ARCHIVED - Transcript
This page has been archived on the Web
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Providing Content in Canada's Official Languages
Please note that the Official Languages Act requires that government publications be available in both official languages.
In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.
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)
8 March 2004 8 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)
8 March 2004 8 mars 2004
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA NO.
PHASE I (cont'd)
PRESENTATION BY / PRÉSENTATION PAR
Newcap Inc. 1274 / 7169
INTERVENTION BY / INTERVENTION PAR
Acadia Broadcasting System Ltd. 1339 / 7588
Maritime Broadcasting System Ltd. 1354 / 7681
REPLY BY / RÉPLIQUE PAR
Newcap Inc. 1362 / 7741
Rogers Broadcasting Ltd. 1371 / 7784
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA NO.
PRESENTATION BY / PRÉSENTATION PAR
Newcap Inc. 1377 / 7828
Maritime Broadcasting System Ltd. 1413 / 8054
Acadia Broadcasting Ltd. 1479 / 8352
Ross Ingram 1541 / 8671
Halifax, Nova Scotia / Halifax (Nouvelle-Écosse)
--- Upon resuming on Monday, March 8, 2004 at 0900 /
L'audience reprend le lundi 8 mars 2004 à 0900
7160 THE CHAIRPERSON: Order, please, ladies and gentlemen.
7161 Welcome back to our proceeding. I hope you all had a good weekend in spite of the miserable weather on Saturday. It seems all the days we are stuck in this windowless room the weather is fine outside, and as soon as we get out of here the weather turns bad.
7162 We will return to our proceeding now, where we are hearing applications for Saint John.
7163 Mr. Secretary.
7164 MR. LeBEL: Thank you, Mr. Chairman.
7165 We will now hear the application by Newcap Incorporated for a licence to operate an English-language FM commercial radio programming undertaking in Saint John.
7166 The new station would operate on frequency 95.9 MHz, on Channel 240C, with an effective radiated power of 50,000 watts.
7167 Mr. Rob Steele will introduce the panel.
7168 You have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
7169 MR. R. STEELE: Good morning, Mr. Chairman, members of the Commission and Commission staff.
7170 I am Rob Steele, President of Newcap. Before we begin our presentation, I would like to present the rest of our team.
7171 In the front row, to your left, is Anna Zanetti, who is the Music Director of our Halifax FM station Q104. Anna has been in radio for almost 20 years and the last 16 years with us here in Halifax.
7172 To my immediate right is Mark Maheu. Mark is the Executive Vice-President and Chief Operating Officer of Newcap Broadcasting. Mark has 24 years of radio experience, including the past 12 years in Ottawa.
7173 To my left is Hilary Montbourquette, the General Manager of our two Moncton FM stations. Hilary has a long history in Atlantic Canadian radio, having worked in each of the four Atlantic provinces. Hilary is the past President of the Atlantic Association of Broadcasters and shares the CBSC's Atlantic panel.
7174 Next to Hilary is Audrey Whalen. Audrey is the Assistant News Director of our News-Talk station in St. John's, VOCM and a producer of VOCM's lunch time news magazine program called "Newfoundland and Labrador Today".
7175 At the second table, to your left, is Jackie Boutilier, who is responsible for Human Resources.
7176 Beside Jackie is Dave Murray, Newcap's Vice-President of Operations, who developed our business plan.
7177 Next to Dave is Steve Jones, Vice-President of Programming for Newcap. Steve designed and launched our Classic Hits station in Halifax.
7178 At his side is Gerry Phelan. Gerry has over 25 years in journalism in Newfoundland and Labrador, where he supervises the news operation of our stations across the province, including over 20 journalists. He is past president of the Radio and Television News Directors Association of Canada. He has served an unprecedented four terms in the position of president, and today he is Canada's representative on the international body.
7179 Since 1985 Gerry has led his news operation to more than 75 journalism awards, including 40 national honours, five regional Murrow Awards and in 2001 the overall Edward R. Murrow Award for Best Radio Newscast, Small Market.
7180 At your far right at the table is Mark Kassof, who conducted our research for this application. Mark has conducted research for our top rated stations at St. John's, Edmonton, Moncton, Halifax and Ottawa.
7181 At the third table, I am going to introduce my two brothers, Pete Steele. Pete is Vice-President of Industry Affairs for Newfoundland Capital. Next to him is John Steele, the President of our radio operations in Newfoundland and Labrador.
7182 I would now like to ask Mark Maheu to start our presentation.
7183 MR. MAHEU: Mr. Chair, Members of the Commission, good morning.
7184 This is my first appearance before you as a member of the Newcap Radio team. I know this company very well from my years in the radio broadcast business. I have watched Newcap Radio's growth and approach to broadcasting very carefully over the past several years.
7185 I have joined the Newcap Radio Group because I firmly believe in their vision and philosophy for radio broadcasting in Canada. Newcap is a passionately local broadcaster that believes in serving communities, large and small. This is accomplished by excellent leadership and heartfelt efforts of over 500 committed radio broadcasters from Cold Lake to Halifax, from Thunder Bay to Cornerbrook, Newfoundland.
7186 It is an honour to appear before you today with an application for a new FM radio station for Saint John, New Brunswick, and again later with an application for Fredericton.
7187 These proceedings are extremely important in determining the value and merits of new service, editorial voices and choices to the listeners and citizens of Saint John and Fredericton.
7188 As you will hear today, Newcap Radio's application for Saint John represents a wonderful opportunity to create a new and dynamic link between the major cities in Atlantic Canada. These links go far beyond the music and will enhance and enrich the fabric of the community.
7189 I would like to now ask Hilary Montbourquette to outline our application. Hilary manages our radio stations in New Brunswick.
7190 MR. MONTBOURQUETTE: Thank you. Good morning.
7191 Saint John would be a new market for Newcap but not an unfamiliar one. We already operate successful FM stations in Moncton. Our country station XL96-FM and rock station C103 are ranked number one and two in a five-station market.
7192 Saint John is New Brunswick's largest city and the largest municipality of the Greater Saint John Region.
7193 The Region is made up of Grand Bay-Westfield, Quispamsis, Rothesay and Saint John, and the population is expected to grow to 130,000 over the next five years.
7194 Long known as the Port City with an economy significantly reliant on ship-building, Saint John has more recently diversified its economy developing new strengths in tourism, manufacturing, telecommunications and high technology.
7195 The University of New Brunswick and the New Brunswick Community College campuses in Saint John have attracted students from around the province and around the world to the city. The efforts of Enterprise Saint John and the Board of Trade to develop the city's economy have paid off.
7196 Saint John is a two-time winner of the Globe and Mail's Report on Business magazine, "Best City for Business Award".
7197 Saint John's per capita retail sales are 4 per cent higher than the national average and Financial Post Markets reports that they will grow by about 14 per cent by 2008. That is promising for the radio industry.
7198 The city is also an active one with a flourishing entertainment scene. Recently, a major new development, Venue Saint John, was built offering more than 1500 guest rooms with indoor access to hotels, shopping and restaurants. The 17,000 square feet of space at the Saint John Trade and Convention Centre is right at hand.
7199 Harbour Station, which is attached to Venue Saint John, is a key showcase for concerts, sporting events, trade shows and the like, with the capacity to seat 7,800 people. It has hosted Classic Hits artists such as Bob Dylan, The Guess Who and Neil Young, to name a few.
7200 Saint John is served by five commercial radio stations: two FMs licensed to Acadia Broadcasting, as well as two FMs and an AM licence to Maritime Broadcasting. But BBM indicates the residents of Saint John listen to radio less than most Canadians and most other New Brunswickers. The hours tuned per capita for all persons 12-plus is about 10 per cent lower than the Canadian average and the same is true for persons aged 35-54, which are the listeners we wish to serve.
7201 We expect that the addition of a classic hit station targeted to serve this group will bring more tuning to radio in the market.
7202 In all of its calls for applications, the Commission requested applicants provide -- and I quote:
"... an analysis of the market involved and potential advertising revenues, taking into account the results of any survey undertakings supporting the estimates."
7203 Following this request and for solid business reasons, as has been our practice every time we apply for a new station, we commission market research to find out what the residents of Saint John feel is missing in their radio menu.
7204 Mark Kassof will summarize the results of that research.
7205 MR. KASSOF: We completed 200 telephone interviews with 25-to-54 year old radio listeners in the Saint John central market in July 2003. The respondents reflect Statistics Canada's distribution of age and gender in the population.
7206 Our questionnaire included 20 questions. First, we studied listening behaviour. Then we probed listeners' interests in eight different music formats and whether they could identify a present station as delivering that format.
7207 One of the most important calculations we did with these data is what I call "per cent of format void". This is the per cent of the entire audience that has both a significant interest in a format and can't presently associate any station with the format.
7208 In the case of classic hits, 43 per cent indicated positive interest in the format, 10 percentage points higher than the next format. The biggest format void percentage belongs to classic hits.
7209 Eleven per cent of all 25-to-54s in the market are interested in this kind of station and cannot name one. This is almost double the next format tested.
7210 To better explain how this works, let's look at the next most popular format, classic rock. The format generates less positive interest, and the format void percentage is lower still because nearly three-quarters of those interested in classic rock associate CJYC-FM with this music. As a result, the format void percentage is only 6 per cent.
7211 The audience for this classic hit station will include more women than men, 57 per cent to 43 per cent. The vast majority, 72 per cent, of all its 25-to-54s will be 35-to-54. Conservatively, we project that the station will reach 36 per cent of 25-to-54 adults in the market, and we project a 14 per cent share of hours tuned 25-to-54, or 12 per cent of all hours tuned 12-plus.
7212 The station will draw its audience from a variety of sources. Only 4 per cent will come from the market leader, CIOK, followed by CHWV at 3 per cent. The other stations in the market, including the CBC, will lose 1 or 2 per cent of total hours tuned each.
7213 MS ZANETTI: We have prepared a short montage to give you an idea of the sound of what we will call Classic Hits 95-9 The Coast.
--- Audio clip / Clip audio
7214 MS ZANETTI: Classic Hits 95-9 The Coast will play a selection of the best rock and pop hits from the late 1960s through the early 1990s. The classic hits format is relatively new in Canada. It is not an oldies station, nor is it a classic rock station. It is based in rock but avoids the harsher sound of classic rock.
7215 The recent success of Jack and Bob demonstrates the interest in the format, although they concentrate more on the 1980s and 1990s than we will. On The Coast, listeners will hear artists like Fleetwood Mac, The Steve Miller Band, the Eagles, Doobie Brothers, The Guess Who, Elton John, Rod Stewart, Neil Young, Bachman Turner Overdrive and the Stampeders. They will hear their hits without the lesser known album cuts that you would hear on a rock radio station.
7216 We are particularly proud of the new Atlantic-wide music show that we propose to launch if we are fortunate enough to receive new licences. Many of our stations already produce programs focusing on the local talent in their area. In St. John's our AM station, Radio Newfoundland, is totally devoted to east coast music with a special emphasis on Newfoundland and Labrador.
7217 Another Newcap station in St. John's, CKIX-FM, broadcasts a four-hour per week program "Home Brew". In Halifax our rock station Q104 provides "Route 104", while in Moncton C103 produces "Action Atlantic".
7218 The new show "Atlantic Exposure" will take a wider focus, bringing in current information from each of the major music centres we currently serve -- Halifax, Moncton and St. John's -- and complementing it with our presence in Fredericton and Saint John, if we are successful.
7219 Our connections to the music industry throughout Atlantic Canada will ensure that musicians from all over the region will think of our show as their showcase.
7220 We will air a number of our other specialty music shows to provide greater service to all segments of the audience.
7221 "Classic Hits by Request" will let listeners be the music director, playing the music that our audience requests via telephone, fax or e-mail.
7222 "A Year in Your Ear" will focus on a particular year via the music and the events that mark the time, with a particular focus on Saint John and other New Brunswick and Atlantic Canadian events.
7223 "Eighties at Eight" broadcast every evening will take a look at the music of the 1980s, featuring artists like Glass Tiger, Bruce Springsteen, Haywire, Gowan and Duran Duran.
7224 "Past to Present" will focus on the evolution of various artists, featuring the music that they played then and how they have changed now. For example, when Atlantic rockers April Wine release a new CD, the program would feature selections from their early work played back-to-back with selections from the most recent CD, putting the band's career in perspective.
7225 The Coast will support Canadian and Atlantic artists by meeting and exceeding the requirements for Canadian music. We will provide exposure for Canadian artists in every day part. We will also make significant cash contributions to support local music. We will provide $175,000 to FACTOR, and they have agreed that the money will be directed to Saint John musicians.
7226 Classic Hits 95-9 The Coast will be much more than a music station. Our experience tells us that our listeners want relevant local, regional, national and international news and other information. We intend to provide them with high-quality news and public affairs service.
7227 I would now like to ask Audrey Whelan to speak to how the station will reflect the community.
7228 MS WHELAN: Thank you, Anna. Good morning, Mr. Chair and Commissioners.
7229 The station's five new reporters will be supported by the 30 reporters in our existing stations across Atlantic Canada. They will also provide reporting and the ability to cover breaking stories in New Brunswick's largest city to our other stations in the region.
7230 All of this attention to what is going on around the region will not detract from the primary focus of 95-9 The Coast's newsroom's local news. Rather, it will enrich and supplement it.
7231 We will provide 51 news packages each week and a one-hour news magazine on the weekend. We will also broadcast five public affairs reports per day, or 35 per week, as well as the same number of community billboards of local events throughout the week. Whether we are awarded a new FM station in Fredericton or not, we will hire a new legislative reporter to feed that city and Saint John and Moncton.
7232 Our reflection of the city will go beyond the news as well. Saint John has a wide variety of public festivals and celebrations. They include the Festival by the Sea, the Winter Carnival, Exhibition Week, the Wine Fair, Black History Month and, of course, Canada Day. In keeping with the active social and family lives of our listeners, The Coast will partner with all of these events.
7233 Newcap has a history of community involvement in all of its stations, whether in Atlantic Canada, Ontario or across Alberta. Our stations see themselves as integral parts of the community and when we are needed we can be counted on.
7234 Here are some examples:
7235 When the residents of Badger, Newfoundland were displaced from their homes by ice and flooding, we set up a pledge centre at CKCM in Grand Falls-Windsor, 30 kilometres from Badger, and raised over $565,000.
7236 Last fall in the aftermath of Hurricane Juan, Q104 called upon its audience to support children of families on low and fixed incomes affected by the hurricane. Q104 conducted an on-air fund raiser to provide milk, baby formula and cash in support of the "Milk for Moms" campaign.
7237 In February during what we called White Juan, the recent blizzard, we worked around the clock with the Emergency Measures Organization providing information on power outages, curfews and snow removal.
7238 Over the past five years, our Moncton stations have helped to raise over $2.5 million for a wide range of charities.
7239 The letters of support from the communities we serve in the Maritime Provinces are tangible evidence of our commitment. And this commitment will continue in Saint John. Our community cruiser will be everywhere and The Coast will be at the heartbeat of community activities.
7240 Mr. Chairman, our licence application also has benefits for the entire region. Gerry Phelan is the corporate news director in Newfoundland and Labrador.
7241 MR. PHELAN: The increased news presence in the region, if we are successful in adding new stations to our group, will enable us to develop a new initiative, one we introduced in our Fredericton application, "Capital Report"
7242 Here is a short sample drawn from recent news.
--- Audio clip / Clip audio
7243 MR. PHELAN: Mr. Chairman and Members of the Commission, "Capital Report" will be an exciting, bold new editorial voice for Atlantic Canada -- an Atlantic newscast bringing the four capital cities in the region together.
7244 From our VOCM news operation in Newfoundland, we will assemble a report from the four Atlantic capital cities. Originally, we foresaw a 90-second report three times a day. We instead propose to make it a minimum of three minutes, in drive times each weekday, bringing the top stories from St. John's, Halifax, Fredericton and Charlottetown and completing the circle.
7245 Our newsroom technology allows this to be up to date, fast reaction to breaking stories, not replacing local news but adding a regional perspective to local and national stories in a way that to now is not fulfilled in the four provinces. We will bring depth and energy to subjects through our Atlantic news network.
7246 It has enormous potential in times of emergency and disaster, like Hurricane Juan or the recent blizzard, and national stories, be they elections or issues of particular interest here. This will also be made available to other broadcasters in markets that we do not serve.
7247 MR. R. STEELE: Newcap is particularly proud of how we reflect Canada in our workplace from coast to coast. We will continue this tradition in Saint John, ensuring the workforce mirrors the community and designated groups.
7248 Our Saint John application has a total of $350,000 earmarked for the development of Canadian talent, including $175,000 to FACTOR. This funding will assist in the continual development of new, emerging Canadian performers in Saint John.
7249 Newcap's business plan for Saint John is well researched, thorough and conservative in its assumptions. We believe the financial plan we have laid out for a new FM station in Saint John is realistic and very achievable.
7250 The classic hits format we propose is a music choice listeners in Saint John have indicated they would like very much to hear. It is a format Newcap has experience and success in programming.
7251 As you may be aware, Newcap is now exclusively a radio broadcasting company. Being based in Atlantic Canada and operating in many east coast markets, Newcap has a unique perspective on Atlantic Canadians' tastes, needs and wants from radio.
7252 Thank you for the opportunity to present to you today. We welcome any questions you may have.
7253 THE CHAIRPERSON: Thank you, Mr. Steele, to you and the members of your team. Ladies and gentlemen, I will turn the questioning over to Commissioner Cram.
7254 COMMISSIONER CRAM: Thank you.
7255 We have three Messrs. Steele. However, for the purposes of where I am going, for shortness or brevity, Mr. Rob Steele will be the "Mr. Steele" that I will be addressing so that we don't have any problems.
7256 Indeed, I will just address my questions to you, Mr. Steele, and you can send them on to whomever you wish.
7257 First I want to talk about programming.
7258 You are proposing classic hits, and in the market already there is an oldies station and two ACs. Have you done any calculation about the amount of duplication?
7259 MR. R. STEELE: Yes, we have. Steve Jones can answer that for you.
7260 MR. JONES: We looked at BDS analysis for all the radio stations in the market, including CJYC, the classic rock station, CIOK, the AC station, and CHWB, the hot AC station. The playlist of CFBC wasn't available to us on BDS. We did look at a standard oldies playlist, a template for that format, if you will.
7261 The biggest duplication with any one station was with CJYC and CFBC, at about 12 per cent of weekly spins.
7262 The playlist duplication with CIOK was just under 5 per cent; and with CHWB was essentially non-existent, because all of their music was 1990 and newer and the vast majority of music on this station is pre-1990.
7263 COMMISSIONER CRAM: To the normal listener, if I am there and going around the dial, how will you sound different musically?
7264 MR. JONES: The selection of music on this radio station is very familiar, for one. If we compare it to the radio stations in the market right now, CJYC is a rock station. They are a very broad rock station, playing music from today right back to the roots of rock. They are essentially a male-skewed, harder edged rock station than what we are proposing.
7265 There is some artist duplication. For example, there may be different selections by the same band, with the Doobie Brothers or Fleetwood Mac on each station, but the selection of songs differs greatly.
7266 An artist like Elton John on CJYC you might hear "Saturday Night's Alright (For Fighting)" whereas on our station you might hear "Tiny Dance", something definitely softer.
7267 Comparing it to CIOK, the music is distinctly older than what CIOK is playing. That is Q100. That station is fairly aggressive by AC standards in terms of their new music content.
7268 Compared to CHWB, it is a completely different format altogether, different artists, different songs.
7269 The overlap with CFBC is primarily in artists from the late 1960s, as the core of that format is 1965 to about the mid-1970s.
7270 COMMISSIONER CRAM: Your study says this is the least intrusive. What share will the existing stations lose? Is it exactly as you said on page 7 -- I forget who that was; Mr. Kassof, I think -- that is the share that each one of them will lose?
7271 MR. JONES: That is correct.
7272 COMMISSIONER CRAM: So it would be four, three and one or two.
7273 MR. JONES: Exactly.
7274 COMMISSIONER CRAM: Why is this the best format choice for 35-to-54s?
7275 MR. R. STEELE: Mark, do you want to answer that?
7276 MR. KASSOF: Sure. Basically what we did is look at the overall interest in the format. When we looked at eight different formats, 43 per cent rated classic hits a 4 or 5 on a 5-point scale, where "1" means "I would never listen to that radio station" and "5" means "I would listen to it all of the time I listen to radio".
7277 So that was by far the highest interest in any of the formats that we looked at. And it is almost half of all 25-to-54s.
7278 Then to complete the picture, because that alone doesn't tell us where the opportunities are and where the needs are, we looked at what percentage of listeners could identify a station with each format.
7279 In the case of classic hits, overall 31 per cent could not identify any station with classic hits. When we take the strong demand for classic hits plus the high percentage of listeners that can't identify any station for classic hits, we get what I call the per cent of format void; 11 per cent of all 25-to-54s saying "I'm interested in this kind of radio station", "I don't think there is one like that" or "I don't know of one like that".
7280 That is by far the highest per cent of format void of any of the ones that we looked at.
7281 COMMISSIONER CRAM: Thank you.
7282 Moving on to CTD, I am going to ask the normal AVRN question.
7283 As you know, you have said you would like to give some money to AVRN. You know it is not eligible as direct CTD. However, it does support the fulfilment of the Broadcasting Act.
7284 In your deficiency of 14 November, I think, you did say that this funding could be redirected to FACTOR or an aboriginal artist initiative.
7285 How would you like to proceed?
7286 MR. R. STEELE: Preferably, if we could write the script, the $175,000 that we have allocated to AVRN hopefully would qualify for CTD.
7287 I understand in our deficiency, that your reply was that it doesn't.
7288 We would prefer to allocate that toward some aboriginal initiative, to promote musicians.
7289 COMMISSIONER CRAM: Instead of AVRN you want to redirect it to some initiative to assist aboriginal musicians. Is that it?
7290 MR. R. STEELE: Yes, and/or FACTOR.
7291 COMMISSIONER CRAM: I am asking you what you want to do.
7292 MR. R. STEELE: It would be easier to allocate it to FACTOR if the AVRN initiative doesn't qualify or you didn't make the exception that it would qualify for CTD.
7293 COMMISSIONER CRAM: Your first preference then is that the money would go to AVRN.
7294 MR. R. STEELE: Correct.
7295 COMMISSIONER CRAM: Even if, as in every other case, it does not qualify as direct CTD.
7296 MR. R. STEELE: That is correct, yes.
7297 COMMISSIONER CRAM: That is your preference.
7298 MR. R. STEELE: That is my preference, AVRN.
7299 COMMISSIONER CRAM: On the spoken word programming, today you were talking about stations in the plural. This led me to wonder what would happen on spoken word if there were a station in the singular granted by us.
7300 I see at page 9, at the bottom, that Ms Whalen talked about:
"Whether we are awarded a new FM station in Fredericton or not, we will hire a new legislative reporter in that city to feed both the Saint John and Moncton stations."
7301 If you got this licence in Saint John, you would have that reporter.
7302 MR. R. STEELE: That's correct, we would.
7303 COMMISSIONER CRAM: Moving on to page 11, there is the "Capital Report". Mr. Phelan talked about:
"The increased news presence in the region, if we are successful in adding other stations to our group --"
7304 So the question is: If you got one station, Saint John or Fredericton, what would happen to the "Capital Report"?
7305 MR. R. STEELE: Mr. Phelan can elaborate on this, but in the event that we were fortunate enough to receive a licence for Saint John but not Fredericton, we could still go ahead with the "Capital Report" initiative. We would have a reporter there in the Legislature.
7306 Gerry, do you care to elaborate on that a little?
7307 MR. PHELAN: Thank you, Rob, and thank you, Commissioner for your question.
7308 We consider "Capital Report" a very strong aspect of our application. To get somebody on the ground in Fredericton is key to making "Capital Report" work, and approval of the Saint John application will indeed permit that because we will indeed have a legislative reporter in Fredericton.
7309 But a legislative reporter is kept pretty busy covering the Fredericton Legislature. While the reporter will cover other duties, a full-fledged news bureau at a radio station, a new licence in Fredericton, would give us that many more resources.
7310 Having said that, a Saint John application approval will at least give us a presence in Fredericton which we commit to with a reporter in Fredericton covering the Legislature and other Fredericton stories. But a full-fledged radio station will let us do a bang-up job in "Capital Report".
7311 COMMISSIONER CRAM: If you only got the Saint John licence, you would still be doing this "Capital Report".
7312 MR. PHELAN: Yes, that is correct.
7313 COMMISSIONER CRAM: If you didn't get the Saint John or Fredericton, would you be doing the "Capital Report"?
7314 MR. PHELAN: We believe that we want to make this a product that will be superb for our listeners. I come from VOCM in Newfoundland where we do similar type programming on a province-wide basis, linking for example, Carbonear, Marystown, Gander, Grand Falls-Windsor, and so on, but providing a good regional news service in Newfoundland and Labrador.
7315 But we have people on the ground in those places. For example, we have a news person in Gander. We have a news person in Marystown and in Grand Falls-Windsor and in Labrador. That permits us to do better.
7316 Right now in New Brunswick, we do have a three-person newsroom in Moncton and they do a great job for Moncton. All of our news people specialize in local news, because local is where it's at; we want them to serve their local market areas.
7317 "Capital Report" is going to allow us to broaden their horizons and broaden the horizons of what we offer our listeners across Atlantic Canada. To do that we actually do need people in Fredericton and in Saint John, which will allow us to do a better job.
7318 Can we do it without those two licences? Yes. But you know what? I don't think it serves our listeners in the best way we could.
7319 COMMISSIONER CRAM: Thank you.
7320 What I want to now get from you -- and you were talking about your news coverage in your application and using the other New Brunswick stations and perhaps the other Atlantic stations.
7321 How would you develop the news for the Saint John station, and how are you going to use the resources from amongst the Atlantic stations?
7322 MR. R. STEELE: I will let Gerry elaborate on this again.
7323 But if you look at the "Capital Report" initiative, it really flies, if we get established in one of Saint John and/or Fredericton, because if you look at the population distribution of New Brunswick compared to Newfoundland and Nova Scotia you have centres. You have St. John's in Newfoundland. You have Halifax in Nova Scotia. You have Charlottetown in Prince Edward Island. But the population of New Brunswick is spread out amongst the three centres: Fredericton, Moncton and Saint John.
7324 Gerry, do you want to elaborate again a little bit on how we would set up that operation?
7325 MR. PHELAN: Thank you, Rob.
7326 For the local contribution itself and the local aspect of the station in Saint John, I will ask Audrey to answer.
7327 But first of all, Commissioner, what we are trying to do is establish a good strong Atlantic news network. We already have Newfoundland and Labrador covered like a glove. We have eight people in Halifax; we have Moncton with three. We have contacts in Gerard Murphy who I can call to get stories in Charlottetown. We want to increase our news presence in this region.
7328 We will link all these people through our news room system, which is already linked. For example, we have the KLZ news room system, which I can see the stories from Halifax and they can see the stories from St. John's. We will create our own network of Atlantic news, which will provide a whole new affair of news, a whole new menu of news, not only for ourselves in being able to choose the stories we use for our individual newscasts but also for our listeners themselves.
7329 Throughout, the reporters that we have in these stations across Atlantic Canada, they will feed into us.
7330 The primary purpose of our licence in St. John's and the three people there, or four people there, sorry, will be the local radio station.
7331 I will ask Audrey to talk about that.
7332 MS WHELAN: We really believe in local news. As Gerry has said, we work in Newfoundland and local news is first and foremost in our minds. We believe that the people want to first hear what is happening in their community. National and international news of course is extremely important, but we believe that people want to know what is happening in their town, across the street, down the road.
7333 Therefore, we believe that local news will be extremely important on our station. That is one of the things that we believe.
7334 We have newscasts planned to air at 6:00, 6:30, 7:00, 7:30, 8:00 and 8:30 each morning, as well as noon, 4:00 p.m. and 5:00 p.m., Monday to Friday. And on weekends newscasts will air at 7:00 a.m. and 8:00 a.m., for a total of four and a half hours per week.
7335 This is in addition to the "Capital Report" and also in addition to our weekly public affairs program that we plan to air.
7336 COMMISSIONER CRAM: The "Capital Report", if I remember, you said 35 times during the week.
7337 Is that right?
7338 MR. PHELAN: No, Commissioner, the "Capital Report" is twice a day.
7339 COMMISSIONER CRAM: Every day or weekends excluded?
7340 MR. PHELAN: Just weekdays for now.
7341 COMMISSIONER CRAM: Let me figure this out. So you do your news and then you do the "Capital Report"? How is it going to be in the wheel?
7342 MR. PHELAN: Our aim is to have "Capital Report" air twice in prime time weekdays. The times we have selected for that right now are at 7:30 in the morning and at 5:30 in the evening. It would appear as a separate entity. It is three minutes long, and if I can sneak a few more seconds in -- you know what news people can be like to add on. But it would be three minutes to cover those particular areas. That is what we are hoping for right now.
7343 COMMISSIONER CRAM: Is your news gathering centred around the OCM? Is that how it is done?
7344 MS WHELAN: In the Atlantic provinces, no. We primarily use our own resources within the province. Of course we are able to use other resources that we have in other stations.
7345 But no, it is primarily Newfoundland and Labrador.
7346 I guess you are alluding to whether or not St. John's, Newfoundland, will be feeding Saint John, New Brunswick?
7347 Saint John will be producing its own local news, using a variety of different sources. So perhaps St. John's, Newfoundland, could send them a story of what is happening in St. John's, like a different couple of stories on different political issues. But they would be producing their own local news.
7348 They could also take that news that they get from St. John's and make it their own; for example, getting local reaction to what is happening in St. John's. You know, auto insurance has been a big problem throughout Atlantic Canada; equalization payments; the fishery, a lot of different concerns there.
7349 There will be different concerns from different provinces. So they would use their own sources to make it their own.
7350 COMMISSIONER CRAM: "Saint Johnify" it.
7351 MS WHELAN: Yes, "Saint Johnify" it.
7352 We would not provide newscasts from St. John's, Newfoundland, to Saint John, New Brunswick. They would provide their own.
7353 COMMISSIONER CRAM: But "Capital Report" is going to be, I gather, produced through VOCM and then transferred everywhere else. Is that it?
7354 MR. PHELAN: Yes, Commissioner. The idea is that fortunately in Newfoundland we are a half hour -- some would say a lifetime -- ahead of everyone else. It works quite well, because indeed at 5 o'clock in the morning, with a full complement of staff on, we are ready to put this thing together and be able to access stories that have already been put into the system via our other stations.
7355 I think the best line to compare "Capital Report" is our local stations will bring the neighbourhood to the city and the city to the province. "Capital Report" will bring the province to the region.
7356 COMMISSIONER CRAM: Thank you.
7357 The reporter in Fredericton is going to come out of the budget from the Saint John application.
7358 Is that correct?
7359 MR. R. STEELE: That is correct, yes.
7360 COMMISSIONER CRAM: Even if you do get a licence in Fredericton.
7361 MR. R. STEELE: Right. That is correct.
7362 COMMISSIONER CRAM: How do you gather Fredericton news now?
7363 MR. R. STEELE: Hilary, do you want to answer that?
7364 MR. MONTBOURQUETTE: Our news department in Moncton, for example, has many contacts in the Fredericton area. We use "Broadcast News" as another source for any stories that are evolving out of Fredericton, plus newspaper information that is reported.
7365 Usually it is through -- in our newsroom our news director, Mike Browne and Brock Gallant have established good relationships in Fredericton, along with members of the Legislature in Moncton and their EAs, and use that as another source to gather information from the Fredericton area as well.
7366 At least that is how we report it in the Moncton area.
7367 COMMISSIONER CRAM: Are there any synergies with the existing stations that you anticipate with this station, with the Saint John station?
7368 MR. R. STEELE: There are some. Again, I will ask Hilary to elaborate on that.
7369 MR. MONTBOURQUETTE: We think there will be a little bit of operational savings but better quality programming. I can expand on these, if you like.
7370 The synergies we anticipate would be news gathering and reporting, some technical, Canadian talent promotion, obviously the Atlantic exposure components, some minor administration matters, charitable activities perhaps.
7371 Those are the areas where we see the synergies, but there would be little in the way of operational savings.
7372 COMMISSIONER CRAM: Aside from "Capital Report", any synergies in terms of programming? Will you be sharing programming?
7373 MR. MONTBOURQUETTE: Programming would originate in Saint John and some type of programming originating in the Moncton area, but we see synergies in terms of Canadian talent promotion. So if an artist in the Saint John area releases a new release or perhaps goes on tour, we can promote that in Moncton. If an artist in the Moncton area, vice versa, we can promote that.
7374 Or even an Atlantic Canadian artist that is coming in from St. John's or Halifax, we could promote in Moncton and in Saint John. We see that type of synergy.
7375 COMMISSIONER CRAM: The public affairs program, is that going to be locally produced in Saint John?
7376 MS WHELAN: Yes, it will be locally produced. It is a one-hour magazine style show that would be aired on Sunday afternoons featuring a variety of different issues that are affecting the community. They could be local issues, national issues, international issues but with a local perspective.
7377 So some topics could include, once again, the high cost of automobile insurance, the dispute over whether or not the new casino licence should be awarded in the province -- a variety of different issues, giving the listener an opportunity to hear the stories that they hear during the week or perhaps news stories that appeared on the weekend in more detail and more depth.
7378 Usually in radio we use what we call audio clips. It doesn't give people a lot of time to hear the whole story. So this is a chance for people to hear all sides.
7379 For example, you can present for and against a different position, a well-rounded detailed look at a particular issue.
