ARCHIVÉ -  Transcription

 

 

 

 

 

 

 

TRANSCRIPT OF PROCEEDINGS BEFORE

      THE CANADIAN RADIO‑TELEVISION AND

TELECOMMUNICATIONS COMMISSION

 

 

 

 

TRANSCRIPTION DES AUDIENCES AVANT

  CONSEIL DE LA RADIODIFFUSION

   ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

 

 

 

 

 

SUBJECT:

 

 

 

VARIOUS BROADCAST APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

 

 

 

 

 

 

 

 

 

HELD AT:             TENUE À:

 

Metropolitan Conference             Centre de conférence

Centre             Métropolitain

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

Calgary, Alberta                Calgary (Alberta)

 

February 27, 2006          Le 27 février 2006

 

 

 

 

 

Transcripts

 

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

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

and staff attending the public hearings, and the Table of

Contents.

 

However, the aforementioned publication is the recorded

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

either of the official languages, depending on the language

spoken by the participant at the public hearing.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

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

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

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

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

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

Canadian Radio‑television and

Telecommunications Commission

 

  Conseil de la radiodiffusion et des

télécommunications canadiennes

 

 

Transcript / Transcription

 

 

 

 

        

  VARIOUS BROADCAST APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

        

 

 

 

 

BEFORE / DEVANT:

 

Michel Arpin          Chairperson / Président

Helen del Val          Commissioner / Conseillère

Elizabeth Duncan          Commissioner / Conseillère

Ronald Williams          Commissioner / Conseillier

Stuart Langford          Commissioner / Conseillier

 

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet     Secretary / Secrétaire

Leanne Bennett          Legal Counsel /

Conseillère juridique

Steve Parker          Hearing Manager /

Gérant de l'audience

 

 

 

HELD AT:          TENUE À:

 

Metropolitan Conference          Centre de conférence

Centre          Métropolitain

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

Calgary, Alberta             Calgary (Alberta)

 

February 27, 2006             Le 27 février 2006

 

 

TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

  PAGE /  PARA

 

PHASE I

 

 

PRESENTATION BY / PRÉSENTATION BY:

 

Golden West Broadcasting Ltd.  1380 /  8727

Vista Radio Ltd. 1427 /  9028

Newcap Inc. 1498 /  9411

1182743 Alberta Ltd. 1544 /  9671

Touch Canada Broadcasting Inc.  1590 /  9899

 

 

 

PHASE II

 

 

INTERVENTION BY / INTERVENTION PAR:

 

Vista Radio Ltd. 1670 / 10566

 

Gelden West Broadcasting Ltd.   1678 / 10621

 

 

 

PHASE III

 

 

INTERVENTION BY / INTERVENTION PAR:

 

Jim Pattison Broadcast Group 1682 / 10649

 

 

 

PHASE IV

 

 

REPLY BY / RÉPLIQUE PAR:

 

Touch Canada Broadcasting Inc.   1707 / 10807

1182743 Alberta Ltd. 1711 / 10836

Newcap Inc. 1718 / 10875

Vista Radio Ltd. 1729 / 10934

Golden West Broadcasting Ltd.   1732 / 10952

 

 

  Calgary Alberta / Calgary (Alberta)

‑‑‑ Upon resuming on Monday, February 27, 2006

    at 0900 / L'audience reprend le lundi

    27 fevrier 2006 à 0900

8719     THE CHAIRPERSON:  Order, please.

8720     Again, welcome to everybody here at this hearing for our review of the Lethbridge application.

8721     I'm asking the secretary to introduce the item.  Thank you.

8722     THE SECRETARY:  Thank you, Mr. Chairman.

8723     Good morning, everyone.

8724     We will now proceed with the competing radio applications for the Lethbridge market.  We will be following the four‑phase process, therefore, we are now ready to start with item 14 on the agenda, which are applications by Golden West Broadcasting Limited to acquire the assets of the radio programming undertaking CJTS‑FM, an English‑language specialty FM radio station at Lethbridge, from Spirit Broadcasting Limited, and to amend the licence by changing the frequency from 97.1 MHz, channel 246LP, to 98.1 MHz, channel 252B, and to change the authorized contours by increasing the effective radiated power from 50 watts to 20,000 watts by increasing the antenna height and by relocating the transmitter, non‑directional antenna, antenna height 174.3 metres.

8725     Appearing for the applicant is Mr. Elmer Hildebrand.  Mr. Hildebrand will introduce his colleagues, and then have 20 minutes for his presentation.

8726     Mr. Hildebrand.

PRESENTATION / PRÉSENTATION

8727     MR. HILDEBRAND:  Thank you.

8728     Mr. Chairman, members of the Commission and Commission staff, my name is Elmer Hildebrand, president and CEO of Golden West Broadcasting.

8729     With me is Lyndon Friesen, executive vice‑president of Golden West, and Terry Fleming, founder and owner of Spirit Broadcasting Ltd., operating CJTS‑FM in Lethbridge.

8730     The application before you today is for Golden West to acquire assets of Spirit FM and to amend the licence so as to authorize an increase in the power of the existing radio stations to service the community more effectively.

8731     Terry Fleming will now provide a brief update on the reasons for the sale transaction and Lyndon Friesen will briefly outline our plans.

8732     MR. FLEMING:  Thank you, Mr. Hildebrand.

8733     I established Spirit FM just over five years ago, going into our sixth year now, in Lethbridge, with a unique gospel music format.  And even though we are an LPF, a low‑power operation, it may not be perfect, but we have a very receptive audience, and growing all the time, in Lethbridge for this radio station.

8734     Over the years, we have had various employees and volunteers help us with the radio station to keep it going; however, it has not been a financial success and has been a bit of a struggle that way.  Although on the air for almost six years, it's been a very heavy struggle.

8735     For health reasons, I have moved to the west coast, and that's where I am at the moment, although I travel back and forth quite frequently to oversee the radio station.

8736     I found it very difficult to maintain staff from that place, even though I go back and forth quite a bit, and, therefore, for the financial and health reasons, I need to sell the radio station.

8737     Now, we wanted very badly to have the radio station stay on the air providing the specialty music format to Lethbridge.  My discussions with Mr. Hildebrand, of Golden West, dates back approximately 15 months and resulted in the transaction that is proposed before you today.  

8738     Golden West has committed to keeping the existing format, which made us very happy, and taking it to a new level, which gave me a lot of comfort and to conclude the arrangement of this sale.

8739     MR. FRIESEN:  We feel very confident that Golden West will be able to not only maintain, but improve, the existing specialty radio service to Lethbridge.

8740     Two years ago, we purchased radio station CHVN‑FM in Winnipeg.  This station has a format much like Spirit FM and we have been able to develop that station into a vibrant and viable radio station.

8741     The experience we have had at CHVN will help us greatly in building a solid and professional operation in Lethbridge.

8742     MR. HILDEBRAND:  The second part of the application is to amend the licence by changing the frequency from 97.1 to 98.1 and to increase the effective radiated power to 20,000 watts.  The amendment will enable us to provide a solid and consistent signal to Lethbridge and surrounding areas.

8743     Our application will not basically alter the existing radio market in Lethbridge.  The city is well‑served by four other private radio stations operated by Rogers and Pattison.  In addition, there's a university radio station, and there's also two commercial television stations, plus a gospel television station, which is also selling sponsorships in the market.

8744     We will, however, bring the Golden West community service radio tradition to the market and, as a result, the overall radio service to Lethbridge will be enhanced.  We will obviously add to the news operation and the overall local service will, I think, be improved significantly.

8745     We will work actively with gospel bands and music groups promoting their brand of music.  We will be able to share the music with our existing gospel music station in Manitoba, so that will give us a larger library.

8746     Our financial projections are modest and should have no negative impact on the existing broadcasters in Lethbridge.

8747     Mr. Chairman, that concludes our remarks and we will be happy to answer any questions.

8748     THE CHAIRMAN:  Thank you very much, Mr. Hildebrand.

8749     For those who weren't here last week, I'm hearing the headset to make sure that I really get everything that is said.  It's not because I'm listening to the translation, it's only for enhance the quality of the sound.

8750     My first questions will be for you, Mr. Fleming.

8751     As you know, the Commission is always concerned when an acquisition is taking place during the first licence term.  I heard you earlier saying that your personal health situation was an impairment at looking at the operation on a day‑to‑day basis, and that alone had a negative financial impact on the operation of the stations.

8752     My first question is those are the accurate and factual reasons for which you have decided to sell the station?

8753     MR. FLEMING:  Yes, sir, it is.

8754     THE CHAIRMAN:  Okay.  For the record, have you received other offers to purchase the station, other than the one you had received from Golden West?

8755     MR. FLEMING:  Yes, sir, I have received a few, but nothing in cement.

8756     THE CHAIRMAN:  Okay.  Thank you.

8757     Finally, if the Commission was to either deny the change of frequency or the increase of power, or even deny totally the Golden West application, you obviously understand that if the increase in power was not approved that Golden West will not do the acquisition, what will happen to the station if the Commission was to deny the Golden West application?

8758     MR. FLEMING:  Well, that's a question, sir, to be very up‑front and honest, I'm not prepared for, but I would imagine that we would have to continue on as best we could, under the circumstances.  With the financial way it is and, of course, with the various radio stations and media and so on in the area, which eats up a pretty big chunk of the pie, I would have to cross that bridge when I came to it.

8759     THE CHAIRMAN:  Okay.

8760     Now, I'm moving my questions to the principals of Golden West, and my first question has to do with ‑‑

‑‑‑ Pause

8761     THE CHAIRMAN:  Mr. Hildebrand, do you have documented evidence supporting the rationale behind your decision to request technical amendments to change from a lower power service to a full‑power FM?

8762     There have been some intervenors who have written saying that the signal of the station, the actual power, is sufficient to cover Lethbridge and the surrounding ‑‑ up to 15 kilometres around Lethbridge.  So my question to you is:  have you undertaken any study to determine that it was absolutely necessary to upgrade to full power?

8763     MR. HILDEBRAND:  Well, I think since low power doesn't provide for any protection from anywhere, it is not really a sound business practice to go into an arrangement where you don't have a protected frequency.  The signal certainly is usable, but it's not consistent in the area.  From our perspective, there were a number of frequencies that could be used, and we felt that at the modest power of 20,000 watts this would be the best way to serve the community.

8764     THE CHAIRMAN:  Obviously, you could have asked for, say, an increase from 50 to 250 watts, and then you will have moved from an unprotected frequency to a protected frequency, but keeping almost the same quality of signal and the same coverage area.

8765     MR. HILDEBRAND:  Surely we could have done that, but we felt, on a business basis, it made a little more sense to provide the service to the surrounding area as well.

8766     One of the things that has been happening in this station is it is getting inquiries from people in the periphery to listen to the station because they like the format.  From a Golden West perspective, it makes sense to have a little more solid signal than the 250 that might be possible.

8767     THE CHAIRMAN:  You have suggested that CJTS, in its existing form, is not viable as a business model.  What evidence do you have to suggest that your commercial business plan is not achievable at a low power?

8768     MR. HILDEBRAND:  Well, I mean, I don't know that we really have that answer for you, Mr. Chairman, but I think as we go forward, from a Golden West perspective, we are inclined to operate with somewhat more power.  At the end of the day, if the Commission would decide, in their wisdom, that it wasn't possible to do this, and that we should operate at a lower power, I'm sure we could accommodate that.

8769     THE CHAIRMAN:  Okay.  You have indicated in your application, and I heard Mr. Friesen saying a few words about it, that you will employ similar strategies that you are currently using at CHVN‑FM in Winnipeg.

8770     Could you elaborate on these business plan strategies?  I'm not talking here the program aim, I'm only restricting myself to the business plan operation strategies, and their success, in the context of CHVN?

8771     MR. HILDEBRAND:  Well, again, CHVN's signal actually covers a large geographical area.  We have found that the format has a receptive audience and we have been able to build the business significantly since we took over the radio station.  Again, we have found that it isn't really interfering with any of the other radio stations in the market because of the specialty format, the niche audience that it has, yet, there is sufficient business interest in the audience that we have been able to increase the advertising revenue steadily.  Our sense is that we will be able to do the same thing here.

8772     One of the difficulties that the radio station has had up to now is, as Mr. Fleming indicated, he has been commuting back and forth between Lethbridge and the coast.  It's hard to really maintain a stable management process in that environment, and so that to hire people and to get them to stay in the environment has been a challenge for him.  As he also indicated, many of the employees at the radio station actually work on a voluntary basis.

8773     Our plan is to set the station up on a pure business model, similar to what we have at CHVN in southern Manitoba.  We are very confident that in that way we can not only provide a service to the community, but to make the radio station viable and to provide some long‑term career opportunities in the community of Lethbridge.

8774     THE CHAIRMAN:  Thank you.

8775     You have indicated that year one projected revenues will be derived primarily from advertisers that currently advertise in CJTS.

8776     What evidence do you have to support that assumption that the existing advertisers are willing to substantially increase their advertising budget to support their service?  Because I know that you are viewing that the incumbent radio stations will not be affected by your increased power and that you will mainly develop either new business or increase budgets from those who are already advertising.

8777     And a subquestion only, and maybe Mr. Fleming could answer to that more than you, is the current advertising on your stations the same ones that are on the other four FM stations in the market?

8778     MR. FLEMING:  I would say, sir, that there are some, yes, but there are certainly many advertisers that have a specific place that they want to advertise on this particular Christian format station that are very, very loyal and, as Mr. Hildebrand said, very few of them are going to be split.

8779     We do have some split, naturally, that want to advertise on the secular radio station and CJTS, as well, so, yes, there are some ‑‑

8780     THE CHAIRMAN:  There are some.

8781     MR. FLEMING:  ‑‑ but many of them are not.

8782     MR. HILDEBRAND:  One of the things I might add here, Mr. Chairman, during my visits to the community, and talking to advertisers, one of the difficulties that the radio station has today is, because the sales account people turn over constantly, so there is a very short‑term lifespan, advertisers have told me that they don't really even get to know the person before they are gone and it's hard to develop a relationship going forward.

8783     So our business model has always been that we put in place solid sales people, that are there for the long run and that develop relationships with advertisers and, as a result, we then turn that into a long‑term business relationship with clients.  That's why we are very confident, when we look at the list of advertisers that the station's had over the past five years, that all we really need is to develop those on a consistent basis, and that would already meet our budgets.

8784     The other thing I think it is important to realize that our budgets are modest.  We are not looking to carve out a huge piece of the Lethbridge market.  That's why, also, we are confident that we are not going to impact any of the other broadcasters in the market.

8785     THE CHAIRMAN:  Thank you.

8786     We will now move to programming.

8787     You have provided some information regarding the type of local and spoken‑word programming you will offer on CJTS.  In part, you indicated that you will maintain CJTS's current commitments over the next full term of licence.

8788     As part of the original licensing decision in 2000, CJTS committed to broadcast local and national news, weather, sports, community events, announcements, artists interviews and public interest stories.

8789     Could you provide us with more information on the type of local reflections, spoke word you will offer on CJTS?  In particular, I am interested in the type of local news programming you will carry and the amount of time per week you will devote to news and related surveillance.

8790     MR. HILDEBRAND:  Maybe I will ask Lyndon Friesen to, first of all, outline our whole news philosophy and process.

8791     MR. FRIESEN:  All of our radio stations in our entire business model, we tell our staff, and we sell it hard, and then we also stick with, that our relevance to any of these communities is only when we provide just a huge level of local news, local information, local sports.  There's too many other options out there, we tell them, that they can listen to. So since that is our foundation, we build it from there.

8792     So Lethbridge will be no different than that.  We are going to provide a local news service that is very similar to other Golden West radio stations, that includes a local surveillance team that will actually be in the community gathering local interest information and stories and providing that for our listeners.

8793     That, again, is our whole reason for existence, and we are only relevant if we can do that well.

8794     THE CHAIRMAN:  Generally speaking, how much time do you dedicate, say, to the local information?

8795     MR. HILDEBRAND:  We would be using local information almost exclusively, with a 60‑second national and international update on the top of the hour, at the newscast.  But we would envision that we would have newscasts hourly between 6 and 10 a.m., between 12 and 2, again between 4 and 6, and then we would have newscasts on the half‑hour, as 7:30, 8:30 and 12:30, and 5:30.  This would be predominantly Lethbridge and area news and information, sports and weather surveillance would obviously be going continuously.

8796     THE CHAIRMAN:  What is the duration of those newscasts?

8797     MR. HILDEBRAND:  The newscasts, on the hour, they would run between three and four minutes and on the half‑hour would be five minutes.

8798     THE CHAIRMAN:  Five‑minute newscasts.

8799     What about the weekend?

8800     MR. HILDEBRAND:  We would have newscasts on the weekends, as well.

8801     Our news operation goes 24/7, so that we would not go on automation for the weekend.  We tend to think that the radio station should answer the phone on the weekend, as well as during the week.

8802     THE CHAIRMAN:  And outside the period that you gave me, 6 a.m. to 7 p.m., if there is a major event, obviously, there will be staff at the station?

8803     MR. HILDEBRAND:  Oh, yeah, we would still have updates in the evening, as well, but we wouldn't have the same complement of news people in the evening as we would during the day.  Most of it would be happening in the day.  We would still have news updates in the evening, as well, but probably not overnight.

8804     THE CHAIRMAN:  How many people are you planning to have in your news department?

8805     MR. HILDEBRAND:  We are planning to have three people in our news department.

8806     THE CHAIRMAN:  News department.

8807     MR. HILDEBRAND:  Right.

8808     THE CHAIRMAN:  That will include a director or ‑‑

8809     MR. HILDEBRAND:  Yes.

8810     THE CHAIRMAN:  But who also ‑‑

8811     MR. HILDEBRAND:  But he would also be on the ‑‑ or she would also be on the air.

8812     THE CHAIRMAN:  I see.  Okay.

8813     You have indicated that the local programming you will offer on CJTS will be similar to what is offered in Winnipeg.

8814     Could you tell us a little more about the types of local reflection and spoken word that are currently offered on CHVN?

8815     MR. HILDEBRAND:  Well, in addition to the news and surveillance that I have already talked about, we also get heavily involved with musical groups that are appearing in the community, in the area, and so we would be not only highlighting their music, but we would be talking to the artists and get them involved with our audience.

8816     We would be involved with pretty well everything that moves in Lethbridge.  We would be providing news and information to all of the civil and public and university outlets, as well.  So we would be involved, basically, with the entire community, which sort of is rolled up in our community service slogan, and so that we would make it a full‑service radio station.

8817     THE CHAIRMAN:  And you will be sharing programs with CHVN?

8818     MR. HILDEBRAND:  We wouldn't be sharing necessarily programming, but we would be sharing music.  In CHVN, we have developed a number of musical talent nights, where we have anywhere from six to eight musical groups performing, and then the top group is awarded a prize of a CD that we helped them make.  So we would certainly be using music from CHVN in Lethbridge, but we wouldn't be ‑‑ otherwise you are sharing information.

8819     But the biggest piece that we can probably provide is the infrastructure that our company has in place, so that we have administrative and traffic and creative and all of those services available.  And that would, again, enable us to provide service at a more professional level in Lethbridge than we would otherwise be able to do.

8820     THE CHAIRMAN:  In increasing to full power, obviously, currently the station is serving specifically Lethbridge, and it's core area, but in extending with full power, obviously, you will be covering some communities like Taber, Fort Macleod, Coaldale, Raymond.

8821     MR. HILDEBRAND:  Right.

8822     THE CHAIRMAN:  Have you any specific plan regarding servicing these communities?

8823     MR. HILDEBRAND:  Well, again, we would provide service there, as well.  You would obviously be secondary to Lethbridge, because Lethbridge is the core that we are looking for, but the specialty part of our music would also appeal to some of those areas and is appealing now.  The station is getting calls from Coaldale, for example, that the signal is spotty, they can hear it sometimes, not all the time.

8824     If there are events taking place in those communities that are in line with our format, we would certainly be covering those, as well, and we would be happy to provide the same kind of overall service to the entire region that we are covering.

8825     THE CHAIRMAN:  Now, we will move towards religious programming, and, obviously, the notion of balanced programming that comes with it.

8826     As you know, the Commission has set out a policy on religious programming and I need to get further information from you.

8827     In your deficiency reply of October 28th, you have stated that you will not offer religious programming as defined in the religious broadcasting policy.  In the same letter, you agreed to accept to operate under the standard condition of licence requiring the provisions of balance and ethics in religious programming.

8828     Brokered spoken‑word programming, such as Focus on the Family, Insights for Living, Adventures in Odyssey, Back to the Bible and Prophesy for Today are programming staples on a number of Golden West stations, such as CHRB, in High River.  As well, programming information supplied on CHDM‑FM website shows that brokered programming, such as Focus on the Family, Insights for Living and Adventures in Odyssey are also here on the Winnipeg station.

8829     Do you plan to offer these types of brokered spoken‑word programs on CJTS?  Given the station's Christian music format, they will seem to be a natural fit.

8830     MR. HILDEBRAND:  Well, first of all, referring to CHVN, those programs that you refer to are not on between 6 a.m. and midnight.  They are broadcast between midnight and 6 a.m.  So, for the record, that's what we have been doing there.

8831     The station was doing that when we purchased it, and so we have left those in place, but we have not been airing any, as you referred to it, brokered programming between 6 a.m. and midnight.  The same plan would be in place for Lethbridge.  We really are seeing this as a music‑based radio station and we wouldn't be looking to carry those programs during the day parts.

8832     THE CHAIRMAN:  I appreciate the fact that these programs are not carried during the defined broadcast day of the regulations, but the religious policy states that the notion of balanced programming applies on the 168 hours a week rather than the 126 hours a week.  So even if they are carried outside the broadcast day, these programs are still under the purview of the religious programming policy and the balanced programming policy.

8833     So my question to you is were you aware that they were covered by the existing policy?

8834     MR. HILDEBRAND:  Yes.

8835     THE CHAIRMAN:  You were.

8836     Now, that it seems that you ‑‑ well, you surely have agreed to operate under the standard conditions regarding balance, so what are your plans regarding balanced programming, if you accept that these programs are to be considered as being religious programs and they are covered by the policy?

8837     MR. HILDEBRAND:  Well, if they are other programs that are interested in the midnight to 6 time block that would require further balance, we would be happy to consider that.

8838     From my knowledge, there haven't been any inquiries for additional programs, so...

8839     THE CHAIRMAN:  But the policy also states that it's not only making available program time, that is it's not only waiting for somebody to knock at your door and say, "I want to have broadcast time", but also the policy strongly suggests that you selected the other, say, group to make use of your airways.  Have you done that in Winnipeg?

8840     MR. HILDEBRAND:  Not really, no, but I guess we basically are reflecting the community, and our efforts are always to reflect the community that we serve.  We think we have done that reasonably well.

