TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

                          SUBJECT:

Review of the Commercial Radio Policy /

Examen de la Politique sur la radio commerciale

HELD AT:                              TENUE À:

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

140 Promenade du Portage              140, Promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

May 17, 2006                          Le 17 mai 2006

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

Review of the Commercial Radio Policy /

Examen de la Politique sur la radio commerciale

BEFORE / DEVANT:

Charles Dalfen                    Chairperson / Président

Michel Arpin                      Commissioner / Conseiller

Rita Cugini                       Commissioner / Conseillère

Andrée Noël                       Commissioner / Conseillère

Joan Pennefather                  Commissioner / Conseillère

ALSO PRESENT / AUSSI PRÉSENTS:

Chantal Boulet                    Secretary / Secrétaire

Peter Foster                      Hearing Manager /

Gérant de l'audience

Bernard Montigny                  General Counsel,

Broadcasting / Avocat

général, Radiodiffusion

Anne-Marie Murphy                 Legal Counsel /

Conseillère juridique

Robert Ramsey                     Senior Director, Radio

Policy and Applications /

Directeur principal,

Politiques et demandes

relatives à la radio

HELD AT:                          TENUE À:

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

140 Promenade du Portage          140, Promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

May 17, 2006                      Le 17 mai 2006

           TABLE DES MATIÈRES / TABLE OF CONTENTS

                                                 PAGE / PARA

PRESENTATION BY / PRÉSENTATION PAR:

CBC/Radio Canada                                  957 / 5409

Corus                                             975 / 5519

CHUM Limited                                     1011 / 5731

Standard Radio Inc.                              1055 / 5979

Rawlco Radio Ltd.                                1086 / 6208

Blackburn Radio Inc.                             1108 / 6338

Jim Pattison Broadcast Group                     1123 / 6400

Rogers Media                                     1143 / 6514

Newcap Radio                                     1192 / 6784

Ontario Independent Radio Group                  1211 / 6875

Milestone Radio Inc.                             1237 / 7046

Radio CJVR Ltd.                                  1265 / 7227

1182743 Alberta Ltd.                             1278 / 7291

Rock 95 Broadcasting Ltd.                        1303 / 7428

Canadian Association of Ethnic (Radio)           1320 / 7541

  Broadcasters

British Columbia Institute of Technology         1337 / 7650

  on behalf of the Broadcast Educators

  Association of Canada

CKUA Radio                                       1357 / 7798

National Campus and Community Radio Association 1377 / 7909

Aboriginal Voices Radio Inc.                     1400 / 8012

                 Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Wednesday, May 17, 2006

    at 0905 / L'audience débute le mercredi

    17 mai 2006 à 0905

LISTNUM 1 \l 1 \s 54035403             THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.  Good morning, everyone.

LISTNUM 1 \l 15404             Madame la Secrétaire.

LISTNUM 1 \l 15405             LA SECRÉTAIRE:  Merci, monsieur le Président.

LISTNUM 1 \l 15406             Good morning.  We will start this morning with the presentation of CBC/Radio‑Canada who are appearing at the request of the Hearing Panel.

LISTNUM 1 \l 15407             Mr. Ray Carnovale will be appearing for CBC/Radio‑Canada and will introduce his colleagues.

LISTNUM 1 \l 15408             You will then have 10 minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

LISTNUM 1 \l 15409             MR. CARNOVALE:  Thank you.

LISTNUM 1 \l 15410             Mr. Chair, Members of the Commission, I am Ray Carnovale, Vice President and Chief Technology Officer at CBC/Radio Canada.  It is a pleasure to appear before you today at this important proceeding to review the regulatory framework for commercial radio.

LISTNUM 1 \l 15411             With me are François Conway, Senior Director Strategy and Planning Technology, and Bev Kirshenblatt, Senior Director Regulatory Affairs.

LISTNUM 1 \l 15412             Consistent with our submission in this proceeding, our remarks today focus on the Commission's transitional digital radio policy.

LISTNUM 1 \l 15413             We have already set out in detail in our written submission in this proceeding, the comprehensive range of English and French‑language radio services we provide to Canadians and the numerous platforms over which we provide them.

LISTNUM 1 \l 15414             We are extremely proud of our programming and our services.  However, a number of dramatic changes are increasingly affecting the Canadian broadcasting environment and, as a result, we face a host of opportunities and challenges if we wish to continue to fulfil our role.

LISTNUM 1 \l 15415             You have heard from many participants in this proceeding how podcasting, streaming audio services and satellite radio have altered the broadcasting landscape and that the pace of change is accelerating.  We all agree that these developments present challenges.

LISTNUM 1 \l 15416             There is significant and ongoing fragmentation of the radio audience for conventional linear programming.

LISTNUM 1 \l 15417             The wide range of technological developments in content delivery, however, also presents extraordinary opportunities for broadcasters.  We think that new distribution technologies provide both new shelf space for Canadian programming, as well as new opportunities for innovative program development.

LISTNUM 1 \l 15418             These new platforms provide an opportunity for us to reach out to Canadians in totally new ways, capturing new audiences and revitalizing the relationship with existing audiences.

LISTNUM 1 \l 15419             We believe that this is an opportunity that cannot be missed.

LISTNUM 1 \l 15420             For CBC/Radio Canada, these changes reinforce the need to maintain a distinctive voice and a unique and ubiquitous presence across all platforms, old and new, so that Canadians will be able to easily find their national public broadcaster on whatever medium they choose to use.

LISTNUM 1 \l 15421             All broadcasters must respond to technological changes as they arise, and CBC/Radio Canada prides itself on being highly accessible and ahead of the curve with respect to emerging and new technology.

LISTNUM 1 \l 15422             In the case of radio, however, the transmission path to digital transmission for AM and Fm ratio stations remains unclear.  Based on the Commission's current transitional digital radio policy, the digital is a replacement technology.

LISTNUM 1 \l 15423             Broadcasters have made significant investment to build, maintain and operate digital radio broadcast infrastructure.  CBC/Radio Canada has invested in transmitters and the necessary connections in five major cities, as well as in production and programming facilities in Montréal and Vancouver.  Unfortunately, for a number of reasons, the rollout of digital radio broadcasting has stalled in Canada.

LISTNUM 1 \l 15424             Since the CRTC's transitional digital radio policy was first issued, other digital transmission technologies have emerged.  For example, in the United States a number of radio broadcasters are promoting HD radio as a response to satellite radio, despite the fact that HD radio is still in the experimental stages.

LISTNUM 1 \l 15425             However, we believe that there are a number of important issues, particularly technical issues, as well as consumer acceptance issues, that must be fully evaluated before this system can be adopted in Canada.  In fact, we will be conducting over‑the‑air transmission tests of HD radio in Toronto this summer.

LISTNUM 1 \l 15426             In preparation for these tests we visited national public radio laboratories in Washington, D.C. to hear of their experiences with HD radio.  They have kindly agreed to let us share their documents with you.

LISTNUM 1 \l 15427             Given the high degree of uncertainty with respect to these technologies, the only thing that is certain is that no one can accurately predict how digital radio will unfold in the future.  We think that it is too early to draw any definitive conclusions on any of these technologies.

LISTNUM 1 \l 15428             However, as stated in our written comments, CBC/Radio Canada remains committed to DRB.  We also believe that DRB should be treated as a complementary technology that will co‑exist with existing analog and other digital services.  DRB should no simply be seen as a replacement technology.

LISTNUM 1 \l 15429             So what will get Canadians interested in a new distribution technology like digital radio?

LISTNUM 1 \l 15430             We think that the first step is to permit broadcasters to innovate and experiment in the provision of digital radio services to Canadians.  For example, the delivery of multimedia content to mobile phones and other portable devices can now be offered using L‑band DRB technology.

LISTNUM 1 \l 15431             Permitting such innovation, experimentation and creativity must just help spark the success of DRB in Canada.  It makes sense to explore the potential that DRB offers us in improving our availability and service to Canadians.  We are currently exploring a number of uses for DRB in ways that could increase its attractiveness to Canadians.

LISTNUM 1 \l 15432             We want to be able to assess the needs and interests of Canadians.  The results of such experimentation could then provide the basis for a review of the current policy on digital radio.

LISTNUM 1 \l 15433             Thank you.  We would be pleased to answer any questions you may have.

LISTNUM 1 \l 15434             THE CHAIRPERSON:  Thank you very much.

LISTNUM 1 \l 15435             Mr. Arpin...?

LISTNUM 1 \l 15436             COMMISSIONER ARPIN:  Thank you, Mr. Chairman.

LISTNUM 1 \l 15437             I will focus on the three real topics:  the transitional period, the one that the Commission created from 1995, say, up to today, particularly ‑‑ I will not discuss the non‑availability of receivers, but the various tests that you have done, particularly out of your Montréal and Vancouver studio facility.

LISTNUM 1 \l 15438             I know, and I think for the record it may be good to know, that you use those 14 hours that the Commission has allocated through its policy to do some different programming, to try to understand what were your conclusions about the use of the technology during that transitional period.

LISTNUM 1 \l 15439             I know that you, Mr. Carnovale, was here yesterday when Mr. Shuldiner from iBiquity appeared, so I will want to hear your comments on what we learned from iBiquity.  Did we learn something that is new?

LISTNUM 1 \l 15440             Following the discussions that we had, what they are proposing for Canada, is it more palatable than it was before the hearing?

LISTNUM 1 \l 15441             I heard that you are going to be testing HD in Toronto over the summer.  Mr. Shuldiner also mentioned that they were contemplating some tests here in Canada.  Are they the same ones or are they other tests that he was referring to?  I don't know where you are.

LISTNUM 1 \l 15442             You addressed somehow the future in your oral presentation, the future use of the L‑band.  Obviously it is going to be an Industry Canada decision, not a CRTC decision, but since we have an opportunity to discuss the matter and put on the record some reflection from the various broadcasters it may help down the road to have a better use of the L‑band.

LISTNUM 1 \l 15443             I also heard you that NPR has allowed you to share studies with the Commission?

LISTNUM 1 \l 15444             MR. CARNOVALE:  Yes.

LISTNUM 1 \l 15445             COMMISSIONER ARPIN:  Could you please make them available at some point in time?  I know that we have set a schedule that we need to have these documents by May 29th.

LISTNUM 1 \l 15446             MR. CARNOVALE:  Yes, we would be happy to.

LISTNUM 1 \l 15447             COMMISSIONER ARPIN:  You would be happy to do so?

LISTNUM 1 \l 15448             Then my first question will deal with the transitional digital period and the various experiments that were done, both in Montréal and in Vancouver, and what have you learned from these experiences?

