ARCHIVED - Transcript, Hearing 21 November 2011
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Volume 1, 21 November 2011
TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
Appearing phase to consider items 28, 29, 30 and 31 listed in Broadcasting Notice of Consultation CRTC 2011-427, 2011-427-1, 2011-427-2 and 2011-427-3
Huron Rooms I and II
The Village Conference Centre
242 Jozo Weider Boulevard
Blue Mountains, Ontario
21 November 2011
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.
Canadian Radio-television and Telecommunications Commission
Appearing phase to consider items 28, 29, 30 and 31 listed in Broadcasting Notice of Consultation CRTC 2011-427, 2011-427-1, 2011-427-2 and 2011-427-3
Véronique LehouxLegal Counsel
André JolyHearing Coordinator and Senior Radio Analyst
Huron Rooms I and II
The Village Conference Centre
242 Jozo Weider Boulevard
Blue Mountains, Ontario
21 November 2011
- iv -
TABLE OF CONTENTS
PAGE / PARA
1. Evanov Communications Inc., on behalf of a corporation to be incorporated5 / 32
2. MZ Media Inc.74 / 393
3. Frank Torres, on behalf of a corporation to be incorporated118 / 622
4. Bayshore Broadcasting Corporation166 / 896
3. Frank Torres, on behalf of a corporation to be incorporated213 / 1170
4. Bayshore Broadcasting Corporation222 / 1217
1. Bayshore Broadcasting Corporation233 / 1288
2. Frank Torres, on behalf of a corporation to be incorporated236 / 1310
3. MZ Media Inc.245 / 1360
4. Evanov Communications Inc., on behalf of a corporation to be incorporated258 / 1446
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PAGE / PARA
Undertaking26 / 130
Undertaking253 / 1405
Undertaking253 / 1409
Undertaking257 / 1436
Blue Mountains, Ontario
--- Upon commencing on Monday, November 21, 2011 at 0900
1 LA SECRÉTAIRE: À l'ordre, s'il vous plaît. Order, please.
2 THE CHAIRPERSON: Please take a seat and make yourselves comfortable.
3 Good day, ladies and gentlemen, and welcome to the appearing phase of the September 19, 2011 public hearing.
4 Allow me to introduce the members of the hearing panel:
5 - To my right is Candice Molnar, Regional Commissioner for Manitoba and Saskatchewan;
6 - To my left is Marc Patrone, National Commissioner;
7 - and I am Timothy Denton, National Commissioner at the CRTC. I will be presiding over this hearing.
8 The Commission team assisting us includes:
9 - André Joly, who is Hearing Coordinator and Senior Radio Analyst;
10 - Véronique Lehoux, Legal Counsel; and
11 - Cindy Ventura, who is the Hearing Secretary.
12 Please speak to Ms Ventura if you have any questions with regard to the hearing procedures.
13 At this hearing, we will be considering four applications for broadcasting licences to operate commercial FM radio stations in the Shelburne and Collingwood area.
14 Three of the four applicants are requesting a licence to operate on a frequency of 104.9 MHz, while the fourth wishes to operate on a frequency of 102.9 MHz. Of these four applications, two are for the Shelburne market and two for the Collingwood market. They will therefore be treated as competing applications for these two markets.
15 The panel will base its decision on several criteria, including the state of competition and the diversity of editorial voices in the market, as well as the quality of the applications. It will also look at the ability of the market to support new radio stations, the financial resources of each applicant, and proposed initiatives for the development of Canadian content.
16 I will now invite the Hearing Secretary, Cindy Ventura, to explain the procedures we will be following.
17 Over to you, Cindy.
18 THE SECRETARY: I would like to go over a few housekeeping matters, to ensure the proper conduct of the hearing.
19 When you are in the hearing room, we would ask that you please turn off your smartphones and beepers, as they are an unwelcome distraction, and they cause interference on the internal communications systems used by our translators. We would appreciate your cooperation in this regard throughout the hearing.
20 You can examine all the documents on the public record for this proceeding in the examination room, which is located in the Huron III. As indicated in the Agenda, the telephone number of the examination room is 705-443-5878.
21 Interpretation services will be available throughout the duration of the hearing. English interpretation is available on channel 1, and French interpretation on channel 2.
22 We would like to remind participants that during their oral presentations they should provide for a reasonable delay for the interpretation, while respecting their allocated presentation time.
23 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'interpretation anglais se trouve au canal 1, et l'interpretation français au canal 2.
24 There is a verbatim transcript of the hearing being taken by the court reporter sitting at the table to my left. If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break. Please note that the full transcript will be made available on the Commission's website shortly after the conclusion of the hearing.
25 Just a reminder that, pursuant to section 41 of the rules of practice and procedures, you must not submit evidence at the hearing unless it supports statements already on the public record. If you wish to introduce new evidence as an exception to this rule, you must ask permission of the panel of this hearing to do so.
26 Finally, please note that we will also be Tweeting the documents at @CRTCGCCA using the hashtag #CRTC or #BlueMountains, ou le mot clé #CRTC ou #BlueMountains.
27 And now, Mr. Chairman, we will begin Phase I, and Item 1 on the Agenda, which is an application by Evanov Communications Inc., on behalf of a corporation to be incorporated, for a broadcasting licence to operate an English-language commercial speciality FM-radio programming undertaking in Collingwood.
28 The new station would operate on frequency 102.9 MHz, channel 275B1, with an average effective radiated power of 1000 watts, maximum ERP of 2000 watts, with an effective height of antenna above average terrain of 266 metres.
29 Appearing for the Applicant is Mr. Bill Evanov.
30 Please introduce your colleagues, and then you will have 20 minutes for your presentation.
31 Thank you
32 MR. BILL EVANOV: Thank you.
33 Good Morning Commission Chair, Commissioners, Commission Staff, ladies and gentlemen, and welcome to the Town of Blue Mountains.
34 My name is Bill Evanov, President and CEO of Evanov Communications Inc. To my extreme right is Paul Evanov, Executive Vice President; next to him is Ky Joseph, our Vice-President of sales of our company; to my left is Carmela Laurignano, Vice-President, group Manager, and author of our application; and next to her is Duff Roman, our Manager of special projects.
35 Directly behind Duff is Chad Skinner, our in-house General Counsel; next to him is Michael Kilbride, our Vice-President of Finance; Gary Gamble, our Operations Manager; and our Program Director, Barry Stewart; and Andrée Wylie with Blakes.
36 In your notice, dated October 31st, 2011, you have asked us to appear before you to highlight what we consider to be the most important points of our application.
37 On the face of it, determining the merits of our application for the Nottawasaga Region looks complex, and any engineer map would show the reach of radio stations in Nottawasaga, and it would look like a very dizzying map. However, the complexity is more apparent than real. In fact, there are only two incumbents: CKCB-FM Collingwood, licensed to Corus, and CHGB-FM Wasaga Beach, licensed to Bayshore Broadcasting.
38 The rest originate -- the rest of the signals originate from markets as far as Owen Sound in the West and Barrie in the East. Corus and Bayshore own seven of the top stations that reach the Nottawasaga Region. It is hard to take seriously their companies' concern that licensing The Breeze would threaten their continued success, let alone their viability.
40 MS LAURIGNANO: No station is licensed for the Town of Blue Mountains and no station is licensed for Clearview Township.
41 Moreover, no station in the region offers the format proposed by Evanov. Furthermore, no station serves the demographic targeted by Evanov.
42 Evanov Communications has established itself as a leader in the Canadian radio industry and is proud to be one of the few independent broadcasters left in the country that is able to offer serious competition to the super-sized corporate giants dominating most radio markets.
43 One of you is already on record as acknowledging that Evanov has been able to make money serving small markets with entrenched competition. The Nottawasaga Region is just such a market. Our business focus is on building locally focused stations which are truly a part of their community.
44 The Breeze will be no exception.
45 MR. PAUL EVANOV: The application currently before you is for a new Specialty FM station to serve the Nottawasaga Region, with particular focus on the Town of Blue Mountains and Clearview Township.
46 The region, as displayed on the monitors, encompasses Blue Mountains, shown in Red, the Township of Clearview, shown in Yellow, the Town of Wasaga Beach, shown in Green, and Collingwood, shown in Blue.
47 According to the South Georgian Bay Cultural Map Project, full-time residents in the region are currently in excess of 50,000 and part-time residents add an additional 25,000 to the mix. The Project estimates these numbers to double over the next 25 years. The potential listenership for the region also includes the approximately 2 million vacationers and tourists which move through annually.
48 MR. KILBRIDE: It is our position that this market is capable of producing huge levels of advertising revenue beyond what is currently being captured by local incumbent stations. Our finding is based on research that includes data from the Financial Post estimates of retail sales in the region as well the application of the RMB formula to those retail sales to calculate potential radio revenues.
49 The Radio Marketing Bureau's widely accepted formula is based upon a percentage of retail sales in a market. Retail sales for the region are projected by the Financial Post to total $1.2 Billion in 2011. By applying the RMB formula we can see that radio advertising in the region should total about $4.7 million in 2011. That number increases to $6.8 million in 2016, given the projected growth assumptions calculated by The Financial Post.
50 MR. ROMAN: The Town of Blue Mountains was formed 14 years ago by an amalgamation of numerous smaller towns and hamlets. This amalgamation has lead Blue Mountains establishing its own unified identity and spirit. Blue Mountains has seen both economic and population growth at incredible levels, as new businesses and infrastructure set up in the area to take advantage of the majestic Blue Mountains Range.
51 According to the last published census from Statistics Canada, the town grew at a rate of 11.6 percent between 2001 and 2006 which is about double both the national and provincial growth rates. The multitude of tourists who also flock to the area to partake in the world class skiing and other recreational activities boost a year-round economy that is largely sales, service and recreation based.
52 The Town of Blue Mountains is at the centre of an area which is expected to continue to grow as established urban dwellers relocate or set up second homes and the tourism industry flourishes.
53 The Township of Clearview was also established by the amalgamation of a number of smaller towns and hamlets on January 1, 1994. Since that time, Clearview has implemented a development plan for substantial expansion that anticipates 5,000 new dwellings by 2031, reclassification of lands for commercial purposes and the introduction of new infrastructure in response to growth estimates which are close to 80 percent above current levels. The Township relies on a combination of agriculture, manufacturing and tourism to support its burgeoning economy.
54 The entire Nottawasaga Region has seen substantial growth since the licensing of CKCB-FM in 1965. The region's population has flourished from 22,000 to over 53,000 since that time. And yet it is only two of the four identified areas which have local radio services, Corus' CKCB-FM for Collingwood and Bayshore's CHGB-FM for Wasaga Beach. The Town of Blue Mountains and Clearview Township have no dedicated local radio service.
55 For an example of the massive growth and substantial changes seen in the area we have a picture of what the Blue Mountains range looked like at the time CKCB was licensed and then that is compared with the radically different landscape of today.
56 In fact, the entire region has evolved, but radio station licensing has not kept up. Smaller sized markets, in terms of population, such as Timmons, North Bay, Brandon and Grand Prairie, each support four commercial stations, some of which have demonstrated less robust economic growth than the Nottawasaga Region.
57 MR. GAMBLE: Our research of the Nottawasaga Region shows that there is a serious void in the market. The current incumbent stations are not serving the communities of Blue Mountains and Clearview Township, and are not serving the 40 plus demographic across the Nottawasaga Region. In fact, CKCB is often operated as a satellite station in a far reaching Corus cluster of three stations which centre on CHAY-FM in Barrie.
58 Until recently, Collingwood's CKCB provided only a live morning show with the balance of the day voice tracked out of Barrie. Further, it is our understanding that their Program Director, Promotion Manager, Sales Manager, News Director and news staff are all working remotely on CKCB from their Barrie base. While operating synergies within a cluster are expected and desirable, relegating an originating service to less than a truly local radio station may benefit the bottom line, but has some listeners feeling disenfranchised and dissatisfied.
59 Similarly, Bayshore's CHGB in Wasaga Beach, which is licensed for that specific market, is operating as part of a Bayshore cluster of stations based in Owen Sound.
60 MR. ROMAN: Neither Bayshore nor Corus are new to this market and together operate five additional out-of-market stations which spill into the Nottawasaga Region while they actively solicit advertising dollars without providing a local dedicated service to these same communities, the Town of Blue Mountains and Clearview Township.
61 Along with the population growth projected for the Region, there is an expectation of a shift in demographics as the populations age and the concentration in the 45 years and older segment increases. Evidence of this trend can clearly be seen in the census data from 2006 which shows that the median age of the population in these areas is increasing above the national average of 39.4 years.
62 In 2006 the median age in the Town of Blue Mountains was 50.6, Clearview Township registered at 41.2, Wasaga Beach had an average age of 48.8 and Collingwood was also above average at 44.4 years.
63 Respondents of our Consumer Demand Survey, conducted by Strategic Inc., in our target demo, indicated that they are currently spending the majority of their hours with spill stations. Almost 75 percent of them indicated that they would listen to The Breeze if it were licensed. Absence of programming appealing to the largest portion of the region's population, suggests The Breeze would quickly find popularity here.
64 As a result of these findings our programmers created an all new Easy Listening format called "The Breeze". This format features a unique blend of genres including "Soft Pop, Folk, Light Jazz, Blues, World Beat, Instrumental and Standards." This easy listening format offers a brand new sound that fills a musical void and caters to the needs of the area's mature and sophisticated boomer audience.
65 All we need is a frequency to bring The Breeze to these listeners.
66 MR. STEWART: The programming choice will serve the needs of the disenfranchised listener in the Region by diversifying the genres of music they can listen to and expanding the artists and songs they can access. The station will introduce a host of music, styles and even re-introduce familiar artists. Performers like Rod Stewart, usually heard on Classic Rock stations will now be heard on "The Breeze," but with American Songbook recordings. Repertoires from other artists also have created "standards" that would be featured including Carly Simon, Cyndi Lauper, Bette Midler and Anne Murray.
67 You will hear great Canadian story tellers such as Valdy, Ronnie Hawkins, Gordon Lightfoot, Ian Tyson and Marc Jordan. There will be light jazz artists like Diana Krall, Matt Dusk, and Michael Buble and light pop artists like Sarah McLachlan, Josh Groban, James Taylor and k.d. lang.
68 Mixed into this sound will be classic performers like Louis Armstrong, Frank Sinatra, Tony Bennett and modern Crooners like Michael Bolton, Norah Jones and Harry Connick Jr.
69 Instrumental music will be played. It is one of Canada's best selling, yet least broadcast music genres. Through The Canadian Catalogue of Instrumental Music, a project originated and funded by Evanov, many instrumental recordings by artists and composers who are typically thought of as only creating vocal performances have been uncovered. Most of these are original works that have found an audience through the internet. "The Breeze" will showcase these artists and bring their works to a broader audience.
70 The sound is new; the feel is easy and the variety extensive.
71 MR. ROMAN: Of course, as a local station, The Breeze will offer substantial and meaningful spoken word programming. Research from our demand study clearly indicated that the top programming elements are updates on news and weather, information on local community events and road reports. The Breeze will provide over 18 hours of spoken word content throughout the broadcast week with 50 percent of our local news content focusing on Blue Mountains and Clearview Township. Surveillance will be conducted on a rolling basis throughout the day with traffic reports, weather conditions, sports and local information.
72 The Breeze will also incorporate a series of targeted features for our demographic, including Healthwatch, Community Calendar, movie and book reviews and seasonal ski and marine reports. All of our 126 hours of programming will be locally produced and will be live-to-air at all times except for 9:00 p.m. to midnight which will be voice-tracked. There will be no automated programming at The Breeze.
73 MS JOSEPH: It is our respectful submission that The Breeze would have the greatest positive impact on this currently underdeveloped radio market, yet would also have the smallest negative impact on incumbent stations. Although it is likely that some of our revenues will come from the two incumbents, our plan is premised on getting the bulk of our revenues by bringing brand new dollars to the broadcasting industry. We will find businesses who are not yet advertising on radio or in the market. We will offer a quality and reliable alternative to other media formats. We will help local advertisers and their budgets grow with The Breeze and we will repatriate advertising dollars to their rightful market.
74 We have an overall company strategy and corporate philosophy which directs all sales staff to develop and focus on earning advertising business from local retailers. Instead of simply chasing national dollars, we place our focus within the community we are serving and give proper and affordable representation to local retailers and service providers. Our non-traditional model will make The Breeze a great success and will bring a huge boost to the broadcast industry by targeting new revenue sources and new listeners to radio who will stay tuned longer.
75 Here in the Nottawasaga Region, we have discussed our advertising plans with numerous business owners and have received nothing but enthusiasm for the opportunities this service would provide. Proof of this support can be found in the more than 120 letters we received from local businesses that were interested in taking advantage of advertising on The Breeze.
76 Local advertisers have made it clear that they are strongly interested in capturing the rapidly growing, mature resident and tourist market of the Nottawasaga Region, but are frustrated by the lack of a targeted forum for reaching this community. Currently, such advertisers are forced to buy promotional space in a variety of media formats in order to catch the attention of this demographic.
77 Beyond the Financial Post projections and RMB Formula application discussed earlier, further proof that the area could easily sustain a new radio service was found through the advertising study conducted as part of our application. The study was conducted in the Town of Blue Mountains, Clearview Township and in Collingwood where respondents were asked about their current advertising levels, preferred media formats and thoughts on taking advantage of our proposed station. The data collected during this survey revealed that advertisers weren't satisfied with radio as a means to bring in clients and instead the number one advertising choice was the yellow pages, at 84.4 percent, followed by the internet, at 75.6 percent, and local newspapers at 62.2 percent.
78 Without being prompted, advertisers stated that out-of-market options were too expensive and local stations did not broadcast in the format and to the audience they are seeking to target. The vast majority interested in taking advantage of The Breeze indicated they would redirect some of their budget from other media outlets, while others stated they would actually increase their advertising budgets to make use of the service.
79 Finally, the majority believe that the proposed format of The Breeze would be a good fit for the Town of Blue Mountains, Clearview Township and Collingwood.
80 MS LAURIGNANO: As with all other Evanov Stations, The Breeze will be committed to fostering the development of Canadian content, from emerging talent to rising stars, by pledging funds to a variety of groups and events throughout the Nottawasaga Region. As part of our application we have offered a total pledge amount of $700,000, over the licence term, which we would be more than happy to accept as a condition of licence. Virtually all of this amount, $693,000 or 99 percent of the total pledge amount, is an over and above contribution that we would like to spread across numerous initiatives in the areas of education, cultural activities and direct payments to artists.
81 It would be a great source of pride for The Breeze to support the already bustling local music scene across the Town of Blue Mountains, Clearview Township and the region. Our support would be divided amongst initiatives including the Elvis Festival, the Music Festival, the Georgian Bay Big Band Festival, and the Georgian Bay Summer Folk Festival.
82 We would also support Canadian Content Development on a national level by contributing to Canadian Music Week and the Aboriginal Media Education Fund.
83 It should be noted that we would be the only broadcaster in this region offering over-and-above CCD contributions.
84 MR. BILL EVANOV: It is our respectful submission that The Breeze is truly the best option for the proposed frequency for the following reasons:
85 One, it is a new, dedicated, local service to serve the Town of Blue Mountains and Clearview Township.
86 Two, it is a service to an underserved demographic, with music and spoken word that appeals to a mature audience.
87 It is a format not currently available in the region.
88 It will be a specialty licence, which, in itself, guarantees diversity.
89 It will add a new, independent, editorial voice to the region.
90 We will bring new revenues to radio in this market.
91 We will invest the substantial amount of $700,000 in CCD initiatives.
92 The Breeze will bring an experienced broadcaster to the region, which also adds diversity in itself.
93 Our service will provide 126 hours of local programming.
94 And, The Breeze will truly be a breath of fresh air for the Nottawasaga region.
95 Thank you. We are ready to take your questions.
96 THE CHAIRPERSON: Thank you very much. That was a nice, informative, well-organized presentation, and now I will try to give you some nice, well-organized questions.
97 As I hear you talk, you are basically aiming for an older demographic, with a mix of music that would appeal to that group, with advertising targeted to the township and the local region.
98 MR. BILL EVANOV: Yes, that's correct.
99 THE CHAIRPERSON: As I am sure you are aware, Bayshore has submitted an intervention, which raised several points about your application, so let's talk about that.
100 One of the points that Bayshore brought up is that you are trying to recreate a Jewel-style radio format similar to that of your Ottawa and Toronto stations. They argue that there could be as much as 50 percent artist and song duplication with their Wasaga Beach station, if you were to adopt The Jewel-style format for your Collingwood station.
101 So, two questions. Could you please comment on the level of musical duplication between your proposed station and that of Bayshore's Wasaga Beach station?
102 MR. BILL EVANOV: Yes, I will begin, and then I will ask our programming people to give you the details.
103 We are going after an older demographic. I think our core audience would be 45-plus. But based on the numbers that you saw on the screen a few minutes ago, the medium age in this market is extremely high. The national average is 39 percent, and here we are at 50 percent in Blue Mountains, et cetera -- in all of the communities here.
104 As an example, there is Barrie at 35, well below the national average, and Barrie is just down the road.
105 We are creating a specific format here, and as I said in my speech, the fact that it's a specialty music station with 30 percent Category 3 -- and we would draw music from subcategories 31, 32, 33 and 34 -- means that it is impossible to sound like The Jewel.
106 Yes, there might be elements in The Jewel that will be similar to some of the elements we carry on this station, but this station will be a blend of music, of Category 3 or specialty music, woven in with the Category 2 easy-listening format, which will give it a very different sound.
107 We examined the playlist and we monitored the Bayshore station, and we see very, very little duplication in terms of spins throughout the week. But I would ask my programming people to respond to that.
108 MR. STEWART: The difference nowadays between Hot AC and AC in the last year has changed considerably. AC isn't what it used to be, and Hot AC definitely isn't what it used to be.
109 All of these types of formats have now moved forward into more of a Top 40 adult-type format, where they are repeating songs more, sometimes up to 50 times a week, playing current music more often. We, definitely, will not be doing that.
110 We are strictly -- for a better term, we are an older station, for an older audience that is looking for a timeless, mature sound that is going to feature artists that you don't hear anywhere.
111 You don't hear Frank Sinatra any more. You don't hear Englebert Humperdinck. You barely hear many types of artists that were on the AC radio, maybe, five years ago.
112 We are going to introduce the fact that we will not repeat a song more than 20 times in a week.
113 We will feature new artists, like Michael Buble and Diana Krall, with their new material on the jazz side.
114 We will bring back artists like Neil Diamond and Michael Bolton, all of the artists that radio has forgotten about, feeling that they no longer are needed or that people are not interested in them. These people wrote hit records and sold millions of records, and all of a sudden they are no longer on the radio.
115 There is a reason for these people selling all of these records. This audience actually liked them. They liked going to their concerts. They liked buying those songs. They like to hear them, and they are no longer on the radio.
116 So that is what we will be bringing back.
117 MS LAURIGNANO: If I could add to that, something about the concern sounding like The Jewel is overstated. For one thing, the format that Bayshore is doing right now for Wasaga Beach is totally separate from The Jewel. Theirs is an AC format that is skewed younger. It is more toward the middle demographic, whereas The Jewel skews and attracts an older audience.
118 So even on a comparative basis, one-to-one, they are dissimilar in terms of format and in terms of their content.
119 The other thing is, as we said, just by the nature of the licence itself, we will play Category 3 music at a rate of no less than 30 percent throughout the schedule, and that, by itself, will automatically distinguish one service from the other. It's impossible to have two stations sound alike with that distinctive difference, as a matter of condition of licence, sound the same.
120 Thirdly, I would like to say that we have looked at the maps that -- I had the engineer look at the maps where Wasaga's contours fall, and their technical parameters --
121 THE CHAIRPERSON: Which map would you like us to look at?
122 MS LAURIGNANO: You don't have it. I would be very happy to provide it. It is something that our engineers did for us internally.
123 Actually, Jim Moltner, our P.Eng, looked at the 3 millivolt and the .5 millivolt of the authorized contours of Bayshore and, technically, their parameters do not extend beyond Wasaga Beach.
124 So the concerns that Bayshore raises from issues that could arise out of the Town of Blue Mountains, or even parts of Clearview, are clearly out of their licensed markets.
125 We believe that they are overstated and grossly unfounded.
126 THE CHAIRPERSON: You presented that as Item F in your presentation, right?
127 You are talking about this.
128 MS LAURIGNANO: That is part of it, yes.
129 THE CHAIRPERSON: If you feel that it would be better to put what you are talking about on the record, that would be gratefully received.
130 MS LAURIGNANO: I will be sure to give copies to the Hearing Secretary as soon as we are finished, so you will have them.
131 THE CHAIRPERSON: Good idea.
132 MR. GAMBLE: If I could add a comment in response to your question about playlists and comparisons, Barry mentioned some of the artists that we play, and how the sound is a lighter blend of softer artists from, let's say, yesterday and today.
133 We did an analysis, for example, of Bayshore, and their sound is more of a hotter AC, more of current and classical rock sort of thrown in together.
134 Some of the artists, for example, that we would not play would be Lady Gaga, Katy Perry, Whitesnake, and Nickelback, just to name a few. There is a distinct difference between the total overall sound, the blend of our music, as compared to Bayshore, for example, which is more of a hotter, upbeat-type sound. Ours is a lighter sound, with lighter-sounding artists.
135 THE CHAIRPERSON: Then, just to allow you one more kick at this particular can, go over the reasons you feel that your proposed format would bring musical diversity to the Collingwood market and, more specifically, in terms of what is currently being offered by other radio stations.
136 Do you feel that question has been answered?
137 MR. BILL EVANOV: I think we will reinforce it or bring a new element to it.
138 Again, when we looked at the market, we looked at the demographics, and it was very clear that there was an older demographic here.
139 And, as we tuned into both the Collingwood station and the Wasaga Beach station, we thought: How can this possibly serve an audience where the core is 45-plus?
140 It just made no sense.
141 And you are aware that most stations across the country are forever targeting younger, younger, younger, at the expense of programming to older. That has been a trend that has been going on for 30 years.
142 But in this particular case, there was a real disconnect between the music they were playing and the bulk of the population, which, when we did our research, showed that virtually 50 percent of the population in the area was almost 50 years of age and over, but the music being played would be for someone in the age group of 25 to 35, in most cases.
143 So there was a disconnect, and then, when we did our survey, we talked to people and we found out ourselves, before we commissioned the research, that they were not happy with the music choices in the area. Many had gone to CDs or to other forms of entertainment, or whatever, and our cause was to bring them back to radio, if we could establish a radio station.
144 So then we commissioned the research with Strategic Inc. They interviewed 500 people and the 500 people, the results of that survey were that the people even there in the 35-plus demo, 71 percent would listen to this new station if it were licensed because of the type of music it was going to bring into the market that was brand new.
145 So if the music is brand new coming into the market, it's unlikely we are duplicating any station here. As a matter of fact, we are not. I have -- since we drove up here we have listened to 97.7 which is The Beach and there is no resemblance to it and The Jewel whatsoever. And again as Carmela said, we are not bringing The Jewel format here. We are bringing a Category 2 format plus 30 percent Category 3 with sub-genres of light jazz, light classical, folk.
146 You know, another reason for this is we looked at the area, not just the population but this area hosts major music festivals like a big band festival, like how many markets have a big band festival? Very few.
147 They have a jazz festival annually here. They have -- one of the biggest folk festivals in the country takes place here, even bigger than some of the ones in my new home called Manitoba. But we were really shocked to hear this.
148 So these are the elements that will be blended throughout the music and these are elements that are not played in any regular way by any of the incumbents. So what we offer is brand new and totally, totally unduplicated.
149 MS LAURIGNANO: Right. Just three of the points -- one is that by virtue of the type of licence that we are seeking, diversity is ensured.
150 It's a commercial Category 2 station versus a specialty station by condition again to play that diversity of music, the Category 3 and the sub-genres which will make it distinct.
151 Number two we call it an easy listening format. An AC format that Bayshore is doing now and a Hot AC that Corus is doing that are very much different and opposed to an easy listening format, in that an A/C will -- and those two other stations are attracting or are targeting and 18 to 54. Our target is 45-plus in markets where the population is skewed older, as we have shown with the median age being at a certain level in this region here.
152 And specifically I mean, right there, like the Town of Blue Mountains where we are right now, right now the median age is 50.6 whereas the national average is 39.
153 So clearly, a lot of people -- and it's not just our guess. We did -- commissioned the research. A lot of people within that age group do not feel that they are being served, not to say that -- you know the other broadcasters are doing a great job serving their demo and serving those formats.
154 But there is clearly enough room in here to bring diversity both in terms of musical format and in terms of options for people, including those people who are 45-plus who feel they don't have an option.
