ARCHIVÉ -  Transcription

 

 

 

 

 

 

 

              TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

 

 

 

 

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

 

 

                          SUBJECT:

 

 

 

Review of the Commercial Radio Policy /

Examen de la Politique sur la radio commerciale

 

 

 

 

 

 

 

 

 

 

 

 

HELD AT:                              TENUE À:

 

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

140 Promenade du Portage              140, Promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

 

May 17, 2006                          Le 17 mai 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

 

 

 

Review of the Commercial Radio Policy /

Examen de la Politique sur la radio commerciale

 

 

 

 

BEFORE / DEVANT:

 

Charles Dalfen                    Chairperson / Président

Michel Arpin                      Commissioner / Conseiller

Rita Cugini                       Commissioner / Conseillère

Andrée Noël                       Commissioner / Conseillère

Joan Pennefather                  Commissioner / Conseillère

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet                    Secretary / Secrétaire

Peter Foster                      Hearing Manager /

Gérant de l'audience

Bernard Montigny                  General Counsel,

Broadcasting / Avocat

général, Radiodiffusion

Anne-Marie Murphy                 Legal Counsel /

Conseillère juridique

Robert Ramsey                     Senior Director, Radio

Policy and Applications /

Directeur principal,

Politiques et demandes

relatives à la radio

 

 

HELD AT:                          TENUE À:

 

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

140 Promenade du Portage          140, Promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

 

May 17, 2006                      Le 17 mai 2006

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

 

PRESENTATION BY / PRÉSENTATION PAR:

 

 

CBC/Radio Canada                                  957 / 5409

 

Corus                                             975 / 5519

 

CHUM Limited                                     1011 / 5731

 

Standard Radio Inc.                              1055 / 5979

 

Rawlco Radio Ltd.                                1086 / 6208

 

Blackburn Radio Inc.                             1108 / 6338

 

Jim Pattison Broadcast Group                     1123 / 6400

 

Rogers Media                                     1143 / 6514

 

Newcap Radio                                     1192 / 6784

 

Ontario Independent Radio Group                  1211 / 6875

 

Milestone Radio Inc.                             1237 / 7046

 

Radio CJVR Ltd.                                  1265 / 7227

 

1182743 Alberta Ltd.                             1278 / 7291

 

Rock 95 Broadcasting Ltd.                        1303 / 7428

 

Canadian Association of Ethnic (Radio)           1320 / 7541

  Broadcasters

 

British Columbia Institute of Technology         1337 / 7650

  on behalf of the Broadcast Educators

  Association of Canada

 

CKUA Radio                                       1357 / 7798

 

National Campus and Community Radio Association 1377 / 7909

 

Aboriginal Voices Radio Inc.                     1400 / 8012

 

                 Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Wednesday, May 17, 2006

    at 0905 / L'audience débute le mercredi

    17 mai 2006 à 0905

5403             THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.  Good morning, everyone.

5404             Madame la Secrétaire.

5405             LA SECRÉTAIRE:  Merci, monsieur le Président.

5406             Good morning.  We will start this morning with the presentation of CBC/Radio‑Canada who are appearing at the request of the Hearing Panel.

5407             Mr. Ray Carnovale will be appearing for CBC/Radio‑Canada and will introduce his colleagues.

5408             You will then have 10 minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

5409             MR. CARNOVALE:  Thank you.

5410             Mr. Chair, Members of the Commission, I am Ray Carnovale, Vice President and Chief Technology Officer at CBC/Radio Canada.  It is a pleasure to appear before you today at this important proceeding to review the regulatory framework for commercial radio.

5411             With me are François Conway, Senior Director Strategy and Planning Technology, and Bev Kirshenblatt, Senior Director Regulatory Affairs.

5412             Consistent with our submission in this proceeding, our remarks today focus on the Commission's transitional digital radio policy.

5413             We have already set out in detail in our written submission in this proceeding, the comprehensive range of English and French‑language radio services we provide to Canadians and the numerous platforms over which we provide them.

5414             We are extremely proud of our programming and our services.  However, a number of dramatic changes are increasingly affecting the Canadian broadcasting environment and, as a result, we face a host of opportunities and challenges if we wish to continue to fulfil our role.

5415             You have heard from many participants in this proceeding how podcasting, streaming audio services and satellite radio have altered the broadcasting landscape and that the pace of change is accelerating.  We all agree that these developments present challenges.

5416             There is significant and ongoing fragmentation of the radio audience for conventional linear programming.

5417             The wide range of technological developments in content delivery, however, also presents extraordinary opportunities for broadcasters.  We think that new distribution technologies provide both new shelf space for Canadian programming, as well as new opportunities for innovative program development.

5418             These new platforms provide an opportunity for us to reach out to Canadians in totally new ways, capturing new audiences and revitalizing the relationship with existing audiences.

5419             We believe that this is an opportunity that cannot be missed.

5420             For CBC/Radio Canada, these changes reinforce the need to maintain a distinctive voice and a unique and ubiquitous presence across all platforms, old and new, so that Canadians will be able to easily find their national public broadcaster on whatever medium they choose to use.

5421             All broadcasters must respond to technological changes as they arise, and CBC/Radio Canada prides itself on being highly accessible and ahead of the curve with respect to emerging and new technology.

5422             In the case of radio, however, the transmission path to digital transmission for AM and Fm ratio stations remains unclear.  Based on the Commission's current transitional digital radio policy, the digital is a replacement technology.

5423             Broadcasters have made significant investment to build, maintain and operate digital radio broadcast infrastructure.  CBC/Radio Canada has invested in transmitters and the necessary connections in five major cities, as well as in production and programming facilities in Montréal and Vancouver.  Unfortunately, for a number of reasons, the rollout of digital radio broadcasting has stalled in Canada.

5424             Since the CRTC's transitional digital radio policy was first issued, other digital transmission technologies have emerged.  For example, in the United States a number of radio broadcasters are promoting HD radio as a response to satellite radio, despite the fact that HD radio is still in the experimental stages.

5425             However, we believe that there are a number of important issues, particularly technical issues, as well as consumer acceptance issues, that must be fully evaluated before this system can be adopted in Canada.  In fact, we will be conducting over‑the‑air transmission tests of HD radio in Toronto this summer.

5426             In preparation for these tests we visited national public radio laboratories in Washington, D.C. to hear of their experiences with HD radio.  They have kindly agreed to let us share their documents with you.

5427             Given the high degree of uncertainty with respect to these technologies, the only thing that is certain is that no one can accurately predict how digital radio will unfold in the future.  We think that it is too early to draw any definitive conclusions on any of these technologies.

5428             However, as stated in our written comments, CBC/Radio Canada remains committed to DRB.  We also believe that DRB should be treated as a complementary technology that will co‑exist with existing analog and other digital services.  DRB should no simply be seen as a replacement technology.

5429             So what will get Canadians interested in a new distribution technology like digital radio?

5430             We think that the first step is to permit broadcasters to innovate and experiment in the provision of digital radio services to Canadians.  For example, the delivery of multimedia content to mobile phones and other portable devices can now be offered using L‑band DRB technology.

5431             Permitting such innovation, experimentation and creativity must just help spark the success of DRB in Canada.  It makes sense to explore the potential that DRB offers us in improving our availability and service to Canadians.  We are currently exploring a number of uses for DRB in ways that could increase its attractiveness to Canadians.

5432             We want to be able to assess the needs and interests of Canadians.  The results of such experimentation could then provide the basis for a review of the current policy on digital radio.

5433             Thank you.  We would be pleased to answer any questions you may have.

5434             THE CHAIRPERSON:  Thank you very much.

5435             Mr. Arpin...?

5436             COMMISSIONER ARPIN:  Thank you, Mr. Chairman.

5437             I will focus on the three real topics:  the transitional period, the one that the Commission created from 1995, say, up to today, particularly ‑‑ I will not discuss the non‑availability of receivers, but the various tests that you have done, particularly out of your Montréal and Vancouver studio facility.

5438             I know, and I think for the record it may be good to know, that you use those 14 hours that the Commission has allocated through its policy to do some different programming, to try to understand what were your conclusions about the use of the technology during that transitional period.

5439             I know that you, Mr. Carnovale, was here yesterday when Mr. Shuldiner from iBiquity appeared, so I will want to hear your comments on what we learned from iBiquity.  Did we learn something that is new?

5440             Following the discussions that we had, what they are proposing for Canada, is it more palatable than it was before the hearing?

5441             I heard that you are going to be testing HD in Toronto over the summer.  Mr. Shuldiner also mentioned that they were contemplating some tests here in Canada.  Are they the same ones or are they other tests that he was referring to?  I don't know where you are.

5442             You addressed somehow the future in your oral presentation, the future use of the L‑band.  Obviously it is going to be an Industry Canada decision, not a CRTC decision, but since we have an opportunity to discuss the matter and put on the record some reflection from the various broadcasters it may help down the road to have a better use of the L‑band.

5443             I also heard you that NPR has allowed you to share studies with the Commission?

5444             MR. CARNOVALE:  Yes.

5445             COMMISSIONER ARPIN:  Could you please make them available at some point in time?  I know that we have set a schedule that we need to have these documents by May 29th.

5446             MR. CARNOVALE:  Yes, we would be happy to.

5447             COMMISSIONER ARPIN:  You would be happy to do so?

5448             Then my first question will deal with the transitional digital period and the various experiments that were done, both in Montréal and in Vancouver, and what have you learned from these experiences?

5449             MR. CARNOVALE:  Well, first I will mention that the genesis of Radio 3, which was based in Vancouver, started out as an internet service, but we took advantage of the 14‑hour provision to transmit some of that programming over the Vancouver DRB transmitter.

5450             I will turn it over to François Conway to describe the ongoing experiments that we have in Montréal right now.

5451             M. CONWAY:  Merci, Ray.

5452             When we selected DRB as a technology several years ago, the reason was that we saw in this technology the potential to deal with the future environment of radio with fragmentation and multiple platforms arriving.

5453             So during these past years in the transitional stage, I can say that we practically tried  every possibility the technology and the regulatory and policy framework allowed us to do, and I will list them.

5454             The first one is, we experimented with transmitting our radio service at various bit rates to see how far we could go and what was the minimum bit rate required to reach CD quality, or near CD quality and people's acceptance or a reaction to it.

5455             The second one is, we experimented with program‑associated data in order to be able to send alphanumeric text messages to the displays of digital radio receivers.

5456             The fourth one is, we also experiment with the ability to dynamically reconfigure the multiplex to apportion the bits or the services.

5457             As you know, we can in fact configure this multiplex to provide 64 services.  Right now the regulation is that it is intended to provide four radio licences with some ancillary data capacity.

5458             We have also used the capacity to create sub‑channels.  Currently in Montreal we are broadcasting a sub‑channel which is a sub‑service transmitting news and traffic information during the morning show and the drive‑home show, so that people who want to immediately have some traffic information can tune on the sub‑channel of la Première Chaîne.  This is currently ongoing.

5459             It has been going on for two or three years and we did ask the CRTC for permission to do this.

5460             We have also used the ancillary data capacity to transmit multimedia content and other types of internet‑type content.  These were basically just technical trials because there was no public receiver to receive it.  So it was in order to be able to see if we can take some internet‑type content, IP‑encapsulated.

5461             In Montréal we have been able to encapsulate RDI clips that are currently available in the Metro and transmit it to fixed DRB receivers and display it on plasma displays.

5462             We also made use of the provision of the 14 hours of distinct programming we could do on the DRB channel.  We did it, as Ray mentioned, in Vancouver with Radio 3.

5463             We also did it in Montréal.  For one year we created a special show, a one‑hour show, daily show, that was broadcast only on one of our DRB services to see how we could exploit this different technology and its flexibility.

5464             MR. CARNOVALE:  I would add, we are currently in discussionS to try experiments with Korean‑manufactured cellphones which have CDMA and L‑band DRB receivers built in.  That for us is one of these breakthroughs, because we are now on the cusp of the availability of mass‑produced low‑cost products.

5465             COMMISSIONER ARPIN:  And available.

5466             Not only mass‑produced, but also available in the market.

5467             MR. CARNOVALE:  Yes.

5468             COMMISSIONER ARPIN:  Except the few initiés who had receivers, did you ever get any reaction from listeners about the various tests you did in Montreal?

5469             M. CONWAY : Oui.  Je pourrais dire que, bon, en ce qui concerne la programmation distincte et la diffusion simultanée de la même programmation analogue, les réactions qu'on a eues... on a fait des public forums, puis des focus groups, des choses comme ça.

5470             Une des premières choses qui est ressortie, c'est qu'il y aurait beaucoup plus d'intérêt pour la radio numérique si la programmation était différente, donc, s'il y avait quelque chose qui est disponible sur la bande numérique qui n'est pas disponible sur la bande analogue.

5471             Premier commentaire.  C'est ce qui supporte notre position que ça devrait être un nouveau service complémentaire au lieu d'un service de remplacement.

5472             Le deuxième commentaire, c'est justement les services spécialisés comme les sous‑canals qui diffusent seulement de l'information en bout continu, comme le trafic, sont très utiles.  Quand les gens, par exemple, sont prêts à prendre le Pont Mercier, puis ils se demandent s'ils vont prendre la 30 ou la 138, c'est très utile pour eux, puis la technologie permet de trouver le canal très rapidement sur la bande.

5473             Finalement, la disponibilité des récepteurs, évidemment, c'est quelque chose qui nous a empêché d'évoluer ou d'aller plus loin dans notre expérimentation.

5474             Donc, les commentaires qu'on a eu, c'est peut‑être de regarder le concept de... de s'éloigner du concept d'un récepteur dédié qui peut seulement recevoir de la radio numérique à des devices qui sont multipurpose devices.  Donc, c'est pour ça qu'on travaille maintenant à regarder ce que les Coréens ont fait avec les téléphones CDMA intégrés avec la réception des RBDMB.

5475             COMMISSAIRE ARPIN : Dans le Scientific American du mois de mars, on parle d'un cognitive receiver.  Je ne sais pas si vous avez vu l'article ou si vous avez entendu parler de... ça faisait partie du mémoire déposé par CHUM.  C'était vraiment sous forme d'une référence, mais je suis allé chercher l'article.

5476             Le cognitive receiver, c'est un récepteur intelligent qui s'habitue à nos usages et qui va chercher les fréquences où ils se trouvent, quel que soit le mode de transmission.

5477             C'est des choses de cette nature‑là que vous voyez dans l'avenir?

5478             M. CONWAY : Oui.  Finalement, ça fait partie du changement de paradigme qu'on voit dans...  L'ancien paradigme analogue, c'était un service, un signal analogique, une fréquence et un récepteur dédié.

5479             Dans le nouvel environnement numérique, on parle de pas seulement un type de média, on parle de multimédia, on parle de contenu disponible sur différentes plates‑formes, et on parle de récepteur programmable ou de devices qui ont plusieurs fonctions pour recevoir le contenu.

5480             Le cognitive radio où on peut appeler le récepteur programmable est vraiment clé, et c'est ce qu'on voit de plus en plus.  Il y a des devices qui ont des lecteurs MP3, qui ont des tuners FM, qui sont des téléphones, qui ont des caméras intégrés.

5481             Donc, c'est l'avenir, et c'est pour ça qu'on regarde la radio numérique sous un nouvel oeil avec ces types de récepteurs.

5482             COMMISSIONER ARPIN:  Mr. Carnovale, you heard Mr. Shuldiner yesterday about HD radio.

5483             Do you have any comments to make following that presentation?

5484             MR. CARNOVALE:  Actually, we do have several observations.  Some of these are based on our visit to National Public Radio, some of it on our own research.

5485             With regard to ‑‑ and first I will talk about FM and then we will move into the AM issues.

5486             One thing that we learned from NPR is that the analog FM coverage contours are not entirely replicated.  It comes close at the higher power levels.  The 100 kilowatt stations almost reach out to their analog protected coverage contour, which in the United States, by the way, is higher by 6 dB or a power factor of 4.

5487             So there is a difference between the definition of Canadian protected contours and the desired signal ratios that are allowed to interfere with these protected contours.

5488             They determined that for lower power stations ‑‑ and they had many of them because of being public radio ‑‑ that there is a non‑linear relationship in the coverage and that the lower power stations, what we know as Class A's at 3 kilowatts, have a significantly reduced digital service area.

5489             Indoor reception turned out to be really problematic and this was a real disappointment.

5490             First of all, with the primary HD channel, if the digital signal drops below a certain threshold you can fail over to the analog signal in the so‑called blend mode.  And that will happen fairly frequently in an indoor environment.

5491             What was interesting with the secondary tertiary channels, which is where they see a lot of potential, is in fact indoor reception was very spotty.  It would cut in and out.  Antenna placement was very critical.

5492             And the most annoying thing, of course, is when the signal cuts out it takes eight seconds for the buffer to fill up again.  So you end up with not just a momentary glitch in the signal but a loss for several seconds.

5493             We also experienced in drive tests in Washington that there was interference from first adjacent out‑of‑market transmitters.

5494             The analog blending can be annoying.  If you are in a car and you lose the digital signal, it blends to analog and then it reverts back.  If you are in a problematic service area, it is kind of annoying that it is going back and forth, back and forth from one mode to the other.

5495             With respect to the audio compression that is utilized, one of the things NPR did was a very extensive classic double‑blind test of perceived audio quality versus the bit rates.  The bottom line is there is no free ride.

5496             Compression can be impressive but in fact there are artifacts, especially with voices as opposed to music, which is not what you would normally expect.

5497             So the sense we had is that for us I think the real interest in the short term is a single primary channel with the full 96 kilobyte bit rate that has the ability to fail back to analog.

5498             COMMISSIONER ARPIN:  So there is a need for further enhancement of the system.

5499             With regard to AM now.

5500             MR. CARNOVALE:  With regard to AM, I just want to clarify the statements made by iBiquity yesterday were focusing on skywave interference to skywave coverage of what we know as the traditional clear channel stations.

5501             That isn't what we identify as the issue.  We are concerned about skywave interference to the groundwave coverage of AM stations which have traditionally had quite a low night time interference free contour.

5502             I am talking about of course the clear channel stations that CBC still operates, that other broadcasters in Canada are now utilizing, stations like CFRB in Toronto which has a very low night time interference free contour.

5503             There was no provision in the original North American Broadcast Agreement of the 1930s, nor in the Rio Accord of 1998, for skywave protection to adjacent channel stations.

5504             That flaw means that because the HD data is actually on the adjacent channel, you are transmitting on top of the adjacent channel.

5505             We are aware of iBiquity's tests with WLW and WOR in the States, Cincinnati vis‑à‑vis New York first adjacent channels.  Those were done over four days in August and four days in December of 2002.

5506             We don't think that that is a definitive study and we think that the same methodology that we use to determine skywave protection for co‑channel at night ought to be applied in analyses of interference to adjacent channels.

5507             COMMISSIONER ARPIN:  Thank you very much, Mr. Carnovale.

5508             For the matter of time, if you have further comments to make, we surely will be pleased to receive them in writing.

5509             I thank you for being here this morning.

5510             Those will be my questions for today.

5511             MR. CARNOVALE:  Thank you very much.

5512             THE CHAIRPERSON:  Thank you very much for appearing.

5513             Those are our questions.

5514             Madam Secretary.

5515             THE SECRETARY:  Thank you, Mr. Chairman.

5516             I would now invite the next participant, Corus Entertainment Inc., to come forward for their presentation.

‑‑‑ Pause

5517             THE SECRETARY:  Mr. John Cassaday is appearing on behalf of Corus.  He will introduce his colleagues.

5518             You will have ten minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

5519             MR. CASSADAY:  Good morning, Mr. Chairman, Commissioners, legal counsel and CRTC staff.

5520             My name is John Cassaday, and I am the President and Chief Executive Officer of Corus Entertainment.

5521             Before we begin our short remarks, allow me to introduce our panel.

5522             Some of our colleagues are less well‑known to you, so we will provide some brief background.

5523             Starting on my extreme left is J.J. Johnston, who recently returned to Vancouver as our new General Manager of the Corus Radio Vancouver cluster, which is comprised of CKMW, MOJO Sports Radio, Rock 101 and CFOX.

5524             J.J. has served on various industry boards throughout his radio career, including the BBM board, CARAS and several years at FACTOR, where he served as chairman of the board from 1997 to 1999.

5525             Kathleen McNair is Vice‑President and General Manager, Radio and Television, Peterborough‑Durham.  In this role, she manages two TV stations and two small market radio stations.  Kathleen also sits on the board of FACTOR.

5526             Ross Winter is our National Program Director and regularly visits our 51 radio stations.  He is located in Vancouver.  In his current role, Ross oversees the research that we do on music formats and consumer tastes, some of which was summarized in our submission.

5527             Gary Mavaara is Vice‑President and General Counsel of Corus Entertainment.

5528             On my right is John Hayes, who is President of Corus Radio.

5529             Pierre Arcand is President of Corus Québec and Pierre also oversees the work of the largest group of radio journalists in Quebec.  Pierre is also the President of the Quebec Radio Marketing Bureau and is also a member of Musique Action.

5530             Alan Cross is the Program Director of 102.1 The Edge in Toronto, Canada's most influential New Rock station.  Alan was named Canadian Program Director of the Year at the Canadian Music Industry Awards for the past two years.

5531             Alan is also a music historian who has hosted 500‑plus episodes of the nationally syndicated radio documentary programming "The Ongoing History of New Music", and Alan is the author of four books on music history.

5532             Doug Rutherford is the Corus National Vice‑President of News‑Talk Radio.  He is also General Manager of Corus Radio in Edmonton.  In this role he sets the standards for the massive amount of news coverage and public affairs programming that we do at some of Canada's best‑known heritage news stations, such as CKNW in Vancouver, CJOB in Winnipeg and CHED in Edmonton.  He served as a director of the Radio‑Television News Directors Association.

5533             Jack Hepner is our National Director of Engineering.  Jack has been involved with installations, maintenance and engineering supervision of radio stations over the past 40 years.  This has included assignments across Canada, Africa and Central America.