7380 COMMISSIONER CRAM: So primarily sort of local-regional issues. Is that it?
7381 MS WHALEN: Yes, because we do focus on local news.
7382 Even a national story can have local implications. So you would always make it local. As I say, all news is local.
7383 COMMISSIONER CRAM: Do you contemplate voice tracking on the station; and if so, when?
7384 MR. R. STEELE: Hilary.
7385 MR. MONTBOURQUETTE: Our plan was to provide full service live broadcast from 6:00 in the morning until midnight, Monday to Friday. We would voice track overnight. The voice tracking would originate in Saint John. It wouldn't be provided from outside the market.
7386 Then on the weekend we would use the same model as we use in Moncton. We are live from 6:00 a.m. until 6:00 p.m. on Saturday and from 9:00 a.m. until around 4 o'clock on Sunday. The rest of the time would be voice tracked, but again the voice tracks would originate from Saint John or be provided in Saint John.
7387 COMMISSIONER CRAM: Moving on to economics, you say that 50 per cent of your revenue will be new to radio advertising. How did you ascertain that?
7388 MR. R. STEELE: Our business plan was developed by Dave Murray. I will let Dave elaborate on that.
7389 MR. MURRAY: Thank you, Rob.
7390 We believe, as demonstrated by our research, that we are going to fill a void in that market and provide a product that doesn't exist there now.
7391 I am going to ask Hilary to also elaborate on specifically how we generate revenue.
7392 At Newcap we approach sales as a value proposition for our clients. We are creative focused and results driven. We are not in the business of selling spots, but we try to create long-term relationships with our clients. We think that will be very attractive to a lot of clients in Saint John.
7394 MR. MONTBOURQUETTE: I can just take you through the process.
7395 We begin by hiring the right people. What we look for are business people in sales. We want them to be expertly trained, and we provide training through the Radio Marketing Bureau, which helps our staff become experts and full-service marketing consultants.
7396 Our sales staff is trained to understand all media, not just radio. They are encouraged to recommend print and television and outdoor, and even competing radio stations if it is necessary and if it makes sense for the marketing objectives of the client that we are trying to serve.
7397 We like to offer radio day seminars where we bring in market experts such as Scott Broderick or Roy Williams and Chris Lytle. These experts come in and talk about the benefits of radio and why radio to advertisers and to the clients.
7398 That is not just good for us, but we feel that is good for the radio industry as a whole and the markets that we serve.
7399 We use our own in-house research, plus the research resources of a Rep House Canadian Broadcast Sales as another tool to help our sales staff to achieve the objectives of our client base.
7400 We price our inventory very fairly and we price it properly. We don't cut rates. We don't allow anybody else to set our rates. We establish value and we try to grow our clients' business, because if our clients' business grows then our business grows.
7401 Our approach is to offer great ideas. We feel we offer exceptional promotions, some serious service. In the long term it is a strategic partnership. That way the client is happy and we are happy and radio wins.
7402 COMMISSIONER CRAM: Thank you.
7403 In your deficiency of December 15th of last year, signed by Mr. Templeton, you stated -- do you have that? Or you don't need it.
7404 I will read it:
"We have no intentions of entering into an LMA or sales agreement in Saint John or Fredericton."
7405 I take it that it is your position that a sales agreement or a sales management agreement doesn't fit into or is not an LMA as defined by the Radio Regulations; that is to say:
"... an arrangement, contract, understanding or agreement between two or more licensees or their associates that relate, directly or indirectly, to any aspect of the management, administration or operation of two or more stations that broadcast in the same market."
7406 My question is: Do you believe that a sales agreement or a sales management agreement fits within that definition of an LMA?
7407 MR. R. STEELE: An LSA, a sales agreement, is vastly different than an LMA.
7408 COMMISSIONER CRAM: No. My question: Do you believe that it fits in the definition of an LMA?
7409 MR. R. STEELE: Could you just read that again?
7410 COMMISSIONER CRAM: Sure. The definition of an LMA means:
"... an arrangement, contract, understanding or agreement between two or more licensees or their associates that relate, directly or indirectly, to any aspect of the management, administration or operation of two or more stations that broadcast in the same market."
7411 MR. R. STEELE: It is an agreement insofar as it affects sales, but sales only.
7412 The last part with reference to programming and management, that kind of thing, it doesn't fit under the LMA definition.
7413 COMMISSIONER CRAM: As it relates to management, administration or operation.
7414 MR. R. STEELE: Management insofar as management manages sales or controls sales.
7415 COMMISSIONER CRAM: Do you believe that a sales management agreement or a sales agreement would fit into the definition under the regulations of an LMA?
7416 MR. R. STEELE: No, I don't.
7417 COMMISSIONER CRAM: Would you agree to a condition of licence, were you to be licensed, requiring prior Commission approval for any sales or sales management agreement?
7418 MR. R. STEELE: Absolutely.
7419 COMMISSIONER CRAM: Do you believe that sales or sales management agreements could be seen by the Commission as anti-competitive the same as LMA?
7420 MR. R. STEELE: Could they be seen that way? If the wrong information was divulged or passed along to the CRTC, they could be seen that way. But it is not accurate.
7421 COMMISSIONER CRAM: Tell me why it isn't.
7422 MR. R. STEELE: I can let Dave Murray elaborate in terms of the specifics of the LSA.
7423 The LSA again applies only to sales of money to the radio station. It doesn't involve programming, programming management and other -- management as it relates to sales only, not other aspects to running the business.
7424 COMMISSIONER CRAM: The question is: Could these sales or sales management agreements be seen as anti-competitive? You said no. Now I am saying: Why not?
7425 MR. R. STEELE: Okay.
7426 Dave, do you want to answer why it is not anti-competitive?
7427 MR. MURRAY: Sure. I think I should start by defining the difference between a local management agreement and a local sales agreement.
7428 A local management agreement, or LMA, is an agreement between two or more broadcasters where one party is given control over all aspects of the business except for programming, news and editorial control.
7429 The parties typically locate in the same facility and share profits. These arrangements provide tremendous cost synergies and are of great benefit to all stakeholders and of great benefit to broadcasting systems. Sorry for the editorial.
7430 A local sales agreement is an agreement between two or more broadcasters where one party represents the other for the sale of their air time. Each party retains complete management control of its business and the two parties typically remain in separate facilities.
7431 It is not unlike combining national sales, for example, Canadian Broadcast Sales represent many broadcasters in many markets. CBC, Canadian Broadcast Sales, is owned jointly by Rogers and Corus and represents them jointly in all the markets where they both operate.
7432 CBS represents both OZ-FM in Newfoundland and Newcap stations in St. John's, but this doesn't affect the operation of either business in any way whatsoever. We are in separate facilities. We have no idea what is going on with them, but they are represented by the same people.
7433 Does it affect competition? I would say that we don't feel that LMAs are particularly negative to competition. We think that multiple ownership -- in 1998 when multiple ownership rules changed and stations began to be bought up by other stations, I think an LMA is far superior to that, where programming and editorial control remain distinct between the broadcasters; whereas if you are purchased by somebody, obviously the editorial voice disappears.
7434 MR. J. STEELE: Madam Commissioner, perhaps I could add to that.
7435 Radio stations don't operate in a vacuum. There are other media choices. So I don't think it is anti-competitive to do that. There is still the TV option, the newspaper option, billboards, many different venues that advertisers could use. Therefore, I don't think it is anti-competitive because of that.
7436 There are very, very few buys that come down that are strictly radio.
7437 COMMISSIONER CRAM: From the point of view of a station that is not part of the sales or the sales management agreement, would you agree it is much harder for that individual station or stations to compete for advertising in the market?
7438 MR. R. STEELE: Mark, could you answer that?
7439 MR. MAHEU: Yes, Madam Commissioner, I think that stations that are in a competitive marketplace that are not part of a local sales agreement, certainly it is more difficult and it is tougher. But nobody ever said this business is easy.
7440 It is a difficult business, and in the case of Saint John where we are talking about 50 per cent of our revenues going to be new money to radio, we have our work cut out for us. We are willing to make that kind of commitment, because we know we have the capability to do it. We have done it before and we can do it again.
7441 There is lots of money being spent on multiple media choices, whether it be outdoor or print or television, that we have a great story to tell about radio. And we are quite good at doing that.
7442 On the anti-competitive nature, if I may, how it might be perceived, or could it be perceived as anti-competitive behaviour: I think the possibility does exist, from the outside looking in without all the fact, that it might be perceived in some cases to be anti-competitive. But we know from the inside that it definitely is not.
7443 Sales agreements between radio stations have been going on as long as, for instance, national advertising has been for sale in Canada. National rep firms represent multiple stations in markets together as a cluster or a group and sell on their behalf. That has been going on for quite some time.
7444 To underscore Dave's point, which I think was a very good one, in multiple licence ownership situations in markets that are big enough to handle it, when those purchases take place there is somewhat of a loss of editorial voice. In local sales agreement situations where one station or one company isn't buying out the other one, they may sell together but you still have multiple editorial voices and control of those radio stations in a market, which I think in some cases does benefit the community.
7445 Also when your radio has historically had a smaller percentage of total advertising budgets than the big media that we know about, like print and television, and even outdoor now in some cases has surpassed radio as a percentage of total advertising dollars spent, radio has to do and must do a better job now and in the future to secure its place as a viable medium.
7446 It is a mature industry and up until now it has done an excellent job. But there are always new choices out there, and radio stations are having to become more competitive and more innovative and bring more to the table for advertisers.
7447 In some cases local sales agreements allow radio to do that, where in some marketplaces one or two radio stations standing alone cannot bring the kind of radio solution to the table that a client requires. It maybe needs three or four stations to reaching different people and for different formats to be effective.
7448 So there is also a case to be made for that as well.
7449 COMMISSIONER CRAM: Thank you.
7450 Here are the last questions.
7451 Can you give me compelling reasons why you should be given this frequency? Also, please tell us why you are the best use of this spectrum.
7452 MR. R. STEELE: There are several reasons.
7453 I think the format that we have identified will be the least intrusive on the other formats that now exist in the marketplace. Also, I think our news initiative is a very compelling reason. We obviously offer a new editorial voice, diversity, because we are not in the Saint John market right now. That is essentially it.
7454 Mark, do you have anything to add?
7455 MR. MAHEU: If I may, Madam Commissioner, also one of the compelling reasons I believe Newcap Radio is the best company to utilize this spectrum in Saint John -- and having just joined the company recently, I have done a lot of homework and talked to a lot of people about Newcap.
7456 This company is uniquely qualified to be the best operator in that market for a new licence. This is an Atlantic-based broadcasting company with very deep roots in Atlantic Canada, the kind of financial commitment that through stormy economic weather has done an excellent job in many, many markets.
7457 There are markets in Newfoundland where we operate that are not profitable, or marginally profitable, or were not profitable for years. We have stuck it out there. We did what we had to do. We provided service to the markets.
7458 In Halifax the same thing; Moncton, the same issue. We have deep Atlantic roots. We understand what the needs and wants are from people living in Atlantic Canada, the expectations they have. I am coming to understand that in a hurry, but the people sitting around this table have a unique understanding of what it is like to live and work in Atlantic Canada and the kind of broadcasting expertise we can bring to a market like Saint John.
7459 We are from here. We understand what people want, and we are prepared to roll up our sleeves and give it to them, to the very best of our ability. That would be our promise to you.
7460 MR. R. STEELE: Just one last point.
7461 A point I forgot was the Canadian Talent Development initiative. I think it is a fairly aggressive one. I think that is another compelling reason.
7462 COMMISSIONER CRAM: Thank you and thank you, panel.
7463 Mr. Chair.
7464 THE CHAIRPERSON: Thank you, Commissioner Cram.
7465 Commissioner Langford.
7466 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.
7467 In looking at your contour map that you filed as part of this application, I notice that the .5 contour stops just short of the Nova Scotia coastline.
7468 From your experience, will your signal be heard in places like Digby and Bridgetown and Middleton, Nova Scotia, do you think?
7469 MR. R. STEELE: Dave, can you answer that?
7470 MR. MURRAY: Unfortunately, our engineer consultant is in Mexico today.
7471 COMMISSIONER LANGFORD: Smart boy.
7472 MR. MURRAY: From our experience, the signal does tend to go a little bit farther over water and it may well get in there. You really can't tell until you build the station and are actually testing it.
7473 COMMISSIONER LANGFORD: I neglected to ask Mr. Miles this, but he is in the audience so I can catch him in Phase IV, because he has a competitive bid of course in the same market.
7474 Does that mean that you will be having some plans? I was listening to Audrey Whelan describe news as local -- "we believe in local news". She said "local news is first in our minds".
7475 Will you do something, then, to include some of these people in your local news coverage on the grounds that they are hearing your signal?
7476 MR. R. STEELE: Do you mean the overspill there into Bridgewater(sic) and these areas?
7477 COMMISSIONER LANGFORD: Yes.
7478 MR. R. STEELE: Audrey, perhaps you can answer this.
7479 MS WHELAN: As I said, it would be determined, when the station is up and running, where it exactly it would be heard.
7480 But yes, if people are hearing us in a particular area and they are responding to us and they are our listeners, we will serve the best interests of our listeners.
7481 Primarily right now we are looking at the Greater Saint John area. But if there are people who need our service and people who are listening to our news, yes, we will focus our news on them as well.
7482 MR. R. STEELE: I don't think we will be focusing on -- we are not going to be focused on Bridgewater(sic), Nova Scotia with a Saint John's signal. There might be news that is relevant to them because it is provincial or regional Atlantic Canadian news that it is relevant to them.
7483 We are not going to cover specific news or anything that is happening in Bridgewater(sic), for example.
7484 COMMISSIONER LANGFORD: I suppose if you are out in a boat and there is some problem, whether your boat left Saint John or left Digby is irrelevant. You wouldn't mind hearing about it on the radio.
7485 So would you be covering that sort of local story?
7486 MR. R. STEELE: You know, if it's a local story that is relevant to the rest of Atlantic Canada, you would cover it, sure.
7487 COMMISSIONER LANGFORD: Will this "Capital Report" be exactly like the tape you played us today? Is that typical or was that abridged in some way?
7488 MR. R. STEELE: It is abridged primarily.
7489 Gerry, do you want to comment on that?
7490 MR. PHELAN: Thank you for your question, Mr. Commissioner.
7491 What you heard was a very edited version. Rather than just giving headlines, we want to give the stories that are happening in the region.
7492 For example, you would hear longer versions of those stories, and indeed there would probably be in some cases taped clips or parts of the interviews an segments that would come.
7493 I visualize, for example, in the case of the recent blizzard that hit all of the provinces across the region that that morning we would have had reports, for example, from Charlottetown from somebody saying here is how the storm is affecting us here, and perhaps some tape and interview, or whatever; and then as it moved into New Brunswick and on to Nova Scotia and then Newfoundland.
7494 We are talking about things in more detail. That is why we found when we were putting together our plans, originally a 90-second report is a lot of news for some of these stations but not enough when you are doing the Atlantic region.
7495 That is why we have graduated to three minutes plus, and I am still lobbying for more time. But three minutes, to make it more detailed and a lot more information on that.
7496 COMMISSIONER LANGFORD: If I can assist you in your lobbying efforts, I will. I found it difficult to follow, to be perfectly honest with you. We had a clip from some fellow explaining why there had been a fire in a boiler, and he barely finished the last word before we were into another story.
7497 It is only an editorial comment from a tired old Commissioner down at this end of the table. But I did find the bridging between the stories very --
7498 MR. PHELAN: Commissioner, I found it insulting, to be honest with you, because as a newsperson I am waiting for all the details and having to clip anybody did me an injustice. I live by the word, and the word is what we were trying to hear.
7499 Hopefully this afternoon or later when you hear the Fredericton thing, you will be more impressed.
7500 COMMISSIONER LANGFORD: Some editor will be busy, I assume, for the next hour or two.
7501 MR. PHELAN: No. It's already done. I can play it right now if you like. I also have the longer version of that one if you would like to hear it.
7502 COMMISSIONER LANGFORD: I am not necessarily going for longer, but I just found it a little confusing jumping from one to the other. So if that is a helpful editorial comment, I leave it with you.
7503 Thank you. Those are my questions, Mr. Chairman.
7504 THE CHAIRPERSON: Thank you, Commissioner Langford.
7505 Just a fairly general question, I suppose, on the economics of the market.
7506 If we look at the four cities that we have been considering last week and this, for 2003 figures, if we look at the overall profitability, Saint John probably, at least from the figures I have, shows the lowest overall profitability at about 20 per cent for 2003.
7507 I would like to know what your view would be in terms of how we should approach it in terms of licensing stations in the market and what your thinking would be.
7508 Can a market at 20 per cent sustain one new station, two new stations?
7509 MR. R. STEELE: Again, if it is not impacting the other stations unduly and if you are able to get your revenue base from other sources, i.e. TV, other media, print, that kind of thing, and you are going after a different demographic, which we are in this case -- it is 35-to-54 primarily -- the market can sustain another station there.
7510 THE CHAIRPERSON: I would like to pursue that.
7511 On that point, we spend a lot of time at these hearings talking about format and you do a lot of research into format. As you know, we don't regulate format.
7512 MR. R. STEELE: Right.
7513 THE CHAIRPERSON: So we could license you on the basis of the presentation here today, but if you find that is not working in six months or twelve months or whatever, you could well change that and go right after one of the other stations in the market. And I take your point.
7514 The other thing that we have been hearing over the years, we have heard it in radio and in TV, is: We are going to grow the pie. We will attract revenues away from newspapers and billboards, and whatever else. Some of that happens and some of it doesn't. In TV we hear: We are going to repatriate all this advertising from the U.S., but somehow or other that repatriation doesn't quite happen the way it is often expected to.
7515 In your view, a PBIT of 20 per cent could provide for at least one more station in the market? Is it one, in your opinion?
7516 MR. R. STEELE: It is one, in my opinion. We are not satisfied ourselves with a PBIT of that kind of return. We strive to get a bigger return in other markets.
7517 A lot depends, quite frankly, on the strength of the broadcaster, the ability of the broadcaster to provide the right programming, to cultivate an efficient sales force, those kinds of things. They are all attributes of success.
7518 THE CHAIRPERSON: In your opinion, a PBIT of 20 per cent would allow for one more player in a market without unduly disadvantaging the existing players in the market.
7519 MR. R. STEELE: It would.
7520 THE CHAIRPERSON: If that was 25 per cent, what would your opinion be?
7521 MR. R. STEELE: One.
7522 THE CHAIRPERSON: And if it was 30?
7523 MR. R. STEELE: Two.
7524 MR. MURRAY: If I could jump in, Mr. Chair, we are thrilled to hear that Saint John could have a 20 per cent PBIT. When we looked at our application's business case for Saint John and Fredericton and we were able to get that data combined, we felt, not categorically, but we felt that most of the problem was probably in Fredericton and that Saint John had an even lower PBIT.
7525 But that didn't deter us in the least from applying. We feel that there is an awful lot of money being left on the table in Saint John, and the intervention that Acadia filed stating that there was cut-throat rate-cutting in the market gave us a clue to why that might be.
7526 We looked at the ratio between retail sales and radio revenue in many markets, markets where we knew what the radio revenue was. For example, in Moncton the ratio is .6 per cent of radio revenue to retail sales; in Charlottetown, it is .59; in St. John's, Newfoundland, it is .5.
7527 In Saint John, New Brunswick, if you believe what is in Acadia's intervention, that the market is around 5.5, the ratio is only .4, and in Fredericton it is .47.
7528 We believe that market should be in the range of seven to $8 million.
7529 Evidence that adding new licences will clearly raise the market, if you could just look to Moncton where in 2000 there were five new radio stations licensed in Moncton, and we saw the revenue increase from $8 million in 2002 to $9.3 million in 2003 once those radio stations got up and running and got through their start-up periods, et cetera.
7530 We think we can do the same thing in Saint John by doing a lot of the things that Hilary mentioned to you, the way we value sales and value product and go after results-driven organization.
7531 THE CHAIRPERSON: Thank you for that.
7533 MR. McCALLUM: Thank you, Mr. Chair.
7534 I would like to go back for a second, if you don't mind, on the Canadian Talent Development initiatives and the response that you furnished to Commissioner Cram.
7535 If I understand it correctly for the purpose of the condition of licence, as you have submitted, you would prefer that the $175,000 go to AVRN, but if the Commission were to disqualify it for the purpose of Canadian Talent Development you would redirect that to FACTOR.
7536 Is that right?
7537 MR. R. STEELE: Yes, that's right.
7538 MR. McCALLUM: So for the purpose of the condition of licence, which would be over seven years, $21,000 to CAB, $154,000 to FACTOR as initially projected or as initially proposed, plus $175,000 to FACTOR, for a total of $350,000.
7539 MR. R. STEELE: Yes, that's right.
7540 MR. McCALLUM: In that case, would you still go ahead with the AVRN initiative?
7541 MR. R. STEELE: Yes. The AVRN initiative is a terrific initiative and is something we are proud to assist.
7542 Mark, do you want to elaborate a little on that?
7543 MR. MAHEU: Yes, I would; thank you.
7544 I would like to go back a moment and try to take 30 seconds to clarify.
7545 AVRN is extremely important to this country and to the broadcast landscape. Newcap Radio has made a commitment to AVRN that has been part of several applications that we have put forth and were approved by the Commission.
7546 We understand that our contribution to AVRN does not meet the technical guidelines of a CTD contribution, although from time to time the Commission has allowed that contribution to count toward that funding.
7547 Mr. Steele, when asked by Commissioner Cram, was commenting about if it couldn't go here, could it go there? Just to add on to what Rob Steele had mentioned, it is our position, if we had a very first choice, obviously we would like the money to go to AVRN to supplement the good work that they are doing.
7548 In the event that the Commission does not allow our contribution to AVRN to come under the Canadian Talent Development cap, we would like to at least make you aware of the fact that I believe there is a way with AVRN that the money that we would give them could be devoted specifically to the development of Aboriginal musical talent, singers, songwriters and performers, and there might be a way, and there could very well be a way that we could accomplish the CTD objectives that you would like to have accomplished through AVRN.
7549 It would be really up to them to comment on that.
7550 If there was any way at all, we would certainly like to do it that way.
7551 Failing all else, certainly the money is on the table for the development of Canadian talent, and sending it to FACTOR for them to continue their good work would certainly be the fallback position.
7552 Our primary position would be if there is any way at all that we can do it with AVRN, that would be our choice.
7553 MR. McCALLUM: Would the following be an option for the Commission, again assuming the Commission -- I am not saying what the decision is, but assuming the Commission says that the $175,000 to AVRN does not qualify for Canadian Talent Development but it does accept the $175,000 to be redirected to FACTOR, so it would be a total of $350,000 as per your original commitment, but the $175,000 that would have gone to AVRN would go to FACTOR. So $350,000 as a condition of licence.
7554 Would it be an option for the Commission to say that is a condition of licence but also the $175,000 that you had initially said would go to AVRN be also accepted as an initiative, outside the Canadian Talent Development?
7555 The two as conditions of licence together, would that be an option?
7556 MR. MAHEU: If I understand what you are saying: Would it be an option to make them a condition of licence, both elements, the FACTOR contribution and the AVRN contribution, recognizing that AVRN may not constitute a full CTD contribution?
7557 I just want to make sure that we are talking about the same thing. Are we speaking about an additional $175,000 over and above the $350,000?
7558 MR. McCALLUM: Effectively, it would be incremental. The $175,000 would be incremental to the COL, the condition of licence, of $350,000. In effect, it would be incremental.
7559 So I am asking if that would be an option for the Commission to consider.
7560 MR. MAHEU: I think that would fundamentally change our application, would it not?
7561 MR. McCALLUM: It would be a substantive change, yes. So I am asking if that would be something the Commission should consider or not.
7562 MR. MAHEU: I would think we would rather not.
7563 MR. McCALLUM: Thank you very much.
7564 I would like to ask one follow-up question about the contour map that Commissioner Langford asked about.
7565 The contour map does show the .5 contour encompassing Fredericton. My question would be: Do you intend to draw ads from Fredericton?
7566 MR. R. STEELE: Hilary can talk to this. But no, we wouldn't.
7567 MR. McCALLUM: If the Fredericton application were refused and the Saint John application were granted, what would be your answer to my question?
7568 MR. R. STEELE: It would be the same.
7569 MR. McCALLUM: Thank you, Mr. Chair.
7570 THE CHAIRPERSON: Thank you, counsel.
7571 I guess it is probably fair to say, with respect to CTD, notwithstanding whatever condition of licence that the Commission may impose should you be granted a licence, it is always open to the licensee to redirect CTD funds to another CTD eligible commitment should you in fact discover an alternative that may be a more effective way to spend that money.
7572 Maybe that can put a period on the question counsel posed.
7573 I don't believe we have any other questions. I think that is all our questioning for you this morning.
7574 Thank you very much.
7575 While it's a little early for our morning break, I think we might take it now anyway.
7576 We will take a 15-minute break at this point, and we will return with Phase II for Saint John.
--- Upon recessing at 1017 / Suspension à 1017
--- Upon resuming at 1037 / Reprise à 1037
7577 THE CHAIRPERSON: Order, please, ladies and gentlemen. We will return to our proceeding now.
7578 Mr. Secretary.
7579 MR. LeBEL: Thank you, Mr. Chairman.
7580 I will now ask Rogers Broadcasting Limited to intervene at this point. You have ten minutes to present your intervention.
7581 MR. MILES: Mr. Chair, Members of the Commission, we have no interventions for Phase II.
7582 THE CHAIRPERSON: Thank you very much.
7583 Mr. Secretary.
7584 MR. LeBEL: Thank you, Mr. Chairman.
7585 Newcap also indicated they would not be appearing in Phase II. So we will now hear the appearing interventions in Phase III.
7586 The first of these appearing interventions is Acadia Broadcasting System Limited.
7587 THE CHAIRPERSON: Please proceed whenever you are ready.
7588 MR. MacMULLIN: Good morning, Mr. Chairman and Commissioners.
7589 My name is Jim MacMullin. I am the General Manager of two FM radio stations in Saint John, New Brunswick.
7590 To my immediate right today is our Business Manager, Peter Scholten, and the rest of the Acadia team I will introduce to you a little later in these proceedings.
7591 The two radio stations I am responsible for are owned and operated by Acadia Broadcasting Limited. One of these radio stations was approved by the Commission just four years ago and is only now showing signs of finding its way in the market.
7592 Acadia would like to make a few brief comments to explain its opposition to the applications by Newcap and Rogers for new FM radio stations in Saint John.
7593 Mr. Chairman, it is my sincere belief that the Saint John region is indeed well served by the five existing commercial radio stations. The market is also saturated with a variety of other media. Lack of service is not an issue in Saint John, in my opinion.
7594 In fact, I would venture to say that all cities the size of Saint John should be as well served with information and entertainment media. This high level of service is driven by fierce competition and a desire by the media to be good community citizens.
7595 The underlying force behind this keen competition is the fact that no one person or equity interest has dominance in the market. We already have a very competitive balance of ownership and a wide diversity of news sources and voices.
7596 A new entrant in the news/talk category will not provide any further breadth or depth to the Saint John region.
7597 Similarly, there currently exists a variety of music formats on the radio stations in Saint John that appeal to all the age groups proposed by both the Newcap and Rogers formats.
7598 In summary, a new entrant in the Saint John radio market at this time, regardless of program format, will have a profound impact on the advertising market and will severely test its economic strength.
7599 As I mentioned a moment ago, the market is currently supporting five commercial radio stations. And that is my main concern. Every market has its limitations -- a saturation point, if you will. One can only imagine the impact of yet another new FM radio station, or stations, in the region.
7600 In this regard, I wonder aloud if the applicants have any appreciation of the unusual business dynamics in the Saint John radio industry at this time?
7601 In a word, it's brutal. The law of the jungle prevails, as Acadia attempted to describe in its letter of intervention. In that same intervention Acadia also cautioned all those concerned that the applicants' assessment of the value of the market is overestimated and overvalued.
7602 As the General Manager responsible for the two radio stations in Saint John, I have no doubt that another entrant would most certainly impact on Acadia's overall business plan and programming strategies.
7603 Commissioners, I have listened carefully to the proceedings of the Newcap and Rogers applications. In my opinion, I have yet to be convinced of a compelling reason to allow more of the same.
7604 Mr. Chairman, Members of the Commission, Acadia Broadcasting respectfully submits that Saint John does not need another radio station. Moreover, Saint John cannot sustain another radio station.
7605 Thank you for this opportunity to express our concerns to you.
7606 I shall be pleased to answer any questions you might have.
7607 THE CHAIRPERSON: Thank you very much for your presentation, Mr. MacMullin.
7608 Commissioner Langford.
7609 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.
7610 Mr. MacMullin, I have listened to you this morning and read your filed intervention. I guess I might as well start with your statement just a minute or two ago that "the law of the jungle prevails" in Saint John.
7611 I must say when I drove through there it didn't strike me as such a brutal place. But I'll take your word for it.
7612 Aren't you kind of responsible for some of that yourself? You seem to indicate in paragraph 33 of your written intervention, where you say:
"Over the past 15 years the lack of rate integrity caused by keen competition on the street has created a fragile sales environment. This has resulted in an 'anything goes' policy to achieve monthly sales quotas. It has been a dangerous practice condoned by the local commercial broadcasters, including Acadia."
7613 Maybe you could explain that to me a little more clearly.
7614 MR. MacMULLIN: Yes, Commissioner, you are exactly right.
7615 Historically, going back into the 1990s and perhaps as far back as the 1980s -- I wasn't in the market until a couple of years ago -- that has been the way that radio unfortunately has been marketed. However it got started is anybody's guess. Why it got continued I suppose is the same thing. But everybody in the market played the game that way. As a result, the overall value of product on all the stations in the market has been severely underpriced and undervalued.
7616 And of course the client base is well aware, when that goes on for any amount of time, how to -- what is the word I am looking for -- maybe manipulate or take advantage of the situation for their own benefit as good business people.
7617 In the last couple of years we have certainly tried to hold the line on rate integrity and offer fair, consistent marketing of our product to our clients. We have managed to do that quite well. However, we are still nowhere near the value per unit in the market that it should be when you compare it to other markets.
7618 COMMISSIONER LANGFORD: But it is your own doing or at least it is the doing of the incumbents. Nobody came down from a cloud and said "thou shalt not sell above this rate". You have done it to yourselves. Is that fair?
7619 MR. MacMULLIN: Unfortunately until two years ago we were part and parcel of that, as I said. Upon my arrival and the changes and restructuring and our different method of marketing under our current management team, we have stopped doing that. We can't get the price up.
7620 Yes, our company in the historical past did contribute to that problem.
7621 COMMISSIONER LANGFORD: I am not going to certainly suggest price fixing to you or anything even close to it. The other side of the equation can be dangerous as well.
7622 I would suggest to you that if it is a problem you created, it may also be a problem that you should be solving on your own rather than asking us to solve it for you by closing the doors.
7623 That is not to suggest that we are preconditioned here to issue another licence or anything. We are listening to your whole report.
7624 On that element of it, it does seem to me -- and agree or not; that is what we are here for -- that it may be something that you caused and you can correct; that we really can't correct that for you. That is something you have to do for yourself.
7625 But we love to regulate, and we will correct anything we can.
7626 Another area where I thought perhaps maybe the solution to your problems may lie with you rather than with the regulator is in the sense of your own personal PBIT situation where you say that one of your stations, the more established CHST-FM is carrying the newer station CHWV-FM.
7627 You refer to it as an example of robbing from Peter to pay Paul. I am not quite sure I understand that analogy in this context.
7628 It seems to me that it is perhaps more analogous to the equalization payments that we have under the constitution; that one of your stations has not been making money and the other has been making significant gains, and averaged out they put you in a bit of a bleak position compared to say the national average or in markets like Halifax that you were discussing earlier, markets like Fredericton where there are higher PBIT levels.
7629 I am sorry to go on so long about this. It occurs to me that that is something that is within your power too. Perhaps you have the wrong format, and we don't regulate format. Perhaps you should be looking at changing that situation and strengthening the weak sister of your two-station family.
7630 MR. MacMULLIN: Mr. Commissioner, we are indeed on the road to doing that. The first two years the new licensed CHWV was on the air it was a very soft AC station and had very little success in the market.
7631 There was also some internal strife in the company, and I won't bore you with the details. But over about an eight or nine-month period, it was either very poorly managed or not at all in the total absence of a general manager. Not saying that I was the saviour, but someone had to sit in that chair.
7632 Shortly after my arrival --
7633 COMMISSIONER LANGFORD: You realize that they are going to blame you when it starts to go wrong.
7634 MR. MacMULLIN: Yes, they are.
7635 COMMISSIONER LANGFORD: It's a two-way street.
7636 MR. MacMULLIN: It's on the record now.
7637 However, we did change the format and informed the Commission of that in January of 2003. We turned it into a hot AC and maybe even a little bit more than that in the evening; that we go after the little bit younger demographic.
7638 After about six or seven months into that format change, of course, the station started to get some recognition and awareness from the audience of the change, because it takes a while. Nobody likes change, especially Maritimers. We are kind of slow to react to things. We did some good promotional events that drew attention to us, good positive attention. And we ended up finishing at the end of August 2003 with a very, very minor profit on the station.
7639 Part of that was at our own expense, not all, not the majority part. But indeed our sister station, the country station, did see a decline over that period while the weak sister was growing. Now we seem to have turned the corner. It has stabilized. We still have a ways to go.
7640 Our intent in opposing these applications, as much as anything, is just to give us a little more breathing space. We have just now got a foothold against some pretty tough competition, and we are starting to level the playing field a little bit. Things are looking pretty good if it's status quo.
