Canadian Radio-television and Telecommunications Commission
www.crtc.gc.ca
Common menu bar links
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/SUJET:
VARIOUS BROADCASTING APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
Portage IV Portage IV
140 Promenade du Portage 140, promenade du Portage
Gatineau, Quebec Gatineau (Québec)
August 27, 2007 Le 27 août 2007
Transcripts
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
Contents.
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Transcription
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Telecommunications Commission
Conseil de la radiodiffusion et des
télécommunications canadiennes
Transcript / Transcription
VARIOUS BROADCASTING APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
BEFORE / DEVANT:
Rita Cugini Chairperson / Présidente
Andrée Noël Commissioner / Conseillère
Ronald Williams Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Jade Roy Secretary / Secrétaire
Michael Craig Hearing Manager /
Gérant de l'audience
Stephen Millington Legal Counsel /
Conseiller juridique
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
Portage IV Portage IV
140 Promenade du Portage 140, promenade du Portage
Gatineau, Quebec Gatineau (Québec)
August 27, 2007 Le 27 août 2007
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PHASE I
PRESENTATION BY / PRÉSENTATION PAR:
Astral Media Radio Inc. 4 / 21
PHASE II
INTERVENTION BY / INTERVENTION PAR:
NCRA/ANREC 104 / 669
CRIA 120 / 755
PHASE I
REPLY BY / RÉPLIQUE PAR:
Astral Media Radio Inc. 130 / 807
Gatineau, Quebec / Gatineau (Québec)
‑‑‑ Upon commencing on Monday, August 27, 2007
at 0930 / L'audience débute le lundi
27 août 2007 à 0930
LISTNUM 1 \l 11 THE CHAIRPERSON: Good morning and welcome to everyone.
LISTNUM 1 \l 12 My name is Rita Cugini and I am the CRTC Regional Commissioner for Ontario. I will be presiding over this hearing.
LISTNUM 1 \l 13 Joining me on the panel are my colleagues Andrée Noël, Regional Commissioner for Quebec, and Ronald Williams, Regional Commissioner for Alberta and the Northwest Territories.
LISTNUM 1 \l 14 The Commission team assisting us includes Michael Craig, Hearing Manager and Senior Radio Analyst; Steve Millington, Legal Counsel; and Jade Roy, Hearing Secretary.
LISTNUM 1 \l 15 Please speak with Miss Roy if you have any questions with regard to hearing procedures.
LISTNUM 1 \l 16 At this hearing we will be examining the application presented by Astral Media Radio Inc. to acquire, among other assets, 53 radio undertakings across Canada and two television stations in British Columbia, all of which currently belong to Standard Radio Inc.
LISTNUM 1 \l 17 I will now invite the Hearing Secretary, Jade Roy, to explain the procedures we will be following.
LISTNUM 1 \l 18 Madam Secretary.
LISTNUM 1 \l 19 THE SECRETARY: Thank you, Madam Chair.
LISTNUM 1 \l 110 Nous aimerions souligner quelques points d'ordre pratique qui contribueront au bon déroulement de cette audience publique.
LISTNUM 1 \l 111 Firstly, simultaneous interpretation service is available during the hearing. Receivers are available from the Commissionaire outside the Hearing Room. The English interpretation is on channel 7 and French is on channel 8.
LISTNUM 1 \l 112 When you are in the Hearing Room, we would ask you to please turn off your cell phones, beepers and BlackBerrys as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translators. We would appreciate your cooperation in this regard throughout the hearing.
LISTNUM 1 \l 113 We expect the hearing to take approximately one day. We will take an hour and a half for lunch and a break in the morning and in the afternoon.
LISTNUM 1 \l 114 Pendant toute la durée de l'audience, vous pourrez consulter les documents qui font partie du dossier public pour cette audience dans la salle d'examen qui se trouve dans la Salle Papineau, située à l'extérieur de la salle d'audience à votre droite.
LISTNUM 1 \l 115 Une transcription des comparutions quotidiennes sera affichée sur le site internet du Conseil peu après la fin de l'audience.
LISTNUM 1 \l 116 Les personnes qui désirent acheter des transcriptions peuvent s'adresser au sténographe qui se trouve à la table à ma droite durant la pause ou directement auprès de la compagnie Mediacopy.
LISTNUM 1 \l 117 For the record, Astral filed their Preferred Ownership Scenario and confidentiality has been granted on the residential addresses of the officers and directors of the corporations. An abridged version has been placed on the file.
LISTNUM 1 \l 118 These documents will be posted on the Commission's website and copies are available in the examination room.
LISTNUM 1 \l 119 Now, Madam Chair, we will proceed with the application filed by Astral Media Radio Inc.
LISTNUM 1 \l 120 Appearing for the applicant is Monsieur Jacques Parisien who will introduce his colleagues. You will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
LISTNUM 1 \l 121 MR. PARISIEN: Thank you.
LISTNUM 1 \l 122 Good morning, Madam Chair, Commissioners. My name is Jacques Parisien and I am Group President to Astral Media Radio and Astral Media Outdoor.
LISTNUM 1 \l 123 Let me begin by introducing the members of our team.
LISTNUM 1 \l 124 On the far right of our panel, your left, is Ian Greenberg, President and CEO of Astral Media.
LISTNUM 1 \l 125 Next to him is Ian Lurie, Vice‑President and Chief Financial Officer of Standard Radio.
LISTNUM 1 \l 126 On my immediate left is Claude Laflamme, Vice‑President Corporate and Regulatory Affair for Astral Media Radio and Astral Media Outdoor.
LISTNUM 1 \l 127 Next to her is Rob Braide, Vice‑President and General Manager for Montreal for Standard Radio.
LISTNUM 1 \l 128 Behind him in the second row is Gary Slaight, President and CEO of Standard Radio.
LISTNUM 1 \l 129 Next to him Luc Sabbatini, President of Astral Media Outdoor and a familiar face to the Commission as a former member of the Astral Media Radio team.
LISTNUM 1 \l 130 Continuing along the row we have Julie Charest, Research Director for Astral Media Radio.
LISTNUM 1 \l 131 Then Don Shafer, Vice‑President and General Manager of the British Columbia Interior Region for Standard.
LISTNUM 1 \l 132 And finally, Claude Gagnon, Senior Vice‑President and Chief Financial Officer of Astral Media.
LISTNUM 1 \l 133 Madam Chair, we are pleased and proud to appear before you today to present this application for Astral Media's acquisition of the radio and television stations of Standard Radio.
LISTNUM 1 \l 134 This acquisition is a major step forward for our company and we believe a very positive development for the Canadian broadcasting system.
LISTNUM 1 \l 135 So we would like to take a few moments this morning to tell you why approval of our application is clearly in the public interest.
LISTNUM 1 \l 136 First, we will talk about the reasons why Astral and Standard agreed on this transaction.
LISTNUM 1 \l 137 Second, how the transaction maintains both diversity and vigorous competition in all the markets affected.
LISTNUM 1 \l 138 And third, we will describe how our benefits package strengthens radio, the communities involved and the music industry, including emerging artists.
LISTNUM 1 \l 139 Ian.
LISTNUM 1 \l 140 MR. GREENBERG: Thank you, Jacques.
LISTNUM 1 \l 141 Astral Media takes great pride in being a Canadian media company. This acquisition is one of the major steps taken by Astral to achieve its ambition of growing within Canada by focusing on sectors where it has proven expertise, continuous success and a track record of substantial contributions.
LISTNUM 1 \l 142 Radio is clearly one of those sectors. Indeed, we believe firmly in commercial radio. It is an exciting and promising business, both today and in the future.
LISTNUM 1 \l 143 In this context, the combination of Standard Radio and Astral is an ideal marriage. Astral stations in French Quebec and in the Atlantic provinces are a perfect complement to Standard stations in the West, Ontario and English Quebec.
LISTNUM 1 \l 144 But our two companies are also a great fit in another way. This association is one that is built on shared values, great mutual respect and a strong commitment to local communities and the promotion of Canadian culture.
LISTNUM 1 \l 145 This is extremely important to us. It was with this in mind that Astral and Standard initiated discussions and negotiated an agreement with terms fair to both parties.
LISTNUM 1 \l 146 Over the years, Astral has grown its radio business primarily through acquisitions. It started with Radiomutuel in 1999, followed by Télémédia in 2002, and the exchange of stations with Corus in 2005.
LISTNUM 1 \l 147 Astral has proven its ability to integrate these stations, improve upon their success both financially and in listenership, and reinforce their ties with the local communities they serve.
LISTNUM 1 \l 148 We have also demonstrated unfailing respect for the culture of the businesses we acquire and their people. We have learned from them just as they have learned from us so that today Astral's culture emanates from a combination of the best practices that each has brought to the table.
LISTNUM 1 \l 149 We encourage all of our stations to be distinct and to create their own individual voices in order to reflect the realities of their local markets. This is why we are enthusiastic about the people who will be joining us, people who have a well‑demonstrated experience in fostering excellent relationships with their communities.
LISTNUM 1 \l 150 Gary.
LISTNUM 1 \l 151 MR. SLAIGHT: Thank you, Ian.
LISTNUM 1 \l 152 I can't tell you how proud we are of all the things that the people at Standard Radio have been able to achieve in the 22 years since my father Allan Slaight acquired it in 1985.
LISTNUM 1 \l 153 A company is just a piece of paper issued by Industry Canada until the people inside the company work their magic.
LISTNUM 1 \l 154 I am not just talking about people like Rob, Don and Ian who have contributed so much over the years, I am referring to every single one of the over 1,000 Standard employees from Montreal to the West Coast who get up every morning full of new ideas and ready to create great local radio, and I want to welcome the people from THE BEAR who, some of them, are with us today.
LISTNUM 1 \l 155 They are the ones who helped build this small cluster of stations into the largest privately held radio group in Canada and it is just going to get better for them as part of the Astral family.
LISTNUM 1 \l 156 Ian, Jacques and their team share the same passion for radio and the same commitment to the community as do all the members of the Standard family.
LISTNUM 1 \l 157 It is going to be especially good for the Canadian music community. Standard is deservedly proud of the many Canadian acts it has broken with a geographic footprint that stops at the east end of Montreal. As Ian said, it is as if these two great companies had just been waiting to be put together.
LISTNUM 1 \l 158 With a scope that would now extend from coast to coast, the possibilities for Canada's new musical talent to achieve national exposure is, in my opinion, a huge benefit of putting these two companies together.
LISTNUM 1 \l 159 The musicians have already figured this out. An interesting thing about many of the interventions is that the musicians believe that however close they may have been to Standard, the relationship will not change with Astral, who are known to be equally passionate and supportive of Canadian talent.
