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:
Triumph Howard Johnson Triumph Howard Johnson
MacDonald-Cartier Salle de bal
2737 Keele Street 2737, rue Keele
Toronto, Ontario Toronto (Ontario)
January 31, 2000 Le 31 janvier 2000
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
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
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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 Commissioner/Conseillère
M. Wilson Commissioner/Conseillère
J. Pennefather Commissioner/Conseillère
A. Cardozo Commissioner/Conseiller
R. Williams Commissioner/Conseiller
C. Grauer Commissioner/Conseillère
A. Noël Commissioner/Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
P. Cussons Hearing Manager and Secretary / Gérant de l'audience et Secrétaire
D. Rhéaume Legal Counsel /
HELD AT: TENUE À:
Triumph Howard Johnson Triumph Howard Johnson
MacDonald-Cartier Salle de bal
2737 Keele Street 2737, rue Keele
Toronto, Ontario Toronto (Ontario)
January 31, 2000 Le 31 janvier 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
YTV CANADA 8
Questions by the Commission 24
Questions by Commission Counsel 83
CHWO ONTARIO INC. 88
Questions by the Commission 106
Questions by Commission Counsel 184
GARY FARMER 191
Questions by the Commission 204
Questions by Commission Counsel 322
Toronto, Ontario / Toronto (Ontario)
--- Upon commencing on Monday, January 31, 2000
at 0900 / L'audience débute le lundi
31 janvier 1999, à 0900
1 THE CHAIRPERSON: Order please. À l'ordre, s'il vous plaît.
2 Good morning, ladies and gentlemen, and welcome to this CRTC public hearing to consider competing applications for radio stations in Toronto.
3 Bonjour, mesdames et messieurs, et bienvenue à cette audience publique du CRTC sur l'étude de demandes concurrentes visant l'exploitation d'une entreprise de programmation de radio dans le marché Torontois.
4 I'm Andrée Wylie, Vice-Chair, Broadcasting, and I will be presiding over this hearing.
5 Joining me on the Panel are my colleagues and fellow Commissioners: on my right, Martha Wilson; on her right, Joan Pennefather; and on Joan's right, Andrew Cardozo; on my left, Ronald Williams; on his left, Cindy Grauer; and on her left Andrée Noël.
6 CRTC staff members assisting us at this hearing are: our Legal Counsel, Donald Rhéaume; Hearing Manager and Secretary, Peter Cussons; as well as Mike Amodeo, Andrew McRae; and, in the examination room, Diane Daley. Do not hesitate to contact them on any procedural issue.
7 Le personnel du Conseil qui nous secondera lors de cette audience sont le conseiller juridique, Donald Rhéaume; le gestionnaire de l'audience, Peter Cussons qui agira également à titre de secrétaire de l'audience; le gestionnaire de la salle d'examen est Diane Daley et nous avons aussi avec nous Mike Amodeo et Andrew McRae.
8 In 1998, an Order in Council directed the Commission to reserve frequencies 93.5 MHz on the FM band, 740 kHz on the AM band, or any other appropriate frequency on the FM band for the use of radio services in Toronto in keeping with the objectives set out in subparagraph 3(1)(d) of the Broadcasting Act.
9 Following a call for applications in accordance with this order, the CRTC is hearing this week 15 applicants for the use of 93.5, 106.3, 106.5 MHz on the FM band, and 740 kHz on the AM band filed by parties who already provide or are interested in providing radio services in Toronto.
10 The hearing follows the Commission's review of a number of its radio policies which it wished to complete prior to its consideration of applications for the provision of radio service in Toronto.
11 The applicants should clearly demonstrate to us the need for, as well as a market for, the proposed use of the frequencies concerned in accordance with the Commission's new commercial radio policy.
12 The Commission is particularly interested in the following issues: the contribution that the service will make towards achieving the objectives of the Broadcasting Act, as well as to the provision of service meaningful to the community concerned; the service's proposed listening audience; how the applicant intends to promote the development of Canadian talent, particularly local and regional talent; the soundness of the applicant's business plan, including market analysis and potential advertising revenue; and, the availability of financial resources to meet the requirements set out in the financial projections of the applicant's business plan.
13 This hearing will take place in five phases.
14 First, the Commission will hear the presentations of the applicants. Next, we will hear the applicants' intervention to each other proposals. In the third phase, we will hear interventions from the public. In a final phase, each applicant may respond to all comments and interventions filed or presented with respect to his application.
15 Finally, the Commission will hear the application from Dufferin Communications for CIDC-FM for authority to relocate its transmitter and to decrease its effective radiated power. We will also hear interventions to this application.
16 The applications filed are competitive on various grounds. Several are mutually exclusive on technical grounds. The Panel wishes to put applicants on notice that, in order to ensure fairness and an orderly proceeding, it will not generally be inclined to allow, at this late stage, changes or additions to applications that it may consider substantive.
17 Les demandes soumises se concurrencent à divers points de vue. Plusieurs s'excluent l'une l'autre au point de vue technique. Par souci d'impartialité, et pour assurer la bonne marche de l'audience, le comité d'audition désire informer les requérantes qu'à un stade aussi avancé, il ne sera pas enclin à autoriser une modification ou un ajout qu'il jugerait substantiel aux demandes qui sont devant lui.
18 The proceedings will be transcribed and filed on the public record. To ensure that the people responsible for recording the transcripts are able to provide an accurate record, I would ask that when you speak you press on the small button on the microphone in front of you to activate the microphone. In order not to create interference, we ask that when you are not speaking you please turn the microphone off. The red light indicates whether the microphone is on or off.
19 My second engineering comment is, please turn off your cell phones.
20 We will sit every day, Monday to Friday, from 9:00 a.m. to approximately 6:00 p.m., with a reasonable break for lunch. We hope to complete this hearing within two weeks. We intend to hear three applications per day.
21 Nous proposons d'entendre trois demandes par jour.
22 This should give you all some indication of when you will be heard.
23 Should there be a need to make changes to sitting hours to achieve our aim, I will keep you posted as to our schedule as the hearing progresses.
24 Nous siégerons tous les jours du lundi au vendredi de 9 heures à 18 heures environ, en prenant une pause raisonnable pour le déjeuner.
25 Nous espérons avoir terminé d'ici deux semaines, ce qui exigera, comme je l'ai déjà dit, que nous entendions trois demandes par jour. Si pour y parvenir nous devons apporter des modifications aux heures d'audience, je vous en informerai en temps et lieu.
26 I will now ask the Secretary, Peter Cussons, to provide any further detail with regard to procedures and to invite the first applicant.
27 Mr. Cussons.
28 MR. CUSSONS: Thank you, Madam Chairperson.
29 As you mention, the Commission does have a standard practice for dealing with competitive applications.
30 During the first phase, which we anticipate will take up most if not all of this week, we invite applicants to come forward and present their proposals. We allow 20 minutes for this exercise, including any audiovisual material. Questions by the CRTC panel normally follow.
31 Phase two consists of the applicants again coming forward, in the same order, to intervene to competing applications. Ten minutes maximum are allowed.
32 With phase three, we invite other parties who have specifically requested to appear to present their interventions on any or all of the competing applications. They are allowed no more than 10 minutes.
33 Phase four involves the competing applicants returning in reverse order to comment on or rebut any or all interventions. Again, they will have 10 minutes to make their remarks.
34 I should mention that there are several applications on this hearing where appearance was deemed to be unnecessary and decisions will also be rendered on them.
35 Now it is my pleasure to introduce the first application by YTV Canada Incorporated for a broadcasting licence to carry on an English language AM radio programming undertaking at Toronto. The new station would operate on frequency 740 kHz with a transmitter power of 50,000 watts.
36 The applicant is proposing a children's radio station that will provide a blend of music, entertainment and information.
37 YTV Canada Incorporated currently operates in a national English language children, youth and family-oriented specialty programming undertaking.
38 The Commission notes that this application is technically mutually exclusive with other applications scheduled at this hearing for the use of the 740 kHz frequency.
39 I now invite Mr. Cassaday to introduce his colleagues.
40 Mr. Cassaday.
PRESENTATION / PRÉSENTATION
41 MR. CASSADAY: Thank you, Mr. Secretary.
42 Good morning, Madam Chair and Commissioners. I'm John Cassaday, President and CEO of Chorus Entertainment.
43 Let me begin this morning by introducing our team. To my immediate left is Paul Robertson, President of YTV; to his left is Ted Kennedy, Director of Programming; on my right is Susan Mandryk, Vice President, Market Development; behind me, from left to right, are Kathleen McNair, Vice President, Regulatory Affairs; and to her right is Jamie Haggarty, Vice President of Finance, YTV.
44 This is a great day for Chorus. We are a brand new entertainment company and this is our first CRTC appearance. We have an application of which we are tremendously proud. With your approval, we will launch the only radio station in the country dedicated exclusively to children.
45 Our enthusiasm for this project stems from a strong belief in the importance of providing for children at a very impressionable stage in their development a station that speaks to them in their own language, to the things that they find relevant, interesting and fun, where the music contains none of the violent, sexual or antisocial messages that permeate much of today's popular music, where the hosts are characters and good role models, and where the children have a sense of place and have a common bond with kids from all backgrounds and cultures across the listening area.
46 There is a complete void in Canadian radio for a service of this kind, one that provides a safe haven for kids in the "anything goes" environment of today's adult-oriented entertainment world.
47 In children's programming, we have gained a comprehensive understanding of what is popular and appropriate for children. We know that we can take the ingredients that have made YTV so well received and apply them with equal success to the new radio service that we are proposing.
48 We were encouraged by the Order in Council directing the Commission to reserve the 740 for a radio service that contributes to the achievement of the objectives of the Canadian broadcasting policy. The specific section referred to in the call provides that the system should, through its programming, serve the needs and interests of Canadian men, women and children, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society, and the special place of aboriginal peoples within that society.
49 YTV Radio will fulfil such a mandate. It will be a station that is dedicated to the needs and aspirations of Canadian children. We will provide programming to an audience of almost half a million six to eleven year olds within the 740 full coverage area.
50 This audience is not simply underserved, it is a group that is not being served at all by any commercial radio station. YTV Radio will be very inclusive to serve this large and diverse audience. Our programming will reflect the circumstances and interests of all cultural groups comprised within the almost half million potential listeners.
51 Young children are very receptive to a variety of new influences. We believe that music, whether it is Caribbean or Celtic, Salsa or novelty, can be used as the common bond among a number of cultural groups. The station will broaden children's appreciation of a range of musical styles from Toronto's cultural mosaic. Interwoven within our musical offerings will be spoken word programming tailored to this age group and designed to be reflective of the diverse cultural fabric of Toronto.
52 In light of this, we believe that YTV Radio is one of the most inclusive applications before you and therefore one that will serve to fulfil the objectives of the Broadcasting Act.
53 I will now ask Paul Robertson to describe our proposed service.
54 MR. ROBERTSON: YTV Radio will give children a sense of ownership of a station dedicated to them. This will ensure that YTV Radio is reflective of the very diverse audience we will serve with broad appeal across social, ethnic and cultural lines. We will have our finger on the pulse of Toronto's very diverse population. The daily schedule will provide for a significant level of interaction with our young audience.
55 YTV Radio will work closely with kids both on and off the air. Children will keep us up to date by participating regularly with our on-air personalities through program features, our request line, quizzes, general dialogue, and focus groups.
56 The station will reach into the community through our remote radio roamers and our student radio reporters. YTV Radio will have a prominent place on YTV's Web site, which is the number one kids Web site in Canada. Children across Canada and from around the world who are on the net will be able to connect with the station.
57 At all times, the station will be a fun experience for kids with a fresh and quirky style that has made YTV so popular. YTV Radio will also create a new showcase for Canadian music and expose Canadian selections and artists to a new audience, the six to eleven year olds.
58 We will broadcast at least 100 hours of local programming each week. Since this is not a niche programming service, we have committed to a minimum Canadian content level of 35 per cent. As is the case with YTV, we see our commitment to Canadian content as a minimum requirement to be surpassed.
59 We will make maximum use of Canadian resources in the creation and presentation of our programming, which will be drawn from local, regional and national/international sources.
60 Additionally, YTV Radio has committed more than $1.6 million to community and talent development initiatives. All of our initiatives were designed to encourage interactivity with our audience and to create a diverse backdrop for our programming.
61 In addition to the annual Canadian talent development requirements, YTV Radio has proposed three innovative commitments. I will now ask Susan Mandryk to describe these initiatives.
62 MS MANDRYK: The engine that will play an important role in the design of this radio station, the savvy server initiative, was designed with this in mind. Currently, there is no equivalent to the broadcast code for advertising to children on the Internet and they can easily become victimized, a real concern for both parents and educators.
63 YTV Radio would work in co-operation with the Media Awareness Network, the Concerned Children's Advertisers and the GTA school board in the development of this Internet literacy program, and we have committed $700,000 over the course of this term of our licence.
64 In order to keep our finger on the pulse of the kids' community, YTV Radio would also commit $350,000 in honorariums to establish a YTV Radio reporters program with the elementary schools and the GTA. Each reporter would call in with news from his or her school to keep the station and the listeners current on events and issues throughout our coverage area. Our reporters will ensure that the station continually reflects the cultural diversity both in Toronto schools and the city itself.
65 Finally, YTV Radio will sponsor a number of annual children's festivals in Toronto that are developed to showcase Canadian talent and enhance the broadcasting environment. This initiative will provide a total of $364,000 to children's focused festivals such as Word on the Street or Sprocket's The Toronto Kids' Film Festival. These important events are chronically short of funding and YTV Radio welcomes the opportunity to provide support to these valuable initiatives.
66 MR. ROBERTSON: YTV Radio will introduce a new and inclusive radio voice into the Toronto market without having a negative impact on any existing station. YTV Radio will generate its audience from children who do not currently listen to radio or who have tuned to stations that are programming for a much older audience. BBM does not even measure the listening habits of anyone under the age of twelve Since this group is not measured, the attraction of six to eleven year olds to our station will have no financial impact on existing radio services.
67 Our revenue will flow from advertisers who do not currently use the medium of radio for market growth. The revenue reported, prepared by Echo Advertising, filed as part of our application, concludes that YTV Radio's share of tuning and revenues will have a negligible impact on existing stations.
68 The Angus Reid survey, also submitted with our application, demonstrates the need and desire for a radio station that presents programming designed for children. The results were absolute and overwhelming. 91 per cent of those surveyed think that a kids' station is a good idea, and 60 per cent think it is a great idea. The survey also reveals that 10 per cent of kids currently do not even listen to radio, and 22 per cent don't have a favourite station. YTV Radio will provide these children with a station they can call their own.
69 The introduction of YTV Radio as an AM service attractive to children will bring a new audience to this band, which should create positive attitudes towards AM. To ensure children adopt a station as their own, YTV Radio will be entertaining and informative. Our station will be known as much for what it is not as for what it is. We will not play popular songs that depict violence or contain explicitly sexual lyrics. Many of the songs that are played on top 40 stations would not be appropriate for YTV Radio.
70 Children and their parents will know what to expect when they tune to 740, a unique station with a playful and inviting approach, that will also create opportunities for the family to share a laugh and discuss issues of concern.
71 I will now ask Ted Kennedy to describe a typical program day for YTV Radio.
72 MR. KENNEDY: Today, YTV Radio is creating a new format in Canada. It is a unique concept: radio for kids.
73 Morning shows on most radio stations follow a set standard: a wacky morning team, two men, one woman; risqué humour aimed at teenagers and young adults; phone contests; news and sports every half hour; traffic reports every ten minutes; time and temperature every time the microphone is open.
74 Mornings on YTV Radio will have few of these elements because the kids' world is focused in different directions from adults. Hosts will use character voices. Standard newscasts will not exist. Rather, information will be spread in easily digestible pieces throughout the hour: places and times for this weekend's comic book convention, for example; the time and place of the skateboarding competition; or how Ty is planning to replace the beanie babies. Coverage of the Stanley Cup may be an interview with the Zambonie operator. The weather will be supplemented by directly relating just how cold that temperature really is and what you should be wearing to be comfortable.
75 On the phone lines, an elementary school boy from Downsview is telling his joke of the day, a Rexdale girl wins a trip to Wonderland by knowing the number of bumps on a Delicious apple, or Winkie and Hank explain the similarities between today's federal election and playing the board game Risk.
76 During the late mornings and early afternoons, YTV Radio may repeat some of the morning show segments for kids that may be at home. A half hour interactive feature will be used in schools to instruct kids on how to research information for their science projects on the Web. Hit music will be interspersed with reports from the Toronto Kids' Film Festival, or Terrabana, and the noon hour features the top 12 e-mail requests of the day from across Canada.
77 After school, the YTV Radio student reporters give the results of the question of the day, finding that 73 per cent of kids figure that 9:00 p.m. is the proper bedtime for an eight-year old, or that the afternoon host talks to Britney Spears on the phone about her upcoming concert at the Air Canada Centre.
78 The replay of the countdown show hit list follows at 7:00 p.m., followed by an interview with J.K. Rowling, who discusses her upcoming Harry Potter novel and gives a short reading from the book. Slug and Gobble have to be rescued after making a mistake repairing the static generator at the science centre setting off every fire sprinkler and nearly drowning. The song parity of the day reworks Mambo No. 5 into your local burger joint's Combo No. 5.
79 MR. ROBERTSON: YTV Radio will engage and stimulate children's imaginations by speaking to them in their language. We will tell kids to keep it weird, using the YTV definition, meaning: unexpected, cool, delightful and playful. Parents will know that YTV Radio is a place where their children can safely experience and enjoy the music, humour and opinions of other kids their age. It will be a welcomed alternative to radio stations designed for an older audience.
80 MS MANDRYK: YTV Radio will be much more than just an entertainment outlet. We will develop initiatives with school boards to create programming that is informative and educational, but presented in an entertaining style. We know from experience that anything with a serious message presented to six to eleven year olds must be done in a humorous or quirky manner.
81 We have had very positive discussions with the Toronto School Board regarding the development of programming by YTV Radio to complement the existing curriculum. Because there is now a consistent course curriculum across area schools, we will work with the board to identify areas where additional resources can be effectively utilized by the teaching community. We intend to feature afternoon programming that will enhance existing in-class curriculum including: background programming on special celebrations and current events such as Chinese New Year or celebrating the creation of Nunavut; historical programming such as War of the World or Famous Political Addresses; and, also readings and storytelling using Canadian and international writers.
82 MR. ROBERTSON: To ensure that we were on the right track, YTV created a demonstration Web site for YTV Radio to test our programming ideas from the children and the current feedback from the children on the proposed radio service. The demonstration featured a sample morning show, contained a listener buzzback line, tested a number of musical clips, and encouraged children to provide their opinions on the proposed station. We believe the Web demonstration captures the quirky spirit of YTV Radio.
83 Let's show you what the kids experienced on-line.
--- Off microphone / Sans microphone
84 MR. ROBERTSON: ...for a four-week period to go to this radio demonstration.
--- Video presentation / Présentation vidéo
85 MR. ROBERTSON: Kids could provide their feedback up here. Clearly, I loved it so I'm going to say something. I guess I'm biased. Here is how the songs might be presented.
--- Video presentation / Présentation vidéo
86 MR. ROBERTSON: Interaction with the kids on air is a really critical part of what we plan to do.
--- Video presentation / Présentation vidéo
87 MR. ROBERTSON: Then, when the demonstration was finished, you completed this little survey. I guess 15 or more is the category that...
--- Off microphone / Sans microphone
88 MR. ROBERTSON: ... loved it, a chance to submit a written comment, which I will spare you at this time.
89 We were delighted with the response we received. More than 4,000 children participated, and 80 per cent said they would listen to a YTV Radio service.
90 We are very excited about the opportunity to create a Toronto radio service dedicated to children. Our application responds to the call and will contribute to the achievement of the objectives of the Canadian broadcast policy.
91 YTV Radio will increase diversity in Toronto without negatively impacting any other station in the market. It will provide at a minimum 100 hours of local programming each week. Here, with an inclusive outlook, YTV Radio will reflect the multicultural nature of Toronto society to area children.
92 We will contribute more than $1.6 million to community and talent initiatives and YTV Radio will bring six to eleven year olds to a new AM station dedicated to entertaining, enlightening and informing this completely underserved group.
93 This concludes our presentation. We would be pleased to answer your questions.
94 THE CHAIRPERSON: Thank you.
95 Good morning, Mr. Cassaday, ladies and gentlemen. Welcome to our hearing.
96 I have some questions for you which will focus, in general, on demand for the service, revenues, programming and a few technical questions. Of course, as we stated earlier, demand in a competitive hearing, such as this one, is of some importance.
97 The Angus Reid study that you filed with your application reveals at page 5 that six to eleven year old children listen to approximately 8.5 hours weekly of radio, compared to teenagers, 13.2 hours weekly, and adults, 22.7 hours weekly, yet you estimate an audience share of 7.5 tuning in year one from the six to elevens, and growing to 15 in year two.
98 Are your audience assumptions based on the proposition that children six to eleven don't listen to radio because there is no station available that appeals to them?
99 MR. ROBERTSON: I will start by answering the question and perhaps Susan Mandryk would add to it.
100 We believe that there is a fair bit of tuning by six to elevens, but that there would be a lot more if the radio station was specifically tuned into their needs. So what we did was we looked at the amount of radio that teens consume and felt that with the appropriate programming and the focus and the interactivity that we are going to bring to YTV Radio, we could encourage the six to eleven group to be radio tuners, much along the lines of the teens, and that is where our audience estimates were derived from.
101 MS MANDRYK: We also took a look at several of the models around the world of children's radio and investigated how the response to that was. What we found was that in many cases the listening behaviour of children was substantially altered over time, to the point where the models were very successful and were rolling out in many new markets. So our assumption is that the same model would apply here.
102 THE CHAIRPERSON: You acknowledge yourself, in response to a deficiency question -- I think it was in response to question 2 -- that that demographic has now an overdeveloped visual orientation and that you hope to move away from that orientation. In fact, a BBM fall survey shows that 78.1 per cent of all children, seven to eleven, tune to TV at least once a week, between 4:00 and 7:00 to the visual medium, and 94.4 per cent of the seven to elevens in the same survey tune to a TV service at least once a week.
103 How difficult may it be to achieve your estimated audience share? Because I note that in your audience projections, which are attached to your Schedule 18, you show that the 3:00 to 7:00 time frame is going to be a high period of tuning to the radio station. How do you combine that with the known visual orientation of children and the BBM showing that they watch TV when they come home after school?
104 MR. ROBERTSON: Thank you, Commissioner Wylie.
105 There is no question that the children are attracted to television as a primary way they get their entertainment, and, as you say, particularly in the after school period. We believe that children are not listening to radio in a large measure due to default and that a service that was dedicated to them, with programming focused on their needs, again would encourage their tuning.
106 With respect to the times that children might tune into such a radio station, we think that the radio station would have a similar development as most radio stations: when the children are being driven to school in the morning, at the end of the day. Also, though, we believe that there is a great opportunity for around bedtime for storytelling, and even at noontimes for those kids that are able to come home. So, with respect to the after school period, in particular, we think that television will continue to be the strongest draw for these children, but that we can encourage some strong tuning with children, also by promoting the YTV Radio station through YTV.
107 Perhaps Susan would like to add to this answer.
108 MS MANDRYK: I think, just following up from Paul's point on bedtime storytelling, that is a huge opportunity for us to increase tuning time. We know that, for example, most teens listen predominantly in the early evening hours just before they go to bed, so we know that that is not at all listened to right now by children of this age group. It is our anticipation that we will be opening up a whole new time during the day when they would be listening to radio in addition to the after school period.
109 THE CHAIRPERSON: It is somewhat difficult, I would imagine, to completely isolate the six to elevens from the twelve to thirteens, and with regard to demand we find that, when you look at the BBMs, the share of tuning to AM by the twelve to seventeen group, which is the demographic that BBM does measure, has decreased from a 7.9 share in 1992 to a .9 share in 1998, while FM tuning for that group has increased from 3.8 per cent in 1992 to 5.6 per cent in 1998.
110 Are you not worried that children are already used to an FM quality sound and will find AM deficient? I know that you propose that children are not that discriminating and that AM, even though there will be a substantial component of music, will not be a problem. Is it not a problem that children are used to the FM quality sound when they listen to the stations that are already existing or that are listened to by their teenage sisters and brothers or their parents, and also from the other sound equipment that they may be using, and AM will be found deficient for them as well and not appealing?
111 MR. ROBERTSON: I would be pleased to answer that.
112 First of all, we are focused very specifically on the six to eleven-year-old group, and through our experience at YTV we have been pretty effective at being able to isolate these different target groups. Really there is, as you are well aware of, substantial differences in terms of their interests and their attitudes and what kind of material they find enjoyable. In our demonstration you heard about Winkie and Hank. Clearly, that is kids stuff. That would probably turn the teens off more than turn them on. So we do think that we can isolate this six to eleven-year-old group effectively.
113 With respect to their enthusiasm about AM radio versus other sources, their primary use of radio is often through a walkman, which will have varying degrees of sound quality associated with it. But, through our experiences, children six to eleven react much more to the programming and the way in which it is presented than the actual quality of the broadcast itself. So what we like about this service is not so much that we really think the kids will be attracted to it, but also we think we can change some attitudes about AM radio, that if the kids get an opportunity to see something exciting and cool that is on AM, perhaps that will open up new possibilities for the AM band down the road.
114 THE CHAIRPERSON: You mentioned, Mr. Robertson, that you were able to isolate the six to eleven group from the top seventeen, but presumably there are six to elevens who now listen to the same stations as the twelve plus, since there is some listening to radio. I understand that presumably you would repatriate them, or some of them, to YTV if you had a children-oriented station and that you would get listeners who don't listen now. But the fact of the matter is, children that age do register, according to the Angus Reid study, as listening to some stations at the moment.
115 MR. ROBERTSON: There is no question that there is listening, among the six to elevens, of radio stations that are designed for older kids. That is our concern and that is where we think that a children's radio station is most appropriate, because when they listen to these stations some of the music and material is fine, but other parts of the music deal with themes that make it very difficult for the kids to understand, or have them ask their parents questions which their parents don't really want to deal with at this stage of their development. So it is this kind of tuning and the unease that parents have about what their children are hearing that we want to address so that the parents can feel totally comfortable with what the children are listening to, and we can be age appropriate with all the programming material and song selection.
116 MR. CASSADAY: Paul, if I could just add.
117 Paul has talked about why it is a concern that kids six to eleven might be listening to older targeted radio stations. The other side of it is: When is the last time any of you ever heard a child six to eleven's voice on any of these other radio stations? Quite frankly, no radio operator wants a seven year old on his station listening to him make a request because it sends a message that that station is not the coolest station in town.
118 So this is another opportunity to be inclusive and to provide, as we said, not only a safe haven but a home for these kids to express their interests in music and their interests in general.
119 THE CHAIRPERSON: When examining demands for the proposal that you have before us, I looked at the Angus Reid report at page 6, which indicates with bars the radio listening the six to elevens do and how it is broken down. It shows that 73 per cent is done in the morning in the car, 63 per cent in the morning at home, 72 per cent in the afternoon at home or at a friend's house, 66 per cent in the afternoon in the car, and 74 per cent in the evening.
120 I assume that when they are listening to the radio in the car, morning or afternoon, or even at home, that they are listening probably to their parents' choice of radio stations, where the eight year old may not be too concerned about whether he or she needs mittens but the mother is, and is listening to weather reports and things that are of no interest to children, and maybe the driver of the car wants to know if there is a traffic jam somewhere or may just be simply trying to pick up the news in the morning.
121 I imagine a kitchen set up with everybody having breakfast and the children running around and trying to find their boots. I can't imagine the radio station being tuned to what you have described as a quirky, weird, frantic radio station intended for six to eleven year olds.
122 Is it your assumption that the parents will actually give up their radio station during drive times, and in the home when the household is getting organized, to ensure that the children have access to YTV?
123 MR. CASSADAY: That is a very good question.
124 What we have found, working with children for many years, is that they always tend to get their way. This is also the same thing we have found at home. The influence that children exert on the decisions that their parents make is, at times, extraordinary, and we believe that children will come to desire this radio station and they will ask their parents to tune it in, and when they do that, the parents will feel good about this decision because they know that everything that will be broadcast on this radio station will be appropriate for their children.
125 I think in the morning and in those afternoon drive periods, sometimes it is not just the parents' station that is being tuned to, it might be an older brother or an older sister, or perhaps the child just enjoys tuning to a particular station by default because there is nothing available that is exactly right for them.
126 So we do believe that children will exert an influence on the station selection and that indeed there will be a strong tuning to the service.
127 THE CHAIRPERSON: In your application, the Disney Experience, and the possibility that that network would expand because it was very successful -- have you checked their Web site lately and are you aware of how many stations they still have in the market and what their success is? Our last check was during the night.
128 MR. ROBERTSON: Then you are going to be very up to date.
129 Our most recent information suggests that they are now serving 60 markets and that they also have representation in all of the top 20 large markets in the U.S. So this is a service that has come from one station in 1996 to now covering the majority of the United States today.
130 Certainly, they have been encouraged by the type of response that they have had from the children and that has led them to increase the geographic distribution of the service, so we really felt that that was a very positive indicator that a service directed to children could be successful.
131 THE CHAIRPERSON: I stand to be corrected, and you will be back at the reply stage to correct me if I'm wrong, but our latest check indicates that they are still at 44 stations and that there has not been an expansion, but maybe their Web site isn't up to date.
132 In any event, there will come a correction if that expansion has occurred when you come back at the reply stage.
133 I think it is fair to assume that children who now listen to radio probably listen to stations that are popular with teens. Would that be fair?
134 MR. ROBERTSON: Yes. Primarily, they would listen to radio stations with teen popularity, but we think that that listenership is really quite scattered.
135 Now, we do not have comprehensive tuning data for children two to eleven because BBM doesn't measure it, so anything in this area we would be making assumptions.
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136 MR. CASSADAY: ...Paul, would it be safe to say that it probably patterns the age or the demographics in the household?
137 If there are teens in the household -- not every six to eleven year old has an older brother or sister -- then chances are good that they would be exposed to the music that they listen to. But in the event that the eight year old is the oldest in the family, they are possibly listening to a station that their parents listen to. But, clearly, there is nothing specifically targeted at them at this point in time.
138 THE CHAIRPERSON: My experience is that cool children of that age want to listen to what the teens, slightly older than they are, listen to if they have -- assuming no other choice more suitable to them. In fact, I think it would be fair to look at, in Toronto, the 1999 fall BBM survey, which indicates that the highest tuning in the twelve to seventeen age groups are CISS-FM, CING-FM, CIDC-FM, and CFNY-FM. I think a correlation of sorts can be made between what is appealing to an eleven year old is likely to be what is appealing to a twelve year old.
139 It is not scientific, but would that be fair? I don't have ten year old children, but I have ten year old grandchildren, two of them, a boy and a girl. How about that?
140 MR. ROBERTSON: Well, we certainly do realize that children tend to aspire up in terms of the way in which they consider their entertainment.
141 The YTV experience has been that we can capture the imaginations of the six to eleven group. That would be our primary target. YTV serves the ages two through to seventeen, but much of the programming that we develop focuses particularly on the six to elevens, and those six to elevens think it is pretty cool to be part of YTV, despite the fact that it is a station that is developed just for them.
142 So we think that children, when a station is developed with them in mind, will be attracted to it, much like children have been attracted to YTV.
143 Perhaps, though, Ted Kennedy could give you a little more of a feel of some of the programming elements and how they will capture the kids' imagination of six to eleven.
144 MR. KENNEDY: There is obviously a transition phase between the ages of six and eleven. An six year old is transitioning from the Raffi and Barney stage into something that is a little bit more evolved. At the other end of the spectrum, the eleven or twelve year old does aspire to perhaps some of the traditional top 40 styles of music. But there are two points that I would like to make there.
145 One is that what they are hearing on the traditional top 40 stations. They are definitely skewing towards a certain style of music, like the Backstreet Boys or Britney Spears, a much younger style, and there is a lot of other content on those stations that we feel is inappropriate and many parents feel it is inappropriate for children of that age to be listening to.
146 The majority of the children in the six to eleven year old age group, I don't think they are aspiring to be older teenagers at that particular point. Maybe once they reach the upper end of that demo that starts to creep into it, but, certainly, six, eight, ten year olds are looking for something that they particularly like.
147 What you won't be hearing on YTV Radio are things that are inappropriate for kids of that age, like the Foo Fighters, the Counting Crows and Filter, which are rock acts targeting older teenagers, or the more sophisticated adult acts that you hear on some of the adult or hit radio stations like Whitney Houston, Mariah Carrey, Celine Dion.
148 Certainly, the most important part of this element is a lot of the explicit sexual or violent lyrics that are a part of contemporary hit radio that won't be a part of YTV Radio -- and we can come up with a number of examples there -- that just are inappropriate for that age group.
149 So it is really important to us to be able to program music and spoken content that communicates to these children, and develop a safe haven where we don't have to have these concerns.
150 THE CHAIRPERSON: I can understand with the spoken word content, but with the music, you keep referring to what is not appropriate, what parents don't want, a safe haven. Demand requires that to successfully show demand you have to also show that you will be successful in appealing to the demographic, and children don't come at it from what is appropriate or not appropriate. They come at it from do they like to listen to what they are listening to. Some of the time they may not even know what is inappropriate, they may not even know what it says, but that is the sound they like, et cetera.
151 It is not just a question of having -- you know, there is obviously value in an appropriate station from the parents' perspective, but it won't make the child listen. The child may turn it off, do something else, watch TV, go out, or whatever. It has to be appealing.
152 I would like to hear how different your music would be, apart from appropriateness but at the level of appeal, for those eleven and ten year olds who may be listeners to the four stations I mentioned who register a high tuning by twelve to seventeens. What will be different in the music and how will it be appealing, not to the parents but to the demographic that you are targeting?
153 MR. KENNEDY: Our reaction, and it was confirmed by the results on the Web site, the kind of music that these kids are choosing to listen to are things that are normally considered viable for the safe haven. They are the younger acts, Britney Spears, N'Sync, the Backstreet Boys. They are not listening to the Ambers or the Monicas, or the Next, who are dealing with the sexually explicit lyrics.
154 These types of songs are testing well with older teenagers or young adults that are listening to contemporary hit radio. They don't much appeal to the kids, so if we eliminate them from the mix, we are not adjusting our appeal downwards. It's not affecting the appeal.
155 There may be the very rare occasion, but I can't think of one right off the top of my head that is existing in the charts this week, of an inappropriate lyrics song that would appeal to a six to eleven year old, but we are concerned about the exposure while they are waiting for the Backstreet Boys or Britney Spears to appear that they are going to be exposed to this other kind of music which is not appropriate.
156 THE CHAIRPERSON: We are still using the word "appropriate" to a large extent. I'm trying to look at appeal. We want to be comforted, when there are a number of parties competing for the frequency you propose, that indeed you will have something that is indeed appealing to the six to eleven year olds because of the high component of music and the possibility that the spoken word programming maybe at times will -- you know, not every parent is generous enough during drive time to turn to a weird, frantic station instead of finding out what the news is while the children are waking up in the back seat.
157 All that combined, what is the music component going to be that is different? Are you going to scan The Barenaked Ladies, which children do listen to, and find numbers that are appropriate but are still a music style that is appealing to the six to elevens?
158 MR. ROBERTSON: Let me start, if I may, and first of all say that you are asking a question concerning, you know, will this service be appealing to children six to eleven years old and what will the music component be that is unique that will be appealing to them.
159 We have a long-running show, I think it is our longest running series show, on YTV called YTV Hit List. YTV Hit List takes the music that the kids enjoy. It excludes some of the songs that we don't think are appropriate and maintains a strong core of music that they particularly want to hear.