LISTNUM 1 \l 15449             MR. CARNOVALE:  Well, first I will mention that the genesis of Radio 3, which was based in Vancouver, started out as an internet service, but we took advantage of the 14‑hour provision to transmit some of that programming over the Vancouver DRB transmitter.

LISTNUM 1 \l 15450             I will turn it over to François Conway to describe the ongoing experiments that we have in Montréal right now.

LISTNUM 1 \l 15451             M. CONWAY:  Merci, Ray.

LISTNUM 1 \l 15452             When we selected DRB as a technology several years ago, the reason was that we saw in this technology the potential to deal with the future environment of radio with fragmentation and multiple platforms arriving.

LISTNUM 1 \l 15453             So during these past years in the transitional stage, I can say that we practically tried  every possibility the technology and the regulatory and policy framework allowed us to do, and I will list them.

LISTNUM 1 \l 15454             The first one is, we experimented with transmitting our radio service at various bit rates to see how far we could go and what was the minimum bit rate required to reach CD quality, or near CD quality and people's acceptance or a reaction to it.

LISTNUM 1 \l 15455             The second one is, we experimented with program‑associated data in order to be able to send alphanumeric text messages to the displays of digital radio receivers.

LISTNUM 1 \l 15456             The fourth one is, we also experiment with the ability to dynamically reconfigure the multiplex to apportion the bits or the services.

LISTNUM 1 \l 15457             As you know, we can in fact configure this multiplex to provide 64 services.  Right now the regulation is that it is intended to provide four radio licences with some ancillary data capacity.

LISTNUM 1 \l 15458             We have also used the capacity to create sub‑channels.  Currently in Montreal we are broadcasting a sub‑channel which is a sub‑service transmitting news and traffic information during the morning show and the drive‑home show, so that people who want to immediately have some traffic information can tune on the sub‑channel of la Première Chaîne.  This is currently ongoing.

LISTNUM 1 \l 15459             It has been going on for two or three years and we did ask the CRTC for permission to do this.

LISTNUM 1 \l 15460             We have also used the ancillary data capacity to transmit multimedia content and other types of internet‑type content.  These were basically just technical trials because there was no public receiver to receive it.  So it was in order to be able to see if we can take some internet‑type content, IP‑encapsulated.

LISTNUM 1 \l 15461             In Montréal we have been able to encapsulate RDI clips that are currently available in the Metro and transmit it to fixed DRB receivers and display it on plasma displays.

LISTNUM 1 \l 15462             We also made use of the provision of the 14 hours of distinct programming we could do on the DRB channel.  We did it, as Ray mentioned, in Vancouver with Radio 3.

LISTNUM 1 \l 15463             We also did it in Montréal.  For one year we created a special show, a one‑hour show, daily show, that was broadcast only on one of our DRB services to see how we could exploit this different technology and its flexibility.

LISTNUM 1 \l 15464             MR. CARNOVALE:  I would add, we are currently in discussionS to try experiments with Korean‑manufactured cellphones which have CDMA and L‑band DRB receivers built in.  That for us is one of these breakthroughs, because we are now on the cusp of the availability of mass‑produced low‑cost products.

LISTNUM 1 \l 15465             COMMISSIONER ARPIN:  And available.

LISTNUM 1 \l 15466             Not only mass‑produced, but also available in the market.

LISTNUM 1 \l 15467             MR. CARNOVALE:  Yes.

LISTNUM 1 \l 15468             COMMISSIONER ARPIN:  Except the few initiés who had receivers, did you ever get any reaction from listeners about the various tests you did in Montreal?

LISTNUM 1 \l 15469             M. CONWAY : Oui.  Je pourrais dire que, bon, en ce qui concerne la programmation distincte et la diffusion simultanée de la même programmation analogue, les réactions qu'on a eues... on a fait des public forums, puis des focus groups, des choses comme ça.

LISTNUM 1 \l 15470             Une des premières choses qui est ressortie, c'est qu'il y aurait beaucoup plus d'intérêt pour la radio numérique si la programmation était différente, donc, s'il y avait quelque chose qui est disponible sur la bande numérique qui n'est pas disponible sur la bande analogue.

LISTNUM 1 \l 15471             Premier commentaire.  C'est ce qui supporte notre position que ça devrait être un nouveau service complémentaire au lieu d'un service de remplacement.

LISTNUM 1 \l 15472             Le deuxième commentaire, c'est justement les services spécialisés comme les sous‑canals qui diffusent seulement de l'information en bout continu, comme le trafic, sont très utiles.  Quand les gens, par exemple, sont prêts à prendre le Pont Mercier, puis ils se demandent s'ils vont prendre la 30 ou la 138, c'est très utile pour eux, puis la technologie permet de trouver le canal très rapidement sur la bande.

LISTNUM 1 \l 15473             Finalement, la disponibilité des récepteurs, évidemment, c'est quelque chose qui nous a empêché d'évoluer ou d'aller plus loin dans notre expérimentation.

LISTNUM 1 \l 15474             Donc, les commentaires qu'on a eu, c'est peut‑être de regarder le concept de... de s'éloigner du concept d'un récepteur dédié qui peut seulement recevoir de la radio numérique à des devices qui sont multipurpose devices.  Donc, c'est pour ça qu'on travaille maintenant à regarder ce que les Coréens ont fait avec les téléphones CDMA intégrés avec la réception des RBDMB.

LISTNUM 1 \l 15475             COMMISSAIRE ARPIN : Dans le Scientific American du mois de mars, on parle d'un cognitive receiver.  Je ne sais pas si vous avez vu l'article ou si vous avez entendu parler de... ça faisait partie du mémoire déposé par CHUM.  C'était vraiment sous forme d'une référence, mais je suis allé chercher l'article.

LISTNUM 1 \l 15476             Le cognitive receiver, c'est un récepteur intelligent qui s'habitue à nos usages et qui va chercher les fréquences où ils se trouvent, quel que soit le mode de transmission.

LISTNUM 1 \l 15477             C'est des choses de cette nature‑là que vous voyez dans l'avenir?

LISTNUM 1 \l 15478             M. CONWAY : Oui.  Finalement, ça fait partie du changement de paradigme qu'on voit dans...  L'ancien paradigme analogue, c'était un service, un signal analogique, une fréquence et un récepteur dédié.

LISTNUM 1 \l 15479             Dans le nouvel environnement numérique, on parle de pas seulement un type de média, on parle de multimédia, on parle de contenu disponible sur différentes plates‑formes, et on parle de récepteur programmable ou de devices qui ont plusieurs fonctions pour recevoir le contenu.

LISTNUM 1 \l 15480             Le cognitive radio où on peut appeler le récepteur programmable est vraiment clé, et c'est ce qu'on voit de plus en plus.  Il y a des devices qui ont des lecteurs MP3, qui ont des tuners FM, qui sont des téléphones, qui ont des caméras intégrés.

LISTNUM 1 \l 15481             Donc, c'est l'avenir, et c'est pour ça qu'on regarde la radio numérique sous un nouvel oeil avec ces types de récepteurs.

LISTNUM 1 \l 15482             COMMISSIONER ARPIN:  Mr. Carnovale, you heard Mr. Shuldiner yesterday about HD radio.

LISTNUM 1 \l 15483             Do you have any comments to make following that presentation?

LISTNUM 1 \l 15484             MR. CARNOVALE:  Actually, we do have several observations.  Some of these are based on our visit to National Public Radio, some of it on our own research.

LISTNUM 1 \l 15485             With regard to ‑‑ and first I will talk about FM and then we will move into the AM issues.

LISTNUM 1 \l 15486             One thing that we learned from NPR is that the analog FM coverage contours are not entirely replicated.  It comes close at the higher power levels.  The 100 kilowatt stations almost reach out to their analog protected coverage contour, which in the United States, by the way, is higher by 6 dB or a power factor of 4.

LISTNUM 1 \l 15487             So there is a difference between the definition of Canadian protected contours and the desired signal ratios that are allowed to interfere with these protected contours.

LISTNUM 1 \l 15488             They determined that for lower power stations ‑‑ and they had many of them because of being public radio ‑‑ that there is a non‑linear relationship in the coverage and that the lower power stations, what we know as Class A's at 3 kilowatts, have a significantly reduced digital service area.

LISTNUM 1 \l 15489             Indoor reception turned out to be really problematic and this was a real disappointment.

LISTNUM 1 \l 15490             First of all, with the primary HD channel, if the digital signal drops below a certain threshold you can fail over to the analog signal in the so‑called blend mode.  And that will happen fairly frequently in an indoor environment.

LISTNUM 1 \l 15491             What was interesting with the secondary tertiary channels, which is where they see a lot of potential, is in fact indoor reception was very spotty.  It would cut in and out.  Antenna placement was very critical.

LISTNUM 1 \l 15492             And the most annoying thing, of course, is when the signal cuts out it takes eight seconds for the buffer to fill up again.  So you end up with not just a momentary glitch in the signal but a loss for several seconds.

LISTNUM 1 \l 15493             We also experienced in drive tests in Washington that there was interference from first adjacent out‑of‑market transmitters.

LISTNUM 1 \l 15494             The analog blending can be annoying.  If you are in a car and you lose the digital signal, it blends to analog and then it reverts back.  If you are in a problematic service area, it is kind of annoying that it is going back and forth, back and forth from one mode to the other.

LISTNUM 1 \l 15495             With respect to the audio compression that is utilized, one of the things NPR did was a very extensive classic double‑blind test of perceived audio quality versus the bit rates.  The bottom line is there is no free ride.

LISTNUM 1 \l 15496             Compression can be impressive but in fact there are artifacts, especially with voices as opposed to music, which is not what you would normally expect.

LISTNUM 1 \l 15497             So the sense we had is that for us I think the real interest in the short term is a single primary channel with the full 96 kilobyte bit rate that has the ability to fail back to analog.

LISTNUM 1 \l 15498             COMMISSIONER ARPIN:  So there is a need for further enhancement of the system.

LISTNUM 1 \l 15499             With regard to AM now.

LISTNUM 1 \l 15500             MR. CARNOVALE:  With regard to AM, I just want to clarify the statements made by iBiquity yesterday were focusing on skywave interference to skywave coverage of what we know as the traditional clear channel stations.

LISTNUM 1 \l 15501             That isn't what we identify as the issue.  We are concerned about skywave interference to the groundwave coverage of AM stations which have traditionally had quite a low night time interference free contour.

LISTNUM 1 \l 15502             I am talking about of course the clear channel stations that CBC still operates, that other broadcasters in Canada are now utilizing, stations like CFRB in Toronto which has a very low night time interference free contour.

LISTNUM 1 \l 15503             There was no provision in the original North American Broadcast Agreement of the 1930s, nor in the Rio Accord of 1998, for skywave protection to adjacent channel stations.