155 THE CHAIRPERSON: Thank you. I am going to consider that area well covered and well answered.
156 Do you foresee any administrative or programming synergies between the proposed station and any of your other radio properties? And if so, could you please elaborate on the types of synergies you expect to realize?
157 MR. BILL EVANOV: Okay, I will ask Mike Kilbride, our VP Finance, to answer that.
158 THE CHAIRPERSON: Don't worry if there are none. It's just a question if there are some --
159 MR. BILL EVANOV: There is a few, and there should be.
160 THE CHAIRPERSON: Okay.
161 MR. KILBRIDE: Yeah, there is a number of financial synergies as a consequence of being so closely -- The Breeze would be. The proximity is a couple of hours north of our head office in Toronto. It's a consequence of a lot of IT support will be offered through our head office.
162 Our engineering team at the head office would also support this station except possibly on an emergency basis.
163 There are certain synergies we realize in terms of web streaming and that. Web streaming costs have an initial hit to get you some bandwidth but the marginal cost of bandwidth is nominal.
164 In addition, all traffic would be provided -- traffic services out of head office. Our traffic is now centralized for virtually all stations across the country.
165 And all accounting administrative services, with the possible exception of depositing cheques, would be provided again out of head office.
166 So those are financial synergies. Those are savings, cost savings that are reflected in the projections.
167 In addition to that we would have synergies that are less cost-directed but synergies in terms of ideas and experiences generated through, you know, a wealth of programming experience and that exists at head office.
168 I'm not sure if Gary would want to speak to other synergies we would realize from a programming point of view.
169 MR. GAMBLE: All of the programming staff, announce staff, are all local. They are all within the local area of the radio station whether that's -- the news department is totally gathering news on a local basis. The announcers are local, the program director and music director are all local to the station at The Breeze in Blue Mountains.
170 MS LAURIGNANO: There would be some other synergies in terms of resources that are available with the company. We have just been approved as you know to acquire two stations from Newcap in Winnipeg, one of which is a specialty station.
171 So there is music by The Breeze and that sort of thing that can be shared and pooled for the local programmers to access. That would be put out there for them.
172 MR. BILL EVANOV: But from a programming point of view and a news point of view, everything is produced here locally.
173 MS LAURIGNANO: We have 18 people that we are going to have.
174 MR. BILL EVANOV: As a matter of fact, we have 18 people we are going to hire locally who will run and operate the station.
175 There is no way we would ever dream of running this from a satellite office, you know, an hour away, two hours away, three hours away which is currently being done in the market.
176 THE CHAIRPERSON: Thank you.
177 Moving the topic along to the question of diversity of voices, in our regulatory policy of the CRTC 2008-4 the Commission noted that the concept of diversity in the Canadian broadcasting system should be approached at three distinct levels, diversity of developments, plurality of editorial voices within the private element and diversity of programming.
178 Could you please comment on how the proposed new station will provide diversity to the Shelburne market particularly with respect to a plurality of editorial voices and a diversity of programming?
179 MR. BILL EVANOV: I am sorry, you said Shelburne?
180 THE CHAIRPERSON: Excuse me, sorry, Collingwood -- so diversity to the Collingwood market particularly with respect to a plurality of editorial voices and diversity of programming.
181 MR. BILL EVANOV: Well, okay I will start, and then maybe Carmella can jump in.
182 Okay. Our commitment is that we will do 50 percent local news and 50 percent of that news will be totally, totally dedicated to the Town of Blue Mountains and the Township of Clearwater (sic).
183 The other 50 percent will be news items from throughout the entire Nottawasaga area because they affect the lives of everybody working here, and of the 37 percent of the workforce, for example, in Collingwood come from outside of Collingwood.
184 I know that 19 percent of the workforce that live in Collingwood travel to other parts of Nottawasaga. So nothing is an island unto itself totally.
185 So in other words we will do local news that will cover the region, but 50 percent of that news will be totally for the Town of Blue Mountain and the Township of Clearview.
186 MS LAURIGNANO: Well, in terms of adding to the market that definitely we would offer the diversity of ownership in that there would be an introduction of a new operator in the area here and then in an area that has the two incumbents.
187 But those two incumbents, as we saw before, also have external influence because of their concentration of ownership on either side of this area here, whether through Barrie, Orillia or Owen Sound. There is that. So there will be a new voice that will be an option within that.
188 In terms of diversity the format, as we said before, is quite diverse from anything else there. The programming choice, in adding to the plurality of choice we have spoken quite a bit about the music diversity but there is also a very important part which rated -- scored very, very high among the desirable elements of the program and that is the spoken word program. We were offering over six hours a week of pure news. There is surveillance and traffic of course.
189 But, beyond that, there is quite a lot to the balance of the talk which brings us to over 18 hours a week. It consists of special features like lifestyle information, business news, things that are important both to -- features that are important both to the demographic and to the area which are not currently available right now and which really don't fit like an AC format. You wouldn't have an agriculture report, you know, in the middle of Rihanna or, you know, something like that, a song.
190 So it's quite a choice. There is very specific things that are of importance to this community whereas a Hot AC station you know may be interested in news that are skewed about entertainment, you know, that kind of thing.
191 A lot of us who are 45-plus, and I'm happy to include myself in that, I think we are interested in other things, you know, such as health issues, financial, retirement and other things.
192 So it will be very desirable and we believe a successful formula to attract the listeners who are looking for that thing there.
193 And just to add to it, we know and you know that ours too are down. That's also a concern and should be a concern to us, especially in this demographic where they grew up with radio, where radio is a medium that, you know, was familiar there. We are not giving those people a chance to tune into radio because that programming choice is not there.
194 THE CHAIRPERSON: Thank you. That is asked and answered.
195 Now, finally, the question of -- well, put it this way, that you have indicated that you believe that only about 10 percent of your revenues would be gained at the expense of other local stations and that you have also indicated that you intend to generate something in the nature of $424,000 of new ad revenues.
196 I want you to speak to this question of gaining new revenue, and tell us where it's going to come from, and how you're going to get it.
197 MR. BILL EVANOV: Okay, I'll ask Ky in a moment; I'll just open up.
198 As we've said, the market we're targeting is an older market, and the core would be 45-plus. In every market and every city there are businesses that cater and sell product to particular demographics. Granted, the food store sells to everyone, but even in the food store, it gets separated between who buys the potato chips and who buys more health-conscious products, et cetera.
199 As we get older, and as we age, we start thinking health-wise. When we're younger, life is forever.
200 So it's really up to the retailer to decide who he wants to go after. So we have a situation in this market, the Nottawasaga market overall, where you have two stations that a have a sound that's a bit young, and therefore where does the person who wants to reach the older person, where does he turn to to advertise?
201 And unfortunately, it's been not radio, but another media, print. That's the market. There is a large level of businesses that really want to target that market, but I'll let Ky pick it up from here.
202 MS JOSEPH: Once we analyzed the enormous retail opportunity, you'll know that per capita spend index is at 188 percent, the national average, that's one of the highest in the country --
203 THE CHAIRPERSON: I'm sorry, could you just say that sentence again? I'm just missed --
204 MS JOSEPH: Yes.
205 Per capita retail spend index is at 188 percent -- at 188, I should say.
206 THE CHAIRPERSON: Okay.
207 MS JOSEPH: Yes, one of the highest in the country, retail sales.
208 So this brought us to commissioning an advertising study with Strategic Inc., and followed by that, we also conducted our own in-market advertising study that took us through over 200 local businesses in the Nottawasaga region. It was interesting to us and we were excited to get 123 filed positive interventions on our behalf from those retailers.
209 So let's start with the largest portion of our revenue projections, which is $425,000 coming from a cross-section of new local business development and advertising dollars placed within the market, not flowing out of the market.
210 As Bill mentioned, 50 percent of the population being almost 50 years old, aren't being served by local radio stations. And by comparison, through our research study with the local businesses, the same large percentage of businesses don't use local radio to target their core consumer, because they can't.
211 The retailers' main reasons for supporting our application were:
212 - To have an affordable, targeted advertising vehicle to reach the 45-plus consumer;
213 - The local station delivers a younger demo, not conducive to their market; and
214 - The out-of-market stations are expensive, don't reflect the local community, and promote competing businesses out of the market.
215 Geographically, the support letters that we received came from -- they were really spread across the region. You have a copy of all of those, but these include Clearview Township, so it includes, Stayner, Nottawa, and Creemore, and Blue Mountain's Craigleith, Clarksburg, Flesherton, Thornbury, Ravenna and The Village at Blue. So these letters came from a cross-section of all of these geographic areas within the Nottawasaga region.
216 We also have a proven track record meeting new business development targets and new business development is truly part of our corporate philosophy. All stations have a new business development target where higher commissions are paid. Bonuses are predicated on meeting new business development goals. We have a standard retail sales methodology which includes the introduction of our local business return-on-investment calculator, which is very important because it analyses client radio investment and manages their expectations, which is essential in renewal of the local business.
217 We have also fostered in-house sales trainers that travel from station to station, and continue to train the sales representatives on new business development initiatives. So, in other words, every aspect of sales generation within all Evanov radio stations is mining for new business development.
218 As Bill had mentioned, and I think we mentioned it, actually, in our opening comments, that the entire region has evolved, but radio station licensing has not kept up. Well, it is amazing, in a time where print has decreased by enormous, enormous -- catastrophic, actually, proportion, it is not the case in this region.
219 I mean, this one publication has over 40 advertisers that we would solicit, that kind of meet our -- I guess what we would call our P1 categories, which are categories that traditionally the 45-plus consumers over-index in. You know, they -- and actually --
220 THE CHAIRPERSON: We have got to have a translation here. "Over-index in"?
221 MS JOSEPH: So, for example -- I will give you an example: A 45-plus audience would drink 7-11 glasses of wine, which would over-index somebody of a younger generation.
222 THE CHAIRPERSON: Yes.
223 MS JOSEPH: So we're able to pull these statistics from return to sample, which is part of BBM measurement, and it basically profiles individuals, so you take -- I mean spread that across all markets, but it is the case. And we saw it also in our support letters. You know, the support letters came from businesses like garden centres, art galleries, antique stores, financial institutions, travel, furniture, fine dining, real estate, home building, renovations, esthetics, grocery stores.
224 So these are categories that traditionally we would mine at all stations that serve the 45-plus demographic.
225 But going back to print for a second, 30 percent of our revenue, or $230,000 will come from print. Of the 30-odd print publications in the region, two-thirds are lifestyle- and visitor-related, and this is a huge source of competition for us, because of the 123 business letters -- support letters that we received, dozens of retailers said that they would either redistribute budget to the station, assuming that they could get a return on investment, which we believe they would be able to, or increase their budgets, based on including the station into their media mix.
226 As far as your question about impact on the existing broadcasters, we know it's unrealistic to believe we're not going to impact a current broadcaster in the marketplace, regardless of the fact that we are going to be offering a completely different format with a completely different audience. We saw in our support letters, there were 3 where we believe that -- just the 3 of the 123 included car dealerships and 1 furniture store that said that we -- you know, we're really excited at the opportunity that you might bring the station to the marketplace, and we would certainly look to you to target the older demographic that we're currently not getting with the current stations in the marketplace.
227 As well, part of the impact will also come, I believe, from the national advertisers. It's funny, this is a unique market in that it's not a cost-per-point market any more, and yet we believe that there's close to $900,000 of agency buys, both local agency and national, coming into the marketplace.
228 So we believe that $40,000, or 5 percent of our revenue, will be coming on the national side, and that is part of the impact. But the impact is small, it's $77,000, it will be spread across the two broadcasters, and with the projected growth in the marketplace, we really believe that the growth is going to absorb the impact that our station may have.
229 THE CHAIRPERSON: Good.
230 MR. BILL EVANOV: Sorry, in terms of dollars available in the market, can I address that? Or is that --
231 THE CHAIRPERSON: You can address any question you want.
232 MR. BILL EVANOV: Okay.
233 I think I'd like to start with our Vice-President of Finance, because we strongly believe that the figures put forth, particularly by Corus, are very very understated. And what it tells us as real hard-working broadcasters, and street-level broadcasters, that they're not working the market to its potential or anywhere near it.
234 If our CCD is going to almost equal what they're doing in one year in Collingwood, there's something wrong with the effort, or something's wrong in this market in terms of mining or making the effort to sell the station. And maybe the real true effort might be on their other stations that also encompass the area.
235 But anyway, I will ask our VP-Finance, Mike Kilbride, just to talk about the dollars in the market.
236 MR. KILBRIDE: Thanks, Bill. If we go back to, I guess, the comments in our opening remarks, and we found that, using our research firm, Strategic, and having them look at Financial Post data that's created for individual markets, we looked at -- as you can see on one of the slides, I think it was our second slide, you know, retail sales they projected for 2011 for the Town of Blue Mountains at $305 Million; Clearview, $217 Million; Collingwood, $488 Million; and Wasaga Beach, $204 Million. You know, it's a region that has an enormous retail sales base, and broadcasters commonly use a retail sales base, they apply the RNB formula, it's pretty widely-accepted, to determine what potential advertising is available in a given market, before going into it.
237 Of course, we did, as we look at a market, we don't want to come in here and lose money; we're not that generous. So we like to make sure we're going to cover ourselves, so we do it two ways: Ky Joseph spoke to you about how, on a street-wise basis, we go to individual potential advertisers, and sort of take the temperature of the market, if you will. But, to back that up, we take a look at the retail sales data, and we apply the RNB formula, and it does show that there's a substantial amount of ad -- potential radio ad revenue available in this market, and it jumps from $4.7 Million in 2011 -- and you'll see on the chart -- it goes, in 2013, to $5.4 Million, and $6.8 Million by 2016.
238 So, by virtually any measure, I think it's fair to say that the amount of revenue available for radio advertising is substantial in the area, in the region. And the amount of revenue we're projecting to take out of it, considering the local incumbents -- there's only two of them -- is pretty insignificant.
239 And I think it's -- "achievable", I guess is the word I'd use. We really feel that the projections are achievable.
240 MS JOSEPH: Chairman Denton, excuse me, can I just add one more thing?
241 THE CHAIRPERSON: Yes.
242 MS JOSEPH: When a big-box store or franchise group decides to come into a market, obviously, they do their own studies and they evaluate the market for profitability and sustainability, and I really want to paint a picture of the enormous growth of the Nottawasaga region. And think this will give you a good idea:
243 There are 10 Petro-Canada locations within the Nottawasaga region, there are 4 RBC-Royal Banks, there are 6 TD-Canada Trust Banks, there are 3 Canadian Tires, 4 Home Hardwares, 2 Starbucks, 10 Tim Hortons, 8 Mac's Convenience Stores, 2 A&W Restaurants, 3 Dairy Queens, 4 McDonald's, 2 Daisy Marts, 3 Food Lands, 2 Price Choppers, 3 Four-Seasons Bed and Breakfasts, 3 Royal-Lepage locations, 4 U-Haul locations, 2 Kelsey's locations.
244 To give you an example, there are 8 Canada Posts, there are 6 LCBOs -- that is probably where the over-indexing comes in with the older demographic.
245 MS JOSEPH: There are 6 Subways, there are 3 Pizza Pizzas, 2 Pizza Huts, 2 Pita Pitas, 6 Sears locations, 4 Beer Stores, 4 WalMarts. Four WalMarts, I mean it is unbelievable, and I'm not giving you all the big-box stores, I'm just giving you the multiple locations.
246 This is not a small market, this is a robust retail sales market.
247 MS LAURIGNANO: Similar population towns, for example, Fredericton, has roughly the same population -- this area has a little bit more, and it supports five commercial stations.
248 THE CHAIRPERSON: Do you have any questions?
249 COMMISSIONER PATRONE: Yes.
250 THE CHAIRPERSON: Mr. Patrone will now be asking you some questions.
251 COMMISSIONER PATRONE: Thank you, Mr. Chairman. And I'm glad you've got that slide -- welcome, by the way. Thank you for your presentation.
252 I see retail sales going up, the estimate being from 305 to 355. Can you tell me what year these estimates were collated? Where they date back from, National Post's data?
253 MR. KILBRIDE: The National Post is generally running --
254 COMMISSIONER PATRONE: The Financial Post, rather.
255 MR. KILBRIDE: Yes. They're generally running about a year behind. I don't have that exact data. I can get that for you, you know, I can tell you what that is later, but I can't tell you right now. But they're generally running a year behind in their projections.
256 So in late 2010, they're projecting 2011.
257 COMMISSIONER PATRONE: It's just that I -- you know, if you consider the macroeconomic trends currently -- and you're all smart people, you know what's going on -- that looks like a fairly optimistic projection, considering the state of the economy.
258 MR. KILBRIDE: I presume when they did this in 2010, things were looking to turn up. And at that time, if we all knew what was going to happen, we'd all be a lot richer, and wouldn't be here today.
259 But I think , at the time, you're right, the economy had levelled-out after the '08 recession, and radio revenues were rising again fairly rapidly, as they did last -- and they've risen, I believe, substantially last year. And I think we're all a little concerned about Europe and that, but even if we assume this market doesn't rise, and we stay at a level of around 4.7 available radio revenues, we're still pretty much on target to hit our $900,000 first-full-year projection.
260 COMMISSIONER PATRONE: Okay.
261 Because it includes 2011 in your projections, and we're at the end of the year now.
262 MR. KILBRIDE: Yes. We are at the end of that, and we're moving off probably, depending on decision times and launch periods, looking at 2013 being our first full year of operation.
263 COMMISSIONER PATRONE: I have a couple of other questions.
264 You talk about the need for a new voice in the market, and you mention on page 2 of your oral presentation about how Evanov would not be a serious competitive threat -- I'm just paraphrasing -- to the success of the incumbents; correct?
265 If you were licensed, how do you see your ability to reach profitability in the same market in which there are better-established players?
266 MR. BILL EVANOV: Well, "better-established players", established, yes.
267 We don't think they're working their full potential. Remember, they have a station here, but you can't look at their stations in isolation. They may have a station in Collingwood, okay? But they also have a major station called CHAY-FM that reaches the entire area, and another station. So they have a 3-station cluster.
268 Where is their concentration? I don't know. I do know that we will have a sales manager and a sales team in Blue Mountain. We will have a promotion manager in Blue Mountain; okay? I know Barrie isn't that far away, and they can drive down the road, but it's really not the same thing; you're not part of the community.
269 So I think if they worked it better, they could probably increase their sales, and not just by a little, I mean by maybe even double, or 50 percent at least, but I think the concentration is elsewhere.
270 And it's the same thing with Bayshore. Bayshore owns a number of radio stations right here in Owen Sound, that have signals that come into the area, and yes, they have Wasaga Beach, but they now also have Orillia. So, in other words, they're surrounded by their own, so which one do you give priority to?
271 We will only have one here, and we will make it work. But not at their expense, because I think what we will do is shake them up, wake them up. I think they'll work harder just because we're here, and the winner's going to be the retailer and the listener. They're going to get a better service, they're going to get live service, less recorded programs, better news -- better attention to news.
272 So the listener, the public, are the winners in this whole thing, not my company, not their companies. I mean, we will benefit too, but you only benefit if you make the listener a winner, and if you make the retailer a winner.
273 COMMISSIONER PATRONE: Are you suggesting they're leaving money on the table, that somehow they could be working harder? I'm just wondering -- they've got their people on the ground, so --
274 MR. BILL EVANOV: They may have some people on the ground. Maybe they do it differently than we do it. I'm just saying that when you have a certain number of stations in one area, you can only concentrate on so many. You always have a favourite to work on, or a favourite to think about, or promotionally or whatever.
275 It just happens automatically in the radio business. You cannot give equal attention to 4 children, you know, you will give attention as much as you can, but you will always have a little favour going here or a little favour going there. It's the same thing here.
276 You can only do so much. But they've had the market for so long, and I think they've always believed that there will never be another licence here, even if the population went to 10 Million, because they wouldn't be able to mine there to be viable. But I think, as Carmela pointed out, there are markets across this country with far less economic growth and far less population that have not only 4 radio stations, but another 2 or 3 or 4 non-commercial stations in the market that fight for the same ears, so --
277 COMMISSIONER PATRONE: On that point, if we do license, do you think the market can sustain, more than one new licensee?
278 MR. BILL EVANOV: Absolutely. From my experience and my many years in broadcasting, and building radio stations from the ground up, absolutely.
279 There's more money in this market than anybody want to pretend there is.
280 COMMISSIONER PATRONE: I want to ask a couple of quick questions regarding your news allocation.
281 I believe you said that you were going to have 50 percent local news programming from Blue Mountain, and 50 percent from the County?
282 MR. BILL EVANOV: From the overall area.
283 COMMISSIONER PATRONE: Because that leaves nothing for provincial, national, international --
284 MR. BILL EVANOV: Oh, no. No, no. Sorry.
285 Of the total, 50 percent will be local, 50 percent will be regional/national.
286 COMMISSIONER PATRONE: Okay, so of the 50 percent local -- 25 percent of the total will be --
287 MR. BILL EVANOV: twenty-five percent will be Blue Mountain --
288 COMMISSIONER PATRONE: Do you have a news network that is able to share resources between your other properties? Stories, for instance, will they be coming from Toronto or Ottawa or any -- do you do that?
289 MS LAURIGNANO: No, we do not have a network. We certainly encourage our people to know -- all our staff to know each other, and you know, certainly, the news director of any station is familiar with somebody who's a news director at another station. If something of importance happens, then they communicate or they would share information.
290 For example, if some important figure is in one's studio, they could hook it up, either by phone, to get a snippet or --
291 COMMISSIONER PATRONE: A clip.
292 MS LAURIGNANO: -- an excerpt, that then the local news director would package and air over there. But there is no news network per se.
293 COMMISSIONER PATRONE: Just getting back to the demand on advertising, because you are focusing mostly on local advertising; correct?
294 MR. BILL EVANOV: Correct.
295 COMMISSIONER PATRONE: What's your read on the current demand for local advertising that would target the audience which you are targeting in terms of your format and programming?
296 MS JOSEPH: Just to be clear, are you asking are the dollars there to target the 45-plus demographic? Are the baby-boomer dollars there?
297 COMMISSIONER PATRONE: I am asking where you are going to get your money from, given the programming and format decisions that you've made here. Assuming you get the licence, where are the advertisers, who are going to be the people that are going to be supporting your station from an advertising vantage point, given the demographic that you're targeting.
298 MS JOSEPH: Yes. Okay, so, we have a list of -- as I mentioned, it kind of starts with the research, and we use RTS and also BBM profiling to -- just to figure out what categories of business the 45-plus demographic tends to use. And I had mentioned some of the categories before and I really just took these categories from the support letters, and they do simulate what we know from our other stations that target the same demographic.
299 So garden centres, shows, art galleries, financial institutions, travel -- travel's a really big category -- furniture, entertaining, dining, real estate -- and actually, when I talk about travel, it's not just travel abroad, but travel within the country -- books, novelty stores, renovations.
300 I mean, these people are classified as that 6-pocket phenomenon. You know, they've got kids that they're paying for, they've got grandkids that they're paying for, they've got themselves that they're paying for. And, without -- because I'm not quite in that demographic just yet --
301 MS JOSEPH: I don't want to sound terrible when I say this, but the baby-boomers are known as the "me" generation -- sorry, Bill -- they have a desire to maintain a lifestyle in which they've become accustomed to, having experienced the era of, you know, the economy flourishing. And that hasn't changed.
302 I've done extensive research on baby-boomer Spend. Gallup Canada conducted a poll that confirmed baby-boomers are expected to fall upon a collective Trillion-dollar inheritance. There is a lot of --
303 COMMISSIONER PATRONE: Am I included?
304 MS JOSEPH: I hope so.
305 You know, baby-boomers themselves are responding to their own economic needs, they really are. They are identifying business that under serve their generation. We heard this in the retailers that we spoke to. You can read the letters yourself. They are really frustrated that they have no outlet to target. A lot of them are new, they don't even use print.
306 COMMISSIONER PATRONE: Yes. Last question on that point?
307 How sensitive is this area to the cyclical seasonal aspect of the economy? I mean they get no snow for instance and this place suffers; right?
308 MS JOSEPH: What is beautiful about this particular region is that it is a four season region.
309 COMMISSIONER PATRONE: Yes.
310 MS JOSEPH: It used to be predominantly ski, but it's not, it's four season. I mean on the ski hills in the summertime they now have a rollercoaster that goes down the hill. So it's full of families, I mean there are over 2 million tourists that come throughout the region year round.
311 MS LAURIGNANO: The fact that between the year round residents and the seasonal residents, the figures that are available is that there is about 75,000 who are here at all times and then that is supplemented by the 2 million. So the 2 million is really the gravy, it doesn't rely on the influx. The influx is great.
312 But it's not one season, it's not just the skiing, because in the summer you have the Bay, so there are the water activities, there's golf, so it really is like a four season thing. It's a steady influx so there are no peaks or anything like that.
313 By the way, I was going to say, as a senior to be soon, it's a known fact that the population is aging so if anything the bubble is going to grow in that direction. A lot of us who are there or getting there have worked very hard and we are going to be in the age of indulgence, you know, so besides the necessity we also, you know, are going to be looking for a lot of stuff and there are a lot of business who are sprouting up and who are going to meet those needs.
314 So it's not a matter of us not having chips, you know, with a glass of wine, but we will have them baked with sea salt kind of thing.
315 COMMISSIONER PATRONE: I appreciate your optimism.
316 COMMISSIONER PATRONE: Thank you very much.
317 MS LAURIGNANO: It's really a big market.
318 MR. BILL EVANOV: The only thing I want to say is, when a Starbucks comes into town -- not just one, but two -- you know you are onto a good thing.
319 I know that Port Carling in Muskoka tried to get a Starbucks for years and Starbucks said no, it's too seasonal. So they didn't go to Port Carling where there is tremendous wealth, but they came to Collingwood. Just interesting.
320 COMMISSIONER PATRONE: Well, they got nine bucks out of me this morning --
321 MR. BILL EVANOV: Did they?
322 COMMISSIONER PATRONE: -- for a coffee and --
323 COMMISSIONER MOLNAR: Good morning. I'm going to continue to beat on this.
324 From my perspective what is for me difficult to understand about your application is the huge reliance on generating new advertising with two established players and I want to make sure I do have the facts straight. So let me just make sure I have the facts straight for your region.
325 The population is about 53,000 -- and these numbers may not be exact, but I just needed to make sure I have this straight -- 17,000 approximately is in Collingwood; 15,000 in Wasaga Beach and about 20,000 in this Blue Mountains, Clearview area that you would target as the centre of your service; correct?
326 MS LAURIGNANO: Correct.
327 COMMISSIONER MOLNAR: Okay. So over half of the region is served by an incumbent.
328 So if I understand, your business plan is really predicated on the fact that you are going with the a format that is unserved and in fact underlying everything is the belief that the licensees that serve this market, at least half of this market within their home territory, are under serving the market.
329 So we have to believe -- because format, as you know probably better than I, is a dangerous thing to rely on because anybody can find statistics to say it's an aging market and there is nothing that would prohibit the incumbents from moving their formats to target that better.
330 So really, to me the real fundamental issue is: Is this market actually so under served from the incumbent radio stations that you can acquire the revenues you need in new radio advertising revenues, both from new advertisers and other media, to support what you want to bring to this market?
331 I have heard you, but it's really just premised on the assumption that the folks in here today, which are not unsophisticated broadcasters, have basically left this market to languish and have not focussed.
332 Do you have anything else that would convince me that that is in fact the case, that you can come in and find revenues of this size to support the full services that you want to deliver?
333 MR. BILL EVANOV: I will ask Ky in a moment, but I did want to respond to one thing.
334 You are correct in terms of the population being 53,000 and they have so much of that and there is 20,000 left over. There is also 25,000 part time residents that have ski chalets up here that come up on weekends and that type of thing -- they have a home in Toronto but they are up here all the time -- and when they come up they do spend, and the vast majority of those would be located in the Township of Blue Mountains, for obvious reasons, not in Collingwood. Maybe some in Clearview, but the big benefactor of that group would be the Town of Blue Mountains.
335 I go back to one thing, I believe that if Corus didn't own any stations in the area and only had the Collingwood station they would do twice as well. I believe that Bayshore, if they only owned that one station in Wasaga Beach and not another three or four or five stations in the area, that station would do better, too.
336 I do this based on everything I have learned as a person, as a young salesman, as a young businessman, everything I have gone through in my life has taught me this, that you can pay attention to so many things, but you always do pick your favourites.
337 So yes, the money is in the market. T here is no question, the money is in the market, someone just hasn't gone after it at full speed because they are busy getting money from somewhere else and there are only so many things you can do in a day.
