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ARCHIVED -  Decision CRTC 2000-219

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Decision CRTC 2000-219

Ottawa, 6 July 2000

CHUM Limited
Victoria, British Columbia
– 199911970
CHUM Limited
Vancouver, British Columbia
– 199911946

CFMT-TV, a division of Rogers Broadcasting Limited
Vancouver, British Columbia
– 199911912

Craig Broadcast Systems Inc., on behalf of a company to be incorporated
Victoria, British Columbia
– 199911905
21 February 2000 Public Hearing
in Vancouver
New television station on Vancouver Island

The Commission approves an application by CHUM Limited for a new television station in Victoria, as well as for a transmitter to rebroadcast the new station’s signal in Vancouver. It denies the competing applications for new commercial television stations to serve the Vancouver/Victoria market from the other parties listed above. The Commission considers that the new station will provide an attractive service that will include a significant amount of local programming of particular interest to residents of Vancouver Island.

1.

The Commission, by majority vote, approves the application by CHUM Limited (CHUM) for a broadcasting licence for an English-language television programming undertaking at Victoria, on channel 53 with an effective radiated power of 12,000 watts.

2.

The Commission further, by majority vote, approves CHUM’s application for a transmitter at Vancouver on channel 17 with an effective radiated power of 44,000 watts to rebroadcast the signal of the new Victoria station.

3.

Subject to the requirements of this decision, the Commission will issue a licence expiring 31 August 2004. This licence will be subject to the conditions specified in this decision and in the licence to be issued.

4.

The Commission considers that a four-year term is appropriate in light of changes occurring in the Vancouver/Victoria television market. This shorter term will allow the Commission to discuss, at an earlier date, whether or not CHUM’s commitments are commensurate with the privilege granted once the market has had an opportunity to adjust to the new stations that have been licensed, both today and in 1997, as well as to any change of ownership that occurs as a result of Decision CRTC 2000-221 issued today.

5.

In that decision the Commission, among other things, approves applications that will result in the transfer of effective control to CanWest Global Communications Corp. of CHAN-TV Vancouver and CHEK-TV Victoria. These stations had previously been owned by Western International Communications (WIC). At the same time, the Commission has required CanWest Global to adhere to its commitment to sell its current indirect ownership of CKVU-TV Vancouver to a third party. The Commission has taken the changing nature of the market and the resulting uncertainties into account in evaluating the reasonableness of the applicants' revenue forecasts, particularly as they relate to the ability of the applicants to fulfill the programming commitments that they have made on the basis of these forecasts.

6.

The licence will only be issued and effective when the undertaking is ready to begin operation. When the licensee has completed construction and is prepared to commence operation, it must advise the Commission in writing. If the undertaking is not constructed and ready to operate within 12 months of today’s date, extensions to this time frame may be granted, provided that the licensee applies in writing to the Commission before the 12-month period or any extension of that period expires.

Background

The public process

7.

At the 21 February 2000 public hearing in Vancouver, the Commission considered five applications for new television stations to serve the Vancouver/Victoria extended market area.

8.

The Commission initiated the process for dealing with these applications after it received an application from CFMT-TV, a division of Rogers Broadcasting Ltd. (CFMT), for a new television station in Vancouver. Consistent with its practice, the Commission issued Public Notice CRTC 1999-101 calling for applications from other parties wishing to obtain broadcasting licences to provide television service to the Vancouver/Victoria area.

The applications

9.

The Commission received five applications to establish new television services, including the application from CFMT. One applicant proposed to serve the Fraser Valley Region. Two applications were to establish stations that would be located in Victoria, and two applications were to establish stations located in Vancouver.

Fraser Valley Region

10.

Trinity Television Inc. (Trinity), a charitable not-for-profit corporation, proposed to establish an English-language religious television programming undertaking to serve the Fraser Valley Region. The Commission approved, by majority vote, Trinity’s application in Decision CRTC 2000-218 issued today.

Vancouver

11.

CHUM proposed to establish a Vancouver station that would be known as CITT-TV. Programming would be based on local news and movies – an approach similar to that used by CITY-TV in Toronto. CHUM indicated that the proposed station would target an urban and ethnically mixed audience that it considered was not currently well served.

12.

CFMT proposed to establish an ethnic television station that would be known as LM-TV. At least 60% of all programming would be ethnic programming, and the station would serve a minimum of 15 language groups and at least 18 distinct ethnic groups. The applicant further proposed to establish a transmitter for the new station in Victoria.

Victoria

13.

CHUM proposed to establish a station that would be known as CIVI-TV. Its programming would emphasize local news and information. CHUM indicated that it would concentrate its commitments related to under-represented categories of Canadian programming on dramatic series, music/variety programs and documentaries. CHUM further proposed to establish a transmitter for the new station in Vancouver.

14.

Craig Broadcast Systems Inc., on behalf of a company to be incorporated, (Craig) proposed a station that would be known as "A-Channel on the Island." The station would be patterned on Craig’s A-channel stations in Alberta and Manitoba and would be heavily oriented to providing a strong local service. Craig further proposed to establish a transmitter for the new station in Campbell River.

15.

The Commission notes that the two applicants proposed to use the same channel in Victoria. They were, therefore, mutually exclusive on a technical basis.

The Vancouver/Victoria television market

16.

The Vancouver extended television market, which also includes Victoria, is currently served by four commercial stations, as well as by the CBC station, CBUT. As mentioned previously, in Decision CRTC 2000-221 issued today, the Commission approved applications that will result in control of CHAN-TV Vancouver and CHEK-TV Victoria passing to CanWest Global. However, the same decision requires CanWest Global to sell its current ownership interest in CKVU-TV. Finally, CTV Television Inc. operates CIVT-TV. This station was licensed by the Commission in Decision CRTC 97-39 dated 31 January 1997. As well, KVOS-TV plays a unique role in the market. KVOS-TV, an American-owned station is located in Bellingham, Washington, but orients its programming and sales activities to the Vancouver market.

17.

There was considerable discussion at the hearing concerning the ability of the Vancouver/Victoria market to sustain the introduction of new television stations. The Commission is concerned that new stations be introduced into a market in a manner that does not compromise the ability of existing stations to fulfil the programming commitments that they have made. As indicated in Decision CRTC 2000-218, the Commission concluded that the introduction of the new not-for-profit religious station proposed by Trinity would have little impact on the revenues of commercial broadcasters while bringing a new voice to the market.

