ARCHIVED - Transcript / Transcription - Halifax - Nova Scotia / (Nouvelle-Écosse) - 2004-03-01
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TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
HELD AT: TENUE À:
World Trade and World Trade and
Convention Centre Convention Centre
1800 Argyle Street 1800, rue Argyle
Halifax, Nova Scotia Halifax (Nouvelle-Écosse)
1 March 2004 1er mars 2004
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
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
BEFORE / DEVANT:
David Colville Chairperson
Barbara Cram Regional Commissioner for
Manitoba and Saskatchewan
Ron Williams Regional Commissioner for
Alberta and the Northwest
Jean-Marc Demers National Commissioner
Stuart Langford National Commissioner
ALSO PRESENT / AUSSI PRÉSENTS:
Pierre LeBel Hearing Secretary / Secrétaire
Peter McCallum Senior Legal Counsel /
Sylvie Jones Conseillère / Counsel
HELD AT: TENUE À:
World Trade and World Trade and
Convention Centre Convention Centre
1800 Argyle Street 1800, rue Argyle
Halifax, Nova Scotia Halifax (Nouvelle-Écosse)
1 March 2004 1er mars 2004
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA NO.
PRESENTATION BY / PRÉSENTATION PAR
Rogers Broadcaating Ltd. 6 / 29
Astral Radio 141 / 548
Halifax, Nova Scotia / Halifax (Nouvelle-Écosse)
--- Upon commencing on Monday, March 1, 2004
at 9:30 a.m. / L'audience débute le lundi
1er mars 2004 à 9 h 30
1 THE CHAIRPERSON: Good morning, ladies and gentlemen and welcome to this public hearing.
2 My name is David Colville and I am the Vice-Chairman of Telecommunications as well as Regional Commissioner for the Atlantic Region. I will be chairing this hearing.
3 With me on the panel are my colleagues Barbara Cram, Regional Commissioner for Manitoba and Saskatchewan; Ron Williams, Regional Commissioner for Alberta and the Northwest Territories and National Commissioners, Jean-Marc Demers and Stuart Langford.
4 Among the members of the Commission staff working with us are Joe Aguiar, Hearing Manager; Peter McCallum and Sylvie Jones are Legal Counsel and Pierre LeBel on the end there is the Hearing Secretary. So please feel free to speak with them if you have any questions about the procedures during the course of the hearing.
5 In June and September of 2003 the Commission issued three calls for applications for broadcasting licences for radio undertakings.
6 In this hearing, we will look at 22 proposals that were received in response to those calls to serve the markets in Halifax, Fredericton, Moncton and Saint John. The panel will first hear the 11 applications to serve the Halifax market in the order of paragraphs 1 to 11 and in the Notice of Public Hearing 2003-12 and next will be three applications for the Moncton market, two of them which are from Rogers Broadcasting and one from Radio Beauséjour. After that we will hear two applications by Rogers Broadcasting and one by Newcap to operate radio stations in Saint John.
7 Finally, we will look to the applications presented by Newcap, Maritime Broadcasting System, la Société acadienne de radio-télévision, Ross Ingram and the Joy FM Network to operate a radio station in Fredericton.
8 The panel will examine the proposals submitted with a view to ensuring that the meet the cultural, economic and social objectives set out in the Broadcasting Act. In evaluating the applications in each market, our criteria will include competition and the diversity of editorial voices in the market, the quality of the application and the potential impact of a new entrant in the market. We will also take into account the analysis of the market and advertising revenues, the availability of financial resources and the proposed initiatives for the development of Canadian talent.
9 The hearing should last about two weeks, although we think it could be perhaps a bit shorter than that. Our sessions will begin -- today we start at 9:30, but for the rest of the hearing we will begin at 9:00 a.m. and we hope to end around 5:00 in the afternoon each day.
10 If there are any changes to that schedule or if we should fall behind, then we will notify the parties through the course of the hearing.
11 This is a constant reminder we have at these hearings for people to turn off their cellphones or pagers when you are in the hearing room as they are an unwelcome distraction for participants and the Commissioners. We hope we can count on your participation in that regard.
12 On a personal note, let me just welcome those of you from out of town to Halifax which is my hometown. I guess we had a bit of a dump of snow last weekend. I was stuck in Ottawa and wasn't able to get home myself. I left my wife to do all the shovelling while I was stuck in Ottawa. I hope you enjoy your time here. I must say this is somewhat surprising I think the number of applications that we have had for this part of the country. It has been a long time since we licensed a new station here and I must say I was somewhat surprised by the application that triggered it and the subsequent applications that came in. It's probably one of the more competitive applications we have had since I have been on the Commission which is now 14 years.
13 I suppose we have had a few; we had one in Edmonton and one for ethnic stations a year or so ago in Toronto, but certainly this is one of the more competitive ones that we have had to deal with. So it will mean a fair bit of work ahead of us both at the hearing and then subsequent to the hearing dealing with the issues to try and come up with a good decision.
14 So with that I will turn it over to our Hearing Secretary for a few opening remarks.
15 Mr. LeBel.
16 MR. LeBEL: Thank you, Mr. Chairman.
17 Before we begin just a few housekeeping matters. First, I would like to indicate that the Commission's examination room is located in Highland Suite 9 and public files of the applications being considered at this hearing can be examined there. The telephone number as indicated in the agenda is (902) 426-0376.
18 In addition, as of this morning, the Commission is making available in the examination room a public file containing the 2003 aggregate financial summaries for the Halifax and Moncton radio markets. Due to the limited number of incumbents serving the Fredericton and Saint John radio markets, these aggregate financial summaries cannot be made public.
19 Secondly, there is a verbatim transcript of this hearing being taken by the court reporter at the table to my left in the centre. If you have any questions about how to obtain all or part of this transcript, please approach the court reporter during a break for information.
20 Now, Mr. Chairman, we will proceed with the appearing applications on the agenda. As you have indicated, we will proceed market by market starting with the Halifax market, then the Moncton, the Saint John and, finally, the Fredericton markets.
21 All applications in each market are competing and we will proceed as follows:
22 First we will hear each applicants in the agenda order and each applicant will be granted either 30 or 20 minutes to make his presentation. Questions from the Commission will follow each presentation.
23 In Phase II the applicants reappear in the same order to intervene on the other applicants. Ten minutes are allowed for this purpose. Questions from the Commission may follow each intervention.
24 In Phase III other parties will appear in the order set out in the agenda to present their appearing intervention. Again, questions from the Commission may follow.
25 Phase IV provides an opportunity for each applicant to reply to all the interventions submitted to their application and applicants appear in reverse order. Ten minutes are allowed for this reply and again questions may follow.
26 Now, Mr. Chairman, we will proceed with items 1 and 2 on the agenda which are two applications by Rogers Broadcasting Limited for licences to operate radio programming undertakings in Halifax. The first, an English-language FM commercial radio programming undertaking on frequency 103.5 MHz on channel 278C with an effective radiated power of 92 watts.
27 The second, an English-language specialty FM commercial radio programming undertaking on frequency 95.7 MHz, channel 239D, with an effective radiated power of 22,100 watts.
28 Mr. Gary Miles will introduce his colleagues. You have 30 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
29 MR. MILES: Mr. Chair, Members of the Commission. I am Gary Miles, CEO, Rogers Broadcasting Limited. With me to my left John Hinnen, Vice-President, Radio and News Programming and Program Director for 680 News in Toronto; Gina Lorentz, News Director, 570 News in Kitchener.
30 To my right, Michael Savage, Chair of the Rogers Broadcasting Local Advisory Board in Halifax and Julie Adam, General Manager, CHFI-FM in Toronto.
31 In the back row starting from my far left, Steve Edwards, Vice-President, Corporate Engineering and Technology; Sandra Stasiuk, Vice-President, Finance Radio; Alain Strati, Director, Business and Regulatory Affairs; Sandy Sanderson, Executive Vice-President, National Program Director, and Rael Merson, President, Rogers Broadcasting Limited.
32 We are pleased to have the opportunity to appear before you today to present our application for two new FM licences in Halifax.
33 Our presentation will address four key questions:
34 1. Why we chose news/talk/sports and urban/top 40 format for this market;
35 2. how the formats will work;
36 3. why local radio listeners and the Canadian broadcasting system will benefit from the approval of our application; and
37 4. how our experience and expertise have equipped us to establish these new radio stations.
38 We will also set out some of the reasons why we filed applications for news/talk/sports stations in Moncton and Saint John and why we proposed a regional operating model for them.
39 We believe that the public interest will best be served by the approval of all six applications. However, during the deficiency process we suggested it would be possible to launch only the two stations in Halifax and upon further review we have concluded it would also be possible to proceed only with the three news/talk/sports stations as a group.
40 In preparing these applications, we carefully reviewed the formats of the radio stations currently serving this market. We believe two major formats are missing. First, all of the private broadcasters in Halifax operate music-based radio stations that focus primarily on listeners 25-54 years of age. The opinions and interests of young people are not being heard. There is an obvious need for a youth-oriented station in this market. A successful urban/top 40 station should develop a personality that is reflective of the attitude and mindsets of young people in the community and engrain itself in their lives. We want to bring that level of connection, energy and enthusiasm to Halifax and build an urban/top 40 radio station that becomes a voice and an identity for young people.
41 Second, while the CBC does provide a valuable radio service in Halifax, our experience has shown that listeners also want access to a very different type of spoken word programming, programming that is news-based, consistent and intensely local. News 96 in Halifax will provide listeners with a truly local source for news and information, one whose approach, perspective and style will complement the programming already available from the CBC.
43 MR. HINNEN: The key to the success of News 96 will be in as much the way we deliver the news as the news itself. Consumers don't rely on just one media source for their news and information any more. They now have the tools at their disposal to access a multiplicity of different sources. They have become content aggregators, using the radio dial, the television remote and the Internet search engines to access the content they want when they want it.
44 To meet this demand, News 96 will establish itself as the source for local news and information in Halifax by incorporating many of the all-news programming elements that have proven so successful with our news and news talk radio stations. While key components of our strategy for News 96 will involve the traditional functions of gathering, reporting and editorializing news and current events, an even more important component will be its local focus and its consistent reliable presentation format. During high listenership day parts such as the morning and afternoon drive and the noon hour period, News 96 will operate as an all-news station.
45 As you can see from the chart behind me, particular segments of each and every hour will be dedicated to specific news components such as news, traffic, weather, sports and business. The consistency of these segments will become a key marketing focus for the station. Halifax radio listeners will quickly become accustomed to traffic and weather together on the 1s, sports at 15 and 45, business news at 26 and 56.
46 Our news-hour format will create a different listening pattern. News 96 listeners will tune to our radio station to get the information they need and then tune back to other stations for whatever other programming they may be interested in.
47 In addition, News 96 will have the flexibility to break away from regularly scheduled programming to cover major news stories and events. For example, we will broadcast from the Nova Scotia Legislature, report on the Speech from the Throne and the budget debate. We will also establish a news bureau in Fredericton with a full-time reporter and office facilities to ensure that we can provide comparable coverage in New Brunswick.
49 MS LORENTZ: During other day parts, News 96 will be a source for interesting and informative personality driven talk programming. With lots of opportunity for listener input and commentary our talk program hosts will examine and discuss the important issues of the day. Whether local, regional, national or international in nature, our talk programs will strive to reflect and entice the opinions of area residents in all three markets.
50 Mid-morning talk programming from 9:00 to noon will be produced by News 92 in Moncton and broadcast on all three of our news/talk/sports stations. This portion of the schedule will also include at least six minutes of news each hour produced and broadcast by each local station. Early afternoon and drive programs from 2:00 to 6:00 p.m. will combine feature talk programming produced by News 89 in Saint John with all-news programming produced by each station.
51 In the evening, News 96 will turn its attention to sports. News 96 will produce a weeknight regional sports column program with news and views from the entire region on all matters related to sports.
52 While our application initially proposed music/talk programs later in the evening, we now believe there may be an even greater opportunity for more sports whether it's junior hockey, the university basketball championships or the upcoming women's world hockey championship. There are a lot of sports fans in Halifax and News 96 will become their source for more sports programming.
53 By focusing on sports/talk shows, live broadcast and in-depth analysis, News 96 will become an even more distinctive format further enhancing the degree of programming diversity in the Halifax market.
55 MR. HINNEN: All three of our proposed news/talk/sports stations will provide important new employment and training opportunity for aspiring and established broadcast journalists. We also hope to establish six annual scholarships totalling $210,000 for broadcast journalism students in Nova Scotia and New Brunswick.
56 In Nova Scotia, we have agreed to provide two annual $5,000 scholarships for students in the one-year intensive post-graduate journalism program at the University of King's College. We have suggested that these journalism scholarships provide particular consideration for perspective aboriginal or visible minorities and that they reflect regional representation from both provinces.
57 We have also agreed to provide an annual $10,000 scholarship for a student enroling in a 16-month intensive program at the Atlantic Media Institute. In New Brunswick, two annual scholarships of $5,000 will be awarded to students enrolled at the French-language radio and television arts program at the Dieppe Campus of New Brunswick Community College. We will also assist in the continuing education of scholarship recipients by offering them summer placement positions.
58 News 96 will be a radio station unlike any other currently available in Halifax. It will become an information of resource for the whole community offering continuous and consistent access to local news, traffic, weather, sports and business. During peak listening periods, almost two-thirds of the programming on News 96 will be dedicated to news and information, far more local coverage than any other station including the CBC.
59 With all news programming in peak listening periods, talk programming in other day part and sports programming in the evening we believe News 96 will quickly establish itself as an essential radio service for this community.
60 I will now hand it over to Julie who will describe the proposed music station.
61 MS ADAM: Halifax is an ideal market for an urban/top 40 radio station. Currently all of the existing music stations serve listeners in the 25 to 54-year-old age group and the music of an entire generation is not being heard. There is this fantastic format of hit music that is not being played in Halifax.
62 Urban/top 40 really is more than just a great format. It's a lifestyle. It's a being. We want to start a radio station that not only plays music for younger people but also a station that has a real personality and a purpose and we have learned with this format that a real community develops among the audience. We will help build that community here in Halifax by providing a station that speaks directly to the youth audience. Music will be the focus of our station with programming like the top 7 at 7:00 countdown and the five o'clock traffic jam. However, while music will be the basis, we have found that content is also very important to this audience. The key is to present this information in their language. We will do that through developing great morning shows that relate to the audience, will provide untraditional news reports and also fun programming segments and we will interact with the younger listeners in Halifax through our DJs and our events.
63 We will broadcast live from local clubs showcasing vast local talent in the city and most importantly we will do all of this with a fresh new perspective that speaks to an audience that is currently underserved in the market.
64 We will have our very own interactive station website with chatrooms, message boards, plus all of the latest music information. Listeners will be able to communicate with us or with each other on everything from the latest CD to the winners of last night's Academy Awards. We will provide consistent radio exposure in this market for many Canadian urban/top 40 recording artists, in effect creating a much needed home for the local music community. We have also committed to major initiatives to support the development of local musical talent. We will sponsor the East Coast Freestyle, an annual MC competition where local artists act in front of a live audience. The winner of this competition will then have the opportunity to perform alongside big names Canadian urban acts at concerts sports at concerts sponsored by our urban/top 40 stations in Halifax, Saint John and Moncton. These initiatives will entail expenditures of $840,000 over the term of the licence. In addition, we will provide funding of $10,000 each year to support an urban/top 40 showcase at the East Coast Music Awards. This showcase will include both local and big name Canadian acts.
65 Finally, we know there is an audience that would love to have a station like this, one that speaks to them and plays their music. We really want to be the ones to bring the excitement, the energy and the enthusiasm of an urban/top 40 station to the community of Halifax.
67 MR. MILES: John and Julie have identified a number of reasons why we believe our applications are in the public interest, including a significant increase in programming diversity and choice for Halifax radio listeners and an important contribution to Canadian talent development.
68 However, we also believe there are four additional benefits worthy of your consideration:
69 1. All of the other applicants are proposing music-based stations. No applicant is proposing to take on the challenge of a station focused on spoken word programming let alone the news/talk/sports format. We recognize the operation of these stations and their focus on the production of news and information programming will be expensive and difficult, but we are prepared to take on that challenge.
70 2. The economics are such that the establishment of strong local news/talk/sport stations would be virtually impossible in smaller markets such as Moncton and Saint John. However, we believe listeners in these markets are just as deserving of access to an intensely local news-based radio service.
To do so, we have specifically designed a regional plan that can generate the operating efficiencies necessary to support the operation of stations in Moncton and Saint John as well as here in Halifax.
71 3. Since Rogers Broadcasting does not own radio stations in Atlantic Canada, the approval of our applications will not only increase the diversity of formats in each market, but also increase ownership diversity to the radio industry in both Nova Scotia and New Brunswick.
72 4. The approval of our application will have minimal economic impact on existing radio stations. This market will be able to absorb our proposed stations, both because it is robust and because our formats will help grow the market. The Halifax radio market can sustain increased competition. Radio airtime revenues were $14.8 million in 2002 and have been increasing at a compound annual rate of 4.1 per cent since 1998. The possibility has also increased with Halifax radio operators enjoying profit margins in excess of 33 per cent well above all of the provincial, regional and national averages making Halifax one of the most profitable radio markets in Canada.
73 By targeting specific underserved segments, our news/talk/sports and our urban talk 40 radio station will attract new advertisers and new advertising revenues.
74 In Toronto, 680 News has brought new revenues to radio by opening up new categories and by expanding the regional advertising market. We expect similar results in Halifax with fully 6 per cent of year one revenues projected to be new radio.
76 MR. SAVAGE: Thank you, Gary.
77 If these applications are approved, I will be the chair of the Rogers Broadcasting Local Advisory Board. I am pleased to have the opportunity to take on that responsibility for a number of reasons.
78 Rogers Broadcasting will be a valuable addition to our local radio market. They are outstanding radio broadcasters who will provide both excellent new radio services and also support economic development in all three communities that they propose to serve. As well as creating a significant number of new jobs in the local radio industry, Rogers Broadcasting is offering more than $200,000 in student scholarships and more than $900,000 to help support our burgeoning local music industry.
79 But the greatest contribution will come from the potential for the establishment of news/talk/sports stations in the Maritimes. Just like the music side of things, I believe radio listeners in the Maritimes also want a greater degree of choice and diversity in their radio news and information programming.
80 CBC Radio provides a valuable radio service that is popular throughout the Maritimes. However, its service is very different from that proposed by Rogers Broadcasting. The CBC's mandate is national and encompasses a wide assortment of different programs discussing a vast array of topics in news, current affairs, politics and the arts. In contrast, News 96 will focus on local news, weather, traffic and sports and deliver it in a very acceptable way.
81 Like many others, I enjoy listening to CBC radio service in my community. However, I believe there is a real need for increased choice and diversity. I believe Halifax radio listeners want a consistent and intensely local source for news and information, one that complements the other programming they already get from the CBC.
82 Our message will be from Maritimers to Maritimers. It will allow for unsurpassed coverage of local politics, business and sports. It will also provide a wonderful forum for different parts of the region to get realtime, real life news update when events like hurricane Juan or the recent "snow bomb" hit the Maritimes. The station will provide a great coming together in times of crisis as radio listeners will have access to a dedicated news-based radio service for important local news and information.
83 I really believe this programming format will allow for the Maritime tradition of kitchen table discussion to be brought into our homes. I also think the Rogers regional approach will provide a forum for Maritimers to integrate our opinions, discus our differences and above all communicate with each other. By synthesizing our voices and our outlook, we also have the opportunity to establish a stronger presence in national policy debates.
84 Rogers Broadcasting knows radio. They invest in their communities and their employees. We can now use this experience to celebrate the heritage of Maritime Canada to bring our voices closer together and increasingly convey our opinions and concerns to the rest of Canada.
86 MR. MILES: Rogers Broadcasting is one of Canada's leading radio broadcasting companies. We have consistently shown that we have the level of commitment needed to develop new and challenging formats. Based on our track record, the Commission can be confident that we will invest the financial and programming resources necessary to ensure the successful launch and develop of news/talk/sports and urban talk 40 stations in Halifax.
87 When we launched 680 News in Toronto in 1993, observers in the industry and the press questioned the wisdom of a all-news station. What these observers failed to understand was our commitment to the concept and our willingness to work through the initial years of losses and investment as the interest of listeners and advertisers continued to intensify.
88 We now operate three successful news-based radio stations: Toronto, Vancouver and in Kitchener, a market comparable in size to Halifax. 680 News alone now reaches more than 1.1 million listeners per week, more than any other radio station in Canada. We also know how to make a local regional business plan work. We know how to balance the primary objective of providing high quality, intensely local programming with the need to generate regional operating efficiency.
89 In conclusion, Mr. Chair, Members of the Commission, we believe the approval of our application would best serve local listeners, contribute to the achievement and the objective of the commercial radio policy and make the most effective use of the available frequencies in the Halifax market.
90 As we have highlighted in our presentation, we submit there are four reasons you should approve our application.
91 1. We have identified the right format. Our news/talk/sports and urban/top 40 radio station will fill a void in this market. News 96 will respond to local listeners' needs for a consistent and intensely local news-based service complementary to the magazine-style programming offered by the CBC. Our urban/top 40 station will provide a music base for younger listeners, a radio hub that features music and programming they are not currently getting from other Halifax radio stations.
2. We have developed detailed innovative plans for the implementation of these formats. Our news/talk/sports stations will combine all news, talk and sports programming components to uniquely address the needs and interests of listeners in Halifax. Our urban/top 40 station will give younger listeners a voice in this community reflecting their unique taste, opinions and lifestyles.
3. Our news stations will offer significant public benefits, including initiatives to support Canadian talent development and a regional operating plan that will allow us to extend the benefits of news/talk/sports format to the smaller markets of Moncton and Saint John.
4. Our intensive expertise and experience in these formats combined with our proving willingness to undertake long-term programming investment means the Commission can be confident we will deliver on all of our commitments to the benefit of local listeners and the Canadian broadcasting system.
92 For all of these reasons, we believe the approval of our applications would be in the public interest.
93 Thank you for your time and attention and, of course, we are prepared to answer any questions.
94 THE CHAIRPERSON: Thank you, Mr. Miles, and to the rest of your panel.
95 I will be doing the questioning of your application and I guess as we said at the outset, as the Secretary indicated, essentially you have one application for six stations in three markets. We will do the other markets separately for the benefit of the competing applicants in those markets and for those markets as well. So once we get to Moncton and Saint John, the questions may seem somewhat repetitive, but that is the road we have to go on.
96 MR. MILES: As indeed may our answers.
97 THE CHAIRPERSON: Well, I thought we could save a lot of time if I just asked you: Would the answer be the same if I were to pose that question for Saint John and Moncton, but counsel and our secretary suggested in fairness to the other parties we probably shouldn't do that.
98 Just let me ask a couple of clarification questions then, and we may pursue these later, that came out of your presentation this morning.
99 On C4 you mention this issue about licensing preferences, if you will, and you said at the top of page 4:
"Upon further review, we concluded it would also be possible to proceed only with the three news/talk/sports stations as a group".
100 Has that been a third alternative because you already indicated -- so the first preference is all six. I think you had two other preferences and so this is the third.
101 MR. MILES: Yes. To clarify the record, the stations that would not be able to stand alone would be a news talk format in Moncton and Saint John as individual stations, but the three of them together as a group would be able to stand.
102 THE CHAIRPERSON: Okay, and we may want to pursue that in a little more detail later.
103 On page 8 you say at the bottom paragraph, this is Ms Lorentz speaking:
" While our application initially proposed music talk programs later in the evening, we now believe there may be an even greater opportunity for more sports...".
104 So does this suggest that there would be no music or are we just talking news/talk/sports now?
105 MR. MILES: What we did, we are consistently taking a look at how to redo all of our formats and all of our operations and as this model closely resembles Kitchener, we found that we were able to do far more local sports programming than we had initially when we proposed that radio station and as we had been back to take a look at this we found there was a void for sports programming particularly at the university level, very, very good sports and highly competitive in the area.
106 We had talked about a 25 per cent level of music on that basis. We currently would suggest that it would be down closer to a 5 or 7 per cent just on those very odd occasions when we wouldn't find the kind of programming, sports programming to put it in, but we are prepared to say, for the record, that we would have no music programming at all, that we will cover it with sports. It's a further refinement to our application.
107 THE CHAIRPERSON: My question wasn't meant as a threat to get rid of the music. I just wanted to clarify what the application is. We are not threatening sort of people.
