TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
BROADCASTING APPLICATIONS AND LICENCES/
DEMANDES ET LICENCES EN RADIODIFFUSION
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
December 11, 1999 Le 11 décembre 1999
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
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Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Public Hearing / Audience publique
Broadcasting Applications and Licences/
Demandes et licences en radiodiffusion
BEFORE / DEVANT:
A. Wylie Chairperson/Présidente
D. McKendry Commissioner/Conseiller
A. Noël Commissioner/Conseillère
B. Cram Commissioner/Conseillère
J.-M. Demers Commissioner/Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
P. Cussons Hearing Manager /
Gérant de l'audience
M. Crowley Legal Counsel /
D. Santerre/P. Cussons Secretary / Secrétaire
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
December 11, 1999 Le 11 décembre 1999
TABLE OF CONTENTS / TABLE DES MATIÈRES
Joseph Rajda 1769
Questions by the Commission 1775
Hull, Quebec / Hull (Québec)
--- Upon resuming on Saturday, December 11, 1999
at 0903 / L'audience reprend le samedi
11 décembre à 0903
9965 THE CHAIRPERSON: Good morning.
9966 Mr. Secretary, please.
9967 MR. CUSSONS: Thank you, Madam Chairperson.
9968 Our first application this morning is by Joseph Rajda doing business under the name of Pols-Haven for a broadcasting licence to carry on a predominantly English-language low power, for-profit specialty FM radio programming undertaking at Nepean (Barrhaven), operating on a frequency of 97.1 MHz, Channel 246LP, with an effective radiated power of 50 watts. The applicant will also offer a maximum weekly level of 30 per cent French-language programming.
9969 The applicant is proposing a broadcast to a maximum weekly combined level of category 21, (pop, rock and dance music), and category 22 (country and country-oriented music) of no more than 51 per cent of the total amount of music aired.
9970 I will ask Mr. Rajda to present his presentation.
9971 Good morning, sir.
9972 THE CHAIRPERSON: Good morning, Mr. Rajda.
PRESENTATION / PRÉSENTATION
9973 MR. RAJDA: Good morning. Thank you.
9974 Good morning, Chairman, and Members of the Commission.
9975 I would like to thank the CRTC and the Commissioners to have the opportunity to speak today; and thank the City of Nepean, their planning and financing consultant; Mr. Petrie, from Petrie Telecommunication; Mr. Mike Janda for finance planning; Mr. Bruce Marples, George Kennedy, who helped me, who has a lot of experience on the business system; Berny Bauer, musical planning, and so on. Especially, I would like to thank the businessmen from Nepean (Barrhaven) and also the future listeners who suggested to me the category of music.
9976 Our goal is to be the first 50-watt, low-power, home-based radio station in Barrhaven or Nepean South, future Ottawa. I would like to provide the listening public a good quality variety of music, local news, music and programming, that they expect from a local radio station and professional run, with minimal expenses, by experienced personnel or retirees and graduates from college, university and institutions, and it will be a good step-up to their future career for the radio station, owned and operated by local personnel, where it is possible to do so, with minimal expenses and save on first, second or third party.
9977 Pols-Haven, "the radio from Barrhaven, CJOE-FM on 97.1, to serve you", is a low-profit organization owned by local individuals, serving the community. I commit to present innovative programming for this area, a good mix of musical categories requested by future listeners. The majority are 30 years old. That I am reporting from the City Hall statistics, which is over 60,000 people.
9978 Their preference is soft rock, easy listening, light music, dance music, and related big bands, for example, country music, international, local, regional and Canadian talents -- for example: Paul Anka, Montovani, Nana Mouskouri -- I see quite a few mistakes, I'm sorry for those -- Michel Louvain and so on. The style of music they would like to hear is also Mexican, Tyrol from Germany or Saudi, or Latin music, and not to change from one station to the next station. Mainly the stations are either soft rock, easy listening, rock or something similar. So in our case we will have everything on one.
9979 We will devote at least one-third of the broadcasting week to Canadian programming: local news, sports, weather and the promotion of our local events and activities.
9980 CJOE-FM will commit for local and Canadian talent, will be one of our strongest criteria and would realize this on a daily basis and create a place for this talent. This will include individuals, school bands, school orchestras, police, fire band departments or military, drama, public and so on.
9981 CJOE-FM advertising will be directed at local businesses to the loyal listeners and ethnic undertakings and will be carried on in a professional manner. This will be the main source of our revenue, so a good bit of time will be directed to our business.
9982 To build and operate a home-based commercial and community radio for a minimal profit radio station in Barrhaven directed to the listeners in Nepean South, to accomplish this, we have the technical knowledge, the time, the equipment and the capacity to operate a radio station.
9983 As to technical knowledge, I was a technical producer for the Polish program here on CKCU in Ottawa for over 14 years, and also worked for CKJL, CKAC and CKVL in the Montreal area as a technician/ operator and as a salesman for Reprox and Kodak Canada.
9984 Initially, at the beginning, I plan to be on the air for 64 hours per week: Monday to Friday from 1600 to midnight, and on weekends from 1200 to 2400 hours, and increase by demand of the listener or clientele to promote small and medium local business. A variety of businesses have agreed to advertise on CJOE-FM.
9985 In addition, we will afford non-profit organizations in their promotion of local advertising, sports, tournaments, new talent, service clubs, fundraising events, church bazaars at a minimum cost for those type of organizations. This will be intermixed with advertising, music and news, and so on.
9986 The programming will be predominantly in English with approximately 30 per cent French content. Statistics Canada from 1996 showed that the total population of Nepean is 114,000: English 36,000, French 20,000, and other, 57,000.
9987 A survey showed that Pols-Haven's, "the radio from Barrhaven, CJOE 97.1, to serve you" programming would serve the needs of the local community.
9988 The census from the City of Nepean in 1997, a few years ago, "Barrhaven, Nepean South", was unknown and now there are over 2,500 businesses in Nepean, three newspapers, and we have two local newspapers beside, and our community has to include many new stores, industries, restaurants and also better roads for access to Nepean South.
9989 Over 30 businesses are ready to advertise their product on CJOE-FM and two for blocks of 30 minutes.
9990 The radio station 97.1 from Barrhaven is pleased to have letters of support from businesses, organizations, from various local and federal governments from the area, grocery stores, garages, barber shops, restaurants, beauty salons, et cetera.
9991 Excuse me. The financial information shows that in fact the studio of CJOE are already in operation under -- either way, manual or computerized assist, is only a minimal purchase of equipment or to update the antennas and to purchase the transmitter to be on the air.
9992 For beginning, the revenue of $71,000 for the first year and $77,000 for the fifth year for the projection of operation expenses $38,000 the first year, then $41,000 for the fifth year.
9993 The fact is mainly the need the local market and not other media is coverage area or marketing -- the sales market and sale potential. The survey showed the marketing will be new and unique chance for the local area for the small and medium businesses to advise -- my glasses get a little bit foggy -- there will be -- they can afford on other media or under certain radio or TV advertising.
9994 It is proven in Montreal area and the south shore of Montreal as very minimal interference with other media only to a larger service advertising and their programming. CJOE-FM will be a unique format, bring a new listener and advertising of that area.
9995 CJOE is here to promote the local new talent for local schools of music by giving away cassettes, CDs to their promotion and CJOE-FM 97.1 will supply free air time for approximately $700 a month. This is not included on our regular expenses.
9996 The businesses and organization please the CRTC and the Commissioners to consider the application of CJOE-FM 97.1 in favour to fill up the gap on the promotion in our new small/medium businesses.
9997 CJOE 97.1 will be formally committed to licence, respect the rules of the CRTC, and committed the new talent from the area, help the community and Ottawa.
9998 Chairman and Members of the Commission, I thank you to have the opportunity to explain particularly my commitment to the CRTC, the businessmen and the public. Thank you again.
9999 I will be answer to your questions. Thank you.
10000 THE CHAIRPERSON: Thank you, Mr. Rajda.
10001 Commissioner Demers, please.
10002 COMMISSIONER DEMERS: Thank you, Madam Chair.
10003 Good morning, Mr. Rajda, or good Saturday morning.
10004 Maybe you could introduce the person who is with you.
--- Off microphone / Sans microphone
10005 MR. RAJDA: Beside me is Mr. Bruce Marples, who is a qualified business -- and retired from his own business for -- I think he owned his business for over 30 years. Is that true?
10006 MR. MARPLES: Thank you, Joe.
10007 Madam Commissioner, Members of the Commission, I will attempt to help Joe in his presentation this morning or answer some of your questions.
10008 I'm doing this as a friend, so please understand this.
10009 Thank you very much.
10010 COMMISSIONER DEMERS: Thank you.
10011 Sir, you live in Barrhaven?
10012 MR. MARPLES: I reside in Barrhaven now. I lived in Toronto for 22 years, but I retired and have lived in Barrhaven for eight years.
10013 COMMISSIONER DEMERS: Thank you.
10014 Mr. Rajda, just a few questions on your oral presentation, please.
10015 Do I understand it correctly that you would be the only owner of this station?
10016 MR. RAJDA: Yes. Yes, it is.
10017 COMMISSIONER DEMERS: Thank you.
10018 Maybe a clarification on the content of the programming.
10019 In your oral presentation you spoke about school bands, school orchestras, and if my reading of your previous application is correct you had made an application for a big band station at that time.
10020 Now, the programming that you are asking to broadcast, is it different from your previous application?
10021 MR. RAJDA: Yes and no. Maybe I don't explain exactly the way I should.
10022 But the main problem is there will be a big band, but as a -- for the beginner, to help the new artists, the new talent, there will be, as I mentioned, school bands and so on, the amateur bands.
10023 Our artist talent we tried to show that we have something in Barrhaven, or we can manage to do something in Barrhaven.
10024 But those big bands, as I mentioned before, is as on a regular basis on the evening, for example, which has some kind of party or dance to accommodate with it, Montovani and so on. Montovani is more an orchestra, but --
10025 COMMISSIONER DEMERS: Okay, thank you.
10026 Don't read in my questions that you have not explained yourself clearly. We question every applicant on their application, okay, so don't feel that you did not express yourself clearly.
10027 You rely in your application on your own knowledge of the business, on your own training. Can you give us precise information on your training and your experience? Are you an engineer? Are you a social scientist? Then you may want to explain the type of work you did, in Montreal for example, in radio stations.
10028 MR. RAJDA: I was, and still I think, graduate in electronic and communication and work with few radio stations.
10029 My first radio where I work was CKJL, St. Jerome with Mr. Jean Lalonde when he start his own radio station.
10030 Then CHRS St.-Jean, where I don't work but I do my investigation.
10031 Then I worked with other radio stations, CKAC, CKJL. And one of them -- I don't want to give up my age -- but I was in charge of telecommunications at Expo 67, Terre des Hommes, where I worked for over 10 years, if not more.
10032 COMMISSIONER DEMERS: Okay. At CKJL with Mr. Lalonde you were a technical advisor? You were a technician? You were a radio announcer
10033 MR. RAJDA: No, no announcer. I don't have that qualification. I'm a little bit -- not a little but, but too shy to do that. Even like today even I'm shaking. I'm not used to work the public but I try to fight my own.
10034 My first intent was when I had to test those microphones or accept the system at Expo 67 and I had to do those tests facing with the public. I was very -- but I have to do my work. And at Place de Nations when you have 120 DB at over 200 feet away, that is a little bit -- even my ears now are weak.
10035 COMMISSIONER DEMERS: Okay. With Monsieur Lalonde what type of work were you doing?
10036 MR. RAJDA: I was operator and technician. My first suggestion to Mr. John Lalonde is power supply, the 10Z4 tube was defective. Mr. John Lalonde was very happy as from the beginning -- just graduated from school and I managed to solve the problem.
10037 COMMISSIONER DEMERS: And at CHRS?
10038 MR. RAJDA: CHRS, I was just to visit their studio and see how they managed to start. That way -- I don't work for them.
10039 COMMISSIONER DEMERS: Okay.
10040 MR. RAJDA: I just visit to see how the CHRS work because there was from sunrise to sunset in operation. It was something new at that time. Then CJMS came in on the air at Berri-Demontigny. Then they change. Now that they're gone --
10041 COMMISSIONER DEMERS: Yes. At CKVL, what type of work was that?
10042 MR. RAJDA: I was a technician and operator on the weekends, so there was not great things to do. Everything was prerecorded. I was putting the tape on for the speech, then I recorded and so on back and forth.
10043 COMMISSIONER DEMERS: Thank you. Then at CKCU-FM in Ottawa you indicate that you were producer of a Polish program for 14 years. This is the only type of work you have done at CKCU?
10044 MR. RAJDA: Yes. I was the producer doing everything that was necessary for carry on the first Polish program here in Ottawa and I thank also the CRTC that a few years ago when I was searching for the air time and that was one of your suggestion, to go to CKCU.
10045 Then I was offered to CKCU to help them to maintain their equipment, but there are issues and again when I found out I did application, they said thank you for my services.
10046 COMMISSIONER DEMERS: Thank you, sir. Now I will ask a few more questions. These will relate directly to your application and less to your oral presentation, although maybe some answers in which you will want to highlight what you have already said in your oral presentation.
10047 I will ask you questions on the format of your station, on your Canadian talent development initiative, on language, on your music list, on your marketing, on some financial aspects like depreciation and expenses. Then we will come to the technical aspect of your application. Okay? So we will go through that in that way.
10048 If we start with the format and especially on the music aspects of your application. While you have stated that 51 per cent will come from categories that we know better here as pop rock, dance and country, you are proposing 40 per cent of contemporary and traditional folk music. Is that correct? That sounds about you?
--- Off microphone / Sans microphone
10049 COMMISSIONER DEMERS: Given the absence of this type of music in radio in Canada, could you describe for us how you determine that there is an interest in contemporary and traditional folk music? Why would you broadcast, in other words, folk music? Have you made an inquiry? Have you asked people? How did you determine that station with 40 per cent folk music is a need in Barrhaven?
10050 MR. RAJDA: Barrhaven is, as I mentioned, a good percentage -- I mentioned that I think somewhere. People over 30 years old is a majority and of them like that type of music to remind them when they was young, especially those people who are over 40 or 50. They said they would like to have that to remember their young time and so on.
10051 Even in some time it's quite very hard, but they says also they have to respect the category of music for those young people from the 20 years old and even younger. Like I have my own is three years old and she like already those exciting music there, heavy rock or steel guitar, something like that which is for us, I think, my age and similar very -- I don't know how to explain that -- make the people more nervous instead of being relaxed or try to hold it.
10052 La musique est plus que nécessaire et ça rend le public nerveux. Je ne sais pas comment je pourrais m'expliquer en anglais de ce côté-là.
10053 I don't know if you understand.
10054 COMMISSIONER DEMERS: No problem in explaining and answering in the language you prefer. I could even ask the questions in French if you prefer.
10055 MR. RAJDA: Some words I prefer in English, some others in French. I'm too confused with those. I'm going quite often in different party or reception. I have to speak more than two or three or sometimes even more.
10056 COMMISSIONER DEMERS: Okay, so feel free to answer in English or in French. Feel free to tell me that I should use the word in French or in English.
10057 How did you find out or how did you decide that this was what should be on your station? You describe it as your own knowledge or your own taste maybe that this is what you like, folk music, but how did you make the decision? On what basis did you decide that this was going to be folk music on there?
10058 MR. RAJDA: I see what you mean. I forgot to answer that previously when you asked me. It look very strange. When some of this plus or minus on the music type, I don't know it's my cause or everybody, but they like to have the opinion of somebody else.
10059 So for so many years, even 20, 30 years ago when I was working directly or on direct to the broadcast, I was asking of the opinion from the public. When I was doing the search and research for my site, I went to shopping centres, in stores, and asked the people what they think about the type of radio they are listening presently and if they would like to have any change or which kind of change or what think they would like.
10060 I mentioned a while I would prefer to have this type of music or that type of music and I says "So what station you are tuned?" So there was A, B, like I don't want to mention any like that. In the car it's fine, they have to adjust, push a button, and they have the type of music they prefer, but at home, because they are too busy doing something around the supper or watch the kids or so, so they don't have a chance to keep changing their station.
10061 They would like to have everything on one station, a little bit of country music, a little bit of semi-classic, big band and so on. The way I found from those people at Barrhaven Shopping Centre, kind of a lingo -- I don't know if you are from this area, but my wife was doing her shopping and on my side I was asking people what they, the type of music they like, but I was not asking the people under age of 30 because on myself I was not interested to people under 30. I was more interested on people above 30 years old.
10062 I see quite often on TV, local radio station, they do interview and commercial, say "Look, people who are with us and you look their age", oh, 14, 13. The reference from those people, either had the knowledge, so I was trying to get from people who had some experience.
10063 COMMISSIONER DEMERS: You have outlined in your oral presentations, you have named artists who would --
10064 MR. RAJDA: Well, I just picked it, not all Canadian but some are Canadian.
10065 COMMISSIONER DEMERS: And these are the artists that one would hear on your station, assorted type. That's what you say.
10066 MR. RAJDA: Yes.
10067 COMMISSIONER DEMERS: So --
10068 MR. RAJDA: Excuse me. I will maintain that going through the category, as was mentioned in the application, and if the CRTC or the Commission judged to change a little bit to not interfere with other radio station, I have no objection for that. But I try to maintain to satisfy the customer first, the clientele.
10069 COMMISSIONER DEMERS: To close on that, you do not have a survey or a questionnaire or something that you could leave with us which would indicate that you have questioned people in a scientific or a semi-scientific way to find our their taste, what they would like to hear on your station?
10070 MR. RAJDA: If I know what you mean, I don't have that. You know why? Because I don't want to get some fake signature, how you want to explain that. I see so many people doing the survey: "Can you sign that? Can you sign that?" Okay, they have quantity. Goodbye. I don't want to do that. I want the true fact, maybe not in black and white but it is better than false black and white.
