TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

                      SUBJECT / SUJET:

VARIOUS BROADCASTING APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

HELD AT:                              TENUE À:

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

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

                 Transcript / Transcription

            VARIOUS BROADCASTING APPLICATIONS /

            PLUSIEURS DEMANDES EN RADIODIFFUSION

BEFORE / DEVANT:

Rita Cugini                       Chairperson / Présidente

Ronald Williams                   Commissioner / Conseiller

Michel Morin                      Commissioner / Conseiller

ALSO PRESENT / AUSSI PRÉSENTES:

Cindy Ventura                     Secretary / Secrétaire

Véronique Lehoux                  Legal Counsel /

Conseillère juridique

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

PHASE I

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.

‑‑‑ Pause

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.