108 Let me start then with a couple of overview questions just on sort of the philosophy, if you will, behind the proposal and then my plan was to go through a number of questions with the urban/top 40 station for Halifax. If you would prefer to do the news first, I am flexible.
109 So let me start then by asking, I must say when I first heard of this application coming in and then read it some time last year I guess it was -- it seems like a long time ago now -- it must seem like a long time ago to you as well.
110 I can't recall having seen a similar group of applications here or anywhere else in the country for that matter for six stations, two in each of three markets. So I guess I would like to get a bit of a sense.
111 I mean, in your presentation this morning you posed the questions and answers on why we chose news/talk/sports and so on, but I guess what I really want to get a sense is why is Rogers even applying for these six stations in these three markets? I remember a number of years ago I had kind of an offside conversation with Phil Lind on the cable side and Phil said that Rogers would probably come to Atlantic Canada only by cable system in Halifax and now Rogers seems to be everywhere except Halifax.
112 So I guess I a kind of curious as to the underlying philosophy is here.
113 MR. MILES: Thank you.
114 The underlying philosophy is that we are a national radio broadcasting company and we want to be truly a national broadcasting company and so we have looked at a number of years ago, as you have discussed, an Atlantic strategy, how can we get in and be there. Rogers radio is in the radio business. We have been in the radio business for a long time. We are committed to the radio business and we are going to continue to be in the radio business. So we were as surprised as perhaps the Commission was when we filed the application and triggered all of this interest.
115 We had taken a look at saying if we were to develop an Atlantic strategy, what are the lessons that we have learned in terms of how to operate? Well, we have learned a couple of them. One is that clustering of radio stations provide some of backroom economics. Your rent is reduced; you are able to provide better level of management and better facilities, technical, human and financial.
116 The second one is that we have also learned how to operate regional stations with the addition of Ontario North to us and provide additional programming, improve the program that we have in that one. So we said: How can we best provide this in the markets that are available? When we had looked at it, the Commission had just licensed two stations in St. John's and we felt that one of our stations could serve Fredericton. So we picked these three operations and said: We will apply for six licences and we will sort of provide that clustering benefit as part of our Atlantic strategy to kick it off and introduce it.
117 THE CHAIRPERSON: Why the six though? What led you to six? Why not four or eight for that matter?
118 MR. MILES: First of all, the regional concept in the news/talk/sports needed to have a string of regional stations. There are clearly some economic advantages but more in the programming advantages in providing that string of programming across the three regions. So that occupied one segment of the thing.
119 We wanted actually to have the impact of the music-based program so that we could provide additional management and technical resources n that. The news/talk/sports is a long haul and we have proven that to ourselves with the establishment of 680 News in Toronto and then the investment in Vancouver with News 1130 and our investment currently in Kitchener and the music-based things suggested by all the applications you can see in front of us, not only our own, have a more rapid return on the investment. So it was to provide that clustering effect that we did the six stations, two in each market.
120 THE CHAIRPERSON: I guess I am still not getting a good sense of why -- what led you to pick six. I mean, I don't --
121 MR. MILES: Well, we looked at the markets that were available in Atlantic Canada that we wanted to be in and we identified Halifax, Saint John and Moncton for our initial strategy. We said we would like to cluster a music and a news/talk/sports station together in each one of those markets.
122 THE CHAIRPERSON: Why not Fredericton then?
123 MR. MILES: We have provided for Fredericton coverage and when we get into technical questions, or I can have Steve answer it right now, we are actually located on the CBC tower that provides coverage into Fredericton. So far our initial application, we had omitted Fredericton as a licensing unit. However, it is a market that we want to serve through the tower location.
124 THE CHAIRPERSON: So is it your view that you in fact are going to be serving the Fredericton market through your location on the CBC tower and therefore you didn't need a stations or two stations in Fredericton?
125 MR. MILES: Yes, as well as we are putting in a news bureau into Fredericton itself and providing coverage back to the rest of the system through Fredericton.
126 THE CHAIRPERSON: So, for example, you might have thought well let's go for six stations and let's do Halifax, Moncton and Fredericton, but you said, in fact we can get eight stations but we don't have to put two in Fredericton. We can serve that market with two of the others.
127 MR. MILES: It certainly wasn't our intention to go into that market by saying we can get eight stations. We just wanted to serve the market. It's not our intention to go in there and solicit local advertising.
128 THE CHAIRPERSON: Okay, I take that point. I guess we could bear that mind for later questioning, but essentially your view is we can serve that market.
129 I didn't get a sense of how you have actually gone about accepting the demand for each of the formats here for these market niches, for these services in each of the markets. You have talked in your presentation here this morning and in your application about what you propose to do and there is kind of a reference to kind of we have a feeling that this will work here and we have done this well elsewhere, but I don't get really kind of a -- I am sorry to say -- some sort of an empirical analysis or study of the market that really says, "We have analyzed this very carefully and here is what...".
130 I would like to get a better sense of how you went about assessing the demand for these services in these markets, each of the services in each of the markets.
131 MR. MILES: We have gone full circle on investing in research prior to making commitments to doing programming formats in radio stations and we think that research is valuable. We spend over half a million dollars on research through our entire system, but we spend it only after the fact.
132 We have experience. We have knowledge. We are experienced radio broadcasters. We operate in similar marketplaces and it is relatively simple to take a look at a market, to listen to the market, come in and listen to the radio stations and feel where there is a need for the service. There is clearly a need for a news/talk/sports operation of a more intensely local nature here because the only one that is currently serving that is CBC News.
133 On the other hand, every single indication in listening to these stations, all of the stations, format to 25-54. So there is no youth-oriented station in these markets at all.
134 If we had relied on research to figure out whether we were going to launch the JACK format in Vancouver the listeners would have told us don't ever go there. It's difficult to get a feel from listeners and from the audience of what a format would be like before you actually put it on the air. From there on you can refine it, and we do that. We do quite extensive research into it.
135 Just as an example, in terms of how we would handle different kinds of formats, John Hinnen has reviewed how we would have handled today's news based on what he heard in the marketplace versus what we would have put on this radio station.
137 MR. HINNEN: Thank you, Gary.
138 That's a great point. I will get to that one as well. The other thing is the research part that Gary talked about. When we launched 680 News we didn't do any research then either. The thing is with research on that kind of format, Mr. Chair, is that if we go into the marketplace and say: Would you like more news? chances are they will say yes, but in many ways it's like if I had let's say a new kind of sauce, President's Choice came out with a new kind of sauce and they went to the marketplace and they said: Would you like this new sauce? The fact of the matter is you don't really know until you have had a chance to try it.
139 And so the truth of the matter is this kind of news/talk format, people have to try and it has worked extremely well. In fact, the research that Gary spoke about, we do regular research. In Toronto 680 News has ended up in the past two years as Toronto's favourite morning show besides having obviously a very significant audience. So from our experience it's very successful.
140 In terms of the other points that Gary talked about, how it would be different from say the CBC. It's interesting, this morning I was listening to CBC Radio in this market and they were talking about strike talks at Acadia University, Highway Workers' Union looking for more money, talked about plans to increase the cost of a 6/49 ticket, the fact that a Rogers video store was held up last night, a new correctional facility opening up. Certainly these are all good stories, but had we been in this market -- and I can tell you what we for instance led with this morning in Toronto on 680 News, we led with the story that we think people are going to be talking about, and our mandate primarily is our lead story will be what people are or will be talking about.
141 We think this morning in light of the fact it ended very late last night, a lot of people want to know who won the Academy Awards for the best movie. A lot of people want to know in terms of who won the best actress award. So those are stories we focus on. As well I think there are two other stories that really were not covered at all by the CBC this morning, the other would be Colleen Jones. They had it in sports, but we think that there is certainly a great empathy here for her in terms of what she has accomplished, the fact she was able to win now four consecutive tournaments. We likely would have done our sports from the Mayflower Curling Club. We would have looked at the local newspaper, the fact that The Herald has gone a brand new face to it this morning, totally new, redesigned. We would have people to get their reaction of it, to talk about those kinds of things. We try to be relevant to talk about issues that people are talking about this morning and that is 680 News and that is the kind of successful thing we can do over here as well.
142 MR. MILES: Mr. Chair, we also, of course, work hard to provide some local input into our application and appearing with us today is Michael Savage. These were the questions we asked him as well. What kind of a need, what kind of a service, is this the right idea for programming?
143 MR. SAVAGE: Thank you, Gary.
144 I think the aspect of the local news versus how CBC covers local news versus how Rogers would was of great interest to me as a CBC listener and it occurs to me the CBC mandate is national and they have national news. Even the most ardent supporters of CBC wouldn't call them intensely local. I look at it in a not very scientific point of view but in my own way the same way I look at newspapers and the headline in the Globe and Mail and the National Post this morning was "Aristide flees Haiti". The headline in the Halifax Chronicle Herald, the new Halifax Chronicle Herald this morning was that Cape Breton was having trouble with too much prescribing of oxy contin and the Halifax Daily News headline was about hospital beds closing in Nova Scotia. I don't think that that competes with the Globe and Mail. I think it complements it and I think that this kind of news talk format would complete CBC very well in this region.
145 THE CHAIRPERSON: Thank you for that.
146 I didn't want to imply in my question that I was necessarily suggesting that a survey should have been done. I was just curious to know what sort of research, empirical study of any sort that you would have done. I guess the sense of what I am hearing is, "We are experienced broadcasters. We have done this successfully elsewhere. We think we can do it successfully here".
147 MR. MILES: That is correct. A look at the BBM results would also show that nobody is serving this particular audience, that after all listening is listening and you have to divide up among the rest of the radio stations and see what is available.
148 THE CHAIRPERSON: I take it your view would be that the Halifax, Moncton, Saint John, and I suppose including Fredericton, markets are fairly homogenous in respect to what the audience wants and needs would be.
149 MR. MILES: Certainly my experience in the years that I have been in radio -- and it has been considerable -- and in my experience as President of the Radio Bureau of Canada, is that in spite of somewhat local differences at the end of the day the radio business is the radio business and it tends to have the same kinds of formats, it tends to have the same kinds of needs and there are the same kinds of gaps in radio markets whether it's in Vernon, whether it's in Sudbury, whether it's in Toronto, Kitchener, and to your point Halifax, Moncton and Saint John.
150 THE CHAIRPERSON: So now we will deal with Halifax and start with the urban/top 40 station and then go to a number of questions related to that and then we will deal with the news, the news talk.
151 You have described your format as offering music and a variety of contemporary urban sub-genres including hip-hop, R&B and old school. Now, five other applicants are seeking to serve much the same demographic as you are with music that would seem to contain some or the same elements that you have proposed. So I know you will have an opportunity to comment on other applications later on, but in terms of describing yours, how do you think your format differs from the other five?
152 MR. MILES: I am going to ask Julie to answer part of that question and then Sandy Sanderson is going to come in with some more empirical things, records that may or may not be played, but certainly the station that we are proposing has a tone, has a feel, has a texture to it and that is as much the makeup if not more than the records you play and for that Julie is the best that we have.
153 MS ADAM: Thanks, Gary.
154 First off, on the music, there are some differences in the proposed formats by the other candidates. Our music format would be rhythmic and that is, as you said, based on hip-hop, R&B and old school music. Some of the other candidates would be playing rock music which we don't propose to do. They would also be playing music that is already covered in this market by one other station, some of the more pop and rock titles from that chart.
155 In our station, I was looking at the ten most popular rhythmic songs of the past week and noticed that currently in Halifax only one of those ten is being played in this market. So that really shows that there is a need for this music and that is primarily the music that we are intending to play.
156 There is another application for a dance format which is very different from what we would be doing. It's more a niche, it's more directed at the club audience whereas we are looking to serve the whole sort of under 35 audience, from 12 years of age and older.
157 Again it is in the presentation. I mean, I think that the key to this format is to speak the audience's language and to talk about things that they care about and to do it in a way that they understand. I mean, it would be very fast-paced. It would be very upbeat and we wouldn't make them sit through music that they didn't want to hear and we wouldn't make them sit through talk that they didn't want to hear. It would be focused solely on them.
158 THE CHAIRPERSON: Are there particular sub-genres that you would be inclined to focus on among the ones that we have talked about or that you have talked about?
159 MS ADAM: I think right now with the music trend and with this one that you have to watch music trends pretty carefully because this age group their musical tastes sometimes lean more rhythm and blues versus hip-hop and sometimes the other way. Right now hip-hop is very strong. I would say that our primary focus would be in that genre and old school would be the sort of smallest percentage of what we are planning on doing.
160 THE CHAIRPERSON: And that is one of the formats that you, given your earlier comments, would argue is not being played by other stations in the market now?
161 MS ADAM: That's correct. This format as I have seen on the chart of the top 10 of the rhythmic chart only one song is being played and of the top 30 songs, only six were being played and really not that frequently.
162 THE CHAIRPERSON: And will you plan to program through the day in blocks of different genres of music or different club genres that we have mentioned through the day? How will this music be mixed through the day?
163 MS ADAM: Generally, we are going to run this as what is known as a top 40 radio station which is rhythmic is the style of music, top 40 is the approach that we would take and top 40 really means another way to say this, contemporary hit radio is playing the most popular songs and if you took 40 songs, 25 of them may be hip-hop-based and 15 of them may be R&B based, whatever the top 40 popular songs are in this genre and we would play them frequently. They would be mixed together. We would do some block programming, likely something like an old school lunch where for one hour from noon to one we would play all old school music, but primarily for the majority of the major day parts we would intersperse all of the genres, all of the proposed genres together.
164 THE CHAIRPERSON: Given the relative -- I mean, it's kind of interesting. We are talking about this sort of music with all these aging babyboomers sitting up here on the panel I guess, but given the nature of the market so to speak, the audience in Halifax with the number of universities -- we just got a huge influx this year I think of students to the university community down here, as you know, given that why is it that you think that none of the existing stations are catering to this market?
165 MS ADAM: I don't think you can do both. Having programmed the top 40 station in Toronto it's very, very difficult to appeal to a 17 year old and a 37 year old. The language is different. The younger audience is much more interested in new music. They are very cutting-edge. They want things quickly whereas the older you get, generally the less new music that you like. You like familiar hits and you are not spending as much time listening to new music.
166 So I believe it's very, very difficult to do both and frankly what ends up happening is stations get caught trying to do both too often because they want to grow their audience, they want to get bigger and they want to serve everybody and it just doesn't work. I mean, you have to be focused on this demographic. You have to speak their language. You have to play their music and you have to understand that the over 30 audience, some may be interested in you and the majority may not be okay with that.
167 MR. MILES: Mr. Chair, perhaps as well as clarifying that Julie just said, and I could ask Sandy Sanderson, we do do research into what the current radio stations are playing and put a proposed playlist against what we would currently propose versus what is on the air. There is a distinct difference.
169 MR. SANDERSON: Thanks, Gary.
170 You can look at this a couple of ways. One of the ways Julie has alluded to and that is to look at the CHR rhythmic chart and the top songs on that chart and see how many are being played in the market and of the top 30 last week, I believe six of them would have been played in Halifax. But that is just part of the story. When you add up the number of times the songs on the chart are played in the market, currently the top 30 songs, 36 times that music would have been played in Halifax.
171 In our proposed station, the number would be 582. So there is clearly -- that market is clearly not being served.
172 The other way I did it is using some software called BDS which I think you are probably familiar with. That is a service that tracks every song on every radio station in North America and you have the ability with this service to take a station from one market and essentially plop it into another market.
173 So if you take a station from another market that would essentially be what we are proposing for this market and plop it into the Halifax market last week, 83 per cent of the music of that station would be unduplicated in Halifax. So it's a segment that is not being addressed at all.
174 THE CHAIRPERSON: So I take it, Ms Adam, from your comment, when you say it's difficult to do both, you would essentially be catering to the younger part of that demographic.
175 MS ADAM: Yes. I have listened to some of the stations here in Halifax and it would be a mistake for them to do that. I mean, they are running very successful radio stations. They are playing very mainstream music and like I said the occasional rhythmic title, but they are catering to a 25-54 audience and doing a great job at it. It would be a mistake for them to implement a lot of this music or implement the language of a youthful audience because they just wouldn't be able to do both and serve both well.
176 THE CHAIRPERSON: I guess that is what I wanted to get at with this. Maybe it goes back a little bit more to my earlier question about research.
177 Given the nature of the market here in Halifax and the station groupings -- I hesitate to use the term LMA or LSA or however one wants to characterize it -- and it was argued certainly when we were dealing with the issue of the ownership policy whether you have LMA or ownership policy or station grouping, however you want to characterize it, the Commission -- the market probably has a greater chance for musical diversity by having an operator or operators having more stations in the market.
178 And so what I am trying to get at if you think this market there is a submarket here that this kind of music will appeal to, that younger demographics, why don't you think one of the existing station groups wouldn't have gone after that market and done it successfully given in one group we have five stations? Why wouldn't one of those five have gone after this market?
179 MR. MILES: I don't profess to speak for the operators in this market, but certainly we have experience in market of similar sizes. There are seven radio stations currently serving Halifax and we are in markets in which a similar thing has happened.
180 I think it's only just recently with new licensing that has come on in which you see subsets of music and I think that is more to the issue you provide radio stations which have broad formats, falling within the 25-54 category, but there is country in there, there is oldies, each one of them identifying different subsets of that. As more licensing come in, you take it and you narrow the subsets down.
181 Each of them are more niche audiences and require a lot more work in terms of attracting new advertisers to the marketplace, but that is how the radio formats do constantly evolve and as we take a look into the larger markets we see many breakouts of different kinds of the formats and subsets of the music. Even AC music today, you know a format that we believe we have had some success with in the past, is breaking down into a soft AC, adult contemporary, mainstream, hot AC, stations that have heritage with big morning shows. Those are the kind of formats that are going on. So I think it's more just a subset of what happens in the marketplace and how you serve part of them, but when a new entrant comes in you can serve that one particularly by tonality and more music on it.
182 THE CHAIRPERSON: Is this a format that is harder to program than two or four?
183 MS ADAM: I think it's one of the harder ones because it's ever changing and the audience is ever changing and their tastes are ever changing. So it does require a lot of attention and it also requires -- any success that we have had with this format, a lot of it has been because we have hired people who are really passionate about the music and are in that demographic. Quite frankly, if the station staffed and run by people who don't love the music and aren't living the lifestyle, it won't be successful and that is hard to do. I mean, instead of hiring on-air talent that is sort tried and proven, you have to go out to the colleges as we did in Toronto, and I speak of Toronto because that was the station that I ran there. You have to go out to the colleges; you have to hire new talent; you have to train them; you have to spend time with them; you can't just sort of go to somebody who applied who has a lot of experience. I mean, frankly it's the fun part of the format. It's a great audience. They are really fun to program to. They are very interactive. They don't use the radio station as background. They are engaged. They participate in all your events. They come out to everything you do and it's very, very rewarding, but, sure, it takes passion and it takes time.
184 THE CHAIRPERSON: I would like to switch gears a little bit now and talk about some of the local and spoke word programming on the urban/top 40 stations, not the news stations.
185 So I would like it if you could give us a sense of what the nature of the spoken word programming and perhaps we can talk about the news programming as well. I will just give you a couple of for instances. What kind of spoken word programming would one be likely to hear during the drive time given the nature of this audience. Is drive time as important as it is for an older audience, for example, and you talked in your presentation this morning at page 12 in the middle of the page of both untraditional news reports. Maybe you can give us a sense of what untraditional news is.
186 MS ADAM: Sure.
187 THE CHAIRPERSON: Is Rogers video store getting robed last night -- it's certainly untraditional for Rogers I guess here.
188 MS ADAM: We think the key to providing news and content on the radio station again is presentation and speaking the language of the audience. So to answer your question about drive time, yes, it is still very important. Still the two peak periods of listening are morning before school and afternoon drive after school. So in those two periods, in the morning between 6:00 and 9:00 a.m. and then afternoons between 3:00 and 6:00 we are planning to do three-minute news packages each hour. Those news packages will not be the same style or delivered in the same manner that for example we would do on our news station. They will be very fast-paced. They again will be delivered in the style by somebody who lives in the format, lives the lifestyle.
189 In the past we have had producers rather than news readers deliver the new style by producing it. So it would be a three-minute produced piece with a reader that is 25 years old that is acquiring all of the information from the news stations to ensure that we have all the right news and the right stories, but a lot of energy, a lot of production and we can talk quicker and get a whole lot of information in in three minutes. It has worked really well.
190 You know, this audience is engaged and they are very interested in content. They just need it delivered in the way that they like it.
191 THE CHAIRPERSON: So does that mean that different news stories would be focused on? I mean, if you are going to get the news from the news stations, I presume the news itself will be the same, it's just that it's going to be delivered by a younger voice in a maybe a little more enthusiastic style.
192 MS ADAM: I think it depends on what the story is. I mean, certainly today the Oscars is going to be the lead story. Sometimes the stories vary, sometimes the angle varies. So if we are covering a piece, it may be more relevant to how it affects the youth audience versus how it affects the world. I mean, we always start with making sure it's relevant for the audience and making sure it's relevant to the local audience. Local and topical and the right demographic are sort of the three criteria. So it depends. The lead news story on the news station may or may not be the same. If it is the same, it would definitely be delivered in a different manner and a different way.
193 THE CHAIRPERSON: I would have thought, maybe with the exception of the Oscars I suppose, and I appreciate that young people want to be as informed about national and international events as many others, but it's like real estate. It's location, location, location and in radio it's local, local, local I always understood. We have talked about some examples this morning of some news stories and I heard Aristide leaving Haiti and the Oscars twice.
194 I would have thought that given the demographic we are trying to cater to here with this music, that young high school/university crowd, that some of this, if you are going to target news to them and when you talked about untraditional news reports that these untraditional news reports would have been focusing on some particularly local issues that would be of concern to the youth market here.
195 MS ADAM: I think you are absolutely right, that is certainly what we would intend to do. I don't think it would be the Haiti story. I will be honest. I have only been in Halifax for half a day so I am not 100 per cent up to speed on some of the local things happening here, but you are absolutely right. That would be what we would do. We would make sure to focus on local and whatever is relevant to that audience. Some big university story; it may be a school story; it might have something to do with entertainment, something that is happening in the community, but it would absolutely be local.
196 MR. MILES: Certainly the stories that I think would be more relevant to that would have occurred and would be particularly leading up to what 13 days away from the big basketball tournament. University sports, we have alluded to that on the other side of it, are very important, but this is what these kids live and breathe. There was a concert in town the other night and there was a massive turnout for it. So these are the kinds of things we would have had people on the scene there, Julie, and reporting back to it.
197 MS ADAM: Absolutely.
198 MR. MILES: And that would become part of what they would consider to be the topical news stories of the day.
199 THE CHAIRPERSON: So fundamentally though you would be getting the news stories from the news stations. Is that correct?
200 MS ADAM: The news stations are a great service to all of our station where we have them because they already have all the information. I meant they get every story, local, national, international, for every demographic because they have great services. So we are able to go directly to the news station and sort of get the breakdown of what is happening in town and around the world pretty easily and then we rewrite it and edit it and ensure that it's the right stories and the right --
201 THE CHAIRPERSON: But you would be largely relying on the professionals -- and I don't mean to make it sound like you are unprofessional, but the professional news gatherers, news reporters of the news stations. Would the top 40 stations have their own news director?
202 MS ADAM: No.
203 THE CHAIRPERSON: So they won't. So I am trying to get a sense of how this news from the news stations is going to get tailored to serve this younger audience besides having just that younger reader, instead of somebody 35 or 40 reading the news, we have somebody 18 or 20 reading it.
204 MS ADAM: We would have a producer that would work with the program director of the radio station who works with the news director of the news station. The producer of the daily morning show and daily afternoon show would be the person responsible for working with the news people that are in the morning and in the afternoon and that person would be qualified and would be able to help gather the information.
205 MR. MILES: Certainly the program director would take on the overall responsibility for determining the news. Julie may want to talk about how we actually went into the news resources we had in one of our markets and got a reader and it didn't work out. Then we changed it.
206 MS ADAM: That's right. In Toronto for KISS 92.5 we had a morning show and then we had a morning show producer who works with the program director which was myself and we began on KISS by using 680 News as both supplying the material and delivering the top of hour newscasts. It just didn't work. These were qualified people and they did a fine job, but the style of it, it was too slow and it sounded out of step with the rest of the radio station. So we had the morning show producer who had a background in content, that is what most morning show producers do, is they focus on the contents, and he would work every day with the news people to get the right stories and then we would have it pre-produced every morning in our own style to run every hour. It worked out much better.
207 So they are a great resource because we are able to get all the information, but it just didn't work having them deliver it.