7641 Another entrant would certainly give us two steps back. That is our concern.
7642 COMMISSIONER LANGFORD: Let's look quickly at the entrants. We usually don't drag these intervention questions out, and especially yours is clear. But there are just a couple of areas where again I find the message a little contradictory.
7643 In your intervention against Newcap specifically -- you break your written intervention down into two parts, one against Newcap and one against Rogers -- you set out a chart on page 4 of that intervention listing the existing five commercial stations and showing their formats and their target demographics.
7644 What I see there is a demographic that is very skewed to an older audience. The youngest member of any of the target demographics of any of the stations is 18 years old, and it goes very quickly into 25-to-54, another 25-to-54, a 35-to-64, and even the 18-year-old ones are not 18-to-35; they are 18-to-54 or 18-to-49. This is an older demographic.
7645 That is fine. You say, perhaps logically: Look, Newcap is going right at that same demographic, and it is insupportable.
7646 Assume we buy that for a moment. We then flip to your written intervention against Rogers, where you basically then take a very, very focused view of the chart you supplied in your earlier intervention and say in paragraph 23:
"The 12-to-24 demographic of Saint John is well served by Acadia's Hot AC, as well as a second adult Contemporary format, a classic mainstream Rock format and the Alternative underground university campus station."
7647 To be perfectly honest with you, I have trouble with that statement. I have trouble with it when I compare it to the earlier statement and the earlier chart.
7648 Your intervention against Newcap seems to paint a very clear picture that Newcap wants to serve an older demographic which is over-served, if anything. You then seem to try to turn that on its head in your intervention against Rogers.
7649 I guess you are going to have to do some explaining to make me understand why you can have it both ways.
7650 MR. MacMULLIN: We are not so much intervening against a format, although we do address that in the intervention letters. But we do very, very strongly point out that regardless of format, a new entrant at this time, it is the economic impact that we are concerned about.
7651 I feel strongly about the statements that we put in our letter. We did our research and did our work and we will stand by those.
7652 Again, it is not format. Right now there is just not room for another entrant. That is our big concern.
7653 COMMISSIONER LANGFORD: Earlier, Mr. Rob Steele indicated that perhaps the Saint John market wasn't being mined with enough energy. He produced figures between retail sales and advertising dollars and indicated that, in comparison to other Maritime cities, Saint John seemed to be a little low; that there was scope there for growth, perhaps as high as six, seven, $8 million, where your figures are talking around four or five, I think.
7654 Do you think he is possibly right?
7655 MR. MacMULLIN: Well, we have lots of miners out there, if that is what you are looking for, both us and Maritime. The undervalue in the market is because the product has been undervalued and not sold at fair market value. You take any market the size of Saint John, even plenty smaller, and they are getting substantially more in rates for the product.
7656 As you said, it is self-inflicted by the players in the market and we are trying to correct it. It is not easily done with a customer base in a market where you deal with these people week over week and this has become ingrained. If I could change it overnight, believe me, Mr. Commissioner, it would have been done the day I got there.
7657 COMMISSIONER LANGFORD: A final quick snapper.
7658 Are your signals heard in Nova Scotia?
7659 MR. MacMULLIN: They are both heard there. CHSJ, the country station, was quite popular along the Annapolis Valley with a lot of listeners.
7660 COMMISSIONER LANGFORD: Thank you very much.
7661 Those are my questions, Mr. Chairman.
7662 THE CHAIRPERSON: Thank you.
7663 Commissioner Cram.
7664 COMMISSIONER CRAM: Thank you, Mr. Chair.
7665 You said you need a little breathing space to consolidate and get yourself up to snuff, or what you would consider snuff. Is a little breathing space September '04, September '05?
7666 MR. MacMULLIN: If you are asking me to decide when another station would be approved, my preferred answer would be never.
7667 However, we do a business plan seven years out when we present an application. We are only about three and a half years into the one from the station that was approved in 2002.
7668 As I said, we are just starting now to level the playing field and starting to look at some positive momentum for our combination of stations in Saint John. I don't think it is coming any more at the expense of our heritage station in CHSJ.
7669 I would think another couple of years. Five to six years was where we planned on breaking even with those stations. We might be a little bit ahead of that curve, hopefully.
7670 Yes, that would be the kind of breathing space I guess I am referring to.
7671 COMMISSIONER CRAM: Another five or six years.
7672 MR. MacMULLIN: Five to six years into the licence.
7673 COMMISSIONER CRAM: So another three years.
7674 MR. MacMULLIN: Before the term is out; another couple of years, two and a half years.
7675 COMMISSIONER CRAM: Thank you.
7676 Thank you, Mr. Chairman.
7677 THE CHAIRPERSON: Thank you very much, lady and gentlemen. We appreciate your appearance here today.
7678 Mr. Secretary.
7679 MR. LeBEL: Thank you, Mr. Chairman.
7680 The next appearing intervention will be presented by Maritime Broadcasting System Limited.
7681 MR. RUSSELL: Thank you, Mr. Chairman.
7682 Mr. Chairman and Commissioners, let me introduce the members of our panel for the record.
7683 I am Merv Russell, President and CEO of Maritime Broadcasting System.
7684 To my left is my partner and Chair, Rob Pace. To my right is Dan Barton, our chief program director and programmer. At the table back here, on my right, is Rob Malcolmson, our legal counsel from Goodmans; and Debra McLaughlin, of course, of Strategic Inc. is on the left of Rob.
7685 We filed with the Commission a detailed written intervention opposing the applications filed by Newcap and Rogers. We do not propose to review that intervention in full today, but we would like to take you through a couple of key points.
7686 Since I am from Saint John and I keep a close eye on the Saint John file, I would like to take the lead.
7687 MBS opposes the Newcap and Rogers applications for the following reasons.
7688 Licensing one or two new stations will create a situation of oversupply in the Saint John radio market. Like Moncton, Saint John is still in the process of absorbing a new commercial station, CHWV The Wave, which was licensed in 2000 and went on the air in 2001.
7689 Saint John is not a growth market. A review of Stats Canada's population trends shows a steady population decline in Saint John over a ten-year period. Between 1991 and 2001 Saint John's population dropped by 2.4 per cent. More disturbing, however, is the drop in the 15-to-24 demographic where the population has declined by 8 per cent over this ten-year period. This decline in the youth population certainly does not bode very well for the Rogers application for a new youth-oriented FM station.
7690 Saint John's economic prospects are weak. TD Economics ranks Saint John second-last among Canada's largest cities with respect to growth prospects. Household income in the market is 10 per cent below the national average. Major employers are also leaving the area. For example, Saint John Shipbuilding, a major employer in the city, recently closed; and Air Canada recently cut over 200 of its staff at its Saint John call centre.
7691 While in recent years our Saint John stations have been able to maintain a reasonable level of success, our year-to-date numbers demonstrate a 20 to 25 per cent decline, reflecting the current difficulties in the marketplace.
7692 We also heard this morning -- I'm sorry, I want to go on to point 4 before I go back to this point.
7693 Neither Rogers nor Newcap have established demand for the formats they are proposing, submitting either unreliable or no local market research whatsoever.
7694 Newcap's proposed CTD contribution in Saint John is 50 per cent less than in their application in Fredericton -- a market that is smaller in terms of population and revenue -- and calls into question Newcap's commitment to this market and the seriousness of their application.
7695 The 25-to-54 year old demographic in Saint John is already well served, and there is no reliable evidence to the contrary.
7696 This brings up my point that I was going to interject earlier, but I now will at this time.
7697 During the appearance of Newcap this morning, they played a 15-song montage to provide the Commission with the sound of their proposed station. We would like to advise you that every one of those songs currently receives air play on our Saint John's stations.
7698 So it seems to us that this new station will be largely duplicative of what is currently on the air today, and it also suggests that Newcap's assessment of the impact on the local stations is somewhat understated.
7699 Mr. Chairman and Members of the Commission, we will answer any questions that perhaps you might have about Saint John.
7700 THE CHAIRPERSON: Thank you, Mr. Russell.
7701 Commissioner Williams.
7702 COMMISSIONER WILLIAMS: Good morning, Mr. Russell, Mr. Pace, panel.
7703 MR. RUSSELL: Good morning.
7704 COMMISSIONER WILLIAMS: In your remarks you just stated that year-to-date you have been experiencing a 25 per cent decline in your numbers.
7705 Which numbers are you speaking of?
7706 MR. PACE: Those are PBIT numbers.
7707 COMMISSIONER WILLIAMS: PBIT; thank you.
7708 Do you think that stations targeting the same demographic can adjust playlists in order to appeal to different and separate demographic segments?
7709 MR. RUSSELL: When it comes to that programming aspect, I will turn that over to Dan Barton.
7710 MR. BARTON: We believe, Commissioner, that they already do.
7711 Earlier, Mr. MacMullin had spoken to the fact that The Wave had adjusted its format in order to fit into the current marketplace. With the diversity of formats in Saint John now, we again believe 25-to-54 is already served with a good variety of format.
7712 COMMISSIONER WILLIAMS: What are your comments on the news/talk application put forward by Rogers, which is directed at the same demographic but providing a different type of programming?
7713 MR. RUSSELL: We believe that that market is currently served very well. CBC does an extremely good job in the marketplace and whether it be Acadia or ourselves, we have good sized news presentations on hourly and regular basis. I think we cover off the city well from a news and talk perspective.
7714 One of our stations also has a talk show. And although we lost the Flames, sports is an important ingredient in our information packages and we cover that off very well in Saint John, as well as do our competition.
7715 COMMISSIONER WILLIAMS: How much of an effect and financial impact would a news/talk radio station introduction in that marketplace have on your company's offerings?
7716 MR. RUSSELL: In the hands of Rogers I think it could be very effective. My past experience going up against news/talk operations was here in Halifax where CJCH had for a short period of time a program in that presentation, and we didn't run into too much difficulty there. Of course, I go away back to the CKO days when they had no effect on us whatsoever.
7717 Depending on how deep you are looking at my good friend Gary Miles and the Rogers application, I think they could have a fair amount of impact. They are good broadcasters and they know how to present. From the presentation they made on 680 in Toronto, it seems to me they are doing quite well with it.
7718 COMMISSIONER WILLIAMS: I have no further questions.
7719 Thank you, Mr. Chair.
7720 THE CHAIRPERSON: Just one quick question.
7721 When you indicated that of the montage we heard this morning all of the songs are played on your station in Saint John, would that be as a result of a change in the playlist that you have had some time in the past number of months, or would that have been the case if it had been let's say a year ago?
7722 MR. BARTON: In fact, Commissioner, this would have been the case a year ago.
7723 THE CHAIRPERSON: Thank you.
7724 Commissioner Langford.
7725 COMMISSIONER LANGFORD: I have become fixated on Nova Scotia and the Annapolis Valley these days, so I might as well ask you the same question I am asking everyone else.
7726 Do your signals get into Nova Scotia?
7727 MR. RUSSELL: Yes, our Saint John's signals do get into Nova Scotia. But we also are the owners of the AVR -- not the AVRN, but the AVR -- the Annapolis Valley Radio network. We do service Weymouth and Digby and Middleton, Kentville and Windsor along that shore.
7728 COMMISSIONER LANGFORD: How is the competition from New Brunswick?
7729 MR. RUSSELL: We do not sell over there.
7730 It is interesting you mentioned the boat. There is a boat that goes back, a regular commercial service between Saint John and Digby. On many occasions I have heard the services of the boat and the schedule of the boat on our radio stations. I did wonder on a couple of occasions: I wonder if we are doing it at the other end at Digby. I asked Di Best, and she said yes, we do it as well. I said well, that's almost duplication but in different markets.
7731 COMMISSIONER LANGFORD: Sometimes duplication is a good thing if you are rushing down the road trying to get to that ferry.
7732 MR. RUSSELL: Indeed.
7733 COMMISSIONER LANGFORD: Thank you very much.
7734 MR. RUSSELL: Thank you.
7735 THE CHAIRPERSON: Thank you very much, gentlemen.
7736 Mr. Secretary.
7737 MR. LeBEL: Thank you, Mr. Chairman.
7738 The next two interventions listed in the agenda will not be appearing, so they will remain on file as non-appearing.
7739 We have now reached Phase IV in which I will ask Newcap Incorporated to respond to the interventions submitted to its application.
7740 THE CHAIRPERSON: Go ahead, Mr. Steele.
REPLY / RÉPLIQUE
7741 MR. R. STEELE: Good afternoon, Mr. Chairman, Members of the Commission and Commission staff.
7742 I am Rob Steele. With me for this phase of the hearing, in the front row to your left, are Steve Jones and Mark Maheu. On my left are Hilary Montbourquette and Mark Kassof.
7743 At the second table, starting from your left, are Jackie Boutilier, Dave Murray, Anna Zanetti, Gerry Phelan and Audrey Whelan.
7744 At the third table are Pete and John Steele.
7745 MR. MAHEU: We are here to reply to the written and oral interventions to our application.
7746 Before replying to the negative interventions from Acadia and MBS, we would like to take the time to thank the supporting interventions from those who know us best -- community leaders from Moncton and the musicians who have benefited from our support in the past. Their letters demonstrate clearly the commitment that Newcap brings, both to community reflection and service and the support of Canadian music.
7747 We would also like to thank CIRPA for its intervention that lays out a number of principles, including ensuring a sufficient amount of funding to FACTOR and ensuring that there is real diversity in the music to be played on any new radio station.
7748 We would note that we are the only applicant for this market that proposes any funding to FACTOR at all. We propose to provide them with $175,000 for the support of Saint John musicians.
7749 We would also note that a review of the playlists of the existing stations and comparison to our own classic hits station in Halifax reveals very little overlap in music played. In fact, we believe that the overlap will be no higher than 25 per cent, in total, in the market.
7750 MR. MONTBOURQUETTE: In their interventions the two incumbents in the market essentially make two major points: the market cannot support a new station and our proposal represents duplication of the existing stations. In addition, Maritime Broadcasting, or MBS, attacks our research.
7751 Let's examine the ability of the market to absorb a new station.
7752 Four years ago Acadia Broadcasting argued in favour of a new station in the market to solidify its position. In 2000 the Financial Post report on markets reported that the Saint John market generated retail sales of $1.1 billion, an amount that was 2 per cent below the Canadian per capita average. Four years later the same report indicates that the market is now generating $1.4 billion, 4 per cent above the national average. This represents a 21 per cent increase over the past four years.
7753 In a press release on February 20th the Conference Board of Canada stated that New Brunswick would lead all Atlantic provinces with a growth rate of 2.9 per cent in 2004.
7754 Now the two incumbents, both with two FMs and one with the heritage AM station, argue that the market can't support them and debate our estimate of what the radio revenues in the market are. On average in this country advertising to all media represents about 4.9 per cent of retail sales. With the retail sales in 2004 that I mentioned, total advertising expenditures in Saint John should be about $69 million.
7755 Radio represents between 12 and 13 per cent of the amount in most markets. So if radio were getting its fair share in Saint John, radio revenues should be in the range of seven to $8 million. Instead, the intervenors suggest that they are in the range of about $5.5 million.
7756 The Acadia intervention supplies an answer for the underperformance of the radio industry in Saint John. They state quite clearly that both companies have undertaken a round of rate cutting in order to gain revenues.
7757 Mr. Chair, Newcap Radio intends to bring a new value proposition to the Saint John marketplace. Our business plan calls for a full 50 per cent of our revenue to come from advertisers not presently using radio. There are millions of dollars a year being spent in Saint John on print, outdoor, television, direct mail and more. We are very confident in being able to show a good many of these advertisers the power of radio and the value of our offering.
7758 This territory is very familiar to Newcap. We have successfully developed significant, new retail revenue in Calgary on a stand-alone station basis. Our network of small market stations throughout rural Alberta are feeling the strain of drought and Mad Cow. Newcap Radio has been able to offset traditional advertising losses by bringing new and non-traditional advertising to the airwaves.
7759 The existing broadcasters are well placed to meet new competition. MBS has three radio stations in the market. Acadia Broadcasting has two FM licences in the market as well as an FM station in nearby St. Stephen and is a sister company to New Brunswick News, which owns the local daily paper and several weeklies.
7760 MR. JONES: Both intervenors also argue that our proposed format would duplicate the music played on the existing stations in the market. We beg to differ.
7761 We undertook a comparison of the playlists of the Saint John stations with our classic hits station in Halifax, CIEZ-FM, the closest approximation to our new station. We found that the only overlap to speak of was with two stations, the classic rock station, CJYC, at about 12 per cent of spins; and oldies/news talk station CFBC, at about the same number. The overlap with CIOK was about 5 per cent, and there was no overlap at all with the country station CHSJ-FM.
7762 In total, more than 75 per cent of the music we would play is not on any station in the market.
7763 Although they cite no evidence to support this, Acadia projects that there would be a 10 per cent overlap between our proposed station and their hot AC/CHR station CHWV-FM. In fact, our analysis suggests no overlap whatsoever. CHWV-FM plays entirely music from 1990 to the present, while our proposed station plays almost exclusively from music pre-1990.
7764 Acadia then goes on to suggest that our classic hits station could -- and I quote -- "quickly morph into a mixture of classic hits and modern rock selections".
7765 Mr. Chair, this would make no sense at all from a programming or business point of view. None of our 57 stations play anything like that mix and such a change would represent a serious contradiction to our research on which we based our business plan.
7766 They also argue that the 25-to-54 year olds in the market are very well served and that there is no need for additional service. However, it is rare in anything but the smallest of markets that stations actually aim to serve 25-to-54 year old listeners as a group. Rather, each station aims to super-serve a subgroup of that demographic.
7767 For example, in Saint John, CHWV-FM caters to the younger side of the demo, combining teens with women 18-to-34; while CIOK centres on women 25-to-40. Meanwhile, CJYC-FM is strongly oriented to men, with the bulk of their listeners between 18 and 44. The AM station CFBC, with a format based on considerably older music than our station, attracts a significantly older demographic, and their strong news/talk heritage also attracts the older listener.
7768 The core of the audience for our classic hits will be 35-to-54, with about 55 per cent of our listeners being female. This is an audience that is not presently served by an Saint John station.
7769 MR. KASSOF: MBS indicated that it felt that my research was flawed. Their claim has two essential issues: the sample size and the absence of a question on whether the respondents would listen to the station or not.
7770 With regard to the first, Mr. Chair, I have been doing radio research in Canada for over 20 years. I used a sample size that would give reliable findings in a market of Saint John's size. MBS might be interested to know that political polls representing Canadian voters across this large and diverse country are often based on samples of around 1,000. So a sample of 200 to reflect Saint John is quite healthy.
7771 The worst-case margin of error for total sample percentages in this study is plus/minus 6 per cent at the 95 per cent confidence level. That means we can be 95 per cent certain that the actual market percentage is no more than plus or minus 6 per cent from the percentage we reported. Importantly, most of the percentages we reported have smaller margins of error.
7772 MBS also states that the other major flaw is that we didn't ask if people would listen to our proposed station. That is just wrong. In fact, in determining the likelihood of listening to each format, we did ask our respondents that very question.
7773 Here is what we asked them:
"Now I'm going to describe some different kinds of radio stations. I want to know how much you listen to each kind of station now, or how much you would listen if that kind of station became available to you."
7774 As you can see, we did ask the question that MBS said we didn't.
7775 MR. MAHEU: Finally, Mr. Chair, Acadia Broadcasting stated in its intervention that there was no need for additional editorial diversity in the Saint John market. In fact, there are only three sources of local news in the market: Maritime Broadcasting with three stations; Acadia Broadcasting with its two stations and its affiliated daily and weekly newspapers; and the CBC.
7776 The listeners in Saint John deserve as much news choice as the market can give them.
7777 The addition of Newcap in the market will add a new competitive commercial dynamism -- not one based on rate-cutting but on providing value to its clients. It will add a new editorial voice to the market, and one with sufficient resources and plans to provide a quality local news service with five journalists.
7778 We also propose an innovative new link with the rest of Atlantic Canada through "Capital Report", an initiative that we are uniquely qualified to deliver.
7779 Newcap will provide $175,000 for Saint John musicians and a new platform for Atlantic artists through our region-wide program "Atlantic Exposure"; and we will provide an additional $175,000 to support Aboriginal broadcasting, through AVRN, across Canada.
7780 Thank you for your attention. We would be pleased to respond to any questions that you may have.
7781 THE CHAIRPERSON: I don't believe we have any questions. Thank you very much.
7782 Mr. Secretary.
7783 MR. LeBEL: Thank you, Mr. Chairman.
7784 I will now ask Rogers Broadcasting Limited to respond to the interventions.
REPLY / RÉPLIQUE
7785 MR. MILES: Mr. Chair, Members of the Commission, we have no response to the interventions.
7786 A point of clarification. We were discussing, Mr. Chair, you and I, the out-of-market share tuning that was going on Fredericton to Saint John. We should have had that information at our fingertips.
7787 We went back and it is instructive, I think, to see that the most sharing that has been done is a 3.9 share with a format this already available in the market, and then it drops down to 3.1, 3.1 and CBC shares about a 3.0.
7788 So I think that our estimation of that three-to-five was probably well within the range and probably a little closer to a three than a five.
7789 We have no other response. If there are no questions, except for the one...
7790 THE CHAIRPERSON: Go ahead. Answer it.
7791 MR. MILES: I have been sitting here trying to think of a situation which would be similar. We have lots of smaller markets closer to bigger markets, but I think it's the fact that the signal crosses over the water that was perhaps at the root of the question.
7792 Certainly that could be applicable to Toronto to Hamilton, St. Catharines and things like that. But I think the markets are not the same kind of size.
7793 So the closest we would have probably would be the Sunshine Coast and Nanaimo, where the signals are quite close to one another. In fact, there is a fair amount of cross-interference. We have experienced no problems with Nanaimo into the Sunshine Coast, nor vice versa.
7794 I think the other way of taking a look at it too would be to say: What information would we want to supply Digby people on our Saint John's station?
7795 I guess if it was a story that was of major import to the area, it would probably be carried. But the Digby station would have a far better take on it than certainly the Saint John's station, because remember our wheel we talked about was currently very, very local, local, local, certainly between 6:00 and 9:00 and 12:00 and 2:00, and then with the local inputs in it.
7796 I couldn't come up with any kind of comparable situation.
7797 COMMISSIONER LANGFORD: I guess I am kind of interested in what -- it's a strange word to use -- what duty -- and I use this word very loosely -- a kind of offshore station like that would feel. In a sense, you are in a metropolitan area in Saint John. It's a bustling city there now, but you are getting into some very, very small towns and villages on the other side.
7798 I just wonder whether knowing you are going in there, a broadcaster feels they have some responsibility to pitch a little bit of programming towards the concerns of those people.
7799 MR. MILES: I don't know whether it is pitching programming toward the concerns of the people, inasmuch as there is already a station in the market. It may well be reflecting some of the issues that would be of concern to the Saint John people, because they would after all be neighbours. Certainly the ferry sailing times, I think would be important. Somebody wanting to come across would like to know what the weather is.
7800 I think it is a pretty fine line and pretty micro, frankly.
7801 COMMISSIONER LANGFORD: If you are doing some kind of exposé on -- and God help us, I hope there isn't one to be done -- pollution problems, environmental problems in the Bay of Fundy, would you put someone on that ferry and send them over to the other side? Or is that just something that is not done in this type of a market breakdown?
7802 MR. MILES: I think we actually would find, to get the comments and responses from those people, to reflect that kind of a thing.
7803 Certainly a story like that, it is instructive. Our Abbotsford radio station, which won an award for the coverage of the Sumac thing -- and they just got a ruling by the Energy Board that kept it out -- that was a big issue that sort of went all up and down the valley. So I think it transcends a specific market when it gets to be stories of that nature. That may be more applicable for what you have outlined.
7804 COMMISSIONER LANGFORD: Thank you very much.
7805 Those are my questions, Mr. Chair.
7806 THE CHAIRPERSON: Thank you.
7807 Thank you very much, Mr. Miles.
7808 MR. MILES: I wish again to congratulate the other applicant on the quality of their application, and thank you, Mr. Chair and Commissioners, for the extensive work that you have done and, through you, to the staff for all the courtesies they extended throughout the application.
7809 Thank you very much.
7810 THE CHAIRPERSON: I think this is your last experience.
7811 MR. MILES: Yes. We are not applying for Fredericton.
7812 THE CHAIRPERSON: Let the record show there was applause in the audience for that statement.
7813 I believe that then completes our four-phase process for dealing with the applications for Saint John, Mr. Secretary?
7814 MR. LeBEL: It does, Mr. Chairman.
7815 THE CHAIRPERSON: We will now turn to Fredericton, and I am trusting that the folks from Newcap are ready to go. I am looking at the back of the room to get a signal.
7816 MR. LeBEL: May I suggest five minutes?
7817 THE CHAIRPERSON: All right. We will take a short break and allow the Newcap folks to gather themselves.
7818 We will take a five to seven-minute break and reconvene hearing the Newcap application for Fredericton.
--- Upon recessing at 1123 / Suspension à 1123
--- Upon resuming at 1130 / Reprise à 1130
7819 THE CHAIRPERSON: Order, please, ladies and gentlemen. We will return to our proceeding now -- as soon as Commissioner Williams arrives.
7820 He is just out testing those signals across the Bay of Fundy. He will be right in.
--- Laughter / Rires
7821 THE CHAIRPERSON: Now we will return to our proceedings.
7822 Mr. Secretary.
7823 MR. LeBEL: Thank you, Mr. Chairman.
7824 We will now hear the application by Newcap Incorporated for a licence to operate an English-language FM commercial radio programming undertaking in Fredericton.
7825 The new station would operate on frequency 92.3 MHz, on Channel 222C1, with an effective radiated power of 76,000 watts.
7826 Mr. Rob Steele will introduce his colleagues.
7827 You have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
7828 MR. R. STEELE: Thank you. Once again, good morning, Mr. Chairman, Members of the Commission and Commission staff.
7829 Before we begin our presentation, I would like to refresh your memory from earlier this morning by re-introducing our team.
7830 In the front row, from your left to your right, are Anna Zanetti, Music Director of our Halifax rock station Q104; and Mark Maheu, Executive Vice-President and COO of Newcap.
7831 I am Rob Steele, President of Newcap.
7832 Next to me is Hilary Montbourquette, the General Manager of our Moncton rock and country FM stations; and Audrey Whelan, Assistant News Director of our St. John's stations.
7833 In the second row, again from your left to your right, are Jackie Boutilier, responsible for Human Resources; Dave Murray, Vice-President of Operations for Newcap; and Steve Jones, VP Programming of Newcap. Beside Steve is Gerry Phalen, who runs our news operation in Newfoundland and Labrador. And once again we have Mark Kassof, who conducted our research for this application.
7834 At the third table, to your left, is Pete Steele and next to him is John Steele.
7835 MR. MAHEU: Good morning. It is a pleasure to appear before you again today with an application this time for a new FM radio station in Fredericton.
7836 Of all the markets that are being considered at this hearing, Fredericton is the one that is most in need of diversity. All three stations in New Brunswick's capital are operated by the same licensee. They do an excellent job in the market, but we believe that the people of Fredericton deserve greater diversity in both musical formats and in editorial voice.
7837 For Newcap, a station in Fredericton would give us a presence in each capital city in the Atlantic Provinces. This enhanced presence in our region will allow us to expand our news operations in a significant fashion. Adding a rock station in Fredericton to our group will give a new platform for Atlantic Canada's heritage rock artists along with the best of the rest of Canada and the world.
7838 MR. MONTBOURQUETTE: Just as Saint John would not be unfamiliar to us, nor would Fredericton. We have operated a successful classic rock station in Moncton for many years now, CJMO-FM or C103. We already know how to meet the needs of New Brunswick classic rock fans. The possibilities for exchanges between the two markets will provide even better programming to both, and better support to touring Atlantic Canadian rock artists.
7839 Fredericton, New Brunswick's capital, is the hub of the Greater Fredericton Region with a total population of 124,000. Since 2001 the population of the city proper has grown by 5.6 per cent and is projected to grow by an additional 5.6 per cent by 2009.
7840 While Fredericton has been thought of as a civil service town and certainly government is a large employer, it has quite a diverse economy. In fact, it has more businesses per capita (one for every 14 people) than any other city in Canada. Government employment provides a stable base from which businesses have sprung in forestry, finance, manufacturing, retail and services. This results in per capita income that is higher than the national average.
7841 Most interesting for radio is the fact that Fredericton's per capita retail sales are 8 per cent higher than the national average, and they are expected to grow by 7 per cent by 2006 and 20 per cent by 2009, according to the Financial Post Markets - Canadian Demographics.
7842 Clearly the city will continue to grow and this bodes well for radio.
7843 Yet Fredericton is still only being served by three commercial radio stations, all licensed to Astral. Contrast this with Belleville, Ontario's five stations to serve a slightly smaller market, Kingston's five stations to serve a market that is minimally larger or four in Kamloops, B.C., whose city population is almost identical. Here in New Brunswick, Greater Moncton with a similar population supports five commercial FM stations.
7844 Fredericton is served by an AM country station (with an FM repeater that fills in coverage gaps), a contemporary rock station and an adult contemporary station. These relatively few local signals result in significant tuning to out-of-market stations -- 19 per cent of all hours tuned 12-plus in fall of 2003 went to out-of-market stations. And the average hours tuned in Fredericton are significantly lower than the Canadian averages. In fact, the average Canadian listens to radio about 15 per cent more than residents in Fredericton. In men 25-to-49, which is the core of our proposed audience, the average Canadian listens some 23 per cent more than men in that age group in Fredericton.
7845 Our approach to this market will not surprise you. We consistently rely on research into what the market void is. Once again we asked Mark Kassof to conduct the research, and I will now call upon him to summarize the results.
7846 MR. KASSOF: The approach was essentially the same as the one we discussed with you this morning for Newcap's Saint John application. Here we surveyed 251 persons 18-to-54. Our questionnaire included 22 questions. First, we studied listening behaviour. Then we probed listeners' interests in nine different music formats and whether they could identify a present station as delivering that format.
7847 One of the important calculations we did with these data is what I call the "per cent of format void". This is the percentage of the entire audience that both has a significant interest in a format and cannot presently associate any station with the format. The biggest format void percentage belongs to oldies at 18 per cent, followed by classic rock at 14 per cent and classic hits at 11 per cent.
7848 I recommended to Newcap that they choose classic rock since the oldies format is impossible to do on FM because of the hits/non-hit rule.
7849 I would like to contrast this with the country format. While there is fairly strong interest in country, most can name a station in the market that plays the music. Fifty-one per cent of those with positive interest in country identified CKHJ-AM and FM as providing the format and 22 per cent identified CHSJ-FM, a Saint John station. So the percentage of format void is quite a bit lower at 4 per cent.
7850 The audience for this station will skew more to men -- 66 per cent to 34 per cent. Over two-thirds -- specifically 68 per cent -- of its 18-to-54s will be 25-to-44. Conservatively, we project that the station will reach 43 per cent of 18-to-54 adults in the market. And we project a 17 per cent share of hours tuned 18-to-54 or 14 per cent of all hours tuned 12-plus.
7851 The classic rock station will draw its audience from a variety of sources -- eight share points will come from market leader CFXY's 27 share, with one share point each coming from the other two commercial stations. The remainder will come from the CBC and out-of-market stations.
7852 MS ZANETTI: This clip will give you a sample of what the station we plan to call 92-3 K-Rock will sound like.
--- Audio clip / Clip audio
7853 MS ZANETTI: Fredericton's 92.3 K-Rock will play the best rock from the late 1960s to the present, with a particular emphasis on the music of the 1970s and 1980s. Canadian artists like Red Rider, The Tragically Hip, Rush and Triumph will be heard along with the giants of international rock -- The Stones, Led Zeppelin and Bruce Springsteen.
7854 And while we will focus on their past recordings, we won't ignore recent projects from these rock icons. Many of these artists are still actively recording, including The Tragically Hip, Tom Cochrane, Tom Petty, The Stones and many others.
7855 We will also play some compatible modern rock music whose sound is similar. In particular, we will focus on new Canadian music by artists like Alberta's Nickelback, Vancouver-based Default, The Trews from Antigonish and Montrealer Sam Roberts.
7856 The classic rock format has been a staple of Canadian radio for some time now. We have a wealth of experience in the format, with our market-leading classic rock stations in Edmonton, Moncton and St. John's. These stations are all extremely successful in their communities. Other stations like CHOM-FM in Montreal, CHEZ-FM in Ottawa and Q107 in Toronto have been serving classic rock fans with great success. The core of the audience is generally men between 35 and 54, although the format also holds appeal across other demographic groups.
7857 When we began working on this application, we realized that if successful we would have rock-based stations in many of the cities in our region. At Q104 in Halifax and C103 in Moncton, we have had amazing success with our Atlantic music shows "Route 104" and "Action Atlantic", respectively.
7858 Meanwhile, in St. John's the long-running "Home Brew" program has nurtured new careers and preserved the heritage of Newfoundland and Labrador music. The dedication that Atlantic Canadians have to home-grown talent is evident in the popularity of these programs.
7859 It is also witnessed by the success of the East Coast Music Awards, of which Newcap is a major supporter and sponsor. In fact, local and regional music is so well supported that Newcap even operates a radio station in St. John's dedicated to east coast music -- Radio Newfoundland. Ninety per cent of its music is Canadian content and 90 per cent of that is Newfoundland and Labrador music.
7860 With that history of commitment in mind, we set about creating a new initiative to support Atlantic talent and share the talent of each community with the rest of the region. Our proposed program is called "Atlantic Exposure", and it will run weekly on stations in each of the major centres we serve -- Halifax, Moncton, St. John's and, if we are successful, in Fredericton and Saint John.