5534             As you can sense, this team has a deep understanding of radio, music and the tastes and interests of the Canadian listening community.  We brought this large group here today to answer any of the questions that you have about radio and how we do our job each day.

5535             Corus is Canada's largest radio operator in terms of ad revenue and audience reach.  We believe that radio's greatest strength is its ability to react instantly to the needs and interests of the local community.  To do this, we must be very much in tune with our listeners.

5536             Corus reaches one in three Canadians.  We have 51 stations operating primarily in urban centres, from Vancouver to Quebec City, in both English and French, with a range of formats.  We are also the largest operator of news‑talk formats in Canada, with 19 stations.

5537             MR. HAYES:  Mr. Chairman and Members of the Commission, Corus will concentrate only on a few themes in our remarks today, but each of these themes will speak to the 400‑pound gorilla who sits in the middle of this regulatory proceeding: the Canadian listener community.

5538             As the old joke goes:  What does the gorilla do?  And the punch line is:  Anything it wants.

5539             If we can't find a way to keep the listener happy, none of us, broadcasters, regulator or musician, will succeed.

5540             Our themes today:  Consumers are becoming agnostic about the delivery system and radio stations face dramatically increased competition, both from old sources such as other traditional radio stations on both sides of the border, and new sources such as MP3 players, the internet and satellite radio.

5541             Bits and bytes don't respect borders or national regulation, and we all need to get used to that fact.

5542             Paradoxically, in this digital world we also need to find a way to successfully introduce digital broadcasting to Canadians so that they will embrace it.

5543             We believe that in a changing world flexibility in regulation is everything.  We are not asking you to reduce Canadian content levels, just to make the rules more flexible so that we can serve listeners better.

5544             We need your help in saving the heritage new stock AM stations which are the predominant source of local programming, including emergency information for our listeners.  And we believe that our proposals, the goals of the Commission and the public interest are aligned.

5545             In our written brief, at paragraph 28, we used a graph to illustrate the evolution of the competition for radio from new digital platforms.  We also described how the traditional radio market has expanded due to the increase in new licences awarded by the CRTC over the past few years.

5546             So the media environment is changing rapidly.

5547             We can't predict how our markets will evolve, but we do believe that the CRTC should carefully consider the following real world facts.

5548             One, as the CRTC 2005 Monitoring Report states, tuning to radio continues to fall each year.

5549             Two, new media platforms seem to be introduced each week and Canadians are embracing them.  All of the statistics indicate that young Canadians, our future core audience, are using traditional media far less than the people in this hearing room.

5550             Three, the music industry has lost a significant revenue stream, almost half in six years, due to the use by Canadian consumers of new digital devices.

5551             Four, these new devices not only entice listeners away from traditional radio but they also make it more difficult for people to listen to us.

5552             We suggest that each member of the panel conduct a personal test.  Go to the nearest electronics store and have a look at the latest gadgets, such as iPods, satellite radios and cell phones that have MP3 players in them.  One of the key lessons you will learn is that these devices do not contain traditional radio receivers in them.  Some offer FM add‑ons but these are really difficult to find.  And you won't find AM devices on any of them.  So the reality is that the new devices don't only compete with radio, they also replace radio.

5553             Five, another aspect of the digital media explosion is simply that a bit stream of data can move globally.  Anyone can easily copy, change or redistribute content and each copy is as good as the first.

5554             The Commission is well aware of this, so we won't dwell on it.

5555             Meanwhile, digital broadcasting presents to Canadian radio system with a wonderful opportunity to participate in this change.  We can mount a successful digital transmission system only if we are very sensitive however to consumer needs and wants.

5556             DAB has languished due to a variety of factors, but frankly the main cause in our view is the lack about real and perceived consumer benefit.  It seems clear that a better sound quality is just not enough to generate interest and sales of receiver devices.

5557             We believe that the answer lies in distinctive content.  We don't know yet what that is, but we need to find it.  To do so, the industry needs maximum flexibility, which is why we recommended that digital broadcasting services have no content regulation until all analog transmissions cease.

5558             This distinctive content might be all Canadian, it might be all music or talk or drama or infomercials, we just don't know yet, but we do need to find out and the only way to do so is to start with a broad canvas fitted only by our creativity, financial resources and consumer demand.

5559             We are asking you to allow us to experiment, to foster consumer interest that will support the launch of digital broadcasting.

5560             M. ARCAND:  Aujourd'hui, nous avons une industrie et un système d'encouragement au talent canadien extrêmement valable.  Dans sa proposition écrite Corus n'a pas demandé une réduction des éléments importants des règlements de programmation.  Nous ne désirons pas réduire la quantité de musique canadienne que nous diffusons.

5561             Par contre, nous croyons que nous pourrions améliorer nos services si nous avions la flexibilité de diffuser un meilleur mélange de musique à travers nos groupes de stations par marché et sur les ondes AM et FM.

5562             Ceci dit, quelques‑unes de nos suggestions demandent le renforcement des règlements de programmation pour assurer par exemple, que la promesse du nouveau titulaire d'une licence d'ajouter de la diversité musicale aux ondes soit satisfaite pendant la première année de la licence.  Donc, nous ne demandons pas au Conseil d'écarter ces règlements, mais simplement de les adapter au contexte actuel.

5563             La situation de la fréquence AM devient dramatique, mais nous avons des solutions.  La radio AM en particulier, les radios dites Patrimoine ou Héritage ont des traditions d'influence dans les marchés qu'elles desservent.

5564             Des stations comme CKAC à Montréal, CJRC à Ottawa‑Gatineau et CHQR à Calgary sont reconnues.  Nous investissons énormément de ressources pour créer les éléments qui rendent cette programmation si persuasive auprès des auditeurs.  Ce sont ces stations que les auditeurs écoutent en période d'urgence et en période d'élection.

5565             Le Conseil est conscient du fait que le nombre d'auditeurs de la bande AM diminue plus rapidement que ceux de la fréquence FM.  Le paradoxe auquel la fréquence est confrontée et que les populations au centre‑ville qui comptent sur ces stations ont de la difficulté à recevoir le signal AM.

5566             Corus recommande donc que le Conseil permette à ces stations dites Patrimoine d'avoir accès aux fréquences FM afin de préserver et de mieux servir ses auditoires.

5567             Dans certains marchés, nous recommandons que le radiodiffuseur d'une station Am soit capable de changer la station en une fréquence FM disponible.  Dans ces circonstances, les limites propriétaires de ces marchés devraient être écartées pour permettre aux mêmes propriétaires d'avoir autant de fréquences FM qu'ils entretenaient avant le changement.

5568             Dans d'autres marchés comme ceux des prairies où le signal AM est plus fort, le radiodiffuseur devrait être autorisé à continuer avec la station AM, mais devrait aussi être autorisé à diffuser la programmation en duplex sur les ondes FM pour mieux servir les auditeurs des centre‑villes.

5569             La question est de savoir où trouver ces fréquences et nous recommandons que le Conseil et Industrie Canada considèrent les fréquences avoisinantes comme sources potentielles pour les demandes de changement du AM au FM.

5570             La nouvelle infrastructure numérique peut supporter un assouplissement des règles de séparation, surtout quand le propriétaire de la fréquence avoisinante demande d'utiliser son signal avoisinant.

5571             Corus croit que si nous n'agissons pas pour préserver la programmation des stations Patrimoines sur les ondes AM, nous risquons de les perdre complètement.

5572             MR. CASSADAY:  The proposals which Corus made in its written brief, some of which were repeated here today, are very much in the public interest.

5573             First of all, our proposals are designed to maintain and increase audiences for our services which by definition carry a preponderence of Canadian content.

5574             Secondly, we are not seeking to reduce the levels of Canadian music played on our stations or the amounts that we would contribute to the development of new Canadian talent.

5575             Thirdly, we believe that we can compete in the digital interactive world.  To do so successfully we need to continue to be financially viable to invest in the research, content, systems and people needed to hold our audiences in a very competitive world.

5576             For broadcasters, our environment over the next two years as new technologies take route is extraordinarily uncertain.  To increase the chance of surviving in the public's interest, the industry has to have the latitude to experiment not just with formats, but also with the best ways to deliver can. con. across and within formats.

5577             To sum up, Corus does not know with certainty where digital interactive technology will take the industry, but we do know that the impacts are being felt in a variety of ways.  No one would debate that.

5578             Corus is not backing away from its commitments and we are not asking the Commission to reduce our obligations.  We are simply recommending that you provide radio with flexibility or existing analog operations and room to experiment in digital to meet the interests of consumer.

5579             Thank you and we look forward to your questions.

5580             THE CHAIRPERSON:  Thank you.  Commissioner Cugini.

5581             COMMISSIONER CUGINI:  Thank you, Mr. Chairman.  Welcome gentlemen and Ms McNeer.  Good morning.

5582             I'm going to ask you a few questions and I would like to ask you to answer the questions only as they relate to Canadian content.

5583             In your written submission, you endorsed the CAB's proposal with regard to its bonus incentive plan and you introduced the market cloister approach to Canadian content.

5584             First question is:  are these two approaches mutually exclusive?

5585             MR. MAAVARA:  The answer is: no.  We could see how we could work with both elements to create a terrific service.

5586             COMMISSIONER CUGINI:  Because in your market cluster approach, I believe you say that a floor could be 15 per cent of Canadian content if we were to accept that approach.

5587             How would you then apply or then if you were to apply the incentive bonus plan as proposed by the CAB, what would happen to the Canadian content level on that 15 per cent station?

5588             MR. MAAVARA:  I think the important thing about our proposal is that it's really a combination of elements, the first element being that we would preserve the amount of Canadian content across the cluster and when you look at the proposals we made, such as the floors or the amount that you can carry on one particular station, you have to think about it in that context.

5589             But the way that we would see it is that if the broadcaster was intending to apply the CAB proposal, then that would overlay upon the cluster arrangement.

5590             COMMISSIONER CUGINI:  Now, your marker cluster approach obviously works for the six largest radio operators.

5591             Are you suggesting that we build a framework for the six largest and a separate framework for the independents to accommodate your marker cloister approach?

5592             MR. MAAVARA:  No, I don't think it's necessarily exclusive of the six.  What it simply does, the fundamental premise is that in that market, there would be the same amount of Canadian content music available to the listener and it really starts with the listener and trying to ensure that we get as much listening as we can to the Canadian content through this type of flexibility.

5593             So in the circumstances where you only for example would have one station, obviously there is not going to be an application of that, but at the end of the day, you are still going to be providing your Canadian content level.

5594             So, to the extent that other smaller operators acquire new stations or, for example, as we were suggesting with respect to the AM migration and, for example, if second agencies start to become more available, then you could see how the application of the cluster rule could expand.

5595             But at the end of the day, it's about getting the same amount of Canadian content out to hopefully a lot more listeners.

5596             MR. CASSADAY:  The only thing I would add, I don't think that we should be given too much credit for this as being a wholly original idea because I think the genesis of the idea was the ruling that came out of the satellite here and where there are, in fact, two distinct forms of regulations.

5597             So, I think it is possible that there could be a separate set of regulations for the big six and others if that was, in fact, felt to be the kind of flexibility that was going to allow us to achieve our objectives.

5598             COMMISSIONER CUGINI:  Have you discussed this approach with your peers at Standard or Rogers?

5599             MR. MAAVARA:  Not extensively.

5600             COMMISSIONER CUGINI:  Okay.  Perhaps in the interest of time, what I could ask you to do, I think it was you, Mr. Hayes who said "with real world facts", I like real world examples.

5601             Perhaps you could by May 29th, I believe, provide us with an analysis of what this approach will do in markets where Corus owns a cluster of services, of radio stations, what this would do for your stations and what would this do to the other radio stations in that market?

5602             MR. MAAVARA:  We would be delighted.

5603             COMMISSIONER CUGINI:  And now, just a couple of practical questions with regards to the CAB proposal and in particular, the use of the BDS list, and I don't know if either Mr. Winters or Mr. Cross would like to answer this question, but have you had an opportunity to analyze the approach, that is the top 40 up until 12 months from the time they reach the top 40?

5604             And if we were to apply that rule, how much of your current play list would be attributable to emerging artists according to the definition provided by the CAB?

5605             MR. CROSS:  Well, we have actually done a simulation already and we have determined that in our ‑‑ currently, we're playing forward what would be considered emerging artists right now and if the bonus system were to be adopted, we see that making room for another four, so we would be playing eight emerging artists that we would play throughout the day and of maximum quality exposure too.

5606             COMMISSIONER CUGINI:  And that compares to how many that you are playing now?

5607             MR. CROSS:  We are playing four right now.

5608             COMMISSIONER CUGINI:  Four right now?

5609             MR. CROSS:  Four right now and we are giving those four songs, if you look at a full broadcast week, we are playing 40, we are giving those songs 40 spins throughout a broadcast week.  Under the new rules, we would play ‑‑ we would give those songs 82 spins.

5610             COMMISSIONER CUGINI:  And is that just on CFNY or is that ‑‑

5611             MR. CROSS:  That is just on ours.  This is a real world example from the current age play list taken from some statistics that we gathered last week.

5612             COMMISSIONER CUGINI:  And what about your more mainstream formats?

5613             MR. WINTERS:  Well, I can speak to the country formats and I spoke to our program directors.

5614             What the proposed ruling is overlaid onto three days of programming at scheduled music programming at CKRI, Calgary for example, they would have played five unique emerging artists for a total of 21 spins in those three days, which would have been five less Canadian selections or over a full week, it would have been 40 to 50 spins of emerging artists and 10 to 11 less Canadian selections played.

5615             COMMISSIONER CUGINI:  Just one final question.  Mr. Cross, I know that you broadcast your show, the ongoing History of New Music.  Have you been able to relate any increase in listenership as a result of your broadcast to your radio station?

5616             MR. CROSS:  Not as of yet.  We can track how many people can download the show, but we have no idea how many people are actually listening to it.  We are getting anywhere from 1,500 to 2,000 downloads a week, which is not large in the grand scheme of things, but it is a step in the right direction.

5617             One of the things that we are finding is that because of the Copyright Regulations regarding the distribution of music, we cannot include any music in any of the broadcast, so it's strictly spoken word.

5618             It is a good bit of viral advertising and marketing for us because it does get us on Ipods in between songs that we are ‑‑ a place where we would otherwise not be.

5619             COMMISSIONER CUGINI:  Thank you and thank you, Mr. Chairman.  Those are my questions.

5620             THE CHAIRPERSON:  Thank you.  Commissioner Noël.

5621             CONSEILLÈRE NOËL:  Alors, monsieur Arcand, en rafale, pour le côté français.

5622             Je pense que dans votre texte de ce matin, vous avez une petite erreur.  Vous faites référence à la première année de licence au troisième paragraphe de votre intervention et dans le texte écrit du Mémoire de Corus, on parle du premier terme de licence pour garder le format après avoir obtenu une nouvelle licence.  Alors, je veux juste le souligner pour que vous nous disiez quelle est la bonne option : la première année ou le premier terme?

5623             Deuxièmement, sur la rentabilité de la radio française et la question de savoir si les frais généraux et d'administration pour ce qui est de la radio francophone, pourquoi sont‑ils plus haut ou que... en règle générale dans la radio anglophone?  En trois mots.

5624             M. ARCAND:  Bien, il y a un peu ce qui s'est produit hier.  Je sais qu'Astral a répondu à cette question‑là hier.

5625             Dans notre cas, c'est sûr qu'il y a moins de revenus et nous, entre autres, dans notre cas, on a plusieurs stations AM.  Quand on a plusieurs stations AM, on se retrouve, évidemment, avec des stations qui sont quand même assez... qui ont besoin de gestionnaires, qui ont quand même besoin... avoir une salle de nouvelles, ça prend des gestionnaires, et caetera.

5626             Donc, il faudrait faire une analyse détaillée, mais c'est sûr que c'est probablement en fonction des revenus et c'est sûr qu'à partir du moment où les stations anglophones, de façon générale, ont beaucoup plus de revenus, leurs frais généraux vont probablement diminuer en relation, évidemment, avec leurs revenus et c'est la même chose du côté francophone où, là, on a un peu moins de revenus et probablement que les frais généraux sont plus élevés, mais ça ne coût pas plus cher d'administrer une station francophone comme telle qu'une station anglophone.

5627             CONSEILLÈRE NOËL:  Ça coûte proportionnellement plus cher parce que les revenus n'y sont pas.

5628             M. ARCAND:  Parce que les revenus sont moindres; exact.

5629             CONSEILLÈRE NOËL:  D'accord.  Musique vocale de langue française, je vous ai entendu ce matin, les gens de Corus ont dit qu'on ne demandait pas de modification, sinon la prime de l'ACR.

5630             Qu'est‑ce que vous pensez de la demande de l'ADISQ, elle, d'imposer un quota pour les nouveautés?

5631             M. ARCAND:  Nous y sommes totalement opposés et farouchement..

5632             CONSEILLÈRE NOËL:  Merci.  Montage; madame Murphy a demandé aux gens d'Astral et de Cogeco de revenir par écrit le 29 mai.  Eset‑ce que vous pouvez faire la même chose?

5633             M. ARCAND:  Oui.

5634             CONSEILLÈRE NOËL:  Ça vient de régler un troisième point.

5635             Deux autres questions... trois autres questions; excusez‑moi.  Le Guide des droits et responsabilités de la presse mis de l'avant par le Conseil de presse, est‑ce que vous avez des problèmes à ce que le Conseil... le CRTC vous impose ce guide?

5636             M. ARCAND:  Écoutez; lorsqu'on a eu l'audience à Québec, on avait présenté, nous, notre Code de déontologie.  J'imagine que les mêmes termes doivent se ressembler.  Il faudrait quand même qu'on voit exactement dans le détail ce que ça implique.

5637             Mais, nous notre Code de déontologie nous paraissait, en tout cas, assez valable à ce moment‑là.

5638             CONSEILLÈRE NOËL:  Vous nous revenez au mois de juin avec vos répliques finales?

5639             M. ARCAND:  Oui.

5640             CONSEILLÈRE NOËL:  Merci.  Question de niveau de programmation locale pour les stations qui opèrent en réseau, est‑ce que vous croyez que le Conseil devrait augmenter le niveau de programmation locale pour les stations opérant en réseau?

5641             M. ARCAND:  Écoutez; nous dans la décision que nous avons eue lorsque nous avons acheté les stations de Astral, on avait quand même des conditions de licence déjà pour avoir un minimum de contenu local que nous avons accepté d'ailleurs.

5642             Nous croyons donc pour l'instant que ça devrait...

5643             CONSEILLÈRE NOËL:  C'est assez?

5644             M. ARCAND:  ... ça devrait être le statu quoi à ce moment‑ci.

5645             CONSEILLÈRE NOËL:  Merci.  Et pour la définition de la programmation locale, avez‑vous quelque chose à ajouter à ce que les gens de Cogeco et de Astral ont dit hier?

5646             M. ARCAND:  Qu'est‑ce que vous voulez dire exactement?

5647             CONSEILLÈRE NOËL:  Ils ont dit qu'ils étaient parfaitement satisfaits de la définition actuelle de la programmation locale.

5648             M. ARCAND:  Oui, moi aussi.

5649             CONSEILLÈRE NOËL:  Vous autres aussi?

5650             M. ARCAND:  Oui.

5651             CONSEILLÈRE NOËL:  Et une dernière question, monsieur Arcand, et c'est pour votre idée de transférer les stations AM au FM.  J'ai compté 22 stations AM dans votre écurie, sur 51 stations au total.

5652             Est‑ce que ce que vous nous demandez, cette flexibilité pour transformer les AM en FM, c'est pour les 22 stations AM ou c'est seulement pour les stations dites Patrimoine que vous avez nommées, soit CKAC, attendez un peu là, je les ai en quelque part.

5653             M. ARCAND:  Oui;, les stations de Calgary.

5654             CONSEILLÈRE NOËL:  Oui, c'est CKAC, CJRC et CHQR?

5655             M. ARCAND:  Non.  C'est pour un plus grand nombre de stations.  Je pense que, nous, dans l'esprit qui nous guide actuellement et pour avoir vécu l'expérience, entre autres, de la transaction d'Astral où on s'est retrouvé... moi, je n'ai pas vécu l'expérience ailleurs, mais on s'est retrouvé avec des stations qui avaient des difficultés sur le plan financier, mais qui avaient vraiment un impact déterminant dans leur communauté.

5656             Alors, on a beaucoup parlé du système français lors de ces audiences jusqu'ici et toutes les stations dites d'influence ou d'Héritage comme Europe 1, comme RTL en France et France Inter qui étaient sur des fréquences dites *ondes longues+ pendant des années en France se sont toutes retrouvées à un moment donné à la fois sur les ondes longues et à la fois sur la bande FM parce qu'ils avaient un rôle d'information et d'affaires publiques particulièrement important.

5657             Alors, nous, on pense que les stations, et ce sera au Conseil de juger, mais il y a des stations qui sont particulièrement importantes dans des marchés... dans la plupart des marchés et qui jouent un rôle, je pense encore plus grand qu'une station qui est purement musicale.

5658             Et on pense donc, nous, pour les mêmes raisons qu'il y a environ dix ans on avait dit, bien, il faut que Radio Canada même au niveau de ses émissions d'affaires publiques ait droit à des fréquences FM, on pense que, nous, les stations qui ont vraiment un service important, qui ont des salles de nouvelles, qui ont des coûts quand même probablement plus élevés qu'une station musicale devraient quand même avoir accès à des stations à des fréquences FM.

5659             CONSEILLÈRE NOËL:  C'est‑à‑dire, maintenir la programmation sur les deux bandes à ce moment‑là, en même temps?

5660             M. ARCAND:  C'est‑à‑dire qu'il y a des cas où c'est carrément des transferts sur la bande FM, mais peut‑être que dans l'ouest, entre autres, là où il y a de grandes étendues, la radio AM pourrait être à ce moment‑là importante de faire les deux pendant une période de temps.

5661             CONSEILLÈRE NOËL:  Vous étiez ici hier soir... en fait, on était presque rendu dans la nuit, je dirais, et les gens de Cogeco, monsieur Mayrand a fait une intervention à l'effet de ne pas modifier la situation de propriétés dans les marchés en permettant, par exemple, la conversion... la règle de propriété sur le nombre de AM et de FM qu'on peut détenir dans un même marché, dans une même langue.

5662             Avez‑vous des commentaires à faire là‑dessus?

5663             M. ARCAND:  C'est‑à‑dire que je pense que je demanderais peut‑être à monsieur Cassaday de faire le commentaire sur cette question‑là, sur la question des règles de propriété.

5664             MR. CASSADAY:  The question of profitability is one that has come up a couple of times and I would just like to make a couple of quick comments.

5665             First of all, I think that we should be proud that the Canadian Radio Industry is strong at a time when we're facing intense new competition and I think the reasons for the strength of radio are really two fold:

5666             1) good public policy.  I think the decision that was made to allow multiple ownership was pivotal to the success that radio is now enjoying.

5667             And the second reason is good management.  With less owners in markets, we are becoming much more externally focused,

5668             In the past, radio turned the guns inside and competed against each other for share and now what we are doing is we are trying to expand our market by going after other ‑‑ for other medias within our industry, the question of the Competition Bureau definition of radio being a unique market we totally disagree with.

5669             We have been very successful in getting money from newspaper and outdoor and other mediums that we compete with on a local basis.

5670             There are two other factors, a couple of other factors that I would like to mention when we think about profitability for radio.  We have gone on record as saying that we believe that the appropriate level of profitability for Canadian radio is in the 30 to 35 per cent margin level.  That is higher than we are today, but it's based on a comparison of the U.S. market where we compete for capital.

5671             In U.S. radio stations are operating with margins in the 40 to 45 per cent level.  We don't believe that we can achieve that level of profitability in Canada because of the scale issues that Pierre talked about earlier, but also because of our higher obligations in terms of performing rights payments and regulatory expenses.

5672             But we do believe that radio in Canada is strong and we think we should celebrate that because in the absence of that, I think we would have a very difficult time competing.

5673             COMMISSIONER NOËL:  If I could just interject.  I think maybe you've got the translation wrong from ‑‑ but I was asking Pierre about the ‑‑ Pierre Arcand about the ownership, propriété, the fact that you could ‑‑ the fact that yesterday we heard Cogeco oppose the proposal of Astral that you could convert an AM into more than ‑‑

5674             MR. CASSADAY:  Oh! I'm sorry.

5675             COMMISSIONER NOËL:  Yes.  Well, propriété and profitability can resemble themselves from one language to the next.

5676             MR. CASSADAY:  You're right.  I apologize for that.  Mostly that was an interesting side by our comment.

5677             COMMISSIONER NOËL:  It's okay.

5678             MR. MAAVARA:  But Commissioner, if I could respond to your question directly and also speak to your earlier question with respect to whether our perspective is only related to the Heritage news talk stations and I think the Commission, as part of this process, is going to have to take a hard look at the AM frequency generally and the first reason for that is because of the listener.

5679             The listener does not really differentiate between AM and FM in kind of a fundamental sense.  For them it's a button or a dial on the receive device and they are just looking for terrific content.  And our challenge on AM is to ensure that we can continue to deliver the audiences to news talk.

5680             But in looking at the broader question and going directly to the points made by Cogeco, in that context of the public service that we are giving to listeners and the listener's interest in receiving the service, it's our view that the Commission is going to have to in fact look at the ownership limits in some markets.

5681             And in markets where, for example, an existing AM owner is already at the FM limit, then there will have to be a review as to the public interest aspects of expanding that and obviously there will be markets where the issue doesn't arise.

5682             But our view is that the existing ownership levels as between AM and FM should probably be reviewed with the idea of allowing the AM operators to assume either a nesting position or a flip in order to continue providing the service to the listener.

5683             COMMISSIONER NOËL:  It would be important in terms of talk radio mainly?

5684             MR. MAAVARA:  Well, that's our first concern.

5685             COMMISSIONER NOËL:  Would you accept a specialty format in those categories?

5686             MR. MAAVARA:  We would, but the other recommendation that we have made with respect to the FM rules is that FM operators have more flexibility to move across that threshold of specialty without having to go through a formal application process.

5687             And what that would do is give us the opportunity again in the context of the listener to meet the listener's need and if we have to cross over that line, then we would do it on ‑‑ we will report to the Commission basis, as opposed to applying to the Commission for permission to do that.

5688             COMMISSIONER NOËL:  You mean going from general to specialty?

5689             MR. MAAVARA:  Yes.

5690             COMMISSIONER NOËL:  Which locks you in for a full licence term, as you know?

5691             MR. MAAVARA:  Well, not to the extent if the rule was relaxed, that would allow for movement across, that is the kind of flexibility that we are looking for and I'll balance that with the notion that if a new applicant comes along and manages to determine to the Commission's satisfaction that a new licence is called for in the market, that over that first term and you astutely picked up the mistake.  We had all read this document, you can imagine, 50 times and I never noticed that it said *any+ as opposed *to term+, but we meant to term, and over that first term, that new applicant would be required to adhere to that format.

5692             COMMISSIONER NOËL:  Uh‑huh!  But, no, the sense of my question is once you ‑‑ if we take Montreal for example, you have how many AM stations, Mr. Arcand, in Montreal?  You have a few.

5693             MR. ARCAND:  Three AMs.

5694             COMMISSIONER NOËL:  Three AMs; trois AMs, oui.

5695             CONSEILLÈRE NOËL:  Un en anglais puis deux en français?

5696             M. ARCAND:  Exact.

5697             CONSEILLÈRE NOËL:  Et vous avez deux stations FM en français, deux stations AM en français, ce qui est le maximum pour le marché.

5698             M. ARCAND:  C'est ça : une station AM en anglais et deux stations AM et on a deux FM en français et un FM en anglais qui sont des marchés séparés, comme vous le savez.

5699             CONSEILLÈRE NOËL:  Qui sont des marchés séparés, c'est d'accord.  Si vous étiez pour... si vous trouviez des fréquences pour faire un flip de vos trois fréquences AM, vous dépasseriez la limite de propriété à Montréal.

5700             M. ARCAND:  Oui.

5701             CONSEILLÈRE NOËL:  Dans le marché francophone et dans le marché anglophone.

5702             M. ARCAND:  C'est pour ça.

5703             CONSEILLÈRE NOËL:  Est‑ce que... moi, ce que je veux savoir, c'est si vous faites ça, parce que vos formats AM, ce sont des formats talk, hein!  Ce sont des formats... une formule parlée.

5704             Est‑ce que vous vous engageriez en faisant ça à conserver le format de spécialité plutôt que de vous ouvrir une porte grande comme une porte de grande pour devenir une autre formule musicale quelconque?

5705             M. ARCAND:  Vous savez, madame Noël, oui, parce qu'on pense, nous, que la formule news and talk ou, enfin, la formule parlée est une formule qui est très valable.

5706             D'ailleurs, je peux vous dire parce que tout à l'heure je vous écoutais et j'ai écouté tout au long de l'audience et une des choses qui m'a frappé, c'est qu'on a eu des discussions même entre radiodiffuseurs, non seulement de la radio mais aussi de la télévision et vous savez, le commentaire qui a été fait par la Ministre des communications du Québec à l'effet qu'il fallait former des journalistes et créer des fonds et... c'est quelque chose qui vient vraiment de nous.

5707             On s'est rendu compte que dans certains marchés du Québec par exemple, que ce soit en télévision ou en radio, il n'y a presque pas de journalistes les fins de semaine.  Dans un cas, en tout cas, on était les seuls à avoir des journalistes qui couvraient les événements.

5708             S'il y avait eu un événement grave, par exemple, dans certaines régions, il y avait juste Corus qui était là.  Il n'y avait même pas de gens de la télévision qui étaient disponibles à ce moment‑là pour des raisons, évidemment, de rentabilité.

5709             Alors, nous, on a dit : on parle sans arrêt de l'importance d'aider les artistes, la musique, l'industrie de la musique puis on est tous d'accord avec ça, mais je pense qu'au niveau journalistique, il y a un effort important à faire et on devrait se pencher sur cet aspect‑là au cours des prochaines années et donc, d'avoir des stations d'information et d'affaires publiques qui sont fortes m'apparaît important et c'est aussi partagé par, semble‑t‑il, le Gouvernement du Québec.

5710             CONSEILLÈRE NOËL:  Oui, avec... en règlement du déséquilibre fiscal, si je comprends bien, ça serait des frais de la partie 2 qui s'en iraient pour financer ça.

5711             Merci, monsieur, messieurs.

5712             LE PRÉSIDENT:  Madame Pennefather.

5713             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.  Good morning, madame McNeer and gentlemen.

5714             I just wanted to ‑‑ I had a request and I had a question, but Mr. Arcand probably just answered the question.

5715             The request is regarding your intervention at paragraph 156, CTD and significant benefits.  Here, you maintain a position of keeping the six per cent, but you propose a scale, a sliding scale and my request is: could you table with the Commission the impact of your sliding scale as you see it and we could perhaps do that in terms of the CAB proposal wherein we are looking at two years if the new frame would amount to approximately 5.48 million and I think you know the model I am referring to and the ADISQ model.

5716             So, if you took your sliding scale and you applied it, what would happen to the numbers in terms of even within the two‑year time frame or transition period proposed by the CAB?

5717             And that was of interest because, of course, the 5.48 is considered in the CAB plan appropriate because of the relation to the demand on a historic basis.  So, if you could provide that to us, it would be very helpful.

5718             MR. MAAVARA:  We would be delighted.

5719             COMMISSIONER PENNEFATHER:  And my other point was the ‑‑ you did place an emphasis on CTD funding eligibility rules expanded to include capital and operating grants to provincially established post‑secondary education.

5720             I am assuming that some of the rationale behind that was the comment Mr. Arcand has just made.  But also, just in terms of regulatory procedure, under the eligibility rules of 195‑196 such grants would be eligible.

5721             So, are we to assume here that you are proposing that this eligibility rule apply across all forms of CTD and that we make that clear?  Is that why this is here?

5722             MR. MAAVARA:  Yes.

5723             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

5724             THE CHAIRPERSON:  Thank you very much gentlemen.  Those are our questions.  Thank you very much for appearing and bearing with us as we kind of move through the hearing and build up our record.

5725             If there are comments that you feel that you wanted to add, of course, in response to other interveners of course, you can do that in the June 12 submission.

5726             Thank you.  We will take a short break now.

5727             Nous reprendrons à 10 h 20 with the next item.

‑‑‑ Upon recessing at 1012 / Suspension à 1012

‑‑‑ Upon resuming at 1023 / Reprise à 1023

5728             THE CHAIRPERSON: Madame la Secrétaire.

5729             THE SECRETARY: Merci, Monsieur le Président.

5730             I would now invite the next participant to make their presentation, CHUM Limited.  Mr. Paul Ski is appearing for the participant who will introduce his colleagues and you will have 10 minutes for your presentation.  Mr. Ski.

PRESENTATION / PRÉSENTATION

5731             MR. SKI: Thank you very much.

5732             Good morning, Mr. Chair, Mr. Vice‑Chair and members of the Commission.  I am Paul Ski, Executive Vice‑President of CHUM Radio overseeing our 33 radio stations from Halifax to Victoria.

5733             To my right, your left, is Kerry French, Director of Research for CHUM Radio.  To Kerry's right is Duff Roman, Vice‑President, Industry Affairs, CHUM Radio.  To my left, your right, is Rob Farina, Program Director for CHUM FM and a member of both the FACTOR and Radio Starmaker Fund boards.  To Rob's left is Sarah Crawford, Vice‑President of Public Affairs for CHUM Limited.  And to Sarah's left is David Goldstein, Vice‑President of Government and Regulatory Affairs for CHUM.  We are also joined by several CHUM Radio managers who are in the room today.  We will now begin our formal presentation.

5734             Radio is an intensely personal medium.  Radio entertains, informs, supports.  Radio stations connect to their listeners and connect listeners to each other.  Radio continues to be a powerful force.  One only has to look back to the 2003 blackout to illustrate this fact.  When the lights went out radio was the medium that told us what was happening both at a local and national level and where we could go to get water, food or gas.

5735             As the thread that helps to knit local communities together, it is vital that through the era of rapid technological change Canadian radio remains relevant, vibrant and financially healthy enough to provide all of the services Canadians expect.  At CHUM we believe this will only be possible with a regulatory regime that is flexible, consistent and forward‑looking.

5736             MR. ROMAN: For 50 years radio has been a part of CHUM's daily passion and it is a critical part of our plans for the future.  However, what was once a highly controlled marketplace has become fragmented with an unprecedented array of regulated and unregulated media options for listeners.  More importantly, radio's role as an intermediary is being undermined.  Until recently, radio was the primary link between artists and the Canadian public, it no longer is.

5737             The music industry has already faced a dramatic breakdown of the value chain and the ramifications are now beginning to impact radio programming.  Since 2001, radio has experienced a steady decline in tuning, a decline that has been more acute among younger Canadians.  With the myriad listening choices now available, MP3 players, satellite, internet and the like, it is evident that the environment in which radio operates has changed radically.

5738             On Monday and Tuesday there were those who had found this change difficult to quantify.  In fact, recently BBM data from January to March 2006 found that in Kamloops, for example, SIRIUS Satellite Radio which just launched in December has already achieved a 5 share with all listeners 12 plus and a 9 share with men.  Clearly, the old business model is dead.  The radio industry must evolve or risk being left behind.

5739             In this process the Commission will hear from several parties with varied self‑interests.  Radio broadcasters are the ones at this hearing that are licensed and regulated by the Commission and responsible for fulfilling the objectives of the Broadcasting Act.  The broadcasting policy for Canada set out in section 3.1 of the Act recognizes that, above all else, broadcasters provide a public service essential to the maintenance and enhancement of national identity and cultural sovereignty.  Radio does this everyday by providing our listeners with music they want to hear from at home and abroad, as well as news and entertainment features presented by top Canadian talent.

5740             MS FRENCH: From the time CHUM purchased CKPT Peterborough in 1960 we have been committed to serving smaller markets.  Though sometimes challenging and less profitable than stations in larger centres, smaller markets benefit from having stations owned by larger broadcasters like CHUM.  In many situations these markets may require a different, more flexible regulatory approach, especially those markets that are located close to the U.S. border.  Some have advocated different rules for smaller companies operating in these markets.  However, CHUM believes that any flexibility that the Commission grants should be applied equally to all licensees.

5741             The next area we would like to comment on is the Commission's common ownership policy.  CHUM firmly believes that the Commission achieved the right balance in its multiple license ownership policy in 1998, specifically in large markets.  The introduction of the MLO policy was the right decision at the right time and helped an industry that was struggling financially.

5742             While some may now be advocating loosening the MLO restrictions by allowing ownership of more stations, CHUM believes that would lead to much less diversity of formats and news voices.  Furthermore, any policy change that would effectively allow one operator to own more than two FM stations in a market would create a competitive imbalance in many markets.  Altering an MLO policy that has worked so well since 1998 and has strengthened the basis of the Canadian Broadcasting System does not serve the public interest.

5743             MR. FARNIA: We would like to now turn to what we believe is the central issue at this proceeding, what radio's contribution should be to the Canadian music industry.  Two very divergent views have emerged.  The first view being advocated by certain representatives of the music industry, including CIRPA and SOCAN is that the Commission should significantly increase the amount of Canadian music radio must broadcast.  The second view being presented by CHUM and other radio broadcasters is an enhanced 35 per cent solution.  An incentive system designed to help develop the careers of emerging Canadian artists as opposed to one that focuses simply on quantity.  We believe this makes more sense for radio, the music industry and, most importantly, the public.

5744             Proponents of the first approach believe that mandating radio to broadcast dramatically more Canadian music will increase the variety of Canadian music on air and further develop the Canadian music industry.  This is simply wrong.  As Program Director of CHUM FM, I work on the frontlines programming the music that airs on one of Canada's top radio stations.  My love of music was why I got into broadcasting and I have worked throughout my career to help Canadian artists find an audience.  These proposals will not benefit Canadian artists.  Moreover, they will impair radio's ability to provide the highest quality programming to Canadians, therefore driving more listeners to unregulated media that plays little or no Canadian music.

5745             Here is the reality about programming music for radio.  People will not listen to radio stations that do not give them the music they want, regardless of cultural objectives.  And while radio once had a relatively captive audience, the array of listening options now available to Canadians means that if radio does not give them what they want they have many many other places to go and get it.

5746             Due to fragmentation, programming radio stations is now not just an art, but a science as well.  Every successful radio station undergoes regular music testing with its respective audience.  A statistically valid number of participants rate the music based on their personal tastes.  In the CHUM FM Toronto music test results from April 20 of this year over 70 per cent of the Canadian music tested was below the 50 per cent positive score threshold.  Furthermore, out of all the Canadian music that tested above the 50 per cent positive threshold only one of those songs came from a domestically‑signed Canadian artist, in this case Bedouin Soundclash.

5747             Over the years we have developed music testing criteria to help us program our stations. In general, we would not air a song that has lower than a 60 per cent positive score.  However, with Canadian music, songs that have as low as a 10 per cent positive score remain in regular rotation on our play lists.  Now, why do we continue to play songs that nine out of 10 audience members tell us they don't like, songs that risk that audience moving to other entertainment platforms?  We play it because we have to.

5748             As in any field of creative expression, only a small amount of music reaches mass acceptance and radio is a mass medium.  And let me be clear, these statements are not a criticism of Canada music, which stands among the best the world has to offer, the problem is there just isn't enough of it.  In 1998 the Commission increased Canadian content from 30 per cent to 35 per cent in an effort to expand the exposure given to Canadian artists on radio.

5749             While radio stations now play more Canadian music, they do not play a wider range of Canadian music.  As we just explained, this is because a sufficient supply of Canadian music that is suitable for radio did not exist then, does not exist now and will not miraculously exist at 40 per cent.  Radio stations must now play Canadian songs for a longer period of time and many stations have moved towards gold‑based formats so they can draw on Canadian music from a number of decades.  This has resulted in music from top Canadian artists becoming burned out.

5750             Increasing Canadian content requirements above their current levels will only compound this problem.  In fact, mandated increases in Canadian content with a one‑size‑fits‑all approach to radio formats will not create more Canadian music that people want to hear.  Similarly, any system that forces all broadcasters in all formats to commit to a percentage of inde artists as part of their CanCon compliment will serious limit our ability to create radio that our audiences want to listen to. 

5751             MR. SKI: Almost 25 years ago CHUM lead the creation of FACTOR and Duff Roman was its first President.  That was the right response at that time to a need to develop more Canadian music for radio.  What is required today is a comprehensive strategy to increase the amount of quality Canadian music available to Canadian radio stations.

5752             In CHUM's view, a key part of this strategy is the incentive‑based enhanced 35 per cent solution which would encourage radio stations to take risks on unknown artists without causing tune‑out.  And to be clear, we define an emerging artist as any Canadian artist that is not charted on the top 40 on either the Nielson BDS or media‑based national airplay charts.

5753             Because of the time it takes to establish and artist to the consumer, we believe the qualifying window should be 12 months.  CHUM firmly believes that public policy must remain relevant in light of the changing media environment in which Canadians' radio broadcasters operate.  That is why we have developed our recommendations to help position radio for future success and ensure that the sector continues to make a substantial contribution to the fulfillment of the objectives of the Broadcasting Act.

5754             We are not afraid of competition.  We have a 50‑year history of responding to changes in technology, changes in the media landscape, listener tastes and economic conditions.  Radio can continue to be a strong medium that serves communities, advertisers and the need of Canadians to fine Canadian expression.  Despite the plethora of new and largely unregulated entrants radio can compete, given a relevant forward‑looking radio policy that gives radio broadcasters the flexibility to adapt to urgent challenges facing the industry.

5755             We thank you for your time and we welcome your questions.

5756             THE CHAIRPERSON: Thank you very much, Mr. Ski.

5757             I guess the first question I have is triggered by the statement, we play it because we have to.  And I guess what we are all involved in in the Canadian Broadcasting System is, and have been I suppose for 75 ‑ 80 years, is combating market forces that alone would in all likelihood lower the level of Canadian content on our airwaves, radio, television and elsewhere dramatically.  Canada itself is a battle against market forces that would otherwise be north/south and we live with that on an ongoing basis.  And part of what we are all involved in is part of the regulatory bargain and the social contract of being in this system is trying to combat those forces as best we can and promote the Canadian music on radio or stories on television with a view to continuing to reaffirm our identity as a country on an ongoing basis.

5758             So I take it that when you say you play it because you have to you are trying to make a regulatory point, because I know that the CHUM group, in effect, embraces Canadian artists and tries to promote them.  So as a sound bite it is a bit of a sour tone and I want to give you an opportunity to explain that that is what it is and that that doesn't sound as badly as when you hear it in the cold light of day.

5759             MR. SKI: Well, and we didn't certainly mean it to be that way.  I think ‑‑ and I will let Rob give you a bit more information on that ‑‑ I think our point was that to try to give you some perspective, in that if we are to compete I guess in the future and hopefully we will have a chance as you had asked for yesterday, go through some of the technological challenges that CHUM sees certainly that we are going to be faced with, that if we are not able to provide our listeners with the music that they want to hear ‑‑ and that is really what it is, it even gets away from hits or non‑hits, it is really what the listeners want to hear.

5760             And for over 20 years now CHUM has been going to the market to research our listeners on various elements of our programming and I think it is one of the reasons that we have managed to be successful in many of our markets is because we are not only a reflection of the community and from our spoken word standpoint, but from the delivery of the music that we provide to the people too.  And sometimes I think that is forgotten, it is forgotten that all of certainly our radio stations and many others are operated autonomously in their market.  So the music that is chosen for Vancouver is very different than what Rob decides to choose for Toronto, because they are different markets and while there may be some similarities, there are many differences.

5761             So I guess what we are trying to say is that when we are moving to add that additional layer of Canadian, between what we would normally play and what we are required to play, that is where it becomes just a little bit challenging for us, because we know that many of our listeners may not necessarily want to hear those songs or, if they do, they are pockets of listeners.  So that you might have somebody ‑‑ I mean, not all songs are bad songs, obviously, as some people have said and if you have eclectic music taste you can hear a lot of different songs, but we are delivering an audience, a mass audience, that is the kind of media that we are in.  And so, as a result, we have to play songs that obviously appeal to the most number of people within our particular format.

5762             Rob may want to..

5763             THE CHAIRPERSON: Well, I take those points and I am not in any way suggesting that you don't try and play what your listeners want.  I guess one of the questions we put forward for comment in this proceeding is at paragraph 119 where we said:

"A number of conventional radio broadcasters have established a presence on the internet as a means of extending their brand and providing value‑added services to their listeners."  (As read)

5764             And we asked the question:

"How can conventional radio licensees utilize new technologies and incorporate new platforms into their strategies in a manner that furthers the objectives of the Act."  (As read)

5765             From our perspective, that is the Act we administer and that is the question we asked.

5766             But I would expect that your own goals, obviously, of giving listeners what they want are also paramount.

5767             So I wonder whether you can address here, or perhaps in your subsequent filings, an answer to that, how you can use these new technologies to further your goals as well as to further the objectives of the Act.  Because that is the Act under which you are licensed, that is the Act under which we operate, and as long as that holds it is going to be a feature of your environment.

5768             MR. SKI:  We wish we had the answer to that today and we may not have the answer by the 29th.  I think it's something that we are all searching for an answer to.

5769             But there is a sea change ‑‑ and you have heard this already ‑‑ that we are going through which is a little different.  Once we start to swim in that ocean ‑‑ and it is an ocean that is very different from the pond that we're in today I think is maybe a good analogy ‑‑ we are moving from broadcast media to connected media.  This is a little different.  Also, we are moving from radios ‑‑ and that has been the primary device, certainly for the broadcast media, for our broadcast media ‑‑ we are now moving to computers and other devices that people listen to music.

5770             So our intermediary role between ourselves and our listeners is changing dramatically.

5771             I wish we had the answer to how we would use that technology?

5772             THE CHAIRPERSON:  Oh, no.  I don't expect that you do, but this is a collective challenge we have to meet, and probably a greater challenge qualitatively and quantitatively than we have had to meet over the past 75 or 80 years.  I don't think there is any question about that.

5773             So it means the bookends are we just simply throw up our hands on the one hand, and I don't think we want to do that; and the other one is, we try to figure out answers that may not be perfect but that achieve the bulk of the objectives that we can manage to do.

5774             Again, I'm not expecting that you have answers or that any of us have answers today, but part of what we are doing at this proceeding is trying to figure out ways collectively where we can address that issue.

5775             Most of the proposals, I think it is fair to say, that we are hearing from the industry, is relax of the rules, lower the thresholds, border, Canadian content, incentives for new artists, Smart regulation, all of which have the effect of providing ‑‑ I guess the operative word is "flexibility" that we are hearing from most broadcasters, and we hear you about that.

5776             But that is a one‑way direction.  That is sort of lowering the existing requirements.  Again, we hear you and we will consider what you are saying.

5777             But I guess the problem will still remain, because at whatever level you have, unless you assume that the objectives are going to disappear, you are probably going to still be combatting market forces to some extent.  So the challenge will remain at whatever level you are, where you are now, higher or lower, and again we have to try to work towards those objectives.

5778             I appreciate that you don't want to take the time before us to do other than get your message across, which is for the moment you think you need the flexibility.

5779             MR. SKI:  Well, we would certainly be pleased to add more if we had the answers for you today.  Unfortunately, this hearing is coming at a time when we don't have the answers, when I think we are all searching for the answers.

5780             I think, as I said, the people certainly on this panel have been in the radio business for many, many years ‑‑ it's our passion.  It's why we get up every morning ‑‑ and we are very optimistic about the radio business, but we are very cautiously optimistic too, because we just don't know what's around the corner.

5781             We see all these things coming before us that we just have never seen before.  We have known what we have been up against.

5782             But when you can go to something like ‑‑ you may have seen pandora.com, the Music Genome Project, where you now can go to the internet, you can log on, and through this particular process, by logging on, you can create 100 radio stations that the Music Genome Project creates for you, something that you can do.  So suddenly you have 100 radio stations that are streaming stations.

5783             So how do we compete with that?  Those are the things that I can tell you there are some sleepless nights and many long days and meetings while we try to figure this out.

5784             And it's not easy, because every day there is something like pandora that is coming along.

5785             THE CHAIRPERSON:  Sure.

5786             MR. SKI:  It's not as if it's one thing comes along that we have to deal with, like we had to deal with television many years ago obviously and recreate our business plan, our business model.

5787             Now what we have to do is, one day it's this, one day it's the internet, the next day it's satellite radio, the next day it's a change for instance in the methodology for measuring our media, the personal people meter, which is going to change the way our business model again is managed.

5788             So it's all of these things that are coming at us.

5789             THE CHAIRPERSON:  And there is going to be a lot of trial and error.  The good news is that you are coming off some very healthy years which are continuing financially and that now is the time to make the investments, both in the expertise for the ideas and in the technological know‑how, so that you can not just treat them as competitive to you but that you can actually harness them for your own promotion.

5790             Because you still do maintain powerful brands in this country and powerful listener identification which works in your favour in addition to your balance sheets and I'm sure that you are doing that as well.

5791             MR. SKI:  Well, the brands are important certainly.  It's a little different.

5792             I heard your comment the other day about Desperate Housewives, and that is a little different than radio in that not everybody can play Desperate Housewives; everybody can play Britney Spears if they want to.

5793             THE CHAIRPERSON:  Right.

5794             MR. SKI:  So we don't operate in that vacuum either, even within our own industry.

5795             I would just like to comment, too, on the fact that we have had some good years, there is no question, and we are quite proud of that.  But it was only a few short years ago that CHUM embarked on another experiment to try to recreate AM radio and do some things differently which dramatically affected the profits of the company.

5796             We see going through that kind of a phase again.  You obviously have our numbers.  You know that when you try to do different things they don't always work.  We have had some successes and some failures and we think that is going to continue to happen.

5797             THE CHAIRPERSON:  Right.  I think the whole industry is, and the industry as it is ever more broadly being defined.

5798             Let me ask you just a few specifics on other parts of your brief, which we have read.

5799             One is on LMAs and LSAs.

5800             We set out in the Public Notice at paragraph 37 the concerns that the Commission has had with LMAs and LSAs, and yet CHUM is, particularly in its brief, making a pitch for their utilization.

5801             If I could I will ask you just a few points of information about LSAs at this point, because I think the issues pro and con are fairly clear.

5802             One question I have is the financial impact that you think it would make on your stations operating in a market in quantitative terms.

5803             How would you estimate the financial benefit to you of using an LSA as distinct from not using an LSA in a given market?  I appreciate it will vary from market to market, but what is it worth to you in dollar terms?

5804             MR. SKI:  I think that it might be difficult to give you an exact number or a percentage.  Kerry may be able to comment on that.

5805             What it allows us to do, especially given the fact ‑‑ and I know it has been chatted about here ‑‑ that radio swims in its own pond again, and it really doesn't.  When our salespeople go out every day, they are competing against all media, not just the other radio stations in the market.  In fact, we would rather not compete against the other stations in the market.  We think there needs to be a more holistic approach.

5806             But the key with an LSA is in part to try to increase the share of market, increase radio's share.  I think we all know that while radio commands 30 percent, roughly, of media usage, our share of market remains less than 10 percent.  It is something that we have had real challenges in growing.

5807             We think LSAs will help that, because what it does, it ‑‑

5808             THE CHAIRPERSON:  Excuse me, Mr. Ski.

5809             MR. SKI:  Yes?

5810             THE CHAIRPERSON:  You say your share of market remains less than 10 percent.

5811             What are you referring to there?

5812             MR. SKI:  Referring just to our share of media revenue, advertising revenue.

5813             THE CHAIRPERSON:  Well, the numbers we have are closer to 14, 15 percent.  I'm looking at the Carat expert table that we have here that I'm sure we could show you which basically show that the share of radio, of total media, including billboards, weeklies, and so forth, has remained pretty constant at about 14.5 percent from 1996 through '05.

5814             Is it you are rounding that to 10 percent?

5815             MR. SKI:  Rounding down to 10, no.

‑‑‑ Laughter / Rires

5816             MR. SKI:  No.  No.

5817             I will ask Kerry to comment on that

5818             MS FRENCH:  I think there are several media ‑‑ radio share of total Ad Spend figures out there and they range between 9 and 15.  It really depends on which media are included in the total number of advertising dollars.

5819             Quite often ‑‑ I don't know about the specific figures that you are referring to ‑‑ they might not include internet advertising or many of the new ‑‑

5820             THE CHAIRPERSON:  No, Well, these purport to do ‑‑ I think the best thing is, we will make that chart available to you.

5821             I don't believe it's confidential, is it, the Carat expert table that we have here?

5822             No.  So we will make that available to you, but you will see a number that runs across pretty well at 14.5 percent, almost constant, whereas newspapers are declining quite clearly, and internet is increasing.  Radio remains pretty constant, a total $9 billion total media ad budget in '05 up from 5.5 in '96.  The 14.5 percent seems to be like an iron law running through it as radio's share.

5823             But go ahead, Mr. Ski.

5824             MR. SKI:  We would be happy to see those numbers.

5825             THE CHAIRPERSON:  Yes.

5826             MR. SKI:  I think our point too, as you have mentioned, is the share has been fairly stable.  Despite the fact that we command 30 percent of media usage we are obviously trying to get that shared market up.

5827             THE CHAIRPERSON:  Yes.

5828             So I guess if you can think about showing us some financial impact, one way or the other.  Because I guess what it comes down to when you read the Competition Bureau's brief ‑‑ I mean quite apart from the fact that we debated is this a substitute or not, and I know your answer to that ‑‑ but what they come down to at the end is, they say even if you assume that it isn't, for those advertisers who wish to use radio in a given market, to the extent that they have no choice, that lessens competition.

5829             Whether or not that is sufficient to outweigh the other considerations, they don't say it is, but that's basically what they ‑‑ there will always be a core of people who, whatever their mix, will still want to use radio and to the extent that there is an LSA or LMA on the market their choice is either totally or partially curtailed and hence that, in their view, lessens competition, which they propose we provide reasons for offsetting if we choose to offset that consideration.

5830             I don't know whether you want to address that comment or not?

5831             MR. SKI:  Yes, we would.

5832             We obviously disagree with that, because of some of the comments we have made ‑‑ I will ask David to comment on this.

5833             But I think, too, what we are asking for really is that stations are allowed to enter into an LSA up to the number of stations they would normally be allowed under the MLO policy, which obviously the Commission reviewed and felt was appropriate at the time.

5834             So we are not asking to go above that number, we are saying based on he multiple licence ownership policy we be allowed to have that same number of radio stations under an LSA.

5835             David...?

5836             MR. GOLDSTEIN:  Thanks, Paul.

5837             Only to reiterate that again our position is that it would be consistent with the MLO policy which we think has already stood the test of the competitive analysis that was done in 1998.  It's only one tool in the toolbox that the Commission has to in fact allow continued diversity of ownership in certain markets given certain parameters.

5838             THE CHAIRPERSON:  All right.

5839             Do you concur with the CAB proposal in regard to the criteria that you would adhere to under LSAs?  Paragraph 199 of their brief.

5840             Use it for local advertising only, maintain distinct and separate programming services, distinct and separate news voices, and otherwise maintain distinct stations operations of the criteria?

5841             Is that what you ‑‑

5842             MR. SKI:  I didn't remember every part of that, but the answer is yes.

‑‑‑ Laughter / Rires

5843             THE CHAIRPERSON:  All right.

5844             MR. SKI:  Thank you.

5845             It was a late night.

5846             THE CHAIRPERSON:  All right.  I think I have your position on that.

5847             The elements on your own profit and loss statements that would be affected with an LSA, then, are what?  Promotional expenses, administrative expenses?

5848             Where would you find savings in your own operations?

5849             MR. SKI:  LSAs, unlike LMAs, the primary reason for them is not necessarily to find savings, although there are some.

5850             You have obviously a saving if you have a sales manager who is responsible for a series of radio stations as except for just one station.

5851             THE CHAIRPERSON:  Right.

5852             MR. SKI:  The other part of it is that what it enables you to do is to have salespeople who are better trained.  CHUM obviously has been a big proponent of our CHUM client solutions where we think that the differentiating point between our sales people, our ales process and others in all media is going to be the salesperson.

5853             We have research that shows that the top three reasons that advertisers buy has nothing to do with rate ‑‑ which might challenge the Competition Bureau's comment ‑‑ and everything to do with the quality of the salesperson.

5854             So it is not necessarily a saving so much as it using our resources in a better way.

5855             THE CHAIRPERSON:  Right.  What is the formula for allocating revenues from those sales?

5856             MR. SKI:  The revenues in an LSA, as we see it, are allocated based on two things.

5857             One, first of all, in an LSA not all stations are bought at the same time.  At a previous hearing we mentioned I think 80 percent of those who bought the radio station under an LSA bought one station.  Those who do buy a multiple number of stations, the revenue is allocated based on share of market relative to the buy.  So if you have a 10‑share or a 5‑share it is allocated proportionately.

5858             THE CHAIRPERSON:  Right.  You don't have a ballpark figure for the impact that an LSA has on your own financials?

5859             MR. SKI:  We don't at this time, but we would be happy to possibly do a work‑up for you on that and come back with a number.

5860             THE CHAIRPERSON:  Thank you.

5861             Commissioner Cugini...?

5862             COMMISSIONER CUGINI:  Thank you.

5863             Good morning.  You heard me tell Corus that I like real‑world examples, so Mr. Farina, perhaps you could clarify for me, or elaborate for me rather,on the emerging artist test and the bonuses that you would claim by applying the test.  And thank you for simplifying the definition for me.

5864             How much do you think the CanCon percentage will fluctuate from week to week, on CHUM‑FM for example, when claiming the emerging artist bonus?

5865             MR. FARINA:  Right, okay.

5866             First of all, we should clarify that on radio stations ‑‑ and I know the CAB report alluded to this ‑‑ that when attracting a mass audience familiarity is really important in a radio station.  An audience wants to know what they are getting from the radio station and they want to count on the fact that they are going to get their favourite song or favourite songs when they tune that radio station in.

5867             So the idea of broadcasters using this quota to completely overhaul all their established Canadian artists for an entirely unknown, unfamiliar emerging artist to try to bring their CanCon down is a little misguided because it is bad business sense for us.

5868             We actually did a study, a three‑day study on a 6:00 a.m. to 6:00 p.m. based on CHUM‑FM alone in Toronto where we currently run at about the 35.5, 36, 36.5 range.  Our percentage changed to an average of about 38.5, 39 with emerging artists.

5869             I should say that as a Hot AC station we are probably one of the most aggressive stations in Canada in terms of airing emerging artists.  We are obviously not up at the level that a station like a Modern rock would be who, you know, their music base is based a lot more on new artists.  So it doesn't really offer a real bottom level of Canadian content happening on our radio station.

5870             What it does do is, I think it incents broadcasters to be able to take a chance on new and emerging artists.  I think when we went from 30 to 35 percent, because being able to do a specified format to a mass market playing contemporary music, it's really hard.  I know you are going to be hearing from some other broadcasters that are at higher thresholds, 40 percent.

5871             So what we saw with the move to 35 percent ‑‑ and we saw many broadcasters, CHUM included, moving to Gold‑based formats.

5872             One of the reasons for that is, it allowed them to fulfil their commitment by playing familiar titles from a number of different decades, and what happened to the music industry was it lost many avenues on terrestrial radio for its new and emerging artists to be heard.

5873             Top 40 is a problem in Canada right now.  There are not a lot of Top 40 stations.  The Urban market has really bottomed out in this country.  We have seen the rise of the Jacks, the Bobs, the Daves, and as well as the continuing growth of Classic Rock throughout Canada, none of which offer platforms for emerging artists.

5874             COMMISSIONER CUGINI:  But your bottom line is that it is a gold based format.  Nonetheless, it is enough of an incentive for you to take the risk to play more emerging artists.

5875             MR. FARINA:  Well, we are not a gold based format.  We are a current based format.

5876             I will give you an example.  One of our recurrent records, which is a record that is not in a current rotation any more but one of the records that is in heavy rotation, is Arcade Fire.

5877             Arcade Fire is hardly who we would classify as a gold based act.  So we are a current based format.

5878             And it is hard to say whether stations in current gold based formats are going to be doing huge overhauls.  But with an incentive in place, I think we will see more opportunities for new emerging artists on the radio and we may see a shift in the amount of format diversity available on the airwaves now because it may be easier to fulfil the CanCon commitments while providing a real focused format to our audiences.

5879             COMMISSIONER CUGINI:  Thank you.

5880             Thank you, Mr. Chairman.

5881             THE CHAIRPERSON:  Thank you.

5882             Commissioner Pennefather?

5883             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

5884             Good morning.

5885             I just wanted to question you a little bit more about your CTD comments, your recommendations.

5886             You have four bullets on page 24 and it is very clearly presented.

5887             The last bullet:

"Applicants for new licences should be allowed to propose initiatives that benefit the broadcasting system and further the objectives of the broadcast policy of Canada."

5888             And your example is the AVR.

5889             That being said, my assumption is that goes beyond the list presented in the CAB proposal, which refers to cultural organizations, education, mentorship, scholarship, outreach.  It would go beyond that.

5890             Is that correct?

5891             MR. SKI:  I will ask David Goldstein to respond to that question.

5892             MR. GOLDSTEIN:  Thank you.  The short answer to that is yes, because we think that the Act provides for several forms of diversity.  And frankly, it is something that CHUM has been doing, as we believe we have pushed the envelope in these areas over time.

5893             Sarah could talk to some of those initiatives.

5894             Obviously I think there is room for some experimentation and some pushing of the limits in order to benefit what the Act, we believe, provided for.

5895             COMMISSIONER PENNEFATHER:  No.  I think I take that point.

5896             Obviously, as you know, during this hearing and in the submissions we have there are various proposals for various funds which of course base their rationale on exactly those points: policy and public interest.

5897             Let me ask you, though:  Considering the discussion with the Chairman earlier and a little bit of the chicken and egg problem of "I'll follow it if I hear it; if I don't hear it, I won't know it" in terms of Canadian music, this brings to mind CTD.

5898             As Mr. Roman knows, that is part of the picture.

5899             What would be your comment on this sector of CTD: namely, the discretionary voluntary sector in new applications of the Commission looking at a percentage or a component of that which would be for emerging artists?

5900             Would you care to comment on that?

5901             MR. ROMAN:  We are talking about discretionary CD.

5902             COMMISSIONER PENNEFATHER:  That's right.

5903             MR. ROMAN:  Are we talking about that in connection with significant benefits, that 1 percent or are we talking ‑‑

5904             COMMISSIONER PENNEFATHER:  No.  I am talking about, just to be clear, your four points.

5905             MR. ROMAN:  Yes.

5906             COMMISSIONER PENNEFATHER:  You have covered the significant benefits, the CAB plan and all other spending.

5907             But you have this section on applicants for new licences allowed to propose initiatives.

5908             So it is really in the new licensing context, where there is a fair amount of discretion.  In your view, would it be interesting to have a component or going forward a percentage for emerging artists: in other words, smart CTD?

5909             MR. ROMAN:  That is an interesting proposition, smart CTD.

5910             Essentially, we would tend to resist firm quotas, I think, on this.  I think there are certain CTDs that lend themselves to a particular market or a particular licence application and that kind of flexibility would show as responding creatively to preparing a new CTD initiative.

5911             On that area, I haven't fully arrived at any kind of quota or percentage.

5912             MR. SKI:  But it is an interesting concept and one I think we would look at.  I think as Duff said, we have to look at obviously when we look at the market.

5913             But it is something we would think about.

5914             COMMISSIONER PENNEFATHER:  If you could get back to us ‑‑ as you expand on your four points, the first three are crystal clear and they connect to the CAB proposal, but the fourth point leaves a little more room for discussion.

5915             So if you could get back to us on that, that would be appreciated.

5916             MR. SKI:  Certainly.

5917             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

5918             THE CHAIRPERSON:  Thank you.

5919             Monsieur Arpin?

5920             COMMISSIONER ARPIN:  Thank you very much, Mr. Chairman.

5921             I cannot miss the opportunity to ask you a few questions on DAB.  I will refrain myself for the time being for the transitional digital period that have gone through from 1995 until to date.

5922             I know Mr. Roman personally, you have been quite involved through that period.  But I want to learn more about what CHUM did during that as an alternative programming with ancillary data.

5923             If you could in a few strokes let us understand how you use the DAB technology to try to develop something for the marketplace.

5924             We won't raise the issue of receivers.  I think we are all well aware there has been only a limited number of receivers available.

5925             The question also could be ‑‑ and let's see if you can address it:  Did you get any feedback from listeners, other than the ones who had one or more receiver?

5926             MR. ROMAN:  Thank you, Mr. Vice‑Chair.

5927             It has been an interesting ride.  And as you so politely noted, I have been involved at the forefront, involved through digital radio research and then digital radio roll‑out since 1995.

5928             I will give you a quick capsule.

5929             At its height we had 62 digital services operating in Canada.  We achieved a population penetration of about 35 percent, or about 11 million people, that would be at reach of those digital signals.

5930             We still are operating 25 DAB signals in Toronto.  I think our 15 signals are still up ‑‑ 13 signals are up in Montreal.  We continue to operate CHUM signals in both Montreal and Toronto.

5931             The CBC was in co‑operation with us in Windsor and they have removed some equipment that has taken the signal down in Windsor.

5932             We operated a trial of more than five services in a pod in Halifax and had very successful results with that.

