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Please note that the Official Languages Act requires that government publications be available in both official languages.
In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
Various broadcasting applications /
Diverses demandes de radiodiffusion
HELD AT: TENUE À:
Sussex Ballroom Salle Sussex
Future Inns Cambridge Future Inns Cambridge
700 Hespeler Road 700, chemin Hespeler
Cambridge, Ontario Cambridge (Ontario)
October 20, 2008 Le 20 octobre 2008
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Various broadcasting applications /
Diverses demandes de radiodiffusion
BEFORE / DEVANT:
Michel Arpin Chairperson / Président
Rita Cugini Commissioner / Conseillère
Elizabeth Duncan Commissioner / Conseillère
Peter Menzies Commissioner / Conseiller
Stephen Simpson Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Cindy Ventura Secretary / Sécretaire
Joe Aguiar Hearing Manager /
Gérant de l'audience
Anthony McIntyre Legal Counsel
HELD AT: TENUE À:
Sussex Ballroom Salle Sussex
Future Inns Cambridge Future Inns Cambridge
700 Hespeler Road 700, chemin Hespeler
Cambridge, Ontario Cambridge (Ontario)
October 20, 2008 Le 20 octobre 2008
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PRESENTATION BY / PRÉSENTATION PAR:
Sound of Faith Broadcasting 5 / 25
Forest City Radio Inc. 65 / 406
CTV Limited 138 / 819
Rogers Broadcasting Limited 193 / 1125
Evanov Communications Inc. (OBCI) 265 / 1553
Cambridge, Ontario / Cambridge (Ontario)
‑‑‑ Upon commencing on Monday, October 20, 2008
at 0930 / L'audience débute le lundi
20 octobre 2008 à 0930
1 THE CHAIRPERSON: Good morning and thank you for waiting.
2 Ladies and gentlemen, welcome to this public hearing. My name is Michel Arpin and I am the Vice Chair of Broadcasting for the CRTC. I will be presiding over this hearing.
3 Joining me on the panel are my colleagues, Rita Cugini, at the far end, Commissioner for Ontario; and Elizabeth Duncan, to my left, Commissioner for the Atlantic Region; Peter Menzies, to my extreme left ‑‑ I don't know if he's pleased to be at the extreme left ‑‑
‑‑‑ Laughter / Rires
4 THE CHAIRPERSON: ‑‑ part‑time Commissioner; and Stephen Simpson, Regional Commissioner for British Columbia and the Yukon.
5 The Commission team assisting us includes Joe Aguiar, Hearing Manager and Manager of English‑Language Radio Operation; Tony McIntyre, Legal Counsel; and Cindy Ventura, Hearing Secretary. Please speak with Mrs. Ventura if you have any questions with regard to hearing procedures.
6 At this hearing the panel will examine nine applications to operate a new FM commercial radio station in the London market, including an application for St. Thomas.
7 We will then study four applications to operate a new FM commercial radio station in Guelph, including an application to convert CJOY Guelph from the AM band to the FM band.
8 Certain applications are competing for the use of the same frequencies in London and Guelph respectively.
9 In light of the recent extraordinary events respecting world financial markets, the Commission wishes to ensure that any application it may choose to license to serve the London and Guelph radio markets have the financial capacity to succeed. Therefore, the Commission requests that each applicant provide updated proof of financing for their proposals, consistent with the Commission's policy regarding documentary evidence to confirm the availability of financing. A copy of this policy can be obtained from the public examination room. Applicants will have 10 days to provide the necessary documentation.
10 I will now invite the Hearing Secretary, Cindy Ventura, to explain the procedures we will be following.
11 Mrs. Ventura...?
12 THE SECRETARY: Thank you, Mr. Chairman.
13 Before beginning I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.
14 When you are in the hearing room, we would ask that you please turn off your cell phones, beepers and blackberries as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translator. We would appreciate your cooperation in this regard through at the hearing.
15 Le service d'interprétation simultanée est disponible durant cette audience. Vous pouvez vous procurer un récepteur auprès du technicien à l'arrière de la salle. L'interprétation anglaise se trouve au canal 4 et l'interprétation française au canal 5.
16 We expect the hearing to take four days, starting today until Thursday. We will begin each morning at 9:00 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 occur.
17 The Essex Room will serve as the examination room where you can examine the public files of the applications being considered at this hearing. As indicated in the Agenda, the telephone number of the examination room is 519‑624‑6737.
18 There is a verbatim transcript of this hearing being taken by the court reporter sitting at the table to my right. 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 transcripts will be made available on the Commission's website shortly after the conclusion of the hearing.
19 Also, for the record, please note that there has been a change to the Agenda of the hearing. Mr. Alan Lazar of the London Silverbacks football team, intervention number 270, will be appearing in Phase III instead of Power 4 Marketing Ltd.
20 Now, Mr. Chairman, we will proceed with Item 1 on the Agenda, which is an application by Sound of Faith Broadcasting for a licenCe to operate an English‑language FM specialty commercial radio programming undertaking in London.
21 The new station would operate on frequency 99.9 MHz, Channel 260A, with an average effective radiated power of 234 W, maximum effective radiated power of 500 W, with an effective height of antenna above average terrain of 107.5 m.
22 Appearing for the applicant is Mr. David MacDonald.
23 Please introduce your colleagues and you will have 20 minutes for your presentation.
24 Mr. MacDonald...?
PRESENTATION / PRÉSENTATION
25 MR. MACDONALD: Good morning, Mr. Chairman and Members of the Commission.
26 My name is Dave MacDonald and I am the Coordinator of Applications for Sound of Faith Broadcasting. I am also a member of the Board of Directors of Sound of Faith and I am the General Manager of our Kitchener station, Faith FM.
27 I have been a broadcaster since 1969 and have been involved with Sound of Faith for about 13 years.
28 Joining me, on my right, is Dr. Robert Reid from Woodstock, Chair of the Board of Sound of Faith. On my left, from London, Dale Elliott, the General Manager of our London station Grace FM.
29 Sound of Faith Broadcasting is a not‑for‑profit corporation that operates three low‑power FM stations, Faith FM in Kitchener, Hope FM in Woodstock and Grace FM in London. We are approaching our fifth year on the air in all three communities and we have been well received by the members of these communities.
30 We come before you today to explain why we have applied for a new operation in London to replace our existing facility.
31 Before we get to this explanation, I would like Dr. Reid to tell you a bit of the history of our ministry.
32 DR. REID: Mr. Chair and Members of the Commission, my name is Dr. Robert Reid. I am an orthopaedic surgeon from Woodstock, Ontario.
33 As Mr. MacDonald mentioned, I serve as Chair of the Sound of Faith Board. I am also on the Local Advisory Board of Hope FM, that's the Woodstock Station; and I am one of the founding members of Sound of Faith Broadcasting.
34 In 1988 a group of four men had a vision and went out to Bower Hill Road near Woodstock to pray for a Christian radio. We felt that there was a need for this kind of ministry in our community, but we were not broadcasters and we did not know how to make this vision a reality.
35 Our first plan was to get up a large receiving antenna at Bower Hill, pick up the signal of WDCX‑FM, a well‑known Christian radio station in Buffalo, New York, and rebroadcast that signal to the community. However, we soon discovered that that would be illegal, so we decided to create a new station, a powerful one that would cover southwestern Ontario.
36 We began recruiting interested parties from other communities and held monthly meetings in Woodstock to see how this might happen.
37 After many meetings and many attempts at fund‑raising, we concluded that a 5000 W station was beyond our reach and it was suggested that we go into our own community and generate local support rather than apply for one large station. We tried to establish a number of small stations that would better serve local markets.
38 This strategy was successful and on December 9, 2002 we received notification from the CRTC that a licence had been granted for a station in London. This was followed on May 7, 2003 by approval for a station in Woodstock, and one week later, May 14, approval was given for our Kitchener station.
39 All three stations have been well received, but our London operation ‑‑ just as this morning ‑‑ had technical difficulties or problems from the beginning.
40 I will let Mr. MacDonald elaborate.
41 MR. MacDONALD: A few months after we received approval from the CRTC we were ready to begin broadcasting our test signal in London. We had acquired a 30 W transmitter from one of our Board Members who operated a company that specialized in professional audio installations.
42 Unfortunately, as soon as we switched the transmitter on, under the watchful eye of a representative from Industry Canada, we discovered that our signal was creating interference with avionics transmissions from the London airport and we were forced to turn it off.
43 We were then obligated to find a solution to this problem before we could begin broadcasting. The solution we decided on was to install a filter on the output of our transmitter. This filter was a special order item. It took several weeks to get it and have it installed.
44 When we switched the transmitter back on we found the interference was gone, but the filter absorbed so much power that we were only getting about 6 or 7 W ERP at the transmitter rather than the 10 W we were licensed for.
45 We cannot yet afford to upgrade this transmitter, so we still operate at this reduced power level.
46 Our engineers tell me this reduced power level is not all that significant and even with full 10 W we would still have the same reception and interference problems.
47 In any case, this means that the coverage is not what we had hoped for and we have received many complaints from people that want to listen to us but cannot. Especially in the downtown core area of London the signal is spotty at best and many potential advertisers will not buy from us because they can't get the signal in their place of business.
48 We also have problems with interference from other stations. From the beginning we have had a lot of interference from a Detroit‑based station on 105.9. There are times when their signal can be heard over ours in the west end of London.
49 Another problem was created for us in a CRTC Decision of May 18, 2005. This Decision reads in part:
"The Commission approves the application by Aylmer and Area Inter‑Mennonite Community Council to amend the broadcasting licence for the low‑power ethnic radio programming undertaking CHPD‑FM Aylmer by changing the frequency from 107.7 MHz (channel 299LP) to 105.9 MHz (channel 290A1) and by changing the authorized contours through an increase in the effective radiated power, from 50 watts to 250 watts. The proposed Class A1 service is the lowest level of a protected FM service."
50 We were not aware that this application was even before the CRTC, but even if we had been made aware of it we are unprotected at our current power level. This change to CHPD‑FM has created interference with our signal on the east side of London.
51 These are the technical reasons we are applying for a new operation on a new and protected frequency.
52 Dale Elliott, the Station Manager, will now tell you more about the vision we have for this new station.
53 MR. ELLIOTT: Good Morning, Mr. Chairman and Members of the Commission.
54 My name is Dale Elliott, I am the General Manager of Grace FM. I am also the host of the midday show from noon until 3:00 p.m.
55 We are here today because there are many things that we would like to change. We think that the best way to start that process would be to have a new licence with different parameters.
56 You have already heard the reasons why we need a new frequency, more power and protected status, but we would also need to be able to sell more advertising. Our current licence restricts us to four minutes per hour and we would like to have that removed.
57 We would like to also change our obligation regarding Canadian Talent Development to the current $500 annually for stations with under $625,000 annual revenue. Our current Condition of Licence for CTD is as follows:
"The licensee shall contribute a minimum of $5,000 per year in direct cost expenditures toward the development of Canadian talent. This would entail holding an annual talent contest for all styles of Christian music, with the winners having an opportunity to record a CD. In addition, the licensee would put out a compilation CD of the top 18 artists in the talent contest." (As read)
58 We have attempted to hold this contest annually, but unfortunately we have not had enough response to be able to consistently issue a compilation CD. Our sister stations in Woodstock and Kitchener have also held this type of event, but with more success. We plan on continuing with these talent searches, but we would like to have them removed from our Condition of Licence.
59 Our plan is to start fresh with a new station. We will have a different name, logo and website, but we will continue to offer programming that is family‑friendly and we will continue supporting Canadian Christian artists. These are people who have no chance of having their music played on any other stations in London and we are helping them to launch their careers in music. We know that some of them have become very successful.
60 Here are some of the comments from Nathan Picher, singer and songwriter with the band Article 1:
"As a professional musician, born and raised in London, Ontario, I have witnessed the impact of local radio stations, particularly Grace FM, in developing Canadian talent. Over the past few years my band, Article 1, has grown from a lofty dream into a full‑time professional career with a U.S. recording contract, world distribution through EMI, a Japanese mainstream release, a United States Christian CHR top 10 single, and hundreds of tour dates over hundreds of thousands of kilometres in front of hundreds of thousands of people coast‑to‑coast in both Canada and the United States.
Right from the beginning Grace FM offered their support. They provided international exposure by hosting the Kingdom Bound Talent Search, which we won, allowing us to play our first concert in the United States. They were also the first station to play our music and the first station to ask for an interview.
All of these experiences gave us a better understanding of the industry, helping us grow our career to where we are today. In fact, in the past few years our music has gone from being played on just one station, Grace FM, to being played on four continents." (As read)
61 We have also received some comments from a well‑known and respected musical icon and four‑time Juno award winner Skip Prokop. Skip was one of the founders of the group Lighthouse and he was the drummer and a vocalist in the band as well.
62 He also played a large part in the formation of the CRTC, as he was invited by Prime Minister Trudeau to address Parliament at the Parliamentary Inquiry into Canadian music. He spoke at length about what it was like to be a Canadian musician recording artist during a time when Canadian radio stations would not play or recognize the benefit of playing Canadian recording artists. This inquiry resulted in the formation of the Canadian Radio and Television Commission.
63 Skip now resides in London and he drums for a Christian band named Mercy Train. He had these comments about our application.
"Speaking as one of the most qualified pioneers and promoters of Canadian talent and Canadian music, I highly recommend the approval of the Sound of Faith application. This can only result in a tremendous boost for local Canadian faith‑based music and musicians, not to mention the increase in a larger geographic awareness of this category of music and, as a result, the increase in sales of their recordings simply because they would be reaching a much larger audience of people of faith." (As read)
64 In addition to our continuing commitment to the promotion of local artists, we will develop a local news service and we will continue to work closely with local organizations to help them promote their events.
65 We believe that the service we offer is unique but very much needed in the community. We also feel that we are best to provide this service as we have been on the air for nearly 5 years and we know our community and its needs. We also feel that in order to achieve these goals we require a new station with more power and a new frequency.
66 MR. MacDONALD: Mr. Chairman and Members of the Commission, we know that there is a potential for Christian radio to do well in London, but so far, because of the problems we have talked about, that potential has been unrealized. We know that the listeners of Grace FM are loyal and they are vocal in their support.
67 We have attached as Appendix 1 a letter from one of our advertisers, Rick Ho of London Audio. Rick expresses his amazement at the response he is getting from his ads on Grace FM. In this letter he states:
"At least once a month one of your listeners takes the time to draw me aside to thank me for supporting the station or to at least mention it's what brought them in to shop. When it first happened I found it novel, but it has occurred with such frequency it has bloomed to complete amazement." (As read)
68 He also calls the money he spends with Grace FM:
"... the best return on investment within our marketing budget." (As read)
69 Grace FM has also been helpful in supporting other agencies in the community. Dale Hunter, the President of the London Knights Hockey Club, in a recent letter said:
"I'm looking to expand our community support base and we are glad to be working with 105.9 Grace FM. This fine station plays contemporary Christian music that is safe for the whole family, as well as community‑related programs concerning health and wellness." (As read)
70 Dr. Barry Slauenwhite, the President and CEO of Compassion Canada had these comments:
"London has certainly benefited from having Grace FM's positive message and we have appreciated their commitment and efforts in our community over the past five years. Grace FM has also partnered with Compassion, supporting our presence in the community and helping to bring exposure to our organization and the children we represent around the world." (As read)
71 Mr. Bev Shipley, MP for Lambton‑‑Kent‑‑Middlesex, recognizes the value we bring to the community when he says:
"This station not only broadcasts contemporary Christian music, traditional hymns and country gospel, but has interesting, informative talk shows, children's programming, daily inspirational readings and more." (As read)
72 We know that we have the potential to reach more people and increase our revenue because our sister station in Kitchener, Faith FM, serves a similar population base and they generate about three times the revenue that we do here in London. Faith FM is a member of BBM and we have some hard numbers to show that a Christian station can attract a substantial following. We have attached a sample of some of those numbers as Appendix 2.
73 We are confident that with this new operation we will be able to see similar results in London and we ask the Commission to grant us this licence so that we can finally realize our potential and allow us to properly serve the Christian community.
74 Thank you for your attention. Now we are at your service to answer any questions that you might have.
75 THE CHAIRPERSON: Thank you, Mr. MacDonald.
76 I want only to say for the record that I'm wearing this earpiece only because I'm deaf in one ear so that allows me to better understand what you say. So I'm not listening to the translation, I'm listening to ‑‑
77 MR. MacDONALD: I appreciate that, sir. My wife is deaf and one ear, I appreciate what you ‑‑
78 THE CHAIRPERSON: ‑‑ to the floor track.
79 We will first start with Commissioner Cugini.
80 COMMISSIONER CUGINI: Thank you, Mr. Chair.
81 Good morning, gentlemen and welcome.
82 MR. MacDONALD: Good morning.
83 COMMISSIONER CUGINI: I have a few housekeeping items, some that have arisen as a result of your oral presentation this morning and some that are in your application.
84 The first one has to deal with the appendices that you have attached to your oral presentation.
85 Is this new information or is this information that was already included in your application?
86 MR. MacDONALD: This is new information. We didn't have this. This is from our Kitchener station, the appendices.
87 I just wanted to show the potential that we have in London is not realized compared to what we are doing in Kitchener. So this is new information which was not in our application.
88 COMMISSIONER CUGINI: Okay. I will let our legal counsel work out whether or not we can accept this information at this stage of the hearing process. If we can, we will put it on the public record for all other applicants and interveners to examine and, if not, thanks and you can take the information home. Our legal counsel will be able to verify whether or not we can accept it.
89 MR. MacDONALD: Okay. Thank you.
90 COMMISSIONER CUGINI: The other item I would like to talk very briefly about ‑‑ and Mr. Elliott, you spoke about it this morning ‑‑ are the changes you would like to your current service.
92 MR. ELLIOTT: Yes.
93 COMMISSIONER CUGINI: You do know that this ‑‑ I believe the licence is up for renewal within a year ‑‑
94 MR. ELLIOTT: Yes.
95 COMMISSIONER CUGINI: ‑‑ and that is the time to address these changes if you would like those changes to be made, or you have to file an Application to Amend those conditions of licence. It's not part of these proceedings because it deals with a current licence and we would have to allow the opportunity for interveners to comment ‑‑
96 MR. ELLIOTT: Right. Correct.
97 COMMISSIONER CUGINI: ‑‑ on those changes and there isn't that opportunity here now.
98 MR. MacDONALD: Yes. I think what we are stating, we formulated this as a new application because we felt ‑‑ there was a call issued and we felt if we waited until a renewal date there would be no frequencies available. So we thought okay, if that's the case then we will make a new application for a new station and we will close down the old one.
99 COMMISSIONER CUGINI: Right. But what I'm saying is, if you are not granted the licence ‑‑
100 MR. MacDONALD: Right.
101 COMMISSIONER CUGINI: ‑‑ for the new application and you continue operation ‑‑
102 MR. MacDONALD: Right.
103 COMMISSIONER CUGINI: ‑‑ of your station and you would like these amendments applied to your existing station, there would have to be a formal process in which you would have to request those amendments.
104 MR. MacDONALD: Right. Yes, we are aware that we would have to do that with our existing station, but if we get approved for this one then we can just close that one down then.
105 COMMISSIONER CUGINI: Okay. I understand.
106 MR. MacDONALD: Yes.
107 COMMISSIONER CUGINI: Okay.
108 Speaking of your existing station ‑‑
109 MR. MacDONALD: Yes...?
110 COMMISSIONER CUGINI: ‑‑ one of the things that has come to our attention as a result of examining this whole proceeding is that we are missing your annual returns for the broadcast years 2005 and 2006.
111 MR. MacDONALD: Yes.
112 COMMISSIONER CUGINI: Is our filing system not up to par or have you just been unable to file those annual returns?
113 MR. MacDONALD: We have had some difficulties with our filing system, with our accounting procedures, which we have taken steps to fix.
114 We have a new bookkeeper who is doing both the books for Kitchener and London and she has been going back and trying to find all of the problems that have occurred. We had some problems with some of the management earlier before Mr. Elliott came on board and these problems are being looked at and hopefully will be rectified in the very near future.
115 COMMISSIONER CUGINI: Do you have an approximate date by which you can file those returns?
116 MR. MacDONALD: I would think probably within the next 60 days.
117 COMMISSIONER CUGINI: Okay.
118 The other issue, again dealing with your existing station, is that you are deficient in the commitments made to CTD as it was then known, CCD as it is known now.
119 I do appreciate that in your oral presentation you did in fact outline the financial difficulties that you were having. However, the commitment to CTD or CCD is a condition of licence.
120 MR. MacDONALD: Right. We are aware of that and basically that's a reporting thing. It's not that we didn't do the talent searches and spend the money, it's simply a reporting thing and we have been advised that we were in deficiency by the CRTC and we have been given the deadline of November 30 I believe it is to submit these reports.
121 COMMISSIONER CUGINI: Okay.
122 MR. MacDONALD: So we are working on that as well.
123 We did have the contest, we are just trying to find all of the proof of the money that was spent. So that, by November 30, hopefully will be filed with the Commission.
124 COMMISSIONER CUGINI: Yes. It's not difficult to spend the money, it's just difficult to ‑‑
125 MR. MacDONALD: Well, unfortunately yes. A lot of the ‑‑
126 COMMISSIONER CUGINI: ‑‑ to keep track of how much we spend.
127 MR. MacDONALD: A lot of the filing was deficient and some of the receipts are still sort of ‑‑ where are they sort of thing, for things like the hall rental and things like that. Dale is working on it very, very diligently to try and get that all sorted out so that we can submit those reports.
128 COMMISSIONER CUGINI: Terrific. Thank you very much for that.
129 We will move on now to the application that is now before us.
130 As you know there is another applicant in these proceedings for a Christian radio service, the United Christian Broadcasters.
131 Have you had an opportunity to look at their application?
132 MR. MacDONALD: Briefly, yes we have. And we are very aware of United Christian Broadcasters and who they are and we are going to address that in the intervention stage.
133 COMMISSIONER CUGINI: Well, I was curious to know from your perspective.
134 I know in your oral presentation you said you have been in the market for five years, you know the community, but if you are us sitting up here, convince us that you are best served to serve the London market when comparing the two applications. Like why should we pick you and not United Christian Broadcasters?
135 MR. MacDONALD: That's a very good question.
136 I'm not sure what they are going to have to say in their presentation, but UCB is ‑‑ what's that?
137 MR. ELLIOTT: I can address that.
138 MR. MacDONALD: Okay.
139 MR. ELLIOTT: I believe that we have a very strong relationship with the community who we broadcast to and in many talks that we have had since it has become known that there is another application for the London market of the same format it is my opinion, and it has been my experience, that many of these either churches or ministries or groups that are of interest to our format are questioning in their mind we already have a station. So to them it has put a bit of a question mark on their mind. It is sort of dividing their loyalties, like do they try and support two different stations?
140 A lot of our financial support comes from the listener base and it's a combination of advertising dollars plus listener donations. So that's been my experience.
141 I believe we have a very strong relationship with the church community and that is our base. So I think we are going to build on that for sure.
142 The only real big question in their mind has been the signal. They have always had this question of, you know, we would love to support more, we would love to hear it more, but it's just very difficult to pick up the station.
143 We have made some advances with having the streaming broadcast on the Internet, that has really helped our listenership as well, but when it comes to putting out 10 W, or 6 to 7 W as it ends up being, there is not a whole lot we can do on that end of it.
144 We do have several people who actually will go and look for radios that pick up our station better as a result. They will give them out to people so they can hear it.
145 People that we have listening to us are very loyal, they are very hungry for this type of format, so they will try and search it out any way they can. In many cases it's only picked up in the vehicles. People can only hear it in their cars.
146 COMMISSIONER CUGINI: Do you think the London market is robust enough to support the licensing of two Christian radio stations?
147 MR. MacDONALD: Absolutely not. Our experience in Kitchener, when we applied in Kitchener, we made the argument that Kitchener was not big enough to support two Christian applicants ‑‑ there were two at the time, there was our station and one from Trust Communications in Barrie ‑‑ and the CRTC saw fit to license it to us because we were the local group. We had been working in the community for five or six years to develop support for our station. And the guys from Barrie, while they were very successful in Barrie, were coming in as outsiders and trying to establish a beachhead in Kitchener and the CRTC agreed with us that there wasn't room for two stations. They licensed us and denied Barrie.
148 We see a similar situation here. We are the local group, we have been working here for years and years and years in the London ‑‑ even before the station was licensed ‑‑ to build support and then UCB comes in from New Zealand and tries to put a beachhead in London, much as they have in Belleville and Chatham.
149 Make no mistake, UCB is based in New Zealand, they have stations all over the world. The Chair of their Board is from New Zealand. They are not local. They may have local people that they hire and have working for them, but they are not a local group like we are. We have been in the community all our lives. I am born in ‑‑ I was actually born in London but raised in southwestern Ontario and I have lived in the Kitchener area since 1968.
150 So we feel that we are best equipped to handle this because we are local, we know the community, we all go to the churches that support us in our communities and we are not coming in from outside trying to establish a big network of stations across Canada.
151 It's just my feeling that there is not enough support for two stations doing the same format in a market this size.
152 I don't even think that there are two oldies stations in Kitchener. If another came ‑‑ there's an Oldies 1090, if another station came in and wanted to do oldies, I don't think there would be support for that so there should be no ‑‑ there should never be too absolutely the same format stations in any market of this size. And what they have come to the table with is basically the same format that we are providing.
153 MR. ELLIOTT: Can I comment as well?
154 COMMISSIONER CUGINI: Of course.
155 MR. ELLIOTT: Additionally I would say that this type of format is still in the infancy stages in Canada. In the United States there is about 80 years of history with Christian broadcasting, but we don't have that in Canada. So as much as yes, it's probably ‑‑ of any sector in radio is one of the most fast‑growing divisions, it's still going to be tough to make things go.
156 Plus, the industry of musicians right now is somewhat in an upheaval as you look at the purchasing of music is on the decline in most cases. I mean people are downloading individual tracks, but they are not buying full CDs.
157 So the music companies may be ‑‑ I mean they are definitely hurting, but they are not hurting nearly as much as what the artists are. So I think it's very key that we have stability in what we have currently and I think it would be very detrimental to have two in this market.
158 That is just my feeling, and with what Dave said, as well, that if there was something being offered new or different in the programming, that would make more sense to me, but to offer a very similar format, that is almost identical in its programming, I don't understand that.
159 MR. MacDONALD: The CRTC actually just turned down an application for an Ottawa station to have a second Christian station. Even though the format was mostly talk, the CRTC determined that it wasn't that much different from what was on the original station. It was the same company applying for a second licence, and the CRTC said there was no room for a second station in Ottawa.
160 So, if that is the case there, I am sure that it is certainly the case in London and Kitchener.
161 DR. REID: Your Chairman made reference to the present economic situation. That is not unique. Sterling Trucks in St. Thomas has just closed its doors. The amount of advertising dollars will be less in the next five years, so why would we bring in two stations and try to make them compete?
162 If we can survive for five years well with a 6‑watt signal, what can we do covering the whole of Middlesex with a good signal?
163 We are going to be fine.
164 COMMISSIONER CUGINI: Thank you. I don't think I need to ask the next question that I had, but I will ask it anyway. I think I know the answer.
165 If we were to deny your application and award the licence to UCB, would you cease the operation of CHJX?
166 MR. MacDONALD: My feeling is, with a 6‑watt station, with the limited resources that we have, compared with the unlimited financial resources that they have at their disposal, and the 2,000 watts, or roughly, that they are applying for, we would have no choice.
167 COMMISSIONER CUGINI: Again, you have talked about the limitations of your signal strength, and I think in your application you actually said that listeners have given up on CHJX because of the poor quality of your signal.
168 So if we grant you this licence, what are you going to do to win those listeners back?
169 Are you going to start a marketing campaign? Is it word‑of‑mouth?
170 If you have lost those listeners, how are you going to get them back?
171 MR. MacDONALD: I think a marketing campaign, from my standpoint.
172 We just re‑branded Kitchener last year. We put up a new logo and increased our marketing budget.
173 One of the things we did was to put up a couple of signs on the local transit buses. It's amazing what impact that has had on the market. People now know we are there. People who said, "Faith FM, what's that," now know that we are there.
174 So, yes, we would start aggressive marketing to let people know that we are here in this market, and that we are here with increased power. "If you heard us before and you couldn't get us in your home, try us now." That sort of thing. Absolutely.
175 We need to do that. They are not going to find you by themselves.
176 COMMISSIONER CUGINI: And if I happen upon your station, if I am flipping through the dial and I just happen upon your radio station, how do I know that I am listening to a Christian radio broadcaster?
177 MR. ELLIOTT: That would depend on what time you would tune in. I don't think it is always readily apparent.
178 In many people's minds, I would have to say that Christian music would be ‑‑ in their estimation, would be sort of old church music and very dry.
179 I think you would be surprised if you tuned into our radio station and found that it was very upbeat, very contemporary, very exciting. However, the message is very clear. It's very different.
180 That is not to say that there aren't many artists in the mainstream who are faith‑based artists, and we do play some of those as well.