7861 "Atlantic Exposure" will showcase up and coming Atlantic Canadians -- singers, songwriters, musicians and bands, as well as established stars like Great Big Sea, Crush and The Trews. The program will feature contributions from our staff in each city, profiling new music being made in their community and sharing it with listeners across the four Atlantic provinces. When a new CD is released or a band is planning a tour, our program will help sell CDs, fill concert venues and ensure a healthy future for Atlantic Canada's music scene.
7862 And now Gerry Phelan will tell you some more about our plans to link Atlantic Canada with news.
7863 MR. PHELAN: Good morning again, Mr. Chair and Commissioners.
7864 Our Fredericton station will play a key role in Newcap's growing news operations in this region. The five reporters will supply and deliver local news to the Greater Fredericton Region but will also be a cornerstone of the Newcap "Capital Report" we unveiled earlier in our Saint John application.
7865 The "Capital Report" will be an exciting and unique news service for this region. It will be a three-minute newscast, twice a day, featuring news from all four capital cities. We will use the reporters and staff at the Newcap operations in St. John's, Halifax, Charlottetown and Fredericton, to give an overview of the top stories from the Atlantic capitals. If the program was to have aired at 7:30 this morning, this is what you would have heard.
--- Audio clip / Clip audio
7866 MR. PHELAN: In our Saint John application we outlined plans for a dedicated legislative reporter in Fredericton, but an entire newsroom will provide even greater depth to cover events in the capital to Fredericton itself and Moncton and, if we are successful, Saint John. It will also provide more resources to "Capital Report".
7867 The "Capital Report" will mirror Atlantic Canada, reflecting the angles from all four capital cities. It will be produced from our award-winning VOCM newsroom in St. John's. Our newsroom computer technology allows for a sharing of audio and text information, to provide a concise but comprehensive Atlantic Canada newscast.
7868 "Capital Report" will provide a regional context to national stories, but perhaps more importantly an exchange of the day's events from one end of the region to the other.
7869 This Atlantic News Network has tremendous potential in times of emergency or disaster, such as the recent blizzard or Hurricane Juan. It should also make for dynamic discussion and reaction in referendums or elections.
7870 Newcap will be the only private broadcaster, radio or television, with the ability and intention to link all four Atlantic capitals, providing a bold, new editorial voice.
7871 MS WHELAN: The primary focus of 92-3 K-Rock's newsroom will of course be local news. We will provide 51 news packages each week and a weekend news magazine. In addition, we will provide five public affairs reports per day, or 35 per week, as well as the same number of community billboards of local events throughout the week.
7872 Our reflection of the city will go beyond the news as well. Fredericton has an active cultural, entertainment and family life. The Harvest Jazz and Blues Fest will be of great interest to our audience who love the blues roots of classic rock, as will the rock and blues concerts included in the Summer Concert series.
7873 We would cover these events extensively with promotion of the artists, particularly our own Canadian and Atlantic Canadian artists, as well as interviews and airplay of the appearing artists' records. And of course we will cover non-music events as well, including The Fredericton Wine and Food Festival, Acadian Day Celebrations and the Regatta.
7874 Newcap has always taken a special interest in support of charities in the communities and, in particular, in children's charities. We will keep up this focus in Fredericton, establishing a Children's Trust the same way we have in many other communities.
7875 MR. R. STEELE: Mr. Chairman, we believe that we have met and exceeded the Commission's criteria for new radio stations. Please consider the following:
7876 Fredericton is an underserved market by an measurement. With its growing economy it can easily absorb our new station with minimal impact on the existing three-station Astral combination.
7877 Newcap has presented a comprehensive business plan, based on projections derived from our research, and we would note that another applicant's research also supports the format that we have proposed -- one not currently in the market.
7878 Our $700,000 Canadian Talent Development commitment is the largest of any applicant for this market.
7879 Newcap's $350,000 to FACTOR will be a significant support to Fredericton music.
7880 Our new Atlantic-wide rock program will give wider exposure to Atlantic rock music in all of its major markets.
7881 Newcap's news and information proposals will bring a new editorial voice to Fredericton and a new choice to the city.
7882 We will bring a new competitive thrust to the market -- one with no private radio competition. We have launched stand-alone stations in a number of markets in Canada, most recently in Ottawa and Calgary. We believe that we can compete successfully against Astral's three stations and we look forward to the challenge.
7883 Our news proposals will ensure a good reflection of the city to itself and through our other stations we will ensure the emergence of a new regional news source, building on our experience in doing this in Newfoundland and Labrador and more recently in Alberta.
7884 A Newcap FM in Fredericton will be the remaining link between the four Atlantic Canadian capitals. That, of course, brings benefits to Newcap, but more importantly brings benefits to the citizens of Fredericton and the other communities we serve. The most tangible evidence of this commitment is our new Atlantic News Network.
7885 We would be pleased to answer any questions you may have.
7886 THE CHAIRPERSON: Thank you, Mr. Steele and the rest of your team.
7887 I will turn the questioning over to Commissioner Cram, who will just let you answer all the same questions she posed to you earlier this morning.
7888 COMMISSIONER CRAM: The second verse, almost the same as the first.
7889 I will start, of course, by prefacing it that when I use the term "Mr. Steele", I am referring to Mr. Rob Steele for the purposes of the next 45 minutes or so.
7890 Welcome again.
7891 I want to talk about this station, which is going to be classic rock. It seems to me that the Acadia proposed format is somewhat similar. How different is it and can you give me examples?
7892 MR. R. STEELE: Certainly. Steve, do you want to explain the format?
7893 MR. JONES: I would be happy to explain the format in context to what is currently in the market, but I would be not in a position to explain it vis-à-vis the other applicant at this time.
7894 COMMISSIONER CRAM: Have you looked at their application? Do you know what they are proposing?
7895 MR. JONES: They are proposing a classic rock format, yes.
7896 COMMISSIONER CRAM: So how would it be different from what you are proposing?
7897 MR. JONES: Again, I am not entirely versed on the intricacies of what their station will sound like when it gets on the air and what the percentages of each era might be.
7898 I can tell you that ours is heavily based in the 1970s and the 1980s. The harder classic rock that emerged in the late 1960s, dominated the 1970s and the 1980s and will include some newer music from 1990 to today.
7899 COMMISSIONER CRAM: All right. You said you worked on the incumbents. Can you tell me the duplication?
7900 MR. JONES: The duplication with the existing stations in the market is quite minimal. CFXY-FM currently plays about 70 per cent of their music from about 1990 to the present. That is an era that in our proposal we would draw about 5 per cent of our music from that same 14-year period.
7901 So 95 per cent of our music is pre-1990. That is probably the most significant difference musically.
7902 I would call upon Anna Zanetti from our Halifax rock station Q104 to possibly tell you about some of the artists and the sounds that might be different.
7903 MS ZANETTI: On the classic rock station we would be playing Led Zeppelin, Ozzie Osborne, those types of artists to present that is music compatible to the format, like The Tragically Hip, The Trews from Antigonish, that kind of thing.
7904 COMMISSIONER CRAM: Mr. Jones, the only crossover you think or the only duplication would be on CFXY?
7905 MR. JONES: There may be some minimal duplication, possibly less than 5 per cent, on the Capital FM, the AC station. And there would be no overlap whatsoever with the country station in the market.
7906 COMMISSIONER CRAM: Yes, of course.
7907 How then would you take such a large share from CFXY in listenership?
7908 MR. JONES: Our research, which Mark Kassof can elaborate on, indicated that there was a large group of classic rock fans who were not being serviced by CFXY as it stands right now.
7909 Although they play some classic rock, and 30 per cent of their music predates 1990, the vast majority of their music is newer and based on aggressive new artists like Stained and Three Doors Down, current rock-based bands.
7910 Our music is dramatically different than that.
7911 One indication is they do play some classic rock, and they may play a song like "You Shook Me All Night Long" by AC/DC. So that may appear on both stations. However, it would be on our station because we focus exclusively in that kind of music, whereas they might pay homage to it.
7912 Our analysis shows that the classic rock fans are listening to that station by default.
7913 Maybe Mark can elaborate.
7914 MR. KASSOF: One thing that is interesting about the classic rock format is that it is not just what you play; it is what you don't play that makes it different from a more broad-based rock station.
7915 Statistically here we found the folks who were "positively interested" in classic rock, about half of them, 54 per cent, identified CFXY as the station for that music.
7916 That might sound like a fairly high number, but remember that that is the only station that is even coming close. Listeners tend to vote for the station that comes close in their market.
7917 The key statistic here is that 59 per cent of the folks who are interested in hot AC, music like Matchbox 20, Michelle Branch, Three Doors Down, 59 per cent of those folks who are interested in that music thought that CFXY delivered that music. And among the folks who were "positively interested" in active rock, Stained, Nickelback, Audioslaves, 73 per cent thought that CFXY was the station for that music.
7918 There is no question that CFXY is playing some classic rock, but it is also associated even more strongly with these other more current music genres.
7919 Also what is interesting is that among the listeners who are "positively interested" in classic rock, a quarter of them are so negative about those new music genres that they said they would never listen to a station that plays active rock, never listen to a station that plays hot AC.
7920 So the fact that you have a classic rock station that is predominantly classic rock and isn't playing the newer genres, as CFXY does, is in fact a benefit for that.
7921 COMMISSIONER CRAM: Thank you.
7922 Why is this the best format of choice?
7923 MR. KASSOF: I will take that too.
7924 Basically because it generates the highest positive interest, and it generates the greatest unserved need in the market as we measure: 43 per cent rating it a 4.5 on a 5-point scale, where 5 means "I listen to this radio station all the time". And overall, 52 per cent saying "I don't know a station like that"; 32 per cent of the people who rated it a 4.5 saying "I don't know a station like that".
7925 That works out to a format void percentage of 14 per cent.
7926 So of the formats that are doable on FM, given the regulations, classic rock is the one.
7927 COMMISSIONER CRAM: Thank you.
7928 I forget who said this, talking about synergy in programming.
7929 It was Mr. Montbourquette.
7930 You were talking on page 2 about:
"The possibilities for exchanges between the two markets will provide even better programming to both, and better support to touring Atlantic Canadian rock artists."
7931 Are you talking then about joint programming in some cases? What do you mean by that?
7932 MR. MONTBOURQUETTE: Much as we discussed with the Saint John application, this would be of benefit to rising Atlantic Canadian rock artists, those artists that are starting to get established. Or even the ones that are already established, we would be able to share the synergies of communication between, in this case, all three markets if we were fortunate enough to be licensed for Fredericton, Saint John and of course operating in Moncton.
7933 With a rock-based format here as well, we would be able to communicate new releases, or if an artist was on tour we would be able to promote how it went in Halifax and how it went in Moncton, if they were progressing through the region. It is that type of synergy.
7934 COMMISSIONER CRAM: Back to news.
7935 The more I think about it, the more I ask myself about it. "Capital Report", because it really is, I guess, provincial news -- I would call it provincial news from the capital -- does that then mean that your normal news would not have that?
7936 Would it only be local and national? How would you handle the news that is already in the "Capital Report"?
7937 MS WHELAN: This "Capital Report" is in addition to our regular newscasts aired each day. There would be some stories, yes. Because they are the top stories that we are taking and putting in the "Capital Report", yes, they would appear on the local newscasts. But there are also many, many other stories that are going to be pertinent to the Fredericton market.
7938 COMMISSIONER CRAM: So we will have news then on this station. When and how much?
7939 MS WHALEN: The same times that we outlined in our Saint John application this morning, which are the 6:00, 6:30, 7:00, 7:30, 8:00, 8:30, noon, 4:00 p.m. and 5:00 p.m., Monday to Friday. On weekends newscasts would air at 7:00, 8:00 and noon.
7940 COMMISSIONER CRAM: The older demographic you are dealing with, I think, than before. No, it is the same demographic.
7941 Any challenges in dealing with the spoken word with this demographic -- of which I am far too young to be a part.
7942 MR. JONES: I can answer that question. The spoken word content on any radio station has to be targeted to that specific radio station's listeners.
7943 On this station, although in terms of age it is a similar demographic, this station definitely skews more to the male side. So our spoken word would probably appeal more to that male listener, and that may just be a matter of tailoring what the announcers are talking about to appeal to a different target.
7944 COMMISSIONER CRAM: I am always fascinated by the skewing to female or male. In the news would you talk more about violence if it were skewed to male, and if it were skewed to females would you talk less about war and violence?
7945 I have no idea.
7946 MR. PHALEN: Commissioner, in my experience in broadcasting in this country and elsewhere, news is news and people are interested. I think when we are talking about tailoring programming, I would resist any attempt at tailoring what goes into our newscasts.
7947 The newscast we just heard, "Capital Report", for example, is put together by our news/talk station in St. John's but will air on many of our FM operations. We are talking about 21 radio stations primarily music driven.
7948 The cast you heard is the same cast that would air at VOCM in St. John's at 7:30 in the morning as would air here.
7949 We adhere to a strict code of ethics, the RTNDA Code of Ethics, that insists that we make no attempt to change our news in any way, shape or form. I am of the belief that people have an interest in all kinds of news.
7950 Where the difference might occur is, for example, in the kicker on our music-driven stations, the last story. It is somewhat lighter often times than we might have on our news/talk station, and it may be specifically tailored to the audience that that would have, male or female. A health story, for example, might have a primarily women's appeal.
7951 Personally, by the way, I don't believe that. I believe that in today's society people are such that all stories are of interest to all.
7952 MR. JONES: Just to clarify, we are speaking to non-news spoken word content, the announcer talking stuff.
7953 COMMISSIONER CRAM: Jock talk, yes.
7954 Then you were talking about this one-hour program with Atlantic artists. It is "Atlantic Exposure" at page 6.
7955 Do I understand from that second paragraph on page 6 that you would launch "Atlantic Exposure" whether or not you got either one of Fredericton and Saint John?
7956 MR. R. STEELE: Yes, that is right.
7957 Anna, do you want to elaborate on that?
7958 MS ZANETTI: Yes. If we didn't get the licence in Saint John or Fredericton, we would not launch this program.
7959 COMMISSIONER CRAM: Oh, you would not.
7960 MS ZANETTI: We would not, no.
7961 COMMISSIONER CRAM: All right.
7962 MS ZANETTI: But if we got one in Saint John, or just one licence, we would.
7963 COMMISSIONER CRAM: Thank you.
7964 Would there be any other shared programming? I am assuming this would be shared, that it would be produced -- wasn't it going to be produced in one place and then it would be shared?
7965 MR. JONES: That one definitely would be shared amongst our radio stations in each market.
7966 Outside of that program, we would not anticipate any sharing of actual programming content.
7967 COMMISSIONER CRAM: Except "Capital Report" too.
7968 MR. JONES: Right.
7969 COMMISSIONER CRAM: Would the one-hour public affairs show be the same as in Saint John, produced locally?
7970 MS WHALEN: Yes, it would be produced locally with local issues that are important to the Fredericton market.
7971 COMMISSIONER CRAM: How would it affect any synergies you are thinking about if Saint John were given a licence and there was none in Fredericton?
7972 MR. MONTBOURQUETTE: The synergies that we mentioned before would still apply. There would be very little on the operational savings side and more on the better quality of programming side.
7973 COMMISSIONER CRAM: The news, the same as you said?
7974 MR. MONTBOURQUETTE: Yes, that is right, Commissioner.
7975 COMMISSIONER CRAM: I am reading your application, and I must say the word sort of jumped out at me, when you were talking in your supplementary brief about the "majority" of our programming will be live-to-air 6:00 a.m. to midnight.
7976 As soon as you say that, you know what I am going to ask.
7977 When will it not be live-to-air during this period of time?
7978 MR. R. STEELE: Steve, do you want to answer that?
7979 MR. JONES: The programming plans for Saint John and Fredericton in terms of live content versus voice track content are the same. We would estimate that we would be live 6:00 a.m. to midnight weekdays, with a slightly less live content on weekends, probably 6:00 a.m. to 6:00 p.m. on Saturday and I believe 9:00 a.m. to 6:00 p.m. on Sunday.
7980 The voice tracking that would occur outside of those times would be done locally and in almost all cases done on the day that it is intended to be used, in order to stay timely and relevant.
7981 COMMISSIONER CRAM: So the use of the word "majority" didn't really signify anything.
7982 MR. JONES: It should be "vast majority".
7983 COMMISSIONER CRAM: Yes; thank you.
7984 You don't think that in Fredericton, because it is smaller, that you would have to do any more automated programming than in say Saint John?
7985 MR. JONES: No. Our business plan is based on providing this level of programming, and we don't see anything in the market that would indicate that that is not feasible.
7986 COMMISSIONER CRAM: Now we go on to CTD.
7987 You know that in the past monies being given to AVRN have not been deemed by the Commission as eligible CTD but have been seen by the Commission as supporting the purposes of the Broadcasting Act.
7988 In your letter of 15 December you said that these monies could be redirected, the monies otherwise to AVRN could be redirected.
7989 What do you want to do: give them to AVRN or redirect them?
7990 MR. R. STEELE: Well, as we said before, we would like to direct it to AVRN, but our commitment is $700,000 in total. If it was the Commission's desire, we would allocate it to FACTOR.
7991 COMMISSIONER CRAM: But your choice really is half and half, FACTOR and AVRN.
7992 MR. R. STEELE: Yes. Half to AVRN and then the other half to FACTOR.
7993 COMMISSIONER CRAM: The FACTOR monies are to go to -- is it New Brunswick or Fredericton artists?
7994 MR. MAHEU: Specifically to Fredericton artists. We have a commitment on that.
7995 COMMISSIONER CRAM: This is one that interests me.
7996 In your audience projections you showed that you would max out by year two, and there is no growth in your audience after that in the whole seven years.
7997 Can you tell me why that was done?
7998 MR. R. STEELE: Mark can answer that for you.
7999 MR. KASSOF: Basically the projection -- there is no time frame on the projection that I provided. I think I would generally defer to the station level to say in their experience how long does it take to achieve these potentials?
8000 I would pass that to Steve.
8001 COMMISSIONER CRAM: You said what the max would be, and then Mr. Jones then decided it would happen in two years. Is that it?
8002 MR. JONES: As part of our business plan we looked at our experience in launching new radio stations. In a market like this that appears to be so underserved amongst those listeners, we anticipate that our radio station would make an immediate impact and then level out. Whereas launching in a more crowded market, you may see a situation where you start out with a minimal audience and gradually build.
8003 COMMISSIONER CRAM: What evidence do you have that new advertisers are looking to buy radio?
8004 MR. R. STEELE: Hilary, maybe you can speak to the positive attributes of where we develop the market.
8005 MR. MONTBOURQUETTE: First of all, we think the radio market is under-performing. We think that our listeners, males 25-to-54 in particular, are underserved. Of course, we talked earlier and we will bring the same unique selling approach to achieve our revenue objectives.
8006 We believe that the BBM fall numbers showed that out-of-market tuning is high. It is 19 per cent. And we don't think it is because of what Astral is doing in the marketplace, because we think they are doing a very good job there. It is just may simply be a lack of choice in the marketplace.
8007 The other factor could be the market itself. The Financial Post survey of markets shows that retail sales in Fredericton are about $950 million, which is about 8 per cent higher than the national average.
8008 We feel that the total media advertising is about $47 million. With radio's share being 13 per cent of that, that would translate to 5.7 to $6 million in the marketplace.
8009 The CRTC financial data for Saint John and Fredericton combined showed $9.6 million. The intervenors in Saint John said the market is about $5.5 million, which would indicate that Fredericton is about $4 million. So there is about $1.5 million sitting there that is not being utilized.
8010 Because the radio market is under-performing, because we bring a very focused demo we think that we would be able to take our unique selling approach and be able to maximize the revenue opportunity.
8011 COMMISSIONER CRAM: Do you think you would have any impact on the actual rate of advertising, the amount that people pay for advertising?
8012 MR. MONTBOURQUETTE: We believe the market leader sets the rate, and we would fall in line, depending on our market share and based on research. We would establish our rate and we would hold our rate. Then we would work hard to serve the community and superserve the advertisers and build our rate and grow our rate.
8013 So we think we would be able to influence it in a positive way, because we bring stability to the rate that we ask. We work hard at growing business partners that we work with in order to grow market share. So I think we could affect it in a positive way.
8014 COMMISSIONER CRAM: In your deficiency letter dated December 15th you stated you had no intention of entering into a business arrangement, be it sales or otherwise, in Fredericton.
8015 Would you agree to a condition of licence wherein permission would be required of the Commission prior to your going into a sales or a sales management agreement?
8016 MR. R. STEELE: Yes, we would.
8017 COMMISSIONER CRAM: What are the compelling reasons why you should be given the licence in Fredericton and why are you the best use of the frequency?
8018 MR. R. STEELE: Again, we have a very aggressive Canadian Talent Development initiative here on this particular application. I think the information of the news programs that were put in, our news concepts, the "Capital Report", is a very compelling reason and I think merits strong consideration.
8019 We will also be a new entrant into the marketplace, a new competitive entrant, adding diversity, a new editorial voice.
8020 Mark, anything you want to add to that?
8021 MR. MAHEU: Just commenting on why Newcap Radio would be the best choice to be granted a licence in Fredericton. Going back to what we spoke about on an earlier application, our deep roots and long history in this region also help us understand the needs, the wants and some of the unique difficulties that businesses and listeners deal with every day in this area.
8022 We are prepared to roll up our sleeves and provide a new voice in the marketplace. We have the resources to sustain it.
8023 And even though our business plan is rather conservative, should things not go according to schedule we have the resources, the wherewithal and the resolve to do whatever it takes for as long as it takes to be successful in that market. We have the financial resources to do that.
8024 We have demonstrated responsibility in all areas in all of our markets, especially in Atlantic Canada, and that would serve as a very good example of how we will operate in this particular marketplace, which is very much underserved.
8025 Our classic rock format proposal is a very good one. As was noted by Mr. Kassof earlier, the actual format that is most wanted in the marketplace is oldies, but due to the limitations and difficulties with the hit/non-hit classic rock was a very close second. Our experience of doing classic rock in other marketplaces and the expertise we can bring to it I believe makes us the best choice for that licence in Fredericton.
8026 COMMISSIONER CRAM: Thank you, Messrs. Steele, Steele and Steele and panel.
8027 Thank you, Mr. Chair.
8028 THE CHAIRPERSON: Thank you, Commissioner Cram.
8029 I just have two related questions.
8030 Mr. Steele, given the discussion we had earlier this morning about PBIT and the ability of the market to absorb one or more new licensees, would it be your position that the Fredericton market could probably sustain two new licensees?
8031 MR. R. STEELE: Yes. In analyzing the market, we feel that that market can absorb two commercial entrants.
8032 Every market is unique and has its own unique chemistry, and of course there are other factors besides PBIT that you have to evaluate. But, yes.
8033 THE CHAIRPERSON: Was your business plan based on just you entering the market or you and --
8034 MR. R. STEELE: It was actually based on two. We did ours on two entering the market.
8035 THE CHAIRPERSON: All right.
8036 Commissioner Langford.
8037 COMMISSIONER LANGFORD: I didn't have a question until David opened his mouth and now I have a question -- which is probably unwise.
8038 You just said, and you said earlier, in response to the Chairman's question that you think the market can absorb two other players, although there were some uncertainties.
8039 If we were to license new stations in Moncton that could be heard in Fredericton, thereby taking part of the audience -- we heard Mr. Miles this morning indicate that it might take as much as 3, 4, even 5 per cent of the share -- would that change your answer, even though they were not looking for ads, they were not soliciting ads in the market?
8040 MR. R. STEELE: That would not change my answer. I don't know if in fact you would be able in Fredericton to hear a Moncton station. I don't know.
8041 COMMISSIONER LANGFORD: Maybe it was Saint John. Which one did he say?
8042 THE CHAIRPERSON: Saint John.
8043 COMMISSIONER LANGFORD: It was from Saint John; excuse me. There are so many applications before us.
8044 MR. R. STEELE: It would not impact our business proposal to you.
8045 COMMISSIONER LANGFORD: Thank you very much.
8046 THE CHAIRPERSON: I understand counsel has no questions. So those are all of our questions. Thank you very much.
8047 I think at this point we will take our lunch break and we will reconvene at 1:30.
--- Upon recessing at 1218 / Suspension à 1218
--- Upon resuming at 1330 / Reprise à 1330
8048 THE CHAIRPERSON: Order, please, ladies and gentlemen. We will return to our proceeding now, hearing applications for Fredericton.
8049 Mr. Secretary.
8050 MR. LeBEL: Thank you, Mr. Chairman.
8051 We will now hear the application by Maritime Broadcasting System Limited for a licence to operate an English-language FM commercial radio programming undertaking in Fredericton.
8052 The new station would operate on frequency 93.1 MHz, channel 226C1, with an effective radiated power of 100,000 watts.
8053 Mr. Robert Pace will introduce his colleagues. You have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
8054 MR. PACE: Thank you, Mr. Secretary.
8055 Mr. Chairman, just to indicate how kind we as Maritime broadcasters are to other broadcasters, when I get up here to speak, I notice two items: Gum, chewing gum and a contact lens container that must have been left by my colleagues. So I would like to let them know that the contact lenses are here, but I might keep the gum.
--- Laughter / Rires
8056 MR. PACE: Good afternoon, Mr. Chairman, Commissioners, Commission staff. My name is Robert Pace and l am the majority shareholder and Chairman of Maritime Broadcasting System Limited.
8057 I am pleased to appear before you today to discuss a new proposal for radio in Fredericton and a new growth opportunity for our Maritime-owned, regional company.
8058 Let me begin by introducing our panel. We presently have two shareholders of our company here today and I will introduce Dale as she arrives.
8059 Next to me is Merv Russell, our President and CEO. Born in New Brunswick, Merv has been in the broadcast business for over 40 years, the majority of his career spent in Atlantic Canada.
8060 To Merv's right is Dianne Best, General Manager of Annapolis Valley Radio based in Kentville, Nova Scotia. Dianne brings to the table the benefit of her 25 years experience with MBS and is the immediate past-President of the Atlantic Association of Broadcasters.
8061 Next to Dianne is Owen Barnhill, our Director of Finance.
8062 Seated in the back row, beginning from my left is Jim Ferguson, who is directly responsible for programming all of our country music stations. Jim, who came to the Maritimes from Ottawa, has been a Maritime resident for almost 20 years. Jim serves on the board of the Atlantic Association of Broadcasters and was a two-term member of the Board of the East Coast Music Association.
8063 Next to Jim is Dan Barton who programs a number of MBS stations. Beside Dan is Debra McLaughlin of Strategic Inc., the author of our Consumer Demand Research Report. Next to debra is our legal counsel, Rob Malcolmson, a partner at Goodmans. Next to Rob is Mike Maxwell, our Director of Technical Services.
8064 At the outset, I would like to make a few comments regarding the importance of these hearings to our company.
8065 At this hearing, the Commission has before it applications for new stations in each of the Maritime's most important radio markets: Halifax, Saint John, Moncton and Fredericton. This is a very important hearing for MBS.
8066 As I stated last week, the outcome of this process will shape the destiny of our company for years to come.
8067 If we are successful in gaining access to the Fredericton market and adding a station in Halifax, our position as a Maritime-owned, regionally based broadcaster will be solidified, and our ability to provide service in smaller Maritime markets ensured.
8068 Because our focus is on the Maritimes and on serving both large and small markets alike, we face unique challenges. Small Maritime radio markets are facing diminishing revenues and, as
such, the provision of local radio service in these communities becomes more challenging each year.
8069 Our ability to serve small markets is linked directly to the strength of our large market stations in Halifax, Saint John and Moncton. Our large market stations help to subsidize the ongoing provision of local radio service in communities like Digby, Nova Scotia, Sussex, New Brunswick and Summerside, P.E.I.
8070 In major Maritime markets, we increasingly find ourselves competing with some of this country's largest broadcasters. The applications before you from Rogers, Astral, Newcap and Global show that this is a continuing trend.
8071 I would like now to ask Merv to give you an overview of our presence in the Maritimes and our regional mandate.
8072 MR. RUSSELL: MBS was originally established in 1969 as Eastern Broadcasting Limited. Our Maritime-owned company is built on a 35-year tradition of community service in Nova Scotia, New Brunswick and Prince Edward Island.
8073 From its beginnings in Campbelton, New Brunswick at CKMB, MBS has evolved into a truly regional broadcaster, owning 23 stations throughout the region, and we are focused on serving the area where we have all spent our lives - the Maritimes.
8074 The two primary benefits of granting MBS a licence in Fredericton will be:
1. the strengthening of an important regional player; and
8075 2. bringing diversity to a market that is underserved and currently dominated by one broadcaster, Astral.
8076 Moreover, in our application we have demonstrated that both of these benefits can be realized with minimal impact on the incumbent.
8078 MR. PACE: To remain a strong regional broadcaster throughout the Maritimes and compete with large, out of province conglomerates, it is essential for MBS to have a viable competitive foundation in larger Maritime markets. Accordingly, we appeared before you last week with a proposal for a new licence in Halifax, a market which has not had a new radio licence since 1989.
8079 Today, we are here seeking a new FM licence in Fredericton, a market which has not had a new licence since the mid-90s.
8080 Our proposal is for a country FM format targeted at adults 26-54, with a particular focus on the male audience. Fredericton, the provincial capital of New Brunswick, is a major Maritime market. A presence in Fredericton provides a much needed new voice in New Brunswick's capital city.
8081 Our application can be approved with minimal impact on Astral's position in the market for the following reasons:
8082 1. Fredericton is a healthy market, yet one in need of diversity as it is dominated by a single broadcaster;
2. there is a void in the market left since Astral abandoned the country format on FM;
3. approval of our application will repatriate tuning from out-of-market country FMs, including to cross-border stations in Maine;
8083 4. Given the depth of the country format, Fredericton is able to support two country stations;
5. Finally, the incumbent broadcaster as the operator of all three English-language commercial stations in the market is very well positioned to respond to the impact of a new FM.
8085 MR. RUSSELL: Fredericton, the capital city of New Brunswick is a centre of economic activity. Fredericton's growing population which outpaces that of Halifax, Moncton, Saint John and St. John's, its retail sales and average family income, all indicate that it is a strong market, poised for growth.
8086 Fredericton is served by just three commercial stations -- two FMs and one AM -- all owned by Astral. Astral's stations dominate hours tuned and enjoy 100 per cent of all radio advertising dollars in Fredericton.
8087 The combined effect of Fredericton's healthy economy and Astral's market dominance ensures that Astral is perfectly positioned to respond to the impact of a new station with respect to programming, operations, sales and marketing.
8088 While Astral clearly dominates the Fredericton market, tuning data indicates that the market is not adequately served. BBM data indicates that the total reach of radio in Fredericton has declined relative to four years ago. Similarly, the total hours tuned to radio have also declined.
8089 Tuning to radio on a per capita basis in Fredericton is on the decline. There is also a significant amount of out-of-market tuning in Fredericton.
8090 In 2003, over 25 per cent total hours tuned in Fredericton were to out-of-market stations.
8091 In 2002, country FM out-of-market stations received two million hours of tuning in Fredericton.
8092 In 2003, country FM out-of-market stations received in excess of 80,000 hours of tuning in an average week, totalling over four million hours tuned out of market to country music FMs annually. This represents an 100 per cent increase in out-of-market tuning over the past year.
8093 These increasing levels of out of market tuning to country FM stations reflect the current gap in the FM programming spectrum - a void that was created four years ago when Astral abandoned the FM country format in favour of its current rock station.
8094 Given these tuning trends and the fact that Fredericton is a hotbed of Canadian country music, it was clear to us that Fredericton needed an FM country station.
8095 To test our assessment of the need for a country FM in Fredericton, we commissioned Strategic Inc. and Pollara to conduct a detailed analysis of consumer interest for a new radio station in Fredericton. Our demand study showed that:
1. When respondents were asked what their favourite station was, less than 7 per cent reported Astral's AM country station as their choice;
8096 2. there is a high level of dissatisfaction with radio choices among 25 to 54 year olds;
3. the incumbent country station, CKHJ, has experienced 45 per cent decline in its share of tuning in the fall of 199 to the fall of 2003;
8097 4. eighty-five per cent of those surveyed in our consumer research responded that they would "definitely" or "probably" listen to a new country station; and
5. finally, of those most dissatisfied with radio in Fredericton, their preference was for country music.
8098 These research findings, combined with the high level of out-of-market tuning to country radio stations, indicate that there is a significant opportunity in Fredericton for a new country FM.
8100 MR. BARTON: Thank you, Merv.
8101 Given that there already exists a country AM station in Fredericton, MBS examined the potential for two country stations in a market to successfully coexist. As operators of five country stations, our experience and analysis of AM/FM country combos in other markets, as well as an examination of playlists and audience profiles, proved to us that two such stations can function in a complementary manner and better serve the broad and diverse needs of the country audience.
8102 Our analysis of dual country markets showed each station has its own unique audience profile and sound. There are dual country stations in Prince George and also in Drayton Valley, Portage LaPrairie and Belleville. In these markets, each of the AM and FM country stations have distinctive playlists and audience profiles, with each station carving out its own niche.
8103 Our proposed station will be programmed in a complementary manner with Astral's CKHJ. The sheer depth of the country format, the size of the country music library and the variety of available music spanning over five decades is what allows for an AM/FM combo to offer complementary programming.
8104 An analysis of audience profiles reveals that AM country services generally tend to attract older audiences and more female than male listeners. Our research analysis also showed that in dual country markets, stations have generally been successful in developing a solid, loyal audience and have established an exclusive core-tuning base.