8841     THE CHAIRMAN:  Now, how much of the spoken‑word programming that you will devote to balanced programming, in terms of ‑‑ I'm trying to figure out ‑‑ well, I know that the programs that you have ‑‑ are they daily programs, Focus on the Family, Insight for Living and ‑‑

8842     MR. HILDEBRAND:  They are Monday to Friday.

8843     THE CHAIRMAN:  They are Monday to Friday.  They an hour each?

8844     MR. HILDEBRAND:  No, half‑hour.

8845     THE CHAIRMAN:  Half an hour.

8846     MR. HILDEBRAND:  The ones you refer to are half‑hour.

8847     THE CHAIRMAN:  So we are talking here five hours of programming that will fall into the religious programming category at this stage ‑‑

8848     MR. HILDEBRAND:  Right.

8849     THE CHAIRMAN:  ‑‑ now.  Okay.

8850     Could you comment on the possibility that the Commission impose your condition of licence requiring you to do a minimum amount of balanced programming?

8851     MR. HILDEBRAND:  Sure, it wouldn't be an issue.

8852     THE CHAIRMAN:  It won't be an issue.

8853     Okay, thank you very much for this discussion.  We will now talk about your CTD plans, and, as well, we will speak regarding tangible benefit in the same section.

8854     The Commission needs your help to clarify the various components and replies you have provided regarding CTD and tangible benefits.  Let me start first with the CTD.

8855     In various replies you have mentioned that you are accepting all the conditions of licence currently imposed to Spirit Broadcasting.  One of them, condition of licence no. 5, deals with an annual minimum contribution of $2,600 towards CTD.

8856     According to our records, which, in a letter dated January 12th, you agreed there are still four $2,600 contributions that are due before the current licence expires in August 31, 2007.  The two obviously are this year and next year and the previous years' contribution has been disallowed, as you know.

8857     So the Commission is expecting that this $10,400 commitment be executed over the next 18 months.  Do you agree with that statement?

8858     MR. HILDEBRAND:  Yes.  I think in one of our letters, in discussions with Commission staff, I said whatever shortcoming there were in the current period, we would make up in ‑‑ if the application was approved, we would make that up in the current licence term.

8859     THE CHAIRMAN:  Fine.

8860     In your application, you stated that were recommending $1,000 per year towards CTD.  In a letter dated October 28, 2005, you mention that the funding was to go to the promotion and to the assistance of local music groups.  In the same paragraph, you also mentioned that the $1,000 cash contribution was to go towards a scholarship at a local education institution.

8861     For the record, are we talking here of two different $1,000 contribution or is it the same one?

8862     MR. HILDEBRAND:  No, it would be two different ones, and these would be minimums.

8863     As we outlined in an earlier application, what we have been able to do with local musical groups, we have been able to sponsor concerts with them, and also then get CDs made and, in some cases, actually market it.

8864     So these would be minimums for CTD.  We would expect to do considerably more.

8865     THE CHAIRMAN:  Okay.  Now, as you are aware, in order to be accepted, the CTD initiatives, they have to meet certain eligibility requirements.  So what types of studies will the $1,000 scholarship funding support?  You are saying that a bursary will be granted to a student in a local ‑‑

8866     MR. HILDEBRAND:  Well, it will be done through the school, obviously, and we will make sure that they are qualified under the CTD guidelines.

8867     THE CHAIRMAN:  Is there a journalism program at, say, the Lethbridge university?

8868     MR. HILDEBRAND:  Yes, there is, but we would tend to try to put the CTD contributions to music rather than journalism, but that would be an option.  But we have done this in other markets, where we provided scholarships to musical groups at various high schools or colleges that we have been able to make sure that they qualify for third‑party regulations, and we would do the same thing here.

8869     But I think want to emphasize that the numbers that we have in our application are minimums.  We will, without a doubt, do significantly more.

8870     THE CHAIRMAN:  How will the successful recipient be chosen?  He will be chosen by the school?

8871     MR. HILDEBRAND:  We have a process where we meet with them and the directors of the band or the musical groups, and we do that in consultation with them.  In some communities there are also competitions, and there's a process that then works from there.

8872     THE CHAIRMAN:  Who will be responsible for administrating the fund?

8873     MR. HILDEBRAND:  That is something that falls into my purview, and that's part of ‑‑ most of my duties have been taken over by other people in our company, but I continue to look after CTD so that I can give ‑‑

8874     THE CHAIRMAN:  That one.

8875     MR. HILDEBRAND:  Yeah, so I give you assurance that we will do that.  I need to have something to do, too.

‑‑‑ Laughter / Rires

8876     THE CHAIRMAN:  Regarding now the talent that you want to promote and assist, the music groups, how will they be selected?

8877     MR. HILDEBRAND:  Well, I mean, I think each market is a little different.  I mean, I refer again to what we did at CHVN in Winnipeg.  In the fall, we had a series of Saturday night concerts, with musical groups from across the area.  Then, there was a competition and an run‑off, and then that culminated in a final concert, where we actually have an over‑sold crowd.  It resulted in a winner, which then resulted in the production of a CD and a distribution of the CD.

8878     So the whole process gets a lot of attraction and gets a lot of airplay on the radio station.  And it really, really makes the musical groups very, very happy because in most cases these are musical groups that would not ever get any exposure on a major market broadcaster because they don't necessarily fit a format.

8879     We are of the opinion that if they are local, then we can work them into our format in some way. We try to support them, and we found that is a very, very satisfying process.

8880     THE CHAIRMAN:  They will not necessarily be groups that are singing hymns or doing Christian music?

8881     MR. HILDEBRAND:  We wouldn't see them as hymns, no.  They may still be in their mind gospel, but they wouldn't fall into the category of "Shall We Gather at the River".

8882     THE CHAIRMAN:  In the same October 28th, 2005 letter, in your paragraph 1 (c), you wrote that,

"We will adhere to the existing conditions of licence 1, 2, 3 and 5 for a new full licensed term."  (As read)

8883     Condition of licence no. 5 deals with an annual minimum contribution of $2,600 for CTD.  So are we talking here about two times $1,000, plus one time $2,600?

8884     MR. HILDEBRAND:  Yes, we are.

8885     THE CHAIRMAN:  So it's a commitment for $4,600 ‑‑

8886     MR. HILDEBRAND:  Right.

8887     THE CHAIRMAN:  ‑‑ toward CTD that we are talking here.

8888     What type of initiatives will Golden West undertake with the other $2,600?

8889     MR. HILDEBRAND:  Well, I think what we will do there is to do what we have done in southern Manitoba ‑‑ I keep referring to that ‑‑ where we will set more concerts into place that will develop more CDs.  Our plan is always to give the artist more exposure.

8890     The other thing that we will be doing is we will be carry a weekly half‑hour musical program that will be featuring musical groups and bands from southern Alberta, and, again, the best of those will be put into a production CD.

8891     So there's more than ample opportunity to spend this money.  What find in most areas, we actually end up spending more.

8892     THE CHAIRMAN:  I see.

8893     Now, I will move towards tangible benefits.

8894     In your June 20th, 2005 reply to deficiency, you stated that,

"If the Commission deems it appropriate to impose the 6 percent fee on this transaction, we will reluctantly agree."

(As read)

8895     My first question to you is:  why will you reluctantly agree?

8896     MR. HILDEBRAND:  Well, I think, in my discussion with the Commission staff, the annual return filed by the licensee showed that this station had a modest profit, but that took into account that more than half of the employees were working as volunteers.

8897     In our case, obviously, we would be paying everyone, we wouldn't be dealing with volunteers, and so my point was that, on a normal business basis, this station was really operating heavily in the red if those things would be paid for.

8898     From that perspective, it was hard to come to the conclusion that the station was profitable.  However, since this may be a grey area, I made the comment that if the Commission feels that ‑‑

8899     THE CHAIRMAN:  In its wisdom.

8900     MR. HILDEBRAND:  ‑‑ in its wisdom would feel that this is now deemed to be profitable, we would agree to that and pay the 6 percent.

8901     THE CHAIRMAN:  I noted in the annual return that, Mr. Fleming, you reported having five employees.  Is that accurate?

8902     MR. FLEMING:  No, sir, it's not, no.  We have two full‑time and three part‑time and about three volunteers.

8903     THE CHAIRMAN:  But, finally, you end up ‑‑ well, obviously, the part‑time, are they half‑time or ‑‑

8904     MR. FLEMING:  Very much so, yes.

8905     THE CHAIRMAN:  So we will say that you have three‑and‑a‑half full‑time employees, and other volunteers.

8906     Mr. Hildebrand, how many employees are you contemplating for ‑‑

8907     MR. HILDEBRAND:  We would contemplate to have around 10 employees on a full‑time basis, plus the back‑up infrastructure from Golden West.  These employees would basically be news people, on‑air people and sales people.

8908     THE CHAIRMAN:  I see.  And the back office is provided out of ‑‑

8909     MR. HILDEBRAND:  Is provided out of Altona and Steinbach, in Manitoba, where all of the traffic, the creative and the production and the overall administration for all of our stations in the prairies, is handled out of there.

8910     THE CHAIRMAN:  Fine.

8911     If the Commission was to determine that it's tangible benefits policy was to apply, what type of initiative other than ‑‑ obviously there are contributions that are deemed to go to FACTOR, and another one, too, Starmaker, but for the remaining part which type of activities will you contemplate?

8912     MR. HILDEBRAND:  We would contemplate, first of all, the FACTOR and Starmaker Fund and the money that we would send to FACTOR, we would try and earmark that they send it back to use in Alberta or Saskatchewan, or somewhere in the prairies, and not spend it in eastern Canada.

8913     The third part, we would like use an organization called Avanti Records, who are in the process of ‑‑ they organize concerts, do CDs and produce records, and so they are in the genre that we work in.  So that's an area that we would likely use the rest of the tangible benefits, if you so deemed it was necessary.

8914     THE CHAIRMAN:  My next question is purely on technical grounds.

8915     Where is currently the transmitter located, on which tower?  I notice that there are two towers?

8916     MR. FLEMING:  Sir, it's currently on top of the Lethbridge Centre, in the centre of Lethbridge, in the middle of town.

8917     THE CHAIRMAN:  In the middle of the town?

8918     MR. FLEMING:  Yes.

8919     THE CHAIRMAN:  I notice through the various documentation that I have, there are two existing transmitting sites, one operated by the CBC and the other one operated by CKUA.  I deducted from reading your ‑‑ looking at the maps that were prepared by your engineer, Mr. Hildebrand, that you are going to be going to the CBC transmitting site.

8920     MR. HILDEBRAND:  That's our plan, yes.

8921     THE CHAIRMAN:  That's your plan.

8922     I haven't seen in the application a letter of confirmation from the CBC agreeing to ‑‑

8923     MR. HILDEBRAND:  D.E.M. ALLEN have that document.

8924     THE CHAIRMAN:  D.E.M. ALLEN.

8925     MR. HILDEBRAND:  If it's not in your files, I will get it to you.

8926     THE CHAIRMAN:  Well, will you ask D.E.M. ALLEN to provide it for us?

8927     MR. HILDEBRAND:  Yes.

8928     THE CHAIRMAN:  Now, also, I notice, looking at the financials that you have allocated for capital expenditures, that you have allocated $50,000 for transmission.  Then, when I'm looking at the others that are planning to go on the CBC tower, they have a much greater amount.  I think it seems to be a much bigger proposition than what you are contemplating.

8929     If it costs much more than what you think you have committed in your application, are you ready to make that investment?

8930     MR. HILDEBRAND:  Yes, we are.

8931     THE CHAIRMAN:  Because we are maybe talking here ten‑fold that money.  I don't know.

8932     MR. HILDEBRAND:  No, it certainly wouldn't.  We have been doing these kind of things in other towers, where we have been leasing space, and, yeah, we haven't had any difficulty with that.  As a matter of fact, we have some CBC leases now, and we know what they are.

8933     THE CHAIRMAN:  Now, I move that one of the comments that was received from an intervenor, because I checked the file and I noticed that you didn't provide any comments or reply to Mr. Eric Cadman in intervention, but he strongly opposed the increase in power, suggesting that the Commission, in the past ‑‑ and he mentions particularly Medicine Hat, where the Commission has denied the power upgrade, and he's opposing your application on similar grounds, claiming that you are coming through the back door and using a financial negative situation only to get in the market.

8934     Do you have comments on that?

8935     MR. HILDEBRAND:  Yeah, I don't ‑‑ I haven't received that letter from the gentleman you refer to, so I don't have a comment on that.  But, again, we feel that we have a service that we are willing to provide, there is a service in the community of Lethbridge now that is in some peril, and we feel that the arrangement that we have proposed not only will ensure that service is maintained in the long run, but will also be enhanced.

8936     THE CHAIRMAN:  Well, we are slowly moving towards the end of your appearance.

8937     If the Commission was to authorize your application, as well as another, which one will have the less negative impact on your business plan, and why?

8938     MR. HILDEBRAND:  That will be a very hard question to answer.

8939     First of all, I mean the Commission will have to determine the merits of the other applicants.  I think, as I indicated in my opening remarks, the City of Lethbridge, at 75,000, is already well‑served by a large number of broadcasters and the southern part of Alberta isn't growing in the same way that some of the other parts of Alberta are growing.  So it would seem to me that the number of radio stations and televisions stations serving the market at this point may be adequate.

8940     So that our point has been, when we filed the application, we were certainly not looking to open the market to a call, we were looking mainly to continue the service that was already being provided, and to do it in a somewhat better manner.

8941     I don't think that we are in a good position to say here today which of the other applicants we would support, because, obviously, if we said this one's better than that one, then we would be providing support for them.

8942     My hope would be that the Commission can deal with this particular application to leave the market as it is, and if the market grows in the future maybe more stations could be added at that time.  But at this point, it seems to me that it might make sense to not over‑license the market.

8943     THE CHAIRMAN:  Thank you.

8944     Mr. Langford wants to ask you questions.

8945     MR. LANGFORD:  Thank you.

8946     Just a couple of questions on format.  Has this station been a gospel station, as described today, for its whole time, its whole five years?

8947     MR. FLEMING:  Yes, sir, it has.

8948     MR. LANGFORD:  Do you have any idea what the listenership to this station is?

8949     MR. FLEMING:  Well, we are not subscribers to BBM, but we are subscribers to the University of Alberta, that's done three surveys for us.  We think they are a very in‑depth survey, with usually five or six people on the survey doing it, the merits are just incredible and we believe in it, and we are told that we have a 15‑and‑a‑half percent share of the market.

8950     MR. LANGFORD:  Now, one of the other applicants did a study by Ipsos Reid on the listening patterns, because they are looking ‑‑ the applicant is Touch, and they are looking to compete with you in the market, and they found ‑‑ and I make no comment on how they did this.  They polled 300 people by telephone ‑‑ and we have heard of Ipsos Reid, but I give no guarantees for their work, I'm simply quoting what I find here on page 6 of their study, which is on the public record ‑‑ and they found that 1 percent of listeners polled identified Spirit FM, CJTS 97.1, as their favourite station.

8951     MR. HILDEBRAND:  If I could comment on that, I think that though the station hasn't been a member of BBM, BBM has been serving the market over the years.  From my position in the industry, I have been able to certainly see some of the numbers that BBM has had for the market, and they would be more in line with the Ipsos Reid figure than the University of Lethbridge figures that may have been used, so...

8952     The station, obviously, it doesn't have a huge audience in the market, nor do I think that in our environment it would have a huge audience in the market.  The format isn't designed to have a mass audience, and I don't think it ever will.

8953     Again, if we keep going back to our station in southern Manitoba, which is similar, it may get into the 5 percent range, but it's not going to be a huge factor in the market.   Nor will it likely be in Lethbridge.

8954     MR. LANGFORD:  So it brings me to the chair's final line of questioning with regard to competition.  I'm not asking your to play favourites, but I am asking you to make a reasonable business decision for me.

8955     What kind of an impact in this sort of market would The Touch FM application, which wants to play gospel music, have?

8956     MR. HILDEBRAND:  Well, by and large, we looked at their application and we see it almost duplicating what we do, and so we don't really see that it is necessary to license another station that's similar.

8957     In our letter of intervention we did outline that ‑‑

8958     MR. LANGFORD:  M'hm.

8959     MR. HILDEBRAND:  ‑‑ it really looks like a duplication of what we are already doing and doesn't make a whole lot of sense.

8960     MR. LANGFORD:  Now, that leads me to my last question, and I'm really just trading on your experience here, if you don't mind.

8961     When the Touch applicants came to us early last week, I believe it was on Tuesday, as one of the applicants for a Calgary station, they made quite a lot out of the notion that there are really two types of gospel music, one traditional or southern, if you want to call it that, and the other contemporary, and that the two don't mix, that they are oil and water.  The two have separate audience, and some people like one and some people like the other.

8962     Is your gospel either southern or contemporary or is it a mix?

8963     MR. HILDEBRAND:  No, I think it would be referred to as a mix.

8964     I think there are many, many niches or many different kinds of gospel music, and whether there's a big enough audience for any particular niche by itself is probably doubtful.  It is my contention that you need to have somewhat of a broad spectrum that you can appeal to.

8965     MR. LANGFORD:  M'hm.

8966     MR. HILDEBRAND:  I think there is the traditional gospel, that goes back many years, and then there is a new genre of gospel music that has some rock elements to it, some black, some soul, some high‑energy music with a lot of instrumentation behind it.  So I think it's very hard to carve it out into a very, very narrow niche.

8967     I mean, my sense is that it's not easy to make a living at this, and I think that if we didn't already have a radio station with a strong ‑‑ in place, we would be less enthused to do this.  But we see that there is a market in many parts of the prairies, especially for the alternative sound that this provides.

8968     I think this plays into the hands of what the Commission wants.  The Commission wants more diversity.  The genre that we are into here isn't going to appeal to most of the mainstream broadcasters, and certainly not the major market broadcasters.

8969     So we look at this as carrying on sort of a niche format that we have been doing all our life, and we see that this makes some sense.  We can trade on what we have learned in Manitoba, and so we see that the main reason why we are doing this.

8970     Certainly, we see no reason why Touch Canada would be needed in the market, since we are already doing that.

8971     MR. LANGFORD:  Could I ask you one last question regarding Manitoba?  I'm sorry to drag this on so long, but I do find this interesting in the context of so many applications nibbling around the same format.

8972     If in Manitoba this Commission today could waive a magic wand and split your Manitoba service into two FM services, would there be enough of a market for you to format those services, one in contemporary gospel and the other in traditional or southern gospel?

8973     MR. HILDEBRAND:  I don't think so.  Certainly, I'm convinced that a free‑standing operation would not be able to survive.

8974     One of the reasons that we can obviously survive at a level that is lower than a free‑standing operation is we do have the infrastructure that provides administration, engineering, accounting and traffic and creative.  All of that infrastructure is in place, so we don't need to hire as many people as a free‑standing operator does.  Then, that obviously reduces our cost, and that's the only reason it works.

8975     I don't think that if you split the thing in half in Manitoba and by your magic wand provided it to two separate operators ‑‑ they would both go broke.

8976     MR. LANGFORD:  You have been very, very helpful, and I'm grateful for that.  Thank you very much.

8977     Those are my questions, Mr. Chair.

8978     THE CHAIRMAN:  Commissioner del Val.

8979     COMMISSIONER del VAL:  Thank you, Mr. Hildebrand.

8980     I have some questions regarding your intervention against Vista, so I don't know whether you are coming back in Phase 2.  If you are not, may I ask them now?

8981     MR. HILDEBRAND:  I would propose to come back in Phase 2, once I had heard their whole application.  I would prefer to maybe answer them at that time, rather than ‑‑

8982     COMMISSIONER del VAL:  Great.

8983     MR. HILDEBRAND:  ‑‑ try to presume in advance what they will be.

8984     COMMISSIONER del VAL:  Thank you.

8985     So you will come back in Phase 2, then?

8986     MR. HILDEBRAND:  I will.

8987     COMMISSIONER del VAL:  Okay, thanks.

8988     THE CHAIRMAN:  Legal counsel.

8989     MS BENNETT:  Thank you.

8990     I just have a couple of follow‑up questions.

8991     The first one goes back to your discussion with Mr. Arpin about your commitment to cover the outstanding CTD commitment owed by CJTS.

8992     Could you comment on the types of initiatives that Golden West would undertake with respect to that outstanding funding?

8993     MR. HILDEBRAND:  Well, I think we would probably do much of the same that Spirit has done to date, but some of the reasons why the situation is in arrears, I think, is because Spirit doesn't have probably the manpower to look after some of these.

8994     They have actually done some of the initiatives, but haven't documented them properly to qualify.  So the first thing we would do is document what is being done, and those items that really qualify we would do that.

8995     To make up any differences, we would accelerate the other initiatives that I already talked about, instead of making one CD with one group, we would make another one for two groups, so that we could get this done fairly quickly.

8996     Our plan would be to do this in the first year of our operation there, rather than wait till the end of the cycle.

8997     MS BENNETT:  Okay.  Thank you.

8998     My last two questions are just housekeeping.

8999     You mentioned that you would file a letter from the CBC with respect to the use of the ‑‑

9000     MR. HILDEBRAND:  Yes.

9001     MS BENNETT:  Could you tell us when you would be able to file that letter?

9002     MR. HILDEBRAND:  Within the week.

9003     MS BENNETT:  Okay.  And the last question.

9004     You had a brief discussion with Mr. Arpin about the intervention, which I believe was from Mr. Cadman.  If you were not served with that intervention and you would like an opportunity to comment, could you either let me know or another member of the Commission staff and we can set up a process to enable you to do that?

9005     MR. HILDEBRAND:  I would certainly like to see it.

9006     MS BENNETT:  Okay.  We are going to check the public file to make sure that it's there, so maybe we can talk at the break.

9007     MR. HILDEBRAND:  Sure.

9008     MS BENNETT:  Okay.  Thank you.

9009     MR. HILDEBRAND:  Thanks.

9010     THE CHAIRMAN:  Now, Mr. Hildebrand, it's the time for the wrap up.  So in your own words, could you give us the reasons why the Commission should retain your application?

9011     MR. HILDEBRAND:  Thank you, Mr. Chair.

9012     Well, I think the main reason is that we are a prairie‑based broadcaster that wants to provide somewhat of a different service than maybe is normally provided in the communities.

9013     We have made our living providing local ‑‑ 100 percent local service, and that includes heavy concentration on news, heavy concentration of local involvement, a very, very direct and dedicated application of hiring people locally.  We are very, very strong in our philosophy to hire people in the community that we serve, so that we are reluctant to parachute people in from another community because, generally, they don't know the community too well, they don't know even the pronunciation of the names, and all of that shows when they are on the air.

