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Please note that the Official Languages Act requires that government publications be available in both official languages.
In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.
TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
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:
Best Western Inn Best Western Inn
2402 Highway 97 North 2402, autoroute 97 Nord
Kelowna, B.C. Kelowna (C.-B.)
October 30, 2007 Le 30 octobre 2007
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
VARIOUS BROADCASTING APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
BEFORE / DEVANT:
Rita Cugini Chairperson / Présidente
Ronald Williams Commissioner / Conseiller
Michel Morin Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTES:
Cindy Ventura Secretary / Secrétaire
Véronique Lehoux Legal Counsel /
Francine Laurier-Guy Hearing Manager /
Gérante de l'audience
HELD AT: TENUE À:
Best Western Inn Best Western Inn
2402 Highway 97 North 2402, autoroute 97 Nord
Kelowna, B.C. Kelowna (C.-B.)
October 30, 2007 Le 30 octobre 2007
- iv -
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA
PRESENTATION BY / PRÉSENTATION PAR:
Vista Radio Ltd. 5 / 26
Sun Country Cablevision Ltd. 46 / 256
Harvard Broadcasting Inc. 89 / 494
CTV Limited 123 / 678
Clear Sky Radio Inc. 205 / 1080
Touch Canada Broadcasting 246 / 1292
Kelowna, B.C. / Kelowna (C.‑B.)
‑‑‑ Upon commencing on Tuesday, October 30, 2007
at 0930 / L'audience débute le mardi
30 octobre 2007 à 0930
LISTNUM 1 \l 11 THE SECRETARY: Attention, please. Please be seated, we are preparing to start.
LISTNUM 1 \l 12 THE CHAIRPERSON: Good morning, everyone. Welcome to this public hearing.
LISTNUM 1 \l 13 My name is Rita Cugini and I am the CRTC Regional Commissioner for Ontario. I will be presiding over this hearing.
LISTNUM 1 \l 14 Joining me on the panel are my colleagues Michel Morin, National Commissioner, and Ronald Williams, Regional Commissioner for Alberta and the Northwest Territories.
LISTNUM 1 \l 15 The Commission team assisting us includes Francine Laurier‑Guy, Hearing Manager and Senior Radio Analyst; Véronique Lehoux, Legal Counsel; and Cindy Ventura, Hearing Secretary. Please speak with Ms Ventura if you have any questions with regard to hearing procedures.
LISTNUM 1 \l 16 At this hearing the panel will consider ten applications to operate a new English‑language FM commercial radio station in Kelowna. We will also study an application to operate a new English‑ and native‑languages FM Type B native radio station in the same market.
LISTNUM 1 \l 17 We will begin with the application by Vista Radio Limited and then examine the applications in the order presented in Broadcasting Notice of Public Hearing CRTC 2007‑12.
LISTNUM 1 \l 18 Some applications are competing technically for the use of the same frequencies.
LISTNUM 1 \l 19 We will then review an application by the Community Media Education Society for a licence to operate a community programming television station in certain areas of British Columbia and Alberta.
LISTNUM 1 \l 110 Finally, we will examine two applications by Jim Pattison Broadcast Group Limited. The first application is to acquire the assets of CKIZ‑FM in Vernon and its transmitter from Rogers Broadcasting Limited, and the second is to acquire the assets of CIGV‑FM Penticton and its transmitters from Great Valleys Radio Limited.
LISTNUM 1 \l 111 I will now invite the Hearing Secretary, Ms Ventura, to explain the procedures we will be following.
LISTNUM 1 \l 112 Ms Venture.
LISTNUM 1 \l 113 THE SECRETARY: Thank you, Madam Chair.
LISTNUM 1 \l 114 Before beginning, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.
LISTNUM 1 \l 115 Le service d'interprétation simultaneé est disponible durant cette audience. Vous pouvez vous procurer un récepteur auprès du technien à l'arrière de la salle. L'interprétation anglaise se trouve au canal 1 et l'interprétation française au canal 2.
LISTNUM 1 \l 116 When you are in the hearing room, we would ask that you please turn off your cell phones, beepers, BlackBerries as they are an unwelcomed distraction and they cause interference on the internal communication system used by our translators. We would appreciate your cooperation in this regard throughout the hearing.
LISTNUM 1 \l 117 We expect the hearing to take approximately four days, starting today and ending on Friday. Starting tomorrow, we will begin each morning at 8:30 a.m. We will take an hour for lunch and a break in the morning and in the afternoon. We will let you know of any schedule changes as they may occur.
LISTNUM 1 \l 118 The North Ballroom will serve as the examination room where you can examine the public files for the applications being considered at this hearing.
LISTNUM 1 \l 119 As indicated in the agenda, the telephone number of the examination room is 250‑860‑8056.
LISTNUM 1 \l 120 There is a verbatim transcript of this hearing being taken by the court reporter sitting at the table to my left. If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break. Please note that the full transcript will be made available on the Commission's website shortly after the conclusion of the hearing.
LISTNUM 1 \l 121 For the record, we wish to inform you that the Applicant, Corus Radio Company, has submitted an updated market research study which will be added to the public examination file of its application. Copies are available in the examination room.
LISTNUM 1 \l 122 In addition, please note that the Commission published the application by Touch Canada Broadcasting as an English‑language FM commercial religious radio programming undertaking, when in fact the proposed service should have been described as an English‑language FM commercial specialty radio programming undertaking, proposing a contemporary gospel music service with 95 per cent of its weekly total music drawn from subcategory 35, non‑classical religious.
LISTNUM 1 \l 123 Now, Madam Chair, we will proceed with item 1 on the agenda, which is an application by Vista Radio Limited for a licence to operate an English‑language commercial radio programming undertaking in Kelowna, British Columbia.
LISTNUM 1 \l 124 The new station will operate on frequency 96.1, channel 241C, with an average effective radiated power of 19,900 watts, maximum effective radiated power of 50,000 watts, antenna height of 506 metres.
LISTNUM 1 \l 125 Appearing for the applicant is Ms Margot Micallef. Please introduce your colleagues, and you will then have 20 minutes for your presentation.
PRESENTATION / PRÉSENTATION
LISTNUM 1 \l 126 MS MICALLEF: Thank you, good morning.
LISTNUM 1 \l 127 I am Margot Micallef, Chair and CEO of Vista Radio Limited and a founding shareholder of the company.
LISTNUM 1 \l 128 To my left is Paul Mann, Executive Vice‑President of Operations for Vista. From 1995 to 2003, operating from a head office in Kelowna, Paul held various executive positions with Standard and the three previous owners and ultimately became Vice‑President and General Manager of Standard Radio's Interior Division.
LISTNUM 1 \l 129 To my immediate right is Glenn Hicks, Regional News Director for Vista Radio. After 20 years with the BBC and South African television, Glenn came to our stations in 2004.
LISTNUM 1 \l 130 Beside Glenn is Jason Mann, our Vice‑President of Programming and also a founding shareholder. Jason was Director of Programming for the B.C. Interior for Standard and its predecessors, also headquartered in Kelowna.
LISTNUM 1 \l 131 Next to Jason is John Yerxa, who has been researching Canadian radio since the mid‑80s.
LISTNUM 1 \l 132 Directly behind Paul is Barb Fairclough, also a founding shareholder and out Controller and Corporate Secretary. Prior to the founding of Vista, she was Corporate Controller of Standard and its predecessors' Interior division, again headquartered in Kelowna.
LISTNUM 1 \l 133 Beside Barb is Ingrid Vaughan who is Director of Human Resources and Diversity for Vista Radio.
LISTNUM 1 \l 134 As you can see, the script calls for me to introduce another of our founders, Bryan Edwards. Bryan is Vice‑Chair of vista. In 1990, Bryan was President of Okanagan Skeena Group and I was a communications lawyer. Together we acquired for Okanagan Skeena an interest in CKIQ, Kelowna. In 1996, OSG then acquired control of Four Seasons Radio, the licensee of CKIQ and CKBL‑FM. Within two years Bryan and his team, including Paul, Jason and Barb, brought that station to profitability.
LISTNUM 1 \l 135 Bryan is here at the hotel and is available if we need him. However, he's not feeling well this morning, so is in his room and, with your permission, will not join us on this panel.
LISTNUM 1 \l 136 Madam Chair, we are now ready to begin our presentation.
LISTNUM 1 \l 137 From our introduction you will appreciate that we are very excited to be here today because of our very special connection to Kelowna. You won't be surprised when I tell you that our founders have been involved in radio in Kelowna for an aggregate of over 40 years.
LISTNUM 1 \l 138 This experience, along with the representation of our shareholders who are resident in Kelowna, and our seven employees who make Kelowna their home, gives us considerable knowledge of this region. We have been studying this market for some time with a view to determine its readiness for an additional radio station. That is why we triggered a call for a new radio station in Kelowna. I.
LISTNUM 1 \l 139 I would now like to ask Paul Mann to outline for you our assessment of why the Kelowna radio market is ripe for new competition, as well as provide you with an up‑to‑date economic analysis of this area.
LISTNUM 1 \l 140 MR. PAUL MANN: Madam Chair and members of the Commission, it is great to be back in Kelowna, applying for a radio licence on behalf of Vista.
LISTNUM 1 \l 141 Shortly after my departure from this community in 2003 to found Vista Radio, I felt there was room for another commercial FM station offering more diversity and competition. After reviewing the economic data for this market, we are convinced there is room for at least one more commercial FM.
LISTNUM 1 \l 142 The Commission is likely aware that, on a population‑per‑station basis, the Kelowna radio market is underserved. How underserved? Well, if the CRTC decided to licence only one more commercial station, Kelowna would still have more residents‑per‑commercial station than cities such as Charlottetown and Saint John in the Maritimes, Belleville‑Trenton and Kingston in Ontario or nearby Kamloops here in British Columbia. And if you examine the retail sales figures for these markets, they are 40 to 50 per cent lower than Kelowna.
LISTNUM 1 \l 143 BBM data for Kelowna has recently shown a dramatic trend away from the existing commercial market. According to the spring BBM survey of 2007, Kelowna residents spend about 27 per cent of all their listening time with out‑of‑market signals.
LISTNUM 1 \l 144 In Vista's view, these results signify a serious lack of choice.
LISTNUM 1 \l 145 Just prior to this hearing being gazetted, the Okanagan Economic Development Commission, the EDC, released its 2007 economic profile.
LISTNUM 1 \l 146 A quick review of the EDC's 2007 economic profile clearly indicates a rapidly growing and diversified economy that is running strong. Not only are current conditions favourable, but given the range of economic sectors active in the region, Kelowna's future prospects are excellent.
LISTNUM 1 \l 147 According to this latest report, more than $5 billion in major projects are now underway, including significant expansion of the local UBC campus, new residential, commercial and retail development.
LISTNUM 1 \l 148 Demand for new and resale homes will remain strong in Kelowna over the next couple of years.
LISTNUM 1 \l 149 Business licences have increased 7 per cent from 2006.
LISTNUM 1 \l 150 Retail sales were up another 10 per cent in 2006, compared to a 5.9 per cent increase for the province overall.
LISTNUM 1 \l 151 Retail sales in the Central Okanagan district outpaced provincial retail sales growth in the ten‑year period from 1997 to 2007, increasing by 146 per cent compared to 69 per cent for the province of British Columbia.
LISTNUM 1 \l 152 Today, FP Markets estimates 2007 total retail sales in the Kelowna CA are $2.7 billion. Moreover, it anticipates they will top $3 billion by 2009, and increase further to approximately $3.7 billion by the year 2012.
LISTNUM 1 \l 153 Also, let's not forget that Kelowna is the central shopping hub of a trading area now encompassing up to a half million people.
LISTNUM 1 \l 154 The CA population itself has increased by over 10 per cent in the past five years, making Kelowna one of the fastest growing census areas in Canada. According to FP Markets (2007), Kelowna's population growth will continue at double the Canadian average growth rate from 2007 through 2012.
LISTNUM 1 \l 155 In view of the economic strength of this region and the lack of choice on the local radio dial, we submit there is now room for at least one more commercial FM station.
LISTNUM 1 \l 156 In 2006, once we determined that Kelowna could support another FM competitor, we commissioned Banister Research to work with John Yerxa in determining what the best format opportunity is in Kelowna.
LISTNUM 1 \l 157 MR. YERXA: Madam Chair and members of the Commission, let me explain how we conduct our research.
LISTNUM 1 \l 158 First, we never select just one or two formats to test. We usually present up to six formats to a random sample of 400 local residents 18 plus years of age.
LISTNUM 1 \l 159 Second, in a small or medium market like Kelowna, we always test mainstream formats. Wherever a limited number of commercial signals exist, it does not make sense for us to propose a niche format if a significant segment of the population is not being served.
LISTNUM 1 \l 160 Third, when presenting a group of mainstream formats, we not only test their popularity, but, more importantly, their availability. After all, simply testing popularity by itself does not identify whether a music hole exists for a particular format. Therefore, our technique enables us to identify the existence and size of any music holes, thereby allowing us to create a pecking order of formats, should the first choice ever be taken.
LISTNUM 1 \l 161 Using this approach, Banister identified two very good format opportunities in Kelowna: Classic Hits and Country.
LISTNUM 1 \l 162 Classic Hits exhibited the highest popularity of all six mainstream formats tested and was also perceived to be fairly difficult to find on the local FM dial.
LISTNUM 1 \l 163 However, Country emerged as the number one option, because, apart from its relatively high popularity, it filled the largest format hole on the local radio dial.
LISTNUM 1 \l 164 MS MICALLEF: We were certain that Country was a good choice since no local station provided that format and Pattison Broadcasting had been clear in its conversion application that it would stay the course with its existing format.
LISTNUM 1 \l 165 But in mid‑August, they completed the conversion of CKOV to the FM band and launched it as a Country station.
LISTNUM 1 \l 166 In a way, this was a compliment to our research. We had identified the largest music hole and Pattison had seen the clear opportunity.
LISTNUM 1 \l 167 Format changes by incumbents are not new to us. In fact, we faced this very issue in Grande Prairie when just weeks before our launch of CFRI‑FM, an incumbent switched its format to the one that we had identified in our application.
LISTNUM 1 \l 168 So just as we did in Grande Prairie, we returned to our research in Kelowna.
LISTNUM 1 \l 169 On page 5 of the research submitted with the application, Banister had identified Classic Hits as:
"...a strong second choice format, given its high popularity and the fact that it is also perceived to be relatively difficult to find on the local FM dial."
LISTNUM 1 \l 170 We studied our application and the market and determined that adjusting our format to the alternative identified by Banister would have a negligible impact upon our business plan. After all, the size of the hole for Classic Hits had been second only to Country, while the format itself was even more popular than Country.
LISTNUM 1 \l 171 We realize that a key question before the Commission this morning is whether the opportunity for Classic Hits is still as significant today as it was back in 2006.
LISTNUM 1 \l 172 Our answer is a resounding yes, especially in light of the programming changes that have recently taken place in the Kelowna market.
LISTNUM 1 \l 173 MR. JASON MANN: Madam Chair and members of the Commission, less than two weeks ago I completed an extensive two‑week BDS monitor of the Kelowna radio market, and compared it to my previous two‑week analysis taken in June of 2006 when we submitted our application.
LISTNUM 1 \l 174 The results show that since 2006, three incumbent FM stations in Kelowna have substantially reduced their 80s music, a core decade for Classic Hits stations, while considerably increasing their spins from 2000 forward.
LISTNUM 1 \l 175 With CKFR having just abandoned Oldies, and with CKOV now taking Country, this means there is no local station focusing its music on the 70s or 80s.
LISTNUM 1 \l 176 Even CKLZ has dramatically reduced the amount of Classic Rock it plays in favour of Newer Rock. In fact, the number of 80s spins on both CKLZ and CILK has dropped by more than 50 per cent on each station since June of 2006.
LISTNUM 1 \l 177 Our monitor, coupled with these recent format changes, lead us to conclude that the opportunity for Classic Hits has increased in this market because there is no station playing rock‑based Classic Hits such as the one we propose.
LISTNUM 1 \l 178 We would be pleased to provide further details during the question period, if the Commission so desires.
LISTNUM 1 \l 179 From a programming perspective, we must remember that 44 per cent of the Kelowna population is 45 years of age or older.
LISTNUM 1 \l 180 Therefore, in line with the Classic Hits audience profile identified in the research, Vista will be presenting a Classic Hits format primarily geared towards a 45 plus listening audience. In fact, our core target will be 45‑54 years of age, leaning more male.
LISTNUM 1 \l 181 Given that three out of four of the incumbent FMs ‑‑ CILK, CHSU and CKOV ‑‑ are now primarily targeted at women, our Classic Hits station will position itself between those stations and CKLZ, which now devotes over half of its music to the current decade and a combined three‑quarters of its total spins to the 1990 and 2000 decades.
LISTNUM 1 \l 182 Classic Hits 96.1 will focus on the 70s and 80s, with an emphasis on rock‑based hits, reintroducing many songs that are not being aired locally in any significant numbers.
LISTNUM 1 \l 183 Specifically Classic Hits 96.1 will play a mixture that is approximately 35 per cent music from the 70s with artists like Trooper, April Wine, The Eagles, Journey, and Super Tramp; 40 per cent from the 80s with artists like Doug and the Slugs, Loverboy, The Police and Foreigner; 10 per cent from the 90s with artists like the Tragically Hip, Colin James and Alanis Morissette; and 15 per cent current compatible music including emerging Canadian artists likely Liam Titcombe, Rex Goudie, Brian Melo and Jeremy Fisher.
LISTNUM 1 \l 184 There will be very little song duplication between Classic Hits 96.1 and the incumbents because, while some of the artists played on our station might appear elsewhere, the tracks we will play will not.
LISTNUM 1 \l 185 We have committed to 40 per cent CanCon. In order to do this, we will present newer Canadian artists who are compatible with the overall sound of the station. The insertion of more up‑to‑date Canadian acts will add variety and freshness to our format without violating the overall premise of Classic Hits 96.1. This commitment will give us the opportunity to put the spotlight on emerging, local, regional, B.C. and Canadian artists. We are proud of our station's support for a Campbell River band called Mr. Completely. We just discovered a new artist from Vancouver Island whose name is Justin Hewitt, and we hope that you will be hearing lots of them in the future.
LISTNUM 1 \l 186 MR. HICKS: Madam Chair and Commissioners, as is consistent with Vista's philosophy, News and Spoken Word programming will also be a key component of our station.
LISTNUM 1 \l 187 Our intention is to establish Classic Hits 96.1 as a significant source for local and regional news with sports coverage with over six hours each week. Vista has made its news mandate across its entire family of stations to produce on average 80 per cent local audio content in all newscasts. We will bring the same approach to Classic Hits 96.1. To do this, we will employ three full‑time and one part‑time news staff.
LISTNUM 1 \l 188 We will broadcast a number of structured spoken word features each week, encompassing regular weather and road conditions, community service announcements, ski and marine reports, entertainment and community events, as well as specialty information specifically designed for the Kelowna region.
LISTNUM 1 \l 189 The station will be lively, entertaining and interactive. We most recently demonstrated this approach to community‑based radio when we entered Grande Prairie. We invited representatives of charities, school organizations, community programs, amateur sports and cultural groups, as well as elected officials, to come on the air in morning drive and throughout the schedule. To Vista, this is an everyday practice, but to the people of Grande Prairie, this was a whole new kind of radio.
LISTNUM 1 \l 190 In addition, we have approached the Westbank First Nation, right across the lake here, to develop a new feature, and their reaction was enthusiastic. Each week we will provide cultural and community news from the band and will broadcast it in various time periods throughout the day and the week, including both morning and afternoon drive.
LISTNUM 1 \l 191 MS VAUGHAN: Madam Chair and members of the Commission, Vista's HR strategy is in a continual state of renewal and re‑evaluation as we continue the development of framing and adapting our processes to remain faithful to our core values, as we develop and enhance existing training opportunities for Vista employees, and as we demonstrate our strong commitment to increasing diversity in all our markets.
LISTNUM 1 \l 192 Given that Vista has entered new markets primarily through acquisition, we have had a greater challenge in shaping a diverse work place. To address this challenge and to demonstrate our commitment, we have recently researched and produced a comprehensive three‑year diversity plan that addresses how we intend to grow and maintain a diverse work place culture. This document will empower our area managers to fulfil our commitment to work place diversity.
LISTNUM 1 \l 193 We are also committed to building a dynamic, supportive and cohesive corporate culture, which empowers our employees to be the best they can be through training, performance evaluation, feedback and mentoring.
LISTNUM 1 \l 194 Further, we have implemented an employee share purchase program and are proud to say that 100 per cent of our senior management and 25 per cent of our general employee population are now shareholders of our company.
LISTNUM 1 \l 195 If licensed in Kelowna, these initiatives and those still to come will build an equally dynamic corporate culture committed to strong local presence, as well as a barrier‑free respectful work place that offers equal opportunity and reflects the diversity of Kelowna. From its first day of operation, our proposed station will employ 16 people, including on‑air announcers, news and sports reporters, creative writers, sales people, administrative and promotional personnel.
LISTNUM 1 \l 196 MR. PAUL MANN: The incumbents in Kelowna are well positioned to face new competition. The research indicated that a Country station would receive a 14.5 per cent share of hours tuned in its first year of operations. When we looked at the demand for Classic Hits, we concluded that our proposed Classic Hits station would meet this threshold. Our recent music monitor confirmed this.
LISTNUM 1 \l 197 The research indicated that fully one‑third of the core listeners to Classic Hits 96.1 would be drawn from out‑of‑market stations and those listeners who currently do not have a favourite station.
LISTNUM 1 \l 198 Our 2006 research indicated that the remaining two‑thirds of the listeners would come primarily, in relatively equal proportion, from four local stations, without impacting any one station head on.
LISTNUM 1 \l 199 With the format changes in the market, there are now three FM stations focusing on women, while another focuses on younger men. There is a significant opportunity to serve a 45‑plus male group who do not really have a station that serves them directly.
LISTNUM 1 \l 1100 In our supplementary brief, we estimated that upon our new station's arrival, the annual radio revenue would be approximately $10.5 million. According to the 2006 TRAM report, the market had already reached that number by the end of 2006. Given the rate of growth of retail sales, we can expect that that market will have grown by about $1.5 million by our first year of operations, and this does not include the stimulative effect of a new station.
LISTNUM 1 \l 1101 We further estimated that $1 million of our year one revenues would come from the incumbents. While this number might seem high, it represents just 9.6 per cent of Kelowna's 2006 annual revenue and only 8 per cent of our projected year one market revenues. This revenue will come at no significant detriment to any one station.
LISTNUM 1 \l 1102 Astral Media and Jim Pattison Broadcasting are well positioned to deal with a new entrant.
LISTNUM 1 \l 1103 Pattison has been able to convert its AM station to the FM band, and it could be expected that Pattison will increase its revenues.
LISTNUM 1 \l 1104 Both companies now have the possibility of combination selling in both Kelowna and the Central Okanagan marketplace, giving them access to expanded revenues.
LISTNUM 1 \l 1105 These are big consolidated companies with synergies from their national and regional reach, enabling them to further drive sales and save expenses.
LISTNUM 1 \l 1106 With our experience in markets where we compete with these operators and our association with Kelowna, we are certain that renewed competition in Kelowna will increase tuning and spur advertising growth.
LISTNUM 1 \l 1107 MS MICALLEF: Madam Chair and members of the Commission, Kelowna's economy is one of the most dynamic in B.C. and its residents are eager for new radio choices.
LISTNUM 1 \l 1108 Our business plan is robust and credible. We have picked the largest format opportunity and have the resources necessary to provide a strong competitor to the incumbents.
LISTNUM 1 \l 1109 Vista will restore competition in advertising and diversity of voice to the Kelowna market.
LISTNUM 1 \l 1110 Through a strong emphasis on News and Spoken Word programming, we will bring a new and independent editorial voice to Kelowna.
LISTNUM 1 \l 1111 In addition to a $700,000 CCD commitment, we are promising 40 per cent CanCon.
LISTNUM 1 \l 1112 We are committed to creating a fair and balanced work place with a significant local presence.
