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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.

PRIVATE

 

 

 

 

 

 

              TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

 

 

 

 

             TRANSCRIPTION DES AUDIENCES AVANT

                CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

                          SUBJECT:

 

 

 

VARIOUS BROADCAST APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

 

 

 

 

 

 

 

 

 

 

 

 

 

HELD AT:                              TENUE À:

 

Best Western Charlottetown            Best Western Charlottetown

238 Grafton Street                    238, rue Grafton

Charlottetown, PEI                    Charlottetown (Î.-P.-É.)

 

 

October 3, 2005                       Le 3 octobre 2005

 


 

 

 

 

Transcripts

 

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

Contents.

 

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.

 

 

 

 

Transcription

 

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

               Telecommunications Commission

 

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

 

 

                 Transcript / Transcription

 

 

                             

              VARIOUS BROADCAST APPLICATIONS /

            PLUSIEURS DEMANDES EN RADIODIFFUSION

                             

 

 

 

 

BEFORE / DEVANT:

 

Stuart Langford                   Chairperson / Président

Andrée Noël                       Commissioner / Conseillère

Elizabeth Duncan                  Commissioner / Conseillère

Rita Cugini                       Commissioner / Conseillère

Barbara Cram                      Commissioner / Conseillère

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet                    Secretary / Secrétaire

 

Anne-Marie Murphy                 Legal Counsel /

                                  Conseiller juridique

 

Joe Aguiar                        Hearing Manager /

                                  Gérant de l'audience

 

 

 

 

 

 

 

HELD AT:                          TENUE À:

 

Best Western Charlottetown        Best Western Charlottetown

238 Grafton Street                238, rue Grafton

Charlottetown, PEI                Charlottetown (Î.-P.-É.)

 

 

October 3, 2005                   Le 3 octobre 2005

 


           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

PHASE I

 

 

PRÉSENTATION PAR / PRESENTATION BY:

 

Newcap Inc.                                         8 /   47

 

Martime Broadcasting System Limited               133 /  879

 

Coast Broadcasting Limited                        212 / 1470

 

 

 

PHASE II

 

 

INTERVENTION BY / INTERVENTION PAR:

 

Martime Broadcasting System Limited               278 / 1842

 

 

 


        Charlottetown, PEI / Charlottetown (Î.‑P.‑É.)

‑‑‑ Upon commencing on Monday, October 3, 2005

    at 0930 / L'audience débute le lundi

    3 octobre 2005 à 0930

seq level0 \h \r0 seq level1 \h \r0 seq level2 \h \r0 seq level3 \h \r0 seq level4 \h \r0 seq level5 \h \r0 seq level6 \h \r0 seq level7 \h \r0 seq level0 \*arabic1                THE CHAIRPERSON:  Okay.  Are we ready, Madame la secretaire?

seq level0 \*arabic2                Good morning, ladies and gentlemen.  Welcome to this public hearing.  Bonjour, mesdames et messieurs.  Bienvenue a cette audience publique.  C'est une grande plaisir pour moi et mes collègues d'être ici à Charlottetown.

seq level0 \*arabic3                My name is Stuart Langford ‑‑ I have to check that on the script to make sure I have that right ‑‑ and I am a National Commissioner of the CRTC and I will be chairing this hearing.

seq level0 \*arabic4                I am joined on this Panel by my colleague Elizabeth Duncan, beside me on my right ‑‑ no, my left.  My right, your left.  Your left, my right.  I can't wait to see this transcript.  Stage left, audience right.  In the pink beside me is Elizabeth Duncan, Regional Commissioner for the Atlantic provinces.

seq level0 \*arabic5                Beside her, her colleague and mine, Andrée Noël, Regional Commissioner for Québec.

seq level0 \*arabic6                On my other side, Rita Cugini, Regional Commissioner for Ontario.

seq level0 \*arabic7                Beside Rita, Barb Cram, who is the Regional Commissioner for Saskatchewan and Manitoba.

seq level0 \*arabic8                I am going to introduce some of the Commission team to you, because you will be working with them very closely.

seq level0 \*arabic9                Our Hearing Manager is Joe Aguiar, who you will see here in the front row in the grey suit.

seq level0 \*arabic10               Beside him is our Hearing Secretary, Chantal Boulet.  You can speak with Ms Boulet if you have any questions or if you are wondering maybe when you should bring your intervenors or if we are going to finish a certain phase today.  Chantal knows all those answers.

seq level0 \*arabic11               Beside Joe is Anne‑Marie Murphy, our Legal Counsel.

seq level0 \*arabic12               Beside Anne‑Marie we have Donna Shewfelt who is with our Maritime Office and is fairly cognizant with the way things work in this part of the world and can help you with some of these questions as well.

seq level0 \*arabic13               In the second row we have Steve Harroun and Carole Douglas who are file analysts on this hearing and are very cognizant of the different aspects of the file.

seq level0 \*arabic14               Somewhere at the back of the room ‑‑there he is at the door ‑‑ is Claude Perrier who is here to offer technical support.  He can help you with that sort of thing.

seq level0 \*arabic15               In our examination room, our file room, a young woman by the name Jade Roy who will help you with anything you need to see in the way of information that has been filed either on your file or someone else's.

seq level0 \*arabic16               This hearing will deal with radio applications.  We are going to have four applications to operate new English‑language FM radio stations in the Charlottetown market.  To of those will be to convert existing AM radio stations CFCY and CHTN to the FM band.

seq level0 \*arabic17               When we finish that, which I suspect we may finish today with any luck, we will see, we will move on to four other applications to operate an FM radio station in New Glasgow, Nova Scotia.  Included there is one application to convert and existing radio station CKEC to the FM band.

seq level0 \*arabic18               For the Charlottetown market, we will first hear two applications presented by Newcap Inc., the group that we have at the presenter's table.  Then we will review the applications from Maritime Broadcasting Systems and Coast Broadcasting Ltd., the two of which are competing for the use of the 95.1 MHz frequency.

seq level0 \*arabic19               For the New Glasgow market, we will begin with the application from Astral Media Radio Atlantic Inc., followed by those of Atlantic Broadcasters Ltd. and Acadia Broadcasting Ltd., and finishing up with the application from Hector Broadcasting Company Ltd.  That is the station that wants to flip their frequency to the FM band.

seq level0 \*arabic20               All of those four applications are competing for the same 94.1 MHz frequency, so obviously they can't all be successful.  Christmas will not come to all of those applicants this week.

seq level0 \*arabic21               This Panel will study the proposals to operate a new FM station in light of the cultural, economic and social objectives defined in the Broadcasting Act and the regulations flowing from it.

seq level0 \*arabic22               criteria, including the level of competition and the diversity of voices in the market, as well as the quality or the applications.

seq level0 \*arabic23               It will also look at the capacity of the market to support new radio stations, the financial resources of each applicant, and proposed initiatives for the development of Canadian talent.  We expect the hearing to take three days.  We may surprise ourselves.  "Productivity", I read in the Globe and Mail, is the new watchword.

seq level0 \*arabic24               We will begin each morning at 9:30, although depending on how today goes I may change that to 9 o'clock just to see how things fit.  I hope to wind up each afternoon no later than 6:00.  I think productivity definitely begins to dwindle after that point.  So we will let you know of any schedule changes that could occur.

seq level0 \*arabic25               While you are in the hearing room, the old plea, please turn off your cell phones, your beepers ‑‑ not your pacemakers, leave those on ‑‑ because these phones and the beepers are an unwelcome distraction.  I don't know whether the Blackberries beep or not, but maybe you can put them on that vibrating mode or whatever.  We thank you for your cooperation.

seq level0 \*arabic26               I am now going to ask our Hearing Secretary, Chantal Boulet, to explain the processes we will be following and then we will get on with the first applicant.

seq level0 \*arabic27               Chantal...?

seq level0 \*arabic28               THE SECRETARY:  Thank you, Mr. Chairman.

seq level0 \*arabic29               Before we begin, as usual I would just like to go over a few housekeeping matters.

seq level0 \*arabic30               The Commission's examination room is located in the Cavendish‑Bradley Room, which is down the hall from the hearing room.  You can examine the applications being studied at this hearing in the examination room.

seq level0 \*arabic31               There is a telephone number to reach the room, which is (902)566‑8664, which is also indicated in the agenda.

seq level0 \*arabic32               Second, there is a verbatim transcript of this hearing being taken by the court reporter at the table behind me.  If you have any questions on how to obtain a copy of part of the transcript or a full transcript, please approach the court reporter during the break for information.

seq level0 \*arabic33               As you mentioned, Mr.  Chairman, we will now proceed with the applications for the Charlottetown market, followed by the applications for the New Glasgow market.

seq level0 \*arabic34               Given that all applications in each market are competing, we will proceed as follows:

seq level0 \*arabic35               First, we will hear each applicant in the Agenda order.  Each applicant will be granted 20 minutes to make their presentation.  Questions from the Commission will follow each presentation.

seq level0 \*arabic36               In Phase II, the applicants reappear in the same order to intervene on the competing applications if they wish.  Ten minutes are allowed for this purpose and questions from the Commission may follow each intervention.

seq level0 \*arabic37               In Phase III, the parties will appear in the order set out in the agenda to present their appearing intervention.  Again, questions from the Commission may follow.

seq level0 \*arabic38               Finally, in Phase IV, it provides an opportunity for each applicant to reply to all the interventions submitted on their application.  Applicants appear in reverse order and 10 minutes are allowed for this reply and again questions may follow.

seq level0 \*arabic39               Now, Mr. Chairman, we will proceed with items 1 and 2 on the agenda, which are two applications by Newcap Inc.

seq level0 \*arabic40               The first application is for a licence to operate an English‑language commercial FM radio programming undertaking in Charlottetown.

seq level0 \*arabic41               The new station would operate on frequency 89.9 MHz, Channel 210 C1) with an effective radiated power of 100,000 watts.

seq level0 \*arabic42               The second application is to convert radio station CHTN Charlottetown from the AM band to the FM band.

seq level0 \*arabic43               The new station would operate on frequency 100.3 MHz, Channel 262 C1) with an average effective radiated power of 33,000 watts.

seq level0 \*arabic44               Appearing for the applicant is Mr. Rob Steele.  Mr.  Steele will introduce his colleagues.

seq level0 \*arabic45               As agreed, you will have 30 minutes to make your presentation on both applications.

seq level0 \*arabic46               Mr.  Steele...?

PRESENTATION / PRÉSENTATION

seq level0 \*arabic47               MR STEELE:  Thank you very much.

seq level0 \*arabic48               Good morning, Mr. Chair, Members of the Commission and Commission staff, I am Rob Steele, President and Chief Executive Officer of Newcap Radio.

seq level0 \*arabic49               Before we begin our presentation, I would like to introduce our team.  Seated in the front row, to my left, is Jennifer Evans, the General Manager of CHTN‑AM here in Charlottetown.  While Jennifer is a newcomer to Newcap, joining us in May of this year, she has many years of experience in PEI radio.

seq level0 \*arabic50               Next to Jennifer is Mark Maheu, Executive Vice President and Chief Operating Officer of Newcap Radio.

seq level0 \*arabic51               To Mark's left is Gerard Murphy, CHTN's Program Director, who has 20 years of broadcasting experience in Prince Edward Island.

seq level0 \*arabic52               In the second row, directly behind me is Dave Murray, Vice‑President of Operations for Newcap Radio.

seq level0 \*arabic53               Next to David is Scott Chapman, CHTN's News Director.  Scott brings 15 years of news experience here in Charlottetown to CHTN.

seq level0 \*arabic54               We appear before you today with two proposals which, taken together, will ensure that Charlottetown and, in fact, PEI, benefits from two strong competitors, three strong news voices and two dynamic new music choices.  We believe that the approval of both our applications will enhance radio service to Charlottetown through an increase in local and provincial news coverage and music choices.  This is an important market for Newcap Radio.  It is where our involvement in radio all began in 1986 when we purchased CHTN‑AM from Northumberland Broadcasting.

seq level0 \*arabic55               CHTN began broadcasting on Christmas day of 1974.  The radio station has a rich history in Charlottetown and over the years it has become a treasured listening choice for many Islanders through its music and its connection to the community at large.

seq level0 \*arabic56               When we purchased the station, it had not been profitable for some time.  In spite of our best efforts, the station continued to be unprofitable until it entered into a Local Management Agreement with Maritime Broadcasting in the mid‑1990's.  This LMA provided the usual economies of scale and a combined sales offering to compete more effectively with newspaper and television.  The result was increased revenue, lower costs and the first profits in the station's history.

seq level0 \*arabic57               The days of LMAs are now over and CHTN has moved on to better compete with radio, TV and newspaper here in Charlottetown.  We are asking for the opportunity to compete in a fair and equitable manner, while providing new service to the city and province.

seq level0 \*arabic58               Since May of this year, Newcap has made extensive investments in the operation of CHIN.  These improvements include significant capital expenditures on state‑of‑the‑art facilities, the hiring of top‑flight staff, increased promotional spending and a renewed emphasis on local service to the community.

seq level0 \*arabic59               Our General Manager, Jennifer Evans, is here to tell you more.

seq level0 \*arabic60               MS EVANS:  Good morning.  Since mid‑May it has been a busy and exciting time for 720 CHTN.  First of all, we moved into the most technologically advanced building in Atlantic Canada, the Atlantic Technology Centre here in downtown Charlottetown.

seq level0 \*arabic61               This location allows us to have a storefront studio, providing Island listeners with access to a medium that has always operated behind closed doors.  Broadcasting from the ATC has also allowed us to become the first and the only radio station in PEI to broadcast on‑line.

seq level0 \*arabic62               Before our move, we were extremely busy hiring the new team needed to operate truly on our own.  Under the LMA, CHTN did not have its own sales team, traffic division or office administration.  Over the past number of months, we have hired many new staff members in sales, administration and community service.

seq level0 \*arabic63               We knew that in order to compete with the power of MBS radio offerings in this market, we had to develop a new and distinct personality.  The key to developing a strong sales presence in an unrated market is to be an integral part of the community.

seq level0 \*arabic64               We have marketed 720 CHTN as  "Your Community Radio Station".  This has meant a very active summer for the entire 720 CHTN team.  Some of the events that we have been part of over the last four months include:  Rendez Vous Rustico, where CHTN was the exclusive radio sponsor of this celebration of Acadian culture on PEI, providing on‑location reports and MCs for some of their concerts.

seq level0 \*arabic65               Our Community Cruiser has been attending community events and festivals since mid‑June and is available 12 months of the year to community organizers.

seq level0 \*arabic66               Since June we have covered events all over Prince Edward Island from the Irish Moss Festival in Tignish to the Souris Regatta in eastern PEI.

seq level0 \*arabic67               The entire CHTN team is very proud of our most recent fundraiser for the local food bank.  The food bank issued a news release stating they were in a crisis situation with near empty shelves.  Our morning show team of Kirk MacKinnon and Kerri‑Wynne MacLeod came to me and said, "We need to do something to help."  So they volunteered to lock themselves in our new storefront studio until the studio was filled with donations for the food bank.  CHTN listeners and Islanders province‑wide responded quickly and we were able to fill seven trucks with food donations, as well as raising over $3,500 in cash in just 27 hours.

seq level0 \*arabic68               CHTN has also been supportive of the local business community.  We are particularly proud of our partnership with the PEI Business Women's Association by supporting the annual Women in Business Symposium.

seq level0 \*arabic69               We won't stop there.  We have a very busy fall schedule lined up, with a fundraiser for the Autism Foundation in October, a much needed seatbelt awareness campaign for the late fall and winter, sponsorship of IODE's school food program and coverage and sponsorship of the upcoming PEI Music Awards in November.

seq level0 \*arabic70               Since June 1st, 720 CHTN has many good news stories to share on the promotional side of our business.  Unfortunately. revenues and profits have not followed.  We have found that MBS provides strong competition to a standalone AM station.  MBS has a distinct competitive advantage.  They operate three stations that cover Charlottetown.  With a less comprehensive advertising offering, CHTN is less competitive with both MBS and, perhaps more importantly, the local newspaper, CBC Television and ATV.

seq level0 \*arabic71               With the increased expenses of separate operations, the profitability in this market is not the same as in years past.  For the broadcast year ending August 2004, CHTN posted an operating margin of 41 percent, and in the first three months of 2005 the margin was 41 percent.  In the first three months of independent operation our operating margin plunged to minus 76 percent.  You can certainly see the difference that being a standalone station can make,

seq level0 \*arabic72               At the same time, the over 139,000 people across PEI deserve the diversity of local service offerings available to other Canadians living in similar size markets.  We believe that the best way to do this is to ensure that Newcap, a strong and proven operator, can compete with MBS, providing a second strong, private news voice and a diverse programming offering that complements MBS's stations.

seq level0 \*arabic73               We propose two new formats for this market, Classic Hits and a Mainstream Rock format, combining the best of Classic Rock and today's rock.

seq level0 \*arabic74               I would now like to call upon our Program Director, Gerard Murphy, to outline the music formats that we propose to bring to Charlottetown.

seq level0 \*arabic75               MR. MURPHY:  Thank you, Jennifer.

seq level0 \*arabic76               At present PEI is served by four commercial radio stations.  MBS operates two country stations, one a more modern country from Summerside appealing to a relatively younger audience, and the other the more traditional full service CFCY, which is strong in all demographic groups and particularly with older audiences.  MBS also operates a Hot AC FM station, Magic 93, which provides a combination of Top 40 and Adult Contemporary music, dominating the listening in the market.

seq level0 \*arabic77               Our own CHTN‑AM provides an Oldies format based upon hits from the late '50s, '60s and '70s and attracts an older audience.  The choice of formats for CHTN‑FM was a relatively easy one to make.  The FM hit requirements do not allow for an Oldies format.  The Classic Hits format can be operated in complete compliance and appeals to much of the same audience.  In fact, CHTN‑FM will be a hybrid Classic Hits/Oldies station.  We aim to transition the station in a manner that appeals to existing listeners while having the opportunity to attract new ones.

seq level0 \*arabic78               When we decided to apply for a second FM, which we are calling Island FM, we commissioned research from Mark Kassof & Co. to identify the format opportunity.  We discovered that while older demographic groups were 76 percent satisfied with PEI radio, 18 to 24 year olds only averaged 58 percent satisfaction, with men in the group even lower at 52 percent.

seq level0 \*arabic79               While 75 percent of all respondents indicated they could find exactly the kind of programming they want on FM, only 39 percent of men 18 to 24 agreed with this.

seq level0 \*arabic80               Those least satisfied with Charlottetown radio were Rock fans, fans of Classic Rock and those of Active Rock were only 64 percent, the lowest satisfaction rating for any format sampled.  This may account for the relative success of C‑103 from Moncton and Astral's CKTO from Truro, both of which provide Rock formats even though they do not aim to serve Island residents.

seq level0 \*arabic81               It is clear that there is a large disenfranchised group of listeners in Charlottetown, to which we can also add the thousands of UPEI and Holland College students.

seq level0 \*arabic82               Kassof tested the interest in nine different radio formats and also the perception of correspondents as to whether the format was available in Charlottetown.  With the results of these two questions, Kassof developed what they call the percentage of format void, which is the percentage of respondents that have positive interest in the format and cannot identify a station playing that kind of music.