9014     So we are 100 percent committed to broadcast on the prairies.  We have covered Saskatchewan and Manitoba almost to the max and we have had so many invitations to provide that service to Alberta, as well. We feel that this is part of the process that we have undertaken some years ago and we see the Lethbridge market as a place where we can make a difference.  We can provide service to the area that is already there, and I think we can provide a better service.

9015     I know that with the addition of our news and information processes, the community will be dramatically better served.  I think it's important to remember that we are doing this for the long run.  We are career professional broadcasters and we are not looking to come in and flip things, we are here for the duration.

9016     I think that Commission understand this.  We are telling the Commission exactly what's on our mind.  We feel that, given the applicants that are before you for Lethbridge, we are by far and away the most logical, the most credible, will provide the best service, provide the least disruption to the market and, at the end of the day, provide the community of Lethbridge with a service that they now have, only in a better manner.

9017     So with that, Mr. Chairman, commissioner and staff, thank you for the opportunity.

9018     THE CHAIRMAN:  Thank you, Mr. Hildebrand, thank you, Mr. Fleming, thank you, Mr. Friesen.

9019     The Commission will take a six‑, seven‑minute break.  We will get back at 10:15 with the next item.

‑‑‑ Upon recessing at 1008 / Suspension à 1008

‑‑‑ Upon resuming at 1020 / Reprise à 1020

9020     THE CHAIRMAN:  Order, please.

9021     I'm asking the secretary to introduce the next item.

9022     THE SECRETARY:  Thank you, Mr. Chairman.

9023     We will now proceed to item 15 on the agenda, which is an application by Vista Radio Limited for a licence to operate an English‑language FM commercial radio programming undertaking in Lethbridge.

9024     The new station would operate on frequency 94.1 MHz, channel 231C, with an average effective radiated power of 42,900 watts, maximum effective radiated power of 100,000 watts, antenna height of 132 metres.

9025     Appearing for the applicant is Ms Margot Micallef, who will introduce her colleagues.

9026     You will then have 20 minutes for your presentation.

9027     Ms Micallef.

PRESENTATION / PRÉSENTATION

9028     MS MICALLEF:  Thank you.

9029     Mr. Chairman, members of the Commission, CRTC staff, good morning.

9030     My name is Margo Micallef and I am the chair and CEO of Vista Radio Limited, a wholly‑owned subsidiary of Vista Broadcast Group Limited.

9031     Before we begin our presentation, I would first like to introduce our team.

9032     Since this is Vista's first application before you, and our first time appearing as a group, I would like to provide some detailed information, perhaps a bit more than I might otherwise.  Collectively, our group has a hundred years of broadcast experience.

9033     Before joining Vista, I was a senior vice‑president of Shaw Communications Inc.  Prior to that time I was a partner with a major law firm in Vancouver, British Columbia.  I was specialized in broadcasting and communications and I was a constructor of a seminar in communications law for the Faculty of Law at the University of British Columbia.  I was appointed to the Queens Council in 2002.

9034     Immediately to my right is Bryan Edwards, president and chief operating officer of Vista Radio Limited.  Mr. Edwards is the former president and chief operating officer of Okanagan Skeena Group Limited, where he oversaw the operations of 20 radio stations in small and mid‑markets in B.C.

9035     Throughout his 30 years in the broadcast industry, Mr. Edwards has served the broadcast industry in a number of capacities.  He was a director and the president of the B.C. Association of Broadcasters, a director of the Canadian Association of Broadcasters, chairman of the Radio Marketing Bureau, he sat as a member of the radio executive committee of the Bureau of Broadcast Measurement, and on the first Broadcast Standards Council.

9036     Mr. Edwards was named B.C. Broadcaster of the Year, an honour bestowed on him by his peers in recognition of his significant contribution to the broadcast industry.

9037     On my left is Mr. Paul Mann, executive vice‑president of Vista Radio.  Paul's career started in Lethbridge 40 years ago, at the age of 16, as the all‑night announcer on 1220 CJOC.  Since then, Paul has worked in numerous radio positions, including news, copyrighting, sales, sales management, and most recently as general manager and vice‑president of the Standard Radio B.C. Interior Operations, based in Kelowna.

9038     Paul raised his family in Lethbridge while hosting the morning show on 1570 CKBA, in Taber.  During this time he also took a leadership role in organizing a grassroots campaign to save a major economic driver in the community, the sugar beet industry.  His effort attracted the support of the local MP, a senator, and 18,000 families in the form of a signed petition, and resulted in a 10‑year, three‑way agreement between the federal and provincial governments and the sugar beet industry.

9039     Paul later went on to host an award‑winning and distinctly Canadian agricultural news syndication called "The Canadian Farmer", which aired on 60‑plus radio stations across Canada for over 15 years.

9040     During his career, Paul has won numerous community service and creative awards from the CAB, the BCAB and other organizations.

9041     To my right, but immediately behind Bryan, is John Yerxa, who has been researching Canadian radio since the mid‑1980s.  Recently, John conducted extensive research which played a pivotal role in our rebranding of Sun FM, in Duncan, as well as Vista's new launch of the new Jet FM in Courtenay.

9042     Prior to that time, during his association with Monarch Broadcasting, John was involved in the launch of Country 95 FM, in Lethbridge, as well as The Hawk, out of Taber.

9043     To John's left, and in the middle of our back row, is Paul's son, the vice‑president of programming for Vista Radio, Mr. Jason Mann.  Mr. Mann was born in Lethbridge and attended junior and senior high school and continued with post‑secondary broadcast training at Lethbridge Community College.

9044     His career path included on‑air work at 1570 CKPA and 1090 CHEC, in Lethbridge.  Jason then went on to stations in Red Deer, Calgary and Kelowna.  While in Kelowna, he was appointed to director of programming for Telemedia Radio West, a position he held through his final years there with Standard Radio.

9045     A highlight of Jason's career was during his final year in Kelowna, when he was responsible for leading the entire staff of the B.C. division of Standard Radio to the 2003 fire storm crisis.  Under his leadership, the Kelowna stations earned one provincial and two national RTNDA awards, as well as one CAB award, for breaking news, and a BCAB award for community service for the yellow ribbon campaign which raised funds and awareness for those who lost so much during the fires.

9046     Since joining Vista Radio, initially as general manager of Sun FM, in Duncan, British Columbia, Jason was the driving force behind a number of community initiatives which saw Sun FM named as business of the year less than eight months after Vista took it over.

9047     Finally, to Jason's left, and directly behind Paul, is Mr. Glenn Hicks.  Glenn is the news director of Vista's Kootenay operations.  Glenn is here today because his input is integral to our whole philosophical approach to news.

9048     Glenn has been a broadcast journalist for over two decades.  He started with the South African Broadcasting Corporation in Johannesburg, and rose to become an anchor on national TV news and the host of a national drive‑time radio show.

9049     Glenn eventually moved to London, England, where he spent three years producing and presenting programming for the BBC World Service and domestic national satellite TV news.

9050     Throughout his broadcast career, he has been active in the nurturing and training of young broadcasters in radio and television.  Now with his wife and daughter, Glenn lives in Nelson, British Columbia.

9051     Members of the Commission, and staff, thank you for indulging us in this extended introduction.  We very much wanted you to know the depth, background and experience that this team brings to Vista Radio and would bring to the Lethbridge market.

9052     Mr. Chairman, and members of the Commission, we are now ready to begin our presentation.

9053     Mr. Chairman, and members of the Commission, it is an honour to appear before you today with an application for a new FM station to serve Lethbridge, Alberta.  The basis of our proposal is simple.

9054     First, Lethbridge has a vibrant and growing economy.

9055     Second, Vista will introduce a distinct format to Lethbridge, designed to react to the largest unserved segment of the adult radio listening population.

9056     Third, by integrating a strong business plan, Vista will become an able radio competitor to the two well‑established commercial broadcasters already serving Lethbridge.

9057     Fourth, we will bring a new editorial voice to south western Alberta.

9058     Fifth, we will make a significant direct contribution to the development of Canadian talent.

9059     And finally, by providing a new radio station reflective of the community and with a significant emphasis on local programming, our application will clearly meet your licensing criteria and benefit the Canadian broadcast system.

9060     MR. EDWARDS:  Vista Radio Limited currently consists of 19 licences, 16 of which are originating stations, all located in smaller British Columbia markets; however, Vista Radio's commitment is to be a strong western Canadian small and medium broadcaster, providing local content which is relevant and connected to the needs of our audiences.

9061     Therefore, the addition of an FM station in Lethbridge will enable us to begin our expansion into Alberta, where most of our shareholders currently reside.

9062     As a small‑market broadcaster, Vista has thus far made major commitments in all of the communities we are currently licensed to serve.  We have local management in all of those stations and all of them make local decisions that are in the best interest of their respective markets.

9063     Vista not only endeavours to employ people locally, but to ensure that all of our stations has sufficient on‑air and informational personnel to deliver a distinct musical sound, excellent local news and an absolute dedication to the cities and towns we operate in.

9064     We view our Vista stations not only as the voice of their communities, but the building blocks of those same communities, and our mandate includes raising awareness of important local issues and supporting local initiatives, such as Vista's recent fund‑raising drive at the Cowichan Regional Hospital in Duncan, B.C.

9065     Right now, we are also investing considerable resources in technology and new staff at all of our Vancouver Island operations in order to denetwork those stations and provide programming that is more in alignment with the principles of the company and the needs of the communities we serve.

9066     Our mandate is simple.  Vista strives to create local radio stations, staffed by local personnel, delivering local programming.  Our company has a clear focus on improving the quality of local service to the small and medium markets where we operate.

9067     MR. P. MANN:  Lethbridge is a perfect fit for our company.  Not only is it my home town, and Jason's home town, but as each of the commercial applicants for a new FM licence have already indicated to you in their supplementary briefs, Lethbridge is a thriving city in a province that is booming.

9068     Indeed, early last January, January 6th, a news release issued by the City of Lethbridge announced that the dollar value of the building permits in 2005 was up a staggering 30 percent over 2004.

9069     Our analysis of the correlation between retail sales and radio revenue further suggests that, as the economic hub of southwestern Alberta, the Lethbridge retail climate is exceptionally robust at over $1.4 billion in 2005.

9070     Yet, the most recent mainstream commercial radio entrant licensed within the Lethbridge region was CKTA, Taber, back in 1974, and prior to that the last commercial entrant licensed to Lethbridge was CHEC radio, in 1970, 36 years ago.

9071     According to Alberta Municipal Affairs, the Lethbridge population in 1970 was 39,552, but since then that figure has nearly doubled.  Moreover, according to the just completed 2005 city census, Lethbridge's population has increased by over 6 percent in just the past three years and the trading area is now approximately 275,000 people.

9072     We would therefore conclude that the Lethbridge radio market is now ready for another entrant.

9073     MR. EDWARDS:  If successful, Vista would operate a stand‑alone commercial FM station up against two large and well‑established radio groups, each operating an FM combo.  Our competitor stations are as follows.

9074     Pattison has Country 95, which targets a broad group of radio listeners who appreciate country music.  It also operates B93, which, according to Rick Arnish, the president of Pattison Radio Group, is Hot AC.

9075     For its part, Rogers operates Rock 106, which primarily focuses on more current rock music.  Rogers also has The River, which is now classified both on the air and on its website as "Today's Hottest Music".

9076     So, as you can see, three of the four commercial radio stations in Lethbridge are currently focused on more contemporary music and listeners at the younger end of the age spectrum.

9077     So while launching a stand‑alone FM station against a Rogers and a Pattison combo may initially appear to put an applicant at a disadvantage, we are confident that Vista can operate successfully under these circumstances.

9078     MR. P. MANN:  To begin with, our proposal is for a classic hits FM specifically designed to appeal to adults between 35 and 54 years of age, many of who are now listening elsewhere to satisfy their hunger for the music they grew up with.  The way we arrived at this choice was by commissioning Banister Research to find out what Lethbridge residents feel is missing from their radio menu.

9079     MR. YERXA:  Between July 25th and 28th of last year, Bannister Research conducted 40 telephone interviews with adult radio listeners in Lethbridge utilizing a questionnaire template which I designed and which has been used by numerous other broadcast companies, including Chorus, Pattison and Standard, to conduct format‑finder studies such as this one.

9080     In the case of Lethbridge, once adult respondents were randomly selected, Bannister first studied their listening behaviour.  It then probed listeners' interest in six mainstream yet very different music formats and asked whether they could identify an existing local FM station delivering each one.

9081     The two most important calculations Bannister performed with their data were to identify the percentage of listeners that expressed significant interest in each format, as well as the percentage that could not associate a local FM radio station with each format.

9082     By comparing these two results, one is able to identify the largest musical hole or opportunity in a market simply by examining the trade‑off between popularity and availability or, as I like to say, between more and less.

9083     Obviously, the more popular a music type is within the overall population, the more economically viable that format will be; however, the more easily available a popular music type is perceived to be, the less opportunity it will have to grow as a distinct format without cannibalizing another player in the market.  Therefore, suffice it to say that the more popular but less available a music type is, the greater opportunity there is for that format in any given market.

9084     Using this approach, Bannister was easily able to determine that classic hits represents the best format opportunity in Lethbridge as it registered very high popularity, but was also perceived by all adult respondents to be the most difficult type of music to find on their local FM dial.

9085     MR. P. MANN:  So Vista was well‑advised by Bannister to go with classic hits, according to the research.  It is a format whose audience is almost equally split between men and women, a format primarily targeted at those 35 to 54 years of age, a mainstream format that will have the least impact on any of the existing commercial stations.

9086     It's also worth noting that the two stations most likely to share their core audience with a classic hit station are The River and Rock 106, at 20 percent and 15 percent, respectively.  Both are operated by Rogers, yet, we would like to point out that Rogers Broadcasting has not intervened against our application.

9087     We believe that's because Classic Hits 94.1 will only share between 11 percent and 20 percent of each existing commercial station's core audience, while gaining a significant percentage of its cume, 38 percent, from out‑of‑market radio stations.  Therefore, Vista will be able to monetize the increased tuning or repatriation of listening to local commercial radio, thereby growing overall market revenue.

9088     Our belief in this regard is significantly bolstered by the feedback we have gathered from numerous advertisers who say they would strongly support the launch of a new classic hits FM station, primarily serving the 35 to 54 demographic.  This target audience is extremely valuable to the local advertising community and, therefore, we are confident that the revenue projections in our application are realistic.

9089     MR. J. MANN:  Vista's research mandate specifically outlined two objectives:  number one, to locate a format that would be commercially viable in Lethbridge, as opposed to a niche format that would not; and, number two, to locate a format that, while popular, would have minimal impact on the four other commercial stations already in the market.

9090     In classic hits, we have found a format that will primarily appeal to 35‑ to 54‑year‑old listeners by reintroducing many songs and artists which are not being currently aired locally in any significant numbers.  Probably best known as one of the Jack, Joe or Bob stations in larger Canadian markets only, the difference between most of those stations and Classic Hits 94.1 is that, given the size of Lethbridge and the nature of the hole in the market, we will be slightly broader in our musical appeal by offering more seventies music and slightly more pop than rock music.

9091     By carefully balancing gold artists like Joni Mitchell, Fleetwood Mac, Billy Joel, Valdy, Rod Stewart, Burton Cummings, America, Sherry Ulrich, the Doobie Brothers, Neil Young, the Eagles, Journey, Chilliwack, The Police, Doug and the Slugs, and the Cars, our classic hits format will be as comfortable for the average 40‑ and 50‑year‑old listener as a warn pair of jeans.

9092     However, given our 35 percent Cancon commitment, we will not only revisit past Canadian acts, but we will also present newer Canadian artists who are compatible with the overall sound of the station, artists like Kathleen Edwards, Daniel Powter, Jeremy Fisher and Matthew Barber, along with Mister Completely, which, incidentally, is a Campbell River band that our stations on Vancouver Island were the first to play.  And, of course Bedouin Soundclash.

9093     Our view is that the insertion of more up‑to‑date Canadian acts will add a variety and freshness to our format without violating the overall premise of Classic Hits 94.1.  After all, the key to this station is that it will be providing a much greater amount of 1970s and 1980s pop and rock music than the existing stations currently do, and in doing so it will be focused specifically on the 35‑to‑54 age demographic.

9094     MR. HICKS:  Classic Hits 94.1 will be much more than just a music station.  Our research revealed that a high number of listeners are currently dissatisfied with the lack of news and information on Lethbridge radio stations and classic hits partisans exhibited the highest dissatisfaction on this issue when compared to partisans of all other music types.  Moreover, they were also the most vocal in demanding increased news coverage.  Therefore, our intention is to establish Classic Hits 94.1 as a significant new source for local and regional news coverage.

9095     One of the biggest reasons why we at Vista feel that we are winning over local listeners is because of our attitude towards local information.  For those few minutes each hour, for that breaking story, for that important local sports game, the news pertaining to your small town becomes the centre of the universe, and the listeners expect that.  We try to deliver it with the same professionalism and dedication that you would expect from the CBC, the BBC or CNN.  Why not?

9096     But we are giving our listeners what the CBC and other large news organizations won't or simply cannot because the concerns of our smaller communities do not register on their dial; however, local news and information is always at the centre of our radar in the Vista Group.

9097     Sure, we only use cell phones, mini‑disc recorders and portable mixing units, but that's all one needs if you blend it with a genuine compassion and understanding of what counts in your local community.  Whether it's city council, the hospital board, the school board, the regional district, local elections, a dangerous intersection, a weather warning or those fire storms we recently encountered, we at Vista have an attitude towards writing, editing and delivering the news that makes our local listeners feel informed, engaged and proud that our various newsrooms goes to the trouble to hear from everyone and anyone who has a voice in their community.

9098     In the case of Lethbridge, Vista will provide 92 regularly scheduled newscasts for in excess of six hours of news coverage per week.  In addition to those 92 newscasts, we will broadcast 9‑and‑three‑quarter  hours of structured spoken word per week, encompassing regular weather and road conditions, hourly community service announcements, entertainment and community events, as well as specialty information specifically designed for the region, such as agricultural reports, energy sector reports and a local business feature.

9099     MR. P. MANN:  Regarding our commitment to local information, I would like to point out that in just our first year on Vancouver Island, we have increased news staffing at our operations by 35 percent, resulting in a dramatic increase in the amount of local news coverage on‑air.  Our policy is that each of our originating stations must have a strong editorial voice.

9100     We view this local component of our programming as Vista's greatest opportunity to compete in an era of increase competitive technology, such as satellite radio and the Internet.  In the case of Lethbridge, Vista's proposals will answer the call for a greater diversity of editorial voices, while our station addresses the local community's demand for more news and information.

9101     MR. EDWARDS:  Mr. Chairman and members of the  Commission, let's turn our focus just for a moment to Canadian talent development.

9102     As the Commission is aware, Vista is prepared to make a direct cash commitment of $50,000 per year, for a total of $350,000 over the full licence term, in support of Canadian talent development.  We are very proud of this commitment and we look forward to discussing our overall approach to CTD with the Commission panel in the upcoming question and answer period.

9103     MR. P. MANN:  Of course, another way for Vista to nurture and develop Canadian talent is through the hiring of new broadcasters, who will come to Lethbridge to work at our station, buy homes, pay taxes, settle down, raise families and contribute to the future of southwestern Alberta.

9104     Our new station will employ from its very first day of operation 16 new employees, including on‑air announcers, news, sports, creative writers, sales reps and promotion personnel.  We are very committed to being a local radio station and Vista's operating philosophy of investing our money in small and medium markets across western Canada is one we will maintain now and in the future.

9105     At the same time, please be aware that Vista is currently working hard to reflect the demographics of Canada in our workforce and our programming and, as such, we will insure that from the day Classic Hits 94.1 goes on air it will reflect the demographic make‑up of Lethbridge.

9106     MS MICALLEF:  Mr. Chairman, and members of the Commission, let's quickly review the merits of our application.

9107     We have provided evidence underlining the strengths and dramatic growth of Lethbridge.  We propose a music format that is commercially viable and which will add diversity to the market.  Consequently, our business plan is well thought out, our revenues are achievable and our costs are reasonable.

9108     We will bring  a new editorial voice to Lethbridge with a commitment to news that is presently unmatched in the market.  We will fully meet the Canadian content requirements and are prepared to allocate $50,000 per year, for a total of $350,000 over the licence term, to support Canadian talent development.

9109     From day one, Vista will be committed to creating a workforce that reflects the cultural diversity of Lethbridge, and the province as a whole.  Two of Vista's founders and key members of our executive team, Paul and Jason Mann, have their roots in Lethbridge.  They, along with the rest of us, will personally insure that Vista's goal of being local, staying local and committing the financial resources to hire broadcasters who will live and work in Lethbridge is met.

9110     This application will not only contribute significantly to the objectives of the Broadcasting Act, but it is truly a reflection of the commitment Vista Radio Limited is now bringing to all of its small‑market radio stations and the communities we are licensed to serve.

9111     I wish to thank the Commission for this opportunity to explain our proposal to you and we would welcome your questions at this time.

9112     THE CHAIRMAN:  Thank you, Mrs. Micallef.

9113     I'm asking Commissioner de Val.

9114     COMMISSIONER del VAL:  Thank you for your presentation.

9115     You have anticipated a lot of the questions naturally, and it's particularly the question of why you chose the format you chose, and that's helpful.  Thank you.

9116     I do still have some more specific questions, and then it may end up being a bit redundant with what you have presented, so forgive me for that.

9117     Based on your market research, what are the spoken‑word and information programming expectations of your target group, the 35‑ to 45‑year‑old?

9118     MR. HICKS:  Madam Commissioner, if I may answer that one, just in terms of the market research we conducted, it very much indicated that particular audience group in Lethbridge, 35 to 54, was the one that was earmarked for classic hits, that's the sort of music they would like, but in conjunction with that, complementary to that, is that is very much the age group that is demanding more news, better news.  So there's a clear synergy there.

9119     So in terms of honing in on that particular market, that's good for classic hits, it's good for news.  That segment of the population stressed in our research that they are the most dissatisfied with the lack of quality news and information.

9120     COMMISSIONER del VAL:  Okay.  And those needs are not being met by the existing stations that are serving Lethbridge?

9121     MR. HICKS:  Madam Commissioner, our research indicated that a large proportion, almost half, were currently dissatisfied with their lot in terms of what they are hearing on the local radio stations, yes, Ma'am.

9122     COMMISSIONER del VAL:  Okay.  What specifically they are looking for is more news?

9123     MR. HICKS:  News and information, better handling of the spoken word.

9124     You will appreciate, Madam Commissioner, and we see this in perhaps local radio across Canada, that older segment, that older listener, is quite rightly demanding a more mature, more professional handling of broadcast journalism.

9125     Of course, while we get it from the respected news organizations like the CBC, we have an attitude at the Vista Group that says, "Well, why can't small market radio news be that way?", and that's why we specifically targeted that older audience in Lethbridge, who have told us by research, "Yeah, give us some of your good quality news, as well", and we can deliver on that.

