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ARCHIVED -  Public Notice CRTC 1992-62

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Public Notice

Ottawa, 11 September 1992
Public Notice CRTC 1992-62
Service Agreement between Telemedia Communications Ontario Inc. and Pelmorex Broadcasting Inc. regarding the operations of CHAS-FM and CJQM-FM Sault Ste. Marie, Ontario
I.BACKGROUND
On 26 June 1992 the Commission received applications by Telemedia Communications Ontario Inc. (Telemedia) and Pelmorex Broadcasting Inc. (Pelmorex) to amend the Promises of Performance of their FM stations in Sault Ste. Marie, Ont., CHAS-FM and CJQM-FM respectively. The applications describe a three-part plan to restore the economic health of their broadcasting enterprises in that city.
Firstly, Telemedia and Pelmorex stated that they were planning to discontinue the operations of their AM stations, CFYN and CKCY respectively, on 30 August 1992, and to return the licences to the Commission. The Commission notes that regular programming on these stations has ceased; the licences have not yet been surrendered to the Commission for purposes of revocation.
The second element of the plan involves a Service Agreement, whereby CHAS-FM would move to the Pelmorex premises and be managed by Pelmorex on behalf of Telemedia. It was to come into effect on 31 August 1992. Management agreements are occasionally employed by licensees in certain circumstances, and areexamined by the Commission to determine whether or not their provisions would affect the compliance of the undertakings with the Radio Regulations, 1986 (the Regulations) or the specific conditions of the licences, particularly with regard to the question of whether effective control of the operations would be changed. The contents of the Agreement and the Commission's deliberations on the matter of effective control of CHAS-FM are described below.
The last element is comprised of the applications to amend the Promises of Performance of the FM stations. These applications propose exemptions from certain of the Commission's policies and from the requirements of certain regulations respecting FM radio, as contemplated in CRTC Public Notice 1992-3, entitled Guidelines for Assessing Applications for Programming Flexibility From Licensees of Radio Stations in Border Markets and Small Markets, and will be gazetted for public comment shortly.
In July the licensees made a public announcement concerning their plans in Sault Ste. Marie. Following this announcement, the Commission received several expressions of concern from local political representatives and members of the public regarding the impending loss of radio services.
The Commission notes that, according to its Radio Market Report, 1987-1991, the four Sault Ste. Marie commercial radio stations, taken together, lost an average of $475,260 annually before interest and taxes during this five-year period. Three of the stations were unprofitable during each of those years; the fourth reported a profit during one of those years.
II.THE SERVICE AGREEMENT Subsection 11(3) of the Regulations states in part that "a licensee shall obtain the prior approval of the Commission with respect to any act, agreement or transaction that directly or indirectly results in (a) a change, by whatever means, of the ownership or effective control of its undertaking".
A condition of the licence of CHAS-FM states that "Except as authorized by the Commission, the broadcasting undertaking licensed hereby shall be operated in fact by the licensee itself".
In the material originally submitted as part of the applications to amend the two Promises of Performance, Telemedia and Pelmorex stated that Pelmorex would be responsible for the day-to-day operation of the three remaining stations, including CJWA Wawa, a part-time rebroadcaster of CJQM-FM. This would include "sales, administration, promotion, and technical". The submissions also made the commitment that each licensee would retain control over its remaining FM licence as well as the news and programming of its station, because the programming and news staffs would continue to operate under the policies and guidelines established by the respective parent company.
In correspondence, the Commission questioned the applicants with respect to certain matters and asked, amongst other things, how the licensees would remain in control of their respective FM stations while ensuring that the stations would continue to meet their obligations to the CRTC at all times. The Commission stated that it would wish to be satisfied that measures would be established to ensure the maintenance of diversity andindependent voices in the community, if the plan to combine the FM operations were to be implemented.
The licensees responded to the Commission's questions, and made a number of undertakings and commitments. They assured the Commission that news and programming staffs of CHAS-FM and CJQM-FM would be assigned exclusively to their particular station at all times. Such staff would report to the News and Program Directors of each station, who would be Telemedia or Pelmorex employees, as the case may be. In turn, these News and Program Directors would report directly to the senior regional staff of the respective Telemedia and Pelmorex offices in Sudbury.
As to the maintenance of independent news voices in the community, the applicants advised that there would be separate news facilities, news vehicles, newsrooms, wire services, news staff, and news gathering. The applicants also advised that Telemedia staff would have unconditional access at any time to the studios and newsroom facilities, and would be able to supervise the operations of CHAS-FM.
Following receipt of these assurances, the Commission requested the applicants to submit for review a signed copy of the Service Agreement, revised in accordance with these commitments. A significantly amended Agreement has recently been filed and put on the public file. In the amended Agreement, the effective date was changed from 31 August 1992 to the date that the parties are informed that the transaction will not constitute or result in a change in the effective control or operations of CHAS-FM.
CONCLUSION
Based on the written assurances made by Telemedia and Pelmorex and after review of the provisions of the amended Service Agreement, the Commission has concluded that the licensees will, upon implementation of the Agreement, remain in effective control of their stations. It is also satisfied that two distinct radio news and programming voices are being maintained in Sault Ste. Marie. All documents and correspondence dealing with this matter have been added to the licensees' public examination files, and in addition the Commission considers that these documents also form part of the applications to amend the licences.
In similar cases, the Commission expects licensees to inform it of all relevant details of a proposal that may raise questions about the application of the Regulations and terms and conditions of their licences.
Allan J. Darling
Secretary General