5933             And I believe the CBC continues to operate DAB in Ottawa.

5934             So essentially that's the background.

5935             Over the course of those years, I would say that CHUM through my representation on DRI made a huge commitment, both time and effort and essentially visibility.

5936             The key there was to achieve the mandates of DRI:  the promotion of publicity of DRI; the testing of the technology; the liaison with the automotive industry.

5937             And to a large degree we did all of those things.

5938             I am going to get to the point of the ancillary data and the 14 hours, but I just want to make a couple of things clear.

5939             When I received my marching orders to liaise with the automotive industry, I am really sure in hindsight that our stakeholders at DRI and the industry did not really dream of achieving any success with the largest auto player in North America at that time, and that's General Motors.

5940             As you are well aware, Mr. Vice‑Chair, Canadian‑born Maureen Kempston Darkes appeared at the CAB and made the commitment on behalf of General Motors to put DAB in 26 models across the line.

5941             What they had asked for, because of the nature of their business, is a firm commitment from the broadcasters as to when we would be bringing DAB to those cities that reside between Windsor in the east and Vancouver in the west.

5942             We simply couldn't give them the answers for Winnipeg, for Calgary, for Edmonton, for Saskatoon, for Regina.

5943             Initially, as our discussions went on, and as we more and more were aware that the U.S. was not going to follow our lead, that they were taking a totally different DAB track, eventually General Motors, who have a limited window in which new electronics can be fitted into their telematics and schematics for the way they build the electronic harnesses for radio, had to move on.

5944             I just want to make the point that General Motors was there for us and that the cost of disengaging from our initiative was $13 million in cash from General Motors due to their commitment with Siemens in Germany for the radios.

5945             So to that end, we missed a great opportunity there.

5946             But to get to the point.  We used sub‑channels at two Canadian auto shows, demonstrating that the DAB pods, which in Canada approximately five services are run, we did sub‑divide those into specialized music channels that we displayed in fact at the General Motors booth at the auto shows.

5947             We didn't spend a lot of time on the 14 hours.  I and my company, with their backing, were spending a lot more time on the macro picture, on the work that DRI was doing, on keeping our membership enthused and positive and involved in DRI, as you well know, essentially trying to carry out that mandate.

5948             We had a very, very successful test, though, of broadband transmission technology.  And that is that we successfully produced 12 services in a pod that normally has five services.

5949             And we operated a 72‑service test facility from 1331 Yonge Street for a number of months, using equipment from stakeholders who are basically the manufacturers of that technology.

5950             It went to question that had been raised at other discussions that we have had with the Chair and with other Members of this Commission regarding spectrum.

5951             There is 40 megahertz of spectrum out there.  Compression technologies will make it even more efficient to be used.

5952             COMMISSIONER ARPIN:  Thank you.

5953             Regarding the future there are various assumptions that are made.  I think you talk about more compression.  Others are talking about other technology than DAB per se.

5954             Do you think, based on your experience, that eventually there will be receivers for the Canadian market?

5955             I know that in your own submission you are talking about software‑defined radio receivers.  You referred us to an article that is called "Cognitive Radio Receivers".

5956             Do you foresee that that is the avenue that should be pursued?

5957             MR. ROMAN:  Well, absolutely.  I see that but I also see a very fundamental point that goes to the heart of the transition policy that we have now, and that was our move to DAB was based on it being a replacement technology.

5958             I think what we have learned is it has to be a policy that encompasses flexibility, unique and distinctive programming.

5959             In other words, the entire marketing proposition of having an FM or an AM station sounding better was a little like AM stereo.  It didn't offer enough.

5960             We think that the business proposition can be found in those sub‑channels, in those multiplexing channels, in those areas where we can bring a different listening experience to our listeners and consumers.  And for that, we are really going to require flexibility.

5961             There should be fewer restrictions.  There should be an effort, I think, to encourage in every way possible our viability as digital operators in the new reality.  We must go digital eventually.

5962             But I don't think we should constrict ourselves now to be picking a standard.  I think it's early in the game with IBOC.  I think there is enough encouragement with the use of L‑Band in the U.K. and in Asia that there will be receivers on the market.  There are 31 different models of receivers in the U.K. today.

5963             I was very heartened to hear Ray Carnovale for the CBC, that again using a Eureka based technology, DMB, Digital Multimedia Broadcasting, that already in Korea Samsung, and not far behind are LG, Sony, Erickson and Nokia with DMB receivers, which are essentially cell phones with a DAB over‑the‑air component.

5964             We are very excited about that.

5965             Receivers will arrive once you have the infrastructure built and once you have made a permanent commitment to be there in the long haul.  That is what the manufacturers want.

5966             We had receivers distributed nationally by Radio Shack, produced in Korea by Perstel, but when they realized that they couldn't hear anything between Windsor and Vancouver, they got less than excited about the proposal.

5967             And even within our cities, unless we are fully rolled out with all the gap fillers, all of the ground repeaters, similar to what even the satellite operators need in order to get their signals into the urban area, you can't really say that DAB was ever launched in Canada.  We are still at the implementation and experimentation stage.

5968             COMMISSIONER ARPIN:  Thank you very much.

5969             THE CHAIRPERSON:  Thank you very much, ladies and gentlemen.  Those are our questions.

5970             MR. SKI:  Thank you.

5971             THE CHAIRPERSON:  Madam Secretary.

5972             LA SECRÉTAIRE:  Merci, monsieur le Président.

5973             I would now invite the next participant, Standard Radio Inc., to come forward for their presentation.

‑‑‑ Pause

5974             THE SECRETARY:  Mr. Rob Braide is appearing for the participant.

5975             I would ask that you introduce your colleague.  You will have ten minutes for your presentation.  Thank you.

5976             THE CHAIRPERSON:  Less Mr. Kim's time.

5977             MR. BRAIDE:  I'm sorry?

5978             THE CHAIRPERSON:  Less Mr. Kim's time.

‑‑‑ Laughter / Rires

PRESENTATION / PRÉSENTATION

5979             MR. BRAIDE:  Thank you, Madam Secretary.

5980             Good morning, Mr. Chair, Vice‑Chair, Members of the Commission.  It's a pleasure to be in front of you again, in a slightly smaller number this morning.

5981             I would like to start off by introducing, on my left, Grant Buchanan, who is our counsel from McCarthy Tétrault in Toronto; and on my right, Jean‑Marie Heimrath, who is the President of Standard Interactive, a division of Standard Radio, which, Mr. Dolfen, you made reference to in the CAB's presentation the other day.

5982             Let me start off by conveying an apology on behalf of our fearless leader Gary Slaight.  I know that he has communicated directly with the Chair regarding this matter.  He has had a significant family crisis and has not been able to leave Toronto.

5983             He sends his regrets.

5984             Another small change in our presentation is that Andy Kim, thank you to our friends at UDA, was able to appear yesterday.  So we have a considerably condensed presentation.  So I will speak slowly.

‑‑‑ Laughter / Rires

5985             MR. BRAIDE:  As the Commission knows, Standard Radio is owned by Standard Broadcasting Corporation Limited, which is Canada's largest privately owned multimedia company.

5986             Standard is an active member of the CAB and we are pleased to endorse the submission made by the CAB in this proceeding.

5987             In our short time here today, we will speak primarily about how to best support emerging Canadian artists, both as regards airplay and funding.

5988             Finally, we will close with our thoughts about the hit/non‑hit rule and our recommendation that they be eliminated.

5989             Given the understandable time limitations, we won't cover Standard's new media investments, such as Sirius Canada and Iceberg Media, in our main presentation.  But as I mentioned, Mr. Heimrath is here today to respond to your questions in particular in regard to Iceberg Media.

5990             Despite the proliferation of new media, Canadian radio has played and will continue to play a pivotal role in getting new Canadian artists launched.  Standard performs a significant role in that process in terms of airplay, the funding of FACTOR, Musique Action, the Radio Starmaker Fund and Fonds RadioStar, and makes significant copyright payments.

5991             In the five‑year period from 2002 to 2006 Standard will have expended over $20 million for Canadian Talent Development support.

5992             Standard also runs free 30‑second promotional spots for newly released albums by Canadian artists on its music stations across Canada.

5993             The value of this plan in terms of free airtime for Canadian artists is about $2 million a year.

5994             Based on our experience, we feel that what is needed is an enhanced 35 percent policy that provides an incentive for stations to play new Canadian music, and in that regard Standard also supports the CAB proposal.

5995             Everyone in this room understands that Canadian private radio is vital to the breaking of new and emerging Canadian artists.  Standard understands the motivations of each of the industry groups that champions different approaches.  Nevertheless, it supports the CAB's proposed policy framework that incents both the airing of new music and the targeting of CTD contributions.

5996             As the Commission has already heard, sales levels for Canadian music are far lower than the current Canadian quota level of 35 percent, and they are only slightly higher than when the quota was at 30 percent.

5997             If the 35 percent quota were increased, this would simply increase the already large discrepancy between what radio stations are required to play and what the reality of the marketplace wants to purchase.

5998             Like many others in the room yesterday, we were surprised to hear CRIA's about‑face, first explaining why they changed their position, then explaining that they had not really changed it at all.

5999             Two comments are in order.

6000             First, nothing is impossible for the person who doesn't have to do it.

6001             Second, it is too bad that the Commission didn't have the power to regulate CRIA's multinational members.  If they had to produce 35 percent Canadian content, maybe it would be easier for all of us.

6002             They suggest that we only get a bonus in AM and PM drive.  Broadcasters know that the universe is changing.  We need to do everything we can to maintain audience, and that means playing familiar music in drive periods.

6003             The bottom line is that CanCon test below the mean.  We need all the tools available to us while satisfying the imperatives of the Act.

6004             As regards funding, CAB has proposed that there be a movement away from the funding of FACTOR and Musique Action by Canadian radio and instead toward the funding of Starmaker, Fonds RadioStar.  Perhaps this idea requires some clarification.

6005             It is not our desire to see FACTOR, Musique Action anything but strong.  We will be recommending to the CAB that the current level of $1.8 million flowing from broadcasters be maintained.

6006             However, of primary importance to us is that all monies should be spent in a transparent fashion with full accountability.

6007             This is the prime reason that these dollars must flow through a commercial fund.

6008             Let's also remember that the two satellite companies have committed approximately $22 million to FACTOR/Musique Action over the next seven years of licence, or the first seven years.

6009             In conclusion, Standard believes that there is sufficient real indicators of future concerns for radio that the CAB proposals make a lot of sense.

‑‑‑ Pause

6010             MR. BRAIDE:  While we are missing a section of the written presentation that we have submitted to you, we also wanted to refer to our position on the elimination of the hit/non‑hit policy.

6011             We feel very strongly that over the past few years while the francophone broadcasters have seen a light diminution in pbits, their successes are not dissimilar to the successes seen by English Canadian radio broadcasters and particularly those in Montreal.

6012             We feel that the CRTC has created an ecology in Montreal radio.  That ecology ‑‑ and I will say Montreal radio.  Sorry, I'm a Montreal operator.  But in terms of the Montreal‑Ottawa‑Gatineau marketplaces.

6013             We feel that that ecology is defined by 65 percent ‑‑ 55 percent in certain day parts ‑‑ French vocal music and the requirement for English broadcasters in those two markets to continue to maintain the hit/non‑hit policy, which the Commission has in its wisdom eliminated in all parts of the country except for Montreal‑Ottawa‑Hull.

6014             We believe that if there is a decrease, as requested by the francophone broadcasters, in the 65 percent vocal music system that that changes the ecology of the English marketplace.  We feel strongly that if there is a change in that ecology, there should be an elimination of the hit/non‑hit requirement.

6015             I think, summing up that concept, is that the CAB and many other broadcasters, and now Standard Broadcasting as well, have said over and over again that this is a changing environment.  We need all the tools available to us in order to compete with things that are not of our control, nor of the Commission's control.

6016             We ask the Commission that we not be forced to compete with one arm tied behind our backs.

6017             In conclusion, we believe that there are sufficient real indicators of future concerns for radio that the CAB proposals do make a lot of sense.  There are lots of ways for listeners to receive music, and there seem to be more each day.

6018             Standard understands and accepts the bargain that it has with the regulators in exchange for its use of public spectrum.  It pays CTD, plays Canadian content and it pays significant copyright fees.

6019             It does all kinds of things that its unregulated competitors do not do, and we are proud of the contributions that we make and the success enjoyed by the artists that we promote.

6020             We hope and trust that you will give radio the tools to continue to play its key role and that you will approve the plan the CAB has put in front of you.

6021             We would be pleased to respond to your questions.  Thank you.

6022             THE CHAIRPERSON:  Thank you, Mr. Braide.  I did receive the communication from Mr. Slaight.  Please convey our best wishes to him and his mother.

6023             MR. BRAIDE:  I will do.  Thank you, sir.

6024             THE CHAIRPERSON:  Commissioner Cugini.

6025             COMMISSIONER CUGINI:  Thank you.  Good morning.

6026             Just some practical questions with regard to the CAB bonus incentive plan.

6027             As you said, you are an owner of 51 stations across Canada.  How many of those stations will be able to take advantage of that bonus incentive plan if we approve it?

6028             MR. BRAIDE:  I don't have a specific number, Madam Commissioner, but certainly it would be virtually all of our FM radio stations.

6029             COMMISSIONER CUGINI:  All of your FM radio stations.

6030             MR. BRAIDE:  Virtually all.

6031             COMMISSIONER CUGINI:  Okay.

6032             This is going to create ‑‑ or maybe create is the wrong word.  But there is going to be a reliance on that BDS list for radio stations to program their play lists so they can identify who is an emerging artist and who isn't.

6033             How much reliance do your stations currently have on that list to come up with a play list?

6034             MR. BRAIDE:  We actually use Media Base, which is a company that we have an interest in.

6035             COMMISSIONER CUGINI:  It's an either/or.  Right?  It's either Media Base or BDS.

6036             MR. BRAIDE:  Absolutely.  Either Media Base or BDS.

6037             COMMISSIONER CUGINI:  Yes.

6038             MR. BRAIDE:  We tend ‑‑ our programmers use those databases or Media Base quite a lot.  I think you would be hard pressed to find a Standard programmer in the group who didn't have Media Base up on his or her screen, I would say virtually daily.

6039             COMMISSIONER CUGINI:  And have you done an analysis as to ‑‑ this is similar to the question that I asked Corus this morning.

6040             Based on this new definition of an emerging artist, by how much will that increase the broadcast of emerging artists on your stations?

6041             Pick a couple to use as examples.

6042             MR. BRAIDE:  I think that the CAB's evaluation is approximately correct, that an extra six plays per day would lead to, I believe, 30 spins per week.

6043             I think that perhaps I could answer you by going in the opposite direction ‑‑

6044             COMMISSIONER CUGINI:  Sure.

6045             MR. BRAIDE:  ‑‑ in an analysis that we did on the application of the bonus system as regards emerging artists.

6046             It has been said many times, Madam Commissioner, that 35 percent is considered a maximum by Canadian radio.  That is just not the case.

6047             I have three days of our CJFM Mix 96 in Montreal from just a couple of weeks ago, and each day we are between 36 and 37 percent.

6048             If we apply the emerging artist bonus using the .25 credit, the first day we landed 31.9 percent.  The second day, based upon 36.2 percent, it is 31.4 percent effective Canadian content.  And then 32 percent.

6049             The CAB says between 2 and 3 percent decrease in CanCon.  We see maybe a point more in this particular example.

6050             I hope that answers your question.

6051             COMMISSIONER CUGINI:  And in terms of numbers of emerging artists, did you do that kind of analysis?

6052             MR. BRAIDE:  I notice that Corus came up with ‑‑ I think they said they were playing on CFNY four per day.  That varies from format to format, clearly.

6053             COMMISSIONER CUGINI:  Right.

6054             MR. BRAIDE:  I would be surprised if we were playing less than that on, for example, our current based radio stations right now.

6055             And interestingly enough, we tend to be playing a great deal of that music, for example, on CHOM‑FM in Montreal, a Classic Rock radio station, because there tend to be a lot of emerging artists in the sort of Rock genre.

6056             And our trade‑off between Classic Rock and Canadian content is a discussion we can have, if you want, regarding library formats.  But that may be for another moment.

6057             COMMISSIONER CUGINI:  Well, you did mention your higher levels of Canadian content.  And you happen to be part owner, I believe, of the Urban Rhythm radio station in Calgary that was licensed in 2001 at 40 percent Canadian content.

6058             If we apply the bonus incentive program, we know the CAB plan is 35 percent Canadian content with a floor of 30, what will your floor be on this 40 percent Canadian content station?

6059             MR. BRAIDE:  I can't answer that question directly, but we would undertake to get back to you with that number.

6060             Specifically regarding the Calgary radio station?

6061             COMMISSIONER CUGINI:  It is the only one that is at 40 percent.

6062             MR. BRAIDE:  Yes.

6063             COMMISSIONER CUGINI:  As per condition of licence.

6064             MR. BRAIDE:  Yes.

6065             COMMISSIONER CUGINI:  Then yes, in regard to that.

6066             MR. BRAIDE:  We would undertake to respond to you on that.

6067             COMMISSIONER CUGINI:  Thank you.

6068             And thank you very much, Mr. Chairman.  Those are my questions.

6069             THE CHAIRPERSON:  Thank you very much.

6070             Vice‑Chair Arpin?

6071             COMMISSIONER ARPIN:  Thank you.

6072             Mr. Braide, both Astral and Cogeco mention in their submission that the three FM Montreal radio stations have increased significantly their listenership of francophone.

6073             If you agree with that statement, to what factor do you attribute that increase?

6074             Is this factor to be taken into consideration in assessing the ecology of the Montreal and Ottawa‑Gatineau markets?

6075             MR. BRAIDE:  Mr. Vice‑Chair, I am deeply confused by their perspective.

6076             I have worked in Montreal radio.  I started off as a disc jockey at CHOM in 1977 and I have been fortunate enough to ply my entire career in that lovely city.

6077             One thing that I knew the day I started at CHOM was that 70 percent of its audience was francophone.

6078             Another thing I know today, some 30 years later, is that 70 percent of its audience is francophone.

6079             There has been no demonstrable change in percentages of francophone tuning to any of the three English FM stations that I believe they would be referring to: our CHOM‑FM, our CJFM Mix 96 and Corus' Q92.

6080             And believe me, I watch this stuff like a hawk because we don't get a lot of credit for our bilingual tuning, as I believe you well know, and only sell our anglo tuning.

6081             For example, CHOM only has 30 percent of its cumulative audience available for sale, because again we don't get credit.

6082             So we watch very, very closely what percentage of our audience is francophone.

6083             That number hasn't changed and I don't understand where they got their figures.

6084             Believe me, I've been in that seat for over 30 years in that marketplace and the needle has not moved.

6085             COMMISSIONER ARPIN:  Well, obviously they have taken their figures out of BBM.

6086             It has slipped over the years somehow and now it is coming back.  I think CHOM is probably a big factor in it because when you purchased it from CHUM you moved it back to its more Classic Rock format, and that surely brought more focus toward the francophone since there was no such format available in the French market.

6087             MR. BRAIDE:  I think, Mr. Arpin, what actually happened is that a lot of tire kickers came in, a lot of francophone tire kickers came in, if I can use that expression, and checked out the format.  There was great concern in the French market at the time because CHOM's tuning amongst the combined English and French market went significantly up.  But the numbers also show that within two books it started coming back down again in the total market but continued to grow in the English market.

6088             And at the same time the percentage of tuning by francophones to that radio station never changed substantially.

6089             In fact, francophone radio stations ‑‑ for example, Énergie, changed their status or their strategy and launched a Classic Rock semi‑format on Montreal CKMF to program almost exclusively anglophone Classic Rock in the afternoon drive period.

6090             And you know what?  Their tuning went up in that area.  CHOM's tuning went back down to its habitual level in the total Montreal market but continued to grow in the anglophone market, which I think was everybody's objective in that transfer of ownership.

6091             So again, Mr. Arpin, the ecology has not changed in terms of transfer of tuning.  Our numbers have remained static.

6092             I would love to see how they have worked out their logic.

6093             COMMISSIONER ARPIN:  Well, I am sure that you have various platforms to meet with them, so you will be able to discuss that with them further.

6094             Thank you very much.

6095             THE CHAIRPERSON:  Thank you.

6096             I have a few questions on Iceberg Radio.  Thank you for being here, Mr. Heimrath.

6097             First of all, is icebergradio.com roughly the channel that is on the satellite, the subscription radio service?

6098             MR. HEIMRATH:  No.  Not to be confused, there is a channel on Sirius Satellite called Iceberg 95, which happens to be the channel it is on.

6099             icebergradio.com does not have any programming on Sirius satellite.  They are two separate entities.

6100             THE CHAIRPERSON:  I see.  So are you in charge of programming the satellite channel?

6101             MR. HEIMRATH:  No.

6102             THE CHAIRPERSON:  I see.

6103             MR. HEIMRATH:  I am only responsible for the internet portion.

6104             THE CHAIRPERSON:  It says on your website that you currently have over 100 channels streaming commercial‑free music 24/7.

6105             MR. HEIMRATH:  That is correct.  There is approximately 15 genres.

6106             THE CHAIRPERSON:  Where do you source this music?

6107             MR. HEIMRATH:  Well, it is sourced from the record labels.  Any type of music that is available worldwide, that is where the music comes from.

6108             THE CHAIRPERSON:  And what is the rights situation with respect to that music?

6109             We heard earlier that there are rights issues with regard to ‑‑

6110             MR. HEIMRATH:  Well, there are several rights issues.

6111             We have licensing agreements with labels where we give them a percentage of revenues.

6112             Outside of that there is pending legislation now on copyright and SOCAN, and so forth, which is still pending.

6113             It is kept on the side.

6114             THE CHAIRPERSON:  Do you have a sense in your mix on those 100 channels what percentage of Canadian content there is?

6115             MR. HEIMRATH:  We don't program that way.  Essentially, we have several programmers, some fulltime, some part‑time, whose mandate is to find the best possible music in the world and it is programmed that way.

