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ARCHIVED -  Decision CRTC 89-849

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Decision

Ottawa, 17 November 1989
Decision CRTC 89-849
Legerbourg Inc.
Trois-Rivières, Quebec - 883199200- 890820400
Following a public hearing in the National Capital Region commencing on 27 June 1989, the Commission approves the application for authority to transfer effective control of Legerbourg Inc., broadcasting licensee for CIGB-FM Trois-Rivières, through the transfer to Radiomutuel Inc. (Radiomutuel) of 102 (51%) common voting shares owned equally by Guy Leblanc, Maurice Bourget, Jean-Louis Guillot and François Dufresne. Since it already owns 49% of the common voting shares, Radiomutuel becomes sole shareholder of Legerbourg Inc.
The Commission also approves the application to amend CIGB-FM's Promise of Performance by changing the station's music format from Group I to a "dance music" format of Group IV, by broadcasting a maximum of 68 hours of weekly programming originating from the Radiomutuel FM station exchange network of which 42 hours will be broadcast at night, by reducing the amount of French-language vocal music broadcast from 65% to 55%, and by eliminating the broadcast of Traditional and Special Interest Music (Category 6). Radiomutuel is one of the major broadcasting companies in Quebec. In addition to holding the licence for the Radiomutuel network, it is the licensee for radio stations CJMS and CKMF-FM Montreal, CJRP and CHIK-FM Quebec City, CJRS Sherbrooke, CIMO-FM Magog, CJRC and CKTF-FM Gatineau, and CJTR Trois-Rivières, with which CIGB-FM will be operated on a joint basis. Radiomutuel is also 50% owner of Communications Cuivor Inc., which operates stations CJMM-FM Rouyn-Noranda and CJMV-FM Val d'Or as well as a rebroadcaster in La Sarre. It also operates, in association with CHUM Limited, the specialty music video service MusiquePlus.
As stated in a number of decisions relating to applications for authority to transfer ownership or effective control of broadcasting undertakings, because the Commission does not solicit such applications, and because there is thus only one proposal presented to the Commission, the onus is on the applicant to demonstrate to the Commission that the application filed is the best possible proposal under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature.
Radiomutuel pointed out its long-standing involvement in the Trois-Rivières area, which dates back to 1968 in the case of CJTR and to 1982 in the case of CIGB-FM. It also said that it had the resources and expertise needed to strengthen the position of these two stations in the market by operating them on a joint basis, and that the Group IV dance music format in which it successfully operates its other FM stations will enable it to attract a large portion of the local 18- to 34-year-old audience that currently listens to stations from the Montreal and Quebec City, outside its market.
Radiomutuel evaluated the cash value of the benefits of the transaction at $693,495 over a five-year period. Among the benefits proposed by Radiomutuel that the Commission could not take into account in its evaluation of this transaction are $53,800 in capital expenditures for the acquisition of various technical equipment. The Commission considers these costs to be part of a normal capital expenditure program.
With regards to Radiomutuel's proposal to devote $100,000 to the development of Canadian talent over five years, the Commission notes that this commitment overlaps with a condition of licence imposed at the time of CIGB-FM's latest licence renewal, that is, a commitment to devote at least $20,000 annually to support Canadian artists. In this regard, the Commission noted Radiomutuel's commitment to increase by $5,000 its direct contributions to Canadian talent up to $25,000 each year, if funds are available. This would represent 1% of the station's gross revenues, less agency commissions. However, the Commission points out that, according to the five-year budget estimates submitted with the applications, this commitment is unlikely to translate into significant increases in the amounts allocated for this purpose over the five-year period. The Commission considers, in general, that the proposed benefits are significant, unequivocal and commensurate with the size and nature of the transaction, and that they take into account the responsibilities to be assumed by Radiomutuel, the nature and viability of the broadcasting undertaking in question and Radiomutuel's programming, management, financial and technological resources. Further, the Commission considers that approval of these applications is in the public interest. The Commission expects Radiomutuel to ensure that all budgeted expenditures related to the proposed benefits are implemented over the next five years, according to the schedule it has established.
With regard to the benefits related to this transaction, Radiomutuel has committed itself to hiring an additional host-researcher who will be assigned to the morning program and a stringer responsible for preparing and presenting socio-cultural features. In addition, with respect to proposed amendments to CIGB-FM's Promise of Performance, Radiomutuel has committed itself to increasing the level of foreground format programming from 15% to 20%, adding 3 hours of locally produced public affairs programming each week, and increasing the Canadian content of its Category 5 music from 30% to 35%.
The Commission noted Radiomutuel's plans to review the entire structure of CIGB-FM's information services. The Commission expects the licensee to stop broadcasting complete news reports from the Radiomutuel network and ensure that the news is adapted specifically to the FM station at all times, in conformity with the policy on FM Radio and the commitment made by Radiomutuel in this regard at the public hearing. The Commission also expects the licensee to broadcast its public affairs programs at times better suited to its audience as a whole.
The Commission further notes the applicant's very broad definition of new music and points out that the definition should include only selections that are truly new and as yet not included on the charts. Therefore, it is extremely unlikely that the percentage of these selections to be broadcast would reach the 60% indicated in the licence amendment application.
The Commission has taken into consideration the intervention made at the public hearing by Cogeco Inc. opposing the applications, and the written intervention in support of the applications submitted by the Corporation économique de développement industriel et commercial de Trois-Rivières et de Cap-de-la-Madeleine Inc.
The Réseau des Appalaches was opposed mainly to the application to amend CIGB-FM's licence by changing its music format from Group I to Group IV. The intervener pointed out that it was preparing to launch CFJO-FM Thetford Mines, a Group IV station also targetting an audience of young adults, and that the operation of two Group IV FM stations in the region could prevent CFJO-FM from reaching its break-even point within a reasonable time frame. In light of the discussions held in this regard at the public hearing and the commitments made by Radiomutuel, the Commission requires the licensee, by condition of licence, to refrain from soliciting commercial advertising in the area served by the intervener, particularly in Thetford Mines, Victoriaville, Plessisville, Lac Mégantic, Asbestos and Disraeli.
Fernand Bélisle
Secretary General