LISTNUM 1 \l 1113 Vista is no longer the new kid on the block. We have established ourselves as high‑quality operators, raising the bar in the markets we serve by investment of financial and human resources. In all our markets, we have restored and increased local service. As a result, we have returned the stations we have acquired in challenging markets to profitability.
LISTNUM 1 \l 1114 This application will contribute significantly to the objectives of the Broadcasting Act, but it also truly reflects the commitment Vista Radio brings to all of its stations and the communities we are licensed to serve.
LISTNUM 1 \l 1115 I wish to thank the Commission for this opportunity to explain our proposal, and we would welcome your questions at this time. Thank you.
LISTNUM 1 \l 1116 THE CHAIRPERSON: Thank you, Ms Micallef, and to your team. Good morning once again and welcome. This is all your fault. No, just kidding.
LISTNUM 1 \l 1117 I'm going to begin the questioning this morning with the most obvious, and that is, of course, your request for change in format from Country to Classic Hits and the commitments that you made in your application as they relate to your business plan.
LISTNUM 1 \l 1118 I know you say both in your letter, in your reply comments and this morning, that it has a negligible impact on your business plan, but I just want to go through some of the details, how the change in format will in fact have that impact.
LISTNUM 1 \l 1119 You did commit this morning to 40 per cent Canadian content and that is during each broadcast week and between 6:00 a.m. and 6:00 p.m. Monday to Friday.
LISTNUM 1 \l 1120 MS MICALLEF: Yes, we did.
LISTNUM 1 \l 1121 THE CHAIRPERSON: And that you will accept as a condition of licence?
LISTNUM 1 \l 1122 MS MICALLEF: Yes, we will.
LISTNUM 1 \l 1123 THE CHAIRPERSON: Will the station's programming continue to be 100 per cent local?
LISTNUM 1 \l 1124 MS MICALLEF: Yes, it will.
LISTNUM 1 \l 1125 THE CHAIRPERSON: Your CCD contribution, you committed to an over and above contribution of $700,00 over seven years. Is that still the case?
LISTNUM 1 \l 1126 MS MICALLEF: Yes, it is.
LISTNUM 1 \l 1127 THE CHAIRPERSON: Just while we are on CCD, you say in your application that you will make the basic annual CCD contributions in line with the new contribution system put in place by the Commission in its Commercial Radio Policy of 2006 and that that $700,000 is the so‑called over and above, but in your financial projections on the CCD line, I just see $700,000 each year as opposed to ‑‑ I mean $100,000, plus the base contribution.
LISTNUM 1 \l 1128 MS MICALLEF: That's because our application was filed before the new rules.
LISTNUM 1 \l 1129 THE CHAIRPERSON: So, can you file revised financial projections that show the base amount, plus $100,000 per year?
LISTNUM 1 \l 1130 MS MICALLEF: Yes, we will.
LISTNUM 1 \l 1131 THE CHAIRPERSON: Is it possible for you to file those before the end of Phase I of this hearing?
LISTNUM 1 \l 1132 MS MICALLEF: Yes, it is.
LISTNUM 1 \l 1133 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1134 In your reply to deficiencies dated July 20th, you detail your plan for the airplay of emerging artists. You say that you will feature musical selections by emerging artists four times per day, seven days per week, and this would equate to approximately 2 per cent of the musical selections aired in a broadcast week. Is that still your plan, given your change in format?
LISTNUM 1 \l 1135 MS MICALLEF: Yes, it is.
LISTNUM 1 \l 1136 THE CHAIRPERSON: On page 14 of your application you say that the Country format audience is known for its loyalty and that this makes the format very attractive to advertisers.
LISTNUM 1 \l 1137 Would you say the Classic Hits audience is more or less or equally as loyal and, therefore, more, less or equally as attractive to advertisers?
LISTNUM 1 \l 1138 MS MICALLEF: I would say that, firstly, the loyalty would come to the station from the manner in which we play the music, the manner in which we format and program the station.
LISTNUM 1 \l 1139 I would also say that the Classic Hits listeners are attractive to advertisers for other reasons. John, can I ask you to comment on that?
LISTNUM 1 \l 1140 MR. YERXA: The loyalty is something that we take into account when determining the share. For example, we noticed that with the Country listener, or with the Country format, the popularity was lower than Classic Hits, but when we take our ratios of conversion into account, we usually take anywhere from two‑thirds to three‑quarters of their core percentage to determine share and, given their loyalty, they are right at the high end. We take the full three‑quarters which is what converted into about a 14 and a quarter to a 14 and a half share. Whereas, with the Classic Hits, we took about two‑thirds of that, given the availability of the market.
LISTNUM 1 \l 1141 Having said that, it again is well known the loyalty of Country, mainly because it is such a distinct format. However, the Classic Hits listener, the audience profile, is a little bit younger, which would mean that you may not have the degree of loyalty, but the core audience profile is perhaps a little bit more appealing to the advertiser out there. So, one kind of cancels out the other. You can monetize that much more easily.
LISTNUM 1 \l 1142 THE CHAIRPERSON: Is that what led you to still maintain that you will be able to achieve a 14 and a half ‑‑
LISTNUM 1 \l 1143 MR. YERXA: Right. In other words, because we took, say, two‑thirds of 22, which is exactly 14 and a half actually. So, that is how we estimated that there would be no real material impact on the business plan, that it could stand.
LISTNUM 1 \l 1144 THE CHAIRPERSON: And in terms of the target demographic group, however, Country does tend to skew a bit older. You did talk about what your core demographic group is for Classic Hits and it seems to be somewhat similar to that of Country, and if Vice‑Chairman Arpin were here, he would ask you what is the median age of your typical ‑‑
LISTNUM 1 \l 1145 MR. YERXA: The Country target is 55‑plus years of age. The Classic Hits target here in this market for us, given the demography, is 45‑54. So, it is younger, and that is what I mean. You may not have the degree of loyalty, but the ability to monetize that is greater, I think, for most advertisers. So it kind of balances out.
LISTNUM 1 \l 1146 You want the median age. I would assume probably late forties, say 49.
LISTNUM 1 \l 1147 THE CHAIRPERSON: Skewing male?
LISTNUM 1 \l 1148 MR. YERXA: Yes, in this market, with our research, about 55 per cent male.
LISTNUM 1 \l 1149 THE CHAIRPERSON: And you did say in your opening statement today that you didn't feel that there would be an impact on the incumbents, given the formats that currently exist in the market. But now that you have said that this does skew younger than Country, are you saying that this will not have an impact on the adult contemporary station operated by Astral in this market?
LISTNUM 1 \l 1150 MR. YERXA: Exactly, because first of all we looked at two things. We looked at the 2006 research, which indicated that the impact would be fairly evenly spread amongst four stations, no station directly being hit.
LISTNUM 1 \l 1151 We then realized, after the duplication analysis, that even though the target had moved younger, not dramatically, in other words from 55‑plus to 45‑plus, the one station in the market that was a Classic Rock station has gone very heavily, I think three‑quarters of their repertoire now ‑‑ and Jason can speak to this, to the duplication analysis ‑‑ is now 1990‑2000 decade. You have three stations now that are essentially targeted at women.
LISTNUM 1 \l 1152 You now have a station that was covering Classic Rock that has now moved lower and is much more current based. So, there is this huge hole now for men, 35‑45‑plus years of age.
LISTNUM 1 \l 1153 THE CHAIRPERSON: Do you have anything you would like to add?
LISTNUM 1 \l 1154 MR. JASON MANN: It depends on how many more details you would like to propose.
LISTNUM 1 \l 1155 THE CHAIRPERSON: All right. Obviously, the impact that you will have on incumbents leads to the revenue that you think you will generate from those existing radio stations, and in your original application, you projected a level of revenue to come from those stations at 65 per cent, which some would say is rather high and that it is a significant impact on incumbents.
LISTNUM 1 \l 1156 How did you arrive at 65 per cent and is that still the case now that you are requesting a change in format to Classic Hits?
LISTNUM 1 \l 1157 MS MICALLEF: I'm going to ask Paul to respond to that.
LISTNUM 1 \l 1158 MR. PAUL MANN: As I stated in the oral presentation this morning, that translated to about 9.6 per cent of what we believed to be the annual revenue at the time on radio in Kelowna. Looking of course with the TRAM information that has subsequently come to the front, knowing it was in fact about $10.5 million in fiscal 2006, our comment now would be if we look at realistically a 2009 fiscal year for a new licence starting up in this market, probably a $12 million market or about 8 per cent of the revenue, based on $1 million.
LISTNUM 1 \l 1159 Do I believe that the first $1 million will come from the existing market and the incumbents? Yes, we stand on that. I guess we could fudge that answer, but on the street, it is the truth. Will it be the same in year two? Definitely not. But the early adopters and the successful business and entrepreneurs in any market, the first 50, 60 clients are going to be the big guys who want to be with the hot new brand. We have seen that in other markets where we operate, including Grande Prairie where we recently launched. We are opening a new business now, but the first $1 million didn't come from people who had never been on radio.
LISTNUM 1 \l 1160 I think if you were to ask year two, will it look the same? No. It will probably drop by $400,000 or $500,000 as the market grows and as we attack new clients.
LISTNUM 1 \l 1161 THE CHAIRPERSON: I just want to say, Mr. Mann, that despite the fact that tomorrow is Halloween we don't like fudge. So we are not fudging.
LISTNUM 1 \l 1162 Because of this great impact that you will be making or ‑‑ let me rephrase that ‑‑ because of the impact, because there is always an impact and qualifying that impact can be a skill, how will your station differentiate itself in the market to attract this level of advertisers and of listeners?
LISTNUM 1 \l 1163 MS MICALLEF: We actually have some very interesting ideas on the programming side, and I will ask Jason if he could speak to that.
LISTNUM 1 \l 1164 MR. JASON MANN: I think first and foremost we are talking format and the differences between the existing formats as they stand today and what we propose in our application.
LISTNUM 1 \l 1165 All things being equal, our station essentially would come into the marketplace and have an inverse relationship with what is already here. While we are proposing approximately 75 per cent of our music from the 70s and 80s, 75 per cent of the music currently being played in the marketplace by the three mainstream FMs, their incumbent here, is 75 per cent. So, that is music from the 90s and 2000s. So it is almost a perfectly complimentary fit.
LISTNUM 1 \l 1166 So, starting there, that would be I guess the biggest point of differentiation.
LISTNUM 1 \l 1167 Just the style in bringing a station to the marketplace and with all of our stations is to be very engaged in the community, be leadership oriented in the community, taking on community events and identifying areas where we can help improve the fabric of the society, where we can help in exposing new and Canadian emerging artists.
LISTNUM 1 \l 1168 I don't know if that totally differentiates us from any other panellists or any other existing station, but it is certainly our deep commitment. We do it well and we do it with vigour.
LISTNUM 1 \l 1169 THE CHAIRPERSON: You did say in your oral presentation that while there may be some overlap in the artists that will be played on the radio stations, the difference will be the decade of music?
LISTNUM 1 \l 1170 MR. JASON MANN: That is right. In fact, I have a sample playlist that I can file, if you wanted to see, that gives you a sense a couple of hours in each day part. I can file that today.
LISTNUM 1 \l 1171 THE CHAIRPERSON: That will be appreciated. Thank you very much.
LISTNUM 1 \l 1172 MR. JASON MANN: Sure. We also have specific programs that are interesting. The Stars of Tomorrow program is one that I am pretty excited about.
LISTNUM 1 \l 1173 I would say that Vista is kind of a forerunner, in fact, in supporting the concept of emerging artists.
LISTNUM 1 \l 1174 This application was filed a year and a half ago, and really there was no premise or definition put around what an emerging artist is or what it would look like. We just took an approach where we probably play a lot of emerging artists and a lot of music from emerging artists on a lot of our stations, but what can we do to schedule them in and to really make a big deal about it. With the Stars of Tomorrow program that we are proposing that would air four times through the day in various day parts, including prime time, we would in fact marry the concept of exposing emerging artists with, I guess, an element that harkens back to the day of mosaic programming, where we would introduce some spoken word around that as well. I think that would be useful, inasmuch that we would be helping to establish and help to orient our audience with these unfamiliar names and sounds, thereby more quickly forging a relationship between the two. I think that is important.
LISTNUM 1 \l 1175 We do a program on a number of our stations, here we would call it Organic Tuneage. Formerly in the brief it was called Songwriters' Cafe, but essentially the same sort of level of commitment to supporting emerging and local artists where we really open the doors and say, what do you have, was this recorded in your basement, great, let's get it on the air and see what it sounds like and get some response from the public.
LISTNUM 1 \l 1176 THE CHAIRPERSON: How will you give emerging artists that access to your station?
LISTNUM 1 \l 1177 MR. JASON MANN: We promote it on the radio station to start with, to try and attract local musicians. Because we have some stations elsewhere in B.C., we will interlink and interfeed some of these tracks where they might be appropriate on stations of similar format.
LISTNUM 1 \l 1178 Actually, we have just entered into a one‑year agreement with B.C. Musicians magazine where we have an agreement where we provide editorial content every month. This is a one‑year agreement currently, editorial content every month, which has our program directors actually write articles and explain to early musicians how they can best get their foot in the door to radio, what types of programs that each of the different stations and different formats do to support emerging artists and how to make contact with us.
LISTNUM 1 \l 1179 We also have an advertising campaign running in the program. This year I believe through all of our CCD commitments, through benefits and everything else, it is about $175,000 that we will pay to organizations like FACTOR and Radio Starmaker. So, we are helping those musicians; we are reaching out to them and saying, this money is available, and e‑mail me, call me, let me know if you are interested and I will help you find a way to get to that money.
LISTNUM 1 \l 1180 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1181 Given everything that we have discussed so far, your original application, the financial projections anticipated that you would achieve positive feedback of 6.6 per cent by year two, increasing to 17.9 per cent by year seven, do you still think that is achievable with the change in format?
LISTNUM 1 \l 1182 MS MICALLEF: Yes, we do, and Paul can provide some details.
LISTNUM 1 \l 1183 MR. PAUL MANN: Save and except for the minor adjustment that would come by adding the year‑over‑year regular CCD numbers in the adjusted financial statement, we are very comfortable with the operating side and the revenue side of it in that; yes, we are.
LISTNUM 1 \l 1184 THE CHAIRPERSON: I would like to move on now to your programming commitments.
LISTNUM 1 \l 1185 On page 19 of your application, you say that the Country audience is interested in greater amounts of spoken word programming, particularly local news and information, and as such you estimate that you will present over ten hours of spoken word content and a further six hours and 45 minutes of special music foreground programming.
LISTNUM 1 \l 1186 Will there be any changes to that amount of spoken word programming?
LISTNUM 1 \l 1187 MS MICALLEF: No, there won't be. We can provide some additional details to you.
LISTNUM 1 \l 1188 Glenn.
LISTNUM 1 \l 1189 MR. HICKS: That has no bearing at all. The Vista Group of stations has a very, very clear mandate when it comes to local radio news. We have really pushed this massively in the last couple of years with all our stations. It is all about local, local, local. There is a mandated 80 per cent local audio news content.
LISTNUM 1 \l 1190 As far as we are concerned, we would have driven the news agenda in terms of its local community news base regardless of what format it was. So it has no bearing.
LISTNUM 1 \l 1191 THE CHAIRPERSON: How much of the ten hours of spoken word content is strictly news and how much is surveillance material?
LISTNUM 1 \l 1192 MR. HICKS: Six hours.
LISTNUM 1 \l 1193 THE CHAIRPERSON: Six hours is strictly news?
LISTNUM 1 \l 1194 MR. HICKS: Strictly news, and that would include, of course, local news and local sports. We regard those all as a package as news. So, over and above that, you have your weathers and your traffics and your special spoken word featurettes, if you like.
LISTNUM 1 \l 1195 THE CHAIRPERSON: You did say in your opening statement that 80 per cent of the news items would be local, the balance of course being national and international.
LISTNUM 1 \l 1196 MR. HICKS: That is right. You can speak to all of our news directors. That is a very powerful mandate that we have in place at every one of our nations. Four out of every five stories in every newscast has to be local.
LISTNUM 1 \l 1197 THE CHAIRPERSON: Do you anticipate any synergies with your other radio operations?
LISTNUM 1 \l 1198 MR. HICKS: Yes, very much so. It wouldn't necessarily be cost saving synergies, but there would be what I call enhancement of enrichment synergies, certainly. As a regional news director, I go around all of our operations and I make sure that people are getting the right sort of training, people are sharing the right sort of ideas, the sort of quality community local radio follow and angle ideas that every regional small community newsroom should have, making sure people come up through the ranks.
LISTNUM 1 \l 1199 We have a great reputation of taking people in from BCIT or whatever, and as those people flourish and grow, we move them out; we spread the word about our colleagues throughout the group.
LISTNUM 1 \l 1200 So, yes, synergies, in terms of growth, but not particularly in terms of story sharing because, again, we drive that point home in all of our individual local newsrooms, that guys, focus on your local area. There is no point in stealing a story from Smithers if you are in Nelson and vice versa unless, of course, we can think of a logical common link.
LISTNUM 1 \l 1201 THE CHAIRPERSON: Your CCD commitments, do you anticipate any changes to the organizations that will be receiving funding as a result of your format change?
LISTNUM 1 \l 1202 MS MICALLEF: No, we don't.
LISTNUM 1 \l 1203 THE CHAIRPERSON: You made quite a case this morning for saying that we should licence one commercial FM radio station in Kelowna. How be two? Can the market sustain two?
LISTNUM 1 \l 1204 MR. PAUL MANN: I think our portion would be we wouldn't be afraid to stand alone in this market and succeed if two licences were granted.
LISTNUM 1 \l 1205 THE CHAIRPERSON: And that is for two commercial FM?
LISTNUM 1 \l 1206 MR. PAUL MANN: Yes.
LISTNUM 1 \l 1207 THE CHAIRPERSON: Would you have any issue if we were to licence one commercial FM plus one of the specialty radio stations that have a better part of these proceedings, say one of the three specialty formats? There are three specialty formats.
LISTNUM 1 \l 1208 MR. PAUL MANN: We would have no problem in any of the specialties being licensed.
LISTNUM 1 \l 1209 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1210 Do my colleagues have any additional questions.
LISTNUM 1 \l 1211 COMMISSIONER MORIN: Yes.
LISTNUM 1 \l 1212 THE CHAIRPERSON: Commissioner Morin.
LISTNUM 1 \l 1213 COMMISSIONER MORIN: On page 12 you are talking about specialty information specifically designed for the Kelowna region. What do you mean by that? On page 12.
LISTNUM 1 \l 1214 MS MICALLEF: Of our supplementary brief?
LISTNUM 1 \l 1215 THE CHAIRPERSON: Yes. It is in your oral presentation.
LISTNUM 1 \l 1216 MS MICALLEF: Oh, I am sorry.
LISTNUM 1 \l 1217 You are looking for details of what that programming would look like?
LISTNUM 1 \l 1218 COMMISSIONER MORIN: Yes.
LISTNUM 1 \l 1219 MS MICALLEF: Jason, you can outline that. We have also provided you a summary sheet in your materials that outlines the programming ideas that we have.
LISTNUM 1 \l 1220 MR. HICKS: Perhaps, Margot, I can just move in here.
LISTNUM 1 \l 1221 We have a matrix programming document for you. For example, we mentioned the marine situation, we mentioned the ski reports, the outdoor recreational type of reports.
LISTNUM 1 \l 1222 Really, we are always looking in the spoken word market that we are in to think of featurettes that are specifically directed for the area. So, again, I would think of specific Chamber of Commerce, tourism type of reports, in this sort of environment, the construction industry, small business reports, things like that.
LISTNUM 1 \l 1223 Jason.
LISTNUM 1 \l 1224 MR. JASON MANN: I think what it is really meant to say there is it is underscoring the fact that we are not going to pad our spoken word content with national generic syndication features. This is about creating local content.
LISTNUM 1 \l 1225 COMMISSIONER MORIN: Thank you.
LISTNUM 1 \l 1226 THE CHAIRPERSON: Legal counsel.
LISTNUM 1 \l 1227 MS LEHOUX: Just one brief question.
LISTNUM 1 \l 1228 In your oral presentation you have attached at least five documents. I know you just spoke to the matrix one, but for the public record I would like you to describe them because they will be available in the public exam room and they will also be put on the public record, but please describe them.
LISTNUM 1 \l 1229 MS MICALLEF: Two of the sheets relate to population matrix, the CA population as well as the number of stations for various markets, which we spoke to in our oral presentation. One of them is the BBS monitor that we referred to in our oral presentation that updated the formats in this market.
LISTNUM 1 \l 1230 The other one is the spoken word programming matrix that we spoke to.
LISTNUM 1 \l 1231 The last one is the samples of our feature programming, the changes from the Country to the Classic Hits format.
LISTNUM 1 \l 1232 MS LEHOUX: Thank you.
LISTNUM 1 \l 1233 THE CHAIRPERSON: Ms Micallef, you have been here before, so you know that this is your final two minutes to tell us why your format is the best one for this market and why you are the best applicant for this market.
LISTNUM 1 \l 1234 MS MICALLEF: Thank you.
LISTNUM 1 \l 1235 There are three reasons. The first is the format hole that we have identified. We have been very clear in our research and in our presentation that there is a format hole in the 45 to 54‑year old male demographic that is not being served in this market.
LISTNUM 1 \l 1236 There are four incumbents in this market. Three focus on the female audience and one focuses on the young male audience.
LISTNUM 1 \l 1237 Of the ten commercial applications that you have before you, only three of them have selected a format which caters to the 45‑54‑year old male demographic. Those are Vista, Sun Country and the Northern Native Broadcasters.
LISTNUM 1 \l 1238 Of these three applicants, Vista is the best capitalized. Vista offers double the CCD of the others. Vista has committed to spend more on programming. Vista's format has the widest appeal to fill this format void with the least duplication in terms of the music that is being played on the incumbent stations.
LISTNUM 1 \l 1239 Vista is also a proven operator. We operate in difficult markets with unique challenges. In one case, prior to our acquisition, one of the stations had abandoned the local community. In another, the station was losing money and had been for a number of years. And in a third, the technical challenges that that station faced made the signal inaudible in the very market that it was serving.
LISTNUM 1 \l 1240 In every instance Vista reconnected with the community, improved the level of service to the local community, and returned those stations to profitability.
LISTNUM 1 \l 1241 We did this by knowing the markets we serve and by galvanizing our listening audience, much like we did in Kelowna. You probably know that Vista garnered over 1,000 letters of support for this application. The letters of support supported Vista, supported a new entrant, and supported our County format. No other applicant was able to generate this level of grassroots support, and for that we thank our supporters.
LISTNUM 1 \l 1242 While we can't give them a Country format, we can certainly give them Vista and we can certainly give them a new entrant into this market.
LISTNUM 1 \l 1243 The last reason is our founding group's commitment to local content, to local radio and to the local community. When we got together, the five of us to agree and invest our money in a company that would support radio broadcasting in western Canada, we did so with the commitment to local radio. That has been our guiding principle that has guided us in our operating decisions and framed our culture. We promise that if licensed in Kelowna, we will bring that same level of commitment to Kelowna and we will continue to raise the performance bar for all of the stations that are here in this market.
LISTNUM 1 \l 1244 Thank you.
LISTNUM 1 \l 1245 THE CHAIRPERSON: Thank you, Ms Micallef, and to your team.
LISTNUM 1 \l 1246 Legal counsel has another question.
LISTNUM 1 \l 1247 MS LEHOUX: I would just like to confirm your commitments that you will submit the sample playlist and also your revised financial projections by the end of Phase I.
LISTNUM 1 \l 1248 MS MICALLEF: Yes, we will.
LISTNUM 1 \l 1249 MS LEHOUX: Thank you. Thank you, Madam Chair.
LISTNUM 1 \l 1250 THE CHAIRPERSON: Madam Secretary.
LISTNUM 1 \l 1251 THE SECRETARY: I would now ask Sun County Cablevision Limited to come forward to the presentation table.
LISTNUM 1 \l 1252 THE SECRETARY: Please be seated. We will proceed with the next presentation.
LISTNUM 1 \l 1253 We will now proceed with item 2, which is an application by Sun Country Cablevision Limited for a licence to operate an English‑language FM commercial radio programming undertaking in Kelowna British Columbia.