6116             Within the database there is no field that indicates where it comes from in terms of nationality.  We don't program that way.

6117             We simply do that because we are competing in an open market.  There are several ‑‑ I can give you several examples as to an internet broadcaster out of Chicago.

6118             ACU Radio, for example; 15 percent of their audience comes from Canada.

6119             LAUNCH, which is part of the Yahoo music offering, has 1.2 million Canadian listeners.

6120             So it is no longer a situation where we program for Canada.  Those borders don't exist any more.  They are gone, never to return.  So you are competing with quite a bit.

6121             THE CHAIRPERSON:  Right.  So you don't track ‑‑

6122             MR. HEIMRATH:  No.

6123             THE CHAIRPERSON:  ‑‑ what is Canadian when you do that.

6124             MR. HEIMRATH:  No.

6125             THE CHAIRPERSON:  And you don't have an estimate.  Do you use the Iceberg vehicle in order to promote artists that you carry on your regulated radio stations or on Sirius?

6126             MR. HEIMRATH:  We just don't program that way.  We will play anything that we believe, and our programmers believe, is solid good music.  If it's Canadian, good for the Canadian artist.

6127             THE CHAIRPERSON:  Right.  So it is an entirely independent operation in that sense.

6128             MR. HEIMRATH:  Yes.

6129             THE CHAIRPERSON:  And Mr. Braide, perhaps a question to you.

6130             So Iceberg Radio then really isn't part of a strategy of extending into the internet your radio services.  It is an effort to meet the requirements of that service, pure and simple.

6131             MR. BRAIDE:  Mr. Chair, we are very much a content oriented company and we feel that we are pretty good content providers and generators of content.

6132             I think the Slaight family has decided some years ago that it wanted to be present on as many platforms as possible.  That's why we entered the internet space.

6133             We see that our programming expertise is lent to a new medium by engaging in the internet space.

6134             The programmers from the radio group don't sit around with the programmers from Mr. Heimrath's group.  They act independently of each other.

6135             We just see it as another place to exercise what we think is an expertise in content generation, if that answers your question.

6136             THE CHAIRPERSON:  Yes.  I guess I'm a little surprised, in view of your mandate under the Broadcasting Act, that you wouldn't attempt to use that vehicle in a way to promote Canadian artists, without being required to do so of course.

6137             MR. BRAIDE:  No, listen, let me make something clear:  We use the internet space to promote Canadian artists by virtue of the websites attached to the individual radio operations.  We have very sophisticated back‑end operations ‑‑ again all of which have been developed by Mr. Heimrath's division ‑‑ which provide pretty remarkable access to information on artists of both Canadian and international stature.

6138             It is important that we differentiate the iceberg.com portal and the websites of individual radio stations.

6139             I believe I would speak for Mr. Slaight in saying we see these as two separate businesses which enjoy some synergies.

6140             I would say that if you were to look at the activities of iceberg ‑‑ and Mr. Heimrath can correct me if he feels I'm wrong ‑‑ that you would see a significant amount of Canadian expression on those sites, simply by virtue of the fact that there is a whole bunch of good Canadian music out there in those genres.

6141             THE CHAIRPERSON:  What would you say the synergies were?

6142             MR. BRAIDE:  Well, again, this is not part of the operation that I am involved in on a day‑to‑day basis so I will freelance a little bit here.

6143             But I think it wouldn't be dissimilar to the way we would look at the synergies between our three radio stations in Montréal.  Perhaps CJAD would not be as healthy financially if it had to pick up all the costs of doing business on its own, billing and invoices and sales management and administration and traffic and those kinds of elements.

6144             Certainly within a corporation as large as Standard there are opportunities to share resources between the various operating units and divisions.  I suspect that would be the most significant synergy, certainly on a business level.

6145             MR. HEIMRATH:  Just to add to that, some of the synergies that Rob was speaking of, Standard Interactive has developed for the radio stations a content management system that allows the radio stations to operate in that space in a more efficient way.  In the past, and in a lot of cases, radio station website are operating on an independent basis with no real comprehensive content management system which we have developed for Iceberg Radio to operate.  So that is a piece of software, if you wish, that we have been able to hand off to the radio stations so they can operate a little bit more efficiently.

6146             THE CHAIRPERSON:  Right.  In terms of managing their websites, for example?

6147             MR. HEIMRATH:  Yes.  The tools that have been given to the radio stations are basically functionality tools.

6148             In terms of operating on a content level, it is still at the discretion of the local radio station to insert and to remove content on an ongoing basis.  We don't influence that at all.

6149             THE CHAIRPERSON:  So it says on your website that ‑‑ network sites, it includes 28 radio station websites across Canada.  Sites cater to specific geo and demo targets.

6150             MR. HEIMRATH:  Yes.

6151             THE CHAIRPERSON:  Those are not entirely Standard stations.  Those are other stations as well?

6152             MR. HEIMRATH:  Well, the stations I think ‑‑ I'm not familiar with that particular piece of information, but I think that is making reference specifically to Standard‑owned and operated stations.

6153             THE CHAIRPERSON:  So those are Standard?

6154             MR. HEIMRATH:  Yes.

6155             THE CHAIRPERSON:  It says that you represent advertising on 80‑plus music and entertainment‑related websites, which I think that would presumably go beyond ‑‑

6156             MR. HEIMRATH:  Yes, to some degree.

6157             Well, the way that works is, as you may know, Iceberg Radio has been around for 10 years under two different names, one Virtually Canadian, which was the original name, and then while it was still a public company it moved to Iceberg Radio.

6158             The idea was that Iceberg Radio had a relatively small audience comparatively speaking in the grand scheme of things.  In order to compete in the marketplace, numbers in the area of, say, 150,000 unique visitors on a monthly basis is extremely small.  As a matter of fact, you are not even on the radar screen when it comes to the advertising community.

6159             The idea here is that if one was to compete in the marketplace, at least in that particular space, one has to be within the top 10 performing sites to even be on the buy.  So in order to do that, one must look at some strategy in terms of aggregating as much as you can to get those numbers up.

6160             It still takes an enormous amount of time and an enormous investment to build audiences, as everyone knows.  So the initial strategy was to take these radio stations collectively, bundle them, and then go back into the marketplace and offer something that is a little bit more palatable.

6161             THE CHAIRPERSON:  The study by Mr. Osborne in the CAB brief suggested that a number of people he interviewed suggested that one way to try to reach a younger demographic ‑‑ which the general sense is abandoning radio for some of these other platforms ‑‑ was to use these platforms to re‑attract them back to radio.

6162             Is that part of your marching orders, or is it again so separate that ‑‑

‑‑‑ Laughter / Rires

6163             MR. HEIMRATH:  Well, once again here is some perspective.

6164             Iceberg Radio, in spite of what people might think, the primary audience of Iceberg Radio is 25‑54.  It is not a young skewing audience.

6165             THE CHAIRPERSON:  I see.

6166             MR. HEIMRATH:  As a matter of fact, that audience ‑‑ and we can provide this to you if you would like it ‑‑ is that the Bell curve is the peak listening is at 3:00 p.m. in the afternoon.  It is at work.  People are listening more and more at work.

6167             MR. HEIMRATH:  Whether they are doing any work, I don't know.

6168             THE CHAIRPERSON:  You use the term "work" loosely here.

‑‑‑ Laughter / Rires

6169             MR. HEIMRATH:  Right.  In terms of the younger skewing audience, as you probably know as well, there are tremendous forces currently in the marketplace.  You have obviously heard of MySpace, Pitchfork, which garner huge audiences.  Even in Canada a community called Nexopia has in the area of 850,000 young teenagers.

6170             So in terms of radio trying to attract a younger skewing audience, it is going to be quite the challenge to try to bring them back.  I don't think it's going to happen.

6171             MR. BRAIDE:  If I could interject, Mr. Chair.  As has been mentioned already during these proceedings, the drop in youth tuning is not dissimilar to the drop that newspapers have seen and television has seen.  This seems to be a broad demographic trend as opposed to something just specifically related to radio, however radio is asking the Commission the ability to work a little bit more flexibly in order to respond to some of the technologies which are pulling these younger people away from it.

6172             THE CHAIRPERSON:  Right.  And the overall solution that's being transmitted to us is a reduction essentially in content levels or flexibility in respect of those levels.

6173             MR. BRAIDE:  I don't think you are seeing a request for a great deal of reduction in content levels.  I think I speak wearing my CAB Chair hat as much as my Standard hat here.

6174             What we are asking for ‑‑ I think if you examine the documents ‑‑ is pretty much a status quo situation, but what we find onerous is an increased level of quotas or something in contrast to a bonus system which allows us to be more flexible in terms of how we respond to these things.

6175             Again, we are not crying that the sky is falling here, but we are saying that there are storm clouds and that is how we would like the Commission to respond.

6176             I want it to be very clear that we are not asking to throw out all the regulations.  We feel comfortable in a regulated environment.

6177             THE CHAIRPERSON:  All right.  Okay, thank you for that.

6178             Commissioner Pennefather...?

6179             COMMISSIONER PENNEFATHER:  Just a quick question, Mr. Braide.  Put the Standard hat back on.

6180             MR. BRAIDE:  Firmly screwed on.

‑‑‑ Laughter / Rires

6181             COMMISSIONER PENNEFATHER:  Not too tight.  I'm going to ask you to take it off again after.

6182             You will be recommending to the CAB that the current level of $1.8 million flowing from broadcasters be maintained.

6183             By that do you mean that that would go directly to FACTOR or do you maintain that it would still go to the commercial fund, then back to FACTOR?

6184             MR. BRAIDE:  Thank you for asking that question.

6185             There has been a great deal of confusion surrounding this issue over the past few days and you have given me an opportunity perhaps once again to clarify, certainly Standard's position, and I think that one may be more clear on the part of the CAB by the deadline for filing of materials in Phase III.

6186             What we are saying is that we see ‑‑ again let's use the living marsh, the ecosystem of the MEC and the strongly funded FACTOR and the commercial fund.

6187             I think what the broadcasters are looking for is greater accountability, a greater transparency, the ability to identify a Canadian as a Canadian, that an individual who is either a landed immigrant or carries a Canadian passport can access funding.  We want a system which maintains a healthy FACTOR and we feel that by flowing monies through Starmaker and Fond Radiostar we can continue to satisfy FACTOR's requirements ‑‑ again, the $1.8 million is I think the 1998 number ‑‑

6188             COMMISSIONER PENNEFATHER:  It's the minimum?  It has actually the ‑‑

6189             MR. BRAIDE:  Precisely.

6190             COMMISSIONER PENNEFATHER:  It has actually been more, as you ‑‑

6191             MR. BRAIDE:  Precisely.  And I think we have to remind ourselves that there may be another $22 million coming from satellite radio and there may be other benefits falling from transactions and new licensing and licence renewals.  We are talking about minimums here.  We understand what you are saying.

6192             We want to be able to have a little bit more control and influence over where our monies go inside FACTOR.  Perhaps we have to set up a Chinese wall inside the organization to make sure that Heritage's imperatives are satisfied.  As we all know, Heritage is not able to advance funds to artists, rather they have to pay upon receipt effectively, and one of the broadcaster's roles inside FACTOR is effectively to advance money.

6193             If that could be done, if we could continue to keep FACTOR healthy by doing that, all the better.

6194             All we want is to be able to see a three‑tiered system whereby MEC looks after Indie royalty, FACTOR goes out and Musicaction and looks after la bourse à l'éleve, and then the commercial fund independently and through FACTOR is able to take artists who are signed and take them to the next level so they become superstars.

6195             COMMISSIONER PENNEFATHER:  So the answer was yes and the reporting would turn up in an annual report of Starmaker Fund.

6196             Thank you.

6197             MR. BRAIDE:  Yes, it would.

6198             THE CHAIRPERSON:  Thank you very much.  Those are our questions.

6199             MR. BRAIDE:  Thank you very much.

6200             THE CHAIRPERSON:  Thank you.

6201             We will take a quick break as we change to the next item.

6202             Do you want to call the next item, Madam Secretary, and they can set up.  We will be back in five minutes.

6203             THE SECRETARY:  Thank you.

6204             I would now invite the next participants, Rawlco Radio Ltd. to come forward and prepare for their presentation.

6205             Thank you.

‑‑‑ Upon recessing at 1152 / Suspension à 1152

‑‑‑ Upon resuming at 1200 / Reprise à 1200

6206             THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

6207             Whenever you are ready, Mr. Rawlinson.

PRESENTATION / PRÉSENTATION

6208             MS LEYLAND:  Good afternoon, Mr. Dalfen, Monsieur Arpin, Ms Pennefather, Ms Noël, Ms Cugina and Commission staff.

6209             I would like to take a moment to introduce you to the members of our panel.

6210             To my far left is Doug Rawlinson, the Executive Vice President of Rawlco Radio.  On my immediate left is Gordon Rawlinson, I always like to say the most challenging person I have to manage.

6211             And on my right ‑‑

6212             THE CHAIRPERSON:  Which Rawlinson was that?

‑‑‑ Laughter / Rires

6213             MS LEYLAND:  That would be Gordon, Mr. Dalfen.

6214             THE CHAIRPERSON:  I see.

6215             MS LEYLAND:  Doug can be kind of tough too.

6216             On my right is Doug Pringle, Rawlco's Director of Programming.

6217             My name is Pam Leyland and I run Rawlco Radio.

6218             Rawlco was started by Gordon and Doug's father, the late E.A. Rawlinson, in 1946 in Prince Albert, Saskatchewan.  Gord and Doug have been in radio for over 35 years and Doug Pringle and I have been with Rawlco for over 25 years.

6219             I have been President for five years.  I am the first woman president of a radio company in Canada.

6220             I am very proud of Rawlco Radio.  We run full‑service radio stations that super serve their communities, and we run excellent news talk stations.  We have won 10 CAB gold ribbons for community service in the past 13 years.

6221             The music on our FM stations is not as tightly formatted as it would be in a major market, and we air music by local Saskatchewan artists many times a day as a company policy.

6222             Because of the success we have had with project 10k20 in Edmonton we have brought it to Saskatchewan and are currently providing $10,000 to each of 20 artists from all over our province to produce their own CD.

6223             We are leaders in First Nations programming and employment, and our owners, Gordon and Doug, have donated over $4 million to the E.A. Rawlinson Centre for the Arts in Prince Albert, the Rawlco Resource Centre to assist aboriginal students at the College of Commerce, at the University of Saskatchewan in Saskatoon, and the Rawlco Centre for mother‑baby care at the Regina General Hospital.

6224             At Rawlco we have always been in compliance and kept our promises.  We are only in radio and we love radio.

6225             Big picture stuff like the review of radio is Gord's area, so Gord..."?

6226             MR. G. RAWLINSON:  Thanks, Pam.

6227             Pam is a great President.  You know, Rawlco Radio is a better run company since she took over from me.

6228             Over the years, I think the CRTC has had great policy and great execution.  We think the CRTC is very good for Canada.  Broadcasters look at it as a business; the CRTC looks at what is best for all Canadians.  Canada is the best radioed country in the world.

6229             You know, everyone appearing before you at this review comes from a point of self‑interest, as we do.  We certainly have self‑interest, too.  But I want to make one point very strongly:  I have tried to step back and realize that what we are talking about is the future of radio in Canada and the people it affects most.  It's not the broadcasters, it's not the music business, and it's not the CRTC, but it is the listeners, the public and the community.  They are ultimately why we do what we do:  the listeners.

6230             We all need to worry and care more about the listener and the community.

6231             One of the joys of operating radio stations in smaller markets is the focus on the listener and the community and not on fighting other radio stations.  But if we look at the United States, each market there has many more radio stations than cities of equal size in Canada.

6232             Let me give you an example.  In Saskatoon all stations in the market are well‑staffed, fully involved in the community, locally programmed, and there is even a news talk station, all in a smaller city of just over 200,000 people.  You will never find that in the United States.

6233             Why?  In the States there are too many stations for the available revenue.  More stations doesn't mean more revenue, it just spreads the revenue thinner to each owner, and pretty soon staff, services and quality suffer and we end up with jukebox radio.

6234             American stations have become glorified jukeboxes and vehicles for syndicated programming, with little or no local relevance.  They have far fewer staff, less community involvement and almost non‑existent newsroom.

6235             I hate jukebox radio. I don't want to own jukebox radio stations.  One of the incredibly great things about Canada is the quality of our radio stations.  Right now in most smaller markets in Canada the CRTC has awarded the proper number of licences to permit high quality service to the public.

6236             So when is a smaller city capable of supporting additional new radio services?  There are several points to consider.

6237             First of all, by major market standards smaller city stations are over staffed.  Community involvement and community service requires people and these additional costs are not optional.

6238             Not surprisingly, then, smaller market stations are much less profitable than their major market counterparts.  The average PBIT for stations in big cities with a population larger than 250,000 is 18 to 20 percent and for the smaller cities it is only 13 percent or less.

6239             The argument in favour of licensing new music‑based radio stations is that they will add musical diversity.  However, the ramifications of applying this policy to smaller cities are very serious.

6240             As everyone knows, the world has been rapidly changing.  It wasn't long ago there wasn't such a thing as an iPod or radio station on the internet or blogs or satellite radio.  For someone living in smaller markets in Canada there is not so much choice it's amazing.  You can hear any kind of music and information you want, anywhere you want and in any order you want from multiple sources all in stereo quality.

6241             The impact of licensing additional new radio stations in smaller cities is dramatic.  The existing full‑service stations lose audience and lose advertising revenues.  At the same time, they have to increase their costs for station promotion and marketing.  The end result is that they lay off staff and they too become only music stations, just like their new competitors.

6242             More stations doesn't mean better quality radio; it means far worse radio, lowest common denominator radio, jukebox radio, radio done on the cheap.

6243             Radio station owners will find a way to make a profit, and if the revenue isn't there then the only way to make a profit is to run radio cheap.

6244             If there are the right number of radio stations in a market, stations are able to maximize profit by really serving the audience, local information, community service, a lot more than just a narrow music service.

6245             If there are too many stations licensed, in order to maximize profit you must do substantially less news, less community service and do a narrow music service.

6246             I think the CRTC's job is to make sure the system is set up to best serve the public.  Radio owner's job is to maximize profits, which usually, but not always, means to best serve the public.  We can make a profit by providing lots of local service or by running a lean and mean music service.

6247             So my question for the Commission today is this:  Are the people in these smaller cities better served as a result of the licensing of these additional radio stations?  My answer is that in many instances they are not.

6248             MS LEYLAND:  I mentioned a few of the things that we do to serve our listeners.  We do all of these things because it solidifies our role in these communities.  Because we do these things, community leaders, advertisers and listeners support our stations.  Clearly the people of Saskatchewan benefit from this radio environment and should it be changed to a multi‑music service environment something valuable would be lost.

6249             MR. G. RAWLINSON:  So I guess just to try and sum it up, today with the dramatic increases in diversity that technology allows, and the continued limiting of licences in smaller cities, the listener, the public, gets the best of both worlds, great diversity of choice and full service community‑minded local radio, the best of both worlds.

6250             That is our presentation and we would be pleased to answer any questions.

6251             THE CHAIRPERSON:  All right.

6252             Mr. Rawlinson and Ms Leyland, both your brief and your oral presentation were fairly clear so I don't really have any follow‑up questions for you in that regard, but one or two of my colleagues may.

6253             Commissioner Cugina...?

6254             COMMISSIONER CUGINI:  Good morning.

6255             In your written submission you say that generally you support the CAB's proposal.

6256             Go ahead.

6257             MR. G. RAWLINSON:  Yes.  Yes.

6258             COMMISSIONER CUGINI:  Does that mean you will avail yourself of the bonus incentive plan for emerging artists on your radio stations?

6259             MR. G. RAWLINSON:  Yes.  But could I ask Doug Pringle to just talk to Canadian music for one second?

6260             COMMISSIONER CUGINI:  Sure.

6261             MR. PRINGLE:  When you say "avail yourself", that means sort of it's a way to play less CanCon.  That is a different question to:  Will the incentive to play emerging artists be there if we can play less CanCon?

6262             I can only speak for myself.  I can't imagine why I would use that incentive to make my radio station sound less good.  I mean, to me the reason why you play new music is because that is the format that you have chosen to do and my decisions would always be based on that.  An incentive would make no difference to me at all.

6263             COMMISSIONER CUGINI:  That is very clear.

‑‑‑ Laughter / Rires

6264             COMMISSIONER CUGINI:  Do you currently use either BDS or MediaBase?  Do you use those services?

6265             MR. PRINGLE:  Absolutely.  I'm aware of BDS, yes.  There are many different sources that you use.

6266             COMMISSIONER CUGINI:  Right.  Based on your previous answer, then, it would be your preference that ‑‑ no.  It is an incentive program, you can opt in or out of using it, so whether we put it in the regulations or in the conditions of licence it will be up to the individual radio broadcasters to apply it or not.

6267             MR. PRINGLE:  Yes.  I think we have a fabulous system in place right now.  I mean, one of the huge successes has been the whole Canadian content ruling.  I mean, I think in terms of what has happened to Canadian music since CanCon came in to now is absolutely staggering, not just in terms of the quantity of music that is available ‑‑ I mean, there is so much good CanCon that is out there to play ‑‑ but also the quality of the music is extraordinary.  I just don't mean in it terms of I like it or you like it, I mean it in terms of not just people in Canada but outside of Canada buying this.

6268             I mean, we are up there with the U.S. and Britain.  In fact, I read last year we sold more dollars worldwide than Britain did.  I mean, that's outrageous, you know, when you think about it, 30 million people, and we don't have the reputation like England does.  So I think it has been a huge success.

6269             I just want to make sure that this success continues.  I hate to see a diminishment of what we have built up up to this point in time.

6270             COMMISSIONER CUGINI:  Thank you for your candour.

6271             I'm sorry...?

6272             MR. G. RAWLINSON:  I would like to just add one thing, though, that we have actually ‑‑ when the CanCon rules changed from 30 to 35 percent, quite frankly we didn't mind at all.  We thought that was just fine.  You have to stay well ahead of what the actual market is or you don't make any impact.

