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 / SUJET:

 

 

 

 

 

 

 

Harmony Broadcasting Corporation called to a Public Hearing /

Convocation de Harmony Broadcasting Corporation à

une audience publique

 

 

 

 

 

 

 

 

 

 

HELD AT:                              TENUE À:

 

Provencher Room                       Salle Provencher

The Fort Garry Hotel                  The Fort Garry Hotel

222 Broadway Avenue                   222, avenue Broadway

Winnipeg, Manitoba                    Winnipeg (Manitoba)

 

June 4, 2008                          Le 4 juin 2008

 

 

 

 

 

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

 

 

 

 

Harmony Broadcasting Corporation called to a Public Hearing /

Convocation de Harmony Broadcasting Corporation à

une audience publique

 

 

 

 

BEFORE / DEVANT:

 

Len Katz                          Chairperson / Président

Peter Menzies                     Commissioner / Conseiller

Marc Patrone                      Commissioner / Conseiller

 

 

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Cheryl Grossi                     Secretary / Sécretaire

Michael Craig                     Hearing Manager /

                                  Gérant de l'audience

Peter McCallum                    Legal Counsel

                                  Conseiller Juridique

 

 

 

 

 

HELD AT:                          TENUE À:

 

Provencher Room                   Salle Provencher

The Fort Garry Hotel              The Fort Garry Hotel

222 Broadway Avenue               222, avenue Broadway

Winnipeg, Manitoba                Winnipeg (Manitoba)

 

June 4, 2008                      Le 4 juin 2008

 

- iv -

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

PHASE I

 

PRESENTATION BY / PRÉSENTATION PAR:

 

Harmony Broadcasting Corporation                   39 /  250

 

 

 

PHASE II

 

INTERVENTION BY / INTERVENTION PAR:

 

Devol Dryden                                      205 / 1484

 

Manjit Blake, Robert Blake, Peter Bjorklund,      228 / 1649

  David Kovnats, Chris Knight & Chris Oliver

 

 

 

PHASE III

 

No reply / Aucune réplique

 

Questions by the Commission                       326 / 2279

 

 

 

 

 

 

 

 

             Winnipeg, Manitoba / Winnipeg (Manitoba)

‑‑‑ Upon commencing on Wednesday, June 4, 2008

    at 1306 / L'audience débute le mercredi 4 juin 2008

    à 1306

1                THE CHAIRPERSON:  Good afternoon, ladies and gentlemen, and welcome to this Public Hearing.

2                Je m'appelle Len Katz et je suis vice‑président des télécommunications au CRTC.  Je présiderai cette audience en compagnie de mes collègues, Peter Menzies, conseiller, et Marc Patrone, conseiller national.

3                The Commission team assisting us today are Hearing Manager Michael Craig, who is also senior radio analyst, Peter McCallum, senior legal counsel and Cheryl Grossi, Hearing Secretary.

4                Please speak with Ms Grossi if you have any questions with regard to hearing procedures.

5                In January, 2007 the Commission issued mandatory orders requiring the licensee of radio station CJWV FM Winnipeg, the Harmony Broadcasting Corporation, to comply at all times with sections 2.2 subsection (8) and (9) of the Radio Regulations and with the station's Conditions of Licence.

6                Harmony subsequently failed to provide logger tapes as requested by the Commission on two separate occasions.

7                This represented an alleged breach of one mandatory order, while also preventing the Commission from verifying if the licensee was in compliance with the other mandatory orders, the Regulations, its Conditions of Licence and the Campus Radio Policy.

8                The station ceased its operations in October, 2007 and the entity known as Harmony Broadcasting Corporation was dissolved.

9                It has since been revived with an entity with an entirely new Board of Directors and a new sole member representing an apparent change of control effected without the Commission's prior approval.

10               The Commission has called Harmony to this Public Hearing to show cause as to why additional mandatory orders requiring the licensee to conform to the Regulations and to its Conditions of Licence should not be issued, why the Commission should not suspend or revoke Harmony's licence under sections 9 and 24 of the Broadcasting Act, and why prior Commission approval for the apparent change of control is not required.

11               In the event that prior approval is required, the licensee is expected to show cause as to why the Commission should grant its approval to the change in control and why further measures, such as suspension or revocation of Harmony's licence, are not warranted.

12               I will now invite the Hearing Secretary, Cheryl Grossi, to explain the procedures we will be following.

13               THE SECRETARY:  Thank you, Mr. Chairman.

14               We will now proceed with the presentation by Harmony Broadcasting Corporation.

15               The Commission is gravely concerned that Harmony has again apparently failed to comply with the very basic and fundamental requirements of the Regulations and a consequent uncertainty concerning its adherence to broadcasting mandatory orders CRTC‑2007‑3 through 2007‑6 and its Conditions of Licence.

16               Appearing for Harmony Broadcasting Corporation is David Asper.  Please introduce your colleagues and you will then have 20 minutes to make your presentation.

17               MR. KOVNATS:  Mr. Chairman, my name is David Kovnats.  I'm with the law firm of Murray and Kovnats.

18               I am here with a few preliminary objections that I would like for the record.

19               First of all, the people set out as representing Harmony Broadcasting Corporation are not the proper people and the Board should not be having presentation made on behalf of Harmony by anyone other than Peter Bjorklund, Paula Bjorlund and Manjit Blake.

20               Secondly, I asked for subpoenas from the Commission counsel in order to subpoena Mr. Don Douglas who is with the law firm of Thompson, Dorfin, Sweatman, and Mr. Shane Lasker.  I am adding to that list.  I would like to also subpoena Rita Tully.

21               I asked for those subpoenas on Monday night.  Mr. Lasker I understand is still in his office today, Mr. Douglas left the city yesterday, I spoke to him.  I would have been able to subpoena him yesterday because he didn't leave the city until this morning.

22               Thirdly, although this is not an objection I guess, not all the interveners were listed on the Agenda, but a number of interveners are now going to be added.

23               I believe that in order for the Commission to have a full and complete understanding of the situation, the proper board of Harmony should be represented and the issue of that should be determined long before we get anywhere else.

24               And, in order to do that, I think it is crucial to have Mr. Don Douglas present by subpoena and it is crucial to have Mr. Shane Lasker who is a government employee present by subpoena and I also would like to have Ms Rita Tully present by subpoena.

25               Without that, I don't think the Commission can get to the truth, and it cannot understand the history of Harmony, nor its proper ownership and its proper directors.

26               In fact, the actions of some of the employees of the Commission have presumed, and have worked to the detriment of the true Board of Directors, the volunteer Board, and they had not been corresponded with until April of this year, and any of the orders that were given in any of the correspondence that went to other parties prior to this year were improper.

27               I respectfully submit that the Commission should order the subpoenas and give a reasonable time before reconvening a hearing in order to hear from these people properly, in order for the Commission to make an adequate and proper determination, with all of the facts before it.

28               THE CHAIRPERSON:  Counsel?

29               MR. McCALLUM:  With respect to the subpoenas that you are requesting, what is it that you want these people to say?

30               What is the issue that you wish them to address?

31               MR. KOVNATS:  The issue that I wish to address through Mr. Douglas ‑‑ in fact, through all of them, is the true Board of Harmony Broadcasting Corporation, who the proper parties are to deal with, and who should be dealing with the matters involved.

32               Mr. Douglas was retained by the Board of Harmony Broadcasting, and I understand that his firm is also representing Mr. Asper's organization.

33               And I am not going to get into that issue, but as far as ownership is concerned, I think that Mr. Douglas is absolutely key, because he made sure ‑‑ first, there were meetings that may or may not have been held properly, but then he made sure that all meetings were held properly, and that the appropriate Board was confirmed.

34               Secondly, I believe that Mr. Lasker will be able to give testimony, specifically, as to how the operations of our Corporations Branch works, and how one has to look at the register in a different way to understand what it really means.

35               And, Ms Tully, the same sort of information, plus financial.  She has other information, as well, as to the ownership.

36               Without those people present and giving evidence, I think there is an issue.

37               I feel that the Commission should have them here, and I think that it wouldn't have been hard to issue the subpoenas yesterday.  I could have had them here, but now we have to get them, and it will have to be at a later date, obviously.

38               But the ownership of Harmony ‑‑ and when you call it ownership ‑‑ the Harmony Broadcasting Corporation is a not‑profit ‑‑ a non‑share corporation in Manitoba.

39               It's not called a not‑profit, it's called a non‑share corporation in Manitoba, and its proper directors have been sidestepped by members of the Commission, who knew of their existence, who talked with them, who met with them, and who had some correspondence with them prior, and they did not follow what they were supposed to.

40               So for this Commission to go ahead ‑‑ and I am not casting any aspersions on anyone.  It didn't happen.  I believe that the Commission should, very definitely, hear from those witnesses on the issue of ownership and control of Harmony Broadcasting long before you deal with any other issues.  I think it's absolutely crucial.

41               MR. McCALLUM:  For the record, who is Ms Tully?

42               MR. KOVNATS:  Ms Tully was an accountant employed at Harmony Broadcasting.

43               MR. McCALLUM:  Why is her testimony needed, in your view?

44               MR. KOVNATS:  My understanding of her testimony is that she will be able to confirm the improper attempts to change directors.

45               The new Board ‑‑ there has been no new Board.  The Board since, I think, 2004 or 2005 has been Manjit Blake, Paula Bjorklund and Peter Bjorklund.

46               No other memberships have been granted.  People's names have been put on registers.

47               There will be further testimony, by other people, who are here, and who will come again, as to how their names were put on without their consent as being on the Board, and I believe this is something that should be dealt with.  The full and complete information should be before the Commission.

48               MR. McCALLUM:  There was a document included in the rather extensive package ‑‑ in the intervention package that Mr. and Mrs. Blake filed, which appears to be an agreement of, I think, January 29, 2004.

49               Was Mr. Douglas retained to draft documents resulting from that meeting?

50               MR. KOVNATS:  Not only from that meeting, but from further meetings in December of 2004, and, I believe, January or February of 2005.

51               He would have the knowledge.  I don't want to say a date, because I don't have it right in front of me, but it was the early part of 2005.

52               I believe that he should be here.  If anyone should be here who can explain it in its entirety, it's Don.

53               THE CHAIRPERSON:  Just so I understand, you mentioned someone's name who could address the issue of improper attempts to change directors.

54               MR. KOVNATS:  Yes.

55               THE CHAIRPERSON:  Which means that the directors have not changed as of this moment, although there were attempts ‑‑

56               MR. KOVNATS:  That's right.

57               THE CHAIRPERSON:  ‑‑ improper attempts to do that.

58               MR. KOVNATS:  That's right.  The directors of the corporation, I submit, are Peter Bjorklund, Paula Bjorklund and Manjit Blake.

59               THE CHAIRPERSON:  I am still confused.

60               You are submitting that, but are you saying that there were improper attempts to remove them, or that there were improper attempts to not put them on the Board?

61               MR. KOVNATS:  No, improper attempts to remove them.

62               They were put on the Board, it was filed with the Corporations Branch of Manitoba, and a copy was given to the CRTC.

63               The documents were filed in 2004, and a copy of the annual return showing them as directors was given to the CRTC in January of 2005.

64               THE CHAIRPERSON:  Most of us in this room weren't there then.

65               There was a preceding hearing that took place two years ago.

66               MR. KOVNATS:  Yes.

67               THE CHAIRPERSON:  Were they principals and Board members at that time?

68               MR. KOVNATS:  Yes, and they had no notification.

69               That's what this is going to boil down to.  They had no notification of the hearing, absolutely none.

70               They are directors; they had no knowledge of this.

71               That is why, I believe, it is imperative that you hear the testimony of Mr. Douglas as to their directorship, as to their membership in the corporation, amongst others ‑‑ Mr. Lasker, on how the operation of our Corporations Branch works, and then hear from people whose names were put forward wrongfully.

72               There were attempts to put people's names at the Corporations Branch that were totally improper, and I have the party present who will say that he was never a director, even though someone put his name down.  He never attended a meeting.

73               Nothing has been done properly since the 2005 filings by Mr. Douglas.

74               THE CHAIRPERSON:  I want to come back to something you said.  You said that they had no knowledge of the public hearing.

75               MR. KOVNATS:  That's correct.

76               THE CHAIRPERSON:  Did the CRTC not put out a Public Notice and publicize the hearing?

77               MR. KOVNATS:  They did not see the notice.

78               This is a volunteer Board.  They were unaware of the hearing.

79               There was a Public Notice, but the letter went to the wrong party.  So the letter that they would have thought they were getting if something was going on never reached them.

80               And the CRTC knew of them, knew of their directorship, and should have notified them the same way they notified other people who were improperly notified.

81               I believe this is very important, and I think this is why you should hear all of the evidence, and that's why I think you should have Mr. Douglas present to testify, Mr. Lasker present to testify, and Ms Tully present to testify.

82               I will admit that I only asked for two subpoenas.  I am not in any way suggesting that I asked for more.

83               MR. McCALLUM:  Can you advise what litigation is going on between the parties to settle these issues?

84               MR. KOVNATS:  None.

85               MR. McCALLUM:  So no litigation has ever been taken.

86               MR. KOVNATS:  None.

87               MR. ASPER:  Mr. Chair, I wonder ‑‑ my name is David Asper, for the record.

88               Mark Lewis, who is regulatory counsel for us, is prepared to respond to what Mr. Kovnats has said.  I am not sure if that's appropriate now, but you might want to hear a response on behalf of us.

89               THE CHAIRPERSON:  I'm in the hands of my counsel on this one, so I will look to him for advice and guidance.

90               MR. McCALLUM:  We may have further questions of Mr. Kovnats, but I think it would be appropriate to hear from Mr. Lewis.

91               MR. LEWIS:  Thank you.  Good afternoon.

92               Section 31 of the Rules of Procedure is clear ‑‑ and I quote:

"The Secretary may, on behalf of, and as authorized by the Commission, issue subpoenas in the form set out in Schedule 2 to compel the attendance of any person at a hearing as a witness."  (As read)

93               Intervenors, in our view, have no right, pursuant to section 31, or any other section of the rules, to request the Secretary to subpoena a witness in a broadcast proceeding.  There is no precedent that we know of where this has happened before.

94               The Blakes are intervenors, plain and simple.

95               At the 2006 hearing, the matter of ownership of the radio station, and the matter of the Blakes, was discussed with Mr. Capozzolo and his counsel.  The transcript of that proceeding, which we have here, is clear, and we can quote the paragraphs verbatim.

96               Notwithstanding the allegations made by the intervenors at the 2006 hearing, the Commission found that Harmony, and specifically the sole member of the corporation, Mr. Capozzolo, was responsible for the operation of the broadcasting undertaking and issued the mandatory orders that we are speaking of today.

97               The rules of procedure in the Broadcasting Act provide for an appeal of the decision, either by way of an appeal to the Governor in Council or the Federal Court.  The Blakes had ample opportunity to challenge the decision issued in January 2007, but took no such action.

98               What they are asserting today is that the proceeding in 2006, and the decision that followed in January 2007, was improper, and the mandatory order accrued or attached to the wrong parties.

99               If the Blakes were in control of the undertaking, or disputed the Commission's finding of facts as a result of the 2006 hearing, they should have come forward.  There was ample publication of that decision, not just the Public Notice of the hearing, and associates of theirs attended at that hearing in 2006.

100              There were legal remedies available to them, and they did not avail themselves of them at that time.

101              When the Notice of Public Hearing was issued for this proceeding a few months ago, they intervened ‑‑ and, I repeat, intervened ‑‑ and they didn't file any response to the matter of regulatory issues before the Commission.  They did not properly put a case before the Commission, and the issues they are raising today, or attempting to raise today, weren't properly raised in the appropriate process of the intervention.

102              So, to purport to have the opportunity to do so today, in our view, is not permitted under the rules.

103              What they are attempting to do, with due respect, is to hijack the hearing.  If there are civil issues as between the parties, those issues should be resolved in the courts.

104              The Commission has the ability to bring clarity to these matters.  Mr. Capozzolo is here voluntarily in the room.  We have had no notice of whom the Blakes, until moments ago, or their counsel wish to compel to attend under subpoena.

105              I understand that one of the parties they wish to subpoena is a solicitor, and he is probably bound by solicitor/client privilege, as well.

106              I just want to go back to the Broadcasting Act.

107              The Broadcasting Act and the Regulations, also, do not allow opposing counsel of intervenors to cross‑examine witnesses.  Section 33 is very clear:

"No evidence may be introduced at a public hearing, except in support of statements contained in an application, intervention, or reply, as the case may be, or in support of documents or material filed in support thereof."  (As read)

108              To be brief, Mr. Chair, the time has past.  Earlier in May was the time that they could have brought all of these matters before the Commission.

109              I have one other comment, and it is on a comment that Mr. Kovnats made regarding the record of the Commission in this matter.

110              The record is clear.  We understand that there is a body of documentation in the possession of the Commission, provided by the Blakes long ago, prior to the issuance of the Public Notice for this hearing, regarding their allegations of putative ownership of this radio station.

111              The Commission properly reviewed the material, and from our examination of the public file, made previous determinations that they were not the putative owners of the radio station, or the undertaking, and had no standing to apply for transfer of ownership for the non‑share corporation, which is the licensee.

112              So today, after repeated determinations, they should not be permitted to hijack the hearing.

113              I have one last comment, that is, directors are responsible in law for the operations and actions of the corporation, and if they have been directors, they have been absent for a very, very long time.

114              THE CHAIRPERSON:  Mr. Kovnats, do you want to respond?

115              MR. McCALLUM:  I'm sorry, could I put a question to Mr. Lewis?

116              THE CHAIRPERSON:  Yes.

117              MR. McCALLUM:  Would you address what value the proposed witnesses could bring to this hearing?

118              Mr. Kovnats has suggested that they would bring some value to this hearing.  What would you say to that?

119              MR. LEWIS:  It appears that the only clarity they might bring is in the determination of the civil matter which is outstanding, and we were going to reply in intervention to the nature of the civil matter, which may be looming, and the discussions that have taken place.

120              I could address that now, if you wish.

121              The other issue that I wanted to raise ‑‑ I'm sorry, I should have raised it a moment ago ‑‑ is that the parties ‑‑ Mr. Kovnats' clients could have brought a complaint pursuant to section 9 of the Rules of Procedure, in writing, at any time in the last two years or three years, because he is alleging that these matters go back to 2005, regarding the putative ownership of the undertaking, and the Commission could have, at that time, investigated, called a hearing, et cetera.

122              He has basically ambushed the Commission today on this matter, and we think that's improper.

123              We see no clarity that can be brought.  We think that our presentation today will bring great clarity to the situation.

124              MR. McCALLUM:  I wonder if you could elaborate on what you mean by the determination of the civil matter.

125              MR. LEWIS:  Perhaps Ms Stiver could make comment.

126              MS STIVER:  Good afternoon.  For the record, it's Lisa Stiver.

127              What I believe Mr. Lewis was referring to is that there are some matters, as Mr. Kovnats has also alluded to ‑‑ issues that go back to 2004, I believe was the date, about some of the material that you have also seen, which they filed in their intervention ‑‑ the Blakes' intervention.

128              We believe that those matters are of a contractual nature.  There may be an issue over what transpired and what documents were executed ‑‑ authorized ‑‑ at that time.

129              Again, that is not related to the regulatory matters, at this point, which Harmony is being asked to deal with today.

130              MR. McCALLUM:  I would like you to explain the latter one, "not related to the regulatory matters".

131              MR. ASPER:  Counsel, there may be civil claims.  There may be contractual claims that Mr. Blake may assert against Harmony Broadcasting regarding ordinary course business dealings that may or may not have occurred back in 2004.  He can go to court and fill his boots, but that's not a matter for the CRTC.

132              MR. McCALLUM:  What about the points of the other two witnesses?

133              I think you were addressing, principally, Mr. Douglas.  What about the other two witnesses that Mr. Kovnats has suggested?

134              MR. ASPER:  I think it is a little awkward to try to particularize what the applicant seeks from a witness.

135              These are employees of the Corporations Branch of Manitoba.  It is a little awkward for us to try to anticipate the particulars of a request for a subpoena.

136              MR. McCALLUM:  Ms Tully is an employee of the Corporations Branch?

137              MR. ASPER:  I'm sorry, no, she is an accountant.

138              I'm sorry, Mr. Lasker is.  Ms Tully was the former accountant and, as you will hear from our presentation, we have actually had to retrieve from her all of the documents relating to Harmony, such that we can, almost on a forensic level, recreate the financial affairs of the company and, as part of getting back into compliance, file the annual returns.

139              Again, I can't particularize or anticipate what Mr. Kovnats thinks Ms Tully will say.

140              MR. McCALLUM:  Would you also elaborate, Mr. Lewis, on what you meant by opposing counsel cannot or should not ask questions?

141              MR. LEWIS:  In a Commission hearing, with the exception of the telecom hearings and regulations under the Telecom Act, there is no provision for intervenors' counsel to cross‑examine witnesses.  It doesn't exist in the rules.  It's not specified.  It is very clearly specified in the telecom rules ‑‑ in the Telecommunications Act.

142              Our position is that, absent very specific direction in the rules in the Broadcasting Act, that is not a remedy available to an intervenor's counsel at a hearing.