10071 If you wished to have that, I would do that for Christmastime.
10072 COMMISSIONER DEMERS: No. I am just asking you. You are in charge. You made the application.
10073 MR. RAJDA: No, I am not in charge. There are people above us, and above us is somebody up there.
10074 COMMISSIONER DEMERS: I imagine nobody --
10075 MR. RAJDA: That happened two years ago for me.
10076 COMMISSIONER DEMERS: Nobody up there wrote your application.
10077 MR. RAJDA: No. But they control us.
10078 COMMISSIONER DEMERS: You did.
10079 MR. RAJDA: They control us.
10080 COMMISSIONER DEMERS: We understand. You have just indicated that you would like to offer your listener a variety of music. My question, then, is: What would distinguish your station from what is currently available in Ottawa at the moment?
10081 MR. RAJDA: Our current radio stations frame it on one type of music: country, western, heavy rock, soft, easy listener, old age, all types like that, or sports, or just open line to the public. One track mind with radio stations. They have no choice or selection. We would like to have something else, but no, they have only that. Some station have only sport. Especially we have a big interview on TV, but radio I think is going in that direction too. They don't plan everything. Either that or that or that. They frame it.
10082 In my case I would like to have a little bit of everything.
10083 COMMISSIONER DEMERS: You want to blend it.
10084 MR. RAJDA: That's right.
10085 COMMISSIONER DEMERS: In your oral presentation you have indicated that you are targeting people over 30 years old.
10086 MR. RAJDA: This is true, yes. And with the baby boomers, the way they gone now, 40, 50, are more and more managing to survive.
10087 As Mr. -- what is his name -- from CHIM-FM Toronto says very nicely: We work for our children and now we suspect the children will work for us. But no. The children said well: You work for us for so many years. Now work for yourself. So I try to do the same thing.
10088 COMMISSIONER DEMERS: Okay.
10089 MR. RAJDA: Mr. Lombardi, I think, from CHIM-FM.
10090 COMMISSIONER DEMERS: Yes, Johnnie.
10091 Initially, you indicated that you would broadcast for 64 hours a week. Given that the studios are to be located in your own home, do you have any plans to increase that level of broadcasting?
10092 MR. RAJDA: Yes. But then I would be no more home based. Then I will have two places suggested by the city, and the shopping centre they supply the place to do that.
10093 COMMISSIONER DEMERS: So you would move outside your home.
10094 MR. RAJDA: That's right. But I don't think so the first couple of years.
10095 COMMISSIONER DEMERS: After two years you would move to the shopping centre.
10096 MR. RAJDA: Two years. I don't want to be to soon.
10097 But with computer system now, you don't need much. Everything go by itself. I experimenting now to be completely computerized, and with the new Windows 98 -- or 96, the recent one -- you don't have to do any extra set-up. Everything in it. Just to know how to do the program. And if you purchase a special program, then the computer know at a certain time this advertising goes on, this speech has to go on, or that music. I have a 200-CD changer and from one end of the CD it change to the next cut, 150 disc, in a matter of two seconds, from one cut to the next cut.
10098 COMMISSIONER DEMERS: I suppose it is -- who puts the cuts in the machine?
10099 MR. RAJDA: Well, you do selection and then the computer will pick up the cut you want, or the CD, or the speech, or the advertising, and the specific program.
10100 COMMISSIONER DEMERS: Okay. Let's turn to another subject, Canadian talent development, that you have proposed in your application.
10101 It indicates that you would commit $4,000 -- you would have a budget of $4,000 a year for Canadian talent development.
10102 Can you provide some details on where that $4,000 would be spent or where it would be applicable?
10103 MR. RAJDA: That would be spent on promotion to prepare for them, to record for them, either on cassette or CD, home-based CD, and to put them on the air.
10104 In Barrhaven we have, I think -- I don't want to put my hand on the hotplate, but I think three professional schools who are getting music and amateur singer like that. A couple of them are quite popular already, the local amateur or talent.
10105 COMMISSIONER DEMERS: The recipients of this $4,000 or equivalent in value --
10106 MR. RAJDA: That's right.
10107 COMMISSIONER DEMERS: Would be three schools, three professional schools of music artists or talent?
10108 MR. RAJDA: Yes.
10109 COMMISSIONER DEMERS: What are these schools?
10110 MR. RAJDA: They are professional.
10111 COMMISSIONER DEMERS: Professional music schools?
10112 MR. RAJDA: That's right. There are three or four.
10113 I don't know exactly. Bruce, do you know how many?
10114 MR. MARPLES: I'm sorry, I don't know.
10115 MR. RAJDA: You don't know exactly.
10116 MR. MARPLES: No.
10117 MR. RAJDA: We know we have a few, two or three at least, who from my knowledge they are on the radio. They are quite popular, from Barrhaven.
10118 COMMISSIONER DEMERS: Have you contacted these schools --
10119 MR. RAJDA: Yes.
10120 COMMISSIONER DEMERS: -- concerning this project?
10121 MR. RAJDA: We will wait until --
10122 COMMISSIONER DEMERS: They know.
10123 MR. RAJDA: Yes.
10124 COMMISSIONER DEMERS: They know you have an application?
10125 MR. RAJDA: Yes.
10126 COMMISSIONER DEMERS: They know you have a budget that could serve them?
10127 MR. RAJDA: That's right.
10128 COMMISSIONER DEMERS: If we turn to the spoken language on your proposed station, your applications provide for approximately -- not approximately, but 56 per cent if we figure it out, 56 per cent of the spoken language would be in English, 30 per cent in French and 14 would be ethnic programming. I think that's quite close to your figures?
10129 MR. RAJDA: We come very close to that, yes, but I don't want to go overboard of 14 per cent.
10130 COMMISSIONER DEMERS: All right.
10131 Now, tell us more about the French that will be spoken on your station. How will it be done? Is it bilingual, by blocks?
10132 MR. RAJDA: Because I was quite a long time in the old country -- it depends on where you are located. If you are familiar with English or French you speak that language, but if you are someplace where there is a blend so you try to pick the more common language that is spoken, either English, French or something similar.
10133 For some occasions, I think where I found it very nice, that is in Switzerland, where there are so many and they switch from second to second from one to the other. You are all strangers and for the beginning maybe it is hard, but after that you feel at home. That sounds very nice.
10134 COMMISSIONER DEMERS: Okay. So, on your station ...?
10135 MR. RAJDA: It would be either French or English or a third one, and on some occasions maybe they will say a couple of words in English or in French to add or to change the picture a little bit, but mainly it will be either French or English or who knows.
10136 COMMISSIONER DEMERS: Do you have an idea of when it would be blended?
10137 MR. RAJDA: That will be blended on ethnic programs.
10138 COMMISSIONER DEMERS: Not on English or French?
10139 MR. RAJDA: I don't think so.
10140 COMMISSIONER DEMERS: That's not your plan?
10141 MR. RAJDA: No. Those DJs who I contacted they are not fluent enough to do so.
10142 COMMISSIONER DEMERS: Thank you.
10143 Ethnic programming. On a weekly basis how many hours would you have of ethnic programming?
10144 MR. RAJDA: I think the maximum, I forget the figures exactly to reach in year 14, but it will be an hour a day I think is the maximum or something like that.
10145 COMMISSIONER DEMERS: But what have you planned, Mr. Rajda?
10146 MR. RAJDA: I know I have already signed for Ukrainian and Polish and another one who was interested.
10147 COMMISSIONER DEMERS: But it would be an hour a day?
10148 MR. RAJDA: I think so. I think so, but not overboard the 14 per cent of the 64 hours.
10149 COMMISSIONER DEMERS: Thank you.
10150 MR. RAJDA: Plus or minus an hour a day.
10151 COMMISSIONER DEMERS: So there would be ethnic programming every day on your station?
10152 MR. RAJDA: Yes.
10153 COMMISSIONER DEMERS: And in what language?
10154 MR. RAJDA: I have a contract already with Ukrainian and Polish and an Italian is extremely interested, and I think there is a Vietnamese, but I am not sure. The German was asking me some qualified questions and that is quite close to being agreed to.
10155 COMMISSIONER DEMERS: Polish. Would that be you that would --
10156 MR. RAJDA: No. I am not good enough for it.
10157 COMMISSIONER DEMERS: But you have done some at Ottawa U. -- not Ottawa U., but CKCU?
10158 MR. RAJDA: I was not a DJ.
10159 COMMISSIONER DEMERS: Sorry, so it's a music program?
10160 MR. RAJDA: Yes.
10161 When I was at CKCU at some point I had eight people preparing and doing a half an hour's work. It was very strange, but sometimes you have more than you need.
10162 COMMISSIONER DEMERS: So I understand from your answer that the production of the ethnic programming will be in the hands of people who do such programming?
10163 MR. RAJDA: Yes, but I will have control of it just in case they don't understand the rules of the radio communications.
10164 COMMISSIONER DEMERS: But these people, the people who would produce ethnic programming, ethnic programs, come from the community in Ottawa?
10165 MR. RAJDA: Yes, it is. One of them, can I say the words, graduated without papers and went to work for a Polish program in Toronto for TV. I think it is owned by CHIN or something like that. I don't know which company.
10166 COMMISSIONER DEMERS: They are professional broadcasters or professional programmers, all of them?
10167 MR. RAJDA: They came as -- without a certificate, but with experience.
10168 COMMISSIONER DEMERS: Experienced.
10169 MR. RAJDA: Yes.
10170 COMMISSIONER DEMERS: Thank you.
10171 You have already -- if we turn to local programming, the aspect of your programming that would be local, you have this morning indicated that you would have one-third that would be local, you indicate local news, sports, weather, promotion of local events and activities. Can you be more precise on that, these local programs, because the Commission has a policy that at least one-third, and you would answer to that, one-third of your station's programming should be local if you wish to advertise, have local advertising. But what would that be, local news, local sports? What would be the content of that?
10172 MR. RAJDA: The content of the one-third would be naturally 100 per cent of the one-third, the things going on in Barrhaven or Nepean. It doesn't matter what, good or bad news, the traffic and the new by-law and similar aspects in sports, what happened, who won.
10173 COMMISSIONER DEMERS: Thank you.
10174 Also this morning you indicated that the population of Nepean is 114,000. Will your station cover the 114,000?
10175 MR. RAJDA: It depends and I think all the research I did and tried to compare with other radio stations there is a possibility to cover that, referring to some radio stations now that change, they went over, but there was a couple of radio stations on the South Shore of Montreal, Chateauguay and Longeuil or Ville Jacques-Cartier with 50 watts. I was comparing them and the one from Toronto, York University. Like the one from Longeuil was going across and up to Laval. I don't know if you are familiar with Montreal, which is over 30 kilometres and that's a good, populated area. But regarding -- excuse me --
--- Pause / Pause
10176 MR. RAJDA: Excuse me. I don't know if I understand exactly what you mean.
10177 COMMISSIONER DEMERS: You have low power, rather low power. My question was really in the coverage area, in the technical, good reception coverage area.
10178 I was asking you if you would cover all the population of Nepean. Or put it in the reverse: How many people would live inside your coverage area?
10179 MR. RAJDA: By Industry Canada, it says up to 3 microvolts. It is not to exceed 8 kilometres. So I will respect that area.
10180 But if you have a better quality of radio, you can go further up than that, but then it is not counted, I think, on your side.
10181 COMMISSIONER DEMERS: Do you know how many people would be in your 3 millivolt coverage area?
10182 MR. RAJDA: Half of it.
10183 COMMISSIONER DEMERS: Half of Nepean. So 50,000 or so?
10184 MR. RAJDA: That's right.
10185 COMMISSIONER DEMERS: Thank you.
10186 MR. RAJDA: Because then, instead, we are not covering the full Nepean but I will be covering Nepean South and also a fraction of Manotick. So it will compensate a little bit.
10187 COMMISSIONER DEMERS: So you would cover that particular portion of Nepean with local news, weather and sports?
10188 MR. RAJDA: Yes.
10189 COMMISSIONER DEMERS: This would be your local programming?
10190 MR. RAJDA: Barrhaven is very active with sports. I was so surprised a couple of years ago because of some areas where they have a small accumulation of houses that have already baseball, hockey, all types of teams, arenas already built.
10191 COMMISSIONER DEMERS: Local events, activities in Barrhaven.
10192 MR. RAJDA: Yes.
10193 COMMISSIONER DEMERS: What type of activities do you have in mind?
10194 MR. RAJDA: Recently we had a Christmas parade; we have a 1st of July, for example -- always something happening when I look at the local newspaper, always something happening. At least every second week we have something done by the city or the area.
10195 COMMISSIONER DEMERS: Is there a municipal council in Barrhaven or is it the Nepean one?
10196 MR. RAJDA: There are two, I think, if I don't do any mistake.
10197 MR. MARPLES: To answer your question, there is only the one. Nepean covers all of Nepean, and Barrhaven is part of Nepean.
10198 COMMISSIONER DEMERS: Thank you.
10199 Now, if we look at the broadcast day on your station, throughout the day where would be the spoken words and where would be the music material? How would that present itself?
10200 COMMISSIONER McKENDRY: Between each cut we would have something new to add. Naturally, we will mention which type of cut we are playing. Then, if, you know, for example, that team and that team won last night or this afternoon or this current -- so on and so on. Then on the next one, "There was an accident at the corner of Fallowfield and Greenbank. Please try to avoid that area", or "There are so many injuries", "Please avoid that area."
10201 It will be like that. Not at a specific time. So whoever listens to that will know exactly where to go to avoid the traffic.
10202 Or would like to visit. We have -- there is a performance at the shopping centre or the coffee or restaurant or arena or sportsplex. We will not block by block so much at a quarter to 5:00 or five after the hour or a quarter after the hour or half an hour some news and sports. No. It will be anytime.
10203 As soon as we have learned, heard something, either from the city or the police or from the CB or somebody calls us. So automatically that will be checked before, if it is true.
10204 COMMISSIONER DEMERS: Okay.
10205 But a person in Barrhaven could not say, "I will tune into your station at five o'clock or four because there will be news"?
--- Off microphone / Sans microphone
10206 MR. RAJDA: If they are tuned to 97.1, they will know if there is something going around, because as soon as something happens we will be there to say so. They don't have to wait an hour or half an hour to find out what is going on in this area.
10207 It would be maybe indirectly repeated a little bit through updating the system, similar to what, in the morning, some radio stations are doing. But sometimes they are a little bit late.
10208 COMMISSIONER DEMERS: I imagine that you would talk about the traffic at traffic time, in a sense?
10209 MR. RAJDA: The traffic, yes. On the traffic, yes. But if something happened after, it will be anytime. Sometimes at eight o'clock, nine o'clock an accident happens or a blockage. We will advise our listeners to avoid that area.
10210 COMMISSIONER DEMERS: Okay.
10211 If we take music now, for example, would there be any blocks during the day where it would be mostly music?
10212 MR. RAJDA: Direct music without breaks? I don't think so. We will try to -- if something happened -- naturally the name of the cut and who is singing, if it is from Barrhaven or not, and some suggestions. Don't look at it as -- I don't know how to explain that -- trop mécanique, trop genre ordinateur, que ça soit fait à main libre, si je peux m'exprimer ainsi.
10213 COMMISSIONER DEMERS: So you will have to have somebody at the station all the time?
10214 MR. RAJDA: There will be always somebody, yes. It doesn't matter if there will be help by the computer, there will always be somebody on standby or -- just manage to flick the switch and to take over.
10215 COMMISSIONER DEMERS: Okay.
10216 But if that person were not to flick the switch, there would be continuous programming without human interruption?
10217 MR. RAJDA: What do you mean by "human interruption"? Voice or --
10218 COMMISSIONER DEMERS: Well, from eight to ten at night, for example, it --
10219 MR. RAJDA: The operator will be always there. If he has something to say, it is not prerecorded, he will have something to say. Those who will be on standby will be the DJ and an operator at the same time.
10220 COMMISSIONER DEMERS: Would it be an operator/announcer?
10221 MR. RAJDA: It is, yes. It will be.
10222 COMMISSIONER DEMERS: Thank you.
10223 I will turn now to your logger tapes, program logs. I believe you referred to it.
10224 So, as I'm sure you know, regulations require stations to keep program logs for one year from the date of broadcast. You are aware of that?
10225 MR. RAJDA: Very aware, because that was one of the main problems on another radio station.
10226 COMMISSIONER DEMERS: So how do you plan to produce logs on a daily basis? How will you do that at your station?
10227 MR. RAJDA: It will be on black and white paper, the log paper, and the backup that is from the air on VCR, which holds for six hours, one shot.
10228 COMMISSIONER DEMERS: On tape?
10229 MR. RAJDA: Tape; VHS, yes.
10230 COMMISSIONER DEMERS: Pardon me? VHS, you say?
10231 MR. RAJDA: Yes, a cassette.
10232 COMMISSIONER DEMERS: Okay.
10233 MR. RAJDA: A video cassette.
10234 COMMISSIONER DEMERS: Did you want to say something, sir?
10235 MR. MARPLES: I'm sorry.
10236 To clarify that, this could be interrupted, if necessary, to give a news clip or something of this nature.
10237 COMMISSIONER DEMERS: Yes. But I think Mr. Rajda understood.
10238 The question is that everything that goes on the air has to be recorded, and I think the answer was it can be -- the programming could be interrupted, but still whatever goes off air would be recorded.
10239 MR. RAJDA: Yes.
10240 COMMISSIONER DEMERS: Yes, I understand.
10241 Who will be responsible for that, Mr. Rajda --
10242 MR. RAJDA: Myself.
10243 COMMISSIONER DEMERS: -- for the recording.
10244 MR. RAJDA: Myself. I will be always on stand-by.
10245 COMMISSIONER DEMERS: Even on weekends?
10246 MR. RAJDA: My vacation will be off, 100 per cent.
10247 COMMISSIONER DEMERS: Even on weekends it's you responsible --
10248 MR. RAJDA: Yes.
10249 COMMISSIONER DEMERS: -- the person who will check if the --
10250 MR. RAJDA: No more holidays.
10251 COMMISSIONER DEMERS: -- if the equipment is working well, and so on? That will be your job.
10252 MR. RAJDA: Yes, sir, it will be.
10253 COMMISSIONER DEMERS: For the two years from the licence?
10254 MR. RAJDA: Two years. I don't have any problem from older and newer equipment for so many years. I must tell you, I'm very lucky on that side. But I have quite a few on back-up just in case.