LISTNUM 1 \l 1254 The new station would operate on frequency 96.3, channel 242B, with an average effective radiated power of 7,100 watts, maximum effective radiated power of 20,000 watts, antenna height of minus 89 metres.
LISTNUM 1 \l 1255 Appearing for the applicant is Mr. Ted Pound. Please introduce your colleagues, and you will then have 20 minutes for your presentation.
PRESENTATION / PRÉSENTATION
LISTNUM 1 \l 1256 MR. POUND: Thank you.
LISTNUM 1 \l 1257 Madam Chair, members of the Commission, Commission staff, welcome to Kelowna. It is one of the most beautiful communities in Canada in which to live, work and play. We hope you will have an opportunity to visit a little bit of Kelowna while you are here.
LISTNUM 1 \l 1258 My name is Ted Pound and I am the President of Sun Country Cablevision. I am proud to introduce our Sun Country team.
LISTNUM 1 \l 1259 With me today, seated to my left is Walter Gray, a director of Sun Country and a life‑long resident of Kelowna. Walter recently finished nine years as Mayor of this city and four years as Alderman. Before that he started and operated Four Seasons Radio here in Kelowna, which I also had the pleasure of working for ten years as its Program Director and General Manager.
LISTNUM 1 \l 1260 Walter is also known in Kelowna as the former President of the Chamber of Commerce and an enthusiastic fundraiser for local causes. This year as the volunteer fundraising chair, he helped raise $3.7 million for the Hospice House. He is also proud of raising over $4 million for what is now the UBC Okanagan campus.
LISTNUM 1 \l 1261 To Walter's left is Mr. Garry Barker, the President of Atlantic Media Institute, a career college specializing in training for careers in radio and television. Garry is augmenting the research and programming expertise of our team.
LISTNUM 1 \l 1262 Beside Garry is Judy Good Sky. She is the Education and Employment Coordinator of the Westbank First Nation, and she has served on many Kelowna boards and committees, from the arts to literacy to chairing the local United Way campaign last year. Judy was the inaugural chair of the Okanagan University College Board of Trustees. She will head our local advisory committee.
LISTNUM 1 \l 1263 In the second row we have Mike Hall, born in Kelowna and the Managing Director of Sun Country. Under his direction, Sun Country has won a number of Shuswap Business Excellence awards, including Best Corporal Stewardship. He has been with us since 1984.
LISTNUM 1 \l 1264 Beside Mike is Kelly Sitts, a Senior Manager with McKay LLP accounting firm here in Kelowna.
LISTNUM 1 \l 1265 Commissioners, we are very excited to be here. We believe in the importance of local radio and we believe in the future of Kelowna.
LISTNUM 1 \l 1266 Sun Country Cablevision is a small independent cable operator serving 7,000 subscribers in Salmon Arm, Enderby and Armstrong, all within Kelowna's greater trading area. We have successfully introduced digital cable, high definition television and digital telephone, while earning accolades as Employer of the Year in Salmon Arm last year.
LISTNUM 1 \l 1267 We believe Kelowna would benefit from a local, independent radio station. We are here to ask you to licence our proposal to give the residents of Kelowna a distinctive new local FM station with strong local ownership.
LISTNUM 1 \l 1268 Walter is the visionary behind our application, and I will turn our presentation over to him.
LISTNUM 1 \l 1269 MR. GRAY: Thank you, Ted.
LISTNUM 1 \l 1270 Madam Chair, members of the Commission, I appreciate that the CRTC has chosen to come to my home town, Kelowna, for this hearing. Our team is excited to have you consider our independent, locally owned and operated FM radio proposal for Classic Rock 96.3.
LISTNUM 1 \l 1271 The last time a new radio station was licensed in Kelowna was in 1994. Since then, our population has grown by 45,000 and the economy has expanded and diversified.
LISTNUM 1 \l 1272 There are now five commercial radio stations serving Kelowna. While there are no obvious demographic gaps in the services provided, there is evidence that today's stations are not meeting local audience needs. More than one‑quarter of radio listening in Kelowna is to stations other than the commercial stations that originate here. Overall radio listening has dropped by nearly 10 per cent in the last two years alone. Garry Barker helped us to determine how to repatriate the lost listeners with our new radio proposal.
LISTNUM 1 \l 1273 Garry.
LISTNUM 1 \l 1274 MR. BARKER: Thank you, Walter. Good morning, Commissioners, bonjour.
LISTNUM 1 \l 1275 We started our research by testing four mainstream formats that are unavailable in the Kelowna radio market. The hands‑down winner was Classic Rock. 72 per cent of survey respondents said they would listen to a new station featuring Classic Rock, and two‑thirds also told us having a new station that is locally owned and managed was also important to them. So we designed an application that provides the sound local audiences want, which includes substantial local reflection through strong news and a variety of regularly scheduled locally produced features.
LISTNUM 1 \l 1276 Classic Rock is everybody's favourite guitar legends and super groups. It appeals to men and women ages 25 to 54. The Synovate survey research showed the format appeals almost equally to both men and women in Kelowna.
LISTNUM 1 \l 1277 We want Kelowna airwaves to rock with the sounds of familiar rock selections from the 70s, 80s and 90s. That is the music of Canadian icons such as Bryan Adams, Honeymoon Suite, Chilliwack, and foreign acts from Led Zeppelin to The Eagles and the Rolling Stones.
LISTNUM 1 \l 1278 We will complement our roster of classics by playing and promoting newer Canadian artists who offer tunes with a Classic Rock essence like the Tragically Hip, Rush, The Trews or Sam Roberts. And we will play new music from enduring Canadian rock bands who keep on producing, like Vancouver's Loverboy, which just released a new album.
LISTNUM 1 \l 1279 We will keep a lookout for emerging artists that fit our musical format, and especially local ones. We will play selections from Ryan Donn's new CD, This Life, which is being released November 24th ‑‑ he is from Kelowna ‑‑ and tunes like Last Regrets by Redfish, who are from nearby Vernon.
LISTNUM 1 \l 1280 The key to our sound and format will be music with a Classic Rock feel that our research says people want.
LISTNUM 1 \l 1281 Classic Rock 96.3 intends to incorporate a broad and rich Classic Rock library into a large playlist. Emerging Canadian artists will be played in more frequent rotations.
LISTNUM 1 \l 1282 Walter.
LISTNUM 1 \l 1283 MR. GRAY: Our vision for a successful station isn't just about the music. It is also about a partnership with the community and celebrating our local roots. It is about 100 per cent origination in Kelowna, and being live‑to‑air. When you listen to our station, you will know you are in Kelowna.
LISTNUM 1 \l 1284 Local reflection starts with news. We have promised over 90 newscasts a week, adding up to five hours and 32 minutes of news, 70 per cent of which will be local.
LISTNUM 1 \l 1285 We also plan an extensive community calendar to be broadcast four times daily. Kelowna has 100 local festivals, performances and exhibits at the Rotary Centre for the Arts, big name concerts at Prospera Place, as well as local clubs. We will give extra air time to major festivals such as Celebrate Canada Day, the Life and Arts Festival, Folk Fest, the wine festivals, and of course Parks Alive, with 65 live musical performances each summer.
LISTNUM 1 \l 1286 Two other daily features will reenforce our sense of community.
LISTNUM 1 \l 1287 In Touch will feature local vignettes and human interest stories, sometimes probing city issues such as traffic congestion and sometimes looking on the lighter side, such as Ogopogo sightings.
LISTNUM 1 \l 1288 Personality Profile will uncover interesting people that live here, young and old, and their claims to fame. For example, we will interview three local entrepreneurs that just sold their Club Penguin web business for $350 million to Disney. And the Athans family which boasts five family members who are world‑ranked athletes from water‑skiing to synchronized swimming to free‑style and downhill skiing. We will talk to award‑winning wine makers, high school track stars. We want our listeners to get to know their neighbours.
LISTNUM 1 \l 1289 On Fridays, we will air three wine and food pairing features. With more than 80 wineries in the Okanagan, world‑class chefs and a bounty of fresh local fruit and vegetables, there will be no shortage of input as our listeners make their weekend plans.
LISTNUM 1 \l 1290 On the weekends, Blast From Our Past will highlight local history, exploring the areas roots and rich heritage, with the help of area museums and the Okanagan Historical Society. Classic Rock 96.3 will have vignettes such as The History of the Okanagan Nation, the stern wheelers that plied the lake from Vernon to Penticton, or recent history like the Kelowna fire in 2003.
LISTNUM 1 \l 1291 We will offer an afternoon drive feature called My Story, My Music, to highlight a local artist or touring band passing through Kelowna, with interviews and music. This way the newcomers will be featured, as well as the major stars.
LISTNUM 1 \l 1292 Many of our weekend features will be music oriented, often with a local focus.
LISTNUM 1 \l 1293 Fresh Rock will be a half hour weekly showcase of newcomers to the Canadian rock scene that fit our format. A good local interview would be with the Sleddogs, an amazing up‑and‑coming rock band who cleaned up at the Okanagan Music Awards just three weeks ago.
LISTNUM 1 \l 1294 Our feature Then and Now will profile performers across their careers and right up to the present, with a focus on Canadian musicians like Randy Bachman and Neil Young.
LISTNUM 1 \l 1295 We also plan a three‑hour music program called Decades on Saturday nights, in which we will not only relive great rock music decade by decade, we will highlight what were the events and the lifestyles in Kelowna at the time. What were the headlines in the Courier and what was the price of a three‑bedroom house on Pandosy Street when April Wine brought their farewell tour to this city in 1984.
LISTNUM 1 \l 1296 Members of the Commission, Sun Country Classic Rock 96.3 is committed to 40 per cent Canadian content for the whole week, and Monday through Friday, 6:00 a.m. to 6:00 p.m. Our commitment to emerging artists is 10 per cent of our Canadian content, and we will proudly focus on local bands such as Sleddogs and Redfish. We want to play a major role in the development of local, emerging talent through airplay and our Canadian Content Development initiatives.
LISTNUM 1 \l 1297 We have put a lot of thought into our package of four CCD initiatives. They total $315,000 over the licence term, in addition to the basic contribution of more than $24,000. We are amplifying them in every way we can on‑air to create a multiplier effect.
LISTNUM 1 \l 1298 Our annual Home Grown CD initiative will offer significant exposure to Kelowna and area rock musicians. We consulted with artists and promoters to determine how to make our $175,000 investment in the CD initiative pay the most dividends for the emerging artists. Through a juried process, we will pick ten local selections from the rock genre each year. The winning artists will have their work professionally recorded and included on the album. They will also benefit from all the proceeds from the CD sales. The compilation will be promoted both on‑air and through paid media. But it doesn't stop there.
LISTNUM 1 \l 1299 It is one thing to have songs recorded, but it is quite another to translate this into radio airplay. We believe we are one of the first to introduce an innovative enhancement to further the Canadian exposure of these local emerging artists beyond just our radio station or this market.
LISTNUM 1 \l 1300 All ten cuts of Sun Country's Home Grown CD initiative will be digitally distributed to every Canadian rock‑based radio station complete with individual press kits. Every Music Director and every Program Manager at rock stations coast to coast will have the new music in a ready‑to‑use format, along with background material on the artist.
LISTNUM 1 \l 1301 We will also fund Canadian rock artists through a $42,000 contribution to Parks Alive. It is a series of 65 free, outdoor summer concerts held in downtown Kelowna. When I was the Mayor of Kelowna, the Downtown Business Association sponsored these concerts as a safe streets initiative, with funding coming from the city and the downtown business community. It was a huge success and has expanded every year, turning our city into a destination for live music entertainment. It is a great opportunity for new bands to build fan support and many have gone on to win the Okanagan Music Awards.
LISTNUM 1 \l 1302 We are proud to be the first radio applicant to make a Canadian Content Development commitment to NARIA. That is the National Aboriginal Recording Industry Association. We will invest $35,000 over the licence term to help showcase emerging aboriginal artists at events such as Canada Music Week, where they can get exposure to record companies and to champions within the radio industry.
LISTNUM 1 \l 1303 Finally, we are making an additional $63,000 contribution to FACTOR, for a total amount of $77,000. Our contribution is pledged specifically to B.C. artists with priority to the Okanagan.
LISTNUM 1 \l 1304 In addition to airplay and CCD initiatives, we will lend our support to Canadian artists through features and promotion, from the Community Calendar to our two series, My Music ‑ My Story and Fresh Rock. Our station's website will include a Classic Rockers of Tomorrow section for Canadian artists, with links to websites and information about seeing them in concert or buying their CDs.
LISTNUM 1 \l 1305 We plan a strong and focused local radio service to compete against Pattison and Astral. We have a solid and conservative business plan, with an appealing mainstream music format that is in high demand ‑‑ the key to success for an independent station. And it is our plan to build a strong local team to attract the best radio people available.
LISTNUM 1 \l 1306 Our entire application is based on being relevant to the community. Our goal is to super serve and over deliver on all our promises, from top local news, to our CCD, and helping emerging artists.
LISTNUM 1 \l 1307 In addition, our local reflection will be enhanced by our local advisory committee. We believe that people on the street, given a forum, can really enrich our community reflection.
LISTNUM 1 \l 1308 We are very pleased that Judy Good Sky, the Education and Employment Coordinator for the Westbank First Nation, a highly respected community leader, has agreed to head that committee for us. We are honoured to have Judy here.
LISTNUM 1 \l 1309 Judy.
LISTNUM 1 \l 1310 MS GOOD SKY: Thank you, Walter.
LISTNUM 1 \l 1311 I was delighted to be asked to chair Sun Country's local advisory committee. It was a sounding board for community issues, from sponsoring local music organizations and being the champion for causes to deeper issues involving community standards and diversity.
LISTNUM 1 \l 1312 I believe Sun Country's Classic Rock 96.3 will give the people of Kelowna a new way to interact with each other. Integrating newcomers and involving them in both our heritage and our future is important to maintaining a strong sense of community as our city grows. Kelowna is prosperous, but we still deal with difficult issues from literacy and residential school impacts in our native community, to homelessness and drugs on the streets downtown. These are areas where we can all pitch in, and focused radio campaigns will make a world of difference.
LISTNUM 1 \l 1313 Our advisory committee will help to ensure that programming and station activities reflect Kelowna's diverse interests and are a positive force in the community.
LISTNUM 1 \l 1314 Sun Country is a company with integrity. I have known Walter Gray for many years. I know the values he stands for and I share them. I am proud to be part of his team in Kelowna.
LISTNUM 1 \l 1315 MR. POUND: Thank you, Judy.
LISTNUM 1 \l 1316 Kelowna is a dynamic and growing city and it deserves a radio company with a local heart and local leadership. Sun Country has the resources, the experience, the vision, and will deliver everything we have in our application as outlined today.
LISTNUM 1 \l 1317 The Kelowna market is underserved compared to other cities with similar or smaller populations, including Fredericton, Prince George and Red Deer. Each of these cities has more choices of private commercial radio stations per capita than Kelowna. They also have two rock stations each, one Modern or Alternative and one Classic Rock.
LISTNUM 1 \l 1318 We think there are five key reasons Sun Country Classic Rock 96.3 is the right format for Kelowna and why we are the preferred applicant.
LISTNUM 1 \l 1319 Number one, our application responds to the overwhelming desire of Kelowna residents for a Classic Rock station. It is the music they most prefer that is currently unavailable in the market, as demonstrated by the Synovate research. It will add diversity to the Kelowna radio spectrum.
LISTNUM 1 \l 1320 Number two, Sun Country will be a strong locally owned, independent radio station, with an independent news voice featuring strong local news and local features. Our local reflection includes five and a half hours of news over a seven‑day schedule, and a commitment to more than 13 hours of spoken word.
LISTNUM 1 \l 1321 Number three, we have extensive community reflection. It is demonstrated by the 100 per cent local programming, with live programming from 5:30 in the morning to 10:00 at night during the week, and we are live from 6:00 a.m. until 6:00 p.m. Saturdays and Sundays. That is more than 100 hours of live‑to‑air local programming during the broadcast week. Our community reflection is further enhanced by the guidance of our local advisory committee.
LISTNUM 1 \l 1322 Number four, we offer a $340,000 Canadian Content Development program that focuses on the Okanagan and that will amplified by the on‑air support we give Canadian artists. Our initiatives include the Home Grown CD initiative, funding to artists showcased at Parks Alive, FACTOR support for the Okanagan and B.C. artists, and a contribution to the National Aboriginal Recording Industry Association. Clearly supporting the development of emerging artists with innovative and original concepts and, in addition, our commitment to 40 per cent Canadian content.
LISTNUM 1 \l 1323 Number five, we have a realistic business plan that ensures we will meet our commitments as an independent local licensee and be a strong competitor to Pattison and Astral. According to the Synovate Research survey of Kelowna residents, two‑thirds feel it is important that the new FM station be locally owned and operated.
LISTNUM 1 \l 1324 We believe it is fundamental to the listening public and to the ownership of Canadian broadcasting that the voices of smaller, independent broadcasters be heard. In consolidating times, it is smaller broadcasters who will contribute to the growth and who will strengthen Canada's broadcast system, just as small business contributes most effectively to job creation and growth in the Canadian economy.
LISTNUM 1 \l 1325 MR. GRAY: Members of the Commission, Sun Country's Classic Rock 96.3 will produce high quality programming that is reflective of the Central Okanagan and its cultural diversity, make a substantial contribution to Canadian musical talent, achieve financial viability without material impact on the existing radio stations, and increase ownership, competition and diversity.
LISTNUM 1 \l 1326 I would like to thank the many people from my home town Kelowna who wrote in and supported us. We are getting great community feedback and encouragement from local residents, wherever I go through this community. It is truly inspirational for me and for our team.
LISTNUM 1 \l 1327 Madam Chair, Members of the Commission and CRTC staff, I would like to thank you again for coming to Kelowna. We are honoured. We look forward to responding in whatever way you wish to questions you may have. Thank you so much.
LISTNUM 1 \l 1328 THE CHAIRPERSON: Mr. Pound, Mr. Gray and to your team, welcome.
LISTNUM 1 \l 1329 Commissioner Williams will begin the questioning this morning.
LISTNUM 1 \l 1330 COMMISSIONER WILLIAMS: Good morning, Mr. Pound, Mr. Gray. Perhaps I will address my questions to Mr. Gray and you can assign them as appropriate.
LISTNUM 1 \l 1331 Picking up on some of the information in your opening presentation and as provided earlier in your supplementary brief, and a letter of support from the local Mayor suggesting that there is no longer any independent regional or local radio ownership in this marketplace, and you talked about a company with local heart and local leadership, could you please expand on the comments that you made and how Kelowna would benefit from a local, independent station?
LISTNUM 1 \l 1332 What would be some of the specific benefits I guess to Kelowna in the first part of the answer, and then to the Canadian broadcasting industry in the broader view, the importance of smaller local, independently‑owned broadcasting company.
LISTNUM 1 \l 1333 MR. GRAY: Thank you very much for the opportunity, Mr. Williams.
LISTNUM 1 \l 1334 First of all, I think we made it quite clear that I have a personal knowledge of the community. I know what is happening here. I know who the contact people are. Every contact you have helps, of course, improve your product on the air.
LISTNUM 1 \l 1335 In addition to that, of course, we have formulated the committee we have, the local advisory board. So, we will be the applicant that really has feet on the street and our ears to the ground in terms of this community.
LISTNUM 1 \l 1336 It will be particularly important with this local knowledge when it comes to our spoken word and our news contacts and our ongoing commitments in those areas.
LISTNUM 1 \l 1337 With respect to your second question, why would independent ownership make it better for Kelowna, I would take your question that way.
LISTNUM 1 \l 1338 COMMISSIONER WILLIAMS: Kelowna, and then for the Canadian broadcasting system as well in the second part of that.
LISTNUM 1 \l 1339 MR. GRAY: In the first place, through consolidation ‑‑ and that word was referred to in the presentation ‑‑ if you don't have new players, and in our case new players with experience, eventually the thing is played right out to the end, there will be one radio company in Canada. I am sure the CRTC wouldn't allow that. But we had the merging of Standard Radio from Kelowna with Astral. Standard was already the biggest radio company, and now it is even bigger with Astral, 80 stations across Canada. They are a great company, no question about that, and we have no difficulty with that; and Pattison, one of the largest western Canadian companies as well, the two broadcast companies in this community.
LISTNUM 1 \l 1340 So, if we are licensed, that then gives the opportunity to bring along a new sort of attitude, a new sort of approach to radio so that it isn't all about big business on the radio dial.
LISTNUM 1 \l 1341 I think this reflects well all across the country. These sort of local applications are important, whatever community you have to consider, I fully believe. We feel very privileged and fortunate with respect to the timing that we are able to be here and offer our past experience, and bring my brief removal from the radio industry, if you like, for the nine years when I was the Mayor, but that will even further embellish our opportunities to lead a great radio team with a great new locally owned and operated radio station.
LISTNUM 1 \l 1342 COMMISSIONER WILLIAMS: In your presentations, you described a program called Blast From Our Past. How did you determine this type of programming would be in demand by your Classic Rock listeners in the Kelowna area? Could you maybe give a couple of examples of the type of programming this would provide?
LISTNUM 1 \l 1343 MR. GRAY: I will turn that over to Garry because that just flows out, of course, our research. Once we did our research to find out what the market was all about, we then said well, how would we fill the need identified by the research.
LISTNUM 1 \l 1344 Garry.
LISTNUM 1 \l 1345 MR. BARKER: Thank you, I think, Walter.
LISTNUM 1 \l 1346 Blast From Our Past ties in nicely with our Classic Rock format. Classic Rock will have songs that people grew up with in the 70s and 80s, and the Blast from Our Past, in terms of spoken word, is supposed to reflect the same thing.
LISTNUM 1 \l 1347 Walter and I were chatting yesterday in regards to an article in the Courier. I was asking Walter, I said, do you remember this day 25 years ago? And Walter did. It was just in regards to the Kelowna hockey team losing for the first time in 13 games and there were 914 people at Memorial Arena.
LISTNUM 1 \l 1348 I think even just that story, as trivial as it may seem, can conjure up stories about Memorial Arena and the history behind that.
LISTNUM 1 \l 1349 We believe that the spoken word fuses nicely with our proposed programming.
LISTNUM 1 \l 1350 MR. GRAY: There is a million great stories from the past in every city, but our resources and depth of knowledge in the community will add to that. We have had two past Premiers of British Columbia both from Kelowna. You know, how did their political careers start?
LISTNUM 1 \l 1351 When did the first cable station come here? I mean, they just took signals off the top of the hill and fed them down a thin wire. To remind people of their past, providing you don't live there, is a tremendous opportunity for radio and we are going to seize on that.
LISTNUM 1 \l 1352 COMMISSIONER WILLIAMS: So, this Blast From The Past programming will go back as far as the beginnings of Classic Rock or are you going to go further into the history of Kelowna and the area?
LISTNUM 1 \l 1353 MR. BARKER: I think it is strictly a matter of whether it is relevant and interesting to our target audience, but I don't think we would tie ourselves to saying it has to start in 1972, no.
LISTNUM 1 \l 1354 COMMISSIONER WILLIAMS: Kelowna grew twice as fast as the Canadian average from 2001 to 2007 and it is forecast to continue to double the Canadian average for the next five years going forward.
LISTNUM 1 \l 1355 What, in your opinion, is driving this population growth? What are the demographics of the people who are coming here, and how does this match up with the type of format that you plan to offer?
LISTNUM 1 \l 1356 MR. GRAY: I will make some comments and if I miss anything, because you really had three questions there, maybe Garry can jump in.
LISTNUM 1 \l 1357 Yes, you are certainly right about our growth pattern. A lot of it has to do with in‑migration, there is no question about that.
LISTNUM 1 \l 1358 Also, a lot of the youngsters graduating from high school or now either the college or university, we have a University of British Columbia here now, have had for two years, they have no reason to leave our community. But what we are discovering about the inward migration is, first of all, these are not typically from years ago your prairie wheat farmer who eventually, when his bones get tired and he is 65, retires to the Okanagan. Those are the old days.