143              MR. McCALLUM:  If the Commission were to allow Mr. Kovnats to ask questions, what would be the repercussions for the group that is in front of the Commission?

144              Would this group be seeking other remedies, or rights?

145              MR. LEWIS:  I think that the Commission's procedures are quite clear.  There is a procedure for filing materials prior to a public hearing.  There were directions in the Public Notice.  There were dates specified.  Those have been complied with, as far as I can see.  I have seen no miscarriage of justice with respect to the filing of materials.

146              Our concern is that Mr. Kovnats may very well bring in new documents that should have been filed either by way of, number one, a complaint under section 9, or prior to the date fixed for interventions in this matter, or under some other procedure at some time in the past.

147              As I alluded to, perhaps he should have challenged ‑‑ or his clients should have challenged the decision in January 2007, on January 29th.

148              MR. ASPER:  Counsel, if I may also add, I think the consequences to this panel may be less than the potential consequences to the operation of the Commission and the operation of the rules.

149              What Mr. Kovnats is essentially trying to do is convert this into an adversarial proceeding.

150              Any questions that he wanted to ask, or wanted the Commission members to be aware of from these witnesses, he could have written them a letter and asked them to answer the questions, and filed it.

151              He could have done that for the past three years, or however long this claim has ‑‑ four years.  However long this has been simmering.

152              What I fear is being attempted here is to take a regulatory proceeding and convert it into a civil litigation forum, and I think that the consequence to the Commission is potentially ‑‑ and how this Commission functions is very serious.

153              MR. McCALLUM:  To be specific, though, if Mr. Kovnats were permitted to ask questions, would you seek the right to ask question as well?

154              MR. ASPER:  Well, now we need a different kind of lawyer on the panel.

155              Yes, I would assume so.

156              If that door opens, then, I think, the door opens.

157              I would certainly want to reserve our right to do so.

158              MR. McCALLUM:  Would you seek to address responding materials?

159              MR. ASPER:  Our position is that they are irrelevant.

160              If the Commission determines that they are relevant, then we will respond.

161              MR. McCALLUM:  It may be appropriate to hear Mr. Kovnats in reply.

162              THE CHAIRPERSON:  Mr. Kovnats?

163              MR. KOVNATS:  Mr. Chairman, there is no attempt by me to hijack anything, and I don't like language used in that way.  I do not use pejorative language, and I will not have it used about me.

164              Number one, I had to take over representation of this client at the last minute because Don Douglas, who is a lawyer with Thompson Dorfman Sweatman, had been their lawyer, who should have taken care of this in the past.

165              Number two, we are not intervenors.  We were forced to be intervenors by the operation of the Commission staff.

166              My clients are not just "The Blakes", my clients, as I indicated, are Peter Bjorklund, Paula Bjorklund and Manjit Blake, for the purposes of the "ownership", or operation, or control of Harmony Broadcasting Corporation.

167              I have represented Mr. Blake in what could be considered a civil way, dealing with contractual matters, but that is a separate issue at this moment.

168              I am here on behalf of the true directors of Harmony Broadcasting Corporation, who had to file papers as intervenors, and shouldn't have had to file as intervenors, but should have been, indeed, the applicant ‑‑ or the respondent.

169              So we are in a conundrum and the Commission staff has taken ‑‑ and I am not questioning them.  They have taken a position in their actions that have put us sort of in a set of rules that don't necessarily apply.

170              Now, there was a letter sent by my office which was declined.  It was returned to me and I was told it had to be filed as intervenors.  And I think that should be brought to your attention.

171              I am not trying to interrupt you.  I didn't mean to cut you off but I did want you to know that I had written on behalf of the directors to the CRTC and they said, "No, you must file as intervenors".  So procedural or not, it would be a denial of natural justice not to have the full matter with all information put before you in a proper fashion.  I'm not trying to hijack your hearing.

172              THE CHAIRPERSON:  Can you explain to us how acting as an intervenor will not allow you to put whatever information you seek to put on the record and have it fully aired and considered by the Commission?

173              MR. KOVNATS:  I can do it from the intervenor chair, so to speak, but I need the power to subpoena people to bring forward evidence because they won't come forward voluntarily.  And I need that evidence before the Commission.  It is absolutely crucial to have that evidence before you in order to respond and to put forward the intervenor's position, if you call them intervenors.

174              I believe they should be the true respondents but for the purpose of this discussion I will call them the intervenors, just for identification purposes only.

175              And the intervenors need ‑‑ and the intervention and the public needs to have the full knowledge, the full facts put forward completely so that you can make an informed decision.  And in order to do that I absolutely need Mr. Douglas.  I need Ms Tully and I need Mr. Lasker.

176              Mr. Lasker will not come voluntarily and I am, quite frankly, embarrassed in some ways because I am cordial with both Mr. Douglas who I consider a friend; I'm cordial with Ms Stiver.  I think their firm is the conflict; they don't.  That's up to them.  My clients relied on their firm.

177              I think you need to have the full facts before you.  In order to do that you need Mr. Douglas to come forward and tell you exactly what happened and when, and without that I don't think you are going to get to the bottom of it the way you should.  My clients can give you a layman's version but you need a proper version and the person who can do it best is Mr. Don Douglas.

178              Mr. Lewis kept referring to the Blakes.  I represent in this capacity Mrs. Blake as a board member, Mr. Bjorklund and Mrs. Bjorklund.  They were the proper board members of Harmony Broadcasting Corporation, and I can't stress that strongly enough.

179              MR. McCALLUM:  If I may, Mr. Chair?

180              THE CHAIRPERSON:  Sure.

181              MR. McCALLUM:  In bringing in the witnesses that you are proposing to bring in, you would ask them questions would you?

182              MR. KOVNATS:  I would ask them just to tell exactly what happened.

183              MR. McCALLUM:  So you would be ‑‑ you would be asking for the right to ask questions; is that correct?

184              MR. KOVNATS:  That is correct.

185              MR. McCALLUM:  You would be asking them to bring a document, would you?

186              MR. KOVNATS:  I don't think that ‑‑ I think most of the documents have been filed with you.  The only person who might have to bring documents I believe would be Ms Tully.  I believe you have the documents that Mr. Douglas can explain and document and I believe you have documents that were registered in the corporation's branch for Mr. Lasker.

187              I did not prepare the packages that were dropped off to your office and I have seen various copies and I believe you have them.  I looked upstairs in the file and I think you have most of them.

188              MR. ASPER:  Counsel ‑‑ sorry, David Asper for the record.

189              Just on that point with respect to documents, Mr. Kovnats is on notice from us that we would be seeking to apply in the event that there is any documentary evidence considered that the best evidence rule apply and that originals be produced.

190              MR. McCALLUM:  So as I understand it, you would have no new documents except from Ms Tully ‑‑

191              MR. KOVNATS:  I don't know if the others would have documents that I am not aware of.  I would ask them to bring their files so I could compare the documents, yes.

192              MR. McCALLUM:  So you would be issuing a subpoena duches tecum, bring your whole file and then it would have to be examined once it's received here.

193              MR. KOVNATS:  Yes, to make sure that the documents that I ‑‑ there is no other documents other than what I have seen here before.  I'm not ‑‑ because I have not seen their files I can't tell you.

194              MR. McCALLUM:  So in other words there may be documents?

195              MR. KOVNATS:  Yes.

196              MR. McCALLUM:  Okay.

197              MR. KOVNATS:  There may be that I can't ‑‑ that I'm aware of.

198              MR. McCALLUM:  Right.

199              MR. KOVNATS:  And there would certainly be some information as to telephone calls.

200              And I don't know where I received notice from anybody.  I would appreciate seeing where I received notice.  I'm not saying what other people did or didn't do.  I never received any notice to produce original documents for the purpose of this hearing.  I was asked to produce some original receipts; that's it.  That's a separate issue.  I was not asked by anyone.

201              MR. ASPER:  Yes, actually, counsel, Mr. Kovnats was asked to produce a particularly contentious original version of the documents because they are not the same, I believe, dated January 24th, 2000 and January 29th.

202              MR. KOVNATS:  If you are talking contractual documents I'm talking corporate ownership documents.  There is a big difference.  I said for the purpose of this hearing.  I was very clear, Mr. Asper, in what I said.

203              And you know what?  I don't want to go on that contract issue.  I am here dealing with the ownership issue, with the control issue; with who should be notified, with who shouldn't be notified.

204              MR. McCALLUM:  You said earlier that Mr. Lasker would not come voluntarily.  Can you explain what you mean by that?

205              MR. KOVNATS:  If you want to subpoena him he will come in a moment but I have tried with Shane before on things.  You have to give him a subpoena.  He is a government employee.

206              MR. McCALLUM:  Have you received any indication that there would be a challenge of that subpoena by anyone?

207              MR. KOVNATS:  No, none.  I don't think he would challenge it.

208              And as to solicitor‑client ‑‑

209              MR. McCALLUM:  Sorry, he is a provincial government employee, right?

210              MR. KOVNATS:  Yes.

211              MR. McCALLUM:  He would presumably have to report to his superiors and his superiors would presumably make a decision whether or not to challenge the subpoena; is that not correct?

212              MR. KOVNATS:  I don't know, sir.  I have never had a situation where I have had to subpoena someone for the provincial government but they declined to show up.  And I have only done it twice in my life so ‑‑ I'm not normally doing litigation.  I would anticipate that in his capacity he would show up with whatever documents he was supposed to and answer questions.  I don't think Mr. Lasker would hold back.  But I could be surprised.  I'm not saying it can't happen but I would be surprised.

213              Mr. Douglas ‑‑ and I want to address the issue of solicitor‑client privilege.  The solicitor‑client privilege that Mr. Douglas would be under would be to the people who retained him, who were Mr. Bjorklund, Mrs. Bjorklund and Manjit Blake.  So I would imagine he would be more than happy ‑‑ if they say to speak, that he would speak.  I can't imagine him not being willing to speak.

214              MR. McCALLUM:  Just for the record, have your clients made any applications to the Commission?

215              MR. KOVNATS:  The Commission through Mr. Crushin had asked them to start an application and to start a new company to make a different corporation.  I was involved in incorporating that new company and then Mr. Crushin said, no, no, it has to be a full application and that wasn't what we had understood at the beginning so they did not proceed with the application.  The application was done at Mr. Crushin's request because he didn't want to have to deal with the dispute with respect to Mr. Capozzolo,  Manjit Blake, Peter Bjorklund and Paula Bjorklund.

216              I would also point out to you that Mr. Capozzolo's:

"No individual can be the 'owner or controller' of a non‑share corporation in Manitoba."  (As read)

217              MR. ASPER:  Counsel, I think if you ‑‑ Commission, I think if you played back the last portion of the transcript you have out of counsel's mouth the concession that they got direction from Mr. Crushin as to what needed to happen and chose not to proceed, that is in fact what happened and that is in fact how the CRTC proceeded in 2006 and 2007.

218              MR. KOVNATS:  With due respect, Mr. Crushin said one thing one day and another thing the next, which is why we didn't proceed.  I wasn't going to attack Mr. Crushin.  He is not here to defend himself.

219              MR. ASPER:  The point is ‑‑

220              MR. KOVNATS:  Information that Mr. Crushin gave us that caused us to initiate something then changed so we didn't proceed because Mr. Crushin said, "If you are going to go this method you also have to do A, B, C".  When he told us originally just go this method and it will happen, that's different.

221              So there was no sense in making an application or a further application in any way because it was not as was presented to my clients, all right?

222              MR. McCALLUM:  Was the name of the company that you incorporated Winnipeg Technical Centre Inc.?

223              MR. KOVNATS:  No ‑‑ well, yes, I think I did that as well but I also did Earhole.  I think they were the people who were going to make it.  I'm not sure.  I don't ‑‑ that was irrelevant for the purpose of this.

224              What happened at that time ‑‑

225              MR. McCALLUM:  Sorry, there is a document:

"Winnipeg Technical Centre Inc., a for profit corporation established under this Canada Business Corporations Act."  (As read)

226              MR. McCALLUM:  It's on the record.  Should the Commission take notice of it or is it irrelevant?

227              MR. KOVNATS:  Was it relevant or not?

228              MR. BJORKLUND:  No, it was relevant because that was the for profit for the purpose of training students.  Earhole was the non‑profit side to take over the licence per se because of all the bad vibes and past history with Harmony Broadcasting and as the current directors we were not wanting that, you know, to follow us.

229              MR. ASPER:  Sorry, sir, for the record could you say your name, please?

230              UNIDENTIFIED SPEAKER:  Peter Bjorklund.

231              MR. BJORKLUND:  I'm Peter Bjorklund.  I am a board member of Harmony Broadcasting.

232              MR. KOVNATS:  I didn't want this to go sort of all over the map.  The purpose of this and the reason I felt that I was approaching this the way I was, and I will continue to do in my own slow style, is I felt the Commission should hear all the facts from the people who can best give them and I need Mr. Douglas present to do that.  I think he has a professional obligation when he comes and I don't think Don would walk away from it.

233              Number two, I believe Mr. Shane Lasker will be able to come.  I also think Shane would answer questions.

234              And number three, I don't know Rita Tully but from what I am told and what I have heard that she testified at another matter, I think it is absolutely crucial for the Commission to hear these three people.

235              I strongly request that you allow the subpoenas to be issued and to reconvene with these people present so that you can hear the whole situation from soup to nuts.  Otherwise, you are not going to get the full story properly.  You are going to get people's versions.  These are the people who know the best and let it come out.  That's what I am asking.

236              THE CHAIRPERSON:  I believe we have two issues in front of us.  The first one is who is the rightful party to appear pursuant to the call today to deal with the non‑compliance in the mandatory order and the second is the issue as to whether we will or we will not accept the proposal to issue subpoenas.

237              In the absence of counsel having other questions I would like to recommend that the panel here adjourn for 15 minutes or whatever period of time it takes for us to deal with these issues.

238              MR. McCALLUM:  Thank you, Mr. Chair.

‑‑‑ Upon recessing at 1448 / Suspension à 1448

‑‑‑ Upon resuming at 1543 / Reprise à 1543

239              THE SECRETARY:  Please be seated. We will now resume.

240              Mr. Chairman.

241              THE CHAIRPERSON:  Thank you.

242              The Commission has received an unusual request to determine, as between two competing groups, which group should be the one that is the respondent to the call to the present hearing set out in Public Notice CRTC 2008‑4 of April 3, 2008.

243              The Commission has heard arguments from the two competing groups and rules as follows.  The group that includes Mr. Capozzolo is directed to act as respondent to the present process and the group that includes Mr. and Mrs. Eddie and Manjit Blake to be designated as interveners in the present process.

244              This ruling is based on the fact that Mr. Capozzolo appears from the renewal to be the sole member of Harmony Broadcasting Corporation.  Mr. Capozzolo was responsible for running CJWV‑FM station during the last several years and it was Mr. Capozzolo who appeared on behalf of Harmony at the September, 2006 public hearing which resulted in the mandatory orders attached to Decision 2007‑27.  He is the only party running the station that can be asked to address the past non‑compliance and his notice at public hearing states a main purpose of this hearing is to deal with and address past non‑compliance. 

245              In argument Mr. Kovnats acknowledged that he would be given an opportunity to deal with the issues during the intervention phase. 

246              The group designated as interveners will have a full opportunity to present their views and material during the intervention phase in support of the extensive materials they have filed and is on the record.

247              On the issue of the request for subpoenas, the Commission is still investigating the matter and will make a decision at the earliest possible time.

248              With that said, we will proceed with the Phase I presentation.

249              THE SECRETARY:  We will now hear from Harmony Broadcasting Corporation.  Mr. Asper, please introduce your colleagues, and you will then have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION

250              MR. ASPER:  Thank you.

251              We will begin with Mr. Wortley please.

252              MR. WORTLEY:  Mr. Chair, Commission members, for the record, my name is Brian Wortley and I appear here today on behalf of Harmony Broadcasting Corporation.

253              With me today are Franc Capozzolo, the former sole member of Harmony Broadcasting; David Asper, who is the sole member of Harmony; Lisa Stiver, legal counsel of the law firm Thompson Dorfman Sweatman LLP, Ms Stiver is also a Harmony board member; Ken Penner, President of Robertson College, Mr. Penner is also a member of Harmony's board; Louise Nebbs, who is CFO of YO Radio Management; Mr. David Dubnicoff, who was formerly with Moffat Communications, Mr. Dubnicoff is a retired Chartered Accountant who was formerly the Controller with the Radio and Television Division of Moffat Communications; Mr. Lewis, Regulatory Counsel from the law firm of Lewis Birnberg Hanet LLP. 

254              And seated in the room today are the board members of Harmony:  Tanis Kircher, Medical Technician Student at Robertson College; Michelle Norris, Human Resources Officer for Manitoba Lotteries Corporation; and Travis De Koning, Chartered Accountant for Book & Partners accounting firm.

255              Prior to the hearing and the issuance of broadcasting notice of public hearing a number of documents were filed with the Commission which we will reference in this presentation.

256              Mr. Franc Capozzolo will speak to the matters pertaining to the operation of CJWV‑FM from the period following the issuance of the mandatory order in January, 2007. 

257              Franc.

258              MR. CAPOZZOLO:  Good afternoon., Mr. Chair and members of the Commission.

259              In 2007 the Commission issued mandatory orders.  Prior to the public hearing in September, 2006 I had negotiated an agreement with Robertson College.  However, around the time of issuance of Broadcasting Decision CRTC 2007‑37 Robertson College withdrew from the agreement due to the negative press that the station was and had received.

260              I immediately contacted a number of educational institutions and concluded that no one was prepared to enter into agreement with the station due to the regulatory status of the station.

261              I met with Gary Krushen of the Commission and was given to understand that I would be given time to come into compliance.  I determined that I would have to apply to the Manitoba Private Vocational Institute for accreditation of the broadcasting curriculum which I had created.

262              However, over a period of time it became apparent that neither I nor Harmony would be accredited as a private vocational institute.  During the period of January 29, 2007 to October 15, 2007 the financial situation of the station continued to worsen.

263              Due to the dire financial situation in mid‑August, 2007 Harmony was evicted from the premises used for the broadcast studios. In accordance with the mandatory order a number of reports were to be submitted as of September 30, 2007.

264              On the date the reports were due to be filed, that would be September 30, I was in a situation where I had just moved from the studio space and I attempted to continue broadcasting from a very small apartment with a lack of financial and/or human resources.

265              Exactly two weeks following the date when the reports were due to be filed with the Commission transmission lines were terminated by the telephone company and the transmissions were disrupted.

266              The letter notices from the Commission requesting additional logger tapes had been sent to a location that I could no longer access.  When I received the notice sometime later via email I was informed that I had less than 48 hours to satisfy the request.  The technician who handled the retrieval of logger material was out of the country at that time.  And in haste to comply with the Commission's request during the short 48 hour period I reproduced the wrong recordings from the files, which were from the prior year.  I admit that I provided those recordings in error, in error, to the Commission.

267              The second request for air‑check tapes for the weeks of September 7 to 13 of October, 2007 was made in October.  The notification was received following the closure of the station. 

268              I did everything in my powers to enter into agreement with an educational institution and get the institutional programming on the air and I attempted to right the financial situation.  Likewise, the failure to file the financial returns was exacerbated by the lack of funds to retain professional accounting services.

269              I was a one‑man show that could no longer pull it together.  I had no intentions of being out of compliance or of misleading the Commission at anytime.

270              Everyday I woke‑up hoping that something would happen to right the situation, but I realized that I could only fool myself for so long.  I realized that I was way over my head and that I had reached the end of the road.  And I determined in October, 2007 that it was the end of the road with respect to the continued operation of the station under my management.

271              I want to state that I regret the series of events which resulted in the closure of the station and the circumstances which brought us to this hearing here today. 

272              Shortly after the station went off the air, I received a call from Mr. Wortley and over the course of a few weeks I was put in touch with Mr. Asper and his team.

273              MR. ASPER:  Mr. Chairman, members of the Commission, last fall when Mr. Capozzolo voluntarily suspended broadcast operations for CJWV‑FM we both made an approach and were approached to determine whether there was any potential for us to assist in rescuing this community resource and whether we could assist in restoring financial viability.

274              As you are aware from the discussion yesterday, I do have a passion for radio and I was aware of this station because my children listened to that station for rap and hip hop music, which was not otherwise readily available as a consistent format in this market.

275              I accepted that the proposition was worth a look.  And, as I said yesterday, this was the first involvement that we had prior to the application for the new commercial FM.  And I accepted the proposition was worth a look and asked Brian Wortley to assemble a team of professionals, which includes the team you see here today, to determine whether a rescue could actually be undertaken.

276              We held a number of meetings with CRTC staff, both the staff based here in Winnipeg and staff located in Gatineau.  This included a number of telephone consultations and fact‑to‑face meetings.  It became clear in the course of those meetings that there was reoccurring managerial and, more particularly, record keeping problems which had occurred over time resulting in regularly noncompliance.

277              We were fully conversant with the problems that Mr. Capozzolo had faced in the operation and management of the station and the regulatory history of the station, including the outstanding mandatory orders as well as the decisions and factual conclusions made by the CRTC, as discussed in the context of the motion and the objection that we discussed earlier today.