208 THE CHAIRPERSON: And what happens if we are dependent on the news station for providing the news, what happens if we don't licence the news stations, any of them?
209 MR. MILES: We still have the same ability to gather that news. It's just more work for the existing people that are in there. Again the program director and the producer of the morning show who work with the morning team to determine what the stories are that we need to provide our coverage for our audience.
210 THE CHAIRPERSON: So what you would have to have are news gathering. Essentially you would have to build a news gathering, news reporting team into the urban/top 40 stations that wouldn't exist otherwise.
211 MR. MILES: That is correct.
212 THE CHAIRPERSON: So it would significantly change the application for that station. I mean, I am not arguing this in the legal sense about appearing in front of us. I mean, it would change the nature of how you would have to operate.
213 MR. MILES: Certainly we would have to probably redirect some of the resources into different genres.
214 THE CHAIRPERSON: Okay. A little bit about regional programming. In the application, you have indicated that three proposed stations, Halifax, Saint John and Moncton, would work together to provide regional programming each week and you specified that the Halifax station will produce a weekly program for broadcast in all three markets.
215 Can you give us a better sense of this, how it would work?
216 MS ADAM: We would be looking at doing a weekly countdown. So one of the great things about having three music stations is we could have a show that is the top 30 countdown every week. We could write it and produce it in Halifax and then send it out to the other stations to run in the local markets.
217 THE CHAIRPERSON: And do you see the other markets providing programming for Halifax, like Moncton for Saint John and Moncton and Saint John for Halifax? How does this work? Is it just Halifax providing programming for the other two?
218 MS ADAM: As of right now we just plan to do a weekly show in Halifax that would run in the other markets. Having said that, we certainly would look at the three stations when they are up and running and see where the best place is and whenever we can pool our resources.
219 One of the things that I think would be really neat about having these three stations is if you have more than one music station in the same format you can generally work with the record business and the artists and the artists managers to get interviews that you can then have one of your on-air people for any station, it doesn't matter which one, do an interview with this artist and bring it back to the studio and produce a one-hour special and then run it on your different stations. We do that quite a bit at Rogers and it's great because it is what any audience, particularly this audience, the two things they love about the format is the connection you can give them to the artists. So the fact that you can sit down one on one with an artist and talk to Eminem about his music. The other thing is concerts. They love concerts and having more than one music station in the same format really allows you to work with the record companies and with the artists and with their managers to have better access to them.
220 THE CHAIRPERSON: Would the three stations essentially be sort of mirror images of each other, or I suppose better asked, would the Moncton and Saint John stations essentially be duplicate of Halifax?
221 MS ADAM: No. We would have local personalities. You know, Gary, I am not sure how you would set up the management structure, but in terms --
222 THE CHAIRPERSON: Would they be essentially playing the same playlist with the program? I mean, I appreciate that you have different on-air personalities, if you will, but essentially would the stations be programmed identically?
223 MS ADAM: I would like to see because I generally believe that the more people involved the better, I would like to see weekly calls between the programming people and the music people in each market to talk about what the hot songs are in their market and what songs are getting great reaction and then customize for each market. I mean, in most top 40 stations the number one song is the number one song regardless of what market you are in. So some of those things may not change, however when you get into local talent, if there is local talent in each market that may be doing better than the others. I think we would share all the information that we have, but we would make certain that the playlist was reflective of the market and it wouldn't just be sort of a cut and paste in every market.
224 MR. MILES: Certainly the playlist would be similar in nature, but there would be additional ads for each one of the markets due to the music testing that we saw and depending on what those radio stations were playing because we pull off that BDS survey. But most particularly what we will do and provide is best practices so that we have the ability to take our talent in this particular genre and teach the other people how to grow and develop with the talent in that individual market.
225 Sandy Sanderson has a monthly program, conference calls across the entire radio chain so that even if you are a newcomer into the programming business in a market say like Lethbridge, you get the advantage of talking on a best practices basis with the programmers who are doing similar formats in Vancouver and Calgary and Ottawa. But yet we are not saying, this is by the way how you do it in Lethbridge. They still do their own programming the way that they want to develop in terms of what is local and what is available.
226 MR. MILES: Given that the regional programming though would come from Halifax, not the other two stations, and I guess we will trip over this later on in terms of questioning for the other markets, but I guess what it means is that if again a similar question about the if others are not licensed, if both Moncton and Saint John were not licensed, it wouldn't change anything for Halifax because Halifax is not receiving any programming from them.
227 Is that correct?
228 MR. MILES: To clarify, when we were talking about regional program, we were talking just about a countdown show that could be done. All the rest of it was there. That is correct.
229 THE CHAIRPERSON: And there are no shows coming from the other two. So it wouldn't change the Halifax situation. Okay.
230 I guess I would just like to get a bit of a sense, just turning to a couple of the economic questions I guess away from the format of the station. I guess you mentioned this in your opening remarks this morning about you are going to grow the market and I have to say that having been on the Commission for 14 years as I said earlier, every time we hear these applications for new stations, "Trust us, we are not going to have any impact on the existing players. We are going to grow the pie", or if it's TV, "We are going to repatriate all this advertising that goes to the U.S.", either one or the other.
231 I guess you argued this morning -- I don't know if I can find it very quickly, but you indicated that largely you were going to grow the market here. So I guess I would like to get a better sense of the factors that you took into consideration in arriving where the sources of revenue were going to come from in putting together your projections.
232 MR. MILES: Did you want me to deal with both the music based and the news talk one together or separate them?
233 THE CHAIRPERSON: Let's just do the music.
234 MR. MILES: Sure. The music, in both instances we said that roughly 40 per cent of the revenue on the thing would come from existing radio stations. That is what happens. You license two or three new operations into a marketplace, the local radio revenue does not grow by the same percentage increase by any stretch of the imagination. But in particular for the music-based radio stations, we said that we would probably be able to increase the advertising budgets of current advertisers which are finding part of that audience on existing radio stations by 10 per cent.
235 The second one is that we would find new advertisers to radio; they are about 30 per cent. Where would we find these new advertisers? Well, when you have a very specific targeted station towards a younger demographic and universities the first places you would go to look for that would be people who are currently advertising in newspaper-based format, newspapers, and also in The Coast, as an example. Right there we found three advertisers that we know would be natural for radio. The wireless companies. They are very interested in terms of all the new technology, text messaging and things like that. The car companies are appealing to younger people. One of the first people we would call on would be Hillcrest Volkswagen which were an extensive advertisers in The Coast newspapers. And the clubs.
236 THE CHAIRPERSON: One of your competitors owns half the car dealers --
--- Laughter / Rires
237 MR. MILES: Then it should be an interesting proposition. And the clubs. Certainly that is a whole new bunch of revenue that is just not there and in the start-up stages, that's a very important part of revenue. You provide actual programming later on in the evening for the clubs. And I guess the last part is that we would actually repatriate money from the newspapers. We have a proposal that we do now currently in markets and it works the best in markets the size of Halifax called Pulp Fiction and with the greatest respect to some of our competitors in this hearing who are in the newspaper business, the newspaper business has some problems these days. Circulation continues to decline and rates continue to go up and we have targeted newspaper advertisers not to get them out of newspaper because that doesn't happen, but certainly in terms of reducing the size o their ad and using that to provide radio campaign.
238 We had an opportunity in a market similar to this the other day. We brought in a new advertiser in radio. He is still in the newspaper business, but we increased the ad buy from zero from $60,000 just by working him through and showing him how reduction in the size of the newspaper ad can actually provide more opportunity at the same spend levels to increase his radio advertising. So we allocated that at around about 20 per cent. So that roughly makes up our 60 per cent right there. But yes, 40 per cent would come from existing radio advertisers that are currently on radio stations. Part of it may well be that they are finding some service by some of that audience being identified by that radio station, but an opportunity to perhaps move over and fully establish advertising and results based on a full-service radio station appealing to the demographic that we are proposing.
239 THE CHAIRPERSON: Were you surprised when you went through the applications and realized that the total revenues projected by you were the highest of all of the applicants as far as I can tell?
240 MR. MILES: No, we take a fair amount of pride in our ability to grow our sales department. We just finished a conference. We have an annual sales conference. We bring in every single one of our radio representatives regardless of the size of the market for three days. This year it was 320 people, sales people that we brought together. We provide a great deal of training programs for our sales people. We have a sales manager's university that we take our people through and develop our future sales managers. We have a 90-day program that we institute for every single new sales people that we bring on. It's a fully 90-day planned gross development of how to understand the business and how to grow better.
241 So we take a great deal of pride in our sales efforts and our sales forces across Canada and consistently -- consistently if I may say -- outperform the averages in terms of returns.
242 THE CHAIRPERSON: Has it been your experience -- largely your entry, your proposed entry into this market is based on your experience in other markets. Has it been your experience that when you have entered into other markets that you have been able to achieve the targets that you proposed here? I mean, some of your competitors in this proceeding aren't exactly slouches in the radio industry. They are experienced. They have been around for a while. Some are new entrants, but some aren't.
243 MR. MILES: We found there are no slouches in the radio business these days. Look it, all of the entrants here are strong, experienced radio broadcasters. They all have at least two radio stations. They are good competitors. We are with them in competition in other markets and we respect their ability to drive revenue and do good programming.
244 What we do know is that we deliver what we commit to and we deliver it to our company as well as to the Commission in terms of our commitment. So while we may be over the year here or there, at the end of the seven years we will be where we believe we made our commitments to.
245 THE CHAIRPERSON: Now, earlier you made a reference to the JACK FM stations. I forget where that was now, the one you referred to earlier in the presentation. So in several markets, you have ended up changing the format from what I would have understood to be generally serving a younger audience to finding that it was perhaps more mainstream, somewhat older.
246 Why have you felt that you had to do that in a number of the markets?
247 MR. MILES: I'm sorry, I didn't realize that --
248 THE CHAIRPERSON: Sorry, that's the question.
--- Laughter / Rires
249 THE CHAIRPERSON: Within several other markets you have had to abandon the existing format and convert over to this JACK FM and so now all the latest region radio is JACK or BOB. I don't know whey they don't pick women's names. I guess we are always catering to men.
250 MR. MILES: There were two markets in which we did that in because the third one actually didn't serve a major market. It was a market outside of Ottawa, Smiths Falls. But in Vancouver we were in the alternative format and there was one of four markets in North America in which there was another radio station in the alternative format. This was a head-to-head slug out for a long period of time. We had identified another format which was going to provide a great deal more diversity to the marketplace. This is Vancouver I am talking about, and it was our opinion that it would be better to provide a new format and introduce a new variety and diversity into the marketplace than continue to have two formats and sort of head bang it together.
251 The reality is that in that particular market, this is about the 7 per cent share of the market and the two radio stations ended up -- we were a little lower; we were about a 2. The other station was around about a 5. We moved back and forth. It would become 3, we would become 4. Had a very good morning show on against us and here was an opportunity to provide this kind of diversity into Vancouver -- I think our reference was that our research showed we should never really have launched the station but we did and so the JACK FM format for Rogers actually started in Vancouver contrary to most people's belief that everything good and wonderful starts in Toronto.
252 Then we rolled it into Calgary and then back into Toronto. In Toronto we also were a radio station as Julie has mentioned called KISS 92.5. It too had a separate share. When that station launched it was the only station in the market. At the time, there was a station in Burlington playing that kind of music and there was also a station in Orangeville. Within about a year after we had launched the station and garnered the 7 share, the Commission licensed another radio station of similar format in Toronto and at the same hearing actually allowed the Orangeville station to move about 35 miles closer to Toronto. So all of a sudden instead of one radio station with a 7 share, we had three radio stations splitting it up.
253 Sandy actually has the numbers that if you want to we can enter into the record, but at the end of the day there was still just the 7 share for that. Again, there were two other radio stations in this format. We had an opportunity to introduce JACK, a format that provides great diversity and a great deal of new listening and we have indeed done that in the Toronto market as well as in Calgary with JACK.
254 THE CHAIRPERSON: I guess what I was trying to get at in asking the question -- and you answered the question I asked, but the follow up I guess to that is: Given these kinds of format changes, I go back I guess to the fundamental premise here, what makes you think that the urban/top 40 would work here and I suppose a subset of that might be if the problem in some of those other markets was somebody went head-to-head against you and then you decided to change the format, I suppose that the question could then be: What if we license another station among the applicants today to do that same format and you, or we license you and one of the existing stations decides maybe there is a market we should go after too, so let's do it, then what happens with your operation given what you have done in other markets in the country? Are you likely to say, "Okay, let's not slug it out. Let's switch to JACK or BOB or MARY or ALICE" or whoever.
255 MR. MILES: One of our commitments to the Commission always has been that we follow through with what we commit to. And so if we are licensed to perform the urban/top 40 radio station in Halifax as a market, it is our application. We are committed to providing that kind of format.
256 The other stations were stations where the marketplace variances had moved around quite a bit, but in terms of licensing radio stations we have always committed and always followed through with what we have been licensed to do.
257 THE CHAIRPERSON: We allow for a change of format with stations. I mean, I am not being critical in asking the question. One of the reasons for changing the policy back in the early '90s I guess it was, was to recognize that radio is a business and as Ms Adam said I think earlier, music taste change over time and it was recognizing that radio stations seeing those tastes change might want to change the format. Does it make a lot of regulatory sense to require people to stick to formats if it's a format that nobody wants to listen to?
258 So I wasn't trying to be critical in posing the question. I was just trying to get again a sense of given what is happening in other markets, does it suggest that, "Well, we will try this. If it doesn't work we will switch to JACK" or whatever?
259 MR. MILES: No. I think what has happened in the other markets is that there have been new competitors licensed against existing formats and that has caused a great deal of change. I certainly think that the phenomena of these BOBs and JACKs and JOEs have also provided an entirely new outlook on how radio markets and formats are going. The fallout and the domino effect from that continues to run throughout the country and probably will be. There is probably a radio station as we speak changing formats and I don't mean that facetiously. It's just that that is what is going on.
260 This is a good radio format. I think it's a good radio format for one station. It's a pretty good radio format for two. When you start to get three or four into it, then it doesn't become a very good radio format in terms of the economics. But again, we are not in charge of how many stations will be licensed and nor can we figure out how the competition is going to change, but I would reflect that given the financial success of the competition currently in the marketplace and the formats that they are in, I think that would be a bit unlikely. Again, I can't speak for them.
261 THE CHAIRPERSON: Well, I take your point. I guess we are in charge of licensing the stations, but given the change in policy ten years ago, we are not in charge of how the formats may change in the market. And so we are just trying to get a sense of that.
262 Can you give us a bit of a feel for how long you would run with -- what would be the trigger -- I think you started to allude to it earlier -- that suggests to you if you came into this market, urban/top 40, if the numbers just aren't working, how long would you run with it? What would be the trigger to decide, "No, no, this isn't working. Let's go with JACK"?
263 MR. MILES: I think that you currently take a look at any kind of format on three bases. You take a look at the first three years to get the launch and get it going and to figure out where the market is going to fall out. Certainly you put a new applicant into any market, it takes two years for the market revenues to adjust to your point about you don't increase by 75 per cent the radio advertising when you add three new stations into a market of seven radio stations or two new stations into a market of eight. So that's the first criteria that you do.
264 The second thing is you take a look and say what is happening to the audience? How can you grow it? Where are the competitors? How are the rest of the radio stations, what area is this serving? So that as Julie said you start with this kind of format and it varies within the musical taste of the day. So that takes you probably to year 5. At that stage of the game I suspect if there were two or three other competitors in the marketplace you would have to take a serious look as to whether it was going to be a format that was going to remain viable over the period of time.
265 THE CHAIRPERSON: So we would probably be looking for three to four years before you would be looking at making some sort of --
266 MR. MILES: It would be unfair I think not only to the people we hire, but it would be unfair to our company because you don't have all the facts in front of you at the time for making those kind of judgement calls and we take them very seriously.
267 THE CHAIRPERSON: I mean, in the case of KISS it was a station you acquired that had been in the market for quite some time.
268 MR. MILES: Correct, yes.
269 THE CHAIRPERSON: The talk about BOB and JACK and whatnot makes me think of a question I meant to ask earlier.
270 Do you consider this urban/top 40 format largely catering to a male audience, somewhat more than female?
271 MS ADAM: No. I think if anything it may cater to slightly more female, but it's pretty much straight down the middle. The most recent numbers we had I guess were slightly more female than they were male but not by much.
272 THE CHAIRPERSON: The reason for asking that question is as you well know -- I use that phrase not because we are targeting you, just that we collectively have had this experience in the radio industry of these so-called shock jocks. I am not just talking about Howard Stern, but others in certain markets across the country where we have no end of complaints about language, sexual innuendo and all of this sort of stuff, and it has been somewhat problematic for us and for some of the stations. I am just wondering, given that my understanding is often that is because we are trying to attract a young male audience whose hormones are raging, and I guess I would just like to get a sense from you about whether that is likely to be the case and how you would deal -- how do you deal with it?
273 MS ADAM: It wouldn't be the case on this station. In fact, Gary instigated a call last week where we just had this discussion about our stations and Howard Stern and everything that is happening. Personally, I think people's tastes have changed. I think they are sick and tired of being pushed over the line in terms of language and content and after the Super Bowl incident, my general feeling is people are sick of it. We don't think that that is the way to attract an audience by trying to push the line or push the language or any of that. So while we would have a morning show that would appeal to the younger demographic, certainly our strategy would not be to come into this market and try to develop shock jocks or anything even close to that.
274 MR. MILES: Certainly in the format we are talking about there is a fair amount of bonding between the youth female and mothers. So sometimes the music is in sync as a mother's/daughter's format. You just don't put that kind of talk pattern on. Julie was particularly vigilant on this one and we just never allowed any kind of innuendo to creep into the programming on KISS 92.5.
275 As Julie has indicated what is happening in all of our focus groups and in all of our research, there is a pushback from this even on classic rock radio stations. We run a couple of classic rock radio stations. The people who were sort of wild in their youth, even the male wildness in their youth, are saying now, "I am not going to listen to that because I have my seven and eight and nine and ten-year-old son in the car". We have zero tolerance on our radio stations. We committed to that on a conference call with all of our station managers just last week again, again not so much about what happened at the Super Bowl, although I think that was a triggering effect, but what we found over the last two or three years in our research and we have been working towards this kind of policy. So, no, we will not shock the listeners in Halifax. We will become part of the community.
276 THE CHAIRPERSON: Okay. Just a couple of question to finish up this urban/top 40 and we will take a break and then do the news after the break which will take us through the lunch and that should finish up Rogers.
277 Just in terms of talent development, as part of your CTD commitment, you have indicated approximately $40,000 will be spent to underwrite the cost of a station-sponsored summer dance.
278 MR. MILES: That is correct.
279 THE CHAIRPERSON: How much of the money would be directed to pay the talent that would perform at the -- I guess as I was going through it and I read it, it seemed like a lot of money to produce a CD. I don't know. Where is the money actually going here?
280 MR. MILES: It's all going towards the talent. So there is no coordinator. There is no staging and things like that. In effect, we have actually talked to the East Coast Music Association and said we were going to contribute those kinds of monies direct to talent contribution, but remember the benefit is spread over the three markets.
281 THE CHAIRPERSON: Right, but I would just like a little more detail. What would that money actually be spent on? Where does the money go?
282 MR. MILES: It goes to the -- in terms of the talent contest, it will go to the winners for a second and third of these regional talent contests in terms of cash payments.
283 THE CHAIRPERSON: It goes as a cash award.
284 MR. MILES: Correct, yes, I am sorry.
285 THE CHAIRPERSON: Oh, I see. Okay. Because as I say, when I read through the thing I think it was referenced as producing the CD and that seems like a lot of money to produce a CD.
286 Let me just ask, and it's a heads up I guess for everybody here in the room, this will be the sort of last question of all of them, and it's a general one. You might prefer to save this for the two together, but given the competitive nature of the applications that we have in front of us, for all of the markets in fact, I guess this is an opportunity for you to sum up, at least on this one, as to why you think this is the best use of the frequency relative to the competitors in the market for this one which is the urban/top 40 in Halifax.
287 MR. MILES: Thank you, Mr. Chair.
288 Yes, we have a format that is unique, that has enough differing points from the rest of the application that will provide a service in the community. The Halifax market has three radio incumbents. They are strong, they are big, they are experienced, they are good radio operators. We respect them and they all operate at least two radio stations. We would be in this particular market with one application against them. That will take additional resources, however we have the experience both in management programming and technical to operate this kind of a music format and we do not have any stations in Atlantic Canada and therefore provide some diversity and also the strength to withstand the vicissitude of entering with the one station into a very strong and good local radio competitive market.
289 THE CHAIRPERSON: Let me just ask that as perhaps a follow up and then I will turn to counsel to see if counsel has any questions, but what would your view be if not withstanding the fact you have applied for six licences. Since we are just talking the top 40 one here right now, if we were just to give Rogers one licence for urban/top 40 in Halifax -- we have heard over the years that it's extremely difficult for a single station to stand up to two, three, four, five other stations in the market but where the others are two of one or two of another and perhaps three and four, would that be problematic for you?
290 MR. MILES: Not at all. We have never been afraid of the challenge. We are a national radio company. We do have resources that we can teach, grow, coach, nurture all of the people that we hire in each individual market. We would have resources that we would bring in to help them out and we would be able to withstand, as I said, that kind of competitive thing that you just described.
291 THE CHAIRPERSON: Thank you.
292 Counsel, no questions? Okay. At that point we will take our morning break then. It's about 11:15 by my watch. So we will break until 11:30 and then reconvene and pursue the news/talk format for Halifax.
--- Upon recessing at 1115 / Suspension à 1115
--- Upon resuming at 1133 / Reprise à 1133
293 THE CHAIRPERSON: Order, please, ladies and gentlemen. We will return to our proceeding now and the questioning of the Rogers panel.
294 I will take up questioning now on the news/talk stations for Halifax.
295 I want to start by piking up on this notion of the regional aspect of these stations so we can understand better how this regional notion would work. I suppose I should tell you what is behind the questioning on our part, my part, is I suppose it's fair to say a healthy bit of skepticism about whether this really can satisfy the market. It goes back to my comment earlier about radio is local, local, local and given that, and I think conventional wisdom says that for the most part what is successful about radio, and I underscore "for the most part", how this regional nation necessarily addresses or satisfies the market itself. So, for example, and perhaps we can get to this a little more specifically, I must say when I read the application was what makes you think that people in Moncton or Saint John will be interested in Halifax news or vice versa, people in Halifax interested in news of activities that are going on in Moncton?
296 I am perfectly aware, of course, in television where they have this regional approach, but I guess here we are talking about radio and for the most part commercial radio in particular operates best it seems when it's operating in a local basis.
297 So I guess what I want to get is a better understanding from you about this whole concept that you have proposed here and how you see this regional programming being focused so as to maintain an audience that crosses all three of those markets.
298 Even in your supplementary brief at 2.2 you talked about shared interests here somewhere. In any event, I will let that go and perhaps just let you answer that question.
299 MR. MILES: I'm going to ask John Hinnen to comment sort of on the structure because I think that's an important answer to your question and then we will follow up by having Michael discuss the importance of news in Moncton, Saint John and Halifax and the relevance of one to another.
300 So if we go to the early morning program, it's important to understand that each one of the radio stations will do completely local programming in the morning drive.
301 Then we go into a talk program, an open line program, if you were. In mid day it still have six minutes of local news input and then we go again back to a local hourlong show at noon, each one of the stations provide local input. Then we go to an afternoon talk programming that again has 22 minutes in each one of the hours of local input for each one of the local radio stations.
302 I think John can explain that probably better, but if you understand that is the concept that provides a great deal of local coverage even into this more regional talk thing that Michael will talk about in a second.
303 MR. HINNEN: I think you are absolutely right. This format does have to be local and certainly a successful radio news programming has to be local in its nature and that is probably one of the big differences between our application and previous FM news applications is the fact that we are going to be very much local with a regional flavour.
304 As Gary alluded to the fact, we are going to be local, certainly morning drive from 6:00 to 9:00 every day and that basically means that each city will have its own news team putting together its own newscast for the entire hour.
305 The way our news will run, just to give you an idea, as you can tell at what we are looking at behind us, is that we are going to start each half hour -- in essence we should look at a half-hour clock because the second half hour sort of repeats with variations. But we begin each half hour with a news headline package that will run roughly a minute. It will talk about the top four stories generally that we see as the top four stories in the morning. We will then go to our sports department and business department to get a news headline from each of them. We will then go to our traffic and weather desks to get an update on what is happening from traffic and weather. We have weather on the air at least ten times and hour and it's set at very specific times. The great thing about the news wheel is that it's cast in stone when we run these items. When we say traffic and weather on the 1s, people can actually set their clocks by it.