LISTNUM 1 \l 1359 People are moving here because they can afford to move here. They move here younger. They figure they will spend the rest of their lives golfing and going to the 80 wineries, quite frankly, and after a year or so they realize that that is not what retirement is about. They are healthy, they are still too young, and they themselves start new businesses as entrepreneurs in our community. So, that really leads to the dynamics with regards to the energy and the economy.
LISTNUM 1 \l 1360 I believe the population growth is sustainable into the future, and I believe statistical data forecasting into the future will bear that out. We have grown, as we said in our presentation, since the last radio station went on the air 12 years ago. We have grown by 45,000 population, but we are not an old town.
LISTNUM 1 \l 1361 COMMISSIONER WILLIAMS: Thank you.
LISTNUM 1 \l 1362 In your presentation you also stated this is a mainstream format, not currently available. Where do your listeners or proposed listeners receive this programming now?
LISTNUM 1 \l 1363 MR. GRAY: Garry is going to comment on this because he is our research expert. I think I will let him get right into it.
LISTNUM 1 \l 1364 MR. BARKER: I am not sure about the term "expert."
LISTNUM 1 \l 1365 If we look at, for example, BBM and radio listening, with over 25 per cent of all tuning to out‑of‑market stations in Kelowna, for one, also from the standpoint that over the last two and a half years radio listening has declined in Kelowna by over 10 per cent, we analyzed the marketplace back in April in terms of what was available and what wasn't.
LISTNUM 1 \l 1366 One of the things that we were searching for was the availability of a mainstream format. We have to realize that, if licensed, we are competing against Astral and Pattison. We have to, in terms of survival, be able to program a mainstream format. We looked at statistics, we looked at the marketplace, and we discovered that there were at least four mainstream format opportunities available. Synovate did the search. Classic Rock came back as the overwhelming choice.
LISTNUM 1 \l 1367 We did monitors back in April; we did monitors in September. We were absolutely convinced in April that Classic Rock is not available in this marketplace and with the research showing what it did, therefore our proposal for Classic Rock.
LISTNUM 1 \l 1368 MR. GRAY: If I could just add to that, the other radio station that may be more closely identified to what we propose, at that time when we were taking the advice from Synovate was Power FM, which is on the station today, but has skewed much younger in the last month or five weeks.
LISTNUM 1 \l 1369 At that time, its positioning statement on the air was "All kinds of rock, one station." They were not a Classic Rock station. They were an all kinds of rock radio station. That has changed. They have now skewed much younger.
LISTNUM 1 \l 1370 COMMISSIONER WILLIAMS: Thank you, Mr. Gray.
LISTNUM 1 \l 1371 Given that your proposed format would seem to somewhat overlap the already offered in the market by CKLZ, what differentiating factors would compel listeners to out‑of‑market and non‑commercial stations to choose your station rather than theirs, and on what assumptions are you basing estimates of deriving 5.6 percentage points of share from out‑of‑market and non‑commercial stations?
LISTNUM 1 \l 1372 MR. GRAY: Garry will respond to the share question.
LISTNUM 1 \l 1373 With regard to the first part of your question, I think maybe I must have anticipated that. Would I have answered that previously?
LISTNUM 1 \l 1374 COMMISSIONER WILLIAMS: Yes.
LISTNUM 1 \l 1375 MR. GRAY: Thank you. Garry, is there anything further to add for Mr. Williams?
LISTNUM 1 \l 1376 MR. BARKER: I don't believe so.
LISTNUM 1 \l 1377 MR. GRAY: I hope we have answered your question.
LISTNUM 1 \l 1378 COMMISSIONER WILLIAMS: You anticipate generating 30 per cent from year two revenues from other forms of media. From which media do you plan to derive these revenues, and how did you arrive at these projections?
LISTNUM 1 \l 1379 MR. GRAY: There will be two parts to that.
LISTNUM 1 \l 1380 One is just the rough numbers, and I am going from memory. 40 per cent of our revenue would come from radio. There would be 30 per cent coming from new money, some of it because of previous relationships with advertisers and people and for other good broadcast reasons, 10 per cent from television and 20 per cent from print.
LISTNUM 1 \l 1381 To maybe further sub‑divide that, if you wish, Garry could go into that, or did you just need the rough big numbers?
LISTNUM 1 \l 1382 COMMISSIONER WILLIAMS: I think Garry should elaborate.
LISTNUM 1 \l 1383 MR. BARKER: Thank you, Mr. Williams.
LISTNUM 1 \l 1384 You are asking specifically in regards to the 30 per cent new?
LISTNUM 1 \l 1385 COMMISSIONER WILLIAMS: 30 per cent total year two revenues, yes.
LISTNUM 1 \l 1386 MR. BARKER: One of the ways we came up with that percentage was again looking at the radio listening in Kelowna as it currently stands. With over 25 per cent of tuning to non‑commercial radio stations from Kelowna, I think it is reasonably safe to assume that if there is such a high level of dissatisfaction with the current radio offerings in Kelowna, that may transpose itself to advertisers within Kelowna as well.
LISTNUM 1 \l 1387 There is also new product categories that we are excited about in radio in terms of advertising that has been traditionally the domain of newspapers, and that is real estate, housing development, and with this buoyant economy in Kelowna, jobs, advertising for employees. Therefore, that is why we came up with the 30 per cent.
LISTNUM 1 \l 1388 COMMISSIONER WILLIAMS: Thank you.
LISTNUM 1 \l 1389 Mr. Gray, how many new undertakings can the Kelowna market support, and can it support two rock stations?
LISTNUM 1 \l 1390 MR. GRAY: If your question is can it support two, meaning the one that exists here now and ours?
LISTNUM 1 \l 1391 COMMISSIONER WILLIAMS: Yes.
LISTNUM 1 \l 1392 MR. GRAY: Absolutely, absolutely it can.
LISTNUM 1 \l 1393 MR. BARKER: If I might just add, Prince George, Fredericton, Moncton, markets smaller than Kelowna, significantly smaller, with two rock stations.
LISTNUM 1 \l 1394 MR. GRAY: And Victoria has two rock stations by the same owner.
LISTNUM 1 \l 1395 COMMISSIONER WILLIAMS: Would the licensing of any other applicants negatively affect your business plan?
LISTNUM 1 \l 1396 MR. GRAY: We weren't anticipating that there would be other licences granted, but if the Commission chose to licence another applicant, we are up for the challenge. We are good competitors. We know this market. We know that local programming and local ownership is important, and we will do just fine.
LISTNUM 1 \l 1397 COMMISSIONER WILLIAMS: In your opinion, how many new stations can this marketplace absorb?
LISTNUM 1 \l 1398 MR. GRAY: We would like to think it would be ours and ours only, but as I have already said, ours and another of the Commission's choosing would be fine, and that other station probably should be one that isn't after the same advertising domain we are. If you are trying to lead me to say could it handle three stations, I would say for us, competition will be very, very keen. It will be for the other two as well, but we are up for the challenge.
LISTNUM 1 \l 1399 I mean, this is our town, we know it, we will do well, not as well if there is more than one station, of course.
LISTNUM 1 \l 1400 COMMISSIONER WILLIAMS: Thank you very much, Mr. Gray, Mr. Pound and panel members. That concludes my line of questioning, Madam Chair.
LISTNUM 1 \l 1401 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1402 Commissioner Morin.
LISTNUM 1 \l 1403 COMMISSIONER MORIN: During your oral presentation you probably identified with the community, and you have given a lot of examples of your identity with the localisms, if I may say.
LISTNUM 1 \l 1404 How do you explain that you weren't the first to trigger the process of a new licence? It was Vista, wasn't it? How do you explain that you weren't the first to trigger the process of a new licence?
LISTNUM 1 \l 1405 MR. GRAY: It is true, Vista triggered the licence a year and a half ago. We simply responded to the CRTC call.
LISTNUM 1 \l 1406 I suppose if much more time had gone by, we could have been the one that triggered the licence, but we were not.
LISTNUM 1 \l 1407 COMMISSIONER MORIN: But for you, do now have an idea that in the few years you would trigger the process or not?
LISTNUM 1 \l 1408 MR. GRAY: I don't think I could say yes to that because, frankly, that hadn't gone through my mind.
LISTNUM 1 \l 1409 What made us look for the opportunity is firstly, and speaking from a personal basis, I have been a radio guy from grade 12 and I took nine years out of my life to be the Mayor of Kelowna, and, for me, it was time to go back into radio. But you don't just do it because you love radio, which I do, you do it because you love radio and you can succeed at it.
LISTNUM 1 \l 1410 I am very, very aware of what has been happening in terms of the revenues in this market. It has increased by over $1 million a year for at least the last three years. Certainly this year just concluded will be another $1 million year, and I have no reason to believe the future years won't be.
LISTNUM 1 \l 1411 But having said that, our business plan was predicated on a $700,000 increase in our first year in terms of the overall market and then out through the next six years of the seven‑year format, half a million dollars.
LISTNUM 1 \l 1412 So, it was really a case of the market is ready for another radio station and am I personally up for the challenge, is Mr. Pound and I, who have been associated in business for many, many years, up for the challenge, is the son of my partner in radio for many, many years, Mike Hall back here, is he up for the challenge? And the timing is perfect for us. We are up for the challenge. We are ready to broaden our cable business experience back into what we do very, very well and practice very well in this market, and that is radio.
LISTNUM 1 \l 1413 COMMISSIONER MORIN: Thank you.
LISTNUM 1 \l 1414 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1415 I just have a couple of clarification questions to ask.
LISTNUM 1 \l 1416 Mr. Gray, in response to Commissioner William's question on the sources of revenue for your advertising, you said that 40 per cent would come from radio, but your application actually says 26 per cent would come from existing radio stations.
LISTNUM 1 \l 1417 MR. GRAY: You will have to respond to that. That is some information that is sort of further subsidized ‑‑ sub‑divides earlier information.
LISTNUM 1 \l 1418 MR. BARKER: Madam Chair, the question that you are asking I believe was answered in our deficiency response, but I do appreciate the opportunity perhaps to explain it a little bit further.
LISTNUM 1 \l 1419 THE CHAIRPERSON: Please.
LISTNUM 1 \l 1420 MR. BARKER: Of the 40 points from radio, 14 points will come from increased budgets from existing radio advertisers, 26 points will come from existing radio stations. Of these 26 points, we estimate that a half or 13 points will come from CKLZ, 40 per cent or 10.4 points from Astral's CILK and Sun, and 10 per cent or 2.6 points from other Kelowna radio stations.
LISTNUM 1 \l 1421 THE CHAIRPERSON: So you make that distinction. Existing advertisers who currently advertise on radio will increase their budgets and then there is a further breakdown, of course, of just new advertisers who are knew to the genre.
LISTNUM 1 \l 1422 MR. BARKER: Correct.
LISTNUM 1 \l 1423 MR. GRAY: Yes, correct, thank you.
LISTNUM 1 \l 1424 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1425 In terms of spoken word programming, today in your oral presentation you said that there is a commitment of more than 13 hours of spoken word.
LISTNUM 1 \l 1426 MR. GRAY: Correct.
LISTNUM 1 \l 1427 THE CHAIRPERSON: Of which five hours and 32 minutes is news and surveillance, and I have the details here on my laptop from your supplementary brief. So I don't need to go into that detail.
LISTNUM 1 \l 1428 But in response to deficiency question dated July 10, you say there is a total of 25 hours and 39 minutes of spoken word programming.
LISTNUM 1 \l 1429 MR. BARKER: Walter, I will kind of jump in on this.
LISTNUM 1 \l 1430 MR. GRAY: Go ahead. You found your place faster than I did.
LISTNUM 1 \l 1431 MR. BARKER: What we tried to do on that is we were thinking that the Commission was after as to how much music programming we would have. So we broke it down two‑fold in terms of spoken word programming which totalled just slightly over 13 hours, and then we put in commercial, station promotion and public service announcements, for an additional 12 hours and 36 minutes.
LISTNUM 1 \l 1432 THE CHAIRPERSON: So, the 13 hours referred to in your oral presentation is your spoken word commitment because we have to subtract the commercials and station promotions?
LISTNUM 1 \l 1433 MR. GRAY: And that is the way we got to the amount of music that we would have on the 126 hours a week.
LISTNUM 1 \l 1434 THE CHAIRPERSON: So your commitment is five hours and 32 minutes of local news, and announcer talk and surveillance six hours and 18 minutes?
LISTNUM 1 \l 1435 MR. GRAY: Correct.
LISTNUM 1 \l 1436 THE CHAIRPERSON: And then your features for a total of one hour and 13 and a half minutes?
LISTNUM 1 \l 1437 MR. GRAY: That is correct.
LISTNUM 1 \l 1438 THE CHAIRPERSON: Okay, thank you very much.
LISTNUM 1 \l 1439 You heard Vista's presentation this morning. Do you see any similarities between your format and the new Classic Hits format as proposed by them?
LISTNUM 1 \l 1440 MR. GRAY: That will be a demographic and music question. Garry.
LISTNUM 1 \l 1441 MR. BARKER: Well, there have to be some similarities, I guess, particularly compared to Country.
LISTNUM 1 \l 1442 We looked at what they presented today in terms of era balance and era balance is not unlike our era balance.
LISTNUM 1 \l 1443 I will read a definition of Classic Hits and see how it goes over.
LISTNUM 1 \l 1444 Classic Hits is a variation on the Classic Rock theme which provides most of the playlist of Classic Rock, with the addition of contemporaneous R & B and Pop Hits, striking a balance between the Classic Rock format and the more broadbased Oldies format.
LISTNUM 1 \l 1445 I go to two sources in terms of Classic Rock versus Classic Hits, and one is from the CRTC database, with format shares. The latest available showed Classic Rock in Canada with 9.4 per cent of tuning and Classic Hits at 4.3 per cent. I also go in terms of our own research, where Classic Rock was the overwhelming number one choice, Classic Hits at times came in number four.
LISTNUM 1 \l 1446 I think the biggest question here would be the demand for the format.
LISTNUM 1 \l 1447 THE CHAIRPERSON: Could the Kelowna market sustain both of those services being licensed as presented, both yours and that of Vista?
LISTNUM 1 \l 1448 MR. BARKER: It is Walter's city.
LISTNUM 1 \l 1449 MR. GRAY: If the Commission is already thinking about more than one licence, I have to ask myself and ask the Commission would Sun Country and Vista be the wrong fit?
LISTNUM 1 \l 1450 We are in large manner going after the current void.
LISTNUM 1 \l 1451 THE CHAIRPERSON: You are the local experts, as you have so expressly told us this morning. I am not sure if you had an opportunity to read the intervention from Standard Radio, and it is not just an intervention opposing your application. It is an intervention to anything being licensed in the Kelowna market.
LISTNUM 1 \l 1452 What has changed, in your opinion, in the Kelowna market in the last year or 18 months to generate the kind of interest that we have here before us today, thanks to Vista, not because of Vista's triggering for the call, but really, thanks to Vista filing their application, it generated the level of interest that we have before us this week.
LISTNUM 1 \l 1453 So, if you did have a chance to read Standard's intervention, can you explain to us, being the local experts, what has changed?
LISTNUM 1 \l 1454 MR. GRAY: Yes, I have. Thirty‑five pages. We have the right one?
LISTNUM 1 \l 1455 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 1456 MR. GRAY: First of all, the local expert would say that the outstanding revenues in this market the last three years have been certainly a ‑‑ would make anybody start to say, Kelowna, it is ready for another radio station, and obviously you have had 11 people respond.
LISTNUM 1 \l 1457 In terms of what has happened in the market, I believe it all started when Pattison, and they did the right thing, but the two AM stations, the Pattison station and the Standard station, AMs, were both really suffering. Maybe one was breaking even. The other would have been losing money. They just weren't cutting it.
LISTNUM 1 \l 1458 Yet, here was this robust radio market. So, Pattison made the decision wisely ‑‑ this is just from the outside looking in ‑‑ to flip to FM, and they identified the market at that time and they appeared before the Commission and they said it would be soft vocals, I believe.
LISTNUM 1 \l 1459 So, everybody knew that something was going to start to change.
LISTNUM 1 \l 1460 Then they got the licence and whatever happened between them and the Commission, I don't know, but certainly in the market they re‑thought the format and they chose Country because our research showed us too, Country was clearly a void, no question. So I think they probably did the right thing.
LISTNUM 1 \l 1461 Then Standard, now Astral, responded to that change. I could see all this coming and it just happened to be when applications were being put together. They said, ah‑hah, one AM station that really focused on news talk, local, national, international, personality talk radio, the whole thing, could really make a go of it. So, they did the right thing too. They said, okay, we have got it all to ourselves, and they have been on the air maybe now for a month or six weeks or less, whatever, with that format, and just as a listener listening, one, I like the station and two, they are doing very, very well, in my view. I think they know they have made the right decision.
LISTNUM 1 \l 1462 In the meantime, not in the meantime, but also in this past year or so, you had SILK‑FM, which was the only independent at the time, and it really did quite well as an independent, Nick Frost's radio station, it was sold to Standard. So, now Standard had control of two of the very dominant radio stations in the community, made I would say, as a listener, some massaging moves. They didn't make the wholesale changes because they didn't need to; they just had to make some subtle moves because they could in order to package those two stations well.
LISTNUM 1 \l 1463 So, that, in itself, didn't change how the radio market would go.
LISTNUM 1 \l 1464 But in the meantime, and this would be on August whatever when they had their press conference and launched their Country station they, at about that time, made the conscious decision to skew their all kinds of rock radio station, Power 104, they skewed that much younger, and I would probably guess ‑‑ and Gary, you may want to comment ‑‑ 15 to 34, just pulling it out of the air, but much, much younger, just to give you a flavour for it.
LISTNUM 1 \l 1465 So what has happened in the market? Everything has happened in the market. But what it has done, and even more so since we first applied, even more so than our research would show, is that our Classic Rock format is staring at this big void that was bigger than when we surveyed the market with Synovate.
LISTNUM 1 \l 1466 So, two things have changed. Everything and the opportunity for Sun Country to fill the void.
LISTNUM 1 \l 1467 THE CHAIRPERSON: Well, thank you very much for that response.
LISTNUM 1 \l 1468 I am going to give you your two minutes to tell us why your format is the best and why you are the best applicant for the Kelowna market.
LISTNUM 1 \l 1469 MR. GRAY: And our President, Mr. Pound, will do that.
LISTNUM 1 \l 1470 MR. POUND: Thank you.
LISTNUM 1 \l 1471 Sun Country's application to serve the Kelowna and Central Okanagan market has the financial resources. We bring a new local ownership group with a tradition of broadcast excellence in this market. We bring a substantial contribution to the development of Canadian musical talent.
LISTNUM 1 \l 1472 Sun Country will be the Okanagan's most committed advocate of our region's new songwriters, artists and performers. Our local emerging Canadian talent will enjoy endless opportunities of financial and promotional support in their budding careers.
LISTNUM 1 \l 1473 We have targeted our Kelowna market with the optimum format, Classic Rock, responding to the strong demand as outlined in the Synovate survey, while adding diversity and choice for our Kelowna listeners.
LISTNUM 1 \l 1474 We bring a new independent newsroom to reflect and report back to Kelowna. Our community advisory board will help to ensure that our programming and station activities reflect Kelowna's diverse interests and are a positive force in the community.
LISTNUM 1 \l 1475 We propose a realistic business plan, based on sound judgment and successful business experience.
LISTNUM 1 \l 1476 Madam Chair, Commission members, Commission staff, we are proud and passionate about our application before you today. If you grant us the privilege to serve our friends and neighbours of Kelowna with Sun Country's Classic Rock 96.3, you will be strengthening local broadcast ownership, which we firmly believe will be very good both for Kelowna radio listeners and the Canadian broadcast system.
LISTNUM 1 \l 1477 Again, a sincere thank you for bringing this hearing to Kelowna. Thank you.
LISTNUM 1 \l 1478 MR. GRAY: Thank you.
LISTNUM 1 \l 1479 THE CHAIRPERSON: My apologies. I will get this right sooner or later. Legal counsel has a question.
LISTNUM 1 \l 1480 MS LEHOUX: It won't be long. It is just a few clarifications, and since they are on condition of licence, it is important to get them on the record.
LISTNUM 1 \l 1481 I just want you to confirm that you agree to have a condition of licence to devote in a broadcasting week a minimum 40 per cent of Canadian content and 40 per cent of Canadian content Monday to Friday 6 a.m. to 6 p.m.?
LISTNUM 1 \l 1482 MR. GRAY: Yes, we do.
LISTNUM 1 \l 1483 MS LEHOUX: And the second one is: Do you agree that you are over and above CCD $315,000 will be imposed as a condition of licence?
LISTNUM 1 \l 1484 MR. GRAY: Absolutely. We are very excited about that component.
LISTNUM 1 \l 1485 MS LEHOUX: Thank you very much.
LISTNUM 1 \l 1486 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 1487 We will now take a 15‑minute break and come back at 11:30. Thank you.
‑‑‑ Upon recessing at 1117 / Suspension à 1117
‑‑‑ Upon resuming at 1134 / Reprise à 1134
LISTNUM 1 \l 1488 THE SECRETARY: Could you please be seated and we will begin.
LISTNUM 1 \l 1489 THE CHAIRPERSON: Madam Secretary.
LISTNUM 1 \l 1490 THE SECRETARY: Thank you, Madam Chair.
LISTNUM 1 \l 1491 We will now proceed with item 3, which is an application by Harvard Broadcasting Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Kelowna, British Columbia.
LISTNUM 1 \l 1492 The new station would operate on frequency 96.3, channel 242B, with an average effective radiated power of 7,100 watts, maximum effective radiated power of 20,000 watts, antenna height of minus 89 metres.
LISTNUM 1 \l 1493 Appearing for the applicant is Mr. Bruce Cowie. Please introduce your colleagues, and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
LISTNUM 1 \l 1494 MR. COWIE: Thank you. Good morning, Madam Chair, members of the panel, Commission staff, legal counsel.
LISTNUM 1 \l 1495 My name is Bruce Cowie and I am the Vice‑President of Harvard Broadcasting. I am pleased to be here today to present our application for Timeless 96.3, a new Adult Standards/Easy Listening FM station, targeting the 45‑plus audience in the growing market of Kelowna, British Columbia.
LISTNUM 1 \l 1496 Before beginning our presentation, I would like to introduce the members of our panel.
LISTNUM 1 \l 1497 Seated on my right in the front row is Michael Olstrom, Harvard Station Group Manager. On my left is Tina Svedahl, Vice‑President, Investments at Harvard. Next to Tina is Larry LeBlanc, one of Canada's best known music journalists and broadcasters. Larry helped design the format and will have an ongoing role in programming Timeless 96.3.
LISTNUM 1 \l 1498 Seated in the back row on my left is Paul Hill, the President and Chief Executive Officer of Harvard Developments, our parent company. Mr. Hill is one of Canada's business leaders and operates a family‑owned diversified company that has recently celebrated 103 years of doing business in Canada.
LISTNUM 1 \l 1499 Next to Paul is Robert Malcolmson of Goodmans LLP, our legal counsel. Seated next to Rob is Deborah McLaughlin of Strategic Inc., the company that did our consumer demand and economic study.
LISTNUM 1 \l 1500 Michael will first give you an overview of the growing Kelowna market and our target audience. I will then summarize the high demand for our proposed format. Larry will describe the kind of music we are proposing and explain why this unique format will meet the needs of Kelowna radio listeners. Next, Michael will provide additional details about the station and talk about our feature programming. Paul will talk about why Kelowna is an essential component in our western regional growth strategy. Then I will present our package of Canadian Content Development initiatives.
LISTNUM 1 \l 1501 Michael.
LISTNUM 1 \l 1502 MR. OLSTROM: Kelowna today is a story of growth: Growth in population, growth in economic development, and growth in retail sales.
LISTNUM 1 \l 1503 Population in the Kelowna CMA has grown at almost double the rate of British Columbia and has increased by 10 per cent between 2001 and 2006. Moreover, it is growth in a very specific demographic. According to the 2006 census, Kelowna is the oldest market in Canada, with a median age of 43, almost four years older than the national average. And the largest projected population increases are anticipated to be in the 45 to 64 and 65‑plus age brackets. This clearly continues an aging trend.