6273             But the world is a new ‑‑ it is becoming a new world and so we are a little unsure of what is going to happen in the future.

6274             We have, as a company, been not broadcasters that are concerned about Canadian content because our competitors had to play the same percentage, and while it was ahead of the percentage of music sales, as I said, you have to do that or else what good is it doing.

6275             Quite frankly, in the radio station business we don't have much regulation.  We have to play Canadian music and we have to keep logger tapes.  That's it really.  So it's a pretty good contract.

6276             But we are apprehensive about the future with all of this unregulated stuff coming in and just don't know where that is going to go.

6277             COMMISSIONER CUGINI:  Thank you for your candour.

6278             Thank you, Mr. Chair.  Those are my questions.

6279             THE CHAIRPERSON:  Thank you.

6280             Vice Chair Arpin...?

6281             COMMISSIONER ARPIN:  Thank you, Mr. Chairman.

6282             I don't know if you were here yesterday when the Francophone Independent Radio Operators appeared, and later today we will hear also the Ontario Independent Radio Group, they both are making the same argument that is in another direction than the one you have made in your oral presentation this morning and that we can find in your paragraph 28 of your submission.

6283             They are making the point that in small markets in order to provide the listeners with a better music choice the Commission shall contemplate allowing a single operate to operate up to three FM services in a small market at benefit of the synergies.

6284             Do you have any specific views and comments to make on those recommendations that have been made to us by the smaller operator groups?

6285             MR. G. RAWLINSON:  Yes.  I think they are actually quite creative ideas.

6286             Radio, when there is just one owner in a market, whether the owner has one or two or three stations, is, quite frankly, the best radio there is in Canada.  It is the closest to the community and it is the most valuable service.  As you get bigger cities and more competition the focus becomes on other radio stations.

6287             So if you are in a small community where it is unlikely there is going to be somebody else going to want to have another station, or where it doesn't make a lot of sense, and I would say that is ‑‑ I don't know whether it's 50,000 or 100,000 people, but where you are best off for the service to the public to have just one owner, then why not give that person an additional licence if they want to do it and they can operate it.

6288             We currently, for example, have a situation where we have just recently filed an application in a place called North Battleford, Saskatchewan where we have an AM licence and two FMs.  The AM, through history, is in the wrong location.  It is north of the city because that's where it was for many, many years and the signal really is poor at night.  So we are asking for an exception, saying "Could we have three FMs because we have 15,000 people in the market, I think maybe a total of 18,000 ‑‑ I'm sorry, 18,000 is the correct number."

6289             To have another owner come in there when there is already three radio stations is just really never going to happen.  I mean, the city would have to be ‑‑ and it isn't really growing.  So we are saying could there be an exception like that to have three FMs instead of an AM and two FMs, just for coverage matters and for technical reasons.

6290             So that's not quite on point, but I think there are opportunities for exceptions in these smaller markets, so you will just get better service for the listener, which again is our whole thrust.

6291             So I think it is quite a creative idea.

6292             COMMISSIONER ARPIN:  I think your answer is giving me an opportunity to ask a subsidiary question.

6293             The CAB has defined a small market as being 250,000 or less listeners.  Obviously you were talking about Saskatoon being 200,000 people, but you are making a comparison using North Battleford as your example.

6294             What is your own definition of "small market"?

6295             MR. G. RAWLINSON:  I'm going to ask Pam to answer that.

6296             MS LEYLAND:  If I can take that question first, Monsieur Arpin, and then Gord will probably jump in after.

6297             I suggest that the biggest reason why ‑‑ and we suggest the threshold would be 250,000 ‑‑ is clearly shown in the study that was done by Ken Goldstein for the CAB.  It showed PBIT in markets with populations of 100,000 or less to be 12.9 percent and in markets from 100,000 to 250,000 population it was 13.1 percent compared to PBIT in centres over 250,000 of in the range of 18 to 20 percent.

6298             So PBIT is essentially the same for communities up to 250,000 and then it takes a significant jump.

6299             I do have some other thoughts too if you wouldn't mind just listening for a moment.

6300             COMMISSIONER ARPIN: Well, I think ‑‑ sure, yes because ‑‑

6301             MS LEYLAD: The other differences, the other ‑‑ the realities.

6302             COMMISSIONER ARPIN: ‑‑ obviously you just gave us the CAB point of view ‑‑

6303             MS LEYLAD: Okay.

6304             COMMISSIONER ARPIN: ‑‑ and I want to hear the Rawlco view.

6305             MS LEYLAD: You bet.  Okay, well let us talk practical examples then, because I heard Commissioner Cugini says that she likes to hear practical stories and I live in the practical world running Rawlco, so..

6306             In markets of 250,000 or less there are no traffic reports, effectively there is no traffic, it is one of the great things about living in a smaller centre.  You can be anywhere in 20 minutes or less and that includes a city the size of Saskatoon of just over 200,000 people.  In Prince Albert, Saskatchewan, population of what 40,000 people, we like to say you can be anywhere in a sportscast and a 30, which means that you can get home during a two or three minute sportscast and a 30‑second commercial.

6307             More than 80 per cent of our revenue in a smaller market comes from the businesses in our community.  It is very very labour intensive.  These businesses don't have advertising agencies, they don't employ an advertising agency to come up with their creative, to place their buy.  I always like to say that we, in effect, are their advertising agency.

6308             Our advertising consultants go out ‑‑ I mean, it is feet on the street ‑‑ they go out and meet with clients.  One of our sales managers calls it belly to belly, belly of the advertising consultant with a belly of the client.  Our writers and producers develop the creative concepts for each client.  You will find more writers and more producers in smaller markets than you will find in larger ones, because we develop the creative, we are their agency.

6309             Running a radio station in a smaller community ‑‑ and talking about our stations, thinking mostly of Saskatoon and Regina at this point ‑‑ are no less expensive than running radio stations in larger centres because of the number of people we have to employ to superserve our clients and our listeners, because of the fact that we need to pay competitive salaries in order to retain our people and keep them with us for a full career in Saskatchewan.

6310             In smaller communities, another example, is everybody knows where the radio station is, they know where the building is that the radio station's located in.

6311             Announcers go out regularly and broadcast throughout the community doing morning shows and other live broadcasts and listeners can stop by and meet the people that they hear on the radio.  And in Saskatchewan too, just a final as a final point, you know our population unfortunately presently is declining, that is the trend and any growth in our two largest urban centres, so Saskatoon and Regina, is population redistribution from rural to urban, which is quite different, I think, from a population that is growing because things are exceedingly vibrant.

6312             MR. G. RAWLINSON: So it is interesting if you actually take a look at the cities that would be over or under the 250,000 and I am going to do this really quickly.  So there is, I think, 16 cities that would be more than 250,000 population and obviously the biggest, Toronto, Montreal, Vancouver, Ottawa, Calgary, Edmonton, Quebec, Hamilton, Winnipeg.  Then you get into London, Kitchener, Waterloo, St. Catharines, Niagara, Halifax, Victoria, Oshawa, Whitby and Windsor.  That is the top 16 cities.

6313             It is interesting, there are no cities between 250,000 and 300,000 population, so those are all over 300,000.  If you get into under 250,000 you have Saskatoon, Sherbrooke, Regina, St. John's, St. Jerome, Saguenay, Kelowna, Barrie, Sudbury, Abbotsford, Kingston, Trois‑Rivières, Moncton, Saint‑Jean, Sarnia and on and on.  Those sound to me too ‑‑ I mean, it just sounds like those are smaller cities versus the other ones that are bigger cities.  It just seems to be a natural fit.  So there is some statistical arguments for this, there is some, you know, about profitability, there is all of these kind of non‑statistical things and then if you just look at the population.

6314             So we think 250,000 is approximately right.  You could say 300,000 and it wouldn't make any difference, there is nobody in between.  We only round up in sales.  A salesman comes in and said they just sold $1,000 and it is usually $650, but..

6315             COMMISSIONER ARPIN: Thank you very much, Mr. Chairman.  Thank you, Mr. Rawlinson.

6316             THE CHAIRPERSON:  Thank you.  Commissioner Noël.

6317             COMMISSIONER NOEL: Well, I guess Mr. Arpin took the mic a little too soon and he asked a question I was looking forward, that is what about the idea of the ARPIF of licensing a second or a third radio station, but to the same owner in a very small market, and you have answered.

6318             But on the 100,000 threshold, do you have separate data to indicate that in Quebec, for example, under the threshold of $100,000 there would be much less profitability?  That is what the people of ARPIF have demonstrated or tried to demonstrate to us yesterday and that is why they are asking for added flexibility for communities of less than 100,000 or your definition of a very small market, as opposed to a small market.

6319             MR. G. RAWLINSON: Yes.  I think that the CAB's position supports that too, that they had a different definition for English Canada than for French Canada or English radio and that they ‑‑ I think the CAB also said that it should be 250,000 for English radio and 100,000 for French radio, because that is where the main difference seems to ‑‑

6320             COMMISSIONER NOEL: And the Broadcasting Act would allow us to do some reasonable accommodation between the French and English markets.  Thank you.

6321             MR. G. RAWLINSON: Could I just make one more comment?

6322             THE CHAIRPERSON: All right.

6323             MR. G. RAWLINSON: And this is something that I just realized that we should have had in our oral, but it is just one more point, if I may.

6324             We would like to suggest that there should be some kind of a process or a test to be able to decide, when the CRTC receives an application for a new station, and given when the market is not very profitable, so that there doesn't have to be a call issued every time.

6325             It seems to me that there has been some instances in the past where the Commission is required to make or feels obligated to make a call if there is an application being filed and there is a whole lot of work done by applicants and a whole lot of work done by the CRTC and the market clearly can't afford to support another station and it would be better if there were some process.

6326             And if we might, we would like to suggest a possible threshold, which could be something like averaging the PBIT over the previous three years for all markets.  Again, we are only talking small markets here, so again under 250,000 population.  If you took the average PBIT for all of those markets across Canada and then you said okay what is this market compared to the average?  And if it didn't meet the average, then perhaps that would be an opportunity to say we won't have a call at this time.  That is a suggestion as to ‑‑ I think it is a fairly low threshold and it wouldn't, even if the market were higher than that, it wouldn't necessarily mean there would be another station, but at least then there would be a call.

6327             So I just throw that out as a possible solution to something which I think could save a lot of people a lot of extra effort.

6328             THE CHAIRPERSON: You are aware of the market entry test that the CAB has proposed?

6329             MR. G. RAWLINSON: Yes, but they are not very precise on what it should be, just saying that there should be a market entry test as I understand it.

6330             THE CHAIRPERSON: Well, they are apparently going to get back to us on that and you may want to feed your idea in with them if you can get consensus there.  Because you are basically talking not only about a licensing threshold but a call threshold.

6331             MR. G. RAWLINSON: Yes.

6332             THE CHAIRPERSON: So you may want to talk to them or submit something on your own.

6333             Thank you very kindly.

6334             MR. G. RAWLINSON: Thank you.

6335             THE CHAIRPERSON: Madam Secretary.

6336             THE SECRETARY: Thank you, Mr. Chairman.

6337             We would now call on the next participant, which is Blackburn Radio Inc. to come forward for their presentation.

PRESENTATION / PRÉSENTATION

6338             MR. COSTLEY‑WHITE: Thank you very much.

6339             Mr. Chairman, Mr. Vice‑Chairman and commissioners and Commission staff, my name is Richard Costley‑White, I am Chairman of the Blackburn Radio Group.  To my right is Sandy Green, President of Blackburn Radio.  To my left is Ron Dann, General Manager of our Sarnia, Ontario‑based stations.

6340             Blackburn has appeared before this body on many occasions, including the last review of radio policy in 1998.  We are pleased to participate once again in the Commissions review of the policies affecting commercial radio and we are grateful for this opportunity to address you today at the risk of message burn.

6341             Blackburn Radio operates ‑‑

6342             THE CHAIRPERSON: That's the Blackburn message?

6343             MR. COSTLEY‑WHITE: Blackburn Radio operates 10 radio stations in small Ontario markets.  In Southwestern Ontario we serve Sarnia, Chatham and Leamington and their surrounding counties and we simulcast one of our Chatham FM signals in Windsor.  From the Town of Wingham, Ontario we serve the numerous communities of mid‑Western Ontario, which is the broad five‑county region below the Bruce Peninsula.  We have attached a map of our service areas as Appendix A to this presentation for your reference.

6344             We are proud of the role our stations play in their communities and we are committed to building on our past successes.  As the Davey Committee noted in 1970, after my grandfather's appearance there:

6345                      "The Blackburn media are providing good service to their community we suggest, because their owner wants them to provide good service and is willing to spend to get it."

6346             Our approach has not changed.  I think a good illustration of this is the number of fulltime news personnel in our stations.  Sarnia, with a CMA population of 117,000 has seven fulltime news staff.

6347             I am proud to say that just this past weekend our News Director in Sarnia, Larry Gordon, accepted one of the most prestigious journalism awards in Canadian Broadcasting, the Gord Sinclair Award for Live Special Events at the Central Canada Meeting of the Canadian Radio‑Television News Directors Association in Sudbury.  And just as a note, the station's entry, Travelling with Heroes, is detailed report Jennifer Johnson's experiences while travelling with Canadian war veterans during the 2005 anniversary of the Liberation of Holland.  Jennifer's reports were heard on 1070 CHOK and we are enormously proud of Larry and his team.

6348             Turning to our Chatham‑Windsor operations we have 10 fulltime and two part‑time news staff and Cheer‑FM in Leamington with a CMA population of 63,000 has three fulltime news staff on a county stringer.  Wingham has a the compliment of eight fulltime news staff, including our news director and a dedicated farm news director overseeing a full agricultural reporting service and, in addition, we have six correspondents covering our counties.  On top of this, two of our Wingham program directors are, themselves, award‑winning news journalists.

6349             It was a Wingham correspondent who broke the story of the Walkerton water disaster from its origins and CKNX follows the story to this day.  Across all of our branches we continue to build our regional farm reporting capability as this is an area from which television has largely retreated in our area.

6350             If there is one overriding theme to this radio review it is transformation.  To survive, our industry must adapt to a much more consumer‑driven technologically complex marketplace and to adapt requires flexibility.

6351             We believe that the Commission can assist our industry in meeting its challenges.  The exciting thing is that none of us knows how it is all going to workout before we sit down together again for the next radio review.

6352             I am now going to turn to Sandy Green who will outline some of the continuing challenges Blackburn faces in maintaining a high level of service our communities have come to expect.

6353             MR. GREEN: Thank you, Richard.

6354             The CAB and other parties to this process have extensively researched and documented the challenge and burdens that radio faces generally, so we won't recite them again, thankfully.

6355             Blackburn faces all of these and we have some special challenges as well.  However, we would first like to re‑emphasize a general point and we have heard it this morning a number of times, I don't think I have to emphasize it too much, but we operate in small markets, we are a small‑market operator.  The fact of the matter is we are small business and, as a result, our overall profitability is much less than it would be for the standard radio operations in Canada.  Blackburn stations receive significant spill from large Ontario markets such as Toronto, Kitchener, London and Windsor.  Many of these business solicit local advertising revenue against us and run promotions in our markets.  This spill particularly affects our access to national advertising dollars.  Sarnia is the 32 size market in Canada and Chatham is number 33.

6356             Many national advertisers will buy London thinking they will cover the whole of Southwestern Ontario.  So, as an example, in the period 1997 to 2005 an average of 10 per cent of Blackburn's revenues was derived from national advertisers as compared with, for all English‑language radio, just under 25 per cent.  What this means is we are highly dependant on local revenue for our survival.  Our stations also feel the impact of powerful American signals.  Sarnia, for example, has 126 different listed stations that showed up in the last BBM survey.

6357             Detroit is a radio behemoth with 65 radio stations alone that offer every possible format choice.  Detroit also has a huge impact on Chatham and Leamington with powerful signals reaching into these markets as well.  In Sarnia, the Port Huron stations across the river also actively solicit foreign ‑‑ attract listeners to their stations and have active sales teams in our market.

6358             So as far as the immediate choices, along with our stations, there are more than 70 different stations in every conceivable format that can be listened to in our Southwestern Ontario market area.  The American signals provide most recognizable music in each of their formats.  Sarnia, Chatham and Leamington have many listeners that tune in for our local news packages and then switch back to U.S. stations for music.

6359             We are competing in heavily‑serviced markets against well‑resourced competition and we don't have the luxury of isolation.  As a result, Blackburn faces far higher out‑of‑market tuning to U.S. stations than the national average.  Specifically, I refer you to Appendix B in our report, which provides further data on this.  You will note that in the case of Sarnia, U.S. stations have a reach of 47 per cent of our central market and a nearly 20 share.  In Chatham, U.S. reach is 43 per cent with a 17 share in Leamington is exposed to a 60 percent reach with a 41 per cent share of tuning to U.S. stations.

6360             We want to bring as many of these listeners as possible back to local Canadian radio.  Our Wingham‑based stations also face very unique challenges.  CKNX and CIBU are unique enterprises, can only be viable with the collective support of listeners and advertisers throughout the market area Richard spoke about, the large five‑county region south of the Bruce Peninsula, which we refer to as mid‑Western Ontario.

6361             In this unique situation we have no one centre large enough to support a station, but rely on multiple service centres, towns like ‑‑ and I am sure you have all heard of these ‑‑ Listowel, Hanover, Goderich, Walkerton, Kincardine, Mount Forest and others, including Wingham itself.  In fact, the top 10 communities in our Wingham market area account for less than 60 per cent of our revenue, the rest comes from a constellation of smaller communities as well as some national and agency.

6362             So the big concern for Wingham is the licensing of low‑power and other FM stations, which would undercut our ability to serve this market which we have served for more than 80 years.  As an example, a low‑power FM station was recently approved in our market for Kincardine, which has resulted in a staffing level of three people at that new station.  With our experience, we know that this will not add meaningful substantive contributions to the community in the areas of news and local involvement.

6363             I am now going to turn it back to Peter ‑‑ or to Richard Costley‑White.

6364             MR. COSTLEY‑WHITE: Peter was my father ‑‑ is my father, he still is.

6365             MR. GREEN: He is still alive.

6366             MR. COSTLEY‑WHITE: He is still alive, yes, but he is not here.

6367             Mr. Chairman, we have reviewed the CAB proposals for Canadian content and we think they make sense, so we are pleased to endorse them, because we feel that the evidence shows that really a one‑size‑fits‑all approach to that tends to inhibit format diversity to a certain extent and so our endorsement of the CAB proposal is consistent with our support of the more flexible approach.

6368             With respect to our heavily‑impacted border stations, we would like to propose that the Commission include Sarnia, Leamington and Chatham in the exception to Canadian content accorded to Windsor.  This flexibility will strengthen us vis à vis U.S. signals against which we must fight and compete on a listener by listener, quarter hour by quarter hour basis as my colleague has pointed out.  And in many ways in this area we are a precursor to the effect of satellite radio, in effect Detroit has a giant satellite orbiting us and they are beaming down all manner of signals into our market.

6369             With respect to Canadian talent development, like most small market broadcasters, our commitment goes beyond the fees that we remit.  We hold local talent contests, concerts featuring Canadian artists, on‑air promotion of local and national talent and broadcasting scholarships, including the Martha Blackburn Scholarship at Fanshawe College in London, to name just a few of our initiatives.

6370             We hope the Commission will take these expenditures into account, allowing more local initiatives to count as CTD and the bonus fees based on the substantial effort and initiative we put in beyond just cutting a cheque and sending it to Toronto.

6371             With respect to common ownership, and this echoes the comments and the discussion that happened with Mr. Rawlinson and his colleagues, we believe that there may be exceptions where an operator in a small market with a proven commitment to community service should be permitted to acquire more than the currently mandated number of stations.

6372             This will improve and broaden local service while enhancing local economies of scale and we feel this will be the benefit of our audience.  We therefore propose that any revision in the common ownership policy should permit small‑market radio to consolidate or to apply for additional licenses if available in our markets.

6373             Finally, we urge the Commission to give careful examination to low‑power and other seemingly low‑impact applications for their affect on small markets.  We believe that the Commission needs to place emphasis on market capacity.  Over‑licensing leading to over‑supply of advertising availabilities is a threat to all of Blackburn's stations.  And, as we have seen in the case of Wingham, low‑power FMs could, town by town, undercut and 80‑year broadcasting legacy.

6374             For the benefit of your reference, I would summarize what I have just said, but I will just pass over that.  To conclude, Mr. Chairman, like Rawlco and other small‑market broadcasters, we are committed to providing radio that isn't just a mirror or a jukebox, we believe it is our role to play a multifaceted and dynamic function strengthening the vital linkages and providing leadership in our communities.  We believe that greater flexibility will enable us to respond more effectively to the many pressures that we face and that we will continue to face during this process of transformation.

6375             In partnership with the Commission, we believe that we can maintain a meaningful presence and that our audiences will continue to be served well.  Thank you.

6376             THE CHAIRPERSON: Thank you very much for your presentation.

6377             Now, I had one question ‑‑ I had a number that your oral presentation have actually answered ‑‑ but I do have one remaining question and that is in your written submissions at paragraph 14 of the executive summary  and you repeat it later on, you say that this not the time for the Commission to increase CanCon levels to 40 per cent, maintaining the 35 per cent status quo is acceptable and then you add, "But much preferable would be a gradual rolling back of CanCon levels for broadcasters as more effective methods for developing Canadian music are pursued."  I was wondering what you meant by that and how you would elaborate on that?

6378             MR. DANN: In our market, simply because of the amount of out‑of‑market tuning that we have to deal with and, as Richard refers to it as the behemoth of U.S. programming, we have found that we have had to be very careful in the introduction of new Canadian music into our formats, although we do do it, we do it on a consistent level.  In fact, at any given time there is four emerging artists on both of our FM music formats that we are dealing with.