LISTNUM 1 \l 160 As you know, assuming your approval of this application, I am going on the board at Astral but will not have day‑to‑day responsibilities as CEO anymore. That means I expect that my appearances like this at CRTC hearings will be a thing of the past.
LISTNUM 1 \l 161 So I would like to take this opportunity to thank all of those at the Commission, both present and past, with whom we at Standard have worked with over the years. Together we have built what I think is the best radio system in the world.
LISTNUM 1 \l 162 Jacques.
LISTNUM 1 \l 163 MR. PARISIEN: Both Astral and Standard make it their first priority to answer the needs of listeners in each local community and that is the basis of our thinking about diversity of voices.
LISTNUM 1 \l 164 Each Astral station has a distinct voice that reflects its community. Each Standard station is equally distinctive. The acquisition will not change any of that.
LISTNUM 1 \l 165 If you approve this application, Astral will have quite a variety of stations in its group: English and French stations in large metropolitan markets, in medium‑size cities, and in the smallest towns one can imagine serving.
LISTNUM 1 \l 166 Clearly, there can be no one‑size‑fits‑all service for a range this broad. To be successful with listeners, a radio station has to be part of its community and sound like its community.
LISTNUM 1 \l 167 It is also true that the diversity of voices will not be reduced by the acquisition because, as Ian noted, the two companies' assets complement each other so neatly that in any single market Astral will not increase the number of stations under common ownership.
LISTNUM 1 \l 168 This is a key fact on the competitive landscape as well. It is important to recall that English and French are separate markets and are treated separately by the Commission's Common Ownership Policy, and since the assets of the two companies are entirely in separate markets, the transaction requires no exception from the Ownership Policy or from any other Commission policy for that matter.
LISTNUM 1 \l 169 When you look at all markets across the country grouped together, you can see that the Astral‑Standard combination would certainly be a national leader but this would not have any negative effect on the competitiveness of the market.
LISTNUM 1 \l 170 The radio industry would subsequently have five strong commercial players: Astral Media, Corus, Rogers, CTVglobemedia and Newcap, as well as a host of medium and smaller players and one public broadcaster operating in two languages.
LISTNUM 1 \l 171 In this arena, Astral and Standard would have a combined national share of listening slightly ahead of Corus.
LISTNUM 1 \l 172 In terms of commercial revenues, the pie would still be divided relatively evenly with no player having a big structural advantage. In fact, the leading player in radio would still have a smaller national share than the leading player in conventional television or in discretionary services.
LISTNUM 1 \l 173 Radio is a highly competitive industry and this acquisition won't change that.
LISTNUM 1 \l 174 Now, I would like to ask Rob and Claude to speak about how our benefits package strengthens radio, the communities involved and new talent in television, radio and the music industry, including emerging artists.
LISTNUM 1 \l 175 Rob.
LISTNUM 1 \l 176 MR. BRAIDE: Thank you, Jacques.
LISTNUM 1 \l 177 The benefits package in this transaction totals over $63 million. Of that total, about $1.7 is in respect of television.
LISTNUM 1 \l 178 The $61.6 million earmarked for radio is a record amount in this sector. It is also money that would not be spent if this transaction had not taken place.
LISTNUM 1 \l 179 Within the radio portion nearly $31 million will go to Starmaker and Fonds RadioStar, and $20.5 million to FACTOR. Importantly, with 10 percent of that money directed to MUSICACTION in recognition of Standard's presence in the Quebec market.
LISTNUM 1 \l 180 This funding will enable these organizations to sustain programs that support Canadian musicians, songwriters, artists, including emerging artists, to achieve the success they deserve.
LISTNUM 1 \l 181 As for the discretionary package of over $10 million, it is structured as a coherent whole that fits into the ecology of both music and radio.
LISTNUM 1 \l 182 Its programs address every stage of the creative process from education through creation and performance to promotion and career‑building for emerging artists and ultimately to the recognition and celebration of accomplished artists.
LISTNUM 1 \l 183 First, we believe that music begins with young people. So two of the supportive initiatives are aimed at assisting their musical education.
LISTNUM 1 \l 184 Second, we believe that good radio is based on good songs. So our proposed program contains a number of initiatives designed to encourage songwriters, to help develop their skills and bring their best work to Canadian ears nationwide.
LISTNUM 1 \l 185 Third, we support promotional programs to ensure that the radio and music industries are made aware of these emerging artists.
LISTNUM 1 \l 186 And, to complete the circle, we support initiatives that celebrate successful artists, helping them to continue their careers and enhance their relationship with the public.
LISTNUM 1 \l 187 Claude.
LISTNUM 1 \l 188 MS LAFLAMME: Thank you, Rob.
LISTNUM 1 \l 189 In spoken word, many of the programs are designed to help individual talents develop their skills and careers, so that the radio industry, as a whole, will be well supplied with skilled professional talent in the years to come.
LISTNUM 1 \l 190 That is also true for the television benefits, where, in addition to local programming, the emphasis is on professional development and mentorship for independent producers and journalists.
LISTNUM 1 \l 191 In addition, several of the programs have been designed to specifically support aboriginal initiatives and small markets. This is especially the case for television, where the assets being acquired are in Dawson Creek and Terrace, both very small northern B.C. towns.
LISTNUM 1 \l 192 We believe that these programs will help to develop future broadcasters and improve service from these small stations.
LISTNUM 1 \l 193 The programs will also help the industry as a whole, including campus and community radio stations and small specialized radio services, such as Radio Enfant.
LISTNUM 1 \l 194 Altogether, we believe we have a balanced package that addresses all of the Commission's objectives, including the creation and promotion of Canadian content, the development of skilled professional talent, both in music and spoken word, and the support of the communities served by the stations.
LISTNUM 1 \l 195 Jacques...
LISTNUM 1 \l 196 MR. PARISIEN: Finally, let me reiterate that at Astral we feel confident about the future of commercial radio and have made it a key part of our corporate strategy.
LISTNUM 1 \l 197 Within that strategy, our approach to the Standard station is simple: maintain and improve.
LISTNUM 1 \l 198 We like the way Standard stations operate. We like their close community ties and their emphasis on local services, and we like their support for Canadian music and musicians.
LISTNUM 1 \l 199 Our intent is to build on this record of achievement and improve the stations gradually, as we have with earlier acquisitions.
LISTNUM 1 \l 1100 In conclusion, Madam Chair, we would like to thank the many intervenors who have supported this application, the charities, community organizations, aboriginal organizations, businesses, musicians and their managers. We are encouraged by their support and believe that the stakeholders view this acquisition as a positive step, in compliance with the Commission's policies in every respect, and, conclusively, in the public interest.
LISTNUM 1 \l 1101 Thank you for the opportunity to introduce our application, and we are ready to answer your questions.
LISTNUM 1 \l 1102 THE CHAIRPERSON: Mr. Parisien, thank you, Mr. Greenberg, and to your team, welcome to these proceedings.
LISTNUM 1 \l 1103 Mr. Slaight, I am sure I speak on behalf of the whole Commission when I say thank you for your contribution to proceedings ‑‑ maybe not like this one in the past, but certainly to CRTC proceedings, and, above all, your contribution to music and Canadian artists. Not just you, but your family, as well. I am pretty confident that we haven't heard or seen the last of you yet, so thank you.
LISTNUM 1 \l 1104 I will begin the questioning today, and I will take a little bit of a springboard from your oral presentation, where you say that, of course, you will extend your stations from coast to coast, but you encourage your stations to be distinct and to create their own individual voices in order to reflect the realities of their local markets.
LISTNUM 1 \l 1105 It is within this framework that I will be asking some of my questions.
LISTNUM 1 \l 1106 Both companies ‑‑ one of the things you have in common is that you operate certain brands: Radio Énergie, RockDétente and Boom FM. Standard, of course, operates EZ Rock, The Bear and MIX, among other formats.
LISTNUM 1 \l 1107 As a result of this transaction, do you plan on branding more radio stations under these banners, or creating more brands?
LISTNUM 1 \l 1108 MR. PARISIEN: We haven't taken over or operated the Standard stations yet ‑‑ we have gone through due diligence ‑‑ so it is difficult for us to speak in detail about the Standard station, but let me recap what we have done already in the Province of Quebec with our brands, and in the Maritimes with the stations that are there.
LISTNUM 1 \l 1109 In the Province of Quebec we have developed our brands through the notion of networking. Networking is a phenomenon that is much more relevant to the Quebec market, the francophone market, than it is to English Canada. You see more syndication in English Canada and more networking in the Province of Quebec; the difference being that in networking the brand develops programming that is played simultaneously on the same brand stations. The examples you gave of Énergie, Boom and RockDétente are exactly that. We have a drive show in the afternoon that is networked. It is the same show in every market of RockDétente and the same show in every market of Énergie.
LISTNUM 1 \l 1110 Mind you, that show has many, many occasions during the show for local insertions, local services, services to the community, sports, weather, traffic and all of that stuff, and also comments from the local station.
LISTNUM 1 \l 1111 The reason we do networking in Quebec is that it's historical. It has been there for years and years. It also provides the smaller stations with high‑quality programming, because we invest more in that programming because it is networked.
LISTNUM 1 \l 1112 It also frees up some budget for the local markets to put on their own local content, such as the morning show, the midday show, and so on.
LISTNUM 1 \l 1113 So networking is a win‑win for the brand and for the smaller markets.
LISTNUM 1 \l 1114 In English Canada ‑‑ and I will let my colleague Rob Braide, and Gary also, talk about syndication a bit more to complement my answer.
LISTNUM 1 \l 1115 In English Canada there is very little networking. I am leaving aside the CBC. In private radio there is more syndication, where you have the same show that is offered to many stations; not necessarily run by all of the stations, and not necessarily at the same time either.
LISTNUM 1 \l 1116 THE CHAIRPERSON: Can you drill down a little bit further and make that distinction for me, in terms of the difference between your network model versus syndication?
LISTNUM 1 \l 1117 MR. PARISIEN: In our network model, the station has to run the network show. It has no choice, and the network show, as I mentioned, provides for local insertion.
LISTNUM 1 \l 1118 It is very typical to the francophone market. Corus in French does it. Cogeco in French does it. Medium and smaller‑sized players do it, such as Radio Nord, which I consider to be medium‑sized. Also, le Réseau des Appalaches does it in smaller markets.
LISTNUM 1 \l 1119 We own stations in English in the Maritimes. We own eight stations. None of them run network. It doesn't apply to them.
LISTNUM 1 \l 1120 That also reflects how respectful we are of the communities and of the specificity of local markets. We do not impose it. If it's an opportunity, we will look at it and we will do it, but we have no devised strategy to go that route, not at all.
LISTNUM 1 \l 1121 I will let Gary talk about syndication.
LISTNUM 1 \l 1122 MR. SLAIGHT: Thanks, Jacques.