278              I want to be clear and candid with the Commission.  We are sitting before you today and have undertaken board management changes on the advice and counsel of Commission staff.  We believe that we have been forthright in providing documentation and a clear plan of action, vis à vis addressing the outstanding regulatory issues, and we will speak to those in a moment. 

279              It was very clear to us after consultation with Ms Lynne Renaud in the CRTC ownership group that a transfer of the licence to a new corporation, which would be unencumbered by the past debts and sins of Harmony, would require a full public hearing and, further, a regulatory process which could take upwards of six to nine months to facilitate.

280              We discussed with the Commission staff the need to get the station back on the air and the need to involve incoming broadcasting students in the current academic year in the operation of the station.  In the course of those discussions, the counsel which we received from the Commission was to provide in great detail an action plan and a proposal to reinstate broadcasts rather than to change the ownership or effective control of the licensee.

281              In those consultations with the Commission we discussed the constitution of a new board of directors for Harmony drawn from the community and in full compliance with the requirements under the Campus and Community Radio Policy of 1992.

282              I personally became involved in the search committee to seek out members of our community who would not only serve on a board of directors, but who would also be a resource for this radio station.  As you are aware, we have found very highly qualified individuals, drawn from the legal community, academia and so on.

283              And while I always understood that there would be some financial risk in attempting to revive the station, the extent to which funds have now been expended on obtain proper corporate and regulatory counsel, as well as with regard to reconstructing the financial affairs of Harmony so as to be in a position to file annual returns and address several outstanding matters with Canada Revenue Agency, is substantial.

284              I say this not to seek your sympathy, but as evidence of our bona fides that we are serious and committed to making this endeavour work.  We have done everything asked of us and are here today to say that whatever problems existed in the past are not going to be problems in the future.  We are here today to ask that you give us the green light to put this station back on the air.

285              One of the issues that seems to have arisen is whether there has been a change of control.  The terms of previous board members had lapsed, hence there was a necessity to appoint new board members.  We met all legal requirements under Manitoba law in order to constitute and appoint the board.  There was no effective change of control of the programming undertaking.

286              I will now turn to Ms Stiver to provide you with additional background concerning Manitoba legal requirements and a corporate governance of Harmony Broadcasting relative to its conditions of licence and the radio regulations.

287              Lisa.

288              MS STIVER:  Thanks, David.

289              As David explained, over the past few months Harmony underwent a reorganization of the board of directors and a change in its membership.  Both of these changes are the same type of changes to Harmony's governance that have occurred various times throughout its corporate existence, from 1993 to the present time. 

290              At this time, however, the correspondence from the CRTC suggests that there was a change of control which is contrary to Section 11(4) of the Radio Regulations.  As I am sure you are all aware, this section speaks specifically to a change in share ownership and a change in voting interest.

291              Harmony is a not‑for‑profit corporation, which it must remain as a condition of its licence.  Harmony is incorporated under the Corporation Act of Manitoba and is referred to as a non‑share corporation, as contemplated under Sections 267 and 277 of the Act.  No shares can be issued in a non‑share corporation.  Accordingly, no change in share ownership can occur. 

292              Specifically these sections provide that:

"Firstly, the articles of a non‑share corporation shall restrict its undertakings to endeavours that are of an artistic, educational, charitable nature, et cetera.

Secondly, that upon dissolution of a non‑share corporation, unless otherwise provided for in the articles, all assets and property must be distributed to another non‑share not‑for‑profit undertaking, which is charitable or beneficial to the community." (As Read)

293              Accordingly, the licence and property and assets of Harmony have no value to its members.  There cannot be a sale of its shares for there are no shares, nor a distribution of its assets, one of which is a licence upon dissolution.

294              In summary, change of control of a non‑share corporation is arguably analogous to a change of its directors.  But there is no requirement to obtain prior approval of a change of directors for broadcasting undertakings either pursuant to the provisions of the Radio Regulations or circulars issued by the Commission.

295              I have brought with me, and I believe we handed to the Secretary beforehand, a detailed legal memorandum which may be of assistance to the Commission in reviewing the Manitoba law pertaining to not‑for‑profit corporations.  I have filed the memorandum with the hearing Secretary and Commission counsel

296              Brian Wortley will now address the safeguards put in place to ensure regulatory compliance.

297              MR. WORTLEY:  Thank you, Lisa.

298              Earlier this year, several months prior to the notice of public hearing, we put into place a number of policies and safeguards to ensure compliance.  Bear in mind there were no broadcasts taking place and all of this was done in full consultation with the Commission prior to undertaking a single broadcast.

299              In January, February and early March we provided the Commission with comprehensive details of these initiatives including draft agreements with Robertson College. A meeting was held in Winnipeg on January 24, 2008 with Commission staff.  With respect to Robertson College, Mr. Penner is in attendance today.

300              The completion of the negotiation of the agreement and provisions of an executed copy of that agreement to the Commission, along with the provisions of full curriculum and course materials and further arrangements undertaken for the first intake of students, resolves a longstanding problem pertaining to the operation of the radio station as an institutional licensee.

301              Further, Robertson has resolved outstanding administrative issues and has obtained full certification of the course from the private vocational institute, thus, the course will fully qualify under the Manitoba Government vocational institutional requirements.

302              We have also undertaken to search for qualified staff who can assist in the practicum portion of the course and integrate the work of students into the programming of the radio stations. 

303              We have simultaneously been in discussion with the members of the Winnipeg community at large and have identified individuals who wish to become involved in the production of high‑quality spoken‑word programming, programming I might add that would be alternative to the programming currently available on mainstream commercial radio stations which serve Winnipeg.

304              We have also worked to create a weekly schedule of programming including required news, talk shows, specialty music programming which meet the licence criteria and should allow the station to perform at or, in fact, over‑perform relative to the conditions of licence and the requirements of the radio policy.

305              We undertook to provide a double logger system with a failsafe program so that a duplicate recording would be made and retained off premises.  In the course of our discussions and communications with the Commission we became apprised of the fact that the station's former management was in default of filing annual returns to the Commission.

306              We retained Mr. Dave Dubnicoff who, as you have heard, was formerly with Moffat Communications.  Mr. Dubnicoff is independent of YO Radio Management and Harmony Broadcasting.  Working with Ms Nebbs and our company staff we obtained financial records of Harmony and prepared annual filings for the years 2004 through 2007.  Those returns have been prepared in the format required by the Commission and have been filed with the Commission, as we had undertaken prior to this hearing. 

307              We believe the licensee has therefore complied with the requirements under the regulations.  Further, we have voluntarily undertaken to bring the company into compliance with CRA relating to GST, payroll withholdings and the annual filings.  We also brought the company into compliance into compliance with respect to filings with the Province of Manitoba, including annual corporate returns.

308              We entered into an agreement with Mr. Capozzolo to facilitate financial arrangements with Harmony's creditors.  We have prepared business plan and cash flow analysis which, with the support of YO Radio Management, would facilitate the restart of broadcast operations by Harmony.

309              I want to be clear.  The financial plan is multifaceted, but Harmony will be operated as a not‑for‑profit radio station.  The modest advertising revenue, in conformity with the institutional radio policy, would allow for payment of transmission costs and a modest professional staff.

310              That brings us to the involvement of YO Radio Management.  We have assessed reoccurring problems with Harmony which apparently have been occurring for nearly 13 years, back to the first licence term of the station under NIB.  It is clear that this community‑supported station cannot depend on the human resources of a single person, nor can a community‑based institutional radio station operate successfully without professional, legal accounting and allied services.

311              YO Radio Management has undertaken to provide clearly defined services provided by qualified professionals who are knowledgeable of the regulatory requirements of the licensee and radio operations.  YO Radio will provide these services on a contracted basis.  I will be the key contact in the provisions of these services.

312              As you heard yesterday, in the event that YO Radio Management is granted the licence for 106.3 FM there would be very limited synergies between the two stations.  Those synergies primarily relate to the provision of professional services.  But I want to be clear.  The provisions of this service to Harmony is not dependent upon licensing 106.3 FM.  And further, this is not an LMA agreement.

313              Programming decisions at CJWV will be made by a program director who will report to the Harmony board of directors.  There will be full transparency of the two radio station operations.  YO Radio will have its own news staff, editorial voice and newsroom which will not be operated in common with Harmony.  106.3 FM is proposed as a full‑fledged local commercial radio service and is not an institutional radio station.

314              We expect that Mr. Kowalson, formerly employed by Harmony, will return as news director of Harmony.  Mr. Kowalson will be responsible for the news and editorial direction of the radio service.

315              That brings us to the matter of Mr. Capozzolo and his continuing involvement in Harmony.  He would be retained to host the morning program.  He will not have day to day managerial duties in the station.  We believe that it was the one‑man operation which consistently lead to regulatory and operational problems.

316              With assistance from YO Radio's professional staff day to day operations with Harmony will run smoothly and Mr. Capozzolo's role will be to use his creative skills to provide Winnipeggers with locally‑focused spoken‑word programming. 

317              In our view he is a talented broadcaster and the topics covered on his talk shows are broader and that commercial radio stations have had been more involved in the community events at the grassroots level.  He will also work with the students mentoring them in their practicum segment of their broadcasting course. 

318              The programming of the station will continue to provide very low duplication of the music broadcast by Winnipeg commercial stations.  We have provided with our presentation a block program schedule which illustrates scheduling of special interest Category 3 music.  There will be Category 3 music in the overall mix throughout the broadcast day.  This will be complimented by an urban music format which will be unique in the Winnipeg area.

319              There is a great affinity between the musical interests of the broadcast students and other younger listeners with this music genre. The music will also conform to the hits restriction imposed on institutional stations.

320              And last, and of key importance, is the role of students enrolled at Robertson College.  They will be involved in all facets of the operation of CJWV.  They will provide spoken‑word content, educational content, assist in preparation and presentation of news programs, will provide voices for commercial messages, will act as program hosts, interviewers and announcers and assist in news gathering. 

321              The Robertson College course is based on semester system with multiple intakes of students each year.  So at any given time students enrolled in the course will be at different stages of their radio development.  Students will be involved in all aspects of radio programming, including audio production, copyrighting, sales, traffic and music selection.

322              As we have noted, the program director will report to the Harmony board of directors, will oversee the programming orientation of the station and regulatory compliance in terms of spoken word, news, Category 3 and Canadian music commitments.

323              To conclude, we believe that the root of regulatory problems of this station have been resolved and the station has the human, financial and managerial resources in place which are necessary to resume broadcasting.  The radio service has been off the air since operations were suspended in the fall of 2007.

324              It would take approximately four weeks to relocate broadcasting equipment and resume broadcast operations.  It is imperative, however, that the broadcasts commence in advance of the fall semester, because the arrangements with Robertson College necessitate on‑air promotion of the broadcasting course in order to attract enrolees.

325              Further, it is imperative that the radio station be operational so that students can obtain their practicum experience as per the curriculum, which was approved by the Private Vocational Institute and the Provincial Department of Education.  The curriculum of the broadcasting course dovetails with the broadcasting operations.

326              The continued registration of the broadcasting course with the government ministry is dependent upon the operation of this station.  Therefore, in order to fulfil enrolment it would be necessary for this station to resume operations by the month of July.  And that is what we seek the authority for the station to resume broadcast operations.

327              We will be pleased to answer your questions.

328              THE CHAIRPERSON:  Thank you very much. 

329              I note in your final conclusion that the radio station is currently off the air, is that correct?

330              MR. WORTLEY:  That is correct.

331              THE CHAIRPERSON:  Where is the infrastructure currently located for this station?

332              MR. WORTLEY:  There is some equipment in Mr. Capozzolo's apartment.

333              THE CHAIRPERSON:  Okay.  And that is all there is right now?

334              MR. WORTLEY:  And there is also equipment in storage.

335              THE CHAIRPERSON:  Has any equipment been purchased in anticipation of this?

336              MR. WORTLEY:  Yes, we have purchased computers.

337              THE CHAIRPERSON:  And how much money has been invested so far in the purchase of all this?

338              MR. WORTLEY:  About $2,000.

339              THE CHAIRPERSON:  Okay.  I want to start I think with the comment that was made in here on page 5, where you say:

"We are here today to ask that you give us the green light to put the station back on the air." (As Read)

340              As I said when we made our ruling earlier, the primary reason we are here is to see whether the Commission should either an additional mandatory order, suspend or revoke the licence of Harmony based on its past operations. 

341              Subsequent to that, you are making an application to transfer the ownership and to create a different entity.  But the primary reason that this hearing was called was to deal with the transgressions that were made pursuant to a mandatory order in 2007 and that is what I look to Mr. Capozzolo to respond to as we go through this.

342              You indicate, Mr. Capozzolo, that you had difficulty getting approval from Robertson College when you approached them.

343              MR. CAPOZZOLO:  No, actually, with the hearing in September of 2006 we had reached a final and comprehensive agreement with Robertson College and that was finalized in May of 2006.

344              In July of 2007 the practicum for the radio program was approved by PBI.  Shortly after the approval I received a notice to appear at the hearing in September of 2006.  Subsequent to the hearing and just prior to the release of the Notice 2006‑37 I received notice from Robertson College that they wished to terminate our agreement. 

345              I spoke with Mr. Penner and he felt concerned that the negative press that the radio station was receiving due to the compliance issues and issues with the regulatory body that it would probably cast his institution in a pall light and decided to withdraw.

346              I immediately searched for someone new.

347              After about the third school that I spoke to, the individual was very frank with me, very candid, and he said:  No one will touch you with a 10‑foot pole.  Good luck with getting accredited because you have issues with your regulatory agency.  PVI is a regulatory agency, and they probably will have a difficult time granting you an accreditation.  If they do, it will probably take two to three years.

348              At this point I have no money.  I have very limited ‑‑ I was counting on January ‑‑ I believe the course was supposed to start in January, and I was looking forward to enrolment and the much needed dollars to be able to put things properly in place.  I was, truly, a one‑man show.  I was the only radio person in the whole building.

349              The people that I had on the air were people that I had trained myself, basically.

350              THE CHAIRPERSON:  And the principal that you were talking with at Robertson College back then, was that Mr. Penner?

351              MR. CAPOZZOLO:  Yes, it was.

352              THE CHAIRPERSON:  And Mr. Penner is in the room here today?

353              MR. CAPOZZOLO:  Yes, he is.

354              THE CHAIRPERSON:  Mr. Penner, can you provide us with some insight as to why you felt compelled to withdraw the agreement, because that, obviously, was one of the critical factors in the ongoing approval process for Harmony.  That is number one.

355              The second question is:  Are you comfortable today with the arrangement that you have struck with the principals, I guess here today, and the fact that the plan, as I heard it this afternoon, is that Mr. Capozzolo will be retained by Harmony ‑‑ by the new owners of Harmony ‑‑ to operate the morning show?

356              You have three questions there.

357              MR. PENNER:  Thank you, Mr. Chair.

358              With respect to the first question, why we withdrew, it was not a light decision.  We chatted a fair bit internally.  We talked to the Department of Education.  The Private Vocational Institutions Branch, we conferred with them.  At the end of the day, we decided that the reputation of the program, of the school, was at risk, and we decided not to proceed.

359              With respect to the second question, do I feel comfortable today?  Yes, I do.

360              The people that I have worked with, Brian and the others so far, we met again with the Director of PVI, the Department of Education, in a meeting with the members here, as well as myself, and they got their blessing to move ahead.  They are supportive of this, so we feel comfortable moving ahead.

361              With regard to Frank's role in the future, as I understand it, as a morning host, we have no objection to that.  We would feel comfortable with that.

362              THE CHAIRPERSON:  Did you, at any time, have any contact with the CRTC during the 2006‑2007 period?

363              MR. PENNER:  I did not.

364              THE CHAIRPERSON:  Mr. Capozzolo, you stated here that you woke up hoping that something would happen to right the situation.

365              Did you ever contact the CRTC formally to indicate the situation you were in?

366              MR. CAPOZZOLO:  I did speak to Mr. Krushen when I spoke to the third school, and I believe that was CDI ‑‑

367              Actually, it was someone that Mr. Penner had suggested that might be interested, and he came straight out and said:  Based on the transcript from the hearings alone, I can't jeopardize the time and sweat that I have put into my school, and I suggest that you would probably have a difficult time getting any accredited school in the province to piggyback with you.

368              THE CHAIRPERSON:  But you were already, at that time, operating under the initial mandatory order by the CRTC.

369              You state here that your transmission lines were terminated, you were disrupted, you moved, your mailing address ‑‑ your Post Office couldn't deliver information to you.

370              Did you ever think of contacting the CRTC to let them know?

371              MR. CAPOZZOLO:  Again, it was a one‑man operation, and to be totally honest, I had allegators at my throat.  I felt that the allegators in Ottawa, with all due respect, were not as urgent.

372              I was evicted from the premises that we had been in for four years.

373              Things were dire.

374              And I didn't know what to do at that point.  I didn't have legal counsel.  I didn't have anything.

375              THE CHAIRPERSON:  Your discussions with Mr. Krushen were on a casual basis, you are saying?

376              There was nothing official?

377              MR. CAPOZZOLO:  I went to the office and spoke to him in person, and I said, "I don't know if you have heard, but the college has withdrawn," and he said, "Yes, I was aware of that."

378              I was rather upset.  I was bitter.  I felt that ‑‑ and I am just being honest here ‑‑ I felt that the Commission had put me into a position where now I was kicked out of compliance by the Commission efforts to keep me in compliance, which was an odd situation, but one of those situations ‑‑ a Catch‑22 situation.

379              THE CHAIRPERSON:  But that is no different from any other obligation.  One has to pay taxes, right‑of‑ways ‑‑ whatever.  You have an obligation.  You were given a licence with certain terms and conditions and ‑‑

380              MR. CAPOZZOLO:  Right.

381              THE CHAIRPERSON:  ‑‑ if you couldn't meet them, there are processes in place to provide extensions, deferrals ‑‑

382              You were already under a mandatory order, to start with.  This was a second mandatory order that you were given, with major, major repercussions, and you chose not to even contact us and let us know that you have gone dark, you can't provide the information that is being sought.

383              MR. CAPOZZOLO:  I believe that in October ‑‑ now, keep in mind that it was a nine or ten‑month period from the time that Robertson College withdrew from our agreement to the time that I went dark.  That was a nine‑month period.

384              It took some time to come to understand that I was on the edge of the precipice, as it were.

385              I should have done things differently perhaps, but at the time it was a desperate situation.

386              THE CHAIRPERSON:  So during this desperate situation we asked you for some logger tapes, and we found you somewhere, and you pulled off logger tapes that were a year old.

387              So, obviously, there was contact between the Commission and yourself.

388              MR. CAPOZZOLO:  Yes, there was.

389              And I also know that the local office was going through some changes, and in the past, any time that I communicated with the Commission, Mr. Krushen would send me advance notice.

390              Now, because I had moved from the premises where we had been for close to four years ‑‑ or a little over four years ‑‑ all of a sudden the mail is a different situation.  There was a paid‑for mailbox.

391              With the first request, I actually discovered that the request was sitting in the mailbox two days before the tapes and documentation were due.  So it was a mad dash.

392              I can't even begin to explain what it would be like to be in a 700‑square foot apartment with 4,000 square feet worth of junk, and the logger machine is sitting on top of boxes somewhere, and you are up there, risking life and limb, trying to pull this thing off.

393              I am looking for dates.  I am looking for the 23rd to the 27th, or whatever it was at the time.

394              Actually, that day Ms Grossi was kind enough ‑‑ I called her and I said:  Look, I'm having problems getting this onto a disk.  Would you be kind enough to give me a few extra minutes to get down to the office?

395              In fact, she waited, and was kind enough to stay an hour late, in order for me to fill in the last few pieces of documentation.

396              And, then, that was the end of it.  That would have been somewhere in and around October ‑‑

397              I don't know.  I think it was October 12th or 10th or 7th, or something along those lines.

398              On October 15th, MTS cut off the transmission lines, and at this point I had serious pause for reflection.  I had exhausted all of my money, a bunch of other people's money, and I was in deep debt, and was just sitting there going, "Okay, what do I do now?"

399              Sometime in November I was contacted by Ms Grossi, by e‑mail, saying, "Frank, there has been another request for tapes which you didn't provide," and I said, "I wasn't even aware of that."

400              Then I received, through an e‑mail, the request asking for tapes in November, and again later on ‑‑ again in November.

401              At that point ‑‑ and I will be totally honest ‑‑ I was upset.  I felt that it was a done thing, and I felt that it was a moot point to pull logger tapes down if I wasn't going to proceed.

402              I had some preliminary discussions with Mr. Wortley.  At the time it seemed like, yes, he might have been interested.  "Well, we're just kind of looking around."

403              So I figured, okay, he was just another tire kicker, and this would never really amount to much.

404              Then it became serious, and Brian introduced me to Mr. Asper.

405              I should also like to add to this that this is a not for profit organization.  There aren't a lot of people walking this country that are willing to invest the kind of dollars that Mr. Asper has invested and we're not even close to being on the air.