18.

The incumbent Vancouver stations, however, expressed concerns about the impact that introduction of new commercial stations would have on their own operations. They noted that a new station, CIVT-TV, had been introduced to the market recently, and that total television advertising revenues for the Vancouver market had actually declined in 1999. These parties considered that this decline in revenues represented the beginning of a trend, as national advertisers begin to place more emphasis on buying time on specialty services at the expense of conventional stations. In light of their predictions of relatively flat revenue growth in the market, the incumbent stations considered that most of the revenue obtained by new stations would come at their expense.

19.

The applicants, on the other hand, generally considered that the 1999 decline in advertising revenues was a short-term phenomenon, caused in part by a shift from a diary to a metered method of audience measurement. They predicted that the market would rebound, and would enjoy modest growth in advertising revenues in upcoming years. They also considered that the introduction of a new station or stations would, in and of itself, increase the amount of advertising purchased in the market. The applicants further predicted that the stations they proposed would repatriate between five and six million dollars of advertising revenues that currently flow from the Vancouver market to KVOS-TV in Bellingham.

20.

Craig, however, considered that the number of new stations that the market could sustain was limited, and indicated that it would not accept a licence if the Commission licensed another commercial station in addition to the one that it proposed.

21.

The Commission agrees that introduction of a new station tends to increase the amount of advertising revenue to some extent. It notes that, when CIVT-TV was introduced, the amount of advertising revenue flowing to Vancouver stations increased by about 6%. As well, the Commission notes the applicants’ projections that they would repatriate between five and six million dollars from KVOS-TV. On the other hand, the Commission considers that the market is still adjusting to the introduction of CIVT-TV, and notes that there was little growth in advertising revenues from September 1999 to February 2000, according to figures filed at the hearing.

22.

The Commission is convinced that advertisers will continue to view conventional television as an effective means of reaching a mass audience. It notes that viewing to conventional television stations still remains at a level that is significantly higher than that to Canadian specialty services. It also notes that, while television national advertising revenues declined between 1998 and 1999 in Vancouver, such revenues increased in Edmonton, Calgary, Toronto and Montréal. Furthermore, the overall profitability of the Vancouver television market, measured at the level of profits before interest and taxes, is currently well above the Canadian average.

23.

After considering the relevant factors, the Commission has concluded that, in addition to the not-for-profit religious station proposed by Trinity, the Vancouver/Victoria market can support the addition of only one commercial television station at this time.

Location of the station

24.

In light of its decision to license only one new commercial station in Vancouver/Victoria, the Commission next considered whether it should license a station based on the mainland or on Vancouver Island.

25.

Vancouver Island is currently served by only one station with studios located there. That station is CHEK-TV. The issue of additional service for Victoria was addressed in Decision CRTC 97-39 in which the Commission licensed CIVT-TV Vancouver. Among the applications denied in that decision was one by CanWest to establish a station in Victoria with a second transmitter at Courtney.

26.

In that decision, the Commission acknowledged that there was a clear demand among Vancouver Island residents for a new local television service. It also agreed that there was a need for such a service, particularly in the absence of an English-language CBC television station to serve the provincial capital.

27.

The Commission, however, did not consider that approval of the CanWest application was appropriate. Both CanWest’s existing station CKVU-TV, as well as the proposed station, would have operated from the same transmitting site and have had similar coverage patterns.

28.

Further, under CanWest’s proposal, more than 50% of the Victoria station’s schedule would have consisted of programs also included within CKVU-TV’s schedule, but aired at different times. The Commission therefore considered that CanWest’s proposed station would have added little by way of diversity to what was already available in the Vancouver/Victoria market, apart from the proposed local programming directed to Vancouver Island viewers. Further, unlike the other applicants, CanWest would not have represented a new television voice in the market.

29.

Both the Craig application and CHUM’s Victoria application considered at this public hearing, proposed services strongly oriented to Vancouver Island, and included initiatives to support productions by island producers. Licensing either would also provide a new television voice in the Vancouver/Victoria market.

30.

On the other hand, the two applicants for stations with studios in Vancouver, CFMT and the CHUM Vancouver application, would also provide new voices in the market and both would offer significant levels of locally oriented ethnic programming. CFMT’s application would provide Vancouver with an ethnic over-the-air television station, something currently not available in the market. The CHUM application would also provide significant amounts of ethnic programming, and a new style of television for the market based on the CITY-TV model.

31.

The Commission shares the views of those who consider that Vancouver’s ethnic communities should have access to additional local programming, especially given the increasingly multicultural nature of the market. The Commission notes, however, that Vancouver residents currently have access to ethnic television programming from several other sources, including a local special programming channel as well as from specialty services. On the other hand, as indicated in Decision CRTC 97-39, the Commission is convinced that Vancouver Island remains seriously underserved with regard to local programming, with only one television station located there. This has been a long-standing concern both to the Commission and to residents of the island given the diverse nature of the island's population and Victoria's status as the provincial capital. Given its decision to license only one station, the Commission considers that the need for an additional television service to serve Vancouver Island should take priority at this time.

Assessment of island applications

32.

The Commission considers that both Craig and CHUM presented very strong applications from the viewpoint of providing original local programming. Both proposals included provisions for the broadcast of extensive local news, as well as local programming falling into other categories.

33.

CHUM proposed to broadcast 26 hours per week of original local programming, including 19.5 hours per week of local news. Craig proposed 24 hours of original local programming per week, plus contributions by the Victoria station to programming on Craig’s television system. Craig’s programming would include 15.5 hours each week of local news.

34.

Craig proposed 8.5 hours of local non-news programming each week, with 3.5 hours of this programming aired in peak time. CHUM proposed 7.5 hours of local non-news programming, including 2 hours broadcast in peak time.

35.

In addition to its strong commitments for local programming which were set out in a detailed programming schedule, and significant commitments to independent production, which are set out later in this document, the Commission considers that licensing CHUM will bring a number of other benefits.

36.

