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Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience.
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:
Various broadcasting applications /
Diverses demandes de radiodiffusion
HELD AT: TENUE À:
Sussex Ballroom Salle Sussex
Future Inns Cambridge Future Inns Cambridge
700 Hespeler Road 700, chemin Hespeler
Cambridge, Ontario Cambridge (Ontario)
October 20, 2008 Le 20 octobre 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
Various broadcasting applications /
Diverses demandes de radiodiffusion
BEFORE / DEVANT:
Michel Arpin Chairperson
/ Président
Rita Cugini Commissioner
/ Conseillère
Elizabeth Duncan Commissioner / Conseillère
Peter Menzies Commissioner
/ Conseiller
Stephen Simpson Commissioner
/ Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Cindy Ventura Secretary
/ Sécretaire
Joe Aguiar Hearing Manager /
Gérant de l'audience
Anthony McIntyre Legal Counsel
Conseiller
Juridique
HELD AT: TENUE À:
Sussex Ballroom Salle Sussex
Future Inns Cambridge Future Inns Cambridge
700 Hespeler Road 700, chemin Hespeler
Cambridge, Ontario Cambridge (Ontario)
October
20, 2008 Le 20 octobre
2008
- iv -
TABLE
DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PHASE I
PRESENTATION BY / PRÉSENTATION PAR:
Sound of Faith Broadcasting 5 / 25
Forest City Radio Inc. 65 / 406
CTV Limited 138 / 819
Rogers Broadcasting Limited 193 / 1125
Evanov Communications Inc. (OBCI) 265 / 1553
Cambridge,
Ontario / Cambridge (Ontario)
‑‑‑ Upon
commencing on Monday, October 20, 2008
at 0930 / L'audience débute le lundi
20 octobre 2008 à 0930
1 THE
CHAIRPERSON: Good morning and thank you
for waiting.
2 Ladies and
gentlemen, welcome to this public hearing.
My name is Michel Arpin and I am the Vice Chair of Broadcasting for the
CRTC. I will be presiding over this
hearing.
3 Joining me on the
panel are my colleagues, Rita Cugini, at the far end, Commissioner for Ontario;
and Elizabeth Duncan, to my left, Commissioner for the Atlantic Region; Peter
Menzies, to my extreme left ‑‑ I don't know if he's pleased to
be at the extreme left ‑‑
‑‑‑ Laughter /
Rires
4 THE CHAIRPERSON:
‑‑ part‑time Commissioner; and Stephen Simpson,
Regional Commissioner for British Columbia and the Yukon.
5 The Commission
team assisting us includes Joe Aguiar, Hearing Manager and Manager of English‑Language
Radio Operation; Tony McIntyre, Legal Counsel; and Cindy Ventura, Hearing
Secretary. Please speak with Mrs.
Ventura if you have any questions with regard to hearing procedures.
6 At this hearing
the panel will examine nine applications to operate a new FM commercial radio
station in the London market, including an application for St. Thomas.
7 We will then study
four applications to operate a new FM commercial radio station in Guelph,
including an application to convert CJOY Guelph from the AM band to the FM
band.
8 Certain
applications are competing for the use of the same frequencies in London and
Guelph respectively.
9 In light of the
recent extraordinary events respecting world financial markets, the Commission
wishes to ensure that any application it may choose to license to serve the
London and Guelph radio markets have the financial capacity to succeed. Therefore, the Commission requests that each
applicant provide updated proof of financing for their proposals, consistent
with the Commission's policy regarding documentary evidence to confirm the
availability of financing. A copy of
this policy can be obtained from the public examination room. Applicants will have 10 days to provide
the necessary documentation.
10 I will now invite
the Hearing Secretary, Cindy Ventura, to explain the procedures we will be
following.
11 Mrs. Ventura...?
12 THE
SECRETARY: Thank you, Mr. Chairman.
13 Before beginning I
would like to go over a few housekeeping matters to ensure the proper conduct
of the hearing.
14 When you are in
the hearing room, we would ask that you please turn off your cell phones,
beepers and blackberries as they are an unwelcome distraction and they cause
interference on the internal communication systems used by our translator. We would appreciate your cooperation in this
regard through at the hearing.
15 Le service
d'interprétation simultanée est disponible durant cette audience. Vous pouvez vous procurer un récepteur auprès
du technicien à l'arrière de la salle.
L'interprétation anglaise se trouve au canal 4 et l'interprétation
française au canal 5.
16 We expect the
hearing to take four days, starting today until Thursday. We will begin each morning at 9:00 a.m. We will take an hour for lunch and a break in
the morning and in the afternoon. We
will let you know of any schedule changes as they occur.
17 The Essex Room
will serve as the examination room where you can examine the public files of
the applications being considered at this hearing. As indicated in the Agenda, the telephone
number of the examination room is 519‑624‑6737.
18 There is a
verbatim transcript of this hearing being taken by the court reporter sitting
at the table to my right. If you have
any questions on how to obtain all or part of this transcript, please approach
the court reporter during a break.
Please note that the full transcripts will be made available on the
Commission's website shortly after the conclusion of the hearing.
19 Also, for the
record, please note that there has been a change to the Agenda of
the hearing. Mr. Alan Lazar of the
London Silverbacks football team, intervention number 270, will be
appearing in Phase III instead of Power 4 Marketing Ltd.
20 Now, Mr. Chairman,
we will proceed with Item 1 on the Agenda, which is an application by Sound of
Faith Broadcasting for a licenCe to operate an English‑language FM
specialty commercial radio programming undertaking in London.
21 The new station
would operate on frequency 99.9 MHz, Channel 260A, with an average effective
radiated power of 234 W, maximum effective radiated power of 500 W, with an
effective height of antenna above average terrain of 107.5 m.
22 Appearing for the
applicant is Mr. David MacDonald.
23 Please introduce
your colleagues and you will have 20 minutes for your presentation.
24 Mr. MacDonald...?
PRESENTATION / PRÉSENTATION
25 MR.
MACDONALD: Good morning,
Mr. Chairman and Members of the Commission.
26 My name is Dave
MacDonald and I am the Coordinator of Applications for Sound of Faith
Broadcasting. I am also a member of the
Board of Directors of Sound of Faith and I am the General Manager of our
Kitchener station, Faith FM.
27 I have been a
broadcaster since 1969 and have been involved with Sound of Faith for about
13 years.
28 Joining me, on my
right, is Dr. Robert Reid from Woodstock, Chair of the Board of Sound of
Faith. On my left, from London, Dale
Elliott, the General Manager of our London station Grace FM.
29 Sound of Faith
Broadcasting is a not‑for‑profit corporation that operates three
low‑power FM stations, Faith FM in Kitchener, Hope FM in Woodstock and
Grace FM in London. We are approaching
our fifth year on the air in all three communities and we have been well
received by the members of these communities.
30 We come before you
today to explain why we have applied for a new operation in London to replace
our existing facility.
31 Before we get to
this explanation, I would like Dr. Reid to tell you a bit of the history
of our ministry.
32 DR. REID: Mr. Chair and Members of the Commission, my
name is Dr. Robert Reid. I am an
orthopaedic surgeon from Woodstock, Ontario.
33 As Mr. MacDonald
mentioned, I serve as Chair of the Sound of Faith Board. I am also on the Local Advisory Board of Hope
FM, that's the Woodstock Station; and I am one of the founding members of Sound
of Faith Broadcasting.
34 In 1988 a group of
four men had a vision and went out to Bower Hill Road near Woodstock to pray
for a Christian radio. We felt that
there was a need for this kind of ministry in our community, but we were not
broadcasters and we did not know how to make this vision a reality.
35 Our first plan was
to get up a large receiving antenna at Bower Hill, pick up the signal of WDCX‑FM,
a well‑known Christian radio station in Buffalo, New York, and
rebroadcast that signal to the community.
However, we soon discovered that that would be illegal, so we decided to
create a new station, a powerful one that would cover southwestern Ontario.
36 We began
recruiting interested parties from other communities and held monthly meetings
in Woodstock to see how this might happen.
37 After many
meetings and many attempts at fund‑raising, we concluded that a 5000 W
station was beyond our reach and it was suggested that we go into our own
community and generate local support rather than apply for one large
station. We tried to establish a number
of small stations that would better serve local markets.
38 This strategy was
successful and on December 9, 2002 we received notification from
the CRTC that a licence had been granted for a station in
London. This was followed on May 7, 2003
by approval for a station in Woodstock, and one week later, May 14,
approval was given for our Kitchener station.
39 All three stations
have been well received, but our London operation ‑‑ just as
this morning ‑‑ had technical difficulties or problems from
the beginning.
40 I will let Mr.
MacDonald elaborate.
41 MR.
MacDONALD: A few months after we
received approval from the CRTC we were ready to begin broadcasting our test
signal in London. We had acquired a 30 W
transmitter from one of our Board Members who operated a company that
specialized in professional audio installations.
42 Unfortunately, as
soon as we switched the transmitter on, under the watchful eye of a
representative from Industry Canada, we discovered that our signal was creating
interference with avionics transmissions from the London airport and we were
forced to turn it off.
43 We were then
obligated to find a solution to this problem before we could begin
broadcasting. The solution we decided on
was to install a filter on the output of our transmitter. This filter was a special order item. It took several weeks to get it and have it
installed.
44 When we switched
the transmitter back on we found the interference was gone, but the filter
absorbed so much power that we were only getting about 6 or 7 W ERP at the
transmitter rather than the 10 W we were licensed for.
45 We cannot yet
afford to upgrade this transmitter, so we still operate at this reduced
power level.
46 Our engineers tell
me this reduced power level is not all that significant and even with full 10 W
we would still have the same reception and interference problems.
47 In any case, this
means that the coverage is not what we had hoped for and we have received many
complaints from people that want to listen to us but cannot. Especially in the downtown core area of
London the signal is spotty at best and many potential advertisers will not buy
from us because they can't get the signal in their place of business.
48 We also have
problems with interference from other stations.
From the beginning we have had a lot of interference from a Detroit‑based
station on 105.9. There are times when
their signal can be heard over ours in the west end of London.
49 Another problem
was created for us in a CRTC Decision of May 18, 2005. This Decision reads in part:
"The Commission approves the
application by Aylmer and Area Inter‑Mennonite Community Council to amend
the broadcasting licence for the low‑power ethnic radio programming
undertaking CHPD‑FM Aylmer by changing the frequency from 107.7 MHz
(channel 299LP) to 105.9 MHz (channel 290A1) and by changing the authorized
contours through an increase in the effective radiated power, from 50 watts to
250 watts. The proposed Class A1 service is the lowest level of a protected FM
service."
50 We were not aware
that this application was even before the CRTC, but even if we had been made
aware of it we are unprotected at our current power level. This change to CHPD‑FM has created
interference with our signal on the east side of London.
51 These are the
technical reasons we are applying for a new operation on a new and
protected frequency.
52 Dale Elliott, the
Station Manager, will now tell you more about the vision we have for this new
station.
53 MR. ELLIOTT: Good Morning, Mr. Chairman and Members
of the Commission.
54 My name is Dale
Elliott, I am the General Manager of Grace FM.
I am also the host of the midday show from noon until 3:00 p.m.
55 We are here today
because there are many things that we would like to change. We think that the best way to start that
process would be to have a new licence with different parameters.
56 You have already
heard the reasons why we need a new frequency, more power and protected status,
but we would also need to be able to sell more advertising. Our current licence restricts us to four
minutes per hour and we would like to have that removed.
57 We would like to
also change our obligation regarding Canadian Talent Development to the current
$500 annually for stations with under $625,000 annual revenue. Our current Condition of Licence for CTD is
as follows:
"The licensee shall contribute
a minimum of $5,000 per year in direct cost expenditures toward the development
of Canadian talent. This would entail
holding an annual talent contest for all styles of Christian music, with the
winners having an opportunity to record a CD.
In addition, the licensee would put out a compilation CD of the top 18
artists in the talent contest." (As
read)
58 We have attempted
to hold this contest annually, but unfortunately we have not had enough
response to be able to consistently issue a compilation CD. Our sister stations in Woodstock and
Kitchener have also held this type of event, but with more success. We plan on continuing with these talent
searches, but we would like to have them removed from our Condition of Licence.
59 Our plan is to
start fresh with a new station. We will
have a different name, logo and website, but we will continue to offer
programming that is family‑friendly and we will continue supporting
Canadian Christian artists. These are
people who have no chance of having their music played on any other stations in
London and we are helping them to launch their careers in music. We know that some of them have become very
successful.
60 Here are some of
the comments from Nathan Picher, singer and songwriter with the band
Article 1:
"As a professional musician,
born and raised in London, Ontario, I have witnessed the impact of local radio
stations, particularly Grace FM, in developing Canadian talent. Over the past few years my band,
Article 1, has grown from a lofty dream into a full‑time
professional career with a U.S. recording contract, world distribution through
EMI, a Japanese mainstream release, a United States Christian CHR top 10
single, and hundreds of tour dates over hundreds of thousands of kilometres in
front of hundreds of thousands of people coast‑to‑coast in both
Canada and the United States.
Right from the beginning Grace FM offered their support. They provided international exposure by
hosting the Kingdom Bound Talent Search, which we won, allowing us to play our
first concert in the United States. They
were also the first station to play our music and the first station to ask for
an interview.
All of these experiences gave us a better understanding of the industry,
helping us grow our career to where we are today. In fact, in the past few years our music has
gone from being played on just one station, Grace FM, to being played on four
continents." (As read)
61 We have also
received some comments from a well‑known and respected musical icon and
four‑time Juno award winner Skip Prokop.
Skip was one of the founders of the group Lighthouse and he was the
drummer and a vocalist in the band as well.
62 He also played a
large part in the formation of the CRTC, as he was invited by Prime Minister
Trudeau to address Parliament at the Parliamentary Inquiry into Canadian
music. He spoke at length about what it
was like to be a Canadian musician recording artist during a time when Canadian
radio stations would not play or recognize the benefit of playing Canadian
recording artists. This inquiry resulted
in the formation of the Canadian Radio and Television Commission.
63 Skip now resides
in London and he drums for a Christian band named Mercy Train. He had these comments about our application.
"Speaking as one of the most
qualified pioneers and promoters of Canadian talent and Canadian music, I highly
recommend the approval of the Sound of Faith application. This can only result in a tremendous boost
for local Canadian faith‑based music and musicians, not to mention the
increase in a larger geographic awareness of this category of music and, as a
result, the increase in sales of their recordings simply because they would be
reaching a much larger audience of people of faith." (As read)
64 In addition to our
continuing commitment to the promotion of local artists, we will develop a
local news service and we will continue to work closely with local
organizations to help them promote their events.
65 We believe that
the service we offer is unique but very much needed in the community. We also feel that we are best to provide this
service as we have been on the air for nearly 5 years and we know our community
and its needs. We also feel that in
order to achieve these goals we require a new station with more power and a new
frequency.
66 MR.
MacDONALD: Mr. Chairman and Members of
the Commission, we know that there is a potential for Christian radio to do
well in London, but so far, because of the problems we have talked about, that
potential has been unrealized. We know
that the listeners of Grace FM are loyal and they are vocal in their support.
67 We have attached
as Appendix 1 a letter from one of our advertisers, Rick Ho of London
Audio. Rick expresses his amazement at
the response he is getting from his ads on Grace FM. In this letter he states:
"At least once a month one of
your listeners takes the time to draw me aside to thank me for supporting the
station or to at least mention it's what brought them in to shop. When it first happened I found it novel, but
it has occurred with such frequency it has bloomed to complete
amazement." (As read)
68 He also calls the
money he spends with Grace FM:
"... the best return on
investment within our marketing budget."
(As read)
69 Grace FM has also
been helpful in supporting other agencies in the community. Dale Hunter, the President of the London Knights
Hockey Club, in a recent letter said:
"I'm looking to expand our
community support base and we are glad to be working with 105.9 Grace FM. This fine station plays contemporary
Christian music that is safe for the whole family, as well as community‑related
programs concerning health and wellness."
(As read)
70 Dr. Barry
Slauenwhite, the President and CEO of Compassion Canada had these comments:
"London has certainly benefited
from having Grace FM's positive message and we have appreciated their commitment
and efforts in our community over the past five years. Grace FM has also partnered with Compassion,
supporting our presence in the community and helping to bring exposure to our
organization and the children we represent around the world." (As read)
71 Mr. Bev Shipley,
MP for Lambton‑‑Kent‑‑Middlesex, recognizes the value
we bring to the community when he says:
"This station not only
broadcasts contemporary Christian music, traditional hymns and country gospel,
but has interesting, informative talk shows, children's programming, daily
inspirational readings and more."
(As read)
72 We know that we
have the potential to reach more people and increase our revenue because our
sister station in Kitchener, Faith FM, serves a similar population base and they
generate about three times the revenue that we do here in London. Faith FM is a member of BBM and we have some
hard numbers to show that a Christian station can attract a substantial
following. We have attached a sample of
some of those numbers as Appendix 2.
73 We are confident
that with this new operation we will be able to see similar results in London
and we ask the Commission to grant us this licence so that we can finally
realize our potential and allow us to properly serve the Christian community.
74 Thank you for your
attention. Now we are at your service to
answer any questions that you might have.
75 THE
CHAIRPERSON: Thank you,
Mr. MacDonald.
76 I want only to say
for the record that I'm wearing this earpiece only because I'm deaf in one ear so
that allows me to better understand what you say. So I'm not listening to the translation, I'm
listening to ‑‑
77 MR.
MacDONALD: I appreciate that, sir. My wife is deaf and one ear, I appreciate
what you ‑‑
78 THE CHAIRPERSON:
‑‑ to the floor track.
79 We will first
start with Commissioner Cugini.
80 COMMISSIONER
CUGINI: Thank you, Mr. Chair.
81 Good morning,
gentlemen and welcome.
82 MR.
MacDONALD: Good morning.
83 COMMISSIONER
CUGINI: I have a few housekeeping items,
some that have arisen as a result of your oral presentation this morning and
some that are in your application.
84 The first one has
to deal with the appendices that you have attached to your
oral presentation.
85 Is this new
information or is this information that was already included in
your application?
86 MR.
MacDONALD: This is new information. We didn't have this. This is from our Kitchener station, the
appendices.
87 I just wanted to
show the potential that we have in London is not realized compared to what we
are doing in Kitchener. So this is new
information which was not in our application.
88 COMMISSIONER
CUGINI: Okay. I will let our legal counsel work out
whether or not we can accept this information at this stage of the hearing
process. If we can, we will put it on the
public record for all other applicants and interveners to examine and, if not,
thanks and you can take the information home.
Our legal counsel will be able to verify whether or not we can accept
it.
89 MR.
MacDONALD: Okay. Thank you.
90 COMMISSIONER CUGINI: The other item I would like to talk very
briefly about ‑‑ and Mr. Elliott, you spoke about it this
morning ‑‑ are the changes you would like to your current
service.
91 Correct?
92 MR. ELLIOTT: Yes.
93 COMMISSIONER
CUGINI: You do know that this ‑‑
I believe the licence is up for renewal within a year ‑‑
94 MR. ELLIOTT: Yes.
95 COMMISSIONER
CUGINI: ‑‑ and that is the time to address these changes if
you would like those changes to be made, or you have to file an Application to
Amend those conditions of licence. It's
not part of these proceedings because it deals with a current licence and we
would have to allow the opportunity for interveners to comment ‑‑
96 MR. ELLIOTT: Right.
Correct.
97 COMMISSIONER
CUGINI: ‑‑ on those changes and there isn't that opportunity
here now.
98 MR.
MacDONALD: Yes. I think what we are stating, we formulated
this as a new application because we felt ‑‑ there was a call
issued and we felt if we waited until a renewal date there would be no
frequencies available. So we thought
okay, if that's the case then we will make a new application for a new station
and we will close down the old one.
99 COMMISSIONER
CUGINI: Right. But what I'm saying is, if you are not
granted the licence ‑‑
100 MR.
MacDONALD: Right.
101 COMMISSIONER
CUGINI: ‑‑ for the new application and you continue
operation ‑‑
102 MR.
MacDONALD: Right.
103 COMMISSIONER
CUGINI: ‑‑ of your station and you would like these
amendments applied to your existing station, there would have to be a
formal process in which you would have to request those amendments.
104 MR.
MacDONALD: Right. Yes, we are aware that we would have to do
that with our existing station, but if we get approved for this one then we can
just close that one down then.
105 COMMISSIONER CUGINI: Okay.
I understand.
106 MR.
MacDONALD: Yes.
107 COMMISSIONER
CUGINI: Okay.
108 Speaking of your
existing station ‑‑
109 MR.
MacDONALD: Yes...?
110 COMMISSIONER
CUGINI: ‑‑ one of the things that has come to our
attention as a result of examining this whole proceeding is that we are missing
your annual returns for the broadcast years 2005 and 2006.
111 MR.
MacDONALD: Yes.
112 COMMISSIONER
CUGINI: Is our filing system not up to
par or have you just been unable to file those annual returns?
113 MR.
MacDONALD: We have had some difficulties
with our filing system, with our accounting procedures, which we have taken
steps to fix.
114 We have a new
bookkeeper who is doing both the books for Kitchener and London and she has
been going back and trying to find all of the problems that have occurred. We had some problems with some of the
management earlier before Mr. Elliott came on board and these problems are
being looked at and hopefully will be rectified in the very near future.
115 COMMISSIONER CUGINI: Do you have an approximate date by which you
can file those returns?
116 MR.
MacDONALD: I would think probably within
the next 60 days.
117 COMMISSIONER
CUGINI: Okay.
118 The other issue,
again dealing with your existing station, is that you are deficient in the
commitments made to CTD as it was then known, CCD as it is known now.
119 I do appreciate
that in your oral presentation you did in fact outline the financial
difficulties that you were having.
However, the commitment to CTD or CCD is a condition of licence.
120 MR.
MacDONALD: Right. We are aware of that and basically that's a
reporting thing. It's not that we didn't
do the talent searches and spend the money, it's simply a reporting thing and
we have been advised that we were in deficiency by the CRTC and we have been
given the deadline of November 30 I believe it is to submit these reports.
121 COMMISSIONER
CUGINI: Okay.
122 MR.
MacDONALD: So we are working on that as
well.
123 We did have the
contest, we are just trying to find all of the proof of the money that was
spent. So that, by November 30,
hopefully will be filed with the Commission.
124 COMMISSIONER
CUGINI: Yes. It's not difficult to spend the money, it's
just difficult to ‑‑
125 MR.
MacDONALD: Well, unfortunately yes. A lot of the ‑‑
126 COMMISSIONER
CUGINI: ‑‑ to keep track of how much we spend.
127 MR.
MacDONALD: A lot of the filing was
deficient and some of the receipts are still sort of ‑‑ where
are they sort of thing, for things like the hall rental and things like that. Dale is working on it very, very diligently
to try and get that all sorted out so that we can submit those reports.
128 COMMISSIONER
CUGINI: Terrific. Thank you very much for that.
129 We will move on
now to the application that is now before us.
130 As you know there
is another applicant in these proceedings for a Christian radio service, the
United Christian Broadcasters.
131 Have you had an
opportunity to look at their application?
132 MR.
MacDONALD: Briefly, yes we have. And we are very aware of United Christian
Broadcasters and who they are and we are going to address that in the
intervention stage.
133 COMMISSIONER
CUGINI: Well, I was curious to know from
your perspective.
134 I know in your
oral presentation you said you have been in the market for five years, you
know the community, but if you are us sitting up here, convince us that you are
best served to serve the London market when comparing the two
applications. Like why should we pick
you and not United Christian Broadcasters?
135 MR.
MacDONALD: That's a very good question.
136 I'm not sure what
they are going to have to say in their presentation, but UCB is ‑‑
what's that?
137 MR. ELLIOTT: I can address that.
138 MR.
MacDONALD: Okay.
139 MR. ELLIOTT: I believe that we have a very strong
relationship with the community who we broadcast to and in many talks that we
have had since it has become known that there is another application for the
London market of the same format it is my opinion, and it has been my
experience, that many of these either churches or ministries or groups that are
of interest to our format are questioning in their mind we already have a
station. So to them it has put a bit of
a question mark on their mind. It is
sort of dividing their loyalties, like do they try and support two different
stations?
140 A lot of our
financial support comes from the listener base and it's a combination of
advertising dollars plus listener donations.
So that's been my experience.
141 I believe we have
a very strong relationship with the church community and that is
our base. So I think we are going
to build on that for sure.
142 The only real big
question in their mind has been the signal.
They have always had this question of, you know, we would love to
support more, we would love to hear it more, but it's just very difficult to
pick up the station.
143 We have made some
advances with having the streaming broadcast on the Internet, that has really
helped our listenership as well, but when it comes to putting out 10 W, or
6 to 7 W as it ends up being, there is not a whole lot we can do on that end of
it.
144 We do have several
people who actually will go and look for radios that pick up our station better
as a result. They will give them out to
people so they can hear it.
145 People that we
have listening to us are very loyal, they are very hungry for this type of
format, so they will try and search it out any way they can. In many cases it's only picked up in the
vehicles. People can only hear it in
their cars.
146 COMMISSIONER
CUGINI: Do you think the London market
is robust enough to support the licensing of two Christian radio stations?
147 MR.
MacDONALD: Absolutely not. Our experience in Kitchener, when we applied
in Kitchener, we made the argument that Kitchener was not big enough to support
two Christian applicants ‑‑ there were two at the time, there
was our station and one from Trust Communications in Barrie ‑‑
and the CRTC saw fit to license it to us because we were the local group. We had been working in the community for five
or six years to develop support for our station. And the guys from Barrie, while they were
very successful in Barrie, were coming in as outsiders and trying to establish
a beachhead in Kitchener and the CRTC agreed with us that there wasn't room for
two stations. They licensed us and
denied Barrie.
148 We see a similar
situation here. We are the local group,
we have been working here for years and years and years in the London ‑‑
even before the station was licensed ‑‑ to build support and then
UCB comes in from New Zealand and tries to put a beachhead in London, much as
they have in Belleville and Chatham.
149 Make no mistake,
UCB is based in New Zealand, they have stations all over the world. The Chair of their Board is from New
Zealand. They are not local. They may have local people that they hire and
have working for them, but they are not a local group like we are. We have been in the community all our lives. I am born in ‑‑ I was
actually born in London but raised in southwestern Ontario and I have lived in
the Kitchener area since 1968.
150 So we feel that we
are best equipped to handle this because we are local, we know the community,
we all go to the churches that support us in our communities and we are not
coming in from outside trying to establish a big network of stations across
Canada.
151 It's just my
feeling that there is not enough support for two stations doing the same format
in a market this size.
152 I don't even think
that there are two oldies stations in Kitchener. If another came ‑‑ there's
an Oldies 1090, if another station came in and wanted to do oldies, I
don't think there would be support for that so there should be no ‑‑
there should never be too absolutely the same format stations in
any market of this size. And what
they have come to the table with is basically the same format that we
are providing.
153 MR. ELLIOTT: Can I comment as well?
154 COMMISSIONER
CUGINI: Of course.
155 MR. ELLIOTT: Additionally I would say that this type of
format is still in the infancy stages in Canada. In the United States there is about
80 years of history with Christian broadcasting, but we don't have that in
Canada. So as much as yes, it's probably ‑‑
of any sector in radio is one of the most fast‑growing divisions, it's still
going to be tough to make things go.
156 Plus, the industry
of musicians right now is somewhat in an upheaval as you look at the purchasing
of music is on the decline in most cases.
I mean people are downloading individual tracks, but they are not buying
full CDs.
157 So the music
companies may be ‑‑ I mean they are definitely hurting, but
they are not hurting nearly as much as what the artists are. So I think it's very key that we have
stability in what we have currently and I think it would be very detrimental to
have two in this market.
158 That is just my
feeling, and with what Dave said, as well, that if there was something being
offered new or different in the programming, that would make more sense to me,
but to offer a very similar format, that is almost identical in its
programming, I don't understand that.
159 MR.
MacDONALD: The CRTC actually just turned
down an application for an Ottawa station to have a second Christian
station. Even though the format was
mostly talk, the CRTC determined that it wasn't that much different from what
was on the original station. It was the
same company applying for a second licence, and the CRTC said there was no room
for a second station in Ottawa.
160 So, if that is the
case there, I am sure that it is certainly the case in London and Kitchener.
161 DR. REID: Your Chairman made reference to the present
economic situation. That is not
unique. Sterling Trucks in St. Thomas
has just closed its doors. The amount of
advertising dollars will be less in the next five years, so why would we bring
in two stations and try to make them compete?
162 If we can survive
for five years well with a 6‑watt signal, what can we do covering the
whole of Middlesex with a good signal?
163 We are going to be
fine.
164 COMMISSIONER
CUGINI: Thank you. I don't think I need to ask the next question
that I had, but I will ask it anyway. I
think I know the answer.
165 If we were to deny
your application and award the licence to UCB, would you cease the operation of
CHJX?
166 MR. MacDONALD: My feeling is, with a 6‑watt station,
with the limited resources that we have, compared with the unlimited financial
resources that they have at their disposal, and the 2,000 watts, or roughly,
that they are applying for, we would have no choice.
167 COMMISSIONER
CUGINI: Again, you have talked about the
limitations of your signal strength, and I think in your application you
actually said that listeners have given up on CHJX because of the poor quality
of your signal.
168 So if we grant you
this licence, what are you going to do to win those listeners back?
169 Are you going to
start a marketing campaign? Is it word‑of‑mouth?
170 If you have lost
those listeners, how are you going to get them back?
171 MR.
MacDONALD: I think a marketing campaign,
from my standpoint.
172 We just re‑branded
Kitchener last year. We put up a new
logo and increased our marketing budget.
173 One of the things
we did was to put up a couple of signs on the local transit buses. It's amazing what impact that has had on the
market. People now know we are
there. People who said, "Faith FM,
what's that," now know that we are there.
174 So, yes, we would
start aggressive marketing to let people know that we are here in this market,
and that we are here with increased power.
"If you heard us before and you couldn't get us in your home, try
us now." That sort of thing. Absolutely.
175 We need to do
that. They are not going to find you by
themselves.
176 COMMISSIONER
CUGINI: And if I happen upon your
station, if I am flipping through the dial and I just happen upon your radio
station, how do I know that I am listening to a Christian radio broadcaster?
177 MR. ELLIOTT: That would depend on what time you would tune
in. I don't think it is always readily
apparent.
178 In many people's
minds, I would have to say that Christian music would be ‑‑ in
their estimation, would be sort of old church music and very dry.
179 I think you would
be surprised if you tuned into our radio station and found that it was very
upbeat, very contemporary, very exciting.
However, the message is very clear.
It's very different.
180 That is not to say
that there aren't many artists in the mainstream who are faith‑based
artists, and we do play some of those as well.
181 There are cross‑over
artists that we would play on our station.
182 I think, if you
tune in during spoken word programming, you are going to definitely notice that
the talk is centred around faith‑based topics. It's very apparent in that regard.
183 It would depend on
when you would tune in.
184 COMMISSIONER
CUGINI: You have anticipated the next
line of questioning, which is your spoken word programming.
185 MR. ELLIOTT: Yes.
186 COMMISSIONER
CUGINI: We do need a little bit more
detail, because when I look at the application, I am still a little bit
uncertain as to what the commitment is.
187 You say that 80
hours will be local, of which 28.5 will be spoken word. Correct?
188 MR. ELLIOTT: That's right.
189 COMMISSIONER
CUGINI: Of the 28.5 hours, just looking
at those hours of spoken word, how many hours will be devoted to foreign‑acquired
programming?
190 I saw the list of
titles that you provided ‑‑ I think it was in your deficiency
letter ‑‑ but how many hours does that mean per week of the
28.5?
191 MR. ELLIOTT: It's in the neighbourhood of between 3 and 5
hours of broadcasting to different cultural groups.
192 For example, for
Spanish and Ukrainian we have ‑‑
193 COMMISSIONER
CUGINI: No, I meant the American‑acquired
brokered programming.
194 MR.
MacDONALD: Let me see if I can refer to
the letter of deficiency that you are talking about.
195 COMMISSIONER
CUGINI: We are trying out a new system,
and everything is on our computer, so I will try to call it up as well. Bear with me.
196 MR.
MacDONALD: If you guys had Max, you wouldn't
have this problem.
‑‑‑ Laughter /
Rires
197 MR.
MacDONALD: We do have a number of local
programmers ‑‑
198 THE
CHAIRPERSON: And we hope that you don't
call us Mr. or Mrs. Toshiba ‑‑
‑‑‑ Laughter /
Rires
199 COMMISSIONER
CUGINI: Yes.
200 For example, I
have "Focus on the Family", "Insight for Living", "In
Touch" ‑‑
201 MR.
MacDONALD: Yes.
202 COMMISSIONER
CUGINI: So of those 28.5 hours of spoken
word programming, how many hours would be comprised of this type of
programming?
203 MR. ELLIOTT: It is in our application.
204 MR.
MacDONALD: Yes.
205 For instance,
"Focus on the Family" is a U.S.A.‑originated program, but they
have a Canadian division, and the programming that they do for the Canadian
station is often somewhat different from the one they broadcast in the U.S.,
especially when the issues are political.
They don't necessarily talk about American politics on their Canadian
broadcasting.
206 They may talk
about the Canadian election, as opposed to the American election.
207 The same thing would
apply to all of these ministries that are marked on here as U.S.A. They originate in the U.S.A., but they will
have Canadian divisions.
208 So it's kind of a
grey area for us to say ‑‑
209 COMMISSIONER
CUGINI: I know, but I just need a
number.
210 MR.
MacDONALD: I wish I could give you one.
211 MR. ELLIOTT: I would say that it's in the neighbourhood of
75 percent U.S.‑originated, but 25 percent would be actually coming from
Canadian programming, Canadian broadcasters, who would actually form the program
here.
212 COMMISSIONER
CUGINI: Okay. Does that mean that 75 percent of the 28.5
hours will be this type of programming, and that 25 percent of the 28.5 hours
will be Canadian?
213 MR. ELLIOTT: That's correct.
214 COMMISSIONER
CUGINI: That makes it a little bit
complicated now, because you also made a commitment to news and sports. You said, I think, that there would be 3
hours and 15 minutes of news, sports and weather.
215 Is this 3 hours
and 15 minutes part of the 28.5 hours of spoken word?
216 MR.
MacDONALD: No, that would be in addition
to.
217 COMMISSIONER
CUGINI: It's in addition to. Okay.
218 So of the 3 hours
and 15 minutes ‑‑ because you have said it would be sports and
traffic ‑‑ how much is just pure news?
219 If we were to
deduct the sports and traffic reports from the newscasts, how much would be
pure news?
220 MR.
MacDONALD: I am not sure that we have
actually laid that down in stone yet.
221 COMMISSIONER
CUGINI: What is it on your current
station?
222 MR.
MacDONALD: It's a continually evolving
thing with us.
223 What are you doing
now for news?
224 MR. ELLIOTT: We only have news, traffic and sports in the
morning programming. In the afternoon we
have news and traffic.
225 Those would be in
the 6 to 9 in the morning time slot, and 3 to 6 in the afternoon.
226 COMMISSIONER
CUGINI: And you don't do news on
weekends, and you don't plan on doing news on the weekends if granted this
licence.
227 MR.
MacDONALD: I would say not at first,
although it's an evolving thing.
228 It's the same as
Kitchener. When we started we did no
news, and now we have syndicated newscasts, plus we have a local guy that goes
out and does local stories for us, plus we have a guy who does the sportscast
for us locally.
229 It's an evolving
thing, and as resources become more available to us, then we would certainly
entertain hiring and establishing a local newsroom, and do news of not only
interested Christians, but the whole community.
230 Our aim is to have
a station that someone can tune into on their way to work, or on their way home
from work, and not have to tune out to somewhere else to get the news, and to
get the sportscasts, and that sort of thing.