181 There are cross‑over artists that we would play on our station.
182 I think, if you tune in during spoken word programming, you are going to definitely notice that the talk is centred around faith‑based topics. It's very apparent in that regard.
183 It would depend on when you would tune in.
184 COMMISSIONER CUGINI: You have anticipated the next line of questioning, which is your spoken word programming.
185 MR. ELLIOTT: Yes.
186 COMMISSIONER CUGINI: We do need a little bit more detail, because when I look at the application, I am still a little bit uncertain as to what the commitment is.
187 You say that 80 hours will be local, of which 28.5 will be spoken word. Correct?
188 MR. ELLIOTT: That's right.
189 COMMISSIONER CUGINI: Of the 28.5 hours, just looking at those hours of spoken word, how many hours will be devoted to foreign‑acquired programming?
190 I saw the list of titles that you provided ‑‑ I think it was in your deficiency letter ‑‑ but how many hours does that mean per week of the 28.5?
191 MR. ELLIOTT: It's in the neighbourhood of between 3 and 5 hours of broadcasting to different cultural groups.
192 For example, for Spanish and Ukrainian we have ‑‑
193 COMMISSIONER CUGINI: No, I meant the American‑acquired brokered programming.
194 MR. MacDONALD: Let me see if I can refer to the letter of deficiency that you are talking about.
195 COMMISSIONER CUGINI: We are trying out a new system, and everything is on our computer, so I will try to call it up as well. Bear with me.
196 MR. MacDONALD: If you guys had Max, you wouldn't have this problem.
‑‑‑ Laughter / Rires
197 MR. MacDONALD: We do have a number of local programmers ‑‑
198 THE CHAIRPERSON: And we hope that you don't call us Mr. or Mrs. Toshiba ‑‑
‑‑‑ Laughter / Rires
199 COMMISSIONER CUGINI: Yes.
200 For example, I have "Focus on the Family", "Insight for Living", "In Touch" ‑‑
201 MR. MacDONALD: Yes.
202 COMMISSIONER CUGINI: So of those 28.5 hours of spoken word programming, how many hours would be comprised of this type of programming?
203 MR. ELLIOTT: It is in our application.
204 MR. MacDONALD: Yes.
205 For instance, "Focus on the Family" is a U.S.A.‑originated program, but they have a Canadian division, and the programming that they do for the Canadian station is often somewhat different from the one they broadcast in the U.S., especially when the issues are political. They don't necessarily talk about American politics on their Canadian broadcasting.
206 They may talk about the Canadian election, as opposed to the American election.
207 The same thing would apply to all of these ministries that are marked on here as U.S.A. They originate in the U.S.A., but they will have Canadian divisions.
208 So it's kind of a grey area for us to say ‑‑
209 COMMISSIONER CUGINI: I know, but I just need a number.
210 MR. MacDONALD: I wish I could give you one.
211 MR. ELLIOTT: I would say that it's in the neighbourhood of 75 percent U.S.‑originated, but 25 percent would be actually coming from Canadian programming, Canadian broadcasters, who would actually form the program here.
212 COMMISSIONER CUGINI: Okay. Does that mean that 75 percent of the 28.5 hours will be this type of programming, and that 25 percent of the 28.5 hours will be Canadian?
213 MR. ELLIOTT: That's correct.
214 COMMISSIONER CUGINI: That makes it a little bit complicated now, because you also made a commitment to news and sports. You said, I think, that there would be 3 hours and 15 minutes of news, sports and weather.
215 Is this 3 hours and 15 minutes part of the 28.5 hours of spoken word?
216 MR. MacDONALD: No, that would be in addition to.
217 COMMISSIONER CUGINI: It's in addition to. Okay.
218 So of the 3 hours and 15 minutes ‑‑ because you have said it would be sports and traffic ‑‑ how much is just pure news?
219 If we were to deduct the sports and traffic reports from the newscasts, how much would be pure news?
220 MR. MacDONALD: I am not sure that we have actually laid that down in stone yet.
221 COMMISSIONER CUGINI: What is it on your current station?
222 MR. MacDONALD: It's a continually evolving thing with us.
223 What are you doing now for news?
224 MR. ELLIOTT: We only have news, traffic and sports in the morning programming. In the afternoon we have news and traffic.
225 Those would be in the 6 to 9 in the morning time slot, and 3 to 6 in the afternoon.
226 COMMISSIONER CUGINI: And you don't do news on weekends, and you don't plan on doing news on the weekends if granted this licence.
227 MR. MacDONALD: I would say not at first, although it's an evolving thing.
228 It's the same as Kitchener. When we started we did no news, and now we have syndicated newscasts, plus we have a local guy that goes out and does local stories for us, plus we have a guy who does the sportscast for us locally.
229 It's an evolving thing, and as resources become more available to us, then we would certainly entertain hiring and establishing a local newsroom, and do news of not only interested Christians, but the whole community.
230 Our aim is to have a station that someone can tune into on their way to work, or on their way home from work, and not have to tune out to somewhere else to get the news, and to get the sportscasts, and that sort of thing.
231 That would be our aim, and that is what we are working toward in Kitchener, and that is what we will work toward in London.
232 Because of the problems we have had there, we haven't had the financial resources to make the expansion that we would like to make.
233 Certainly, it is our aim to follow the Kitchener model and do that.
234 DR. REID: In our presentation we alluded to our relationship with the London Knights, and now that that relationship has been established, there is no reason why we cannot participate in more local athletic events.
235 COMMISSIONER CUGINI: In order to close the circle on spoken word programming we have to talk about the Religious Broadcasting Policy.
236 I know that in your application you said that you will adhere to the guidelines of that broadcasting policy when it comes to providing balance and ethics in religious programming.
237 I would like to know what mechanism you currently have in place, or what mechanism you plan on putting in place, to ensure that, especially that acquired American programming, over which you have no control for content ‑‑
238 What mechanism are you going to put in place to make sure that you comply with those guidelines on ethics and balance?
239 MR. ELLIOTT: It is our intention to have other faiths represented. Currently we have a Jewish one‑hour program per week. We also have a locally produced program, which is called "The Cross‑Current", and it is going out and getting different opinions on topical issues. It is very much open to opposing perspectives and opinions.
240 We look to grow that aspect of the station further. That is our intention.
241 I am not quite sure what you mean as far as the mechanism ‑‑
242 As far as a plan? Is that what you are referring to?
243 COMMISSIONER CUGINI: Yes. How many hours of balanced programming, for example, will you provide?
244 What will you do if someone accuses you of airing a broadcast that is offensive?
245 Just this morning, on Canada AM, I heard that Sony has to pull one of their anticipated games because the music in the background has two lines that are offensive ‑‑ two lines from the brand that are offensive to Muslims.
246 What are you going to do to address those kinds of concerns from listeners who say, "You know what? The guy I heard this morning, who said that gays should be" ‑‑ you know, "should not be part of this world," for example, what are you going to do about that?
247 MR. ELLIOTT: Currently we do air a disclaimer before programs that may be considered that way. That's a first step, I realize.
248 We intend to not air anything that will be too controversial, but yet we need to have, like you said, balanced programming.
249 So we are continuing with ‑‑ if we were to be approved, we would be continuing with the Jewish program that we have on currently, which is on all three of our stations.
250 MR. MacDONALD: That's right.
251 It's a really high‑quality program, by the way. He has interviewed Dr. Phil, he has interviewed all kinds of Hollywood people, Margot Kidder and that sort of thing, but it comes from a Jewish perspective.
252 My response, also, speaking from the Kitchener perspective, is that we make sure that these programs that we put on the air, such as "Focus" and "Insight", are from trusted ministries, who we think will not be doing things that are offensive to groups.
253 We had a case in Kitchener where we had a local pastor doing a show, and he started off one Saturday morning by running the disclaimer twice, and he said, "I had to do that, because I know that I am going to offend some people today." He said, "The Roman Catholic Church, as an institution, is not Christian."
254 So, as you might expect, the phones and e‑mails ‑‑
255 COMMISSIONER CUGINI: You think?
256 MR. MacDONALD: ‑‑ started coming in pretty quickly.
257 Our response to that was to immediately pull his program off the air. We will not tolerate that sort of intolerance to any group. Whether it be Roman Catholic, whether it be Muslim, whether it be Jewish, we will not tolerate that.
258 We pulled him off the air immediately, and he understood the reasoning, and he apologized to me, and he said, "I am sorry if I offended someone."
259 I immediately contacted every person who had called and e‑mailed, and the response was overwhelmingly positive that we had dealt with the problem, that we had listened to their concerns.
260 That is how we deal with these things as they come up.
261 I have one question for you, if I might ‑‑
262 COMMISSIONER CUGINI: I don't have to answer it, but go ahead.
‑‑‑ Laughter / Rires
263 MR. MacDONALD: No, no, of course not.
264 COMMISSIONER CUGINI: I'm just kidding.
265 MR. MacDONALD: This issue of balance has come up time and time again in discussions around the table, and we are not sure exactly ‑‑ I understand that you are trying to be all‑inclusive here, but, as Christians ‑‑ there are 270‑odd Protestant denominations, all having a different perspective on Christianity. Does balance necessarily have to mean non‑Christian, or can it mean different points of view within the Christian community?
266 We have programs that are from an evangelical point of view, we have programs done by Roman Catholics, we have programs done by the Lutheran church, we have programs done by many different denominations. Would that also be a kind of balanced viewpoint, in your opinion, or do we always have to open the airwaves to non‑Christian‑type groups to be balanced in our programming?
267 COMMISSIONER CUGINI: I am sure that legal counsel and staff will correct me if I got a wrong interpretation of it, but, to me, it is all those things, and it is the opportunity, however, for there to be expression of different points of view.
268 Let's take the Sony video game example from this morning. As long as there is an opportunity to comment on whether or not those two lines of background music are, in fact, offensive to people of the Muslim faith, so that there is an open access policy between the station and the public ‑‑
269 "You know what? This is a Christian station, and if you don't believe in what we have to say, that's just too bad. Move on."
270 MR. MacDONALD: No, we are not of that mindset at all. In fact, in Kitchener we have a half‑hour program hosted by two Muslims, a husband‑and‑wife couple, who believe in promoting harmony between faiths. They do an excellent program for us.
271 We have invited other groups who might be interested to have airtime. Some of them have not responded to us.
272 We believe in being open to anyone in the community who has a point of view, and that is, I believe, how we have approached it.
273 I just wanted to clarify whether or not it simply meant that we had to go out and find a Muslim group to be on the air, or whether we could do it the way you have suggested.
274 DR. REID: Let me illustrate that Cory McKenna has a show where he walks up and down the street and asks people questions. The one that I particularly remember was a question of abortion, and it happened that he met three Muslims, and he got their views on abortion, and they were publicized.
275 What does balance mean? They were different opinions, and they were on the air.
276 I think that Dale also failed to mention that he has a phone‑in show, where people phone in, and we don't have a special mic where you can cut them off, but it is recorded. They phoned in, here are the answers, and that is published. That is part of our presentation.
277 The phone‑in show does provide balance, as far as I am concerned.
278 COMMISSIONER CUGINI: I would think that it would also make for more interesting programming.
279 MR. MacDONALD: Absolutely.
280 COMMISSIONER CUGINI: Just a couple of more questions, and then I will hand you off to my colleagues. They may have further questions.
281 This question has to do with your business plan. We have talked about both your spoken word programming, the acquired programming as well as your news commitment, and, of course, your music. One thing I noticed in your business plan is that you have allocated $10,000 per year to programming.
282 Educate me. I am not a radio broadcaster. What is included in that $10,000 per year, and exactly how are you going to achieve all of these programming commitments with that dollar figure?
283 Do you have a lot of volunteers on staff?
284 It just doesn't seem like a lot of money to be able to pay people to do this kind of programming.
285 MR. MacDONALD: No, paying the people to do the programming comes under "Administration and General", $170,000 for the first year. No, that wouldn't come ‑‑
286 We don't buy a lot of programming. We don't generate a lot locally that costs us a lot of money.
287 Most of the programming, like "Focus on the Family", pays us to be on the air, so that comes under "Revenue" rather than under "Programming Expense".
288 Programming expenses might include upgrades to our studio and stuff, so that we can have people come in and record programs locally, in the studio, and that sort of thing.
289 MR. ELLIOTT: Equipment costs, software ‑‑
290 MR. MacDONALD: Equipment costs.
291 It's not necessarily staffing costs at all there.
292 COMMISSIONER CUGINI: So all of your staff would be in "Administration and General".
293 MR. MacDONALD: That is where we put the staffing cost, yes.
294 COMMISSIONER CUGINI: And the brokered programming, you said that they actually pay you, and that is the nature of brokered programming.
295 MR. MacDONALD: Yes.
296 COMMISSIONER CUGINI: Is there revenue sharing with the brokered programming?
297 MR. ELLIOTT: It varies.
298 MR. MacDONALD: Some are revenue shared and some are flat rate.
299 COMMISSIONER CUGINI: The Chairman this morning, in his opening remarks, talked about these economic times, which are precarious, at best.
300 Your revenue projections ‑‑ let's take worst case scenario ‑‑ or let's take a scenario. What if you only achieve half of your revenue projections?
301 MR. MacDONALD: We are operating now on about half of the numbers on Year 1 for Grace FM. We are projecting that in the first year our revenue would double because of the increased power.
302 Because we are operating on a lean budget right now, we are capable of doing that. The only real cost to this upgrade would be a new transmitter, a new antenna. We would continue to operate out of our existing facility.
303 We just moved to a new facility, where we reduced our rent by about half. So we are working on a lean budget.
304 If the revenue stream were to decrease, so that in the first year it was only $150,000, we wouldn't be in a worse position than we are now. The only thing we are going to have to raise money for is a new transmitter, and we have some sources for that.
305 We just had a transmitter donated to us for our Woodstock operation.
306 We think that financially we are fairly solid, because we have been there for five years. We already have a base of clients who are supporting us. We have church support already. I don't think that would be a major problem for us.
307 It would be a bigger problem for us in Kitchener, where we have a bigger operation, if, suddenly, the revenue stream dried up there, where we have 11 employees.
308 That would be a bigger problem for us, but in London it is not going to be that major a problem.
309 COMMISSIONER CUGINI: Gentlemen, thank you very much.
310 Thank you, Mr. Chairman, those are my questions.
311 THE CHAIRPERSON: I would now ask Commissioner Menzies if he has questions.
312 COMMISSIONER MENZIES: Thank you.
313 Just to follow up on that quickly, do you think the revenue forecasts ‑‑ not the overall business plan, but strictly the revenue forecasts that you have in your plan right now ‑‑ do you think those still stand?
314 MR. MacDONALD: If conditions don't change appreciably.
315 I based those figures on our Kitchener operation, which has had a little more success, right from Day 1; not because we have more power, but because we are in the same position as London, we have areas where we are not received well.
316 But because we had infrastructure in Kitchener for six or seven years ‑‑ we had a program on the air in one of the local stations in Kitchener before we got our licence ‑‑ people knew about Faith FM. So we started on the ground running in Kitchener, and these projections are sort of based on the numbers that we have been able to achieve in Kitchener from the beginning.
317 Obviously it is difficult, when you are projecting seven years out, to say what you are going to do, but we think that, with the increased power, with the better signal in London, we should do at least as well as our Kitchener station, in a similar population area.
318 We already have the base of support there, as I mentioned, and we think that will increase. I don't think we will have any trouble reaching these projections, again providing that the economy doesn't go completely in the tank. Hopefully Mr. Harper will be able to stop that from happening.
319 DR. REID: I am totally amazed that we have had the success that we have with 6 watts. I can tell you that our salesman is bringing in two or three new advertisers every week. If he just maintains what he is doing, and brings in two or three new advertisers every week, that business plan will be fulfilled.
320 COMMISSIONER MENZIES: Which actually segues nicely to my other question, which is why, in your business plan ‑‑ and this is not atypical or untypical of faith broadcasters ‑‑ why is your main source of advertising ‑‑ it appears to be, from the application, just within the Christian community, in terms of approaching Christian business people to advertise.
321 I mean, Christians buy gas, they eat, they do all of the other things that ‑‑
322 MR. ELLIOTT: I can address that.
323 I think that, initially, it has a lot to do with the signal and the wattage being so low. It is hard to convince someone who may not even know what a faith‑based or Christian radio station sounds like or looks like ‑‑ it is hard to convince them more so than someone who is already backing you, listening to you already.
324 I don't think that's where we intend to stay at all. Now that we do have a full‑time salesperson, he has really expanded our clientele in a lot of ways.
325 By no means do we intend to stay under that umbrella.
326 I am fully in support of what you said, that we buy gas, that we buy groceries; it is tough to get national accounts though. It's very tough. We don't have the benefit in London, as of yet, of the BBM ratings.
327 Dave mentioned, however, that Faith FM does have it. So we have a general idea, in the same market size, with roughly the same coverage area, of what our numbers should look like. We won't know that for a fact until we get the rating system working for us.
328 That is kind of my feeling on it, that we have started there, with the Christian business owners, but by no means do we intend to just air commercials and seek their business only.
329 MR. MacDONALD: If I could also address that; in Kitchener, for the first couple of years, it was the same thing, we talked mainly to Christians.
330 But we were very fortunate, in that a Christian lady, who is a registered sales marketeer, was working for the number one station in our market and came to us and said, "I think I would like to work for you."
331 So she did, and when she came to us she had eight and a half years of experience as a sales representative, and she has been with us now for about two and a half years.
332 She doesn't just call on Christian businesses. As a matter of fact, some of our biggest accounts are non‑Christian, and some of them are singing our praises to such a degree that they have gone out and got some of their friends to advertise with us.
333 We do not intend to restrict ourselves strictly to Christian business in any way. Some of our best successes ‑‑ the one that I included in our proposal here is not a Christian business, but it is a very successful business in London ‑‑ London Audio. It is one of my favourite stores, actually, in London, because I am an audiophile. Rick is just amazed by the loyalty of our listener base.
334 One of our advertisers sells windows and doors ‑‑ replacement windows and doors ‑‑ and he convinced one of his friends to come on with us recently, a guy who originally, when he was approached, said, "What, me advertise on a Christian station? You've got to be kidding."
335 But his friend said, "Listen, it works. It works for me, you should try it," and now he is one of our advertisers as well, and a non‑Christian.
336 So, certainly, we are not restricting ourselves in any way to Christian businesses.
337 COMMISSIONER MENZIES: Thank you very much.
338 THE CHAIRPERSON: Commissioner Duncan?
339 COMMISSIONER DUNCAN: I have a couple of quick questions on the projections ‑‑ and I apologize if it is already in the filing, but I just want to make sure that I leave here with a complete understanding.
340 On your revenue lines, the line that is called "Other (Donations)", is that all brokered programming, or do you actually receive donations as well?
341 MR. MacDONALD: No, the donations come from ‑‑ actually, they are donations from businesses and from individuals. The brokered programming would be included under ‑‑ I included it under the "National" area.
342 "Local" would be the local advertisers, and the donations are actually from ‑‑ we have fundraising campaigns every year, and we encourage people to donate whenever they can; and if a church gives us a $1,000 donation, it would come under that line.
343 It has been our experience that the split has been about one‑third, one‑third, one‑third of donations, corporate and individual, and local advertisers, and the brokered programming. That's where the split is, about a third each.
344 COMMISSIONER DUNCAN: Thank you. That, actually, answers my second question as well.
345 THE CHAIRPERSON: If I pursue your business case, Mr. MacDonald, you said that all of the staff costs are shown under "Administration and General". Are you able to break it down, between the various components of the radio stations that you are planning to operate, between programming ‑‑
346 I see some numbers for "Technical". Do you have technical staff on hand or ‑‑
347 MR. MacDONALD: For "Technical", we have an engineer under contract, who works only when needed, at an hourly rate, and ‑‑
348 THE CHAIRPERSON: Is he forecast in your Technical line expense?
349 MR. MacDONALD: Yes, he would come under "Technical"; his cost, plus any cost of gear that we might require.
350 THE CHAIRPERSON: And regarding sales, I would suspect that it is pure commission?
351 MR. MacDONALD: "Sales and Advertising and Promotion" would include the salesman's commissions, and then "Administration" would be like Dale's salary and that sort of thing ‑‑ and rent.
352 THE CHAIRPERSON: And you said that if you were to have any programming costs, you would incorporate them under "Administration".
353 Do you have employees other than your general manager on a full‑time basis, or on a part‑time basis?
354 MR. MacDONALD: At this point in time ‑‑ well, Dale can answer.
355 MR. ELLIOTT: Currently, there is myself, we have one other fulltime on‑air announcer and then we have one part‑time on‑air person and one part‑time salesperson and one that works fulltime on commission.
356 THE CHAIRPERSON: And could you account for that part‑time programming person as a programming cost?
357 MR. ELLIOTT: We haven't in this report, that would be under the administration. That is where it has come under.
358 THE CHAIRPERSON: If I was to ask you to re‑file your economic data, could you move out of administration the payroll costs of programming and put them under programming expense?
359 MR. MacDONALD: We could do that if you would like. I mean, it is certainly ‑‑
360 THE CHAIRPERSON: It will then give us a better picture of where the money will be spent. Obviously, when I am looking at the current data that I have, over the seven‑year period you are going to be spending $10,000 on programming. And what is radio if it is not programming?
361 MR. MacDONALD: Well, then it comes down to a misunderstanding of how you wanted this presented. Because, you know, programming, I just took that as a the ‑‑
362 THE CHAIRPERSON: Oh no, you gave the explanation or I heard you.
363 MR. MacDONALD: Yeah, I took ‑‑ yeah.
364 THE CHAIRPERSON: But what I am saying is that if I wanted to have a real picture of what you are contemplating as your real programming costs, if it is buried somewhere else, who could I make that assessment?
365 MR. MacDONALD: Okay, I understand where you are coming from there. We can certainly modify that to reflect that.
366 THE CHAIRPERSON: Now, earlier, Mr. MacDonald ‑‑ well, could you re‑file within a couple of days or very quickly?
367 MR. MacDONALD: Before the hearing is over I could redo this sheet, yes.
368 THE CHAIRPERSON: Yes? And could we have it say before we undertake Part III of the hearing?
369 MR. MacDONALD: I will attempt to redo this this evening and bring it back tomorrow.
370 THE CHAIRPERSON: Okay, fine, thank you. Well, I am taking it as a commitment and I am sure the lawyer will register it.
371 Second, you said that you have 60 days to completing filing of financial statements for 2005 and 2007. As you know, the expected date is the end of November of each year. Do you think you could make them within the next say 40 days, rather than 60 days, so you will be filing before the end of November?
372 MR. MacDONALD: We will commit to that.
373 THE CHAIRPERSON: Okay. I will ask the legal counsel if he has any further questions.
374 MR. McINTYRE: Thank you, Mr. Chair.
375 I just have two housecleaning questions relating to the weekly programming commitments.
376 You submitted in your application that you would provide 28.58 hours of spoken word programming. Could you inform us as to how many of those hours per week would be considered religious programming? Would that be the entire amount or is there some different number?
377 MR. MacDONALD: I would say most of that would be religious programming with the exception perhaps of the ones we have already referred to; Barry Shainbaum interview program and the Man On The Street program, a couple hours of that would be totally non‑religious.
378 MR. ELLIOTT: There is some programming that is health and wellness related, more of a general topic but, as David mentioned, it probably would be in the 90 to 95 per cent of that 28.5 amount, yes, so a high percentage.
379 MR. McINTYRE: Okay. My second question relating to programming is how many hours would you undertake to provide balanced programming?
380 MR. MacDONALD: Well, again, that comes down to the definition of what balanced programming is. We consider that our Man On The Street program is balanced programming. We consider that Barry's Jewish program is balanced programming. But we bring many different perspectives to the table, even from the religious standpoint of different of denominations who might have a different viewpoint.
381 For instance, I think someone here on the Commission mentioned that, you know, somebody said something about the gay community, there are many churches who support gay marriage, many who do not.
382 So you have balance there between ‑‑ opinions between one church and another church even though they might both be considered religious programming, it is still a balanced issue because the different denominations take a totally different view.
383 So it is kind of a grey area for us as to exactly what that constitutes, because we feel we are representing a large and diverse group of Christians who come at their faith from a totally different perspective.
384 DR. REID: At a previous hearing I asked if we could get a definition of balance. And the commissioners all pointed to a gentleman. I asked the gentleman if I could come to Ottawa and meet with him and take our representatives with him so we could finally pound out what it means to have balanced programming.
385 In spite of multiple letters, I never received any reply or any attempt at a meeting to define what balanced programming is. And I will put out the same challenge to you; we will go to Ottawa, we will sit down with you until we find out what balanced programming really is.
386 Thank you.
387 MR. McINTYRE: Okay, thank you. I just want to read into the record the undertakings that were committed to. The first one relates to providing proof of financial capacity in light of the current market situation, and that will be for 10 days which would bring us to October 30.
388 You committed to providing your annual returns on your current undertaking and I think you provided 60 days to give us that information. It looks like we would need that information actually quite a bit sooner. Would it be possible for you to provide it within 30 days?
389 MR. MacDONALD: Is November 30 the deadline, is it ‑‑ is that what I was ‑‑
390 MR. McINTYRE: I believe the November 30 deadline was for the CCD shortfall.
391 MR. MacDONALD: Okay. Thirty days then, we will certainly make that commitment.
392 MR. McINTYRE: I think the last undertaking relates to re‑filing the financial brief as per the Chair's request. I think that is it.
393 MR. MacDONALD: Okay.
394 MR. McINTYRE: Thank you.
395 THE CHAIRPERSON: Mr. MacDonald, Dr. Reid and Mr. Elliott, thank you very much for your presentation this morning.
396 We will take a 15‑minute break.
397 MR. MacDONALD: Thank you.
398 THE CHAIRPERSON: We will resume at 11:10.
‑‑‑ Upon recessing at 1055 / Suspension à 1055
‑‑‑ Upon resuming at 1110 / Reprise à 1110
399 THE CHAIRPERSON: Order, please.
400 Ms Secretary, could you introduce the next applicant?
401 THE SECRETARY: Thank you, Mr. Chairman.
402 We will now proceed with item 2, which is an application by Forest City Radio Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in London.
403 The new station would operate on frequency 98.1 MHz. (channel 251B1) with an average effective radiated power of 4,000 watts, (maximum effective radiated power of 7,000 watts with an effective height of antenna above average terrain of 106.5 metres).
404 Appearing for the applicant is Mr. Doug Kirk. Please introduce your colleagues and you will have 20 minutes for your presentation.
405 Mr. Kirk.
PRESENTATION / PRÉSENTATION
406 MR. KIRK: Thank you, Ms Ventura.
407 Good morning, everyone, good morning, Vice‑Chairman and Chair Arpin, Commissioners Cugini, Simpson, Duncan, Menzies.
408 My name is Doug Kirk, I am the Chairman and CEO of Durham Radio Inc. and Forest City Radio Inc. This is a new company which is proposing an exciting new radio station from London.
409 We currently operate four radio stations in Hamilton and Oshawa and are looking forward to the opportunity to of expanding to London and Guelph.
410 I have been a passionate participant in the broadcasting business for over 30 years, a station owner for over 20 years and I am here to continue to build and grow. As part of my personal commitment I have recently taken over the job of running the Ontario Association of Broadcasters as President.
411 Before we share highlights of our application with you, let me take a moment to introduce our panel. Before you sit a dedicated group of individuals who are engaged and excited about the proposal we are going to present to you.
412 To my right and your left is Dean Sinclair. Dean is the proposed President and General Manager of Forest City Radio. He is a 30‑year experienced broadcaster, a long‑time resident of London, Ontario and previous General Manager of Corus' multi‑station cluster in London.
413 To my left and your right is Steve Kassay, who is Vice‑President, Programming and Operations of our four Durham Radio stations in Oshawa and Hamilton, Ontario. To Steve's left is Andrew Forsyth, our Programming Consultant. Durham Radio stations have benefitted from Andrew's expertise for over 15 years. And behind me is my associate of many years, John Wright, who is controlling shareholder and President of K‑Rock and KIX Country in Kingston, Ontario.
414 As the Commission is aware, John Wright was to have been our President of this application. For personal reasons John has withdrawn from his day to day operation and responsibilities in this application. He will participate as an investor. Since John was actively involved in the preparation of this application, I have asked him to appear with us at the hearing today.
415 And just a note, Dr. Liesa Norman, a proposed Director or Forest City Radio and an accomplished classical and pop musician from Vancouver, B.C. could not make it to this hearing because of a timing change of a concert she is involved in in Vancouver. Liesa, with her husband and partners, will own one‑third of the station.
416 The applicant, Forest City, is headed by me. Mr. Sinclair and I will make the day to day operating decisions relating to the station. And along with Dean and me, the board of directors will include Mr. Kassay, Mr. Wright and representatives of our investor partners. I will have the casting vote in order to control the board of the applicant.
417 Forest City brings together the operating experience and background of Durham Radio along with Mr. Sinclair, combined with the experience and counsel of Mr. Wright.
418 Now you probably want to hear about our application.
419 Boomer 98.1 will be a very different station from existing London radio stations and very different from other stations being proposed by other applicants at this hearing. Forest City represents a strong combination of broadcasting experience and expertise based on successful radio operations in Southern Ontario.