LISTNUM 1 \l 15504             That flaw means that because the HD data is actually on the adjacent channel, you are transmitting on top of the adjacent channel.

LISTNUM 1 \l 15505             We are aware of iBiquity's tests with WLW and WOR in the States, Cincinnati vis‑à‑vis New York first adjacent channels.  Those were done over four days in August and four days in December of 2002.

LISTNUM 1 \l 15506             We don't think that that is a definitive study and we think that the same methodology that we use to determine skywave protection for co‑channel at night ought to be applied in analyses of interference to adjacent channels.

LISTNUM 1 \l 15507             COMMISSIONER ARPIN:  Thank you very much, Mr. Carnovale.

LISTNUM 1 \l 15508             For the matter of time, if you have further comments to make, we surely will be pleased to receive them in writing.

LISTNUM 1 \l 15509             I thank you for being here this morning.

LISTNUM 1 \l 15510             Those will be my questions for today.

LISTNUM 1 \l 15511             MR. CARNOVALE:  Thank you very much.

LISTNUM 1 \l 15512             THE CHAIRPERSON:  Thank you very much for appearing.

LISTNUM 1 \l 15513             Those are our questions.

LISTNUM 1 \l 15514             Madam Secretary.

LISTNUM 1 \l 15515             THE SECRETARY:  Thank you, Mr. Chairman.

LISTNUM 1 \l 15516             I would now invite the next participant, Corus Entertainment Inc., to come forward for their presentation.

‑‑‑ Pause

LISTNUM 1 \l 15517             THE SECRETARY:  Mr. John Cassaday is appearing on behalf of Corus.  He will introduce his colleagues.

LISTNUM 1 \l 15518             You will have ten minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

LISTNUM 1 \l 15519             MR. CASSADAY:  Good morning, Mr. Chairman, Commissioners, legal counsel and CRTC staff.

LISTNUM 1 \l 15520             My name is John Cassaday, and I am the President and Chief Executive Officer of Corus Entertainment.

LISTNUM 1 \l 15521             Before we begin our short remarks, allow me to introduce our panel.

LISTNUM 1 \l 15522             Some of our colleagues are less well‑known to you, so we will provide some brief background.

LISTNUM 1 \l 15523             Starting on my extreme left is J.J. Johnston, who recently returned to Vancouver as our new General Manager of the Corus Radio Vancouver cluster, which is comprised of CKMW, MOJO Sports Radio, Rock 101 and CFOX.

LISTNUM 1 \l 15524             J.J. has served on various industry boards throughout his radio career, including the BBM board, CARAS and several years at FACTOR, where he served as chairman of the board from 1997 to 1999.

LISTNUM 1 \l 15525             Kathleen McNair is Vice‑President and General Manager, Radio and Television, Peterborough‑Durham.  In this role, she manages two TV stations and two small market radio stations.  Kathleen also sits on the board of FACTOR.

LISTNUM 1 \l 15526             Ross Winter is our National Program Director and regularly visits our 51 radio stations.  He is located in Vancouver.  In his current role, Ross oversees the research that we do on music formats and consumer tastes, some of which was summarized in our submission.

LISTNUM 1 \l 15527             Gary Mavaara is Vice‑President and General Counsel of Corus Entertainment.

LISTNUM 1 \l 15528             On my right is John Hayes, who is President of Corus Radio.

LISTNUM 1 \l 15529             Pierre Arcand is President of Corus Québec and Pierre also oversees the work of the largest group of radio journalists in Quebec.  Pierre is also the President of the Quebec Radio Marketing Bureau and is also a member of Musique Action.

LISTNUM 1 \l 15530             Alan Cross is the Program Director of 102.1 The Edge in Toronto, Canada's most influential New Rock station.  Alan was named Canadian Program Director of the Year at the Canadian Music Industry Awards for the past two years.

LISTNUM 1 \l 15531             Alan is also a music historian who has hosted 500‑plus episodes of the nationally syndicated radio documentary programming "The Ongoing History of New Music", and Alan is the author of four books on music history.

LISTNUM 1 \l 15532             Doug Rutherford is the Corus National Vice‑President of News‑Talk Radio.  He is also General Manager of Corus Radio in Edmonton.  In this role he sets the standards for the massive amount of news coverage and public affairs programming that we do at some of Canada's best‑known heritage news stations, such as CKNW in Vancouver, CJOB in Winnipeg and CHED in Edmonton.  He served as a director of the Radio‑Television News Directors Association.

LISTNUM 1 \l 15533             Jack Hepner is our National Director of Engineering.  Jack has been involved with installations, maintenance and engineering supervision of radio stations over the past 40 years.  This has included assignments across Canada, Africa and Central America.

LISTNUM 1 \l 15534             As you can sense, this team has a deep understanding of radio, music and the tastes and interests of the Canadian listening community.  We brought this large group here today to answer any of the questions that you have about radio and how we do our job each day.

LISTNUM 1 \l 15535             Corus is Canada's largest radio operator in terms of ad revenue and audience reach.  We believe that radio's greatest strength is its ability to react instantly to the needs and interests of the local community.  To do this, we must be very much in tune with our listeners.

LISTNUM 1 \l 15536             Corus reaches one in three Canadians.  We have 51 stations operating primarily in urban centres, from Vancouver to Quebec City, in both English and French, with a range of formats.  We are also the largest operator of news‑talk formats in Canada, with 19 stations.

LISTNUM 1 \l 15537             MR. HAYES:  Mr. Chairman and Members of the Commission, Corus will concentrate only on a few themes in our remarks today, but each of these themes will speak to the 400‑pound gorilla who sits in the middle of this regulatory proceeding: the Canadian listener community.

LISTNUM 1 \l 15538             As the old joke goes:  What does the gorilla do?  And the punch line is:  Anything it wants.

LISTNUM 1 \l 15539             If we can't find a way to keep the listener happy, none of us, broadcasters, regulator or musician, will succeed.

LISTNUM 1 \l 15540             Our themes today:  Consumers are becoming agnostic about the delivery system and radio stations face dramatically increased competition, both from old sources such as other traditional radio stations on both sides of the border, and new sources such as MP3 players, the internet and satellite radio.

LISTNUM 1 \l 15541             Bits and bytes don't respect borders or national regulation, and we all need to get used to that fact.

LISTNUM 1 \l 15542             Paradoxically, in this digital world we also need to find a way to successfully introduce digital broadcasting to Canadians so that they will embrace it.

LISTNUM 1 \l 15543             We believe that in a changing world flexibility in regulation is everything.  We are not asking you to reduce Canadian content levels, just to make the rules more flexible so that we can serve listeners better.

LISTNUM 1 \l 15544             We need your help in saving the heritage new stock AM stations which are the predominant source of local programming, including emergency information for our listeners.  And we believe that our proposals, the goals of the Commission and the public interest are aligned.

LISTNUM 1 \l 15545             In our written brief, at paragraph 28, we used a graph to illustrate the evolution of the competition for radio from new digital platforms.  We also described how the traditional radio market has expanded due to the increase in new licences awarded by the CRTC over the past few years.

LISTNUM 1 \l 15546             So the media environment is changing rapidly.

LISTNUM 1 \l 15547             We can't predict how our markets will evolve, but we do believe that the CRTC should carefully consider the following real world facts.

LISTNUM 1 \l 15548             One, as the CRTC 2005 Monitoring Report states, tuning to radio continues to fall each year.

LISTNUM 1 \l 15549             Two, new media platforms seem to be introduced each week and Canadians are embracing them.  All of the statistics indicate that young Canadians, our future core audience, are using traditional media far less than the people in this hearing room.

LISTNUM 1 \l 15550             Three, the music industry has lost a significant revenue stream, almost half in six years, due to the use by Canadian consumers of new digital devices.

LISTNUM 1 \l 15551             Four, these new devices not only entice listeners away from traditional radio but they also make it more difficult for people to listen to us.

LISTNUM 1 \l 15552             We suggest that each member of the panel conduct a personal test.  Go to the nearest electronics store and have a look at the latest gadgets, such as iPods, satellite radios and cell phones that have MP3 players in them.  One of the key lessons you will learn is that these devices do not contain traditional radio receivers in them.  Some offer FM add‑ons but these are really difficult to find.  And you won't find AM devices on any of them.  So the reality is that the new devices don't only compete with radio, they also replace radio.

LISTNUM 1 \l 15553             Five, another aspect of the digital media explosion is simply that a bit stream of data can move globally.  Anyone can easily copy, change or redistribute content and each copy is as good as the first.

LISTNUM 1 \l 15554             The Commission is well aware of this, so we won't dwell on it.

LISTNUM 1 \l 15555             Meanwhile, digital broadcasting presents to Canadian radio system with a wonderful opportunity to participate in this change.  We can mount a successful digital transmission system only if we are very sensitive however to consumer needs and wants.

LISTNUM 1 \l 15556             DAB has languished due to a variety of factors, but frankly the main cause in our view is the lack about real and perceived consumer benefit.  It seems clear that a better sound quality is just not enough to generate interest and sales of receiver devices.

LISTNUM 1 \l 15557             We believe that the answer lies in distinctive content.  We don't know yet what that is, but we need to find it.  To do so, the industry needs maximum flexibility, which is why we recommended that digital broadcasting services have no content regulation until all analog transmissions cease.

LISTNUM 1 \l 15558             This distinctive content might be all Canadian, it might be all music or talk or drama or infomercials, we just don't know yet, but we do need to find out and the only way to do so is to start with a broad canvas fitted only by our creativity, financial resources and consumer demand.

LISTNUM 1 \l 15559             We are asking you to allow us to experiment, to foster consumer interest that will support the launch of digital broadcasting.

LISTNUM 1 \l 15560             M. ARCAND:  Aujourd'hui, nous avons une industrie et un système d'encouragement au talent canadien extrêmement valable.  Dans sa proposition écrite Corus n'a pas demandé une réduction des éléments importants des règlements de programmation.  Nous ne désirons pas réduire la quantité de musique canadienne que nous diffusons.

LISTNUM 1 \l 15561             Par contre, nous croyons que nous pourrions améliorer nos services si nous avions la flexibilité de diffuser un meilleur mélange de musique à travers nos groupes de stations par marché et sur les ondes AM et FM.

LISTNUM 1 \l 15562             Ceci dit, quelques‑unes de nos suggestions demandent le renforcement des règlements de programmation pour assurer par exemple, que la promesse du nouveau titulaire d'une licence d'ajouter de la diversité musicale aux ondes soit satisfaite pendant la première année de la licence.  Donc, nous ne demandons pas au Conseil d'écarter ces règlements, mais simplement de les adapter au contexte actuel.

LISTNUM 1 \l 15563             La situation de la fréquence AM devient dramatique, mais nous avons des solutions.  La radio AM en particulier, les radios dites Patrimoine ou Héritage ont des traditions d'influence dans les marchés qu'elles desservent.

LISTNUM 1 \l 15564             Des stations comme CKAC à Montréal, CJRC à Ottawa‑Gatineau et CHQR à Calgary sont reconnues.  Nous investissons énormément de ressources pour créer les éléments qui rendent cette programmation si persuasive auprès des auditeurs.  Ce sont ces stations que les auditeurs écoutent en période d'urgence et en période d'élection.

LISTNUM 1 \l 15565             Le Conseil est conscient du fait que le nombre d'auditeurs de la bande AM diminue plus rapidement que ceux de la fréquence FM.  Le paradoxe auquel la fréquence est confrontée et que les populations au centre‑ville qui comptent sur ces stations ont de la difficulté à recevoir le signal AM.

LISTNUM 1 \l 15566             Corus recommande donc que le Conseil permette à ces stations dites Patrimoine d'avoir accès aux fréquences FM afin de préserver et de mieux servir ses auditoires.

LISTNUM 1 \l 15567             Dans certains marchés, nous recommandons que le radiodiffuseur d'une station Am soit capable de changer la station en une fréquence FM disponible.  Dans ces circonstances, les limites propriétaires de ces marchés devraient être écartées pour permettre aux mêmes propriétaires d'avoir autant de fréquences FM qu'ils entretenaient avant le changement.

LISTNUM 1 \l 15568             Dans d'autres marchés comme ceux des prairies où le signal AM est plus fort, le radiodiffuseur devrait être autorisé à continuer avec la station AM, mais devrait aussi être autorisé à diffuser la programmation en duplex sur les ondes FM pour mieux servir les auditeurs des centre‑villes.

LISTNUM 1 \l 15569             La question est de savoir où trouver ces fréquences et nous recommandons que le Conseil et Industrie Canada considèrent les fréquences avoisinantes comme sources potentielles pour les demandes de changement du AM au FM.

LISTNUM 1 \l 15570             La nouvelle infrastructure numérique peut supporter un assouplissement des règles de séparation, surtout quand le propriétaire de la fréquence avoisinante demande d'utiliser son signal avoisinant.

LISTNUM 1 \l 15571             Corus croit que si nous n'agissons pas pour préserver la programmation des stations Patrimoines sur les ondes AM, nous risquons de les perdre complètement.

LISTNUM 1 \l 15572             MR. CASSADAY:  The proposals which Corus made in its written brief, some of which were repeated here today, are very much in the public interest.

LISTNUM 1 \l 15573             First of all, our proposals are designed to maintain and increase audiences for our services which by definition carry a preponderence of Canadian content.

LISTNUM 1 \l 15574             Secondly, we are not seeking to reduce the levels of Canadian music played on our stations or the amounts that we would contribute to the development of new Canadian talent.

LISTNUM 1 \l 15575             Thirdly, we believe that we can compete in the digital interactive world.  To do so successfully we need to continue to be financially viable to invest in the research, content, systems and people needed to hold our audiences in a very competitive world.

LISTNUM 1 \l 15576             For broadcasters, our environment over the next two years as new technologies take route is extraordinarily uncertain.  To increase the chance of surviving in the public's interest, the industry has to have the latitude to experiment not just with formats, but also with the best ways to deliver can. con. across and within formats.

LISTNUM 1 \l 15577             To sum up, Corus does not know with certainty where digital interactive technology will take the industry, but we do know that the impacts are being felt in a variety of ways.  No one would debate that.

LISTNUM 1 \l 15578             Corus is not backing away from its commitments and we are not asking the Commission to reduce our obligations.  We are simply recommending that you provide radio with flexibility or existing analog operations and room to experiment in digital to meet the interests of consumer.

LISTNUM 1 \l 15579             Thank you and we look forward to your questions.

LISTNUM 1 \l 15580             THE CHAIRPERSON:  Thank you.  Commissioner Cugini.

LISTNUM 1 \l 15581             COMMISSIONER CUGINI:  Thank you, Mr. Chairman.  Welcome gentlemen and Ms McNeer.  Good morning.

LISTNUM 1 \l 15582             I'm going to ask you a few questions and I would like to ask you to answer the questions only as they relate to Canadian content.

LISTNUM 1 \l 15583             In your written submission, you endorsed the CAB's proposal with regard to its bonus incentive plan and you introduced the market cloister approach to Canadian content.

LISTNUM 1 \l 15584             First question is:  are these two approaches mutually exclusive?

LISTNUM 1 \l 15585             MR. MAAVARA:  The answer is: no.  We could see how we could work with both elements to create a terrific service.

LISTNUM 1 \l 15586             COMMISSIONER CUGINI:  Because in your market cluster approach, I believe you say that a floor could be 15 per cent of Canadian content if we were to accept that approach.

LISTNUM 1 \l 15587             How would you then apply or then if you were to apply the incentive bonus plan as proposed by the CAB, what would happen to the Canadian content level on that 15 per cent station?

LISTNUM 1 \l 15588             MR. MAAVARA:  I think the important thing about our proposal is that it's really a combination of elements, the first element being that we would preserve the amount of Canadian content across the cluster and when you look at the proposals we made, such as the floors or the amount that you can carry on one particular station, you have to think about it in that context.

LISTNUM 1 \l 15589             But the way that we would see it is that if the broadcaster was intending to apply the CAB proposal, then that would overlay upon the cluster arrangement.

LISTNUM 1 \l 15590             COMMISSIONER CUGINI:  Now, your marker cluster approach obviously works for the six largest radio operators.

LISTNUM 1 \l 15591             Are you suggesting that we build a framework for the six largest and a separate framework for the independents to accommodate your marker cloister approach?

LISTNUM 1 \l 15592             MR. MAAVARA:  No, I don't think it's necessarily exclusive of the six.  What it simply does, the fundamental premise is that in that market, there would be the same amount of Canadian content music available to the listener and it really starts with the listener and trying to ensure that we get as much listening as we can to the Canadian content through this type of flexibility.

LISTNUM 1 \l 15593             So in the circumstances where you only for example would have one station, obviously there is not going to be an application of that, but at the end of the day, you are still going to be providing your Canadian content level.

LISTNUM 1 \l 15594             So, to the extent that other smaller operators acquire new stations or, for example, as we were suggesting with respect to the AM migration and, for example, if second agencies start to become more available, then you could see how the application of the cluster rule could expand.

LISTNUM 1 \l 15595             But at the end of the day, it's about getting the same amount of Canadian content out to hopefully a lot more listeners.

LISTNUM 1 \l 15596             MR. CASSADAY:  The only thing I would add, I don't think that we should be given too much credit for this as being a wholly original idea because I think the genesis of the idea was the ruling that came out of the satellite here and where there are, in fact, two distinct forms of regulations.

LISTNUM 1 \l 15597             So, I think it is possible that there could be a separate set of regulations for the big six and others if that was, in fact, felt to be the kind of flexibility that was going to allow us to achieve our objectives.

LISTNUM 1 \l 15598             COMMISSIONER CUGINI:  Have you discussed this approach with your peers at Standard or Rogers?

LISTNUM 1 \l 15599             MR. MAAVARA:  Not extensively.

LISTNUM 1 \l 15600             COMMISSIONER CUGINI:  Okay.  Perhaps in the interest of time, what I could ask you to do, I think it was you, Mr. Hayes who said "with real world facts", I like real world examples.

LISTNUM 1 \l 15601             Perhaps you could by May 29th, I believe, provide us with an analysis of what this approach will do in markets where Corus owns a cluster of services, of radio stations, what this would do for your stations and what would this do to the other radio stations in that market?

LISTNUM 1 \l 15602             MR. MAAVARA:  We would be delighted.

LISTNUM 1 \l 15603             COMMISSIONER CUGINI:  And now, just a couple of practical questions with regards to the CAB proposal and in particular, the use of the BDS list, and I don't know if either Mr. Winters or Mr. Cross would like to answer this question, but have you had an opportunity to analyze the approach, that is the top 40 up until 12 months from the time they reach the top 40?

LISTNUM 1 \l 15604             And if we were to apply that rule, how much of your current play list would be attributable to emerging artists according to the definition provided by the CAB?

LISTNUM 1 \l 15605             MR. CROSS:  Well, we have actually done a simulation already and we have determined that in our ‑‑ currently, we're playing forward what would be considered emerging artists right now and if the bonus system were to be adopted, we see that making room for another four, so we would be playing eight emerging artists that we would play throughout the day and of maximum quality exposure too.

LISTNUM 1 \l 15606             COMMISSIONER CUGINI:  And that compares to how many that you are playing now?

LISTNUM 1 \l 15607             MR. CROSS:  We are playing four right now.

LISTNUM 1 \l 15608             COMMISSIONER CUGINI:  Four right now?

LISTNUM 1 \l 15609             MR. CROSS:  Four right now and we are giving those four songs, if you look at a full broadcast week, we are playing 40, we are giving those songs 40 spins throughout a broadcast week.  Under the new rules, we would play ‑‑ we would give those songs 82 spins.

LISTNUM 1 \l 15610             COMMISSIONER CUGINI:  And is that just on CFNY or is that ‑‑

LISTNUM 1 \l 15611             MR. CROSS:  That is just on ours.  This is a real world example from the current age play list taken from some statistics that we gathered last week.

LISTNUM 1 \l 15612             COMMISSIONER CUGINI:  And what about your more mainstream formats?

LISTNUM 1 \l 15613             MR. WINTERS:  Well, I can speak to the country formats and I spoke to our program directors.

LISTNUM 1 \l 15614             What the proposed ruling is overlaid onto three days of programming at scheduled music programming at CKRI, Calgary for example, they would have played five unique emerging artists for a total of 21 spins in those three days, which would have been five less Canadian selections or over a full week, it would have been 40 to 50 spins of emerging artists and 10 to 11 less Canadian selections played.

LISTNUM 1 \l 15615             COMMISSIONER CUGINI:  Just one final question.  Mr. Cross, I know that you broadcast your show, the ongoing History of New Music.  Have you been able to relate any increase in listenership as a result of your broadcast to your radio station?

LISTNUM 1 \l 15616             MR. CROSS:  Not as of yet.  We can track how many people can download the show, but we have no idea how many people are actually listening to it.  We are getting anywhere from 1,500 to 2,000 downloads a week, which is not large in the grand scheme of things, but it is a step in the right direction.

LISTNUM 1 \l 15617             One of the things that we are finding is that because of the Copyright Regulations regarding the distribution of music, we cannot include any music in any of the broadcast, so it's strictly spoken word.

LISTNUM 1 \l 15618             It is a good bit of viral advertising and marketing for us because it does get us on Ipods in between songs that we are ‑‑ a place where we would otherwise not be.

LISTNUM 1 \l 15619             COMMISSIONER CUGINI:  Thank you and thank you, Mr. Chairman.  Those are my questions.

LISTNUM 1 \l 15620             THE CHAIRPERSON:  Thank you.  Commissioner Noël.

LISTNUM 1 \l 15621             CONSEILLÈRE NOËL:  Alors, monsieur Arcand, en rafale, pour le côté français.

LISTNUM 1 \l 15622             Je pense que dans votre texte de ce matin, vous avez une petite erreur.  Vous faites référence à la première année de licence au troisième paragraphe de votre intervention et dans le texte écrit du Mémoire de Corus, on parle du premier terme de licence pour garder le format après avoir obtenu une nouvelle licence.  Alors, je veux juste le souligner pour que vous nous disiez quelle est la bonne option : la première année ou le premier terme?

LISTNUM 1 \l 15623             Deuxièmement, sur la rentabilité de la radio française et la question de savoir si les frais généraux et d'administration pour ce qui est de la radio francophone, pourquoi sont‑ils plus haut ou que... en règle générale dans la radio anglophone?  En trois mots.

LISTNUM 1 \l 15624             M. ARCAND:  Bien, il y a un peu ce qui s'est produit hier.  Je sais qu'Astral a répondu à cette question‑là hier.

LISTNUM 1 \l 15625             Dans notre cas, c'est sûr qu'il y a moins de revenus et nous, entre autres, dans notre cas, on a plusieurs stations AM.  Quand on a plusieurs stations AM, on se retrouve, évidemment, avec des stations qui sont quand même assez... qui ont besoin de gestionnaires, qui ont quand même besoin... avoir une salle de nouvelles, ça prend des gestionnaires, et caetera.

LISTNUM 1 \l 15626             Donc, il faudrait faire une analyse détaillée, mais c'est sûr que c'est probablement en fonction des revenus et c'est sûr qu'à partir du moment où les stations anglophones, de façon générale, ont beaucoup plus de revenus, leurs frais généraux vont probablement diminuer en relation, évidemment, avec leurs revenus et c'est la même chose du côté francophone où, là, on a un peu moins de revenus et probablement que les frais généraux sont plus élevés, mais ça ne coût pas plus cher d'administrer une station francophone comme telle qu'une station anglophone.

LISTNUM 1 \l 15627             CONSEILLÈRE NOËL:  Ça coûte proportionnellement plus cher parce que les revenus n'y sont pas.

LISTNUM 1 \l 15628             M. ARCAND:  Parce que les revenus sont moindres; exact.

LISTNUM 1 \l 15629             CONSEILLÈRE NOËL:  D'accord.  Musique vocale de langue française, je vous ai entendu ce matin, les gens de Corus ont dit qu'on ne demandait pas de modification, sinon la prime de l'ACR.

LISTNUM 1 \l 15630             Qu'est‑ce que vous pensez de la demande de l'ADISQ, elle, d'imposer un quota pour les nouveautés?

LISTNUM 1 \l 15631             M. ARCAND:  Nous y sommes totalement opposés et farouchement..

LISTNUM 1 \l 15632             CONSEILLÈRE NOËL:  Merci.  Montage; madame Murphy a demandé aux gens d'Astral et de Cogeco de revenir par écrit le 29 mai.  Eset‑ce que vous pouvez faire la même chose?

LISTNUM 1 \l 15633             M. ARCAND:  Oui.

LISTNUM 1 \l 15634             CONSEILLÈRE NOËL:  Ça vient de régler un troisième point.

LISTNUM 1 \l 15635             Deux autres questions... trois autres questions; excusez‑moi.  Le Guide des droits et responsabilités de la presse mis de l'avant par le Conseil de presse, est‑ce que vous avez des problèmes à ce que le Conseil... le CRTC vous impose ce guide?

LISTNUM 1 \l 15636             M. ARCAND:  Écoutez; lorsqu'on a eu l'audience à Québec, on avait présenté, nous, notre Code de déontologie.  J'imagine que les mêmes termes doivent se ressembler.  Il faudrait quand même qu'on voit exactement dans le détail ce que ça implique.

LISTNUM 1 \l 15637             Mais, nous notre Code de déontologie nous paraissait, en tout cas, assez valable à ce moment‑là.

LISTNUM 1 \l 15638             CONSEILLÈRE NOËL:  Vous nous revenez au mois de juin avec vos répliques finales?

LISTNUM 1 \l 15639             M. ARCAND:  Oui.

LISTNUM 1 \l 15640             CONSEILLÈRE NOËL:  Merci.  Question de niveau de programmation locale pour les stations qui opèrent en réseau, est‑ce que vous croyez que le Conseil devrait augmenter le niveau de programmation locale pour les stations opérant en réseau?

LISTNUM 1 \l 15641             M. ARCAND:  Écoutez; nous dans la décision que nous avons eue lorsque nous avons acheté les stations de Astral, on avait quand même des conditions de licence déjà pour avoir un minimum de contenu local que nous avons accepté d'ailleurs.

LISTNUM 1 \l 15642             Nous croyons donc pour l'instant que ça devrait...

LISTNUM 1 \l 15643             CONSEILLÈRE NOËL:  C'est assez?

LISTNUM 1 \l 15644             M. ARCAND:  ... ça devrait être le statu quoi à ce moment‑ci.

LISTNUM 1 \l 15645             CONSEILLÈRE NOËL:  Merci.  Et pour la définition de la programmation locale, avez‑vous quelque chose à ajouter à ce que les gens de Cogeco et de Astral ont dit hier?

LISTNUM 1 \l 15646             M. ARCAND:  Qu'est‑ce que vous voulez dire exactement?

LISTNUM 1 \l 15647             CONSEILLÈRE NOËL:  Ils ont dit qu'ils étaient parfaitement satisfaits de la définition actuelle de la programmation locale.

LISTNUM 1 \l 15648             M. ARCAND:  Oui, moi aussi.

LISTNUM 1 \l 15649             CONSEILLÈRE NOËL:  Vous autres aussi?

LISTNUM 1 \l 15650             M. ARCAND:  Oui.

LISTNUM 1 \l 15651             CONSEILLÈRE NOËL:  Et une dernière question, monsieur Arcand, et c'est pour votre idée de transférer les stations AM au FM.  J'ai compté 22 stations AM dans votre écurie, sur 51 stations au total.

LISTNUM 1 \l 15652             Est‑ce que ce que vous nous demandez, cette flexibilité pour transformer les AM en FM, c'est pour les 22 stations AM ou c'est seulement pour les stations dites Patrimoine que vous avez nommées, soit CKAC, attendez un peu là, je les ai en quelque part.

LISTNUM 1 \l 15653             M. ARCAND:  Oui;, les stations de Calgary.

LISTNUM 1 \l 15654             CONSEILLÈRE NOËL:  Oui, c'est CKAC, CJRC et CHQR?

LISTNUM 1 \l 15655             M. ARCAND:  Non.  C'est pour un plus grand nombre de stations.  Je pense que, nous, dans l'esprit qui nous guide actuellement et pour avoir vécu l'expérience, entre autres, de la transaction d'Astral où on s'est retrouvé... moi, je n'ai pas vécu l'expérience ailleurs, mais on s'est retrouvé avec des stations qui avaient des difficultés sur le plan financier, mais qui avaient vraiment un impact déterminant dans leur communauté.

LISTNUM 1 \l 15656             Alors, on a beaucoup parlé du système français lors de ces audiences jusqu'ici et toutes les stations dites d'influence ou d'Héritage comme Europe 1, comme RTL en France et France Inter qui étaient sur des fréquences dites *ondes longues+ pendant des années en France se sont toutes retrouvées à un moment donné à la fois sur les ondes longues et à la fois sur la bande FM parce qu'ils avaient un rôle d'information et d'affaires publiques particulièrement important.

LISTNUM 1 \l 15657             Alors, nous, on pense que les stations, et ce sera au Conseil de juger, mais il y a des stations qui sont particulièrement importantes dans des marchés... dans la plupart des marchés et qui jouent un rôle, je pense encore plus grand qu'une station qui est purement musicale.

LISTNUM 1 \l 15658             Et on pense donc, nous, pour les mêmes raisons qu'il y a environ dix ans on avait dit, bien, il faut que Radio Canada même au niveau de ses émissions d'affaires publiques ait droit à des fréquences FM, on pense que, nous, les stations qui ont vraiment un service important, qui ont des salles de nouvelles, qui ont des coûts quand même probablement plus élevés qu'une station musicale devraient quand même avoir accès à des stations à des fréquences FM.

LISTNUM 1 \l 15659             CONSEILLÈRE NOËL:  C'est‑à‑dire, maintenir la programmation sur les deux bandes à ce moment‑là, en même temps?

LISTNUM 1 \l 15660             M. ARCAND:  C'est‑à‑dire qu'il y a des cas où c'est carrément des transferts sur la bande FM, mais peut‑être que dans l'ouest, entre autres, là où il y a de grandes étendues, la radio AM pourrait être à ce moment‑là importante de faire les deux pendant une période de temps.

LISTNUM 1 \l 15661             CONSEILLÈRE NOËL:  Vous étiez ici hier soir... en fait, on était presque rendu dans la nuit, je dirais, et les gens de Cogeco, monsieur Mayrand a fait une intervention à l'effet de ne pas modifier la situation de propriétés dans les marchés en permettant, par exemple, la conversion... la règle de propriété sur le nombre de AM et de FM qu'on peut détenir dans un même marché, dans une même langue.

LISTNUM 1 \l 15662             Avez‑vous des commentaires à faire là‑dessus?

LISTNUM 1 \l 15663             M. ARCAND:  C'est‑à‑dire que je pense que je demanderais peut‑être à monsieur Cassaday de faire le commentaire sur cette question‑là, sur la question des règles de propriété.

LISTNUM 1 \l 15664             MR. CASSADAY:  The question of profitability is one that has come up a couple of times and I would just like to make a couple of quick comments.

LISTNUM 1 \l 15665             First of all, I think that we should be proud that the Canadian Radio Industry is strong at a time when we're facing intense new competition and I think the reasons for the strength of radio are really two fold:

LISTNUM 1 \l 15666             1) good public policy.  I think the decision that was made to allow multiple ownership was pivotal to the success that radio is now enjoying.

LISTNUM 1 \l 15667             And the second reason is good management.  With less owners in markets, we are becoming much more externally focused,

LISTNUM 1 \l 15668             In the past, radio turned the guns inside and competed against each other for share and now what we are doing is we are trying to expand our market by going after other ‑‑ for other medias within our industry, the question of the Competition Bureau definition of radio being a unique market we totally disagree with.

LISTNUM 1 \l 15669             We have been very successful in getting money from newspaper and outdoor and other mediums that we compete with on a local basis.

LISTNUM 1 \l 15670             There are two other factors, a couple of other factors that I would like to mention when we think about profitability for radio.  We have gone on record as saying that we believe that the appropriate level of profitability for Canadian radio is in the 30 to 35 per cent margin level.  That is higher than we are today, but it's based on a comparison of the U.S. market where we compete for capital.

LISTNUM 1 \l 15671             In U.S. radio stations are operating with margins in the 40 to 45 per cent level.  We don't believe that we can achieve that level of profitability in Canada because of the scale issues that Pierre talked about earlier, but also because of our higher obligations in terms of performing rights payments and regulatory expenses.

LISTNUM 1 \l 15672             But we do believe that radio in Canada is strong and we think we should celebrate that because in the absence of that, I think we would have a very difficult time competing.

LISTNUM 1 \l 15673             COMMISSIONER NOËL:  If I could just interject.  I think maybe you've got the translation wrong from ‑‑ but I was asking Pierre about the ‑‑ Pierre Arcand about the ownership, propriété, the fact that you could ‑‑ the fact that yesterday we heard Cogeco oppose the proposal of Astral that you could convert an AM into more than ‑‑

LISTNUM 1 \l 15674             MR. CASSADAY:  Oh! I'm sorry.

LISTNUM 1 \l 15675             COMMISSIONER NOËL:  Yes.  Well, propriété and profitability can resemble themselves from one language to the next.

LISTNUM 1 \l 15676             MR. CASSADAY:  You're right.  I apologize for that.  Mostly that was an interesting side by our comment.

LISTNUM 1 \l 15677             COMMISSIONER NOËL:  It's okay.

LISTNUM 1 \l 15678             MR. MAAVARA:  But Commissioner, if I could respond to your question directly and also speak to your earlier question with respect to whether our perspective is only related to the Heritage news talk stations and I think the Commission, as part of this process, is going to have to take a hard look at the AM frequency generally and the first reason for that is because of the listener.

LISTNUM 1 \l 15679             The listener does not really differentiate between AM and FM in kind of a fundamental sense.  For them it's a button or a dial on the receive device and they are just looking for terrific content.  And our challenge on AM is to ensure that we can continue to deliver the audiences to news talk.

LISTNUM 1 \l 15680             But in looking at the broader question and going directly to the points made by Cogeco, in that context of the public service that we are giving to listeners and the listener's interest in receiving the service, it's our view that the Commission is going to have to in fact look at the ownership limits in some markets.

LISTNUM 1 \l 15681             And in markets where, for example, an existing AM owner is already at the FM limit, then there will have to be a review as to the public interest aspects of expanding that and obviously there will be markets where the issue doesn't arise.

LISTNUM 1 \l 15682             But our view is that the existing ownership levels as between AM and FM should probably be reviewed with the idea of allowing the AM operators to assume either a nesting position or a flip in order to continue providing the service to the listener.

LISTNUM 1 \l 15683             COMMISSIONER NOËL:  It would be important in terms of talk radio mainly?

LISTNUM 1 \l 15684             MR. MAAVARA:  Well, that's our first concern.

LISTNUM 1 \l 15685             COMMISSIONER NOËL:  Would you accept a specialty format in those categories?

LISTNUM 1 \l 15686             MR. MAAVARA:  We would, but the other recommendation that we have made with respect to the FM rules is that FM operators have more flexibility to move across that threshold of specialty without having to go through a formal application process.

LISTNUM 1 \l 15687             And what that would do is give us the opportunity again in the context of the listener to meet the listener's need and if we have to cross over that line, then we would do it on ‑‑ we will report to the Commission basis, as opposed to applying to the Commission for permission to do that.

LISTNUM 1 \l 15688             COMMISSIONER NOËL:  You mean going from general to specialty?

LISTNUM 1 \l 15689             MR. MAAVARA:  Yes.

LISTNUM 1 \l 15690             COMMISSIONER NOËL:  Which locks you in for a full licence term, as you know?

LISTNUM 1 \l 15691             MR. MAAVARA:  Well, not to the extent if the rule was relaxed, that would allow for movement across, that is the kind of flexibility that we are looking for and I'll balance that with the notion that if a new applicant comes along and manages to determine to the Commission's satisfaction that a new licence is called for in the market, that over that first term and you astutely picked up the mistake.  We had all read this document, you can imagine, 50 times and I never noticed that it said *any+ as opposed *to term+, but we meant to term, and over that first term, that new applicant would be required to adhere to that format.

LISTNUM 1 \l 15692             COMMISSIONER NOËL:  Uh‑huh!  But, no, the sense of my question is once you ‑‑ if we take Montreal for example, you have how many AM stations, Mr. Arcand, in Montreal?  You have a few.

LISTNUM 1 \l 15693             MR. ARCAND:  Three AMs.

LISTNUM 1 \l 15694             COMMISSIONER NOËL:  Three AMs; trois AMs, oui.

LISTNUM 1 \l 15695             CONSEILLÈRE NOËL:  Un en anglais puis deux en français?

LISTNUM 1 \l 15696             M. ARCAND:  Exact.

LISTNUM 1 \l 15697             CONSEILLÈRE NOËL:  Et vous avez deux stations FM en français, deux stations AM en français, ce qui est le maximum pour le marché.

LISTNUM 1 \l 15698             M. ARCAND:  C'est ça : une station AM en anglais et deux stations AM et on a deux FM en français et un FM en anglais qui sont des marchés séparés, comme vous le savez.

LISTNUM 1 \l 15699             CONSEILLÈRE NOËL:  Qui sont des marchés séparés, c'est d'accord.  Si vous étiez pour... si vous trouviez des fréquences pour faire un flip de vos trois fréquences AM, vous dépasseriez la limite de propriété à Montréal.

LISTNUM 1 \l 15700             M. ARCAND:  Oui.

LISTNUM 1 \l 15701             CONSEILLÈRE NOËL:  Dans le marché francophone et dans le marché anglophone.

LISTNUM 1 \l 15702             M. ARCAND:  C'est pour ça.

LISTNUM 1 \l 15703             CONSEILLÈRE NOËL:  Est‑ce que... moi, ce que je veux savoir, c'est si vous faites ça, parce que vos formats AM, ce sont des formats talk, hein!  Ce sont des formats... une formule parlée.

LISTNUM 1 \l 15704             Est‑ce que vous vous engageriez en faisant ça à conserver le format de spécialité plutôt que de vous ouvrir une porte grande comme une porte de grande pour devenir une autre formule musicale quelconque?

LISTNUM 1 \l 15705             M. ARCAND:  Vous savez, madame Noël, oui, parce qu'on pense, nous, que la formule news and talk ou, enfin, la formule parlée est une formule qui est très valable.

LISTNUM 1 \l 15706             D'ailleurs, je peux vous dire parce que tout à l'heure je vous écoutais et j'ai écouté tout au long de l'audience et une des choses qui m'a frappé, c'est qu'on a eu des discussions même entre radiodiffuseurs, non seulement de la radio mais aussi de la télévision et vous savez, le commentaire qui a été fait par la Ministre des communications du Québec à l'effet qu'il fallait former des journalistes et créer des fonds et... c'est quelque chose qui vient vraiment de nous.

LISTNUM 1 \l 15707             On s'est rendu compte que dans certains marchés du Québec par exemple, que ce soit en télévision ou en radio, il n'y a presque pas de journalistes les fins de semaine.  Dans un cas, en tout cas, on était les seuls à avoir des journalistes qui couvraient les événements.

LISTNUM 1 \l 15708             S'il y avait eu un événement grave, par exemple, dans certaines régions, il y avait juste Corus qui était là.  Il n'y avait même pas de gens de la télévision qui étaient disponibles à ce moment‑là pour des raisons, évidemment, de rentabilité.

LISTNUM 1 \l 15709             Alors, nous, on a dit : on parle sans arrêt de l'importance d'aider les artistes, la musique, l'industrie de la musique puis on est tous d'accord avec ça, mais je pense qu'au niveau journalistique, il y a un effort important à faire et on devrait se pencher sur cet aspect‑là au cours des prochaines années et donc, d'avoir des stations d'information et d'affaires publiques qui sont fortes m'apparaît important et c'est aussi partagé par, semble‑t‑il, le Gouvernement du Québec.

LISTNUM 1 \l 15710             CONSEILLÈRE NOËL:  Oui, avec... en règlement du déséquilibre fiscal, si je comprends bien, ça serait des frais de la partie 2 qui s'en iraient pour financer ça.

LISTNUM 1 \l 15711             Merci, monsieur, messieurs.

LISTNUM 1 \l 15712             LE PRÉSIDENT:  Madame Pennefather.

LISTNUM 1 \l 15713             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.  Good morning, madame McNeer and gentlemen.

LISTNUM 1 \l 15714             I just wanted to ‑‑ I had a request and I had a question, but Mr. Arcand probably just answered the question.

LISTNUM 1 \l 15715             The request is regarding your intervention at paragraph 156, CTD and significant benefits.  Here, you maintain a position of keeping the six per cent, but you propose a scale, a sliding scale and my request is: could you table with the Commission the impact of your sliding scale as you see it and we could perhaps do that in terms of the CAB proposal wherein we are looking at two years if the new frame would amount to approximately 5.48 million and I think you know the model I am referring to and the ADISQ model.

LISTNUM 1 \l 15716             So, if you took your sliding scale and you applied it, what would happen to the numbers in terms of even within the two‑year time frame or transition period proposed by the CAB?

LISTNUM 1 \l 15717             And that was of interest because, of course, the 5.48 is considered in the CAB plan appropriate because of the relation to the demand on a historic basis.  So, if you could provide that to us, it would be very helpful.

LISTNUM 1 \l 15718             MR. MAAVARA:  We would be delighted.

LISTNUM 1 \l 15719             COMMISSIONER PENNEFATHER:  And my other point was the ‑‑ you did place an emphasis on CTD funding eligibility rules expanded to include capital and operating grants to provincially established post‑secondary education.

LISTNUM 1 \l 15720             I am assuming that some of the rationale behind that was the comment Mr. Arcand has just made.  But also, just in terms of regulatory procedure, under the eligibility rules of 195‑196 such grants would be eligible.

LISTNUM 1 \l 15721             So, are we to assume here that you are proposing that this eligibility rule apply across all forms of CTD and that we make that clear?  Is that why this is here?

LISTNUM 1 \l 15722             MR. MAAVARA:  Yes.

LISTNUM 1 \l 15723             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

LISTNUM 1 \l 15724             THE CHAIRPERSON:  Thank you very much gentlemen.  Those are our questions.  Thank you very much for appearing and bearing with us as we kind of move through the hearing and build up our record.