231 That would be our
aim, and that is what we are working toward in Kitchener, and that is what we will
work toward in London.
232 Because of the
problems we have had there, we haven't had the financial resources to make the
expansion that we would like to make.
233 Certainly, it is
our aim to follow the Kitchener model and do that.
234 DR. REID: In our presentation we alluded to our
relationship with the London Knights, and now that that relationship has been
established, there is no reason why we cannot participate in more local
athletic events.
235 COMMISSIONER
CUGINI: In order to close the circle on
spoken word programming we have to talk about the Religious Broadcasting
Policy.
236 I know that in
your application you said that you will adhere to the guidelines of that
broadcasting policy when it comes to providing balance and ethics in religious
programming.
237 I would like to
know what mechanism you currently have in place, or what mechanism you plan on
putting in place, to ensure that, especially that acquired American
programming, over which you have no control for content ‑‑
238 What mechanism are
you going to put in place to make sure that you comply with those guidelines on
ethics and balance?
239 MR. ELLIOTT: It is our intention to have other faiths
represented. Currently we have a Jewish
one‑hour program per week. We also
have a locally produced program, which is called "The Cross‑Current",
and it is going out and getting different opinions on topical issues. It is very much open to opposing perspectives
and opinions.
240 We look to grow
that aspect of the station further. That
is our intention.
241 I am not quite
sure what you mean as far as the mechanism ‑‑
242 As far as a
plan? Is that what you are referring to?
243 COMMISSIONER
CUGINI: Yes. How many hours of balanced programming, for
example, will you provide?
244 What will you do if
someone accuses you of airing a broadcast that is offensive?
245 Just this morning,
on Canada AM, I heard that Sony has to pull one of their anticipated games
because the music in the background has two lines that are offensive ‑‑
two lines from the brand that are offensive to Muslims.
246 What are you going
to do to address those kinds of concerns from listeners who say, "You know
what? The guy I heard this morning, who
said that gays should be" ‑‑ you know, "should not
be part of this world," for example, what are you going to do about that?
247 MR. ELLIOTT: Currently we do air a disclaimer before
programs that may be considered that way.
That's a first step, I realize.
248 We intend to not
air anything that will be too controversial, but yet we need to have, like you
said, balanced programming.
249 So we are
continuing with ‑‑ if we were to be approved, we would be
continuing with the Jewish program that we have on currently, which is on all
three of our stations.
250 MR.
MacDONALD: That's right.
251 It's a really high‑quality
program, by the way. He has interviewed
Dr. Phil, he has interviewed all kinds of Hollywood people, Margot Kidder and
that sort of thing, but it comes from a Jewish perspective.
252 My response, also,
speaking from the Kitchener perspective, is that we make sure that these
programs that we put on the air, such as "Focus" and
"Insight", are from trusted ministries, who we think will not be
doing things that are offensive to groups.
253 We had a case in
Kitchener where we had a local pastor doing a show, and he started off one
Saturday morning by running the disclaimer twice, and he said, "I had to
do that, because I know that I am going to offend some people today." He said, "The Roman Catholic Church, as
an institution, is not Christian."
254 So, as you might
expect, the phones and e‑mails ‑‑
255 COMMISSIONER
CUGINI: You think?
256 MR. MacDONALD:
‑‑ started coming in pretty quickly.
257 Our response to
that was to immediately pull his program off the air. We will not tolerate that sort of intolerance
to any group. Whether it be Roman
Catholic, whether it be Muslim, whether it be Jewish, we will not tolerate
that.
258 We pulled him off
the air immediately, and he understood the reasoning, and he apologized to me,
and he said, "I am sorry if I offended someone."
259 I immediately
contacted every person who had called and e‑mailed, and the response was
overwhelmingly positive that we had dealt with the problem, that we had
listened to their concerns.
260 That is how we
deal with these things as they come up.
261 I have one
question for you, if I might ‑‑
262 COMMISSIONER
CUGINI: I don't have to answer it, but
go ahead.
‑‑‑ Laughter /
Rires
263 MR.
MacDONALD: No, no, of course not.
264 COMMISSIONER
CUGINI: I'm just kidding.
265 MR.
MacDONALD: This issue of balance has
come up time and time again in discussions around the table, and we are not
sure exactly ‑‑ I understand that you are trying to be all‑inclusive
here, but, as Christians ‑‑ there are 270‑odd Protestant
denominations, all having a different perspective on Christianity. Does balance necessarily have to mean non‑Christian,
or can it mean different points of view within the Christian community?
266 We have programs
that are from an evangelical point of view, we have programs done by Roman
Catholics, we have programs done by the Lutheran church, we have programs done
by many different denominations. Would
that also be a kind of balanced viewpoint, in your opinion, or do we always have
to open the airwaves to non‑Christian‑type groups to be balanced in
our programming?
267 COMMISSIONER
CUGINI: I am sure that legal counsel and
staff will correct me if I got a wrong interpretation of it, but, to me, it is
all those things, and it is the opportunity, however, for there to be
expression of different points of view.
268 Let's take the
Sony video game example from this morning.
As long as there is an opportunity to comment on whether or not those
two lines of background music are, in fact, offensive to people of the Muslim
faith, so that there is an open access policy between the station and the
public ‑‑
269 "You know
what? This is a Christian station, and
if you don't believe in what we have to say, that's just too bad. Move on."
270 MR.
MacDONALD: No, we are not of that mindset
at all. In fact, in Kitchener we have a
half‑hour program hosted by two Muslims, a husband‑and‑wife
couple, who believe in promoting harmony between faiths. They do an excellent program for us.
271 We have invited
other groups who might be interested to have airtime. Some of them have not responded to us.
272 We believe in
being open to anyone in the community who has a point of view, and that is, I
believe, how we have approached it.
273 I just wanted to
clarify whether or not it simply meant that we had to go out and find a
Muslim group to be on the air, or whether we could do it the way you have
suggested.
274 DR. REID: Let me illustrate that Cory McKenna has a
show where he walks up and down the street and asks people questions. The one that I particularly remember was a
question of abortion, and it happened that he met three Muslims, and he got
their views on abortion, and they were publicized.
275 What does balance
mean? They were different opinions, and
they were on the air.
276 I think that Dale
also failed to mention that he has a phone‑in show, where people phone
in, and we don't have a special mic where you can cut them off, but it is
recorded. They phoned in, here are the
answers, and that is published. That is
part of our presentation.
277 The phone‑in
show does provide balance, as far as I am concerned.
278 COMMISSIONER
CUGINI: I would think that it would also
make for more interesting programming.
279 MR.
MacDONALD: Absolutely.
280 COMMISSIONER
CUGINI: Just a couple of more questions,
and then I will hand you off to my colleagues.
They may have further questions.
281 This question has
to do with your business plan. We have
talked about both your spoken word programming, the acquired programming as
well as your news commitment, and, of course, your music. One thing I noticed in your business plan is
that you have allocated $10,000 per year to programming.
282 Educate me. I am not a radio broadcaster. What is included in that $10,000 per year,
and exactly how are you going to achieve all of these programming commitments
with that dollar figure?
283 Do you have a lot
of volunteers on staff?
284 It just doesn't
seem like a lot of money to be able to pay people to do this kind of
programming.
285 MR.
MacDONALD: No, paying the people to do
the programming comes under "Administration and General", $170,000
for the first year. No, that wouldn't
come ‑‑
286 We don't buy a lot
of programming. We don't generate a lot
locally that costs us a lot of money.
287 Most of the
programming, like "Focus on the Family", pays us to be on the air, so
that comes under "Revenue" rather than under "Programming
Expense".
288 Programming
expenses might include upgrades to our studio and stuff, so that we can have
people come in and record programs locally, in the studio, and that sort of
thing.
289 MR. ELLIOTT: Equipment costs, software ‑‑
290 MR.
MacDONALD: Equipment costs.
291 It's not
necessarily staffing costs at all there.
292 COMMISSIONER
CUGINI: So all of your staff would be in
"Administration and General".
293 MR.
MacDONALD: That is where we put the
staffing cost, yes.
294 COMMISSIONER
CUGINI: And the brokered programming,
you said that they actually pay you, and that is the nature of brokered
programming.
295 MR.
MacDONALD: Yes.
296 COMMISSIONER
CUGINI: Is there revenue sharing with
the brokered programming?
297 MR. ELLIOTT: It varies.
298 MR.
MacDONALD: Some are revenue shared and
some are flat rate.
299 COMMISSIONER
CUGINI: The Chairman this morning, in
his opening remarks, talked about these economic times, which are precarious,
at best.
300 Your revenue
projections ‑‑ let's take worst case scenario ‑‑
or let's take a scenario. What if you
only achieve half of your revenue projections?
301 MR.
MacDONALD: We are operating now on about
half of the numbers on Year 1 for Grace FM.
We are projecting that in the first year our revenue would double
because of the increased power.
302 Because we are
operating on a lean budget right now, we are capable of doing that. The only real cost to this upgrade would be a
new transmitter, a new antenna. We would
continue to operate out of our existing facility.
303 We just moved to a
new facility, where we reduced our rent by about half. So we are working on a lean budget.
304 If the revenue
stream were to decrease, so that in the first year it was only $150,000, we
wouldn't be in a worse position than we are now. The only thing we are going to have to raise
money for is a new transmitter, and we have some sources for that.
305 We just had a
transmitter donated to us for our Woodstock operation.
306 We think that
financially we are fairly solid, because we have been there for five
years. We already have a base of clients
who are supporting us. We have church
support already. I don't think that would
be a major problem for us.
307 It would be a
bigger problem for us in Kitchener, where we have a bigger operation, if,
suddenly, the revenue stream dried up there, where we have 11 employees.
308 That would be a
bigger problem for us, but in London it is not going to be that major a
problem.
309 COMMISSIONER
CUGINI: Gentlemen, thank you very much.
310 Thank you, Mr.
Chairman, those are my questions.
311 THE
CHAIRPERSON: I would now ask
Commissioner Menzies if he has questions.
312 COMMISSIONER
MENZIES: Thank you.
313 Just to follow up
on that quickly, do you think the revenue forecasts ‑‑ not the
overall business plan, but strictly the revenue forecasts that you have in your
plan right now ‑‑ do you think those still stand?
314 MR.
MacDONALD: If conditions don't change
appreciably.
315 I based those
figures on our Kitchener operation, which has had a little more success, right
from Day 1; not because we have more power, but because we are in the same
position as London, we have areas where we are not received well.
316 But because we had
infrastructure in Kitchener for six or seven years ‑‑ we had a
program on the air in one of the local stations in Kitchener before we got our
licence ‑‑ people knew about Faith FM. So we started on the ground running in
Kitchener, and these projections are sort of based on the numbers that we have
been able to achieve in Kitchener from the beginning.
317 Obviously it is
difficult, when you are projecting seven years out, to say what you are going
to do, but we think that, with the increased power, with the better signal in
London, we should do at least as well as our Kitchener station, in a similar
population area.
318 We already have
the base of support there, as I mentioned, and we think that will
increase. I don't think we will have any
trouble reaching these projections, again providing that the economy doesn't go
completely in the tank. Hopefully Mr.
Harper will be able to stop that from happening.
319 DR. REID: I am totally amazed that we have had the
success that we have with 6 watts. I can
tell you that our salesman is bringing in two or three new advertisers every
week. If he just maintains what he is
doing, and brings in two or three new advertisers every week, that business
plan will be fulfilled.
320 COMMISSIONER
MENZIES: Which actually segues nicely to
my other question, which is why, in your business plan ‑‑ and
this is not atypical or untypical of faith broadcasters ‑‑ why
is your main source of advertising ‑‑ it appears to be, from
the application, just within the Christian community, in terms of approaching
Christian business people to advertise.
321 I mean, Christians
buy gas, they eat, they do all of the other things that ‑‑
322 MR. ELLIOTT: I can address that.
323 I think that,
initially, it has a lot to do with the signal and the wattage being so
low. It is hard to convince someone who
may not even know what a faith‑based or Christian radio station sounds
like or looks like ‑‑ it is hard to convince them more so than
someone who is already backing you, listening to you already.
324 I don't think
that's where we intend to stay at all.
Now that we do have a full‑time salesperson, he has really
expanded our clientele in a lot of ways.
325 By no means do we
intend to stay under that umbrella.
326 I am fully in
support of what you said, that we buy gas, that we buy groceries; it is tough
to get national accounts though. It's
very tough. We don't have the benefit in
London, as of yet, of the BBM ratings.
327 Dave mentioned,
however, that Faith FM does have it. So
we have a general idea, in the same market size, with roughly the same coverage
area, of what our numbers should look like.
We won't know that for a fact until we get the rating system working for
us.
328 That is kind of my
feeling on it, that we have started there, with the Christian business owners,
but by no means do we intend to just air commercials and seek their business
only.
329 MR.
MacDONALD: If I could also address that;
in Kitchener, for the first couple of years, it was the same thing, we talked
mainly to Christians.
330 But we were very
fortunate, in that a Christian lady, who is a registered sales marketeer, was
working for the number one station in our market and came to us and said,
"I think I would like to work for you."
331 So she did, and
when she came to us she had eight and a half years of experience as a sales
representative, and she has been with us now for about two and a half years.
332 She doesn't just
call on Christian businesses. As a
matter of fact, some of our biggest accounts are non‑Christian, and some
of them are singing our praises to such a degree that they have gone out and
got some of their friends to advertise with us.
333 We do not intend
to restrict ourselves strictly to Christian business in any way. Some of our best successes ‑‑
the one that I included in our proposal here is not a Christian business, but
it is a very successful business in London ‑‑ London
Audio. It is one of my favourite stores,
actually, in London, because I am an audiophile. Rick is just amazed by the loyalty of our
listener base.
334 One of our
advertisers sells windows and doors ‑‑ replacement windows and
doors ‑‑ and he convinced one of his friends to come on with
us recently, a guy who originally, when he was approached, said, "What, me
advertise on a Christian station? You've
got to be kidding."
335 But his friend
said, "Listen, it works. It works
for me, you should try it," and now he is one of our advertisers as well,
and a non‑Christian.
336 So, certainly, we
are not restricting ourselves in any way to Christian businesses.
337 COMMISSIONER
MENZIES: Thank you very much.
338 THE
CHAIRPERSON: Commissioner Duncan?
339 COMMISSIONER
DUNCAN: I have a couple of quick
questions on the projections ‑‑ and I apologize if it is already
in the filing, but I just want to make sure that I leave here with a complete
understanding.
340 On your revenue
lines, the line that is called "Other (Donations)", is that all
brokered programming, or do you actually receive donations as well?
341 MR. MacDONALD: No, the donations come from ‑‑
actually, they are donations from businesses and from individuals. The brokered programming would be included
under ‑‑ I included it under the "National" area.
342 "Local"
would be the local advertisers, and the donations are actually from ‑‑
we have fundraising campaigns every year, and we encourage people to donate
whenever they can; and if a church gives us a $1,000 donation, it would come
under that line.
343 It has been our
experience that the split has been about one‑third, one‑third, one‑third
of donations, corporate and individual, and local advertisers, and the brokered
programming. That's where the split is,
about a third each.
344 COMMISSIONER
DUNCAN: Thank you. That, actually, answers my second question as
well.
345 THE
CHAIRPERSON: If I pursue your business
case, Mr. MacDonald, you said that all of the staff costs are shown under
"Administration and General".
Are you able to break it down, between the various components of the
radio stations that you are planning to operate, between programming ‑‑
346 I see some numbers
for "Technical". Do you have
technical staff on hand or ‑‑
347 MR.
MacDONALD: For "Technical", we
have an engineer under contract, who works only when needed, at an hourly rate,
and ‑‑
348 THE
CHAIRPERSON: Is he forecast in your
Technical line expense?
349 MR.
MacDONALD: Yes, he would come under
"Technical"; his cost, plus any cost of gear that we might require.
350 THE
CHAIRPERSON: And regarding sales, I
would suspect that it is pure commission?
351 MR.
MacDONALD: "Sales and Advertising
and Promotion" would include the salesman's commissions, and then
"Administration" would be like Dale's salary and that sort of
thing ‑‑ and rent.
352 THE
CHAIRPERSON: And you said that if you were
to have any programming costs, you would incorporate them under
"Administration".
353 Do you have
employees other than your general manager on a full‑time basis, or on a
part‑time basis?
354 MR.
MacDONALD: At this point in time ‑‑
well, Dale can answer.
355 MR. ELLIOTT: Currently, there is myself, we have one other
fulltime on‑air announcer and then we have one part‑time on‑air
person and one part‑time salesperson and one that works fulltime on
commission.
356 THE
CHAIRPERSON: And could you account for
that part‑time programming person as a programming cost?
357 MR. ELLIOTT: We haven't in this report, that would be
under the administration. That is where
it has come under.
358 THE
CHAIRPERSON: If I was to ask you to re‑file
your economic data, could you move out of administration the payroll costs of
programming and put them under programming expense?
359 MR.
MacDONALD: We could do that if you would
like. I mean, it is certainly ‑‑
360 THE
CHAIRPERSON: It will then give us a
better picture of where the money will be spent. Obviously, when I am looking at the current
data that I have, over the seven‑year period you are going to be spending
$10,000 on programming. And what is
radio if it is not programming?
361 MR.
MacDONALD: Well, then it comes down to a
misunderstanding of how you wanted this presented. Because, you know, programming, I just took
that as a the ‑‑
362 THE
CHAIRPERSON: Oh no, you gave the
explanation or I heard you.
363 MR.
MacDONALD: Yeah, I took ‑‑
yeah.
364 THE CHAIRPERSON: But what I am saying is that if I wanted to
have a real picture of what you are contemplating as your real programming
costs, if it is buried somewhere else, who could I make that assessment?
365 MR.
MacDONALD: Okay, I understand where you
are coming from there. We can certainly
modify that to reflect that.
366 THE
CHAIRPERSON: Now, earlier, Mr.
MacDonald ‑‑ well, could you re‑file within a couple of
days or very quickly?
367 MR.
MacDONALD: Before the hearing is over I
could redo this sheet, yes.
368 THE
CHAIRPERSON: Yes? And could we have it say before we undertake
Part III of the hearing?
369 MR.
MacDONALD: I will attempt to redo this
this evening and bring it back tomorrow.
370 THE
CHAIRPERSON: Okay, fine, thank you. Well, I am taking it as a commitment and I am
sure the lawyer will register it.
371 Second, you said
that you have 60 days to completing filing of financial statements for 2005 and
2007. As you know, the expected date is
the end of November of each year. Do you
think you could make them within the next say 40 days, rather than 60 days, so
you will be filing before the end of November?
372 MR.
MacDONALD: We will commit to that.
373 THE
CHAIRPERSON: Okay. I will ask the legal counsel if he has any
further questions.
374 MR. McINTYRE: Thank you, Mr. Chair.
375 I just have two
housecleaning questions relating to the weekly programming commitments.
376 You submitted in
your application that you would provide 28.58 hours of spoken word
programming. Could you inform us as to
how many of those hours per week would be considered religious
programming? Would that be the entire
amount or is there some different number?
377 MR.
MacDONALD: I would say most of that
would be religious programming with the exception perhaps of the ones we have
already referred to; Barry Shainbaum interview program and the Man On The
Street program, a couple hours of that would be totally non‑religious.
378 MR. ELLIOTT: There is some programming that is health and
wellness related, more of a general topic but, as David mentioned, it probably
would be in the 90 to 95 per cent of that 28.5 amount, yes, so a high
percentage.
379 MR. McINTYRE: Okay.
My second question relating to programming is how many hours would you
undertake to provide balanced programming?
380 MR.
MacDONALD: Well, again, that comes down
to the definition of what balanced programming is. We consider that our Man On The Street
program is balanced programming. We
consider that Barry's Jewish program is balanced programming. But we bring many different perspectives to
the table, even from the religious standpoint of different of denominations who
might have a different viewpoint.
381 For instance, I
think someone here on the Commission mentioned that, you know, somebody said
something about the gay community, there are many churches who support gay
marriage, many who do not.
382 So you have
balance there between ‑‑ opinions between one church and
another church even though they might both be considered religious programming,
it is still a balanced issue because the different denominations take a totally
different view.
383 So it is kind of a
grey area for us as to exactly what that constitutes, because we feel we are
representing a large and diverse group of Christians who come at their faith
from a totally different perspective.
384 DR. REID: At a previous hearing I asked if we could get
a definition of balance. And the
commissioners all pointed to a gentleman. I asked the gentleman if I could come
to Ottawa and meet with him and take our representatives with him so we could
finally pound out what it means to have balanced programming.
385 In spite of
multiple letters, I never received any reply or any attempt at a meeting to
define what balanced programming is. And
I will put out the same challenge to you; we will go to Ottawa, we will sit
down with you until we find out what balanced programming really is.
386 Thank you.
387 MR. McINTYRE: Okay, thank you. I just want to read into the record the
undertakings that were committed to. The
first one relates to providing proof of financial capacity in light of the
current market situation, and that will be for 10 days which would bring us to
October 30.
388 You committed to
providing your annual returns on your current undertaking and I think you provided
60 days to give us that information. It
looks like we would need that information actually quite a bit sooner. Would it be possible for you to provide it
within 30 days?
389 MR.
MacDONALD: Is November 30 the deadline,
is it ‑‑ is that what I was ‑‑
390 MR. McINTYRE: I believe the November 30 deadline was for
the CCD shortfall.
391 MR.
MacDONALD: Okay. Thirty days then, we will certainly make that
commitment.
392 MR. McINTYRE: I think the last undertaking relates to re‑filing
the financial brief as per the Chair's request.
I think that is it.
393 MR.
MacDONALD: Okay.
394 MR. McINTYRE: Thank you.
395 THE
CHAIRPERSON: Mr. MacDonald, Dr. Reid and
Mr. Elliott, thank you very much for your presentation this morning.
396 We will take a 15‑minute
break.
397 MR.
MacDONALD: Thank you.
398 THE
CHAIRPERSON: We will resume at 11:10.
‑‑‑ Upon recessing
at 1055 / Suspension à 1055
‑‑‑ Upon resuming
at 1110 / Reprise à 1110
399 THE
CHAIRPERSON: Order, please.
400 Ms Secretary,
could you introduce the next applicant?
401 THE
SECRETARY: Thank you, Mr. Chairman.
402 We will now
proceed with item 2, which is an application by Forest City Radio Inc. for a
licence to operate an English‑language FM commercial radio programming
undertaking in London.
403 The new station
would operate on frequency 98.1 MHz. (channel 251B1) with an average effective
radiated power of 4,000 watts, (maximum effective radiated power of 7,000 watts
with an effective height of antenna above average terrain of 106.5 metres).
404 Appearing for the
applicant is Mr. Doug Kirk. Please
introduce your colleagues and you will have 20 minutes for your presentation.
405 Mr. Kirk.
PRESENTATION / PRÉSENTATION
406 MR. KIRK: Thank you, Ms Ventura.
407 Good morning,
everyone, good morning, Vice‑Chairman and Chair Arpin, Commissioners
Cugini, Simpson, Duncan, Menzies.
408 My name is Doug
Kirk, I am the Chairman and CEO of Durham Radio Inc. and Forest City Radio
Inc. This is a new company which is
proposing an exciting new radio station from London.
409 We currently
operate four radio stations in Hamilton and Oshawa and are looking forward to
the opportunity to of expanding to London and Guelph.
410 I have been a
passionate participant in the broadcasting business for over 30 years, a
station owner for over 20 years and I am here to continue to build and
grow. As part of my personal commitment
I have recently taken over the job of running the Ontario Association of
Broadcasters as President.
411 Before we share
highlights of our application with you, let me take a moment to introduce our
panel. Before you sit a dedicated group
of individuals who are engaged and excited about the proposal we are going to
present to you.
412 To my right and
your left is Dean Sinclair. Dean is the
proposed President and General Manager of Forest City Radio. He is a 30‑year experienced
broadcaster, a long‑time resident of London, Ontario and previous General
Manager of Corus' multi‑station cluster in London.
413 To my left and
your right is Steve Kassay, who is Vice‑President, Programming and
Operations of our four Durham Radio stations in Oshawa and Hamilton,
Ontario. To Steve's left is Andrew
Forsyth, our Programming Consultant.
Durham Radio stations have benefitted from Andrew's expertise for over
15 years. And behind me is my associate
of many years, John Wright, who is controlling shareholder and President of K‑Rock
and KIX Country in Kingston, Ontario.
414 As the Commission
is aware, John Wright was to have been our President of this application. For personal reasons John has withdrawn from
his day to day operation and responsibilities in this application. He will participate as an investor. Since John was actively involved in the preparation
of this application, I have asked him to appear with us at the hearing today.
415 And just a note,
Dr. Liesa Norman, a proposed Director or Forest City Radio and an accomplished
classical and pop musician from Vancouver, B.C. could not make it to this
hearing because of a timing change of a concert she is involved in in Vancouver. Liesa, with her husband and partners, will
own one‑third of the station.
416 The applicant,
Forest City, is headed by me. Mr.
Sinclair and I will make the day to day operating decisions relating to the
station. And along with Dean and me, the
board of directors will include Mr. Kassay, Mr. Wright and representatives of
our investor partners. I will have the
casting vote in order to control the board of the applicant.
417 Forest City brings
together the operating experience and background of Durham Radio along with Mr.
Sinclair, combined with the experience and counsel of Mr. Wright.
418 Now you probably
want to hear about our application.
419 Boomer 98.1 will
be a very different station from existing London radio stations and very
different from other stations being proposed by other applicants at this
hearing. Forest City represents a strong
combination of broadcasting experience and expertise based on successful radio
operations in Southern Ontario.
420 Earning a licence
in London provides our group with the opportunity to expand to a larger
regional platform, which will compliment our Durham Radio stations in Oshawa
and Hamilton.
421 Dean Sinclair's
history in London, both as a broadcaster and a resident, provides local
leadership for Forest City Radio.
Together with the panellists before you here you have over 150 years of
Canadian broadcasting system experience.
I can't believe it.
422 We offer firsthand
experience, both in London and in operating successful radio stations in
similar‑sized markets in Southern Ontario. Forest City Radio understands London.
423 Dean Sinclair will
now describe to you London's Boomer 98.1.
424 MR. SINCLAIR: Thank you, Doug.
425 Boomer 98.1 offers
a Pop/Oldies music, local news and information station and a unique plan for
emerging artists all packaged to target adults 35 to 64 years of age.
426 Our application
meets the needs of the London marketplace.
Fifty‑five per cent of the population is over 35 and 25 per cent
are over the age of 55. Our research
clearly shows that there is a demand for news and information programming.
427 Anecdotal evidence
gathered from our one‑on‑one visits with civic officials, local
business owners and community members indicates that the quality of news and
information available from the London media has deteriorated dramatically.
428 Where our proposed
Pop/Oldies format will add much needed musical diversity in London our
independently owned and operated station will add a fresh and distinct news and
editorial voice to the market while broadening the ownership base of the London
radio landscape.
429 Approval of Forest
City Radio's application will repatriate out‑of‑market tuning and
serve a large and prosperous under‑served market. It will increase ownership diversity, will
increase editorial diversity, will increase musical diversity and will provide
substantial new support for Canadian content development and, in particular,
for new and emerging Canadian talent.
430 It will provide
much needed financial and promotional support to the Kiwanis Music Festival of
London and Orchestra London. And it will
not have any significant economic impact on existing local radio stations.
431 London can support
another radio service. Radio revenues in
London have grown by an average of 7.3 per cent annually. Operating margins, PBIT margin and pre‑tax
margins are well above the national averages.
Retail sales are projected to grow at an average of 4.7 per cent
annually over the period from 2008 to 2013.
432 MR. FORSYTH: As Dean has indicated, London is a vibrant
radio market served by first class operators.
The London FM stations provide their audience with primary music formats
such as rock AC, country, top 40 hits and most recently adult hits, the 1980s,
1990s or whatever format.
433 We know that to
offer diversity the new station would have to offer something very different
from the existing formats, yet be a viable business service serving a sizeable
audience.
434 Our financial
analysis of the market convinced us that only a format with broad appeal across
the 35 to 64‑year‑old audience would be feasible as a standalone
entity in London. Hendershot Research
was commissioned to determine listening habits, perceptions of the current
services and determine the appeal and attraction for three formats not present
in London; smooth jazz, triple A, Pop/Oldies and the availability of CHR.
435 The results show
Pop/Oldies is of greater interest to older listeners with one in three
respondents in the 45 to 64‑year‑old group likely to listen more
often to a radio station with this format, while 36 per cent of the 25 to 64‑year‑old
respondents preferred Boomer 98.1's Pop/Oldies over smooth jazz, triple A and
CHR. Two‑thirds of 35 plus
respondents wanted to hear more variety.
Boomer 98.1 addresses that demand.
436 Boomer 98.1's
programming philosophy is simple, provide the 35 plus London audience with the
music that was a big part of their lives in their formative years and present
the information that is relevant to their lives today. Steve will outline the exciting spoken‑word
programming ideas in a moment.
437 Today's 35 to 64‑year‑olds
grew up listening to a broad canvas of musical styles that fall into the
general adding of pop music. The heyday
of that music was from the late 1950s through the 1960s and 1970s. That is when the pivotal changes in pop music
happened for Canada's largest generation, the baby‑boomers.
438 This essential
music is not getting regular airplay in London.
Older listeners can't find the music they grew up with on the
radio. London is well served with
stations playing newer music, the bulk of which comes from the 1990s and the
present decade.
439 A one‑week
BDS radio analysis shows the average year of the music aired by London's FM
stations is 1996. And over 70 per cent
of the spins came from the 1970s and today.
440 In a moment, we
will play a sample for you of the music that will make up the Boomer 98.1
playlist. You will hear musical styles
that I know you will recognize, but they receive no airplay in London; music
from Motown, the British Invasion, the Stax and Atlantic labels. Let's reminisce by presenting a snapshot of
the music that will fuel the Boomer 98.1 brand.
‑‑‑ Audio
presentation / Présentation audio
441 MR. FORSYTH: There is Boomer Ian Thomas's part of a 60‑second
sample of what we are going to play on a regular basis.
442 But there is
more. You hear from girl groups like The
Ronettes and The Crystals, the Phil Spector sound, R&B from Otis Redding
and Sam & Dave, the Philly sound, more mainstream pop like we heard from
Tommy James and The Shondells. The Brill Building sound of early Neil Diamond
and of course Neil Sedaka, and naturally California's surfing pop from the
Beach Boys/Jan & Dean, folk rock from The Bird's, Ian & Sylvia and
Leonard Cohen. Now, that is really
variety.
443 All of these
styles make up the exciting world of Pop/Oldies from the golden generation of
the 1960s to the early 1980s. These
styles appeal to the 35 to 64 year age demographic whose formative musical
years span the span the 1970s and the 1980s.
Great music from an exciting time for an underserved baby‑boom
audience.
444 MR. KASSAY: Now, Boomer 98.1 will offer a fun,
informative and local listening environment ideally suited to London's over‑35
population. It will focus on the music
while emphasizing news and information that addresses the needs and the
interests of the mature adult segment.
Boomer 98.1 will present over 20 hours per week of spoken‑word
programming.
445 You see, spoken
word is what brings intelligence and relevance to the radio. It is the instrument through which will bring
London to Londoners. It is what makes
Boomer 98.1 London's radio station.
446 Spoken word
content will compliment the audience demographic, the music and the on‑air
presentation style. Boomer news will
present over 11 hours of news and information weekly with pure news accounting
for 3.5 hours of that weekly total.
447 Reporting on
stories about the launch of Diamond Aircraft's new D‑Jet or the
Talbotville Ford plant future or the ongoing water issues in town, Boomer news
will devote 75 per cent of news air time to items of local importance and
interest.
448 To give live to
Londoners' demand for more in‑depth information programming each weekday
morning we will engage in lively conversation with featured guests selected
from the array of elected officials who serve London residents.
449 Music and
entertainment spoken word will reflect the personality of the station designed
to primarily serve the audience segment 35 to 64. The music mixture customized to identify with
the life experiences of baby boomers will present an energetic environment, it
will be supported by format elements that contribute motion and relevance and
excitement to the overall presentation.
Music and entertainment spoken word will compliment the listening
environment and its attributes through a fun and upbeat delivery of
entertainment information.
450 Lifestyle oriented
spoken word programming will address the interests of those Londoners attracted
to the Pop/Oldies format. We will offer
information on the environment in Boomer's Mother Earth segments, small
business interests on Business is Booming, and life's finer pleasures on
Boomer's Wine & Dine Show.
451 Our foremost
commitment is to the community and that will be done through the unique Boomer
community initiative. Everyday we will
share important information, community information, about local organizations
and events.
452 We will open our
doors to local groups, we will open our doors to local groups, we will offer
combinations of live primetime interview opportunities, online listings,
regularly scheduled on‑air interviews and announcements and on‑site
station visits to promote events and messages of a non‑profit and
charitable nature.
453 Londoners can keep
up‑to‑date with the information about area fundraisers and charity
events, such as campaign drives for the LHSC, events and happenings for Big
Brothers and Big Sisters. We know the
people involved in these organizations and we will build relationships that benefit
London.
454 MR. SINCLAIR: Approval of Forest City Radio's application
will have a significant benefit for musical talent in London as well. Boomer 98.1 is committed to $1,609,179 of
direct cash in the first licence term.
455 In addition to
over $350,000 committed to FACTOR Boomer 98.1 will undertake four local London
initiatives targeted at the development and the promotion of new and emerging
local talent. These projects include the
Boomer Festival, MusiCounts, Orchestra London, and the Kiwanis Music Festival.
456 The Kiwanis Music
Festival of London has just celebrated its 48th year and the Festival drew
2,950 entries from over 99 different categories with nearly 12,000
participants, 18 top adjudicators, 17 separate hall locations and the help of over
400 volunteers. These stars of tomorrow
are non‑professional emerging artists and history shows many have gone
onto musical prominence.
457 Boomer 98.1 is
pleased to commit over $274,000 for annual scholarships. Jim Scott will be speaking with you further
about the festival and those who benefit from it during Phase III of this
hearing.
458 We are also
pleased to support Orchestra London with a commitment of over $274,000. Orchestra London has a long proud heritage
within the community and we are particularly excited to partner with them
through funding them with their special program initiatives which include the
community programs and Red Hot Weekends.
459 Rob Gloor, who is
the Executive Director of the Orchestra, will share his insights with you on
these plans and others and the importance the Orchestra plays within London's
cultural mosaic during Phase III of the hearing.
460 Boomer 98.1 is
also pleased to partner with MusiCounts through CARAS. Their mission is to make sure that young
Canadians have access to a comprehensive music program through the school
system. MusiCounts includes Band Aid as
well as scholarships and music education initiatives. Boomer 98.1 will spend nearly $400,000 on
these projects designated through MusiCounts for London CMA schools, which
include London, St. Thomas and Strathroy.
461 And finally, the
Boomer 98.1 Festival will develop and showcase new talent through a local
London competition. Winners will have
studio‑quality demos done, produced to their events to advance their
careers within radio and the music industry, and the overall winner will open
for a major act playing in London. We
have committed $300,000 in direct funds to this initiative.
462 MR. KIRK: Thanks, Dean.
463 Members of the
Commission, Canada has seen an unprecedented number of new FM licences issued
in the past years. Many markets have
been diversified through issuing new licences to establish new operators or
establish new formats. We think this is
just such an opportunity for London, which saw its last new licence issued over
eight years ago.
464 Forest City is an
independent regional broadcaster which does not have, and has never had,
licences in the London market. We know
how to operate radio stations in this scale of market and we believe the market
is currently underserved.
465 I would like to
finish by recapping three key points pertinent to the Forest City radio
application. The first is diversity.
466 Forest City will
increase diversity in the London market through introducing a new owner with no
other media or cable or telecom interests in the market. Licensing us will provide London with its
only independent radio station.
