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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TELECOMMUNICATIONS COMMISSION
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
Various broadcasting applications /
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
Transcripts
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
Contents.
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Transcription
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Telecommunications Commission
Conseil de la radiodiffusion et des
télécommunications canadiennes
Transcript / Transcription
Various broadcasting applications /
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
Conseiller Juridique
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
PHASE I
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.
91 Correct?
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.
531 Dean.
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.
‑‑‑ Pause
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.