10255 COMMISSIONER DEMERS: Okay.
10256 MR. RAJDA: I don't want to get stuck -- I heard some suggested to do what they call permanent work and suggest that you do to -- to do that and, "Oh, it's still working okay." I mentioned awhile ago, "But this screw, it's a little bit loose. Please fix it." "Oh, we will do that. We will do that." Weeks, months pass.
10257 COMMISSIONER DEMERS: So you will be the person responsible?
10258 MR. RAJDA: That the PM system works, I learned that very well and I will take Kodak Canada to show me how -- well, to train us to prevent those kind of catastrophic work.
10259 COMMISSIONER DEMERS: Thank you.
10260 Then there is a regulation which requires a submission of music lists and, as you have indicated, you have proposed a lot of music. So usually weeks of music selections broadcast between 6:00 a.m. and midnight. So you would have to produce that. All Canadian songs would have to be identified through the use of the MAPLE System.
10261 Do you know what the MAPLE System is, Mr. Rajda?
10262 MR. RAJDA: A little bit, but I will try to have more clarification on that.
10263 COMMISSIONER DEMERS: I think I can assure you that if you have a licence you will be asked to provide the Commission with a one week music list.
10264 MR. RAJDA: One week or one month?
10265 COMMISSIONER DEMERS: Well, certainly one week. Well, maybe one month also, but let's talk about one week.
10266 So what source would you use to help provide the information with the MAPLE System? Where are you -- you have just indicated that you are not quite familiar with the details, so how do you plan to get familiar with that if you were to have a licence?
10267 MR. RAJDA: Somebody mentioned one place, a Mr. -- who is on -- I think he collects on that, on programming. He knows very well that type of category or MAPLE System, and if he is not so I will ask the CRTC to update me on that side.
10268 COMMISSIONER DEMERS: Okay. You understand that --
10269 MR. RAJDA: Because MAPLE if I don't do any mistake -- excuse me if I interrupt you -- is abbreviation on --
10270 COMMISSIONER DEMERS: Sure. It's not maple syrup.
10271 MR. RAJDA: I know we are Canadian, but not to that point.
10272 COMMISSIONER DEMERS: Sure. It's not that sticky.
--- Laughter / Rires
10273 COMMISSIONER DEMERS: You know that we are talking about for one week of broadcast up to 1,000 or more song selections of -- you understand that?
10274 MR. RAJDA: Yes.
10275 COMMISSIONER DEMERS: It is a rather important amount of work for you to do.
10276 MR. RAJDA: Like for the moment I have what you call a blank in my mind.
10277 COMMISSIONER DEMERS: Okay.
10278 The marketing of your station. Have you prepared any estimate of the size of audience you would expect to attract to your station, during a week for example?
10279 MR. RAJDA: Oh, I don't know if I understand well your question or not? Here I tried to --
10280 COMMISSIONER DEMERS: Well, you will broadcast --
10281 MR. RAJDA: M'hm.
10282 COMMISSIONER DEMERS: -- programming that you have outlined in your application. Now, do you know, do you estimate, how many listeners will you have?
--- Pause / Pause
10283 MR. RAJDA: I think around 5,000, maybe 7,000, from that -- our area.
10284 COMMISSIONER DEMERS: How did you come to estimate that? That is about one-fifth if you have about 5,000 people --
10285 MR. RAJDA: No, I came --
10286 COMMISSIONER DEMERS: -- 50,000 in your --
10287 MR. RAJDA: I came from that by when I did all those surveys at different shopping centres and when I came up to our area, Barrhaven and Nepean South, the way the people responded. When I suggested that for -- the people were going for it.
10288 COMMISSIONER DEMERS: Okay. So you --
10289 MR. RAJDA: So, excuse me.
10290 There are not so many tuning to a specific type of music, for example country music or oldie or heavy rock or anything like that. There are some percentage who don't want to hear nothing either from country music or heavy rock and so on. They are more favourable on to have a little bit of everything. So that's why I'm concluding to that number of persons who will be interested between 5,000 and 8,000.
10291 COMMISSIONER DEMERS: Five and eight thousand?
10292 MR. RAJDA: Yes.
10293 COMMISSIONER DEMERS: On advertising revenue projections, how did you -- what were the considerations to come to the figures, the projections you have made? What was the basis for that?
10294 MR. RAJDA: If I understand your question, somebody, like some people ask me "Hey, there are so many businesses, 2,500 businesses in Barrhaven or Nepean?" I says, "Yes, that is a statistic of the city."
10295 COMMISSIONER DEMERS: Two thousand, five hundred?
10296 MR. RAJDA: Yes, 2,520 on --
10297 COMMISSIONER DEMERS: Okay.
10298 MR. RAJDA: -- on the report from 1997.
10299 They say "Where they are?" I said, "I was surprised myself." But there are so many home-based, if we can call home-based, there are accountants, small repair shops, all type home-based system and we don't know about them.
10300 So even, for example, a barber shop, they can't afford to cover the cost on the radio or on TV so they are willing to do that on the -- on CJOE because we will be less expensive.
10301 COMMISSIONER DEMERS: So if I understand you correctly, you have made a list of 2,500-and-so businesses and out of that you have come to -- you have analyzed that yourself and come to the conclusion that there would be so many who would advertise on your station?
10302 MR. RAJDA: That's right.
10303 COMMISSIONER DEMERS: That is how you made your projections?
10304 MR. RAJDA: Yes. And I have a list here already preferred for all of those who are very directly interested to sign in, those that can use as a sign in already.
10305 COMMISSIONER DEMERS: Yes. A couple of dozen is it?
10306 MR. RAJDA: What do you mean a couple of thousand, of what?
10307 COMMISSIONER DEMERS: A couple of dozen of people, 24 or so --
10308 MR. RAJDA: Yes.
10309 COMMISSIONER DEMERS: -- or 25 --
10310 MR. RAJDA: Yes. They are waiting --
10311 COMMISSIONER DEMERS: -- have already --
10312 MR. RAJDA: They are waiting until I have the authorization to be on the air.
10313 COMMISSIONER DEMERS: So you have discussed with at least two dozen people --
10314 MR. RAJDA: More than that.
10315 COMMISSIONER DEMERS: Okay. But --
10316 MR. RAJDA: Everybody is waiting for the decision. Even the medium-sized businesses, they said they can't do anything, they have to ask their head office to do that.
10317 For example, Home Hardware, the owner of Home Hardware -- I don't want to make the giant one, but the corner Home Hardware at the Crossings, Crossings Shopping Centre.
10318 COMMISSIONER DEMERS: So you have, in fact, gone door-to-door or telephoned people?
10319 MR. RAJDA: Face-to-face. I'm sorry, face-to-face, not door-to-door.
10320 COMMISSIONER DEMERS: Door-to-door?
10321 MR. RAJDA: Yes. For getting for the advertising.
10322 COMMISSIONER DEMERS: Yes.
10323 MR. RAJDA: I went to speak to them face-to-face. Excuse me, I don't know if it's the proper word to say.
10324 COMMISSIONER DEMERS: But you have done it yourself?
10325 MR. RAJDA: Oh, yes.
10326 COMMISSIONER DEMERS: You have done that yourself?
10327 MR. RAJDA: Yes.
10328 COMMISSIONER DEMERS: You plan to hire two paid staff at slightly under $30,000.
10329 MR. RAJDA: Yes.
10330 COMMISSIONER DEMERS: You agree with that? It's in your --
10331 MR. RAJDA: Yes. It's true, yes.
10332 COMMISSIONER DEMERS: Are you concerned --
10333 MR. RAJDA: Can I --
10334 COMMISSIONER DEMERS: -- about attracting qualified people for that level of salary?
10335 MR. RAJDA: Can I reverse a little bit --
10336 COMMISSIONER DEMERS: Yes.
10337 MR. RAJDA: -- go backwards?
10338 COMMISSIONER DEMERS: Yes.
10339 MR. RAJDA: The amount would be as commission. Nothing will be paid as a salary, it will be on commission. I mean, if that person works to a good effort he will get paid more because he has a better -- more customers and a better income for him.
10340 It will be -- if I want to explain on that, my strategy on the commission is -- will be any advertising or anything similar will be 50:50. I mean, 50 per cent who found the customer and 50 per cent for the radio station. If that person has his own program, for example, half an hour block, well, that 50 per cent will be for him or for the person who is helping him to do that.
10341 COMMISSIONER DEMERS: Okay.
10342 MR. RAJDA: So the 50 per cent can be divided a quarter or one-third, or whatever kind of agreement would be done with others.
10343 COMMISSIONER DEMERS: So even the two paid staff are to be on commission, because you --
10344 MR. RAJDA: The two paid staff, no, they will be paid from the 50 per cent.
10345 The two permanent --
10346 COMMISSIONER DEMERS: Yes.
10347 MR. RAJDA: -- they will be on small salary.
10348 COMMISSIONER DEMERS: Right. Because you indicate a little later that you will have 14 to 18 people on commission.
10349 MR. RAJDA: That's right.
10350 COMMISSIONER DEMERS: Your permanent staff will be salaried at a salary of a little less than $30,000. That's correct?
10351 MR. RAJDA: That's correct, yes.
10352 COMMISSIONER DEMERS: You are not concerned about the turnover of staff at that salary, the impact on your operation.
10353 MR. RAJDA: Yes. I don't think so it will be a good turnover. Before this time you meaning --
10354 COMMISSIONER DEMERS: Well, people at that salary maybe want to go and work somewhere else for some experience.
10355 MR. RAJDA: Here I would like to mention is will be little bit as a family work. I don't know if you can -- that way I consider there will be no good turnover because it will be from the family, myself and, you know, one of my kids. I call this brother-in-law or something similar.
10356 COMMISSIONER DEMERS: Okay. So they will be in the family.
10357 MR. RAJDA: Yes.
10358 COMMISSIONER DEMERS: And then you indicate you would be one of them and I understand you will be the manager, their manager, and the other person would do what?
10359 MR. RAJDA: They will assist me if for any reason I will be upset. For example, either way we will go to get some customer or sign any type of contract, one will be always by the system just in case there will be any failure.
10360 COMMISSIONER DEMERS: So the station will be operated with one person there all the time and only one permanent employee at a time.
10361 MR. RAJDA: Yes, and no again. It's very hard -- c'est très difficile de s'expliquer parce qu'il y aura toujours une personne présente. La deuxième personne va être là aussi mais en contact avec la clientèle. Je ne sais pas si on se comprend.
10362 CONSEILLER DEMERS: Il y aura deux personnes alors à la station.
10363 M. RAJDA: Oui.
10364 CONSEILLER DEMERS: Bon. Juste une courte question -- on depreciation.
10365 Your projections are between 800 and 1,000 per year of depreciation over an investment -- over assets of $60,000. That looks very low. What are your comments on that? If you depreciate $60,000 at 1,000 a year, you may have to replace equipment before that.
10366 MR. RAJDA: The repeat spin of equipment, if you want to use that word, now they manage to last longer than we suspect. Up to a few years ago there was question to replace every five years because was very high wear and tear through the heat and all the equipment was not upgraded as now.
10367 Now the equipment managed to last longer but in revenge, they are more sophisticated, so it has to be changed at least every five to eight years.
10368 COMMISSIONER DEMERS: Okay. If you have to change equipment in five to eight years, you will have $8,000 at a thousand a year, even a little less, that will be depreciated, so you will have to invest -- the value of the equipment that will be there may not have the value that you have on the books. That's your answer.
10369 MR. RAJDA: Yes.
10370 COMMISSIONER DEMERS: Okay.
10371 MR. RAJDA: For example, if we take the valuation of CBC, they like to operate quite often. They're nice. They have the money to do that.
10372 COMMISSIONER DEMERS: No, but we are not talking about CBC.
10373 MR. RAJDA: I know.
10374 COMMISSIONER DEMERS: A general question. Do you have any concern about operating inside your budget? Do you think it's realistic, the budget you have --
10375 MR. RAJDA: I feel very free on that. How do you call? Je peux être en opération bien en-dessous des dépenses prévues. Il n'y a aucune objection de ce côté-là. Ce qui m'inquiète le plus -- pas ce qui m'inquiète le plus, ce que je veux dire, principalement, c'est je préfère payer les autres que de me payer moi-même alors que la plupart du temps c'est le contraire qui se passe.
10376 COMMISSIONER DEMERS: Merci. The technical aspects of your operation now, and I will end with that, Mr. Rajda.
10377 MR. RAJDA: Merci.
10378 COMMISSIONER DEMERS: The Commission notes that FM channel 246LD, the one you have asked to use --
10379 MR. RAJDA: Yes.
10380 COMMISSIONER DEMERS: -- is short spaced with channel 245, low power also --
10381 MR. RAJDA: Yes.
10382 COMMISSIONER DEMERS: -- currently used by CKDJ.
10383 MR. RAJDA: CKDJ, Algonquin College, yes.
10384 COMMISSIONER DEMERS: Algonquin College. Given the close proximity of your proposed channel to CKDJ and the potential for interference, what remedial measures would you take to eliminate interference should it occur?
10385 MR. RAJDA: Between Algonquin and Barrhaven antenna location they are inside the limit, the specification.
10386 COMMISSIONER DEMERS: Yes.
10387 MR. RAJDA: And knowing Mr. Crawford a little bit, so mutually we agree to do that necessary adjustment, the patent of the contour to don't interfere either way. Also, if will be any similar thing like that, we lucky. We have the Greenbank. We are divided by the Greenbank there between Ottawa and Nepean or Barrhaven that the location -- if will be any interference will be on that area, so nobody will be affected really, but again, if we have to change the patent of the antenna, it's no problem.
10388 COMMISSIONER DEMERS: You know you would have to do it.
10389 MR. RAJDA: Yes.
10390 COMMISSIONER DEMERS: You understand that.
10391 MR. RAJDA: I like to take a note somewhere on the paragraph, it says on Industry Canada. I would like to some day take them on consideration.
10392 COMMISSIONER DEMERS: You know that you would have to resolve the problem. Do you know that? You agree with that. In other words, your channel does not have priority over the other one.
10393 MR. RAJDA: I would like to have a not public definition on that, personal definition. It is possible. I agree to do on public.
10394 COMMISSIONER DEMERS: Yes.
10395 MR. RAJDA: But technically with Industry Canada mentioned on their reference with 7 watts and 50 watts agreement or rules, you want to go by rules.
10396 COMMISSIONER DEMERS: Okay. Our understanding of Industry Canada technical regulation, you will be responsible for solving that problem. You, not Algonquin College.
10397 MR. RAJDA: They will have to change the rules.
10398 COMMISSIONER DEMERS: Well, that's what the rules are today.
10399 MR. RAJDA: Yes.
10400 COMMISSIONER DEMERS: Your understanding of the rules today.
10401 MR. RAJDA: No.
10402 COMMISSIONER DEMERS: What then are the rules?
10403 MR. RAJDA: That's why I preferred not to discuss on the air.
10404 COMMISSIONER DEMERS: Well, it's our understanding that the rules are --
10405 MR. RAJDA: In my case, until something change, I would modify the patent of my antenna.
10406 COMMISSIONER DEMERS: Yes.
10407 MR. RAJDA: To not be undisturbed with CKDJ.
10408 COMMISSIONER DEMERS: You are aware that if you had to do something --
10409 MR. RAJDA: Yes.
10410 COMMISSIONER DEMERS: You would have to assume the reasonable costs arising from it.
10411 MR. RAJDA: Yes. That's why I do all kind of summer test or getting the reception. The reception and transmission is nearly the same patent of antenna as to not interfere with CKDJ because CKDJ is a seven watt on the rules under the very lower power and very low power is ten watts and low power reach up to 50 watts. It's a little bit different.
10412 COMMISSIONER DEMERS: Are you also aware that low power FM stations are not entitled to protection from regular stations?
10413 MR. RAJDA: That's why A, B, C, D, B1, B2 and so on.
10414 COMMISSIONER DEMERS: B1A and B and C1 and C.
10415 MR. RAJDA: Yes.
10416 COMMISSIONER DEMERS: You are aware of that.
10417 MR. RAJDA: Yes. Like the regulation, the 50 watt, is not hard to go with three microvolts over a kilometre, I think, and very low power, ten watts, up to ten watts, exceed over two kilometre, not exceed two kilometre.
10418 COMMISSIONER DEMERS: You are aware that you have no protection from these people. Are you also aware that should a future regular class station established result in a short spacing with your area --
10419 MR. RAJDA: Yes. I have to move out. Yes.
10420 COMMISSIONER DEMERS: You will be required to change frequency of channel.
10421 MR. RAJDA: Yes.
10422 COMMISSIONER DEMERS: You understand that.
10423 MR. RAJDA: Yes. Then it would be a big problem with not so many available here in Ottawa.
10424 COMMISSIONER DEMERS: Sure. I certainly understand the problem.
10425 MR. RAJDA: Yes.
10426 COMMISSIONER DEMERS: But you understand that you would have to do it.
10427 MR. RAJDA: Yes. The other point I would like to mention regarding very low and low power. Low power class A, B and C. Those were I think are equal.
10428 COMMISSIONER DEMERS: Are you aware that in the event that a replacement LP-FM channel could not be found, you would have to cease operation.
10429 MR. RAJDA: That I am aware, yes.
10430 COMMISSIONER DEMERS: Thank you, Mr. Rajda.
10431 MR. RAJDA: Thank you very much.
10432 COMMISSIONER DEMERS: Madam Chair, thank you.
10433 THE CHAIRPERSON: Counsel. No.
10434 Thank you very much, Mr. Rajda, Mr. Marples for your appearance.
10435 MR. RAJDA: Excuse me, I am little bit shaky. This kind of exam is very hard for me. I am not used to it.
10436 THE CHAIRPERSON: You did very well.
10437 MR. MARPLES: Thank you, Madam Chair.
10438 MR. RAJDA: Thank you.
--- Pause / Pause
10439 THE CHAIRPERSON: Would you go to a microphone, sir.
INTERVENTION / INTERVENTION
10440 MR. KUCE: Madam Chairman and auditorium, my name is Marion Kuce. I am a doctor of biology.
10441 Mr. Rajda is fully secured with support of all scientific materials for his radio, contacts with experts, and institutions.