LISTNUM 1 \l 1123 In the rest of Canada, in English Canada, we really find that networking is not something that works. Most of the local markets are so different ‑‑ Hamilton is different from St. Catharines ‑‑ so we don't do a whole lot of networking. We do syndication, and we have a syndication arm which creates and represents programming, which stations across Canada ‑‑ we have about 140 clients, many of which are not Standard Radio stations, who pick up the programming to augment the programming they are carrying in the local markets.
LISTNUM 1 \l 1124 THE CHAIRPERSON: Are your syndicated programs available to only those Standard stations that are branded MIX, The Bear?
LISTNUM 1 \l 1125 MR. SLAIGHT: No, there is a difference. Syndicated programming will run on any radio station in other markets, whether it's a Standard station or not.
LISTNUM 1 \l 1126 EZ Rock is really a brand for the product. As a matter of fact, EZ Rock differs in every market where we use the brand, as does The Bear.
LISTNUM 1 \l 1127 The Bear in Ottawa is totally different from The Bear in Edmonton.
LISTNUM 1 \l 1128 THE CHAIRPERSON: Would two radio stations in the same market carry the same program?
LISTNUM 1 \l 1129 MR. SLAIGHT: In some cases with syndication that will happen, but, as a rule, stations like to have the content exclusively.
LISTNUM 1 \l 1130 THE CHAIRPERSON: Would they run them at the same time, if they did have them?
LISTNUM 1 \l 1131 MR. SLAIGHT: The timing is really up to the radio station, as to when they run the programming.
LISTNUM 1 \l 1132 THE CHAIRPERSON: How much of the programming on the Standard Radio stations is syndicated versus local programming?
LISTNUM 1 \l 1133 MR. SLAIGHT: A very, very small percentage.
LISTNUM 1 \l 1134 It's mostly short‑form programming. It's mostly business features or music features or weekend countdowns, or we might pick up David Letterman and run the short bits that he does on morning shows across the country, again including some non‑Standard radio stations.
LISTNUM 1 \l 1135 The percentage of programming that Standard runs on our radio stations is very small.
LISTNUM 1 \l 1136 THE CHAIRPERSON: Is there a difference, depending on format?
LISTNUM 1 \l 1137 MR. SLAIGHT: Yes, the one difference would be with the EZ Rock brand, where we do run some long‑form programming, i.e., John Tesh, which is carried, but we Canadianize that program, in terms of incorporating Canadian content into the program.
LISTNUM 1 \l 1138 So, for that particular programming, that would be the only difference.
LISTNUM 1 \l 1139 THE CHAIRPERSON: So EZ Rock would probably run the most syndicated programming.
LISTNUM 1 \l 1140 MR. SLAIGHT: Yes, that format would run more than a rock station or a CHR station.
LISTNUM 1 \l 1141 But, again, the John Tesh show runs on some of our stations, but it runs on some of our competitors' stations, as well, in other markets.
LISTNUM 1 \l 1142 THE CHAIRPERSON: At the Standard stations, who decides how much and in what time slots this programming will run?
LISTNUM 1 \l 1143 MR. SLAIGHT: It is really up to the local market, the general manager, the program director and the sales manager to decide whether or not they take the programming.
LISTNUM 1 \l 1144 THE CHAIRPERSON: And that is true of the non‑Standard radio stations, as well?
LISTNUM 1 \l 1145 MR. SLAIGHT: The non‑Standard stations have an opportunity to pick up our programming when it becomes available, and they will decide themselves, also, whether they run it and when they run it.
LISTNUM 1 \l 1146 THE CHAIRPERSON: Your Sound Source website ‑‑ you describe the service as offering a comprehensive range of targeted, substantive and entertaining programming designed to capture and maintain a loyal audience during fixed airtimes throughout the week.
LISTNUM 1 \l 1147 MR. SLAIGHT: Right.
LISTNUM 1 \l 1148 THE CHAIRPERSON: Do those fixed airtimes translate into "You have to run this show at 7 o'clock"?
LISTNUM 1 \l 1149 MR. SLAIGHT: No, I think it would be fixed on a particular radio station, where they can use the fact that they have the program to drive audience to certain time slots on that particular radio station.
LISTNUM 1 \l 1150 THE CHAIRPERSON: So it doesn't mean that Sound Source determines at what time that show is run.
LISTNUM 1 \l 1151 MR. SLAIGHT: Absolutely not.
LISTNUM 1 \l 1152 THE CHAIRPERSON: "Command Performance" ‑‑ which, of course, is a series of live concert performances. You distribute these concerts across the country. Are they broadcast simultaneously by all radio stations that purchase the program?
LISTNUM 1 \l 1153 MR. SLAIGHT: We haven't done many of these lately, but when we did run the program, it was recorded and rebroadcast in most cases.
LISTNUM 1 \l 1154 THE CHAIRPERSON: So not necessarily simultaneously?
LISTNUM 1 \l 1155 MR. SLAIGHT: Exactly.
LISTNUM 1 \l 1156 THE CHAIRPERSON: Do you enter into a formal agreement with radio stations for the running of this type of programming?
LISTNUM 1 \l 1157 MR. SLAIGHT: Yes, they have contracts.
LISTNUM 1 \l 1158 THE CHAIRPERSON: Are you at liberty to tell us what the terms of those agreements are?
LISTNUM 1 \l 1159 MR. SLAIGHT: It really depends on the program, the market, the radio station, but it is usually for barter, i.e., airtime. So they get the program; we would take a 30‑second commercial that we would go to a national advertiser and sell it to.
LISTNUM 1 \l 1160 THE CHAIRPERSON: Are these programs ‑‑ these, too, are available to all radio stations, not just Standard?
LISTNUM 1 \l 1161 MR. SLAIGHT: Yes.
LISTNUM 1 \l 1162 MR. PARISIEN: Maybe, Madam Chair, we should have mentioned that Sound Source ‑‑ Standard operates 52 stations, and Sound Source has 140 stations that are clients of Sound Source.
LISTNUM 1 \l 1163 THE CHAIRPERSON: Including Astral stations?
LISTNUM 1 \l 1164 MR. PARISIEN: No. It is offered to our English stations in the Maritimes, but they don't pick it up.
LISTNUM 1 \l 1165 THE CHAIRPERSON: Again, because their main focus is ‑‑
LISTNUM 1 \l 1166 MR. PARISIEN: Because the local market decides that it doesn't want it.
LISTNUM 1 \l 1167 THE CHAIRPERSON: I wonder if Standard could provide us with a breakdown, station‑by‑station, of how much network programming is used versus local programming; and if in that document you could further compartmentalize it by including call letters, market and format.
LISTNUM 1 \l 1168 MR. SLAIGHT: I believe we have already done that exercise, and I am sure we could provide that.
LISTNUM 1 \l 1169 THE CHAIRPERSON: Would a week be sufficient time for you to ‑‑
LISTNUM 1 \l 1170 MR. PARISIEN: We will do it within a week. Don't worry.
LISTNUM 1 \l 1171 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1172 As a result of this transaction, do you anticipate that these levels of network programming versus local would increase or decrease?
LISTNUM 1 \l 1173 MR. PARISIEN: As I mentioned, we are not operating the stations yet, but our intention is to continue to do the same thing that Standard has been doing. We don't fix something that's working, and the results are very good. The local markets are satisfied with what is offered and what they choose, so we intend to continue doing the same thing, not increasing.
LISTNUM 1 \l 1174 THE CHAIRPERSON: You also say in your supplementary brief that you do not discount the possibility of importing the network model used by Astral in Quebec to the rest of Canada.
LISTNUM 1 \l 1175 If you are successful in rolling out this model, will it have any impact at all on local programming?
LISTNUM 1 \l 1176 MR. PARISIEN: No, it wouldn't have any impact on local programming, other than what I have described to you as being the way we do it in the francophone market.
LISTNUM 1 \l 1177 THE CHAIRPERSON: Your model includes a decentralized editorial control, allowing stations to upload content and redistribute that content to the network in terms of news.
LISTNUM 1 \l 1178 MR. PARISIEN: In terms of news, you are absolutely right.
LISTNUM 1 \l 1179 In terms of news, our intention is to continue the same way that Standard is doing it with the Standard properties, and to continue doing it the way Astral does it.
LISTNUM 1 \l 1180 We will apply the best practice approach. There are things that Standard does that we don't do that can benefit our stations, and there are things that we do that Standard doesn't do that can benefit their stations.
LISTNUM 1 \l 1181 To the point of news, you are absolutely right, we do have a pretty unique system, called the Burli System, and it is a system where all of the stations have access to a central server, where every newsroom in every station puts on their news content, and it is accessible, with no charge, by any other local market that decides to run the piece of news.
LISTNUM 1 \l 1182 Therefore, it gives small markets and medium markets access to a lot of information. We will put that service in place in the Standard stations as well. So it will be bilingual, bicultural, from coast to coast and it will give access, especially to smaller markets, to news‑breaking events which otherwise they may not be covering. So, in that sense, it will enhance tremendously the news gathering and the news broadcasting.
LISTNUM 1 \l 1183 THE CHAIRPERSON: Do you have a sense right now of how much news content is provided by the network versus how much news content is provided by each individual radio station?
LISTNUM 1 \l 1184 MR. PARISIEN: It is all local, so every local station puts its news content on the server. So I can't answer that question, except by saying that the local station, if it has so many minutes of news, will put it on the system and will be accessible to all the other stations.
LISTNUM 1 \l 1185 THE CHAIRPERSON: And what about national and international news?
LISTNUM 1 \l 1186 MR. PARISIEN: Seventy per cent of what we put there is local content, the rest is national and regional.
LISTNUM 1 \l 1187 THE CHAIRPERSON: And is the national and regional news provided by this network system?
LISTNUM 1 \l 1188 MR. PARISIEN: Yes, it is.
LISTNUM 1 \l 1189 THE CHAIRPERSON: Okay. If you are again successful in rolling out this model across Canada, what effect do you anticipate this would have on on‑air talent, in particular, news readers, but as well as other on‑air talent?
LISTNUM 1 \l 1190 MR. PARISIEN: You know what we have discovered it does and what we have already been doing in Quebec, it puts pressure on the journalists, the news people to do a better job, to gather better content, to deliver better news. It just enhances the whole system, and pretty fast also because ‑‑
LISTNUM 1 \l 1191 THE CHAIRPERSON: So it won't mean job losses?
LISTNUM 1 \l 1192 MR. PARISIEN: ‑‑ a piece of news will be taken by another market and there is a question of ego and who is going to cover it and how good is it going to be and how many people will pick it up and so on and so forth, so it enhances the system completely.
LISTNUM 1 \l 1193 THE CHAIRPERSON: And so you don't anticipate job losses?
LISTNUM 1 \l 1194 MR. PARISIEN: Oh, not at all, not at all.
LISTNUM 1 \l 1195 THE CHAIRPERSON: Okay. On page 11 of the supplementary brief you say that this acquisition represents a benefit in terms of guidance to smaller‑market English stations and employment opportunities. I am wondering if you could elaborate a little bit on that statement and tell me what your plans are.
LISTNUM 1 \l 1196 MR. PARISIEN: Well, again, I have to give you what we have done in the francophone market and in the Maritimes that works and that we could apply to the Standard's property. And what we have done is we have rolled out a system by which we encourage mobility of people across the markets and we have lived through that. We have a lot of our people who move from smaller markets to medium markets to big markets in all categories; on‑air people, research, scripts, all sorts of radio talent do that.
LISTNUM 1 \l 1197 We intend to apply that to the Standard properties also, it has been successful for us. I think Standard also encourages that, so we will continue on the line. But we have a system where we promote it, we also choose, and I think we have addressed it in the supplementary brief, we have a program called Career Plus where we identify young, eager radio employees that want to be on a fast track and Career Plus gives them the advantage to be on a fast track. We will rollout Career Plus in the Standard properties also with the same target of giving access to young, eager radio professionals the possibility to access better jobs and do more.
LISTNUM 1 \l 1198 THE CHAIRPERSON: This transaction also, of course, includes AM stations ‑‑
LISTNUM 1 \l 1199 MR. PARISIEN: Yes, it does.
LISTNUM 1 \l 1200 THE CHAIRPERSON: ‑‑ and even though there isn't a requirement to provide a minimum level of local programming, what are the efficiencies you see for these AM stations that you are acquiring?
LISTNUM 1 \l 1201 MR. PARISIEN: Are you asking me efficiencies in the sense of synergies?
LISTNUM 1 \l 1202 THE CHAIRPERSON: Efficiencies in the sense of synergies and in the sense of further development for on‑air talent, for the retention and hopefully enhancement of local programming.
LISTNUM 1 \l 1203 MR. PARISIEN: Okay. I appreciate the question on synergies and I would like to take a few minutes to talk about synergies because, as we have mentioned and as we have said publicly, the Standard stations compliment the Astral stations. Standard has a structure of management, has a structure of local resources, which we do not intend to change, it just compliments what we already have.
LISTNUM 1 \l 1204 We need all the people, we need to maintain the structure in place and we have the intention of doing so. Except for the very top management, which is Gary Slaight, all the rest of the people are invited to stay.
LISTNUM 1 \l 1205 MR. SLAIGHT: Thank you.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1206 MR. PARISIEN: In terms of AM stations, there is nothing particular about AM stations in terms of human resources. We just intend to maintain the same people in place and just try to do the same good job and, if possible, a better job than what has been done in the past. So there is no strategy to cut, whatever so far.
LISTNUM 1 \l 1207 MR. BRAIDE: Jacques, if I could. The folks at Astral have been very clear with me from the beginning how important it is that our people stay in place and that we keep doing what we have been doing and that has been a clear message from the beginning, since we started talking.
LISTNUM 1 \l 1208 THE CHAIRPERSON: Thank you. We will move to the issue of emerging artists. Currently, Astral has a definition for emerging artists for the French‑language market and Standard offered a definition in the licence renewal application of CIBK‑FM.
LISTNUM 1 \l 1209 Now, I know from your application that you would prefer, as does the rest of the industry, that there be an industry‑wide definition for emerging artists. But, given the fact that Astral has a definition, Standard has offered one, can you point out to me where you see the differences in the two definitions that we have that your two companies have provided to us?
LISTNUM 1 \l 1210 MR. PARISIEN: Well, I will start the answer and then I will ask Rob, who has participated in this debate for quite a few years, to compliment.
LISTNUM 1 \l 1211 Astral Media, as you mentioned, has come to an agreement for the francophone market on a definition for emerging artists with ADISQ. We have been working at it for quite a while and, by the way, we are the only francophone broadcaster who has an agreement with ADISQ so far.
LISTNUM 1 \l 1212 On the English side in the Maritimes our stations don't have an issue with music, it is not a big thing for the stations that we run in the Maritimes, so they haven't been very proactive. But we have, Astral, monitored what has been going on on the English side.
LISTNUM 1 \l 1213 There is a proper forum where it is being discussed, all the players are there and the CAB is driving the exercise, there have been discussions with the Commission. And we intend to continue to play that active role, proactive role I should say, as we have done with ADISQ, and try to come to an agreement as soon as possible.
LISTNUM 1 \l 1214 Maybe, Rob, do you want to add something to that?
LISTNUM 1 \l 1215 MR. BRAIDE: Sure, Jacques. I think maybe we should start off, if you will allow me, by saying that emerging artists are not a group of people who are standing over in a corner waiting to get attention for the first time. Emerging artists have been looked after by Astral and Standard and the Canadian music system in general for decades. I think that emerging artist has become a new buzz word fuelled by some of the industry associations who are, as we are, concerned that Canadian talent get a good plein feux, a good spotlight, and are paid attention to.
LISTNUM 1 \l 1216 That said, you know, during my tenure as Chair of the CAB we worked and in preparation for the review of radio we did a lot of thinking on this subject. There really is a need for this industry get‑together where we can discuss with CIRPA and CRIA and the broadcasters and the Commission and other interested parties what an emerging artist is, how long it takes for that person to emerge and then not be emerging anymore, and whether or not we need a quota. There are many many issues on the table.
LISTNUM 1 \l 1217 The Astral ADISQ definition is very different from the one that the CAB came up with and which other companies such as CHUM in their recent hearing or CTV mentioned. There is just no common ground, Commissioner Cugini, right now, it is just not there and the definitions will ultimately be very different between Canada and Quebec.
LISTNUM 1 \l 1218 THE CHAIRPERSON: Well, we have to acknowledge that this new company, you will be the radio industry leader in Canada as a result and that perhaps other radio broadcasters are going to look to you for guidance on this issue which, Mr. Braide, as you correctly say, has been debated for quite a while now. And somewhere, somehow someone should come up with a definition that is going to be acceptable to all radio broadcasters and perhaps it is you guys.
LISTNUM 1 \l 1219 MR. BRAIDE: And we look forward to that conversation. We just don't feel that even though we will be a leader in radio, we won't be dominant in radio, we won't be able to sort of control the agenda, we will be one of the players. There are four or five others, you know, who are very close to the size of the new combined Astral and Standard.
LISTNUM 1 \l 1220 This really does need to be an industry‑wide conversation which I think the Commission has agreed it is going to take leadership in.
LISTNUM 1 \l 1221 MR. PARISIEN: And we are here to give you some comfort in the fact that Astral Media will be as active on that debate as it has been on the francophone debate.
LISTNUM 1 \l 1222 THE CHAIRPERSON: Thank you for that.
LISTNUM 1 \l 1223 You did mention, Mr. Braide, quotas and, in that renewal application for CIBK, Standard did say that approximately 10 per cent of its selections are devoted to the airplay of emerging artists as defined in that application. Would that be true for all the Standard Radio stations?
LISTNUM 1 \l 1224 MR. BRAIDE: Madam Chair, I believe that it varies. Gary might be able to correct me if I am wrong, but I think it varies within a couple of per cent. Again, it is based upon the format. A country station may have more exposure to emerging artists than an easy rock station in Canada. So I think really it comes down to the local imperative.
LISTNUM 1 \l 1225 MR. SLAIGHT: Yes. It would vary dramatically from market to market and station to station. That particular radio station is a station that plays new music, it has targeted young people and, consequently, it is in our best interest and works out well in terms of the amount of product available for us to be able to do that.
LISTNUM 1 \l 1226 In some other formats it doesn't make as much sense, there is not a lot of new country music. For instance, it is very hard finding new country music featuring Canadian country artists, so it varies market to market and format to format.
LISTNUM 1 \l 1227 THE CHAIRPERSON: Now, both of your companies, as you also mentioned in your opening remarks this morning have, indeed, a proven track record in supporting and promoting emerging artists. How will these efforts be enhanced by this transaction?
LISTNUM 1 \l 1228 MR. PARISIEN: Well, we will definitely continue the same approach as we have and we know, in part, what Standard has been doing and we endorse that also. So we will continue encouraging emerging artists, opening our studios as we do, giving them the chance to be on air, have interviews. We also have studies where we can lend to them where they do shows with a small group of people attending. We will continue to do all that across the country when it is possible and feasible. And we have done it in the Astral Media properties so far and it works, it works very well, it is well received and we have been supporting emerging artists tremendously. I think Standard has the same approach and we will continue to do that.
LISTNUM 1 \l 1229 You must also recognize that we have tabled a benefit package that is quite substantial and addresses also the issue of emerging artists. Maybe I will let Claude and Rob talk about that.
LISTNUM 1 \l 1230 MR. BRAIDE: Let me just say quick that, you know, Gary will be leaving this organization and, you know, his leadership in terms of Canadian music will be missed. But, as a result of Gary's work, concentration on developing artists is deep inside of our culture.
LISTNUM 1 \l 1231 And, you know, with all due respect to my friend and boss, Gary, he setup a system in Standard whereby it will continue to flourish in his absence. He is also going to be on the board of directors of Astral and he is going to have some input here. And, you know, I can just speak from 20 year of experience with this company, this stuff is deep inside of our culture and I know it is that deep inside the Astral culture as well.
LISTNUM 1 \l 1232 THE CHAIRPERSON: We will move on to television because, of course, this transaction does include the two CBC affiliates in Dawson Creek and Terrace.
LISTNUM 1 \l 1233 What are the synergies between the radio holdings and these television stations?
LISTNUM 1 \l 1234 MR. PARISIEN: We are fortunate to have with us the operator, Don Shafer, so I will let him take that question.
LISTNUM 1 \l 1235 MR. SHAFER: Thank you, Jacques.
LISTNUM 1 \l 1236 Madam Chair, these TV stations operate as small families. Each station has roughly 35 people and everybody does everything. Radio and news people carry cameras, both can go on the air for AM or FM or for television when necessary and they do as much as they can to help each other at each station.
LISTNUM 1 \l 1237 THE CHAIRPERSON: Help each other in which way?
LISTNUM 1 \l 1238 MR. SHAFER: Well, I mean, I think I said at the review of television that Dawson Creek, for example, is in a log cabin. It is a small community and the stations are very tiny. Everybody has to help out. They share each other's responsibilities where possible, they help cover each other in different jobs, they promote each other on and off the air and support each other in varying roles.
LISTNUM 1 \l 1239 The engineer sometimes goes no the air when he has to, they setup remotes or they setup remote broadcast. If there's an emergency or a fire or a snowstorm in Dawson Creek, for example, everybody rallies to help the crew that is out in the field. So it really is a small group effort.
LISTNUM 1 \l 1240 THE CHAIRPERSON: And again, when you say everybody, you are including some employees of the Standard Radio stations?
LISTNUM 1 \l 1241 MR. SHAFER: Absolutely.
LISTNUM 1 \l 1242 THE CHAIRPERSON: Do the radio stations provide any news content, for example, to the television stations?
LISTNUM 1 \l 1243 MR. SHAFER: Probable one of the best examples that I could give would be the ferry sinking in Prince Rupert, where one of the first people on site or nearby was one of our radio reporters who also carries a camera. So, the first reports were on the radio station, but also the first footage that we had and that CBC had was from our camera.
LISTNUM 1 \l 1244 THE CHAIRPERSON: Do you anticipate, Mr. Parisien, that these televisions stations will contribute to the network model that you've described earlier for news? In any way, is there a possibility that they could contribute?
LISTNUM 1 \l 1245 MR. PARISIEN: Well, there is a possibility if the system rose out in that fashion, yes, there is a possibility. And because, as Don has said, the news ‑‑ the people are so tightly knit and multi tasking that there is a possibility.
LISTNUM 1 \l 1246 Our intention is to continue to do in those two stations what has been done so far. They're very tied to their community, they serve the community very well, there is interest all around from the community for the services and we just intend to maintain it and if possible, enhance it. That would be one way of enhancing it.
LISTNUM 1 \l 1247 THE CHAIRPERSON: Would enhancement also, therefore, come from the reverse, i.e. would you network model in any way contribute to the provision of local news to those markets?
LISTNUM 1 \l 1248 MR. PARISIEN: Well, that would be great and maybe that will happen, but I don't have any pre‑design or strategy to that effect, except to make our news system gathering available for all the stations and if it works for the television stations, that's going to happen also.
LISTNUM 1 \l 1249 THE CHAIRPERSON: Is the local news program the only program that is produced locally? That is does everything else come from the CBC? Mr. Shafer?
LISTNUM 1 \l 1250 MR. SHAFER: Madame Chair, we produce 13 hours of local programming. Five hours is news, there is five hours of repeats. We run tribal trails, one local religious program and a weekend review at each station.
LISTNUM 1 \l 1251 THE CHAIRPERSON: A weekend review I understand, sir?
LISTNUM 1 \l 1252 MR. SHAFER: A weekend review, a combination of a compilation of the best events or stories of the week.
LISTNUM 1 \l 1253 THE CHAIRPERSON: And is that as per your Affiliation Agreement with CBC? In other words, if you could do more local programming than those 13 hours, would your Affiliation Agreement with CBC allow you to do that?
LISTNUM 1 \l 1254 MR. SHAFER: At present, no, it wouldn't.
LISTNUM 1 \l 1255 THE CHAIRPERSON: It would not?
LISTNUM 1 \l 1256 MR. SHAFER: CBC takes 113 hours week.
LISTNUM 1 \l 1257 THE CHAIRPERSON: Okay. What about your non‑canadian programming? Again, is that a provision of your agreement with CBC in terms of how many hours?
LISTNUM 1 \l 1258 MR. SHAFER: Yes. That's correct, but it's all CBC programming.
LISTNUM 1 \l 1259 THE CHAIRPERSON: All CBC?
LISTNUM 1 \l 1260 MR. SHAFER: Correct.
LISTNUM 1 \l 1261 THE CHAIRPERSON: So, if Astral had a television property that it felt would serve these two markets well, it could not provide those programs to that station with genesis?
LISTNUM 1 \l 1262 MR. SHAFER: That's correct.
LISTNUM 1 \l 1263 THE CHAIRPERSON: It could not.
LISTNUM 1 \l 1264 MR. SHAFER: That's correct.
LISTNUM 1 \l 1265 THE CHAIRPERSON: Are there other synergies that could be realized between the Astral specialty services and the two television stations?
LISTNUM 1 \l 1266 MR. PARISIEN: Not that we know of, no.
LISTNUM 1 \l 1267 THE CHAIRPERSON: Well, thank you. Those are all my questions, but I am going to hand you over now to Commissioner Noël.
LISTNUM 1 \l 1268 COMMISSIONER NOËL: Are you trembling?
LISTNUM 1 \l 1269 MR. PARISIEN: No, but we're all yours.
LISTNUM 1 \l 1270 COMMISSAIRE NOËL: Alors, un petit peu de français pour changer le mode.
LISTNUM 1 \l 1271 Bonjour, madame Laflamme, madame Charest et monsieur Greenberg et monsieur Parisien, monsieur Slaight, monsieur Braide, monsieur Gagnon, monsieur Sabbatini, Mr. Lurie and Mr. Shafer.
LISTNUM 1 \l 1272 I will have discussed a number of things with your this morning, concerning valuation, ownership, et cetera, but first I would like to make a few ‑‑ maybe add to what Mr. Cugini said earlier and ask a few questions.
LISTNUM 1 \l 1273 Monsieur Parisien, on a discuté tout à l'heure de syndication. Monsieur Slaight a parlé de syndication. Au Québec, est‑ce que ça existe la syndication?
LISTNUM 1 \l 1274 MR. PARISIEN: Si vous permettez, je vais répondre en anglais.
LISTNUM 1 \l 1275 COMMISSAIRE NOËL: Oui, c'est correct.
LISTNUM 1 \l 1276 MR. PARISIEN: Pour le bénéfice de mes collègues de Standard surtout.
LISTNUM 1 \l 1277 To the question does it exist in Quebec; not it does not. It's really for the francophone market. It's really a Canadian anglophone phenomenon and there is none in Quebec.
LISTNUM 1 \l 1278 COMMISSIONER NOËL: But isn't it true that some very small stations do purchase programming from the CHORUSES and the Astrals?
LISTNUM 1 \l 1279 MR. PARISIEN: Oh! it's very possible, yes, but it's not a rolled out phenomenon where you see if ‑‑
LISTNUM 1 \l 1280 COMMISSIONER NOËL: Okay, but it's an isolated phenomenon.
LISTNUM 1 \l 1281 MR. PARISIEN: Yes, exact.
LISTNUM 1 \l 1282 COMMISSIONER NOËL: Now, do you believe, monsieur Parisien, and we are talking about emerging artist, do you believe that it's necessary to have only one definition of emerging artist or that we could live with two definitions that coexist for the French and the English markets?
LISTNUM 1 \l 1283 MR. PARISIEN: Yes. I think it has to be two definitions because the environment is so different, the music industry structure, the number of artists that we deal with is so different that ‑‑ and you know, the regulation on radio in French market is completely different than the regulation on radio in English market, so we need two definitions.
LISTNUM 1 \l 1284 I think, Rob, you will agree with that?
LISTNUM 1 \l 1285 MR. BRAIDE: Absolutely, we need two definitions. I would also like to read into the record that, you know, two per cent of this sixty‑six million dollars is going to factor. That's over twenty million dollars. That's going to go a long way to helping emerging artists. It's aside, but yes, I do most definitely believe that two different definitions are necessary. The markets, as we know, are very distinct.
LISTNUM 1 \l 1286 COMMISSIONER NOËL: Thank you. And then, one final little point about your TV operations. Where these TV stations came through the Telemedia transaction that you made earlier, Mr. Slaight, I guess?
LISTNUM 1 \l 1287 MR. SLAIGHT: That's correct.
LISTNUM 1 \l 1288 COMMISSIONER NOËL: Okay. So, there is sort of an anomaly in the overall picture.
LISTNUM 1 \l 1289 MR. SLAIGHT: Right. We had no intention of getting into the TV business at that point in time, but I think we've done a good job in maintaining and running the TV station now.
LISTNUM 1 \l 1290 COMMISSIONER NOËL: And Mr. Parisien, are you dreaming of buying CTV?
LISTNUM 1 \l 1291 MR. PARISIEN: I am not calling it. I am not calling it a ‑‑
LISTNUM 1 \l 1292 COMMISSIONER NOËL: Or Canwest?
LISTNUM 1 \l 1293 MR. PARISIEN: No, no, no. I am not calling it an anomaly; I am calling it a nice‑to‑have. Not necessarily a must‑have, but we're happy to have them.
LISTNUM 1 \l 1294 COMMISSIONER NOËL: A nice‑to‑have and I gather from what Mr. Shafer said earlier, that there is no ‑‑ and I'll use a French term for lack of the proper English one ‑‑ étanchéité between the newsrooms in the operation.
LISTNUM 1 \l 1295 MR. PARISIEN: No. From what we all understand, it's multi tasking and they are a lot. It's a very small community and I think the fact that they do share so much because of a better service of that community also.
LISTNUM 1 \l 1296 COMMISSIONER NOËL: Thank you very much. Those were my frivolous questions. Now, let's get to the meat, and I'm putting my glasses. I have to be able to re‑read my pattes de mouche here.
LISTNUM 1 \l 1297 There is four points that I would like to discuss this morning. The first one will be the value of the transaction; the second one will be the potential effect of common ownership, particularly in the Montreal and Ottawa‑Gatineau market as well as the potential for destabilization of the national and local advertising costs in those markets and the potential for homogenization of the news and information. That's very hard in English. In French it's easy, but in English, it's more complicated. And the possible reduction of overall programming diversity.
LISTNUM 1 \l 1298 Thirdly; I would like to address the ownership and that's going to be very short because of the fact that you have finally chosen your scenario and we received documentation. There are a few things missing that I will ask you to file.
LISTNUM 1 \l 1299 And finally, I would like to discuss corporate renewals, given the fact that many of the licences of the Standard Life will expire in 2010 and 2011 and I would like to address, you know, some of that.
LISTNUM 1 \l 1300 Value of the transaction. You established a value of the transaction in the Purchase Agreement and the total consideration is, according to the Purchase Agreement, $1,082,369,866 payable in cash and in shares.
LISTNUM 1 \l 1301 The cash consideration totals $879,882,800 and the share part totals $4,759,087 Astral Class A non‑voting shares, a weighed average price of $42.62, totalling $202,487,066.
LISTNUM 1 \l 1302 You have all those figures in front of you, I'm sure and, Mr. Gagnon, you have to open your ears because I think you will be ‑‑ you will have to interfere somewhere in here.
LISTNUM 1 \l 1303 So, I'm sorry for the length of the question, but I will come to the meat later on. I am just trying to stage what I have to tell you.
LISTNUM 1 \l 1304 This weighed average price was arrived at by using the trades over a period of five days, from Tuesday April 10, to Monday April 16 inclusive. That means two days before the announcement, the day of the announcement and two days after the announcement of the transaction that was announced on April 12.
LISTNUM 1 \l 1305 You also based that choice, using Chapter 1581 of the CICA Handbook on Business Combinations at paragraph 25 and you quote in one of your answers to the Lettre de lacunes, the market value ‑‑ I'll use the English version :
"The value of the shares is based on their market price over a reasonable period before and after the date, the terms of the business combinations are agreed to and announced."
LISTNUM 1 \l 1306 And that is the bottom part of paragraph 25.
LISTNUM 1 \l 1307 But in the same paragraph the gap also states :
"Accounting for a business combination effected by issuing shares, the quote of the market price of the shares issued generally is used to estimate the fair value of the acquired enterprise after recognizing possible effects of price fluctuations, quantities trade issues, costs and similar items."
LISTNUM 1 \l 1308 Because the market was worried that Astral could pay too much to acquire Standard assets, the value of the class A shares went down considerably during the negotiation period, closing at $41.58 before the public announcement down from a weighed average price of $46.30 between January 22nd and February 2nd.
LISTNUM 1 \l 1309 But after the announcement, the share price rebounded by $1.17 on April 12 and at $42.85 and by another $0.21 the next day, to reach $42.96. And I have somewhere ‑‑ somewhere I do have those. Ah! Voilà. Okay.
LISTNUM 1 \l 1310 So, given that, and here is the question: Given that the uncertainty in the market was only removed after the announcement, would it not be preferable to calculate the weighed share price by using the five‑day period starting on April 12, the day of the announcement and ending on April 18, rather than from April 10 to 16.
LISTNUM 1 \l 1311 And, of course, the weighed average price would be different. It would be $42.94 and that's according to the calculation you submitted to us instead of $42.62, that's $0.32 difference and it could increase the value of the transaction by that amount multiplied by the number of shares.
LISTNUM 1 \l 1312 Monsieur Parisien.
LISTNUM 1 \l 1313 MR. PARISIEN: Well, I'll give you the short form answer to that and then I will let Claude Gagnon give you details and before giving Claude the chance to ‑‑ I'll give you the details and I'll also talk about valuation in general.
LISTNUM 1 \l 1314 The short answer to that is "no". The value of the share has no impact on the price of the transaction, okay, and Claude will address that for you.
LISTNUM 1 \l 1315 This deal was dealt between a motivated vendor and a motivated purchaser. It was negotiated at arms' length, in good faith. We used a multiple formula, which is something you see in all industries and it was applied with the right standards.
LISTNUM 1 \l 1316 It was also backed by our advisors and we have filed with the Commission documentation to that effect and there are three different documents. One is a KPMG document, a National Bank document and the Ernst & Young document.
LISTNUM 1 \l 1317 So our advisors did confirm that the price in the negotiation reflected a fair market value as agreed upon by both parties. And maybe Claude can explain to you what the documents refer to and why it doesn't affect ‑‑ why the share price doesn't affect the price of the transaction.
LISTNUM 1 \l 1318 COMMISSIONER NOËL: Maybe just before that, do you mean to say that the cash part would have varied if the price had been ‑‑
LISTNUM 1 \l 1319 MR. PARISIEN: No. I think we should listen to the experts explanation.
LISTNUM 1 \l 1320 COMMISSIONER NOËL: Merci, monsieur Parisien. Monsieur Gagnon, je suis tout ouïe.
LISTNUM 1 \l 1321 MR. GAGNON: Thank you, Jacques, for the compliment.
LISTNUM 1 \l 1322 Alors, madame la Commissaire, to specifically reply to your question, would it be preferable to use a five‑day period subsequent to the announcement, the answer to that is : no, the rules are quite clear that the market value of the shares to be established on the basis of the trading price over a short period of time, prior to the announcement and a short period of time subsequent to the announcement.
LISTNUM 1 \l 1323 So, we have to cover a period prior to the announcement of the binding agreement between the two parties.
LISTNUM 1 \l 1324 Yes, we did supply that information at the request of the Commission and I think frankly that information demonstrates that the share price did not fluctuate significantly after the, say, the three‑day period beginning with the date of the announcement.
LISTNUM 1 \l 1325 So, the rules are quite clear and we have to abide by the rules. We're a public corporation and we report on the basis of Canadian generally accepted accounting principles and we have followed those.
LISTNUM 1 \l 1326 As a matter of fact, the example that is depicted in the CICA Handbook, it so happens covers the same period of time. Two days prior to the announcement of the binding agreement, the day of the announcement and two days subsequent, hence, the price of $42.62 a share.
LISTNUM 1 \l 1327 I'll just correct something that monsieur Parisien mentioned and that if the share price varies, of course, the value of the share component is going to vary. It could have varied up or down between the day of the non‑binding agreement between the two parties and the day of the binding agreement.
LISTNUM 1 \l 1328 So, either way that component could have varied. It so happens that the share price did go down. It could have gone up for other reasons, but we've reported on the basis of the rules.
LISTNUM 1 \l 1329 COMMISSIONER NOËL: Merci, monsieur Gagnon.
LISTNUM 1 \l 1330 Now, Mr. Parisien, if the Commission was to determine if, in its wisdom and despite your arguments, that the value of the shares is actually $42.94 and not $42.62, the value of the transaction would increase by $1,520,316. Could you comment on this possible approach?
LISTNUM 1 \l 1331 MR. PARISIEN: Well, I would be very surprised if the Commission would defy the general recognized Canadian accounting principles and not follow the rule. I would be surprised to see the Commission go in that direction.
LISTNUM 1 \l 1332 COMMISSIONER NOËL: Merci, monsieur Parisien pour ce conseil de sage.
LISTNUM 1 \l 1333 Maintenant, the Purchase Agreement provides that Mr. Slaight will be appointed to the Board of Astral if the transaction is approved.
LISTNUM 1 \l 1334 In an answer to a deficiency letter, you confirmed that the fees payable to directors on the Board of Astral are $40,000 a year, what fee payable in two instalments, 20‑20.
LISTNUM 1 \l 1335 Could you tell us why this amount should not be added to the value of the transaction or do you not consider it to be a remuneration?
LISTNUM 1 \l 1336 MR. PARISIEN: It is definitely not remuneration. Mr. Slaight will have no dealings or no responsibility in the operation of the Standard properties nor of Astral Media Radio. He was invited to sit on the Board of Astral and that fee is paid as a compensation for his role as an administrator director of Astral, sitting on the Board the same way we remunerate all our other directors.
LISTNUM 1 \l 1337 COMMISSIONER NOËL: But it's also a financial advantage for him.
LISTNUM 1 \l 1338 MR. PARISIEN: That's his tax problem, but it has nothing to do with the operation of the radio stations.
LISTNUM 1 \l 1339 MR. GREENBERG: If I can just add something to that, Commissioner Noël. It is customary for someone who is a large shareholder of a corporation to also have a seat on the Board.
LISTNUM 1 \l 1340 COMMISSIONER NOËL: Especially if his shares are non‑voting.
LISTNUM 1 \l 1341 MR. GREENBERG: Well, 98 per cent of all shares of Astral are non‑voting, but the point is that he is compensated as a director. The reason he is on the Board is because he is going to become a significant shareholder.
LISTNUM 1 \l 1342 As you know, Board of Directors are approved and voted on every year. There is no guarantee he is there for one year, 10 years or 20 years. So, it's quite customary. We have had it in the past when a large corporation bought a significant amount of shares, we've offered them.
LISTNUM 1 \l 1343 I mean, we offered Mr. Slaight to sit on the Board the same way we offered other companies when they had a large shareholding to sit on the Board and they get the exact same remuneration all that year.
LISTNUM 1 \l 1344 COMMISSIONER NOËL: And there is also some liabilities that are attached to the duty of directors.
LISTNUM 1 \l 1345 MR. GREENBERG: Absolutely.
LISTNUM 1 \l 1346 COMMISSIONER NOËL: That are probably far more important than the $40,000 a year of compensation.
LISTNUM 1 \l 1347 MR. GREENBERG: I would think so.
LISTNUM 1 \l 1348 COMMISSIONER NOËL: But some of our personnel are questioning the validity of adding this to the transaction or not and since there are no terms for the appointment of a director because he is re‑elected every year, as you say, by the voting shareholders, but our personnel or our staff estimated that five years would be a reasonable time frame to evaluate the value of this item to be added to the value of the transaction, at $200,000.
LISTNUM 1 \l 1349 Bear with me, we are not ‑‑ and I am not talking about the bear here ‑‑ so, I've heard your comments. It's clear that you don't think that this should be added to the value of the transaction. But in the hypothesis that the Commission determines that the value of the transaction is increased by those two amounts that I have mentioned, $1,520,316 based on the weighed average price of the shares, $42.94 versus $42.62, and by an additional $200,000, i.e. the remuneration paid to Mr. Slaight as a director of the company, based on a five‑year tenure, this would bring the total value of the transaction to $1,084,090,316, a total increase of $1,720,316 over more than a billion dollars.
LISTNUM 1 \l 1350 And using the same allocation you used between the regulated and the non regulated assets, i.e. 94.83 per cent for the 52 radio stations and 1.54 per cent for the two TV stations, staff calculated that an additional $110,469 should be payable as benefits, for a total of $61,683,000 for the radio assets and $1,670,000 for the TV assets.
LISTNUM 1 \l 1351 Would you agree to file an amended benefits plan to take into consideration those additional amounts?
LISTNUM 1 \l 1352 MR. PARISIEN: I think the benefit package that we have offered is ‑‑ you know, it's one of the most generous package ‑‑ it is the most generous package in the radio industry of Canada. It has conformed to all of the Commission's regulation, to general accepted accounting principles and to the way businesses are run, especially public companies with board and members on the boards.
LISTNUM 1 \l 1353 I think it would be a very dangerous precedent and it would be unfair because all the cases have not been treated the same way. I know Astral has gone through another case when it purchased Radio Mutuelle and monsieur Beauchamp joined the Board and we never considered his compensation as a Board member at that time.
LISTNUM 1 \l 1354 So, why would it change today?
LISTNUM 1 \l 1355 So, I am not sure that's the right direction to go.
LISTNUM 1 \l 1356 COMMISSIONER NOËL: Merci, monsieur Parisien. I have one final question on the topic of valuation of the transaction and I would like you to give us your point of view on materiality.
LISTNUM 1 \l 1357 Could you tell us what are your views on the materiality of the changes we just discussed and what should we do with that?
LISTNUM 1 \l 1358 MR. PARISIEN: Claude, do you want to address the materiality issue?
LISTNUM 1 \l 1359 MR. GAGNON: You're talking about the two adjustments that ‑‑
LISTNUM 1 \l 1360 COMMISSIONER NOËL: Voilà.
LISTNUM 1 \l 1361 MR. GAGNON: ‑‑ the staff may deem, the Commission may deem ‑‑
LISTNUM 1 \l 1362 COMMISSIONER NOËL: Yes. If we were in pure accounting, would that be material?
