my other experience. I do research for youth stations as a regular part of their programming, planning and strategizing, and news and information is always one of their top interests. Music, I have to say, is the most, but very close. Again, it gets back to what Garry was saying, it's the relevance, it's the stories covered, and it's the perspective given.
4984 COMMISSIONER DUNCAN: So that 89 percent is the result that you get when you asked the question: are you interested in spoken word, 89 percent said they are interested in relevant stories?
4985 MS McLAUGHLIN: Well, we don't ask it that way. What we do is we ask them to rate the importance of our various programming elements, and we have a battery of about 15 of them. So we just ask them to rate it, and then we take those elements that score in the "very important" or the scale that we put in, and we simply add that up and rank it, and news and information is at the top.
4986 COMMISSIONER DUNCAN: Thank you.
4987 That, I think, leads well into the next question, because we are just wondering, you indicate you are going to have 4‑and‑a‑half hours ‑‑ 3 hours of news and approximately 4‑and‑a‑half hours of weather, traffic and sports each week. So then on the point of "other spoken word", does the information or the example that Mr. McGowan gave us, would that count in your news or in the spoken word?
4988 MR. OLSTROM: That would be part of ‑‑ what Garry was giving you was just sort of the perspective of what the youth ‑‑
4989 COMMISSIONER DUNCAN: Yes.
4990 MR. OLSTROM: ‑‑ are looking for in stories that they want to hear.
4991 COMMISSIONER DUNCAN: Is that a story, though, or a news item, do you think ‑‑
4992 MR. OLSTROM: That would be an ‑‑
4993 COMMISSIONER DUNCAN: ‑‑ in that illustration?
4994 MR. OLSTROM: That would be a news item.
4995 COMMISSIONER DUNCAN: Would it?
4996 MR. OLSTROM: Yeah.
4997 COMMISSIONER DUNCAN: Okay, that's fine.
4998 MR. OLSTROM: In total, we have 8 hours and 31 minutes of news and spoken‑word programming.
4999 COMMISSIONER DUNCAN: So, then, what about the types of articles? Because it sounds to me like your audience is interested in more than just news. What other types of spoken programming have you considered or do you think that you might put in? I'm thinking some of the applicants we have heard mention health, issues of health, or abuse or ‑‑ are you planning to do that type of spoken‑word programming?
5000 MR. OLSTROM: No, we are not. That would be probably more an add‑on to the news story, but there isn't separate features that ‑‑
5001 COMMISSIONER DUNCAN: You are not ‑‑
5002 MR. OLSTROM: ‑‑ go into health or ‑‑
5003 COMMISSIONER DUNCAN: Thank you.
5004 Then ‑‑ and maybe Mr. McGowan's answer is the answer here ‑‑ but what's going to distinguish, then, your news from what this age group is currently getting in the market?
5005 MR. OLSTROM: I think Garry hit it on the head when he said here's a story that wouldn't be covered by necessarily mainstream media in the city currently, but it is a story that may have relevance to the youth demographic.
5006 It's not that traditional stories won't be covered. I mean, the Alberta budget comes out, those things ‑‑ I mean, they want to know that information. It's just it's all in context, and what you can add to that.
5007 COMMISSIONER DUNCAN: Did I understand, though, that on your website you would be maybe discussing other issues, will you, health issues, drugs, whatever, police, whatever?
5008 MR. OLSTROM: Possibly. I mean, what we have intended with that, with our chat space, it would be a situation, for example, if we have got an artist in for an interview and there's only so much time allotted to that on‑air interview, there's an opportunity, then, afterwards to go to the website and the opportunity to bring the listeners there to interact with that artist.
5009 COMMISSIONER DUNCAN: All right. Excellent. Okay.
5010 In your supplementary brief, you refer to bringing community‑level news to your newscasts. And maybe we have already, again, through Mr. McGowan's comments, heard what that might be, but we just want to sort of elaborate on the concept of community level news.
5011 MR. OLSTROM: Okay, and I would like to turn back to Garry to further go on with that story.
5012 MR. McGOWAN: Well, I think, again, Commissioner, it's a question of how it all stitches together and from what perspective it stitches together.
5013 I think, again, there's a certain ‑‑ in programming to this demographic there's a certain, shall we say, looseness to the approach. It's not so much that the news jingle comes up, here we go for two minutes, then we go to something else. I mean, I think there's a give and take because it's so multi‑dimensional with our audience.
5014 Maybe that issue I cited, or the fact that we had Franz Ferdinand when they come to town later this month, maybe they come into the station and there's a chance for the on‑air personality to talk to them, then they do some online chat, and then maybe for the next day we pull some clips from that interview because, again, this is pretty central to this life experience of theirs at this point in time, to keep that story, as it were, alive. Or we continue to offer up samples of comment that people sent into us via e‑mail, to say, "Hey, this, that and the other thing" about it, or "Here's what I thought of the show when it was done".
5015 Again, back to hard news, the Speech from the Throne in Alberta happened last night and there's many different things that occur in that. What's the perspective of our audience? Well, in many cases it might be what's happening with post‑secondary education versus what's happening with retirement funding dollars?
5016 I mean, not that ‑‑ again, your top lines are terribly different. The fact is that occurred, here's the big ‑‑ the stuff, where do you go from there? And the "where do you go from there" is how you connect with your audience, and that's what we want to do.
5017 COMMISSIONER DUNCAN: So I understand what you are saying, then, probably these community‑level news clips would maybe originate from your website. Is that what you are ‑‑
5018 MR. McGOWAN: Potentially, yeah. Again, I think they could come from many different sources, in our case.
5019 COMMISSIONER DUNCAN: Okay. Thank you.
5020 MR. OLSTROM: With respect, I mean, we will also have ‑‑ within the website there will be links to different community groups that are of relevance or importance to this demographic.
5021 COMMISSIONER DUNCAN: Yes, I had noticed that.
5022 This is interesting, because we had the impression from your brief, you state:
"The music component on the station's format is the more critical element..."
‑‑ and I guess that's what we have heard here today ‑‑
"...and that on‑air personalities are of lesser importance." (As read)
5023 Would you elaborate on how this thinking will affect your programming and give us some idea of your staffing plans in the area of news and on‑air development and general programming?
5024 MR. OLSTROM: Well, in terms of ‑‑ yes, the music is, we keep saying, is the important thing here. I don't want to give the impression that we don't believe that personalities aren't part of where radio is going to be, but the music is important.
5025 If I could, I will go to your question with respect to staffing levels.
5026 COMMISSIONER DUNCAN: Yes.
5027 MR. OLSTROM: Within programming there are 14 programming staff. That includes three news staff.
5028 COMMISSIONER DUNCAN: These are full‑time positions?
5029 MR. OLSTROM: Those are full‑time positions, yes.
5030 COMMISSIONER DUNCAN: M'hm.
5031 MR. OLSTROM: Sorry.
5032 COMMISSIONER DUNCAN: That's all right. That's okay.
5033 MR. OLSTROM: I'm sorry, and the second part of your question.
5034 COMMISSIONER DUNCAN: Oh, I was just wondering about the importance that you placed on the on‑air personalities, really, I mean.
5035 MR. OLSTROM: Well, there is an importance there. The personalities are there to talk about the music, interact with the music, interact with the audience, relate what's important to the target demographic.
5036 COMMISSIONER DUNCAN: So the other 11 in the staffing would be, then, dealing with that ‑‑
5037 MR. OLSTROM: Yes.
5038 COMMISSIONER DUNCAN: ‑‑ type of stuff ‑‑
5039 MR. OLSTROM: Yes.
5040 COMMISSIONER DUNCAN: ‑‑ would they?
5041 MR. McGOWAN: Commissioner, if I could just jump in? Again ‑‑
5042 COMMISSIONER DUNCAN: Sure.
5043 MR. McGOWAN: ‑‑ the relationship of the on‑air people to the audience comes very much out of the way the audience relates to its music, and maybe at no time in popular music history has there been, in some sense, less of a gap between the audience and the creators.
5044 There's a very great sense of peer‑to‑peer relationship between them because, in many cases, they are of the same age, and they relate very well to each other. And there has been a great sense of rejection of a lot of the trappings of stardom, and I think that trickles down into how our on‑air approach will take place.
5045 You know, you don't have so much the sense of "The Morning Man" speaking or being ‑‑ you know, it's more of a peer‑to‑peer thing. So you are de facto on line with your audience or you are talking to them on the phone, and, you now, "Oh, that's an interesting bit, we'll use that", because, again, this is part of this community, this portal that we are creating and building.
5046 So it's not that we don't have on‑air personalities live and as per our regular radio station, but it's just the relationship, because that's key to serving them.
5047 COMMISSIONER DUNCAN: All right. Thank you.
5048 I'm wondering how many hours per week you would offer live‑to‑air programming, as opposed to prerecorded or voice‑tracking?
5049 MR. OLSTROM: We would be full time, 24 hours a day live.
5050 COMMISSIONER DUNCAN: Okay.
5051 COMMISSIONER DUNCAN: I think we have already answered this question, but you might want to add something else to it. We were just wondering about the lifestyle, human interest or entertainment features, but, as I understand, most of that will be available on the website and, as appropriate, brought onto the radio station. Is that...?
5052 MR. OLSTROM: Well, in terms of ‑‑ yeah, I guess the feature programming that we do have is sort of laid out, and we would make those available on the website. This is about the radio station, but the website is of vital importance, in particular with this demographic ‑‑
5053 COMMISSIONER DUNCAN: I got it.
5054 MR. OLSTROM: ‑‑ so we need to ensure that we sort of marry the two.
5055 COMMISSIONER DUNCAN: So what type of ‑‑
‑‑‑ Background noise / Bruit de fond
5056 COMMISSIONER DUNCAN: ‑‑ because I understood there earlier that you weren't really planning features.
5057 MR. OLSTROM: Well, we do. We do feature programming. So, in other words, we have shows like the Indie show ‑‑
5058 COMMISSIONER DUNCAN: Oh, yeah, no, sorry, that's not what I meant.
5059 MR. OLSTROM: Okay.
5060 COMMISSIONER DUNCAN: I meant like lifestyle features ‑‑
5061 MR. OLSTROM: No, no lifestyle.
5062 COMMISSIONER DUNCAN: ‑‑ human issues.
5063 MR. COWIE: I think, Commissioner, I might be able to help with this.
5064 There is a segment of what we will do that is not attached to news, but it is an outreach from our street program, from the colleges, high schools and venues, of what's going on in the community ‑‑
5065 COMMISSIONER DUNCAN: Okay.
5066 MR. COWIE: ‑‑ which is a communication process that will be, not only on our website, but will be on our air. That's where Garry comes from. He has that street‑level experience. He has those contacts. So we will have a constant input of that kind of information, but it will not be necessarily in the news service, it will be in the jock talk on the station ‑‑
5067 COMMISSIONER DUNCAN: Okay.
5068 MR. COWIE: ‑‑ and upgrades of entertainment and that sort of thing.
5069 COMMISSIONER DUNCAN: That is helpful.
5070 MR. COWIE: Yeah. I didn't mean to jump in there, but we were missing a very important point, I think. Thank you.
5071 COMMISSIONER DUNCAN: Thank you. Yes, I've got it.
5072 With programming designed to appeal to youth and young adults ‑‑ or that programming can be edgy and walk a fine line between what is acceptable and unacceptable in over‑the‑air content. Who will be responsible for ensuring that Xtreme FM's over‑the‑air content would not contravene accessible broadcast standards?
5073 MR. OLSTROM: Well, we, first of all, believe that we are responsible broadcasters and the program director is the ultimate, I guess, authority or sheriff in town and they will insure that we are within all the standards.
5074 COMMISSIONER DUNCAN: Thank you.
5075 And regarding synergies, are there any plans for your Calgary station to share programming, resources or programming content with your Regina station?
5076 MR. OLSTROM: No.
5077 COMMISSIONER DUNCAN: No. Thank you.
5078 Canadian content, this just needs to be cleared up here.
5079 In your original application, you indicated you would accept a condition of license 40 percent Canadian content each week, as well as between the 6 a.m. and 6 p.m. period Monday to Friday. In the revised brief, at page 11, you speak only of a commitment of 40 percent Canadian content level on a daily basis.
5080 Can you confirm your proposed minimum Canadian content commitment for the broadcast week and for that 6 a.m. to 6 p.m. period?
5081 MR. OLSTROM: It should be 40 percent 6 a.m. to 6 p.m. and 40 percent for the broadcast week.
5082 COMMISSIONER DUNCAN: Okay. Okay, so that would be a condition of licence, then? You're prepared ‑‑
5083 MR. OLSTROM: Absolutely.
5084 COMMISSIONER DUNCAN: Thank you.
5085 Now turning to Canadian talent development ‑‑ and this, again, referring to your supplementary brief, on page 14 ‑‑ you indicated that you would underwrite the production of a 1,000 CDs annually for each of the five annual talent search finalists. So that would be 5,000 CDs. You indicated that these CDs would be for the use of each artist, whatever they wanted to use them for.
5086 However, in your brief you also state, and I think you said something along this line this morning in your introduction that,
"all profits from any sales of the CDs through station activities will be split among the contributing artists." (As read)
5087 So we just were wondering if you would elaborate on that statement, if you are planning to cut more than a 1,000 CDs, and how that will be administered.
5088 MR. OLSTROM: I would like to turn to Garry McGowan to speak about that.
5089 MR. McGOWAN: Yeah, certainly.
5090 As you heard from our visual discussion with some of the artists in Calgary and some of the challenges they face, one thing we want to do first for them is to deliver a professional recording that allows them to promote themselves.
5091 A lot of the process nowadays, just to give you an example of why we are doing this, is, if you try to get a booking somewhere else, the first thing somebody will say is, "Send me a CD". Nowadays, you know, sometimes it's, "Send me your MP3 or the link to your website", but there's still a great requirement for a lot of free CDs to be handed out by an artist. So we wanted to arm them with that tool.
5092 Then, secondly, as part of the exposure marketing component, we wanted to be able to offer a retail element to it so that audience in Calgary could go out and purchase the music and, de facto, register their support for these artists because, of course, they would know that the money's going back to them.
5093 Finally, we, again, as part of our commitment to making this work, want to make sure that we have sufficient copies on hand ourselves to market it elsewhere. So that we plan on, obviously, sending this to every other alternative rock station in the world that we can source out, and that's why we are producing the CDs in the quantity that we had specified.