306 I remember McCowlan when he said that weather was the most important thing on radio and so we feel that it deserved to be mentioned at least ten times an hour. Some people it's too much, but quite frankly we think that it's the one thing people want to know when they get up in the morning. What do I have to dress the kids in? How should I prepare myself and those kinds of things.
307 Traffic means --
308 THE CHAIRPERSON: Ten days ago it was the only thing on radio.
309 MR. HINNEN: And you know what? It would have been the only thing on this radio station that particular day too because obviously that was a huge, huge story and that is the great thing about this format is we can grab a story like that and there is so many different angles to it.
310 In a case like that, we would have had a storm centre set up and the storm centre would be on the air every ten minutes talking about what is closed, the roads closed. It could be hospitals, in terms of how you deal with situations like that if you have to get to the hospital; how can you get there. In many ways, we sort of become the town crier if you will and the other thing also as an example -- we did this last summer when we had the major blackout in Toronto. We felt it was such an important story that we put all four of our radio stations in Toronto on 680 News because it became an essential service and that is really the big part of this format. In many ways, when at times of crisis such as the one you spoke of, it really is an essential service for the community and we don't play any music, and never do, and we just talk about all the things that are important. How can we best serve the people in our community? So local, you are absolutely right. That's where it's at.
311 But just to follow up on the clock, after the traffic headlines, we then get into our first story and generally we will always have a reporter on our local lead story. The issue of "local", quite frankly, there are many definitions of local. Local can mean broadcast from a certain city; it can also mean what is important locally. When we launched 680 News back in '93 we looked at the idea of being 70 per cent local and that worked for a while, but quite frankly it really sort of hindered us in some ways because there are some days when the local news is all 100 per cent.
312 There are other days when quite frankly there are issues that are going on elsewhere. If we use today as an example, I mean the Oscars, is that a local story? We make it a local story because of how we take that information, take that story and relate it back to our local audience in terms of what they thought of the show, whether they thought the right film won. So we really try to bring it home. So instead of using that 70 approach that we initially started with on 680 for instance, we now say we want to be 100 per cent local interest and that is our mandate.
313 Our feeling is that we want to put stories on the air that people actually care about. There are times when we would have some meetings on site with our newspeople and I would say to them: What was your lead story and usually they would come up with that lead story. I would say: What is your second story or what is your third story? By the time you got to the fourth story quite often they had no idea what that story was because oftentimes I found that there is so much news dogma that would take place that people wouldn't have a clue what was going on and they really didn't care.
314 So it really became important for us to say, "With our news we want our newspeople to be able to care as much about the stories they are putting on the air as what is being broadcast" because generally speaking if I care about a story it means I will make you care about the story as well. And so from that perspective, I agree with you, local is where it's at and local is where it's gotta be and that's really where our goal is in this.
315 MR. MILES: When you talk about the big snow ball, I mean, that was an event, there is no question about it. In terms of how we would handle the continuing coverage of it, now the local story is when is my sidewalk going to be cleared? When are we going to get some of this snow away from the intersections? Certainly there is discussion going on at City Hall and even in the Legislature about whether we should second trucks and snow removal equipment if this ever happens again. Those are the kinds of things that we will be getting comments and talk on. Interviewing people on the street when they come in off the ferries, talking about that. This is a kind of local reaction that we are talking about.
316 So we are satisfied in our presentation that we have a great deal of local input every hour and more in several of the big blocks and morning and afternoon drives of that local radio station, whether it be in Moncton or Saint John or Halifax, to actually provide localism for the listeners in that case.
317 Part of the component, however, is this regional concept of two talk shows, in the day and in the afternoon drive. We thought long and hard about this one and Michael has some interesting comments and observations.
318 MR. SAVAGE: Thank you, Gary.
319 We have some very good radio stations here in Halifax including the CBC. I think our local radio stations, absent of the CBC, are tremendously focused on this market and the CBC is tremendously focused nationally. I think it creates a bit of a gap.
320 You mentioned the snow storm we had last week. CBC tried to cover it and I think did an admirable job. They extended their morning show, their local show, but the snow didn't stop when they switched to the current. We have a local calling show that Rick Howe does on another station which I think does a reasonable job of bringing people together in a format where they can talk about issues of the day, but again the snow started long before he came on and it continued for what seemed like days after he left the air.
321 I think that there is a regional component. It certainly excites me and I think it's important for the region. Let me tell you why. New Brunswick and Nova Scotia share a lot. We are of similar size. We share a history; we share a culture; we share a level of prosperity or lack of prosperity. I think our needs are similar. We have similar industries, fishing and forestry, primary industries. We have issues around access to markets. We have issues of funding from the federal government, for example, and I think what you are seeing around here is a greater attempt for Nova Scotia and New Brunswick to work together. The two Chambers of Commerce in Moncton and Halifax have developed what they call the Moncton-Halifax corridor which is to increase the prosperity and economic development across the border of Nova Scotia and New Brunswick and the Chambers of Commerce under the Atlantic Provinces Chamber of Commerce talk an awful lot about what we can do as a region and focusing on those things that bring us together and not those things that divide us.
322 Last year the provincial leaders, the three Premiers and Maritime Canada got together to discuss car insurance and insurance issues, the basis being that maybe together we can do something about these skyrocketing insurance rates. The Council of Maritime Premiers, the Maritime Provinces Education Committee, help charities. It has helped charities that I work with and Nova Scotia, New Brunswick and P.E.I. are now saying, "Let's work together. We are not that big that we can do it separately. Let's do those things together". And I don't talk about Maritime union as some political people in the past may have talked about it. I do talk about Maritime collaboration and I think it begins with Maritime communication and this shared airways concept and the opportunity to get together to discuss these issues I find very exciting and I think it may be just slightly ahead of the curve, but I think it's there and I think Maritimers want that.
323 THE CHAIRPERSON: So when we talk about an idea that may be ahead of the curve, it's not necessarily, from your point of view, satisfying a demand that you know exists. You suspect based on the issues that Mr. Savage has raised that there would be an interest among the three -- four markets, indeed if we include Fredericton because essentially that is part of your expanded market even though you have committed that you would not take advertising out of that market. Really we are talking about four markets here. Your expectation is that there would be an interest for these shared regional programs.
324 MR. MILES: Certainly Maritimers talking to Maritimers about Maritimers, not all the time, and there will be some time in which there will be diverse opinions and that I think is as important as when they certainly all agree on what is going on.
325 There is another sidebar effect too, Mr. Chair, if I might for a second. Certainly coming from the Prairies, I grew up in an area where we always thought that we got all of our news fed from Toronto and the same thing must be applicable out here. Here is an opportunity for us to take these resources and actually translate them back to Toronto and to Vancouver and to Kitchener on a reverse thing because news stories that are important are important. During the Okanagan fires the person that was featured the most and the radio station featured the most on 680 News as well as News 1130 was our station in Vernon, the stand-alone radio station, but we had the people there; they knew what we needed. They provided the news input and this appeared across our national chain. That is the kind of transferring back we see about views and opinions that may not have been that readily available in those markets.
326 MR. SAVAGE: Gary, if I can add. You know, the great thing, the exciting thing as well that I find involved with the news part of it is that this will give the Maritimes an opportunity to get those voices heard across the country and we are set up technically to be able to do that.
327 We use a program called BURLI. It's a software system that is actually made by a company in Vancouver and all of our stations have that system. We can actually go in -- for instance in Toronto I can go in and take a look at what the Vancouver line up is the minute it actually goes on the air, even beforehand as they are preparing it, and vice versa. And we would be able to do the same thing here as well. So we can actually see what events are making news in the Maritimes and be able to cross those issues as they come up and also as a result I think have a better understanding of what actually is making news in the Maritimes, in the other parts of Canada.
328 THE CHAIRPERSON: You are getting ahead of me. I think Mr. Savage might agree that it's probably fair to say that as Toronto is to the country Halifax is to Atlantic Canada. I'm sure people outside of Halifax and the rest of Atlantic Canada kind of feel that way, that when they tune into TV or whatever they just get bombarded with what is going on -- they actually want to know more about what is going on elsewhere. Again, that is not intended to be critical of the proposal here.
329 Mr. Hinnen, do I take it that not only would you be sharing "regional news stories" or "significant news stories" from one of the centres around the region but indeed significant stories from the regions with Toronto and other stations across the country?
330 MR. HINNEN: The potential is there for that to happen, absolutely, and we would certainly look at ways in which we can address that in the other markets as well and make sure that the key issues in the Maritimes are voiced in Toronto and Vancouver, particularly.
331 THE CHAIRPERSON: Does that imply that key stories from Toronto or elsewhere would be coming here as well?
332 MR. HINNEN: Again, coming back to the issue of local, if there is local interest in these stories, these stories will most likely be heard as well, but that's the neat part about having stations across the country is that we can tap into those resources and make the format better here as opposed to relying on a service such as a broadcast news. We will actually be able to provide it in the context in which we try and develop those stories.
333 THE CHAIRPERSON: Let me just go back to the starting point here because at the outset I think you clarified what was going to be truly local-local sort of wall-to-wall -- or half hour. As I understood you to say the morning drive period would be 100 per cent local in that the local people are covering -- I mean, some of the news stories may be from elsewhere, but it's not a program packaged in Halifax that is now being carried in Saint John or Moncton.
334 MR. MILES: The people in Saint John would hear their complete local wheel, similar to what we have up on the board, out of that market.
335 THE CHAIRPERSON: From...?
336 MR. MILES: From Saint John.
337 THE CHAIRPERSON: No, no, time.
338 MR. MILES: Six to nine.
339 THE CHAIRPERSON: Six to nine.
340 MR. MILES: Yes, and that would also apply to Moncton, same wheel.
341 THE CHAIRPERSON: Okay.
342 MR. MILES: Local from Moncton as well as Halifax. So you have three different markets all hearing their own local stuff.
343 THE CHAIRPERSON: Let's take it this way. The other time periods through the day that it would be as local as the 6:00 to 9:00.
344 MR. MILES: That would be the most intensely local with 100 per cent programming for that three-hour time period.
345 THE CHAIRPERSON: Okay.
346 MR. MILES: Then mid-morning from 9:00 to 12:00 there would be six minutes per hour of local, each hour from Halifax, Saint John and Moncton. What we have allowed for in that particular time to talk about regional exchange of ideas is that the talk show host would actually be based in Moncton for the talk show portion of that that would be heard in Saint John and Halifax. So you have the person that we hire in Moncton providing that kind of bias -- and I mean that in the nicest of terms, not disrespectfully -- that kind of bias from that marketplace; that is the middays from 9:00 to 12:00.
347 At twelve o'clock we go back into that local 100 per cent as we saw from 6:00 to 9:00 and then --
348 THE CHAIRPERSON: So that's what? Twelve to 2:00.
349 MR. MILES: Twelve to 2:00, yes. And then in the afternoon from 2:00 to 6:00 there is 20 minutes per hour of local input in each one of the markets, plus the talk show in that particular place is from Saint John.
350 THE CHAIRPERSON: Right.
351 MR. MILES: Again providing that same kind of dynamic.
352 THE CHAIRPERSON: Right, okay.
353 MR. MILES: And then in the evening we switch into the sports talk show which would be done out of Halifax.
354 THE CHAIRPERSON: So 6:00 to midnight is sports talk.
355 MR. MILES: Yes, and sports programming.
356 THE CHAIRPERSON: And that is modified somewhat from the original application because there was a lot more talk about music in the original. I gather from your comments in your opening statement and the question I posed that we are talking very little music now in this time slot --
357 MR. MILES: That's correct. What we found is when we got in here and took a look at the actual sports coverage going on is that certainly the junior hockey league was covered by radio stations, but we got talking to Dalhousie and we got talking to St. Mary's, University of King's College and the same thing in the other places. We have this tremendous amount of university sports and the attraction amongst the various places in Atlantic Canada because of where they come for school. St. Mary's for instance has been in the Vanier Cup three, four years; it won a couple of them. No coverage of any of those games during their regular season. So that is the kind of sports programming we would be putting on. We would be doing the play-by-play ourselves or we believe there is a great opportunity to work with the university radio stations and take their play-by-play people and put them on, give them more experience, provide a wider audience. So that's the refinement that has gone on, less music, more sports programming.
358 MR. SAVAGE: Could I just add to that if possible? For a brief period of time we had a sports radio station in Halifax that people listened to. I listened to it myself. The problem with it was that the morning show came out of Toronto, the early morning. The other morning show came out of Toronto. The afternoon show came out of I think Los Angeles and there wasn't really any local aspect to it. I think a lot of people were big on sports radio as a component of their radio listening, but they want local aspects. They want to know what somebody other than Don Cherry thinks about Sidney Crosby. They want to know about the local hockey junior teams and how they are staking up and I think that this local aspect of sports is in big demand.
359 MR. MILES: If I may I could ask Gina to explain how we do this in Kitchener in a market similar in size to Halifax.
360 MS LORENTZ: In Kitchener we have a fair bit of university involvement on our radio stations. There is a one-hour program on the weekend focusing on Wilfred Laurier University with the Golden Hawks called Hawk Talk where they bring alumni, current coaches, talking about all things Wilfred Laurier and also involvement with the other universities. We have also carried the football games that Wilfred Laurier has been involved in, live broadcast of those shows and they continued on to the Yates Cup falling short of the Vanier Cup, but we carried those broadcast live and also as a mention of junior hockey, we carry all the Ontario hockey league Kitchener Rangers games, OHL live broadcast with our own crew from 570 News in Kitchener and we are filling a lot of potentially what would be a local void by having the news/talk/sports format in Kitchener.
361 THE CHAIRPERSON: If I just go back through the day, and bear with me, maybe I am just being a little slow here today, the morning period from 9:00 to 12:00 has the talk program originating in Moncton which would be shared with St. John and Halifax. Right? Then the afternoon from 2:00 to 6:00 would be the regional programming based in Saint John shared with Moncton and Halifax and then the evening is the sports talk which would be based in Halifax which would be shared with Saint John and Moncton. Have I got that right?
362 MR. MILES: Yes.
363 THE CHAIRPERSON: So those three time periods are regional programming if you will, recognizing there is local within that with the news; six minutes for the morning one and then 20 for the afternoon I guess and then the sports talk.
364 So the sports talk I guess probably seems a little more obvious. You cover the two provinces, would you, or the three or the four?
365 MR. MILES: Certainly we would have open line participation. So there would be a toll-free line from wherever. We also are expecting to insert local play-by-play programming from each one of the markets as the occasion would arise. So it's entirely conceivable that we would have University of New Brunswick play by play on the Saint John station at the same time we would have we hope Dalhousie as we have a bit of an in there play-by-play the sports programming onto the Halifax station at the same time. So we would always be willing to go to each one of the local markets for input.
366 THE CHAIRPERSON: Would each one of the markets be the four markets we talked about here or would it be university sports elsewhere in the Maritimes as well?
367 MR. MILES: I think that we want to serve those particular markets first and then if there was a need or an occasion and an interest to do it, we would certainly put that on in terms of additional programming.
368 THE CHAIRPERSON: Sorry, somebody else wanted to jump in there just before I asked that question.
369 MR. MILES: No, I think it was me.
--- Laughter / Rires
370 THE CHAIRPERSON: Is the primary focus of this university sports?
371 MR. MILES: It would be at the very beginning as we waited to see whether other people wanted to give up on rights to do a play by play. Certainly in terms of that word that nobody wants to talk about, the synergies and things like that, Eastlink cable carry junior hockey and I know that our cable systems in New Brunswick and Newfoundland are working in conjunction with Eastlink to try and provide out of town coverage of the junior hockey teams.
372 If that was an opportunity and we were able to get the rights for that, we would carry the out of town games, applicable to each one of the markets in conjunction with the television coverage on the community channels. So those are the opportunities that we see. We don't have them in place right now, but that is where we go typically with all of our sports programming.
373 THE CHAIRPERSON: Would I understand from your comment that primarily this is university and primarily it's play by play coverage or is a lot of this just news talk about -- well, you mentioned Don Cherry.
374 MR. MILES: Certainly sports fans like --
375 THE CHAIRPERSON: I guess Don Cherry could provoke hours of news talk.
376 MR. MILES: What we have found and we have experience in this one, we operate the FAN in Toronto and also the FAN in Calgary. We think they are -- we know through our focus groups and our research that there are two components to people who are advocates of sports programming. First of all it's play by play and the play by play starts with the team they are most interested in, but they are play by play junkies and so they will follow play by play of other sports programming and I think in university towns you not only have the people attending universities but you have the alumni and so they are interested in what those teams are doing.
377 The second component is they love to talk about sports and so we would run sports open line programming. We have a great radio show on the FAN of Bob McCowlan and there is a special 30 minutes of that show that we put over for a total of about 22 radio stations. Bob McCowlan is amongst I would say the top four open line sports programmers in North America and we would put that show in here to start to stimulate conversation. He just does not talk about Toronto issues, but let me tell you he will talk about Don Cherry when Don Cherry is in the news, but he will talk about those other things. So that's the kind of programming. It's very exciting programming and we have a great deal of experience in it. That's in the evening.
378 THE CHAIRPERSON: How long is that program?
379 MR. MILES: The Bob McCowlan show?
380 THE CHAIRPERSON: Yes.
381 MR. MILES: Half an hour.
382 THE CHAIRPERSON: Just a half an hour.
383 MR. MILES: Yes.
384 THE CHAIRPERSON: Any other programs like that that would be syndicated from elsewhere that would be filling in this time period?
385 MR. MILES: We would certainly take a look at carrying the Jays if we thought there was a demand for it. We carry the Jays in a lot of other radio stations, that's the Toronto Blue Jays, and we carry them both on our own radio stations, but there is demand on other radio stations across Canada for --
386 THE CHAIRPERSON: Would you carry a professional sports team that your owner doesn't own?
--- Laughter / Rires
387 MR. MILES: If we had the rights to them, if we had the rights to them.
388 THE CHAIRPERSON: What about weekends?
389 MR. MILES: A great deal of the sporting activity that we took a look at in terms of play by play would be on in the weekends. So that's the first part of it, and the second part is programming that we do in local nature where we have experts on, and Gina perhaps can explain some of those that we are currently doing in Kitchener.
390 THE CHAIRPERSON: Well, I was getting to some more general questions. She can answer if she wishes, but it was really the more general question of how much, and we talked about the regional programming in these three time periods throughout the day. I take it that's Monday until Friday.
391 MR. MILES: Yes.
392 THE CHAIRPERSON: Would we see this regional programming on the weekends?
393 MR. MILES: Yes.
394 THE CHAIRPERSON: Would there be more of it on the weekends? We are not talking drive periods; we are not talking peak listening periods.
395 MR. MILES: Probably in the early morning and in the late evening period there would be a little bit more regional programming, but again play by play throughout the day and most time periods, but each one of the markets would have local information shows that Gina is going to describe.
396 MS LORENTZ: As mentioned with our Wilfred Laurier Hot Talk that runs during our Saturday morning period in addition to having local newscasting in between those programs, we also have a financial expert, Frank Dakos with the Investment Planning Council of Canada who will come on for an hour-long show and discuss financial issues. Big this weekend was certainly with the RRSP deadline today if that is something that people should be doing or not and taking calls regarding that. Even some of the weekend programming involves local church service from St. Matthews Lutheran church on Sunday mornings. So I don't know if that would be similar to Halifax, but those are some of the local components that we work into the weekend programming.
397 THE CHAIRPERSON: Now, if I go back to the Moncton and Saint John pieces of this, if I was in Halifax listening to Moncton from 9:00 to 12:00 what are the kinds of things I would be listening to?
398 MR. MILES: In terms of the regional talk programming?
399 THE CHAIRPERSON: Yes.
400 MR. MILES: I think the best way to describe that would be to take a look at what we would be doing in Kitchener that would be of interest to the region, the Kitchener region, because we consider that to be the same kind of talk pattern that we would need.
401 So, Gina, what would be some of the programming we would have on?
402 MS LORENTZ: Some of the programming may change depending on the interest at the time, but it could include any variety of things, investment planning, gardening show, home renovations, and having a local expert talking about some of the issues specifically that maybe some people calling in would require some answers.
403 MR. MILES: I'm sorry, I understand your question to be more: What would we do during the weekday programming in terms of the talk pattern.
404 THE CHAIRPERSON: Right. The morning session from Moncton and the afternoon one from Saint John. If I was in Halifax, what would I be listening to?
405 MR. MILES: Michael, what would be some of the issues that would be of interest across?
406 MR. SAVAGE: I think you would get some sports in the morning as well, but you would get a lot of discussion of politics in this area. You would get discussion of where the government is cutting back; where it's spending. Cultural issues that would come up. Obviously, you would need to have people from the three areas calling and talk about how clear the roads are in the wake of a storm, I think the kind of issues that people talk about over the kitchen table would be the kind of things that they would call into on that show.
407 MR. MILES: I think that it would be wrong to indicate that there would be a specific Moncton topic that would be of interest to the people in Halifax and vice versa, but what we tend to find on these open line shows is that there is a pattern or a topic that runs across all three markets and what provides the more interesting part about it are the comments and the call ins from each particular market, all of which would be featured on this show. So if the topic was a political one, you would be able to get the political comments and inputs from the people from Halifax phoning in as well as the ones from Moncton and Saint John at the same time.
408 I think that is going to provide the real opportunity for the exchange of views and opinions at the same time amongst the three markets.
409 MS LORENTZ: And certainly an example, last week in the Kitchener market was the release of the Passion of the Christ, the movie, sparking a lot of emotion amongst people and also bringing in local religious leaders who could address some of the perspectives they had when they viewed the movie and also answer any questions that some people may have. On 570 News in Kitchener, we did have a Jewish rabbi and a Protestant minister come in in studio with our morning show hosts and discuss some of those issues with listeners.
410 MR. SAVAGE: As well if I might, Mr. Chair, in a time like this in Nova Scotia and New Brunswick we have a very close provincial seat count in New Brunswick. It's one of two seats between the government and the opposition in Nova Scotia as a minority government. We have a federal election upcoming and I think civic issues as well, getting the three mayors, Peter Kelly, Shirley McAlary and Brian Murphy perhaps come on the show at the same time to talk about those kind of issues. I see great potential in discussing civic issues and the commonalities and differences from a civic issues point of view as well.
411 THE CHAIRPERSON: I see, Mr. Savage, you are here as Chair of the Rogers Broadcasting Local Advisory Board in Halifax. It's what was mentioned. Perhaps you could tell us a little bit about this advisory board and I guess I am kind of curious whether there are separate advisory boards in Saint John and Moncton. Would you have comparable people to Mr. Savage advising the Rogers programming people of the programming interests in Moncton and Saint John as well?
412 MR. MILES: Here is how we run the local advisory boards. We do it for three reasons and we have them in all of our markets with the exception of Toronto where we seem to have a lot of advice on the radio stations without the need of a local advisory board.
413 We run, as I say, for three reasons. We have input twice a year on advisory board meetings from the people in the surrounding districts. In Ottawa, for instance, we actually have an advisory board that is representative of Smiths Falls, Perth Country and Carleton Place and they meet as a group. We would do that same model here so that while Mr. Savage would be the chair of the Halifax Advisory Board, we would have representation from our other two markets if we were successful, Moncton and Saint John.
414 The advisory board people are there to listen to the business plans and we present our business plans twice a year. We talk to them about what has happened since we thought about the plan, how the radio stations are going, what is the input. They then advise us also about what the local area of concern is, where the matters are, how the economics of the place is coming along, what our sales people could be doing differently, what our programming people could be doing differently, and the third part of it is that there the tremendous growth to allow our own management to present to somebody else other than additional management people. So these people each year get the chance to come up and talk about their business plan to people who live in the community even though they are operating the radio stations in there.
415 We find them very, very helpful and very useful.
416 THE CHAIRPERSON: Did you say you meet with them twice a year?
417 MR. MILES: Yes.
418 THE CHAIRPERSON: And how many people are on the advisory board?
419 MR. MILES: Usually it runs between three or four depending on the size of the market, the markets that they serve. So in this particular instance there would certainly be at least four, probably two from Halifax and one each from Saint John and Moncton.
420 THE CHAIRPERSON: Okay. Thank you.
421 On the financial side, I was struck by the fact that we talked earlier on the urban/top 40 about the sources of revenue and the relative distribution of those sources and I was struck by the fact that your projected sources of revenue were identical for the news/talk as a percentage coming from incumbent stations as for the urban/top 40 and I guess I was a bit surprised at that given we are talking about different stations, one that doesn't exist in the market as opposed to a music station granted at this point, different music, and so on.