160 THE CHAIRPERSON: This is on TV?
161 MR. ROBERTSON: And this is on TV.
162 We were very encouraged that YTV's Hit List is the most popular countdown show on the air of any show. So we know from our experience that we can get strong, strong tuning to this type of song mix by the six to eleven year olds.
163 Also, I would just add that the Disney Experience, and the difference between the 60 and the 42, may indeed be projections versus actual to date or markets versus stations we can clarify, but the important thing about the Disney Experience is that they started with one station and now they are up over 40, which means that they are finding their audience. They realize that they can program to this six to eleven year old group and they will find it.
164 I would just like to add one more thought in response to your comment about being a sort of frenetic service -- I believe those are the words you used -- and whether the parents --
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165 THE CHAIRPERSON: ... frantic, quirky, weird. Those are your words. I can tell you exactly where they are.
166 MR. ROBERTSON: Absolutely.
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167 MR. ROBERTSON: Well, we make no apology for that. This is what the kids are looking for.
168 You know, what we found on YTV is that there is as much adults viewing with their children as there are children viewing by themselves. We intend to take the same format, the same feeling and environment and extend it into radio, and if parents are pleased to listen and watch with their kids on television, we believe the same thing is true for radio.
169 MS MANDRYK: I would just add the fact that we have received, over the course of the four weeks that the YTV Radio demo was on -- we purposefully put in a number of different genres of music and orientations towards music to give us a sense for whether or not the kids would be accepting of the broad base that we wanted to present to them, which was very different from what they were hearing on conventional radio. The feedback that we got week over week over week was that they either -- you know, 80 per cent of the kids either loved or liked the selection of music that we were presenting to them.
170 So that gave us some encouragement that in fact they are much more open to a broader base of music styles than what they are currently hearing on the radio.
171 THE CHAIRPERSON: Now, obviously, the question about whether the six to eleven target will be the target that will make this proposal viable leads us to wonder how easy it would be to move closer to the twelve to seventeen group, which has a higher listening and has, in Toronto, some popular stations for that group.
172 Do you know -- I should know this but I don't -- are the six to elevens measured in the -- listening measured in the United States? It is not measured either?
173 MS MANDRYK: No, it's not. No.
174 THE CHAIRPERSON: So the experience with Disney would be based on expansion?
175 MS MANDRYK: Well, Disney, in fact, commissions their own research in the U.S. to ensure that they get a good handle on what is going on, but it is not traditionally measured.
176 THE CHAIRPERSON: In your application at 10.4, you indicate that your primary target group is the six to elevens, and the surveys have been based on that, and that is what we have been talking about this morning. You nevertheless estimate in Schedule 18 that you will get from the twelve plus a .8 share in year one and 1.1 in year two.
177 I'm looking at Schedule 18, under "Audience Projections", which would be I think the fourth page in of Schedule 18. You have here your audience projections for the six to elevens and then the twelve plus. You did not measure the twelve to seventeens or project the twelve to seventeens?
178 My question is, if I were to take not all persons twelve plus, which is what you did here -- you did six to elevens and then jumped to all persons twelve plus and year two had a 1.1 share -- if instead of all persons twelve plus you had twelve to seventeens, what projections would you have had instead for audiences? Do you follow me?
179 MR. ROBERTSON: Yes. You are asking the question: If all of the twelve plus were indeed twelve to seventeens, what would --
180 THE CHAIRPERSON: No. Why you didn't project the twelve to seventeens and instead jump from six to eleven to twelve plus?
181 Because once you get to nineteen you are not going to have, I suppose, any listeners, if you are successful in having a proposal that is indeed well suited to the six to elevens. But that would not necessarily be true of the twelve, thirteen year olds who may be less mature, who may be more like eleven year olds.
182 It is obvious that the question that will come now is: What would prevent you on AM to pitch to the twelve to seventeens if the six to elevens doesn't work?
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183 THE CHAIRPERSON: ...from skewing the service to an older demographic and, therefore, in a competitive situation, having obtained a licence on the basis of a proposal that may or may not be viable as put forward?
184 MR. ROBERTSON: Yes.
185 Certainly, we have focused our efforts on the six to eleven group, but we also thought that the six to eleven year old group would be -- that their parents would listen to the service with them.
186 Picture a family trip with young children, picture the drive time to school, back home from school. What we hoped is that the children would ask to tune to YTV Radio and their parents would listen with them. So when we devised our target group, our particular audience focus, we really did say six to eleven is what we are aiming at. That is going to be the demographics that we will really keep an eye on. That will be the demographic that will work with our advertisers and will end up generating commerce.
187 The twelve plus group we really envisioned would be parents viewing with the young children. Perhaps there is going to be an older brother and sister also in that audience to comprise it, but we have no intention of programming to the teens and therefore we don't believe that this service will appeal to the teens for two reasons.
188 One is that, as you pointed out earlier, the teens aspire up and are going to be looking to broad-based radio that they think is cool, that they want to be associated with. The teens are not going to want to be associated with a kids channel.
189 The second reason is, as you have also pointed out, there is some quality restrictions to AM radio, and the teens, as they are coming into that age, get very savvy about different quality of sound and will say, "Oh, you know, I don't want to be listening to the AM. That's for the kids."
190 We are very confident that these are the sort of attitudes that prevail, so we have nothing in our application that focuses on anything above six to eleven except that parental viewing, and that is why it was structured in that way.
191 THE CHAIRPERSON: In the Angus Reid study, at page 9, there is a pie chart there showing that when the children six to eleven in the study group were asked, "Do you think kids should have their own radio station in Toronto", 88 per cent felt that kids should have their own station in Toronto.
192 Do you think that we should get a whole lot of comfort from this?
193 MS MANDRYK: Well, again --
194 THE CHAIRPERSON: This is on the phone.
195 MS MANDRYK: Right.
196 THE CHAIRPERSON: It is on the telephone.
197 MS MANDRYK: At YTV, we have done a lot of research with kids in the target group between six and eleven, so even though it is very difficult to get a lot of valid information from that target group there are ways of doing it.
198 When we retained Angus Reid, we were very specific about the type of information that we needed to get from the children and we know that it is, in fact -- it's possible to get good feedback from kids and, in fact, have driven a lot of our YTV programming as a result of feedback we are getting from children.
199 I would also say that we looked for proxies of demand in other places around the world, as I mentioned before, to see whether or not the notion of kids having their own radio station was a viable option. Based on everything we saw, from the United States to the United Kingdom, when kids are provided with radio stations that are their own, their listening habits go up. So we were encouraged by not only other samples from around the world, but also from experience we had with research on YTV.
200 THE CHAIRPERSON: I'm somewhat puzzled by the very high percentage of children who claim to have access to the Internet, I think six and ten are 51 per cent. Is that not very high?
201 MS MANDRYK: It is broad access. Either it's school or from their libraries or from their homes. So it is a variety of different sources.
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202 THE CHAIRPERSON: ...to access at home, which I think would be lower probably.
203 MS MANDRYK: It's probably around a third, yes.
204 THE CHAIRPERSON: Now revenues.
205 Of course demand and revenues go hand in hand in trying to ascertain whether this is an efficient use of 740 in light of the number of parties who are interested in using the frequency.
206 There is some confusion in your application, which I would like to clear up first, with regard to the split between the national and local revenues that you expect.
207 I don't know how easy it is for you to get these, but if you look at Schedule 17, you mention there that 60 per cent, local -- it is financial operations in response to paragraph 9 or requirement 9 in the application form -- that it is 60 per cent local and 20 per cent national. Then, if I look at Schedule 18, the second page, at the top of the page, the small paragraph that says:
"YTV Radio will derive 60 per cent of its revenues from local advertising." (As read)
208 Now, if I look at your financial assumptions, however -- or the financial operations rather, the projections, and I look at national -- now I'm looking at 9.1 -- do you follow me -- if I do the split it is about $900,000 for national and $600,000 for local, which gives me a 60/40 split national to local.
209 So, what is it? Is that sheet the right one?
210 MR. HAGGARTY: Madam Chair, your struggles with it are well founded because there is a typographical error in Schedule 9.1. The local revenue stream should actually be switched with the national revenue stream.
211 So Schedule 18 and so on, those are all absolutely correct. It is Schedule 9.1 --
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212 THE CHAIRPERSON: ...financial operations is wrong?
213 MR. HAGGARTY: Well, the numbers are accurate, but rather the captions associated with -- for instance, the national revenue in year one of $900,000, that should actually be the local line.
214 THE CHAIRPERSON: Okay.
215 So you have something that is a little different from the achievement by AM stations in Toronto, Ontario, Canada, but not as much at odds as this would have looked like.
216 So you would invert the words, so that gives you 60 local, 40 national, which is still high on national compared to what is achieved -- 1998 AM stations is about 18 per cent, 19 per cent, and FM, 25 per cent to 26 per cent.
217 What has led you to have a national that is higher than what we usually see?
218 MR. ROBERTSON: When we were developing the radio application we conferred with the advertising community and we were really enthusiastic about the kind of response to a Toronto radio service that would be focused particularly on kids. We knew, from those discussions, that what we would be able to do would be to take the YTV national service and then add to it a YTV radio component and some other elements of a plan and create a partnership agreement with these advertisers that would lead to a strong national component of YTV Radio.
219 So it really comes from our strength in YTV and our ability to package YTV Radio into existing relationships.
220 THE CHAIRPERSON: Do you envisage a sale in conjunction with YTV to advertisers?
221 MR. ROBERTSON: Yes. In part, it would be done that way, and then at other times, if the advertiser was not a current YTV customer or was more of a local advertiser than a national one, then certainly we would go directly to them and build the business that way. But certainly we did see a strong component of this being an integrated offering with YTV.
222 THE CHAIRPERSON: Do you envisage actual sales in conjunction with YTV? Presumably, a Treehouse would be possible, too, although I guess you are going to tell me the Treehouse is for preschoolers so it won't be relevant.
223 MR. ROBERTSON: That's correct. Treehouse is non-commercial, so we are really speaking of the connection of YTV, the television service, to YTV the radio service, which the advertisers said, "You know, this sounds really exciting."
224 Currently, television is well developed and tends to be the primary game in town for the kids. The idea of having a radio station, a different way of connecting with the target groups that they work with, was exciting to them and they were very supportive of the idea.
225 THE CHAIRPERSON: You do stress in your supplementary brief that there would be also limitless cross-promotional opportunities between the two. When we talk about programming, we can also talk about the possible synergies there, but other than having a relationship with advertisers that may include the two, would you also use one and the other to promote?
226 MR. ROBERTSON: Yes.
227 YTV has several different ways of entertaining the children. The best example is that when we -- we used to be just YTV, the television service. Then we launched our Web site and we were able to, on the air, on YTV, to tell kids, you know, "Go to ytv.com", and since we are telling them that every day, we are giving them a reason to go.
228 The YTV Web site has now become the number one kids' Web site in Canada. On an international basis, this is a Web site that has come into international prominence as being one of the best in the world. It is the YTV television service that was used to stimulate that YTV Web site.
229 Since that, we have launched a YTV magazine, which also represents a promotional opportunity.
230 All these, whether it is the television service, the Web site, the magazine, all of these can be used to drive demand for YTV Radio. So in this area we are extremely confident that we can create a market for this service.
231 THE CHAIRPERSON: In Schedule 18, where you discuss your revenue rationale, at the very bottom of the page you speak about the fact that you will have to be careful to safeguard the value of the radio station offering, not allowing advertisers to perceive YTV Radio to be value-added, meaning at no charge. Can you clarify what is intended here?
232 MR. ROBERTSON: Yes.
233 This is a concern that has been mostly associated with the Web site offerings of broadcasters, whether it is radio or television. The concern is that if you add a new way for the advertisers to access their target market, they may say, "Well, that sounds just terrific. Why don't you throw that in for the same price as I'm currently paying you on YTV." They call that, euphemistically, value-added. One might consider it a discount or something.
234 So, anyway, we would work very hard to establish a separate value for YTV Radio, just as we have for the YTV Web site, so that we can really get a discrete stream of revenue that can be used of course to fund the strongest possible programming offering possible.
235 THE CHAIRPERSON: In the Echo Advertising and Marketing study, it is one of the conclusions that there are some advertising agencies that may be hesitant to include radio to reach kids.
236 Have you had some face-to-face discussions with advertising agencies or advertisers that you deal with about how this transition can be made so that it is not value-added but a distinct revenue stream for you?
237 Also, what is your view of how these companies reach kids now?
238 MR. ROBERTSON: Yes, we have consulted with the advertising agency community, and the response we got was extremely positive. We will reference some of the positive interventions we received from advertisers, particularly OptaMedia, which is responsible for General Mills and is known to be one of the most formidable agencies working with children in the country. To paraphrase, their comment was that YTV was ideally suited to develop a radio station for the children.
239 So we were really encouraged by the response by the advertising community and felt that this was an area where we would receive tremendous support.
240 THE CHAIRPERSON: In your Schedule 18, where you discuss your marketing efforts, if I understand, when you are asked where your revenues will be derived, it will be 20 per cent from current advertisers and 80 per cent from advertisers who use radio but not to kids. Is that correct?
241 Actually, what I want to focus on is the pie chart that is attached to Schedule 18 and understand it better, where you identify your revenue sources.
242 Of course, everyone before us at this hearing will say that they won't take -- they will take a minimal or insignificant amount of revenues from existing stations. That is one of the questions that is usually looked into: What effects will there be on the market? I don't quite understand the pie chart in that regard, and especially the difference between YTV-derived and promo tie-ins with YTV.
243 Mind you, when you look at demand, and revenues therefore as well, the connection with YTV is obvious, that, quite possibly, if anyone at all can start a six to eleven radio station, it is someone who has -- a good argument can be made that it would be more likely to be successful if you have the synergy with a service that already pitches to children or skews its programming to children of that age. It doesn't get you all the way home, but I would like to understand better what this pie chart means and especially the difference between the two items I have mentioned.
244 MR. ROBERTSON: I would be pleased to answer that.
245 If you look at the two sections of the pie that you referred to, the YTV-derived and the promotional tie-ins, we really meant by that that we could -- on the YTV-derived side, that we could go to an existing YTV advertiser, such as Kraft, where we have a large relationship, and add YTV Radio into that relationship. So that would be 13 per cent of our source of revenue.
246 The other 7 per cent, called promotional tie-ins, is going to existing YTV advertisers and developing a promotional basis for them to get involved.
247 Often we have promotions like super-soaker promotions or whatever the promotional platform is that runs on the television. It runs in the magazine, it runs on the Web site, and now it would indeed run on YTV Radio as well.
248 So that 20 per cent, if you add the 13 and the 7 together, would be an immediate source of revenue that we could access on the basis of extending existing YTV relationships.
249 Do you want me to continue on with the pie?
250 Then, in the next section, the national radio section, we thought that this was an area where we could get national advertising with advertisers that are currently not customers of YTV. An example here might be Jamieson Vitamins, who we would love to have on the air, but perhaps they are more of a radio advertiser than a television advertiser, so we would get them on the air with YTV Radio and then maybe some day they would graduate to YTV the television service. Who knows? But that is 20 per cent.
251 Down into existing family retail, this is things like, say, Sam-the-Record-Man, where you have families coming to buy CDs. That would be a logical one. That is not currently on YTV, but they would be a radio advertiser.
252 THE CHAIRPERSON: Already on other existing radio stations that would add some of their buys to YTV?
253 MR. ROBERTSON: Yes. That's correct. The existing advertising using those teen demographics or adult demographics.
254 THE CHAIRPERSON: Yes. To other stations, yes.
255 MR. ROBERTSON: They would have to come up with a new budget for this one because they would be now opening up a kids target group, so that would be the key there.
256 We have some, you know, really intriguing new stores opening up that are just starting to develop an advertising presence. One such retailer is the Peanut Club that works with this particular demographic, the kids.
257 The next section, the 20 per cent, which is local youth combo with teen radio, this is the opportunity to look at buys that are currently teen-oriented buys and say, "Hey, you know, let's add a child component onto that teen buy. Let's put them both together", so you are not displacing the teen advertising, but you are complementing it with a kid component.
258 A good example of that might be HMV, which is currently a very strong teen advertiser but don't have a child dimension. We could add that on there.
259 Then, the last piece of the pie, the 20 per cent which is local attractions, probably the most notable example would be Canada's Wonderland, where they, on a promotional basis, sometimes get involved in the television area. But we think that local attractions is a terrific market for us as they open up the kid demographic.
260 So, as you look at this pie, and just try to recast it, it is 40 per cent national, which is the top right breakout slices of the pie, and it is 60 per cent local.
261 As we say, this is exclusively new business because six to elevens aren't even monitored by BBM at this stage, so this would be incremental business to the radio market which will be a good thing for radio and not impact existing players.
262 THE CHAIRPERSON: That helps.
263 We all know that 740 is a frequency that has got a very broad appeal throughout large parts of southwestern Ontario. In projecting your audience shares and your revenues and, for example, when we discuss programming, the counting of 600 schools, you say it is in the GTA -- the Greater Toronto Area, I guess -- and you also say there are 350,000 six to elevens in the GTA. What area did you actually look at?
264 I have maps, of course, of the contour, et cetera, but I would like a better feeling from you as to where you counted these six to elevens, these 600 schools, and therefore your projections.
265 MS MANDRYK: Yes.
266 The numbers that are quoted in the application are the Toronto GTA and the CMA, which would be the surrounding areas. If you look at the full frequency reach of the 740 frequency, we are in fact up at around 470,000 students, probably closer to half a million. So it is underestimated there in the application, because we were looking at just the GTA, not the full coverage area. So if you do look at the full coverage area, we are up at a half a million.
267 THE CHAIRPERSON: That includes the core of Toronto?
268 MS MANDRYK: That includes the core of Toronto, right, elementary school students, six to eleven.
269 THE CHAIRPERSON: You know from reading the decision that was issued after the last hearing in Toronto that 740 was abandoned by the CBC on the grounds that it was technically weak or of limited quality in the core of Toronto.
270 Do you have any concerns with regard to that, or do you count in all the children 6 to 11 that are in those areas as well?
271 MS MANDRYK: We did count them in for purposes of the population, but we are not concerned about that. We believe that the majority of the population that we were going after will not be in the core of downtown Toronto. It is not going to be in the high density buildings. It will be, for the most part, in the outer areas and the suburban surrounding areas.
272 THE CHAIRPERSON: Or in the areas that are surrounding Toronto.
273 MS MANDRYK: Yes.
274 THE CHAIRPERSON: Which means, then, from a programming perspective, if we can move to programming, you would have to make your programming relevant to a very large area, you know, in terms of which schools are open, what is going on in various communities.
275 For example, with your radio roamers, et cetera, you would have a large area to cover for a proposal that I think would be fair to say would depend on interactivity, visible presence in schools or wherever there are happenings that involve young children.
276 MS MANDRYK: Yes. It would be our plan that we would break out the larger area into probably five separate regions and on a weekly basis we would concentrate on one particular region. That would give us numbers that were manageable in terms of radio reporters reporting into the school.
277 So, for example, week one we would look at sort of the western part of the block and we would have the radio reporters reporting in on sort of -- during the week. We would take that information and put it back onto the air for just that region for that week, and then the second week we would move to a different region.
278 So we would try to really focus and concentrate on particular areas every week so that we could maintain that relevancy.
279 In addition to the YTV Radio reporters we also have roamers, who would be YTV staff who would be out in the community also looking for community information.
280 So the combination of segmenting the YTV Radio reporters input as well as having the staff roamers out on the street I think will allow us to maintain a relevant currency about the activities that are going on.
281 THE CHAIRPERSON: That should be quite expensive, shouldn't it? We are a little puzzled by the fact that if we look at the seven year projections and -- well, first let me ask you: YTV reporters, and so on, those activities, would they fall under programming, the roamers and -- well, the Canadian talent development reporters, I understand. The roamers would not be -- would simply be an expense of the station.
282 MS MANDRYK: That's correct.
283 THE CHAIRPERSON: That would be found in programming?
284 MS MANDRYK: Yes, that would be found in programming.
285 MS HAGGARTY: Yes, that's correct.
286 THE CHAIRPERSON: If I look at the figures for seven years, your programming expenses, even if I add the higher than required Canadian talent development to it, would add up to in the neighbourhood of maybe 30 per cent of your revenue spent on programming, which is a good 10 per cent lower than what AM stations in Toronto spend on programming.
287 Do you consider this proposal to be not as expensive a proposal -- I know talk TV, for example, is expensive, but the large area that you will have to cover and be relevant to entice children to hear it and find it relevant to them, will require high expenditures.
288 MS MANDRYK: Actually, let me just clarify. The costs associated with the radio roamers is in the sales, advertising and promotion line, not in the programming line. So that is an expense that YTV Radio will incur as part of their advertising and promotion expense.
289 THE CHAIRPERSON: So it would not include it, and it would not be included either for roamers to schools or roamers to children's events or festivals, or so on?
290 MS MANDRYK: Right. No, the Canadian Talent Development Fund, the second line, includes all of the initiatives associated with the Canadian talent development as well as the community initiative.
291 THE CHAIRPERSON: Now, of course, I haven't calculated whether those expenses are higher than the average AM stations, so presumably it should be because that, to me, sounds like an expensive proposition if you really want to be relevant. There are 600 schools.
292 I think it would be fair to say that this being a new proposal you will have to lure children away from the stations they may be listening to now or get them onto radio listening. So you will have to do quite a bit of that.
293 Anyway, we will have a chance to examine whether those expenses are higher since that is where you are going to put roaming.
294 MR. ROBERTSON: If I might add that one of the real strengths of this radio station is that it will have the strength of YTV behind it. That kind of support you can't always lock into dollars and cents to be spent in a cash basis against the service. In fact, we would expect to be able to mention YTV Radio frequently on the air on the YTV service.
295 We also think that the outstanding creative pool of talent that is available on YTV can be buttonholed to take their concepts and their ideas that they are just bubbling over with and extend them into YTV Radio. So there is going to be a lot of benefit coming from the YTV side that is above and beyond these levels of support that have been specifically outlined in the application.
296 THE CHAIRPERSON: My colleague tells me that sales, advertising and promotion average for a Toronto AM station is $1.5 million and yours don't reach $1.5 by year seven. It's still $1.3. So they are not higher than the average, but they are rather lower.
297 MR. ROBERTSON: There is also a non-cash contribution that YTV makes that will really be a critical part of the success of YTV Radio. We will be able to mention YTV Radio on the air every time, you know, we take a break. We will be able to promote it through the Web site, through the YTV Magazine.
298 We haven't put a cash value on all those promotional elements because we really don't see that as an out-of-pocket expense. But, in addition to the strong level of existing support that is there from a cash basis, there will be a powerful big brother there called YTV which will be reporting and developing new listeners.
299 So we are very confident that the marketing plan that has been put together can generate the type of audience that we have identified in our plan.
300 THE CHAIRPERSON: What could I envisage as a parent, that there would be an identifiable YTV Radio station vehicle of some sort visiting the school when some -- let's say it's a Christmas concert or some special event that the Grade 1 is having a graduation party, or whatever it is that is on, there will be a visibly identifiable person there with a visibly identifiable vehicle participating. Well, what will they do? They will tape what's going on?
301 I understand that you have looked at the YTV reporters, you say you have spoken to school boards and they are quite onside with that.
302 What about the roamer? Has that been -- is every school satisfied that that is acceptable to them, to have this commercial operation on site when they have school events?
303 MS MANDRYK: It will be entirely up to the individual schools whether they participate in these opportunities, but in our discussions with the Board the feedback that we received is that they expect that there would be a high participation rate. But unless you go out to every single Board and ask them, you really don't know what that is.
304 But their expectation is that we are bringing enough value into the community that it is entirely likely that most of the schools will want to participate.
305 I think the notion is we would take the vans into the schools, but it is very much a community initiative so our intent is to report on things that are relevant to children in that area that they are going to want to hear about and know about and the parents are going to want to have more information about. So it's much less of the commercial element than it is more of the community reporting element that becomes the critical part of the initiative in the community.
306 THE CHAIRPERSON: I understand you will be dealing with individual principals.
307 MS MANDRYK: Yes.
308 THE CHAIRPERSON: That is where, of course, you can play the appropriateness part --
309 MS MANDRYK: Yes.
310 THE CHAIRPERSON: -- of getting children to listen to a more appropriate radio station.
311 How many of the 600 schools do you expect you would roam to in one year?
312 MS MANDRYK: We are hoping that we would get access to at least half of those from the roaming standpoint.
313 THE CHAIRPERSON: That's quite an endeavour I would gather.
314 MS MANDRYK: Yes. And it will ramp up over time as we become more familiar with the structure and how to work through the schools and become more efficient at it. It will ramp up over time.
315 THE CHAIRPERSON: And there will be, of course, duplication and overlap because Christmas concerts are usually at the same time of the year, which will create some difficulties as well.
316 MS MANDRYK: Yes. Hopefully we will be able to supplement that with the in-school reporting though, to make sure that everyone gets their fair share on-air.
317 THE CHAIRPERSON: How will you gather information from that very broad coverage area about school closings, school happenings?
318 MS MANDRYK: We expect that we will have the technology set up to enable either voice mail or via the Internet or via direct to hard drive, abilities for people to call in and give us that information automated and then we deal with it from that standpoint.
319 THE CHAIRPERSON: Now I would like some more clarification on what your broadcast day will be.
320 In Schedule 18 you talk about sales rotation to start at 6:00 a.m. rather than the traditional 5:00 a.m. and to end at 11:00 p.m. rather than the traditional 1:00 a.m. for radio stations.
321 What exactly is going to be your broadcast day? Because I think your answer in the application to the question of how many hours it is 126. So how do you calculate your broadcast day?
322 I'm leading to the question of you say there will be 100 hours of local. Will there be then more hours of local, or where would the number of hours come from?
323 MR. KENNEDY: We are planning on an 18-hour broadcast day, from 6:00 a.m. until midnight. The 100 hours of local would then leave our maximum -- it's a minimum of 100 hours local, it would leave a maximum of 26 hours for syndicated programming.
324 THE CHAIRPERSON: A minimum of 100 hours of local?
325 MR. KENNEDY: That's correct.
326 THE CHAIRPERSON: What would the other hours be?
327 MR. KENNEDY: Syndicated programming could include things -- there are syndicated humour programs, jokes, top 10 lists; there are story times available from various countries around the world.
328 We have done some research, there are 20 or 30 companies that we have identified -- we haven't approached any of them as yet, but we have identified that are in the business of selling children's programming, audio programming, that we could approach; readings.
329 There is some public domain material. There are companies like BBC and CBC and Australian broadcasting companies that are producing programming for sale.
330 We have begun some encouraging discussions with the ATTN(ph) here in Canada, the possibility of simulcasting programs on television as well, for example concerts and things of that nature.
331 That is basically what we are looking at for that syndicated programming. Again, that is a maximum of 26 hours a week.
332 THE CHAIRPERSON: So by local you are using the traditional definition of station produced?
333 MR. KENNEDY: That's correct.
334 THE CHAIRPERSON: Do you propose to try to get any of the programming from Disney?
335 MR. KENNEDY: That's has not been discussed at this time, no.
336 THE CHAIRPERSON: Is that an opportunity that could work? You haven't explored it?
337 MR. KENNEDY: We haven't explored it.
338 We look for all opportunities to get whatever programming is appropriate for this age group, but at this point in time we haven't had discussions with Disney, no.
339 THE CHAIRPERSON: I understand that Disney is a network of a number of stations. Is that how it works?
340 MR. CASSADAY: Yes, it is.
341 THE CHAIRPERSON: In the same format?
342 MR. CASSADAY: It is not entirely the same format. Disney also programs to preschoolers and we have chosen to focus our application entirely on 6 to 11.
343 THE CHAIRPERSON: Have there been in your plans, if this were to work, to try to expand this format in other areas in Canada, or have you not thought about it yet, or do you not want to tell me if you did?
344 MR. CASSADAY: Well, one thing, for example, I was in London a couple of weeks ago and our AM station in London is predominantly a talk station but on the weekend they play music because of the costs associated with mounting a legitimate news service over the weekend, and the programmer asked me if I thought there would ever be a possibility where YTV Radio, if it was successful, could be syndicated on weekends.
345 Madam Chair, if in fact we did think there was an opportunity for network syndication we would come back to the Commission to request a licence to do that.
346 But it is possible that AM stations across the country, many of whom are still struggling, would be very grateful for some form of syndication, a network-type relationship with a successful kids service, particularly for the weekend time periods when it is difficult for them to mount the kind of programming they need to be competitive.
347 THE CHAIRPERSON: To be inserted into their normal format --
348 MR. CASSADAY: That's correct.
349 THE CHAIRPERSON: -- at appropriate times --
350 MR. CASSADAY: That's correct.
351 THE CHAIRPERSON: -- and which could become a source of revenue, I guess, for you.
352 MR. CASSADAY: Correct.
353 THE CHAIRPERSON: And more appropriate radio across the country.
354 MR. CASSADAY: Well, generally it would be replacing talk at most of these AM stations. But again, we think, as Paul alluded to earlier, that we have identified a true market opportunity to serve a segment of the population that is currently not being addressed by any radio operator in Canada.
355 THE CHAIRPERSON: You speak in your supplementary brief at page 6 of the transformation of YTV TV programs to radio. How would that be accomplished?
356 MR. KENNEDY: There are several opportunities here. One, we had mentioned simulcast on an appropriate program, for example a concert or something of that nature. There is also the option of developing the YTV hit list into a syndicated countdown program that would be available for the radio station.
357 Some of the story time readings we think -- that are developed with the company -- would be appropriate for YTV Radio. Those are the sorts of examples we are looking for.
358 THE CHAIRPERSON: The Angus Reid report has found that children are very receptive to the idea of a radio station designed to play music that is picked by children of their age and the opportunity to interact with disc jockeys of their age. How will that work?
359 In the choice of on-air hosts and of DJs and of actually the music, how will you -- will you have actually children on-air, YTV reporters support? What will that lead to?
360 You mentioned earlier as well the fact that children love to hear children's voices on the air, so I suspect -- will have not -- not child labour, that would be inappropriate, but will you have children on-air rather than simply an open-line type of interactivity?
361 MR. KENNEDY: While we have made great strides technically over the last decade I think we are still beyond the capability of having 7 or 8-year-old disc jockeys.
362 I think the interaction with the children on the air will be hearing other children's voices on the air in the buzz back sections of the program, or hearing them request songs or talk to the disc jockey on the telephone. That's where we get some of that interaction, because they can react to something else that they have heard on the air.
363 Our disc jockeys obviously have to be able to communicate and relate to these people, so the same way that I would assume that YTV would choose a VJ we will be choosing disc jockeys that are young, youthful and able to relate to this audience.
364 That goes for the radio roamers as well. Although they have to be old enough to drive, obviously, we want them to be young enough to feel comfortable in those surroundings.
365 MR. ROBERTSON: Perhaps I could just build on Ted's answer and say that on the YTV television side what we think of is that our program jockeys would be perhaps a child's older brother or sister, and that is the kind of model that we look for.
366 So we want somebody that speaks their language, that can relate to them not as a parent would to a child, but also not on a straight peer level either because we hope to help set a positive role model for these children. We hope to be able to teach them something while they are being entertained, and that is what an older person can do, although of course they are selected to be very young and hip and something -- someone that the kids would find cool.
367 THE CHAIRPERSON: Besides the traditional feedback similar to audience sweeps, et cetera, will you have a system, some type of system to get feedback as to whether you are successful in pitching to the 6 to 11 radio listener, which may be different from the TV viewer?
368 MR. ROBERTSON: Yes. We would expect to have a constant feedback loop with the children 6 to 11 and that could be done by letters that they send in, it could be phone calls to the station, it could be Web site interaction, but all these things -- you know, we would see our responsibility to be very specific in this area, that we would give them tailored responses, we would listen to what they had to say and we would act on it.
369 On the YTV front, the only way that we have been able to maintain our current nature and continue to be cool for the kids is because we take their direction. We actually listen to them and change our approach based on what they have to say.
370 These kids are not shy, they will give you their honest opinion. Sometimes it's a little on the brutal side. We are tough and we can take it. We certainly learn from it and will change the service to meet their needs.
371 THE CHAIRPERSON: One last question on your Canadian talent development: $52,000 a year to children's festivals. That will be simply money given to help the staging of festivals? How will this contribution materialize?
372 MS MANDRYK: Well, what we expect is that we would set up a committee that would evaluate all of the opportunities of the children's festivals in the local area that help to further Canadian talent development as well as the broadcast, the broadcast specifically of television and radio. We would set up a committee and we would have a number of criteria that we would look at.
373 What we believe is that we would pay this money to the third party, which would be the festival. So, for example, for "Word on the Street" or for "Sprockets", which is a kid's Toronto film festival, that money would be paid to the third party's festival for use in their local initiative.
374 THE CHAIRPERSON: Now for the frequency, or a technical question.
375 We have a number of applicants for the use of 740. Have you thought of alternatives for your competitors, if not for yourself, in the AM band for example?
376 The AM band, the extended portion of it from 605 kilohertz to 705 kilohertz? Are there other alternatives that you can generously suggest to your competitors to implement an AM proposal in Toronto, or have you simply applied for 740 and not looked at what else may be available?
377 MR. CASSADAY: We have simply applied, Madam Chair, for 740. A number of -- I guess two of the applicants for AM have also applied for FM. It's an either/or scenario.
378 THE CHAIRPERSON: So you don't have anything more to offer?
379 MR. CASSADAY: We think that this 740 signal, while it may be weak in the core of Toronto it is an incredible signal and argues for a service as inclusive as the one which we are proposing which we in fact would argue is the most inclusive of the services and provides, we think, tremendous utility for such an exceptional signal.
380 THE CHAIRPERSON: Now that you are in full flight, Mr. Cassaday, I will give you five minutes -- these are my questions -- to tell us why you should get 740, if you have any more to say -- Mr. Robertson is all smiles, so he obviously has -- or to answer any other question I didn't ask.
381 MR. ROBERTSON: Okay. Well, that's very generous of you, Madam Chair.
382 First of all, I think we have a clarification in the nature of your question concerning program expenditures compared to market and these sorts of things.
383 Perhaps I could ask Jamie Haggarty, first of all, to comment on that.
384 MR. HAGGARTY: Yes. I guess we just wanted to supplement some of the comments or questions around some of our spending assumptions.
385 On the programming expenditures I think we are quite proud to acknowledge that we have committed $5.3 million over the seven years, which is second to no other applicant for the AM frequency. So clearly we are deeply committed to spending and supporting our programming for the $5.3 million. That includes both our personnel costs, but also acquisition costs for other programming for radio services, spoken word as well as music.
386 So I just wanted to sort of note that our spending on programming is second to none.
387 On the sales and promotion I just wanted to sort of add to, I guess, the analysis of the YTV Radio's spending for our sales and promotions.
388 If I compare our assumptions for sales and promotion as a percentage of revenue, in year one our sales and promotion are 76 per cent of our revenue. By year seven sales and promotion expenses are still 31 per cent of revenue. If I compare that to the AM/FM Toronto market spending of sales and promotion that was included with the call for the applications, in all the Toronto market sales and promotion spending in 1998 was 27 per cent.
389 So I think we are clearly committed to sales and promotion because our -- even by the seventh year we still exceed the average spent in 1998 in all the Toronto AM and FM.
390 THE CHAIRPERSON: You are combining AM and FM.
391 MR. HAGGARTY: That's right.
392 THE CHAIRPERSON: I was using AM figures.
393 MR. HAGGARTY: Okay.
394 MR. ROBERTSON: We could clarify those numbers on the AM basis as well.
395 I think that what we are enthusiastic to project is that when we developed this application we did it with, you know, all the proper tools put in place, not only the support that is on paper but also the strong support of YTV behind the scenes.