seq level0 \*arabic83               The results were very revealing:  the highest percentage of format void was Classic Hits at 13 percent, followed closely by Classic Rock at 12 percent.

seq level0 \*arabic84               In a large market with multiple stations, our choice for the new station would have been the same as Astral's, pure Classic Rock.  In Charlottetown, with only the MBS FM stations, we believe we can serve more people by putting together compatible music groupings.  Combining Classic Rock and compatible Active Rock will serve a significant number of people and, in particular, males 18 to 34, with a strong showing among men 35‑54.

seq level0 \*arabic85               This bears out our experience with our Rock stations in Moncton and Halifax, both combining Classic Rock and Active Rock.  This format is also friendlier to developing Canadian rock artists than a pure Classic Rock format.

seq level0 \*arabic86               So what will these stations sound like and how will they be different?

seq level0 \*arabic87               Put very simply, CHTN‑FM will play the music that was on the top 40/pop charts during the '70s, the '80s and the '90s, with a sprinkling of '60s.  Island FM, our Rock station, will play the harder edged Rock from the same era mixed with compatible Rock from today.

seq level0 \*arabic88               The Classic Hits format is relatively new in Canada.  It is focussed on Rock, but avoids the harsher musical edges of Classic Rock and the greater sonic intensity of Modern Rock. There are many variants of the format across the country, with Bob, Jack, Dave and Joe‑FM, as well as stations calling themselves purely Classic Hits.

seq level0 \*arabic89               On CHTN‑FM 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 lesser‑known album cuts that you would hear on our Rock radio proposal.

seq level0 \*arabic90               The audience for CHTN Classic Hits will be older and slightly more female than the audience for the Island.  The Classic Hits audience will be about 55 percent female, with the strongest individual age group being 35 to 54.

seq level0 \*arabic91               The station will feature a number of music programs that focus in on our listeners' favourite music as outlined in our application.  In particular, I would like to point out "CHTN Presents", an hour‑long program that will feature PEI artists and their music, with interviews and possible live "acoustic" performances in our storefront studios.  It will also serve as a showcase for the East Coast Music Award's, ECMA, Battle of the Bands, to which we are providing a financial contribution through our Canadian Talent Development program.

seq level0 \*arabic92               The Island will have a harder edge than CHTN‑FM, playing Canadian Classic Rock artists like Bryan Adams. Rush, Trooper and PEI's own Haywire, along with international artists like Led Zeppelin, The Who, U2, AC/DC and Aerosmith.  We will also play the best of New Rock from these and other Classic Rock artists like the Tragically Hip, the Rolling Stones. Bruce Springsteen and Maritime artists like Sloan.  Of course new Canadian rock acts like Nickelback, Nova Scotia's the Trews, Montreal's Sam Roberts and PEI's The Rude Mechanicals will be the mainstays on Island FM.

seq level0 \*arabic93               About two‑thirds of its hours tuned will come from men, with the strongest age group being 18 to 34.

seq level0 \*arabic94               Island FM will offer a variety of specialty music shows.  Each week we will showcase Atlantic Canadian Rock, on "Rockin' the Island" with the emphasis on PEI music first and foremost.  The program will be similar to those featured on our Moncton, Halifax, St. John's and Fredericton stations.  Our objective is to give exposure across Atlantic Canada to artists from all four provinces.  Each week a one hour program "Sonic Source" will feature the newest rock releases, with Canadian Content.  Of course, both of our stations will be all over the PEI Music Awards and the ECMA'S activities.  While there may be some overlap between the stations, we think that the audiences to both stations will want to know about their own artists.

seq level0 \*arabic95               I would now like to ask Scott Chapman, CTN's News Director, to talk about our news, information and community events.

seq level0 \*arabic96               MR. CHAPMAN:  Chapman  Thanks, Gerard and good morning, Commissioners.

seq level0 \*arabic97               Since joining Newcap, I have been very active in improving our news department and expanding our local news coverage.  We provide 82 newscasts per week, with longer news packages in the morning and afternoon drive periods all seven days per week, and shorter bulletins at other times, almost six hours of news, weather and sports per week.  In keeping with our wish to be "Your Community Radio Station", 75 percent of our newscasts are devoted to local stories.

seq level0 \*arabic98               We also provide input to the daily "Capital Report" currently broadcast in Fredericton and St. John's, which airs three daily updates on the events in the four Atlantic capitals.  We plan to add this show to our schedule soon.

seq level0 \*arabic99               CHTN also airs a full range of regular community information, with twice hourly weather and travel updates 24 hours per day, PSAs every hour of the day, and other community announcements throughout the day.  Of course, our community cruiser is everywhere on the Island, providing regular reports from events throughout the province.  Then there is our seasonal coverage of events throughout PEI and our various charitable initiatives.  In all, we total about 12 and one half hours per week of spoken word.  All of this will continue on CHTN‑FM.

seq level0 \*arabic100              What is especially exciting to us is the addition of a new set of journalists if Island FM is approved.  We will add three new people to our existing newsroom of three, broadening and deepening cur news coverage.  Clearly both stations will not each send a reporter to cover a fire or Provincial Legislature or Charlottetown Council, rather we will split up these duties, allowing us to assign one reporter to regularly cover federal events affecting the province, another to cover the Legislature, and others to agriculture, tourism and fishing industry.

seq level0 \*arabic101              Each station will choose from the stories filed to our computerized news system to ensure that its newscasts will be shaped to the needs and interests of the audience.  Clearly, many of the stories will be the same.  If a provincial election is called or gas prices increase yet again, this is news to all of us.  But treatment will be different for some stories and others may be of greater interest to one audience.

seq level0 \*arabic102              The additions to our newsroom will allow us to expand our news and information on CHTN‑FM.  For example, we will be able to produce a month in review news special, expand our election coverage and add new features that our current staffing does not allow.

seq level0 \*arabic103              Island FM will also provide comprehensive news for a new demographic, many of whom listen to out‑of‑province stations and don't have access to local news.  We will air 53 newscasts with three and a half hours of news per week, 75 percent of which will be local.  Each day our major newscasts will feature "Island Cause", focussing on the efforts of a charity in the community; and a one‑minute public affairs feature, "Charlottetown Today", will air eight times per day.  Our daily entertainment feature, "PEI Rocks", will provide the day's and week's concert listings, theatre and other performances.

seq level0 \*arabic104              With the resources of two stations in the market, we will be a major force for the coverage and promotion of Charlottetown and PEI's social, community and cultural life.

seq level0 \*arabic105              Now to talk about our Canadian Talent Development efforts, here is Mark Maheu.

seq level0 \*arabic106              MR. MAHEU:  Thanks, Scott.

seq level0 \*arabic107              Mr. Chair, Members of the Commission, Ncwcap is proposing a comprehensive package of Canadian Talent Development initiatives.  The current requirement under the CAB plan for CHTN is $400 per year.  We propose to exceed that requirement by devoting $6,000 each year to Prince Edward Island initiatives.

seq level0 \*arabic108              We intend to provide all of that money to the East Coast Music Awards Association, the (ECMA).  The ECMA has developed a strong reputation over the past few years and Newcap has been heavily involved with its evolution.  The ECMA will use the money for its Battle of the Bands right here in PEI, which results in prizes, including studio time and equipment, as well as the recording of a new single.  We are proud to be associated with that endeavour.

seq level0 \*arabic109              We have a much larger contribution planned for Island FM, recognizing the increased value of a second FM licence.  We propose to provide fully  $1 million over the course of a seven‑year licence term to the development of Canadian Talent.

seq level0 \*arabic110              $70,000 each year, or a total of $490,000 over the term, will be devoted to the Canadian Radio Starmaker Fund.  The fund aims to bet on success, helping emerging artists go up to the next level through promotional, tour and marketing support.

seq level0 \*arabic111              $279,000 of our Canadian Talent Development monies will go to the artist development and education activities at the PEI Music Awards Association and the ECMA Association.  The money will have two focuses, more established artists and new and emerging artists, but all will go to PEI artists.

seq level0 \*arabic112              The PEI Music Awards Association will receive about $20,000 each year to create and manage a PEI music showcase and to support new and emerging artists in touring.  Our contribution will help new artists hone their performance skills and give them a showcase at an industry event.

seq level0 \*arabic113              The ECMA will receive $20,000 each year to develop more established artists by providing education to them and their managers as to how to market themselves nationally and internationally.  In addition, it will provide tour support for national and international tours.  We believe that this will help more established PEI artists to break through into new markets.

seq level0 \*arabic114              Canadian artists like Kathleen Edwards, Sarah Harmer and Ron Sexsmith from central Canada are getting airplay and exposure throughout the U.S. through new forms of marketing and on radio formats not available here in Canada.  The success of Halifax‑based bands, both nationally and internationally, and the interest in east coast music means that our artists just need a nudge to get up to the next level.

seq level0 \*arabic115              Finally, we are providing a significant contribution to the music program of the University of Prince Edward Island.  With a small but excellent faculty, UPEI's music department is only lacking cash to help develop more young classical musicians.  Our contribution of $231,000 will support visiting artists who provide master classes, fund UPEI faculty recitals around the province and underwrite a music recital series featuring new performers and provide three bursaries for studies at summer programs.  We know that UPEI believes that this contribution will be key in helping it to develop an even better program and reputation.

seq level0 \*arabic116              On the business front, here in Charlottetown there is a perception that this market is a very profitable one.  The reality is that since the unwinding of the agreement between Newcap and Maritime the overall profitability in Charlottetown has fallen.  CHTN has gone from being a profitable radio station inside of the local marketing agreement to being significantly unprofitable as a stand‑alone.

seq level0 \*arabic117              The research conducted by Newcap is confirmed also by the research conducted by Astral in their application.  There was a large demand for a Rock station here in PEI, whether it is our broader format or Astral's pure Classic Rock proposal.

seq level0 \*arabic118              Astral's research indicates that the average hours tuned in Charlottetown are lower than the national average and declining.  This is particularly true with men age 25 to 54.

seq level0 \*arabic119              The tuning to out‑of‑province stations, like our own Moncton radio station C‑103 or Astral's Truro radio station, the "Big Dog", demonstrates the appetite for Rock even though those signals are not local and the services are not aimed at the people of Charlottetown or Prince Edward Island.  Between them, they draw about 10 percent of their tuning by adults 25 to54.

seq level0 \*arabic120              We project that a significant amount of our tuning is going to come from Rock stations in Moncton and Truro.  Our research also indicates that the core listeners for our new proposed station are:

seq level0 \*arabic121              One, less satisfied with PEI radio than the average listener;

seq level0 \*arabic122              Two, listen to radio fewer hours per day than the average Charlottetown listener; and

seq level0 \*arabic123              Three, spend more time listening to other audio sources.

seq level0 \*arabic124              We believe that the arrival of a Rock radio station will bring listeners back to radio and specifically back to PEI radio.

seq level0 \*arabic125              In trying to develop local awareness and support for our new station proposal, we launched a website called "Island FM" which provided a four‑hour music sample of what we thought the radio station would sound like if we were licensed.

seq level0 \*arabic126              Media monitoring services do not track Charlottetown stations, so we compared our music sample that we played on the internet to music played by other stations programming a similar format to what MBS is doing here with Magic 93.  These stations share few artists and even fewer songs in what we would play on the Island FM.

seq level0 \*arabic127              To conclude, we believe that approval of our two proposals is in the public interest for the following, specific reasons:

seq level0 \*arabic128              Two exciting new formats would be launched, both of which research clearly shows strong demand by Charlottetown radio listeners.  Our FM Rock proposal will bring a rock‑music based format to Charlottetown for the very first time.

seq level0 \*arabic129              The launch of new FM stereo services, both through conversions from the FM band and through the launch of our new Rock station, will create such excitement in Charlottetown that it will enhance radio listenership and increase the value proposition of our medium.

seq level0 \*arabic130              Newcap will provide over $1 million in Canadian Talent Development funds.  These funds will serve to continue the development of new, emerging Canadian artists from Prince Edward Island and the Maritimes.

seq level0 \*arabic131              Finally, Newcap has a strong tie to this city and the people of Charlottetown.  This is the birthplace of our company as we know it today.  We are ready, willing and anxious to invest the working capital, the time, the patience and the people power to create exciting, innovative and great sounding radio in this great City.

seq level0 \*arabic132              We thank you for your time and attention this morning.  We would be pleased to answer any questions you may have about our proposals.

seq level0 \*arabic133              THE CHAIRPERSON:  Thank you very much.

seq level0 \*arabic134              Commissioner Cram...?

seq level0 \*arabic135              COMMISSIONER CRAM:  Thank you and good morning.

seq level0 \*arabic136              It is nice to see, Ms Evans, that women are getting somewhere in the radio ranks in Newcap.

seq level0 \*arabic137              I want to start off first by talking about CHTN as it was before mid‑may, because it seems there have been some substantial changes.

seq level0 \*arabic138              My first question is:  When was your research conducted?

seq level0 \*arabic139              MR. MAHEU:  The research for the conversion?

seq level0 \*arabic140              COMMISSIONER CRAM:  Yes.

seq level0 \*arabic141              MR. MAHEU:  It was in late 2004.

seq level0 \*arabic142              COMMISSIONER CRAM:  So that was before CHTN went through its conversion?

seq level0 \*arabic143              MR. MAHEU:  That is correct.  The research was conducted for the conversion in the market before we were out of the agreement with Maritime.

seq level0 \*arabic144              COMMISSIONER CRAM:  You say at page 3 of today's opening remarks, that you have added your own sales team, traffic division and office administration, or at least you had to deal with that.

seq level0 \*arabic145              You have hired, you say, many new members in sales, administration and community service.

seq level0 \*arabic146              Can you tell me how many people you have added May‑Jun‑ish?  Well, since the Mark Kassof research?

seq level0 \*arabic147              MR. MAHEU:  Sure.  We began the process of dismantling the LMA right after the public notice came out at the end of January 2005 and it gave a deadline of the end of May.  So we had that time, a rather short period of time, to begin to transition.

seq level0 \*arabic148              That  involves a number of things Commissioner Cram, including finding our own place to set up shop, so to speak.  So that, combined with identifying who we would need to add to our staff was a pretty big job in very short order.

seq level0 \*arabic149              Being in the LMA meant that going forward we had to find out own sales staff, administration staff, traffic and accounting and folks like that, and when we talked about community service it really plays into a bigger area.

seq level0 \*arabic150              When we separated we were effectively a standalone AM radio station, so we had to, from a strategic point of view, start to rethink our proposition to both listeners and advertisers.  Since we were going to be on our own, we had to discover how we were going to be different, how we were going to be unique and generate a large enough audience on our own to be able to monetize that.

seq level0 \*arabic151              The real key to that, as Scott mentioned in his remarks, was the area of news and community service.  We felt that we really needed to beef that area up in order to be able to stand out and compete.  We weren't on the FM band, we were not going to be able to compete effectively necessarily for a music audience, but in spoken word and community involvement we thought, regardless of being an AM or an FM station, we would have a shot at that and be able to go out and find a new audience and build the one we had.

seq level0 \*arabic152              So we started to look for B I will let Jennifer talk in just a second here about some of the specific things we did, but strategically we wanted to add more news people, which we did.  We went up to three news people on CHTN.

seq level0 \*arabic153              COMMISSIONER CRAM:  From?

seq level0 \*arabic154              MR. MAHEU:  I believe we had two and we are proposing more with our second application.

seq level0 \*arabic155              But we also set out and embarked upon a very ambitious program throughout the summer, a community cruiser program, and we hired some folks to do that for us as well, to get out throughout Charlottetown and into some of the smaller communities and be visible, report on their activities, a lot of them charity and community endeavours.

seq level0 \*arabic156              If I may, I will just ask Jennifer to kind of fill you in on that a little bit because she was a big part of it.

seq level0 \*arabic157              COMMISSIONER CRAM:  :  Just tell me how many people, though, you added?

seq level0 \*arabic158              MR. MAHEU:  In terms of...?

seq level0 \*arabic159              COMMISSIONER CRAM:  Community service, in addition to the news staff.

seq level0 \*arabic160              MR. MAHEU:  Jennifer, go ahead.

seq level0 \*arabic161              MS EVANS:  Certainly.

seq level0 \*arabic162              In the area of community service we hired one full‑time promotions director in addition to a part‑time summer staff person.

seq level0 \*arabic163              The interesting thing with that is that when you are operating a standalone small station everyone is part of the community service team.  When we first got together as a team at the end of May, we held a strategic planning session as a group and I said, "Okay, folks, what are we going to do here to be different?  We know that the cards are stacked against us.  As one standalone A station it is going to be a tough road.  What can we do to be different and to make a difference in this marketplace?"

seq level0 \*arabic164              The answer cam back pretty resoundingly clear as we have to work together as a team and we have to get connected with the community once again.  That is what radio's biggest strength is, part of he community, and that is our key to success.

seq level0 \*arabic165              This summer, although on paper it was our promotions director and our summer student who was ultimately responsible for delivering community service, it was really each and every one of us who did charity barbeques on our sidewalk during the month of June, each and every one of us who went to old home week and helped with the delivery of reports there every day for a 12‑day event.

seq level0 \*arabic166              This really has been a team effort and we are fortunate with a small staff that we can take that approach and we have had a lot of fun in the last four months.

seq level0 \*arabic167              COMMISSIONER CRAM:    So what other staff members have you added in sales and administration?

seq level0 \*arabic168              MS EVANS:  We now have a staff of 17, 16 full‑one, 1 part‑time.  In our sales division, we have a total of four sales members, and we have two on our administrative side.

seq level0 \*arabic169              COMMISSIONER CRAM:  Just tell me how many you have added.

seq level0 \*arabic170              MS EVANS:  We have added eight.

seq level0 \*arabic171              COMMISSIONER CRAM:  You had added eight, including the new staff, the part‑time summer promotions and the full‑time promotions?

seq level0 \*arabic172              MS EVANS:  And sales.  Correct.

seq level0 \*arabic173              COMMISSIONER CRAM:  And sales.

seq level0 \*arabic174              So if I have it right, if you have added eight, you have added essentially six salespeople?

seq level0 \*arabic175              MS EVANS:  We have added four salespeople.

seq level0 \*arabic176              COMMISSIONER CRAM:  Four sales?

seq level0 \*arabic177              MS EVANS:  Correct

seq level0 \*arabic178              COMMISSIONER CRAM:  So I have one news staff, I have one full‑time promotions, four sales, and then the rest are admin?

seq level0 \*arabic179              MS EVANS:  Yes.  Our receptionist, our accounting position and our on‑air positions.  Correct.

seq level0 \*arabic180              COMMISSIONER CRAM:  Okay.  Do I take it, and indeed just what you have said, Ms Evans, that before you did not have a community cruiser?  You just finished saying:  We decided we had to connect with the community once again.

seq level0 \*arabic181              MS EVANS:  Under the LMA there certainly was a community presence for all three stations which existed under the LMA.  Our strategy in operating as a standalone is we had to ramp that up considerably in order to gain listeners and gain the appreciation of the advertising community as well.

seq level0 \*arabic182              So there has been a considerable increase in the focus of reconnecting with the community.

seq level0 \*arabic183              COMMISSIONER CRAM:  So there wasn't a dedicated community.  CHTN didn't have a dedicated community cruiser before?

seq level0 \*arabic184              MS EVANS:  It did, however the promotional side was shared among all three stations.

seq level0 \*arabic185              COMMISSIONER CRAM:  You didn't have these strategic relationships or associations or partnerships with things such as the PEI Business Women's Association?

seq level0 \*arabic186              MS EVANS:  Not to the extent that we do today, no.

seq level0 \*arabic187              COMMISSIONER CRAM:  You talk about revenues and profits not having followed.  So I understand we are talking about the three months of June, July and August that you are talking about?

seq level0 \*arabic188              MS EVANS:  Correct.

seq level0 \*arabic189              COMMISSIONER CRAM:  You talk about the operating margin plunging.  How did you record the moving expenses, the capital, the recruitments costs, and all the other one‑time costs.  Did you inject them into that quarter?

seq level0 \*arabic190              MS EVANS:  I am actually going to allow David Murray to handle those questions.

seq level0 \*arabic191              COMMISSIONER CRAM:  Thank you.

seq level0 \*arabic192              MR. MURRAY:  All of those costs were capitalized, so we are talking strictly operating costs.

seq level0 \*arabic193              COMMISSIONER CRAM:  So they were all capitalized?  There were none of them that were injected, even recruitment costs?

seq level0 \*arabic194              MR. MURRAY:  None of them.  Everything was capitalized.

seq level0 \*arabic195              COMMISSIONER CRAM:  Okay.  So we are talking strict gross revenues, minus operating, which would include the eight new staff?

seq level0 \*arabic196              MR. MURRAY:  Yes.  The comparison between the three months prior to the LMA, March, April and May, and the three months following the LMA, June, July and August, are completely apples and apples and the margin was 41 percent for the three months just prior and the operating loss for the three months just after was 76 percent negative.

seq level0 \*arabic197              COMMISSIONER CRAM:  So there was a decrease in revenues, was there ‑‑

seq level0 \*arabic198              MR. MURRAY:  Yes.

seq level0 \*arabic199              COMMISSIONER CRAM:  ‑‑ or was it just an increase in expenses?

seq level0 \*arabic200              MR. MURRAY:  Revenues decreased 61 percent.

seq level0 \*arabic201              COMMISSIONER CRAM:  61 percent.  Expenses increased...?

seq level0 \*arabic202              MR. MURRAY:  I didn't do the percentage; $130,000.

seq level0 \*arabic203              COMMISSIONER CRAM:  $130,000, is that primarily staff?

seq level0 \*arabic204              MR. MURRAY:  Expenses increased 82 percent.

seq level0 \*arabic205              COMMISSIONER CRAM:  I didn't hear that, I'm sorry.

seq level0 \*arabic206              MR. MURRAY:  Expenses increased 83 percent.  You can't really compare the operations before and after because in the LMA, which you are probably aware, we were sharing 25 percent of virtually everything, so there was a ‑‑ we did our own programming and news, but we were in one building, there was a sharing of revenues and there was a sharing of expenses.

seq level0 \*arabic207              COMMISSIONER CRAM:  The LMA, then, was simply a percentage of gross, was it?

seq level0 \*arabic208              MR. MURRAY:  Correct.

seq level0 \*arabic209              COMMISSIONER CRAM:  In terms of staffing, did CHTN have its actual staff or again were they all shared?

seq level0 \*arabic210              MR. MURRAY:  No, CHTN had its own programming and news staff, but Maritime was responsible for administration, sales and general management.

seq level0 \*arabic211              COMMISSIONER CRAM:  Okay.  If I can quote Ms Evans again, you had to connect with the community once again.

seq level0 \*arabic212              Would you expect, after three months, to end up at a positive ‑‑ at a similar margin as you had before, or how long would you expect to recuperate?

seq level0 \*arabic213              MR. MURRAY:  No, we certainly didn't expect a positive margin operating independently, because ‑‑ before the main difference was we had 25 percent of the total revenues of the three stations and now we knew we were only going to have the revenue of CHTN‑AM, which was a very small percentage of the total revenue.

seq level0 \*arabic214              So we were expecting a loss and we have a loss.

seq level0 \*arabic215              COMMISSIONER CRAM:  But surly with all of the ramping up you have done, you would expect to be doing better?

seq level0 \*arabic216              MR. MURRAY:  Probably not.

seq level0 \*arabic217              Go ahead, Mark.

seq level0 \*arabic218              COMMISSIONER CRAM:  Really, you expect that after this huge impetus of adding the community cruiser, adding promotions people, adding new staff, that after a year or two you wouldn't expect to be in a relatively good position?

seq level0 \*arabic219              MR. MAHEU:  Commissioner Cram, if I may, we are doing all the things we are doing now for two reasons.

seq level0 \*arabic220              Number one, they are the right thing to do.

seq level0 \*arabic221              Second, it is absolutely what is necessary to even give us a fighting chance to be competitive on the revenue side of things.

seq level0 \*arabic222              It's not that we do a bad job that we are losing money.  I think we do a fabulous job here and provide great service.  Jennifer and her crew have just done yeoman's work on making it happen.

seq level0 \*arabic223              The fact is, what is holding us back from being able to monetize all of that good work and the effort is the simple fact that we are broadcasting an amplitude modulation at 720 on the AM band.  That is the equivalent in a high‑speed world of being a 14.4 dial‑up modem in a satellite‑driven broadband world.  It is not that people don't like what we do, it is just very difficult for them to hear us.  It is very difficult for them to listen.

seq level0 \*arabic224              The minimum threshold now in many cases is stereo quality sound.  Even the cheapest television you can buy today, the cheapest VCR, are all stereo capable.

seq level0 \*arabic225              It is kind of the standard that most entertainment users, radio listeners, expect.  Most of the AM stations across Canada, there are very, very few radio stations on the AM band still playing music.  We are one of them.  Most of them are doing spoken word, news talk, or whatever.

seq level0 \*arabic226              For instance, in government offices here in Charlottetown, in you are in a provincial or government office or any office building, like any AM radio station we are very difficult to receive because of the structural steel in the building, and that combined with computers now in most offices that cause interference.  The personal computers cause a great deal of interference when they are near AM radio.  So you will find that most of these offices either don't have radios or cannot get AM reception.

seq level0 \*arabic227              So we just have a difficult time generating listenership, not because the product isn't good, it is just very, very hard to listen to.  Thus, why we are before you today is what we are really looking for is an opportunity to take what we are doing now and continue to do it, but do it with a delivery mechanism that will allow more people to hear it and benefit from it.

seq level0 \*arabic228              COMMISSIONER CRAM:  Mr. Chapman, were you the news director before?

seq level0 \*arabic229              MR. CHAPMAN:  I was the news director on CFCY and Magic 93.

seq level0 \*arabic230              COMMISSIONER CRAM:  Okay.  So now you are the news director for CHTN?

seq level0 \*arabic231              MR. CHAPMAN:  Yes.

seq level0 \*arabic232              COMMISSIONER CRAM:  You talk about improving your news department and expanding your local coverage.

seq level0 \*arabic233              You now provide 82 newscasts per week.  How many did you provide before?  How many did CHTN provide before?

seq level0 \*arabic234              MR. CHAPMAN:  When I joined CHTN, CHTN was running 57 newscasts per week, and with a conversation with Jennifer and Gerard we felt one avenue that we needed to improve to become a community information station was to increase our number of newscasts.  We added a 10 o'clock newscast, an 11 o'clock newscast, and 1 o'clock and 2 o'clock and 3 o'clock on weekdays.

seq level0 \*arabic235              That upped the total to 82 newscasts per week.  That is over 5 hours and 25 minutes of news per week.  With a 75 percent local content that we strive for, that is over 4 hours of news locally per week.

seq level0 \*arabic236              COMMISSIONER CRAM:  So how many hours of news, weather and sports was it before, before the LMA?

seq level0 \*arabic237              MR. CHAPMAN:  Before the LMA it was ‑‑ during the LMA there were not the hourly newscasts that we now have.  There were half hour newscasts between 6:00 and 9:00 a.m. and then there was a noon and then there was a 4 o'clock and a 5 o'clock.

seq level0 \*arabic238              Since we came out of the MLA ‑‑

seq level0 \*arabic239              COMMISSIONER CRAM:  LMA.

seq level0 \*arabic240              MR. CHAPMAN:  LMA.

seq level0 \*arabic241              COMMISSIONER CRAM:  You are not a member of the legislature yet.

seq level0 \*arabic242              MR. CHAPMAN:  I am not a member of the legislature, no.

‑‑‑ Laughter / Rires

seq level0 \*arabic243              MR. CHAPMAN:  You tend to say that a bit in the news.

seq level0 \*arabic244              COMMISSIONER CRAM:  When you are in the news, I understand.

seq level0 \*arabic245              MR. CHAPMAN:  LMA.

seq level0 \*arabic246              Since then we have added the hourly newscasts because we feel that is important.

seq level0 \*arabic247              COMMISSIONER CRAM:  It is now at 6 hours.  What was it before?

seq level0 \*arabic248              MR. CHAPMAN:   Before it was 57 newscasts per week, 10 per day during the LMA, yes.  I don't have an hourly total for you, but it was approximately 10 newscasts per weekday after the LMA and we are talking about 10 per day during the LMA.

seq level0 \*arabic249              COMMISSIONER CRAM:  Ten.  How long were they?

seq level0 \*arabic250              MR. CHAPMAN:  They were 4 minutes in total.

seq level0 \*arabic251              COMMISSIONER CRAM:  All news, weather, sports?

seq level0 \*arabic252              MR. CHAPMAN:  All news, weather sports, yes.

seq level0 \*arabic253              COMMISSIONER CRAM:  Now that we have an idea of what has changed between December 2004 and now, I want to start asking questions about the flip, the flip in and of itself.

seq level0 \*arabic254              Your format, you are going from Golden Oldies to Classic Hits, the >70s to today.  The change really is because the format, the Golden Oldies, you can't flip to FM and this is essentially the closest you can find.

seq level0 \*arabic255              Is that right?

seq level0 \*arabic256              MR. MAHEU:  That is correct.

seq level0 \*arabic257              COMMISSIONER CRAM:  The target demographic, can you give it to me in ages?

seq level0 \*arabic258              It is primarily women, isn't it?  Skewing towards women, let's put it that way.

seq level0 \*arabic259              MR. MAHEU:  Very similar to what we see in other markets for the format.  The format generally does very well with adults 35 to 54, more women than men.  Slightly more, but more.

seq level0 \*arabic260              COMMISSIONER CRAM:  Yes.

seq level0 \*arabic261              MR. MAHEU:  The real sweet spot, if I could say it, is the 35 to 44 year old demographic.

seq level0 \*arabic262              COMMISSIONER CRAM:  What is that as a percentage of the population of PEI?

seq level0 \*arabic263              Start with 35 to 44.

seq level0 \*arabic264              MR. MAHEU:  I don't think we have that, Commissioner, but I would guess if it is close to what StatsCan would do, it would be probably in the neighbourhood of the mid‑20 percent range, 25 or 26.

seq level0 \*arabic265              COMMISSIONER CRAM:  In the supplementary brief you talked about 20 percent being from the >70s, 40 percent being from the >80s, 20 percent from the 90s and the rest up to now.

seq level0 \*arabic266              Yet today I got a different feeling of what you were going to play.  There was more of Top 40 pop charts during the >70s, >80s and >90s, with a sprinkling of the >60s.

seq level0 \*arabic267              Am I right?

seq level0 \*arabic268              MR. MAHEU:  That is correct.

seq level0 \*arabic269              COMMISSIONER CRAM:  So what happened here?  Have I gone a little crazy with Air Canada losing my luggage or what?

‑‑‑ Laughter / Rires

seq level0 \*arabic270              MR. MAHEU:  No.  We are looking at what the best opportunity here is.  If we were coming into the market today with no presence here at all and we were just looking at the Classic Hits format and saying what is the best recipe for success for the Classic Hits format, it would very likely follow the tried and true formula for Classic Hits, about 20 percent >70s, 40 percent >80s, 30 percent >90s and 10 percent today.

seq level0 \*arabic271              What we are trying to do is to really  transition one audience from one band to the next.  Right now what we have found with CHTN is that as an oldies station we do have an audience out there and there are folks who really enjoy the music from the >60s.  If we do have the opportunity to move to the FM band, we are going to have to change some things, obviously, to comply with the rules, but we would like to try to manage that change and still hang on to the folks who enjoy music from the >60s.

seq level0 \*arabic272              The interesting thing about the research, when we looked at it, is that there ‑‑ I think it is party because of CHTN's success here ‑‑ is that there is an oldies market here and we can find a way to make some of that >60s music work with the Classic Hits format.  It will help transition the people who are listening to us and enjoying us now, because the last think we want to do is really get approved for a new FM signal and then move the station over to the FM and then basically abandon all the folks who were enjoying us while we were on the AM band.

seq level0 \*arabic273              We felt we owed them that transition, so we think we have found a way to do that.  But the >60s will not be a major part of our sound, but there will be a flavour of it there.

seq level0 \*arabic274              COMMISSIONER CRAM:  Can you give me numbers on how many in the >70s, >80s and >90s, or do you know?

seq level0 \*arabic275              MR. MAHEU:  It would basically work out to be, in round figures, about 10 percent >60s, it is in that 20 to 30 percent >70s, 20 to 30 percent >80s, about 20 percent >90s and some today.

seq level0 \*arabic276              COMMISSIONER CRAM:  It does seem that this is almost identical to the flip that actually happened with CKY in Winnipeg in terms of going from the oldies to the Classic Hits.

seq level0 \*arabic277              Are you aware of how that has fared?

seq level0 \*arabic278              MR. MAHEU:  Are you talking about their conversion of CKY‑AM to FM, not the clear FM?

seq level0 \*arabic279              COMMISSIONER CRAM:  No, no.

seq level0 \*arabic280              MR. MAHEU:  No, okay.

seq level0 \*arabic281              No, I'm not really familiar with that.  It is always difficult because it is, in effect, a small format change.  It is not a total format change, but it is a format modification and it is very, very difficult to do.

seq level0 \*arabic282              But we feel that given what the research is showing us here in terms of the opportunity for Classic Hits is rather large and the compatibility with that format to Oldies should make it a smoother transition than just blowing up one thing and starting something new the next day.

seq level0 \*arabic283              We also want to keep the same name and the same identity, and so on, so that it is just a nice, natural progression, but I'm not familiar with how well Rogers has fared with that.

seq level0 \*arabic284              COMMISSIONER CRAM:  If memory serves, it wasn't that well.

seq level0 \*arabic285              MR. MAHEU:  Right.

seq level0 \*arabic286              COMMISSIONER CRAM:  The heritage station with the Oldies format that everybody loved moving on to FM and going into, if memory  serves, at least initially was not a terrifically wonderful change.

seq level0 \*arabic287              MR. MAHEU:  Would it possible, not to put it in a bad light, but maybe some of that has to do with execution.

seq level0 \*arabic288              COMMISSIONER CRAM:  I hear you.  Nothing against Rogers, if you are listening.

seq level0 \*arabic289              MR. MAHEU:  No problem.  Sorry, Gary.

seq level0 \*arabic290              THE CHAIRPERSON:  They are always listening.

‑‑‑ Laughter / Rires

seq level0 \*arabic291              COMMISSIONER CRAM:  I guess, given that my luggage was lost and the taxi driver and I had a fairly long time going to the drug store and picking things up, we had a good conversation, I kind of want to talk about the repeat factor.

seq level0 \*arabic292              What would be the highest repeat factor that you would be planning when you are programming your new Top 40 of the >70s, >80s and >90s?

seq level0 \*arabic293              MR. MAHEU:  On the Classic Hits format?

seq level0 \*arabic294              COMMISSIONER CRAM:  No, no, on the CHTN one.

seq level0 \*arabic295              MR. MAHEU:  Yes, the Classic Hits format.

seq level0 \*arabic296              COMMISSIONER CRAM:  Yes, you are right.

seq level0 \*arabic297              MR. MAHEU:  Yes.

seq level0 \*arabic298              Going into the future, the proposed repeat factors would be rather low relative to some more contemporary formats.

seq level0 \*arabic299              Traditionally we would certainly conduct some music research before we did the conversion.  Traditionally, high testing songs, or songs that people do enjoy and want to hear a lot would probably be spun probably no more than five times a week.  That is the most popular stuff, it would be a day and a quarter.

seq level0 \*arabic300              So much of what is fun about Classic Hits is all the songs that people forgot were out there, some great oldies that don't get a lot of airplay, and you will find the libraries in these formats tend to be a lot larger than normal.

seq level0 \*arabic301              But there will be some music that will be spun a little more than five times a week and that would be probably some more current‑based or recurrent Canadian music.

seq level0 \*arabic302              One of the things about this format is it tends to play and rely on the music of the past, but people do want to live in today.

seq level0 \*arabic303              Part of the component of Classic Hits is obviously we have Canadian content to deal with and if you are focussing on just Canadian Gold, the stuff from the past, The Stampeders and April Wine and stuff like that, there are some great songs there, but the burn on them tends to be very high because so many stations have played them so much.

seq level0 \*arabic304              So what you try to do to keep listenership up, and at the same time it kind of helps out on the Canadian talent side, is that you can find some new emerging Canadian music that will work with this format and it will probably get a little more play than five times a week per spin.

seq level0 \*arabic305              COMMISSIONER CRAM:  I don't know how to distinguish between what you have proposed in your supplementary brief and what you are proposing today, but with today's proposal on the flip format can you tell me what is different between today's proposal and Coast's Adult Pop?

seq level0 \*arabic306              MR. MAHEU:  Sure.  Obviously, we have looked at all the proposals and obviously we have a pretty good understanding of what we want to do and where we think the opportunity is.

seq level0 \*arabic307              In the Coast proposal, the format that they are proposing tends to mirror or be a lot closer, in our professional opinion, to what is happening in the market already on Magic 93.  Magic 93 is kind of a hybrid Top 40 Adult Contemporary radio station.  Some call it an adult CHR.  There are lots of different names for it, but the idea is it is basically a fairly wide contemporary‑based, current‑based music choice.

seq level0 \*arabic308              In the Coast proposal I believe they are calling it "Pop Adult".

seq level0 \*arabic309              COMMISSIONER CRAM:  Adult Pop, yes.

seq level0 \*arabic310              MR. MAHEU:  Adult Pop, Pop Adult.  It would encompass and engender many of the same types of songs and artists that are presently being played on Magic 93, from what we can see and hear, and those types of formats tend to be more current than gold‑based.

seq level0 \*arabic311              What distinguishes us from that proposal, at least on CHTN specifically, is the vast majority of our music on CHTN is going to be from the past.  Well over 60 percent of this music is going to be basically pre‑1990.  In an Adult Pop or Pop Adult format, most of the successful ones anyhow across the country, tend to be a lot more current‑based than that.

seq level0 \*arabic312              So that starts to lead it into competing with the Top 40 AC hybrid that is already on the air here in the market.

seq level0 \*arabic313              COMMISSIONER CRAM:  Coast talks about the years of Pop being >80s, >90s and today.

seq level0 \*arabic314              What do you think the duplication would be between yourselves as proposed today and Coast?

seq level0 \*arabic315              MR. MAHEU:  Duplication, Commissioner Cram, between what they are proposing and what we are proposing today would likely be in the range of ‑‑ of the music that we would share, the >80 and >90s, if they are going to do Pop Adult or Adult Pop the way it should be done and we are doing Classic Hits the way it should be done, likely the music that falls into the >80s and >90s there could be duplication above 70 percent in that music, because many of the songs are the same.

seq level0 \*arabic316              COMMISSIONER CRAM:  What about duplication, with your proposal today for CHTN versus CHLQ?

seq level0 \*arabic317              That is Magic 93, isn't it?

seq level0 \*arabic318              MR. MAHEU:  Yes.

seq level0 \*arabic319              COMMISSIONER CRAM:  Yes.

seq level0 \*arabic320              MR. MAHEU:  It tends to be more current.

seq level0 \*arabic321              Interesting listening to the radio station, I guess there is going to be some overlap obviously with popular music from the >90s, although the >90s is a small part of what the Classic Hits format is going to do, roughly around 20 percent.  Much of the music on Magic is in the >90s or from the past 15 years, today back to about 1990.  So we don't see a lot of duplication there.

seq level0 \*arabic322              We are also bringing the majority of the music that we are proposing for CHTN‑FM in the Classic Hits format is coming from the >70s and >80s genre and some from the >60s.  So the vast majority of the music we are going to play will not overlap or compete with anything that Magic plays.

seq level0 \*arabic323              Then, where we do have some overlap in terms of era, 1990 for instance, I would say less than a third in terms of song overlap there.

seq level0 \*arabic324              COMMISSIONER CRAM:  Okay.  So one third of...?

seq level0 \*arabic325              MR. MAHEU:  Twenty percent.

seq level0 \*arabic326              COMMISSIONER CRAM:  Twenty percent?

seq level0 \*arabic327              MR. MAHEU:  Yes, 25 percent tops.  Very little.

seq level0 \*arabic328              COMMISSIONER CRAM:  Thank you.

seq level0 \*arabic329              If we refuse the flip, are you planning on staying with your Oldies or would you change to something else?  Join up with Rogers in their talk stations throughout the Maritimes?

seq level0 \*arabic330              MR. MAHEU:  Well, that would be a last resort but it is an interesting idea.

‑‑‑ Laughter / Rires

seq level0 \*arabic331              MR. MAHEU:  Obviously, we certainly don't want to contemplate the possibility that our conversion application wouldn't be approved, but obviously we do have to make long‑term plans.  There could always be a worst‑case scenario.

seq level0 \*arabic332              We made a commitment in Charlottetown when we purchased CHTN back in 1986.  It has been a long road.  It has been very difficult to make money as a standalone.

seq level0 \*arabic333              But we are a big company and we understand what our responsibilities are.  If we have to compete as an AM standalone here, then we will compete and we will fight the good fight.  We will find a way.  We are not ‑‑ it will be a long time before the station achieves any level of profitability because it is a people‑intensive business and we are going to need to have people like Jennifer and her team, and Scott and Gerard and our on‑air folks and our news commitment to get out there and at least have an opportunity to do some business.

seq level0 \*arabic334              Because our proposition to listeners and clients is based on what kind of value we bring.  So we wouldn't turn it into a jukebox or warehouse it, we are just going to have to find creative ways to come up with product that people are going to listen to on a deficient band.

seq level0 \*arabic335              That is really what the issue is.  It is not a matter of they don't like the product, it is just very difficult for them to spend any amount of time listening to it, especially when you have other options on the FM band.

seq level0 \*arabic336              It kind of gets back to much like on television if you have two channels side‑by‑side and they are both playing relatively contemporary programming, if one only broadcasts in black and white and the other one broadcasts in colour and you have a choice, you are going to watch the programs that are in colour and have good sound.

seq level0 \*arabic337              In the radio business we are kind of in the same position.  So it is a sound quality issue, but we will do what we have to do, Commissioner Cram, to make it work.

seq level0 \*arabic338              COMMISSIONER CRAM:  Thank you.

seq level0 \*arabic339              I'm going to move on to your local and spoken word.

seq level0 \*arabic340              What would be the ratio between your music and spoken word on the new CHTN as proposed?

seq level0 \*arabic341              MR. MAHEU:  I believe, Gerard, we are offering ‑‑ how many hours is it, 13?

seq level0 \*arabic342              MR. MURPHY:  Thirteen hours of spoken word, including our news, on CHTN‑AM, and we will maintain that level on CHTN‑FM.

seq level0 \*arabic343              COMMISSIONER CRAM:  That is 2 percent; 126 hours broadcast a week.

seq level0 \*arabic344              MR. MAHEU:  It is 10 percent.

seq level0 \*arabic345              COMMISSIONER CRAM:  Ten percent.  Math was not my ‑‑ we are not going to go there.

‑‑‑ Laughter / Rires

seq level0 \*arabic346              COMMISSIONER CRAM:  In your application you talked about having 53 local newscasts.  You are now giving 82 and I'm assuming you are going to continue that.

seq level0 \*arabic347              MR. MAHEU:  Yes, that is our intention.  As Scott mentioned earlier, we did that after he joined to beef up the competitiveness of the station.

seq level0 \*arabic348              By the way, we apologize if there are some changes in there.

seq level0 \*arabic349              We put this application in last November, so it is about a year ago now, and that was before we had any word on sales agreements in the LMAs.  That didn't come out until January.  So some of what you see there was addressed in deficiency and some of it is just old information that may not be as relevant today as it was.

seq level0 \*arabic350              COMMISSIONER CRAM:  Yes.  That is 82 newscasts, news, weather, sports, each consisting of four minutes each?

seq level0 \*arabic351              Mr. Chapman?

seq level0 \*arabic352              MR. CHAPMAN:  That is correct.

seq level0 \*arabic353              COMMISSIONER CRAM:  Can you give us the hours again, just for the record, so we get it all down?

seq level0 \*arabic354              MR. CHAPMAN:  CHTN‑FM would be 5 hours and 25 minutes of news per week.  That is the current situation on CHTN‑AM.

seq level0 \*arabic355              COMMISSIONER CRAM:  Okay.  Just when  would it be?  When would they be?  Seven o'clock...?

seq level0 \*arabic356              MR. CHAPMAN:  They would be 6 o'clock, 6:30, 7 o'clock, 7:30, 8 o'clock, 8:30 and 9 o'clock.  We have added 10 o'clock, 11 o'clock, there has always been a 12 o'clock, and we added 1 o'clock, 2 o'clock, 3 o'clock, and then there has been a 4 o'clock and a 5 o'clock.

seq level0 \*arabic357              COMMISSIONER CRAM:  Okay.

seq level0 \*arabic358              THE CHAIRPERSON:  It sounds like an old Bill Haley song, doesn't it?

‑‑‑ Laughter / Rires

seq level0 \*arabic359              COMMISSIONER CRAM:  This also happens on the weekends?

seq level0 \*arabic360              MR. CHAPMAN:  On the weekends CHTN‑AM currently has news at 8:00, 9:00, 12:00 and 5:00 on both Saturday and Sunday.

seq level0 \*arabic361              COMMISSIONER CRAM:  Four minutes?

seq level0 \*arabic362              MR. CHAPMAN:  Four minutes, yes.

seq level0 \*arabic363              COMMISSIONER CRAM:  How much of these four minutes are news?

seq level0 \*arabic364              MR. CHAPMAN:  News is 3 minutes, then we have roughly half a minute of sports and another half minute of weather.

seq level0 \*arabic365              COMMISSIONER CRAM:  In both the supplementary brief and here you talk of 75 percent local ‑‑ where did I find that ‑‑ "Local", yes, page 10 ‑‑ 75 percent of which will be local.

seq level0 \*arabic366              So we are talking about the 3‑minute news and 75 percent of that will be local?

seq level0 \*arabic367              MR. CHAPMAN:  Yes, 75 percent of that will be local as well as sports.  We try to focus on local sports as well.

seq level0 \*arabic368              COMMISSIONER CRAM:  So 75 percent of the sports also will be local?

seq level0 \*arabic369              MR. CHAPMAN:  Well, 75 percent of the news will be local.  There is not a 75 percent commitment to sports, but in terms of the 4‑minute package 75 percent will be local.

seq level0 \*arabic370              COMMISSIONER CRAM:  Okay.  So of the total 4‑minute package ‑‑

seq level0 \*arabic371              MR. CHAPMAN:  Of the total 4‑minute package ‑‑

seq level0 \*arabic372              COMMISSIONER CRAM:  ‑‑ news, weather and sports ‑‑

seq level0 \*arabic373              MR. CHAPMAN:  If you break it down to the number of stories, 75 percent of our stories will be local stories.

seq level0 \*arabic374              COMMISSIONER CRAM:  Including weather?

seq level0 \*arabic375              MR. CHAPMAN:  No, not including the weather.

seq level0 \*arabic376              75 percent of our stories in the news will be local.

seq level0 \*arabic377              COMMISSIONER CRAM:  News alone, excluding sports.

seq level0 \*arabic378              MR. CHAPMAN:  News alone, yes.  And already are local.

seq level0 \*arabic379              COMMISSIONER CRAM:  Okay.  So of that 75 percent that you say is local, what does "local" mean?

seq level0 \*arabic380              MR. CHAPMAN:  "Local" in Prince Edward Island means all of Prince Edward Island.  It is a very unique place because it is 140,000, 139,000 people so many people in PEI have relatives all over the Island.  An event, maybe we will say an accident, a fatality in western PEI may affect a number of people in eastern PEI because they have family in eastern PEI.

seq level0 \*arabic381              A federal initiative announced in eastern PEI affects all of the economy in Prince Edward Island.

seq level0 \*arabic382              COMMISSIONER CRAM:  So you would agree to a COL that 75 percent of your news, excluding weather and sports, would be local, "local" being defined as relating to all of Prince Edward Island?

seq level0 \*arabic383              MR. CHAPMAN:  All of Prince Edward Island, yes.

seq level0 \*arabic384              COMMISSIONER CRAM:  Thank you.  That is what you do presently, you say?

seq level0 \*arabic385              MR. CHAPMAN:  That is currently what we do, yes.

seq level0 \*arabic386              COMMISSIONER CRAM:  Okay.  You have done this since June of this year?

seq level0 \*arabic387              MR. CHAPMAN:  Since June.

seq level0 \*arabic388              COMMISSIONER CRAM:  Is that fair to say?

seq level0 \*arabic389              MR. CHAPMAN:  Yes.

seq level0 \*arabic390              COMMISSIONER CRAM:  With the one additional news staff and yourself, or how many news people do you have?

seq level0 \*arabic391              MR. CHAPMAN:  We currently have three positions in the newsroom, yes.

seq level0 \*arabic392              COMMISSIONER CRAM:  Including yourself, Mr. Chapman?

seq level0 \*arabic393              MR. CHAPMAN:  Including myself.

seq level0 \*arabic394              COMMISSIONER CRAM:  Okay.  Thank you.

seq level0 \*arabic395              On CTD you are talking about $6,000 a year to the East Coast Music Awards and the PEI Music Awards Association.

seq level0 \*arabic396              Are those two separate associations?

seq level0 \*arabic397              Ms Evans is nodding.

seq level0 \*arabic398              MR. MAHEU:  Yes, they are two separate organizations.

seq level0 \*arabic399              COMMISSIONER CRAM:  I'm looking at page 11, the bottom paragraph, you say:

                      "The money will have two focuses of today, more established artists and new and emerging artists."

seq level0 \*arabic400              If I have it right, then you are going to divide the money into ‑‑ I'm getting mixed up here.

seq level0 \*arabic401              I had initially $6,000 a year in my notes to the East Coast Music Awards, but you are really talking about $20,000 a year, are you?

seq level0 \*arabic402              MR. MAHEU:  In the other proposal, yes.

seq level0 \*arabic403              COMMISSIONER CRAM:  In the other proposal?

seq level0 \*arabic404              MR. MAHEU:  Yes.  In the CHTN proposal it is $6,000 a year.

seq level0 \*arabic405              COMMISSIONER CRAM:  Oh, good.  Okay.  Then I have not gone ‑‑ okay.

seq level0 \*arabic406              In this one it goes to the East Coast Music Awards for the "Sound‑Off"?

seq level0 \*arabic407              MR. MAHEU:  Yes.

seq level0 \*arabic408              MR. MURPHY:  Battle of the Bands.

seq level0 \*arabic409              COMMISSIONER CRAM:  Battle of the Bands, okay.

seq level0 \*arabic410              The Battle of the Bands, that is 100 percent to the East Coast Music Awards for Battle of the Bands?

seq level0 \*arabic411              MR. MURPHY:  That is correct, of the $6,000 annually.

seq level0 \*arabic412              COMMISSIONER CRAM:  Yes.  It used to be I had "Sound‑Off", which was provincial for high school bands.

seq level0 \*arabic413              Is that the same thing we are talking about?

seq level0 \*arabic414              MR. MURPHY:  No, no.  The  ECMA Battle of the Bands is a process where they ‑‑ well, I'm not actually quite sure where the bands come from, to tell you the truth ‑‑ I think Jennifer may have more details, or Scott has more details on that ‑‑ but it comes down to five bands at the ECMAs and they have a sound‑off and then one is selected as the top band for that ECMA year.

seq level0 \*arabic415              COMMISSIONER CRAM:  Okay.  So it may or may not have anything to do with PEI artists?

seq level0 \*arabic416              MR. MAHEU:  Go ahead, Jennifer.

seq level0 \*arabic417              COMMISSIONER CRAM:  It does, Ms Evans says.

seq level0 \*arabic418              MR. MAHEU:  Yes.

seq level0 \*arabic419              MS EVANS:  Yes, it does.  Actually, the program you are referring to sounds very similar.  Perhaps it has been a name change for the ECMA.  This is a program that involves high school bands competing across the Province of PEI because we are the host province this year for East Coast Music Awards.  Then the top five bands which are selected have an opportunity to showcase on stage during the East Coast Music Awards held here in February.

seq level0 \*arabic420              So it is sounding similar, but this is exclusively for PEI.

seq level0 \*arabic421              COMMISSIONER CRAM:  Okay.  So in a year when PEI does not host the East Coast Music Awards, the $6,000 would go to, again, a PEI competition?

seq level0 \*arabic422              MS EVANS:  That money is dedicated for Prince Edward Island, so in a year that it is not our turn to host then we will be certainly establishing a new competition process to try to provide this level of band with exposure at the ECMAs.

seq level0 \*arabic423              COMMISSIONER CRAM:  Okay.

seq level0 \*arabic424              MR. MAHEU:  This year it happens to be Battle of the Bands.  That's what we get to call it because we are the host province.  Next year we will call it something else, but it will be the same process.

seq level0 \*arabic425              COMMISSIONER CRAM:  But you will then administer the funds?  When the ECMA is not in Prince Edward Island, you would then administer the funds and have this kind of competition?

seq level0 \*arabic426              MS EVANS:  The money is dedicated for the East Coast Music Awards Association.  We are fortunate that their head office is also here in Charlottetown so we can work quite closely with them.  Obviously this year it is a process that will be similar to what happened last year in Cape Breton.  Next year, certainly with our guidance, but it is their funds to execute.

seq level0 \*arabic427              MR. MAHEU:  Basically, if I may add, Jennifer ‑‑

seq level0 \*arabic428              MS EVANS:  Sure.

seq level0 \*arabic429              MR. MAHEU:   ‑‑ that money, that $6,000 is going to the ECMA.  For years, as you say, when the awards ceremonies are held somewhere else throughout the Maritimes we are going to do some sort of Battle of the Bands format in PEI to find one band to be able to export over to the ECMAs and appear.

seq level0 \*arabic430              That $6,000 in years where it is not in PEI is going to be used to get the band there and make sure that they have what they need to showcase their talents properly.

seq level0 \*arabic431              But leading up to it, if there were five bands and there is a competition and costs and promotion and all that kind of stuff, that would be part of what we would call station promotion, that would be on our nickel and we would come up and do some sort of elimination process to get that one band that is going to head off to Halifax or Moncton or St. John's or wherever the ECMAs are that year.

seq level0 \*arabic432              That $6,000 that has been earmarked for the ECMA, they are going to use that money to support that one winning band, whether it is travel and getting a venue and getting the Music Press or whomever, radio, out to see them, promotion of them, or whatever it is.

seq level0 \*arabic433              So that is the way it would work.

seq level0 \*arabic434              COMMISSIONER CRAM:  Okay.  So you are going to give, as a part of your CTD, $6,000 to the East Coast Music Awards for them to have their Battle of the Bands in whichever province the ECMA awards are happening for the next seven years?

seq level0 \*arabic435              MR. MURPHY:  No...

seq level0 \*arabic436              COMMISSIONER CRAM:  Correct?

seq level0 \*arabic437              MR. MURPHY:  The ECMAs have committed that this $6,000 is going to go to Prince Edward Island bands ever year.  That is one of the commitments they have to make when they get it.

seq level0 \*arabic438              The ECMAs have many programs regardless of where they are showcased for that year.  They will have a rock thing which we sponsor, but the $6,000 will go to Prince Edward Island bands every year.

seq level0 \*arabic439              COMMISSIONER CRAM:  Okay.  So the money is going to the ECMA and you are going to have the equivalent of ‑‑ for them to have a program equivalent to the Battle of the Bands each year in PEI and it won't be on your nickel, it will be on the ECMA's nickel.

seq level0 \*arabic440              Do I have that right now?

seq level0 \*arabic441              MR. MURPHY:  Yes.

seq level0 \*arabic442              MR. MAHEU:  If it goes over and above that in years where ‑‑ it is less expensive when it happens when the ECMAs are here, because everything is here, but if the $6,000 when it is in other markets is not enough, the ECMA still has that $6,000 to do whatever they need to do to make this a success, but in terms of the local ramp up to it, if it is going to be happening in Moncton or whatever and we are holding competitions throughout the Island for a few weeks or a few months leading up to the ECMAs, that will be station promotion.

seq level0 \*arabic443              That would be expense that we would do as a matter of course as part of what we are doing.  It wouldn't come out of the $6,000 that the ECMAs have earmarked for the PEI bands.  It would be over and above.

seq level0 \*arabic444              COMMISSIONER CRAM:  So then you do a have a letter from the ECMA saying that they will use the $6,000 for the equivalent of a PEI provincial competition annually?

seq level0 \*arabic445              MR. MURPHY:  It's an e‑mail.  I don't think there is a letter in the application, but I could get one.

seq level0 \*arabic446              COMMISSIONER CRAM:  This money is incremental, clearly, to anything else?

seq level0 \*arabic447              MR. MURPHY:  Absolutely.

seq level0 \*arabic448              COMMISSIONER CRAM:  Sorry.  I must have  myself fairly confused.

seq level0 \*arabic449              I want to talk about your financial projections now.  I know it is all in an LMA context, but it seems the Oldies were sort of financially rewarding for you.  They, by the way, also appear to have been in other places.

seq level0 \*arabic450              Why would you change the format and flip?

seq level0 \*arabic451              MR. MAHEU:  I'm going to let Dave speak to some of the specifics in a moment on the finances.

seq level0 \*arabic452              The financial success of CHTN inside the LMA had very little to do with the format that it was in and it had a lot to do with a combined sales offering in a marketplace, a consolidated media offering from radio to clients competing effectively against other mediums like newspaper and television.

seq level0 \*arabic453              The profitability had a great  deal to do with economies of scale that can be achieved when broadcasters joined together, as was the case in the LMA.

seq level0 \*arabic454              So it wasn't driven largely by the format, it was driven largely by the consolidated sales offering and a reduction in expenses.

seq level0 \*arabic455              As a standalone, we are obviously seeing the impact of that now.  When you are on your own you are going to have higher expenses, and when you are competing now, where we weren't competing with those radio stations for revenue anymore, it was complementary, now we are competing not only with those radio stations for revenue, but from other advertising media like newspapers and television.

seq level0 \*arabic456              So not a lot to do with the format.

seq level0 \*arabic457              COMMISSIONER CRAM:  It seems to, at least the projections that we have. ‑‑ this is in your application.  Help me, Mr. Maheu, this would have been dated November/December of 2004.

seq level0 \*arabic458              So the expenses were projected to be consistent with the expenses you had when you had the LMA?

seq level0 \*arabic459              MR. MAHEU:  When we put together the application in November 2004 they were based upon ‑‑ David, I am correct in saying they were based upon us still being in the LMA, because we didn't know at the time what the outcome of the deliberations of the Commission were going to be.

seq level0 \*arabic460              COMMISSIONER CRAM:  Okay.  Were they also predicated on getting the new FM also?

seq level0 \*arabic461              MR. MAHEU:  No.  At the time of the originally filing for the conversion we had not applied for a second FM.  That came later.

seq level0 \*arabic462              COMMISSIONER CRAM:  Your application, then, for the new FM, the financial projections there are based on obtaining both the flip and the FM?

seq level0 \*arabic463              MR. MAHEU:  I will let Dave comment on that, but I believe we got to that in deficiency when that came up.

seq level0 \*arabic464              COMMISSIONER CRAM:  All right.  Okay.

seq level0 \*arabic465              MR. MAHEU:  Go ahead, Dave.

seq level0 \*arabic466              MR. MURRAY:  Yes.  To clarify, the 4.1 filed in November was assumed that we would remain in either a sales agreement or a Local Management Agreement with Maritime, and then the 4.1 filed with the new FM, The Island, the Rock station, that was filed independently.  The 4.2 that represented CHTN actually assumed CHTN would be flipped to an FM.

seq level0 \*arabic467              COMMISSIONER CRAM:  Okay.  So right now how much voice‑tracking is there on CHTN?

seq level0 \*arabic468              MR. MAHEU:  Gerard, do you want to handle that?

seq level0 \*arabic469              MR. MURPHY:  Sure.  Clearly on CHTN‑AM we are live from 6:00 until 6:00 p.m. Monday through Friday ‑‑ actually, seven days a week.  We have voice‑tracking from 6:00 p.m. until 6:00 a.m. the next morning.  So 12 hours a day.

seq level0 \*arabic470              COMMISSIONER CRAM:  Your financial projections for CHTN‑FM, how much voice‑tracking are you planning on?

seq level0 \*arabic471              MR. MURPHY:  We were planning on proposing to be live from 6:00 a.m. Monday through Friday until ‑‑ actually, 5:00 Monday through Friday until midnight.

seq level0 \*arabic472              COMMISSIONER CRAM:  Sorry.  Can you run it by me again?  I missed it.

seq level0 \*arabic473              MR. MURPHY:  We are proposing to be live from 5:00 a.m. until midnight Monday through Friday.

seq level0 \*arabic474              COMMISSIONER CRAM:  Monday to Friday.  Then on ‑‑

seq level0 \*arabic475              MR. MURPHY:  The weekends, probably from 6:00 a.m. until 6:00 p.m.

seq level0 \*arabic476              COMMISSIONER CRAM:  Are you planning on any additional staff if you receive only the flip?

seq level0 \*arabic477              MR. MAHEU:  Just the conversion of CHTN from AM to FM?

seq level0 \*arabic478              COMMISSIONER CRAM:  Yes.

seq level0 \*arabic479              MR. MAHEU:  Not likely.

seq level0 \*arabic480              COMMISSIONER CRAM:  In terms of if you receive only the conversion from AM to FM, would you plan on reducing staff?

seq level0 \*arabic481              MR. MAHEU:  No.  I think we addressed that a little bit earlier, that we are going to have to tough it out and we are going to have to do what we have to do.

seq level0 \*arabic482              COMMISSIONER CRAM:  We have talked about being live.  How much of it will be locally produced?

seq level0 \*arabic483              What I'm trying to get at here is, clearly you are going to be obtaining part programming or parts of programming from other stations belonging to you in the Maritime provinces.  There was one here that I saw where I think you were talking about a news ‑‑

seq level0 \*arabic484              MR. MAHEU:  "Capital report"?

seq level0 \*arabic485              COMMISSIONER CRAM:  Yes.

seq level0 \*arabic486              MR. MAHEU:  Yes.  That is a cooperative news feature that all of our stations participate in.  In other words, we have stations in many of the provincial capitals in the Maritimes and Atlantic Canada and they all contribute a news story every day and we have created this program called "Capital Report".  It airs in Fredericton, it airs in St. John's right now in Newfoundland.  It is going to start airing at CHTN as well.

seq level0 \*arabic487              So it is cooperative programming rather than supplied.  We contribute to it and part we get to export our story to those other markets as well, but that is really the bulk of what we would be doing.

seq level0 \*arabic488              In terms of the voice‑tracking, any voice‑tracking that we do on the radio station is going to be done by people who work here, who live here.  We don't bicycle voice‑tracks or other programs from other markets between any of the Newcap stations.

seq level0 \*arabic489              COMMISSIONER CRAM:  I thought there was one on music from the Maritimes.

seq level0 \*arabic490              MR. MAHEU:  I think that was in the Island FM proposal.

seq level0 \*arabic491              COMMISSIONER CRAM:  Yes.

seq level0 \*arabic492              MR. MAHEU:  I think you may have had that impression only because we mentioned that it will be like programs that air in our other markets.  But it will not be the program that airs in other markets, it will be similar to.  But we will create it ourselves here.

seq level0 \*arabic493              COMMISSIONER CRAM:  So save and excepting cooperative efforts amongst all of your stations in the Atlantic provinces, all live broadcasting will be locally produced?

seq level0 \*arabic494              MR. MAHEU:  That's correct.  The midday woman in Fredericton won't be doing the voice‑track on the all night show here.  Nothing like that.

seq level0 \*arabic495              COMMISSIONER CRAM:  So are there any other synergies with your other stations ‑‑ I'm trying not to say "in your other Maritime stations" to get us mixed up with Maritime Broadcasting ‑‑ but are there any other synergies with your other stations in the Atlantic provinces that you would be having?

seq level0 \*arabic496              MR. MAHEU:  There may be some promotional synergies where we could work together with a major client or a major advertiser to do some things together, because we can bring reach and scale to some of those endeavours.

seq level0 \*arabic497              I think there are probably going to be the sharing of some ideas on best practices, whether it be sales or programming or whatever between our stations, as there are now, but the one thing we try to foster at Newcap and what has helped make us successful is a pretty fierce independence.

seq level0 \*arabic498              Jennifer is the General Manager in Charlottetown and Jennifer's mandate is to run this operation like she owns it.  A bit of her personality and her style goes into it, as it should.  That is the same in all of our markets.

seq level0 \*arabic499              So we try, with a great degree of caution, of imposing anything on markets.  We suggest it is available as a resource.  If you choose as a manager to implement it, that's up to you, if it makes sense for your market.  But most of our managers are very independent and they have their own ideas and they are quite autonomous.

seq level0 \*arabic500              So there is no pressure and there is no need for them to look to other markets to do their work for them.  We staff our radio stations across our group in such a way that they are able to live up to their commitments on their own.  If they need help, they can ask for it, but they rarely need help.

seq level0 \*arabic501              COMMISSIONER CRAM:  Thank you.

seq level0 \*arabic502              I was going to be asking the Chair for a break, but I'm going to give you some homework.  After the break if you will come back with what you view as the impact on Newcap if:

seq level0 \*arabic503              One, we approve both applications;

seq level0 \*arabic504              Two, we grant the new FM but refuse the flip;

seq level0 \*arabic505              Three, if we deny both, and;

seq level0 \*arabic506              Four, if we give the flip and deny the new FM.

seq level0 \*arabic507              THE CHAIRPERSON:  I'm sure you wouldn't have thought of any of those scenarios on your own.

‑‑‑ Laughter / Rires

seq level0 \*arabic508              THE CHAIRPERSON:  We will break for 15 minutes.  By my watch, at 11:15 we will be back.

seq level0 \*arabic509              Thank you very much.

‑‑‑ Upon recessing at 1059 / Suspension à 1059

‑‑‑ Upon resuming at 1119 / Reprise à 1119

seq level0 \*arabic510              THE CHAIRPERSON:  We are just about to start.

seq level0 \*arabic511              I want to say if there are any interveners here, we are just at the cusp.  We have the interventions scheduled for tomorrow morning, but if someone is here and wants to go ahead this afternoon, we are not going to send you home and drag you all the way back.  If someone is here and wants to intervene, speak to the Secretary and we can fit you in towards the end of the afternoon.  It will be no trouble.

seq level0 \*arabic512              That means you can have some time to go to the used book store on Queen Street.  It looks like a good used book store.  Or you can go over to the Confederation Art Gallery, give you something to do, and we will fit you in this afternoon.  If not, we will certainly have you on first thing tomorrow morning.

seq level0 \*arabic513              Commissioner Cram, away you go.

seq level0 \*arabic514              COMMISSIONER CRAM:  Thank you, Mr. Chair.

seq level0 \*arabic515              So to your homework, gentlemen and Ms Evans.

seq level0 \*arabic516              The first one was approve both applications.

seq level0 \*arabic517              MR. MAHEU:  We think that's an excellent idea.  That came in first, actually.

‑‑‑ Laughter / Rires

seq level0 \*arabic518              MR. MAHEU:  Obviously the approval of both of our applications and our proposals we see would provide the greatest benefit to the community at large here in Charlottetown and Prince Edward Island.  We were the only applicant to apply for a Rock format, which the research clearly shows is one that is wanted and needed.  We think the public would be well served with the new service of a Rock‑FM in the marketplace.

seq level0 \*arabic519              We also believe that the community would be well served by the good things that CHTN does, that it does today, but being able to do it on the FM band will give that radio station the potential to have a larger and wider audience and be heard.  We believe that is a best case scenario, not only for ourselves but particularly for the listeners in Charlottetown and Prince Edward Island, that both of those proposals be approved.

seq level0 \*arabic520              COMMISSIONER CRAM:  And there will  certainly be no need for an LMA or an LSA or anything like that.

seq level0 \*arabic521              MR. MAHEU:  No.  I think as Rob mentioned earlier in our opening remarks, the days of LMAs and sales agreements are largely over, and the Commission stated pretty clearly that they will only entertain thoughts of those in situations where economic hardships exist.  We believe the market can support two operators and five radio stations.

seq level0 \*arabic522              COMMISSIONER CRAM:  What if we granted the new FM but not the flip?

seq level0 \*arabic523              MR. MAHEU:  Well, that would certainly be good news for fans of Rock because they would finally get an FM Rock station in the market, which again the research clearly shows is one they need and want.  It would be good for the community that there would be a new service available to them.

seq level0 \*arabic524              The downside of that for Newcap is that CHTN is effectively marginalized as a standalone AM radio station doing what it can.  It is not that this doesn't happen in some other markets where operators have AM and FM operations.  Unfortunately, in a market the size of Charlottetown with the economic realities, we wouldn't have the option that maybe some AM operators have in larger markets where they could possibly convert the station to a News or a News/Talk format and have a potential market size large enough to support it.  With the CBC doing a pretty good job in this market, that would be virtually impossible as an AM signal competing there.

seq level0 \*arabic525              Approving the new FM without converting CHTN is positive news for Rock fans but is certainly bad news for those who enjoy CHTN, and they would not have a Classic Hits format to listen to in the market on FM.

seq level0 \*arabic526              COMMISSIONER CRAM:  And what if both applications were denied?

seq level0 \*arabic527              MR. MAHEU:  That would be unfortunate, for the most part, for everybody in the community.  The Island itself is under‑radioed to some degree, and denying both of our proposals, both of our applications, would deny the Island of the number one format that they are calling for right now.  And that is a Rock format.

seq level0 \*arabic528              The Island and Charlottetown in particular waited a lot of years.  This is the last market of this size without some sort of Rock and Roll on the radio.  They want it so much that they are willing to listen to stations in Moncton and Truro, the picket fencing and the interference, just to have something on the radio that plays what they enjoy.

seq level0 \*arabic529              We would see that as being an opportunity lost in terms of being able to service the community.

seq level0 \*arabic530              Again on the CHTN side, denying that application, we would be left with a standalone AM radio station doing its best to survive in a consolidated radio market with other owners broadcasting on the FM band.

seq level0 \*arabic531              COMMISSIONER CRAM:  You would nonetheless persevere?

seq level0 \*arabic532              MR. MAHEU:  A promise made is a promise kept.  We don't give up.  Obviously, we would like to be fighting in a battle that we absolutely have an opportunity to win at some point down the road, but we don't turn in the keys and we don't run away.

seq level0 \*arabic533              We are employing a number of people right now at CHTN, and many of their livelihoods obviously depend on our long‑term success.  We want to grow.  We want to make capital investment in the community.  We want to be here for a long time.

seq level0 \*arabic534              Our proposal before you today for the conversion and the new FM we believe gives us the best prospect to do that.

seq level0 \*arabic535              COMMISSIONER CRAM:  And what if we approved the flip and denied the FM?

seq level0 \*arabic536              MR. MAHEU:  That would be good news for CHTN and its listeners and those that like Classic Hits, because that would be available on the FM band finally.  We would be able to somewhat compete a little more effectively, but it would still be one radio station versus three.  And that is not even taking into account if you licensed anybody else.  The bad news on that scenario is that people in Charlottetown and Prince Edward Island are still going to have to tune to Moncton and Truro and get pretty sophisticated antennas for their radios to be able to listen to Rock on the radio in this marketplace.

seq level0 \*arabic537              Again, the research shows pretty clearly that that is a gigantic hole and a format opportunity that people want that is not being served, and we were the only ones to apply for it.

seq level0 \*arabic538              COMMISSIONER CRAM:  But you are not married to the format you have chosen.  If you only get the flip, you could go to a Rock format, couldn't you?

seq level0 \*arabic539              MR. MAHEU:  We could.  That possibility does exist.  When you look at the research, there is really room for both and both are quite compatible.

seq level0 \*arabic540              It gets back to the competitive environment in the marketplace where with MBS having three radio stations on the Island and we have one, there is very much a competitive imbalance in the marketplace.  Even if we were to be upgraded to an FM as a standalone, it is still three versus one and that is not taking into account any other operators that you would consider licensing.

seq level0 \*arabic541              What we were trying to do with our proposal and our application ‑‑ and then I will stop talking ‑‑ is to really bring some competitive balance to the marketplace so that we as an operator have at least the opportunity to compete in a fair and equitable manner to get whatever fair share of revenue we feel we can generate in a market that we see can support two operators if there is some balancing taking place.

seq level0 \*arabic542              We also did it in a way that would provide some new service and new formats that were wanted by the listeners of Charlottetown.

seq level0 \*arabic543              COMMISSIONER CRAM:  If you say the Island is so under‑Rocked, probably if you only got the flip ‑‑ you are smart operators ‑‑ that is probably where you would go.

seq level0 \*arabic544              Is that right?

seq level0 \*arabic545              MR. MAHEU:  Not necessarily.  You can make more money doing Classic Hits.  The opportunities for Classic Hits and Rock are about the same.  They are pretty sizable.  In terms of demographic and advertiser appeal, Classic Hits is a better choice.

seq level0 \*arabic546              If you only had one and you had to compete in a consolidated marketplace, as a smart operator we would likely look at the format that could provide the best opportunity for us to generate some revenue on a three‑versus‑one basis.  So that would not include Rock.

seq level0 \*arabic547              COMMISSIONER CRAM:  Can you give us your revised financial projections for the flip alone?  The projections we had were based on being in an LMA.

seq level0 \*arabic548              MR. MAHEU:  Sure.  Could we forward that to the staff as quickly as we can?

seq level0 \*arabic549              COMMISSIONER CRAM:  Yes.

seq level0 \*arabic550              Ms Murphy will help you with the dates on that.

seq level0 \*arabic551              MR. MAHEU:  All right.

seq level0 \*arabic552              COMMISSIONER CRAM:  Let's go on to the new FM.  This is the guys' station; skewed male.  This demographic you chose, would it be because of the balance in the other one or because it was most under‑served?

seq level0 \*arabic553              MR. MAHEU:  The targeting for the new FM, Island FM, is really based on the research target.  We asked listeners in Charlottetown about a lot of different formats, and when it came to the Rock format we found the big opportunity in Rock was largely it is more male than female, although women do listen to the Rock station, there is no question.  It follows the pretty traditional path of being two‑thirds male and one‑third female in its appeal.

seq level0 \*arabic554              Demographically the ratio station's strength is in the younger end, 18‑to‑34, but it still does relatively well 35‑to‑54.  The real big core of the radio station's heart and soul and its largest appeal is going to be in that 25‑to‑34 area, a little bit 35‑to‑54.

seq level0 \*arabic555              COMMISSIONER CRAM:  And this is going to be a Bob, Jack, Dave, Joe kind of format, is it?

seq level0 \*arabic556              MR. MAHEU:  No.

seq level0 \*arabic557              COMMISSIONER CRAM:  No?

seq level0 \*arabic558              MR. MAHEU:  That is what CHTN is going to be.

seq level0 \*arabic559              COMMISSIONER CRAM:  Okay.

seq level0 \*arabic560              MR. MAHEU:  Island FM is going to be a Rock station in the best tradition of Rock stations.

seq level0 \*arabic561              The research that we conducted and also the research that Astral did when they were looking to come into this market were strikingly similar.  There is a big hole for a Classic Rock radio station in this market.  A Classic Rock radio station is defined largely as a Rock station that plays mostly gold music, mostly older music, very little current music, if any at all.  There are some Classic Rocks that play no current music.

seq level0 \*arabic562              When we got looking at the research a little further in, looking at the size of the market ‑‑ this is in Toronto or even Edmonton; it is just a little over a hundred thousand people ‑‑ we felt that if we went right by the book on the research and just did Classic Rock that that might be a little narrow for this marketplace and not satisfy those folks who like current based Rock.

seq level0 \*arabic563              What we found for the research is that there is some compatibility between the tastes, the needs and the wants of the different groups, the Classic Rock fans and the Active Rock fans.  We put together what we call a hybrid format.  The format is part Classic Rock and part Active Rock.

seq level0 \*arabic564              There are radio stations like this across Canada in a lot of different sized markets.  The music draws the best from the Classic Rock library while playing some of the new, more popular Rock songs of today.

seq level0 \*arabic565              It is really a combination of old Rock and new Rock together.

seq level0 \*arabic566              COMMISSIONER CRAM:  In your programming what percentage would be classic and what percentage would be new?

seq level0 \*arabic567              MR. MAHEU:  It is pretty much 50:50.

seq level0 \*arabic568              COMMISSIONER CRAM:  50:50?

seq level0 \*arabic569              MR. MAHEU:  Yes.  And new meaning stuff out in the last three years, from today to three years old.

seq level0 \*arabic570              COMMISSIONER CRAM:  What degree of duplication do you see with any of the present stations in the market now?

seq level0 \*arabic571              MR. MAHEU:  Very little.  Very little duplication on the Rock side at all.  There is the possibility of a small amount of duplication with CHTN when you get into some songs by some artists, but that is less than 10 percent.  As it relates to MBS' radio stations, two of them are Country, so there is zero duplication.  The only station with the potential of any duplication would be Magic 93, and we anticipate the duplication there to be in the range of 10 percent or less.

seq level0 \*arabic572              The songs that we are going to play on Island FM are a lot harder in nature than what they generally play.

seq level0 \*arabic573              A great example, just driving in yesterday over the bridge and into town and listening to Magic 93, they played "Angel" by Aerosmith, which is kind of a power ballad by a Rock band.  That is not the kind of song we would play on the Island, but we will play a lot of Aerosmith.  So while Magic might play "Angel" by Aerosmith, we are going to be playing "Sweet Emotion", "Walk This Way" and "Dude (Looks Like a Lady)", and stuff like that.  It is much harder and songs that you may not recognize but they certainly would not play.

‑‑‑ Laughter / Rires

seq level0 \*arabic574              COMMISSIONER CRAM: Commissioner Cugini may recognize it but I may not.

seq level0 \*arabic575              MR. MAHEU:  Some of you may recognize it, yes.

seq level0 \*arabic576              COMMISSIONER CRAM:  I want to know, for my taxi driver, what are we talking about as a repeat factor, maximum repeat factor?

seq level0 \*arabic577              MR. MAHEU:  It is very similar to Classic Hits.  On the gold music we would play on Island FM, the top spin on a gold song is probably going to be five spins a week.  You are going to have some music that will get 25 or 30 spins a week, and most of it is the top current Rock music that is just out, just released, and top new Canadian Rock music that is just out and just released.  It will get the most play.  Top spins are likely in that 25 to 30 spins a week, which would represent four to five times a day play.

seq level0 \*arabic578              COMMISSIONER CRAM:  This demographic ‑‑ and forgive me if I don't understand this demographic ‑‑ what kind of spoken word do they want, the one that skews primarily male?   MR. MAHEU:  We touched on it a little in our opening remarks.  There is some perception that listeners of Rock stations don't enjoy Talk and they don't want any News, and those types of things, and that has just not been our experience.  We program Rock stations across the country in a lot of different markets and a lot of different forms, some Classic, some hybrid Classic and Active Rock radio stations.

seq level0 \*arabic579              What we found is that Rock listeners are very much and very similar to radio listeners in other formats.  They are really interested in relevant Talk from our personalities and from the news that we do.  In other words, we need to do a good job.  They expect us to be more than just a juke box.  They expect to be entertained.  They expect to be informed.

seq level0 \*arabic580              How you go about doing that on a Rock radio station is a little bit different than how you would go about it on an Adult Contemporary station or a Country station.

seq level0 \*arabic581              As part of our plan for the Island, we are still doing 50‑plus newscasts a week.  As Scott mentioned earlier on, how we treat that news and the types of stories that we cover on the radio station may be a little different because of the demographic difference and the gender difference, but news is the news and what is topical is what is topical with everybody.  Our treatment of it and how we handle it will be a little bit different.

seq level0 \*arabic582              Also, one of the other areas of spoken word that is very important on a Rock station is talk about the music.  Rock fans tend to be active consumers of music and they are interested in what is going on.  They are interested about the artist.  They are interested in who is in the studio, who is recording, who is on tour.

seq level0 \*arabic583              The Rolling Stones are out on a tour right now, as is U2 and Paul McCartney.  Some big names are out there touring.  Every time that happens, that brings the interest to the forefront of what is going on in music, and we need to be talking about those kinds of things.

seq level0 \*arabic584              We have outlined a number of special feature programs we are going to do in certain parts of the day, but largely our personalities and our staff on the air throughout the day are going to be talking about the music, talking about the lifestyle of what is relevant to the people that are listening to the radio station.

seq level0 \*arabic585              That goes beyond music.  It could be money, cars, gadgets, relationships, all sorts of things.

seq level0 \*arabic586              COMMISSIONER CRAM:  This Island FM will have 53 newscasts.  When are they going to be scheduled?

seq level0 \*arabic587              MR. MAHEU:  Scott, would you like to take a crack at filling Commissioner Cram in?

seq level0 \*arabic588              MR. CHAPMAN:  With Island FM, as you mentioned, we would have 53 newscasts per week and we would have nine newscasts each weekday.  Those newscasts would be at 6:00, 6:30, 7:00, 7:30, 8:00, 8:30, 12:00, 4:00 and 5:00.  Then on the weekends we would have newscasts on each day at 8:00, 9:00, 12:00 and 3:00.

seq level0 \*arabic589              That would give us three and a half hours of news per week.  There would be 75 percent local content in the news portion itself, and that would be over two and a half hours of local news content.

seq level0 \*arabic590              COMMISSIONER CRAM:  Mr. Chapman, this is news, or news, sports and weather?

seq level0 \*arabic591              MR. CHAPMAN: All of the packages would be news, sports and weather.  The 75 percent would be the actual news portion of it.

seq level0 \*arabic592              COMMISSIONER CRAM:  News only.

seq level0 \*arabic593              So news of the three and a half hours will be how much?

seq level0 \*arabic594              MR. CHAPMAN:  There will be local content of two and a half hours.  So the news content of three and a half hours would be roughly three hours.

seq level0 \*arabic595              MR. MAHEU:  I think, to be most accurate, it would be based on what we said before: 75 percent of three and a half hours would be news.

seq level0 \*arabic596              COMMISSIONER CRAM:  Okay.

seq level0 \*arabic597              MR. MAHEU:  Scott was mentioning of the four‑minute newscasts, three minutes is news.  There is 30 seconds of sports and 30 seconds of weather.

seq level0 \*arabic598              COMMISSIONER CRAM:  So we are back at 75 percent of three minutes.

seq level0 \*arabic599              MR. CHAPMAN:  Which would be 2.6.

seq level0 \*arabic600              COMMISSIONER CRAM:  That would be local?

seq level0 \*arabic601              MR. MAHEU:  Yes.  That was just talking about news in total form.  You asked about how much of that news would be ‑‑ how much of the spoken word news would be news.

seq level0 \*arabic602              COMMISSIONER CRAM:  Okay.

seq level0 \*arabic603              MR. MAHEU:  So 75 percent of the hourly total will be news.

seq level0 \*arabic604              COMMISSIONER CRAM:  Of the three and a half hours, 75 percent will be news.

seq level0 \*arabic605              MR. MAHEU:  And 25 percent would be sports and weather.

seq level0 \*arabic606              COMMISSIONER CRAM:  Yes.  And of that 75 percent, 75 percent yet again will be local, being defined as provincial.

seq level0 \*arabic607              MR. CHAPMAN:  Provincial, that is correct.

seq level0 \*arabic608              COMMISSIONER CRAM:  And you will agree to a COL that you will provide 75 percent local news out of the totality of news.

seq level0 \*arabic609              MR. CHAPMAN:  Yes.

seq level0 \*arabic610              MR. MAHEU:  That is correct.

seq level0 \*arabic611              COMMISSIONER CRAM:  Your brief says you will be hiring a news director and two full‑time reporters.  Essentially you, Mr. Chapman, will then be news director for one or the other?

seq level0 \*arabic612              MR. CHAPMAN:  I will let Mr. Maheu address the staffing issue.

seq level0 \*arabic613              MR. MAHEU:  Since we put our supplementary brief together, we are still going to have six people between the two radio stations if they are both approved.

seq level0 \*arabic614              In looking back at that, it doesn't make sense at this point now, now that we have had the benefit of filing this, to have two news directors.  We are still going to have six people, but Scott would be the news director of both the Island and CHTN.

seq level0 \*arabic615              It just makes sense that there is one news director overseeing the news operations of two radio stations.

seq level0 \*arabic616              However, as Scott mentioned earlier, it is very important that each radio station do a good job for its own target audience.  That is going to mean some similarities of stories that are covered on both, but it doesn't make sense to have a separate news director for each radio station.  What does make sense is that one person has a good oversight of our news gathering and news reporting capabilities and that both radio stations are being well served.

seq level0 \*arabic617              The total number of news people, including the news director, remains the same.  That will also allow us to reassign what was going to be a news director that might be in the office a lot more out in the field and on the air.

seq level0 \*arabic618              COMMISSIONER CRAM:  This one, I believe, had a lot more, if I can call it, editorial ‑‑ or at least as proposed was going to have a lot more sort of editorial minutes, at least if I understood correctly.

seq level0 \*arabic619              Who will have editorial control over the news on either one of the stations?

seq level0 \*arabic620              MR. MAHEU:  Well, the news director is the first line of defence and oversight on a radio station's news broadcast and newscast.  The news director recruits and hires and oversees the folks in the newsroom on a daily basis.

seq level0 \*arabic621              Editorial control over the news ‑‑ news is part of the overall programming of a radio station, and in most radio stations the news director reports to the program director, who is in charge of the total sound and the total scope of the radio operations of the radio stations.

seq level0 \*arabic622              I guess in terms of the editorial control or who is responsible, the program director is responsible for all the content on a radio station.  That is where it would end.

seq level0 \*arabic623              The news director's responsibilities are pretty clear:  to oversee and supervise based on what the goals and objectives of the radio stations are as they relate to news.

seq level0 \*arabic624              COMMISSIONER CRAM:  Thank you.

seq level0 \*arabic625              I want to go into your financial projections.  First, we had better get the dating right.

seq level0 \*arabic626              This application was filed after you knew you had to discontinue the LMA.  Is that correct?

seq level0 \*arabic627              MR. MAHEU:  That is correct.

seq level0 \*arabic628              COMMISSIONER CRAM:  So in your financial projections you have stated you believe only 30 percent of your revenue will come from the incumbents.

seq level0 \*arabic629              The others are projecting up to 65 percent.

seq level0 \*arabic630              Do you have any reason why you are so low or they are so high?

seq level0 \*arabic631              MR. MAHEU:  The biggest reason that our financial projections may differ from others is the fact that we are proposing a brand new format that has not been on the air here before.

seq level0 \*arabic632              We know through the research we have done that there are many listeners going out of province to hear Rock music on the radio.

seq level0 \*arabic633              As an advertiser in Charlottetown, and albeit Prince Edward Island, if you want to reach a Rock audience, you cannot do it right now on radio.  You have to find other ways to do it.  You either have to spend on the internet, advertise in magazines, do direct mail, buy some television, get creative and do stuff door to door, outside events, sampling or whatever.

seq level0 \*arabic634              So we believe and we understand that there are a number of clients right now that would love to reach the audience that would listen to Rock, but that money is being spent in other mediums right now, or not being spent at all.

seq level0 \*arabic635              We believe that bringing a new format like this one into the marketplace is going to free up some dollars from some other areas that presently isn't going into radio right now.

seq level0 \*arabic636              I can't say for sure but I can only surmise that other applications that have a higher amount of the revenue coming from other radio stations may be because there is more duplication there, and there is going to be audience erosion or audience transfer between other broadcasters which may account for why many of their revenues, or most of them, are going to come from existing broadcasters.

seq level0 \*arabic637              COMMISSIONER CRAM:  The synergies you would have from a second station would be similar, I would assume, if CHTN were flipped or not flipped?

seq level0 \*arabic638              MR. MAHEU:  We will get economies of scale.  What changes there is if CHTN is not approved and converted to FM, it will still be marginalized as an AM radio station and will not achieve its revenue potential, which will impact profits.

seq level0 \*arabic639              In terms of expenses and shared economies of scale across the board, yes, that will exist, but the upside on the AM is capped and rather limited.

seq level0 \*arabic640              That will affect the overall profitability of the two‑station cluster.

seq level0 \*arabic641              COMMISSIONER CRAM:  Again, some synergies with stations in the Atlantic, including Newfoundland.  I have been told when I use the term "Maritime", I am wrong because it excludes Newfoundland.

seq level0 \*arabic642              MR. MAHEU:  That is Atlantic Canada.

seq level0 \*arabic643              COMMISSIONER CRAM:  Atlantic Canada.

seq level0 \*arabic644              So there would be the same synergies with Atlantic Canada:  some back office with very little else?

seq level0 \*arabic645              MR. MAHEU:  In terms of the synergies between the two stations here?

seq level0 \*arabic646              COMMISSIONER CRAM:  And all of the stations in Atlantic Canada.

seq level0 \*arabic647              MR. MAHEU:  Each of our operations throughout the Maritimes and Atlantic Canada stand on their own.  We don't share resources.

seq level0 \*arabic648              The only resources we do share are head office resources, payroll and payables and things like that, that many companies do.

seq level0 \*arabic649              In terms of the business operations, the programming operations, the news operations on a day to day basis in all of our markets are conducted in the markets by the people in the market.

seq level0 \*arabic650              There are no synergies or sharing in terms of we can't get St. John's to do our traffic for us and cut a couple of positions.  We don't do that.

seq level0 \*arabic651              COMMISSIONER CRAM:  The end of the LMA, aside from the administration and operational changes that you have already referred to, are there any others?

seq level0 \*arabic652              MR. MAHEU:  I'm not sure I understand the question, Commissioner; I'm sorry.

seq level0 \*arabic653              COMMISSIONER CRAM:  As a consequence of the end of the LMA, you talked about adding eight new staff.

seq level0 \*arabic654              MR. MAHEU:  Yes.

seq level0 \*arabic655              COMMISSIONER CRAM:  The capital.  You had to inject a fair bit of capital, and then you moved to the new storefront building, if I can call it that.

seq level0 \*arabic656              Are there any other admin and operational changes?

seq level0 \*arabic657              Or what didn't change?

seq level0 \*arabic658              MR. MAHEU:  Pretty much everything changed.  It is very akin to the launching of a new radio station.

seq level0 \*arabic659              I will get Jennifer to tell you a little bit about that.

seq level0 \*arabic660              When we ended the LMA, we had to move out.  We had to move to a new location and we had to build new studios.  We are pretty proud of it actually, on University Avenue.

seq level0 \*arabic661              From that day forward when we started out, everything was new and everything was different.  We moved out of the place we were in.  We had to hire our own sales department.  We had to go out and sell our own merits.  We improved the product.

seq level0 \*arabic662              Jennifer, feel free to chip in.

seq level0 \*arabic663              I know it was an awfully big deal.

seq level0 \*arabic664              MS EVANS:  Well, it has been quite an adventure for the last four months.  There is no question about that.

seq level0 \*arabic665              What we have seen happen is we really have put together what I feel very confident in, the best broadcasting team here in PEI.  We have some very well‑known experienced broadcasters on our team.  We have a sales team that is very well connected to the community.  We are in the best location that we could possibly broadcast from, really, in Atlantic Canada.  We have a lot of good things on our side.  We have had a lot of good news stories from our community service.

seq level0 \*arabic666              At the end of the day what we are hearing from our clients and from our listeners is: "When are you going to be FM?  Tell me more about when you are going to be FM.  I can't wait to do business with you when you are FM."

seq level0 \*arabic667              I have never seen so much excitement or buzz about radio in a really long time.  People are talking about this medium like they haven't done for a number of years, and that has been a really refreshing thing to see in this industry.

seq level0 \*arabic668              People are interested.  I can tell you I am sure by the end of today we will have a lot of phone calls to return with people wanting to know:  How did you make out?  Are you going to get that Rock station?

seq level0 \*arabic669              When we did the sampling of the Island FM through the website, we drove traffic to that website and as a result of that over 1300 letters were generated from listeners that had absolutely no stake in this process other than we want a Rock radio station in PEI.

seq level0 \*arabic670              We had listeners calling me and e‑mailing Mark and saying:  Can I do anything to make that happen?  Do you want to give me some postcards?   Do you want to give me a T‑shirt and I'll go out and I'll talk about it?

seq level0 \*arabic671              We had two open houses to explain where our business was going and to show people our new storefront studio.  Over 300 people came out to see and hear about what our plans are.

seq level0 \*arabic672              There has been some real excitement again about radio in this marketplace, and that is very exciting to be part of.

seq level0 \*arabic673              At the same time, we are pretty realistic in knowing that they want FM quality sound.  Our listeners want it.  Our clients want it.  That is what we are up against currently.

seq level0 \*arabic674              COMMISSIONER CRAM:  I think you said, Mr. Murphy, a 61 percent reduction in revenue?

seq level0 \*arabic675              MR. MURPHY:  Yes.  For the three months just prior to the end of the LMA, compared to the three months just after, a 61 percent reduction.

seq level0 \*arabic676              COMMISSIONER CRAM:  Coast Broadcasting said in their supplementary brief that ‑‑ and I believe it is over the period of the LMA:

                      "It is interesting to note that the radio sales have dropped in the market by half a million dollars, yet profit has gone up half a million to $1.5 million."

seq level0 \*arabic677              It being, I guess, the assertion that the resources put into radio in Charlottetown were reduced as a result of the LMA and that the revenues received from radio were reduced as a result of the reduced programming quality.

seq level0 \*arabic678              Do you think it is possible that your revenues could go up as a result of the increase in the coverage and quality of CHTN?

seq level0 \*arabic679              MR. MURPHY:  Well, our revenue as CHTN‑AM has not really changed very much before or after the LMA.  Remember, we were recording 25 percent of the total revenue in the market, 25 percent of the expenses and 25 percent of the bottom line.

seq level0 \*arabic680              CHTN never really sold very much.  We never made money when CHTN was AM.  So from 1986 to 1994 we never made a penny.  We made money during the LMA years from 1994 to 2005, and now we are back into the standalone and we are not making money.

seq level0 \*arabic681              Things will improve somewhat.  I don't know when or if we will make money with CHTN‑AM.

seq level0 \*arabic682              COMMISSIONER CRAM:  Are you essentially saying that as a consequence of the LMA, your revenues were higher than the share CHTN would get as a standalone?

seq level0 \*arabic683              MR. MURPHY:  Absolutely.

seq level0 \*arabic684              COMMISSIONER CRAM:  What can you tell me about the competitiveness of the market since the end of the LMA?

seq level0 \*arabic685              MR. MAHEU:  I think that Jennifer can give you an update on that.

seq level0 \*arabic686              MS EVANS:  As I talked about just a moment ago, there is real excitement in this marketplace now, especially among our advertisers.

seq level0 \*arabic687              They are excited for two reasons.   People like to see competition.  There is no question about that.  They like to have a choice in who they do business with, so they are excited about that prospect.  Then they are also very excited about the new formats that we are proposing to bring to Charlottetown.

seq level0 \*arabic688              That has made things very interesting in the short term, but at the same time I have been very fortunate that this is a small operation.  So the general manager is the sales manager and goes out on a lot of sales calls with our sales team.

seq level0 \*arabic689              I have been on the front line with our sales team and we have great discussions with these clients.  They are excited about what we are doing and the team we have gathered together, but the last statement is:  "When are you going FM?  I will do business with you when you are FM."

seq level0 \*arabic690              That is just the reality that we are facing.  We are an optimistic team.  We have been working very hard over the last four months, and will continue to do so, to make this operation as successful as we possibly can.  However, at the end of the day after being on the front lines for the last four months and meeting with all of these clients and being quite involved in the business community, that is the message that we are hearing.  I don't see that changing.

seq level0 \*arabic691              We have put a lot of resources towards CHTN‑AM.  I don't know how much more we can really do as an AM station in order to possibly get to a break‑even point, if ever get to turning a small profit.

seq level0 \*arabic692              The FM is a crucial element to giving us a product that our clients and our listeners really are demanding.

seq level0 \*arabic693              COMMISSIONER CRAM:  Tough to compete with colleagues of nine years.

seq level0 \*arabic694              MS EVANS:  Absolutely.  It is pretty hard to deny.  I have been out of the radio business for the last five years but worked certainly with many of the folks that we are now calling after or calling in between appointments.  We all shared the same roof for nine years and it is pretty tough to all of a sudden be saying okay, now you are the competition.

seq level0 \*arabic695              I think we are both approaching it from a very friendly, competitive nature.  It is a small town.  We have to be very aware of the fact that it is a small town, and people don't want to hear negativity about competition.  That is certainly not the way that we operate in our business at Newcap.  That has been our approach.

seq level0 \*arabic696              We are focussed on what Newcap Charlottetown is doing and what we can do to possibly be successful.

seq level0 \*arabic697              COMMISSIONER CRAM:  Have the costs of advertising spots gone up or down since the end of the LMA?

seq level0 \*arabic698              MS EVANS:  We have maintained the rate for the benefit of our clients.  It certainly is no fault of theirs that we have to pay for rent and additional staff and all the overhead that has come along with the end of the LMA.  So we have made that commitment to our clients that they would not incur those additional costs in the short term.  They have been very receptive and respectful of the fact that we have been respectful of their budgets.  Just because in the middle of the year we changed our business operations, certainly they can't change and increase their advertising budgets.

seq level0 \*arabic699              COMMISSIONER CRAM:  Voice tracking.

seq level0 \*arabic700              I think this is you, Mr. Murphy.

seq level0 \*arabic701              When is that proposed, live ‑‑

seq level0 \*arabic702              MR. MURPHY:  We propose to do 15 hours live Monday through Friday.

seq level0 \*arabic703              COMMISSIONER CRAM:  From?

seq level0 \*arabic704              MR. MURPHY:  From 5:00 a.m. until 8;00 pm.  And then on the weekends, from 6:00 a.m. to 6:00 p.m., which would be 12 hours.

seq level0 \*arabic705              COMMISSIONER CRAM:  And again maybe cooperative efforts on programming with the rest of the Atlantic stations, but everything else would be locally produced.

seq level0 \*arabic706              MR. MURPHY:  Yes.

seq level0 \*arabic707              COMMISSIONER CRAM:  I want to talk about your CTD just a little.

seq level0 \*arabic708              You are talking about giving $70,000 a year to Starmaker, and I recall hearing a briefing from the head of the Starmaker Fund and noticed that of the money going out, 50 percent of it went to broadcasters.  In other words, broadcasters put money into the Starmaker Fund and 50 percent of it went back to broadcasters.

seq level0 \*arabic709              On average, how much money do you get back from the Starmaker Fund per annum as a percentage of how much you put in?

seq level0 \*arabic710              MR. MAHEU:  I will tell you, as God is my witness, I am not aware of us receiving any money back from Starmaker.  But now that I know about this, this is wonderful news.

‑‑‑ Laughter / Rires

seq level0 \*arabic711              MR. MAHEU:  I know that Starmaker, to their credit, is using radio where it is appropriate in terms of marketing and advertising, and that makes sense.  This isn't radio with its hand back out, and I am not going to be an apologist for Starmaker.

seq level0 \*arabic712              I do know a little bit about the organization.  They are in the business of promoting and marketing music and tomorrow's stars, music stars, exporting Canadian talent.

seq level0 \*arabic713              We would be a little disingenuous as an industry if we said you should spend all that money on TV because that is the best way to reach people.  It is not.  In the music business radio is still the most effective way that people discover new music and find out about new bands, and so on.

seq level0 \*arabic714              To take those bands to the next level, radio should certainly be part of the media mix.

seq level0 \*arabic715              We do not get a lot of business from Starmaker, and that is not why we give them money.  We give them money so that they can continue the good work they are doing.  We believe that the money we spend with Starmaker is well spent in positioning the next new crop of stars to get to the next level, whether it is the Avril Lavignes or the Nickelbacks, or whoever else become international stars.  It reflects well on Canada and it reflects well on our business, and we think in the end it reflects well on our company.

seq level0 \*arabic716              So that is why we are giving money to Starmaker.

seq level0 \*arabic717              COMMISSIONER CRAM:  You haven't answered my question.

seq level0 \*arabic718              MR. MAHEU:  The answer to your question is:  To my knowledge, we have not put our hand in their pocket for a nickel.

seq level0 \*arabic719              COMMISSIONER CRAM:  Thank you.  Subject to further notice and ‑‑

seq level0 \*arabic720              MR. MAHEU:  Yes, subject to further review, but I am not aware that that generally goes on with us.

seq level0 \*arabic721              COMMISSIONER CRAM:  And then there is the money ‑‑ and now I'm on track with this one ‑‑ the money going to the PEI Music Awards Association and the ECMA.

seq level0 \*arabic722              If I have it right, it is $40,000 a year and it is $20,000 to each one.

seq level0 \*arabic723              MR. MAHEU:  Correct.

seq level0 \*arabic724              COMMISSIONER CRAM:  I guess the money that is going to the ECMA is for established artists, providing education, their managers, tour support.

seq level0 \*arabic725              I am asking myself:  What is the difference between that and the Starmaker Fund?

seq level0 \*arabic726              MR. MAHEU:  In terms of what they do or what they offer?

seq level0 \*arabic727              COMMISSIONER CRAM:  Yes.  It seems that there is really a nuance on ‑‑

seq level0 \*arabic728              MR. MAHEU:   There are some similarities there too, very much so, Commissioner Cram.  I think the real difference is with Starmaker they have the flexibility to buy advertising and buy marketing materials, et cetera.  The money we are giving to the ECMA is really more educational and hands on, for their managers and so on, to make them a little more effective in what they do.

seq level0 \*arabic729              Both our Starmaker plans and our ECMA plans are PEI‑specific.  With Starmaker we don't put any strings saying you can't buy advertising, because that is a lot of what they do.  The ECMA money doesn't involve buying any advertising or buying newspaper/television.  It is practical hands on education and help.

seq level0 \*arabic730              COMMISSIONER CRAM:  Then you say that Starmaker ‑‑ did I misunderstand you?  Did you say that Starmaker is dedicated solely to PEI artists?

seq level0 \*arabic731              MR. MAHEU:  We are asking Starmaker that the money we are giving to the Starmaker Fund be devoted, if possible ‑‑ if there are PEI artists that qualify, that they get first crack at that money.

seq level0 \*arabic732              There isn't always a PEI artist or band that is ready to go to the next level that will qualify for Starmaker funding.  What we are asking the Starmaker Fund to do is if there is an emerging PEI artist, and as a fallback position a Maritime artist if there is no PEI artist ‑‑

seq level0 \*arabic733              COMMISSIONER CRAM:  An Atlantic artist.

seq level0 \*arabic734              MR. MAHEU:  Then we go to the Atlantic.  Anywhere out in this part of the world, if there is nobody from PEI specifically, these folks have first crack and are in line for our money.

seq level0 \*arabic735              We want our money at Starmaker to be focussed on artists from this area.

seq level0 \*arabic736              COMMISSIONER CRAM:  Is the Starmaker Fund like FACTOR, in that the money is allocated to a certain region or area and if it is not spent in that year, then it goes into the general funding?

seq level0 \*arabic737              MR. MAHEU:  I'm not sure about that. I would have to check on that.

seq level0 \*arabic738              My understanding with Starmaker is they have no shortage of folks lined up to take advantage of the funding.  The way the Canadian music industry is right now, it is rather buoyant and there are a lot of emerging stars that are kind of on the cusp ready to take the next step.

seq level0 \*arabic739              So I don't see that as being an issue.  If it was a concern for the Commission, we would certainly find out.

seq level0 \*arabic740              Our preference would be that it doesn't go into general revenues; that it is reserved aside and accrues.  So if there is nothing going on in Maritimes and Atlantic Canada one year, that money be set aside so that when somebody does come along, there is an even greater pool of money for them to take advantage of.

seq level0 \*arabic741              COMMISSIONER CRAM:  And that the money would be incremental to that otherwise allocated to PEI.

seq level0 \*arabic742              MR. MAHEU:  That is correct, yes.

seq level0 \*arabic743              COMMISSIONER CRAM:  Can you ascertain exactly how Starmaker is going to handle those monies?

seq level0 \*arabic744              MR. MAHEU:  We will find out and file it.

seq level0 \*arabic745              COMMISSIONER CRAM:  Whether it will be incremental and whether the allocation would simply remain until a PEI or a Maritime or an Atlantic ‑‑

seq level0 \*arabic746              MR. MAHEU:  We will be happy to do that and we will file it with staff.

seq level0 \*arabic747              COMMISSIONER CRAM:  And the money going to the PEI Music Awards is for a showcase.  This is its own association.  Do they have a showcase at present?

seq level0 \*arabic748              MR. MAHEU:  Dave Murray, do you want to touch on that?

seq level0 \*arabic749              MR. MURRAY:  My understanding is that they don't and that they need these funds to create the showcase.

seq level0 \*arabic750              The organization is helped by the ECMAs.  It contributes to the ECMAs, but it is not  very active.  They are having difficulty raising funds now.

seq level0 \*arabic751              COMMISSIONER CRAM:  Is it just going to be a showcase that is going to cost $20,000?

seq level0 \*arabic752              MS EVANS:  The PEI Music Awards Association is relatively new to Prince Edward Island, so they are in the formative struggling years.  Currently they have an annual music awards which happens in November of each year.  It has probably taken place for the last four years.  720 CHTN is the sponsor of this year's awards program.

seq level0 \*arabic753              Their vision is not to become a duplicate of the ECMAs but certainly provide those resources to PEI artists, similar to what the East Coast Music Awards Association does on an Atlantic basis but have a core area of contact for PEI musicians and artists.  So that is their vision.

seq level0 \*arabic754              They are really in an expansionary role right now and looking for additional funds to make it more of a full‑time presence instead of it being a standalone event once a year.

seq level0 \*arabic755              COMMISSIONER CRAM:  The $20,000 is for that standalone showcase?

seq level0 \*arabic756              MS EVANS:  No.  It is to go to the Music Awards Association to continue with their efforts of expanding.

seq level0 \*arabic757              The music awards in November is part of their activities, but they are also looking at offering additional activities beyond the awards showcase itself.

seq level0 \*arabic758              COMMISSIONER CRAM:  Then it is really just $20,000 as general funds for the PEI Music Awards Association.

seq level0 \*arabic759              MR. MURPHY:  There is a specific budget in our reply to deficiency that they have provided for us.

seq level0 \*arabic760              COMMISSIONER CRAM:  Then the ECMA already are holding these seminars and workshops, if I noticed.  There was one for February 17th.  I think it was something that was given to us.

seq level0 \*arabic761              This is incremental money so they can have more.  Is that the idea?

seq level0 \*arabic762              MR. MURPHY:  That is correct.

seq level0 \*arabic763              COMMISSIONER CRAM:  Have they committed to having one more, two more a year?

seq level0 \*arabic764              MR. MURPHY:  I didn't get into that level of detail, to be honest.  The ECMAs are very active.  As Mark indicated, there is no shortage of Maritime and Atlantic Canadian artists.  We do partner with them in many of our stations and we contribute in many ways.  We give them countless amounts of promotional airtime, et cetera, to support their groups.

seq level0 \*arabic765              I am not quite sure of the answer to that question.

seq level0 \*arabic766              COMMISSIONER CRAM:  They are a very successful organization, I must say.

seq level0 \*arabic767              MR. MURPHY:  Yes.

seq level0 \*arabic768              COMMISSIONER CRAM:  Thank you.  I think those are all of my questions, except for the last one:  Why is yours the best use of the frequency?

seq level0 \*arabic769              THE CHAIRPERSON:  Perhaps if I may, since that is your chance to hit a home run, we will see if there are other questions from my colleagues or from staff, and then in summing up we will give you the chance to be the local Sultan of Swat here and knock that one out of the park.

seq level0 \*arabic770              Commissioner Cugini.

seq level0 \*arabic771              COMMISSIONER CUGINI:  Good morning.

seq level0 \*arabic772              Perhaps, Mr. Maheu, you and I can have a Battle of the Bands a little later on.

seq level0 \*arabic773              MR. MAHEU:  Sure.

seq level0 \*arabic774              COMMISSIONER CUGINI:  You had a discussion with Commissioner Cram about the duplication in the market should Island FM be licensed.

seq level0 \*arabic775              I would like to know, in your ideal scenario, if both the flip is approved and the new FM is approved, what duplication is there going to be between those two services?

seq level0 \*arabic776              Is the Joshua Tree going to be on CHTN‑FM and the new U2 album on Island FM?

seq level0 \*arabic777              MR. MAHEU:  That is a good question.  The duplication between the Classic Hits format we are proposing for CHTN‑FM and our proposed Island FM station is rather small, less than 15 percent.  They are going to share some artists but they are not going to share a lot of songs.

seq level0 \*arabic778              For instance, on a Classic Hits station you might play "Hungry Heart" by Bruce Springsteen because it was a great hit in the 1980s but that song likely wouldn't get play on the Rock station.  We would be playing different Springsteen tracks.

seq level0 \*arabic779              The same with John Mellencamp and all that kind of stuff.  To be fair, there is some duplication because there are some songs that crossed over and were big Top 40 hits and big Rock hits; some Bon Jovi stuff.  There is some Def Leppard music, some Mellencamp songs, but largely the actual song duplication between the two stations will be less than 15 percent.

seq level0 \*arabic780              COMMISSIONER CUGINI:  With some artists they could qualify on both.

seq level0 \*arabic781              MR. MAHEU:  That's right.

seq level0 \*arabic782              COMMISSIONER CUGINI:  For both formats.

seq level0 \*arabic783              MR. MAHEU:  They do.

seq level0 \*arabic784              To use your example of U2, for instance, the Island FM would be deep into U2, very deep into a lot of albums, where I am trying to think off the top of my head, there might be one, possibly two songs that you might hear on the Classic Hit station: "Mysterious Ways" and maybe "I Still Haven't Found What I'm Looking For", probably.  Those appear on a lot of Classic Hit stations.

seq level0 \*arabic785              You might hear those two songs on the Island once in a while, but you would be a lot deeper, dozens of U2 cuts deep on the Island.

seq level0 \*arabic786              COMMISSIONER CUGINI:  You talked about "CHTN Presents", an hour‑long program that will feature PEI artists and their music, with interviews and possible live acoustic performances in our storefront.

seq level0 \*arabic787              Is this a program that exists currently on your AM station?

seq level0 \*arabic788              MR. MURPHY:  No, it doesn't.

seq level0 \*arabic789              COMMISSIONER CUGINI:  So this would be a new initiative.

seq level0 \*arabic790              MR. MURPHY:  Yes, it would.

seq level0 \*arabic791              COMMISSIONER CUGINI:  Would these be new and emerging artists or established artists?

seq level0 \*arabic792              MR. MURPHY:  They would be both, I would imagine.  We would feature both up‑and‑coming artists and those that are just starting out, or artists that are currently in the music industry and those that are moving up as well.

seq level0 \*arabic793              COMMISSIONER CUGINI:  I suppose to new and emerging, we should also add the word "unsigned".

seq level0 \*arabic794              MR. MURPHY:  Yes.

seq level0 \*arabic795              COMMISSIONER CUGINI:  So is there a policy or an objective that you would have in giving unsigned artists some airtime?

seq level0 \*arabic796              MR. MAHEU:  Yes.  Really this is one of those rare occasions where a radio station will break its format.  There are going to be times where we are not going to play Classic Hits, and this is going to be one of those times where ‑‑ our preference always is to try to give these new emerging acts a helping hand up instead of a handout.

seq level0 \*arabic797              A lot of them just want some notoriety.  There are some bands that play in markets like Charlottetown where these folks have full‑time jobs and they may never sign a recording contract.  They play on weekends at clubs and bars and they play at weddings and things like that, and they are looking for some exposure.  Sometimes they write new material and they are very proud of it.

seq level0 \*arabic798              As a local radio station this is an opportunity for us to be a bit of an outlet so that people can hear about them and discover them.  It helps their profile.  It helps get them noticed a little bit.  Sometimes it never amounts to very much.  They may never be on their way to a gold record, but as a percentage very few do.

seq level0 \*arabic799              "CHTN Presents" is really an opportunity to showcase some Island talent.  As Gerard mentioned in our opening remarks, we have that storefront studio now that faces out on University Avenue.  It is a great venue for people to be able to walk by and see it and hear it, and people want to be part of it.

seq level0 \*arabic800              That is really what we are trying to do with "CHTN Presents".

seq level0 \*arabic801              COMMISSIONER CUGINI:  And some, of course, would argue that if you never give them airplay, we will never know if they will become ‑‑

seq level0 \*arabic802              MR. MAHEU:  Yes, that's right.

seq level0 \*arabic803              COMMISSIONER CUGINI:  Along those same lines for Island FM you talked about "Sonic Source", "Rockin' the Island".  Again, are we talking about established artists or new emerging and unsigned?

seq level0 \*arabic804              MR. MAHEU:  A combination of both.   It is going to be not only focussed on PEI but the maritimes in general, east coast music, with obviously preference given to new emerging artists.

seq level0 \*arabic805              We see these programs as an opportunity to kind of solicit some demos and tapes and MP3s from bands.  They are looking for exposure.  It is not hard.  Once the word gets out, stuff travels pretty fast on the internet.  When they know there is an FM station that is doing a weekend show and they are featuring unsigned artists and acts, in come the MP3s.  So we have lots to choose from.

seq level0 \*arabic806              You never know what you are going to find.  That is the other thing.  The next big thing might be coming into your in‑box by e‑mail, and you listen to it and you go "wow, this is pretty good".  That is what these shows are all about.

seq level0 \*arabic807              Again, with Island FM, going back to the type of people that listen to Rock radio, they are interested in what is new, what is bubbling under and what is emerging.  From a programming point of view, every radio station takes a certain amount of pride in being the radio station or the music director or the program director that discovered the next Nickelback and the next Avril Lavigne.  So they are always on the lookout out there.  I think these types of shows are great to give that kind of showcase and profile.

seq level0 \*arabic808              COMMISSIONER CUGINI:  Do you have an idea yet when they would be scheduled?

seq level0 \*arabic809              MR. MAHEU:  Those types of programs tend to be scheduled in the early evening or on the weekends.  I think if we get enough reaction to those types of shows ‑‑ and, again, it will be up to the local folks ‑‑ they can be run multiple times too, where you might run something every Thursday night at 7:00 and then repeat it again on Saturday morning at 6:00 and Sunday afternoon, because people don't always necessarily make an appointment to listen at those particular times.  If the shows are good enough and there is enough material, we can move it around a little bit.

seq level0 \*arabic810              COMMISSIONER CUGINI:  Just one last question:  When did the Tragically Hip cross over to Classic Rock?

seq level0 \*arabic811              You don't have to answer that.  Thank you.

