ARCHIVED -  Decision CRTC 88-833

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Decision

Ottawa, 2 December 1988
Decision CRTC 88-833
Radio CFIN Inc.
Coaticook, Quebec -873209100
Following a Public Hearing in Trois-Rivières, Quebec on 5 July 1988, the Commission denies the application by Radio CFIN Inc. (CFIN Inc.) for a licence for a French-language FM radio broadcasting transmitting undertaking at Coaticook on the frequency 104.5 MHz, channel 283A, with an effective radiated power of 450 watts.
CFIN Inc. is 100% owned and controlled by Courbinson Inc. which is owned by Mr. Bertrand Robinson (52%) and Mr. Michel Brochu (48%). Between the time that the application was filed and the public hearing, Mr. Brochu, who had held 24% of the shares of Courbinson Inc., purchased the 24% shareholding of Mr. André Courtemanche, thereby increasing his ownership in the company from 24% to 48%. Mr. Robinson, who was unable to attend the public hearing due to health considerations, is President of Courbinson Inc. while Mr. Brochu is Vice-President. Mr. Yves Laurin is General Manager and would have had primary responsibility for the day-to-day management of the proposed radio station. All of the principals involved are from the Montreal area.
Although Coaticook is no longer served by any local radio station, this small centre located just north of the Vermont border at the extreme south-east of the Eastern Townships falls within the service contours of five French-language stations and one English-language station located in nearby Sherbrooke and Magog. The population of Coaticook and the surrounding villages is approximately 13,000 and the total population which would have been served by the new radio station numbers approximately 39,000.
In Decision CRTC 82-998 dated 3 November 1982, the Commission approved an application by Coaticook FM Inc. to operate a French-language FM station at Coaticook. The applicant had however, earlier been denied authority to establish a radio station in this community primarily because of financial concerns (Decision CRTC 81-802 dated 30 October 1981). The 1982 decision to authorize a country music format FM station at Coaticook was based on a more realistic application which proposed to offer a true alternative to the radio services available in the region. Nevertheless, the Commission did express concern about the ability of Coaticook FM Inc. to meet its programming objectives "considering the limited resources of a community the size of Coaticook and the staff available to operate the station".
The new station, CFIN-FM, which commenced operation on 13 February 1984, did in fact encounter serious problems with respect to programming deficiencies, resulting in a one year renewal of its licence in Decision CRTC 86-595 dated 20 June 1986. Following a public hearing in Montreal on 12 May 1987, the Commission denied an application by Coaticook FM Inc. to renew the licence for CFIN-FM. The Commission determined that the licensee had "still not managed to resolve its problems of non-compliance" with respect to foreground programming, the unauthorized broadcasting of English-language spoken word programming and the broadcasting of a minimum of 55% French-language vocal music, as required by condition of licence. In that decision the Commission stated:
In view of the financial difficulties facing the station, which has not recorded any appreciable increase in revenue since it first went on the air in early 1984, and because of its very small staff, the Commission considers that the licensee would not be in a position to honour the commitments contained in its new Promise of Performance or the requirements of the FM policy and the regulations.
The Commission also noted that it had been advised by the Department of Communications that CFIN-FM had not been on the air since 4 July 1987.
In reviewing the current application by CFIN Inc. the Commission has had to be cognizant of the history of FM radio at Coaticook and of its responsibility to ensure that any new service introduced to the area, such as the one proposed, would be financially-viable in order to ensure the quality of the service.
As stated in previous decisions, in assessing any application for a new broadcasting undertaking, the Commission must first be satisfied that the prospective licensee possesses a full and clear understanding of the market it proposes to serve and the needs of its residents. In cases such as the one before it, the Commission must also be convinced that the applicant has a thorough knowledge of the FM policy and a strong commitment to its objectives. Further, the Commission needs to be assured that the applicant has an adequate business plan, together with the financial resources necessary to maintain the proposed service and meet all of its commitments should revenues fall short of projections.
In the present case, the Commission notes the applicant's evident interest in providing an FM radio station at Coaticook as well as the dynamism and determination displayed by the promoters of the project. However, given the lack of available human resources and the strong competition from out-of-market radio services, the Commission remains unconvinced that the station can achieve either the revenue projections put forth by CFIN Inc. or the programming commitments set out in its application and at the public hearing.
CFIN Inc. proposed to revive the country music format of the previous station and to broadcast 91 hours per week of music consisting entirely of subcategory 53 (country and country-oriented) musical selections. In this respect, the Commission notes that the former station was unable to meet either its original commitment to broadcast 65% French-language vocal music or the 55% level of French-language vocal music imposed by condition of licence in Decision CRTC 86-595. The former licensee attributed the shortfalls in this area to the unavailability of country selections in the French language, stating at the May 1987 public hearing that it would have difficulty broadcasting more than 40%. At the Trois-Rivières public hearing, CFIN Inc. failed to demonstrate to the Commission's satisfaction that it would be able to meet its commitment to provide a level of 55% French-language vocal music.
With respect to spoken-word programming, which was to have comprised 11.3% of its weekly schedule, the Commission considers that with the very minimal commitment to Enrichment material (2.7%), it would be practically impossible for the applicant to provide the 12% foreground programming and 33% combined foreground and mosaic programming outlined in its Promise of Performance.
The Commission notes that the programming staff would have consisted of five or six persons, several of whom would be able to devote only a limited percentage of their time to the production of programs. Further, only one employee would have had direct programming experience.
Although CFIN Inc. had commissioned a market analysis, at the public hearing it did not present any detailed assessment of potential advertising revenues. It did however project that in the first year these would equal those realized by the old station in its last full year of operation. In this respect, the Commission has noted the applicant's sales stategy which aimed to sell a much higher volume of advertising messages at significantly lower rates than other stations. However, it had planned to have only one full-time salesperson and appears to have prepared its projections largely on the basis of expressions of intended support by local merchants. As a result, the applicant may have seriously overestimated the market's revenue potential, which it projected would increase by 18% each year.
According to CFIN Inc., its first-year revenues would have been $229,000, increasing to $401,476 at the end of the fifth year of operation, and the station would have been profitable by the end of year 1. Such a performance appears to be extremely optimistic in an industry where new undertakings do not normally achieve profitability until well into their second or third year of operation.
The Commission was also concerned that the applicant's proposal for the support and development of Canadian talent may not be realistic. It planned to produce a weekly program from local establishments featuring local talent backed by a band to be engaged by the station. The budget for "Les Découvertes CFIN" was to be $4,000 per annum and it was to be hosted by one of the station's employees. The applicant also proposed to grant an annual sum of $500 to one of the participating artists.
In conclusion, the Commission considers that CFIN Inc. has not demonstrated a sufficient knowledge of the operational demands and responsibilities which the Commission's FM policy and regulations place on the licensee of a commercial FM station. Moreover, the commitments appear to be unrealistic, particularly given the level of staff proposed, which appears to be inadequate to produce the quantity and quality of programming promised in its application and to fulfill its commitments on an ongoing basis.
The Commission acknowledges the supporting interventions from Mr. Fran çois Gérin, M.P. for the constituency of Megantic-Compton-Stanstead, and from Mr. André Langevin, Mayor of Coaticook.
Fernand Bélisle
Secretary General

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