9126     COMMISSIONER del VAL:  Okay.

9127     According to your research ‑‑ and I'm looking at page 4 of your presentation ‑‑ there's stations that you have listed.  According to your research, what is their age target group?

9128     MR. HICKS:  Ma'am, can I hand that one over to my colleague, John, here?

9129     MR. YERXA:  Commissioner del Val, are you looking for the audience overlap that this format would have?  Are you looking at where the present partisanship of these stations is right now?  What specifically are you asking for?

9130     COMMISSIONER del VAL:  Probably simpler than you thought.  I have a notion in my mind that I just wanted to confirm.

9131     All I need right now is, if I look at page 4 of your presentation, and at the top, you have, "Pattison has Country 95".  According to your age group, what is their core demographic, and then, say, the same for B93, the same for Rock 106, and the same for The River, just those specifically, what age groups do those stations target?

9132     MR. YERXA:  All right.

‑‑‑ Pause

9133     MR. YERXA:  According to our research, and I may have to dig out more information as we go along here because I have quite a thick binder, but in a nutshell all four of the existing commercial FM stations do skew towards ‑‑ or should I say at least three out of the four do skew significantly towards the younger end of the age spectrum, according to our research.

9134     As far as the 35‑plus audience is concerned, as it stands right now in Lethbridge, one really has only a single choice when it comes to music, the more mature listener, and that is country.  That is what our research identified, that apart from country, there is no classic hits station, with, I guess, the emphasis on the 18‑to‑34, 18‑to‑44 end of the age spectrum.  That's where the hole exists.

9135     I hope that answers your question a little bit.

9136     COMMISSIONER del VAL:  Okay.  If you need more time to provide the numbers, or perhaps they could be in the research already and I just have missed those numbers, it's just that 35 would be young to me. So if you are saying "younger", are they skewed towards, say, 35 to 44, or are we actually talking 18 to 25?

9137     So if you could provide that information, and just let us know how much time you need, to give the core audience, the targeted group of ‑‑ the respective target audience of each of the four stations you have mentioned, I would appreciate it.

‑‑‑ Pause

9138     COMMISSIONER del VAL:  Is that doable?

9139     MR. YERXA:  Yes.  I'm going to do that right now.

9140     It's interesting, because I have never been asked, according to our research, what the rankings are and then breaking it out into the key demographic cells, although we certainly have that.

9141     COMMISSIONER del VAL:  Okay.

9142     MR. YERXA:  I do know what the overall rankings are and I do know that there is a concentration at the younger end of the age spectrum.  What you want are specific percentages, if I'm not mistaken.

9143     COMMISSIONER del VAL:  No, I don't even need the ‑‑ I just need the age.  What is the age core demographic for Country 95?  Do they target 24 to 44?  And say B93, do they target 18 to 25?  That's all I need.  I need the core audience targeted for each of those four stations, that's all I need.

9144     MR. YERXA:  I will do my best.

9145     COMMISSIONER del VAL:  Okay.

9146     Now ‑‑ I will have more questions on this ‑‑ what about the Jim Pattison station that's classic hits, that is CJBZ, that is also a classic hits station and you wouldn't include that in your Lethbridge market?

9147     MR. YERXA:  Madam Commissioner, this really is the key point in this entire presentation ‑‑

9148     COMMISSIONER del VAL:  I know.

9149     MR. YERXA:  ‑‑ because there were a number of pieces of research that were conducted in the market.  We conducted one, a competing applicant conducted another.  In both pieces of research, we discovered that the largest format void in the market was for classic hits.

9150     In our research, and in the competitor, I will mention the name, Kassof indicated that the largest, I think they term it, "format void", the methodology is very similar with classic hits.

9151     Now, once Bannister had finished conducting this research for Vista, and I eventually inherited it, I was astounded to see this hole, having heard that supposedly one of the stations impacting the market was a classic hits station.

9152     If you are going to conduct research and spend the money, then you had ‑‑ you are probably best advised to take those results seriously, otherwise why do research?  My advice to Vista was to immediately go into the market and to monitor these stations and to do an extensive analysis to see if it backed up the research results, which it did.

9153     The other applicant in this case, I understand now, reading through the materials and the supplementary, simply chose to move away from it simply because, if another station supposedly claimed to be doing that, then they felt that maybe that hole was filled.

9154     I think they were, now in retrospect, under the misinterpretation that this station was moving into the format, where we have subsequently found they were moving away from that, if at all having served it in the first place.  I believe, and I will turn it over to Mr. Jason Mann, if he wishes to comment, but I believe the most recent monitor of just two weeks ago ‑‑ this has been a series of monitors ‑‑ completely confirms this.

9155     I shouldn't keep going because I'm the research consultant here, but I will turn it over to you and you can discuss the clarification from Pattison.

9156     COMMISSIONER del VAL:  Okay.  But just so far on what you have said, so what you are telling me is that CJBZ ‑‑

9157     MR. YERXA:  B93.

9158     COMMISSIONER del VAL:  Yes ‑‑ is not a classic hits station?

9159     MR. YERXA:  No.  In fact in the document that was passed onto to me in this whole process, I believe Mr. Rick Arnish, in his letter of intervention, even finally added some clarification, appropriate clarification of this, and said, "We are a Hot AC station".

9160     COMMISSIONER del VAL:  Okay.

9161     Would you like to add anything, Mr. Mann?

‑‑‑ Pause

9162     COMMISSIONER del VAL:  You don't have to.

9163     MR. J. MANN:  We did conduct a monitor, and if you wanted additional information on that specific demographic, breakdowns and decades of music that each station currently plays, we can provide that.

‑‑‑ Pause

9164     COMMISSIONER del VAL:  What programming challenges do you anticipate that you will face in serving the spoken word, sort of the news and information programming, of your target audience in Lethbridge?

9165     MR. HICKS:  Madam Commissioner, I haven't identified specific challenges, I just know that certainly in a small ‑‑ from my experience already with the group, in a small market you really want to do the spoken word and news coverage justice, and perhaps the challenge will be how best to deploy and allocate a relatively modest newsroom.

9166     I have experience in doing that and if you work on the shifts and you have the right enthusiasm amongst qualified broadcast journalists, then you can get there.  But the challenges are covering everything.  The challenges are making sure that the voices are all heard.  The challenges are what happens on a Monday night, when you have Lethbridge city council and there happens to be perhaps a regional district side meeting and a school board deal going on.  How do you get three people out there, whereas the perhaps the CBC they can get people out there, they have bigger teams.

9167     So certainly the challenges would be deploying and using efficiently our broadcast journalists throughout the day, over the weekends, to make sure we don't miss important stories or important voices are not missed in Lethbridge.

9168     COMMISSIONER del VAL:  Okay.

9169     Then, I'm jumping back again to my earlier question.  I was trying to figure out why it is that you feel the spoken‑word expectations or needs are not currently being met by the incumbents.  That's why I was asking about the age, because perhaps if I saw that they were in fact a lot younger, say 18 to 25 or whatever, which is unlikely, then, okay, maybe if their spoken word's targeted for a younger audience that could be one of the reasons.

9170     But what are the other reasons?  Are the existing stations not doing enough spoken work?  They are doing a different type of spoken word?  What does your research show that is lacking in the existing stations' spoken‑word programming?

9171     MR. YERXA:  Madam Commissioner, I will try and answer this as best I can.

9172     First of all, within the research component that was conducted by Bannister Research, my understanding is that they did not deal in depth on specific issues and what do you want hear more of or less of, or so on.

9173     But what they did derive from the research was that there certainly is ‑‑ the population, as we looked at the higher end of the population, they are ‑‑ especially dealing with the hole in the market, dealing with the classic hits partisans, primarily 35 to 54, that they expressed a greater dissatisfaction with news and information, and they also expressed a desire to hear more.

9174     Now, I suppose ‑‑ and I have to be careful I don't move out of my realm here ‑‑ but I suppose one might want to look at the tonnage, if you will, at what is being offered in the market as far as newscasts and scheduling is concerned, as opposed to also what these people are currently receiving.

9175     The fact is, if I have to go to a rock station to receive my information or if I have to go to a contemporary hit station, that may lend to my dissatisfaction, if you will.  And to the extent that I may have to go out of market, to the extent that I may have to go to the CBC, which actually is not a bad option, but to that extent, where I have to go outside the market and listen to other stations to derive news and information programming, I suppose that is a factor which weighs on the collective psyche of that 35 to 54 target that we are looking at.

9176     I hope that helps a little bit.

9177     COMMISSIONER del VAL:  Yes, thank you, it does.

9178     Then, going back to your answer, Mr. Hicks, of the newsroom, I know that in your presentation I think you say that there will be 16 employees.

9179     MR. P. MANN:  A total of 16.

9180     COMMISSIONER del VAL:  A total of 16 for this particular station.

9181     MR. P. MANN:  Correct.

9182     COMMISSIONER del VAL:  So can you give me possibly a breakdown of what they do?  In particular, say, what is the size of your newsroom staff and the types of resources that will be available to your news staff to ‑‑

9183     MR. HICKS:  Madam Commissioner, if I can just correct that ‑‑

9184     COMMISSIONER del VAL:  Okay.

9185     MR. HICKS:  ‑‑ I think in the presentation the 16 may very well have referred to our total newsroom complement across the Vista Group.

9186     COMMISSIONER del VAL:  Oh, okay, sorry, then.

9187     MR. HICKS:  But certainly this proposal, Ma'am, in terms of Lethbridge, would be a three‑person ‑‑

9188     COMMISSIONER del VAL:  Okay.

9189     MR. HICKS:  ‑‑ a full‑time news team ‑‑

9190     COMMISSIONER del VAL:  Okay.

9191     MR. HICKS:  ‑‑ typically working a 40‑hour week.  In news there's no such thing as a 40‑hour week, but we try and get people get around that.

9192     So, yes, I will give you an indication.  Let me just give you a breakdown of exactly how those people would be deployed.

9193     As we suggested, we have 92 newscasts per week, and that is completely doable with a complement of three full‑time broadcast journalists with Vista.

9194     We are proposing three minutes of news every half hour, between 6 in the morning and 9 in the morning, and then hourly thereafter until 6 p.m. Monday to Friday.  That will be for a total of 16 newscasts and 60 minutes of news coverage per day.  Weekends, as well, newscasts on the hour between 7 and noon, totally 12 newscasts, or another hour of coverage.  Our newscasts will be between four minutes and five‑and‑a‑half minutes, inclusive of sports, traffic and weather.

9195     I would really like to emphasize, Ma'am, that we go crazy for local.  I look after the Kootenay operation and when I arrived there there was a sad dependence on wires, on stories that really weren't hitting true to those communities there.

9196     So I have implemented a proto, call it our news operation, there and I'm spreading it around the group, that we want to see 80 percent local content in all newscast, and I currently implement that as a minimum on a daily basis at our Kootenay operations.

9197     You have got to get the team into that.  You have to really help younger journalists, or journalists who may be not as experienced in the smaller markets, to look for lots of stories that are of genuine local interest.  And we are achieving that, Ma'am, in one of our operations already.

9198     COMMISSIONER del VAL:  And you said 80, eight‑zero percent?

9199     MR. HICKS:  Eighty percent.  In other words, if I can break it down in simple terms, if, for example, a typical morning show newscast would have five or six news stories, then I would expect five of them to be local, with local audio, and perhaps 20 percent of that newscast could hone in on an important provincial story or international story.

9200     MR. P. MANN:  Madam Commissioner, if it would be helpful, we do have a comprehensive by‑day, full‑week spoken‑word calendar or schedule, if you will, that we would be pleased to file if it would assist you.

9201     COMMISSIONER del VAL:  Yes, please.  And that will be for this proposed station?

9202     MR. P. MANN:  Correct.

9203     COMMISSIONER del VAL:  Yes, please, if you could file.  When do you think you could?

9204     MR. P. MANN:  We have it prepared, if you feel it's appropriate.

9205     COMMISSIONER del VAL:  Great.

9206     So you have three as your newsroom staff.  What other resources will be available to your news staff?

9207     MR. HICKS:  Well, there will be an ethic.  One would be ignorant to assume that a small station can cover absolutely everything at all times, but what we are doing in the group, and similarly for Lethbridge, is to make sure the producers and presenters, and people who are in the building, have a sense of what to do, there's a protocol in place for news.

9208     So I guess everybody in the station, to answer that question, everybody who works certainly at our stations in B.C., understands what a protocol should be, in terms of handling a news story, getting the chain of command, getting people out to the scene of somewhere.  So we would call on the entire station, Madam Commissioner.

9209     MR. J. MANN:  Further to that, we do have a modest stringer and part‑time budget, as well, for evening meetings allocated.

9210     COMMISSIONER del VAL:  Thank you.

9211     Will you be sharing any of your resources with your British Columbia stations?

9212     MR. HICKS:  I would imagine if there's a rationale, if there's a common link.

9213     Again, I know that we hear often that certain broadcast groups say they are going to be able to link up with the rest of their national or provincial group, in terms of accessing those resources, and, of course, if there's an opportunity to use them, if there's an natural news link, but I want to really focus here, Madam Commissioner, that local is local.

9214     If I'm going to bring the news to Lethbridge, as our news team will, and I'm giving you 80 percent of round‑the‑corner, round‑the‑block news, I really don't see how bringing in our other colleagues around B.C., for example, would do an awful lot on the day‑to‑day basis.  But, of course, experience, advice, and possible story linkage, one has to be aware of that.

9215     COMMISSIONER del VAL:  Thank you.

9216     Will the spoken‑word programming be 100 percent produced locally?

9217     MR. HICKS:  Yes, Ma'am.

9218     COMMISSIONER del VAL:  Okay.  Thank you.

9219     MR. HICKS:  Of course, our spoken word is not only the newscasts, as you will see in our files there, that we have several other spoken word components ‑‑

9220     COMMISSIONER del VAL:  Yes.

9221     MR. HICKS:  ‑‑ over and above the newscast that really latch into local‑specific issues and information.

9222     COMMISSIONER del VAL:  Yes, and you have it in the program guide that you have provided.  And in your supplementary brief, on pages 20 and 21, you have also mentioned your programs, "Agri Biz", "Energy Reports", "The Ag Market Reports".  In your brief, you have also explained that you may be sharing some of the relevant stories between your proposed Lethbridge station and the Grande Prairie stations.

9223     The programs that you have mentioned, the "Agri Biz", "Energy Report", "Ag Market Reports", are those being produced now?

9224     MR. P. MANN:  Perhaps I can answer that.

9225     COMMISSIONER del VAL:  Yes.

9226     MR. P. MANN:  No, they are not being produced now because we don't really have, obviously, an Alberta property at this time.

9227     COMMISSIONER del VAL:  Okay.

9228     MR. P. MANN:  However, I think our reference, really, in tying into Grande Prairie was on story content.  So because there is a resource sector parallel, if you will, in the Peace country and in southwestern Alberta, as well as a significant comparable in the agra business area, there may be some appropriate story sharing that would contribute to the local feature in each case.

9229     COMMISSIONER del VAL:  Okay.

9230     So those specific programs that I have mentioned, "The Agri Biz", "Energy Report" and "Ag Market Reports", will those be produced only if this particular Lethbridge station is licensed?

9231     MR. P. MANN:  We saw them as relevant to this particular area, as well as the Grande Prairie area, relevant to that application you referenced.

9232     COMMISSIONER del VAL:  Okay.  Thank you.

9233     Now, one of the statements you made in your supplementary brief, on page 27, and it was in section N, where you talked about alternative proposal, you said:

"In preparing this application, we have presented research which demonstrates that no station is presently perceived by adult radio listeners as offering a classic hits format in Lethbridge.  This situation could change however before a new licence is granted.  Should this occur, Vista Broadcast Group has identified an alternative format and we would propose to operate a new FM radio undertaking in Lethbridge utilizing this alternate format should the market conditions change."

(As read)

9234     Maybe two things.  You said you have identified an alternative format, but it's not identified here.  Maybe you can just explain that statement.

9235     MR. YERXA:  Madam Commissioner, yes, I spent a fair amount of time in southern Alberta going between markets, and Lethbridge is certainly one I have had a lot of experience in, and this research has touched on one or two possibilities that I had a feeling did exist in the market, not by any means as large at this point as classic hits.  Suffice it to say, however, that if the stations move around and if somebody moves in to a new area, then another hole develops in another area.

9236     I do have a couple of ideas.  I just don't ‑‑ I don't know if I should divulge them publicly at this time.  I should probably take direction from Vista at this stage, only because I think that giving this kind of information in a public forum may put a new entrant at a bit of a disadvantage.

9237     COMMISSIONER del VAL:  Okay.

9238     MS MICALLEF:  Madam Commissioner, we can file that on a confidential basis, if you would like us to.

9239     COMMISSIONER del VAL:  You see, my difficulty ‑‑ and I know that commercial FM stations can change their format, and I know that poses questions for a lot of people.  However, I don't quite know what is the fairest way to interpret this message, when what we have in front of us is an application based on ‑‑ that's your foundation of this application is the classic hits.  The financial are based on those, intervenors' comments are based on this.  This is the foundation of the application.

9240     Maybe you can help me.  I don't know what is the fairest way to look at such a statement.  If you file an alternate ‑‑ no, I don't think I would like you to file an alternate format in confidence, unless legal counsel advises me, because then what do I do with that information?

9241     MR. YERXA:  Well, Madam Commissioner, with all respect, I think the important thing at this juncture is that we honestly have identified a very good hole in the market.  The danger, of course, in this whole public process ‑‑ and you have seen it before in other markets ‑‑ is everyone brings forth the best research and the best strategy and then, of course, the market kinds of welcomes them with open arms in different ways once they are fortunate enough to get the licence.

9242     But, really, classic hits is the opportunity as it exists at this time.

9243     MR. P. MANN:  If I might, I suppose another alternative answer to your question might be that, in the event that someone usurped this format opportunity prior to us getting to air, if we were the successful applicant, another option, given the movement that can realistically take place, would be to do the research yet again before going to an alternate business plan.

9244     MR. YERXA:  I'm completely in favour of that.

9245     MR. EDWARDS:  If I may comment, I think there's an underlying question, and the question is:  do we have a secret plan?

9246     The answer is, no.  We are applying for a classic hits format.  I think our comment, we were anticipating what others may do in the market, and what we are saying to you, if they move, there are other opportunities.  But our total business plan and our audience profile is based on classic hits.

9247     COMMISSIONER del VAL:  I'm not making any judgement on secret plans or whatever.  I mean, in this market people move.  But it's just that I didn't really ‑‑ I wasn't quite sure what you wanted me ‑‑ how you wanted me to interpret this message, particularly when your financials are based on this format.

9248     Okay, then, I guess the question is, if you change your format, and your financials now are based on this format, how would the Commission be confident that you would continue to meet the commitments made based on this format?

9249     MR. P. MANN:  If I might, Madam Commissioner, we would just like to put forward, I think, that our intention is in good faith on this format and this research, and we trust everyone would play the game fairly, if it occurs.

9250     MR. YERXA:  I really hesitate to do this, but I really ‑‑ I know you want clarification on this and I will just say that one of the opportunities would also be in the 35‑plus realm, and I think, as far as the business plan and so on is concerned, there's going to be compatibility there.

9251     So I hope that helps, but...

9252     THE CHAIRMAN:  If I was to ask you, will you maintain the same commitment regarding news, sports, weather, road conditions, agri‑business, energy, ski outdoors, than the one that you have made with regard to classic hits?

9253     MR. P. MANN:  Yes, Mr. Chairman, we would.

9254     THE CHAIRMAN:  So the commitments are the same, whatever the music format was to be, that's what you are saying?

9255     MR. P. MANN:  Yes, sir.

9256     If I may, one more comment, Madam Commissioner, as well.

9257     There are some alternative formats really alluded to as second and third choices, if you will, in the public research that's filed, as part of our Commission submission, that I suppose conclusions would be drawn from.

9258     COMMISSIONER del VAL:  Then I take it, just to follow up on Mr. Chairman's question, even if you had to change your format, which is the same rules as others, whatever condition of licence you have accepted, should you be licensed, they will stay the same and you will remain committed to those?

9259     MR. P. MANN:  Absolutely.

9260     COMMISSIONER del VAL:  Yes.  The same with the CTD contributions?

9261     MR. P. MANN:  Yes.

9262     COMMISSIONER del VAL:  Okay, great.

9263     Now, on your CTD contributions, CIRPA has filed an intervention, commenting against a number of applications, including yours.  I think you have yet to respond to it, and against Vista specifically, CIRPA said this, regarding the CTD:

"CIRPA does not feel the proposed funds earmarked for the Native Women in the Arts Program will further advance the recording industry in Canada, and as such should not qualify for it's CTD spend.  CIRPA Is also concerned that the station proposes to commit six times more funding to its own talent contest initiative than it will contribute to either FACTOR or the Radio Starmaker Fund."  (As read)

9264     So could you respond, firstly, to their comment about your Native Women in Arts Program and then, secondly, to their comment about not contributing more to FACTOR or Radio Starmaker Fund, please?

9265     MR. P. MANN:  Madam Commissioner, Mr. Edwards will respond to the greater question, I will answer the Native Women in the Arts question, if I may.

9266     COMMISSIONER del VAL:  Yes.

9267     MR. P. MANN:  The aboriginal population in south western Alberta is an important part of the social fabric.  In fact, I grew up mere metres from the boundary of the Blood Indian Nation, attended school with them, did my first public music performance at age 10 on a stage on a Blood Nation recreation complex.

9268     It's a mere $5,000 a year.  They deserve the same chance.  I think that's part of our commitment to this market. 

9269     MR. EDWARDS:  I think you are going to find our response on the larger question quite interesting.

9270     We were very moved by that letter and have reconsidered our position.  In fact, we are a small organization, beginning to grow, and questioned whether in fact we could have as much impact on Canadian talent development with our own plan, as opposed to giving it to someone who has a charter.  So we are prepared to take the additional $210,000 in our Front and Centre initiative and give it over to FACTOR.

‑‑‑ Pause

9271     COMMISSIONER del VAL:  Sorry, your contribution to FACTOR as it currently stands is what?

9272     MR. EDWARDS:  Thirty‑five thousand.

9273     COMMISSIONER del VAL:  Thirty‑five thousand, and ‑‑  

9274     MR. EDWARDS:  We are prepared to add the additional $210,000, for a total of $245,000.

9275     COMMISSIONER del VAL:  So you are proposing to increase your contribution to FACTOR ‑‑

9276     MR. EDWARDS:  In lieu?

9277     COMMISSIONER del VAL:  ‑‑ now?

9278     MR. EDWARDS:  Yes, in lieu of our own initiative.

9279     THE CHAIRMAN:  Sir, I understand that what you are saying, if the Commission was to disqualify all your other alternatives, you will give all the money to FACTOR?  That's what I heard?