422 So how did you come to the percentages of being exactly identical to the ones for the urban/top 40?
423 MR. MILES: Again, based on our experience not much changes. You have a new radio station coming in that is going to provide a whole new genre of music and identify new audiences in the music base. Here we have a news/talk/sports radio station that is coming into a marketplace serving a market that currently doesn't have one of those. The CBC certainly provides a kind of service like that, but remember they take no radio revenue.
424 So our experience then is like a hockey stick. It takes a fair amount of time to build up the kind of loyalty with the clients and with the audience to start moving these revenues and taking them into a sharper curve upward, but our experience is 680 News. We went into this and people said, "There is no revenue for this kind of operation". Well, the first people that came on board were the financial services. TDwaterhouse had never, ever spent a cent in radio before 680 News came on. So they were spending money on 680 News. We launched News 1130. That money flowed out from 680 News to Vancouver and hence into Kitchener. So we used 680 as sort of a gathering point for this new revenue that we have identified.
425 Here it would be the same way. Once we get people accustomed to buying into the news, news/sports/weather/talk format, we know that they can be successful in one of our markets and they will expand outward. So there is the first one.
426 We had a whole bunch of new clients come into it. Certainly there is a big article in the paper this morning about the importance -- where MBA programs rank in terms of Canada and the world and the North American continent. Do you know that three of our current advertisers on 680 News and News 1130 are the MBA schools based out of Toronto. Schulig and Rothman's and Queen's University executive all advertise on that one. We had the British Trade Commission, our very first client almost I think on 680 News come out and talk about people who wanted to base businesses in the United Kingdom and they were here to help.
427 So that is where we see that kind of growth of revenue of clients that have never been there before to radio. So we are going to take some increased advertising expenditures of the clients who are already on there. They may find this news wheel a better mode of identifying themselves with news to about 10 per cent. Moving existing clients over to radio, and that means existing clients that we have on 680 News on a more national basis than moving them into this kind of format. Again, we would go in and take money out of the newspaper because we are very, very targeted for business to business.
428 THE CHAIRPERSON: I guess that raises a slightly different issue. I guess this goes I suppose in a way the heart of some of the concern that I was having, that we would have, about this, particularly in this market where I know it's quite some time ago that the CKO model exploded and I guess you alluded to it earlier. That was a national network operation, but that failed elsewhere and here. They did have an operation here and then Mr. Savage referred earlier to one of the existing stations that had a sports/talk format.
429 I know that if I went through your financial figures that fundamentally a stand-alone news operation probably couldn't be viable, while I think you have kind of modified your views somewhat here today, given that you would be prepared to take a stand-alone news operation.
430 When I looked at the numbers I thought -- well, actually the news proposal, the expense side of the equation here is actually less than the urban/top 40. The problem is the revenue is not there comparable to cover up the expenses. So the problem is not cost so much as it is revenue.
431 MR. MILES: Yes.
432 THE CHAIRPERSON: So I guess my question is given the fact that two stations of this sort of broad nature, if you will, have failed in this market, what makes you think this one can succeed, that there would be enough of those kinds of advertisers to make a go of it because now I guess you are saying that you would take the news without the music, that you would be prepared to make a go of it, so what makes you think there would be enough advertising to make this work given that that style of radio has failed twice in this market.
433 MR. MILES: Let's talk about CKO just for a second and again look at that with a different time period and certainly a different model. It was a model not similar at all to the kind of local input that we have, nor did they operate their news radio station the way that we are proposing this one. We are a utility; we are a service. We are there every ten minutes with the weather and the traffic; we are there every half-hour with the sports; we are there with the business. It becomes such an integral part of the daily life of the people in the community in which these radio stations are. It's almost hard to understand how you could live in Toronto or Vancouver or Kitchener these days without this kind of a wheel and this kind of a service. So it does become a local radio station. CKO attempted to be a local radio station but just didn't have this kind of concept of utility service as well as news. So that's the first one. It may well have been a bit ahead of its time. It may well have been a bit ahead of its time.
434 The team concept in sports -- and look it, we took some of the team programming; we took it in Calgary. We run an all-sports station in Calgary and just as Michael said, we had the same kind of problems with it. We actually had to leave the service about the same time as they abandoned the service which was in Calgary the people don't much care for a morning show talking about Toronto stuff. They just don't care. So that's why we designed our wheel the way we thought it, so that we have this local input throughout the entire broadcast day and specifically with a great deal of local input into the morning. So that's sort of where our model is different.
435 The second one of the financial figures, what we did when we presented this application is that I think we allowed for roughly about a 3 per cent growth in the radio revenues on these new talk/sports stations. We know from our own experience that we have been experienced after the initial one or two years to double-digit percentage increases on a compounded annual growth, certainly on 680 News. It took us roughly about six years for that to become cashflow positive, but it has curved upwards like a bit of a hockey stick.
436 We are experiencing the same thing in Vancouver, a little longer, a little smaller market, but over the course of about eight years we will break that even. In Kitchener, it's a little longer thing, but we have only been in it for three years and we see the same kind of pattern developing and going. We would suggest the same thing would happen here. It's going to take a bit of time to get going in terms of the financial impact, but the curve usually goes like that as compared with what we forecasted over a straight flat curve on it.
437 So that's where we think the issues for the revenue are going to be. You have correctly identified it. If we just got the three stations, the news/talk/sports and the three marketplace, it will probably cost us a little more money to operate, although we are going to have the same commitment to programming and to on-air as where we are going, we would probably see the ability to reduce a bit of the expenses in terms of the six operations in the back part in terms of accounting and trafficking and things like that. But by and large we are committed and we will run the same amount of people and we will also have the ability to take our experience in selling these formats, both the all news and the all sports format that we have, and translate them into directing new revenues in the radio and the markets.
438 THE CHAIRPERSON: Do you have -- let me preface this question. I remember years ago after CFDR which used to play a lot of easy listening music changed its format to rock and roll and the older demographics were quite annoyed that they had lost their easy listening music at the time. So along came SUN-FM and SUN-FM was licensed to serve that market and there was a presumption that there was a large audience for this easy listening music format which probably was true. What appeared to be equally true is there weren't enough advertisers who wanted to advertise to that market. So even though there was an audience, not enough advertisers would go and so the station ended up changing format and becoming part of a larger ownership group.
439 Do you have any empirical evidence that advertisers in this market want to advertise on this sort of station, or is your presumption based on -- again, going back to our discussion earlier -- largely on what is happening in the other markets?
440 MR. MILES: It is what is happening in the other markets. I will take Kitchener as an example where we have now 570 News. We were a music-based radio station. We have now seen revenues increase at approximately 10 per cent. Up until this year, and with the greatest of respect, there are three new applicants, three new entrants into the Kitchener market ad the revenues have stalled. You know, they are not going to be increasing at double digits. The Commission licensed two new applicants. They are now all on the air and at the same time increased the power of the station in Cambridge which now has become a Kitchener radio station. So three new players and I think in earlier part of the discussion, Mr. Chair, we discussed that it takes two or three years for this to sort out.
441 But I will tell you what. We haven't lost any of the advertisers on News 570 in Kitchener. We haven't grown them, but we haven't lost any. So the people that come to this kind of format come to it for a reason and the reason is really simple. It delivers results and it talks business-to-business and that's the beauty and the magic of what we think we can bring to new advertisers who haven't experienced this kind of programming concept because it wasn't this programming concept with CKO and it certainly wasn't with team sports.
442 MR. HINNEN: If I can add to that as well, the great thing about our format is that we really have a unique selling proposition when it comes to commercial advertising. We isolate all of our commercials no longer than 60 seconds. Music-based stations will tend to cluster their commercials together. We don't do that. So if somebody is buying a 60-second commercial, it's the only element in that particular stop sale. We actually have a line on the air right now that says we have 60 minutes of information every hour.
443 This kind of format is foreground programming unlike music station which tend to be background programming. By foreground, we mean that people are listening intently. They have a very specific reason for coming to this format. They are listening for either weather, traffic, who knows what, but they are coming to get some basis of information and as a result of that they kind of listen and as a result of that as well, the advertisers who are with us find they get much better results advertising on a station such as this one because of the active listening that is involved versus the music-based stations. That, as a result, has tended to -- we found so many new advertisers who have come to 680 News as a result of that and have stuck with us. Some people have actually cancelled their campaigns in newspapers and other media to stay with us because it has been very successful.
444 So there is going to be a learning curve involved with the advertising community as well to see how successful this station can be for them. So we believe that it's one of those formats that takes some time to nurture itself, like a good bottle of wine; it needs to sit on the shelf for a little bit of time and in many ways it's the kind of format that will not be an overnight success and we know that. That certainly has been the case with 680 News as well. We knew it was going to take a long time for that to happen. It was one of those situations where we saw the ratings go up either by share -- every book it would go up slightly to the point where now it's a very successful radio station on all fronts.
445 THE CHAIRPERSON: I would presume though that you can't reflect that intensity of listening in your rate card.
446 MR. MILES: Yes.
447 THE CHAIRPERSON: You can? I mean, the difference between a radio station that might be just background music in an office environment where people, as you imply, would tune out the ads whereas if I am a more intent listener because I am actually listening to the talk that is going on, you can reflect that and do you in your rate card?
448 MR. MILES: Yes, we do. What happens --
449 THE CHAIRPERSON: Quite apart from the size of the audience.
450 MR. MILES: Quite apart from the size of the audience, yes. We have done I think the best job of any of our stations like 680 News under the direction of the general sales manager and station manager, Derek Berghuis. What he has done is he has been able to take this dedication to the format and the ability to influence listeners and business to business and put that kind of experience and knowledge and selling IQ into our other two radio stations that says we have a product and it's worth a considerable amount of money because it delivers results targeted to the clients that you want to go there.
451 The second thing that happens is that by and large most of the owners end up listening to it because that's how they need their news. They need to know what is going on. They need to know what is happening throughout the entire day. And so there is an easier entry into this one than just coming in and saying, "Do you want to buy some radio today?".
452 THE CHAIRPERSON: So to use the example you had earlier about Hillcrest Volkswagen, you could go to Hillcrest Volkswagen and suggest to them that, "You might have to pay out more than you would have to pay on another radio station in this market to reach the same size of audience, but we can guarantee you we have an audience that listens more intently to your ads" and they will pay more?
453 MR. MILES: And given the ownership that we know exists in that one, I would make the call myself, but the answer is yes.
454 THE CHAIRPERSON: Okay.
455 I don't think I asked this question. If I did I apologize for asking it again, but going back to the regional programming -- I don't want to try to beat this death, but it was an aspect I forgot to ask. If Moncton and Saint John were not licensed, the morning piece that originates from Moncton and the afternoon piece that originates from Saint John, that would then all be done out of Halifax?
456 MR. MILES: Yes.
457 THE CHAIRPERSON: And if Halifax and only one of the other two --
458 MR. MILES: If only one of the other two and Halifax --
459 THE CHAIRPERSON: Halifax and Saint John, Halifax and Moncton --
460 MR. MILES: Then we would go with the schedule. If it was Moncton, then we would do the Moncton open line out of there. If it was Saint John, we would do the Saint John that we had scheduled out of there. So that wouldn't change the concept.
461 THE CHAIRPERSON: Okay.
462 We mentioned the possibility of Blue Jays baseball and there was that one other sports/talk, Bob McCowlan.
463 MR. MILES: Bob McCowlan, yes.
464 THE CHAIRPERSON: Any other syndicated programming that would be offered on these stations?
465 MR. MILES: We may have a program that takes off. Don Cherry does do a syndicated program. It's on 102 radio stations across Canada. Certainly if the radio stations here wanted that, we would put that on, but, no, we are not talking about lots of other syndicated programming.
466 THE CHAIRPERSON: I'm kind of just picking up some loose ends here now. If the Saint John and Moncton stations were not licensed, what would happen with the Fredericton news bureau?
467 MR. MILES: We would keep it.
468 THE CHAIRPERSON: You would keep it.
469 Would you have a news bureaus in Moncton and Saint John? If the stations weren't licensed, would you still -- I mean, if your only news station is the Halifax one, what you are saying is you would still have a news bureau in Fredericton.
470 MR. MILES: Yes.
471 THE CHAIRPERSON: What about the other two cities?
472 MR. MILES: No because we would be covering the provincial Legislature.
473 THE CHAIRPERSON: So it's essentially just the provincial Legislature and the provincial governments issues.
474 MR. MILES: Right.
475 THE CHAIRPERSON: I guess the last one I have here is this issue of the talent development. I guess you went through the -- can you describe again the talent development initiative with respect to news/talk?
476 MR. MILES: Yes. I am going to ask Mr. Strati to make sure that we described it correctly. I think I put my notes on that one at the back of the book, but one of the other benefits that we believe accrues from the regional concept of the news/talk/sports is just the benefits themselves of being able to provide this kind of service into markets of 117,000 and 122,000 that normally would not take that.
477 This is a big adventure for us and one that we are absolutely committed to and you sort of want to be careful of what you ask for in case you get it, but we have done this so many times now that we understand the curve that is needed to do this one. So the benefit we believe part and parcel, aside from the monetary one, is actually the benefit of providing that programming into those two other markets based on our Halifax, Saint John and Moncton thing.
479 MR. STRATI: Just in terms of the details of the scholarships we have talked to three different institutions. The first one is the University of King's College in Halifax and we have two $5,000 scholarships. They have both a Bachelor of Journalism program, a three or four-year program, but they also have an intensive post-graduate program at King's College so there would be two scholarships to that institution.
480 We did talk to them a little bit about the fact that they are in Halifax, in Nova Scotia, and that we would prefer to have some regional representation so that students from New Brunswick as well as Nova Scotia could take advantage of the scholarships.
481 We also talked about the possibility for stronger consideration for students who are visible minorities or aboriginal students. We also talked to the Atlantic Media Institute here in Halifax and it was an annual $10,000 scholarship. They have a 16-month program so the scholarship is for one person given that the program is a little bit longer in nature and a bit more expensive.
482 Given that we are talking about the New Brunswick stations, we also talked to New Brunswick institutions that have radio and television arts program. Unfortunately, on the English side the New Brunswick community college has ceased its program. However the Dieppe Campus does for the French colleges, for the collège communautaire, has continued its program at Dieppe and so we will provide two scholarships to French-language students who are involved in the radio and television arts program. So together it's three institutions with $10,000 towards each institution for a total of $210,000 over the seven years.
483 THE CHAIRPERSON: When you say you have talked to these institutions, I mean that doesn't say a lot to me just the fact that you have talked to them.
484 MR. STRATI: Well, we have discussed, if I take, for example, for King's College, we have talked to them about their program and we have talked to them about where the opportunities are and what their needs are. In that specific instance we talked about what would provide a strong resource for a potential journalist and we talked about the one-year intensive program where it has sort of a -- it's a very practical application in the field of radio, television and journalism. It also has students from a lot of different backgrounds and different interests who do come take all those interests and bring them into journalism. And so they feel it's a strong sort of journalism program for a perspective journalist in the field.
485 MR. MILES: What we have also discussed with them is that the people who are recipients would then come in and work for money during their summer recesses.
486 THE CHAIRPERSON: I seem to recall this morning you indicated that you would like to see a focus -- I forget the words you used -- on natives and visible minorities. Is there something more than a desire on your part to see that happen in the discussions, whatever formal arrangements you would undertake with respect to the institutions we are talking about here because I can't find it here right now, but I do recall that when you mentioned it in your opening remarks that it's something like you had a desire that this the case, but how do you give effect to that desire?
487 MR. STRATI: Currently we do have, for example, in talking to the institutions for both on the French side with the collège communautaire as well as with King's College, we have discussed it in a general scope, if you will, and we do have correspondence from each of the universities agreeing to some of the elements that we have talked about.
488 THE CHAIRPERSON: And we have suggested that these journalism scholarships take into consideration prospective aboriginal and visible minorities.
489 MR. MILES: So if the question is: Would we say that that will be conditional upon us giving the money, the answer is yes.
490 THE CHAIRPERSON: It always sounds like my follow up is going to be: Would you accept as a condition of licence... I wasn't going there necessarily. I just want to know whether the discussions you had with King's of a nature that it's beyond the fond hope on your part that they would actually do it.
491 MR. MILES: When I said conditional, I didn't mean conditional in the way that we understand conditions, COLs, but it would be how we would want the money designated and we have talked to them about that and they have agreed.
492 THE CHAIRPERSON: They have agreed.
493 MR. MILES: Yes. I'm sorry.
494 THE CHAIRPERSON: Okay.
495 I understand my colleague, Commissioner Cram, may have a question or two.
496 COMMISSIONER CRAM: Thank you, Mr. Chair.
497 This addition of sports into your programming, does that change your financial projections at all?
498 MR. MILES: No. I think if anything else if allows an opportunity to better expand the service. When we filed these applications, we thought there would be an opportunity for that and as we moved through the process and got more into it, we continually change the programming in all of our radio stations in order to improve it. We think this is a vast improvement. So will it cost us a bit more money? Sure. Will there be a couple of advertisers that may want to come in, Dalhousie graduates, if we ran a Dalhousie sports program? Sure. It's offset. It doesn't make it any better nor any worse.
499 COMMISSIONER CRAM: And I am curious. I am from the Prairies too where AM goes forever. Why would you not have with this particular, with the talk formats, why would you not have applied for an AM frequency? It seems to me it would give you more flexibility in that you wouldn't be caught into the specialty format.
500 MR. MILES: Thank you for that question because it is integral to our application. The short answer to it is that if we would have needed AM frequencies to make these formats work in the three markets we would not have presented this application. It is far too expensive.
501 Steve Edwards can talk to that and I am going to ask him in second.
502 Secondly is that this format is already carried on FM frequencies. The CBC itself carries this kind of format in broad terms. Throughout the United States there is more and more radio stations of this kind of format. I think there are about 25 of them right now on FM frequencies. So it's not uncommon for this to be there. They are operating efficiencies.
503 But Steve, can you talk a bit about the difficulty in getting AM formats or AM frequencies these days?
504 MR. EDWARDS: Thanks, Gary.
505 Commissioner Cram, it's really a non-starter to look at AM in major markets these days for a number of reasons, particularly in the northeast part of North America.
506 Where we have been able to find a frequency that would give us the coverage and the audio quality that we would need to serve these markets it would have required highly directional end patterns that would take six to ten towers, upwards of 100 acres of land. The cost of developing an AM transmitter site, a major AM transmitter site, today is at least an order of magnitude greater than a typical FM transmitter site particularly in our case. We were conscious of trying to keep these services as cost-effective as possible. That is why we are proposing in each of the three markets to share with existing CBC facilities. There is absolutely no doubt that it would have made these applications completely uneconomical had we had to consider AM.
507 COMMISSIONER CRAM: Thank you.
508 THE CHAIRPERSON: One question that occurred to me -- I meant to ask it a few minutes ago -- was at the outset you said you would accept stand-alone radio, the three stations, or I presume just Halifax. In fact, I think I did ask that.
509 Why did you change your mind from the time of the application, in which case -- from the time of the decision that is in question, I guess, when that was posed where you indicated you would not want the radio on stand alone because it was your view it wouldn't be profitable, I presume, to today when you are saying you would accept it either as the three stations or the stand-alone in Halifax. What has caused you to change your mind in that respect?
510 MR. MILES: The number of applications for existing frequencies and that they are limited. As a result of that I think it would be presumptions of us to expect two licences to be granted for us in each one of the markets. So we went back and reviewed our operation and said, "Could we make this as a regional basis news/talk/sports?". We said, "Yes, we can".
511 THE CHAIRPERSON: You could. So you went back and looked at the numbers again and you are now confident that you could make a buck, and as we said earlier it's not really a question of the cost as much as whether or not you can attract enough advertising to cover that and based on what you have seen happening in other markets you are saying you are now confident that you could do that.
512 MR. MILES: That is correct.
513 THE CHAIRPERSON: So where would that rank then in your -- could you list your priorities for us in order of priority?
514 MR. MILES: Yes. Two frequencies in Halifax.
515 THE CHAIRPERSON: That's the first priority.
516 MR. MILES: Yes. News/talk/sports in Halifax; news/talk/sports regional Halifax, Moncton, Sain John. Then in my wildest dreams a music station in each one of the three markets.
517 THE CHAIRPERSON: In your wildest dreams a music station in each one of the three. I'm sorry, I am getting confused. I thought your wildest dream would have been all six stations.
518 MR. MILES: But I did. I said the three news/talk/sports together.
519 THE CHAIRPERSON: Okay, all right. I will check the transcript I guess.
520 I think those are all my questions. Counsel, do you have --
521 MS JONES: I have a few questions.
522 When you talked earlier about sports/talk during the evening, would this sports programming be all local, or would it include some U.S.-type programming --
523 MR. MILES: I'm sorry. I didn't hear the last part of the question.
524 MS JONES: Would it be all local or would you join U.S.-type sports networks for programming in the evening for sports/talk?
525 MR. MILES: No, not in the evening. Probably we would take some after midnight for a period of time.
526 MS JONES: Thank you.
527 And you changed your frequency and I am wondering if it would be possible to refile the estimated coverage and population data under the new parameters.
528 MR. MILES: Yes, absolutely. When do you require that by?
529 MS JONES: Ideally before Phase IV.
530 MR. MILES: Perfect.
531 MS JONES: In your presentation of this morning at page 8 you said that you would decrease the amount of music programming from 25 to more likely 5 to 7 per cent. Would you be willing to accept that as a condition of licence, let's say 7 per cent maximum of music programming?
532 MR. MILES: I would take 7 per cent. I would be more comfortable with 10, but, yes, I would take 7.
533 MS JONES: Thank you.
534 Has the weekend programming changed from what you submitted in your application because I know we have talked about changes for the weekdays, but on the weekends has it changed?
535 MR. MILES: Yes, where we had indicated that there would be music programming, we have now added sports.
536 MS JONES: Would it be possible to file a new wheel?
537 MR. MILES: We have it available and we will file it.
538 MS JONES: Thank you.
539 About the news bureau in Fredericton. Other than providing news input, would your reporter there be producing any type of long-form spoken word features?
540 MR. MILES: No.
541 MS JONES: Local programming. What kind of percentage would you be ready to accept as a condition of licence for local programming for the Halifax spoken word stations?
542 MR. MILES: We have indicated that it's 50 per cent local programming. If we were to just get those as stand-alone radio stations while we would have to do at least a third local programming in order to sell advertising, we would be much more comfortable with a slight increase on a stand-alone basis, or decrease I guess is the best way of describing it, perhaps 45 per cent.
543 MS JONES: Thank you very much. Those are all my questions.
544 THE CHAIRPERSON: Thank you, counsel. I think those are all our questions, ladies and gentlemen. Thank you very much. We will see you at the next round, I guess.
545 We will take our lunch break now and reconvene at 2:00 p.m. at which point we will hear the applications from Astral.
--- Upon recessing at 1244 / Suspension à 1244
--- Upon resuming at 1400 / Reprise à 1400
546 THE CHAIRPERSON: Order, please, ladies and gentlemen. We will return to our hearing now. The next group to present is Astral for two radio stations for Halifax.
547 Good afternoon, ladies and gentlemen. Please proceed when you are ready.
PRESENTATION / PRÉSENTATION
548 MR. PARISIEN: Good afternoon, ladies and gentlemen, members of the Commission and Commission staff.
549 My name is Jacques Parisien and I am the president of Astral Radio and Astral Radio Atlantic.
550 Commissioners, we are pleased to appear before you today to present our plan for two FM radio stations to serve young adults in Halifax.
551 Before we begin, I would like to introduce our panel. With me today, in the first row, is our Atlantic Canada team. To my left is Jennifer Cox, group director of Marketing and Promotion; next is John Eddy, the executive vice-president of Astral Radio Atlantic and responsible for our operations in Nova Scotia and New Brunswick; then Tom Blizzard, group program director; and beside him Wayne Adams, a well-known native of Halifax and a former broadcaster, who will be chairing our advisory board.
552 John Eddy, Tom Blizzard, Jennifer Cox and Wayne Adams, together, have more than 62 years of radio experience in the Maritimes.
553 In the second row, directly behind Wayne, we are pleased to have Ian Greenberg, the president and CEO of Astral Media; beside him, from our Astral Radio team are Claude Laflamme, our vice-president, Legal and Regulatory Affairs; Denis Rozon, our vice-president, Finance and Administration; and Anne McNamara, our vice-president, Human Resources and Industrial Relations, who also looks after employment equity and training of all of our employees in the station. Directly behind me is Jacques Dorion, president of Carat Experts, the research firm that developed our market analysis.