‑‑‑ Laughter / Rires

seq level0 \*arabic812              THE CHAIRPERSON:  I have two very short questions, after which we will go to the lawyers and then we will let you hit your home run.

seq level0 \*arabic813              I wanted to follow up on the homework that Commissioner Cram gave you:  what if you could have this, what if you could have that, what if this scenario, what if that?

seq level0 \*arabic814              I want to put a final question to you, just in a very, very simple way.  It is not going to be a question that will make you happy but think of it only as a hypothetical.

seq level0 \*arabic815              What if you had to choose?  You could have one of your applications but you couldn't have both.  Which one would you take?

seq level0 \*arabic816              MR. MAHEU:  Both.

‑‑‑ Laughter / Rires

seq level0 \*arabic817              MR. MAHEU:  If we had to choose between one of the proposals.  That is a very difficult question to answer.

seq level0 \*arabic818              THE CHAIRPERSON:  If I knew the answer, I wouldn't waste your time.

seq level0 \*arabic819              MR. MAHEU:  And if we knew we could choose, we probably would have prepared an answer.

seq level0 \*arabic820              Regardless of what happens, regardless of which one we would choose, having one and only one radio station is a very difficult position to be in, in this particular market.

seq level0 \*arabic821              THE CHAIRPERSON:  Well, if you choose the new FM, you would have two.

seq level0 \*arabic822              MR. MAHEU:  We would, but it would be the equivalent of having a station and a half, because the potential of CHTN to generate the size of audience necessarily to be financially successful is very, very limited.  The market is of a size that it would be very difficult to program News/Talk, which is people who are predisposed to AM radio want Talk.

seq level0 \*arabic823              THE CHAIRPERSON:  Suppose I just push you in a corner and say we still want an answer, which one would you take?

seq level0 \*arabic824              Maybe we should go to Mr. Steele on this one.  I don't know.

seq level0 \*arabic825              Assuming in our deliberations, hearing all the other applications and looking at what the market can bear, we somehow come to a conclusion where you could get one but you couldn't have both ‑‑

seq level0 \*arabic826              MR. MAHEU:  We would want the new FM.

seq level0 \*arabic827              THE CHAIRPERSON:  You would want the new FM?

seq level0 \*arabic828              MR. MAHEU:  And keep CHTN.  Who knows what is going to happen down the road?  There may be a technological breakthrough tomorrow that makes AM sound as good as FM.  Who knows with digital radio policy, et cetera.

seq level0 \*arabic829              THE CHAIRPERSON:  At least you are growing, one step at a time.

seq level0 \*arabic830              MR. MAHEU:  You can certainly move some economies of scale on cost, but I do have to caution you that in saying that, I am answering the question because you asked it.

seq level0 \*arabic831              THE CHAIRPERSON:  Absolutely.  These are hypothetical questions.

seq level0 \*arabic832              MR. MAHEU:  It would be a hardship.  It would certainly eliminate some of the potential service that the market, we feel, deserves and wants.

seq level0 \*arabic833              THE CHAIRPERSON:  We have heard everything that you have said today, and I don't want you to think that I have somehow reduced this to a coin toss or something.  It just seemed to me to be one extra question in the list that Commissioner Cram had that maybe would be useful.

seq level0 \*arabic834              Finally, you have looked at this market pretty carefully, and you have been in it now in a number of incarnations under an LMA and now on your own.  How many licences could we issue?  What will the market stand?

seq level0 \*arabic835              MR. MAHEU:  You just said it.  I  think what the market will stand is the important question.

seq level0 \*arabic836              In terms of service to the community, I think Islanders would want as many radio stations as you could possibly license.  Whatever spectrum is available, license it and let people have as much choice as they possibly could have or want.  That, I think, is the public's feeling.

seq level0 \*arabic837              That always has to be balanced with the financial reality of what can be supported in a market like this.  We believe that the public deserves as much choice as the market can possibly afford to provide them.

seq level0 \*arabic838              We know right now, as a standalone AM, we are losing money and will continue to lose money as long as we are a standalone AM, in spite of Jennifer and her crew's great efforts.  That is just the realities of being an AM radio station.

seq level0 \*arabic839              On the other side of the coin, the other operator in the market, MBS, has three stations, two FMs and an AM.  Their AM is a heritage station, on the air since 1924.  It has a big signal and a large enough audience that it does very well.

seq level0 \*arabic840              Could the marketplace in your question, Mr. Chair, support multiple owners more than what it has now?  That is the very difficult question to answer.  Our considered opinion, given what we know about the market and given what we know about expenses and costs, is that it would be very difficult for this market to support a third operator, especially an operator that will come in as a standalone, enjoying no economies of scale on cost, having to start up and build goodwill from ground zero against a consolidated MBS, and even a standalone Newcap.  We have been here for 20 years, almost 20 years now, and we do have some goodwill and good things happening in the market.

seq level0 \*arabic841              Financially, the impact it would have on the other two operators, although we haven't seen any rate reductions thus far in the market, a third operator would likely mean the potential of that happening.  Right now this market is unrated.  It is not rated by BBM.  We would see that a third operator in the market means the market is likely to be rated, which then moves radio away from a results‑oriented sale to a rating and share sale, which normally is followed by spiralling and declining rates, higher expenses for promotion and marketing and costs of research and costs of BBM, and that results in declining profitability.

seq level0 \*arabic842              THE CHAIRPERSON:  We have just come out of a week where all the telephone companies are telling us:  Let the market go.  Let the market go.  Maybe we want to experiment.

seq level0 \*arabic843              MR. MAHEU:  Yes.

seq level0 \*arabic844              THE CHAIRPERSON:  I don't want to get you alarmed.

seq level0 \*arabic845              I have your answer on that, and I am grateful for it.

seq level0 \*arabic846              Ms Murphy.

seq level0 \*arabic847              MS MURPHY:  Thank you, Mr. Chair.

seq level0 \*arabic848              I would like to review the undertakings that I have noted.  I have three.

seq level0 \*arabic849              First, confirmation in writing from the East Coast Music Association, the ECMA, with respect to your proposed contribution of $6,000 per year, as set out in your application, to convert CHTN.

seq level0 \*arabic850              Second, revised financial projections for the proposed conversion of CHTN‑FM, to reflect the termination of the LMA.

seq level0 \*arabic851              Third, details as to how your contribution to Starmaker will be allocated to artists, as proposed in your application for the new FM station.

seq level0 \*arabic852              Would you be willing to provide all three submissions by Wednesday, October 12th, taking into consideration that it is Thanksgiving weekend next weekend?

seq level0 \*arabic853              MR. MAHEU:  A week should be more than enough time.

seq level0 \*arabic854              MS MURPHY:  Thank you

seq level0 \*arabic855              That is all, Mr. Chair.

seq level0 \*arabic856              THE CHAIRPERSON:  I guess it is your turn, then, to take a couple of minutes and tell us why you should have what you desire.

seq level0 \*arabic857              MR. MAHEU:  Thank you, Mr. Chair.  It won't even take that likely.  We have been through a lot of ground this morning.  Thank you for your attention and your time and some excellent questions.

seq level0 \*arabic858              I think we have indicated over our discussion and our presentation this morning that Newcap would very much like to be the licensee of CHTN‑FM, and we would also like to be the company that brings a new service to the market of Charlottetown.

seq level0 \*arabic859              What it boils down to is:  Why us when you have other choices and other options in the market?

seq level0 \*arabic860              Very simply ‑‑ this may sound a little repetitive but we absolutely believe it to be true ‑‑ approval of our proposal will bring two exciting new listening choices to the Charlottetown and Prince Edward Island area, two choices that the research indicates very clearly are needed and wanted by Charlottetown radio listeners.

seq level0 \*arabic861              Approval of our applications will also result in another editorial news voice on the air available to listeners who presently are listening out of market and out of province right now to get their news and information and their rock music.

seq level0 \*arabic862              We are also ready, willing and able to put a million dollars of Canadian Talent Development money over seven years on the table to some of the initiatives that we discussed earlier this morning.  That money could have a real impact for area artists, emerging artists, both in PEI and other parts of the Maritimes to help them get a leg up and take the next step.

seq level0 \*arabic863              We have a long and rich tradition in this market of service, not only throughout the Maritimes but in Charlottetown in particular.  As Rob mentioned earlier, as we began the day, we purchased CHTN in 1986, so it is coming up on its 20th year anniversary as a Newcap radio station.  We see the post LMA days here as a new opportunity and a new day in broadcasting for us.

seq level0 \*arabic864              This company is under new management and has been since Rob became the CEO a few years back.  I joined the company less than two years ago.  We have a new approach and a new outlook on things.

seq level0 \*arabic865              We are proudly and fiercely independent and we are going to remain that way.  We would really love the opportunity to roll up our sleeves and get to work on bringing two new FM services to Charlottetown.  We know it is a sacred trust.  We will put the money, the capital and the people behind it, and we will put great product on the air.  We will make it work, and we will make you proud of your decision.

seq level0 \*arabic866              We thank you very much.

seq level0 \*arabic867              THE CHAIRPERSON:  Thank you very much.

seq level0 \*arabic868              That concludes this morning's proceedings.  We will break until 2 o'clock for lunch.

seq level0 \*arabic869              At 2 o'clock ‑‑ and I would be very grateful if we could get started at 2:00.  It gives us enough time, I think, to find a hot dog vendor out there somewhere.

seq level0 \*arabic870              At 2 o'clock we will hear from Maritime Broadcasting and the questions will be by my colleague Commissioner Cugini.

seq level0 \*arabic871              Thank you very much.

‑‑‑ Upon recessing at 1230 / Suspension à 1230

‑‑‑ Upon resuming at 1400 / Reprise à 1400

seq level0 \*arabic872              THE CHAIRPERSON:  Madam Secretary.

seq level0 \*arabic873              THE SECRETARY:  Thank you, Mr. Chairman.

seq level0 \*arabic874              We will now proceed with Item 3 on the agenda, which is an application by Maritime Broadcasting System Limited to convert Radio Station CFCY Charlottetown from the AM band to the FM band.

seq level0 \*arabic875              The new station would operate on Frequency 95.1 Mhz, Channel 236‑C1, with an average effective radiated power of 73,300 watts.

seq level0 \*arabic876              Appearing for the Applicant is Mr. Robert Pace, and Mr. Pace will introduce his colleagues.

seq level0 \*arabic877              You will have 20 minutes to make your presentation.

seq level0 \*arabic878              Thank you.

PRESENTATION / PRÉSENTATION

seq level0 \*arabic879              MR. PACE:  Thank you.

seq level0 \*arabic880              Good afternoon, Chairman Langford, Commissioner Duncan, Commissioner Cram, Commissioner Cugini, Commissioner Noël, and staff.  I am Robert Pace, the owner of Maritime Broadcasting Systems Limited.  I would like to welcome you to Charlottetown, the birthplace of Confederation.

seq level0 \*arabic881              It is worthy to note that the framework and foundation of our great country was debated and confirmed just a few short blocks from this room in September 1864.

seq level0 \*arabic882              Coming to Charlottetown, either with my family or on business, always gives me a great sense of pride that our company plays such an important role in the city where Canada first established its roots.

seq level0 \*arabic883              While on the subject of roots, I would like to welcome Commissioner Duncan, a fellow Nova Scotian, to our first public hearing in the maritimes.  We are certain that your knowledge and broadcast‑related experience will be sound counsel in the decisions to be made resulting from this public hearing.

seq level0 \*arabic884              Mr. Chairman, I also feel certain that Mrs. Duncan can steer yourself and fellow commissioners in the right direction for a great feed of P.E.I. lobster.

seq level0 \*arabic885              We are pleased to be here today to discuss an exciting proposal for radio in Charlottetown.  Let me begin by introducing my panel.

seq level0 \*arabic886              To my right is Owen Barnhill, our Chief Financial Officer.  To my left is Heather Tedford, our General Sales Manager for CFCY and CHLQ here in Charlottetown.

seq level0 \*arabic887              Seated behind me, to my right, is Dan Barton, Director of Programming.  Next to him is Mike Maxwell, Director of Technical Services, and Rebecca Black, our Morning Show Host at CFCY AM.

seq level0 \*arabic888              We are here today to make our case to convert CFCY AM, with 80‑plus years of service on Prince Edward Island, to the FM frequency 95.1, while maintaining our country music format, a music format that is not currently available on the FM dial here in Charlottetown, and for which no other party has made application at this hearing.   

seq level0 \*arabic889              We will start by asking Heather to provide an overview of MBS' history in the maritimes and our regional mandate.

seq level0 \*arabic890              MS TEDFORD:  Thank you very much, Robert.

seq level0 \*arabic891              Originally established in 1969 as Eastern Broadcasting Limited, our maritime‑owned company is built on the tradition of community service, faithfully providing broadcast services in Prince Edward Island, Nova Scotia and New Brunswick.

seq level0 \*arabic892              From its beginnings in Campbellton, New Brunswick, MBS has evolved into a truly regional broadcaster, operating 24 stations in markets as large as Halifax, with a population of over 350,000, to Digby, Nova Scotia, with a total population of just over 2,000 people.

seq level0 \*arabic893              In addition to high quality radio services in every market in which MBS operates, we have provided human and financial resources, programming expertise, state‑of‑the‑art equipment, modern facilities and a longstanding commitment to the communities we are privileged to serve.

seq level0 \*arabic894              For over 80 years our most senior heritage station, CFCY AM, has played a vital role in the lives of the residents of Prince Edward Island, a province with a solid foundation of country music.

seq level0 \*arabic895              CFCY AM was the original host station for Don Messer and his Islanders, and in later years was instrumental in the music careers of island residents, Stompin' Tom Connors, and the late Gene MacLellan.

seq level0 \*arabic896              With the approval of this application, we will continue to embrace these traditions, including the weekly Saturday night "Hoedown" program.  This three‑hour program has been part of island listeners' lives for nearly 50 years and will continue to be a Saturday night staple on CFCY FM.

seq level0 \*arabic897              The "Hoedown" reflects the island audience by being interactive, with listener requests welcomed each and every week.

seq level0 \*arabic898              Other program features will include our Wednesday night, one‑hour "Bluegrass Island" program, hosted by local bluegrass musicians and P.E.I. music award winners Charlie Hanson and Serge Bernard.

seq level0 \*arabic899              Also included will be the one‑hour Sunday night "Country Roots" program, which pays tribute to the artists who first brought country music to audiences.

seq level0 \*arabic900              CFCY has long demonstrated its commitment to local and regional artists through regular airplay for maritime artists, as well as within its long‑running "Homegrown Country" program.

seq level0 \*arabic901              As the advantages of improved technology become available to the island's newest artists, such as Richard Wood, Lennie Gallant, Ninth Hour, Jericho Road, Cynthia McLeod and Kim Albert, there has been an increased demand for a better method of delivering their music.  Thus our application for conversion to the FM band.

seq level0 \*arabic902              The country music fans in Charlottetown deserve to hear their favourite music in the superior technical quality that broadcasting on the FM band can deliver.

seq level0 \*arabic903              Dan.

‑‑‑ Pause

seq level0 \*arabic904              THE CHAIRPERSON:  There seem to be some difficulties with the microphones, so we will take a five‑minute adjournment while we settle the problem.

seq level0 \*arabic905              I apologize, and if you want to start again at any point, that is fine with us.

‑‑‑ Upon recessing at 1410 / Suspension à 1410

‑‑‑ Upon resuming at 1420 / Reprise à 1420

seq level0 \*arabic906              THE CHAIRPERSON:  All right.  Let's start again.  You folks can start precisely where you are most comfortable.

seq level0 \*arabic907              MR. BARTON:  That's great.  Thank you.

seq level0 \*arabic908              I actually found this quite reminiscent of our challenges dealing with AM technology, so maybe it is apropos.

seq level0 \*arabic909              As the Commission is aware, AM stations have faced considerable economic difficulties in recent years.  Listeners now have a multitude of choices from which to obtain information and entertainment:  television, newspaper, and the internet.

seq level0 \*arabic910              The recent approval of satellite radio licences in Canada has paved the way for a variety of listening options with high quality digital signal, but without the same content restrictions as commercial radio stations.

seq level0 \*arabic911              When a listener decides that local radio is their choice for entertainment and information, listening is done on the FM band.  It is a continuing struggle for CFCY to attract and maintain both listeners and advertisers.

seq level0 \*arabic912              With the majority of listeners ‑‑ 25 to 54 ‑‑ expecting to find their music choice on the FM band, demographics most sought by advertisers do not turn to AM music stations.  Despite the creative and dedicated efforts of the programming and sales team at CFCY, we firmly believe that the long‑term viability of CFCY depends on a transition to FM.  The FM band simply provides better technical quality, better reach and less chance of signal interruption.

seq level0 \*arabic913              The most recent Bohn & Associates "Ranking the Formats" report showed a two‑year growth trend in the country format, citing it as the most listened to format in Edmonton and London, Ontario.  Country music continues to satisfy its established fan base, but it is also reaching younger listeners.

seq level0 \*arabic914              Country music has a long and proud history on Prince Edward Island.  When CFCY was the only signal originating from Charlottetown, it provided a wide variety of musical styles, including Don Messer and his Islanders, Stompin' Tom and other country favourites.

seq level0 \*arabic915              Fast forward to today.  The country music format is enjoying a resurgence in popularity across North America, thanks not only to a new crop of American artists, but to the rise of Canadian stars like George Canyon, Erin Purget and Derek Rattan, and the continued success of Terri Clark and Shania Twain.

seq level0 \*arabic916              As the only Applicant at this hearing seeking to bring the country format to the FM band, CFCY wishes to secure the future of country music in Charlottetown.

seq level0 \*arabic917              Rebecca.

seq level0 \*arabic918              MS BLACK:  Thank you, Dan.

seq level0 \*arabic919              Good afternoon.  I am proud to be part of 630 CFCY, the friendly voice of the maritimes.  We continue an 80‑year tradition of presenting information and entertainment to the people of Prince Edward Island.

seq level0 \*arabic920              We show our commitment through on‑air support of local talent and various service organizations, in their efforts to better their community.

seq level0 \*arabic921              At CFCY we take pride in our ability to partner with our community.  For instance, the Queen Elizabeth Hospital Foundation and CFCY held a radio‑thon and raised over $100,000 for the hospital's first CAT scan during the "Back the Cat" campaign.

seq level0 \*arabic922              CFCY recently assisted Hurricane Katrina relief efforts by offering our listeners the opportunity to promote their fundraising events on the air.

seq level0 \*arabic