338 COMMISSIONER MOLNAR: I have to ask you this question then.
339 MR. BILL EVANOV: Okay.
340 COMMISSIONER MOLNAR: Because you are premised on the fact that their attention is other places and you are sitting with three new stations in Winnipeg --
341 MR. BILL EVANOV: Yes.
342 COMMISSIONER MOLNAR: -- that you need to put some attention to obviously.
343 MR. BILL EVANOV: Yes.
344 COMMISSIONER MOLNAR: So why are you in a different situation to put emphasis on this market than the other broadcasters?
345 MR. BILL EVANOV: Because I have --
346 COMMISSIONER MOLNAR: Only because you brought it up.
347 MR. BILL EVANOV: Okay. I want to answer it.
348 Because I have a full team in Winnipeg that are handling it that are doing it better. We oversee it, we visit them and that type of thing. And we will have a full team here that will look after this. My Winnipeg stations are not here. If I had then all together I might have a problem in this market. I would probably pick a favourite or two. The ones that are easiest to sell -- everybody goes the route of easy, the ones that you can sell easier you will sell easier; the ones that take a little bit more difficulty to sell, well, you take some more time.
349 Ky will come in in a minute, but I think -- okay.
350 MS LAURIGNANO: Yes. I was just going to say that really we are talking about what the incumbents are possibly doing or not doing. It is our firm belief that the full potential, or even part of the potential of the market is not being realized. We have used a standard formula to regulate what the -- to establish or project what the potential of the market is, we did two advertiser studies, one like a third party on and the other one like a one-on-one with talks with the advertisers.
351 We also know what similar markets -- I mean you are in a better position as the Commission to -- I ask you to get the staff to dig up, because you are privy to the returns of broadcasters, get markets that have similar population and look at the number of stations are operating there and see what kind of revenues they are reporting.
352 You know, I ask something like Fredericton which has a population of 50,000, you have I think five commercial radio stations. Are they getting $800,000, which Corus declared, plus whatever Bayshore may product.
353 So we really are in no position to judge what the competition or what the others are doing. It's their business. I mean they have interior reason, exterior reason, all we know is the potential. So it's not how much money is available or about how much -- it's not how much money is in your pocket right now but how much could be.
354 We are definitely convinced that there is enough revenue in this area, judged by all sorts of criteria in getting there, by our ability to do that, to get to the revenue, and to the fact that we are not going to rely on the incumbents for a number of reasons. One is, they are not going to hand it to us, that's for sure. That's why we have estimated only the 10 percent impact.
355 The other thing is, we are proposing something totally different and, you know, we will get it. We know where to go and it's not where everybody else is going, it's somewhere else.
356 COMMISSIONER MOLNAR: So can you tell me, do you have an example of where you have done this before, where you have entered in as a second or third player and have been successful in generating 90 percent of the revenue from new sources? You have done that before?
357 MS JOSEPH: Actually I can answer that question really quickly.
358 When we went into Halifax with a new format that no one was serving with our youth contemporary radio we did exactly that. I don't have the figures in front of me -- but I know they are on record because I have quoted them before -- of the 400 -- like I'm going by memory now, but of the 483 advertisers that we got to use the station in the first year, it was something like 80 percent were new to radio.
359 A lot of them came from print. There was The Coast Newspaper -- and I don't want to talk about the Halifax market, but to give you an idea we have done that in several markets.
360 MS LAURIGNANO: And we do that every day. With the station in Toronto, the most competitive market in the country, with a 50 W station called CIRR-FM which targets the LGBT community. Not rated, not traditional advertising, no national buys, just door-to-door because the advertisers are interested in that particular market and reaching that particular sector of the population. And it has its following, because the programming is of appeal to that.
361 So there is a whole stream of revenue that's not traditional in terms of being established and being in the market and cost per point and all that stuff, and the same would be here. We are not relying on national advertisers, which the incumbents might.
362 In fact, I think, what, 10 percent of our budget is national, which would probably be promotional and not like a regular spot traditional buy per se. Five percent or even more.
363 COMMISSIONER MOLNAR: Can I ask another question, because you answered. You said yes, you have done it, you have given an example so let me move on.
364 Again, you have a fulsome plan for this market, you mentioned 18 people, you mentioned $700,000 in CCD and a commitment to 30 percent specialty broadcasting. Once again it is all predicated that there is an under developed radio advertising market and therefore you can fund all this with 90 percent new revenues.
365 So what happens if there isn't 90 percent there, if some of the advertising revenue perhaps really just isn't achievable by radio because this is a bit of a unique tourist market, and so on.
366 So what happens to your business plan? Have you looked? Do you have a contingency? What would be first to happen?
367 MS LAURIGNANO: First of all, we believe that it is realistic and it is conservative. With sales, those who have a sales background understand that a lot of it is percentages so the more doors you knock on, the more you -- the harder you work, the luckier you're going to get in that regard.
368 However, we are committed to the business plan. We have never abandoned format. Should we fall short, our company is well equipped, both in terms of resources to deploy staff to correct the situation or to make sure that it's on track, and also financially.
369 We have a lot of other assets and properties that, you know, require more investment and more money than it would take to keep this plan alive or to supplement it should the need arise. However, we really believe that that won't be necessary, that we will achieve our targets and if there are any shortfalls we will cover them. We have several properties, as you know.
370 COMMISSIONER MOLNAR: I want to talk specifically about the 30 percent Cat 3 music COL.
371 Can you make a commitment that you will not come back to the Commission to ask that that be changed? Should this business plan not be feasible, that you would simply hand it back and not ask that it be changed?
372 MS LAURIGNANO: We would certainly undertake that for the first licence term, absolutely.
373 COMMISSIONER MOLNAR: For the first licence term.
374 MS LAURIGNANO: Well, I mean I think that's as far as you could bind us for the time being; right? For the licence term, yes.
375 COMMISSIONER MOLNAR: Those are my questions.
376 MS JOSEPH: Commissioner Molnar, can I just add one thing because it's really, really important when you talk about the sales and are they the retail sales and are they actually here.
377 When you look at just the national buys that have happened in this market last year -- I have a list of them here. So there are 37 national buys and they equate to, based on the weights that the advertising agencies bought, about half a million dollars. So these don't include in the Toronto market -- and certainly it's translated into this market -- all the fast food chains are all considered retail agents, so they are national clients but they are not bought from a national rep house. That is probably another $400,000.
378 So if there is $900,000 in agency business alone in this marketplace, it gives you a really good understanding because you know the comparison between national dollars and retail dollars, or what they should be in a market, and they are just not here. They are just not here.
379 So we know, based on all of the research that we have done -- and this is just one other element that confirms that the retail dollars are here in the market.
380 You know, when I go to Loblaw's to get a snack at night and I come back from Loblaw's with this, this is crazy. I have gone through ever single paper for the time that I have been in Collingwood and it's unbelievable and the categories are for the most part in the 45-plus demographic.
381 It's just out-of-market stations are too expensive. I'm sure we all didn't mean to say that -- and we certainly don't mean that the other broadcasters are bad broadcasters, if anything they are great broadcasters, but there is a lot of national business and a lot of agency business here for sure that they are capitalizing on and a lot of bigger retailers. Like the car dealerships and the furniture stores, that have confirmed that they advertised in the out-of-market stations. They shouldn't have to advertise in the out-of-market stations, they should be advertising, you know, locally for the local communities, because there certainly is the traffic here to be able to sustain their business.
382 THE CHAIRPERSON: Thank you. As always you have come very well prepared.
383 We are going to take a 10-minute break and then resume. See you then.
384 MR. BILL EVANOV: Thank you.
--- Upon recessing at 1029
--- Upon resuming at 1044
385 THE SECRETARY: A l'ordre, s'il vous plaît. Order, please.
386 THE CHAIRPERSON: Take a seat, join the show, please.
387 Gentlemen, please begin.
388 THE SECRETARY: Sorry. Before beginning I would just like to add that Evanov Communications has submitted Corus and Bayshore 3 mV maps, as well as Corus Bayshore .5 mV map. Copies are available in the examination room.
389 Now, Mr. Chairman, we will begin with item 2 on the Agenda, which is an application by MZ Media Inc. For a broadcasting licence to operate an English-language commercial specialty FM radio programming undertaking in Collingwood. The new station would operate on frequency 104.9 MHz, Channel 285B, with an average effective radiated power of 3,100 W, maximum ERP of 6,500 W, with an effective height of antenna above average terrain of 269 m.
390 Appearing for the applicant is Ms Monique Lafontaine.
391 Please introduce your colleagues, after which you will have 20 minutes for your presentation.
392 Thank you.
393 MS LAFONTAINE: Good morning, Mr. Chair, Commissioners and Commission staff. My name is Monique Lafontaine and I am the Vice-President of Regulatory Affairs at ZoomerMedia Limited.
394 Prior to commencing our 20-minute presentation, I would like to take the opportunity to introduce the members of our panel. They are: Moses Znaimer, Founder, ZoomerMedia Limited. Mr. Znaimer has had a legendary broadcast career as a founder of Citytv, MuchMusic, MusiquePlus and more than a dozen specialty services. In 2006, Moses acquired CFMX and CFMZ, Canada's only English-language all classical radio stations. In 2010 ZoomerMedia completed its acquisition of Vision TV, ONE and the JOY TV stations.
395 George Grant is the President and CEO of MZ Media, the licensee of CFMZ and CFMX. George's illustrious career in radio spans close to five decades. He has done every job that can be done in radio and has owned and operated two of his own very successful radio stations in the GTA. George also has longstanding roots in the Collingwood community and is the original creator of a major ski report program for radio and television. He has also been on the Board of Directors of the Ontario Ski Resorts Association and George will quarterback the questions from the panel after our presentation.
396 John Van Driel is Vice-President Programming and Operations at MZ Media. John is also an on-air presenter at Classical 96.3 and 103.1 and has been with the stations for nearly three decades.
397 Dan Hamilton, behind me here, is Vice-President Broadcast Sales for ZoomerMedia. Dan has had a long career in broadcasting, most recently as VP Sales at CHUM Television. He will address issues pertaining to the projected constituency of Classical 104.9 Collingwood advertisers and the split feed revenue model.
398 Our advisors are:
399 Andrew Forsyth, President of a company which provides strategic consulting services to the broadcast industry. For more than 15 years, Andrew has been a consultant to Nielsen BDS, and has an extensive background in sales research, client liaison and market development.
400 Andrew will address the state of the Collingwood advertising market and market growth over the term of the proposed licence and the likely impact of Classical 104.9 on the incumbent stations in the market.
401 Dan Plouffe, who has worked in broadcast sales and management, is a small business owner based in Collingwood. Dan will be part of our sales and marketing team, and knows this market very well.
402 Ed Bogdanowicz, whose work is well known to the Commission, is our consulting engineer. Ed can provide you with background concerning our choice of the primary frequency, 104.9 megahertz, and, if necessary, can discuss changes announced this week by Industry Canada relative to new FM technical licensing criteria.
403 Mark Lewis, of Lewis Bimberg Hanet LLP, is our outside regulatory counsel.
404 And, in attendance, as a representative of the nearly 300 supportive intervenors, is Major-General Richard Heath Rohmer, Canada's most decorated citizen and, arguably, Collingwood's most famous resident. He is an aviator, an expert in aviation law, and a prolific Canadian author.
405 Moses Znaimer will now begin our presentation.
406 MR. ZNAIMER: Good morning. Thank you for hearing our application. We believe that it can best be described as the "Goldie Locks" solution to the puzzle of whether you license anything at all here in Collingwood today, and, if so, what.
407 In program terms, our proposal is not just another iteration of the same pop/rock/country and talk formats already available in enormous abundance, but neither is it so alternative a focus as to spend a very scarce frequency on a minuscule audience. In business terms, our proposition is not so large as to cause anyone trouble, but neither is it so small as to not be viable.
408 In other words, our idea is not too hot and not too cold, but just right, a combination of diversity of musical content, diversity in the exposure of musical talent, and diversity of spoken word, along with diversity of ownership, and perhaps most important of all, diversity in demographic served.
409 For those of you who are unfamiliar with our FM radio stations, they provide a radio specialty service unique in all of English Canada, which plays the finest classical music, all the time, along with commentary and information about related cultural activity. They are rewarded for this service with a weekly audience in excess of three-quarters of a million people in our coverage area.
410 It is true that classical music appeals to people of all ages, and we, of course, have many young listeners who both love and play classical music. But the overwhelming majority of our audience, 80 percent actually, is 45-plus. This turns out to also be the largest segment of Canada's population, a massive 40 percent segment, that can only get bigger over the coming years as a thousand boomers a day turn 65, every day, for the next 20 years.
411 That is what brings us here. Zoomers are a robust and flourishing segment of the Collingwood population, which is itself growing at twice the national average. In 2010, 52.7 percent of the Collingwood population consisted of zoomers or "boomers with zip", a term that I coined and our organization has popularized.
412 Yet this community of active, creative and compassionate Canadians is hugely underserved, not only by the existing radio stations in this market, but, may I say, by an existing radio system almost entirely devoted to the 18 to 34 or 25 to 54 demographics -- dozens and dozens and dozens of stations doing pretty much the same thing, in pursuit of and to the benefit of exactly the same limited audience.
413 And so, as the vast boomer generation moves inexorably through history, and the demographic pendulum swings away from youth, the services that remain in place become progressively more irrelevant. It is akin to looking at the audience in the rear-view mirror. Even as the youth audience dwindles and recedes in the distance, you are still being asked to add to the already bloated overrepresentation of service enjoyed by the younger demos, while denying even a bit of additional service to precisely the demographic that is advancing.
414 It may sound paradoxical, but it is important, so I will try to express it another way. The story of youth is usually a story about the future, but in terms of demographic weight, it turns out now to be a story of the past, while older Canadians, whose story, ostensibly, is about the past, actually represent the new and unavoidable wave of the future. Thus we submit that you can and should acknowledge this hugely important new reality by giving zoomers what they need and what they like, and what they don't have, namely, our modest service.
415 MR. GRANT: Indeed, MZ Media is not asking for a full-blown new local station, but rather authorization to rebroadcast The New Classical 96.3 and 103.1 FM into the Collingwood area, with a split feed providing unique local spoken word programming and advertising for the Collingwood community.
416 The CRTC has approved this in the past with our Toronto and Cobourg services. Hence, the regulatory precedent exists. It would, therefore, be appropriate -- and reasonable -- to do the same for the residents of Collingwood.
417 Why is this extension of our specialty service important to the Canadian media landscape? The answer is simple:
418 There are hundreds of thousands of fans of classical music north of Toronto. They are not, however, able to receive our signal off-air.
419 The mainstream English language media do not provide in-depth arts coverage, and CBC radio has jettisoned classical music and arts coverage in favour of its AAA format and talk.
420 As you travel across this region from Toronto northwards, in radio market after radio market you will find a cluster of stations with identical formats. That is certainly the case for the Corus and Bayshore broadcasting services in this region, which have eight stations between them -- seven FM and one AM -- operating in the pop formats. Every one of these eight stations is easily heard in Collingwood.
421 By contrast, we provide the only radio format that is unduplicated across Ontario, and for that matter, unduplicated throughout the rest of English Canada.
422 Our core audience is also on the move. Many people who have been long-time listeners to our stations in southern Ontario have relocated to the Collingwood area. This is also a region where people spend a great deal of time driving from one community to the next, visiting friends, family, and getting to the ski hills. The limited availability of our signal on cable and DTH does not adequately serve this community.
423 In 2008, the Mayor of Collingwood wrote a letter in support of the application and stated:
"Small urban municipalities such as Collingwood enjoy a rich diverse arts community and it is long overdue to have access to a commercial radio station that will cater to that listener."
424 We agree.
425 Andrew Forsyth will now elaborate on the reason why this radio market can support our modest and reasonable business plan.
426 MR. FORSYTH: It is our respectful submission that the entry of this station into the Collingwood radio market can take place with little to no impact on the incumbent radio stations. Our revenue projections are reasonable and modelled on the "real world" experience of MZ Media's split-feed operation in Cobourg and Toronto.
427 In the first year of operation, the advertising revenue for our proposed Collingwood service is projected to be all of $100,000. That is consistent with the experience in Cobourg, which is a comparable radio market, with two other local commercial FM stations and many out-of-market signals. The audience demographics are also similar in Cobourg and Collingwood.
428 In recent licensing decisions for small markets, the Commission has considered the financial impact that new stations might have on incumbent stations, and vice versa.
429 In a recent decision relating to Port Hope, the average revenue for the new entrant was projected to be $230,000 per year. That is more than twice the revenue that we project in our first year of operation in Collingwood. Nonetheless, the Commission approved that proposal, stating:
"In regard to concerns over the potential market impact on the incumbents' existing commercial radio services, the Commission notes that the applicant's financial projections are reasonable and, if achieved, would be unlikely to cause undue impact on the incumbent stations in the region."
430 In 2009, when we first prepared our application, we provided an analysis of Collingwood retail sales based on retail sales estimates published annually by FP Markets. That information was updated and filed on August 25th of this year, and is reproduced in the chart attached.
431 The incumbents were also provided with this data.
432 The FP data demonstrates the continued growth of retail activity in the communities of Collingwood Township, Meaford and Wasaga Beach. The data also shows that over a five-year period, starting in 2010, radio revenue is projected to grow to over $4 million.
433 The CRTC and CAB have acknowledged that radio sales are typically one-third of 1 percent of commercial retail sales activity in a region. To put this in perspective, in the first year following launch our share of radio advertising revenue would represent only 3 percent of total advertising revenue available to radio in this market. That is $100,000 out of a potential revenue base of more than $3 million in 2012.
434 So, based on the same criteria that the Commission used earlier this month in the Cobourg market, in Broadcasting Decision CRTC 2011-699, the Collingwood market could support Classical 104.9 without undue impact on the incumbent stations in the region.
435 MR. HAMILTON: Throughout our history, 96.3 and 103.1 have sold local advertising to retail accounts throughout their coverage area, including Toronto, Cobourg, Port Hope and Peterborough. In 2008, we determined that many retailers in the 103.1 Cobourg coverage area did not require, nor could afford, their advertising to be heard in the entire GTA on 96.3.
436 They wanted an affordable advertising package to reach listeners only in their own backyard. We saw an opportunity, through the split feed, to provide some local spoken content focused on the arts. We, therefore, submitted an application to split feed advertising and other spoken word material on the Cobourg 103.1 transmitter, clustered within two breaks per hour. That application was approved in 2008.
437 This application proposes the identical approach for 104.9 Collingwood.
438 Listeners will receive all-important local weather, traffic, advertising, station breaks and, especially, arts calendars, specifically targeted to the region.
439 In our letter to the Commission of June 29th this year, we provided a description of the split feed, which confirmed: two hourly breaks, each of 2 minutes duration.
440 We have forecast a modest sell-out for commercial advertising in those breaks. In fact, after three and a half years of operation, we estimate that only about 30 percent of the total advertising inventory on the Cobourg transmitter will be differentiated from the advertising inventory on the Toronto transmitter. That means that in other breaks each hour, advertising and other programming elements are identical on each of 96.3 and 103.1 -- and would be, as well, on 104.9.
441 In other words, this is not an inventory situation that could hurt the incumbents.
442 In fact, when it approved that proposal, the Commission limited the amount of differentiated programming in our Toronto/Cobourg split feed, which is now Condition of Licence No. 6.
443 A similar condition of licence in Collingwood would be acceptable to us.
444 MR. van DRIEL: When Moses Znaimer acquired CFMZ and CFMX, he created a vision for the stations that went beyond typical juke box radio. Programming was added that is engaged and engaging, and programs like "Sunday Night at the Opera", "Zero to 1800", "The Classical Chartz" and "Destination Classics".
445 Another element that makes our stations unique is the fact that the on-air staff reflects gender equality and is made up of a diverse group of broadcasting and music professionals. Jean Stilwell is the co-host of the breakfast program "Good-Day GTA", and is an acclaimed Canadian mezzo-soprano.
446 Other members of our on-air staff are professional musicians, performing artists, and conductors.
447 In an era where FM stations are cutting back on news and information programming, we are the exception. CFMZ/CFMX broadcasts 18 newscasts each weekday, and 16 on the weekends, for a total of 106 each week. Each of these has an arts news component. To this will be added events occurring in the 104.9 listening area.
448 Our information programming also includes the "Zoomer Report", two-minute tips on living well, aimed at the 45-plus demographic, and aired eight times daily following the newscasts.
449 In addition to the cash commitments required by the CRTC, our stations support Canadian talent every day through their musical selections, on-air interviews, arts billboards, interactive websites, podcasts and live concerts.
450 Since acquiring CFMZ and CFMX, MZ Media has broadcast nearly 400 performances from what we call the Concert Lobby at our Queen Street facility in Toronto. They are broadcast on both CFMZ and CFMX during peak listening periods, and streamed live over the internet.
451 These performances have featured many of the greatest artists on the planet, such as Lang Lang, Yundi Lee and Sondra Radvanovsky, with a vast majority comprising Canadian stars and emerging artists -- from Measha Bruggergosman, James Ehnes, the Gryphon Trio, the Canadian Tenors and the Canadian Brass, to students of the Royal Conservatory of Music and the Canadian Opera Company's Ensemble Studio.
452 All the live concert broadcasts involve interviews with the performers, promoting their upcoming concert, the venue and/or the performer's new recording. The performer and the promoter are then each given a DVD copy of the live broadcast, free of charge, to use as they please for their own promotions and marketing.
453 And, over and above the concerts, we broadcast close to 700 interviews a year.
454 There is one other aspect to our programming that should not be overlooked, that is, the continuous, daily exposure of emerging artists. By any definition, the preponderance of Canadian classical music artists on our air falls within the category of emerging artists.
455 MR. LEWIS: In conclusion, we submit that the issuance of a specialty format radio licence to MZ Media in Collingwood is in the public interest and would make the best use of 104.9.
456 It would allow an independent broadcaster to extend a high-quality broadcast service into this region, a radio service that provides alternative high-quality spoken word and Category 3 musical programming not otherwise available on any other radio station.
457 It will provide radio listeners with hundreds of hours of unique live performances and artist interviews, and provide new opportunities for exposure to Canadian performers, over three transmitters, reaching hundreds of thousands of listeners.
458 It will provide a balance to the existing radio stations in the region, which are actually owned by only two licensees, who, between them, control multiple stations with overlapping coverage.
459 The proposed service will have limited to no impact on the incumbents.
460 It is wholly consistent with the Commission's previous licensing decisions, including the use of split feeds, as permitted in Cobourg.
461 For your consideration, we are providing with this presentation a series of suggested conditions of licence for CFMO 104.9, acceptable to us, that would be consistent with the licences of CFMX Cobourg and CFMZ Toronto.
462 So far we have had to discuss music with words. Now we wish to conclude with a very short video presentation, to let you experience a taste of MZ Media's classical music radio service.
--- Video presentation
463 MR. LEWIS: Thank you for your attention, and we would be pleased to answer your questions.
464 COMMISSIONER MOLNAR: Good morning. Thank you for your presentation this morning.
465 I want to begin by following up a bit on the discussion we just had with Evanov, before you, as regards the capacity of this market. You have made it a point and have highlighted within your presentation the fact that your proposed station would have little or no impact on the incumbents.
466 As you heard, before you, the argument made to us was that, in fact, there is great capacity within this market for an additional -- a fulsome, full, additional station, and the advertisers and retail markets here are largely underserved.
467 Based on the work that you have done in preparation for this market, where do you sit on that?
468 MR. GRANT: To begin with, ours is a very modest proposal that utilizes approximately two minutes per hour for advertising that would be separate from what would be fed in both Toronto and Cobourg. So we know that ours would have minimal -- probably little impact on the incumbent broadcasters in the area.
469 As far as the addition of a station beyond 104.9, as a classical station licensed the way we have proposed it, it would certainly be reasonable, in my opinion, for the CRTC to look at whether one of the other broadcasters, utilizing a different frequency, would also be sufficiently able to provide a service into the market that is sustainable.
470 It is pretty clear from Mr. Evanov's proposal today that they believe that they can be sustainable and, clearly, they have the means to ensure that they have longevity if their projections are perhaps a little bit too optimistic.
471 Rather than comment on whether his projections are realistic, let me finish by saying ours are. They are also conservative and they are very doable.
472 MR. HAMILTON: If you would like me to --
473 COMMISSIONER MOLNAR: Fair enough.
474 MR. HAMILTON: If you would like me to speak to our projections, you know, we felt like our model was based on the split feed, the licence that you granted us in 2008 for Cobourg and Port Hope.
475 So as a starting point, we have over three years' experience with the sales model in Cobourg. And they are very similar-sized markets.
476 COMMISSIONER MOLNAR: Sorry, before you go on, maybe I should rephrase my question.
477 I wasn't asking about whether your advertising projections were reasonable given your business model. What I was asking about is you know there is a scarce number of frequencies and there are markets to be served.
478 And so what I'm trying to understand is while I know you put forward a relatively limited marketing impact on this market, we just heard others come forward and say there is a large under-served retail base here who needs a broadcaster to get out to the community.
479 Have you done work to see? Have you just come forward with how you get your split feed out here or have you done any market analysis for this market, to know what is the capacity of the market?
480 MR. LEWIS: I would call upon Andrew Forsyth to deal with that, if I may.
481 COMMISSIONER MOLNAR: Thank you.
482 MR. FORSYTH: What we have done, of course, as most broadcasters do, looking at new markets, we have gone to FP markets, looked at retail sales, recognizing that those retail sales form -- create a formula by which you can determine the broadcast revenue availability.
483 We looked at those retail sales and recognized that in the marketplace there were significant dollars available. When we filed this in 2009 we saw that there were going to be certainly sufficient revenue to meet the revenue requirements for this application.
484 In 2008 we saw that the radio share was about $2.5 million in the market, rising to approximately $3.3 million in 2013. And that's based on the forecasts that FP markets put together at that point in time. We submitted those numbers and as we have discussed, as did Evanov, those numbers have grown.
485 So, looking at the marketplace from that point of view, we realized that there were dollars available.
486 I think also, MZ Media has looked at this as something that is similar to the situation they have in Cobourg. They are very compatible markets from the viewpoint of demographics and also from a radio perspective. There are two incumbent radio stations and there are a lot of other market signals.
487 So there were a lot of similarities.
488 I just want to turn the mike over to Dan Hamilton who can speak to the experience in Cobourg and what this application is modelled from.
489 MR. HAMILTON: Certainly, our model is targeting the "Zoomers" the terms that Moses coined and all of our media properties, whether it's our magazines, TV, radio stations, target that demo. So we have a lot of experience in growing revenue targeted against that demo.
490 And as we spend time in this community we have seen categories that made great sense for us to make inroads on, many of them mentioned this morning. You know categories like condo developments, financial advisors, travel agencies, upscale housing developments like Tanglewood and Cranberry Resort and Long Point Estates and Pretty River Development; high end car dealerships, home renovation, kitchen builders that we see advertised.
491 I brought a number of publications this morning from Escarpment, you know, on the bay --
492 COMMISSIONER MOLNAR: Excuse me, if it's okay with you I'm going to stop you because we have on the record all of the advertisers in this market.
493 My question was more about bringing forward what is a relatively modest revenue projection for this market. Was it your sense that that's what the market could sustain or was your sense that there was a large underserved market but you put forward a business model to serve only a partial -- you know, a bit of that underserved market?
494 That's what I was trying to get a sense of because we had a discussion earlier that there is a large underserved market. There is a lot of revenue advertising that's not -- you know needs that are not being fulfilled in this market.
495 Do you agree or disagree with that?
496 MR. ZNAIMER: May I make an effort?
497 COMMISSIONER MOLNAR: Sure, thank you.
498 MR. ZNAIMER: Yes, Commissioner Molnar.
499 We characterized our presentation as the "Goldie Locks" presentation" so we think the market is more robust than is characterized by incumbents like Corus. We don't think it's as robust as characterized by an applicant like Evanov.
500 We think that there is a marketplace for a new kind of service. And that's the last point I would like to make; not all these marketplaces are identical. When you have a service like a classical music service you are creating an entirely new community of advertisers who simply would not place their business on existing stations with existing formats.
501 So we believe there is a new marketplace capable of supporting our service. We're not sure about more extravagant claims.
502 COMMISSIONER MOLNAR: Thank you. That was my question. Thank you for answering it.
503 So I want to focus on what you have proposed -- your Goldie Locks' service, as you phrase it.
504 Essentially, you are proposing four hours, 12 minutes of spoken word, with no local news and approximately 15 hours of advertising each week, correct?
505 MR. GRANT: That is correct.
506 COMMISSIONER MOLNAR: So, as you know, frequencies are very scarce in this area and we need to ensure we are using the scarce frequencies wisely and to their best advantage to the community.