LISTNUM 1 \l 15725             If there are comments that you feel that you wanted to add, of course, in response to other interveners of course, you can do that in the June 12 submission.

LISTNUM 1 \l 15726             Thank you.  We will take a short break now.

LISTNUM 1 \l 15727             Nous reprendrons à 10 h 20 with the next item.

‑‑‑ Upon recessing at 1012 / Suspension à 1012

‑‑‑ Upon resuming at 1023 / Reprise à 1023

LISTNUM 1 \l 15728             THE CHAIRPERSON: Madame la Secrétaire.

LISTNUM 1 \l 15729             THE SECRETARY: Merci, Monsieur le Président.

LISTNUM 1 \l 15730             I would now invite the next participant to make their presentation, CHUM Limited.  Mr. Paul Ski is appearing for the participant who will introduce his colleagues and you will have 10 minutes for your presentation.  Mr. Ski.

PRESENTATION / PRÉSENTATION

LISTNUM 1 \l 15731             MR. SKI: Thank you very much.

LISTNUM 1 \l 15732             Good morning, Mr. Chair, Mr. Vice‑Chair and members of the Commission.  I am Paul Ski, Executive Vice‑President of CHUM Radio overseeing our 33 radio stations from Halifax to Victoria.

LISTNUM 1 \l 15733             To my right, your left, is Kerry French, Director of Research for CHUM Radio.  To Kerry's right is Duff Roman, Vice‑President, Industry Affairs, CHUM Radio.  To my left, your right, is Rob Farina, Program Director for CHUM FM and a member of both the FACTOR and Radio Starmaker Fund boards.  To Rob's left is Sarah Crawford, Vice‑President of Public Affairs for CHUM Limited.  And to Sarah's left is David Goldstein, Vice‑President of Government and Regulatory Affairs for CHUM.  We are also joined by several CHUM Radio managers who are in the room today.  We will now begin our formal presentation.

LISTNUM 1 \l 15734             Radio is an intensely personal medium.  Radio entertains, informs, supports.  Radio stations connect to their listeners and connect listeners to each other.  Radio continues to be a powerful force.  One only has to look back to the 2003 blackout to illustrate this fact.  When the lights went out radio was the medium that told us what was happening both at a local and national level and where we could go to get water, food or gas.

LISTNUM 1 \l 15735             As the thread that helps to knit local communities together, it is vital that through the era of rapid technological change Canadian radio remains relevant, vibrant and financially healthy enough to provide all of the services Canadians expect.  At CHUM we believe this will only be possible with a regulatory regime that is flexible, consistent and forward‑looking.

LISTNUM 1 \l 15736             MR. ROMAN: For 50 years radio has been a part of CHUM's daily passion and it is a critical part of our plans for the future.  However, what was once a highly controlled marketplace has become fragmented with an unprecedented array of regulated and unregulated media options for listeners.  More importantly, radio's role as an intermediary is being undermined.  Until recently, radio was the primary link between artists and the Canadian public, it no longer is.

LISTNUM 1 \l 15737             The music industry has already faced a dramatic breakdown of the value chain and the ramifications are now beginning to impact radio programming.  Since 2001, radio has experienced a steady decline in tuning, a decline that has been more acute among younger Canadians.  With the myriad listening choices now available, MP3 players, satellite, internet and the like, it is evident that the environment in which radio operates has changed radically.

LISTNUM 1 \l 15738             On Monday and Tuesday there were those who had found this change difficult to quantify.  In fact, recently BBM data from January to March 2006 found that in Kamloops, for example, SIRIUS Satellite Radio which just launched in December has already achieved a 5 share with all listeners 12 plus and a 9 share with men.  Clearly, the old business model is dead.  The radio industry must evolve or risk being left behind.

LISTNUM 1 \l 15739             In this process the Commission will hear from several parties with varied self‑interests.  Radio broadcasters are the ones at this hearing that are licensed and regulated by the Commission and responsible for fulfilling the objectives of the Broadcasting Act.  The broadcasting policy for Canada set out in section 3.1 of the Act recognizes that, above all else, broadcasters provide a public service essential to the maintenance and enhancement of national identity and cultural sovereignty.  Radio does this everyday by providing our listeners with music they want to hear from at home and abroad, as well as news and entertainment features presented by top Canadian talent.

LISTNUM 1 \l 15740             MS FRENCH: From the time CHUM purchased CKPT Peterborough in 1960 we have been committed to serving smaller markets.  Though sometimes challenging and less profitable than stations in larger centres, smaller markets benefit from having stations owned by larger broadcasters like CHUM.  In many situations these markets may require a different, more flexible regulatory approach, especially those markets that are located close to the U.S. border.  Some have advocated different rules for smaller companies operating in these markets.  However, CHUM believes that any flexibility that the Commission grants should be applied equally to all licensees.

LISTNUM 1 \l 15741             The next area we would like to comment on is the Commission's common ownership policy.  CHUM firmly believes that the Commission achieved the right balance in its multiple license ownership policy in 1998, specifically in large markets.  The introduction of the MLO policy was the right decision at the right time and helped an industry that was struggling financially.

LISTNUM 1 \l 15742             While some may now be advocating loosening the MLO restrictions by allowing ownership of more stations, CHUM believes that would lead to much less diversity of formats and news voices.  Furthermore, any policy change that would effectively allow one operator to own more than two FM stations in a market would create a competitive imbalance in many markets.  Altering an MLO policy that has worked so well since 1998 and has strengthened the basis of the Canadian Broadcasting System does not serve the public interest.

LISTNUM 1 \l 15743             MR. FARNIA: We would like to now turn to what we believe is the central issue at this proceeding, what radio's contribution should be to the Canadian music industry.  Two very divergent views have emerged.  The first view being advocated by certain representatives of the music industry, including CIRPA and SOCAN is that the Commission should significantly increase the amount of Canadian music radio must broadcast.  The second view being presented by CHUM and other radio broadcasters is an enhanced 35 per cent solution.  An incentive system designed to help develop the careers of emerging Canadian artists as opposed to one that focuses simply on quantity.  We believe this makes more sense for radio, the music industry and, most importantly, the public.

LISTNUM 1 \l 15744             Proponents of the first approach believe that mandating radio to broadcast dramatically more Canadian music will increase the variety of Canadian music on air and further develop the Canadian music industry.  This is simply wrong.  As Program Director of CHUM FM, I work on the frontlines programming the music that airs on one of Canada's top radio stations.  My love of music was why I got into broadcasting and I have worked throughout my career to help Canadian artists find an audience.  These proposals will not benefit Canadian artists.  Moreover, they will impair radio's ability to provide the highest quality programming to Canadians, therefore driving more listeners to unregulated media that plays little or no Canadian music.

LISTNUM 1 \l 15745             Here is the reality about programming music for radio.  People will not listen to radio stations that do not give them the music they want, regardless of cultural objectives.  And while radio once had a relatively captive audience, the array of listening options now available to Canadians means that if radio does not give them what they want they have many many other places to go and get it.

LISTNUM 1 \l 15746             Due to fragmentation, programming radio stations is now not just an art, but a science as well.  Every successful radio station undergoes regular music testing with its respective audience.  A statistically valid number of participants rate the music based on their personal tastes.  In the CHUM FM Toronto music test results from April 20 of this year over 70 per cent of the Canadian music tested was below the 50 per cent positive score threshold.  Furthermore, out of all the Canadian music that tested above the 50 per cent positive threshold only one of those songs came from a domestically‑signed Canadian artist, in this case Bedouin Soundclash.

LISTNUM 1 \l 15747             Over the years we have developed music testing criteria to help us program our stations. In general, we would not air a song that has lower than a 60 per cent positive score.  However, with Canadian music, songs that have as low as a 10 per cent positive score remain in regular rotation on our play lists.  Now, why do we continue to play songs that nine out of 10 audience members tell us they don't like, songs that risk that audience moving to other entertainment platforms?  We play it because we have to.

LISTNUM 1 \l 15748             As in any field of creative expression, only a small amount of music reaches mass acceptance and radio is a mass medium.  And let me be clear, these statements are not a criticism of Canada music, which stands among the best the world has to offer, the problem is there just isn't enough of it.  In 1998 the Commission increased Canadian content from 30 per cent to 35 per cent in an effort to expand the exposure given to Canadian artists on radio.

LISTNUM 1 \l 15749             While radio stations now play more Canadian music, they do not play a wider range of Canadian music.  As we just explained, this is because a sufficient supply of Canadian music that is suitable for radio did not exist then, does not exist now and will not miraculously exist at 40 per cent.  Radio stations must now play Canadian songs for a longer period of time and many stations have moved towards gold‑based formats so they can draw on Canadian music from a number of decades.  This has resulted in music from top Canadian artists becoming burned out.

LISTNUM 1 \l 15750             Increasing Canadian content requirements above their current levels will only compound this problem.  In fact, mandated increases in Canadian content with a one‑size‑fits‑all approach to radio formats will not create more Canadian music that people want to hear.  Similarly, any system that forces all broadcasters in all formats to commit to a percentage of inde artists as part of their CanCon compliment will serious limit our ability to create radio that our audiences want to listen to. 

LISTNUM 1 \l 15751             MR. SKI: Almost 25 years ago CHUM lead the creation of FACTOR and Duff Roman was its first President.  That was the right response at that time to a need to develop more Canadian music for radio.  What is required today is a comprehensive strategy to increase the amount of quality Canadian music available to Canadian radio stations.

LISTNUM 1 \l 15752             In CHUM's view, a key part of this strategy is the incentive‑based enhanced 35 per cent solution which would encourage radio stations to take risks on unknown artists without causing tune‑out.  And to be clear, we define an emerging artist as any Canadian artist that is not charted on the top 40 on either the Nielson BDS or media‑based national airplay charts.

LISTNUM 1 \l 15753             Because of the time it takes to establish and artist to the consumer, we believe the qualifying window should be 12 months.  CHUM firmly believes that public policy must remain relevant in light of the changing media environment in which Canadians' radio broadcasters operate.  That is why we have developed our recommendations to help position radio for future success and ensure that the sector continues to make a substantial contribution to the fulfillment of the objectives of the Broadcasting Act.

LISTNUM 1 \l 15754             We are not afraid of competition.  We have a 50‑year history of responding to changes in technology, changes in the media landscape, listener tastes and economic conditions.  Radio can continue to be a strong medium that serves communities, advertisers and the need of Canadians to fine Canadian expression.  Despite the plethora of new and largely unregulated entrants radio can compete, given a relevant forward‑looking radio policy that gives radio broadcasters the flexibility to adapt to urgent challenges facing the industry.

LISTNUM 1 \l 15755             We thank you for your time and we welcome your questions.