8105 A different audience base, plus a programming format with a great variety and depth will allow our proposed country-formatted station to identify and develop its own exclusive audience and revenue base without unduly impacting Astral's CKHJ.
8107 MR. FERGUSON: We are proposing a blended country format that will combine the best of traditional country music with today's contemporary country. This will be easily distinguishable from Astral's AM country station, both in terms of its audience composition and sound.
8108 Astral's AM country station, offers programming of greater appeal to female audiences. In stark contrast, MBS' proposed FM country station will be targeted, in both spoken word and music programming, primarily at males aged 25-54.
8109 In contrast to Astral's CKHJ, our programming will strongly focus on the era of 1987 to 1995. This is the era when the "new traditionalists" such as Randy Travis, Dwight Yoakam and Garth Brooks and Canadian artists, Paul Brandt, Prairie Oyster and Jason McCoy, revitalized country music. We also propose to feature newer artists who enjoy great popular success, such as Tim McGraw, Shania Twain, Travis Tritt and Toby Keith.
8110 By way of comparison, Astral's country AM, offers approximately 60 per cent of its programming from the year 2000 to present, with a particular emphasis on newly released country music, while MBS, however, plans to offer a playlist, 55 per cent of which, will be selected from the '80s and the '90s. This era, widely regarded as a "golden era" for country music, receives little attention on many country radio stations.
8111 In fact, it could be that we are on the precipice of another golden era for country music. In a February press release ranking formats, Bohn & Associates described the country format, and I quote, as "on the comeback trail", having posted its best share in more than five years.
8112 A programming initiative we are particularly proud of will be the sizable amount of on-air presentation devoted to Atlantic Canadian country music. This library will include artists such as J.R. Vautour, Shirley Myers, Joan Kennedy, Julian Austin, Denise Murray, newcomers Shanklin Road and Kevin Chase and former STARTRACK winner, Chris Cummings. This music will represent 15 per cent of our Canadian content commitment -- almost 6,000 spins a year -- and MBS would be pleased to commit to a condition of licence to this effect.
8113 MR. RUSSELL: We also intend to offer a quality of news coverage that is currently unavailable in Fredericton. This will be made possible by virtue of the MBS Radio News Network.
8114 Using the existing technological infrastructure, reporters in each of the MBS markets will be able to submit stories from their areas to be used by others and customized at the local level.
8115 Further, Fredericton listeners will benefit from the assignment of a dedicated staff reporter responsible for covering the Provincial Legislature. Not only will Fredericton be better served, listeners in smaller markets will also benefit from an unprecedented level of local and provincial government-related information in Fredericton.
8116 With the launch of this initiative all listeners will benefit from a significantly improved level of editorial diversity in a market currently dominated by one broadcaster. And, as in each of the other Maritime provinces, MBS will be able to provide service to New Brunswick's capital city.
8118 MS BEST: In addition to consumer research, we also undertook to survey local media buyers and advertisers to determine what level of demand there might be for a new FM country station in
8119 The results of this research demonstrate that there is an opportunity to generate more business in Fredericton by introducing a new voice into the market with an FM format that is high in demand. MBS will offer an advertising outlet that is independent of Astral's current control of the market and that can offer competitive rates.
8120 This pent-up demand for an independently owned advertising outlet, combined with the proven demand among adults 25 to 54 for a country FM format, is a winning combination and represents a viable, long-term business opportunity for our company.
8121 MS GODSOE: I am the Dale Godsoe that was introduced earlier. My apologies for being late. Who knows? Cellphones sometimes don't work in systems.
8122 Not only will our proposed station being benefits to Fredericton in terms of programming, a new editorial voice and greater options in competition for advertisers, but we are delighted to make a meaningful contribution to the promotion of local Canadian talent in Fredericton.
8123 We are pleased to contribute almost $600,000 over seven years to two initiatives that will contribute to the development of local Fredericton and Maritime country music artists; $525,000 to PROJECT JUMPSTART and $70,000 to the CCMA's Talent Development Fund.
8124 PROJECT JUMPSTART is a ground- breaking initiative designed to both identify, and support promising Fredericton area country artists in the fledgling stages of their careers. We propose a fund of $75,000 annually, to be distributed by Music New Brunswick to worthy up and coming Fredericton area country artists. These artists will be selected by a jury and the winners will receive funding to be put towards all manner of promotional endeavours, from video production to tour support.
8125 We are pleased to announce that, among others, New Brunswick's own country music artists J.R. Vautour and Denise Murray have agreed to devote their time and industry experience to this exciting program.
8126 MBS is also pleased to make an annual contribution of $10,000 to the Canadian Country Music Association's Country Talent Development Fund.
8127 In addition to these initiatives, through our ownership of 23 radio stations, MBS passionately promotes local talent through countless other endeavours, including music festivals and in-house talent showcases. Not only do these undertakings keep us in touch with local culture, but they also serve to develop and promote the untapped potential of local music in all the communities we serve.
8128 MR. PACE: Mr. Chairman, Commissioners, MBS is an experienced broadcaster with a strong track record of community service and sound business management.
8129 Licensing MBS will serve not only to bring much needed diversity to a market currently dominated by a single broadcaster, but it will bring a viable format to an audience previously abandoned by their only country FM service.
8130 The licensing of MBS radio will also confirm that the Canadian broadcasting system is not only for national conglomerates, but rather one that has room for and values the unique contribution of locally owned and operated regional broadcasters.
8131 Licensing MBS will strengthen our regional player and, in so doing, help continue the high level of service we provide in the smaller markets we serve across the Maritimes.
8132 Our proposal will add diversity of ownership and programming to Fredericton radio. Further, licensing MBS in New Brunswick's capital city will strengthen our ability to carry out our regional mandate. Given Astral's strength in the market, these important goals can be accomplished with minimal impact.
8133 In closing, Mr. Chairman and Commissioners, we believe that MBS' proposal for a new country FM in Fredericton meets all of the Commission's licensing criteria:
1. We have proven market demand for our service;
2. our target market is underserved, and has been since 2000 when Astral abandoned the format on FM;
3. we are a new voice in the Fredericton market, a market which has not had a new entrant in almost a decade, and that only has access to one perspective and editorial voice;
4. of particular importance to MBS as a truly Maritime company, a licence in Fredericton will allow us to serve the capital city of New Brunswick, just as we do in Nova Scotia and P.E.I. with our Halifax and Charlottetown stations; and
5. finally, we offer new monies for CTD that are truly incremental, creative and I emphasize very local.
8134 Thank you.
8135 THE CHAIRPERSON: Thank you, Mr. Pace and the rest of your team.
8136 I will turn the questioning over to Commissioner Williams.
8137 COMMISSIONER WILLIAMS: Thank you, Mr. Pace, and welcome Ms Godsoe.
8138 So you might keep the gum, hey? I have heard of broadcast competitors trying to eat each other's lunch, but this is the first time I heard of them actually going even for the gum.
8139 MR. RUSSELL: Mr. Commissioner, he actually tried on the contact lenses, I want you to know.
--- Laughter / Rires
8140 COMMISSIONER WILLIAMS: Well, the Maritime radio industry is certainly competitive.
--- Laughter / Rires
8141 COMMISSIONER WILLIAMS: Thank you again for your presentation. I have a series of questions that I will run through and perhaps for reason of convenience I will direct them through your corporation's President and he can redirect as required until we get the appropriate answers. Thank you.
8142 Mr. Russell, you have described your proposed service as a blended country music format.
8143 Given the limited range of radio formats in Fredericton, could you elaborate on why you decided to propose a format that while blended, as you described, would obviously serve to duplicate some of the music that is currently broadcast by the AM station with its country music format?
8144 MR. RUSSELL: The first thing that tempted us when we went forward with our research was the obvious out-of-market tuning that was very blatant when you just observed what was going on in the Fredericton market, when you consider that 25 per cent of the tuning within the market is out of market, and then we found out what formats they were listening to. It became very obvious there were three stations that were really abandoning the AM format and they were listening to XL in Moncton, a country formatted FM station. They were listening to CHSJ in Saint John, a country formatted station, and a country formatted station in Presque Isle in the state of Maine across the U.S. border. Interestingly enough they were all skewed male, but as we went into that deeper, it was out of my hands, I thought, out of my hands and Robert's, we thought there is an opportunity. How can you bland a format so you won't be a burden in the market and develop a meaningful format that will gain listenership and I am going to turn that over to Jim Ferguson and Dan Barton.
8145 COMMISSIONER WILLIAMS: Maybe as part of their answer, they could also tell us a bit more on how your proposed service would add diversity to that radio market.
8146 MR. RUSSELL: Absolutely.
8147 MR. FERGUSON: We may bounce back a little bit here between Dan and I just to fill in some of the gaps for you, but being in the Maritimes and realizing the landscape as well as we do, back in the year 2000 CKHJ moved from FM to AM. Astral made a conscious decision to take their product off of AM and put it on AM.
8148 At this point that station in the market had close to a 20 per cent market share, and I am not going to profess to understand what the decision was behind the scene, but obviously they made a decision for strategic business purposes that perhaps they had more business growth potential from another format. So they took away the country FM in that marketplace.
8149 Knowing that, when we went through our consumer demand study, we found all kinds of interesting information that supports the need for a country station in that market. Perhaps most telling is the fact that less than 7 per cent of the consumer demand respondents picked CKHJ as their favourite station although more than 85 per cent of the respondents in the same study said that they would listen to a new country FM station, and obviously as Merv eluded to, the other huge significant factor is that repatriation of listeners. We have a real headstart to bring country FM listeners in Fredericton back to their home.
8150 I am going to give you just a little bit of history in terms of my perspective from a country background of how we are going to coexist with CKHJ.
8151 The Fredericton market currently has a female skew. Capital FM is there which is CIBX FM, 59 per cent female audience. CKHJ comes in at 54 per cent in terms of their female skew. The FOX is targeted to males, the rock station that is in that market with a 57 per cent male skew. One of the biggest factors in terms of looking at country music these days is a study that was done in the States by Larry Rosin and Edison Research and for those that follow country music they maybe tuned into the research work that he has done. He has particularly identified that country music moving forward is going to move forward more on the basis of gender than it is on contemporary or traditional as a sound.
8152 We referred to the fact that respondents actually picked a blended format, but from that we are jumping to the fact that we are going to actually male skew this station. Doing that can mean things as subtle as picking from Garth Brooks' library and picking songs that may be a little more up tempo, with a little more edge to them. There is a little more sports content that Dan will talk about just a little further down the road in terms of our spoken word commitment, and obviously jock talk has a slight male leaning which we can further elaborate on.
8153 MR. BARTON: I just want to add a little bit to what Jim is saying. In regards to out-of-market tuning we are talking substantial figures. According to fall 2003 BBM data, approximately 80,000 hours of tuning each week is going to out-of-market FM country stations. That's just the FM country stations.
8154 When we broke that down further, as Merv said, we looked at which country stations are getting those tuning. Two are accounting for over 78,000 of these hours and those would be CHSJ in Saint John, accounting for 60,000, and a radio station in Presque Isle accounting for 18,000, and both of these regular stations do in fact skew male. So we see that it is the male side that is being underserved and is going out of market to get their tuning. Again, 80,000 hours per week, four million hours per week; that's just out of market country FM stations.
8155 MR. FERGUSON: I will jump to a little snapshot of CKHJ as it exists today, if I can, so that I think that there will be great clarity about how we will exist in that marketplace.
8156 I like to describe that format when you are an AM country station, they are sort of all things to all people. More than 60 per cent of their music, as we commented before, comes from a current recurrent library, this again on AM station. Ten per cent of their music library is from our gold focus. We are claiming that we are going to target '87 through '95 as the golden era of country music. That's when Randy Travis and "Forever and Ever, Amen" changed the sound of country music.
8157 Well, our focus within that is going to be 40 per cent of our gold library. They are currently drawing 10 per cent of their library from those years. I will give you some concrete examples. The 1987 library on CKHJ has four songs, this information through BDS. If you jump to 1989, they have five songs. If you jump to 1991, they have 19 songs; 1993, 29 songs; 1995, 48 songs. There is a huge depth of country music to draw on that is not being exposed in that marketplace. Again, I do want to point out that they do have as female skew by nature of their programming; 67 per cent of their listening, their hours tuned is coming from those 45 plus. They do have a diverse library. They play almost 800 songs with an average of 2,200 spins a week. They have 211 distinct artists and this is an interesting area to talk about in terms of country music.
8158 Country music, generally speaking as I look at country stations across Canada, have somewhere between 175 and 232 distinct artists. That's sort of the range. It's a lot less than the pop music world, and if you would like I could give you the example of C100 that has about 300 distinct artists; 96.5 in this marketplace with 355 distinct artists. Country has less artists, but deeper libraries.
8159 In CKHJ's top 30 spinning artists, if we took a look at last week, the following artists were not in their top 30 spins: Toby Keith, Garth Brooks, Travis Tritt, Emerson Drive, Randy Travis and Vince Gill. They were outside their top 30. If I can go back into a gold library a little bit, Alabama released an album a number of years ago called "41 number 1 hits". On CKHJ you will hear five of those. There is a huge library to draw on. Also our commitment to news is going to increase exposure in that marketplace and I know that Dan is going to speak to that.
8160 So our goal of delivering a male targeted 25-54 radio station, a country FM to Fredericton, there is no doubt that we can fit into that marketplace and bring new music to the marketplace that will repatriate the listeners back and then also serve the audience in there that has found a need to jump.
8161 MR. RUSSELL: Commissioner Williams, I hope we have answered your question there, but I started out on the out-of-market tuning and since you are very familiar with a lot of statistics and data related to Halifax, Moncton and Saint John this past week or so, the out-of-market tuning for Halifax is 9 per cent. The other market tuning for Saint John is 7 and the Moncton 11, and Fredericton to be actually and precise is 24.1.
8162 COMMISSIONER WILLIAMS: My information is slightly lower than that, but we will accept your answer on the record. Thank you.
8163 MR. PACE: I think the more interesting point, of all those four million hours, 25 per cent of them are to a U.S. male station. So I will just put my patriotic hat on there for a second.
8164 COMMISSIONER WILLIAMS: Thank you. That answers my question. Your presentation, of course, was very thorough so a lot of this may seem even repetitive as we work out way through our format to ensure that it's all covered in an equal manner with the other competitors.
8165 So the area we are going to move into now is the Canadian talent development area. Since you will not be responsible for the administration of PROJECT JUMPSTART, how will you monitor the distribution of funds in order to ensure that they do qualify as direct CTD expenditures, and have you discussed with Music New Brunswick how the funds will be disbursed?
8166 MR. RUSSELL: Mr. Commissioner, I have to carry the bucket on operation JUMPSTART. We mentioned with a great deal of pride a young lady by the name of Denise Murray who was a winner of one of our other initiatives called STARTRACK and she has had an unfortunate bout of health reversal and is just an outstanding Canadian talent. She has had a number of hits -- and I mean very, very serious health problems and it's incumbent upon us as friends of hers -- we call her on a pretty regular basis. I was just checking in on her health and I told her that we were contemplating on applying for a country station in Fredericton, New Brunswick and we got on this conversation about how difficult it is for young artists to get going and I have to give her full authorship of JUMPSTART. She said young artists today need a jumpstart; they need some funding and some help to get underway. So PROJECT JUMPSTART, the authorship of that is Denise Murray and for the explanation on how it's going to be administered I am going to turn it over to Jim Ferguson.
8167 MR. FERGUSON: Thanks very much, Merv.
8168 PROJECT JUMPSTART, as Merv alluded to, came from a conversation as simple as Merv speaking with Denise Murray and I guess that this speaks to how our tentacles are on the ground in Atlantic Canada. I have served for four years on the East Coast Music Association and became aware of the folks that were helping artists out there.
8169 It is interesting to note that the most aggressive body within New Brunswick without a doubt is Music New Brunswick and later in this process you will be hearing from Robert Bellefleur who will talk about their organization and what this commitment means to them.
8170 This is an organization that helps make artists in New Brunswick aware of VideoFact, of FACTOR, all of the funding agencies that are out there that are supported by the provincial government, but with a financial commitment from us of $75,000 specifically to country music artists, they can now develop a wing under their umbrella that is going to allow them to develop the country music industry as it should be. There is not a country music association in New Brunswick.
8171 Music New Brunswick is going to fill the void. This committee Denis Murray has offered to chair -- we alluded to J.R. Vautour being a part of it as well -- the jury process will consist of five people that will be overseen by the folks at Music New Brunswick. We will also have a representative on that committee. The rest of the committee is yet to be filled in.
8172 I can tell you that they have a program called the Emerging Artist Assistance Program for Music New Brunswick and they are following exactly the same guidelines that have been created there. I know the Commission is very aware of that because the Commission has supported, I believe in the past, some applications that have included a contribution to Music New Brunswick.
8173 To give you a couple of the highlights, this five-member team will be looking to ensure that those who are applying for funds are a native of New Brunswick with first consideration given to country artists from the Fredericton area.
8174 PROJECT JUMPSTART will provide assistance of up to 50 per cent with a maximum of $8,000 per project. Breaking that down, that includes the possibility of up to $2,000 for demo work; $2,000 for promotional support; stage performances allowing up to $4,000 and professional development up to $2,000. In addition, one of the things that we haven't documented, but I am excited to explain here in indirect costs is that we are going to contribute $75,000 in air time to promote this initiative and we are going to use our group of stations throughout New Brunswick to do that.
8175 As well, as I alluded to, Robert Bellefleur will be speaking on this with great passion tomorrow and I am sure he will be able to fill in anything that you think might be a void.
8176 COMMISSIONER WILLIAMS: I am going to ask a couple more questions of clarification in this area.
8177 In your opening remarks, I think you talked about PROJECT JUMPSTART and you would be selecting worthy and upcoming young artists. What will the required criteria be with respect to talent drive and financial need? How will you identify the worthy and upcoming?
8178 MR. RUSSELL: I am going to pass that over to Jim, but we are going to ask Music New Brunswick to act as a third party in this situation and the criteria will be set up by them in conjunction with the one representative we have to make certain that it meets the CRTC criteria for Canadian talent development.
8180 COMMISSIONER WILLIAMS: Perhaps in answering, I will throw a couple more in and then you might be able to grab them all at the same time.
8181 MR. RUSSELL: Okay.
8182 COMMISSIONER WILLIAMS: You talked about your committee and the five members. What would their roles be each of the five and from what portions of the community will you be selecting these people? Maybe the criteria on that as well. That will probably keep you busy for a little while.
8183 MR. RUSSELL: Okay. I have worked with Robert on this as well, but Jim has worked on a much closer basis.
8185 MR. FERGUSON: Thank you, Merv.
8186 When you put an application in, obviously you want to make sure that this is a finished thought so that we understand exactly how that committee will function, but it would be certainly erroneous to say that all of the workings of that committee and how it's going to explore the application process are not 100 per cent in place.
8187 Having said that, we are following the Music New Brunswick guidelines which say that there is an initial screening process which will look at the eligibility of the applicants, an evaluation panel which is this group of five represented by industry professionals and peers and those from the radio broadcasting industry, and in this case our Maritime Broadcasting System representative will evaluate the merit of the project itself.
8188 One thing as just a sideline which I think is outstanding is Music New Brunswick has the ability to turn money back out to these people really quickly. So as someone applies that will generate the committee getting together to respond to the need and I have seen through their history that funds go back out as quickly as within eight weeks. So they really get money back on the ground.
8189 I do want to just elaborate on something. As much as Merv talked about and we have talked about the emerging artists and those up and coming, Denise Murray is a fine example of someone who has had a career set back because of health. She is someone who although charing our committee, if there is something that is similar like that in the country music world, she certainly would be able to apply for funds through this organization. Now, I am not saying Ms Murray is going to because she is chairing the committee, obviously, but similar situations we will take a look at all country artists and their needs.
8190 COMMISSIONER WILLIAMS: Your PROJECT JUMPSTART, would you or Music New Brunswick be able to provide a cost breakdown associated with this initiative by the end of say Phase IV, detailing exactly which activities the money is intended to be used for?
8191 MR. RUSSELL: Absolutely, we will submit it.
8192 COMMISSIONER WILLIAMS: Good.
8193 How many artists a year do you anticipate would be receiving funding from this initiative?
8194 MR. FERGUSON: Well, based on the fact that we could go to $8,000 per artist, I guess if we do some fast math in that regard, if each asked for the maximum, but the $75,000 contribution that we are making for Music New Brunswick is not the entire fund of money. The Emerging Assistance Fund certainly will furnish the details from Robert Bellefleur as part of this document that Merv spoke to to tell you exactly where it tops out at, but this is specifically country music genre.
8195 MR. RUSSELL: Yes, it would certainly be a minimum of eight or nine a year if they got the maximum.
8196 COMMISSIONER WILLIAMS: And there is an adequate supply of upcoming and worthy artists that aren't getting support today?
8197 MR. RUSSELL: From our experience, yes, sir. That's why we had such an overwhelming success with STARTRACK. I mean just over the period, we had thousands of applicants, absolutely.
8198 COMMISSIONER WILLIAMS: Thank you.
8199 Let's talk a bit about the importance of the repatriation of out-of-market tuning.
8200 What portion of the projected audience is expected to be repatriated from out-of-market stations?
8201 MR. RUSSELL: I am going to turn that over to Dan and Jim again.
8202 COMMISSIONER WILLIAMS: And while they are thinking about that then, what evidence does the applicant have to suggest that the local Fredericton advertisers buy time on out-of-market stations and is there a revenue estimate that could be come up with and what portion, if any, of the applicant's revenue projection is expected to be derived from repatriated advertising?
8203 So what portion and how much?
8204 MR. RUSSELL: Let me deal with that side of it before we go to the first part of your question.
8205 I am quite familiar with going after or proposing or coming to the Commission to go after advertising in the Fredericton market. I have to just go back a few years ago and I appeared before the Commission looking for a condition of licence of K100 or CIOK to be lifted so we could solicit advertising in Fredericton. We were receiving many calls for our station CIOK and we were a stand-alone AC at that time and we had a very sizeable audience.
8206 There were two owners in the marketplace at that time and they consolidated and then sold and then it was sold again, but in the wisdom of the Commission we were denied that right and at that time we knew there was a sizeable amount of revenues that could be derived just from the phone calls we received.
8207 However, when we looked at going into the Fredericton market with an application, we surveyed a good number of clients within the marketplace just to find out what their attitude was towards the current situation that exists and it was quite clear with a number of them -- and some of them we listed in our supplementary brief -- that it was a one-purchase situation, one company and often it lacked flexibility required in the minds of the purchaser. Now, you have to look at it from the purchaser's side and, of course, from the broadcaster's side, but they felt a number of the people, businesspeople that we talked to, they made it very obvious to us that probably the most appropriate way to say it was there is a lack of flexibility when it came to rates and when it came to promotional activity in particular.
8208 COMMISSIONER WILLIAMS: I think you have stated the exact out-of-market stations that you hoped to gain repatriated audience from.
8209 For the record, could you just kind of run through them briefly again?
8210 MR. RUSSELL: Surely. The three stations that we noted when we were doing our preliminary research was one, CJXL, the FM country station owned by Newcap Broadcasting in Moncton. Secondly was CHSJ FM, the country FM station owned by Acadia Broadcasting or the Irwin Company out of Saint John, and the third, which was very surprising to us, was a brand new station that was on the air less than a year at the time called WBPW Presque Isle FM country.
8211 MR. BARTON: Just if I can jump here. As Merv had mentioned, those are the three radio stations where we saw -- the three non-originating country FM station -- all of this out-of-market tuning going to, the one with the highest amount of tuning being Saint John CHSJ; CJXL from Moncton to a lesser extent, but again the one that really, really caught our attention was WBPW in Presque Isle, 18,000 hours tuned per week which again represents about 25 per cent of that out-of-market country FM tuning.
8212 With that in mind -- I always find it hard to believe that I am answering a math question, but I am going to throw it out here for you anyhow -- we are estimating 30 per cent of our projected audience will come from out-of-market country FM tuning and an additional 15 per cent from rock or male-based programs because we are planning this radio station with a male skew.
8213 COMMISSIONER WILLIAMS: Yes. Your business plan indicated that 40 per cent of your revenue would be derived from new business, including repatriation of out-of-market tuning. So we are just trying to allocate it appropriately.
8214 I think I will move into the area of synergies. We have basically filled in the blanks, and at least the last remaining questions in that area, both through your presentation today and in answering.
8215 So in the area of synergy, synergies are respecting advertising revenue and expenditures reflected in the financial projections for the proposed blended country service?
8216 I will maybe touch on the area of say shared programming and to what degree will the addition of a Fredericton help amortize operating costs across the MBS group of regional stations and to what degree will the addition of Fredericton to MBS' existing larger market stations in Moncton and Saint John boost potential advertising revenue?
8217 So how will this help MBS?
8218 MR. RUSSELL: The first two from a financial -- and this man has been waiting since the Halifax hearing to have his say -- I will turn it over to our Director of Finance and then we will come back with the third part of that.
8219 MR. BARNHILL: Thank you very much.
8220 When we budgeted the Fredericton station, it was fairly independent. There aren't very many synergies. I think we spoke of this in Halifax where we are going to physically have a new station under the same roof. There aren't very many financial synergies that are going to happen with the Fredericton station.
8221 We did mention the Maritime News Network. There were two stand-alone people, but they were in the Halifax budget. There is a legislative reporter in the Fredericton budget, but he is not incremental to the Maritime News Network and it's going to be a fundamental part of that. So I don't think that there is any cost savings from having a Fredericton station incorporated into MBS as a whole.
8222 COMMISSIONER WILLIAMS: So for purposes of this question, let's assume that you only receive a Fredericton station, not any of the others.
8223 How would the synergies affect your numbers now?
8224 MR. BARNHILL: They would be the same, yes.
8225 COMMISSIONER WILLIAMS: Okay.
8226 MR. RUSSELL: On the third part of that, I know Rob Pace is anxious to answer that.
8227 MR. PACE: I want to kind of lay this out in simplistic terms. We have had a crack at it on the Halifax application; we talked a little bit about it in Moncton; we alluded to it in Saint John and now we are in Fredericton.
8228 So the simple message is we bought three players here, this company from Rogers in 1995. At that time it was 11 stations. Through acquisitions and purchases, we have increased that from 11 to 23. During the course of that time, we have been focused on infrastructure improvements, and I don't want to go back in history because Merv was part of that, but essentially when this used to be owned by McLean-Hunter it was a vehicle to move cash up to Toronto and Merv basically had to beg for the replacement equipment to come back east. That was the situation and that's what we inherited. Now, we are not complaining.
8229 So for the last ten years, we have been focused on improving the infrastructure, our studios, our buildings, so we feel pretty proud of the fact that we have improved it for our listeners in the Maritimes and we have improved it for our employees.
8230 Through the course of that time, the three -- you could say Stooges here -- we haven't taken a dime out of this company. However --
8231 COMMISSIONER WILLIAMS: That's for the full ten-year period?
8232 MR. PACE: The full ten-year period.
8233 COMMISSIONER WILLIAMS: Okay.
8234 MR. PACE: And we are not here to say that we are not a financially solid company. We are, but our experience in the Maritimes is you get to be a healthy company and over the course of time people put their heads in the sand and, like our fishermen, they don't have their radar out looking at what shows they could spear their boats into and consequently what we see on our radar for our company is real simple. There is a generational change happening in the Maritimes. It's not unlike in some ways the Prairies out west, and we have talked to our colleagues at Golden West, but basically we have rural migration to an urban centre. So at the present time we can sit here and we can face yourselves and the staff and say we are financially solid.
8235 However, if we don't pay attention to what is facing us not next year -- three, five years down the road -- we have situations like northeastern New Brunswick, which our Secretary is from originally, we have population decreases of 8 to 10 per cent over a five-year period. We have 8 to 10 per cent in youth populations, as we alluded to in Saint John, but also Sydney. We have an uphill battle facing us down the road in Sydney, Nova Scotia. You had the closure of mines, you had closure of the Sydney steel plant, and we have an old demo there, but the young people are not staying. They are going to Halifax. That's where you are seeing in the course of these hearings two places. You are seeing increased population in Halifax and you are seeing increased population in Fredericton.
8236 So what we are saying if we are prudent businesspeople and we want to build a future for this company, we have got to go where the people are and we are presently in a market where we have declining populations. So simply put, that's out pitch. We want to grow the company and have a solid financial presence here for a long time to be an independent regional broadcaster.
8237 I will note this. In the ten years we have owned this company, this is the first time we have ever come to the CRTC looking for a new licence -- the first time -- and I don't think, if you look at the other big broadcasters they could say that, whether it was Standard, Rogers, CHUM, Newcap. I mean, in the last two months they got new licences -- maybe not new because some of them are flips, I want to be fair here. So that's our pitch. Is that enough?
8238 Merv, is that enough?
8239 MR. RUSSELL: Almost.
--- Laughter / Rires
8240 MR. RUSSELL: Mr. Commissioner, the two hearings we are at -- and we have taken them very seriously and Rob Pace said to us we better be prepared for this because this could be the last kick we are going to have as we go forward if we truly want to be a regional broadcaster. I am the guy that convinced Dale's late husband, Gerry, and Rob Pace to get into this business.
8241 I had a philosophy that I took from Jack Schoone who started Eastern Broadcasting in 1969 and I joined him in 1971, that there was room for a regional broadcaster in the Maritime provinces.
8242 But what we have noticed -- and that's why we asked Di Best to join us today -- is the fact that in small markets like Middleton and Digby there are big-box stores being strategically located at geographical areas where people can travel into them all the time and those little Main Street merchants like in Digby or Middleton, they are being impacted very seriously and that's how we provide those services in those small towns.
8243 Just give them an example of the bill Wall-Mart store in New Mines.
8244 MS BEST: Thanks, Merv.
8245 Mr. Commissioner, while we have a very loyal listenership in our small town of Digby and all the way in our small markets of Digby, Middleton and Windsor, just over a year ago when the Wal-Mart opened in New Mines, which of course is a big-box store, we saw and continue to see the migration of the shoppers going into that New Mines territory.
8246 For example, in Digby there is only one store alone which is a SAAMS store which is a department store which has clothing for women, children and men and a very small selection at that. So in order to get the selection, they can in an hour be in New Mines. So they have chosen to do that. We see that all the way through and in Windsor they migrate into our Halifax market. On the new highway it takes no time at all.
8247 MR. RUSSELL: The other day Minister Eddy said something that we agree very much. I don't think he completed the equation, however. He said that serving small markets is a privilege not a burden. There is only one thing I would add to that: There are great challenges ahead.
8248 COMMISSIONER WILLIAMS: I had the pleasure this weekend of driving. We did two days almost solid, I think 12 hours one day and seven the other through southwest -- Hopewell, Rocks and down to Lunenburg yesterday -- and so we got I guess the opportunity to sample some of the local radio music because we had a diversity of tastes within the vehicle and then, of course, as we were moving out of various contraries we would pick up new stations. We seen some of that country side that you are talking about and we can recognize the challenges. There are some more than in other areas in Canada. I don't think the Maritimes is unique in that area, but yes, we appreciate the words that you provided.
8249 MR. PACE: Was that taste or demographics?
--- Laughter / Rires
8250 COMMISSIONER WILLIAMS: I'm not going to answer that.
8251 To discuss the potential, I guess what I want to do is discuss the potential business arrangements between the broadcasters. Given the market profile of Fredericton and Astral's ownership of the only three commercial radio stations, what specific operating efficiencies are you proposing that will enable you to compete with Astral?
8252 Would you, say for example, consider entering into a business arrangement with Astral such as a local Sales Agreement or a local Management Agreement?
8253 MR. RUSSELL: No, not whatsoever. I was just thinking that we are pretty good competitors and there was some shots about Saint John this morning in the jungle and that's straightening up. We are pretty good competitors and they are good broadcasters in Atlantic Canada and particularly in the Maritimes and Astral are good broadcasters in that market. They fetch a very good dollar for their product, maybe some clients think abnormally high, but we can go in that market, as our business plan has suggested, and compete fairly and squarely and we are long-term investors, you know.
8254 I convinced this guy next to me that we should purchase a radio station in Summerside a few years ago and it was a radio station that was having financial problems. I said, "You know, you can't embarrass the family; you can't embarrass the community. If we are going to do it, we have to pay this". And no question; everybody sort of smiled and said they paid too much. Well, it will take us a lot longer to do it, but we are fulfilling our commitment as a regional broadcaster.
8255 To answer your question conclusively, no, we will not enter into any sales arrangement.
8256 Commissioner, there is something I would like to get on the record. I have been around this racket for a long, long while. I was smiling this morning when Mr. Maheu was talking about the roots of Newfoundland capital and I smiled because I got them in the radio business and I was smiling when I saw Jim MacMullin here representing Acadia today because Jim was one of our managers up until two years ago and when he said he is confident he can get things straightened up in Saint John in cooperation with us, I am sure he can because he is a well-trained, fine broadcaster.
8257 But, you know, I think the CRTC give you a licence and it's a public trust. This has always been my philosophy. There are some of those that look at this public trust that their job is stewardship. We believe that our job with a public trust is to be operators.
8258 A situation popped up here at a previous hearing and I said we were at the dance, but the price was too high. That's what it was all about and you can't be a regional broadcaster in the Maritime provinces without being the operator.
8259 So the short answer to it is no.
8260 COMMISSIONER WILLIAMS: I am nearing the end.
8261 As you know, your application for the use of the FM frequency 93.1 is competitive and technically mutually exclusive with another application at the hearing.
8262 What, in your view, are the compelling reasons to grant you the requested frequency and in what ways does your proposal constitute the best use of the frequency spectrum?