396 In terms of the big reasons why we believe the Commission should say yes to YTV Radio, first of all, this is a fresh new format, there has been nothing like it in Canada. It is something that clearly adds diversity to the dial.
397 Second, kids are not served by radio. They are not under served, they are not served at all. Yes, they are listening to radio stations, but what they are listening to is not always appropriate.
398 Third, 100 hours of local programming I think will stack up as a very favourable commitment in terms of the nature of this programming and it being a unique offering to the marketplace.
399 Fourth, $1.6 million in talent and community initiatives, which again is an extraordinary strong level of support and typical of our powerful commitment behind the service.
400 Fifth, need for a safe haven versus some of the inappropriate options that are out there.
401 Sixth, we think it's good for radio, and AM in particular, if we can get these kids involved in the AM and in radio, that it will speak good things about the future of radio.
402 Finally, we believe it will have a negligible impact on existing radio services which we think is a major, major positive aspect of this.
403 We have added 22 people to run this YTV Radio station. We are going to get people that understand radio, people who understand kids, put them together with the kind of energy and positive outlook that we have at YTV and create just an outstanding service that kids will be really enthusiastic to take part in and that parents will endorse.
404 THE CHAIRPERSON: Thank you.
406 MR. RHEAUME: Thank you, Madam Chairperson.
407 Just a few clarifications at this time.
408 You indicated, I believe, that you would have 100 hours of local hours that the station produced. What proportion would be repeats and originals? Because you did mention repeats in the evening at least.
409 MR. KENNEDY: We haven't specifically targeted a number. We feel that everything that we put effort into producing, for example for the school board and daytime programming, we think that has tremendous value to people who may have been in class when it originally aired and were not able to hear it, and we would expect to repeat those in time periods when people were available in the evening or in the afternoon time periods.
410 Although at this point in time we haven't targeted a specific number we do feel a strong commitment to doing that and it will probably ramp up, you know, from day one up to year seven.
411 MR. RHEAUME: How about weekends? Do you have repeats scheduled on the weekend? Because you don't say a lot about your weekend schedule, I believe, in your application.
412 MR. KENNEDY: The weekend schedule we are viewing as similar to the afternoon and the evenings in that the kids are available most of the day part. So we will just program the weekends as we program the 3:00 to 8:00 or 3:00 to 9:00 p.m. period.
413 MR. CASSADAY: Just, counsel, one additional comment.
414 For this particular target repetition is a virtue not a sin, and I think the points that Ted is making are such that we really will have to find out as we go the appropriate level of repetition, but we know kids do like to hear the same thing over and over again until they can internalize it.
415 MR. RHEAUME: I was not accusing you of sinning, by any means.
416 Just one final question, maybe clarification on the community development initiative. You did mention the radio reporters and the children's festival.
417 The Savvy Surfers, literacy on the Web, how would that work? Would that be direct contributions? That's essentially what I'm looking for.
418 MS MANDRYK: We would expect that that program -- we would work in conjunction with the media awareness network and the school boards as well as the Concerned Children's Advertisers to put together a program that has four phases to it.
419 One would be, obviously, providing in-class resourcing material for teachers and educators.
420 The second part would be a public awareness campaign.
421 The third part would be working to develop CD-ROMs and Internet-based information for the students.
422 The last point would be an Internet Web site for the parents.
423 So those four elements would be combined together, which we would develop in concert with these other organizations.
424 MR. RHEAUME: And that would be cash outlay on the part of your company?
425 MS MANDRYK: Yes.
426 MR. RHEAUME: And you do volunteer all of these as conditions of licence. Is that correct?
427 MS MANDRYK: Yes.
428 MR. RHEAUME: Thank you.
429 THE CHAIRPERSON: Thank you, counsel.
430 Thank you, Mr. Cassaday, ladies and gentlemen. We thank you for your co-operation.
431 We will adjourn now for 15 minutes. We will be back at 11:15 and we will sit until approximately 12:30, depending on what is a reasonable point to take our lunch break.
432 Thank you.
433 Nous reprendrons 11 h 15.
--- Upon recessing at 1100 / Suspension à 1100
--- Upon resuming at 1120 / Reprise à 1120
434 THE CHAIRPERSON: Mr. Secretary.
435 MR. RHEAUME: Thank you, Madam Chairperson.
436 Our next application is by CHWO Ontario Incorporated on behalf of 1210361 Ontario, the general partner, and Ken Harrigan, George Patton, Terry Patterson and Peter Gilgan limited partners in a limited partnership to be created and to be known as AM 740 PrimeTime Radio, for a broadcasting licence to carry on an English-language AM radio programming undertaking at Toronto.
437 The new station would operate on frequency 740 kilohertz with a transmitter power of 50,000 watts.
438 The Applicant is proposing to offer music and spoken word programming of particular relevance to listeners who are 50 years of age or older.
439 The Commission notes that this application is technically mutually exclusive with other applications scheduled at this hearing for the use of the 740 kilohertz frequency.
440 We have Jean Caine and her colleagues.
441 Ms Caine.
PRESENTATION / PRÉSENTATION
442 MS JEAN CAINE: Good morning, Madam Chair, ladies and gentlemen of the Commission. My name is Jean Caine and I am the Chairperson and Chief Executive Officer of CHWO Radio Limited.
443 On behalf of CHWO and the proposed limited partnership to be known as AM 740 PrimeTime Radio, I am grateful for this opportunity to appear before you with our application for a new and a much needed radio station to serve Toronto and Southern Ontario at 740 on the AM dial.
444 Before we begin our presentation I would like to introduce you to the members on my panel.
445 On my immediate right here is my son, Michael Caine. Michael is the President and General Manager of our company. He has spent over 30 years in the radio business and I am very proud that his exceptional leadership has enabled our company to achieve far more than even his father and I ever dreamed possible, and I can tell you, we had some pretty big dreams.
446 Sitting next to Michael is Harry McDonald, who is our Vice-President of Sales and Marketing.
447 To Harry's immediate right is Jacqui Gerrard, CHWO's Controller.
448 Directly behind is our legal counsel from Borden Elliot, John Hylton. Incidentally, John is also the Chair of the School of Radio and Television Arts at Ryerson Polytechnic University.
449 Next to John is Kaan Yigit. Kaan is the President of Solutions Research Group who conducted our market research for us.
450 Beside Kaan is our Music Director, Brian Peroff.
451 Seated next to Brian is our Program Supervisor and News Director, Bob Sheppard.
452 To Bob's right is Jim Leek, the host of the national award winning program "Celebrate" on CJMR.
453 Finally, to the far right at the back I would like to -- no, now they have moved over here to the left, I'm sorry. I have them pinned now -- are Naomi Strasser and Lori Payne who are going to be assisting with the audio and visual portions of the presentation.
454 Over to my very right -- I have lost him now -- behind me -- is the third generation of the broadcasting Caine's, Matthew Caine, my grandson. He too will be assisting with the audio and visual portions of our presentation.
--- Musical interlude / Intermède musical
455 MR. MICHAEL CAINE: I bet you could be tapping your toes right now along with a lot of the other people in the room.
456 You can bring it down now. Thanks very much.
457 If we had started with "I Left My Heart in San Francisco" I bet you could sing all the words along with Tony Bennett as well.
458 You see, there is a reason for the great adult standards of the hit parade and why there will forever be the hallmark of the people who shape the latter half of the 20th century. It's timeless, it touches the heart, it has lasting relevance.
459 This application is all about what a huge number of people in Toronto and surrounding want in a radio station but is currently unavailable to them. It's about an affluent demographic group that makes up one-quarter of the population of Canada's largest city.
460 According to the CRTC, and specifically section 3 of the Broadcasting Act, we are challenged to achieve a varied and comprehensive broadcast system that provides a balance of information and entertainment for people of all ages, cultures, interests and tastes.
461 The submission we present to you today not only satisfies those challenging goals, but the other expectations of the Commission as outlined in its call for application.
462 When it comes to relevant programming, today's 50, 60 and 70-year-olds do not want to limit themselves to weekly bingo. They want to know where the snow is falling so they can strap on their "fatboys" and hit the slopes.
463 This mature, active, healthy and affluent generation is growing younger by the minute, but not so young that they want to immerse themselves in the world of rock and rap. Today they want memories of the hit parade, the romance of Sinatra, the cool ease of Nat King Cole. And yes, they even want Johnny Favourites swing orchestra, Celine Dion and Harry Connick Junior. They want to know what's happening in the world and they want to know the best destination for a Sunday outing with their children and grandchildren.
464 They have always worked hard, continue to work hard and want access to the products and services that will keep them and help them to live well. They want a radio station that addresses these needs. They want a radio station of their own.
465 We are the people who understand the 50-plus demographic. We are experts at bringing them programming that will always meet their needs, whether we are in 1956 or 2006.
466 There are currently 23 radio stations licensed in the GTA. There are several ethnic stations, adult contemporary and top 40 stations, stations that feature classical, jazz and other special interests. We have news, talk and sports stations and stations that carry new rock, oldies rock, alternative rock and urban rock. With a variety of rock on one end and hard news and talk on the other, it could be said that the 50-plus of Toronto are between a rock and a hard place.
467 What it means is that over 1.2 million listeners over the age of 50 in the GTA are channel surfing, looking for the kind of music they love and the information programming designed for them.
468 Furthermore, there is limited opportunity for advertisers and programmers to bring relevant consumer and issues-oriented messages to this vibrant, active and affluent demographic.
469 For the past 44 years my family has operated CHWO 1250, a successful independent radio station in Oakville. When CHWO went to air in 1956 there were a number of radio stations in southern Ontario that served a mature audience. As its out-of-town competitors began to abandon the mature market by targeting younger listeners, CHWO became the only station in the area, AM or FM, to remain true to the adult standards format and committed to listeners who are 50 years of age and older.
470 The one area of complaint has and continues to be: They can't hear us. This has nothing to do with growing older.
471 Well, it's time to change that. Most 50-plus listeners in Toronto and other communities in southern Ontario are outside CHWO's local coverage area. Because our signal is too weak and often distorted by interference we are cut off from a huge portion of our potential audience, especially in the import early morning, late afternoon, evening and nighttime hours when we must cut power and change patterns in accordance with international agreements.
472 Now, this map, prepared for us by Bell Actimedia, shows where the 50-plus of southern Ontario are concentrated. The three darker colours show a high concentration of 50-plus while the cream colour shows a lower density of 50-plus residents.
473 Focusing now on the local service areas, this map of the Golden Horseshoe shows where the 50-plus live in and around the greater Toronto area.
474 The CRTC, Industry Canada and others look at the 15 millivolt contour of an AM station as the bench mark to define its local service area.
475 Now, as we have overlaid this 15 millivolt daytime contour of CHWO 1250 on the map, you can see that it does not even reach the old City of Toronto, but instead only reaches as far as the Humber Bay in Etobicoke, it barely covers the Toronto International Airport in Mississauga and the City Centre of Brampton. It skirts just under the town centre of Milton and finishes up by barely covering half the City of Burlington. With a 50 per cent reduction in power and a pattern shift, you can imagine how much smaller our nighttime coverage is.
476 This demonstrates, we think, that the vast majority of those over the age of 50 are beyond CHWO's local service area, even in the daytime. A man from Scarborough put it best in a complaint letter to the Commission a few years ago when he commented about our 1250 signal in Oakville by saying "You can't get to hear from there". That's H-E-A-R.
477 It also explains why over 7,000 people took the time during the busy holiday season to write emotionally charged letters to you in support of our application.
478 Now, as you can see, the 15 millivolt contour of AM 740 easily covers all of Toronto and surrounding areas where the affluent and discerning 50-plus demographic is concentrated. With AM 740 PrimeTime Radio mature listeners everywhere will finally be able to hear a radio station designed for them which can be heard interference free.
479 Here is why they will want to listen.
481 MR. SHEPPARD: We commissioned the Solutions Research Group, one of the four most independent research firms in the country today, to study the 50-plus age group in Toronto. Their research reveals that 93 per cent of those aged 53 years and older identify listening to music as their number one interest.
482 The CHWO team brings extensive experience in 50-plus radio programming, and a broad knowledge of the kind of music that shaped the last century. Guided by professional research and demographic studies, AM 740 PrimeTime Radio will be a refreshing new option for the people who grew up listening to AM radio and form the majority of its listeners today.
483 For our AM-friendly 50-plus audience we will blend a mix of M.O.R., easy listening, '50s pop, big band, swing and nostalgia into a single unified and carefully crafted musical format known throughout the industry as adult standards.
484 The adult standards radio format is perhaps the most misunderstood format on the dial. Simply put, it's a dynamic and growing format appealing to the increasingly important 50-plus population base in most radio markets in the United States, over 550 stations nationwide in 1998, and in many Canadian centres, with the glaring exception of Toronto. With the arrival of 740 PrimeTime Radio the 50-plus of Toronto will finally be able to listen to the kind of music that belongs to them, presented by well-known and polite personalities.
485 Naturally, as the years go by and other stations vary their musical formats to chase those new generations of coveted 18 to 30-year-olds, PrimeTime Radio will adjust its play list accordingly in order to appeal to the 50-plus audience.
486 PrimeTime Radio will also deliver a comprehensive schedule of regional and local news, as well as an array of entertaining and informative programs, everything from "The S.A.L.T. Report" to "Relatively Speaking" where three generations from the same family discuss issues of concern.
487 Though it's our intention to bring the golden age of radio back to Toronto, we want to make it clear that AM 740 PrimeTime Radio will not be lost in a mid-20th century time warp.
488 Our studios will be Internet equipped to add strength and precision to the information we share with our listeners. Through our Web site primetimeradio.net AM 740 commentary and discussion will be referenced, expanded and linked so that audiences can continue to learn, participate and comment long after our feature has left the air.
489 Our companion print publication, "PrimeTimes", will keep our listeners in tune and a step ahead of topics and events that affect their lives. At AM 740 PrimeTime Radio we will connect with our audience better than before.
490 To ensure that all we do remains relevant and current to our 50-plus audience, we have the AM 740 Advisory Council. We are pleased and honoured that a number of prominent Canadians have already agreed to become members of our advisory counsel.
491 The chief anchor for CTV News, Lloyd Robertson will be our expert on news and public affairs.
492 Keeping us in touch with political affairs and other important issues facing Torontonians will be David Crombie, former Mayor of the City of Toronto and Chairman of Toronto's Waterfront Commission.
493 University of Toronto Professor of Economics and best selling author of "Boom Bust and Echo", Dr. David Foot will share his considerable expertise on demography and trends.
494 Dr. Elaine Denbe is one of Canada's most recognized experts on health and wellness, as well as being a best seller author, media personality and motivational speaker.
495 Lillian Morgenthau is the President of CARP, the Canadian Association of Retired Persons, and will be a valuable resource to PrimeTime Radio on all issues involving those over 50.
496 Finally, Russ Little will help us maintain our musical focus. Russ is a former Director of Music at CTV and a successful and accomplished musician, composer, arranger, conductor and record producer.
498 MR. McDONALD: Perhaps because it was the United Nations International Year of Older Persons, it seems especially over the past year our television sets, magazines, newspapers, trade associations and government agencies have all reported on the huge size of the 50-plus market and its buyer power and economic influence on our society today.
499 The 50-plus demographic group controls 80 per cent of the country's personal wealth. It represents 28 per cent of all discretionary income, accounting for the largest share of spending on most categories of goods and services, a share that will increase steadily over the next 15 years.
500 This silent, demographic majority is not so silent at the cash registers. They are the power players that drive our economy today and it is certain that they will be in the driver's seat into the foreseeable future.
501 AM 740 PrimeTime Radio will be the only radio station capable of delivering this specific audience group to an advertiser within the greater Toronto area and throughout southern Ontario.
502 CHWO's existing sales and marketing initiatives are enormously successful. As a proven leader in the 50-plus market, we confidently submit to you the sales projections for AM 740 PrimeTime Radio. They are supported by independent findings from the Solutions Research Group and Harrison, Young, Pesonen & Newell, HYPN, one of Canada's largest and most respected media planning and buying organizations.
503 The Solutions Research Group estimates that PrimeTime Radio will have a weekly cume in year one of about 400,000 people in the 50-plus category.
504 In terms of hours tuned, the data suggests a market share in the 9.6 to 12.8 per cent range among adults 50-plus, placing the station in the top five in Toronto in this demographic group.
505 HYPN has analyzed this data and projected that PrimeTime Radio will be 65 per cent sold out in year one and rise to 100 per cent sold out in year five, when it will earn a 1.52 per cent share of the total radio advertising dollars available in Toronto.
506 AM 740 PrimeTime Radio will have a major head start on revenues, since CHWO has pledged to transfer a significant amount of its air time sales from its existing 1250 operation to the new venture. This means that approximately 60 per cent of the projected first year sales for AM 740 have already been accounted for through current income.
507 Because of the programming and sales plans for CHWO 1250 and its subsidiary CJMR 1320, the financial stability of the parent company will not be harmed.
508 Finally, the research studies also indicate that the impact of AM 740 PrimeTime Radio on the audience share and advertising revenues of existing Toronto radio stations will be, quote, "Negligible".
510 MS GERRARD: For the past 44 years we have successfully operated an AM radio station in the most competitive broadcasting environment in Canada. However, to survive on the new and emerging playing field of multiple ownership, LMA's, industry giants and new technologies, it is crucial that this independent, family-owned radio station be given the opportunity to maximize its potential that can only be achieved through the granting of this application for AM 740 PrimeTime Radio.
511 We are confident that we have realistically projected the costs of operating and financing the new venture in every detail, including synergies that will be realized in the administration and technical departments.
512 The economic foundations of AM 740 PrimeTime Radio are built upon the enthusiastic support of solid investors. The partners of this venture, all successful Canadian entrepreneurs, are committed to achieving the goals and objectives of our collective vision, which is to build the preeminent radio station in the greater Toronto area catering to the musical and information interests of those in our society who are 50 years of age and older. Their business acumen and successful management and leadership skills will ensure that AM 740 PrimeTime Radio will be a success in every respect.
513 You have heard the essential elements of a formidable business plan that will make AM 740 PrimeTime Radio a viable competitor in the Toronto market.
514 Let me summarize by saying that the strength of the business plan for this application rests on three pillars:
515 - A proven format and track record;
516 - Responsible economic stability; and
517 - Responsible, experienced partners.
519 MR. MICHAEL CAINE: Thank you, Jacqui.
520 I would like to bring our presentation to a close by coming full circle and returning to the substantial public benefits associated with this application.
521 One we haven't mentioned yet is our commitment to the development of Canadian talent. AM 740 PrimeTime Radio will annually contribute funds to five worthy recipients who are all directly and actively involved in the development of Canadian talent.
522 Our CTD partners are:
- One of Canada's foremost educational institutions, the School of Performing Arts at Humber College which focuses on jazz, big band and commercial music;
- The Music Theatre Program at Sheridan College, considered to be one of the top three of its kind in North America;
- Canadian Music Week will work with us to bring a higher profile to big band and pop orchestral music to their premier trade event for the international music and broadcasting industries;
- To Factor;
- And to the establishment of the Toronto Big Band Festival, the first festival of its kind in Toronto that will provide much needed exposure to Canadian talent in this genre and will bring strong tourism and economic opportunities to the city.
523 Another benefit of the AM 740 PrimeTime Radio application is that after a three month simulcast period when the adult standards format is moved completely to AM 740, CHWO will become JOY 1250, the area's first full-time station dedicated to family values, positive living and contemporary Christian music.
524 At the present time, listeners who enjoy this kind of programming must tune out-of-country to WDCX in Buffalo, which BBM reports as having 40,000 listeners in the GTA, almost twice as many as it has in Buffalo.
525 Furthermore, WDCX claims that 66 per cent of its revenues come from Canadian advertisers. JOY 1250 will repatriate those listeners and substantial advertising dollars back to Canadian radio.
526 Ladies and gentlemen, we conclude our presentation by highlighting the main reasons we believe that our application should be approved:
1. The contribution of the proposed AM 740 PrimeTime Radio service not only achieves but surpasses the objectives established in the Broadcasting Act.
2. The huge 50-plus demographic, over 1.2 million strong, is the largest, most under served segment of Toronto's population. They appreciate AM radio and deserve service on the last available AM frequency.
3. With AM 740, CHWO can finally reach all of its potential audience with a clear, interference-free signal.
4. Granting CHWO's application will bring diversity of ownership to the Toronto market and allow CHWO to survive in a new competitive environment that includes multiple ownerships, LMAs, industry giants and new technologies.
5. A significant but largely ignored segment of the domestic music scene will receive much needed Canadian talent development funds and exposure.
6. Solid investors and favourable independent market studies show realistic and achievable audience and financial projections.
527 MS JEAN CAINE: Ladies and gentlemen, that concludes our formal presentation.
528 We would be delighted to answer any questions you may have.
529 THE CHAIRPERSON: Thank you, Mrs. Caine, Mr. Caine, ladies and gentlemen.
530 Commissioner Wilson.
531 COMMISSIONER WILSON: Good morning, Mr. Caine, ladies and gentlemen.
532 I'm going to take, I guess a somewhat linear approach. I'm going to go through the various things that you have submitted to us I guess, except for the fact that I am going to start with the supplementary brief which actually comes at the end of the application.
533 Before I was at the CRTC I always wondered why it was called a supplementary brief since it's always the first thing that I read in terms of describing what the application is all about, but have their way.
534 So I'm going to start with the supplementary brief and go through a few general questions and some questions of clarification.
535 I want to take a look at the Solutions Research Group study and the HYPN analysis of the SRG results.
536 I have one very quick question about the Nordicity Group Study and then I want to look through your business plan in terms of some of the assumptions that you have made, as well as the financial impact on your existing stations.
537 If you don't mind, although they are not before us in application form, you have brought these changes in format to your existing stations to us as additional benefits of this application, I would like to look at some programming issues associated with those two stations.
538 The Canadian talent benefits and technical issues.
539 I will just warn you that there is likely to be some overlap as I work my way through each of these sections, but at the end I imagine we will emerge with a clearer picture, at least in my head hopefully, and my colleague's heads too.
540 I will also warn you that although I did spend quite a bit of time in the communications industry before I came to the CRTC, I never had the honour of working in radio, so you will forgive some of questions that might suggest a certain lack of knowledge about some of the radio audience ratings aspects. I'm going to ask for your help on those things.
541 I will just leave it up to you, Mr. Caine, to decide amongst you who is the best person to answer the various questions that I put to you.
542 You have been quite eloquent in articulating throughout your application, and again in your presentation, what a significant demographic we are dealing with with the 50-plus age group. I'm just wondering, in your opinion, because you have been serving this demographic for such a long time, why are the Toronto radio stations not programming to that group, considering their economic power and everything else that you have presented as backup for the fact that this demographic is a very important one?
543 MR. MICHAEL CAINE: Well, one of the first areas to respond to that is that the 50-plus of course are -- as Bob had indicated in his comments with the adult standards format -- it's probably one of the most misunderstood formats going because of the demographic group. There is no question about the buying power, the size, the importance to the economic part of our community and our country.
544 But I think in radio, in competitive radio in Canada at least, everyone seems to chase those 18 to 34 demos. Or, if you want to be blend them, between 18-34 and 25-54. Those are the main areas that advertisers look at, that research is geared towards, and it excludes the 50-plus generation, or those who are over 50-plus. So in order to attract the kind of advertising dollars and the larger generic audience size, they seem to go after that blended 18 to 54 demographic and the over-50 fall off the table.
545 Quite frankly, as we say in Schedule 16, we don't know why they are ignoring one-quarter of the population of Toronto. We have been doing it for a long time, and quite successfully, but we are unable to cover the whole area.
546 Why other stations have chosen to go after those younger demographics I suspect is because of the advertising potential and the way that the system is structured.
547 COMMISSIONER WILSON: I guess I'm just curious, based on the evidence that you present in your application, if the 50-plus demographic has such incredible spending power and appeal why other broadcasters aren't going after them and I'm wondering if you looked at the spending power of the sort of expanded 18 to 54 range versus the spending patterns of 50-plus, if that would give you any indication of why?
548 MR. MICHAEL CAINE: There is no question that the 18 -- the younger demographics are sexier demos.
549 COMMISSIONER WILSON: Are they spending more money?
550 MR. MICHAEL CAINE: No. The 50-plus actually spent -- out-spend the younger demographics in almost every product category, according to the research that we have seen from Canadian broadcast sales.
551 COMMISSIONER WILSON: Okay. Thank you.
552 Now, the BBM fall 1999 results identify the target audience for your current station in Oakville, CHWO, as 35 to 54, though I notice in your application you state numerous times that the audience is 50-plus and that the audience for the new station is 50-plus, and I'm just wondering if you could explain why BBM identifies your target audience at that age bracket?
553 MR. McDONALD: BBM target that audience of 35 to 54, but there is very little in the way of demographics going beyond 54. It's almost like the 50-plus market just doesn't exist. That's why we have had a lot of difficulty over the last few years trying to encourage national advertisers to use our station. But 35 to 54, in fact if you look closer to the numbers you will find that over 90 per cent of our audience is over 50 years of age.
554 COMMISSIONER WILSON: I'm trying to figure out -- somebody is turning on and off the microphones for us.
555 So over 90 per cent of your audience?
556 MR. McDONALD: Over 90 per cent of our audience is over 50.
557 COMMISSIONER WILSON: Is over 50?
558 MR. McDONALD: Yes.
559 COMMISSIONER WILSON: Okay. That's actually part of my next question.
560 So 90 per cent of your audience comes from over 50. The rest comes from what age group? Just broadly speaking, 18 to 49?
561 MR. McDONALD: Yes, obviously. Well, if you want to cut that down even to not a pure demographic but to pure numbers, it's over 40.
562 COMMISSIONER WILSON: On page 6 of your supplementary brief you say that:
"PrimeTime Radio will offer a carefully researched mix of music from the big band era to some of today's easy listening standards of tomorrow." (As read)
563 I realize that we don't regulate formats any more, but what percentage of your play list would be today's easy listening standards of tomorrow versus everything else which is described in the SRG study on page 17 and the question that you asked your survey respondents describing the station?
564 There is a big, long list of different kinds of music in there and big band era is on one end and the easy listening standards of tomorrow are on the other. So what percentage of your play list would be the easy listening standards?
565 MR. MICHAEL CAINE: The easy listening standards of tomorrow, today. That's actually a very small percentage of the play list. It's a lot of the easy listening tunes from, say, broadway, the Canadian cast recording of Phantom of the Opera. That sort of thing would be included in the play list today in those easy listening standards.
566 The bulk of the music is coming from the '50s pop and about 20 per cent of the play list is made up of the earlier, the big band sounds, which is what gives the station its unique flavour and character.
567 COMMISSIONER WILSON: I'm sorry, Mr. Caine, the fan just went on again so I had a bit of trouble hearing the middle part of your answer. If you could just give me those numbers again?
568 MR. MICHAEL CAINE: A very small percentage of the music play list are those easy listening standards today of tomorrow -- or how did you describe it -- or we describe it?
569 The bulk of the play list is from the '50s pop, now, the Perry Como's as opposed to the early rock and roll type of thing, and then about 20 per cent of the play list is from the big band swing era, which is what gives the station -- or will give the station its character and its flavour.
570 COMMISSIONER WILSON: The reason that I'm asking you -- and I guess we will go back to this in a little more detail later -- is that two stations from which you expect to draw the most audience are CFRB and CHFI and I was just wondering how much like them you are likely to sound on your station since, you know, big portions of the people who are looking for the kind of music that you are offering are currently listening to those two stations?
571 MR. MICHAEL CAINE: Well, clearly we are not going to sound very much like CFRB at all, because it's all talk and news and this is a music-based format.
572 In response to that, in fact in response to a question posed by an intervenor, we took the play list, the sample play list that you have in the application, and we submitted it to the top 10 stations that had any 50-plus listeners in Toronto, and only two of them -- and asked them to compare what they play versus what we intend to play.
573 There were only two stations that there was any kind of duplication at all, and that was CHFI, who indicated that 8.3 per cent of our proposed play list them played.
574 The other was 1050 CHUM, which is an oldies '50s-60s rock and roll station, and the duplication there was just over 10 per cent.
575 There was no duplication on any other station in Toronto and, of course, there were several that were not applicable, like CFRB, Talk 640, the FAN, all of whom had listeners who were 50-plus but are spoken word format.
576 The others were easy rock, the mix, 99.9, and Q107. I think that is the 10 of them.
577 COMMISSIONER WILSON: That's really interesting, but maybe you can just explain for me, then, why -- I mean, if CFRB has changed its format now into a news and talk, why do you expect to draw such a significant portion of your audience from them?
578 The SRG study listed the 13 stations including your own in Oakville from which you expect to draw audience in the Toronto market and CFRB is, I believe, the largest -- has the largest percentage at 26 per cent of your total projected weekly cume. So I'm just wondering why you expect to draw from there.
579 MR. MICHAEL CAINE: CFRB of course has a long and illustrious history in Toronto of serving a mature market. They were the adult standard station in Canada -- the premier adult standard station in Canada for decades. There is an awful lot of loyalty to that station, and rightly so, amongst the 50-plus.
580 We have also found that a number -- and if you read a lot of those letters that have been sent to you, a lot of the people who listened to CFRB before don't want all that talk and commentary and they are looking for their music.
581 I think it demonstrates the fact that the 50-plus are active and involved in their neighbourhoods and in their world and they want to know what's going on around them and want to participate in that kind of discussion, but they also want to hear their music. So I would think CFRB, there is a significant number of people who listen to CFRB who are 50-plus and they are satisfying that specific niche.
582 We will let Kaan answer that perhaps, because it is leading to research.
583 Well, I will let him do it now because I have lost my thought.
584 MR. YIGIT: Thanks.
585 I just wanted to point out a couple of things with respect to audience composition.
586 First of all, CFRB gets affected a little bit more than others, and we have a saying in the research business "law of large numbers". They are the dominant station by far in the 40-plus demographic, so no matter what kind of a station you put up there targeting 50-plus, by default CFRB would get affected a little bit more.
587 According to the research on page 12, I think, of that appendix, they have a reach of about 28 per cent, nearly 30 per cent in the 50-plus demographic. So they already -- of the roughly 800,000 to 900,000 listeners they have weekly, close to 40 per cent comes from that demo.
588 Now, as the slides earlier indicated, the projected audience, weekly audience for the new CHWO is about 400,000. Quite a number of that obviously will come from when the signal switches off in Oakville will migrate. Of the rest you are looking at 26 per cent of the remaining audience coming from CFRB.
589 So when you actually work the numbers down, while on the table that we presented because we are showing audience competitions at the top, when you work it back to the CFRB's base of almost a million listeners, it still isn't a huge number that you are looking at.
590 The second station is CHFR obviously, and then there are five or six stations that lose a little bit here and there.
591 COMMISSIONER WILSON: What is the weekly reach for CHWO currently?
592 MR. McDONALD: We cume as 182,000. That is at the fall BBM.
593 COMMISSIONER WILSON: One hundred and eighty-two thousand?
594 MR. McDONALD: One eighty-two, yes.
595 COMMISSIONER WILSON: Okay, that is very helpful. Thanks.
596 On page 7 of your supplementary brief, and actually again in this morning's presentation, you referred to your on-air talent and said that it would consist of "well-known", friendly "and polite" broadcasters.
597 You know that Canadians are well-known for our politeness, so I'm just wondering who else in the Toronto market besides Howard Stern is impolite?
--- Laughter / Rires
598 COMMISSIONER WILSON: I'm just wondering if there is something we should know about.
599 I'm just kidding.
--- Laughter / Rires
600 COMMISSIONER WILSON: But I did notice that. I was trying to think of all the stations that I listen to when I'm driving to and from work in Toronto who I would consider impolite, and I'm not sure I could really come up with one.
601 More polite. Your announcers would be more polite than the other polite announcers?
602 MR. SHEPPARD: I might add that our listening audience is the first to bring us to task if we forget manners, I can assure you.
603 COMMISSIONER WILSON: I'm big on manners.
604 You make another comment in this vein on page 17 where you state that when selling your announcers won't exhort. So you're saying that your ads won't be like nationwide warehouse where the guy is yelling at you to buy something?
605 MR. MICHAEL CAINE: There is definitely a knack and a position when advertising to people 50-plus and it does require manners and it does require not the hard-sell type that you often hear elsewhere.
606 We have become quite good at it. In fact, Harry and I go quite often to 50-plus marketing seminars and make presentations just how to appeal to the 50-plus and especially through radio.
607 COMMISSIONER WILSON: I know I'm taking a bit of a lighthearted approach, but I guess what I'm trying to get at is how your station will sound different from the stations that are currently serving people in this demographic in the Toronto market currently.
608 Just one other very quick question.
609 On page 18 you mention that you sell video tapes and I was just curious what kinds of video tapes a radio station is selling.
610 MR. McDONALD: Very polite.
--- Laughter / Rires
611 COMMISSIONER WILSON: My background, of course, is in television, so, you know, my ears immediately perked up when I saw that.
612 MR. McDONALD: Yes. Over the years -- well, a number of years ago we formed a company called the Heritage Library and the Heritage Library was made up basically of a number of -- a lot of BBC video tapes. I'm talking about the comedy that a lot of people have seen over the years, "Keeping Up Appearances", "Tony Hancock", "Faulty Towers", all that type of thing, and we have been very successful over the years in selling those video tapes.
613 We have also expanded into CD-ROMs. We have a CD-ROM in Scotland, and I am very proud of that, but we have a British program, we have a Scottish program, also an Irish program. Therefore, Once again, we have been serving that community and we have gone out to big band video tapes.
614 We actually sell more -- not video tapes, CDs and cassettes. We sell more CDs and cassettes of the Spitfire Band than any other retailer in Canada. So it became another arm of CHWO and the service that we are presenting to our listeners.
615 COMMISSIONER WILSON: So it's really just a way of servicing your demographic to the fullest extent possible.
616 MR. McDONALD: Very much so. Always has been.
617 COMMISSIONER WILSON: Thank you.
618 I would like to turn to the Solutions Research Group Study.
619 I might just suggest you will have to speak up fairly clearly from the back row because with the fan it's pretty hard to hear sometimes.
620 But since the audience projections from the SRG study really form the basis of the business plan in terms of the revenue projections for PrimeTime Radio, I just wanted to explore some of the data with you and try to understand a little better how you reached your conclusions.
621 I admit to sitting at my kitchen table with my calculator. I'm obviously not in the ratings business, but I was trying to figure out how you got there from here, if I can borrow one of your own phrases.
622 So let me just take you through some questions. I guess the point that I'm really looking at exploring is how you get from the projected weekly reach of 32 per cent to the market share of 9.6 to 12.8 per cent, but I will just take you through a couple of questions to get there.
623 Now, at the beginning of your study you say that the household selection was based on the presence of at least one adult 50 years of age or older.
624 This may sound like a really picky point, but was that the person you actually spoke to, the person who was 50-plus?
625 MR. YIGIT: Yes, correct. The screening criteria was, you phone into a household, obviously -- and it's a random selection process. It's not from a database, Commissioner.
626 COMMISSIONER WILSON: But I mean --
627 MR. YIGIT: Yes, correct. You have to be --
628 COMMISSIONER WILSON: You can say, "Is there a person 50-plus in your household?" but then you don't speak to them.
629 MR. YIGIT: No, no. In fact, just to be accurate about this, at the end of -- the sample composition actually accurately reflects the gender and age distribution in the 50-plus age group in Toronto central, which is the radio market we are talking about.
630 So roughly, for example, 50 per cent of the 50-plus population is 50-64, another 50 per cent is 65-plus, and the study is really a microcosm. That 400 respondents fit in all material ways to that demographic. That's the fundamental part of it.
631 COMMISSIONER WILSON: Thank you.
632 On page 5 where you state the weekly reach estimates for the stations of the Toronto market for the 50-plus demographic group were obtained. That phrase "were obtained" is used a couple of times in your study, but it doesn't seem to me you actually told me where you obtained them. Did you get them from somewhere else or did you come up with those yourself?
633 MR. YIGIT: As you will note at the back of the Appendix, the full interview schedule or the questionnaire is also appended.
634 Just to give you a bit of a sense of how this market research really was done, after we find the person in the 50-plus age group in the household, then we ask them about their radio listening habits. We ask them how much radio they -- how much time they spent listening to radio. Then we go into questions about "What radio stations have you listened to in the last seven days and which stations do you listen to most often?" Those form the basis for what we refer to as reach projections on page 5.
635 So everything that is recorded in the research was obtained through the interviewing of this representative sample of 50-plus persons in the Toronto area.
636 COMMISSIONER WILSON: Do you double check those reach estimates for the stations in the Toronto markets against BBM to figure out whether or not they were accurate?
637 MR. YIGIT: The short answer is yes.
638 Just to give you an idea, BBM of course uses diaries to measure radio listening, and I have been active in radio measurement for about 10 years now and in every market study we like to just do a double check to make sure that we are generally in line.
639 There will be some differences between what BBM produces and what we produce because we use a telephone methodology which is more responsive to certain types of formats versus a diary methodology. For example, a diary methodology is not particularly useful or has problems in the young demographics.
640 But, in any case, in terms of the ordering of the station in the 50-plus demographic, the rank ordering and the weekly reach and share, you will find that our listing of reach numbers will correspond fairly closely to BBM numbers. They will tell you that CFRB has the biggest cume and share in that age group and we will tell you the same thing.
641 COMMISSIONER WILSON: Okay. Thank you.
642 Speaking of share, on pages 5, 6 and 13 you use two terms with respect to share. The first is "share of preference" and the second is "share of hours tuned" or "market share".
643 You talk about CFRB having a reach of 37 per cent and a 26 per cent share of preference in the 65-plus age demo, while CHFI has a 25 per cent reach and a 12 per cent share of preference in the 50 to 64 age demo. Then on page 6 you state that PrimeTime Radio has a weekly potential reach estimate of 32 per cent.
644 I did go through your calculations and your questions. You say that that implies a market share of 9.6 per cent to 12.8 per cent in the 50-plus age demo.
645 So there are a lot of shares being tossed around in two pages in particular, pages 5 and 6, and this is where really my lack of experience in the radio industry is going to express itself.
646 But I don't think we are comparing apples to apples here. You are talking about share of preference, you are not talking about share of hours tuned, are you?
647 MR. YIGIT: No, and that is actually precisely why those -- the terminology is distinct in that regard.
648 Share of preference -- let me just try to explain it this way: The best you could do when you are doing radio research using telephone methodology is determine share of preference, for a number of reasons. Share of preference really refers to this: Have you listened to a station -- let's say, how many stations have you listened to in the last week? Four. And then you could identify them.
649 The station that you listen to most often, as per this research, becomes your preferred station. So if in this market, in a different table, you will see that -- for example, let me take that location.
650 I'm on 65-plus age group. Thirty-seven reach means that of 100 people randomly selected in that age group in the market 37 will say that they have listened to CFRB in the past seven days and 26 of them will say that it's their most listened to or favourite station. So that is what we are measuring in the study.
651 Now, when we are translating the reach, potential reach numbers for CHWO, or AM 740 PrimeTime Radio in the second paragraph that you quoted, what we are doing is using our model and projecting a share number that is consistent with what you would use from BBM so that in fact you could plug that into a business plan. So we are not -- we are skipping the share of preference in that regard and just going directly to share.
652 I could go through the detail of that model. Just for background, the projection model that we use is not, you know, custom-made for this particular application, it has been in use in 1992 in every possible market you could imagine in Canada. So it's not something we put -- it is a bit of a -- it has a bit of a history, predictive history, if you will, in that regard.
653 So the 9.6 to 12.8 reference is comparable to a BBM-type of share projection.
654 COMMISSIONER WILSON: Just for that particular demographic, for the 50-plus demographic?
655 MR. YIGIT: I'm sorry?
656 COMMISSIONER WILSON: Just for the 50-plus demographic?
657 MR. YIGIT: Yes. The way the model works is -- just bear briefly without boring everybody -- we first project --
658 COMMISSIONER WILSON: I'm not bored.
659 MR. YIGIT: Okay. We first project a reach number, if you will. In this case we found after two filtered questions that 32 per cent of this demo might be weekly listeners to the station. That's about 400,000 people.
660 Then we literally turn that into share projection this way: Every station has a relationship of share versus reach, so if I take an example in Toronto, to give you -- Mix 99.9 had 20 per cent reach and 8 per cent share in the spring of 1999, okay. So that's a factor of .4, let's say. What that means is, .4 of your reach is actually translating into share.
661 So based on that kind of a logic we are saying, if it's, you know, 32 per cent reach, then your market share in 50-plus will be such and -- you know, 9.6 to 12.8.
662 Then the next step is to bring it down to 12-plus, which is the common, if you will, currency that all radio stations use to sell advertising. That's when you get into -- in the business plan I think the 3-4 point range.
663 COMMISSIONER WILSON: Okay. Thank you for explaining that to me and contributing to my education, because a couple of times you said that the weekly reach implied a certain share but the steps between the two was never explained in your study. So I appreciate the clarification.
664 On page 24 of your study you mentioned that 32 per cent of the respondents to the survey stated that there was too little of their favourite type of music on Toronto radio. Is it just coincidental that this is the same amount as the projected weekly reach?
665 MR. YIGIT: It's one of those delightful coincidences.
666 That question, by the way, is also included in every market research study we do on radio. It is sort of a proxy indicator of under served demand. So if I ask the entire Commission this question and if two our of seven said, you know, "Too little", then I would say, "Well, that percentage is under served. There is something there."
667 So it is a separate question that generates the 32 per cent number and through another set of questions, as you would have noted, we came up to about the same number. But that is pure coincidence.
668 But it is also quite powerful in that both two separate measures in the same survey research instrument is generating exactly the same result.
669 So the implication is that of that 50-plus demographic somewhere in the neighbourhood of -- if I look at all the numbers here, somewhere in the neighbourhood of 30 per cent to 40 per cent of that total feels under served.
670 Not everybody is under served. I mean, arguably they could grow into this format, and so on and so forth, but there are people in that demographic to whom this radio station would not necessarily be, you know -- it might be one of the choices, but not a favourite.
671 Does that answer the --
672 COMMISSIONER WILSON: Thank you. In terms of drawing audience from the other stations the 50 plus age group listens to, particularly CFRB and CHFI, do you know what per cent of their total audience they stand to lose to Prime Time Radio?
673 MR. YIGIT: Yes. That could be easily calculated using -- I believe there was on -- table 10 on page 28 of that appendix has a listing of all the different stations. I don't have exact numbers, but they are very easy to calculate because all we do is look at the audience composition for CHWM 740, which is that we are looking at 400,000 listeners.
674 If we make a very aggressive assumption that as per that table everybody, you know, who say that they might listen will switch from their current favourite radio station, then we could calculate for each station the number.
675 To give you an example, for CHFI, for example, 14 per cent of total. Again they make an assumption. If we assumed about 250,000 listeners, then 14 per cent of that would be about 40,000 and CHFI, in looking up my other figures here, has 910,000 listeners currently, if they all switch, which they won't do by the way, but this is to keep it, you know, straight and narrow. If they all switched, SHFI might go from 910 to 870.
676 I guess what I'm trying to say without going on forever is that it could be calculated at a theoretical level for each station in the marketplace.
677 COMMISSIONER WILSON: Okay.
678 MR. M. CAINE: If I could just add to that or remind you that none of the Toronto stations has intervened against this application in terms of their concern of potential audience loss.
679 COMMISSIONER WILSON: I did notice that. I just wanted to ask the questions while I had the numbers guy in the back row.
680 One of the things that you have asked for in this application is relief from the regulation which requires 35 per cent Canadian content due to the lack of inventory in the genre. I noticed on page 17 of the SRT study in the description of the new service that was read to respondents that not one of the artists' names offered as an example of type of music you will be playing was Canadian.
681 MR. M. CAINE: I will defer to Mr. Yigit.
682 COMMISSIONER WILSON: Canadian content is (technical difficulty) the largest. I just thought I would ask the question if Guy Lombardo wouldn't fit in there.
683 MR. M. CAINE: If the Commission deems Guy Lombardo to be Canadian, we will be happy to include him in the list.
684 COMMISSIONER WILSON: I would not (technical difficulty) to deem that. Who wrote the question?
685 MR. YIGIT: I did actually, but I know the last time I checked this, the Spitfire band I believe is Canadian.
686 COMMISSIONER WILSON: I guess that shows my lack of familiarity with adult entertainment.
687 MR. M. CAINE: Just as a point of (technical difficulty) we took great pain in trying to make sure that question is balanced and representative of what the station will actually play on the air and the four streams are chosen accordingly.
688 As you will note in the description, (technical difficulty) it's fairly clean and, you know, basic so that we could properly measure interest.
689 COMMISSIONER WILSON: That's a good answer. You said that the weekly reach for CHWO is currently 182,000. What's the total 50 plus in your coverage area?
690 MR. McDONALD: In the coverage area of CHWO or -- the coverage area of CHWO? About four million I believe it is if you look at the full contour. Are you looking just at the 50 millivolt contour business?
691 COMMISSIONER WILSON: I'm talking about your local station. You can't have four million -- maybe we are talking about two different numbers.
692 MR. McDONALD: We are obviously. I was talking about the full coverage area of the total station, not just the local station. I'm thinking about the AM 740 actually. Sorry.
693 COMMISSIONER WILSON: Yes, but I was going to say four million, that's the broad CMA population, but what's the 50 plus population within the contour of your existing station?
694 MR. CAINE: Commissioner, if you look at the map here and get some idea -- it's hard to tell from there. It's in your package, of course, the same chart. You can see then in the coloured areas, within the red contour there the 50 plus are concentrated along the lake and into the Etobicoke area of Toronto.
695 There's also a lot of lighter colours there, so they are not as concentrated within our red contour. The number that we were able to get from Bell Actimedia with respect to this map is that in the Golden Horseshoe -- now, within the AM 740 thing, this is what Mr. McDonald was just talking about -- is 1.5 million people over the age of 50.
696 You are asking, of course, what is CHW -- what is the potential that CHWO has in that area.
697 COMMISSIONER WILSON: Well, I guess what I'm interested to know is the relationship between the listenership that you receive and the 50 plus population that is within your contour in terms of establishing how much more demand there might be and whether or not your financial projections are realistic in terms of the listenership that you are going to get.
698 MR. McDONALD: The current audience of CHWO in the Toronto area, for instance, against 182,000 CHUM is 40 per cent. The Toronto audience for existing CHWO is approximately 72,000. The rest will then come from Mississauga, Oakville and Burlington and slightly less from Hamilton.
699 COMMISSIONER WILSON: Okay.
700 MR. CAINE: Does that answer the question?
701 COMMISSIONER WILSON: I think so. Going to the HYPN, what you did with this was you took the share, the projected share of 9.6 to 12.8 per cent of this demographic. You don't have anybody from HYPN here who can talk to this.
702 MR. CAINE: I'm sorry, Commissioner, no, we don't have someone from HYPN, but I think amongst us all we can provide you the answers you are looking for.
703 COMMISSIONER WILSON: I guess what I was hoping to get was just a thumb nail sketch of how the 9.6 to 12.8 per cent share of adult 50 plus translates into a 1.2 per cent share of the combined 18 to 49 and 25 to 54 age demographic and then into a potential share of the radio advertising revenues of 1.52 per cent.
704 HYPN goes through this, but they start with 32 per cent weekly reach. They move to the share that was developed by SRJ and then they take that through a number of calculations. I guess they're plugging it into a model like the model that you have been using for a significant period of time.
705 MR. YIGIT: I don't want to speak out of turn for another company, but it has been explained to me. They have a model that they use -- actually, they submit quite a number of projection type things to the Commission. It runs on 18-20 and 25-54 demos.
706 We didn't know this at the outset. When the research was submitted, they said "Well, we have got a model that predicts what you will do, but it's based on these demographics". Now, it actually ties back to another question you asked as to advertisers.
707 As of 55, people cease to exist. I mean this is mainly my domain.
708 COMMISSIONER WILSON: I'm not quite there yet.
709 MR. YIGIT: The average age for a media buyer in this town is about 24. The model works on that basis. What they did is they used a Vancouver station as a proxy to see if you have this share of 50 plus, will you have any spill into, you know, the 35 to 50 age group and what that might be and then worked out -- because they are saying that your audience in those age groups is most predictive of your advertising revenues in general. Okay?
710 I think what they have done is went from 32 per cent down to about 9.8 to 12.8, translated into about three and a half per cent share of the 12 plus market, okay, and they built in a little premium for the, you know, under 50 age group of people and said really, at the end of the day the market will recognize that audience more so than it will recognize the 50 plus model.
711 Now, Michael will have other things to say about that, but that was the basis of their projections that ended up with how a three share ends up being a 1.5 share of advertising revenues is -- they are saying not every share point in the market is the same value as the other share point.
712 If you bring in a demographic that is 18 to 34, I will give you a premium. If you bring me a different demographic, I will, you know -- I don't know if that helps, but that's my understanding of the basis of the projections.
713 COMMISSIONER WILSON: That is very helpful. Thank you. Mr. Caine.
714 MR. CAINE: Well, my only thing to add, as Kaan knows, I am prepared to jump in on this, is the projections, and perhaps the Commissioner is leading you to other questions that you are getting into in the business plan with it.
715 We want to quickly point out that the financial projections that are submitted to you are based on -- well, not based on but supported by the numbers from HYPN. What we want to quickly point out to you is that the HYPN analysis excludes 76 per cent of our potential audience.
716 Because HYPN, and they are one of the biggest and largest in the business, does not or has not yet developed the methodology for determining, as Kaan explained, for determining audiences over 50 that this is the way it ends and it's a tried and true formula. It has certainly worked many, many times before for you when you are able to determine those kinds of things.
717 In our particular demographic group that we are going after, we feel that the numbers that have been presented to you in terms of sales projections and so on are extremely conservative because the HYPN study actually doesn't even take into account three quarters of the audience we are going after.
718 COMMISSIONER WILSON: Yes, and I mean -- I guess I'm kind of laying myself bare here in terms of not understanding how this all works. When I look at the bottom line in terms of your projections, intuitively I see that they seem quite conservative, but I just wanted to try and understand a little better how you got your way there. It's just useful for me in terms of weighing everything.
719 I told you I had one very, very quick question on the Nordicity study which I did find very interesting, even though it's a little out of date. It did present some interesting insights into the market, some of which would still seem relevant. I just have this one question. It's not one of particular consequence, but what does AQH stand for?
720 MR. CAINE: Average quarter hour.
721 COMMISSIONER WILSON: I should have known that.
722 MR. CAINE: It's one of those radio expressions.
723 COMMISSIONER WILSON: (technical difficulty) you know, the lawyerly approach where the first time you spell it out and then you put it in brackets. I didn't find it anywhere. I work with so many lawyers.
724 THE CHAIRPERSON: This appears to be a good time to take a break so you can get some more lawyerly help.
725 We will resume at a quarter to two. Thank you.
726 Alors nous reprendrons à deux heures moins le quart.
--- Recess at 1231 / Suspension à 1231
--- Upon resuming at 1350 / reprise à 1350
727 THE CHAIRPERSON: Order, please. The application by CHWO.
728 Commissioner Wilson.
729 COMMISSIONER WILSON: Thank you, Madam Vice-Chair. I got lots of lawyerly advice during the lunch hour, so you know I followed up on that suggestion by the Chair of the panel.
730 I want to turn now to your business plan. You filed with us three statements of revenues and expenses, one for Prime Time Radio and, at our request, two for your current stations, CHWO Oakville, looking at the impact on that station of either an approval or a denial of Prime Time.
731 I recognize that you filed those latter two statements in confidence, so I will not be quoting any exact figures. I may be looking at the percentages and hopefully you have got the statements with you so that we can look at them together, but I do have some questions about those statements and some of the figures in them that I want to go through with you.
732 I will start asking my questions about all three of the statements. This is probably the area where you will see the most overlap because there is obviously sort of a domino effect through your other stations if this application were approved.
733 The revenues that you projected, if you turn to your projected financial statement of revenues and expenses for the new station, Prime Time Radio. The revenues projected for years one through five are precisely those that were calculated for you by HYPN.
734 This morning you said that a portion of your revenues from your current station in Oakville would move over and that that portion would constitute 60 per cent of your first year's expected sales revenues, and these are number I can quote because they are not in confidence, 1.8 million the first year.
735 When I looked at the statements, and I do have one big issue with the two statements that you filed in confidence in terms of your revenue figures, but approximately 35 per cent of the revenues for your Oakville station, based on the August 31, 1999 results, were gone as of year one and I assume into Prime Time Radio, so they would constitute part of that 1.8 million in revenues.
736 I'm trying to figure out how 35 per cent of the revenues from your current station equal 60 per cent of your total sales in your new station because by my calculations, it only costs you about 25 per cent of your first year sales if you move that revenue over.
737 MS GERRARD: I just want to clarify. You are talking regarding the comparison between 740 projections and between the JOY 1250 projections or the 1250 status quo?
738 COMMISSIONER WILSON: The JOY 1250 projections. If you look at the JOY 1250, in year one the revenues are 35 per cent lower.
739 MS GERRARD: Yes, they are. What we have done is the 1250, the sales related to the format on 1250 that will be moved over to 740, pretty well all of those revenues will be moved over and the sales for JOY 1250 are some current sales that are currently on CJMR right now because 1320 is split between some religious programming and ethnic programming. Those will be moved over to 1250 plus new air time commercial local sales as well.
740 In actual fact, the revenues that are showing on JOY 1250 are currently not reflected on CHWO 1250 right now. Have I made things more murky?
741 COMMISSIONER WILSON: Let me try that one more time.
742 MS GERRARD: The sales that are currently on CHWO 1250 with the 50 plus format will be transferred over to the AM 740 format.
743 COMMISSIONER WILSON: And that's about 35 per cent of the revenues that you show at August 31. Is that a consolidated figure?
744 MS GERRARD: No.
745 MR. McDONALD: Yes, I believe it is a consolidated figure. If you were to take the CHWO 1250 revenue and look at that, that's what we will be turning over to AM 740.
746 COMMISSIONER WILSON: Maybe we should go there first before we pursue this because when I went through these statements, sort of looking at how the revenues are moving, I looked at your results for the current station in Oakville in the CRTC database based on your annual return. Those are not the same revenues that appear on the statement in the approvals scenario for August 31, 1999. Do you have the approvals scenario revenue statement?
747 MS GERRARD: I'm sorry. You are looking at the numbers for the status quo 1250.
748 COMMISSIONER WILSON: No, I'm not.
749 MS GERRARD: The only location where we showed the August 31 numbers were for the status quo. The JOY 1250 is not showing.
750 COMMISSIONER WILSON: It is on mine.
751 MS GERRARD: It's kind of hard to sort this out if we can't actually use the numbers, but -- were the numbers from the deficiency list submissions?
752 COMMISSIONER WILSON: And these are the two statements that were filed in confidence. One is the projected statement of earnings and deficit for CHWO JOY 1250. I think you filed these two statements with some financial assumptions in response to a deficiency question. Yes. Locate the deficiency letter. I believe it was the first one, was it not?
753 MR. CAINE: I don't know if this is helpful, Commissioner Wilson, but of course the status quo assumptions were prepared before the annual statements were complete and mailed to the Commission, if you are talking August 1999.
754 COMMISSIONER WILSON: Okay. I'm looking for the sake of argument because the same number appears on both of the statements that I am looking at. Just (technical difficulty) I am looking at copies of these statements that are in my factum book prepared by the staff.
755 MR. RHÉAUME: Can I interrupt for one second? Maybe that will be helpful. Could I give the applicants a copy of what you are looking at just now.
756 COMMISSIONER WILSON: That would be really helpful.
757 MR. RHÉAUME: Thank you.
758 COMMISSIONER WILSON: Okay. Page 109. Okay. I believe that this is a photocopy of what you submitted to us. It's on blue paper, but it's a photocopy of what you submitted to us.
759 MS GERRARD: I find it now. My copy has that one column just removed. It was more done for public information. We didn't want to show the current year file, the current annual year's statement for 1999.
760 Yes, the numbers that you are looking at, under August 31, 1999, (technical difficulty) the revenues for CHWO 1250, the difference being in the sales is the management fee that we charged to sister company CJMR which on a consolidated basis is eliminated.
761 COMMISSIONER WILSON: It is eliminated from the amount that you report to the CRTC and which appears in your financial return.
762 MS GERRARD: No, no. It's (technical difficulty) between the sales and expenses.
763 COMMISSIONER WILSON: Okay. I guess it would have been really helpful to have a note to that effect under your assumptions because when I am reviewing these and trying to prepare my questions for you, if I don't know that then I have to try and reconcile in my mind and then bring to you now to reconcile why your revenues are 35 per cent higher than what we have in our database because that's a significant difference from what we are showing as the revenues for the station that you operate right now.
764 The number that we have in our database, and I can't say that number, is 35 per cent lower. It's actually closer to the number. If you look under the year one column, that's the number that we have for the August 31, 1999.
765 MS GERRARD: Yes.
766 COMMISSIONER WILSON: Okay. So explain to me, now that we have got that sorted out, explain to me if that's the level of revenues for the current station, how many of those revenues are going to move over.
767 MS GERRARD: We will be moving all of the 1250 revenues over. Those were the sales for 1999, year ending 1999. They are higher for this year as well.
768 COMMISSIONER WILSON: So that's how you arrive at meeting 60 per cent of your projected sales figures for year one.
769 MS GERRARD: Yes. One other note to add. In the calculations for the sales figures number, the Toronto rates that we would charge on 740 were used to equalize the sales so that they would be reflective of the 740 revenues, equivalent to the 740 revenues that we would see because on 740, of course, a higher spot rate would be allowed, we would ask for.
770 COMMISSIONER WILSON: Okay. Let me just turn you to the assumptions on the statement that was not filed in confidence, the one that we can actually talk about the numbers for.
771 In schedule 10 and in the presentation this morning, you said that you would be 65 per cent sold in year one in terms of your ad inventory. Under your assumptions, the assumption number that I am looking at is 2(e) for 740 Prime Time Radio, year one is showing 50 per cent. I am just wondering what's the difference.
772 I am looking at the fill rate. It's got 50 per cent of fill in the year ending 2001 and it shows 50 per cent. That 50 per cent is equivalent to the revenues that you are projecting based on the HYPN analysis of the market share.
773 MS GERRARD: Yes. The HYPN analysis of the market share, to arrive at the total dollars, works from the top down. What they would do, what they have done is determine what the total market revenue in Toronto would be, apply our 1.5 to 2 per cent share to that, and then they have applied the fill rate to that to lower it down to the 1.87.
774 What we did internally, we worked from the bottom up in that we estimate the number of commercials per hour, the number of spots per day, anticipated rate per spot to arrive at a total gross revenue. Our gross revenue figures were slightly higher than HYPN's. With applying a 50 per cent fill rate, that gave us an equivalent to HYPN.
775 Our sales numbers we feel are conservative based on the 1.52 per cent share we feel is low because of the amount of our demographic not included in the market study and also with the fill rate.
776 COMMISSIONER WILSON: Okay. Thanks for that explanation. This is more a question just for curiosity.
777 Under the three scenarios that you have provided to us, the 740 AM and JOY 1250 and CJMR, under your assumptions in 2(e) you calculate different number of spots per day, so the total inventory of spots that you are selling at under the three scenarios are very different. Actually you can use the blue sheets even if you want to and you will see.
778 MS GERRARD: Even comparing JOY 1250 with the AM 740, there is a reduced number of spots available because we have spoken word programming of which the commercial time is not -- is it eight minutes per hour. There may only be two or three. So the number of spots available for commercials is reduced on JOY 1250.
779 COMMISSIONER WILSON: Thank you. I want to ask you a couple of questions. Actually
Commissioner Wylie was questioning a party this morning on the same issue.
780 On page 18 of your supplementary brief you state that your launch promotion budget will be $400,00, half from station dedicated funds and half from contract arrangements. I'm assuming that the $200,000 for advertising and promotion which appears in your business plan assumptions for startup is the station -- represents the station dedicated funds of $200,000, half that $400,000 amount.
781 MS GERRARD: Yes, it is. That's for pre-operating costs. That's not the regular ongoing advertising costs.
782 COMMISSIONER WILSON: You may recall from this morning's conversation that -- well, the reason that I am asking and I mean you have been in this business a long time so maybe you can tell me how you think you can get away with what I would say is a pretty low amount for a Toronto area station considering that the average is 1.5 million. YPD Radio is planning to spend in the range of 1.1, somewhere thereabouts.
783 You know, when you consider the range of promotional and advertising activities that you are proposing to undertake, all of which are described on page 19 of your supplementary brief -- you talk about mass media advertising, billboards, transit advertising, television, newspapers, magazines.
784 It was just hard for me to imagine, considering the size of your coverage, the new coverage area, on 740 and the competitiveness of the market. I recognize to our simulcasting for three months, so you will bring those listeners which I am sure is an important contribution to your listenership. It just struck me that the $400,000 was pretty low, a bit low.
785 I think your ongoing budget is $250,000, again half in cash and half in contract compared to an average of 1.5 million a year.
786 MR. CAINE: If I could just start off and then I am going to ask our VP sales marketing to respond to that question.
787 Just from the competitive standpoint within the market, and we have already -- I am sure you are aware that this is one of the most competitive areas in the country, so I don't disagree with -- I am unaware of that number, but I think you said the average was 1.5 million.
788 COMMISSIONER WILSON: For an AM station, the typical AM station in Toronto.
789 MR. CAINE: Yes.
790 COMMISSIONER WILSON: The Toronto CMA spending about one and a half million dollars on advertising and promotion of sales.
791 MR. CAINE: Okay. I wouldn't have access to that information. Personally, that seems excessive to me from what I have seen in Toronto. We have been successfully marketing CHWO to this demographic group for many years now. We are looking forward in serving them again.
792 I think the word is going to get out very, very quickly. They have been looking for this kind of station in all of the letters of support you see. I think it's going to happen very quickly and the loyalty of those listeners to this kind of format is incredible. The Commission is more than aware of some of the format changes going on in Ottawa and what's happening there.
793 We believe that a great percentage of all the people within that black line are going to know pretty quickly about the single and only choice that they have, but we do need to obviously reach them. We have successfully done it with much less in terms of our budget.
794 I will ask Mr. McDonald to perhaps describe some of the plans on how we are going to utilize that $400,000.
795 MR. McDONALD: Thank you. I think right off the bat we are an existing station. We have an existing target market. $400,000 represented by $200,000 cash and $200,000 in kind will immediately -- the cash portion will probably go to the billboards, the transit advertising, newspapers and magazines.
796 That's when you are trying to reach out to the mass market. Now we have got to back up and start looking at the 50 plus market and how can we can target that specific area of advertising and promotion. That's where the existing publications within that market come into play, like Forever Young, Mature Lifestyles, the CSA news, Big Band World, Adult Lifestyles.
797 I mean there are approximately eight publications already targeting this market. Therefore, we don't have to immediately start buying the Toronto Star or the Globe and Mail or the Toronto Sun to reach that market. We reach a great portion of it already on the air waves, but then by supplementing that with these other areas.
798 COMMISSIONER WILSON: So you would generally --
799 MR. McDONALD: If I could hold this magazine up. This is our own organ too. Our next edition of this goes out in March of this year. That's going into 50,000 homes in the Greater Toronto area.
800 COMMISSIONER WILSON: That's 50,000?
801 MR. McDONALD: Fifty thousand, yes.
802 MR. CAINE: But not general, targeted to high density fifty plus by postal code. It's not just 50,000 going all over the city. We have targeted where they are going to go.
803 COMMISSIONER WILSON: Yes. I made that assumption. It's not in my house, for example.
804 The reason that I am asking these questions obviously is -- we were talking this morning about trying, when you have only two or three frequencies left in a market, you want to try and make sure that you are going to make the best use of it and that you are going to be able to create a demand amongst your target audience for the station. That's why I'm asking the questions.
805 I am certainly familiar with being very creative with a small amount of money in terms of promoting something. I have been there myself. The Toronto market is quite different from what you are doing now. It's much bigger.
806 MR. CAINE: It is much bigger. I think the response is rather than us creating the demand for our radio station, the demand is there. The demand exists. They are screaming at you. Thousands of them are screaming at you "Please give us at least one radio station out of a city where there are something like 23 stations, give us at least one that caters to the kind of kind of musical and information needs that we have. There is this little outfit out there in Oakville, but we can't hear it because of the interference of it and the restrictions". They don't know anything about it.
807 There's a wonderful letter in there from a gentleman in Guelph who set up a whole AM array around his house. He explained to me how he had to go and buy from all across the United States to get this equipment. The bottom line was to him "Why am I telling you all this? For God's sake, don't change your format". He finally was able to hear us with all this.
808 The demand is already there. We don't have to create it. That's why I said it's going to spread like wildfire when they finally have got a radio station and that big, beautiful 740 frequency, nobody is kidding ourselves about that, about how big it is. It is in my opinion in exact proportion to the need. The demand for this kind format all across southern Ontario, not only Toronto, is what's key to, as you say, Madam Commissioner, the best use of the spectrum. That's what we are trying to show you.
809 I think that even as little as you may be concerned it is, I think we believe anyway that it is more than adequate to get out name out in that year one.
810 COMMISSIONER WILSON: Thank you, Mr. Caine.
811 MR. CAINE: I beg your pardon. That's over three months. Yes, thank you, Jacqui. It's not year one. That's launch money.
812 COMMISSIONER WILSON: Right. And you have $250,000 a year. I realize the $400,000 was the launch money.
813 Can I just ask you a question about your capital expenses. For the new station you are showing $201,000 in capital expenses and in schedule 14 of your application you outline what that's made up of. Are you going to be operating this station out of your existing facilities in Oakville? It says new offices. It says studio leasehold equipment sales office.
814 MR. CAINE: No. We will be operating it out of Toronto. Admin, of course, we talked about the synergies of some of the departments, administration and technical, will be operated out of the broadcast centre in Oakville but no, the studio facilities, sales office will be located in Toronto.
815 COMMISSIONER WILSON: Okay. Maybe if I can turn you to page -- if you look at the blue sheets, Ms Gerrard, it might be easier to follow me, but page 111 of the blue sheets where you show capital assets. I'm not mentioning any numbers here, but you show capital assets for JOY 1250. They are significantly higher than what you are going to spend on the new station. Why is that?
816 MS GERRARD: The current capital assets that are showing for the JOY 1250 is in existence for the parent company right now, so it's a continuation.
817 COMMISSIONER WILSON: So those aren't new.
818 MS GERRARD: No.
819 COMMISSIONER WILSON: Okay. In the approval scenario, blue pages, 109, your projections in the scenario also indicate significant operating expense reductions for the Oakville station. Are these the result of synergies and economies of scale resulting from the combined operations of your stations?
820 I will tell you why I'm asking you. The one that I am most curious about is the reduction in sales expense because you are taking the station to a new format.
821 If Nordicity was right in its study was right when they said that a religious format generally appeals to non-traditional radio advertisers, I'm just wondering if you wouldn't expect that you might have to spend more on sales in the early years to try and build -- I realize you are bringing some existing format from CJMR over to JOY 1250, so you will bring something with it. I know you obviously have some experience selling advertising for that format, but you are going to be running an entire station based on that format.
822 I see a reduction in your sales expenses, for example. Would you not need to spend a bit more in the early years to try and build your advertising base for the new station?
823 MS GERRARD: You are talking about a reduction of our current reported sales.
824 COMMISSIONER WILSON: I'm looking at the financial assumptions for prime time radio, 2(e), the summary of significant assumptions and 2(e) is projected revenues based on a percentage of fulfilment of the total inventory of time available for local advertising. Should that read local and national advertising?
825 MS GERRARD: Yes.
826 COMMISSIONER WILSON: Okay. It shows two strains on your financial projection.
827 MS GERRARD: Yes. Those were combined for the 1.8. Three seven is a combination of both.
828 COMMISSIONER WILSON: But in the case of JOY 1250, it is strictly local.
829 MS GERRARD: It is local sales plus spoken word programming.
830 COMMISSIONER WILSON: Okay. So that would account for the differences then if you look at page 110 and 113 which show your projected annual sales. Then you look at the revenue line in those two statements. They are obviously quite different. The differences between the local sales and the revenues that you show for 1250 AM, the difference between the local sales and those revenue brokeraged times.
831 MS GERRARD: It's the sales showing on 110, line 110 2(c).
832 COMMISSIONER WILSON: Yes.
833 MS GERRARD: Those are for local sales, local commercial sales.
834 COMMISSIONER WILSON: If I now look at 109. I know you explained to me on the statement of revenue and expenses and then the assumptions for 740 AM that you have done a top down and a bottom up calculation to try and mesh the two approaches to arriving at the same number.
835 If you look at the revenues, the sales revenues that you are projecting for JOY 1250, years one through five, and you look at the annual sales that you are projecting, years one through five under that assumption 2(c), the annual sales for year one, for example, are only about a quarter of what your revenues are projected to be. So the rest of that would be brokerage time.
836 MS GERRARD: Yes, it is, current broker time.
837 COMMISSIONER WILSON: Current or projected because this is looking out. In the event that we approved your sub 40 application and in turn JOY -- you turned JOY (technical difficulty) into JOY 1250.
838 MS GERRARD: That is the current (technical difficulty) which is programming that would be transferred from 1320 to JOY 1250. It's not projected.
839 COMMISSIONER WILSON: Okay. Just give me a second here while I look at where I am at. Okay. Under the status quo, page 112, and this is where we don't approve Prime Time Radio and your Oakville station continues as it is, the outlook for your revenues is really quite spectacular, I think a 53 per cent increase over five years. Would you consider that a pretty good result? Sorry. Here I am yattering over here.
840 MS GERRARD: In the status quo the sales revenue figures include the management fee. Remember we spoke about that before? If you take a look at August 31, 1999, you are indicating that that number was higher than what was reported.
841 When we do internal projected statements, because we have the 1250, 1320, even in our budgeting we allocate those costs. On a consolidated basis they do, you know, they do mesh out. These numbers include the management fee for the projects for 1250 status quo.
842 COMMISSIONER WILSON: So what percentage of these figures would be the management fee? I'm looking at page 112, the year one sales revenue figure, for example.
843 MS GERRARD: I just did August 1999. It would have been about 31.5 per cent. The year one would be about 27 per cent.
844 COMMISSIONER WILSON: Okay. So then what is your actual projected growth rate under your status quo scenario? I should have brought my calculator.
845 MS GERRARD: It's approximately 20 per cent a year, just a little under 20 per cent a year.
846 COMMISSIONER WILSON: And is that based on your historical growth? Is that a reasonable assumption?
847 MR. McDONALD: Yes, it is. Historically over the last two years you have obviously seen the figures, Madam Commissioner, as being a large increase in local sales simply by the investment that we have made into that department. I think last year just finished, we showed a 25 per cent increase in local sales -- in local sales, not total sales. We will see that going forward like that for the next few years.
848 COMMISSIONER WILSON: Okay. Thanks. I guess I want to explore with you a little bit from the financial perspective the reorientation of the old station to JOY 1250. You describe that as a station being dedicated to family values, positive living and contemporary Christian music. I assume they would have polite announcers too, very polite announcers.
849 On pages 22 and 23 of your supplementary brief you provide lots of anecdotal evidence about why you think a station, a full service station because you already provide some of this on CJMR, but why you think a full service station would succeed in the Toronto market. You mention the Buffalo station which garnered a .2 share.
850 I just wanted to try and understand a little better what kinds of assumptions you used to project the revenues for the new Oakville station. Did you base it -- I assume you based it partly on what you are doing at CJMR. What proportion of your projected sales would that be and then did you also base them on repatriation of listeners from the Buffalo station?
851 MR. CAINE: To some degree, yes. To a larger degree, it's our historical experience with the format and what we expect to be able to do, but I will ask Harry and Jacqui to finish that answer.
852 COMMISSIONER WILSON: I notice that -- I mean the results on CJMR are better than the results for CHWL. I'm wondering how much of that has to do with this family oriented programming that you are doing on CJMR.
853 MR. McDONALD: At the current time on CJMR we are running the family oriented programming from 8:30 to 6:00 p.m. five days a week. The rest of the time is taken up by fulfilling our mandate as far as ethnic programming is concerned. That 8:30 to six o'clock plus two or three hours on Sunday morning accounts for approximately 50 hours of programming time.
854 COMMISSIONER WILSON: Considering that you have to (technical difficulty) ads, it's spoken word or are you playing (technical difficulty) Go right ahead. I'm sorry.
855 MR. McDONALD: Once again, from 8:30 to six o'clock there was approximately two and a half hours a day that is the Christian contemporary music. The other times, that would be then about the five and a half hours a day, that would then be spoken word.
856 COMMISSIONER WILSON: Okay. So I hope you had a chance to figure out what percentage of the revenues will come from CJMR under the approval scenario, under the JOY 1250 statement. What percentage of those, let's say the year one revenues, move over?
857 MS GERRARD: The year one revenue transfer over will be about 70 per cent.
858 COMMISSIONER WILSON: Seventy per cent of this number that's showing under the column labelled here "one" in the JOY 1250 statement comes from the other station.
859 MS GERRARD: Yes.
860 COMMISSIONER WILSON: Okay. What's your listenership like for the programming, family line programming on CJMR?
861 MR. McDONALD: It's not measured under traditional terms as is PBM, being under a specialized format with Christian and ethnic. There's just no way of measuring it. We tried to do a comparison with Vancouver when Vancouver were running their Christian station a couple of years back and we figured we had about 60,000 listeners weekly. That would only be for the Christian programming, not the ethnic. The ethnic is even more difficult to measure.
862 COMMISSIONER WILSON: You mentioned that there were maybe only a handful of stations like this in Canada, one of which is in Barrie. I guess if they're not measured then it's pretty hard for you to compare results.
863 MR. McDONALD: I think again when we were doing these numbers and Barrie wasn't on the air -- it only went on the air last August I recollect -- and once again it's a full time Christian station where we're not. You just can't make any comparison.
864 MR. CAINE: If I could throw a few cents in here. The advantage that this is giving us in this application in the approval scenario is, of course, that we are able to maximize the audience in the respective formats that we are serving, so we will be able to maximize too the returns on that.
865 By the 50 plus on AM 740, the family oriented programming that is successful but locked in right now to the ethnic format, the ethnic licence of CJMR and can't expand, will give it and there is a demand for it. There's not a lot of audience figures about it unfortunately because we only -- well, Jim Leek back here, the host of "Celebrate" and others just managed to convince the Junos to create a category for contemporary Christian music and convince them that there is a market for it.
866 There is a lot of research and a lot of information that needs to be done, but there's certainly a lot of examples. Seventy thousand people who fill up the Air Canada Centre, and they are on page 23, the page of reference, so that -- I'm just trying to give sort of the overall General Manager's admin point of view of how this is all going to fit and be beneficial to all the special interests that we are going to appeal to on the three stations.
867 COMMISSIONER WILSON: I was really just curious to understand how realistic the financial projections are in terms of when you are moving a chunk from here over to here over to here, how well are all three stations going to end up doing. It's quite a complicated package that you have put together.
868 Would you still be carrying Amy Grant songs on your family oriented radio station?
869 MR. CAINE: You bet we will, and a lot of others.
870 COMMISSIONER WILSON: It has been dropped by a few stations in the States. You have to (technical difficulty) They just didn't fit the image, I guess.
871 MR. CAINE: Because this is an exciting new area, especially in Canada, of contemporary Christian music, we happen to think in terms of new artists, new talent, there's going to be an explosion in this country of this kind of music.
872 I would like to ask Jim Leek, who is the host of "Celebrate" -- he is a performer himself. He is on the board of the Canadian Gospel Music Association, their advisory board. I would like him to tell you about some of those experiences with new CCM artists. Jim?
873 MR. LEEK: Yes. In reply to your question on Amy Grant --
874 COMMISSIONER WILSON: I was being facetious.
875 MR. LEEK: I know. (technical difficulty) embraces the answer to that. But yes, I am on the advisory committee to the Juno Awards as well as on the Board of Directors for the newly brought together chapter, Canadian chapter, of the Gospel Music Association International, have previously been on the board for the Canadian Gospel Music Association, been involved in the Christian music industry for 20 plus years and found it very frustrating because there was not the infrastructure in place to support Canadian Christian artists. That's why I was so excited five years ago to join on with CJMR and promote Canadian Christian artists.
876 It has been my experience in this past five years to see a tremendous increase, a proliferation if you will, of new Canadian Christian artists that are producing quality CDs that match up with anything that is produced south of the border. We have a number of Canadian artists that are doing well south of the border but aren't doing as well here in Canada because we don't have the radio support for them.
877 It's something that has long been on my heart and thousands of people that I have come in contact with over the past 20 years desiring to see Christian radio that's meeting the needs specifically of Canadians here in the Greater Toronto area.
878 All due credit to WDCX across the border, they do not play Canadian artists. They do not give public service announcements that relate to activities within the community here within the Golden Horseshoe area, so we need something that's here that meets the needs of people residing here in southern Ontario.
879 COMMISSIONER WILSON: So I guess when you are trying to figure out how well a station like this is going to do and you don't really have any measurements to base on it, it requires a bit of a leap of faith.
880 MR. LEEK: Thank you very much. It does indeed require a certain amount of prognostication, if you will, and leaping in faith, but I think there is sufficient evidence that there is a tremendous demand for it.
881 I have been involved in not only on air work, but a lot of promotions, going to various Christian concerts, conferences, various events and meeting the public, promoting CJMR and the Christian programming that was there. They said "We love it. Can't you expand it to be 24 hours?" I said at this point in time we can't, but now here's the opportunity.
882 I have also been involved in sales for CJMR and come across many clients who are advertising across the border who said you need a 24 hour station to make it reasonable for us to invest in you.
883 COMMISSIONER WILSON: Thanks (technical difficulty)
884 MR. CAINE: Commissioner, you keep opening doors, we will keep walking in with answers for you.
885 COMMISSIONER WILSON: Thank you, Mr. Caine.
886 I just have a few more questions for you. I won't take much longer. With respect to CJMR, the station is according to CRTC database doing pretty well, but if we were to license an ethnic station -- yes, you reference this in your supplementary brief -- if we were to license an ethnic station on one of the available frequencies in Toronto, have you looked at what kind of an impact it might have on, what kind of a financial impact it might have on your station?
887 MR. McDONALD: Devastating. It really would. When you look at what we are doing with our ethnic programming, once again we are fulfilling our mandate from six o'clock to midnight five days a week, 6 a.m. till 8:30 Monday through Friday, and then 18 hours each day on Saturday and Sunday. If there were another licensee or another ethnic licence granted, this would suddenly impact greatly on CJMR.
888 COMMISSIONER WILSON: That leads me actually to a couple of questions that I want to ask you with respect to the programming. I will start with CJMR.
889 As you know, we have issued a new ethnic broadcasting policy and one of the elements of that policy is taking a slightly different approach towards broad service rule in a market where there are multiple outlets providing programming.
890 I'm wondering if, sort of in the lead up to all of this, if they would have a devastating effect on that station if you have considered changing your approach. I guess it would require maybe some cooperation amongst the various ethnic broadcasters in the Toronto market in terms of who would serve whom, but essentially the approach taken for a market like Toronto where there are these multiple outlets that each broadcaster might serve fewer groups, but give them more time and thereby provide a higher quality of service.
891 Have you considered that at all, especially because here -- I mean you are talking about adding 50 hours a week of programming to that station now. Would you just continue on the way that you are going or would you maybe try and take a slightly different approach in view of the new ethnic policy?
892 MR. CAINE: Well, the new ethnic policy which we were very pleased to be a part of in the consultative process and made presentations on -- by the way, it's very good because we were very pleased with the 1986 policy. It's updated it very well.
893 In terms of the sort of a line or even fewer language groups that, Commissioner, you talked about, to some degree that's exactly what happened, at least in the Toronto market anyway. There are six stations, full time ethnic stations, CJMR being one of them, that are serving the GTA.
894 COMMISSIONER WILSON: With television.
895 MR. CAINE: And there's television and always a few publications. I would say that Toronto is extremely well served with the ethnic services that it has. We have -- that was the point I was aiming at -- we have to some degree sort of aligned ourselves within certain, you are aware, the number of -- the conditions of licence refer to the number of languages you are going to produce, not the number of hours you are going to devote to those languages.
896 In great measure, for example, CHIN is already very Italian. Fairchild is already very Chinese. In our case, we are South Asian. The predominant languages on our station on CJMR are South Asian.
897 We have almost aligned ourselves, without even knowing it to some degree, into the major language groups or cultural groups within the city.
898 COMMISSIONER WILSON: Some would say that's an example of the policy following the market.
899 MR. CAINE: That may be true and, of course, it's the changing face. It's difficult, I'm sure even with the policy, to keep up to date when the face of the population changes so quickly and so much in a short time.
900 The demand of the 50 plus population -- I'm sorry, of the ethnic population -- is being well served, I think, within the six -- at least in radio, the six radio stations that are there now.
901 The addition of the approximately 50 hours of programming that we will be adding I think can be added without any undue impact on the existing broadcasters. In actual fact, of course, CJMR is already entitled to do that to the 100 per cent ethnic. It's not a point that we actually considered.
902 COMMISSIONER WILSON: Okay. Thank you.
903 How much third language programming is CJMR currently providing?
904 MR. McDONALD: Seventy-five hours a week, 75.6 or something like that, 75.6 or something like that, 75, 76 hours a week which is 60 per cent of the total week.
905 COMMISSIONER WILSON: Okay. Just a couple of quick questions about JOY 1250. Are you familiar, and I would expect you to be, you have been in this business for 30 years, but you are familiar with the Commission's religious broadcasting policy.
906 MR. CAINE: Yes, we are.
907 COMMISSIONER WILSON: How do you ensure balance in your programming and how do you deal with requests that you receive seeking alternative viewpoint programming?
908 MR. CAINE: Jim, I'm going to let you answer this one.
909 MR. LEEK: Thank you. One would be through some open air phone type programming to allow callers to phone in and give their alternate view on situations.
910 COMMISSIONER WILSON: Good. My next question was if you planned any live open line programming. You have already answered that one. Okay.
911 A quick question on your Canadian talent development. There is just one of your commitments I wanted to ask you about and that's the $6,000 contribution to Theatre Sheraton and I am just trying to understand the connection between the musical theatre program -- I think I can probably guess, but just for the record -- the musical theatre program and Canadian talent development as it pertains to radio. Musical theatre hits would be the kinds of things you would carry on your station. Is that it?
912 MR. CAINE: Yes. That's basically it. I am going to answer that in just a second, but I would like to just sort of finish that point with Jim in terms of the balance on CJMR.
913 It's the response to the audience that demands the service that is important to take into account. That balance has always been there and has been there for years in terms of the programming that we present. The audience is going to demand the kind of balance that you are talking about, Commissioner. We are ready to respond to that. In fact, we want the time to be able to do it.
914 Theatre Sheraton. You happen to have touched on one of the softest parts of my heart as the founding Chair of the Friends of Theatre Sheraton. The Theatre Sheraton program is the third most successful program of its kind in North America, after Hollywood and New York, in producing young people on the musical stage.
915 It's an absolutely fabulous thing. I can sell you tickets to it whenever you would like to come down.
916 COMMISSIONER WILSON: At least you didn't offer to give them to me.
917 MR. CAINE: They are so strapped for money, Commissioner, that we have to sell tickets wherever we can.
918 They are absolutely wonderful, talented young people. The enthusiasm that we have for Theatre Sheraton and for Humber College for that matter as opposed to, say, FACTOR. Although we are contributing to FACTOR, on CHWO right now we have dropped our FACTOR contribution several years ago, not that they are not doing a good job, but quite frankly, they were not producing the kind of talent or promoting the kind of Canadian young talent in the genre that we present on the station.
919 When we saw Bryan Adams getting contributions and that kind of stuff, we thought no, these kids need the help. With government cutbacks, they are unable to maintain the quality program and the technical assistance for their program that they used to. Hence my involvement in them and our station's commitment to the Theatre Sheraton program.
920 Of course, it's the kind of talent, musical talent, that you get in virtually every theatre, not only in Toronto but throughout Canada. I would be willing to bet you that there is a music program grad from Sheraton in the cast of practically every major theatre in the country.
921 COMMISSIONER WILSON: Well, it's close to my heart too because I used to be in musical theatre when I was in high school. I didn't make my career there.
922 I'm going to ask you two quick technical questions, both of which you have heard already if you were listening this morning. The first one has to do with the fact that CBC when they vacated the frequency in favour of FM claimed that the signal was not satisfactorily received in certain areas of urban Toronto, primarily in the downtown core.
923 I'm just wondering if you have any concerns about that or if you have looked at it, have you made (technical difficulty) to do anything about improving signal reception problems as they occur? I guess you could say anything would be better than what you have got now, but that's not what I'm looking for.
924 MR. CAINE: Thank you for the lead in because from our standpoint, of course, in terms of coverage and reach, yes, 740 is obviously much better than we have now.
925 Just a little bit of history. Commissioner, you may know we were an applicant for 99.1 two years ago or three years ago. We were not as convinced, shall we say, as the CBC engineers of the problems that the corporation was saying they were having in downtown Toronto. We didn't think that their reception problems were as great as they were trying to indicate.
926 As an AM broadcaster of two stations right now, I am more than well aware of the problems of AM reception in built-up downtown areas. I would submit to you that all AM broadcasters have problems in the canyons of downtown Toronto.
927 Fortunately, however, the vast majority of the people that we are appealing to don't live in downtown Toronto, so this frequency is extremely well suited for where the 50 plus are concentrated.
928 The other point to that is that we are and have already invested in our financials and so on the investment into digital audio broadcasting. We are expecting 740 to go DAB fairly -- as soon as possible after we were granted the licence. That would certainly cover up -- I'm being presumptuous -- that would certainly cover a number of the --
929 COMMISSIONER WILSON: I didn't react.
930 MR. CAINE: Thank you. A number of the downtown core problems there might be in reception.
931 COMMISSIONER WILSON: One of the other questions that Commissioner Wylie asked this morning of YTV radio was about the appropriateness of the AM band. I wonder if you would comment on that in terms of your demographic.
932 MR. CAINE: Kaan, do you want to say something?
933 MR. YIGIT: Yes. There's some reference to that in the audience part provided for prime time radio and 61 per cent of the proportion of listeners to the new station, Prime Time 740, are current AM listeners, so there is a high correlation of the existing listenership to AM band versus, you know, in comparison to the market on average.
934 MR. CAINE: Which is not surprising, Commissioner, because they grew up with AM radio. They are well acquainted with it. As you have noted, I suspect, in the application we call them AM-friendly.
935 COMMISSIONER WILSON: Just to wrap up, I would like to offer you the same opportunity that was offered to the applicant this morning.
936 Just sort of sum up and tell us what in your view are the compelling reasons to grant you this frequency over the other applicants and in what ways your proposal would constitute the best use of this frequency, and any other questions I didn't ask I believe was the phrase that Commissioner Wylie asked that you feel compelled to answer.
937 MR. CAINE: Commissioner, I think you have done a good job at dissecting our application in asking most of the prudent and proper questions. We would simply sum up by saying, as I was mentioning to a reporter at the break, that the need for this service in a market like Toronto where there are 23 stations, and I have mentioned this already before, where you have the rock and the talk and all of the other formats, ethnic.
938 There is not one single station -- that doesn't mean that the people over 50 aren't listening to other stations to some degree, but there is not one single station devoted to the kind of music of their area and interest. They are helping me. What? Devoted to their kind of music that represents their genre and their generation, the kind of information programming, the relative speaking.
939 That's an exciting program to me where you have got three generations from the same family, where an older person is saying "Nobody listens to me any more", a younger person says "Nobody ever listens to me" and the poor parent in the middle is going "What do I do?".
940 Here's a program where they get to air their, whether it's cleaning up your room or to the war in Bosnia, where all three get together. It's sort of a throwback to the dining room table and everybody eating together.
941 The fact is that people over 50 take more day trips and overnight trips than any other demographic group, so we will be able to work with the Ministry of Tourism in Ontario and the Ontario Chamber of Commerce to produce programs like "Freedom Bound" and "Prime Time Trips" and all that kind of stuff, to become the authority on day tripping in Ontario.
942 The health and wellness, the financial affairs, travel, dining out, theatre, did you know the people over 50 buy more tickets to live theatre than any other demographic group? Nobody is advertising to them, nobody is promoting to them.
943 We know the 50 plus market. We also know the demand that they are creating, that they can't hear our existing signal and they want a radio station of their own. As I mentioned to the reporter, this beautiful big AM 740 frequency is in direct proportion and commensurate with the demand and the need because there's people all over southern Ontario who are over the age of 50 who want to have this.
944 We didn't supply you with that information, but I'm sure it's very easy for you to check the number of adult standards that there are in other communities across southern Ontario. I don't think there any.
945 This is a wonderful opportunity for the Commission, in our humble opinion, to satisfy a huge need, 1.2 million people, a quarter of the population of this city, that want this kind of service or are entitled to hear this kind of service.
946 The Commission has the chance to license CHWO with 740. Fortunately, this time around too you can also license the needs of some other special and niche interests in some of the areas that perhaps you were talking about before in ethnic or multicultural and that sort of thing in the other two frequencies.
947 The Commission does have a chance to kill a number of birds with one stone this time around. We are simply grateful for the opportunity to have made our case to you. We think it's a very strong one. Thank you very much for the opportunity to have made the presentation to you.
948 COMMISSIONER WILSON: Thank you to you and your team, Mr. Caine.
949 THE CHAIRPERSON: Counsel.
950 MR. RHÉAUME: Thank you, Madam Chairperson.
951 I just have one question at this time. It has to do with your business plan. In your pro forma projections you project total revenue over five years of $13.4 million and then looking at your operating expenses in programming as a percentage of your revenues.
952 I would like to know how you arrived at those projected expenses in your programming. I will tell you why I'm asking. If I look at your actual numbers in that regard for CHWO, and they are confidential figures so I won't quote any of those, but it seems that there's a decrease in the percentage at a time when you are entering what you describe as an extremely competitive market.
953 There you are. You are applying to enter the Toronto market and in your business plan you actually decrease your programming expenses as a percentage of total revenues. I would like you to explain what your business plan is in that regard.
954 MS GERRARD: One thing with percentages, it all depends what they are based on sometimes. In this case, program expenses currently are quite high percentagewise on average in comparison to the average station in our size market.
955 When we go to the AM 740 projections, they average anywhere from 42 down to 35, 33 per cent in year five. That's basically due to the increase of sale over the projected costs.
956 MR. RHÉAUME: I'm not sure if I understand. Your current figures, actually it's 1998, which are confidential, maybe the percentage is not. If I look over the last four or five years, you can see the range of the percentage of total revenues. But then if you go into your projections, there's a significant drop. I'm not quite sure if I understood your answer.
957 MS GERRARD: In our projections we do show an increase of programming costs in year one and accordingly. The previous projections were based on a lower sales level. It looks like they have done a percentage basis.
958 MR. RHÉAUME: I understand that there is an increase indeed in terms of programming expenses, but there isn't as a percentage of total revenue. Just answer my question. If you look at the current operation and the proposed operation, there's a decrease.
959 Again, my question turns on you are entering a very competitive market, extremely competitive, I think Mr. Keen used that expression, the most competitive market, but then in your business plan your decrease your programming output as a percentage of inflowing money.
960 MR. CAINE: I wonder if this would help. It's not so much that there is a decrease in the cost of programming as there is an increase in the cost of -- and maybe this is what Jacqui was talking about in terms of -- it depends what your percentage is based on.
961 We are already producing those programs and the cost of producing those programs are pretty well existing. There are some, of course, increases in the cost of our programming because we are entering a major market situation, but we are already very familiar with the costs of talent and the programs to produce.
962 The revenue, however, compared -- and again you are in a confidential area, but the revenue increases are considerably more for AM-740 prime time radio, so that there is a difference which makes it look like the program costs have gone down, but they haven't really.
963 MR. RHEAUME: Okay. So, (technical difficulties) It's that there is little relationship between revenues coming in and your actual costs. They are going to remain stable regardless of the money that flows in. Is that your answer?
964 MS GERRARD: Somewhat, yes. Yes, that would be.
965 I was curious also, you mentioned you have the '88 figures because I have the --
966 MR. RHEAUME: 1998.
967 MS GERRARD: 1998, sorry. I have the CAB stats for the bench mark stats for AM radio in major markets. It shows about 40 per cent programming costs. Did I get cut off? And that's for all AM stations and for AM stations that show profits it's 39 per cent and that's for 1998.
968 Our program costs are about 42 percent, down to 33 per cent of sales over the five years. With the number of programs that we have or already in existence, we wouldn't need to constantly inject the high program costs that perhaps other stations would require.
969 MR. RHEAUME: Thank you. I think you are answering my question. The figures I have over five years, $4.3 million in terms of programming expenses, I'd say projections, against $13.4 in terms of total sales revenue, is that fair? Is that the figures you have?
970 MS GERRARD: I just don't have them.
971 MR. RHEAUME: If you have the blue page 105 you will see the figures I am quoting from.
972 MS GERRARD: Was that 105?
973 MR. RHEAUME: The blue page 105.
974 MS GERRARD:
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975 We only have 109 to 114.
976 MR. RHEAUME:
--- Technical difficulties / Problèmes techniques
977 You have answered my question. Thank you.
978 THE CHAIRPERSON: Thank you, counsel.
979 Thank you, Mr. Caine, and your team.
980 We will give you a deserved break and we will take one too.
981 We will be back in 15 minutes. It will allow the opportunity for the change in contour maps and parties, unless you want to stay and help finish.
982 Alors nous reprendrons dans 15 minutes, at 3:25.
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--- Upon resuming at 1534 / Reprise à 1534
983 THE CHAIRPERSON: Mr. Secretary.
984 MR. CUSSONS: Thank you, Madam Chairperson.
985 I would just like to make an announcement before I introduce our next application. We have just been advised that Item 7 in our agenda, the application by Erin McNulty, also known as Good News Broadcasting, has been withdrawn from this hearing at the applicant's request.
986 This means that we can adjust our schedule later this week. On Wednesday morning, instead of Good News Broadcasting, we would start with Mr. de Brabant's application, followed by Mr. McNabb and Mr. Jolly.
987 On Thursday we would review the applications by Mr. Auguste, Fairchild Radio and St. Sava's Radio, and on Friday we would hear Enfavi Radio, Radio 1540 and possibly Phase II of the competitive process, where our applicants come back and comment on one another's applications.
988 So I would now like to introduce our next application by Gary Farmer on behalf of an incorporated body to be known as Aboriginal Voices Radio, for a broadcasting licence to carry on an English and Aboriginal-language native (Type B) FM radio programming undertaking at Toronto. The new station would operate on frequency 106.5 MHz (channel 293A) with an effective radiated power of 305 watts, and with a transmitter at Toronto/Hornby that would operate on frequency 740 kHz with a transmitter power of 50,000 watts.
989 The Commission notes that this application is technically mutually exclusive with the other applications scheduled at this hearing proposing use of the 106.3 MHz and 740 kHz frequencies.
990 Mr. Farmer.
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991 MR. FARMER: (Aboriginal dialect)
992 Madam Chair, members of the Commission, (Aboriginal dialect)
993 THE CHAIRPERSON: (Native dialect)
994 MR. FARMER: Merci.
995 We are before you today with three intentions, to offer you the vision which unifies our membership, to share the passion which ignites our effort and to convey the wisdom that flows through our plan.
996 This presentation to you is part of a circle of 80 volunteers working to realize the dream of an Aboriginal radio service for Toronto. Our experience is both wide and deep in native radio and other kinds of media.
997 We came together in 1997 through a radio training and production centre hosted by Aboriginal Voices magazine. We have produced and distributed radio shows to native stations and networks across North America. We have produced concerts, an arts festival, web casts and special event broadcasting in Toronto.
998 Three years above reach to the community has shaped our vision for an Aboriginal radio station. We based ABR's decision-making process on consensus, the customary form of inclusive and respectful decision making, the style of decision making reflecting indigenous community based ethnics and this restores the values that have eroded by colonization.
999 We are incorporating ABR as a non-profit organization with predominantly Aboriginal ownership/membership. Our radio is controlled and produced predominantly by Aboriginal people for the benefit of Aboriginal people in particular, and for all people of Toronto as well.
1000 MS PODEMSKI: It has been difficult for Aboriginal people to trust in Canada's institutions after years of betrayal and, more often than not, institutions have turned their backs on what Aboriginal people have to offer. One of the brighter spots in our dealing with Canadian institutions has been the CRTC, from the Native Radio Policy to the licensing of TVNC and ABTN, the Commission has provided a foundation for Aboriginal broadcasting, but now is not the time to stop. By licensing ABR the Commission can support our continuing efforts to build a media infrastructure.
1001 Over 30 radio services are received in the Toronto market. No current Toronto radio service reflects Aboriginal culture.
1002 Moreover, of the roughly 5,000 hours of radio programming available here, we know of only five programs with a consistent Aboriginal focus. Not one single station among 30-plus stations and only five hours of 5,000.
1003 And defining our audience isn't as easy as might be expected. Toronto is a cosmopolitan city, embracing people from many backgrounds. Aboriginal people are a part of this city and we have so much to offer and to contribute to its cultural and civic life.
1004 While you might think that only Indian people would be interested in our station, market surveys have shown an overwhelmingly favourable response from all Canadians. Our programming includes and welcomes people, all people, and is an offering to all of Toronto, and it is attentive to Aboriginal lives, experiences, aspirations and connecting to non-Aboriginal people.
1005 We can offer a new, unique perspective to the issues of the day, a perspective rooted in our relationship with history and the natural world. Aboriginal artists will have the opportunity to break through and present their many styles of music, whether it be Inuit throat singing, country, folk, jazz or the blues, and you can't get a more distinctively Canadian culture than that.
1006 Our programming will help our audiences better understand the Aboriginal perspective on our common history and heritage, whether it is about the great peace, the treaties, the War of 1812, Louis Riel and the rebellion, our perspective is a new and fresh one for Canadians.
1007 Think of ABR as the station of Toronto's Aboriginal people for everybody.
1008 MR. FARMER: Toronto's Aboriginal population is growing and our youth have special needs. Aboriginal people are restoring and reclaiming our communities through personal and collective healing journeys. Aboriginal people want to take part in the discourse which will shape the future of our lives. We need a radio voice to promote the struggle of a healthy community and build understanding between Aboriginal people and other Canadians, explore the ignorance of history and of the Aboriginal experience, provide role models and balance negative media stereotypes.
1009 Our programming will specifically show respect for all people through special initiatives for women, the elders and youth. Today you have the opportunity to licence a new and unique service. All the necessary elements have come together.
1010 One, we have identified a demand in Toronto for a high quality Aboriginal service that will entertain and inform.
1011 Two, there is a passion amongst Aboriginal people to share with all Canadians a wealth of indigenous knowledge, culture and positive values.
1012 Three, by consulting the community we have come up with a unique service that complements what is already available. We have designed a strong program schedule to serve a variety of needs and tastes.
1013 Four, we have secured the funding and developed a well through out business plan.
1014 Five, we have identified the frequencies which permit the required coverage, and;
1015 Six, we are the team that can put it all together, experienced, confidence, knowledgeable and up to the challenge, an Aboriginal non-profit group drawing from its membership and from the community.
1016 We envision that our station will become a flagship, producing programs for distribution throughout Canada and supporting native and Aboriginal stations across the country.
1017 Mme OBOMSAWIN: Il faut savoir qu'à peu près 60 000 personnes autochtones vivent dans la ville de Toronto, ainsi que plus de 100 000 personnes autochtones de l'Amérique latine. Parmi elles, il existe une riche communauté artistique qui s'est développée dans les disciplines variées.
1018 Cependant, dans les rues de la ville on peut voir bon nombre d'autochtones errants, perdus, le visage triste, se demandant où trouver un abri pour se réchauffer ou dormir.
1019 D'autres viennent à Toronto pour étudier et un grand nombre de familles s'y sont établies et y vivent convenablement. Tous ces gens possèdent une culture riche et la plupart d'entre eux parlent encore leur langue maternelle.
1020 Ce que tous ces gens ont en commun c'est le silence de leur histoire.
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1021 ... l'attention du reste des citoyens de notre pays et de nos gouvernements à leur égard. La Radio autochtone donnera la voix à nos peuples dans la ville, une place pour raconter leur histoire et entendre les nouvelles des autres peuples à travers le pays.
1022 Également, les derniers développements de toutes les négociations concernant l'avenir de nos futures générations et bien d'autres choses encore. Les langues autochtones, l'espagnol ainsi que le français auront enfin leur place. Les citoyens de notre pays pourront ainsi mieux comprendre notre côté de l'histoire vécue depuis les derniers 500 ans.
1023 MS PODEMSKI: We used a variety of community consultation and market research methods to identify community needs and interests. Two studies at major Aboriginal public events, three Aboriginal focus groups, two of which were used in students, and a broad market research study of Toronto residents aged 18 to 54 by Peter Doering. This gave us crucial information about the radio listening habits and interests of natives and non-native people. It established our programming plans and proved that an Aboriginal centred radio station is viable and integral to the community consciousness.
1024 In June of 1999 we provided a special event FM station to cover the Aboriginal Voices Festival. The feedback that we received there confirmed the interest shown in our market research. We also consulted the community at customary gatherings like the Toronto Powwow. These research methods demonstrate our commitment to reflect the Aboriginal community and led to our unique programming plans.
1025 Our proposals reflect the needs and aspirations that the community expressed to us and complement the radio services already available in the market.
1026 MS OBOMSAWIN: The community's interest guided our development of spoken word and music programming. The Aboriginal people of Toronto are representative of indigenous culture from around the world. ABR's commitment is to welcome and include them and make them all feel at home. The programming will reflect the diverse spectrum of everyone in our community.
1027 We will use targeted recruitment, volunteer training and various languages; French, Spanish, Aboriginal languages to reach out and ensure diverse representation on the air.
1028 Our Spanish-language programming will reach out to the Latin American people of both Aboriginal and mixed origin. Our French-language programming is reflective of both Canadian francophone Aboriginal people and indigenous francophone from around the world.
1029 Indigenous languages will be woven into the programming according to the community's needs and as we find resources. We plan to combine English and other languages on the same program to appeal to the young listeners in an urban setting.
1030 This approach worked well to attract young listeners to the Auckland, New Zealand Maori station.
1031 We will honour indigenous languages by including them throughout our programming and we will promote language retention and revitalization efforts to the community.
1032 Our news and public affairs shows will be as diverse as the interests of the many people and cultures in our circle. Our staff will work with up to 75 motivated volunteers to produce cutting-edge news, public affairs, profiles and features on subjects as varied as car repairs, comedy, respect for elders, Aboriginal cuisine, storytellers and the concerns of our youth.
1033 MS BOMBERRY: We will provide a diverse range of music programming not currently available on Toronto's radio dial. Our central focus will be Aboriginal and a minimum of 25 per cent of the music in each program we will air will be by Aboriginal artists.
1034 While much of this music will be in English French and Spanish, we will easily exceed the minimum of 2 per cent of all musical selections in Aboriginal languages.
1035 Your new music category system allows us to describe our music programming much more precisely. As seen in our music list in our application, we will be playing at least 40 per cent world music. So using your new categories, we would reduce the amount of pop rock and dance to a maximum of 45 per cent and provide a minimum of 30 per cent world beat and international music.
1036 Diversity will be ensured by our low repeat factor and low level of hits. We will exceed the Commission's regulatory requirements of 35 per cent Canadian content in Category 2 and 12 per cent in Category 3.
1037 We will feature both Aboriginal and non-Aboriginal Canadian artists through regular air play, special feature programs, in studio appearances, live concerts and other initiatives as funds become available.
1038 Aboriginal music is at the heart of our programming. ABR will provide a platform for local and regional talent, urban and rural talent, both prerecorded and live from our studios.
1039 MR. MANESS: Our revenue projections are based on conservative assumptions. The Doering study estimated that ABR would reach 10 to 13 per cent of Toronto, which would give us a 3 per cent market share.
1040 We have estimated selling one-fifth of our advertising maximum. We will bring in $380,000 in year one. Thus, estimated accounts for a potentially lower advertising demand for niche programming and uncertainty about the extent of our coverage.
1041 We also sought three estimates from national sales rep houses. Our projected revenue was 20 per cent lower than their lowest estimate. Furthermore, both advertising and fundraising revenue projections start low and grow slowly in subsequent years. This modest approach will ensure that we can easily afford the staff levels needed to exceed the minimum programming commitments.
1042 At least seven full time and six part time creative positions will be filled by Aboriginal people. These people will provide training for up to 150 volunteers a year.
1043 The amount of high quality spoken word programming will depend on the available resources. Canadian talent development will play an important role here.
1044 Our minimum programming commitments were just as conservative as our revenue projections. That's why we can talk of exceeding them.
1045 To sum it up, we have a solid plan based on years of experience in the not for profit native and community radio and backed up by a reserve fund of $750,000 and the expertise of our advisor's circle.
1046 Our technical plans flow from our need to reach the people of Toronto. CBC moved off 740 because apart from the limited AM fidelity, the coverage in downtown Toronto was deficient.
1047 We have a solution to that problem. By adding 106.5 we have proposed complementary AM and FM coverage areas. Alternately, 106.5 could be expanded to reach our goal of almost all of the CMA population with a directional antenna and waivers from a couple of out of market stations. So we have given you the details on how your decision could support expansion.
1048 We would prefer an expanded 106.5 because it's a better match for the reach and quality we need.
1049 MR. FARMER: We could talk about millions of listeners, but we know we need to win them one by one. Let's take a look at what people have to say about us.
--- Video presentation / Présentation vidéo
1050 MR. FARMER: There is no current Toronto radio service reflecting Aboriginal culture and there is a demonstrated market demand for Aboriginal radio. ABR is proposing a quality service with great programming. ABR has funding in a feasible business plan. This is the last chance until the digital radio for a frequency. The service is non-competitive with black and invisible minority applicants. Additional benefits arise for the Canadian system as a whole.
1051 Members of the Commission, the time has come, (a) for an Aboriginal radio service in Toronto; and (b) for the voice of the first Canadians to be heard here in Canada's largest city.
1052 Just before replying to your questions, we would like to thank all those who have helped us get us here today, our team, the members of ABR, the community people who have supported us, the intervenors who will be supporting us and those who will appear before you later in the hearing, CHER-FM for its support and Newcap for its general financial backing. Thank you.
1053 THE CHAIRPERSON: Thank you, Mr. Tomson, Mr. Farmer and your team.
1054 Commissioner Williams, Please.
1055 COMMISSIONER WILLIAMS: Good afternoon.
1056 I guess just to give you an overview of the process that I am going to be spending the next hour and a half on, is I am going to cover through approximately 55 question and then I will be exploring about three or four basic themes, one being the financial viability and the high reliance on fundraising and uncertain revenue sources will be one area.