6379             I think, more than anything, what we need to have in our market specifically is the flexibility to at least address it as we go.  We have done well with 35 per cent over the last couple of years.  It took us seven years to build our market share to the point where actually in‑market tuning to our three stations was on the positive side of the ledger for the Canadian radio ‑‑

6380             THE CHAIRPERSON: But, Mr. Dann, I don't mean to interrupt you, but I get that part, the rolling back part.  The part I was wondering about is the phrase, "as more effective methods for developing Canadian music are pursued."  It is that part that I wonder if you could elaborate.

6381             MR. DANN: Certainly one of the things that we think is advantageous that we certainly heard from, you know, the record companies that we deal with is the internet.  We have been very active in working with record companies in their promotion of new Canadian talent on the internet.  We think that is one of the emerging technologies, and certainly it has been echoed very much this morning, on the number of new Canadian acts that are being introduced on the internet.  We have worked with Canadian record companies to make sure that that access is available to our listeners and we do actively promote internet sources that allow them to listen to new Canadian music.

6382             THE CHAIRPERSON:  Can you point to any?  I don't think you will find the information is there on Iceberg, for example.

6383             MR. DANN: We do it on an artist by artist basis.  For example, Sam Roberts, who is an emerging Canadian talent, we directed people to his website for an opportunity to listen to the new album in its entirety.  While we feature the new individual singles themselves, we also encourage people by giving Sam Roberts actually air time to promote his active website.  We have done that with the band Mobile, we have done that with a couple of Canadian acts that have expressed an interest in having people checkout their website not only for the individual music itself, but for whether touring, their background information, those kinds of things.

6384             One of the things that we have actively done in Sarnia ‑‑ and I am sure Canadian broadcasters across the country do the same thing ‑‑ is when a new act comes out that we think is strong we will actually do interviews with them and do one hour of programming based on their actual album.  This coming June our radio station, CHKS, is celebrating a seventh anniversary.  We have Mobile and Stabilo, two emerging Canadian acts, that we are going to bring into our market at no charge to our listeners to expose them to their music.  We have 800 people ‑‑

6385             THE CHAIRPERSON: But you been doing that presumably for a long time, like Blackburn has been promoting those kinds of artists ‑‑

6386             MR. DANN: Not as aggressively as we have on the rock station over the last seven years.  Yes, that has been a ‑‑

6387             THE CHAIRPERSON: Last seven years ‑‑

6388             MR. DANN: ‑‑ changing dynamic with our ability to program a rock radio station.

6389             THE CHAIRPERSON: Okay, thank you very much.  Commissioner Pennefather.

6390             COMMISSIONER PENNEFATHER: Just a quick question.  I noticed in both your written presentation and today you mention a bonus system related to Canadian talent development.  Now, I understand completely the theme here is the recognition of local initiatives.  Would it be possible for you to get back to the Commission with some concrete examples of how the bonus system that you propose here would work?

6391             MR. COSTLEY‑WHITE: Yes, absolutely.  Yes, happy to do that.  Thank you, Commissioner.

6392             COMMISSIONER PENNEFATHER: Thank you.

6393             THE CHAIRPERSON: Thank you very much, gentlemen, for appearing before us and answering our questions.

6394             We will break now and resume at 1:45.  Nous reprendrons à 1h45.

‑‑‑ Upon recessing at 1246 / Suspension à 1246

‑‑‑ Upon resuming at 1348 / Reprise à 1348

6395             THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

6396             Madame la Secrétaire.

6397             LA SECRÉTAIRE:  Merci, monsieur le Président.

6398             We would now call on the next participant, The Jim Pattison Broadcast Group, to make their presentation.

6399             Mr. Arnish, you have ten minutes for your presentation after introducing your colleagues.

PRESENTATION / PRÉSENTATION

6400             MR. ARNISH:  Thank you, Madam Secretary.

6401             Good afternoon, Mr. Chair, Members of the Commission and Commission staff.

6402             My name is Rick Arnish.  I am President of The Jim Pattison Broadcast Group Limited Partnership.

6403             With me today here in Gatineau is our outside legal counsel Chris Weafer from the Vancouver law firm of Owen Bird.  Chris has also served as an adjunct professor at the University of British Columbia Faculty of Law and at Simon Fraser University teaching in the areas of communications law and broadcasting policy.

6404             Our broadcast group has been an active participant with the Canadian Association of Broadcasters and endorses the written submissions filed by the CAB in this proceeding.

6405             That said, we believe that it is important for the Commission to be able to get direct access to broadcasters in a public forum, to ensure full, open and transparent dialogue on the issues that are of importance to the Commission and to licensees.

6406             We generally believe the existing regulatory framework for commercial radio is effective and working well for both the industry and Canadian artists.  While we value the partnership that we as broadcasters have with the recording industry, we fundamentally believe that a healthy radio industry is critical to the success of a healthy Canadian recording industry.

6407             Changes to the regulatory structure which on the face appear to be beneficial to Canadian artists, if harmful to the Canadian radio industry will also be harmful to Canadian artists.

6408             We will focus on four primary topics today raised by the Commission in the Public Notice calling this proceeding to review the state of commercial radio in Canada.

6409             The Commission asked the question:

Is it in the public interest to ensure a healthy independent sector in radio; that is, radio stations operated by the licensees other than the six largest radio groups in Canada?

6410             We find ourselves in a rather unique position in responding to this question in that we have emerged from a small independent radio player to become western Canada's largest privately‑owned radio broadcast group.

6411             In our process of growth, we in many cases acquired independent operators which were struggling and unable to respond to either difficult economic or operational challenges.

6412             We firmly believe and we believe our audience and the Canadian music sector would confirm that we have in all cases increased the level of management expertise, financial commitment and enthusiasm to the operation of the stations which we acquired from independent operators.

6413             It is our submission that it is fundamentally wrong for there to be an assumption that an independent operator may operate a better or more unique radio service than would a large company.

6414             The Commission should not conclude that because an entity is an independent operator, they will somehow have a better or unique model which would somehow add unanticipated benefits to the Canadian broadcast system.  At the end of the day, we are all in a creative business seeking to attract audience in an increasingly competitive market.

6415             The market is particularly competitive when it comes to the delivery of music services.  The strength of larger players and their ability to rely on experience and resources to improve the quality of radio in a market is something which should take, at a minimum, equal consideration to criteria around supporting independent ownership.

6416             If we were talking about the news business or newspapers, clearly a distinct editorial voice may play an important role.  In most applications for a radio station licence, applicants are not filing applications to create new editorial voices but rather new formats in the delivery of music.

6417             We do not believe that independent radio station ownership in and of itself is a criteria which should be considered by the Commission in assessing new licences to a market.  We submit that in all circumstances the best application should be what is approved by the Commission taking into account all factors.

6418             The next issue which we will respond to is the Commission's comment on small market radio stations and specifically the question asked:

What particular challenges are faced by small market stations, both those owned by independent operators and larger station groups?

6419             As has been discussed in this proceeding, generally speaking, small market stations are not as profitable as large market stations.

6420             We as a company have had the good fortune in recent years of being in small markets that have generally seen economic growth and success.  We are pleased that we are now participating in a positive economic cycle in western Canada.  However, it was not that long ago that the resource‑based economy in British Columbia and some of the agricultural areas of Alberta were struggling.

6421             In central Canada less positive economic indicators are impacting regional and national advertising revenues in 2006.

6422             As the Commission is aware, the tide has turned in western Canada and as a result we are seeing more applications for new licences in smaller western Canadian cities.  The Commission has generally chosen to issue new licences in those markets, and we have had to adapt and compete with those new services.

6423             The Commission needs to understand that in competing, one of the key challenges we face is maintaining our news and spoken word programming in those smaller communities.  We believe strongly in the importance of a news and information voice in a local market.  We also believe that it is in effect what creates the unique position for radio and the new world of iPods, file sharing and satellite radio.

6424             Local presence and local news and information is fundamentally key to the unique platform of local commercial radio.  However, that is not an inexpensive platform.

6425             We are challenged with maintaining acceptable levels of profitability against balancing the cost of the most expensive aspect of our operations, news and information services.

6426             We have been concerned with the trend towards increased numbers of licences in smaller markets, which may result in a temporary increase and a diversity of formats to a market but equally increasing pressure on the ability to deliver the more expensive programming, spoken word.

6427             In many cases diversity of format is not maintained as the new player struggles to achieve profitability.  We believe that this is a fundamental public policy issue for the Commission that needs to be considered.

6428             In this area of consolidated news voices, the decline of local news and information on radio has been significant in western Canada.  We work to maintain that presence and we will continue to do so, but the Commission needs to understand that increased music formats in a market resulting in more owners splitting a revenue pool amongst more players will inevitably result in an impact on the amount of news and information programming in those smaller communities.

6429             We would ask that the Commission take that matter into consideration when looking at the licensing of new services into smaller markets.

6430             We would also request that the Commission take a longer term view in reviewing the economics of a market before adding new services to take into account the cyclical nature of many smaller communities.

6431             Clearly one measure which we strongly agree with, which would assist local small market broadcasters fulfil their public service obligations with respect to news and spoken word programming, would be to lessen the restrictions on the number of licences which may be held by a company within a small market.

6432             We submit that there should be less restrictions on the number of licences held in a smaller market, which would enable incumbent players to add more diversity of music to a market while not reducing the revenue and thereby increasing the possibility of maintaining spoken word programming in those markets.

6433             We submit that in a market of less than 150,000 people the Commission should give a priority to incumbent licensees over new applicants to apply for the opportunity to service the market with new formats.  In markets of this size the primary concern for the Commission should be around adding diversity of format to the market and not necessarily the number of owners in a market.

6434             Clearly an incumbent operator will not duplicate existing formats in a market if awarded a licence to service the market.  This is clearly an effective way to ensure increased diversity of Canadian music on radio in different formats in smaller markets, thereby assisting the competitiveness of radio as against satellite radio, internet radio and iPod tuning.

6435             Allowing an incumbent operator in a small market multiple licences will create a better opportunity to maintain the competitive nature of  Canadian radio and therefore Canadian music in these communities, as well as preserve employment opportunities in the industry.

6436             The next issue I would like to address is the Commission's question:

Would an increase in the minimum Canadian content requirement for Category 2 Popular music to 40 percent result in the broadening of the play list for Canadian artists, or are there other more effective ways of achieving this objective?

6437             Members of the Commission, you are not in the Canadian radio industry if you do not support Canadian music.

6438             Notwithstanding the long‑standing discussions around the appropriate percentages level of Canadian artists aired on Canadian radio, the Canadian radio industry and the Canadian music industry are partners, which can only achieve success by supporting each other's success.

6439             Clearly it is not in the interest of Canadian radio to have levels of Canadian content which lessen our ability to compete against unregulated audio services.

6440             The phenomenal success of the iPod product and the potential loss of a significant sector of the Canadian youth population from radio is an issue of material concern to broadcasters and the music industry alike.

6441             There is no other medium that delivers music service which has the programming challenges which says 35 percent of what you need to play has to come from this music catalogue.  We do not believe that an increase to 40 percent will be in the interest of the Canadian music industry of the Canadian broadcasting industry, as further constraining the flexibility of programming in Canadian radio is not in the interest of increasing the attractiveness of Canadian radio to existing and new audience.

6442             In our view, this approach will potentially result in a decline of the competitiveness of radio as against unregulated audio services.

6443             Finally, the next area we would like to comment on is the CTD commitments made when applying for new radio licences.

6444             We believe that the Commission should not place a cap on the amount of CTD contributions that applicants are expected to make when applying for a new licence as proponents should be able to afford their best application which delivers the maximum benefits to the Canadian broadcasting system in all areas the Commission considers when looking at new licences.

6445             With respect to whether benefit should be directed to the regions or markets in which a station is being applied for, as a regional western Canadian player we have taken particular pride in attempting to deliver CTD benefits in the region in which we operate.

6446             We know that this has been a source of frustration for western artists; that they have perceived, whether correctly or not, that a disproportionate level of CTD contributions have gone to central Canadian based funds, which do not always distribute monies equitably across the country.

6447             While we do not believe the Commission should involve itself in allocating funds to regions, we do believe the Commission should be responsive to applicants who show a sensitivity and a commitment to the region in which they intend to provide service.

6448             Mr. Chair and Members of the Commission, thank you for your time today.  We appreciate being in front of you and look forward to responding to any questions you may have.

6449             THE CHAIRPERSON:  Thank you.

6450             Commissioner Pennefather.

6451             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

6452             Good afternoon, gentlemen.

6453             I am going to just clarify some of your comments on Canadian Talent Development and I had one in the similar point that you make about benefits in the region.

6454             Let me start with your written intervention which on page 5, in the context of talking about CTD commitments when applying for a new radio licence, at the very bottom of the page:

We do not understand why these types of tangible benefits aren't considered eligible where transfer of ownership occurs but not where a new licence is issued.

6455             I was assuming from that that what you were getting at was to apply the same criteria in both instances.

6456             MR. ARNISH:  That is correct.

6457             COMMISSIONER PENNEFATHER:  So the criteria you are referring to, the 1995‑196 description, is that still what you think should apply as benefits?

6458             MR. ARNISH:  We are very happy in the regulations as they are set out today, in regard to either applying for new licences or in the case of acquisitions.

6459             We think certainly that as the world changes and evolves, there are always going to be new opportunities that are going to come upon us.

6460             I can give you an example of something that we talked about with the Commission when we applied for a licence in Calgary at the hearing recently.

6461             We have created this new fund under the Pattison umbrella called Save the Music Foundation.  The monies that we wish to allocate, if we are successful in being granted a licence, are destined to go toward making the best of the best in high school music; have the resources and the access to funding to certainly help them become new and emerging Canadian artists.

6462             And that is certainly the dialogue that we have here at the hearing in Gatineau this week.  We are talking about new and emerging artists.

6463             Mr. Weaver may want to have a comment on this as well.

6464             We certainly believe these types of new initiatives need to be looked upon by the Commission as something that is exciting, good for Canada's future and good for Canada's youth.

6465             COMMISSIONER PENNEFATHER:  I think that is clear and I think, as you say, there are a number of examples.  One of them is that: in other words, that that description, which includes education, scholarships, not necessarily music related, are included as acceptable in the benefits.

6466             MR. WEAFER:  In this specific example that we are referring to here, the issue is around employment equity initiatives that have been put forward and whether those get categorized as tangible benefits.

6467             COMMISSIONER PENNEFATHER:  Yes.

6468             MR. WEAFER:  The position being that if they are investments that benefit the industry, they should be considered in that category.

6469             The Act has a broad number of objectives for the Commission to pursue, and we think we should be able to pursue those benefits in what is put forward in an application for transfer of ownership or a new licence.

6470             COMMISSIONER PENNEFATHER:  I think that is clear.  Your rationale is clear.

6471             Obviously there are some who would say no, it must be more specifically music related.

6472             The other aspect of your comment which you say today, I think I can summarize as saying you should be given credit or benefits should count where they are in the regions, and it has been frustrating for western artists; that they perceived, whether correctly or not, that a disproportionate level of CTD contributions have gone to central Canadian based funds.

6473             Let me start by asking:  Are you comfortable with or are you in agreement with the CAB proposal that in fact all contributions to CTD go to a consolidated fund, called the Radio Starmaker Fund, and then be reimbursed via FACTOR, Musique Action, if that is the case, and that 1 percent would be left as discretionary?

6474             MR. ARNISH:  We don't have any particular concern over that.  We would agree with the CAB's presentation on that.

6475             I always look at it this way.  If there is some way that you can cut out administrative costs ‑‑ I do a lot of volunteer work with a lot of boards in the interior of British Columbia, particular Kamloops where I am from, and it is always on fund raising.

6476             We are always concerned about the issue of what are the administration costs when you go out to collect a dollar.  Is it 20 cents on the dollar or is it 10 cents on the dollar, or whatever the case may be.

6477             If there is any way that we can reduce the administration costs in both these funds and that means it goes back into the system, I think that is a real positive for Canadian talent and the funds that they need to then get to that next level as well.

6478             COMMISSIONER PENNEFATHER:  I ask just because you raise the point about western artists' concern.  And this would bring more funds to a central fund, let's say for the sake of argument a central Canadian fund.

6479             MR. ARNISH:  We were talking about this when we were looking at everything related to this hearing, and we certainly would like to have that opportunity, as perhaps other western Canadian broadcast groups may as well, in establishing other funds that western Canadian artists can have access to.

6480             I guess the frustration that we hear from some western Canadian artists ‑‑ it is certainly not from all of them ‑‑ they are saying that they have no access.  They can't get this access to the FACTOR funds, to the Starmaker Fund at times as well, because they may perhaps not meet the criteria that is set down by FACTOR and by the Starmaker Fund or Radio Fonds.

6481             We think if there is another opportunity for companies like ourselves to perhaps contribute to the Starmaker Fund and FACTOR as well, but also create our own fund in these areas, again that is something else that is certainly going to enhance and improve the Canadian music system.

6482             COMMISSIONER PENNEFATHER:  Okay, I take your point on that.

6483             Just one last comment, then, back to the point of local initiatives and, as you just said, create your own funds.

6484             There has been discussion during the hearing and certainly in the submissions regarding transparency, accountability and monitoring.

6485             In the case of the local initiative, if that component was in fact well defined by the Commission as to what is eligible, do you have any comment on what kind of reporting or what kind of accountability would be required?

6486             MR. ARNISH:  Well, personally ‑‑ and others may be have different comments ‑‑ I don't think that the system has to be reinvented.  We have to report annually our CTD contributions and our annual returns to the Commission.

6487             I could see that maybe there is an addition in that area, where if you have your own established fund for artists, that you have a very straightforward component to that as far as the reporting structure goes:  This is how much money is in the fund for this year, over a seven‑year period.  This is the money that was dispenses.  Here is who it went to.

6488             I don't have any problem having a straightforward accountability process to make sure that the Commission is satisfied that this money has gone to where it should go.

6489             And as we follow through on our commitments, we would definitely dispense that money as we said we would.

6490             COMMISSIONER PENNEFATHER:  Thank you very much, Mr. Arnish.

6491             MR. ARNISH:  Thank you.

6492             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

6493             THE CHAIRPERSON:  Monsieur Arpin?

6494             COMMISSIONER ARPIN:  Could I pick up on your last sentence.

6495             I think the concern that we have is not that you haven't sent the money and you are not accountable for it.  It is the recipient.  Have they used the money for the purpose for which the money has been given?

6496             We don't have any type of documentation regarding the CTD commitments that are made by the broadcasters.  The broadcasters pay out, but what happens next?

6497             Has it achieved the goal that it was supposed to have achieved?

6498             That is what is of concern here.

6499             MR. ARNISH:  I clearly understand where you are coming from, Commissioner Arpin.

6500             As I say, we are hearing from artists in western Canada that they don't have easy access to these funds.  And there is a lot of money in the pool, there's no doubt about it.

6501             Maybe they have to do a better job of accessing the funds themselves.  It shouldn't just all fall against Starmaker or FACTOR.  Some of these artists have to do their work as well to get access to these funds.

6502             MR. WEAFER:  Commissioner Arpin, I think it is not like there are a lot of funds available.  I think broadcasters, in my experience, are very selective in terms of who the money goes to because there is a long list of people who want it.

6503             In receiving those funds, they are generally quite anxious to please the broadcaster and meet the criteria the broadcaster has to meet.

6504             So I think it is a bit of a red herring.  I do think that people are accountable.  When a broadcaster is funding an entity that needs funds, they generally wish to use those funds appropriately.

6505             So to create more review or another level of oversight I don't think would be that efficient.  I think broadcasters make sure the money gets spent properly by the entity that receives it.

6506             COMMISSIONER ARPIN:  Thank you very much.

6507             THE CHAIRPERSON:  Thank you very much, gentlemen.  Those are our questions.

6508             MR. ARNISH:  Thank you.

6509             THE CHAIRPERSON:  Madam Secretary.

6510             THE SECRETARY:  Thank you, Mr. Chairman.

6511             I would now call on the next participant, Rogers Media, to come forward to make their presentation.

‑‑‑ Pause

6512             THE SECRETARY:  Mr. L. Merson is representing Rogers.

6513             I would ask if you could introduce your colleagues, and you will have ten minutes for your presentation.

PRESENTATION / PRÉSENTATION

6514             MR. MERSON:  Thank you very much.

6515             Good afternoon, Mr. Chair, fellow Commissioners and Commission staff.

6516             I am Rael Merson, President of Rogers Broadcasting Limited.

6517             Thank you very much for the opportunity to appear before you as part of this important proceeding reviewing the Commission's commercial radio policy and examining the public policy objectives for our industry.

6518             Before I get to the key themes of our presentation, allow first to introduce our panel.

6519             Beginning from your far left and my far right is David Neal.  David is Vice‑President of Services Development for Rogers Communications.  David is responsible for the content and all the new digital services that run across all of the Rogers networks.

6520             Jackie Donaldson.  Jackie is News Director at News 1130, our all news radio station in Vancouver.

6521             Sitting next to me is Chuck McCoy, Executive Vice‑President of Programming.  Chuck is responsible for the programming and marketing at all 46 of our radio stations across the country.

6522             On my left is Gary Miles, Chief Executive Officer of Rogers Radio.

6523             On his left is Linda McErlain, General Sales Manager at 680 News, our all news radio station in Toronto.

6524             Next to Linda is Kirk Nesbitt, Vice‑President of Radio Engineering.

6525             On his left is Tony Viner, President and Chief Executive Officer of Rogers Media.

6526             And on his left is Alain Strati, Vice‑President of Business and Regulatory Affairs at Rogers Media.

6527             Thank you again for allowing us to appear.

6528             The purpose of our presentation today is not to repeat many of the points we have already made in our written submission but rather to focus on what we believe are the three key themes.

6529             First, further increases to Canadian content we believe are not effective public policy.

6530             Second, we believe a more important aspect of public policy is the nurturing of emerging Canadian talent.

6531             Third, we believe radio needs a digital future.

6532             We believe Canadian content at 35 percent has created ineffective radio programming patterns and emphasis on the sheer volume of Canadian music has not generated a broader array of Canadian stars and emerging artists.