420 Earning a licence in London provides our group with the opportunity to expand to a larger regional platform, which will compliment our Durham Radio stations in Oshawa and Hamilton.
421 Dean Sinclair's history in London, both as a broadcaster and a resident, provides local leadership for Forest City Radio. Together with the panellists before you here you have over 150 years of Canadian broadcasting system experience. I can't believe it.
422 We offer firsthand experience, both in London and in operating successful radio stations in similar‑sized markets in Southern Ontario. Forest City Radio understands London.
423 Dean Sinclair will now describe to you London's Boomer 98.1.
424 MR. SINCLAIR: Thank you, Doug.
425 Boomer 98.1 offers a Pop/Oldies music, local news and information station and a unique plan for emerging artists all packaged to target adults 35 to 64 years of age.
426 Our application meets the needs of the London marketplace. Fifty‑five per cent of the population is over 35 and 25 per cent are over the age of 55. Our research clearly shows that there is a demand for news and information programming.
427 Anecdotal evidence gathered from our one‑on‑one visits with civic officials, local business owners and community members indicates that the quality of news and information available from the London media has deteriorated dramatically.
428 Where our proposed Pop/Oldies format will add much needed musical diversity in London our independently owned and operated station will add a fresh and distinct news and editorial voice to the market while broadening the ownership base of the London radio landscape.
429 Approval of Forest City Radio's application will repatriate out‑of‑market tuning and serve a large and prosperous under‑served market. It will increase ownership diversity, will increase editorial diversity, will increase musical diversity and will provide substantial new support for Canadian content development and, in particular, for new and emerging Canadian talent.
430 It will provide much needed financial and promotional support to the Kiwanis Music Festival of London and Orchestra London. And it will not have any significant economic impact on existing local radio stations.
431 London can support another radio service. Radio revenues in London have grown by an average of 7.3 per cent annually. Operating margins, PBIT margin and pre‑tax margins are well above the national averages. Retail sales are projected to grow at an average of 4.7 per cent annually over the period from 2008 to 2013.
432 MR. FORSYTH: As Dean has indicated, London is a vibrant radio market served by first class operators. The London FM stations provide their audience with primary music formats such as rock AC, country, top 40 hits and most recently adult hits, the 1980s, 1990s or whatever format.
433 We know that to offer diversity the new station would have to offer something very different from the existing formats, yet be a viable business service serving a sizeable audience.
434 Our financial analysis of the market convinced us that only a format with broad appeal across the 35 to 64‑year‑old audience would be feasible as a standalone entity in London. Hendershot Research was commissioned to determine listening habits, perceptions of the current services and determine the appeal and attraction for three formats not present in London; smooth jazz, triple A, Pop/Oldies and the availability of CHR.
435 The results show Pop/Oldies is of greater interest to older listeners with one in three respondents in the 45 to 64‑year‑old group likely to listen more often to a radio station with this format, while 36 per cent of the 25 to 64‑year‑old respondents preferred Boomer 98.1's Pop/Oldies over smooth jazz, triple A and CHR. Two‑thirds of 35 plus respondents wanted to hear more variety. Boomer 98.1 addresses that demand.
436 Boomer 98.1's programming philosophy is simple, provide the 35 plus London audience with the music that was a big part of their lives in their formative years and present the information that is relevant to their lives today. Steve will outline the exciting spoken‑word programming ideas in a moment.
437 Today's 35 to 64‑year‑olds grew up listening to a broad canvas of musical styles that fall into the general adding of pop music. The heyday of that music was from the late 1950s through the 1960s and 1970s. That is when the pivotal changes in pop music happened for Canada's largest generation, the baby‑boomers.
438 This essential music is not getting regular airplay in London. Older listeners can't find the music they grew up with on the radio. London is well served with stations playing newer music, the bulk of which comes from the 1990s and the present decade.
439 A one‑week BDS radio analysis shows the average year of the music aired by London's FM stations is 1996. And over 70 per cent of the spins came from the 1970s and today.
440 In a moment, we will play a sample for you of the music that will make up the Boomer 98.1 playlist. You will hear musical styles that I know you will recognize, but they receive no airplay in London; music from Motown, the British Invasion, the Stax and Atlantic labels. Let's reminisce by presenting a snapshot of the music that will fuel the Boomer 98.1 brand.
‑‑‑ Audio presentation / Présentation audio
441 MR. FORSYTH: There is Boomer Ian Thomas's part of a 60‑second sample of what we are going to play on a regular basis.
442 But there is more. You hear from girl groups like The Ronettes and The Crystals, the Phil Spector sound, R&B from Otis Redding and Sam & Dave, the Philly sound, more mainstream pop like we heard from Tommy James and The Shondells. The Brill Building sound of early Neil Diamond and of course Neil Sedaka, and naturally California's surfing pop from the Beach Boys/Jan & Dean, folk rock from The Bird's, Ian & Sylvia and Leonard Cohen. Now, that is really variety.
443 All of these styles make up the exciting world of Pop/Oldies from the golden generation of the 1960s to the early 1980s. These styles appeal to the 35 to 64 year age demographic whose formative musical years span the span the 1970s and the 1980s. Great music from an exciting time for an underserved baby‑boom audience.
444 MR. KASSAY: Now, Boomer 98.1 will offer a fun, informative and local listening environment ideally suited to London's over‑35 population. It will focus on the music while emphasizing news and information that addresses the needs and the interests of the mature adult segment. Boomer 98.1 will present over 20 hours per week of spoken‑word programming.
445 You see, spoken word is what brings intelligence and relevance to the radio. It is the instrument through which will bring London to Londoners. It is what makes Boomer 98.1 London's radio station.
446 Spoken word content will compliment the audience demographic, the music and the on‑air presentation style. Boomer news will present over 11 hours of news and information weekly with pure news accounting for 3.5 hours of that weekly total.
447 Reporting on stories about the launch of Diamond Aircraft's new D‑Jet or the Talbotville Ford plant future or the ongoing water issues in town, Boomer news will devote 75 per cent of news air time to items of local importance and interest.
448 To give live to Londoners' demand for more in‑depth information programming each weekday morning we will engage in lively conversation with featured guests selected from the array of elected officials who serve London residents.
449 Music and entertainment spoken word will reflect the personality of the station designed to primarily serve the audience segment 35 to 64. The music mixture customized to identify with the life experiences of baby boomers will present an energetic environment, it will be supported by format elements that contribute motion and relevance and excitement to the overall presentation. Music and entertainment spoken word will compliment the listening environment and its attributes through a fun and upbeat delivery of entertainment information.
450 Lifestyle oriented spoken word programming will address the interests of those Londoners attracted to the Pop/Oldies format. We will offer information on the environment in Boomer's Mother Earth segments, small business interests on Business is Booming, and life's finer pleasures on Boomer's Wine & Dine Show.
451 Our foremost commitment is to the community and that will be done through the unique Boomer community initiative. Everyday we will share important information, community information, about local organizations and events.
452 We will open our doors to local groups, we will open our doors to local groups, we will offer combinations of live primetime interview opportunities, online listings, regularly scheduled on‑air interviews and announcements and on‑site station visits to promote events and messages of a non‑profit and charitable nature.
453 Londoners can keep up‑to‑date with the information about area fundraisers and charity events, such as campaign drives for the LHSC, events and happenings for Big Brothers and Big Sisters. We know the people involved in these organizations and we will build relationships that benefit London.
454 MR. SINCLAIR: Approval of Forest City Radio's application will have a significant benefit for musical talent in London as well. Boomer 98.1 is committed to $1,609,179 of direct cash in the first licence term.
455 In addition to over $350,000 committed to FACTOR Boomer 98.1 will undertake four local London initiatives targeted at the development and the promotion of new and emerging local talent. These projects include the Boomer Festival, MusiCounts, Orchestra London, and the Kiwanis Music Festival.
456 The Kiwanis Music Festival of London has just celebrated its 48th year and the Festival drew 2,950 entries from over 99 different categories with nearly 12,000 participants, 18 top adjudicators, 17 separate hall locations and the help of over 400 volunteers. These stars of tomorrow are non‑professional emerging artists and history shows many have gone onto musical prominence.
457 Boomer 98.1 is pleased to commit over $274,000 for annual scholarships. Jim Scott will be speaking with you further about the festival and those who benefit from it during Phase III of this hearing.
458 We are also pleased to support Orchestra London with a commitment of over $274,000. Orchestra London has a long proud heritage within the community and we are particularly excited to partner with them through funding them with their special program initiatives which include the community programs and Red Hot Weekends.
459 Rob Gloor, who is the Executive Director of the Orchestra, will share his insights with you on these plans and others and the importance the Orchestra plays within London's cultural mosaic during Phase III of the hearing.
460 Boomer 98.1 is also pleased to partner with MusiCounts through CARAS. Their mission is to make sure that young Canadians have access to a comprehensive music program through the school system. MusiCounts includes Band Aid as well as scholarships and music education initiatives. Boomer 98.1 will spend nearly $400,000 on these projects designated through MusiCounts for London CMA schools, which include London, St. Thomas and Strathroy.
461 And finally, the Boomer 98.1 Festival will develop and showcase new talent through a local London competition. Winners will have studio‑quality demos done, produced to their events to advance their careers within radio and the music industry, and the overall winner will open for a major act playing in London. We have committed $300,000 in direct funds to this initiative.
462 MR. KIRK: Thanks, Dean.
463 Members of the Commission, Canada has seen an unprecedented number of new FM licences issued in the past years. Many markets have been diversified through issuing new licences to establish new operators or establish new formats. We think this is just such an opportunity for London, which saw its last new licence issued over eight years ago.
464 Forest City is an independent regional broadcaster which does not have, and has never had, licences in the London market. We know how to operate radio stations in this scale of market and we believe the market is currently underserved.
465 I would like to finish by recapping three key points pertinent to the Forest City radio application. The first is diversity.
466 Forest City will increase diversity in the London market through introducing a new owner with no other media or cable or telecom interests in the market. Licensing us will provide London with its only independent radio station.
467 As pointed out earlier, our news and spoken‑word commitments are very substantial. Forest City will provide an independent news voice in the market.
468 We have also articulated how our format will add music diversity to London.
469 The second area is contributions to the community. Forest City will provide over $1.6 million of direct contributions over the first term of licence to four major initiatives, which Dean articulated and I will recap: Orchestra London, over $274,000; the Kiwanis Music Festival of London, over $274,000; MusiCounts, this is the London band aid project, which goes out to schools and helps them equip bands, over $391,000; and the Boomer Festival, over $313,000. Also, FACTOR will receive in excess of $350,000 as part of this proposal.
470 You will hear more about these initiatives in Phase III, but I must emphasize, right, that these are sizeable and needed initiatives for the music community in London.
471 Finally, the third point, viability. Forest City has proposed a format which will serve a demographic which is valuable to advertisers. You have to get advertisers that can spend money on the radio and it has to be pertinent at this time. We are not getting into any easier economic times.
472 We will repatriate out‑of‑market tuning and have an independent station which will be strong enough to be viable in London.
473 Current market conditions have bred a group of independent broadcasters ready for growth. I have spent 15 years with Durham Radio building a company which is serving markets of this size. We need growth opportunities like this to continue to challenge and build on our people ‑‑ most importantly our people ‑‑ and our staff, and we have to have those opportunities to keep them growing with us.
474 This kind of opportunity is exactly the kind of thing that we need. We are up to the challenge and we are ready to grow.
475 Thank you. We as you to approve our application for Boomer 98.1 to serve London. Thank you for your time and we will take questions.
476 THE CHAIRPERSON: Thank you, Mr. Kirk.
477 I will ask Commissioner Menzies to do the first round of questions.
478 COMMISSIONER MENZIES: Thank you.
479 I thought maybe we would start with the three key points you made at the end of your presentation and ask you to try to be as precise as you can in the responses because I'm trying to get a grip on some of these things and be as subjective as we can about it.
480 You say you are going to have an independent news voice and you articulated that mostly in terms of your ownership structure being independent versus some of the other applicants and incumbents.
481 Other than the fact that your ownership structure is different, how else would somebody determine that your news voices is independent?
482 MR. KIRK: Okay, let me try and answer that and I will ask Steve, particularly, and Andrew and Dean, to contribute to fill out the answer.
483 First and foremost, by being new to the market and having no other interests, you will be a new entity; the number of the voices in the market owned by distinct companies will go up by one. So by that nature you have a new entrant, a new voice, without other connections in the market.
484 But secondly, and importantly, is how we do news. News and local information and connection to the community are extremely important, particularly in the context of the markets that we serve. Oshawa and Durham Region is one example ‑‑ Oshawa, Ajax, Durham Region ‑‑ and in Hamilton, the west side of the GTA, and we have to be able to produce news that's connected to that community.
485 You know, redoing national news, rereading the wire copy, isn't going to do it for us. We have to get in and get into the real context of the community.
486 So I would like Steve just to fill out a little bit on how we produce news to give you an idea of the kind of depth of the news and spoken word that we produce in our current stations and as part of this application.
487 MR. KASSAY: Well, thanks, Doug.
488 Commissioner Menzies, I think I'm going to expand a bit, but, you know, support a lot of what Doug said.
489 We have experience working in markets that are unique, yet in the shadow of big cities. It's very competitive. We know that in order to be successful and to achieve the success we have had, we have had to develop a news process where we are very local, outbound, on the streets, small but effective teams.
490 When the Bowmanville propane fire occurred, we had to be there right away. We were there right away. Residents want to know. We are there to help. When the downtown fire occurred, coincidentally in Bowmanville ‑‑ we are starting to see a trend. And what happened there? Retailers: I'm taking emails from retailers, phone calls from retailers contacting us saying, you know, "Appreciate the coverage". In step, because we have built a reputation, "Now would you go on‑air and please let people know we are reopening tomorrow because my family has been out of business for four months".
491 This is ‑‑ I use an old phrase ‑‑ the touchy/feely, the very ground level on which we operate with clientele, the community. We are part of the community. Our philosophy is we are part of the community. We can't succeed if we are not.
492 Hamilton, it's the same type of situation.
493 And I think, to answer your question on independent voice, we are not affiliated with any other organization. There's no agenda. If it's happening, we want to be there to cover it fast, correctly and then get armed and ready to go for the new occurrence. It's a busy place where we live and a very large market, and neighbouring markets, in which we do business.
494 COMMISSIONER MENZIES: Okay. I don't want to belabour the point, but just on that, I'm pretty sure that if we ask the others and the incumbents, they would say much the same thing: that they are dedicated to local news. They would probably bristle at your referenced to an agenda.
495 I mean just what do you see that happens in chain news that you can do better? I mean if we are talking about a large operator versus your small independent, why are you ‑‑ let me put it this way: how do you add diversity beyond just adding another voice with a different ownership structure?
496 MR. KIRK: I think it's got be in the independent approach. You know, we ‑‑ for example, Dean, who will be the general manager of the London station, has been a resident here for eight years now ‑‑ sorry in London. I'm thinking about London, we are in Cambridge. But has been a resident there for eight years, knows what's going on in the local community.
497 We are not trying to say that, you know, the local operators, I think, are doing a bad job, I think they do a credible job. But we are a new entity, we will have different levels of contacts, different experiences in the market and priorities with the format we are serving to cover items that may not be on everybody's agenda.
498 MR. SINCLAIR: Thanks, Doug.
499 Commissioner Menzies, if I could just maybe jump in for a second.
500 One of the things that's interesting in the market, Doug's correct, I have been there for eight years. I left another company three years ago and I have worked independently since then, but have still maintained many of the contacts that I have in the marketplace, especially civic people.
501 When we were assembling this application ‑‑ and John and Doug both came down and we did a whirlwind tour through the city over a few days ‑‑ I met several people: economic development ‑‑ spoke with them again this morning ‑‑ tourism, city hall, it was interesting in speaking with them and other business people in the marketplace. And we have great respect for what the radio stations in the marketplace do, but there is a sense of staleness overall in what the media provides in the market.
502 One of the challenges you have is when you have three good operators in the marketplace, two of them with multiple stations, it's difficult to start creating ‑‑ you will find that there's a sense of sameness in stories ‑‑ not exactly the same, but a sameness in stories ‑‑ that may go with inside a cluster of stations. That's just common and that happens over a time.
503 And I think, to a large degree, and what happens with this city, you know, I would challenge people, "How many people do really cover city hall any more or cover those issues?" The only time we talk about a water problem in the city, which is huge in London, is when we get a gapping sink hole that a crater goes through, and then all of a sudden it's the big news of the week or for the next month and that's all we focus on.
504 Those issues have been around for a long time. And I think that one news service will jump on it, whether it's electronic or print media, and then all of a sudden everybody does that.
505 But I think that, you know, the sense of staleness, this was the feedback we got from people within city hall, we got from business owners, we got from tourism, downtown economic development. People just said, you know, "What are you offering in terms of news and information?"
506 We said, "Look, you know, we're fresh, we're an independent voice for the marketplace. We're hungry, we're going to hunt down what's going on and we're going to work with the stories and make the links there."
507 They said, "That's fresh because we don't get that now. Nobody talks to us. People don't call us to find out. Everything is an after‑the‑fact situation."
508 So I think that we took that to heart. I think that some of the letters that have been provided by the people that have intervened on our behalf have indicated interest in what we are doing in that way, and I think that that's a big part of it.
509 COMMISSIONER MENZIES: Okay. Thank you.
510 MR. KIRK: Steve Kassay just wanted to finish a point on that.
511 MR. KASSAY: Your question made me think of two things, just to answer it quickly.
512 Number one, we consider ourselves community leaders in the stations in which operate, a philosophy that we have presented to you, too, today, because it's honed and it's effective. We are talking to different people. We are very close with a certain group of people: politicians, community leaders, leaders of organizations. This also affects the input that we receive and helps us shape how we deliver news.
513 Secondly, we are talking to a completely different target. I mean we presented to you Boomer 98.1 based on an opportunity to serve a segment of the population that we think is underserved, possibly not served in some areas.
514 Our attack to cover news would reflect that in that the advantage to licensing us to, indeed, start this news endeavour is we are associating with a group of people that we have found are underserved. And we are just basically talking to a different target. So we add texture simply by serving a segment of the populace that we feel are not being served now.
515 COMMISSIONER MENZIES: Okay. Thank you.
516 And just on a technical matter, when you refer to "pure news", I just need to confirm that you are referring to the CRTC's definition of "pure news". You have three hours and 36 minutes listed ‑‑
517 MR. KIRK: That's correct.
518 COMMISSIONER MENZIES: ‑‑ so you are familiar with the definition, then?
519 MR. KIRK: That's the "pure news" commitment, yes.
520 COMMISSIONER MENZIES: Okay. Thank you.
521 Again, on the diversity issue, in terms of format, notwithstanding what you have just said ‑‑ and this is where I just need you to expand and clarify on that a little bit ‑‑ on the face of it, if you a drive‑by look at the market, it appears to me there's stations already targeting the mature demographic that you are going after as well: CFPL, CJBK and CKSL and, to some extent, maybe even CIQM and CHST.
522 Help me understand more fully how your business plan evolves in terms of building your audience in the demographic you are seeking.
523 MR. KIRK: I will start this and we will have some other inputs.
524 COMMISSIONER MENZIES: Or it's okay to tell me I'm wrong, too, on that.
‑‑‑ Laughter / Rires
525 MR. KIRK: No, you are not wrong. Obviously, people in the market are listening to the radio and they are landing on radio stations.
526 But our approach to finding a viable, strong business opportunity for London was to do research and find out.
527 There are a number of formats. As you know, there are eight originating stations in the market now and they are all doing various formats and that serve their university campus stations and the CBC. So there's radio being consumed.
528 But our approach was to do a very intensive research, outbound research, to find out what people would like. There are unserved formats. What do people want to listen to in the market? So that was really the starting point.
529 We believe starting the station will gather that listenership because there is a focus and an orientation to the programming based on the music, complemented by the news and community approach to the station that will gather audience together. There's some audience that we can repatriate from out of the market that are listening to stations not originating that format in the London market.
530 So, I mean, that's really the approach to finding it.
532 MR. SINCLAIR: Sure. Thanks, Doug.
533 Commissioner Menzies, I think you had mentioned ‑‑ I'm trying to remember your list ‑‑ a couple of stations, CJBK, CFPL, both news/talk AM stations in the market, and though they do cater to an older audience to some degree, they also ‑‑ once of them carries ‑‑ well, they both carry sports properties, one carries the local London Knight's hockey team broadcast, as well. They don't provide music to that audience either. CKSL is a standard station, it's an AM station, as well.
534 And then some of the older tuning that we see in the marketplace actually goes out of market to stations within an hour away. So that's sort of our buzz of why we want to put this station on and the audience that we are going after. You are going to have a little bit of interest, there's a little bit of tuning in the market with a couple of the other incumbents, but not to any large degree, in terms of the definition of the audience we are going after.
535 COMMISSIONER MENZIES: Okay.
536 MR. FORSYTH: If I may just add one point to that, I hope this clarifies it, too, that I think the general target of this radio station, which is, in large terms, 35 to 64, is different from the existing stations in the market, where, generally, the big target is a 25‑to‑54‑year‑old audience. And that's just targeting and that's looking at where the numbers fall out of BBM.
537 But when you take it down another level and actually take a look at the components of the programming ‑‑ and Dean has spoken to that ‑‑ where some of it is talk and sport oriented, which does attract an older audience and some of these out‑of‑market stations that do skew a lot older, one of the other components we look at is just the music and what's available, what's being played within the market.
538 And as I had mentioned in my part of the presentation, we looked at it and we discovered that 70 percent of the music that you hear on London radio is recent music, "recent" in the sense that it's the nineties and today. So when you go back to looking at the musical components of what's being played on the radio, there's a large hole of music that's really not getting a lot of play.
539 So that sort of comes back to, again, talking to an older audience, and the older audience is the 35‑to‑64‑year‑old audience.
540 COMMISSIONER MENZIES: Okay. In terms of that, I noticed, though, too, where you will get your audience from, you came to the conclusion that 20 percent of your year‑two revenues would be at the expense of the existing radio stations in your application.
541 I just want to know how you came to that conclusions, that's the (a) part of the question, and (b) who do you think you will get the most from?
542 MR. KIRK: The year‑two projection, the 20 percent, relates to out‑of‑market stations.
543 COMMISSIONER MENZIES: Out‑of‑market?
544 MR. KIRK: Out‑of‑market.
545 COMMISSIONER MENZIES: Okay. So that's existing out‑of‑market?
546 MR. KIRK: Yes.
547 COMMISSIONER MENZIES: Thank you.
548 And 25 percent, you say, is going to come from new advertisers to radio.
549 Is that people who haven't advertised in radio before or people who are ‑‑ or let me put it this way, new advertisers to radio or new advertisers period, like growth in the market?
550 MR. KIRK: That could be in both categories. These might be advertisers that haven't found a station that really is efficient for them.
551 And we are designing this station to a little older skew. As you know, the aging of the Canadian population is moving into that, the bubble is moving through to that 35 ‑‑ or 45‑65 market. Just let time evolve and the baby boom is moving into that area and this station provides a way to access that market.
552 It's a market with people that are probably in the mature part of their careers, they have paid for their homes, they have a ratio of their income ‑‑ more of it's disposable and are willing to spend on, you know, some of the good things in life that they feel that they have earned, and there are retailers there that want to reach those.
553 They may not have found a very efficient vehicle. That's what we look to as new advertisers. These are retailers that may have used radio in the past but have slowed down or moved off radio because it wasn't as efficient as other media. This provides a very highly targeted media that could get them back into the market.
554 There may be also accounts that have never used radio before, but if you find the appropriate target audience that's something that we can develop and use.
555 And that's the whole secret of this: finding the right advertisers to bring onto the station, creating new advertisers or new advertising dollars for radio.
556 COMMISSIONER MENZIES: Okay. I just want to go back for a second to the out‑of‑market.
557 Were you talking about local advertisers who are currently advertising with out‑of‑market stations or were you talking about advertisers outside of the current market? That's the 20 percent?
558 MR. KIRK: This would be the repatriation argument, where there is tuning in those demographics to out‑of‑market stations. Establishing an in‑market station serving those demographics would allow you to go ‑‑
559 COMMISSIONER MENZIES: Sure. I'm just talking specifically about the advertising dollars. The source of the advertising dollars, would they ‑‑
560 MR. KIRK: Advertising dollars that are now moving out of the market being brought back to the market.
561 COMMISSIONER MENZIES: Right. Thank you.
562 What's the one factor, in 10 words of less, that gives you confidence that your business plan's going to succeed in that demographic? You can go 25 if you want.
563 MR. KIRK: It's still going to be hard. Sorry, I will start now.
‑‑‑ Laughter / Rires
564 MR. KIRK: We have the experience to deal with setting up radio stations in these markets. We are highly experienced in developing retail advertisers. I have no problem with programming. We have done that, we can do that. The key to having a station like this succeed in London is finding the right market for it, getting the right people listening to it and being able to translate that into advertising dollars, and that's where I think we are ‑‑ we have done that, we can replicate that in the London market.
565 COMMISSIONER MENZIES: Okay. And what would be the one thing that would come to mind, if you were successful ‑‑ or first thing that would come to people's mind? If you were successful in this application, and I went out and asked them, "How are these guys, how is Forest City different from CKSL?", which also offers an oldies format, what would you hope would be the first thing that they would say?
566 MR. KIRK: At the risk of getting people at CKSL mad, I think we would be a new entity, very energetic, on FM, we provide a high quality product and we really connect to the community.
567 That's the reason why we have been able to build the Oshawa cluster of three stations, which is in the shadow of a lot of stations in the Toronto area. That's why it works out there: you get in and connect. And we are everywhere and we are representing the community.
568 COMMISSIONER MENZIES: Sorry, were you interrupted or were you done?
569 MR. KIRK: No, no, something went off back there ‑‑
570 COMMISSIONER MENZIES: Yes.
571 MR. KIRK: ‑‑ but I don't know whose it was.
572 And with that approach you can develop sales. This will be primarily a retail sales‑based radio station. That's going to be the key to do it is getting into the local market and developing the right listenership, and translating that into sales.
573 COMMISSIONER MENZIES: Okay, thank you.
574 Now, just on your business plan ‑‑ and you quoted some economic forecasts in your presentation and they are in your business plan, as well ‑‑ how confident are you that those still stand up, given, I'm assuming, that the application was done was some months ago? And you referred to it again this morning. You talked, Mr. Sinclair, about having met with people in economic development as recently as this morning.
575 Does your brief use the FP survey of markets, which showed an annual growth in this market of 4.2 percent till 2013 and average growth in retail spending of 4.7 percent?
576 On Friday, FP reported that the consumer confidence index dropped to 67.9 from 84.5, in Ontario, and that was the largest drop on record and low since 1982. So given all that, any second thoughts?
577 MR. KIRK: Second thoughts, third thoughts, fourth thoughts, they are all good thoughts.
578 You are right, everybody in the room did their projections last spring probably, we filed in May, and the world's a different place today than it was last May. So with regard to the FP ongoing forecasts, probably revised downward would be guess if we had to put a bet on it. But I think we have to understand how that works and how it might fit in with what we are proposing.
579 Our projections were based not on 4.7 percent or 7 percent, which the London market had been growing, we did our expectations on a 3 percent market growth. One thing, the market's not going to disappear. It will be there.
580 COMMISSIONER MENZIES: Good.
581 MR. KIRK: It may flatten ‑‑
‑‑‑ Laughter / Rires
582 MR. KIRK: ‑‑ it may be tougher, but it's not going to disappear and there will be a substantial base.
583 And I recall you mentioned 1982. Looking back at radio, and, sorry, I don't have that 30‑year series of Canadian radio revenues, but just my recollection from it back in the eighties, even though we went through a pretty severe recession in 1982, radio revenues didn't disappear, they flattened out for a while. They had been growing quite strongly for a number of years prior to that, they flattened out for a year or two and then continued to march upward.
584 We have had lower inflation expectations, certainly in the late‑eighties and nineties. We still had very strong ongoing growth in radio revenue. So I could see that this could flatten out here, you know, maybe drop a little bit, but, you know, we are not going to see, as I think the question was posed earlier, "What if they go to half?", I don't think that's going to happen.
585 So there's still a very, very substantial revenue base in the market on which to build a business. The question is: how much do we repatriate and how hard to we have to work in building a sales team, and really focus on that. It's a bit market. There are lots of potential advertisers in it. It's really just getting in there and developing that.
586 COMMISSIONER MENZIES: Sure. And you based your business plan on ‑‑ or your financial plan, at least, on 16 assumptions that you listed.
587 MR. KIRK: Yes.
588 COMMISSIONER MENZIES: Are you confident all of those still stand and, if not, are there any that you have had a chance to look at and revise?
589 MR. KIRK: I can't say that we have sort of looked at 16 and here they are.
590 We assumed annual expenses for example increased 3 per cent as well. Well, if we get into a low growth, potentially low inflation or a deflation environment, that offsets it. So a large part of the costs of running the radio station would reduce in tandem with lower sales expectations. You would have probably lower expense expectations as well.