LISTNUM 1 \l 1504 Kelowna serves as the economic hub of the Central Okanagan region. The region's Economic Development Commission has been actively engaged in business development and the area boasts a diversified industrial base. According to the EDC, there are 28 major projects underway in the area, representing over $5.5 billion worth of investment, and there are a further 22 projects proposed, injecting an additional $3.9 billion in infrastructure development.
LISTNUM 1 \l 1505 The retail sector has also grown, posting a 22 per cent gain between 2005 and 2006. Retail sales are robust, with per capita expenditures of 27 per cent above the national average. These expenditures are forecast to increase by more than 12 per cent in the next two years.
LISTNUM 1 \l 1506 Despite this steady growth, radio advertising revenues are underdeveloped relative to retail sales. According to our economic analysis, the very healthy retail sector, high population growth, new job creation rate and projected increases in retail sales all lead to the conclusion that radio is underperforming. Accordingly, it is our view that competition will stimulate radio revenues in this two‑player market, and we believe there is room for expansion in Kelowna's radio advertising base.
LISTNUM 1 \l 1507 Bruce.
LISTNUM 1 \l 1508 MR. COWIE: Kelowna has the oldest average age in Canada. The proposal for an Adult Standards/Easy Listening format addresses this demographic skew by providing a mature sound that will appeal primarily to a 45‑plus audience.
LISTNUM 1 \l 1509 Tuning in Kelowna has declined across all sub‑groups, including people age 55 and over. Our search revealed that there was a large subset of that population that is dissatisfied with existing services. Several measures pointed to a portion of the population that was not being well served.
LISTNUM 1 \l 1510 Sixty‑five per cent chose other media to hear the music they liked, and only 22 per cent report being very satisfied with radio in Kelowna.
LISTNUM 1 \l 1511 The consumer research identified strong demand for a format with almost two‑thirds of the respondents reporting high levels of interest in this service. All of this suggests that Harvard's Timeless 96.3 could repatriate a significant number of listeners.
LISTNUM 1 \l 1512 Larry.
LISTNUM 1 \l 1513 MR. LeBLANC: Thanks, Bruce.
LISTNUM 1 \l 1514 I am going to speak about the format that Harvard has chosen, what it is, why it will fill a unique niche in Kelowna, why it is a good fit with this market. I have been a music industry trade journalist for 40 years. For the past 16 years, I was the Canadian Bureau Chief for Billboard magazine.
LISTNUM 1 \l 1515 Timeless 96.3 will incorporate a wide variety of music and a wide variety of artists. What is notable is the broad mix of decades and sub‑genres of music that it represents: New crooners, traditional crooners, folk, world music, instrumental and light jazz, with hits and artists from the 50s to the current day.
LISTNUM 1 \l 1516 This format is aimed at mature adults, meaning mainly those 45 and older. It is one of the very few formats that can combine current artists with artists from multiple decades in a seamless presentation.
LISTNUM 1 \l 1517 Adult Standards first became a popular format in the late 1970s and early 1980s. It was a way to reach mature adults who came of age during the rock era, but were too young for Adult Contemporary or Beautiful Music. Today there are about 200 Adult Standards/Easy Listening stations in the United States, and a growing number in Canada.
LISTNUM 1 \l 1518 A popular misconception about the Adult Standards/Easy Listening format is that few artists are making this kind of music today and yet nothing could be further from the truth. Canadians Michael Buble, Diana Krall, Mat Dusk and Holly Cole, as well as such international acts as Rod Stewart, Cindy Lauper and Carly Simon are all recording songs within the format and, in many cases, they are giving new life to songs first made popular in the 40s, 50s and 60s.
LISTNUM 1 \l 1519 These tracks, mixed with classic performances from such musical icons as Frank Sinatra, Dean Martin and Barbra Streisand, will sit comfortably alongside light jazz artists like Norah Jones.
LISTNUM 1 \l 1520 World artists such as Il Divo, soft pop groups like the Bee Gees and Air Supply will mix with timeless Canadian artists like Gordon Lightfoot and Anne Murray, and Canadian instrumental music artists like Loreena McKenna, Pavlo, Michael Jones, Michael Kasehammer, and Jesse Cook.
LISTNUM 1 \l 1521 While some of these artists are heard on other formats, like AC and even Rock, you won't find the same tracks being played. Rod Stewart, for example, may get airplay for such rock anthems as Maggie May and Young Turks. But on Timeless 96.3, we will play classic selections from his Great American Songbook series, such as Time Goes By and The Way You Look Tonight.
LISTNUM 1 \l 1522 This format also holds a special place for new and emerging Canadian artists like Emily Barlow‑Clare, Michael Massaro and Dean Nesbitt Jr., who are now developing their own timeless musical styles within the Adult Standards/Easy Listening genre.
LISTNUM 1 \l 1523 Timeless 96.3 will attract listeners with its broad blend of enduring, soft melodic music and meaningful lyrics. Let's look and listen to why Timeless 96.3 is the right sound for Kelowna.
‑‑‑ Video presentation / présentation vidéo
LISTNUM 1 \l 1524 MR. COWIE: The Adult Standards format will fill a gap that Harvard's research identified in the Kelowna market in three very specific respects.
LISTNUM 1 \l 1525 First, respondents to the consumer demand study identified a large variety of music as a very important element in their station selection. Mixing current with contemporary artists will create a larger playlist which will address that key programming consideration.
LISTNUM 1 \l 1526 Second, a combination of vintage and contemporary artists will meet the needs of established fans, bring back disenfranchised listeners, and help develop new listeners in Kelowna.
LISTNUM 1 \l 1527 And third, this format will meet not just the needs that are being expressed today, but those of tomorrow's audience, based on what we anticipate will be a growing audience of aging baby boomers in the Kelowna market.
LISTNUM 1 \l 1528 Michael.
LISTNUM 1 \l 1529 MR. OLSTROM: Thank you, Bruce.
LISTNUM 1 \l 1530 Let me start with our Canadian content commitment. Timeless 96.3 will maintain 40 per cent Canadian content over the broadcast week and day, giving both established and new artists the widest possible exposure. Within the format, a minimum of 25 per cent of our Canadian content, or 10 per cent of the station's broadcast schedule, will be assigned to new and emerging artists to ensure they receive effective airplay.
LISTNUM 1 \l 1531 In addition to rotation in the playlist throughout the broadcast day, Timeless 96.3 will offer special programming features that will contribute directly to exposure for Canadian artists.
LISTNUM 1 \l 1532 For example, Canadian Spotlight will profile artists in a 90‑second feature airing six times daily. And New Crooners will cover the careers and works of these artists with special emphasis being placed on Canadian performers.
LISTNUM 1 \l 1533 Our consumer research also demonstrated the importance of news to the target audience. In order to meet this interest, Harvard will schedule 104 newscasts in prime listening times, for a total of just over nine hours of news each week. Throughout this schedule, emphasis will be given to local news and to covering regional events from Kelowna and the Okanagan Valley. Each weekday at noon, Timeless 96.3 will provide a 30‑minute program in which we will explore the events making headlines. Expanded news coverage, coupled with interviews from local news makers, will provide more in‑investigation of the stories shaping the community. With a fully staffed newsroom, Timeless 96.3 will provide diversity to news in Kelowna by providing a fresh new editorial voice.
LISTNUM 1 \l 1534 Paul.
LISTNUM 1 \l 1535 MR. HILL: Thank you, Michael.
LISTNUM 1 \l 1536 Harvard Developments is a family‑owned diversified company that has been doing business in western Canada for over 100 years, including 30 years in the broadcast business. Harvard's radio stations are local, community‑based, consistent with the community service principle that has always been part of our family's approach to business. In fact, our family has been doing business in Kelowna for a number of years through our real estate and surety businesses. My uncle and currently my sister, husband and nephew reside in Kelowna.
LISTNUM 1 \l 1537 As the Commission knows, Harvard has been aggressively pursuing a regional growth strategy in recent years. In this ever consolidating media environment, we need to achieve critical mass and the system needs the diversity of voices that new ownership brings. This is particularly true in Kelowna, where all five stations are controlled by two major radio companies, Pattison and the newly approved Astral/Standard.
LISTNUM 1 \l 1538 Today, Harvard owns and operates three stations in Regina, an FM station in Calgary, and we will launch new FM stations in Fort McMurray and Saskatoon by the end of the year. This application is important to our continuing growth and development as a mid‑sized western regional broadcaster and a significant contributor to Canadian Content Development. A Kelowna station would mean our entrance into the British Columbia market, a logical and important move for a company that prides itself on its distinctly western voice.
LISTNUM 1 \l 1539 Bruce.
LISTNUM 1 \l 1540 MR. COWIE: Harvard will contribute $900,000 over seven years in CCD. Just over $330,000 will be designated for FACTOR. Harvard will continue to focus on activities that support the cornerstones of artist development: Discovery, exposure and support.
LISTNUM 1 \l 1541 We commit to provide incremental funding to several initiatives, including Mountain Fest. We will fund the Little Big Stage which features artists under the age of 20 who are beginning their careers by augmenting artist fees.
LISTNUM 1 \l 1542 Parks Alive, an initiative of Festival Kelowna, a summer‑long concert series in the parks. Harvard proposes to provide funding to bring Canadian artists performing in the Adult Standards or Easy Listening style to the market.
LISTNUM 1 \l 1543 The Aboriginal Media Education Fund. AMEF is dedicated to providing aboriginal artists and youth, in particular, with training for careers in the broadcasting and performing arts fields. Harvard will continue its commitment to aboriginal people by sponsoring AMEF's audio production training courses in British Columbia.
LISTNUM 1 \l 1544 The Canadian Catalogue of Instrumental Music. The CCIM is a catalogue dedicated to the promotion and support of Canadian instrumental artists. Harvard is pleased to provide funding to ensure it can continue to promote these performers both within Canada and abroad.
LISTNUM 1 \l 1545 Madam Chair, members of the Commission, Harvard's application for Timeless 96.3 will meet the needs of Kelowna's listeners and will be of benefit to the Canadian broadcasting system. We are here today to offer a fresh option to Kelowna listeners, with a unique musical format, in‑depth local news and feature programming, and a new perspective that will add diversity in all forms to the market.
LISTNUM 1 \l 1546 Our proposal for an Adult Standards/Easy Listening station meets all of the Commission's licensing criteria.
LISTNUM 1 \l 1547 Our business plan is sound and can be achieved with minimal impact on the incumbent broadcasters. We have chosen a format that is not present in the market and we are targeting a demographic that is not well served by the incumbents. Timeless 96.3 will therefore complement existing services, not compete with them.
LISTNUM 1 \l 1548 Harvard will bring diversity of ownership and add a new editorial voice to Kelowna, a market that is currently dominated by two large players, Pattison and Astral/Standard.
LISTNUM 1 \l 1549 Our impact will be minimal as our core audience is readily distinguishable from the incumbents.
LISTNUM 1 \l 1550 Growth in the overall economy and in retail sales in particular indicates that this market can accommodate new entry.
LISTNUM 1 \l 1551 And finally, the incumbent operators are well positioned to respond to competition.
LISTNUM 1 \l 1552 Madam Chair, this is the right proposal at the right time and in the right place. Our format choice serves the largest and fastest growing demographic segment in Kelowna and all the economic indicators demonstrate that now is the time for new entry. It is clear that this two‑owner market will benefit from increased competition and from new editorial diversity.
LISTNUM 1 \l 1553 For all of these reasons we hope the Commission will endorse our proposal and allow Harvard to extend its tradition of community service to Kelowna with Timeless 96.3 FM.
LISTNUM 1 \l 1554 Thank you, and we are ready for your questions.
LISTNUM 1 \l 1555 THE CHAIRPERSON: Thank you, Mr. Cowie. I will ask Commissioner Morin to begin the questions.
LISTNUM 1 \l 1556 COMMISSIONER MORIN: Good morning.
LISTNUM 1 \l 1557 I would like to discuss with you your choice of music format for your proposed radio station, given the presence of SILK‑FM in the market. Firstly, can you describe how your Adult Standards/Easy Listening format will defer from SILK‑FM Adult Contemporary format, and secondly, why do you believe that your format will provide the greatest degree of programming diversity and represent the best choice of format to serve the adult population of Kelowna?
LISTNUM 1 \l 1558 MR. OLSTROM: Commissioner Morin, I will be pleased to start the process here.
LISTNUM 1 \l 1559 Whenever Harvard Broadcasting goes into a marketplace, we look at a number of things. Obviously the demographics, and what we came out with our research was definitely there was a missing link to the listeners of the 45‑plus demographic that this format, Adult Standards/Easy Listening targets.
LISTNUM 1 \l 1560 The second step that we take is a look at a duplication analysis in terms of music and the incumbents that currently exist in the marketplace. What we did was we took the Jewel in Ottawa as a proxy playlist and we did an analysis over a five different week period, the most recent being October 15th through 29th, and determined that the duplication of artists within the marketplace is in the neighbourhood of 16 and a half to 17 per cent, which indicates a fairly low duplication of artists being played and tracks being played in the marketplace.
LISTNUM 1 \l 1561 Our format also giving a wide range of different types and styles and genres of music and sub‑genres of music. Our non‑hit‑to‑hit ratio is going to be much higher. Our inclusion of instrumental, folk music, world music, jazz, all lend itself to different music than what is currently being play by the incumbents in the marketplace.
LISTNUM 1 \l 1562 What I would like to do is I would like to turn to Larry LeBlanc to speak a little bit further about the specific format and how it differentiates itself from those incumbents currently in the market.
LISTNUM 1 \l 1563 MR. LeBLANC: Commissioner, one thing we must understand here is the Adult Standards/Easy Listening format is distinct. It is not Easy Listening by itself. It is not Adult Contemporary. It is not Hot AC, Light AC, however you want to name it. It is a throwback in one sense to Beautiful Music and Easy Listening formats that were available, widely available in North American radio markets in the 1950s and 60s. I would make note that I appeared before the Commission in the 1970s, after writing a paper called The Demise of the Easy Listening Instrumental, as radio stations were bailing out of that format at that particular time and bailing out of their commitments that they had to be instrumental category.
LISTNUM 1 \l 1564 While the instrumental category did disappear from radio for some time, and the format itself disappeared, or certainly evolved, and it evolved into Light AC, AC to some degree, as the rockers that were around at that particular time or grew up with it, they had their own choices of music. The Easy Listening/Beautiful Music format that was available within that period of time reached back into the 30s and 1940s for its music.
LISTNUM 1 \l 1565 I am 60 years old next month. I grew up with different types of music. Everything from the Beetles, Rolling Stones to Led Zeppelin, but I also grew up with Perry Como. I also grew up with music that I heard like Dean Martin, like Frank Sinatra. I can probably trade off that music, and that music has endured.
LISTNUM 1 \l 1566 I would argue that my age demographic, as we grew older, that was just one part of the music that we have listened to over a period of time. Yes, we are fighting to go see Neil Young as he plays in concert or Led Zeppelin, but I think I would give anything to see a Neil Diamond concert at the same time or Diana Krall or a number of these different people. So the music itself hasn't changed.
LISTNUM 1 \l 1567 I would even point out to you that in the 1960s, what knocked off the Beetles I Want to Hold Your Hand off the Number 1 spot on the charts was Dean Martin with Everybody Loves Somebody Sometime. So, we have had this music in our demographic for some time.
LISTNUM 1 \l 1568 But why is this format unique? Well, it starts with the fact that there is an instrumental component of 15 per cent. No other format plays instrumentals today, or certainly don't play them in abundance. They may have a few here and there. The instrumental disappeared basically off the radio dial for two or three decades. You are not likely to hear Percy Faith on the radio any more. You are not likely to hear an artist like Michael Jones, who is a Canadian from Orilla. He has put out six albums. He sold over a million units, and yet most people don't know who the heck he is because he doesn't get that much radio play or press attention.
LISTNUM 1 \l 1569 The other thing that is interesting about Adult Standards/Easy Listening as well too is it picks from a number of different musical genres. We are proposing and looking at playing 70.1 per cent Adult Standards, 5 per cent Light Classical, 10 per cent Jazz Oriented, 9.9 per cent of the music would be Folk or Roots Oriented, and World or International, 5 per cent. That is why we can play newer artists or different things like that that haven't been heard. Virtually 40 per cent of the titles we will play will be since year 2000, and less than 15 per cent of that will be from the past two years, 26 per cent will be from the 80s and 90s, and 16 per cent from the 60s and 70s, and 18 per cent from the 1950s, where obviously the roots of this format were born. But they have grown and they have also evolved as well.
LISTNUM 1 \l 1570 For a number of years, particularly with the instrumental artists, they have been living in a cottage industry, trying to get their music out.
LISTNUM 1 \l 1571 We are lucky today to have something like the Canadian Catalogue of Instrumental Music, where people can tap into that. They can go on line and hear samples. I know from working in this format a few years ago, we had trouble finding instrumental artists. It wasn't that they weren't there. It is just that they were not showing up on the radar of the record industry, while in the last couple of years they are, and thanks to the Canadian Catalogue of Instrumental Music they are more readily available today.
LISTNUM 1 \l 1572 In fact, I would also say that with the music education programs in a lot of high schools and colleges today, now that this format is becoming more available, we are seeing the emergence of a lot more artists as well.
LISTNUM 1 \l 1573 MR. OLSTROM: Thank you, Larry.
LISTNUM 1 \l 1574 If I could also add, Commissioner Morin, the differentiation between ourselves and what CILK is currently doing, we are projecting the median age for Timeless 96.3 to be approximately 58 years of age, where if we do a calculation on SILK's audience, difficult to nail it down, but it is somewhat below 50.
LISTNUM 1 \l 1575 Also, a very significant difference is going to be, as much as the artist, it is the tracks from the artists. As you may have noticed in the video, artists like Shania Twain or Alanis Morissette, who come from maybe different genres, but fit into the genre of what we are presenting here, but doing different tracks that wouldn't normally be played on a mainstream format in the marketplace today.
LISTNUM 1 \l 1576 MR. LeBLANC: If I can add, Commissioner, in looking at the CILK playlist, we couldn't obviously pick out selections all the way through, but we could pick out artists.
LISTNUM 1 \l 1577 In fact, there would be a duplication of maybe 15.2 per cent artists, that is it, and that is minimum. If you look at the breakdown of airings, it is quite a bit different too. For example, from '69 or earlier, they are playing 4.9 per cent. We would be playing 70.5 in 1970. There is a separation there as well.
LISTNUM 1 \l 1578 As I said, that duplication of 15.2 per cent, that is only artists. That doesn't mean we would be playing the same selections.
LISTNUM 1 \l 1579 I dare say that they might be playing, as we indicated in our oral, a Rod Stewart track, but they sure the heck are not playing As Time Goes By. It is not likely. They might be, but I don't think so.
LISTNUM 1 \l 1580 The same thing with other selections and other artists as well too. Certainly they might be playing a Celine Dion track, but they might not be playing, say, Celine sings Luc Plamondon. You might not find that track available on there.
LISTNUM 1 \l 1581 Each artist, don't forget, on an album has 10, 12, even 14 tracks. There are other selections that are available quite often. The interesting thing about this format is it is not necessarily a hit‑driven format. It can go other places as well.
LISTNUM 1 \l 1582 COMMISSIONER MORIN: How do you intend to schedule the 40 per cent Canadian content? You state that new and emerging artists will receive effective airplay. During what time slots will new and emerging artists receive airplay?
LISTNUM 1 \l 1583 MR. OLSTROM: They will receive airplay throughout the entire broadcast day. In fact, if you take a look at our Canadian Spotlight feature, it runs six times daily. Four of those features run before 6:00 o'clock in the evening. So, not only do they get their music played, they get a profile of what they are about and introducing them to the audience.
LISTNUM 1 \l 1584 Also, our New Crooners feature, which is focused primarily on the new up and coming artists and, in particular, those new Canadian artists.
LISTNUM 1 \l 1585 COMMISSIONER MORIN: You are aware of the 2006 policy revised criteria by which initiatives would be considered eligible. In other words, under the 2006 policy, your CCD contributions are no longer eligible initiatives. Could you confirm if the CCD sums will be redirected to eligible projects?
LISTNUM 1 \l 1586 MR. OLSTROM: Bruce, would you speak to that?
LISTNUM 1 \l 1587 MR. COWIE: If any of the initiatives that we have presented to the Commission today are not acceptable under the changed criteria, those would be directed to FACTOR.
LISTNUM 1 \l 1588 COMMISSIONER MORIN: Could you provide us with a revised copy of your financial projections that reflects this change?
LISTNUM 1 \l 1589 MR. COWIE: I am not sure, Commissioner, what the changes would be.
LISTNUM 1 \l 1590 THE CHAIRPERSON: I think there are two issues here.
LISTNUM 1 \l 1591 If we go back to what you just said, what you presented today in your oral presentation are your CCD initiatives.
LISTNUM 1 \l 1592 MR. COWIE: Right.
LISTNUM 1 \l 1593 THE CHAIRPERSON: What I think the other question is: What is your over and above CCD contribution, over and above the base required amount?
LISTNUM 1 \l 1594 MS SVEDAHL: It is $634,706.
LISTNUM 1 \l 1595 THE CHAIRPERSON: And your financial projections, as filed with the application, show the base amount plus that over and above each year or for seven years?
LISTNUM 1 \l 1596 MS SVEDAHL: Our application showed $900,000 for CCD. That is inclusive of the FACTOR plus the $634,706.
LISTNUM 1 \l 1597 THE CHAIRPERSON: And you are willing to accept those as conditions of licence?
LISTNUM 1 \l 1598 MR. COWIE: Yes.
LISTNUM 1 \l 1599 COMMISSIONER MORIN: Thank you.
LISTNUM 1 \l 1600 COMMISSIONER MORIN: You have already a station in Regina, one in Calgary, and you are in the process of launching new stations in Fort McMurray and Saskatchewan. It sounds like you have a lot on your plate.
LISTNUM 1 \l 1601 Given your other commitments, can you handle a new licence?
LISTNUM 1 \l 1602 MR. COWIE: Yes. There is still a lot of room on our plate. We have not had an opportunity to speak to you, Commissioner Morin, about our regional strategy of the Harvard Broadcasting Company.
LISTNUM 1 \l 1603 We have been in the business for more than 30 years now. In recent years we decided that there were two or three things that we needed to accomplish. One was to become a significant player, but in the western Canadian region. That would be from Manitoba west.
LISTNUM 1 \l 1604 The reason for that was that in small markets, it is difficult to become significant contributors to Canadian Content Development. We wanted to do that. So, as we build our number of stations into a larger strategic group, we accomplish that.
LISTNUM 1 \l 1605 The Calgary station that we put on the air last year will be a very major contributor to Canadian Content Development, as will this station, if we are successful here.
LISTNUM 1 \l 1606 So, the strategy is ongoing. It is well‑funded. You will hear from us again in other places. We are also looking at the opportunity of purchasing radio stations where it is strategically within our purview. So, we hope to meet you many times in the future.
LISTNUM 1 \l 1607 COMMISSIONER MORIN: Good.
LISTNUM 1 \l 1608 In your presentation, the written one, you state that you will bring a new perspective on news and information. Could you explain in some detail and even with some examples, if possible, what you mean by a new perspective on news and information?
LISTNUM 1 \l 1609 MR. OLSTROM: I think a perspective that we will bring is a perspective that is targeted towards an older demographic.
LISTNUM 1 \l 1610 We are a music‑based radio station. However, we are not going to be here to compete with the News/Talk station. However, we will have concise news that covers the Okanagan and Kelowna and the Central Okanagan Valley.
LISTNUM 1 \l 1611 Maybe I will turn to Bruce just for a moment to talk a little bit about his history and his perspective on that.
LISTNUM 1 \l 1612 Just before I do that, I meant to say that one of the other things that will be a little bit distinctive of our format is during the noon hour, between noon and 12:30 we have a half hour program that gives us a little bit more time and we have put more resources into evaluating and talking about and exploring the different things that are going on in the Okanagan and that impact the community of Kelowna and the Central Okanagan.
LISTNUM 1 \l 1613 I will have Bruce speak a little bit to his experiences with that.
LISTNUM 1 \l 1614 MR. COWIE: I think, Commissioner, what led us to begin to talk about a different perspective on news was when we first got involved with the application for Fort McMurray. Here is a city which is going through tremendous change. Kelowna is not very much different.
LISTNUM 1 \l 1615 Many of the news stories here have to follow what people are saying to each other on a regular basis: What is going on here? Where is all of this development going? How is it affecting the prices of homes? How is it affecting the health services? I remind you that we are talking to an older audience here. They need to know what their place is in this new Kelowna, how it affects them.
LISTNUM 1 \l 1616 They are interested in health issues. I shouldn't say health. I should probably say wellness issues. They are certainly in this market interested in traffic and the building that is going on around them.
LISTNUM 1 \l 1617 So, the influx of baby boomers here is changing Kelowna, and it is changing it in a very positive way. They are coming here, they are investing. They have had successful careers and they are joining the older demographic. This is becoming a very powerful economic group. So, they have something to say about what goes on here.
LISTNUM 1 \l 1618 So, our job, we think, as a licensee here, is to chronicle daily for those folks what is going on, how it affects them. We will talk to them, both through our website and through our on‑air personnel, as to how we can be of assistance in making sure that this transition, which for older people can be unsettling, can be understood and they can be made more comfortable by it.
LISTNUM 1 \l 1619 That is one perspective of the news and features.
LISTNUM 1 \l 1620 But the other part of that is nine hours of news on an FM station is a lot of news on an FM station. We are doing that because the people we interviewed in our research, and I can let Deborah McLaughlin speak to this, identified news as very, very important to them. So, we are building a larger newsroom than we have in any of our other FM stations at the moment, with the exception of Calgary, which is a major market in order to, in effect, take care of that request of this demo.
LISTNUM 1 \l 1621 COMMISSIONER MORIN: But you didn't provide any staffing plans about this.
LISTNUM 1 \l 1622 MR. OLSTROM: We have four individuals, four staff in our newsroom.
LISTNUM 1 \l 1623 COMMISSIONER MORIN: And you will be able to produce and offer quality newscasts, addressing the needs and interests of the community you propose to serve?
LISTNUM 1 \l 1624 MR. COWIE: Yes, we will. That is to provide the on‑air news gathering group.
LISTNUM 1 \l 1625 In addition to that, the thing I have noticed in Kelowna in the time I have been here is there is a very large group of people who are deeply involved in this marketplace who know it inside and out, you know, people that write in periodicals here and in tabloids and those sorts of things.
LISTNUM 1 \l 1626 We want to attract them to our station as regular guests and with input into the kind of information that we are going to disseminate for this group of people.
LISTNUM 1 \l 1627 COMMISSIONER MORIN: Thank you.
LISTNUM 1 \l 1628 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1629 Mr. Leblanc, in response to a question by Commissioner Morin, said that 15 per cent of the content on this radio station would be instrumental music. Is that correct?
LISTNUM 1 \l 1630 MR. LeBLANC: Yes.
LISTNUM 1 \l 1631 THE CHAIRPERSON: Do you plan on programming this instrumental music throughout the day or will it be in a specific time block?
LISTNUM 1 \l 1632 MR. LeBLANC: It will be throughout the day.
LISTNUM 1 \l 1633 THE CHAIRPERSON: Would you accept 15 per cent as a condition of licence?
LISTNUM 1 \l 1634 MR. OLSTROM: As long as it was a condition of licence within the format.
LISTNUM 1 \l 1635 THE CHAIRPERSON: Can you explain that to me, please?
LISTNUM 1 \l 1636 MR. OLSTROM: As you are aware, we wouldn't want to be saddled with a condition of licence if, for example, one of the incumbents in the marketplace who has much greater resources decided that they wanted to do this format and take this audience away from us. We may be challenged a period of time down the road to have to make a format change.
LISTNUM 1 \l 1637 We don't foresee that. In fact, we are well behind this format, we are believers of the format and we don't anticipate that happening, however, we would hate to have a condition of licence that prevented us from running a business.
LISTNUM 1 \l 1638 THE CHAIRPERSON: In other words, if one day you had to change to an Alternative Rock format, you wouldn't want that 15 per cent of instrumental music to carry over to Alternative Rock?
LISTNUM 1 \l 1639 MR. OLSTROM: That is correct.
LISTNUM 1 \l 1640 MR. COWIE: Thank you for your understanding. The answer is yes.
LISTNUM 1 \l 1641 THE CHAIRPERSON: I remember, Mr. Olstrom, I think it was in Edmonton when you were describing the Fort McMurray proposal, that you were stoked.
LISTNUM 1 \l 1642 MR. OLSTROM: I was. I am stoked about this format.
LISTNUM 1 \l 1643 THE CHAIRPERSON: You are just as stoked about this format?
LISTNUM 1 \l 1644 MR. OLSTROM: Yes.
LISTNUM 1 \l 1645 THE CHAIRPERSON: Good to know.
LISTNUM 1 \l 1646 As we heard already this morning, there have been format changes in the market since you submitted your application of the incumbents.
LISTNUM 1 \l 1647 How, if at all, will these format changes impact the business plan because they are arguably going after the same demographic group that you are going after.
LISTNUM 1 \l 1648 MR. COWIE: Well, they are. I think their focus is younger, and I don't think the changes made will affect our business plan in any way.
LISTNUM 1 \l 1649 In fact, the separation between our demographic group and if there had been two Country stations, for example, in the market, has improved, if that is not the answer at the end of the day. So, we are fine with that.
LISTNUM 1 \l 1650 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1651 So, you are still convinced that you will reach positive PBIT by year four?
LISTNUM 1 \l 1652 MR. COWIE: Yes.
LISTNUM 1 \l 1653 THE CHAIRPERSON: Those are all my questions.
LISTNUM 1 \l 1654 Legal counsel.
LISTNUM 1 \l 1655 MS LEHOUX: No questions.
LISTNUM 1 \l 1656 THE CHAIRPERSON: Now I can say with confidence, Mr. Cowie, you have your two minutes.
LISTNUM 1 \l 1657 MR. COWIE: Thank you, Madam Chair, members of the Commission.
LISTNUM 1 \l 1658 The Commission has been asked to review the opportunity for a new licence for Kelowna three times in as many years. The reason for the enduring interest is easily understood by anyone who spends any time in this market.
LISTNUM 1 \l 1659 I have had a residence here since 2003, the year of the wild fires. I was here two weeks and then evicted from our new home. So I have had a front row seat from which to view the growth, the phenomenal expansion of the Central Okanagan. It was because I was witnessing the increases in the price of housing, noted the entry of new businesses and seeing the influx of people moving into the market that in each of the past three years we examined the potential for a new radio station here in Kelowna.
LISTNUM 1 \l 1660 Like the Commission in 2005 and 2006, we decided after each review that despite what we were seeing firsthand, the data necessary to demonstrate this growth did not yet exist. So, we waited.
LISTNUM 1 \l 1661 In 2005, we noted the beginning of positive change, with a better than inflationary increase in retail sales.
LISTNUM 1 \l 1662 In 2006, we saw a phenomenal 22 per cent jump in retail sales in Kelowna, evidencing an ever‑expanding economic base.
LISTNUM 1 \l 1663 According to our interviews with advertisers, this expansion of sales continues in 2007.
LISTNUM 1 \l 1664 So now the data finally reflects that which we have been witnessing in recent years.
LISTNUM 1 \l 1665 Our choice of Adult Standards/Easy Listening reflects another important fact about this market. Census Canada data shows, and I can confirm, much of the market growth has been among those persons who have retired or are approaching retirement age. All forecasts suggest this trend of attracting older residents will continue.
LISTNUM 1 \l 1666 So, our proposal is clearly the most appropriate for Kelowna. The market needs a diversity of voices and we provide that. The older demographics are growing, but remain underserved. Licensing Harvard will resolve that gap in the market.
LISTNUM 1 \l 1667 Timeless 96.3 provides increased choices for consumers, while creating the least disruption for the current broadcasters. We will serve a demographic that is not the core audience for any of the existing broadcasters. Timeless 96.3, therefore, has the greatest potential for developing new revenues in a market where radio is clearly underperforming relative to the overall economy.
LISTNUM 1 \l 1668 Harvard has the ability to face the challenge of a start up in a market dominated by two large players. As a small independent broadcaster, we strive to be innovative and look to serve niche markets with our extensive formats.
LISTNUM 1 \l 1669 In Calgary, where we operate a stand alone, we described our strategy as fishing in the shallow end of the pond. In Kelowna we will dive a little deeper into the pool, but with the same net results: Service to an increasingly disenfranchised demographic through the creation of a distinctive music format that will compliment existing services.
LISTNUM 1 \l 1670 Members of the Commission, we said in our presentation, we believe it bears repeating here, Timeless 96.3 is the right format at the right time and in the right place. Harvard is the right broadcaster with the appropriate vision for this market, and the credentials to fulfil our commitments to Kelowna.
LISTNUM 1 \l 1671 Thank you for your time and attention.
LISTNUM 1 \l 1672 THE CHAIRPERSON: Mr. Cowie and your colleagues, thanks you very much.
LISTNUM 1 \l 1673 We will now break for lunch and we will resume at 1:30. Thank you.
‑‑‑ Upon recessing at 1224 / Suspension à 1224
‑‑‑ Upon resuming at 1333 / Reprise à 1333
LISTNUM 1 \l 1674 THE SECRETARY: Order, please be seated. We will begin.
LISTNUM 1 \l 1675 We will now proceed with item 4, which is an application by CTV Limited, formerly CHUM Limited, for a licence to operate an English‑language FM commercial radio programming undertaking in Kelowna, British Columbia.
LISTNUM 1 \l 1676 The new station will operate on frequency 96.3, channel 242B, with an average effective radiated power of 7,100 watts, maximum effective radiated power of 20,000 watts, antenna height of minus 89 metres.
LISTNUM 1 \l 1677 Appearing for the applicant is Mr. Paul Sparkes. Please introduce your colleagues, and you will have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
LISTNUM 1 \l 1678 MR. SPARKES: Madam Chair, members of the Commission, Commission staff, good afternoon.
LISTNUM 1 \l 1679 My name is Paul Sparkes and I am Executive Vice‑President, Corporate Affairs for CTVglobemedia.
LISTNUM 1 \l 1680 When we acquired CHUM, one of the most attractive aspects of the company was the radio business and its outstanding management team represented here today by my colleagues on the panel.
LISTNUM 1 \l 1681 To my far right is Duff Roman, Vice‑President of Industry Affairs. As one of the founders of FACTOR and other Canadian talent development initiatives, Duff will help with any questions on Canadian Content Development.
LISTNUM 1 \l 1682 Next to Duff is Kerry French, our Vice‑President, Business Analysis. Kerry will answer questions on our market and economic research, as well as the financial aspects in our application.
LISTNUM 1 \l 1683 To Kerry's left, your right is Paul ski, President of CHUM Radio and one of Canada' most recognized and successful radio operators, who will be the Chair of our panel today.
LISTNUM 1 \l 1684 On Paul's left is Rob Farina, our Vice‑President of Program Development. Rob has been Program Director for some of Canada's top radio stations, including CHUM‑FM in Toronto and has now taken on a more senior role providing programming support to our radio stations across the country and leading our innovation process for developing new formats.
LISTNUM 1 \l 1685 Rob will walk you through the ground‑breaking concept that is AIR‑FM.
LISTNUM 1 \l 1686 Next to Rob is David Goldstein, Senior Vice‑President, Regulatory Affairs for CTVglobemedia.
LISTNUM 1 \l 1687 CHUM Radio has built one of the most successful radio groups in this country. This success is based on the ability to blend industry leading research with a passion for building intensely local and popular stations in large and small communities from coast to coast.
LISTNUM 1 \l 1688 The CHUM Radio Group is, and will continue to be, at the forefront of community support, programming invasion and the promotion of emerging Canadian talent.
LISTNUM 1 \l 1689 These are shared values for us at CTVglobemedia. Our priority is to ensure that our new radio group has the support and the resources needed to innovate and grow in this very competitive sector.
LISTNUM 1 \l 1690 Setting trends and changing the radio landscape is part of CHUM Radio's DNA. At CTVglobemedia we celebrate that sense of innovation. Today we are here to present a cutting edge proposal that will reshape radio for a new generation of young Canadians. Paul Ski will now lead our presentation and discussion of this very exciting opportunity for the residents of Kelowna and the Central Okanagan.
LISTNUM 1 \l 1691 Paul.
LISTNUM 1 \l 1692 MR. SKI: In our presentation this afternoon, we will demonstrate how our proposal for Alternative Interactive Radio or AIR‑FM will provide first an innovative approach to a radio station for Kelowna's significantly underserved youth audience; second, a multi‑pronged support proposal for Canadian talent, our 40/40 plan, Canadian music, and of that, 40 per cent dedicated to emerging artists; third, a direct response to the key challenge raised by the Commission in its commercial radio policy; and fourth, the most diversity to the Kelowna market with the least impact on the two well‑established players.
LISTNUM 1 \l 1693 I spent just over 20 years of my career in broadcasting here in B.C. I have watched the remarkable growth of Kelowna and the Okanagan Valley with keen interest.
LISTNUM 1 \l 1694 Local radio in Kelowna is strong in the wake of consolidation with two large and well‑resourced players, each with two FM stations. This has allowed for revenue growth to outpace the provincial average.
LISTNUM 1 \l 1695 Kelowna is the fastest growing Metro area in B.C. and the fifth fastest growing metro area in Canada, but a drill down into those numbers tells an interesting story.
LISTNUM 1 \l 1696 In fact, the population numbers tell a tale of two cities. One that is increasingly older and one that is increasingly younger, both growing dramatically. The growth of the younger demographic is why Olympian, Ross Rebagliati, is leading an investment group to build Kelowna Mountain, the world's largest snowboard park; why there has been dramatic interest and investment in local ski hills, such as Big White, now the second largest ski resort in B.C.; and why UBC has recently invested almost $300 million in capital and program upgrades to the UBC Okanagan campus.
LISTNUM 1 \l 1697 Currently in Kelowna, there are just over 48,000 people between the ages of 12 and 34, a number that is expected to grow to almost 54,000 by 2015.
LISTNUM 1 \l 1698 Imagine a town of 48,000 people without a radio station to call their own. That is the reality for young people in Kelowna. According to BBM, tuning by audiences from 12 to 34 across the country has declined nearly 16 per cent since 2000. The situation in the Kelowna market is even worse, where tuning is off a dramatic 20 per cent since the spring of 2000. What is even more telling is that residents age 12 to 34 are spending four hours less each week with radio than they were in 2000.
LISTNUM 1 \l 1699 Radio's reach in this demographic has declined by 11 per cent during the same time frame. Over 15 per cent of that audience in Kelowna are not listening to radio at all.
LISTNUM 1 \l 1700 When it comes to tuning to radio over the internet, our research shows that 13 to 30 year olds are going out‑of‑market to fill their needs. Of the 36 per cent who listen on‑line, almost half of their tuning is to stations outside of Kelowna.
LISTNUM 1 \l 1701 We do not believe young people have given up on radio. We believe they are simply looking for a radio experience that reflects their world.
LISTNUM 1 \l 1702 In its 2006 commercial radio policy, the Commission highlighted the following as one of its overall objectives:
"A commercial radio sector that provides listeners with a greater diversity of musical genres, and airplay for a greater variety of Canadian artists."
LISTNUM 1 \l 1703 Later in the same public notice, the Commission goes on to say:
"The key challenge facing the radio industry is to keep radio relevant and local in an environment of rapidly changing technology and consumer behaviour."
LISTNUM 1 \l 1704 This key challenge outlined by the Commission is most acute with young Canadian audiences and was a framing principle for this application.
LISTNUM 1 \l 1705 In fact, CHUM Radio has a long track record of programming innovations that reinvented the radio experience for successive generations of young Canadians.
LISTNUM 1 \l 1706 The most recent example of this is the creation of our station The Bounce, a new style, youth driven Urban/Contemporary Hit radio station in Edmonton. In three short years, with key leadership provided by James Stuart, General Manager of The Bounce who is here with us today, The Bounce has changed the local radio landscape and is one of the most popular stations in Edmonton with listeners 12 to 34. In fact, BBM has found that despite a general downturn in youth tuning to radio across Canada, in Edmonton, the average hours of tuning in this demographic has actually gone up 10 per cent between 2005 and 2007.
LISTNUM 1 \l 1707 Based on that success, we have set out to create something unique for the young listeners in Kelowna.
LISTNUM 1 \l 1708 While statistics helped us determine the size of the underserved market of young people, it was our community research and consultations that helped us understand their thirst for a local media source that was tailored to their world. This was noted in several interventions, but perhaps best exemplified by the UBC Students' Union Okanagan, who stated:
"We believe the 4,000 university students at UBCO would welcome a station that was focused on young people in our community and that played the kind of music young people want to hear. It would also be great to have a station in the Central Okanagan that covered news, issues, sports and current events that impacts young people here on campus and throughout community."
LISTNUM 1 \l 1709 We agree. Kelowna is a city with a clearly underserved youth demographic that is technologically savvy. It is an ideal place to address the Commission's key challenge of how to continue to make radio relevant in the face of changing technological trends and consumer behaviour.
LISTNUM 1 \l 1710 I would now like to turn to Rob to outline for you how this truly innovative approach will work.
LISTNUM 1 \l 1711 MR. FARINA: AIR‑FM or Alternative Interactive Radio, represents the first fully realized integration between radio, the internet and the local community.
LISTNUM 1 \l 1712 A radio station with a website is not new. One that provides a 360 degree interactive experience that draws local audiences into the programming of the radio station is unprecedented.
LISTNUM 1 \l 1713 AIR‑FM will be mostly a mix of Alternative Pop and Modern Rock. Our key demographic demands a deeper and less predictable music mix. This station will not be reliant on hits, but will showcase unreleased tracks. The programming will also feature live recordings, listener created mixes and in‑studio performances promoting local emerging talent.
LISTNUM 1 \l 1714 We would now like to show you a brief video presentation that will give you a better sense of how the AIR‑FM concept will work.
‑‑‑ Video presentation / présentation vidéo
LISTNUM 1 \l 1715 MR. FARINA: As you can see, this is much more than a simple proposal for a radio station, but a means to build a community that supports Canadian talent and adds a true new level of media diversity.
LISTNUM 1 \l 1716 Delivering a deep and meaningful experience to the audience is not limited to music alone. Our news and information gathering will be providing a new platform for expression for a generation that is not consuming traditional media.
LISTNUM 1 \l 1717 As the Commission is aware, interest in traditional news and information programming among younger listeners is a challenge. Youth put social issues, the environment, music and entertainment news first. By providing a focused news approach covering the stories that Kelowna youth are passionate about, we can engage our listeners, and tell the stories which are not being told from their perspective.
LISTNUM 1 \l 1718 Seventy‑five per cent of the news on AIR‑FM will be local and regional news stories. Stories such as the toll crystal meth is taking on young lives, stories about the crisis in affordable housing, and stories about an inefficient transit system which leaves a large carbon footprint. We believe these are the stories not being heard and that national and international stories are readily available from thousands of other sources.
LISTNUM 1 \l 1719 AIR‑FM will tell these local and regional stories, and tell them on the audiences' terms, reaching them not only on radio but linking the stories on‑line to provide listener commentary, polling and blogging. Young media consumers want information on their terms. Because of this concise, yet meaningful news and information approach, we believe the diversity of voices in Kelowna will be greatly enriched by AIR‑FM.
LISTNUM 1 \l 1720 This was best outlined by intervenors like the Okanagan College Student Union who wrote:
"The idea of alternative interactive radio is appealing because our generation has different listening habits than our parents' generation. We do not plan our day around scheduled newscasts or the morning paper..."
LISTNUM 1 \l 1721 Air‑FM will increase editorial diversity in the marketplace with three and a half hours of news and current affairs each week, delivered in a style and presentation aimed directly at the key demographic. AIR‑FM'S personalities will engage them by sharing information and content that is very targeted and relevant to their lives.
LISTNUM 1 \l 1722 Adding to the musical diversity in the marketplace, AIR‑FM presents a unique proposal to support the next generation of Canadian talent. Supporting the next generation of Canadian talent cannot be done through just airplay or Canadian content development initiatives. It requires a focused and coordinated effort. To that end, this application involves a four‑pronged proposal to support Canadian talent.
LISTNUM 1 \l 1723 Number one, our 40/40 plan for CanCon and emerging artists. Given our chosen format, for AIR‑FM, we have made a two‑fold commitment to support Canadian artists. Forty per cent of the songs on the playlist will be Canadian content, higher than the requirements under the radio regulations, and within that Canadian content, we will dedicate 40 per cent of those tracks to emerging Canadian artists, a focus that was identified as a priority in the Commercial Radio Review.
LISTNUM 1 \l 1724 Second, a deeper playlist equalling more choice. This station, by its nature, will have a much larger playlist than traditional stations. It will have an audience base that will demand less repetition and more new music to keep them engaged, and it will offer the AIR‑FM community an opportunity to push emerging artists on to the playlist through their on‑line relationship with the station's programmers. As well, the on‑line functionality will facilitate listener dialogue about music, bands, and the thriving local music scene.
LISTNUM 1 \l 1725 AIR‑M artists will include titles by Gym Class Heroes, Muse, and the Arctic Monkeys, and a myriad of emerging Canadian artists like Tegan & Sara, Thousand Foot Crutch, Tokyo Police Club, Evans Blue, and many, many, more, none of which are currently receiving radio airplay in Kelowna.
LISTNUM 1 \l 1726 Third, Canadian Content Development. On top of the normal CCD component of any license, we are committing $700,000 over the first seven‑year licence term to targeted initiatives and events to support emerging B.C. artists.
LISTNUM 1 \l 1727 Fourth, the CHUM Emerging Indie Artist Initiative. The Chum Emerging Indie Artist Initiative is a national initiative that flowed from our successful Calgary radio application. With this initiative, CHUM stations across the country profile an emerging Canadian artist each month with promotional announcements and dedicated airplay, creating enough spins nationally to actually move those artists on to the charts. This has created huge national profile for such artists as State of Shock, Elise Estrada, Live on Arrival and Suzie McNeil, whose song Believe was picked under the CHUM Emerging Indie Artist Initiative and has gone on to be chosen as the official song for the 2010 Winter Olympics, as well as Shiloh, whose song Alright was played during last week's broadcast of Gossip Girl, a new U.S. television program.
LISTNUM 1 \l 1728 We are extremely excited that in less than a year this initiative has already made a huge contribution to emerging Canadian talent. We look forward to making Kelowna's AIR‑FM part of that success story.
LISTNUM 1 \l 1729 MR. SKI: One of the Commission's key tests for licensing is to determine the best possible use of a frequency to advance the objectives of the Broadcasting Act and to increase service to the local community.
LISTNUM 1 \l 1730 While others have chosen to come forward in this competitive process with more conventional formats, targeted at older and more affluent audiences, we are prepared to commit the resources and talent to execute this ground‑breaking offering targeted at a clearly underserved market.
LISTNUM 1 \l 1731 We believe this hearing represents one of those unique opportunities where the Commission's objectives and our desire to create a truly new kind of radio community fit hand in glove.
LISTNUM 1 \l 1732 In short, AIR‑FM will deliver the following:
LISTNUM 1 \l 1733 Programming designed for an underserved demographic that will reflect the local live music scene, clubs, campus life and community events through the station, as well as through on‑line, interactive and mobile technology.
LISTNUM 1 \l 1734 Support for Canadian talent, emerging and local talent through:
LISTNUM 1 \l 1735 Our 40/40 plan: 40 per cent Canadian content, of which 40 per cent will be emerging Canadian artists; a more extensive playlist with more variety; targeted CCD initiatives; and participation in the CHUM Emerging Indie Artist Initiative.
LISTNUM 1 \l 1736 Diversity with a news and current affairs service that appeals to our key demographic.
LISTNUM 1 \l 1737 We will create a radio station that is built around the way the young people of Kelowna live and, in turn, they will make AIR‑FM a part of their lives. We will connect to them the way they connect with each other. We will be able to attract them back to radio by giving them a station that understands them, that respects them and that reflects them.
LISTNUM 1 \l 1738 Finally, we have provided an innovative response to the key challenge outlined in the Commercial Radio Policy, that is, to make radio relevant in the face of changing technology and consumer behaviour.