10442 Secondly, our club of naturalists and young paeleontologists at Carleton University is very interested in history of the Nepean and Gloucester Townships for the last 7,000 to 10,000 years where from this area appeared the Champlain Sea. They have specimens, land forms, history, maps, et cetera, and they will be very glad to use this local radio and to increase the number of members of these institutions' clubs.
10443 Students of modern languages at Ottawa University, they already form a formal circle around this radio that they want to show publicly how they progress in modern languages and how they communicate as ethnic students studying mainly Slavik languages. There are four languages under consideration.
10444 Thank you kindly.
10445 THE CHAIRPERSON: Thank you, Mr. Kuce.
10446 Mr. Secretary, I believe this completes this particular application?
10447 MR. CUSSONS: Yes, it does, Madam Chairperson.
10448 THE CHAIRPERSON: We will take a ten-minute break and then return to hear Mr. Zwig's application. Thank you.
--- Recess at 1034 / Suspension à 1034
--- Upon resuming at 1048 / Reprise à 1048
10449 THE CHAIRPERSON: Order, please.
10450 Mr. Secretary.
10451 MR. CUSSONS: Thank you, Madam Chairperson.
10452 Our next application, and in fact the last appearing application for this particular hearing, is by Anthony Zwig, on behalf of a company to be incorporated for a broadcasting licence to carry on an English-language FM radio programming undertaking at Belleville.
10453 The new station would operate on frequency 100.1 MHz (channel 261B) with an effective radiated power of 40,000 watts.
10454 The applicant is proposing a country music format.
10455 It should be noted that Anthony Zwig, through his ownership of Belleville Radio Limited, licensee of CJOJ-FM, has an FM presence in Belleville.
10456 I invite Mr. Zwig to introduce his colleagues and make his presentation.
10457 THE CHAIRPERSON: Good morning, Mr. Zwig.
10458 MR. ZWIG: Good morning. Thank you, Mr. Cussons.
PRESENTATION / PRÉSENTATION
10459 MR. ZWIG: Good morning, Madam Chair, Members of the Commission, and Commission staff. My name is Tony Zwig, and I am the applicant on behalf of a company to be incorporated. We are very pleased to be here today to present to you our application for a new country FM to serve the Quinte area.
10460 Before starting our presentation in chief, it is my pleasure to present Quinte's Hot Country team.
10461 To my immediate left is Wanda Love, OJ95.5 FM's General Manager, whose job will expand to include two stations if we are granted the licence. She has over ten years experience in radio and most recently has worked as a promotion and marketing consultant to radio, television and print.
10462 To my immediate right is one of those guys with the big voices. Mark Philbin is the busy man who programs OJ95.5 and will program the new station.
10463 Beside Mark is Sandi Hibbard, born and raised in Belleville and educated at Loyalist College. Ms Hibbard originally came to us as an intern and is our News and Community Affairs Director.
10464 In the back row is Ken Goldstein, who is no stranger to the Commission. Ken is the President of Communications Management Inc., an economic research firm. Ken has worked on a large number of radio, television and specialty service applications and conducted the economic research that we filed with our application.
10465 I am now going to start our presentation.
10466 Today, we have four key messages that we want to leave with you.
10467 First, the country music fans of the Quinte area deserve and want an FM country station. Ten per cent of the tuning in our full coverage area is to out-of-market country FM signals. We will provide exciting, music-oriented country programming in full stereo, 24 hours a day, seven days a week, to bring those listeners back to local radio. We will showcase the best of Canada's country music sounds.
10468 Second, licensing a new FM station to our country will strengthen an independent news voice and ensure continued diversity in news and opinion in the Quinte area.
10469 Third, a second licence will create an even playing field in the Quinte area, where at present our stand-alone FM station must compete with Quinte Broadcasting, with its three radio stations and cable serving most of the communities in the area.
10470 Fourth, the Quinte area can support an additional radio station, and our competitor is well placed to meet new competition. At present, they draw 85 per cent of the market's radio revenues.
10471 The map in Exhibit 1 of your handouts shows the contours of our proposed station. The station, as all country stations do, will serve much more than the central market of Belleville.
10472 In fact, from Prince Edward County in the south to Tweed in the north and from Brighton in the west to Napanee in the east, the station will be available to almost 180,000 people. We expect to develop strong audiences throughout this area, including Belleville and the new Quinte West, as well as throughout the more rural parts of our service area.
10474 MS LOVE: Thank you, Tony.
10475 Country music is a fact of life in rural, small town and most of our regional centres. From the Celtic strains of the Rankin Family in Cape Breton to the more uptown sounds of Ontario's new country artists to the cowboy tunes of Ian Tyson in Alberta and the rock tinged country of British Columbia's Sean Hogan, Canadian country music has carved out a place in Canadian fans' lives that complements and enriches the more commercial sounds coming from Nashville.
10476 The country format is the second most listened to format in Canada, with 13 per cent of all hours tuned. Country FM stations are popular all across the country, and in particular in cities and towns similar to Quinte.
10477 For example, in Kingston, CFMK-FM draws 14 per cent of all hours tuned, while Peterborough's CKQM-FM draws 27 per cent of all hours tuned in that market. Belleville is remarkably similar to these markets in make-up, and in fact the Peterborough and Kingston stations draw tuning in our market despite relatively weak signals.
10478 Belleville listeners tuning to CJBQ make it clear that they are not going to them for country music. Once the morning news and information package is past, the tuning drops more precipitously than is the norm for country music stations.
10479 The audience charts in Exhibit 2 compare tuning through the day on CJBQ-AM and CKQM-FM. It is clear that the country audience holds on through the day when a stereo signal providing fulltime country music is available.
10480 Exhibit 3 shows that the same trend is true for the Kingston station. CJBQ's audience all but disappears in non-drive periods.
10481 And why wouldn't it? CJBQ is Belleville's heritage station, even calling itself Belleville's Heritage News station on-air. They rely on their full service news package to attract their listeners. We would rely on music.
10482 At 9 o'clock they provide a two-hour phone-in show. We will be playing country music.
10483 During the winter they run hockey games three or four nights a week. In fact, one of the intervenors against our application did so not in support of CJBQ's country format but because he liked their hockey games.
10484 Exhibit 4 best illustrates what CJBQ really is: a news and full service station that happens to play a bit of country music. The chart shows the audience curve when they played AC music and now that they play some country music -- almost the same curve.
10485 It is clear that audiences come to CJBQ largely for the news and services, regardless of the music aired. In reviewing diary comments from the Fall 98 survey, we noticed that the comments focused on their news, sports and information.
10486 And yet we know that audiences react positively to country FM. Witness Kingston, Peterborough and many other markets.
10487 So where do Quinte's country music fans get their stereo FM fix? Kingston, Peterborough and U.S. country FM stations. We propose to change that by providing an exciting new FM station that will meet the needs of Quinte's active and informed country music fan who now must listen to out-of-market country FM.
10489 MR. PHILBIN: Thanks, Wanda.
10490 Quinte's Hot Country will be a music intensive FM station focused on country music and its fans, playing the best of today's country supplemented by recent and past hits. But it will not be simply a country music jukebox. We intend to provide a number of features whose purpose is to give the audience a more in-depth look at the artists who shape today's hot new country.
10491 Exhibit 5 shows what our schedule will look like.
10492 Twice each weekday we will run "Denims and Dreams", featuring songs from an artist and tell a little of their story -- sometimes biographical, sometimes anecdotal, but always topical and insightful. Of the ten featured each week, four will be Canadian.
10493 "Under Wraps" is our new album spotlight. It will celebrate newly released music while sharing insights from the artists. This will be featured every Thursday and repeated on Sundays. And again, four out of every ten albums would be Canadian.
10494 Every Tuesday, Rising Star will showcase the music and background of an up-and-coming performer. Four out ever ten performers would be Canadian, and listeners will get a second chance to hear this program on the weekends as well.
10495 Finally, what better way for a country music fan to spend a Saturday afternoon but with Canada's Country Top 40.
10496 Throughout the day we will serve our audience with news, weather, sports and, because of the rural audience we want to reach, commodity and farm price reports. And, of course, we will provide all sorts of features on the country music lifestyle, whether it is news on the Calgary Stampede, the Canadian Country Music Awards or our own Havelock Jamboree. We will actively seek out concert listings, interviews with artists and other elements that interest the country fan. This will be a unique approach to country music in our market.
10497 Quinte's Hot Country will provide a new platform of Canadian country music artists. Not only will we meet the regulatory requirement, but all of our specialty programs will be above and beyond the 35 per cent. For example, at OJ 95.5 FM we have always exceeded our requirements. The last time the CRTC monitored our station, not only did we meet the existing 30 per cent, we exceeded it, clocking in at 37 per cent.
10498 We will bring the same commitment to Canadian artists in the country music area as well. And, of course, all of the Canadian songs and artists we play will be highlighted and promoted on our Web site with biographical, concert and other information available at the clock of a mouse.
10499 News and community service will be an important part of our new station and Sandi Hibbard will tell you about our plans in this area. Sandi.
10500 MS HIBBARD: Thanks, Mark, and good day to all of you.
10501 I was born and raised in Belleville and have lived in various parts of the Quinte area. I have always wanted to be in broadcasting and did my studies in radio and television arts at our own Loyalist College. OJ brings lots of college and high school students in on internship and I received my start in that way. Fortunately, they kept me on.
10502 News and community outreach are my greatest interests and I am really excited about the possibility of adding to our existing newsroom.
10503 At present there are three of us in the newsroom at OJ; myself, Paul Martin -- no, he is no relation to the Finance Minister -- and Carey Tucker. Between us we provide 52 newscasts a week, with particular emphasis on local and regional stories that we gather, supplemented by Broadcast News for provincial, national and international news.
10504 A study conducted in 1998 by Angus Reid shows clearly that what is most important to Canadians is what is going on in their own neighbourhoods and backyards. In addition, the study indicated a desire for greater coverage in the areas of health, the environment, technology and women's issues. And that is what we will focus on.
10505 Unfortunately, a single station in a smaller market can only devote so many resources to the news. So I am very pleased to note that if we are successful, we will be adding an additional full-time person to our news department.
10506 This would mean that we could do a more in-depth job on big news stories -- for example, elections. Another journalist would allow us to expand our coverage in Prince Edward County, Hastings, East Northumberland and Greater Napanee.
10507 The additional budget will also enable us to hire stringers and commentators, allowing us to do more features and editorials.
10508 In addition, we will be able to download the extra information onto our daily news page for the station's web site.
10509 As a Bellevillian, I know that this area was served for almost 60 years by one broadcaster, who also at one time owned the local newspaper and still owns the cable company. With the arrival of OJ 95.5, our community has benefited from the presence of a different news voice.
10510 Competition has good results in news as well as in economic endeavours. As we have covered events that the opposition hasn't in the past, the listener is the winner and the other stations have had to adjust as well. With an additional station and the resources that we could add to our newsroom, we could certainly strengthen that other news voice.
10511 MS LOVE: Our Canadian Talent initiative will give a local Rising Star the tools to advance their music career.
10512 Two thousand dollars in direct expenditures will pay for the recording of a professional quality demo. In addition, we will barter air time with other local providers to give the winners additional prizes to use in developing and marketing their music. This is outlined in Exhibit 6. Here's how it will work.
10513 Quinte's Hot Country will issue a call for cassettes from new local country music talent. We will recruit a panel of experts in the area to select 12 finalists.
10514 We will make arrangements with four area venues to hold battle of the bands competitions. So far, the Waring House in Prince Edward Country, Copperfield's in Belleville and the Red Lion in Trenton have agreed to host. We will heavily promote the contest on air and on our web site, supported by print and other promotion. Three of the finalists will play each evening with the winners advancing to the finals.
10515 The finalists will play at the popular Havelock Jamboree, a well-known and high profile area country music festival. A grand prize winner will be selected and will receive the prize package.
10516 Of course, the winner will also receive extensive exposure on Quinte's Hot Country. We will feature the artist on the Rising Star spotlight that Mark has already spoken of and we will also add the recording to our regular rotation. In addition, the winner and the finalists will be featured on our web site.
10517 Tony and I have had experience in developing just such a contest in London with the Country Roads initiative. It was this contest that gave Michelle Wright her start. Her demo was her first step on the road to stardom.
10518 MR. PHILBIN: The market can support a new station.
10519 We have projected that we would receive 10 per cent of all tuning in our full coverage market in the first year of operating, rising to 15 per cent over the course of the licence. This number is similar to the share that CFMK draws in Kingston and is phased in.
10520 We will target the full coverage area of Hastings, Prince Edward and Northumberland East. Country radio is a full coverage format, reflecting the intense attraction that rural residents have for this music. As our application indicates, our marketing area includes some 90,000 people and we expect to reach almost double that with a listenable signal.
10521 As Exhibit 7 shows, 43 per cent of the tuning in our full coverage area is to out of market stations. The number four station is the country station from Peterborough, CKQM-FM with 5 per cent of hours tuned. CFMK-FM from Kingston draws a three share and other Canadian country stations draw a one share. American stations draw about 8 per cent of all tuning, and this includes country stations Froggy and The Bee. We estimate that at least 10 per cent of all tuning is to our of market country stations.
10522 We believe that Quinte's Hot Country will repatriate a significant number of these hours and draw from 6 to 8 per cent tuning from this. Obviously, we will have an impact on CJBQ, but only in non-drive periods, since their strength is in their news and information and services. We also believe that we will take some audience from our own station, given our overlapping demographics. Exhibit 8 shows how the tuning will be divided if we are licensed. Ken.
10523 MR. GOLDSTEIN: Thank you, Mark.
10524 I was asked by Mr. Zwig to estimate the radio revenues available in the Belleville market and the ability of the market to absorb an additional station. Now, as you know, because there are only two owners in the market, it is difficult to have exact numbers, particularly when looking at profitability. Nevertheless, by analysing the overall numbers for Kingston and Belleville for radio, and looking at economic statistics overall for the Belleville census agglomeration, we are able to estimate revenues.
10525 We estimate that the Belleville radio advertising market in 1998 was almost $3.2 million. Then we estimated the growth in the market based on forecasts for the market itself. This enabled us to project the growth in the market absent a new station. And our projections are that there will be natural growth in the market even if no new station is licensed.
10526 We also know that the entry of a new station can stimulate new business and revenue increases beyond normal market growth. Our projections for the extra growth due to stimulation in this case are conservative, being only half of the increase that occurred when CJOJ-FM entered the market. We project a growth of some $228,000 in the market between 2000 and 2001 with the entry of the new station.
10527 Therefore, more than half of the new station's first year revenues of $440,000 would come from market growth and stimulation, and the remainder would come from the existing stations. If all of the revenue comes from Quinte Broadcasting's three existing stations, then the impact would be about $212,000 in revenue across those three stations in the first year of the new station's operation, or less than 8 per cent of their revenues.
10528 We believe that impact is modest when compared to the structural benefit that will be achieved. By approving this application, the Commission can help to correct the severe structural imbalance that currently exists in the Belleville radio market.
10529 MR. ZWIG: Quinte Broadcasting can handle the impact. Quinte Broadcasting is well placed to handle a new station's impact. Quinte has three stations in the market and with their recent closure of studios in Trenton, have all the synergies of three stations and a cable company in one building. They currently have 50 per cent of all hours tuned in the extended market area, compared to OJ's 7 per cent.
10530 In an optimistic scenario for us, OJ will increase its share to 10 per cent, and Quinte's Hot Country will do 10 per cent in year one. If half of that growth came from their stations, they would decline to 43 per cent, still more than double our market share.
10531 From a revenue point of view, we receive about 16 per cent of market revenues at present and they receive 84 per cent. We estimate that if licensed here, by 2003 we would have progressed to 31 per cent of the market and they would still have 69 per cent. Exhibit 9 demonstrates the revenue picture before and after licensing Quinte's Hot Country.
10532 Quinte Broadcasting not only has the combined revenues of three radio stations, they also have the cable franchises for most of the area as well. And they derive advertising revenues from the preview channel and other advertising venues on cable. We do not believe that Quinte has anything to fear from us.
10533 On the other hand, it is not clear how we can continue to provide the level of service, the news diversity and competition in the market while competing with one FM station against a competitor with three stations and the cable company. Our competitor is long entrenched in the Belleville market and holds many more cards than we do.
10534 Madam Chair and Members of the Commission, we have made four points clear to you today.
10535 First, most of the surrounding markets have country FM stations drawing significant shares in their own market. More importantly to us, 10 per cent of all tuning in our full coverage area is to out-of-market country FM stations. Quinte residents also deserve and want to have country available to them full time in stereo and we have a plan to give them an active, music-intensive station.
10536 Second, OJ 95.5 has provided an independent news voice in our area and the addition of a new station will allow us to maintain and strengthen that voice. The new resources available will allow us to add new features and even editorials.
10537 Third, the market can absorb a new station without significant impact on the ability of the existing stations to meet their obligations. Much of our listening will come from repatriating tuning to out-of-market stations. Moreover, Quinte Broadcasting is a strong competitor with the resources to survive and flourish.
10538 Fourth, licensing a new station to us will level the playing field in our region, enabling an independent player to survive and bring the benefits of competition to the Quinte area.
10539 Madam Chair, in the early nineties the Commission licensed a new voice to serve the people of Belleville. We believe that competition has been good for the market, but for it to bee effective it must be real. When one competitor holds all the cards, the full benefits of competition, such as choice and quality, are not felt. We would like the chance to provide the people of the Quinte area with a vibrant radio market with two strong players.
10540 Thank you. We would be pleased to answer any questions.
10541 THE CHAIRPERSON: Thank you, Mr. Zwig and your colleagues. I'm sure you have thought of many other things you would like to be doing on Saturday. We appreciate your patience in being here on the weekend.