LISTNUM 1 \l 1363 MR. GAGNON: To answer that question, pure accounting, the answer would be "no", but I think what monsieur Parisien expressed here has nothing to do with materiality. It's more a matter of principle.
LISTNUM 1 \l 1364 COMMISSIONER NOËL: Merci beaucoup, monsieur Gagnon. Alors nous allons laisser le sujet de l'évaluation de la transaction et on va parler de common ownership.
LISTNUM 1 \l 1365 Given, that you will own four FM and one AM stations in Montreal, that's two FM in French, two FM in English and one AM in English, and that you will own three FM in the Ottawa‑Gatineau area, and that's two French and one English, if the transaction is approved, is there a risk that it could destabilized the cost of local and national advertising in those two markets?
LISTNUM 1 \l 1366 MR. PARISIEN: No, that could not happen and I will explain why. I think Rob would like to comment on that and Mr. Sabbatini also.
LISTNUM 1 \l 1367 You know, at the end of the day in the radio industry, rates and tariffs are not established by the radio operator. They're established by the marketplace and that's a fact. Any broadcaster in radio would come here and say that you can push your tariff as much as you want, there is ‑‑ the ultimate decision is done by or is made up by the clients.
LISTNUM 1 \l 1368 To address a specific situation in the English and French market, I just want to remind the Commission that, you know, this has been debated in the last five years at length in Canada, through the Commission, through the Competition Bureau and that are measuring bureau, the BBM Offices consider the English market as one market and the French market as another market.
LISTNUM 1 \l 1369 The Competition Bureau in recent cases where we have been involved has also established that Montreal French and Montreal English are two different markets, just as the BBM reports them as two different markets.
LISTNUM 1 \l 1370 And I think the Commission also supported that in recent decisions and in policies.
LISTNUM 1 \l 1371 We consider them as two different markets and we cannot add them together to talk about the size of the share in those two markets.
LISTNUM 1 \l 1372 In the Montreal market something also particular is the fact that CHORUS is in the same situation, as Astral will be. They have French stations, English stations and that doesn't seem to be an issue.
LISTNUM 1 \l 1373 I also know that Rob has spent 30 years, even thought he doesn't look like it, living through that, so maybe he can add something on that.
LISTNUM 1 \l 1374 COMMISSIONER NOËL: Only his hairdresser knows.
LISTNUM 1 \l 1375 MR. BRAIDE: Madame Noël, Montréal est une ville très très bien intégrée au niveau culturel. We are very well‑integrated culturally in Montreal. The English and French communities move virtually seemlessly amongst each other.
LISTNUM 1 \l 1376 However, in terms of radio sales, we might as well be the East Coast and the West Coast. They are very very distinct markets. It has been the source of some frustration for me over the 30 years of my career in Montreal that we haven't been able to get quite for the francophone tuning on our radio stations, therefore selling a reduced percentage of our cumulative audience.
LISTNUM 1 \l 1377 I have fought these Astral guys hard on this over the past years and I have lost at every turn.
LISTNUM 1 \l 1378 However, you know, I understand your concern. On the face of things, it would be perplexing, but from my personal experience as an anglo‑québécois and as a business person in Quebec, I can assure you that this does not change the face of the market place at all. They are two marchés séparés.
LISTNUM 1 \l 1379 COMMISSIONER NOËL: Et, monsieur Braide, je sais que vous êtes un montréalais pure laine, mais what about the Ottawa‑Gatineau market? Do we have the same phenomenon in the Ottawa‑Gatineau market?
LISTNUM 1 \l 1380 MR. SABBATINI: I can talk about the Ottawa market and just for Montreal ‑‑
LISTNUM 1 \l 1381 THE CHAIRPERSON: Ah! monsieur de l'affichage extérieur.
LISTNUM 1 \l 1382 MR. SABBATINI: Well, since you give me the opportunity to talk about outdoor, outdoor is a real ‑‑
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1383 MR. SABBATINI: One of the first lunches I had with Rob, I just made a joke to Rob and I said : this is great. You guys are now going to move in our offices on Papineau and René‑Lévesque. So, as I was saying that, I saw his face turn to white because most of the people working at CHOM, CJAD and mix never went so much east in Montreal, So ‑‑
LISTNUM 1 \l 1384 COMMISSIONER NOËL: And what about the team?
LISTNUM 1 \l 1385 MR. SABBATINI: So, that shows you the big difference between the French and the English market in Montreal.
LISTNUM 1 \l 1386 And first, before I go to the Ottawa‑Gatineau market, I should say that in the Montreal market, we will have five stations if this transaction goes through, just to remind you that CHORUS has six. And now, CHORUS has just teamed up with COGECO and Radio Nord to form a national rep shop where they have eight stations altogether with 55 shares in the French market to sell to advertisers.
LISTNUM 1 \l 1387 So, you know, again, I had to reflect on my career in radio after 20 years and I was very unsuccessful to increase rates and now I understand why, because they have no control on rates and we have no control on rates. Rates in radio go up when the ratings go up and they go down when the ratings go down.
LISTNUM 1 \l 1388 In the Ottawa‑Gatineau market ‑‑ we have our GM who is in the room ‑‑ we are a small player and a very small player in the Ottawa English market.
LISTNUM 1 \l 1389 In Ottawa English, Rogers has four stations and they have like 26 shares. CHUM, they have four stations plus TV and they have 40 shares. Newcap has two stations with 20 shares. And the Standard radio station has one FM with 11 shares.
LISTNUM 1 \l 1390 So even if we teamed up, even though it's two different markets, with our small French station we are unable to reach the English advertisers. We are not a dominant player, we are not even a leader, we are a very small player compared to these guys.
LISTNUM 1 \l 1391 CONSEILLERE NOËL : Merci beaucoup, Monsieur Sabbatini de cet éclairage.
LISTNUM 1 \l 1392 Maintenant, the other team I announced, is there a risk of homogenization of the news and information, especially in the Montreal and the Ottawa‑Gatineau market?
LISTNUM 1 \l 1393 MR. PARISIEN: No, there is no danger of homogenization ‑‑
LISTNUM 1 \l 1394 COMMISSIONER NOËL: Ah, tu n'es pas mieux que moi.
‑‑‑ Rires / Laughter
LISTNUM 1 \l 1395 MR. PARISIEN: ‑‑ for the newsroom in Ottawa or Montreal, and to that effect, Madam Commissioner, anywhere else.
LISTNUM 1 \l 1396 The issue of diversity is an important one to us. There will be no reduction of diversity. We are substituting one broadcaster by another. We are not reducing the number of stations.
LISTNUM 1 \l 1397 We are maintaining and, if possible, enhancing the news programming and the local programming and so on and so forth. So no, there will not be any reduction.
LISTNUM 1 \l 1398 COMMISSIONER NOËL: What you are telling us is that finally what we are doing ‑‑ if the transaction is approved, what we would be doing is reconstituting the old Télémédia ‑‑
LISTNUM 1 \l 1399 MR. PARISIEN: It is maintaining ‑‑
LISTNUM 1 \l 1400 COMMISSIONER NOËL: ‑‑ that was spanning across the country?
LISTNUM 1 \l 1401 MR. PARISIEN: ‑‑ maintaining the editorial voices as they are, yes, which reflects what was there five‑six years ago.
LISTNUM 1 \l 1402 COMMISSIONER NOËL: The Great Atlantic and Pacific Company. You should rebrand it that way.
LISTNUM 1 \l 1403 Finally on that topic, although you claim in your supplementary brief that you will remain a medium‑size player after the transaction, and I guess you are comparing yourself to the CTVs and Rogers and other players of the world ‑‑ I see Mr. Lind in the back of the room here ‑‑ you will become if the transaction is approved the largest radio broadcaster in the country.
LISTNUM 1 \l 1404 Could this be an advantage in terms of national sales and advertising?
LISTNUM 1 \l 1405 MR. PARISIEN: No, it is not because, again, it has to be looked at market by market and we are not necessarily the number one or the number two or necessarily the number three station in all the markets where we are present.
LISTNUM 1 \l 1406 We have markets where we are stronger and markets where we are weaker and as Mr. Sabbatini mentioned, so goes the BBM, so goes the revenue, and it is more a reflection of our performance than it is size.
LISTNUM 1 \l 1407 If you look at size, I think there are two criteria we should consider to establish a comparison and they are generally recognized by the industry.
LISTNUM 1 \l 1408 One is the listening hours. So when we put all of our stations, the Astral Media stations and the 52 stations that Standard is operating, we get, if we base it on the last BBM we had, a 19 percent share of the Canadian market, followed very closely by Corus at 17.
LISTNUM 1 \l 1409 And if we want to compare our leadership to the radio industry, well, I don't think that is dominant, for sure, especially since the word "dominant," if you look in a standard dictionary ‑‑ standard in the sense of Webster or these kinds of dictionaries ‑‑
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1410 MR. PARISIEN: ‑‑ you will see that it is something ‑‑
LISTNUM 1 \l 1411 COMMISSIONER NOËL: It is not Mr. Slaight's definition.
LISTNUM 1 \l 1412 MR. PARISIEN: ‑‑ that pertains to sovereignty.
LISTNUM 1 \l 1413 And also, the other criteria is national sales, revenues ‑‑ not national but all revenues, and if you look at the last compilation of statistics, the English market shares were for the combined Astral and Standard at 22 percent, followed by Corus at 18 and Rogers at 14.
LISTNUM 1 \l 1414 Now, we all know how volatile radio is. Three BBMs from now, that 4 or 3 percent spread could change from one player to the other. You lose two or three market shares in Toronto and that makes a helluva difference.
LISTNUM 1 \l 1415 So I submit that no, there is no way that that leadership can turn into controlling prices or controlling rates and such awful thoughts.
LISTNUM 1 \l 1416 COMMISSIONER NOËL: Market dominance.
LISTNUM 1 \l 1417 MR. SLAIGHT: If I could just add another small point. In terms of national sales, and we have dealt with it and it is difficult, Corus and Rogers sell together nationally in most marketplaces, so they will continue to dominate in terms of putting those two audiences together.
LISTNUM 1 \l 1418 COMMISSIONER NOËL: Except in Quebec where they sell with Cogeco and Radio Nord ‑‑
LISTNUM 1 \l 1419 MR. SLAIGHT: Yes.
LISTNUM 1 \l 1420 COMMISSIONER NOËL: ‑‑ RNC Media.
LISTNUM 1 \l 1421 MR. SABBATINI: On the national side, I should remind you that nothing is going to change.
LISTNUM 1 \l 1422 We are already a client of IMS and we have been a client of IMS for many, many years. So that doesn't change anything in Toronto, that doesn't change anything in Vancouver, where, like Gary mentioned, CBS is a much stronger national rep firm.