591 As we mentioned, the market revenue we assumed at 3 per cent, which was more conservative than the FP series forecast outlook, so that might be toned down to 1 per cent or 2 per cent.
592 I think the other items, interest rates, we had assumed 6 per cent on loans. Well, interest rates, as you know, have come down I guess two points now from their peak, the prime rate and the Bank of Canada is talking about reducing it again. Across the world we are talking about reducing rates to try and stimulate the economy. So there are balances to the revenue side.
593 Our job here is by establishing a radio station to go out there and find the revenues. There are revenues to repatriate which going out of market for starters and, within a market revenue of about in the $25 million range, find our share of it. I think that's our job and we just have to work harder.
594 Dean mentioned in his piece, talking to the economic development people in the city of London, we had met with them on our get to know the market tours as we were developing the application and London is a very interesting market. It may have ‑‑ if you looked at it 20 years ago it was more of a manufacturing‑based economy, but it still had a pretty broad base of financial services industries.
595 I think in the last two decades London has even further diversified. The big growth in London has been in health services, in some biotechnology, and it has really added, along with a growing educational side of it with large universities and other institutions in the market, there really is a very, very solid broad base to the economy. So it's not as exposed to the manufacturing problems that some specific towns are experiencing.
596 The London Economic Development Corporation is a group that really keeps tabs on all that. We talked to them. The future looked bright when we were talking to them earlier in the year, and we talked to them this morning again, just to bring you up to date if we could, give you a flavour of what they were thinking about the market.
597 Dean has some specific notes from that conversation that he would like to share.
598 MR. SINCLAIR: Commissioner Menzies, Staff, I think it was an interesting phone call.
599 First thing, I had talked with these folks a couple of weeks ago and the key person I was looking for was in today and I think the first question was, she says, "Oh, you are the fellow" ‑‑ because I was looking for the Executive Director, she said "You are the fellow that visited us a few months ago and got your truck stuck underneath City Hall wasn't it?" I said, "That's true." She says "How is that going?" I said "Good. I'm curious about how things are going in the city otherwise." She said "You should buy a smaller car I think."
600 The quick update from the London Economic Development Corporation simply was, despite some of the things I think that have been inferred in the last application you heard about the Sterling Truck Plant which is down in St. Thomas closing at the end of the year, some 2,300 jobs.
601 Of course Talbotville, which is right near London, which is the Ford plant which makes Crown Victorias and now the Lincoln Town Car, is working on some reduced shifts, as a lot of plants are right now, the CAMI Plant by Ingersoll as well.
602 Those of course are the auto manufacturing corporations and the economic development watches those and certainly there is some concern. Those people live inside London as well, many of those people.
603 But on the uptake is, we talked about it this morning, you know, we have several new industry startups happening in London. As Doug mentioned, manufacturing is huge and continues to grow. We have large companies like General Dynamics which are hiring constantly and have a big push right now. They are building more vehicles that they are sending across the world. 3M of course, McCormick's are expanding their operations.
604 And one of the cool companies that's opening up nationwide is called The Original Cakerie, which makes cakes across Canada and they are hiring over 400 people right now. We have organizations like Hanwha, the large countertop company, hiring 200‑plus people right now that build countertops that distribute red across Canada.
605 IT is huge. International Peavey is hiring 150 people and there's a lot more IT development happening inside the market.
606 And of course the hospital system which is big in London, which is continually hiring new doctors and expanding their services.
607 COMMISSIONER MENZIES: Okay, good. Thanks. I mean, it's your money, so as long as you feel good about it I guess.
‑‑‑ Laughter / Rires
608 MR. KIRK: We try and invest it carefully and make a return on it in the long term.
609 COMMISSIONER MENZIES: In year five in your forecast or your financials you forecast a growth in national revenue of $165,000. It also just kind of caught my eye that it appeared to be forecasting a $76,000 drop in local revenue from $2.5 million to just over $2.4 million.
610 Is that just a rounding off of things for the purpose of putting the thing together? Was there something that you saw there?
611 MR. KIRK: It was actually just a ‑‑ if I can use the word ‑‑ a proportionalizing of revenue.
612 COMMISSIONER MENZIES: Okay.
613 MR. KIRK: We had made some assumptions that the national would be a growing. National requires that you get established, get ratings and we had made some assumptions of converting those ratings to more national dollars ‑‑
614 COMMISSIONER MENZIES: Sure.
615 MR. KIRK: ‑‑ and really to keep the overall revenue at an expected ‑‑ you know, without it popping up. It took away a bit from the local and in fact I think it's just a cautious assumption.
616 COMMISSIONER MENZIES: Okay, thanks.
617 Just to clear up a perception of inconsistency in a couple of numbers, but just for the Boomer Festival, moving on to that, your supplementary brief allocates $45,000 for year one and in Appendix 8.1A it lists it as that allocation as varying from $40,000 in year one to $48,400 in year seven.
618 I just want to clear that up, whether it's $45,000 or $40,000 and, if need be, could you file an amended financial projection just so we get the exact number?
619 MR. KIRK: Yes, the 8.1A is the revised.
620 COMMISSIONER MENZIES: So it's the $40,000?
621 MR. KIRK: We ended up recalculating the FACTOR contributions because of the start‑up year and ended up reallocating that. We wanted to keep the total commitments the same. Our FACTOR numbers dropped a little bit so we added and revised the numbers for the other.
622 COMMISSIONER MENZIES: Okay. So if staff requires it you don't have any problem just refiling that?
623 MR. KIRK: Absolutely. No problem.
624 COMMISSIONER MENZIES: Thanks. You would do that pretty much right away?
625 MR. KIRK: We can do that this afternoon, sure.
626 COMMISSIONER MENZIES: Okay. Thanks.
627 Can you just talk about your association with the orchestra a little bit? Particularly there is a reference to an outreach program and I just want to know a little bit more about that regarding its giving school children access to the orchestra.
628 MR. KIRK: Sure. I will ask Dean to really fill this out, but the whole idea of supporting Orchestra London was the complementarity. The orchestra has a lot of young musicians coming up and exposure to the community and we thought it would be a good fit with the demographics we were pointing at.
629 The orchestra always needs support, it is very active in the community. So that was why we picked that project.
630 I will turn it over to Dean to give you the flavour on the outreach program.
631 MR. SINCLAIR: Thanks, Doug.
632 Commissioner Menzies, Rob Gloor will be down this week, who is the Executive Director as well from Orchestra London, excited to talk to you about the programs as well.
633 But the quick thumbnail of it, the two big projects that the orchestra does, the outreach program takes the music and the musicians out to people that normally can't afford to go and see the orchestra or have any experience with it. It's not just necessarily young people, but they go through the school system, through the music programs. They will actually do little concerts, little shows. And it's people, like I say, that normally don't have access to what the orchestra is about or get introduced to it, even though they are interested in it.
634 So that's where some of the funding goes in terms of that particular outreach program.
635 It also takes it to other groups away from just the schools that have no accesses again to the orchestra program. So it's an initiative they have started a few years ago. It's not as big as they would like it to be. They have a funding problem right now overall. They are in the middle of a big drive campaign right now and it's a challenge.
636 When we sat down and spoke with them about getting together and supporting the causes, it was one of the initial causes that they linked right away where they really could use some help. It really raised the profile for Orchestra London and really reached out more in the community.
637 The other one that we talked about, too, are the special projects, some of the red hot weekends they have. We had real interest. Their gala events were supporting the Motown weekend that they had several months ago. So there is a real nice tie‑in in terms of what we do formatically with this organization. You will find when you speak with him they are very eager to get involved.
638 COMMISSIONER MENZIES: Okay. Thank you.
639 Another quick question here on specifics: Are you willing to accept your over and above annual contributions as detailed in Appendix 8.1A as a condition of licence?
640 MR. KIRK: Yes, we are.
641 COMMISSIONER MENZIES: Thank you.
642 In your business plan again, the current market average for revenue is $360,000 for each point of market share. Your business plan proposes $286,000 per point.
643 Prudence is always a good thing. It seems pretty conservative. Just help us understand why you foresee collecting $74,000 per point less than the average?
644 MR. KIRK: Prudence is probably a good thing, particularly today.
645 COMMISSIONER MENZIES: Yes.
‑‑‑ Laughter / Rires
646 COMMISSIONER MENZIES: Yes, it is a good thing, but I just need to understand where you ‑‑
647 MR. KIRK: That's normally how we ‑‑
648 COMMISSIONER MENZIES: ‑‑ how you came to that.
649 MR. KIRK: First of all, I think it's a process of a station maturing in the market and it takes a while to get a station from establishment to maturity and in protecting that your initial audience has to be plumbed and mined and developed with advertisers. So it takes a while.
650 So even though you might have the rating points in the market, it takes a while to convert those rating points into their full dollar value. That's how we approached it.
651 COMMISSIONER MENZIES: Okay. Thank you.
652 COMMISSIONER MENZIES: Those are all my questions. Thank you.
653 MR. KIRK: Thank you.
654 THE CHAIRPERSON: Thank you very much.
655 I will ask Commissioner Simpson...
656 COMMISSIONER SIMPSON: Thank you.
657 I would like to go back to the programming part of your proposal for a second and I would like to get from you a better understanding of what you see as the principal difference in your music programming with pop and oldies as defined against something like a CKSL programming which is, by definition, a standards or oldie format.
658 Where I'm going with this is to try and understand what you see as the magic bullet in the formula for your success.
659 What I'm seeing in the market right now is I think what you perhaps have seen in that the demographic you are targeting is a fairly hefty chunk of the overall CMA. It's well in excess of 40 per cent of the market.
660 What I am perplexed by is how existing or incumbent radio stations that are programming to this group, either with news or oldie format, are not enjoying what I would ‑‑ what would seem to be a considerable success. If you took the market share of CFPL, CJBK and SL and added them up, they don't reach the percentage of share of any of the top three stations in the market.
661 So I guess my question is this: In programming the music component of your station could you better explain to me what you are going to be doing that is substantially different than the traditional oldies format? I know that you have made reference to pop, but explain to me how you see this is going to make the difference.
662 MR. KIRK: One of the major differences, if I can start there ‑‑ and I see all this activity around me, people wanting to chip in. The programming experts will chip in.
663 First of all, some of the stations you were mentioning, I guess the three in particular, are AM only stations in the market.
664 And I think a direct comparison between CKSL and the pop oldies format that we are proposing is not an apples to apples comparison. The CKSL format could be called I think more of a standards or music of your life feel to it, older music. It would not be in this ‑‑ the rock 'n roll era, the pop oldies definition that we are using. So that's one factual difference in terms of music eras being put on the station.
665 We are really trying to target the station, as Andrew articulated earlier, to really fit in with boomers. The boomers were from 1946 to whenever, '60‑something. They have now moved through the system and the music choices, the context of the station is the music they grew up with from the start of the rock 'n roll era in the mid‑'50s up until the late '70s, early '80s. That's really where the flavour of the station exists.
666 So it's highly targeted. It's not older than that. It's not 10 years older than that, it's on that demo as they have moved through life and now have more disposable income and are reaching to the bubble of the population that's moving through the city of London. So that's an attractive target.
667 It's an FM station and it will be more effective in translating a music format into listenership and therefore dollars in the market. I think that's my quick overall 30,000 foot view of the picture.
668 I will turn it over to I think Andrew and Steve who want to make some supplementaries and later Dean.
669 MR. KASSAY: Thanks, Doug.
670 Commissioner Simpson, it's not music alone either. I just wish to make the point in the presentation of the package we put before you today the whole idea and the reason we are excited about it is because it's not music alone. It includes the components, and to a large degree, of community. I come back to spoken word again, but community. It's a whole new personality. The music is important. Everything we do is important, yet everything supplements all the key areas.
671 So the way I look at it, music supplements the community aspect of the station. By virtue of who we will be, who this baby will grow up to be and what kind of person will it be. It will grow into its own distinct personality. Music is a supplement when it comes to adding up all the traits and getting the unique package.
672 MR. FORSYTH: To try and sort of get back to your point about the three stations in the marketplace that you feel, you know, may have some overlap, again I go back to the point that Doug raised.
673 Number one, this is FM not AM.
674 Number two, the AM stations are operating, one is basically sports, one is news/talk and the other is an adult standards. Adult standards, I think again Doug very correctly identified it, it's not rock 'n roll. That would be the big difference. It is Tony Bennett, who is a fabulous performer and Perry Como and Frank Sinatra. And there may be some contemporary artists like Diana Krall who may end up on that format.
675 We are not about that type of music at all, we are really talking about music that came right after ‑‑ you know, right on the tail of rock 'n roll opening up in the mid‑'50s. So it's post Buddy Holly and Elvis Presley and that sort of stuff, but it's the material that sort of comes in starting with the '60s. So musically there is quite a difference.
676 As Steve has said, I think the big difference also is the spoken word. When we compare what we are trying to accomplish with Boomer, what we are really trying to do is address an audience that, as we said, is under served. One of the reasons we feel it is under served with the existing FMs is that they do target 25‑54 and that is because that's where the so‑called advertising dollars are, certainly from the national side. That forces those radio stations to target younger.
677 That targeting comes out in the music, which we have already discussed. You know, it comes from a newer age of music. It also comes about from the talk content. You know, you can probably go to four or five radio stations and you hear the latest story about Britney Spears, or whomever it is, but there is not necessarily a lot of depth in content, which is what Steve was talking about, for the 35 to 64‑year‑old audience.
678 So I think what we are bringing to the table is a very different animal to what already exists in the marketplace.
679 MR. KIRK: Dean has a little supplement from personal experience in London.
680 MR. SINCLAIR: I was just going to add, the three stations you mentioned, Commissioner Simpson, we talked ‑‑ as the other fellows have mentioned, they are AM stations.
681 The two news/talk stations have been within those formats for several years now in the market. I managed one of them. There has always been a see‑saw battle back and forth between them in rating periods. It depends on news of the day, it depends on sports. And the share levels that they enjoy now and have enjoyed probably the last five years have been fairly consistent. So it's a punch in for what's happening in terms of information. I want to hear the Tigers, I want to hear the Blue Jays or the Leafs or the Red Wings or the London Knights hockey game.
682 CKSL, with respect to the station, in respect to it in the marketplace now, it would be my experience that from a programming standpoint it is a fairly stripped‑down radio station now. It's not on autopilot, but it's a fairly stripped‑down radio station.
683 So what we are proposing is substantially different. And we talked about I think everyone has tried to put a spin on the music and we have talked about we really call it old oldies, really old oldies.
684 So I hope that helps.
685 COMMISSIONER SIMPSON: If I may, just one more piece of information, please, to help me totally understand this distinction. It's not due to programming but back to your determination of where your income is going to be derived from.
686 I'm just going by memory here, but I think you had said that about 25 per cent of the revenue captured for the station would be coming from essentially new business to radio advertising.
687 Is that correct?
688 MR. KIRK: Yes, that's correct.
689 COMMISSIONER SIMPSON: Have you researched or do you have a fairly good gut instinct as to where that money is being spent now outside of radio?
690 MR. KIRK: I will ask Dean for some local flavour on it.
691 We have seen a lot of experience ‑‑ not directly in London but in our other stations ‑‑ serving those demos. It comes out of print. There is an ongoing slope for print products and high quality magazine products that there are just more magazines, free magazines. They are not having the effectiveness. We see conversion of dollars out of print as an ongoing trend. That's one area.
692 If you put up the right audience on the radio, then serving it through a print product becomes a reasonable case to take them from that print product onto the radio. We have seen that particularly with our Hamilton station which is targeted at this demo, into the 45‑65, 35‑65 demo, that that has been a source of being able to plumb advertising dollars out of different print products and move them into the radio, or at least split, split their budgets to give them better overall circulation.
693 I think that's maybe a big picture trend.
694 Dean may have some specific points from the market.
695 MR. SINCLAIR: Sure. I think what you have to remember or keep in mind that what radio tries to do is connect advertisers with their audience.
696 Advertisers specifically in London there has been some pull back in the last few years from a couple of standpoints. One is not the satisfaction necessarily of serving some of the audiences that they want.
697 Radio stations in London ‑‑ it's an opinion only as a former manager here and a resident ‑‑ can tend to be a little wider in terms of scope, in terms of serving audiences outside of just their pure core and sometimes advertisers don't necessarily buy into that.
698 There have certainly been some cutbacks, some of the money has gone out of the market to out‑of‑market stations. Some of the money has just been put back in the bank at this point or they have found alternative sources. For example, there is a lot of funding that goes on with local sports teams, local sports initiatives, hockey especially, but there is an issue of dissatisfaction in terms of trying to reach some of their particular clients. So it's just kind of not there, it's on hold.
699 And in speaking with some of those people, some are former clients of mine and other new clients in the marketplace, there is a general malaise in terms of what they should do with those dollars at this point in time.
700 When you talk to them about this older audience there is a fair bit of excitement that comes into play because, see, I can understand that, I can relate to that. I like that kind of music, I like what you are proposing. So we know that it's out there.
701 COMMISSIONER SIMPSON: Thank you.
702 THE CHAIRPERSON: On the same topic, you also are forecasting that 20 per cent of your revenues will be coming from radio stations out of the market. When I'm looking at the table that you have filed on page 7 of your supplementary brief, I'm looking at radio stations that are from Toronto or from Kitchener, Tillsonburg and Woodstock, and except for the Tillsonburg radio station ‑‑ which is an easy listening type of a format, which I guess is also playing some pop music that you are aiming at ‑‑ which other radio stations are you aiming at when you are saying that it will come from existing radio stations out of market?
703 MR. KIRK: The prime sources for repatriation of out of market revenue, not tuning but revenue, would be to the Tillsonburg and Woodstock radio stations.
704 THE CHAIRPERSON: Now, according to BBM Woodstock is registered as a London radio station. Even if you go on the BBM website today and you check the London numbers that are released by BBM you will see that they are attributing Woodstock to the London market.
705 MR. KIRK: In terms of revenues?
706 THE CHAIRPERSON: Well, in terms of BBM as well.
707 MR. KIRK: In terms of BBM tuning, yes.
708 THE CHAIRPERSON: Yes.
709 MR. KIRK: Obviously our understanding is that the Woodstock station is a Woodstock‑licensed radio station and it has bought into the BBM London survey.
710 THE CHAIRPERSON: Some other applicants are saying that a significant part of the revenues from Corus in Woodstock is coming from the London market.
711 That's not in your supplementary brief, but it's in the supplementary brief of other applicants.
712 MR. KIRK: Yes. I think they have probably come to that conclusion from fairly good knowledge that there is a lot of revenue from London on Woodstock and Tillsonburg. Their advertisers on the ‑‑ they are out of market stations.
713 THE CHAIRPERSON: Obviously both have ‑‑ well, all together they have more than 11 share.
714 MR. KIRK: Sure. Yes.
715 THE CHAIRPERSON: What you are aiming at is to repatriate part of those revenues from those stations.
716 MR. KIRK: Yes. We would attribute all of them, but certainly in the year two revenue we are assuming 20 per cent.
717 THE CHAIRPERSON: Yes.
718 MR. KIRK: That would represent $378,000.
719 THE CHAIRPERSON: Yes.
720 MR. KIRK: Which would be just a proportion, a fraction of what they are getting.
721 THE CHAIRPERSON: I'm working out of that table.
722 MR. KIRK: Yes.
723 THE CHAIRPERSON: Now, you are saying "Other", which you have attributed a percentage of 10 per cent of your revenue ‑‑ and by "Other" are you saying ‑‑ you have already said new advertisers will be coming to Mr. Simpson partly from the press. So "Others", what are you talking about here?
724 MR. KIRK: Those would be other advertising media.
725 THE CHAIRPERSON: Well, a source. Television?
726 MR. KIRK: It could be television, people spending money on Internet advertising.
727 THE CHAIRPERSON: I have Commissioner Duncan who has some questions.
728 COMMISSIONER DUNCAN: I have a few questions.
729 First of all, Mr. Sinclair, you referred to a fairly stripped down approach. Can you just explain? I'm just not familiar with the lingo. I just wanted to know what you meant by that. I thought you said that in relation I think to see CKSL.
730 MR. SINCLAIR: I did.
731 With respect to that company, a stripped‑down approach would be a form where you would have very few people involved in putting the product on the air, probably a fair amount of automation.
732 In terms of presenters ‑‑
733 COMMISSIONER DUNCAN: I thought perhaps you were meaning that they had fewer spoken word content, or less ‑‑
734 MR. SINCLAIR: That could also be part of it, yes.
735 MR. KIRK: I think it is just a business reality. If you have a cluster of stations and one of the stations is not well positioned in the market, and has low revenue streams, the natural thing to do, particularly because this is an AM station, would be to cut your costs. That is really ‑‑
736 We may have used the vernacular, but it is really to have a low cost operating strategy for the station, to try and bring those two ‑‑ the revenue and the expense lines as close together as possible.
737 COMMISSIONER DUNCAN: That segues into my next question, in a way, because there are, of course, clusters in the market, as you mentioned, and they are benefiting from efficiencies in the market, and you are going to be an independent station competing with them.
738 I am wondering, your projections, do they reflect the synergies that you might expect to realize because of Oshawa and Hamilton, or is it completely stand‑alone in your projections?
739 MR. KIRK: These projections are, essentially, stand‑alone, and I could ask Andrew and Steve to give you a little flavour of what the staffing matrix looks like.
740 You bring up a good point, we do have synergies, potential, between the Oshawa and Hamilton stations right now.
741 Currently we do operate Oshawa and Hamilton with some sharing of resources. In fact, we amalgamated the Hamilton and Oshawa companies last year, and the Commission is aware of that. That allowed us to rationalize our administration costs materially enough that it's noticeable.
742 We were able to do it with one less position overall in the companies, and we have refined the positions. We have an administration person in Oshawa, for example, doing all of the billing and accounts receivable collection, and payroll, and an administration person in Hamilton doing all of the corporate accounting.
743 So we have been able to be more efficient as a company by looking at the four stations as a group.
744 That is one area that would be a potential add‑on. We haven't really factored that in there, but it's possible.
745 In addition, we feel that it is very, very crucial that we have, on the ground, programming people and news people in the market ‑‑ and sales people. You have to have that in the market. You can't do sales from an hour away very well, so you need that in the market.
746 So the programming and sales expenses are pretty true, because they have to be staffed within the market.
747 But there are the availabilities ‑‑ and we do this currently ‑‑ of having a larger pool of talented broadcasters to do commercial production, and we use the resources in Hamilton and Oshawa, basically, as one pool. Steve can fill you in on that. That allows a greater variety of voices on the air, and talent to do better commercial work ‑‑ again, taking the cost, but being able to work a little more efficiently.
748 That is the approach. I wouldn't say that there would be huge efficiencies in the sales and programming elements, but certainly on the admin side, and production costs could be lowered, having the station operated on a platform.
749 COMMISSIONER DUNCAN: I understood you to say that those are not, at this point, included in the projections.
750 MR. KIRK: No.
751 COMMISSIONER DUNCAN: Is that your answer?
752 MR. KASSAY: Yes, that's the answer. There is nothing hidden here. We have built this proposal to work in London, by people employed in the building, ensuring that we have a greater range of voices, so we can have greater depth when it comes to producing retail announcements.
753 But, no, not living in one and sitting and voice‑tracking in the other. We have learned that local works; that's how it's built.
754 COMMISSIONER DUNCAN: Because we often hear applications where somebody is an independent in the market, and they could operate much more efficiently if they had, yet, another licence. That is sort of where I am coming from. I am wondering about that.
755 MR. KIRK: Certainly that brings in a whole other question. You can, by adding in clusters ‑‑ and you see it in London. At least two of the operators are operating large clusters ‑‑
756 COMMISSIONER DUNCAN: Yes.
757 MR. KASSAY: ‑‑ and Dean managed one of those. It sure is easier to allocate if you have three engines pulling the train rather than one ‑‑ to operate more efficiently.
758 COMMISSIONER DUNCAN: That leads into my next question, because, obviously, by your projections, you are not intimidated by any advantage that the others might have as a result of those efficiencies, because I see that you are projecting a positive operating income in Year 3.
759 I just have one quick question. Further to your discussion on the current downturn in the economy, what would you say ‑‑ when would you now expect ‑‑ or would you change your forecast with respect to the year that you might see positive net income?
760 You still have quite a substantial amount in that year, so we will just stick with that year.
761 MR. KIRK: It begs the question, obviously. Times have changed and we have to be realistic about it.
762 First off, in terms of timing, we are sitting in this room in October, and it will be a while before ‑‑ you have to do a lot of debriefing in the process, so it will be a while before a decision comes out, and it will take a while to build a station.
763 We don't have a cluster in the market, or facilities in the market, so we have to build it from scratch.
764 That will take a while, so launch is really, probably, a year or two ‑‑ 18 months away. From what I am reading, hopefully we will be through ‑‑ it may not be a "V" this time, it may be more like a "U". There will be a bumpy period for a while before it starts to roll.
765 All I am reading is that expectations for late 2008/early to mid 2009 ‑‑ it could slow down a bit, but we should be trying to uptick, at least, by late 2009 and into 2010.
766 That would maybe pause radio revenue growth in London, or slow it down a bit, but, in our launch, we are probably launching into an uptrend rather than a downtrend. That's one point.
767 I think that the commitments made by the shareholders ‑‑ if we put a prudent set of projections in front of you ‑‑ the shareholders, in our experience ‑‑ and you have known our operating procedures now for 15 years. We do what we say. If it takes a little more, the shareholders step up and provide the capital to see it through.
768 That's what we would do. It's hard to give a hard forecast. I don't hear a lot of hard forecasting yet going out, other than it's probably going flat, or we may be in a recession for a couple of quarters.
769 But I think that the timing of this is good, in that it is further out.
770 And in terms of adjustments, our cost elements may come down if we do get a recession, and a bit of that "biz" will be out of the market, and salary expectations will be lower, so all in all ‑‑ and interest rates will be lower.
771 So there are some offsets to a slightly slower revenue outlook when you are starting a radio station.
772 We are comfortable, I think, that we can run the radio station, and in the third year from start‑up we could be reaching the top break‑even level.
773 COMMISSIONER DUNCAN: Thank you. We are actually thinking now in terms of probably launching in 2010, so I am sure that you are probably on the money ‑‑
774 MR. KIRK: Our assumptions ‑‑ you asked in the deficiency questions, "Which year do you anticipate starting," and we said that 2010 would be the fiscal, so it may be late fiscal 2009/early 2010, meaning the mid‑year.
775 COMMISSIONER DUNCAN: I have one last question. I noticed in your presentation that you didn't talk about new media, or using the internet, or streaming your station. Do you do that, or intend to do that, or you don't think there is a market for your audience?
776 MR. KIRK: Four lights go on. Wait a second.
‑‑‑ Laughter / Rires
777 MR. KIRK: New media are very crucial and very important to what we do and how we operate today. All of our radio stations stream audio. We all have active websites.
778 For an independent company, we devote a lot of resources to websites. About half to two‑thirds of a staff position in each market that we operate is devoted specifically to web activities, and we post, daily, changes to community events. We post news every day on our websites.
779 So you can take your local radio station ‑‑ if you go down to Missouri and attend a rally down there, you can take your local radio station with you. Just call it up and get all of the local news, on a daily, updated basis, via the web. You can listen to the station anywhere.
780 We didn't dwell on that, but it's part of what we do, and Boomer would have the same approach that we would have, a very active local website. We would have streaming available, and a lot of components in it, too ‑‑ all of the community information and news updated on a daily basis.
781 Steve supervises that activity every day, so maybe he should comment.
782 MR. KASSAY: I don't want to use the word "oversight", but, yes, that is exactly what we do. We stream. It is very interactive, especially ‑‑ I guess that the Wave case is a little different, where it is very interactive musically with the artists and having the online store.
783 All of these ideas we do daily. I guess it's not top of mind as a bright light bulb idea because we have been doing this for year.
784 To answer your question: yes, it's a component; yes, we will take what we do and what we have learned and apply it here as well; and hopefully it will be an opportunity to learn even more.
785 COMMISSIONER DUNCAN: That's great. Thank you very much.
786 MR. FORSYTH: To add to that, if I might ‑‑ and this is more for the Commission's knowledge, not only these particular licensees ‑‑ I think that the radio industry recognizes that the web and new media is where we are going.
787 THE CHAIRPERSON: It is very well documented.
788 MR. FORSYTH: It is, and it is radio's ‑‑
789 THE CHAIRPERSON: I appreciate that.
790 MR. FORSYTH: It is radio's advantage in being able to engage its audience.
791 THE CHAIRPERSON: If you were to be granted the licence, what would be the role of the London investors' group?
792 MR. KIRK: The London investors' group is a group of people who are very interested in the broadcasting business. They are participating primarily as a way to finance the company. They are putting share capital in, primarily as preferred share capital, and that provides a very solid base for the company to develop.
793 We put that together earlier in the year. I am even happier today that we have it there. We are not highly levered to debt, it is primarily an equity base.
794 These people will have representation on the Board. They will not control the Board. They are very interested broadcasters. I think they are good partners, and they are there primarily for financing. They will have a one‑third equity participation in the company.
795 THE CHAIRPERSON: It's an investment ‑‑
796 MR. KIRK: It's an investment for them, yes.
797 THE CHAIRPERSON: Again, if you are granted the licence, but the economy keeps going down, could they elect to drop out?
798 MR. KIRK: Would we elect to drop out?
799 THE CHAIRPERSON: No, could they, themselves, elect to drop out, even if you are granted a licence?
800 Or, are they bound?
801 MR. KIRK: They have committed in their arrangements with us to fund on the award of a licence.
802 So, if we win the licence, they commit to fund the amounts ‑‑
803 THE CHAIRPERSON: They are committed.
804 Legal counsel?
805 MR. McINTYRE: Thank you, Mr. Chair. I don't have any further questions, I just want to read into the record, or to confirm two undertakings.
806 The first one is for the Applicant to re‑file financial projections for the Boomer Festival CCD initiative this afternoon, and the second one is to provide updated financing for the application, in accordance with the Commission's policy, by October 30th.
807 Thank you.
808 MR. KIRK: Yes, we commit to filing the revised Boomer Festival commitments, and to the financing commitments, in the timeframe you mentioned.
809 THE CHAIRPERSON: Gentlemen, thank you very much.
810 We will break for lunch, and we will return in an hour's time, at 1:45 p.m.
‑‑‑ Upon recessing at 1245 / Suspension à 1245
‑‑‑ Upon resuming at 1400 / Reprise à 1400
811 THE CHAIRPERSON: Order, please.
812 Madam Secretary.
813 THE SECRETARY: Thank you, Mr. Chairman.
814 Just a reminder to please turn off your cell phones, beepers and BlackBerrys, as they are causing interference on the internal communications system used by our translators. Thank you.
815 Also, for the record, we wish to inform you that the Applicant Forest City Radio Inc. has submitted Appendix 8.1(a), "CCD Initiatives for Boomer Festival", in response to undertakings. This document will be added to the public record, and copies are available in the Public Examination Room.
816 Now we will proceed with Item 3 on the agenda, which is an application by CTV Limited for a licence to operate an English‑language FM commercial radio programming undertaking in London. The new station would operate on Frequency 98.1 MHz, Channel 251B, with an average effective radiated power of 6,600 watts, maximum effective radiated power of 20,000 watts, with an effective height of antenna above average terrain of 132.6 metres.
817 Appearing for the Applicant is Mr. Chris Gordon.
818 Please introduce your colleagues, and then you will have 20 minutes for your presentation.
PRESENTATION / PRÉSENTATION
819 MR. GORDON: Thank you.
820 Mr. Chair, members of the Commission, Commission staff, my name is Chris Gordon and I am the President of CHUM Radio.
821 Before we begin our formal presentation, I would like to introduce my colleagues on the panel today.
822 To my left, your right, is Jim Blundell. Jim is the Vice‑President and General Manager of our station 102.3 BOB‑FM in London. Jim has been with CHUM Radio for 20 years, and before then owned and operated several radio stations across Canada.
823 Next to Jim is Kerry French, Vice‑President of Business Analysis, who oversees our market and economic research, and provides our business development analysis.
824 To my right, your left, is Rob Farina, Vice‑President of Programming. Rob works with our program directors across the country, as they innovate with new formats and build multi‑platform connections with listeners.
825 Next to Rob is David Jones, Program Director of BOB‑FM.
826 Behind us, in the second row, is Lenore Gibson, Director of Regulatory Affairs, and Jim Fealy, our Vice‑President of Finance.
827 I will now begin our opening statement.
828 Today we are here to tell you about The Curve, an innovative new radio station that we want to bring to London. Our market research and our eight years of experience and in‑depth involvement in the London community demonstrate that this station will resonate with Londoners between the ages of 13 and 34.
829 This audience is not served by the current London radio stations, even though more than one‑quarter of London's population falls into this age group.
830 Tailor made for young listeners in London, licensing The Curve will respond to their musical tastes and to their desire to be part of a social network of music and local reflection.
831 CHUM Radio has a proven track record of bringing young people to radio in other cities. We will do the same in London, with an innovative station that uses leading edge technology to marry the internet, mobile devices and over‑the‑air radio.
832 In addition, The Curve will correct a serious competitive imbalance in the London market, an imbalance that is negatively impacting our existing station and our ability to serve London listeners.
833 Jim Blundell will return to these two critical points ‑‑ one, our proven ability to serve young listeners; and, two, the significant competitive imbalance that we face. Before he does, I would like to ask Rob and Dave to explain our innovative approach to music and spoken word programming on The Curve, and to highlight our commitments to emerging artists and Canadian Content Development.
834 MR. FARINA: The Curve's musical format will be modern hit radio, a mix of pop, urban, alternative and alternative pop music that targets listeners from 13 to 34.
835 This format does not currently exist in London, and will fill a void in this market. In fact, we polled all radio stations for the week of October 4th and found that over 76 percent of The Curve's playlist consists of music not currently being played in London by any of the commercial radio stations.
836 As well, we found no airplay for emerging Canadian artists like Danny Fernandez, Faber Drive, the Royal Society, The Midway State, Shiloh and many, many more.
837 A minimum of 40 percent of the musical selections on The Curve will be Canadian, and a minimum of 25 percent of these selections will be from emerging Canadian artists.
838 It sounds simple, but in this day and age it is anything but simple to create attractive programming for our target demographic.
839 The Commission recognized this complex and dynamic situation in the 2006 Commercial Radio Policy, stating that the tuning decrease to radio was most notable in our target audience, the teen demographic and young adults 18 to 34.
840 As the Commission indicated, the tuning decrease coincides with the advent of new technologies, such as internet music services and personal media devices.
841 CHUM Radio has successfully addressed this tuning decline by young listeners in other markets, and we will bring this success to London.
842 We would like to explain how London's radio listeners will give life to The Curve.
843 The Curve will be an interactive experience, where listeners have unprecedented power to influence the music, stories and community reflection, both on‑air and online. After giving express and informed consent, listeners download The Curve software from the station's website. This same application is available on iPhone and iPod touch platforms.
844 The software analyzes what songs and artists London listeners support. It sends this information to our database and forms the basis of the music we play on the radio.
845 We will, of course, exercise oversight to ensure that we meet our Canadian content and emerging Canadian artist commitments.
846 The Curve software augments our ability to identify new Canadian artists that our listeners have found online, and whose music they have stored on their computers.
847 This is an important benefit, because the days of relying on record labels to identify, nurture and promote emerging artists are over.
848 Today, young people regularly discover new talent online, and spread the word through chat rooms and blogs. The Curve will directly plug into this immense change in how new artists break through to commercial success.
849 As each listener becomes part of The Curve community, the playlist becomes reflective of the pulse of the city.
850 To add value to the experience, The Curve listener gets new music recommendations targeted to their individual music tastes. The ability to make these recommendations will enable The Curve to become CHUM's latest launch pad for emerging Canadian artists.
851 In addition to giving young London listeners unprecedented input into the programming of our radio station, The Curve will be the hub for London music fans. Online they can connect with each other and share or comment on news and community events, post their playlists, exchange ideas, interact with The Curve personalities, and upload content such as podcasts, audio shout outs and video.
852 The Curve programming team will moderate the online community and select elements of that content for airplay on the radio station.
853 MR. JONES: I want to turn now to The Curve's spoken word programming.
854 Delivering a deep and meaningful radio experience to our audience is not limited to the music. The Curve will increase not only the diversity of music available in the London market, but will also increase the diversity of spoken word programming.
855 The Curve will have an intensely local focus. We will provide 12 hours and 48 minutes of spoken word programming each week, in a presentation style targeted to young listeners. This programming will include a minimum of 4 hours and 25 minutes each week of locally produced news and information programming.
856 Reaching young listeners with news and information programming is a challenge. They do not plan their days around the morning paper or newscasts. As a result, The Curve's presentation style will be a "news you can use" approach, covering stories that London youth are passionate about ‑‑ for example, social issues and the environment ‑‑ framed in a way so that they can connect with the story and see its relevance in their lives.
857 In addition, The Curve's news will be presented in a round‑table setting, with our hosts using a conversational approach.
858 Is this a traditional approach to news? No.
859 Is this a relevant and useful approach to news for young people? Yes, and we have successfully applied this approach in other cities, like Vancouver, Edmonton, and, most recently, Halifax.
860 The interactive component of The Curve, which we discussed earlier, will extend to the local news and information programming of the station. Our listeners will be able to comment on news stories, post their own stories, and upload blogs and podcasts relating to a variety of local issues.
861 The Curve is all about people in London aged 13 to 34, listeners that are not served today and that CHUM Radio has successfully brought back to radio in other cities.
862 Our focus on London's young people extends to the $3.5 million that we will invest in Canadian Content Development initiatives, including funds that will benefit students at Fanshawe College, the University of Western Ontario, and the arts‑focused H.B. Beal Secondary School.
863 These local initiatives reflect our longstanding philosophy that a CHUM radio station is a local experience, and that our responsibility is to serve the local community.
864 Now, to give you more insight into The Curve, we have prepared a short video.
‑‑‑ Video presentation / Présentation vidéo
865 MR. JONES: The youth audience craves hit music and wants to be on top of hot new artists as they emerge. Music from emerging Canadian artists will be featured prominently on The Curve. The Curve will also participate in the CHUM Emerging Indie Artist Initiative. This initiative has created huge national profiles for artists such as Suzy McNeil, State of Shock, Elise Estrada and Shiloh.
866 CHUM Radio helped launch Shiloh's career and we are thrilled that she has signed an international recording contract. Since its inception almost a year and a half ago we have selected 17 emerging Canadian artists which, due to their selection as CHUM's emerging artist of the month, have received a total of thousands of spins across all Canadian radio stations.
867 CHUM Radio also discovered and helped launch Kreesha Turner's career. She now has an international recording deal with Virgin Music and an album that was released last month. CHUM has made a huge contribution to emerging Canadian talent. The Curve will be a key part of our emerging artist success story. The Curve will give young Londoners the music, the information and the social network they demand. One, where they can hear the new music they choose, stay informed about what is happening in their city and connect with each other through their shared musical tastes and experiences.
868 MR. BLUNDELL: CHUM Radio has reinvented the radio experience for successive generations of young Canadians. The most recent example of this is the creation of our station The Bounce, a new style of youth oriented, urban, contemporary hit radio station in Edmonton. In four short years The Bounce has changed the local radio landscape and is the most popular station in Edmonton with young listeners.
869 CHUM knows how to connect with Canadian youth and it has proven success with repatriating disaffected young listeners to the radio dial.
870 To do the same in London we need a frequency. The only viable commercial frequency left in London is 98.1 and we have presented to the Commission the best proposal for the use of the single frequency. While we have applied to use this frequency, its use will cause a third adjacent interference with Astral's CIQM‑FM.
871 We have taken the initiative and found a solution. We have reached an agreement with Astral that if our application to launch The Curve is approved both stations will co‑site their transmitters in London. This proactive approach by CHUM Radio will remove any possible interference by our proposed station with Astral.
872 CHUM Radio is facing a serious competitive disadvantage because Corus and Astral own eight of the 10 stations serving London. CHUM Radio owns one station. This is the only market in Canada where a single FM operator competes with two multiple station operators; one with four stations and one with three stations, plus another licence for Woodstock that competes directly in the London market.
873 In developing common ownership policy in 1998 the Commission expressly recognized that the ownership consolidation would strengthen the radio industry's overall performance, allow it to compete more effectively and enhance its support of Canadian cultural expression.
874 Corus and Astral are able to achieve marketing and sales synergies and economies of scale that we, only operating a single station in London, cannot. Each group of four stations serving the London market has the opportunity to share technical, administrative and sales operations, an opportunity not available in CHUM's standalone radio station.
875 In addition to these operational synergies Corus and Astral are able to provide more well‑rounded support to the local London community through promotions for community and charitable events.
876 Our standalone station supports many community groups, such as the Thames Valley Children's Centre, the London and District Distress Centre. A second station would allow us to enhance our support for these and other valuable community organizations such as Youth Opportunities Unlimited and Big Brothers and Sisters.
877 CHUM Radio needs two stations to compete effectively in the London market and better serve London listeners. Licensing another single FM station does nothing to correct the serious competitive imbalance in London, rather the situation would be made considerably worse. The London market would have two standalone stations facing all the same competitive disadvantages that we do today, and that would make our situation significantly worse.
878 MR. GORDON: The Commission said in the 2006 Commercial Radio Policy the key challenge facing the radio industry is to keep radio relevant and local in an environment of rapidly changing technology and consumer behaviour. We agree.
879 The Curve will embrace technology and the dynamic online behaviour of young people to meet the challenge set out by the Commission with an innovative station serving listeners from 13 to 34. This group represents 27 per cent of the London population and they do not have a radio station programmed for them.
880 With The Curve these young residents and the 44,000 fulltime students that arrive in London each year will not only have a radio station, they will have a radio station that they can help program and one that meets their technological expectations.
881 Of all the applicants proposing to serve the London community, our application represents the best opportunity to attract young people back to radio. We have the best business plan, we will invest in the community, we are local London broadcasters. Our knowledge of this market gives us the expertise to create a radio station for London listeners that truly reflects the city and its citizens. For these reasons, our application should be approved.
882 Thank you and we will be happy to answer your questions.
883 THE CHAIRPERSON: Thank you very much, Mr. Gordon.
884 I will start with the first round of questions and my fellow colleagues I am sure will probably want to supplement.
885 I will start by ‑‑ you have covered it in your oral presentation, but that really was an intriguing thing, that when I read your application and some of your supplementary replies to some Commission questions you dealt with the music programming of your proposed station. And particularly, you stated that ‑‑ and again here in your oral presentation, you make the statement that you will be seeking from your listeners the information to fill your database in order to do your ongoing music programming.
886 Could you tell us more how it is going to be working? And as a matter of fact, you are saying ‑‑ I think you are already doing it in other markets, but for the record could you give us much more details?
887 MR. GORDON: Yes, thank you, Commissioner Arpin.
888 It is a very innovative approach to using the internet and using interactive information and technology to help program the radio station.
889 Rob Farina has been working directly on this project and he can fill you in on exactly the parameters of how this database works.
890 MR. FARINA: Thank you, Chris. I will explain it in real simple terms. So a listener discovers this new radio station in town, listens to it, they go online to find out more and they find out that they can actually contribute to shaping the sound of the radio station.
891 So they download the radio station software. And what that software does is it goes into their music library. So for the sake of clarity, let's say it is their iTunes library. It looks at the music in their iTunes library, but it also looks at the amount of times that music has been played and it categorizes it based on what music they use heaviest to what music they use the lightest.
892 That information then goes to our database and, culminated with all the other listeners in the community of the database, it starts to form the basis of the music heard on the radio.
893 Now, the music director at the radio station and the program director at the station obviously continue to curate the music, but they are able to use the listener's actual habits, actual music consumption habits to not only put a radio station reflective of the city on the air for them, at the same time the software is able to really fine tune music recommendations.
894 So, for example, if one of the listeners listens exclusively to hip‑hop music we know the software allows the emerging hip‑hop music artist to be recommended directly to that listener and that would be personalized when they go on the website and log in. With their sign in there would be a sign, you know, 'Hey, Jane, here's your new music recommendations.' And it will be new music recommendations in sync with their actual music habits.
895 THE CHAIRPERSON: And how did you make sure that you are always within your format? Because the software that goes through the iTunes list of all you listeners only picks the sounds that are already listed in your database or is it contributing new material to your database?
896 MR. FARINA: It is pulling all the information. The Job of the program director and music director of the station is to curate that sound to make sure it is focused on the format. But further to that, Commissioner, in our experience with youth audiences, the vast majority of those listeners are going to be listening to a certain kind of music.
897 And the people that have more narrow music tastes, things that fall outside of those huge parameters, because the sheer number is smaller that stuff is going to fall lower on the list and probably never make it onto the ‑‑ I shouldn't say probably, will never make it onto the air.
898 THE CHAIRPERSON: It is probably true what you are saying, but at Western University they have a music program which is catering to those who are studying classical music. They will be in the same age group than then the listeners of your radio stations. You will be purging out all classical music that will come up from their own database?
899 MR. FARINA: Right. Well, I would wager to guess that even the students in the classical music program probably aren't listening to that much classical music.
‑‑‑ Laughter / Rires
900 MR. FARINA: But we will be able to tell you that with great accuracy.
901 THE CHAIRPERSON: With greater accuracy.
902 Now, in your written presentation, and you alluded to it in this oral presentation, to emerging artists. And obviously the Commission has not yet come up with a definition of what is an emerging artist. You have provided us with your own definition and you are obviously coming with a fairly significant number of emerging talent in your format. And obviously the format that you are proposing really caters a lot to the emerging talent.
903 So it is surely not an issue to understand, but since there is not yet a policy and that the CHUM group, as a party to the CAB, has provided a definition that the Commission is still reviewing, what is going to happen if we come up with the CAB definition of emerging artists with respect to your plan?
904 MR. GORDON: We would adapt to whatever the CRTC regulation, if and when that happens would adapt to our radio station.
905 THE CHAIRPERSON: We may end up adopting a policy that is less generous than yours.
906 MR. GORDON: That would be terrific.
‑‑‑ Laughter / Rires
907 THE CHAIRPERSON: I thought you were to make a commitment keeping the definition that you have provided us.
908 MR. FARINA: Just for clarity, our definition is in line with the CAB's definition. We have obviously been very involved with participating in that definition with the CAB and also with the music industry.
909 THE CHAIRPERSON: It is not exactly the same definition. I think it is ‑‑ yours is more generous, if my memory serves me. I don't have the document here, and it's something that I have already read sometime ago. But when I read yours it struck me that you were somehow much more generous to the definition than what the CAB has provided.
910 And I can understand that there will be numerous definitions, depending on format and type of audience that you are catering to.
911 MR. GORDON: Well, we would be prepared for a licence term to commit to 25 per cent emerging artists.
912 THE CHAIRPERSON: And whatever the definition be, you are aiming at having a quarter of the music played, not necessarily the playlist, but the music played coming from emerging artists.
913 MR. GORDON: A quarter of the Canadian content, that is fair.
914 THE CHAIRPERSON: Okay. Of the Canadian content?
915 MR. GORDON: Yes, that is right.
916 THE CHAIRPERSON: Of course, yes.
917 Now, you also talk ‑‑ let me make sure that now with those hearings everything is ‑‑ I am the one who had the problems with the system. And I am trying to figure out ‑‑ probably I am the youngest around the...
‑‑‑ Laughter / Rires
918 THE CHAIRPERSON: So I have to figure out where my things are.
919 How many new stations do you think will ‑‑ if the Commission was to grant more than one licence, how many new stations do you think will survive and will make their way in London ‑‑ my question will be including yours?
920 MR. GORDON: Two points to your question, Commission Arpin.
921 One is that we are looking at the frequencies and none of us up here are engineers, but London is a different market in the way that the frequencies are allotted, not just necessarily just in London, but in the surrounding area.
922 So we fully believe that 98.1 is really only the true frequency that a radio station can operate. You know, in the surrounding area it is not just Sarnia and Windsor and Leamington and Chatham and Stratford and Kitchener‑Waterloo, there is Port Huron, there is Erie, Pennsylvania, there is Cleveland, there is signals that are coming in from all over. We are completely surrounded in the London market.
923 So for that reason we believe that really there is only one frequency available and that one stations should be licensed.
924 THE CHAIRPERSON: I see. But if in its wisdom the Commission thought that ‑‑ well, from a programming standpoint, how do you differentiate yourself from the applications filed by Rogers and Evanov?
925 MR. GORDON: There is a number of differentiations. I think the first one is our track record at putting these kinds of radio stations on the air. We have tremendous success in Edmonton, in Vancouver and most recently in Halifax where we have launched a brand new radio station called The Bounce. We have an incredibly complex and exciting and very innovative, interactive platform with listeners.
926 You know, the evolution of hit radio, we firmly believe it is moving into what we call modern hit radio, which draws on more musical genres than strictly top 40 or CHR. And we are committed to providing an unparalleled level of support for emerging Canadian artists.
927 THE CHAIRPERSON: And how do you see yourself different from CFBL‑FM and CHFK‑FM?
928 MR. GORDON: I am going to ask David Jones to respond to that question, Commissioner.
929 MR. JONES: If I may, Commissioner, just to describe the London market to you. As mentioned, there is a competitive disadvantage that we have identified. You could also extend that to the formats and the market itself. Astral has the four stations, of which two are on FM, CIQM which is an AC and then they have their country station. Corus has four stations essentially in the market; three FMs and an AM, one licensed actually to Woodstock.
930 What has happened over the past several years which we feel has created our hole. Fresh FM previously was known as Energy FM many years ago, they have moved to a slightly older demographic and self‑describe as Hot AC. FM 96, which is CFBL‑FM, probably as early as two years ago was a very youth‑oriented new rock radio station, and they had The Hawk out of Woodstock, which basically is a London radio station, as a classic rock station.
931 What we found over the last year and a half is that the classic rock station has migrated slightly older to now describing themselves as 1960s, 1970s and 1980s, more oldies based and FM 96 has now taken on both the role of the younger rock, but they have also added a lot of classic rock titles. So you have a hole under the age of 34 that truly we feel we can serve.
932 THE CHAIRPERSON: Let's now get to news. In your oral presentation you are talking about a new type of setting and conversational approach to news rather than traditional. But on a day to day basis, and since you are doing it in other markets, how does it appear to be different than the standard newscast that we hear on radio stations?
933 MR. GORDON: Thank you, Commissioner.
934 It would be dramatically different sound to what we would normally hear on a typical radio station where an anchor is reading the news. I will ask David Jones to jump in here to explain how we would do it specifically in London.
935 But it would involve all the cast members say of a typical morning show with the newscaster reading the top story, providing some background on it and then at that point the other hosts on the show would weigh in with their opinions on it. And then we would get interactive with the audience and be able to take text messages or emails or phone calls and be able to fully integrate the audience into the news in a way that traditionally it is not done.
936 We found in the other markets that we have done this our youth audiences are responding very very favourably to it and really enjoy the conversation style.
938 MR. JONES: We are calling it News That You Can Use. So what we are going to try to do is frame the cause and then the effect it will have on our audience.
939 So in a roundtable setting, as Chris mentioned, we are going to have various people discussing the news stories. And through our online platform, the website of the radio station, we can get reaction to that, bring that to air, or telephone conversations, bring those to air from our listeners and that will be either further news stories or provide conversation in that roundtable environment.
940 THE CHAIRPERSON: Now, you are also in your written submission talking about a different manner to collect the news allowing ‑‑ but having people collecting the news, your reporter on the road collecting the news. But you seem to have a fairly small staff to do what you are planning to do under that theme. You have a news director and two journalist reporters who are working split shifts and they also are working Saturdays and Sunday morning.
941 So in daily life how are you able to make it up? Since you are doing it elsewhere, so maybe Mr. Gordon or other members of the team who are much more knowledgeable of what is going on in other locations, is it the same type of settings; one director and two reporters, and they will also go on air?
942 MR. GORDON: Yes, that is correct. That is similar in other markets that we employ this type of approach to news. And how we do it is we rely on our audience to provide a lot of the colour and a lot of the information and a lot of the background, you know, while we are doing the news. But they can also post it onto our website, they can post blogs on our website, they can provide us with information on a 24‑hour, you know, basis as they deem necessary.
943 Then our news director and our journalists are able to disseminate that information and bring it to the airwaves.
944 THE CHAIRPERSON: Our reliance to information provided to various ways, messages and creates a problem of reliability. How do you make sure that the news that you are finally broadcasting are accurate and reliable?
945 MR. GORDON: Well, we would adhere to all journalistic practices and follow up with sources.
946 THE CHAIRPERSON: So that requires time, and if it requires time it requires people and you appear to have a fairly small staff. Unless you will be working with the newsroom of your existing radio and television station, which is contrary to what you say in this paper.
947 MR. GORDON: We will not be working with our exiting television station in our news environment. We will have, you know, some information shared back and forth between our two radio news departments. But we have employed this system in other markets and we feel three journalists for a youth‑based format is a very reasonable number.
948 THE CHAIRPERSON: And how many ‑‑ I have to find out where ‑‑ I apologize, I have yet to find it myself with the new technology.
949 Okay, well I have another question, all related to news, but not specifically the one that I had in mind, but it is related. Can you help us in breaking down what is between news, sports and business information? Because you seem to have staggered that information altogether in your supplementary brief. So could you help us in saying how much will be pure news and how much will be sports and business information?
950 MR. GORDON: Absolutely. David Jones can answer your question, Commissioner.
951 MR. JONES: Certainly, Commissioner.
952 We filed news, sports and business would be four hours, 25 minutes. And I believe in the supplementary brief it also states three hours of pure news, so we will do three hours of pure news.
953 THE CHAIRPERSON: Another thing, I noticed that you have 17 newscasts ‑‑ so three hours will be strictly news. Because altogether it totals four hours and 25 minutes. So what you are saying three hours is what we call pure news and the rest will be shared between sports and business. And what is the business attraction for the young audience that you are aiming at?
954 MR. GORDON: Well, it would depend on the day. Certainly, the environment of the last couple of weeks ‑‑
955 THE CHAIRPERSON: Maybe.
956 MR. GORDON: ‑‑ would push the business news, you know, much higher up on the scale of relevance.
957 THE CHAIRPERSON: But it will have then been covered by the general news?
958 MR. GORDON: Generally it would be, yes.
959 THE CHAIRPERSON: They certainly are less keen at hearing the quote from the TSX and how the TSX has climbed and who has climbed and who has furthered their losses, whatever happens on that day.
960 So what kind of business news are you talking? Because the general business ‑‑ the general economy will have been covered within the newscast by itself.
961 MR. GORDON: Those business stories would be strictly 100 per cent local business stories, whether they were plant closures or new investments into new local businesses. Certainly with the educational institutions, funding, transfer payments, those kinds of things.
962 THE CHAIRPERSON: So that will enter into what you qualified here as business ‑‑
963 MR. GORDON: That is correct.
964 THE CHAIRPERSON: ‑‑ rather than the overall news of the day, even if a major local employer is closing down their plant?
965 MR. GORDON: That is right. I mean, in a roundtable approach we would look at news in a different way. We wouldn't just talk about the fact that a plant was closing. We would be able to talk about what impact that would have on all of our listeners within our target demographic.
966 THE CHAIRPERSON: And the human interest out of that.
967 MR. GORDON: That is right.
968 THE CHAIRPERSON: Now, again, I am back with your staff; director and two reporter journalists who will at the end of the day have the responsibility of altogether 27 newscasts: 17 Monday to Friday and 10 on the weekend. And the hours are limited because they are in split shift.
969 So there's almost no news during daytime, except ‑‑ well, between 9:30 in the morning and 3:30 there is no news, in accordance to your plan, except one at noon. And then over the weekend you have news between eight and noon. What happens if there is a big, big new breaking out of the hours for which you have scheduled news.
970 MR. GORDON: I will ask Rob Farina to answer your question, Commissioner.
971 MR. FARINA: Thank you, Chris.
972 I think in a case like that, maybe to take a step back from this, you know, one of the things we are finding with engaging young people with news and public affairs programming is what's really helping us do that is demystifying the news.
973 In the old days, you know, the news anchor would come down from the mountain top and the sounder would ring and, you know, they had one hand over the ear and delivered the news. Well, that's not connecting with young audiences any more. So the nature of how news is delivered has changed, and also the nature of who delivers that news has changed, too.
974 So when we look at our entire line‑up of The Curve on‑air personalities, which we prefer to refer to as multimedia personalities because they need to engage with our listeners on several levels, The Curve is very much about having personalities that add, you know, a deeper connection to the listener other than telling them, you know, what the last record was and what the next record is.
975 So in the case of being reflective of something big happening the community, that's a case of the live person on the air being able to relay that to listeners and, at the same time, being able to call in, you know, resources to help uncovering the story.
976 THE CHAIRMAN: Okay. Well, we will move now to your Canadian content development program. I know that we have had exchange of letters with you regarding some of your projects, and particularly the Fanshawe Faculty Music Program and Western University, for which you are contemplating giving a significant contribution, and also I remember the H.B. Beal Secondary School, where you are talking about musical instruments.
977 Help us to understand, really, what you are planning to do regarding, say ‑‑ let's start with the Fanshawe Music Faculty. Obviously, when we are reading your submission, we are noting that this program is more related towards management of a music career rather than supporting and developing new talent, because when I have read the list of the music industry arts graduates that you have provided us, my own understanding of the list of names that you have provided is that only Yurko Mikaluk will meet the definition of a new artist. The others are in production, in management and in copyright matters.
978 So how will you make sure that the money that you are contemplating granting to the Fanshawe Music Faculty will really go to what the CRTC has defined as "Canadian development"?
979 MR. GORDON: We had many discussions and conversations ‑‑ and David Jones can step in here any moment ‑‑ with Fanshawe. We have a long relationship with them in the music industry arts program. The discussions have been about evolving their technology and their music production facilities from analogue to digital and those are the areas that we would look at supporting them in.
980 THE CHAIRPERSON: But if, at the end of the day, the Commission was to conclude that this is not a CCD‑eligible program, what will you do?