LISTNUM 1 \l 15756             THE CHAIRPERSON: Thank you very much, Mr. Ski.

LISTNUM 1 \l 15757             I guess the first question I have is triggered by the statement, we play it because we have to.  And I guess what we are all involved in in the Canadian Broadcasting System is, and have been I suppose for 75 ‑ 80 years, is combating market forces that alone would in all likelihood lower the level of Canadian content on our airwaves, radio, television and elsewhere dramatically.  Canada itself is a battle against market forces that would otherwise be north/south and we live with that on an ongoing basis.  And part of what we are all involved in is part of the regulatory bargain and the social contract of being in this system is trying to combat those forces as best we can and promote the Canadian music on radio or stories on television with a view to continuing to reaffirm our identity as a country on an ongoing basis.

LISTNUM 1 \l 15758             So I take it that when you say you play it because you have to you are trying to make a regulatory point, because I know that the CHUM group, in effect, embraces Canadian artists and tries to promote them.  So as a sound bite it is a bit of a sour tone and I want to give you an opportunity to explain that that is what it is and that that doesn't sound as badly as when you hear it in the cold light of day.

LISTNUM 1 \l 15759             MR. SKI: Well, and we didn't certainly mean it to be that way.  I think ‑‑ and I will let Rob give you a bit more information on that ‑‑ I think our point was that to try to give you some perspective, in that if we are to compete I guess in the future and hopefully we will have a chance as you had asked for yesterday, go through some of the technological challenges that CHUM sees certainly that we are going to be faced with, that if we are not able to provide our listeners with the music that they want to hear ‑‑ and that is really what it is, it even gets away from hits or non‑hits, it is really what the listeners want to hear.

LISTNUM 1 \l 15760             And for over 20 years now CHUM has been going to the market to research our listeners on various elements of our programming and I think it is one of the reasons that we have managed to be successful in many of our markets is because we are not only a reflection of the community and from our spoken word standpoint, but from the delivery of the music that we provide to the people too.  And sometimes I think that is forgotten, it is forgotten that all of certainly our radio stations and many others are operated autonomously in their market.  So the music that is chosen for Vancouver is very different than what Rob decides to choose for Toronto, because they are different markets and while there may be some similarities, there are many differences.

LISTNUM 1 \l 15761             So I guess what we are trying to say is that when we are moving to add that additional layer of Canadian, between what we would normally play and what we are required to play, that is where it becomes just a little bit challenging for us, because we know that many of our listeners may not necessarily want to hear those songs or, if they do, they are pockets of listeners.  So that you might have somebody ‑‑ I mean, not all songs are bad songs, obviously, as some people have said and if you have eclectic music taste you can hear a lot of different songs, but we are delivering an audience, a mass audience, that is the kind of media that we are in.  And so, as a result, we have to play songs that obviously appeal to the most number of people within our particular format.

LISTNUM 1 \l 15762             Rob may want to..

LISTNUM 1 \l 15763             THE CHAIRPERSON: Well, I take those points and I am not in any way suggesting that you don't try and play what your listeners want.  I guess one of the questions we put forward for comment in this proceeding is at paragraph 119 where we said:

"A number of conventional radio broadcasters have established a presence on the internet as a means of extending their brand and providing value‑added services to their listeners."  (As read)

LISTNUM 1 \l 15764             And we asked the question:

"How can conventional radio licensees utilize new technologies and incorporate new platforms into their strategies in a manner that furthers the objectives of the Act."  (As read)

LISTNUM 1 \l 15765             From our perspective, that is the Act we administer and that is the question we asked.

LISTNUM 1 \l 15766             But I would expect that your own goals, obviously, of giving listeners what they want are also paramount.

LISTNUM 1 \l 15767             So I wonder whether you can address here, or perhaps in your subsequent filings, an answer to that, how you can use these new technologies to further your goals as well as to further the objectives of the Act.  Because that is the Act under which you are licensed, that is the Act under which we operate, and as long as that holds it is going to be a feature of your environment.

LISTNUM 1 \l 15768             MR. SKI:  We wish we had the answer to that today and we may not have the answer by the 29th.  I think it's something that we are all searching for an answer to.

LISTNUM 1 \l 15769             But there is a sea change ‑‑ and you have heard this already ‑‑ that we are going through which is a little different.  Once we start to swim in that ocean ‑‑ and it is an ocean that is very different from the pond that we're in today I think is maybe a good analogy ‑‑ we are moving from broadcast media to connected media.  This is a little different.  Also, we are moving from radios ‑‑ and that has been the primary device, certainly for the broadcast media, for our broadcast media ‑‑ we are now moving to computers and other devices that people listen to music.

LISTNUM 1 \l 15770             So our intermediary role between ourselves and our listeners is changing dramatically.

LISTNUM 1 \l 15771             I wish we had the answer to how we would use that technology?

LISTNUM 1 \l 15772             THE CHAIRPERSON:  Oh, no.  I don't expect that you do, but this is a collective challenge we have to meet, and probably a greater challenge qualitatively and quantitatively than we have had to meet over the past 75 or 80 years.  I don't think there is any question about that.

LISTNUM 1 \l 15773             So it means the bookends are we just simply throw up our hands on the one hand, and I don't think we want to do that; and the other one is, we try to figure out answers that may not be perfect but that achieve the bulk of the objectives that we can manage to do.

LISTNUM 1 \l 15774             Again, I'm not expecting that you have answers or that any of us have answers today, but part of what we are doing at this proceeding is trying to figure out ways collectively where we can address that issue.

LISTNUM 1 \l 15775             Most of the proposals, I think it is fair to say, that we are hearing from the industry, is relax of the rules, lower the thresholds, border, Canadian content, incentives for new artists, Smart regulation, all of which have the effect of providing ‑‑ I guess the operative word is "flexibility" that we are hearing from most broadcasters, and we hear you about that.

LISTNUM 1 \l 15776             But that is a one‑way direction.  That is sort of lowering the existing requirements.  Again, we hear you and we will consider what you are saying.

LISTNUM 1 \l 15777             But I guess the problem will still remain, because at whatever level you have, unless you assume that the objectives are going to disappear, you are probably going to still be combatting market forces to some extent.  So the challenge will remain at whatever level you are, where you are now, higher or lower, and again we have to try to work towards those objectives.

LISTNUM 1 \l 15778             I appreciate that you don't want to take the time before us to do other than get your message across, which is for the moment you think you need the flexibility.

LISTNUM 1 \l 15779             MR. SKI:  Well, we would certainly be pleased to add more if we had the answers for you today.  Unfortunately, this hearing is coming at a time when we don't have the answers, when I think we are all searching for the answers.

LISTNUM 1 \l 15780             I think, as I said, the people certainly on this panel have been in the radio business for many, many years ‑‑ it's our passion.  It's why we get up every morning ‑‑ and we are very optimistic about the radio business, but we are very cautiously optimistic too, because we just don't know what's around the corner.

LISTNUM 1 \l 15781             We see all these things coming before us that we just have never seen before.  We have known what we have been up against.

LISTNUM 1 \l 15782             But when you can go to something like ‑‑ you may have seen pandora.com, the Music Genome Project, where you now can go to the internet, you can log on, and through this particular process, by logging on, you can create 100 radio stations that the Music Genome Project creates for you, something that you can do.  So suddenly you have 100 radio stations that are streaming stations.

LISTNUM 1 \l 15783             So how do we compete with that?  Those are the things that I can tell you there are some sleepless nights and many long days and meetings while we try to figure this out.

LISTNUM 1 \l 15784             And it's not easy, because every day there is something like pandora that is coming along.

LISTNUM 1 \l 15785             THE CHAIRPERSON:  Sure.

LISTNUM 1 \l 15786             MR. SKI:  It's not as if it's one thing comes along that we have to deal with, like we had to deal with television many years ago obviously and recreate our business plan, our business model.

LISTNUM 1 \l 15787             Now what we have to do is, one day it's this, one day it's the internet, the next day it's satellite radio, the next day it's a change for instance in the methodology for measuring our media, the personal people meter, which is going to change the way our business model again is managed.

LISTNUM 1 \l 15788             So it's all of these things that are coming at us.

LISTNUM 1 \l 15789             THE CHAIRPERSON:  And there is going to be a lot of trial and error.  The good news is that you are coming off some very healthy years which are continuing financially and that now is the time to make the investments, both in the expertise for the ideas and in the technological know‑how, so that you can not just treat them as competitive to you but that you can actually harness them for your own promotion.

LISTNUM 1 \l 15790             Because you still do maintain powerful brands in this country and powerful listener identification which works in your favour in addition to your balance sheets and I'm sure that you are doing that as well.

LISTNUM 1 \l 15791             MR. SKI:  Well, the brands are important certainly.  It's a little different.

LISTNUM 1 \l 15792             I heard your comment the other day about Desperate Housewives, and that is a little different than radio in that not everybody can play Desperate Housewives; everybody can play Britney Spears if they want to.

LISTNUM 1 \l 15793             THE CHAIRPERSON:  Right.

LISTNUM 1 \l 15794             MR. SKI:  So we don't operate in that vacuum either, even within our own industry.

LISTNUM 1 \l 15795             I would just like to comment, too, on the fact that we have had some good years, there is no question, and we are quite proud of that.  But it was only a few short years ago that CHUM embarked on another experiment to try to recreate AM radio and do some things differently which dramatically affected the profits of the company.

LISTNUM 1 \l 15796             We see going through that kind of a phase again.  You obviously have our numbers.  You know that when you try to do different things they don't always work.  We have had some successes and some failures and we think that is going to continue to happen.

LISTNUM 1 \l 15797             THE CHAIRPERSON:  Right.  I think the whole industry is, and the industry as it is ever more broadly being defined.

LISTNUM 1 \l 15798             Let me ask you just a few specifics on other parts of your brief, which we have read.

LISTNUM 1 \l 15799             One is on LMAs and LSAs.

LISTNUM 1 \l 15800             We set out in the Public Notice at paragraph 37 the concerns that the Commission has had with LMAs and LSAs, and yet CHUM is, particularly in its brief, making a pitch for their utilization.

LISTNUM 1 \l 15801             If I could I will ask you just a few points of information about LSAs at this point, because I think the issues pro and con are fairly clear.

LISTNUM 1 \l 15802             One question I have is the financial impact that you think it would make on your stations operating in a market in quantitative terms.

LISTNUM 1 \l 15803             How would you estimate the financial benefit to you of using an LSA as distinct from not using an LSA in a given market?  I appreciate it will vary from market to market, but what is it worth to you in dollar terms?

LISTNUM 1 \l 15804             MR. SKI:  I think that it might be difficult to give you an exact number or a percentage.  Kerry may be able to comment on that.

LISTNUM 1 \l 15805