10542 Commissioner McKendry, please.
10543 COMMISSIONER McKENDRY: Thank you, Madam Chair. There is nothing we would rather be doing on Saturday, so you can take that into account.
10544 THE CHAIRPERSON: There we are.
--- Laughter / Rires
10545 COMMISSIONER McKENDRY: Thank you for your presentation.
10546 I just wanted to begin by asking you a question about something you said in your presentation this morning. It is on page 10 of your presentation.
10547 At the top you say, and I quote:
"We also know that the entry of a new station can stimulate new business and revenue increases beyond normal market growth."
10548 I wonder if you could just elaborate on that statement for me.
10549 MR. GOLDSTEIN: I will take you through some of the numbers very, very quickly.
10550 There is a pattern that when a new station comes into a market there is some stimulation. I think we have to be reasonable in projecting how much. We have a system, as you are probably aware, of relating these things to retail trade and income.
10551 I think in the given case of this market, it is interesting that the history of this market -- and it is actually a relatively recent history -- 1993 was the last station before OJ-FM started in Belleville. 1994 was the first year. In that first year, the market revenues went up $410,000. So the projection that we have made that it would go up $228,000 in 2001, due, in part, to growth and from the stimulation, is only really about half of what actually occurred five years ago.
10552 I think based on evidence from many markets, but particularly from this market, I think our assumptions are pretty conservative.
10553 COMMISSIONER McKENDRY: I just want to make sure I understand the concept here. The concept is that when a new station enters the market, because there was more stations available to advertise on, more advertising is done. Is that the concept?
10554 MR. GOLDSTEIN: It's both a question of more stations, but it is also a question -- in this particular case you have a couple of things happening.
10555 First of all, we do have a structural imbalance in this market. If one moves from a three-to-one to a three-to-two situation, we will now have two owners that have tools that are able to be used most effectively.
10556 The second thing that is very important here is that this station, by the nature of its format, will be serving the full coverage area to a greater extent than it might be serving, only Belleville central, and that also has the opportunity to bring in some advertising dollars.
10557 Obviously, Belleville is the centre of a trading area, and if you have a station that is clearly targeted at the nether reaches of the trading area -- people do come in from those areas to shop in Belleville -- there is also an opportunity to stimulate some advertising.
10558 COMMISSIONER McKENDRY: Your calculation here is based on the stimulation that occurred, I think you said, in 1993 --
10559 MR. GOLDSTEIN: Ninety-four.
10560 COMMISSIONER McKENDRY: Ninety-four. I'm sorry. And that is the source or the basis of the calculation here?
10561 MR. GOLDSTEIN: That is actually the check that the calculation is correct.
10562 In fact, if you take a look at our report, you can see -- I will just have to find it here; it is Table 3 on page 5 of our report -- we look at the relationship between retail sales and local advertising revenues and we calculate out the local ad revenues per thousand dollars of retail sales.
10563 In 1993, in the Belleville census agglomeration, which by the way includes Belleville and Trenton, both, it was $2.30, in the first year of the new station it was $2.48, a jump of 12 cents. The next year it was $2.60, a jump of a further 12 cents.
10564 Our projection in this case, if I remember correctly, is that the total jump would only be about 15 cents.
10565 So if we say "Here is the historic relationship with retail trade", it comes out netting out to $228,000. Then we go back and say, "What happened? Hey, it was about twice as big." It gives one a comfort level.
10566 COMMISSIONER McKENDRY: Thank you.
10567 MR. ZWIG: Commissioner, excuse me.
10568 I think also the pie is growing in this business plan as well because of the large amount of out-of-market tuning. That also contributes to the ability of the new station to have the market grow.
10569 COMMISSIONER McKENDRY: The key factor, then, in understanding this stimulation that occurs is retail sales. Is that the key element of understanding the stimulation?
10570 What about factors -- I'm sorry. Perhaps you should answer that on the record, because we are taking a transcript.
10571 MR. GOLDSTEIN: Obviously, it is related to retail sales and it does, of course, tie in very closely to repatriating some tuning into the market. Because if a retailer has a sense that, through a radio buy, previously that retailer was getting a certain percentage of the audience through radio and now the retailer is getting a higher percentage of the audience through radio, the retailer will say, "Okay, I'm deciding among newspapers, I'm deciding among radio, billboards or whatever", and now it is more reasonable in terms of delivering the potential shoppers to use the radio more.
10572 So that is how the pieces tie together.
10573 COMMISSIONER McKENDRY: Thanks.
10574 I will probably come back to this area a little later on, but I just wanted to take a look at it now in light of that comment in your oral comments.
10575 My questions are broadly going to fall into five areas this morning: the demand and availability of country music in the Belleville/ Trenton market; the competitive situation in the market; the ability of the market to support an additional radio station; programming; and Canadian talent development. You have touched on these areas in your oral comments and in my questions I would like to expand on them.
10576 I would like to start by looking at the demand and availability of country music in the Belleville/Trenton market.
10577 In your revised supplementary brief you state, and I'm going to quote:
"FM new country is distinct from AM country, and the FM new country we propose is not available, resulting in an underserved demographic. We would be providing a unique sound. This serves the broadcast system and the community by adding diversity to the offerings." (As read)
10578 We note that CJBQ Belleville says that it presently plays more than 97 per cent new country music, which, according to it, is the same music that you are proposing.
10579 Could you please elaborate on how the new country music you are proposing would be distinct from the music currently available on CJBQ and how your proposal would contribute to the diversity of music in Belleville.
10580 MR. PHILBIN: I think we are looking at a question of presentation. There is no doubt that we all read the same music charts and receive the same music, but when you put it into a feature format it allows you to give in-depth analysis of the artists, make them more familiar to your audience in key feature presentations at a higher level, more time spent; the presentation becomes part of what the radio station is.
10581 To simply say we play 97 per cent of the similar music is not the same as saying we are going to put it into a feature presentation and provide background and offer that as well on our Web site and the opportunities that that spoken word gives to provide them much more than simply an extra spin of their record here and there.
10582 So while music is one angle, it is certainly the presentation and the ability that the artist will have in this platform to have not only their song played but to have their story told, to have their career examined and then have the opportunity to expand it on FM -- which we know has higher tuning than AM -- would give that artist a better platform for which their music to be exposed to in the Quinte region that is currently not available on FM.
10583 COMMISSIONER McKENDRY: If I understand you correctly, then, the music -- just looking at the music -- is, to a large extent, the same, but what would distinguish your format is the presentation of the format and the way it is done?
10584 MR. PHILBIN: That's correct. I think if we were to sit down and decide, well, what would their 10 core artists be and what would our 10 core artists be, they would be the same 10.
10585 But in a presentation point of view we would take it a little bit farther. We would be expanding a little bit more off of the charts because we would be playing album cuts in the "Under Wraps". Everybody will play the new single off, but you would play the other five, giving a better feel for what the artist did.
10586 That is when we say the presentation is different to be able to provide that in the area.
10587 MR. ZWIG: I think, Commissioner, also just referring to the effect of the features, as Mark described, the features focus, for example, on Canadian artists, they focus on new and rising artists, and it is part of giving a presentation to what we have called a more active country lifestyle, people who would be more interested in knowing if there are concerts or artists in the area, packaging opportunities for them to meet artists or bringing artists to meet their fans
10588 Also, you refer to the 95 or 97 per cent of the music CJBQ says they play is country. We are not arguing with that, just that is 95 per cent of whatever amount they do play, which isn't clearly 24 hours of the service. What we are saying is our service will be a 24-hour country music station.
10589 COMMISSIONER McKENDRY: The Bureau of Broadcast Measurement currently reports the format of CJTN-AM as adult contemporary/country. How much country music is played on this station and, if country music is played on the station, how will your proposed station be distinct from the CJTN-AM?
10590 MR. PHILBIN: Well, that is the first I have heard that they claim country. I will say it's from a crossover. I believe them to be an AM light hits, '70s and '80s base, very familiar artists, Elton Johns and the like.
10591 If it's country music, I would say it's to placate the rural areas that surround us, but certainly not from a presentation point of view.
10592 Much like CJBQ, CJTN is the Trenton heritage station. So I don't believe that country music is what they put on the flag when they sell or when they promote their radio station.
10593 COMMISSIONER McKENDRY: Thank you.
10594 You indicated in the supplementary brief filed with your application, and I quote:
"There is out-of-market tuning to FM country in Kingston and Peterborough. Also, we suspect that there is out-of-market tuning to Rochester. We would repatriate these listeners who are currently underserved because they are listening to out-of-market." (As read)
10595 End of quote.
10596 You discussed this this morning in your oral comments, the tuning to Kingston and Peterborough.
10597 According to recent BBM surveys of the Belleville-Trenton market, these stations -- and I think the stations are CKQM-FM and Peterborough and CFMK-FM in Kingston -- these stations only account for about 3 per cent of the total hours tuned in the market.
10598 Furthermore, WBEE-FM in Rochester, the only other country station reaching the market, achieves under 1 per cent of the total hours tuned in the Belleville-Trenton market. I think you indicated there were problems with its signal.
10599 Assuming that your new station would repatriate a large portion of this audience, the 3 per cent-plus, and given that you were projecting a 10 per cent share in year one, where would the other 7 per cent come from?
10600 MR. PHILBIN: Your numbers are completely accurate from BBM under Cell 5139. We use Cell 5140, which is the full coverage market area of Hastings and Prince Edward County.
10601 Within that Peterborough draws a 5 share; Kingston draws a 3 share; WBEE Rochester draws a 1 share; Pembroke draws a 1 share; Froggy, BY in Ottawa each draw a half share. So within the full market range of which these signals are not even within the .5 they are already pulling a 10 share outside of our full coverage area.
10602 We believe to draw, of that 11 share, conservatively we will say half, a 6 share. We believe we will draw some from CJBQ, as much as a 2 share from non-drive and a 2 share from our own OJ due to the overlapping demographics. That's how we arrived at 10.
10603 COMMISSIONER McKENDRY: Thank you.
10604 I would just like you to elaborate, if you could, on how you reached the conclusion the demand for country music in the market was not being addressed by the existing local stations. Now, you have talked about that in your oral comments, but particularly I would like to know whether or not you have conducted any market studies, any formal market studies with respect to your assumptions about country music in the Belleville-Trenton market
10605 MR. ZWIG: Well, we had to make a choice and we decided to invest in -- when I say "choice", a choice of where to invest in studies -- and felt in this case the priority was to invest in an economic study as done by Ken Goldstein.
10606 Also -- and I'm sure you have seen many studies -- nothing would be more independent than using the BBM numbers than us having a specific market research study for ourselves.
10607 Frankly, the BBM jumped out at us, I mean on two basis: One, having 43 per cent out-of-market tuning is a huge amount, and 10 per cent -- and by far the largest amount goes to the FM countries out-of-market, as Mark just described. We believe that tells the story because, as you know, people, if given a choice, would prefer to listen to local news and local information and these listeners who are going out-of-market are obviously working hard to make that effort to go find these out-of-market stations.
10608 COMMISSIONER McKENDRY: Earlier this week we had some discussion with some of the Applicants about the current state of country music and there was a view expressed that country music was facing challenges in the sense of declining interest by listeners.
10609 I wonder if you have any comments about the country music market in general?
10610 MR. PHILBIN: From what I understand, having not programmed it before but from within a radio standpoint over the years, country music as a radio format always continues to ebb and flow. Everybody talks about the great Class of '89 and that if the decline from the Class of '89 were to be the curve then, yes, it's going down. But what was it in '79? Well, it's still much higher than what is there.
10611 But the point about country music listenership is there is always the core. When everybody takes a look at the decline what you are seeing are those people who jump back and forth from year-in and year-out. They took line dancing classes and that was a great thing and so they get involved with that on the radio side.
10612 But there is always that core who will keep country music as the number two program format in Canada because of the rural attraction and the geography of the country.
10613 So what it tends to do in high urban areas is not as relevant to me with this application or programming as it does because of our geographical makeup of our market.
10614 COMMISSIONER McKENDRY: I would like to talk about the competitive situation in the Belleville-trenton market now.
10615 The market structure currently requires CJOJ-FM to compete against the stations operated by Quinte Broadcasting.
10616 I would like to know if you view yourself as competing against all three stations, including CJTN in Trenton or just the two Belleville stations?
10617 MR. ZWIG: No, against all three. Because, frankly, that is explicitly how they are sold.
10618 COMMISSIONER McKENDRY: What competitive advantages does the three-station combination provide for your competitor?
10619 MR. ZWIG: Well, first there is what we call combination selling, where they are able to provide a range of formats and a range of demographics. Just as sometimes we hear that people prefer to purchase TV instead of radio because they say it's a one-stop shop and radio may be a little more complicated to purchase, that is also the advantage that they have in going out and making their presentations. They say "You don't have to go any further, I cover the age factor or the demographic spectrum from A to Z", so it gives that strength.
10620 Also, they are needed on a buy so that right now our proportion is too small for an advertiser to come to us and say "Okay, we can spend all our money with you." Where, conversely, they are in a position to and do exercise it very effectively, to say, "Look, we have all of this and we will make it attractive to you to deal with us."
10621 Also, by consolidating they get some very powerful advantages and synergies. They get all the benefits of the savings, the benefits of the cross-promotion and cross-work of the personalities and the other assets that they have.
10622 MS HIBBARD: Commissioner, if I may add, in addition the news departments are all put together into one. They rely on each for other for resources whereby we only have the one newsroom, so it's quite a challenge to keep up with three news departments essentially.
10623 COMMISSIONER McKENDRY: Taking into account the advantages you just set out for us, could you relate your proposal now to those advantages and how you intend to address the advantages your competitor has that you just set out for us?
10624 MR. ZWIG: Well, first of all, there are some clear synergies that we are able to operate a second station as part of a business unit in the same market. That makes us more efficient, makes us more flexible and allows us on its own to further invest in quality resources to go out and get our share of the market.
10625 Also, in addition, we now are able to offer two different services, two different interests. When I say interests, interests of the listener. When we go out, should we be licensed, if we were to go out and market that package, we have two aspects in the constellation to market.
10626 To me, it's a bit like shelf space on the supermarket shelves. I'm not sure when, but it was a revelation to go down the market and you see all the soaps and there's all these different brands. Then if you look closely, almost all of them are made by Proctor & Gamble or Lever Brothers. There's some obvious benefits to being able to present a more significant number of choices.
10627 COMMISSIONER McKENDRY: If your application is denied, can CJOA-FM continue to compete in the Belleville-Trenton market?
10628 MR. ZWIG: Well, it's going to be touch. We will try to soldier on, but I think the benefit that is going to be lost to the market -- a number of benefits. One is a strong, diverse news voice.
10629 As Sandy just indicated, I mean she's very close to trying to be the best that she can and for us to be the best that we can in news. To be an alternative, you have to be credible. To be credible, you have to have the quality and to be able to offer the quality, you have to have the financial strength to be able to invest in those resources.
10630 It would be very difficult to offer the market a true alternative. Inevitably, as pressures would be there, I would find myself across the table from Sandy saying "Look, we are going to have to restrain things just because of the facts of life".
10631 COMMISSIONER McKENDRY: Thank you. I'm going to turn now to the ability of the market to support an additional radio station. This is an important area and you spent some time on in your oral comments.
10632 Some of my questions are going to touch areas that you discussed in your oral comments. Because it is an important area, I would like to go through these questions with you. If I do occasionally appear to be asking something you have already put forward in your oral comments, it's because we think it's an important area and we would like you to expand on it.
10633 Your revenue projections for the new country music station are $440,000 in year one, increasing to $650,000 in year seven. In order for the Belleville-Trenton market to support your new station without harming the incumbents, a substantial growth in radio advertising would be necessary or may be necessary.
10634 I would like to know about the assumptions you used in regard to the projected growth and the overall radio revenues when you prepared your application. If you could discuss the assumptions and how you calculated those assumptions.
10635 MR. GOLDSTEIN: Are you asking for the overall radio market?
10636 COMMISSIONER McKENDRY: Yes.
10637 MR. GOLDSTEIN: I will touch again on some of the points that we discussed a little earlier. We have developed over the years a method of modelling that takes into account the retail trade in the area and the personal disposable income.
10638 In the case of radio as an intensely local medium, the key factor is the retail trade. We are able to get from Statistics Canada retail trade data. It's actually interesting that the Belleville and Trenton combined retail trade is almost the same size as Kingston. It's actually quite a good size retail trade market. That is, of course, because it serves the surrounding areas as a centre for far larger than its own population.
10639 We then work out relationships. We look at the past history of those relationships, what does the local revenue do in relation to retail trade and it provides a method of projecting. As I said a little earlier, when the new station started in 1994, there was an increase of some $410,000 we estimate in the market. Indeed, there was an increase the year after as well. We think the market does have the capacity to support this station.
10640 If I might -- I don't want to get too academic of professorial -- but we have here an actually quite interesting almost textbook case of what happens when what was a monopoly is challenged by a competitor.
10641 Until 1994, radio in this area was a monopoly. The new station came in. Monopolies often take a while to react and that was the situation here. The new station did quite well in its first two or three years because the monopoly was slow to react, but then the monopoly did react.
10642 Because so many more tools were available to the former monopoly, which is now just a near monopoly, it was able to beat back the competitor from that initial two or three year period when they were in denial or caught by surprise or however you want to call it.
10643 They still had the structural tools to respond very effectively, having three stations and an integrated operation, being able to use some of the announcers from those stations on the community cable channel. All of those are structural tools that the dominant player has and that the new player doesn't have.
10644 If I could recast your question -- I know you won't let me -- but if I could recast your question, I wouldn't say that the real question here is about supporting a new station. I think the real question here is what tools will be in the hands of the two players that are in the market.
10645 I think if you have two players with reasonable tools at their disposal, you have created a structural situation in the market that is best able long term to serve the market and also to serve the players.