5094 COMMISSIONER DUNCAN: So these are over and above the 1,000 ‑‑
5095 MR. McGOWAN: Yes.
5096 COMMISSIONER DUNCAN: ‑‑ that go to each artist?
5097 MR. McGOWAN: Yeah, absolutely.
5098 COMMISSIONER DUNCAN: And so the ones that are going to other stations, they would be complementary, I assume ‑‑
5099 MR. McGOWAN: Yes.
5100 COMMISSIONER DUNCAN: ‑‑ you are trying to get them to play the music. But the others that are sold, those are, like, at local retail outlets or ‑‑
5101 MR. McGOWAN: Yes.
5102 COMMISSIONER DUNCAN: And so how do you control the cash for things like that, for sales?
5103 MR. McGOWAN: Usually in programs like this they go out on a consignment basis. so an interested retailer, you will establish a price plan, let's say it's $10, and if you are the local HMV store, for example, you will deem it to be a retail face ‑‑ that's their choice, obviously ‑‑ and the station would be responsible for collecting the money against the stock imputed into the outlet, and accounting.
5104 Certainly, we would prepare an accounted statement for all the artists, to say, "Here's what was sold, ultimately, in the campaign window, and here's your cheque".
5105 COMMISSIONER DUNCAN: So hopefully, there will be lots collected?
5106 MR. McGOWAN: It would, and I think we will, actually.
5107 COMMISSIONER DUNCAN: As part of the CD support for new and emerging artists, you outlined the travel assistance plan, which you indicated would be independently administered. We wondered why this administration wouldn't fall under the auspices of the talent development coordinator, and if you anticipate a fee being paid, if it's coming off of the $105,000, and any other information that you could provide us with respect to that travel insurance plan would be helpful.
5108 MR. OLSTROM: Okay, I will turn to Bruce Cowie to say something about that.
5109 MR. COWIE: The talent coordinator clearly will be the liaison person with ARIA, who will administer the funding, but we thought it better to have an independent organization make the choices from those who apply as to who gets the money. We don't think the radio station should having anything to do with that. That's the first part.
5110 COMMISSIONER DUNCAN: Mr. Cowie, can I just interrupt for a second?
5111 Who did you say would be ‑‑
5112 MR. COWIE: ARIA, the Alberta ‑‑
5113 COMMISSIONER DUNCAN: Oh, it's going through them?
5114 MR. COWIE: Yes.
5115 COMMISSIONER DUNCAN: Okay. Sorry.
5116 MR. COWIE: And they have experience at administering funds of this kind. There is an administration fee of 10 percent, which is over and above the CTD package. We are responsible for that.
5117 COMMISSIONER DUNCAN: You are paying that? Okay ‑‑
5118 MR. COWIE: Yeah.
5119 COMMISSIONER DUNCAN: ‑‑ that's great. Thank you.
5120 MR. COWIE: In fact, I have a letter from ARIA which contains that arrangement ‑‑
5121 COMMISSIONER DUNCAN: All right.
5122 MR. COWIE: ‑‑ and we would be prepared to file that with the Commission, if you wish.
5123 THE CHAIRMAN: A question of clarification.
5124 Is the 10 percent within your CTD ‑‑
5125 MR. COWIE: No.
5126 THE CHAIRMAN: ‑‑ or outside the CTD?
5127 MR. COWIE: No, it's outside the CTD.
5128 COMMISSIONER DUNCAN: So, yes, that would be a good idea to file it, if you would. Sure, it would be useful to have.
5129 MR. COWIE: We will.
5130 COMMISSIONER DUNCAN: Thank you.
5131 Regarding the talent search initiative, you have designated $14,000 for announcement and promotion of the contest. So will this funding be going to third parties and, if so, how will they be using it ‑‑ I suppose they will have a free hand to do what they like with it, perhaps ‑‑ how will they use it, and will any of it be used to underwrite promotion of the contest on your own website or on air?
5132 MR. COWIE: The answer to the second part is, no. It will all be used for third party promotions.
5133 This is going to be a huge bet, so we will obviously do a lot of work in promotion of this event, but none of the funds will flow to us for that purpose.
5134 COMMISSIONER DUNCAN: Thank you.
5135 With respect to your scholarship initiative, Harvard plans to award six scholarships of $5,000 each to students of SAIT, and in the cinema, television, stage and radio division you have said that this division has a program that produces broadcast‑ready news reporters, but this does not necessarily imply the study of journalism.
5136 We have asked this question of other applicants: according to the CTD funding guidelines, funds for scholarships will qualify as CTD expenditures only when they support students engaged in music, journalism or other artistic studies, and traditionally the Commission has viewed general broadcasting studies as a vocational not an artistic study.
5137 So with that in mind, is there a program within SAIT dedicated to teaching the skills of journalism? If so, would you confirm whether the scholarship funding will be awarded to a student to specifically study within the journalism program?
5138 MR. OLSTROM: Yes, there is, and I will have Garry speak to that.
5139 MR. McGOWAN: Yes, SAIT has a diploma program called Cinema, Radio and Television Arts, so it's kind of an omnibus degree, if you will. It obviously cycles an undergrad through a lot of different components to give them a flavour, and hopefully a direction, that they might go post‑graduation, or to further specialize. So that would be where the scholarships go.
5140 COMMISSIONER DUNCAN: Thank you.
5141 I think that's it for that section.
5142 THE CHAIRMAN: We will take a 15‑minute break, so we will resume in ‑‑ we will be back at 10 before 10.
‑‑‑ Upon recessing at 0935 / Suspension à 0935
‑‑‑ Upon resuming at 0955 / Reprise à 0955
5143 THE CHAIRMAN: Order, please.
5144 We will continue with the questions of Madam Duncan.
5145 MR. COWIE: Commissioner Duncan, with your permission, at the end of the programming section you asked a question with respect to core audience, and I'm not sure we adequately answered that question. So if you would permit, I would ask Debra to go through that with you.
5146 Thank you.
5147 MS McLAUGHLIN: When we look at the current tuning patterns that we can obtain from BBM, and we simply look at the distribution of hours amongst these subgroups within our broad demo, the index on 12 to 17 is 210 and the index on 18 to 24 is 257 and 25 to 35 166.
5148 Now, what this means in practical tuning is that the majority of our audience will below the age of 24. There will be some tuning, obviously, from the 25‑34, but this is truly a youth demographic.
5149 Also, I just might add, I think I may have heard your question wrong, so correct me if I have, but I thought I heard you ask: how can you program from 12 to 24 to 34, like how do you in one station?
5150 I think that's a question that has been asked a lot by the Commission over the years in all manners of setting: ConnectTV, which was a speciality licence, which subsequently became MTV, in other radio hearings I have been at.
5151 I do have a lot of experience in that area, because outside of this particular hearing I have been doing the research for all of those groups. What you find is the interest between the 12 to 17 and the 18 to 24 are not dissimilar. If you look at their choices in music format, television programs, they are all the same. The programs rank the same, the formats rank the same. What you start to see in the 25‑ to 34‑year old group is a broadening of their interests and a migration to other services.
5152 But it is possible to serve all of them because, as you can appreciate, not everybody transitions at the same rate.
5153 COMMISSIONER DUNCAN: Thank you. That's useful, because we did have a concern that I hadn't gotten the answer to that question, so you were right on the money there.
5154 But I still don't have a clear picture ‑‑ I mean, obviously you have spoken to it ‑‑ but I still don't have a clear picture of how the programming would differentiate. You are going to serve alternative rock music to that whole age group?
5155 MS McLAUGHLIN: That's correct.
5156 COMMISSIONER DUNCAN: And your news will appeal to the whole of the broad group?
5157 MS McLAUGHLIN: Well, the news ‑‑ and just to step back, because I can rely on the researcher, I will refer back to the research that I did. There is an interest in the top stories from across Canada, there's an interest in local news, and that's not different across all of those groups. So inasmuch as we provide that, all groups will be able to find something, in terms of our news and spoken word.
5158 The music, itself, alternative rock, appeals across that entire age group. What will help or result in this station skewing younger is the fact that some of the news stories will rely on the community base that Garry talked about, news that comes out of the universities, out of the club scene and event scene.
5159 It's most likely, though not improbable, but most likely that a 34‑year‑old has less interest in a skateboarding event than a 12‑ to 17‑year‑old. But one of the questions you asked earlier about the role of the on‑air personality, I think, speaks to how we will be able to serve that full 12 to 34.
5160 The branding for this station is the music. Unlike a lot of the ads you see for older skewing stations, they have personalities in the morning. It's about them talking about what they did with their kids last night and the new car they bought and the movies, and it's a perspective that is very important to the programming of those stations.
5161 This format is about the music. There will be some talk. It will refer to the music, about the artist. It won't turn off the 25‑ to 34‑year‑old, and, most importantly, it won't turn off the 12‑ to 24‑year‑olds. It's because it's in the talk that differentiates the interest in this group, they will be able to serve it across the board. But if the 25‑ to 34‑year‑old, as they are transitioning, want to get into that personality, that will be available in the market.
5162 I don't know if that answers your question.
5163 COMMISSIONER DUNCAN: You do. I think that's all very helpful.
5164 When Mr. McGowan gave the illustration and response, I think, to the community news idea, of a news event that might happen in the bars ‑‑ so that I gather the legal drinking age in Alberta is 18 ‑‑ but can you give me an example of an equivalent ‑‑ maybe not equivalent, but a similar event that might constitute community news in a younger group?
5165 MR. McGOWAN: Well, yeah, I can, actually.
5166 There's another issue that's on the table in Calgary right now, and that's the question of downtown or inner city parking. And within the city of Calgary there is a ‑‑
5167 COMMISSIONER DUNCAN: Yeah, I know.
5168 MR. McGOWAN: ‑‑ which perhaps you can relate to if you have been driving, and certainly we can. It's difficult to find downtown parking. Part of the reason is because the city controls how much ‑‑ as any municipality, controls the level of parking developed.
5169 In Calgary, for whatever reason, they put a levy on developers who are proposing to build buildings like the one we are in. They don't necessarily require you ‑‑ well, they don't require you to have parking for every person who could potentially be there, in fact, it's a fairly ‑‑ it's almost a minority number. They take a levy, and the concept is that the city, itself, will go forward and build these parking spaces.
5170 Now, a top‑line media story, again, since I believe it's about to be debated by city council, is the fact that, okay, if I am 35‑plus and I have to drive, commute into my office from a part of Calgary, and I drive, maybe I have to come and go during the day, I got to have parking, and it's expensive, and difficult to obtain, that's the top‑line story. There is a parking issue.
5171 But for our demo, I mean, many of them are working at beginning jobs or they are students, at whatever level, secondary, post‑secondary school, it's not ‑‑ they don't have a car. So maybe their greater issue, the other thing that's on the debating table right now in the city, is the further expansion of transit, or LRT, light rail transit, to northeast Calgary.
5172 What's more important? Well, we will know by the feedback we get from our community, both phone calls, website, interaction with them, where they are at with it.
5173 I suspect that maybe their is, "Well, hey, if you're not building parking anyway, why isn't more of that coming to transit, because it's difficult for me to come back from studying in Mount Royal, which is down in the southwest, because transit service declines in the evening and I have to cram for examines until midnight and I have no way of getting home. It's of greater use to me if there's better transit service".
5174 So I think, once again, there's a certain skew of how you speak and serve your community with your spoken word and news programming, and that would be another example I would use.
5175 COMMISSIONER DUNCAN: I appreciate that, too. I as actually trying to think of something that might be 12 to 17, but ‑‑
5176 MR. McGOWAN: Yeah.
5177 COMMISSIONER DUNCAN: ‑‑ if it happens, you will see us ‑‑
‑‑‑ Laughter / Rires
5178 COMMISSIONER DUNCAN: ‑‑ but I was just trying to see what your community news might constitute for that group, that age group.
5179 MR. McGOWAN: Well, again, I think there are issues ‑‑
5180 COMMISSIONER DUNCAN: Maybe a rock concert ‑‑
5181 MR. McGOWAN: Yeah, exactly.
5182 I mean, further to what Debra said, you, again, have to appreciate, and I think anyone in the room who's a music fan knows how central to your life experience music is. You are either at some point touched by it, or probably not at all, but in your prime years, which usually fall somewhere between 12 and 34, the fact that an act like Metric or Franz Ferdinand are coming to Calgary is really important.
5183 The more contact you can have with that even, maybe the group phones in from a tour stop in advance, maybe the radio station's giving you a chance to win tickets or even meet the group, that's really important. That could be the biggest thing of your month, if not year.
5184 Again, your job, as a broadcaster, with a focus on your audience, is obviously to serve them. And that happens in different genres and ages in different ways, but ours, I think we are pretty focused on what we need to do to speak to them.
5185 COMMISSIONER DUNCAN: I guess Hilary Duff might be a good example for that age group. I don't know if she was here to Calgary recently or not. She was in Halifax.
5186 MR. McGOWAN: Age group, I think that belongs more to the CHR side of the spectrum.
5187 COMMISSIONER DUNCAN: Oh, does it?
5188 MR. McGOWAN: Yeah, absolutely.
5189 COMMISSIONER DUNCAN: Okay. I won't help you out, then, okay? Okay.
5190 Now, just going to ‑‑ and thank you for adding that. It was helpful.
5191 I just want to go to the economic analysis. This is kind of an interesting thing because the two questions, to me, go in sort of the opposite direction, and so I will ask them both, and then you can see.
5192 We note that, in comparison with the experience of an existing Calgary station, CIBK‑FM, your overall 12‑plus audience share may be somewhat underestimated.
5193 CIBK‑FM generates a large portion of its total audience from the 12‑to‑34 demographic group, the same group you are targeting with your proposed service, although I notice that wasn't the station that you quoted in your example earlier. But given this comparison, because they had a 9.2 percent audience share 12‑plus, we thought perhaps your audience share estimates were underestimated.
5194 But the other question I have that sort of goes the other way is then I noticed that your revenue projections, compared to all of the other applicants, are more bullish, they are highest of all of the applicants in every year, and so I was just sort of interested in your comments.
5195 MR. OLSTROM: I would first, actually, like to turn to Debra McLaughlin to speak to the first portion of your question, and then Tina Svedahl will speak to the financials.
5196 MS McLAUGHLIN: Commissioner Duncan, can you tell me the stat you quoted?
5197 COMMISSIONER DUNCAN: Oh, 9.2 for audience share, the fall BBMs for CIBK.
5198 MS McLAUGHLIN: That's a 12‑plus figure?
5199 COMMISSIONER DUNCAN: Yes.
5200 MS McLAUGHLIN: Okay.
5201 Yes, that format is, as I understand it from surveillance and from descriptions in the industry publications, is broader. It's urban/hip Hop and has a bit of CHR. So it's not alternative. We are a much more narrow focus that serves certainly the large demographic of the 200,000, but their approach is somewhat broader in terms of what they can capture.
5202 In order to estimate our shares, we have relied on the consumer demand study. How we do that is we ask a series of questions within the context of that study. We asked all of our respondents their impressions of radio, the degree to which they are satisfied, do they find variety, and would they listen more?
5203 We also go through a music test, and we play samples of the music and get scores on that; we ask them for their tuning within specific genres; and finally, we describe the service in its full context, combining the spoken‑word element, what that will look like, ‑‑ or sound like, rather, and the music. From that we get very specific responses in a definitely/probably listen category.
5204 I take those numbers, and based on all of the elements I have just described to you, plus, frankly, experience, because I have fortunately done this long enough that I can track what I say at these hearings against what actually happens, I estimate an adoption rate by demographic.
5205 The figure that I have provided here represents, on the basis of this research, about 65 percent to 70 percent of our mid‑range share, and we think that's fairly reasonable.
5206 Just to put that in contrast, if I was doing an adoption rate on a 45‑plus demo, it would be in the area of 40 to 50, because these are early adopters. So, actually, I have taken a bit of an aggressive stance.
5207 Just again, you are comparing in that statement to a broader format. If I compare that to a station like The Edge, in Toronto, it's always sort of ‑‑ well, I shouldn't say "always", but at least for the last five or six surveys, been hovering around a 4.5. So for a new entrant into the market, a 3.28 I think is both reasonable and, I would say, aggressive, but fairly aggressive.
5208 COMMISSIONER DUNCAN: Okay. Thank you. That's good.
5209 MR. OLSTROM: And I will turn to Tina to speak to our financial projections.
5210 MS SVEDAHL: Madam Duncan, as we know, the Calgary market is very strong, and getting stronger every day. As CHOM and many others, we develop our revenues based on total market value for Calgary. That definitely substantiates the reason why our numbers are the way they are today.
5211 When we filed, as you know, in 2004, we then subsequently sent an amended revenue projection in to increase it. That further suggests that the market is growing, and I will just take you through that quickly.
5212 The CRTC numbers for 2004 increased, to the Calgary market, to $70 million. That was an 8.6 percent increase over the previous year. In conjunction with that, the Conference Board of Canada also released their information for 2004, and the retail sales for Calgary surpassed their forecast by 7 percent, totalling a 10.3 percent increase in retail sales.
5213 Those two figures alone, and in the way we do our business plan, considering total market, definitely substantiated a reforecast in our business plan and further substantiates the reason why our number is $39 million.
5214 Then, because of the top‑down approach, we simply just calculated the value of a share and multiplied it by the share point, as Debra mention, of 3.2. Extrapolating that over the seven years you, will arrive at our $39 million.
5215 Based on that assumption alone, I'm very confident that our numbers are realistic. However, I will pass it over to our sales expert, and she can further demonstrate our bottom‑up approach to further substantiate that is a reasonable number.
5216 MS BRODERICK: Yes. Thanks, Tina.
5217 We also used a second set of calculations to determine if our share estimate made sense, based on sellout rates and unit rates. So what we did was take individual day parts, estimated sellout rates, annual rates, and multiplied by 52 weeks. When we did this, we had a less than $9,000 difference in our $39 million budget.
5218 So on both levels, we feel that our rates are reasonable, as well reflective of the markets.
5219 COMMISSIONER DUNCAN: All right. That's great. You are obviously very confident in your numbers.
5220 MS STRAIN: If I could just add, Commissioner Duncan, I think the confidence in our numbers also reflects the fact that we ‑‑ just getting back to what we said before, we think we found the gap in this market. Whereas, some of the other applicants in this hearing will be competing for listeners with the incumbent stations when and if they launch, we won't have that problem.
5221 COMMISSIONER DUNCAN: All right. Thank you.
5222 MS SVEDAHL: Madam Duncan, if I could also add, just a point of interest, yesterday, when listening to the other applicants, there were suggestions that the market forecasts were close to $80 million. So there, again, I think that further substantiates that we were very reasonable in our market forecast.
5223 COMMISSIONER DUNCAN: It just begged the question cause you were number one. I had to ask.
5224 I think maybe, I don't know ‑‑ Ms McLaughlin, you have been so helpful here today ‑‑ but we have tried from other applicants, as well, to get a better understanding of how your research ties into your revenue projections, and probably you have given me that in your last comments.
5225 MS McLAUGHLIN: Well, as both Karen and Tina have just described, the audience research in the top‑down approach is the basis after calculating the share point value. As she said, you just take the total values reported by the CRTC, take the total share of the originating stations, which are the only ones that contribute to that revenue summary that you provide us, you divide it in, you find a share point value.
5226 You take that number and depending on your confidence in the market, you either increase it by what you think the market will grow by, and in our case we also added an inflationary rate, assuming that because we did originally file in 2004 there would be some growth just based on inflation alone, and you multiply it by the share point value that comes directly out of the research.
5227 There's the acid test that we have described. In terms of my share, I have not only looked at CFNY, I have had the advantage now to look at what's happening at Sonic in Edmonton, and I believe they came out over 5.
5228 We have an alternative rock coming out of Vancouver, so we can look and pretty much gauge whether I'm twice what everybody else is or half that, or whatever, and I think that we are very bang on.
5229 Then, as Karen can describe for you, once you have got all that, you go into the market, you get the cost on average unit rate, figure out what you sellout rate will be on each day part, and because of the high demand from advertisers that Karen and her team, and, frankly, I had to investigate, as part of the feasibility study, the sellout rates were about 50 percent, which seems aggressive perhaps to some for a marketed new station, but in actual fact have been achieved by other youth stations right off the mark.
5230 So it's been tested in several directions, and the audience research, the demand that we see, is the premise for the economics. It isn't derived from the economics, it is the premise.
5231 COMMISSIONER DUNCAN: And I did understand you to say you used 65 percent or you do temper that.
5232 MS McLAUGHLIN: Yes.
5233 COMMISSIONER DUNCAN: I noticed some of the other applicants referred to taking a ‑‑ they didn't like to use the word "conservative", but a more moderate approach.
5234 MS McLAUGHLIN: Well, yeah, because ‑‑
5235 COMMISSIONER DUNCAN: You tempered yours a bit.
5236 MS McLAUGHLIN: Yes. What we do, and what I was referring to, is if I was to get a score of 21 percent of all respondents saying they would definitely listen, it would be a glorious thing, and I supposed I would be much better if I could ‑‑ or, you know, busier, if I could predict bang on that what my research says is what happened.
5237 We know that there is a variation between what people state they will do and what they actually do in practice. So we discount that. We discount it lesser for the less competent statement of listenership, as it were, "probably listen", we discount that portion more.
5238 But I used in this area between 65 and 70 ‑‑ and, I'm sorry, that's the one last calculation I didn't manage to do ‑‑ but, again, it goes back to the experience that I have in watching the behaviour of this group. They are really adopters, and they do take up services and new products faster.
5239 COMMISSIONER DUNCAN: Thank you.
5240 MS BRODERICK: If I can just add to what Debra says, early on, to determine viability, it was important for us that we do ongoing street‑level research with the potential advertisers.
5241 We have spoken with many, both traditional youth advertisers, as well as ‑‑ or traditional youth advertisers that you might expect, like Megatunes, The Union, Fido Wireless, Axe Music and The Source, just to name a few, but we also spoke with many automotive dealerships, restaurants and night clubs. So what we heard was that the Calgary youth radio market was limited, with little or no efficiencies for advertisers trying to reach this demo.
5242 So this has created significant demand. And I can unequivocally state with confidence that we believe that this format has sustainability.
5243 COMMISSIONER DUNCAN: I do have one question for you, because I was curious ‑‑ and I touched on it there earlier when I was talking to Mr. McGowan ‑‑ because I do see, as a selling feature for you in this proposed formate, is hearing my ad on the website as a bonus.
5244 MS BRODERICK: Absolutely.
5245 COMMISSIONER DUNCAN: So you have factored that in and ‑‑ I don't mean ‑‑
5246 MS BRODERICK: We didn't factor it in to necessarily our revenue projections, but it certainly would be an added bonus, definitely.
5247 COMMISSIONER DUNCAN: Thank you.
5248 MR. COWIE: If I might add one more pillar into this ‑‑ and this is not news we have at the time ‑‑ but we suspected there would be substantial growth in the 12‑24 youth target audience that we are looking for here. We were astounded to find that, since the 2002 census, Financial Post now has taken a look at it after five years and that number has risen to over 200,000 in the 15‑24 age group, which is closing in on 20 percent of the population of the city.
5249 So we take great comfort in that. That will again prove our financial proposals.
5250 COMMISSIONER DUNCAN: Thank you.
5251 Now, we are getting down here on the questions. I'm not going to bother with this one.
5252 I only have one left, actually. You have been very helpful. The other applicants have all been asked this.
5253 We are just curious to know how many new licensees you think the market the market could sustain.
5254 MR. COWIE: Well, we don't agree with the Rawlco figure yesterday of 20.
‑‑‑ Laughter / Rires
5255 COMMISSIONER DUNCAN: We didn't take that too serious.
5256 MR. COWIE: We live in Saskatchewan, too.
5257 COMMISSIONER DUNCAN: Yeah.
5258 MR. COWIE: We think that the market could certainly sustain a licence in the area that we are applying for the younger demographic, and likely a licence in the higher demographic.
5259 COMMISSIONER DUNCAN: Okay.
5260 MR. COWIE: Beyond that, if the Commission chose to license beyond two, our view is that we can come to this market, operate successfully at whatever number you choose.
5261 COMMISSIONER DUNCAN: That's great. Thank you. That's very helpful.
5262 That's all my questions.
5263 THE CHAIRMAN: I have Mr. Langford, for you.
5264 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.
5265 I wonder if we could just sharpen the focus on that last question, if you don't mind, because we are really getting down to the sort of short strokes, as they say here. As we are hearing more and more applicants, we are beginning to see the format pie cut in thinner and thinner slices.
5266 It's clear when you say the older demographics, that you could live happily with, say, Evanov or Larsen or Rawlco, they are way up top, and you are about as far down in the age bracket, as we have heard so far.
5267 What about with the CHUM proposal, which is somewhere in the middle, any overlap in your content with what CHUM is proposing?
5268 MR. COWIE: I guess we would have included CHUM in that third option. If there was a licence beyond two, we could coexist there, yes.
5269 COMMISSIONER LANGFORD: Right.
5270 Are your divisions, which you spent quite a long time on with Commissioner Duncan this morning, and it was very, very helpful, at least for me, and I'm sure for my colleagues, but are you clear enough in your mind, in your sort of division of format, that you actually would not anticipate overlap with, say ‑‑ and I'm just choosing CHUM because they are just kind of in the middle ‑‑ no overlap at all amongst your format, CHUM's, which I see in the middle, and any one of the ones at the top, say, Larsen or Independent? Would you see any area for overlap at all there?
5271 MR. COWIE: I'm going to ask Debra to help me with this. There is some overlap, clearly, at the top end of our 12‑24 or 18‑34 larger demograph, although we do see CHUM as a step higher than we are. But at the bottom end of theirs and the top end of ours there likely would be some overlap.
5272 But if you will allow, I will have Debra speak to that.
5273 COMMISSIONER LANGFORD: Thank you.
5274 MS McLAUGHLIN: Commissioner Langford, I have to admit not having memorized all of CHUM's statistics, but I was present for their presentation and I thought I heard them ‑‑ and correct me if I'm wrong ‑‑ but quite clearly state that their demographic is women and 25 to 44, with maybe a focus, I believe I heard, 30‑ to 40‑year‑old women.
5275 We are clearly not there. The music itself, as you heard, between our video and the presentation they gave you, it just doesn't sound alike.
5276 We are young, we are skewing towards males, and occasionally, and it's hoped, I supposed, by some artists, but not all artists operating in this genre, they do slip over into a mainstream or a Hot AC they become so popular.
5277 But the minute they do that, they fall off of the alternative rock charts because, by definition, the alternative rock format plays a larger range of music, they play more new music, they play less spins. I mean, it really is almost counter programming. They are women, we are male. They have a higher repetition rate. By virtue of having that, well, they say they are introducing new artists, and I'm certainly not here to contest that, it's probably not at the rate that we are, so ‑‑
5278 COMMISSIONER LANGFORD: Thank you.
5279 What about your own video, which you showed us? There was one aspect of it that struck me as keeping with the rest of it, and that was the young lady with the acoustic guitar, whose name I'm afraid I have forgotten. I make not comment on her talent, which I'm sure is enormous, she just didn't seem to be a member of the same club as the rest of the people who were playing in your video.
5280 So how do we account for that in your format?
5281 MR. McGOWAN: Well, I think, just to give you some background, we were ‑‑ of course, deadlines approach, so everyone else we were able to do a shoot live with a band, and in her case, I mean, she had no show scheduled and we really wanted to include her in our video, so we had to do a studio shoot just with her and her acoustic guitar.
5282 I think you have heard a fair amount about how music gels ‑‑
5283 COMMISSIONER LANGFORD: M'hm.
5284 MR. McGOWAN: ‑‑ and the gestation of it and everything and, realistically, if you write songs, you may play them with a band, but in many cases it starts at the piano or it starts on the guitar. We captured her at that level.
5285 COMMISSIONER LANGFORD: I see. So she's not always playing with an acoustic?
5286 MR. McGOWAN: No.
5287 COMMISSIONER LANGFORD: This isn't a young Joni Mitchell we are looking at here?
5288 MR. McGOWAN: No.
5289 COMMISSIONER LANGFORD: Okay.
5290 And last question, if I may, always on the same topic cause we are just getting down to impact on each other, at this point, we are hearing enough now, CJAY, it's pretty clear from the charts that you handed us this morning, they are going to take the hit, if anybody in this town's going to take the hit from you arriving in town. How big a hit? How negatively will your station impact upon CJAY‑FM?
5291 MR. COWIE: Again, Commissioner Langford, to give you a definitive answer, we think it's minimal. But we will give you a number, and I will have Debra do that for me.
5292 MS SVEDAHL: Actually, sorry, Bruce, I can speak to that.
5293 MR. COWIE: Okay.
5294 MS SVEDAHL: Our impact study showed that it was 30 percent. Of that, 40 percent was going to go to the two existing stations and the two stations in the market that we have mentioned. Our number, to quantify it, was $1.1 million.
5295 That being said, 40 percent of it was going to be shared between the two stations, which would be about $440,000.
5296 COMMISSIONER LANGFORD: And you see no problem with them absorbing that kind of an impact?
5297 MR. COWIE: No, it's very small. It's an audience that was going to migrate anyway and one that is clearly nowhere near their core audience.
5298 I would point out that neither of those stations intervened against us.
5299 COMMISSIONER LANGFORD: If I could just turn it around ‑‑ and this will be my last question ‑‑ they are not going to be blind and deaf to what's going on in this room ‑‑
5300 MR. COWIE: No.
5301 COMMISSIONER LANGFORD: ‑‑ and there's going to be some lag time between the time when, hypothetically, we license you and you get up on the air. What kind of a strategy could they use to eat your lunch? Is their format at this point malleable enough that they could push down on it and leave you less of a market to ‑‑
5302 MR. COWIE: We think there's no danger of them doing that. As we have said before, that many have visited the alternative rock genre in the past and had a cup of coffee and decided that there were better things where there were more people and who were a little older. That's changed now. Twenty percent of this marketplace is available in 12‑24s. In order for them to do that, they would have to come and play there, and they are not going to do that.
5303 COMMISSIONER LANGFORD: They would have to abandon their present demographic?
5304 MR. COWIE: That's right.
5305 If you recall, Commissioner Langford, this is a wheel. At the bottom side and on one side it's CHR urban, which is female oriented, and alternative rock or modern rock on the other side, which is male oriented. They can coexist very nicely together and it would be tough for somebody to come in and take the two of them on.
5306 COMMISSIONER LANGFORD: I see.
5307 Thank you very much.
5308 Those are my questions, Mr. Chair.
5309 THE CHAIRMAN: Thank you, Mr. Langford.
5310 We will have a few questions for you.
5311 I was listening with Mr. McGowan spoke about podcasting, and while it is interesting, it also raises some issues. And I'm understanding that currently you already have some music on your website, and that music, could it be downloaded or it's only streaming that you are doing now?
5312 MR. McGOWAN: It's streaming.
5313 THE CHAIRMAN: It's only streaming.
5314 Now, you have said that you are going to be making your programming available for podcasting. Will it be all the programming or only certain segments or certain programs?
5315 MR. OLSTROM: It would be selected segments.
5316 THE CHAIRMAN: And have you already identified which segments it's going to be, and will it include music?
5317 MR. McGOWAN: If I might jump ahead, I know you have some copyright concerns probably. We wouldn't be intruding on copyright issues, so...
5318 MR. OLSTROM: It would include our future programming, the different ‑‑ whether it be our news, for example, and young consumers like to have things on demand or at their schedule so they can download the newscast, and that would be available for them to listen to at their leisure.
5319 MR. COWIE: To be more precise, Mr. Chairman, it would be only the feature programming.
5320 THE CHAIRMAN: Okay, fine.
5321 Now, you also spoke, Mr. McGowan, about news coming from your community website. Now, obviously, you were using the word "chat", but you more than likely were talking about blogs.
5322 MR. McGOWAN: Well, not necessarily. I mean, we actually don't at this point have a position on whether the station would have its own blog, for example. I don't know if we would do that.
5323 I'm more referencing the fact that we see many dimensions to our points of contact, to our portal, if you will, of our community and how we reach them. So traditionally, I think, people would look at: how do you contact a media outlet? It would be, well, you could write them a letter or you could phone them.
5324 Now there's many ways to do it. I mean, you can e‑mail them. If the station sponsors, as I say, a monitored chat facility nothing prevents the program director from spending 11 to 11:30 in the morning reviewing what the audience has to say about the radio station, in addition to those traditional methods.
5325 I'm sure people won't never write us a letter or won't ever, obviously, phone, but, again, the points of contact are multi‑faceted and from there, whether you are the program director or the news director, you reach a certain consensus and an understanding of what are the top‑line issues with your audience.
5326 THE CHAIRMAN: Yeah. Okay, because did I hear you also saying that you will be using that community website to do some news gathering? Because it raises all sorts of questions regarding the reliability of the information and how it is made available.
5327 MR. McGOWAN: Well, I don't think it usurps any traditional role that, let's say, a news director would have. I mean, I wouldn't seen any difference, for example, between receiving an e‑mail or following an e‑mail string on a chat room, where there's some suggestion that maybe this is an issue worth following up to the due diligence that any programming or news department would do, any different from 20 years ago, when you might receive a phone call. Is this a real tip, you know?
5328 THE CHAIRMAN: Okay, well ‑‑ yeah?
5329 MR. OLSTROM: Sorry, this information wouldn't be necessarily posted on the website as an e‑mail, as Garry said, it would be incoming information to the radio station, to the program director or news director.
5330 THE CHAIRMAN: Okay, fine.
5331 Okay, thank you. It clears up the questions that your presentation made, at least to my mind.
5332 Also, I have another question which has to do ‑‑ I read in your application, if you have been granted the licence, you are going to go on the Rogers transmitter site. I also read in the Rogers' letter that they will facilitate you and they are ready to allow you to use antenna and transmission lines.
5333 Will you also need a combiner? Or is there already a combiner on that site that you will be able to use?
5334 MR. OLSTROM: Technical stuff usually goes over my head ‑‑
5335 THE CHAIRMAN: Yeah.
5336 MR. OLSTROM: ‑‑ but Gord Henke of DEM Allen I know is here and I could have that information provided for you.
5337 THE CHAIRMAN: Okay. I'm trying to relate it to the budgets that you have submitted. Obviously, if there is the need for a combiner, your numbers are probably low. That's why I'm asking the question.
5338 MR. COWIE: We will have to get that answered for you, Mr. Chairman.
5339 THE CHAIRMAN: Okay, fine.
5340 Could we expect to have that answered filed, say, at the time of the reply?
5341 MR. COWIE: Absolutely.
5342 MR. OLSTROM: Vice‑chair, Gord Henke is here. I could have him come to ‑‑
5343 THE CHAIRMAN: No, well, you will ask him and you could give us the answer at the time either if you ‑‑
5344 MR. COWIE: We will supply that.
5345 THE CHAIRMAN: Okay, fine. Thank you very much.
5346 I have Mrs. Legal Counsel.
5347 MS BENNETT: Good morning. I have one technical question for you.
5348 As you have heard in the last couple of days, several applicants, including yourself, have proposed Calgary Rock and 106.1 as a second choice frequency. As you would also have heard announced, Industry Canada has advised the Commission that this allotment has a history of NavCom issues in Calgary.
5349 Could you explain how this allotment is a viable alternative for your proposed service? And would its use affect your service to the Calgary market?
5350 MR. COWIE: Well, my understanding was that is not available.
5351 MS BENNETT: So you have not proposed it as an alternative?
5352 MR. COWIE: We have not proposed it as an alternative, no.
5353 MS BENNETT: Okay. Thank you.
5354 THE CHAIRMAN: Okay. Well, it's time now for the wrap‑up.
5355 So Mr. Cowie, Mr. Olstrom, in five minutes or less, could you tell us why the Commission should grant you the licence?
5356 MR. COWIE: Well, first, we are delighted with our conversation with you this morning and we would like to leave you with these thoughts.
5357 Of the many applications before you, we believe our alternative rock proposal best fulfils the Commission's licensing criteria, as set out in the Call for Applications, PM2005‑48.
5358 Further, approval of the Harvard application meets a number of key objectives identified in the Commission's Radio Review, PM‑2006‑1 ,and here's why.
5359 First, the contribution to Broadcasting Act objective. Section 3 of the act calls for diversity of voices, diversity of programming, and the development of local and regional talent. Harvard offers all three.
5360 In diversity of voices, we offer a new editorial voice and diversity of ownership to the Calgary market. We are a western regional broadcaster and Calgary is a natural fit for us. It's a must‑have market that will form the basis for our growth strategy.
5361 In diversity of programming, of all of the applicants before you, our alternative rock format is the most in demand and represents service to the least‑served of all the demographic groups in the market.
5362 As our duplication analysis shows, alternative rock tracks are not being played to a significant degree in Calgary today and there is no alternative rock station in the city, a clear anomaly in a major Canadian market.
5363 A goal of the radio review is to provide listeners with a greater diversity of music genres and a greater variety of Canadian artists. Harvard's proposal achieves this goal in Calgary.
5364 In terms of local and regional talent, our format, with its emphasis on new music, our commitment to 40 percent Cancon, and our CTV package are all focused on the development, exposure and support of local and regional Calgary‑area artists. No other applicant offers a better format or a comparable CTD package in support of the exposure of new music and local artists.
5365 The Commission's recently released radio review calls for effective contributions to Canadian artists through airplay of Canadian music. What we have proposed by way of music programming and our artist‑based CTD package is consistent with that objective.
5366 With respect to our business plan, our plan for Calgary was carefully formulated and is achievable. We have chosen a demographic that is underserved, so we will not be competing in the 25‑54 demo that many of the existing stations already serve and a number of applicants are targeting.
5367 We are at the other end of the lake, fishing alone in the shallow end, where the fish these days are getting bigger. We are introducing a format that does not exist in the market today and which no other applicant has proposed. In short, we are unique both from a demograph and from a format perspective.
5368 Our one‑year revenues represent 4.1 percent of the total projected radio revenues for the Calgary market, a reasonable goal given the size of the target market and proven demand for the format.
5369 We have a market of over 200,000 to draw from, as 12‑24s represent almost 20 percent of the population. Most importantly, this demograph is one of the key growth groups going forward.
5370 Harvard is well financed. We have been in business for 103 years. We have resources to achieve our goals.
5371 Finally, our APTN news mentoring program recognizes the special place of aboriginal peoples in our society, another goal of the radio review.
5372 For all of these reasons, we believe our proposal represents the best use of the frequency.
5373 Mr. Chairman, if you will allow, I'm going to ‑‑ shouldn't often do this ‑‑ but answer a question with a question. Why Harvard in Calgary? Where else could a stand‑alone survive if not in what is arguably the healthiest radio market in Canada, where the demand for the service we propose is obvious, definable and extends into the future.
5374 Calgary's economy is undeniably strong and our proposed format has been licensed in other markets to serve the same demographic that is most underserved here.
5375 If not here, if not now, where would a western regional broadcaster grow? This is the market, this is the economical environment. We think we have provided the application.
5376 Thank you very much for your attention.
5377 THE CHAIRMAN: Thank you, Mr. Cowie. Thank you to your team.
5378 We will take a 10‑minute break and start with the next item.
‑‑‑ Upon recessing at 1040 / Suspension à 1040
‑‑‑ Upon resuming at 1058 / Reprise à 1058
5379 THE CHAIRMAN: Order, please.
5380 Ms Secretary.
5381 THE SECRETARY: Thank you, Mr. Chairman.
5382 We will now proceed with item 10 on the agenda, which is an application by Newcap Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Calgary.
5383 The new station would operate on frequency 92.9 MHz, channel 225C1, with an average effective radiated power of 48,000 watts, maximum effective radiated power of 100,000 watts, antenna height of 160 metres.
5384 Appearing for the applicant is Mr. Rob Steele, who will introduce his colleague. You will have 20 minutes for your presentation.
5385 Mr. Steele.
PRESENTATION / PRÉSENTATION
5386 MR. STEELE: Thank you.
5387 Good morning, Mr. Chairman, members of the Commission and Commission staff.
5388 I'm Rob Steele, president and chief executive officer of Newcap Radio, and before we begin our presentation I would like to introduce our team.
5389 Seated in the front row, furthest to my left, is Stephen Peck, the general manager of our jazz station here in Calgary, CIQX‑FM.
5390 Next to Stephen is John Beaudin, program director of CIQX.
5391 Next to John, I am pleased to introduce Kathy Shane, actor, songwriter and musician. Kathy has been a performer since she was 16 years old. Her activities have included tours with Tom Jackson's "Huron Carole", seven years singing with Eric Friedenberg's big band and an ongoing jazz trio called Outcats. Her new five‑song EP recording entitled, "Party of Two", will be released soon.
5392 Next to Kathy is Mark Maheu, executive vice‑president and chief operating officer of Newcap Radio.
5393 And beside me is Shaneen (ph) Carr, music director of CIQX.
5394 In the second row is Dave Murray, vice‑president of Operations for Newcap Radio, and next to Dave is Brad Boechler, Newcap's vice‑president of sales.
5395 Beside Brad is Mark Kassof, who conducted two format studies in the Calgary market in helping us prepare our application.
5396 We are here today to present our application to bring an exciting new radio station to Calgary, and adult album alternative station or, as it is know, triple A. Triple A is a new format to Canada and although it has been in existence in the United States for over 15 years, CAFÉ92.9, as we have dubbed the station, will be a sister station for CIQX, a specialty format station which has carved out a small niche in Calgary playing jazz and blues and complementary music.
5397 You have heard from all of the applicants who preceded us this week that Calgary is a dynamic market, benefitting from the sustained growth of the Alberta economy. A couple of quick facts. Calgary's retail sales of $13.8 billion, projected for 2006, are expected to grow to $20.5 billion by 2011. That's an increase of 52 percent.
5398 According to TRAM, Calgary's radio revenues have grown an average of 8.7 percent every year since 2001, while the aggregate of all Canadian markets grew at 6.5 percent.
5399 The PBIT margin in Calgary is among the highest in the country, at over 27 percent, even with the addition of four new stations since 2002.
5400 In today's presentation, we will outline how we decided on the format that would best serve the market and what that format is and how it will serve the Calgary audience and our proposals for Canadian talent development.
5401 We always like to conduct detailed and thorough research to determine the kind of station that will best serve the market and we have worked with Mark Kassof for a number of years now and Mark has prepared the research for all of our applications for some time.
5402 He also uses similar techniques and approach to helping us position our stations in markets where we have purchased a station or need to refocus our programming.
5403 A copy of the latest research has been provided in your folder.
5405 MR. KASSOF: Thanks, Rob.
5406 Good morning, Commissioners.
5407 I would like to outline how we conduct audience research. We believe this is important since you have seen contradictory research findings at this hearing.
5408 First is what we don't do. We don't decide in advance what the format should be, and then seek data to support that conclusion. We don't start with a predetermined idea about a target audience or format choice.
5409 Instead, we target a wide variety, a wide sample, in the case of Calgary 12‑ to 64‑year‑olds, and ask them about a realistic number of music formats, in the case of Calgary eight different music formats.
5410 We did 15‑minute interviews with a representative sample of Calgary listeners to describe each format to listeners, play them a montage of music from that format, ask how often they think they would listen to it, and ask whether Calgary offers any stations like that right now, in their perception.
5411 From these questions, we calculate what we call percent of format void: the percent of all listeners who have an interest in a format and cannot name any station presently delivering it.
5412 In the case of Calgary, we did this twice, once in March 2004 and once in June 2005. The reason we did a second test was that there were significant format changes in the market. Not surprisingly, our results changed, as well.
5413 In our first survey, we found CHR to be the missing format following the change of an existing CHR station to another format. However, within a year another station, The Vibe, had adopted CHR and the format opportunity had changed.
5414 In our June 2005 research, triple A's percent of format void was 8 percent overall, highest of the formats we tested, and it was even higher among people in their twenties to mid‑thirties: 13 percent are interested in triple A and don't get it from any Calgary station.
5415 We went beyond merely testing the formats. We tested listeners' behaviour and their satisfaction with radio choices in the market. What we learned is that the potential P1s for triple A, those we project will listen to it most, are less satisfied than average with Calgary radio.
5416 We also learned that they spent more time listening to other music sources, such as CDs and MP3s than average, and spent less time listening to radio than average. In fact, they presently spend more time listening to other music sources than they do to radio.
5417 A new triple A station will give them a compelling reason to come back to radio.
5418 MS SHANE: Thanks, Mark, and good morning.
5419 I would like to describe the musical sound of CAFÉ92.9. Triple A radio focuses on the softer, more mature side of today's alternative music. It delivers a mellower, more eclectic mix of rock, targeted at men and women in their twenties and thirties.
5420 At its heart are contemporary performers like Jack Johnson, Tracy Chapman, Dave Matthews, Kathleen Edwards, Matt Dowdy, Moby, Matthew Goode and David Gray.
5421 Triple A breaks through the barriers that put artists into rigid categories that keep them off the radio. Triple A stations are unique because they build playlists based on the sound and content of the music, regardless of the artist. The mix is eclectic, innovative and sophisticated.
5422 In addition to a diverse mix of rock, triple A draws music from genres as different as folk, jazz/blues and roots. The emphasis is on the lyrics and on creative and sophisticated music. Calgary, Canadian and international singer/songwriters will find a home on our station that they don't have anywhere else.
5423 Triple A is softer than alternative rock,leaving out the heavy edge and hostility associated with alternative. What makes this format interesting and unique is its ability to accommodate a wide range of music by common‑threading the sounds.
5424 What other station in Calgary or Canada could boost a set of music including Sarah Slean, the Neville Brothers, Death Cab for Cutie, Sarah Harmer, Mark Knopfler, Tegan and Sara, and Newfoundland's Andrew LeDrew.
5425 While triple A targets a much different audience and has a very different sound than CHR, it does have one thing in common: a strong reliance on newly released music. Many Canadian artists and their new releases get significant airplay on U.S. and satellite radio. Their exposure in Canada is limited to the CBC or campus radio, for the most part.
5426 Canadian singer/songwriters, like Ron Sexsmith, Mae Moore and Fred Eaglesmith are mainstays of these music outlets and regularly sell out their shows across the country, but are seldom heard with any frequency on commercial radio in Canada. Calgary artists like Max Serpentini, Madison, Polyjesters and Fraid Knot will finally get the local exposure they deserve.
5427 The nature of the format and the presence of all these great artists waiting for airplay means that we are confident that we can maintain a minimum of 40 percent Canadian content. In addition, speciality music shows like "Acoustic Café", "Red, White and New", "Roots" and "On the Cutting Edge", will feature the full range of the music of the format, with a strong emphasis on new Canadian artists.
5428 We checked the playlists of all the other stations in Calgary last week against the triple A national airplay chart in the North American trade magazine "Radio & Records". Only three of the 30 songs on that chart received any airplay in Calgary at all.
5429 So a different sound, based on recent releases, with lower repetition and a more diverse playlist, differentiates this format.
5430 To talk about our spoken‑word programming, here's our program director, John Beaudin.
5431 MR. BEAUDIN: Thanks, Shaneen.
5432 We propose to provide a significant package of news, services and other spoken‑word programming on CAFÉ92.9. Our listeners want current local and relevant news and information. We have developed a complete and comprehensive plan to exceed their expectations.
5433 Our service of news and information to our listeners will take two forms: 81 traditional newscasts, scheduled through the week, for a total of five hours and 45 minutes per week. These will be supplemented by information updates dropped into the program flow through the week, a combination of news bulletins, traffic and weather updates and sports information, for an additional three hours and 9 minutes per week.
5434 Along with informed talk about music, community events and local happenings, we will provide a total of over 15 hours of spoken‑word programming each week.
5435 To deliver on our commitment of spoken word, Newcap will employ an additional five newscaster reporters. This will bring the complement of news people in our combined operation to a total of seven.
5436 The news gathering and reporting structure will be a two‑station cooperative effort. The delivery of news on each station will be separate and distinct. Each station will have its own dedicated newscaster on the air. The newsroom and news reporters' assignments will be handled by one news director.
5437 This combined approach allows for a greater amount of news gathering and reporting for both stations. Having separate on‑air newscasters for each allows for different and appropriate treatment of stories that is station and demographic specific.
5438 The end result: more news gathering, more coverage and better service for listeners on both stations.
5439 And now to speak about the Canadian talent development, Mark Maheu.
5440 MR. MAHEU: Thanks, John.
5441 Good morning.
5442 At Newcap, we are strong believers in Canadian talent development and all of the applications we are presenting at this hearing reflect our commitment and our willingness to invest.
5443 In our Ottawa application, you may recall, we developed a number of new initiatives aimed at helping new artists develop into viable performers. They will also benefit from the strong support of our radio stations in many markets across Canada. We have brought that approach to Calgary and tailored it to CAFÉ92.9's sound.
5444 We propose to direct $1 million each year to Canadian talent development initiatives, all direct spending that clearly qualifies under your rules. Our initiatives aim at three levels of talent development.
5445 First off, at the beginning level, we will provide $40,000 each year to support the development of young musicians. In cooperation with the Calgary school system, we will run a summer clinic that will provide young local musicians with a three‑week intensive training session in developing their musical and performance skills.
5446 Secondly, we are going to provide over a half‑a‑million dollars each year to helping three artists develop over a one‑year period with one emerging with even more sustained support. It's called our Making of a Band initiative, and it will start with the selection of three winners of the Calgary Folk Festival's song writing contest.
5447 In addition to their prizes from the festivals, these three winners will each receive $80,000 in tutoring, coaching, recording time, and the support to produce a good quality CD over the course of a year.
5448 The folk festival winners are songwriters and their level of performance skills will vary greatly. This year's tutoring will allow them to develop or upgrade their performance skills.
5449 At the end of the year, we will hold an industry event to publicize all three and to choose one grand prize winner. This winner will receive a little over a quarter of a million dollars to develop a high‑quality recording, video and performance presence over the course of the next year.
5450 We requested Key Entertainment, now knows and Grellin (ph) Entertainment, a Calgary artist management company, with a great track record, by the way, of developing rock, country and other Canadian music talent to manage this part of the initiative for us.
5451 To be sure that we are on the right track, we will ask the Radio Starmaker Fund to vet their plans and budgets.
5452 We will provide them with a guarantee of high‑rotation airplay for at least two cuts from the resulting album, not only on CAFÉ92.9, but on our format‑compatible stations right across Canada. We expect that this will include our modern rock station in Ottawa, as well as our rock, top 40 and AC stations in other markets, from St. John's, Newfoundland, through Halifax, Moncton, Fredericton, Thunder Bay and Edmonton, as well as many other smaller markets right here in Alberta.
5453 As importantly, our stations will provide extensive promotional support when these artists come to town on the resulting tour.
5454 And last but not least, on the national front we will provide a contribution of $450,000 each year for seven years to the Radio Starmaker Fund. We will ask them to direct these funds to the development of new Calgary folk, adult rock, blues and roots artists. If there are not sufficient projects to cover the funds contributed, the fund will direct them to their general support projects for emerging Canadian talent.
5455 Kathy Shane, seated to my left, is a local Canadian performing artist, and she would like to tell you a little bit more about the impact of CAFÉ92.9 and what it might do to her career.
5456 MS SHANE: Thank you, Mark, and good morning, Commissioners.
5457 As Rob Steele mentioned, I'm involved in the music business as a writer and as a performer. I have regular big band gigs, a jazz trio and a guitar‑based acoustic duo. Collaborations with my writing partner have resulted in soundtracks for videos, ad campaigns, TV and film.
5458 I have managed to make a living primarily from writing and performing, if mostly for other people's companies and projects, and I am thankful for that.
5459 A few years ago I tracked the course of an original compilation record through its various stages in an attempt to get radio airplay, and all the benefits that can bring. This tracking process was a huge eye‑opener for me.
5460 From the calls that I was making, I gathered that it was rare that a station would or could take the chance of spinning an unknown versus slotting in the more proven Canadian artists. It seemed that a couple of spins on CBC, CKUA, some brave but very cautious radio stations, and university radio would be the highlights of my career.
5461 I have had a relationship with the people at CIQX, who have supported my music, and they explained it the exact ways in which they are willing to roll the dice for lesser known Canadian talent, for local talent.
5462 My friends and peers, like Steve Pineau (ph), Shannon Gay, Scott Henderson, all one‑of‑a‑kind talents, would be greatly helped by shows like "Red, White and New" or "Acoustic Café", which spotlights a different artist each day. This is the kind of thing that inspires creativity and writing on a daily basis. It actually gives us hope.
5463 Making of a Band would leap‑frog a deserving performer into the spotlight. The half‑a‑million‑dollar annual spending would help glue our musical community together and inspire some healthy competition.
5464 It's exciting that there are plans in the works to improve on the music scene that a lot of musicians have just grown to accept. I hope that this may be a prototype for other markets to pick up on, cause it would enhance many lives, and I hope that mine is one of them.
5465 And now to sum up, Rob Steele.
5466 MR. STEELE: Thank you, Kathy.
5467 We would like to present a short video that showcases the positive impact that a station like CAFÉ92.9 will have on Calgary.
5468 Run the video, please.
‑‑‑ Video presentation / Présentation vidéo
5469 MR. STEELE: Mr. Chair, members of the Commission, we believe that the approval of our application is in the public interest for the following reasons.
5470 First, Calgary's economy leads the country, and the radio revenues and profits reflect it. There have been year‑over‑year increases of radio revenues of almost 9 percent, and all observers predict continued growth. We believe that the market could absorb four or five stations, and particularly a diverse one like CAFÉ92.9.
5471 Two, we filed the most comprehensive research at this hearing. We surveyed radio listeners aged 12 to 64, the widest age range of any application at this hearing. We also tested more format options than any other applicant, and our research indicates that CAFÉ92.9 is the right choice for Calgary.
5472 Three, our diverse format, with its emphasis on new artists, with a Canadian content of 40 percent and a variety of programs supporting local and Canadian artists, will provide a new window for critically recognized artists who go unheard on commercial radio.
5473 Four, our $1 million per year in Canadian talent development will go directly to the support of new and emerging artists, with at least a half‑a‑million dollars per year guaranteed for local Calgary artists and performers.
5474 Five, the addition of a new station will strengthen our newsroom and will allow us to provide a more comprehensive news voice and increase the editorial diversity in the marketplace.
5475 Finally, the approval of our application will go a long way to providing competitive balance in Calgary. We will have a more equitable opportunity to compete with the national consolidated media companies, and this will mean higher levels of sustained service for Calgary listeners.
5476 Calgary has grown to the point where it deserves the diversity and choice available in other similarly sized markets. At Newcap we are proud of our contribution to Calgary radio and we look forward to the opportunity of doing much more with CAFÉ92.9.
5477 That concludes our presentation this morning.
5478 Mark Maheu will take your questions and direct them to the appropriate members of our team, and I thank you for your time and consideration.
5479 THE CHAIRMAN: Thank you, Mr. Steele.
5480 It's my understanding that you left with the secretary this morning and you gave all the members a copy of the July 1st market of ‑‑ new survey. We looked into it, we accept it, and we have made available a copy of the survey in the CRTC Secretariat, so those who want to revise it.
5481 The survey supports the amendments that have been filed by this applicant during the deficiency process. While it's new material, it is based on the same methodology and only updates the information as of July 2005. So we have accepted it.
5482 MR. STEELE: Thank you.
5483 THE CHAIRMAN: I'm asking Mrs. Helen Del Val to put the first questions.
5484 COMMISSIONER del VAL: Thank you for your presentation.
5485 I think, as you had anticipated in your presentation, one of the obvious questions that were raised were in the revised market study and your revised format. It did raise some questions, particularly when in your 2004 study you had concluded that a new triple A station would struggle in Calgary, that only 15 percent expressed positive interest in triple A, and that a mere 3 percent would listen to that format at all times.
5486 Then, I guess 11 months later ‑‑ sorry, about 13 months later that was the format you chose.
5487 This raises obvious questions, as you had anticipated that it would. I think in the future it would be very helpful ‑‑ and it's not your obligation, but it would be very helpful ‑‑ to offer the explanation at the time of filing the revised materials. It would have given a little more time, I think it could have prevented some of the questions that are raised and left unanswered for so long.
5488 I acknowledge in your opening that the market has changed, but maybe you could explain that a little bit more, for example, the significance of wide changing formats, then, in March 2004, what were the formats? Where there any sort of similar triple A formats, or the stations that were targeting that audience? And then, what changed by the time you conducted the 2005 study?
5489 If you could just walk me through those changes, I would appreciate it, please.
5490 MR. MAHEU: Thank you for the question, Madam Commissioner, and I will do my best to answer your question as specifically as we possibly can. In a moment I will ask Mark Kassof, who conducted the research study, to get into some of the specifics about what has changed in the market and what we saw.
5491 First off, I would like to, on behalf of Newcap, apologize for the lateness of the filing of the research.
5492 To give you a little bit of background, maybe, for those in the room today, we originally triggered the call for a new application for a Calgary radio station. We applied for a new radio station in mid‑2004. So our research was conducted for the Calgary marketplace, and hopefully to put an application forth for a new Calgary radio station, in the middle of 2004.
5493 When there was a public call for applications in the middle of the year in 2005, we had already been filed for well over a year at that point. When the public call for applications came out, I guess we could have left things they were, but we really thought about it and we thought, "You know, there's been a year that's gone by since filed", and we know, because we do business in the Calgary marketplace, that things have changed in the market and evolved.
5494 It was an expensive process for us to go back into the market and resurvey the market. I'm glad we did because we did find some pretty significant changes that affected what we were prepared to bring forth in the Calgary market.
5495 To be able to conduct that study at the last minute, within the deadlines of the public call, that did fall through the cracks. It was an administrative error, not filing the research. We had thought we had filed it. It is available in the examination room, and we understand your point of view on that, so thank you.
5496 I will ask Mark Kassof to kind of go through, if he may, for just a moment on the differences between the two studies, and what changed in that period of time and led us to the proposal before you today for a triple A, adult alternative station.
5498 MR. KASSOF: Sure.
5499 One thing we are always looking for is the best opportunity. Sometimes the best opportunity is different 15 months later, and that's certainly the case here.
5500 Now, let me address two aspects of your question.
5501 First of all, CHR, and what happened to CHR.
5502 CHR, in March of '04, among the people who had a positive interest in CHR, that is a 4 or 5 on a 5‑point scale, where 5 means, "I listen to this all the time", among those people only 28 percent of the people could not identify a radio station ‑‑ I'm sorry, excuse me, among those people, 43 percent could not identify a CHR station; 33 percent of those people said The Vibe was a CHR station. Or there were changes in the market. You had Power becoming the peak Hot AC, eventually moving on to classic rock. And now, in '05, June 2005, now only 17 percent of the people who are interested in CHR cannot identify a CHR station.
5503 COMMISSIONER del VAL: And so "now", that's June 2005?
5504 MR. KASSOF: Correct.
5505 COMMISSIONER del VAL: Okay.
5506 MR. KASSOF: So in other words, the percent of people who are interested in the format and can't identify a station with the format went from 43 percent to 17 percent. The Vibe's association with CHR among those folks went from 33 percent to 71 percent.
5507 Well, the net result of all of this is that the percent of format void calculation drops in half. So what was a 10 percent of format void, and definitely number one in March of 2004, now moves right down the pack. So that's what happened to CHR.
5508 But there's another aspect to your question, which is: what happened to triple A?
5509 What's interesting what happened to triple A is that the interest in triple A, comparing March 2004 to June 2005, is essentially dead on in our research. I mean, the numbers are very close. The interest in the format didn't change. What did change is the percent of listeners who could identify a station with the format.
5510 Now, in '04, among the people who were interested in triple A, 28 percent of those people could not identify a station with the format. Fifteen months later, 63 percent cannot identify a station with the format.
5511 Well, in this case what changed? And what changed is Jack's association with triple A. In '04, 42 percent of the people interested in triple A said Jack was the station for that music. In '05, only 11 percent of those people said that Jack was the station for that music.
5512 Now, the question arises: well, now Jack, I don't did change format. So what happens? And on that I can only give you speculation, educated judgement on what happened. Jack sold itself, positioned itself as a station that plays what we want, it plays everything. It sold itself as a variety station.
5513 Well, when a station like that is new, people buy into the premise of the radio station. It does sound, initially, like "We're playing everything". Fifteen months later, people realize, "You know what, it's not playing everything". In effect, it's a contemporary music station that plays classic hits. It plays a wide variety of classic hits, but does it play triple A? No. But in March 2004, it seemed like the kind of station that would play that kind of music.
5514 So, in other words, we have a much bigger opportunity here simply because people realize that Jack isn't delivering this music and a much higher percentage of folks who say, "I don't know what station is delivering that kind of music".
5515 So those are the two changes that explain the shift in analysis.
5516 COMMISSIONER del VAL: Thank you.
5517 What about the U.S. stations? I heard, I have been told, that the triple A format is actually a staple in U.S. markets. What are a few examples of the triple A stations that are operated in the U.S. which would have a similar format to what you are proposing?
5518 MR. KASSOF: I think that probably the best known triple A stations, one of them, would be KBCO in Denver, which is number 412‑plus. I mean, it's been around a long time and it's really developed roots in that community. Another station of similar ilk is in Chicago, WXRT. Those are the two that really pop into my mind first, stations that have been around a long time and really developed roots in their community and are major forces in their communities.
5519 COMMISSIONER del VAL: Any idea how well they are doing financially? Not that we are in the same market, but...
5520 MR. MAHEU: We don't have specific information on how well they are doing, but if you look at Duncan's American Radio and you look at the power ratios for different formats throughout different sized markets in the United States, this format tends to index extremely well, billing over and above its share.
5521 So one has to assume that a lot of these radio stations, as Mark has mentioned, have been in triple A for a long time, and that kind of tells us that the revenue and profitability of the format is quite good.
5522 And the reason for that is they really carve out a niche. It's a loyalty format. It's never going to be the number one radio station in the market because it is really focused in a certain area, but it's certainly number one in the hearts and minds of the people that really enjoy that kind of music. And when you enjoy that kind of loyalty to a radio station and the music it plays, you can monetize that to a great degree over a long period of time.
5523 COMMISSIONER del VAL: So your core audience is 18 to 34 of the 18 to 44 range, that's what the focus is, isn't it?
5524 MR. MAHEU: Demographically, in the research that Mr. Kassof conducted, we broke those age groups into the traditional BBM age breaks, but we know that format targeting doesn't always fall naturally in to the age breaks that BBM devises. Eighteen to 34 is a common age break in BBM, and Arbitron in the United States.
5525 What we found through the research, though, Commissioner, is the fact that real strength of triple A demographically begins in the early twenties and goes right through to the mid‑ to late‑thirties. So although there is some resonance for the format and some passion and loyalty for the music in that 18 to 20 age group, the real strength of the format is 20 and 30‑year‑olds, in that twenties and thirties, and it starts to trail off when you get up around 38 and 39. So you have got that nice big middle of twenties and thirties.
5526 COMMISSIONER del VAL: I think you probably noticed yourself, but there's quite a bit of overlap in the applications and proposed formats. From just looking at the age groups that are being targeted, I would have thought right off the bat Harvard, whom we just heard, is aiming at the same age groups; CHUM, probably the Energy FM, I would identify as being a competitor.
5527 Also, actually, I'm glad Mr. Pringle is in the room because my ignorance is going to show, looking at your video, a lot of what you showed looked very folksy, to me, so Rawlco's station could be another competing format.
5528 How would you distinguish your format from those other stations?
5529 MR. MAHEU: I would like to take the opportunity to do that, and just before I do, just on your question about the video, one of the things we did to generate some awareness for our application in the market is we set up in a local shopping mall and we set up, basically, an information kiosk so that people could come down and ask questions about what we had proposed. We also did some live performance, which you saw on the video.
5530 The reason it was mostly acoustic is cause we didn't set up a big sound stage, with all the power and everything that would incorporate electric guitars and so on. So it gave you the impression that maybe it was a little more folky than it actually was, but focus certainly part of what triple A's all about, but maybe not to the extend that we demonstrated in the video.
5531 On your question of how our proposal for CAFÉ92.9 and triple A is different from the Harvard application for alternative rock, for CHUM's application for Hot AC, and even Rawlco's fine application for folk, if I could take just a couple of moments and hit really the key differentiation points, I think it will help you to understand how different triple A really is.
5532 COMMISSIONER del VAL: Okay.
5533 MR. MAHEU: Beginning with the Harvard proposal, which is probably most recent, it was just a few moments ago ‑‑ and we do have some experience with alternative rock. We just launched a brand new alternative rock station in Ottawa called Live 88.5, so we are very up to date with that format and what the listenership for that format is all about ‑‑ there are some very big differences between alternative rock, as proposed by Harvard and triple A, as we propose, beginning with the name.
5534 I think the name Xtreme FM, compared to CAFÉ92.9, kind of tells you right away up front how these radio stations are going to be different. But it goes much deeper than that. With triple A music, it's much more mellower and it's a much more mature sound than you would find in alternative rock.
5535 Alternative rock is based on the harder‑edged, more intense and more rebellious type of music, and when you listen to the two types of music, it becomes very apparent.
5536 There's more acoustic material, as you noted in our video. There's certainly more acoustic material generally in a triple A format, where alternative rock is very much electric guitar and drum‑driven.
5537 The other key difference here musically is that triple A draws from multiple genres, and that's what makes the format so enjoyable and so fun to listen to. It's not one genre of music. Triple A draws from rock, it draws from pop, blues, jazz, folk, roots, it's very song‑driven, lyric‑driven, where alternative rock is very band‑driven and sound‑driven, hard, rebellious intense and loud.
5538 So those are the real key differences. And you notice demographically, too, a big difference there, and our research bears it out and I think the Harvard application talked about it today.
5539 Predominantly, alternative rock appeals mostly 12‑ to 24‑year‑old. And we know through the research we have done, both here and in Ottawa, the real heart and soul and the strength of an alternative rock station is 15 to 24. That's where it lives. And it's generally young males, very male skewed.
5540 The skew on triple A is twenties and thirties. So it's almost a half a generation or more removed demographically. And the format appeal on triple A is slightly more male that female, but not to the extent that alternative is very male skewed.
5541 So that's the difference between those two, and if I could just talk a little bit about the difference, quickly, between triple A and Hot AC. In listening to the CHUM proposal, it's a pretty traditional Hot AC application. It's quite good. The differences, though, are quite apparent between triple A and Hot AC.
5542 Triple A is very much a non‑hit‑driven format. We go deep into albums, we go deep into artists that don't get a lot of airplay on radio, and a lot of this music to the general listening audience is unfamiliar. It's music that a lot of listeners want to hear, but they have told us through the research they have to go to other sources of music to get it. So we want to bring that to the radio.
5543 Conversely, a Hot AC format is largely driven by hits, and that's what makes Hot AC work: hit, after hit, after hit. And there's nothing wrong with that, but it's a different type of listening experience and a different type of expectation that listeners to Hot AC have than to triple A.
5544 Hot AC radio stations tend to work with a very tight playlist. Smaller playlist, higher spins, high rotation, move 'em up the chart, move 'em down the chart, given the people what they want in a very mainstream popular way. Triple A is quite different. We have a very large playlist and it's very diverse, and we talked about the genres and the artists before so I won't go into that.
5545 Slower rotations, as well, on triple A and fewer repeats, where Hot AC really depends on the hot hits of the day for adult contemporary music and CHR, and they spin them and they move 'em up and down the charts. Hot AC is very much a massive‑appeal format. It's very much in the middle. It's very much in the mainstream. That's why it predominantly is a 25‑ to 44‑year‑old format.
5546 I think CHUM was mentioning in their application, if I'm correct, when I was hearing them, when asked, the real strength of that format is 35 to 44, which would be correct. When you look at the most successful Hot AC radio stations across the country, they tend to be the market leaders, 35 to 44, very heavily skewed female. That's why they are so successful, because they look very good 25 to 54.
5547 So there's a generational difference and a musical difference again.
5548 Lastly, the difference between triple A and folk. Triple A, as a format, generally, is very new‑music driven. In our proposal for a triple A format for CAFÉ92.9, we are proposing that 65 to 70 percent of all the songs we play on the radio station will be new or recent, so newly released or released within the past 18 to 24 months. So it's a very new‑music focus.
5549 Folk tends to be more gold‑based than triple A. Folk tends to be very acoustic. In listening to the Rawlco presentation, I think I heard the figure of somewhere upward of 80 percent of their music would be acoustic‑based folk. Folk is spice in the triple A format, to give it some texture and some feel, and is likely more in the 15 percent range than the 80 percent range. So that's another big difference.
5550 As we talked earlier, triple A really targets people in their twenties and thirties. Folk, as Rawlco indicated, generally targets people 45 and older. So there's a complete generational difference demographically.
5551 We took a look at the songs, in listening to the Rawlco application yesterday, the top 100 songs that the would play, and we found a 9 percent overlap between the songs that they would propose to play in a folk format and what we would propose to play in a triple A format. So there's no song duplication there either.
5552 So that's a long‑winded way of saying I hope we have differentiated how we are unique.
5553 COMMISSIONER del VAL: Yes, thank you. That's a very thorough answer ‑‑
5554 MR. MAHEU: Okay.
5555 COMMISSIONER del VAL: ‑‑ and I'm grateful for it. Thank you.
5556 Now, from the 2005 BBM tuning data, it suggests that the 18‑to‑44 group, and specifically the 18‑to‑34 age group, are quite well served by the incumbent stations. They tune a lot to those stations. And the stations that they tune to include CIBK, which offers the contemporary hits radio format; CJ, offering the adult‑oriented rock format; then CFGQ, offering a classic rock format; and CHFM, offering an adult contemporary format.
5557 In your opinion, how would your proposed triple A format differ from those existing radio stations?
5558 MR. MAHEU: The triple A that we are proposing for CAFÉ92.9 would be very different than the four radio stations that you just mentioned.
5559 Also, you mentioned an interesting statistic about BBM tuning for them, 18 to 44. When you look at ‑‑ we took a look at the BBM tuning in this market for 18‑ to 34‑year‑olds because it captured most of what we were trying to target with triple A, and that age break of 18 to 34 is kind of as close as we can get. If you look at the total hours tuned by all people 18 to 34 in the Calgary market, in 2004, and then look at that same group of people again in 2005, you will find that the time spent listening to radio with 18‑ to 34‑years‑olds dropped three hours a week between 2004 and 2005.
5560 What that tells us, it confirms what we did find in the research, that these younger folks are having to seek the music they want to hear on the radio from other sources. Triple A specifically, in our research, showed that people with a high predisposition to make triple A their favourite radio choice spend more time with alternative music sources, CDs and MP3s, than they with radio. So it's not surprising to see that younger age group with the time spent listening fall from year to year.
5561 The radio stations that you described do have some audience in that 18‑to‑44, 18‑to‑34 age group, and undoubtedly there will be some small transfer of tuning. Whenever a new radio station comes on, in any format, there's always a little moving around and a little curiosity, but we know through the research ‑‑ and I may ask Mark Kassof to comment on this specifically because it is in our research and we did test it ‑‑ what impact triple A would have on the incumbent radio stations, and it is a very small impact.
5562 Mark, would you be kind enough to fill in.
5563 MR. KASSOF: Sure.
5564 One point I want to make before that is we looked at how much time listeners spend listening to radio and other music sources ‑‑
5565 COMMISSIONER del VAL: I'm sorry, on the...?
5566 MR. KASSOF: To radio, in other words how many hours per day to radio, how much times other music sources. The average, for the market as whole, 12 to 64, was three hours listening to radio, 1.7 listening to other music sources.
5567 Among the people who told us that they would listen to triple A all the time, 3.1 hours listening to other music sources, 2.6 hours listening to radio. Of the eight formats we looked at, it is the only one where they listen more to other music sources than to radio.
5568 Now, as far as the ratings projections go, this format is very different, shares very little musically with any of the formats in the market, and we found very little impact on any of the stations.
5569 Let me give you an example. Jack, we projected before, to have a 10.6 share, 12‑64, after a 10.1 share. Q107, 6.8 to 6.6; The Vibe, 12.8 to 12.7. The biggest change we found actually was CBC, which went from 6.7 to 4.9. So it's different in every other format. It's taking a little bit from every station to build its share.
5570 COMMISSIONER del VAL: Why CBC?
5571 MR. KASSOF: Well, I think because you are dealing with people who are, first of all, not satisfied very much with the radio, music radio, but on the other hand they still have a need for information, so therefore CBC is certainly a choice for those folks. I mean, that's one explanation I could give for that, one hypothesis for that.
5572 COMMISSIONER del VAL: Thank you.
5573 Why do you consider your target audience of 18 to 34, and then the broader audience of 18 to 44, underserved? Or am I ‑‑ because according to BBM, this target group does tune a lot to radio.
5574 MR. MAHEU: You are correct, they do tune to radio. As mentioned a little earlier, they do, and have started to listen to less radio. The time spent listening in that age group is falling.
5575 Normally, when you see time spent listening fall with an age group, it's normally related to general dissatisfaction to the choices that are available.
5576 In the case of 18‑ to 34‑year‑olds ‑‑ you mentioned the four radio stations that are enjoying some tuning there ‑‑ all those radio stations have different subtargets. And they are all going after a certain piece of that 18 to 44, but generally what we are seeing, and we have seen it in the research, as well, is that there's a dissatisfaction with this group of people, especially those who say, "Triple A is the kind of music I like the most, and there's no where I can here it on the radio in Calgary". And we are interpreting through the data when we are asking the question that, "I love it so much that I have to spend more time listening to my iPod or my CD collection because radio isn't giving me what I want".
5577 We are pretty confident that if we are fortunate enough to be licensed, we can bring some people back to radio. Some of them are still with radio right now, but instead of listening the Canadian average of about 20 hours a week, they are listening to half that amount.
5578 I think we can bring some more hours tuned back to radio if we do a better job for people, and that's why we believe this is a great opportunity, when new licences are available, to bring new services to the city that are not presently available, especially for people who have indicated that they are not satisfied with the choices and they have an idea of what should be offered, so...
5579 COMMISSIONER del VAL: Thank you.
5580 MR. MAHEU: Okay.
5581 COMMISSIONER del VAL: So I note that you have reoriented your smooth jazz station's music offering from The Breeze to California 103. Now, our casual tuning to the newly branded service identifies a more contemporary music offering than what was offered on The Breeze, and this music reorientation appears to be targeted to a younger audience and away from the traditional audience of smooth jazz, so mainly the 45‑plus professional demographic.
5582 Now, given that your proposed triple A station could also be in a position of targeting some of the same demographic as your California 103, can you elaborate on sort of the similarities and the differences between these two, between their formats with respect to target ‑‑ I'm sorry, can you elaborate on the similarities and differences between these stations with respect to the target audience and their format?
5583 MR. MAHEU: Sure.
5584 Very few similarities, a lot of differences. California 103 is a jazz radio station and our condition of licence is 70 percent subcategory 34, so there's really not a lot of flexibility there. It's 70 percent minimum jazz/blues, that's it.
5585 So up until recently, the radio station was branded as The Breeze, and the music on the radio station was largely what is generally called smooth jazz. Smooth jazz is basically music that has a lot of saxophone in it, it's very easy to listen to, it's usually the softest thing on the dial.
5586 And we have been doing it for a number of years now. We are very proud of what we have been able to contribute to radio in Calgary with The Breeze. Unfortunately, as we do continual research in the market, looking at how we can improve what we do and improve our offering, it became pretty clear, through the research that we have been doing and the rating success, or lack thereof, that we were having with that format, that we had to modify it somewhat to be a little more competitive.
5587 What we found is that the opportunity was still in jazz, because we don't have any choice, we need to be a jazz radio station, and we are fine with that, but what we try to do is find a type of jazz that gave us a better opportunity to reach a wider audience.
5588 So we rebranded the radio station away from being a softer or a sleepier smooth jazz sound into a little more up‑front sound. The jazz on the radio station is pretty much exclusively guitar‑based jazz now, rather than saxophone‑based jazz, and the feedback has been pretty good.
5589 We are also taking advantage of some of the contemporary blues music that is available now and is being made now and incorporating that into the mix.
5590 CIQX, or California 103, is a radio station, regardless of the rebranding and the slight adjustment in the sound ‑‑ well, it's actually more than a slight adjustment, it's a major adjustment, to be fair, but the station is still largely focused at a jazz listener and a jazz sensibility and our research indicate those people are largely 45‑plus. That's where the relative strength of the radio station is going to be, and will remain as long as it's a jazz station.
5591 That's why we felt that triple A was very complementary to what we were already offering to the marketplace, that we wouldn't be overlapping very much and we are reaching a very different audience, but from a sales proposition point of view, because that's the other part of our business, that we could go out and offer a complementary service of jazz and triple A, where one audience leaves off, the next audience kind of begins. There's a little gap there, but it kind of fits hand and glove.
5592 And in terms of the psychographic type of radio station that they are both going to be, if we are fortunate enough to be licensed, it was a good fit. So in terms of overlap or similarities, there's probably a little bit, but not as much as you think, and demographically they are quite different.
5593 COMMISSIONER del VAL: Thank you.
5594 So is this proposed station, CAFÉ92.9, quite similar to your Winnipeg station that's been rebranded as CAFÉ100.7? Is that a triple A format?
5595 MR. MAHEU: That is our first triple A, and it's the first triple A station in Canada, and we are quite proud of it.
5596 It will be very similar. The music and the approach to broadcasting that format will be very much the same. What will be different, though, is that CAFÉ100, in Winnipeg, is really focused on the type of music that Winnipegers want to hear ‑‑ and we have done homework on that ‑‑ and we also have a condition of licence in Winnipeg that we have to live to up to, in terms of the type of music that we are playing.
5597 So we are doing our very best to bring a triple A approach. We found that is the opportunity in the marketplace, to still be softer than most things on the dial, but to provide something that had an opportunity for us to provide a sustainable, reasonable format for a long period of time. In Calgary, our focus will strictly be on the needs and wants of Calgary, and we found that in the research.
5598 So there will be some similarities, in terms of tone and style. Music? A lot of it will be the same, but some of what works musically in Winnipeg won't work in Calgary, and vice versa. And we will also do our own music research and so on.
5599 The other key thing is that what we really want to do with triple A in Calgary, as Kathy mentioned, a lot of her contemporaries and colleagues are making great music here in Calgary right now, and they don't have anywhere to get heard.
5600 We are committing to 40 percent Canadian content in this format because we know there is a tonne of music out there because we are drawing from so many genres. We are not locked into just rock or just jazz or just blues, and we have kind of the pick of all the great new music that's being made out there. That's going to be the difference between, say, a Winnipeg station and a Calgary station, where in Winnipeg we are trying to focus on finding some of that local Winnipeg triple A, and getting it on the air ‑‑ and our folks there are doing a good job ‑‑ and we are going to do the same in Calgary. We want a lot of what we play here to reflect the community.
5601 We also think that's a great opportunity to build an audience and generate awareness. The music community is kind of a tight‑knit group and they have a following, and if people know that some of the folks that they are friends with and go and see at clubs are getting played on the radio, we have a chance to bring some new listeners to our radio station.
5602 Again, it's never going to be the number one station in the market, but it's a tight, loyal following, and word of mouth is very important. So that will be some of the differences between Winnipeg and Calgary.
5603 COMMISSIONER del VAL: Thank you.
5604 Your answers anticipate my next 16 questions.
‑‑‑ Laughter / Rires
5605 COMMISSIONER del VAL: I may be repeating it, but what about the sharing of programs between the Winnipeg and this Calgary station, if it were to be licensed? I think you have answered.
5606 MR. MAHEU: Yeah, no sharing there.
5607 COMMISSIONER del VAL: Okay.
5608 MR. MAHEU: Again, these are major market radio stations and they have to stand on their own. When we put a business plan together and take a look at what the opportunity is, the stakes are too high and it's too important to kind of cut corners and, "Geez, can we save a little money over here, $20,000, by piping this?". We don't do those kinds of things.
5609 Each station is big enough and important enough that it deserves its own service and its own focus. So there's no sharing between the two. They may share some ideas, but in terms of content or programming, none.
5610 COMMISSIONER del VAL: I just have to ask this to be fair to the interventions, but I think you have answered it already.
5611 In CIRPA's intervention, they did talk about the diversity of playlists, and I will let you answer that again, I guess, in terms of will you be using different playlists in your Winnipeg station and the Calgary station, should it be ‑‑
5612 MR. MAHEU: Yeah, the music in Winnipeg on CAFÉ100 will be different from the music on CAFÉ92.9. Again, when we go into markets of any size, we always take a look at: what does the market want, need and expect from this radio station? We do that through research, and we do a lot of music research, as well, and what we found is that there is some common threads between a number of markets, a hit's, a hit, a hit in most places, but when you get into this type of music, what may work in Winnipeg, which tends to be a little bit more of a hard rockin' town, and it's demographically a little older than Calgary is, some things that work in one place don't work in another. So we take steps to make sure that the playlist in each one of our markets reflects what listeners in that marketplace want, and that's what helps us be successful.
5613 You could save a little money and a little time by just stamping out the cooking cutter and rolling it out, but long term that's not going to make for great radio. We are in these markets for the long haul, we are trying to build a franchise, we are trying to build a following, so it gets our full time and attention and there will be differences.
5614 COMMISSIONER del VAL: Thank you.
5615 So now I would like to ask you some questions on local and spoken‑word programming. In that area can, you please confirm how many hours of programming aired each week would be local station produced, please?
5616 MR. MAHEU: Yes, I can. I'm going to ask Dave Murray to comment on that specifically, and then if you have some news questions, et cetera, I will ask John Beaudin to do that.
5617 But, David, would you mind local station...
5618 MR. MURRAY: Right.
5619 One hundred percent of the 126 hours of broadcast week will be live, no voice tracking, et cetera.
5620 COMMISSIONER del VAL: Thank you.
5621 You have characterized your targeted 18‑to‑24 adult audience as being abandoned or being underserved by existing commercial stations, I guess in terms of the triple A format.
5622 Now, based on your market research, what is it that this group of abandoned audience is looking for in spoken word or programming or information?
5623 MR. MAHEU: I think when you mentioned 18 to 24, you might have meant 18 to 34?
5624 COMMISSIONER del VAL: I did say 18 to ‑‑ but it's okay, you can answer it as 18 to 34.
5625 MR. MAHEU: Right. That primarily comprises most of the key targeting for the radio station, twenties and thirties.
5626 It's interesting because, as Mr. Kassof mentioned in our research, it's quite interesting to see if CAFÉ92.9 were to be licensed and go on the air, our research indicates the radio station that would show the biggest decrease in tuning is the CBC. That was a cue to us.
5627 Also, anecdotally, knowing a little bit about what we are doing in Winnipeg, and the types of people that are listening to triple A and calling the radio station and e‑mailing us and talking about what we are doing, we are starting to get a sense of the needs and wants of these people, and it's quite interesting that CBC would be affected most. That tells us that there is a need and a want and an interest in spoken word and news and information.
5628 We also see that as an opportunity in this marketplace. As time goes on, radio has become more and more a music‑focused medium and specialization has started to take place in radio, where news/talk radio stations, 24‑hour news/talk stations are on the air, 24‑hour a day sports radio stations are on the air, things that really didn't exist 10 years ago, but kind of following the trend of what's been happening with TV and speciality television, where we are in the age of specializing and diversifying.
5629 With triple A, the news and information needs of the audience, through our research and looking at CBC being the station that gets hurt, tell us that these folks want a little bit more than music from the radio station. So we need to design a program and a plan to deliver on the needs and wants.
5630 To be fair, and to be quite forthright with you, up until this point we have done the best job we can on California 103. This is a radio station that has struggled financially. Not that we are complaining. We bought it, that's the way it is, and we are living up to it. We are doing our best. But with more resources, we could do more.
5631 That's why we are kind of excited about this idea because, if we were able licence CAFÉ92.9, our proposal is to add five news people to the organization, which would bring it up to seven, on a combination basis. And we believe that one of the ways that we can differentiate ourselves, now and in the future ‑‑ and I am getting to the direct answer to your question ‑‑ in the world of satellite radio, in the world of subscription‑based audio services, broadcasting to mobile phones, I see in The Globe and Mail this morning XM is talking about streaming video to their radios now, the world is changing quickly. We are going to be facing competitive pressures. I'm taking a look at the end of a seven‑year licence, it's going to be 2013, 2014, at the end of that licence period, and the world may be quite different then.
5632 We see spoken word as being almost a secret weapon in differentiating ourselves from other services that are out there. It's the one thing that satellite radio, broadcasting to mobile phones and other things cannot duplicate. And they can't compete with us.