507 So can you give me your rationale to offer listeners in the Collingwood area limited amounts of locally relevant programming and particularly no local news?
508 MR. ZNAIMER: We were in a sense directed by the Commission in its decision in Cobourg. The Commission went out of its way in that decision to actually cap the amount of extra service that we should supply to that community, in part because the Commission was concerned for the wellbeing of the incumbents.
509 At the same time, the Commission weighed our proposition which is a brand new and entirely different nature of service, the only all-classical music radio station in all of English Canada. It's quite extraordinary that there should not be another one in the entire rest of the country that speaks English.
510 So in trying to balance these two impulses, the Commission said you may have the split feed but you can't become entirely another additional service.
511 We took that an indicator of what would work here and we have attempted to replicate that formula in this application.
512 COMMISSIONER MOLNAR: And it is obvious that you have relied a lot on the exception that has been granted in Cobourg, but now we're talking about this market and I want to read to you from the Commercial Radio Policy of 2006.
513 Paragraph 207 of the Local Programming Policy states -- and this is a partial quote:
"In their local programming licensees must incorporate spoken word material of direct and particular relevance to the community served. This must include local news, weather, sports coverage and the promotion of local events and activities".
514 Keeping this in mind, could you please comment on how your station's programming offerings would satisfy this Commission policy of providing spoken word programming of direct and particular relevance to the community of Collingwood?
515 MR. ZNAIMER: Yes, thank you.
516 We focused on the part of the community's life that is utterly unreported right now and that is arts coverage.
517 In communities with significant Zoomer populations, we have found a tremendous interest in culture. That interest in culture seems to go hand in hand with an interest in classical music. That is precisely the service that no other broadcaster is supplying.
518 We also are offering traffic and weather services and an ability to engage the community in situations of emergency.
519 But the essential core of the difference that we bring, in addition to the music, will actually be a reflection of this very dynamic thing that exists in this area and in other areas of Zoomer concentration which goes wholly underreported in the rest of the broadcast mix.
520 MR. LEWIS: And if I might respond, the Commercial Radio Policy that you quoted came out in 2006.
521 In 2007 after the policy came out, we went to meet with Commission staff to discuss the concept of the split feed at the time that we were considering for Cobourg.
522 And we raised specifically these issues and we noted at the time of those meetings, prior to the application which went in, in 2007, that we were going to restrict the spoken word elements primarily to these areas, particularly the arts billboards, the arts and culture, the local organizations, et cetera.
523 The staff at that time had a comfort level that they acquired with that. When we went forward with the application, as we stated earlier, that amount of spoken word material was actually capped in the decision.
524 So one of the things that we did, shortly after, just a matter of months after we were approved for Cobourg, was we submitted this application on the heels of the Cobourg approval.
525 The difference that the station provides in spoken word material -- and I think this is something that is difficult to explain when you read the application, is that the spoken word material on the station includes 700 interviews a year with performing artists of interest to people in this region. They are not just performing artists that are of interest to people in Toronto.
526 We don't run a Lindsay Lohan, get out of jail story, on the newscast. We run stories about culture, orchestras, et cetera.
527 So the spoken-word content very much reflects what the Commission had in the 1970s and that is foreground format radio where the announcer is knowledgeable about music and performing arts.
528 The thrust of the spoken word content which is differentiated -- we don't run extensive sportscasts on a classical music station. We run material relative to the community's interests.
529 The other way that we address that is in split fees. We have arts calendars that are of particular interest to the people in this community.
530 I'm going to let Mr. van Driel or Mr. Znaimer finish this answer up.
531 But the other element that's very important is that over the three transmitters right now, when there is something that is of interest from the cultural community of Cobourg, for example, in Northumberland County, interviews with people from that region are not just carried on the split feed and only to that region. They are carried across the -- if I can call it the network or the regional broadcast so that everybody benefits.
532 MR. ZNAIMER: Mr. Denton, Commissioner Denton, when you opened the hearing you said that one of the essential criteria that would be applied is the criteria of diversity in the music service.
533 Clearly, we offer absolute diversity but it's also in this information area where we are making a contribution. Our newscasts do record important sports scores and of course we deal with weather and traffic.
534 But the essential diverse contribution that we will make will lie in the area of culture and the reflection of the tremendous amount of cultural activity that is in this area.
535 THE CHAIRPERSON: Noted.
536 COMMISSIONER MOLNAR: Once again, you rely significantly on the decision that came out for Cobourg. And you had a rebroadcasting transmitter in Cobourg, correct?
537 MR. LEWIS: It was actually at the time the originating transmitter.
538 But the station has a history unlike any in other parts of Canada which is it had two transmitters, both of which were allowed prior to the policy going back many, many years to solicit local advertising in each of their markets and broadcast it, notwithstanding the fact that the main originating studio has been in Toronto since about 1994.
539 So we're not asking for the Commission to revisit its policy. This is just a one-of broadcasting undertaking that there is no parallel in the rest of Canada.
540 And as a result of that, when we relooked at or we re-examined, after MZ Media took over the stations in 2006, how best to serve the communities this was a formula that we thought would work and it has been embraced by the community in Cobourg. And we believe it would work here very, very well because of the -- we're not trying to replicate and take away listeners who may be interested in a local Junior B hockey score. We are providing alternative programming.
541 COMMISSIONER MOLNAR: And you are asking to use one of the most valuable frequencies that remain and frequencies where you are in competition with services that are proposing to fully serve the local communities.
542 So one of the issues that is also part of the Commercial Radio Policy is that there is a requirement under that policy that commercial FM licensees in markets served by more than one commercial station refrain from soliciting or accepting local advertising when less than one-third of the programming aired each week is local. So you would be looking for an exception to that policy.
543 I would like you to take -- you know give us your best as to why we should provide you with an exception to that policy in this market.
544 MR. LEWIS: Two reasons:
545 One is certainly we are the exception. We have been the exception since the 1980s. And we have been the exception in 2006. We continued to be the exception in 2007 and we continue to be the exception today.
546 If one were to examine the actual spoken word content on a local radio station here, and I actually did that yesterday as we were preparing for the hearing, the 12 o'clock news broadcast, the first two stories were not only identical stories but they were from the same source. One was the story from, I believe, broadcast news on the Occupy Toronto court case. The second story was the outbreak of violence in Egypt, again from a source.
547 And it was -- and the stories in terms of their symmetry were identical. The only different between the two newscasts was we had an arts story on our newscast and locally the broadcaster had a story about waste recycling.
548 So, again, we wouldn't be doing a waste recycling story on CFMZ necessarily. We would be doing an arts story. The weather forecast would have been identical.
549 The difference is of course, that we bring to the local community we are constantly providing arts calendars; arts billboards, things of interest to this particular demographic that they just can't get anywhere else.
550 And so the totality of, if I can call it, disc jockey chatter, which is what makes up the rest of that 42 hours a week, is not -- and I don't mean to demean the other radio stations, but it's introducing songs, song titles. There isn't a great deal of substance in this community but on CFMZ and CFMX there is a great deal of substance involving the artists who are featured' discussions with the artists that are featured, background information that the announcers provide.
551 And that is of relevance to the listener to classical music. It may not be of relevance to an AC listener who is a very -- a younger skewing listener, but to this particular constituency this is what they would like to hear. It factors into who is coming to the region to perform.
552 MR. ZNAIMER: Monique would like to add something.
553 MS LAFONTAINE: Thank you.
554 What I would like to add is that this model that we are proposing is really the best way to bring the classical music radio station into the Collingwood community. It's tried and tested and it has worked well in the Toronto and Cobourg corridor.
555 My sales colleagues can join in and discuss this as well but ultimately this model of split feed, a fixed amount of local content, a 50 percent max advertising sales, this is what works. This is what will allow the classical music radio station into this market.
556 And the reason why we need such a strong signal and such a strong frequency is because of the type of music. It's very different from the other pop stations and that. To fully enjoy the station, to enjoy the service you need to have a strong signal. And my colleagues can chime in on that.
557 And as Mark was saying this is what CHAY you know provides an opportunity for Canadian artists to be heard on radio and to have their voices heard, that which is not able to be heard elsewhere. So it's -- this model provides the opportunities for the artists, the opportunities to the residents, the opportunities for sales and minimal impact on the community.
558 That's why we are basing it on the Cobourg approach.
559 MR. van DRIEL: I would like to add to that in terms of the programing aspect of it, that the station is an advocate for classical music in all the regions in Cobourg, Toronto and in the Collingwood area that we will have separate arts billboards, information coming across.
560 But there will also be, as Mark was mentioning that in the newscasts, there will be information and news about the arts that are relevant to everyone in the community and people within this community will have a voice in terms of interviews as well as performances in our concert lobby.
561 I know no other radio station in North America right now that gives you that kind of approach to classical music in terms of live on-air concerts 20 minutes to 100 to 60 minutes at a time and interviews close to 700 of five to 10 minutes in duration. They will become a part of that approach to advocating classical music and this format in the Collingwood area.
562 MR. GRANT: I would also submit that the whole concept behind bringing classical music to this area hinges on the fact that it's otherwise virtually not available.
563 If you go across the radio dial here, as I did this morning about 6:30 with the little clock radio in the hotel bedroom, listening to the various stations the differences are at best moot. They all sound very much the same. They all have very similar formats. One might be country, another might be pop.
564 But there is already such a diversity of those various segments of the same thing that the missing ingredient here clearly is not just an age demographic that we are proposing 45-plus but also the fact that there is virtually no other classical music service available.
565 And in order for us to make this viable, the only way that it will work economically from our experience is the way we're proposing the split feed.
566 So I would not consider it a waste of a good frequency. In fact, I think it would be a very important and valuable use of that frequency for this purpose.
567 MR. LEWIS: If I could just add one final thought, and that is in this region prior to the devolution of CBC Radio 2 which has now become a Triple A format, between CFMZ and CBC Radio 2 and the classical music programming, if you looked at the ratings of the two stations, the two stations had almost a five share of audience listening and that was only through DTH and through Rogers Cable because the over-the-air signals of both stations were very spotty, very, very sparse.
568 So a five share and particularly in this audience demographic, is a very important resource. We looked at, when we were developing this application could you set a disc jockey in a room playing classical records here? It just didn't make economic sense because it would denude the service. We have very, very specialized on-air staff who don't exist on other radio stations. There aren't many radio stations in Canada who have professional musicians who are actually on air and performing and talking about the music. That's how the station is designed, to be almost a super-fan of the music, for the listeners.
569 And you couldn't do that in a local radio studio for 42 hours a week; it was just not economically viable.
570 COMMISSIONER MOLNAR: So, speaking of economically-viable, what if this is not economically viable? Would you be prepared to turn the licence back?
571 All I'm saying is not come for any change in conditions of licence. You're asking for a special circumstance with a specialty radio station, on the assumption it can be made viable under these -- with these exceptions to policies.
572 So if it's not viable, what's your contingency?
573 MR. GRANT: To begin with, we are asking for a specialty licence, which by its very nature would mean we could not change the format.
574 Secondly, if it were not --
575 COMMISSIONER MOLNAR: There have been licensees known to come to us and ask to change the format. That's why I'm asking the question.
576 MR. GRANT: We would submit we would not change the format, and we would submit that if it became commercially unviable, and we were not able to continue, we would hand the licence back. We would take that as a condition of licence.
577 COMMISSIONER MOLNAR: Thank you.
578 I just have one more question. You were speaking that it's not feasible to be putting in the programming -- programmers or the disc jockeys here in this market, so what would you have for employment here within this market?
579 MR. GRANT: We would, as our application indicates, have initially, two people here at a local office in Collingwood. Again, this is modelled on our template in Coburg that has been quite successful, so we would be replicating that here, as Moses indicated.
580 So that would be two people, initially, and grow from there. These folks would be generals, just like we have now in Coburg, so they would assist in gathering the information required for the arts reports and other information of interest that would be broadcast to the community.
581 COMMISSIONER MOLNAR: Those are my questions.
582 THE CHAIRPERSON: Mr. Patrone?
583 COMMISSIONER PATRONE: Thank you, Mr. Chairman. Welcome.
584 Just a couple of quick follow-ups:
585 The two people that you're going to be hiring, you said they were generals. They're also going to be part of the sales contingent?
586 MR. GRANT: Yes, they would be. The gentleman who is with us today at the table, Mr. Dan Plouffe, who is a local businessman here in Collingwood, and is also an old colleague of mine from my Rogers days; we worked together in Toronto many years ago, would be assisting in that set-up, and would also be involved in the sales effort.
587 We would have a second person who would assist him in that regard, initially, and we would expect that to grow from that modest beginning.
588 COMMISSIONER PATRONE: So we're talking about a real jack of all trades, then, because he'll be doing news and --
589 MR. GRANT: Yes, because that's how we do it and, frankly, it works quite well.
590 COMMISSIONER PATRONE: I mean, I get the fact that really, without the split-feed model, you couldn't -- it would be very difficult to justify full service station, and do the format that you're doing.
591 In terms of establishing some kind of business case, it only works if your costs are rock-bottom.
592 MR. GRANT: Well, I think there's a second factor. Aside from the business model, there's a question of how it would sound, because we want it to sound professional, we want it to sound first class, so from that standpoint, if were to try to do it as a local station, as a stand-alone, business case does not work, but also the sound of the station would not be as good.
593 And people who listen to classical music are very discriminating.
594 COMMISSIONER PATRONE: And as I understand it, you really feel strongly that you're filling a vacuum here that was left over when CBC changed its approach. And we'd heard often from our Chairman, who's a big a fan -- my colleagues, I think, would agree with that -- he often lamented the fact that he couldn't get the classical music service from the CBC any more.
595 So, presumably, that's the vacuum that you're looking to fill.
596 MR. GRANT: That's part of the vacuum, not the whole vacuum. Because even if there were CBC2 playing classical music, it still doesn't totally address the interests of the marketplace, because when CBC2 was offering classical across the board, CFMZ and CFMX still had quite good ratings.
597 But you're right, now that they've pretty much abandoned it, we believe that this market is being totally deprived of the opportunity to receive the kind of programming that we're quite prepared to offer.
598 COMMISSIONER PATRONE: I guess the issue is that, really -- I mean, you've got your people in Toronto who presumably are going to be tackling a lot of the phone info -- the traffic information is all going to be done out of Toronto, the billboards information, arts calendars information is basically going to be produced out of Toronto with information that's going to be phoned-in from your individual here.
599 MR. GRANT: The information would be gathered in the marketplace, as we currently do it in the Coburg area. It's true that it's done in Toronto because that's where the production facilities are, but the gathering and dissemination back to Toronto would come from here locally.
600 COMMISSIONER PATRONE: But zero local production.
601 MR. GRANT: Zero local production.
602 COMMISSIONER PATRONE: Nothing produced here at all.
603 MR. GRANT: That is correct.
604 MR. van DRIEL: But if I can add something to it, a different dimension. In terms of -- as I was mentioning, the station is very much an advocate of classical music, in all these different frequencies, not only in terms of, let's say, the local split feed, but it also gives access to this community to a larger audience, so it goes both ways.
605 For instance, just an example, in Port Hope, there's a Port Hope Friends of Music, which is a small group that brings in different artists from around the country. One was I Musici de Montréal, who came in, they did an hour-long broadcast from our station in Toronto before they did their concert in Port Hope. Well that a huge impact on that community, on that group, in terms of being able to sell tickets and in terms of being able to have a full house.
606 That goes with other artists, young artists. I mean, just a week ago, we had Lang Lang, who is arguably one of the great pianists on the planet. He came in for a half-hour interview, but he didn't play. Who played was a 13-year-old young student; he looked at -- he was a mentor to her, but the whole point of that was to promote education in music to young people. Well, that affects everybody, whether they're in Collingwood, Port Hope, Toronto, everywhere.
607 And that's the type of thing that we really try to do in our broadcasts with classical music, is to advocate for artists, in terms of new recordings, in terms of selling tickets, whatever the venue is. And there are so many possibilities in Collingwood down the road for all kinds of different performances, festivals. It feeds off of each other, we're inspired by each other in what we're doing and how we're doing it.
608 And I think that's what's really important with what we can offer, something that is totally unique for this community, in fact, totally unique for any other community across the country.
609 COMMISSIONER PATRONE: Thank you.
610 THE CHAIRPERSON: Thank you, ladies and gentlemen. That completes our questions, and I think it's time to take a break, because otherwise we're going to be running into the lunch period for the next people.
611 So I think it would be best for the next group up if we give them a clean and uninterrupted start, so we will be back here at 1 o'clock.
612 Thank you.
613 MR. van DRIEL: Thank you very much.
--- Upon recessing at 1144
--- Upon resuming at 1305
614 THE CHAIRPERSON: Welcome back everybody.
615 Madame Secretary, let's roll.
616 THE SECRETARY: Thank you, Mr. Chairman.
617 We will now proceed with Item 3 on the Agenda, which is an application by Frank Torres, on behalf of a corporation to be incorporated, for a broadcasting licence to operate an English-language commercial FM radio programming undertaking in Shelburne.
618 The new station would operate on frequency 104.9 MHz, Channel 285B, with an average effective radiated power of 15,600 Watts, maximum ERP of 50,000 Watts, with an effective height of antenna above average terrain of 60 metres.
619 Appearing for the applicant is Mr. Ed Torres.
620 Please introduce your colleagues, and then you will have 20 minutes for your presentation.
621 Thank you.
622 MR. ED TORRES: Thanks, Cindy.
623 Good afternoon, Mr. chair, members of the Commission and Commission staff. My name is Ed Torres. I'm the President and Co-founder of SkyWords Media and Chief Executive Officer of 101.9 DAWG FM, CIDG in Ottawa, Ontario, Canada's only commercial blues radio station.
624 Thank you for hearing our application for an adult contemporary FM radio licence to serve Shelburne and Dufferin County.
625 Seated to my right is my brother Frank Torres. Frank is the Chief Operations Officer at SkyWords. Together, we founded SkyWords in 1991. Today, it's a national radio company, with offices in several Canadian major markets, including Ottawa, Halifax, and our head office in Markham.
626 To my left is Yves Trottier. Yves serves as Operations Director at DAWG FM. Yves is the former Operations Director at Couleur FM in Gatineau, and he has held various PD positions in commercial radio over his 25-year career.
627 To the far right of the front row is Catrina Bulbulian, Vice-president, Sales, for SkyWords Media, and to the far left, Jeff McFayden, he's been promoted to the front row because his laptop power cord was too short.
628 MR. ED TORRES: He acts as our sales supervisor for DAWG FM in Ottawa.
629 In the second row, directly behind me, slightly to my right, is Ron Ford. Ron is a chartered accountant and Chief Financial Officer for SkyWords and DAWG FM. Ron has held various senior management positions in his career, including that of senior accountant at Coopers and Lybrand.
630 To the left of Ron, Aubrey Clarke, Director of Business Development at SkyWords, and former National sales manager. To the left of Aubrey is Todd Bernard, General Manager and Partner of 101.9 DAWG FM, and to the right of Ron is Kim Elliot. Kim is the Assistant Sales Manager at SkyWords Media, and prior to SkyWords, Kim held various news positions with Corus Entertainment.
631 We are very, very pleased to have the opportunity to present our application to you in person. We think that our new station will fulfil three important objectives of the Broadcasting Act:
632 We add diversity to Dufferin County and Shelburne as a new ownership group, and a distinct news voice.
633 Secondly, This station will strengthen our broadcast company and assist it to grow in the Canadian broadcast system.
634 Lastly, our format is the right format for Shelburne and Dufferin County, and therefore in the best public interest.
635 MR. FRANK TORRES: You may notice that our panel today is made up of SkyWords people and DAWG people, almost all of whom are in our November Splendour, I might add. A central message that we need to convey to you today is that our young broadcast company is made up of two distinct yet complementary businesses.
636 Although we only hold a single broadcast licence to serve Ottawa and Gatineau, through 101.9 DAWG FM, our SkyWords business, which celebrated its twentieth anniversary this past Friday, is the backbone of the Torres Media Group.
637 Before we get into details of our proposed radio station, I want to give you some insight into the company that I, along with my brother, founded twenty years ago, SkyWords.
638 We started SkyWords in November 1991 to provide traffic reports to radio stations. This was back in the day before cell phones, cameras on highways, GPS, automatic traffic sensors. The best way to detect a traffic jam was to jump in an airplane, fly overhead, and report it via radio back to the station.
639 Both Ed and I are commercial pilots, and we provided traffic reports at no cost to the radio stations. The service was a huge success. High-quality traffic reports, no out-of-pocket cost to the station, and a new revenue source from non-traditional advertisers for radio; a win-win-win.
640 The service spread across the country. Today, SkyWords serves over 160 radio stations with Traffic reports, business reports, weather, news, snowmobile trail conditions, entertainment reports, and recently we started to syndicate programming for DAWG FM's other radio stations. SkyWords now distributes DAWG FM's Howling Blues Show to five markets in Canada.
641 In 2007, our company applied for a broadcast licence to serve Ottawa and Gatineau with a new, innovative format: Rock and Blues-Rock. We were granted the licence in 2008, but as a result of an appeal by another party to those hearings, our station's launch was delayed for a year.
642 CIDG launched in June of 2010 in our Blues and Blues-Rock format, and has achieved its business programming plan as presented to the Commission.
643 MR. BERNARD: There are three key reasons for you to license our application for Shelburne:
644 Diversity. Shelburne and Dufferin County need their own news voice. Our application adds a fresh news voice into the market.
645 Format. Our format is the right format for Shelburne and Dufferin County. The A/C format is currently the most listened-to format in Dufferin County, even though residents need to tune to out-of-market stations to do so. In Ottawa, we operate Canada's only Rock-Blues format. This is a format that we innovated, and our A/C will, like our Blues format, be built from the ground up.
646 We will provide a missing, high-desired, extensively-researched radio option to listeners in the region.
647 Synergies and Growth. Granting us the licence will strengthen an independent broadcast business with a twenty-year track record in the industry, by allowing us to derive synergies from our SkyWords and DAWG operations.
648 We will be able to use existing resources from our Ottawa station, and our SkyWords head office in Markham, but yet the station will remain autonomous in terms of its local programming, including its local news.
649 We've received over 30 letters of support for our application. In fact, our application is the only application to have the unanimous support and resolutions in council of both Shelburne Town Council and Orangeville Town Council.
650 Further, our application is the only application that has the support of the Shelburne Business Improvement Area.
651 The resolution in Shelburne Town Council is included as a positive intervention on our application file.
652 Orangeville Town Council also intervened to support this application and on November 19, 2009 Mayor Rob Adams said, and I quote:
"Currently Orangeville is not served by a local FM radio station and has no programming that addresses the needs of the approximately 28,000 residents and local businesses..."
"A local radio station would also help raise the profile of community news, increase community spirit and provide a venue for non-profit organizations to advertise locally.... For the reasons outlined above, The Town of Orangeville fully supports the application by Frank Torres."
653 Close quotes.
654 MR. McFAYDEN: Shelburne bills itself as Ontario's fastest growing small town. In fact, the 2006 Census shows a rate of population growth of 22 percent. As the cities of Toronto, Brampton and Mississauga expand, Shelburne provides country living close to the GTA for commuters to these three main urban centres. As more people choose to live in Shelburne, more jobs are created. Census data shows Shelburne's average annual employment growth rate to be more than double the provincial average for the period 1996 through 2006.
655 Shelburne is a town of 5,100 people, according to Census data. FP markets currently estimate it's population closer to 6,800. Shelburne is situated northwest of Orangeville, but is geographically centre of Dufferin County. Shelburne sits amongst some of the finest farmland in Ontario.
656 With the markets of Barrie, Mississauga, Oakville and Toronto to draw from, the small town charm of Shelburne attracts many visitors each year. With easy access to ski hills in the winter and beaches in the summer, it's an ideal four seasons stop for many recreational tourists.
657 The Shelburne Business Improvement Area has recently spearheaded a revitalization of the town centre, including the Victorian town hall. All major banks have branches in the town and there are numerous financial planning and management services available.
658 Major employers in Shelburne are: Shelburne Wood Processing, KTH Manufacturing Inc., and the Upper Grand District School Board.
659 FP Markets provides data on Dufferin County and a full set of indicators on Orangeville. It is important to note that our application's business plan is predicated on Dufferin County as a whole, including Shelburne.
660 Retail sales in 2011 for Dufferin County was estimated by FP markets at $819 million, indexing higher than the Canadian average. With a population estimated over 30,000, Orangeville is the largest town in Dufferin County which totals 61,700.
661 Retail Sales in Orangeville account for nearly half of all the retail sales activity in Dufferin County. The healthy size of the retail sales activity in Orangeville and Dufferin County were key in the construction of our financial projections.
662 MS BULBULIAN: Our business plan has been carefully prepared by our management team and is based on three key sources. The first is our 20 years of experience selling radio in small markets across Canada through our SkyWords business.
663 Secondly we have analyzed and aggregated research that was performed by previous applicants, BBM data, and our own canvas of area businesses in both Shelburne and Dufferin County.
664 Lastly our assumptions are based on discussions with management who operated CIDC when their studios were located in Orangeville prior to its format change.
665 We do not believe that Shelburne as a stand-alone market can support a commercial radio station without driving revenue from greater Dufferin County, including Orangeville. It is with this assumption that our business plan was conceived.
666 Based on these assumptions we expect that our station will debut with a five share of tuning in the market. Our experience in Ottawa with the launch of a new service shows that moving listeners from their established tuning habits is a process that is achieved over years. We will grow this level of tuning over our first licence term to a nine share.
667 As we analyze the latest BBM data for Dufferin County, we can see that CBC pulls the greatest share of tuning at 11.9 percent. This is not unlike many Ontario markets, particularly small markets without radio stations.
668 It then becomes clear from the rankers that Adult Contemporary and standards stations are the most listened to out of market stations in Dufferin County with 33.3 percent of the tuning. These are the stations that are closest in format to our proposed station.
669 Other strong formats for this market include Rock at 30.1 percent and News Talk at 8.4 percent -- not including CBC.
670 The country format is the least listened to at 3.7 percent.
671 MR. CLARKE: Our research led us to a comprehensive study of the market that was conducted by Strategic Inc. and Pollara in November of 2007. It was conducted for the Evanov Radio Group. The Evanov group proposed an Adult Contemporary easy listening format similar to the one that we have proposed in our application.
672 Among some of the key findings of that study:
"The average hours of tuning in Dufferin County are down across several demographics"
"Tuning in the market is predominantly to Toronto services with two thirds of total tuning going to stations from the GTA."
"Respondents were also asked to comment on their likelihood of listening to the new service if it were licensed. The majority of those surveyed stated that they would listen. Among respondents from Shelburne, the number was slightly higher with almost three quarters stating an intention to listen."
673 The music styles and artists of the Evanov application are significantly similar to those that we are proposing here today.
674 We expect that 40 per cent of the new station revenues will be derived from current radio advertisers who use out of market signals to reach Dufferin consumers. With our ability to leverage our existing relationships with regional advertisers through the use of our SkyWords sales team, we believe that these numbers are easily attained.
675 Although our original forecast of 10 percent growth in radio advertising budgets may be tempered by current economic conditions, our experience with CIDG-FM indicates that this level of growth can be attained by using online and social media strategies to make up for growth shortfalls.
676 The remaining 50 percent we expect to be new retail business from Shelburne, Orangeville and Dufferin County as we launch the only local service in the market.
677 MR. FORD: Our economic assumptions are outlined in our Supplementary Brief. They are based on 20 years of radio experience with SkyWords and our more recent experience in the launch of our start-up radio station.
678 It is interesting to note that the initial projections that we prepared for CIDG in 2007 are within 10 percent of bottom and top line projections. This, in a climate of extreme economic uncertainty, points to our experience in this industry and the strength of our forecasting models.
679 MR. TROTTIER: WARM-FM will not be a cookie-cutter format. As we did with DAWG-FM, we will build the playlist from the ground up. We will carefully select our music to differentiate ourselves from the other corporate AC stations that filter into the market. Our positioning statements will be fresh, our imaging will be new, our news and spoken word features will also be constructed to suit the Shelburne and Dufferin County markets.
680 WARM-FM will reach a broad adults 25-54 audience, but will target women aged 35-54. The station will provide local weather, news, traffic and sports for Shelburne and Dufferin County.
681 The music will have a smooth and comfortable feeling and focus on familiar music from the last 30 years, with an emphasis on ballads, slow and mid tempo songs.
682 The playlist will include Canadian artists such as Michael Buble, Diana Krall, Gordon Lightfoot, Jann Arden, Shania Twain, Sarah McLachlan, and Joni Mitchell to name a few.
683 Emerging Canadian Artists will also be featured predominantly in all day parts. International artists also, such as Sting, Phil Collins, Norah Jones, Billy Joel, Elton John, Barbara Streisand, Madonna, and the Bee Gees will round of our easy recognizable sound.
684 MS ELLIOT: Our news programming will be central to the success of the station. Once again, we will not employ a cookie-cutter approach to this. We will create totally new features to highlight Shelburne, and Dufferin County, just as we have done in Ottawa to feature our Blues community.
685 Orangeville shares it's local newspaper with Shelburne but, as it stands, Shelburne does not have its own news outlet with a focus on the community. As somebody who grew not too far from Shelburne, I can empathize with the lack of local news coverage. WARM-FM will fill that gap for the people of Shelburne. The station will increase plurality of news voices in Shelburne by providing a new distinct, independent news voice.
686 Our newscasts will have a local focus on Shelburne and Dufferin County. Sixty percent of newscast content will be local Shelburne stories; 20 percent would be regional content, covering those outlying towns who also lack a voice in major radio newscasts, like Hockley, Grand Valley, Mansfield and Dundalk, just to name a few.
687 The remaining 20 percent will be national and International news stories. Our newscasts will run slightly longer than those in other music-intensive formats, really putting focus on the community. Sportscasts will make local sports and athletes the priority. Weather information will focus on Shelburne and Dufferin County to ensure listeners are prepared for their day.
688 Traffic is a growing concern among Shelburne's population throughout Dufferin county and Southern Ontario. Over 60 percent of the labour force commutes beyond Dufferin County to work. The rapid growth of the region means construction efforts are underway to keep pace with economic growth. This makes traffic reports a key component of this application and SkyWords will be best positioned to assist the station in the dissemination of traffic information.
689 Because of the heavily traveled nature of Highways 10 and 9, winter road conditions are critical. The past several years have seen an increase in major accidents and road closures. Accurate traffic and road conditions are a critical part of our station's programming.
690 Social media is also an integral part of our news gathering and our programming process. When an airliner carrying a Russian KHL hockey team recently crashed, our station in Ottawa was the first to break the news as a result of our active engagement Social Media strategy.
691 Twitter and Facebook will allow our station to:
692 Build a community of listeners that participate in the station online through posts and tweets;
693 Disseminate important information like local events, concerts, road closures or breaking news stories to keep our community informed;
694 Engage listeners of the station in an ongoing conversation with our on-air personalities; and
695 Create new non-traditional revenue opportunities.
696 All of our programming initiatives will be driven by a local Program Director and News Director. These crucial decision-making processes will rest in Shelburne, not a distant regional office.
697 MR. FRANK TORRES: Our Canadian Content Development has been carefully designed to support FACTOR and the Upper Grand District School Board.
698 Increasingly public school boards have found themselves struggling to fund music programs. Our CCD initiatives will monetarily support the purchase of musical instruments, but we will also support local schools by assisting them in fund-raising endeavours as a part of our community service mandate.
699 MR. ED TORRES: I will recap the three main reasons that we feel that our application is the most best suited to meet the criteria set out in the Broadcasting Act.
700 Firstly, we will introduce a new broadcast voice into this region.
701 Secondly, our format is the right format for Shelburne; it's the format that will attract the greatest number of Dufferin County and Shelburne listeners. It's the local station that businesses can play and advertise with. A narrow format would not be as well received as our AC format. That's why most small radio markets in Canada run an AC format, and that makes AC the most popular format in this country music-wise.
702 Lastly, our company will be greatly strengthened by this station. Our Ottawa and Markham operations will contribute synergies in back-end functions and the Commission can rest assured that as an independent broadcast company with a 20-year stake in the industry that this is an important growth opportunity for Torres Media.
703 In closing I will leave you with words from The Chair of the Shelburne Business Improvement Area. I could not find better words than his to conclude this presentation.
704 In his intervention letter Mr. Chenette states, and I quote:
"There are no radio stations which are local to Shelburne and I think it's about time we are granted one. That being said -- I think the adult contemporary radio station being proposed for 104.9 FM on the dial is just what this town needs. It would be wonderful to be able to listen to a radio station which is LOCAL and RELEVANT to me my business and my family.
I appreciate your consideration in this matter and do hope the station licence gets put into the right hands with Mr. Frank Torres."
706 Close quote.
707 Esteemed Commissioners, you can be sure that the "right hands" are those of Frank Torres OBCI. We lived up to our commitment to launch a new format in Ottawa, which we did in the hardest of economic times, and we did so just as we presented to the Commission in 2007.
708 We will have a permanent presence in Shelburne, in the format that we have presented to you today.
709 Thank you we can now take your questions.
710 THE CHAIRPERSON: I believe Mr. Patrone will start.
711 COMMISSIONER PATRONE: Thank you, Mr. Chairman, and welcome Torres.
712 Again, we appreciate your application. There are a couple of anomalies in your application that we have been asked to clear up so we might as well get to those right now.
713 One of them involves some clarification needed about your commitment to local programming. There seemed to be some question as to whether it's 120 hours or 126 hours.
714 Could you help us out with that?
715 MR. ED TORRES: Sure. I believe it's 126, but I will ask Yves to give you the definite --
716 MR. TROTTIER: What we say is that we are going to have 120 for sure and maybe six hours we will do syndicated shows, but the Program Director will see when we launch the station.
717 But what we have planned is 120 hours of local programming and we have six hours there that we can use for a syndicated show.
718 COMMISSIONER PATRONE: And if there isn't appropriate syndicated shows available, then it's just more local or how do you fill that void?
719 MR. TROTTIER: When we talk about syndicated shows, we are doing syndicated shows ourselves. So that's maybe like we're doing DAWG blues show that we said in the presentation, so when we launch the station we are going to see what kind of AC station we are going to do with the population of the county and if the format fits with the blues show we may play it on Sunday night, something like that. But it's something that we have to do when we are going to be there.
720 COMMISSIONER PATRONE: We notice a striking difference in spoken word between the Torres application and the Bayshore application. Torres has proposed 10 hours and 30 minutes per week -- correct me if these figures are not correct -- including 8 hours and 30 minutes of news and surveillance info; Bayshore proposes 18 hours, including 10 hours and 32 minutes of news.
721 It stood out that there was a fairly wide difference there so I wanted you to address that. What, if anything, should the Panel read into this difference?
722 Can you talk about how this program orientation will help repatriate out of market tuning amongst your target audience?
723 MR. ED TORRES: That's an excellent question.
724 I think when you put both applications side by each that does stand out as a glaring difference.
725 I guess if you drill down, Bayshore has, for lack of a better word, a whack of spoken word features that they already run on their seven stations in and around this market so to us it appears that there spoken word is very, very cookie-cutter, they are just going to cut and paste, whereas our spoken word is going to be created from scratch. I mean we are the spoken word experts.
726 At SkyWords we create, we mentioned, the entertainment report, the business report, traffic reports, we create snowmobile trail reports, we have syndicated shows that number in the 20s or 30s.
727 So we could really run a news talk station if we wanted to, but the point is it's not relevant content for this market. Once we get into the market we have to really decide what is relevant to the local towns, the local people and that's when we will create it.
728 So this is a ballpark figure, but certainly news for the station that we are proposing is critical and we said that in our presentation, it is critical because it's going to be a small-market station and the thing that is going to attract listeners to us versus CHFI or CHUM-FM is going to be the local news.
730 MR. FRANK TORRES: I think the absolute underlying bottom line best way to answer that question is that 100 percent of our spoken word content will be unique and original and designed and originated specifically for Shelburne and Dufferin County, whereas you take an ownership group that has a cluster of seven or eight stations in overlapping markets and it stands to reason that they repeat and replay a large quantity, if not all of their spoken word material. That's the main difference.
731 COMMISSIONER PATRONE: On pages 5 and 6 of your supplementary brief you talk about synergies. You mentioned exploiting synergies with "our existing Shelburne broadcast operation makes good strategic sense".
732 Now, I know you're not operating a pirate station there so we are not aware of any other broadcast operation, unless of course you are speaking about SkyWords. Is that the operation you were referring to?
733 MR. ED TORRES: It starts with an "S" and at the time that we put this together, yes, that's correct.
734 COMMISSIONER PATRONE: Do you expect to maybe discuss a little more the synergies are possible synergies between your Ottawa station CIDG and this proposed new operation and to what degree that has been factored into the financial projections for this application?
735 MR. ED TORRES: Okay. Yes, it's an excellent question. Really that's why we are here, we want to grow our business, we want to maximize some of the operations that we have going on in Ottawa.
736 So why don't we start with Ottawa and there's three areas I think in promotion, production and IT.
737 MR. TROTTIER: Yes. Like in promotion, just to give you an example for promotion, if we are having a big promotion in Ottawa, we are giving on the air 10 trips to a vacation destination, we can like keep two for Shelburne. That's something we can do with a big station in Ottawa to help the local station in Shelburne. That promotion will help, the first part.
738 Second part, special programming. Like I said, maybe we are going to send some special programming from Ottawa to Shelburne. Also, some news features. Like if something big is happening in Ottawa we have some people there in Ottawa who can call Shelburne and do a special report live in Shelburne.
739 Traffic log will be done in Ottawa as well. Traffic log is when you sign a contract with a client you put it in a computer and you are doing the traffic log. That will be done in Ottawa.
740 And also singer programming, singer musical programming in Ottawa. We have Program Director here in Shelburne and a Musical Director here in Shelburne, but we have senior people in Ottawa who supervise everything. So that's from DAWG-FM.
741 And production as well. Normally production-wise you are doing all the production here in Shelburne, but all the ID things, the liners and everything, is done with the big production studio in Ottawa.
742 So that's the things that we can do.
743 COMMISSIONER PATRONE: And congratulations on your 20th anniversary, by the way, on your SkyWords and ever.
744 I'm a little curious, I take it some of your SkyWords customers could also be your competitors and I'm just wondering to what degree that complicates things, because obviously there may be breaking news stories in which SkyWords could potentially leverage its position to favour Torres stations over clients who are your competitors, if you know what I mean.
745 Could you address that for me?
746 MR. ED TORRES: Yeah. Really the two operations are autonomous in the news -- we will call it traffic report gathering function.
747 One thing that you have to consider is for 20 years we have been managing this because we have been dealing with clients, radio stations, in a market that compete against each other so we have to make sure that we don't favour Evanov in Toronto versus MZ Media in Toronto. So it's very important to us. We are almost like the lottery, we have to make sure that nobody gets preferential treatment.
748 In fact, when we launched our station in Ottawa we had our best voice talent providing traffic reports for Jewel; we had our secondary voice talent providing traffic reports for DAWG-FM. So it's a balance that we have to strike.
749 COMMISSIONER PATRONE: When you had your out of market tuning map up earlier, if I heard you correctly in your oral presentation you were talking about taking tuning from CBC. You felt that CBC was in a strong position relative to market share and that you felt that your operation would be well-positioned to take tuning from them.
750 I'm trying to understand how your format would do that, would appeal to CBC listeners, many of whom are quite loyal to talk and what CBC does. How are you going to take their listeners?
751 MR. FRANK TORRES: That's another excellent question.
752 Again, it has to do with the news element that we are going to provide. People tune into CBC at the top of that newscast to hear national news. If you don't have a local station in Shelburne, would you tune in to CBC for the national news or would you tune to a Toronto radio station? I think that given the choice most people would tune to a CBC newscast.
753 So, again, the strength of what a local radio station provides is local relevant news, and I think that will affect CBC. I think it will affect all of the tuning in the market when we launch our station.
754 COMMISSIONER PATRONE: We are going to talk a bit about your business case in a minute, but you are on the subject of news and I was wondering about your news allocation -- reporters on the street, that kind of thing.
755 MR. ED TORRES: I think that Kim has the breakdown of how our News Department works.
756 MS ELLIOT: What we are doing for the News Department is, we have a full-time news journalist, the news director, who will be doing Monday to Friday, nine to five. He will be recording and gathering news.
757 We have the co-host in the morning and the drive show, who will be reading the news, but the most important thing, I think, is that we have three stringers. We have people covering Orangeville, we have people in Shelburne, and stringers in Dundalk. So, as needed, they will be bringing us stories and filing reports. We are going to have them going to town hall meetings, to Dufferin Council meetings, reporting back to us -- as much local, local, local as we can. That is where those stringers really come in handy for that.
758 COMMISSIONER PATRONE: I want to ask you about the advertising direction that you are going to take. There were some suggestions by incumbents and competitors that you hadn't really done your homework relative to examining and analyzing possibilities as far as advertising is concerned, but you have, in fact, produced some information.
759 Do you have any other data that might help us understand the degree to which this market can handle more competition?
760 MR. ED TORRES: Yes, that's an excellent question. We can drill down into some of our projections.
761 The research was performed by Evanov in November of 2007. It was in the public domain.
762 And, further, we consulted FP Markets.
763 We canvassed our own existing regional clients. That's one thing that Skywords does very well, sell regional packages to advertisers.
764 We examined FP Markets, and we looked at the retail sales, which are projected now to be $819 million, and we have all heard about the RMB formula. It puts revenue in Dufferin County at anywhere from $3 million to $4 million.
765 We think we did our homework. We certainly did more than the industry in small markets. HBG Radio has just been awarded stations in Prescott and Kemptville, without any research, and before that in Barry's Bay.
766 myFM doesn't provide any research into the small markets. They say: We are running an AC format, we know how to run them, and this is a market that works. They use a lot of their experience.
767 So those are some of the factors that came into our decision to make this application.
768 But in terms of where the sales will come from -- and I don't want to jump ahead if that's not your question, but we have a breakout --
769 COMMISSIONER PATRONE: Please do. Go ahead.
770 MR. FRANK TORRES: Actually, just before we go there, another comment about our due diligence is that we did two full delegations to City Council, one to Shelburne and one to Orangeville. Anyone who has been in a public process like that understands that City Council for small towns like this is a mecca for business contacts, and really helps you put your finger on the pulse of what the community is doing, because at those small Town Councils, as opposed to our big City Councils in the cities, you have all of the business leaders there, and all of the community leaders there, gathering in one place every week. That was a really valuable source of information for us.
771 That was two delegations that we did, but we also had sales reps on the street.
772 Catrina, you made a trip down there.
773 MS BULBULIAN: Yes.
774 MR. FRANK TORRES: And we also canvassed our existing clients that advertise in the region, as well, to find out what their demand or desire would be for a local station.
775 COMMISSIONER PATRONE: You have something to add to that?
776 MR. CLARKE: Yes. To expand on that, I could name a few of our clients who have requested that market actually. Vandyk Homes right now is building in Shelburne. They are a customer that doesn't do very much radio, but they have requested that, if we do get the application, they would support us.
777 We have a couple of other clients -- like, Total Vacations does only radio with Skywords right now, and they have requested that if we do get into Dufferin County, they will support us, as well.
778 And there is a bunch more of our clients that are spending money on Skywords that are local to Dufferin County. Some of the car dealerships right now are using Skywords stations that surround the area, like the Barrie stations, the station from Hamilton, the stations from Oka, to reach Dufferin County businesses -- consumers right now. They also would support us.
779 COMMISSIONER PATRONE: Thank you for that.
780 I also take note that some of the data that you have used -- you have used Evanov's information, dating back to 2007. I think we will all agree that the world has changed a lot since then, when you consider everything that we have gone through.
781 Do you find that the advertising market in this area might be overly susceptible to seasonal economic fluctuations and that kind of thing, and have you factored that into your projections?
782 MR. ED TORRES: Collingwood, yes. Shelburne, no.
783 Shelburne and Orangeville -- again, Shelburne is one of the fastest growing cities in Ontario. Orangeville continues to grow in population.
784 Basically, the City of Toronto continues to expand northwards. I think that this region is well positioned to cash in on that increasing demographic shift of the country.
785 Aubrey has talked about Vandyk Homes, which is a long-term client of ours. They are building.
786 In fact, Orangeville's number one business sector is construction.
787 So when you factor in where we sit, in terms of the geography of this part of Ontario, I don't think that seasonally we will be affected at all.
788 MR. FRANK TORRES: I think, also, when you combine that with the fact that 60 percent of residents actually commute to their place of work, outside the county and outside the town, that indicates that, economically, they are sustained by businesses and the economy outside the immediate county.
789 COMMISSIONER PATRONE: Your financial projections appear to be fairly aggressive. You are looking at losses in the first two years, and then you expect profitability in the third year.
790 I believe it averages out to 12.5 percent over the licence term.
791 You don't think that's overly rosy?
792 MR. ED TORRES: No, I don't. I think it's, actually, conservative.
793 Again, if we look at the $818 million in retail sales, when we consider that we just launched our radio station -- coming up on two years ago, I think -- and Ron can speak to some of the forecasting that we did, but our forecast model for Ottawa was also questioned about being overly optimistic.
794 Skywords provided in the first year of DAWG 40 percent of the revenue. That was booked and sold out of Toronto for an Ottawa radio station to, essentially, our existing clients.
795 Ron, I don't know if you have any more thoughts on that.
796 MR. FORD: You have raised the question about the economic conditions currently that everybody is aware of, but, again, we had the same situation in 2008 and 2009. These ups and downs do go through. They do go through, and we were able to sustain that going into Ottawa.
797 So I take the dire economic forecast with a lot of salt, actually. To my diet -- I should be taking less salt, but anyway that is the way I view some of these gurus who are coming up with these doom-and-gloom forecasts.
798 I think, if you look at your plan properly, and if you analyze it properly, then you should be able to adhere to it.
799 MR. CLARKE: Something else to take into consideration is that our numbers are very similar to Bayshore's numbers. Bayshore is proposing to service a market of 13,000 people, and we are proposing to service a market of 57,000 people.
800 So I don't think our numbers are too optimistic.
801 COMMISSIONER PATRONE: The Ottawa station is still a relatively new operation, so we ask whether there is a good deal of confidence that Torres would be in a position financially to sustain, were it to happen, an extended period of, let's say, an underperforming market.
802 Do you want to address that?
803 MR. ED TORRES: Yes, absolutely. That's why we are here. We want to grow our business. We want to get our people, who we are paying, busier. We want them to traffic two radio stations or three radio stations, so that we can grow our top line and grow our bottom line.
804 We want to get synergies out of our production people.
805 The launch of our radio station in Ottawa has been highly successful. We launched with 930 watts ERP, and we achieved a 2.1 rating. So if you divide the number of listeners that we have by the kilowatts that we put out, we are the most efficient radio station in the country.
806 Astral launched with a 30,000 watt signal at the same time, and reached 1 share.
807 And we have just boosted our signal in Ottawa.
808 But the reason we are here is, we need to grow our business, and this is part of our strategic plan to do so.
809 COMMISSIONER PATRONE: Thank you very much. My colleagues may have some questions, so I will leave it to them.
810 THE CHAIRPERSON: Ms Molnar?
811 COMMISSIONER MOLNAR: Thanks. I have a couple of questions, just to ensure that I understood what you were saying to us this afternoon.
812 First of all, I wrote down, as you spoke about your spoken word, that 100 percent of spoken word would be designed and originated for this market.
813 Then, later, under a discussion of synergies, I wrote down something that was said about special programming being created in Ottawa as a synergy.
814 I have misunderstood one of those statements, so could you tell me --
815 MR. ED TORRES: The spoken word is going to be designed and it is going to be produced here. So, local news.
816 Now, we will use synergies with Skywords. A traffic report, for example, may not be produced in Shelburne. It may be produced in Markham, as we produce content for other radio stations in our chain.
817 However, we may decide to position our Skywords people in Shelburne, like we have done in Ottawa. Our Skywords people are actually resident in Ottawa, because we find that, if you are in the market, you can maybe better serve it in terms of traffic.
818 So that might be a growth opportunity for Skywords, because our person here will now be able to specifically focus on western Ontario and northern Ontario.
819 So we might divide up that spoken word in that sense.
820 To be clear, though, the syndicated programming is music content. It's a music show, so it wouldn't be spoken word.
821 But, again, it is highly unlikely that that show will make it onto the air, Yves was just using it as an example.
822 Is that clear?
823 COMMISSIONER MOLNAR: Not entirely. You have a specialty licence in Ottawa, which is not the same format as what you are proposing here. So I am a little confused as to how you could have special programming from a music format that is going to fit into what you are proposing for this market.
824 That is the one thing that wasn't clear to me, and the other was, as I said, I wrote down -- and we can check the transcript, but I think you said that 100 percent of the spoken word in your application would be designed and originated for this market. And now I think I heard you saying that you may move some of Skywords' business to Shelburne.
825 What is your commitment to this market?
826 MR. FRANK TORRES: Let's make that perfectly clear. Our commitment on spoken word is 100 percent, without a doubt.
827 If we provide traffic information, for example, from our Markham traffic bureau to Shelburne, it is specifically for Shelburne -- specifically designed and covers only the routes in that market, which qualifies it as local spoken word content.
828 That's what we do, across the board, for all of our stations, no matter, geographically, where they are located. We cater the reports specifically into that market, which qualifies it as local spoken word content.
829 Just to clarify the other point, where I think we haven't been as clear as we could, 126 hours a week is what our programming provides for. We will launch with 126 hours of local programming.
830 We like to leave a window of 6 hours for possible syndicated programming.
831 At the time of launch, we will launch with 126 hours of local programming. We may take on an outside show, depending on how the audience there reacts to it and what the programming director decides.
832 MR. TROTTIER: Also, my first thought -- thinking that the blues will not fit the format -- that is perfectly clear. Like, Stevie Ray Vaughan's rock songs would not go well with a soft AC station.
833 But at DAWG, when we launched, we had a show called "Ottawa Soul City", and it was & , with Marvin Gaye, Stevie Wonder, Aretha Franklin, and that kind of show will fit that format.
834 Right now we don't have this show on DAWG. We removed it, but it is something that we might do later on, and that will fit, also, with this station.
835 But, for now, there are no shows that we are producing that would be able to be played on our Shelburne station.
836 Is it more clear now?
837 COMMISSIONER MOLNAR: Yes. It was a hold card. If I listen to everything here, it is like a hold card for, maybe, something in the future.
838 Is that right?
839 MR. TROTTIER: Exactly.
840 COMMISSIONER MOLNAR: There is one other thing that I am sure you folks can help me with. I know that you are targeting -- as a first potential station in the market, you are targeting a very broad audience. I think what you have said here is that you are targeting women 35 to 54, but could you give me the information as it regards the demographics of this marketplace?
841 MR. ED TORRES: The mean age of people in Dufferin County is 36 years of age. So when we put our plan together -- females make the major buying decisions still, and when the buys come down from the agencies -- the national agencies -- they are always looking for females 25 to 54, or adults 25 to 54.
842 So our idea is to try to cast as wide a net as possible, to catch as many 25 to 54-year-olds with this format, but to target a 35 to 54-year-old female that makes those buying decisions and fits within the mean of the population in the area.
843 That is really what we are trying to achieve, and because it is small market radio, we want it to play in all of the businesses downtown. So, when the coffee shop owner is making his coffee for the morning rush, he has the station playing, he can be informed by the local news, and it is going to be the least offensive format for his customers.
844 That is really where we are going with the design of the demographic.
845 COMMISSIONER MOLNAR: Fair enough. I was looking and, as I said, just trying to better understand.
846 As you know, while it is not relevant to your application, there was quite a lot of -- the demographics of the markets this morning were very relevant to the discussions.
847 I know that you provided quite a bit of information as it regards your multiplatform strategy and the use of different mediums, such as the Twitters and -- you know, using Twitter online and so on.
848 I was just trying to get a sense as to how significant that would be to the success of a station in this market.
849 MR. ED TORRES: Our experience with CIDG is that radio stations are no longer broadcasters. You no longer talk to your audience. You engage them in a conversation.
850 The over-the-air signal tells them what you want them to hear, and then Facebook allows them to talk back.
851 We have a very active social media engagement policy. It is very much a free rein kind of system. It is very loosely patrolled and policed, so that it doesn't appear to be corporate.
852 What that does is, it allows us to build a real community of listeners.
853 With CIDG, another important success that we have is, we have 8,000 fans on our Facebook page, which makes us third in the Ottawa market. If you can believe it, after 19 months of broadcasting, we have more Facebook fans than CFRA. We have more Facebook fans than Majic.
854 So it is integral to the strategy, and over the summer -- I will just give you one example of how we leverage our Facebook fans. We put on a blues festival in Calabogie. We organized it 100 percent. We drove that festival through our Facebook fans, and then we surveyed the fans that showed up.
855 We had an attendance of 8,000 people go to Calabogie, which is a good hour north of Ottawa, and 75 percent of them were from Ottawa, listeners to the station.
856 We drove that message with Facebook and --
857 COMMISSIONER MOLNAR: If I could just --
858 MR. ED TORRES: I'm sorry, I get excited when we start talking about --
859 COMMISSIONER MOLNAR: You are getting excited about Ottawa, and I want to talk about Shelburne. So if you could convince me that it is an important element for this market, that would be awesome.
860 MR. ED TORRES: Our experience there equals here.
861 Go ahead, Frank.
862 MR. FRANK TORRES: I think that radio is about community. That's how we see it. So as important as local programming is, and certainly local presence is to Shelburne, you really need to develop a virtual community for your listeners.
863 That's what Facebook and Twitter are fantastic for. It's not something that we drive or mandate. Our input in Shelburne will be minor as far as the online community, because the online community grows and builds on its own.
864 It is a wonderful thing to see people interacting on your Facebook page, on subject matter that has nothing to do with your radio station. You just build a portal where people are comfortable and they are happy, and they certainly start off with an element in common, and you build a different form of community. You have your physical community in Shelburne, and you have an online community, which is very important to us.
865 MR. CLARKE: Just to expand on that, Facebook also helps us with our sales. We have built a number of Facebook fan pages for our clients, and we intend to do the same thing for our clients in Shelburne, as well.
866 It also increases our sales and their commitment to us.
867 MR. ED TORRES: Yes, a lot of the ma and pa older businesses -- established businesses -- don't really understand social networking. So, as part of our strategy to grow revenue, that 10 percent of radio growth, we found that we can make that up on the social media side.
868 So, when we sell an advertising package to a client, it includes Facebook, or it has an option to include mentions on our website banners and the like.
869 But, further, what we do is, we help those clients. We set up their Facebook pages, and then we administer them and manage them. We post content to them.
870 So we are driving revenue through radio.
871 That is going to be integral to our strategy in Shelburne.
872 MR. FRANK TORRES: There is not a businessperson we have met that hasn't said, "I would love to be on Facebook," or, "I know I need to be."
873 But usually what shortly follows that is: I just don't get it. I just don't know. I just don't have time. I'm not great on computers.
874 That is where our sales people come in and say, "We will handle it. We will set it up for you and we will run it for you."
875 COMMISSIONER MOLNAR: Thank you.
876 THE CHAIRPERSON: Okay. I hear words like "we need to cast a wide net", and you are in a small market, so you want all of the local businesses to play it, and it is "the least offensive format".
877 You have heard the other people say: We are awash in a sea of adult contemporary, or hot adult contemporary -- whatever that means -- and it's the sameness of a sameness of a sameness.
878 So you are asking us to license more sameness. Why?
879 MR. ED TORRES: It is strictly a business decision. In a market like Ottawa, we can run a specialty format. We have to, because it is a little too competitive. But in a market the size of Dufferin County, and Shelburne specifically, you have to cast as wide a net as possible.
880 BBM shows that, actually, news talk outperforms adult contemporary, in terms of a listening audience, slightly, but now you are into a whole different animal. Your costs are much higher. It doesn't work in a small market.
881 So we have to go down the middle of the road, unfortunately.
882 THE CHAIRPERSON: Okay. That's a fair answer.
883 MS BULBULIAN: Being in sales, I have experienced a lot of clients who, basically, are telling me exactly what they need. Adult contemporary is where all the money lies, especially with agencies, and national and even local retail.
884 A lot of trade shows that we have come across in selling Skywords and traffic tags, they are all looking for adult contemporary. It is where all of the decision-makers are, the household female shoppers. That is basically exactly what Shelburne needs to tap into. It is what everybody is requesting. That is the highest request that we have gotten being in sales.
885 MR. FRANK TORRES: It is very difficult to move listeners to a different format. We have learned that, and we expected that in Ottawa.
886 And instead of doing that, what we think our application does is, it provides the music that we know already works in the region, but it adjusts it to the market there, and when you surround that with 100 percent local spoken word content, a diverse, new and plural voice for the Town of Shelburne, and the region in general, that is why we think it is the right format.
887 THE CHAIRPERSON: That's fair enough.
888 I think that's it for now. Thank you very much.
889 THE SECRETARY: I would invite Bayshore Broadcasting Corporation to come forward.
890 THE CHAIRPERSON: Just before we do that, let's have a five-minute break. We will start with Bayshore in five minutes.
--- Upon recessing at 1400
--- Upon resuming at 1409
891 THE CHAIRPERSON: Please, go ahead.
892 THE SECRETARY: Thank you, Mr. Chairman.
893 We will now proceed with Item 4 on the Agenda, which is an application by Bayshore Broadcasting Corporation for a broadcasting license to operate an English-language commercial FM radio programming undertaking in Shelburne. The new station will operate on frequency 104.9 MHz, channel 285B, with an effective radiated power of 12,500 watts, maximum ERP of 50,000 watts, with an effective height of antenna above average terrain of 82 meters.
894 Appearing for the applicant is Mr. Ross Kentner. Please, introduce your colleagues. You will then have two minutes for your presentation.
895 Thank you.
896 MR. KENTNER: Thank you, Madam Secretary.
897 Commissioners and Mr. Chairman, I am Ross Kentner, the President and General Manager of Bayshore Broadcasting.
898 With me today are: Kevin Brown, our Vice President of Sales and Marketing; JD Moffat, Operations Manager for Owen Sound; Manny Paiva, the News Director in Owen Sound.
899 Also, in the second row, we have got Ron Funnell, who is the General Manager, General Sales Manager, for Wasaga Beach and Orillia. We also in the back row have Stuart Hahn, Bayshore's Consulting Engineer, who is here to answer any questions you may have about these frequencies. And we have Michael Fockler, Programming and Regulatory Affairs for Bayshore Broadcasting.
900 It's my pleasure to introduce to you at my far right Mayor Ed Crewson of Shelburne here in an official capacity today representing the Town.
901 Finally, right directly behind us, in the audience is Mr. Douglas Caldwell, the owner of Bayshore Broadcasting, and also Ernest Leonard, Treasurer.
902 It is our pleasure to come before you today it share Bayshore's vision for what we hope is going to be a first and full-service radio station for Shelburne & Dundalk, Country 104.9.
903 This group of enthusiastic broadcasters has been together for quite some time, and has helped Bayshore grow from two stations in Owen Sound to a group of seven full-service radio stations, and all that, in less than ten years.
904 We operate in markets from Goderich and Port Elgin on the Lake Huron shoreline to Owen Sound and Wasaga Beach on Georgian Bay, as well as our newest radio station, Sunshine 89.1, in Orillia.
905 Each of our stations operates in much the same fashion; namely a dedication to providing high quality local news and information, as well as music programming with a broad, family-friendly appeal.
906 Shelburne has always seen to us a logical extension to the Bayshore family.
907 Bayshore saw an opportunity to expand into a market naturally suited to its long-term business plan. As a result, Shelburne is a perfect fit with our other radio stations.
908 The town of Shelburne is very similar in size and composition to the other communities in which Bayshore operates, such as Goderich and Wasaga Beachi, comparable populations and growth patterns, economic development, and demographic profile.
909 We have operated radio stations in the Central Ontario region for many years. This area is our home.
910 As such, Bayshore is uniquely positioned to provide a truly localized radio service in Shelburne & Dundalk, while at the same time reflecting our appreciation for this very special part of Canada.
911 Some Bayshore stations have limited spill into the Shelburne market.
912 However, each station is dedicated to super-serving its own community with unique news, information, spoken word, and music programming.
913 Country 104.9 will be no different. Listeners will know immediately that this is a radio station based in Shelburne, Ontario and reflecting the local community.
914 MR. BROWN: Members of the Commission, prior to submitting this application in 2008, Bayshore carefully evaluated the Shelburne market, using a number of different research methods.
915 Moreover, since the initial application was filed, we have provided updated economic statistics that reflect growth in the region over the intervening period.
916 Bayshore studied the economic strength of the market using data from Statistics Canada, the Financial Post, Dufferin County, the Town of Shelburne, and other sources.
917 We analyzed the competitive state of the market by engaging Solutions Research Group to do an audience tuning study. We also examined current BBM figures.
918 Mr. Kentner and I, as well as others from Bayshore, visited Shelburne on numerous occasions to speak with retailers, advertisers, listeners, community groups, and local politicians. A retail survey was conducted to determine music and advertising preferences amongst potential clients in the Shelburne and Dundalk area.
919 We looked carefully at the impact Country 104.9 would have on the existing commercial radio stations currently heard in the region, and realized we could add to the diversity of musical formats and news voices in Shelburne.
920 Our business plan reflects the economic realities of the Shelburne area, we have undertaken a retail survey and we have provided realistic financial projections in our business plan.
921 And last, but certainly not least, we examined how Bayshore could make a meaningful contribution to the objectives of the Broadcasting Act, through local and regional programming.
922 MR. FOCKLER: Commissioners, what we found through all of our research was that audiences desire a strong, local radio station offering news and information focused specifically on Shelburne and Dundalk, while retailers are seeking a cost-effective way to target customers.
923 Bayshore notes that there are currently no radio services providing news and information programmed specifically to audiences in Shelburne. Other stations, from Owen Sound, Wingham and Barrie largely ignore this area.
924 These regional services provide little content to listeners in Shelburne. For example, according to Solutions Research, more than two-thirds of adults surveyed can't seem to find a radio station that plays the type of music that suits their tastes.
925 What is even more troubling to Bayshore is that only 21 percent of survey respondents said radio was their primary choice for news and information.
926 Bayshore's own advertiser survey showed that nearly 70 percent of retailers want a station that is locally based. Many said that advertising was simply too expensive on regional radio stations, and do not provide a targeted message to audiences in Shelburne. As a result, only one retailer stated that they utilized radio as an advertising medium.
927 There is a clear desire amongst listeners and advertisers for a radio station that Shelburne can call its own.
928 MR. PAIVA: Bayshore is confident that its own Country 104.9 is the right radio station for Shelburne and Dundalk.
929 Our market visits and audience research have told us that highly localized news and information is what's most vital to listeners in the region. This is what Bayshore does best.
930 As one example, allow me to quote from a letter by Mayor Delbert Shewfelt of Goderich when an F3 tornado struck the town on August 21st this year. And I quote:
"The Emergency Operation Control Group continually used the local radio station to provide the public with messages and updates concerning the status of storm-related matters, including emergency services, victim supports and many other services that were available to the community. I would like to emphasize the importance not only during the tornado but on a regular on-going basis, of a radio station to Goderich and surrounding communities." (As read)
931 In fact, His Worship Mr. Ed Crewson, Mayor of Shelburne, is with us today as you know, to describe how Bayshore will best meet the needs of the community.
932 MAYOR ED CREWSON: Good afternoon, Commissioners.
933 My name is Ed Crewson, and I'm embarking upon my 15th year as Mayor of Shelburne and I have been a member of Shelburne's Council since 1988.
934 I'm here today directed by a resolution of Shelburne Council, authorized to support the Bayshore Broadcasting application before you today.
935 We believe that Bayshore's application is the best fit for Shelburne because their stations in similar communities are noted for strong local news coverage and a strong local presence. As a long-established town with rural roots, we now find ourselves on the leading edge of the Greater Toronto Area.
936 We are experiencing rapid changes and a lot more population turnover than ever before. A radio station like Bayshore has proposed will give us our own voice, helping us to reinforce our local identity and build a stronger sense of community.
937 Lacking that local voice and the ability it would give us to rally the community has made it difficult to communicate with each other and to integrate newcomers into our community. We are especially interested in the open line programming that will inform the whole area of important issues such as the quarry development.
938 We especially like the proposed country music format which will strengthen our famous Old Time Fiddle Championship and other proposed programming that will clearly build on our existing strengths.
939 Growing up in Shelburne, I listened to Conway Twitty and Johnny Cash, broadcast from CFGM in Richmond Hill. Most of my friends in high school listened to CFGM. Many of the people who are moving to our community are coming to a small town and a rural community because they want to be country people and so they want to listen to country music.
940 Currently we have no country music radio station that reaches our community. I am one of those who are listening to the CBC instead.
941 And so I am here today asking that you will approve this application because we have great confidence that if approved, Bayshore will serve our community with the promises it has made.
942 MR. PAIVA: We will provide the community of Shelburne with high quality local news and information, just as we do on our other radio stations.
943 Our news teams have won multiple RTNDA awards for Best Small Market Newscast. In fact, we have won five consecutive awards over the last five years and we have received many other honours for our coverage of news stories and public affairs issues.
944 Mr. Chair, while many radio stations are cutting back on local news coverage, Country 104.9 plans to carry 10 hours and 32 minutes of locally-produced news weekly, including eight hours and 20 minutes of core news programming.
945 These minimum commitments specifically address Mayor Crewson's request for localized news coverage. A minimum of 75 percent of this news coverage will be stories of local importance, including municipal council meetings, school and hospital boards, news conferences, local emergencies and so on.
946 As we do on other Bayshore stations, and in addition to the news coverage, Country 104.9 will broadcast a one-hour open-line style program each weekday, covering topics of local and national importance, allowing citizens to call in and question local experts in the fields of politics, health and social services or groups associated with community involvement and non-profit groups.
947 Bayshore is proud of its promise of performance. In total, Country 104.9 will offer 18 hours of news, information and enriched spoken word programming, representing as much as 14 percent of the broadcast week.
948 MR. MOFFAT: Commissioners, the New FM music content will be contemporary country, appealing to a broad 25-64 age demographic and targeting 35-54 females. Musical selections will be drawn from current and classic country music artists.
949 Songs from artists like Jason McCoy, Emerson Drive, Dean Brody, Terri Clark as well as new and emerging artists like Meagan Morrison, Cary Smith will provide listeners in Shelburne and Dundalk with a musical alternative to existing stations.
950 The daily musical selections will be upbeat in presentation, providing audiences with an enjoyable listening environment in which to work, play, and live.
951 Overall, Bayshore is proposing as a condition of licence Shelburne's new FM will ensure a minimum commitment of 40 percent Canadian Content between six a.m. and six p.m. daily, and 40 percent Canadian content over its 126-hour broadcast week.
952 But Country 104.9 will be much more than just a music jukebox. We are proposing a minimum of two and a half hours per week of dedicated, enriched spoken-word programming tailored to the Shelburne audience.
953 Bayshore defines enriched spoken word as information delivered at a specific time for a specific audience but does not include news, weather, surveillance or announcer talk. The Dufferin Highlands Explorer -- an extension of our award-winning Georgian Bay Explorer historical series -- is one such example.
954 Other segments centred on healthy living, entertainment, community events and the local arts scene will appear at regularly scheduled times throughout the broadcast week.
955 In addition to our programming commitments, Bayshore has allocated $24,000 per year to the development of Canadian content, over and above the basic annual requirements of the CRTC.
956 Every effort has been made to target groups and individuals in Shelburne and Dundalk that might not normally receive funding for musical projects.
957 The Old Time Fiddle Championship, the Northern Bluegrass Committee, Country Exposure Live, and FACTOR will all receive funds to develop, promote and stage live events in and around Shelburne and Dundalk.
958 In total, Bayshore has committed $168,000 over seven years to Canadian content development, solely in locally-based, direct expenditures. This amount is over and above the Commission's basic annual contributions.
959 MR. BROWN: Bayshore has designed a business plan and long term strategy that is realistic and achievable, even in today's difficult economy.
960 Although the economic situation is improving, consumers and advertisers continue to tighten their belts. In light of this, Bayshore has looked at a worst-case scenario based on a theoretical I0 percent and 15 percent reduction in first year revenue.
961 Maintaining the same financial commitment to both programming and CCD, we determined the station could take an additional year to year and a half, to realize positive PBIT.
962 As a broadcasting group, Bayshore is fully prepared to absorb any additional losses without impacting our local news and programming plans.
963 We are very confident in our financial forecast. Bayshore has launched four new radio stations in the past six years, utilizing similar programming and business models.
964 In each case, the new stations are operating at or very close to revenue levels forecast in the business plans, as approved by the Commission.
965 Based upon our proven track record, the Commission should be confident that Bayshore will achieve each of the goals established in our promise of performance and business plan for Shelburne and Dundalk.
966 MR. KENTNER: Commissioners, it must be noted that two other applicants at this hearing have also requested the 104.9 frequency. Bayshore has determined this is the only frequency that will meet the objectives of our business plan.
967 More to the point, the 104.9 frequency is the only one that places a 3 mV/m contour over the Town of Shelburne from our proposed transmitter site. In our view, this is one of the fundamental issues at this hearing.
968 While there are other frequencies available, such as 89.3 and 91.7, the 104.9 frequency is the only one that directly serves Shelburne and Dundalk.
969 Our consulting engineer, Stuart Hahn, has prepared contour maps showing how inadequate the other frequencies are for this market. He would be pleased to elucidate on that for you.
970 Mr. Chairman and Commissioners, in summary, Bayshore has grown from two stations in Owen Sound to building a regional group of seven radio stations in southern Ontario in just 10 years.
971 Bayshore is setting new standards with award-winning local news and local reflection in centres such as Owen Sound, Goderich, Port Elgin, Wasaga Beach and Orillia.
972 All of these stations have gone from licensing to launch in record time and all are performing at or close to projections.
973 Bayshore has a strong management team with the in-depth knowledge and experience to do what we planned to do here in another small market in central Ontario.
974 We have strong ownership with the financial resources to support this operation.
975 We will be offering a musical alternative and specialized theme programs that are heard nowhere else in the region.
976 We will provide the local news voice that Shelburne listeners, advertisers, and Mayor Crewson have clearly said they want and need.
977 Bayshore's Country 104.9 will be a radio station that Shelburne can truly call its own.
978 Thank you for your time. Now, we look forward to your questions.
979 THE CHAIRPERSON: Good afternoon. Thank you for your presentation. I always enjoy when you say you are looking forward to your questions.
980 So let's -- actually I want to take up an issue that is out of the usual sequence but if you could just go to spectrum usage in your radio engineering plans?
981 You said in paragraph 70 that:
"Stuart Hahn has prepared contour maps showing how inadequate the other frequencies are for this market."
982 So we have these maps in fact before us, do we not?
983 And I take it -- Mr. Hahn, would you like to speak to them?
984 MR. HAHN: Yes. Do you have the colour copies or are they in --
985 THE CHAIRPERSON: I have got a colour copy before me.
986 Yes, okay. So Figure 1 and Figure 2 what do they show?
987 MR. HAHN: They show the coverage that is possible on the two other frequencies that we have looked at, 89.3 and 91.7. They both provide much less coverage than 104.9. Roughly half the -- the 3 millivolt is produced by roughly half in terms of area and it's only one-third the population.
988 THE CHAIRPERSON: Why -- I mean perhaps this is deeper than we need to go into, but why is -- why does the coverage vary so much between frequencies?
989 MR. HAHN: Basically, it's the protection requirements on the specific frequencies. They all use directional antennas that shape the radiation pattern to avoid interfering with existing stations.
990 In the case of the two alternate frequencies there are protections to stations in Toronto and Paris that limit the southerly coverage, and that's why we can't get the same service that we can on 104.9.
991 THE CHAIRPERSON: Well, I am glad it's human policy and not some spooky artefact of nature. Okay, great.
992 So back to the main event: I have noted that you have made a commitment to provide 18 or more hours of overall spoken word per week and, in particular, 10 or more hours of news and related surveillance is part of your contemporary country format.
993 Now, you will notice that -- you will have noticed that as part of his application Torres had committed to provide approximately 10 hours and 30 minutes of spoken word per week including eight hours and 30 minutes of news and related surveillance, and this does not include announcer chit-chat.
994 So could you please explain why your spoken word offerings vary so much from those of Torres?
995 MR. KENTNER: I think the basic answer is that we do not include announcer comment, the introduction of music.
996 Perhaps, Michael, you would like to just elucidate a bit on that?
997 MR. FOCKLER: Yes. The spoken word numbers they do vary, but Bayshore is proposing open line programing and enriched spoken word that perhaps Torres is not.
998 And I would like to make a point on a comment that Torres -- that all of our spoken word is produced in studio in Shelburne, or will be produced in studio in Shelburne.
999 THE CHAIRPERSON: So why will this programming orientation result or contribute to the successful repatriation of out-of-market tuning amongst your target audience?
1000 MR. KENTNER: They have an expression in real estate, "Location, location, location" and in radio it's "Local, local, local". We hear a lot at these hearings about various formats. We are the only broadcast group that has spoken in recent years about local as a format.
1001 Now, our friends from Torres certainly did a good job today of explaining they understand what local is, and we certainly do. That's what we do in each of our communities.
1002 You can tell from the Mayor's comments that what is really lacking here and what people are actually waiting for. And especially when those winds start blowing and the snow starts coming in the next few weeks that they are waiting for local snow and road condition reports. They are waiting for a lot of things that are theirs.
1003 That's how we're going to repatriate to people. Plus, we know that this is Ontario's richest farming community. Hundreds of square miles of some of the best farmland and these people are country music crazy.
1004 MR. PAIVA: If I may just add, our open line program we have noticed in our other markets has really allowed us to connect with the community and I think in turn has allowed the residents to connect with the radio station and to allow it to become a community radio station.
1005 THE CHAIRPERSON: Thank you.
1006 You mentioned in your supplementary brief that Bayshore has begun to benefit from operating synergies due to the company's expansion in various markets.
1007 Can you please elaborate on the types of synergies that you allude to in your brief?
1008 MR. KENTNER: We are talking typical head office functions; payroll, traffic.
1009 The jobs that we are going to be creating in Shelburne are the kind of jobs that people there hope to get because the radio station is coming. There will be news jobs. There will be announcing jobs. There will news jobs, there will be announcing jobs, there will be production jobs.
1010 So the synergies that we've been able to make primarily have been in the back room, more or less, and there certainly was a time when Bayshore just had too much head office and not enough branch plant, but I think we have resolved that.
1011 THE CHAIRPERSON: Thank you. Noted.
1012 And have these synergies been taken into consideration in the station's financial projections?
1013 MR. KENTNER: Very definitely.
1014 THE CHAIRPERSON: I understand that Bayshore owns and operates CKYC-FM, a country music station in Owen Sound. Will the proposed Shelburne station share any programming with CKYC-FM?
1015 MR. KENTNER: Why don't you handle that, J.D.
1016 MR. MOFFAT: There are some feature programs that we do have at CKYC whose theme is what we will share with the Shelburne market, of course.
1017 Our plan is to taylor-make everything to appeal to the Shelburne audience. If it's a bluegrass show per se that we'd run out of Owen Sound, the same idea would be broadcast at the new station in Shelburne, but it would have very much a Shelburne flavour, a Shelburne/Dundalk appeal and approach because it would involve more of that kind of material than it --
1018 MR. KENTNER: We also have a -- what do we call it -- it's the Country Hall of Fame, which the mayor would certainly identify with, and that's another program concept that will basically be created or re-done in Shelburne.
1019 THE CHAIRPERSON: So I'm going to switch the topic to diversity of voices.
1020 In Broadcasting Regulatory Policy, CRTC 2008-4, the Commission noted that:
"...the concept of 'diversity' in the Canadian broadcasting system should be approached at three distinct levels: diversity of elements, plurality of editorial voices within the private element, and diversity of programming."
1021 Now, as you already know MZ Media submitted an intervention which seemed to question how Bayshore would add diversity to the Shelburne market, given that a number of your radio stations can already be received in the community, and his service offerings overlap that of your proposal.
1022 Could you please comment on how the proposed new station will provide diversity to the Shelburne market, particularly with respect to a plurality of editorial voices, and a diversity of programming.
1023 MR. KENTNER: Thank you for my favourite question.
1024 How many Canadian --
1025 THE CHAIRPERSON: We try to please.
1026 MR. KENTNER: Thank you.
1027 How many Canadian broadcast companies are running a daily editorial, 5 days a week, 52 weeks a year? And we do this editorial activity involving all of our stations, so there are writers in each community. In Orillia, someone can write something that runs because it is specific to that community, but they might also write something on provincial or federal politics which should be heard throughout our network of stations, and that opportunity exists.
1028 And maybe, Manny, you could, as the news director in Owen Sound, talk a little bit about how we do our editorials. I just want to emphasize that I think that is the basis of diversity, is different editorial voices, but nobody else is editorializing. We are the only broadcast group out there, on a daily basis, giving people an opportunity to exchange views about the things that effect them.
1029 THE CHAIRPERSON: How is this achieved? I mean, I quite literally haven't heard your station, so how do you do it?
1030 MR. KENTNER: Manny?
1031 MR. PAIVA: Our staff may tackle one specific issue. For example, the quarry that is proposed in the Shelburne area, they may have talked to the Boston Fund Group that is proposing to build this, and through their conversation, they may put together a 90-second commentary that would be available to our other Bayshore stations, because it has been a hot topic in the news.
1032 MR. KENTNER: And whenever we get into a controversial issue such as the quarry, the opportunity for like time is available; it's built into the Broadcasting Act. It's our responsibility to provide that, and we promote that widely.
1033 So, at the moment, I would say, across our stations, there would probably be ten or more newspeople who are contributing to editorial activity on a regular basis, and we have also engaged a couple of people who have -- outside of our staff -- who are just really well-qualified people who enjoy this, they're intrigued by this kind of thing.
1034 Michael Warren, former postmaster in canada, is one of those who lives in the area and is an occasional contributor. One of the First Nations Council, David McLaren, is another who likes to engage our audience in various topics.
1035 Especially during the election process, locally, we are very careful when we do make a comment impinging on the political scene, to make clear that there is a like time available, and we facilitate that. someone will write a reply, and we invite them to the station and record them. Or if that isn't something they want to do, we record it on their behalf.
1036 But editorial activity, in my view is -- as far as know, I'm unaware of any other broadcaster in Ontario doing this, and think it is the key to our brand of diversity. And that's why I feel we can go into Shelburne -- the Mayor's already said he can't get our country station there anyway -- but I feel that it is the editorial activity we will be doing that is -- will set us apart as mush as anybody, in terms of being a truly diverse voice.
1037 THE CHAIRPERSON: One of the obvious problems of your application is your previous success. You own a lot of stations around here, and therefore adding another one to your operation would not increase the diversity of owners, it would only perhaps increase the diversity of -- how are we to assess that?
1038 MR. KENTNER: I think if you look at those coverage maps, and if we were forced to operate on one of the alternative frequencies, I think it would be a problem, because that would move us back into the Grey-Bruce area, where we already operate, but in Shelburne and Dundalk, I don't believe that people are regularly using our facilities.
1039 THE CHAIRPERSON: Noted. Thank you.
1040 THE CHAIRPERSON: Now the analysis provided in your application is based on 2007 market data, we understand. And my question relates to the fact of have economic conditions in Shelburne changed, and have you more recent market studies or estimates of market radio's advertising capacity in the local market.
1041 MR. KENTNER: Kevin Brown will respond to that.
1042 MR. BROWN: Yes, we do, is the answer.
1043 We took another look at the data for the 2011 estimates, and the good news was there has been growth, which we were excited to see. In 2008, the total retail sales in the Dufferin Principal Marketing area was $750 Million, and that has risen to $819 Million.
1044 And working through the formula, retail average advertising expenditures in all media at 2.9 percent, according the Retail Council of Canada, it is now at $24 Million, and the share allocated to radio, of course, being 15 percent, it shows the market at $3,562,000.
1045 Now what we did beyond that was we took the population of Shelburne and Dundalk as a percentage of Dufferin County and that is 24 percent, and that worked out to -- $3.5 Million times 24 percent -- $855,000 in radio revenue, and this is a market that is not served by other radio stations, and we believe there is ample revenue there for us to achieve our first year revenue projections.
1046 THE CHAIRPERSON: This may be -- your source of your data may be more familiar to others. What was the source of that data, please?
1047 MR. BROWN: Sure. I'll step you through.
1048 The first -- the total retail sales was FP Markets, Canadian Demographics, 2011.
1049 The 2.9 percent we used is from the Retail Council of Canada, and that is an average of what retailers spend, as a percentage of their gross sales, on advertising.
1050 And the third step is -- 15 percent is what the CAB determined to be the evaluation of Canadian radio advertising in their model of 2006.
1051 And then the final step, we took 24 percent of the population of Dufferin County, which Shelburne and Dundalk.
1052 THE CHAIRPERSON: Thank you.
1053 So, Shelburne is a small market, and Bayshore is forecasting an aggressive revenue return of 13 percent during the licence term. Would you please discuss your commitment and ability to maintain the station, should the station take longer than projected to achieve profitability.
1054 MR. KENTNER: Again, I think Kevin has the first kick at that.
1055 MR. BROWN: Yes. We all know that it's a tough economy out there. We have been working with, as you know, a number of new stations in the last few years, and we have found a model that has been working for us.
1056 We find this trading area is very similar to Goderich and our Wasaga Beach stations, and within the markets, we're finding that we are finding profitability. It is a tough go, there's no question about that, but the dollars are there.
1057 Breaking it down, what we find is, you know, our national is not a great deal in any of these markets, but using a nucleus of 2 to 3 local sales representatives in the market, building local sales, has achieved our monthly projections in all of the markets, and we believe Shelburne is the same way.
1058 The other good point that we're pretty excited about is the growth of Shelburne itself, and what we're finding is that the population of Shelburne, since the original application that we made, has grown 35 percent, which is quite encouraging. Dufferin County has grown 14 percent and the population of Dundalk in Southgate Township has grown 8 percent.
1059 As well, I was told today by the Economic Development Officer of Shelburne that they have just learned that they have been approved for 640 new homes in Shelburne, which is very encouraging for us.
1060 So we are quite confident that we will reach these objectives.
1061 THE CHAIRPERSON: Thank you.
1062 Do any of my Panel Members have any questions?
1063 COMMISSIONER PATRONE: I have one.
1064 THE CHAIRPERSON: All right, you have one. Ladies first, venue.
1065 COMMISSIONER MOLNAR: I have a number of questions in no particular order here.
1066 I'm going to go back to the question asked by our Chair that, frankly, I'm not certain UN search. He asked what happens if you don't achieve your projections, so you confirmed you're going to.
1067 COMMISSIONER MOLNAR: So perhaps you want to just tell us what's your plan.
1068 MR. BROWN: Yes. We have the resources to continue for a year to year and a half passed what we projected and beyond that if we don't hit our projections. We have run the numbers for 10 percent less, 15 percent less and we are still very confident that we will be able to achieve what we need to achieve.
1069 MR. KENTNER: Could I add, Commissioner, that in Orillia we are actually I had of our projections. To be honest, the market we are having a problem in is Wasaga Beach.
1070 COMMISSIONER MOLNAR: There was a bit of a question, in achieving objectives when you're growing -- and you noted in your own presentation to us that you have grown significantly over the past period of time and in a period of growth of course it takes both human and capital resources to achieve the full potential of that growth. We heard, not related to this application in front of us, but we heard today that perhaps all of the potential of growth has not been achieved in all markets.
1071 So looking at the growth that you have undertaken in the past few years, it becomes a question for me -- because it isn't simply about do you have the financial capacity to hold on for another year if you don't achieve your targets -- do you have the human capacity to grow this market as you continue to develop and reach the full potential in the other markets that you have just launched?
1072 So how is it you are going to stretch yourself over all of these markets?
1073 MR. KENTNER: I will let you say what you would like to, Kevin, but I would like to say that the way we are doing it in Orillia is with a lot of really talented broadcasters, probably more than most people hire. It's a bit of an enigma, but in today's broadcast scene there is an awful lot of talent that has been cut loose, largely by bigger players and we find it very easy to attract some excellent talent to places like Orillia and Shelburne.
1074 We are just very confident that we will find it -- in all honesty, I still only work 50 or 60 hours a week and so, you know, I couldn't possibly manage Orillia or Goderich, but they get managed very well and is with the people that we put in place there.
1075 Did you have a --
1076 MR. BROWN: I was basically just going to say the same thing.
1077 It's not that our current management team will manage Shelburne full-time, we will hire managers that will report back to head office. We will look more at the numbers and things like that, but they will manage the day-to-day and they will live in that community. So we want to hire -- we are looking at a staff of hiring 12 people into Shelburne.
1078 COMMISSIONER MOLNAR: Fair enough. You know, I am not going to belabour this too long, but once again you have grown rapidly. When I look at the numbers I don't know that these are looking that you have achieved where you need to be in all of your markets yet because of the growth that you have undertaken.
1079 People manage to objectives and then when objectives are being achieved is when normally you get additional corporate oversight and actions and corrective actions. You are not there managing day-to-day, but you are managing to ensure that you are going to achieve the objectives that both you have as a corporation and your promises to us in each of these markets. You have a lot of them to oversee at this point and they are not all were they need to be yet.
1080 So simply saying you are going to hire people into another market doesn't really, in my view, answer my question.
1081 MR. KENTNER: I guess if I could take you back to July when you visited us in Orillia, it didn't look like chaos, did it? I thought things were in good order and I believe we can be very successful in the Shelburne scenario.