554 We have a substantial team with us today. They represent the expertise and resources we bring to our plans for Halifax from our operations in Quebec and our operations in the Atlantic.
555 Before I pass the microphone to John Eddy, I would like to ask Ian Greenberg, our president, to say a few words.
556 MR. GREENBERG: Thank you, Jacques.
557 Mr. Chair and commissioners, I'm here today --
558 THE SECRETARY: Excuse me, sir, could you turn on your microphone.
559 MR. GREENBERG: Thank you, Mr. Chair and commissioners.
560 I'm here today to underscore our commitment to Atlantic Canada, its communities and its artists. We are successful here. Our vision is to build on that success and become even a stronger regional radio player. Halifax is crucial to realizing this vision.
561 As you know, Astral Radio is a major regional broadcaster. We own and operate 18 radio stations in Quebec, including NRG, which is the most successful private radio network for young adults in Canada.
562 Astral Radio Atlantic is headquartered in Fredericton, with eight stations in Nova Scotia and New Brunswick. All of our radio services are known for being essential partners to the audiences they serve and relevant voices in their communities.
563 We are seeking your approval for what we believe is an innovative and highly beneficial approach to the unique opportunity and challenge presented by the Halifax radio market.
564 Our application draws on our extensive experience and success with the young adult demographic, our history of community involvement and our track record of support for Canadian talent.
565 We have the resources and the expertise to provide relevant, top quality radio service to young adults in Halifax and to make an important contribution to the broadcasting system with our presence in this city.
567 MR. EDDY: Thank you, Ian.
568 I grew up in the radio business here in the Maritimes. My father founded CKBC in Bathurst, New Brunswick, in the 1950s and built the Radio Atlantic Group, which is the core of Astral Radio Atlantic.
569 I have managed radio stations in New Brunswick and Nova Scotia for the past 14 years. With Astral I have the good fortune to be surrounded by experienced professionals, who share my passion for radio and for our part of the country.
570 Our first step in developing this application was to look at the market today. What we found is shown on this map that illustrates the demographic appeal and positioning of the stations. The map is attached at the back of your materials that we handed out just moments ago.
571 If you will take a moment to look at that map, I think you will immediately notice that if you are 40 or over you have lots of radio choices in this city; if you are under 35, you have very little.
572 Our next step was to ask: what do listeners really want and need in Halifax? Extensive research confirms that young adults are starving for more choice, especially the new music of their generation. It's no surprise that they listen less to radio than their peers elsewhere in the province and most of Canada.
573 Commissioners, we have developed two radio applications to fill this gapping hole. We will be the first to focus exclusively on meeting the needs of 15-to-34-year-olds. We will offer young adults the new music our research shows is their favourite, music that is rarely heard on the radio in Halifax today.
574 Rock 105 will play modern/alternative rock and Hot 103.5 will play urban rhythmic music. These will be quality services, providing real musical diversity and new editorial reviews geared to the interests of young adults.
575 Our target audience is large. There are more than 115,000 people ages 15 to 34 in Halifax and 30,000 young adults in the city's six universities.
576 In meeting the needs of these listeners, our application fully responds to the selection criteria for licensing new stations. Both Rock 105 and Hot 103.5 will provide significant exposure for new and established modern/alternative rock artists, hip hop, soul and R & B artists.
577 Our stations will be 100 percent local, with more live programming than any station in the city today. Rock 105 and Hot 103.5 will provide a new reflection of the local cultural scene and local news from a fresh perspective, with each station respecting and reflecting the community's diversity.
578 Together Rock 105 and Hot 103.5 will make a substantial contribution to Canadian talent development through airplay and $4.2 million in initiatives, initiatives that address real needs of emerging artists for exposure, promotion and recording opportunities.
579 Together our stations will have minimal impact on Halifax's existing stations, but they also represent new, committed, stable ownership that will enhance the competitive environment.
580 Our research shows that the modern/alternative rock and urban rhythmic formats are distinct from each other and unlike anything available on local radio. Both Rock 105 and Hot 103.5 are committed to broadcast 40 percent Canadian content. Our commitment to Canadian artists is especially significant because our formats focus on new music and new artists, not just hits and established stars.
582 MR. BLIZZARD: Thank you, John.
583 Commissioners, Rock 105 will play modern rock alternative music, which is the number one format for men under the age of 35. The sound will be loud, it will be edgy, ranging from the metallic crunch of a group like Linkin Park to organic jam bands like the Jimmy Swift Band, a progressive, bold mixture, tailored to listeners who want to hear what's new and what's happening next.
584 We promise a significant focus on local and regional alternative rock talent, including the Joel Plaskett Emergency, Buck 64, Slowcoaster, Shine Factory, Matt Mays. Rock 105's mission will be an ongoing search for local artists warranting exposure.
585 Aside from regular airplay, we have developed a feature call Local Licks. This will showcase original rock by bands from Halifax and across Atlantic Canada, featuring both new groups without major record deals, as well as demo tapes from emerging groups.
586 We will have New Music Mart. This will be designed to be interactive, a show that will give listeners a chance to tell us about new Canadian rock tunes and artists that they have discovered.
587 Rock 105 will be first with the news. We will have newscasts at five minutes to the hour, the content, primarily local, stories that resonate with our listeners. And given our young male audience, we will also include sports highlights from local teams, the Moosehead, the university team, high school.
588 Hot 103.5 will energize the Halifax Regional Municipality with a pulsating combination of hip hop, R & B and dance music, some of which will come from right here on the local scene.
589 We plan to deliver the fun that comes from listening to live radio, with all the spontaneity and immediacy, even when other stations rely on automation or satellite feed. Really, you can't expect to play American-syndicated shows all weekend and maintain audience loyalty with these fans. You really have to be there with a personal, local connection.
590 In contrast to our Rock 105's young male skew, Hot 103's urban rhythmic format will entertain an audience with more young women. Urban music has its roots in Black innercity music, but it has grown to transcend race, ethnicity and culture. And it's not a fad, it's a phenomenon, showing impressive growth across Canada and attracting growing audiences in Calgary, Ottawa, Vancouver.
591 More and more urban rhythmic is the music found in young people's Mp3 and CD players around town and we want to serve them by playing their favourites on our station, Hot 103.5.
592 Maritime artists like Universal Soul, Red Sugah, Classified and Dutch Robinson, just recently an ECMA award-winner, will be on Hot 103.5's playlist from day one. And we will continually be searching for new, local hip hop and R & B artists to feature.
593 Hot 103.5's spoken word will be totally reflective of our young audience. Our news and public affairs features will be local and spontaneous seven days a week. A team of student reporters will scour Halifax for news and issues that speak to their peer group. Hot 103.5 news will cover social, consumer and student issues and highlight local music and cultural events.
594 MR. EDDY: Most stations will reflect Halifax's cultural diversity. With annual scholarships for visible minority students, internships and our employment initiatives, we are talking steps to bring a more diverse work force to radio.
595 Our local advisory board, chaired by Wayne Adams, will help us to reflect Halifax's diversity on air. Mr. Adams has a long and distinguished career in politics, business and broadcasting and Wayne is one of Halifax's most respected community leaders. I'm proud to announce that Wayne Adams is a recipient of the Order of Canada.
596 MR. ADAMS: Thank you, John.
597 I was delighted to be asked to chair Astral's local advisory board. It will be a sounding board on community issues from sponsoring local music organizations to deeper issues involving community standards and diversity.
598 I truly believe Astral's stations will give our city a new way to connect with young people. From time to time we have high profile and highly sensitive race issues in Halifax. We also have news and community issues, such as the highest university tuition in Canada, urban transit, car insurance rates and homelessness that concern young adults more than other age groups.
599 In this environment, media aimed at youth and young adults have a special responsibility. Our advisory board will help to ensure that programming and stations activities reflect Halifax's diverse communities. Rock 105 and Hot 103.5 can be a positive force in raising awareness of cultural issues and values.
600 Astral is a company with integrity. Their commitment to diversity is backed by an action plan and I am proud to be a part of their team here in Halifax.
601 MS COX: Thank you, Wayne.
602 Our Canadian Talent Development Program also has a strong focus on community and the region. Together our stations will contribute $4.2 million in CTD initiatives over seven years. We will capitalize on the ability of our format to introduce new artists, with initiatives to discover and develop talented newcomers.
603 Our seven-year commitment for Rock 105 include organizing, producing and airing five concerts from Halifax clubs every year and five garage band discovery concerts every year. These concerts will give promising local rock bands a wider audience through promotion and airplay; a web site for Canadian modern and alternative rock that's a resource to both the artists and their fans; a Rock 105 Songwriters' Contest; and a significant contribution in musical instruments to Halifax Regional Municipality high schools.
604 Hot 103.5 promises an annual all-day Atlantic Beat Concert in Halifax, showcasing at least 10 artists or bands, with prizes of studio recording time for the top entertainers and an annual CD compilation of top, new local hip hop, R & B, rhythmic dance and rap artists distributed throughout the Halifax Regional Municipality.
605 Both stations will offer and Media Arts Scholarships and internship every year for local visible minority students. In addition, the two stations will contribute $1,225,000 in cash donations to local music festivals and music organizations over seven years.
606 All of these initiatives will be managed by out CTD coordinator to maximize their impact. At $4.2 million, our Canadian Talent Development Program meets the needs of young artists for exposure to broader audience promotion and recording opportunities.
607 MR. EDDY: Commissioners, our proposal is designed to meet the needs of the young adult market, and with two stations we have a business plan that makes sense for Halifax.
608 Here's why a combo works best. First, market demand: this young adult market is larger than the entire Moncton-Saint John or Fredericton radio markets. It is dramatically underserved and clamouring for two distinct musical formats: modern/alternative rock, which appeals more to young men, and urban rhythmic, which appeals more to young woman.
609 One-hybrid format is not the answer. Research proves that there is very little audience duplication between fans of these two formats and even less musical crossover.
610 Second, the combo not only enables us to specialize in this demographic and superserve the audience, it permits critical economies of scale; it offers more effective reach and improved advertising efficiency; it addresses the challenge posed by the high level of ownership concentration and joint management in Halifax. It's the best way to ensure independence and success and contribute to the competitive balance.
611 Our forecast proves that the Halifax market can absorb both of these unique stations with ease. Post-launch existing players will still have PBIT levels of 26 per cent. That's 10 percentage points or 60 percent more than the average profitability for commercial radio in Canada today.
612 Now, here's something we would like you to see.
--- Video presentation / Présentation vidéo
613 MR. PARISIEN: Halifax is a world-class city and it deserves world-class radio. Astral has the resources, the commitment, the experience and the financial strength to deliver what we promise over the long run.
614 There are five reasons modern rock and urban rhythmic are the right formats and we are the right applicants: first, we directly address the demand of underserved young men and women in Halifax with their two favourite music formats, neither of which is available in the market today.
615 Second, our commitment to community reflection is demonstrated by 100 percent local programming, more live programming than any licensed station offers today, strong local news and a local advisory board.
616 Third, we offer the most generous and comprehensive Canadian Talent Development Program. We respond to the real needs of emerging artists, with a $4.2-million program designed to develop and promote new musical talent in Halifax and Atlantic Canada.
617 Fourth, with our combo, we have a realistic business plan that contributes to greater competitive balance in the marketplace.
618 Fifth, we build on our Atlantic roots and draw on the strength of Astral Media to deliver new media ownership in Halifax and a new editorial voice. The broadcasting system will gain a third strong regional broadcaster in Atlantic Canada.
619 Commissioners, this proposal meets the needs of the neglected young adult audience that is in search of new music and new artists belonging to its own generation. Our application fully meets the licensing criteria that you have and contributes to the objective of the Broadcasting Act.
620 Mr. Chair, members of the Commission, we look forward to responding to whatever questions you may have.
621 Thank you.
622 THE CHAIRPERSON: I feel so old and dead! How the hell did I get this old?
623 Thank you, Mr. Parisien and all your team. I will turn the questioning over to Commissioner Demers.
624 COMMISSIONER DEMERS: Thank you, Mr. Chair.
625 Just before we go farther, Rock 105 uses which frequency, 89.9?
626 MR. PARISIEN: Yes, that's it, 89.9 and Hot 103.5 uses 103.1.
627 COMMISSIONER DEMERS: Thank you. I was afraid that I would have to edit all my questions because I thought you were using frequency 105, and that disturbed me.
628 Now, what I intend to do is I have questions of a general nature concerning both applications, which I will start with, then have questions on Hot 103.5 and then questions on Rock 105.
If we start with general questions -- and it will involve even questions of conclusion at a certain point before we get into the two specific applications -- the challenges in scheduling spoken word, I would start with.
629 You have described the means by which spoken word programming will be scheduled at both your stations. Recognizing the particular needs and interests of your target demographic groups, what role will spoken word programming play at each of your stations?
630 MR. EDDY: Mr. Commissioner, I will start, and then I will pass on to Tom Blizzard.
631 COMMISSIONER DEMERS: Yes.
632 MR. EDDY: Spoken word programming is integral to each of these formats. Our spoken word programming is intended to be reflective of our audience and intended to be responsive to their needs and interests.
633 We have localized our applications so that our commitment is to 100 percent local programming, our news commitment is to 90 percent local news and we are offering substantially more localized programming than is currently available on any radio station in Halifax today.
634 I will ask Tom to fill you in on the details with respect to our spoken word initiative.
635 MR. BLIZZARD: To get a feel for the audience that we are going to be talking to, on the rock side we are looking at young adults, primarily men, or at least a men's skew, that male audience with a big interest, we feel, in electronic gaming, Internet, skateboarding, BMX bikes, extreme sports; the audience for our Hot station, urban rhythmic, more tuned with dancing, clubbing, fashion, perhaps going to the mall, trying to establish a skew for those stations and headed the Hot station in more of a female direction.
636 Spoken word content, as John mentioned, our commitment is to 90 percent news. The style of delivery will be focused on that appropriate demographic. It will be tailored with respect to the audience, the greater number of people that we are speaking to on either of those stations.
637 We are very, very excited about our street beat team proposal, which really distinguishes news gathering and news delivery on the Hot station from the Rock station.
638 And when I talk about the street beat team, let's go to the storm a couple of weeks ago, how the our news could have -- how I could use the news as an example to distinguish Rock from the Hot, the urban rhythmic station. Of course, we would be covering all of the necessary surveillance, the latest update on -- well, we were under a state of emergency. We had a curfew, a 10 p.m. curfew, important information that should be on each station. But the Rock station, perhaps, might have come up with what job opportunities are there because of this storm? Has anything been created, an opportunity been created because of the storm? Or, at the very least, how can you volunteer in your community to help out?
639 Meanwhile, the Monday after the storm, when the schools and the universities were closed, except for one -- St. Mary's was open -- we had no city transit that day, if we could mobilize our street team on a day like that we would track down some people who had to make the trudge to school.
640 And after they got to St. Mary's, we would further investigate to see how many of the classes were actually being taught that day. Sure, the university was open, we were told it was open, but does that mean all classes were being taught that day?
641 Beyond that, on the Rock station, we have Rock Blocks during the day. There is nothing that we would like better than to open the door to a new artist from this area, a big name artist, who's in town, who has just sold out the Metro Centre.
642 Twice a day, every day, we will feature Rock Blocks. It's an update on what's happening in the rock scene around town, whether it's in the clubs, whether it's in concert and we will take great pride in offering exposure to new artists.
643 Personally, I really have a soft spot for new artists, and I think everyone associated with this new station will empathize in that way. We want to explore opportunities. We have proposed some here and we will come up with others on how we can launch the next big star out of Atlantic Canada into the rest of the country and around the world. It has been a while.
644 COMMISSIONER DEMERS: Thank you.
645 Could you look at it from another way? For each proposed station, what would be the challenges faced in scheduling spoken word?
646 MR. BLIZZARD: One of the most important things, I feel, Commissioner, in scheduling any spoken word. When we talk about news, sure, news is going to be at five to the hour on the Rock station, it will be on the hour with the street beat component in other parts of the hour during the day. But the feel should not be so structured -- pretend I'm reading the news right now -- so that everything comes to a standstill.
647 We are going to work hard enough to tailor this news to the audience. The delivery is going to be important there, too. We want to have a flow. We want to have more of a flow in that content and we want to make it a conversation with our listeners. We are going to be giving them relatable information, but we want to do that in relatable way.
648 COMMISSIONER DEMERS: So on the content, you see no particular problems in the spoken word content, no particular problems or challenges in the face of the two demographic groups you are facing?
649 MR. BLIZZARD: Demographics different not in age, but different in lifestyle and different in taste. And well written, well focused news and information for either of those stations will do nothing except bring added appeal to the format.
650 COMMISSIONER DEMERS: Thank you.
651 I will focus on your proposal and the formats that do exist today, so first with your proposal for your Hot 103.5 station. You have described your format as offering music in a variety of contemporary urban subgenres and you have referred to it in your oral presentation including modern, rhythm and blues, hip hop dance and rap. That will target the 25 to 54 age demographic. Your Rock 89.9 station would also target the 24 to 54 age group, but would offer a different format.
652 Several of the applicants are seeking to serve part of the same demographic groups as yourself, with music that would seem to contain some of the same music elements as both of your proposed music formats.
653 As an applicant in a competitive process, I assume you have reviewed the other applications. Could you explain how you think your format for each of your proposed stations differ from these?
654 MR. EDDY: Mr. Commissioner, I will begin, and then I will pass it off to Tom.
655 There is an erroneous assumption contained in your question. Each of these formats targets a 12-34 demographic, not a 25-54 demographic. And as would be apparent from the mapping that we provided with our opening comments, you will see that there is virtually a wasteland in Halifax with respect to service of those demographics.
656 COMMISSIONER DEMERS: Thank you. It's a very important statement.
657 MR. EDDY: So I will pass it on to Mr. Blizzard, with respect to the balance of your question.
658 MR. BLIZZARD: And the question is in distinguishing one format from the other --
659 COMMISSIONER DEMERS: Yes.
660 MR. BLIZZARD: -- and this format from other formats currently in the marketplace?
661 COMMISSIONER DEMERS: Right.
662 MR. BLIZZARD: The urban rhythmic format, while we have an adult top 40 player in this market, and they may end up playing some of the music that we are playing, I feel that it will start out in the urban format.
663 Many of these artists, they crossover -- you understand what crossover in music is -- certain artists, for whatever reason. It could be their association with someone else, it could be a duet that suddenly crosses an urban artist over because they are working in conjunction with a top 40 artist. But by and large I think this is a format where this pure urban music starts and, for whatever reason, some of the tunes, very few of them, reach a level that they spill out of the format and into others because of their feel.
664 This is a format that will feature a lot of local artists, local artists that we, through our Canadian talent development initiatives -- local artists that are already recording, regional artists and Canadian artists that at this point are receiving very little exposure, if any, in this market -- regular exposure. And we plan on exposing these artists with the frequency warranted so that our audience will be familiar with them.
665 Talking about artists like Buck 65, you heard that fellow mentioned in the video that we watched. There's also Classified, Ground Squad, Universal Soul, ECMA-nominated. These are artists that we feel we can further develop, make the community at large aware of and perhaps help in exposing them to one radio -- radio stations watch each other across this country.
666 If a radio station in Toronto or Calgary is watching our radio station, the Hot station here in Halifax, saying, "Who is this Ground Squad? My goodness, they are playing them 25 times a week that record. It must be hot. We have to get a copy of it", perhaps it doesn't have national distribution, but they will find it. This could be a discovery new to Calgary that we have helped develop here in Halifax.
667 At our core for artists will be a number of rap artists, whether it's Jayz, 50 Cents, but also Canadians: Nellie -- Swollen Members, Rascals. We promise 40 percent Canadian content in this format.
668 For the rock side, and in sharing that music with another radio station in this market perhaps to a degree, I feel that it wouldn't exceed 20 percent to 25 percent.
669 Once again, those artists could be the reason for sharing our smaller pool of Canadian artists to draw from in the rock format. We could be on records, developing them, and they could spill over into the broader rock format if those programmers see the appeal in these artists.
670 Our emphasis will be on primarily new music. We aren't going to go back that far. Even in urban, we don't plan on a lot of exposure of old-school music. Every format will expose its roots from time to time, but in our instance it would likely be: "Today Ice Cub is celebrating his 45th birthday. Remember this?".
671 It would be rare. It wouldn't be part of our permanent day-to-day playlist. Our emphasis? Very new and very, very local.
672 MR. EDDY: If I can add to what Tom has said, our view is that, with respect to competing applications in this sort of genre, we are the only applicant before you who is proposing a pure urban rhythmic station, to the extent that we can tell.
673 Now, the clear differentiating points between our proposal in that regard and that of the others is that ours is based on research and market-demand studies. Those studies have indicated to us quite clearly that there is a great deal of distinction between an urban rhythmic format and a modern/alternative rock format. And I would point out that we are the only applicant at all before you who is proposing a modern/alternative rock format.
674 So we end up with two because, in our view, based on the research that we have done, endeavouring to put these two formats together is risky and likely, far more likely to fail than to run these two formats in parallel.
675 Part of the reason for that, if I can address you on that subject, our view that urban rhythmic music is really the expression of what seems to be an emerging new culture, which is very, very different from the culture of rock and pop.
676 The culture of rock and pop has been around with us for the past 30 or 40 years at least. It's characterized by its roots, which had to do with, I think fairly put, alienation and some sense of "we against them" and all that sort of thing, which has developed in rock a sense of tribalism. There is a hierarchy about that whole genre of music.
677 And that would be typified, for example, by appellations and titles attached to stars in that format. For example, Elvis would be "The King" and Michael Jackson is "The King of Pop" and you have queens and all the rest of it.
678 The other format, the urban rhythmic format, is really expressive of quite a different culture. It is far more egalitarian. It's far more inclusive. You will hear that word used all the time in the context of urban rhythmic music.
679 What that means, of course, as we point out in our brief, is that it transcends race and ethnicity and culture, but it's also a very, very welcoming kind of genre and egalitarian.
680 So the messages from these two formats are really quite distinct from one another. That's a very significant reason why they don't fit well together and why our proposal for two makes sense and how it's different from the others in this competition.
681 COMMISSIONER DEMERS: So from what you say, this would be a distinction that would be apparent, very apparent from what I gather from your statements. That would distinguish your station, from a music point of view, from what exists today in Halifax, did I...?
682 MR. EDDY: Well, it will distinguish us -- I mean, clearly, what we are proposing to offer is not available in Halifax today, other than the merest of samplings. So it distinguishes us, in that regard, from what is available in the market today and also distinguishes us from what other applicants here are proposing to do, in that our whole focus here is to superserve a demographic that is basically neglected by existing market operators and to do it in such a way that we have a sustainable and focused effort that delivers product into the marketplace that research shows is in great demand.
683 COMMISSIONER DEMERS: Thank you.
684 A few questions on synergies with your two proposed stations. According to the market study conducted by Carat, it would appear that a target demographic for your Hot 103.5 stations is underserved. In light of this, could you explain why your business plan is not financially viable as a stand-alone service in the market?
685 MR. EDDY: I will begin, and then I will ask Mr. Dorion to comment directly on the details contained in the research.
686 First of all, obviously, it is our position that there is substantial demand for the format. Unfortunately, or fortunately, it is a new and emerging format. It's obviously experiencing substantial growth across the country, across North America but, because of its new and emerging nature, it doesn't have a huge audience today.
687 We think it will. That's why we are prepared to invest in it and that's why we are prepared to stay with it.
688 At the same time, our research shows that on its own this format will not generate sufficient advertising revenues in this market to be sustainable or if it is it's very marginal.
689 I will pass on to Mr. Dorion.
690 MR. DORION: Good afternoon.
691 What we have done in this market to identify the demand or the need for the two formats, the two best formats to serve Halifax is to follow a very systematic approach, very detailed and extensive, and try to project a reach number: how many individuals would listen to a specific stations and how many hours they would tune in, and then generate for the Astral group the revenue numbers.
692 The first thing we did on a macro side to identify the need was to get an helicopter view of the market using the syndicated research we have in our office, things like BBM, Arbitron, PMB, Neilsen, all data banks that supports Astral's application and our research, that are key indicators and that show trending of these two formats.
693 Then we asked a company called Synovate to do some custom research in Halifax. Synovate, for those who are not familiar, is the ex-market fact, a very well-known international company, established in 50 countries, with offices in Halifax, Vancouver, Montreal, Toronto, and works with national advertisers, regional advertisers. People like Coke and Honda would have their research done through Synovate.