9280     MR. EDWARDS:  Now, what you heard was we have ‑‑ well, let's go back.

9281     We believe the Native Women in the Arts, we have stated, should stay, and that's for $35,000.  We have a cash contribution to the Alberta Recording Industry's Association of 35, we believe that should stand.  We pledged $35,000 to Radio Starmaker, that should stand.  We already pledged $35,000 to FACTOR.

9282     What we then said was that we would run our own aggressive program for a total of $210,000.  We have agreed with the CIRPA comments that perhaps they are in a better position to do it than we may.  We are prepared to roll that $210,000 over to FACTOR.

9283     COMMISSIONER del VAL:  So what will your total CTD ‑‑  

9284     MR. EDWARDS:  It will still remain at $350,000.

9285     MS MICALLEF:  Madam Commissioner, the difference is that our Front and Centre initiative paralleled the sort of program that FACTOR runs, and as they pointed out in their letter, why duplicate the effort?  So we agree with them.

9286     MR. J. MANN:  I would like to add one point of clarification, as well, regarding the Native Women in the Arts.

9287     The founder of that particular organization, Ms Sandra Lalonde, has agreed that those funds would be ear‑tagged for musical artists.

9288     COMMISSIONER del VAL:  Thank you.

9289     Now, I have also noted that, aside from the commitment to the Native Women in the Arts organization, there aren't any specifics about any commitments towards the reflection and representation of cultural diversity in your programming or your corporation.

9290     So have you identified at this point any other initiatives you are planning regarding the reflection and representation of cultural/ethnic/racial diversity in your employment practices, on‑air commitments, news, music or promotion of Canadian artists?

9291     MS MICALLEF:  We have a policy that our cultural diversity is aimed at showcasing the cultural mosaic of each of the communities.  As well, that's reflected in our hiring practices.

9292     COMMISSIONER del VAL:  Okay.

9293     Was your mike on, Ms. Micallef?

9294     MS MICALLEF:  It was.  Did you not hear me properly?

9295     COMMISSIONER del VAL:  No, I could, but I can't see the light, sorry.  Okay.

9296     MS MICALLEF:  My light's flash is showing here.

9297     COMMISSIONER del VAL:  Okay, great.  Thank you.

9298     MS MICALLEF:  So what I would suggest is, if I can ask Jason Mann, who is our V‑P and director of programming, to talk about some of the sorts of programs that we have initiated in some of the other communities.

9299     What we will do is, if licensed, we will work with the community to identify programs that would be appropriate for us to support.  Lethbridge has a number of different festivals and different programs that do really build on the cultural diversity of the area.  One of the programs they have is a Changing Faces Festival, which showcases the different cultural groups in the area.  We have identified that it would make sense for us to work with that organization, because it does support the initiatives and the values that we also believe in.

9300     We have not actually done anything with that organization yet, feeling it was premature to speak with them at this point, but we can speak to what we have done in other communities, where we have looked for these sorts of opportunities, and then Paul Mann can also speak to our employment equity policies and programs.

9301     MR. J. MANN:  Drawing on my experience in Duncan, which also has a fairly large representation of first nations people, we have a very strong relationship with the first nations of that area.  We do give a considerable amount of access, and one would say that they are appreciative of that, I believe.

9302     More specifically, an example, I guess, of something that we are doing, as far as working in hand with the community, in that particular segment of the community, is there's an individual who grew up in Smithers, showed some promise as a mathematician, which is well‑known that, for whatever reason, this segment of the population doesn't tend to perform well in the area of mathematics.  So there was considerable interest taken in this particular person and their performance in that area.

9303     Through the early ‑‑ well, through the high school years, the grades for this individual began to drop.  It was later found that the reason was, after the ‑‑ after the school board did some investigation, they found that the reason why he wasn't doing homework ‑‑ sorry.

9304     COMMISSIONER del VAL:  Would you like me to come back to this question.  I can go to other questions first.

9305     MR. J.  MANN:  I can finish.

9306     COMMISSIONER del VAL:  Okay.

9307     MR. J.  MANN:  ‑‑ was the reason that they were poverty‑stricken and they could not afford a table for him to do his homework on.  Having been near there, I can relate ‑‑ sorry.

9308     At any rate, this individual was given a grant to continue their education in a private school on Vancouver Island, Shawnigan Lake Private School.  That funding has ceased, so we are taking up, with arms in the community, to help raise funds for this individual so that they could continue their education in that form and reach the excellence that they know that he can.

9309     So in that way, we have become involved in the community.  And, of course, when you become involved in the community at that level, you can't help but reflect it on the air.

9310     Thank you.

9311     COMMISSIONER del VAL:  Thank you.

9312     I will move on to the economic portion of my questions.

9313     I note that your projected audience share, ranging from 14, in year one, up to 16.7 percent, in year seven.  Now, can you please discuss how you use the results of your demand study to derive both your audience projections and your revenue projections?

9314     MR. P. MANN:  Madam Commissioner, perhaps we could break that into two parts.

9315     MR. YERXA:  I will deal with the audience.

9316     MR. P. MANN:  John will do the audience, yes.

9317     MR. YERXA:  When I received the results from Bannister, and they came to their various conclusions, one of the questions, of course, Vista posed was:  what's a realistic market share?  Knowing the dynamic of the Lethbridge market, I believe that the guaranteed cume came in at about 28 percent.

9318     I suggested to them ‑‑ normally we take about anywhere between about a 50 percent to 70 percent cume core conversion, so I suggested, given the nature of the market, the competitiveness, they should probably cut that in half, go with 50 percent.  That would put them at about a 14 share and they could build on that basis.  That's how the market share was derived.

9319     MR. P. MANN:  Of course, we don't have PBIT information and revenue information on this particular market; however, with our experience and time spent in the market, our business community connections in the market, and our own due diligence, from several levels, we reasonably predict that it's conservatively at least a $6‑million market.  So we built our model on that $60‑million current base.

9320     We also looked at the fact that a share point at about 65 percent local tuning would suggest share points worth about $92,000.  If we can affect approximately a 5 share point repatriation in the market to, say, 70, this would put the future share point about $96,400, suggesting that we would contribute about $750,000, first year of growth, to the market, the difference coming from direct impact on the incumbents, so in this approach, Madam Chairman, our 14 share, if you will, calculated to about $1,349,000, which we, frankly, felt was perhaps a big aggressive.

9321     We took a second approach, as well, based on rate and inventory, if you will, using our experience in similar launches and relaunches of brands, and so forth.  We set our inventory at 39,000 minutes a year, we based our first year at 50 percent sold, and created a rate assumption per minute of $58.

9322     How did we arrive at $58, because we are quite aware, by the way, it's higher than our competing applicants.  On the other hand, we are in a prime demographic, the most prime demographic for many advertisers.

9323     We also believe that breaking that down to a $29 averaged 30‑second unit rate is not out of line in this market for a winning product, and we went with the alternative here, which created a million one‑thirty‑one, as the first year revenue assumption, and treated that, if you will, as our discount on what the first approach gave us.

9324     COMMISSIONER del VAL:  Okay.  I also see that I think in your projections you are projecting about 33 percent will be ‑‑ the source of the income will be from incumbent stations, their existing advertiser budgets.

9325     The 33 percent, can you identify any specific incumbents that will sort of take the ‑‑ how will they take the hits, like including, say, out‑of‑market tuning?

9326     MR. P. MANN:  We believe the Rogers products would take the largest hit, in part based on The River's format today, some from Rock 106.  By and large, from the Pattison‑side, we think the bulk of the difference would come from the country brand.

9327     COMMISSIONER del VAL:  Okay.

9328     On your programming expenses ‑‑ so your total expenses, programming expenses, is $2 million‑nine‑hundred‑plus, and that's for 9 hours and 45 minutes of scripted word per week.  Then I compare it to, say, Newcap's, and their total programming expenses is just under $8 million, and yet what they are projecting in local word and spoken‑word proposal is 5 hours of scripted spoken word.  So your programming expenses is about one‑third of Newcap's, but you are committing to almost double what they will provide.

9329     Then, your sort of percentage of total revenue is ‑‑ about 20 percent of your total revenue is going to total programming expenses, say, while for Newcap they are about 30 percent, and for about half of the programming.

9330     How would you like to comment on that?  Is yours low?  Is theirs too high?  Is yours realistic?

9331     MR. P. MANN:  I certainly can't comment on theirs.  I can tell you that our model is a model that's in use today in all of our operations relative to size and scale, and certainly is a model very similar to those that I have worked with in my past involvements with other sizeable companies in our industry.  It's a budget percentage, departmental percentage structure, that works.

9332     COMMISSIONER del VAL:  So you are confident that your budget for programming expenses will be sufficient to cover your spoken‑word commitment,  because that's expensive to produce?

9333     MR. P. MANN:  Yes, we are.

9334     COMMISSIONER del VAL:  Okay, and your total operating expense is about $28 million.  In the first year, it's about $1.2 million total operating expenses, and you say that you are estimating about 16 employees.

9335     What proportion of this total operating budget, what percentage, is for salaries and wages?

9336     MR. P. MANN:  We have 16 employees slated, and there is a budgetary break by position laid out in our backup information that we can provide you, if you wish, that identifies the anticipated start‑year salaries by position.

9337     COMMISSIONER del VAL:  Okay.  Could you provide that, please?

9338     MR. P. MANN:  Certainly.

9339     COMMISSIONER del VAL:  How long do you think it will take?

9340     MR. P. MANN:  Before the reply portion, if that's appropriate.

9341     COMMISSIONER del VAL:  Thank you.

9342     Have you done any studies or what evidence do you have to support the assumption that more than 50 percent of projected revenues will be derived from increased advertising budgets and new radio advertisers?

9343     MR. P. MANN:  Madam Commissioner, we did conduct an advertiser study in the marketplace, and I recognize we have not filed that research.

9344     We chose not to do so for a couple of reasons.  Obviously, number one, they identify specific significant advertisers by name and business in the marketplace and, as part of that respect, we also had additional concern about their privacy.  But, yes, we did conduct specific sales research that led us to, in part, those conclusions, in addition to one‑on‑one dialogue with a number of businesses.

9345     I can also speak to the fact that, as a philosophy, from a sales perspective with Vista, we very much believe in growing the value of radio as a medium.

9346     It is fair to say in many of the markets we operate as ‑‑ we have taken them over, one of the first kinds of research we do is to determine what percent of the business licence numbers in the market we are actually doing business with and they have been anywhere from typically 5 to 8 or 9 per cent depending on the market and the previous ownership and so forth.

9347     So I think it is fair to say that there is significant growth potential within the marketplace in a size of Lethbridge, not unlike many other places where the percent of businesses doing radio is still significantly small and that not unlike most places the significant percentage is in print and that there is a significant approach in our vision of sales to grow the business from other media as opposed to poaching on our radio competitors, if you will.

 

9348     COMMISSIONER DEL VAL:  Thank you.  I appreciate the privacy concern.  So provided that you, say, have consent from the advertisers you have spoken to or who have provided you their budgets or whatever to disclose to the Commission, would you be able to file the consent to disclosing with us on a confidential basis.

           MR. P. MANN:  On a confidential basis, Madam Commissioner, yes, we would and I believe we could do that before the end of the afternoon as well.

 

9349     COMMISSIONER DEL VAL:  Great, thank you.

9350     Now, you are aware of the intervention that Golden West filed at intervention 256 and also the Jim Pattison Group filed at intervention 341, and they both commented that your revenue projections are overly aggressive.  Can you respond to that please?

9351     MR. P. MANN:  We are comfortable with them and I guess if it gives us any comfort, in fact, the Newcap application first‑year revenue projections ‑‑ while it has not been dealt with here, we have certainly read the submission ‑‑ are fairly close to our own, although they are coming from a different format perspective.

9352     I can certainly anecdotally comment to you that from past experience ‑‑ and Kelowna might be a very good one.  I arrived in Kelowna in October 1995 as a sales manager for what was about to become the fifth station in the market, a country FM.  We launched it as a country FM.  It had an AM sister station that was full service, middle of the road music.  It got reasonable takeoff and reasonable share but still didn't give us what we needed, we thought, to run our business.

9353     So we did a re‑launch of the FM and I can tell you that in our experience it is all about getting the brand right, it is about how you approach the market, and I can say to you, because it was a publicly traded company at the time under Okanagan Skeena Group, that we were able to literally double the revenue of that combo in approximately 18 months.  So it comes from your vision of business, I think, to a certain extent.

9354     COMMISSIONER DEL VAL:  Thank you.  Those are my questions.

9355     Thank you, Mr. Chairman.  Those are my questions.

9356     THE CHAIRPERSON:  Thank you, Commissioner del Val.

9357     I spent some time over the weekend perusing the Lethbridge and some of the localities' website.  I spent some time trying to get a better feel for the market and found on the business development portion of the site a document that is called "Choose Lethbridge," which, to some extent, you referred in your introductory remarks when you said that the trading area is approximately 275,000 people.  I know that it is mentioned in that section but that, I suspect, is what the document calls the southern Alberta communities.

9358     When I am looking at your coverage map, you are surely not covering the total southern Alberta communities, you are only ‑‑ well, I will say a major portion of it and probably the one that is the most developed and inhabited.  But there is another number that I find in that city that they call the Lethbridge region, and more than likely it will be the area where you will be deriving most of your activities.  The study mentions that the population of 15+ in the Lethbridge region is close to 190,000, which is surely significant for your operation.

9359     My question to you is in terms of coverage of your services, regarding particularly, say, news particularly, will you be covering Lethbridge or all these areas, including Taber, Vauxhall, Champion, Granham, Calston, Warner?  What is your plan?

9360     MR. P. MANN:  It is definitely ‑‑ you have identified a number of the communities, certainly Taber, Coldale, Fort McLeod, Raymond, Clarisholm.  I am picking the ones now, obviously ‑‑

9361     THE CHAIRPERSON:  Yes.

9362     MR. P. MANN:  ‑‑ of the larger populations where there is a fairly decent hub of business and other activity in communities of that size.  There is no question that the service to the core communities, particularly within that 30 to 50 minutes or so of Lethbridge, would fall under our mandate.  I think people look at themselves in the Lethbridge region very clearly within that circle.

9363     THE CHAIRPERSON:  That is what you will define being the Lethbridge region because, obviously, the document defines the southern Alberta communities which includes the Lethbridge region, obviously.  So your plan is to have a broader view of all the ‑‑ what you say, within the 30‑45 minute drive from the core of Lethbridge will be the sector you will be servicing?

9364     MR. P. MANN:  Yes, and it is one of the reasons we identified some of the specific information features that we think are relevant to not just, obviously, the city ‑‑

9365     THE CHAIRPERSON:  Yes.

9366     MR. P. MANN:  ‑‑ but these rural and smaller agri‑business  based communities within that hour's drive.  They are all very much in tune with the agri‑business base and for some of them, particularly when you get into the Vauxhall, Hayes, Wolmand areas, places like that where the resource sector plays a greater role in what is coming out of the ground there as well.

9367     THE CHAIRPERSON:  Okay, thank you.

9368     I have a question also that deals with your CTD and I only want to make sure because I heard Mr. Edwards saying that the front and centre initiative ‑‑ are you saying to us today that you are no more planning to do it, you agree with CIRPA and it is a plan that is totally removed if you are saying to us that if we think it doesn't meet the spirit of the CTD, you won't do it and then give the money to FACTOR?

9369     MR. EDWARDS:  I think what we are saying is we agree with the position taken in the intervention that it is probably a better use of our funds.

9370     THE CHAIRPERSON:  Obviously, cutting a cheque takes much less time than putting together the front and centre initiative.

9371     MR. EDWARDS:  Yes, it does, but we also had to weigh what was the best return on the investment and the name of the game here is to get some more Canadian content exposure and more airplay.  So we are taking the position, being a small company, perhaps our impact would be greater to work with another organization.

9372     THE CHAIRPERSON:  Okay.  If the Commission was to decide to grant two licences to Lethbridge, which one will have the lesser impact on your business plan?

9373     MR. EDWARDS:  The second FM that you give us.

‑‑‑ Laughter / Rires

9374     MR. EDWARDS:  I think that probably the application by Elmer would not give us any hesitation at all.

9375     THE CHAIRPERSON:  And if we were to grant, say, the Demers Company or Newcap ‑‑ say, if we were to grant also Newcap, you are going to be really competing for the same audience?

9376     MR. EDWARDS:  I think Newcap's application would be for a younger audience than yours.

9377     THE CHAIRPERSON:  Than yours.  Okay, fine.

9378     The legal counsel wants to ask you a further commitment.

9379     MS BENNETT:  No, just a clarification.  With respect to the advertiser study that you discussed with Commissioner del Val that information is not something that would be treated as confidential under the Commission's Rules of Procedure.  So I just wanted to ask if you could perhaps file an abridged version with no names that could be filed on the public record, and if you needed more time to do that, then, you know, if you needed until next week or something, that would be fine for filing.

9380     MR. YERZA:  That can be filed today.  We will simply remove any reference to the people that were talked to, their phone numbers, the businesses, the cross‑section of advertisers.

9381     MS BENNETT:  All right, thank you very much.

9382     THE CHAIRPERSON:  Now, it is time for the wrap‑up of this appearance.  So could you, in your own words, tell the Commission why we should retain your application over all the others that we are going to be hearing today?

9383     MS MICALLEF:  Thank you.

9384     Firstly, we would like to start with why Lethbridge?

9385     I think we have shown that the Lethbridge market is booming.  The Mayor of Lethbridge himself just last month was quoted as saying that measuring the dollar value of building permits in the city was an indicator that Lethbridge was attracting its share of the economic boom experienced by the province as a whole.  So Lethbridge, like the rest of Alberta, is doing very well.  In fact, their retail market is $1.4 billion.  They haven't had a licence in over 36 years.

9386     So why Lethbridge?  We think that we have shown that it makes a lot of sense right now for Lethbridge to have another radio station.

9387     In terms of the age demographics that we have identified, 35‑54 represents the largest 20‑year age block in the community and it is largely unserved by the radio stations that are presently there.

9388     If we were awarded a licence to provide a classic hits FM radio station in Lethbridge and in the area, we would provide diversity of programming; we would provide a diversity of voices; we would provide local presence, a strong local presence.

9389     We would make a cash commitment of $245,000 to FACTOR, an additional $95,000 to additional Canadian talent development programs, including one that was focused on the Aboriginal community in the Lethbridge area.  We would be able to achieve this through a business plan that was strong, that is reasonable, that is well financed and that is attainable.  It is attainable because we have identified the right format, the right core group that is not being addressed and it is a group that is an important part of the advertising community and advertising decisions.

9390     Two of our founders, Paul and Jason Mann, are from the area.  They have ties to the area, they have worked in the area, they have worked in radio in the area and they understand the community.  They are passionate about radio.

9391     When Paul and Brian and Jason and I founded Vista Radio we did it with a vision that we wanted to make a difference in the small markets that we served.  We believe that we are making that difference in British Columbia.  We want to make that difference in Alberta.

9392     We are asking you to help us make our vision a reality by giving us a licence in Lethbridge.  Thank you.

9393     THE CHAIRPERSON:  Thank you very much.

9394     Just before ‑‑ may I put the following question to you, Mrs. Micallef?  You just mentioned that father and son Mann come from Lethbridge.  If you were granted a licence, will any of the two return to live in Lethbridge?

9395     MR. P. MANN:  I have been the one designated to answer that question because my mom, who just turned 80, is saying, you have been on the road since you were 16, isn't it time to come home?

9396     So while I am not prepared to commit full time, certainly, for the first year to 18 months of launching this product and working with the building of the product, the teams and the business community, absolutely, that will be a primary residence for me.  Where we go from there depends on our business as a whole.

9397     But as an initial commitment, absolutely, and I can say that on an interim basis because Jason is integral to building our product side wherever we go, we will have a significant joint presence in certainly the first 18 months.

9398     THE CHAIRPERSON:  Thank you very much.

9399     We will break for the lunch period and we will ‑‑ oh, the secretary wants to add something.

9400     THE SECRETARY:  Thank you, Mr. Chairman.

9401     I just want to say for the record that the spoken word programming matrix that was produced this morning by the Vista applicant will be available in the public examination room on this applicant's file.  Thank you.

9402     THE CHAIRPERSON:  Thank you.

9403     So we will break for lunch and we will get back at a quarter past one.

‑‑‑ Upon recessing at 1200 / Suspension à 1200

‑‑‑ Upon resuming at 1315 / Reprise à 1315

9404     THE CHAIRPERSON:  Order, please.

9405     I will ask the secretary to introduce the next item.

9406     THE SECRETARY:  Thank you, Mr. Chairman.

9407     Before we go on to the next item, I would just like to say for the record that the document called "Open Line Programming Policy" for the Jim Pattison Broadcast Group, which was item 6 on the agenda, this document has been filed with the panel and will be available in the public examination room for anybody to consult.  Thank you.

9408     Now, we are proceeding to item 16 on the agenda which is an application by Newcap Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Lethbridge.

9409     The new station would operate on frequency 94.1 MHz (channel 231C1) with an effective radiated power of 100,000 watts (non‑directional antenna/antenna height of 174.3 metres).

9410     Appearing for the applicant is Mr. Rob Steele who will introduce his colleagues and you will have 20 minutes for your presentation.  Mr. Steele.

PRESENTATION / PRÉSENTATION

9411     MR. STEELE:  Good afternoon, Mr. Chair and Commissioners, members of the Commission and Commission staff.

9412     I am Rob Steele, President and Chief Executive Officer of Newcap Radio and I would like to introduce the members of my team.

9413     Seated in the front row to my far left is Josie Geuer, the Music Director of our Ottawa urban CHR station HOT 89.9.  Next to Josie is Rob Mise, Group Program Director of Newcap.

9414     Josie and Rob worked together in Ottawa until very recently and they led the team that made the launch of HOT 89.9 a huge success for us there in Ottawa.

9415     Next to Rob is Mark Maheu, Executive Vice‑President and Chief Operating Officer for Newcap.

           Seated beside me is Dave Murray, Vice‑President of Operations for Newcap Radio.

9416     Mr. Chairman, we are very excited about the possibilities and opportunities in the Lethbridge market and we are surprised that more broadcasters did not answer your call for applications for a new radio station to serve Lethbridge because as you heard earlier today from other applicants, Lethbridge is an attractive and a dynamic market.  Its residents deserve as much choice as Canadians in similar size markets.

9417     Today, we will present to you the economic case for Lethbridge, our research into the programming needs of the market and our proposals to meet those needs.

9418     I would like to ask Mark Maheu to present some context for the radio industry in the smaller markets of this province.

9419     MR. MAHEU:  Thank you, Rob, and good afternoon, Mr. Chair, members of the Commission, staff.

9420     We are already well embarked on a new era for radio in this country.  As the Commission noted in its Review of Radio Public Notice, we are seeing an increase in the competition for the ears and leisure time of the public.  Two satellite radio companies are already launched, providing 100 channels or more in a variety of formats.  It is likely that among the early adopters of this technology will be the residents of smaller and medium‑size markets throughout the country, those with relatively limited choice in local radio stations.