467 As pointed out
earlier, our news and spoken‑word commitments are very substantial. Forest City will provide an independent news
voice in the market.
468 We have also
articulated how our format will add music diversity to London.
469 The second area is
contributions to the community. Forest
City will provide over $1.6 million of direct contributions over the first term
of licence to four major initiatives, which Dean articulated and I will
recap: Orchestra London, over $274,000;
the Kiwanis Music Festival of London, over $274,000; MusiCounts, this is the
London band aid project, which goes out to schools and helps them equip bands,
over $391,000; and the Boomer Festival, over $313,000. Also, FACTOR will receive in excess of
$350,000 as part of this proposal.
470 You will hear more
about these initiatives in Phase III, but I must emphasize, right, that these
are sizeable and needed initiatives for the music community in London.
471 Finally, the third
point, viability. Forest City has
proposed a format which will serve a demographic which is valuable to
advertisers. You have to get advertisers
that can spend money on the radio and it has to be pertinent at this time. We are not getting into any easier economic
times.
472 We will repatriate
out‑of‑market tuning and have an independent station which will be
strong enough to be viable in London.
473 Current market conditions
have bred a group of independent broadcasters ready for growth. I have spent 15 years with Durham Radio
building a company which is serving markets of this size. We need growth opportunities like this to
continue to challenge and build on our people ‑‑ most
importantly our people ‑‑ and our staff, and we have to have
those opportunities to keep them growing with us.
474 This kind of
opportunity is exactly the kind of thing that we need. We are up to the challenge and we are ready
to grow.
475 Thank you. We as you to approve our application for
Boomer 98.1 to serve London. Thank you
for your time and we will take questions.
476 THE
CHAIRPERSON: Thank you, Mr. Kirk.
477 I will ask
Commissioner Menzies to do the first round of questions.
478 COMMISSIONER
MENZIES: Thank you.
479 I thought maybe we
would start with the three key points you made at the end of your presentation
and ask you to try to be as precise as you can in the responses because I'm
trying to get a grip on some of these things and be as subjective as we can
about it.
480 You say you are
going to have an independent news voice and you articulated that mostly in
terms of your ownership structure being independent versus some of the other
applicants and incumbents.
481 Other than the
fact that your ownership structure is different, how else would somebody
determine that your news voices is independent?
482 MR. KIRK: Okay, let me try and answer that and I will
ask Steve, particularly, and Andrew and Dean, to contribute to fill out the
answer.
483 First and
foremost, by being new to the market and having no other interests, you will be
a new entity; the number of the voices in the market owned by distinct
companies will go up by one. So by that
nature you have a new entrant, a new voice, without other connections in the
market.
484 But secondly, and
importantly, is how we do news. News and
local information and connection to the community are extremely important,
particularly in the context of the markets that we serve. Oshawa and Durham Region is one example ‑‑
Oshawa, Ajax, Durham Region ‑‑ and in Hamilton, the west side
of the GTA, and we have to be able to produce news that's connected to that
community.
485 You know, redoing
national news, rereading the wire copy, isn't going to do it for us. We have to get in and get into the real
context of the community.
486 So I would like
Steve just to fill out a little bit on how we produce news to give you an idea
of the kind of depth of the news and spoken word that we produce in our current
stations and as part of this application.
487 MR. KASSAY: Well, thanks, Doug.
488 Commissioner
Menzies, I think I'm going to expand a bit, but, you know, support a lot of
what Doug said.
489 We have experience
working in markets that are unique, yet in the shadow of big cities. It's very competitive. We know that in order to be successful and to
achieve the success we have had, we have had to develop a news process where we
are very local, outbound, on the streets, small but effective teams.
490 When the
Bowmanville propane fire occurred, we had to be there right away. We were there right away. Residents want to know. We are there to help. When the downtown fire occurred,
coincidentally in Bowmanville ‑‑ we are starting to see a
trend. And what happened there? Retailers:
I'm taking emails from retailers, phone calls from retailers contacting
us saying, you know, "Appreciate the coverage". In step, because we have built a reputation,
"Now would you go on‑air and please let people know we are reopening
tomorrow because my family has been out of business for four months".
491 This is ‑‑
I use an old phrase ‑‑ the touchy/feely, the very ground level
on which we operate with clientele, the community. We are part of the community. Our philosophy is we are part of the
community. We can't succeed if we are
not.
492 Hamilton, it's the
same type of situation.
493 And I think, to
answer your question on independent voice, we are not affiliated with any other
organization. There's no agenda. If it's happening, we want to be there to
cover it fast, correctly and then get armed and ready to go for the new
occurrence. It's a busy place where we
live and a very large market, and neighbouring markets, in which we do business.
494 COMMISSIONER
MENZIES: Okay. I don't want to belabour the point, but just
on that, I'm pretty sure that if we ask the others and the incumbents, they
would say much the same thing: that they
are dedicated to local news. They would
probably bristle at your referenced to an agenda.
495 I mean just what
do you see that happens in chain news that you can do better? I mean if we are talking about a large
operator versus your small independent, why are you ‑‑ let me
put it this way: how do you add
diversity beyond just adding another voice with a different ownership
structure?
496 MR. KIRK: I think it's got be in the independent
approach. You know, we ‑‑
for example, Dean, who will be the general manager of the London station, has
been a resident here for eight years now ‑‑ sorry in London. I'm thinking about London, we are in
Cambridge. But has been a resident there
for eight years, knows what's going on in the local community.
497 We are not trying
to say that, you know, the local operators, I think, are doing a bad job, I
think they do a credible job. But we are
a new entity, we will have different levels of contacts, different experiences
in the market and priorities with the format we are serving to cover items that
may not be on everybody's agenda.
498 MR. SINCLAIR: Thanks, Doug.
499 Commissioner
Menzies, if I could just maybe jump in for a second.
500 One of the things
that's interesting in the market, Doug's correct, I have been there for eight
years. I left another company three
years ago and I have worked independently since then, but have still maintained
many of the contacts that I have in the marketplace, especially civic people.
501 When we were
assembling this application ‑‑ and John and Doug both came
down and we did a whirlwind tour through the city over a few days ‑‑
I met several people: economic
development ‑‑ spoke with them again this morning ‑‑
tourism, city hall, it was interesting in speaking with them and other business
people in the marketplace. And we have
great respect for what the radio stations in the marketplace do, but there is a
sense of staleness overall in what the media provides in the market.
502 One of the
challenges you have is when you have three good operators in the marketplace,
two of them with multiple stations, it's difficult to start creating ‑‑
you will find that there's a sense of sameness in stories ‑‑
not exactly the same, but a sameness in stories ‑‑ that may go
with inside a cluster of stations.
That's just common and that happens over a time.
503 And I think, to a
large degree, and what happens with this city, you know, I would challenge
people, "How many people do really cover city hall any more or cover those
issues?" The only time we talk
about a water problem in the city, which is huge in London, is when we get a
gapping sink hole that a crater goes through, and then all of a sudden it's the
big news of the week or for the next month and that's all we focus on.
504 Those issues have
been around for a long time. And I think
that one news service will jump on it, whether it's electronic or print media,
and then all of a sudden everybody does that.
505 But I think that,
you know, the sense of staleness, this was the feedback we got from people
within city hall, we got from business owners, we got from tourism, downtown
economic development. People just said,
you know, "What are you offering in terms of news and information?"
506 We said,
"Look, you know, we're fresh, we're an independent voice for the
marketplace. We're hungry, we're going
to hunt down what's going on and we're going to work with the stories and make
the links there."
507 They said,
"That's fresh because we don't get that now. Nobody talks to us. People don't call us to find out. Everything is an after‑the‑fact
situation."
508 So I think that we
took that to heart. I think that some of
the letters that have been provided by the people that have intervened on our
behalf have indicated interest in what we are doing in that way, and I think
that that's a big part of it.
509 COMMISSIONER
MENZIES: Okay. Thank you.
510 MR. KIRK: Steve Kassay just wanted to finish a point on
that.
511 MR. KASSAY: Your question made me think of two things,
just to answer it quickly.
512 Number one, we
consider ourselves community leaders in the stations in which operate, a
philosophy that we have presented to you, too, today, because it's honed and
it's effective. We are talking to
different people. We are very close with
a certain group of people: politicians,
community leaders, leaders of organizations.
This also affects the input that we receive and helps us shape how we
deliver news.
513 Secondly, we are
talking to a completely different target.
I mean we presented to you Boomer 98.1 based on an opportunity to serve
a segment of the population that we think is underserved, possibly not served
in some areas.
514 Our attack to
cover news would reflect that in that the advantage to licensing us to, indeed,
start this news endeavour is we are associating with a group of people that we
have found are underserved. And we are
just basically talking to a different target.
So we add texture simply by serving a segment of the populace that we
feel are not being served now.
515 COMMISSIONER
MENZIES: Okay. Thank you.
516 And just on a
technical matter, when you refer to "pure news", I just need to
confirm that you are referring to the CRTC's definition of "pure
news". You have three hours and 36
minutes listed ‑‑
517 MR. KIRK: That's correct.
518 COMMISSIONER
MENZIES: ‑‑ so you are familiar with the definition, then?
519 MR. KIRK: That's the "pure news" commitment,
yes.
520 COMMISSIONER
MENZIES: Okay. Thank you.
521 Again, on the
diversity issue, in terms of format, notwithstanding what you have just
said ‑‑ and this is where I just need you to expand and
clarify on that a little bit ‑‑ on the face of it, if you a
drive‑by look at the market, it appears to me there's stations already
targeting the mature demographic that you are going after as well: CFPL, CJBK and CKSL and, to some extent,
maybe even CIQM and CHST.
522 Help me understand
more fully how your business plan evolves in terms of building your audience in
the demographic you are seeking.
523 MR. KIRK: I will start this and we will have some other
inputs.
524 COMMISSIONER
MENZIES: Or it's okay to tell me I'm
wrong, too, on that.
‑‑‑ Laughter /
Rires
525 MR. KIRK: No, you are not wrong. Obviously, people in the market are listening
to the radio and they are landing on radio stations.
526 But our approach
to finding a viable, strong business opportunity for London was to do research
and find out.
527 There are a number
of formats. As you know, there are eight
originating stations in the market now and they are all doing various formats
and that serve their university campus stations and the CBC. So there's radio being consumed.
528 But our approach
was to do a very intensive research, outbound research, to find out what people
would like. There are unserved
formats. What do people want to listen
to in the market? So that was really the
starting point.
529 We believe starting
the station will gather that listenership because there is a focus and an
orientation to the programming based on the music, complemented by the news and
community approach to the station that will gather audience together. There's some audience that we can repatriate
from out of the market that are listening to stations not originating that
format in the London market.
530 So, I mean, that's
really the approach to finding it.
531 Dean.
532 MR. SINCLAIR: Sure.
Thanks, Doug.
533 Commissioner
Menzies, I think you had mentioned ‑‑ I'm trying to remember
your list ‑‑ a couple of stations, CJBK, CFPL, both news/talk
AM stations in the market, and though they do cater to an older audience to
some degree, they also ‑‑ once of them carries ‑‑
well, they both carry sports properties, one carries the local London Knight's
hockey team broadcast, as well. They
don't provide music to that audience either.
CKSL is a standard station, it's an AM station, as well.
534 And then some of
the older tuning that we see in the marketplace actually goes out of market to
stations within an hour away. So that's
sort of our buzz of why we want to put this station on and the audience that we
are going after. You are going to have a
little bit of interest, there's a little bit of tuning in the market with a
couple of the other incumbents, but not to any large degree, in terms of the
definition of the audience we are going after.
535 COMMISSIONER
MENZIES: Okay.
536 MR. FORSYTH: If I may just add one point to that, I hope
this clarifies it, too, that I think the general target of this radio station,
which is, in large terms, 35 to 64, is different from the existing stations in
the market, where, generally, the big target is a 25‑to‑54‑year‑old
audience. And that's just targeting and
that's looking at where the numbers fall out of BBM.
537 But when you take
it down another level and actually take a look at the components of the
programming ‑‑ and Dean has spoken to that ‑‑
where some of it is talk and sport oriented, which does attract an older
audience and some of these out‑of‑market stations that do skew a
lot older, one of the other components we look at is just the music and what's
available, what's being played within the market.
538 And as I had
mentioned in my part of the presentation, we looked at it and we discovered
that 70 percent of the music that you hear on London radio is recent music,
"recent" in the sense that it's the nineties and today. So when you go back to looking at the musical
components of what's being played on the radio, there's a large hole of music
that's really not getting a lot of play.
539 So that sort of
comes back to, again, talking to an older audience, and the older audience is
the 35‑to‑64‑year‑old audience.
540 COMMISSIONER
MENZIES: Okay. In terms of that, I noticed, though, too,
where you will get your audience from, you came to the conclusion that 20
percent of your year‑two revenues would be at the expense of the existing
radio stations in your application.
541 I just want to
know how you came to that conclusions, that's the (a) part of the question, and
(b) who do you think you will get the most from?
542 MR. KIRK: The year‑two projection, the 20
percent, relates to out‑of‑market stations.
543 COMMISSIONER
MENZIES: Out‑of‑market?
544 MR. KIRK: Out‑of‑market.
545 COMMISSIONER
MENZIES: Okay. So that's existing out‑of‑market?
546 MR. KIRK: Yes.
547 COMMISSIONER
MENZIES: Thank you.
548 And 25 percent,
you say, is going to come from new advertisers to radio.
549 Is that people who
haven't advertised in radio before or people who are ‑‑ or let
me put it this way, new advertisers to radio or new advertisers period, like
growth in the market?
550 MR. KIRK: That could be in both categories. These might be advertisers that haven't found
a station that really is efficient for them.
551 And we are
designing this station to a little older skew.
As you know, the aging of the Canadian population is moving into that,
the bubble is moving through to that 35 ‑‑ or 45‑65
market. Just let time evolve and the
baby boom is moving into that area and this station provides a way to access
that market.
552 It's a market with
people that are probably in the mature part of their careers, they have paid
for their homes, they have a ratio of their income ‑‑ more of
it's disposable and are willing to spend on, you know, some of the good things
in life that they feel that they have earned, and there are retailers there
that want to reach those.
553 They may not have
found a very efficient vehicle. That's
what we look to as new advertisers.
These are retailers that may have used radio in the past but have slowed
down or moved off radio because it wasn't as efficient as other media. This provides a very highly targeted media
that could get them back into the market.
554 There may be also
accounts that have never used radio before, but if you find the appropriate
target audience that's something that we can develop and use.
555 And that's the
whole secret of this: finding the right
advertisers to bring onto the station, creating new advertisers or new
advertising dollars for radio.
556 COMMISSIONER
MENZIES: Okay. I just want to go back for a second to the
out‑of‑market.
557 Were you talking
about local advertisers who are currently advertising with out‑of‑market
stations or were you talking about advertisers outside of the current
market? That's the 20 percent?
558 MR. KIRK: This would be the repatriation argument,
where there is tuning in those demographics to out‑of‑market
stations. Establishing an in‑market
station serving those demographics would allow you to go ‑‑
559 COMMISSIONER
MENZIES: Sure. I'm just talking specifically about the
advertising dollars. The source of the
advertising dollars, would they ‑‑
560 MR. KIRK: Advertising dollars that are now moving out
of the market being brought back to the market.
561 COMMISSIONER
MENZIES: Right. Thank you.
562 What's the one
factor, in 10 words of less, that gives you confidence that your business
plan's going to succeed in that demographic?
You can go 25 if you want.
563 MR. KIRK: It's still going to be hard. Sorry, I will start now.
‑‑‑ Laughter /
Rires
564 MR. KIRK: We have the experience to deal with setting
up radio stations in these markets. We
are highly experienced in developing retail advertisers. I have no problem with programming. We have done that, we can do that. The key to having a station like this succeed
in London is finding the right market for it, getting the right people
listening to it and being able to translate that into advertising dollars, and
that's where I think we are ‑‑ we have done that, we can
replicate that in the London market.
565 COMMISSIONER
MENZIES: Okay. And what would be the one thing that would
come to mind, if you were successful ‑‑ or first thing that
would come to people's mind? If you were
successful in this application, and I went out and asked them, "How are
these guys, how is Forest City different from CKSL?", which also offers an
oldies format, what would you hope would be the first thing that they would
say?
566 MR. KIRK: At the risk of getting people at CKSL mad, I
think we would be a new entity, very energetic, on FM, we provide a high
quality product and we really connect to the community.
567 That's the reason
why we have been able to build the Oshawa cluster of three stations, which is
in the shadow of a lot of stations in the Toronto area. That's why it works out there: you get in and connect. And we are everywhere and we are representing
the community.
568 COMMISSIONER
MENZIES: Sorry, were you interrupted or
were you done?
569 MR. KIRK: No, no, something went off back there ‑‑
570 COMMISSIONER
MENZIES: Yes.
571 MR. KIRK: ‑‑
but I don't know whose it was.
572 And with that
approach you can develop sales. This
will be primarily a retail sales‑based radio station. That's going to be the key to do it is
getting into the local market and developing the right listenership, and
translating that into sales.
573 COMMISSIONER
MENZIES: Okay, thank you.
574 Now, just on your
business plan ‑‑ and you quoted some economic forecasts in
your presentation and they are in your business plan, as well ‑‑
how confident are you that those still stand up, given, I'm assuming, that the
application was done was some months ago?
And you referred to it again this morning. You talked, Mr. Sinclair, about having met
with people in economic development as recently as this morning.
575 Does your brief
use the FP survey of markets, which showed an annual growth in this market of
4.2 percent till 2013 and average growth in retail spending of 4.7 percent?
576 On Friday, FP
reported that the consumer confidence index dropped to 67.9 from 84.5, in
Ontario, and that was the largest drop on record and low since 1982. So given all that, any second thoughts?
577 MR. KIRK: Second thoughts, third thoughts, fourth
thoughts, they are all good thoughts.
578 You are right,
everybody in the room did their projections last spring probably, we filed in
May, and the world's a different place today than it was last May. So with regard to the FP ongoing forecasts,
probably revised downward would be guess if we had to put a bet on it. But I think we have to understand how that
works and how it might fit in with what we are proposing.
579 Our projections
were based not on 4.7 percent or 7 percent, which the London market had been
growing, we did our expectations on a 3 percent market growth. One thing, the market's not going to
disappear. It will be there.
580 COMMISSIONER
MENZIES: Good.
581 MR. KIRK: It may flatten ‑‑
‑‑‑ Laughter / Rires
582 MR. KIRK: ‑‑
it may be tougher, but it's not going to disappear and there will be a
substantial base.
583 And I recall you
mentioned 1982. Looking back at radio,
and, sorry, I don't have that 30‑year series of Canadian radio revenues,
but just my recollection from it back in the eighties, even though we went
through a pretty severe recession in 1982, radio revenues didn't disappear,
they flattened out for a while. They had
been growing quite strongly for a number of years prior to that, they flattened
out for a year or two and then continued to march upward.
584 We have had lower
inflation expectations, certainly in the late‑eighties and nineties. We still had very strong ongoing growth in
radio revenue. So I could see that this
could flatten out here, you know, maybe drop a little bit, but, you know, we
are not going to see, as I think the question was posed earlier, "What if
they go to half?", I don't think that's going to happen.
585 So there's still a
very, very substantial revenue base in the market on which to build a
business. The question is: how much do we repatriate and how hard to we
have to work in building a sales team, and really focus on that. It's a bit market. There are lots of potential advertisers in
it. It's really just getting in there
and developing that.
586 COMMISSIONER
MENZIES: Sure. And you based your business plan on ‑‑
or your financial plan, at least, on 16 assumptions that you listed.
587 MR. KIRK: Yes.
588 COMMISSIONER
MENZIES: Are you confident all of those
still stand and, if not, are there any that you have had a chance to look
at and revise?
589 MR. KIRK: I can't say that we have sort of looked at 16
and here they are.
590 We assumed annual
expenses for example increased 3 per cent as well. Well, if we get into a low growth,
potentially low inflation or a deflation environment, that offsets it. So a large part of the costs of running the
radio station would reduce in tandem with lower sales expectations. You would have probably lower expense
expectations as well.
591 As we mentioned,
the market revenue we assumed at 3 per cent, which was more
conservative than the FP series forecast outlook, so that might be toned down
to 1 per cent or 2 per cent.
592 I think the other
items, interest rates, we had assumed 6 per cent on loans. Well, interest rates, as you know, have come
down I guess two points now from their peak, the prime rate and the Bank of
Canada is talking about reducing it again.
Across the world we are talking about reducing rates to try and stimulate
the economy. So there are balances to
the revenue side.
593 Our job here is by
establishing a radio station to go out there and find the revenues. There are revenues to repatriate which going
out of market for starters and, within a market revenue of about in the $25
million range, find our share of it. I
think that's our job and we just have to work harder.
594 Dean mentioned in
his piece, talking to the economic development people in the city of London, we
had met with them on our get to know the market tours as we were developing the
application and London is a very interesting market. It may have ‑‑ if you looked
at it 20 years ago it was more of a manufacturing‑based economy, but it
still had a pretty broad base of financial services industries.
595 I think in the
last two decades London has even further diversified. The big growth in London has been in health
services, in some biotechnology, and it has really added, along with a growing
educational side of it with large universities and other institutions in the
market, there really is a very, very solid broad base to the economy. So it's not as exposed to the manufacturing
problems that some specific towns are experiencing.
596 The London
Economic Development Corporation is a group that really keeps tabs on all
that. We talked to them. The future looked bright when we were talking
to them earlier in the year, and we talked to them this morning again, just to
bring you up to date if we could, give you a flavour of what they were thinking
about the market.
597 Dean has some
specific notes from that conversation that he would like to share.
598 MR. SINCLAIR: Commissioner Menzies, Staff, I think it was
an interesting phone call.
599 First thing, I had
talked with these folks a couple of weeks ago and the key person I was looking
for was in today and I think the first question was, she says, "Oh, you
are the fellow" ‑‑ because I was looking for the
Executive Director, she said "You are the fellow that visited us a few
months ago and got your truck stuck underneath City Hall wasn't it?" I said, "That's true." She says "How is that going?" I said "Good. I'm curious about how things are going in the
city otherwise." She said "You
should buy a smaller car I think."
600 The quick update
from the London Economic Development Corporation simply was, despite some of
the things I think that have been inferred in the last application you heard
about the Sterling Truck Plant which is down in St. Thomas closing at the
end of the year, some 2,300 jobs.
601 Of course
Talbotville, which is right near London, which is the Ford plant which makes
Crown Victorias and now the Lincoln Town Car, is working on some reduced
shifts, as a lot of plants are right now, the CAMI Plant by Ingersoll as well.
602 Those of course
are the auto manufacturing corporations and the economic
development watches those and certainly there is some concern. Those people live inside London as well, many
of those people.
603 But on the uptake
is, we talked about it this morning, you know, we have several new industry
startups happening in London. As Doug
mentioned, manufacturing is huge and continues to grow. We have large companies like General Dynamics
which are hiring constantly and have a big push right now. They are building more vehicles that they are
sending across the world. 3M of
course, McCormick's are expanding their operations.
604 And one of the
cool companies that's opening up nationwide is called The Original Cakerie,
which makes cakes across Canada and they are hiring over 400 people right
now. We have organizations like Hanwha,
the large countertop company, hiring 200‑plus people right now that build
countertops that distribute red across Canada.
605 IT is huge. International Peavey is hiring 150 people and
there's a lot more IT development happening inside the market.
606 And of course the
hospital system which is big in London, which is continually hiring new doctors
and expanding their services.
607 COMMISSIONER
MENZIES: Okay, good. Thanks.
I mean, it's your money, so as long as you feel good about it I guess.
‑‑‑ Laughter /
Rires
608 MR. KIRK: We try and invest it carefully and make a
return on it in the long term.
609 COMMISSIONER
MENZIES: In year five in your forecast
or your financials you forecast a growth in national revenue of $165,000. It also just kind of caught my eye that it
appeared to be forecasting a $76,000 drop in local revenue from
$2.5 million to just over $2.4 million.
610 Is that just a
rounding off of things for the purpose of putting the thing together? Was there something that you saw there?
611 MR. KIRK: It was actually just a ‑‑ if
I can use the word ‑‑ a proportionalizing of revenue.
612 COMMISSIONER
MENZIES: Okay.
613 MR. KIRK: We had made some assumptions that the
national would be a growing. National
requires that you get established, get ratings and we had made some assumptions
of converting those ratings to more national dollars ‑‑
614 COMMISSIONER
MENZIES: Sure.
615 MR. KIRK: ‑‑
and really to keep the overall revenue at an expected ‑‑ you
know, without it popping up. It took
away a bit from the local and in fact I think it's just a cautious assumption.
616 COMMISSIONER
MENZIES: Okay, thanks.
617 Just to clear up a
perception of inconsistency in a couple of numbers, but just for
the Boomer Festival, moving on to that, your supplementary brief allocates
$45,000 for year one and in Appendix 8.1A it lists it as that allocation
as varying from $40,000 in year one to $48,400 in year seven.
618 I just want to
clear that up, whether it's $45,000 or $40,000 and, if need be, could you
file an amended financial projection just so we get the exact number?
619 MR. KIRK: Yes, the 8.1A is the revised.
620 COMMISSIONER
MENZIES: So it's the $40,000?
621 MR. KIRK: We ended up recalculating the FACTOR
contributions because of the start‑up year and ended up reallocating
that. We wanted to keep the total
commitments the same. Our FACTOR numbers
dropped a little bit so we added and revised the numbers for the other.
622 COMMISSIONER
MENZIES: Okay. So if staff requires it you don't have any
problem just refiling that?
623 MR. KIRK: Absolutely.
No problem.
624 COMMISSIONER
MENZIES: Thanks. You would do that pretty much right away?
625 MR. KIRK: We can do that this afternoon, sure.
626 COMMISSIONER
MENZIES: Okay. Thanks.
627 Can you just talk
about your association with the orchestra a little bit? Particularly there is a reference to an
outreach program and I just want to know
a little bit more about that regarding its giving school children access
to the orchestra.
628 MR. KIRK: Sure.
I will ask Dean to really fill this out, but the whole idea of
supporting Orchestra London was the complementarity. The orchestra has a lot of young musicians
coming up and exposure to the community and we thought it would be a good fit
with the demographics we were pointing at.
629 The orchestra
always needs support, it is very active in the community. So that was why we picked that project.
630 I will turn it
over to Dean to give you the flavour on the outreach program.
631 MR. SINCLAIR: Thanks, Doug.
632 Commissioner
Menzies, Rob Gloor will be down this week, who is the Executive Director as
well from Orchestra London, excited to talk to you about the programs as well.
633 But the quick
thumbnail of it, the two big projects that the orchestra does, the outreach
program takes the music and the musicians out to people that normally can't
afford to go and see the orchestra or have any experience with it. It's not just necessarily young people, but
they go through the school system, through the music programs. They will actually do little concerts, little
shows. And it's people, like I say, that
normally don't have access to what the orchestra is about or get introduced to
it, even though they are interested in it.
634 So that's where
some of the funding goes in terms of that particular outreach program.
635 It also takes it
to other groups away from just the schools that have no accesses again to the
orchestra program. So it's an initiative
they have started a few years ago. It's
not as big as they would like it to be.
They have a funding problem right now overall. They are in the middle of a big drive
campaign right now and it's a challenge.
636 When we sat down
and spoke with them about getting together and supporting the causes, it was
one of the initial causes that they linked right away where they really could
use some help. It really raised the
profile for Orchestra London and really reached out more in the community.
637 The other one that
we talked about, too, are the special projects, some of the red hot weekends
they have. We had real interest. Their gala events were supporting the Motown
weekend that they had several months ago.
So there is a real nice tie‑in in terms of what we do formatically
with this organization. You will find
when you speak with him they are very eager to get involved.
638 COMMISSIONER
MENZIES: Okay. Thank you.
639 Another quick
question here on specifics: Are you
willing to accept your over and above annual contributions as detailed in
Appendix 8.1A as a condition of licence?
640 MR. KIRK: Yes, we are.
641 COMMISSIONER
MENZIES: Thank you.
642 In your business
plan again, the current market average for revenue is $360,000 for each point
of market share. Your business plan
proposes $286,000 per point.
643 Prudence is always
a good thing. It seems pretty
conservative. Just help us understand
why you foresee collecting $74,000 per point less than the average?
644 MR. KIRK: Prudence is probably a good thing, particularly
today.
645 COMMISSIONER
MENZIES: Yes.
‑‑‑ Laughter /
Rires
646 COMMISSIONER
MENZIES: Yes, it is a good thing, but I
just need to understand where you ‑‑
647 MR. KIRK: That's normally how we ‑‑
648 COMMISSIONER
MENZIES: ‑‑ how you came to that.
649 MR. KIRK: First of all, I think it's a process of a
station maturing in the market and it takes a while to get a station from
establishment to maturity and in protecting that your initial audience has to
be plumbed and mined and developed with advertisers. So it takes a while.
650 So even though you
might have the rating points in the market, it takes a while to convert those
rating points into their full dollar value.
That's how we approached it.
651 COMMISSIONER
MENZIES: Okay. Thank you.
‑‑‑ Pause
652 COMMISSIONER
MENZIES: Those are all my
questions. Thank you.
653 MR. KIRK: Thank you.
654 THE
CHAIRPERSON: Thank you very much.
655 I will ask
Commissioner Simpson...
656 COMMISSIONER
SIMPSON: Thank you.
657 I would like to go
back to the programming part of your proposal for a second and I would like to
get from you a better understanding of what you see as the principal difference
in your music programming with pop and oldies as defined against something like
a CKSL programming which is, by definition, a standards or oldie format.
658 Where I'm going
with this is to try and understand what you see as the magic bullet in the
formula for your success.
659 What I'm seeing in
the market right now is I think what you perhaps have seen in that the demographic
you are targeting is a fairly hefty chunk of the overall CMA. It's well in excess of 40 per cent
of the market.
660 What I am
perplexed by is how existing or incumbent radio stations that are programming
to this group, either with news or oldie format, are not enjoying what I
would ‑‑ what would seem to be a considerable success. If you took the market share of CFPL, CJBK
and SL and added them up, they don't reach the percentage of share of any of
the top three stations in the market.
661 So I guess my
question is this: In programming the
music component of your station could you better explain to me what you are
going to be doing that is substantially different than the traditional oldies
format? I know that you have made
reference to pop, but explain to me how you see this is going to make the
difference.
662 MR. KIRK: One of the major differences, if I can start
there ‑‑ and I see all this activity around me, people wanting
to chip in. The programming experts will
chip in.
663 First of all, some
of the stations you were mentioning, I guess the three in particular, are AM
only stations in the market.
664 And I think a
direct comparison between CKSL and the pop oldies format that we are proposing
is not an apples to apples comparison.
The CKSL format could be called I think more of a standards or music of
your life feel to it, older music. It
would not be in this ‑‑ the rock 'n roll era, the pop oldies
definition that we are using. So that's
one factual difference in terms of music eras being put on the station.
665 We are really
trying to target the station, as Andrew articulated earlier, to really fit in
with boomers. The boomers were from 1946
to whenever, '60‑something. They
have now moved through the system and the music choices, the context of the
station is the music they grew up with from the start of the rock 'n roll era
in the mid‑'50s up until the late '70s, early '80s. That's really where the flavour of the
station exists.
666 So it's highly
targeted. It's not older than that. It's not 10 years older than that, it's on
that demo as they have moved through life and now have more disposable income
and are reaching to the bubble of the population that's moving through the city
of London. So that's an attractive
target.
667 It's an FM station
and it will be more effective in translating a music format into
listenership and therefore dollars in the market. I think that's my quick overall 30,000
foot view of the picture.
668 I will turn it
over to I think Andrew and Steve who want to make some supplementaries and
later Dean.
669 MR. KASSAY: Thanks, Doug.
670 Commissioner
Simpson, it's not music alone either. I
just wish to make the point in the presentation of the package we put before
you today the whole idea and the reason we are excited about it is because it's
not music alone. It includes the
components, and to a large degree, of community. I come back to spoken word again, but
community. It's a whole new
personality. The music is
important. Everything we do is
important, yet everything supplements all the key areas.
671 So the way I look
at it, music supplements the community aspect of the station. By virtue of who we will be, who this baby
will grow up to be and what kind of person will it be. It will grow into its own distinct
personality. Music is a supplement when
it comes to adding up all the traits and getting the unique package.
672 MR. FORSYTH: To try and sort of get back to your point
about the three stations in the marketplace that you feel, you know, may have some
overlap, again I go back to the point that Doug raised.
673 Number one, this
is FM not AM.
674 Number two, the AM
stations are operating, one is basically sports, one is news/talk and the other
is an adult standards. Adult standards,
I think again Doug very correctly identified it, it's not rock 'n roll. That would be the big difference. It is Tony Bennett, who is a fabulous
performer and Perry Como and Frank Sinatra.
And there may be some contemporary artists like Diana Krall who may end
up on that format.
675 We are not about
that type of music at all, we are really talking about music that came right
after ‑‑ you know, right on the tail of rock 'n roll opening
up in the mid‑'50s. So it's post
Buddy Holly and Elvis Presley and that sort of stuff, but it's the material
that sort of comes in starting with the '60s.
So musically there is quite a difference.
676 As Steve has said,
I think the big difference also is the spoken word. When we compare what we are trying to
accomplish with Boomer, what we are really trying to do is address an audience
that, as we said, is under served. One
of the reasons we feel it is under served with the existing FMs is that they do
target 25‑54 and that is because that's where the so‑called
advertising dollars are, certainly from the national side. That forces those radio stations to target
younger.
677 That targeting
comes out in the music, which we have already discussed. You know, it comes from a newer age of
music. It also comes about from the talk
content. You know, you can probably go
to four or five radio stations and you hear the latest story about Britney
Spears, or whomever it is, but there is not necessarily a lot of depth in
content, which is what Steve was talking about, for the 35 to 64‑year‑old
audience.
678 So I think what we
are bringing to the table is a very different animal to what already exists in
the marketplace.
679 MR. KIRK: Dean has a little supplement from personal
experience in London.
680 MR. SINCLAIR: I was just going to add, the three stations
you mentioned, Commissioner Simpson, we talked ‑‑ as the other
fellows have mentioned, they are AM stations.
681 The two news/talk
stations have been within those formats for several years now in the
market. I managed one of them. There has always been a see‑saw battle
back and forth between them in rating periods.
It depends on news of the day, it depends on sports. And the share levels that they enjoy now and
have enjoyed probably the last five years have been fairly consistent. So it's a punch in for what's happening in
terms of information. I want to hear the
Tigers, I want to hear the Blue Jays or the Leafs or the Red Wings or the
London Knights hockey game.
682 CKSL, with respect
to the station, in respect to it in the marketplace now, it would be
my experience that from a programming standpoint it is a fairly
stripped‑down radio station now.
It's not on autopilot, but it's a fairly stripped‑down
radio station.
683 So what we are
proposing is substantially different.
And we talked about I think everyone has tried to put a spin on the
music and we have talked about we really call it old oldies, really old oldies.
684 So I hope that
helps.
685 COMMISSIONER
SIMPSON: If I may, just one more piece
of information, please, to help me totally understand this distinction. It's not due to programming but back to your
determination of where your income is going to be derived from.
686 I'm just going by
memory here, but I think you had said that about 25 per cent of the
revenue captured for the station would be coming from essentially new business
to radio advertising.
687 Is that correct?
688 MR. KIRK: Yes, that's correct.
689 COMMISSIONER
SIMPSON: Have you researched or do you
have a fairly good gut instinct as to where that money is being spent now
outside of radio?
690 MR. KIRK: I will ask Dean for some local flavour on it.
691 We have seen a lot
of experience ‑‑ not directly in London but in our other
stations ‑‑ serving those demos. It comes out of print. There is an ongoing slope for print products
and high quality magazine products that there are just more magazines, free
magazines. They are not having the
effectiveness. We see conversion of
dollars out of print as an ongoing trend.