LISTNUM 1 \l 1423 And in terms of French or Ottawa‑Gatineau, we have been rep'd by IMS, so we have been together for close to 10 years now. So this transaction doesn't change anything in terms of adding stations or control.
LISTNUM 1 \l 1424 CONSEILLERE NOËL : Merci beaucoup, Monsieur Sabbatini.
LISTNUM 1 \l 1425 I will now switch to ownership and I would just ‑‑ well, you confirmed by a letter dated August 17th that Astral Media Radio General Partnership would be the licensee of the undertakings covered by the transaction if it is approved.
LISTNUM 1 \l 1426 The partners will be Astral Media Radio (Toronto) Inc., a wholly owned subsidiary of Astral Media Radio Inc., instead of doing it directly with Astral Media Radio Inc., and the other partner will be 4382072 Canada Inc., a wholly owned subsidiary of Astral Media Inc.
LISTNUM 1 \l 1427 Could you refile an executed partnership agreement between Astral Media Radio (Toronto) Inc. and the numbered company?
LISTNUM 1 \l 1428 MR. PARISIEN: Yes, absolutely.
LISTNUM 1 \l 1429 COMMISSIONER NOËL: Okay. Could you also refile an amended Déclaration d'enregistrement de la société with the proper partners?
LISTNUM 1 \l 1430 MR. PARISIEN: Yes.
LISTNUM 1 \l 1431 MME LAFLAMME : Elle est déjà faite et je l'ai en main. Je pourrais la laisser tout à l'heure.
LISTNUM 1 \l 1432 CONSEILLERE NOËL : Merci.
LISTNUM 1 \l 1433 Maintenant, dernier point que je voulais aborder avec vous, the corporate renewals.
LISTNUM 1 \l 1434 I have a little chart here in front of me of renewals for the next seven years of the Standard radio licences: one in 2007; four in 2008; two in 2009; then we jump to 17 in 2010; 13 in 2011; and then it trickles down to barely nothing in 2014.
LISTNUM 1 \l 1435 So the bulk of the renewals are concentrated in 2010 and 2011, 30 out of 53, and the balance is scattered across the board.
LISTNUM 1 \l 1436 So would you agree if the transaction is approved to have administrative renewals of all the licences expiring in the years 2007 to 2010 inclusively, that means 24 licences, and administrative renewal 2011, at which time the Commission could review the renewal applications of 37 out of the 53 stations?
LISTNUM 1 \l 1437 MR. PARISIEN: Yes, we would.
LISTNUM 1 \l 1438 CONSEILLERE NOËL : Alors, mesdames, messieurs, je vous remercie beaucoup d'avoir participé à cet échange, et je n'ai plus de questions.
LISTNUM 1 \l 1439 Madame la Présidente.
LISTNUM 1 \l 1440 THE CHAIRPERSON: Thank you, Commissioner Noël.
LISTNUM 1 \l 1441 We will be taking a break but before we do I just wanted ‑‑ for those of you planning your day, we will break at noon for lunch for an hour and a half. A couple of us have a meeting back at the CRTC offices.
LISTNUM 1 \l 1442 So we will now take a break for ‑‑ which may also mean that we will interrupt Ron Williams when he is asking his questions but so be it.
LISTNUM 1 \l 1443 So we will now take a 15‑minute break. We will resume at 11:10.
LISTNUM 1 \l 1444 MR. PARISIEN: Thank you.
LISTNUM 1 \l 1445 THE CHAIRPERSON: Thank you.
‑‑‑ Upon recessing at 1055 / Suspension à 1055
‑‑‑ Upon resuming at 1112 / Reprise à 1112
LISTNUM 1 \l 1446 THE CHAIRPERSON: Order, please.
LISTNUM 1 \l 1447 Commissioner Williams.
LISTNUM 1 \l 1448 COMMISSIONER WILLIAMS: Good morning, Mr. Greenberg, Mr. Slaight, Mr. Parisien and the Astral/Standard panel members.
LISTNUM 1 \l 1449 I will direct my questions to you, Mr. Parisien, and you can decide the most appropriate way to answer.
LISTNUM 1 \l 1450 The areas that I am going to be covering in the next little while will deal with tangible benefits, compliance and outstanding benefits payments, and Canadian content development with respect to its regulatory change.
LISTNUM 1 \l 1451 To begin, I would like to confirm that the benefits arising from this transaction will be exclusive of any other commitment, sponsorship, CCD commitment, outstanding benefit or other source of funding already directed at any of these initiatives from either Astral or Standard.
LISTNUM 1 \l 1452 MR. PARISIEN: That is right.
LISTNUM 1 \l 1453 COMMISSIONER WILLIAMS: I would also like to confirm whether these benefits would be tied to specific undertakings or would be a corporate payment.
LISTNUM 1 \l 1454 MR. PARISIEN: I'm sorry, could you elaborate a bit on that question?
LISTNUM 1 \l 1455 COMMISSIONER WILLIAMS: I guess that you could tie the benefit to individual pieces of the transaction ‑‑
LISTNUM 1 \l 1456 MR. PARISIEN: No. So, in that sense, they will be corporate.
LISTNUM 1 \l 1457 COMMISSIONER WILLIAMS: In the case of one of your benefits to the Canadian Communications Foundation, the initiative does not appear to directly support, promote, train or develop Canadian musical or spoken word talent. I wonder if you would consider the possibility that this initiative may not be acceptable and you may wish to explore the manner in which Astral would redirect funding, should we find that this ‑‑
LISTNUM 1 \l 1458 MR. PARISIEN: Maybe we should take some time to explain that benefit, because I think it is an interesting benefit to consider.
LISTNUM 1 \l 1459 COMMISSIONER WILLIAMS: That would be very good.
LISTNUM 1 \l 1460 MR. PARISIEN: We are fortunate to have with us two experts on benefits, Claude Laflamme and Rob Braide, so I will let them explain to you what it is.
LISTNUM 1 \l 1461 MR. BRAIDE: Thank you, Jacques.
LISTNUM 1 \l 1462 Commissioner, referring quickly to paragraphs 169 and 170 of our supplementary brief, there is an explanation of what this benefit would promote; also referring to paragraph 108 of the new commercial policy that the Commission instituted, or is about to institute.
LISTNUM 1 \l 1463 Quoting from paragraph 108:
"All CCD initiatives must involve direct expenditures and must be allocated to the support, promotion, training and development of Canadian musical and spoken word talent, including journalists."
LISTNUM 1 \l 1464 It is our strong belief that the Canadian Communications Foundation portion, which is $140,000 during the course of the licence, at $20,000 per year, is part of the global initiative which we are trying to present to the Commission today.
LISTNUM 1 \l 1465 We have a wide variety of items, adding up to, as I pointed out, over $10 million. Each of them takes a step.
LISTNUM 1 \l 1466 I spoke of the ecology of our benefit package, and we believe that it starts when the individual picks up the pen to write the song. We are working with the Canadian Songwriters Association, again to the extent of over $1 million over the seven years of the licence.
LISTNUM 1 \l 1467 As well, CARAS MusiCan will be putting musical instruments into the hands of young Canadians, for $100,000 a year, for $700,000 for the term of licence.
LISTNUM 1 \l 1468 I can refer to several other items.
LISTNUM 1 \l 1469 We see the donation to the Canadian Communications Foundation as kind of the cherry on the sundae, if you will, in that you have to understand history, and there needs to be a place, in our opinion, that you can point to and say: Here is an archive of Canadian broadcasting. Here is what spoken word broadcasters, journalists, can look to to understand where we came from, and also to have access to some of the history of Canadian broadcasting, to further make them understand what Canadian broadcasting is all about.
LISTNUM 1 \l 1470 We believe that it does, very clearly, fit into, as I mentioned, paragraph 108 of the new commercial policy.
LISTNUM 1 \l 1471 If that answers your question ‑‑
LISTNUM 1 \l 1472 COMMISSIONER WILLIAMS: It does. It gives good clarification. Thank you, Mr. Braide.
LISTNUM 1 \l 1473 Does Astral feel it would be appropriate to submit annually a report detailing the manner in which the required benefits have been extended, including the amounts and the recipients, so that it's easier for us to track?
LISTNUM 1 \l 1474 MR. PARISIEN: Absolutely. We would volunteer for that.
LISTNUM 1 \l 1475 COMMISSIONER WILLIAMS: I would like to talk a bit more about the Astral benefit package, along the lines of consideration of the pros and cons of different approaches to administering benefits packages.
LISTNUM 1 \l 1476 If you could touch on the following themes: long‑term versus short‑term funding; independently administered versus broadcaster administered funds; regional voices and regional representation; opportunities for new players vis‑à‑vis independent production; flexibility within the creative process; and responsiveness to broadcasters' needs and viewer demand.
LISTNUM 1 \l 1477 I recognize that that is long, so as you work your way through I will tick them off, and if we miss some I will come back to them.
LISTNUM 1 \l 1478 MR. PARISIEN: I will let Claude and Rob address the specifics of that, but the general principle that we tried to lay out when we drafted our benefit package was to, again, continue a lot of what Standard had already done and committed to in the field of the music industry, including emerging artists, evidently.
LISTNUM 1 \l 1479 Also, to favour local communities as much as possible, and I think we have succeeded in doing that.
LISTNUM 1 \l 1480 So in terms of long‑term, short‑term, and our overall commitment, we are dedicated to making those benefits happen.
LISTNUM 1 \l 1481 As you know, we have provided for an administrator in our operating costs, not in the benefits themselves. This is pretty unique. It will be someone on staff with Astral, paid by Astral from its operating budgets and not the benefits, who will administer all of this. That person will monitor the feedback from the benefits and the effects of the benefits, and that person will probably be the one who will be doing the annual report that we talked about in your previous question.
LISTNUM 1 \l 1482 In that report, you will also be able to follow the long‑term and shorter term effects of the benefits.
LISTNUM 1 \l 1483 Rob may want to add something to that.
LISTNUM 1 \l 1484 MR. BRAIDE: I am excited about this new position. It is important to underline that this is new head count for Astral. This individual is not being charged against the benefit package.
LISTNUM 1 \l 1485 This individual ‑‑ let's say about $100,000 a year ‑‑ will be in charge of administering a portion of our benefits. The vast majority of those benefits will be administered by the individual organizations that we are giving the money to.
LISTNUM 1 \l 1486 For example, Canadian Music Week, the expansion of the Canadian Radio Star Competition ‑‑ for a total of $2,175,000 during the term of the licence ‑‑ Canadian Music Week would administer this. This would not be done in‑house at Astral.
LISTNUM 1 \l 1487 In that regard, I would like to refer the Commission to its Decision 2005‑247 regarding Sirius Canada. In that decision the Commission said that :
"it found it quite acceptable that the management of the discretionary portion of these funds to the eligible third parties would be done by Sirius."
LISTNUM 1 \l 1488 &nbs