8263 MR. PACE: Perhaps I will answer that. I will do this in two parts. Our opposition to the person applying for the same frequency wasn't so much that we are against that service. It's that we felt that service could be on another frequency of not so much power. I guess that's the point, but here is why we think in a nutshell we could use the best use of this frequency.
8264 We will bring back country music back to the FM band. We will repatriate the market tuning from Moncton, Saint John, and particularly Maine, the four million hours that were mentioned in the year 2003.
8265 We will add diversity of ownership and editorial voices to the Fredericton market which is currently dominated by one broadcaster. It will not have a material adverse impact on Astral's AM station. Our FM will target a male 25-54 audience and we will focus on repatriating that out-of-market tuning.
8266 We believe that the market can support -- I mean, this is the hotbed of country music in the Maritimes. You heard Jim Ferguson passionately talk about -- when he gets onto country music, you have to have a long time. Finally, the licence will give Maritime a regional voice. It will basically finish off our Maritime group in the sense that we will -- it's a bit embarrassing that we are a Maritime company and we are not in the three capital cities. I mean, we cover Halifax, we cover Charlottetown, but we are missing in Fredericton.
8267 Finally, we believe that there are two growth markets in the Maritimes: Halifax, population wise; Fredericton, population wise. We want to be there and I think we are unique, and you have seen this through the seven or eight days that we have been here. Our CTD is local, local, local. I mean, we are deliberate on that. We didn't want to give very much to national bodies. We wanted the monies back in the Maritimes, reinvest it and build our artists in the Maritimes that we run into that we see everyday. That's about all I can say.
8268 COMMISSIONER WILLIAMS: Okay.
8269 The Fredericton marketplace, it's seems attractive. How many commercial stations do you think the Fredericton marketplace can support?
8270 MR. PACE: Two.
8271 COMMISSIONER WILLIAMS: Two full commercial stations?
8272 MR. PACE: Yes. Two Maritime broadcasters.
--- Laughter / Rires
8273 THE CHAIRPERSON: You better get another application in.
--- Laughter / Rires
8274 MR. RUSSELL: I think there is often trick questions. That could have been a trick answer. All three broadcasters are from the Maritimes that are applying.
8275 COMMISSIONER WILLIAMS: It was easy. And maybe just as go through briefly the last area, I would like you to spend a bit of time talking about some of your spoken word programming. Like you say it's going to be male oriented. So maybe talk a bit about your sports bullet and a bit about the BUZZ and that sort of thing.
8276 MR. RUSSELL: Perhaps I will turn that over to Dan Barton who was the designer of all of those elements.
8278 MR. BARTON: Thank you, Merv.
8279 First I think I would like to talk about our frequency of news, just to kind of give you an outline of that because the rest of this falls around our news frequency.
8280 When we tested individual programming elements, much as we saw in Halifax, in Fredericton, local and regional news was of utmost importance. So we wanted to give news in a frequency and in a presentation not currently available in Fredericton.
8281 So in breakfast, for example, it will be available every half-hour on the quarter hour starting at 5:45, continuing through to 8:45; through the mid-day hourly, again on the quarter hour, from 9:45 to 2:45, and the afternoon drive this is where you will get a greater frequency than you will with any other station in the marketplace; it will again be presented every half-hour, from 3:45 to 5:45, and that is a three-minute news package.
8282 On the weekends, Saturday and Sunday, again hourly, on the quarter hour from 7:45 to 12:45 and then in the afternoon at 3:45 and 5:45. So we started looking at our spoken word commitment by saying we want to give the most news available in Fredericton.
8283 It's part of that with our sports content. Our sports content falls into two areas. First of all, I want to mention the sports bullet that you mentioned, Commissioner. It's an update on local, regional and national sports; that's a 30-second individual package that will air hourly from 9:15 a.m. to 5:15 p.m. Monday through Friday and again it will continue on the weekend from 7:15 a.m. to 12:15 p.m., designed to air opposite the newscast. So this is above and beyond the sports content that we will be placing with our newscast as sports bullet.
8284 The BUZZ is a 60-second spotlight on community events which will air four times daily, 10:00 a.m., noon, 2:00 p.m. and 4:00 p.m., and we also wanted to put in our Citizen on the Street feature, this is called Fredericton Speaks. It's a 60-second feature presented twice daily following the news at 8:50 in the morning and 5:50 in the afternoon Monday through Friday. That gives Fredericton people an opportunity to speak on local issues.
8285 COMMISSIONER WILLIAMS: Thank you.
8286 And just to repair the record somewhat, Mr. Russell, I am sure we can accept your out-of-market numbers. The figures and the chart I was working more from a Canadian out-of-market tuning and that's why the discrepancy in the figures. I figured if you are in the business that long, you certainly know that number.
8287 MR. RUSSELL: We felt it was very important to get on the record the amount of cross-border tuning.
8288 MR. BARTON: And one thing I would like to clarify too, when Merv had mentioned 24.1 per cent, that was actually the 2002 figure. We found by fall 2003 that it had jumped over 25 per cent.
8289 COMMISSIONER WILLIAMS: Thank you very much. I have enjoyed questioning you and receiving your presentation.
8290 MR. RUSSELL: Thank you.
8291 COMMISSIONER WILLIAMS: Thank you, Mr. Chairman.
8292 THE CHAIRPERSON: Commissioner Cram.
8293 COMMISSIONER CRAM: Thank you.
8294 When you said that two commercial stations could be licensed in this market, it led me to think about Charlottetown and your dance partner there. So would you agree to a condition of licence that you would seek prior Commission approval prior to entering into any sales or Sales Management Agreement in the market of Fredericton if you were given a licence?
8295 MR. RUSSELL: Absolutely.
8296 COMMISSIONER CRAM: Now, I have another issue. It seems to me -- and I think it happened to you in Halifax -- that when there are competitors in a market that there is a tendency to program absolutely against another station and that's what has happened here with your two licences here.
8297 So although you could be complementary in country to Astral, you could also program directly against them and it seems to me that that appears to be the more likely scenario. If I look at what is happening in other markets, then doing the complementarity.
8298 Can you sort of tell me what's in it for you to either be complementary or to program head-on against the type of country that is there?
8299 MR. RUSSELL: I think I am going to hand that over to Rob because we were talking about that earlier today. We anticipated that this might pop up.
8300 MR. PACE: Just a quick note on that. If we did that, all of the valuable research and details that we have relied on for this application essentially we would be throwing that out the window.
8301 What we have seen is dramatic numbers of male audience just leaving the market completely. So we believe that we could be very successful just focusing directly on that demo. The country format which Jim alluded to is quite deep and quite wide.
8302 I think your point is very, very well taken perhaps in another format, but with the country format we have seen in other markets -- and we are very familiar with it -- if we stick to our research and follow that plan, I think we will be successful.
8303 The person that has guided us through this -- and I have to get her on the record here just for the hearing -- was Debra McLaughlin.
8304 So, Debra, would you like to say something? This is a team effort.
8305 MS McLAUGHLIN: Thanks, Rob.
8306 I think part of the decision here on the format came as a bit of a surprise to me because when we went to the field to do the research we didn't look at just the country format. One of the things that I attempted to do was try to establish the difference between two typical streams, or how they are typically defined, of country music.
8307 I was shocked to find, frankly, that with the presence of a country station here, regardless of the fact that it's an AM, that 85 per cent of the people still wanted country. So we had to go a little deeper to find out why that could be and how you would program so it wouldn't be competitive. We looked at other markets across the country. We looked at research in the U.S. Jim has referred to the Edison Research which talks about a new paradigm that gets away from traditional versus contemporary.
8308 It all comes back to the demand for it and, in fact, if you are building a business case you do have to go with the format that is in highest demand and 85 per cent is an exceptional score number for any format.
8309 MR. RUSSELL: Did we answer your question?
8310 COMMISSIONER CRAM: The issue is there is a tendency to want to own the whole market as opposed to going for even 85 per cent, although given the 85 per cent, of course, it does say that you would own that market almost given that number.
8311 MS McLAUGHLIN: If I could respond o that?
8312 COMMISSIONER CRAM: Yes.
8313 MS McLAUGHLIN: Not really because 85 per cent wanted a country format that was a blend. When we looked at the out-of-market tuning, the U.S. station indexed at 135 against males and the local AM station over indexed in women. There is clearly a division in terms of the sound of these two potential stations. From an advertiser's perspective -- and this is very important for the business plan -- the hardest group to reach in radio generally is male, particularly in a music format. You can get them in a news format, but the incidences of tuning are shorter periods of time and that means from an advertiser's perspective that you have to buy a whole lot more and it's a less efficient buy.
8314 But, in fact, in this type of format they will spend more time. The average hours tuned to the U.S. service by male is twice the market average and that's the opportunity. It really is there. We found that between AM and FM there was a clear difference between preference of listening by band. There was a strong core market for the AM. It tended to be along the more traditional minds, but given the fact that in markets as small as Drayton Valley which I think is about 5,000 people, Prince George which is a slightly larger market, two services do coexist and they do split the market and if you look at the research, it's clearly divided, intentionally or by default, along the male/female axes.
8315 MR. RUSSELL: If I could just add to what Debra is saying? Basically if we did decide to take this new FM and go exactly at CKHJ's audience, two things would happen. First of all, we would split the audience, and second of all, we could be missing that opportunity of repatriating that four million hours tuned that is going to out-of-market radio stations that are male skewed. We would be missing that opportunity and we don't want to miss that opportunity.
8316 I can give you an example. In Halifax, for example, when CIEZ flipped their format and went to classic hits, they were coming at our CHNS. There was about a 40 per cent level of duplication there. CHNS is still here. It still has its loyal audience.
8317 COMMISSIONER CRAM: Thank you.
8318 MR. RUSSELL: Thank you.
8319 COMMISSIONER CRAM: Thank you, Mr. Chair.
8320 THE CHAIRPERSON: Thank you.
8321 Just a couple of issues occurred to me during the questioning. Mr. Russell, or Mr. Pace, or whoever, but Mr. Russell you were the one who answered Commissioner Williams' question about this issue of LMA, LSA issue and you answered with some conviction; you were concerned about being an operator and Commissioner Cram raised the issue of Charlottetown and I guess what I find a bit curious is how you would, given the conviction with which you answered Mr. Williams, distinguish Charlottetown as being different from some of the other markets that we have talked about over the last six days?
8322 MR. RUSSELL: Our manager is in the building. It's an LMA as we know. It's under review and will come up for review very soon.
8323 The only components that we do not play a role in are the on-air programming and the news. So we are there operating our two stations in that building on a daily basis.
8324 MR. PACE: Just to add to that. I think the key point here to focus on is in that situation it's an LMA with three stations. There are three stations in the market. Nobody is disadvantaged. It's significantly different than when you come to Halifax where essentially you have the five against two and you have a significant disadvantage with the two that are not involved in that situation.
8325 That's how I sort of clearly define or separate the two.
8326 THE CHAIRPERSON: I guess -- and I appreciate Charlottetown is not in front of us here today -- there is another party I guess we consider in all that in terms of advantage/disadvantage and that is the audience, the general public who may be -- I underscore "may" -- disadvantaged when it comes to diversity of news and public opinion, depending on how the structure is operated, and I take the point about the LMA.
8327 But moving off of that to the point you just made, because that takes me to the other issue that I wanted to raise that struck me, when you talk about your disadvantage in Halifax -- and you talked about that last week and just raised it again -- it strikes me that in Fredericton you are proposing to put yourself at numerically an even greater disadvantage than you now have in Halifax.
8328 I guess I wonder why you would do that, and if you are prepared to do it, is it really so bad in Halifax?
8329 MR. RUSSELL: No. With regards to the Fredericton situation, I mentioned earlier to Commissioner Williams that we are in this for the long haul and we are willing to make that investment, and if we -- when we put together our business plans, they are usually on the small "C" conservative side, but we feel that our numbers our strong. We feel that the market is strong and that in that three to one situation, we will be there in the long haul. We don't walk away from our responsibilities.
8330 Yes, the ratio is probably higher in Fredericton than it is here with five to two, and, as we mentioned at last week's hearing, we were ready to apply when the call was made. We recognized that this situation wasn't going to go away; it was difficult since 1998, and we were going to apply and come to the Commission. When the call was made by the Rogers' applications, we were in readiness to come in to see if we couldn't sort of even up that battle, and if there only one licence given in Halifax and it's us, that's what we are up against, we realize that, but it will give us a much stronger financial foundation in the long term to survive as a regional broadcaster in the Maritimes.
8331 MR. PACE: Just to add to that, I think there are a couple of distinguishing points with respect to Halifax and our situation here, and the one in Fredericton.
8332 You know, the main sales forces -- it's just not the Newcap/CHUM situation -- were TV, whether it's Global or whether it's ATV, is right here in Halifax. There is intense competition in Halifax with respect to newspapers. Those elements don't exist to the same extent in Fredericton. What we find very attractive in Fredericton is we know what the pivot is in Fredericton; that's number one. We know that there is a rates system there that is attractive, that we can go in and compete, but there is not as many vehicles in the media business in Fredericton.
8333 I think that that is kind of the distinction. Halifax is a tough market here when you have an imbalance that we are presently facing.
8334 I hope that answers your question.
8335 THE CHAIRPERSON: It does, and that's helpful. I mean, we are pursuing all of these things because when we go back to the ranch and have to sit down and figure this out, frankly this is probably one of the more complicated broadcasting hearings that I think the Commission has had to deal with in some time, although the Edmonton one recently was somewhat similar, but over the years we think that we have issued about all the licences you could issue and things should get simpler as we go down the road, and it doesn't seem to get any simpler. It seems to get more complicated. So that's helpful.
8336 Mr. Pace, just a footnote on that point you raised. I understand the newspaper stuff, the newspaper issue in terms of the competitiveness with radio, and we have heard allegations in other markets across the country over the years, particularly I think in Newfoundland and perhaps in some parts of Quebec where TV is sometimes sold at radio rates.
8337 Is it your experience that that is happening in Halifax?
8338 MR. PACE: It certainly was for a while. I think it has improved a bit. It has been our experience that that situation has improved probably in the last year, year and half, but when the real showdown was going on between Global and ATV it seemed that we were running into it on a very regular basis, that presentations we were putting together were very close to the cost associated with purchasing television.
8339 THE CHAIRPERSON: So it's your experience now those rates have gone back up to what one would expect TV rates to be?
8340 MR. PACE: Yes. Nancy Hilchi could speak better to that, our General Manager here. She had her group on the street all the time, but I haven't heard that complaint as much as in the last year and a half as I had when we were reviewing situations with the General Managers.
8341 THE CHAIRPERSON: Okay.
8342 Those are my only questions. Any questions, counsel? Okay. Thank you very much. Those are all our questions.
8343 MR. RUSSELL: Thank you very much. We could make your decision very easy, but...
8344 THE CHAIRPERSON: I'm sure.
--- Laughter / Rires
8345 THE CHAIRPERSON: So could all the rest of the parties in the room.
8346 We will take our afternoon break now and reconvene at let's say ten after three.
--- Upon recessing at 1450 / Suspension à 1450
--- Upon resuming at 1510 / Reprise à 1510
8347 THE CHAIRPERSON: Order, please, ladies and gentlemen. We will return to our proceeding now, and just to give you a sense of the agenda, we are actually going to begin now where we had expected to be first thing tomorrow morning and it will be our plan to hear the application from Acadia for Fredericton followed by the application by Ross Ingram for Fredericton and then end our business for the day today and commence tomorrow with the application by Joy FM for Fredericton.
8348 Mr. Secretary.
8349 MR. LeBEL: Thank you, Mr. Chairman.
8350 We will now hear the application by Acadia Broadcasting Limited for a licence to operate an English-language commercial FM radio programming undertaking in Fredericton.
8351 The new station would operate on frequency 92.3 MHz, channel 222B, with an effective radiated power of 41,000 watts.
8352 Mr. Jim MacMullin will introduce his colleagues. You have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
8353 MR. MacMULLIN: Thank you, Mr. Secretary.
8354 Good afternoon, Mr. Chairman and Commissioners.
8355 My name is Jim MacMullin, General Manager of Acadia Broadcasting. Joining me are colleagues from Acadia, who will be assisting me with the presentation today.
8356 On my right is Peter Scholten, our long-time Business Manager, Accountant and financial expert at Acadia, and to my left is Bruce Weaver, who has recently joined us as the Program Director of our two FM stations in Saint John. Beside Bruce is Michael Fockler, Acadia's broadcasting consultant.
8357 In the second row, starting again at my right, is Gary MacDonald, News Director for our radio stations in Saint John, and next to Gary is Lori Carle, Promotions Director in Saint John, and finally, John Wiles, Station Manager of CKBW FM, our station in Bridgewater, Nova Scotia.
8358 Mr. Chairman and Commissioners, in the next few minutes we will tell you who we are and why we are here. We will then proceed to tell you what we promise to do with our new FM station in Fredericton, should this application be approved.
8359 But first, who we are. Acadia is the licensee of four radio stations, one in Bridgewater, Nova Scotia; one is St. Stephen, New Brunswick, and two stations in Saint John, New Brunswick.
8360 All four stations operate in the same fashion. There is a strong commitment to quality programming that emphasizes local information and community involvement.
8361 One of our long-term goals at Acadia is to expand by geographic diversification. Because we are a Maritime-based company, our preferred focus is to grow in the Maritime provinces. This is the region we know best. We live here, we work here, and our financial resources are generated here.
8362 That is who we are. And now permit me to explain why we are here.
8363 As part of our growth strategy, Acadia initiated a study to determine the feasibility of a new FM radio station in Fredericton. We found a robust economy with an optimistic future. We also found an opportunity in the market that appealed to us as radio broadcasters.
8364 Thus, the combination of a strong economic base and an underserved radio market seemed like a good fit, and as part of our growth strategy, we submitted this application.
8365 It is our understanding it was Acadia's initiative that triggered this call for applications for Fredericton. Until this point in time, no other commercial broadcasters had expressed an interest or desire to develop another radio station in the Fredericton region.
8366 Acadia is proposing a "true classic rock" format for Fredericton. It is our intention that this be a good "old-fashioned radio station" with lots of public service announcements, interviews, and on-site coverage of special events, similar to our other four radio stations.
8367 MR. SCHOLTEN: Mr. Chairman, the revenue and operating forecasts for the proposed New FM station are based on our many years experience with Acadia' s four radio stations.
8368 If we have erred at all, we have erred on the side of caution. We have taken pains in our financial forecast to clearly show the Commission how Acadia intends to finance the operation of a live-to-air music format and the attendant costs that are incurred with this type of local programming.
8369 From an economic point of view, I am convinced we have conducted due diligence in the Fredericton market over the past two years. According to our research, we determined the proposed music format and the local economy can support our financial forecast.
8370 Our business plan includes employing 17 full and part-time professional broadcasters. We have taken great care in preparing our business plan to present financial forecasts as they relate to the format and the target audience.
8371 In Year One, Acadia forecasts total revenue to be approximately $600,000. Of that amount, more than half will be allocated to program expenses, which suggests where our priorities lie.
8372 As a result of our findings, we are satisfied we can enter the advertising market without causing undue harm to the other commercial broadcasters.
8373 However, should our revenue forecasts fall short, or should our expenses be greater than forecast, I can assure you that Acadia has the financial capacity to meet all the objectives of the business plan, and will provide additional funds to augment broadcast operations, should they be required.
8374 We are confident Acadia's management team can achieve the strategic goal of growing our business, and understand the resources required for starting a new radio station.
8375 MR. MacMULLIN: Prior to submitting this application, Acadia carefully evaluated the Fredericton market. There were four specific areas we examined:
8376 1. The economic strength of the market, as Mr. Scholten just mentioned;
8377 2. the competitive state of the market;
8378 3. the impact our new FM station would have on the three existing commercial radio stations in Fredericton owned by Astral Media; and finally,
8379 4. the diversity of news voices in the market.
8380 We have undertaken to address these four issues in our supplementary brief. Obviously we would not be appearing here today if we had not first assured ourselves that we could satisfactorily answer those four criteria. Acadia is satisfied this is a viable proposal.
8381 Last summer, Acadia's management team, supported by experienced broadcast consultants, spent considerable time in Fredericton monitoring the current radio services. We also gathered economic information about the area to learn more about the potential future of this market.
8382 We then commissioned an independent market research company to conduct a scientific survey in Fredericton to provide empirical evidence of the potential success a new radio entrant might have. In our view, it made good business sense to seek an arms' length, second opinion.
8383 The results of that survey confirmed our initial appraisal of the market and prompted Acadia to submit the application before you today.
8384 It is also interesting to note one of the other applicants for an FM radio station in Fredericton has confirmed our analysis of the market, and also found it to be lacking a classic rock format.
8385 In other words, right from the start, Acadia appears to have identified an opportunity for a new entrant in commercial radio in Fredericton.
8386 MR. FOCKLER: Our proposed true classic rock format is distinctly different from the three existing formats in the market. As a matter of fact, our monitoring of the stations and the market study determined one-third of all fans of classic rock are not being adequately served by the existing stations, as stated on page 14 of our supplementary brief.
8387 Mr .Chairman, a moment ago you heard Mr. MacMullin mention as part of our original due diligence, we conducted a music monitor in Fredericton last summer, to be absolutely certain a true classic rock format would "fit" among the other existing radio stations.
8388 And again, just three weeks ago, we conducted another music monitor to double-check our original assumptions. And once again our assessment of the "music market" confirmed there is indeed room for a true classic rock format.
8389 Acadia is forecasting a 14 per cent share of the total audience, with the impact on any one radio station not exceeding 3.5 per cent in total share. According to our research we expect our audience to come from a variety of different sources, but very little from the Astral radio stations.
8390 For example, we have our eye on redeeming and reclaiming a substantial number of listeners who, according to BBM, are tuning to out-of-market radio stations.
8391 Our programming will attract an audience back to radio which we feel has been declining in recent years. We are confident the introduction of a true classic rock format will appeal to a whole new constituency who will be attracted to the format for the first time.
8392 Our share estimates show minimal financial impact on the existing stations. The reason we are able to say this is because Acadia proposes to operate in a format targeted at listening preferences other than those currently served in Fredericton.
8393 All these issues concerning the possible impact on the three Astral radio stations have been fully examined and included in our supplementary brief.
8394 In other words, Mr. Chairman, there should be no concern on the part of the Commission or Astral Media that a true classic rock format will unduly impact on their formats.
8395 MR. MacMULLIN: Mr. Chairman, Commissioners, I would now like to address the subject of our proposed initiatives regarding the development of Canadian talent.
8396 Acadia is proposing four initiatives, each targeted at supporting a different segment of Canadian talent. We have endeavoured to spread as wide a net as possible.
8397 For example, we will provide local musicians with the opportunity of local live on-stage exposure; another initiative will purchase musical instruments; and two other benefits will provide direct financial assistance to Music New Brunswick, a provincial organization, and to FACTOR at the national level.
8398 We understand that commitments to Canadian Talent extend far beyond the cash contribution in our application. Acadia recognizes the spirit and intent of the development of Canadian talent as originally envisaged by the Commission many years ago. We believe this intent is reflected not only in the four initiatives proposed in our application, but throughout our programming and promotional efforts as well.
8399 Our annual cash contributions to Canadian talent development represent the absolute minimum level of our commitment.
8400 I am proud of our accomplishments in exceeding our commitments to Canadian talent with our other radio stations. We fully intend to do the same in Fredericton.
8401 Mr. Chairman, here is our Program Director, Bruce Weaver, who will briefly describe Acadia's plans for our community-friendly radio station.
8402 MR. WEAVER: Should this application be approved, it will be my responsibility to set the building blocks in place and develop the program plans that we have promised today.
8403 I would like to describe the New FM station to you.
8404 The New FM will be a full-service local radio station catering primarily to a 25-54 demographic with a "true classic rock" format. The music will span the '60s, and '70s, and will also include the '80s to reflect what is now considered "True Classic Rock".
8405 But embedded in the format will be more than just music. Our experience has told us this audience is interested in style and form, production values and presentation. They want information related to the music and their lifestyle. This radio station will not be a music jukebox.
8406 The all-important morning and drive segments will be packed with information, particularly weather and driving conditions. In severe weather, or emergency conditions, additional staff will be brought in to be on the air and providing the necessary information, such as school closures and cancellations.
8407 Birthdays, anniversaries, and lost and found announcements will engender a "neighbourhood back-fence" relationship with the listeners.
8408 The true strength of the station will be its continuous presence in the community. This will be apparent when listening for less than an hour -- any hour -- and knowing without a doubt this is a radio station originating in Fredericton, New Brunswick, and this program could not possibly originate anywhere else.
8409 MS CARLE: At Acadia Broadcasting, the role of the Promotion Director is to tie together programming, news, and sales because everything we do at our stations touches all these departments.
8410 At the New FM in Fredericton, it is our plan to showcase our community involvement with a weekly program called "Fredericton Fridays". This program will be scheduled each Friday for one hour between 7:00 and 8:00 in the morning. Over the course of the hour, a guest, or co-host, will interact with the morning show's team, introduce records, and promote their cause in a fun and informal environment.
8411 For example, they will be able to discuss their fundraising events and they can come to us if they would like to promote these and get their word out in the community. They will be invited to appear on air to discuss this and get their objectives out to Fredericton.
8412 On other occasions, airtime will be provided to community groups and individuals for drop- in interviews or spontaneous comments.
8413 In addition to Fredericton Fridays, the promotions person will be .heavily involved with coordinating the "Sound of Music" project, one of Acadia's Canadian talent development initiatives designed to provide musical instruments to local youth.
8414 The New FM will participate in many other events involving local talent, fundraising, and community awareness campaigns, above and beyond the commitments made in this application.
8415 Staff members will also be encouraged to join community organizations, service clubs, and committees. On-air community announcements will cover a myriad of fundraising events such as Saturday morning car washes, bake sales, and other similar events. Many events will be reported live from on-location broadcasts using station promotional vehicles.
8416 MR. MacDONALD: Mr. Chairman, in a day and age when many radio stations are cutting back on local news coverage, the New FM station plans to carry nine hours and 50 minutes of local news weekly. Local coverage will be comprised of City Council meetings, school and hospital boards, news conferences, emergencies, and the like.
8417 In addition, the New FM will carry three hours and 45 minutes weekly of the broadcast news service, during evenings and weekends. Overall, this represents a total news package of 13 hours and 35 minutes weekly.
8418 Each Sunday morning we plan to put all this news and information into context, with a one-hour program delving deeper into the stories and issues behind the daily newscasts.
8419 For example, a recent Sunday Morning Magazine might have included a segment looking back at what has been learned in the wake of a controversy over the construction of apartment buildings on wetlands near the University and an in-depth look at municipal smoking bylaws.
8420 Each week the program will conclude with a segment called "Capital Comment", which will offer a "soapbox" for those involved in the issues, thereby adding an alternative editorial voice for the community.
8421 Some of these commentaries will be of interest outside the Fredericton area and may be shared with our other three radio stations in New Brunswick, from time to time.
8422 Our regular newsroom staff will be augmented by employing students from the journalism courses at St. Thomas University in Fredericton, on a stringer basis. We have also had discussions about a relationship with the journalism course at the Woodstock campus of the New Brunswick Community College. Those discussions include the possibility of an internship program, as well as offering students freelance work with monetary compensation.
8423 MR. MacMULLIN: Mr. Chairman, while we are on the subject of a new voice in town, I would like to address the issue of ownership and diversity of voices.
8424 I am privileged to be a member of a prominent media group in New Brunswick. The group is divided into two divisions. One division operates the newspapers, and the other division operates its four radio stations. Two separate companies, two different media, and that's about a close as we get. Convergence hasn't happened here. We are on our own.
8425 I can assure the Commissioners from my own first-hand experience of operating two radio stations in Saint John for Acadia Broadcasting, that there is absolutely no crossover between the Telegraph Journal newspaper and my radio stations. We are competitors in every sense of the word.
8426 We address this issue on Page 42 in our supplementary brief, where we state:
"It is Acadia's clear understanding that should this application be approved, the New FM station will operate independently and autonomously from the Fredericton Northside News and The Daily Gleaner newspapers".
8427 The radio station and newspapers will operate separate news, advertising and administrative departments.
8428 In the case of news, the radio station will have its own reporters assigned only to radio duties, separate and distinct from the newspapers. Similarly, there will not be any relationship between the advertising sales departments. The two media will remain totally separate. Competition will prevail at all levels.
8429 Mr. Chairman and Commissioners, I would like to conclude my remarks by simply stating that Acadia proposes a bright, friendly, and informative FM radio station for Fredericton.
8430 Hopefully we have projected this sense of community with this presentation. It is the very heart and soul of this application.
8431 We have endeavoured to present a reasonable business plan that describes how Acadia would increase the diversity of voices in Fredericton and increase the overall level of competition in the market.
8432 We sincerely believe our proposal is a good "fit" for Fredericton.
8433 We thank you for your attention, and we shall be pleased to answer any questions you would have.
8434 THE CHAIRPERSON: Thank you, Mr. MacMullin and the rest of your team.
8435 I will turn the questioning over to Commissioner Langford.
8436 COMMISSIONER LANGFORD: Thank you, Team Acadia, if I can call you that. Team Acadia, it doesn't sound bad. We will have some jackets run up.
8437 I think I might as well just start with your presentation this morning, start right at the end and move forward while the stuff is fresh in my mind -- or this afternoon... fresh is my mind!
--- Laughter / Rires
8438 COMMISSIONER LANGFORD: There will be large areas of your application that I won't touch on and the simple reason is they are clear. Your stuff on CTD for example is a model of clarity. I don't need to cross-examine you on something that is absolutely clear. You have referred to it again today and there doesn't seem to be to be any point of just asking questions to hear myself speak.
8439 But where I would like to begin is on your last page of your opening statement today where you talk about your determination to separate yourself from the newspaper interests in the kind I call it sort of the corporate family you are a member of.
8440 I suppose the simplest way to put it would be that if the Commission were to need some comfort on these very clear statements you have made today, and we were to craft a condition of licence essentially adopting your intention to have complete separation of the two worlds, the two members of your corporate family, would that be acceptable to you?
8441 MR. MacMULLIN: It certainly would.
8442 COMMISSIONER LANGFORD: That solves that problem, doesn't it? We will move right along.
8443 The second aspect of your opening statement today was mentioned in a number of places. Just at the end of your opening remarks, Mr. MacMullin, you said:
"It is our intention that this be a good "old-fashioned radio station" with lots of public service announcements, interviews, and on-site coverage of special events, similar to our four stations".
8444 There was mention then by Mr. Scholten about:
"... how Acadia intends to finance the operation of a live-to-air music format and the attendant costs that are incurred".
8445 Then again, we heard about covering everything from lost dogs to charity car washes, and then I think it was summed up by Mr. Weaver who, quoting your supplementary brief, said:
" The true strength of the station will be its continuous presence in the community. This will be apparent when listening for less than an hour -- any hour -- and knowing without a doubt this is a radio station originating in Fredericton, New Brunswick, and this program could not possibly originate anywhere else".
8446 Well, to be frank with you, when I read your very clear application and your very clear supplementary brief, this wasn't as apparent to me as perhaps it should be, and what I want to refer to -- I will get into a little bit of the spoken word programming itself -- is the split between what I would call live programming, if I can call it that, and automated programming, and it's not -- when I read that, I almost get the feeling we are going back to the '50s where there is a disk jockey on all night-long, but in fact your split is almost even; it's 51 per cent live, if I read your application and supplementary brief correctly, and if I don't you will correct me, I am sure, and it's 49 per cent automated.
8447 So not to want to put Mr. Weaver on the spot, but definitely to want an answer, how will I know when listening for less than an hour -- any hour -- that this radio station originated in Fredericton, New Brunswick?
8448 MR. WEAVER: As I mentioned in my statement, we will not be a music jukebox. It has been the tradition with radio programs of late to develop six in a row, ten in a row formats, or commercial free for an hour of straight music. That is not going to be the case with your radio station in Fredericton.
8449 What we plan to do is with every stop down or break, as we refer to it in the industry, there will be community announcements. Our announcers and staff will be very involved in the community as we are in our Saint John radio stations.
8450 We will be broadcasting as many events as possible to the public to let them know what is going on in the community. Saint John is a very busy and bustling city, as we have mentioned and heard this morning and this afternoon, and a lot of community organizations in Fredericton are just as active and we know that we can be there for them and provide them with additional community announcements, I guess, that aren't normal in the Fredericton market right now.
8451 We have, for example, "Fredericton Fridays" which we plan to allow people from the community, if they have an event coming on the weekend, for example, or some time early in the following week, we will allow them to come in and be a part of our morning show, prime time radio, from 7:00 to 8:00 a.m, join the morning team, co-host, if you wish, and really get their message to the public that, "Hey, our event is going to take place and we want you there" or " we want you to support us financially", whatever their message tends to be. But we are going to give them that time, plus we have a community bulletin board that is going to air twice daily, at 10:30 and at 4:30, and throughout the rest of the broadcast day, there will be a lot of community announcements as well as promotional announcements from the radio station.
8452 COMMISSIONER LANGFORD: So will you be working it even into the automated section? I assume the automated stuff comes at night.
8453 MR. WEAVER: There will be some automated through the mid-day period. We will be live in the morning. We take an hour break, and this will really give the announcers the opportunity to do community events. They could actually get out in the cruiser instead of being locked into the control room during those voice track periods, and especially during the evening. A lot of community events take place during the evening and radio staffs aren't as big as they were in the '70s and '80s, and you really have to really get your people out a whole lot more and it's tougher.
8454 Automation helps that way. Somebody wants you to MC an event, an auction or a fashion show or something in the evening, if we had a live announcer on the radio station, that announcer is not available. So this will make that person more available to the community -- all of our announcers.