694 It's a public company, based on the London Stock Exchange, quoted on the London Stock Exchange, with a very high reputation. We have used them in the past, several other times, in other markets of Canada.
695 The objective of the research, the main objectives of the research, was to identify the radio formats that would appeal more to the Halifax metropolitan area, and gather the appreciation of five proposed formats.
696 Out of the 16 that were identified or that are listed in the BBM, we have chosen five that were tested among a group of 300 people, among all age groups in the Halifax area aged over 15 years and up.
697 With them there was an interview of 17 minutes, with a musical clip of 75 seconds playing four to six songs each time for people to understand what kind of music. Because a description of a format for an individual listener is somewhat fuzzy. It's not clear because the genres are -- there are genres, there are subgenres. I mean, we played music to them so they could identify easily the format.
698 Using the numbers that followed the 300 interviews, we have used the numbers to determine the potential listeners of those five tested formats.
699 Three important answers composed or delivered what we call the aggregate score. The aggregate score is the best indicator, according to Synovate, of the success of a given format in a market.
700 Those three questions were: what is the overall appreciation of the format? Do you like the format? Would you listen to it? What's the likelihood of listening to it over time? And three, how exclusive in this market is this format?
701 Combining those three numbers, we came up with recommendation one: to have a modern rock, modern/alternative rock. Two was urban rhythmic, but because urban rhythmic, for instance, is a new format, a new emerging format, and the numbers show lower penetration and market shares than your usual mainstream pop stations or contemporary stations, from this research we have supplied market shares of, I think it was, 5 percent and 8 percent for individual stations. Then, revenues were produced and Astral, based on these revenues, produced some financial statements.
702 COMMISSIONER DEMERS: But other applicants are targeting a similar demographic and are projecting profitability by the end of the proposed licence term. You are projecting a negative PBIT throughout the seven-year license time.
703 MR. EDDY: If I can address you on that, and then perhaps I will invite Mr. Dorion to comment further, with respect to our competitors in this process only one of them has done any research with respect to the viability of this format, demand for this format, or any research that would attempt to translate audience numbers into audience shares and into revenues.
704 So with respect to all but one, there is no research, and so there is no basis for their claim, really, of profitability in year one or year seven.
705 The second point I would make is that, with respect to the only applicant other than us before you that has done research, the research is badly flawed. And it's flawed in this key, key respect: the format that they are proposing -- and I am referring now to CKMW -- the format that they are proposing is a hybrid format that combines urban rhythmic music with modern/alternative rock music.
706 In fact, what they say in their response to deficiencies is that their format will contain 27 percent modern/alternative rock music. But if you look at the market research that they did, the study did not make any inquiry of anybody about modern/alternative rock. They only inquired about top 40 and urban rhythmic. So the validity of their research, with all due respect to them, is highly questionable, in our judgement.
707 Secondly, to compound the problem, what this applicant has stated in its materials is that the target demo for their format is 12-24. As you know, we have just stated the target demo for our proposed format is 12-34.
708 The facts of the matter are that in Halifax the total potential audience available for their station is some 63,000 people. This is with a hybrid format that our research shows is going to have difficulty because the fans of each of these formats are not going to be very happy about the other formats' music being played over the music they want to listen to. So there is going to be substantial tune-out.
709 I think it's real fair to say that the likelihood of them attracting all 60,000 people is extremely remote. So if you have a 12-24 radio station with a slightly compromised format, in circumstances where we have put research before you to say that it won't work on a 12-34 basis, with a population base to choose from of 115,00 people, plus university students, I think you have to ask serious questions about the viability of their business plan.
710 Our expectation here is that what this proposal of CKMW really implies is that they are going to try and be a top 40 radio station. If you license that, our suspicion would be, our expectation would be, that you are really licensing demo-creep.
711 The likelihood here is that they will seek to duplicate, to the extent that they can, music that is now offered on C100. Because otherwise, on a stand-alone basis, quite frankly, their proposal is just a non-starter financially.
712 MR. ROZON: If I may complete John's answer, Mr. Commissioner, on a more financial approach of your question, I think, you were quite aware why we are not showing profitability on the urban ethnic format, even on a combo basis. Am I right about...?
713 COMMISSIONER DEMERS: Well, I would say that we have come to see that the urban rhythmic service will only generate approximately 50 percent of the total revenue that the modern/alternative rock service will generate, yes.
714 MR. EDDY: If I can just step in for a moment, I think the point that underlies what Denis is saying is that we are seeking the urban rhythmic format licence only in conjunction with the modern/alternative rock licence. We are not seeking it separately and on its own. We don't think it's viable separately and on its own. So since we do not think it's viable separately on its own, we certainly don't think it's viable for anybody else.
715 MR. ROZON: Also, Commissioner, what we have to keep in mind, you were talking about synergy, okay, the synergy that brought a combo operation, it's on two levels. You have the fixed costs or the operating costs of both stations. But also, if you look at the combo statement on the modern rock alternative format, there is some additional synergy on that format that brings a profitability or a reasonable profitability to the urban rhythmic format when you are onto a combo operating station.
716 So if you look at only the urban rhythmic format financial statement, it looks like we are not making money. But we have to look at it globally as a project, itself, because you have additional savings and synergy on the modern rock alternative format and also on the revenue side, which we think, and the history, the past history is the proof -- and probably John could add to that -- when you have more than one station in Halifax or in any other market, you could have a better sales approach to your customers and get a better power ratio for the same offer that you are having for the same market share. And you are having it on both formats.
717 That's why when you look only at the urban rhythmic, it could seem like you are not making money. But when you look at it globally, we are making more money with both stations than with only the modern rock alternative format.
718 MR. DORION: To the math, I would like to add to John's comment. The difference between Astral's application and, I should say, the other four that have, shall I say, formats that could relate to one another, one, the competition seems to overestimate a market share of an urban rhythmic.
719 Maybe they think by combining two kinds of music they would get a higher market share. We don't think that would happen because music and listeners on stations combining rock and urban do not duplicate.
720 If you look in markets in Vancouver, Toronto, the people who listen to urban usually don't listen to modern rock. It's two different entities. We think they have overestimated their market share.
721 We also think they overestimated a share point in Halifax, even though the numbers you have shown us this morning, the 2003 numbers, show that the industry was quite healthy last year, thanks to a boom in national advertising -- still is.
722 The value of the market I think was overestimated. And three, like Denis mentioned, if your station number five, number six in a given market, or number seven, you can't expect to have what we call a power ratio of 100.
723 If you have a five share, you will get probably 80 percent or 5 percent because you are number seven, you are number eight in a radio bank. So the power ratios of our competitors, we think, were overestimated.
724 Astral's application is a little more, shall I say, conservative, I think more realistic about the results that would be delivered by an urban station. Because if you look at what has happened in a market bigger than Halifax, Calgary, for instance, a market share for the urban is 5.3. I see numbers like 7, 12, 9 here in year one. I don't think so.
725 So for all these reasons, Astral's numbers, they look a little more on the downside than the competitor.
726 COMMISSIONER DEMERS: Thank you.
727 Then I will adopt my next question. Should the Commission decide to grant only one licence at this proceeding in Halifax, could you comment, because I would not -- or would you say which of your two applications should be approved, in your own mind?
728 MR. EDDY: Yes. We have made it quite clear throughout our materials that modern/alternative rock is viable and sustainable on its own and we would be very pleased to accept that licence on its own.
729 By comparison, the urban rhythmic format station is not viable on its own and we would not be prepared to take that licence without the other.
730 COMMISSIONER DEMERS: To put it bluntly, you would not implement a licence for an urban rhythmic, your Hot 103.5 application, if it were granted?
731 MR. EDDY: On its own, no.
732 COMMISSIONER DEMERS: Thank you.
733 More on a technical aspect and concerning the two frequencies, as you know you application for the use of 103.5 is competitive and technically mutually exclusive. With three other applications at this hearing, under this scenario the Commission seeks the competitors' views to assist it in deciding which applicant has proposed the best use of the requested frequency.
734 What is your view of the compelling reasons that the Commission should take to grant you the requested frequency 103.5?
735 MR. EDDY: Thank you, Mr. Commissioner.
736 COMMISSIONER DEMERS: From a technical point of view only.
737 MR. EDDY: From a technical point of view?
738 COMMISSIONER DEMERS: Yes, the use of the frequency, as such.
739 MR. EDDY: You mean from an engineering perspective?
740 COMMISSIONER DEMERS: Yes, exactly, or at least in what way is your proposal the best use, in fact, of the frequency spectrum?
741 MR. EDDY: Okay. Thank you.
742 We are the only applicant before you to propose a pure urban rhythmic station. That proposal is based on research we have done which we believe demonstrates market demand that is not being met currently.
743 Our business plan, with respect to this station, is viable in combination with our modern/alternative rock station. The two formats, we believe, are quite distinct from one another. We do not believe that it makes sense or is appropriate to try to run a hybrid format in the marketplace.
744 As Mr. Dorion has just pointed out, there is very, very little audience duplication between these two formats, and even less musical crossover. But we think the distinctiveness with respect to these two is important. Insofar as 103.5 is concerned, the opportunity has presented itself for us, as an applicant, as a new entrant to this marketplace, to put together a business plan that enables us to superserve this demographic.
745 From our point of view, the plan that we have laid out to superserve the demographic, which includes a very strong CTD plan, a comprehensive community reflection plan that includes our local advisory board and extensive commitments with respect to news and other spoken word and our experience nationally with this format -- with this demographic, I should say, in Quebec, all should, we think, lead you to the conclusion that you should license us on 103.5 to deliver this format to meet the demand, on the basis that we have the financial strength and the commitment to meet our licence obligations and we have a business plan, that if you put the two formats together, is viable and sustainable and enables us to compete effectively in a marketplace that is characterized by heavy media concentration, ownership and management.
746 COMMISSIONER DEMERS: Thank you.
747 The same question would be with the case of 89.9. Would you have different comments or further comments concerning -- and I say it again -- concerning the technical aspects, the fact that you are in a competitive application?
748 For example, the use of 89.9 is mutually exclusive with 89.7, proposed by another applicant, East Coast Broadcasting. Would you have further comments on the particulars of 89.9, from a technical point of view?
749 MR. EDDY: Yes. The proposal before you from East Coast Broadcasting is, from our perspective, an underutilization of the frequency. Our view of that application -- and I guess we would urge this on you -- as I think my colleague, Jennifer, said to me the other day, it's an application that is not really ready for prime time.
750 This is an application that looks to us very much as though it derives from small, small markets and is an attempt to translate that into Halifax. From our perspective, the business case for that proposal's viability is extremely weak.
751 Just to give you one example, my understanding from that proposal is that they expect to have a morning show host who will conduct a morning show, prepare for it and run a morning show for four hours in a day, after which that person is going to, apparently, go out into the community as a full-time salesperson for the radio station and accomplish all of that for the sum of about $22,000 a year.
752 We just do not believe that is viable, sustainable, competitively relevant in a market as sophisticated as Halifax.
753 The second point that I would like to make again is that we are the only applicant before you who is proposing a modern/alternative rock format. We believe that our research has demonstrated that the demand for modern/alternative rock in this market is greater than the demand for urban rhythmic. That's why we think it's more viable.
754 For those reasons, we feel that our proposal, with respect to the use of that frequency, is compelling.
755 COMMISSIONER DEMERS: Thank you.
756 Now, I will turn to Hot 103.5, with a few direct questions to that application, itself. And I start with this CTD you have referred to -- CTD in your oral presentation.
757 With respect to the Canadian Talent Development, we note that as part of your Hot 103.5 station initiatives you have budgeted an annual amount of $82,000 for your Annual Atlantic Beat CD Compilation Initiative. However, according to the Commission policy on qualifiable contributions -- and I believe you know that public notice, but I could refer precisely to it, if you wish -- it would seem that $29,500 of your total annual budget would not qualify you as a direct contribution.
758 We have questions on judging -- $4,500 -- and $25,000 in CD duplication. In answer to deficiency letters on judging costs, you have stated that you expect to have to transfer some entries to one format at an estimated cost of $3,000 annually.
759 The Commission generally accepts production costs at direct expenditures when paid out to a third party. In the present case, you would use the station's studios. Therefore, could you tell us if the transfer costs would be paid out to a third party or if the transferring would be done in the station's studios?
760 MR. EDDY: Forgive me, can you repeat just the last part of that question again? I'm sorry, I didn't catch that.
761 COMMISSIONER DEMERS: Yes.
762 The last part is: will be transferred in the station's studios? Are you going to pay a third party or will you do it in your own station's studios?
763 MR. EDDY: I don't believe our plan is to do that in the station. Those are third-party costs.
764 COMMISSIONER DEMERS: So it will be a third party?
765 MR. EDDY: Yes.
766 COMMISSIONER DEMERS: So this money will be handed out to a third party.
767 Will this be in cash or can you assure us that this will not be through a contra arrangement?
768 MR. EDDY: Our entire CTD plan has been formulated and accounted for in our financial projections on a cash basis. However, in the event that an opportunity arises for us to make a sensible kind of trade or barter deal, we would certainly look at it.
769 I can tell you now, today, we have made no such arrangements with anybody, but should the opportunity arise we would certainly consider it.
770 COMMISSIONER DEMERS: That's a very important point. I want to get it very clear.
771 If it's a contra arrangement, there would be very little chance, I imagine, that it would be recognized as a direct investment in Canadian Talent Development. So this is the reason for the question.
772 MR. EDDY: I understand that.
773 The short answer is that our business case, our entire plan, is based on these being cash out.
774 COMMISSIONER DEMERS: You have also specified in the cost breakdown you have provided that $25,000 a year is earmarked for the cost of CD duplication.
775 Are you concerned that these costs are not related in any way to the $3,000 a year earmarked for transfer costs of entries to judges CD, in other words, there is no relation between this and what we have talked about earlier?
776 MR. EDDY: Correct.
777 COMMISSIONER DEMERS: And the same question goes concerning contra: these duplications, will they be done by the station or by a third party? And if by a third party, will it be through a contra arrangement or through dollars paid out to third parties?
778 MR. EDDY: Our plan, our assumptions, are based on these being third-party costs paid for in cash.
779 COMMISSIONER DEMERS: Thank you.
780 In your cost breakdown, you indicate that $1,500 of your budget would go to honorariums for external judges to attract three appropriate individuals. Generally, judges are not paid, and if they were this would be normal costs for doing business.
781 Could you explain why you feel an exception should be made in this case so honorariums could be accepted as direct contribution to CTD?
782 MR. EDDY: Well, in the context of this CTD initiative, what we are intending to do is empower experienced, professional, high-profile, qualified judges, whose time we are going to be taking away from what they otherwise might be doing, in terms of gainful employment. So in the circumstances, we thought it entirely appropriate that their contribution should be remunerated in some fashion -- modest fashion.
783 COMMISSIONER DEMERS: So should the Commission not recognize judging costs, to what initiative would these funds be redirected?
784 MR. EDDY: To factor.
785 COMMISSIONER DEMERS: Thank you.
786 Could you confirm that the costs associated to price of recording studio time, representing $15,000 a year, would in fact be paid out to a third party?
787 MR. EDDY: Again, Mr. Commissioner, our plan and our assumptions are based on these costs being third-party costs, paid in cash.
788 COMMISSIONER DEMERS: Thank you.
789 Atlantic Beat Concert, with respect to your Annual Atlantic Beat Concert, you indicate that you will award prizes for studio recording time totalling $52,500 a year.
790 Could you confirm that the studio to be used for the recording is not that of the proposed station?
791 MR. EDDY: Absolutely.
792 COMMISSIONER DEMERS: Could you confirm that the use of the third-party studio will not be contributed through a contra arrangement?
793 MR. EDDY: No arrangements exist for such an arrangement and our plan is entirely based on this payment being to a third party in cash.
794 COMMISSIONER DEMERS: Thank you.
795 Target audience, maybe we have covered most of this. According to your market study and evidence provided by other applicants at this proceeding, this format generally appeals to 12-34, as we have discussed before.
796 What is the rationale behind the marketing of this service? And you have confirmed earlier that you are not marketing that to any other age group than the 12-34. Do we all agree with that?
797 MR. EDDY: That is our target demographic and our absolute commitment here is to that demographic.
798 COMMISSIONER DEMERS: Thank you.
799 MR. DORION: Mr. Demers, I would like to add, if you look at the profile of urban stations in some markets of Canada -- Ottawa, Calgary, Toronto -- 80 percent to 85 percent of listening hours is 12-34. And modern rock is about the same. So I mean, you can't cheat because the music is not appealing for people over 35 or 40. It doesn't relate to them.
800 COMMISSIONER DEMERS: Thank you.
801 And now to Rock 89.9 programming, with respect to your 89.9 CTD plan, we note that you have budgeted an annual amount of $29,000 for your Songwriters' Contest Initiative. I'm questioning here the $2,000 and here I explain.
802 Please explain what you mean by "$500 for copying of all applications and the processing of applications". Could you explain that $500?
803 MR. EDDY: I will ask Jennifer to comment on the specifics of that particular component of the Songwriters' Contest Initiative.
804 COMMISSIONER DEMERS: Thank you.
805 MS COX: We will be asking rock artists to submit lyrics and we want the judges to have identical and consistent lyric sheets. Therefore, we have budgeted to make sure that is done properly.
806 COMMISSIONER DEMERS: So this is to copy the lyrics sheets?
807 MS COX: Yes.
808 MR. EDDY: It's to provide the judges with the material and information they need in order for them to be credible and in order for the initiative to be relevant.
809 COMMISSIONER DEMERS: Thank you.
810 You have indicated $1,500 for an honorarium to outside judges. We have discussed that in the case of the other application. Do you have anything to add to what you have said before concerning judges -- the $1,500 for judges?
811 MR. EDDY: No. Our position with respect to the merits of that are the same.
812 COMMISSIONER DEMERS: Thank you.
813 The web site for that station, you state at the bottom of page 18, in your supplemental brief, and I will quote two sentences:
"Rock 89.9 will launch a high-quality web site to establish a strong presence for the station in cyberspace. The web site will be an integral part of CTD initiatives aimed at ensuring a strong focus on the development of Canadian modern/alternative rock artists." (As read)
814 My first question would be: will this CTD web site be separate from your station's own web site?
815 MR. EDDY: Two comments. First, we have no plan, as yet, for a station web site. This will not be a station web site; this will be a CTD web site only.
816 COMMISSIONER DEMERS: So there is no relation between a station web site that could exist in the future?
817 MR. EDDY: None.
818 COMMISSIONER DEMERS: Thank you.
819 No plans for any program information on the web site that we are speaking about?
820 MR. EDDY: Mr. Commissioner, if by that you mean programming related to the radio station --
821 COMMISSIONER DEMERS: Yes.
822 MR. EDDY: No, there will be no information on the web site about programming related to the radio station.
823 The purpose for the web site is to enable us to communicate with an audience, communicate with a demographic, one of whose standard tools of communication today is the Internet. What we need to do is reach these people so that we can inform them of the support and the opportunities that are available to them through our $2.1-million Canadian Talent Development Initiative Plan attached to this radio station.
824 So it would be, frankly, irresponsible for us, I think, not to endeavour to reach them through communication means that they are most comfortable with. That's the purpose of the site and that's what we hope it will accomplish.
825 COMMISSIONER DEMERS: Another question: will the CTD web site include no links to any of Astral's other broadcasting holdings?
826 MR. EDDY: It may contain a link, it may contain links to all manner of relevant sites here, there and everywhere. This is really not at all about Astral.
827 COMMISSIONER DEMERS: Thank you.
828 The proposed budget for this initiative is $130,000 over seven years. In the first year, $40,000 is probably the establishment, then $15,000 a year for maintenance and updating.
829 Could you tell us how you have arrived at $40,000 for the creation of the site?
830 MR. EDDY: First of all, this is a third-party expense, this is not an internally generated expense. So we would be looking to third parties to create the web site and it is a genuine estimate of what we think it will cost to have that piece of work accomplished professionally for us.
831 COMMISSIONER DEMERS: Is it based on discussions with a third party or from sites that you have created in the past?
832 MR. EDDY: Well, we actually haven't created any sites, so it's based on our discussions with third parties who are in the business of web site development.
833 Like any other construction project, it really depends on how complex you want the site to be. And so based on the information that we generated at the time that we were putting this application together, the best range of estimates we could get landed us with this number, and we are comfortable with it.
834 COMMISSIONER DEMERS: The same thing with the annual cost for maintenance and updating of $15,000?
835 MR. EDDY: Yes, absolutely.
836 A web site of this sort particularly will not be at all effective if it is not current, kept up to date, a rich and a useful experience for the users of it. So for us to fail to include in a provision for a CTD web site moneys for the maintenance of it would be simply to ensure its failure.
837 COMMISSIONER DEMERS: A general question on the web site: is there anything you would like to add to demonstrate that this web site will contribute significantly to the promotion and development of Canadian talent and therefore should qualify as a direct CTD Initiative? Anything else to add?
838 MR. EDDY: I will ask Jennifer to comment on that.
839 MS COX: If I could, I would just like to take you through a few of the initiatives that will be found on this web site.
840 It will be online information and publicity for the Rock 105 Live Club Concerts and the Rock 105 Garage Band Discovery Concert; online information and online applications for funding requests, as part of our cash donations to local music festivals, music organizations, as well as the Music in Schools Initiative; information and online applications for the Rock 105 Songwriters' Contest; significant exposure to rock music events, artists, concerts and appearances of local Halifax and area performers; and give listeners the opportunity of direct and significant input into specific local rock music programs, like Local Licks, which not only offers on-air exposure for up and coming and new rock bands in the region, but it offers listeners an opportunity to vote and request their favourite local selections 24 hours a day.
841 One of the other things that they will be able to do is voice their opinion on the Canadian rock songs featured in the programs, along with the requests for exposure to these new bands.
842 The Canadian Talent Development Initiative will be the primary focus of this web site.
843 COMMISSIONER DEMERS: Thank you.
844 A last question, and it concerns your budget over seven years. It's just a reference. At the top of page 21 of your supplemental brief, you have provided Table 2, "Summary of Rock 89.9 CTD Initiatives". Apparently, there may be an arithmetical error. There is a $500 -- either too much or not enough -- that may be you can look at and try to find out so that our books balance.
845 MR. PARISIEN: Yes, we are glad you found it. You are right, there is a $500 mistake in the total.
846 COMMISSIONER DEMERS: Thank you.
847 Thank you, Mr. Chairman. This is all the questions I have.
848 THE CHAIRPERSON: Thank you, Commissioner Demers.
849 I understand Commissioner Cram may have a question or two.
850 COMMISSIONER CRAM: Thank you, Mr. Chair.
851 I wanted to go back to that web site. You were quoting, I think, from your deficiencies. I think it's your letter of November 6th, 2003, about Rock 105, at page 6, were you not, when you were talking about the web site?
852 MS COX: Yes.
853 COMMISSIONER CRAM: I have to say, given that, I think, Mr. Blizzard -- and you have to realize, Mr. Blizzard, I had a hard time even saying your name in Halifax a week after what happened, I'm sorry.
854 MR. BLIZZARD: It's not a good word here.
855 COMMISSIONER CRAM: Yes.
856 MR. BLIZZARD: Although I was in the headlines.
857 COMMISSIONER CRAM: Yes, you certainly were, sir, I'm sure.
858 But Mr. Blizzard, you were talking about your emphasis in programming on new artists and bringing them on. I have to say when I read what this web site is going to do, I can interpret that it would advantage you and your station as much, if not more, than artists because you find your young artists through this and you also get their feedback.
859 The last bullet you have on page 6 talks about listeners voicing their opinions on the Canadian rock songs featured in the program, which is Local Licks, which will be on your station, along with requests for exposure of new bands.
860 It seems to me that a lot of this is getting -- at least that last bullet is getting feedback from your listeners about what you have on your programs.
861 MR. EDDY: I don't think we could deny that there is some benefit that flows to the radio station from this initiative. But there is some benefit, we hope, that flows to the radio station from every one of our initiatives. We hope that people respond to them, we hope that people participate, we hope that people feel good about what we do, we hope that people acknowledge our contribution.
862 But the benefit that flows to us is, in our view, vastly outweighed by the support and the opportunity and the benefit that we are providing to new and emerging artists. So from a point of proportionality, we think that this is a very valuable resource for this consistency and will be of assistance.
863 COMMISSIONER CRAM: And after seven years, will you stop your Rock 105 Live Club Concerts and Garage Bands Discovery Concert and Songwriters' Contest?