9421     Music downloads to the computer, to the cell phone, iPods, MP3 players and other non‑conventional sources are flourishing.  Youth tuning continues to decline.  For example, the average hours tuned by teens declined in Canada from 11.3 hours per week to 8.5 hours a week between 1999 and 2004.  Among men 18‑24 the decline was from 16.8 hours a week down to 15.5, and among women of the same age group, 17 hours a week down to 15.9.

9422     We know that local radio can be successful against these emerging technologies even when they play music.  The local touch is very important to listeners of all age groups whether for news, local events, weather or even the opportunity to call in for contests or influence the sound of the radio station.

9423     Market surveys, listener callouts, emails, music tests, all help tailor the sound to local tastes.  Compare this to paying a monthly fee for programming designed in Washington, D.C., New York or even Toronto.  However, we must provide the music format that appeals to listeners and in many markets radio has failed young people, in particular, in its search for the Baby‑Boom generation.

9424     So while in larger markets like Ottawa we can provide two youth‑oriented radio stations successfully with our CHR urban station and our modern rock station, younger audiences in other markets have a lot less choice.  The good news is that when services are provided the audiences respond.  The success of our CHR stations attest to this.

9425     We believe that we will be successful in Lethbridge with a younger listener group because we approach it as we have in many other markets across Canada and here is how we go about doing this.

9426     We pick markets with a capacity, we believe, will support new radio stations.  In a second, Dave Murray is going to tell you a little bit more about the bright economic future for Lethbridge.

9427     We then look for the biggest unserved group of listeners in the market, and Rob Mise will outline our research findings in Lethbridge.

9428     Then we go to work.  We have a great team in place at Newcap and when we launch a new radio station we are able to attract the best and brightest people to bring their passion for radio and to join us.

9429     The end result of all these efforts will be a radio station playing the hit music and providing the services Lethbridge needs and wants.

9430     MR. MURRAY:  Thank you, Mark.  Good afternoon, Commissioners.

9431     Like all of Alberta, the Lethbridge area continues to benefit from an economic growth.  The Lethbridge census area, which is largely made up of Lethbridge and its surrounding trading area, continues to show growth in all key economic indicators.  Here are a few.

9432     From 1996 to 2001, the population grew by 10 per cent according to Stats Can, and from 2001 to 2004, it grew a further 4 per cent according to Alberta Municipal Affairs.  Between 1996 and 2001, the number of people employed in the area grew by 10 per cent.  In the same period, median family income grew by 13 per cent from $14,000 to $53,000.

9433     These facts lead us to conclude that there are more people in Lethbridge with more jobs and more money to spend on homes, vehicles, appliances as well as restaurants and other services.

9434     It is no surprise that Financial Post Markets confirms this optimism.  It projects that the retail sales of $1.9 billion in 2006 are projected to grow by $100 million per year for every year until 2011 to a total of $2.4 billion.  That is a growth rate of 26 per cent.

9435     The Lethbridge economy is a diversified one.  With 33 per cent of Alberta's farmgate receipts, the dairy and cattle businesses, grains and other cash crops help drive the economy.  As a result, food processing is a major industry.

9436     Lethbridge is southern Alberta's shopping hub with several shopping centres and a downtown serving a retail trading area of about 275,000 people which extends into the United States and British Columbia.

9437     The city is also the service and convention centre for southern Alberta, with multiple tourist attractions.

9438     The University of Alberta attracts students from all over Alberta, Canada and the world.  These young people are prime prospects for our proposed format.

9439     The Alberta radio industry is among the most successful in the country with an average annual growth rate in the years from 2001 to 2004‑05 of 10 per cent in revenue and 9 per cent in profit before interest and taxes.  The profit margins are among Canada's highest with a profit before interest and taxes margin of 30 per cent.

9440     The two existing licensees, Rogers and Pattison, each with two stations, are well positioned both financially and competitively to continue to be successful with the addition of a new competitor.

9441     Newcap is confident that this market can easily sustain our proposed station, particularly since it will provide a service aiming at a previously underserved demographic group.

9442     Now, to talk about how we choose our format, I would like to introduce Rob Mise.

9443     MR. MISE:  Thank you, David.

9444     Our approach to finding the right format for Lethbridge is the same as what Mark Kassof presented to you in our Calgary application.  We did not go in to test a format we had already selected or limit ourselves to an age group that we had decided in advance is underserved.  Rather, we tested a wide range of age groups within a variety of formats, the most popular ones from our experience.

9445     In the case of Lethbridge, we surveyed 18‑64 year olds to check their interest in eight different formats.  But we are not only interested in the most popular format, we also look to find one that is not already served in the marketplace.  So in addition to our questions on current listening habits and music preferences, we also asked if there is a station playing the various kinds of music in the market.

9446     We then calculated what we call the percent of format void for the market and for various demographic groups.  We checked into this against recent market developments and other factors such as satisfaction with radio by the various demographic groups.

9447     The percent of format void is highest for classic hits followed by contemporary hit radio or CHR.  But we had to temper this with the relatively recent change of a Pattison station to classic hits.

9448     A check against some other questions reinforces the choice of CHR.  The format has the highest percent of format void among 18‑34 year olds, both men and women.  Those who are the most interested in CHR have the lowest rate of satisfaction with Lethbridge radio of any of the formats tested at 2.7 on a scale of 1‑5.

9449     Now to tell you more about the sound of the station we are going to be talking about is Josie Geuer.

9450     MS GEUER:  At Newcap, we have a lot of experience in the successful launch of stations oriented to young adults.  In Ottawa, our station HOT 89.9 has been a critical success and I am proud of what our team has done there in a few short years.  We will bring the same diligence and energy to HOT 94.1.

9451     Newcap runs CHR stations in several markets and we have learned a few lessons about this on the way.  We do not cookie‑cutter these stations.  To be successful they have to have their own personality and reflect the nature of the market.

9452     So HOT 94.1 will be a broader CHR format than our Ottawa station where there are other stations serving youth and young adults.  With a target demographic that certainly includes teens but also 18‑34 year olds we will include a lot more pop music in the mix along with the best of today's modern rock, hip‑hop and other hits.

9453     If we were on air today you would be hearing great Canadian artists like Keisha Chante, Mesari, Nickelback, Carl Henry, A Simple Plan and Melissa O'Neill, and international artists like Kelly Clarkson, Pussycat Dolls and Fallout Boy.

9454     Along with our energized music mix including lots of talk about the world of music and pop culture, we will have a number of special interest music programs that will be as interactive as possible, giving our audience the chance to reach us through instant messaging, email or their cell phones.

9455     Local shows like the HOT's "Seven at Seven," "Battle of the Beats," and "Instant Request" will all showcase the new "HOT and Happening" while asking our listeners to get involved in choosing and commenting on their favourite picks, and Lethbridge will have both its own "Top 30 Countdown" and Newcap's "National Canadian Hit 30," featuring the top hit music for the week across Canada along with the best Canadian hits of the week.

9456     Our approach will be fun and upbeat.  We will showcase our audience's favourite music but speak to them about what is going on in their world.

9457     Our newsroom with the equivalent of four full‑time people will produce 53 weekly news packages, 35 community event updates, 35 public affairs features and a weekly hour public affairs program.  The emphasis will be largely on the local news of Lethbridge and area accounting for about 75 per cent of the stories.

9458     At Newcap we are strong believers in investing in Canadian music at all levels to help build a pipeline of appealing Canadian music that our audiences are eager to listen to.  We propose to spend $700,000 over the course of the licence to support Canadian music.  Our initiatives in Lethbridge are aimed at three levels.

9459     Basic music education.  We propose to devote $15,000 each year for a total of $105,000 over the term of licence to initiatives with the Lethbridge Board of Education, with $5,000 annually for the purchase of instruments for students who can't afford them, $5,000 for music scholarships and $5,000 to support the annual music festival.

9460     Educating developing musicians.  We will spend $385,000 on the creation of the Southern Alberta Music Conference, a regional equivalent of Canadian Music Week, providing musicians with the opportunity to meet and work with labels, producers, managers and top‑flight musicians to learn more about developing their musical skills and careers.  The conference will include a contest whose winner will get both cash and airplay from Newcap.

9461     Helping emerging acts to the next stage.  We propose to provide $210,000 to the Radio Starmaker Fund to support promotional and market opportunities for new and emerging acts.

9462     Rob Steele will now sum up our presentation.

9463     MR. STEELE:  Thank you, Josie.

9464     We believe that our application is in the public interest and deserves your consideration for the following reasons.

9465     Number one:  Lethbridge is a growing and dynamic market that deserves a great new radio station, particularly one that targets a group that is currently greatly underserved.

9466     Two:  Newcap will bring a new listening choice to the market with the financial resources, great people and new ideas to make a great new station come to life.

9467     Three:  HOT 94.1 will bring a new editorial voice to the market with the resources necessary to provide a credible voice to a younger demographic.

9468     Four:  We propose to invest $700,000 in Canadian talent development.

9469     Five:  We will be playing new Canadian music supporting a new generation of artists.

9470     Six:  We will invest $4.1 million for program expenses to provide the highest quality local service we can.

9471     And finally, we have chosen the most underserved group in the market, identified through extensive research looking at market preferences for a wide range of formats.

9472     Thank you for your attention.  Mark Maheu and our team will be pleased to answer any questions you may have.

9473     THE CHAIRPERSON:  Thank you, Mr. Steele.

9474     Commissioner Duncan.

9475     COMMISSIONER DUNCAN:  Good afternoon.  We note in part of your five‑hour spoken word commitment that you did not include DJ banter and we were just wondering if you could give us an estimate of how much in addition that would add to the five‑hour weekly commitment.

9476     MR. MAHEU:  Commissioner Duncan, I am assuming you mean the general ‑‑

9477     COMMISSIONER DUNCAN:  Chatter.

9478     MR. MAHEU:  ‑‑ talk on the air and so on?

9479     COMMISSIONER DUNCAN:  Yes.

9480     MR. MAHEU:  It is likely the equivalent of that or a bit more.  I would say 5 to 7 hours a week over the course of a seven‑day week.

9481     COMMISSIONER DUNCAN:  So double the amount?

9482     MR. MAHEU:  Yes.  And that would be just general ‑‑

9483     COMMISSIONER DUNCAN:  Talk?

9484     MR. MAHEU:  ‑‑ talk back and forth and information and morning shows, things like that.

9485     COMMISSIONER DUNCAN:  In your October 28^th deficiency response you indicated you will be live to air 6:00 a.m. to midnight daily and voice‑tracked overnight.  You also indicate in that response that the "Canadian Hit 30" program originating from your Ottawa radio station will represent one hour per week of non‑local programming.

9486     Will there be any other non‑locally produced programming aired during the broadcast week, and if so, how much?

9487     MR. MAHEU:  Likely there is going to be at least one syndicated countdown program that would be non‑locally produced.  That would probably run three hours a week and likely, like we do in other places, we would air it twice.  So there's six hours a week of non‑originating programming.

9488     COMMISSIONER DUNCAN:  That is like a weekday evening?

9489     MR. MAHEU:  It would likely be on the weekends.

9490     COMMISSIONER DUNCAN:  Thank you.

9491     I am turning now to the CTD and specifically to the Alberta Musicians' Convention, Southeastern Alberta Musicians' Convention.  We are wondering who would be invited to attend the convention and if the invitation will be strictly limited to musicians from the southeastern part of Alberta.

9492     MR. MAHEU:  I am going to ask Rob Mise in just a moment to expand a little bit on that but I should give you some of the details on that.

9493     I should preface it with the idea behind this annual music conference would be to make it as inclusive as possible.  Predominantly, we were kind of counting on the fact that people within the province of Alberta generally would be the first ones to kind of gravitate towards it but we hope to see this kind of grow and mushroom much like the Canadian Music Week Conference started.

9494     I know personally, I was at the very first one when it was called the Record Conference back in the early 80s and you could have counted the people in the room on five different hands.  It wasn't a very big crowd and then it has grown into what we see today as being the premier music event.

9495     So we see it as being open to everybody but we think in the early years it will be predominantly people from Alberta.

9496     I will let Rob expand on that a little bit.

9497     MR. MISE:  When we were putting together the application for today, we asked, what can we do for musicians and for artists to provide support for the Alberta music industry, and we are very excited about this.  We have kind of dubbed the whole program "The Future is Now."

9498     Mark mentioned Music Week in Toronto which starts this week and Newcap is a corporate sponsor.  The east coast has the ECMAs and, of course, Vancouver has New Music West.  Then we talk about the Prairies with great outstanding talent like Jann Arden and Ian Tyson, Nickelback, Paul Brandt.

9499     This is a convention for musicians, songwriters, also for artists, labels, independents, students, teachers.  This is going to be an all‑inclusive two‑day event for them regardless of their job experience or their job title.  It is very grassroots.  It is for emerging singers and songwriters and it will be directed by the stakeholders who are the artists and musicians.

9500     It will be slow to start.  We are going to roll it out as the years go on but we see the artists and musicians really being in charge of this program and we see many of them who will be attending for the very first time.  As opposed to hopping on a plane to go into Toronto or Vancouver, this could be a half‑day drive into Lethbridge for this conference.

9501     COMMISSIONER DUNCAN:  Now, Mr. Mise, a further question on that.  Then how would you go about soliciting or inviting people to come?

9502     MR. MISE:  We will be advertising on all of our Alberta radio stations inviting the public, plus we will be using extensive database material too for that.

9503     COMMISSIONER DUNCAN:  Thank you.  Just continuing on then with the budget, we noted that you had allowed in the budget $5,800 for high school scholarships.  So first of all, we wanted to clarify if these were in addition to the $5,000 allowed for in the Lethbridge School Board music program.

9504     MR. MURRAY:  Yes, they are in addition to that.

9505     COMMISSIONER DUNCAN:  In addition.  Thank you.  And how would those then ‑‑ could you give us some detail on how they would be administered?

9506     MR. MAHEU:  Do you want to answer that one?

9507     MR. MISE:  Sure, please.  The $5,000, for example, is for the purchase of students' ‑‑ for the instruments and we are certainly aware that there is no shortage of need here.

9508     COMMISSIONER DUNCAN:  Well, this is on the $5,800 now for the musicians' convention.  That is the one I was wondering about the details on.  There is $5,800 in the budget.  It is called High School Scholarships.

9509     MR. MISE:  Yes.

9510     COMMISSIONER DUNCAN:  Go ahead.  I am sorry, I didn't mean to interrupt you.

9511     MR. MISE:  No, that is okay.

9512     MR. MAHEU:  I think ‑‑ if I can just borrow this page.

9513     MR. MISE:  Sure.

9514     MR. MAHEU:  You are talking about the budget we have laid out for the Southern Alberta Music Conference?

9515     COMMISSIONER DUNCAN:  Exactly.

9516     MR. MAHEU:  Yes.  We budgeted $5,800 for high school sponsorships, and as Dave mentioned, that is in addition to what we budgeted in the schools.  This is still very much in the formulaic stages of what we want to do with the conference and what it will become but what we kind of had in mind is that in conjunction with the conference annually that we would make $5,800 available in scholarships and we haven't determined how many or what the amounts would be, probably in the area of $800 to $1,200 so we could do a number of them by region and those would be awarded annually as part of our Southern Alberta Music Conference.  These would be for deserving students mostly at the high school level to continue their music education.

9517     COMMISSIONER DUNCAN:  I noticed one other point you mentioned is that they wouldn't be for tuition but these are more like prizes, are they?

9518     MR. MAHEU:  Exactly, they are almost like bursaries or honorariums that would be awarded.

9519     COMMISSIONER DUNCAN:  Thank you.

9520     With regards to that budget and the personnel, you indicate a convention manager, an IT supervisor and a technical director.  Are these people in addition to Newcap's salary budget or are they employees of Newcap?

9521     MR. MURRAY:  No, these are individuals that would be hired to operate the convention on a full‑time basis during its tenure, like not full‑time all year‑round, I mean, but while the convention is being organized and at the convention itself.

9522     COMMISSIONER DUNCAN:  Okay.  You indicate also in that budget that $12,900 would go for the talent contest winner and you indicate for producer, studio time, cash prize, radio play.  Does this amount represent out‑of‑pocket expenses to be paid to outside parties or are they in‑kind contributions?

9523     MR. MURRAY:  No, they would be outside third‑party contributions.

9524     COMMISSIONER DUNCAN:  So the radio play then, when you include radio play in that, there is no dollar amount attributed to ‑‑

9525     MR. MAHEU:  There is no cash value associated with that, no.

9526     COMMISSIONER DUNCAN:  Okay, thank you.

9527     Just on the merchandise souvenir table, a $4,400 component to the program, we were just curious if you could give us some idea about what you see happening there.  I assume it is going to generate revenues.  What will happen with the monies generated?

9528     MR. MISE:  We don't really expect it to make any money at all.  This is more just souvenirs of the event.

9529     COMMISSIONER DUNCAN:  So people will buy them it will just cover the cost?

9530     MR. MISE:  That is correct.

9531     COMMISSIONER DUNCAN:  Thank you.

9532     MR. MAHEU:  Madam Commissioner, if I may too, just on that point because it is an important point.

9533     The money that we are budgeting each year for the Southern Alberta Music Conference, that is for the course of the seven years of the licence but we also know that once something like this starts, just because at the end of a seven‑year licence period ‑‑ we are not anticipating stopping it.

9534     So the idea in our minds is to start small, we put some seed money towards this, enough that we figure we can get it going over the course of the seven years but if it grows like we think it is going to grow, it is going to cost much more than the $55,000 a year that we have budgeted.

9535     Our approach to this is going to be that this is a not‑for‑profit operation.  So in other words, if there are any profits made from this, whether it is through souvenirs or at some point we are doing showcase shows where you have to buy a ticket to get in or something like that, above and beyond the free stuff that is available, if there is any revenue generated from this, it is going to go into adding on to next year's.

9536     It is not going to be a self‑liquidating thing by any respect because we think this is going to cost probably a little more than we budget because these things tend to always cost more than we think they are going to cost.  We are committed to doing it but we are also trying to see well into the future that this is going to continue after the first seven‑year licence period is done and we can't just say then, well, we have done our bit for king and country and you are on your own.

9537     We see ourselves as being a partner and a founding partner in this and it is going to be our responsibility to continue to see it funded as time goes on.  We hope that after the course of the seven years is done it can fund itself, and starting things like this in the early going may help us get there.

9538     COMMISSIONER DUNCAN:  All right, I appreciate that.

9539     MR. MAHEU:  Okay.

9540     COMMISSIONER DUNCAN:  That is very enlightening.  I think that is helpful.  Probably it might make some of my questions sound petty but I am just kind of curious to get sort of a better understanding of what some of the projects are but I am glad you made those comments.

9541     The technical sessions then, for example, that you would offer, are they an in‑kind donation or are those third‑party contributions or payments to third parties as well?

9542     MR. MISE:  Also third‑party payment, correct.

9543     COMMISSIONER DUNCAN:  So these would be musicians who need ‑‑ what would they be getting for that?

9544     MR. MAHEU:  I think what we are referring to there is there is going to be some cost for the technical setup to do some of these workshops and so on and some of that is budgeted.  I think when you get into who is going to be doing the actual work conducting these, we are going to rely on a number of things.

9545     We have a number of radio stations across the country, some of them in fairly significant markets.  Those are very important markets to labels.  They lean on us an awful lot to play their music and to help them do what they need to do, as they do with every radio station, but I think this is a way that we can lean back a little bit and say, listen, you have got some great emerging artists or you have got a couple of songwriters that are making a lot of great hit music right now in your stable, in your roster, and can you get them out to the Southern Alberta Music Conference.

9546     I think we are going to try to use relationships we have built.  We have a very good relationship and I think most of the people that are going to participate as speakers, as teachers or as facilitators for certain seminars are going to come on a no‑charge basis and we have enough time each year to kind of start lining that up.

9547     For instance, most of the speakers, if not all of them, at CMW are not compensated for their appearance and we are going to approach the Southern Alberta Music Conference the same way.

9548     COMMISSIONER DUNCAN:  You raise an interesting point or you make me think of an interesting point.  You have not allowed for a CTD coordinator.  So who would be responsible for ‑‑ because this obviously is going to take quite a bit of organization.

9549     MR. MAHEU: It is and it is going to be basically a stationwide effort.  It is going to be headed up by the general manager, the program director, the promotion director, the music director.  We envision the whole staff taking this on as a project.  It is part of our commitment to making ourselves part of the Lethbridge community.  So it is going to be a full‑out station effort.  We do not and have not budgeted anybody as a coordinator.

9550     If we find this thing is bigger than we thought it was going to be and it needs some full‑time management, then we will hire full‑time management and that management of the conference will be funded outside of our commitment to the Canadian Talent Development.  So it would be on our nickel on the expense line.

9551     COMMISSIONER DUNCAN:  Thank you.

9552     The Special Women in Broadcast session, I was curious to know what you envision there.

9553     MR. MISE:  That is actually a typo.  It should say:  "Special Women in Music" session as opposed to broadcast.

9554     COMMISSIONER DUNCAN:  Okay.

9555     MR. MISE:  I am sorry about that.

9556     COMMISSIONER DUNCAN:  Okay.  Then I probably don't have to ask the question.

9557     Now turning to the Lethbridge School Music Board program, you indicate that the scholarships are not designed to offer tuition costs ‑‑ this is in your brief, I believe ‑‑ but to help raise awareness and to promote music program excellence.  I am wondering if they would be more accurately described then as prizes than scholarships.  Are they actually going to be scholarships, as required?

9558     MR. MAHEU:  If that is what it takes to make it work, that is our intent.

9559     COMMISSIONER DUNCAN:  This is my advice to you.

9560     MR. MAHEU:  Yes.  We would do it in such a way that it does qualify but the important part is that the money gets to the people where it can do the most good.

9561     COMMMISSIONER LANGFORD:  I think you have got him going, Elizabeth.  Just keep tightening the screw.

‑‑‑ Laughter / Rires

9562     MR. MAHEU:  The key here is to get the money to the people where it can do the most good and there are some very young deserving students, I think, throughout the school system that could use a little help getting their music career to the next level, and as always, we would work with the appropriate authorities within the school to identify those folks and create a system whereby it could be awarded properly and used for the right reasons.  It is for them to continue their musical education.

9563     COMMISSIONER DUNCAN:  Thank you.

9564     I am turning to the market study and ‑‑ I am just referencing your market study and you expressed interest in the CHR format.  We wondered if you were confident ‑‑ obviously you are but I will ask anyway ‑‑ that the surveyed 23 per cent of positive interest and 9 per cent of strong positive interest constitutes a potential audience sufficient to make your business plan viable.

