ARCHIVED - Broadcasting Decision CRTC 2015-494

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Reference: 2015-136

Ottawa, 5 November 2015

Clear Sky Radio Inc.
Sylvan Lake, Alberta

Application 2014-0015-0, received 8 January 2014

Golden West Broadcasting Ltd.
Sylvan Lake, Alberta

Application 2014-1019-1, received 4 December 2014

Public hearing in the National Capital Region
12 June 2015

Licensing of new radio stations to serve Sylvan Lake

The Commission denies applications by Clear Sky Radio Inc. and Golden West Broadcasting Ltd. for broadcasting licences to operate English-language commercial FM radio stations to serve Sylvan Lake.

Applications

1. At a public hearing commencing 12 June 2015 in Gatineau, Quebec, the Commission considered two applications for new English-language commercial FM radio stations to serve Sylvan Lake, Alberta. The applicants were as follows:
   • Clear Sky Radio Inc. (Clear Sky)
   • Golden West Broadcasting Ltd. (Golden West)
2. Given that the applicants proposed to use adjacent frequencies, their applications are mutually exclusive on a technical basis. The Commission therefore considers it appropriate to consider both applications in the same decision.

Application by Clear Sky

3. The station proposed by Clear Sky would operate at 88.5 MHz (channel 203A) with an average effective radiated power (ERP) of 791 watts (maximum ERP of 1,500 watts with an effective height of antenna above average terrain (EHAAT) of 150 metres).
4. The station would offer a Modern Music hybrid format comprised of Hot Adult Contemporary and Modern Rock/Alternative, and would target adults aged 18 to 44. It would broadcast 126 hours of local programming each broadcast week, with 3 hours and 6 minutes devoted to news coverage, including 2 hours and 29 minutes of local and regional news.
5. Clear Sky committed to devote, by condition of licence, 40% of its content category 2 (Popular Music) musical selections broadcast each broadcast week and between 6 a.m. and 6 p.m. from Monday to Friday to Canadian selections.
6. It also committed to exceed the minimum contribution to Canadian content development (CCD) required by section 15 of the Radio Regulations, 1986 (the Regulations). Specifically, it committed to contribute, by condition of licence, over and above the basic annual contribution to CCD, a total of $84,000 to CCD over seven consecutive broadcast years ($12,000 per broadcast year) upon commencement of operations. Of this amount, at least 20% would be devoted to FACTOR, with the remainder to be directed to parties and initiatives fulfilling the definition of eligible initiatives set out in paragraph 108 of Commercial Radio Policy 2006, Broadcasting Public Notice CRTC 2006-158, 15 December 2006 (Broadcasting Public Notice 2006-158).

Application by Golden West

7. The station proposed by Golden West would operate at 88.3 MHz (channel 202B) with an average ERP of 24,000 watts (maximum ERP of 50,000 watts with an EHAAT of 118.8 metres).
8. The station would offer a New Country Music format and would target adults aged 18 to 54. It would broadcast 126 hours of local programming each broadcast week, with 3 hours and 12 minutes devoted to news coverage, including 3 hours and 2 minutes of local and regional news.
9. Golden West committed to devote, by condition of licence, 40% of its content category 2 musical selections broadcast each broadcast week and between 6 a.m. and 6 p.m. from Monday to Friday to Canadian selections.
10. It also committed to exceed the minimum contribution to CCD required by section 15 of the Regulations. Specifically, it committed to contribute, by condition of licence, over and above the basic annual contribution to CCD, a total of $105,000 to CCD over seven consecutive broadcast years ($15,000 per broadcast year) upon commencement of operations. Of this amount, at least 20% would be devoted to FACTOR, with the remainder to be directed to parties and initiatives fulfilling the definition of eligible initiatives set out in paragraph 108 of Broadcasting Public Notice 2006-158.