5633 They can play all the music they want, they can play less Cancon than we do, or whatever they want to do, but they can't duplicate our people and they can't duplicate spoken word. So we see this as the beginning of a competitive difference that, where for so long news and information was almost a condition of licence and a requirement, and it was an expense but it didn't generate a lot of audience for you, we see in the future it's going to be exactly the opposite of that. It's going to help us hang onto an audience, it's going to help us build some loyalty, and it's going to be money well spent.
5634 So that's the reason we believe that our focus on news and information is going to be important and that listeners to CAFÉ will benefit from the amount of resources we are putting against news and spoken word.
5635 COMMISSIONER del VAL: I can see how you see the spoken‑word content as an opportunity. Now, what do you see as the challenges of providing relevant spoken‑word programming to your target audience?
5636 MR. MAHEU: Well, one of the challenges is right away, and if we were licensed, what we normally do in situations is if we do receive a licence, we normally go back into the market before we launch, and we go, "Okay, we're doing triple A. Now, let's really go in...", kind of like we did in Ottawa before we launched Live 88.5. We were licensed, then we immediately put a new research study into the market: what's changed, what do we need to adjust, and how do we fine‑tune this now that we know we have got the opportunity to do it, and we would do the same thing.
5637 One of the challenges is to reach out to these folks through research, through focus groups, through a whole bunch of different types of techniques, to find out what it is they really want, need and expect from our radio station. That's challenge number one, because although we may have good intension and good ideas, if they are not connecting with what these folks need and want, it's not going to resonate to the degree or strike the responsive cord we want it to strike.
5638 So the challenge, number one, is to go out and find out who these folks are, find out what they need and what. Then it's going to be an ongoing challenge in a competitive environment to keep giving it to them. We are going to try ‑‑ and I believe we will be very successful ‑‑ in building personalities on our radio station, not only in the news and spoken‑word part, but the spoken word as it relates on the air.
5639 Part of what's going to make this radio station special is we want to hire people that love the music just as much as the listeners do, and it kind of harkens back to the early days of progressive radio, where the folks on the air knew a lot more about the music than the listeners did, they had opinions about it, they got to pick some of their own songs, and they had some pretty strong opinions about the world and about the music that was being made. The challenge there is to be able to find those kinds of people, hire them, get them on the air and retain them.
5640 One of our worries is we are going to develop some people like that, who start to build a following and they are going to start to be lured away. Not a lot of people are doing this yet, but we believe in the future it's going go be a bigger part of what makes radio satellite‑proof, audio‑service‑proof, mobile‑phone‑proof, and it's incumbent upon us to come up with strategies and ideas to face the future.
5641 Regulatory relief if great, and we love all you can give us, but, at the end of the day, it boils down to us. So we are taking the first step now to build ourselves a franchise that can withstand all the other options out there. Radio has done it before, we will do it again.
5642 COMMISSIONER del VAL: Thank you.
5643 Okay, now we can move onto Canadian talent development.
5644 So you propose a minimum of $7 million annually, it's $1 million per year, and I just want to clarify a few areas, please.
5645 Now, referring to your Radio Starmaker Fund, you have indicated that you have asked your Radio Starmaker Fund to create a specific fund that would benefit local Calgary artists. So my first question is: have you entered into any formal agreement with the Radio Starmaker Fund with a board or with that organization?
5646 MR. MAHEU: We have done a number of contributions to Radio Starmaker Fund and proposed a number of them in other applications. Our relationship with them is quite good. What we normally ask, and we have in this case, is if we are licensed would you please guarantee to devote the $450,000 a year that we are proposing to Calgary local artist development? And they have been very good about that. We will get a letter to that effect, but they have indicated it would.
5647 They have also indicated that there may not be anybody from Calgary in a particular year that is worthy or deserving of the money, and, if so, it will go into their general promotion fund. But preference will be given ‑‑ when there is a Calgary or local project that deserves funding preference will be given to it. And they are quite good at following ‑‑ they used to not agree to do those kinds of things, and that's started to change, and they are doing that now.
5648 COMMISSIONER del VAL: So what benchmarks will be used in determining the number of artists who will be eligible for this particular fund?
5649 MR. MAHEU: The Radio Starmaker Fund is a collaborative effort of broadcasters across Canada and it's largely focused and devoted to taking emerging artists that have had some degree of success really to the next level, in marketing, promotion, et cetera.
5650 The Radio Starmaker Board is comprised of a board of directors who have a lot of experience in artist management and understand what it takes to be successful in the music industry. We are sending that money to the Radio Starmaker Fund and, based on their past track record, counting on them to make the right decisions. There's many other broadcasters who also contribute to the fund and the broadcast interests are represented on the board of directors, and we are quite confident that they will continue to do the good work they have always done.
5651 COMMISSIONER del VAL: Thank you.
5652 Then on your annual summer jam clinic, and you have indicated that the clinic will be similar to the one that was proposed in your application for the recently licensed alternative rock station in Ottawa, do you have more details that you can provide us with about this clinic?
5653 MR. MAHEU: Not at present, but we are starting to actually put together our summer jam clinic in Ottawa.
5654 Just to basically give you a sense of what it is, it's largely designed for younger people. We are going to work with the school board in Calgary and what we are really looking for are kids with promise, kids who really want to take their musical career to the next level but really don't know where to go. A lot of them are kind of playing in loose‑knit bands or they excel in a particular area, whether it's keyboards or guitar or drums.
5655 It's been very successful in Ottawa. What it does is it brings them together with professionals, professional producers, people who produce CDs, professionals who specialize in stage performance. I know this from personal experience cause my son went through it. That's how I got kind of turned on to this and came up with the idea for Ottawa to do it. To see the kids start as individuals with some talent at the beginning of a week or two and do a live performance at the end of it as a group, and all the stuff they learned about lighting, staging, miking techniques, performance, recording techniques, is quite exciting and it gets them very jazzed and very enthusiastic.
5656 So we are going to count on the school board to help us with this and to help us coordinate it. We want to make it available to as many people as possible and we really want it to be available to as many of those younger people that normally might not be able to afford something like this or are extremely deserving, so...
5657 COMMISSIONER del VAL: Do you have any agreements with any of the local school boards yet?
5658 MR. MAHEU: No, we have no formal agreements. We have had informal discussions, there's enthusiasm, and we are very confident that we won't have any problem securing their agreement to move this forward.
5659 COMMISSIONER del VAL: At this point, do you have any idea of approximately how many youth would benefit from this program each summer?
5660 MR. MAHEU: Based on our Ottawa example, it works out to be about $400 per student to go through the jam clinic, et cetera, so we are anticipating at least a hundred every summer would be able to participate in this program.
5661 The other nice thing about it is if we can ‑‑ and we are looking at it in Ottawa, as well ‑‑ if we can bring some sponsors in and so on, we might be able to generate a little extra incremental money that makes the 40 that we are spending go a little further and we might be able to do 125 or 150. Music companies and companies that are in the business of selling musical instruments, and so on, all like to participate around this, they like to sponsor that, and so on, so at least a hundred.
5662 COMMISSIONER del VAL: And how are you making dispersements to the schools boards? Like, how will you make it? You say like your station in Ottawa, well, how will you be making ‑‑
5663 MR. MAHEU: We are going to follow the same course, from the standpoint of we are going to find a company to manage it for us and to coordinate the effort to get the right people to come in and work with the kids, the right producers, the right singer/songwriter coaches, et cetera.
5664 So we are going to work ‑‑ we are going to find ‑‑ we have already identified a company that's going to help us with the artist management, and so on, for the other part of our program. It may be this company, it may be another one, but somebody's going to run it for us, and we are going to count on the school board to help us publicize it and to really help us choose the most deserving prospects.
5665 There's a lot of music students throughout the school system and we are hoping to work with music teachers and so on and create a network of when they spot bright kids or kids who really could use a hand up or take that extra step, to recommend them for the course, and we want to make sure that it's available free of charge for them, so...
5666 COMMISSIONER del VAL: So CIRPA, in their intervention, described the summer jam clinic as nothing more than just a summer camp, and I know that in your response to CIRPA's intervention you didn't really address that point.
5667 Do you care to comment on that point or...?
5668 MR. MAHEU: I can tell you from personal experience and I can tell you from professional experience, it's a lot more than a summer camp. Young people between the ages of 12 and 17, who have a passion and an interest for music, I think that description by CIRPA dishonours their enthusiasm and passion for what they are doing.
5669 They are at a very impressionable time and a very impressionable age in their life, where things like this can make the difference whether or not they want to pursue this to the next level or not. Although from the outside looking in it may look like just another band camp summer kind of activity, we know that it's much more than that.
5670 If we can impact a few lives ‑‑ this isn't going to change every kids life who goes to it, but it's going to give them an experience they otherwise wouldn't have. And if a few of them take it to the next level or we were part of the catalyst that kept them going to want to make sure that they pursued their art to the highest possible degree, I think that would be money well spent.
5671 COMMISSIONER del VAL: Okay. Then, on page 22 of your supplementary brief, you mentioned that Newcap will guarantee A‑list rotation to two singles from the winning band's CD on all its format‑compatible major market stations in Halifax, Moncton, St. John's, Ottawa, Edmonton and Calgary, as well as some of the smaller markets.
5672 Can you explain in more detail how the rotation works or will work?
5673 MR. MAHEU: Sure.
5674 That was a question that certainly came up from the staff in deficiency ‑‑
5675 COMMISSIONER del VAL: Yes.
5676 MR. MAHEU: ‑‑ and just to kind of reiterate what we were talking about there, A‑list rotation is more of an acronym for real airplay, and wanted to make sure the Commission knew was that this isn't going to be token airplay, that is on the evening or the weekend or the overnight show, that when we make a commitment to get the record or the song on the radio station, we do it in a meaningful way.
5677 Part of our approach to programming in all of our markets is to let the managers and the programmers and the people who work at the stations in the market make the decisions on their radio stations to best suit the market. This is going to be one of those cases where we have to walk the fine line. We don't want to tell them what to play, but by the same token this is a corporate commitment we have made and we expect to honour our promises.
5678 So it is going to depend, in some cases, on how well the song fits on the radio station that it's asked to be played on. For instance, if it's a more acoustic‑based or folk‑based type of production, it may get less airplay on an alternative rock station in our group than it would on an adult contemporary radio station in our group, so we need to leave some flexibility there.
5679 But what we are guaranteeing is on any radio station it gets played on it's going to get played on all‑day parts and it's going to get played in prime time and it's going to receive the kind of exposure that can generate awareness, and potentially sales, of either live performance tickets or CDs for that artist. So it's real airplay.
5680 COMMISSIONER del VAL: Okay, great.
5681 So now we are onto the economics. You are on the home stretch now, okay?
5682 I just need some more information on your projected audience share for your format.
5683 For your triple A format, you are projecting a 4 percent audience share over the course of the seven‑year licence. Is that correct?
5684 MR. MAHEU: Yes.
5685 COMMISSIONER del VAL: Can you maybe walk me through how you made that projection?
5686 MR. MAHEU: The projection of a 4 percent audience share is based on the research that we conducted in the marketplace, and that's a 4 percent share of the 12‑plus audience ‑‑
5687 COMMISSIONER del VAL: Okay.
5688 MR. MAHEU: ‑‑ okay? We know that our share in certain demographic groups will be higher than a 4, which makes us a little more competitive. Again, when you take a look at where all the money is being spent on radio in Calgary and other markets of the same size, we know that as good a job as we can do with triple A, we are never going to be the number one biller and we are never going to be number one in the ratings, but that doesn't mean we cannot be successful.
5689 So the 4 percent share is based on the research that we have done. We also know that when any new radio station launches, it creates a ripple effect across the market, other format adjust and change and so on and everybody finds there new pecking order and their new place. Although do believe that during the course of the seven‑year licence that the station may achieve a higher share than a 4, there may be times during the licence where it achieves a lower share than a 4. So we are kind of projecting that average out over the course of this seven‑year timeframe that we are going to be in and around a 4.
5690 If you looked at it in the 24‑to‑55 age group, which is the big sales demographic, or the 25‑to‑44 age group, the station will probably do a little higher, 25‑34, 25‑44.
5691 COMMISSIONER del VAL: Okay. Now, then at section 5.1 of your application, which is average number of commercial minutes expected to be sold per hour, in year one you have estimated 5, year 7, it's 7.
5692 On what basis were you making those projections?
5693 MR. MAHEU: The basis on that, and it seems a little low, and the reason for that is our approach on this format is again to differentiate ourselves and keep the sensibility of the listeners in mind. Knowing that they kind of turned away from commercial radio now, to a great degree, we are trying to bring them back.
5694 We have learned this a little bit on our jazz radio station that part of the value proposition to advertisers is not only the size of your audience, but it's the qualitative nature of your audience: how many of them are owners, managers, professionals or graduated from university, or whatever, and how many of them average household incomes over $100,000, et cetera? So those things become important.
5695 What we found with our jazz radio station and what we are looking at with triple A is that the type of listener it attracts is quite desirable. What we are hoping is that we can build a larger, more loyal audience by playing fewer commercials, and if we play fewer commercials they will listen longer and they will stay with us longer. And if we play fewer commercials, advertisers on our station will stand out a little more, and, hopefully, we get to the point where that advertising time could actually command a bit of a premium because of the loyalty of the audience, the qualitative nature, and you are not listening to 12 to 15 minutes of commercials an hour that you do on some radio stations.
5696 So that's the rational behind it: limit supply, create demand, leverage the price over time.
5697 COMMISSIONER del VAL: Okay. So does that also explain why the ratio of your projected total advertising revenues to total projected audience shares, it seems to be lower than when compared to the existing Calgary radio stations?
5698 MR. MAHEU: That's part of it.
5699 COMMISSIONER del VAL: Okay.
5700 MR. MAHEU: The other part is just being realistic. Every company does their own examination and does their own business plan based on what they think the radio station can do in a competitive environment.
5701 We have a little insight because we operate a small specialty station now, so we know, to some degree, what it's like to operate at the low end of the rating spectrum which, California 103, that's where it is.
5702 One of the things that you have to factor in with a new station launch is, as big as the hole might be or as big as the opportunity presents itself, it's never that big the day you launch. It's going to be a while before you are able to fill the hole that the research shows to the point where you will get a rating and share that you can then monetize. Chances are it takes a year, sometimes a year‑and‑a‑half, before you can fully begin to take advantage of the full share that the radio station is going to generate. We are talking that into account.