LISTNUM 1 \l 1739 AIR‑FM will provide a truly underserved segment of the market with a truly local voice. We hope the Commission agrees.
LISTNUM 1 \l 1740 We thank you for this opportunity and we look forward to your questions.
LISTNUM 1 \l 1741 THE CHAIRPERSON: Thank you, Mr. Ski, and to your colleagues, good afternoon. I will ask Commissioner Williams to ask the first set of questions.
LISTNUM 1 \l 1742 COMMISSIONER WILLIAMS: Good afternoon, Mr. Ski and CTV panellists.
LISTNUM 1 \l 1743 Your application and presentation today has been very thorough. However, as is our custom, I have a number of detailed questions to help us better understand your proposal. This may of course cause some repetition of points that you have made either in whole or in part. However, I will try and focus the questions as best I can, and hopefully you will do your part to focus the answers accordingly.
LISTNUM 1 \l 1744 I will begin with a few questions from your supplementary brief.
LISTNUM 1 \l 1745 In your supplementary brief you indicated you devote a minimum of 90 per cent of the broadcast week or approximately 113 hours to local station produced programming. However, section 8.3(a) of your application, you committed to provide a minimum level of 81 hours and 54 minutes of local programming.
LISTNUM 1 \l 1746 For the record, could you confirm your local programming commitment for the broadcast week?
LISTNUM 1 \l 1747 MR. SKI: Certainly, Commissioner Williams.
LISTNUM 1 \l 1748 The commitment is the 113 hours or 90 per cent.
LISTNUM 1 \l 1749 COMMISSIONER WILLIAMS: Thank you.
LISTNUM 1 \l 1750 You have committed to provide a minimum of three hours, 30 minutes of news and surveillance spoken word per broadcast week. You have indicated also that three hours and 30 minutes would consist of a minimum of two‑plus hours of news and a minimum of one hour of traffic and weather surveillance weekly.
LISTNUM 1 \l 1751 However, these minimum news and traffic/weather surveillance given total only three hours per week and not three hours and 30 minutes. Could you provide us with figures for news and traffic/weather surveillance that would more accurately reflect your three hour, 30 minute minimum commitment, please.
LISTNUM 1 \l 1752 MR. SKI: Commissioner Williams, I will have Duff Roman run you through those numbers.
LISTNUM 1 \l 1753 MR. ROMAN: Yes, Commissioner Williams, just to give you the details, as you said and as focused as possible, here is how the news is comprised, along with the surveillance.
LISTNUM 1 \l 1754 Starting with the news, AIR‑FM will broadcast 11 newscasts a day, Monday through Friday, and three per day on Saturday and Sunday, for a grand total of 61 scheduled newscasts during each broadcast week. That will comprise two hours and 17 and a half minutes of news content.
LISTNUM 1 \l 1755 For traffic and weather surveillance, on week days AIR‑FM will broadcast two 60 second traffic and weather reports per hour each weekday morning between 6:00 a.m. and 9:00 a.m. Between 9:00 a.m. and 4:00 p.m. and 6:00 p.m. and midnight, there will be one 30 second weather report minimum per hour.
LISTNUM 1 \l 1756 On weekends, AIR‑FM will broadcast one 30 second weather report every hour from 6:00 a.m. through midnight each of Saturday and Sunday.
LISTNUM 1 \l 1757 That brings the total of traffic and weather surveillance to one hour and 20 and a half minutes. That would bring the news and surveillance combined to a total of three hours and 38 minutes.
LISTNUM 1 \l 1758 COMMISSIONER WILLIAMS: Thank you, Mr. Roman.
LISTNUM 1 \l 1759 As a percentage of your overall weekly news content, how much of your news programming would be devoted to local and regional stories?
LISTNUM 1 \l 1760 MR. SKI: Essentially most, if not all. Normally it is in the 75 per cent or 80 per cent range as local or regional news. All of our radio stations are local by their very nature. That is all we do is local radio. So, the majority of the news would be local. It has to be to reach the underserved market that we have been talking about.
LISTNUM 1 \l 1761 COMMISSIONER WILLIAMS: Thank you, Mr. Ski.
LISTNUM 1 \l 1762 On pages 9 through 11 and 17 through 20 of your supplementary brief ‑‑ I will give you a moment to find it ‑‑ you emphasize the importance of listener interactivity with the station to develop relevant and meaningful spoken word and music on‑air content for your target audience, the 12 to 34 age group.
LISTNUM 1 \l 1763 Could you elaborate on the type of spoken word content you would offer this age group in order to make your proposed station relevant and meaningful to them? I am specifically interested in the type of on‑air news, information and surveillance content you would offer your 12 to 34 year old listener.
LISTNUM 1 \l 1764 MR. SKI: Certainly, Commissioner Williams.
LISTNUM 1 \l 1765 Let me maybe start with the news portion of that, just to give you some flavour for how we see this being done a little bit differently. I think we have to remember that the majority of these people, young teens and young adults, their priority in listening to radio is listening to their favourite music and listening to new music. But within that context, obviously we want to provide the type of information that is relevant to them, that kind of reflects their particular world, because we believe that these richer experiences that we think we can bring to them will help us to promote engagement, and we need engagement from this particular audience.
LISTNUM 1 \l 1766 On the news side, the news is going to be a little different. It is more of an integrated communications approach with these people or experience.
LISTNUM 1 \l 1767 Let me divide it up into maybe three different segments. One is content, context and process.
LISTNUM 1 \l 1768 The content is really the editorial process. What stories are important to this particular demographic, and we will find that out by our constant research, by listening to them and by finding out what is important on a day‑to‑day basis.
LISTNUM 1 \l 1769 Secondly, it is context. How does the story relate to that particular audience, because nobody is really relating to them in this particular market now, from the spoken word and from an information standpoint. That determines our approach as to how each of these stories fits into their lives.
LISTNUM 1 \l 1770 The third is really the process through some of the interactive comments that we get some engagement as I mentioned earlier, and that is the start of the experience.
LISTNUM 1 \l 1771 If I could, I would like maybe to have Duff and Rob give you examples of how our news would be a little bit different than what is currently existing in the market.
LISTNUM 1 \l 1772 COMMISSIONER WILLIAMS: Please do so.
LISTNUM 1 \l 1773 MR. SKI: Thank you.
LISTNUM 1 \l 1774 MR. ROMAN: Here is an example. For instance, a news story might be local parents and concerned groups gathering in Kelowna, as they did recently, to discuss local use and abuse and problems associated with one of the fastest growing drugs crystal meth. While not yet an epidemic, it is a problem.
LISTNUM 1 \l 1775 So, AIR‑FM'S News Director makes his editorial decision that the story or content, as Paul mentioned, is air worthy. Conventionally the context of the story could be criminal gangs, could be policing awareness or education. But for our AIR‑FM listeners the pressing issue in the context of impacting their lives is the unrelenting peer pressure of classmates or co‑workers to be a user, to be hip, to be cool.
LISTNUM 1 \l 1776 For AIR‑FM, the process of getting the content and context of this story out to the listener launches a dialogue where the station receives revelations of school yard or work place experiences and coping strategies that are shared through the reciprocal communication of chats, blogs, podcasts, text messaging and other interactive touch points, part of the 360 degree experience fuelling a constantly revolving circle of communication.
LISTNUM 1 \l 1777 MR. FARINA: Further to what Duff says, we also don't want to underestimate the power of blogs in terms as an opportunity for listeners to be able to share information and for that information to turn into news stories on the air on AIR‑FM.
LISTNUM 1 \l 1778 In researching for the kind of news stories we would be covering, it is amazing how many of the stuff existed on blogs but wasn't being reported on traditional media.
LISTNUM 1 \l 1779 A great example I have for you is School District 23 right here in Kelowna initiated a laptop program for the students, where students had a laptop for their studies at school and to bring home for homework. While I think everybody loved the idea at first, a semester in, the reality of it was a completely different story. Laptops didn't cut down on the amount of textbooks kids had to carry to and from schools. The lockers at the school were so small that it was hard enough to fit their backpack in there, let alone the laptops, so they had to lug it around. More importantly, the laptops made them a target for assault and theft on their way to and from school from bullies.
LISTNUM 1 \l 1780 The other side of that is research studies have shown where the laptop program was put into place, that it had no effect on reading and comprehension skills on students.
LISTNUM 1 \l 1781 This story did not come through traditional media. It is a story that affects the people that we are targeting. It is a story that affects that environment in that school, but it is not a story that is making it to traditional media. When we talk about this being the tale of two cities, it is on this end of the spectrum where the stories and the reflection does not seem to be embraced on radio in this market.
LISTNUM 1 \l 1782 THE CHAIRPERSON: We can relate, because as you can see our laptops didn't eliminate the omni present binder.
LISTNUM 1 \l 1783 Go ahead.
LISTNUM 1 \l 1784 COMMISSIONER WILLIAMS: This is a pretty innovative concept. What can you tell us about the challenges of meeting this 12 to 34 listening market? How do you create and develop relevant and meaningful on‑air news and spoken word programming for this group?
LISTNUM 1 \l 1785 MR. SKI: We do it in a number of different ways, Commissioner Williams, but I think your are right, it is certainly not an easy task. It is certainly a task that we are up to. As you know, we have developed formats in the past that have been very successful and we have a lot of experience in it.
LISTNUM 1 \l 1786 One of the things that we did, we looked at a study from the University of California Media Lab, and that particular study was entitled "How to make radio more appealing to the next generation." As I mentioned earlier, the primary reasons they listen to radio were to hear their favourite music and to hear new music.
LISTNUM 1 \l 1787 So, certainly the spoken word content is important. It is important that it be relevant. We have to get them into the tent. We have to get them back to radio or keep them engaged in radio before we can do anything else.
LISTNUM 1 \l 1788 In terms of that relationship, it is part of our 360 degree experience, which I will have Rob tell you a little bit more about, because if we can reflect their world, if we can mirror what is happening in their lives in providing information, and helpful information, in part, on how they get through their daily lives, then we will engage them and we will have them as listeners.
LISTNUM 1 \l 1789 Rob.
LISTNUM 1 \l 1790 MR. FARINA: Maybe to start, I want to frame this in that who we are talking about here is the cultural navigators of our time. That is the audience we are trying to reach through this. It is an audience that studies on the media habits that consume 20 hours of entertainment in seven hours. What that means, and anybody that has children can attest to this, is they are on the TV, on the laptop, on the cell phone, at the Gameboy within arm's reach, and they are doing all these things simultaneous, much to our chagrin.
LISTNUM 1 \l 1791 When we look at that kind of experience that they have, that need of being connected at all times and also the need ‑‑ technology has allowed them to access anything they want instantaneously. So, there needs to be a level of control and interaction with whatever service we design for them.
LISTNUM 1 \l 1792 As Paul mentioned, we operate successful youth formats across the country. We also operate successful television youth formats, and within that, we also have a great interactive department that is targeted at youth and, through that, we have learned a lot about the habits and what it takes to engage them.
LISTNUM 1 \l 1793 We know that providing traditional news, they don't have an appetite for it. They have a rejection towards traditional news. But I don't want that to be confused with that this audience is disinterested. Quite the opposite. They are very engaged. They crave information, but they crave information on their own terms.
LISTNUM 1 \l 1794 So, with AIR‑FM, it isn't about outside of the news and traffic, about us saying this was, that is, you know. It is about engaging people at all times and we engage them by talking about what is affecting their lives at this moment in time.
LISTNUM 1 \l 1795 The difference is the values that they place. There is a strong value on the environment, strong value on social issues, particularly in this market of Kelowna. When we keep going back to the fact that it is a tale of two cities, it is also a tale of two cities in the business community. You have some young entrepreneurs looking to capitalize on the thriving music scene in Kelowna, and then you have another segment that would want to curtail that expansion.
LISTNUM 1 \l 1796 There is a lot of differences in the needs of this audience, and this market in particular seems to be a perfect location for this format, based on the fact that the music isn't available, based on the strong support of local talent, the amazing roster of local artists and the amazing vibe being created in this city through the live music scene.
LISTNUM 1 \l 1797 In the audience today is Ryan Abougoush and Dan Wetjen, who is the editor for Event. Ryan runs the Grateful Fed here in the Okanagan. Ryan and Dan got together, and noticing this unbelievable music scene that is happening in this market and started the Rockanagan Festival this fall. They had 30 acts over two nights. They had to turn down a lot of acts because they didn't have room, and already they have enlisted three more clubs for next year's and Molson's has hopped on board as a major sponsor.
LISTNUM 1 \l 1798 There is an incredible vibe here. There is an incredible popular event, But it is not the Kelowna we are hearing about, but it is the Kelowna that therein exists, and we feel this is a perfect offering for a new generation in an underserved market.
LISTNUM 1 \l 1799 COMMISSIONER WILLIAMS: Thank you.
LISTNUM 1 \l 1800 This programming that you are developing to fill that need, how do you develop programming that is relevant to appeal to an 18 to 24 year old that is attractive at the same time to the further end of your demographic, to a 30 to 34 year old? Aren't these different demographic groups?
LISTNUM 1 \l 1801 MR. SKI: Commissioner Williams, I will comment and then have Rob provide you with a few comments.
LISTNUM 1 \l 1802 If you look at the core audience, and every radio station has a core audience which normally has about a ten‑year span, so while the audience overall is 12 to 30, 12 to 34, the core audience is 15 to 25.
LISTNUM 1 \l 1803 One of the things we have to remember is that we are not appealing to all of the 12 to 30 year olds in the market. When you look at the research we did, we are appealing to a 12 to 30 year old who says a station like AIR‑FM would be their favourite. So there is a big difference. This is a group that in fact says yes, we like to listen to this particular radio station, the core audience in the 15 to 25 range as I mentioned, and peripherally there is listening on either sides of that.
LISTNUM 1 \l 1804 It is not unlike a 25 to 54 year old target audience. Are 25 year olds and 54 year olds the same? No, they are not. But within that cohort, there are people who have similar likes, similar dislikes and similar likes, and we are saying it is the same thing with this group too, although there may be some generational differences. One of the things that can bring these people together is music. Music can be a common denominator for people to listen to a radio station. That is normally what it is.
LISTNUM 1 \l 1805 Rob can maybe give you some examples of how we see that from the information.
LISTNUM 1 \l 1806 MR. FARINA: I will just add to that. We are looking a lot more at life stage demographics as well as age as a tool. By life stage demographics I mean people could be of different ages, there could be a ten or 20‑year span, but their interests and the kind of media and information they are accessing is the same thing.
LISTNUM 1 \l 1807 For this particular demo, a good example is a 15‑year old and a 25‑year old, while the 15‑year old is well into their high school years and thinking about career and what to take in university, the 25‑year old may be starting their life and new career. So, they are going to be very focused and interested in items about the job market and career options of the like. You know, 15 and 25‑year old men generally index really high on electronics and gadgets. They would be interested on that kind of thing. Gaming for this particular audience is a big thing. Entertainment news and lifestyle issues, social issues also very important for this audience.
LISTNUM 1 \l 1808 We try as best we can to bridge the gap with that life stage demographic, knowing the different and varied interests of the audience. But the one defining motivator to the radio station, and as our research shows, is these are people that said they were interested in this format. So, because of the music we play, that is the one thing that binds them to the radio station.
LISTNUM 1 \l 1809 MR. SKI: If I could too just mention what got us very excited about this opportunity was the fact that in the research almost 90 per cent of the people in that age group said they would listen to a station of this type.
LISTNUM 1 \l 1810 The other part which is even more important, 70 per cent of those people said that they would listen often. What that means is that this station would become their favourite. So, that becomes the core audience, and that is what drives the success of any station, those people who would listen often.
LISTNUM 1 \l 1811 Because of the ongoing research that we do and that we have always done, but especially in this market, in order to fine tune what we are doing with the radio station, what we look for in the research is where there is agreement within this particular age group and we focus our product or a lot of our product on those areas of agreement. That is again how you maintain that core or keep that core as high as it is, and the ongoing research helps a lot.
LISTNUM 1 \l 1812 COMMISSIONER WILLIAMS: So, 70 per cent of the approximate 48,000 members I guess of that demographic is 33,000, 34,000 people. Is that enough of an audience for your business plan to survive?
LISTNUM 1 \l 1813 MR. SKI: Remember it is more than that. It is enough of the audience for our station to survive, but those are the people who are the core. You have to go beyond the core because while every radio station has a core, they also have peripheral listening. So, we expect the listening to be higher than that because, as I said earlier, 90 per cent said they would listen to the station at some point or another. So, the vast majority of them would be listening to the station.
LISTNUM 1 \l 1814 But the core are the people who keep the station alive, quite frankly. As Rob said earlier, they are the taste makers. They are the people who tell other people about the radio station. They are the people who are there day after day after day to make sure that this station is successful over the long term while others go in and out.
LISTNUM 1 \l 1815 COMMISSIONER WILLIAMS: I would like now to have a better understanding of how and to what degree you will develop your listener generated interactive news and spoken word content into programming that is appealing to this group and how this interactive content will be integrated into your regular programming mix. Obviously the station's programming staff will also be responsible and create and deliver on‑air spoken word programming.
LISTNUM 1 \l 1816 How will the station produced content and listener generated content be blended to provide the 360 degree AIR‑FM format listening experience you have described earlier today?
LISTNUM 1 \l 1817 There is a couple main questions in there. I didn't know whether you got them when I was going through, but I will go back to them.
LISTNUM 1 \l 1818 First, we want to have a better understanding of how and to what degree you will develop your listener generated interactive news and spoken word programming, and how it will be integrated.
LISTNUM 1 \l 1819 Then compare that with the station programming staff produced material and how is that blended into the final product?
LISTNUM 1 \l 1820 MR. SKI: Thank you very much.
LISTNUM 1 \l 1821 We talked a little bit about the content, context, process in terms of the spoken word, but I will have Rob give you an idea of how those two work, both the user generated and the on‑air generated or what is generated from the staff.
LISTNUM 1 \l 1822 COMMISSIONER WILLIAMS: Thank you.
LISTNUM 1 \l 1823 MR. FARINA: Thank you, Paul.
LISTNUM 1 \l 1824 In many ways what AIR‑FM represents is before radio was marginalized in its role of being the only source for information for a long time, for being the only source for music and new music to a listener in the sense of community that radio built itself around, in many ways, what AIR‑FM does is go back to the essence of what made radio fantastic and re‑invent it for a new world, a world that demands deeper interaction, a deeper relevance and in some ways immediate gratification with its needs, which is a big hill to climb.
LISTNUM 1 \l 1825 So, when the development of this came and really technology and marrying technology with what we do in radio was what turned the light bulb on on connecting the two on AIR‑FM, in terms of how we interact that content, there is two sides of it.
LISTNUM 1 \l 1826 First, there is the news content that comes from our audience. When a news story or a news idea comes from the audience, they could text message or e‑mail or call into the newsroom or post a blog or a commentary or a podcast on a specific issue. Before that information is loaded, it is important that if it is a news story, that the news department checks it for facts and accuracy.
LISTNUM 1 \l 1827 We don't imagine that to be a huge portion of the listener supplied or listener generated content on line.
LISTNUM 1 \l 1828 What we expect to be a bigger part of the listener‑generated content is blog,s posting opinions, podcast on specific interests or community issues that are facing Kelowna, that people want to post and have other listeners comment on.
LISTNUM 1 \l 1829 We use the internet portion of the service to feed the on‑air portion of the service. All our personalities and news people, their job is to moderate and engage the audience on a variety of levels at all times. So, for example, we might have local Kelowna band Secret and Whisperer in the radio station. We are taking calls from fans. At the same time the band is chatting with fans on the Message Board. While the band is in there, we happen to know because previously we had promoted that we were going to debut Feist's new album and ask people that were huge Feist fans if they wanted to be alerted about it to text us. At the same time, this whole other group is getting a text message that the new Feist CD is debutting on the next hour. At the same time there are some listeners that have an interest in a new business initiative the city of Kelowna and the Chamber of Business is initiating and decide they want to put together a podcast on doing that.
LISTNUM 1 \l 1830 So, there is varied and multiple levels of things going on at all times with the radio station, with it all leading to people coming back to the radio station for the content. We want the radio station to be the hub and then engage people and connect them to each other and their community using the on‑line and on‑air in a very symbiotic fashion.
LISTNUM 1 \l 1831 I don't know if that answers your question.
LISTNUM 1 \l 1832 COMMISSIONER WILLIAMS: I think that gives us a good indication of where you want to go. I think how you began was I guess it is Saturday Night Request Show goes high tech and in many different directions and a full 360 with many different types of interactive ‑‑
LISTNUM 1 \l 1833 MR. FARINA: Right. On that note, Commissioner, I am happy to talk about the Saturday Night Request Show because one of the things we are able to do now with the developments in technology that I spoke of is this virtual auditorium we are able to create.
LISTNUM 1 \l 1834 This software which users decide they can opt in on to become a taste maker for AIR‑FM and feed into the music they are going to hear on the radio station, the way it works is the software detects the play counts in either their iTunes folder or RealPlayer or QuickPlayer, whatever they use on their PC or MP3 player to listen to music.
LISTNUM 1 \l 1835 COMMISSIONER WILLIAMS: And they have to give you their permission for you to access that?
LISTNUM 1 \l 1836 MR. FARINA: Absolutely. They consent to being part of this. We see a huge buy‑in on that because it allows them to have a real opportunity to influence what they are getting out of the radio station, and it is also an important selling proposition because I think for the first time we could actually create a radio station around a specific demographic and build a radio station specifically for their needs because all the information that we are getting from them is based on their own music habits. Within those music habits, we are able to find the relationships between the artists they already love and listen to and introduce new artists to them, both on the air on the radio station and also on‑line.
LISTNUM 1 \l 1837 At the same time, they are able to influence our programming staff in a very symbiotic fashion about new music they have heard of or discovered and be able to push that music to be on the air.
LISTNUM 1 \l 1838 COMMISSIONER WILLIAMS: Thank you.
LISTNUM 1 \l 1839 Let's talk now about the level of live‑to‑air programming. Could you please provide the amount of time broadcast per week that you would offer live‑to‑air programming, voice track programming and any automated programming? We could not find this anywhere in your application.
LISTNUM 1 \l 1840 MR. SKI: Commissioner Williams, we expect that approximately eight hours of the broadcast week would be potentially voice tracked. This is the type of format that, again, as we say, if we are trying to repatriate youth, teens and young adults, the important thing is that interactivity. So, in order for that to happen, we need to be live. We need to be live; we need to be interactive. That is the only way that we can establish what radio has done so well over the years is some type of psychological affiliation with the listener. We have lost that with the young people.
LISTNUM 1 \l 1841 COMMISSIONER WILLIAMS: Do you see that live interactivity taking a form of one of your on‑air personnel are working their way through a program and a listener can MSN them and somebody will receive that and respond to that as quickly as they had received it or within a reasonable period of time?
LISTNUM 1 \l 1842 MR. SKI: That is correct. It is going to be, as Rob said earlier, interactive and almost immediate and also spontaneous at the same time. That is important for this relationship.
LISTNUM 1 \l 1843 I mentioned the study from the University of Southern California. One of the key findings in that study was that radio needed to completely embrace all of the technology available as extensions of the radio station, and that is what we are trying to do.
LISTNUM 1 \l 1844 COMMISSIONER WILLIAMS: Let's spend a bit of time now on music format and target audience.
LISTNUM 1 \l 1845 You have described your music mix as being a blend of Modern Rock and Pop music. Do you envision both styles of music being blended more or less equally in a broadcast week or is one style going to be more prominent than the other?
LISTNUM 1 \l 1846 MR. FARINA: I think one of the problems we face is the labelling of music, which younger music fans are generally disregarding, the whole thought of putting things into genres.
LISTNUM 1 \l 1847 It is tough to answer the question because a lot of the music could be classified as an Alternative Rock or an Alternative Pop, but just based on the current music trends right now, and the kind of music that is being accessed in on‑line music experiences, I think it is probably going to be a mix of about 60 per cent Alternative Rock and 40 per cent Alternative Pop. That all depends on the available music that is out right now. The trend may change a year from you. Trends change quickly, and there may be, with the success of acts like Amy Winehouse and Groove Armada and Mika in the Alternative Pop genre, there may be many more of those kind of acts a year from now.