864 MR. EDDY: Will we stop them?
865 COMMISSIONER CRAM: Yes.
866 MR. EDDY: Well, I don't know what we will be doing --
867 COMMISSIONER CRAM: Mr. Blizzard is shaking his head.
868 My point is, you probably do this in the normal course of business anyway.
869 MR. BLIZZARD: Perhaps not to that degree, Commissioner. This is an expensive commitment, but we feel very passionately about developing local artists.
870 If I could mention --
871 COMMISSIONER CRAM: But that benefits your programming. I mean --
872 MR. BLIZZARD: There is no debating that.
873 COMMISSIONER CRAM: Yes.
874 MR. BLIZZARD: There is no debating that. It benefits our programming local, but it also benefits the artists, in that in 1996 I first started working with a gentleman who does an east coast music show presentation on one of our Fredericton radio stations. Subsequently, he has been nominated twice, which he's certainly very flattered about.
875 Back at that stage of east coast music development, there was definitely a very Celtic sound to the music. It was Celtic folk, maybe Celtic folk rock. Since then, though, the categories have expanded to include practically every popular genre coming off the east coast. Distinctive, yes, but definitely not fiddle music.
876 But I can't remember -- I was trying to think last week just walking around the streets -- when the last east coast artist exploded from this scene. Was it Great Big Sea? We could go back to Anne Murray, before there was --
877 COMMISSIONER CRAM: But it may not be my demographic.
878 MR. BLIZZARD: No. Before it was called east coast music, definitely it was Anne Murray. I can think of Anne Murray. Hank Snow. Sloan. Great Big Sea, though, I think is the last one.
879 What we want to do is be part of a launching pad to get these artists back out across Canada and around the globe because we really feel there is a scene locally, as well as across the region. I know it's there. I know it's there.
880 You must know the number of venues in the city, not so much all-ages venues, which is why our Garage Band Discovery Program is important to us. But the venues.
881 Clubs, per capita, the clubs around here, there must be a greater number than any other city this size in Canada, and they appear to be thriving. If you go to our the programming that we plan on featuring on Hot 103, I mean, half of the clubs are likely featuring urban programming. They most certainly feature great club jocks. And the other half are either presenting rock or they are presenting some form of music that's derivative of rock. It could be lighter, it could be even heavier, but the scene here is vibrant. I don't hear it on the radio stations currently. We want that to be part of the thread of our programming, and a very important one.
882 I have a couple of sons -- I was a musician. I have two sons who are musicians now and we feel very passionately about -- these guys are tired of hearing me say this likely, but my two boys grew up in radio stations. Now, one fellow still lives at home and he knows about the radio and he uses it. His brother, I doubt if he has a radio in his apartment.
883 He has many other sources of entertainment, but I want that demographic here in Halifax to come to us for entertainment, for information, to hear that group they heard over here at The Attic on Friday night: "Hey, I just heard them on Rock 89" -- I'm going to have to get used to saying that, I think, rather than Rock 105 -- "I just saw those guys in the club. They are great". We want to hear more of their music.
884 COMMISSIONER CRAM: Thank you, Mr. Blizzard.
885 MR. BLIZZARD: You are welcome.
886 COMMISSIONER CRAM: On page 8 of the same deficiency letter you are talking about the CTD coordinator and the last, the last -- after you do cash donations and the ilk, the paragraph at the bottom, before subparagraph (b) is:
"The Canadian talent coordinator will also be one of Rock 105's key people in ensuring the radio station is doing its utmost on a regular basis to being at the forefront of Canadian, and in particular local, modern/alternative rock music development." (As read)
887 What is the difference between that and what a program director should be doing?
888 MR. BLIZZARD: I don't think there would be enough hours in the day for the program director to do that job.
889 COMMISSIONER CRAM: No, I'm talking about that last paragraph.
890 MR. BLIZZARD: Could you repeat that for me, please, Commissioner?
891 COMMISSIONER CRAM: Do you have that -- you don't have that.
892 MR. BLIZZARD: Okay.
893 COMMISSIONER CRAM: It's the November 6th letter on Rock 105, and it's at page 8.
894 MR. BLIZZARD: Your question is: should the Commission not qualify it as a direct contribution?
895 COMMISSIONER CRAM: No, my question is, at page 8, whether or not the paragraph above subparagraph 5, what is the difference between the job of a program director and what this Canadian talent coordinator is doing, in that last paragraph?
896 MR. EDDY: If I can start the answer and maybe Tom can finish it --
897 COMMISSIONER CRAM: Yes.
898 MR. EDDY: -- a program director's responsibility primarily is to manage the programming talent in a radio station and develop that talent. It's also to ensure that the music and the format that we play stay between the white lines.
899 It's really an internal management job. The CTD coordinator job --
900 COMMISSIONER CRAM: I know, but don't they have to know the format --
901 MR. EDDY: Absolutely.
902 COMMISSIONER CRAM: -- and know the genre --
903 MR. EDDY: Absolutely.
904 COMMISSIONER CRAM: -- and know what is going on in that scene?
905 MR. EDDY: Absolutely.
906 COMMISSIONER CRAM: To me, that's what your programmers do, not what a developer of talent.
907 MR. EDDY: Well, no, the Canadian development coordinator component of that is really more in the context of outreach and organization. These are disparate groups of people that are playing music in garages and playing music in clubs and engaging in some sort of musical activity in schools and on the street. That's not a program director's job. Really, Tom is absolutely right. There wouldn't be enough hours in the day to get anywhere close to that kind of involvement. This wouldn't happen.
908 MR. BLIZZARD: I would expect her function to be more of a conduit back to the music director. And then, ultimately, once they have brought together whatever they feel is of the standard to make it into a meeting with the program director -- "We have some really good suggestions here. You have to hear this. You are going to be interested" -- but I think the first part of the filtering process, as well as a conduit, the front end of our programs at the radio station is the talent coordinator, the CTD coordinator, then through our music director, before it arrives at the program director's feet.
909 COMMISSIONER CRAM: You said in your opening statement twice, the first time at page 4, in the penultimate paragraph:
"Our stations will be 100 percent local, with more live programming than any station in the city today." (As read)
910 What do you mean by that?
911 MR. EDDY: By the second part, we mean that we will be far less reliant on automation and syndicated programming than current radio stations, listening radio stations in the market are and 100 percent of the programming on radio stations will be generated locally.
912 COMMISSIONER CRAM: So you are saying there is voice tracking going on and you will do less.
913 MR. EDDY: Absolutely.
914 COMMISSIONER CRAM: Is that right?
915 MR. EDDY: Yes.
916 COMMISSIONER CRAM: So can you give us an idea of the numbers when you say that?
917 MR. EDDY: I will ask Tom to address you on that. This is numbers with respect to voice, right?
918 COMMISSIONER CRAM: Well, no, I just want to know why you think you are going to have more live programming and why you think you will have more. In other words, what is here now and --
919 MR. BLIZZARD: I think, in order to be committed to the interactive radio stations, both of them highly interactive, in order to do that justice somebody is going to have to be there live at the switch.
920 COMMISSIONER CRAM: Okay. So how much non-live programming is there in the stations in Halifax now?
921 MR. EDDY: I think, typically, you have two live air shifts a day and the rest is typically automated.
922 COMMISSIONER CRAM: So morning drive and afternoon --
923 MR. EDDY: Exactly, yes.
924 COMMISSIONER CRAM: -- and the rest is, you are saying, voice tracks?
925 MR. EDDY: Absolutely, yes.
926 COMMISSIONER CRAM: And you are sure that's happening in all the stations?
927 MR. BLIZZARD: Commissioner, I can't speak as an expert to all other the stations. Generally, I think that's a true statement.
928 COMMISSIONER CRAM: You said it twice, and I kept thinking if you said it twice you have to have done an analysis.
929 MR. BLIZZARD: Okay. I guess the exception might be CBC, but it wouldn't be local. It wouldn't be voice tracked, but it wouldn't be local.
930 COMMISSIONER CRAM: Okay. And you are saying you will not voice track what? The whole thing will be live?
931 MR. BLIZZARD: No, we are saying that we will be offering far less voice tracking than existing services are.
932 COMMISSIONER CRAM: So how much voice tracking will you have over the seven years? Because it's one thing to say now you are going to offer it, and we say, "Okay, fine, that's a great idea, we will give you a licence", and then next year you go to voice tracking. So that's my question.
933 MR. EDDY: It's a fair question.
934 Two comments: one, we don't believe we would be successful with this demographic if we provided other than interactive, highly relevant, personal radio on a day-in/day-out basis. So our commitment throughout these applications, these proposals, is to the demographic.
935 Our business plan now calls for us to have three live shifts a day on each of these radio stations and live shifts on weekends. That is substantially more than --
936 COMMISSIONER CRAM: When will you not be live over the seven years?
937 MR. EDDY: We will not be live probably overnight.
938 COMMISSIONER CRAM: Twelve to six?
939 MR. EDDY: Yes.
940 COMMISSIONER CRAM: And my last question -- and it relates to what the chair asked previously -- your rock station, which is the one, I guess, skewed to young males, screams to me the possibility of "shock jock". What are you going to say to me about what is going to happen on your station, if you get it?
941 MR. EDDY: I will start and I will ask Tom to comment, as well.
942 First of all, we subscribe to the Canadian Broadcast Standards Code of Conduct with respect to all of our operations. Secondly, our view generally is that all programming on our radio stations should reflect community standards and they should reflect the tastes and interests and lifestyle of our target audiences.
943 In addition to which, we have the huge advantage with these proposals and this market of Mr. Adams and his keen insight on what the community standards are and his willingness to be entirely outspoken about what he considers to be appropriate. We are more than happy to take his advice, we value it tremendously. So we are persuaded that as between free-speech issues and appropriate-content issues, we will come down on the side of appropriate content.
944 COMMISSIONER CRAM: Thank you.
945 Did you have something to say, Mr. Blizzard? No?
946 MR. BLIZZARD: Something that I have always believed in, and I have passed this on to my colleagues over the years, is that when somebody snaps the radio on, when they turn the radio on, you are an invited guest, so just conduct yourself appropriately. You don't know the sort of company you are in, if it's mixed company, if it's a bunch of guys or whatever. You are a guest. You could be meeting these people for the first time, make a good first impression.
947 COMMISSIONER CRAM: Thank you.
948 Mr. Blizzard, I'm sorry, I now have visions of "singing Blizzards" because you talk about your children being in music!
949 Thank you.
950 THE CHAIRPERSON: Thank you, Commissioner Cram.
951 Commissioner Langford.
952 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.
953 I will try to be brief. You guys have had a long go of it.
954 The question following up on something that the chairman asked this morning to the Rogers group, and I don't know if you were here for it, but in a discussion about format. I was taken this afternoon by your very candid description of the more female side, the rhythm, hip hop side of your joint proposal, that in the foreseeable future, especially if it were stand alone, that's not a money maker. And yet as I look at Mr. Greenberg back there, he's wearing a very nice suit, he has a nice haircut, a nice tie, he doesn't look like a man who likes to loose money to me.
955 Considering that we don't regulate formats, how long do you hold out? How long do you see yourselves giving this plan of alternative rock, on one side of your chart, and the hip hop, R & B and dance on the other side? I understand synergies, at least we all like to pretend we understand that word, but how long do you stick with it before somebody says, "You know, we can make a heck of a lot more money, buy Mr. Greenberg a new suit, if we just dropped the right-hand side of this chart and went to something else"?
956 MR. GREENBERG: Mr. Langford, if I can just say that the haircut, the suit and the tie were bought specifically for this hearing! I don't normally look or dress this way.
--- Laughter / Rires
957 COMMISSIONER LANGFORD: More fool you!
958 MR. EDDY: Mr. Langford, if I may, our commitment here is to the demographic. Absolutely, that is our commitment.
959 Secondly, our business case is that the urban rhythmic station, however weak it is on its own, which we freely acknowledge, is viable in connection or in combination with the alternative/modern rock station. So we are absolutely convinced of the viability of these two together and we have no interest whatever in changing formats.
960 COMMISSIONER LANGFORD: But it's awfully tempting, isn't it? I mean, you have told us this afternoon that the modern/alternative could stand alone. And I'm not suggesting that you are going to bail in the first week or the first year or the first two years. But won't it be tempting, getting down the road to year four or year five?
961 And your people are good. You do good research. You explained how you used international research firms. You may isolate another pocket, another format. All of which is quite legal, so there is no trick question to this.
962 MR. EDDY: No, no.
963 COMMISSIONER LANGFORD: I'm looking for information as to how long, when you do all of this research, sort of what's your time frame, what's your timeline for this sort of thing?
964 MR. EDDY: It's a good question. The answer, in part, is that radio advertisers don't buy formats. Radio advertisers buy demographics.
965 The opportunity we believe available to us here is to superserve and own this demographic. We believe, we are convinced, that we will be successful with that approach over time.
966 COMMISSIONER LANGFORD: One more question. I keep forgetting this is a red light district.
967 To you, Mr. Adams. I listened to you in your prepared remarks -- and I read them again, and they are eloquent -- but having listened this afternoon of your new colleagues, your new best friends in Halifax, can you tell us a little more now about what you think you might be doing for this crowd?
968 MR. ADAMS: I fully attend to be visibly assisting this -- well, not "crowd", good friends. I think we have a very good, competent group of broadcasters before us and I'm pleased to be a part of them.
969 We will use that advisory board to the best benefit of the public and the broadcaster, which his Astral Media. We will broaden the scope of the information that goes the various decisions that have to be made by the broadcasting company at the two stations regarding spoken word programming and local Canadian Talent Development.
970 COMMISSIONER LANGFORD: Do you get out to the sort of schools, to the communities? Or is the board so structured that you have sort of automatic access to the public, as well as to your new friends here at Astral?
971 MR. ADAMS: I wouldn't say it's a firmly structured board, but the structure is such that it's flexible. We will able to look at a broad community of people, who will in time be members. Certainly all the time we will be participants in our dialogue in our search for information and sensitivities.
972 COMMISSIONER LANGFORD: And where do you use your influence to get the broadcasters out to the problem areas or to bring the representatives of the problem areas to the broadcasters? How does that dynamic work?
973 MR. ADAMS: I think it works both ways, quite frankly. I think it's important that we are flexible enough to go out and be outreach broadcasters and at the same time invite the community to be part of the broadcast.
974 COMMISSIONER LANGFORD: And is this something new in your experience in Halifax? Will this bring a whole new sort of dynamic to radio broadcasting in this city?
975 MR. ADAMS: In terms of broadcasting this is new, yes. That's why I'm personally excited about being a part of, because it will add a new dimension, a new dynamic and I think a better day for quality broadcasting.
976 COMMISSIONER LANGFORD: Thank you very much.
977 Those are my questions, Mr. Chair.
978 THE CHAIRPERSON: Thank you, Commissioner Langford.
979 I just have one question. I guess it's either Mr. Eddy or Mr. Dorion. I take it it's your view an urban rhythmic station, as a stand-alone, whether it be yours or somebody else's, is just doomed to failure?
980 MR. EDDY: Yes.
981 THE CHAIRPERSON: Why is that? You have just mentioned this issue of demographic, by formats and by demographic. The bottom line, I take it, it's your view, again, that not enough advertisers either sell the kind of product or whatever, are interested in the demographic that would be tuned into that station.
982 MR. EDDY: Yes. There are two components to this. I will try and address one and I will ask Mr. Dorion to --
983 THE CHAIRPERSON: He's wincing back there.
984 MR. EDDY: The component I will address is the stand-alone component.
985 The experience of stand-alone radio stations in this market has been a sad and sorry one. The last station licensed in this market was CIEZ-FM, and I think that was in 1989. It debuted in this market with an easy listening format, I think at number two or three in the market -- three at worst.
986 It remained in that position, which is really quite a prominent position -- I mean, it had very, very substantial audience share, an upper demographic station. It maintained that share for a considerable of time. The experience, however, was that it was unable to convert that share into advertising revenue. There, again, we are back to what Mr. Dorion was referring to earlier about the power ratio and so forth. It was just unable to convert.
987 On the street, what would happen to that radio station is that it was unable to compete with the two- and three-station combos that would be able to offer advertisers kind of a one-stop-shopping solution to their advertising needs and inducements to avoid advertising on CIEZ-FM, for example, we will give you one station free if you don't advertise with those guys.
988 The result of that experience is that those folks ended up -- well, trying various and sundry formats, but, ultimately, they ended up out of business. From our point of view, the business case here is to serve the demographic and provide a combo that can compete effectively.
989 Mr. Dorion.
990 MR. DORION: I can't answer for Astral on financials, what I call cost of doing business, but I think I heard the commitment to the target group. I think this is the answer to your question.
991 The presumption is that, the assumption is that there are no actual radio stations in Halifax, if you hear back their videos. I mean, young kids express it even better. There is no station that programs for the under-35ers, for the 24s or for the 26s or for the 18s, as such.
992 It is also true that there is less money, advertising money, everywhere in the world -- in it's Canada even truer -- for this target group. It's a segmented target group. It's a specialized group, the under-35 group, but there are more and more advertisers and there are specific categories.
993 This morning discussed cellular phone, we discussed cars. Electronic games are one. So there are some categories there for the under-35. The example would be the MuchMusic and the MusicPlus of this world. Fifteen years ago these stations did not exist. If you look at their power ratios for television in specialized TV they are very strong because they have developed advertisers, they have developed listeners, viewers and they have created interest in the category for the under-35.
994 So the assumption here is that by putting two stations together that are the most in demand in the market, one that is male, one that is female, we will attract more advertisers, there will be more advertisers interested in the Halifax market specifically for the under-35.
995 Because right now they have to advertise on more generic stations or more adult stations, even though these stations appeal to the young crowd. If you look at the listening patterns of Halifax, especially for the 12-24, there are less hours tuned in the market for these two groups. And one of the reasons could be that there are no specific stations appealing to them.
996 So all in all, what we are saying is that by having two stations, advertisers are buying target groups, they are not buying format. Right now the formats that are demanded by Halifax is, one, modern rock, which exists in Canada in very many markets, and urban, which has started in bigger cities than Halifax but is developed to be more and more, I shouldn't say mainstream because I'm not a radio person, but is getting more and more accepted by the general public -- the general public being the under-35 group.
997 The example of that is the Grammy winners for the best album is Outcast. Outcast is urban. It's not rock. It's contemporary, but it's urban. So will this be a fad? Will it last only seven years? We presume it will last and it's the start of a culture. But, again, the commitment is for the under-35 group.
998 MR. EDDY: Mr. Colville, I did address the advertising disadvantage side of the single station formula. I didn't mention to you -- and I should have, I apologize -- the huge disadvantage that CIEZ or any stand-alone operation would face on the operating-cost side of the equation.
999 THE CHAIRPERSON: No, I understand that. Actually, you answered the more general question, which I didn't ask, about any stand-alone station. My question was more directed to the urban rhythmic and, based on the comments I heard you say in conversation with Commissioner Demers, essentially is that in an urban rhythmic station, and my question to you was, is it your view that, whether it's you or anybody else, as a stand-alone an urban rhythmic station is doomed to failure? And I take it your view is that's correct.
1000 MR. EDDY: Yes.
1001 THE CHAIRPERSON: Now, my question was: why is that? And I took it that your point was that, as you said, advertisers don't buy formats, they buy demographic and this demographic isn't worth it enough for most advertisers to advertise to?
1002 MR. EDDY: That's part of it. And the other side of that equation is the disadvantage on the street and the disadvantage in terms of operating costs.
1003 For example, you take our two stations, on a stand-alone basis our projection is that it will take 15 full-time employees to meet our commitments to put the formats out. On a combined basis, it will take us 22 employees. So the savings there are huge.
1004 So my point, again, to any urban rhythmic applicant here on a stand-alone basis, they are at a huge disadvantage compared to everybody else in the marketplace and they are going to pay for it, no question about it.
1005 THE CHAIRPERSON: But I understood you to say, in answer to Commissioner Demers, as well, that you would accept one station of the two and the one you would accept, because the other one is doomed to failure --
1006 MR. EDDY: Right.
1007 THE CHAIRPERSON: -- is the modern/alternative rock.
1008 MR. EDDY: Yes.
1009 THE CHAIRPERSON: So recognizing the handicap that you just mentioned about CIEZ, you figure, notwithstanding the problems that CIEZ faced, you, as a stand-alone, could overcome those problems?
1010 MR. EDDY: Yes. We think the business case is solid. We understand --
1011 THE CHAIRPERSON: It seems to me you just made a pretty good case for failure for there, too.
1012 MR. EDDY: Well, yes. There is a serious risk. That's how badly we want the market.
1013 THE CHAIRPERSON: I will leave it at that.
1015 MR. McCALLUM: Just a couple of things.
1016 First of all, I understand the parameters have changed. They were initially 105 and they have now become 89.9 for the modern rock station. As a result of the technical changes, can you refile the estimated coverage and population data for the new technical parameters for the 3-microvolt-per-meter and the .5-microvolt-per-meter contours?
1017 MR. EDDY: We can do that, but my understanding is that they will be virtually identical.
1018 MR. McCALLUM: Okay. So you will do that --
1019 MR. EDDY: Certainly.
1020 MR. McCALLUM: -- within part of this process.
1021 And I take it as a result of that there is no impact on your business plan?
1022 MR. EDDY: No, the parameters are the same.
1023 MR. McCALLUM: Okay. By phase four, I believe, you would file that. Correct?
1024 MR. EDDY: Yes.
1025 MR. McCALLUM: On the Canadian Talent Development, I just wanted to be sure I understood the answer to one of the questions. It deals with the honorariums for judges.
1026 In the case of the first of the two stations, the 103.5 station, you said that if the Commission were unable or unwilling to accept the honorariums for judges as qualifying for Canadian Talent Development you would simply redirect the funds
to factor. Is that right?
1027 MR. EDDY: Yes.
1028 MR. McCALLUM: Is that also the case for 89.9?
1029 MR. EDDY: Yes.
1030 MR. McCALLUM: Thank you.
1031 Secondly, again on the Canadian Talent Development, for the 103.5 station, you would be the compilation CD and it would be available for sale at various music outlets throughout Halifax and sold at cost, according to your application.
1032 MR. EDDY: Yes.
1033 MR. McCALLUM: What would you do with the moneys recovered from the sales? Would you reinvest those moneys in Canadian Talent Development, for example?
1034 MR. EDDY: Our proposal, I believe, is that, in the event that there are any moneys generated from it, they will go to some charitable organization recommended to us by our local advisory board.
1035 MR. McCALLUM: So they would not be reinvested in Canadian Talent Development, they go to charitable...?
1036 MR. EDDY: That's my understanding.
1037 MR. McCALLUM: All right. Can you also give your view about whether the Halifax radio market could support the licensing of more than one commercial station at this time and why? Let's assume, for the sake of that question, that you were granted both your stations, as a first hypothesis, and your modern rock station as a second hypothesis. Could the market support the licensing of another one that's a result of this process in those two hypotheses?
1038 MR. EDDY: The short answer to your question is, yes, we think that if you licensed both of our proposed stations, we believe, pending, to some extent, what format the third proposed stations would be on. But as a general proposition, our analysis is that the PBIT margins in this market are sufficiently high, such that they will still be well above the national average with three. So that answers the first part of your question.
1039 The second part of your question was whether, if you only granted us one licence, what would be our position with respect to a second one? Again, that would depend on which format it was in, I think.
1040 MR. McCALLUM: Again, making the assumption that the format was not directly competitive with the format that you are proposing in each case --
1041 MR. EDDY: Right, so that would be fine by us, yes. There would be no problem.
1042 MR. McCALLUM: Thank you.
1043 Thank you, Mr. Chairman.
1044 THE CHAIRPERSON: Thank you, counsel.
1045 Madam LaFlamme.
1046 MS LAFLAMME: Sorry, if I can come back to your first question regarding the engineering brief, it was filed with the CRTC, with the map, on February 11.
1047 THE CHAIRPERSON: Perhaps we will have the staff confirm that we have it, and if we don't we can check with you.
1048 MS LAFLAMME: Okay.
1049 THE CHAIRPERSON: Thanks for that.
1050 Thank you very much, ladies and gentlemen. Those are all our questions. We appreciate your answers and your presentations today.
1051 That will complete our work for the day. We won't start into the next application, given the hour.
1052 We will convene tomorrow morning at 9 o'clock -- not 9:30 as today, 9 o'clock tomorrow -- and it will be Maritime Broadcasting.
--- Whereupon the hearing adjourned at 1620, to resume
on Tuesday, March 2, 2004 at 0900 / L'audience est
ajournée à 1620, pour reprendre le mardi 2 mars
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