10646 COMMISSIONER McKENDRY: I appreciate your point, but wouldn't there be a limit to the number of stations that can survive in a market regardless of the tools that the competitors have?
10647 MR. GOLDSTEIN: I think obviously on and on and on there would be a limit, but I think that given the -- I mean the growth last time was almost as much as this station's first year projected revenues. I think that we are well within that limit.
10648 COMMISSIONER McKENDRY: Just on that point, I would like to get your comment on some data that I have here with respect to markets and the number of stations in them. You have referred to Kingston in your comments.
10649 We pulled together a couple of markets that on the basis of census population appeared to be about the same size, Brantford and Guelph. Belleville-Trenton, the 1996 census has a population of 93,000, Brantford 100,000 and Guelph 105,000.
10650 The number of stations in Belleville-Trenton is five, three FM and two AM stations. In Brantford and Guelph, there's two stations in each of those cities. It's one AM and one FM in each case.
10651 On the face of it, one would look at that and say "Well, there's more than twice the number of radio stations in Belleville-Trenton than there are in Brantford and Guelph combined. I guess one might conclude that that's an indication that perhaps there are as many stations or more stations in that market than can sustain themselves.
10652 Would you have any comment on that?
10653 MR. GOLDSTEIN: Well, I can't give you just off the top comments on those specific markets other than I think if you look at Kingston, for example, with a roughly similar retail trade level, you will find there are four stations, but in two owners, so they have the tools.
10654 I think you will find that the revenues there are higher there in that market. You also have to look in these markets at where the neighbouring market is. I mean when you have Guelph, you have some pretty large neighbouring markets that put signals in there.
10655 I think in terms of counts of stations, you can only go so far with that analysis. I did note, by the way, that you said that Belleville had five. I hope that's an augur of things to come.
10656 COMMISSIONER McKENDRY: I think that's probably including -- isn't there a community station there?
10657 MR. GOLDSTEIN: Well, okay. One tries.
10658 COMMISSIONER McKENDRY: So maybe you hope it isn't an augur.
10659 MR. GOLDSTEIN: In this particular case, in the case of the Belleville market, I think really that the right way to look at this is owners and giving owners the tools.
10660 MR. ZWIG: Commissioner, also, I think another reason that we think it's appropriate to look at owners or business units or by ownership is the synergies. As you have seen in our materials, the costs of running for us what would be a second station is so much less than running the first one for the obvious reasons that a lot of the infrastructure is being supported by the first one.
10661 As we add stations, but to a limit, it's not that each station then has to be able to rationalize on its own 100 per cent of the setup.
10662 What this does, frankly, is exactly the reverse. It allows us to use a second one to strengthen the whole unit.
10663 COMMISSIONER McKENDRY: You have referred to the Kingston market, and I just want to make sure that I understand that.
10664 The analogy that you are drawing between the Kingston market and the Belleville/Trenton market is retail sales. Is that the growth in retail sales in those markets or the total size of the retail sales in those markets?
10665 MR. GOLDSTEIN: The total size appears to be quite similar in the two markets, and yet I think the radio revenues in Kingston are higher than the radio revenues in Belleville.
10666 MR. PHILBIN: It would be interesting to note, too, Commissioner that Kingston has a television station that also draws revenue.
10667 COMMISSIONER McKENDRY: I have the retail sales here for Belleville/Trenton. If you could provide us with the retail sales for Kingston for 1995 and 1999, that would be helpful as well.
10668 MR. GOLDSTEIN: We would have to do an estimate for 1999. But we do have them from the Statistics Canada small area retail trade database, called SART. They label it not just another existential database.
10669 We have the data for Belleville/Trenton and Kingston, and I would be quite happy to give them to you later this morning.
10670 COMMISSIONER McKENDRY: That is fine. And if it is not available for 1999 --
10671 MR. GOLDSTEIN: We use the most recently available and then project it based on general trends. But I can certainly give you the actual numbers we have received from Statistics Canada.
10672 COMMISSIONER McKENDRY: What would be the population of Kingston in relation to Belleville/Trenton?
10673 MR. GOLDSTEIN: I don't have that immediately in my head. The Kingston census agglomeration I think would be a little bigger. The total market area would also be a little bigger.
10674 COMMISSIONER McKENDRY: But not substantially bigger.
10675 MR. GOLDSTEIN: No.
10676 COMMISSIONER McKENDRY: Thanks. As you are probably aware, on an aggregate basis the current stations in the market are operating in a negative position at the level of profit before interest and taxes.
10677 What impact would the new station, if it were approved, have on the profitability of the existing stations in the market?
10678 MR. GOLDSTEIN: Again this is so fascinating because it is such a structurally imbalanced market. You obviously have the numbers. We have the estimates based on the numbers one can get for a combined Belleville and Kingston.
10679 It seems that the losses in this case are almost entirely in one place; namely, the player that has the 16 per cent share. The player that has the 84 per cent share, as far as we can tell, is pretty close to break-even in 1998.
10680 I have done this simply by subtracting the CJOJ numbers from the combined Kingston/Belleville numbers, which produces a positive PBIT for the balance of the players. Then I assumed that the three players in the Belleville market, the three Quinte Broadcasting stations, are combined approximately in the break-even position.
10681 I would assume that having consolidated Trenton and Belleville, that they probably would be a little better than break-even.
10682 So we are in a situation where the market statistic that looks bad is all in the one player that is seeking relief and trying to fix it.
10683 COMMISSIONER McKENDRY: Thank you.
10684 You may have answered this question in your oral comments, but I didn't have a chance to look at the exhibit.
10685 How much of your audience will come at the expense of CJBQ?
10686 MR. PHILBIN: We believe it will be a two share. Of our ten share, 6 per cent will be repatriated from full coverage; 2 per cent from our existing CJOJ and 2 per cent from CJBQ.
10687 COMMISSIONER McKENDRY: In your view, will CJBQ be forced to change formats if a new country FM is introduced in the market?
10688 MR. PHILBIN: I wouldn't say would be forced to. I believe with the programming they had, when they were an adult contemporary station in the late 1980s, they drew the same number of shares in the afternoon, despite out-of-market tuning.
10689 We provided the adult format. They went to country. And numbers remain very similar in the afternoon. If they choose, they could go oldies and probably draw the same share in the afternoon. Big band could draw a share in the afternoon.
10690 The highest quarter hours in their afternoon are still for their newscasts and not even for the music on the quarter hour.
10691 So could be forced to, certainly to their own detriment; chances are probably not.
10692 The cumulative numbers are exclusively for their news, and very rarely upon examination of BBM do we find times when there are very few audience members, if we could find any, that were exclusively at their times of playing music.
10693 COMMISSIONER McKENDRY: Is it possible that the level of community and local service provided by the existing stations will decrease if another station is licensed?
10694 MR. ZWIG: No. I think it would increase.
10695 I mentioned my reference to Sandi in the news department. We have this ongoing discussion about resources, and you can imagine which way the discussions are going or which arguments are being advanced.
10696 We feel that a key benefit here is the ability to offer an alternative news voice and an alternative in the way things are presented.
10697 Formerly, when we were doing better, we had introduced programming that did not exist in Belleville; for example, editorials. At times they were produced locally by staff. For a couple of years we went outside and engaged Roy Bonisteel to write a daily editorial.
10698 We thought, and think, that these are good different kinds of programming that we would like to do. We believe in them because of the service. We think they are good programming.
10699 Strengthening us with this application would allow us to return to those. For example, we are not playing any of the editorials any more. They were just a casualty to try to rationalize our systems.
10700 Licensing this station would frankly increase the level of service throughout the market.
10701 MS HIBBARD: Commissioner, if I may add as well: As we have spoken about, the addition of an extra station will also give us additional budget for the newsroom that we will use to put additional journalists into our newsroom; one fulltime body. We will have stringers as well, that I have already lined up, that are very eager to come on board and will allow us some commentators for our editorials and features.
10702 One of the things I am greatly looking forward to is not encountering a problem that I have so often right now. Very often you will meetings or events or occurrences that happen more than once at a time.
10703 For example, last week or the week before I had a Belleville Utilities Commission scheduled for the same time as County Council, but I only had one available reporter. With the addition of an extra journalists, I will be able to cover both of those events, so the greater productivity the newsroom is going to experience, which is better of course for the entire community: more issues, more concerns to be covered, and that is good for everyone involved.
10704 COMMISSIONER McKENDRY: Just on that area, how would you separate the news gathering and delivery for each station?
10705 Or is that your intention?
10706 MS HIBBARD: What we do plan to do with that extra body is to have that person for the morning news drive. In the afternoon it is likely that we will do the same as the folks at CJBQ and CIJL do. We will probably have one person who will track a cast on one of the stations, and the other one will be live.
10707 COMMISSIONER McKENDRY: Before I leave the area of the ability of the market to support an additional radio station, I want to make sure I understand the essence of your view here.
10708 As I understand what you have told us, the important thing for us to take into account is to ensure that the competitors each have the tools they need to compete effectively; that that should take priority over a concern about whether or not there might be too many stations in a market.
10709 MR. ZWIG: The short answer to that is yes.
10710 One of the concerns about maintaining a market, I think, is maintaining the service. Here we are saying that because it is not the stations but it is the two ownership groups here, the best way to protect and set up a situation for service to improve is to have two strong competitors who are then going to be effectively egging each other on.
10711 But the fact that we each have the tools to be able to maintain and withstand the situation is the key.
10712 As I think I indicated before, there is a direct connection. If you want to compete, you have to have the credibility and the quality in your service. The only way to do that is to be able to have the strength to invest in those resources.
10713 COMMISSIONER McKENDRY: If by putting those tools in the hands of the competitors -- and in this case the tool you are looking for is a new licence for another FM station -- one of the stations fell by the wayside in the ensuing battle with the tools, is that something that we should be concerned about when we license?
10714 MR. ZWIG: Not in this case. We are talking about a situation here where our competitor has 85 per cent of the revenues. If licensed, we are not talking about a situation where it becomes 50/50; we are talking about something that approximates 70 per cent/30 per cent.
10715 They are coming from an exceedingly dominant situation. I think I heard yesterday morning that 75/25, in the discussion about Newfoundland, was acknowledged as the dominance or the momentum that would be hard to turn around.
10716 In this case we are dealing with 85 per cent, and we are suggesting that if we are successful -- we have a lot of things to accomplish should we be licensed, a lot of work to do -- that it might change to a 70/30. That would then be sustainable for both of us.
10717 COMMISSIONER McKENDRY: Let me ask you a couple of questions now about your Canadian talent development proposals.
10718 We note that you have agreed to participate in the Canadian talent development plan created by the Canadian Association of Broadcasters which, for the Belleville market, represents an annual contribution of about $400.
10719 In addition, you have committed by condition of licence to devote an additional $1,000 a year for five years in direct contributions to a talent search program within direct contributions estimated at $1,000 a year.
10720 These commitments were confirmed in your letter of May 13, 1999. However, in your revised financial projections submitted on the 27th of August 1999 you indicate under operating expenses for CTD yearly contributions of $2,000 for five years.
10721 Can you explain the difference between the $2,000 projection in each year and the $1,400 yearly commitment?
10722 MR. ZWIG: Yes. It is actually $2,000 in addition to the $400. I have to apologize for that. We were updating the application up to the last minute of the deadline and requesting certain papers be taken out and certain be put into the application. We frankly didn't quite get the paper all straight.
10723 The number is $2,000 in addition to the CAB guideline.
10724 COMMISSIONER McKENDRY: Thank you.
10725 As you know, the Commission may grant a licence for a term not exceeding seven years. Should the Commission approve your proposal and grant you a licence for a seven-year term, what would be your proposed CTD initiatives, direct and indirect, for the two additional years?
10726 MS LOVE: We would be continuing with the Canadian talent development contest that we have outlined here. I have had experience with these types of contests, and they do tend to gather momentum. That is how we experienced so much success with Country Roads. So we would be continuing on with that initiative.
10727 COMMISSIONER McKENDRY: In terms of the financial commitment, what would that amount to? Would it be the same annual amount that was in the first five years?
10728 MR. ZWIG: Yes. The minimum we are saying would be $2,400. And then what Wanda would be working on, and has done before, is with respect to that Rising Star initiative, there is a lot of leverage that comes out of that.
10729 It was again implicit, we felt, in what we were saying, that we were going to repeat a Country Roads type of endeavour which gets quite involved.
10730 In London, as it grew, it got to a point where it then was televised annually on the local television station. We didn't talk about that, and perhaps Wanda can give you some more details.
10731 But we want to walk before we run. So the first stage is to get it up and going.
10732 In addition, in the confidential numbers that we filed for CJOJ, the existing station, we have also indicated that, if licensed, we would raise our commitment from the $400 to $2,000.
10733 Just by way of context, that would mean that our group in total would be contributing $4,400, which is roughly triple what our competitor is required to do with their stations under the CAB plan.
10734 COMMISSIONER McKENDRY: Thanks. I have a final question for you that relates to the financial area.
10735 Your projections for combined operations indicate that you anticipate a small profit in year three and that profits would increase thereafter.
10736 Should, for whatever reason, your projections prove to be optimistic, do you have the financial resources to absorb any sustained losses beyond year three?
10737 MR. ZWIG: Yes, I do. Evidence of that has been filed in confidential papers with the Commission. I am committed to making that work.
10738 COMMISSIONER McKENDRY: Thank you very much.
10739 Thank you for answering my questions.
10740 Thank you, Madam Chair.
10741 THE CHAIRPERSON: Mr. Zwig, there has been an improvement between 1997-98 and 1998-99 numbers in radio generally.
10742 Was there such an improvement or any improvement in your PBIT experience between 1997-98 and 1998-99 now that you have numbers, final numbers?
10743 You don't have to give me anything exact, because we know that it was filed with the Commission in November, but I haven't seen those numbers yet.
10744 Has the situation for your station experienced the same improvement as many areas have experienced in Canada in radio results?
10745 MR. ZWIG: Well, not exactly. When I say not exactly I am not totally familiar with what's happening and neither is the rest of the country.
10746 THE CHAIRPERSON: Well, exactly, and we would have to assume that I've picked a market in particular -- generally, but basically, your station, did you do better in 1999 than you did in 1998, that's all I want to know?
10747 MR. ZWIG: Our revenues in 1999 from 1998 are up about 10, 12 per cent from 1998. They are still lower than they were in 1997, so there has been an incremental improvement.
10748 THE CHAIRPERSON: But there has been an improvement, and that also reflected itself in an increase in your PBIT for 1999?
10749 MR. ZWIG: Well -- or a decrease in the loss.
10750 THE CHAIRPERSON: Yes. So a better position?
10751 MR. ZWIG: It's better, as I say --
10752 THE CHAIRPERSON: You have already told us more than you have to. You have already put on the record you are still in a loss position.
10753 MR. ZWIG: But I think, just in the larger discussion here, we have done a lot of work in the last two years gathering some of the people who are with me at this table as part of this effort and in the current situation I frankly think either squeezed or expanded as much as I could in terms of finding solutions on my own, the station on its own in terms of correcting this. I think to go further and do a long-term sustainable situation we need to have something that corrects the structural imbalance here. Today we are saying it's a new station.
10754 THE CHAIRPERSON: Mr. Goldstein, is it your view, as I know you are very involved in this area, that we are correct in saying there has been an improvement in radio revenue and radio results in the last year or two?
10755 MR. GOLDSTEIN: Yes.
10756 THE CHAIRPERSON: And would it be your expert forecast that this is likely to continue for some time, at least for the short term?
10757 MR. GOLDSTEIN: It appears that radio revenue --
10758 THE CHAIRPERSON: Put your microphone on, please. Success is indicated by the red light.
10759 MR. GOLDSTEIN: Success.
10760 Radio has been growing very nicely and it appears to have grown in the 1999 fiscal year over 1998. I think there are reasonable opportunity for growth over the next -- in the short to medium term, yes.
10761 I wonder, without interrupting the flow of the question, I have the numbers that Commissioner McKendry asked about for the retail trade. Would you like them in the record?
10762 THE CHAIRPERSON: Yes, that would be helpful, especially since we have an intervenor then that intervenor would know what numbers you are putting forward.
10763 MR. GOLDSTEIN: Exactly.
10764 THE CHAIRPERSON: I suspect that those statistics are publicly available.
10765 MR. GOLDSTEIN: The statistics are publicly available, but not published. You have to go to ==
10766 THE CHAIRPERSON: But anyone can get them?
10767 MR. GOLDSTEIN: Anyone can get them from the small area retail, the SART database.
10768 THE CHAIRPERSON: I think it's fair to say they are publicly available.
10769 MR. GOLDSTEIN: Yes.
10770 THE CHAIRPERSON: And would you put them on the record so that the intervenor, who I suspect is in the room, will have them?
10771 MR. GOLDSTEIN: Yes.
10772 THE CHAIRPERSON: Or perhaps you could kindly show them, if there is nothing else on --
10773 MR. GOLDSTEIN: Well, there are some other notes.
10774 THE CHAIRPERSON: All right. So, if you, relatively slowly, put those statistics on the record then it will help the intervenor perhaps, not your client, but there it is.
10775 MR. GOLDSTEIN: Well, we have to be fair.
10776 This is based, as I say, on Statistics Canada's small area retail database which is based on a survey of the retail companies in the area. This is for 1996. For Kingston the total retail sales were $1,181,581,847. I will repeat that, $1,181,581,847.
10777 For Belleville and Trenton combined they were $1,172,632,841, and again that's $1,172,632,841. So you can see that the difference between the retail trade in Kingston and Belleville is about $9 million and they are both roughly $1.2 billion in retail trade.
10778 THE CHAIRPERSON: Thank you, Mr. Goldstein.
10779 MR. ZWIG: Commissioner, just to go back to your question that the radio market in the country seems to have improved, as I said, I am not familiar, specifically, with the other markets, but what I have noticed is that in the last couple of years with the change here at the Commission permitting multiple ownership, first LMAs, then multiple ownership and markets has permitted radio to strengthen itself and get more of the sales from other media. Frankly, it was seeing this in part which led us in casting about for solutions to our situation.