Interventions

11. The Commission received interventions in support of each application. It also received interventions opposing both applications from Newcap Inc. (Newcap), Harvard Broadcasting Inc. (Harvard), Jim Pattison Broadcast Group Limited Partnership^{Footnote 1} (Jim Pattison) and L.A. Radio Group Inc. (L.A. Radio). Golden West also filed an intervention opposing Clear Sky’s application. The applicants replied to the interventions. The public record for this proceeding can be found on the Commission’s website at www.crtc.gc.ca or by using the appropriate application number, provided above.
12. Jim Pattison, Newcap and L.A. Radio stated that their Red Deer stations already provide news and information to serve Sylvan Lake.
13. Newcap also submitted that the Red Deer market is stagnant, largely due to the number of stations present. It estimated that 8% of its Red Deer station’s (CKGY-FM) revenues come from Sylvan Lake and that approval of either of the applications could have a detrimental impact on the Red Deer market. Newcap added that both proposed stations would pursue advertisers in Red Deer.
14. Harvard noted that both applications have several flaws, such as their analysis of the potential economic and coverage impact of the proposed stations on the market.
15. L.A. Radio submitted that the addition of a station in Sylvan Lake would have a negative financial impact on its stations CJUV-FM Lacombe and CKIK-FM Red Deer, which already serve that market. It added that Clear Sky’s financial projection of gaining only 5% of its revenues from existing stations is grossly understated.
16. For its part, Golden West indicated that Clear Sky has used unrealistic audience projections based on an incorrect definition of the market to be served.

Reply by Clear Sky

17. Clear Sky replied that it has significant support for its proposed radio service and that it would offer a musical format and local spoken word content that are appropriate for Sylvan Lake’s young demographic. It argued that much of its advertising revenue would come from local Sylvan Lake businesses that have not advertised on radio before and that its proposed station is technically not designed to compete with stations in Red Deer. In regard to Golden West’s intervention, Clear Sky expressed its concern with the timing of Golden West’s application and the unfair competitive advantage it has gained as a result.

Reply by Golden West

18. In its reply, Golden West argued that the interveners focused almost solely on the short-term economic outlook and that the local community needs its own voice. It indicated that its business models have always been predicated on a long-term approach and have been built entirely on serving distinct non-metropolitan communities like Sylvan Lake. According to Golden West, the interveners’ characterization of Sylvan Lake as a quiet, sleepy bedroom community of Red Deer is the very reason why Sylvan Lake needs its own Golden West station.

Commission’s analysis and decisions

19. After examining the public record for this proceeding, the Commission is of the view that the issue to be considered is whether the addition of one of the proposed radio stations in Sylvan Lake would have an undue negative impact on existing stations, mainly those in Red Deer.
20. According to the 2011 census, the town of Sylvan Lake has a population of approximately 12,760 people. However, the technical parameters proposed by Clear Sky and Golden West are such that their stations would respectively reach 15,911 and 26,444 people in their primary contour and 134,331 and 183,554 people in their secondary contour. Moreover, although there are presently no local radio stations dedicated to serving Sylvan Lake, the proposed stations would encompass significant portions of the primary contours of existing commercial radio stations-namely, several from Red Deer and one from Lacombe-and would reach nearby markets.
21. Further, both applicants stated that it was not their intention to provide programming to Red Deer and Lacombe and agreed to adhere to conditions of licence that would ensure the broadcast of local Sylvan Lake programming. However, since these conditions of licence would not preclude them from broadcasting content exclusively to Sylvan Lake while targeting other markets, and given the contours of the proposed services, there is a risk that the stations could choose to direct programming and their marketing activities outside Sylvan Lake and into other markets to achieve their financial objectives.
22. Finally, the proposed stations could have a negative impact on stations originating in nearby markets-Red Deer, in particular-given that:
    • advertising revenues of Red Deer radio stations are stagnant, and the market is still absorbing two radio stations that have launched since 2010; and
    • the profit before interest and taxes margin of Red Deer stations is below the Canadian average.
23. In light of all of the above, the Commission denies the applications by Clear Sky Radio Inc. and Golden West Broadcasting Ltd. for broadcasting licences to operate English-language commercial FM radio programming undertakings in Sylvan Lake.

Secretary General

Date modified:

2015-11-05