Public Notice CRTC 1999-97 Building on success – A policy framework for Canadian television (the television policy) stresses the importance of strong players in the television industry if its regulatory objectives with regard to Canadian content are to be met in the medium and long term in a rapidly changing broadcasting landscape. With a station in the Vancouver/Victoria market, the potential reach of CHUM television stations will increase from about 48% to over 60% of English-speaking Canadians. If Craig were successful, its potential reach would increase from about 17% to about 30% of Canadians. The new station will therefore increase CHUM’s ability to provide a stronger additional private television voice for Canadians than would be the case if the Craig application were approved. As well, as discussed later, CHUM proposed to increase the level of priority programs on all of its "NewNet" stations in Ontario, if this application were approved. This increased amount of priority programming would be available to more Canadians than would be the case if Craig implemented its commitments to increase the level of priority programming on its existing stations if the Commission approved its Victoria application.

37.

As well, synergies between the new station and CHUM's specialty channels, as well its international operations, will help make the voices of British Columbia residents available to all Canadians, and to those living beyond our borders.

38.

The Commission further notes that CHUM’s television stations have a strong history of reflecting their local communities in innovative ways, as well as reflecting Canada’s cultural diversity both on and off the air.

39.

On a local level, the Commission considers that CHUM is better positioned to repatriate viewership from KVOS-TV Bellingham, since CHUM holds the Canadian rights to several programs that KVOS-TV now broadcasts. At the hearing, CHUM noted that its programming schedule included programs that it already owned or for which it could readily obtain Victoria and island rights. It therefore considered that its activities related to acquiring programming would not further drive up the costs of acquiring U.S. programming in the market.

40.

The Commission has concluded that approving CHUM's application is in the public interest as it would serve the need of viewers on Vancouver Island for a new local television service and best promote the objectives set out in the Commission's television policy and in the Broadcasting Act. The new station will thus serve the needs of the local community, as well as fulfil national goals.
The new station
Local programming

41.

The new station will provide an additional local service for those living in Victoria and throughout Vancouver Island. Programming will include extensive local news coverage, including four newscasts on weekdays, and two on Saturdays and Sundays. The Commission notes the licensee’s commitment that local newscasts will feature staff specialists who will provide regular segments on local arts and culture, sport and recreation, and the ecology and environment. The Commission further notes that the licensee plans to address demands for coverage of events in the northern part of Vancouver Island through the establishment of a bureau in Nanaimo. This bureau will be staffed by a videographer, and will include a Speaker’s Corner. In order to ensure even broader coverage of the island, CHUM will distribute digital handicams to stringers in outlying areas. The Commission expects the licensee to fulfil all of these commitments.

42.

The new station will also broadcast local programs that showcase local talent and provide coverage of local events. One example is Island Weekend, a local magazine program that will reflect the attitudes, activities and ambitions of residents across Vancouver Island.

43.

The licensee has made a commitment to broadcast a minimum of 26 hours of original local programming each broadcast week. This programming will include a minimum of 19.5 hours of local news, and at least 6.5 hours of other categories of local programming. As well, the licensee has made a commitment to broadcast a minimum of two hours of original local programming in peak time (7 p.m. to 11 p.m.) during each week of the licence term. The Commission requires the licensee to fulfil each of these commitments.

44.

The Commission further requires the licensee to fulfil its commitment to broadcast a weekly half-hour local program in peak time that will focus on aboriginal issues in British Columbia.
Priority programming

45.

The Commission’s new policy for television places emphasis on the broadcast of Canadian programming in the priority categories. Priority programming includes drama, music and dance, variety, long-form documentaries, regionally produced programs in all categories other than news and information and sports, as well as Canadian entertainment magazine programs.

46.

Under the television policy, major television groups that may potentially reach 70% or more of the anglophone population must broadcast at least eight hours of priority programming per week. With the addition of this new station, CHUM television will have a potential reach of about 60% of anglophones.

47.

Nevertheless, the licensee has made a commitment to broadcast, at a minimum, in each broadcast year, an average of eight hours per week of Canadian programs in the priority program categories between 7 p.m. and 11 p.m. The Commission is imposing a condition of licence, set out in the appendix to this decision, that requires CHUM to fulfil this commitment.

48.

The Commission also notes the licensee’s commitment to provide eight hours per week of programming from the priority categories on all of its "NewNet" stations in Ontario, if the application for a new station in Victoria is approved. The licensee is therefore required to submit applications to amend conditions of licence relating to priority programming to reflect this commitment, within a time frame that will permit the revised commitment to take effect coincident with the launch of the new Victoria station. Such applications should relate to the following stations: CHRO-TV Pembroke, CFPL-TV London, CKNX-TV Wingham, CKVR-TV Barrie, and CHWI-TV Wheatley.

Independent production from British Columbia

49.

At the hearing, the licensee made a commitment to Canadian programming based on a scenario where the Commission denied its proposed station for Vancouver, while approving the proposed station in Victoria. CHUM stated:

In Vancouver, you will recall we have an $18 million commitment to feature film, plus the $6.7 million commitment to the dramatic serial for a total of $24.7 million.

In looking at the revenue that we would generate on the Victoria alone scenario, we are comfortable with bringing some of those commitments over to the Victoria alone scenario. The commitment we would be prepared to make is a $12 million special Canadian programming commitment on the Victoria alone scenario.

50.

The applicant further indicated that at least half of the $12 million would be spent on programs that fall within the definition of regional programming.

51.

The Commission notes that CHUM's proposed expenditure related to feature films, which amounted to about $18 million of CHUM's total $24.7 million commitment for its proposed Vancouver station, was clearly designated for independent producers in British Columbia.

52.

The Commission expects the licensee to fulfill, as a minimum, its special commitment to spend $12 million on Canadian programming during the first seven years of operation of the new Victoria station. The Commission further expects that all of this money will be spent on independent production from British Columbia, with at least half of the total going to independent producers based on Vancouver Island.

53.

Over the four-year licence term, the Commission requires the licensee to spend $7 million on independent production, the amount derived by pro-rating the $12 million over a four-year period. The fulfillment of the remaining portion of the $12 million commitment will be examined in the context of the renewal of the Victoria station's licence.
Other matters
Cultural diversity

54.

In its television policy, the Commission expressed its confidence that the Canadian broadcasting system could "better reflect the presence of minority groups in Canadian society, and…portray them accurately and fairly."

55.

The Commission notes the licensee’s commitment to comply with its corporate statementCultural diversity best practices in a manner appropriate for Vancouver Island. It further notes CHUM’s commitment to convene and televise a National Ethnic Forum within one year of the date that the station begins operation. This forum will explore how the media can better reflect Canada’s cultural diversity.
Employment equity

56.