10780 We say maybe what we are seeing there could work for us as well.
10781 THE CHAIRPERSON: Thank you.
10783 MS CROWLEY: Just to clarify, could you please define again what you mean by your full coverage area?
10784 MR. PHILBIN: Full coverage area, which is as defined by what is known in the BBM book as cell 5140, it is Hastings County, Prince Edward County and East Northumberland.
10785 MS CROWLEY: Do you have any idea what percentage of your revenues and what percentage of your tuning for your existing FM station comes from the central market area, as opposed to the full coverage area?
10786 MR. PHILBIN: From a share perspective we are a nine share in central market, seven share full coverage; currently, CJOJ-FM. Yes, those are the share numbers.
10787 MS CROWLEY: How about your revenues?
10788 MR. ZWIG: Revenues -- it's harder to answer that because what is happening is advertisers are trying to get listeners who are in these different areas and it is, in our view, not so much relevant where the advertiser is as much as where the listener is. We have advertisers who are down in Picton or up in Sterling and I would say that just by coincidence the businesses who are out in these other nether regions are a significant part of our revenue.
10789 MS CROWLEY: One of your arguments today was to say that you need approval of this new station to correct an imbalance in the market. Could you comment on the fact whether if we approve this new station this would create, in fact, an imbalance in the market because now your group would have two FM stations versus Quinte who would have one FM and two AM stations?
10790 MR. ZWIG: Yes. We feel that licensing or approving this application would correct the imbalance. The key point here is our tool is one radio station. Their's are three stations and the cross-promotional abilities and the synergies of operating them in one building, as well as with the cable company.
10791 I guess the proof is in the numbers. They have 85 per cent, roughly, to our 15 per cent and with the help of Mr. Goldstein have scientifically built up, as he says, what we think are conservative numbers that would just slightly level that balance, I guess in the term levelling the playing field, where we would hope to get 30 per cent to their 70 per cent.
10792 We think that that's a sustainable situation for both of us then to go forward.
10793 MS CROWLEY: Do you think it's fair to compare an AM station and an FM station knowing that the trend in the current market is the decline in viewership from the AM?
10794 MR. PHILBIN: If I could answer that question. It is completely impossible to invent heritage. There is no radio station that can go on the air today and instantly format credibility, heritage and history. Quinte Broadcasting has entrenched, as it says in its intervention, generations of credibility in the market that will not disappear simply because we have licensed a country FM radio station.
10795 It is impossible for Sandi to read one news story and for them to read the exact same and be able to say, "Well, then, those are equal newscasts."
10796 When you are discussing news and heritage in a small market, it is impossible for us to instantly get the credibility they have been able to build up over time. So to say it's a question of AM and FM is more to say the history and heritage in the community versus the ability of a new broadcaster to compete.
10797 MR. ZWIG: Also, counsel, again it is not one AM and one FM standing out in a vacuum on its own. It is two business units and the ability to work with each other.
10798 I mean, the opportunity to offer a combined selling package is very powerful, because you say, look, here we have the opportunities to offer different demographics and we can also make those efficient. There is also the benefit of just the intelligence that goes back through a larger group, you know, such as we are talking about today.
10799 MS HIBBARD: I also think it is important to add that the financial numbers that you have in respect to CJTM, the Trenton station, do not take into account the fact that this year they have just moved their operation, the broadcasting portion of their operation, into the Belleville building, and they will realize savings there. It is important to keep that in mind.
10800 MS CROWLEY: Okay. I just want to clarify an answer you gave to one of my earlier questions.
10801 Could you give me the percentage of hours as opposed to the share coming from the central market area of your existing station?
10802 MR. PHILBIN: I believe in the -- would you like the fall '98 or spring '99?
10803 MS CROWLEY: Whatever you have.
10804 MR. PHILBIN: Okay. Whichever one paints a better picture.
10805 I believe we were roughly 275,000 last fall, of which 141 was full coverage. It would be fair to say half and half, 55/45. It's roughly half. I think we were 141 central, 277 full coverage; and in the spring we rose to 337,000 full coverage, 161 central market.
10806 MS CROWLEY: Thank you.
10807 THE CHAIRPERSON: Thank you, Mr. Zwig.
10808 I appreciate your answer, but I'm not sure Ms Hibbard does, that her newscast is not equal to her competitors.
10809 MS HIBBARD: I'm trying, Madam Chair.
--- Laughter / Rires
10810 THE CHAIRPERSON: Thank you very much.
10811 We will hear the intervenor immediately, then take a 10-minute break so you have a little bit of a lapse before replying.
10812 Correction. We will take a short break now.
--- Recess at 1211 / Suspension à 1211
--- Upon resuming at 1222 / Reprise à 1222
10813 THE CHAIRPERSON: Mr. Secretary.
10814 MR. CUSSONS: We received an intervention from the Belleville National Family Week Committee. Originally, they had asked to appear, but we were advised yesterday, unfortunately, they are unable to be with us, but we will keep their intervention on file and of course take it into consideration in the decision-making process.
10815 So, having mentioned that matter, I will introduce Quinte Broadcasting Company Ltd. and invite them to come forward and present their intervention, please.
10816 MR. MORTON: Thank you very much.
10817 THE CHAIRPERSON: You are welcome to come closer. It would be easier perhaps for the applicant.
10818 MR. MORTON: For the applicant. Okay.
10819 THE CHAIRPERSON: The idea is that we can see you.
10820 MR. MORTON: Sure.
10821 THE CHAIRPERSON: And you will see the screen more easily. I don't want to impose on you, but we don't make that much difference between applicants and intervenors.
10822 Go ahead.
INTERVENTION / INTERVENTION
10823 MR. MORTON: Thank you.
10824 Good morning, Madam Chair and Commissioners. I thank you for the opportunity to speak here today. I know it has been an extremely busy week for you.
10825 As mentioned, we are here today to intervene against the application by Mr. Zwig for an FM country station in Belleville. We believe the Belleville market cannot support the introduction of a fifth radio station at this time and have come to this conclusion for the following reasons.
10826 Number one, plant closures within the past six months have left more than 1,100 full-time employees jobless. This translates into more than $35 million in lost wages to the city annually.
10827 Number two, three of the four existing radio stations in the market are currently losing money and the aggregate profit before interest and taxes for radio in Belleville is negative.
10828 Number three, BBM figures indicate that 53 radio signals are heard in the Belleville central market and of these only 3 per cent of the total out-of-market hours tuned are to country radio stations.
10829 Number four, according to the applicant's own figures and without inflation factored in, radio advertising revenues for the market are less now than they were in 1996.
10830 Number five, Calgary and Edmonton are the only markets in Canada presently supporting two country stations. These are both major markets and we believe Belleville is far too small to support two country stations.
10831 Six, Statistics Canada population figures for Belleville indicate that growth is nil and the projected growth for the years 1996 to 2002 is only 73 people.
10832 Number seven, the existing AM country radio station presently plays 97 per cent new country music and the impact of duplicating this music on the FM dial in Belleville will be devastating on the existing AM country station.
10833 Number eight, in a recent decision in Kelowna, British Columbia, the CRTC denied two applications for reasons which presently exist in Belleville.
10834 Commissioners, my family has lived in the Belleville area for seven generations, and with my daughter now working part time at the radio stations we enter our fifth generation as broadcasters in the market and are the only broadcasters who actually live in the market.
10835 The Belleville economy is not presently experiencing growth, but instead the local economy is shrinking.
10836 Nortel stunned the community this past summer when they announced that they would be closing their manufacturing division in Belleville at the end of 1999. This closure affects 730 highly paid employees, translating into more than $35 million in lost wages to the community. The local economy will soon feel the effects of this closure.
10837 Nortel's closure is by far the most devastating economic news the city has ever experienced. In combination with the closure of Bata Shoes, Journey's End Motels, plus others, more than 1,100 full-time positions will be lost by year's end with no new industry to replace these positions.
10838 As with many other small communities, retail giants such as Wal-Mart have left our downtown core in disarray with a 30 per cent vacancy rate.
10839 Statistics Canada's most recent population change report for Belleville indicates that the central market population from 1991 to 1996 did not experience any growth.
10840 According to BBM, there are 53 radio signals available in the Belleville central market. Of these 53 signals, the total out-of-market tuning to country music represents only 3 per cent of the total weekly hours tuned.
10841 These reports clearly demonstrate that CJBQ's listeners do not drop away dramatically to FM country stations in Kingston, Peterborough or the U.S., as suggested by the applicant.
10842 BBM information clearly indicates that another country station in Belleville is not required at this time. It would not repatriate out-of-market listeners but instead would take a significant portion of its audience from the existing AM country station.
10843 The AM country station, by the way, broadcasts only 45 hockey games per year and not three per week.
10844 Let's take a look at radio in Belleville.
10845 Presently, three of the four existing radio stations in the Belleville market are losing money, and the aggregate profit before interest and taxes for the market is negative.
10846 When the applicant's existing radio station was introduced to the Belleville market, available advertising dollars really didn't increase but instead the pie was just split four ways. The introduction of a fifth radio station will, in our opinion, just split the existing pie five ways and result in all five radio stations losing money.
10847 The applicant's own figures indicate that estimated revenues for private radio in the Belleville market were greater in 1996 than in 1998. This certainly does not indicate growth in the market.
10848 Our FM station profits are presently subsidizing our AM stations and, as a whole, Quinte Broadcasting is losing money.
10849 Let's talk about country radio in Canada.
10850 Calgary and Edmonton are the only two markets in all of Canada presently supporting two country radio stations. Recent events in Toronto indicate that with more than 4 million people it could not support just one country station. How is a market 50 times smaller expected to support two? It is our opinion that it can't.
10851 A recent special issue of The Record stated that, based on research done by Soundscan, country music sales and country music hours tuned on radio have plummeted since the mid-nineties.
10852 An FM country station in Belleville will have a devastating impact on the existing AM radio station.
10853 For the record, Quinte Broadcasting wishes to comment on statements made in the applicant's brief, which we believe reflect negatively on our operation.
10854 The applicant suggests that Quinte Broadcasting did not support community causes prior to his arrival to the marketplace. We will let our record speak for itself:
10855 CJBQ, twice named by the CAB as radio station of the year for outstanding service to the community, both times prior to the applicant's arrival to the market.
10856 CJTN, named by the Central Canada Broadcasters Association as radio station of the year for outstanding service to the community, also prior to the applicant's arrival to the market.
10857 And CIGL-FM, named in 1998 by the Ontario Association of Broadcasters as radio station of the year for outstanding service to the community.
10858 We understand the Commission no longer utilizes the radio market criteria but does use it to evaluate the ability of a market to absorb an additional station.
10859 Number one, the economics of the Belleville market already indicate that it can't support the existing four radio stations, let alone a fifth. The aggregate profit before interest and taxes for the market is negative. The introduction of a fifth station would, in all likelihood, put all five stations in a losing position, leading to both a reduction in the quality of programming and service to the community.
10860 Two, diversity in the market will not be increased by the introduction of another country station and BBM figures clearly indicate that there is no demand for such a station at this time. Only 3 per cent of the total out-of-market tuning is to country radio, and the existing AM country station presently plays more than 97 per cent new country music.
10861 Duplicating this service will not maintain the strength of the broadcasting system in Belleville but may in fact weaken it. The approval of this application will not strengthen diversity in the market, will not improve the financial state of the existing players, does not promote a healthy radio environment and does not adequately promote Canadian talent.
10862 Three, the applicant's own figures indicate that there has been no growth in radio advertising revenues in the past three years. These figures lead us to believe that his projections for increases in the market's radio advertising revenues are unrealistic. We base this on historical trends for the market.
10863 Number four, in reviewing the annual returns, the Commission will clearly see the financial state of radio in Belleville is not healthy.
10864 Number five, the Commission itself suggests that over-licensing is bad for the system as a whole, and particularly problematic for local communities who see a direct impact through a decrease of service. We feel that five stations in this market constitutes over-licensing and would put all five stations at risk.
10865 Financial impact on the existing country station.
10866 The applicant suggests that the proposed station will gain 8 per cent of its revenues from Quinte Broadcasting's total revenues in year one.
10867 First of all, this would have a devastating effect on our company as a whole, but in particular on the AM country station. We also feel from past experience that the 8 per cent figure is low. When the applicant's existing station began operations in Belleville, our total revenues decreased by nearly 25 per cent by the end of year two.
10868 We believe that the proposed station could take as much as 50 per cent of its revenues from our AM country station. It would not be possible to absorb losses to this degree. This would lead to further layoffs and a reduced service to the community but, in all likelihood, would force the station to turn dark after more than 50 years of serving the community, leaving a large portion of our audience with nowhere to turn for the local programming they desire.
10869 CJBQ presently broadcasts 22 music hours per day. When OJ launched their AC format we were forced to change format to country and the AM station has yet to regain profitability.
10870 Canadian talent contribution.
10871 The applicant's proposed direct commitment to Canadian talent is $10,000 based on a five-year licence term. This falls very short, we believe, of achieving the mandate and the spirit of the Broadcasting Act, the CRTC and the industry as a whole.
10872 For the licence in Barrie, which is marginally larger than the Belleville market, ROCK 95 is proposing nearly $1 million, while the CHUM Group is proposing $600,000. These figures translate into amounts 60 to 100 times that being offered by the Belleville applicant.
10873 Considering the Applicant proposed nearly $320,000 when his existing licence in Belleville was granted, we feel his proposed commitment for this licence does not even come close to adequately promoting the development of Canadian talent.
10874 On October 28th of this year the Commission released its decision regarding the applications for the market of Kelowna. The Commission denied both the application for an FM country station and an application to convert an AM station to an FM country station.
10875 This decision was based on the following criteria:
10876 Number one: The aggregate profit before interest and taxes for the Kelowna market has been negative for three years.
10877 This is also the case in Belleville.
10878 Number two: Out-of-market tuning in the Kelowna central market is low and offers a new entrant little opportunity to repatriate tuning from out-of-market stations. The Commission stated that the significant portion of the audience of a new station in Kelowna would likely come from existing players.
10879 This is also the case in Belleville. With only 3 per cent of out-of-market tuning being to country stations, a new FM country station could only gain a significant portion of its audience from the existing AM country station.
10880 Three: The Commission states that many markets in Canada the size of Kelowna are served by fewer than five radio stations.
10881 The Belleville market is 35 per cent smaller than Kelowna and certainly cannot support a fifth station at this time.
10882 Number four: CKLV and CKLZ-FM stated that the Kelowna market is in a very serious financial plight and the introduction of another radio station is not in the public interest and will only exacerbate the already perilous losses taking place in the Kelowna radio market. Again, the situation in Kelowna is very similar to that taking place in Belleville and should be viewed in the similar light.
10883 In closing, as demonstrated, there are many reasons why the proposed station for Belleville, in our opinion, should not be licensed at this time.
10884 Number one: The local economy is shrinking.
10885 Two: Out-of-market tuning for country is only 3 per cent.
10886 Three: Diversity will not be provided.
10887 Four: Profit before interest and taxes for the market is negative.
10888 Five: Radio advertising revenues are not growing.
10889 Six: The population in Belleville is not growing.
10890 Seven: Only two markets in Canada are presently supporting two country stations and they are both major markets.
10891 Eight: The listening audience for country music has plummeted, according to research done by SoundScan.
10892 Number nine: The Applicant's commitment to Canadian talent is insignificant; and
10893 Number ten: We believe the licence should be denied based on the same conditions which exist in Kelowna.
10894 I conclude my presentation.
10895 THE CHAIRPERSON: Thank you.
10896 Commissioner Cram.
10897 COMMISSIONER CRAM: Thank you, Madam Chair.
10898 I did not hear your name, I'm sorry, and don't know it.
10899 MR. MORTON: I'm sorry, it's Bill Morton.
10900 COMMISSIONER CRAM: Mr. Morton.
10901 MR. MORTON: I'm the President -- yes.
10902 COMMISSIONER CRAM: Mr. Morton, I wanted to go to the first -- or one of the last things you said when you were talking about the demand of country music having plummeted.
10903 We heard evidence a couple of days ago that whilst it may have plummeted since the '90s it is still a heck of a lot higher than it ever was because there was such a high point in 1989.
10904 MR. MORTON: Right.
10905 COMMISSIONER CRAM: Would you agree with that?
10906 MR. MORTON: I certainly couldn't disagree with that. I know there is some concern within the country music industry and they are working very hard to try to regain shares that they have lost, from both the record purchasing standpoint and from radio tuning.
10907 COMMISSIONER CRAM: The other thing that was said a couple of days was even though demand may have gone down from the very, very high numbers of '89 there is a fragmentation and there are different subsets of country music now: hot, new, traditional.
10908 MR. MORTON: Sure.
10909 COMMISSIONER CRAM: Would you agree with that?
10910 MR. MORTON: Yes, I would agree with that.
10911 COMMISSIONER CRAM: Are you aware whether in Calgary and Edmonton, the two that are competing for country, are they the same subgenre, do you know, or the subgroup or different?
10912 MR. MORTON: I would say they are somewhat different.
10913 Actually, one of the stations in Calgary does play music that probably may not always be considered as country music, perhaps similar to the CISS-FM format in Toronto where there is some crossover, but there is more from the AC side to the country side. But predominantly the country music they are playing is new country on both those stations.
10914 COMMISSIONER CRAM: You are aware, of course, that Saskatoon used to have two country and they no longer do?
10915 MR. MORTON: Yes.
10916 COMMISSIONER CRAM: I understand the population of Belleville-Trenton to be 100,000. What is the extended BBM population?
10917 MR. MORTON: The extended, probably 170,000 to 180,000. You are talking the total trading market?
10918 COMMISSIONER CRAM: Yes.
10919 MR. MORTON: Yes.
10920 COMMISSIONER CRAM: Yes.
10921 Now, if I were to say, then -- did I hear you say that in 1994 when Mr. Zwig first came into the market that your station ending in BQ had to change its format to country?
10922 MR. MORTON: We changed it to country because Mr. Zwig was coming in with a format which was basically exactly the same as we were playing on the AM station at that time and we were aware that we would not be able to compete against a duplicated format on an FM dial.