1057 The fact that your service would be run mainly by inexperienced volunteers would be another area. You may say they are experienced volunteers, and how the format will appeal to the broader community and other uncertainties.
1058 After going through these series of questions, of course we will have the opportunity to summarize with a closing statement presentation that pulls it all together for your best benefit.
1059 I know from some of the research I have done into your project, one of the things I read was your volunteers' vision statement and there are some pretty good goals, if I can quote from it:
"We strive to be the first among Toronto's radio stations to be dedicated to raising self-esteem and nurturing self-reliance among the first citizens of this community. Hence their aspiration to be one jump ahead in community radio."
1060 I guess that's where the JUMP! FM came from.
1061 So to begin the process I will start working my way through the questions. I guess where I would like to start is Newcap Broadcasting seems to play a very supportive role to your organization. In recent radio applications to the Commission they have -- as part of their Canadian Talent Development contributions they have made large financial commitments.
1062 If you could take a few minutes just to explain how you view your relationship with Newcap Broadcasting; two, are there any formal agreements between you and, if so, if you could discuss the nature of these agreements, and I guess third, assuming there is such an agreement then we would like a copy of the agreement to be filed with the Secretary.
1063 So just to recap, how do you view your relationship with Newcap Broadcasting? Are there any formal agreements between you and what is the nature of them?
1064 MR. FARMER: Thank you, and it's nice to be here among you all again.
1065 First off, the agreements that we have with Newcap are pretty well based on a verbal commitment, a handshake and we are in the midst of negotiation with them. We would be happy to provide those papers for you by the end of this hearing and we can hand those over to the lawyer at that time.
1066 Our relationship with them is like, basically, they are like a bank. They have a certain amount of money that they have put up in case that we can't raise enough funds on our own. We feel very confident with our modest proposal that we will be able to raise more than enough funds to operate our station as we have set forth in our application.
1067 They are simply there if we need them and our relationship with them is as simple as that. We are working with them in part to help with other applications throughout the country to supply dollars to our infrastructure to help us with programming and training above and beyond what our current business plan is as it's laid out in this application. All that is gravy on your potatoes, as it were.
1068 The relationship is nothing more than that. There is no -- all of our relationship with them over the past almost year has been very wonderful. They are very generous people and there is no sign of any kind of -- anything that they are asking from us other than we are the recipient of their Canadian Talent Development Funds as they apply in markets across the country.
1069 I think that answers all your questions, I am not sure though.
1070 COMMISSIONER WILLIAMS: You say that the relationship is similar to that with a banker. What are the fixed terms of repayment then?
1071 MR. FARMER: There is no repayment. There is no terms per se. If we need the money, we simply request -- it's like any other relationship with a banker I suppose. They need to see a business plan. They are looking for some audited statements in regards to the funding that they do supply to us.
1072 I guess that relationship is like the father co-signing for a loan I guess, so they are helping us that way, but that is simply the relationship.
1073 There is another part to that question, isn't there?
1074 COMMISSIONER WILLIAMS: Now, Newcap's loan is for $750,000 to pay ABR, to cover capital and operating costs incurred during the launch of your proposed station by way of a forgivable loan, but ABR will have to repay this loan as it receives money from unrestricted sources. This is from a letter between yourself and Newcap. How do you define unrestricted sources?
1075 MR. FARMER: If we receive any funding from something that is not restricted -- for instance, if we were to get a grant from the Norman Jewison Foundation, if those monies came in it's unrestricted, just money to help us in our effort for a broadcasting, that would be money that could go toward them.
1076 If we were to receive a large donation from someone for our efforts, if indeed we used any of the funds, then we would repay them anything that we used.
1077 If we got a grant from the government to produce programming specifically for a training initiative, then that money is restricted and it is specifically for that kind of program and we wouldn't be able to pay back Newcap. There is no interest on these dollars and so they are just there to help us in this big business with all the broadcasting to get on our feet and get established.
1078 COMMISSIONER WILLIAMS: So my understanding is that if monies that you receive are earmarked for a specific project, they would be considered (technical difficulties) and they wouldn't be part of a repayment?
1079 MR. FARMER: That's true. And also we have a plan to go ahead with this kind of operation for a couple of years, so that the other markets that they apply in, if indeed we receive those licences, then those dollars that are coming to us as Canadian Talent Development would be as well applied toward what they have put forward to us currently.
1080 COMMISSIONER WILLIAMS: I am going to move into the area of fundraising now. In your first year of operation fundraising activities represent over half, in fact, close to 55 per cent of your projected revenues. Can you spend a bit of time telling us about your fundraising strategy and plans and how you will go about obtaining donations from individuals, corporations and the government, and if you could be quite specific, even including in your answer the methodology you plan to use to secure each type of funds.
1081 MR. FARMER: Yes. We have struck a relationship up with something like Casino Rama, for instance, which is very supportive of our effort, with the 740 service we would be broadcasting right to the market we would be broadcasting right through the market that they are most interested in, that's attracted to their initiative. It's an Aboriginally-owned business. They have the dollars to support. They have committed a significant portion to advertising on the one hand, yet they are also willing to put money towards us as a charitable donation to do that kind of work.
1082 Our own ability is fundraising related to publishing. We have gotten dollars from the Canada Council, the Ontario Arts Council and many other foundations and corporate donors. We are finding that the corporate area in Canada is opening up far more, picking up the slack where government funding has somewhat fallen away, though we have a relationship the Department of Indian Affairs supported our initiative for our temporary broadcast and our festival. They are very excited by the possibility of reaching large numbers of Aboriginal people throughout this market.
1083 We expect that there are many other government areas in terms of training. Human Resources Development Canada is also -- we had a program with them, "Visible Beak," where we do training initiatives. Training is a big part of our development here and also there is a lot of other government areas that I would certainly like to explore, especially Heritage Canada. But there is a lot of opportunities for us to -- we don't feel that creating the economy that we need to run this station will have any problem at all.
1084 Jennifer Podemski would like to give you some examples.
1085 MS PODEMSKI: I just have a specific example of a fundraising initiative. I own and am executive producer of an all Aboriginal operated production company and am producing a television series on Aboriginal youth role models. One of our main initiatives is to raise money for non-profit organizations, such as ABR, which of course will be within the first portion of our launch. We are looking at 1,000-plus people attending a fundraiser in September. I think it's initiatives like this that can support and continue to support a non-profit organization like ABR in the future.
1086 COMMISSIONER WILLIAMS: Are the revenues from your fundraising activities indicated in your financial projections net of expenses? Have the expenses been deducted from the revenues as expenses related to the raising of these funds?
1087 MR. FARMER: Maybe Mark MacLeod can give you more detail on the formula.
1088 MR. MacLEOD: It's nice to be able to give a one word answer and that's they are. Well, it's not a one word answer. It is that there are gross figures. So I was looking up the answer when you asked the question, so it's either yes or no, depending on what you ask, but there are expenses in the cost that relate to all the activities involved in fundraising, including a full time development director who would be devoted to revenue generation. So it isn't the case where all of our staff are going to be preoccupied with producing programming and not able to focus on what it takes to fundraise.
1089 But I hope the Commission recognizes -- if members of the Commission have experience in fundraising, you would probably recognize, not only from watching the video, but just from appreciating the media savvy that this particular team has that fundraising -- we expect it will be a forte. It won't be an area that we will have to struggle in. We have a lot of connections on this team that built this application and we expect that we will be able to be very successful in fundraising.
1090 We have had a lot of interest expressed already in the station but, of course, people want to contribute to something. There is less interest in putting something into a development project than there is once people can be connected to actual programming that's on the air. So it's our intention to -- and we believe the fundraising figures are actually conservative. Our numbers would have been a lot higher if we had of felt we needed to push the figures higher, but we basically built our expenses and saw that we had enough staff and then put the revenue figures to match it.
1091 Just on this team alone, there is experience in fundraising with radio in Toronto. We have people who have been involved in over the air fundraising and fundraising in the community with Toronto and non-profit radio stations and we have a good idea how easy and difficult it is to raise funds in this city for non-profit radio. We are confident that these numbers reflect accurate estimates of how much we could raise.
1092 As was mentioned earlier, we have ramped those numbers up slowly. It's like kind of a cup half full, cup half empty. Our perspective is that the numbers are low and they ramp up slowly, rather than being high and staying at that level. It's a reflection of our confidence in our ability to fundraise.
1093 MR. FARMER: And lastly regarding that, we have a lot of support from Canadian artists outside of our community, for instance, Neil Young and the Crosby, Stills, Nash and Young tour that is about to take part in Toronto March 30 and 31. There is a co-operative deal with Neil and myself and our team to raise awareness and dollars at that time during those concerts, for instance. So there is a lot of support out there for Aboriginal people.
1094 COMMISSIONER WILLIAMS: Okay. My next question was how are you going to meet your targets without a full time person dedicated solely to fundraising activities, but am I to understand that the development director position you just spoke of would be dedicated towards fundraising?
1095 MR. MacLEOD: That person would actually be -- can I answer this Gary? That person would actually be dedicated to revenue generation in all manners, that is grant applications and co-ordinating the sponsorship and sales. So, in effect, part of their effort would be in going after the minimal levels of advertising that we are looking at generating as well. But they are in the revenue generation department of Aboriginal Voices Radio.
1096 COMMISSIONER WILLIAMS: There is a reason for that question. It was that in your application and in the information I have here you have four full-time employees; station manager, program director, news director and music director. Are you saying this development director would be added to that full time employee list?
1097 MR. FARMER:
--- Technical difficulties / Problèmes techniques ...had just employed through our current situation. We have two companies, one is AVR, of course, Aboriginal Voices Incorporated, which is the publisher, which is really the mother to Aboriginal Voices Radio which is a separate organization, but had just hired a fundraising consultant who is working full time for us in that regard for Aboriginal Voices Incorporated.
--- Technical difficulties / Problèmes techniques
1098 ...until such a time when Aboriginal Voices Radio is able to afford someone like that, but right now it's AVI that is carrying the ball on the fundraising for both situations.
1099 MR. MacLEOD: I think I can just clarify that the figures that you were mentioning for staff are in fact the programming staff, not the staff for the whole station. Is that possible? I am not sure where you are looking at the numbers.
1100 Our budget allows for seven full time and six part-time staff, including four and three in the programming area. So if there is a place where you saw it otherwise, I could check that out and see what was meant by it.
1101 COMMISSIONER WILLIAMS: So AVI, an associated organization, is going to be providing the development directors' contribution to AVR until such time as AVR is financially able to attract and retain some more positions. Is that what you are saying?
1102 MR. FARMER: That's the situation that is going on right now, yes.
1103 COMMISSIONER WILLIAMS: Is there any expenses to AVR as a result of that arrangement?
1104 MR. FARMER: You know, there has been some talk among the Board to really pay back AVI at some point in its development, but they are truly sister organizations and will continue to support each other.
1105 We hope that the radio empowers itself that it will certainly bring an economy to us that we have never, ever had before to engage and continue on publishing and other interests and media production.
1106 COMMISSIONER WILLIAMS: Okay. I am going to move into the area of government grants. You have stated that government grants are expected to be a significant source of funds, maybe the largest source. You have identified some government departments and we would need a bit more information on that, and agencies such as DIAND and Heritage and the Canada Council and other levels of government, both provincial, municipal and even federal.
1107 Have negotiations for any grants started? Is the process under way and, if so, which departments are you negotiating and if you are able can you give us an update on the status of those negotiations?
1108 MR. FARMER: I don't believe that we put any government funding into our proposal for this radio service. All the government grants -- it's not in our fiscal plan, if I am not mistaken, in the application that we put forth to you.
1109 Yes, we have had a relationship with federal departments in all areas regarding financing of various projects that we have undertaken in the arts and publishing areas over the years. We know, for instance, the Department of Indian Affairs has special initiatives designed at trying to better reach the people that they are trying to serve, so there is a sincere interest and I spoke directly to the Minister of Indian Affairs at the Assembly of First Nations and he gave me that they are waiting for the right time to get ahead and talk about where their support could -- at what level, et cetera, et cetera, but really there is a message that they are trying to reach Aboriginal people and having trouble. So we certainly know that we will be there to offer support and initiative in that regard.
1110 Outside of that, all the others we really haven't had a chance to sit down with them. We know that there is a lot of interest on the part of HRDC to empower people in the broadcast industry, both with the new initiatives at APTN and, of course, what our service will be providing. We hope that that will meet a favourable response from these people when we do have a licence in hand. I am sure there is a lot of interest in our community and people are just coming around to the concept that native people could have jobs in the broadcast industry. It's something that is a brand new horizon for us and we are all very excited about it. So we don't think that there is going to be any trouble in securing the funds that we need to do what we want to do once we get the licence.
1111 COMMISSIONER WILLIAMS: Okay. Another source of revenue that you have listed is for brokered programs. What would be the source of these brokered programs and do you have any producers interested in buying time for the exhibition of brokered programs on AVR?
1112 MR. FARMER: I had discussions with Pomerex over time, several other distributors of programming and several private broadcasters in the commercial realm are very interested to put some spots of Aboriginal programming in their cycles which they have never had. We are going to be at the forefront of producing radio, so we expect that there is going to be a lot of interest in trying to fulfil their CRTC commitments for a special place of Aboriginal people in the Broadcast Act, and we expect that there will be a lot of interest.
1113 We also put that forth because of the subcarrier possibilities of selling our subcarriers to communities that might be of interest to -- that there is a lot of possibility there to generate some income as well.
1114 MR. MANESS: Excuse me, I would like to add that we haven't look at or figured into our planning structure now having to use brokered programming because it has been our experience in our years of working with non-profit organizations, it's very difficult to get any kind of funding commitment from government unless you incorporate it. We are now in the process of going through that incorporation.
1115 It is very difficult to do any kind of fundraising, or do any kind of active fundraising. We can do all our planning. While plans are in place, we have seriously looked at all kinds of options for increasing our income over the next few years, but we have to wait until our organization is incorporated and that will happen in the near future. We are going after a federal incorporation.
1116 Until that happens, it is very difficult to put together any kind of comprehensive planning based on going to speak to anybody because we have always found in my years of working with organizations people don't take you really that seriously until you say, "Yes, here's our letterhead. Take us seriously. We have a bank account. Everything is set up. All we need is -- we can fill in your applications. We are very clear on what the objectives of our organization are. You can read what our mandate is. We can forward to you what our objectives as they are registered with the Government of Canada."
1117 Until that happens it is very difficult to move ahead. This is the point that we are at.
1118 We are going to go ahead. Our plan now is to go ahead with the incorporation as soon as we can, which would even take place before we find out if indeed we get the licence because it is very important for us to start establishing a positive, concrete cash flow prior to the kind that would go on here. But the critical point for us is to get our articles of incorporation registered, so we can demonstrate that indeed the money we are applying for is really within our organizational mandate.
1119 It is very difficult to go forward because of the way that funding is given to organizations because they have to look to find out if we are covered under our mandate in order to receive funding. If we have our organization papers together and in order we can say, yes, this is well within our mandate. So it's very difficult, except to keep those levels purely on the level of discussion. To get anything concrete requires that incorporation to occur.
1120 COMMISSIONER WILLIAMS: Thank you for that.
1121 I guess just coming back a bit to these brokered programs. In that you listed them as a source of revenue, I was curious as to what will be the source of these programs. Where will they come from?
1122 MR. FARMER: Well, we will produce them. We will produce them ourselves for outside of area networks that want them. There is a lot of need for Aboriginal programming right across the country. So we feel that was a source of income for us, that the skills that we will develop as broadcasters and the training that we will do among our community will create a market demand for the materials that we are perpetuating in Toronto. We believe that there will be a market for the materials right across the country.
1123 MR. MacLEOD: I would like to just make it clear because we seem to be going a little bit on a track here, that there is no inclusion in our funding plans for the first five years from any broker program revenue, no money from government grants.
1124 I am not sure if we made a reference in our application to these, you know, 100 per cent possible sources of funding, but not source of funding that we have included in our plan. We basically only wanted to project the absolute -- you know, the things that we felt we were confident within our hands to be able to do.
1125 There was a temptation, of course, to want to put together 25 employees, but you have to understand that there is non-profit radio experience on this team and that for us -- I mean, for many non-profit stations, and the Commission knows this, to have seven full-time employees and six part-time employees is total luxury. I mean, you know, we will be the envy of many other non-profits, if not all non-profits in this country.
1126 So you need to keep in mind that the level we are talking about here is high-quality programming done by volunteers and a paid staff mix, and that we very purposely left out SCMO rentals and all these other sources of funding which would allow us to expand and build that staff.
1127 Again, I just wanted to clarify that because you seem to be on a track asking where we are going to -- more detail about how we are going to get this funding, and it wasn't meant to be indicated that we are looking for revenue from those sources. Thank you.
1128 COMMISSIONER WILLIAMS: No. I agree, your business plan was put forward in a very conservative manner. In fact, some questions further down will say that maybe in fact too conservative. So, we will start exploring some of how you have just put in the absolutely confirmed areas in a further set of questions.
1129 Further on this brokered programming, what do you mean by a brokered programming?
1130 MR. FARMER: I don't know. What do you mean?
1131 COMMISSIONER WILLIAMS: I think we are in a quandary here. You go ahead first.
1132 THE CHAIRPERSON: Yes.
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1133 COMMISSIONER WILLIAMS:
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1134 MR. FARMER: Like Mike says, I didn't think that we put that in our budget, but we believe that there is a hunger for Aboriginal content. d We know that people who are in the private broadcasting arena haven't turned, don't know where to turn for programming.
1135 We also know, I know that in order to get a licence in this country you have to create a special place for Aboriginal people in the Broadcast Act. So, I think you have created a demand in that regard, especially to the private industry broadcasting issue in this country.
1136 I think that for the first time ever we will be in a position to offer programming as a service to the private broadcasting arena and possibly create an economy from that on the side, somewhere down the line, once we get up to the level that we think we will be.
1137 COMMISSIONER WILLIAMS: Yes, I agree there is the need. One of our earlier applications today was for a children's station and at some time during their programming day they were going to explain to six to eleven year olds the impact of the creation of the Nunavut, which was the largest land claim I guess in Canadian history. I was just wondering how they were going to do that. I didn't ask them the question, but maybe there is a way they could buy that type of programming from someone who has already put it together.
1138 Anyway, back to the question, if for whatever reason you fail to reach the advertising revenue target, I guess could and how would you increase revenues or I guess through fundraising and fundraising activities. How would you go about covering an advertising revenue shortfall if you didn't achieve your target?
1139 MR. FARMER: Well, we have that covered simply with the Newcap formula. Whereas, within the first five to seven years of operation if we have any shortfalls regarding the business plan that we have put forth to you that Newcap Broadcasting will be there to help us out, and certainly, hopefully, by the end of the first year of our operations we hope to be successful at least in some markets, so that that funding would be coming to us is a possibility anyway.
1140 COMMISSIONER WILLIAMS: So the answer I guess is Newcap will be there and this is based on your verbal handshake agreement with them, or are there any details? Is there any cap on Newcap's ability to contribute?
1141 MR. FARMER: Well, $750,000 is there for us over the first seven years of operation. So it's a significant body of dollars there for us. Of course, our advertising budgets that we put forth to you are projections. As was said in our opening statements, we really low balled it to give the worst case scenario, but there really won't be much problem for us.
1142 That's how I started publishing was selling advertising. We have a long term, seven years of publishing experience in the advertising market, so we published the book which is also non-profit. So, if we can survive in the publishing arena for seven years in this country, the broadcasting is a bonus.
1143 I mean, coming from someone who is in the print industry and the publishing, you know, radio is very sexy, so it is not going to be any problem at all. We think we will exceed those numbers we have put forth to you. Again, we came in to show you that the -- to low ball it.
1144 MR. MANESS: It has always been our position as an organization working towards non-profit status, we are in the process now, we have our plans in place to increase our membership.
1145 In the 25 years of experience I have had in working with non-profit organizations nothing succeeds like success. The worst thing you can do with a non-profit organization is set your standards, not necessarily standards, but your budget so high that it is impossible to reach them, that they drain the resources of your organization to the point where your product, in our case our programming is going to suffer.
1146 Nothing motivates people to get involved with this process. We are hoping to motivate volunteers. Not disheartens those people more than if you were continually -- don't reach our fundraising targets. We bring them on line to work and producing programs, and then before we produce the programs, "I'm sorry, folks, we didn't reach that particular level of fundraising," and they go away.
1147 What we are doing is we are boiling down our experience as an organization, based on what it is to grow up in this particular society, working with the federal government, working with corporations, going after private grants, everything. We know we have to start low. It is not our experience to start high. It is our experience to start low and grow because that's how we work with our people. We have that commitment.
1148 The question if our budgets appear low compared to other organizations, we are not trying to be a rock station. We are not trying to do that. We are trying to put together a vehicle to empower people. The only way we can do that with any kind of assurance is to put together a budget that's low, that's easily achievable, extremely easy to achieve. Whatever money we make above that is going to be focused as per our application on working on developing high quality spoken word programming.
1149 The reason why we are sitting here is we are extremely confident that our bases are covered. We can deliver quality programming as a not for profit organization. Our budgets are low, which is amazing as it may seem, but this is the way that we operate. We build first. We build our foundation. We maximize our strength.
1150 After that, when we reach that level, we pour all the money back into increasing the kind of content, spoken word. Will we have our membership in place? Everything will work. Thank you.
1151 COMMISSIONER WILLIAMS: Well, I admire your confidence. When you start off on a hard journey it is good to have the right attitude.
1152 In a letter dated to the Commission on November 5th you stated that AVR would be able to offer a viable service with no funding donation revenue whatsoever. Since the funding from the activities is a significant part of your revenue base, as we discussed earlier, 55 per cent, we are curious as to how you can make that claim.
1153 Maybe before you answer I will just speak a bit about these questions. The nature of these questions is to help you present your case as best possible and it is to bring out information that may not have shown up in your application.
1154 So I guess just to repeat the question now, it says AVR would be able to provide a viable service with no funding donation revenue whatsoever, but since funding represents 55 per cent of your business plan how can you make that claim?
1155 MR. FARMER: I will refer this to Mark MacLeod.l
1156 MR. MacLEOD: I spent a fair amount of time thinking about this and developing up my answer to you at the time, so I don't know if I can really elaborate on it beyond that point.
1157 We originally felt that our September 20th application that the small amount of money that we needed to actually get going, $150,000, was really all we felt we needed to get to air was something we could raise between the time we were awarded the licence and we hit the air. We thought maybe three months at the most it would take to get that money, given that people have already said, it's only verbal of course, but when you have a lot of people saying, you show them a video, they say they will give you money, we know we have a large number of clients perhaps to grab right away.
1158 So we felt that it was sufficient without having the funding reserve from Newcap and it wasn't our intention in applying to even have that reserve, but we had a number of things -- a number of people we had spoken to and Newcap was really the only company that we spoke to that had really come up and said, yes, we will put some money up because we think what you guys are doing is so valuable.
1159 So after we got the Commission's response that having no money up front, and thinking that you are going to be able to raise $150,000 after you get the licence is just not on for us. We need to know you have some money in the bank. We went to Newcap and we said "We need some money. The Commission is saying that they want to see something in a bank account for us, even though we don't believe we need it. We believe our plan -- we can do it without that money."
1160 So we worked out with them that surely three-quarter of a million dollars would be enough to secure a start up. We look at that as saying, okay, $150,000, that's -- if we go out and fundraise once you give us the licence and we get zero, nobody, no people on the street and nobody wants to give us any money, we have got $150,000 out of that Newcap money. If at the end of the first year we are totally off and we are down $200,000, then we draw down $200,000 from that Newcap reserve.
1161 But you should understand, it's our intention and we have made this clear to Newcap that we don't intend on drawing on any of that money. We don't think we need it. We think that we can operate this service without drawing in that funds, but it's money that they have made available to us and I guess that would be the main thing.
1162 I mean, the other side of that, I guess, besides having that reserve, I guess there are two ways I tried to answer it before I think. One is that we have that reserve, which is in a sense the easy way out. The harder way out is if we have some flexibility, not that we want to go below seven full-time staff and six part-time staff, but we could go lower than that if we had to. We believe in not reduce our level of service such that we would not be a high quality distinctive service in Toronto, but we picked seven full-time and six part-time as kind of a minimum that we were certain we could meet our language commitments.
1163 It's a lot that we are promising and I know you are going to get to that when your questioning time comes, but our response to sum up is that the reserve from Newcap and/or simply buckling down and saying "Okay, we have got to get some more money here, let's get out on the street, get the shoe leather going and find corporations, find individual donors to support us."
1164 COMMISSIONER WILLIAMS: Thank you.
1165 I guess the question was in a letter dated November 9th you said you could do with no funding donation revenue whatsoever and you answer is because Newcap would cover that. But in your AM/FM combined and your stand alone FM pro forma statement of revenues and expenses you have got fundraising activities in both cases representing more than 50 per cent. In this example $330,000 worth of fundraising as being the base part of your business plan in year one in either scenario, the AM/FM or the FM stand alone.
1166 I guess that's where my question is directed, to the November 5th letter and then your business plan. Your November 5th letter says you don't need the money and you could do it without any funding whatsoever, but then your actual pro forma income and expense portion of your business plan it represents 55 per cent of what's needed to make it work and this bare bones, most worst case scenario, most conservative type example budget it still does represent 55 per cent.
1167 I guess I am just trying to get an understanding of how that reconciles.
1168 MR. FARMER: If you could excuse me for one minute, I also wanted to let you know that Alanis King is replacing Jennifer Podemski as Jennifer has to rush off to an opportunity, so excuse me.
1169 COMMISSIONER WILLIAMS: Welcome, Alanis.
1170 MS KING: Thank you.
1171 MR. MacLEOD: I guess when we got the question from the Commission we didn't really understand why the Commission would suggest that we would not be able to raise funds.
1172 We have people on our staff who have successfully raised $100,000, $200,000 a year at other non-profit stations that in a lot of ways we believe are less attractive to donors than we think our service will be.
1173 So, I thought okay, a theoretical question is being posed. Okay, I will give you an answer, but it seems like a stretch to suggest that we would be that unsuccessful. There is nobody else across Canada at any other non-profit station that try fundraising that don't raise at least $25,000, $50,000, $150,000.
1174 We have a great team. We have got people that are in the media and we have got TV people, radio people on the team that know how to speak in public, that can get on television, that can get on other radio stations. We have got a good quality design team to produce excellent work. We are really confident about these numbers, I guess that is all I could really say. We believe we have the talent to raise that money.
1175 COMMISSIONER WILLIAMS: It sounds viable to me, but I guess getting back to the question, in a letter that you wrote to the Commission you said you would be able to offer a viable service with no funding donation revenue. That's what you said in the letter. What you say in your business plan is you have to get $330,000 a year and we want to know which one, do we believe the financial projections, the letter or is there some reason that it is stated differently in each of them? We are curious.
1176 MR. NacLEOD: I guess I'll -- you know, like I said, I thought about this and I can quote you from the response that I put in here. I put that if our fundraising projections fall short, I am paraphrasing, that we could make an additional series of expenditure cutbacks or add new areas of revenue which could replace the amount of fundraising revenues, additional revenue, you know, we expect will come from a variety of other sources.
1177 I guess my answer was that we could survive without getting any fundraising at all, that we would be able to cut our programming staff in half. We would be able to aggressively -- if funding was not an avenue for us we would simply have to transfer our activity to another area.
1178 Our goal on this station is not to sell all of our advertising time. We have picked an amount of advertising time which supports our activities, but maybe we would look at more aggressively selling advertising.
1179 I am actually trying to give you an answer. I am just not sure what you want to know. We could deal without any advertising revenue, we could do it, by cutting and dipping into the Newcap reserve fund or by getting other sources of revenue. The worst case scenario is more likely only raise half the money we say we are going to raise. That would be a disaster scenario for us and we were short by $150,000 or something. It doesn't seem conceivable that we could be shorter than that.
1180 COMMISSIONER WILLIAMS: I think you have answered my question and clarification re the letter. What I am hearing you say is that we will go with the budget that is put forward in your pro formas and the business plan, and that if something not very favourably financially happened to you then you would adjust your business plan to meet the new financial reality. Is that basically what you are saying?
1181 MR. FARMER: Yes, basically.
1182 COMMISSIONER WILLIAMS: Okay. We are moving to a new area now.
1183 THE CHAIRPERSON: Is it possible that the person who would get the business plan is not the person who wrote the November 5 letter?
1184 MR. FARMER: No, I think they are one and the same. Mark and I worked together primarily on both the licence and the business plan and all the letters.
1185 I am worried that there is -- the question that you are bringing up I am not sure I understand totally what you are trying to get at, so maybe with some clarity on that it might help us both. I think we are a little in the dark here.
1186 COMMISSIONER WILLIAMS: I think we got the information in the last response that was needed and that when he read from his response back to a letter and how he detailed it it was a small part of his total response and it wasn't really the main theme of the message is what I got from that.
1187 Based upon that we will go upon your financial projections that you have put forward for the licence period, which you have already said were very conservative and worse case type scenario, even though we have heard in a "worser case" if I can use that word, you would find a way of -- Martha will get me for this later -- will find a way of adjusting your plan accordingly.
1188 MR. FARMER: Yes, I truly believe that if we win this licence that fundraising will not be an issue. It will generate more than enough dollars to operate this service above and beyond what we are actually committing in this licence application.
1189 COMMISSIONER WILLIAMS: You have stated that if you are not granted a licence for an FM and AM then perhaps the coverage area of 106.5 could be expanded to include most of the Toronto CMA. I have a couple of questions in that area.
1190 Have your stand alone FM projections been based on this expanded coverage area and, if yes, what is the population difference between the current and the expanded area?
1191 MR. FARMER: I believe John Matthews would be the best to answer for you.
1192 MR. MacLEOD: Just one moment, we need to pull that page out of a licence.
1193 COMMISSIONER WILLIAMS: While you are doing that maybe I will read off a couple extra and then when someone's answering -- what service areas would be included with the expanded FM service and what proportion of the Aboriginal population currently reside in the expanded area?
1194 So, one, we want to know if your financial projections have been based upon this expanded coverage area and expanded FM area and, if yes, what is the population difference between the current and the expanded area?
1195 I understand from much of the material I have read there are several different ways of estimating what is the Aboriginal population. So, it isn't a test. We just want to know what your read on it is because just from the provincial -- federal and common knowledge methods there is a vast discrepancy in actual population data anyway.
1196 So did I give you enough time?
1197 MR. MATTHEWS: Yes.
1198 The stand alone FM revenue was based on a reduction of 33 per cent and it was based as well on an estimate that we would be able to reach between 75 and 90 per cent of the CMA population with the expanded FM signal.
1199 MR. FARMER: Our population in the CMA that he speaks of, the 90 per cent, sits around 75,000 people. Of course, with the 740 that increases dramatically to approximately 200,000 Canadian Aboriginal people, and then significantly beyond that if we include the Aboriginal people from Central and South America.
1200 COMMISSIONER WILLIAMS: Okay. So the financial projections have been upon the expanded coverage area? Is it an assumption in your financial plans that the FM would be expanded or are you basing your plans on the current coverage area?
1201 MR. MacLEOD: The answer to the question is our AM/FM combination was the basis of all of our financial planning and we offered the Commission a budget after being asked for it for what we thought would be a budget if we had a stand alone FM, and you have that in our licence, one of our additional question responses.
1202 As John just mentioned, that was a 33 per cent reduction in advertising. Of course, without the AM we would not have to pay for the AM transmitting plant which is a heavy expense, nearly a quarter of a million dollars a year, and then a few other expenses, less than $10,000 would change. But, essentially, all of the numbers that we have been talking about, talking about how conservative those numbers are, they are all based on the AM/FM combination.
1203 COMMISSIONER WILLIAMS: Thank you.
1204 Your revenue assumptions assume that you will only sell 21 per cent of your annual allotment of minutes of 504 weekly minutes in year one, and then you rise to 33 per cent in year five. Is it fair to assume from this that the current 504-minute limit does not affect your station, including the six minutes per hour maximum?
1205 MR. MacLEOD: Go ahead, Gary.
1206 MR. FARMER: Again, we low balled, came in low on that advertising for our first year just to present an honest appeal as to what we -- we don't want to concentrate on sales. We want to concentrate on programming. So we want to build our sales over the course of our first seven-year period to a level where we think we can exist and yet be creative.
1207 MR. MacLEOD: In fact, our projection is that we would have advertising at about the amount of .8 minutes per hour in our first year, rising to 1.3 minutes an hour by the fifth year. So, the answer is clearly no, that the 504 minutes or four minutes an hour maximum does not harm us in any way.
1208 It is not our intention to run a service that has a lot of commercials. We will be running sponsorships and advertising, but we will be charging a reasonable rate on those, rather than doing a high volume of cheap ads and that type of thing.
1209 We have talked about different sources of revenue. I want to make sure that the Commission is clear that we have tried to diversify our funding, so that in a sense there is some balance between getting money from advertising and getting money from corporations in donation form and from foundations and that type of thing. So we have tried to find some kind of balance, so that if one varies in a given year based on a difference in personnel or whatever it might be that we would be able to cover it on the other side of that balance.
1210 COMMISSIONER WILLIAMS: Have you had the opportunity to talk to our survey potential advertisers regarding their attitudes towards advertising on Aboriginal Voices Radio? Do you have any idea how the market will respond to your advertising sales pitch?
1211 MR. FARMER: Yes. We talked to all the major advertising firms that handle radio advertising and presented our initiative to them. They all responded very favourably toward the response.
1212 We know the federal government would be very interested in terms of its initiatives to put commercials on our air system.
1213 And we have surveyed a lot of aboriginal business. We are finding a lot of support in that area if we win the licence. Especially, there are negotiations going on with several companies in Canada who are interested to move into this major market. There are a lot of successful businesses, like P-Sales Trust, for instance, a banking institution primarily in the west who is moving this way and is very interested to see how this hearing goes for us, besides the Business Development Bank, Nova Scotia, CIBC, Bank of Montreal. All have aboriginal banking initiatives under way. They will all be extremely interested in our results at this hearing.
1214 Business in Canada in general is moving toward the native community, especially in the east, up in Nova Scotia and Newfoundland. The oil industry seems to be moving out there. A lot of them are looking for ways and means to do good things in our community in order to initiate business relationships with native communities.
1215 There is an astounding market of alternative energy, alternative building and development in native communities, and a lot of those industrial and light industrial giants are interested in our -- my discussions as well with -- Union Gas, people like that, who pull lots of natural gas from native communities throughout this country, are also interested in showing support in that regard.
1216 Outside of that, the casino situation, both in Saskatchewan and Ontario, are also showing significant interest, especially in our training initiatives and such.
1217 So we believe that the aboriginal people in this country are moving ahead in the business world, and we want to be right there with them. So the timing is very significant.
1218 MR. MacLEOD: There are just two points I would like to add to that, and that is our team was well informed from the close sister relationship with the magazine. Of course, Aboriginal Voices Magazine does a wide sweep of all types of potential advertisers and has a good feeling of who out there is sympathetic to aboriginal media in general, and in the course of the last year or so, as we have been working on the radio, we have been in close touch with the people handling advertising in the magazine, and have a fairly good idea about how -- we haven't done official surveys, but a feeling of how much interest there might be in the radio, and it is fairly universal in that area.
1219 And, secondly, we are expecting that our split of advertising would be approximately a third to a half in government money, like kind of problem-solving type ad campaigns and that type of thing, that about a third to a half will come from large corporations, like banks and other sympathetic institutions like Benneton or progressive organizations that want the image associated with a goodwill endeavour like ours.