The Commission notes that this licensee is subject to the Employment Equity Act that came into effect on 24 October 1996, and therefore files reports concerning employment equity with Human Resources Development Canada.

Service to the hearing impaired

57.

Consistent with CHUM’s commitments, the Commission requires the licensee, beginning 1 September 2002 and throughout the remainder of the licence term, to caption all local news programming including live segments. The licensee may implement this commitment using real time captioning or another technology that produces high quality captioning for live programming.

58.

The Commission further requires the licensee, beginning 1 September 2002 and in each year of the licence term, to caption at least 90% of all programming aired during the broadcast day.

59.

These requirements are consistent with the Commission’s approach related to closed captioning by private conventional television licensees set out in Public Notice CRTC 1995-48 Introduction to decisions renewing the licences of privately-owned English-language television stations.
Service to the visually impaired

60.

In the television policy,the Commission strongly encouraged licensees to adapt their programming to include audio description wherever it is appropriate. The Commission further indicated that, at licence renewal, it would explore with licensees the progress that they have made to meet the needs of the visually impaired.

61.

As a first step toward meeting this objective, in accordance with CHUM's commitment, the Commission expects the licensee to establish transmitting facilities that will accommodate a Secondary Audio Program (SAP) channel so that it may offer descriptive video services (DVS) at some time in the future.

Industry codes

62.

As proposed by the licensee, the Commission is imposing conditions of licence requiring the licensee to adhere to the Canadian Association of Broadcasters' (CAB) codes relating to gender portrayal, advertising to children and violence in television programming.
Interventions

63.

The Commission acknowledges the interventions submitted concerning these applications and has considered all of them in reaching its decision.

Related CRTC documents:

• Public Notice 1999-97Building on success – A policy framework for Canadian television

• Public Notice 1999-206Implementation of the TV Policy

Secretary General

This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined at the following Internet site:
www.crtc.gc.ca 

 

Conditions of licence

1. a) The licensee shall broadcast, at a minimum, in each broadcast year, an average of 8 hours per week of Canadian programs in the priority program categories between 7 p.m. and 11 p.m.

For the purpose of this condition of licence the priority program categories are as follows: Canadian drama programs (category 7); Canadian music and dance (category 8a) and variety programs (category 9); Canadian long-form documentaries (category 2b); Canadian regionally-produced programs in all categories other than News and information (categories 1, 2 and 3) and Sports (category 6); Canadian entertainment magazine programs.
b) For the purpose of fulfilling the above-noted condition, the licensee may claim the new dramatic programming credit set out in Public Notice 1999-205, as may be amended from time to time.
The licensee is not entitled to claim the dramatic programming credit set out in the appendix to Public Notice CRTC 1984-94 and appendices I and II to Public Notice CRTC 2000-42.
2. The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' (CAB) Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and approved by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the Canadian Broadcast Standards Council.
3. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.
4. The licensee shall adhere to the guidelines on the depiction of violence in television programming set out in the CAB's Voluntary Code Regarding Violence in Television Programming, as amended from time to time and approved by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the Canadian Broadcast Standards Council.

 

Dissenting opinion of Commissioner Cindy Grauer

I would not approve an application for a second television station in Victoria.
I would approve the application by CFMT-TV a division of Rogers Broadcasting Limited for a new ethnic television station in Vancouver and a transmitter for the station in Victoria.
I would not approve an application for a second television station in Victoria because the advertising revenue available is not sufficient to support another locally oriented television station. In addition, the entry of another station places at risk the local orientation of the existing station due to the loss of revenue from fragmentation of the market. Given the proximity of Victoria to Vancouver, both stations can readily shift their programming focus to the much larger Vancouver market in order to attract revenue.
I would approve CFMT’s application for a new ethnic television station in Vancouver. According to the majority of commissioners (the majority):

The Commission shares the views of those who consider that Vancouver's ethnic communities should have access to additional local programming, especially given the increasingly multicultural nature of the market. (Paragraph 31)

I agree with the majority’s view. I do not, however, agree with the majority’s decision to deny Vancouver’s multicultural community’s access to additional programming, particularly on the grounds that a second station in Victoria should take priority over the 750,000 members of Vancouver’s multicultural communities who have no free over-the-air ethnic service:

Given its decision to license only one station [in the Vancouver/Victoria market], the Commission considers that the need for an additional television service to serve Vancouver Island should take priority at this time. (Paragraph 31)

As I discuss below, the Victoria market cannot support a second locally oriented station.
This licensing decision is a bitter development for the large and growing multicultural community in what is arguably Canada’s most culturally diverse city. The Commission has missed an important opportunity to signal to this vibrant and dynamic community that it recognizes the social and cultural transformation that has taken place on Canada’s West Coast. A local ethnic service would have added program diversity, made a significant contribution to the goals of the Broadcasting Act and demonstrated the Commission’s commitment to the values articulated in the new ethnic policy.
The Vancouver/Victoria television market
The Vancouver/Victoria television market or the Vancouver extended market is considered one market by the Bureau of Broadcast Measurement (BBM) and by the Commission. Five private conventional stations are now licensed to serve this extended market, three in Vancouver and, as of today, two in Victoria. Vancouver and Victoria, however, are, as the Commission recognizes, very different and distinct communities separated by Georgia Strait. Each city has a unique demographic profile and culture. Local programming oriented to one city holds little appeal to the other city, a situation recognized by the majority when it acknowledges demand by Victoria and Vancouver Island viewers for more local service.
The Vancouver extended market consists of the Vancouver central market, the Victoria central market, and most of the Fraser Valley and Vancouver Island. According to BBM, the population of the extended market is just over three million. As the table below shows, two-thirds of the population lives in the Vancouver central market.
The table also shows why Victoria cannot support two locally oriented television stations, a matter that I discuss later. The majority’s decision has reduced the population per station by 50 per cent to 170,000 in a market that is obligated to produce 50 hours of local programming each week. This stands in stark contrast to the Vancouver central market where the population per station is 700,000, more than four times the population per station in the Victoria central market.
The figures related to the number of private stations and hours of local programming are effective September 1, 2001.

 

Central market Vancouver Victoria

Population 2,000,000 339,000

Growth 1991-1997
17.5%

7.1%

Private conventional stations
3

2

Population per private conventional station
700,000

170,000

Private conventional station weekly local programming

74.5 hours


50 hours

Victoria cannot support a second private conventional television station
The majority has not fully explored how local programming will be financed. The majority assumed that because demand exists in Vancouver for additional advertising inventory that this demand extends to programming oriented to Victoria audiences. In my opinion, this is not a valid assumption. In addition, sufficient advertising revenues are not available in the Victoria market to finance the 27 hours of local programming commitments made by CHUM and the 23 hours of local programming commitments undertaken by Global in their acquisition of CHEK, particularly given that CHUM’s projected revenues are 40 percent local and 60 percent national.
Advertisers buy programs – not stations. Advertisers want to reach certain demographics in specific geographic markets. The price advertisers will pay corresponds to the size and desirability of the market and the target demographic within that market. The rates an advertiser will pay to reach a small market will be commensurately less than what the same advertiser will pay to reach a large market everything else being equal. While there is evidence of unmet demand by advertisers, including Vancouver retail advertisers, to reach Vancouver audiences, there is no evidence of increased or unmet demand by advertisers to reach Victoria audiences. It is erroneous to assume that because there is a demand by advertisers for television inventory in Vancouver that this demand will apply to all stations and programs in the extended market.
Vancouver is a significantly larger market than Victoria. The advertiser wanting to reach Vancouver audiences will find the programs that will deliver the desired demographic in that market. Because Vancouver is almost five times as large as Victoria, the price an advertiser will pay to reach a specific demographic in Vancouver will be that much higher than the price an advertiser will pay to reach the same demographic in the Victoria market. The only way for a Victoria station to generate the same revenues as a Vancouver station is to orient the programming to Vancouver.
The programming proposed for the new station, particularly the local programming, will be oriented to a smaller market – Victoria. The revenues from national advertisers wanting to reach this audience will be considerably less than the same advertisers will pay for local programming oriented to Vancouver audiences.
Responding to questions at the hearing about the advertising environment a Victoria stand-alone licensee would encounter, CHUM said:

The Vancouver revenue that you could generate against that station if there was no new Vancouver station would really be national selective dollars by and large. There aren’t a lot of retailers in Vancouver who are going to spend a lot of money on the Island at retail, certainly not to get back to Vancouver because they are not going to be watching the Victoria based newscasts. The local programs that are designed for the Island, the Islanders are going to watch those. (Page 427)

The record of the proceeding speaks to demand by advertisers for inventory in the Vancouver market. There was little evidence of demand from Victoria advertisers for additional television inventory.
Most indicators are that CHEK is meeting the demand of Victoria advertisers. Given the limited advertising dollars in the Victoria market, a second station, particularly one that depends on local advertising for 40 percent of its revenue, will drive down the price of TV time on both Victoria stations. This would jeopardize not only the ability of these two stations to sustain their local programming commitments but also the stability of the radio advertising market in Victoria where the Commission recently licensed one new FM station and approved an AM/FM conversion. The extent to which the Victoria market could support the introduction of new FM stations was discussed extensively at that hearing.
I do not believe this market can sustain the highly local programming orientation of both CHUM and CHEK. Two stations competing for the available revenues in this market puts the local orientation of both at risk. The people of Victoria may well end up with nothing if these stations are forced to turn their programming orientation to Vancouver to sustain financial viability.
I share the concerns expressed by the people of Victoria who want more local programming. Licensing stations in markets that can’t support them will not deliver it.
CBC
I also want to address here the reference by the majority in this decision to Decision CRTC 97-39 in which it licensed CIVT-TV. The 97-39 decision notes that the CRTC agreed there was a need for a second service particularly in the absence of an English-language CBC television station to serve the provincial capital. The 97-39 decision does not address the ability of the market to support a second private conventional station in Victoria.
At no time during this proceeding was there any discussion of the differences inherent in licensing a second private conventional station and a CBC station for Victoria. Licensing a stand-alone private conventional broadcaster is not, in my view, a comparable alternative or suitable substitute for the public broadcaster.
I would have licensed the ethnic service
I agree with the majority that the Vancouver extended market can sustain the licensing of one additional television service. There is ample evidence of advertiser demand for additional television inventory in Vancouver. I would have licensed the ethnic multilingual station proposed for Vancouver by CFMT-TV to serve three-quarters of a million people who are unserved by any free, local over-the-air ethnic television service.
According to 1996 census data, there were over 700,000 people in the Greater Vancouver area who have a mother tongue other than English, French or an aboriginal language. This is twice the number of people who live in Victoria. Vancouver is now arguably the most culturally diverse city in Canada, and while the multicultural communities in both Montréal and Toronto are served by a free, local over-the-air ethnic television service, Vancouver has none.
Justice Wallace Oppal of the Supreme Court of British Columbia appeared at the hearing in his capacity as Chairman of the Law Courts Education Society in support of the ethnic application. He submitted that the population of Vancouver is now 44 percent visible minority, over 50 percent of students in Vancouver schools have English as a second language and two-thirds of all immigrants come from Asia.
This demographic reality presents a challenge to the people and institutions of Vancouver and Canada - a challenge the Commission’s ethnic policy was designed to address.
The Commission released a new ethnic broadcasting policy in July 1999 and this would have been the first television application to be considered under the revised policy. In the policy the Commission states:

The Commission has decided to continue the basic framework of the 1985 ethnic broadcasting policy. It considers that this policy has led to a substantial increase in the diversity of the Canadian broadcasting system through the emergence of many new ethnic broadcasting stations. Many participants in the review emphasized how valuable the programming of these stations was to them, their families, their cultural groups and to their integration into Canadian society... The policy will continue to provide a framework for broadcasting that fosters opportunities for greater understanding among people with different cultural backgrounds. As is the case with larger groups, the Commission continues to consider that smaller ethnic groups benefit from a basic level of broadcasting in their own languages and from programming that assists in their full participation in Canadian society, reflects their culture and promotes cross cultural understanding.

In conclusion, the Commission stated that it

expects that the revised policy will support the continued growth of high quality third-language Canadian programming.