1082 We are learning as we go and we are definitely, as you can see by my comments about Mr. Funnell being the GSM for both Wasaga Beach and Orillia, that we are adapting to some of the, as you say, Murphy's Law sometimes comes into play.
1083 I'm just saying that --
1084 COMMISSIONER MOLNAR: Okay. I'm going to move on then.
1085 MR. KENTNER: Okay.
1086 COMMISSIONER MOLNAR: Again in no real particular order here, my questions, I heard you say when you were speaking to Commissioner Denton that all your spoken word is produced in studio in Shelburne, your plan is all of it. So the 18 hours per broadcast week is all proposed to be produced in Shelburne and this editorial, where you are talking about sharing editorial stories, that's over and above the 18 or how did those two --
1087 MR. KENTNER: Editorials are within the 18 hours, but there is -- each of our stations is engaged in the editorial activity and we have a monthly schedule. Like I write two days a week often, unless I get too pressed, and Manny usually writes every two weeks and we have others writing on a schedule, so we all contribute.
1088 COMMISSIONER MOLNAR: Can you tell me, then, because I thought I did understand that from what you were saying that these editorials are stories that you share across your greater broadcasting group because they are of interest to your greater broadcasting group. So of the 18 hours, how much of this is produced in studio in Shelburne?
1089 MR. KENTNER: I would say --
1090 COMMISSIONER MOLNAR: And how much is shared amongst your broadcast group?
1091 MR. KENTNER: The vast majority of the 18 hours will actually be produced in Shelburne.
1092 On the editorial activity, which is a very high level of activity, Manny or I have to see every editorial that is broadcast and sometimes we have to run it by our counsel to be satisfied that we are not getting out on a limb. And we generally operate a day ahead. In other words, people -- we have to see the copy that's being suggested in advance.
1093 MR. PAIVA: If I just may add, the morning newscaster or news director in each location, they are told whatever the commentary is -- not told, but given the option of airing the commentary. If I did a commentary today about the CRTC hearing and offered it up tomorrow morning, the news director or the morning co-host may have a better localized editorial that they would run that morning.
1094 MR. FOCKLER: Commissioner, may I direct you to a page in our supplementary brief, if you have it before you. Okay. We're looking at page 17 of the supplementary brief which breaks down our enriched spoken word summary.
1095 COMMISSIONER MOLNAR: If you want to read it, I have --
1096 MR. FOCKLER: Okay. This incorporates all of our enriched spoken word, including the Dufferin Highlands Explorer and the Making Waves commentary, as well as the healthy living minutes and Entertainment Ontario, et cetera.
1097 So at the heart of your question, the vast majority of this programming will be produced in Shelburne. To put an exact number on it, it would be 90 percent plus would be produced in house in Shelburne.
1098 COMMISSIONER MOLNAR: Okay. Thank you. And that's your news programming and that's all of your spoken word? It includes your news?
1099 MS BULBULIAN: Our next page, page 18, shows the total combined news and spoken word. That shows 18 hours. I would say a good 17 hours and 50 minutes of that would be locally produced in Shelburne.
1100 COMMISSIONER MOLNAR: Thank you.
1101 That's very helpful, by the way, just cleared that up.
1102 Just a little on the format. You spoke about you have a little bit of spill into this market from your other stations. What is spilling into this market from your other stations and what are the formats?
1103 MR. KENTNER: The only stations that would spill into Shelburne would be our Owen Sound cluster. The AM station, you know, on a good day you can take it to Peterborough, but that's only between sunrise and sunset and after that you can't get to Chatsworth, which would be about 6 km south of Owen Sound.
1104 So daytime service, the CFOS would get in there. It would be because that service is filtered with, I think it's a 6 kHz sharp cut-off filter, it would be impaired by the signal of 570 in Kitchener.
1105 But our two FM's, MIX 106.5 and Country 93, both get, I think, a pretty good signal -- I am talking on a car radio -- to about Mount Forest, which is north of Shelburne, but beyond that I don't think these are usable signals. They are certainly not something people would rely on for their everyday road and weather conditions.
1106 And the community of interest just isn't there in terms of like those stations focus on Owen Sound and Grey and Bruce Counties. So the local news, though they are very news rich, would not really be what people in Shelburne would seek or would identify as local news to them.
1107 COMMISSIONER MOLNAR: Okay. Thank you.
1108 I also wanted to --
1109 MR. CREWSON: Could I speak to that?
1110 I can tell you that I cannot get your Owen Sound country and Western station until I get north of Dundalk. Shelburne has no country station, we can't get KICX in Orillia, we can't get the Owen Sound country and Western station that you transmit, or that you broadcast, so that's why we are anxious to have this station est. in Shelburne.
1111 Thank you.
1112 COMMISSIONER MOLNAR: Mr. Mayor, I did understand that you are a country music fan, but I did want to ask the folks of Bayshore, just as you know when the Torres group was up right in front of you they spoke of the fact that advertisers want the adult contemporary format so I found it very interesting to hear this very contrary view that's coming forward, that they would say as a first station where you have an unserved advertising base that they are looking for a particular format, where you come in, and you are an experienced broadcaster, served many small markets, and yet have said that the country format is the format to take in there.
1113 MR. KENTNER: Both Torres and Bayshore spoke to retailers and we got different answers, but Bayshore also did a Solutions Research survey which indicated very definitely that country music was the preference in Dufferin County. We had Mr. Jeff Fidler, who was the principal behind that research, provide a letter which we have -- I think you have it on file as part of when this finally got gazetted. You have that letter and in it he says he believes that in fact the demand for country music in this market will have increased since the original application, due in part to a country music service changing format to the south of the area.
1114 COMMISSIONER MOLNAR: Okay, I have one final question and that's about the use of social media or other multimedia platforms to support your local broadcasting in this market.
1115 Do you have plans and, if so, what are those plans?
1116 MR. KENTNER: Let me give you Manny Paiva.
1117 MR. PAIVA: Thanks for the question.
1118 We currently use our social media. I will give you two examples on how we use it in Owen Sound. The same philosophy is used at our other Bayshore stations and would be in Shelburne as well. I was broadcasting the OHL game between the Owen Sound Attack and the London Knights last night on CFOS radio, defending OHL champs I might add -- I just have to throw that out there -- and I tweeted during the broadcast. As well as broadcasting on radio, I tweeted stats, happenings as part of the game.
1119 One of our big stories today in the newsroom in Owen Sound was the Kraft Assist victory for the Owen Sound Salvation Army Food Bank, because we work so closely with the non-profit organization. They won the Kraft Assist contest and only eight days when it was scheduled to go to the end of January. But the spokesperson, Alice Wannan used Facebook --
1120 COMMISSIONER MOLNAR: I'm sorry. I'm going to ask you -- I think examples are good, but I'm more interested in the strategy, the business strategy.
1121 MR. PAIVA: Sure. Sure.
1122 COMMISSIONER MOLNAR: Since I don't know that hockey team you tweeted about it's better if you speak of strategies.
1123 MR. PAIVA: Sure. If I just may speak to that is with regards to the strategy and the fact that we connect with our listeners that way with regards to our news coverage, which I can speak to, and the fact that it drives listeners to our program and vice versa. From a news programming standpoint that's how we use our strategy that way.
1124 MR. BROWN: Most of the social media is used by our Programming Department, Promotion Department and the News Department to give our audience more than what they're getting on just the radio. It's a supplement to what we're doing.
1125 On the advertising side, we try to work with our clients as a full-service marketing rep, so if they need help with Facebook, if they want to tie their Facebook campaigns to their advertising campaigns, we work with them on that regard.
1126 To be totally honest with you, we are not finding a large revenue source using social media or the web. We have seven websites. Our Bayshore Broadcasting News Centre site gets over 100,000 unique visitors per month, so they are very successful, unfortunately they are very hard to sell because the web -- I don't care what anybody says, people don't want to pay for it. They will pay for the radio advertising and they like the web on the side, and we work with them on that because we believe in the new media, but it's not a big revenue source for us. I don't see it becoming one in the very near future.
1127 COMMISSIONER MOLNAR: Thank you.
1128 Those are my questions.
1129 THE CHAIRPERSON: Commissioner Patrone...?
1130 COMMISSIONER PATRONE: Thank you, Mr. Chairman.
1131 My colleagues have taken care of the vast majority of the questions, but I did have one.
1132 I wanted to take another run at the diversity matter, because the fact that you have an editorial is good in a way because it shows that you are plugged into the communities you serve and that you have a stake in the communities in which you offer your service, but it also raises the stakes as far as diversity of voices his concerned and emphasizes the need to hear different opinions rather than the one that may or may not reflect the views of the station.
1133 How do you come up with these editorials? Whose views are they?
1134 MR. KENTNER: well, I think that's the beauty of the system that has evolved over time. This all began many years ago with Bill Hawkins, the owner of the station, doing -- I think he started with two editorials a week and gradually ramped up to five, but he eventually spread that out and got people in the newsroom, and so on, involved.
1135 We have just carried that forward to the extent that today all the people involved in news across Bayshore stations can participate in this activity and do so very readily. Each of the news people have beats and from time to time something comes up that's really important.
1136 I certainly recall doing the editorial on the quarry situation at Shelburne and I took the time to research the matter -- it is a very very complex situation and it involves very high stakes and very high emotions -- and I tried to do a balanced piece that just showed, you know, these are the advantages of these are the disadvantages and just it's out there and we get feedback and we will probably revisit that many times.
1137 But certainly, you know, ongoing, people I think I appreciate a local point of view on what's really happening at the legislature or what's really happening on Parliament Hill, and especially if it involves their local Members, and then they just love to hear something about what we think is happening at Council or not.
1138 COMMISSIONER PATRONE: But this is the same editorial -- this is the part I'm still a little unclear about -- this is the same editorial that would air across all Bayshore stations?
1139 MR. KENTNER: Yes. But what I'm trying to say, it's a little bit like Mr. Znaimer's split feed, it isn't always a good idea. Like something that really only pertains to Owen Sound is not of interest in Goderich or in Orillia, so that day somebody else does something different.
1140 But there are times -- for example there was a lot of interest in the Goderich tornado. People wanted to know, "Boy, those people can't go back to their homes. They can't even get their wallets out of their bedroom. You know, what is this." And people were interested in that kind of information all around.
1141 COMMISSIONER PATRONE: Yes. Presumably that's a news story. That's a news story rather than taking an editorial position, like endorsing the Mayor for the next election or something.
1142 MR. KENTNER: The editorial position had a lot to do with how is Goderich going to retrieve -- like rebuild their downtown, which was a one-of-a-kind in Ontario, based on Greek architecture of this central square.
1143 COMMISSIONER PATRONE: I understand that.
1144 But I guess among the questions that we are faced with when we look at awarding licences is the aggressive growth that you of already undergone over the last 10 years -- and you said you've launched four stations in the last six years, you have a dominant position in the market -- you wouldn't say --
1145 MR. KENTNER: I wouldn't say. I wouldn't say.
1146 COMMISSIONER PATRONE: You say you don't think it's dominant?
1147 MR. KENTNER: You see, these are different markets, Mr. Patrone, they are different markets. It's not all one market by any means.
1148 COMMISSIONER PATRONE: They are adjacent markets , very close to one another.
1149 MR. KENTNER: They are adjacent, but I want to stress, you know, like I can drive from Orillia on my way home and come to a point where Orillia isn't very good and I tune in and I can get Wasaga Beach but, you know, that is not really the way consumers consume radio. They are --
1150 COMMISSIONER PATRONE: But people say to us, "You know what, Bayshore is very strong in the area, the region if you want to call it, is it not time for somebody else, for a new voice to come in?
1151 How would you have us respond to that?
1152 MR. KENTNER: Well, we are not "same as" for sure, so that in each community that we come into we bring different strengths. We have the best CCD proposal for Shelburne and I think that we are bringing a lot to the table there. I believe that the community wants what we have offered and will be disappointed if they don't get it.
1153 COMMISSIONER PATRONE: Thank you very much.
1154 THE CHAIRPERSON: Thank you.
1155 I think we're done for this phase.
1156 Madam Secretary, it looks like when we do the arithmetic -- well, first of all, why don't we describe Phase II and then we will talk to it.
1157 THE SECRETARY: Sure. Yes, Mr. Chairman.
1158 Phase II is the phase in which applicants appear in the same order to intervene on competing applications if they wish.
1159 I have been advised so far that Evanov will not be appearing in Phase II and the other three, one I haven't reached -- I haven't been able to discuss and the other two will be appearing.
1160 Thank you, Mr. Chairman.
1161 THE CHAIRPERSON: Why don't we take a 5 minute break and you can have those discussions.
1162 I raised with everybody today the possibility that if we move efficiently we will be able to get out of here, having heard everybody in the proper sequence, by about 5:30 or less and that might be both a saving of time and your money and also the valuable taxpayers money. So I think what I would like to do is move, with that in mind, and see whether this theory can be completed in the course of today, even if we go a little late. So that's my intention.
1163 So, Sylvie, you have your chance and we will see how we can do this.
--- Upon recessing at 1512
--- Upon resuming at 1529
1164 THE CHAIRPERSON: Welcome back, everyone. Mrs. Ventura?
1165 THE SECRETARY: Thank you, Mr. Chairman.
1166 For the record, MZ Media Inc. has indicated that they will not be appearing in Phase II, so we will now proceed with Frank Torres on behalf of a corporation to be incorporated.
1167 Please reintroduce yourselves for the record, after which you have 10 minutes for your presentation.
1168 Thank you.
1169 MR. ED TORRES: Thank you.
1170 MR. ED TORRES: Good afternoon, Mr. Chair, members of the Commission, and Commission staff. My name is Ed Torres. Seated to my right is my brother and partner, Frank Torres. To my immediate left, Yves Trottier, our operations director at DAWG FM, and Frank McFadyen is going to run the slide show again.
1171 Frank Torres OBCI opposes the application by Bayshore Broadcasting to operate a new FM in Shelburne for the following reasons.
1172 The Bayshore application will not add diversity to Dufferin County. Bayshore already serves the Shelburne and Dufferin County market with its radio station CFOS, as you can see from this slide.
1173 The Bayshore application for Shelburne would sit entirely within the CFOS contour, as you can see from this slide, giving Bayshore, effectively, two signals into all of Dufferin County, including Orangeville.
1174 The Bayshore stranglehold on this part of Ontario is even more evident in the next slide, which shows Bayshore's seven radio stations and their proposed Shelburne station. Bayshore, in fact, already has four stations that can be heard in parts of Dufferin County. The proposed station would make it five stations in the market.
1175 By contrast, Torres operates one radio station in Ottawa. The station operates an innovative blues/rock format that was built from the ground up. The proposed AC format will not be a cookie cutter format of an existing format that we already operate.
1176 The next slide shows Bayshore's existing country station and its proposed country station. In effect, Bayshore is creating a superstation. It will encompass an area from Toberymory to Brampton. What's to stop Bayshore at some point in the future from rationalizing the Shelburne operation and creating this one superstation, a station that could seriously threaten and impact existing broadcasters in the area?
1177 Bayshore has abandoned markets before. On page 5 of Bayshore's Shelburne supplementary brief, it states:
"The true strength of the station will be its ubiquitous presence in the community."
1178 That statement, word for word, can also be seen on page 28 of its supplementary brief for its application for a new FM service in Wasaga Beach, application number 2005-1546-3.
1179 Bayshore was granted an FM radio station licence for Wasaga Beach in decision 2006-507. Shortly after its launch in Wasaga Beach, Bayshore moved its physical offices out of Wasaga Beach and consolidated operations in nearby Collingwood as can be seen in the location section of 97.7 The Beach, Wasaga Beach location contact page.
1180 In its Shelburne supplementary brief, Bayshore states:
"The Shelburne market is separate from yet close to Bayshore's base of operations in Owen Sound."
1181 The Commission and the people of Shelburne should be concerned that Bayshore's local presence in Shelburne, if any at all, may be short lived, and that Bayshore could consolidate operations to its nearby base of operations in Owen Sound.
1182 Torres reaffirms that its application for Shelburne, Ontario will serve Shelburne and surrounding communities in Dufferin County with a high level of unique community-based programming originating from Shelburne and designed for the people of the community.
1183 The country format is the least listened-to format of the existing out of a market of -- pardon me, it's the least listened-to format of the existing out of market radio stations as shown in most recent BBM rankings.
1184 Upon review of comparable BBM market statistics, it can be seen that very little has changed from the original data that the Torres application used regarding the high out of market tuning of AC formats. Conversely, the market data relied upon by Bayshore is over three years old and has not been updated to account for the increase in availability of country music due to the format conversions of CKPC FM, CIWV FM and, as stated by Bayshore in paragraph 44 of its letter, CING FM.
1185 Bayshore fails to account for how the addition of three country music formats in the region since its initial application and research in 2008 will impact its listener market share and finances.
1186 Bayshore's financial assumptions are based on research that doesn't include Orangeville. We submit that their business plan is unattainable based on the research of just Shelburne and Dundalk.
1187 Bayshore's research ignores the most populous town in Dufferin County, Orangeville. The research that they have provided was conducted only in Shelburne, Dundalk, Mulmar and Malanchton Township. By not surveying the southern most populous part of their signal coverage area, their country format research is seriously flawed.
1188 Bayshore's supplementary brief clearly outlines the desire of the people of Northern Dufferin County. Bayshore did not survey Orangeville. They will only program to Northern Dufferin County.
1189 We maintain that this can be achieved through a lower power radio station at an alternate frequency. The contours of Bayshore's proposed station will take away the ability of another broadcaster, namely us, to serve Orangeville and Southern Dufferin County. Southern Dufferin County will be left without a radio station.
1190 Further to this point today, Bayshore actually submitted maps that show that they can serve the area that they've researched, Northern Dufferin County. As you can clearly see, Dundalk lies within the three millivolt contour and Shelburne, just south of it, in the interference-free five millivolt contour.
1191 We're suggesting that Bayshore here could serve the communities of Shelburne and Dundalk, and our application could also serve that of Dufferin County and Orangeville.
1192 MR. FRANK TORRES: And just to briefly outline the map, although it's difficult to see on the slide, you can clearly see that the proposed Bayshore application signal does completely encompass Orangeville with an interference-free contour. And so we question why Orangeville would be covered with a fully receivable signal but have absolutely no local programming, no content originated for it whatsoever.
1193 MR. ED TORRES: The Bayshore station will not contain news except for Northern Dufferin County. Further, if Bayshore wants only to serve Shelburne and Northern Dufferin County, they can achieve this by use of a lower power station on several available frequencies.
1194 The Bayshore application makes no mention of social media as an important tool in engaging listeners as a news resource. In fact, Bayshore's seven radio stations combined have 3,684 likes; by contract, DAWG FM has 7,800 likes. Our listeners are engaged because of our active social media policy.
1195 Bayshore's enriched news and spoken word seems to be merely a regurgitation of features that they are currently running or similar to other features on their station. We submit our news and spoken word will be relevant and will be designed in consultation with the various stakeholder groups in Shelburne and Dufferin County.
1196 We can take any questions now, if you have any.
1197 COMMISSIONER PATRONE: I don't have any questions.
1198 THE CHAIRPERSON: So just to -- what you're basically saying, if you had your druthers, is that you would get a frequency that would better serve Orangeville or would better serve Shelburne?
1199 MR. ED TORRES: We're saying that 104.9 is a better frequency for Dufferin County and our application has the geographical centre of Dufferin County as where the station will originate from, Shelburne.
1200 MR. FRANK TORRES: And Jeff, if you could put back all the -- the slide with all the Bayshore contours.
1201 We're also submitting that's what in the best interests of diversity is not this. It's not to have an eighth station put into an obviously very dominated spectrum of southern Ontario.
1202 THE CHAIRPERSON: Go ahead.
1203 COMMISSIONER PATRONE: But you're suggesting they're basically potentially cannibalizing their own country service in this general region. Is that right?
1204 MR. ED TORRES: Well, it's interesting because their country station is received in a car in Shelburne, we listened to it on the way up. Not only the country station, but their Mix 106 is also received in a car. And so essentially, we don't know what they're doing.
1205 Why would -- their research is totally focused on Northern Dufferin County. It totally -- they haven't mentioned Orangeville in any of their supplementary briefs. So why would you use the best frequency to serve Dufferin County to serve only a population of 13,000 where our use of the frequency will serve a population of 60,000.
1206 MR. FRANK TORRES: And with regards to cannibalizing, that's a very interesting term. It's something we haven't addressed yet at this hearing, but in Bayshore's own research, they clearly indicate that in Dundalk and Shelburne where they performed their research that there is a percentage of population that already tunes their existing country station.
1207 So they don't account for how that loss of that revenue will impact their existing operations or if or how that will impact their new proposed operations, but that does exist in their research.
1208 COMMISSIONER PATRONE: So you feel that it's back door entry into Orangeville?
1209 MR. ED TORRES: It certainly looks like that.
1210 MR. FRANK TORRES: Their contour certainly covers Orangeville completely and totally with an interference-free signal.
1211 MR. ED TORRES: I mean, they submitted today two maps that would perfectly serve the areas that they researched.
1212 COMMISSIONER PATRONE: Okay, thank you.
1213 COMMISSIONER MOLNAR: I have no questions.
1214 THE CHAIRPERSON: Okay, gentlemen, good. Nice hit. See what they say.
1215 THE SECRETARY: I would now invite Bayshore Broadcasting Corporation to come forward. Thank you.
1216 THE CHAIRPERSON: Gentlemen, you have 10 minutes for rebuttal.
1217 MR. KENTNER: Thank you, Mr. Chairman, Commissioners. Thank you for this time to explore Bayshore's concerns regarding the other applications that have been presented today.
1218 With respect to the competing application by Mr. Torres for a new FM in Shelburne, I think we believe the public record stands on its own merits and we really don't have anything more to add at this time.
1219 However, Bayshore is objecting to the applications from MZ Media and Evanov for new FM stations in Collingwood.
1220 Referring first to Evanov's application for Collingwood, it should be denied for the following reasons.
1221 Number 1, the proposed application is not for a first service, as claimed by Evanov. Stations in Collingwood and Wasaga Beach already serve the proposed coverage area.
1222 (2) The Evanov application will duplicate existing radio services, particularly CHGB FM Wasaga Beach, and its own 88.5 FM, which is readily heard in Wasaga Beach, Collingwood and Clearview Township.
1223 And (3) the proposed market cannot sustain a new radio entrant. The two incumbents are severely restricted by limited assignments.
1224 We welcome discussion on each of these three points, but today we want to focus on the third, simply put, the Collingwood-Wasaga Beach market has reached a saturation point at this time. Any new entrant, regardless of format, will create upheaval in the market and place incumbent stations in a position to realize substantial loss of revenue.
1225 And should either Evanov or MZ Media be licensed, the two incumbent radio stations would be at an immediate competitive disadvantage based on frequency alone.
1226 Corus has an average ERP of 350 watts and Bayshore of 200 watts, and that compares with Evanov's proposed 1,000 watts and MZ Media's 3,100 watts.
1227 Both incumbents would be nearly encompassed by either of these footprints.
1228 MR. BROWN: Further, Bayshore's CHBG is a relative newcomer to a market that sees 15 radio stations competing for advertising dollars in Wasaga Beach and as many as 30 stations competing for audience. In fact, as the CRTC can confirm with the station's annual returns, after four years of operation CHGB has yet to see significant PBIT growth in Wasaga Beach, and it is well below the national average for FM radio PBIT.
1229 And while Evanov claims to accept as a condition of licence not to solicit advertising in Wasaga Beach, the markets of Wasaga and Collingwood are barely three kilometres apart.
1230 Many businesses operate locations in both Collingwood and Wasaga Beach. As a result, these businesses purchase advertising to capture both markets with one budget. Given the close proximity of Wasaga Beach to Collingwood and the fact that Evanov has discussed sales efforts in Wasaga, the Wasaga Beach market will inevitably become a key advertising target.
1231 Obviously, Wasaga Beach factors into the Evanov business plan. Should this application be approved, it will most definitely impact Bayshore's existing radio operations.
1232 Because of the seasonality of the Wasaga Beach market, retailers are very small and they advertise with very limited funds, especially in the summer periods that are less than weather friendly.
1233 Of the 500 plus businesses in Wasaga Beach, over 365 of them are direct tourism businesses. Next to grocery stores, summer attractions are our largest employer in the market.
1234 Bayshore estimates the Collingwood, Blue Mountain and Wasaga Beach radio advertising market to be 3.1 million dollars. Divided equally amongst the 15 radio stations that have significant tuning in the market, revenue equates to only $206,000 per station.
1235 That is not to say that the Wasaga Beach market cannot sustain its own radio station or even competition from CKCB Collingwood, but any new entrant will inevitably draw revenue and audience away from CHGB at a time when our incumbent station can least afford it.
1236 The market has truly reached a saturation point.
1237 MR. KENTNER: Now, in relation to MZ Media, Bayshore believes this application should be denied for the following reasons.
1238 (1) MZ Media has provided no convincing evidence to suggest there is a need for this service.
1239 (2) The addition of a part-time repeater service will cause further audience erosion to an already fragmented market in Collingwood-Wasaga Beach.
1240 (3) Approval of this part-time repeater transmitter would create a dangerous precedent to be exploited by other broadcasters throughout southern Ontario.
1241 And (4) approval of this application would prevent the implementation of a first service radio undertaking in Shelburne, Ontario.
1242 It is Bayshore's contention that the MZ Media application is little more than repeater service of FCF MZ FM Toronto and is essentially a back-door attempt to enter the entire central Ontario market. The proposed coverage ranges from Owen Sound in the west to Barry in the east, and it places a three millivolt contour directly over Wasaga Beach.
1243 Bayshore is concerned MZ Media is requesting exemptions to CRTC policies when other broadcasters are proposing a first service localized radio station in Shelburne.
1244 Above all else, it does not seem proper that MZ Media should be granted a repeater in Collingwood to the detriment of a full-time, full service radio proposal such as Bayshore has presented.
1245 Bayshore requests -- sorry, Bayshore questions what direct and particular programming benefits could a radio station from Toronto provide to the Town of Collingwood over 150 kilometres away such as local news, weather and emergency announcements.
1246 As the Commission heard during our presentation, Mayor Ed Crewsome supported Bayshore's application because it would create a community presence amongst listeners in Shelburne and Dundalk.
1247 MZ Media is proposing none of that. It offers nothing more than music content to residents of Collingwood and, should its application be approved, it would be a substantial loss to audiences and advertisers in Shelburne that clearly seek a radio station to call their own.
1248 Bayshore has already stated that its business plan for Shelburne is predicated upon approval of the 104.9 FM frequency. According to our engineer, Mr. Hahn, this is a drop-in frequency. There are two allotments designed for Collingwood, plus a third available frequency as proposed by Evanov.
1249 Should the Commission determine that MZ Media service is necessary, Bayshore submits that it should be MZ Media that seeks a new frequency in order to allow Shelburne to have its first service full service radio station, namely Country 104.9 FM.
1250 In conclusion, the addition of a new FM radio station in Collingwood would move the market beyond its advertising saturation point. Approval of MZ Media on 104.9 FM will prevent Shelburne and Dundalk from receiving its first full service radio station.
1251 Thank you.
1252 THE CHAIRPERSON: What do you say to the argument that MZ is so different from anything else that it's really not going to compete either for your audience that you already have or that you might gain, that it's basically appealing to the Lexus crowd of Toronto weekenders and it's just not going to have much effect if moved to a different frequency than 104.9?
1253 In other words, it may be a violation of some policy -- leave that aside for the moment -- but basically, it's just not even in the regular planet of normal radio programming.
1254 MR. KENTNER: I wonder if I could ask Mr. Brown to speak to -- they were talking this morning about $900,000 worth of agency business that's just floating around there and somehow Bayshore can't get their hands on it and Corus can't attract it.
1255 Maybe Kevin could explain how the MZ proposal would, in fact, affect our top line.
1256 MR. BROWN: I would just say that both CHGB and CKCB are very small, locally focused operations that depend on the local retail economy. National dollars are disproportionately allotted to the regional stations out of Barry, as their audience spill is significant within these adjacent markets.
1257 Even at $100,000, if MZ Media takes $100,000 out of our market, that is very significant to us. And I'll quote a couple of figures.
1258 The total national revenue for Corus in that market is about 100 to 110,000 dollars, and that is the same for our station. So the total national spend in the Wasaga-Collingwood cell is less than $225,000. So $100,000 is half of that, so it kind of puts it into perspective how devastating any entrant into that market would be to us at this time.
1259 MR. KENTNER: And if I could just expand a little bit on the comment about the spill into southern Georgian Bay from the Barry market stations, you see the Barry operators in the audience today, Rock 95 and Corus are both represented here, and Larche as well from Midland, very interested in this proceeding.