9565     MR. MAHEU:  There is no question about that.  In our research study ‑‑ it was interesting listening this morning to the Vista presentation because they did research on the Lethbridge market and there are some differences in opinion on where the opportunities are.  We are very confident in the market's ability, based on our research, to support a contemporary hit radio station.

9566     One of the things we should note, in this particular study, we only surveyed 18‑64 year olds; so teens do not make up part of this research study.  But we know from our practical experience in our own markets where we have top 40 radio stations and when you look at the ratings of markets across the country, any top 40 radio station has a significant share of teens.  So we kind of know right away that we are going to have teen tuning and a pretty significant share of it.

9567     So when you add that tuning, which is not included in the research tuning that we are projecting, we are very, very confident that there is more than enough share here to have a significant presence in the marketplace and be able to fulfill our business plan.

9568     COMMISSIONER DUNCAN:  Just following along with some of what we heard this morning, you had ‑‑ I read in your brief ‑‑ considered the classic hits and decided against that, that this was the better route for you.  I am just wondering if there was anything that you heard this morning, particularly with respect to the Pattison Group's Tabor station, if you were aware that they had changed their format, as I understood this morning.

9569     MR. MAHEU:  Yes, and some of those things had an impact, had a definite impact on our decision to go with a contemporary hit radio station.  If I could take maybe 90 seconds or so to kind of go through that for you.

9570     The Pattison station in Tabor is positioning itself as 80s, 90s and now.  Now, we operate a number of classic hits radio stations in different markets across Canada.  So we have some really good practical experience with classic hits and what makes that work and we know that about 90 per cent of the classic hits format is 80s, 90s and today.  Eighties, 90s and now could be another word for classic hits or another acronym for it because that is exactly the essence of what classic hits is.  A little bit of 70s in classic hits but only about 10 per cent.  Ninety per cent of it is 80s, 90s and today.

9571     So when we look at and when you listen to the Pattison radio station ‑‑ and it has gone through a number of changes over the years in terms of what its programming is ‑‑ it is very much what you would hear on any classic hits radio station across Canada right now, very, very close.  So we perceive that one to be a classic hits radio station that is already on in the market.  It is not as highly rated as some of the other radio stations in the city but when we did our research we saw that there could be a hole for classic hits and we have to ask ourselves, okay, why would there be a hole for classic hits if there is a station that is classic hits or pretty much classic hits already?

9572     And this is not meant with any disrespect whatsoever to the Pattison Group because they are excellent broadcasters and do a great job but normally when you see an opportunity like that the research is telling you that if there is a station in that format right now, it is not doing a very good job or it is not doing as good a job as it could maybe do to maximize the potential of the format.

9573     There may be a whole bunch of reasons that we are not aware of for that to be happening but the fact of the matter is if you take a look at the type of music a classic hit station plays, that music is being played predominantly on one radio station in the marketplace and it is the Pattison station.

9574     So when we looked at the research, we thought, well, there is a call for applications, where is the opportunity in the market?  And we are also aware of all the different criteria that the Commission looks at when licensing a new applicant.  One of the criteria is what impact is it going to have on the incumbent broadcasters in the market.

9575     When we looked at all of that and boiled it all down, and there was a pretty significant opportunity for contemporary hit radio which does not exist in the market at all, it became a much easier decision for us to make and then we did the business plan around that.  So that is why we think top 40 or contemporary hit radio is the opportunity because that format does not exist in any shape or form right now.

9576     One more thing, if I may, to sum up on your question.  From what we heard this morning, the characterization by the Vista Group that three of the four broadcasters in the market are targeting a younger audience, we don't believe that that is accurate.

9577     If you look at the BBM results and you take a look at the radio stations and how they are doing in certain demographic groups and the formats that they are in, it is an easy case to make.

9578     When you take a look at the Rogers, HOT AC radio station is the number one radio station 35‑54 by a country mile and it does a great job in an older demo.  Country is predominantly normally in most markets an older demo as well, and the rock station is filling a fairly wide hole as an active rock station and it does well young and it does well 35‑54, especially with men.

9579     So we don't believe the assertation that there is a lot of choice there for younger listeners and we think that a top 40 station could move in there and fill a nice gap that is available.

9580     COMMISSIONER DUNCAN:  So your target audience, again, is ‑‑

9581     MR. MAHEU:  Eighteen to 34.

9582     COMMISSIONER DUNCAN:  Eighteen to 34.  And the rock station would not be ‑‑ Rogers rock station would target what ‑‑ what age group would they target?

9583     MR. MAHEU:  Right now, that rock station is likely targeting an 18‑44 demographic and the ratings it has 18‑34 are quite high but part of that is by virtue of the fact that there is no top 40 alternative right now in the marketplace.  When you take a look at top 40 music right now, it is pretty much made up 50 per cent pop and dance music and 50 per cent pop alternative, and the Rogers station is certainly playing some of that pop alternative music.

9584     There is no CHR station in the city playing it.  So they are going to generate maybe a large audience than they might if there was competition.  So there is certainly a little bit of audience that is at risk there but it would be at risk no matter who came in.  Anybody serving a younger audience is going to take a little bit of that away when that is not your primary focus.

9585     COMMISSIONER DUNCAN:  That is very helpful, especially in light of the comments we had this morning.  So you are obviously convinced you have made the right decision?

9586     MR. MAHEU:  Absolutely!  Even more so now.

9587     COMMISSIONER DUNCAN:  Thank you.

9588     The Commission notes the market study that you provided to determine the proposed format and the financial assumptions behind the revenue projections for your proposed service but we are just wondering if you could link the two for us, if you could explain how you use the results from the demand study to get to your projected revenue.

9589     MR. MURRAY:  Thank you.  The audience share that we feel we will achieve, as we indicated in deficiency, is 13 or 14 per cent.  And basically sort of going through our experience in many size markets that we are in like Fredericton, which is around the same population and Red Deer, et cetera, we came up with our revenue in that way or we came up with our revenue, as you indicated in Appendix 4.4, by looking at the number of minutes and the rate per minute that we felt was reasonable in these size markets, and then we looked at that amount and compared them to what we were getting in Fredericton, Red Deer, et cetera, for a station, also taking into consideration that it would take some time to build that revenue up after you have launched.  We felt that starting at $1.2 and growing to almost $2 million in seven years was reasonable.

9590     COMMISSIONER DUNCAN:  It was amazing to me how close your projections were with Vista's as if somebody was looking over somebody's shoulder.

9591     MR. MURRAY:  Right.

9592     COMMISSIONER DUNCAN:  The projections ‑‑ it was quite interesting that they were that close.

9593     MR. MURRAY:  Quite coincidental.

9594     COMMISSIONER DUNCAN:  With respect to the market impact, you project that 35 per cent will come from the incumbent station and I am just wondering, most of that ‑‑ did I read that you expect it would come from the Rogers station?

9595     MR. MAHEU:  Thirty‑five per cent would likely come from incumbent stations and it ‑‑ although we don't have the revenue figures that other markets ‑‑ we don't know what Rogers is billing and we don't know what Pattison is billing.  We know by looking at the ratings and our general overall knowledge of both of those companies in the business, we have a sense of how well each one is doing.

9596     The more you have, the more you have to lose, I guess.  So we are suggesting that Rogers is probably billing a little more money in that market.  So some of it would come from them.  Certainly, if they have a rock station, which they do, and some of their audience is in our target demo, there is a direct correlation there as well.

9597     COMMISSIONER DUNCAN:  So in concluding that 65 per cent will either come from expanded budgets or new radio advertisers, do you have a scientific approach to coming up with that number?

9598     MR. MAHEU:  It is something we look at in every market where we have a radio station or we have a new radio station going on.  It is a relatively unscientific approach.  It is based on a lot of experience, what has happened in the past.

9599     Our experience is when new radio stations sign on in the market, whatever growth rate was existing in that market and would have happened anyways is somewhat accelerated and the more radio stations you add, the bigger the degree of acceleration for a period of time, and it normally lasts anywhere between 12 and 18 months.

9600     So if you have a market that is ticking along at 5 per cent annual increases every year and just seems to be going up with the economy, if you were to license a new radio station or two, all of a sudden that market might grow 8, 9, 10 per cent the first year and it might even grow 8 or 9 per cent the second year and then kind of come back to the normal levels of growth.

9601     The reason for that, we found, is that when you add more people in a market, especially a smaller market, where more people are out there selling radio, talking up radio a little more, and when new competition comes in, existing incumbent broadcasters, they tend to step up their game a little bit too and they are back to selling radio again, maybe not just themselves but how they are different from everybody else.  It is good for the business and business tends to be a little better over time.

9602     So we feel by adding another radio station to the market, the market will actually expand a little more than it would have without a new radio station.  So that will help fund some of it.

9603     The other thing that we are counting on is the fact that we are proposing to bring a new format to Lethbridge, a format that targets a younger adult audience, and right now it is a little difficult to reach that younger adult audience on any of the existing radio stations.

9604     We believe that there are a number of business categories in this market, the same kind of business categories we find in other markets we are doing business in, that would like to reach a younger demographic but they have to buy an older‑targeted radio station or pay for a lot of reach they really don't need and they are not using as much radio, if any at all.  So we think that offering a product that is going to reach a targeted group of people is going to bring some of those advertisers to the table where they might not be there now.

9605     COMMISSIONER DUNCAN:  What about the age demographic then of this market?  How is the age demographic?

9606     MR. MAHEU:  As compared to the national average?

9607     COMMISSIONER DUNCAN:  Well, I am just wondering, on the total population, is it young, old, in Lethbridge?

9608     MR. MAHEU:  I know that Alberta is slightly younger than the national average and I think that has a lot to do with a lot of younger people moving to the province from other provinces to go to work because the economy is so strong here.  Our understanding of Lethbridge is it is just about the national average in terms of average age.  So there isn't a disproportionately large or small number of people in any demographic group.

9609     COMMISSIONER DUNCAN:  So how many licences do you think, Mr. Maheu, that the market could sustain?

9610     MR. MAHEU:  Hum ‑‑ no.  Mr. Murray said five and I don't think that is correct.

9611     COMMISSIONER DUNCAN:  It will make our decision easier.

‑‑‑ Laughter / Rires

9612     MR. MAHEU:  That is a different place.

9613     Are you considering the Spirit FM power upgrade to full station status as a new licence?

9614     COMMISSIONER DUNCAN:  You can ignore that for that question.

9615     MR. MAHEU:  Okay.  Setting that one aside, there is certainly room for one.  I guess it would depend on what the format was going to be for the second one.

9616     You have consolidated competition in the marketplace with Rogers and Pattison each owning two, and I am going to give you kind of a ‑‑ I am not trying to avoid the question but I am going to give you an answer just for context.

9617     If you were to have one owner get two licences, it could probably support two.  And the reason I am saying that is because the owner would enjoy some economies of scale in the operation.  So in terms of your ability to generate revenue and to be profitable in a reasonable amount of time, it could probably support two.

9618     It would be a little more difficult to support two independent operators with standalone FMs because they each have their own start‑up costs, they each have their own overhead and there are no economies of scale there.

9619     So one for sure.  Two would be ‑‑ it would be tough.  It is not impossible but it would be certainly tougher.  Our business plan was based on one radio station, one commercial mainstream radio station being licensed in the market.

9620     COMMISSIONER DUNCAN:  Thank you very much.

9621     That concludes my questions, Mr. Chairman.

9622     THE CHAIRPERSON:  If I was to ask the same question but this time agreeing with the increase in power to Spirit, will your answer be the same?

9623     MR. MAHEU:  Yes, Mr. Chair, it would be the same.  We don't see the Spirit format or the radio station in its present form being a real big competitor for ad dollars compared to, say, the Rogers and the Pattison operations.

9624     THE CHAIRPERSON:  For sure, but they are, nevertheless, aiming at getting half a million dollars of local retail revenues.

9625     MR. MAHEU:  Our experience with those types of radio stations with specialty licences and the religious gospel or Christian music formats tends to be they find ad revenue or non‑traditional revenues for radio that normal broadcasters would never have access to.  There are some business owners and people in the community that will spend money on that radio station because of their beliefs and they want to support that radio station, and in other cases they wouldn't be interested in radio advertising or couldn't afford regular radio advertising.

9626     So the money ‑‑ it is not insignificant once you are proposing to build but we believe it comes from places that most mainstream stations would not get a lot of money from.

9627     THE CHAIRPERSON:  Commissioner Langford.

9628     COMMMISSIONER LANGFORD:  I think we are all singing the same tune as we get near the end but maybe that is not abnormal.  I would just like to build again on Commissioner Duncan's and Chair Arpin's probing here, just take it to another level.

9629     Is it irrelevant to you regarding religious programming which one it is, Touch or Golden West expanded?

9630     MR. MAHEU:  It is not relevant in terms of our business plan, no.

9631     COMMMISSIONER LANGFORD:  And is it relevant ‑‑ I just want to cover all the earmarks.  If we left Spirit at low power and said to Mr. Hildebrand, you can own it if you want but it is staying that way, and brought in Touch ‑‑

9632     MR. MAHEU:  No problem at all.

9633     COMMMISSIONER LANGFORD:  So no relevance.  Okay, so now we are down to three people.

9634     So let us assume, just because I am mean‑spirited I have decided to license two and you are second, and I am going to give it to one of the other guys, they are my first choice.  Who would you prefer me to choose ‑‑ not personalities here, they are all good people and all that, but I am talking format, business, impact, that sort of thing ‑‑ of the other two?

9635     MR. MAHEU:  Well, it is kind of like you are giving me the great opportunity to be a radio King Solomon here and it is very difficult to ‑‑

9636     COMMMISSIONER LANGFORD:  No, you can't have half of each.

‑‑‑ Laughter / Rires

9637     COMMMISSIONER LANGFORD:  You have to have one or the other.

9638     MR. MAHEU:  Yes.

9639     COMMMISSIONER LANGFORD:  It seems obvious to me but I just would like to know what ‑‑

9640     MR. MAHEU:  Sure.  Obviously ‑‑

9641     COMMMISSIONER LANGFORD:  So just a review ‑‑ I am sorry.  Here is your market.  You are going to have something in religion, probably just one to make it easier, you are going to have yourself ‑‑

9642     MR. MAHEU:  And one other.

9643     COMMMISSIONER LANGFORD:  ‑‑ but you are conditional upon one other.

9644     MR. MAHEU:  Then the one other, I would have to say, is the 45+ application from the Larsen Group, only because it would stay out of our way demographically and there would be very little overlap between those two radio stations, and our experience and my personal experience with radio stations targeted 45+, they tend not to be a big player for revenue.  So that would leave more room for us.  Just speaking corporately and somewhat selfishly if there had to be two.

9645     That is not to say that Vista Group doesn't have some merits in their application but if you are asking me to decide, that would be what I would suggest.

9646     COMMMISSIONER LANGFORD:  So you have answered my question in an interesting way here because if I decide you are not getting anything, the other two fit together not too badly either too.

9647     MR. MAHEU:  There is a lot more overlap ‑‑

‑‑‑ Laughter / Rires

9648     COMMMISSIONER LANGFORD:  But let us not leave it on a negative note.

9649     MR. MAHEU:  There is a lot more overlap between a 35‑54 and a 45+ but I take your point.

9650     COMMMISSIONER LANGFORD:  I just couldn't help having a little fun.  That is great, thanks very much for that.  It really helps to hear it from the people who are running these things, who are programming them.  We have to remain slightly academic here and you guys are on the ground.  So I am very grateful for that.  Thank you very much.

9651     Thank you, Mr. Chair.

9652     THE CHAIRPERSON:  Thank you, Commissioner Langford.

9653     If I was to give you five minutes to wrap up, Mr. Maheu, what will you tell us?

9654     MR. MAHEU:  It probably wouldn't take five minutes but if I could have 60 to 90 seconds, I think we could sum it up pretty quickly.

9655     Thank you again for the opportunity to present our idea for a radio station in Lethbridge.  We have great experience with this format.  It is obvious through what we have talked about today that there is a strong need and a want with 18‑34s in the marketplace for a radio station that plays the music that they want to hear.

9656     This group is less satisfied with radio in Lethbridge, according to our research, than any other group that we surveyed.  The people in the 18‑34 year old age group that like top 40 music do not have anywhere that they can listen.

9657     When you look at the BBM numbers, most of that listening, 70 per cent, for instance, on teens, which we didn't survey, but if you look at teens and BBM, a 30 per cent share going to the HOT AC radio station, a 40 share of teens going to the rock station, which is highly unusual.  You won't see that in virtually any other market in the country.

9658     So there is obviously with teens and 18‑34 year olds a need for a radio station.

9659     We would very much like to be that radio station.  We were the only applicant coming forward with an idea for a younger format.  We believe we can deliver on our promises.  We have devoted $4.1 million over the first term of our licence into programming which includes significant news and which we believe will benefit the community significantly.

9660     We have also earmarked $700,000 for Canadian talent development and I won't go into all of that again.  Suffice it to say we believe we have come up with a great new idea with the Southern Alberta Music Conference that could really start something from the grassroots up for the Lethbridge area and for all of Alberta and could benefit a lot of aspiring singers, songwriters and musicians.

9661     And as I always mention because I am very proud of it, Newcap is now 750+ people strong.  We believe we have some of the best and brightest minds working for us.  We understand this format very well and we as a company would be very excited at the prospect of putting our creativity and our energy to work to put a great radio station on the air for the listeners of Lethbridge.  I certainly hope we get that opportunity and I thank you very much.

9662     THE CHAIRPERSON:  Thank you, Mr. Maheu.  Thank you to your team.

9663     We will take a 5‑6 minute break in order to allow the next applicant to come up to the table.

‑‑‑ Upon recessing at 1415 / Suspension à 1415

‑‑‑ Upon resuming at 1430 / Reprise à 1430

9664     THE CHAIRPERSON:  Order, please.

9665     I will ask the secretary to introduce the next item.

9666     THE SECRETARY:  Thank you, Mr. Chairman.

9667     For the record, I would just like to inform all applicants that it is the panel's intention to complete the proceedings by the end of the day today.

9668     We are now ready to proceed to item 17 on the agenda which is an application by 1182743 Alberta Ltd. for a licence to operate an English‑language FM commercial radio programming undertaking in Lethbridge.

9669     The new station would operate on frequency 94.1 MHz (channel 231C) with an effective radiated power of 100,000 watts (non‑directional antenna/antenna height of 175.8 metres).

9670     Appearing for the applicant is Mr. Paul Larsen who will introduce his colleagues, and you will then have 20 minutes for your presentation.  Mr. Larsen.

PRESENTATION / PRÉSENTATION

9671     MR. LARSEN:  Thank you, Madam Secretary.

9672     Good afternoon, Mr. Chairman, Commissioners and CRTC staff.  My name is Paul Larsen and we are very excited to be here to present our application for a new FM radio station to serve Lethbridge.

9673     Before we get started with our presentation, I would like to introduce you to our team.

9674     To my right is Rick Volpatti.  Rick has spent his entire professional life in radio, starting in Nelson. B.C.  He later moved on to Vancouver where he was an on air announcer and Production Manager at CKNW in the Western Information Network.  In 1992, Rick transferred to CHQR Calgary as Assistant Program Director and Afternoon Drive host and has spent the past 14 years in the Calgary radio market in programming and production with both Corus and Newcap.

9675     To be part of our application, Rick recently resigned his position with Newcap Calgary.  Rick is 38 years old and this is his twentieth year in radio.  He was instrumental in developing many aspects of our application, and if licensed, Rick will join our company in the position of Director of Programming.

9676     Next to Rick is Desiree Daniel.  Desiree is 28 and no stranger to radio.  Her father is Jean Daniel, a well‑known broadcaster and owner in western Canada who just celebrated his fortieth year in the business.  Desiree has a degree in psychology and started her own coaching business in Vancouver working with individuals and small business owners on goal‑setting and planning.

9677     But radio is in her blood.  She joined Silk FM in Kelowna two years ago doing sales, promotions and marketing.  She is also a writer and seminar facilitator, and if licensed, Desiree will join our company in the position of Director of Marketing.

9678     To my left is Mary Mills.  Mary is the President of Norscot Holdings Ltd., my business partner in this application.

9679     Finally, next to Mary is Brenda Stonnell.  Brenda is Norscot's Chief Financial Officer.

9680     I am very fortunate to have a strong funding partner in Norscot.  They have been invested in radio in western Canada for 35 consecutive years and our relationship goes back to my very first radio job.

9681     I started my radio career in 1986 at age 16 at CKNL in Fort St. John, B.C. as a part‑time announcer, later becoming Program Director of that radio station at age 18.  In 1989, I transferred to CHUB‑AM in Nanaimo and six months later was hired at CKNW in Vancouver for overnights.  It was there that I first met Rick.  In 1992, I moved to rural Alberta to hone my programming and management skills.  In 1998, I moved to Calgary for five years as a Program Director working with Corus and later Newcap.  In 2003, I moved to Vancouver Island to become a General Manager and within nine months was promoted to President of the company.

9682     The next natural step in my career is ownership.  I am a 50 per cent partner in our new company, 1182743 Alberta Ltd., and if licensed, I will return to Alberta as President and General Manager of our new company and radio station.

9683     In our presentation today we will touch on the vibrant Lethbridge economy, the need for a radio service targeting the large 45+ population in Lethbridge and how our exciting radio station will complement rather than compete with existing stations and benefit Canadian recording artists, the Canadian radio industry, and, most importantly, benefit the Lethbridge community.

9684     This application is the result of our deep‑rooted passion for radio.  We wrote the application, we built the multimedia presentation you will see and we created a website utilizing skills that we have developed throughout our careers.

9685     We strongly believe that the future of mainstream terrestrial radio in Canada depends on innovative new leaders stepping forward with creative and exciting applications such as this one we are about to present.

9686     MR. VOLPATTI:  If licensed, our radio station will be called The Lounge 94.1.

‑‑‑ Video presentation / Présentation vidéo

9687     MR. VOLPATTI:  That audio sample meets every CRTC regulation.  It was 47 per cent hit, 53 per cent non‑hit, 40 per cent Canadian content and 50 per cent of the Canadian songs were from 2000 or later per our unique initiative to expose newer Canadian music.  The audio sample shows how well we will be able to mix our proposed music genres to create a really engaging radio station.

9688     We call our format modern nostalgia.  Our format is not just old songs.  At least 50 per cent of our music will be newer than 1981 to comply with the hit/non‑hit rules.  This exciting mix of new and old music creates an especially unique sound.

9689     We are proud that Canadians are leading the way in the creation of this music style around the world, artists like Vancouver's Michael Bubblé, Toronto's Matt Dusk, Vancouver Island's Diana Krall.  Sadly, these great Canadian artists receive no airplay on Lethbridge radio, something we propose to fix.