That's one area.
692 If you put up the
right audience on the radio, then serving it through a print product becomes a
reasonable case to take them from that print product onto the radio. We have seen that particularly with our
Hamilton station which is targeted at this demo, into the 45‑65, 35‑65
demo, that that has been a source of being able to plumb advertising dollars
out of different print products and move them into the radio, or at least
split, split their budgets to give them better overall circulation.
693 I think that's
maybe a big picture trend.
694 Dean may have some
specific points from the market.
695 MR. SINCLAIR: Sure.
I think what you have to remember or keep in mind that what radio tries
to do is connect advertisers with their audience.
696 Advertisers
specifically in London there has been some pull back in the last few years
from a couple of standpoints. One
is not the satisfaction necessarily of serving some of the audiences that they
want.
697 Radio stations in
London ‑‑ it's an opinion only as a former manager here and a
resident ‑‑ can tend to be a little wider in terms of scope,
in terms of serving audiences outside of just their pure core and sometimes
advertisers don't necessarily buy into that.
698 There have
certainly been some cutbacks, some of the money has gone out of the market to
out‑of‑market stations. Some
of the money has just been put back in the bank at this point or they have
found alternative sources. For example,
there is a lot of funding that goes on with local sports teams, local sports
initiatives, hockey especially, but there is an issue of dissatisfaction in
terms of trying to reach some of their particular clients. So it's just kind of not there, it's on hold.
699 And in speaking
with some of those people, some are former clients of mine and other new
clients in the marketplace, there is a general malaise in terms of what they
should do with those dollars at this point in time.
700 When you talk to
them about this older audience there is a fair bit of excitement that comes
into play because, see, I can understand that, I can relate to that. I like that kind of music, I like what you
are proposing. So we know that it's out
there.
701 COMMISSIONER
SIMPSON: Thank you.
702 THE
CHAIRPERSON: On the same topic, you also
are forecasting that 20 per cent of your revenues will be coming from
radio stations out of the market. When
I'm looking at the table that you have filed on page 7 of your supplementary
brief, I'm looking at radio stations that are from Toronto or from Kitchener,
Tillsonburg and Woodstock, and except for the Tillsonburg radio station ‑‑
which is an easy listening type of a format, which I guess is also playing some
pop music that you are aiming at ‑‑ which other radio stations
are you aiming at when you are saying that it will come from existing radio
stations out of market?
703 MR. KIRK: The prime sources for repatriation of out of
market revenue, not tuning but revenue, would be to the Tillsonburg and
Woodstock radio stations.
704 THE
CHAIRPERSON: Now, according to BBM
Woodstock is registered as a London radio station. Even if you go on the BBM website today and
you check the London numbers that are released by BBM you will see that they
are attributing Woodstock to the London market.
705 MR. KIRK: In terms of revenues?
706 THE
CHAIRPERSON: Well, in terms of BBM as
well.
707 MR. KIRK: In terms of BBM tuning, yes.
708 THE
CHAIRPERSON: Yes.
709 MR. KIRK: Obviously our understanding is that the
Woodstock station is a Woodstock‑licensed radio station and it has bought
into the BBM London survey.
710 THE
CHAIRPERSON: Some other applicants are
saying that a significant part of the revenues from Corus in Woodstock is
coming from the London market.
711 That's not in your
supplementary brief, but it's in the supplementary brief of
other applicants.
712 MR. KIRK: Yes. I
think they have probably come to that conclusion from fairly good knowledge
that there is a lot of revenue from London on Woodstock and Tillsonburg. Their advertisers on the ‑‑
they are out of market stations.
713 THE
CHAIRPERSON: Obviously both have ‑‑
well, all together they have more than 11 share.
714 MR. KIRK: Sure.
Yes.
715 THE
CHAIRPERSON: What you are aiming at
is to repatriate part of those revenues from those stations.
716 MR. KIRK: Yes.
We would attribute all of them, but certainly in the year two revenue we
are assuming 20 per cent.
717 THE
CHAIRPERSON: Yes.
718 MR. KIRK: That would represent $378,000.
719 THE
CHAIRPERSON: Yes.
720 MR. KIRK: Which would be just a proportion, a fraction
of what they are getting.
721 THE
CHAIRPERSON: I'm working out of that
table.
722 MR. KIRK: Yes.
723 THE
CHAIRPERSON: Now, you are saying
"Other", which you have attributed a percentage of
10 per cent of your revenue ‑‑ and by
"Other" are you saying ‑‑ you have already said new
advertisers will be coming to Mr. Simpson partly from the press. So "Others", what are you talking
about here?
724 MR. KIRK: Those would be other advertising media.
725 THE
CHAIRPERSON: Well, a source. Television?
726 MR. KIRK: It could be television, people spending money
on Internet advertising.
727 THE
CHAIRPERSON: I have Commissioner Duncan
who has some questions.
728 COMMISSIONER
DUNCAN: I have a few questions.
729 First of all, Mr.
Sinclair, you referred to a fairly stripped down approach. Can you just explain? I'm just not familiar with the lingo. I just wanted to know what you meant by
that. I thought you said that in
relation I think to see CKSL.
730 MR. SINCLAIR: I did.
731 With respect to
that company, a stripped‑down approach would be a form where you would
have very few people involved in putting the product on the air, probably a
fair amount of automation.
732 In terms of
presenters ‑‑
733 COMMISSIONER
DUNCAN: I thought perhaps you were
meaning that they had fewer spoken word content, or less ‑‑
734 MR. SINCLAIR: That could also be part of it, yes.
735 MR. KIRK: I think it is just a business reality. If you have a cluster of stations and one of
the stations is not well positioned in the market, and has low revenue streams,
the natural thing to do, particularly because this is an AM station, would be
to cut your costs. That is really ‑‑
736 We may have used
the vernacular, but it is really to have a low cost operating strategy for the
station, to try and bring those two ‑‑ the revenue and the
expense lines as close together as possible.
737 COMMISSIONER
DUNCAN: That segues into my next
question, in a way, because there are, of course, clusters in the market, as
you mentioned, and they are benefiting from efficiencies in the market, and you
are going to be an independent station competing with them.
738 I am wondering,
your projections, do they reflect the synergies that you might expect to
realize because of Oshawa and Hamilton, or is it completely stand‑alone
in your projections?
739 MR. KIRK: These projections are, essentially, stand‑alone,
and I could ask Andrew and Steve to give you a little flavour of what the
staffing matrix looks like.
740 You bring up a
good point, we do have synergies, potential, between the Oshawa and Hamilton stations
right now.
741 Currently we do
operate Oshawa and Hamilton with some sharing of resources. In fact, we amalgamated the Hamilton and
Oshawa companies last year, and the Commission is aware of that. That allowed us to rationalize our
administration costs materially enough that it's noticeable.
742 We were able to do
it with one less position overall in the companies, and we have refined the
positions. We have an administration
person in Oshawa, for example, doing all of the billing and accounts receivable
collection, and payroll, and an administration person in Hamilton doing all of
the corporate accounting.
743 So we have been
able to be more efficient as a company by looking at the four stations as a
group.
744 That is one area
that would be a potential add‑on.
We haven't really factored that in there, but it's possible.
745 In addition, we
feel that it is very, very crucial that we have, on the ground, programming
people and news people in the market ‑‑ and sales people. You have to have that in the market. You can't do sales from an hour away very
well, so you need that in the market.
746 So the programming
and sales expenses are pretty true, because they have to be staffed within the
market.
747 But there are the
availabilities ‑‑ and we do this currently ‑‑
of having a larger pool of talented broadcasters to do commercial production,
and we use the resources in Hamilton and Oshawa, basically, as one pool. Steve can fill you in on that. That allows a greater variety of voices on
the air, and talent to do better commercial work ‑‑ again,
taking the cost, but being able to work a little more efficiently.
748 That is the
approach. I wouldn't say that there
would be huge efficiencies in the sales and programming elements, but certainly
on the admin side, and production costs could be lowered, having the station
operated on a platform.
749 COMMISSIONER
DUNCAN: I understood you to say that
those are not, at this point, included in the projections.
750 MR. KIRK: No.
751 COMMISSIONER
DUNCAN: Is that your answer?
752 MR. KASSAY: Yes, that's the answer. There is nothing hidden here. We have built this proposal to work in
London, by people employed in the building, ensuring that we have a greater
range of voices, so we can have greater depth when it comes to producing retail
announcements.
753 But, no, not
living in one and sitting and voice‑tracking in the other. We have learned that local works; that's how
it's built.
754 COMMISSIONER
DUNCAN: Because we often hear
applications where somebody is an independent in the market, and they could
operate much more efficiently if they had, yet, another licence. That is sort of where I am coming from. I am wondering about that.
755 MR. KIRK: Certainly that brings in a whole other
question. You can, by adding in
clusters ‑‑ and you see it in London. At least two of the operators are operating
large clusters ‑‑
756 COMMISSIONER
DUNCAN: Yes.
757 MR. KASSAY: ‑‑
and Dean managed one of those. It sure
is easier to allocate if you have three engines pulling the train rather than
one ‑‑ to operate more efficiently.
758 COMMISSIONER
DUNCAN: That leads into my next
question, because, obviously, by your projections, you are not intimidated by
any advantage that the others might have as a result of those efficiencies,
because I see that you are projecting a positive operating income in Year 3.
759 I just have one
quick question. Further to your discussion on the current downturn in the
economy, what would you say ‑‑ when would you now expect ‑‑
or would you change your forecast with respect to the year that you might see
positive net income?
760 You still have
quite a substantial amount in that year, so we will just stick with that year.
761 MR. KIRK: It begs the question, obviously. Times have changed and we have to be
realistic about it.
762 First off, in
terms of timing, we are sitting in this room in October, and it will be a while
before ‑‑ you have to do a lot of debriefing in the process,
so it will be a while before a decision comes out, and it will take a while to
build a station.
763 We don't have a
cluster in the market, or facilities in the market, so we have to build it from
scratch.
764 That will take a
while, so launch is really, probably, a year or two ‑‑ 18
months away. From what I am reading, hopefully
we will be through ‑‑ it may not be a "V" this time,
it may be more like a "U".
There will be a bumpy period for a while before it starts to roll.
765 All I am reading
is that expectations for late 2008/early to mid 2009 ‑‑ it
could slow down a bit, but we should be trying to uptick, at least, by late
2009 and into 2010.
766 That would maybe
pause radio revenue growth in London, or slow it down a bit, but, in our
launch, we are probably launching into an uptrend rather than a downtrend. That's one point.
767 I think that the
commitments made by the shareholders ‑‑ if we put a prudent
set of projections in front of you ‑‑ the shareholders, in our
experience ‑‑ and you have known our operating procedures now
for 15 years. We do what we say. If it takes a little more, the shareholders
step up and provide the capital to see it through.
768 That's what we
would do. It's hard to give a hard
forecast. I don't hear a lot of hard
forecasting yet going out, other than it's probably going flat, or we may be in
a recession for a couple of quarters.
769 But I think that
the timing of this is good, in that it is further out.
770 And in terms of
adjustments, our cost elements may come down if we do get a recession, and a
bit of that "biz" will be out of the market, and salary expectations
will be lower, so all in all ‑‑ and interest rates will be
lower.
771 So there are some
offsets to a slightly slower revenue outlook when you are starting a radio
station.
772 We are
comfortable, I think, that we can run the radio station, and in the third year
from start‑up we could be reaching the top break‑even level.
773 COMMISSIONER
DUNCAN: Thank you. We are actually thinking now in terms of
probably launching in 2010, so I am sure that you are probably on the
money ‑‑
774 MR. KIRK: Our assumptions ‑‑ you asked
in the deficiency questions, "Which year do you anticipate starting,"
and we said that 2010 would be the fiscal, so it may be late fiscal 2009/early
2010, meaning the mid‑year.
775 COMMISSIONER
DUNCAN: I have one last question. I noticed in your presentation that you
didn't talk about new media, or using the internet, or streaming your
station. Do you do that, or intend to do
that, or you don't think there is a market for your audience?
776 MR. KIRK: Four lights go on. Wait a second.
‑‑‑ Laughter /
Rires
777 MR. KIRK: New media are very crucial and very important
to what we do and how we operate today.
All of our radio stations stream audio.
We all have active websites.
778 For an independent
company, we devote a lot of resources to websites. About half to two‑thirds of a staff
position in each market that we operate is devoted specifically to web
activities, and we post, daily, changes to community events. We post news every day on our websites.
779 So you can take
your local radio station ‑‑ if you go down to Missouri and
attend a rally down there, you can take your local radio station with you. Just call it up and get all of the local
news, on a daily, updated basis, via the web.
You can listen to the station anywhere.
780 We didn't dwell on
that, but it's part of what we do, and Boomer would have the same approach that
we would have, a very active local website.
We would have streaming available, and a lot of components in it, too ‑‑
all of the community information and news updated on a daily basis.
781 Steve supervises
that activity every day, so maybe he should comment.
782 MR. KASSAY: I don't want to use the word
"oversight", but, yes, that is exactly what we do. We stream.
It is very interactive, especially ‑‑ I guess that the
Wave case is a little different, where it is very interactive musically with
the artists and having the online store.
783 All of these ideas
we do daily. I guess it's not top of
mind as a bright light bulb idea because we have been doing this for year.
784 To answer your
question: yes, it's a component; yes, we
will take what we do and what we have learned and apply it here as well; and
hopefully it will be an opportunity to learn even more.
785 COMMISSIONER
DUNCAN: That's great. Thank you very much.
786 MR. FORSYTH: To add to that, if I might ‑‑
and this is more for the Commission's knowledge, not only these particular
licensees ‑‑ I think that the radio industry recognizes that
the web and new media is where we are going.
787 THE
CHAIRPERSON: It is very well documented.
788 MR. FORSYTH: It is, and it is radio's ‑‑
789 THE
CHAIRPERSON: I appreciate that.
790 MR. FORSYTH: It is radio's advantage in being able to
engage its audience.
791 THE
CHAIRPERSON: If you were to be granted
the licence, what would be the role of the London investors' group?
792 MR. KIRK: The London investors' group is a group of
people who are very interested in the broadcasting business. They are participating primarily as a way to
finance the company. They are putting
share capital in, primarily as preferred share capital, and that provides a
very solid base for the company to develop.
793 We put that
together earlier in the year. I am even
happier today that we have it there. We
are not highly levered to debt, it is primarily an equity base.
794 These people will
have representation on the Board. They
will not control the Board. They are
very interested broadcasters. I think
they are good partners, and they are there primarily for financing. They will have a one‑third equity
participation in the company.
795 THE
CHAIRPERSON: It's an investment ‑‑
796 MR. KIRK: It's an investment for them, yes.
797 THE
CHAIRPERSON: Again, if you are granted
the licence, but the economy keeps going down, could they elect to drop out?
798 MR. KIRK: Would we elect to drop out?
799 THE
CHAIRPERSON: No, could they, themselves,
elect to drop out, even if you are granted a licence?
800 Or, are they
bound?
801 MR. KIRK: They have committed in their arrangements
with us to fund on the award of a licence.
802 So, if we win the
licence, they commit to fund the amounts ‑‑
803 THE
CHAIRPERSON: They are committed.
804 Legal counsel?
805 MR. McINTYRE: Thank you, Mr. Chair. I don't have any
further questions, I just want to read into the record, or to confirm two
undertakings.
806 The first one is
for the Applicant to re‑file financial projections for the Boomer
Festival CCD initiative this afternoon, and the second one is to provide
updated financing for the application, in accordance with the Commission's
policy, by October 30th.
807 Thank you.
808 MR. KIRK: Yes, we commit to filing the revised Boomer
Festival commitments, and to the financing commitments, in the timeframe you
mentioned.
809 THE
CHAIRPERSON: Gentlemen, thank you very
much.
810 We will break for
lunch, and we will return in an hour's time, at 1:45 p.m.
‑‑‑ Upon recessing
at 1245 / Suspension à 1245
‑‑‑ Upon resuming
at 1400 / Reprise à 1400
811 THE
CHAIRPERSON: Order, please.
812 Madam Secretary.
813 THE
SECRETARY: Thank you, Mr. Chairman.
814 Just a reminder to
please turn off your cell phones, beepers and BlackBerrys, as they are causing
interference on the internal communications system used by our
translators. Thank you.
815 Also, for the record,
we wish to inform you that the Applicant Forest City Radio Inc. has submitted
Appendix 8.1(a), "CCD Initiatives for Boomer Festival", in response
to undertakings. This document will be
added to the public record, and copies are available in the Public Examination
Room.
816 Now we will
proceed with Item 3 on the agenda, which is an application by CTV Limited for a
licence to operate an English‑language FM commercial radio programming
undertaking in London. The new station
would operate on Frequency 98.1 MHz, Channel 251B, with an average effective
radiated power of 6,600 watts, maximum effective radiated power of 20,000
watts, with an effective height of antenna above average terrain of 132.6
metres.
817 Appearing for the
Applicant is Mr. Chris Gordon.
818 Please introduce
your colleagues, and then you will have 20 minutes for your presentation.
PRESENTATION / PRÉSENTATION
819 MR. GORDON: Thank you.
820 Mr. Chair, members
of the Commission, Commission staff, my name is Chris Gordon and I am the
President of CHUM Radio.
821 Before we begin
our formal presentation, I would like to introduce my colleagues on the panel
today.
822 To my left, your
right, is Jim Blundell. Jim is the Vice‑President
and General Manager of our station 102.3 BOB‑FM in London. Jim has been with CHUM Radio for 20 years,
and before then owned and operated several radio stations across Canada.
823 Next to Jim is
Kerry French, Vice‑President of Business Analysis, who oversees our
market and economic research, and provides our business development analysis.
824 To my right, your
left, is Rob Farina, Vice‑President of Programming. Rob works with our program directors across
the country, as they innovate with new formats and build multi‑platform
connections with listeners.
825 Next to Rob is
David Jones, Program Director of BOB‑FM.
826 Behind us, in the
second row, is Lenore Gibson, Director of Regulatory Affairs, and Jim Fealy,
our Vice‑President of Finance.
827 I will now begin
our opening statement.
828 Today we are here
to tell you about The Curve, an innovative new radio station that we want to
bring to London. Our market research and
our eight years of experience and in‑depth involvement in the London
community demonstrate that this station will resonate with Londoners between
the ages of 13 and 34.
829 This audience is
not served by the current London radio stations, even though more than one‑quarter
of London's population falls into this age group.
830 Tailor made for
young listeners in London, licensing The Curve will respond to their musical
tastes and to their desire to be part of a social network of music and local
reflection.
831 CHUM Radio has a
proven track record of bringing young people to radio in other cities. We will do the same in London, with an
innovative station that uses leading edge technology to marry the internet,
mobile devices and over‑the‑air radio.
832 In addition, The
Curve will correct a serious competitive imbalance in the London market, an
imbalance that is negatively impacting our existing station and our ability to
serve London listeners.
833 Jim Blundell will
return to these two critical points ‑‑ one, our proven ability
to serve young listeners; and, two, the significant competitive imbalance that
we face. Before he does, I would like to
ask Rob and Dave to explain our innovative approach to music and spoken word
programming on The Curve, and to highlight our commitments to emerging artists
and Canadian Content Development.
834 MR. FARINA: The Curve's musical format will be modern hit
radio, a mix of pop, urban, alternative and alternative pop music that targets
listeners from 13 to 34.
835 This format does
not currently exist in London, and will fill a void in this market. In fact, we polled all radio stations for the
week of October 4th and found that over 76 percent of The Curve's playlist
consists of music not currently being played in London by any of the commercial
radio stations.
836 As well, we found
no airplay for emerging Canadian artists like Danny Fernandez, Faber Drive, the
Royal Society, The Midway State, Shiloh and many, many more.
837 A minimum of 40
percent of the musical selections on The Curve will be Canadian, and a minimum
of 25 percent of these selections will be from emerging Canadian artists.
838 It sounds simple,
but in this day and age it is anything but simple to create attractive
programming for our target demographic.
839 The Commission
recognized this complex and dynamic situation in the 2006 Commercial Radio
Policy, stating that the tuning decrease to radio was most notable in our
target audience, the teen demographic and young adults 18 to 34.
840 As the Commission
indicated, the tuning decrease coincides with the advent of new technologies,
such as internet music services and personal media devices.
841 CHUM Radio has successfully
addressed this tuning decline by young listeners in other markets, and we will
bring this success to London.
842 We would like to
explain how London's radio listeners will give life to The Curve.
843 The Curve will be
an interactive experience, where listeners have unprecedented power to
influence the music, stories and community reflection, both on‑air and
online. After giving express and
informed consent, listeners download The Curve software from the station's
website. This same application is
available on iPhone and iPod touch platforms.
844 The software
analyzes what songs and artists London listeners support. It sends this information to our database and
forms the basis of the music we play on the radio.
845 We will, of
course, exercise oversight to ensure that we meet our Canadian content and
emerging Canadian artist commitments.
846 The Curve software
augments our ability to identify new Canadian artists that our listeners have
found online, and whose music they have stored on their computers.
847 This is an
important benefit, because the days of relying on record labels to identify,
nurture and promote emerging artists are over.
848 Today, young
people regularly discover new talent online, and spread the word through chat
rooms and blogs. The Curve will directly
plug into this immense change in how new artists break through to commercial
success.
849 As each listener
becomes part of The Curve community, the playlist becomes reflective of the
pulse of the city.
850 To add value to
the experience, The Curve listener gets new music recommendations targeted to
their individual music tastes. The
ability to make these recommendations will enable The Curve to become CHUM's
latest launch pad for emerging Canadian artists.
851 In addition to
giving young London listeners unprecedented input into the programming of our
radio station, The Curve will be the hub for London music fans. Online they can connect with each other and
share or comment on news and community events, post their playlists, exchange
ideas, interact with The Curve personalities, and upload content such as
podcasts, audio shout outs and video.
852 The Curve
programming team will moderate the online community and select elements of that
content for airplay on the radio station.
853 MR. JONES: I want to turn now to The Curve's spoken word
programming.
854 Delivering a deep
and meaningful radio experience to our audience is not limited to the
music. The Curve will increase not only
the diversity of music available in the London market, but will also increase
the diversity of spoken word programming.
855 The Curve will
have an intensely local focus. We will
provide 12 hours and 48 minutes of spoken word programming each week, in a
presentation style targeted to young listeners.
This programming will include a minimum of 4 hours and 25 minutes each
week of locally produced news and information programming.
856 Reaching young
listeners with news and information programming is a challenge. They do not plan their days around the
morning paper or newscasts. As a result,
The Curve's presentation style will be a "news you can use" approach,
covering stories that London youth are passionate about ‑‑ for
example, social issues and the environment ‑‑ framed in a way
so that they can connect with the story and see its relevance in their lives.
857 In addition, The
Curve's news will be presented in a round‑table setting, with our hosts
using a conversational approach.
858 Is this a
traditional approach to news? No.
859 Is this a relevant
and useful approach to news for young people?
Yes, and we have successfully applied this approach in other cities,
like Vancouver, Edmonton, and, most recently, Halifax.
860 The interactive
component of The Curve, which we discussed earlier, will extend to the local
news and information programming of the station. Our listeners will be able to comment on news
stories, post their own stories, and upload blogs and podcasts relating to a
variety of local issues.
861 The Curve is all
about people in London aged 13 to 34, listeners that are not served today and
that CHUM Radio has successfully brought back to radio in other cities.
862 Our focus on
London's young people extends to the $3.5 million that we will invest in
Canadian Content Development initiatives, including funds that will benefit
students at Fanshawe College, the University of Western Ontario, and the arts‑focused
H.B. Beal Secondary School.
863 These local
initiatives reflect our longstanding philosophy that a CHUM radio station is a
local experience, and that our responsibility is to serve the local community.
864 Now, to give you
more insight into The Curve, we have prepared a short video.
‑‑‑ Video
presentation / Présentation vidéo
865 MR. JONES: The youth audience craves hit music and wants
to be on top of hot new artists as they emerge.
Music from emerging Canadian artists will be featured prominently on The
Curve. The Curve will also participate
in the CHUM Emerging Indie Artist Initiative.
This initiative has created huge national profiles for artists such as
Suzy McNeil, State of Shock, Elise Estrada and Shiloh.
866 CHUM Radio helped
launch Shiloh's career and we are thrilled that she has signed an international
recording contract. Since its inception
almost a year and a half ago we have selected 17 emerging Canadian artists
which, due to their selection as CHUM's emerging artist of the month, have
received a total of thousands of spins across all Canadian radio stations.
867 CHUM Radio also
discovered and helped launch Kreesha Turner's career. She now has an international recording deal
with Virgin Music and an album that was released last month. CHUM has made a huge contribution to emerging
Canadian talent. The Curve will be a key
part of our emerging artist success story.
The Curve will give young Londoners the music, the information and the
social network they demand. One, where
they can hear the new music they choose, stay informed about what is happening
in their city and connect with each other through their shared musical tastes
and experiences.
868 MR. BLUNDELL: CHUM Radio has reinvented the radio
experience for successive generations of young Canadians. The most recent example of this is the
creation of our station The Bounce, a new style of youth oriented, urban,
contemporary hit radio station in Edmonton.
In four short years The Bounce has changed the local radio landscape and
is the most popular station in Edmonton with young listeners.
869 CHUM knows how to
connect with Canadian youth and it has proven success with repatriating
disaffected young listeners to the radio dial.
870 To do the same in
London we need a frequency. The only
viable commercial frequency left in London is 98.1 and we have presented to the
Commission the best proposal for the use of the single frequency. While we have applied to use this frequency,
its use will cause a third adjacent interference with Astral's CIQM‑FM.
871 We have taken the
initiative and found a solution. We have
reached an agreement with Astral that if our application to launch The Curve is
approved both stations will co‑site their transmitters in London. This proactive approach by CHUM Radio will
remove any possible interference by our proposed station with Astral.
872 CHUM Radio is
facing a serious competitive disadvantage because Corus and Astral own eight of
the 10 stations serving London. CHUM
Radio owns one station. This is the only
market in Canada where a single FM operator competes with two multiple station
operators; one with four stations and one with three stations, plus another
licence for Woodstock that competes directly in the London market.
873 In developing
common ownership policy in 1998 the Commission expressly recognized that the
ownership consolidation would strengthen the radio industry's overall
performance, allow it to compete more effectively and enhance its support of
Canadian cultural expression.
874 Corus and Astral
are able to achieve marketing and sales synergies and economies of scale that
we, only operating a single station in London, cannot. Each group of four stations serving the
London market has the opportunity to share technical, administrative and sales
operations, an opportunity not available in CHUM's standalone radio station.
875 In addition to
these operational synergies Corus and Astral are able to provide more well‑rounded
support to the local London community through promotions for community and
charitable events.
876 Our standalone
station supports many community groups, such as the Thames Valley Children's
Centre, the London and District Distress Centre. A second station would allow us to enhance
our support for these and other valuable community organizations such as Youth
Opportunities Unlimited and Big Brothers and Sisters.
877 CHUM Radio needs
two stations to compete effectively in the London market and better serve
London listeners. Licensing another
single FM station does nothing to correct the serious competitive imbalance in
London, rather the situation would be made considerably worse. The London market would have two standalone
stations facing all the same competitive disadvantages that we do today, and
that would make our situation significantly worse.
878 MR. GORDON: The Commission said in the 2006 Commercial
Radio Policy the key challenge facing the radio industry is to keep radio
relevant and local in an environment of rapidly changing technology and
consumer behaviour. We agree.
879 The Curve will
embrace technology and the dynamic online behaviour of young people to meet the
challenge set out by the Commission with an innovative station serving
listeners from 13 to 34. This group
represents 27 per cent of the London population and they do not have a radio
station programmed for them.
880 With The Curve
these young residents and the 44,000 fulltime students that arrive in London
each year will not only have a radio station, they will have a radio station
that they can help program and one that meets their technological expectations.
881 Of all the
applicants proposing to serve the London community, our application represents
the best opportunity to attract young people back to radio. We have the best business plan, we will
invest in the community, we are local London broadcasters. Our knowledge of this market gives us the
expertise to create a radio station for London listeners that truly reflects
the city and its citizens. For these
reasons, our application should be approved.
882 Thank you and we
will be happy to answer your questions.
883 THE
CHAIRPERSON: Thank you very much, Mr.
Gordon.
884 I will start with
the first round of questions and my fellow colleagues I am sure will probably
want to supplement.
885 I will start
by ‑‑ you have covered it in your oral presentation, but that
really was an intriguing thing, that when I read your application and some of
your supplementary replies to some Commission questions you dealt with the
music programming of your proposed station.
And particularly, you stated that ‑‑ and again here in
your oral presentation, you make the statement that you will be seeking from
your listeners the information to fill your database in order to do your
ongoing music programming.
886 Could you tell us
more how it is going to be working? And
as a matter of fact, you are saying ‑‑ I think you are already
doing it in other markets, but for the record could you give us much more
details?
887 MR. GORDON: Yes,
thank you, Commissioner Arpin.
888 It is a very
innovative approach to using the internet and using interactive information and
technology to help program the radio station.
889 Rob Farina has
been working directly on this project and he can fill you in on exactly the
parameters of how this database works.
890 MR. FARINA: Thank you, Chris. I will explain it in real simple terms. So a listener discovers this new radio
station in town, listens to it, they go online to find out more and they find
out that they can actually contribute to shaping the sound of the radio
station.
891 So they download
the radio station software. And what
that software does is it goes into their music library. So for the sake of clarity, let's say it is
their iTunes library. It looks at the
music in their iTunes library, but it also looks at the amount of times that
music has been played and it categorizes it based on what music they use
heaviest to what music they use the lightest.
892 That information
then goes to our database and, culminated with all the other listeners in the
community of the database, it starts to form the basis of the music heard on
the radio.
893 Now, the music
director at the radio station and the program director at the station obviously
continue to curate the music, but they are able to use the listener's actual
habits, actual music consumption habits to not only put a radio station
reflective of the city on the air for them, at the same time the software is
able to really fine tune music recommendations.
894 So, for example,
if one of the listeners listens exclusively to hip‑hop music we know the
software allows the emerging hip‑hop music artist to be recommended
directly to that listener and that would be personalized when they go on the
website and log in. With their sign in
there would be a sign, you know, 'Hey, Jane, here's your new music
recommendations.' And it will be new
music recommendations in sync with their actual music habits.
895 THE CHAIRPERSON: And how did you make sure that you are always
within your format? Because the software that goes through the iTunes list of
all you listeners only picks the sounds that are already listed in your database
or is it contributing new material to your database?
896 MR. FARINA: It is pulling all the information. The Job of the program director and music
director of the station is to curate that sound to make sure it is focused on
the format. But further to that,
Commissioner, in our experience with youth audiences, the vast majority of
those listeners are going to be listening to a certain kind of music.
897 And the people
that have more narrow music tastes, things that fall outside of those huge
parameters, because the sheer number is smaller that stuff is going to fall
lower on the list and probably never make it onto the ‑‑ I
shouldn't say probably, will never make it onto the air.
898 THE
CHAIRPERSON: It is probably true what
you are saying, but at Western University they have a music program which is
catering to those who are studying classical music. They will be in the same age group than then
the listeners of your radio stations.
You will be purging out all classical music that will come up from their
own database?
899 MR. FARINA: Right.
Well, I would wager to guess that even the students in the classical
music program probably aren't listening to that much classical music.
‑‑‑ Laughter /
Rires
900 MR. FARINA: But we will be able to tell you that with
great accuracy.
901 THE CHAIRPERSON: With greater accuracy.
902 Now, in your
written presentation, and you alluded to it in this oral presentation, to
emerging artists. And obviously the
Commission has not yet come up with a definition of what is an emerging artist. You have provided us with your own definition
and you are obviously coming with a fairly significant number of emerging
talent in your format. And obviously the
format that you are proposing really caters a lot to the emerging talent.
903 So it is surely
not an issue to understand, but since there is not yet a policy and that the
CHUM group, as a party to the CAB, has provided a definition that the
Commission is still reviewing, what is going to happen if we come up with the
CAB definition of emerging artists with respect to your plan?
904 MR. GORDON: We would adapt to whatever the CRTC
regulation, if and when that happens would adapt to our radio station.
905 THE
CHAIRPERSON: We may end up adopting a
policy that is less generous than yours.
906 MR. GORDON: That would be terrific.
‑‑‑ Laughter /
Rires
907 THE
CHAIRPERSON: I thought you were to make
a commitment keeping the definition that you have provided us.
908 MR. FARINA: Just for clarity, our definition is in line
with the CAB's definition. We have
obviously been very involved with participating in that definition with the CAB
and also with the music industry.
909 THE
CHAIRPERSON: It is not exactly the same
definition. I think it is ‑‑
yours is more generous, if my memory serves me.
I don't have the document here, and it's something that I have already
read sometime ago. But when I read yours
it struck me that you were somehow much more generous to the definition than
what the CAB has provided.
910 And I can
understand that there will be numerous definitions, depending on format and
type of audience that you are catering to.
911 MR. GORDON: Well, we would be prepared for a licence term
to commit to 25 per cent emerging artists.
912 THE
CHAIRPERSON: And whatever the definition
be, you are aiming at having a quarter of the music played, not necessarily the
playlist, but the music played coming from emerging artists.
913 MR. GORDON: A quarter of the Canadian content, that is
fair.
914 THE
CHAIRPERSON: Okay. Of the Canadian content?
915 MR. GORDON: Yes, that is right.
916 THE
CHAIRPERSON: Of course, yes.
917 Now, you also
talk ‑‑ let me make sure that now with those hearings
everything is ‑‑ I am the one who had the problems with the
system. And I am trying to figure out ‑‑ probably I am the
youngest around the...
‑‑‑ Laughter /
Rires
918 THE
CHAIRPERSON: So I have to figure out
where my things are.
919 How many new
stations do you think will ‑‑ if the Commission was to grant
more than one licence, how many new stations do you think will survive and will
make their way in London ‑‑ my question will be including
yours?
920 MR. GORDON: Two points to your question, Commission
Arpin.
921 One is that we are
looking at the frequencies and none of us up here are engineers, but London is
a different market in the way that the frequencies are allotted, not just
necessarily just in London, but in the surrounding area.
922 So we fully
believe that 98.1 is really only the true frequency that a radio station can
operate. You know, in the surrounding
area it is not just Sarnia and Windsor and Leamington and Chatham and Stratford
and Kitchener‑Waterloo, there is Port Huron, there is Erie, Pennsylvania,
there is Cleveland, there is signals that are coming in from all over. We are completely surrounded in the London
market.
923 So for that reason
we believe that really there is only one frequency available and that one
stations should be licensed.
924 THE
CHAIRPERSON: I see. But if in its wisdom the Commission thought
that ‑‑ well, from a programming standpoint, how do you
differentiate yourself from the applications filed by Rogers and Evanov?
925 MR. GORDON: There is a number of differentiations. I think the first one is our track record at
putting these kinds of radio stations on the air. We have tremendous success in Edmonton, in
Vancouver and most recently in Halifax where we have launched a brand new radio
station called The Bounce. We have an
incredibly complex and exciting and very innovative, interactive platform with
listeners.
926 You know, the
evolution of hit radio, we firmly believe it is moving into what we call modern
hit radio, which draws on more musical genres than strictly top 40 or CHR. And we are committed to providing an
unparalleled level of support for emerging Canadian artists.
927 THE
CHAIRPERSON: And how do you see yourself
different from CFBL‑FM and CHFK‑FM?
928 MR. GORDON: I am going to ask David Jones to respond to
that question, Commissioner.