1260 THE CHAIRPERSON: Okay. Anyone else?
1261 Commissioner Patrone.
1262 COMMISSIONER PATRONE: Thank you, Mr. Chairman.
1263 I was just a little unclear about the audience erosion argument in Wasaga and Collingwood with respect to MZ Media because it struck me as odd that an audience that maybe was listening to Lady Gaga one day would listen to Mozart the next on the radio.
1264 And can you help me with that? I mean, is there really a significant threat of audience erosion to a classical music station from what there is now?
1265 MR. KENTNER: I believe so. And I confess that I'm a serious music buff, and I enjoy this music immensely and so do many people of all ages, as the applicant has stated. And there are many people, as they have said, are part-time residents and there are many people who are -- have retired here, and these are mature people.
1266 And so the fact of the matter is, this radio station will be impactful in terms of audience development and it will take audience away from both of the incumbents.
1267 COMMISSIONER PATRONE: Did you have any response to what Torres said about your application regarding the back-door entry into Orangeville and the issues around sort of competing against your own country music station with this proposed new Shelburne application?
1268 MR. KENTNER: I thought that was part of another phase, but I'm delighted to --
1269 COMMISSIONER PATRONE: If that's the case.
1270 MR. KENTNER: I'm delighted to respond that there --
1271 COMMISSIONER PATRONE: Maybe I was out of line in asking that question, Mr. Chairman.
1272 THE CHAIRPERSON: Well, by the authority vested in me as Chairman, why don't you ask that question and let him answer?
1273 THE CHAIRPERSON: Unless you want more time to prepare a response.
1274 MR. FOCKLER: Mr. Chairman, perhaps we could have a few moments just to confer.
1275 THE CHAIRPERSON: Okay. Why don't we just put it into the next phase anyway, and that will give you the time?
1276 MR. FOCKLER: Thank you.
1277 COMMISSIONER PATRONE: That's it for me, Mr. Chairman.
1278 THE CHAIRPERSON: I think that's it for now.
1279 THE SECRETARY: Thank you, Mr. Chairman.
1280 That concludes Phase 2. Please note that given that no intervenors other than the applicants requested to appear in their written interventions, so this also completes Phase 3 of the agenda.
1281 THE CHAIRPERSON: We can now take a break for 10 minutes so you can prepare further for the next round. Okay?
--- Upon recessing at 1553
--- Upon resuming at 1604
1282 THE CHAIRPERSON: Hello everyone, please take a seat.
1283 THE SECRETARY: Thank you, Mr. Chairman.
1284 We will now proceed to Phase IV in which applicants can reply to interventions submitted on their applications. Applicants appear in reverse order.
1285 We will begin with Bayshore Broadcasting Corporation.
1286 Please reintroduce yourselves for the record, after which you have 10 minutes for your presentation.
1287 Thank you.
1288 MR. KENTNER: Thank you, Madam Secretary and Mr. Chairman, Commissioners.
1289 Our panel, we have just changed seats a little bit, but Ron Funnell, the Manager at CHGB in Wasaga Beach; Kevin Brown, our Vice-President of Sales and Marketing; our Regulatory Affairs Consultant Michael Fockler; and Stuart Hahn our Consulting Engineer.
1290 Behind me, David Moffat, our Program Director in Owen Sound; and Manny Paiva, our News Director in Owen Sound.
1291 Mr. Chairman, we feel, as is often the case at this stage, that a fair bit of confusion has been created and we would like to do our best to help you straighten that confusion out. So I would like to turn the microphone over to Ron Funnell.
1292 MR. FUNNELL: Thank you, Ross. Good afternoon, everyone.
1293 One of the discussion points today has been the fact that Bayshore has spill into this market.
1294 In fact, there are a number of broadcasters that do spill into the market, but I think the key point that needs to be made is that there is not a local service that's being provided. Country 104.9, as a first licence, will provide that service and included content that is necessary for these residents, including everything from school and bus cancellations to road closures, which is a significant challenge for people in this region; emergency services; it's also a platform for community stakeholders and politicians to have a voice on a local outlet.
1295 And again, the market does receive a fair amount of spill from Barrie and Toronto radio stations, but there's not a service that's being provided to the area.
1296 MR. KENTNER: I think the point being that Bayshore would be a diverse owner in that market. There seems to be a feeling that Goderich, Shelburne and Orillia are sort of contiguous. That's just not true. It takes 2 1/2 hours to drive from Shelburne to Goderich, or more, and similarly to drive to Orillia. So especially Shelburne is really quite a unique market and distinctive market.
1297 At this time I would like to just turned over to Stuart Hahn who can perhaps explain a little more about this frequency issue and also answer the question why it is that we are not making Orangeville a significant part of our marketing plan.
1298 MR. HAHN: Yes. The focus of the marketing plan was the 3 mV per metre contour. This is the CRTC's definition of a market and it's also necessary to provide reliable service indoors, in homes and businesses and on lower quality receivers. So that is the reason that we focused on that contour and it's why we need 104.9 to provide the largest 3 mV coverage possible.
1299 In addition, we included realistic coverage predictions in a technical brief. It's on the last page. I don't know if you got that in a separate form, but it shows that the coverage of Orangeville will be poor, marginal .5 coverage. So it will be much more poorly served then shown by the smooth earth contours, which is another reason we would not rely on that market in terms of our business plan.
1300 MR. KENTNER: And I might just say that the 104.9 is going to work for Torres exactly as it works for us and if our analysis is that Orangeville would not be a reliable coverage then you have to wonder about Torres' estimates.
1301 MR. FOCKLER: I think ultimately if Bayshore had wanted to serve the Orangeville market it would have applied for the Orangeville market. Bayshore is dedicated to serving the Shelburne and Dundalk area with a specific music format and a specific amount of news and spoken word formatting.
1302 Thank you.
1303 MR. KENTNER: Mr. Commissioner, I believe that's really our case, if you have questions.
1304 THE CHAIRPERSON: Nice, simple and to the point. Thank you very much.
1305 MR. KENTNER: Thank you, sir.
1306 THE SECRETARY: Thank you, Mr. Chairman.
1307 I would now invite Frank Torres on behalf of of a corporation to be incorporated to come forward.
1308 THE SECRETARY: Please reintroduce yourselves for the record and when you are ready you have 10 minutes for your presentation.
1309 Thank you.
1310 MR. FRANK TORRES: Thank you, Madam Secretary. Hello again, Mr. Chairman, Commissioners, Commission staff.
1311 My name is Frank Torres. A brief introduction. Seated to my left is my brother and partner Ed Torres; and seated at the far end is Jeff McFayden.
1312 I would like to thank the Commission for the opportunity to address the Commission in Phase IV and specifically to address Bayshore's intervention against our application.
"Approximately 50 percent of the universe is drawn from the City of Orangeville, a city falling outside the proposed Torres service area." (As read)
1313 This is a direct quote from the Bayshore intervention and it's incorrect.
1314 Orangeville does lie well within our service contour. We have always intended to provide service to Orangeville and we have always intended to derive revenues from Orangeville. It wouldn't make financial sense for us to ignore 50 percent of the population of the county and a commensurate amount of revenue potential.
1315 Conversely, not once does Bayshore mention Orangeville in its application or its presentation, except to emphasize that they don't intend to service or generate any revenue from Orangeville at all.
1316 It's perplexing why Bayshore would ignore or alienate 50 percent of the population of Dufferin County, yet still claim that it can make revenue predictions based on two small towns with combined populations in the area of 7000.
1317 Another quote in Bayshore's intervention is that:
"Bayshore submits that Torres forecast to generate 40 percent of its first-year local revenue from existing local radio advertisers." (As read)
1318 That's incorrect. That's not a correct quote and we have never made that statement.
1319 On page 22 of our supplementary brief we state that:
"40 percent of our revenue will be derived from out-of-market advertisers that reach Dufferin County consumers." (As read)
1320 These are existing clients of ours that we can leverage into more economical targeted buys. We have gone through that quite a bit in our presentation so I won't elaborate more on that.
1321 Bayshore states in its intervention that:
"5 percent of revenue will be drawn from an increase in existing radio budgets with regards to its application, yet in its due diligence street-level canvassing Bayshore could only find one existing radio buyer. We submit that any statistical relevance drawn from a sample size of one cannot be considered credible."
1322 Bayshore's intervention relies on a research study which they crafted specifically to promote the possibility of a country format and it's clearly stated in their objectives. Quote:
"The primary purpose of the study was to assess the potential for a country format." (As read)
1323 In paragraph 3 of Bayshore's intervention it questions the use of spectrum in southern Ontario.
1324 Jeff is now going to show a slide of the existing Bayshore spectrum in southern Ontario, as we have shown before, combined with their proposed FM completely encompassing Dufferin County. What I submit to the Commission is that that is not the best choice for diversity.
1325 Although it appears that their existing contours end at the north end of different County, we did a scan of the frequencies in Shelburne. There has been some question in the hearings about spill and coverage.
1326 We scanned the frequencies in Shelburne and Orangeville and we found that three of Bayshore's FMs and one AM already reach Shelburne. That's three FMs, The Beach 97.7, Country 93.7, MIX 106.5 and AM 560.
1327 Jeff is now going to play little scan that we recorded sitting in Shelburne in a Toyota Tercel that clearly illustrates that four Bayshore signals are currently receivable in the town of Shelburne.
1328 MR. ED TORRES: Just for the record, it's a RAV4.
1329 MR. FRANK TORRES: RAV4. What did I say, Tercel? Sorry.
1330 THE CHAIRPERSON: No product placement, please.
1331 MR. FRANK TORRES: Now, do keep in mind that this is an iPhone video recording so it's a little shaky it's not the best quality.
--- Video Presentation
1332 MR. FRANK TORRES: There could be no question that this is not spill or overlap. There can also be no question about the sound quality. That's four radio stations that serve, cover, encompass the town of Orangeville.
1333 MR. ED TORRES: Shelburne.
1334 MR. FRANK TORRES: The Town of Shelburne. We will get to Orangeville.
1335 Bayshore states that it super serves local communities with unique news, information and spoken word content.
1336 We tuned into another set of radio stations to monitor spoken word and we did come up with a different finding. We tuned 93.7, 106.5 FM and 560 AM -- and Jeff is going to play that now -- which highlights how diversity can suffer when we license one licensee with too many stations in proximity to each other.
--- Video Presentation
1337 MR. FRANK TORRES: So that's three radio stations, one newscast and I submit to the Commission that that was only three radio stations because we couldn't get around to monitoring all of them, we couldn't wait until the top of the hour, but that's very clearly what that shows.
1338 That was the intersection of Highway 9 and Highway 10, Orangeville.
1339 So we are not talking about spill or overlap, they have very solid coverage to and through Dufferin County, right to the bottom, right to and through Orangeville.
1340 That's all we have.
1341 Ed, do you have anything to add?
1342 We are ready for any questions.
1343 COMMISSIONER PATRONE: I had trouble hearing. I mean I had a sense that they were talking about the same story, but is it your understanding that it was exactly the same copy that was read between stations?
1344 MR. FRANK TORRES: It wasn't only the same copy, it was the very same report, just replayed. So the only reason why there was a bit of a different -- there was a bit of a lag between AM and FM there, so we heard a bit of overlap delay, duplication. But it was exactly the same voice, same report, just literally being played over three frequencies.
1345 THE CHAIRPERSON: So what you're saying then is that there's already solid coverage by Bayshore stations, that there is a repetition of content.
1346 MR. FRANK TORRES: What we are saying is that what we just displayed is a lack of diversity and what the Commission is responsible for now is deciding if they will license one application which clearly does bring a diverse pluralized new news voice, new editorial voice, or whether we will just have the same of that.
1347 COMMISSIONER MOLNAR: I'm not certain that the process is actually to rebut the rebuttals, but what about the argument that was just made that this frequency 104.9 does not adequately serve Orangeville?
1348 MR. FRANK TORRES: Well, we also heard in the hearing that those signals don't reach Shelburne.
1349 I think the reality about -- Jeff, if you could put on that slide of all the spectrum, I think the reality is that those lines look great on a map and they get you approvals at Industry Canada, but we do have to be aware of what actually exists out there and what exists out there is not that.
1350 I mean that on its own is an astounding stranglehold on central Ontario spectrum. I submit, and the evidence that we have submitted today. is that the true picture is actually much greater than that, perhaps double.
1351 COMMISSIONER MOLNAR: So just to be clear, your picture, your lines -- and I'm looking at your lines that are the contours as shown through Industry Canada -- you believe you have adequate coverage, despite what might be within the 3 versus 5 mV, to actually execute your business plan in Orangeville?
1352 MR. ED TORRES: Yes. It's a fairly rural area. We're not trying to penetrate big concrete buildings so a 5 mV interference free, you have to build that into your business plan. Everyone would agree with that.
1353 MR. FRANK TORRES: And the application clearly has a population number for the .5 mV, which both Bayshore and every applicant would fill out. That's really who we target.
1354 THE CHAIRPERSON: I have no further questions.
1355 Thank you very much. That will complete it.
1356 THE SECRETARY: Thank you, Mr. Chairman.
1357 I would now invite MZ Media Inc. To come forward.
1358 THE SECRETARY: Please reintroduce yourselves for the record, after which you have 10 minutes for your presentation.
1359 Thank you.
1360 MR. LEWIS: Good afternoon. I'm Mark Lewis, I'm counsel to MZ Media and with me is Mr. Moses Znaimer, who will begin.
1361 MR. ZNAIMER: Thank you, Commissioners.
1362 We appreciate the opportunity to provide comments and reply and to further discuss key issues that were raised during our presentation this morning.
1363 With respect to the use of 104.9, it's incomprehensible to us that bringing the one and only classical music service in English Canada into a community that's starved for it and the only way that such a service could possibly be financially viable could be considered a waste of a frequency. On the contrary, that would be its highest and best use.
1364 And what is local anyways? Of what real use are more and more local DJs playing the same Canadian, American and international pop records by the same artists. Actually, it's only in the bits of Jock talk or news, traffic and weather that you get a glimmer of local and we offer pretty much the same, but from an entirely different arts-oriented perspective.
1365 Because of the much more difficult talent and cost requirements of a format like ours, and because of the dynamic range required by symphonic and operatic music, 104.9 is by far the most appropriate frequency for our purpose.
1366 But as we said in our written rebuttal to interventions, and because of last week's Industry Canada's change to the protection rules, there are one or two other frequencies that could be second and third choices, but they would be decidedly reluctant ones that we would make.
1367 It is typical of new applicants that they are optimistic, but in case they have missed it, the Dow is off 300 points today and the TSX Composite another 200. The USA is deadlocked on its budget and Europe is on the verge of default because of runaway debt in Greece, Italy and possibly Spain and France. Such a serious recession would undoubtedly reverberate in Canada and could well imperil ambitious plans for full born stations, but our modest proposition will weather the storm here in Collingwood, just as we did in Cobourg in 2008 and 2009.
1368 In other words, in the face of a possible worldwide economic meltdown we submit it would be entirely prudent, indeed wise, to adopt our Goldilocks proposition.
1369 As for the existential threat to Bayshore and Corus -- it's hard not to laugh. Our modest $100,000 as projected in the first year has no national component in it and will primarily come from new business from the antique shops and art galleries and real estate developments and upmarket goods and services providers who would simply never advertise on pop, rock or country stations.
1371 MR. LEWIS: Mr. Chair, we couldn't let something Mr. Kentner said in intervention pass without comment a few moments ago. He said that the $3 million of revenue in this market is already fragmented by other stations that take listeners and revenue away from the Wasaga Beach and Collingwood stations.
1372 In fact, both Bayshore and Corus, as you have heard, fragment this market with their own multiple adjacent market signals which spill into here.
1373 Finally, the question was raised as to why we should continue to receive an exception from the 2006 Commercial Radio Policy.
1374 The Commission has consistently granted exceptions from his policies. It takes a look at the case and grants exceptions where appropriate to further the objectives of the Broadcasting Act. And you did it in Cobourg two years after the Commercial Radio Policy was revised.
1375 Three years later it remains appropriate here, given the quality of the application, the lack of classical and fine arts programming, the size of the market, the demographics of the market and the world economic forecast.
1376 The exception is justified by providing a uniquely high level of cultural programming which cannot be replicated at a local level. In fact, our current exception limits the amount of local programming for two reasons. One, the impact it would have on other local stations; and, secondly, to ensure that the classical service remains viable.
1377 Over the years the Commission has repeatedly encouraged the provision of programming services that cater to specialized tastes and licensees to provide programming from Category 3. Well, ours is the only model that has worked in English Canada to provide a specialty FM classical and fine arts music format.
1378 The Commission addressed precisely this question of sustainability of a classical music specialty format in broadcasting Decision 2008-31, where it considered the 2006 Commercial Radio Policy and the local programming obligation.
1379 It stated the following in granting the exception:
"As the sustainability of the Specialty FM Classical and Fine Arts music format and the diversity of format remains a concern today, the Commission notes that maintaining the status quo and excepting the service with respect to the requirement concerning local advertising would further this aim."
"The Commission also notes that it has granted similar exceptions to the requirement concerning local advertising as that requested by the applicant in Decisions 96-675 and 98-61. In doing so, the Commission took into consideration the impact on existing stations in the market."
1381 So here we have proposed the following:
1382 One, to take the licence subject to a strict condition that it be operated as a classical music station; and
1383 Two, to surrender the licence if we cannot provide the radio service in accordance with our licensed commitments.
1384 The element make our service unique and one that no other broadcaster could provide in this market.
1385 Thank you for the opportunity to address our comments this afternoon.
1386 Mr. Bogdanowicz, our consulting engineer, is in the audience should you have any questions of a technical nature.
1387 THE CHAIRPERSON: Yes, I do, actually.
1388 You state that 102.9 is your reluctant second choice. Do we have any kind of map or chart showing why that is so?
1389 Since this is an appeal to engineering fact, let's hear from the engineer.
1390 THE SECRETARY: I would just ask that you introduce yourself before you start speaking for the record.
1391 Thank you.
1392 MR. BOGDANOWICZ: My name is Ed Bogdanowicz, I'm with MZ Media.
1393 THE CHAIRPERSON: So the question arises as to why it is maintained by Mr. Znaimer that 102 is the reluctant second choice. We assume there must be sound reasons for this.
1394 MR. BOGDANOWICZ: There are.
1395 The primary reason is that the nature of classical music is that there are a lot of soft passages, a lot of silent moments in the music and in order to avoid artefacts showing up in the audio in those periods one likes to have the strongest signal as possible in an urban environment or a town environment or anywhere where there are structures or shadowing possibilities or multipath.
1396 So in order to preserve the quality of the music we would like to have as much signal as we can. That's reason number one.
1397 Number two is simply to provide the coverage in a wider area other than just the immediate area around Collingwood.
1398 THE CHAIRPERSON: Have you people already produced a map showing the differing coverages produced by 104.9 and 102.9?
1399 MR. BOGDANOWICZ: I have not. I have done studies to determine what the limitations are, comparing what they were when we looked at them earlier versus what would be permitted with the Industry Canada's revised regulations and in some cases we get some significant improvements in terms of the allowable signal levels.
1400 But I haven't gone to the stage of actually producing coverage contours. I can, if that would be helpful.
1401 THE CHAIRPERSON: Actually it would be very helpful since it's a question of fact and since you're making the claim of scientific fact that we would benefit from seeing it on a map, if you don't mind.
1402 Could you enter that?
1403 MR. BOGDANOWICZ: Sure.
1404 THE CHAIRPERSON: I'm sorry, I'm speaking to the engineers if he's running the show.
1405 MR. LEWIS: No, that's fine, we'll do the work and we will submit it.
1406 THE CHAIRPERSON: Okay.
1407 MR. LEWIS: Mr. Chair, there is one other frequency that we have alluded to this afternoon, that's 99.3. That now becomes usable because of Industry Canada's changes. We could overlay that on the map as well.
1408 THE CHAIRPERSON: That would be useful. We just might as well get the best engineering evidence on the table that you can provide. So let's do that.
1409 MR. LEWIS: Absolutely. Thank you.
1410 THE CHAIRPERSON: Mr. Lewis, you are proposing, then, that the principal legal objection -- the principal policy-based objection to the classical music format you are proposing is that it really becomes something of a chain or a network and the justification for the licensing of a classical music station has to deal with that objection.
1411 So just run by me again your argument that you are proposing.
1412 MR. LEWIS: The argument is that, number one, we are constrained by a condition of license so we can't morph the service of all.
1413 THE CHAIRPERSON: Yes.
1414 MR. LEWIS: It has to work in tandem with the two other stations, it can't be broken away on its own.
1415 Secondly, we have the limitation on spoken word material that we have in Cobourg so that we are not going to become super competitive or hypercompetitive at a local level with the incumbent stations. This is a classical and arts programming service and so that keeps us, if I can put it -- to use the vernacular -- honest. We are just not going to move into somebody else's space. We are very constrained.
1416 Then the third element is, we limit the commercial activity because of the nature of the split feed, the mechanics of how it works. The Commission considered that in Cobourg two or three years ago.
1417 THE CHAIRPERSON: Okay.
1418 MR. LEWIS: And what's the quid pro quo I suppose you're asking me in terms of from a regulator standpoint, it's that people get a high-quality classical music service, we are going to provide weather, we will cover road closures, inclement weather issues, we can do all of that in the split feed time or, as you referred to it, in our networked periods of news coverage which would include all of that information as well on a real-time basis.
1419 The only thing we don't have is localized disk jockey chatter and we don't -- we are not going to cover City Hall. If there was a major story in the region that would be a major regional story, we would cover it in our hourly newscasts.
1420 THE CHAIRPERSON: Yes. But essentially what you're saying is you are going to leave the local business to the local radio stations.
1421 MR. LEWIS: Absolutely.
1422 THE CHAIRPERSON: Okay.
1423 MR. ZNAIMER: The reason for it all, of course, is the overriding interest in diversity. It does seem incredible that there is no classical music service outside the GTA in all of English Canada. As I said in my written remarks, it seems quite incomprehensible.
1424 So the Commission's trade-off is ,in order to secure this essential piece of diverse city, a mark of a society, you have given this exception in the East and we propose that you can and should give it here in the Northwest.
1425 THE CHAIRPERSON: So what do you say to the objection that since we are serving the Lexus crowd here that you should be able to get your classical music off satellite radio?
1426 MR. ZNAIMER: Yes. When you do that, though, you detach from the local life of the real community. You get nothing by way of information about what's happening in the cultural life of a community and, of course, not everybody gets satellite radio. Everybody gets FM.
1427 MR. LEWIS: And in terms of -- just to clarify on that point, satellite radio, to use the term Sirius or XM, their focus in terms of that service is not on Canadian musicians, regional musicians, local musicians. They don't present concerts as we do. They don't present artist interviews of Canadian performers.
1428 So, again, these are the real hard-core elements of the application.
1429 MR. ZNAIMER: You can see their level of commitment to classical just in the number of services they offer. They have well over 100 channels, right?
1430 THE CHAIRPERSON: I think you have answered that. I think you have addressed that.
1431 Any Commissioners wish to comment, debate, attack, question -- no?
1432 Gentleman, thank you all.
1433 MS LEHOUX: Just for the undertaking, given that we have a final reply -- a final submission, sorry, for the 28th of November and the final reply is for the 5th of December, when could you provide the map?
1434 MR. BOGDANOWICZ: Perhaps in a week.
1435 MS LEHOUX: In a week? So let's say -- let's say next Wednesday, okay?
1436 MR. BOGDANOWICZ: Thank you.
1437 THE CHAIRPERSON: I would just like to say thank you to all parties and players for --
1438 THE SECRETARY: I am sorry. I am sorry, Mr. Chairman. We still haven't --
1439 THE CHAIRPERSON: I keep cutting into your time.
1440 THE SECRETARY: That's okay. We still have Evanov Communications Inc. --
1441 THE CHAIRPERSON: Oh, my God!
1442 THE SECRETARY: -- on behalf of a corporation to be incorporated, if they could please come forward?
1443 Thank you.
1444 THE CHAIRPERSON: My apologies to Evanov. I didn't mean to cut them off from anything.
1445 THE SECRETARY: Please reintroduce yourselves for the record, after which you will have 10 minutes for your presentation. Thank you.
1446 MS LAURIGNANO: Thank you. Good afternoon again. My name is Carmela Laurignano. With me is Andrée Wylie with Blake's LLP.
1447 We are giving our men a rest in the back rows over there.
1448 During the first phase of this proceeding there was some discussion about how much money is available in the market and how much is being captured by incumbent operators.
1449 We are in no position to know the internal workings of either Corus or Bayshore in the Nottawasaga region and, therefore, any reason we offer about why they may be underachieving is speculative and is an assumption.
1450 What is not an assumption or speculation is the basis upon which we built our projections.
1451 We are confident that we can meet our targeted revenues and substantial CCD obligations and, as a further assurance, we can tell you that our company has the resources to weather any storm or to go through any rough spots that may arise.
1452 The market can support the addition of our proposed service because even if one divides the available dollars in the market of over $5 million by 2016, that represents over two and a half times what is being realized by the incumbents locally today.
1453 Concerns have also been raised about the Commission -- by the Commission regarding the availability of human and other capital when a broadcaster launches yet another radio station. It is a fact and our experience that the more the business and the critical mass grows, the easier it is to attract highly skilled personnel. It allows one to first attract and train, develop and then deploy these employees and others; in other words, to have a farm system in place.
1454 It's how Astral and Rogers do it and they certainly have many more holdings, broadcasting and otherwise than we do.
1455 Mr. Rogers did not have to do everything personally while he was alive and he is certainly not doing that today. Yet, Rogers keeps going.
1456 A few comments on the Bayshore intervention:
1457 The points that were raised today were not new. They were included in their written interventions to which we replied, and those are on the record.
1458 I would just like to emphasize though that our service is to serve a portion of the region of Nottawasaga. By the same measure that Bayshore serves Wasaga Beach and Corus serves Collingwood, we are seeking a service that focuses on the other parts of the region, those being the Town of Blue Mountains and the Township of Clearview.
1459 I'm glad that Bayshore also confirmed that there is a lot of available money in the market. It was quoted at $3.1 million that they believe and we assume from experience because they operate -- a lot of which they themselves realize because, according to them, that what they said a few minutes ago, proportionate shares of that revenue go out of market.
1460 Lastly, it was submitted with our intervention, we remain of the view that use of 104.9 by MZ Media for part of their feed to be split with a purpose we understand of inserting differentiated commercial advertisements, is not in keeping with the Commission's policy.
1461 However, should the Commission be prepared to grant MZ another exception to that policy, we are confident that we can coexist with "Goldie Locks" and still achieve our business plan through our plan in the Nottawasaga Region and with the use of our 102.9.
1462 I might also suggest that if somebody was looking at that frequency that was mentioned, there is a map on file already that could be looked at, on a preliminary basis.
1463 Finally, we feel that this oral phase has provided us with an opportunity to answer your questions and hopefully provide you with more clarifications to help you in your deliberations.
1464 Thank you, Mr. Chairman. Thank you, Commissioners Molnar and Patrone.
1465 Thank you, Commission staff, for being your usual cheerful and helpful selves. That's part of our enjoyment in these proceedings.
1466 We wish you well in your deliberations and a safe trip home. We are glad to answer any questions you still might have.
1467 COMMISSIONER MOLNAR: I have a question, just one question, because it just came up right before you came forward where MZ Media came forward and suggested that the 102.9 would be you know kind of sorry second for them.
1468 You have said you can coexist but is that dependent on you getting 102.9?
1469 MS LAURIGNANO: No, that is not dependent. We have identified other frequencies that are available. There are some others.
1470 I don't have them handy, but there are two other frequencies that we thought would work, not as well, but could be used.
1471 We would prefer to use 102.9 because it's a frequency that we have invested in. So we have already funded the technical brief and all of that. So that part of the cost is covered.
1472 However, we would abide by your wisdom in that regard.
1473 COMMISSIONER MOLNAR: So, based on what you have put on the record as it regards your alternate frequencies, you are comfortable moving forward with that?
1474 MS LAURIGNANO: Yes, I am.
1475 COMMISSIONER MOLNAR: Okay, thank you.
1476 MS LAURIGNANO: Thank you.
1477 THE SECRETARY: This completes Items 1 to 4 in the Agenda.
1478 Thank you, Mr. Chairman.
1479 THE CHAIRPERSON: So I want to thank you all for excellent presentations. We, all of us on the Panel, have learned a whole lot about the situation in central Ontario and we deeply appreciate the time and effort you have put it into your applications. They can only be made better by your participation and good advocacy.
1480 Thank you.
--- Whereupon the hearing concluded at 1645
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