9690     Of significance is the number of relatively unknown Canadian artists who will receive regular prime time airplay on The Lounge.  None of these artists receive airplay in Lethbridge today, artists like Don Aiken, Karen Playdo, Carol Welsman, Andrea Ménard, Denzel Sinclair, Suzie Vinnick, and there are many other that we simply don't have the time to mention but who we named in our supplementary brief.

9691     The Lounge will also feature Canadian superstars such as Anne Murray, Gordon Lightfoot, Randy Bachman and Paul Anka who are still producing new music and touring.  Even though these names are instantly familiar, they too suffer from a lack of airplay in Lethbridge.  The Lounge will play not only their established hits but also their new music.

9692     Canadian music will be prominently featured in our programming, scheduled evenly throughout each hour.  We will play 40 per cent Canadian content weekly and to ensure significant airplay of newer Canadian music, 50 per cent of our Canadian songs will be released in 2000 or later.

9693     Of course, The Lounge will also feature international artists, many of them lesser known singers, again, ensuring diversity, names like Steve Tyrell, Renée Olstead, Jamie Culum, not household names but exceptional new artists recording great music.

9694     The Lounge will feature well known artists who are re‑recording great standards and new songs in the standard style, artists like Rod Stewart, Natalie Cole, Harry Connick Jr. and others.  We will play the artists who originated and pioneered this music style, Sinatra, Ella Fitzgerald, Nat King Cole, Tony Bennett and many others, and we will play singers from the 60s, 70s and 80s, artists who, despite their superstar status, receive very little airplay on Lethbridge radio, names like Barry Manilow, Barbra Streisand, Neil Diamond, James Taylor, The Carpenters and others.

9695     Again, we will play their new music in addition to the hits.  We will blend these diverse music styles together to create an appealing mix of music, new and old, targeted to Lethbridge's adult audience.

9696     MR. LARSEN:  The Lounge will bring a new independent news and information voice to Lethbridge.  We will place a significant emphasis on spoken word relating to new, our music, the community and the lifestyle of Lethbridge's adult population.

9697     Lethbridge has been lacking a radio station with a strong news focus since CJOC‑AM converted to FM a number of years ago.  CJOC was historically the full‑service station in Lethbridge and that content was not transferred to FM when the station became Rock 106.  In fact, we reserved the CJOC call letters for Lethbridge to reflect this full‑service heritage and our commitment to spoken word programming for The Lounge.

9698     Calgary's news talk station, CHQR, has a substantial market share in the Lethbridge market among adults 45+, indicating the Lethbridge adult audience's desire for strong spoken word programming.

9699     If licensed, The Lounge will provide hourly locally produced newscasts between 6:00 a.m. and 6:00 p.m. Monday to Friday and 8:00 a.m. to 4:00 p.m. on weekends.

9700     Our research showed the demand for news, particularly local news:  92.7 per cent of total respondents to our research said news and information specific to Lethbridge is important, and we will provide it for them.

9701     We propose to hire two full‑time and one part‑time news staff in year one.  In total, The Lounge will provide 93 newscasts per week totalling 4 hours and 33 minutes.

9702     Other spoken word, including sports, road reports, agricultural and business news, arts and entertainment will total another 2 hours and 30 minutes weekly.

9703     Lethbridge's adult audience wants to hear about important topics such as municipal issues, cultural events, health and finance.  The Lounge will air a daily magazine program called "Lethbridge at Noon" to address this need.

9704     The Lounge will feature a one‑hour weekend lifestyle program called "Life on The Lounge."  We will air artist spotlights five times daily, featuring artists in their own words connecting directly with our audience.  At least 50 per cent of these will be Canadian artists.

9705     The Lounge will feature old‑time radio shows nightly and we are also hoping to broadcast CBC's original "Sunday Showcase" dramas which feature Canada's finest writers and actors, exposing them to a broader audience.

9706     Our spoken word will reflect Lethbridge's diversity and provide listeners with a balance of news, entertainment and community information.  Our spoken word programming totals 22 hours and 9 minutes weekly, approximately 18 per cent of the broadcast week.

9707     On top of that will be announcer show prep, community ad libs and live interviews which will add even more spoken word dimension to The Lounge.

9708     We have made this strong commitment to spoken word based on what Lethbridge adults told us in our research and because we believe it is the content that airs between the records that makes a radio station truly unique and engaging.

9709     MS DANIEL:  It is amazing how radio has the power to work so closely with the community.  The Lounge will be highly supportive of Lethbridge events, charities, the arts and entertainment community and cultural groups.

9710     Lethbridge has a vibrant arts community.  There are many annual festivals and events representing virtually every ethnic group, and The Lounge will be front and centre broadcasting live from each of them.  Some of these events include "Whoopup Days," "Symphony on the Green," "Japanese Cultural Day," "Egg Expo," "The Dragonboat Festival," "The International Air show," "The Down on the Farm Festival," "Changing Faces," and many others.

9711     Lethbridge is home to a number of professional and amateur theatre groups, including the Lethbridge Symphony, New West Theatre, the Lethbridge Folk Club and others which The Lounge will proudly support.

9712     Lethbridge has a strong not‑for‑profit sector.  Well over 30 individual organizations promote and offer activities and services relating to multicultural interests within the city.  We have already reached out to many of these organizations, ensuring our support through no charge public service announcements and interviews if we are licensed.  This will be invaluable in assisting these groups with fundraising initiatives and general awareness.

9713     Some of these organizations have written letters of support on behalf of our application based solely on our promise to include them in our programming.  Our team strongly believes that radio is a public service, an outlet to support community, people and events.

9714     MR. LARSEN:  In our research, we asked about the importance of exposure and promotion of local and Canadian artists; 74.9 per cent of those surveyed said it is important.  Our Canadian talent development starts first and foremost with airplay of new and emerging Canadian artists, most of whom receive no airplay in Lethbridge today.

9715     A cornerstone of our indirect CTD initiatives is a commitment to play new Canadian music.  We propose that at least 50 per cent of our Canadian content will be songs released in 2000 or later, ensuring airplay of a high percentage of newer Canadian songs and artists.  This initiative is unique and exclusive to our application.

9716     Further, to demonstrate our commitment to Canadian music, we will play 40 per cent Canadian content over the broadcast week, 5 per cent over the mandated amount.

9717     Canadian artists told us consistently that what they need from radio is simple:  airplay and exposure.  The Lounge will ensure this through these two commitments.

9718     We are firm believers in Canadian talent development, both direct financial and in the equally important non‑monetary means.  Our direct CTD contribution will be $129,500 over the initial licence term, a significant contribution for a new broadcast entity.  One hundred per cent of our direct CTD will stay in the Lethbridge region.

9719     Our annual proposals include post‑secondary music and journalism bursaries for Lethbridge students; purchase of music instruments for Lethbridge schools; funding to FACTOR, which Canadian artists told us is a critical source of funding for development of their music, and our FACTOR contributions will be coming back to southern Alberta artists.

9720     Our original song competition will be of direct benefit to local and regional artists and we have outlined in our application support for a number of other Lethbridge initiatives.

9721     Our direct CTD commitments will be supported by significant on air promotional support, website exposure and other marketing.

9722     MR. VOLPATTI:  In addition to our unique Canadian content airplay and our direct CTD plans, we also propose two significant indirect CTD initiatives.

9723     First is "The Indie Lounge," a weekly one‑hour program focusing exclusively on independent Canadian music.  While we will be highly supportive of Canadian music throughout our programming, "The Indie Lounge" will give us a platform to explore artists more thoroughly.

9724     Second is a unique educational partnership with Lethbridge and southern Alberta broadcasting schools which we call "Future Broadcasters."  If licensed, we will work with these schools to place students in actual paid jobs at The Lounge that will assist them in their education and development of their radio skills.  These positions include on air, news and production.

9725     Lethbridge Community College has reviewed our plan and will work with us to make our "Future Broadcasters" initiative a reality.

9726     Representatives from the other seven Alberta institutions based in Calgary, SAIT and Mount Royal College are also on board.

9727     Our industry is facing a shortage of skilled performers, created in large part by the elimination of positions in favour of voice‑tracking and automation.  We are committed to helping replenish the pool of future broadcasters through this initiative.

9728     MS DANIEL:  Lethbridge is very much a culturally diverse city.  Many of Lethbridge's ethnic groups have formed community structures, including the German, Italian, Japanese, Chinese, Hungarian and Croatian societies.  The Lounge has already reached out to Lethbridge's ethnic population, and if licensed, we will ensure that our programming is inclusive of Lethbridge's entire population.

9729     Our news department will take into account the diversity of Lethbridge and establish contact with the city's cultural communities to ensure The Lounge includes their news in our programming.

9730     Lethbridge has a rich First Nations history and we will make a strong effort to connect with the Blood and Peigan Nations and other Aboriginal populations in the region.

9731     We are committed to reflecting diversity within our company as well through employment and provided information to this in our application.

9732     Our music format lends itself perfectly to reflecting cultural diversity.  The vast and varied music styles that comprise The Lounge music format include artists and musicians from every background and region of Canada and beyond.  We will encourage Canadian artists from all backgrounds to submit new music for airplay consideration.

9733     MR. LARSEN:  The Lethbridge economy is vibrant and diversified.  Major industries include agriculture, utilities, manufacturing, finance and real estate.

9734     Retail sales in Lethbridge are among the strongest in Canada, 93 per cent higher than the national average according to Financial Post Markets 2005 edition.  Financial Post Markets 2006 edition is predicting retail sales of $1.882 billion ‑‑ that is up $400 million from their 2005 estimates; 2006 retail sales are forecast to be 116 per cent higher than the national average.

9735     Lethbridge is experiencing rapid population growth.  According to the 2005 municipal census, the population grew 6.2 per cent from 2002 to 2005 and now totals 77,202.

9736     The largest population increases have occurred within the upper demographics, specifically 45+, the target audience for The Lounge.

9737     The 2005 municipal census is not fully broken down yet, so we refer to the 1996 and 2001 federal census to show the growth of the 45+ population specifically.

9738     As you can see on the graph, the Lethbridge population of adults aged 45 and up increased 17.4 per cent between 1996 and 2001.  By comparison, those aged 0‑44 jumped only 1.4 per cent during the same period.

9739     PBIT and market revenue for Lethbridge are not published because of the limited number of owners in the market.  However, the provincial PBIT statistics show a very healthy FM radio market in Alberta and we are confident the Lethbridge market is also performing above average.

9740     The Lounge will open up new advertising opportunities for retailers and manufacturers who until now have had no viable local radio source on which to advertise their products and services to the 45+ population.

9741     MR. VOLPATTI:  Lethbridge is served by five commercial radio stations, one of which operates a specialty Christian format.  There is also a Campus FM and the CBC and CKUA public radio services.

9742     Ownership and market tuning is dominated by Pattison and Rogers.  Combined, they have 71.3 per cent market share 12+ according to the fall 2005 BBM.

9743     When you look at adults 45+, the Pattison and Rogers market share drops to 59.7 per cent, as you can see on the screen.

9744     So where does the 45+ audience go in Lethbridge?  The answer is Calgary AM radio stations located 217 kilometres north of Lethbridge.  Calgary CHQR, CKMX, CFAC and CFFR have a combined Lethbridge market share of 19.6 per cent with adults 45+.  The graph on the screen shows this.  The four combined Calgary AM radio stations have a red column on the right.

9745     The Lounge will repatriate this significant out‑of‑market tuning, attracting 45+ listeners with a format specifically designed for them and one that is not currently available in Lethbridge.

9746     We may also gain listeners from satellite or cable, internet radio, personal CDs and MP3s, and people who have simply quit listening to radio or given up on radio because they have been unable to find their music.

9747     Our research shows 82.4 per cent of 35‑64 year olds would definitely or probably listen to The Lounge.  Of those, 41.7 per cent said The Lounge would become their favourite radio station.

9748     MR. LARSEN:  We have given this application considerable thought and extensive planning, investing in research to double‑check our instincts.  The Lounge will bring a new format to Lethbridge, one with virtually no overlap with existing stations.  We will provide significant news and other spoken word elements that are important to our target audience.

9749     And we recognize that operating a radio station means operating a public service.  Community service will be the foundation upon which our company and our radio station is built.

9750     We are proud of this application.  We feel its unique and innovative quality is essential to the future of Canadian radio.  We are young, experienced career broadcasters who have 30 or more working years ahead of us to create compelling radio and we hope to have the opportunity to do so in Lethbridge.

9751     Thank you for this opportunity to present our application for The Lounge and we look forward to your questions.

9752     THE CHAIRPERSON:  Thank you, Mr. Larsen.

9753     For the record, you did file, regarding the other application, the item 3 application that was heard last week, the content of your shareholder agreement and obviously it will apply to this application since it is the same corporation.

9754     MR. LARSEN:  Yes, sir, and if need be, Mary could verify that as well but that is correct.

9755     THE CHAIRPERSON:  It is the same company?

9756     MR. LARSEN:  Yes.

9757     MS MILLS:  That is correct.

9758     THE CHAIRPERSON:  That is correct.

9759     I am requesting Commissioner Williams to question you.

9760     COMMISSIONER WILLIAMS:  And I am accepting his request.  Good afternoon.

9761     MR. LARSEN:  Thank you.

9762     COMMISSIONER WILLIAMS:  Good afternoon, Mr. Larsen and Ms Mills.  I will be directing my questions to you, Mr. Larsen, and you can have whoever in your group that you deem is most appropriate to answer them.

9763     MR. LARSEN:  Thank you.

9764     COMMISSIONER WILLIAMS:  My first question is you have characterized your targeted 35‑45+ adult audience as being underserved.  I think we just saw some slides on that a minute or so ago.  Based on your market research, what are the spoken word and audience programming expectations and needs of this audience?

9765     MR. LARSEN:  In our research, we had developed this format.  So we specifically researched the 35‑64 population in Lethbridge and we asked some specific questions relating to spoken word.  We asked them about how important news programming is to them and more specifically a second question, how important is local news, Lethbridge news to them.

9766     We asked a range of questions regarding spoken word, from how important is it to hear lifestyle information, gardening shows, finances, health, those types of things.

9767     We even asked a specific question about how important is it to include music and spoken word content that is targeted to a more mature audience.  And looking at the 45‑54 year olds, 62.7 per cent said it is important; 55‑64 year olds, 69 per cent said it is important.

9768     So we knew based on our experience with this particular demographic that spoken word programming is important to them, some items more than others and the research would help us determine what type of spoken word programming to put on the air if we are successfully licensed.

9769     COMMISSIONER WILLIAMS:  How do these needs and expectations differ from the majority of adult listeners in the marketplace who seem dissatisfied with the level and quality of spoken word programming provided by the incumbents?

9770     MR. LARSEN:  I think looking at our information, when you look at the 45+ demographic and BBM specifically, CHLB country 95.5 operated by Pattison has the highest tuning of 45+ audience in the market.  So we would comfortably predict that country 95 does a fair amount of spoken word programming.

9771     Country music is a very genre‑specific format, obviously, and therefore, adults over 45 who aren't particularly interested in country music are finding the spoken word elsewhere and predominantly from Calgary AM radio stations that do come into the market during the daytime.

9772     COMMISSIONER WILLIAMS:  Thank you, Mr. Larsen.

9773     We note that you have indicated that you have been successful in Parksville, British Columbia with the station that you launched in March 2005.  We also note that the Parksville market is less competitive in terms of local programming than a market such as Lethbridge.  It is not clear how the niche service you propose will be as successful.

9774     Would you please comment on how your proposed service will be received by the audience in Lethbridge?

9775     MR. LARSEN:  Commissioner Williams, I am glad you asked that question.  The Parksville comment came up a few times last week, as you know, and I was hoping to have the opportunity to address it here.

9776     Every or most ‑‑ maybe I should say most ‑‑ good thing in life, whether it is a franchise, whether it is a medical improvement, whether it is a new invention, most things are tested in a smaller environment and we have an environment in Parksville with another company that I have been associated with to experiment with a format that is brand new in Canadian radio in a market where there is not going to be a lot of financial impact in doing so.  So it, to me, seemed to be a logical and a great place to experiment and form and mould this format into something that we could take elsewhere.

9777     What I referred to in the supplementary specifically were comments from Parksville listeners who had found the station and were enjoying it and also some comments from out‑of‑market people.  As is fairly obvious, Vancouver Island is a high tourist destination.  We get a lot of people coming to Vancouver Island from elsewhere in Canada and a lot of people that send us emails after the fact asking if we would stream the radio station so that they could listen to it back home.  So it gave us a really strong indication that our format idea could work specifically with the 45+ audience in other parts of Canada.  So we have now ventured out beyond Vancouver Island to try and take this format to more 45+ people in other parts of Canada.

9778     COMMISSIONER WILLIAMS:  If licensed, The Lounge would be a standalone in the marketplace.  Are there certain programming synergies that you can utilize to keep your annual programming expenses in line with your estimates?

9779     MR. LARSEN:  Well, if we look at The Lounge, Lethbridge specifically, licensed as a standalone radio station in Lethbridge, we have some administrative types of synergies with Norscot, the parent company that Mary operates in Vancouver, in terms of accounting procedures and budgeting, administrative type of things that we could utilize some synergies there.

9780     If we are fortunate enough to be licensed in more than one market, of course, as you build mass, those synergies build out.  So this is our second presentation to you this week.

9781     Looking at Lethbridge specifically, we do feel comfortable that we have enough synergies with Norscot to keep our operating costs in line with what we have presented on paper but those specifically would only be on the administrative side.  Because Norscot is not a radio company, it can offer us some help with some budgeting and accounting but beyond that, not much.

9782     COMMISSIONER WILLIAMS:  So there are no programming synergies?

9783     MR. LARSEN:  Absolutely not, and not with the Parksville station either.

9784     COMMISSIONER WILLIAMS:  Okay.  We are going to move into the area of spoken word now.

9785     You have identified a number of spoken word and general programming expectations that you feel are necessary to incorporate into your programming in order to successfully program your targeted 35‑45+ audience.  These would include news, information, lifestyle, radio drama, spoken word programming.

9786     I also note on page 34 of your application that you plan to hire a staff of six which will consist of three news journalists, two anchors and one reporter.  You have also stated that the morning anchor will serve as the station's news director.

9787     Based on the extensive spoken word you plan to offer, please describe the positions to be filled by the other five members of the news team that you plan to hire.

9788     MR. LARSEN:  I am sorry, I am just trying to find where we said six.

9789     COMMISSIONER WILLIAMS:  Yes.

9790     MR. LARSEN:  To clarify ‑‑

9791     COMMISSIONER WILLIAMS:  It is okay, take your time.

9792     MR. LARSEN:  ‑‑ in our programming budget, we have budgeted for six full‑time positions.  Of those, two will be in news and one part‑time position in news.  So that would be the two plus one reporter in the news and spoken word.  So we believe we can do our spoken word commitments with a full‑time news staff of two people and one part‑time.

9793     The other programming people would be a morning announcer, midday announcer, evening announcer ‑‑ I am sorry, afternoon drive ‑‑ morning, midday, afternoon drive and also a producer.

9794     COMMISSIONER WILLIAMS:  Okay.  You also point out in the supplementary brief that spoken word plays a significant role in the station's programming with a daily one‑hour magazine program, 93 newscasts as well as a weekly one‑hour lifestyle program.

9795     From what sources do you plan to draw material for these programs?  Also, will all of the material be scripted or do you plan to air syndicated material?

9796     MR. LARSEN:  Another great question and thank you.

9797     The spoken word that you are referring to, specifically the "Lethbridge at Noon" show and the weekend program, our news director would be heavily involved, our news department would be heavily involved in getting topics to talk about on those two particular initiatives.

9798     After this application was presented and publicly gazetted, I started getting a lot of interest from the Lethbridge community.  When CJOC was an AM radio station, it employed a lot more staff than it does as an FM station and a lot of their staff have decided, for lifestyle reasons, to remain in the Lethbridge community.  They are now employed in other industries but they have contacted us, out of interest sake, with the idea of being able to contribute to our programming on a part‑time basis.

9799     So we think there are resources in the community that we can use but even if we didn't have that, which I am very confident, based on their enthusiasm in their communication with us, our news director would be the anchor for the Monday to Friday "Lethbridge at Noon" show, the weekend show likely would be pre‑recorded by the same news staff but all of the programming would be produced and scripted locally and it would not be syndicated programming.

9800     COMMISSIONER WILLIAMS:  Compared to projected expenditures proposed by the other applicants, your planned programming expenses appear to be on the low side.

9801     Considering the number of staff you plan to hire, why do you feel your projected annual programming expenditures are sufficient to provide your target audience with the level and quality of relevant spoken word and music programming necessary to be successful in Lethbridge?

9802     MR. LARSEN:  In operating a company, I have always kind of used the philosophy of cutting your clothes by the cloth that is available and we have presented, obviously, revenue forecasts which are lighter than the other applicants specifically because we are targeting a demographic on the outer edge of the typical advertising pie of 25‑54 or 18‑34.

9803     We feel confident 40 ‑‑ I believe it is 41 per cent or 44 per cent ‑‑ quoting from page 46 on our supplementary, 44 per cent of our expenses will go into programming in year one.  We are very confident in our ability to deliver on the spoken word commitment.

9804     There has been a lot of discussion at the hearing about the cost of creating spoken word programming and it is all relative.  We are employing two full‑time staff that we are expecting to work generally eight hours a day.  But some of the other spoken word, things like business reports, for example, people often pay us or approach us to provide that content, places like CIBC, Wood Gundy or TD Waterhouse, investment firms that are experts in that particular area of spoken word and would provide that 90‑second or two‑minute report on our behalf.  So we don't have to use our own station resources other than somebody to tape‑record the report off of the telephone.

9805     Another thing I think that is important with our spoken word is out of the total, seven hours is the radio plays that we plan to run at night.  So of course, there is very little cost involved in that particular aspect of our spoken word.

9806     So we are confident in our expense forecast that we have budgeted responsibly and affordably and that we could deliver our spoken word commitment.

9807     COMMISSIONER WILLIAMS:  Okay, thank you.

9808     Let us talk about your expected rate of success in Lethbridge.  I note that you have indicated you have been successful in Parksville with the station you launched in March '05.  I also note the Parksville market is smaller.  It is less competitive in terms of attracting listeners to local programming and competition for advertising dollars than a market such as Lethbridge.  In Lethbridge, you are going to be competing directly with two well established corporate broadcasters.  It is not clear to us how a format developed to serve Parksville will be successful in the larger, more competitive market of Lethbridge.

9809     I have two questions in this area.

9810     MR. LARSEN:  Sure.

9811     COMMISSIONER WILLIAMS:  Why do you think your proposed format will be attractive to audiences in the Lethbridge marketplace and what experience in running your Parksville format would you bring to the table that gives you the confidence that you would be able to compete successfully with major corporate broadcasters such as Jim Pattison Industries and Rogers?