929 MR. JONES: If I may, Commissioner, just to describe the
London market to you. As mentioned,
there is a competitive disadvantage that we have identified. You could also extend that to the formats and
the market itself. Astral has the four
stations, of which two are on FM, CIQM which is an AC and then they have their
country station. Corus has four stations
essentially in the market; three FMs and an AM, one licensed actually to
Woodstock.
930 What has happened
over the past several years which we feel has created our hole. Fresh FM
previously was known as Energy FM many years ago, they have moved to a slightly
older demographic and self‑describe as Hot AC. FM 96, which is CFBL‑FM, probably as
early as two years ago was a very youth‑oriented new rock radio station,
and they had The Hawk out of Woodstock, which basically is a London radio
station, as a classic rock station.
931 What we found over
the last year and a half is that the classic rock station has migrated slightly
older to now describing themselves as 1960s, 1970s and 1980s, more oldies based
and FM 96 has now taken on both the role of the younger rock, but they have
also added a lot of classic rock titles.
So you have a hole under the age of 34 that truly we feel we can serve.
932 THE
CHAIRPERSON: Let's now get to news. In your oral presentation you are talking
about a new type of setting and conversational approach to news rather than
traditional. But on a day to day basis,
and since you are doing it in other markets, how does it appear to be different
than the standard newscast that we hear on radio stations?
933 MR. GORDON: Thank you, Commissioner.
934 It would be
dramatically different sound to what we would normally hear on a typical radio
station where an anchor is reading the news. I will ask David Jones to jump in
here to explain how we would do it specifically in London.
935 But it would
involve all the cast members say of a typical morning show with the newscaster
reading the top story, providing some background on it and then at that point
the other hosts on the show would weigh in with their opinions on it. And then we would get interactive with the
audience and be able to take text messages or emails or phone calls and be able
to fully integrate the audience into the news in a way that traditionally it is
not done.
936 We found in the
other markets that we have done this our youth audiences are responding very
very favourably to it and really enjoy the conversation style.
937 David.
938 MR. JONES: We are calling it News That You Can Use. So what we are going to try to do is frame
the cause and then the effect it will have on our audience.
939 So in a roundtable
setting, as Chris mentioned, we are going to have various people discussing the
news stories. And through our online
platform, the website of the radio station, we can get reaction to that, bring that
to air, or telephone conversations, bring those to air from our listeners and
that will be either further news stories or provide conversation in that
roundtable environment.
940 THE
CHAIRPERSON: Now, you are also in your
written submission talking about a different manner to collect the news
allowing ‑‑ but having people collecting the news, your
reporter on the road collecting the news.
But you seem to have a fairly small staff to do what you are planning to
do under that theme. You have a news
director and two journalist reporters who are working split shifts and they
also are working Saturdays and Sunday morning.
941 So in daily life
how are you able to make it up? Since
you are doing it elsewhere, so maybe Mr. Gordon or other members of the team
who are much more knowledgeable of what is going on in other locations, is it
the same type of settings; one director and two reporters, and they will also
go on air?
942 MR. GORDON: Yes, that is correct. That is similar in
other markets that we employ this type of approach to news. And how we do it is we rely on our audience
to provide a lot of the colour and a lot of the information and a lot of the
background, you know, while we are doing the news. But they can also post it onto our website,
they can post blogs on our website, they can provide us with information on a
24‑hour, you know, basis as they deem necessary.
943 Then our news
director and our journalists are able to disseminate that information and bring
it to the airwaves.
944 THE
CHAIRPERSON: Our reliance to information
provided to various ways, messages and creates a problem of reliability. How do you make sure that the news that you
are finally broadcasting are accurate and reliable?
945 MR. GORDON: Well, we would adhere to all journalistic
practices and follow up with sources.
946 THE
CHAIRPERSON: So that requires time, and
if it requires time it requires people and you appear to have a fairly small
staff. Unless you will be working with
the newsroom of your existing radio and television station, which is contrary
to what you say in this paper.
947 MR. GORDON: We will not be working with our exiting
television station in our news environment.
We will have, you know, some information shared back and forth between
our two radio news departments. But we
have employed this system in other markets and we feel three journalists for a
youth‑based format is a very reasonable number.
948 THE
CHAIRPERSON: And how many ‑‑
I have to find out where ‑‑ I apologize, I have yet to find it
myself with the new technology.
949 Okay, well I have
another question, all related to news, but not specifically the one that I had
in mind, but it is related. Can you help
us in breaking down what is between news, sports and business information? Because you seem to have staggered that information
altogether in your supplementary brief.
So could you help us in saying how much will be pure news and how much
will be sports and business information?
950 MR. GORDON: Absolutely.
David Jones can answer your question, Commissioner.
951 MR. JONES: Certainly, Commissioner.
952 We filed news,
sports and business would be four hours, 25 minutes. And I believe in the supplementary brief it
also states three hours of pure news, so we will do three hours of pure news.
953 THE
CHAIRPERSON: Another thing, I noticed
that you have 17 newscasts ‑‑ so three hours will be strictly
news. Because altogether it totals four
hours and 25 minutes. So what you are
saying three hours is what we call pure news and the rest will be shared
between sports and business. And what is
the business attraction for the young audience that you are aiming at?
954 MR. GORDON: Well, it would depend on the day. Certainly, the environment of the last couple
of weeks ‑‑
955 THE
CHAIRPERSON: Maybe.
956 MR. GORDON: ‑‑
would push the business news, you know, much higher up on the scale of
relevance.
957 THE
CHAIRPERSON: But it will have then been
covered by the general news?
958 MR. GORDON: Generally it would be, yes.
959 THE
CHAIRPERSON: They certainly are less
keen at hearing the quote from the TSX and how the TSX has climbed and who has
climbed and who has furthered their losses, whatever happens on that day.
960 So what kind of
business news are you talking? Because
the general business ‑‑ the general economy will have been
covered within the newscast by itself.
961 MR. GORDON: Those business stories would be strictly 100
per cent local business stories, whether they were plant closures or new
investments into new local businesses.
Certainly with the educational institutions, funding, transfer payments,
those kinds of things.
962 THE
CHAIRPERSON: So that will enter into
what you qualified here as business ‑‑
963 MR. GORDON: That is correct.
964 THE CHAIRPERSON:
‑‑ rather than the overall news of the day, even if a major
local employer is closing down their plant?
965 MR. GORDON: That is right. I mean, in a roundtable approach we would
look at news in a different way. We
wouldn't just talk about the fact that a plant was closing. We would be able to talk about what impact
that would have on all of our listeners within our target demographic.
966 THE
CHAIRPERSON: And the human interest out
of that.
967 MR. GORDON: That is right.
968 THE
CHAIRPERSON: Now, again, I am back with
your staff; director and two reporter journalists who will at the end of the
day have the responsibility of altogether 27 newscasts: 17 Monday to Friday and
10 on the weekend. And the hours are
limited because they are in split shift.
969 So there's almost
no news during daytime, except ‑‑ well, between 9:30 in the
morning and 3:30 there is no news, in accordance to your plan, except one at
noon. And then over the weekend you have
news between eight and noon. What happens
if there is a big, big new breaking out of the hours for which you have
scheduled news.
970 MR. GORDON: I will ask Rob Farina to answer your
question, Commissioner.
971 MR. FARINA: Thank you, Chris.
972 I think in a case
like that, maybe to take a step back from this, you know, one of the things we
are finding with engaging young people with news and public affairs programming
is what's really helping us do that is demystifying the news.
973 In the old days,
you know, the news anchor would come down from the mountain top and the sounder
would ring and, you know, they had one hand over the ear and delivered the
news. Well, that's not connecting with
young audiences any more. So the nature
of how news is delivered has changed, and also the nature of who delivers that
news has changed, too.
974 So when we look at
our entire line‑up of The Curve on‑air personalities, which we
prefer to refer to as multimedia personalities because they need to engage with
our listeners on several levels, The Curve is very much about having
personalities that add, you know, a deeper connection to the listener other
than telling them, you know, what the last record was and what the next record
is.
975 So in the case of
being reflective of something big happening the community, that's a case of the
live person on the air being able to relay that to listeners and, at the same
time, being able to call in, you know, resources to help uncovering the story.
976 THE CHAIRMAN: Okay.
Well, we will move now to your Canadian content development
program. I know that we have had
exchange of letters with you regarding some of your projects, and particularly
the Fanshawe Faculty Music Program and Western University, for which you are
contemplating giving a significant contribution, and also I remember the H.B.
Beal Secondary School, where you are talking about musical instruments.
977 Help us to
understand, really, what you are planning to do regarding, say ‑‑
let's start with the Fanshawe Music Faculty.
Obviously, when we are reading your submission, we are noting that this
program is more related towards management of a music career rather than
supporting and developing new talent, because when I have read the list of the
music industry arts graduates that you have provided us, my own understanding
of the list of names that you have provided is that only Yurko Mikaluk will
meet the definition of a new artist. The
others are in production, in management and in copyright matters.
978 So how will you
make sure that the money that you are contemplating granting to the Fanshawe
Music Faculty will really go to what the CRTC has defined as "Canadian
development"?
979 MR. GORDON: We had many discussions and
conversations ‑‑ and David Jones can step in here any
moment ‑‑ with Fanshawe.
We have a long relationship with them in the music industry arts
program. The discussions have been about
evolving their technology and their music production facilities from analogue
to digital and those are the areas that we would look at supporting them in.
980 THE
CHAIRPERSON: But if, at the end of the
day, the Commission was to conclude that this is not a CCD‑eligible
program, what will you do?
981 MR. GORDON: We would divert the money into one of our
other programs.
982 THE
CHAIRPERSON: You will divert the money
to...?
983 MR. GORDON: Into one of our other programs at ‑‑
984 THE CHAIRPERSON: Other program.
985 MR. GORDON: Yes.
986 THE
CHAIRPERSON: Now, we seem to have the
same type of difficulty with the Western University program that you are
contemplating also giving money, and, again, with the H.B. Beal Secondary
School.
987 What will you do
if the Commission was to come to the conclusion that those are not eligible
CCD?
988 MR. GORDON: Well, we would ‑‑
989 THE
CHAIRPERSON: Because they are
significant sums that you have committed.
I'm sure that you surely have already spoken with those institutions and
they will be at your doorstep if you are granted the licence.
990 MR. GORDON: Certainly we would ‑‑ you
know, we are confident that these programs will meet the CCD requirement, and
if they were not we would fund other initiatives, such as FACTOR and MusiCan
and MusiCounts and those things, but we are very confident that these do meet
CCD regulations.
991 THE
CHAIRPERSON: Surely I don't think it's
for me to make suggestions here, but those institutions have broad programs which
are mainly, from what description you have provided us ‑‑ take
the Don Wright Faculty of Music, in that faculty of music I'm sure that they
have other things than production courses.
They do have also talent, they do give also straight music courses to
eventual performers.
992 MR. GORDON: David Jones can add some colour to this,
Commissioner.
993 MR. JONES: Let me just tackle a couple of things.
994 I believe the list
you are referring to with Yurko on it is some of the faculty members that would
teach some of these courses. So they
wouldn't be directly impacted by this, it would be the students that would be
taking the courses.
995 Let me take one
and just give you an example: the H.B.
Beal scenario. We approached them ‑‑
and I was lucky enough to tour the facilities ‑‑ and the
intent is to give money to MusiCounts and let them do their thing to purchase
musical instruments for the students at H.B. Beal.
996 I toured their
facilities, and while Beal is a fantastic heritage school in the downtown core
and they have had money to upgrade their facilities, their actual building, so
that it's really a nice building right now, they are in need, as we hear every
year on the Junos, every year on the Grammies and from every Canadian artist
that ever speaks about education, they are in need of money to upgrade the
actual instruments that their students use.
997 So when you walk
by a couple of stand‑up pianos that are certainly a lot older than I am
and guitars that are really held together by duck tape, I mean there really is
a need there. So that's how we came
about with that specific initiative.
998 MR. FARINA: And just for clarification, MusiCounts, for
anybody that may not be aware, is the new name for MusiCan. There was a dispute issue, so MusiCan recently
changed its name to MusiCounts, which has been an eligible CCD recipient up
until then.
999 THE
CHAIRPERSON: Right.
1000 If those were
eligible under the prior definition of CTD, but when we redefined CCD, we
came with a much narrower definition than
the one we had previously, in a way, but we have expanded it towards
journalism, as well, not only the music but also towards journalism and other
related talent, but it's really talent driven, and rather than sustain ‑‑
and I hear what you said regarding music instruments because, at the end of the
day, they go in the hands of those who are learning music, but the two
programs, the one from Fanshawe and one from the Faculty of Music at Western,
obviously it has numerous components, because some could take more managerial
orientation, another production, another one will study instruments to
eventually become a performer whatsoever, because you gave names of
operatic ‑‑ I'm not sure that it goes really within the
format, but the list of the grants from the university that you have provided
us included some people who learn opera at Western ‑‑ and,
obviously, those are meeting the definition of a talent, so....
1001 I only want to
bring it up. Surely, we will look
closely at your submission, but I know that staff pointed out that it might not
specifically meet the letter ‑‑ not the spirit but the
letter ‑‑ of the policy, you know, that you have people around
the second table who are listening closely to what I'm saying here.
1002 Look more at the
business. And I know that in the
economic profile that Communications Management Inc. did for you, there is a
section where the writer of the report talks about having to compete against
players like Astral and Corus, who both have already four radio stations in the
market, and he called it the four plus four plus one.
1003 Obviously, one
aspect of your presentation here is, in order to be able to really compete
against those two players, you need to have a second radio station. So what are really the challenges that you
are currently facing and what will be the benefit of granting you a second
licence?
1004 And I will ask
already my second question: what will it
be like if we were not to license you but gave the licence to another one so it
would be four plus four plus one plus one?
1005 So what is
currently the challenge and what will be the future challenge if there was
another licence, but granted to another than CTD?
1006 MR. GORDON: Thank you, Commissioner Arpin.
1007 The first
challenge is one that involves two components:
the ability of our competitors to manage their costs and manage their
expenses across a synergistic platform for radio stations. They are able to operate four radio stations
with a single production department, a single marketing department, a single
creative department, and that is a situation that we are not able to currently
enjoy.
1008 The other
disadvantage is from a sales and marketing and promotional situation, where we
represent a very small percentage of the total listening in London and our two
competitors represent a substantial amount of tuning in the market.
1009 I'm going to ask
Jim Blundell to step in and talk a little bit about what happens on the ground
on a daily basis in London.
1010 MR. BLUNDELL: Thanks, Chris.
1011 Well,
Commissioner, I'm really excited about being here today. I'm excited that we have got this chance to
talk to you because I don't just represent CHUM Radio, I represent 25 young
people back in London that just really want a great ‑‑ this
opportunity for another radio station.
1012 It's been a tough
go this last eight years because when you have 8.3 percent of the hours‑tuned
market share, your competitor, of course, has 28 percent and Astral has 33.1
percent, it's hard, it's very difficult, because no matter which way you turn
they can block up. They can beat us on
just overall tuning an audience, but also because they have got, if you will,
four cash registers and we have one.
1013 They can throw
some away; in other words, they can discount some of their radio stations to
force a buy from some of our advertisers to them from us. And they have been quite successful at
it. These guys are good broadcasters,
they know what they are doing, and they have made it difficult for us.
1014 So I can tell you
that, you know, I have been in London since the get‑go. I was there the day the radio station signed
on, and these eight years, while they have been fun, they have been
exhilarating in a lot of ways, it's been hard.
And it's getting harder because our competitors, as my colleagues, David
Jones said earlier, our competitors are making changes as we are moving along.
1015 Where they see us
making gains, they can take one of their radio stations and literally throw it
at us and try to knock our ratings down.
And that sort of was evident in the last book and it ‑‑
you know, we have gone from a number one position 25‑54 to number
four. It makes it hard.
1016 So, you know, from
my perspective, I just want you to know that myself, and the 25 great people I
work with every day in London, we would really like this opportunity to make
this competitive imbalance more fair, to make this playing field a little bit
more fair than it has been.
1017 MR. GORDON: And truthfully, in the future, by licensing
another stand‑alone radio station, that would just dilute the market
more, and especially if another radio station, as a stand‑alone, was
going after a youth‑based audience.
They would have a very, very difficult time competing, especially in the
current economic climate, you know, with the two major competitors in the
market that are fully consolidated.
1018 THE
CHAIRPERSON: So that's the view of the
other, but what could be the impact on your own existing radio station if we
were to grant a new licence to one of the other applicants here?
1019 MR. GORDON: Well, we would experience a decrease in
revenue and a decrease in EBITDA.
1020 THE
CHAIRPERSON: For your existing radio
station?
1021 MR. GORDON: For our existing radio station, correct.
1022 THE
CHAIRPERSON: But if the format that we
were to ‑‑ say that we were to grant the licence to Rogers or
Evanov, which are both catering to a much younger demographic than your
existing FM station, will it have the same impact?
1023 MR. GORDON: It would be an impact. It wouldn't be as great as some of the other
applicants, that one that we heard here this morning, but it would definitely
have an impact on the market, especially in light of the fact that the
Conference Board just recently released their projections for London for the
next year at a 1.3 percent, you know, growth rate for the market.
1024 You know, the BMO
radio report on radio broadcasting nationally in Canada was just released a
couple of weeks ago and they are calling for a 1 percent national increase
across the board for radio. If we are
talking about a 0 or a 1 percent increase in total revenue for the radio
stations in the London market, any entrant into the market is going to have an
adverse effect on the other players.
1025 THE
CHAIRPERSON: And how confident should we
be about the London market? We only got
last Friday, I think, the trend for September, and when I'm looking at the
adjusted revenue figure I note that the London market is down for September. Obviously it's only one month, but if we look
towards the near future, I don't think it is going to go much better, it will
keep going down.
1026 And it's
interesting because London is one of the very few markets that is down in
September. Most of the markets were up
in September, but London was down in September.
My guess is that the coming months will not be much better, but will it
be worse in London than anywhere else?
1027 MR. GORDON: I don't think ‑‑ and, Jim,
jump in here, by all means ‑‑ in London it would be worse than
any other market in southwestern Ontario.
And looking at TRAM, we have to careful looking at one month in
isolation because ‑‑
1028 THE
CHAIRPERSON: Oh, yes. When I'm looking at the previous year,
though, year to year there is an increase, but, amazingly ‑‑
it really drew my attention because I was coming here for a hearing concerning
the London market and so I look at the numbers and I noticed that, out of all
the markets reported by TRAM, London is one of the two markets where the
revenues were down for that month.
1029 MR. BLUNDELL: If I'm not mistaken, Mr. Commissioner,
national business was down quite significantly in September, and I don't have
these numbers in front of me, but, in fact, I think local business might have
been flat. But you are right, national
business was off a frightening amount, as a matter of fact.
1030 THE
CHAIRPERSON: I can't make any comparison
because they started to report the numbers through national, local and
agency. They don't have comparative for
previous years, so I cannot go and check.
And I will take your statement as being....
1031 So the issue is,
hence, that could vary from month to month, depending on the national
advertiser strategy ‑‑
1032 MR. BLUNDELL: Right.
1033 THE CHAIRPERSON:
‑‑ but from the retail standpoint you think it has sustained.
1034 MR. GORDON: Yes.
And I think, you know, for our purposes, we are very committed to the
London market. and, you know, we have
been through economic downturns before, we have launched radio stations during
economic downturns, and they have been very successful. And certainly licensing another radio station
for CHUM in the London market would definitely help us, you know, through those
choppy waters.
1035 THE
CHAIRPERSON: Now, looking at your
revenue projections, I note that when I'm considering a market share for the
whole year of 2008, I think ‑‑ let me just to make sure ‑‑
the market point is somewhere close to $275,000 per point. That's if the whole universe was to
be...there were no out‑of‑market listeners. But based on the market shares in the market,
we are somewhere around $360,000 for market point.
1036 Now, for your
third year of operation you are forecasting a market share of $409,000. Is it an optimistic scenario, a realistic
scenario or...?
1037 MR. GORDON: I'm going to ask Kerry French to jump in
here, but we feel it's a realistic scenario, especially based on the
demographic of the radio station that we are going to be putting on the air.
1038 THE
CHAIRPERSON: Well, we are talking here
the market.
1039 MR. GORDON: I will ask Kerry to jump in, please.
1040 MS FRENCH: I think, Mr. Vice‑Chair, the difference
in the figures there are market growth.
You refer to year three. We are
looking at 7.4 percent share of tuning.
But actually our revenues are 7 percent of what we project the market to
be at at that point, so we are actually under what the average 1 percent share
would be.
1041 And the reason for
it being under is it does really take some time to grow your audience and to
grow your relationships with your clients so that share point and share of
revenue comes into line. Not everybody
is at the mid level. Some stations have
a higher power ratio so that they get more than a 1:1 share. It takes a certain amount of time to get
there.
1042 THE
CHAIRPERSON: Now, your financial
projection, and one of the assumptions is, obviously, money that would come up
from various sources, and you are estimating that by year two 35 percent of
your advertising revenues will come at the expense of the existing radio
station, and that amounts to $553,000.
1043 Now, what you are
saying is that your format catering to the youth market will not necessarily be
done at the expense of the other existing radio stations. So for which station do you think that money
will be coming up?
1044 MR. GORDON: I will ask Kerry to answer that question.
1045 MS FRENCH: I think, Mr. Vice‑Chair, there's also
market growth in that figure, so we wouldn't necessarily take any particular
amount from any particular radio station.
Because the way it works is an advertiser has a pool of dollars and they
are trying to attract a certain audience, and what you do is try and get your
appropriate share of that big pie. They
don't necessarily buy the same number of stations each time.
1046 If you are
providing an alternative to reach an audience that they haven't been able to
reach with radio before, they may add you to the list. And what happens when they do that is the
investment in current radio stations will be a little lower than it would have
been had you not been there and offered that alternative.
1047 So it really also
depends on what those radio stations are doing at the time and where their
shares of the total audience fall out in reaction to you being on the air.
1048 If I could try and
bring a little clarity to this, those radio stations that are currently on the
air are not targeting this particular demographic, in fact, two have moved away
from the target, so there is a pool of audience that is available for us to
attract.
1049 And by the same
token, if they are not attracting the higher end of this audience that they
were before that will fall away from their total numbers. So it's a matter of there are probably three
or four stations that will be impacted, but not to any great extent on any one
of them.
1050 THE
CHAIRPERSON: Thank you.
1051 Really my last
question, and it has to do with your filing, which is Schedule 7(1)(b), and it
has also to do with my introductory remark.
1052 In your point
number five to that schedule, it says:
"An operating line of credit
has been obtained to finance any cash flow deficit for the FM Edmonton
licence." (As read)
1053 How is it related
to this application?
1054 MR. GORDON: I would say that it's not.
‑‑‑ Laughter /
Rires
1055 MR. GORDON: Strike that from the file.
1056 THE
CHAIRPERSON: From the file.
1057 Obviously, you
heard us earlier this morning asking all the applicants to provide us within
the next 10 days with a commitment letter from their banker. I think, and I don't know, I'm asking you, if
you are able to meeting that deadline?
1058 MR. GORDON: We would be pleased to provide that.
1059 THE
CHAIRPERSON: Thank you very much. I will check with my colleagues if they have
questions.
1060 Rita Cugini.
1061 COMMISSIONER
CUGINI: Thank you.
1062 Just a couple of questions
on the software that you will be using for The Curve.
1063 Are you currently
using this software on any of your other radio stations?
1064 MR. FARINA: We have not deployed this yet.
1065 COMMISSIONER
CUGINI: Why not?
1066 MR. FARINA: With competitors in the room, without giving
away too much, CHUM Radio is in the process of building an entire interactive
platform that we are going to be unveiling at the beginning of 2009.
1067 COMMISSIONER
CUGINI: So is this software proprietary?
1068 MR. FARINA: It's proprietary software and it's exclusive
to CHUM Radio in Canada.
1069 COMMISSIONER
CUGINI: Okay.
1070 I mean, I think I
know the answer to my next question, and you are going to say it's the
economics, but given your target audience, given where they are accessing their
music now, why go through this process?
Why not just launch as a web radio station?
1071 MR. FARINA: I think we see this as an exciting way to
bring radio back to its roots. Radio, we
think of radio as the original social networking hub and for a long time radio
didn't work hand‑in‑hand with the technology.
1072 As the technology
evolved I really believe that it has gotten to a point where the technology
being used by a lot of the Internet audio entertainment players out there is
actually quite complementary to what we do in radio and will allow us to do
what we do even better.
1073 We believe radio
has a strong future and we believe radio has a strong future with young
people. And despite the tuning declines
that we are seeing in young people we feel that by marrying the two we could
enhance the connection to radio.
1074 COMMISSIONER
CUGINI: I know that ‑‑
I mean especially the younger part of your demo, why that would be attractive
to you, that is the age 13, 14, 15, you are looking for your own radio station,
you don't want to listen to what your parents are listening to, you might not
even want to listen to what your older siblings are listening to, but how are
you going to keep that audience as they grow up into their late teens and early
20s?
1075 MR. FARINA: Well, Commissioner, I should say that when we
researched, you know, the format ‑‑ and when we researched the
format the audience tells us who is going to listen to it, not the other way
around. The biggest appeal for this
format, while great appeal 13 to 17, the biggest appeal was actually 18 to 24
and 25 to 34.
1076 I think the reason
why they are going to listen to this format, it is a format that's
evolutionary, it's a format that's reflective, but most importantly of all it's
a format focused on local community reflection and I think that's a basic need
of the human condition, is to connect with each other in the community that we
belong in. We believe that that's what
radio does best and we believe that that's what the technology now allows us to
do even better.
1077 COMMISSIONER
CUGINI: Thank you, Mr. Farina.
1078 Thank you. Those are my questions.
1079 THE
CHAIRPERSON: Thank you very much.
1080 Commissioner
Simpson...?
1081 COMMISSIONER
SIMPSON: Thank you.
1082 Three questions.
1083 Following on with
respect to the software, my first question is to do with the privacy issues
which I would like to know a little bit more about because I understand you had
implied that the software, I presume on a permission basis, would allow the
software to interact with data in the computers of subscribers or listeners who
have volunteered to participate in this undertaking.
1084 Have you run the
course and where are you at with respect to the privacy issues?
1085 MR. GORDON: We will be complying with all Canadian
privacy laws and PIPEDA legislation.
1086 We currently have
a draft consent, informed and express consent form in place that will comply
with all regulations.
1087 MR. FARINA: And just further to that, just for the sake
of clarity, we are not pulling music files out of people's computers, we
are finding out, you know, the titles and artists and specific to those habits,
you know, that they are accessing those titles and artists, and then we are
offering on our website the opportunity to stream customized new music
recommendations.
1088 But we are not
trading music files back and forth, if there was any confusion about that.
1089 COMMISSIONER
SIMPSON: I think I understand that, but
there is a big distinction between someone pushing data to you any you pulling
data from them. I know that you
understand that distinction, but the impact of it is not lost on me in terms of
the fact that it can potentially be a thorny issue.
1090 MR. FARINA: Well, what we could tell you is the software
we are using is already being used by 21 million users worldwide and about half
a million of those in Canada and has been in existence for the last six years.
1091 THE
CHAIRPERSON: But somehow you are picking
your nose in somebody else's computer and I don't ‑‑
because ‑‑
‑‑‑ Laughter /
Rires
1092 THE
CHAIRPERSON: So you may be looking for
some very specific data, but someone could think that you are trying also to
see what else they have on their computer.
1093 MR. FARINA: Sure.
1094 THE CHAIRPERSON: Because it does matter.
1095 MR. FARINA: I'm still getting over the analogy. I think we ‑‑
‑‑‑ Laughter /
Rires
1096 THE
CHAIRPERSON: We are not the Privacy
Commission, but ‑‑
1097 MR. FARINA: Sure.
‑‑‑ Laughter /
Rires
1098 MR. FARINA: Respectfully, Chairman Arpin, we are talking
about an audience that's comfort level is a lot different than an older
listener. We are talking about an
audience that's used to the idea of file sharing and we are talking about an
audience that's used to the idea of ‑‑ like for examples in
the iTunes folder implementing their tune so that everybody around them can
have access and hear the music on their library. So the comfort level is different.
1099 Again, obviously
the safeguards that CHUM Radio and our parent company CTV puts in place in
terms of its privacy policy upholds to the most stringent of government
regulation.
1100 COMMISSIONER
SIMPSON: Just one more question.
1101 With respect to
the software itself, one of the life lessons in doing qualitative research is
you keep asking the same question until you get the same answer and my
curiosity is now wanting to focus on the idea that if you have the sort of a
closed loop going on between your listener and your ability to program to the
listener's taste, at what point does the water pressure equalize, where
what they have on their computer is what they are getting on the radio station
and does that enhance or lessen the demand?
1102 MR. FARINA: The beauty of the software is it's a moving
target as every day the listener is accessing music. When they disconnect from the radio
station and they are accessing music either off our website or on their iPod or
in their music folder online, that information is constantly being updated.
1103 The other great
thing about this is that's how we pick up immediately when new artists are
being discovered and found.
1104 So it really
is ‑‑ when we talk about, you know, our opportunity to now
really be able to reflect the pulse of the city, it's a constantly evolving,
constantly moving target. We don't get
the information and then that's just what we live with, it's continually
evolving just like pop culture is continually evolving.
1105 COMMISSIONER
SIMPSON: Not meaning to pin you to a
hard answer, but try to, for my understanding, quantify how much of this system
is being used to program the station.
Obviously there is some subjectivity and a lot of objectivity. Just on a percentage basis, are you using
100 per cent of what you find, 50 per cent, 75? You know, what is that ratio between judgment
and data?
1106 MR. FARINA: I would probably say it's going to be
75 per cent reflecting the habits of the listeners,
25 per cent being able to curate those habits and ensure that we are
playing, you know, our Canadian content requirement or emerging artist
requirement. But I would probably tell
you it's a 75:25.
1107 I don't want to
diminish the role that the Program Director and the Music Department
play in this radio station and ion going out and sourcing and discovering
new artists, but the audience plays a dominant role in helping us reflect their
music choices.
1108 COMMISSIONER
SIMPSON: Thank you.
1109 THE
CHAIRPERSON: So we will go to the legal
counsel.
1110 MR. McINTYRE: Thank you, Mr. Chair.
1111 I just have one
question about the sample playlist that was submitted with your
application. I believe that you
submitted a one hour sample and I believe the application requests example
blocks from morning, afternoon, peak periods as well as off‑peak periods.
1112 Could you
undertake to provide us with that?
1113 MR. FARINA: Yes.
We do have a full playlist available and we would be more than happy to
file that what the Commission.
1114 MR. McINTYRE: Great.
1115 That's all.
1116 THE
CHAIRPERSON: Thank you very much.
1117 Gentlemen, thank
you for your presentation.
1118 We will take a 10
minute break.
‑‑‑ Upon recessing
at 1525 / Suspension à 1525
‑‑‑ Upon resuming
at 1540 / Reprise à 1540
1119 THE
CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.
1120 Madam Secretary...?
1121 ASSISTANT
SECRETARY: We will proceed with Item 4,
which is an application by Rogers Broadcasting Limited for a licence to operate
an English‑language FM commercial radio programming undertaking in
London.
1122 The new station
would operate on frequency 98.1 MHz, Channel 251B1 with an average effective
radiated power of 4000 W, maximum effective radiated power of 7000 W, with an
effective height of antenna above average terrain of 106.5 m.
1123 Appearing for the
applicant is Mr. Paul Ski.
1124 Please introduce
your colleagues and you will have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
1125 MR SKI: Thank you very much.
1126 Mr. Chair, Members
of the Commission and Commission staff, my name is Paul Ski, I am the Chief
Executive Officer of Rogers Radio.
1127 We are delighted
to be here today to present our application for the next generation of FM radio
aimed at serving the young people of London.
With me today to talk about our proposal for a new brand of interactive
radio is, to my far left, Lannie Atkins, General Sales Manager for CJAQ in
Toronto. Next to Lannie is Julie Adam,
Assistant National Program Director for Rogers.
To my right is Susan Wheeler, our Vice President of Regulatory
Affairs. Next to Susan is Adam Kaftalovich,
Director Online Operations and Content.
1128 In the back row,
to my left, is Chuck McCoy, Executive Vice President Programming and
Marketing. Beside Chuck is Sandra
Stasiuk, Vice President Finance Radio.
1129 We are also
pleased to have with us today in the audience Rael Merson, President of Rogers
Broadcasting and Ken Engelhart, Vice President Regulatory Affairs, Rogers
Communications Inc.
1130 Mr. Chair and
Commissioners, our presentation today will focus on four key areas.
1131 First, London's
under served youth market.
1132 Second, our
proposal for a new kind of interactive nontraditional radio station POD‑FM.
1133 Third, the
development and promotion of Canadian music talent.
1134 Fourth, why
licensing POD‑FM is in the public interest.
1135 As radio
operators, we know that young people are disengaging from radio and we see
this as radio's biggest competitive challenge going forward. Young people have an increasing array of
entertainment choices at their disposal that allow them to pull and push
content when they want it and how they want to.
They are no longer fixed passive receivers are programming.
1136 This means that we
can no longer afford to approach our audience or our programming like we have
in the past if we expect to reach these younger listeners. Youth media habits require us to reinvent
traditional radio by seamlessly integrating it with online video and mobile
technologies to create an interactive and personal experience that they can call
their own.
1137 The evidence is
clear, London is an ideal market in which to launch this new brand of
interactive radio. Of the 15 to 34‑year‑olds
surveyed in our research, 33 per cent are listening to radio less
than they did before, particularly women 15 to 29. 62 per cent of those who said they
were listening to radio less cited personal media and/or Internet listening as
the reason. 83 per cent said
they go to the Internet daily and 41 per cent listen to radio online,
with the majority listening to stations other than local radio stations in
London.
1138 When it comes to
music, here is what the young people of London had to say:
1139 Seventy‑nine
percent think that local London radio stations play the same songs.
1140 Eighty percent
want to hear new and emerging artists on London radio.
1141 And the majority
think that a contemporary hit radio, or CHR station, has the most appeal.
1142 Currently, the
only option that young London listeners have for a contemporary hit radio or
youth‑based station on traditional radio is Kitchener station CKBT‑FM,
a station 90 kilometres away ‑‑ a little closer here. We believe that these listeners deserve their
own local station.
1143 pod fm is a new
paradigm in radio. Its interactive and
on‑demand strategy is designed to encourage young listeners to return to
radio by offering them all of the community elements of local radio with the
functionality of internet and wireless technologies.
1144 We believe that
this interactive strategy will re‑engage young listeners and allow us to
keep them in the regulated system.
1145 Simply put, if we
can engage young listeners now, we stand a better chance of being part of their
future.
1146 Reaching young
listeners also creates new business opportunities for radio, as it allows us to
connect our advertising clients with this demographic in a more meaningful and
relevant way.
1147 Through pod fm's
significant and incredible online presence, pod fm will be in a better position
to attract new advertisers to the radio market, which will strengthen the
business case for this type of interactive, youth‑oriented radio format.
1148 pod fm's focus on
driving engagement online and on‑air will give youth advertisers a more
relevant choice when it comes to their advertising buys.
1149 pod fm's ability
to tap new advertisers of products and services, such as fast food, energy
drinks, cosmetics, video games, among others, will create new revenue in the
radio market and minimize the impact on the incumbent radio stations in London
who do not serve this client base.
1150 pod fm's online component
will also give advertisers a higher degree of measurability and accountability
when it comes to their media buys, which will enhance radio's competitive
position in the advertising market.
1151 Now, to give you a
better sense of how pod fm will approach its programming and listeners, we have
prepared a short video that describes the type of station we would like to
build and the response we received from London's young people.
‑‑‑ Video
presentation / Présentation vidéo
1152 MS ADAM: As you heard on the video, pod fm is not your
traditional radio station. It is
designed to fill an obvious hole in the London market by engaging young people
in a manner that traditional radio has found difficult to do in recent years.