The review clearly demonstrated that there was a wide demand for ethnic programming. At consultations in Vancouver the multicultural community was particularly eloquent about its desire for a local ethnic television station.
The majority shares the view of those who consider that Vancouver’s ethnic communities should have access to additional local programming. I do not accept the rationale of denying this application because there is access to ethnic television programming from other sources. Virtually all the other sources of ethnic television are not local and are available only through cable (a community channel with very little local originated third language programming) and for a price (pay and specialty services with no local programming). Limited Punjabi programming (2 hours on weekend mornings) is available.
There are individuals within both the mainstream and the ethnic community who cannot afford or do not wish to have cable or pay television. The ethnic policy anticipates this and is dedicated to delivering this diversity in over-the-air services. Given the language barrier, free, off-air delivery of local ethnic programming is very important.
CFMT filed its application in 1998. The Commission issued a call for applications only after the ethnic policy review was completed. The Commission recognized in the new policy that the demand for ethnic services existed. In their application CFMT made significant commitments to third language programming, particularly local third language programming. They also included a proposal to fund and broadcast ethnic documentaries making a contribution to the priority programming categories in the new television policy.
At the commencement of the Vancouver hearing the opening remarks included the following:

today’s applicants should clearly demonstrate to us that there is a need in the market for the proposed station and service. The Commission will examine these applications in light of the objectives of the Broadcasting Act and the new television policy issued last June. With this in mind the Commission will pay particular attention to the following elements which can be found in Public Notice CRTC 1999-101:

  • The contribution that the new service will make toward achieving the objectives of the Broadcasting Act, notably the production of local and regional programs;
  • How the applicant intends to promote the development of Canadian talent, particularly local and regional talent;
  • How the applicant will contribute to the priority programs nationally as defined by the TV policy;
  • The possibility of concluding program co-investments and co-purchase agreements with Canadian or foreign broadcasters;
  • The new services proposed audience;

  • The soundness or the feasibility of the business plan, the validity of the market analysis and the advertising revenue forecasts;

  • The availability of financial resources to meet the requirements identified in the business plans financial projects; and

  • Finally, the impact on the existing players in the Vancouver extended market as well as nationally.

Of course, while being aware of Canadian television programming, the applicants should also address the needs and tastes of their respective markets, not forgetting the viewers.

It is difficult for an applicant for an ethnic station to succeed in a competitive process against applicants for conventional stations. Applications filed under the ethnic policy are designed to meet the goals of that policy. Applications filed under the television policy are designed to meet the goals of that policy. Conventional stations in large markets generate, for the most part more revenues than ethnic stations and are in a position to make larger contributions to the convention television policy and the priority program categories contained in that policy. I believe that ethnic applications should be looked at in a different light given these considerations.
New American multilingual service
A new television service, located in Bellingham Washington, and oriented to Vancouver has recently received Federal Communications Commission approval to boost their power to 3,300,000 watts. It programs exclusively to ethnic markets from 5:30 p.m. to 11:30 p.m. daily.

There is every indication that this station is targeting the Vancouver multicultural community like KVOS targets the Vancouver English language market. Clearly its orientation is to Vancouver as Bellingham, home of KVOS, is a small border community with no discernible multicultural population.
The Commission has missed an opportunity to license a Canadian station to serve Vancouver’s large and growing multicultural community. Today’s decision will clear the way for revenues and audiences that could have accrued to a Canadian station and benefit the Canadian broadcasting system to flow south of the border and allow another US border station to establish a foothold in this market.
Craig superior to CHUM
As I have discussed above, Victoria cannot support another highly local service. I am compelled, however, to express my disagreement with the majority’s choice of CHUM. In my opinion, Craig’s proposal is more substantial and would contribute more to the goals of the Broadcasting Act, the Commission's policy objectives and the elements outlined at the outset of the hearing.
The elements that would be considered when evaluating the applications are identified earlier in this dissent. It is illuminating to compare elements of the Craig and CHUM applications for a Victoria service.
First, the decision speaks of licensing a Vancouver Island service. It is worth pointing out that CHUM applied for a Victoria service, and that Craig applied for a Vancouver Island service. The coverage maps filed with CHUM’s Victoria application show modest coverage over Greater Victoria and the Saanich Peninsula with a low-power transmitter. CHUM’s high power Vancouver transmitter will cover Greater Vancouver, the lower Mainland, the Fraser Valley and parts of the Gulf Islands east of Nanaimo and Cowichan. The population of Vancouver Island is spread over a vast geographic area. The residents of Vancouver Island north of the Saanich Peninsula who do not have cable will not be able to pick this signal up off-air.
Craig’s proposed transmitters at Victoria and Campbell River would have provided extensive coverage on Vancouver Island, from Victoria in the south and Campbell River in the north. Its Victoria transmitter would also provide coverage to the Greater Vancouver and Fraser Valley.
Craig proposed one bureau in Nanaimo and three sub-bureaux throughout the Island. CHUM proposed one bureau in Nanaimo. Craig proposed more local programming, more spending on independent production and more total Canadian program spending. Craig proposed to source 50 percent of its priority programming from Western Canada and proposed a local development office. CHUM made no such commitments.
The majority has referred to the television policy and its emphasis on strong national players in its reasons for licensing CHUM. Strong national players in Canada subsidize service to smaller cities across this country. Both Global and CTV serve smaller, less attractive markets as well as the larger, more profitable ones. CHUM has refrained from applying for licences in other markets in Western Canada (or Canada for that matter) saying at the hearing:

Most notably, we did not apply for Alberta in the competitive round four years ago because we wanted to signal that Vancouver was the one that counted most in CHUM Television’s future. This is still the case. (Page 15)

The only market in Western Canada CHUM is interested in is the highly profitable, second largest English language market in Canada –Vancouver, bypassing the less lucrative markets.
By licensing CHUM, whose only other television operations are in the densely populated southern Ontario market, the majority has put at risk, if not foreclosed on, Craig’s opportunities to grow. In licensing CHUM, Craig is denied perhaps forever, the opportunity to enter the Vancouver market and help offset the costs of providing service in Alberta and Manitoba. In using the rationale of creating strong national players the Commission could be seen to be sending the message that there is no place in the Canadian broadcasting system for the development of strong regional players. This is particularly disappointing given the strength of Craig’s application, their long history and the contribution they have made to the development of the broadcasting industry in Western Canada.
What has the Commission licensed
CHUM stated at the hearing in response to a question about the severability of their applications:

We are absolutely prepared to live by what we have here by way of proposals. We are offering this application (Vancouver) as separate from the other application (Victoria). They each stand alone and each stood independently and on their own. (Page 68)