406              I mean, this is a philanthropic thing as far as that goes.  You know, I don't know anybody who's willing to drop a few hundred thousand dollars into a not for profit situation unless it's someone who's interested in the community.

407              THE CHAIRPERSON:  I believe it was Ms Stiver's piece here on page 6 where she indicates that:

"The licence and property of Harmony has no value to its members, there cannot be a sale of shares, as there are no shares, nor a distribution of its assets, one of which is the licence upon dissolution."  (As read)

408              THE CHAIRPERSON:  Mr. Capozzolo, is there a change of money flowing between yourself and YO with regard to this transaction?

409              MR. CAPOZZOLO:  Harmony Broadcasting owes me something in the neighbourhood of $590,000.  Mr. Asper said he wouldn't be interested in providing that, he wouldn't be interested in discussing that, it's way out of his league in terms of wanting to do that.

410              But he was impressed with my on‑air work and would be interested in keeping me on as an on‑air personality and I said sure.

411              THE CHAIRPERSON:  And for that there is a contractual obligation to pay you for a period of time, to compensate you for the equivalent of that $590,000?

412              MR. CAPOZZOLO:  No.

413              MR. ASPER:  No, Mr. Commissioner, if I may jump in.

414              There is a contract with ‑‑ there would be a contract with Mr. Capozzolo to provide broadcast services for the morning show for which he would be compensated by way of salary.

415              THE CHAIRPERSON:  And that salary would be at market rates going forward?

416              MR. ASPER:  Or lower.

417              MR. WORTLEY:  Lower.

418              THE CHAIRPERSON:  Lower.

419              MR. WORTLEY:  Yeah.

420              THE CHAIRPERSON:  And aside from that there is no exchange of funds at all in this transaction?

421              MR. WORTLEY:  The only funds that are going to be forwarded will be satisfy outstanding creditors.

422              THE CHAIRPERSON:  Can you expand upon that?

423              MR. WORTLEY:  Well, there were a number of loans that were made to the company.

424              THE CHAIRPERSON:  From...?

425              MR. ASPER:  I wonder if I ‑‑ maybe Ms Nebbs or Mr. Dubnicoff who have been reconstructing the finances can explain it to you in detail.

426              THE CHAIRPERSON:  Well, no, Mr. Wortley is doing a good job.  I don't need the fine detail, I just want to understand the principles behind it and we can get into the finer details later on.

427              MR. ASPER:  Okay.

428              MR. WORTLEY:  There were outstanding loans, there was service providers that were owed money and statutory remittances with Canada Revenue Agency that had to be satisfied and that's where those funds were going.

429              THE CHAIRPERSON:  Were there loans from principals such as Mr. Capozzolo himself?

430              MR. WORTLEY:  No.  Mr. Capozzolo was owed money ‑‑ Mr. Capozzolo basically worked for nothing for four years.  He took very little out of the company and I guess I could tell you just the way it is, and he had a contract with Harmony as the manager, but he did not take any money out per se and I think at one point he may have made $15,000 in that neighbourhood

431              However, he did invest a fairly large sum of money into the company starting out, along with other investors.

432              THE CHAIRPERSON:  And is he getting anything out for that investment?

433              MR. WORTLEY:  No, he's not.  What we're prepared to offer Franc, and only because of the kind of announcer he is, you know, he's a very talented announcer, not that great on the administrative side.  We want him to be involved in the morning show because we feel that he can bring something to the table for our students and he can ‑‑ some of his shows were very informal, informative and did a lot for the community that wasn't noted in past documentation or correspondence.

434              So, what we're paying him is far under market value for a morning host and Mr. Capozzolo will do a morning show for three hours Monday to Friday.

435              MR. ASPER:  I think, sir, we should be very precise on this question and I'm going to ask, if you don't mind, Louise Nebbs to explain exactly the structure.

436              THE CHAIRPERSON:  Sure.

437              MS NEBBS:  When Mr. Asper first became  the sole member of Harmony Broadcasting, we understand what it means to be the sole member and to be a director and the obligations involved.

438              The first thing that we did was attempt to get control of the financial records and reconstruct the financial records, and particularly in  this situation I was most interested in what the liabilities of the company were.

439              And since that time we have been on a meticulous basis going through and satisfying the liabilities of the company.

440              And the liabilities included debts to CRA as well as to Mr. Capozzolo.  The debts to Mr. Capozzolo were made up of cash advances that he had put into the company, as well accrued but unpaid wages.

441              THE CHAIRPERSON:  So, Mr. Capozzolo has already ‑‑ I won't say been made whole ‑‑ but been compensated for the past debts and the outstanding wages?

442              MS NEBBS:  No, he has not.  Mr. Asper agreed that he would pay Mr. Capozzolo a partial settlement for those amounts due to him, but funds have not been advanced at this time.

443              THE CHAIRPERSON:  I'm probably going to come back for some more questions later on, but I will allow my co‑Commissioners here to ask some questions.

444              Commissioner Menzies.

445              COMMISSIONER MENZIES:  Maybe we could just finish on that point then.

446              Mr. Capozzolo, what was the management ‑‑ what was the compensation, what was the contract between you and Harmony, what were the management fees that you charged?

447              MR. CAPOZZOLO:  $150,000 a year.

448              COMMISSIONER MENZIES:  Okay.  And that was for how long?

449              MR. CAPOZZOLO:  And that was ‑‑ I believe it was the year 2003 into 2007.  No, it was 2002 when I started to negotiate with the previous licence holder and I put it all together.

450              COMMISSIONER MENZIES:  And how much of that are you still owed?

451              MR. CAPOZZOLO:  How much of that money?

452              COMMISSIONER MENZIES:  Yes.  How much of it was actually paid to you?

453              MR. CAPOZZOLO:  There was money given to me to help, for example, I had friends pay for my rent, cigarettes, food for the last seven or eight months.  They were people locally who lent me money to ‑‑

454              COMMISSIONER MENZIES:  No, sorry.  Just to be clear, between 2002 and 2007, how much did Harmony pay you ‑‑

455              MR. CAPOZZOLO:  Oh, how did it pay me or owe me?

456              COMMISSIONER MENZIES:  How much did it ‑‑ I understand that for six years, 2002, 3, 4, 5, 6 and 7.

457              MR. CAPOZZOLO:  No, I didn't actually ‑‑ you know, I started putting up money in 2002.  The licence wasn't actually signed over until ‑‑

458              COMMISSIONER MENZIES:  But your contract, your management fees contract with Harmony is what ‑‑

459              MR. CAPOZZOLO:  Yeah, yeah, we'll go back to 2002, yes.

460              COMMISSIONER MENZIES:  Okay.  So that was for six years was to pay you $150,000 each year?

461              MR. CAPOZZOLO:  Yeah.

462              COMMISSIONER MENZIES:  So, that's $900,000.

463              MR. CAPOZZOLO:  Yeah, but the first year it was more of a ‑‑ because I sat down with the accountant and we went over the numbers because I put it together in terms of, you know, finding the location and buying the furniture and contacting the people, I mean.

464              COMMISSIONER MENZIES:  How much did it pay you?

465              MR. CAPOZZOLO:  Basically at the end of 2007 it owed me $590,000.

466              COMMISSIONER MENZIES:  So, it paid you $310,000?

467              MR. CAPOZZOLO:  No, it paid me somewhere in the neighbourhood of ‑‑ over the last six years, maybe 45 in total.

468              COMMISSIONER MENZIES:  So, if you had a management contract with them for $900,000 over a six‑year period and you're still owed $590,000, where did the rest ‑‑

469              MR. CAPOZZOLO:  No, no, no, no, no.  No.

470              In total ‑‑ the only money that I took out of this company over five years is $45,000.

471              COMMISSIONER MENZIES:  Okay.  I'm trying to establish how come you're only owed $590,000 when you had a six‑year contract for $150,000.

472              MR. CAPOZZOLO:  Because ‑‑

473              MS NEBBS:  Could I correct the numbers for Mr. Capozzolo.

474              I have had the opportunity to review the financial statements and as at August, 2007 the financial statements show a liability of $896,000 to Mr. Capozzolo.

475              Going through the records, we've only been able to find evidence of a payment of $10,000 to him in return for management fees.

476              He has had some cash advances being repaying of cash advances he made to the company.

477              COMMISSIONER MENZIES:  And how much in expenses did he ‑‑ were claimed?

478              MS NEBBS:  These numbers were include expenses claimed.

479              COMMISSIONER MENZIES:  Those numbers would include expenses claimed?

480              MS NEBBS:  Yes.

481              COMMISSIONER MENZIES:  So, in six years he claimed $10,000 worth of expenses or $10,000 worth of management fees?

482              MS NEBBS:  The evidence that we found was that the company paid about $10,000 of the management fees that were accrued to him.

483              COMMISSIONER MENZIES:  Okay.  What is the amount of expenses claimed by Mr. Capozzolo from Harmony between 2002 and 2007?

484              MS NEBBS:  I don't think I found any detail on that.  We found from time to time expenses paid by the company, but they were charged against Mr. Capozzolo, they were charged as a repayment of his debt.

485              So, where we found evidence of that, the company had accounted for it correctly.

486              COMMISSIONER MENZIES:  Okay.  So, the correct figure then of what Harmony owes Mr. Capozzolo is $890,000 not 500?

487              MS NEBBS:  $896,000 ‑‑ 896,206.

488              COMMISSIONER MENZIES:  And Mr. Capozzolo, how do you intend to get repaid that amount of money?

489              MR. CAPOZZOLO:  Well, until Mr. Asper came along I didn't expect to get anything.

490              COMMISSIONER MENZIES:  Okay.  So, how much are you getting now?

491              MR. CAPOZZOLO:  Well, I asked Mr. Asper to take care of debts that ‑‑ from family and friends that I borrowed and it's somewhere in the neighbourhood of $200,000.

492              And Mr. Asper offered me a $60,000 a year job, and that's it.

493              COMMISSIONER MENZIES:  Okay.  What is the ‑‑ is that job a contract or is that an employee job?

494              MR. CAPOZZOLO:  That is a contract.

495              COMMISSIONER MENZIES:  And what's the length of the contract?

496              MR. CAPOZZOLO:  It is a three‑year ‑‑

497              COMMISSIONER MENZIES:  Guaranteed contract?

498              MR. CAPOZZOLO:  Not guaranteed, but it's a three‑year contract.

499              COMMISSIONER MENZIES:  It's a three‑year contract.

500              MR. CAPOZZOLO:  Yeah.

501              COMMISSIONER MENZIES:  For $60,000 a year?

502              MR. CAPOZZOLO:  Yeah.

503              COMMISSIONER MENZIES:  Any expenses involved, any automobiles, any rent, anything in addition to that?

504              MR. CAPOZZOLO:  Maybe a cell phone.

505              COMMISSIONER MENZIES:  That's it?  Okay.

506              MR. ASPER:  Commissioner Menzies, just ‑‑ I hope you can appreciate, Members of the Panel, that we are and Louise and Dave Dubnicoff and others have done service in actually reconstructing the financial records of the corporation as best as we can.  It's by far complete, however.

507              COMMISSIONER MENZIES:  Sure.  Thank you.

508              Mr. Capozzolo, are you in control of Harmony?

509              MR. CAPOZZOLO:  In what way?  Now?

510              COMMISSIONER MENZIES:  Now.

511              MR. CAPOZZOLO:  No.

512              COMMISSIONER MENZIES:  When were you last in control of Harmony?

513              MR. CAPOZZOLO:  I think it was January where we signed off.  You know, I should also add that the Board of Directors were more than happy to jump off because in the end they would responsible for outstanding debts, not to me, however, but...

514              COMMISSIONER MENZIES:  End of January you said?

515              MR. CAPOZZOLO:  I believe January was when we signed things across.

516              COMMISSIONER MENZIES:  Okay.  Now, in your comments, in our preliminary comments and that, in going through this and it seemed there are a number of people that you had difficulties with and I want to give you an opportunity to address this.

517              It seems that some of your problems arose from the CRTC, some of your problems arose from negative media, MTS was a problem ‑‑

518              MR. CAPOZZOLO:  CRA, the Labour Board and PBI.

519              COMMISSIONER MENZIES:  Yes.  I mean, did it ever cross your mind that maybe they weren't the problem?

520              MR. CAPOZZOLO:  I'm sorry, one more time?

521              COMMISSIONER MENZIES:  Did it ever cross your mind maybe they weren't the problem, that maybe your actions were the problem?

522              MR. CAPOZZOLO:  Certainly my actions.  I'm an intelligent person, I want you to know that and I don't apologize for that.  I created a nine‑month curriculum with a one‑month practicum.

523              I've been in this industry for over 30 years.  I've trained the new broadcasters out of so‑called broadcasting schools all the way through and I ‑‑ you know, what happens is we have a group of people like we have here today, every single one of the interveners today are the exact same interveners from the previous hearing.

524              They have maligned me, assassinated my character with PBI, with CRA, with the Labour Board.  They've made outrageous allegations that have been posted willingly and openly by the CRTC and I'm upset about that.

525              You know, I put five years of myself into this and, do you know what, I'm more than happy to pull away.  All I've been done is been shot at, I've been threatened physically, mortally.  I've gone to the police.  I can't begin to tell you what I've been through over the six years.

526              And, you know, I look back, I've certainly had a lot of time for reflection over the last eight months.  And I think, you know, if I had to do it again, I'm down a family.  I didn't have a place to live for nine months, you know, and I'm being treated like I'm some kind of villain here.

527              We've got people in this room who, I assure you, should be behind bars and they are making me to look to be this evil character who's trying to pull the wool over the Commission's eyes.

528              I've been in this business for 30 years, why on earth would I do that?

529              I'm sorry, you know, and I'm sorry if I get a little hot, I'm getting a little instruction ‑‑

530              COMMISSIONER MENZIES:  No.

531              MR. CAPOZZOLO:  But it's been a long time.

532              COMMISSIONER MENZIES:  I wasn't trying to cast aspersions on your stellar broadcasting career, I was just trying to establish where you feel the accountability for your current circumstances truly lays.

533              MR. CAPOZZOLO:  It lays with me, I mean ‑‑

534              COMMISSIONER MENZIES:  Thank you.

535              Now, Mr. Capozzolo, the Campus Radio Policy defines a campus station as a not for profit organization associated with an educational institution.

536              MR. CAPOZZOLO:  Right.

537              COMMISSIONER MENZIES:  That has not always been the case with Harmony; has it?

538              MR. CAPOZZOLO:  No.

539              COMMISSIONER MENZIES:  Mr. Wortley, what written policies and procedures do you have in place to address that shortcoming?

540              MR. WORTLEY:  The agreements with the post‑secondary education?

541              COMMISSIONER MENZIES:  No, with ‑‑ yes.

542              MR. WORTLEY:  Well, we have now a signed agreement with Robertson, Krushen, Mr. Ken Penner ‑‑

543              COMMISSIONER MENZIES:  And I believe that's been completed filed with us now?

544              MR. WORTLEY:  It has been filed with the Commission, yes, sir.

545              COMMISSIONER MENZIES:  Mr. Capozzolo, the Campus Radio Policy defines a campus station as one that its primary role is to be a training ground for students in broadcasting courses.

546              That has not always been the case with Harmony; has it?

547              MR. CAPOZZOLO:  No.

548              COMMISSIONER MENZIES:  Mr. Wortley, what written documentation do you have for us in terms of the ‑‑ do you have, for instance, do you have any students registered for the course yet?

549              MR. WORTLEY:  We don't.

550              COMMISSIONER MENZIES:  Okay.

551              When is registration to take place for the course.

552              MR. WORTLEY:  Right now.  And perhaps, if you wouldn't mind, Commissioner Menzies, I would like to ask Mr. Penner just ‑‑

553              COMMISSIONER MENZIES:  I'll come back to that okay.

554              MR. WORTLEY:  Okay.

555              COMMISSIONER MENZIES:  And if I don't remind me, all right.

556              MR. WORTLEY:  Okay, thank you.

557              COMMISSIONER MENZIES:  Okay.  Mr. Capozzolo, the Campus Radio Policy defines a campus station as one that provides listeners with alternative music, especially Canadian not normally based on commercial radio.

558              Has that always been the case?

559              MR. CAPOZZOLO:  Not initially, not always the case.

560              COMMISSIONER MENZIES:  I'm sorry, I beg your pardon?

561              MR. CAPOZZOLO:  Not initially.  I had difficulty finding artists that ‑‑ because I was unfamiliar with this brand of music, so it took me some time to identify who those artists were, but as soon as I did they were on and I believe that a great part of  the success of the radio station, if we can call anything a success with this radio station, was the fact that I was so involved with the local hip hop and R&B community.

562              COMMISSIONER MENZIES:  Okay.  And, Mr. Capozzolo, despite many requests, have consistently refused or been incapable of proving to the Commission that you have been in compliance with the Policy.

563              Is that not the case?

564              MR. CAPOZZOLO:  Yes.

565              COMMISSIONER MENZIES:  Mr. Wortley, on those items, what policies and procedures do you have in place to address those shortcomings?

566              MR. WORTLEY:  What items would you want me to refer to, sir?

567              COMMISSIONER MENZIES:  That would be the provision of alternative music, especially Canadian not normally heard on commercial radio to be in compliance with the Campus Radio Policy.

568              MR. WORTLEY:  Right.  We have an operating system in place now and all loggers are approved by me weekly, I have to check all loggers.  Our program director will be responsible that all music is in compliance on a day‑to‑day basis, on a weekly basis that would be put through me to sign off on and authorize the fact that it is in compliance with...

569              COMMISSIONER MENZIES:  Do you have written policies and procedures on that?

570              MR. WORTLEY:  Yes, we do.

571              COMMISSIONER MENZIES:  Okay.  Have they been filed with us?

572              MR. ASPER:  Moreover, sir, if I can just add, from a governance perspective, because this is a very serious, see it's the core of the issue here or part of it, we will construct and have committed to construct a program advisory committee of the board so that the board will constantly monitor Mr. Wortley to ensure management compliance.

573              COMMISSIONER MENZIES:  And have you ‑‑ do you have written policies and procedures on that that you can ‑‑

574              MR. WORTLEY:  We submitted to the Commission on February the 15th our policies on programming with regards to CAT 3 and logger tapes and Canadian content.

575              COMMISSIONER MENZIES:  Does it have procedures and do we know what procedures you have, your checks and balances?  As Mr. Asper said, it's a very ‑‑

576              MR. WORTLEY:  Yes, yes, it does.

577              COMMISSIONER MENZIES:  ‑‑ serious matter, so it has all that.  Okay.  Thank you.

578              And does that apply to your spoken word programming as well?

579              MR. WORTLEY:  It does.

580              COMMISSIONER MENZIES:  Okay.  Thank you.

581              Mr. Capozzolo, do you have any documentation that you can provide or have provided to the Commission to show that CJWV has provided listeners with educational programming?

582              MR. CAPOZZOLO:  You want documentation?

583              COMMISSIONER MENZIES:  Yes.

584              MR. CAPOZZOLO:  I don't understand.  Wouldn't that be logs; is that what you're asking for?

585              COMMISSIONER MENZIES:  Right.  I mean, there's space in your programming where it says educational.

586              MR. CAPOZZOLO:  Right.

587              COMMISSIONER MENZIES:  But do you have anything to prove that what was scheduled actually went on the air or what went on the air?

588              MR. CAPOZZOLO:  Well, I mean, you know, I could ‑‑ I do but I don't.  I could give you documentation ‑‑ what I did was, we'd have educational guests on and we'd record it and then we'd cut it up and run it gain on the weekend.

589              I was out of compliance initially when there were a bunch of people who were upset with me, complained as a way of getting back at me.

590              And at that point, you know, there were things that I didn't know because I came from a commercial broadcasting world, I didn't realize that news about artists didn't count as news.  I think that perhaps that's a little different today.

591              I didn't know that sports didn't count as news, I didn't know that weather didn't count as news.  So, my news was way out and I thought that I was in place.

592              There was never any issue with regards to the level of spoken word, we always over delivered on the spoken word.

593              Once I came to understand things, I put things into place.

594              COMMISSIONER MENZIES:  So, is the answer yes or no?

595              MR. CAPOZZOLO:  I can't.  I mean, what ‑‑

596              COMMISSIONER MENZIES:  I'll take that as a no for now.

597              MR. CAPOZZOLO:  Okay.

598              COMMISSIONER MENZIES:  Mr. Wortley, what policies and procedures do you have in place to address this shortcoming?

599              MR. WORTLEY:  Of the spoken word?

600              COMMISSIONER MENZIES:  That would be the educational programming?

601              MR. WORTLEY:  Of the educational programming?

602              COMMISSIONER MENZIES:  Yes.

603              MR. WORTLEY:  Well, it's part of the logger ‑‑ like of our operating system, so there has to be spoken word inserted into our operating system and we have also submitted a programming grid ‑‑

604              COMMISSIONER MENZIES:  Specifically educational programming.

605              MR. WORTLEY:  Right.

606              COMMISSIONER MENZIES:  Is that all in there for us?

607              MR. WORTLEY:  It is.

608              COMMISSIONER MENZIES:  Okay.  And what's the content going to be of it?

609              MR. WORTLEY:  The content can vary from a number of topics.  It could go from the green gas effects on the economy, it could ‑‑ or on the environment, it could go with regards to the pollution in the water and run‑offs, the pork problem we're having now with the big barns.