1153 Radio was the
first social network medium, so it is only natural that radio should come full
circle and reinvent its role as the voice of its local community, using a
variety of different technologies.
1154 Today's young
people talk, text, chat, surf and watch all at the same time, consuming and
creating content simultaneously.
1155 In recognition of
these dynamic media habits and eclectic music tastes, pod fm will encourage
listeners to shape the station's music and content.
1156 pod fm will drive
engagement in four fundamental ways that are very different from radio's
traditional approach to programming:
first, through its music; number 2, through its local content; number 3,
through its Very Interactive People ‑‑ VIP ‑‑
Program; and fourth, and finally, through the use of social networking.
1157 First, pod fm will
drive engagement through its music.
1158 At pod fm, gone
are the days where we program the station and push it out to our audience. In pod fm's new paradigm, listeners, not the
program director, will shape the playlist and the content.
1159 Specifically, pod
fm will empower and engage listeners by giving them the opportunity to shape
its playlist by choosing from a constantly changing variety of titles,
including a wide variety of selections from Canadian emerging artists, such as
Kardinal Offishall, Danny Fernandez, and local London artist Shad.
1160 pod fm's audience‑driven
playlist will ensure that listeners hear the bands they are interested in and
that emerging artists get the airplay they deserve.
1161 pod fm listeners
will also be encouraged to continually contribute to the station's playlist by
listening to clips, voting on artists and ranking their favourite tracks
online, which will result in a broad, varied and unique mix of songs not often
heard on commercial radio, let alone in the London market.
1162 In fact, based on
our research, pod fm is guaranteed to be unique to London, playing 70 to 75
percent new music. No other station in
the market offers this level of diversity of music.
1163 pod fm listeners
will shape the playlist in four ways:
they will engage in online music surveys; they will listen and vote on a
list of five music clips every time they refresh a page on
"podfm.com"; they will submit their favourite songs via text, e‑mail,
or through the pod's social networking space; and they will vote daily on the
pod's "7@7" playlist.
1164 Secondly, pod fm
will drive engagement through its local spoken word and music content.
1165 Using a
combination of listener and station‑generated content, pod fm will ensure
that it continually has the pulse of London's youth market by offering over 9
hours a week of talk, including over 3 hours a week of pure news programming,
covering issues that our listeners have identified as relevant to them.
1166 With programs such
as "Talk to pod" and "My pod News", pod fm will offer
information and invite discussion on topics that young London listeners have
told us they want to hear, encouraging ongoing input on the issues that are the
most important to pod fm listeners, through text, e‑mail, blogs, chat
rooms, instant messaging and webcams.
1167 Listeners and on‑air
announcers submitting user‑generated audio and video content online, and
featuring an emerging artist on "podfm.com" each month, listeners
will have access to videos and/or MP3 podcasts of live performances, along with
interviews and segments on the artist and their music.
1168 pod fm will also
encourage listeners to preview new music, post music recommendations online,
plug into London's live music scene, and learn more about their favourite
artists.
1169 Through the use of
citizen journalism and social networking features and functionality, pod fm
listeners will have the ability to comment on articles, videos and blog posts,
creating a community dialogue that is unparalleled in the London market.
1170 Thirdly, pod fm
will also drive engagement by encouraging listeners to generate and maximize
the use of "podfm.com" content through the pod VIP program.
1171 VIP stands for
"Very Interactive People". It
is an incentive‑driven program that gives points or credits to listeners
for posting, submitting, voting and communicating with the station.
1172 The pod VIP
program will give listeners exclusive access to contests, online auctions and
digital downloads, among other innovative and relevant content and product
offerings.
1173 Finally, pod fm
will create a social network specifically for the young people of London. pod fm will leverage the popularity of
established social networking sites like MySpace and Facebook by integrating
its online presence into these web communities and giving young people in
London the ability to connect with each other, in addition to their broader
global network.
1174 Similar to how big
heritage radio stations were once the barometers of local culture, pod fm will
create a social network where young people in London can share their likes,
dislikes, and create their own culture.
1175 pod fm will
recapture radio's legacy of community involvement and local expression for
London's youth market.
1176 As a youth‑oriented
and interactive radio format, pod fm is ideally positioned to offer unique and
innovative opportunities to promote and showcase Canadian musical talent on‑air
and online.
1177 As part of its
commitment to the local London community and emerging music artists, pod fm
will invest $3.2 million over and above its basic Canadian Content Development
requirements to the development of local and regional emerging musical talent
and music education.
1178 Working with the
North by Northeast Music Conference, an organization with proven expertise and
experience in the promotion of emerging Canadian talent, we have developed a
new and exciting initiative to be known as "The pod Road Tour". We believe that this will make a discernible
difference in the career development of local emerging talent.
1179 Live touring is,
without question, one of the most important elements in the development of an
artist's career. With record sales in
decline, and so many sources for new music, touring is not only the best way
for artists to distinguish themselves and build a profile, it is also one of
the largest sources of revenue for them.
1180 "The pod Road
Tour" is specifically designed to tap into and leverage this lucrative
revenue stream for emerging music artists by investing over $1.8 million,
$265,000 each year, and full tour funding to support three top emerging bands
from the London and surrounding areas.
1181 pod fm's website
will serve as the go‑to place for the latest information on "The pod
Road Tour" bands, with each band having a dedicated space where they can
blog, post audio streams and pictures and videos of their various gigs
throughout the tour, and keep a backstage tour diary that will allow pod
listeners to ask questions and interact with the bands as they travel from city
to city.
1182 At the end of the
tour, pod fm listeners will vote online for their favourite band, based on
their music, live performances and tour diary, in addition to other content on
their web page.
1183 The band with the
most listener support will be awarded new gear and a showcase spot at the 2010
North by Northeast festival.
1184 We believe that
"The pod Road Tour" initiative responds directly to young London
listeners' desire to hear and learn more about new music and new music artists.
1185 pod fm will also
make significant local contributions to music education by investing $490,000
in CARAS' early music education charity, "MusiCounts". This program is designed to ensure that young
Canadians, regardless of their cultural or socioeconomic background, have
access to music programs and instruments in their schools.
1186 pod fm also
intends to invest locally in advanced music education programs, with $210,000
in scholarship funding for students enrolled in the University of Western
Ontario's Master's of Music in music education degree.
1187 MR. SKI: Understanding the interplay between content
and technology is key to speaking to this audience. Taking media and technology in bold new
directions is part of Rogers' DNA.
1188 As experienced
radio broadcasters, we have the expertise and the resources to launch this new
brand of interactive radio and see it through to success.
1189 We have never
shied away from innovation, and would be proud to introduce this new brand of
interactive radio to London.
1190 The London radio
market is heavily consolidated, and dominated by a few large players. Licensing Rogers will allow the Commission to
introduce a new entrant to London that has the experience and resources needed
to compete effectively with three of the largest radio groups in Canada.
1191 In licensing pod
fm, the Commission can be assured that it will increase the diversity of
programming, editorial voice, and ownership in the London radio market ‑‑
and we are here to stay.
1192 As a new entrant
to the market, pod fm's programming will be specifically geared at an
underserved and, consequently, disenfranchised demographic. This is a demographic that is growing up
without the benefit of a local radio experience.
1193 pod fm's aim is to
change that reality and reintroduce this generation to local radio in a way
that reflects their media habits, tastes and expectations.
1194 For these reasons,
we believe that our proposal for pod fm represents the best use of remaining FM
frequencies in London, as it will keep young people engaged in the regulated
system today, and, we believe, for years to come.
1195 As we have
described in our presentation, pod fm will serve the public interest and
achieve the objectives of the Commercial Radio Policy and the Broadcasting Act
in a number of ways.
1196 One, it will
provide a personalized and interactive local radio experience that will re‑engage
the young people of London in the regulated system.
1197 Two, it will offer
a diverse music format that will repatriate out‑of‑market tuning
and target an underserved demographic.
1198 Three, it will
offer over 9 hours per week of local spoken word content, including
professional news segments that will engage young listeners.
1199 Four, it will
increase ownership, editorial and music diversity in the London radio market
and recalibrate its competitive balance, with minimal impact on incumbent
stations.
1200 Five, it will
invest $3.2 million in the development of local and emerging Canadian music
talent and music education initiatives.
1201 Mr. Chair and
members of the Commission, I started my radio career in London. I won a guest disc jockey competition on CKSL
many years ago, which is not unlike our "You Power the pod" program,
which is part of this application.
1202 Over that time I
have witnessed the many changes and competitive challenges that local radio has
faced over those years.
1203 I believe that pod
fm is the next evolution in radio, and has all of the right ingredients to
reinvent radio for the youth market, and make it a truly personal and on‑demand
interactive experience.
1204 Thank you for your
attention. We would be pleased to answer
any questions you might have.
1205 THE
CHAIRPERSON: Thank you, Mr. Ski. You are a long way from London.
1206 How many years?
‑‑‑ Laughter /
Rires
1207 THE
CHAIRPERSON: You don't count them any
more?
1208 MR. SKI: I had a note of that somewhere here, but I
seem to have misplaced it.
1209 THE
CHAIRPERSON: Commissioner Duncan will
have the first round of questions.
1210 COMMISSIONER
DUNCAN: In your supplementary brief you
refer to audio content that will be available for listeners to download, store
and remix, and you indicate that there will be a comprehensive selection of
audio content available 24/7 on your website.
1211 I am just curious
to know if there are rights issues, and who would be responsible for paying for
the rights that allow your listeners to download, store, remix and share the
music you are playing.
1212 MR. SKI: Thank you, Commissioner Duncan. I will have Julie Adam give you a better idea
of how we plan to put all of those pieces of interactivity together.
1213 MS ADAM: Thank you.
1214 We are really
excited about the web applications. This
is really our whole approach to the radio station, that it is not just a radio
station.
1215 In terms of
rights, a lot of things are still being ironed out, but what we know for sure
is that we are able to put any spoken word content on the website. There are no rights issues with that.
1216 We will seek the
permission of any independent artists to post their music. We are actually going to make it so that
independent artists can post their own music if they want to. So, obviously, there won't be any rights
issues with that.
1217 In terms of
mainstream artists or mainstream songs, we can post clips. We can post ‑‑ I think it is
5 to 20 seconds of clips of songs without any rights issues. We will do that.
1218 Full‑length
live songs, when we have artists that come into perform, as long as we get
their sign‑off when they are in, we will be able to do that.
1219 And, then, any
secondary streams, there are some rights issues with that that we will have to
overcome and sort out with the major labels.
1220 COMMISSIONER
DUNCAN: Those costs, are they provided
for in your projections?
1221 MR. SKI: Yes, they are.
1222 COMMISSIONER
DUNCAN: So you have estimated them
somewhere?
1223 MR. SKI: I will let Sandra estimate them.
1224 I think, as Julie
said, the vast majority of what we will be doing, from an interactive standpoint,
there won't be a great cost to it, but there will be some.
1225 MS STASIUK: We have included in all of our copyright fees
any calculations based on the total revenues, including Web revenues.
1226 COMMISSIONER
DUNCAN: I am just not quite sure how that
would incorporate the fees that you would have to pay with respect to music
that the listeners are downloading and exchanging.
1227 When you get
rights, you are buying the rights to air it on your radio station, not on the
web, I don't expect.
1228 Or are you?
1229 I guess that's the
question.
1230 MR. SKI: That's correct. I will have Susan respond.
1231 MS WHEELER: There are tariffs that are certified for that
particular function. Some of them have
yet to be certified, so we have taken the proposed rates into consideration
when coming up with our financial projections.
1232 COMMISSIONER
DUNCAN: So you have put them in there.
1233 MS WHEELER: Yes.
1234 COMMISSIONER
DUNCAN: Okay, thanks.
1235 Those would be,
probably, on your "Administration" line?
1236 Is that the idea?
1237 MS STASIUK: They would be in "Programming and
Administration", yes.
1238 COMMISSIONER
DUNCAN: Can you give us some examples of
the listener‑generated content that you expect to air?
1239 I am also
wondering who is going to monitor and edit it, and who will be responsible for
deciding what goes on air. Will you be
using a delay, or are you just going to air it?
1240 MR. SKI: I will have Julie flesh that out a bit.
1241 No, we won't air
it. As a matter of fact, because the web
component is so important to us ‑‑ most radio stations have a
program manager, and a music director, in most cases, to shape the programming
formatics. In our particular case, we
will have not only that, but, in addition to that, we will have somebody who is
really a program manager for web content.
1242 That person will
act as the filtering device for this particular information, as well as some of
the on‑air people. But we will
have somebody whose primary purpose will be to ensure that the web content works,
and he or she will work along with the program manager to make sure that the
two come together.
1243 MS ADAM: Our overall vision for the station is really
that we want it to be interactive, so we want absolutely everything we do on
the radio station to be generated by the listeners as much as possible, also,
obviously, understanding that there are responsibilities that come along with
that.
1244 We would never put
anything on the radio station that didn't meet all of those requirements.
1245 As Paul said, the
online and the on‑air program director will ensure that, if there is any
language that isn't appropriate, it is not going to make it on the air.
1246 We will preview
everything before it goes on the air. If
we are going to be taking live calls, then we would ensure that we would have
some sort of delay set up.
1247 When it comes to
the programs, what we really envision is that ‑‑ you know, a
lot of these programs will be pre‑recorded. The pod "7@&", which will be
the top 7 songs, which will be played twice a day ‑‑ listeners
will have the opportunity to text, or call in, or leave a voice mail, or
request online their favourite songs, and the DJ who is on the air will record
their requests, and edit them, and put them on the air, to make sure that
everything is right and that there isn't any content that shouldn't be on.
1248 One of the
features we are the most excited about, which Paul was referring to, is called
"You Power the pod", which is that every night at 8 o'clock we will
turn the radio station over to a pod listener, and that person will be able to
come on the air, play their songs, and recommend music.
1249 Really, this whole
community that we are trying to establish is based on what listeners do in real
life right now. Young listeners have a
whole new approach to how they listen to music and how they communicate with
each other.
1250 But all of those
things will ‑‑ we are thinking of these listeners as being an
extension of our staff, frankly, and the program directors will work with them
to ensure that everything is pre‑taped and that there isn't anything that
is going to make it to air that is inappropriate.
1251 COMMISSIONER
DUNCAN: So it will take away some of the
spontaneity ‑‑
1252 MS ADAM: Sure.
1253 COMMISSIONER
DUNCAN: ‑‑ but, I guess, you have to deal with it.
1254 MS ADAM: You have to.
1255 The truth of the
matter is, even the professionals that we have on our radio stations, they edit
themselves. They self‑edit because
that is the responsible thing to do.
1256 MR. SKI: I think, too, Commissioner, that it is not
unlike some shows, such as The Tonight Show or David Letterman. Those shows are not live, but they are live‑to‑air. They don't lose any of that spontaneity. If there is anything that happens that they
need to take out, they take it out, but, basically, you can retain the
spontaneity of that program.
1257 The other thing,
too, is that where we have a talk show, for instance, then we will be on a 7‑second
delay.
1258 COMMISSIONER
DUNCAN: Thank you.
1259 I notice that you
do have your revenue line broken out in your projections to show your web
revenues. I am wondering about the costs
associated with your on‑air and online platforms, if they are both
included in your financial projections, and what the split would be by expense
category, for example.
1260 MR. SKI: I am not sure if we have that particular
figure, whether Sandra or Ms Adam has that in terms of an expense, but we could
certainly undertake to file that with you.
1261 COMMISSIONER
DUNCAN: You have just done your expenses
considering that everything is part of the radio operation, not allocating it
or ‑‑
1262 MR. SKI: No, we didn't. I think that we have an allocated amount for
the web‑based component of it, but we will just have to put our hands on
it.
1263 COMMISSIONER
DUNCAN: Okay.
‑‑‑ Pause
1264 COMMISSIONER
DUNCAN: If you want to submit that
later, then that's fine.
1265 MR. SKI: Definitely.
1266 COMMISSIONER
DUNCAN: A number of the applicants, as
you know, who have appeared before us are proposing similar youth and young‑adult
targeted formats, and they have highlighted the challenges in developing
relevant and meaningful on‑air news and surveillance.
1267 I want to know
specifically, with respect to local news, if you could elaborate on the type of
on‑air news programming you would offer, and what challenges, if any, you
anticipate in developing relevant news content.
1268 MR. SKI: With this particular demographic, it is
always a bit of a challenge. They are
tuning the radio station, by and large, for music, so we have to make darn sure
that the information we are giving back to them is information that they ‑‑
things that they want to hear about.
1269 That is why a
portion of our research was set aside to define those things.
1270 It is a little bit
difficult when you are doing research in a market where you don't have a radio
station already existing. It is sort of
a "ready, fire, aim" approach, where we are kind of ready, and then
we fire and put the content on the air, and then the aiming is really what we
get back from the audience through further research, and it's a recalibration
that takes place once we have a radio station on the air.
1271 Again, as I say,
we have to make sure that we have the right information for these people.
1272 Julie will expand
on that a bit.
1273 MS ADAM: Again, because the theme is that we want to
be as interactive as possible, there are a few different ways in which we are
going to approach the news.
1274 As we have already
talked about, first and foremost, we have to make sure that it is professional
and credible, and that news doesn't get on the air that isn't credible. So we will have people in place to do that.
1275 Our approach with
news is four things. First and foremost,
we need to make sure that the content is relevant. We need to make sure that ‑‑
1276 As Paul said, it
is tricky to talk to this audience about news.
If we use an example like the election, obviously the biggest news story
in Canada over the last few weeks, 15 to 34‑year‑olds, particularly
the younger end of the demo ‑‑ how interested are they in
politics? Some maybe not as much.
1277 We have to make
sure that we make it interesting for them, and I think they are interested, but
it's on their own terms. Maybe they are
interested in the environment.
1278 CNN did this
really neat thing, where they had a reporter talk to people who were voting for
the first time, and, with the election going on in the U.S., talk about things
that happen when you vote for the first time.
1279 We were also thinking
that, the day of the election and the day after the election, one way we may
approach it is, instead of reporting on what the statistics are in Canada for
the number of people that are going to show up at the polls, we would ask our
pod listeners to tell us: Is today the
first day you are going to vote? Are you
going to vote tonight?
1280 We would put a
poll up on the website, and they could go to "podfm.com" and vote,
and they could tell us, "Yes, I am going to vote because...," or,
"No, I am not going to vote because..."
1281 Then, the next
day, instead of, again, just reporting the national story, we would report the
pod story. We would tell the
listeners: Thirty‑eight percent of
pod listeners showed up to vote last night, and here is what you said.
1282 They would be able
to blog about it. They would be able to
call us from a polling station after they voted to tell us about the experience
for the first time.
1283 It would be a
credible news story, which would be managed by professional people in the
station, but the voice would be from the people of the station, and it would be
all about the people of the station.
1284 COMMISSIONER
DUNCAN: Do you have radio stations
appealing to this demographic in other centres?
Do you have radio stations appealing to this demographic, not
necessarily the same format, but in other markets?
1285 MR. SKI: Not really.
We have one station in Edmonton, but it is actually older than
this. The core audience for this station
is much younger than the one in Edmonton and it is a different type of format.
1286 COMMISSIONER
DUNCAN: Because this sounds like it
would be quite labour intensive. Is
there more staff here than you typically have on a radio station?
1287 MR. SKI: Well, there is. There is a few more people here than we would
have on a normal CHR type radio station.
I mean, every station is different, depending on the format.
1288 But a normal CHR
contemporary hit radio station would probably have fewer people than we might
have here and I think that is why we have tried to ensure that we have
the ‑‑ we laboured long and hard on the cost to make sure that
we had the right people. Obviously, the
interactivity is a big part of it. But
yes, it is going to be quite labour intensive.
1289 COMMISSIONER
DUNCAN: I actually will have some
questions a little later on about it when I get to the expense side, so that
will probably ‑‑
1290 MS ADAM: I think just if I may add one thing
please. It is going to be labour
intensive, but that is what it is going to take. You know, radio has changed and the world has
changed and in order to really speak to this demographic we can't just do it
the way we used to do it.
1291 You know, we have
to do it on so many different levels and, you know, they are watching TV, they
are doing their homework, they are listening to music, they are texting, they
are chatting, they are on Facebook. And,
you know, we can't just say well let's just do it the way we have always done
it.
1292 And also being a
radio person ‑‑ labour intensive, but it is also going to be
really fun. I mean, this is going to be
a great, fun radio station to program.
We will hire people that will love this station and will love to do this. And I think it could really be a great
station.
1293 COMMISSIONER
DUNCAN: I am sort of thinking in terms
of business case, but we will come back to that then in a few minutes.
1294 So in your Talk to
the pod program, the description that you included, you indicate that it will
be hosted by a local London personality.
So I am just wondering are they going to be paid or volunteer positions?
1295 MR. SKI: Commissioner Duncan, that is a paid position.
1296 COMMISSIONER
DUNCAN: Paid position. So will it be just one personality or you
will be bringing them in ‑‑
1297 MR. SKI: Well, I think it all depends. There is an ebb and flow of these kind of
things. That person may do something
else with the station, that person could be just a London personality that we
have on some type of a retainer or some type of a contract basis.
1298 COMMISSIONER
DUNCAN: I didn't explain myself
clearly. So are you anticipating it will
be more than one person or just a particular person?
1299 MR. SKI: No, it is essentially one host.
1300 COMMISSIONER
DUNCAN: Okay.
1301 MR. SKI: I mean, there may be times depending on the
content or the topic where it might be two people, but essentially one.
1302 COMMISSIONER
DUNCAN: So you list a number of
information and discussion topics appealing to youth that will be featured
during this one‑hour talk show. But
with respect to the balance of the week your spoken word programming appears to
be largely unstructured and focused on surveillance material and impromptu talk
segments between songs.
1303 So I am just
wondering if you will offer any surveillance material in more structured
fashion and during other periods of the week?
For example, interstitials, public affairs programming, community event
segments.
1304 MR. SKI: The short answer to that is yes, we
will. Again, we have got to make sure
that we connect with these people, so throughout the week we will be offering
information about clubs, information about new music.
1305 Julie, do you want
to expand on that a bit?
1306 MS ADAM: Sure.
What we are thinking right now is we have broken out the spoken word in
a couple of different ways, so we have pure news and then we are going to have
traffic and weather.
1307 Some will be
inside of newscasts, and I can give you the breakdowns if you like, but pod
traffic would be 25 minutes a week, pure news is three hours and seven minutes,
the weather within the news is going to be 13 minutes just over that, and then
outside of the news we will do weather reports, that will be 63 minutes.
1308 And the weather,
again, it is going to be credible weather, but the presentation will be
different because it is essential that, you know, this is going to be a
different presentation.
1309 Sports, we are
going to do sports in a couple of ways within the news again, within a regular
newscast which will account for 13 minutes and 40 seconds. We are going to do a local sports feature
which ‑‑ the idea behind this is to not just talk about, you
know, major league sporting events, but local London sports. That will be seven minutes a week and that
will be its own feature that will run Monday to Sunday every morning at 8:20
and it will run about 60 seconds in length.
1310 Pod on the Street,
which is club and concert listings in the community, what is going on, will
account for 14 minutes twice a day ‑‑ 14 minutes a week and
the feature will run twice a day. My pod
7 @ 7, which is the guest deejays hosting and is going to account for 13
minutes a week. You Power the pod, our
8:00 feature that we talked about, will be 14 minutes a week. Talk to pod, our talk show, will be 50
minutes a week.
1311 And then we will
have some deejay talk. So the morning
show, you know, the deejays are going to add colour and we anticipate that will
be an hour a week. Other deejays outside
of mornings will account for 65 minutes a week on weekdays and 24 minutes a
week on the weekends.
1312 COMMISSIONER
DUNCAN: So it sounds like you are going
to have a lot of short clips, which I expect is what you want for that age
group, short and snappy?
1313 MS ADAM: I think so.
1314 COMMISSIONER
DUNCAN: Yes.
1315 MS ADAM: You know, in our program schedule we said
that the news would be, for example, at 6:00 a.m. the news would run four
minutes and 30 seconds in. You know,
whether that runs as one whole package or maybe what we do is we do four one‑minute
bits.
1316 You know, it is a
quick piece of news delivered in a high energy reflective way and then it is a
song and then the deejay comes on, and maybe we have a guest deejay on and then
it's another piece of news. Because that
tends to be, from the research that we have done and what we see from this age
group, how they like it, they like it in short bursts.
1317 And with
everything that we do on air we will then do ‑‑ our objective
is to expand upon everything on the website.
So if we do a one‑minute piece on the radio we will be able to say
go to Podfm.com if you want to hear more on this story or the extended
interview or the extended news piece.
1318 MR. SKI: I think too, Commissioner Duncan, when we
looked at all of the research short‑form content is really the most
successful type of content on the web right now and the most successful type of
content with this particular demographic.
1319 COMMISSIONER
DUNCAN: Thank you. Now, I want to talk about format diversity,
and you have heard the earlier questions, so comparing your proposal to the two
Corus stations, CFPL and CFHK. But also
I wanted to ask your comments on your proposing a contemporary hit radio music
format. And we just heard from the CTV
people and they are proposing a modern rock hit I think they called it.
1320 And so I am just
wondering how you feel that yours is an advantage or better suited to the
market and brings diversity?
1321 MR. SKI: Certainly, I will begin and then ask Julie to
add.
1322 I think a couple
of things. When we did our research into
the market, and maybe I will cover ‑‑ you mentioned the
previous applicant and also some of the other stations that Corus has in the
market, so I will try to cover all of those.
1323 When we set out to
put together an application our approach to it normally is to have the
experienced people like Julie and Chuck go into a market and look at that
market and find out if there are any other opportunities for us or any types of
opportunities. That is the first
step. And based on their long history of
knowledge we normally come up with what the opportunities may be.
1324 Secondly, we have
others have a look at the market at the same time, that was Bohn &
Associates. And then we do the actual
primary research into the market. And we
found a couple of things. We found that
there was tuning outside of the market to what would be a contemporary hit
radio station, which is a younger based station playing mostly current music.
1325 One of the other
things that we also found though was that when we asked people if there was a
radio station like this available the majority said there wasn't until you
added ‑‑ and you mentioned the rock component ‑‑
until you added the rock component.
1326 And once you added
the rock component to researching a particular format blend then other stations
started to show up. Fifty per cent and
77 per cent I think were the numbers in the research if I can recall. And I think it was around 35 per cent for
CHR. The majority of that was either out‑of‑market
or Kitchener.
1327 So from that, we
obviously decided to go down this path.
That is one of the primary reasons that this particular station is
different.
1328 Julie, would you
like to add?
1329 MS ADAM: Sure.
First off, the stations on the stations that are already in London, the
difference between Podfm and those existing stations. I think there are three key areas. Number one, is they are primarily radio
stations with a website.
1330 Podfm is going to
be a radio station and a completely interactive experience that will include a
very, you know, as we have said, an in‑depth website and an interactive
capability where the listeners are going to participate in absolutely
everything we do from shaping the playlist to providing content to interacting
with our deejays.
1331 The second point
is in new music. Podfm is going to play between 70 to 75 per cent new
music. The station in London right now,
that is the station that is playing the most new music, the highest percentage
is the country station at 44 per cent.
And we, you know, clearly we are not going to be anything like a country
station.
1332 And then the final
key difference to me is the target audience.
I mean, we are going to be speaking to a youth demographic. And I have listened to those stations in
London and they are very good stations and they are successful, but they are
just not speaking to a young demographic.
Their content and their music just doesn't reflect a young demographic.
1333 In terms of what
the difference will be between Podfm and the other applicants, I think it is
similar. I mean, we have committed to
and we know that our playlist is going to be 70 to 75 per cent new music and I
didn't see or hear that from the other applicants that I have heard today.
1334 We are definitely
not leaning on the rock music side. And
the video that I saw earlier today was excellent, but it really ‑‑
there were a lot of rock artists in that.
We think rock music is well served in London, so we don't plan in going
in that direction.
1335 Again, our
demographic is going to be younger, it is going to be on the female side. And I
know one of the other youth‑based stations is talking about having a
secondary target of 18 to 49‑year‑olds and, to us, that is not
youth‑based. I mean, it is not to
say it is right or wrong, but it is very different from what we are doing.
1336 And I guess the
last point that I would add is when it comes to shaping the playlist as long as
you have a computer you can participate in picking songs for the radio
station. So it is very accessible and it
is open to anyone. We are going to do it
in a number of ways where you can just go on the website and help shape the
playlist and it will be very easy to do.
1337 COMMISSIONER
DUNCAN: I want to just clarify, and
actually in fairness to the CHUM people it was modern hit radio. But it seems to me because you are
determining your playlist, what you are going to play based on your audience's
feedback, you are both going to end up with the same result wouldn't you
say? You are appealing to the same audience,
you are just calling it slightly different names. Am I wrong in that?
1338 MR. SKI: No, I wouldn't say that. The difference is I
think their audience composition was going to be 50/50 male/female, our
audience composition is not. Our
audience composition is predominantly female.
1339 COMMISSIONER
DUNCAN: And if I can just ask you, so if
you are starting out with the audience telling you what they want to hear, how
are you going to control that? You are
not really, are you?
1340 MR. SKI: Well, we have to and I think it is the
umbrella within which the music is that ‑‑ now, for instance,
if there are ‑‑ I guess when we do some of our music testing
for other stations sometimes we will have people who get into those music tests
who don't really listen to that kind of a radio station who are just ‑‑
well, they mess it up a little bit because they wouldn't listen and they are
not part of that designated group.
1341 So what we have to
make sure is that we are talking to the right people. So if someone does want to hear something
that is more rock leaning and it is too far rock leaning, we probably wouldn't
play that particular station, that is not where this station can be. And by and large what will happen is that
many of the other stations are probably already playing those songs, so then it
becomes a popularity contest to some degree.
1342 And if those songs
are being exposed in the market already, then ‑‑ especially on
the rock end because the rock end will do two things. It will lean the radio station more male and
it will put us in a position where we are competing with the market
incumbents. And we don't have to do
that, there is such a large opportunity, such a large hole for this particular
format that we want to make sure that we stay within the context of it.
1343 COMMISSIONER
DUNCAN: Just so I understand, that is
really the role then of your music director?
1344 MR. SKI: And the program director.
1345 COMMISSIONER
DUNCAN: Yes.
1346 MR. SKI: Julie, do you have anything to add?
1347 MS ADAM: No. I
guess the only thing I would add is I agree with Paul and he is 100 per cent
right when he talks about music not getting played in the market. About 70 per cent of what we anticipate our
list to be isn't getting played in London right now, so that is another key
difference.
1348 COMMISSIONER
DUNCAN: Is that different than what CHUM
said though?
1349 MS ADAM: I am not sure what CHUM said, but it is
different to what is happening in the market.
1350 UNIDENTIFIED
FEMALE: Currently she's saying.
1351 MS ADAM: Currently, yes.
1352 COMMISSIONER
DUNCAN: Okay, I take your point.
1353 Now, I noted that
in your brief you also highlight that the 12 to 34‑year‑old
population is expected to be 160,000 by 2012.
And I am just wondering, because that is a significant audience, how
many stations targeting this demographic do you think the market can support?
1354 MR. SKI: Commissioner Duncan, at the present time we
probably think one for this particular demographic, especially if it is on the
younger end of the scale. Again, this
isn't going to be easy and embarking on this kind of project I don't think is
for the faint of heart.
1355 I mean, it was
developed through our research, our experience and something that came out of
the format lab that we have established at Rogers to try to find new and
interesting formats, because we have to do that, we have to keep reinvigorating
ourselves and regenerating ourselves.
1356 So I think this
type of a radio station we think probably only one at this point in time because
there was a radio station of this nature before, they are not in the format
anymore, there was a couple of them. And
so it is going to take some time to build, going to take some time to build
from an audience standpoint, some time to build from an advertiser‑based
standpoint.
1357 So could there be
one in the future? Possibly. Right now, in this economy, we think only
one.
1358 COMMISSIONER
DUNCAN: Those that you refer to that
left the format, can I assume that they left the format because they didn't
initially incorporate such an interactive component assuming they didn't ‑‑
1359 MR. SKI: I don't think they did. Although, I can't say
exactly why they changed the format. But
you change formats in some cases because new competitors come in, if you have a
particular share of market and someone comes in, like a new sort of a market
map comes in underneath you from a demographic standpoint or on top of you from
a demographic standpoint and chip away and somebody comes in from either side,
then you are in trouble, it leaves you with not very much left.
1360 So as a result,
you may have to find another opportunity through nothing that you did other
than you find it hard to compete because maybe you have got four new
competitors who are not coming up against you with sort of a direct approach,
but they are taking little pieces away. So that is one of the reasons that
people change.
1361 I think the other
is sometimes new formats are developed that offer a better business opportunity
and that are maybe somewhat easier to monetize.
1362 COMMISSIONER
DUNCAN: So the ones that you are
referring to that got out of the format, were they specifically offering a
format directed at this group, 15 to 34?
1363 MR. SKI: I believe they were.
1364 COMMISSIONER
DUNCAN: Okay. Now, just turning to your CCD. The $70,000 annual commitment to MusiCan and
it includes an administrative grant of $5,000.
I am just wondering why you think that administration fee would qualify
as an eligible CCD?
1365 MR. SKI: Susan.
1366 MS WHEELER: I actually hadn't really thought of it that
way, but you are right. Certainly, our commitment would be the $70,000 and we
would cover the administration fee.
1367 COMMISSIONER
DUNCAN: Okay, thank you. I am wondering now, continuing on with the MusiCan
program, how the funds will be allocated between the replacement of instruments
and providing assistance to students.
1368 MS WHEELER: I believe they are one and the same. We will be providing assistance through the
schools by providing them with those musical instruments and allowing them to
continue their music programs.
1369 COMMISSIONER
DUNCAN: Okay, so it is not funding
that ‑‑ it is not two things, it is one thing?
1370 MS WHEELER: It is one thing.
1371 COMMISSIONER
DUNCAN: Okay. And who is going to determine the
criteria? Will Rogers be involved in
that or will that be entirely up to MusiCan?
1372 MS WHEELER: For the MusiCounts program, yes, that will be
entirely at the discretion of MusiCounts.
1373 COMMISSIONER
DUNCAN: And then how do you monitor
that? Will you have an annual reporting
from these..?
1374 MS WHEELER: That is correct. We have requested that they provide us with
an annual report so that we can see how our contributions have been used.
1375 COMMISSIONER
DUNCAN: Okay. And switching now to FACTOR, I note in your
comments that you said that you were going to ask them to reserve a substantial
portion of the monies that you are contributing to the development of artists
from the London area. And I just
wondered if you had confirmation back from FACTOR?
1376 MS WHEELER: We actually indicated that we would work with
FACTOR to see if that was possible.
Certainly, the emerging artist program within FACTOR is a relatively new
program. It is actually experiencing a
few hiccups at this point because they currently don't have the benefit of a
workable definition as to what really is an emerging artist.
1377 I am Rogers'
representative on the FACTOR board, so it is basically our commitment to work
with the board of directors to see if it is possible to be able to retarget or
direct some of the emerging artist funding towards local markets where we have
been given a licence.
1378 COMMISSIONER
DUNCAN: Okay, thank you.
1379 Maybe, Mr. Ski, I
could go back to you and just ask you how many new entrants, considering all
the formats, do you think that the market could withstand?
1380 MR. SKI: Well, as we have said, launching new radio
stations at this point in time is not for the faint of heart. And we think that the market may be able to
sustain two new applicants, depending on again where they are positioned in the
market, what particular demographic they actually go after. Again, as we said, we don't think that
necessarily two contemporary hit radio stations or two contemporary radio
stations that skew the younger end of the demographic would be necessarily a
good thing to do, but we think possibly two.