1220 And the other third will come from retail, and that would be aboriginal businesses and other businesses that would see, you know, a 1 to 3 per cent audience as an audience they would want to get their advertising in.
1221 We clearly believe we will attract a sophisticated audience in a cosmopolitan city like Toronto and that there will be a -- you know, the advertising demographic, as it were, will be attractive to some companies despite our non-profit format.
1222 COMMISSIONER WILLIAMS: These financial targets for advertising, you expect to achieve these without dedicated full-time sales personnel? Who is going to be selling these ads?
1223 MR. FARMER: We sell the ads, we always have, and we will continue to. We have a sales force built into the seven/six, part-time/full-time scenario. So that sales force has been --
1224 Also, the magazine has worked off of commission sales. People as well, for the large part, work off of commission sales.
1225 MR. MacLEOD: I will just give you the facts and figures.
1226 The sales team is planned to be two full-time people selling ads and a development -- a revenue generation person on top of that, so there will be three people involved. But their costs are to be netted out of the expenses -- out of the revenue, I should say, so they will be covered in the actual operating of that.
1227 MR. FARMER: Another significant contribution would come from the Aboriginal Peoples Television Network, which will be appearing before you as well on our behalf, with of course the combo of having a national service for television in the largest market like Toronto, and we would be able to service them significantly, which also is very interesting to us because they would offer as well language diversity in aboriginal languages in the case of ads in support of programming that is going on on the television. That radio-TV combo will also work to our advantage, especially as the service is presenting itself to Canadians. So there is a big interest in us with APTN as well.
1228 COMMISSIONER WILLIAMS: In your proposal, where you are calling for four full-time and four part-time paid employees, how much of your expense budget is represented?
1229 MR. FARMER: That is a question again for Mark.
1230 MR. MacLEOD: Closing in on 50 per cent of our total operating budget is dedicated to personnel -- about 48 per cent.
1231 COMMISSIONER WILLIAMS: Does that include all employee benefits and expenses?
1232 MR. MacLEOD: Yes.
1233 COMMISSIONER WILLIAMS: What is your annual projected studio cost?
1234 MR. MacLEOD: Approximately $33,000 for (technical difficulties / problèmes techniques) and media materials.
1235 COMMISSIONER WILLIAMS: You talked earlier about incorporating your organization. Do you anticipate having to use professional consultants, such as accountants, lawyers and engineers, and, if so, how much of your annual expense budget does this represent?
1236 MR. FARMER: We have accountants and lawyers who have been working with Aboriginal Voices Incorporated for a number of years. We have a lot of aboriginal talent in these areas and many of them have been helping us along all along. I don't have an exact budget figure, but maybe Mark can help you with that.
1237 MR. MacLEOD: We had approximately $25,000 dedicated to engineering services. I can look it up, but we had, you know, a fee for an annual audit and a retainer fee for a legal firm, although we have had a lot of interest in pro bono work in that area, but it is included in the budget.
1238 COMMISSIONER WILLIAMS: Okay.
1239 How many hours a day are you going to work these four full-time paid positions? Is it pay plus volunteer or is it pay for a certain period of time?
1240 MR. FARMER: No. You know, we have regular work hours. You know, we are not going to abuse any labour laws. We are going to play along with the situation there. That is how we are planning to operate.
1241 COMMISSIONER WILLIAMS: Good.
1242 Your financial projections -- as we spent much time on earlier -- refer to a bare-bones operating expense. You talked briefly about where you would cut back in the event, say, that funding wasn't received. How would that affect programming and operations as a whole if you started cutting back from a pretty bare-bones operation?
1243 MR. FARMER: Well, it is going to affect it fairly significantly. It just means, I guess, I will dig in deeper myself.
1244 I have worked for AVR pro bono for seven years. I'm moving to this whole application process on my own. I'm totally committed to it. I would be more than happy to pick up the slack on the situation and work the rest of my life, as it were, to get this operation up and operating. I believe a lot of people in my community, if it is necessary, will do the same.
1245 All of our commitment to the board movement in the past year has all been voluntary and the native community has learned to exist with very little resources. We have had to. There has been very little support for much of the endeavours that we have undertaken in the cultural area in this country over the years. Now that is starting to turn around a bit, so we feel more confident than ever that we will be able to step in these shoes and create the kind of service that we will be all proud of. If certainly the magazine is any indication, we will be very successful at it.
1246 COMMISSIONER WILLIAMS: The administrative function within AVR, is that performed 100 per cent by volunteer staff? Who in your full-time staff will be responsible for overseeing the day-to-day stuff like banking, bill payments, invoicing, accounts receivable, Receiver General, just the normal day-to-day administrative stuff?
1247 MR. FARMER: Yes. We have put staff in there, the station management, program management. Also, administrative support. We have administrative support staff included in this budget. We believe that the outline of seven and six will accommodate all of the necessary staff in that administrative level to take care of that.
1248 MR. MacLEOD: I can offer some specifics on that. Perhaps we should have done an overhead that just laid out our staffing commitment -- that was perhaps an oversight -- because we could have clarified that earlier when you asked your first question about staffing, but I will clarify it for you now.
1249 We are looking at having, in general in administration, one full-time and one part-time person, an operations manager or a station manager with basically an assistant in the area of programming having, as we mentioned earlier, three full-time people. The plan was for a program director overseeing all programming, somebody overseeing music and another person overseeing spoken word and, then, below them, in part-time positions, a volunteer co-ordinator, a production director and a couple of program producers.
1250 Then the remaining salaries are in the sales and revenue generation area, as we mentioned, which will be three full time and one part time.
1251 That total is seven full time and six part time, not including contracted engineering or legal help or accounting help. So that is the real breakdown. So when we say bare bones, that is our idea of bare bones.
1252 COMMISSIONER WILLIAMS: Okay.
1253 My next question deals with the AM/FM or standalone FM. Your advertising seems to indicate FM, on a jump to FM, but you do have two proposals before the Commission today. The first proposal is for a combined AM/FM frequency, and the second is for a standalone FM frequency.
1254 You have provided financial projections for both of these undertakings. When comparing the revenue and expense projections of the standalone FM compared to the AM/FM, we note the AM frequency will incur operating losses during the first five years of operation. Given these projected losses, why are you including the AM frequency in your request?
1255 MR. MacLEOD: I'm not sure what you are referring to in the way of operating losses.
1256 We actually propose in our financial plan to have a very small -- because we are non-profit, obviously we spend all the money that we pull in and put it into programming. In our first year we project a very, very small surplus. And with the advertising and fundraising figures that we have projected we show an increasing surplus every year.
1257 The idea would be that at the end of each year the board of directors would, depending on whether that surplus was realized, then turn it into increasing the staff component. So we would add another -- you know, we would make some of the part-time positions full time or add another full-time position.
1258 But right from our first year, there is no plan for any operating loss, and that includes the very expensive cost of operating the 740 plant out at Hornby that is included in the budget. That shows no loss.
1259 COMMISSIONER WILLIAMS: Great. Thank you.
1260 You have a projected audience share of 3 to 5 per cent among the 18 to 54 age group of the Toronto market. Are these projections based on combined frequencies or just the FM?
1261 MR. FARMER: They are based on the combination right now. We did present a budget as well, a figure, on the FM alone.
--- Pause / Pause
1262 MR. MacLEOD: Just one moment. We are just trying to figure out who can best answer this question.
--- Pause / Pause
1263 MR. MacLEOD: Yes. We need to just get a recap of that question, if we could.
1264 COMMISSIONER WILLIAMS: I'm sorry. I was guilty of conferring with one of my fellow Commissioners. What did you say?
1265 MR. MacLEOD: You just made my point. I was talking when you were previously asking the question, and now we were talking and now we can't remember exactly what your question was.
1266 If it is about a coverage area, then it will probably be John. If it is about how that coverage area relates to revenue, then I will try and answer.
1267 COMMISSIONER WILLIAMS: All right. I will repeat the question.
1268 You have projected an audience share of 3 to 5 per cent among the 18 to 54 age group in the Toronto market.
1269 Here is the question. Are these audience projections based on the combined frequencies, AM/FM, or just the FM frequency?
1270 MR. MacLEOD: It's based on the tandem of the two frequencies. All of the business planning is based on the tandem of the two frequencies except for the information we provided the Commission in November after the submission of the application.
1271 COMMISSIONER WILLIAMS: In terms of your projected audience, what is the composition of the projected audience? What percentage aboriginal, what percentage non-aboriginal? Who makes up your audience? What demographic is the audience?
1272 MR. FARMER: Well, we believe that -- well, because I believe that Canadian aboriginal people are at the centre of Canada and that everything that we face, whether it be taxation, dealing with the government in terms of land claims, in terms of the whole economy, of Indian reservations and the resources, and the fact that 50 per cent of Canada is still on land claim in regards to the situation out in British Columbia, we believe that we are at the thermometer of the Canadian population.
1273 Our market surveys that we did with Peter Doering show that we will definitely get our audience share, because there is sincere interest in the lives and the future of aboriginal people in this country and the role that we play within the Canadian culture and the Canadian psyche, so that we believe that our audience will be all Canadians.
1274 We also believe very much in our music format. The kind of music that we are going to present is a unique genre new to the Toronto market, world aboriginal music or world beat music, for which there is currently no -- at that level that we are going to be playing. It is going to attract a considerable share, enough to allow us to create the kind of programming that we think is going to be beneficial to all Canadians, so that we don't have any -- we think that we are going to be a popular station in the Toronto market.
1275 I draw this a lot from the experience of MY-FM in Auckland, New Zealand, who launched an urban network about 12 years ago playing much of the same music and the formats that we are suggesting and raced off to be number one in the market very fast. We believe that the time has come where people really are interested and anxious to hear the music that we are going to bring forth to the audiences. So we don't have any -- my interest and our interest is just to be a popular listening station.
1276 We believe that the nature of aboriginal people, and also the fact that we would like to operate the station from a nature-based society where nature, natural law or the essence -- that Mother Earth lays down the laws as opposed to man-made law and the essence that the world that we face and the environmental degradation that is all around us, that we are going to be a welcomed voice in the Toronto market.
1277 MR. HIGHWAY: I would like to add to that, if I may.
1278 My name is Thompson Highway. I am Cree from northern Manitoba. I'm a playwright, a professional playwright here in the city, and a novelist as well. I work within the context of a very national aboriginal literary community, a literary community that has made serious inroads onto the national and international literary scene, particularly in the last decade, that has made quite an impression, so that I can say with complete confidence, after having worked for the past 15, 20 years in the field, having been a cultural activist after my own fashion in the field of literature, namely Cree-speaking and English-speaking literature in the form of poetry, drama and fiction -- non-fiction as well I suppose -- there is a high -- increasingly every year a high level of interest and fascination on the part of the Canadian population as a whole in what is happening in Canadian drama, Canadian aboriginal drama, literature, and literature in general.
1279 And the ideas that are propagated through our increasingly skilled literary craftspeople is something that is of growing fascination for the Canadian population at large, as well as -- and even more so for the City of Toronto itself. It is like a remarkable, remarkable phenomenon but it happened in literature. And Canadian literature as a whole -- as you probably are aware, we have Canadian literature and we have international -- a powerful, exciting, passionate international profile. The aboriginal portion of that effort certainly has not gone unnoticed.
1280 It is very, very exciting to be working in the field today and promises to be even more so in the future, particularly with the existence of a radio station that will assist in the dissemination of this extraordinary form, not only in the English language, as I say, not only in the French language, but in the Spanish language, when we happened to, in the -- the very considerable Latin-American native aboriginal community here in the city, but also on top of that in the various aboriginal languages that are still active today -- Cree, for instance, in my case.
1281 MR. FARMER: The other part of our service that I think will attract audiences is that most of the service in Toronto, the other 30 stations, the multicultural and multiethnic, has been working east and west. Our service is very interested to work north and south so that we reach out and literally affect our brothers and sisters to the south who are very related to us. So that we think that there is a huge audience of new immigration into this country that is going to be interested, and we believe that that is really going to establish us as a number one radio station in Toronto.
1282 MR. DOERING: And the research does support that the audience will reflect the Toronto population as a whole. The people who are interested in the market closely match the demographics of Toronto overall in terms of gender and age, and there is above-average interest among visible minorities in the community.
1283 MR. MacLEOD: One more anecdotal piece of information, if possible -- actually, an example is more appropriate.
1284 We found that when we did our survey at the Toronto International Powwow to try and get an idea about how aboriginal people or people that were interested in aboriginal culture might respond to the station, we found that 90 per cent of those people seemed like they would be very active listeners to the station, and 70 per cent of the people we surveyed were aboriginal in there. So our expectation is that we will get a high percentage of the aboriginal population, whatever we decide that that number actually is.
1285 Of course, it is difficult to nail that down but, as Peter said, the interest was across the whole spectrum in the idea of finding out about aboriginal cultures.
1286 MR. MANESS: I would just like to make one point.
1287 COMMISSIONER WILLIAMS: Sure.
1288 MR. MANESS: When you start talking about identifying aboriginal people and trying to base them within a specific geographical situation, you will have a very difficult time doing that because that information does not exist at this point in time. Perhaps maybe in 10 years you will.
1289 This was a difficulty that I had when I first started working with -- sitting down with this organization, because I knew we would be facing those kinds of questions because of the type of -- the industrial focus of radio was going towards a demographic, you are focusing on numbers, the potential of numbers of people who are listening to your station, and I pondered a way of: How do we communicate interest in our culture? How do you quantify that? I have no idea.
1290 The only thing we can do is if you ask numbers and numbers and numbers of people in any kind of situation. You can ask them through survey questionnaires. You can do any kind of scientific data gathering you wish. You will come up with the same answer that, yes, they are interested in aboriginal culture, in learning about it. It has come to a point where it's a generalized question where you can assume a large proportion of people are interested in aboriginal culture, in aboriginal people.
1291 I know it must be very frustrating if you try to categorize using structures like what exists in the radio industry in Canada now, or in any industry, because those kinds of demographics, although we can say, yes, they fit, we have to accept the fact they really don't. They really don't have the same kind of meaning when you start talking about financial projections. You can't do that because your numbers -- because a basic assumption of statistics is your numbers have to be relevant on one side. Where you base your projections are they have to be solid, known. All the beans have to be there. Some of the beans will be orange, some of the beans will be blue. Out of that you make projections.
1292 When you start talking about the kind of market we are going after, and we are talking about the kind of information and content, you don't have any beans -- it doesn't matter what colour they are -- to gauge the projections. The only thing you have is the assumption, hopefully, the sensitivity that people have, that indeed people are interested in aboriginal culture because we have always, as aboriginal people, been put in the position of trying to come up with some kind of a definition, a statistical answer, of who we are, where we live. The federal government has yet to do it, StatsCanada has yet to do it, but everybody says you have to come up with something. Whatever we come up with, the powers that be say, "This isn't right", every time.
1293 I'm not trying to make a large issue of it. I'm just trying to relate to you the facts of the kind of world that we have to live in. We can come up with the submission to identify and fit within particular policy parameters. We can fit within economic parameters. We can do all of those things. We are really good at it. Our objective is not to make money. Our objective is to generate income based -- to generate further programming. That is what we want to do.
1294 I understand the question that started this whole discussion off of how many people will be in the different coverage areas depending on if we are going for an AM, FM or a combined AM and FM. We could pretty well give you that idea right off the top of how many aboriginal people live within Greater Metropolitan Toronto. We can give you the specific numbers of how many people live on reserves within the coverage area of AM radio. We can do that. Are you going to make decisions based on that number?
1295 Hey, those numbers don't mean a thing because it doesn't consider the amount of non-stats people; it doesn't consider the amount of Inuit people. It doesn't consider any of those things because that data does not exist. But we can do it. We can pull a number out of a hat too, and your substantiation of that being true is no greater than ours.
1296 The only thing we are trying to do -- we based our submission on interest shown by people in this particular municipality. Of that, we backtracked to come up and try to fit our substantiation within the policy parameters of the Broadcast Act. We did. We have tried to fit within the parameters of marketing. We have done that. We tried to keep it within the realms and our experiences of working with a non-profit corporation. We can fit within any kind of corporate act or corporate structure. We have no problem with that.
1297 But the difficulty that we face is the same difficulty that you are going to face: the numbers when you are dealing with aboriginal people outside of a specific community. If we were talking about a small reserve in northwestern Ontario going for a radio licence, that's easy. That number is known. It's very clean. When you start talking about people who live in a large municipal area like Toronto, I'm sorry, folks, but it ain't easy and it's not clean and those numbers are not known. We can give you our best guess.
1298 So how many people live in an expanded coverage area?
1299 MR. FARMER: You know, just to augment what Sherman is saying as well, there is an historical context of course which is -- you know, I myself have never stood for a Statistics Canada -- I'm not counted as an aboriginal person because -- you know, there is a whole historical context to this, of course, the Twenty-three and the Indian Act and the takeover of our communities. I'm listed in Indian Affairs as Oneida 642, but I'm actually a Cayuga because of the paternalism of how the government has treated indigenous people in this country.
1300 So it is very difficult the way this application is based on numbers. It's something that is based on -- we believe, and our audience surveys have shown, that there is a really great market demand for the products, the cultural industries that we produce as indigenous people in this country. We believe that we can correct -- you know, that we are the solution to bringing aboriginal people to the forefront of the minds and hearts of Canadian people, and that is why we are here today.
1301 COMMISSIONER WILLIAMS: Well, we spent the last hour on numbers, either projections or demographic numbers. You know, AVR is applying for a unique format radio licence in the most competitive market in the marketplace in Canada. It is also the largest marketplace. Over a period of time they have found that they need the numbers part of the broadcasting business to convince advertisers to spend with them, to set the rates, to measure their success or failure. So I don't think we can totally ignore numbers.
1302 Now, I see from your presentation that there is a variety of ways, just population statistics can be presented. What you have presented here, you are saying that according to Ontario Census there is 8,500, according to Statistics Canada there are 16,000, according to the Indian Registry there are almost 42,000, and then, according to conventional wisdom, which includes students, transient population and non-reporting, there are 75,000 or, in your presentation, 2 per cent of Toronto's population, and includes only Central South American aboriginal people, and then the Canadian statistics only reflect North American or native American Métis and Inuit people. So we will need numbers to make these decisions. Okay? It's a reality.
1303 You have stated in your application that in the city -- and maybe it is just your best guest, as Sherman said -- as you have stated in your application that there are, in the City of Toronto today, close to 200,000 aboriginal people of Amerindian origin. What ethnic groups are -- who is covered by Amerindian origin?
1304 MR. FARMER: That is when we speak of all the -- well, I mean, if you look at the Spanish population, there are more Spanish-speaking Indian people in Central and South America than the total population of the U.S. and Canada put together.
1305 The Los Angeles population of Chicanos is 7 million out of 11 million people. There is a significant force due to the Civil War situation in Central America, and, in the last 15 years, a significant amount of population has come into this country through immigration.
1306 That is why we believe that the Spanish-French-English combo, along with the complement of aboriginal languages, increases our population numbers to fairly significant -- and then when you look at the AM market and you include the 24 native communities and the 20 urban centres that we would hit with that, you know, we match -- you know, it's 250,000 Canadian aboriginal people in those urban regions. So, you know, it covers southern Ontario pretty well.
1307 We have a significant population outside of Toronto as well, in Hamilton and Fort Erie and Kitchener, Waterloo, and Kingston, Belleville. You know, those are significant populations of indigenous people in the southern Ontario region. In the end, we saw the value of that in our application for this licence. That is why we set forth with those numbers and we present those to you, that there is that number of indigenous people in this southern Ontario region to fulfil those two applications for an AM/FM combo.
1308 COMMISSIONER WILLIAMS: So from your presentation, 75,000 of these 200 are Canadian aboriginals, as I previously defined, and 100,000 are other aboriginals which are Central South American and North American.
1309 MR. FARMER: Yes. And that is not even -- that is not including the Mestizo populations of Central South America, which we didn't include in those numbers.
1310 The other situation we are dealing with here is you have to look at the history once again, unfortunately, with the foster -- the residential school system. Many of our people aren't even -- I mean, if you go around Toronto and you ask people -- I mean, there are so many people who have indigenous blood in this country after the three, 400-year relationship we have had we haven't even really -- there are so many other people out there who are a part, since aboriginal people have been here since the Confederation and beyond that for thousands of years. You know, our people are all over the place. But that is just us.
1311 We are also talking about another situation there that I know is difficult for you to comprehend enough to give us the licence, but we are talking about our points of view as well, which is again based around the natural world, and that is as well where we think we are going to have a tremendous audience response to the service that we will be providing Canadians that has never been the mainstay of any broadcast service.
1312 We believe that our aboriginal selves have a lot to share with Canadians in general, and we believe truly that the time has come for that message to be heard and those stories to be understood, in the context of all the history that I bring before you today to be understood. The new Canadians coming to this country, we find an extreme amount of support there. The new Canadians are anxious to know the history of this country and they have only been presented with one point of view.
1313 So we think it is really significant, especially in a relationship that is about to endure with the kinds of negotiations that are going around with that 50 per cent land claim, land base. There is a lot of ignorance about native people and our history here.
1314 If that is not kind of dealt with and talked about at a service like this -- that is what we are trying to provide is a service that those kinds of stories can be discussed. If that context is not established, I'm worried for my own survival as an indigenous person in this country. I'm also, you know, worried about our youth and how -- we are the fasted-growing population. After all the decimation that we have faced, native people are the fastest-growing population in Canada. We are significant. If we can use the Toronto marketplace to build a national service or a national programming service for our people right across the country -- because this is where the concentration of aboriginal artists are, is in the Toronto region, that is why it makes so much sense for us.
1315 MR. HIGHWAY: Having had the privilege of teaching at the University of Toronto in the recent past, in the field of Canadian studies, and more specifically within the Canadian studies programs in such institutions as the University of Toronto, there are specifically within that this thing called Native Studies -- I taught aboriginal mythology, for instance -- and I go and do lots of speaking at other universities and colleges and high schools. Within this area that we are talking about, we are talking about large educational institutions such as the University of Toronto, Ryerson University, York University, McMaster, Guelph, and so on and so forth, any number of institutions of post-secondary education, not to mention all the high schools, most of which, to one extent or another, do try to introduce some kind of aboriginal studies, native study programs.
1316 I can tell you, from having been an instructor and a speaker and an activist in that area, that there was tremendous hunger within the educational community alone for this kind of information, for the history of native people of this country, for the languages of the native people of this country, the political situation, and particularly as we go into the new millennium on issues of environmental concern which lie at the very, very root of native philosophy, which lie at the very root of the very structures of aboriginal languages. There is a tremendous amount of hunger in a non-aboriginal population for that kind of information for the students, for their children, because, up to this point in time, there has been, I think, just too much ignorance about the importance of the native people to the historical development of this country, and I think that an opportunity such as this is a very good time to rectify a shortcoming of that effect.
1317 Thank you.
1318 COMMISSIONER WILLIAMS: Okay.
1319 What is the source of your information? How did you get to these numbers, 175, 75? It says "conventional wisdom", but where is the source of that?
1320 MR. FARMER: The source for the 75,000 people on the aboriginal is coming from the Ontario Federation of Indian Friendship Centres, which operates approximately 40 friendship centres in Ontario and about 176 in Canada.
1321 The population of the indigenous people from the south is coming from primarily the resources of the Food for Chiopies Campaign in the Toronto market here who has had collective negotiations with all the southern populations that are immigrating to Canada.
1322 That is where we got those numbers from. The numbers that were presented to us are far larger than the ones we have actually presented to you, but we have reduced them for you, especially the immigration policies coming from the south in the Toronto area, in the southern Ontario region.
1323 COMMISSIONER WILLIAMS: Okay.
1324 You originally submitted an application for a community radio licence and then later changed your application to a request for a licence under the native broadcasting policy. I guess technically you could be considered under either one, so we would like confirmation of your intentions in this regard and explain why you prefer one over the other.
1325 MR. FARMER: The community or the native policy was actually written during a time when that was -- there was an Act in 1977, the Humlin Line cut the country in half, said that only three languages would survive to the year 2000: Cree, Ojibway and Inuktitut. That policy was designed for small native communities, the populations of 250 to 300, mostly in northern communities.
1326 I have spent 25 years of my life trying to bring recognition to the fact that southern situations in terms of language development and retention and the ability to communicate to an audience was necessary in the south. We are not disappearing; we are not going away. Again, we are the fastest-growing population.
1327 So, initially, when we looked at the application we thought that we fit the community radio application process best there to understand the southern needs of aboriginal people, that the combination of the native policy didn't really suit, but then we looked at the Broadcast Act and of course all the signals that are to be set aside and the effort to be set aside for native people and the special place of native people both in employment and in terms of broadcasting signals. We decided to opt and go toward the native policy and possibly set a brand new trend in terms of the southern situation of other communities or other urban regions in Canada coming towards you for operations in major urban markets like this.
1328 We also realized that we can't sustain the kind of operation that we hope to do in small communities. In order to really get to the essence of the programming, we need a large market in order to underwrite these activities. So, hence, we were confused where to go.
1329 In the end, we chose to go to the native policy, and we wrote that to you in a second letter after the question. And that is where we are still sitting, within the native broadcast policy.
1330 MR. MacLEOD: I would just like to add that I think the Commission should recognize that the native policy is far less restrictive in what it requires of stations compared to the community radio policy. When we were first putting this together, like Gary was saying, we had to figure out whether we were a community station that was aboriginal centred or a native station that was community focused. It could have been one or the other and we picked one and realized later that perhaps there was a political or a strategic advantage to be the other.
1331 But we never changed our substance of our application, it is still the same, and it is just a question of the Commission taking a look at -- you have a number of policies for community radio stations and a specific one for if they are native community radio stations. Like Gary said, we are hoping that by going under the native policy we will set a new trend for urban aboriginal radio stations and the type of community that they can pull together.
1332 MR. HIGHWAY: I just would like to say one thing, maybe just a little tiny touch on the humorous side.
1333 The fact is that, you know, as much as we love the fact that we have all these fabulous Canadians living here with us and people whom we love dearly, whether our fellow Canadians have been living with us for five years, for one generation or five generations, we find it just a little tiny bit uncomfortable to realize that when they say -- when the average Canadian says Saskatoon, Saskatchewan, Winnipeg, Manitoba, Chicoutimi, Quebec, Toronto, Ontario, Canada, that they don't realize that they are actually speaking Cree. I think maybe it is time we change the situation a slight bit.
1334 Canada, that is -- you know, like the average Canadian doesn't even know what that means, and that is kind of shocking.
1335 COMMISSIONER WILLIAMS: Just to remark on that, it (technical difficulties / problèmes techniques) aboriginal tradition is not always written down, it is an oral history that is handed down from generation to generation, and maybe there is an opportunity, if you are successful in getting this radio station, to develop something like the syndicated Paul Harvey column -- I don't know if you are familiar with it -- it is called "The Rest of the Story" from an aboriginal point of view programming idea.
1336 MR. HIGHWAY: Like "Dear Abbey" is short for "aboriginal"?
--- Laughter / Rires
1337 COMMISSIONER WILLIAMS: Well, it could be hard to get back to the dry questioning after that.
1338 What advantages do you perceive as being available under the native broadcasting policy as compared to the community radio policy? What are the main advantages/disadvantages?
1339 MS OBOMSAWIN: I think if we look at our experience with the radio stations in the Indian communities and reservations and Métis communities, the fact that they did acquire a radio station has changed their lives, not just in communicating with the people but for information, for the language that is being spoken at the local station, for the social meetings for people. You go into a reserve, you go into a community, and all the houses have that radio station on.
1340 For instance, I was in one of the communities one day and somebody on the radio said, "Hey, this man is beating his wife at such a house", and it took about 10 minutes and all the women were there and they beat him up. I don't think he was going to do that again, you know.
--- Laughter / Rires
1341 MS OBOMSAWIN: But it is a community kind of life, and the city has been totally forgotten, especially in a city like this. A lot of people that are living here live a very difficult life and are not really represented in the media as such. I really believe that a radio station here in this community, where the population is so high -- not only that, when you look at the -- it is known all over the country that Toronto is the place where you have the heart of the artists and all disciplines here. People come here from different communities or from different cities because they feel that it is easier to get into the art world.
1342 So a radio station here, for me, is not a luxury. It is going to be very good for our people, but also the teaching that it will do for the rest of the country I think is very important.
1343 When we talk about the land issues -- everybody talks about the land issues and aboriginal people right now. I have been with the Film Board for 31 years and I have been making films there and I cover social issues and injustices and land issues. Everywhere I go people ask me questions, questions, questions. You would think I was a dictionary.
1344 There is a need -- people don't understand what is going on in this country concerning the land. It is not explaining to the outside -- people are negotiating in secret, so people are wondering, "Hey, I live here in this municipality. Is this Indian going to come and take my land?" And there is no real human communication to relay and to respect and to understand the beginning of the relation with the people.
1345 All those things could be done on the a radio station such as this, because there is much a need for all people to really understand what that is about.
1346 MR. FARMER: I guess that is why we wanted to go with the native policy end, because we are native people and we wanted to take advantage of the situation, of course, the outlines in the Broadcast Act and the directive that came from Cabinet to you. So, in the end, that is the advantage for us, of course.
1347 MR. MANESS: I would like to add something.
1348 When we looked at the policies, like, probably summing it up in as few words as you can, policy for community radio is community ownership of community radio. If we switched over to the native policy, it is native control over native radio.
1349 Perhaps you can look at it as a semantic issue or you can look at it from quite a variety of points of view, but we prefer to be recognized as aboriginal people in control of our aboriginal institutions. Although we could fit under the whole notion of a community radio station, controlled and answerable to a board of directors made up of community members, that to us is not precise to us. For us, we almost insist on being recognized as aboriginal people. Hence, our choice was to pursue a licence under the native policy, which is native control of a native radio station.
1350 It comes down to what Al Niece said, what other people here have said. In summary, that is probably as concise as you want. We understand policy. We understand the whole notion of Acts and what they mean, and we know that there is a certain flux in how they can be interpreted, and we hope that the interpretation would fall in our favour because we understand what the notion of native radio was in the past.
1351 But what we are saying is it is time that that idea be defined as an aboriginal community living in an urban area. It may be a quantum leap but it is time for that leap to happen. Unless that leap happens, the same gulf will exist between our culture and the other people who live in Toronto. We feel very strongly about that. We want to really define who we are.
1352 We ask the people of Toronto, we ask the people of Canada to accept us as we are: aboriginal people who are developing an aboriginal institution answerable to the aboriginal people who live in this city.
1353 Thank you.
1354 COMMISSIONER WILLIAMS: Okay. I guess that is a good opening to the next question.
1355 AVR is applying for a unique format radio licence in, as we have said, the largest and the most competitive marketplace in this country. If the service is licensed, the Commission would like to ensure the integrity of the application process and to make certain that the service proposed will actually be the one that is offered.
1356 So what conditions of licence would you consider to be appropriate to ensure that AVR maintains its program orientation, and maybe just give us some thoughts on your background on how you think you would -- if economic necessity caused you, would you stray from your goals and vision and change or modify the station, or would you stay with what you were licensed for?
1357 MR. FARMER: No. We put forth that program schedule to represent our legitimate goals for reaching, you know, 25 per cent spoken-word programming, which we feel would exceed that. In our schedule, it is currently about 38.5 per cent spoken word, but we would like to stand by the 25 per cent. That is more than anyone else is doing in the Toronto market.
1358 We also believe in the 25 per cent Canadian -- 35 per cent Canadian content regulation of course, like everyone else. That is not an issue for us at all. We would like to stand by that.
1359 I realize that probably the biggest issue for you will be our native language or aboriginal language content, which we have suggested to be at 2 per cent with no regulation put on us about upping that. We want to stand by that, the 2 per cent. And we certainly have a really good argument for that, so we would like to present that to you, if you would like.
1360 But I guess the ones that we have put forth to you, we feel very positive that we are able to do that, and exceed those numbers very well, very easily. That is what our goal is to present.
1361 The other aspect of course is that the aboriginal music is, with the development of the Juno categories as such, at the height of its production and we believe that the music that aboriginal people create, even beyond our own communities -- and if we look at the world aboriginal community, there are services much like ours throughout the world that have existed for 40, 50 years: the Sammi populations in Sweden and Finland, or for 15 years with the Mauri populations in New Zealand. We believe that the human rights issues that we face are necessary for us to have those kinds of service.
1362 That is our goal for getting the licence, so we certainly feel that we will be able to fulfil the commitments that we have outlined to you in our application.
1363 MR. MANESS: I would like to add something to that, please.
1364 Basically, the conditions that we would like to have included in any licence we receive are the same conditions which we stated that we would fulfil in our application.
1365 COMMISSIONER WILLIAMS: Okay.
1366 MR. MANESS: Maybe there is another side to that: How can we provide you the assurances that we will fulfil those minimum standards that for us are defined in our licence?
1367 Let me tell you something. The CRTC's minimum standards are a tremendous amount lower than the community standards of the people who live in the city. They are going to make the kind of demands on us for the quality programming that is relevant to them. Their standards are exceedingly high. They have great expectations of what we can do, and it will be some discussion that we have when we get into our community meetings. Through a corporate structure, we will have to do some talking. We have to explain to them what our limitations are.
1368 Our limitations will be based on finance, will be based on human resources, all the normal kind of things that every organization has to face, but the expectations of our performance and our programming will be extremely high. They wouldn't let us get away with anything less than excellence, because that is the community standards of this particular community in the realm of media, and we set those standards. We would not be representative of a community unless we strive for the highest level of performance we possibly could.
1369 Included in that excellence is fundraising, avoiding that situation where we are in dire straits and the finances and the income compromises our ability to fulfil the standards of our community. I can only provide you the kind of assurances that the organization, of what you see here, will not get themselves into that particular position any more than any other person who is going after this licence can. None of us can.
1370 None of us knows what is going to happen down the road. We can guess real good. And if we guess in the same wavelength as the policies of the Broadcast Act, everything is fine. We can assure you of that. We will not get ourselves into a position where finances compromise our integrity in the programming that we are going to produce. That will not occur.
1371 COMMISSIONER WILLIAMS: Very good.
1372 The next area we are going to go into is going to deal with the volunteers and some of the programming issues.
1373 As I was listening to your presentation on getting a radio station licence and that sort of thing -- I'm from a small urban community. It is about 20,000. We are served in radio there by CBC, a commercial radio station and an aboriginal broadcaster. That is in spite of the fact that 90 per cent of the population is non-aboriginal, but that is still the make-up of the broadcast community, as well as it was one of the birth places of PVNC, which is the APN of today. So it is interesting to hear all of your arguments from a personal perspective as well as a business perspective.
1374 THE CHAIRPERSON: This may be a good time to give Commissioner Williams a break as well as you.
1375 Mr. Farmer, there must be someone -- so that you keep working during the break -- is there someone responsible for financial affairs or financial responses on this panel?
--- Off microphone / Sans microphone
1376 THE CHAIRPERSON: Is it Mr. MacLeod?
1377 MR. FARMER: No. I can handle --
--- Off microphone / Sans microphone
1378 MR. FARMER: Right.
1379 THE CHAIRPERSON: I just want to forewarn you that I will go back to the material you have filed with regard to your financial projections.
1380 I mentioned this morning before we started that this is a very competitive process and therefore we have a responsibility to have some comfort as to whether the proposals that are put before us will be the proposals that will be the ones that will be heard, at least for some time, to add diversity to the city, and that requires that they be viable.
1381 If you have the application before you, there is a Schedule 7 where you have assumptions which do speak of fundraising and the importance of the amount. Then you have filed pro forma statements of revenue and expenses for both the combination and the standalone FM. A very simple exercise would show that if fundraising was not successful your operating margins would be very seriously affected, so we need better comfort than we have now about how successful you are likely to be at that.