CHUM made, however, over the course of the hearing, changes to the Victoria application, some of which, as they admitted, would clearly affect the business plan. Again in response to a question about severability, CHUM said:

It would certainly affect the business plan, but each variable will change it in a different way. (Page 35)

It is difficult to know just how their business plan is affected and what the Commission has licensed.
One example of the difficulty of understanding the business plan, is the majority’s reference in the decision to the fact that CHUM’s proposed stations would repatriate $5 million in revenues from US conventional stations including KVOS. In fact, it would appear that the Victoria station, according to the applicant, would repatriate only $1.8 million (Page 60).
There was discussion of moving some programming from Vancouver to Victoria if Vancouver was not licensed and Victoria was (Page 414). But we don’t know what those programs are or how they would affect the repatriation figures or the orientation of the service, although it is clear from the transcript (Page 413) that they expected their revenues to increase by 25-30 percent. They also said the numbers and projections were developed on the premise of having two stations. (Page 412)
In my view, the two applications, effectively, were not filed as severable and stand-alone.
CHUM’s revenue projections and programming for this station changed over the course of the hearing and we don’t know the extent or ramifications of the changes.
In conclusion, I agree that the Vancouver extended market can support another television station, but not a second locally oriented station located in Victoria. I would have licensed the ethnic service in Vancouver, delivering to that large multicultural community market their first free local over-the air service. While I would not have licensed either of the island applicants, I believe Craig presented a stronger application. I also believe the Commission has licensed an application for which it does not have a business plan.
I am in complete agreement with Commissioner Barbara Cram in her addition to this dissent.

 

Dissenting opinion of Commissioner Barbara Cram
I am in total agreement with the dissent of Commissioner Grauer. I do however wish to add the following:
It is unclear what exactly the majority licensed
In Phase 1 of the hearing each of the applications was heard in turn. Given that CHUM had submitted two applications, one for Vancouver and one for Victoria, clearly one of the issues with them would be the severability of their applications. In filing the two applications, CHUM was certainly well aware of Commission policy against dual ownership in single markets.
Thus on their first panel, for the Vancouver station, Mr. Znaimer stated "We are offering this application as separate from the other. They each stand alone. They stand better together, but they do stand alone." (p. 68-69 transcript)
On the second CHUM panel for their Victoria application, a "stand-alone" Victoria station would be much different from the application as filed:

We think our revenue projections would go up about 25 to 30 percent, so we would come in around thirteen and a half million dollars. (p. 414 transcript)

We might take some of the programming that we had on the Vancouver station, some of that, and put it over to Victoria" (ibid.)... But we would not in any way adjust the local programming schedule. (p.416, transcript)

And yet

we looked at it, it is obviously theoretically possible for someone to come up with an application that would just serve Vancouver Island, but the economics would be such that they couldn't commit to the same level of local programming that we are able to commit to by virtue of the revenues from the broader Vancouver area, so for us it was a balancing of how do you provide local service and sustain that on a reasonable revenue base. We felt this was the best approach [this referring to dual licensing]. (p. 420-421 transcript)

These numbers were developed and all of the projections developed on this premise of having the two stations. Ron made the point that if we licensed for Victoria alone the revenues would go up but so would the costs... (p. 423 transcript)

Later, after discussing a different topic, CHUM volunteered the following:

In looking at the revenue that we would generate on a Victoria alone scenario, we are comfortable with bringing some of those commitments over to the Victoria alone scenario. The commitment we would be prepared to make is a 12 million special Canadian programming commitment on the Victoria alone scenario. (p. 437 transcript)

It should be noted that this latter statement increased the commitment of CHUM twelve-fold from its original application - closer to but not equal with the commitment of Craig. No further particulars showing specific revenues and specific expenses over the first seven years were provided for the Victoria stand-alone proposal. Neither was a specific program schedule provided showing the changes that seem to have been contemplated.
The majority has now accepted the increased commitment of $12 million, something without which, acceptance of CHUM's application would have been totally untenable.

The Commission has a long established policy of not granting a person two conventional television licences for the same market. CHUM was well aware of this policy. CHUM should have filed two truly separate and severable applications - not applications that presume an exception will be made. Notwithstanding what the first CHUM panel stated, I do not consider that CHUM has filed these applications as stand-alone. As a result, at the public hearing CHUM made a change to its application for Victoria to increase its spending commitment to $12 million, in addition to the other changes referred to. I would not have accepted it.
The repercussions however are relevant. What exactly has the majority licensed? The application as filed referred to the Victoria station programming being similar to their more laid back; less zippy format called "NewNet" as in the Pembroke and Barrie stations. In their verbal presentation with Victoria as a stand-alone, the panel stated they would move some of their programming from the proposed Vancouver station that was formatted as a Citytv format. First they said the local programming would not change and subsequently they stated with the economics they could not commit to the level presumably stated in their application as filed. Based on the application as filed, the repatriated programming from KVOS would only amount to $1.8 million as opposed to $5 million for the Vancouver station (p. 60 transcript) and yet some programming would be moved over - does this include more repatriation? It should be noted that the majority used the issue of repatriation as a rationale for their decision. Based on the record, the Victoria CHUM proposal is the worst in terms of dollar amount of repatriation.
CHUM said the Victoria stand-alone would earn 25% to 30% more revenue than stated in their application as filed. Their commitments, save and excepting the independent production, should change but presumably have not. Their expenses will change because they will not have the synergies with a Vancouver station but we do not know how nor if their commitments as to employment will be the same.
Presumably programming, revenue and expenses are relevant to competitive television applications. The Commission requires this information with each and every application. Without this specific information, I do not know how the majority compares the CHUM Victoria stand-alone application with the others to arrive at its conclusion of the best application.
Craig’s superiority includes the promotion and support of independent production in the west
As stated in the dissent of Commissioner Grauer, the opening remarks listed the criteria to be used in assessing the applications, two of which involved the development of local and regional talent and programs.
The Commission is well aware of the demise of WIC. WIC, a broadcaster headquartered in British Columbia, commissioned and licensed a substantial amount of independent production in Western Canada. WIC did this not as a result of a benefits package, a licensing commitment, or a condition of licence but as a result of the fact of it being in the West and knowing the quality of the producers, similar to broadcasters being headquartered in Toronto and knowing the quality of the producers there.
Craig’s $12.7 million commitment to independent production was specifically directed to local and regional talent but was significantly enhanced by several facts. An individual intimately involved with the local production scene would have done the commissioning of independent production on Vancouver Island. This individual previously worked with Telefilm in Vancouver and subsequently with the Vancouver Island Film Commission. Additionally, Craig was going to provide an assistance structure for producers providing for skills and script development – the cost of which would be in addition to the monetary amount committed. In contrast, CHUM’s monetary commitment became $12 million but there was no commitment as to commissioning nor for assistance for the production community.
Craig, like WIC, is a western based broadcaster and has been based in the west for over 50 years. Its record, both in its award winning local news and previous commitment to independent production in the west, is unsurpassed.
‘Strong players’ are not created –players become strong by succeeding in competition
The majority has referred to the television policy and its emphasis on "strong players". It is my view that the majority decision creates exactly the opposite for the following reasons:

a) Whilst CHUM is made strong, this is at the expense of Craig which now runs the risk of becoming a marginal player. By the numbers of the majority CHUM will now have a reach of 60% and Craig will have 17%. By Craig’s numbers, Craig and CHUM would have been approximately equal in reach if they had been licensed.

b) CHUM now has a reach of 60% but it is significant as to where this reach is. CHUM was very clear at the hearing that it chose not to apply for the Alberta stations when they were licensed. CHUM sold its stations in the Maritimes. Thus the reach of CHUM extends only to the more densely populated areas of Canada such as Ontario and now Vancouver. CHUM has no smaller market coverage or obligations however its competitors, Global, CTV and Craig, do. Thus while Global and CTV use their revenues from larger markets to subsidize their smaller markets, CHUM has no such smaller markets. Thus, licensing of CHUM may very well reduce the strength of the national "strong" players and may well have an impact on their ability to continue to cover the smaller markets.

c) I do not believe strong ‘players’ are created in this manner. In this and any other marketplace, strength is gained by succeeding in competition. Our role, I believe, is to create a level playing field for all the various parties and to maintain as far as possible a fair and level field. Thereafter, by skill, innovation, creativity, the stronger ‘players’ emerge. Moreover they have gained the skills to continue to succeed in the increasingly competitive national and global environment.

The needs of the specific market are the priority

This is the essence of my disagreement with the majority. I do not accept that an unknown quantum of increased priority programming on 6 Ontario stations (the NewNet stations) and the belief (albeit misguided in my view) that a strong ‘player ‘ has been created is more important or is in priority to the needs of the specific market. In a normal competitive process, I believe the best applicant best suited for the specific market should be licensed. In the Vancouver market but for the ethnic fact and the Vancouver market sustainability issue, Craig should have been licensed.
But in a contest between conventional commercial applications versus an ethnic application the criteria for assessment must be different
With respect to conventional television applications, save and excepting the last licensing round in Vancouver, the Commission has never been in a position of assessing and rating ethnic conventional applications versus mainstream conventional applications. As to the previous licensing round, Rogers had applied for an ethnic station and the Commission opted for another English-language conventional station. However, as to the present applications, I do not believe we can assess ethnic applications on the same criteria, otherwise there would be no need to have an ethnic broadcasting policy.
First, I believe we cannot compare the two types of applications based on quality and type of programming. The ethnic policy specifies the requirements for ethnic programming and given its content and specificity, it is my view it has excluded any comparative assessment of programming in situations such as this. Therefore in comparing programming in conventional applications and ethnic applications, the ethnic application should be considered equal to all conventional applications if the programming meets the requirements of the ethnic policy.
Secondly, given that the manner of financing ethnic stations is similar to conventional stations, i.e. the advertising revenue from foreign programming subsidizes the ethnic/Canadian programming, the market must be able financially to sustain a new service. I agree with the majority that the Vancouver market can sustain one new service, albeit, in Vancouver.
Next, there should be an assessment of supply and demand. As to supply, the Vancouver English-language market, excluding Vancouver Island, is very well served off-air by many conventional stations including CBC, CTV, Global, and, at present, one WIC station. Based on Statistics Canada 1996 census data, this means one station per approximately 700,000 individuals (excluding CHEK). As to Vancouver Island, one of the WIC stations, CHEK, is supposed to be directed towards the Victoria market. Again, based on the 1996 census data, with the majority decision, Victoria will now have one station per 170,000 individuals, because Victoria’s population is 339,000. Concurrent with this decision, the Commission is issuing its decision on the sale of WIC to Shaw, Corus and Canwest and it will be fortifying the CHEK commitment to the island. Further there is the outstanding commitment of CTV to apply for a Vancouver Island station.
As to demand, I recognize the majority felt persuaded by our prior Decision CRTC 97-39 and comments therein as to the "clear demand" among Vancouver Island residents for a new local television service. On balance, and considering my conviction that Vancouver Island cannot financially support a second service, I do not feel similarly persuaded. Consider the following:

a) The population of Vancouver Island is 700,000 whereas the relevant ethnic population at present in the Vancouver area, as stated by Rogers, is 800,000. Further, the Vancouver Island population can only be expected to increase at approximately the normal population growth rate whereas the ethnic population will increase far more given the annual immigration into the Vancouver area plus the normal growth rate. Thus, the demand for an ethnic station will increase more quickly.

b) The ethnic fact is far more visible in Vancouver than in Toronto. Both cities have, according to Statistics Canada, approximately the same number in ethnic population but due to the lower total population of Vancouver, the fact that Vancouver is a mosaic is far more apparent.

c) It also appears at least to me that the ethnicity of Vancouver and environs is an accepted fact, in that many politicians, federal, provincial and municipal and many prominent professionals come from the various ethnic communities.

d) Even if all immigration would cease entirely, which is very unlikely, there would continue to be a demand for ethnic broadcasting for the foreseeable future. At the hearing, Rogers referred to a 30-year entry time span of demand for ethnic broadcasting, this based on their experience in Toronto.

e) Finally, the Vancouver area is home to the largest ethnic population in Canada not being served by an off-air television ethnic station.

If the demand in this market were not seen as sufficient, this would mean there would never be another ethnic television station in Canada. Clearly the Ethnic Broadcasting policy contemplated otherwise. As to the Vancouver market, I do not believe we need go any further with any additional criteria given the facts as to supply and demand.
With the greatest respect to the majority, I would have licensed CFMT.