981 MR. GORDON: We would divert the money into one of our other programs.
982 THE CHAIRPERSON: You will divert the money to...?
983 MR. GORDON: Into one of our other programs at ‑‑
984 THE CHAIRPERSON: Other program.
985 MR. GORDON: Yes.
986 THE CHAIRPERSON: Now, we seem to have the same type of difficulty with the Western University program that you are contemplating also giving money, and, again, with the H.B. Beal Secondary School.
987 What will you do if the Commission was to come to the conclusion that those are not eligible CCD?
988 MR. GORDON: Well, we would ‑‑
989 THE CHAIRPERSON: Because they are significant sums that you have committed. I'm sure that you surely have already spoken with those institutions and they will be at your doorstep if you are granted the licence.
990 MR. GORDON: Certainly we would ‑‑ you know, we are confident that these programs will meet the CCD requirement, and if they were not we would fund other initiatives, such as FACTOR and MusiCan and MusiCounts and those things, but we are very confident that these do meet CCD regulations.
991 THE CHAIRPERSON: Surely I don't think it's for me to make suggestions here, but those institutions have broad programs which are mainly, from what description you have provided us ‑‑ take the Don Wright Faculty of Music, in that faculty of music I'm sure that they have other things than production courses. They do have also talent, they do give also straight music courses to eventual performers.
992 MR. GORDON: David Jones can add some colour to this, Commissioner.
993 MR. JONES: Let me just tackle a couple of things.
994 I believe the list you are referring to with Yurko on it is some of the faculty members that would teach some of these courses. So they wouldn't be directly impacted by this, it would be the students that would be taking the courses.
995 Let me take one and just give you an example: the H.B. Beal scenario. We approached them ‑‑ and I was lucky enough to tour the facilities ‑‑ and the intent is to give money to MusiCounts and let them do their thing to purchase musical instruments for the students at H.B. Beal.
996 I toured their facilities, and while Beal is a fantastic heritage school in the downtown core and they have had money to upgrade their facilities, their actual building, so that it's really a nice building right now, they are in need, as we hear every year on the Junos, every year on the Grammies and from every Canadian artist that ever speaks about education, they are in need of money to upgrade the actual instruments that their students use.
997 So when you walk by a couple of stand‑up pianos that are certainly a lot older than I am and guitars that are really held together by duck tape, I mean there really is a need there. So that's how we came about with that specific initiative.
998 MR. FARINA: And just for clarification, MusiCounts, for anybody that may not be aware, is the new name for MusiCan. There was a dispute issue, so MusiCan recently changed its name to MusiCounts, which has been an eligible CCD recipient up until then.
999 THE CHAIRPERSON: Right.
1000 If those were eligible under the prior definition of CTD, but when we redefined CCD, we came with a much narrower definition than the one we had previously, in a way, but we have expanded it towards journalism, as well, not only the music but also towards journalism and other related talent, but it's really talent driven, and rather than sustain ‑‑ and I hear what you said regarding music instruments because, at the end of the day, they go in the hands of those who are learning music, but the two programs, the one from Fanshawe and one from the Faculty of Music at Western, obviously it has numerous components, because some could take more managerial orientation, another production, another one will study instruments to eventually become a performer whatsoever, because you gave names of operatic ‑‑ I'm not sure that it goes really within the format, but the list of the grants from the university that you have provided us included some people who learn opera at Western ‑‑ and, obviously, those are meeting the definition of a talent, so....
1001 I only want to bring it up. Surely, we will look closely at your submission, but I know that staff pointed out that it might not specifically meet the letter ‑‑ not the spirit but the letter ‑‑ of the policy, you know, that you have people around the second table who are listening closely to what I'm saying here.
1002 Look more at the business. And I know that in the economic profile that Communications Management Inc. did for you, there is a section where the writer of the report talks about having to compete against players like Astral and Corus, who both have already four radio stations in the market, and he called it the four plus four plus one.
1003 Obviously, one aspect of your presentation here is, in order to be able to really compete against those two players, you need to have a second radio station. So what are really the challenges that you are currently facing and what will be the benefit of granting you a second licence?
1004 And I will ask already my second question: what will it be like if we were not to license you but gave the licence to another one so it would be four plus four plus one plus one?
1005 So what is currently the challenge and what will be the future challenge if there was another licence, but granted to another than CTD?
1006 MR. GORDON: Thank you, Commissioner Arpin.
1007 The first challenge is one that involves two components: the ability of our competitors to manage their costs and manage their expenses across a synergistic platform for radio stations. They are able to operate four radio stations with a single production department, a single marketing department, a single creative department, and that is a situation that we are not able to currently enjoy.
1008 The other disadvantage is from a sales and marketing and promotional situation, where we represent a very small percentage of the total listening in London and our two competitors represent a substantial amount of tuning in the market.
1009 I'm going to ask Jim Blundell to step in and talk a little bit about what happens on the ground on a daily basis in London.
1010 MR. BLUNDELL: Thanks, Chris.
1011 Well, Commissioner, I'm really excited about being here today. I'm excited that we have got this chance to talk to you because I don't just represent CHUM Radio, I represent 25 young people back in London that just really want a great ‑‑ this opportunity for another radio station.
1012 It's been a tough go this last eight years because when you have 8.3 percent of the hours‑tuned market share, your competitor, of course, has 28 percent and Astral has 33.1 percent, it's hard, it's very difficult, because no matter which way you turn they can block up. They can beat us on just overall tuning an audience, but also because they have got, if you will, four cash registers and we have one.
1013 They can throw some away; in other words, they can discount some of their radio stations to force a buy from some of our advertisers to them from us. And they have been quite successful at it. These guys are good broadcasters, they know what they are doing, and they have made it difficult for us.
1014 So I can tell you that, you know, I have been in London since the get‑go. I was there the day the radio station signed on, and these eight years, while they have been fun, they have been exhilarating in a lot of ways, it's been hard. And it's getting harder because our competitors, as my colleagues, David Jones said earlier, our competitors are making changes as we are moving along.
1015 Where they see us making gains, they can take one of their radio stations and literally throw it at us and try to knock our ratings down. And that sort of was evident in the last book and it ‑‑ you know, we have gone from a number one position 25‑54 to number four. It makes it hard.
1016 So, you know, from my perspective, I just want you to know that myself, and the 25 great people I work with every day in London, we would really like this opportunity to make this competitive imbalance more fair, to make this playing field a little bit more fair than it has been.
1017 MR. GORDON: And truthfully, in the future, by licensing another stand‑alone radio station, that would just dilute the market more, and especially if another radio station, as a stand‑alone, was going after a youth‑based audience. They would have a very, very difficult time competing, especially in the current economic climate, you know, with the two major competitors in the market that are fully consolidated.
1018 THE CHAIRPERSON: So that's the view of the other, but what could be the impact on your own existing radio station if we were to grant a new licence to one of the other applicants here?
1019 MR. GORDON: Well, we would experience a decrease in revenue and a decrease in EBITDA.
1020 THE CHAIRPERSON: For your existing radio station?
1021 MR. GORDON: For our existing radio station, correct.
1022 THE CHAIRPERSON: But if the format that we were to ‑‑ say that we were to grant the licence to Rogers or Evanov, which are both catering to a much younger demographic than your existing FM station, will it have the same impact?
1023 MR. GORDON: It would be an impact. It wouldn't be as great as some of the other applicants, that one that we heard here this morning, but it would definitely have an impact on the market, especially in light of the fact that the Conference Board just recently released their projections for London for the next year at a 1.3 percent, you know, growth rate for the market.
1024 You know, the BMO radio report on radio broadcasting nationally in Canada was just released a couple of weeks ago and they are calling for a 1 percent national increase across the board for radio. If we are talking about a 0 or a 1 percent increase in total revenue for the radio stations in the London market, any entrant into the market is going to have an adverse effect on the other players.
1025 THE CHAIRPERSON: And how confident should we be about the London market? We only got last Friday, I think, the trend for September, and when I'm looking at the adjusted revenue figure I note that the London market is down for September. Obviously it's only one month, but if we look towards the near future, I don't think it is going to go much better, it will keep going down.
1026 And it's interesting because London is one of the very few markets that is down in September. Most of the markets were up in September, but London was down in September. My guess is that the coming months will not be much better, but will it be worse in London than anywhere else?
1027 MR. GORDON: I don't think ‑‑ and, Jim, jump in here, by all means ‑‑ in London it would be worse than any other market in southwestern Ontario. And looking at TRAM, we have to careful looking at one month in isolation because ‑‑
1028 THE CHAIRPERSON: Oh, yes. When I'm looking at the previous year, though, year to year there is an increase, but, amazingly ‑‑ it really drew my attention because I was coming here for a hearing concerning the London market and so I look at the numbers and I noticed that, out of all the markets reported by TRAM, London is one of the two markets where the revenues were down for that month.
1029 MR. BLUNDELL: If I'm not mistaken, Mr. Commissioner, national business was down quite significantly in September, and I don't have these numbers in front of me, but, in fact, I think local business might have been flat. But you are right, national business was off a frightening amount, as a matter of fact.
1030 THE CHAIRPERSON: I can't make any comparison because they started to report the numbers through national, local and agency. They don't have comparative for previous years, so I cannot go and check. And I will take your statement as being....
1031 So the issue is, hence, that could vary from month to month, depending on the national advertiser strategy ‑‑
1032 MR. BLUNDELL: Right.
1033 THE CHAIRPERSON: ‑‑ but from the retail standpoint you think it has sustained.
1034 MR. GORDON: Yes. And I think, you know, for our purposes, we are very committed to the London market. and, you know, we have been through economic downturns before, we have launched radio stations during economic downturns, and they have been very successful. And certainly licensing another radio station for CHUM in the London market would definitely help us, you know, through those choppy waters.
1035 THE CHAIRPERSON: Now, looking at your revenue projections, I note that when I'm considering a market share for the whole year of 2008, I think ‑‑ let me just to make sure ‑‑ the market point is somewhere close to $275,000 per point. That's if the whole universe was to be...there were no out‑of‑market listeners. But based on the market shares in the market, we are somewhere around $360,000 for market point.
1036 Now, for your third year of operation you are forecasting a market share of $409,000. Is it an optimistic scenario, a realistic scenario or...?
1037 MR. GORDON: I'm going to ask Kerry French to jump in here, but we feel it's a realistic scenario, especially based on the demographic of the radio station that we are going to be putting on the air.
1038 THE CHAIRPERSON: Well, we are talking here the market.
1039 MR. GORDON: I will ask Kerry to jump in, please.
1040 MS FRENCH: I think, Mr. Vice‑Chair, the difference in the figures there are market growth. You refer to year three. We are looking at 7.4 percent share of tuning. But actually our revenues are 7 percent of what we project the market to be at at that point, so we are actually under what the average 1 percent share would be.
1041 And the reason for it being under is it does really take some time to grow your audience and to grow your relationships with your clients so that share point and share of revenue comes into line. Not everybody is at the mid level. Some stations have a higher power ratio so that they get more than a 1:1 share. It takes a certain amount of time to get there.
1042 THE CHAIRPERSON: Now, your financial projection, and one of the assumptions is, obviously, money that would come up from various sources, and you are estimating that by year two 35 percent of your advertising revenues will come at the expense of the existing radio station, and that amounts to $553,000.
1043 Now, what you are saying is that your format catering to the youth market will not necessarily be done at the expense of the other existing radio stations. So for which station do you think that money will be coming up?
1044 MR. GORDON: I will ask Kerry to answer that question.
1045 MS FRENCH: I think, Mr. Vice‑Chair, there's also market growth in that figure, so we wouldn't necessarily take any particular amount from any particular radio station. Because the way it works is an advertiser has a pool of dollars and they are trying to attract a certain audience, and what you do is try and get your appropriate share of that big pie. They don't necessarily buy the same number of stations each time.
1046 If you are providing an alternative to reach an audience that they haven't been able to reach with radio before, they may add you to the list. And what happens when they do that is the investment in current radio stations will be a little lower than it would have been had you not been there and offered that alternative.
1047 So it really also depends on what those radio stations are doing at the time and where their shares of the total audience fall out in reaction to you being on the air.
1048 If I could try and bring a little clarity to this, those radio stations that are currently on the air are not targeting this particular demographic, in fact, two have moved away from the target, so there is a pool of audience that is available for us to attract.
1049 And by the same token, if they are not attracting the higher end of this audience that they were before that will fall away from their total numbers. So it's a matter of there are probably three or four stations that will be impacted, but not to any great extent on any one of them.
1050 THE CHAIRPERSON: Thank you.
1051 Really my last question, and it has to do with your filing, which is Schedule 7(1)(b), and it has also to do with my introductory remark.
1052 In your point number five to that schedule, it says:
"An operating line of credit has been obtained to finance any cash flow deficit for the FM Edmonton licence." (As read)
1053 How is it related to this application?
1054 MR. GORDON: I would say that it's not.
‑‑‑ Laughter / Rires
1055 MR. GORDON: Strike that from the file.
1056 THE CHAIRPERSON: From the file.
1057 Obviously, you heard us earlier this morning asking all the applicants to provide us within the next 10 days with a commitment letter from their banker. I think, and I don't know, I'm asking you, if you are able to meeting that deadline?
1058 MR. GORDON: We would be pleased to provide that.
1059 THE CHAIRPERSON: Thank you very much. I will check with my colleagues if they have questions.
1060 Rita Cugini.
1061 COMMISSIONER CUGINI: Thank you.
1062 Just a couple of questions on the software that you will be using for The Curve.
1063 Are you currently using this software on any of your other radio stations?
1064 MR. FARINA: We have not deployed this yet.
1065 COMMISSIONER CUGINI: Why not?
1066 MR. FARINA: With competitors in the room, without giving away too much, CHUM Radio is in the process of building an entire interactive platform that we are going to be unveiling at the beginning of 2009.
1067 COMMISSIONER CUGINI: So is this software proprietary?
1068 MR. FARINA: It's proprietary software and it's exclusive to CHUM Radio in Canada.
1069 COMMISSIONER CUGINI: Okay.
1070 I mean, I think I know the answer to my next question, and you are going to say it's the economics, but given your target audience, given where they are accessing their music now, why go through this process? Why not just launch as a web radio station?
1071 MR. FARINA: I think we see this as an exciting way to bring radio back to its roots. Radio, we think of radio as the original social networking hub and for a long time radio didn't work hand‑in‑hand with the technology.
1072 As the technology evolved I really believe that it has gotten to a point where the technology being used by a lot of the Internet audio entertainment players out there is actually quite complementary to what we do in radio and will allow us to do what we do even better.
1073 We believe radio has a strong future and we believe radio has a strong future with young people. And despite the tuning declines that we are seeing in young people we feel that by marrying the two we could enhance the connection to radio.
1074 COMMISSIONER CUGINI: I know that ‑‑ I mean especially the younger part of your demo, why that would be attractive to you, that is the age 13, 14, 15, you are looking for your own radio station, you don't want to listen to what your parents are listening to, you might not even want to listen to what your older siblings are listening to, but how are you going to keep that audience as they grow up into their late teens and early 20s?
1075 MR. FARINA: Well, Commissioner, I should say that when we researched, you know, the format ‑‑ and when we researched the format the audience tells us who is going to listen to it, not the other way around. The biggest appeal for this format, while great appeal 13 to 17, the biggest appeal was actually 18 to 24 and 25 to 34.
1076 I think the reason why they are going to listen to this format, it is a format that's evolutionary, it's a format that's reflective, but most importantly of all it's a format focused on local community reflection and I think that's a basic need of the human condition, is to connect with each other in the community that we belong in. We believe that that's what radio does best and we believe that that's what the technology now allows us to do even better.
1077 COMMISSIONER CUGINI: Thank you, Mr. Farina.
1078 Thank you. Those are my questions.
1079 THE CHAIRPERSON: Thank you very much.
1080 Commissioner Simpson...?
1081 COMMISSIONER SIMPSON: Thank you.
1082 Three questions.
1083 Following on with respect to the software, my first question is to do with the privacy issues which I would like to know a little bit more about because I understand you had implied that the software, I presume on a permission basis, would allow the software to interact with data in the computers of subscribers or listeners who have volunteered to participate in this undertaking.
1084 Have you run the course and where are you at with respect to the privacy issues?
1085 MR. GORDON: We will be complying with all Canadian privacy laws and PIPEDA legislation.
1086 We currently have a draft consent, informed and express consent form in place that will comply with all regulations.
1087 MR. FARINA: And just further to that, just for the sake of clarity, we are not pulling music files out of people's computers, we are finding out, you know, the titles and artists and specific to those habits, you know, that they are accessing those titles and artists, and then we are offering on our website the opportunity to stream customized new music recommendations.
1088 But we are not trading music files back and forth, if there was any confusion about that.
1089 COMMISSIONER SIMPSON: I think I understand that, but there is a big distinction between someone pushing data to you any you pulling data from them. I know that you understand that distinction, but the impact of it is not lost on me in terms of the fact that it can potentially be a thorny issue.
1090 MR. FARINA: Well, what we could tell you is the software we are using is already being used by 21 million users worldwide and about half a million of those in Canada and has been in existence for the last six years.
1091 THE CHAIRPERSON: But somehow you are picking your nose in somebody else's computer and I don't ‑‑ because ‑‑
‑‑‑ Laughter / Rires
1092 THE CHAIRPERSON: So you may be looking for some very specific data, but someone could think that you are trying also to see what else they have on their computer.
1093 MR. FARINA: Sure.
1094 THE CHAIRPERSON: Because it does matter.
1095 MR. FARINA: I'm still getting over the analogy. I think we ‑‑
‑‑‑ Laughter / Rires
1096 THE CHAIRPERSON: We are not the Privacy Commission, but ‑‑
1097 MR. FARINA: Sure.
‑‑‑ Laughter / Rires
1098 MR. FARINA: Respectfully, Chairman Arpin, we are talking about an audience that's comfort level is a lot different than an older listener. We are talking about an audience that's used to the idea of file sharing and we are talking about an audience that's used to the idea of ‑‑ like for examples in the iTunes folder implementing their tune so that everybody around them can have access and hear the music on their library. So the comfort level is different.
1100 COMMISSIONER SIMPSON: Just one more question.
1101 With respect to the software itself, one of the life lessons in doing qualitative research is you keep asking the same question until you get the same answer and my curiosity is now wanting to focus on the idea that if you have the sort of a closed loop going on between your listener and your ability to program to the listener's taste, at what point does the water pressure equalize, where what they have on their computer is what they are getting on the radio station and does that enhance or lessen the demand?
1102 MR. FARINA: The beauty of the software is it's a moving target as every day the listener is accessing music. When they disconnect from the radio station and they are accessing music either off our website or on their iPod or in their music folder online, that information is constantly being updated.
1103 The other great thing about this is that's how we pick up immediately when new artists are being discovered and found.
1104 So it really is ‑‑ when we talk about, you know, our opportunity to now really be able to reflect the pulse of the city, it's a constantly evolving, constantly moving target. We don't get the information and then that's just what we live with, it's continually evolving just like pop culture is continually evolving.
1105 COMMISSIONER SIMPSON: Not meaning to pin you to a hard answer, but try to, for my understanding, quantify how much of this system is being used to program the station. Obviously there is some subjectivity and a lot of objectivity. Just on a percentage basis, are you using 100 per cent of what you find, 50 per cent, 75? You know, what is that ratio between judgment and data?
1106 MR. FARINA: I would probably say it's going to be 75 per cent reflecting the habits of the listeners, 25 per cent being able to curate those habits and ensure that we are playing, you know, our Canadian content requirement or emerging artist requirement. But I would probably tell you it's a 75:25.
1107 I don't want to diminish the role that the Program Director and the Music Department play in this radio station and ion going out and sourcing and discovering new artists, but the audience plays a dominant role in helping us reflect their music choices.
1108 COMMISSIONER SIMPSON: Thank you.
1109 THE CHAIRPERSON: So we will go to the legal counsel.
1110 MR. McINTYRE: Thank you, Mr. Chair.
1111 I just have one question about the sample playlist that was submitted with your application. I believe that you submitted a one hour sample and I believe the application requests example blocks from morning, afternoon, peak periods as well as off‑peak periods.
1112 Could you undertake to provide us with that?
1113 MR. FARINA: Yes. We do have a full playlist available and we would be more than happy to file that what the Commission.
1114 MR. McINTYRE: Great.
1115 That's all.
1116 THE CHAIRPERSON: Thank you very much.
1117 Gentlemen, thank you for your presentation.
1118 We will take a 10 minute break.
‑‑‑ Upon recessing at 1525 / Suspension à 1525
‑‑‑ Upon resuming at 1540 / Reprise à 1540
1119 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.
1120 Madam Secretary...?
1121 ASSISTANT SECRETARY: We will proceed with Item 4, which is an application by Rogers Broadcasting Limited for a licence to operate an English‑language FM commercial radio programming undertaking in London.
1122 The new station would operate on frequency 98.1 MHz, Channel 251B1 with an average effective radiated power of 4000 W, maximum effective radiated power of 7000 W, with an effective height of antenna above average terrain of 106.5 m.
1123 Appearing for the applicant is Mr. Paul Ski.
1124 Please introduce your colleagues and you will have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
1125 MR SKI: Thank you very much.
1126 Mr. Chair, Members of the Commission and Commission staff, my name is Paul Ski, I am the Chief Executive Officer of Rogers Radio.
1127 We are delighted to be here today to present our application for the next generation of FM radio aimed at serving the young people of London. With me today to talk about our proposal for a new brand of interactive radio is, to my far left, Lannie Atkins, General Sales Manager for CJAQ in Toronto. Next to Lannie is Julie Adam, Assistant National Program Director for Rogers. To my right is Susan Wheeler, our Vice President of Regulatory Affairs. Next to Susan is Adam Kaftalovich, Director Online Operations and Content.
1128 In the back row, to my left, is Chuck McCoy, Executive Vice President Programming and Marketing. Beside Chuck is Sandra Stasiuk, Vice President Finance Radio.
1129 We are also pleased to have with us today in the audience Rael Merson, President of Rogers Broadcasting and Ken Engelhart, Vice President Regulatory Affairs, Rogers Communications Inc.
1130 Mr. Chair and Commissioners, our presentation today will focus on four key areas.
1131 First, London's under served youth market.
1132 Second, our proposal for a new kind of interactive nontraditional radio station POD‑FM.
1133 Third, the development and promotion of Canadian music talent.
1134 Fourth, why licensing POD‑FM is in the public interest.
1135 As radio operators, we know that young people are disengaging from radio and we see this as radio's biggest competitive challenge going forward. Young people have an increasing array of entertainment choices at their disposal that allow them to pull and push content when they want it and how they want to. They are no longer fixed passive receivers are programming.
1136 This means that we can no longer afford to approach our audience or our programming like we have in the past if we expect to reach these younger listeners. Youth media habits require us to reinvent traditional radio by seamlessly integrating it with online video and mobile technologies to create an interactive and personal experience that they can call their own.
1137 The evidence is clear, London is an ideal market in which to launch this new brand of interactive radio. Of the 15 to 34‑year‑olds surveyed in our research, 33 per cent are listening to radio less than they did before, particularly women 15 to 29. 62 per cent of those who said they were listening to radio less cited personal media and/or Internet listening as the reason. 83 per cent said they go to the Internet daily and 41 per cent listen to radio online, with the majority listening to stations other than local radio stations in London.
1138 When it comes to music, here is what the young people of London had to say:
1139 Seventy‑nine percent think that local London radio stations play the same songs.
1140 Eighty percent want to hear new and emerging artists on London radio.
1141 And the majority think that a contemporary hit radio, or CHR station, has the most appeal.
1142 Currently, the only option that young London listeners have for a contemporary hit radio or youth‑based station on traditional radio is Kitchener station CKBT‑FM, a station 90 kilometres away ‑‑ a little closer here. We believe that these listeners deserve their own local station.
1143 pod fm is a new paradigm in radio. Its interactive and on‑demand strategy is designed to encourage young listeners to return to radio by offering them all of the community elements of local radio with the functionality of internet and wireless technologies.
1144 We believe that this interactive strategy will re‑engage young listeners and allow us to keep them in the regulated system.
1145 Simply put, if we can engage young listeners now, we stand a better chance of being part of their future.
1146 Reaching young listeners also creates new business opportunities for radio, as it allows us to connect our advertising clients with this demographic in a more meaningful and relevant way.
1147 Through pod fm's significant and incredible online presence, pod fm will be in a better position to attract new advertisers to the radio market, which will strengthen the business case for this type of interactive, youth‑oriented radio format.
1148 pod fm's focus on driving engagement online and on‑air will give youth advertisers a more relevant choice when it comes to their advertising buys.
1149 pod fm's ability to tap new advertisers of products and services, such as fast food, energy drinks, cosmetics, video games, among others, will create new revenue in the radio market and minimize the impact on the incumbent radio stations in London who do not serve this client base.
1150 pod fm's online component will also give advertisers a higher degree of measurability and accountability when it comes to their media buys, which will enhance radio's competitive position in the advertising market.
1151 Now, to give you a better sense of how pod fm will approach its programming and listeners, we have prepared a short video that describes the type of station we would like to build and the response we received from London's young people.
‑‑‑ Video presentation / Présentation vidéo
1152 MS ADAM: As you heard on the video, pod fm is not your traditional radio station. It is designed to fill an obvious hole in the London market by engaging young people in a manner that traditional radio has found difficult to do in recent years.
1153 Radio was the first social network medium, so it is only natural that radio should come full circle and reinvent its role as the voice of its local community, using a variety of different technologies.
1154 Today's young people talk, text, chat, surf and watch all at the same time, consuming and creating content simultaneously.
1155 In recognition of these dynamic media habits and eclectic music tastes, pod fm will encourage listeners to shape the station's music and content.
1156 pod fm will drive engagement in four fundamental ways that are very different from radio's traditional approach to programming: first, through its music; number 2, through its local content; number 3, through its Very Interactive People ‑‑ VIP ‑‑ Program; and fourth, and finally, through the use of social networking.
1157 First, pod fm will drive engagement through its music.
1158 At pod fm, gone are the days where we program the station and push it out to our audience. In pod fm's new paradigm, listeners, not the program director, will shape the playlist and the content.
1159 Specifically, pod fm will empower and engage listeners by giving them the opportunity to shape its playlist by choosing from a constantly changing variety of titles, including a wide variety of selections from Canadian emerging artists, such as Kardinal Offishall, Danny Fernandez, and local London artist Shad.
1160 pod fm's audience‑driven playlist will ensure that listeners hear the bands they are interested in and that emerging artists get the airplay they deserve.
1161 pod fm listeners will also be encouraged to continually contribute to the station's playlist by listening to clips, voting on artists and ranking their favourite tracks online, which will result in a broad, varied and unique mix of songs not often heard on commercial radio, let alone in the London market.
1162 In fact, based on our research, pod fm is guaranteed to be unique to London, playing 70 to 75 percent new music. No other station in the market offers this level of diversity of music.
1163 pod fm listeners will shape the playlist in four ways: they will engage in online music surveys; they will listen and vote on a list of five music clips every time they refresh a page on "podfm.com"; they will submit their favourite songs via text, e‑mail, or through the pod's social networking space; and they will vote daily on the pod's "7@7" playlist.
1164 Secondly, pod fm will drive engagement through its local spoken word and music content.
1165 Using a combination of listener and station‑generated content, pod fm will ensure that it continually has the pulse of London's youth market by offering over 9 hours a week of talk, including over 3 hours a week of pure news programming, covering issues that our listeners have identified as relevant to them.
1166 With programs such as "Talk to pod" and "My pod News", pod fm will offer information and invite discussion on topics that young London listeners have told us they want to hear, encouraging ongoing input on the issues that are the most important to pod fm listeners, through text, e‑mail, blogs, chat rooms, instant messaging and webcams.
1167 Listeners and on‑air announcers submitting user‑generated audio and video content online, and featuring an emerging artist on "podfm.com" each month, listeners will have access to videos and/or MP3 podcasts of live performances, along with interviews and segments on the artist and their music.
1168 pod fm will also encourage listeners to preview new music, post music recommendations online, plug into London's live music scene, and learn more about their favourite artists.
1169 Through the use of citizen journalism and social networking features and functionality, pod fm listeners will have the ability to comment on articles, videos and blog posts, creating a community dialogue that is unparalleled in the London market.
1170 Thirdly, pod fm will also drive engagement by encouraging listeners to generate and maximize the use of "podfm.com" content through the pod VIP program.
1171 VIP stands for "Very Interactive People". It is an incentive‑driven program that gives points or credits to listeners for posting, submitting, voting and communicating with the station.
1172 The pod VIP program will give listeners exclusive access to contests, online auctions and digital downloads, among other innovative and relevant content and product offerings.
1173 Finally, pod fm will create a social network specifically for the young people of London. pod fm will leverage the popularity of established social networking sites like MySpace and Facebook by integrating its online presence into these web communities and giving young people in London the ability to connect with each other, in addition to their broader global network.
1174 Similar to how big heritage radio stations were once the barometers of local culture, pod fm will create a social network where young people in London can share their likes, dislikes, and create their own culture.
1175 pod fm will recapture radio's legacy of community involvement and local expression for London's youth market.
1176 As a youth‑oriented and interactive radio format, pod fm is ideally positioned to offer unique and innovative opportunities to promote and showcase Canadian musical talent on‑air and online.
1177 As part of its commitment to the local London community and emerging music artists, pod fm will invest $3.2 million over and above its basic Canadian Content Development requirements to the development of local and regional emerging musical talent and music education.
1178 Working with the North by Northeast Music Conference, an organization with proven expertise and experience in the promotion of emerging Canadian talent, we have developed a new and exciting initiative to be known as "The pod Road Tour". We believe that this will make a discernible difference in the career development of local emerging talent.
1179 Live touring is, without question, one of the most important elements in the development of an artist's career. With record sales in decline, and so many sources for new music, touring is not only the best way for artists to distinguish themselves and build a profile, it is also one of the largest sources of revenue for them.
1180 "The pod Road Tour" is specifically designed to tap into and leverage this lucrative revenue stream for emerging music artists by investing over $1.8 million, $265,000 each year, and full tour funding to support three top emerging bands from the London and surrounding areas.
1181 pod fm's website will serve as the go‑to place for the latest information on "The pod Road Tour" bands, with each band having a dedicated space where they can blog, post audio streams and pictures and videos of their various gigs throughout the tour, and keep a backstage tour diary that will allow pod listeners to ask questions and interact with the bands as they travel from city to city.
1182 At the end of the tour, pod fm listeners will vote online for their favourite band, based on their music, live performances and tour diary, in addition to other content on their web page.
1183 The band with the most listener support will be awarded new gear and a showcase spot at the 2010 North by Northeast festival.
1184 We believe that "The pod Road Tour" initiative responds directly to young London listeners' desire to hear and learn more about new music and new music artists.
1185 pod fm will also make significant local contributions to music education by investing $490,000 in CARAS' early music education charity, "MusiCounts". This program is designed to ensure that young Canadians, regardless of their cultural or socioeconomic background, have access to music programs and instruments in their schools.
1186 pod fm also intends to invest locally in advanced music education programs, with $210,000 in scholarship funding for students enrolled in the University of Western Ontario's Master's of Music in music education degree.
1187 MR. SKI: Understanding the interplay between content and technology is key to speaking to this audience. Taking media and technology in bold new directions is part of Rogers' DNA.
1188 As experienced radio broadcasters, we have the expertise and the resources to launch this new brand of interactive radio and see it through to success.
1189 We have never shied away from innovation, and would be proud to introduce this new brand of interactive radio to London.
1190 The London radio market is heavily consolidated, and dominated by a few large players. Licensing Rogers will allow the Commission to introduce a new entrant to London that has the experience and resources needed to compete effectively with three of the largest radio groups in Canada.
1191 In licensing pod fm, the Commission can be assured that it will increase the diversity of programming, editorial voice, and ownership in the London radio market ‑‑ and we are here to stay.
1192 As a new entrant to the market, pod fm's programming will be specifically geared at an underserved and, consequently, disenfranchised demographic. This is a demographic that is growing up without the benefit of a local radio experience.
1193 pod fm's aim is to change that reality and reintroduce this generation to local radio in a way that reflects their media habits, tastes and expectations.
1194 For these reasons, we believe that our proposal for pod fm represents the best use of remaining FM frequencies in London, as it will keep young people engaged in the regulated system today, and, we believe, for years to come.
1195 As we have described in our presentation, pod fm will serve the public interest and achieve the objectives of the Commercial Radio Policy and the Broadcasting Act in a number of ways.
1196 One, it will provide a personalized and interactive local radio experience that will re‑engage the young people of London in the regulated system.
1197 Two, it will offer a diverse music format that will repatriate out‑of‑market tuning and target an underserved demographic.
1198 Three, it will offer over 9 hours per week of local spoken word content, including professional news segments that will engage young listeners.
1199 Four, it will increase ownership, editorial and music diversity in the London radio market and recalibrate its competitive balance, with minimal impact on incumbent stations.
1200 Five, it will invest $3.2 million in the development of local and emerging Canadian music talent and music education initiatives.
1201 Mr. Chair and members of the Commission, I started my radio career in London. I won a guest disc jockey competition on CKSL many years ago, which is not unlike our "You Power the pod" program, which is part of this application.
1202 Over that time I have witnessed the many changes and competitive challenges that local radio has faced over those years.
1203 I believe that pod fm is the next evolution in radio, and has all of the right ingredients to reinvent radio for the youth market, and make it a truly personal and on‑demand interactive experience.
1204 Thank you for your attention. We would be pleased to answer any questions you might have.
1205 THE CHAIRPERSON: Thank you, Mr. Ski. You are a long way from London.
1206 How many years?
‑‑‑ Laughter / Rires
1207 THE CHAIRPERSON: You don't count them any more?
1208 MR. SKI: I had a note of that somewhere here, but I seem to have misplaced it.
1209 THE CHAIRPERSON: Commissioner Duncan will have the first round of questions.
1210 COMMISSIONER DUNCAN: In your supplementary brief you refer to audio content that will be available for listeners to download, store and remix, and you indicate that there will be a comprehensive selection of audio content available 24/7 on your website.
1211 I am just curious to know if there are rights issues, and who would be responsible for paying for the rights that allow your listeners to download, store, remix and share the music you are playing.
1212 MR. SKI: Thank you, Commissioner Duncan. I will have Julie Adam give you a better idea of how we plan to put all of those pieces of interactivity together.
1213 MS ADAM: Thank you.
1214 We are really excited about the web applications. This is really our whole approach to the radio station, that it is not just a radio station.
1215 In terms of rights, a lot of things are still being ironed out, but what we know for sure is that we are able to put any spoken word content on the website. There are no rights issues with that.
1216 We will seek the permission of any independent artists to post their music. We are actually going to make it so that independent artists can post their own music if they want to. So, obviously, there won't be any rights issues with that.
1217 In terms of mainstream artists or mainstream songs, we can post clips. We can post ‑‑ I think it is 5 to 20 seconds of clips of songs without any rights issues. We will do that.
1218 Full‑length live songs, when we have artists that come into perform, as long as we get their sign‑off when they are in, we will be able to do that.
1219 And, then, any secondary streams, there are some rights issues with that that we will have to overcome and sort out with the major labels.
1220 COMMISSIONER DUNCAN: Those costs, are they provided for in your projections?
1221 MR. SKI: Yes, they are.
1222 COMMISSIONER DUNCAN: So you have estimated them somewhere?
1223 MR. SKI: I will let Sandra estimate them.
1224 I think, as Julie said, the vast majority of what we will be doing, from an interactive standpoint, there won't be a great cost to it, but there will be some.
1225 MS STASIUK: We have included in all of our copyright fees any calculations based on the total revenues, including Web revenues.
1226 COMMISSIONER DUNCAN: I am just not quite sure how that would incorporate the fees that you would have to pay with respect to music that the listeners are downloading and exchanging.
1227 When you get rights, you are buying the rights to air it on your radio station, not on the web, I don't expect.
1228 Or are you?
1229 I guess that's the question.
1230 MR. SKI: That's correct. I will have Susan respond.
1231 MS WHEELER: There are tariffs that are certified for that particular function. Some of them have yet to be certified, so we have taken the proposed rates into consideration when coming up with our financial projections.
1232 COMMISSIONER DUNCAN: So you have put them in there.
1233 MS WHEELER: Yes.
1234 COMMISSIONER DUNCAN: Okay, thanks.
1235 Those would be, probably, on your "Administration" line?
1236 Is that the idea?
1237 MS STASIUK: They would be in "Programming and Administration", yes.
1238 COMMISSIONER DUNCAN: Can you give us some examples of the listener‑generated content that you expect to air?
1239 I am also wondering who is going to monitor and edit it, and who will be responsible for deciding what goes on air. Will you be using a delay, or are you just going to air it?
1240 MR. SKI: I will have Julie flesh that out a bit.
1241 No, we won't air it. As a matter of fact, because the web component is so important to us ‑‑ most radio stations have a program manager, and a music director, in most cases, to shape the programming formatics. In our particular case, we will have not only that, but, in addition to that, we will have somebody who is really a program manager for web content.
1242 That person will act as the filtering device for this particular information, as well as some of the on‑air people. But we will have somebody whose primary purpose will be to ensure that the web content works, and he or she will work along with the program manager to make sure that the two come together.
1243 MS ADAM: Our overall vision for the station is really that we want it to be interactive, so we want absolutely everything we do on the radio station to be generated by the listeners as much as possible, also, obviously, understanding that there are responsibilities that come along with that.
1244 We would never put anything on the radio station that didn't meet all of those requirements.
1245 As Paul said, the online and the on‑air program director will ensure that, if there is any language that isn't appropriate, it is not going to make it on the air.
1246 We will preview everything before it goes on the air. If we are going to be taking live calls, then we would ensure that we would have some sort of delay set up.
1247 When it comes to the programs, what we really envision is that ‑‑ you know, a lot of these programs will be pre‑recorded. The pod "7@&", which will be the top 7 songs, which will be played twice a day ‑‑ listeners will have the opportunity to text, or call in, or leave a voice mail, or request online their favourite songs, and the DJ who is on the air will record their requests, and edit them, and put them on the air, to make sure that everything is right and that there isn't any content that shouldn't be on.
1248 One of the features we are the most excited about, which Paul was referring to, is called "You Power the pod", which is that every night at 8 o'clock we will turn the radio station over to a pod listener, and that person will be able to come on the air, play their songs, and recommend music.
1249 Really, this whole community that we are trying to establish is based on what listeners do in real life right now. Young listeners have a whole new approach to how they listen to music and how they communicate with each other.
1250 But all of those things will ‑‑ we are thinking of these listeners as being an extension of our staff, frankly, and the program directors will work with them to ensure that everything is pre‑taped and that there isn't anything that is going to make it to air that is inappropriate.
1251 COMMISSIONER DUNCAN: So it will take away some of the spontaneity ‑‑
1252 MS ADAM: Sure.
1253 COMMISSIONER DUNCAN: ‑‑ but, I guess, you have to deal with it.
1254 MS ADAM: You have to.
1255 The truth of the matter is, even the professionals that we have on our radio stations, they edit themselves. They self‑edit because that is the responsible thing to do.
1256 MR. SKI: I think, too, Commissioner, that it is not unlike some shows, such as The Tonight Show or David Letterman. Those shows are not live, but they are live‑to‑air. They don't lose any of that spontaneity. If there is anything that happens that they need to take out, they take it out, but, basically, you can retain the spontaneity of that program.
1257 The other thing, too, is that where we have a talk show, for instance, then we will be on a 7‑second delay.
1258 COMMISSIONER DUNCAN: Thank you.
1259 I notice that you do have your revenue line broken out in your projections to show your web revenues. I am wondering about the costs associated with your on‑air and online platforms, if they are both included in your financial projections, and what the split would be by expense category, for example.
1260 MR. SKI: I am not sure if we have that particular figure, whether Sandra or Ms Adam has that in terms of an expense, but we could certainly undertake to file that with you.
1261 COMMISSIONER DUNCAN: You have just done your expenses considering that everything is part of the radio operation, not allocating it or ‑‑
1262 MR. SKI: No, we didn't. I think that we have an allocated amount for the web‑based component of it, but we will just have to put our hands on it.
1263 COMMISSIONER DUNCAN: Okay.
1264 COMMISSIONER DUNCAN: If you want to submit that later, then that's fine.
1265 MR. SKI: Definitely.
1266 COMMISSIONER DUNCAN: A number of the applicants, as you know, who have appeared before us are proposing similar youth and young‑adult targeted formats, and they have highlighted the challenges in developing relevant and meaningful on‑air news and surveillance.
1267 I want to know specifically, with respect to local news, if you could elaborate on the type of on‑air news programming you would offer, and what challenges, if any, you anticipate in developing relevant news content.
1268 MR. SKI: With this particular demographic, it is always a bit of a challenge. They are tuning the radio station, by and large, for music, so we have to make darn sure that the information we are giving back to them is information that they ‑‑ things that they want to hear about.
1269 That is why a portion of our research was set aside to define those things.
1270 It is a little bit difficult when you are doing research in a market where you don't have a radio station already existing. It is sort of a "ready, fire, aim" approach, where we are kind of ready, and then we fire and put the content on the air, and then the aiming is really what we get back from the audience through further research, and it's a recalibration that takes place once we have a radio station on the air.
1271 Again, as I say, we have to make sure that we have the right information for these people.
1272 Julie will expand on that a bit.
1273 MS ADAM: Again, because the theme is that we want to be as interactive as possible, there are a few different ways in which we are going to approach the news.
1274 As we have already talked about, first and foremost, we have to make sure that it is professional and credible, and that news doesn't get on the air that isn't credible. So we will have people in place to do that.
1275 Our approach with news is four things. First and foremost, we need to make sure that the content is relevant. We need to make sure that ‑‑
1276 As Paul said, it is tricky to talk to this audience about news. If we use an example like the election, obviously the biggest news story in Canada over the last few weeks, 15 to 34‑year‑olds, particularly the younger end of the demo ‑‑ how interested are they in politics? Some maybe not as much.
1277 We have to make sure that we make it interesting for them, and I think they are interested, but it's on their own terms. Maybe they are interested in the environment.
1278 CNN did this really neat thing, where they had a reporter talk to people who were voting for the first time, and, with the election going on in the U.S., talk about things that happen when you vote for the first time.
1279 We were also thinking that, the day of the election and the day after the election, one way we may approach it is, instead of reporting on what the statistics are in Canada for the number of people that are going to show up at the polls, we would ask our pod listeners to tell us: Is today the first day you are going to vote? Are you going to vote tonight?
1280 We would put a poll up on the website, and they could go to "podfm.com" and vote, and they could tell us, "Yes, I am going to vote because...," or, "No, I am not going to vote because..."
1281 Then, the next day, instead of, again, just reporting the national story, we would report the pod story. We would tell the listeners: Thirty‑eight percent of pod listeners showed up to vote last night, and here is what you said.
1282 They would be able to blog about it. They would be able to call us from a polling station after they voted to tell us about the experience for the first time.
1283 It would be a credible news story, which would be managed by professional people in the station, but the voice would be from the people of the station, and it would be all about the people of the station.
1284 COMMISSIONER DUNCAN: Do you have radio stations appealing to this demographic in other centres? Do you have radio stations appealing to this demographic, not necessarily the same format, but in other markets?
1285 MR. SKI: Not really. We have one station in Edmonton, but it is actually older than this. The core audience for this station is much younger than the one in Edmonton and it is a different type of format.
1286 COMMISSIONER DUNCAN: Because this sounds like it would be quite labour intensive. Is there more staff here than you typically have on a radio station?
1287 MR. SKI: Well, there is. There is a few more people here than we would have on a normal CHR type radio station. I mean, every station is different, depending on the format.
1288 But a normal CHR contemporary hit radio station would probably have fewer people than we might have here and I think that is why we have tried to ensure that we have the ‑‑ we laboured long and hard on the cost to make sure that we had the right people. Obviously, the interactivity is a big part of it. But yes, it is going to be quite labour intensive.
1289 COMMISSIONER DUNCAN: I actually will have some questions a little later on about it when I get to the expense side, so that will probably ‑‑
1290 MS ADAM: I think just if I may add one thing please. It is going to be labour intensive, but that is what it is going to take. You know, radio has changed and the world has changed and in order to really speak to this demographic we can't just do it the way we used to do it.
1291 You know, we have to do it on so many different levels and, you know, they are watching TV, they are doing their homework, they are listening to music, they are texting, they are chatting, they are on Facebook. And, you know, we can't just say well let's just do it the way we have always done it.
1292 And also being a radio person ‑‑ labour intensive, but it is also going to be really fun. I mean, this is going to be a great, fun radio station to program. We will hire people that will love this station and will love to do this. And I think it could really be a great station.
1293 COMMISSIONER DUNCAN: I am sort of thinking in terms of business case, but we will come back to that then in a few minutes.
1294 So in your Talk to the pod program, the description that you included, you indicate that it will be hosted by a local London personality. So I am just wondering are they going to be paid or volunteer positions?
1295 MR. SKI: Commissioner Duncan, that is a paid position.
1296 COMMISSIONER DUNCAN: Paid position. So will it be just one personality or you will be bringing them in ‑‑
1297 MR. SKI: Well, I think it all depends. There is an ebb and flow of these kind of things. That person may do something else with the station, that person could be just a London personality that we have on some type of a retainer or some type of a contract basis.
1298 COMMISSIONER DUNCAN: I didn't explain myself clearly. So are you anticipating it will be more than one person or just a particular person?
1299 MR. SKI: No, it is essentially one host.
1300 COMMISSIONER DUNCAN: Okay.
1301 MR. SKI: I mean, there may be times depending on the content or the topic where it might be two people, but essentially one.
1302 COMMISSIONER DUNCAN: So you list a number of information and discussion topics appealing to youth that will be featured during this one‑hour talk show. But with respect to the balance of the week your spoken word programming appears to be largely unstructured and focused on surveillance material and impromptu talk segments between songs.
1303 So I am just wondering if you will offer any surveillance material in more structured fashion and during other periods of the week? For example, interstitials, public affairs programming, community event segments.
1304 MR. SKI: The short answer to that is yes, we will. Again, we have got to make sure that we connect with these people, so throughout the week we will be offering information about clubs, information about new music.
1305 Julie, do you want to expand on that a bit?
1306 MS ADAM: Sure. What we are thinking right now is we have broken out the spoken word in a couple of different ways, so we have pure news and then we are going to have traffic and weather.
1307 Some will be inside of newscasts, and I can give you the breakdowns if you like, but pod traffic would be 25 minutes a week, pure news is three hours and seven minutes, the weather within the news is going to be 13 minutes just over that, and then outside of the news we will do weather reports, that will be 63 minutes.
1308 And the weather, again, it is going to be credible weather, but the presentation will be different because it is essential that, you know, this is going to be a different presentation.
1309 Sports, we are going to do sports in a couple of ways within the news again, within a regular newscast which will account for 13 minutes and 40 seconds. We are going to do a local sports feature which ‑‑ the idea behind this is to not just talk about, you know, major league sporting events, but local London sports. That will be seven minutes a week and that will be its own feature that will run Monday to Sunday every morning at 8:20 and it will run about 60 seconds in length.
1310 Pod on the Street, which is club and concert listings in the community, what is going on, will account for 14 minutes twice a day ‑‑ 14 minutes a week and the feature will run twice a day. My pod 7 @ 7, which is the guest deejays hosting and is going to account for 13 minutes a week. You Power the pod, our 8:00 feature that we talked about, will be 14 minutes a week. Talk to pod, our talk show, will be 50 minutes a week.
1311 And then we will have some deejay talk. So the morning show, you know, the deejays are going to add colour and we anticipate that will be an hour a week. Other deejays outside of mornings will account for 65 minutes a week on weekdays and 24 minutes a week on the weekends.
1312 COMMISSIONER DUNCAN: So it sounds like you are going to have a lot of short clips, which I expect is what you want for that age group, short and snappy?
1313 MS ADAM: I think so.
1314 COMMISSIONER DUNCAN: Yes.
1315 MS ADAM: You know, in our program schedule we said that the news would be, for example, at 6:00 a.m. the news would run four minutes and 30 seconds in. You know, whether that runs as one whole package or maybe what we do is we do four one‑minute bits.
1316 You know, it is a quick piece of news delivered in a high energy reflective way and then it is a song and then the deejay comes on, and maybe we have a guest deejay on and then it's another piece of news. Because that tends to be, from the research that we have done and what we see from this age group, how they like it, they like it in short bursts.
1317 And with everything that we do on air we will then do ‑‑ our objective is to expand upon everything on the website. So if we do a one‑minute piece on the radio we will be able to say go to Podfm.com if you want to hear more on this story or the extended interview or the extended news piece.
1318 MR. SKI: I think too, Commissioner Duncan, when we looked at all of the research short‑form content is really the most successful type of content on the web right now and the most successful type of content with this particular demographic.
1319 COMMISSIONER DUNCAN: Thank you. Now, I want to talk about format diversity, and you have heard the earlier questions, so comparing your proposal to the two Corus stations, CFPL and CFHK. But also I wanted to ask your comments on your proposing a contemporary hit radio music format. And we just heard from the CTV people and they are proposing a modern rock hit I think they called it.
1320 And so I am just wondering how you feel that yours is an advantage or better suited to the market and brings diversity?
1321 MR. SKI: Certainly, I will begin and then ask Julie to add.
1322 I think a couple of things. When we did our research into the market, and maybe I will cover ‑‑ you mentioned the previous applicant and also some of the other stations that Corus has in the market, so I will try to cover all of those.
1323 When we set out to put together an application our approach to it normally is to have the experienced people like Julie and Chuck go into a market and look at that market and find out if there are any other opportunities for us or any types of opportunities. That is the first step. And based on their long history of knowledge we normally come up with what the opportunities may be.
1324 Secondly, we have others have a look at the market at the same time, that was Bohn & Associates. And then we do the actual primary research into the market. And we found a couple of things. We found that there was tuning outside of the market to what would be a contemporary hit radio station, which is a younger based station playing mostly current music.
1325 One of the other things that we also found though was that when we asked people if there was a radio station like this available the majority said there wasn't until you added ‑‑ and you mentioned the rock component ‑‑ until you added the rock component.
1326 And once you added the rock component to researching a particular format blend then other stations started to show up. Fifty per cent and 77 per cent I think were the numbers in the research if I can recall. And I think it was around 35 per cent for CHR. The majority of that was either out‑of‑market or Kitchener.
1327 So from that, we obviously decided to go down this path. That is one of the primary reasons that this particular station is different.
1328 Julie, would you like to add?
1329 MS ADAM: Sure. First off, the stations on the stations that are already in London, the difference between Podfm and those existing stations. I think there are three key areas. Number one, is they are primarily radio stations with a website.
1330 Podfm is going to be a radio station and a completely interactive experience that will include a very, you know, as we have said, an in‑depth website and an interactive capability where the listeners are going to participate in absolutely everything we do from shaping the playlist to providing content to interacting with our deejays.
1331 The second point is in new music. Podfm is going to play between 70 to 75 per cent new music. The station in London right now, that is the station that is playing the most new music, the highest percentage is the country station at 44 per cent. And we, you know, clearly we are not going to be anything like a country station.
1332 And then the final key difference to me is the target audience. I mean, we are going to be speaking to a youth demographic. And I have listened to those stations in London and they are very good stations and they are successful, but they are just not speaking to a young demographic. Their content and their music just doesn't reflect a young demographic.
1333 In terms of what the difference will be between Podfm and the other applicants, I think it is similar. I mean, we have committed to and we know that our playlist is going to be 70 to 75 per cent new music and I didn't see or hear that from the other applicants that I have heard today.
1334 We are definitely not leaning on the rock music side. And the video that I saw earlier today was excellent, but it really ‑‑ there were a lot of rock artists in that. We think rock music is well served in London, so we don't plan in going in that direction.
1335 Again, our demographic is going to be younger, it is going to be on the female side. And I know one of the other youth‑based stations is talking about having a secondary target of 18 to 49‑year‑olds and, to us, that is not youth‑based. I mean, it is not to say it is right or wrong, but it is very different from what we are doing.
1336 And I guess the last point that I would add is when it comes to shaping the playlist as long as you have a computer you can participate in picking songs for the radio station. So it is very accessible and it is open to anyone. We are going to do it in a number of ways where you can just go on the website and help shape the playlist and it will be very easy to do.
1337 COMMISSIONER DUNCAN: I want to just clarify, and actually in fairness to the CHUM people it was modern hit radio. But it seems to me because you are determining your playlist, what you are going to play based on your audience's feedback, you are both going to end up with the same result wouldn't you say? You are appealing to the same audience, you are just calling it slightly different names. Am I wrong in that?
1338 MR. SKI: No, I wouldn't say that. The difference is I think their audience composition was going to be 50/50 male/female, our audience composition is not. Our audience composition is predominantly female.
1339 COMMISSIONER DUNCAN: And if I can just ask you, so if you are starting out with the audience telling you what they want to hear, how are you going to control that? You are not really, are you?
1340 MR. SKI: Well, we have to and I think it is the umbrella within which the music is that ‑‑ now, for instance, if there are ‑‑ I guess when we do some of our music testing for other stations sometimes we will have people who get into those music tests who don't really listen to that kind of a radio station who are just ‑‑ well, they mess it up a little bit because they wouldn't listen and they are not part of that designated group.
1341 So what we have to make sure is that we are talking to the right people. So if someone does want to hear something that is more rock leaning and it is too far rock leaning, we probably wouldn't play that particular station, that is not where this station can be. And by and large what will happen is that many of the other stations are probably already playing those songs, so then it becomes a popularity contest to some degree.
1342 And if those songs are being exposed in the market already, then ‑‑ especially on the rock end because the rock end will do two things. It will lean the radio station more male and it will put us in a position where we are competing with the market incumbents. And we don't have to do that, there is such a large opportunity, such a large hole for this particular format that we want to make sure that we stay within the context of it.
1343 COMMISSIONER DUNCAN: Just so I understand, that is really the role then of your music director?
1344 MR. SKI: And the program director.
1345 COMMISSIONER DUNCAN: Yes.
1346 MR. SKI: Julie, do you have anything to add?
1347 MS ADAM: No. I guess the only thing I would add is I agree with Paul and he is 100 per cent right when he talks about music not getting played in the market. About 70 per cent of what we anticipate our list to be isn't getting played in London right now, so that is another key difference.
1348 COMMISSIONER DUNCAN: Is that different than what CHUM said though?
1349 MS ADAM: I am not sure what CHUM said, but it is different to what is happening in the market.
1350 UNIDENTIFIED FEMALE: Currently she's saying.
1351 MS ADAM: Currently, yes.
1352 COMMISSIONER DUNCAN: Okay, I take your point.
1353 Now, I noted that in your brief you also highlight that the 12 to 34‑year‑old population is expected to be 160,000 by 2012. And I am just wondering, because that is a significant audience, how many stations targeting this demographic do you think the market can support?
1354 MR. SKI: Commissioner Duncan, at the present time we probably think one for this particular demographic, especially if it is on the younger end of the scale. Again, this isn't going to be easy and embarking on this kind of project I don't think is for the faint of heart.
1355 I mean, it was developed through our research, our experience and something that came out of the format lab that we have established at Rogers to try to find new and interesting formats, because we have to do that, we have to keep reinvigorating ourselves and regenerating ourselves.
1356 So I think this type of a radio station we think probably only one at this point in time because there was a radio station of this nature before, they are not in the format anymore, there was a couple of them. And so it is going to take some time to build, going to take some time to build from an audience standpoint, some time to build from an advertiser‑based standpoint.
1357 So could there be one in the future? Possibly. Right now, in this economy, we think only one.
1358 COMMISSIONER DUNCAN: Those that you refer to that left the format, can I assume that they left the format because they didn't initially incorporate such an interactive component assuming they didn't ‑‑
1359 MR. SKI: I don't think they did. Although, I can't say exactly why they changed the format. But you change formats in some cases because new competitors come in, if you have a particular share of market and someone comes in, like a new sort of a market map comes in underneath you from a demographic standpoint or on top of you from a demographic standpoint and chip away and somebody comes in from either side, then you are in trouble, it leaves you with not very much left.
1360 So as a result, you may have to find another opportunity through nothing that you did other than you find it hard to compete because maybe you have got four new competitors who are not coming up against you with sort of a direct approach, but they are taking little pieces away. So that is one of the reasons that people change.
1361 I think the other is sometimes new formats are developed that offer a better business opportunity and that are maybe somewhat easier to monetize.
1362 COMMISSIONER DUNCAN: So the ones that you are referring to that got out of the format, were they specifically offering a format directed at this group, 15 to 34?
1363 MR. SKI: I believe they were.
1364 COMMISSIONER DUNCAN: Okay. Now, just turning to your CCD. The $70,000 annual commitment to MusiCan and it includes an administrative grant of $5,000. I am just wondering why you think that administration fee would qualify as an eligible CCD?
1365 MR. SKI: Susan.
1366 MS WHEELER: I actually hadn't really thought of it that way, but you are right. Certainly, our commitment would be the $70,000 and we would cover the administration fee.
1367 COMMISSIONER DUNCAN: Okay, thank you. I am wondering now, continuing on with the MusiCan program, how the funds will be allocated between the replacement of instruments and providing assistance to students.
1368 MS WHEELER: I believe they are one and the same. We will be providing assistance through the schools by providing them with those musical instruments and allowing them to continue their music programs.
1369 COMMISSIONER DUNCAN: Okay, so it is not funding that ‑‑ it is not two things, it is one thing?
1370 MS WHEELER: It is one thing.
1371 COMMISSIONER DUNCAN: Okay. And who is going to determine the criteria? Will Rogers be involved in that or will that be entirely up to MusiCan?
1372 MS WHEELER: For the MusiCounts program, yes, that will be entirely at the discretion of MusiCounts.
1373 COMMISSIONER DUNCAN: And then how do you monitor that? Will you have an annual reporting from these..?
1374 MS WHEELER: That is correct. We have requested that they provide us with an annual report so that we can see how our contributions have been used.
1375 COMMISSIONER DUNCAN: Okay. And switching now to FACTOR, I note in your comments that you said that you were going to ask them to reserve a substantial portion of the monies that you are contributing to the development of artists from the London area. And I just wondered if you had confirmation back from FACTOR?
1376 MS WHEELER: We actually indicated that we would work with FACTOR to see if that was possible. Certainly, the emerging artist program within FACTOR is a relatively new program. It is actually experiencing a few hiccups at this point because they currently don't have the benefit of a workable definition as to what really is an emerging artist.
1377 I am Rogers' representative on the FACTOR board, so it is basically our commitment to work with the board of directors to see if it is possible to be able to retarget or direct some of the emerging artist funding towards local markets where we have been given a licence.
1378 COMMISSIONER DUNCAN: Okay, thank you.
1379 Maybe, Mr. Ski, I could go back to you and just ask you how many new entrants, considering all the formats, do you think that the market could withstand?
1380 MR. SKI: Well, as we have said, launching new radio stations at this point in time is not for the faint of heart. And we think that the market may be able to sustain two new applicants, depending on again where they are positioned in the market, what particular demographic they actually go after. Again, as we said, we don't think that necessarily two contemporary hit radio stations or two contemporary radio stations that skew the younger end of the demographic would be necessarily a good thing to do, but we think possibly two.
1381 COMMISSIONER DUNCAN: Now, I am sure were here and heard CHUM's presentation and their great concern and it sounds like quite a burden that they have trying operate as an independent against the groups of stations that are in the market, clusters, the station clusters. And I am just wondering what your reaction to that is because you are asking to come in as an independent.
1382 MR. SKI: Yes. Well, I think what you have got in London is you have got three very large broadcasters at the present time; you have Corus, you have Astral and you have CTV‑CHUM. They have one radio station in the market and they have a television station in the market, so they are a formidable force.
1383 Also, their particular radio station is quite successful, it is in the top three in the 25 to 54 demographic. I wouldn't guess what their PBITs are, but for the market it is 28 per cent, which is a pretty good number. Normally, radio stations that are in the top three of any market perform even better than ‑‑ that is the market average, so if you are in the top three in the 35 to 54 demographic, normally you are producing more revenue and normally you are producing more profit.
1384 COMMISSIONER DUNCAN: So you don't mind to be in that position is what you are telling me?
1385 MR. SKI: No, we don't. I mean, we are ‑‑ again, we are here for the long haul. We think we add diversity to the market and we are really excited about this particular format. And I think the other thing here is that you can't bring this type of a format to every market.
1386 There are very few markets where you can do this right now because there is already a radio station that is, even if they aren't doing some of the things that we are doing, by their very nature they are dominating the younger demographic. So if they are bringing something new like this then it would be a difficult task.
1387 We don't think it will be as hard, we think it will take time to develop obviously, especially in this economy where we are seeing some headwinds and a bit of deceleration and that is why we are a little conservative in our cost structure. But, no, we are here, as I say, for the long haul, we have the resources and we think we are the ones to launch this type of a radio station.
1388 COMMISSIONER DUNCAN: Now, you must have nearby radio stations, do you? Are there any efficiencies built into your projections that capitalize on that or is this completely standalone?
1389 MR. SKI: No, it is completely standalone. The synergies that Rogers, as well as other larger companies are able to take advantage of are sort of really back office things to begin with. And also, as I mentioned earlier, when we embarked on preparing an application for London we are in a position where Julie with her experience and Chuck with his experience can go into the market and look at the market and look for what opportunities might be available.
1390 And by the same token, they could also help ‑‑ even though we have got a staff in London totally focused on this particular product, we have also got expertise that we have with Julie and Chuck and others in various aspects of the business who can also help. But both from a programming, from a sales standpoint, which are extremely important, especially now, and then the normal back office, finance, HR elements.
1391 COMMISSIONER DUNCAN: Okay, thank you. I notice that you mention that your radio stations have established local advisory boards. And I am wondering if you had planned to do that in this market?
1392 MR. SKI: I think our local advisory board for this particular application are all of the people who are going to be interconnected with the radio station. It is like having thousands of advisory boards and I guess ‑‑
1393 COMMISSIONER DUNCAN: A huge board of directors?
1394 MR. SKI: Yes, is what ‑‑ well, I hope not that.
‑‑‑ Laughter / Rires
1395 MR. SKI: But certainly, it is like having thousands of advisory boards that will help with this particular radio station. I think it takes it beyond the advisor boards, which I think is great and it gives us more feedback from more people.
1396 COMMISSIONER DUNCAN: Right, that is a good point, yes.
1397 You indicate that you will have 114 hours of live programming and six out‑of‑market. And I was just interested to know a little bit more about the out‑of‑market programs, six hours, sorry, of out‑of‑market programs.
1398 MR. SKI: Certainly. I will have Julie explain that. But it is essentially a placeholder to make sure that we can take advantage of any other programs that are or might be available for this particular demographic.
1399 MS ADAM: Thank you. We don't know exactly what we are going to do with that programming right now because, again, we need to get the station, we need to get in the market and talk to the audience.
1400 But there are a lot of terrific programs out there. And I think what we would like to do is MuchMusic has a countdown that is great, MTV has some programming, iTunes has some programming, Rogers has ‑‑ for our adult contemporary stations we have developed a program called Up Close and Personal where we get an artist to come in and play live in front of a studio audience. So obviously, the artist would be different, but there is that kind of programming that I think would be really great for London and for the London station to develop.
1401 So what we would like to do is ‑‑ it would be great to be able to grab snippets of these shows and put them up on the website and ask the listeners, hey, which of these do you like and are there others that you like that you would like us to bring to market?
1402 So we have just put that in there because we know there are some things we want to do, we are just not exactly sure what we want to do until we get that feedback.
1403 COMMISSIONER DUNCAN: All right, thank you. I notice you refer to automated or taped programming per week, 12 hours, automated or taped. Could you just elaborate for me what the difference would be?
1404 MS ADAM: Sure. Our plan would be for vacations or if somebody gets sick and we, you know, need somebody to voice track within the market. It is further to the discussion about the Tonight Show where it is sort of live‑to‑tape. So they would do the show in the market that day and it may run later on that night.
1405 MR. SKI: And I think the other aspect of that too, something that we have been experimenting with lately is bringing new people into radio. And I alluded to that, because without what happened to me many years ago I wouldn't probably be here today.
1406 But sometimes people aren't necessarily ready to go on the air live. And so what we have been trying to do now is to have them tape some of the segments before they go on the air so they can perfect their craft and provide something that is professional enough for our listeners, but do it in a way that gives them that opportunity rather than having them, as I did, practice in front of the mirror for a long time, not that it was TV, but it was a fun thing to do I guess.
1407 But I think what we are giving them now is an opportunity to get on the air than they might normally be on the air, because then you can have the program director, people like Julie, along side them listening to what they pre‑taped or voice tracked for that particular show, go over it with them and say, yes, if you change this, if you do this a little differently, then this is good enough to go to air. So it is a great way to train people.
1408 COMMISSIONER DUNCAN: Now, I wanted to talk about your financial projections, and so I am referring to the ones that came. And I see that my computer has a huge hiccup here, so I think I have a back‑up, just hold on a second.
1409 So these are the projections that came with your July 18 response. And you are not showing a positive PBIT until year seven, and even at that point you are only forecasting a PBIT of 4 per cent, which certainly doesn't look very appealing on the surface.
1410 And I notice that Evanov is projecting a positive PBIT in year three and CTV very close to break even in year four on the PBIT line. So I am just wondering ‑‑ and I looked at your expenses, I don't think that your expenses are off considerably from either of those two, so it seems to be on the revenue side.
1411 So I guess I am just trying to understand two things. Why that would be a very attractive ‑‑ oh, maybe three things ‑‑ why that would be a very attractive business case? If your revenues are in fact understated, how much you think they are understated; and the impact of the current downturn in the economy, because, of course, these would have been prepared and submitted before this recent downtown, so....
1412 MR. SKI: Certainly. I will try to cover those. I think there were three points, Commissioner Duncan.
1413 As I said from the beginning, we are in this for the long haul. And I will ask Lannie to comment on the sales aspect in a couple of seconds, but I think it was some time ago, and before we prepared these particular numbers, Ted Rogers was telling most of the people in the various divisions of Rogers that we were heading for difficult times. So take that into consideration whenever you are putting together any business plans or looking at investment because he had a concern.
1414 We took that into account when we did these. Also, we think that it's going to be a little bit more difficult. I think you saw in our plans that 50 percent of the revenue is coming from new advertisers, so it takes a while to build that, especially if you are not ‑‑ if you are not already a marketing company, it takes you a while longer. So, as we said, it's not for the faint of heart.
1415 But we are obviously seasoned broadcasters and we are ready to withstand the storm because we are here for the long term.
1416 But let me start out by having Lannie maybe just give you a little more in depth ‑‑
1417 COMMISSIONER DUNCAN: Maybe if I could make one comment just right there, because, I mean, you are certainly seasoned broadcasters, as you say, and getting the advertising sales you will certainly be able to get that up to speed very quickly, I would expect.
1418 MR. SKI: Well, it still takes time. As I say, I will have ‑‑ now, I ask the sales people that all the time ‑‑
‑‑‑ Laughter / Rires
1419 MR. SKI: ‑‑ but I also know that it does take time. And it takes a longer amount of time if you are not taking the revenue from other radio stations in the market, so if we went into a market with a radio station that targeted older, where advertisers in the 25 to 54 demographic, for instance, are already advertising on the radio, it makes a little bit easier. The sell is a little different. I guess you are taking advertisers who are already inclined to advertise on the radio.
1420 That's really not the case here. These people or the advertisers who we will be getting for this radio station are not, for the most part, currently advertising on existing radio stations. So it is a different type of sell.
1422 MS ATKINS: Thank you, Paul.
1423 When we took a look at our business plan, we are estimating about 80 percent of our revenue is coming from new advertisers or other media. So taking a look at a market like London, where it's not served by a CHR station right now, we have to repatriate those dollars back into the youth market.
1424 So it's not like we are going to get the dollars from another radio station, we have to go to the advertising community and say, "There's a CHR station in the market, let's talk about how we can put together some programs", and get them confident to advertise on this station and in this demo again.
1425 I worked with a CHR station, and launched one, and it was frustrating at the beginning because you are not going to existing advertisers and you are trying to show the value of what you have to offer. And people trying to reach a youth market want an unconventional way to get there, so it would take time.
1426 We are working with Oxy, which is an anti‑acne cream. It took about a year to get them onside to use radio. They had never used radio before. And once we had them on, they were there every year, but these clients take time to build.
1427 So to Paul's point, when you are coming into a market that's underserved from a programming point of view, it's also underserved from an advertising point of view. So as time goes on, you will see those revenues increase fairly quickly. After, you know, year three or four, it will really get cooking, but it does take some time to really start monetizing your market share.
1428 COMMISSIONER DUNCAN: I see you show 20 percent of your projected year to revenue coming from existing stations. CHUM made that point that was existing out‑of‑market stations, but in your case "existing" means just as it reads, from the ‑‑
1429 MS ATKINS: Existing from originating stations, yes.
1430 COMMISSIONER DUNCAN: Okay. In the market?
1431 MR. SKI: No. For instance, Kitchener ‑‑ I think Lannie has an example of the Kitchener station ‑‑
1432 MS ATKINS: Yes.
1433 MR. SKI: ‑‑ the closest station that's offering this type of format is in Kitchener ‑‑
1434 COMMISSIONER DUNCAN: Okay.
1435 MR. SKI: ‑‑ and so London advertisers are advertising on the station.
1437 MS ATKINS: There is one CHR station in Kitchener called The Beat, CKBT, and, for example, right now Maple Leaf Sports and Entertainment is doing an advertising and promotional campaign with them for an event that's taking place in London, which is a three‑on‑three basketball tournament put on with the Raptors. So the station from Kitchener is coming into London to broadcast this event because there isn't a CHR format that can accommodate that type of a campaign.
1438 So, you know, also with our CHR station being so targeted 12 to 34, the efficiency that the station will give advertisers will certainly bring some of the dollars back into that youth station that perhaps some of the older stations in the market have been getting it from default.
1439 COMMISSIONER DUNCAN: Now with respect to the downturn, I think I did read the article where it quoted Mr. Rogers as saying that he told his people 18 months ago to start preparing for this. So you would need to adjust your forecast downward, then?
1440 MR. SKI: No, we don't believe so.
1441 COMMISSIONER DUNCAN: Okay. Thanks.
1442 Now, I wanted to ask you about the alternative frequencies. And in your July 18th response, you indicated that there was one frequency that might be suitable, 91.1, but then you identified some problems and two possible corrective measures for those but neither was satisfactory, so I want to be very clear.
1443 Does this mean that you are not interested in a licence if you are not given the frequency you requested, 98.1?
1444 MR. SKI: No. We certainly think that licensing ‑‑
1445 COMMISSIONER DUNCAN: No, you are not interested?
1446 MR. SKI: I beg your pardon?
1447 COMMISSIONER DUNCAN: No, you are not.
1448 MR. SKI: No, that doesn't mean that.
1449 COMMISSIONER DUNCAN: Oh, okay.
1450 MR. SKI: Sorry. Yes, let me clear.
‑‑‑ Laughter / Rires
1451 MR. SKI: I should have answered, yes, differently before I....
1452 Anyway, we think that it's the best use of the frequency given our application. And also, 98.1 happens to be the same frequency that CHFI is on in Toronto, so there's always the possibility of some interference between those two stations mid‑ground.
1453 As it relates to other frequencies, there are a couple of others that, as we have said, will be difficult, quite frankly. If we are licensed, and we are licensed with 98.1 as the frequency, that would be great. If we are not and we have to find a frequency, could we find another one? We possibly could.
1454 We would have to figure out how to solve some of these other problems. The other problems can be solved either by looking beyond the basic computerized systems that the consulting engineers now use to find frequencies, and that's a pains‑taking approach and it's a very expensive approach. But do we do it? Of course.
1455 I mean, the Commission has licensed people previously with no frequencies. They have tried to find, obviously, alternate frequencies that they could use, and they have. It's not an easy process, but it can be done. It takes time and money.
1456 COMMISSIONER DUNCAN: Okay. I read your July 18th response as much more definite in the negative. All right, so then you are interested and it would be possible.
1457 So what impact, then, would it have on your projections? Like, do you expect that you would be able to find a frequency that would allow you to serve the whole market?
1458 MR. SKI: Well, yes, the majority of the market is I think what we have to try to serve. And what we would do as a first step in that process is figure out what part of the market we needed to serve. And when I say that we find out where the majority of 12 to 34 year old are, from a geographic standpoint. And that's the first step because just looking for a signal that serves an area where the majority of our audience is is obviously not helpful.
1459 So we don't necessarily have to serve the whole market, but we do have to serve the part of the market where our listeners happen to live. And that would be the first step.
1460 COMMISSIONER DUNCAN: All right, thank you.
1461 Oh, yes, we have a little discrepancy here in your calculation on your CCD for the...what is it, North by Northeast tour? The budget that we received, if you look at that, totals to $260,000 a year, but I think it's supposed to be $265,000, at least if you want to have the total $1.855 million.
1462 MS WHEELER: That's correct.
1463 COMMISSIONER DUNCAN: So will you give us a revised tally so we can see where the $35,000 a year fits?
1464 MS WHEELER: Yes, we will.
1465 COMMISSIONER DUNCAN: Okay.
1466 I'm just wondering, then. There's an admin item there, as well, $39,000, in that, per year. Do you see that?
1467 MS WHEELER: Yes, there's an administrative expense.
1468 COMMISSIONER DUNCAN: And so I guess that's the same question I asked before: how you feel that satisfies the eligibility criteria.
1469 Or if the Commission ‑‑ let me put it this way, too. If the Commission decides it doesn't ‑‑
1470 MS WHEELER: Right.
1471 COMMISSIONER DUNCAN: ‑‑ unless you want to justify how it does.
1472 MS WHEELER: Sure. I guess with this particular initiative, given the complexity involved in putting on an initiative of this nature, I think that we would see it as part and parcel of our contribution, because there is expertise being brought and support begin brought from the North by Northeast organization to these artists. They give them advice, they make sure they have the resources that they need to have a successful tour, so I do think that is part and parcel of the initiative.
1473 But certainly, should the Commission deem that it's not an eligible initiative, we would make sure that North by Northeast obviously has the resources it needs to execute the initiative.
1474 COMMISSIONER DUNCAN: All right.
1475 And so I'm assuming, then, that would apply to any of the other individual line items there if we decided they didn't meet the criteria?
1476 MS WHEELER: That's correct.
1477 COMMISSIONER DUNCAN: Can you just confirm that all of these moneys, the $265,000 a year, will be paid to independent third parties?
1478 MS WHEELER: Yes, absolutely.
1479 COMMISSIONER DUNCAN: All right, thank you.
1480 And with respect to Rogers' involvement with regards to the logistics of the tour, will you be involved or will that entirely be handled by North by Northeast?
1481 MS WHEELER: North by Northeast will be handling the administration, but certainly PodFM will be involved to the extent that it would want to promote and make sure that its audience is aware and has access to all of the content and information coming from the tour. So that will be the extent of our relationship.
1482 COMMISSIONER DUNCAN: Okay, but you won't be directing sort of the logistics ‑‑
1483 MS WHEELER: No.
1484 COMMISSIONER DUNCAN: ‑‑ they will be doing that, they will just keep you informed.
1485 MR. SKI: That's correct. And I think that the real value of this is not only the tour, which I think we have said that's where a lot of these artists make their money these days, not necessarily in producing the music, so it's important for us to ensure that they are promoted. And so the radio station will do that both on air and online.
1486 COMMISSIONER DUNCAN: So now will there be tickets sold by North by Northeast for these performances, and if there is an admission fee where will that money go? Or are these all free?
1487 MS WHEELER: I believe that way that it will work, and certainly Andy McLean, who is the executive director of North by Northeast will be here in Phase III to talk bit more about the Pod Road Tour initiative so he will certainly be able to answer most of these details, but my understanding of how it would work is that we would secure the spot at the venue for the band. If the establishment wanted to charge an overhead, then that would be separate and apart from how our funding is used, which is primarily for the support of the artists.
1488 COMMISSIONER DUNCAN: And as far as the eligibility criteria for the tour, will North by Northeast be determining that? You know, for example, will a country music group be eligible, because that's not consistent, I don't expect, with your formats?
1489 MS WHEELER: The artist will be drawn from the North by Northeast jury database, so these are already artists who have been selected by the North by Northeast Conference and they will be selecting artists from the London and surrounding areas.
1490 And in terms of the genres of music, I'm not exactly sure what criteria they will use to determine that, but I would expect that they would look at the artists that they have in their database and see who has the best potential for really resonating with the audience that PodFM is hoping to gain.
1491 COMMISSIONER DUNCAN: Okay.
1492 Now, with regards to your bank letter that you had provided, I was just curious because I noticed that your capital investment indicated in your application was $950,000, but the letter refers to a $9‑million line of credit available for this purpose. Is there something ‑‑
1493 MR. SKI: That may be in case things really get bad, but ‑‑
‑‑‑ Laughter / Rires
1494 COMMISSIONER DUNCAN: Who are really anticipating a downturn, right?
1495 MR. SKI: Well, again, we hope ‑‑
1496 COMMISSIONER DUNCAN: You took the message to heart.
1497 MR. SKI: Well, we hope not.
1498 Maybe I will get Sandra to respond to that.
1499 MS STASIUK: That would include all the start‑up costs and the operations over the seven‑year period. We looked at the total costs and that's what the bank letter covered off.
1500 COMMISSIONER DUNCAN: So that's the amount of money it's going to take you to operate until you turn into a positive cash flow, then?
1501 MS STASIUK: Yes.
1502 COMMISSIONER DUNCAN: Okay.
1503 All right. And you heard Vice‑Chairman Arpin's request for bank letter confirming the availability of the funds.
1504 MR. SKI: Yes.
1505 COMMISSIONER DUNCAN: Thank you.
1506 MR. SKI: We would be happy to provide that.
1507 COMMISSIONER DUNCAN: Now I have just a few more questions here, but, Michel, if you wanted to see if somebody else has anything after mine.
1508 THE SECRETARY: Sure.
1509 THE CHAIRPERSON: Commissioner Simpson.
1510 COMMISSIONER SIMPSON: Thank you.
1511 We heard today that to program to this audience, you know to this demographic, there has to be a very strong interrelationship between broadcasting and the use of the internet, that interrelationship. But what I find interesting is that yours was the only application that really started to hint at that relationship with the internet having a revenue play and I was wondering if you could tell us a bit more about it.
1512 You had indicated in your verbal presentation that,
"PodFM's online component will also give advertisers a higher degree of measurability and accountability when it comes to the media buzz, which will enhance radio's competitive position." (As read)
1513 I'm just wondering if you could tell me a bit more about that?
1514 MR. SKI: Certainly, and I will have Lannie give you some examples.
1515 But two things the online component does: it strengthens the power of the brand, obviously, that we have and extends that brand to another platform, and it gives us a chance, then, or it's another conduit to extend our brand on a local basis, but it also gives advertisers an opportunity, another opportunity, to reach this particular audience and it's something that's really challenging for them now.
1516 So we believe if we can put the two of those together then it will pack a more solid punch, I guess, is the best way to put it.
1518 MS ATKINS: Thank you, Paul.
1519 Certainly when advertisers are trying to reach this market they want to do it in a way that will make a strong impact on them, so they want to be a part of how they live their life. The internet is very much a part of that, so what we will do is we will integrate our on‑air campaigns with our online campaigns. We, really, instead of seeing them as two separate entities, will sell them as one entire unit with a client.
1520 And the value to a client is that they can actually measure through the internet what kind of results they are getting on any particular promotion that they are doing. So we could do a survey on the internet, tie it into an on‑air campaign, and they actually can see the results and they can measure what kind of response they are getting, and that's going to be very important, particularly when you are working with a youth‑based format.
1521 So that's how we see the two working hand‑in‑hand.
1522 COMMISSIONER SIMPSON: So, clearly, you are saying that you do have a revenue opportunity out of the internet. Is that correct?
1523 MS ATKINS: Yes, absolutely.
1524 COMMISSIONER SIMPSON: Is that built into your financials or is that an exception? How have you treated that?
1525 MS ATKINS: We have built it into the financial in both our advertising revenue and the separate web revenue. We have it in both. Because we will have some clients that will advertise exclusively on the web through the use of banners and just online, but primarily we drive the two together.
1526 COMMISSIONER SIMPSON: So here's the punch line: what percentage are you anticipating will come from the web? Do you have any idea at this point?
1527 MS ATKINS: Exclusively on the web, right now we are projecting around 8 percent.
1528 COMMISSIONER SIMPSON: Okay, thank you.
1529 THE CHAIRPERSON: Thank you very much.
1530 I'm asking the legal counsel if he has any questions.
1531 MR. McINTYRE: Thank you, Mr. Chair.
1532 One thing I just wanted to clarify is I think you agree that the number for the North by Northeast CCD initiative was $265,000. Would you be willing to accept that as a condition of license?
1533 MS WHEELER: Yes.
1534 MR. McINTYRE: Great.
1535 So in terms of undertakings, the first undertaking was to file financial projections, broken down to show web‑specific allocations as per Commissioner Duncan's request. When could you provide that information by?
1536 MR. SKI: I think we could provide that either today or, at the very latest, tomorrow.
1537 MR. McINTYRE: Okay.
1538 And I guess the other undertaking was to provide a revised budget for the North by Northeast CCD initiative.
1539 MS WHEELER: Yes, we can, and we will provide that by end of day tomorrow.
1540 MR. McINTYRE: Great.
1541 That's all. Thank you.
1542 THE CHAIRPERSON: Thank you very much.
1543 Thank you, Mr. Ski, and your group.
1544 We will take a 10‑minute break and reconvene at 5:15 for the last item of the day.
1545 MR. SKI: Thank you very much.
‑‑‑ Upon recessing at 1705 / Reprise à 1705
‑‑‑ Upon resuming at 1720 / Reprise à 1720
1546 THE CHAIRPERSON: Order, please. À l'ordre, s'il vous plaît.
1547 Madam Secretary, could you introduce the next item, please?
1548 ASSISTANT SECRETARY: Thank you, Mr. Chairman.
1549 We will now proceed with Item 5, which is an application by Evanov Communications Inc. on behalf of a corporation to be incorporated for a licence to operate an English‑language FM commercial radio programming undertaking in London.
1550 The new station would operate on frequency 98.1 MHz, Channel 251B1 with an average effective radiated power of 4000 W, maximum effective radiated power of 7000 W, with an effective height of antenna above average terrain of 106.6 m.
1551 Appearing for this applicant is Mr. Paul Evanov.
1552 Please introduce your colleagues and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
1553 MR. EVANOV: Thank you.
1554 Good afternoon, Chair, Commissioners, Commission staff.
1555 My name is Paul Evanov and I am Vice President of Evanov Communications Inc.
1556 With me here today are, on my right, Dan Barton, Program Director of our youth contemporary radio station in Halifax. Beside Dan is Ky Joseph, Vice President Sales. On my left is Carmela Laurignano, Vice President and Radio Group Manager. To her left is Ashley Greco and Scott Fox, two of our morning show co‑hosts at CIDC‑FM in the Toronto CMA.
1557 Behind me, on your left ‑‑ sorry, on my left and your right, is Sean Moreman, in‑house legal counsel. Beside Sean is Rob Malcolmson from Goodman's; and beside Rob is Chris Edelman, Regional Sales Manager.
1558 Also in the audience is Bill Evanov, our President and CEO of ECI.
1559 Evanov Communications is here today to propose a youth contemporary radio service for London, 98.1 The Beat of London.
1560 The ability to repatriate young people to commercial radio is vitally important to the success of the medium in the long run. ECI has marketed to the youth demographic for over 15 years, with both our top 40 dance station CIDC‑FM in the Toronto CMA and with our youth contemporary station in Halifax. Throughout that time ECI has not abandoned our format or our listeners, despite operating as a stand‑alone and highly competitive markets dominated by large broadcasters.
1561 Three applicants have identified a need for youth service in London. Understanding that need, we believe the question the Commission should answer during his hearing is not whether this is the right format to license, but who is best suited to serve the youth demo.
1562 We submit the answer is ECI, a broadcaster who has proven to be committed to both the format and to the youth audience.
1563 Overall radio listening among young people between the ages of 12 and 24 is declining faster than any other demographic. In 1993 this age group listened to radio on average of 24 1/2 hours per week. By spring 2008 tuning among 12 to 17‑year‑olds in London has dropped to just 8.8 hours per week on average.
1564 The London market reflects this national trend from 2004 to 2008 tuning in all age groups under 50 years old indexes at less than 90, meaning a decrease of 10 per cent in overall tuning. One of the biggest declines in London is shown in the 12 to 17 age group were the index is 83 or a 17 per cent drop.
1565 MS LAURIGNANO: Despite, or possibly causing this decline in youth tuning, the London market has a number of commercial stations five of which serve the 45‑plus demographic. Although there are two services that pose deficiency in each of the 12 to 17 and 18 to 24 demos, no single station effectively targets the 12 to 34‑year‑old listener.
1566 Looking at what is available in London, it became clear to us that a YCR format is needed to best serve the gap in the market and to reverse the downward trend. YCR is essentially a younger sibling of adult contemporary, with the primary difference being a lack of charts leading to less hit‑driven style of programming.
1567 Part of the YCR concept is being in tune with what is current in the market in the clubs and on the streets. The music selection provides a blend of musical genres such as urban, hip‑hop, R&B, dance, top 40, modern and alternative rock. This blend of music is not heard on any other radio stations in the market.
1568 Because of the assortment of musical styles, YCR also provides more variety in the artists that are played. This musical selection which will attract a younger demographic is also attractive to advertisers who are trying to market this under served but influential age group.
1569 MR. EDELMAN: There are three very different audience profiles we serve within the YCR audience, teens, 18‑24s and 25‑34s. Each demographic has very different spending habits.
1570 Teenagers have a lot of money to spend. Recent studies in the United States reveals that this age group had over $179 billion in spending power in 2006 and by virtue of being teenagers they can spend that money on stuff instead of mortgages, hydro bills and other utility costs.
1571 In addition to having money of their own to spend on consumable products, studies have shown that this demographic is extremely influential when it comes to a family purchase decision such as vacations and other large ticket items.
1572 Whereas teens spend their money on things such as entertainment, fast food, clothing, cosmetics, social activities, technologies, electronics and music, 18 to 24s spend on new categories influenced by their entrance into the job force, university and perhaps a first apartment.
1573 The transition into the next life stage of the 25 to 34 demo increases the advertising categories to first mortgages, automotive, higher‑priced technology and electronics, home accessories, wedding and baby categories, to name just a few.
1574 MS JOSEPH: Based on the demographics of London, the potential for youth spending is enormous. London is a relatively young city. Over 25 per cent of the population is between the ages of 15 and 34 and almost half of the population is under the age of 35. With no single radio station in the market fully serving half of the population, there has been no opportunity for advertisers to tap into this wealthy and influential market.