610              It will vary from week to week.

611              COMMISSIONER MENZIES:  And what sort of people would be offering the educational programming?

612              MR. WORTLEY:  Students.

613              COMMISSIONER MENZIES:  Is this ‑‑

614              MR. WORTLEY:  Part of their curriculum is to research ‑‑

615              COMMISSIONER MENZIES:  So, students would be teaching students...

616              MR. WORTLEY:  No.  The instructor ‑‑ the head instructor of our course will teach the students, but these will be assignments that the students will have to create educational programming for the station.

617              COMMISSIONER MENZIES:  Okay.  And what sort of people would they be ‑‑ would they be interviewing experts in these areas?

618              MR. WORTLEY:  Absolutely.  Yes.

619              COMMISSIONER MENZIES:  So they would be drawing on people from the academic field, professional field, that sort of thing.

620              MR. WORTLEY:  Right.  Yes.

621              COMMISSIONER MENZIES:  So the students listening would be able to benefit from that voice.

622              Is that what's happening?

623              MR. WORTLEY:  That's right.

624              That's essentially how the curriculum has been developed, was those are assignments that students would be responsible for.

625              MR. ASPER:  Commissioner, one of the philosophies here and one of the unique attributes of the license is that in that particular strand of programming it provides an outstanding opportunity, educational opportunity, because this has to be a very significantly diverse voice and something that is not on the commercial radio stations, is to take an approach to issues and to educational matters that is counter to the mainstream and to try to force people into that mind‑set is part of the philosophy of what we are trying to achieve here.

626              COMMISSIONER MENZIES:  Do you want to expand on that bit?

627              MR. ASPER:  Well, critical thinking.  It's critical thinking.  And it would be our hope that part of the learning experience at Robertson College and through Harmony Broadcasting will be to use that strand to critically evaluate and to communicate things of interest, things maybe not of interest, things that maybe should be of interest.

628              COMMISSIONER MENZIES:  Maybe what we would call contrarian points of view?

629              MR. ASPER:  I would hope so.

630              COMMISSIONER MENZIES:  I wonder where they got that idea?

‑‑‑ Laughter / Rires

631              COMMISSIONER MENZIES:  Are there any other agreements, Mr. Capozzolo, between ‑‑ do you own any other companies that might have any agreements or have had any agreements with Harmony?

632              MR. CAPOZZOLO:  No.

633              COMMISSIONER MENZIES:  Okay.  Does anybody else at the table own any other companies that might have any agreements or arrangements with Harmony?

634              MR. ASPER:  No.

635              COMMISSIONER MENZIES:  Mr. Capozzolo, how many students were involved with the station in 2006 and 2007 before you went dark?

636              MR. CAPOZZOLO:  None.

637              COMMISSIONER MENZIES:  Mr. Wortley, how many students will be involved under your watch if you were to be granted it?

638              MR. WORTLEY:  Our business plan was developed based on a minimum of 10 students per intake.  Because it's a trimester intake, every quarter there will be another intake of students.

639              COMMISSIONER MENZIES:  So 10 students per quarter ‑‑

640              MR. WORTLEY:  Yes.

641              COMMISSIONER MENZIES:  ‑‑ flowing through?

642              MR. WORTLEY:  Yes.

643              COMMISSIONER MENZIES:  What do they do?

644              MR. WORTLEY:  I'm sorry?

645              COMMISSIONER MENZIES:  What do they do?

646              MR. WORTLEY:  They learn the radio business.

647              COMMISSIONER MENZIES:  Okay, but how?  I mean do they learn sales, are they on air, are they copywriters, are they producers?

648              MR. WORTLEY:  Well, maybe what would be best is the architect of the course could explain to you how it would flow.

649              Would that be all right?

650              MR. ASPER:  And also, everybody has seen the curriculum.  We have looked at the production kits that have been provided.  And the Board has actually evaluated this.  So this is not sizzle, there is steak to this.

651              COMMISSIONER MENZIES:  Yes, it's not the curriculum that I'm so much worried about in this specific question, it is exactly their roles at the station.

652              MR. CAPOZZOLO:  Can I answer that question?

653              COMMISSIONER MENZIES:  Sure.

654              MR. CAPOZZOLO:  The course was designed to appease or satiate the requirements of the campus radio license, so the students begin with a general overview.  Almost immediately the students will be on the morning show, which will lessen our requirement for ‑‑ it will give us fodder for picking on somebody and getting them to know how to become the second banana.

655              The talk has been placed on the morning show.  Anybody can read a liner after a week and a half, but personality radio is, if not dead is certainly dying in our country.  There are no more places where we are growing future talent.

656              Therefore, these kids will come on right away and they will provide traffic or they will provide ‑‑ interview guests or subjects, whatever, and that is almost immediately.  We will introduce them and we will rotate through them.

657              We might have Billy and Susie and Billy will be taking care of this and he is a knucklehead and Susie is hot so were going to be nice to her, that kind of thing.  This is just hypothetical.

658              And then, within, I would say within a couple of weeks, they will be editing to fulfil our talk commitment.  The morning show, which is basically a three‑hour talk show, quite often a name, quite often quite interesting and engaging.

659              We have had Dr. Suzuki live in the studio with us.  He came in one day for 15 minutes.  He ended up staying over an hour.  He said "Are you sure this is a hip‑hop station?  This is a lot of quality talk for a hip‑hop station."  I said "Hey, whatever works."  And he continued to stay.

660              So what happens is, we will take that interview, we will chop it up, we will run it on the weekend.  David Suzuki would be an educational guest.

661              We have had the Manitoba Museum.  We have had each of their departments and they were a regular guest, we have had the geology department on, we have the astronomy division on, all kinds of things like that.  We have homeless, blah, blah, blah, blah, local issues.

662              So this stuff will be edited and they will learn editing and producing as they learn writing skills with regards to commercials and newsgathering and presenting.

663              And within two months they will be voicetracking the rest of the shifts.  There are only two shifts that are going to be filled, that is the morning show ‑‑

664              COMMISSIONER MENZIES:  Are you responsible for the management of the students?

665              MR. CAPOZZOLO:  No.

‑‑‑ Laughter / Rires

666              MR. ASPER:  Commissioner, the course is divided up into specific modules.  I think your question is:  What are the students actually going to do.

667              Is that where you were headed?

668              The course is divided up into specific modules with a subject matter per module and resources are applied as each module is taught.  They are quite intensive.  So there is of course a production module, but there is also a sales module, and admin module and all the way through, marketing, branding, you know.

669              There is a classroom and they sit in the classroom and there are instructors and they get taught.  And part of why we recruited the board that we did was because we are all interested in interacting with the students, in providing the expertise that we can provide, and they move through the program.

670              It is a phenomenal idea, because it is a 10‑month program that respects the fact that some people don't have many years, 2, 3, 4 years to go through a formal university program, but this gives them the broadest possible exposure and makes them ready the day they walk out the door to come in at an entry‑level to anything that is going on in a radio station.  It is quite a phenomenal program.

671              COMMISSIONER MENZIES:  Okay.  Who manages those students?

672              MR. WORTLEY:  Those students will be managed by a lead instructor.

673              COMMISSIONER MENZIES:  A yet to be identified person?

674              MR. WORTLEY:  Correct.

675              COMMISSIONER MENZIES:  Okay.  Thanks.

676              MR. WORTLEY:  We have had a couple of resumes of people who are interested, primarily ex‑announcers who found out that we were involved in the school.  We haven't hired anyone yet.

677              COMMISSIONER MENZIES:  Okay.  Who manages Mr. Capozzolo?

678              MR. WORTLEY:  Mr. Capozzolo will be managed by me and the Program Director.

679              COMMISSIONER MENZIES:  You will be responsible for him?

680              MR. WORTLEY:  I will.

681              MR. ASPER:  I think you need to know also about the instructor, that this is not isolated or disaggregated from Robertson.  Mr. Penner and his people will have to be approving in order for the accreditation process any instructors that are brought in to program.

682              COMMISSIONER MENZIES:  Okay.  What will happen to your association with Robertson College ‑‑ and I would like Mr. Penner's comments on this as well ‑‑ if the Commission suspends the CJWV licence or revokes it ‑‑ well, suspends it.  Change the question, please.

683              MR. ASPER:  What will happen to the program, to the broadcast program?

684              COMMISSIONER MENZIES:  What will happen to the association with Robertson if there is a suspension of the licence?

685              MR. ASPER:  Well, I think Mr. Penner could tell you sort of the practical implication of that and that I can pick up from there.

686              COMMISSIONER MENZIES:  Okay.

687              MR. PENNER:  Well, we likely would not be proceeding.

688              COMMISSIONER MENZIES:  Okay.  Thank you.

689              Mr. Asper...?

690              MR. ASPER:  I think we will have to evaluate that in the circumstances as they present themselves.

‑‑‑ Pause

691              COMMISSIONER MENZIES:  My apologies, I'm pretty sure I asked this before, but there has been no money deposited by any students for this course at this time?

692              MR. WORTLEY:  No.

693              COMMISSIONER MENZIES:  Thank you.

694              Mr. Capozzolo, CJWV has frequently operated in noncompliance with the Campus Radio Policy and terms of the structure of its Board, has it not?

695              MR. CAPOZZOLO:  Yes.

696              COMMISSIONER MENZIES:  I will leave the board questions to Commissioner Petrone.

697              A radio licensee has the privilege of using radio frequencies that are public property.  This means that licensees are accountable to the public and, Mr. Capozzolo, this hasn't always been the case with Harmony, has it?

698              MR. CAPOZZOLO:  No, it hasn't.

699              COMMISSIONER MENZIES:  Okay.

700              Mr. Capozzolo and Mr. Wortley, who handles your complaints if and when you get them?  What is your procedures on that?

701              MR. WORTLEY:  From the Commission?

702              COMMISSIONER MENZIES:  No, not your complaints from us.

703              MR. WORTLEY:  From the general public, oh.

704              MR. ASPER:  There aren't going to be any more complaints from the Commission.

705              COMMISSIONER MENZIES:  Yes, yes, yes, yes, yes.

‑‑‑ Laughter / Rires

706              MR. WORTLEY:  I will.

707              COMMISSIONER MENZIES:  You will get ‑‑ somehow yes.

708              Sorry, who will?  You will?

709              MR. WORTLEY:  Yes.

710              COMMISSIONER MENZIES:  What is the process you have developed for the handling of public complaints?

711              MR. WORTLEY:  From the public?

712              COMMISSIONER MENZIES:  Yes.  I'm not talking about public institutions, I'm talking about from your listeners, audience.  They hear something, they don't like it ‑‑

713              MR. WORTLEY:  Right.

714              COMMISSIONER MENZIES:  ‑‑ somebody goes over the edge, somebody says something, they think there is an imbalance in programming, they don't like one of the contrarian point of view, anything like that ‑‑

715              MR. WORTLEY:  Right.

716              COMMISSIONER MENZIES:  ‑‑ the sort of things that people phone up and say "I have a complaint, I don't like what you did, when he going to do about it?"  Accountability to the public.  You are holding ‑‑ you are holding a public property.

717              MR. WORTLEY:  Right.

718              COMMISSIONER MENZIES:  How are you going to manage your relationship with the public and any complaints it has with you?

719              MR. WORTLEY:  Well, I think I can just pull from my experience as a General Manager, whenever we had complaints from a commercial station ‑‑ and I don't differentiate between a complaint from a listener on a commercial station or a not‑for‑profit station.  I look at them as the same.

720              I would listen to the listener, I would invite them to write in, if they wish, to me, and then  I would look into the complaint internally with our staff.

721              If I felt that there was a valid complaint, then I would take the necessary action.

722              If I felt that perhaps the listener might have exaggerated ‑‑ at times when they do ‑‑ I would respond by letter of what I did in terms of their complaint and follow through and "Here's what I have done" or "Here's what I haven't done".  If they wish to take it further they also have the opportunity to.

723              COMMISSIONER MENZIES:  Okay.  Is it just you are is there ‑‑ I mean do you have an advisory committee or a similar structure to oversee the handling of the complaints?

724              MR. WORTLEY:  Well, what we are looking at implementing ‑‑

725              COMMISSIONER MENZIES:  What happens if you get hit by a truck?

726              MR. WORTLEY:  ‑‑ is a program advisor.  This essentially takes the place of a program director.  The program advisor would have two members from the Board of Directors with him to oversee the programming of CJWV.  They would report directly to the Board of Directors.  So yes, there is someone in place.

727              COMMISSIONER MENZIES:  So your Programming Advisory Committee would also be your public complaints?

728              MR. ASPER:  That's a committee of the board, Commissioner Menzies.  It is a committee of the board and we expect that the public reaction, public interaction be part of an ongoing reporting by Mr. Wortley to the board.

729              COMMISSIONER MENZIES:  Okay.  Do you have a written policies or written procedures in place like that that you could provide us with in terms of ‑‑

730              MR. WORTLEY:  I don't.

731              COMMISSIONER MENZIES:  ‑‑ specifically in terms of your handling of your public complaints

732              MR. ASPER:  We can provide you with ‑‑

733              COMMISSIONER MENZIES:  Your public complaints procedures.

734              MR. ASPER:  Sure.  Absolutely.

735              COMMISSIONER MENZIES: Thank you.

‑‑‑ Pause

736              MR. McCALLUM:  Could we set a date on that undertaking?

737              MR. ASPER:  Seven days.

738              COMMISSIONER MENZIES:  What is the total outstanding debts of Harmony?

739              MR. ASPER:  That is a great question.

740              MS NEBBS:  In a situation like this there are what is recorded on the financial statements and then there is the unrecorded liabilities.  I probably do not know right now the total unrecorded liabilities.  What is recorded on the financial statements, however, is a total of $981,206.  What is not recorded in that number were some of the debts to CRA.

741              COMMISSIONER MENZIES:  Do you have any idea what that is?

742              MS NEBBS:  To date we paid that additional assessment relating to GST of approximately $10,000.  Upon completing the calculations an amount of about $3,500 was paid.  We had an assessment relating to payroll withholdings, as we investigated and discussed that matter with CRA.  I think we believe that there will be an amount of about $1,500 due and owing at the end of those discussions.

743              COMMISSIONER MENZIES:  Sorry, it was $980,000?

744              MS NEBBS:  The total recorded liabilities are $981,206.

745              COMMISSIONER MENZIES:  And $890,000 of that is to Mr. Capozzolo?

746              MS NEBBS:  Pardon me?

747              COMMISSIONER MENZIES:  $890,000 of that is to Mr. Capozzolo?

748              MS NEBBS:  The vast majority of that is to Mr. Capozzolo.

749              COMMISSIONER MENZIES:  Mr. Capozzolo, you mentioned that Mr. Asper had offered to clear off about $200,000 in debts to your families and friends.  So that's money that is owed in addition to the $890,000.

750              Is that money owed that is in addition to this money that's on the books?

751              MR. CAPOZZOLO:  No.  You know what, to be honest, I was never a money guy.  It never really ‑‑ you know ‑‑

752              COMMISSIONER MENZIES:  Really.

753              MR. CAPOZZOLO:  Yes, money is important, don't get me wrong, I have habits, but however it wasn't my driving force.  As long as I had enough to get by it really didn't matter.

754              But there were people, people in this room who put in a serious amount of money.  My parents took a mortgage out on their house, my sister did, my brother lent me $3,000 to $10,000 at a time as I needed it along the way, be it for rent or whatever.  There were local friends that would lend me $5,000 at a time when I needed it.

755              I should also mention that I do a lot of freelance work and I was taking that money and putting it into helping pay the bills.

756              COMMISSIONER MENZIES:  Where do you freelance?

757              MR. CAPOZZOLO:  I do voiceover work for local and national advertisers.

758              COMMISSIONER MENZIES:  Is that how you have lived for the last six years?

759              MR. CAPOZZOLO:  Mostly borrowing money here it

760              COMMISSIONER MENZIES:  Mostly borrowing money.

761              How many people are not going to get repaid at the end of this?

762              MR. CAPOZZOLO:  Including myself?

763              COMMISSIONER MENZIES:  No, I'm not worried about you in this question.

764              MR. CAPOZZOLO:  Okay.  I think that everybody will get pretty close to what they put in, if not a little extra.

765              COMMISSIONER MENZIES:  Is there any procedure set up for handling that?

766              MR. CAPOZZOLO:  I'm going to give them the names of the people that get the money and they are going to make the cheques out to those people.

767              COMMISSIONER MENZIES:  Is that correct, Mr. Asper?

768              MR. ASPER:  Generally, yes.

769              We have taken concrete steps in several specific directions.  A couple of our ‑‑ a couple remain outstanding and a couple remain to be quantified, but yes.

770              COMMISSIONER MENZIES:  Okay.

771              Can you give me examples of other community radio stations that pay their morning man $60,000 a year, or campus radio stations that do that?

772              MR. CAPOZZOLO:  This one.

773              MR. ASPER:  I can't offhand, no.

774              COMMISSIONER MENZIES:  What would be the average pay for a morning announcer at a campus radio station?

775              MR. WORTLEY:  I can't ‑‑ I'm not sure of that.

776              The challenge with this license is, unlike other campus licences, it is not housed inside a university or a college.

777              I can give you a great example.  Red River Community College here in Winnipeg has a campus licensed radio station.  Their station is housed in their building.  Red River Community College picks up all the bills of the radio station, with the exception of the General Manager, which I believe his salary is somewhere around $50,000 or $60,000.  That is the only cost, direct cost that the radio station is responsible for.  The rest of those expenditures are covered by the community college.

778              Because this licence sits outside of a campus they are responsible ‑‑ it is responsible for all its bills.  I wouldn't know what a morning man on a campus radio station ‑‑ I can tell you what a morning man in commercial radio might make and it's a lot more than that here in Winnipeg.

779              COMMISSIONER MENZIES:  Well, I'm just wondering, because I look at a lot of radio applications and quite often their operating expenses for an entire year in a commercial relatively small market might be $600,000 or $700,000 and their on‑air talent, a lot of it is making $30,000 a year.

780              Put it this way:  How much more ‑‑ is the amount Mr. Capozzolo is being paid as part of this arrangement for his talent ‑‑ and I'm not getting into whether it is deserved or undeserved or market value ‑‑ an extraordinarily high amount within the campus radio world?

781              Yes or no?

782              MR. ASPER:  Let me answer that, if I can.

783              That really never factored into it.  We tried to evaluate what was basically available in this market at what rates and the value that we thought we could derive from Mr. Capozzolo's talent in terms of the teachers, the teaching and mentoring skill that he can do in the course of that program.

784              What Mr. Capozzolo does ‑‑ and I have to tell you, I listened and I kept wondering why I was listening to his program in the morning, except I kept listening, because he is actually very engaging.  So there is a subjectivity to this, not a scale, and we made a choice.

785              COMMISSIONER MENZIES:  I'm not saying that it's ‑‑ I mean it's your choice, I just need to get an answer as to whether it ‑‑ Mr. Capozzolo, said no there isn't another campus radio station doing that.

786              MR. CAPOZZOLO:  There are ‑‑

787              COMMISSIONER MENZIES:  I'm not getting into whether or not it is justified, I just need for the record the fact that it is exceptional or not exceptional.

788              MR. ASPER:  I'm not sure how you want us to answer that ‑‑

789              COMMISSIONER MENZIES:  Yes or no.

790              MR. ASPER:  Because I don't know if it's exceptional or not.

791              MR. WORTLEY:  And I have to be honest with you, I'm not familiar with the other campus licences in Canada so I wouldn't know what they would pay a morning show, to be honest with you.  I look at it as it's ‑‑ I felt it was low on the scale.

792              COMMISSIONER MENZIES:  Mr. Capozzolo, how much would people typically pay a campus radio station host?

793              MR. CAPOZZOLO:  I don't know that with regards to this kind of licence.

794              I mean, you are going to have your ‑‑ you see, the radio station is the marketing tool for the school.  To hire somebody with my abilities, capabilities, talents, whatever you want to call that, experience, not only is there the possibility of garnering advertising revenue from a captivating program, but you are also the marketing tool for the school.  If someone enjoys listening to my program and loves listening to me, as sometimes listeners do, I would want to go to that course before any other course.  Therefore, $60,000 would be ‑‑

795              COMMISSIONER MENZIES:  Gentlemen, like I said, I'm not saying that the circumstances and the job description ‑‑

796              MR. CAPOZZOLO:  Oh, you are just saying ‑‑

797              COMMISSIONER MENZIES:  ‑‑ teacher, mentor, guru, broadcaster, whatever, that is multifaceted enough to justify the $60,000, I just need to know, is this somewhat unique within the campus radio world?

798              MR. CAPOZZOLO:  I don't necessarily think so, no.

799              MR. ASPER:  We can endeavour to try to find out.  I'm not sure that that is easily obtainable information.

800              I think the other thing we have to look at is total on‑air professional paid compensation for campus radio stations as opposed to an individual, because you may have ‑‑ if you follow what I'm saying.

801              COMMISSIONER MENZIES:  Okay.

802              MR. ASPER:  I mean, we can endeavour to try.  I'm not sure how we can answer.

803              COMMISSIONER MENZIES:  Let me try one more time this way.

804              Mr. Wortley, what would be the average market rate in a market the size of Winnipeg for a commercial morning radio host in terms of compensation?

805              MR. WORTLEY:  Your range would probably be anywhere from $80,000 to $120,000 a year.

806              COMMISSIONER MENZIES:  Okay.  Thank you.

807              Those are my questions for now.

808              THE CHAIRPERSON:  Thank you.

809              Commissioner Petrone...?

810              COMMISSIONER PATRONE:   Thank you, Mr. Chair.

811              Good afternoon.  I have some questions around corporate governance, specifically effective control of Harmony Broadcasting.  When I look at the document that was handed to me today, the statement, it lists Franc Capozzolo as the former sole member of Harmony, David Asper as the sole member of Harmony currently.

812              On page 5 you say that there was no change of effective control.

813              I need you to walk me through this because as the sole member of Harmony, Mr. Asper, would you not in effect be in control of this undertaking at this point?

814              MR. ASPER:  I'm going to dodge this, but Lisa can explain that I think comprehensively, because I know that it kind of feels like it.

815              COMMISSIONER PETRONE:  Yes.

816              MR. ASPER:  But there is actually law around this that explains it.

817              COMMISSIONER PETRONE: Okay.

818              MR. ASPER: So let me pass it over to Lisa.

819              MS STIVER:  Thank you

820              I just wanted to clarify, at the beginning of your question you said ‑‑ I think we had listed in here that there was no change of control, and what I mean by that is that there is no change of control as it is defined in your Radio Regulation or as it appears on the Notice.

821              In other words, what I'm trying to say is that we have not effectively had a change of control the way that it would I guess traditionally be defined or how it is defined in the Regulations.

822              So is your question just to walk you through it?

823              COMMISSIONER PATRONE:  My question is how is Mr. Asper both the sole member of Harmony and yet not in effective control of Harmony?

824              How do you square that?  How do you reconcile those two points?

825              MS STIVER:  Okay.  Where should I start?

826              In the memorandum that I handed out to you ‑‑ I don't think you have had a chance to look at it, or if you have ‑‑ I didn't read it through for everyone because it's boring, but it's a memo that we presented to the Board ‑‑

827              COMMISSIONER PATRONE:   Feel free to bore me, because ‑‑

828              MS STIVER:  Okay.  And basically it discusses the specific sections of the Corporations Act of Manitoba that speak non‑share capital corporations.  That was in regard to the fact that then there are no shares so there could be no transfer of share ownership, which is part of what is defined as a change of control under the Regulations.

829              So there is no change of share ownership, so therefore there is no change of control in that respect.

830              Now, if you look at Mr. Asper now being the member, and you asked the question how is there no change of control, in a campus instructional station, of which this undertaking is one, under the license it has actually been discussed by the CRTC in Public Notice 2000‑12 that ‑‑ and I quote it in the memorandum.  I won't quote the whole piece, but what is said is that:

"There was a range of opinions expressed by certain licensees of campus stations relating to how the Board of Directors of a campus station should be structured."  (As read)

831              And the CRTC goes on to say:

"The extent of the interest in this particular issue stems from the fact that it is with the Board of Directors of a campus station that effective control of the station resides."  (As read)

832              That supports our contention as well that three is no change of control because there is no change of shares.

833              What we would like to say, then, is there may have been a change of control under that definition in the Board of Directors, but the Board of Directors changes continuously with this undertaking, as with any other undertakings, and there is no requirement to approve a change of Board of Directors.

834              COMMISSIONER PATRONE: I guess the word that jumps out at me is "effective control" of this undertaking.

835              So my question remains, Mr. Asper, are you not ‑‑

836              MS STIVER:  No.

837              COMMISSIONER PETRONE: ‑‑ in effect in control of Harmony broadcasting and has therefore, not been a change in effective control of this entity?

838              MR. ASPER:  No. At the end of the day the governance of this non‑share capital corporation occurs at the Board of Directors and I do not control the Board of Directors.

839              MS STIVER:  He is one of seven Board of Directors at this point and conceivably 8 or 9 or 10 if we can add more, as we hope to do.  So in this case he wouldn't in any way control the Board or the company.

840              COMMISSIONER PATRONE:  Correct me if I'm wrong, Mr. Capozzolo, you do not sit on the Board?  You are no longer a Board Member?

841              MR. CAPOZZOLO:  First I want to say that it's an excellent pronunciation of the last name, as my parents would say.

842              No, I don't sit on the Board and, if I can give my two cents, sole member basically to me means the guy who you guys call up and say "What's going on over there", like you were doing with me, now you do it with David.

843              David's name is on the licence.  Harmony Broadcasting is the licensee, but there has to be someone who answers.  Like a board doesn't answer to the Commission, it would be an individual, and the individual's name appears on the licence.  I believe in the grand scheme of things that is what a sole member is.

844              For the Red River College licence for example, somebody's name has to be on the licence.  When that individual retires or moves to another institution, somebody else's name has to be put on the licence because they are the person that is contacted if you need logger tapes, if whatever.

845              COMMISSIONER PATRONE:  Were you, in effect, in control of Harmony Broadcasting before Mr. Asper and his group came along?

846              MR. CAPOZZOLO:  For the most part, yes.  Yes.

847              COMMISSIONER PATRONE:  And now you are not?

848              MR. CAPOZZOLO:  Not at all.

849              COMMISSIONER PATRONE:  So logic would dictate to me that there has been a change.

850              MR. CAPOZZOLO:  I'm still involved, but we have to say ‑‑

851              COMMISSIONER PATRONE:  But you are no longer in effective control though.

852              Is that correct?

853              MR. CAPOZZOLO:  In effective control only because I don't have as much money as Mr. Asper, and the few dollars that I had, I didn't have Board of Directors that were professionals.  There were decent local individuals, but not experts in the field of law or accounting or any of that stuff.

854              COMMISSIONER PATRONE:  But, Mr. Capozzolo, you just told me a minute ago that you were in effective control of Harmony Broadcasting and now you no longer are.

855              Did I not hear you correctly?

856              MR. CAPOZZOLO:  And I don't mean it ‑‑ and I think that ‑‑

‑‑‑ Pause

857              MR. CAPOZZOLO:  Okay.  This is a legal question.

858              MR. ASPER:  Commissioner, the record has to be clear and Mr. Capozzolo's response is on the record.

859              But there is a line, there is a very technical legal line ‑‑ that I'm not sure Mr. Capozzolo completely appreciates ‑‑ about where the control ultimately resides.

860              In all of the discussions leading up to this hearing with Mr. Capozzolo, his conception of the corporate law is actually not the way it actually is, not the way the law is actually constructed as to how the concept of corporate control resides.

861              So again, if I can pass it over to Lisa, but the fundamental issue is that once you appoint the board, the board is in control of the corporation.

862              MR. LEWIS:  If I could just ‑‑

863              COMMISSIONER PATRONE:  Sorry, did you want to say something, sir?

864              MR. LEWIS:  Yes, please.

865              If I could  just add something, the fundamental problem that we assessed over the last few months as we were trying to make things right and go forward and consult with the Commission, is the fact that ‑‑ and getting back to the central compliance issue ‑‑ there probably was at times no effective control by board because the Board Members were either (a) inactive, some of their memberships had lapsed, and weren't being apprised of the operating problems.

866              So we came at is as to what does Manitoba law say, first of all, vis‑à‑vis the effective control.  We went back to the source of the Campus Radio Policy, the Commission's circulars, the Ownership Policy, and in putting this new board together we attempted to make it right and conform to the Regulations.

867              COMMISSIONER PATRONE:  Counsel may have something to say at this point.

868              MR. McCALLUM:  Could I ask a few questions in this area, Mr. Chair?

869              THE CHAIRPERSON:  I want to go first, if you don't mind.

870              MR. ASPER:  Can I just add one thing on there?

‑‑‑ Laughter / Rires

871              MR. ASPER:  Everybody wants ‑‑ if I can just add one other part to this, and you may want to raise this in due course, we hope to incorporate this actually as part of the course itself.

872              Being a Director, being a member of the Board of Directors, whether it's this company or another company, brings with it a duty of due diligence and a duty of inquiry and a duty to know what is going on with the corporation for which you may personally be held liable.  That wasn't happening.

873              If you bisect the issue before the Commission today, if you accept Mr. Blake's position, or Mr. Kovnats' position, there was absolutely no corporate governance or due diligence.  Zero.  None.  Didn't even know what was going on, by their own words.

874              If you accept our position you are pretty close to the same thing.  And what we have come to you today is to say we have fixed it and we have proper corporate governance.  I don't control the board.  We have a capable, credible board that understands the obligations of corporate governance.

875              COMMISSIONER PATRONE:  And yet we are here to examine whether or not, among other things, there has been a change in control.  You yourself said you believe that it appears that there has been and when you examine Mr. Capozzolo's role under this new arrangement, he is being put in the function of mentoring and training students and, as far as I can see, he is your main on‑air talent.

876              Is that correct?

877              MR. ASPER:  I think that's true. But bear in mind ‑‑ and everybody focuses on the on‑air part because it's the public part.  I think that's maybe two or possibly three of 10 modules that will be taught in this program.

878              You know, Mr. Capozzolo will not be involved in broadcast sales, teaching or admin or traffic or production, or the other parts.  I mean there is a discrete area.

879              COMMISSIONER PATRONE:  I know our Chairman wants to weigh in as well as our legal counsel, so I'm going to allow them to do this at this point.

880              Thank you.

881              I have more questions afterwards.

882              THE CHAIRPERSON:  Thank you.  Thank you for letting me interrupt as well.

883              I have always been taught to follow the money and after sitting on the BCE hearing as well control and effective control, it begs the question ‑‑ and Ms Stiver may be talking about the legal Act in the Province of Manitoba that I'm not cognizant of, and I know our counsel will get involved as well ‑‑ but do you want us to believe, Mr. Asper, that Tannis Kircher, Travis DeKoning and Michelle Norris, notwithstanding their excellent credentials, have as much power and authority to hire and fire Mr. Wortley as you do?

884              MR. ASPER:  I will tell you, Mr. Chairman, that just before we resumed the hearing this afternoon I collected the board to consider a very important urgent matter and was given specific direction by that group and took it on a very serious issue that touches on the very hearing today.

885              So yes, I do believe that and I am prepared to abide by the direction of the board.

886              THE CHAIRPERSON:  Okay.

887              Counsel...?

888              MR. McCALLUM:  Yes, thank you.

889              Just a couple of questions about the legal control.  I appreciate the opinion that was attached by Ms Stiver.

890              Do you have the Radio Regulations section 11 open by any chance?

891              MS STIVER:  Yes, we do.

892              MR. McCALLUM:  You did 11(4) which talks about:

"a change by whatever means of the effective control of (an) undertaking."

893              And you also spoke of 4(b) and following which deals with share corporations.

894              Is that right so far?

895              MS STIVER:   Yes, I believe so.  We are just trying to find it.  Sorry.

896              MR. McCALLUM:  Sorry.  It's in the green book, it's not in the red book.  Sorry about that, but it is the same and the other regulations.

897              This is for the benefit of Mr. Lewis.  If you look up for example the Broadcasting Distribution Regulations you will find a provision that is similar.

898              MR. LEWIS:  Okay.

‑‑‑ Pause

899              MR. McCALLUM:  You will find it at pages 142 and 143 of the green book, Mr. Lewis.

900              MR. LEWIS:  Right.

901              MS STIVER:  Thank you.

‑‑‑ Pause

902              MR. LEWIS:  Yes...?

903              MR. McCALLUM:  So (b) and following deal with share corporations, but:

"(a) a change by whatever means of the effective control of its undertaking"

904              ‑‑ does not address whether it's a share corporation or a membership corporation.

905              Is that correct?

906              MS STIVER:  Yes.

907              MR. McCALLUM:  Okay.

908              Effective control of a licensee is defined in 11(3).  Right?

909              MR. LEWIS:  Yes.

910              MR. McCALLUM:  And it has two or three possible definitions.  One is:

"a person controls, directly or indirectly, other than by way of security only, a majority of the voting interests of a licensee;

(b) a person has the ability to cause the licensee or its board of directors to undertake a course of action;

(c) the Commission, after a public hearing of an application for a licence, or in respect of an existing licence determines that a person has effective control and sets out that determination in a decision or public notice."

911              MS STIVER:  Yes.

912              MR. McCALLUM:  Okay.

913              In (a) the words "voting interest" is then defined in the previous subsection, which is (2).

914              Is that correct?

915              MR. LEWIS:  Yes.

916              MS STIVER:  Yes.

917              MR. McCALLUM:  2(a) says:

"the person is, directly or indirectly, the beneficial owner of the voting interest; or

(b) the person, by means of an arrangement, a contract, and understanding or an agreement, determines the manner in which the interest is voted..."

918              It excludes solicitation of proxies.

919              That's correct so far?

920              MR. LEWIS:  Yes.

921              MS STIVER:  Yes.

922              MR. McCALLUM:  Okay.

923              And then voting interest is a term that itself is defined, correct, in 11.1(1)?

924              MS STIVER:  Yes.

925              MR. LEWIS:  Yes.

926              MR. McCALLUM:  And (b) says:

"a corporation without share capital, means an interest that entitles the owner to voting rights similar to those enjoyed by the owner of a voting chair."

927              MS STIVER:  Yes.

928              MR. McCALLUM:  And (d) says ‑‑ I will read (d):

"a not‑for‑profit partnership, trust, association or joint venture, means a right that entitles the owner to participate directly in the management of it or to vote on the election of the person to be entrusted with the power and responsibility to manage it..."

929              MS STIVER:  Yes.

930              MR. McCALLUM:  Okay.

931              So explain why the provisions do not apply in the case of a membership corporation.

‑‑‑ Pause

932              MR. LEWIS:  Well, you have to read the effective control provision ‑‑ I lost my way.

‑‑‑ Pause

933              MR. LEWIS:  You have to read it in concert with (3)(b):

"a person has the ability to cause the licensee or its board of directors to undertake a course of action or determines that the person has such effective control..."  (As read)

934              I'm sorry.  I'm sorry:

"...a person has the ability to cause the licensee or its board of directors to undertake a course of action..."

935              Mr. Asper does not have that ability with this Board of Directors.  He may be the sole member, but he doesn't have the power ‑‑

936              MR. McCALLUM:  He has the power to name all the Directors because he is the member ‑‑ he is the sole member.  So if it goes from one sole member who has the power to name the entire Board of Directors to another sole member that has the power to name the entire Board of Directors, how is that not a change of effective control?

937              MS STIVER:  What we did in this case is we have the board changed before the sole member had changed.  The board was appoint ‑‑ I don't want to call it a vacuum, but there were virtually no board members.  So first we constituted the board.  The board then held meetings and approved further board members and then the membership was changed.

938              MR. McCALLUM:  But it remained a sole member corporation all the time.  Right?

939              MS STIVER:  All the time as in the operative time period, for the last few months.

940              MR. McCALLUM:  I'm sorry, it still remained a sole member board.

941              MS STIVER:  Sorry, yes.  It was not always just a sole member, but for the operative time we are talking about, yes.

942              MR. McCALLUM:  So your view is that the naming of board members by the sole member prior to the change of the sole membership from Mr. Capozzolo to Mr. Asper is sufficient to not engage our regulations.

943              Is that your view?

944              MS STIVER:  I would believe so, yes, as it has been done in the past with this same undertaking.

945              MR. LEWIS:  And with other community radio stations.  That's the policy, the Campus Radio Policy.

946              Certainly it is very well defined in the policy as to how board members must be replaced, the nature and the qualification of the board members, but nowhere in the policy or in this Regulation does it say that in the campus stations does prior approval have to be made ‑‑ obtained from the Commission in electing or appointing new members of the board.

947              MR. McCALLUM:  Well, I think that's an issue the Commission is going to decide, so I think we will leave it at that and my perhaps let you resume questions.

948              COMMISSIONER PATRONE:  Thank you, counsel.

949              Relative to that, how are new members going to be appointed going forward?

950              Will you, Mr. Capozzolo, be continuing to do that function as you did before YO Radio came along?

951              MR. CAPOZZOLO:  No.  I have absolved myself of any administrative, board or any responsibility.  I just want to be a talent now.

952              MR. ASPER:  And I made it clear, Commissioner Petrone, that when we first initiated discussions with the Commission and this issue arose ‑‑ and I will just be straight up.

953              The idea was to try to rescue and to try to get some stability quickly and to try to move forward and resume its operations and do all the other things that we had to do.  And I said to Commission staff of the time that ‑‑ although I don't want to trigger another hearing, but I'm happy to expand the membership and I'm happy to ‑‑ you know, once we get on our feet, if you give us the opportunity to do that, to make this maybe look and feel a little bit more like what you want but, you know, the house was on fire.

954              COMMISSIONER PATRONE:  I can appreciate that.  And as long as we are being straight up, it sounds like you have done contortions to try and get around this stipulation in order to change control without having to say that you have changed control.

955              MR. ASPER:  Well, we started by going and asking the Commission about what to do here and it was part of our due diligence as to whether we were going to wind up with a change of control hearing versus whether there was a mechanism of survivorship, organic survivorship.  That's what we hoped we were trying to achieve.

956              COMMISSIONER PATRONE:  I'm going to ‑‑

957              MR. LEWIS:  I'm sorry, if I may jump in?

958              COMMISSIONER PATRONE:  I'm sorry, please continue.

959              MR. LEWIS:  Well before this hearing was called we apprised the Commission ‑‑ we wrote to the Commission and apprised them specifically of the Board change, the methodology being used.

960              The one thing we were very careful of was ‑‑ and this was in discussions with Commission staff ‑‑ not to resume broadcasting until there had been consideration of these changes.

961              But we were very clear that these were the things that were being put into place because directors, former directors who are apprised of their potential financial and other liability, did not want to be directors and were dropping off.  Directors' terms had expired as well.  So in order to resuscitate the corporate structure in line with the Act, these were undertaken.

962              But we also wrote to the Commission and there is a letter on file from myself to the Secretary General advising that in other situations where there had been a collapse ‑‑ and I cited a number of cases, specifically the Dancy Broadcasting case a number of years ago, where in that particular case the sole shareholder had died and on his deathbed he had transferred he shares to other family members, and because he was gone, passed away, and this couldn't be undone, the Commission looked at it and approved it after the fact through an expedited process.

963              What we did here was we wrote to the Commission and said these of the things that are being put in place in trying to become ready to, in the dialogue with the Commission, resume broadcasting.  And if it suited the Commission we believed, in our opinion that we sent to the Commission, that this could be done on an expedited basis similar to the Dancy case.

964              COMMISSIONER PATRONE:  I'm just curious, given what you had to go through in order to try to meet stipulations before your radio could initiate this process how you are going to go forward in cases where there are changes in the board or reappointments or that sort of thing.

965              Have you figured that part out yet?

966              MR. LEWIS:  Well, from a governance point of view I think Ms Stiver can comment on that.

967              But going forward the Board Members will ‑‑ there will be elections on a regular basis.  We anticipate that in the future, because there are, with campus community radio, specific categories of people that must be on the board.  For example, a student.  What will happen in the future ‑‑ and this happens with all campus community stations ‑‑ students graduate and they are no longer eligible under the policy, under the 1992 policy, to serve on the board.  At that point the stations don't back to the Commission.  A search committee of the board or the people within the stations seek out someone to replace them and they are elected for a fixed term.  That's how it works.

968              I think, as I say, the '92 policy is pretty clear on that.  I know in '91 and '92 there was a series of Public Notices because people were coming to grips with the fact that changes were coming down in the policies as to the composition of these boards and the mechanics are not simple.

969              I'm sorry to go on for so long.

970              COMMISSIONER PATRONE:  That's okay.

971              Further to the composition of the board, and the Chairman alluded to this earlier with respect to your stature, Mr. Asper ‑‑ I know that you say earlier today as a matter of fact there was an issue brought before to your attention by the members of the board and so forth.  But with all due respect, you would be the elephant in the room, wouldn't you, as far as your stature, as far as your background.

972              What guarantees does the CRTC have that board members will be given the leeway to express themselves and vote based on their beliefs, experience and values rather than by pressures to ratify decisions made by yourself?

973              MR. ASPER:  I want to be careful in this answer because if ‑‑ there is some idea that because I walk into a room people clam up or people won't say what they think, and it's just false.  I encourage you, I encourage everybody ‑‑ Mr. Menzies knows this ‑‑ come into my life and feel the dissent.

‑‑‑ Laughter / Rires

974              MR. ASPER:  That's all I get in my life, and nobody seems to shy about giving it to me.

975              COMMISSIONER PATRONE:  I'm feeling a little bit of it now.

976              MR. ASPER:  Yes.  You haven't heard it yet.

977              I think that you can't underestimate the intelligence and the willingness of the people that we have recruited.  I don't want you to underestimate my enjoyment of a good solid debate and discussion.  I can't force people how to vote, they are independent‑minded people.

978              And I'm telling you, there was a serious issue today where Ms Kircher and Ms Norris spoke most vociferously and told me exactly what I was going to do, and I did, and I value the advice.

979              COMMISSIONER PATRONE:  That allowed you to have something to speak to before this Commission.

980              MR. ASPER:  It was coincidental, but it's a good example.

981              And I can tell you that the issue, how it was resolved, was contrary to my commercial interest.

982              COMMISSIONER PATRONE:  As sole member, what powers does that titled give you, either over the board or any other aspects of involving Harmony?

983              MR. ASPER:  To be honest, once the board is constituted I guess ‑‑ I'm not sure what it gets me.  I'm not sure what it gets me, because the board then is ‑‑ the idea is the board will regenerate and create its own election and nomination process.

984              COMMISSIONER PATRONE:  Could you endeavour to find out what that entails and inform our staff?

985              MR. ASPER:  Do you know?

986              MS STIVER:  One thing I think, and Franc spoke to it earlier, is I believe then David would be the person responsible for what I'm told there won't be any future CRTC issues.  But he would be named likely as the member in those circumstances.  But beyond that we can put something together and look at it.

987              Really, we have focused much more on the composition of the Board of Directors and that has been our focus, but we can look into this.

988              COMMISSIONER PATRONE:  How many students are on the board right now?

989              I'm sorry if you have already answered that, but do you have any?

990              MR. ASPER:  We asked Mr. Penner to nominate one until we have got through this process to determine whether we were actually going to be an ongoing licensee.  And if that becomes the case, we intend to bring broadcast program students more onto the board.

991              COMMISSIONER PATRONE:  That would  be one out of seven?

992              MR. ASPER:  More than that.  I think more.

993              COMMISSIONER PATRONE:  No, I mean currently.

994              MR. ASPER:  Oh, currently, yes.  Yes.

995              COMMISSIONER PATRONE:  Because of course you know that among the stipulations are that students have adequate representation on that board.

996              So currently you would be not in compliance as far as that issue is concerned.

997              MR. ASPER:  I'm not sure if having one puts us offside strictly speaking.  I can tell you that ‑‑

998              COMMISSIONER PATRONE:  One out of seven.  I would think that ‑‑

999              MR. ASPER:  I'm not sure what "adequate" means.

1000             MR. CAPOZZOLO:  The campus regulations say you should have at least one member that is community at large, somebody representing the student body, somebody representing volunteers, representative from the school.

1001             So the Commission actually recommends six, but at least one from each one of these different areas.

1002             COMMISSIONER PETRONE:  I'm going to shift gears a ‑‑

1003             MR. ASPER:  Again, the difficulty is that with no program it is very difficult.

1004             I can assure you, though, that the size of the board will expand and the number of students will grow.

1005             COMMISSIONER PATRONE:  I think I touched on this and you touched on this as well.

1006             Could you give me some more information about the nomination process in terms of board members, appointments, selections, by whom and for how long?

1007             Do you have that information?

1008             MR. ASPER:  Well, we had ‑‑ actually, I sat down with Brian Wortley and with Ms Stiver and we evaluated what kind of people we might need in the first go round of appointing new directors, the kinds of skills we might need.  We determined that we needed some financial strength, some legal strength.

1009             And given the interrelationship with the students Ms Norris would bring some ‑‑ or we needed some HR and some sort of administrative strength.  Ms Norris had already had some experience with the station, was known to Mr. Wortley.

1010             Mr. DeKoning is known to me and actually was a fan of the station, was well aware and had asked me, you know, where was it.  These were people who were interested.

1011             Mr. Penner represented Ms Kircher as a student representative and we felt looking at it that that would suffice.  We met, discussed what was expected and what was going to be going forward and we felt that the constitution of this board would be sufficient to get us going.

1012             COMMISSIONER PATRONE:  I'm going to shift gears a little bit here and just go into some history.

1013             On page 3 of your statement today, Mr. Asper, you say:

"We both made an approach and were approached to determine whether there was any potential for us to assist in rescuing this community resource."  (As read)

1014             Who exactly approached who and under what terms was a deal struck?  And is there a written statement or contract between you and Mr. Capozzolo?

1015             MR. ASPER:  No.  This issue has been going on for quite a while and I can't specifically recall who or when the first discussion arose about the distress of the campus radio station of Flava 107.9 in Winnipeg.  It was well before the conversation, the first conversation, with Mr. Capozzolo.  I was intrigued by it because, as I said in my comment, I was actually listening to this station more than I was listening to other stations.

1016             I don't recall exactly how the first conversation with Mr. Capozzolo arose.  Mr. Wortley I think, who had ‑‑ Mr. Wortley and I had been talking for quite some time about Flava and I think Mr. Wortley may have gone to Mr. Capozzolo, or he may have made a call to us first, I'm not exactly sure.

1017             I do know that there were some over last summer, other than Mr. Capozzolo, who spoke to me about this radio station and I got drawn in.  I can't give you all the ‑‑

1018             COMMISSIONER PATRONE:  In what way did you get drawn in?

1019             Did you believe this would be a licence that you could try to acquire?

1020             MR. ASPER:  Or somehow rescue.  I didn't even understand ‑‑ to be honest, going into it, I didn't even understand what the legal construct of a campus instructional radio station was, even though I had worked many years ago at CJUM.

1021             But it was an intriguing opportunity.  I think it's an ‑‑ done well, I think this is a really interesting idea.

1022             COMMISSIONER PATRONE:  I want to ask a question regarding the role of students.  My colleague, Mr. Menzies, has touched on this as well.

1023             Specifically the role of students in all aspects of the broadcast operation, because it appears that, Mr. Capozzolo, you are the main source of talent, on‑air talent, and that you will be involved in pretty much all aspects of the programming area of the station.

1024             Where do students actually get any hands‑on experience here?

1025             MR. CAPOZZOLO:  When the students deal with me it's only because they are requiring or fulfilling their requirement to be on the morning show.

1026             They will have an instructor.  I am not the head instructor, I am the facilitator for the morning show practicum or practical experience.  They will have a lead instructor and there will be also guest instructors along the way that, you know, some might be salespeople, some might be Commission people, some could be ‑‑ that type of thing.

1027             So my only component is when they show up on the morning show.

1028             COMMISSIONER PATRONE:  The representative of the college, sir, are you comfortable with that?

1029             MR. WORTLEY:  I am.

1030             COMMISSIONER PETRONE: I believe those are my questions, Mr. Chair.

1031             Thank you.

1032             MR. WORTLEY:  Mr. Petrone, if I could just add ‑‑

1033             COMMISSIONER PETRONE:  Go ahead, Mr. Wortley.

1034             MR. WORLEY:  ‑‑ with regard to the curriculum and the program, because the lure of this program is on‑air.

1035             Here is the key, and I can't stress it hard enough here, because I have been in the business for 26 years, I have seen what has happened to the radio industry with development of on air, with development of sales people, production people.  Right now, there is a real need in western Canada for traffic managers.

1036             The one woman that we had hired to be part of our group was taken away from us, was stolen away by a big company to do traffic.  So I know there is a shortage of traffic people.  The key here is that when a student enters this school and this course probably the first thought was to be on air. 

1037             But once they get inside and they get into real time in terms of inside of a radio station, it is not simulated, it is not internet, but now they get exposed to creative, they get exposed to production and perhaps they may not want to go on air.  They may find a career path in production would be interesting to them.

1038             This is what I find is crucial is that there is now an environment for these young people to learn radio, trained by professional broadcasters, not theory, not what is in a textbook, but actually what happens inside a commercial radio station. 

1039             I have seen too many practicum of students coming into radio stations, that I have not managed but I have been involved in, and they end up getting coffee and doughnuts for program directors.  And we have to look for jobs for these kids to do, because it is really difficult for them to integrate into a commercial radio station just by sitting there and watching, this is how you do it.

1040             So instead, this concept of this campus instructional licence of bringing a student in the door and they now can experience the real world of radio.  It may not be what they set out to be, but this is what it is like.  So when they leave our course in 10 months they are market ready.  This is not a young student coming out with a diploma from somewhere and saying, I want to be on the air.  They are market ready.  They are market ready in sales, production and they are trained by professional broadcasters.

1041             We have overlooked this and I want to reinforce this with the Commission that this is one venue that young people will have a chance to learn the business. 

1042             We have voice tracked all nights, we have cut staff, we have gutted news departments and sports departments.  I am not saying everybody but we have, and I am talking about us as an industry, have been dictated by an ROI, by shareholders and a board of directors and it is appalling.

1043             Because now what we end up doing as broadcasters is steal talent from other broadcasters.

1044             COMMISSIONER PATRONE:  But with a professional like Mr. Capozzolo as your morning man and your main source of on‑air talent, it sounds like you are trying to put as professional a product on the air as possible.  So my question would be, how do students get a chance to make their mistake on air and still allow you to do what you want to do?

1045             So in other words, will students get a chance to do the sort of things that they need to do in order to become professional broadcasters. 

1046             MR. WORTLEY:  Right.  And this is the venue that we are offering them.  They will do an on‑air shift, they will do a ‑‑ they will make mistakes, absolutely they will make mistakes.  But what they will be allowed to do is to develop as an announcer and develop their persona.  What they will see and learn from Mr. Capozzolo is how to read a log, how to setup a song. 

1047             He will be cueing them up with interviews, he will be teeing them up for doing weather, traffic reports, news reports.  They will sit in that studio and watch him operate and they will learn firsthand of what it is like to be a morning announcer, not to mention do a three‑hour talk show with very little commercial breaks.

1048             I just think the concept was fabulous.  And I contacted Mr. Asper.  I am sure he doesn't remember all the details, but I went to David and I said, there is something here.  And he already know about Flavin.  And he said, do you listen to it?  And I go, I listen to it too.  There is something about it, it just has a ‑‑ I would hate to see this go away, for our radio industry.

1049             I am sorry to go on.

1050             COMMISSIONER PATRONE:  That is all right, that is okay.

1051             MR. WORTLEY:  But I am very passionate about this side of the business.

1052             COMMISSIONER PATRONE:  Your passion, I can hear it.

1053             MR. WORTLEY:  Thank you.

1054             COMMISSIONER PATRONE:  So thank you for your answers.

1055             Those are my questions, Mr. Chairman.

1056             THE CHAIRPERSON:  I think there is still some follow‑up questions that some of us have.

1057             I want to come back to control in law and control in fact.  I think I heard you say, Mr. Asper, that the size of the board will grow and the number of students on the board will grow.

1058             I didn't hear you say anything about the size of the sole member expanding beyond a sole member.

1059             MR. ASPER:  I have been very clear that, and I said it from the outset, that I was quite happy if we were successful in reviving this operation to look at expanding the membership.  But I didn't want ‑‑ and until we get some clarity on whether that is going to wind‑up in a change of control, unless it is only one other member, I think we just need some direction on that.

1060             But I am happy to look at increasing the membership.  As I say, what we were confronted with was a crisis.  And we went to the Commission staff and we tried to figure out a way to work within the rules and to get the flames out and to get this thing back and complying with the rules.  So yes, it will look different over time.

1061             THE CHAIRPERSON:  Would you accept, if the Commission did award the transfer of licence or the approval, as a condition of licence to increase the sole membership beyond just yourself?

1062             MR. ASPER:  I would.  There would have to be some shape around that.  I have been involved in other not‑for‑profit corporations where you can actually take it over, there can be hostile takeovers.  So I would be interested in what the Commission has in mind there.

1063             THE CHAIRPERSON:  I am going to jump back to the finances.  And I guess Louise Nebbs put on the record the fact that the liability outstanding was $981,206.  And I have actually got the balance sheet in front of me here and I always shake when I see pink pages, because they are confidential and I can't quote numbers, but you put the number on the record, so that is fine.  And when I look at the page I see a whole host of assets and liabilities. 

1064             Can you tell me post‑transfer, if it comes to pass, what this balance sheet in front of me will look like?  There are all sorts of assets and liabilities on here and there is obviously a huge deficit on here as well.  We talked about the huge management fees that are payable.

1065             MS NEBBS:  Yeah.

1066             THE CHAIRPERSON:  What gets wiped out and what gets paid?

1067             MS NEBBS:  We are honestly going through that process and it isn't complete.  So I don't know right now what of these liabilities will actually be paid in full versus some settlement reached.  We know the amount paid to Mr. Capozzolo.  We know as well there are certain liabilities that weren't recorded.

1068             My other variable that is preventing me from answering that question is the costs that we are incurring right now.  I have prepared a number of cash flow forecasts in terms of the start‑up costs of rescuing Harmony and resuming broadcast and those numbers keep growing.

1069             So that forecast I have revised it several times and it is standing at approximately $500,000 right now, the cost to get Harmony from the state it was when Mr. Asper first became involved to the point where it will be broadcasting again.

1070             THE CHAIRPERSON:  But there are some long‑term debts on here called deposits I guess, loans and advances and that sort of thing. Will they all be paid off?

1071             MS NEBBS:  Some of them will be paid in full.  In other cases, such as the case of Mr. Capozzolo, we have reached an arrangement where it will be partially paid.

1072             THE CHAIRPERSON:  And that arrangement is what we talked about earlier?

1073             MS NEBBS:  Pardon me?

1074             THE CHAIRPERSON:  That arrangement is what we talked about earlier?

1075             MS NEBBS:  Yes.

1076             THE CHAIRPERSON:  Okay.  I see on here as well "value of a CRTC licence" under assets.  Who set that amount of money and how did that come about?

1077             MS NEBBS:  These are the financial records that were prepared by the company's accountants.  In some cases we are not able to find the supporting documents, we didn't necessarily ‑‑ we weren't able to audit or review. In that case my recollection was, and Dave can correct me, that that represented certain payments Mr. Capozzolo made when he became the sole member, including professional fees.

1078             Dave, is that correct?

1079             MR. DUBNICOFF:  That is pretty much correct, yes.

1080             MS NEBBS:  So those were professional fees that Mr. Capozzolo incurred.

1081             THE CHAIRPERSON:  So it is not good will for the value of the CRTC licence?

1082             MS NEBBS:  No.  No, it was professional fees incurred.

1083             THE CHAIRPERSON:  Okay.  There is also a value here on a broadcasting system, which I gather is in Mr. Capozzolo's apartment?

1084             MS NEBBS:  Yes.

1085             THE CHAIRPERSON:  Will he be compensated for that?

1086             MS NEBBS:  And that is the antenna.  Pardon me?

1087             THE CHAIRPERSON:  Will he be compensated for that?

1088             MS NEBBS:  No, they are in storage in Mr. Capozzolo's apartment.  Mr. Capozzolo also has assets with a professional storage company, so these are assets of the company.

1089             THE CHAIRPERSON:  Okay.  And they won't be sold basically, they will remain where they are?

1090             MS NEBBS:  They remain the assets of the company.

1091             THE CHAIRPERSON:  I want to go back to the contract between Robertson College and Harmony.

1092             I have the contract in front of me here and I am trying to understand the term of this agreement.  And it is article 12 on page 9, and obviously written by a lawyer, there is five parts to it and a lot of "subject tos."  Can someone provide me with just a synopsis as to what are the outs by each of the parties with regard to this agreement, who can trigger what and when?

1093             MR. ASPER:  We are just retrieving the document.  I am sorry, which clause were you referring to?

1094             THE CHAIRPERSON:  It is article 12 on page 9.  Article 12.01, there is five parts; a, b, c, d and e.

1095             MR. ASPER:  It looks to me like it is 90 days notice generally and 30 days on breach.

1096             MS STIVER:  Sorry.  And provided that there is no classes running at the time.

1097             THE CHAIRPERSON:  So between September and June, 10 months of the year I think someone said, September and July, whatever it is, school is running so you can't trigger that until July effectively, is that right?

1098             MS STIVER:  Well, and Brian Wortley might clarify this, but I believe that it runs throughout the year though, right?

1099             MR. WORTLEY:  I am sorry, what was that, Mr. Chair?

1100             THE CHAIRPERSON:  Well, I was told that you can't terminate this agreement during the school year.

1101             MR. WORTLEY:  Our agreement is that you cannot terminate the agreement as long as there is an intake in process.  You have to wait for an intake to complete the final process before that could be triggered.  In other words, if there is an intake in place halfway through the quarter you couldn't trigger that out clause until the complete course was completed.

1102             THE CHAIRPERSON:  But there is an intake every quarter.

1103             MR. WORTLEY:  Right.

1104             THE CHAIRPERSON:  And students register in advance of that quarter.

1105             MR. WORTLEY:  Correct.

1106             THE CHAIRPERSON:  So there is always students that are on the hook for the next quarter sometime during the quarter.

1107             MR. WORTLEY:  Right.

1108             THE CHAIRPERSON:  So how does someone trigger this without impacting the students that have either registered already or, as you are saying, you can't do it if they are already in the program?

1109             MR. WORTLEY:  That is right.  It could not be terminated while there are students in the nine‑month course, it doesn't matter where they come in.

1110             MR. ASPER:  But if you have no applicants for the intake that was due, you have to complete what is there and then you can terminate is my understanding.

1111             THE CHAIRPERSON:  So it is basically if there are no applicants for a quarter this agreement can be terminated?

1112             MR. ASPER:  I think that is the way it reads.

1113             THE CHAIRPERSON:  And as long as there is one student that has applied you can't?

1114             MS STIVER:  Well, arguably, the 90 days is your restriction there.  So, arguably, if there even was one student and there was a class running you could give longer than 90 days' notice and it would be terminated between the parties, in agreement though, but the 90 days is stipulated there for when there are no classes running.

1115             Arguably, it would be longer then, you could give a year's notice if you wanted to and that would give everybody time to find a transition out plan.

1116             THE CHAIRPERSON:  Now, if there is no program would that put your licence conditions in jeopardy?

1117             MR. ASPER:  Yes.

1118             MS STIVER:  Yes.

1119             THE CHAIRPERSON:  Where in this contract does it say that, at the same time as you notifying the other parties, the other venture as you call it, that you are triggering this termination.  You are also at the same time informing the CRTC that basically you are shutting down is what I gather it is going to be.

1120             MS STIVER:  No, sorry.  It could also be that an arrangement is being made with another school, for instance.

1121             THE CHAIRPERSON:  Okay.

1122             MR. ASPER:  Oh, absolutely.  It wouldn't necessarily collapse automatically, we would obviously look for other arrangements. 

1123             But are you looking from the regulatory perspective of knowing that the termination provisions have been triggered?

1124             THE CHAIRPERSON:  First of all, the answer to your question is yes.

1125             MR. ASPER:  I know you ask the questions, but ‑‑

1126             THE CHAIRPERSON:  Yes.  The answer to that question is yes.  But the thing I am looking for here as well is if the Commission is to approve this, obviously this contract becomes part of that approval process as well.

1127             MR. ASPER:  Right.

1128             THE CHAIRPERSON:  And if it is to be amended by some other agreement with some other college or institution or something, I think it behoves the Commission to approve that as well and make sure that it isn't being watered down or, in some other way, reshaped.

1129             MR. ASPER:  Right. 

1130             MS STIVER:  Yes.

1131             MR. ASPER:  If you would like us to provide alternate language requiring notification to the Commission with respect to those provisions, we would be happy to do so.

1132             THE CHAIRPERSON:  Okay.  And in your clause 12.01(d) you talk about the 30‑day breach with a 30‑day remedy period.  If someone complains to the CRTC about the terms and conditions of this not being upheld and we contact I guess yourselves, the ventures, with regard to a potential breach in here.  How would that evolve? If after 30 days there was no remedy, would one party automatically be able to walk away from this agreement?

1133             MR. ASPER:  If I can just have a moment.

1134             MS STIVER:  Sorry, just to clarify your question.  The question is if one party breaches the agreement can that party walk away from the arrangement or can the other party walk away from the arrangement?

1135             THE CHAIRPERSON:  Can either party?  And I am using the CRTC as an example of us coming to you and saying we have had a complaint from somebody, a student, Robertson College, whomever, with regard to the way you are administering this contract and you fail to remedy.

1136             MS STIVER:  So, in your scenario, Harmony has done something that someone is complaining of and Robertson ‑‑ because this is an agreement between Robertson and Harmony, so Robertson would have to then put Harmony on notice that they have breached the agreement.

1137             THE CHAIRPERSON:  Right.

1138             MS STIVER:  Then Harmony would have 30 days to remedy the breach.  If they haven't remedied the breach within that time Robertson, under this contract, has an obligation if they wish or they have a right to then carryon without Harmony involved and fulfil their obligations under the agreement to the students.

1139             THE CHAIRPERSON:  But the location of this course is not in Robertson College, it is standalone, separate, rented facilities by Harmony or whomever.

1140             MS STIVER:  Yes.

1141             THE CHAIRPERSON:  So how could they continue this process on when they don't have control of the infrastructure, if I can call it that?

1142             MR. ASPER:  Well, I suppose Robertson could build its own.  Let's take that scenario and that is how they are going to deal with it.  I think it would be fair for the Commission to want to know whether those provisions have been triggered and we would be happy to live with that.

1143             THE CHAIRPERSON:  Okay.  And you have no problem with adding a clause in here that would basically inform the CRTC if the terms were ever invoked?

1144             MR. ASPER:  Absolutely.

1145             MS STIVER:  No, we have no problem.  Of course, I would make sure Robertson was okay with that as well, but we would have no problem with that.

1146             THE CHAIRPERSON:  Robertson, would you have any problem with that?

1147             MR. PENNER:  No, that is fine. 

1148             I mean, the perspective we look at this is from, the 90‑day clause, is from a student perspective as well, is that we are obligated through our licence to look after a student and so the 90‑day clause, because the program is continuous intake so to say, every quarter another group comes in, is that we have to ensure that any student that starts with us completes with us. 

1149             And so it would definitely mean that there would be a planned ending, in which case we would stop recruitment, so the students in the program would be able to complete their program.  With other organizations we have health programs running in Beausejour, St. Pierre and so on which are not at our location and, as well as at our location, so we are acquainted with running programs off campus.

1150             THE CHAIRPERSON:  Thank you, those are my questions.

1151             Mr. Menzies.

1152             COMMISSIONER MENZIES:  Thanks.

1153             I just want to look back at a couple of things.  I know some of this has been filed with us, but it is a public hearing.  Mr. Asper, in terms of your financial commitment to this, is it an ongoing commitment, is it budgeted, scheduled for years ahead? 

1154             I am just trying to get back to the board issue in terms of that, that if you are ‑‑ and I will have another question regarding the business structure coming up ‑‑ if you are, at least in the short‑term, the sole source of funding for this is that funding going to be renewed on an annual basis and what happens if you get hit by a bus?

1155             MR. ASPER:  Yes, there is a business plan which has a full cash flow analysis of what we think this project is going to need.  And I am hopeful that there will be a repatriation of the capital that it has taken to get it back up and running.  And I do have a commitment to continue to fund it.  My hope is that this can become a self‑funding operation as soon as possible.

1156             COMMISSIONER MENZIES:  And I just want to take that back for clarity on the relationship with the board.  And I accept what you say in your undertaking to take direction from the board and that sort of stuff. 

1157             But if you are the sole or the necessary source of funding for the operation for a while isn't there, as much as you might oppose it, don't you fear a fairly, how do I put this, an almost systemic endemic process with board members that they will have to say, well, okay David is being really good about this and he is taking lots of direction, but we really don't want to push it too far because after all, I mean, he is the guy who is propping this thing up?

1158             MR. ASPER:  Let me approach it a different way.  I think a business person would look at me with the capital that I am proposing to inject into this project where I don't have control of the board and send me straight to a psychiatrist.

1159             COMMISSIONER MENZIES:  Yeah, there's that option (laughter).

‑‑‑ Laughter / Rires

1160             MR. ASPER:  Because you may think that there's this suasion and you may think that there's this endemic sort of moral thing.  And you may be right but I'm taking a huge, huge, financial leap of faith if you are right. 

1161             And I understand what you're saying.  People are going to say, you know, he's funding it and we should we defer to him.  I think that actually puts a higher obligation on me to work cohesively with the group knowing that on the turn of a dime the group could turn.

1162             COMMISSIONER MENZIES:  And my concern isn't so much for the present.  Is it sort of are there guarantees in place around this for down the road?  Are there written documents, written commitments, that sort of stuff?

1163             Because you know, as much as we can all say ‑‑ and this is our mood at the moment, it's optimistic and it's gung ho ‑‑ relationships break down.  You know, people feel differently a few years from now and that sort of stuff.  And then you know we're looking at, you know, seven‑year license periods and that sort of stuff. 

1164             And you are asking us to approve a rescue of something.  And you know, I mean frankly if we do I don't think anybody wants to be back here five years from now rescuing it again because something has broken down.

1165             MR. ASPER:  Yes, least of all me because that will mean that we've failed. 

1166             COMMISSIONER MENZIES:  So are there written documents in place, written commitments in place in terms of that, I mean for like a seven‑year license term or...?

1167             MR. ASPER:  In terms of providing funding?

1168             COMMISSIONER MENZIES:  Yeah.

1169             MR. ASPER:  No.  There's no written agreement at this point. 

1170             COMMISSIONER MENZIES:  So, the funding you would provide would be at the board's request perhaps or management's request on an annual basis from ‑‑ 

1171             MR. ASPER:  No.

1172             COMMISSIONER MENZIES:  ‑‑ budget meetings or budget approval process?

1173             MR. ASPER:  What we decided at the last board meeting was that we have been working obviously on draft business plans and that we would await the outcome of this hearing before finalizing it. 

1174             It is a multi‑year plan.  It is a plan that I will obviously have to review.  But given that I will be providing a major source of the capital I will not be present during the voting or discussion of the actual business plan.

1175             And it will be a multi‑year plan.  It's not a contract but it will be a multi‑year plan.  And it will provide for the capital requirements of the company.

1176             COMMISSIONER MENZIES:  So let me get this straight.  You have told the board to go ahead and do up a budget and you're good for whatever they need you to be good for?

1177             MR. ASPER:  Oh, no, no, no.

1178             COMMISSIONER MENZIES:  Okay.

1179             MR. ASPER:  Oh, no, no, no, no.

1180             COMMISSIONER MENZIES:  You really would need a psychiatrist then.

‑‑‑ Laughter / Rires

1181             MR. ASPER:  Oh, no, no, no, no, no.  I mean that's part of the due diligence, part of the due diligence of looking at this business was to say what realistically is it going to need?  And I will provide the money as a lender in effect to the business.

1182             COMMISSIONER MENZIES:  Okay.  So, you're the bank.

1183             MR. ASPER:  Yes.

1184             COMMISSIONER MENZIES:  Okay.

1185             Now, and have you a preset limit on...?

1186             MR. ASPER:  Not formally.

1187             COMMISSIONER MENZIES:  Informally?  I mean is there ‑‑ 

1188             MR. ASPER:  Well, I'll probably know it when I see it.

‑‑‑ Laughter / Rires

1189             MR. ASPER:  I haven't thought of the actual number.

1190             COMMISSIONER MENZIES:  Okay, because I mean it's just a little awkward for us in terms of that in that you're waiting for our decision and we kind of need to have some idea from you in order to make a fully informed decision.

1191             MR. ASPER:  Well, I have to tell you, we went into this thinking that it was actually a fairly straightforward project.  And the costs have spun massively out of control. 

1192             And I'm not shying away from what it's going to take.  And I have a very good sense of what it's going to take and I'm not backing away from it.

1193             COMMISSIONER MENZIES:  Okay.  I'll take that as the answer on that.

1194             Now, in terms of the business plan, like the Campus Radio Policy limits advertising to 504 minutes a week, sort of maximum four minutes an hour of advertising.  And now, that's, I don't know, if you sold every minute that would be about $3 a minute to pay Mr. Capozzolo's salary and benefits. 

1195             That's obviously not going to be ‑‑ I'm not sure if you'll sell it as cheap as $3 a minute but it's not going to be enough to operate the whole station.  And typically campus stations have different types of fundraisers for a campus radio station. 

1196             And one of them, one of the most popular sources is student fees, right?

1197             Now, do you have any plans around charging student fees with Robertson or around Robertson, any current or future plans on that?  Well, we'll just deal with that question first.

1198             MR. WORTLEY:  No.  We haven't any plans to charge student fees. 

1199             What we have looked at is a model where ‑‑ a membership model with the listeners, very similar to I guess PBS.  We have looked at that where you can get a membership and then this will access you to information about the Hip Hop world and the Rap world. 

1200             And if you'd like to have this information e‑mailed to you it might afford you with other opportunities where you might be able to get into a nightclub for half‑price of the cover charge.  We have looked at that model but we've not decided on anything.

1201             MR. ASPER:  That's listener membership ‑‑ 

1202             MR. WORTLEY:  That's a listener membership as ‑‑ 

1203             MR. ASPER:  ‑‑ as opposed to sole member membership.

1204             MR. WORTLEY:  Yeah, thank you.

1205             COMMISSIONER MENZIES:  Yeah.  Yeah.  I'll get to that in a minute too. 

1206             MR. WORTLEY:  On the revenue side, Commissioner Menzies, because I was ‑‑ been involved in the preliminary budgeting of the revenues and we have the advertising inventory, I mean there's not a lot there.  And by design of the conditions of license there's a reason for that.

1207             I think what is important also though is that the tuition is there to defer some of your costs of the radio station also.  And this is one of the reasons that Mr. Capozzolo had problems because he never did launch the course, of course he never collected tuitions. 

1208             When we budgeted the advertising we actually looked at only selling 40 percent of the inventory on average for the year as opposed to 100 percent.  So, it's on the conservative side. 

1209             So, if you have 504 minutes and we were to looking at 40 percent of that as a revenue budget at about $15 ‑‑ $10 to $15 a spot.

1210             COMMISSIONER MENZIES:  Okay.

1211             MR. WORTLEY:  That's not a lot but it goes towards obviously the operation and that's the intent of it. 

1212             COMMISSIONER MENZIES:  Can you provide us with that?  

1213             MR. WORTLEY:  Certainly.

1214             COMMISSIONER MENZIES:  Your plans versus on revenues.

1215             MR. WORTLEY:  We're working on that on our business plan.

1216             COMMISSIONER MENZIES:  Yes.

1217             MR. WORTLEY:  It's being worked on as we speak and we would certainly supply that to you once ‑‑

1218             COMMISSIONER MENZIES:  When do you think that would be a reasonable time to get it to us?

1219             MR. WORTLEY:  Ten days. 

1220             COMMISSIONER MENZIES:  You can take two weeks if you want.  Is ten days enough?  Or two weeks?  Two weeks?

1221             MR. WORTLEY:  Sure.

1222             COMMISSIONER MENZIES:  Okay.

1223             MR. WORTLEY:  Thank you.

1224             COMMISSIONER MENZIES:  And just, Mr. Asper just one point.  Are you providing this financing at no cost to the station or is there an interest rate that you're charging?

1225             MR. ASPER:  My approach is that I would like to get my money back plus the cost of the money if I can.  If I can't then I'd like to just get the money back, the principal.

1226             COMMISSIONER MENZIES:  Okay.  Is that prime, prime plus one?  Sub‑prime?

‑‑‑ Laughter / Rires

1227             COMMISSIONER MENZIES:  You don't have to ‑‑ a competitive, a generous rate?  I mean are you subsidizing this?  Is it ‑‑ 

1228             MR. ASPER:  It will not be something that jumps off the page. 

1229             COMMISSIONER MENZIES:  Okay.  Thank you.

1230             One last area, Mr. Capozzolo.  Now, the Harmony by‑laws, that's for NIB 95.5 FM.

1231             MR. CAPOZZOLO:  Right.

1232             COMMISSIONER MENZIES:  Section 302 state, "Directors shall be members of the corporation."

1233             Now, based on the application Harmony has been operating in violation of its own by‑laws since January 22nd, 2003 when you are recorded as the sole member until you were recently replaced by Mr. Asper.  Would you agree that that was the case, that the company was operating in violation of its own by‑laws for that period of time?

1234             MR. CAPOZZOLO:  Yes.

1235             COMMISSIONER MENZIES:  Okay.  And now I need you to explain to us the contradiction between the information and the application regarding this sole membership.  As you just said it was operating ‑‑ at the public hearing in 2006 and I'm quoting from paragraph 390 of the September 29th, 2006 Winnipeg public hearing, you indicated to us that there were "40 or so" Harmony members.

1236             MR. CAPOZZOLO:  Right.

1237             COMMISSIONER MENZIES:  Right.

1238             MR. CAPOZZOLO:  But not members, okay, see sole member is a term that's only cropped up since Mr. Asper has been involved.  In the past as well as with the Commission it was always referred to as a single shareholder. 

1239             COMMISSIONER MENZIES:  Right.  But were there really 40 members there in 2006?

1240             MR. CAPOZZOLO:  Well, members, these are people that participated in the station.  They're not the kind of members that necessarily pay you money.  They are people that come to the station.  They give you advice on things, they provide music, contacts with people who can ‑‑ 

1241             COMMISSIONER MENZIES:  But you pretty much in your opening statement you pretty much told us that you were a one man show, you were all on your own ‑‑ 

1242             MR. CAPOZZOLO:  Yeah, in terms of the radio station. 

1243             COMMISSIONER MENZIES:  You didn't have anybody around, anybody to turn to, anybody who could support you, so...

1244             MR. CAPOZZOLO:  No, in terms of running the operation as it were but not as far as people who are associated with the station who felt like members of, you know, part of the ‑‑ 

1245             COMMISSIONER MENZIES:  And did they feel like members or were they members?

1246             MR. CAPOZZOLO:  Yeah, they'd walk in; they'd walk in to my office; they'd walk in and talk to the guy on the air.  I mean it was ‑‑ 

1247             COMMISSIONER MENZIES:  I'm trying to get to the difference between members and pals, right?

1248             MR. CAPOZZOLO:  Well (laughter) aren't they the same thing?  No.  They were, I suppose pals, members, people that I met because of the radio station.

1249             COMMISSIONER MENZIES:  So there were no official members.

1250             MR. CAPOZZOLO:  No, they weren't, I mean if I went home and called them up and said, okay, how did you get to know this guy and it was because of the radio station what would you say?  Are they members or are they pals? 

1251             They're people that associated with the station who contributed their time, effort, things like that...food...certainly cigarettes.

‑‑‑ Laughter / Rires

1252             COMMISSIONER MENZIES:  Okay, thank you very much.

1253             THE CHAIRPERSON:  Counsel, have you got any questions?

1254             MR. McCALLUM:  Yes, I do.  Thank you.

1255             Just on the number of directors, in the book that was sent to you with the materials for this file, I see one Bylaw, No. 1 that said the number of directors should be not less than three and no more than seven.  In another version of Bylaw No. 1 it says:

"...unless changed in accordance with the act the board shall comprise of three directors."  (As read)

1256             MR. McCALLUM:  Can you tell me, is the board three or is it three to seven?

1257             MR. ASPER:  Of which company?

1258             MR. McCALLUM:  It was NIB 95.5 Cable FM Inc. Bylaw No. 1, and then you have another one called Bylaw No. 1, being a general bylaw of the same company NIB 95.5.

1259             MS STIVER:  Sorry, what are the dates on those bylaws?  I vaguely recall ‑‑ I'm not sure Frank can clarify this but I vaguely recall a reference somewhere to an attempt to amend the bylaws.  So there was an amendment to the bylaws but I'm not sure if those are the two versions that you have.

1260             MR. McCALLUM:  Okay.  Well, in the package that was sent it's under the tab "Correspondence between CRTC and Harmony" and it's maybe midway through the package.  One Bylaw No. 1 says "29 January 1999" and another one which is unsigned says "17 June 1999".  And as far as I can tell those appear to be the bylaws of the company.

1261             MS STIVER:  And sorry, what is the difference in the number of directors as stated in each one?

1262             MR. McCALLUM:  Yes.  One says "not less than three and not more than seven" and the other one says, "The board shall comprise of three directors".

1263             MR. ASPER:  I think that had something to do with the previous licence holder because then Manitoba ‑‑ Manitoba corporate law in comparison to what the Commission requires.  So I think that might have been an amendment in a previous life.

1264             MR. McCALLUM:  Well, sorry, but the Commission records have this document and to the best of my knowledge, and correct me if I'm wrong, it has not been updated, amended or changed.  So vis‑à‑vis the Commission it appears to be a document that says that either there is a minimum three directors or somewhere between three and seven.

1265             And if you want to take an undertaking to check into it I am more than happy to let you do that.

1266             MR. ASPER:  I think that's what we should do.

1267             MR. McCALLUM:  Okay.  Assuming the number is three, just for the sake of argument, the next problem that I had was that whether it's three or seven it says that "they shall be members of the corporation".  And how can you have board directors of three directors exist when you have a sole member of corporation and the other two don't seem to be qualified because they are not members.  How does that work?

1268             MR. ASPER:  I think we need to undertake to get you an answer on that.

1269             MR. McCALLUM:  Okay, thank you.  I would appreciate that.

1270             Let's assume that all the undertakings are 14 days because that's the ‑‑ is that the date you have set?  Thank you.

1271             Okay.  The next one is this.  It's to be determined whether Commission approval is required for the transfer to Mr. Asper or not and you have made submissions on that.  So we are there so far, right?

1272             MR. ASPER:  Yes.

1273             MR. McCALLUM:  Okay.

1274             If Commission approval is required, you would agree with me that the Commission could subject that approval to conditions?

1275             MR. ASPER:  Yes.

1276             MR. McCALLUM:  One of the conditions discussed with Commissioner Katz was that there be a minimum number of members.

1277             MR. ASPER:  Yes.

1278             MR. McCALLUM:  And you asked for clarification on that.

1279             MR. ASPER:  Yes.

1280             MR. McCALLUM:  And the bylaw seems to have, at least in one of the versions, that a minimum of directors is three and they all have to be members.  What if the condition of approval was that there be three members of the corporation?

1281             MR. ASPER:  As I say, I don't philosophically have a problem with that.  I would like to understand however, though, and I think for the purposes of the corporation like leave me out of it.  What happens and what is the mechanism for change in that membership and will that organic change then result in another hearing like this?

1282             I think we need ‑‑ I'm fine with the numbers but I think we need some clarity as to how this company keeps going.

1283             MR. McCALLUM:  Sure, and I think that has to be looked at in due course.

1284             MR. ASPER:  Absolutely.

1285             MR. McCALLUM:  But in terms of that as a condition of approval that seems acceptable?

1286             MR. ASPER:  Yes.

1287             MR. McCALLUM:  Okay.

1288             You probably are aware that there was an old condition on the licence before the policy changed and the condition as it used to read was:

"It is a condition of licence that the applicant..."

1289             MR. McCALLUM:  In this case it would be the licensee:

"...retain full control over all decisions concerning the management and programming of this station and that representatives of the student body, faculty alumnae or administration representatives of the university or college with which the station is associated considered together form a majority of the board of directors."  (As read)

1290             MR. McCALLUM:  That was a condition on NIB 95.5?

1291             MR. ASPER:  Right.

1292             MR. McCALLUM:  If that were imposed as a condition of approval what would be your reaction?  I will change applicant to:

"It is a condition of approval that the board of directors of the licensee retain full control...." (As read)

1293             MR. McCALLUM:  Et cetera.

1294             MR. ASPER:  I think we could live with that but I wouldn't agree with that and I think that you are unduly limiting the scope of experience that can be brought to bear both with the students and the other members of the board.  But we could live with it.

1295             MR. LEWIS:  Counsel, if I can just jump in?

1296             In the green regulatory book I found the clause I was looking for.  We have to reconcile that because I think that's been overridden by paragraph 56 which came into force as the licence was turned over after that.

1297             MR. McCALLUM:  Sure, and I'm looking at a situation to deal with the specific circumstances of this licensee.  So that's what I am dealing with.  There are certain policy things and there are these specific circumstances.

1298             MR. LEWIS:  Yes, my question is this:  My understanding is that as licenses were renewed, and this licence was renewed I believe in 2002‑2004, the provisions of that paragraph overrode the old conditions.  So I think each party has to look at that and see if it's overridden now.

1299             MR. McCALLUM:  All right.

1300             MR. LEWIS:  Because in preparing for this hearing we looked at the old licence and we looked at a policy.  It was our view in the constitution of the board that that paragraph is now operative for all institutional licensees.  We may be ‑‑ we may be in error but that's what we were going on.

1301             MR. McCALLUM:  Sure, and I'm saying you know what about an option of the Commission imposing it as a condition of approval.  That's what I'm dealing with.

1302             MR. LEWIS:  I appreciate that.

1303             MR. McCALLUM:  Okay.

1304             My next question is, in respect of the questions that I just asked this licence term began on the 1st of September '04; is that correct?

1305             MR. LEWIS:  Yes.

1306             MR. McCALLUM:  Five years into the term would be the 1st of September '09, correct?

1307             MR. ASPER:  Yes.

1308             MR. McCALLUM:  The Commission could impose conditions of licence effective the 1st of September, '09, correct?

1309             MR. ASPER:  I assume so.

1310             MR. McCALLUM:  Could the Commission impose the very conditions that I discussed with you as conditions of approval as conditions of licence effective on the 1st of September '09?

1311             MR. ASPER:  I think it could but they shouldn't ‑‑ but it shouldn't.  I don't know.  I'm not sure what is magic about September 1, 2009.

1312             MR. McCALLUM:  It's five years into the licence term;

1313             MR. ASPER:  Right.

1314             MR. McCALLUM:  But that would be a possibility the Commission could consider?

1315             MR. ASPER:  You could do it four and a half years in or four years in.

1316             MR. McCALLUM:  No, I think we will have to look at section 9 of the Act, but the five‑year anniversary is the magic date.

1317             MR. ASPER:  Well ‑‑

1318             MR. McCALLUM:  Unless you apply, of course.

1319             MR. ASPER:  Okay.

1320             MR. McCALLUM:  Could you comment just for the record on the possibility of the Commission revoking this licence?

1321             MR. ASPER:  Well, I was going to raise that and I think I was going to speak to that specifically in conclusion, but I'm happy to deal with it.

1322             It's something that we frankly considered as one of the recommendations that we might actually make to the Commission as a way of flushing everything from the past out and come back and start anew.  At the end of the day that's capital punishment, and what are we talking about here?