1382 Also, I would like to know what your intentions are with the $750,000 that will be made available to you. The letter says it will be made available for the launch. Does that mean you can draw it all down in year one? I heard you say $150,000 over the five years. Because if fundraising is not successful, let's say -- never mind the 5th of November letter, just take these assumptions, these projections that this is -- what we have before us, if fundraising was not successful, even with the drawdown of $150,000 a year, you would be carrying not an operating margin but an operating loss, which may -- I would like Mr. MacLeod to speak to how this is going to be managed, based on what we have before us, without the fundraising or fundraising that is lower than it is and what you will do with the $750,000. Am I making sense?
1383 MR. FARMER: Yes.
1384 THE CHAIRPERSON: I would like you to have a chance to look at that and come back.
1385 So look at your Schedule 7 where you give your assumptions. Under "Revenues" there are two sections: one is "Advertising" and the other one is "Fundraising". That tells us that you are not looking at grants, but you are factoring in fundraising to the extent that Commissioner Williams suggested. So, in all honesty, you have to clarify this and explain to us how your financial viability will be, at least, assured for a launch of what you propose for 740, because we have other proposals as well.
1386 So when we come back, Commissioner Williams will finish his questioning and then, hopefully, at some point, you will give us some more comfort at that level. Mr. MacLeod, agreed?
1387 So we will take a 15-minute break until around 6:15.
--- Recess at 1801 / Suspension à 1801
--- Upon resuming at 1825 / Reprise à 1825
1388 COMMISSIONER WILLIAMS: Is the rest of your panel coming shortly?
1389 MR. FARMER: Yes. They are upstairs. They are just on their way down. But we can proceed if you would like.
1390 COMMISSIONER WILLIAMS: Okay.
1391 I know it is your financial people that are away, so I will avoid questions of that nature until they return.
1392 I guess I have a couple of questions in the area of your volunteers. I recognize we have covered much of this ground early on so we may not need as much detail in the answers, it is just to cover off the area.
1393 You mentioned that you would dedicate 30 per cent of your first year exclusively to youth-based programs and programmers. How will you go about finding and recruiting these people?
1394 MR. FARMER: There are several organizations that are affiliated with them. Some of them have sent letters of support for our application to the hearing. Youth movements in this country, like I mentioned earlier, is the fastest-growing population, and these organizations are such that they are truly committed to developing programming.
1395 Most of the people that we are dealing with in the aboriginal community in Toronto are under the age of 30 years old, so that the youth force is the biggest force, population, that we have in the community. It is people around my age and above that are the lesser numbers. So the youth represent the majority population that we have in our community. It is simply through the training initiatives that we are undertaking, and we will be offering training situations in our communities, that we will attract the youth because they realize that media production is an interesting form.
1396 Also, all of the media training operations it seems that are affiliated with colleges that are specifically for native people have been cut back and are no longer existing. So, for the most part, there is a real lack of training going on in terms of media production, so we don't believe that we will have any problem attracting students to this potentially, you know, rich organization compared to what the situation is around the country. So Toronto will become the centre for youth in terms of media development
1397 And we believe that media development, especially in radio production, is key even prior to the development of television. I mean, I argued with my cohorts with APTN that radio should be the first because it is the best training ground in that area.
1398 So we feel very confident that the youth will adjust well to the oral medium, and that is where we are going to be pulling our workforce from, it's all in Toronto.
1399 With the work we have done over the last three years, we have a collective of 80 people currently right now with the average mean age around 28 years old. So it is a very youthful workforce that we have and they are really committed to this licence.
1400 MS BOMBERRY: I would also like to add that the major post-secondary institutions in Toronto -- George Brown College, York University, the University of Toronto and Ryerson Polytechnic University -- all have very active aboriginal student associations who have all expressed interest in the viability of Aboriginal Voices Radio.
1401 Thank you.
1402 MR. FARMER: Actually, the University of Toronto has a 240 member aboriginal student association.
1403 MR. HIGHWAY: Not to mention such colleges as George Brown and the Ontario College of Art and Design, which has a significant aboriginal enrolment.
1404 MR. FARMER: And we are currently in negotiations with Centennial College and the Bell Communications Centre there to begin training very shortly in that regard, because our events we have been broadcasting on the Web off and on experimentally for about one year and we are getting a lot of support from other major -- well, for instance, NewCap, you know, as well acquired Iceberg Media, which is probably the largest -- virtually largest Canadian operator of Web casting in the country. So there is some gel going there, too, in terms of our ability to access the high end in the operations for access and for training.
1405 MR. MANESS: If I could just add something.
1406 We are considering the training component, but generally the staffing, not about recruiting of just going out -- because we have access to all of the other aboriginal media to circulate jobs that are available, if so, if we need to go that route and because we have to have somebody to train, to keep training those people, and we always like to have a backup, and we want to build up the highest quality staff that we can possibly have and that we can possibly afford, we want to get high-quality people, we are going to train our own and import them, if we have to, from other parts of Canada.
1407 Thank you.
1408 COMMISSIONER WILLIAMS: Okay. One more question on volunteers.
1409 It is a pretty ambitious program, the schedule that you have pulled together. I guess we are questioning to some extent: Can volunteers pull off this project? Certainly they can in the short term, but day in and day out, over several years, maybe volunteers will develop other interests or go elsewhere.
1410 So I guess what we would like to know is: What experience do you have co-ordinating and working with volunteers and recruiting and replacing them as they tend to drift off over a period of time?
1411 MR. FARMER: For seven years I have published Aboriginal Voices Magazine totally training every staff member that exists there. We didn't have any experience in publishing when we started, and we went from a quarterly magazine after four years to a bimonthly magazine, and we are about to launch a monthly publication. It is all done with no experienced staff except for two of us who had any experience in publishing prior to undertaking that effort.
1412 What I find is that our people, once they adapt themselves and understand the realm of the work, have absolutely no trouble in raising and rising to the occasion to produce high-quality, informative, entertaining material, and we have a very creative community.
1413 MR. HIGHWAY: Can I just add to that quickly? Bear with me.
1414 As recently as 15 years ago there was virtually no such thing as a professional native actor in this country. As recently as 15 years ago there was virtually no such thing as a professional native writer in this country, like a novelist, a playwright or otherwise. Fifteen years later we have an entire community of professional native actors, writers, novelists, playwrights that stretches right across the country from Halifax to Whitehorse, and it has been a -- we have seen this amazing growth in the face of -- like in what were seemingly insurmountable challenges, but the growth happened and it continues to happen. It is, like, an incredibly exciting privilege to be a part of that wave of talent, and the future appears to hold nothing but more of the same in the medium of radio.
1415 MR. MANESS: This goes with the whole notion of volunteers. It is really important that within our organization we are going to really value those people, and you really respect. Through a corporate structure we will have on staff a person whose responsibility it is to manage and direct those kinds of -- the volunteers. We want to take it almost to the point where each person has a job description. The only thing is they won't be paid for it, but at least they will be able to fit that into their life, fit that into their busy schedule so we know that specific tasks will be done. It is just a question of working with those people and respecting them as human beings and they will keep coming back for more, to do more work for us.
1416 COMMISSIONER WILLIAMS: I think that is really important. I owned a cable company for almost 20 years and we had a volunteer-driven community access channel with 50 volunteers, and they tend to -- it is a revolving door kind of thing. But the job description and the person dedicated to co-ordinate them is extremely important because people get really gung ho, in our marketplace anyway, in the fall, but by springtime they want to do something else, particularly through the summer months, and that is when you really find that you need -- it is a big challenge to get people, because if you have already made a commitment to do a series of weekly programs you have to -- you can't threaten to fire them because they are working for free, right? So you have to find other ways to motivate, retain and keep them.
1417 Anyway, I think that is probably enough on the volunteer side.
1418 I guess we want to look at commitment to programming and the languages of aboriginal peoples. You know, you have a goal of broadcasting 5 per cent of aboriginal languages in year one, an increase of 2 per cent over the first five years of programming in the languages of aboriginal peoples of Canada. Tell us a bit about those plans. Maybe you can give us a thumbnail sketch of what the plan is in that area of this business.
1419 MR. FARMER: You can look at our program schedule. The first thing here is an opening address which is done in a language each day from 6:15 to 6:30. That takes care of our total commitment of 2 per cent right there.
1420 Much of our language is going to be coming through the music and the sounds that we create as artists. As you heard with Thompson, he is one of our significant playwrights in the community. His work will be heard on our radio station, which is a blend of Cree and English and French.
1421 Our languages will be coming, incidentally, through the programmers. We hope to offer -- it is detailed in there, but we have money set aside that we will actually be doing instructional training with our staff so that they will all be studying aboriginal languages as part of their employment term with us.
1422 You have to appreciate that in my community, which is only 60 miles from Toronto, of the 17,000 people living there, we -- the Sweetgrass Language Institute did a study where there was only eight people under the age of 40 that spoke any one of the six languages that exist in my community.
1423 So language development is something that we are going to spend a lot of time doing in terms of sensitizing our staff to the languages, and then slowly begin to -- bringing the language forth in our programming as creative ways and as the resources of course increase for our operations. Then we will be able to develop the programming at a pace much faster than, you know, we are outlining to you.
1424 Just with that program that we are offering first thing in the morning complements the commitment that we would like to make for that, but incidental programming in regards to language will be coming from all angles of our broadcast day.
1425 There are other people here who would like to speak on that topic as well.
1426 MS OBOMSAWIN: Coming back to that previous discussion, I just wanted to say that if you look at our history and if you think of 25 years ago, 30 years ago -- you could even go to 20 years ago -- whenever we heard that a young person was becoming a professional out of university, we didn't even know his name and we used to hear -- and they used to call it moccasin telegraph -- everybody would know across the country and it would become a very important conversation: Did you know that there is an Indian doctor from such and such a reserve? And without never seeing him we imagined all kinds of things because that is how rare it was.
1427 Our people were not even allowed in university until 1952, but now the progress has been enormous. When you count the people that are at the university level and that are coming out of there, you are talking 30,000 people at the university level right now in this country, more than that. All those people that have come out of there and are professional people, there is a lot of people that are very interested in radio broadcasting and in filmmaking, video productions. We get calls every day about people who want to come and be a trainee of the Film Board without pay. That is how interested they are.
1428 So we are full of wonderful young people that are so talented, and it will be a place for them to come either to be a worker there on paid salary or to start as a trainee. And there will be a rotation. Eventually, they would be on salary and another trainee will come in. It will be wonderful. It is a very different time.
1429 COMMISSIONER WILLIAMS: Good. Thank you.
1430 MR. HIGHWAY: And up in northern Manitoba where I come from, every time they read the weather forecast in Cree, guaranteed we get better weather.
1431 MR. FARMER: The whole issue around language is very critical to us and we realize that while the Commission had asked us to -- if we would take a higher commitment with that, we always felt really strongly that we actually knew best how to handle the situation with language and how to regenerate our languages in a situation that is desperate is the one we are faced in terms of language retention.
1432 We find in the Toronto community there are a number of families and individuals that do speak the language, so we are going to take full access and full complement with that and utilize those language speakers and develop -- who are not often used to the radio realm of broadcasting. So it is going to be a period, in the first seven-year term, to really get our hearts around that issue and to work at it to the fullest of our ability.
1433 MS BOMBERRY: If I could add as well.
1434 I know we say in our application that 2 per cent of our musical selections will be in aboriginal languages. In fact, it is much higher than that when we look at the amount of aboriginal music that will be played, not only Canadian aboriginal music but aboriginal music as well from the United States and other parts of the world. The traditional music is sung in the various languages, so that 2 per cent that we said is low and we will be going over that number quite a bit.
1435 Thank you.
1436 COMMISSIONER WILLIAMS: Okay.
1437 I guess, given that you are applying for a licence under the CRTC's native broadcast policy, it would be expected that there be a greater commitment to Canadian aboriginal languages. What I am hearing you say is, "Yeah, we know that. Trust us and we will deliver."
1438 MR. FARMER: Yes.
1439 COMMISSIONER WILLIAMS: Okay.
1440 In your promise of performance you commit to broadcasting a minimum of 25 per cent spoken word per week. Would you accept this commitment as a conditional licence?
1441 MR. FARMER: Yes, we would.
1442 COMMISSIONER WILLIAMS: How do you define "aboriginal recording"?
1443 MR. FARMER: Elaine.
1444 MS BOMBERRY: Okay.
1445 There is all kinds of aboriginal music that is being created all over Turtle Island, which also is North America. Traditional aboriginal music consists of social dance songs of the Iroquois people; social powwow music from many nations -- I will mention a few -- the Sioux, the Assiniboine, Cree, Ojibway, Blackfoot, et cetera; all hand drums including Inuit, Danais, Cree, M'kmaq, and all the nations on the west coast, et cetera; Inuit throat singing; traditional flute; Métis, Cree and M'kmaq fiddling.
1446 As well, there is contemporary aboriginal music which is being created which often fuses a lot of the traditional recordings and as well reflects a unique aboriginal experience in Canada by virtue of its lyrics and its music. And we have got lots of it.
1447 COMMISSIONER WILLIAMS: Thank you.
1448 What kind of mechanisms will you put in place while your having open-line type programming to make sure you don't experience any problems with abusive comments, balance of programming, and, you know, program of a high standard? Like, the Commission has a certain set of rules for a broadcaster.
1449 MR. FARMER: We will have the standard delay on open-mic programmings that will allow us to monitor and ensure that we are keeping the Broadcast Act and upholding the sensitivity of the situation.
1450 COMMISSIONER WILLIAMS: Okay. The next question is similar. I may even end up with a similar answer.
1451 Do you propose to put in place internal guidelines or other control mechanisms for your open-line programming to ensure that your regulatory obligations and responsibilities are met at all times?
1452 MR. FARMER: Yes. We fully intend on in fact participating in a full manner in this regard, especially, you know, in other areas too.
1453 For example, we would like to be a full participant in the SOCAN arrangement to ensure that the artists are paid their rightful funds that are coming to them. That is not the case. Many of our artists don't even have acceptance within that organization because there is little or no air play for them. So it is going to be pretty astounding for us to actually begin to create some kind of economy for the artists, which we believe will create a real dynamic in the work and begin to perpetuate the work that the people are currently creating.
1454 MR. MANESS: I would like to add something.
1455 The safeguards or the points that Gary raised will be what is seen by a board of directors who will receive reports from the program manager and will assume the responsibility of ongoing monitoring and compliance with any conditions of the licence and compliance with the standards and the editorial policy of our organization and the laws of the land. So it will be basically board responsibilities and it will be part of the policies of our corporate structure. They will be very clear, very concise, and people won't be -- the person who supervises that activity, from a staff point of view, will be very clear in what those regulations are.
1456 COMMISSIONER WILLIAMS: Thank you.
1457 The next couple of sets of questions I will give you a bit of a heads up on.
1458 The first one we are going to talk about is your CD project for aboriginal artists.
1459 The next one, which we will give some of you people the time to think about, is, you know, your application is competitively and technically mutually exclusive with seven other applications for the use of the frequency. Under this type of scenario the Commission seeks the competitors' views to assist it in deciding which applicant has proposed the best use for the coveted frequency. What we would be looking for there is what, in your view, are the compelling reasons to grant you the requested frequency and how is your proposal the best use of the frequency?
1460 So you can think about that and I will go into these other questions now.
1461 Tell me a bit about your producing the CD of local aboriginal artists. How are you going to select the artist and how many do you plan on producing over your licence term? Have you put together a budget of sorts for achieving this and, if so, how much?
1462 So how many and how much, as far as the CD project goes?
--- Pause / Pause
1463 MR. FARMER: As funds become available of course. As, in the past, as funds become available, we would be producing CDs as we see fit.
1464 But I think, primarily, from fundraising purposes, as compilations to introduce new talent -- it's part of our commitment of course to develop talent in this arena. In the past we have used CDs again as compilations to present -- of course, you know, during the Aboriginal Voices Festival we produced a compilation but exclusively for the media because -- and that is part of our mandate, I suppose, to start bringing talent to this particular market. Of course the radio will augment the marketing ability of our ability to really begin to forge talent into this market and across the country.
1465 But there really is no planned particular CD development per se over the course of our licence as producers for -- we would simply be broadcasting the material.
1466 COMMISSIONER WILLIAMS: The information that I have been provided with suggests that, as part of your contribution to talent development, you would be producing a CD. I guess that was the one I was questioning on specifically and then just seeing if there was much more.
1467 MR. MacLEOD: Perhaps I can just clarify that.
1468 As Gary mentioned with Aboriginal Voices, it costs nothing these days to have a CD burner and to be able to, with the approval of artists that we gather together and that we promote on the station, be able to produce a number of CDs to send out to other media and to help those bands with their promotions. But of course to actually help stations put a product on the record shelf would be a funding project that we would work together with FACTOR or some other organization.
1469 So we did not project actual -- you know, a large expense item to do that, but the capability with technology these days is that, you know, you can do 25 or 30 CDs to get to major stations that might play this music and therefore have a dramatic impact. Our role would be simply to be a centre point where all these people are coming together, where there is finally a station that would play aboriginal music in a major market in Canada.
1470 MR. MANESS: I would like to make a comment.
1471 I believe this is part of one of the -- part of the vision of Aboriginal Voices Radio. It is to stimulate the whole idea of aboriginal people, documenting their music through recording. We believe that as long as -- as soon as we have a place, a station that is ongoing, that will promote them, play their music on air, it will stimulate them. It will give them something to work for, which I really think is greatly needed, an essential place for all aboriginal musicians in Canada to send their demo tapes, demo CDs and give them some air play, to get the people in the market or in the industry interested in what they are doing, which will in turn generate more music for radio.
1472 So it is just a whole little system we hope to build up, and hopefully for other people it will have some sort of an economic gain which native musicians desperately need.
1473 MR. FARMER: As the (technical difficulties / problèmes techniques) to Aboriginal Voices, we have been at the forefront of the development of new talent and new artists to the Canadian and American scenes. We are the only publication that actually brings forth, like Entertainment Weekly, the statistics as to what the radio stations around the country are playing, what artists and what music. So we will continue that format.
1474 And that is why all the music comes to us already. We are well informed about the music contemporary situation and also we are well informed about all the historical recordings that have gone on before. So we will actively take a part in presenting that music to a large market like Toronto, which has really revolutionalized the whole movement of cultural initiatives and cultural products.
1475 COMMISSIONER WILLIAMS: Okay.
1476 We will move on now to: What are the compelling reasons that you should be granted this frequency and in what ways does your proposal constitute the best use of the proposed frequency?
1477 MR. FARMER: I would like to start off by giving that question to Alanis King, if she will take it.
1478 MS KING: (Native language spoken / language autochtone). Manitoulin Island is where I'm from and the story behind Manitoulin is that when the world was created the creator looked for a final resting place and chose my special home. It is these types of things that can come to take part in a big way in Toronto here.
1479 As artists, for a long time we have been listening to our own storytellers and our own people, and so we really see all of our experience in theatre just simply transferring to what we know is our oral tradition. And I can't see Canada any more without recognizing this.
1480 Every single culture here of the dominant society has a motherland to go back to, but my six-year old boy, he has nothing; he has only Canada. So when you talk about the best use or the most, you know, deserving need or blaring omission, you know, all you really have to do is look at the Broadcast Act, you know, and that becomes a political arena.
1481 The world really hasn't been expressed in a way that is truthful. It has never been of any meaning to any of us because it is not our world view. Our world view doesn't exclude people. In fact, it includes everybody.
1482 In terms of women and in terms of the men who support native women, that is what is going to help us is when native women are able to stand up in Canada, because it is all the non-native women in Canada who are coming to us and looking for some sort of spiritual reason and, "What's ahead? What's going on?" You know, industry is destroying the very mother that -- you know, you would never do that to your own mother.
1483 So I think we are appealing to that, to the child you once were and how important is that child. You have to let us grow now. We can use this one final medium to tell the truth because we don't have anything left. The only thing we have left is the truth.
1484 All the money in the world and mainstream radio, you know, that's not what we are about. This is about life. You are going to give us women the ability to carry life, and that is what we are. We are the creators.
1485 Those are my words. (Native language spoken / language autochtone).
1486 MR. MANESS: I would like to add something.
1487 As we talked about in our introduction, right now there is five hours of native programming in Toronto out of 5,000. We don't exist. We exist at the whim of others. It is important that we have the institution, that we do it, that we are given that means of communicating our culture because our culture is growing; it grows every day. We share what went on in the past. Hopefully, we will use that to continue on in the future. Radio is a perfect vehicle for that.
1488 But, in summary, our format and programming proposals are diverse and they are unique, and they are based on our research. This is what the audience of this city wants. They want what we have. They want what other stations are not delivering. They are not doing a bad job, they are doing what they do, and they do a very, very good job of it, the rest of the stations in this city.
1489 We will provide an exposure for a wide range of Canadian artists and, in particular, aboriginal artists who are not being heard at the present. We want to introduce them into the mainstream, introduce them to the rest of the city. That is not happening now. If you grant us the licence, that will happen.
1490 Our spoken-word proposals will reflect the issues and concerns that touch all Torontonians from the perspective of aboriginal people. That is not happening now. Given a licence, that will occur.
1491 I could go on and on and on about the way the other people who spoke before me have articulated from their perspective. Their perspective is also true. You cannot deny that our presence does not exist in the media, in radio in this city. There are enough of us here. If our population was 70,000 -- you could take a city like Belleville, which has 70,000 people. That community has two FM stations and one AM station. What's wrong with this picture?
1492 If it's 40,000, maybe we could get by on one FM transmitter, but when you have such a huge number of people who have such a huge amount of information to share, and that passion, that burning passion to share it, 40,000 of them, 70,000 of them -- every other municipality that has that scope and that population in this country has at least one radio station devoted just to it, and it's really important that those kind of considerations are well noted and referred to.
1493 I don't think any other of the applicants will be able to say that to you because their focus and their energy is elsewhere, which is good, and we wish them well. I even listen to them every night because I don't have our station and our music to listen to.
1494 Thank you.
1495 MR. FARMER: I just wanted to say that I have learned that our languages are the true study of nature based on observation over centuries of time, and they are not spoken anywhere else in the world except for here, and they tell us how to live in this world forever.
1496 Our leadership used to make decisions based on that knowledge of 200 years. It affected seven generations of our people. But in today's society, decisions are made at whims, in political terms of two and four years, and now we are feeling the effects of those decisions.
1497 I think the native community in this city has so much integrity and so much to share at that level that it is going to warm the hearts of every Canadian that ever hears it, and I truly believe it is going to be a popular service that is going to enable our community, not only in radio broadcasting but in all kinds of cultural activities that service the whole country.
1498 COMMISSIONER WILLIAMS: Okay. Thank you.
1499 We are going to spend a minute just on some technical areas. Then we will come up with your opportunity to summarize the benefits of your applications, and then Chairman Wylie has a few other questions in the financial area.
1500 Maybe you will want to do those -- maybe I have the order wrong. I will ask my financial questions, she will do her financial questions, and then you can do your wrap-up and summary.
1501 THE CHAIRPERSON: No. I have no questions. I'm just waiting for answers.
1502 COMMISSIONER WILLIAMS: All right.
1503 I guess what she is saying is she asked the questions before the break and we can hear those answers in a minute or so. I just have one question before that.
1504 There is a variety of questions here that deal with coverage on, "106.5 FM is hampered by strong co-channel interference" and "The CRTC must instruct the maximum hour." I guess what these questions are indicating to us is that there seems to be a little bit of misunderstanding on the technical side of your application in that these types of questions are best dealt with through the Broadcasting Technical Advisory Committee, it's known as BTAC, or, you know, directly with Industry Canada. They are not things that the CRTC deals with. Your engineering consultant would have filed a brief detailing your technical proposal, so engineering and technical issues are probably best dealt with with them.
1505 So that concludes my list of questions.
1506 If you have the reply to Chairman Wylie's earlier questions, we will hear them now.
1507 MR. MacLEOD: Yes.
1508 I was taken away to a room and pummelled until I came to understand that you had serious doubts about our fundraising.
1509 I must say that, because fundraising in a non-profit radio setting is probably my greatest area of expertise, I was perhaps deluded into thinking that these numbers would be conservative to anybody just because they seem conservative to me. In fact, I was prepared to answer questions about the advertising revenue, but I conceded the fundraising would probably seem acceptable and reasonable and you wouldn't have a lot of questions about it.
1510 So I will attempt, in a very brief time, to convince you that I have the answers you are looking for.
1511 I want to clarify that you should understand that I mentioned earlier we wanted to have diversified funding so we picked what we thought would be a balance between advertising and fundraising, both numbers very reasonable, very understated, very attainable -- no danger in our first year of coming short of funding.
1512 I just want to touch briefly on the advertising before I go to fundraising, because I want you to appreciate that we use three different methods to come up with our advertising projections.
1513 We put those numbers as low as we possibly could by looking at the total -- the annual market revenue in Toronto, and, based on our projection from Peter Doering of 3 per cent, we looked at a possible revenue of about $5 million if we were a normal station that had a 3 per cent share. We then reduced that by 75 per cent to take into effect the fact that we are a niche market, and that gave a number of $1.3 million. So we are saying, okay, $1.3 million might be a reasonable goal for us to shoot for.
1514 We looked at how much advertising we actually wanted to sell on the air and we decided that in years one to five we wanted to end up in year five at 30 per cent of our total maximum of four minutes. So we basically picked a number that seemed reasonable and 21 per cent was it. That ends up being 30 per cent of what might normally be predicted that we would get according to what we thought was very conservative figures.
1515 That number was substantiated by talking to national rep houses. We got a number of figures from $1.5 million a year to as low as half a million dollars a year. Our number starts at basically $400,000 a year and goes to $600,000 a year. So I want you to appreciate that our ad revenue projections, we believe, are very conservative.
1516 So that takes us to the fundraising.
1517 I have the same confidence in fundraising when I'm trying to put that across to you. I want you to understand a number of things.
1518 One is that one of the first people we will hire when we get the licence will be a development director. So there will be somebody on the ground working right away to fundraise, basically from day one. So it is a high priority.
1519 We indicated in our initial business plan we were going to be fundraising as soon as we had the licence, and that is how we were going to fund our start-up. Whether we end up having to use other funds or not, we are definitely fundraising from day one.
1520 Now, there are a variety of sources that we were looking to take our fundraising from, basically, three main ones: from corporate contributions, from individual contributions, and from benefit events.
1521 So let's go perhaps from the least controversial to the most controversial.
1522 I'm assuming that our projection of about $24,000 a year in benefit events is not controversial. I'm assuming that our projection of somewhere between sixty-six and up in year five, it's just over $100,000 in individual contributions, is not controversial because other stations in this market, including university-based stations, raise that much already and there is no reason to think that we can't match what they are doing. There are cases, there are examples like CJRT, a jazz station in town, whose numbers are up -- like $1.5 million is what they get when they are doing on-air fundraising.
1523 I want you to appreciate that that money is going to be coming through the course of the regular operations of each of the hosts. It will be the type of fundraising where the host says, you know, "If you support my show, call this phone number and make a donation." We think that projecting from $66,000 to $100,000 by year five is totally, totally conservative in that measure. And our targets, when we announce our campaigns on the air, I assure you they will be much higher than that. You know, we might start out at a quarter of a million dollars in our first year as our goal. We are going to be aggressive on that, but we went with very low numbers.
1524 On that same note, we only planned on running one campaign a year because most stations in Toronto and most stations do that. But if we find for instance that our first campaign falls short, we would simply add a second campaign and, you know, go to a two-campaign system. That is hard on listeners, but it is not uncommon, and we would do it if we were falling short in our fundraising projections for the on-air component.
1525 The third component is the corporate contributions. We feel that, and I imagine the Commission feels that, our proposal for our service is a totally attractive destination for donated monies. Aboriginal causes already get a lot of support and we believe that our first urban aboriginal station with such a wide listening audience, where we can thank people over the air for their donations, would be a highly attractive place for corporate contributions to come in.
1526 So, from those three areas, I do not want to concede that those numbers are not totally conservative. I don't want to give that up to you. But let's just say that either you have been told or from your own experience those numbers sound really high, so let's go to a simple calculation which I hope will convince you that there is no danger the station will be unviable without fundraising.
1527 So you can make these notes if you want. These are simple numbers.
1528 If we raise no dollars -- in other words, we don't raise a single dollar -- basically over five years we will be short about $1.7 million. That is where we will end up if we don't raise anything.
1529 Now, we projected over our first five years a certain amount of surplus every year. Obviously, that surplus would be gone if we didn't raise funds, so you can deduct that surplus of $.6 million off of that.
1530 If we had to -- in other words, if we weren't fundraising, if we weren't bringing in the revenue that we wanted -- we would cut expenses. We mentioned that. If we cut our expenses by only 15 per cent, which would not harm our programming -- you know, it's a cut but it's not the kind of cut that would drastically affect what we do -- over five years that would give us another half million dollars in savings.
1531 So you would end up between the surpluses and the cut in our expenses of $1.1 million. So that would still leave us with a shortfall of $.6 million to cover, and there is where the NewCap money would come in if we needed it.
1532 If we used $150,000 of the NewCap money to get the station off the air, which I don't think we will need to do, then, you know, you are looking at a break-even budget over five years with zero dollars of fundraising.
1533 So I had to get beat up in order to produce those numbers, but when I answered in my deficiency question that we would be viable without any fundraising, you know, clearly that is the answer that I should have given you, but instead I talked about how unreasonable it was that we would be short. I mean, to even think of only raising half of that money seemed inconceivable to me, but to suggest we would raise no money at all --
1534 So my disbelief has been unsuspended and I hope I have given you an answer in those simple numbers that show you that with zero dollars we are still a viable service in that five-year business plan.
1535 THE CHAIRPERSON: Thank you, Mr. MacLeod.
1537 MR. RHÉAUME: Thank you, Madam Chairperson. Very briefly. It is after 7:00 after all.
1538 The NewCap commitment, is that essentially a line of credit? Does that work like a line of credit?
1539 MR. FARMER: Yes. It's basically like a bank extending us a line of credit for the seven-year term.
1540 MR. RHÉAUME: The NewCap and the letters we have in front of us are very brief. Is it a phone call? In practical terms, how does it work?
1541 You want to launch a station. Let's say you have a licence tomorrow morning. You want to launch a station. Where do you start?
1542 MR. FARMER: Where do we start?
1543 MR. RHÉAUME: Yes.
1544 MR. FARMER: We start in our offices. We already have a studio assembled. We are already broadcasting, as it were, on the Web.
1545 MR. RHÉAUME: Where would you get the money to launch a new station?
1546 MR. FARMER: We can probably get a significant amount of money from any number of sources, including some of the ones I outlined earlier to you, whether it be, you know, turn to the government in terms of training and development for the broadcast industry, for HRDC. We could get the money to purchase the kind of equipment -- we don't need a lot of money in terms of the equipment that we need to actually broadcast. I think it is in the neighbourhood of around fifty or $75,000 to upstart our -- there are four of the casinos who are really behind us.
1547 I have been negotiating with a number of casinos, not only in Ontario and Saskatchewan but all over North America, who have a special interest in what we are doing here. It is very exciting. There is 147 casinos in North America owned by native people. You know, I have been involved with projects where native casinos have outlaid $900,000 to make a movie. Our community has wealth.
1548 I don't understand why, you know, it would be a big issue to raise $150,000 if we had a licence like 740 AM, 106.5, that is worth millions of dollars. Our community is not -- we are very smart people.
1549 MR. RHÉAUME: I don't dispute that for one second, but we keep hearing "We would not have to go to NewCap." After all, the letter you have from NewCap is for capital expenditures and launch costs and we keep hearing, "Don't worry about NewCap. We don't need their money." Now you are suggesting that there is, what, some other sources of funds to start up, $150,000 or -- I don't know how much to start up, to start up the station.
1550 MR. FARMER: Our start-up funds are about approximately $150,000 to $180,000 on the expanded FM, and if we need that money from NewCap, and we can't raise any money anywhere, then that money is -- we can go to NewCap and if we post our business plan and our financial predictions for the operation of our launch, then that money is not a problem to come to us.
--- Technical difficulties / Problèmes techniques
1551 MR. MANESS: Just to finish up, as I understand, we have -- from the time that a licence is granted until the time we go on the air we have one year. I can't see much of a problem in doing corporate fundraising -- even if we had zero, zero commitment to raise $100,000 or $150,000 in one year -- if we had a CRTC licence in our hand. That is an impossibility that we couldn't do that within a one-year time frame. Even if we had nothing and just walked around with a licence, we would phone our contacts up in government and we would have that money fairly quickly.
1552 MR. RHÉAUME: Thank you. Thank you for that.
1553 I guess I should explain where we are coming from, or I'm coming from at least.
1554 Rightly or wrongly, when somebody applies for a licence, the Commission traditionally has asked for evidence up front that the money is there to build and launch that station. So that is why, to some extent, we, at the Commission, relied heavily on the NewCap commitment to provide you with funds because it seems right now that is the only clear indication that we have. I could be wrong, I could have missed something, but I think that is the only clear indication that we have that there are funds available to launch that station.
1555 So that was the sense of my question and I thank you.
1556 THE CHAIRPERSON: Thank you, counsel, and thank you, Commissioner Williams.
1557 Was there anything else you wanted to add in the next five minutes?
1558 MR. FARMER: You know, I simply want to say that, again, there is no current Toronto radio service reflecting the aboriginal culture, and there is a demonstrated market demand for the products that we create as indigenous people and that AVR is proposing a quality service based on the artists that are before me. There are 80 more behind us right now ready to go to work.
1559 We are going to produce great programming for this city. We have a feasible business plan, contrary to popular belief. This is really the last chance for us here in this market, and this market means so much to aboriginal people, not only in the Toronto market -- and I know you don't want to hear this Commissioner -- but it is a huge influence right across the whole country.
1560 I truly believe that Toronto is such a renowned bad place. The Big Smoke is really always looked at as the big, nasty, ugly person that gobbles up all the resources in this country. Here is a chance for Toronto to give something back to the country. So I think that is really important.
1561 We have also been very sensitive to the other applicants in this market and our brothers and sisters who have come to this hearing for licences, and we are willing to work with them to find our place in this radio society.
1562 Again, I just want to say that the benefits that we have as a community I think are so large that I just think it is such a great thing, especially in this year 2000.
1563 We are really excited by this possibility and this opportunity that you gave us today. I want to thank you very much and give also my comrades and friends and brothers and sisters a chance to respond as well in the five-minute period.
1564 Thank you.
1565 THE CHAIRPERSON: Thank you, Mr. Farmer, and your team. And do take Mr. MacLeod to dinner.
--- Laughter / Rires
1566 MR. HIGHWAY: Seeing as we started our presentation off in Cree I would like to end it off in Cree: Saskatoon, Saskatchewan, Winnipeg, Manitoba, Chicoutimi, Quebec, Toronto, Ontario, Canada, (native language spoken / language autochtone).
1567 COMMISSIONER WILLIAMS: Mr. Highway, you have inspired me to remember one of the first aboriginal broadcasters I met. Her name was Nellie Cornier. She used to be a broadcaster in 1960 up in the MacKenzie Delta and she used to end all of her radio programs with "(native language spoken / language autochtone) good listening", which was four different languages of saying good listening and thank you for tuning in.
1568 So it has been an enjoyable listen today and thank you very much for your presentation.
1569 THE CHAIRPERSON: Mr. Highway, by the reply stage I will know one more sentence for you.
--- Laughter / Rires
1570 THE CHAIRPERSON: Good night.
1571 We will resume at nine o'clock tomorrow morning with the next applicant.
1572 Nous reprendrons à neuf heures demain matin.
--- Whereupon the hearing adjourned at 1921,
to resume on Tuesday, February 1, 2000 at 0900 /
L'audience est ajournée à 1921, pour reprendre
le mardi 1er février 2000 à 0900