8455 If I could just add to that.
8456 COMMISSIONER LANGFORD: Go right ahead.
8457 MR. WEAVER: If something is developing -- I don't know, a major storm like they have had in Halifax -- we will stay live and if it continues into a weekend period of voice track, we will bring in live people to go on the air and get the information that is needed to the community.
8458 COMMISSIONER LANGFORD: But assuming it's not Armagedon, or something, and it's more business as usual, your announcers have gone off to do a community event, and good on them say all of us; meanwhile you have some voice tracking going on to keep the music coming out of people's radios. How will the people, to pick up the quotation I have used twice from you, but how will they know if they listen for less than an hour -- any hour -- that this is old-fashioned radio. I am kind of merging yours and Mr. MacMullin's quotations together, but why is it old-fashioned radio? Are you going to have sort of customized voice tracking in the sense that there will also be community announcements worked into that or...?
8459 MR. MacMULLIN: You just kind of answered your own question, Commissioner. That's exactly what it is. We try to do this -- we call it voice tracking in the business -- taking advantage of the technology; we get the multi-task with the smaller staffs, and you have heard all those things before, but --
8460 COMMISSIONER LANGFORD: Oh, but we love to hear it again.
--- Laughter / Rires
8461 COMMISSIONER LANGFORD: Keep on trucking! This is your time in the spotlight.
8462 MR. MacMULLIN: We mandate with all of our talent on all of our radio stations, from our smallest to our biggest market, from our newest announcer to our oldest veteran, show preparation, and that show preparation must include huge amounts of community information. If they are going to voice track a session, a block of programming, a couple of hours, whatever it is, they have been instructed and trained to incorporate community information and involvement as up-to-date as is available to them at the time of doing the show.
8463 About the only thing, unfortunately, a voice track we can't do up to the minute unless we have people in the building as weather, but other than that we will be talking about Fredericton, what is going on in the Fredericton region, giving people information, things as simple as buying tickets to the local hockey game or the big Highland games that are coming up every year in the city.
8464 So, yes, that's exactly what we do. We enforce the on-air talent to customize their voice track periods.
8465 COMMISSIONER LANGFORD: In general, is -- and I appreciate your explanation and I understand it -- 49 per cent a large amount these days for voice tracking? Is it above the sort of average. I gather, Mr. MacMullin, you have had experience in working for all kinds of companies recently, so maybe you could help me out.
8466 MR. MacMULLIN: Thanks, Merv. I promised I would mention his name.
8467 I don't know what the average is. I can only speak for the stations that we operate, of course, and some familiarity with past companies. That's about the norm and we kind of model it after what we do in most of our operations, I guess is the only way I can answer your question.
8468 COMMISSIONER LANGFORD: Okay. Let's look a little bit at what you are going to be doing when you are either live or voice tracking. Classic rock I gather is going to be the preponderance of what people will hear, and you are not the only one who would like to give the good burghers of Fredericton some classic rock. Newcap wants to give them some as well.
8469 Can you help me distinguish between what I might hear if you were -- are you offering the same thing that your true classic rock, classic rock, but in fact does it come to the same thing?
8470 MR. WEAVER: The main difference between our two applications is the fact that we will not play anything beyond the 1980s. Our format will consist of the '60s, '70s and '80s, what we consider to be true classic rock. The current licensee in Fredericton with the rock format, FOX predominantly, broadcast music from the '90s and today with a spice of some classic rock from the '60s and '70s.
8471 So if the question is between the two applications, the main difference between the two is the fact that we are true classic rock, no '90s, no today.
8472 COMMISSIONER LANGFORD: Although I must say when Mr. Steve Jones was answering this same question earlier put by one of my colleagues, I think he came up with an explanation very much the same. The notes I jotted down were, "Heavily based in the '70s and '80s; 95 per cent of our music is pre-1990". So I suppose your two applications really are going head to head here.
8473 MR. WEAVER: Yes. We are 100 per cent and I think the other main difference between our two applications is in our spoken word and news commitment to the market and maybe Gary could give you an indication on what our news commitment is.
8474 COMMISSIONER LANGFORD: Look, if we could just hold on that for a moment -- I mean, certainly we will get to it -- and trust me, if we don't ask you every question we are able to count hours too. You know, we are pretty good at arithmetic -- all but Commissioner Cram; she is not very good at it at all actually, but the rest of us are and we help her.
--- Laughter / Rires
8475 COMMISSIONER LANGFORD: So you are both going to do classic rock, probably very similar. I mean, classic rock is classic rock, '70s-'80s, a little bit from the '90s. You are not going there, but they will go there for 5 per cent.
8476 MR. WEAVER: No, we aren't.
8477 COMMISSIONER LANGFORD: It does seem tome though the three incumbents in town are doing country and hit radios and adult contemporary, you are all looking after that same older demographic. Would that be fair to say?
8478 MR. WEAVER: Twenty-five to 54.
8479 COMMISSIONER LANGFORD: Yes.
8480 MR. WEAVER: Yes.
8481 COMMISSIONER LANGFORD: And their three demographics are 30 to 64 for country; 18 to 49 for contemporary hit radio, so dipping down a little; and 25 to 54 for adult contemporary. So you are really scrapping over that same market. Is that wise? Why didn't you go younger or something?
8482 MR. WEAVER: Well, we did some music research. Actually we did two monitors of the Fredericton market; one in September and another one just recently in February, and I think Michael could shed some light on to what we found with the existing rock station. They tend to be skewing to a younger audience since the application. In fact, more of their music today or in February was coming from the '90s and today than it was back in September after the applications.
8483 I think Michael has got that information here.
8484 MR. FOCKLER: Thank you, Bruce.
8485 I can take you in two directions here. We can either go with the BBM numbers which are from fall of 2002 that suggest that I believe 52 per cent of all teenagers between 12 and 17 listen to the FOX and what that suggests is that the radio station CFXY is skewing young and with that hypothesis we continued on and conducted the music monitors that Bruce mentioned.
8486 The first monitor took place in September of '03.
8487 COMMISSIONER LANGFORD: Could I stop you there? Would you mind? I don't interrupt very often, but is it possible that the reason so many young people are listening to the FOX, as you call it, is because that's all there is for them, but if they had their druthers, they would rather be listening to something like some of the applications we heard for Halifax earlier last week where we were going to urban and alternative rock?
8488 It seems to me -- and listen, you people have put in your application. It's clear, it's fine, but one does wonder when everybody seems to be heading for that same demographic, even the country applicants we had before are still heading for the same demographic, why nobody says, "Well, gee, there is the obvious huge hole. I am going there".
8489 MR. MacMULLIN: Commissioner, again I think you have somewhat answered your own question. The young people do go to the FOX because that is the source in Fredericton for the current popular trendy music, much like our station in Saint John we call the WAVE. Our decision to go with the classic rock and spoken word format that we have presented to you so clearly is because we saw that that was going to have the least amount of impact on the incumbents, which was certainly one of the criteria of preparing the application and presenting it. It showed us that it would impact the least amount on their operations and give us the highest likelihood for success with the operating plan we have prepared.
8490 COMMISSIONER LANGFORD: So if you went to a mixed urban hip-hop alternative rock format, heavy dance, you are telling me that would have more impact on the incumbents than what you are proposing?
8491 MR. MacMULLIN: It would impact on the FOX certainly a lot more than the classic rock format would because that seems to be their core. The other thing is if we had chosen to go that route -- they have three stations, we are going in with one. So we have to have a format that has a demographic that has broad appeal and will allow us to mix the spoken word content that that little older demographic requires because our research showed that spoken word and news was lacking somewhat in the opinion of the people in our research, and Michael can speak to that in great detail if you would like.
8492 But that was the reason; it was to meet that criteria and allow us the opportunity to survive in a three-against-one situation.
8493 COMMISSIONER LANGFORD: So a mix of the older demographic and the desire for more spoken word.
8494 Mr. Fockler, I cut you off. Carry on.
8495 MR. FOCKLER: Well, no, I was about to agree with you, Mr. Commissioner.
8496 COMMISSIONER LANGFORD: Almost everyone does in this sort of an environment.
--- Laughter / Rires
8497 COMMISSIONER LANGFORD: Afterwards, I understand they are not always as kind, but in this room they always do.
8498 MR. FOCKLER: As I said, I was going to agree with you and then I would say, "However...". When you were speaking of urban content in the music, as we have heard here in Halifax about the applications, the demographic is very illusive. Any demographic these days is very illusive because of the fragmentation of the market in the music that is being played in it.
8499 So someone who is 16 or 22 may like something, a selection that was released a year ago or 20 years ago. The idea now is that you capture the niche in the market regardless of what the actual target demographic is.
8500 So coming back to your original question, yes, CFXY is skewing younger. That is the very reason why we decided to go with the older classic rock so that CFXY can maintain the youth market and still stay current and play the Defaults and the Nickelbacks and music like that that is brand spanking new and we will take the old foggie rock. We will take the old stuff that people can relate to, but the younger market may not be drawn to anymore.
8501 COMMISSIONER LANGFORD: And that fits with the adult contemporary I suppose as well.
8502 MR. FOCKLER: Yes.
8503 COMMISSIONER LANGFORD: Nobody is stepping on anybody's toes.
8504 Gee, it's just like marriage. Everybody has to give a little.
--- Laughter / Rires
8505 COMMISSIONER LANGFORD: Okay. Well, the second piece of this then is the spoken word content that you are obviously committed to and proud of, and you have spoken with some eloquence about today.
8506 I am pretty clear on the amount of news. You laid it out again today, 9.5 hours jumping to 13 plus the Sunday kind of wrap up.
8507 I am clear on the enthusiasm for the other spoken word, and everything from lost dogs to whatever, found kittens, but I am not clear on how much there is. What does it all amount to in the terms of either the percentage of 126 hours or the number of hours. What is it all going to come down to in the non-news spoken word, or if you want to wrap it all up, Professor Cram can do the substraction later.
--- Laughter / Rires
8508 MR. MacMULLIN: Bruce, maybe we should have Michael jump in that one if you don't mind. We have discussed this a little bit obviously in the preparation and, you are right, we are quite proud of our spoken word commitment. We find the format is rather unique and it's certainly going to fill a nice void.
8509 But, Michael, if you would on the spoken word issues other than news, can you just outline that for the Commission?
8510 MR. FOCKLER: Thank you, Mr. MacMullin.
8511 I don't feel that I can speak to the content of it, however the amount of spoken word would be, when you combine with the news, approximately 20 hours per week of news and spoken word which works out to 15 per cent of our overall play.
8512 COMMISSIONER LANGFORD: And the news was about, counting the Sunday show, what? About 14.5 hours or something?
8513 MR. FOCKLER: It was 13.35.
8514 COMMISSIONER LANGFORD: Does that count Sunday?
8515 MR. FOCKLER: That includes the Sunday Magazine as well as BN.
8516 COMMISSIONER LANGFORD: So 6.5 hours roughly speaking of lost dogs. I am being facetious -- but all of the other stuff that you are dealing with.
8517 MR. FOCKLER: Yes.
8518 COMMISSIONER LANGFORD: Now, what I am interested in -- and maybe we will be finally getting to you, Mr. Scholten, I am not quite sure how you have broken this up, but I am going by the introductions -- I am kind of interested in how you program this 20 hours news plus other spoken local content to hit that demographic of 25 to 54, I believe is your choice.
8519 Is there a special way to do that or do you just basically give them the same news that everybody else gets, the same spoken word content?
8520 MR. WEAVER: Through our experience, or my experience and those of us at the table in radio, you program to your demographic. You look at their lifestyles, what they are interested in. Our spoken word will relate to the audience, the greatest number of audience or listeners, I guess, that if an event affects say 1,000 people in our demographic, it's going to get a lot of coverage on our radio station.
8521 If the newscast, our local news content are regional and national, of course; there will also be lifestyle portions to the newscast as well and those lifestyle portions will be aiming at the 25 to 54 demographic. Also included in our spoken word programming, outside of the news will be a lot of information on the artists. A lot of these guys, where are they? David Crosby was just in court again for drug possession and firearms possession and a lot of people are fans of Crosby Stills Nash and Young. That is the kind of information -- we will relate to the artists we play as well as to the community in our news and on-air programming.
8522 COMMISSIONER LANGFORD: But 25 to 54 is a bit of a spread. It's not quite the newlywed and the nearly dead, but it's in there somewhere.
--- Laughter / Rires
8523 COMMISSIONER LANGFORD: I mean, the reason I ask these is your supplementary brief is full of that kind of language and you are full of that kind of language this morning and enthusiastic about how you have created this package where both the music and the spoken word will work together to fulfil the needs of this special demographic, but other than telling us that Mr. Crosby has got problems again, can you give me some more examples? I am not quite sure how one either chooses news or presents news or programs spoken words not news to appeal to that demographic.
8524 MR. MacMULLIN: It's not news that we will choose in the sense of that spoken word. I think one of the applicants this morning kind of addressed it in the same fashion. The news of the day and the content of that is driven and that's the same whether you are 12 or you are 112. If it's happening in your town, if it affects you, we read it in the news.
8525 It's something like I said a while back about mandating the show preparation and knowing what is going on and being involved in the community, and maybe we should ask Lori Carle who does promotions for us in Saint John to just give you a little indication of the kinds of things that we will be getting involved with and get a lot of information on and then make sure that the information is communicated to the on-air talent who can deliver the message to the audience.
8527 MS CARLE: Just, as we were talking about earlier, in Saint John alone we do so much in the community and that's what we want to do as well when we get into Fredericton. Some of the different things that go on in Fredericton such as in May, they have the Fredericton Marathon. It's a run for emergency shelter as well as for their Safe Grad. That could be something that we touch on. Hospithon, the Dr. Emerett Chalmers Regional Hospital; that's a huge fundraiser for them and that's something we could get involved in, right through to the Harvest Jazz and Blues Festival which is a huge well-known festival that they hold in the fall. Any number of these types of events, the Fredericton Comedy Festival, the Tidal Wave Film Festival, and so on.
8528 COMMISSIONER LANGFORD: So it's heavily local, very, very local. Will the news then be heavily skewed to local as well?
8529 MR. MacMULLIN: Local is the secret to our success and, as I said, we are very proud in the communities that we are in for exceeding commitments in all kinds of ways.
8530 But Gary MacDonald, our News Director, can certainly speak to that because he will be instrumental in setting up the news department in this new station if we are successful.
8531 Mr. MacDONALD: Mr. Commissioner, 75 per cent of our newscasts will be local in nature; our five live local newscasts, that is. We will also being into play about 10 to 15 per cent of provincial regional stories and about 10 per cent of national stories and any international stories that may be relevant at the time.
8532 Again, it all comes back around to, as you heard this morning as well, you localize, localize, localize. Most stories can be localized in some way, shape or form, and that's how we will do it.
8533 Just to give you an outline as to what we are doing, we will be running live local newscasts Monday through Friday between 6:00 a.m. and 9:00 a.m. They will go every 30 minutes. Through mid-day it will be at the top of the hour, five minutes, and then through the drive period, 4:00 to 6:00 every half-hour, again a five-minute news package.
8534 In addition, on the weekends between 7:00 a.m. and 2:00 p.m. on Saturday and Sunday we will have a five-minute newscast every hour and on Sunday mornings, of course, we will have our one-hour news magazine. That will be supplemented, by the way, by the broadcast news report on the off times.
8535 COMMISSIONER LANGFORD: And those weekend news programs will be live.
8536 MR. MacDONALD: That's right.
8537 COMMISSIONER LANGFORD: Do you anticipate with this demographic losing some of your audience to the CBC for a major international news, say the World at Six or something in the morning, perhaps one newscast in the morning? People of this age are often very serious about their international news which isn't in any way to minimize the impact of their appetite for local, but do you anticipate losing them occasionally for --
8538 MR. MacDONALD: Mr. Commissioner, the CBC does an excellent job on international coverage and as well national coverage and I would suggest to you, yes, that from time to time people will tune in to take advantage of that coverage.
8539 COMMISSIONER LANGFORD: Just sort of go out and get their international hit and find out where Belinda is today and then come back.
8540 MR. MacDONALD: Well, we can find out where Belinda is today especially if she is in Fredericton on our station.
8541 COMMISSIONER LANGFORD: But she is in Indian Head, Saskatchewan which is inevitable she will be eventually. I gather you wouldn't be carrying that.
8542 MR. MacDONALD: It would depend on the actual story coming out of her visit there.
8543 COMMISSIONER LANGFORD: And I suppose if she tripped up in Indian Head, they are all waiting for a woman like a death watch.
--- Laughter / Rires
8544 COMMISSIONER LANGFORD: She may defy them all yet.
8545 Okay. I want to go on with the notion of shared programming in some of this spoken word, perhaps news. You have other stations in New Brunswick. You made it clear you are not going to share with the newspapers and you are going to have your own separate news bureaus, and hurray say all of us, but what about with your other radio stations?
8546 MR. WEAVER: No, there would be no sharing of programs other than news. We are dealing with a country format in St. Stephen and in Saint John and a very hot AC format in Saint John as well. So this format will be totally different and most of the programming on our existing radio stations, including CKBW in Bridgewater, is distinctly different from what we are offering in Fredericton. So I don't think there would be a lot of programs available that would fit all formats.
8547 COMMISSIONER LANGFORD: When you say "other than the news", do you mean the whole news show or just to pick up a story here and there?
8548 MR. WEAVER: A story here and there.
8549 COMMISSIONER LANGFORD: What about this provincial legislative coverage. I am not quite clear how that is going to work. You say you are going to share that with others. You are even going to make it available to the competition. I don't know why anyone would do that. Am I reading that correctly, that you are going to cover the Provincial Legislature in Fredericton?
8550 MR. MacMULLIN: I will let Gary explain, but I mean we often feed stories to broadcast news, so that's sharing with the competition regardless and they do the same.
8551 But, Gary, maybe you can explain that a little bit better, the legislative coverage and sharing that.
8552 MR. MacDONALD: Well, what we propose in Fredericton, we will have three full-time journalists in the newsroom. One of those reporters or journalists will primarily be a reporter responsible for the Legislature coverage, and of course other events in and around the Fredericton area.
8553 We will use that resource to draw some local angles for our Saint John newsroom as well as our St. Stephen newsroom from time to time because obviously the reporter in Fredericton would have perhaps slightly faster access to some of the newsmakers than what we could over the phone from Saint John.
8554 COMMISSIONER LANGFORD: I see, and is that normal to be sharing that kind of stuff with the competition?
8555 MR. MacDONALD: That wouldn't be shared with the competition. That would be within our own organization.
8556 COMMISSIONER LANGFORD: But did I misread it? Did you not say in your supplementary brief, and gosh, I didn't make a note of everything, but did you not say that you would be perhaps even sharing the legislative coverage?
8557 MR. MacDONALD: No, I heard something along that line from another applicant earlier today, but we do not state that.
8558 COMMISSIONER LANGFORD: I am going to ask staff to help me on that one, see if you can dig that one up and hand it to one of our sharp-tooth lawyers to follow up afterwards, but --
8559 MR. FOCKLER: Commissioner, just to try and help, it's on page 23 of our supplementary brief.
8560 COMMISSIONER LANGFORD: Okay.
8561 COMMISSIONER LANGFORD: Well, I am not finding it, but I have made mistakes before. I made on one on May 4 in 1955 and that's on the record, and I have made another one today, obviously. I don't know where I got that idea, but we will carry on, if we can. I apologize for that mistake.
8562 So the sharing of the news from the Legislature will be strictly among your own radio group.
8563 MR. MacDONALD: That's correct.
8564 COMMISSIONER LANGFORD: Well, it certainly makes more sense in a competitive market, doesn't it? But I thought maybe you were taking a kind of Lochinvar approach to public interest stories.
8565 I want to move on then to your projections in the sense of a business case of how successful you will be and what kind of revenues you will enjoy with this format.
8566 I want to look first at projected market share and I am a little confused about a few numbers and this time I think it might be your fault and not mine, I hope, although I said that earlier and was proven wrong.
8567 You at one point in your supplementary brief at page 24 indicate that you will draw your share of the market 25 per cent from existing stations; 50 from new radio listeners; 15 from other media, Internet, personal audio, et cetera; and 10 per cent from out-of-market tuning.
8568 Then on November 7th, you provided us, in answer to a deficiency, an amended table setting out the market share which said local market would be 18 per cent; new tuning, 35 per cent; other media, 17; and repatriation of out-of-market tuning, 30.
8569 Before we get into the realities or not of those numbers, why the big changes? What happened to make you so alter the case? Have I got that wrong now? I am seeing some pretty confused faces.
8570 MR. FOCKLER: Once again, Mr. Commissioner, you are correct. We did alter those share numbers from our supplementary brief to the deficiency letter of November 7th. What had happened is that we simply reworked our numbers and found that we could be a little more conservative in some places and a little more aggressive in others and felt that this was more representative of what we will actually do in the market.
8571 COMMISSIONER LANGFORD: Okay. So you want to go with the 18-35, 17-30, November 7th numbers?
8572 MR. FOCKLER: That's correct.
8573 COMMISSIONER LANGFORD: Fair enough. Can you help me through them? I mean, now that I have seen them changed, I guess I want to know where they come from the numbers like this. It fascinates me. So starting with the big one, shall we say, repatriation of out-of-market tuning, 30 per cent. That's huge, isn't it?
8574 MR. FOCKLER: That's 30 per cent of our overall total hours tuned, yes, that's correct.
8575 COMMISSIONER LANGFORD: Right.
8576 MR. FOCKLER: We felt that in market that, as a previous applicant had stated, has at the time of this writing 24.1 per cent of out-of-market tuning and in 2003 had jumped to 25.2, or in other words a five-year average of I believe 20.2 per cent in Fredericton of out-of-market tuning, we took a look at what they were listening to and some of the stations and some of the formats, and we felt that we could repatriate probably 30 per cent is what we came down to because of the large amount of out-of-market tuning and the dissatisfaction within the market of the existing stations.
8577 COMMISSIONER LANGFORD: But your first number was 10 and you tripled that on your second go around. Maybe that's realistic, but what we heard from the last applicant, and it's fresh in all our minds, is the reason they felt they could do so well is because their country format was the real niche where people were turning to an American station and to a lesser extent other stations and that's where they could really pick them off by going right after that same demographic in that exact same format. But you are not in country; you are in classic, true classic rock, excuse me.
8578 So can you give me a similar kind of breakdown to the one they provided? How do you move from 10 per cent, your initial guesstimate, to 30 per cent? What do you base that on?
8579 MR. FOCKLER: Again, Mr. Commissioner, we based it on the reflection of the high out-of-market tuning, the high level of out-of-market tuning to a station whose -- I believe it was CJYC in Saint John that there was a high level of market tuning to that station from Fredericton. So we felt that those were the types of things that would draw the listeners back. As well with the existing rock station in the market, as we discussed earlier, skewing younger, the older people would be more drawn away from the out-of-market and back to the New FM.
8580 COMMISSIONER LANGFORD: I don't want to seem difficult, but taking from an existing station that is skewing younger, certainly not out-of-market tuning. So let's hit that on the side, and that is not to say you can't do it, but it doesn't come under this category.
8581 Now, I am searching my memory. It has been a long week and a half, and I may be wrong on this, but it seems to me that when Mr. Miles for Rogers was in front of us earlier today, or maybe the day before or maybe the day before that, he indicated that the most any Saint John station was taking out of Fredericton was somewhere between a 3.9 to 5 share.
8582 So even if you have all of it, is that going to make up the 30 per cent that you are building your business plan on?
8583 MR. FOCKLER: Any single station would take more than 3 per cent out of Fredericton. As we have stated, there is a very substantial -- over one quarter of all tuning in Fredericton is out of market.
8584 COMMISSIONER LANGFORD: To Saint John.
8585 MR. MacMULLIN: To Saint John and to Moncton.
8586 COMMISSIONER LANGFORD: And to where?
8587 MR. FOCKLER: And to Moncton.
8588 COMMISSIONER LANGFORD: To Moncton.
8589 MR. FOCKLER: And to that general area.
8590 COMMISSIONER LANGFORD: As far away as Moncton?
8591 MR. FOCKLER: Yes.
8592 COMMISSIONER LANGFORD: And one American station.
8593 MR. FOCKLER: Yes.
8594 COMMISSIONER LANGFORD: Okay. Seventeen per cent from other media, the Internet, personal audio and cable. Now, we have been led to believe, certainly I have, that these are the domain o the very young, the 12 to 24 demographic. They are the ones who are loading up their MP3 players and going jogging and they are the ones who are downloading, hopefully legally, from the Internet and listening to it.
8595 Your demographic isn't there, certainly, now I am right off the demographic charts, but nobody I know is downloading anything mainly because they are so incompetent with the computer; they don't know how to do it. It isn't that they don't have a larcenous streak in them a mile wide; they simply don't have the technological ability to pull it off. It's the kids who are doing this.
8596 So where do you figure this classic rock stuff that was recorded years before they were born is going to persuade them to leave the Internet and come to you?
8597 MR. FOCKLER: Just if I could digress for half a second. There are people today who are listening to this hearing who are not listening to the radio and those are the people in part that we will draw back.
8598 COMMISSIONER LANGFORD: If my secretary starts listening to your radio station instead of doing her work -- and Nicole, are you listening -- I will not have it.
--- Laughter / Rires
8599 COMMISSIONER LANGFORD: Actually, we have to call them personal assistants now, I suppose.
8600 All right. So you have a few people in that, but this is a big hunk. I mean, we are talking 17 per cent of your projected market share.
8601 MR. FOCKLER: That's correct, Mr. Commissioner. A radio station suggests -- let's say Q107 from Toronto or CHTZ from St. Catharine's. They can be picked up, of course, all around the world via the Internet and if an individual, regardless of their age, whether they fall into our age demographic or not, and is looking for that kind of continuous music source, will go to the Internet and after two or three very simple clicks will call up Q107, CHTZ, CFOX Vancouver, and they will get their Internet source for their classic rock music, true classic rock music.
8602 COMMISSIONER LANGFORD: Good luck on that one.
8603 The final figure is 35 per cent from new radio listeners. So who are they?
8604 MR. FOCKLER: They are people, of course, who are new to the market, or who are new to radio in general. Just a couple of statistics here. There are over 8,000 full-time students at the University of New Brunswick in Fredericton and those students represent a transient listening base. They come in; they come out; they spend a year there. They are factored into BBM and then they leave again. So that's could very well be a significant source of listening.
8605 The second spot is that Fredericton has a projected growth rate of 2.4 per cent per annum which translates into approximately 2,500 new listeners each year in the market. That 2,500 persons will make up a substantial portion of the new tuning.
8606 COMMISSIONER LANGFORD: How many listeners do you expect to have?
8607 MR. FOCKLER: One second, please.
8608 MR. FOCKLER: We expect to grab a 14 share of the market which represents about 12,135 people.
8609 COMMISSIONER LANGFORD: Twelve thousand and 17 per cent of that will come from Internet users and 35 per cent from new radio listeners and many of those you are hoping will come out of the 18,000-strong student body.
8610 MR. FOCKLER: Yes, sir.
8611 COMMISSIONER LANGFORD: Are they going to listen to music that I listened to when I was their age?
8612 MR. FOCKLER: Musical tastes these days are so eclectic. You cannot keep it within the boundary of a 12-24 or a demographic scale and I think that is one of the things that the people last week in Halifax were saying as well, is that with the urban market you can have someone 12 or you could have someone 40 and if they like that kind of music, that genre, or that band, then that's where they will go.
8613 MR. MacMULLIN: In addition, the classic rock format in our research showed it had the highest single percentage of people who would come back to radio or listen to radio more if they had a steady source for that kind of music. So all those percentages are going to be added to right out of whatever part of the group that that percentage falls into, of course.
8614 COMMISSIONER LANGFORD: And then once you get all these listeners from all these sources, and they are all happy as heathens, you are going to go off to the advertising market and try and make some money with your product and you project, roughly speaking, a doubling of revenues between year 1 and year 7 starting at around 600,000, 599,000 exactly I think, and moving to about 1.2 million.
8615 These assumptions, these figures, if I read your brief correctly, are estimated on the assumption that the Fredericton market has a value of around five million. You are going to get a 14 per cent share of that which would mean 700,000, but you then discount that number by what you sort of describe as a caution factor of 14 per cent.
8616 So it's pretty complicated. Can you take me through it, how that worked?
8617 MR. SCHOLTEN: A description of the methodology is all found in section 5.5, but I will help explain some of it. Because the detailed summary of the local revenue for the Fredericton radio market is not available due to the limited number of incumbents, we turned to available financial data and other sources of statistical information to come up with a valuation for the radio revenue in Fredericton.
8618 Calculations for the application were based on CRTC financial summary for AM and FM radio for the Province of New Brunswick 2002; Statistics Canada population figures 2001 census; Statistics Canada demographic statistics, June 2003; BBM fall 2002; tuning levels; Enterprise Fredericton; New Brunswick Economic Development Corp. Using all this data, we first calculated the population ratio of the greater Fredericton market to the total NB population, then applied this ratio to the total AM-FM radio revenue and included a calculation for the optimistic economic indicators to come up with a Fredericton market valuation of about $5 million.
8619 We then used a conservative estimate of 12 per cent market share to arrive at the first year revenue of $600,000. I think that's where your discounted by 14 per cent, we used a conservative figure of 12 per cent. That was just the math to get down to that 12 per cent figure.
8620 COMMISSIONER LANGFORD: Was there any reason for that, or is that just something that --
8621 MR. SCHOLTEN: We wanted to stay on the conservative side of our calculation. Further to that, of the total we estimated that regional national revenue was going to be about 6 per cent of that, therefore 94-95 per cent of that being local.
8622 We further kind of got a confirmation of the total Fredericton radio market. The more recent data just submitted from the 2003 annual returns, the details for Fredericton are not available again. So using the Moncton market as a benchmark, it being a healthy competitive market, indicates radio advertising to be roughly half of 1 per cent of Moncton's total retail sales.
8623 If we apply that factor to an estimate of Fredericton's total retail sales of a billion dollars, again it gives us about a $5 million market value.
8624 COMMISSIONER LANGFORD: And you wouldn't be putting that cautious sort of reduction from 14 to 12 share or 14 per cent discount, however you want to phrase it, just to make us feel comforted that you won't be hurting the incumbents, or anything like that, would you? Or is that a sound mathematical equation? Is that what everyone in the industry does, put in a cautious factor, or is it just to make us feel --
8625 MR. FOCKLER: Mr. Commissioner, I have no idea what the finance side of it is, but I can tell you that we did sit down and have a couple of discussions about it and with the 14 per cent market share in the first year it would kind of be a honeymoon period, people tuning in and listening to our station for the first time and just drawn by the uniqueness of a new station regardless of format.
8626 So it would behove us as a new station to go out and maintain our 14 share and work to hold the listeners, but we don't expect the same from the advertisers. The advertisers won't be as excited to spend their money with the new station until we can assure them, and assure ourselves, that we can hold the 14 per cent.
8627 So I think that's where the 2 per cent difference between the market share and the revenue share might come from.
8628 COMMISSIONER LANGFORD: I see. And you expect to bring in 25 per cent of your revenues from brand new advertisers, according to your supplementary brief and your application. Have I read that correctly?
8629 MR. SCHOLTEN: For that area, that section of the market that is not being adequately served, advertisers that want to reach that market, we would see that as a nice potential to garner those advertising dollars back into the market. So those advertisers can directly target the listeners and that audience.
8630 COMMISSIONER LANGFORD: So you are going to take them from the Fredericton Gleaner?
8631 MR. SCHOLTEN: Sure, if it's there to be had. They are as much a competitor for us as anybody else in the market.
8632 COMMISSIONER LANGFORD: It must be a heck of a Christmas party you guys are going to have when the whole family gets together, I will tell you.
8633 And 25 per cent doesn't seem high. You don't think they might fight back, do you?
8634 MR. MacMULLIN: Well, I know I would. We never said it was going to be a walk in the park to do this. We have conservative estimates. We think our plan is very realistic and to get 25 per cent there we too have a very professional, well-trained, well-managed marketing department that we are quite confident can do the job and find that there. There are a lot of businesses in Fredericton, a lot.
8635 COMMISSIONER LANGFORD: If I read your brief correctly though, one of your main strategies is that you are going to drop the price of advertising as soon as you hit town. You are going to cut $6 off the $30 rate which is a 20 per cent cut, and that sounds an awful lot like you might be creating the kind of jungle mentality that you were beating your breast about a little earlier and saying mea culpa and wishing you had never started it.
8636 So are you going to go in and do it again?
8637 MR. MacMULLIN: That rate card was prepared without all of the pertinent market information and perhaps should have been adjusted before it was submitted. We plan to go in and be very competitive. I certainly don't want to create the situation that I spoke about earlier today. We will maintain a very competitive rate card and get full fair value for our product in the market. That's what that comes down to.
8638 COMMISSIONER LANGFORD: Yes. In the other market you are kind like Mr. Martin. You can blame it all on the last guy, but this time it will be your fault if you own it.
8639 MR. MacMULLIN: Exactly.
8640 COMMISSIONER LANGFORD: Well, any other competitive techniques then? If you are not going to cut prices, what are you going to do? You are three against one.
8641 MR. MacMULLIN: Yes, exactly right. We will be distinctly different. It is rather a unique format. It has a very heavy spoken word content. We will be very visible in the community, very hands on. The other day, as we were preparing, for example we did a very quick count of the kind of major activities we are involved in in our Saint John market right now, and a comparison to Fredericton, and we hit about 17 major events that we are directly responsible for helping raise, over $2 million a year for local community and charity organizations. That really gives us a very high profile, hands on. We get letters of praise and thank you from those organizations. A lot of our customers partner with those organizations as well. So we have become very, very much a part of the community and we will have at least a 14 share, hopefully more as we grow, and we will certainly be an attractive vehicle for Fredericton and area retailers and business to advertise with.