1381 COMMISSIONER
DUNCAN: Now, I am sure were here and
heard CHUM's presentation and their great concern and it sounds like quite a
burden that they have trying operate as an independent against the groups of
stations that are in the market, clusters, the station clusters. And I am just
wondering what your reaction to that is because you are asking to come in as an
independent.
1382 MR. SKI: Yes.
Well, I think what you have got in London is you have got three very
large broadcasters at the present time; you have Corus, you have Astral and you
have CTV‑CHUM. They have one radio
station in the market and they have a television station in the market, so they
are a formidable force.
1383 Also, their
particular radio station is quite successful, it is in the top three in the 25
to 54 demographic. I wouldn't guess what
their PBITs are, but for the market it is 28 per cent, which is a pretty good
number. Normally, radio stations that
are in the top three of any market perform even better than ‑‑
that is the market average, so if you are in the top three in the 35 to 54
demographic, normally you are producing more revenue and normally you are
producing more profit.
1384 COMMISSIONER
DUNCAN: So you don't mind to be in that
position is what you are telling me?
1385 MR. SKI: No, we don't.
I mean, we are ‑‑ again, we are here for the long
haul. We think we add diversity to the
market and we are really excited about this particular format. And I think the other thing here is that you
can't bring this type of a format to every market.
1386 There are very few
markets where you can do this right now because there is already a radio
station that is, even if they aren't doing some of the things that we are
doing, by their very nature they are dominating the younger demographic. So if they are bringing something new like
this then it would be a difficult task.
1387 We don't think it
will be as hard, we think it will take time to develop obviously, especially in
this economy where we are seeing some headwinds and a bit of deceleration and
that is why we are a little conservative in our cost structure. But, no, we are here, as I say, for the long
haul, we have the resources and we think we are the ones to launch this type of
a radio station.
1388 COMMISSIONER
DUNCAN: Now, you must have nearby radio
stations, do you? Are there any
efficiencies built into your projections that capitalize on that or is this
completely standalone?
1389 MR. SKI: No, it is completely standalone. The synergies that Rogers, as well as other
larger companies are able to take advantage of are sort of really back office
things to begin with. And also, as I
mentioned earlier, when we embarked on preparing an application for London we
are in a position where Julie with her experience and Chuck with his experience
can go into the market and look at the market and look for what opportunities
might be available.
1390 And by the same
token, they could also help ‑‑ even though we have got a staff
in London totally focused on this particular product, we have also got
expertise that we have with Julie and Chuck and others in various aspects of
the business who can also help. But both
from a programming, from a sales standpoint, which are extremely important,
especially now, and then the normal back office, finance, HR elements.
1391 COMMISSIONER
DUNCAN: Okay, thank you. I notice that you mention that your radio
stations have established local advisory boards. And I am wondering if you had planned to do
that in this market?
1392 MR. SKI: I think our local advisory board for this
particular application are all of the people who are going to be interconnected
with the radio station. It is like
having thousands of advisory boards and I guess ‑‑
1393 COMMISSIONER
DUNCAN: A huge board of directors?
1394 MR. SKI: Yes, is what ‑‑ well, I hope
not that.
‑‑‑ Laughter /
Rires
1395 MR. SKI: But certainly, it is like having thousands of
advisory boards that will help with this particular radio station. I think it takes it beyond the advisor
boards, which I think is great and it gives us more feedback from more people.
1396 COMMISSIONER
DUNCAN: Right, that is a good point,
yes.
1397 You indicate that
you will have 114 hours of live programming and six out‑of‑market. And I was just interested to know a little
bit more about the out‑of‑market programs, six hours, sorry, of out‑of‑market
programs.
1398 MR. SKI: Certainly.
I will have Julie explain that.
But it is essentially a placeholder to make sure that we can take
advantage of any other programs that are or might be available for this
particular demographic.
1399 MS ADAM: Thank you.
We don't know exactly what we are going to do with that programming
right now because, again, we need to get the station, we need to get in the
market and talk to the audience.
1400 But there are a
lot of terrific programs out there. And
I think what we would like to do is MuchMusic has a countdown that is great,
MTV has some programming, iTunes has some programming, Rogers has ‑‑
for our adult contemporary stations we have developed a program called Up Close
and Personal where we get an artist to come in and play live in front of a
studio audience. So obviously, the
artist would be different, but there is that kind of programming that I think
would be really great for London and for the London station to develop.
1401 So what we would
like to do is ‑‑ it would be great to be able to grab snippets
of these shows and put them up on the website and ask the listeners, hey, which
of these do you like and are there others that you like that you would like us
to bring to market?
1402 So we have just
put that in there because we know there are some things we want to do, we are
just not exactly sure what we want to do until we get that feedback.
1403 COMMISSIONER
DUNCAN: All right, thank you. I notice you refer to automated or taped
programming per week, 12 hours, automated or taped. Could you just elaborate for me what the
difference would be?
1404 MS ADAM: Sure. Our plan would be for vacations or if
somebody gets sick and we, you know, need somebody to voice track within the
market. It is further to the discussion
about the Tonight Show where it is sort of live‑to‑tape. So they would do the show in the market that
day and it may run later on that night.
1405 MR. SKI: And I think the other aspect of that too,
something that we have been experimenting with lately is bringing new people
into radio. And I alluded to that,
because without what happened to me many years ago I wouldn't probably be here
today.
1406 But sometimes
people aren't necessarily ready to go on the air live. And so what we have been trying to do now is
to have them tape some of the segments before they go on the air so they can
perfect their craft and provide something that is professional enough for our
listeners, but do it in a way that gives them that opportunity rather than
having them, as I did, practice in front of the mirror for a long time, not
that it was TV, but it was a fun thing to do I guess.
1407 But I think what
we are giving them now is an opportunity to get on the air than they might
normally be on the air, because then you can have the program director, people
like Julie, along side them listening to what they pre‑taped or voice
tracked for that particular show, go over it with them and say, yes, if you
change this, if you do this a little differently, then this is good enough to
go to air. So it is a great way to train
people.
1408 COMMISSIONER
DUNCAN: Now, I wanted to talk about your
financial projections, and so I am referring to the ones that came. And I see that my computer has a huge hiccup
here, so I think I have a back‑up, just hold on a second.
1409 So these are the
projections that came with your July 18 response. And you are not showing a positive PBIT until
year seven, and even at that point you are only forecasting a PBIT of 4 per
cent, which certainly doesn't look very appealing on the surface.
1410 And I notice that
Evanov is projecting a positive PBIT in year three and CTV very close to break
even in year four on the PBIT line. So I
am just wondering ‑‑ and I looked at your expenses, I don't
think that your expenses are off considerably from either of those two, so it
seems to be on the revenue side.
1411 So I guess I am
just trying to understand two things.
Why that would be a very attractive ‑‑ oh, maybe three
things ‑‑ why that would be a very attractive business
case? If your revenues are in fact
understated, how much you think they are understated; and the impact of the
current downturn in the economy, because, of course, these would have been
prepared and submitted before this recent downtown, so....
1412 MR. SKI: Certainly.
I will try to cover those. I
think there were three points, Commissioner Duncan.
1413 As I said from the
beginning, we are in this for the long haul.
And I will ask Lannie to comment on the sales aspect in a couple of
seconds, but I think it was some time ago, and before we prepared these
particular numbers, Ted Rogers was telling most of the people in the various
divisions of Rogers that we were heading for difficult times. So take that into consideration whenever you
are putting together any business plans or looking at investment because he had
a concern.
1414 We took that into
account when we did these. Also, we
think that it's going to be a little bit more difficult. I think you saw in our plans that 50 percent
of the revenue is coming from new advertisers, so it takes a while to build
that, especially if you are not ‑‑ if you are not already a
marketing company, it takes you a while longer.
So, as we said, it's not for the faint of heart.
1415 But we are
obviously seasoned broadcasters and we are ready to withstand the storm because
we are here for the long term.
1416 But let me start
out by having Lannie maybe just give you a little more in depth ‑‑
1417 COMMISSIONER
DUNCAN: Maybe if I could make one
comment just right there, because, I mean, you are certainly seasoned broadcasters,
as you say, and getting the advertising sales you will certainly be able to get
that up to speed very quickly, I would expect.
1418 MR. SKI: Well, it still takes time. As I say, I will have ‑‑
now, I ask the sales people that all the time ‑‑
‑‑‑ Laughter /
Rires
1419 MR. SKI: ‑‑
but I also know that it does take time.
And it takes a longer amount of time if you are not taking the revenue
from other radio stations in the market, so if we went into a market with a
radio station that targeted older, where advertisers in the 25 to 54
demographic, for instance, are already advertising on the radio, it makes a
little bit easier. The sell is a little
different. I guess you are taking
advertisers who are already inclined to advertise on the radio.
1420 That's really not
the case here. These people or the
advertisers who we will be getting for this radio station are not, for the most
part, currently advertising on existing radio stations. So it is a different type of sell.
1421 Lannie.
1422 MS ATKINS: Thank you, Paul.
1423 When we took a
look at our business plan, we are estimating about 80 percent of our revenue is
coming from new advertisers or other media.
So taking a look at a market like London, where it's not served by a CHR
station right now, we have to repatriate those dollars back into the youth
market.
1424 So it's not like
we are going to get the dollars from another radio station, we have to go to
the advertising community and say, "There's a CHR station in the market,
let's talk about how we can put together some programs", and get them
confident to advertise on this station and in this demo again.
1425 I worked with a
CHR station, and launched one, and it was frustrating at the beginning because
you are not going to existing advertisers and you are trying to show the value
of what you have to offer. And people
trying to reach a youth market want an unconventional way to get there, so it
would take time.
1426 We are working
with Oxy, which is an anti‑acne cream.
It took about a year to get them onside to use radio. They had never used radio before. And once we had them on, they were there
every year, but these clients take time to build.
1427 So to Paul's
point, when you are coming into a market that's underserved from a programming
point of view, it's also underserved from an advertising point of view. So as time goes on, you will see those
revenues increase fairly quickly. After,
you know, year three or four, it will really get cooking, but it does take some
time to really start monetizing your market share.
1428 COMMISSIONER
DUNCAN: I see you show 20 percent of
your projected year to revenue coming from existing stations. CHUM made that point that was existing out‑of‑market
stations, but in your case "existing" means just as it reads, from
the ‑‑
1429 MS ATKINS: Existing from originating stations, yes.
1430 COMMISSIONER
DUNCAN: Okay. In the market?
1431 MR. SKI: No.
For instance, Kitchener ‑‑ I think Lannie has an
example of the Kitchener station ‑‑
1432 MS ATKINS: Yes.
1433 MR. SKI: ‑‑
the closest station that's offering this type of format is in Kitchener ‑‑
1434 COMMISSIONER
DUNCAN: Okay.
1435 MR. SKI: ‑‑
and so London advertisers are advertising on the station.
1436 Lannie.
1437 MS ATKINS: There is one CHR station in Kitchener called
The Beat, CKBT, and, for example, right now Maple Leaf Sports and Entertainment
is doing an advertising and promotional campaign with them for an event that's
taking place in London, which is a three‑on‑three basketball
tournament put on with the Raptors. So
the station from Kitchener is coming into London to broadcast this event
because there isn't a CHR format that can accommodate that type of a campaign.
1438 So, you know, also
with our CHR station being so targeted 12 to 34, the efficiency that the
station will give advertisers will certainly bring some of the dollars back
into that youth station that perhaps some of the older stations in the market
have been getting it from default.
1439 COMMISSIONER
DUNCAN: Now with respect to the downturn,
I think I did read the article where it quoted Mr. Rogers as saying that he
told his people 18 months ago to start preparing for this. So you would need to adjust your forecast
downward, then?
1440 MR. SKI: No, we don't believe so.
1441 COMMISSIONER
DUNCAN: Okay. Thanks.
1442 Now, I wanted to
ask you about the alternative frequencies.
And in your July 18th response, you indicated that there was one
frequency that might be suitable, 91.1, but then you identified some problems
and two possible corrective measures for those but neither was satisfactory, so
I want to be very clear.
1443 Does this mean
that you are not interested in a licence if you are not given the frequency you
requested, 98.1?
1444 MR. SKI: No. We
certainly think that licensing ‑‑
1445 COMMISSIONER
DUNCAN: No, you are not interested?
1446 MR. SKI: I beg your pardon?
1447 COMMISSIONER
DUNCAN: No, you are not.
1448 MR. SKI: No, that doesn't mean that.
1449 COMMISSIONER
DUNCAN: Oh, okay.
1450 MR. SKI: Sorry.
Yes, let me clear.
‑‑‑ Laughter /
Rires
1451 MR. SKI: I should have answered, yes, differently
before I....
1452 Anyway, we think
that it's the best use of the frequency given our application. And also, 98.1 happens to be the same
frequency that CHFI is on in Toronto, so there's always the possibility of some
interference between those two stations mid‑ground.
1453 As it relates to
other frequencies, there are a couple of others that, as we have said, will be
difficult, quite frankly. If we are
licensed, and we are licensed with 98.1 as the frequency, that would be
great. If we are not and we have to find
a frequency, could we find another one?
We possibly could.
1454 We would have to
figure out how to solve some of these other problems. The other problems can be solved either by
looking beyond the basic computerized systems that the consulting engineers now
use to find frequencies, and that's a pains‑taking approach and it's a
very expensive approach. But do we do
it? Of course.
1455 I mean, the
Commission has licensed people previously with no frequencies. They have tried to find, obviously, alternate
frequencies that they could use, and they have.
It's not an easy process, but it can be done. It takes time and money.
1456 COMMISSIONER
DUNCAN: Okay. I read your July 18th response as much more
definite in the negative. All right, so
then you are interested and it would be possible.
1457 So what impact,
then, would it have on your projections?
Like, do you expect that you would be able to find a frequency that would
allow you to serve the whole market?
1458 MR. SKI: Well, yes, the majority of the market is I
think what we have to try to serve. And
what we would do as a first step in that process is figure out what part of the
market we needed to serve. And when I
say that we find out where the majority of 12 to 34 year old are, from a
geographic standpoint. And that's the
first step because just looking for a signal that serves an area where the
majority of our audience is is obviously not helpful.
1459 So we don't
necessarily have to serve the whole market, but we do have to serve the part of
the market where our listeners happen to live.
And that would be the first step.
1460 COMMISSIONER
DUNCAN: All right, thank you.
1461 Oh, yes, we have a
little discrepancy here in your calculation on your CCD for the...what is it,
North by Northeast tour? The budget that
we received, if you look at that, totals to $260,000 a year, but I think it's
supposed to be $265,000, at least if you want to have the total $1.855 million.
1462 MS WHEELER: That's correct.
1463 COMMISSIONER
DUNCAN: So will you give us a revised
tally so we can see where the $35,000 a year fits?
1464 MS WHEELER: Yes, we will.
1465 COMMISSIONER
DUNCAN: Okay.
1466 I'm just
wondering, then. There's an admin item
there, as well, $39,000, in that, per year.
Do you see that?
1467 MS WHEELER: Yes, there's an administrative expense.
1468 COMMISSIONER
DUNCAN: And so I guess that's the same
question I asked before: how you feel
that satisfies the eligibility criteria.
1469 Or if the
Commission ‑‑ let me put it this way, too. If the Commission decides it doesn't ‑‑
1470 MS WHEELER: Right.
1471 COMMISSIONER
DUNCAN: ‑‑ unless you want to justify how it does.
1472 MS WHEELER: Sure.
I guess with this particular initiative, given the complexity involved
in putting on an initiative of this nature, I think that we would see it as
part and parcel of our contribution, because there is expertise being brought
and support begin brought from the North by Northeast organization to these
artists. They give them advice, they
make sure they have the resources that they need to have a successful tour, so
I do think that is part and parcel of the initiative.
1473 But certainly,
should the Commission deem that it's not an eligible initiative, we would make
sure that North by Northeast obviously has the resources it needs to execute
the initiative.
1474 COMMISSIONER
DUNCAN: All right.
1475 And so I'm
assuming, then, that would apply to any of the other individual line items there
if we decided they didn't meet the criteria?
1476 MS WHEELER: That's correct.
1477 COMMISSIONER
DUNCAN: Can you just confirm that all of
these moneys, the $265,000 a year, will be paid to independent third parties?
1478 MS WHEELER: Yes, absolutely.
1479 COMMISSIONER
DUNCAN: All right, thank you.
1480 And with respect
to Rogers' involvement with regards to the logistics of the tour, will you be
involved or will that entirely be handled by North by Northeast?
1481 MS WHEELER: North by Northeast will be handling the
administration, but certainly PodFM will be involved to the extent that it
would want to promote and make sure that its audience is aware and has access
to all of the content and information coming from the tour. So that will be the extent of our
relationship.
1482 COMMISSIONER
DUNCAN: Okay, but you won't be directing
sort of the logistics ‑‑
1483 MS WHEELER: No.
1484 COMMISSIONER
DUNCAN: ‑‑ they will be doing that, they will just keep you
informed.
1485 MR. SKI: That's correct. And I think that the real value of this is
not only the tour, which I think we have said that's where a lot of these
artists make their money these days, not necessarily in producing the music, so
it's important for us to ensure that they are promoted. And so the radio station will do that both on
air and online.
1486 COMMISSIONER
DUNCAN: So now will there be tickets
sold by North by Northeast for these performances, and if there is an admission
fee where will that money go? Or are
these all free?
1487 MS WHEELER: I believe that way that it will work, and
certainly Andy McLean, who is the executive director of North by Northeast will
be here in Phase III to talk bit more about the Pod Road Tour initiative so he
will certainly be able to answer most of these details, but my understanding of
how it would work is that we would secure the spot at the venue for the
band. If the establishment wanted to
charge an overhead, then that would be separate and apart from how our funding
is used, which is primarily for the support of the artists.
1488 COMMISSIONER
DUNCAN: And as far as the eligibility
criteria for the tour, will North by Northeast be determining that? You know, for example, will a country music
group be eligible, because that's not consistent, I don't expect, with your
formats?
1489 MS WHEELER: The artist will be drawn from the North by
Northeast jury database, so these are already artists who have been selected by
the North by Northeast Conference and they will be selecting artists from the
London and surrounding areas.
1490 And in terms of
the genres of music, I'm not exactly sure what criteria they will use to
determine that, but I would expect that they would look at the artists that
they have in their database and see who has the best potential for really
resonating with the audience that PodFM is hoping to gain.
1491 COMMISSIONER
DUNCAN: Okay.
1492 Now, with regards
to your bank letter that you had provided, I was just curious because I noticed
that your capital investment indicated in your application was $950,000, but
the letter refers to a $9‑million line of credit available for this
purpose. Is there something ‑‑
1493 MR. SKI: That may be in case things really get bad,
but ‑‑
‑‑‑ Laughter /
Rires
1494 COMMISSIONER
DUNCAN: Who are really anticipating a
downturn, right?
1495 MR. SKI: Well, again, we hope ‑‑
1496 COMMISSIONER
DUNCAN: You took the message to heart.
1497 MR. SKI: Well, we hope not.
1498 Maybe I will get
Sandra to respond to that.
1499 MS STASIUK: That would include all the start‑up
costs and the operations over the seven‑year period. We looked at the total costs and that's what
the bank letter covered off.
1500 COMMISSIONER
DUNCAN: So that's the amount of money
it's going to take you to operate until you turn into a positive cash flow,
then?
1501 MS STASIUK: Yes.
1502 COMMISSIONER
DUNCAN: Okay.
1503 All right. And you heard Vice‑Chairman Arpin's
request for bank letter confirming the availability of the funds.
1504 MR. SKI: Yes.
1505 COMMISSIONER
DUNCAN: Thank you.
1506 MR. SKI: We would be happy to provide that.
1507 COMMISSIONER
DUNCAN: Now I have just a few more
questions here, but, Michel, if you wanted to see if somebody else has anything
after mine.
1508 THE
SECRETARY: Sure.
1509 THE
CHAIRPERSON: Commissioner Simpson.
1510 COMMISSIONER
SIMPSON: Thank you.
1511 We heard today
that to program to this audience, you know to this demographic, there has to be
a very strong interrelationship between broadcasting and the use of the
internet, that interrelationship. But
what I find interesting is that yours was the only application that really
started to hint at that relationship with the internet having a revenue play
and I was wondering if you could tell us a bit more about it.
1512 You had indicated
in your verbal presentation that,
"PodFM's online component will
also give advertisers a higher degree of measurability and accountability when
it comes to the media buzz, which will enhance radio's competitive
position." (As read)
1513 I'm just wondering
if you could tell me a bit more about that?
1514 MR. SKI: Certainly, and I will have Lannie give you
some examples.
1515 But two things the
online component does: it strengthens
the power of the brand, obviously, that we have and extends that brand to
another platform, and it gives us a chance, then, or it's another conduit to
extend our brand on a local basis, but it also gives advertisers an
opportunity, another opportunity, to reach this particular audience and it's
something that's really challenging for them now.
1516 So we believe if
we can put the two of those together then it will pack a more solid punch, I
guess, is the best way to put it.
1517 Lannie.
1518 MS ATKINS: Thank you, Paul.
1519 Certainly when
advertisers are trying to reach this market they want to do it in a way that
will make a strong impact on them, so they want to be a part of how they live
their life. The internet is very much a
part of that, so what we will do is we will integrate our on‑air
campaigns with our online campaigns. We,
really, instead of seeing them as two separate entities, will sell them as one
entire unit with a client.
1520 And the value to a
client is that they can actually measure through the internet what kind of
results they are getting on any particular promotion that they are doing. So we could do a survey on the internet, tie
it into an on‑air campaign, and they actually can see the results and
they can measure what kind of response they are getting, and that's going to be
very important, particularly when you are working with a youth‑based
format.
1521 So that's how we
see the two working hand‑in‑hand.
1522 COMMISSIONER
SIMPSON: So, clearly, you are saying
that you do have a revenue opportunity out of the internet. Is that correct?
1523 MS ATKINS: Yes, absolutely.
1524 COMMISSIONER
SIMPSON: Is that built into your
financials or is that an exception? How
have you treated that?
1525 MS ATKINS: We have built it into the financial in both
our advertising revenue and the separate web revenue. We have it in both. Because we will have some clients that will
advertise exclusively on the web through the use of banners and just online,
but primarily we drive the two together.
1526 COMMISSIONER
SIMPSON: So here's the punch line: what percentage are you anticipating will
come from the web? Do you have any idea
at this point?
1527 MS ATKINS: Exclusively on the web, right now we are
projecting around 8 percent.
1528 COMMISSIONER
SIMPSON: Okay, thank you.
1529 THE
CHAIRPERSON: Thank you very much.
1530 I'm asking the
legal counsel if he has any questions.
1531 MR. McINTYRE: Thank you, Mr. Chair.
1532 One thing I just
wanted to clarify is I think you agree that the number for the North by
Northeast CCD initiative was $265,000.
Would you be willing to accept that as a condition of license?
1533 MS WHEELER: Yes.
1534 MR. McINTYRE: Great.
1535 So in terms of
undertakings, the first undertaking was to file financial projections, broken
down to show web‑specific allocations as per Commissioner Duncan's
request. When could you provide that
information by?
1536 MR. SKI: I think we could provide that either today
or, at the very latest, tomorrow.
1537 MR. McINTYRE: Okay.
1538 And I guess the
other undertaking was to provide a revised budget for the North by Northeast
CCD initiative.
1539 MS WHEELER: Yes, we can, and we will provide that by end
of day tomorrow.
1540 MR. McINTYRE: Great.
1541 That's all. Thank you.
1542 THE
CHAIRPERSON: Thank you very much.
1543 Thank you, Mr.
Ski, and your group.
1544 We will take a 10‑minute
break and reconvene at 5:15 for the last item of the day.
1545 MR. SKI: Thank you very much.
‑‑‑ Upon recessing
at 1705 / Reprise à 1705
‑‑‑ Upon resuming
at 1720 / Reprise à 1720
1546 THE
CHAIRPERSON: Order, please. À l'ordre, s'il vous plaît.
1547 Madam Secretary,
could you introduce the next item, please?
1548 ASSISTANT
SECRETARY: Thank you, Mr. Chairman.
1549 We will now
proceed with Item 5, which is an application by Evanov Communications Inc. on
behalf of a corporation to be incorporated for a licence to operate an English‑language
FM commercial radio programming undertaking in London.
1550 The new station
would operate on frequency 98.1 MHz, Channel 251B1 with an average effective
radiated power of 4000 W, maximum effective radiated power of 7000 W, with an
effective height of antenna above average terrain of 106.6 m.
1551 Appearing for this
applicant is Mr. Paul Evanov.
1552 Please introduce
your colleagues and you will then have 20 minutes to make your
presentation.
PRESENTATION / PRÉSENTATION
1553 MR. EVANOV: Thank you.
1554 Good afternoon,
Chair, Commissioners, Commission staff.
1555 My name is Paul
Evanov and I am Vice President of Evanov Communications Inc.
1556 With me here today
are, on my right, Dan Barton, Program Director of our youth contemporary radio
station in Halifax. Beside Dan is Ky
Joseph, Vice President Sales. On my left
is Carmela Laurignano, Vice President and Radio Group Manager. To her left is Ashley Greco and Scott Fox,
two of our morning show co‑hosts at CIDC‑FM in the Toronto CMA.
1557 Behind me, on your
left ‑‑ sorry, on my left and your right, is Sean
Moreman, in‑house legal counsel.
Beside Sean is Rob Malcolmson from Goodman's; and beside Rob is Chris
Edelman, Regional Sales Manager.
1558 Also in the
audience is Bill Evanov, our President and CEO of ECI.
1559 Evanov
Communications is here today to propose a youth contemporary radio service for
London, 98.1 The Beat of London.
1560 The ability to
repatriate young people to commercial radio is vitally important to the success
of the medium in the long run. ECI has
marketed to the youth demographic for over 15 years, with both our top 40 dance
station CIDC‑FM in the Toronto CMA and with our youth contemporary
station in Halifax. Throughout that time
ECI has not abandoned our format or our listeners, despite operating as a stand‑alone
and highly competitive markets dominated by large broadcasters.
1561 Three applicants
have identified a need for youth service in London. Understanding that need, we believe the
question the Commission should answer during his hearing is not whether this is
the right format to license, but who is best suited to serve the youth demo.
1562 We submit the
answer is ECI, a broadcaster who has proven to be committed to both the format
and to the youth audience.
1563 Overall radio
listening among young people between the ages of 12 and 24 is declining faster
than any other demographic. In 1993 this
age group listened to radio on average of 24 1/2 hours per week. By spring 2008 tuning among 12 to 17‑year‑olds
in London has dropped to just 8.8 hours per week on average.
1564 The London market
reflects this national trend from 2004 to 2008 tuning in all age groups under
50 years old indexes at less than 90, meaning a decrease of
10 per cent in overall tuning.
One of the biggest declines in London is shown in the 12 to 17 age group
were the index is 83 or a 17 per cent drop.
1565 MS
LAURIGNANO: Despite, or possibly causing
this decline in youth tuning, the London market has a number of commercial
stations five of which serve the 45‑plus demographic. Although there are two services that pose
deficiency in each of the 12 to 17 and 18 to 24 demos, no single station
effectively targets the 12 to 34‑year‑old listener.
1566 Looking at what is
available in London, it became clear to us that a YCR format is needed to best
serve the gap in the market and to reverse the downward trend. YCR is essentially a younger sibling of adult
contemporary, with the primary difference being a lack of charts leading to
less hit‑driven style of programming.
1567 Part of the YCR
concept is being in tune with what is current in the market in the clubs and on
the streets. The music selection
provides a blend of musical genres such as urban, hip‑hop, R&B,
dance, top 40, modern and alternative rock.
This blend of music is not heard on any other radio stations in the
market.
1568 Because of the
assortment of musical styles, YCR also provides more variety in the artists
that are played. This musical selection
which will attract a younger demographic is also attractive to advertisers who
are trying to market this under served but influential age group.
1569 MR. EDELMAN: There are three very different audience
profiles we serve within the YCR audience, teens, 18‑24s and 25‑34s. Each demographic has very different spending
habits.
1570 Teenagers have a
lot of money to spend. Recent studies in
the United States reveals that this age group had over $179 billion in spending
power in 2006 and by virtue of being teenagers they can spend that money on
stuff instead of mortgages, hydro bills and other utility costs.
1571 In addition to
having money of their own to spend on consumable products, studies have shown
that this demographic is extremely influential when it comes to a family
purchase decision such as vacations and other large ticket items.
1572 Whereas teens
spend their money on things such as entertainment, fast food, clothing,
cosmetics, social activities, technologies, electronics and music, 18 to 24s
spend on new categories influenced by their entrance into the job force,
university and perhaps a first apartment.
1573 The transition
into the next life stage of the 25 to 34 demo increases the advertising
categories to first mortgages, automotive, higher‑priced technology and
electronics, home accessories, wedding and baby categories, to name just
a few.
1574 MS JOSEPH: Based on the demographics of London, the
potential for youth spending is enormous.
London is a relatively young city.
Over 25 per cent of the population is between the ages of 15
and 34 and almost half of the population is under the age of 35. With no single radio station in the market
fully serving half of the population, there has been no opportunity for
advertisers to tap into this wealthy and influential market.
1575 Our experience in
Halifax tells us that the youth market is attractive to advertisers and if you
provide a platform to them they will jump at the opportunity.
1576 In addition to its
success in garnering retail advertisers for this target demographic, ECI has a
proven sales strategy to attract a higher than average amount of agency
dollars.
1577 Consequently, and
because London serves as a test market for many national products, The Beat
will attract a higher percentage of national buys.
1578 Tying into our
national expansion strategy, ECI expects to use the synergies created through
its three youth stations in Halifax, the Toronto CMA and in London in order to
gain leverage through increased national buys.
Although national agencies buy on a per‑market basis, broadcasters
with critical mass in any given demo can negotiate these buys in the planning
stages and offer discounts based on multi‑station inclusion.
1579 MR. BARTON: Two of the biggest complaints reported about
London radio by young people were that radio does not offer anything they like
to listen to and that most radio offers similar types of programming. YCR as a format addresses each of these
concerns head‑on.
1580 Because
62 per cent of respondents indicated an interest in new music, a
typical set might balance Girlicious, Hedley, Armin Van Buren and Li'l Wayne
with new and emerging Canadian artists like De'Ja, Lauren Christoff and Danny
Fernandes and London‑based Staylefish and Jason Mercer.
1581 Many of the
artists that will be played on The Beat are currently not being spun in the
market. In fact, at the time we filed
our application almost 80 per cent of selections to be spun on our
station were new to the London market.
This represents the lowest duplication of all the applicants looking to
serve the youth demographic.
1582 Young radio
listeners in London indicated that not only did they find that local stations
all sounded the same, but they demonstrated a big appetite for new music and
new artists. Consequently, The Beat will
dedicate 40 per cent of its playlist to Canadian content and a full
12 per cent of our overall playlist to new and emerging Canadian
talent to be blended throughout the entire broadcast day and week.
1583 MR. FOX: Going further than just playing the music of
these artists, The Beat will also give our listeners information on the artists
about how the music is made.
1584 In addition to our
normal DJ banter that may discuss artists in a more general sense, The Beat
will have four interactive music and spoken word features that delve more
deeply into the music‑making process.
These include CD of The Week, Made in Canada, Mix It or Nix It and our
daily countdowns.
1585 Respondents to the
research also placed a high degree of importance on news and information about
London and the community. Despite there
being eight commercial stations in the market, there are only three private‑sector
news voices, each of which belongs to a large national broadcaster.
1586 Consequently, we
believe licensing a strong independent in this market will truly bring
diversity of editorial voices to London.
1587 Not only would
licensing The Beat bring a new voice to the market, it would represent
the only voice that presents news and information to a youth audience
in a way that's relevant to them and that engages them. For example, news coverage on The Beat
this week might include the ongoing violence on the campus at the University of
Western Ontario, which is not declining despite the best efforts of the police.
1588 A second story
might touch on the consolidation of three local schools into one school that
will require putting some students in portables.
1589 Recognizing the
importance of local news coverage, The Beat will broadcast an average of
75 per cent local news during its 3 1/2 hours of news coverage per
week. To achieve this target, The Beat
will have a completely local newsroom that will gather information from London‑based
newsmakers.
1590 MS GRECO: I know firsthand, because I do this every
day, stories are of importance to our listeners. It will not be confined to the formal
newscast that will be integrated into the normal jock talk of the day. Announcers will encourage listeners to call
in, to send e‑mails or to text their views about things that are
happening in their community. These
thoughts will be shared with other listeners, creating a dialogue between them
and giving the younger audience a voice through radio that they currently do
not have in London.
1591 Recognizing that
young people also have a high interest in celebrity and entertainment news, we
will also air twice a day our Hollywood Headline segment. This feature will not only bring listeners up
to date with what's happening with their favourite artist or favourite stars, it
will also inform listeners what is happening in clubs and concert venues in and
around London. As well, like our formal
newscasts, certain issues that may come out of Hollywood could lead to more
ongoing discussions during the day such as drug use or eating disorders.
1592 MR. BARTON: It is often said that Canadian youth are some
of the most connected people in the world.
Where once the Internet only served as a source of research
information, it is now a medium through which young people communicate with one
another and seek out sources of entertainment, including radio listening.
1593 Given this shift
in Internet use, The Beat's website will incorporate online streaming, music
and artist information and a way for listeners to communicate with each other
and with the station.
1594 Podcasts,
announcer blogs, online voting and participation are important to this audience
and we will ensure that they have all the bells and whistles to keep them
engaged.
1595 For us, the
Internet is both a marketing partner and a distribution platform for our programming
to be heard. Our website will allow
listeners to enter their votes for Mix It or Nix It, to make musical requests
and to submit new stories of interest to our news department.
1596 This Internet
strategy will help maintain the relationship between the station and our
audience that is so important to keep youth interested in radio.
1597 This Internet
formula has been extraordinarily successful in engaging our audience in both
the Toronto CMA and in Halifax. The CIDC‑FM
website had over 6 million hits per week in September and our YCR station in
Halifax generated almost 3.5 million hits in the same month.
1598 Through both the
programming and the Internet strategy implemented by The Beat, we will be able
to engage youth not only in radio but also in their broader community.
1599 ECI has a long
history of working with community organizations in trying to bring their
message to you. In particular, over the
last 10 years CIDC‑FM has established a partnership with both the
Toronto police and Crime Stoppers to engage youth in anti‑gun endeavours
and to fight the no snitch mentality that exist among youth.
1600 We have been in
contact with the London police who have expressed an interest in exploring
similar initiatives with The Beat. As
well, we have identified other organizations such as the Craigwood Youth Centre
with whom we wish to develop community partnerships.
1601 ECI's commitment
to the London community also extends to our CCD package.
1602 MR. MOREMAN: The $2.1 million CCD package that we have put
together for The Beat is almost exclusively local to London.
1603 Of the eight
initiatives identified, six are organized and held in London, the foremost of
which is our Summer Rush concert. The
remaining initiatives include the Kiwanis Music Festival, the Home County Folk
Festival, London Pride and a London International Children's Festival.
1604 ECI has a strong
commitment to developing and showcasing new and emerging Canadian talent. We are very pleased to have supported
artists such as Elise Estrada and classified during the early stages of
their careers and seeing them develop a national audience. This is also true for Chad Hatcher who will
be speaking with you during Phase III of this process.
1605 As our largest CCD
initiative, The Beat will hold the London Annual Summer Rush and
as part of that a contest called London's Next Big Star. This $910,000 total initiative includes local
new and emerging Canadian artists sharing $175,000 in prize money and
earning a chance to launch their music careers by playing live in front of an
audience of thousands.
1606 Summer Rush
provides new and emerging Canadian artists the opportunity to perform alongside
established acts in the industry. These
artists will also have the chance to perform at Summer Brush in other markets.
1607 As you will see
shortly an our video presentation, Evanov Communications has a strong history
of organizing events such as these in both Toronto and Halifax.
1608 This past summer
each of our Summercamp Rush events showed to capacity crowds and we expect the
event in London will be no different.
1609 But don't take our
word for it...
‑‑‑ Video
Presentation / Présentation vidéo
1610 MS
LAURIGNANO: Not only does that video
demonstrate how effective we are in bringing talent to the markets we serve and
entertaining our audiences live, but it also shows how effective the YCR format
is in engaging and re‑engaging youth and bringing them to radio.
1611 When we launched
our YCR service in Halifax the hours tuned for the 12 to 34 demographic had
been in steady decline. Since we went on
the air in 2006 however, the time spent listening for this age group has
increased by 15 per cent compared to spring 2006, whereas the
national average saw a decrease of 8 per cent.
1612 MR. EVANOV: Evanov Communications Inc. has a strong and
established history of serving niche demographics and in particular the youth
market. Our youth contemporary radio
station in Halifax has been extremely successful in attracting teens back to
radio and our Toronto CMA service remains number one among 18 to 34‑year‑olds.
1613 As the video you
saw earlier demonstrates, it is more than speculation when we say we can
deliver on our promise to engage London youth in radio, including the 45,000
local and transient post secondary students attending Western and Fanshawe
College and bring them to the medium at a time when it is critically important
to the industry.
1614 We thank you for
the opportunity to present this proposal and we would be pleased to answer any
questions you may have.
1615 THE
CHAIRPERSON: Thank you, Mr. Evanov.
1616 I'm asking
Commissioner Simpson to ask the first round of questions.
1617 COMMISSIONER
SIMPSON: Thank you very much.
1618 I think I want to
start on the programming.
1619 The first
impression I have of your approach to a marketplace is that it seems to be a
clean slate in terms of how you look at a market. I say that as evidenced by what I have seen
in your approach to other markets. You
run the gamut from easy listening to top 40, adult contemporary now in Winnipeg
and so on, and hip‑hop and the like in Halifax.
1620 So with that said
my first line of questioning has to do with how you arrive at
the determination to do what you are going to do in the marketplace.
1621 You referenced in
your presentations that research has shown pathways to understanding of how to
take on the market.
1622 How do you go
about your research? Have you been going
outside your organization and working with research companies?
1623 Obviously the two
types that I'm interested in hearing about are market researchers
and programming consultants. I
haven't seen evidence of this and I'm just curious if this is part of what
you do.
1624 MR. EVANOV: It's a few tiered approach that we take. I will start off and then throw it off to
Carmela and Sean to talk a bit more about the actual research.
1625 But it goes back
to starting in the industry broadcasting back in 1991 when we launched Energy
108. At the time it was basically the
first dance CHR type hybrid radio station in all of Canada. And when we launched that radio station Bill
Evanov, our President and CEO, had the insight to look at a market, see what
was going on in the Toronto CMA area and noticed that there was a huge void,
without research, just from basically observing and noticing a huge void
saying there is nobody playing any music to a young demographic, everybody is
playing, you know, AC, or hot AC or classic rock. The older demographic is fairly well taken
care of, but all these kids are going to the clubs and out on the streets and
they want new music and, you know, fun music, dance music, hip‑hop,
R&B and whatnot and had the insight to launch Energy 108 at the time and
basically it has grown into that.
1626 So it almost goes
back ‑‑ I'm just taking you back about 20 years of noticing a
void in the market like that. And we
have been doing that all the way through our radio career and through all our
radio stations, is first seeing ‑‑ not relying just on the
research ‑‑ that's a very, very important tool ‑‑
but first noticing and using our expertise in saying what's lacking in the
market, what's currently in the market right now, what's being played.
1627 And not so much
even musically, but really demographically.
Who is being served and who is not being served.
1628 And over the years
as we have been in front of the Commission we have noticed a huge void in youth
in the markets that we have applied for, but also a national trend across the
country saying, you know, youth are being, you know, left by radio everywhere
over the last little while.
1629 So it's a national
item and it's also a market‑by‑market items that we take a look
at. That's the first item.
1630 I will Carmela and
then Sean to kind of explain how we then go into the market with
the research.
1631 MS
LAURIGNANO: Thanks, Paul.
1632 With regards to
the research, we have with every application that we have advanced ‑‑
and there have been quite a number of them for this particular demographic in
various forms ‑‑ we have always gone to outside research companies
such as Pollara, Strategic, and this last one which was Can Facts, to sometimes
confirm what we suspect, sometimes to arm ourselves with what we may not want
to do.
1633 And certainly
there is a wealth of information in the public domain already about the
advances that we have made in this area here.
It's not the first time that we have sought to serve this demographic
and this particular segment of the population.
We were in Vancouver just a little while back doing the same sort of
thing.
1634 However, what I
think bears to be told is that the format is a little different than your
traditional one in that it seeks to serve the demographic rather than a
specific musical taste.
1635 So this is not a
format that is driven by music of the hit genre or the hit category or it's not
a single genre variation of a particular genre like rock or pop, something like
that. It is meant to satisfy as wide as
possible the tastes of this demographic and to cast as much as a big net as
possible to really engage them. It is a
very fluid format and it will always serve the format rather than the musical
taste.
1636 One of the
Commissioners earlier on ask of somebody, you know, what are you going to do
with this audience? Are you going to age
with them are what are you going to do?
Well, we are going to let them go.
There is going to be a time when their musical preference is going to be
different and that's fine. It is always
our intention to be there at the beginning, which is when they are 12 years old
or earlier and then just keep feeding the system that way.
1637 So the blend is
different. There is always a blend, but
it's different. It depends on the
musical tastes, it depends on the fads a lot of times. There might be ‑‑ I mean,
you know, who knew hip‑hop and R&B, you know, would come along at a
certain time, but that was certainly a time when it was popular and it's the
young people who embraced it, who changes the music. So that is a big difference of how we determine
to approach a particular format.
1638 In this case YCR
is a perfect fit for London. In the
Toronto market where we do a top 40/dance it's a different thing because there
is an urban station and there are all kinds of other things happening. So we have to look at the conditions in the
market and then see what format fits.
1639 MR. MOREMAN: So, Commissioner Simpson, to answer your
question, more specifically about the research itself, as a starting point we
looked at the market to see what the stations were offering, both how they self‑identified
and looked at a variety of charts that were being played, and what
we discovered was most of the music that was being played and how stations
self‑identified tended to skew towards the older end. So when we commissioned Canadian Facts to do
the actual phone surveys, we knew we were already looking at a whole on the
younger end of the demographic.
1640 So we didn't do a
format find and land on youth, we looked and saw the obvious hole at the
younger end had asked Can Facts to test a format that we believed strongly
would be successful in London, which the research proved is the case, because
that's our experience in Halifax as well.
1641 COMMISSIONER
SIMPSON: Would you say then that that's
why ‑‑ when we had originally sent out a deficiency letter to
you we had asked if you had a core audience in mind and your reply was
yes. But it's really three audiences in
degrees of interest as far as you are concerned.
1642 MS
LAURIGNANO: Just to clarify, we did
provide what may look like a shopping list but it's really a dissected version
of what the reality we expect to be.
1643 The core
demographic, the bulk of listeners that we expect to attract are from 12 to 24
years of age. That is the core demo.
1644 Our target larger
demo is 12 to 34 and within the 34 and under a full 63 per cent of
the audience we expect to be between that 12 to 24.
1645 Because of our
experience and because of the nature of the listener we also expect to attract
other listeners such as their parents, because it is the kids, you know, who
are controlling the dial in the car, that kind of stuff.
1646 So while the reach
also encompasses some of those, the hours tuned don't equate to the same
amount. We expect that the younger end
of the demographic will be, you know, the ones who will tune in the most and
the other ones are going to be listening to it because in some cases there are
circumstances and in other cases, I mean just because you are a little bit
older doesn't mean you're dead and we find that a lot of older people really
enjoy our young stations and that's just a natural reflection.
1647 But for all
intents and purposes the core demo is definitely 12 to 24.
1648 COMMISSIONER
SIMPSON: Thank you.
1649 Moving over to the
spoken word portion then, could you give me a bit of an insight into ‑‑
let's go a little deeper beyond your submission into what your gut feeling or
what your experience has taught you in terms of how to deal with a wider
demographic, both with news and with spoken word in general. Because all of us who have kids know that
there is a vast difference when you start talking about demographics that go
from 15 to 34 and I am curious how you risk alienation and optimize retention
when you have that white and age group.
1650 MR. EVANOV: We would be happy to explain on two levels.
1651 (a) I will have
Scott break down how we talk to both and then I will ask Dan to speak on the
real‑life experience that he has had overseeing the programming in
Halifax and how we have been successful in doing that in Halifax.
1652 But before Dan I
will just have Scott give our general overview of how we are going to approach
the spoken word as we know it is very, very important to this youth demographic
all across the country, but definitely in London, along with the music and how
it's interwoven and how it's presented to the demographic to appeal to all
aspects within our core.
1653 MR. FOX: Thanks, Paul.
1654 We have a great
plan that weaves the spoken word into our programming and the common element is
going to be the music. The music is
aimed at youth. And one of the things
that this demographic has in common is they are a youth audience.
1655 There will be a
certain amount of dayparting in our spoken word subjects. We know for example that a large portion of
our audience is in school during the day, whereas in the morning they are
active. At night they are doing their
homework and we want them to have The Beat on while they are doing that.
1656 So we plan to
celebrate the fact that there is a lot in common in this youth appeal. And the best thing that brings it all
together is the fact that it's going to be delivered with a youth appeal. We are talking about interactive announcers
that allow the audience to take part in the spoken word. It's going to be engaging.
1657 It's going to be
delivered, specifically in the news side, very locally. 75 per cent of our newscast is
going to be local, direct information about London. And it's going to be headline format. Not a lot of detail, what you need to know,
the information that our audience can take from, learn from and move on, and
then we get them back to the music.
1658 We think that the
spoken word is actually going to be a very engaging part of the format and I
will ask Dan to speak specifically about something that happened recently in
Halifax that underscores that greatly.
1659 MR. BARTON: Thanks, Scott.
1660 Yes, as both Scott
and Paul mentioned, in Halifax we have a lot of experience in dealing with
this demographic and we have a lot of experience with the interactivity
that's expected from them.
1661 I find it
interesting to hear the broadcasters talk about what an innovative idea it is
to be so interactive with your audience.
We think so too because we have been doing it for years now.
1662 In Halifax, I will
just use the election as one example of how we speak to both an older
demographic of the 18 to 24, but also the 12 to 17.
1663 We partnered with
an organization called D250 and D250's mandate was to educate younger people
about the importance of voting, both those who were just hitting voter age and
those younger rather than to have them slammed up with oh, by the way, you have
just turned 18, here is what you need to do.
It was a really, really important education process we felt and we were
proud to partner with them.
1664 So what we did on
election day, in addition to educating people about the polls
are here, here is where the polls close, we also posted information
on our website that outlined all of the major candidates, you know what
they were promising Canadians they were going to do, what the platforms were.
1665 We also went
another step beyond that, because interactivity to us, the Internet is an
important part of it, text messaging is an important part of it, but we also
believe that face‑to‑face is an important part of it, too. If you are going to touch youth, you have to
be where youth is. And we took a bus
tour to the local universities on election day to remind them of the importance
of voting, to remind them where they would vote and to answer any questions
that they might have about the process.
1666 So to us it's
about speaking to both ends of that demographic because it's ‑‑
you know, again we are using the election as an example, it's not just those of
voting age that need the educating, it's the 12 to 17s.
1667 And that fits in
with our mandate for radio as well.
As Carmela mentioned, our mandate is to feed the system. Where are these next radio listeners going to
come from. That's the importance of YCR
to us.
1668 MR. FOX: If I could also add ‑‑ I'm sorry,
Carmela ‑‑ there is also a lot of spoken word subjects that do
have a fair bit of universal appeal as well.
1669 As Paul mentioned
at the beginning, Ashley and I host the morning show on CIDC‑FM and
just recently we had a fantastic subject that got such incredible
reaction from both our younger listeners and from our older listeners and it
had to do with body image.
1670 Ashley, maybe you
could speak about that.
1671 MS GRECO: Yes.
Thank you very much, Scott.
1672 It was amazing
actually when we did talk about body weight.
There is no denying certainly that is a big issue with not only youth
but women, so it was interesting to see that we had mothers and daughters
calling in and we were able to debate how women in a whole view not only their
own body image but the pressures that they face within society and almost for
the youth we were able to give them really a voice that they might not have had
and I think really created a great support system.
1673 And that just came
up through some research that we had been debating and that's a great way that
we were able to not only reach the younger demographic but the older as well.
1674 MR. FOX: It's also a great example of how we can
become targeting the youth audience like this an important part of their
lives. That conversation started on the
radio, but then it went home and it turned into a dinner table conversation as
well. And that's how you make a
connection with people and really get into their lives and get into their
household. That's part of the reason
that our audience has been so loyal to us.
1675 MS
LAURIGNANO: I just wanted to add one
little thing to what Scott said before about how the dayparting serves to make
sure that the both ends of the demographic are served.
1676 I mean that's for
example if you're looking for structured newscast, which is more of an
appeal to the older end of the demographic, those are present but they are
only in certain parts of the day like to drive times when it's really
important. And there are things like traffic
and weather that are also important to everybody and sometimes even more to the
older one because they are the drivers.
So we make sure that those are integrated throughout the day as
well.
1677 And then again in
the case where those other things can be incorporated in the other spoken word,
that's how it's done through the job talk.
1678 So we know that,
you know, on a Friday night after 10 o'clock there are the clubgoers. You know, they are going out to the clubs on
Friday and Saturday night so we do it a little bit differently there.
1679 That's what I
wanted to add.
1680 COMMISSIONER
SIMPSON: Thank you.
1681 Just a little
housekeeping on the issue of spoken word content.
1682 Going back to the
deficiency letter that we sent out to you, we were trying to pin you down at
that time regarding the infamous 26 hours that you came back to us and said you
choose to remain fluid.
1683 Now, I understand
that you want some room to manoeuvre in that area, but if you can't answer what
you are going to do with it, can you give me an idea of why you feel it's
important to hold those 26 hours in reserve until you have gotten yourself
into the market?
1684 MS
LAURIGNANO: Right.
1685 Well, it was not
our intent to appear to try to dodge the question because truly we have no
plans to do anything but 100 per cent of all the programming done
local, local programming.
1686 What we wanted to
do is, we realize that seven years is a long time during a license term and we
believe that there may be opportunities wherein within those seven years we can
find something that would be suitable for those hours, maybe it's some new
technology that can make something available, it could be something that we
ourselves may develop through other markets, something that a third party could
come up with or something that we could work together with the strategic
partner.
1687 So we just wanted
that flexibility to not have to come back to you within those seven years and
say, you know, can we ask for an amendment to the licence.
1688 But we are
definitely 100 per cent sure that we have nothing right now that
would predicate us doing anything but the full schedule.
1689 MR. BARTON: Again, a hugely important part of the YCR
format is that interactivity and hearing back from our audience what it is they
want to hear and it does have an effect on our programming.
1690 I can use Halifax
as an example. Since the time we
launched we got feedback from our audience we would like to hear more mix
shows, so we started doing more mix shows.
We would like to hear more local DJs on the air. So every Wednesday we feature a local DJ on
the air actually spinning live in the studio.
1691 So in order to
really accommodate the feedback that we are going to get from our audience over
that seven‑year term, that's why we leave in the flexibility that Carmela
is speaking of.
1692 COMMISSIONER
SIMPSON: Thank you.
1693 Moving over to the
talent development and Canadian content side of the equation, a very
specific question to do with your relationship with Western.
1694 You have proposed
to, for the sake of a better term, create an endowment to support scholarship
for students in the music degree program, but what ‑‑ unless I
missed it what seemed to be missing was the eligibility criteria. I'm wondering if you could walk me through
that.
1695 MR. EVANOV: Yes, definitely. I will have Sean Moreman go through it for
you.
1696 MR. MOREMAN: Commissioner Simpson, our understanding of
the CCD policy explicitly allows for scholarships that are for students
studying music.
1697 When we spoke with
the University of Western Ontario, certainly our intent was to
create an endowment that over the course of the seven years would collect
more interest and in fact be a larger contribution than what you see in the
documents before you specifically for the benefit of students studying music.
1698 So we believe that
is a right to the letter eligible criteria under the policy, unless we have
misunderstood the policy on that front.
1699 COMMISSIONER
SIMPSON: Okay. I'm still not sure I got the gist of the
answer, I'm sorry.
1700 MR. MOREMAN: As the university is a recognized educational
institution that offers a course in music, we are creating a scholarship fund
for the benefit of students studying music.
1701 COMMISSIONER
SIMPSON: Okay. So what you are saying is you are adapting
your program to the eligibility requirements of the university as opposed to
setting your own criteria for the endowment?
1702 MR. MOREMAN: As to
who will receive the funding?
1703 COMMISSIONER
SIMPSON: Yes.
1704 MR. MOREMAN: That will be up to the university's
department.
1705 COMMISSIONER
SIMPSON: Okay. Okay.
1706 MS
LAURIGNANO: I might add, we
have two similar arrangements with some ongoing initiatives with the
University of Sherbrooke and with the University of Ottawa as well through
some other holdings.
1707 COMMISSIONER
SIMPSON: Okay.
1708 Moving over to the
fun part, which is financials, I couldn't help but note given the times we are
in that your turning the corner to profitability was quite early compared to
some of the others that I have seen. As
admirable as that is, it is also matched with a PBIT that is considerably more
aggressive.
1709 I am wondering if,
given the fact that you rely so much on your own instinct, what is it that you
know that Rogers and CTV and others don't know about this market?
1710 MR. EVANOV: Well, obviously, we can't comment on how
Rogers, CTV and any other broadcasters operate their business or have allocated
their financials there.
1711 COMMISSIONER
SIMPSON: My apology.
1712 MR. EVANOV: Bur for ourselves, I will ask Ky to go in
more detail as our Vice‑President of Sales.
1713 But again, a lot
of it has to do with experience. A lot
of it the same team that we have been successful with, radio stations in huge
markets like the Toronto CMA and most recently in Halifax, we have done very
well in both those markets and continue to do so and it is part of our approach
coming into the market and how we sell.
1714 And to give you a
better explanation of how we do that and come to that, I will ask Ky to
explain.
1715 MS JOSEPH: Thank you.
Actually, just in comparing CTV and Rogers' and our application I notice
that the market growth, for example, we did project a slowdown in the economy
when we projected our financials and that is why there is only a 2 per cent
growth year over year in the market.
1716 Whereas I think
you will note that ‑‑ I can't remember which, it was either
CTV or Rogers, one was 5 per cent, one was 4 per cent, so they were
considerably aggressive, actually double or even more than that. So we did project that into our financial so
we feel comfortable with our financials the way they are.
1717 But just to go a
little bit deeper into your question, we review several calculations when we
are looking at revenue in a market. You
know, we always talk to the advertisers and I can ask Chris Edelman, our
Regional Sales Manager, to tell you a little bit about what the advertisers in
this market said.
1718 We also had the
liberty of analyzing in great detail what happened in Halifax, because it
wasn't so long ago when we launched a youth‑oriented station there. And here is what we found, that coming into a
market where there were major dominant players with multi‑stations which
is the case here, which is the case in every single market that we are in. We are certainly no stranger to that.
1719 As a matter of
fact, I don't even know if we would know how to sell if there was no
competition like that, which is very important because out of that was born our
sales philosophy. And our sales philosophy I think is very different than most
stations based on my conversations with all the other VPs of every other
company.
1720 And that is
specifically that when we are devising budgets I guess at a level to the
specific sales representatives there is a huge new business development
component and that is predicated on making your bonus or making the sales
incentives. So there is that built into
that.
1721 So if I go back
to, for example, what happened in Halifax within the last 24 months we
attracted 483 clients onto the station to date, 315 of those were retail, 67
were national. Of the 315 retail clients
144 were completely new to radio, 51 were a result of taking money from other media
other than radio and 90 were a result of a combination of increased budgets in
radio and impact on other stations.
1722 So we use this
template because there are so many similarities with regards to London and
Halifax, being that the population is similar, that the market conditions are
similar and in fact, of course, we have to project and our projection really is
just a projection based on our experience and market indicators. But the impact was less than we forecasted
and the new business development was a lot more. So we feel very confident coming into this
market.
1723 It is an
extraordinary opportunity for a broadcaster who has, you know, two decades of
experience serving and targeting youth dollars.
1724 MS
LAURIGNANO: I would just add that, as Ky
has said, our sales philosophy is different in terms of how we approach it.
1725 But if you notice
of the sales projections the three youth applicants are pretty much right on
line with each other in terms of what the expected revenue is going to be. I think the operating philosophies are a
little different. Nevertheless, I can
say that should there be any impact or any shortfall in the projections that we
have made, we certainly have the resources to weather it and we have the
resources to put money in if we need to and that will be evidenced by the
letter which we will resubmit again.
1726 But we are very
confident in our projections, because it is straight‑up formula that we
work with.
1727 COMMISSIONER
SIMPSON: Thank you for that. And I perhaps should have not said
aggression, but retention in terms of the PBIT because, you know, you are
obviously telling me that you do something different with respect to operations
as opposed to just forecasting.
1728 But thank you for
answering my next question, which was going to be along the lines of how you
arrived at the basis for the estimate of 35 per cent of your revenue coming
from advertisers new to the market or to the category.
1729 But I still would
like just one little touch on this before we go, in that the 15 to 34 market is
probably most heavily populated by the present incumbent broadcasters and
potentially new ones. And I am curious
if the previous experiences you have had in being able to get new business to
the table is parallel to or close to what you think you are seeing here in London.
1730 The idea is that
you have already ‑‑ you have a lot of competition going into
that space of 15 to 34. One more time
for old times sake, what is it that you think you can do to extract something
like 35 per cent new revenue to your station that isn't on radio now?
1731 MS JOSEPH: I guess the first part of that question is
that you say there is a lot of broadcasters that are serving that market. And we find that that is actually not the
case, because when you dissect their audiences they are actually serving the
older demographic and getting the younger demographic by default.
1732 And what
advertisers have told us, both national and local, is that some of them have
spent money and they want to be on radio, but it is just not cost efficient, it
is not cost effective. So they are
getting I guess, you know, a part of the reach.
There are 32 per cent I believe of market tuning that is out‑of‑market
and most specifically in Kitchener and also in Woodstock.
1733 And so to answer
your question, we are not going to be rolling over on their revenue so to speak
and that is really where the opportunity lies.
And this is actually where I would like our Regional Sales Manager,
Chris Edelman, to elaborate on where we get the revenue at a local level.
1734 But I just want to
talk a little bit about national for a second, because we have been very
strategic in getting extra national dollars.
And what I mean by that is, as I am sure you are familiar, but if you
are not national rep houses are very reactive.
1735 So a buy comes in,
there is a certain amount of GRPs, here is the demographic, boom boom boom,
here is the stations, they might try and get some other stations on that as a
combo buy or what have you and the buy is done.
Where we react, our national rep house reacts to that, but then at a
local level we get a report of all the national buys have gone through.
1736 I will give you
the perfect example, it happened four days ago, where Phillips did a buy, a GRP
buy, and it was an $18.49 buy.
1737 We went in there,
we went locally, direct to the client, which is very unusual, but it is part of
our sales strategy, and we said to them, look, we know that you are doing this,
we want to create a promotion for you that is tied into the web, it is tied
into all these components and it is a customized promotion. And we got an extra $10,000 as a result of
our I guess unique sales template. And
we are the only station that got that buy.
1738 Another perfect
example is actually just today in the Globe & Mail an article, "Toyota
Aims at Youth Market with their Scion Model in 2010." So that is a perfect example once again. I know the national rep houses will be like
great, you know, we are going to wait for the buy to come through.
1739 Where we are now
going to go direct to Toyota and start working that business in order that we
can, you know, perhaps get a vehicle, drive it around, do a lot of non‑traditional
things in order to get the radio dollars from perhaps television or other
media.
1740 So at a national
level we have been very successful.
1741 Another I guess
unique approach that we take is in terms of our programming we will develop
campaigns on air that are tied in with programming that will get national
buyers. So you saw Summer Rush, for an
example. We are one of the only stations
in Canada that actually puts on concerts like this.
1742 We have been able
to garner dollars fro McDonalds, Pizza Pizza, Brisk Iced Tea. So national clients that would generally not
have money for radio, but we go after them because we are offering them a very
very unique opportunity where they can reach the masses and perhaps sample or
do things that you generally wouldn't be able to do with radio.
1743 I will ask Chris
Edelman to talk about the local front.
1744 MR. EDELMAN: I hear a lot of broadcasters I hear a lot of
broadcasters mention the challenge of selling the 12 to 34 demographic. I kind
of scratch my head at that maybe because that is all I know, but they refer to
the 25 to 54 demographic that, yes, in current times garners a large portion of
revenues in the radio market.
1745 The way that I
deal with that when I am on the street and with a variety of sales staff is I
ask them to try to find out what a 25 year old has in common with a 54 year
old. They are living completely
different lifestyles, they are interested in different things. And what we do is we target businesses that
want to speak to that lower end of the spectrum.
1746 And in that avenue
what we do create is a very effective and cost effective means of delivering a
target market to a business so that 100 per cent of their revenue is going
exactly where they want to, or I should say of their marketing budget.
1747 Now, I have
personal experience of this happening in Halifax where we far surpassed our
projections from a revenue standpoint, our year 1, our year 2, our year 3 and
we continue to do so even in these economic times we are doing fantastically
well.
1748 Researching this
market we also found the same opportunity.
And we spoke with many retailers in the London market and with different
media buyers that would potentially be interested in investing the radio money
into the London market.
1749 I have personal
relationships with products such as Wrecking Balm, Proactiv, Hoodia, Fat
Assassin, these are people that are all trying to get to that younger
"demographic" and will only do so if they can find a cost effective
means of getting that demographic.
1750 When you are
talking about acne skin cream they are not interested in talking to a 54 year
old, they want to talk to a teen, right, and we would be the perfect vehicle
for them to do so. And I am quoting the
client here:
"I do business with all the
young astute Evanov properties and would love the opportunity to advertise in
London under their umbrella. I want to
advertise on this station. Rick Selsby,
CNR Media." (As Read)
1751 Fabutan is another
significant sponsor to us on CIDC and CKHZ in Halifax. They have two locations in the London market
and when told about the possibility of a YCR in London Sherri Hodges, Eastern
Regional Manager, says:
"Finally, a way to allocate my
marketing dollar direct to my target group, the way I do with CIDC and in
Halifax. Advertising in London has
always been a challenge for us." (As Read)
1752 And the list goes
on. We were able to collect a tremendous
amount of support letters, namely from Le Chateau, which is a retail operation
targeting the younger demographic. YM
including stores Urban Planet, Stitches, Suzy Shier. itravel2000 is also targeting a younger demographic
with their ability to use the web to sell vacations.
1753 We also spoke with
the general manager of Laser Quest, Michel.
The problem there is they have got a continuous struggle to target the
12 to 24 demographic that is so important to his business. His opinion is that TV is his only option,
but is frustrated because it is too expensive, and newspaper has not worked for
him.
1754 Now, Michel shares
the same opinion as many marketers do, is that young people just don't read
newspapers so that eliminates yet another option for him.
1755 Our countless
discussions with London retailers and media buyers all indicate that an
advertising vehicle to the 12 to 24 demographic would be more than welcomed.
1756 COMMISSIONER
SIMPSON: Thank you. I think I am done.
1757 THE
CHAIRPERSON: Thank you very much, Mr.
Simpson.
1758 Commissioner
Cugini.
1759 COMMISSIONER
CUGINI: Thank you. Just a couple of more questions, don't want
to keep you here too late.
1760 Ms Joseph, you in
particular, with regards to all of these great efforts that the Evanov group
does to attract national advertisers, is the split still 80/20 local to
national, which we typically hear from other radio operators?
1761 That is usually
your advertising revenue is 80 per cent is from retail advertising, 20 is from
local?
1762 MS JOSEPH: Well, we projected 20 per cent to come from
national and 80 per cent to come from local, yes. And as you will see from the other two
broadcasters that are looking to launch a youth‑oriented station there I
believe significantly lower in the national dollars. And I believe that is because the young
demographic is not lucrative.
1763 And I believe
actually that 80 per cent of all buys done on the national level are within the
18 to 49 and 25 to 54 demographics. So
we do have to dig like I said we do in order to get even the 20 per cent on a
youth‑oriented radio station.
1764 COMMISSIONER
CUGINI: Okay, thank you. And I apologize, I am not quite sure who said
it in your oral presentation, but you talked about the number of hits on your
website for both Toronto and Halifax.
1765 Just out of
curiosity, it is a laudable number for both markets, have you been able to
monetize those hits or is it simply complimentary to your radio station?
1766 MR. EVANOV: Yeah, it is complimentary and it is part of
our marketing and basically it is an extension of both radio stations as Dan
was explaining as far as listening live, information and everything else. So it is more of a marketing tool than
anything else.
1767 COMMISSIONER
CUGINI: So the six million hits doesn't
translate at all into dollars for you?
1768 MR. EVANOV: No, but it shows the ‑‑ you
know, the website.
1769 COMMISSIONER
CUGINI: No, I understand that, yes. No, I understand. I didn't mean to minimize that number of
hits.
1770 MS JOSEPH: Actually, if I can just add to that. We don't necessarily monetize it on a huge
level, it is less than 1 per cent.
Truly, we do sell banner advertising and you will see that on the
stations. But it has been so almost
insignificant in terms of the total dollars that it really is part of our
overall projections.
1771 COMMISSIONER
CUGINI: Well, it speaks to the
popularity of your stations. I get that.
1772 One housekeeping
issue and it is to do with your level of Canadian content. I know that you have committed to 40 per
cent. Will you accept that as a
condition of licence?
1773 MR. EVANOV: Yes, we will.
1774 COMMISSIONER
CUGINI: And will that apply to the
entire broadcast week or Monday to Friday, 6:00 a.m. to 6:00 p.m.?
1775 MR. EVANOV: That is for the entire broadcast week.
1776 COMMISSIONER
CUGINI: For the entire broadcast week.
1777 Okay, thank you
very much. Those are all my questions.
1778 THE
CHAIRPERSON: Commissioner Duncan.
1779 COMMISSIONER
DUNCAN: Yes, I have a question. You have undoubtedly heard both the CHUM and
the Rogers presentation. And I am just
wondering, you have been involved in this type of programming, as you point out,
for a long time and Halifax certainly, as you say, is the exact format you are
proposing.
1780 How would you see
or what do you see as the difference between your approach and what is being
suggested by CHUM and also Rogers? Just
ignoring the fact, I know, that CHUM is going to do theirs in a very
sophisticated software type program to get feedback. But aside from that, is there a big
difference in what the three of you are proposing?
1781 MR. EVANOV: Yes, I will ask Dan to take you through some
of the differences in the programming elements and maybe the strategy in
programming and then I can run through a bit more of the corporate philosophy
about the difference between us.
1782 MR. BARTON: One of the biggest differences with our
application being a YCR is, as Carmela had mentioned earlier, it serves a
demographic, it doesn't serve a specific music style.
1783 The variety of
genres that we present with pop and top 40, urban, hip‑hop, R&B,
dance and modern alternative rock is really designed to get the bulk of 12 to
34 radio listeners.
1784 With the other two
applicants, with Rogers and their CHR, it seems to be a narrower format. In terms of CTV, they kind of seem to be
taking a little baby step toward getting the variety and the format but they
haven't quite gotten there yet.
1785 And we know what
we are doing with this, we are experienced broadcasters with this format. We understand how innovative it is because we
have been doing it for a few years now. They had talked about interactivity as
part of the format. And again, we aren't
just talking the talk, we are walking the walk.
Not only interacting through website and through email and through text
messaging, but again we are out in the community.
1786 One of the reasons
why we are able to determine what dance songs are popular in the absence of a
Canadian chart is because we are actually in the dance clubs. Deejays on our staff are actually spinning in
the clubs, so we get face to face with what works and what doesn't in the
Halifax market. And I mean, that is
something that hacking into someone's computer playlist just isn't going to
give you.
1787 In terms of
exposing new and emerging talent, again we are very aggressive in that respect
because we have always had an open door policy musically. So it is not just a case of seeing what the
top spinning songs are on iTunes on someone's computer or just taking email
requests.
1788 That is certainly
a part of it, but part if it is having the open‑door music policy that
these artists who ‑‑ you know, again, we found tons of them in
Halifax, we are seeing a lot of them in London as well that just weren't being
heard on radio that came to us.
1789 You know, we had
tons of submissions when we launched in Halifax. So we found a lot of quality in this music
from artists like Jay Brew, like Chad Hatcher who you will hear from tomorrow,
like Jamie Sparks that just weren't being heard. And we were able to provide an avenue for
that music before anyone else was able to hear it.
1790 MR. EVANOV: Another difference just on that with Dan is
we have the experience, you know, broadcasters, Rogers, you know, excellent
broadcasters in many fields, but don't have, as they stated, really the
experience with the youth market. We
do. In Halifax alone we have increased
the youth tuning by 15 per cent while the rest of the country has gone down 8
per cent.
1791 So we feel, like
Dan said, you know, we have done it, we have been there, we continue to do so
and so that experience, to go on that again, gives us a real advantage and
really makes us distinctive from the other two applicants in there.
1792 Also, we feel like
we are going to bring diversity in the market as well. You know, Rogers doesn't have a station in
London, but CTV‑CHUM does. And
Rogers has many stations in and around London, some stations coming into London
as well.
1793 So out of the
three of us, really providing a true diversity as far as news editorial, voice,
music, programming, our whole philosophy, when the other two are kind of, you
know, already in the market to a degree on both of them.
1794 And also, on that
too, as part of our overall expansion strategy, we need this for critical
mass. We successfully operate standalone
in the 12th most competitive market in North America, in the Toronto CMA, and
other markets as well as a standalone and we have been successful at it for a
long time. And we know that we can do
the same on London as well.
1795 COMMISSIONER
DUNCAN: Thank you.
1796 THE
CHAIRPERSON: Thank you very much.
1797 Legal counsel.
1798 MR. McINTYRE: Thank you.
Just one housekeeping question.
1799 About your CCD proposal
to contribute money to the University of Western Ontario Scholarship, do you
have a sense of how many scholarships would be awarded per year?
1800 MR. MOREMAN: That has not yet been calculated and, as I
explained earlier, that will be at the discretion of the department when they
ultimately distribute them. There are
many factors that play in the endowment creation considering the amount of
interest that is being paid as well.
1801 So if there is
more interest being paid in a particular year they may be able to give out
more. If the interest rate is quite low
they may only be able to pay out the principal.
But that is going to be entirely up to the university.
1802 MS
LAURIGNANO: And if I might add, we would
be very pleased to report what the criteria is when it is established as part
of the file at some point or other, when we have something concrete and that
has developed we will be filing it.
1803 MR. McINTYRE: Certainly, I think we would expect that, so
that would be great.
1804 I guess the only
other issues is the confirmation of the undertaking to provide updated
confirmation of financing for October 30.
1805 MR. EVANOV: Yes, we will provide that.
1806 MR. McINTYRE: Thank you.
1807 THE
CHAIRPERSON: Well, gentlemen, thank you
very much for the presentation. We will
adjourn until tomorrow morning at 9:00.
1808 Have a good
evening.
‑‑‑ Whereupon the
hearing adjourned at 1836, to resume
on Tuesday, October 21, 2008 at 0900 / L'audience
est ajournée à 1825 pour reprendre le mardi
21 octobre 2008 à 0900
REPORTERS
____________________ ____________________
Beverley Dillabough Jean Desaulniers
____________________ ____________________
Sue Villeneuve Jennifer
Cheslock
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