LISTNUM 1 \l 1848 But we believe that right now it looks like about 60 per cent Alternative Rock, 40 per cent Alternative Pop.
LISTNUM 1 \l 1849 COMMISSIONER WILLIAMS: So, that is today and if you are successful and you get licensed and launched, your audience will let you know what they are listening to and what they prefer, and you will adjust accordingly?
LISTNUM 1 \l 1850 MR. FARINA: Right.
LISTNUM 1 \l 1851 COMMISSIONER WILLIAMS: How do you expect this blended music format, the one you envision today, to skew amongst male and female listeners? Is it 50/50 or more one than the other?
LISTNUM 1 \l 1852 MR. FARINA: It is virtually the same. There is a slightly more male skew, but there is great appeal for both young males and young females.
LISTNUM 1 \l 1853 COMMISSIONER WILLIAMS: In terms of market impact, I note that incumbent station, CHSU‑FM, is currently offering a CHR Hot AC format music mix. Could you describe any similarities or differences between your proposed AIR‑FM music mix and what is currently programmed on CHSU‑FM?
LISTNUM 1 \l 1854 As well, I would be interested in your view on the degree of audience overlap with since CHSU‑FM since CHR Hot AC format also draws listeners from the same age 18 to 34 age group although as a rule generally more female listeners than male.
LISTNUM 1 \l 1855 MR. SKI: Commissioner Williams, we don't think there is going to be much duplication. Rob has done quite a bit of analysis over the last several months.
LISTNUM 1 \l 1856 If you look at the target audiences of these radio stations, the one that you mentioned, SUN and the others, their target audiences are normally from 35 to 45 to 55, but there is nobody down in the 25 or 15‑year old sort of median range. That is where we think we fit in.
LISTNUM 1 \l 1857 As we mentioned from the research, it appears that 90 per cent of the people in that range believe there is not a radio station of that nature available.
LISTNUM 1 \l 1858 Rob will give you an idea of some of the duplication that we don't find in this market.
LISTNUM 1 \l 1859 MR. FARINA: Further to what Paul said, CHSU is a Hot Adult Contemporary station. We operate several of those in a bunch of markets. The core of that format generally leans female and is 25‑44. We are slightly male skewed and target 15 to 25.
LISTNUM 1 \l 1860 Presentation on CHSU and AIR‑FM would be worlds apart. The audience demands a much more interactive and less structured and less produced presentation. They crave something that is a little more real. So the presentation is different.
LISTNUM 1 \l 1861 The playlist on CHSU is actually comprised of Hot Adult Contemporary hits and they do a great job at that.
LISTNUM 1 \l 1862 AIR‑FM'S music is very different with Alternative Pop and Alternative Rock.
LISTNUM 1 \l 1863 When we looked at artist duplication in the market and specifically with CHSU, we found that nine of the 40 most played artists were artists that would potentially be played on FM. I think there is a huge difference in how we approach the music on a station like AIR‑FM.
LISTNUM 1 \l 1864 The audience we are going after are really the taste makers. They are on the first wave. When a hot new band comes out, they are not interested in just hearing the single that the record company is pushing. They want to hear three or four or five tracks off that record. They want a deeper experience with it.
LISTNUM 1 \l 1865 Even when a single comes out for an act like, I will use the example of a band like Muse or Arcade Fire, there is a process that a single goes to. First it goes to the core audience, and in the case of an Arcade Fire, that core audience resides on Alternative Rock radio. Then once the song builds, it may move on to other formats. The next obvious one is CHR. Then the longer legs a song has, the more it moves up the food chain in terms of formats, and Hot AC is very much a mainstream hit driven format.
LISTNUM 1 \l 1866 That is all to say that while there might be a duplication in nine out of the top 40 artists of artists we play, the actual selections are vastly different because the song they would be playing on CHSU is probably a song we have established and has moved off the playlist anywhere from one year to 18 months ago. So, very different there.
LISTNUM 1 \l 1867 Obviously our news and information, with the different targets, the way we deliver the news and the kind of stories we talk about are very different, and also important to note that AIR‑FM'S programming is 100 per cent Kelowna focused. A good portion of CHSU's programming is networked between Kelowna, Penticton and Vernon.
LISTNUM 1 \l 1868 MR. SKI: Commissioner Williams, if I could ask Kerry to just comment briefly.
LISTNUM 1 \l 1869 MS FRENCH: Mr. Commissioner, when we looked at the duplication between these formats in other markets, we find that there is very little overlap between Alternative and Hot AC.
LISTNUM 1 \l 1870 In Toronto, we operate the number one Hot AC station in the country. The only audience we share with The Edge, which is a long‑established Alternative station, the audience we share is only 14 per cent.
LISTNUM 1 \l 1871 In a market like Ottawa, where we operate Magic 100, another AC station, the duplication between Live 88 Five, another alternative station, is even less at 9 per cent. So, we see very little duplication of audience with those formats.
LISTNUM 1 \l 1872 COMMISSIONER WILLIAMS: Thank you for that.
LISTNUM 1 \l 1873 Let's talk a little bit about how current the station will sound. If I understand, the music portion of your application correctly, your weekly music list will be comprised between 800 and 1,000 distinct selections, an element you suggest would distinguish your station from other mainstream FM formats. As well, you indicate that 75 per cent of material programmed will consist of music released within the past three years. This is all from your application.
LISTNUM 1 \l 1874 Of interest to us is your gold music library, since it will have upwards of 700 selections. How will gold music be defined on your proposed station. On average, what percentage of your weekly music list do you anticipate devoting to gold and will the presence of gold music detract from the proposed air format's ability to sound highly current and contemporary, two elements that you have identified as being critical to your target audience.
LISTNUM 1 \l 1875 MR. SKI: Certainly, Commissioner Williams. I will have Rob explain that to you. We will go through the definition and also the percentages for you.
LISTNUM 1 \l 1876 I think we have to look at gold in maybe a slightly different context because essentially with this particular audience, we are hardly playing any gold because these gold songs are really what are termed recurrent in this particular type of format. So it may be a misnomer. Rob will explain that.
LISTNUM 1 \l 1877 MR. FARINA: First let's talk about the age of the songs. A lot of the records we are talking about are records that have come out within the past five years that would be known as essential tracks and probably in most other formats would be referred to as recurrent.
LISTNUM 1 \l 1878 In this format and for the purposes of the application, we would look at them as gold.
LISTNUM 1 \l 1879 Every hour is comprised of 75 per cent new music as opposed to older titles. The reason for that is the audience craves it. This is a very important aspect. The reason some of those older songs get put into the mix is basically that creates the glue that builds some familiarity on the radio station and keeps people engaged with familiarity to link them to the unfamiliar songs. There is a tremendous amount of them.
LISTNUM 1 \l 1880 In most formats, you look at 30 to 40 songs at the upper end to be on the current playlist. This format, 200 songs are in the current playlist. The amount of diversity in the music and the amount of airplay of new music, I would go as far to say, hasn't been seen in Canada in a long time.
LISTNUM 1 \l 1881 When we talked about the approach we are taking to music on this radio station, the only thing it reminds me of, and this may be a bad comparison for some members of the Commission, but CFNY, specifically 25 years ago had a huge reputation for alternative music, and a lot of that music wasn't heard anywhere else. What is interesting about that is a lot of that music is now on rock playlists 25 years later.
LISTNUM 1 \l 1882 We see a lot of the same things happening with the alternative music revolution, which started in the late 70s, and went through to the mid 80s. We see a lot of that happening right now in music. We see a lot of artists, both domestically and nationally, that are breaking out, and this is a perfect format for this time in this market to showcase that music.
LISTNUM 1 \l 1883 COMMISSIONER WILLIAMS: So, the gold doesn't take as long to be gold. Is that because the changes are moving so quickly?
LISTNUM 1 \l 1884 MR. FARINA: That is because their appetite for older music ‑‑ young people have an appetite for older music. We don't want to say they don't, but when they want to access that, they disconnect from us and we can't be all things to all people.
LISTNUM 1 \l 1885 What they really want, what they want more than anything in this demographic and the people we are going after, new music and alternative music, the sense of discovery, the sense of independent music, the feeling of championing for the underdog are the hot points when it comes to the music.
LISTNUM 1 \l 1886 Playing titles from the 70s and 60s does not help our cause in this market.
LISTNUM 1 \l 1887 When we look at the era balances on the radio station in this market, and I am aware that CKLZ in August moved their format from a classic rock to a mainstream rock, they are still 60 per cent a gold‑based radio station, meaning that in any given hour 60 per cent of the music you are hearing is gold as opposed to new music.
LISTNUM 1 \l 1888 This format is completely different than that. There is already a format like CKLZ in this town that does a great job of playing a lot of Classic Rock titles, and it is not what our audience wants.
LISTNUM 1 \l 1889 COMMISSIONER WILLIAMS: Thank you.
LISTNUM 1 \l 1890 Moving to the area of Canadian content now, I have a number of questions relating to your commitment of 40 per cent Canadian weekly content between 6:00 a.m. and p.m. Monday to Friday.
LISTNUM 1 \l 1891 My first question is related to the lower spin repeat factor on current selections. As a rule, mainstream radio tends to keep two current playlists, one for international selections and one for Canadian selections. Will this be the case with your AM/FM format?
LISTNUM 1 \l 1892 MR. FARINA: No. There will be no distinction spins between Canadians and internationals.
LISTNUM 1 \l 1893 There will obviously be a distinction in categories in order for us to manage that we are reaching our benchmarks, but no distinction in spins.
LISTNUM 1 \l 1894 A heavy rotation international will be a heavy rotation Canadian. They will receive the same amount of exposure, and also the category sizes we anticipate specifically in the heavy, medium and light categories to be identical as well.
LISTNUM 1 \l 1895 COMMISSIONER WILLIAMS: In your proposal you talk about a spin rate, a maximum repeat factor of 25 spins for current selections and an expanded playlist size between 80 to 100 and 1000 selections per week and a higher percentage in new and emerging music.
LISTNUM 1 \l 1896 Will your maximum weekly spin factor of 25 spins be applied equally to both your international and your Canadian current playlists?
LISTNUM 1 \l 1897 MR. FABRO: That is correct, Commissioner.
LISTNUM 1 \l 1898 COMMISSIONER WILLIAMS: Perhaps you could outline the mechanisms you have in place to ensure that the 25 spins maximum weekly repeat factor will not affect your ability to meet your weekly and daily Canadian content requirements. Is there enough product out there?
LISTNUM 1 \l 1899 MR. FARINA: There is definitely enough product out there specifically for this format. As I said, there is a strong music movement going on right now.
LISTNUM 1 \l 1900 I have been blown away by specifically the local community here, and I urge any members of the Commission or staff to just do a My Space search for Kelowna music and see the wealth of talent that is out here and, more importantly, it is great music.
LISTNUM 1 \l 1901 Maybe it would be of benefit to the Commission if I stepped back. When I talk about the database of information that we are getting by consent from our listeners, that database is not married to the music scheduling system. What we do is we receive all that information and then our programming team is responsible for putting that information into play on the radio station. So, we break things down into different categories, rotations, making sure we have the right balance each hour, and also making sure that we are able to schedule the minimum benchmarks of Canadian content throughout each day and throughout the week.
LISTNUM 1 \l 1902 Within that are personalities, and especially for a format like AIR‑FM, we want to really embrace spontaneity and innovation. So, if a listener sends a text message in or there is a posting on the Message Board on‑line or a phone call comes in where there is a great story or a unique perspective that is tied to the playing of a certain song, the personality would be able to implement that song into that hour's programming, but they would also know which category that song would have to replace, just to make sure that we don't fall short of our commitments.
LISTNUM 1 \l 1903 COMMISSIONER WILLIAMS: It appears, through our discussion this afternoon, that you will rely on listener requests in developing your weekly music playlists. You suggest that, along with other programming elements, such as the maximum spin factor and expanded playlists being responsive to listener requests will add to the diversity, unpredictability, spontaneity and the interactive nature of the station's music programming and sound, elements that you have described as being essential in trying to parallel the iPod and MP3 listening experience and bring these young listeners back to radio.
LISTNUM 1 \l 1904 You indicated in July 10, 2007 deficiency response that your music database and music selector system will be programmed to take into account listener requests and to give priority, but not exclusivity, to these songs.
LISTNUM 1 \l 1905 How will listener requests be scheduled? Will they be incorporated randomly into the regular music lists as they come into the station or will they be inserted into some form of block programming? How are you going to integrate these requests?
LISTNUM 1 \l 1906 MR. FARINA: Requests is a bit of a misnomer in that with the information we are getting ‑‑
LISTNUM 1 \l 1907 COMMISSIONER WILLIAMS: It may not be a specific request. It may just be a type of music.
LISTNUM 1 \l 1908 MR. FARINA: That is right.
LISTNUM 1 \l 1909 COMMISSIONER WILLIAMS: I understand.
LISTNUM 1 \l 1910 MR. FARINA: But on that note, we are dealing with an audience that can get what they want, when they what, wherever they want.
LISTNUM 1 \l 1911 COMMISSIONER WILLIAMS: So, are you going to be able to give them the same?
LISTNUM 1 \l 1912 MR. FARINA: We are trying to on as many levels, but they are also drawn to the feeling of community networking, which is what a radio station does best in terms of championing the market, informing and entertaining.
LISTNUM 1 \l 1913 If we could give them that at the core and at the same time connect them to each other and to the radio station using technology that is available, we believe we will do that.
LISTNUM 1 \l 1914 Now I have forgotten your question.
LISTNUM 1 \l 1915 COMMISSIONER WILLIAMS: The requests for similar type, how are you going to incorporate that?
LISTNUM 1 \l 1916 MR. FARINA: Now I remember where I was going with the requests.
LISTNUM 1 \l 1917 So, when you put into context who the audience is and the cultural navigators of our time that are growing up in a world of technology that we didn't even dream of when we were their age, the whole notion of a radio station doing a request hour used to be a great thing 20 years ago. Now it is a who cares because if I want to hear a song, I could access it on several places.
LISTNUM 1 \l 1918 So, what we want to do is use their personal habits to create a product for them, and this is when we allude to requests, it is alluding to that deeper control of the radio station that we talk about with this service.
LISTNUM 1 \l 1919 COMMISSIONER WILLIAMS: Will it be put into some form of block programming or just randomly inserted? It is a lead in to a next question.
LISTNUM 1 \l 1920 MR. FARINA: It would be randomly inserted throughout, but the personalities would know how to slot that in the hour and assure that all our commitments are being met within the hour and that the hour is balanced.
LISTNUM 1 \l 1921 COMMISSIONER WILLIAMS: That clearly is our concern, and the focus of the next question is the obvious concern here is the degree to which weekly pre‑coded Canadian content levels in either the music database, the music selector system or program thought may or may not be affected by insertion of a high number of listener requests, requests inserted randomly, as you have answered.
LISTNUM 1 \l 1922 What mechanisms will you have in place to compensate for any disruption of pre‑determined Canadian content levels that may be caused by the insertion of listener requests as part of daily or weekly music programming? How will you balance that?
LISTNUM 1 \l 1923 MR. SKI: Commissioner Williams, we handle those kinds of things in a few different ways, kind of our fail safe approach.
LISTNUM 1 \l 1924 First off, the software that we use determines the amount that we need to play in terms of CanCom commitments, et cetera.
LISTNUM 1 \l 1925 On top of that, the Program Director and the Music Director on a daily basis watch those levels to ensure that we are meeting any of our commitments. On a weekly basis, that information is provided to the manager of the radio station, who is in essence responsible for making sure that we live up to our commitments, and then at the end of the week I get that information in a weekly report to make sure that all of our stations have lived up to those commitments.
LISTNUM 1 \l 1926 COMMISSIONER WILLIAMS: So there is a lot of checks and balances, I think is what you have just described.
LISTNUM 1 \l 1927 MR. SKI: Yes, we don't want to make any mistakes so there are several along the way.
LISTNUM 1 \l 1928 Again, since it is a weekly commitment, we want to be able to adjust. If on one day it is off a little bit especially because of this particular type of format, we can adjust on the next day or the next hour if that happens.
LISTNUM 1 \l 1929 COMMISSIONER WILLIAMS: Thank you, Mr. Ski.
LISTNUM 1 \l 1930 Projected revenues and profitability, I will spend a question or two on that.
LISTNUM 1 \l 1931 Your business plan indicates you are expecting to attract close to $600,000 a year to revenues from new advertisers and other forms of media, hoping to repatriate advertisers who have abandoned radio for other interactive approaches. What are the differentiating factors that will prompt advertisers to gravitate back to radio and to your proposed station?
LISTNUM 1 \l 1932 MR. SKI: I think it is two things and I will let Kerry go through the approach that we use when we develop our numbers. We kind of use two approaches, kind of a top down and bottom up approach.
LISTNUM 1 \l 1933 I think we should remember that this is a very underserved market so that there are very few ways to reach these particular people, this particular audience, certainly not through radio, but I will let Kerry provide maybe some insight into that.
LISTNUM 1 \l 1934 MS FRENCH: Commissioner Williams, we have a great deal of experience in running radio stations and launching radio stations. We bring all of that experience to bear when we create audience and revenue projections for any licence.
LISTNUM 1 \l 1935 There are six areas that we investigate: The current market conditions, audience projections and revenue projections, advertiser demand, our experience in other markets, and the effect our proposed service will have on the market.
LISTNUM 1 \l 1936 If I could just quickly go through those six areas.
LISTNUM 1 \l 1937 First of all, the market conditions. Many of the applicants today have suggested, and we agree, Kelowna is a very robust market. The compound annual growth rate for revenues between 2001 and 2005, the last published revenue figures for Kelowna, show a growth rate of 4.7 per cent. In that last published year 2005 it was up to 10.7 per cent. We think that growth will continue, and we are projecting in year two of our operation the growth rate will be 6.5 per cent.
LISTNUM 1 \l 1938 In audience projections, we used our demand study and BBM and they both show that the target group of 12 to 34 is well underserved. They are tuning an average of four hours less each week to radio. So, we look at those two methods by using the research from ARI, our demand study. It tells really the potential for the format from a listening perspective, and we analyzed BBM tuning patterns to the stations that are currently in the market.
LISTNUM 1 \l 1939 That tells us, because we are targeting a completely different demo, that the impact we will have on their tuning is going to be minimal.
LISTNUM 1 \l 1940 COMMISSIONER WILLIAMS: So advertisers that are trying to reach the 12 to 34 year old demographic, how do they reach them now? What methods are they using?
LISTNUM 1 \l 1941 MS FRENCH: If they are using radio it is a very inefficient method to reach the 12 to 34‑year olds.
LISTNUM 1 \l 1942 COMMISSIONER WILLIAMS: But if we are going to bring them back to radio, what are they using now other than radio?
LISTNUM 1 \l 1943 MS FRENCH: There are other opportunities with direct mail or newspaper. Those aren't terribly efficient methods to reach them either, and some of them may be using the internet. Some of them aren't using advertising at all because this demographic in this market is so hard to reach, there is no specific source.
LISTNUM 1 \l 1944 COMMISSIONER WILLIAMS: So, advertisers catering to that age group have no real way of reaching them, is that what you are suggesting?
LISTNUM 1 \l 1945 MS FRENCH: Exactly, they don't. I think that was reflected in a lot of the intervenors who supported our application.
LISTNUM 1 \l 1946 There is two that I will mention, Greg Evtushevski from Chefy Source for Sports and Caroline Greyell from West 49. They both really highlighted the fact that it is not only an underserved market for the demographic, it is underserved for the advertisers. They have no vehicle to reach this demographic. There just isn't one in the market.
LISTNUM 1 \l 1947 So, we think we are offering that ability to reach the demographic.
LISTNUM 1 \l 1948 Further, when we look at our experience in other markets, particularly our recent success with The Bounce in Edmonton, we were not only just successful in increasing tuning by 12 to 34s, we were incredibly successful in bringing new advertisers into the media, advertisers that had never used radio before. That is reflected in the TRAM figures.
LISTNUM 1 \l 1949 In 2005, radio revenues in Edmonton grew by 10 per cent, in 2006 by 14.3, and in 2007 by 9.6. We know that our station in Edmonton contributed to that lift.
LISTNUM 1 \l 1950 We think the same thing is going to happen in Kelowna. Because we are offering the advertisers a vehicle to reach this demographic that they have never had before, we think there will be a great amount of new advertisers to radio, and that we will lift that total market spend in radio for Kelowna.
LISTNUM 1 \l 1951 MR. SKI: Commissioner Williams, if I could just add to that, unless an advertiser is trying to reach a 12 to 44 or 54‑year old audience, it is very inefficient, as Kerry said, for them to buy radio in this market. Even though they may only want to reach 12 to 30‑year olds, they have to pay for that peripheral audience because that is where most of the radio stations in this market tend to be. They tend to be older than 25 in terms of where their skew is.
LISTNUM 1 \l 1952 So, obviously they are going to charge clients based on where the bulk of their audience is, otherwise they would be charging a lot less.
LISTNUM 1 \l 1953 Advertisers tend to shy away from that because they are having to pay a premium in order to get the audience that they want.
LISTNUM 1 \l 1954 COMMISSIONER WILLIAMS: Thank you, Mr. Ski.
LISTNUM 1 \l 1955 We will spend a minute on market impact. Given the potential overlap in target audience and music mix between the proposed CTV station and incumbent station CHSU, CKLZ, please clarify why you are estimating audience impact to CHSU 2 percentage points of audience share, and to CKLZ 1 percentage point of audience share to be somewhat modest?
LISTNUM 1 \l 1956 MR. SKI: I think we said, and I will let Kerry give you some of the background information, that nobody really targets this audience. There may be some overlap. There is in every market with every radio station, so it is a matter of looking at how much overlap there may be.
LISTNUM 1 \l 1957 What we have been saying is that there may be some tuning, but this isn't the prime audience of any of the radio stations in this market.
LISTNUM 1 \l 1958 Kerry.
LISTNUM 1 \l 1959 MS FRENCH: Paul explained it very well in that because there is no outlet currently in the market for the 12 to 34s to listen to, some of the stations are getting tuning by default because there is no where else for them to go. I think it is really telling how much the tuning has declined in this market more than in Canada because they don't have the choice.
LISTNUM 1 \l 1960 Some of that tuning will come back to a station that is programmed directly to them, like AIR‑FM, but what we will impact, we don't think the impact will be large and it will be on the lower end of their demographic groups. They have some 18 to 24 tuning, some teen tuning. We won't impact their core demographic. We will take some of the tuning away that is in the younger end of their demo that they are not really monetizing anyway.
LISTNUM 1 \l 1961 MR. SKI: I guess what we are saying is that to my previous comment, those radio stations should not lose advertisers because of the fact that we have some of the lower end of their audience because that is not the bulk of what they are selling.
LISTNUM 1 \l 1962 COMMISSIONER WILLIAMS: Understood.
LISTNUM 1 \l 1963 In your estimation, how many new undertakings can the Kelowna market support? If we were to licence more than one, which would have the least negative impact on your business plan and which would have the most negative impact on your business plan?
LISTNUM 1 \l 1964 MR. SKI: Commissioner Williams, we think that the market possibly could have two licences. The market is robust and it is growing. As we have said earlier, the existing stations are well resourced and well positioned in the market.
LISTNUM 1 \l 1965 We think the PBIT in the market is good and we also think it may be better than it really seems given what we see in some of the other markets that we happen to operate in, such as Kingston.
LISTNUM 1 \l 1966 Certainly if the Commission feels there should only be one licensed, we obviously think it should be AIR‑FM because we think we brought forth a compelling argument for a very underserved market and a segment of the population, and we think we are responding to the Commission's radio policy, to bring this particular demographic back to radio.
LISTNUM 1 \l 1967 That is where, as we have said, the decreases in tuning are most notable.
LISTNUM 1 \l 1968 COMMISSIONER WILLIAMS: Thank you, Mr. Ski and your team of panellists for your responses. I think we have had a complete airing of your application. That completes my line of questioning.
LISTNUM 1 \l 1969 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1970 Commissioner Morin.
LISTNUM 1 \l 1971 &n