10923 COMMISSIONER CRAM: Okay. So if we were to license Mr. Zwig with another station that appears to be doing or proposing to do the same programming at that AM station, what would you then do?
10924 MR. MORTON: Well, we would put up a fight obviously. We would try to compete with Mr. Zwig's new licence. I believe we would be unsuccessful at that so we would have to change format somehow, or to some format.
10925 We wouldn't go back to an AC format because we are already playing AC on two of our stations differing -- you know, one is a hot AC and one is a soft AC.
10926 Polka music would probably be out of the question. The market is too small to support all news. Right now I think we have a really nice fix -- a really nice mix with our full service, our country, our news. CJBQ is the number one AM radio station between Toronto and Montreal as far as hours tuned.
10927 So it would be a tough decision and I don't know at this point what we would switch to.
10928 COMMISSIONER CRAM: You heard the people with Mr. Zwig talk about the fact that they believed that the tuning really was to your news and sort of your more generalist approach. What do you say to that?
10929 MR. MORTON: I would disagree with that. We still have good audiences throughout the daytime. Eveningtime, which is really not a busy time for radio listening in most markets anyway, our evening time is low. We do get lots of comments about the country music. We do have a good rural audience which accounts for more than half of our full coverage.
10930 News is obviously important. We have listeners from our FM side to the -- if they want the more detailed news they will flip over to our AM station. But, you know, we don't carry a lot of news in the mid-afternoons and the audience is still quite good in those times. So I would suggest that a lot of our listeners do listen to the country music.
10931 COMMISSIONER CRAM: Did you carry through when you changed the format in '94 or so -- did you carry through the phone-in show from before --
10932 MR. MORTON: Yes.
10933 COMMISSIONER CRAM: -- and the hockey from before also?
10934 MR. MORTON: Yes.
10935 COMMISSIONER CRAM: And the news? So it was really just the --
10936 MR. MORTON: Just the music changed.
10937 COMMISSIONER CRAM: What are your projections for the radio revenue, say over the next three or four years?
10938 MR. MORTON: I will say that our FM revenues have increased this past year. The AM revenues have decreased.
10939 I have some concerns with the market, especially with the fact that we have had all these people lose their jobs and we are really not going to feel the effect of that for probably another nine months to a year when their severance pays are gone. That is a lot of money to take out of the local economy. Not only is that money missing, but a lot of these families will probably move to other areas and take other jobs.
10940 So I would like to say I'm optimistic, but I don't see any significant increases for the next three to four years.
10941 COMMISSIONER CRAM: So flat? Is that what you're saying?
10942 MR. MORTON: I would say flat.
10943 COMMISSIONER CRAM: Right now in the market you have three out of the four stations. What sort of an advantage does that provide you in the market?
10944 MR. MORTON: Well, for starters I would say more isn't always better. When you have three stations and two are losing money I don't know that that is necessarily an advantage.
10945 Our AM station in Trenton is 1,000 watt AM station, which is barely heard in the Belleville market. There is a 12 mile difference and it's tough to pick up. You can't really pick up the AM station from Trenton when you are in the east end of Belleville.
10946 Our expenses with the AM stations, especially CJBQ, are much higher than an FM station because of the news content. We cover a lot of community events, the talk features, which are all locally produced. I don't necessarily look at that as an advantage.
10947 COMMISSIONER CRAM: There is the ability to joint sell though.
10948 MR. MORTON: There is the ability to do that, although I can quite safely say there's not a lot of demand for a Trenton station in the Belleville market from a client standpoint.
10949 COMMISSIONER CRAM: You referred to the Trenton station. Did I hear that the management or the people moved into your --
10950 MR. MORTON: What happened, our lease was up in our Trenton space. We have been in the same space since the station started on the air in the late seventies. We at one point had 117 full time employees. That's down to seven now. We obviously didn't require the square footage that we had before.
10951 What we have done is we have moved the announcers for broadcasting from a studio in our Belleville location. We still have a functional studio in the Trenton facility. About an hour of broadcasting in the mornings, Monday to Friday, we use the Trenton facility. We have a young lady who co-hosts with the morning man.
10952 We also have a receptionist in Trenton. We have a manager still in place who is also sales manager for that station. We have another sales rep and we have an engineer. So all we have moved to Belleville are two announcers. The station still carries 24 hours of its own programming. There is no simulcasting with any of our other stations.
10953 It's really invisible to the listener, the fact that we have moved the location to Belleville.
10954 COMMISSIONER CRAM: It creates more synergies though, did it?
10955 MR. MORTON: Well, we still have the same number of staff as we did before. Really our only savings would be on the lease base and associated costs with that. In fact, we feel that we better are serving the Trenton community now because we do have more resources. Yes, there are some synergies that allow us to provide better service I think to Trenton.
10956 COMMISSIONER CRAM: You heard Mr. Zwig and his people say that they believe the total loss financially to you would be $212,000 in the first year and that's based on their analysis. Do you agree that that would be approximately the revenue loss? Does that fit with your --
10957 MR. MORTON: I would suggest that it would be higher than that just based on what happened when his existing station was licensed in the market. I truly do believe that he will take a large portion of the AM country station's revenues, up to 50 per cent of them. If that was the case, then that would certainly account for more than he is suggesting.
10958 COMMISSIONER CRAM: So you are saying up to 50 per cent of CJBQ's --
10959 MR. MORTON: Of CJBQ's revenues.
10960 COMMISSIONER CRAM: And what would that be in terms of the impact on the whole operations of --
10961 MR. MORTON: It would be very difficult. Obviously it has been difficult. Our company has not made a profit since Mr. Zwig's station was licensed in Belleville, his existing station. Things have progressed only because of the success of our FM station which again has been able to subsidize the AM stations. Although we are still losing money, the scenario is improving.
10962 Even if the amounts that Mr. Zwig is suggesting were taken from us, it would be very difficult to sustain.
10963 COMMISSIONER CRAM: What about if this did happen and it was licensed and things rolled out as you have projected? How would that affect sort of your community initiatives?
10964 MR. MORTON: It would affect them to some degree. If the impact is like I am suggesting, I really wouldn't have much choice but to make further cuts in staff. When that happens, obviously you don't have the number of people there and you don't get out to cover three community events on a Saturday where right now we might have two or three people at different events. It makes it difficult when those people aren't around. You can only make people work so many hours. It's a fear you have that the less you can do that.
10965 COMMISSIONER CRAM: Thank you, Mr. Morton.
10966 THE CHAIRPERSON: Mr. Morton, may I ask you the same question I asked the applicant. The 1999 numbers are in now. Has there been an improvement in either two or three of your stations in the results for 1999 compared to 1998?
10967 MR. MORTON: There has been an improvement in our FM station and both the AM stations are below previous year.
10968 THE CHAIRPERSON: Counsel.
10969 MS CROWLEY: Yes. I'm wondering if you could comment on the applicant's use of the full coverage area in its analysis as opposed to the central market area.
10970 MR. MORTON: I think it's unfair to use full coverage numbers because in the counties that they are discussing, Hastings County for example, that country runs north many, many miles. He could be using people, listeners, from 60 miles away.
10971 To suggest that they are living in the market and listening out of market, the fact is they are originating from out of market so you can't repatriate them. That's why I figure that the central market figures are really the only numbers that you can use. Did I explain that?
10972 MS CROWLEY: If you want to.
10973 MR. MORTON: No, did I explain that?
10974 MS CROWLEY: Yes. You did explain that, yes. That's correct. Thank you.
10975 THE CHAIRPERSON: Thank you, Mr. Morton.
10976 MR. MORTON: Thank you very much.
10977 THE CHAIRPERSON: We will now proceed to the reply. Would the applicant like us to take a break or are they ready to appear now?
10978 MR. CUSSONS: They have just advised me, Madam Chairperson, that they are ready now.
10979 THE CHAIRPERSON: So we shall hear them now.
10980 MR. CUSSONS: So we will now invite Mr. Zwig and his colleagues to respond to all interventions.
10981 Mr. Zwig.
10982 THE CHAIRPERSON: Welcome back, Mr. Zwig. Go ahead when you are ready.
REPLY / RÉPLIQUE
10983 MR. ZWIG: Thank you once again, Madam Chair and Members of the Commission.
10984 We are pleased to be back again before you to reply to the intervention. We have changed our seating arrangement, not to confuse you, but to put the people in the front row who will be doing the most speaking.
10985 MR. ZWIG: To my far right is Ken Goldstein who will speak to the economic issues. To my immediate right is Mark Philbin, the Program Director. To my left is Wanda Love, the General Manager of OJ955. In the back row, our News Director, Sandy Hibbard. I will now start the reply.
10986 First, I would like to thank the many intervenors that have supported our application. They range from country music fans and artists, the community service groups that have benefited from our support. In a community where the competition is such a large share of the market, it is courageous to make these interventions.
10987 Second, I would like to thank Mr. Rob Graham who intervened against our application, but because he likes the hockey games on CJBQ. Although this intervention opposes our application, it underscores our point that listeners like CJBQ for things other than country music. Whether CJBQ goes to another format or keeps the country format, I assume Mr. Graham will still have his hockey games.
10988 Quinte Broadcasting is now a fifth generation broadcasting family. It owns the cable company and at one time published the local newspaper.
10989 Ken Goldstein will now address the economic issues they raised.
10990 MR. GOLDSTEIN: Quinte Broadcasting makes claims about population growth which are not even supported by the material contained in their own intervention. They state that the population has declined. As a matter of fact, on the last page of their intervention you will find a sheet entitled "1996 Population Change Report". They want us to focus only on the population within a five-mile radius, which they say declined from 1991 to 1996.
10991 If we go out 25 miles, the population grew by 2.4 per cent. Unless it is the contention of Quinte Broadcasting that the signals of the radio stations in question will not travel farther than five miles, its claim of population decline in the market can charitably be called somewhat misleading.
10992 In fact, we have accessed the most recently available population data for the Belleville area from Statistics Canada. The data are for Hastings and Prince Edward counties, which are a reasonable proxy for the extended Belleville market, although the signals of the Belleville radio stations actually do cover a larger population.
10993 According to Statistics Canada, the combined population of the two counties in 1991 was 145,516 people. By 1996, it had grown to 149,040, which is an increase of 2.4 per cent over 1991. And by 1998, the population had grown further, to 150,227, which is an increase of 3.2 per cent over 1991. If fact, the population of Prince Edward County alone has grown by over 6 per cent since 1991.
10994 With respect to the local economy, employment in general and Nortel in particular, to focus only on that closing is to present a distorted picture of what is actually happening in the market.
10995 In fact, the economic development councils of the area are predicting ongoing employment growth. Wanda Love and her team surveyed the three major municipalities in the area: Belleville, Quinte West and Prince Edward County.
10997 MS LOVE: We spoke to Richard Shannon, CAO of Prince Edward County, Karen Poste, the Manager of Economic Development for the City of Belleville, and Chris King, Manager of Economic Development for Quinte West.
10998 We also consulted the Belleville Employment Outlook Survey, which was released in late November, and some other sources. They paint a much different economic outlook than does Quinte Broadcasting.
10999 Just some quick facts:
11000 One thousand new fulltime jobs are projected from among existing business and industrial employers in Belleville alone.
11001 Employment for Kingston/Quinte/Pembroke is up 10.9 per cent from August 1998 to August 1999.
11002 The Quinte and District Real Estate Board reports 1999 dollar volume year to date sales have increased by 13.8 per cent from 1998, and a significant number of new businesses have recently relocated in the area creating new employment.
11003 A list is included in the handout that we provided you. It is marked as Exhibit A.
11004 One anecdote often illustrates the trend better than any group of statistics. You might be interested in this piece of news from the London Free Press of September 1, 1999.
11005 The article reported on the plan of Bioniche Life Sciences to move to Belleville by June 2000. The article then quoted a company official who said:
11006 "Bioniche could open itself to a huge European market, equivalent to a quarter of the world market, by consolidating its operations in Belleville."
11007 The article went on to note that:
"...the company plans to transfer a production facility in Georgia to Belleville as a result of the move as well."
11008 There are a significant number of capital projects planned for our area as well.
11009 The Quinte Healthcare Corporation is spending $22.7 million on current projects, with all of the projects being completed by early 2001.
11010 Building permits for 1999 are soaring in Quinte West, as noted in Exhibit A.
11011 The picture of economic doom and gloom painted by Quinte Broadcasting in its intervention is simply not supported by reality.
11012 MR. GOLDSTEIN: Because Quinte Broadcasting owns three of the four stations in the Belleville market, it is not possible to get market data from Statistics Canada. But we can get aggregate data for Kingston and Belleville combined, and we can subtract the data for OJ-FM from those totals.
11013 On that basis, we would estimate that, without OJ-FM in the totals, the combined results of the three stations owned by Quinte Broadcasting were likely pretty close to a break-even position in 1998, and the consolidation of Trenton's operations into Belleville should have improved that in 1999.
11014 Thus, what Quinte Broadcasting is really telling the Commission is: "Don't let my competitor have another licence in Belleville because my competitor is losing money."
11015 Because of Quinte Broadcasting's overwhelming share of stations and advertising, we believe that arguments about the total market have little meaning in this case, particularly when the losses are located in the one station that is not part of Quinte Broadcasting's near-monopoly.
11016 What about the impact of OJ-FM on Quinte Broadcasting's Belleville stations?
11017 OJ-FM began broadcasting in 1994. We can find nothing in publicly available data to support Quinte Broadcasting's contention that its revenues declined by 25 per cent after that introduction. Only the two Quinte Broadcasting stations in Belleville are included in the Kingston/Belleville combined data: CJBQ-AM and CIGL-FM.
11018 Based on the publicly available data, we would estimate that the combined revenues of those two stations were higher in 1998 with CJOJ-FM in the market than they were in 1993 before OJ-FM began broadcasting.
11019 In fact, if we add the results of OJ-FM to the estimates for the two Quinte Broadcasting stations in Belleville, then the market total would appear to be more than 30 per cent larger in 1998 than it was in 1993.
11020 Given Quinte Broadcasting's multiple assets in the market, the good economy in general, and the radio market itself, we conclude that the market can absorb a new station without jeopardizing the ability of existing stations to meet their obligations.
11021 MR. PHILBIN: We are proposing an FM stereo, 24 hours a day country station, with feature programming that looks at the music and the lifestyle supplemented by news with a local focus.
11022 CJBQ is a full service station that happens to play some country music, as we pointed out in our opening remarks. Exhibit B, which you have already seen, shows clearly that once CJBQ finishes its morning and afternoon news packages, audiences disappear for the music.
11023 Exhibit C shows each quarter hour in the afternoon. This demonstrates clearly that even in periods where people usually tune in for music, on CJBQ they disappear as soon as the newscast is over.
11024 Exhibit D shows very clearly that the audience for the news quarter-hours is much higher than for the music quarter hours.
11025 Country music is incidental to what they do best: news and talk.
11026 In its written intervention, Quinte provided MicroBBM analysis that indicates that in central Belleville/Trenton they share only 5 per cent of their audience with country FM stations. However, when we ran the same analysis for the full coverage area, in fact fully 30 per cent of their audience is shared with FM country stations, as you can see in Exhibit E.
11027 The exhibit further shows that when their own station and OJ are included, they share half their audience with music stations. People tune to CJBQ for news, not music.
11028 MR. ZWIG: Belleville is not Kelowna. Quinte Broadcasting suggests that the Commission should use the precedent of Kelowna to deny our application. But an examination of the facts shows that there are few similarities.
11029 First, Exhibit F shows the share of revenues that goes to the players in each of the markets. In Kelowna, an analysis undertaken by Ken Goldstein shows that in 1998 the market was reasonably evenly divided with a 40:30:30 split of revenues. In Belleville the split is 84:16.
11030 Kelowna has three players to ensure diversity in news voices where Belleville has but two players: one who operates three radio stations and a cable company, while we have a stand-alone FM.
11031 Lastly, Kelowna has minimal out-of-market tuning as it is located in a valley surrounded by mountains. Central Market has less than 15 per cent. Belleville Central market has about 28 per cent, almost double Kelowna's out-of-market tuning, and our full coverage area has a staggering 43 per cent out-of-market tuning.
11032 Madam Chair and Members of the Commission, we believe that we have presented a compelling case to you today. In 1990, you licensed a new competitor to serve the Quinte area, stating "that the proposed service will also provide an alternative news voice in a market where a single owner currently operates all local stations".
11033 We have provided that alternative in competition to what was then a pure monopoly and is now a near monopoly.
11034 But for the real benefits of competition to be felt, there must be real competition. We submit to you that the public interest would be best served by providing us with an additional station. We believe it will bring the following benefits to the market and to the system:
11035 (1) a strengthening of the alternative news voice and diversity in the market;
11036 (2) the provision of a format that will repatriate Quinte listeners to local radio;
11037 (3) the exposure for Canadian artists in the best format possible; and
11038 (4) competition for audiences, advertisers and in community service that will make both players better.
11039 Thank you again.
11040 THE CHAIRPERSON: Thank you. We have no further questions, so that completes the hearing of your application.
11041 Mr. Secretary.
11042 MR. CUSSONS: Madam Chairperson, I would just like to mention that there were some applications considered at this hearing where the Commission determined that appearance was not necessary. Even though there is no oral presentation of these applications, they are nevertheless part of this public hearing and, as such, they will be considered by the Commission and a decision will be rendered at a later date.
11043 This completes all of the business on this hearing -- the last CRTC broadcasting hearing of the millennium, Madam Chairperson.
11044 THE CHAIRPERSON: Since this completes our hearing, I wish to thank, first, my colleagues for their hard work throughout the week; the staff for their support; and the court reporters and interpreters who had to put in very long days with us.
11045 We thank, also, all the participants and the intervenors for their co-operation and patience with our somewhat unorthodox schedule.
11046 We wish you all a Merry Christmas -- and don't expect a decision until the new millennium.
11047 Thank you.
--- Whereupon the hearing concluded at 1303 /
L'audience se termine à 1303