8642 COMMISSIONER LANGFORD: You wouldn't be tempted to get into any sort of local Sales Agreement with the three incumbents, would you?
8643 MR. MacMULLIN: No.
8644 COMMISSIONER LANGFORD: So if were to put a COL on your licence saying that before you did anything like that, you would come before us?
8645 MR. MacMULLIN: Exactly.
8646 COMMISSIONER LANGFORD: You would be agreeable to that?
8647 MR. MacMULLIN: That would be fine.
8648 COMMISSIONER LANGFORD: Okay. I just have a few more questions. We have done the whole relationship with the newspapers, so we can give that a miss.
8649 I think just before I give you the chance to hit the big ball out of the park, I am going to go back to that second mistake I made since 1955 or 1954, and refer you to page 16 of your supplementary brief where you talk about the coverage of the Provincial Legislature and you say:
"Of note will be the special emphasis placed on coverage originating from the Provincial Legislature. These stories and soundbites will be shared with Acadia's three other radio stations in New Brunswick".
8650 So you are right, and somehow I was wrong and I don't know how I did it. So I just thought I might as well put that on the record and clear it up.
8651 THE CHAIRPERSON: Quit while you are behind.
--- Laughter / Rires
8652 COMMISSIONER LANGFORD: Yes, quit while I am behind, as the Chairman says, but if you have it wrong, you have it wrong you might as well prove you have it wrong and get it out of the way.
8653 Finally then, this is a competitive process and you are looking for a frequency that others are looking for. You have alternatives, but you have a favourite too, and so I suppose this is your chance to tell us why your application is the best use of this public property, the best use of this frequency.
8654 MR. MacMULLIN: Thank you, Mr. Commissioner.
8655 I will do that. Acadia first and foremost is a new entrant and a brand new voice in Fredericton. We have an excellent track record we bring to the table and our approach to it and bringing that new voice and competitive level to the market is certainly a strength.
8656 We will be live-to-air at least ten hours daily, seven hours daily on the weekends. So we bring a lot of live programming to the market and more is required, and as business permits, hopefully.
8657 Thirteen and a half hours, or a little better than that every week of live, local news with at least 75 per cent local content in those newscasts and, of course, our weekly magazine with capital comment that act as that soapbox for people dealing with the issues of the day as they relate to the community.
8658 A lot of community access to the station. The many new features and programs like "Fredericton Fridays" and on a daily basis, we will encourage people from all walks of life and from all organizations to share their story with us so we can share their story with the Fredericton population.
8659 Fifteen per cent spoken word content certainly brings a lot of that community involvement and news to the community. Minimal impact, we believe, on the existing stations, as I think we have demonstrated pretty clearly in our presentation and in our supplementary brief. It certainly benefits our long-term plan and strategies to be a bigger and better Maritime broadcaster. We will also add to the economic strength of Fredericton with 17 people on the payroll, over half a million dollars in payroll as we launch the station, hopefully.
8660 We have the management experience and certainly the financial capacity to make sure that we can get through the rough times before we get to the good times, so there is no fear of that.
8661 We really and truly do believe that our proposal is absolutely the best fit for Fredericton right now.
8662 Thank you very much.
8663 THE CHAIRPERSON: Thank you.
8664 Counsel, no questions? Those are all our questions. Thank you very much, lady and gentlemen.
8665 MR. MacMULLIN: Thank you, Commissioners.
8666 THE CHAIRPERSON: Mr. Secretary.
8667 MR. LeBEL: Thank you, Mr. Chairman.
8668 We will now hear the application by Mr. Ross Ingram on behalf of a corporation to be incorporated for a licence to operate an English-language low power commercial specialty FM radio programming undertaking in Fredericton.
8669 The new station would operate on frequency 94.7 MHz, channel 234LP, with an effective radiated power of 25 watts.
8670 Mr. Ingram, you have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
8671 MR. INGRAM: I am Ross Ingram and this is Paul Dixon.
8672 The last time I was involved in a radio station application was in the late '50s when the Amherst Broadcasting Company applied for what became CKDH.
8673 That was heard before the governing body of the day -- that was a long time ago; it was the BBG or the CBC, I can't remember which.
8674 I want you to know that the hearing here today is much less intimidating than that one 40-odd years ago. We felt like we were on trial for our lives. We are older and wiser now though and we realize that the decisions made then were good ones. That is proven by the fact that CKDH is still a successful broadcasting entity.
8675 We would like to take our assigned time to outline our philosophy of low power broadcasting and the special place of low power community radio stations in the overall spectrum of broadcasting, and apply this philosophy to our own application.
8676 Low power community radio is essentially "cottage industry radio" -- a staff of two or three people providing community-based programming for a specific area -- in our case the City of Fredericton. Based on experience in both media, I can tell you that the old 250-watt local AM radio station, or the small weekly community newspaper, had much the same objective -- to inform and entertain the community it served.
8677 We believe that one of the basic ingredients of the service provided by these community radio stations is local news. The daily round of telephone checkups with the local police and fire departments, the rumour in the barbershop that you pick up and follow, your knowledge of the movers and shakers in your community -- all go to make up local news. Needless to say, local news would be an integral part of our program service.
8678 With that comes the importance of getting the stories behind the news through interviews with newsmakers and informed observers. From time to time that includes informed editorial comment, clearly defined as such.
8679 We badly need a diversity of editorial voices in Fredericton where there is actually only one editorial voice heard regularly on the Astral radio stations in Fredericton.
8680 I think another important task for a religious-based radio station is to foster understanding among the Christian community and other religious groups. The Jewish and Moslem communities in Fredericton are very small, but in this day and age, more than ever, there is a need for understanding and cooperation among the world's major religions.
8681 Cooperation and understanding already exist to a great degree in fields such as the operation of the Fredericton Community Kitchen where the regular staff takes a Christmas holiday while the Jewish community takes over. There are many stories like this to be told and much to learn, we think, from other faith groups.
8682 Our proposed radio station will be, first and foremost, a community radio station in every sense of the word, and, secondly, a radio station with a gospel and praise music format as outlined in our application.
8683 Now, in the case of Christian-based radio stations the question is often asked: Is the target audience Christians or non-Christians? In our opinion, the answer is both. A radio station with strong community programming will attract both groups because our community, on the order of about 100,000 people in the Greater Fredericton area, is composed of both Christians and non-Christians.
8684 The Commission should note that the letters of support submitted along with our application come from a cross-section of the community. In most cases we are unaware of their religious or denominational affiliation. They deal with the need for a radio station of the type we are applying for and with our ability to make it happen if we are granted a licence.
8685 The Board of Faithways Communications consists of a person well-experienced in administration, John Church, a former School Board superintendent. Malcolm Thomas, a former pharmacy owner, will provide business advice and expertise. Both will advise me on the financial and administration operation of the station while I oversee the programming and all other aspects.
8686 Should our application be approved the Board will be expanded with the addition of Bill LaPointe. Bill has been performing southern gospel music for well over 50 years in Eastern Canada, the United States and the Caribbean and would provide a wealth of knowledge of gospel music to our board. We also anticipate a Sunday program which he would host.
8687 A little bit of history. The Christian music tradition in our area of New Brunswick dates back almost 200 years to the time when missionaries from the British and Foreign Bible Society arrived in Maugerville near Fredericton. The Church of England hymns they brought with them are still sung from time to time in many of the Anglican churches in Canada. T he Baptist, Wesleyan and Pentecostal traditions, among others, have taken southern gospel music and country gospel music to heart over the past 50 years or more, and there are at least 40 performing gospel-singing groups in the so-called Bible Belt extending from Maugerville to Centreville in central New Brunswick.
8688 In addition, church music in the Roman Catholic tradition has a long New Brunswick tradition dating back to the time of the Irish immigration to the province during the Potato Famine in Ireland.
8689 So the audience is there for southern gospel music, for country gospel and for hymns and compositions of praise from a number of traditions.
8690 We believe that small community radio stations in an urban setting such as Fredericton must share whatever synergies they can they should cooperate wherever possible. We are already involved in such efforts.
8691 Both Mr. Dixon and myself have provided help and advice to the low-power native operation in Fredericton -- the Maliseet Nation Radio station, CKTP. Mr. Dixon voluntarily installed the technical equipment and transmitter and I provided an a news service and programming advice from time to time.
8692 Mr. Dixon has also put many hours into maintaining and improving the technical operations of CJPN, the French-language community radio station in Fredericton.
8693 The federal minister of Infrastructure, the Honourable Andy Scott, is supporting and furthering a project, initiated by Mr. Dixon and myself. The Wabanaki Media project would link together existing First Nations radio stations in New Brunswick and establish native radio stations where they do not now exist.
8694 If Faithways Communications is the successful applicant we also propose to explore avenues of cooperation with other successful applicants and with the existing Christian radio station, JOY FM, since between us, with our differing music formats, we would cover essentially the entire potential listening audience for Christian radio in this area.
8695 Also specific to our proposal there is within the primary listening area of our proposed radio station a number of First Nations Christian people among those living on the three Maliseet First Nation reserves in our area and among those living off-reserve. We propose to include in our program schedule a weekly program featuring Ross Maracle who is a Mohawk evangelist from Ontario. Should the native radio station, CKTP, return to the air with programming, we would also offer the program to them.
8696 We will differ in many ways from the existing Christian radio operation in Fredericton. We do not -- repeat do not -- intend to solicit donations from Fredericton-area churches to finance our operations. We recognize from speaking with pastors and members of our local churches that churches need all the financial help they can get. Our inquiries lead us to believe that money donated to support outside ventures such as radio stations or televangelism is money that would otherwise be given to one's church.
8697 As an element of giving to the community we propose to select a Christian-based charity each year and donate a portion of the station's income to that charity based on the tithing principle.
8698 We intend to help churches and church organizations develop spoken word and live music programs for which the groups involved will pay for airtime. We will develop new, affordable advertising initiatives for churches. In other words, instead of taking from our area's churches, we will be giving to them. We do not intend to actively solicit advertising, although we do anticipate a certain level of "walk-in" business.
8699 Radio, in our estimation, is a business of personalities, not programs. The on-air personalities on our radio station would be, first and foremost, experienced communicators.
8700 We also anticipate we will be using the services of volunteers with a knowledge of broadcasting and the desire and motivation to contribute to our operation. We would also undertake to train those with an interest in our operation and with broadcasting potential.
8701 For programming purposes, we would require the volunteer to secure sponsorship or underwriting for the airtime of his or her program.
8702 Some comments on automation, a subject that was brought up here earlier today. The main benefits of computer-based automation are that of convenience and music quality, in our estimation. Convenience because the elements of daily programming are assembled in order -- the music, the commercial messages, the public service announcements and the like.
8703 Our operation during daytime hours -- during daytime hours -- would be "computer-assisted" with live on-air hosts able to react, to communicate, developing events, weather, news and the like and to interact with studio guests and the listening public. This is not possible for a radio station that is completely automated, or partially automated, during the important daytime hours.
8704 Our station would be completely automated between the hours of 7 p.m. and 7 a.m. on weekdays, but would still include timely broadcast items and other information features repeated from our daytime programming. It would be our objective to, as soon as possible, provide "computer-assisted" programming during daytime hours on the weekend. I think this is what we were calling live-to-air earlier.
8705 We would like to point out that this is not presently done on any Fredericton radio station and the ability to react to significant events suffers as a result.
8706 Let the Commission be assured we do not expect to become wealthy from this small-scale radio venture. Based on our experience in broadcasting, we anticipate the top salary to be in the $25,000 to $30,000 range with one and eventually two more positions in the range of $20,000 to $25,000 annually. Those who venture into this kind of radio operation, basing salaries on high power commercial radio wage scales are doomed to defeat.
8707 Another luxury we cannot afford is that of full-time employees who hope to specialize in some narrow aspect of the operation. The two or three salaried employees, in our estimation, must be able to perform just about any broadcasting function in existence and do it when required at any time.
8708 The licensing authority in the United States, the FCC, has a requirement that sums up quite well what should be the objective of every broadcaster no matter what the size of the operation. They promise to: "serve the public interest, convenience and necessity".
8709 We suggest that Faithways Communications will do just that - -serve the interest in our proposed listening area in southern gospel, country gospel and praise music, provide up-to-date and meaningful total news coverage stressing the latest local news for the convenience of our listeners, and public service information as requested and provide the necessary, so-called survival information such as frequent weather forecasts, storm warnings, notices of school closings, late school buses and whatever other information is vital to our listener.
8710 If we are the successful applicant for this radio station we anticipate being on the air within a three-month period after approval.
8711 So, in summary, we are asking the Commission to also consider our application in the light of the ever-shrinking availability of frequencies and the undesirability of issuing a second licence to an organization that already holds a frequency in the same market.
8712 Our application is the result of months of thought and deliberation, augmented by our total of almost 75 years of broadcast experience and expertise.
8713 I would ask Mr. Dixon to briefly address some of the technical aspects of our application.
8714 MR. DIXON: Thank you, Ross.
8715 From my aspect of this application I would like to state that we have been most fortunate enough to have written permission from the Aliant Telephone Company to put our antenna on their Priestman Street tower if we are granted a licence. This is probably the most desirable antenna location for low power FM in the Fredericton area.
8716 We are looking forward to establishing a technical state-of-the-art radio operation if our application is approved. I have a background of 33 years as a studio and transmitter technician with the CBC. I am now semi-retired and devoting most of my time to community radio, which, along with satellite broadcasting I consider the most exciting development in broadcasting in recent years.
8717 I have installed equipment and transmitters for a number of community radio stations including JOY FM, CKTP, CJPN, Life 107 in Blackville, New Brunswick, and I have prepared the technical specifications for the Wabanaki Media project that was mentioned earlier.
8718 As a dealer for radio station equipment and transmitters I already have most of the components on hand, those that would be required for our station should our licence be approved. That would give us a step up for the three months to on-air deadline that was mentioned earlier in this presentation.
8719 I can assure the Commission that our application, if approved, will result in a well-run radio station programmed with its target audience in mind and operating to a high technical standard.
8720 Mr. Chairman, that concludes our presentation today. Thank you. We are open for your questions.
8721 THE CHAIRPERSON: Thank you, Mr. Dixon, Mr. Ingram.
8722 I will turn the questioning over to Commissioner Williams.
8723 COMMISSIONER WILLIAMS: Good afternoon and welcome, Messrs. Dixon and Ingram.
8724 I am pleased to hear our process is not viewed as an intimidating exercise similar to a trial for your lives, as you described your appearance before a similar panel some 40-odd years ago. While it's not necessarily a walk in the park, we hope to offer a friendly, respectful and far less formal process than your first experience with a similar panel.
8725 I note that your application was originally filed and gazetted as Ross Ingram on behalf of a corporation to be incorporated. Subsequently, you filed a draft application for incorporation proposing to be called Faithways Communications Inc. So for purposes of identifying your application, although legally it's listed as Ross Ingram, OBCI, as per our process I will refer to it as which is your pleasure, Faithways Communications Inc. during my questioning.
8726 MR. INGRAM: Faithways Communications, right.
8727 COMMISSIONER WILLIAMS: Mr. Dixon, what was the process to select the Priestman Tower for the Faithways' broadcasting site?
8728 MR. DIXON: This took a little bit of doing. We had to approach the Aliant Telephone Company. They have I think a board of seven and they review the application and they think upon it upon some time. They come back and ask quite a few questions, just as you people do. After this review, we received a letter of approval.
8729 COMMISSIONER WILLIAMS: The name seems appropriate for your service.
8730 MR. DIXON: Yes.
8731 COMMISSIONER WILLIAMS: In your presentation today, you talked about:
"Our proposed radio station will be, first and foremost, a community radio station in every sense of the word".
8732 In a couple of paragraphs previous to that, you referred to the Jewish and Muslim communities and the need for understanding and cooperation.
8733 Can you give us an example how you could pull those groups together a bit more?
8734 MR. INGRAM: I mentioned in the application the Christmas operation at the Fredericton Community Kitchen where the Christian people take the week of and the Jewish community moves in.
8735 I actually was volunteering at the Fredericton Community Kitchen when I found that out and I was putting out a weekly newspaper at the time. I was the only person that used that story. It was a total scoop and if I hadn't been there, that story wouldn't have been told, but in a situation like this with a radio station like ours, it would be our effort to be where these things are happening, one, and two, to let the listening public know about them, in other words, publicize them, let people know what is happening in this regard.
8736 COMMISSIONER WILLIAMS: Would you have, say, community advisors from each of those religious groups assisting your organization in any manner?
8737 MR. INGRAM: We haven't thought it that far ahead, but we do have people that -- I do have people that I have consulted as a weekly newspaper editor who I could very well continue doing for radio.
8738 COMMISSIONER WILLIAMS: Okay. In the area of Canadian content, you may not be aware, or you may, but the radio regulations require commercial specialty FM stations to offer a minimum of 10 per cent Category 3 music per week. Elsewhere in the Commercial Radio Policy, the Commission states that at renewal time the Commission would discuss with commercial FM, specialty FM stations offering high levels of Category 3 music its expectation that licensees propose to exceed current Category 3.
8739 Given your station's proposed operation as a Category 3 music station, would you explain to the panel why you feel that a Canadian, a 10 per cent Canadian content level is appropriate in your case?
8740 MR. INGRAM: Because in the field of southern gospel music, not praise particularly but country gospel, Canada has only been getting into that particular type of music perhaps in the last six or seven years and there really isn't a great file of that music that we can draw on, but as it comes along, we will increasingly draw on it. Most of the southern gospel music comes from two places now when it comes to recordings: One from Ontario and from the U.S. -- most of it from the U.S.
8741 COMMISSIONER WILLIAMS: Thank you for that.
8742 Can we talk a bit now on the balance programming? The Commission's religious policy states that those stations which broadcast religious programming have an obligation to offer different views on matters of general public concern including religious matters. This is a fundamental requirement of the policy. The Commission expects all applicants to provide details in how they intend to ensure balance in their programming and how they would respond to complaints from the public about their balance in programming.
8743 So given that, would you describe for the panel the kinds of balanced programming you propose to provide, maybe develop that a bit as to who you have approach to help you provide these balanced programmings, and how many hours per week of balanced programming would you provide?
8744 MR. INGRAM: First, we will talk about news. Our news, as I mentioned there, we look on ourselves as first and foremost a full-service community station. When it comes to news, our news would include most times, wherever possible, religion-based stories. It could be something about Pope John Paul; it could be Billy Graham's health problems; it could be something that is happening in our own area of religious interest. So we would be very much aware of that in our news operation.
8745 Another thing, and it wasn't mentioned here, that we have been looking into quite extensively before we came here is broadcast and getting back to the old church broadcast service every Sunday morning, in other words broadcasting from a different church every Sunday morning. Of course, our spoken word programming and the advertising initiatives that I spoke of from churches these would be available to all elements of the Christian community.
8746 COMMISSIONER WILLIAMS: How would you select the churches?
8747 MR. INGRAM: We would leave that up to the Fredericton Ministerial Association which there is a Fredericton North and a Fredericton South Ministerial Association. The pastors and ministers of the various churches belong to that and we would let them make up the schedule for it.
8748 COMMISSIONER WILLIAMS: Who have you approached, specifically approached, to offer some of this programming? Are there any groups that you have already contacted?
8749 MR. INGRAM: Well, I have talked to various people. Speaking of the radio station is kind of difficult since it really doesn't exist until the licence is approved, but I have spoken for instance to the Anglican bishop of Fredericton. I have spoken to various members of the Evangelical churches in the Fredericton area. There is a great many of those. The Bible Belt is largely Evangelical-Protestant. I suppose over the last year I have probably spoken to 25 or 30 of those people. So I think we have a pretty good feel of what the Christian community wants and needs.
8750 COMMISSIONER WILLIAMS: How many hours per week of balancing programming would you provide?
8751 MR. INGRAM: Could you explain that?
8752 COMMISSIONER WILLIAMS: Well, the church service might be an hour and there may be some spoken word programming on Billy Graham or others like you have described. Approximately what percentage or how many hours of your broadcast week would --
8753 MR. INGRAM: I think we are saying in the application 35.
8754 COMMISSIONER WILLIAMS: And would you be prepared to agree by condition of licence to broadcast that many hours of balanced programming every week?
8755 MR. INGRAM: Absolutely.
8756 COMMISSIONER WILLIAMS: Thank you.
8757 You have described your format as southern gospel, country gospel and praise genres of Christian music that will target the 20 to 65 age demographic.
8758 JOY FM Network is also seeking to service some of the same demographic group by targeting the 50 plus age group with a music format that has similarities to your proposed format. As an applicant in a competitive process, I assume you have had the opportunity to review their application.
8759 Could you please explain how you think your format is different from theirs and can you give us any examples to demonstrate the differences? Also in the area of religious spoken word programming, if your format is different and your spoken word program is different, what are the differences?
8760 MR. INGRAM: Yes. I think the main difference, of course, is in the type of music that we are going to provide. The JOY FM format is contemporary Christian and it's my opinion, perhaps shared by a few other people, that probably the contemporary Christian format as a successful one is maybe eight or ten years away in this country whereas southern gospel has been a favourite type of gospel in the Bible Belt, a favourite type of music in the Bible Belt that I mentioned for at least 50 or 60 years and they are not hearing it, they are not hearing it on JOY FM nor are they hearing country gospel on JOY FM.
8761 So basically it's a difference in music format. Other aspects of the application would be quite similar, yes.
8762 COMMISSIONER WILLIAMS: So the spoken word would be similar.
8763 MR. INGRAM: Yes, yes.
8764 COMMISSIONER WILLIAMS: In your application, you provide us with the information, your plans with respect to local programming which you propose being at least 48 hours per week.
8765 Forty-eight hours per week seems like a lot of local programming to us, and so I am curious if you can tell us the source of this amount of local programming.
8766 MR. INGRAM: Local programming I think what I was looking at there was the fact that we would be doing a morning program, a noon program, an afternoon program, that sort of thing, if this is what is meant by local programming.
8767 COMMISSIONER WILLIAMS: Our definition by virtue of our nature is a little more complicated than that in that local programming is that which:
"... originates with the station or is produced separately and exclusively for the station. It does not include programming received from another station and rebroadcast either simultaneously or at a later time; nor does it include network or syndicated programming that is five minutes or longer unless it is produced by the station or in the local community by arrangement with the station. In their local programming, licensees must include spoken word material of direct and particular relevance to the community served, such as local news, weather, spots, and the promotion of local events and activities".
8768 So given that direction, or that description, pardon me, would your local programming still be 48 hours per week?
8769 MR. INGRAM: This is what we would be doing all the time.
8770 COMMISSIONER WILLIAMS: You may want to spend a brief moment, maybe after we break, with some of our Commission staff and if you wish to adjust your response, feel free to do that and they will be more than prepared to help you through that.
8771 MR. INGRAM: Thank you.
8772 COMMISSIONER WILLIAMS: Can you tell me a bit about your methodology, the methodology that you used for identifying the need in your listening area for your service? How did you go about determining that this was a service that was in need?
8773 MR. INGRAM: I think it dated back to two or three years ago when JOY FM went on the air and the contemporary Christian format, I think they got a fair number of complaints on it. We started thinking about it and looking at it and saying, "There is a Christian radio station on the air, what don't you like about it?". And the thing that we continually got was, "We would like southern gospel. We would like familiar hymns", the so-called praise category and there was also, we felt, a strong representation there for country gospel. So we incorporated the three of those and that is basically the reason that we made the application because I think between JOY FM with their contemporary Christian format and us with our format that appeals to an older demographic, we would have the entire potential Christian listening audience pretty well covered.
8774 COMMISSIONER WILLIAMS: Thank you, Mr. Ingram.
8775 What demographic group audience do your projections apply to? Maybe you can tell me a bit about the factors you took into consideration at arriving at audience projections that did appear relatively optimistic.
8776 MR. INGRAM: Well, looking at the demographic for southern gospel music, I think you have to stray away from categorizing it in a demographic fashion. I think it has to be categorized more by Christian tradition, the Evangelical-Protestant churches. The Roman Catholic churches have a type of southern gospel music that is quite popular in the area of Our Lady of Fatima church in Marysville. So I think you probably have to categorize it as a Christian tradition-type thing, and I think it goes from the late teenagers -- there are some southern gospel quartets in our area that are composed of teenagers, people in their early 20s. So it goes I think from the teenage years, as one of the people at the head table said earlier this afternoon, through the nearly wed, the nearly dead. It covers the spectrum.
8777 COMMISSIONER WILLIAMS: Okay.
8778 Can you tell us a bit about your financial projections?
8779 MR. INGRAM: We are financing this from our own resources.
8780 COMMISSIONER WILLIAMS: Okay. Thank you. Say your revenue projections.
8781 MR. INGRAM: We are looking at costs, on-air costs, of about $45,000 and the revenue projections, we anticipate that it's going to take about three months to -- we see a lot of that coming from our spoken word programming and it's going to take about three months to get that up and running and probably another three months to really see the cash flow moving there. It's a low budget operation, so once we pay the bills and pay ourselves, that's basically what we are looking at.
8782 COMMISSIONER WILLIAMS: You have identified broker programming as one of your sources of revenue.
8783 In fact, in your supplementary brief you state that the selected spoken word programmers that pay $60 per half-hour for a total of 600 nightly; $4,200 weekly or $218,000 annually. Like Commissioner Cram, I am no mathematician, but our staff has noted that this figure exceeds the $176,000 revenue projection that you included in your application.
8784 So there are two sets of numbers here and I guess I am looking for clarification as to whether we take the higher number or the lower number.
8785 MR. INGRAM: Let's say that the higher number was probably a best case scenario and I would be more comfortable going with the lower number there.
8786 COMMISSIONER WILLIAMS: Faithways Communications anticipates advertising revenues from individual churches which will consist of advertisement for the Sunday church services both on a regular and on an occasional basis. These services are currently advertising in newspapers. Faithways expects this form of advertising in addition to that placed in the newspapers.
8787 How much of your financial projection would come from that source?
8788 MR. INGRAM: Not very much, not very much, for sure. The Christian churches in the area have basically one avenue to advertise which is the newspaper and I am not sure, I think it's quite expensive over the last little while.
8789 The other aspect of that, what we were looking at there, is developing spoken word programs with these local churches and airing them and the churches paying for airtime. Also it appears that there may be some interest in certain commercial organizations in the city underwriting programs and presenting them.
8790 COMMISSIONER WILLIAMS: You also plan to offset costs through barter arrangements such as free advertisements and promotion, say for your landlord, in exchange for the rent of the studio location.
8791 Do you have other barter and finance arrangements that you are contemplating?
8792 MR. INGRAM: That is the only one and we are really not going to pursue that. That would be pending the approval of a licence when we exist.
8793 COMMISSIONER WILLIAMS: Okay. I think, Mr. Chair, I have reached the end of the portion of the questioning that I will be performing today and I thank you very much.
8794 MR. INGRAM: Thank you.
8795 THE CHAIRPERSON: Thank you, Commissioner Williams.
8796 I think Commissioner Cram has a question or two.
8797 COMMISSIONER CRAM: Thank you, gentlemen.
8798 I have heard you talking a lot today about a Christian station and using the word "Christian" interchangeably with the word "religious". If you have read our religious policy that is not the point. Christians aren't the only religion in the word and, in fact, Muslims and Jews have their holly days on Saturdays. And so I wanted to get into, and I have heard you, Mr. Ingram, talking about the Fredericton Ministerial Association. Is that a Christian association or are there non-Christians in it?
8799 MR. INGRAM: I think the local rabbi is part of the Ministerial Association. I am not sure of that, but I think he is.
8800 COMMISSIONER CRAM: And so when we talk about balanced programming, we are talking about a balance to Christian programming essentially and so when you said you would do 35 hours of balanced programming, what that says to me is you would do 35 hours of non-Christian programming as a condition of licence.
8801 Is that what you really meant?
8802 MR. INGRAM: Would you define the community radio programming that we are doing as -- that wouldn't be the Christian aspect. Is that what you are referring to?
8803 COMMISSIONER CRAM: No, I am talking about if you are doing religious programming, you have to live up to our religious policy which talks about providing a balance to Christian within the programming in your station. So I am talking about adherence to our religious policy.
8804 MR. INGRAM: Yes, we would have no problem with that.
8805 COMMISSIONER CRAM: So the question would then be: How much balanced programming would you provide?
8806 MR. INGRAM: Balance being defined as 50/50, or how would you go about defining it? You say how much.
8807 COMMISSIONER CRAM: It's in our policy. Have you read our religious policy?
8808 MR. INGRAM: I have, not recently, but I have when I was putting the application together.
8809 COMMISSIONER CRAM: So that the question is: How much balanced programming would you undertake by condition of licence, and maybe you would like to leave that for a further phase and talk with our staff about that.
8810 MR. INGRAM: I will do that. Thanks.
8811 COMMISSIONER CRAM: Thank you.
8812 You then said, Mr. Ingram, at the end when you were talking about JOY and how they have a different type of music, you then filed this and you said that the two of you would fill the field with your gospel and their contemporary.
8813 Are you aware of JOY applying for another licence?
8814 MR. INGRAM: Yes, we are.
8815 COMMISSIONER CRAM: At this hearing?
8816 MR. INGRAM: Yes.
8817 COMMISSIONER CRAM: And I guess the question is: Do you think the market can sustain three religious --
8818 MR. INGRAM: I think if you look at our application, we are not actively soliciting commercial advertising. The spoken word programming is virtually an untapped resource in the area, plus the advertising initiatives that we would develop with the local Christian churches I don't think would have any dent on the market at all.
8819 COMMISSIONER CRAM: So then when you said that, you didn't mean to say that you would have a problem with JOY getting a second licence.
8820 MR. INGRAM: No.
8821 COMMISSIONER CRAM: Okay. That was my only concern.
8822 Thank you very much.
8823 MR. INGRAM: Okay.
8824 COMMISSIONER CRAM: Mr. Chair.
8825 THE CHAIRPERSON: Thank you, Commissioner Cram.
8826 I would just like to follow up on that final issue, based on something you said in your presentation to us at the outset, but I take it given the discussion you just had with Commissioner Cram, it would make no difference to your application if we licensed one or two of the commercial applications for Fredericton.
8827 MR. INGRAM: No.
8828 THE CHAIRPERSON: It doesn't change it whatsoever.
8829 MR. INGRAM: No problem.
8830 THE CHAIRPERSON: In your presentation this afternoon at page 8, under summary, in the second paragraph you said:
"So, in summary, we are asking the Commission to also consider our application in the light of the ever-shrinking availability of frequencies and..."
8831 This is the one I want to underscore:
"... the undesirability of issuing a second licence to an organization that already holds a frequency in the same market".
8832 Now, I assume that other organization is JOY.
8833 MR. INGRAM: Yes.
8834 THE CHAIRPERSON: So what do you mean given the answer you just gave to Commissioner Cram, what do you mean by the "undesirability" of issuing a second licence?
8835 MR. INGRAM: What I am saying here is that frequencies are increasingly scarce, the ever-shrinking availability of frequencies, and rather than one organization have two, control two frequencies, we are saying there that we think they should be shared. I guess that is basically not worded very well, but that is what we were saying there.
8836 THE CHAIRPERSON: I take it then that that is kind of a general statement. You are not arguing that JOY would have, if we were to issue them a second licence, it would have a significant negative impact on your operation.
8837 MR. INGRAM: No.
8838 THE CHAIRPERSON: Thank you.
8840 MR. McCALLUM: Could you just explain one statement that you made in your presentation at page 6? Just the last sentence under the staff aspect where you say:
"For programming purposes, we would require the volunteer to secure sponsorship or underwriting for the airtime of his or her program".
8841 Could you explain what you mean by that and how it would work?
8842 MR. INGRAM: What we mean by that is for instance someone comes in and they want to do a program of let's say Caribbean gospel music, for instance. Okay, they go out and find a sponsor for that half-hour and come in and do their programming basically. They come in and produce their program.
8843 MR. McCALLUM: So if they didn't have a sponsor, they would not be able to get on?
8844 MR. INGRAM: We would like them to have a sponsor, but we say it further, we anticipate we will be using the services of volunteers with knowledge of broadcasting and a desire and motivation to contribute to our operation.
8845 A lot of them won't be coming in to do programs. They will be coming in to do an on-air shift and I think that's the difference. For volunteers who want to do specific programs, we would ask that, yes.
8846 MR. McCALLUM: And if the person was non-Christian, would they have to secure sponsorship as well?
8847 MR. INGRAM: Yes, sure.
8848 MR. McCALLUM: Except that as we may have to discuss further, that you would nonetheless fulfil the balance requirement for non-Christians in some manner, even if it meant that you would have to put someone on without a sponsorship. Is that correct?
8849 MR. INGRAM: Yes.
8850 MR. McCALLUM: Thank you, Mr. Chair.
8851 THE CHAIRPERSON: Thank you, counsel.
8852 Well, gentlemen, those are all our questions for this afternoon. I don't think it was terribly intimidating as you may have faced a number of years ago.
8853 That concludes our work for the day. We will resume tomorrow morning at 9:00 a.m. when we will hear from JOY FM and following that Phase II of the operation of this proceeding, at which point we will see you back again.
8854 MR. INGRAM: Thank you.
8855 THE CHAIRPERSON: Thank you.
--- Whereupon the hearing adjourned at 1710,
to resume on Tuesday, March 9, 2004 at 0900 /
L'audience est ajournée à 1710 pour reprendre
- Date modified: