ARCHIVED - Transcript, Hearing 7 February 2012
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Volume 2, 7 February 2012
TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2011-694 and 2011-694-1
The Coast Plaza Hotel & Conference Centre
1316-33rd Street N. E.
7 February 2012
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
To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2011-694 and 2011-694-1
Moira LetourneauLegal Counsel
Michael CraigHearing Manager and Manager, Radio Policy and Applications
The Coast Plaza Hotel & Conference Centre
1316-33rd Street N. E.
7 February 2012
- iv -
TABLE OF CONTENTS
PAGE / PARA
6. Jim Pattison Broadcast Group Ltd. (the general partner) and Jim Pattison Industries Ltd. (the limited partner), carrying on business as Jim Pattison Broadcast Group Limited Partnership297 / 1904
7. Harvard Broadcasting Inc.391 / 2517
8. Bell Media Inc. and 7550413 Canada Inc., partners in a general partnership carrying on business as Bell Media Calgary Radio Partnership462 / 2967
9. Clear Sky Radio Inc.515 / 3323
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PAGE / PARA
Undertaking502 / 3211
Undertaking513 / 3303
Undertaking513 / 3308
Undertaking567 / 3577
--- Upon commencing on Tuesday, February 7, 2012 at 0907
1896 THE CHAIRPERSON: Good morning. Nice to see you this morning. When everybody is in a good mood, it's good. That makes a lot of us in a good mood.
1897 Madam Ventura...?
1898 THE SECRETARY: Thank you, Mr. Chairman, and good morning.
1899 We will now proceed with item on the Agenda, which is an application by Jim Pattison Broadcast Group Limited, the General Partner, and Jim Pattison Industries, the Limited Partner, carrying on business as Jim Pattison Broadcast Group Limited Partnership for a broadcasting licence to operate an English-language commercial FM radio programming undertaking in Calgary.
1900 The new station would operate on frequency 95.3 MHz, Channel 237 C1, with an average effective radiated power of 36,000 watts, maximum ERP of 100,000 watts, with an effective height of antenna above average terrain of 180.3 metres.
1901 Appearing for the applicant is Mr. Rick Arnish.
1902 Please introduce your colleagues and then you will have 20 minutes to make your presentation.
1903 Thank you.
1904 MR. ARNISH: Thank you very much, Madam Secretary.
1905 Good morning, Chair, Members of the Commission.
1906 I am Rick Arnish, President of the Pattison Broadcast Group. We are pleased to appear before you today to present our application for a new FM station to serve the City of Calgary.
1907 Before commencing our formal presentation, I would like to introduce the panel which is appearing before you this morning.
1908 To my right is Mr. Gerry Siemens, Vice President and General Manager of our Vancouver radio stations.
1909 To Gerry's right is Rod Schween, General Manager of our Lethbridge, Alberta and Cranbrook, British Columbia stations.
1910 To Rod's right is Mr. Bill Dinicol, the Vice President of Finance.
1911 To Bill's right is Mark Rogers who is our General Sales Manager in Vancouver. Mark can speak to our revenue forecasts in this application.
1912 To my left is Tamara Stanners, Program Director of our Vancouver station PEAK-FM who will speak to our programming.
1913 To Tamara's left is James Sutton who has been instrumental in the success of our Vancouver Triple A station operations and who worked on the music and spoken word programming for our new Calgary station. James can speak to the music components of our application.
1914 Beside James is Amanda Panes who works on the social media side of our Vancouver radio operations.
1915 In the back row we have Chris Weafer, our legal counsel from Owen Bird in Vancouver, and to Chris' right is Jeff Vidler of Vision Critical Research who did our market research for this application.
1916 Chair, we are ready to begin our presentation. We will commence with a 4-minute video which will give you a good picture of PEAK-FM, our proposed Adult Album Alternative format which we believe is the best choice for Calgary.
--- Video presentation
1917 MR. ARNISH: Members of the Commission, the application we have before you is an extremely important application for our company. If approved, you will strengthen a Western-based radio-focused broadcast company which has operated since 1965. While independents, large groups and regional players have come and gone from the radio industry over the last 47 years, our shareholder has maintained a commitment to investment in the Canadian broadcast system and to the growth of our broadcast group.
1918 We believe, consistent with the Commission's criteria, that a new FM station for Calgary must have the following five points:
1919 1. Provide a new exciting format choice and a new stand-alone Western based independent station which adds diversity to the marketplace;
1920 2. Have strong Canadian Content Development initiatives and other measurable and tangible benefits that contribute to the Canadian Broadcasting System;
1921 3. Be based on a solid, realistic business plan and have the financial resources of a strong owner to ensure proposed programming plans and commitments are met over a seven year license term;
1922 4. Have minimal impact on existing players and will best suit the market; and
1923 5. Be a benefit to the local community.
1924 Our filed application addresses all of these points, as we will highlight this morning.
1925 The adult album alternative ("Triple A") format is a format not available in Calgary. Our market research and the letters filed in support of our application confirm that the Triple A format is in demand in Calgary. Of the non-ethnic applications before you, we believe ours is the only truly unique and diverse format. To speak on the feel and flavour of PEAK FM, here is Gerry Siemens.
1926 MR. SIEMENS: In studying the Calgary market, we determined that Triple A represents a wide open opportunity. Based on our research, we developed an application for the Triple A format that incorporates a wide range of current and recent music, supplemented with music from the last decade. The station will target 25 to 49-year-old women as a wide target, but will narrow its focus to women 25 to 34 years of age.
1927 The Triple A radio format is best described as a spinoff from the AOR or album oriented rock format. Its roots can be tracked back to late '60s with what was then considered underground or progressive music.
1928 Triple A has a broad and more diverse playlist than most radio stations and less played tracks are quite common. The music tends to be on the fringe of mainstream, popular music and rock music and is quite often acoustic based, with forays into alternative rock, folk, and alternative-country.
1929 We are proposing a softer, acoustic-based format with a heavy emphasis on current and recent material. Sixty percent of our music will have been released within the last two years. Core artists on the station will include Dan Mangan, Feist, Hey Rosetta, Arcade Fire, Florence and the Machine, and Jack Johnson. The station would create an exciting, new vehicle to expose new Canadian artists in Calgary and will repatriate listeners to conventional radio.
1930 PEAK-FM will be a unique music-intensive station that will be a refreshing alternative to existing Calgary FM stations. It's clear from our research that the Triple A format will add diversity to the market.
1931 A minimum of 40 percent of the music aired on The PEAK will be Canadian content and 15 percent will be emerging Canadian Artists.
1932 Tamara Stanners and James Sutton will now detail our 21 hours and 18 minutes per week of news and spoken word programming.
1933 MS STANNERS: Spoken word on The PEAK will be carried out be a team of intelligent, mature and articulate announcers with a thoughtful and professional presentation. We will still be fun, but we are not going to waste our listener's time with inane or useless chatter.
1934 News, sports, weather and traffic information will be brief, to the point, and contain the most important facts PEAK listeners need to feel satisfied that they are informed.
1935 The Peak will offer its listeners a wide spectrum of ideas and perspectives with a concerted focus on listener interaction. All of our on-air staff will be proficient with Twitter and Facebook and the rest of the up and coming social networks. Spoken word programs will be augmented by corresponding pages on the PEAK website; each with discussion groups, listener polls, blogs and podcasts.
1936 News. PEAK listeners have a higher than average interest in local news and information as illustrated in the research filed with our application. Fully 95 percent of those interested in a softer Triple A station stated an interest in local news and information. Although the PEAK is about the music, listeners will also want frequent, to the point "tell me something I don't already know" newscasts. Keeping a constant eye on the "Now Trending" bars on websites like Twitter and Google News and Yahoo! will help ensure that we are as current and in touch as our listeners are.
1937 Stories affecting Calgary and Southern Alberta will form the majority of scheduled newscast content. However, in the Vision Critical study, 71 percent of potential core listeners to the softer Triple A format indicated they also would be very or somewhat interested in hearing news from other parts of Alberta, with a particular interest in Alberta business and the provincial and local economy. The Pattison Broadcast Group has a unique opportunity to satisfy these needs by channelling our news resources from our 10 smaller market Alberta stations.
1938 A minimum of 54 PEAK information updates will account for 3 hours and 7 minutes of spoken word programming.
1939 Our News staff will also produce a weekly 30-minute information program airing Sunday mornings called "PEAK Around Alberta". It will give us the opportunity to share the most interesting news stories of the week from our stations from all across the province.
1940 This unique news feature will account for an additional 30 minutes of news and information programming.
1941 Traffic and weather together will amount to 5 hours and 31 minutes per week of spoken word.
1942 To set the spoken word programming apart from existing Calgary stations, The PEAK has created a number of long and short-form programs that are set out in our application and will consist of the following: PEAK Fitness; PEAK Outside; PEAK Around Calgary; and Calgary Flavours. Each of these will amount to 28 minutes per week of spoken word.
1943 The Suzuki Report; the PEAK Funfinder; and @ The PEAK.
1944 Now, our listeners are super tech savvy and are keenly interested in social networking. @ The PEAK is a special program that will speak to this highly connected listener every Sunday morning. @ The PEAK will be fun and interactive, as we introduce the latest trends in social networking, identify new sites that are fun and trending, and talk about the "what's next" piece of technology or the new killer app.
1945 James Sutton is here to speak about the special music program components of the PEAK.
1946 MR. SUTTON: The PEAK program schedule features a number of innovative music shows like The Daily Demo. Each weekday evening from 8:00 to 8:30 The PEAK will present music primarily from emerging artists that will be, for the most part, their first radio exposure. A live music performance calendar will provide listeners with local clubs and concert listings. The Daily Demo webpage will reflect the content and spirit of the program, offering listeners artist bios, live music listings, demos available for streaming, listener discussion groups and listener polls.
1947 The Basement Suite. Friday nights at 9:00 the Basement Suite gives listeners an hour of "unplugged" and roots performances. The texture of the show will be a natural acoustic sound drawn from genres such as roots, folk, alternative country, new grass, and acoustic blues and rock. Canadian artists such as The Great Lake Swimmers and Joel Plaskett, along with "folksy" sounds of current alternative acts like Mumford and Sons are examples of music you will hear on Basement Suite. Emerging Canadian artists not currently being heard on commercial radio will find a venue on this unique show.
1948 The Borders. Sunday morning at 11:00 we will air Borders, a weekly 60-minute program that will transcend the lines of musical genres. It will feature culturally diverse or "world" music from around the globe.
1949 And finally, Check This Out! It's our daily new music feature where we highlight the newest, brightest and best music discoveries, airing three times daily with new releases and background information that our audience will most likely be hearing for the first time.
1950 Check This Out helps PEAK Listeners feel like they are on top of new music. Feedback from them is constantly encouraged through Facebook, Twitter and the phone, and then we share it on-line and on-air.
1951 Our total spoken word programming amounts to 21 hours and 18 minutes per week.
1952 MR. ARNISH: Chair and Members of the Commission, I would like to highlight for you now our CCD commitments.
1953 Our CCD initiatives amount to $12,250,000 over the course of the 7-year licence term. This amount includes $8.75 million in direct cash contributions, and an indirect contribution of $3.5 million in on-air support, as well as promotional components from other Pattison companies. The plan has five parts, each of them quite different, but all designed to:
1954 One, benefit emerging Canadian artists;
1955 Two, create sustainable Canadian content; and
1956 Three, be of long term benefit to the broadcast industry as a whole.
1957 We have made the following commitments over the proposed 7-year licence term:
1958 One, $1,750,000 to FACTOR;
1959 Two, $350,000 to the Calgary-based Sled Island Music Festival;
1960 Three, $1,225,000 to the Save the Music Foundation or other eligible organizations for funding in supporting music in schools;
1961 Four, $525,000 to the MEGA Music Canadian Music Giveaway; and
1962 Five, $4,900,000 to the PEAK Performance Project.
1963 We are extremely proud to be in a position to fund a unique, innovative project originally designed in consultation with MusicBC and now adopted by the Alberta Music Industry Association, subject to your approval.
1964 We asked the music industry in British Columbia and Alberta the question: What do emerging artists need to get a foothold in the music industry? We were told five key things were needed:
1965 1. A solid financial footing;
1966 2. Marketing;
1967 3. Air play;
1968 4. Tour support; and
1969 5. Solid management and a development plan.
1970 Our $4.9-million commitment over the term of our licence is specifically focused on serving these needs.
1971 MS STANNERS: One of my favourite roles in assisting in preparing this Application was to discuss the PEAK Performance Project with young artists working in Calgary.
1972 As the Commission is well aware, there is a growing trend of "do-it-yourself music" in starting a music career. Now, this Project will create a valuable support tool for up and coming artists to develop their skills in Calgary, just as it has in Vancouver.
1973 The PEAK Performance Project is proving itself to be one of the most effective and impactful artist development programs in Canada. We have seen unprecedented success with several of the artists that have taken part in the Project.
1974 For example, Said the Whale won $75,000 in career and development funding in the PEAK Performance Project 2010 edition. Just four months later, they went on to win the Juno Award for best new band in Canada.
1975 Greg Sczebel also took part in the PEAK Performance Project in 2010, finishing in the Top 5. Greg also went on to win a Juno for best Contemporary Christian Album.
1976 Our latest winners, Current Swell, are doing incredibly well with the momentum from the PEAK Performance Project. Their latest single "Too Cold" is charting at number 15 on the modern rock charts, they are selling thousands of copies of their album, and their latest video has over 250,000 hits. We believe that they are on track to international success.
1977 The Project has also proven to be influential to other music programmers, including CBC Radio 3, who immediately added our PEAK Performance Project Top 20 artists to their regular rotation, which further benefits the artists.
1978 We appreciated receiving the letters of support which were included in our Application, which speak to the heart of the proven benefits of the PEAK Performance Project.
1979 In a letter dated September 15, 2011, MusicBC stated:
1980 MR. SCHWEEN:
"The Peak Performance Project is proving itself to be one of the most effective and impactful artist development programs in Canada."
1981 MS STANNERS: In the letter filed by the Alberta Music Industry Association, they stated:
1982 MR. SCHWEEN:
"The Peak Performance Project is designed in such a way as to benefit a great number of emerging artists while creating an opportunity to isolate a few artists with the potential to succeed nationally and perhaps even internationally..."
1983 MS STANNERS: Turning to major music industry experts in British Columbia, Sam Feldman & Associates wrote:
1984 MR. SCHWEEN:
"I'm consistently impressed with the entire team of [...] 100.5 The PEAK. They are committed to developing B.C. talent with their ground-breaking PEAK Performance Project. I would like to see a PEAK radio station in every province/territory of Canada."
1985 MS STANNERS: Rick Arboitt, President of Nettwerk Music Group, wrote:
1986 MR. SCHWEEN:
"In Nettwerk's dealings with, and in my own personal observations of the Peak, I have recognized the organization's unparalleled commitment to the Vancouver independent music community."
1987 MS STANNERS: Moving to artists who filed letters of support, We Are The City, the band who won the first ever PEAK Performance Project in 2009 writes:
1988 MR. SCHWEEN:
"The Peak Performance Project could very well be the means to a stronger and more unified music community across the country."
1989 MS STANNERS: And Vince Vaccaro wrote in his letter:
1990 MR. SCHWEEN:
"Every city across this country needs people like this and a station like this. As a Canadian musician I can tell you first hand that support teams like the people of The Peak are very few and far between in Canada or anywhere else for that matter. Lets change that."
1991 MR. ARNISH: Members of the Commission, you have a large number of applicants before you in this proceeding. We're all making promises about our contributions to the community, to Canadian talent and to the broadcast industry. But to deliver on these contributions, there must be a business case.
1992 We know how to successfully launch and operate a unique format competitively in a major market. We must be patient as a new station appealing to a key demographic takes time to find its feet. Given time, this format will work. We're committed to making it work.
1993 We launched the PEAK-FM Vancouver in 2008 and it has exceeded expectations on all fronts, including the PEAK Performance Project winning the Radio Promotion of the Year at Canada Music Week in the first year of operation.
1994 We have full confidence in our ability to meet the ambitious commitments we have made. We have a solid and attainable business plan, and we have the resources of the Pattison Group of Companies behind us.
1995 Consolidation of ownership in the broadcasting industry has made it even more important to ensure that regional players be strengthened and be enabled to compete fairly and effectively.
1996 We have been serving the Western Canadian radio market for over 47 years and remain committed to the growth of our regional company. This is our second appearance requesting a licence for Calgary. If we are anything, we are persistent!
1997 Our Application, if approved, will have minimal impact on existing players in the market as they are either strong, national, competitive players or well-established standalone operators. Our market research verifies this view.
1998 The Pattison Broadcast Group keeps its promises and serves its communities. We have a core belief, as does our shareholder, that the more we serve our community, the more successful we will be. Collectively, our Group commits in excess of over $14 million in airtime each year towards charitable and community service causes.
1999 In conclusion, the Jim Pattison Broadcast Group believes this Application, if approved, will be the best utilization of the available frequency in Calgary and submits that approval is in the public interest and in furtherance of the objectives of the Broadcasting Act.
2000 Approval will:
2001 1. Enable a longstanding, well-respected Western-based broadcast company to enter the playing field in the very competitive Calgary market with a standalone FM licence.
2002 2. Result in $8,750,000 in direct benefits targeted primarily to emerging Canadian artists; a further $3.5 million in indirect benefits will be provided over the licence term.
2003 3. Add a unique and diverse Triple A FM format to the market, which will air as a Condition of License 40 percent Canadian content and 15 percent emerging Canadian artists, a format which will embrace new and emerging artists unlike any proposed or existing format in the Calgary market.
2004 4. Create 25 full-time and three part-time broadcasting jobs in Calgary.
2005 5. Provide 21 hours and 18 minutes weekly of new, innovative spoken-word programming from a Western Canadian-owned and -operated broadcast company. A new Calgary-based editorial voice will be created.
2006 Thank you Chair, Members of the Commission and Commission staff. We look forward to responding to your questions.
2007 THE CHAIRPERSON: Well, thank you very much. Excellent presentation.
2008 Let's maybe start at the beginning here, and you mentioned it, in the Calgary market. As such, my question is quite simple. What's new about you? At the end of the day, I mean. I understand the video. I understand your text. But your music, I think there are at least three or four, maybe five or six, other stations in Calgary that will have a similar format. So what makes you different?
2009 MR. ARNISH: Well, that's an excellent question to start off with this morning.
2010 What makes us different and unique? Well, one thing, we were in front of the Commission here in Calgary as a Western-based broadcasting company about five years ago and we applied at the time for a very different format than we have in front of you today, and our regional broadcast company is such that the only major market station that we have in the West is in Vancouver.
2011 We have, as you heard in our presentation, 10 small market radio -- nine radio stations and one television station throughout the Province of Alberta and we're back in front of you today with a very different, very unique Triple A format.
2012 And yes, correct, the format may have some overlap between other formats in the marketplace, but when we applied in Vancouver and received your approval for the Triple A format, we didn't really, in a sense, know fully what we were getting into in Vancouver with this Triple A licence.
2013 I'm going to ask Mr. Siemens and Ms Stanners and Mr. Sutton to talk about this as well, but let me conclude before I turn it over to Gerry, that we launched the station in Vancouver with your permission and your approval and created this wonderful new format in Canada, that we're, quite frankly, the only ones left doing it, and created this absolutely unique and wonderful PEAK Performance Project that we want to bring here to Alberta.
2014 So with that, I'm going to ask Mr. Siemens to elaborate further.
2015 MR. SIEMENS: Well, thank you, Rick.
2016 THE CHAIRPERSON: I really don't want to interrupt, but -- we'll talk about the PEAK Performance Program, but in terms of your programming, in terms of your playlist, what's different about PEAK?
2017 And I can sort of ring off -- I'm going to put my glasses on and give you my age.
2018 THE CHAIRPERSON: I might even have to turn on my light.
2019 But, you know, when you compare yourselves with CJAY, CFGQ, CFEX, Rogers, Corus, Harvard, CJAQ, Jack FM, CJVP and even CKCE, and Triple A formats are sort of so standard, so overdone, what's different?
2020 MS STANNERS: We are different.
2021 THE CHAIRPERSON: Excite me about Triple A.
2022 MS STANNERS: Okay. I am so excited to be able to do this for you because we do believe that we've created something that is truly unique in Vancouver and what we want to do is do the same thing here in Calgary.
2023 The way that Triple A works is that it's not something that is chart-driven, as you know. It's really something that is up to whoever the programmers are.
2024 The way that we do it is we listen to the community as they tell us what they want to hear and 70 percent of what we hear is something that you won't hear on any other radio station. You just won't, although lately what we found is once we start playing it, then other stations will copy us. So that makes it a little bit of a challenge to be unique and different.
2025 But we really do listen to the community that we are in to find out what they want to hear as opposed to telling them what they should be hearing and it does make us different. It really does.
2026 I know that James has a list of all of the absolute unique bands that we're the only ones in Canada playing. And they're not just local Vancouver bands. They do range from right across Canada. And it's exciting to be able to give them the opportunity to get an audience that they've never been able to have before. We really truly are unique in doing that.
2027 MR. SIEMENS: Before Mr. Sutton comments on the number of new artists that we have exposed in Vancouver and look forward to exposing in Calgary, I would like to react to your comment about the Triple A format being overdone.
2028 We are in fact the only surviving Triple A station in Canada.
2029 In 2006 you licensed one here in Calgary. They signed on and lasted seven months.
2030 In 2007 or 2008 you licensed one in Edmonton. They lasted seven months.
2031 You licensed three in Vancouver, and CHOR-FM has been sold and is going to change format soon, one is yet to get to air, and we are the last surviving Triple A station.
2032 So it's not overdone at all. In fact, it's very unique. And one of the things that Tamara was commenting on that makes it unique is our reliance on new music that isn't being exposed anywhere else, which is why we've agreed to a 15 percent condition of licence that we will play emerging artists for 15 percent of our music, and no other applicant is even close to that.
2033 And, James, maybe you could comment on some of the artists that we've played that no one else in Canada has tried.
2034 MR. SUTTON: I have a list of over 500 bands here. I'm not going to go all the way -- that deep, but maybe some Canadian artists that we've helped, really helped develop, really helped launch their career across Canada, being picked up by many other broadcast groups across Canada, especially here in Calgary.
2035 THE CHAIRPERSON: And you were alone in developing these bands --
2036 MR. SUTTON: We were alone --
2037 THE CHAIRPERSON: -- and in promoting these bands?
2038 MS STANNERS: We also had help from our sister station The Zone in Victoria, who's absolutely fantastic at helping out.
2039 THE CHAIRPERSON: And no one else picked them up coast to coast?
2040 MS STANNERS: They have.
2041 THE CHAIRPERSON: They have now?
2042 MS STANNERS: It took a while, and three years ago we started doing things that nobody else was doing, like Mother Mother and Said the Whale, who hadn't had any commercial exposure whatsoever.
2043 We started playing them because they were our neighbours, and people were telling us that's what they wanted to hear.
2044 And thank God for that, and thank goodness for you guys giving us the approval to have that station there, too, because it has created just this unbelievable music community in Vancouver that really didn't exist before.
2045 It has given artists a chance to sell-out venues and to sell their music, and also spread right across the country. It is really gratifying to come into Calgary and hear those bands that we were the first to ever play get the exposure here, too.
2046 And I know that the reason that is happening is because it works.
2047 But we have to continue to do it. It's an ongoing process. We are continually finding new bands.
2048 THE CHAIRPERSON: And no one else in Calgary or Vancouver is out there looking for new bands?
2049 MR. SUTTON: If they are, they are not developing -- supporting them the way we are, in any way.
2050 I find it strange that we play more Calgary artists than most Calgary radio stations. Calgary radio stations play a lot of Vancouver artists that we have developed and we have encouraged and grown with since the start of the radio station.
2051 THE CHAIRPERSON: So, at the end of the day, Calgary stations are already playing --
2052 MR. SUTTON: Vancouver artists.
2053 THE CHAIRPERSON: -- your playlists.
2054 MS STANNERS: No. Some of, but we are building so much more. Like, it's an ongoing job to be searching out these new bands, and continuing to expose them.
2055 I just think, at the end of the day, the fact that we are really actually developing Canadian talent that is going to be heard -- and not just in Vancouver or in Calgary. If we get The PEAK, if you so chose, it's going to go right across the country. It really is impactful.
2056 And one of the best stories is Dan Mangan, who you saw on the video. He was actually in the video that we put together for The PEAK presentation for the very first PEAK that we did. I went to interview him at a coffee shop, and he couldn't afford a coffee. He was carrying around his two boxes of CDs, as he was going to take the Greyhound to Prince George to do his show, by himself.
2057 Now, we were the very first to ever play Dan Mangan, and from that point, I can assure you, his success has grown absolutely, because we gave him the support that he so desperately needed.
2058 And now, right across the country, Dan Mangan is being played, and even internationally.
2059 Now, these are just examples of people who have really benefited from the support, but it's ongoing and continuing, and we won't stop.
2060 It's a passion, and you are making dreams come true by allowing us to have the format and to really make it happen.
2061 THE CHAIRPERSON: This may come as a surprise, Ms Stanners, but most people come before the Commission and talk about how they are developing Canadian acts and artists, and they are out there looking, and they are promoting, and it just doesn't seem new or fresh.
2062 And we have to figure out what the demand is in this market.
2063 We had the ethnic stations speak yesterday, and they said: Listen, great, you license another English, middle of the road, radio station. They are already out there, they are already being serviced.
2064 MS STANNERS: Right.
2065 THE CHAIRPERSON: That clientele is.
2066 I am just looking for something exciting about Triple A.
2067 MR. ARNISH: Sure, and that's fair, and I would like to ask Mr. Vidler, from Vision Critical, to give us his overview of the marketplace and the research that he did here, which will certainly address your concern.
2068 MR. VIDLER: Yes, I think it is probably worth speaking a little bit to the research, in terms of how it was done, that really helped to provide some of the confidence that the Pattison Broadcast Group has, in terms of putting a Triple A station on the air in Calgary.
2069 Certainly, they were looking at their success in Vancouver. They looked at the fact that Newcap had launched a Triple A station here, based on research, to some extent, that indicated there was a hole. Gave up on it after seven months. They felt that there was an opportunity for replicating some of what they are doing in Vancouver, but also understanding exactly what worked in Calgary.
2070 They looked at three different variations of the Triple A format, and that format was described both in words and in terms of music -- most of the songs played in those montages, and the description -- in fact, one of the descriptions for the Triple A format said: These are songs that are not normally played -- regularly played -- on Calgary radio stations.
2071 And, in fact, the audience demand came back that there was a very strong interest in the format. Thirteen percent of those who were exposed to the broad-based Triple A format said that it would become the station they would listen to most often.
2072 Now, that's a large figure, and, I think wisely, Pattison has discounted that in terms of what it will actually mean in terms of eventual share. But there clearly is a demand there.
2073 You have a market in Calgary where you are looking at 18 to 44-year-olds, which is the real core demographic for --
2074 THE CHAIRPERSON: Eighteen to 34?
2075 MR. VIDLER: Eighteen to 44 -- which is the core demographic, based on the research, for the Triple A format, where you really have, you know, on the one side, four different radio stations that are pop-based, pop/dance-based radio stations, core artists -- and these stations would be AMP, Virgin, Kool, and even Lite 95.9 now. They have artists like Lady Gaga, Katy Perry, Rihanna. They are core artists on all of those stations. Those artists are not going to be played on The PEAK, nor is any artist that sounds like that. That was part of the format that we put forth to the potential audience in the research.
2076 On the other side you have rock stations, very hard rock stations like CJAY, classic rock stations like Q-107, and you have an alternative, but a harder edged alternative station, X92.9 -- again, really not playing much of the music that was being presented in terms of the kind of format that Pattison is looking to put forth.
2077 So there is really, actually, in fact, a really wide chasm between those pop and dance-based stations on the one side and the rock-based stations on the other; and Triple A really represents adult, album, alternative, it represents those artists that aren't getting played by the other stations. It really, in effect, defines the format.
2078 THE CHAIRPERSON: With respect to your research, Mr. Vidler, if I look at the data that was provided in your submission, you mention that 9 percent of 18 to 54-year-old adults identified a Triple A station as having the potential to be their favourite station, and you also mention that 75 percent of respondents would enjoy a Triple A station, and said they could not identify a Calgary station that was doing a good job of playing their type of music.
2079 How do you reconcile the discrepancy between 75 percent not happy, and that they are not finding a Triple A station, and 9 percent who would have the potential to see it as their favourite station?
2080 Nine percent identified a Triple A station as potentially being their favourite --
2081 MR. VIDLER: Yes.
2082 THE CHAIRPERSON: -- and you go on to say in the next paragraph that 75 percent would enjoy a Triple A station, and said they could not find -- they could not identify that kind of station in Calgary.
2083 So why would only 9 percent feel that a Triple A station could be their favourite station?
2084 MR. VIDLER: I would like to clarify the second point that you mentioned.
2085 It comes from -- what page of the research would that be?
2086 THE CHAIRPERSON: I don't have the specific page, but I have the submission.
2087 MR. VIDLER: If I might read this, perhaps this is the point that came out of the research, and I can speak to that.
2088 Potential core listeners to the middle ground and hard rock-edged Triple A format options are especially dissatisfied with current music choices.
2089 THE CHAIRPERSON: Seventy-five percent said --
2090 MR. VIDLER: Seventy-three percent and seventy-five percent, respectively, say that they can't seem to find a Calgary radio station that consistently plays the kind of music they like.
2091 THE CHAIRPERSON: Seventy-five percent of respondents would enjoy a Triple A station, and said they could not identify a Calgary station that was doing a good job playing their type of music.
2092 MR. VIDLER: You are referring to what is in the supplementary brief?
2093 THE CHAIRPERSON: I don't have your document, I just have the notes that we have.
2094 MR. VIDLER: It's on page 7.
2095 THE CHAIRPERSON: It's there somewhere, but --
2096 Just take a look at that, and we can move on and address it later on.
2097 MR. VIDLER: Yes, I think I can speak to that. That was really taken from the research, and the research point that I was just reading was from the Executive Summary, which says that between 73 and 75 percent of those people attracted to the Triple A format said that they don't -- they can't find a Calgary radio station that consistently plays the kind of music that suits their taste.
2098 That is above the average for 18 to 54-year-olds, in general, which is --
2099 THE CHAIRPERSON: Yes, but only 9 percent of your survey group has the potential to make a Triple A station their favourite station.
2100 MR. VIDLER: Right, and --
2101 THE CHAIRPERSON: There seems to be a discrepancy there.
2102 MR. VIDLER: The fact that 75 percent are not necessarily satisfied with the music they are hearing now, this is among those people who said that this would become their favourite station.
2103 So that's, of that, 9 percent would listen to a Triple A station. Seventy-five percent of those people say they can't consistently find a radio station that currently plays to their taste.
2104 So that is actually, really, quite consistent, I think --
2105 THE CHAIRPERSON: I'm sorry, 9 percent of 75, which gives you a total potential market of, you know, 5 or 6 percent.
2106 MR. VIDLER: And, in fact, that's right, you would ramp that down a little bit, in terms of what it would mean, and that is one of the reasons why I said it was really wise to kind of roll it back, in a sense, from those who said it would become their favourite, and to take a look at what percentage of those people are in fact expressing dissatisfaction with hearing the music that is being played now.
2107 THE CHAIRPERSON: So, given your own numbers, the best you can hope for is -- if you monopolize that market, is 6 percent of the global market in Calgary.
2108 If every one of those listeners tunes into The PEAK, and sets aside every other musical option that resembles yours, the best you can hope for is a 5 percent or 6 percent share.
2109 MR. SIEMENS: The potential audience for the station, based on the research, would be about 8 percent, actually. That is what we said in the Executive Summary that you are looking at, and that's among 18 to 54-year-olds.
2110 Part of that, as well -- and we haven't talked to this -- one thing that the research did indicate was that on the softer end of that Triple A spectrum -- and they did look at three different format variations for Triple A -- there was even a little bit larger opportunity there. There was 13 percent --
2111 THE CHAIRPERSON: Yes, 13 percent.
2112 MR. SIEMENS: -- who indicated that that would become the station they would listen to most often.
2113 Now, that measure is one that really expresses the share, or potential share of interest in the market. If it's your favourite radio station --
2114 THE CHAIRPERSON: When you combine Triple A and the softer version of Triple A, when you put the two of them together, you are up to 13 percent.
2115 MR. SIEMENS: No, those are actually two separate, but, to some extent, overlapping targets.
2116 MR. ARNISH: I would like to add, Mr. Chair, that success in this format is not driven by a published market share. When we got into this format in Vancouver -- and we go into this format in Calgary fully understanding that this will never be a ratings winner.
2117 And for us to be successful, it really doesn't have to be. I mean, what we are going to do is repatriate a number of listeners to radio that aren't using the genre at all right now, and that takes time.
2118 We understand fully that this format takes a long time to grow, because we are living it.
2119 THE CHAIRPERSON: I understand that, but your market share in Year 7 is 7 percent, and your figures are based on that result.
2120 So are you telling me that you won't be at 7 percent market share by Year 7?
2121 MR. SIEMENS: We have the potential to be at 7 percent by Year 7, yes.
2122 MR. ARNISH: We think that -- and I concur with what Mr. Siemens has said -- that our projections are conservative. That's the way we operate our company, and the 7 percent is certainly attainable.
2123 And quite frankly, with the music that -- and the format that we're airing in Vancouver, we see the same potential being that and more here in Calgary and that the market should be beyond seven percent.
2124 We think it's a very attainable goal and very achievable for our group.
2125 THE CHAIRPERSON: Given your numbers, at seven percent you're going to knock three or four stations completely off the air in Calgary if you were to hit this number ---
2126 MR. ARNISH: Well, no, no.
2127 THE CHAIRPERSON: --- which is more than the maximum, according to your own survey, of the potential of this station.
2128 So either you want to hit seven percent and you want to be financially viable, or the other argument is that we're not going to measure our success by market share and we'll settle for two percent or even less.
2129 MR. ARNISH: Well, the Calgary --
2130 THE CHAIRPERSON: I mean, which one is it?
2131 MR. ARNISH: Well, as we all know, the Calgary market is going to continue to grow substantially in the future, and over the next seven years it's got the potential to really grow.
2132 And we know the Conference Board of Canada has predicted that the growth in Calgary and in Edmonton, for example, is going to be -- lead the country, quite frankly. And with that, there's going to be more consumers moving into Calgary. There's going to be more business established in Calgary.
2133 That's going to roll out and share out the revenues to the media sector in Calgary. We'll carve out our fair share of that with a Triple A format and the other stations, we believe, will do very also.
2134 The market's going to continue to grow.
2135 THE CHAIRPERSON: What would be the impact on PEAK if we were to licence two new stations in Calgary, FM -- on the FM dial?
2136 MR. ARNISH: Well, I guess depending on the formats, I don't think it's going to have a significant impact. We don't believe that. We've talked about it amongst our group that if you licence more than one, we feel our business plan and our plan for this Triple A station in Calgary will survive and will do very well.
2137 We're not afraid of the competition. If you did licence two, so be it. We think that's great for the marketplace and we're up for the challenge.
2138 THE CHAIRPERSON: When you look at what's available right now, who would you -- when you want to pick up your market share, be it two, three, four, five, six percent, what are people listening to that they'll stop listening to if and when PEAK airs?
2139 MR. SIEMENS: Their iPods. You know, any ---
2140 THE CHAIRPERSON: And you won't have any impact on other players in Calgary.
2141 MR. SIEMENS: Very minimal. Very minimal impact on any of the existing players in Calgary.
2142 When we put the PEAK on the air in Vancouver, for the first year the number one comment we got from our listeners -- and I'm not talking hundreds; I'm talking thousands and thousands of people commented, and Tamara, you may want to talk about this a little bit, the dialogue that we have with our listeners.
2143 The number one comment we got is "I had given up on radio and thank God that you're here because now I can turn the radio back on again".
2144 And that was universal. And even three and a half years later, it's still happening. We get that comment at least daily.
2145 Tamara, perhaps you can talk a little bit further about that.
2146 MS. STANNERS: Yeah. We really believe that dealing with our listeners and talking to our listeners is the only way that we are going to succeed as a radio station. It's how the format really develops. But we, every single day, do get that comment from people who are still just finding us, saying, you know, "We stopped listening to radio altogether just because it didn't offer us anything".
2147 And we provide them with a service, and I know you want to be excited about what we do. I am so excited about it I find it very challenging to almost remain seated sometimes.
2148 But what we get to do is to play music that nobody else commercially is playing. And I know that there will be some overlap. There just always will be.
2149 For example, some of the bands that we did break that would never have seen the success that they did were like Mumford and Sons and Foster the People and even Adele. Way before Adele was famous, we were playing her.
2150 Now, I know that doesn't seem like much, but people are following our lead.
2151 What we do do is we go into the internet and we see what's happening on our social networks with the people who follow us on Twitter and Facebook and telling us what they want, and then we respond to them.
2152 It's a very unique way of doing radio. And in fact, James can speak to this, too, because it's -- the industry has changed so much, but there aren't a lot of radio stations who are actually following the industry changes. And we're working on a completely different model that really has the listeners' best interests in mind.
2153 So we're bringing back people to radio that had lost faith. I'd lost faith.
2154 If it weren't for this radio station, I wouldn't be here. I wouldn't be listening to radio. I'd quit the business 'cause I just didn't believe in what was going on.
2155 It's so amazing to have an opportunity to be able to share new and exciting music like what was going on in the '70s with FM when it started and what was going on in the '60s when people could actually play new and exciting music.
2156 THE CHAIRPERSON: Oh, those good old days, those '60s and '70s.
2157 MS. STANNERS: Oh, they were awesome. I don't remember them -- I was born. I was.
2158 THE CHAIRPERSON: Just before we get to Mr. Sutton, and it's funny -- a side note. I was watching a Woody Allen film on the way in from Ottawa, Midnight in Paris, I think it's called, and they were talking about the '20s -- and I'm a big Paris fan and I'm a big '20s fan -- and those American ex-pats that went to Paris.
2159 Anyways, they were -- the main characters were all just talking about how great the '20s were and then he goes to the '20s and the people in the '20s are talking about how good the Renaissance was and it just keeps going back.
2160 At any rate, back to the point.
2161 MS. STANNERS: Okay.
2162 THE CHAIRPERSON: You mentioned social media -- before we get to Mr. Sutton -- and you mentioned that one of your arguments was going to be that you were sort of going to be sort of tech savvy and social media involved.
2163 I mean, everybody's into social media. Everybody's --
2164 MS. STANNERS: That's true.
2165 THE CHAIRPERSON: -- into, you know, Twitter and Facebook and everything else. There's nothing new and exciting about that.
2166 MS. STANNERS: Well, the difference is that we just don't speak to our listeners.
2167 And if you look at most radio stations --
2168 THE CHAIRPERSON: You listen to your listeners.
2169 MS. STANNERS: We really do. We communicate on a -- like we're back and forth all the time.
2170 And I know it may not seem that different, but --
2171 THE CHAIRPERSON: You don't think everybody does that?
2172 MS. STANNERS: No, I don't. I watch. I see what they're doing. I know exactly what they're up to and I know that they're not responding in the same sort of way.
2173 I do -- I really think that -- I mean, we get music programming from people who Tweet us all the time. Like we'll -- and it's not because record companies are telling us, "Hey, you should be playing this".
2174 We'll have an individual say, "I found this great song, Tamara and James at the PEAK". We listen to it and we will add it to our playlist. That just doesn't happen anywhere else, but it's --
2175 THE CHAIRPERSON: Ms. Stanners, everybody's listening to what their listeners are asking for and following social media and seeing what's hot and everyone tries to address what the public and their public wants.
2176 MS. STANNERS: Sometimes.
2177 Here's the thing; I worked for so many program directors who said, "Listeners are stupid, they don't know what they want. We can tell them". Like I literally did work for those sorts of program directors and we wanted to turn it upside down and do something different and respect our listeners, their intelligence, because they are truly intelligent people.
2178 And I guarantee that the people that we will repatriate to radio are walking amongst us right now. We don't see them. They don't stand out. But they want to have a station that they can feel they can listen to and not feel that they are -- that it's just useless, that they're not getting good information or not good music.
2179 It's really an amazing sort of format where you can educate people, but they're educating us at the same time.
2180 THE CHAIRPERSON: Okay. What were your provisions for market share in Vancouver when you lost PEAK?
2181 MR. SIEMENS: We anticipated a two share in our first year, and we, I think, finished the first year at a 1.8. And it's since grown between a 3 1/2, sometimes a 3. We've touched a 4.
2182 But you know, the real beauty of the radio station, and it's a point I started to make earlier, is that it's not -- its success is not driven by ratings.
2183 We understood when we got into this, as I said earlier, it's very difficult to be successful in a ratings war with this format.
2184 Part of the reason is because of the PPM technology and more than 40 percent of our listeners don't have land lines, which makes it very, very difficult to PPM to even find them. And then if they do find them, our listeners are very tech savvy and they look at the PPM technology as being somewhat antiquated and they don't want to carry the devices and they don't really trust big surveys like that.
2185 So we've had to learn -- I'm going to ask Mark Rogers to comment on this a little bit. We've had to learn to survive basically without ratings, and that means you sell local first. And that's what we've tried to do, and are doing very, very well.
2186 And as Rick commented in his presentation this morning, we are way ahead of our expectations in Vancouver.
2187 And Mark, maybe you can talk a little bit about where that money comes from.
2188 MR. ROGERS: Thank you, Gerry. Good morning.
2189 THE CHAIRPERSON: Good morning.
2190 MR. ROGERS: Mr. Arnish challenged me to make sure that there was a business model for the Calgary project and is there an opportunity there.
2191 In the three decades of being a general sales manager -- or consecutive years of being a general sales manager in Canadian broadcasting, I can assure you that the most diligence has gone into our business plan. We find it's sound and achievable.
2192 Let me go to the experience in Vancouver.
2193 We were very sure that we wouldn't have a ratings winner, and in the first year, two yeas of the station as a start-up, of which this was my third FM start-up, we already understand that the large nationals, the agencies, even the local agencies have no appetite for a sign-on station. They say give me four books, give me two years and then they'll have a look at it.
2194 And we understand that. They have a responsibility to spend their client's money in a justified manner.
2195 So it's all about retail. It's all about direct retailers, and we staff and train our sales people as we would in Calgary to understand that it's good business, it's very good business to make sure you're looking out for your client and your customers, your advertisers to grow their business.
2196 It's good business.
2197 So understanding this audience that the station will deliver, that profile is of a certain age, that they perhaps might like greener initiatives, that they might prefer local choices. Certainly that they have a very active lifestyle. They're socially connected, digitally connected.
2198 And in this particular format situation, they are all about the music, new music, new artists, what's happening in emerging scene. They're really into that.
2199 If you find business owners who are looking for those people as customers, you'll have yourself an advertiser, and a long-term advertiser, at that, as we've seen.
2200 So the sales department in Calgary will draw upon the experience in Vancouver.
2201 Now, there are some exceptions to those large advertisers in our experience.
2202 The Hudson's Bay Company, the Bay with Bonnie Brooks and her entire new campaign, they found it important that the PEAK was part of their radio mix and they purchased the PEAK for that audience.
2203 Also, the largest urban mall in Vancouver is called Pacific Centre. It's run by Cadillac Fairview. And the only radio station that they run advertising on or do promotions with is the PEAK Vancouver.
2204 Also, Live Nation is a concert promoter nationally, a very large one. And they insisted that before we put the station on as a local advertiser they would support us because of the audience we would bring and what the station was about for music and promoting concerts and local artists, saying that they can get lots of people out to a local venue or a bar, club, nightclub that -- for a band that gets no air play, and imagine if they did.
2205 Now, I've had, in my experience, lots of advertisers that say if you bring this, I will invest in your radio station, and sadly, many times, that's not really the case.
2206 In the case of PEAK Vancouver that has been the case. We have brought what we said we would and they found it of interest.
2207 Local advertisers, like I said, it's all about local retail. Those categories, we knew what they would be when we went into this and in fact it ended up being true. Telcom is huge, Fast Phones, Smartphones, devices, automotive sales, clothing, obviously music concerts and everything to do with music, downloads, and so on.
2208 I love to say, beer, wine, spirits, entertainment, outdoors and adventure.
2209 We have brought new business and it's retail business. We brought new business in Vancouver that was never in radio. Like Bremner Foods, which is a juice company; ELLA Shoes, a two location Italian shoe store, high-end female shoes, they bought it long term, they get results. Because that's why they buy us and we have to help our clients, as we would in Calgary, grow their business. It's what we have to do and it works.
2210 THE CHAIRPERSON: Thank you, Mr. Rogers.
2211 Can we speak on synergies briefly? You have 10 or 12 stations in Alberta, correct, and in your submission you mentioned there would be synergies.
2212 What kind of synergies are you looking at between --
2213 MR. ARNISH: Right. The synergies that we are looking at is from a news perspective. In the Pattison Broadcast Group all of our licensed operations are truly independent and serve completely the marketplaces that we are allowed to operate in, but certainly in the Province of Alberta, as we do in the Province of British Columbia, share, when we are speaking of spoken word, news and sports stories of interest throughout the province.
2214 And we see that happening here in Calgary with the program that we want to air on the weekend that would allow a sharing of news and our research clearly showed that the listeners to our news station here in Calgary, a full 71 percent of them, want to have more information from around the region of the Province of Alberta and we can certainly do that.
2215 I'm going to ask Mr. Schween to give you an overview and an example of what we do in news exchanges and we would bring those same synergies here to the PEAK in Calgary.
2217 MR. SCHWEEN: Thank you, Rick, and good morning.
2218 Well, as Rick mentioned, 71 percent of the respondents to the research identified that they would be very interested or somewhat interested in hearing news from other parts of the province and we feel that we are uniquely qualified to serve this niche because of our history of service to the province.
2219 We have a team of over 30 information staff across the province, we are already doing this on a regular basis, we already share information among our radio stations in the province.
2220 A few stories that you might be familiar with as they became national in nature -- we will go back to 2006, between 2006 and 2008 -- our Alberta stations relied on the news department of our station in Medicine Hat to supply coverage of a story regarding the murder of Mark and Debra Richardson and their 8 year old son.
2221 Our station shared information as the story unfolded and carried that across the province and continued through the trial of the 12 year old girl and her boyfriend, Jeremy Steinke, who were ultimately charged with those three murders.
2222 A more recent case that I can give you just happened this past September when B.C. RCMP issued an Amber Alert for the disappearance of 3 year old Keenan Hebert -- he was a young boy from Sparwood -- and that Amber Alert was only issued in the Province of B.C., when in fact Sparwood is only 20 kilometres away from the Alberta/B.C. border.
2223 We operate stations in Cranbrook and in Lethbridge and they are on either end of that spectrum and that area is of keen interest to our coverage area and we were able to share that Amber Alert from our B.C. station over to our Alberta property well in advance of the Alert being issued to the rest of the province and ultimately in the end the suspect in the case was caught in the Alberta area and so we were able to share that information in advance and get that information out well in advance of all the other broadcasters in the region.
2224 So when you factor in our history in the province, we have over 280 years of combined service to the communities of Medicine Hat, Lethbridge, Red Deer, Grand Prairie, Rocky Mountain House, we feel that should we be fortunate enough to be licensed we would provide a new distinctive news voice to serve Calgary with the resources and a history of service to this province that no other broadcaster appearing before you can.
2225 MR. ARNISH: I just want to add to Rod's comments about the news that clearly we don`t have a central hub in Alberta that we send out voice tracking to our various stations. We are very, very committed -- as we have said at a number of CRTC hearings over the years, we are very committed to serving and we are proud to serve the local marketplace with live and local first. That may be an old over used moniker, but really that's what it's all about.
2226 We have all these news rooms, well staffed in all of our stations in Alberta, so we see the sharing of news being one; accounting obviously would be another; engineering services would also be another sharing or synergy there as well, but our proposal to you is to create 28 new jobs in Calgary and we are committed to that and we will do that.
2227 We made those types of commitments in Vancouver, that we would also make sure that 50 percent of our new employees would be from the four ethnicity groups that we fall under with employment equity and we have done that in Vancouver, very proud to do that, and we see this new Triple A station in Calgary creating a great opportunity for people in the broadcasting industry and from within our company.
2228 One of the factors that we always talk about in our group with only having one major market station is the fact that we don't have a major market station in the Province of Alberta to again give our people in the broadcast group an opportunity to go work in a bigger market.
2229 It certainly happened from our television station in Medicine Hat. The Commission, as you know, with your integrated hearings, vertical integration hearings, we have Bell buying CTV, Shaw buying Global, they have made major commitments to Canadian content and news in television and created a lot of new news programming in Alberta and Saskatchewan in particular and they are looking for new people and we are proud to say that we have the well-trained people in Medicine Hat to go work in major markets.
2230 THE CHAIRPERSON: That's great.
2231 MR. ARNISH: We want to have that opportunity in radio as well.
2232 THE CHAIRPERSON: Fantastic.
2233 Most commercial applicants are going to be hiring people with 25 or 28. That would be higher than what most commercial stations have working for them.
2234 Are you any different from anyone else in that respect?
2235 MR. ARNISH: Probably we are not. We certainly have a much higher commitment than some of the ethnic applications in front of your today.
2236 But yes, all stations -- as a standalone we may very well be. We have applicants in front of you that already are standalone stations here in Calgary so they may or may not be hiring as many new people as we are.
2237 THE CHAIRPERSON: At the end of the day the synergies will be limited if you want to be local, if you don't have another stick in Calgary?
2238 MR. ARNISH: Very much so.
2239 THE CHAIRPERSON: Okay.
2240 MR. ARNISH: Yes.
2241 THE CHAIRPERSON: PEAK Performance. I'm sure it's no surprise to you and people have raised this before, that there seemed to be a lot of those funds going towards administrative costs. A lot of those administrative costs may find themselves back in the pocket of Pattison Group entities.
2242 Do you want to speak to that issue, Mr. Arnish?
2243 MR. ARNISH: Well, we will, but -- I will turn it over to Mr. Siemens and then Ms Stanners.
2244 We are very, very proud of the PEAK Performance Project in the Province of British Columbia. All of the monies really do go back into the music industry and the music scene. And, as you have heard already today in our presentation, and heard from Ms Stanners in particular, with the PEAK Performance Project we have been able to create a whole new music industry in a sense in British Columbia that's really fostered the industry in Triple A across Canada. And yes --
2245 THE CHAIRPERSON: But aren't a lot of these costs going to be going directly into existing staff with the Jim Pattison Group?
2246 MR. SIEMENS: No, none of it.
2247 MR. ARNISH: None of it.
2248 MR. SIEMENS: Absolutely none of it. In British Columbia we write MusicBC a series of very large cheques and they administer the program and we are arms length from it, although both Ms Stanners and I are on the Board of the PEAK Performance Project, but we do not interfere at all with the operation of the project and it will be the same --
2249 THE CHAIRPERSON: You understand those funds cannot be self-serving?
2250 MR. SIEMENS: Excuse me?
2251 THE CHAIRPERSON: You understand those funds cannot be self-serving?
2252 MR. SIEMENS: Absolutely.
2253 THE CHAIRPERSON: Okay. And you are not troubled by large fees? I mean, I look at some of these numbers, you don't think some of them may be excessive in terms of production, administrative costs and management costs?
2254 MS STANNERS: Well, no, I don't think that they are high at all in terms of what we are able to provide for the artists.
2255 THE CHAIRPERSON: Yes.
2256 MS STANNERS: We go into our boot camp, which is extensive and amazing, and we have been able to put together four state-of-the-art studios where -- five, sorry -- five state-of-the-art studios where the best producers from across Canada come and record with these bands, opportunities that the bands would never, ever have.
2257 So we have actually been able to get way more for our money by getting Apple computers to supply all of the computer equipment for those five studios and then another 13 other satellite studios the bands can practice on within the boot camp.
2258 And then we have also been able to get Roland Canada to give us all of their equipment, too, to use and we have also got Long & McQuade doing the same thing.
2259 So those production costs that we spend as part of the project also go on to do the finale and then our concert series, which is five concerts where four bands will play each night.
2260 They are actually smaller than what they could be because we get so much equipment in kind the bands really are benefitting from it.
2261 THE CHAIRPERSON: And no arms length Pattison Group entities get involved in the management --
2262 MS STANNERS: No.
2263 THE CHAIRPERSON: -- or the signing of any of these bands?
2264 MS STANNERS: No.
2265 MR. SIEMENS: No.
2266 MS STANNERS: We will never -- that's just not what we are about.
2267 Everything that they produce is theirs. They own it. Anything that they write at boot camp, anything they do at boot camp, that's theirs.
2268 THE CHAIRPERSON: Okay; For the purpose of the record, I mean we just have to make things clear --
2269 MS STANNERS: Thank you.
2270 THE CHAIRPERSON: -- and cross our "i's" and dot the "t's".
2271 MS STANNERS: Thank you.
2272 THE CHAIRPERSON: You also mentioned that there is $8,750,000 direct cash contributions and there is also %3.5 million indirect contributions, promotional components from the Pattison companies.
2273 Do you want to speak to that?
2274 MS STANNERS: Sure. We are really fortunate to have the strength of the Pattison Group behind us where we have television, we have our other radio properties, we have outdoor and we utilize all of those to further promote our bands.
2275 We run television and --
2276 THE CHAIRPERSON: But can I --
2277 MS STANNERS: Yes...?
2278 THE CHAIRPERSON: Those are monies you would have spent to fulfil obligations for your other stations and your other properties, right, that $3.5 million?
2279 MS STANNERS: No, no.
2280 MR. SIEMENS: No. The $3.5 million is in support of the PEAK Performance Project and we utilize the strength of the other Pattison companies in a number of different ways.
2281 We promote the PEAK Performance Project across the entire Province of British Columbia on our radio stations and our TV stations. That's worth a certain amount of money. We have outdoor advertising up in key markets throughout British Columbia that advertises the fact that the PEAK Performance contest is coming, that advertise the fact that the PEAK Performance artists are getting into the Showcase series, and we spend a great deal of money on outdoor for that.
2282 Then, more recently, now that was are into year three and the artists are starting to mature and they are continuing to put out product, we are using outdoor and we are using radio across B.C. and Alberta and we are promoting the fact that The Left have a new CD about to drop, Said the Whale have a new CD that's coming out and we run advertising that draws the attention of our listeners and viewers to buy the music if it's for sale, or download it for free if that's the option the band has chosen.
2283 So it just really takes the benefit of the PEAK Performance Project and it just expands it.
2284 THE CHAIRPERSON: All on Pattison platforms basically.
2285 MS STANNERS: Right.
2286 MR. SIEMENS: On Pattison platforms.
2287 THE CHAIRPERSON: TV and billboards.
2288 MS STANNERS: Exactly.
2289 THE CHAIRPERSON: Okay.
2290 MR. SIEMENS: That is their contribution to our success, but no money actually changes hands amongst the companies.
2291 THE CHAIRPERSON: Okay.
2292 Commissioner Menzies may have some questions. Thank you.
2293 COMMISSIONER MENZIES: We will hear today and tomorrow at least that the time of a standalone station and ownership group in a big market is passed and that everybody needs to have two, whether it's in Vancouver, Edmonton, Calgary, et cetera, et cetera. I would like you to address that.
2294 Can you stand alone in Calgary competitively against others who would have two -- or have two.
2295 MR. ARNISH: Yes, Commissioner Menzies.
2296 The short answer to your question is yes.
2297 We queried ourselves, too, when we came back a second time here in Calgary applying for a licence. When we were here before in front of you we unfortunately weren't granted a licence for Calgary.
2298 We certainly echo the Commission's concerns about making sure that applicants in front of you at this hearing have the financial wherewithal to certainly be in the marketplace seven years out.
2299 We know in the industry that over the past few years in certain markets, small and large, companies have been licensed and then they have got out, sold out because they didn't have the financial wherewithal to do that.
2300 We think, in our own opinion in Calgary, there is three independent applicants in front of you today with license applications, there are limited frequencies in Calgary, it could perhaps be difficult to license one of those three and allow the other two to continue on their own as independents.
2301 And we believe with our 95.3 here being in the best use of the public frequency, in the interest of the general public, that with our application in front of you, and the fact that we have a 47 year track record in the industry, that we can stand the pressure of being a standalone station here in Calgary against some great competitors.
2302 The Calgary market is very --
2303 COMMISSIONER MENZIES: You would be familiar with the power of having two --
2304 MR. ARNISH: Yes.
2305 COMMISSIONER MENZIES: -- because you have two in Medicine Hat --
2306 MR. ARNISH: Yes, correct.
2307 COMMISSIONER MENZIES: -- two in Lethbridge, two in Red Deer.
2308 MR. ARNISH: Yes, but with this -- we keep calling it unique and diverse format that we are presenting to you, we know that we are going to create a whole new audience in Calgary, we are going to be able to repatriate listeners back to the station, we are going to be able to repatriate new advertisers to the station as well.
2309 That is going to be something certainly different here in Calgary. We have the experience in Vancouver and we think the station in the long term will be very successful.
2310 The one thing about our group is that we have a long-term vision in our Broadcast Group -- and our owner does as well -- that you put a plan together and you work at it very hard and very diligently and you know at the end of the day -- for the most part, it doesn't work all the time -- but for the most part with our history and our group we have been very successful and we are committed to the Commission to follow through with our license commitments, not only to the music, but certainly to our commitments on Canadian Content Development.
2311 We will be here in Calgary for the long haul. We want to be.
2312 COMMISSIONER MENZIES: Thank you.
2313 On page 7 of your oral presentation there you have referred to programming such as "Daily Demo", "Basement Suite", et cetera.
2314 Is that original local programming or is that Group programming?
2315 MR. SIEMENS: All programming on the PEAK in Calgary will be original local programming, with the one exception being the David Suzuki Report. The Pattison Broadcast Group has an exclusive arrangement with Mr. Suzuki and we already are producing that feature, it's a short form feature that runs on all Pattison stations across the platform. That will be the only -- and it's 90 seconds and will air twice a day.
2316 That is the only non-local programming that will be on the station.
2317 COMMISSIONER MENZIES: Okay. Thanks.
2318 The last question I have is just concerning the nature of the $350,000 a year to the Sled Island Music Festival, which is a pretty big deal around here.
2319 MS STANNERS: Yes.
2320 COMMISSIONER MENZIES: Is that just, "Here is the money; have fun."
2321 MS STANNERS: No, no. We are really excited because we love Sled Island and, you know, watching it from Vancouver and seeing how it's grown has been really very cool. So to be a part of it and to have the PEAK Performance Project also be a part of it is really exciting.
2322 So we have committed $50,000 per year to the Festival. You know, the fact that they have already been really programming a lot of the bands that we have been first to play and who are in the PEAK Performance Project just makes this a perfect fit.
2323 And their energy is so awesome and the way that they curate it is so incredible. So what we have chosen to do with that $50,000 is to have them curate the PEAK Performance Project stage, which means --
2324 COMMISSIONER MENZIES: I'm sorry, I missed that. "Curate"?
2325 MS STANNERS: Curate. Well, they will choose who is going to be on it, but it will be PEAK Performance Project artists, the ones -- the 12, the top 12 from Calgary, they will be featured there. I mean from Alberta, because they can be from anywhere in Alberta. They will be featured there, as well as they will also have the opportunity to bring in anybody else that they see fit who has been in the PEAK Performance Project in B.C. as well. So there is definitely some synergy there.
2326 MR. SIEMENS: Yes. The beauty of the Sled Island Music Festival is it is a perfect match for what we are going to be doing in Calgary with The PEAK. I mean their music is very much a mirror of the type of adventurous music that we will be playing on the new station and we are really excited about that.
2327 But we have had great success in Vancouver with taking the new artists every year that come into The PEAK Performance Project and giving them a one day orientation. Last year we had all 20 bands playing at the Canada Day Festival in Cloverdale and we had hundreds of thousands of people come out and see them.
2328 So it's a great opportunity, the Sled Island Festival is, for us to showcase the Alberta bands that are going to be going into the PEAK Performance Project every year.
2329 So that's kind of what makes it work so very well, they dovetail so nicely together.
2330 And then just to finish up on Tamara's thought of a moment ago, we will also have the alumni over the years as the PEAK Performance grows that can also come back and be part of the PEAK stage at the Sled Island Festival.
2331 MS STANNERS: And it's not just the money either. Like we will throw our full weight of promotion behind Sled Island, too, to help them with that. That is exponential in growth how much we can do with our social networking and with the radio station.
2332 COMMISSIONER MENZIES: Okay. Thank you.
2333 THE CHAIRPERSON: As someone who is not in denial about his knowledge about '70s radio, Mr. Steve Simpson may have some questions for you.
2334 COMMISSIONER SIMPSON: I didn't need that.
2335 COMMISSIONER SIMPSON: Okay, I will take the bait.
2336 I remember the days when we were all not mortified but actually overjoyed when you could actually hear rock music on a Sunday morning. I remember days in the late '60s when stations like WXYZ started playing album music, alternative music and everyone said it wouldn't work. I think the biggest problem was that radio, which was becoming highly formatted in those days, particularly the rock environment, management didn't know what the heck to do with alternative because it was so unstructured and it was so organic and everyone sat back and tried to figure out how to monetize it.
2337 So why I prefaced what I'm about to ask with that statement is that our Chair was hammering away at you to try and define thyself. It's something that I think is becoming pretty darned important because, you know, we are in that area of diminishing return and spectrum is becoming disproportionately important as you get down to that last square inch of spectrum and try and dole it out with as much responsibility as you can.
2338 What I was sensing as I was listening to the questioning was that I think, from my perspective, I see -- you had mentioned, Mr. Rogers -- or I'm sorry, it may not have been you, but you or Mr. Schween had said that you are really one of the last alternative radio formats of its type in the country.
2339 And I think going back to my opening comments, you know, it's a hard format to monetize I think at times and what I see here is a station with a format that's working because you have inverted the standard model. You haven't got a tried and true format.
2340 With your monetary obligation to CCD you have actually gone out and you are a broadcaster that is before us, in my eyes, with a really -- you have a runaway hit in your CCD formula and you are developing a formal organically to go along with it. I'm sure whether it will monetize or not, but it's going to lead me to my first question.
2341 If indeed this is the way you wish to roll as an applicant in this market, do you have the ability -- not necessarily financially but talent-wise -- to be able to replicate what you have done in Vancouver?
2342 Should you answer yes to that question, which I would be surprised if you didn't --
2343 COMMISSIONER SIMPSON: -- does the Patterson Group, with all its formidable financial might, really have the patience, not the financial wherewithal, to be able to ride out the commitment?
2344 MR. SIEMENS: Good question. I'm tempted to say yes.
2345 MR. SIEMENS: I suspect you want a little more than that.
2346 You know, one of the things, Commissioner Simpson, that makes this format so difficult -- and going back to the Chair's opening questions -- it's very difficult to define. It's very difficult to define because it's so unique and hard to categorize. So I certainly appreciate where he was coming from with his questions.
2347 But yes, the depth of talent is here for sure. I think it was myself that mentioned that some of the Triple A stations tried and failed and that's unfortunate. We were very disappointed to hear that. Because you have to really love this format and we do and we get it and we understand it completely and it takes a lot of time and it takes a lot of patience on the part of management and ownership to say, "Yes, if we give these guys enough time they can get it going", and that's what's happened in Vancouver.
2348 The other thing that has happened is -- and I think this is kind of your comment -- the PEAK Performance Project has gotten such traction in Vancouver that it has gotten all immersed or intertwined with the brand itself. I said to the Group last night, "You know, in Vancouver we couldn't change format even if we wanted to because the brand and the PEAK Performance Project are one and the same."
2349 So when we look at Alberta and the number of bands that are here that aren't getting much exposure -- and, Tamara, you might want to talk about this a little bit -- or any at all, we know with bands like The Dudes -- and I won't get into the naming the bands because I know I will get it wrong, but Tamara can -- the talent is certainly here.
2351 MS STANNERS: Oh, yes. Well, I mean, and I know that it's not just the talent and the bands -- James is passing me the list of all the amazing bands.
2352 We have been really fortunate to meet a lot of them, too. There is Sidney York and Michael Bernard Fitzgerald, he gets love here for sure, so do The Dudes, but there are so many more that are untapped and we haven't even, you know, scratched the surface of what's really here. And that's also what we found in B.C.
2353 The cool thing about it, too, in the way that it works is that it does unite the industry within the province, whereas, you know, in Alberta it will unite artists between Fort McMurray, Edmonton, Red Deer, Calgary, Medicine Hat, Lethbridge, really, and then the smaller outlying communities.
2354 It forms a community within the industry where they're able to share and support each other. And it's not just the artists who benefit. The talent also comes from the producers and management and venues who finally get to sell out and, you know, really expose great new music to other places.
2355 So is there enough talent? Absolutely. I can't wait to meet them. I know that they're there and I'm really excited about it.
2356 MR. ARNISH: Commissioner Simpson, I understand where you're going here with your question as well, and Gerry and Tamara, I think, have given you a good response to that.
2357 But Gerry just mentioned one very important factor. In Vancouver if we decided to get out of the Triple A format, we would probably have a riot in front of our building on West 8th Avenue, quite frankly. And it wouldn't just necessarily be the listeners, it would be the bands that we have broken with the station in Vancouver. But it would be very hard for us.
2358 We've made a major commitment here, not only to CCD but we've made a major commitment to the Commission and obviously to the City of Calgary on Canadian content, and for us -- you know, we know this format, we're committed to it.
2359 For us to make a commitment to 40 percent Canadian content as a condition of licence and 15 percent of our music to be emerging Canadian artists -- which it could very well be higher because of what we've done in Vancouver -- it would be very hard for us at the end of the day to get out of this format.
2360 So just so you know, so you have some assurance from myself and others and everybody else at the table and our broadcast group that if you license us here in Calgary, we will follow through on our commitments.
2361 MR. SIEMENS: And, you know, just one final thought if I might. Commissioner Simpson, you were talking a moment ago about the scarcity of the frequency and your responsibility to make sure that the frequency is used for its best possible purpose.
2362 I think we would like to point out that we are the only applicant at 95.3 that can apply for a full 100,000-watt signal, because we are going to create a little bit of interference with our station in Lethbridge and we're willing to accept that if it's our licence, but the other applicants are in a position where they will have to apply for lesser power and we think that that is one of the things you might consider when you are deciding that is the best use for this frequency.
2363 COMMISSIONER SIMPSON: Thank you. I just have one last question.
2364 Going back to your spoken-word commitment and the fact that you've done research, given that you are aiming at a fairly tight demo, female 25-54, I am intrigued and I would like to hear both from a programming and a research perspective -- I am intrigued as to what your research is telling you beyond some of the topical stuff I heard earlier, because it seems to me that younger audiences are wanting to be more engaged in social issues and I am just curious how that is going to actually drill down into your spoken-word content from the standpoint of going beyond their interest in lifestyle stuff and music and where that is going to impact on news --
2365 MR. ARNISH: Thank you for that. I will have Ms Stanners talk and then I will ask Mr. Vidler to follow up.
2366 MS STANNERS: Well, again, our listeners are really well educated. That is something that we found out. It's very clear that people who like this music are very well educated. So they want information that is going to be stimulating for them. In Alberta it's really great because the economy is just, you know, what it is. It's just this powerhouse.
2367 We know that the people who are educated, who want this kind of music, want to know exactly what's going on in their world, and to have our news force based in Alberta and being able to utilize the rest of our resources throughout the group to give that kind of information is going to be really -- it is going to be great.
2368 I think it's going to be unique too because you don't have a whole lot of other commercial stations who are willing to take the time to devote to news to really make it local and about the place that they're in. And we're super excited, especially when it's a music-driven station.
2369 But because they are so intelligent, our listeners, and because they want this kind of information, we are prepared to do that, and I know that Jeff has the research to back up why we are committing our efforts to this.
2370 MR. VIDLER: Yes. I mean, just to follow up on what Tamara says, and research bears this out as well, is that a Triple A audience is a unique psychographic really. It's a very well-educated audience. A lot of these people got exposed to alternative music when they were going to university and it's sort of become almost part of the fabric of their sensitivity -- or sensibility of who they are.
2371 So, you know, they are above average in terms of their interests in virtually all the different types of news information that we presented in the research. They are, as I think we mentioned earlier, you know, interested in local news. They're also interested in hearing news from other parts of Alberta.
2372 But the other thing we looked at as well, we wanted to look at sort of information gaps in the research, so not only what were people interested in but what did they feel that they were interested in -- those people were interested -- what did they feel was not being well covered in the market now on radio.
2373 And there were three different information categories that rose to the top of that among 18 to 54-year-olds in general, but even more so on the Triple A audience, and I think it speaks to really that unique profile.
2374 Those categories were restaurant reviews/local food, outdoor life reports, green tips and information on the environment, which, again, actually sort of dovetails back to the experience of Vancouver, again, and speaks to the psychographic, the unique psychographic that Mark Rogers was talking about in terms of the success of the sales department and who they've been able to attract as advertisers, who may not be traditional advertisers, but identified this very unique psychographic, this group of urbanites, really, who are interested in this particular format.
2375 COMMISSIONER SIMPSON: Thank you very much.
2376 THE CHAIRPERSON: Thank you, Commissioner Simpson.
2377 Ms Stanners, just to get back to CCD contributions and my bit about promotional and administrative costs, just to give you an example, Grand Finale Showcase: publicity, promotion, PPP production, $4,000; graphic design, $2,500; Web site production and maintenance, $5,000; million-dollar marketing activation hard costs, $5,000; contingency, $8,084. There's $24,500 in CCD contributions there for marketing, graphic design, advertising and so on.
2378 Is a portion of that to be attributed to service provided by one of your companies?
2379 MS STANNERS: No.
2380 THE CHAIRPERSON: You're also excluding Pattison Outdoor from that?
2381 MS STANNERS: Yes. None of the fees are at all going to any of our Pattison Groups.
2382 THE CHAIRPERSON: They will be paid to a third party?
2383 MS STANNERS: Yes.
2384 MR. SIEMENS: That's correct.
2385 THE CHAIRPERSON: We're clear?
2386 MS STANNERS: Absolutely.
2387 MR. SIEMENS: Absolutely.
2388 THE CHAIRPERSON: You also have $116,666 towards the Music Alberta production fees. Can you provide more detail on that?
2389 MS STANNERS: Yes.
2390 THE CHAIRPERSON: Go ahead.
2391 MR. SIEMENS: Well, it's the same instance that we have in British Columbia, the arrangement we have with Music BC. I mean, when we challenge these organizations to --
2392 THE CHAIRPERSON: It's a very simple question. Does it involve general costs associated with putting on the Grand Finale Showcase?
2393 MS STANNERS: Does that $116,000 that you're giving to the --
2394 THE CHAIRPERSON: That you've mentioned here, yes.
2395 MS STANNERS: Right.
2396 THE CHAIRPERSON: Does that involve general costs associated with putting on the Grand Finale Showcase?
2397 MS STANNERS: Yes.
2398 MR. SIEMENS: It involves the general costs of the administration the Alberta Music Industry Association will have to put into managing the PEAK Performance Project.
2399 THE CHAIRPERSON: And you're comfortable that that is eligible for CCD contribution?
2400 MR. SIEMENS: Yes.
2401 MS STANNERS: Yes. Yes. We couldn't pull off the finale without that money. You know, we have to spend it on the production costs.
2402 MR. SIEMENS: Or the bootcamp.
2403 MS STANNERS: Or any --
2404 MR. SIEMENS: Or the Showcase series or any of it. Someone has to manage it.
2405 MS STANNERS: And we have to pay people to do it because nobody is going to do it for free, and they do an exceptional job. We also stream it now live via AUX TV and so those sorts of costs are going into spreading the music even further, further benefiting everybody.
2406 THE CHAIRPERSON: And none of those funds are going to Pattison payrolls?
2407 MS STANNERS: No, none. None. None. I do it for free.
2408 MR. SIEMENS: None whatsoever, Chair.
2409 MS STANNERS: It's so fun, I do it for free. I'm not kidding.
2410 THE CHAIRPERSON: Okay.
2411 Madam Cugini?
2412 COMMISSIONER CUGINI: Thank you.
2413 And briefly, I too want to talk to you a little bit about your CCD, and it may come as no surprise that we are questioning you in detail about CCD. Number one, you're the highest contributor of CCD. So it just shines a bit of a bright light on that expenditure, which is not necessarily a bad thing.
2414 I do want to talk about the PEAK Performance Project, but I have to say, Mr. Arnish, I think last time we met you were disappointed that we didn't have an opportunity to talk about music. So this is going to be our opportunity --
2415 MR. ARNISH: Thank you.
2416 COMMISSIONER CUGINI: -- but not going through your sample playlist this time.
2417 When I read the criteria by which artists can apply, it says they must have some track record in the music industry, some experience with live performance and at least one professional recording. That's a pretty high bar, is it not?
2418 MS STANNERS: It is. It is. But if we're going to be playing an artist on the radio, that song has to be ready for radio airplay. So it can't be a demo that they've just produced in their bedroom. I mean, some bedroom recordings we are playing actually because they're really good, but there does have to be a certain quality to it for sure.
2419 There does have to be -- they have to prove that they can perform live because so much of what we do with them is based on live performance. They're judge on it. They're put in front of hundreds of thousands of people to perform. If they can't do that, then we're not doing them a service, we're putting them in a really awkward position.
2420 So what we do is we ask them to provide us with at least a video of them performing live with their application and a song that, you know, is palatable to the human ear.
2421 COMMISSIONER CUGINI: How many artists do you have applying with the PEAK Performance Project in B.C.?
2422 MS STANNERS: Five hundred per year.
2423 COMMISSIONER CUGINI: And how many do you take? How many do you accept?
2424 MS STANNERS: Twenty.
2425 COMMISSIONER CUGINI: Twenty per year?
2426 MS STANNERS: Right.
2427 COMMISSIONER CUGINI: Based on what you know about the number of artists in Alberta, what do you expect to receive your first year in terms of applications?
2428 MS STANNERS: I'm expecting around 300 the first year. That's a hope. And then we have a team, a panel of judges that will be from right across the country music executives who will be judging it through the digital music download service. That's how we do the initial judging.
2429 And then we whittle it down to about the top 100. And then from there we take it and we have a panel who sits and listens and goes over everything, because there has to be an essay included as well as to why the bands believe that they should be in the PEAK Performance Project. And then we make the final decisions based on all of those criteria.
2430 COMMISSIONER CUGINI: A few of us attended an event Saturday night here in Calgary and we heard, among other bands, The Dudes --
2431 MS STANNERS: Yes.
2432 COMMISSIONER CUGINI: -- who you've mentioned a number of times here this morning, Mischievous Innocence and a couple of others, all of whom could play on this radio station.
2433 MS STANNERS: Yes, for sure.
2434 COMMISSIONER CUGINI: And this was an event sponsored by another radio broadcaster.
2435 MS STANNERS: Right.
2436 COMMISSIONER CUGINI: So it's here already. Somebody's doing it already.
2437 MS STANNERS: Something like it, they are, but not anywhere near with the same commitment that we have to developing Canadian talent. I think many radio stations are putting money towards Canadian content development. We all have to do it. I mean, you know, you've asked us to and I thank you for that because --
2438 COMMISSIONER CUGINI: But they're targeting the type of bands that you would be targeting.
2439 MS STANNERS: Not necessarily.
2440 COMMISSIONER CUGINI: Okay.
2441 MS STANNERS: Ours are going to go towards a softer-leaning focus. That's what we're looking into.
2442 I think James is ready to speak more towards that.
2443 MR. SUTTON: We've had many bands who took part in the PEAK Performance Project and bands that we play definitely are not in a format of a modern rock format whatsoever.
2444 The band who won last year is a folk band. The band who came in second was basically a Caribbean band. We've had a hip-hop artist win the whole thing.
2445 MS STANNERS: He's actually debuting his musical in Calgary tomorrow night at the EPCOR CENTRE.
2446 MR. SUTTON: These are true musicians who don't follow a specific format. The great thing about Triple A is it is wide open and our audience is willing to accept bands who aren't just a rock-and-roll band.
2447 The Dudes are a great rock-and-roll band, but there's lots of other fantastic bands in Calgary who won't get exposure on rock-and-roll or any other Top 40 radio because they don't really fit the specific format.
2448 We've had 55 bands take part in the PEAK Performance Project so far in Vancouver and one of them was actually a band called Delhi 2 Dublin, who one of the applicants yesterday was talking about as being a band who they support fully as a world musician.
2449 This is just a small example of the real talent and the diversity of emerging Canadian artists that we will be focusing on -- we focus on in Vancouver and we will be focusing on in Calgary.
2450 COMMISSIONER CUGINI: So in other words, just as the Triple A format casts its net wider, so too your PEAK Performance --
2451 MS STANNERS: Absolutely.
2452 MR. SIEMENS: I think, you know, your comment a moment ago was it's already here. Well, it's really not. I mean I'm guessing that probably X sponsored that concert you were at, and that's fine, we have no argument with that at all, but the situation is very similar here as to what we had when we went on the air in Vancouver, where our main competitor was CFOX, which is a modern rock, sort of hard rock station.
2453 The same situation exists in Calgary. We totally respect what X are doing, but they are way harder. And, James, you might comment on the unique nature of the music we're going to play as compared to what X plays.
2454 But the same situation is exactly the same. There's this great big hole that is much softer than what X is, and the crossover amongst the artists is rather minimal.
2456 MR. SUTTON: It definitely is. We will be about 85 percent entirely unique in the market, as we are in Vancouver. It is, as Gerry said, not a lot different than the position we are in, in that situation. It's a different radio station than Calgary will be, and Jeff Vidler had -- according to the research, Calgarians want something different than what we're doing in Vancouver, not totally different but definitely different.
2457 We have a lot of opportunity here. I'm not going to start reading off a list of bands but we really do have hundreds and hundreds of unique Canadian emerging artists that we support, that no one else does.
2458 And hopefully, our goal for them -- and nothing makes us happier than when other broadcasters do start supporting those artists. Yes, we lose standing ground on saying we're the only ones playing them, but isn't that what we want to do with these artists?
2459 We want them to be on other radio stations. We want the rest of the world to be playing artists from Calgary, and as we are doing right now, ours from Vancouver. And it is working.
2460 It is awesome to turn on the radio in Calgary and hear my friends' bands being played as big, big Canadian stars. Those are fantastic feelings and that's what we're here as broadcasters to do.
2461 COMMISSIONER CUGINI: Understood.
2462 MR. ARNISH: I just want Mr. Vidler to just take a moment to sum this up.
2464 MR. VIDLER: Just going back to the research, I think one thing that maybe helps to clarify the unique musical stance that this format has relative to the existing players, if you look on page 40 of the Research Report that was filed with the application, it indicates the current favourite station of those people who say that one of these Triple A formats would become their favourite station.
2465 And if you look at the range of stations that it would draw from, it's not taking from any one station. In fact, it really is a station that kind of drives down the middle of really that sort of chasm between the pop and dance stations on one side and the rock stations on the other. It casts a wider net, but it also catches that stuff, in that net, in the middle that isn't getting played.
2466 So if you look at the stations that it would attract listening from, it's really from -- it will take some from Virgin, it will take some from Lite 95.9, it will take some from the X, it will take some from CJAY, because it really reflects a format that is not being represented and really is not sitting on top of any existing format.
2467 COMMISSIONER CUGINI: Well, thank you. I just have to, out of respect for the great artists that we saw on Saturday night, make a correction. It was Makeshift Innocence, not Mischievous Innocence.
2468 Those are all my questions. Thank you.
2469 THE CHAIRPERSON: I am surprised Mr. Siemens didn't correct you on that one.
2470 I think my colleague Mr. Patrone has a question.
2471 COMMISSIONER PATRONE: I do, Mr. Chairman, thank you.
2472 Good morning. Thanks for your presentation. I have a couple of questions, one on your fiscals and another one on programming.
2473 You've identified 2013 as your first year of operation and it struck me, depending on when the decision came out, as a fairly brief window in terms of launch.
2474 When would you expect to launch?
2475 MR. ARNISH: Well, that is certainly our target. We haven't assumed, obviously, that we're going to be the successful applicant here in Calgary, but our engineering team is geared to the fact that if we are allowed to operate a station here in Calgary that we'll get the process going and we certainly have targeted 2013 to be the on-air date. We think that's very attainable.
2476 COMMISSIONER PATRONE: Your year end is August 31, is it?
2477 MR. ARNISH: It is. Our year end is the CRTC year, yes, correct.
2478 COMMISSIONER PATRONE: Right. So you would expect presumably to launch late?
2479 MR. ARNISH: Well, we know the Commission is trying to speed up decisions --
2480 MR. ARNISH: -- and we think, you know, with a decision late spring, early summer, I mean it is going to take six to nine months to order equipment and make an agreement with -- you know, we got a letter from Bell that said they would talk to us about renting tower space to us. So all that's going to take time. So we think spring of 2013.
2481 COMMISSIONER PATRONE: The other question had to do with your sales and advertising and promotion budgets between years one and two, 2013-14. I noticed that it only goes up by $1,000. It doesn't even meet the rate of inflation. So it surprised me that a new station would essentially be spending less on sales, advertising and promotion between year one and year two.
2482 I was wondering if you could just help me out with that, because then in year three it jumps up over $100,000. This is paragraph 7.1 in your financial operations.
2483 MR. ARNISH: I am going to turn that question over to our VP of Finance, Mr. Dinicol.
2484 MR. DINICOL: I think that's reflecting the extra start-up and first year promotions that we would be doing that wouldn't normally be an annual cost. It's mainly the launch cost that would be in year one.
2485 COMMISSIONER PATRONE: So you are essentially cutting costs between year one and year two in terms of sales, advertising and promotion? I mean it only goes up by $1,000.
2486 MR. DINICOL: Yes. If we have, let's say, $100,000 or $200,000 in launch marketing, that cost wouldn't be in year two.
2487 COMMISSIONER PATRONE: And then you go up -- you jump up $100,000 between years two and three. You go from 871 to 976.
2488 MR. DINICOL: Yes. A lot of that would be in variable costs, sales commissions, et cetera, as our revenue increases.
2489 COMMISSIONER PATRONE: Okay.
2490 Second question. The Suzuki segment, is that identified as editorial comment or --
2491 MR. ARNISH: No, it's not. It's a feature on green environment issues and how to live a healthier lifestyle and how to make the environment that much better for all of us to live in.
2492 COMMISSIONER PATRONE: Okay.
2493 MR. ARNISH: He's got the history, as we all know.
2494 COMMISSIONER PATRONE: Yes.
2495 MR. ARNISH: You may or may not agree with it.
2496 COMMISSIONER PATRONE: Well, I mean he's taken certain positions on the oilsands. I'm not sure how that would fly here in Calgary. It might fly in Vancouver, but --
2497 MR. ARNISH: We know that in other markets where we've got some instant response when he said the oilsands need to be cleaned up, yes, it doesn't go over very well.
2498 COMMISSIONER PATRONE: Thank you.
2499 MR. ARNISH: Thank you.
2500 THE CHAIRPERSON: Well, thank you very much. We appreciate the patience and care with which you answered our questions. I hope you didn't think we were too rough on you, but, you know, it's all about the content and the programming and that's what everyone is interested it.
2501 MR. ARNISH: We understand that.
2502 THE CHAIRPERSON: And you're on record on the CCD questions. We appreciate that as well.
2503 I don't think -- y a-t-il quelque chose d'autre, Moira?
2504 MS LÉTOURNEAU: No, I'm fine. I have no more questions.
2505 THE CHAIRPERSON: Great. Thank you so much, guys.
2506 MR. ARNISH: Thank you very much, Mr. Chair.
2507 THE CHAIRPERSON: Have a great day.
2508 MR. ARNISH: Thank you.
2509 THE CHAIRPERSON: Maybe we'll take a 10-minute break. Thanks.
--- Upon recessing at 1045
--- Upon resuming at 1108
2510 THE CHAIRPERSON: Good morning. We are happy to have you here.
2511 Madam Ventura...
2512 THE SECRETARY: Thank you, Mr. Chairman.
2513 We will now proceed with Item 7 on the agenda, which is an application by Harvard Broadcasting Inc. for a broadcasting licence to operate an English-language commercial FM radio programming undertaking in Calgary. The new station would operate on 95.3 MHz, Channel 27C1, with an average effective radiated power of 11000 watts, maximum ERP of 36000 watts, with an effective height of antenna above average terrain of 319.7 metres.
2514 Appearing for the Applicant is Mr. Cam Cowie.
2515 Please introduce your colleagues, and you will have 20 minutes for your presentation.
2516 Thank you.
2517 MR. CAM COWIE: Mr. Chairman, members of the Commission, Commission staff, before presenting our application, let me introduce our panel.
2518 My name is Cam Cowie, and I am the General Manager of Harvard Broadcasting.
2519 Seated immediately to my right is Bruce Cowie, Vice-President of Harvard Broadcasting.
2520 Next to Bruce is Gary Brasil, National Sales Manager.
2521 Seated immediately to my left is Christian Hall, Harvard's National Program Manager, and next to Christian is Mike Shepard, President of Shepard Media Research.
2522 Beside Mike is Ginette Ouimet, Assistant Program Director and Marketing Director of our station here, X92.9.
2523 Seated in the back row, beginning on my far left, are: Paul Hill, President and Chief Executive Officer of our parent company, Harvard Developments, and Tina Svedahl, Vice-President of Investments for Harvard Developments.
2524 Seated next to Tina is Malissa Dunphy. Malissa is our CCD Coordinator at X92.9.
2525 Beside Malissa is Paul East, President of SBL Consulting Engineers.
2526 Next to Paul is our regulatory counsel, Robert Malcolmson, a partner at Goodmans LLP.
2527 MR. HILL: Ten years ago, Harvard began a dialogue with the Commission regarding our company's western regional growth strategy. We outlined our goal of expanding from our base in Regina, Saskatchewan to other markets in our home province and into the growing market in Alberta.
2528 Through a series of applications for new licences and, more recently, through acquisitions in Edmonton and Yorkton, we have continued to pursue and execute our goal of becoming a western regional radio voice.
2529 When we last appeared before you in 2006 here in Calgary, we had three stations. Today, with the Commission's support and encouragement, we now operate 11 stations in Calgary, Edmonton, Fort McMurray, Red Deer, Regina, Saskatoon and Yorkton.
2530 At Harvard, we believe that there is an important place for mid-sized regional broadcasters within an ever-consolidating broadcasting system. Our view is that well-resourced regional operators with a track record of business success and a commitment to the broadcasting system are essential elements in maintaining diversity of voices and editorial perspectives.
2531 We hope that you will continue to share our vision.
2532 MR. BRUCE COWIE: Mr. Chairman, members of the Commission and Commission staff, we are very pleased to appear here today to present our application for a second FM station in Calgary.
2533 As you know, Harvard triggered this call for applications when we filed in November of 2008. The economic downturn delayed the processing of that proposal, and we filed a new application for Calgary in response to this competitive call.
2534 The fact that 12 applications were received in response to the call underscores the importance of the Calgary radio market, and the demand for a new station in this growing city.
2535 We have learned from our experience that multi-station ownership in cornerstone markets like Calgary is necessary in order to achieve sustainable diversity.
2536 MR. BRASIL: Today's broadcasting environment is characterized by, first, fragmentation in audiences and advertising revenues, and second, consolidation in ownership. Across the country, national radio operators run multiple stations in major markets, and Calgary is no exception.
2537 Together in Calgary, Rogers, Astral, Corus, Newcap and Bell control 13 of the 15 commercial stations, and 92 percent of the hours tuned.
2538 The critical mass enjoyed by these national operators gives them great control over market dynamics, both in terms of advertising and the ability to respond to changes in programming.
2539 At the same time, this consolidation makes it difficult for single station operators to compete on equal footing. To date, Harvard's X92.9 has been able to carve out a distinctive niche in Calgary, and after five years on air, we are achieving some level of success, but it has not been easy.
2540 In order to become sustainable over the long term we need to achieve some of the critical mass that our competitors currently benefit from.
2541 MR. BRUCE COWIE: We have proactively responded to the reality of major market consolidation in Edmonton, where we recently purchased CJNW-FM. We seek to accomplish the same goal here in Calgary, with a successful application for a second FM licence in this cornerstone market, as well.
2542 It is noteworthy that of all the major markets now in western Canada -- Vancouver, Edmonton, Winnipeg and Calgary -- Calgary is the only one where standalone operations continue to exist.
2543 It is essential that the Commission take into account the dynamics of the Calgary radio market when assessing which of the applications before you will best achieve the objectives of the Broadcasting Act.
2544 Calgary is one of western Canada's most important markets. While it has enjoyed unparalleled growth in the last decade, it is also vulnerable to economic downturns and periods of stagnation, as recent years have demonstrated.
2545 Recent economic data show that Calgary has recovered from the recession. TRAM data on sales activity for the past year indicate that radio revenues are up 5 percent relative to the year previous.
2546 The market is posting growth that exceeds the other major centres. In the most recently reported period, the operating margin for FM services was at 26 percent. This not only signals a strong radio market, it also is evidence of a healthy economy.
2547 The radio market in Calgary is intensely competitive, as evidenced by the fact that there have been seven format flips in the past four years.
2548 In our view, all of these factors point to the need to ensure through licensing that companies like Harvard are equipped with the means necessary to compete in Calgary over the long term. For Harvard, this means a second FM station in this market.
2549 Now we would like to tell you why we believe Harvard's proposal represents the best possible use of frequency in Calgary.
2550 MR. HALL: In past applications, where many frequencies were available, applicants had the luxury of pre-determining what they felt was the best format opportunity for the market, and then employ research to support their conclusions. Back in 2008, when Harvard initiated this call, we employed this practice with our original Triple A proposal.
2551 However, due to the limited number of frequencies available, Harvard recognized that this process had to be different. Rather than coming to the market with a preconceived format preference, Harvard cast a wide-net research study over Calgary to allow Calgary radio listeners to determine the best use of frequency. And we are really glad that we did. Not only did this study lead us to the right format opportunity for Calgary, it demonstrated that our original Triple A format choice didn't have nearly enough interest to support a viable business plan, and clearly was not the best use of frequency.
2552 Over the past five years, Calgary has seen four new stations launch and endured seven format flips. While these have plugged some of the programming holes in Calgary, they have also created new opportunities. Our wide-net research study determined that the biggest format opportunity is traditional adult contemporary, or traditional AC.
2553 For years, traditional AC listeners in Calgary have been served well by the market, but much like how rock and CHR formats have evolved and splintered off into sub-categories of themselves, so now has AC.
2554 And, with that, Calgary's long-serving full service AC, Rogers CHFM, made the decision to change their format to a much more contemporary version of itself, focusing primarily on AC music from the past few years, abandoning much of its older and more traditional flavour of AC selections.
2555 That shift has been noticed by a large segment of Calgary's radio listeners, who now find themselves without a radio station that caters to their more traditional AC tastes. Harvard proposes to fill this void with My95.3.
2556 MS OUIMET: Although we are proposing a traditional AC, My95.3 will be anything but traditional. Born from talking to the people of Calgary, that connection will continue once on the air.
2557 My95.3 will engage its listeners through social media platforms such as Facebook, Twitter and Blogging. We will also connect with them via their mobile devices, using our standalone My95.3 mobile apps.
2558 While these are all popular with existing stations today, there is plenty of room for innovation, and for My95.3 that innovation is listener driven radio, or LDR.
2559 LDR allows listeners to connect to My95.3 in a unique way, as it allows them to have a direct impact on the songs that play.
2560 We have provided you with a handout showing the LDR interface, and we hope to have the chance to discuss this exciting innovation with you further during your questioning.
2561 "My Picks" will allow listeners to vote songs on the air every hour, through voting sessions found on our homepage. Whichever song gets the most votes is played instantly by LDR, and then immediately followed by a new voting session, constantly keeping the listener engaged with My95.3.
2562 On "My Choice Saturdays", we open up our entire library for listeners to set the complete playlist for a full 12 hours.
2563 Through LDR, listeners can recruit their Facebook friends to help them get their songs on the air, and they can even be notified via e-mail or text message the instant their favourite song is playing.
2564 This direct link between the station and the listener will be something no AC listener in Calgary has ever experienced, but it doesn't end there. LDR also creates a link directly to Calgary's independent music community, allowing artists to upload their own music for My95.3 listeners to discover and vote onto the My95.3 airwaves.
2565 MR. HALL: And that is just a taste of My95.3's commitment to Canadian artists.
2566 We are proposing 40 percent Cancon, with a focus on future Canadian AC artists by dedicating 40 percent of our Cancon to new and emerging artists. This will result in 16 percent of our total schedule being dedicated to new Canadian talent.
2567 MS OUIMET: Two of the ways we propose to do this are by emulating the success we have had with our modern rock station, X92.9, with feature programming called "Exposed" and "Exposure", exchanging the modern rock focus for that of a singer-songwriter focus that better fits the AC profile.
2568 "Exposed", heard six times daily, will contain a 60-second featurette focused on a new and emerging local artist, followed by a song from that artist.
2569 "Exposure", heard twice a week, is a 60-minute music magazine program profiling emerging Canadian AC artists, with a focus on the artists right here in Calgary.
2570 MR. HALL: My95.3 will not only serve the music needs of a largely dissatisfied Calgary audience, but it will also fill its news, information and lifestyle needs with its spoken word programming.
2571 As a matter of fact, news and information about Calgary ranked as the fourth most important thing that Calgarians wanted to hear on their ideal radio station when surveyed.
2572 Therefore, My95.3 will be dedicating more than five hours a week of news programming, consisting of four-minute updates every half hour in the morning, two-minute headline packages every hour during the midday, and back to four-minute hourly updates during the afternoon drive.
2573 Through the day, Calgarians will hear about events in their communities with "My Calgary", AC music events with "Calgary Live", and lifestyle tips covering a variety of subjects, such as health, parenting, fashion, food, and entertainment, with "My Life".
2574 These features, along with the news programming, result in a spoken word component of 6 hours and 27 minutes a week.
2575 MR. CAM COWIE: When we first embarked on our western regional growth strategy, one of our goals was to develop a unique approach to news and information, one that would allow all of our stations to draw from stories being reported by Harvard stations in other western markets.
2576 Dubbed the New West Initiative, this sharing of western stories across our stations in Saskatchewan and Alberta was a recognition of the growing economic and social linkage that is occurring among western provinces. The New West Initiative reflects these realities and seeks to provide news infrastructure that can respond to and reflect this environment.
2577 Through the New West Initiative we were able to create a philosophy and a system that gives each of our stations the ability to immediately access shared stories and content that has significance to the new west and tells those stories in their own unique editorial voice.
2578 A second station in Calgary featuring a broad format ideally suited to news and information will provide another platform across which the New West Initiative can be further developed and shared across all our stations.
2579 MS DUNPHY: Our artist-focused CCD package of $4.3 million over seven years is rooted in the three cornerstones of artist development: discovery, exposure and support.
2580 In addition, as we have done with all of our applications, we will make a substantial commitment to the development of Aboriginal broadcasters.
2581 Building on the success of X92.2's "Xposure" initiative, we will launch a companion talent contest with a funding commitment of almost $1 million over seven years, combined with on-air support and promotion on the station.
2582 If the success of the "Xposure" initiative is any indication, this additional window for Calgary-based singer/songwriters will act as a launching pad for local artists who are currently undiscovered.
2583 Another key component of our CCD platform is a $690,000 contribution to the Canadian Blast artist travel program, administered by CIMA. This program, which is supported by Heritage Canada, puts together showcases for Canadian talent at music symposiums and conferences around the world. It is our hope that local Calgary acts that are discovered through our talent contest will then have the opportunity to showcase their talents on the world stage through the funding we will provide to Canadian Blast.
2584 We will also provide financial support to the new National Music Centre here in Calgary. The National Music Centre will be the home of the Canadian Music Hall of Fame, and an extremely potent source of Canadian creativity and musical output.
2585 Harvard's funding of the Canadian New Music Recording Program will give Canadian artists the facilities to create initial demo recordings, capture performances on various in-house instruments, and complete live recordings of performances on the King Eddy Stage.
2586 Our support of the Aboriginal community will consist of a $280,000 funding commitment to the Aboriginal Media Education Fund, or AMEF.
2587 This will fund Aboriginal people interested in pursuing a career in the media arts, either through paid internships with established broadcasters or financing formal education.
2588 AMEF has been recognized by the Commission as an eligible CCD initiative in the past, and Harvard is pleased to continue its support.
2589 Other initiatives which round out our CCD package include contributions to the New Music West Festival, Canadian Music Week, the University of Calgary, Calgary Arts Summer School and, of course, FACTOR.
2590 MR. CAM COWIE: Mr. Chairman, Commissioners, given the number of applications before you, the scarcity of available frequencies, and the importance of issuing a decision that will achieve sustainable diversity for the Calgary market over the long term, we wish to provide some comment on the issue of frequency availability.
2591 There are two potential frequencies available to the FM applicants, 95.3 and 100.3. Each of these channels requires directional coverage patterns, and each comes with third adjacent technical issues. Thus, the use of 95.3 or 100.3 by any broadcaster will require the careful implementation of a directional signal and a practical program for third adjacent channel interference abatement.
2592 Having recently launched two third adjacent channel operations in Alberta, we understand the complexity. What Harvard finds difficult to understand is why an incumbent broadcaster would agree to accommodate one applicant's third adjacent channel interference and another applicant would receive technical acceptability from Industry Canada without either a co-site agreement or an interference accommodation in circumstances where the interference issue is common to all.
2593 In considering the applications before you, Harvard submits that the objectives of the Broadcasting Act would be better served if both frequencies could be considered as available to all of the FM applicants, instead of being presented with a scenario where only two applicants can be considered for 100.3.
2594 In this way, the Commission's range of licensing scenarios would be enhanced, and each applicant would be competing on equal footing in terms of frequency availability. At the same time, the incumbent broadcaster would be no worse off, as it would have to consent to any arrangement that the successful applicant proposed in terms of managing interference.
2595 MR. BRUCE COWIE: Mr. Chairman, members of the Commission, Harvard believes that its proposal for a second FM in Calgary represents the best use of spectrum and best fulfils the objectives of the Broadcasting Act for the following reasons.
2596 We offer a format -- traditional AC -- for which there is the greatest demand. The breadth of the AC format and its proven track record in markets across the country will offer Calgary listeners a popular and sustainable programming option over the long term.
2597 Given the highly competitive nature of the Calgary radio market and its importance to the regional growth strategy, it is essential that Harvard achieves the critical mass necessary to offer sustainable diversity. Single stick operations in major markets are no longer viable over the long term, as evidenced by recent transactions in Vancouver and Edmonton.
2598 The Commission has acknowledged in previous licensing decisions the issues associated with operating a single station against a multi-station group. Examples include the approval of Newcap's second FM in Ottawa-Gatineau in 2005, and applications for second FMs for Standard Radio and Newcap here in Calgary in 2001 and 2006, respectively.
2599 Our application for a second FM in Calgary is consistent with those decisions and with the operational realities of major markets.
2600 A second FM in Calgary will secure our company's place in Alberta, with two FMs in Edmonton and two in Calgary. Your approval of our Calgary application will secure the regional growth strategy for Alberta that we first outlined to you ten years ago, and which has resulted in the creation of a strong, independent western radio voice that now employs over 250 people, in seven markets, and has made an aggregate commitment to CCD of over $15 million.
2601 Mr. Chairman, members of the Commission, we hope that you continue to share our vision of an independent western voice. We thank you for this opportunity to appear before you, and we would be pleased to answer any of your questions.
2602 If I may, Mr. Chairman, I would ask that those questions be directed to my partner on the left, Cam, and he will redirect them to the proper people to answer them.
2603 Thank you very much.
2604 THE CHAIRPERSON: The questions will go to the designated dispatcher.
2605 THE CHAIRPERSON: Thank you very much. You have raised some interesting questions and concepts and ideas, and Commissioner Cugini will start off with our questions.
2606 COMMISSIONER CUGINI: Thank you, Mr. Chair.
2607 Good morning to all of you. I am going to begin where you left off, and that is the single station operator versus dual station operators, and I am going to assume, because I didn't pull up the transcript, that when you were first licensed in Calgary, you were asked the question, "How is a single station operator going to compete in this market," and you probably answered, "We have the wherewithal, and the shoulders, and the financial backing to compete in the long run."
2608 MR. BRUCE COWIE: That is correct, and we answered that in exactly that phrase and tone, but we also said "We will be back," signalling the second call, which we triggered in 2008.
2609 So we always thought, with the line-up of stations and the control of hours tuned, that we would need to have, given the ability of the market to allow it, a second FM, to be a dual operation for the long term.
2610 So the answer to your question is, yes, we did say that, and I am pleased to report to you that X92.2 is doing just fine.
2611 COMMISSIONER CUGINI: Okay. Fair enough.
2612 Because you say in your oral presentation that the other operators control 92 percent of the hours tuned in this market today, how does that compare with five years ago when you launched your station here?
2613 In other words, how much of a dent have you made in the market?
2614 MR. CAM COWIE: We would be about a 4 share in the marketplace. The other new entrant would be about a 4 share in the marketplace.
2615 Bell would be rolled into the 92 percent. They were also one of the new applicants. So in the 12 percent range over the last five years.
2616 COMMISSIONER CUGINI: And how much of a dent do you expect to make with a second station?
2617 MR. CAM COWIE: In our first year, we proposed 2.3 percent, and when we get into the programming, I think we will be able to demonstrate that 2.1 percent of that is already there, which has resulted from some programming shifts in the past year.
2618 COMMISSIONER CUGINI: As you all know, when we look at a market and we look at licensing a new station in a market, we look at diversity, and diversity has two components -- one is diversity of ownership and one is diversity of programming, and those two things go together.
2619 So it's the big question, it's the broad question, which I want to give you the opportunity to -- not to understand, because I am sure you understand it -- to answer, and that is, you are currently in the market and you are proposing a format that at least three other stations in the market already have one of the terms to describe their format.
2620 We will get into this listener driven radio concept later, because I do want to hear how it is unique and innovative.
2621 But what is it that you bring to this market that will enhance what some may call an already robust radio market?
2622 MR. CAM COWIE: We knew that this would be a vital component of determining best use of frequency, and as Christian mentioned in his opening comments, rather than coming to the market with a preconceived format and pushing it through with a research plan to support it, we took the opposite approach --
2623 COMMISSIONER CUGINI: And just for my own clarification, when you say a preconceived format, you mean preconceived in the sense that it is something that you had already thought of in the past?
2624 MR. CAM COWIE: Yes, or something that is a format where you would go out and say, "Here is the format. Here is the concept. Would you support this?" and then back it with research.
2625 COMMISSIONER CUGINI: Okay.
2626 MR. CAM COWIE: We knew that there was going to be a scarcity of frequency. We wanted to let Calgarians determine what was the best use of that frequency.
2627 So, as opposed to a push strategy, we employed a pull strategy, and we commissioned Shepard Research to do a wide-net format finder, and to really take a look at what opportunities, if any, existed in the marketplace, and 601 Calgarians who were radio listeners were surveyed. Quite frankly, we were surprised by the result.
2628 So, with your indulgence, as this will probably take a little time, I am going to get, first, Mike to talk a little bit about the wide-net research and the difference that it has, and I think we will be able to show you that we are not just proposing painting your old Chevy, we are prepared to pimp your ride.
2629 MR. SHEPARD: Thank you, Cam.
2630 Commissioners, this study was commissioned, as Cam noted, as a wide net. In other words, we were not going in with one or two versions of -- whether it be a Triple A, rhythmic CHR format -- we decided to take a very broad look at the marketplace.
2631 So we talked to 601 respondents in the Calgary market between the ages of 18 and 54, a sample size significantly larger than PPM employs at the present time.
2632 These respondents had to listen to radio, on average, for at least 30 minutes per day.
2633 Our intent was not to repatriate listening, because we found that has not been terribly successful in the past. We wanted to look at the marketplace of Calgary radio users presently.
2634 The respondents were not presented with any sort of musical descriptor or explanation. They were, however, exposed to 30 very discrete music styles running the gamut of virtually everything we could look at.
2635 We looked at musical styles ranging from Triple A to hip-hop to hard rock to disco to smooth jazz, CHR and more. And each of the respondents were asked to rate these discrete music styles, individual music styles, on a scale of 1 to 5, 1 meaning they absolutely disliked the music and never wanted to hear it on their favourite Calgary radio station, 5 meaning it was a favourite and they would listen to that type of music often.
2636 And then what we did is allowed our very sophisticated software to segment this audience based upon the voting patterns they displayed, how they rated each of those songs, both on passion, on rejection, even ambivalence.
2637 And what we were presented with at the end of the day were 11 audience segments, naturally occurring audience segments identified objectively by statistical method rather than our pre-conceived methods.
2638 So when we talked about these segments, we're not -- the segment leads to a format, but the segment is actually a group of listeners as we refer to them.
2639 And when we looked at these 11 segments, we found three that were currently, in their own words, under served by the present choices in Calgary radio. And at that point, I presented these three audience segments and their representations and formats to Harvard Broadcasting.
2640 COMMISSIONER CUGINI: And I don't mean to -- please, I don't mean to minimize the work you've done, but just so I understand this approach to format research, this was more of a -- not what would you -- no, would you listen to this, but this is more of a what do you want to listen to.
2641 MR. SHEPARD: Yeah, what their musical tastes were on a scale of 1 to 5 and then whether or not a station was known for playing this music presently in the market on each one of those 30 discrete music styles.
2642 COMMISSIONER CUGINI: And has Harvard used this approach in other markets when entering a market to research a format?
2643 MR. COWIE: No, this is the first time that we've gone this deep, as we mentioned.
2644 This was going to be all about limited frequency and best use. We wanted to make sure that we gave Calgarians an opportunity, and they came back in spades with what they were looking for.
2645 COMMISSIONER CUGINI: Because, I mean, your research is quite detailed in your written submission, and I do appreciate that because I did go through it.
2646 Was there something else you wanted to add? I saw you go for your microphone.
2647 MR. HALL: Yeah, absolutely.
2648 Well, you had mentioned, you know, you wanted to have a clearer idea of what -- how our AC proposal separates itself from the rest of the market.
2649 So we made a really good point about how the research sets us apart from all the other applicants here, so now I just want to take you through exactly how the AC station that we're proposing is going to be quite different than what's currently in the market.
2650 We identified that the market currently has two AC stations. You had mentioned three, but I'm going to focus on two that are Rogers contemporary AC station, CHFM, and Bell's hot AC station, CKCE.
2651 However, looking at a long-standing successful format like AC, we know that our research that there's both desire and room for a third AC station.
2652 We've seen this across multiple formats. Rock has been split up into many different versions of rock. Calgary currently has three distinct rock stations in the market. We even have three classic hits stations in the market now, and 10 years ago that format barely even existed, and now we sit here with three unique classic hits stations.
2653 But getting back to my point about AC, even with two distinct ACs in Calgary, our wide net research study pointed out that there's not only desire for a third, but actually a fourth, as two of the three most desired and unsatisfied formats that came from the research both fall under the AC umbrella.
2654 So if you let me, I'll point you to how our traditional AC application would be quite different than the ACs in the market, and there's three ways that we're going to do that.
2655 One is the era of music that we'll be covering on My95.3, two is the variety of the music that we'll be offering, and three is with a programming strategy that connects the listener to the station like no other AC in the market that we mentioned, and that being LDR.
2656 So I'll start with the era, and if you'll allow me to take you to supplementary brief, you'll notice that on paragraph 18 we really illustrate how the current ACs in the market present themselves to listeners of Calgary.
2657 With CKCE, the hot AC, you'll notice that the majority of their music comes from the last five years. If you add it all up, more than 50 percent of their playlist is relatively new AC selections.
2658 They have a little bit of a bump in the early '80s which, according to our research, is also very favourable from Calgary artists, so kudos to them for nailing that down, and as well as a little bit from the late '90s.
2659 But the most obvious era is music from the last decade.
2660 If you take a look at the entire decade of AC selections or hot AC selections, as it were, you'll -- that increases over to two-thirds of their playlist comes from this era.
2661 By no means is this a shot at CKCE. They're a hot AC. It's an adult top 40 branded station. They're doing exactly what a hot AC should do, and they're doing a really good job of it.
2662 With CHFM, the contemporary AC, you don't see nearly as many little bumps along the road. You just see one massive spike. And that's music from the last five years where it's actually a larger number than the hot AC. It's closer to 60 percent of their total playlist and spins comes from that era.
2663 Take a look at the whole decade, once again, the last 10 years of music, it's more than three-quarters of their playlist and spins comes from this era of music.
2664 Now, we know that AC has been around for a really long time and it's had a great deal of success, so what happened to all that AC music that existed, you know, before the last 10 years which is being very well covered?
2665 This is where My95.3 gets to be a different kind of AC for Calgary.
2666 As identified, the AC selections that a traditional AC listener is craving and is no longer being satisfied with by Calgary radio is selections from the '90s and a small selection as well from the early 2000s. This is that large segment that we're talking about that Calgary listeners are craving and are currently being unsatisfied.
2667 They used to get this kind of radio. They're radio tuners. They've been accustomed to hearing this music on the air for decades. Not hearing it any more, and this level of dissatisfaction came out in our research.
2668 And in our era map, which we identify as well in paragraph 18 of our supplementary brief, it shows how we're going to be different. You see this big hill, and this hill represents this segment of music from the early '90s to the early 2000s.
2669 And not only that, but that spike reflects just the commitment that we're making to this era. It represents close to two-thirds of the entire playlist when you take a look at it. There's even some selections that are older than the '90s which brings that playlist actually closer to over 70 percent.
2670 There's actually one other spike, too, that I should point out on our era map that we provided, and that is new music because our listeners do want to be exposed to new music and we reflect that in our commitment to new and emerging artists on the radio station, both international and particularly in Canadian.
2671 By dedicating 16 percent of our total playlist to new and emerging Canadian artists, that's going to result in that spike that you see, so I just wanted to make sure everyone's really clear on that.
2672 So the second part I mentioned was in the variety, in the wide selection of songs that we're going to be offering. I promise this answer won't be nearly as long.
2673 MR. HALL: So recent BDS analysis on both AC stations shows that the playlists of the current ACs represent just over 400 songs. Now, our station averages around 2,100 spins per week, so that means they're turning their entire library about five times in a given week.
2674 Now, not that every single song in the station is being played five times; some are as little as once a week, some are as many as 40 or even 50 times a week. What matters is that the average is over five times a week.
2675 With My95.3, our library is going to consist of more than double that, so it's going to be around 850 songs because we know that there's a wide breadth of selections from these artists that fall underneath the traditional AC umbrella that aren't being played that used to define the format.
2676 So clearly, they built it so, you know, there's a large library of songs there for us to choose from.
2677 And the reason we do this is simple. It's because back to the research study, the two top programming preferences that were pointed out is that a traditional AC station really needs to have a really good blend of music, and it needs to have a wide variety of music. So we're going to reflect that in our library size.
2678 So to recap, on the music front we have two ways that we're going to be different; one, in the eras served, and two, in the variety of song selection.
2679 So now there's the third reason, and you'd mentioned you wanted to get to LDR a little bit later, so I hope you don't mind if I press it because we're really excited about it.
2680 So let's turn to that third way, and it's how we communicate with our audience and, more importantly, how they communicate back to us because this station was born from research and it's not going to end now that they've just given us the answer that we want. We want to continuously be engaging them.
2681 And the way we do that is with listener-driven radio.
2682 But for this part, I'm going to turn it over to Ginette for a brief presentation on how LDR works and how it connects the audience directly with the radio station.
2683 MS. OUIMET: Thank you, Christian.
2684 So My95.3 is going to use popular social media platforms such as Facebook, Twitter and on-air announcer blogs as well as the apps for mobile devices to connect with listeners, but we're going to take that one step further. We're going to use a unique platform that connects listeners with the radio station in a way that directly affects programming, and we do this through the use of listener-driven radio, or LDR.
2685 This innovative, interactive web engine works with our automation system. It constantly keeps our listeners engaged. It introduces listeners to new and emerging artists as well as local, undiscovered artists, and is an incredibly useful tool for programming.
2686 X92.9, Harvard's Calgary station, was the first station in Canada to actually use this technology and has been using it for the last year and a half, so if you'll allow me a few moments of your time, I'd like to show you exactly how it works.
2687 So the My95.3 LDR interface is found on the main page of the website. It can also be accessed through mobile devices via the My95.3 apps.
2688 So every hour through the My Picks tab, we provide listeners with a list of upcoming songs. Now, this list can include 30 songs, 15 songs. In this case, we've given them an opportunity to choose on three.
2689 So allow me to put myself in the listener's place.
2690 I've looked at the list and I've decided that I'm going to choose Montreal-based band Mobile as my choice of song that I want to hear. I simply click on it, and I'm instantly provided with the current voting results.
2691 Now, as you can see through the red and green bars, green being the one that's currently in the winning, you can see that my song is trailing, so I'm going to enlist my friends through Facebook.
2692 By simply clicking on the Facebook logo, I can then post a notice on my wall inviting my friends to help me vote, along the lines of "I love this song, I know you love it too, simply click on the My Picks tab link below and help me vote".
2693 In that case, they would then be directed directly to the interface page.
2694 After doing that, I'm going to return to the interface and I'm going to click on the Alert Me logo. What this does is it gives me the ability to be notified either through email, text or instant message the instant my song wins a vote and is on the air.
2695 So here are the options that I've been provided with, and I'm going to choose to be texted. I'm going to type in my phone number -- that's not really my phone number -- and I'm going to ask to be alerted.
2696 And just like that, I get a text to my phone. Clearly my Facebook friends have come through. The song that I voted for for Mobile has won and is now playing on the air.
2697 The song will then finish out playing and LDR will then upload the next voting session for the fun to continue.
2698 Now, listener-driven radio also provides listeners with an opportunity to rate and request songs from the entire My95.3 music library. By simply clicking on the Request tab, they can either scroll through the entire list of songs or they can type in the list -- or the name and the song that they're looking for.
2699 So in this case, I typed in Canadian favourites Arcade Fire. I love this song, I'm going to give it a thumb's up.
2700 It then prompts me with an opportunity to then request the song. I can share that request with my friends on Facebook, letting them know what an awesome interface this is, and once again, I can be alerted the second that song plays on the air.
2701 Now, the Request tab lists the entire music library for our listeners to scroll. The My New Music tab is going to provide them with a list of the newest songs being featured on My95.3. This includes songs that are up for consideration.
2702 And what I mean by that is if we are provided with a song from either an international or a Canadian artist, we're not quite sure what we want to do with it, we're going to upload it to the My New Music tab.
2703 Listeners here have an opportunity to preview 30 seconds of the song and then can rate it with a thumbs up or thumbs down.
2704 So in this case, BC band Said the Whale, their brand new song, I'm going to click "play". The stream comes up, I listen to it and I give it a thumbs up because it's a great song.
2705 I've now told programming I love it, so hopefully you guys are going to keep it on the air.
2706 Now, as I mentioned, local artists also have a voice through LDR. Through the Get Exposed tab, local artists can fill out the online submission form which also involves them uploading a song.
2707 COMMISSIONER CUGINI: I'm going to stop you there.
2708 MS. OUIMET: Yeah.
2709 COMMISSIONER CUGINI: If I want to hear Mobile's song Out of My Head, why don't I just go to my music library on my computer or go to Youtube? That's a lot of steps to go through to get you to play that song for me.
2710 MS. OUIMET: I think it's more of the interaction where they're getting an opportunity to tell us the songs that they want to hear coming up.
2711 MR. COWIE: If I could add to that --
2712 COMMISSIONER CUGINI: And you're not concerned about immediacy. We know that this is a generation coming up that they want it now, they want it fast, they want it when they want it.
2713 MR. COWIE: Commissioner Cugini --
2714 COMMISSIONER CUGINI: Please.
2715 MR. COWIE: -- the -- Ginette will have the number, but I believe now we're at about 33,000 weekly, so they are definitely taking advantage and they are definitely involved in the engagement with the radio station.
2716 COMMISSIONER CUGINI: You did, in your oral presentation, talk about the exposure of new artists and what this will allow.
2717 So if I'm a new artist, I will upload my song to this system and it's played automatically on the radio station?
2718 MS. OUIMET: No.
2719 COMMISSIONER CUGINI: Okay.
2720 MS. OUIMET: So programming will then, in turn, ensure that the song fits on brand and as well as the quality is there. And then it will upload it to the Exposure tab where listeners can then listen to the song in its entirety and give it a thumbs up or a thumbs down.
2721 COMMISSIONER CUGINI: Is this software proprietary to Harvard?
2722 MS. OUIMET: No.
2723 COMMISSIONER CUGINI: It's not? Okay.
2724 MS. OUIMET: No.
2725 COMMISSIONER CUGINI: So any radio station in Canada could use this.
2726 MS. OUIMET: Yes.
2727 COMMISSIONER CUGINI: Okay.
2728 MS. OUIMET: Yes. We just happen to be the first.
2729 COMMISSIONER CUGINI: Pardon me?
2730 MS. OUIMET: We just happen to be the first.
2731 COMMISSIONER CUGINI: Okay. So you don't have anybody else in Canada who is using it currently?
2732 MS. OUIMET: I believe --
2733 MR. COWIE: Our station in Edmonton.
2734 MS. OUIMET: Yes.
2735 COMMISSIONER CUGINI: And you know, I do appreciate the fulsomeness of your answer to the question. I know you know that this is a big issue for the Calgary market, especially when it comes to a market that has a scarcity of frequencies, and because it is an important radio market for, obviously, all of the applicants who are before us this week.
2736 It's almost lunch, but I'd like now that I have to go on to those good old detailed questions that every hearing seems to have.
2737 And just a point of clarification when it comes to your Spoken Word programming.
2738 Give me the overall commitment -- I think it's six hours and 27 minutes.
2739 MR. COWIE: Yeah, I'll ask Christian to take you through that.
2740 COMMISSIONER CUGINI: Thank you.
2741 MR. HALL: Yeah, that's right. It's six hours and 27 minutes is the total commitment.
2742 COMMISSIONER CUGINI: And of those six hours and 27 minutes, five hours and 10 minutes are news and -- is strictly news programming.
2743 MR. HALL: That's strictly newscast programming. It doesn't include surveillance information, like traffic and weather outside of newscasts.
2744 COMMISSIONER CUGINI: Okay. Because the balance is made out of these features that you list in your supplementary brief, is that correct, to get to the six hours and 27 minutes?
2745 MR. HALL: Correct.
2746 COMMISSIONER CUGINI: Okay. Thank you.
2747 You've made a commitment to 40 percent Cancon. Is that throughout the broadcast week, or is that to be measured Monday to Friday 6:00 a.m. to 6:00 p.m.?
2748 MR. HALL: It's both.
2749 COMMISSIONER CUGINI: It's both, okay.
2750 MR. HALL: Yeah.
2751 COMMISSIONER CUGINI: Okay, thank you.
2752 And you will commit to that as a condition of licence.
2753 MR. HALL: Yes.
2754 COMMISSIONER CUGINI: Thank you.
2755 We're going to talk a little bit about your CCD contributions, and there are two in particular that we need a little bit of more detail on, and that is the Aboriginal Media Education Fund -- and I know we've been through this one before -- as well as the Calgary Art Summer School Association.
2756 There's an issue with the paid internships when referring to the Aboriginal Media Education Fund. Does Harvard plan on using those internships that will be funded through the Media Education Fund?
2757 MR. HALL: No.
2758 COMMISSIONER CUGINI: No? Okay.
2759 The Calgary Art Summer School Association, part of the fund, part of the monies that go in this Art Summer School Association includes movement and art, improvisation, theatre, drama and playwriting. And those programs don't meet the criteria for eligible CCD funding.
2760 MR. HALL: When we looked at this one, we made sure that we talked to Commission staff, and the portion that we're looking at is the musical aspect of it. And it will be similar to a program that we're supporting in Edmonton that we also made sure we cleared with Commission staff in terms of the music component, access to the musical instruments and instruction.
2761 COMMISSIONER CUGINI: And so you will work with the Calgary Art Summer School Association to make that absolutely clear.
2762 MR. COWIE: Yes. What we do is once the commitment is in place is we do put together a fairly detailed letter that lays out which of the CCD commitments qualify and then we have that letter signed. And the last sentence proviso is in it must remain this way and may not be changed unless in writing.
2763 And any time we would have a question, again, we would go back to Commission staff and ensure that there was a qualification.
2764 COMMISSIONER CUGINI: And the change would -- in writing would have to obviously go to you and then you would get that.
2765 MR. COWIE: Yes, and then we would go to Commission staff and ensure that it was an eligible --
2766 COMMISSIONER CUGINI: I mean, I have a bunch of questions here about your share of hours in terms of your projections, but I think that you pretty much answered the question in the first go-around.
2767 MR. COWIE: Well, I think if we could add one item to it that I think may be helpful is -- and I'll get Christian to take you through this. But when we did the research and the research really did capture what has happened in the last year in terms of movement, you know, within formats and so on, is most of the first year share is showing up in that share that has left the full service and really is sitting there in an undecided or I think the term is 70 percent settling.
2768 So if maybe Christian and Mike can take us through that, we think the share is not only realistic, but there and ready for format.
2769 MR. HALL: Sure. Before I turn it over to Mike on just on how we came with our large share projection five years down the road, I'll just reflect on something that Cam had touched on, and it has to do with market impact.
2770 We think the impact of a traditional AC coming into the market is already been felt. The full service AC station, CHFM, before their flip to a more contemporary version of themselves, were third in the market with an 88 share.
2771 In the year since their shift, they've lost over 25 percent of that audience.
2772 Our research has identified that audience being traditional AC listeners that are no longer satisfied with what they're hearing on the radio, and that's been reflected in the ratings. There's been a 2.1 share point loss on CHFM and completely, you know, separate from the fact that when get the research back, we see that our modest projection of a 2.3 share in year one almost matches up identically with this hole or this loss of audience that's there.
2773 So to talk about how we got to that 2.3, I'll start with Mike.
2774 MR. SHEPARD: Thank you.
2775 As we discussed before, we identified these various audience segments and then we had a battery of questions regarding their overall satisfaction with Calgary radio currently.
2776 And one measure we use, and we use this in most of our studies, is what we call a settling index.
2777 We found that listeners will default to a favourite station even if they're not at all satisfied with that radio station, so we ask a question, first of all, your favourite station for music and then we ask a follow-up question, it's an agree or disagree set-up, where we say, "Would you agree or disagree that the music on [fill in that favourite station] isn't what you really like but it's the best that's available in this area so you're settling with it -- settling for it?"
2778 It was astounding to see the number of settlers in Calgary in general, 50 percent, which is a very high number for a market, speaking to the fact that this market does appear to be under served.
2779 What was even more astounding is that within the audience segment we identified, traditional AC, fully 70 percent of that audience segment indicated that they were settling for music on their current favourite radio station.
2780 So to work backwards -- and I will put out the caveat that any audience estimate projection is just that. Anyone who claims they can give you an empirical number of what a station will achieve in any given year is being disingenuous.
2781 So these are based upon, I think, very well thought out, you know, projections and estimates that we developed, so we take the size of the audience segment in the market at eight percent, we see 70 percent of that audience segment is settling for their favourite radio station, which leaves us with a raw station potential roughly 5.5 percent.
2782 We also see that among this group 4 percent of them say there is no station. They don't have a favourite music station whatsoever. They are not only not settling, they just don't have a favourite station for music.
2783 That gives us a raw P1 potential, favourite station share potential, of roughly 5.7 percent in the marketplace.
2784 And then I will turn it over to Christian who can explain how we adjusted that for a 12-plus estimate, which is what you were looking for, and how we graduate that over the five years.
2785 MR. HALL: So when Mike is talking about that 5.7 it's because it's adult 18-54 because that is the size of the net that we cast over the market.
2786 So what we did then is we took a look at AC stations across the country and how their 18 to 54 audience translates on a 12-plus. The average was a decrease of 20 percent in the number, so that's where we came up with the 4.6.
2787 Then, you know, we are confident that we can get half of that audience out of the gate. We have already seen the majority of that 2.3 drop off from what once was the full service AC station in the market, so we are confident in our projections.
2788 COMMISSIONER CUGINI: We always look at the table in terms of what is submitted with your application and that is the table that details the projected sources of revenues for year two, and you estimate that your impact on existing radio stations -- that will about 35 percent of your revenues on existing radio stations in the market.
2789 MR. CAM COWIE: Yes.
2790 COMMISSIONER CUGINI: How did you come up with that number? Let's start with that.
2791 MR. CAM COWIE: Well, I'm going to turn it over to Gary.
2792 We looked at that, we noted when we ran the competitive grid that we said that we were the highest at 35 percent. We took a look at a number of things, Gary's expertise in the marketplace and what has transpired with X92.9, so I will ask Gary to take us through the projection.
2793 MR. BRASIL: Thanks, Cam.
2794 Commissioner, based on my experience of being the General Sales Manager at "X" since its inception, and combining that with what I see on a day-to-day basis, that 35 percent coming from existing is certainly a realistic number. I might add that that 35 percent represents less than 1 percent of the total market revenue here in Calgary, is what I'm seeing based on my estimation.
2795 I would also add that this revenue is going to be disbursed amongst a minimum of five to six radio stations. So if I look at current market rank for females 25 to 44, the top six stations, they represent a 50 percent market share.
2796 COMMISSIONER CUGINI: What impact is it going to have on your existing radio station, plus or minus?
2797 MR. BRASIL: Zero.
2798 COMMISSIONER CUGINI: Revenue neutral?
2799 MR. BRASIL: Yes.
2800 COMMISSIONER CUGINI: There have to be some synergies that you anticipate between the two radio stations.
2801 MR. BRASIL: When you are talking about revenues -- sorry, synergies, you are talking about the opportunity that we are going to have here to have a second station that provides a complimentary demographic to X92.9 and that's going to give us a better opportunity to serve our existing customers as well as potential new advertisers.
2802 COMMISSIONER CUGINI: From a sales point of view.
2803 MR. BRASIL: From a sales point of view, yes.
2804 COMMISSIONER CUGINI: Any other synergies anticipated with the two?
2805 MR. CAM COWIE: Yes. Predominantly on administration, so a single general manager, traffic, reception, admin, sales assistants, and so on. The synergy ends at programming and news, I mean those are full complements, and a little bit on the accounting side as well. So the synergy is there.
2806 Another opportunity is in terms of negotiation and buying power with suppliers. So if you were doing, as an example, an service agreement with WideOrbit, it's one price for one station, for two stations it's a considerably smaller fraction added on, so we see some synergies there.
2807 So on the admin side, on the negotiation side, and then Gary mentioned on the opportunity side in terms of having more than one tool in the toolbox when you are going to call on an advertiser.
2808 COMMISSIONER CUGINI: Okay. You did mention the issue of frequencies in this market. You did not propose an alternate frequency or provide a technical brief for a second FM frequency?
2809 MR. CAM COWIE: We did not.
2810 COMMISSIONER CUGINI: Is there a reason for that?
2811 MR. CAM COWIE: Yes. I would love to take you through, if you give me two seconds, the --
2812 COMMISSIONER CUGINI: It's your chance.
2813 MR. CAM COWIE: Because this one has been contentious from the start.
2814 COMMISSIONER CUGINI: Okay.
2815 MR. CAM COWIE: In 2008 we had filed -- and the frequency chosen -- when we do a frequency we do a frequency analysis, so we look at the full spectrum, then we do a very detailed frequency analysis with D.E.M. Allen and from there we select a frequency and then do the technical brief looking for the technical acceptability from Industry Canada.
2816 In 2008 we filed for 100.3. When we filed again -- when we started the process this year we looked at the frequency analysis again. There had been some rule changes associated with third adjacent interference in 2010. D.E.M. Allen was informed by Industry Canada that 100.3 would not receive a technical acceptability, unless the applicant was able to either get a co-site agreement or an accommodation letter from -- and this is the one I really like -- from a station licensed to serve High River-Okotoks for interference in North Calgary.
2817 So we were unable to do that and I think as you go through the presentations a number of applicants were unable to do that, so we went to 95.3. 95.3 was very similar, it's about a 2 percent difference, did not have a specific problem with the business plan.
2818 So as we went along it almost looked like one applicant was able to block a frequency until Industry Canada did exactly what they said they would not do for an applicant on 100.3, is provide technical acceptability to the numbered company without a co-site agreement or, to the best of our knowledge, an accommodation letter from Golden West.
2819 So we are really confused, because we have the T-shirt, we got it in Edmonton. We were awarded a licence and not a frequency. We know this. We spent a lot of time with our engineering firm, we spent a lot of time with Paul East, we spent a lot of time with the engineers at the CRTC and it was play by the rules because this is what happened. And we played by the rules and when we played by the rules we ended up going in without a backup frequency, which clearly is not our first choice.
2820 We looked at 100.6, but it's a 1 kW frequency and I think you heard yesterday it would be enough to service, you know, the multicultural aspect of the City of Calgary but wouldn't get outside. It didn't work with our business plan.
2821 So here we are and hence the dissertation about the Broadcasting Act and so on. I know the ball is in your court, it's going to be an interesting decision.
2822 COMMISSIONER CUGINI: And that's the reason why you therefore say that 95.3 is the only one that works for you?
2823 MR. CAM COWIE: Yes.
2824 COMMISSIONER CUGINI: Okay. Well, thank you very much.
2825 Those are all my questions.
2826 THE CHAIRPERSON: Thank you, colleague.
2827 It's in our court, but if you don't have a TA it's not really in our court. You could have applied.
2828 MR. CAM COWIE: We could have applied. We were told it wouldn't receive technical acceptability.
2829 Now, having said that --
2830 THE CHAIRPERSON: Told by whom, just to bring me back up to speed?
2831 MR. CAM COWIE: Industry Canada.
2832 So you do have an option, if I might.
2833 THE CHAIRPERSON: Go ahead.
2834 MR. CAM COWIE: In Edmonton you licensed without frequency and you have that option here to license without frequency and come back. Theoretically somebody should be able to go now with a technical brief to Industry Canada without a co-site and receive --
2835 THE CHAIRPERSON: I don't know what happened in Edmonton. I mean, I know what happened in Edmonton, but our Notice is pretty clear.
2836 MR. CAM COWIE: It was crystal clear.
2837 THE CHAIRPERSON: I think crystal, yes.
2838 MR. CAM COWIE: Crystal clear.
2839 THE CHAIRPERSON: So that's the issue.
2840 Peter, questions? My colleague, Commissioner Menzies, might have some questions for you.
2841 COMMISSIONER MENZIES: There are a couple of things.
2842 In terms of you have spent a lot of time researching format and everything, but when did you first start doing the research on that? Your audience research.
2843 MR. CAM COWIE: Audience research?
2844 COMMISSIONER MENZIES: Yes.
2845 MR. CAM COWIE: Prior to filing.
2846 COMMISSIONER MENZIES: No. When did you first go into the field to do the research? Sometime last year; right?
2847 MR. CAM COWIE: Yes.
2848 COMMISSIONER MENZIES: This isn't really a critique of you so much as it is of everything the way we do it, but I just kind of want to know about your flexibility, because if you are researching the market in 2011, given how quickly things change, and by the time we make a decision and you launch could be two more years, could be three years from when the research started until there is a launch, it could be longer, everything can change; right.
2849 MR. CAM COWIE: Absolutely.
2850 COMMISSIONER MENZIES: Like Facebook is what, seven years old, six years old; right.
2851 So how flexible are you as a corporate structure? I mean the other formats being done in the city could change; right?
2852 MR. CAM COWIE: Absolutely.
2853 COMMISSIONER MENZIES: So how quick can you change if you have to?
2854 MR. CAM COWIE: Well, I mean if there was a massive shifting in the marketplace we certainly have the option to re-look.
2855 We also, before sign-on, run a music test, even within the parameters that we have determined the format. The format was approved and then, as you say, there is anywhere from up to a two-year window. We also do a music test associated with it.
2856 So if there was massive change in the marketplace there would be an ability to re-look, but we think the market has moved and we think we have found that hole.
2857 COMMISSIONER MENZIES: Okay.
2858 In terms of this sort of competition to get your music play thing, how does that -- do you balance that at all? I mean what happens if you get taken hostage by 12 year old girls and end up playing Justin Bieber 24/7?
2859 MR. CAM COWIE: I will let "G" answer that, but it has to be, number one, on the playlist. Number two, there is an IP address so that you can't sit there and go (banging his finger on the table).
2860 COMMISSIONER MENZIES: Okay.
2861 MR. CAM COWIE: Because we would never want a Nickelback song on "X".
2862 COMMISSIONER MENZIES: No Nickelback.
2863 Okay. More broadly than just the last question is: How would giving you this licence make Calgary a better place?
2864 MR. CAM COWIE: I think I would like to give that one to my partner next door.
2865 COMMISSIONER MENZIES: Okay.
2866 MR. BRUCE COWIE: At the basis of this application is sustainability for us and I guess that leaks off a little bit to audiences. But it would fill a hole that we were surprised existed in the AC format.
2867 We have experience in AC formats in Red Deer and in Edmonton, Regina, so we are comfortable there. But we launched our business plan to become an editorial voice to fill a regional void in the west as exists in other parts of the country, in the Maritimes, in Quebec and Central Ontario, and so on. And we are good broadcasters, we do a good job, we do a good community -- our presence in the community is respected and felt, so it is important for us for sustainability.
2868 Just to point it out, Paul Hill is here. We made a plan to be a significant contributor to Canadian Content Development and programming in western Canada because there is a different idiom here. It is the fastest growing part of the country and will be an economic driver for years to come, so we have a place and we have an obligation and a job to do.
2869 So X92.9 has been a great success story for us. As we said years ago, we were fishing in the shallow end and we went there and we were right and the station has grown and is a factor in this marketplace.
2870 So our proposal is for us, and others who have single sticks, single stations in these markets, is longevity. As we pointed out, in the major cities across western Canada now, Calgary is the only place with single operators and that is not -- and we have seen them dropping off. New licences in multi-station markets have been falling everywhere because, you know, the large players are large players and they have a lot of control over the marketplace.
2871 So survival is part of it, but really we think the notion of the new west and having a voice and a place to communicate with people throughout the region is a vital service in the next decade or two.
2872 COMMISSIONER MENZIES: Okay. Thank you.
2873 THE CHAIRPERSON: Thank you.
2874 Commissioner Simpson and then Commissioner Patrone.
2875 COMMISSIONER SIMPSON: Thank you.
2876 At the outset of your presentation you had said with a sigh of relief that had your initial presentation for Calgary gone through you might have made an error in proposing a Triple A format.
2877 Is that correct? I'm just going by memory here.
2878 MR. CAM COWIE: Yes. Had our proposal been through and accepted we would have had a Triple A format in a frequency that we can't use.
2879 COMMISSIONER SIMPSON: Okay.
2880 Leaving the technical issue of the frequency aside, but just to understand from my benefit -- fortunately I have a 23-year-old daughter who is my music director and so I'm able to keep current on a lot of emerging bands and I'm trying to sort of dissect from my understanding, and perhaps my fellow Commissioners, what you viewed as Triple A format versus the AC format you are proposing now.
2881 Because I see in the examples of your listener interactive format you are referring to groups like Said the Whale and The Spanks and others which seem to me to be right smack dab in the middle of alternative, certainly not mainstream, and I'm just curious if you can give me one more time with feeling a little bit of a circle tour as to how those bands fit into an AC format and not an alternative format?
2882 MR. CAM COWIE: Okay. Just for clarification, the bands that we are using here like Michael Bernard Fitzgerald that's up on the screen, we are using our X92.9 interface because we don't have the My95.3. So all of those bands that you have seen are bands that we play. As a matter of fact, I think Michael Bernard Fitzgerald was one of our 2007 exposure winners.
2883 COMMISSIONER SIMPSON: So aren't you impressed that a 63 year old guy was able to divine that?
2884 MR. CAM COWIE: But let me turn it over to Christian --
2885 COMMISSIONER SIMPSON: Yes.
2886 MR. CAM COWIE: -- to take you through the Triple A versus --
2887 MR. HALL: Yes. I'm also just saying I'm really impressed you guys went to the Dudes show last night. I think that's fantastic.
2888 COMMISSIONER SIMPSON: Dude Strokes(ph), Cuff the Duke, you name it.
2889 MR. HALL: Yes, absolutely.
2890 COMMISSIONER CUGINI: What, you don't think we're hip enough? Sorry, I was going to let that one go by.
2891 MR. HALL: I'm just saying, you know what, it was a long day and you guys still have time to go tear it up at night and see a band.
2892 THE CHAIRPERSON: Because you have to stop digging.
2893 THE CHAIRPERSON: Put down the shovel, move on.
2894 MR. HALL: Yes. You know, there is definitely a crossover from Triple A to alternative and as the Program Director of the alternative station here in Calgary I can certainly speak to it.
2895 You know, when we had a Triple A station in the market it was a difficult war and, fortunately for us, we came on the winning side of that war. A lot of our playlist crossed over and I would say even more so in the last 12 to 18 months the format has crossed even more over into each other`s sort of yards.
2896 The Pattison Group before us did a great presentation of identifying these types of bands and, you know, it's kudos to their PEAK Performance Project for bringing a band like Said The Whale to a big -- larger audience.
2897 Certainly we are a station that has since added that band and we see that as exactly what CCD is meant for. The same way how Michael Bernard Fitzgerald was a 2007 winner for us in our second year of operation, to see them embrace Michael Bernard Fitzgerald in Vancouver is exactly the whole point of CCD, is to get these bands out of their backyards and to give them the exposure on a national and -- knock on wood -- an international level. There is no greater joy than to see that band all of a sudden take the stage around the world and know that you had a hand in that.
2898 So there is certainly some crossover in that.
2899 The sort of folked explosion, as it were, on alternative right now shares a lot with Triple A and alternatives, bands like Mumford & Sons and Dan Mangan and -- there are so many, The Rural Alberta Advantage to name another one.
2900 The line is getting very blurry. Had our original 2008 application gone through it's really tough to say we would have allowed that because so many years have passed and that line has blurred. Back then there seemed to be much more of a differentiation between the two formats but now not so much.
2901 I think that has a lot to do with the short term sustainability of the format that we have seen the last couple of years. They are the only ones left.
2902 We are rubbing our crystal balls here and assuming that the Shore in Vancouver will flip formats after its sale and dismissal of the entire staff from last week, but nonetheless it is certainly a concern.
2903 COMMISSIONER SIMPSON: Taking everything you say at face value with respect to there being a discernible difference, out of the 17 or so stations that are in the market 10 are programming some form of contemporary, adult contemporary, classic rock, alternative and, as you say, you know, the lines are getting blurred.
2904 So one of the concerns that I have personally is that the lines will continue to blur, because if you look at an iPod playlist it really is a composition of personal taste which can run the gamut.
2905 As Commissioner Cugini pointed out, I think radio is fighting the mobile device for not just other radio stations for ear time.
2906 So my last question is: Aside from the nuances of programming this is another presentation before us where interactivity is becoming a really important part of the toolkit. Is this where most contemporary radio is going to be going? Broadcasters have to stop being programmers and start being more interactive in sort of a participatory democracy with their audience.
2907 MR. HALL: If they want to survive, yes, absolutely. You can sort of sit on the side of the road and watch all the cars go by or you can get in traffic and start playing.
2908 Listening isn't just, you know, the clock radio and in your car anymore. It is, it's on your mobile device.
2909 Harvard has done a lot with their mobile devices you know. We have apps for all of our stations, and they are standalone apps, too. We don't just cluster them all together as like, "Here is all of our stations, feel free to listen."
2910 We designed them with the customer in mind. We want to make sure that that connection with the radio station continues on mobile platforms. X92.9 has a standalone app, as does Lite 95.7 in Edmonton. All of their stations have their own standalone apps because we know that that connection has to be a personal one and not just some big box store.
2911 It's why formats are sort of slicing themselves into necessarily a thinner pie, because you can't just serve all AC or all rock or all talk anymore, you have to pick a path. That might not be a path that garners you as much audience as once before, but at least you know that's a hill that you can own. We have done that with modern rock and we are looking to do that with traditional AC.
2912 COMMISSIONER SIMPSON: And it's not as much the music you play, but the commitment to which you do it.
2913 MR. HALL: Absolutely.
2914 COMMISSIONER SIMPSON: Yes, okay. Thanks.
2915 THE CHAIRPERSON: Thank you, Mr. Simpson.
2916 Mr. Patrone...?
2917 COMMISSIONER PATRONE: Thank you, Mr. Chairman.
2918 Just a little more clarity on your comments regarding sustainability.
2919 I just want to be absolutely clear, you feel that there is no business case anymore for a single stick in a market like Calgary?
2920 Part two of that, you don't think that you can survive going forward?
2921 Did I hear you correctly?
2922 MR. CAM COWIE: No.
2923 MR. CAM COWIE: I think what we are suggesting is we have diversity of ownership in the Calgary marketplace, we have diversity of voice. What we are suggesting is sustainability of that diversity and levelling the playing field with standalone broadcasters to allow us to better compete.
2924 We deal on a daily basis with some of Canada's largest multi-station, vertically integrated broadcasters. They have distinct advantages on access to talent, distinct advantages on the ability to adapt programming changes, distinct advantages in terms of advertising revenue and relationship leverage. So it is a battle every day and if we could go on a local level -- even on a local level into a car dealership and be able to present them with an advertising opportunity that would allow them the depth and breadth of what they do.
2925 We tend to skew a little younger, we tend to skew male. We are a single solution. The other opportunities are multi-solution, whether that's four radio stations or whether that's a radio station and a television station and digital and billboard, and so on, it's an opportunity to stand with them and compete.
2926 COMMISSIONER PATRONE: But surely you know that going into any market when you are going for your first licence?
2927 MR. CAM COWIE: Yes. And as Bruce said, I mean in 2006 the comment was we would be back. I mean we looked at it in Edmonton, sustainability, and that certainly drove our decision to purchase CJNW. It probably drove Evanov's decision to purchase in Winnipeg and The Shore to sell.
2928 I mean it's tough and we don't want this to seem -- I'm sure there is the right word, but in terms of giving us an opportunity to ensure that what we bring to the market is strengthened. So sustainability.
2929 COMMISSIONER PATRONE: I'm just trying to get my head around the word "sustainability", because when I think of that word I think that unless something changes then I have to throw in the towel.
2930 MR. BRUCE COWIE: No.
2931 COMMISSIONER PATRONE: You know, that the position you are currently in is not sustainable, meaning you can't -- that tells me that you can't go on much longer unless you get that second licence.
2932 MR. BRUCE COWIE: Well, you heard of the program Fear Factor, that's what this is.
2933 COMMISSIONER PATRONE: I'm not a regular viewer of that show, but okay.
2934 MR. BRUCE COWIE: Yes. But that's what this is. We are committed to broadcasting in the western part of the country. We have invested across two provinces now -- and soon to be three hopefully -- and we want a playing field where we can coexist.
2935 If you look at the history of the last five years a lot of owners have gone away because they couldn't sustain their business. We are here for the long term. We don't sell anything.
2936 And what we are asking the Commission to consider, is there a business case for allowing companies like ours, which are small, regional, but well financed, operating companies to stay in play. And doubling up, it's more risk for us, but I think it's less risk for the broadcasting system because the control will still be diversified, and particularly the editorial voice will be diversified.
2937 So that's why we are here, that's why we are applying for a traditional licence, because it fits. We will be the least impactful against anybody if we were to get this licence in the Calgary market, because it already exists, it's there.
2938 So sustainability in some cases has proved to be not possible in some markets, you have seen it, but we, with two stations here and two stations in Edmonton, we believe we have reached the point of some comfort that we can play on through this province at least, because we have doubled up -- if we get the licence here we will have doubled up in Calgary and Edmonton. Those are the cornerstone markets.
2939 COMMISSIONER PATRONE: Because when I hear you, sir, it makes me wonder whether you are suggesting that we second-guess any decision that would bring a new player into any market for the very reason that you're telling me --
2940 MR. BRUCE COWIE: Not at all.
2941 COMMISSIONER PATRONE: -- for the very reason that you're telling me --
2942 MR. BRUCE COWIE: Not at all.
2943 COMMISSIONER PATRONE: -- lack of sustainability going forward.
2944 MR. BRUCE COWIE: Not at all. We are just asking for -- you know, if you are in a market like this one which has a very low frequency count beyond what is already licensed, it may look like that, but I think it's something you ought to consider as to whether you need another new player, another standalone in this market, or whether you need to give the licensees who are already here an opportunity to help them to sustain their position in the market.
2945 Maybe that's not the Commission's job, but we are asking you to think about it, as to whether that gives us any points at all in the application for this licence.
2946 COMMISSIONER PATRONE: Thank you.
2947 THE CHAIRPERSON: Food for thought. It's coming up on lunch time.
2948 We appreciate your presentation. You have made a clear case that it is in the best interest of Harvard that you get another stick in Calgary. Our job is going to be at the end of the day to decide what is in the best interest of the system and what is in the best interest of Calgarians and their musical options on the dial.
2949 Thanks again so much. We really appreciate it. You did a great job dispatching, by the by.
2950 MR. CAM COWIE: Thank you.
2951 THE CHAIRPERSON: Enjoy your lunch.
2952 Madam Ventura, I think it is 12:30, is 2 o'clock good?
2953 THE SECRETARY: That's fine, thank you.
2954 THE CHAIRPERSON: And we will be coming back with Bell?
2955 THE SECRETARY: Bell Media, yes. Thank you.
2956 THE CHAIRPERSON: So we will see Bell at 2:00.
2957 Thank you so much.
--- Upon recessing at 1231
--- Upon resuming at 1402
2958 THE CHAIRPERSON: Good afternoon.
2959 Madame Ventura -- oh, madame... Sorry, go ahead. Please introduce yourself.
2960 THE SECRETARY: My name is Margot Anderson.
2961 We will now proceed with item 8 on the Agenda, which is an application by Bell Media Inc. and 7550413 Canada Inc., partners in a general partnership carrying on business as Bell Media Calgary Radio Partnership, for a broadcasting licence to operate an English-language commercial FM radio programming undertaking in Calgary.
2962 The new station would operate on frequency 95.3 MHz (channel 237C1) with an average effective radiated power (ERP) of 21,000 watts (maximum ERP of 54,000 watts with an effective height of antenna above average terrain of 180.3 metres).
2963 Appearing for the applicant is Chris Gordon. Please introduce your colleagues and then you will 20 minutes to make your presentation. Thank you.
2964 THE CHAIRPERSON: Thank you. Before you do, Margot runs the CRTC in this province and the Territories. Menzies is just a figurehead.
2965 THE CHAIRPERSON: Just so we're clear. A good-looking figurehead, but a figurehead nonetheless.
2966 Go ahead.
2967 MR. GORDON: Thank you.
2968 Good afternoon, Mr. Chair, Members of the Commission, Commission Staff. My name is Chris Gordon and I am the President of Bell Media Radio.
2969 Joining me on this panel:
2970 - to my right, your left, is David Corey, our Vice-President of Programming as well as Program Director for our Toronto radio stations, CHUM-FM and our Hip Hop and R&B station, Flow 93-5;
2971 - to David's right is Karen Kelly, a senior account executive for Flow in Toronto. Karen has been with Flow since shortly after the station's launch back in 2001;
2972 - to Karen's right is Eric Stafford, our General Manager of Kool 101.5 here in Calgary;
2973 - to my left, your right, is Kevin Goldstein, Vice-President of Regulatory Affairs;
2974 - beside Kevin is Jim Fealy, Vice-President of Finance;
2975 - behind me in the back row, from your right to left, is Lenore Gibson, Director of Regulatory Affairs;
2976 - Carlos Cuevas from Kool 101.5 and known to the Calgary community as Goodwill Carlos; Carlos is responsible for Kool's social media communication and outreach;
2977 - and finally, Nicole Wong, Kool's Promotions Co-ordinator.
2978 I would also like to acknowledge the presence of Len Perry, our Regional Vice-President for Alberta and Saskatchewan, as well as many staffers here that have joined us from our station Kool 101.5.
2979 I will now begin our opening statement.
2980 We're here today to tell you about our proposal for Flow 95-3, an innovative radio station in the rhythmic CHR format, that features Hip Hop and R&B music that we want to bring to Calgary. The market research conducted for this application and our multiple years of experience and in-depth community involvement in Calgary demonstrate that this station will truly resonate with young adults between the ages of 18 and 29.
2981 At present, young Calgarians are not adequately served by the current radio stations in the market even though approximately 20 percent of Calgary's population falls into this age group. Tailor-made for Calgary, licensing Flow will respond to the demographic's musical tastes and their desire to be part of a lifestyle promoting a social network of music and local reflection.
2982 As the Commission has acknowledged, there has been significant declines in radio tuning by young adults brought on mainly by new technologies such as Internet music services and personal media devices.
2983 Bell Media Radio has a proven track record of bringing young people back to radio in other cities, such as The Bounce in Halifax, The Beat in Vancouver, 89X in Windsor and Flow in Toronto. And we have made radio relevant for them once again through playing the music that they want to hear and by engaging them using leading-edge social media technology, the same technology that they have embraced to communicate with each other.
2984 We are confident in our ability to do the same here in Calgary.
2985 In addition, licensing Flow will correct the serious competitive imbalance in this market, an imbalance that is negatively impacting our existing station and our ability to serve Calgary listeners.
2986 I would like to now turn to David and Karen to explain our innovative approach to programming on Flow 95-3 and the demographic that Flow will reach.
2987 MR. COREY: Flow's format will be Hip Hop and R&B. This format does not currently exist in Calgary, and indeed, with the exception of Flow in Toronto, it doesn't exist anywhere else in Canada.
2988 Hip Hop is one of the top musical choices for young adults, not just in Canada but all over the world. One need only look at the music charts and sales figures to understand the significant popularity of Hip Hop and R&B artists. In fact, this is further illustrated by Drake's album debuting at number one in local Calgary album sales two months ago. Our proposed station will clearly fill a musical void in this market.
2989 We monitored all Calgary radio stations for the week of January 30th and found that 62 percent of Flow's proposed playlist consists of music not currently played in Calgary by any of the incumbent commercial radio stations. In contrast, AMP and Virgin in this market have nearly identical playlists. So while we would have some minor overlap with both these stations, a Hip Hop fan would have to listen to several songs from other music genres such as Pop, Rock or even Country before potentially hearing a Hip Hop or R&B song.
2990 As well, outside of Drake and Kardinal Offishall, two well-known Canadian Hip Hop artists who have found international success, we found no airplay in Calgary for emerging Canadian Hip Hop and R&B artists like A-Game, Belly, P. Reign, Weeknd, Page, Saukrates, Andreena Mills, Big Lean, Untitled and JD Era.
2991 Notably, R&B artist Melanie Fiona, who enjoyed success three years ago with her breakout hit, Give It To Me Right, is currently getting airplay for her new single, 4AM, on 120 U.S. stations, with nearly 33,000 spins and a Top 10 ranking on the Urban chart south of the border. In Canada, it's only getting played on two radio stations. One is Flow in Toronto.
2992 Canadian Hip Hop and R&B artists need another radio station to call home. We want to give it to them and to Calgary listeners who have clearly indicated their desire to have greater access to this type of music.
2993 MS KELLY: Hip Hop and R&B appeal to both men and women, from teenagers to people in their late twenties. Although there is a portion of the audience that is black, listeners' ethnic backgrounds vary. Common among them is their strong passion for the music and this translates into them wanting a lifestyle just like their favourite artists. They do this by spending money on items involving appearance: clothing, watches, cars and the like. It is all about looking like you're a "baller" -- in Hip Hop lingo, someone with money.
2994 Flow listeners will enjoy the station not only for the music but also for the community feel, which comes from everything on-air and online. From the DJs to social media to community and event involvement, the Hip Hop and R&B lifestyle is about creating a sense of belonging. This group is similar to a clique -- they only associate with people like them and are heavily invested in the lives of their social leaders, in this case, the artists and celebrities.
2995 The Flow listener is quick to detect anyone trying to fake being part of the group and they are quickly called out. And so it is important for the station and our radio personalities to be perceived as being part of the "in" group, or even better, as a leader.
2996 Now, to give you additional insight into Calgary's Flow 95-3, we have prepared a short video.
--- Video Presentation
2997 MR. COREY: Delivering a deep and meaningful radio experience to our target audience means being a leader and a trendsetter for Calgary's young adults. We will achieve this by not only playing the music that they want to hear but also through engaging with our listeners in the way that they communicate with one another -- through social media.
2998 Hip Hop and R&B artists are significant users of social media, keeping their fans plugged into their music and their lives. And Calgary's Flow 95-3 will engage them in the same way.
2999 However our audience chooses to interact with us, today or in the future, will be the manner in which we will communicate with them and this means staying current with trends in technology. Today, a rich and cutting-edge interactive experience for our listeners means three things:
3000 - first, a handset-friendly mobile Web site, both to allow listeners to stream the station online as well as to allow listeners to view a streamlined version of the station's traditional website on their devices;
3001 - second, companion applications to allow listeners to interact online with each other and share or comment on news and community events, post their playlists, exchange ideas and interact with Flow personalities; and
3002 - third, gamification, which will further engage our audience by allowing them to compete against friends and other members of the Flow listening club.
3003 These trends are activation points for a very mobile and wireless audience, such as our target demographic. Twitter, and to some degree Facebook, will also play a large role in connecting with our audience and allowing our audience to connect with us. Through our experience across the country, we've seen that Twitter, and not Facebook, is the social medium of choice for young adults. For example, Flow in Toronto's Twitter followers outpace the station's Facebook followers by 2 to 1.
3004 I would like to turn now to the delivery of news.
3005 Reaching young adult listeners with news and information programming can be a challenge. They do not plan their days around the morning paper or evening newscasts. Given this, and our listeners' propensity to use social media -- they'll text before they pick up the phone -- delivering the news that's important to them and catching their attention means that Flow's presentation of the news will be non-traditional.
3006 Our listeners will receive regular news updates and Breaking Flow Alerts through Twitter and email. In addition, our on-air personalities will be discussing news that affects our listeners as part of the content on their shows and framed in a way so they can connect with the story and see its relevance in their lives.
3007 Clearly, this isn't a traditional way to present the news, but just as different mediums -- television, radio and print -- lend themselves to the different presentation of news, so too does radio format and demographic. For young adults 18 to 29, this is the manner to present news that is relevant and useful, and more importantly, one that will keep them listening to the music rather than switching the dial when a newscast comes on at the top or bottom of the hour.
3008 MR. STAFFORD: Our focus on Calgary's young adults extends to the $3.5 million that we will invest in "over and above" Canadian Content Development initiatives. This includes funds that will benefit local Hip Hop and R&B artists as well as local high school students. These local initiatives reflect our longstanding philosophy that a Bell Media Radio station is a local experience and that our responsibility is to serve the local community.
3009 We have a long and successful history of finding and developing Canadian artists. Calgary's Flow 95-3 will continue this strong tradition in contributing to the discovery of emerging Canadian artists and will be a key part of our emerging artist success story. Through two of our CCD initiatives -- Flow Future Star and Flow Song Search -- we will look for the next big local Hip Hop and R&B star.
3010 Future Star is modeled after our very successful talent show initiatives that we've done in the past. It was through such a talent contest that Bell Media discovered and launched the careers of Shiloh and Kreesha Turner, both of whom now have international recording contracts. And another winner, Quanteisha, took home the Juno Award last year for R&B/Soul Recording of the Year. We have the experience to bring this same success to Calgary's Hip Hop scene.
3011 Through Flow Song Search, one song per month will be selected from a pool of local Hip Hop and R&B artists and will receive extensive airplay and promotion on Flow 95-3 with a minimum of 14 spins per week and identical airplay on Flow in Toronto.
3012 This initiative is modeled after the highly successful Bell Media Emerging Indie Artist Initiative, which was developed in connection with the launch of Kool 101.5 here in Calgary.
3013 Through that initiative, we select an emerging Canadian artist to be profiled each month, and consequently, we have created huge national profiles for several artists, including Calgarian Raghav, Kuba Omes, Elise Estrada and Alissa Reid. She currently has the number one selling song on iTunes in the U.K.
3014 In developing the Common Ownership Policy in 1998, the Commission expressly recognized that ownership consolidation would strengthen the radio industry's overall performance, allow it to compete more effectively and enhance its support of Canadian cultural expression. Bell Media Radio needs two stations to compete effectively in the Calgary market and to better serve Calgary listeners.
3015 In Calgary, the multi-station groups of Astral, Corus, Newcap and Rogers together own 12 of the 15 commercial radio stations. These multi-station groups are able to achieve marketing and sales synergies and economies of scale that we operating a single station here in Calgary cannot. These four groups serving the Calgary market have the opportunity to realize technical, administrative and sales synergies, an opportunity not available to Kool 101.5 as a standalone station.
3016 In addition to these operational synergies, these multi-station groups are able to provide more well-rounded support to the local Calgary community through promotions for community and charitable events. A second station for us here in Calgary would allow us to enhance our support for many community groups, such as the YWCA's Give the Gift of Safety, the Kids Help Phone and the Calgary Humane Society.
3017 Licensing another standalone FM station does nothing to correct the serious competitive imbalance here in Calgary. Rather, the situation would be exacerbated -- the Calgary market would have standalone stations facing all the competitive disadvantages that we do today and that would make our situation significantly worse.
3018 Solving this market dilemma must remain central to the Commission's objectives. Competing as a standalone is not sustainable in the mid- to long-term, particularly since this licensing process will potentially hand out the last of the remaining viable FM frequencies here in Calgary.
3019 MR. GORDON: The Commission said in the 2006 Commercial Radio Policy:
"The key challenge facing the radio industry is to keep radio relevant and local in an environment of rapidly changing technology and consumer behaviour."
3020 We agree. Flow will embrace technology and the dynamic online behaviour of young people with an innovative station serving listeners from 18 to 29.
3021 The interactive component of Flow, combined with playing the music that today's young adults are passionate about, will bring them back to radio. Flow will give young adults in Calgary the music and the social network they demand, one where they can hear the new music they choose and connect with each other through their shared musical tastes and experiences. We will serve our audience in the way that they want to be served.
3022 In addition, licensing Flow will correct the serious competitive imbalance in this market, an imbalance that is negatively impacting our existing station and our ability to serve Calgary listeners.
3023 Of all the applicants proposing to serve the Calgary community, our application to use 95.3 represents the best opportunity to attract young people back to radio. We have the best business plan. We will invest heavily in this community. We are local Calgary broadcasters. Our knowledge of this market gives us the expertise to create a radio station for Calgary listeners that truly reflects the city and its citizens.
3024 For all these reasons, our application should be approved.
3025 Thank you. We will be happy to answer your questions.
3026 THE CHAIRPERSON: Thank you very much.
3027 Commissioner Menzies.
3028 COMMISSIONER MENZIES: Thank you.
3029 It is interesting that we are sort of at the point where we are talking about the best way to have a competitive market is to have fewer ownership groups owning more. Sometimes I have to remind myself what room I'm in. I'm not saying it doesn't make sense in this context, but it's fascinating.
3030 Sixty-two percent of the music you propose to play isn't being played right now. How do you know that's not because nobody wants to listen to it?
3031 MR. GORDON: Well, we know that people want to listen to it and we have the experience in Toronto with this format. We've gone in the ratings from, a year ago, 11th place in adults 18-34 to 6th place in that particular ratings demographic.
3032 So, you know, rhythmic music, Hip Hop and R&B, is becoming the biggest form of music in the world. The artists are huge. Artists like Drake are international superstars. Artists like Melanie Fiona are requiring airplay in this country. We know that people want to listen to these artists.
3033 The stations that we're talking about and we're monitoring, those are Top 40 stations. I'm going to ask David Corey to sort of talk about the differences between what we would be doing --
3034 COMMISSIONER MENZIES: You don't have a study then of any kind? Do you have a study?
3035 MR. GORDON: A research, yes, we do.
3036 COMMISSIONER MENZIES: I've read a lot and I may have missed it.
3037 MR. GORDON: Yes, we do have a research study. You have the report.
3038 COMMISSIONER MENZIES: Thank you.
3039 If this changes, and things change quickly -- and I asked this question previously -- how quickly can your corporate structure adapt to change?
3040 MR. GORDON: We are incredibly nimble. You know, we were just discussing this earlier. When the licensing decision takes place, we would hope to have this radio station on by the end of this year.
3041 COMMISSIONER MENZIES: Okay. And if it doesn't work, how quickly can you change the format to something that does? I mean, do you have experience with that, where you had to -- because, like I mentioned earlier, we don't regulate format, so it's --
3042 MR. GORDON: I mean, there has always been, you know, business reasons and competitive reasons, and, you know, the tastes of the listeners and the tastes of audience have precipitated format changes. In this case, this format is growing, it's on the move, it's on the cutting edge of youth demographics and music. So we don't anticipate changing this format.
3043 COMMISSIONER MENZIES: Okay.
3044 In paragraph 12 of your written submission, you state that your proposal will have negligible impact on existing stations.
3045 Help me understand what the advertising base is that you've discovered that others haven't found that you'll be able to tap into if you're --
3046 MR. GORDON: Yeah, I'm going to ask Mr. --
3047 COMMISSIONER MENZIES: I'm not opposed to the idea that markets grow in terms of that, but I need to understand what it is the market that you've -- the revenue stream that you've found.
3048 MR. GORDON: Well, absolutely. I mean, you -- if you look at our application, you know, we feel that our revenue projections are very reasonable and very conservative and very much driven around the fact that this is a niche format.
3049 And I'm going to ask Mr. Fealy to talk about, you know, specifically where the revenue is coming from.
3050 MR. FEALY: In year two, our financial projections call for approximately 1.3 million dollars in the station. Of that 1.3 million dollars, 25 percent, or $335,000, we believe will migrate from two incumbent stations. In this particular case, it would be AMP and Virgin, who place some degree of overlap.
3051 We feel that they -- while they may play some musical overlap, we feel that the advertisers would be better attracted and better migrate to our station, which will be a tighter fit with the demographic.
3052 Beyond the 25 percent that would come from existing radio stations, we believe that there are new advertisers that would come into this space.
3053 As we said earlier, this is a new format for Calgary. We believe that there's a retail segment within the Calgary marketplace that would give rise to advertisers that may not currently be radio advertisers. This is their way to reach that audience.
3054 As well, Calgary is a growing market. It's estimated at $90 million. Our projections call for it to continue growing at a normalized rate of three percent.
3055 We've heard from other applicants that in the past 12 months it grew at a rate of five percent, so we believe that the growth trajectory in Calgary is sufficient.
3056 And then finally, emphasizing local, the strength of radio is local and we believe that in the local marketplace we can put forward a viable proposition that will attract other media players, advertisers that currently advertise in other media to the radio space.
3057 COMMISSIONER MENZIES: Okay. So there's no like one particular genre of advertising like cell phones or anything like that that you're going to --
3058 MR. FEALY: We would take advantage of all of the different categories, and our colleagues here would give a little bit better insight, but it's largely local play. Eighty percent of our revenue is driven locally.
3059 MR. GORDON: Yeah. I mean, I'm going to ask Ms. Kelly to talk a little bit about the advertising, you know, opportunity with this format.
3060 It is a little bit different. The demographic is younger. But the demographic is also affluent, and the things that they spend their money on, appearance, vehicles, you know, skins for ipods are a status symbol these days.
3061 Those things are places that are not currently being, you know, advertised on the radio.
3062 Ms. Kelly?
3063 MS. KELLY: Yes. I've been selling Flow 93.5 in Toronto for over 10 years, and what we've found is that yes, there's a lot of local advertising. There's a lot of advertisers, a lot of retailers that, previous to Flow didn't have an avenue to advertise their product because mostly if they focus on hip-hop clothing, some jewellery stores could advertise certain things that they didn't advertise before.
3064 We've got a lot of mobile companies on air. Also found that a lot of major corporations who, you know, allocate a lot of dollars to the mainstream stations are now specifically designating a portion of their advertising dollars for Flow because they realize the strength of the hip-hop audience and they do want to reach them.
3065 Another avenue could be what's happened in Toronto, and I see it happening here, is that when you have a hip-hop station, it can develop a different ecosystem.
3066 There will be young people opening retail stores that specifically sell hip-hop clothing and shoes. There will be different hair salons opening, beauty supply shops, different streams of retailers that came about in the Toronto area that specifically use Flow to advertise.
3067 COMMISSIONER MENZIES: Okay, thank you.
3068 In your written submission, again going back to sort of between paragraphs 30 and 34 -- 37, you discuss our recent experiences in Edmonton a little bit. And I must say, as I read through it -- and I wanted to give you the opportunity to dispossess me of this notion -- I got the impression that in terms of Calgary you might be playing double or nothing here a little bit if -- because in Edmonton you couldn't find the frequency, so you made, no doubt, a good business decision not to launch, and then you left the market completely.
3069 And I don't know if you intended to imply that or infer that or whatever the right characterization is in your application, but I -- that thought was planted in my head reading through those paragraphs.
3070 So what should I do with that thought?
3071 MR. GORDON: I think you can probably retire that thought.
3072 You know, as far as the Edmonton situation is concerned, that was a very difficult experience for us. We were granted a licence without a frequency, and when we went to the market to try and get a frequency, we approached several other incumbent broadcasters. We almost had a deal with the university radio station, but their price quickly went from $500,000 to five million.
3073 So when you had a $10 million CCD commitment, three or four million dollars in start-up costs, $5 million to get a frequency, you're in a very difficult position. And we made that difficult decision in that we would exit that marketplace and focus our resources in other cities.
3074 And this is a perfect example of that in that a consolidated radio market is allowing us to propose a radio station like this. You could not operate Flow in Calgary as a stand-alone business. The economic model wouldn't work.
3075 COMMISSIONER MENZIES: So you're committed to -- I understand that.
3076 But you're committed to Cool 101.5 no matter the outcome of this?
3077 MR. GORDON: Absolutely.
3078 COMMISSIONER MENZIES: Okay, thank you.
3079 What -- how do we know this -- what's your -- you've just indicated that, you know, a station such as the one you're proposing couldn't exist as a single stick in that sense.
3080 How do we know -- because we don't want to get into regulating format or anything like that, how do we know that you'll stick with this sort of addition to the market with this format in the years ahead and won't simply switch to something more mainstream, you know, three, four or five years? I mean, seven years is a long time for a licence.
3081 Like I was saying earlier, things change. How do we know that this is part of an overall business plan to stick with this?
3082 MR. GORDON: I think there's three points to that.
3083 You know, the first one is that, you know, from a business point of view, a format point of view, this is what's new and what's happening and what's current.
3084 You know, when we look at the research, it's very crowded when you look at a 25 to 54 year old demographic. We compete in that demographic with our current station.
3085 There's a lot of good radio operators in that demographic that are offering services, you know, from rock to country to top 40.
3086 When we look at this format and we look at the success that we've had in Toronto, when we purchased Flow in Toronto it was an urban and a rhythmic station.
3087 We purchased it over a year ago and we looked at the research and we looked at the radio station and we said, you know, yeah, we could easily change the station to something else. There's a number of different things that we could look at.
3088 But the fact that the music was exploding, the artist connection with the audience was rapidly growing, the business model was starting to take hold. You know, as Karen was mentioning, these new businesses.
3089 We've had media agencies in Toronto buy our station. T-D Bank and McDonald's, they approached our creative department to do specialized creative for this audience. They veered away from their national campaign and asked us to create specific content and creative so that they could reach the audience.
3090 So we are very committed to this format and we'll be there for a long time.
3091 COMMISSIONER MENZIES: In your -- again referring to your written presentation, you mentioned that Calgary radio revenues reached a high of 100 million in 2008 and just a few minutes ago you mentioned 90 million in terms of that, so they're not what they were four years ago.
3092 And I'm trying to get my head around when you expect them to get back to 2008 levels, or if they're there or --
3093 MR. GORDON: Yeah, they're not quite there.
3094 COMMISSIONER MENZIES: Where we're going with radio revenues in Calgary in terms of that.
3095 MR. GORDON: Yeah. Radio revenues are growing rapidly. They're growing faster than any other market in the country. I believe it was referenced earlier --
3096 COMMISSIONER MENZIES: Well, they also -- I'm trying to get -- they're five percent below where they were four years ago --
3097 MR. GORDON: Right.
3098 COMMISSIONER MENZIES: -- or three and a half years ago according to your own stuff.
3099 So if they're growing rapidly, they're recovering rapidly.
3100 MR. GORDON: They're recovering rapidly from that time.
3101 COMMISSIONER MENZIES: So when are they going -- when do you see -- where do you see the growth going in, say, the next course of the licence term because your projections for your own revenue and profitability are, as you said, very prudent, is one way of putting it. And the other way of putting it is seven years is a long time to start making money.
3102 MR. FEALY: Seven years is a long time to make money, but we will be back at the $100 million threshold in our modeling by 2015. The market -- we have normalized a market rate of return of three percent in terms of revenue growth.
3103 When we look out as of today, given conference board projections, we think that may be a tad on the conservative side.
3104 But to answer your question very narrowly, we are back to the 2008 levels by 2015.
3105 COMMISSIONER MENZIES: Thank you.
3106 How would -- with -- we've sort of got some of the synergies that a hip-hop and R&B station would enjoy, but how would the synergies improve Cool 101.5's performance?
3107 Would you forecast increased efficiencies and profitability there with the addition of this station to yourselves as well?
3108 MR. GORDON: I think in the near term there would be a little of that, but over the longer -- you know, the longer term -- and I'll ask Mr. Stafford to weigh in here on this.
3109 There's two pieces to the synergy puzzle. You know, the first piece is being able to extend your, you know, sort of finance and human resources and engineering expertise, you know, across more than one radio station. That is a definite benefit.
3110 You know, the other offer is to clients, and you've heard earlier today, when you're dealing with advertisers and you have, you know, one offering, when your competitors can come in and talk to you about three or four different products that they have as part of their sales arsenal, you're really at a disadvantage when it comes to those situations. So you know, there are two pieces to the synergistic, you know, part of the business.
3111 And over time, you do realize a more efficient operation.
3112 I don't know, Eric, if you have anything to add to that.
3113 MR. STAFFORD: I think, Chris, you've pretty much covered it, but certainly the synergies would include back end administration, general manager, general sales manager, business manager, technical director.
3114 We, too, would have some purchasing power in terms of promotional marketing items with our suppliers.
3115 I think the key, though, is to have two offers, two distinct inventories to sell. It's very difficult, just one, and having only, you know, four or five account executives who compete with teams of, you know, five to 15, 20 reps on the street.
3116 Those are the --
3117 COMMISSIONER MENZIES: So if you would have a single sales force selling this when I -- in my previous life, I used to know sales guys who would refer to this as the stop me when you hear something like sales approach.
3118 MR. STAFFORD: Selling both stations.
3119 COMMISSIONER MENZIES: Yes.
3120 MR. STAFFORD: Yes.
3121 COMMISSIONER MENZIES: Thank you.
3122 I was surprised to see your CCD contribution. I know you're proud of it and I don't wish to diminish it because three and a half million dollars is a lot, and $500,000 a year, particularly in the first year when you're only predicting a million dollars' worth of revenue is a lot.
3123 But it's actually lower than all but one, who I won't mention to embarrass -- to save his blushes -- of the successful applicants in 2006. And it's considerably lower than some of the others applying here. And I need to understand that strategy, so I want to give you the opportunity to not let us hold it against you.
3124 MR. GORDON: Great question. And when we, you know, decided that we would, you know, participate in this process, you basically go back to the business model of the radio station.
3125 The first thing you do is you do the market research and you find out what the audience wants to hear and what the holes are, and then, from there, you build out a financial case and business plan.
3126 You know, when we looked at this format and we looked at the -- you know, the financial projections over the course, you know, the first licence term, that really informed us as to, you know, how fast, you know, the station could get to profitability and also how fast, you know, that -- and how much we could commit to, you know, CCD commitments.
3127 And you know, in the case of this radio station, the biggest CCD commitment would actually be the licensing of this station.
3128 COMMISSIONER MENZIES: Sorry. Run that last bit past me again.
3129 MR. GORDON: The licensing of this station, the music that we'd be playing on this station --
3130 COMMISSIONER MENZIES: Right.
3131 MR. GORDON: -- the artists that would be getting exposure in this country and in this -- you know, in Calgary would be far different than any other station in the market.
3132 COMMISSIONER MENZIES: Right, I understand that.
3133 In your -- I just want to move on to the spoken word. You talked a lot about how you would use social media to -- as your news platform, and so I'm kind of unclear how your -- and we don't regulate that, which I'm sure makes you happy.
3134 But we do regulate the over-the-air part, so I need to understand how you're using over-the-air in terms of your spoken word and news.
3136 MR. GORDON: Want to go ahead?
3137 COMMISSIONER MENZIES: Or are you using it?
3138 MR. COREY: Well, we're using it, but done in a different kind of way.
3139 We feel that young listeners are not looking to get news the way that their parents used to get news or still do get news, so we've -- we would move away from the, you know, typical top hour news updates, bottom hour news updates. But our announcers, especially our morning show, will be talking about things that relate to the audience in Calgary, but as part of their content, rather than, you know, dedicated news updates at the top and the bottom of the hour.
3140 So there will be talk on air about news that appeals to the audience, traffic and weather, of course, but it'll just be done in a very different kind of way.
3141 You know, our goal with this radio station, musically and with the spoken word, is to -- we want to bring the younger people back to radio so we don't want to do things that drove them away from radio.
3142 So doing news the right kind of way, we feel, is our best opportunity to get them back.
3143 COMMISSIONER MENZIES: Yeah. No, I understand. I mean, a market this big with this many stations, it seems to me certainly -- a certainly sensible approach to not necessarily compete and do what everybody else is doing.
3144 But I'm just trying to flesh out whether -- I don't really -- pretend I don't care whether it's news or not. I need to know what sort of local information and reflection is flowing through your station and to the consumer.
3145 How do I know that I'm listening to a Calgary radio station as opposed to just being online to Toronto Flow?
3146 MR. GORDON: Yeah. I mean, our on-air staff would provide news and weather and traffic and --
3147 COMMISSIONER MENZIES: Doesn't need to be news, doesn't need to be weather, doesn't need to be sports.
3148 MR. GORDON: When I say news, and I'm going to -- we're going to actually flesh this out for you, you know.
3149 News to this demographic is not necessarily just, you know, some serious -- something that happened, you know, on the Deerfoot, you know, yesterday afternoon. News, to them, is whether or not there's a Drake concert happening. News, to them, is whether or not, you know, the C train has left the tracks in northeast Calgary.
3150 And they're not waiting, you know, for that to happen at 8 o'clock in the morning or at 4 o'clock in the afternoon. They want to get that information immediately.
3151 So we will give that to them on the air and we will also give that to them through social media. We will Tweet that information, we'll put it on Facebook, we'll talk to our database about it. They will get it instantaneously, as it happens.
3152 COMMISSIONER MENZIES: So what will be the information-gathering process?
3153 MR. GORDON: The information-gathering process would be the people that are on the air.
3154 COMMISSIONER MENZIES: So the announcer, the presenter, the DJ, whatever will be just gathering the information that gets sent in to him or something, the data that he gets, and passing it along or make --
3155 MR. GORDON: Yeah. And I'm going to throw this to Ms. Wong. She's right in the middle of the demographic and she can speak to exactly how people in this radio station, how they look for their information and how they get it.
3156 COMMISSIONER MENZIES: Yeah. No, I get that. I'm just trying to get a -- I'm trying to figure out that if I'm the guy working for you, what are you telling me to do? Like what's my job description?
3157 And please answer at the back.
3158 MR. CUEVAS: Well, for social media department, Commissioner, what's going to happen is that we have -- in the social media department, we have all the tools and we have all the contacts to actually get all this information to us and we actually will utilize those contacts to get that information out to our listeners itself.
3159 COMMISSIONER MENZIES: Okay. So what's my job description if I work for you and I get on the air? That's what I'm trying to get to.
3160 How am I gathering the information or am I just aggregating it?
3161 I mean, I'm okay with the answer. I just -- whatever it is. Like am I just aggregating information that gets sent to me and disseminating it back out?
3162 And I understand how social media works and it's -- you're Tweeting it and it's getting posted on Facebook and it's getting texted all around. I -- it all makes sense to me, but I just don't understand the employee's job description.
3163 MR. COREY: Well, I can answer -- I can speak to that, for sure.
3164 All of our on-air personalities at all of our radio stations, especially Flow in Toronto and hopefully Flow here in Calgary, their job is to yes, present the music in a fun and entertaining kind of way, but they're also -- their job is also to present anything that's going on in Calgary or across the country that appeals to the audience.
3165 So it's basically show prep. Before they go on the air, they do, you know, an hour or so of show prep and they're talking about things that relate to the audience.
3166 That has to do with the music, that has to do with the lifestyle, the hip-hop community, what the artists are doing, what they're Tweeting along with, you know, weather updates, traffic updates and entertainment news is very big with this demographic as well as, you know, typical news stories that appeal to the younger audience.
3167 COMMISSIONER MENZIES: Right. So they're surfing the web and --
3168 MR. COREY: Oh, without a doubt.
3169 COMMISSIONER MENZIES: And grabbing --
3170 MR. GORDON: Yeah, I mean --
3171 COMMISSIONER MENZIES: -- the stuff that's getting sent in to them and going on Twitter and blah, blah, blah, blah, blah and then just -- okay.
3172 MR. COREY: Correct.
3173 MR. GORDON: The job description has changed so dramatically in the last three or four years of what it requires to be an on-air personality and to connect with your audience.
3174 You know, if you're not doing that constantly, 24/7 -- social media doesn't sleep, so if you're not doing that on a full-time basis, you're not doing what your friends are doing and you're not doing what the audience is doing and you're not doing what the expectation is, so --
3175 COMMISSIONER MENZIES: Okay. So just specifically and to be helpful to staff on this, how does that meet our requirements for local programming in 25 words or less?
3176 MR. GORDON: Well, I think it completely meets the need for local reflection, local programming.
3177 COMMISSIONER MENZIES: So all the -- I mean, because if -- put it this way. If we're talking about, I don't know, Demi Moore all morning, right, and rehab or something like that, how is that local?
3178 And it's a local voice that's chatting about it, but how is that local programming?
3179 MR. GORDON: I wouldn't even -- you know, that's locally generated programming, but it's not local programming in that --
3180 COMMISSIONER MENZIES: Yeah.
3181 MR. GORDON: -- what's happening here in Calgary.
3182 You know, our on-air teams and our on-air announcers would be completely focused on hyper local events and activities. You know, entertainment, you know, things in Hollywood, those kinds of things, they're part of what the audience is looking for, but they're also looking for, you know, what festivals are happening in Calgary and what events are taking place.
3183 And we'll be giving that to them both on the air and through social media.
3184 COMMISSIONER MENZIES: Okay. How do we measure that?
3185 MR. GOLDSTEIN: In terms of like a metric?
3186 COMMISSIONER MENZIES: You get this and you come back seven years and we say "How you been doing?" and you said, "Well, we did it".
3187 I'm not completely comfortable with having to ask that, but I do. Like how do we know whether you were doing local programming or not?
3188 MR. GOLDSTEIN: I think radio in and of itself is an incredibly local medium. I think if we -- you know, I think the audience is going to abandon us if we move, you know, away from doing that generally.
3189 In terms of the way in which the Commission measures it from a purely local perspective, generally it's measured in terms of where the content's being produced in terms of now.
3190 You know, I'm not certain of any situation where we've analyzed it in terms of the exact detail of what is in that content, although I can't really think of a radio station that would be more local than what this is and what we are proposing.
3191 COMMISSIONER MENZIES: Okay. I understand that answer.
3192 There is a math issue in your supplementary brief and it was Appendix 8A. You have your contribution to Mega Music Canada as $35,000 annually for a total of $385,000 over the term, but 35 times 7 is 245 and I didn't understand where that was going. Or 385 divided by 7 is 55K a year.
3193 Pick one.
3194 MR. GOLDSTEIN: This is the problem when you let regulatory people do math.
3195 COMMISSIONER MENZIES: Yes.
3196 MR. GOLDSTEIN: Perhaps Ms Gibson would like to walk you through it.
3197 COMMISSIONER MENZIES: It would be engineers --
3198 MR. GOLDSTEIN: We actually did notice that in our preparations, quite embarrassingly.
3199 MS GIBSON: Yes. I'm confirming that it is $35,000 a year to Mega Music for a total of $245,000 over the course of the licence.
3200 COMMISSIONER MENZIES: Okay. Because that solves the other issue, because the total contribution --
3201 MS GIBSON: Is $3.5 million.
3202 COMMISSIONER MENZIES: -- is 3.5, not 3.64 --
3203 MS GIBSON: Correct.
3204 COMMISSIONER MENZIES: -- which the other one added up to.
3205 MS GIBSON: Correct.
3206 COMMISSIONER MENZIES: Okay. It's $35,000 a year then. Thank you.
3207 The If You Could Read My Mind initiative, you have said $20,000 annually. How would that money be used?
3208 MS GIBSON: The Canadian Songwriters Hall of Fame has a program If You Could Read My Mind where they bring in a Canadian artist along with an emerging Canadian artist. The last one they did was Jim Cuddy with Wayne Petti about a year or so ago and it's an established artist bringing along an emerging Canadian artist and exposing them. That $20,000 per year would go to that program.
3209 COMMISSIONER MENZIES: Okay. Thank you.
3210 Can you just confirm that in writing to us?
3211 MS GIBSON: Absolutely.
3212 COMMISSIONER MENZIES: Thanks.
3213 Do you think this market could sustain the licensing of more than one station?
3214 MR. GORDON: We believe that based on the financial projections the market can sustain the licensing of two stations.
3215 COMMISSIONER MENZIES: Okay.
3216 How would your station make Calgary a better place?
3217 MR. GOLDSTEIN: First and foremost the station would be providing music that's not currently being heard in the marketplace. We would be repatriating younger listeners back to the radio by playing this music, by communicating with them through social media. We would be an intensely local radio station that would be looking for new music and new artists and new people that will emerge on the scene that will be developed right here in Calgary.
3218 COMMISSIONER MENZIES: Okay.
3219 Thanks very much. I'm sure my colleagues have some questions.
3220 THE CHAIRPERSON: Just before we get to other colleagues questions, can you really make that comparison in terms of the hip-hop market in Toronto as compared to the market in Calgary?
3221 Is there a market for hip-hop in Calgary? I mean I could see hip-hop being really, really big in Toronto, but can you make the same claims for Calgary?
3222 MR. GORDON: I think, you know, when you look at the demographics, you look at the 18 to 24, it's the largest demographic sell in the Calgary marketplace if you look around the city, if you hop on the C-Train. Calgary is an incredible diverse city now. I moved here in 1988. Diversity in 1988 was k.d. lang in a wedding dress and cowboy boots.
3223 You know, when you look around --
3224 THE CHAIRPERSON: That was out there.
3225 MR. GORDON: What's that?
3226 THE CHAIRPERSON: That was out there.
3227 MR. GORDON: When you look around the city and you see the influx of immigration, the influx of new people moving to the city, we absolutely believe that the market can support a station like this.
3228 The music is becoming bigger than ever. Rhythmic CHR, hip-hop and R&B music is the first choice of young adults of 18 to 29 year olds and there are lots of them in this city that would love this radio station.
3229 And we know that this is a situation where we know we are a niche market player so we have modelled our financial projections accordingly.
3230 THE CHAIRPERSON: You are not looking to be profitable until year seven as it is. I mean this is your projections. You can call it conservative, but how long are you willing to stick out this particular model?
3231 MR. GORDON: As long as it takes to win.
3232 MR. COREY: If I might add, hip-hop music is going to continue to grow. It is extremely big now, it was bit 10 years ago, and five or 10 years from now we feel it's going to be even bigger.
3233 It is amazing that one of the biggest artists in the world right now is a hip-hop artist from Toronto named Drake and Drake credits Flow in Toronto for building his career. As a matter of fact, he was on our station in Toronto a couple of months ago and said that without Flow in Toronto he would never be where he is today and our hope is that we can find a big artist like that right here in Calgary.
3234 THE CHAIRPERSON: Your Strategic Radio Solutions indicates that 69 percent of respondents between the ages of 18 to 24 would be interested in a rhythmic CHR.
3235 Would you consider yourself to fall strictly speaking -- isn't hip-hop a part of rhythmic CHR?
3236 MR. COREY: It is a part of rhythmic CHR, but there are also many other rhythmic sounding formats that also fall under rhythmic CHR.
3237 THE CHAIRPERSON: Exactly. So why don't I ask the question as it relates to hip-hop specifically and precisely. I think your net is a little big here with respect to what you are offering today in your study.
3238 Tell me I'm wrong.
3239 MR. GORDON: No, we firmly believe that the net is exactly as presented. I mean this is the kind of research we do in every market for every single one of our radio --
3240 THE CHAIRPERSON: Yes, but hip-hop is but a portion of rhythmic CHR. Why not conduct a study on the portion that you plan on playing on your station?
3241 MR. COREY: We did in this study look at hip-hop and R&B and there is some overlap with Amp and Virgin here in Calgary, but they play a little bit of hip-hop and a very little bit of R&B and this station would play all of it.
3242 THE CHAIRPERSON: That's a whole different question. There is overlap. I understand the other stations would be playing a fair bit of hip-hop, because hip-hop is a big part of what to 40 is today -- we all agree on that -- so why not do a study and concentrate on hip-hop if hip-hop is going to be the be all and end all of your station?
3243 MR. COREY: Yes, okay. I understand what you are saying now, Mr. Chair.
3244 The format that we did test was all hip-hop, but we call it rhythmic CHR because that's just the only format name that kind of fits. There isn't really a format called hip-hop. So our version of rhythmic CHR is completely hip-hop that we tested here.
3245 THE CHAIRPERSON: I still think you are throwing your net a little too large and you could strictly do a hip-hop survey.
3246 MR. GORDON: Well, if you look carefully at the survey --
3247 THE CHAIRPERSON: We can agree to disagree, but I really -- I wish you would come out and say, "You know what, yes, we tried."
3248 MR. GORDON: Well, no. If you look at the research study the music that would be played, we played songs for people to hear and they responded to them. Those songs were all hip-hop songs.
3249 THE CHAIRPERSON: If you were to put on a number, what percentage of CHR rhythmic does hip-hop constitute?
3250 MR. COREY: well, it's different on every station. If I look at the CHR stations here in Calgary I would say that hip-hop makes up about 10 percent of what they are playing. This station would be about 70 percent hip-hop and then the rest would be R&B and reggae.
3251 THE CHAIRPERSON: So you have a market that's 10 percent of 69 percent, if I follow your logic, on your survey?
3252 MR. COREY: I'm not sure I understand. I'm not sure I'm following.
3253 MR. GOLDSTEIN: Mr. Chair, maybe if I could offer something.
3254 THE CHAIRPERSON: Hip-hop is a percentage of CHR rhythmic.
3255 MR. COREY: Right. Mr. Chair --
3256 THE CHAIRPERSON: Is what? Give me a number. You are the hip-hop experts, you are the radio experts, give me a number.
3257 MR. COREY: Of a rhythmic CHR, I would probably say about 50 to 60 percent.
3258 THE CHAIRPERSON: Okay.
3259 MR. GOLDSTEIN: Mr. Chair, just if I could offer something, and I'm far from the research expert on this panel.
3260 My understanding in terms of the methodology we use in our research studies, including this one, is that we play a musical montage and people tell us whether or not they like it. We don't say, "We are going to play you a musical montage and this is what it's going to be."
3261 So we played them a musical montage that consisted of hip-hop music. We have classified it in the study as rhythmic CHR because that's where it falls into the spectrum of formats, but the actual sampling that we provided was hip-hop. So we are the ones who have provided that label.
3262 THE CHAIRPERSON: So the document here should read that 69 percent of people between 18 and 24 would like a hip-hop station and not a CHR rhythmic station.
3263 Is that correct?
3264 MR. GORDON: That would be cored, yes.
3265 MR. COREY: That would be correct, yes. There just isn't a format name that's just called hip-hop so we identified it as rhythmic CHR, but yes, you are right.
3266 THE CHAIRPERSON: Can you provide us with that indication in your study?
3267 MR. COREY: Absolutely.
3268 MR. GORDON: Yes.
3269 THE CHAIRPERSON: That wording?
3270 MR. COREY: Sure.
3271 THE CHAIRPERSON: Yes. Great.
3272 Is there any money to be made in that 18-24 demo?
3273 MR. GORDON: Yes, there is money to be made and there is more money to be made at it and I think we have adequately addressed it in the financial plan. You know, it's a growing market, it's a market that has been under served by radio in the past for a lot of different reasons and, you know, we feel in the situations where we have provided this kind of radio station in other markets we have definitely had advertising revenue follow suit.
3274 THE CHAIRPERSON: Why would they leave their iPod to listen to 95.3?
3275 MR. GORDON: Why would they leave their iPod to listen?
3276 THE CHAIRPERSON: Hip-hop or whatever you want to call it? Yes, why leave the iPod?
3277 MR. GORDON: Because we are going to give them an experience that they are not currently getting from other radio stations. You know, from --
3278 THE CHAIRPERSON: The iPod. Why would they abandon the iPod for your radio station? Forget the other radio stations.
3279 MR. GORDON: Right. Because we are going to give them an interactive experience, we are going to give them the music that is not currently being played on other radio stations.
3280 Any radio station -- anybody can program their iPod, you know, to exactly the way that they want.
3281 THE CHAIRPERSON: But if there was a market for more hip-hop wouldn't the other top 40 stations play more hip-hop? And what happens then? What if they adjust the -- ils ajustent leur tir. What if they adjust their fire? What happens to 95.3 then when it launches three years down the road?
3282 MR. GORDON: Well, they could adjust their radio station.
3283 THE CHAIRPERSON: What happens to 95.3 when they do?
3284 MR. GORDON: Nothing.
3285 MR. COREY: We continue with what we are doing.
3286 You know, yes, the top 40 stations could add more hip-hop, but it would change the sound of their radio station significantly if they decided to all of a sudden play all hip-hop and R&B.
3287 We are going to come in and do that. If they adjust we are going to continue with our plan.
3288 THE CHAIRPERSON: But the bigger a chunk of the mainstream pop culture that hip-hop occupies -- and according to your study and your point of view that percentage will be growing -- the greater the chances are that these other competitors are going to occupy that market way before you can get into it.
3289 MR. GORDON: Well, they are a mass appeal radio stations at this point, they will play everything from Justin Bieber to Lady Gaga to Lady Antebellum. Those are mass radio stations.
3290 What we are talking about now is a growing niche. If they choose to abandon their mass appeal format and move into more of a niche format, they are going to be hurting themselves, they are not going to be hurting us.
3291 THE CHAIRPERSON: I have to beg to differ. If that niche is growing you are going to want to occupy that niche. You are going to go where the music is going and where contemporary pop culture is going.
3292 MR. COREY: I think the bottom line here would be if somebody chose to do exactly what we would be doing, we still feel that we can do it better.
3293 THE CHAIRPERSON: Okay.
3294 MR. COREY: We have the experience in Toronto and we feel that we could program a radio station better than anybody else in this format.
3295 THE CHAIRPERSON: That's fine.
3296 Anything else for you? No?
3297 Wow, that's it. Thank you so much.
3298 MS LÉTOURNEAU: Mr. Chair --
3299 THE CHAIRPERSON: Yes, Madam Létourneau?
3300 MS LÉTOURNEAU: -- I have one undertaking, sorry to interrupt you. Only one undertaking, please.
3301 The applicant will provide written detail on how it intends to expand the $20,000 allocated for the If You Could Read My Mind Initiative by Phase IV.
3302 Is it possible?
3303 MR. COREY: Yes, absolutely.
3304 MS LÉTOURNEAU: Thank you.
3305 Now we are done.
3306 THE CHAIRPERSON: And the data showing that 69 percent of listeners 18 to 24 in Calgary would want to hear hip-hop.
3307 I want to see hip-hop, I don't want to see CHR rhythmic.
3308 MR. COREY: Okay.
3309 THE CHAIRPERSON: As is indicated in your document, in your submission.
3310 MR. COREY: Understood.
3311 THE CHAIRPERSON: I'm not making it up.
3312 Thanks so much, guys. Enjoy the rest of the day.
3313 We will take 10.
--- Upon recessing at 1502
--- Upon resuming at 1520
3314 THE CHAIRPERSON: Good later afternoon. It was good afternoon earlier, it's good later afternoon.
3315 Je vais céder la parole à madame Ventura. She has an announcement to make.
3316 THE SECRETARY: Thank you, Mr. Chairman.
3317 I would like to go over the Agenda for the remainder of the week. We will finish today with Clear Sky Radio Inc; tomorrow morning we will start with the presentation of 7954689 Canada Inc.; followed by Rawlco; followed by Corus and Phase II.
3318 On Thursday we will do the intervenors in the order set out in the Agenda followed by Phase IV and we will complete the hearing on Thursday. Thank you.
3319 I will now proceed with item 9 on the Agenda, which is an application by Clear Sky Radio Inc. For a broadcasting license to operate an English-language commercial FM radio programming undertaking in Calgary.
3320 The new station would operate on frequency 95.32 MHz, Channel 237 C1, with an average effective radiated power of 21,000 watts, maximum ERP of 54,000 watts, with an effective height of antenna above average terrain of 180.3 metres.
3321 Appearing for the application is Mr. Paul Larsen. Please introduce your colleagues, after which you will have 20 minutes.
3322 Thank you.
3323 MR. LARSEN: Thank you.
3324 Mr. Chairman, Commissioner and CRTC staff, good afternoon. We are excited to be before you today to present our application for Calgary.
3325 Just before beginning our presentation I would like to take a minute to introduce our panel.
3326 My name is Paul Larsen, 2012 will be my 26th year in radio and for the past six I have been the President and co-owner of Clear Sky Radio.
3327 The two individuals seated to my left are my business partners in Clear Sky, Mary Mills and Hugh McKinnon are the sister and brother principles of Norscot Investments, a diversified family holding company. When I formed Clear Sky in 2005, I wanted the company to have a strong financial nucleus and these were the two individuals I had chosen to be my partners. My relationship with their family goes back to my very first day in radio as I started at CKNL in Forth St. John, B.C., which was the first station their father Neil purchased in 1972. So 2012 marks the 40th anniversary of their family's involvement in Canadian radio.
3328 I worked for them as an employee a number of times over the years, first as an announcer, later as a program director, and again from 2002 to 2005 as President of Island Radio, so it was really no surprise we would eventually become business partners.
3329 Our supplementary brief does detail our individual experiences so I won't take time to reiterate our full backgrounds, but I would like to express our partnership is strong, engaged in one of trust and mutual respect that has been built over 25 years.
3330 The five individuals to my right are the senior management team of Clear Sky Radio responsible for day-to-day operations of CJOC Lethbridge and CJCY Medicine Hat.
3331 To my immediate right is Casey Wilson. Casey is General Manager of both CJOC and CJCY. He was the very first employee ever hired at Clear Sky when we won our Lethbridge licence. Casey joined us originally as Sales Manager, was promoted to General Manager Lethbridge a year later and added responsibility for CJCY two years ago. He was previously a Senior Account Manager at Newcap Radio Red Deer and, before radio, owned his own restaurant franchise.
3332 Next to Casey is Lorene Halseth. Lorene is our Director of Administration, responsible for our business functions including accounting, traffic and human resources. Lorene was the second person we ever hired. She has 20 years experience in radio administration at Corus Radio Calgary where she started in accounting and when she left was Executive Assistant to the President and General Manager.
3333 Next to Lorene is Brent Young. Brent is the only member of our panel who is not an original hire. Brent joined us a year ago as Director of Programming and oversees programming and promotions for both our stations. Brent came to us from Newcap Radio Red Deer, where he spent 20 years and programmed two of Alberta's most successful radio stations, CKGY and Z99.
3334 Next to Brent, Michelle Steele. Michelle first joined us as a sales rep from Global TV. Within a year she was billing mid to high six figures and it became apparent to us she might be able to teach our other reps how to sell better, so we promoted her to Sales Manager of CJOC last year. Michelle oversees four full-time radio sales reps and one full-time internet specialist in Lethbridge.
3335 Finally, next to Michelle is Pat Siedlecki. Pat is News Director at CJOC as well as play-by-play voice of the Western Hockey League Lethbridge Hurricanes, who we are the official broadcaster of. Pat oversees a team of four dedicated news journalists at CJOC, which is a two time RTNDA award winning newsroom. He joined us from Island Radio where we worked previously together.
3336 Members of the Commission, this is our team and Brent Young will now begin our official presentation.
3337 MR. YOUNG: Thanks, Paul.
3338 Good afternoon. When we examined the format opportunity in Calgary the choice became immediately clear. We found rock is well served with active rock CJAY-92 serving the middle, modern rock X92.9 on the young end, and classic rock Q107 on the older end.
3339 Adult contemporary is equally well served with mainstream AC, CHFM serving the middle, flanked by hot AC KOOL 101.5 on the younger end, and variety AC up 97.7 on the older end
3340 CHR Top 40 has a heated battle with Virgin Radio and Amp Radio competing for the youth demos. Oldies is well served with XL 103's classic hits and Jack FM's adult hits in addition to, as well, classic rock Q107.
3341 Newcap won a Triple A licence in 2006, but that format failed in Calgary. Niche formats like smooth jazz have also been tried and failed here.
3342 The only mainstream format that is under served with only one FM station is country. For 30 years Country 105 has had a format monopoly on FM. Here we are in Calgary, the biggest country music market in Canada, home of the Calgary Stampede, a city with a cowboy hat logo and a city known as The Heart of the New West, if there is one major market in Canada that can sustain and support a second country FM station, Calgary is it.
3343 As we conducted deeper research, the opportunity and demand for another country station became even clearer. Music analysis revealed that CKRY-FM, Country 105, is heavily focused on the past decade, with 91.2 percent of their music spins from the year 2000 and newer.
3344 In addition to Country 105, Astral does operate a classic country station on the AM dial, 1060 CKMX. In researching that station we found its music based primarily in the '70s and '80s and their target demographic to be 50-plus.
3345 Putting these two stations side by side we were able to see a clear hole, country form the '90s is not getting substantial airplay on Calgary radio. The '90s was one of the biggest and most successful decades for country music. It was a time when some of the formats biggest stars emerged, Clint Black, Faith Hill, Alan Jackson, Garth Brooks, Brooks & Dunn; Canadians like Carolyn Dawn Johnson, Jason McCoy, Shania Twain, and the list goes on.
3346 This decade also produced very successful artists who never achieved superstar status, but who were staples of radio airplay throughout the '90s, such artists as Blackhawk, Duane Steele, Sawyer Brown, Lisa Brokop, Neal McCoy, Mark Chesnutt, Joe Diffie and countless others. A generation grew up on this music, but have little opportunity to hear these artists on Calgary radio today.
3347 While we see a clear opportunity to base our gold library on this decade of exceptional music, we are not proposing a country oldies station, simply our gold universe will heavily focus on the '90s where Country 105's gold is focused in the 2000s and AM 1060's gold is focused on the '70s and '80s.
3348 New music is a big part of country radio's success. Our station will not be an exception. Twenty-five percent of our spins will be dedicated to new music, allowing us to prominently feature today's rising stars. With a commitment of 40 percent Canadian airplay, we will also have the opportunity to focus significantly on emerging Canadian artists, with a projected 8 percent of our spins qualifying under the definition in CRTC Regulatory Policy 2011-316.
3349 Our focus on the '90s will differentiate us from AM 1060 and Country 105. It will allow us to expand the diversity of country music heard in this market and grow the overall tuning of country radio.
3350 But it will not be in the music alone that sets us apart. Our commitment to spoken word, specifically local news, will further differentiate our station from almost all other FMs in Calgary.
3351 MR. SIEDLECKI: Our commitment to local news is significant, as proven in CJOC and CJCY. In all markets we research, respondents clearly indicate the desire to hear local news on their favourite radio station. In Calgary, 94.8 percent of those we surveyed indicate this desire and 85.9 percent wished to hear it seven days a week.
3352 We are not proposing an all news station; we are proposing a full service radio station which not only plays the audience's favourite music, but which will also keep them informed of the day's events.
3353 In this market we know they can punch over to 660 News or QR77 to catch up on the news or leave radio and hit the Web, but we also know they would rather have their radio station keep them informed. Whether they hear breaking news when listening or we push an update via Twitter or Facebook, the audience knows they don't have to tune elsewhere to know what's going on. It allows us to build a strong, trusting relationship and maintain listening we would otherwise lose.
3354 Imagine these situations: A local high school invokes a lockdown. Police are on scene, but the situation is not life threatening; or a plane has crashed at a public air show, no one is injured, but the area around the airport is chaotic; or a huge grass fire quickly spreading out of control toward city limits, officials just issued evacuation notices. These are real situations our news department responded to with breaking news minutes after happening.
3355 Without our reports listeners would have eventually heard them through a text or a phone call, maybe even hours later on the TV news, but because we reported them parents with children in that high school knew there was no imminent harm to their kids; the public knew to avoid roads around the airport; residents of the west side of Lethbridge knew that a fire they could see coming did pose an immediate risk and they should get out now.
3356 Following the recent Lethbridge fire for instance, comments on CJOC's Facebook page included the following:
"Thanks so much for taking the responsibility to inform us. It was a great relief to be able to know what we needed to do."
"Thank you for updating us on the local fires frequently and keeping the information up to the minute. I will tune into you guys first in the future for any emergency information."
"Thank you CJOC for reporting this story. Nobody else will bother on a Sunday. The city could burn down and nobody would report except for you."
3357 We will bring this same commitment to Calgary if we are licensed, airing locally produced newscasts between 6:00 a.m. and 7:00 p.m. Monday to Friday, 8:00 a.m. to noon on weekends. That's 97 newscasts weekly, totalling 6 hours and 3 minutes of new, diverse news content each week on Calgary's airwaves.
3358 In addition to news we will feature other spoken word elements, including traffic, sports and weather, community updates, business reports, et cetera.
3359 We will also launch a website branded as "Clearly Calgary", expanding our news content beyond radio, exposing it to Calgarians who may not listen to our radio station. We operate similar websites in our existing markets.
3360 Licensing Clear Sky Radio will increase diversity of news content in Calgary, not only on radio but also online. It will also create a significant regional benefit, strengthening the news content in all three southern Alberta markets we would serve.
3361 This is a significant commitment, but one that we know we can deliver as we do it every day at our current stations.
3362 MS STEELE: In forecasting revenue our best reference is retail sales. The correlation between retail sales and a market's radio advertising potential has proven over time to be very accurate.
3363 One of the strongest indications that Calgary can sustain another radio station at this time is the continued growth of retail sales, despite the global economic downturn of the past few years. Calgary's 2010 retail sales were approximately $18.5 billion according to Financial Post markets and were 20 percent above the national average.
3364 Back in 2005 when we were an applicant for Calgary, retail sales were also 20 percent above the Canadian average and totalled $12.5 billion. That is a 48 percent increase in the five year period between 2005 and 2010. Financial Post markets forecasts continued growth, estimating $24.6 billion by 2015. We have confidence radio revenues will continue to increase, growing in tandem with retail sales.
3365 Whatever decision you make at this hearing, any station licence will not launch until well into 2013 at the earliest. Indications are radio revenue, and likely the overall economy, will be back to solid growth by that time.
3366 In terms of our proposed station's impact on the market, we believe it will be minimal, based on the following:
3367 Our revenue forecasts of slightly more than $2 million in year one represents just 2.3 percent of the market total. Radio revenue will increase by the time our station launches, making this small impact on the incumbents even more marginal.
3368 We believe businesses that specifically target country listeners will increase their overall radio spend, keeping their current buy with Country 105 and adding our station with a supplementary buy to increase their overall reach to this audience.
3369 And rather than further fragmenting well served formats like rock, CHR, oldies or AC, the addition of our station will add diversity to the country music genre and increase overall tuning of country radio.
3370 MR. WILSON: The big question facing us all is: Can the city support another commercial radio station? We strongly believe it can. While it is true that total radio revenue and PBIT margins have declined in the past couple of years, let's look at these fats in context.
3371 In 2006, four new commercial radio licences were issued in Calgary. In the two years following, total radio revenue jumped 25 percent or a little more than $20 million, eclipsing $102 million in 2008. So the addition of new stations did not have a negative impact on the market, in fact just the opposite occurred. When new stations launch you often see this trial spending which results in larger than normal overall market increases.
3372 After two years of double digit growth where revenue jumped more than $20 million in that short period, a correction was imminent, it just happened to be more severe as it coincided with the economic downturn.
3373 Calgary's 2011 TRAM Report indicates a return to revenue growth, posting a 5 percent gain which put the total a little over $90 million. Another realistic 5 percent increase in 2012 would put market revenue around $98 million, so it's very likely radio revenue will be back over $100 million by the time a station licensed at this hearing launches.
3374 In 2006 Calgary PBIT was 33.1 percent. The same year national English radio was 22.1 percent, and Edmonton was 20.6 percent. Recognizing Calgary was well ahead of national and regional margins, the Commission licensed new stations.
3375 In 2008 Calgary PBIT declined to 26.2 percent, but revenue hit a record $102.25 million. The discrepancy between rising revenue and lower profit lies in the fact newly licensed stations have extraordinary start-up expenses and first term CCD commitments that drag down the total market PBIT. It's not that every station's profit drops substantially, it's that new stations have significantly lower PBIT than incumbents. We built this into our business plan and are prepared for negative and low profits in start-up years.
3376 In 2010, lower revenue and higher expenses of new stations continued to create PBIT that looks down. However, viewed in context, we are confident that the impact on incumbent stations is not as drastic as it appears.
3377 Recent headlines also give us confidence that Calgary can sustain another radio station from The Globe and Mail in recent weeks.
3378 Saskatoon will lead the country's economic growth this year, along with the other resource-rich cities of Calgary, Edmonton and Regina.
3379 In 2013, Calgary is forecast to lead all Canadian cities, with growth of 4.9 percent.
3380 The jobs picture is better in the west, particularly in Alberta. Oil prices are back to pre-recession levels. Construction projects have continued through the downturn. Fifteen to twenty thousand people continue to move to Calgary every year, meaning more people to support more radio.
3381 The city's population increased by just under 100,000 over the past five years, and forecasts call for 15 percent more growth over the next ten, putting the population at between 1.25 and 1.5 million people.
3382 This city is among the best positioned anywhere in the world to lead economic recovery.
3383 MS HALSETH: As you heard in our introduction, four of the five of us appearing before you today are original Clear Sky Radio hires. We are very proud of our employee retention and satisfaction, which we attribute to a number of factors.
3384 As a small entrepreneurial company, we operate differently than larger companies that have strict corporate mandates or criteria associated with being publicly traded. We are able to truly empower our employees, making them invested in our success.
3385 We generally offer compensation that is higher than the market average. We have a company-wide RRSP matching program to help our employees save for the future, something normally only found in larger companies.
3386 In many cases we have been able to promote from within, allowing employees to increase their responsibilities without having to move to another company.
3387 That said, opportunities for career growth are limited with only two smaller market stations. If we are not able to grow Clear Sky, we will eventually see higher attrition as employees move to larger markets to further their careers.
3388 We will also realize some operational synergies if licensed in Calgary, primarily in administration, creative and engineering.
3389 For example, while our current size only permits us to employ part-time technical services, a third and larger station would allow us to add a Director of Engineering, benefiting the overall company.
3390 In creative, we would gain access to major market quality writers and voices for commercials.
3391 In administration, we would see reductions in our cost base for items such as benefits and insurance, as we add more people to those programs.
3392 The addition of a major market station would also increase the likelihood of attracting staff with more significant experience, opening up training and mentoring opportunities for our younger staff.
3393 Having a major market station would make our company that much more attractive to potential employees.
3394 These are small, but important benefits of strengthening a regional operator like Clear Sky Radio, which helps ensure the long-term viability of independent ownership in Canadian radio.
3395 MR. YOUNG: With our previous experience and associated relationships in country music, we have been able to put together a CCD package that will truly benefit emerging Canadian country music artists. Totalling over $2.5 million in direct expenditures, our initiatives will have a significant impact.
3396 The cornerstone is our Canadian Country Talent Search. We have obtained commitments from some of the most influential people in Canadian country music to assist us in finding, mentoring and launching the careers of emerging Canadian talent.
3397 Through Cressman Sakamoto Agency, we are able to offer a prize package that includes career counselling, major tour support, production, and songwriting assistance from the CCMA and Juno Award-winning country artist and producer George Canyon, and more. This package will provide as big a chance of success as possible.
3398 We are also excited about other initiatives that we have proposed, including an annual contribution to FACTOR of $75,000, plus 100 percent of our basic CCD, and an annual contribution of $50,000 to the Canadian Country Music Association. We would work with the CCMA to ensure that these funds directly benefit new and emerging talent.
3399 An annual contribution of $40,000 will be made to Mega Music Canada to develop an innovative digital distribution website that will put new Canadian music in the hands of listeners for free, while at the same time ensuring that artists earn their royalties.
3400 The expansion of the Music in Schools Program that we run in Lethbridge and Medicine Hat will contribute $25,000 annually to the purchase of musical instruments for Calgary public schools.
3401 And we are proud to support post-secondary music and journalism education with annual bursaries totalling $20,000.
3402 All of these CCD initiatives will meet CRTC criteria for qualification.
3403 MR. LARSEN: In closing, I would like to turn to why Clear Sky Radio is the ideal choice to be licensed to serve Calgary.
3404 This is our second attempt to secure a Calgary station. In fact, the very first application that we ever filed was in response to the 2005 call for new stations in this market.
3405 A call for Lethbridge was on that same public hearing, and we won Lethbridge and lost Calgary. That decision, in hindsight, was really the best that we could have hoped for.
3406 In 2005 we had no other stations. Clear Sky was just a numbered company. We were young and perhaps a little overly confident. But the Commission did see our experience, enthusiasm and entrepreneurial spirit and granted us a licence in a highly competitive smaller market to prove that we could operate a radio company and deliver on our promises.
3407 We subsequently won Medicine Hat, and today, six years later, Clear Sky Radio is a very successful broadcaster, with over 30 staff, a strong balance sheet, positive cash flow, number one ratings, competing very effectively with Pattison and Rogers, two of Canada's biggest and most respected companies.
3408 We are now established, proven, more mature and experienced, and ready to take on the challenge of a major market station.
3409 As the Commission has heard from us on the six occasions we have appeared before you for new licences, we created and set up Clear Sky Radio operationally to be a regional broadcaster, not a standalone owner/operator.
3410 We know that the Commission values ownership diversity, but for it to be truly effective, that diversity has to be sustainable over the long term, and the best way to ensure that long term sustainability is for the Commission to help create strong companies that can compete with the conglomerates.
3411 We don't need to be huge like them, just big enough to realize operational synergies that will allow us to compete effectively.
3412 We believe that this application is the right one for Calgary for these reasons:
3413 We propose to increase the availability and diversity of country music, the only mainstream format without competition on the FM dial. Country is a proven format, with listeners that deserve the same level of choice that rock, CHR, AC and oldies listeners enjoy in this market.
3414 In choosing country, we ensure the least impact on incumbent stations. Rather than further fragment existing formats that are well served, our station will increase the overall tuning of the only underserved format.
3415 When country listeners tune away from Country 105, rather than turn on their IPod or satellite radio, they will instead be able to punch over to another local FM station.
3416 Our station will enhance and diversify news content in a significant manner, with over six hours of news content weekly on air, in addition to distribution online, through the creation of "Clearly Calgary.com".
3417 We propose a very robust Canadian content development package that will inject over $2.5 million into enhancing the careers and opportunities for emerging Canadian talent.
3418 Equally important to the cash total is the fact that we have secured commitments from some of Canada's most successful country music industry people to work with us on our proposed CCD annual talent search.
3419 We presented a strong and well-researched business plan. We have looked deep below the surface to come to an informed conclusion that Calgary can sustain another commercial station at this time.
3420 We have an existing base of operations right here in Alberta, within a two-hour driving distance to Lethbridge, and three hours to Medicine Hat. That infrastructure positions us well to be able to handle the addition of a new, nearby Calgary station.
3421 Our company has experienced ownership, we are well financed, and we have positive cash flow, which put us in a strong position to grow.
3422 Finally, strategic regional growth would significantly strengthen our company, benefiting our employees, enhancing the programming and service in all of our markets, and ensuring the long-term viability of the diversity that our company brings to Alberta radio ownership.
3423 Mr. Chairman and Commissioners, this application is important and critical to our company. We know the scope of what we are asking you for, but please let me assure you that we have made a very well-informed decision in pursuing this opportunity to apply, and we are prepared for the challenge. If licensed, we will not let you down.
3424 I thank you for your attention, and we look forward to your questions.
3425 THE CHAIRPERSON: Thank you for your presentation, especially the financial figures. You were quite positive and enthusiastic.
3426 Mr. Simpson...
3427 COMMISSIONER SIMPSON: Thank you very much.
3428 Mr. Siedlecki, I haven't heard a news voice like that since the days of Byron MacGregor at CKLW.
3429 MR. SIEDLECKI: Thank you.
3430 COMMISSIONER SIMPSON: I would like to, first off, ask a top of mind question concerning Norscot. I noticed that, very proudly, you hailed your experience in ownership and management in radio for, I think, something like 30 years. Was it just CKNL that you were involved in, or were there other operations, as well, Ms Mills or Mr. McKinnon?
3431 MR. McKINNON: We were involved with the start-up of CKNL. My father had it. We then grew that into a company called Nornet Broadcasting.
3432 Nornet Broadcasting had, I think, 12 stations throughout Alberta.
3433 We then merged with a publicly traded company, Okanagan Skeena, and I became the President and CEO of the company, and that company was sold to Telemedia.
3434 We also started a company in 1985 on Vancouver Island. We had a radio station that we bought, CHUB Radio. We merged with our competitor there, one of the first of its kind in Canada, two AMs coming together, flipping one to an FM, and grew that station up to six radio stations on Vancouver Island, which we subsequently sold in about 2000 to the Pattison Group.
3435 COMMISSIONER SIMPSON: I'm glad I asked.
3436 COMMISSIONER SIMPSON: Your modesty in online and other presences belies your actual experience. That is really gratifying. And, again, I am glad that I asked the question.
3437 I think I will start with the easy stuff -- we will start with the dessert and get to the vegetables later.
3438 Your research -- I believe it was you, Mr. Young, during the oral presentation -- you were saying that in your analysis of the Calgary market, it became almost instantaneously obvious that there was a gap in the market that you could drive a truck into, and you had every intention of doing that with the way you devised the format.
3439 Is that correct?
3440 Was it pre-research and simply experience that was telling you this?
3441 MR. YOUNG: Tricky to answer. I suppose, being from the province my whole life, and a student of radio for the past 25 years, that the simple answer is yes, I see a clear opportunity for what we have proposed.
3442 Then, obviously, in discussions with Paul and our management team, further analysis, deeper research, proved initial gut instinct.
3443 COMMISSIONER SIMPSON: So your relationship with Telelink in doing market research was done after your initial analysis.
3444 MR. LARSEN: Right.
3445 We gauged a market analysis through our own prior experience. I was a music director and assistant program director at Country 105 for a four-year period in the late nineties to the early two-thousands, so I was very familiar with the country music market in Calgary specifically.
3446 And it was that gut instinct, that -- as we looked at 3 rock stations, 3 varieties of A/C, 2 CHRs battling it out, 3 varieties of oldies -- that there was this big monster country music station that was all unto itself. So it began as a gut feeling, and then we backed it up with research, by hiring Telelink to conduct a survey of 400 people in Calgary.
3447 COMMISSIONER SIMPSON: Just out, again, my insatiable curiosity: Why TeleLink? I'm not questioning their capabilities, but they're rather far afield, being based in Newfoundland.
3448 MR. LARSEN: We prefer, whenever we can, to work with Canadian vendors. We started Clear Sky Radio as a numbered company back in '05, on a very limited budget, as an idea, and Telelink did our first research piece for Calgary. And they subsequently did Lethbridge, Medicine Hat, Red Deer; they did every piece of research that we've applied for.
3449 And so, because we are a smaller company, they offer us an ability to do affordable research, because they are third-party, they are qualified, you know, they are well-respected. But they feed us back raw data, so we don't get a fancy report with graphs; I have to build all that myself.
3450 But I get the information that they glean for us, in terms of providing third-party research to the market.
3451 COMMISSIONER SIMPSON: Ah.
3452 Also, in your oral presentation -- I can't recall who it was that had said this portion of the presentation -- but you were making observations about how other operators have found it neccessary to flip formats because, you know, they were competing with each other in a fairly overcrowded market, with the exception of the Jazz -- notwithstanding the Jazz format.
3453 I couldn't help but catch your critique that you felt that they were also having to do this because they were going after niche markets, and I can't help but feel -- and I'd like to move into this questioning later -- that you're trying to do the same thing in going after a niche within a larger format.
3454 MR. LARSEN: Sure. Well, to speak to that, on two points, I guess, I have some experience any real niche format. I was the first program director of the Breeze, which was the smooth jazz station here in Calgary. We put on a very, very good radio station. It had initial -- very strong ratings. We came out at a 4 1/2, almost a 5-share. We had a strong adult 25-54 ratings.
3455 Corporate started to get the feeling that we were on to something that could be bigger and bigger and bigger, and perhaps maybe we could knock off Lite 96. And when that vision came into their head, it started to drift a little askew and, consequently, the format started to go downhill.
3456 So we were operating a niche format as a niche format for a short period of time, and successfully. And as we tried to morph it into something mainstream, it began to fail. So I think that helps explain why some of the niche formats -- niche formats typically are going to drive a 1 1/2-2 share in the market this size or a Vancouver or Edmonton, and it's very difficult as a stand-alone station, as other applicants have said, to make a business plan out of a 2-share radio station.
3457 So in our case, in coming to Calgary this time around, I know there is a temptation to say country's a niche format because it's sort of out there, separate from the rock genre or whatnot. The country station in this market, Country 105 on FM, is the number 3-rated radio station in the last PPM, with an 8.3-share of adults 2+.
3458 Country music is as mainstream music as it can possibly be. Rock, roots, blues all grew out of country music, so I would challenge that country music is not a niche, that it's very broad-based mainstream format, with many successful artists that are now crossing over to the other side and getting airplay on Top-40 and A/C and CHR-type radio; you know, artists like Taylor Swift, for example, I hear Lady Antebellum on more than the country station in this market.
3459 So I would respond by saying I personally don't believe that country is niche music, or that the format is a niche radio format.
3460 COMMISSIONER SIMPSON: I buy most of what you say, except for the part about rhythm and blues growing out of country; I think Robert Johnson would take issue with that, but we'll leave that one aside.
3461 MR. LARSEN: I might be a little young, maybe, to make that parallel, but --
3462 COMMISSIONER SIMPSON: Yeah.
3463 In understanding and agreeing with the notion that, like the old days of MoR/country, has been sort of a very comfortable set of shoes to fit into for programmers and audiences, because it really does run the gamut, both demographically and economically.
3464 The idea of going after 35-54 is intriguing to me because it is a sweet spot, the pig in the python, or whatever you want to call it. You know, it's post-baby boom, but it's still a lucrative market, and I understand the thinking in going after that market, because it represents well to advertisers and the like.
3465 But I need you to help me line up the format you're choosing with the goal of the demographic, because -- I think you called it the golden universe or something like that -- it seems to me that this -- what is it that country music in the 2000s is not doing that causes you to want to exclude that portion of music? Has it gone too much over the top from country? What is it?
3466 MR. LARSEN: It's not that we would exclude the 2000s -- 30 percent of our playlist would actually be from the 2000s -- it's just that the one FM station in Calgary that plays country music is extremely focused on only the 2000s, so they don't play anything before that. So our audience would tend to skew about 10 years older than what Country 105's audience would be, which is, hence, we get into their 35-54, 35-60 type of target.
3467 That target works well when you're dedicated to doing news content and traditional news -- and when I say "traditional news", there is a lot of talk about, you know, engaging listeners to send us news tips via Twitter and this type of thing. It's extremely dangerous to just take a tweet from a listener and put it on the air un-fact-checked.
3468 And we just recently went through it in Lethbridge. In Lethbridge, on Grey Cup Sunday, there was a huge grass fire fuelled by 140 km/h winds, and the tweets and pandemonium that were caused in the market as a result were out of control.
3469 And when we went on the radio and started giving factual information that the brand-new West side High School was not burning down, that the West side new neighbourhood of Copperfield was not to be evacuated, and that the fire was actually 2 miles north of being in danger of engulfing the city, that's the type of responsibility that we take with news.
3470 Now, that type of news tends to resonate better with people over the age of 30-35, but it does fit very well with the demographic that we are hoping to target with this radio station.
3471 You know, in terms of ignoring the 2000s, it is not our intent, and maybe we weren't clear enough about that in our oral presentation, because we did focus on the hole that we are trying to fill. So 45 percent of our music would be from the 90s, and 30 percent from 2000 to about 2010, and then 25 percent would actually be current spins from today's hottest artists, which allows us, in tandem, to meet our criteria for emerging Canadian talent and to play 40 percent CanCon without burning gold, and that type of thing.
3472 So we will be a well rounded station. Our universe will just go back about 10 years deeper then where CKRY is right now. And CKMX, the AM station, tends to end at about '86 -- they probably play 10 or 12, 13 percent from our monitor into the 90s, so it's a small part of their airplay. So we kind of invision our station plugging that hole in the middle between where CKMX ends and where CKRY starts.
3473 COMMISSIONER SIMPSON: Thank you. That was an excellent answer.
3474 When I read your application, and I read the factum provided by staff which is a regurgitation of all the legal, financial and programming aspirations of your application, and put into our language -- which means a lot more syllables and numbers -- I totally understand what you've said, and I understand how you describe your format in your application and in the factum, because paper's cheap and words plentiful.
3475 But I haven't seen anything yet -- given that, for example, rock 'n' roll, which is an age-old format, has managed to find handles like "classic rock", you know, "album rock", "adult contemporary", you know, "Hot A/C" and so on, I haven't seen anything yet in the stuff coming from you that will boil it down to the elevator pitch that you can take to your audience, other than letting the music do the talking for you.
3476 Have you guys actually got to that point where you've got a handle for what you're trying to do with the format?
3477 MR. LARSEN: Yes. We propose a positioning line somewhere in the range of "Playing country from the 90s to now." So that gives a clear definition of the music spectrum that were going to play. Country 105's tagline is "Today's country, Country 105." 1060 is "Classic country, AM 1060." So we think that we can easily differentiate who we are, musically.
3478 You're right. I mean, because rocks been so fragmented, there's classic rock, modern rock, alt rock, mainstream rock -- "Active rock" is sort of a new one that's out there now -- you know, I would say there is traditional country, which is what CKMX is doing, there is probably an industry label, we would say "Today's country", which is what 'RY is doing, we would say we would be mainstream country, and it just means that our gold universe would be slightly more broad, by about a decade, than what CKRY is doing.
3479 You know, you tend to see in the U.S. markets that we looked at -- and that's the reference we have to use, because those are the ones that have multiple country stations -- that's exactly the split. There is usually -- if there's three, there is a classic country, one like we're proposing, and a modern country station.
3480 In the markets where there are two FM's, usually it's a modern country, focused on new music, and the more traditional country that is focused on the 90s, maybe even into the very late 80s.
3481 COMMISSIONER SIMPSON: From your experience as broadcasters, have you -- or are you aware of other broadcasters in North America who are trying to perfect this format -- not just having the discipline of going after a demographic group, but doing it with a certain programming in country in mind?
3482 MR. LARSEN: I guess, given that we saw at a borrowed the name from them, Cumulus Media runs this Wolf format; the most successful market is in Dallas, which is KPLX. Over a long period of time, they overtook the market heritage station, KSCS. There's two country stations in Seattle, KMPS and a Wolf station, and again, the format model, I guess, if we've borrowed it a little bit, is probably from that model.
3483 So I would say that it is successfully being done in any mid-size market similar in size and population to Calgary, where there is more than one country station on the air in that market.
3484 COMMISSIONER SIMPSON: Okay, thank you.
3485 I'm going to move into spoken word now. Your written application spoke of a strong component of local news, information and lifestyle that's important to your target audience. I would like you to refine their bit for me, starting off with -- that run-on sentence, by the way, came as a direct lift from your application; did you mean that you are going to be -- I better preface this by saying I understand what you mean when you say information and lifestyle that's important to your target audience", but did you really mean to say news that's important to your target audience? Because you sort of bundled it with the other two, and I was wondering if --
3486 MR. LARSEN: I guess I'm guilty of the run-on sentence, because I wrote it.
3487 Both are important to our audience. Our audience has shown a great passion for news, and it may be skewed a little higher in Lethbridge and Medicine Hat because all the AM radio stations that used to serve that market, prior to us coming, had converted to FM.
3488 So when we came to Lethbridge in 2007 and signed on, there were no -- there was no radio news, it did not exist. They were listening to 660 and 77 out of Calgary to get local news, or 550 out of Montana.
3489 So news became a cornerstone of our philosophy in Lethbridge, it was always intended to be as such. Over the 4 1/2 years that we've been on the air there, we've come to realize how important that news is to listeners. We know that listeners will go elsewhere from news. They certainly -- once they heard about the fire on our station, I know they went to the Internet to find more information or they went to television or they went to the all-news station, if they could pick it up.
3490 But what they love from us is that we actually give them the news when they're listening, so they know something happened, and then they can make the choice whether they got enough information from us or whether they're going to move on to somewhere else.
3491 The lifestyle information -- you know, traffic's not a big deal in Lethbridge; rush hour is all of about seven minutes, and it's only important if you live on the west side of town. But other lifestyle, what's happening around town, community updates, live remote broadcasts, being live at things like Whoop-Up Days or Canada Day, that type of sort of local community lifestyle information is very important to our audience; they want to know what's happening in their home town, they want to know what the weather's like, they want to know what the weather's going to be like this weekend, they want to know if it's going to be windy or not -- in Lethbridge in particular --
3492 COMMISSIONER SIMPSON: I gather, too, that from your experience in operating big market radio stations, there is always -- the needle always moves towards the need to inform the community on a more fulsome basis, even if you are running a contemporary radio station format, because smaller markets need their news; they have fewer sources of it.
3493 But my question with respect to Calgary is have you taken that learning experience from Lethbridge and Medicine Hat and automatically applied it to your application here, or did your research tell you that this demographic group needs and wants more spoken word and more information?
3494 MR. LARSEN: Sure.
3495 The research, again, confirming our gut instinct that news is going to be important to listeners on a Calgary radio station as well, but it's not that they are expecting us to do 8- or 10-minute major newscasts at noon, like a QR77 or 660 might do, and we are fully aware that there are other radio stations in town that are dedicated and focused exclusively on news, but what the audience told us loud and clear is when we are listening to our favourite music station, we appreciate hearing what's going on in the world, even if it's a 2- or 3-minute update.
3496 And again, for us, as a business model, it helps us maintain that -- you know, in a diary world, we would call it a quarter-hour of listening -- it would help us maintain that listening, because they haven't punched over to the news station to hear the update at the top of the hour. In the PPM world, where its minute-by-minute-by-minute, it's even more critically important.
3497 So, again, I would stress that we are not intending to be an all-news station. If there is an emergency -- I know the windstorm affected Calgary to, where a downtown windows were blown out and downtown was shut down -- you know, people are not going to tune to us to get that information, looking for updates on what happened; there are going to go to QR, they're going to go to 660.
3498 But people who were listening to our station, and the wind picked up, and Windows blew out, and we mentioned it, and they knew not to go downtown, they would know not to go downtown, they would know to punch over to 660 or QR to get more information about exactly what was going on.
3499 So what the research kind of told us was it's important to us that our radio station tells us what's happening. Give us the information that radio has always given us.
3500 We do it in different ways now. In Calgary, we would probably even ramp this up more so, this "Clearly Calgary" idea -- we do a "Clearly Lethbridge" and a "Clearly Medicine Hat", so the idea there is we have four radio news reporters out generating news all day, it goes on the air. It goes on our radio station website, but that news is only ever heard or seen by people that like our radio station, that listen to it and visit our station website.
3501 By putting it on a separately-branded Internet portal that has local information, we can expand that new news content that we are generating in the market to a broader audience.
3502 So in a lot of cases, we've reversed away we do news. You know, the traditional thinking would be a story breaks, we have to hold it until noon, put it on our noon newscast, and then we'll put it on the website and tell everybody. We've kind of flipped that around now where, quite often, we get breaking news, we tweet it first and then put it on our website. And in the tweet and the website, we tell people to listen to the radio at noon for more information.
3503 So almost, kind of, in today's world, use those social media and other interactive tools to your benefit, but we are doing it to augment, you know, a more traditional style of news and information. And again it's because, in Lethbridge and Medicine Hat, our stations happen to target that 35+ audience as well, and it's just been important to that segment of the population.
3504 COMMISSIONER SIMPSON: Okay.
3505 Segueing from news to synergies, but staying with the news slant, if you like, your total body count between the two stations -- I shouldn't use that term, it sounds terrible --
3506 COMMISSIONER SIMPSON: Your total personnel count between the two stations right now is about 30 people, if I recall --
3507 MR. LARSEN: Correct. Yes, thirty.
3508 COMMISSIONER SIMPSON: And what would the percentage or number of people be in the newsrooms of those two stations?
3509 MR. LARSEN: So, in each news room we have three full-time and one part-time, so the equivalent of -- eight full-time equivalents, but three full-time and one part-time in each station.
3510 COMMISSIONER SIMPSON: And your projected resource -- human resource count in your Calgary operation would be? Total number.
3511 MR. LARSEN: Total number of staff, I believe, off the top of my head, was 18. And the news staff I know, specifically, for sure, was the same as Lethbridge and Medicine Hat, three full-time and one part-time.
3512 COMMISSIONER SIMPSON: Okay.
3513 I think that maybe answered my question, because I was going to ask, with respect to synergies, setting up a Calgary shop, notwithstanding the fact that there is a substantial size difference between yourself and a Bell or a Pattison or a Harvard, the ability to provide resources to a Calgary operation, other than the areas you described in your oral presentation -- I'm thinking particularly programming and, more specifically, news -- would there be a tendency or a inclination to try to build your news hub out of Calgary and then feed back -- you know, in other words, reverse the flow.
3514 Would that make good business sense?
3515 MR. LARSEN: It may make good business sense. It's not something that we would be tempted to do. We'd be called out on it pretty quickly.
3516 In Lethbridge, in particular, was a market when we got there where one of the big stations runs a lot of Voicetrack programming from out-of-market, so in that whole midday period on both their radio stations, there is no local weather, no local updates, no local information.
3517 Almost 90 percent or better of the news we put on the air on every single newscast is local to the community. So a news staffer in Calgary, even on the phone, would just not have an opportunity to be plugged in enough to generate that amount of local news that our audience has become used to hearing in those markets. So I don't think, even regardless that there might be a financial temptation to do it, it would certainly not be something we would intend to do, and I know our audience would react negatively to it in a very short order.
3518 COMMISSIONER SIMPSON: Given that the format of the two stations -- thinking about programming synergies now -- other than the embellishments of, you know, production value departments, voices, writers and the like which, again, would make sense if you had a third leg to the stool in the ability to share resources between the three stations rather than two -- are there any impediments, other than buying a library, to going in a different direction music format-wise, from the two stations you have now?
3519 Is there any synergy at all that you'll be able to lend from your programming experiences in Lethbridge and Medicine Hat, even though you're changing format?
3520 MR. LARSEN: Right.
3521 So you're saying our formats in Lethbridge and Medicine Hat are what they are today, we win the Calgary license; are there programming synergies that could be seen, even though the formats are different?
3522 COMMISSIONER SIMPSON: Right.
3523 MR. LARSEN: It's not an area that we would pursue as a synergy. I imagine that, you know, we have a dedicated music director in Lethbridge who's on-air right now. Maybe a synergy, potentially, could be to take that person off-air, replace them with a new on-air person, and have that person dedicated to being a music scheduler. But again, we'd be hiring a body in one location or the other, so our preference would be to hire a local on-air music director in Calgary that knows country music.
3524 Part of this format, it's crucial that you know this music, you know the lifestyle, so I don't really anticipate synergies like that.
3525 A synergy that is a really strong benefit to us is, in smaller markets, we have younger on-air staff that need to be coached and developed and mentored so they can grow their careers. If we are able to hire a talent that is a major market quality -- and we have two or three of them on the air here in Calgary -- we have the opportunity to bring our younger announcers to Calgary and do a weekend aircheck session, or a weekend mentoring session from that more, higher-calibre talent, that we've been able to bring into our company because we've been able to grow.
3526 Those types of synergies are the ones that we really focus on. I mean, there's operational synergies, as we mentioned, in engineering and accounting, creative, and those types of things, but from a programming standpoint and product standpoint, our intent would be to put on a very locally-focused, locally-staffed Calgary radio station.
3527 COMMISSIONER SIMPSON: Sorry, I'm just going through my checklist.
3528 MR. LARSEN: M'hmm.
3529 COMMISSIONER SIMPSON: Getting rid of the vegetables --
3530 COMMISSIONER SIMPSON: -- CCD and financials as a whole.
3531 Your application -- your description of your commitments to CCD and, in particular, your Star Search initiative, have raised a few concerns with staff, largely because they appear on the surface, to us, to not adhere, I think, you know, quite unintentionally, to the revisions we made in 2008 to the Commercial Broadcasting Policy.
3532 We changed the nature of CCD commitments to make sure that they were extremely arm's-length with respect to both -- trying to eliminate the low-hanging temptations of doing things like on-air promotions that are self-serving in nature and the like -- but I can't help but notice that, specifically, in the area of your Star Search, it seems that you haven't quite gotten there yet, and I was wondering if you want to comment on that.
3533 Do you have some concerns, or do you want me to spell them out?
3534 MR. LARSEN: Well, if you have specific concerns, I'd be happy to really answer to those.
3535 COMMISSIONER SIMPSON: On the area of professional production of a music video, that -- first of all, explain to me the process by which you would mount that particular aspect of the project, in terms of where would the money come from, to whom would it be spent, in terms of a production company. I'm thinking about -- the concern here is arm's-length, third-party --
3536 MR. LARSEN: Sure.
3537 COMMISSIONER SIMPSON: How would it be debuted, how would it be circulated? Would there be any desire on your company's behalf to obtain some rights with the artist? That's the first area.
3538 MR. LARSEN: Right, sure.
3539 In answer to the latter part of your question, absolutely not. I mean, we would have no intention of getting in the music business or are taking a piece of that artist's royalties or having anything to do with that type of thing.
3540 In terms of the video production, I mean, we would source out a third party, arm's length professional firm that does videos for a living, preferably a Calgary vendor, and we're confident through looking that there are several that could do it here.
3541 The intent of the video would be so the artist would have a video to play on their Web site. Hopefully if the quality is good enough, we can get it on CMT through Relationship, though they're not playing as much music videos as they used to.
3542 But it's not something that we intend to produce. It's not something that Clear Sky Radio would be involved with in any way, shape or form. We would pay the fees to the third-party production company to produce the video for the artist, and the artist would own the video at that point.
3543 COMMISSIONER SIMPSON: Okay. The issue of full rotation airplay -- and I'm not an expert in this because that's why we have staff -- is not acceptable as a contribution to CCD under the terms of our 2008 Policy. So there may be the need to revise your thinking in that regard.
3544 MR. LARSEN: I'm sorry, I just missed the first part.
3545 COMMISSIONER SIMPSON: The full rotation airplay aspect, which is point 2 of your --
3546 MR. LARSEN: All right.
3547 There is no monetary value to that full rotation airplay. I was simply trying to state that our station would play the contest winner, and if a major market country station is playing that artist, chances are smaller market country stations pick up and play that.
3548 When I was the Music Director at Country 105, quite often, the small market stations would look for us to add music and then they would add it. So in other words, we became their sort of free research.
3549 So there's no monetary value whatsoever associated with that. We were simply saying that we're going to find this talent and we're going to support them by playing them on the radio. We're not just going to pay for a CD for them and never give them any exposure. But there's no dollars associated with that component.
3550 COMMISSIONER SIMPSON: Well, the lift out of our view on that is that, as discussed in our policy, airplay is an indirect benefit for Canadian artists and a normal cost of doing business.
3551 MR. LARSEN: Right.
3552 COMMISSIONER SIMPSON: Okay. I think again we will have to revisit that.
3553 Now, with respect to distribution of the CDs to your listeners -- I'm not speaking anecdotally here but don't take this as a specific but a generality -- I was involved in a decision recently where in the full spirit of CCD a station had distributed tickets to a concert which was paid for entirely by the radio station on behalf of the beneficiary of CCD, the artist, and the tickets given away to the listeners of the radio station, but, again, it contravened our policy. The tickets should have been made more broadly available to the marketplace.
3554 And that is an example of what we're talking about with respect to third party.
3555 MR. LARSEN: Right.
3556 COMMISSIONER SIMPSON: Okay. And in this instance, it seems that you haven't contemplated that.
3557 MR. LARSEN: So with the music distribution we would be tying in with our Mega Music Canada component. So what that is, is a digital download of the song through a music credit, and Mega Music Canada has been approved by the CRTC as eligible for CCD.
3558 The store that we build would be an exclusively Canadian store with a heavy focus on emerging Canadian talent, and Mega Music tells us that they can build into our Web site exposure for our contest winner.
3559 So, again, there's no sort of transaction. We're not selling CDs or we're not sort of in the business of selling CDs or trying to monetize that artist. We're just trying to take that song that we produced for the artist and put it in as many hands of country music fans as possible at no charge to that fan.
3560 And the beauty of Mega Music is that the artist gets paid their royalties because there's a fee that we're going to pay through our CCD to built the store and set that project up.
3561 COMMISSIONER SIMPSON: But the knowledge of the existence of that effort would be beyond the direct promotion on air. There would be another aspect of promotion beyond talking to your listeners directly as the only means by promoting the availability of that CD. That's the issue.
3562 MR. LARSEN: Right. So you are looking to say, would that CD be available in music stores or elsewhere or more broadly distributed than only going to our radio station Web site in a --
3563 COMMISSIONER SIMPSON: I think if you go back and look at the intent of the policy, what it was trying to do is discriminate your fulfilment of CCD in such a way that it precluded what you're doing as being not just an effort to fulfil CCD but separate it from the normal cost of doing business.
3564 MR. LARSEN: Now, we completely support that redefinition of the rule and tightening up because we have heard stories of companies that have gone out to almost monetize their CCD and we understand why you don't want us to do that. It's not the intent of what we're supposed to do.
3565 You know, we will make a commitment on the record to follow whatever staff's recommendations would be as a condition of licence in terms of how our CCD is structured.
3566 COMMISSIONER SIMPSON: Great.
3567 MR. LARSEN: You said unintentionally we may be on the fringe of the new rules and regulations. It is completely unintentional. The reason, you know, we're working primarily with one organization on our CCD is because they're the best at concert tours, at production, they can bring George Canyon to the table, you know, those types of elements. So we --
3568 COMMISSIONER SIMPSON: I think what I'm trying to do here is to save you from a potential inadvertent issue that may knock you out of the box and so the way we'll leave it, I have one more question and then I'll drop the shoe.
3569 MR. LARSEN: Okay.
3570 COMMISSIONER SIMPSON: With respect to the company you were referring to earlier -- I've lost it --
3571 MR. LARSEN: NRCCD?
3572 COMMISSIONER SIMPSON: Yakomoto --
3573 MR. LARSEN: Yes, Cressman Sakamoto Agency.
3574 COMMISSIONER SIMPSON: So your relationship with them is strictly arm's length?
3575 MR. LARSEN: A hundred percent arm's length.
3576 COMMISSIONER SIMPSON: Okay. So this is what I think we should do. With respect to the aspect of your Star Search submission, which is a substantial amount of money, I would like you to go back and review the 2008 Policy changes that we've made and be prepared to make a submission under the fourth phase of this hearing, in writing, so that any corrections that you wish to make that are largely the result of these hints here are submitted before we --
3577 MR. LARSEN: We will certainly commit to that.
3578 COMMISSIONER SIMPSON: Okay. Great.
3579 Now -- almost done -- going into the financials for a second, your financial projections, and understanding the confidentiality of everything that was submitted, is taking the position that you will start to see blue sky in your financials by year three; is that correct?
3580 MR. LARSEN: That's right.
3581 COMMISSIONER SIMPSON: Okay. In your CCD contributions you have not -- you have chosen to not ramp up your CCD commitments, I have noticed, which is, you know, very brave of you, but you're basically biting off an equal amount in every one of the seven years.
3582 MR. LARSEN: Right.
3583 COMMISSIONER SIMPSON: Now, given capital costs in the first year, given ramping up of the sales effort, extra promotional costs, all the other stuff that goes with the start-up, against the -- without getting into the specifics, against the backstop you have in terms of your commitments financially, do you feel satisfied that you have the financial resources to be able to get to year three should your business plan take a year longer?
3584 MR. LARSEN: Yes, absolutely.
3585 COMMISSIONER SIMPSON: Okay. It's an important question to ask.
3586 MR. LARSEN: It is.
3587 COMMISSIONER SIMPSON: My wife is asking me that all the time.
3588 COMMISSIONER SIMPSON: I've got to go back. I'm circling back. I'm doing a bit of a cleanup here. One more time with feeling.
3589 The format. As you've indicated, you have an FM country station right now that is largely uncontested, but including in this conversation the AM station as well, would you tell me what you feel you're going to be doing in offering an alternative country format that's going to contribute to the diversity of programming for the audiences of Calgary?
3590 MR. LARSEN: Sure. When a core listener of Country 105 hears something they don't like on that radio station, they do not turn to CKMX. That audience is not going to turn to AM radio for an oldies country music station.
3591 So our proposal really will offer country music listeners in this market the same choice or opportunity to listen to another station when they don't like what their favourite station is doing.
3592 So if CJAY is playing a rock song that a listener doesn't like, if they're a classic rock fan, they go to Q, if they're younger, they go to X, and then they drift back to CJAY.
3593 So really, what our station will do is give country music listeners that same opportunity to listen to another local FM country music station as opposed to either turning on their CD or iPod or listening to another format entirely.
3594 COMMISSIONER SIMPSON: Thank you very much.
3595 My last question. You seem to be extremely hands-on as an owner and I presume operationally, and I presume you would be significantly involved in the start-up should you be the successful applicant. Do you reside in Alberta?
3596 MR. LARSEN: Currently, I reside in Nanaimo, British Columbia.
3597 We built Clear Sky, again, to grow and to become a regional company. So when we started Lethbridge, my wife and I lived in Lethbridge for the first two years. Casey started as my Sales Manager, mentored with me for that first two years, and then I had confidence to promote him to General Manager.
3598 We consequently then won Medicine Hat. So I went there. My dad lived there, so I moved to Medicine Hat for a period of time and set that station up.
3599 If we win Calgary, we will be moving to Calgary, my wife and I, and I will be the Manager of this radio station.
3600 From a personal standpoint, not that it matters on the record, but my wife and I had a baby two years ago, so we have a two-year-old daughter now. So the isolation of living on Vancouver Island as two single adults was great, but all our family is in Alberta. Her sister is here, her mom's in Lethbridge, dad's in Lethbridge.
3601 So it is our intent, honestly, to move to Calgary regardless of whether we get a radio station or not.
3602 COMMISSIONER SIMPSON: So the demographic of Calgary of 35-54 --
3603 MR. LARSEN: Will increase --
3604 COMMISSIONER SIMPSON: -- will go up by two?
3605 MR. LARSEN: A two-year-old, yes.
3606 COMMISSIONER SIMPSON: Okay, thank you, those are my questions.
3607 MR. LARSEN: Thank you.
3608 THE CHAIRPERSON: Have you told your wife about the move and is that a tax play --
3609 MR. LARSEN: It was actually my wife's idea.
3610 THE CHAIRPERSON: -- because of all the money you're making in the radio business?
3611 MR. LARSEN: Right.
3612 THE CHAIRPERSON: Look, cutting edge weather reports, Lethbridge being windy, kind of like the desert being dry, but --
3613 You know, Steve spoke to you briefly about niche country, and if you're painting yourselves in sort of nineties, primarily nineties country, would you qualify yourselves as niche?
3614 MR. LARSEN: No. And again, I think if you look -- and maybe I should have done a better job on the graph -- 45 percent of our music will be from the nineties, 55 percent will actually be from 2000 and newer. So we are going to be a very broad-based mainstream country music station. It's just our Gold will go back 10 years more than what the current FM station does.
3615 THE CHAIRPERSON: The only diversity you will be offering is that a bigger chunk of the airtime will go to nineties country? That's the big differentiation between yourself and 105, Country 105?
3616 MR. LARSEN: I think the diversity will be that. So there will be artists that we will play that aren't getting played in the market now, that have been sort of ceased being airplayed.
3617 The other diversity we're going to bring is that our FM station will have the news and information component. You know, that will, again, enhance us and make us different from Country 105 and bring something honestly --
3618 THE CHAIRPERSON: They're not offering news and information?
3619 MR. LARSEN: They do some short updates in the morning show.
3620 Over time FM radio has really ceased to do news, you just don't hear it on many FM radio stations. And I understand why, it's expensive to do news. It's a great easy business decision to not do it.
3621 I grew up in an era -- and I know it sounds maybe corny or cheesy or whatever, but I grew up on radio that had full service newscasts on the hour, it's part of the DNA I grew up with. I grew up in small market radio and I still think it's important to serve that audience and we can afford to do so. We have profit margins in Lethbridge and Medicine Hat that are in excess of the average PBIT margins and we run an 8-person equivalent newsroom between those two small market radio stations. So I could make 45 percent profit if I cut the news department out, but we choose do that news.
3622 FM radio in a major market in particular, I challenge you to turn an FM station on at 4 o'clock this afternoon and hear a news update, it just doesn't happen.
3623 THE CHAIRPERSON: Did I correctly read your projections when you were calling for a 4.2 market share in year one?
3624 MR. LARSEN: I believe that is the number that we projected, yes, sir.
3625 THE CHAIRPERSON: Where are you going to get that? Is that optimistic, one, and where would you get that? Who would pay the price of that huge market share in year one?
3626 MR. LARSEN: Well, you know how radio share is built is, you know, you get cume and people bounce back and forth between stations and the share builds. So because if we have a four share, we are not going to take all four of those points away from a station. So if a listener listens to both Country 105 and our station and they go back and forth, 105's share may dip a little bit and we pick up share from that.
3627 A station like classic rock and country, a lot of people that like classic rock are closet country music fans, maybe there is a little bit of share in there, but it's not really that that four points just comes away from a single person. You know, the overall share of listening in the market will rise with new radio stations in this market.
3628 THE CHAIRPERSON: I think it's public knowledge, but did you make mention of what 105's market share was earlier? I thought I heard you drop a figure.
3629 MR. LARSEN: So in the published most recent Calgary PPM which covers the period August 29 to November 27th, adult 2-plus is an 8.3 share.
3630 THE CHAIRPERSON: An 8.3 share and they have had a monopoly in the market for 30 years --
3631 MR. LARSEN: Correct.
3632 THE CHAIRPERSON: -- and you are year one, you are going to come up with 4.2 market share?
3633 MR. LARSEN: That is the number we came up with in our research. We asked people, "What stations do you listen to?" We go through the research to come up with those numbers and then apply them to the population and, you know, on paper we come up with a four share.
3634 If we become the second choice country music station, because there is no other choice, we will grow a larger share than a brand new station in a new format trying to carve it out from nothing, because we will instantly become the second favourite station of all the country music listeners, or a good majority of them, maybe not all.
3635 THE CHAIRPERSON: You are pretty much becoming the second, but you have half the market share of the incumbent that's been there forever.
3636 MR. LARSEN: When we look at other formats, so I'm looking at Amp, which is recently converted to CHR.
3637 THE CHAIRPERSON: I understand it might be --
3638 MR. LARSEN: In a short period of time they have grown to a five share.
3639 THE CHAIRPERSON: I understand your argument to the fact that being number two in country you will have a bigger market share than any other format, even if there is no one else in the market with that format.
3640 That being said, is that a realistic projection, 4.2 market share in year one?
3641 MR. LARSEN: I mean, it was a gut feeling backed by some statistics that we put together. We feel it's achievable.
3642 If it's not achievable, though, I will say that it doesn't really impact our business plan significantly because local radio advertising is not bought on PPM share. It does impact your national share. Absolutely it impacts your national numbers.
3643 THE CHAIRPERSON: It may not impact your business plan, but it has the potential to impact your credibility.
3644 MR. LARSEN: Right.
3645 THE CHAIRPERSON: And there is value to that.
3646 MR. LARSEN: Absolutely. No question.
3647 When I look at the list of radio stations and the ratings from top to bottom I am comfortable that on FM playing country music in Calgary, Alberta that we will have in that range of a four share within the first year of being on the air.
3648 THE CHAIRPERSON: Great.
3649 COMMISSIONER SIMPSON: Sorry. You seldom get good news from government or lawyers, but I just add a note that was sent to me by our policy and legal people that our conversation with respect to CCD and your testimony was sufficient enough that it will not be necessary to file a section 4.
3650 MR. LARSEN: Oh, thank you.
3651 THE CHAIRPERSON: Thank you, Stephen.
3652 Commissioner Menzies...?
3653 COMMISSIONER MENZIES: Thank you.
3654 Just actually to be blunt and give you the chance to deal with this issue, there are probably at least 10 people in the room who are saying these are really good radio operators and they are really fine people and if we gave them a licence in Calgary they would get killed --
3655 MR. LARSEN: Sure.
3656 COMMISSIONER MENZIES: -- and don't do it if you like them.
3657 MR. LARSEN: Right.
3658 MR. LARSEN: Actually, those 10 are saying, "Don't do it because we want the station", but anyway.
3659 COMMISSIONER MENZIES: No, no, because they will point to other places where these things have happened and --
3660 MR. LARSEN: Yes.
3661 COMMISSIONER MENZIES: -- and that sort of stuff and that is maybe not fair but it's reality.
3662 MR. LARSEN: Sure.
3663 COMMISSIONER MENZIES: So I thought we should bring that out because we have had Pattison in here who has, you know, reasonably deep pockets, right, and they are really willing to be a standalone; we have Harvard in here which has pretty deep pockets and Harvard is kind of, "We need two to compete."
3664 MR. LARSEN: Right.
3665 COMMISSIONER MENZIES: That is sort of the mantra that goes on. And it's probably true if everybody believes it's true, but it's maybe not true in some cases.
3666 So you compete in Lethbridge with two Pattisons?
3667 MR. LARSEN: Two Pattisons, two Rogers.
3668 COMMISSIONER MENZIES: Two Pattisons, two Rogers.
3669 And you complete in Medicine Hat with...?
3670 MR. LARSEN: Two Pattison and a single standalone Rogers.
3671 COMMISSIONER MENZIES: And a single standalone Rogers. How is that?
3672 So why would you not get killed in Calgary?
3673 MR. LARSEN: Sure. I'm glad you asked because it is certainly hard not to get painted into that box by other people.
3674 COMMISSIONER MENZIES: Yes.
3675 MR. LARSEN: For one, as a small entrepreneurial younger country with an involved owner/operator in myself, we operate very differently than some other people do.
3676 So the Shore example in Vancouver has been discussed by previous applicants in the hearing. The difference between, say, us and what happened at Shore is the people that won the Shore licence didn't have any other radio stations, they are not radio people. It is the person that started The Keg restaurant and Bruce Allen who manages Brian Adams and other country big, big music artists, so in other words they are investors, very wealthy, deep-pocketed investors that wanted to get into the radio industry because it can be profitable.
3677 To me, in my mind, I have done radio since I was 16 years old, that's all I have done in my career, so I'm passionate about contributing to this industry and being in this industry and going forward and growing my company to be a significant player -- as much as you can be a significant player with three or four stations -- and contribute to the industry because it's what I have done. It's my passion and I love it. So we operate differently.
3678 So those investors decided, I'm anticipating, that in Vancouver they were losing a lot of money, they didn't want to keep putting their own money into it and consequently decided to sell.
3679 When the sale of Shore was denied, all the public record came out on the CRTC website, so reading through some small examples of how we might be different from that type of operator.
3680 They had studio space with rent in excess of $20,000 a month. You know, our intention is to get nice studio space on the peripheral of Calgary, maybe in the southeast or northeast, one of the quadrants of Calgary where real estate is somewhat more affordable. We need 3,500 square feet. I have done market research, we can probably get there all in for about $30 a square foot so our rent will be somewhere in the neighbourhood of $6500 or $7000 a month.
3681 As a general manager/owner of the radio company I'm not going to pay myself a dollar more in the start-up years than I pay myself today because I don't need any more money to live my lifestyle.
3682 So fundamentally we have some advantages from the structure of our company that allow us to operate differently than some of the other examples.
3683 You know, the other example that was put out was the Yerxa station in Edmonton. Well, John has extenuating personal health issues that led him to decide to sell that radio station on advice of his doctor and a personal decision to say, "If I keep going this hard I could potentially lose my life", because he has been diagnosed for a second time with a life-threatening disease.
3684 So those aren't necessarily circumstances where independents want a licence and they just decided to cash out in two years to make a bunch of money and go away, or that they couldn't operate radio stations in those markets. I think it pained especially John in Edmonton to sell because his passion was that radio station, but circumstances come around that have people to make some decisions.
3685 I understand the argument that it is tough. I'm not saying that Lethbridge and Calgary are identical apples to apples, but I do know after 26 years in this business that running a good radio station is the same formula in Lethbridge that it is in Calgary. It's more competitive here, there are more stations, there is more risk, there is higher expenses, but if you put on a good product and have good ratings and serve your listeners, that will translate into sales and revenue and your ability to grow.
3686 Today we have an operating company with two radio stations within a two to two-and-a-half hour drive of Calgary and I was pleased to see that in this application process one of the new criteria is for our company to file financial statements from our existing broadcaster in addition to the additional financing that we would have. So you have been able to see that Clear Sky Radio is a profitable company, that we generate, you know, figures in the -- six figures that can help support the start-up of this Calgary radio station.
3687 So as investors, myself, Mary and Hugh, are 100 percent prepared to put the profit we make in our current two stations back into our company to grow the company bigger. That is what entrepreneurs do to build their companies. We are prepared to reinvest into our company to help it grow.
3688 We honestly operate different than the large corporations. And it's not that we are better than them or they are better than us, it's just different due to our circumstances. I mean Bell Media operates differently than Clear Sky Radio, they are a multibillion dollar corporation in so many different businesses, right.
3689 So for me, when I say passionately that this application is a company-changing decision for our company, because if we grow from a small market operator to one that has a mix of small and major markets, that is a truly honest statement.
3690 I struggle a little bit when some of the big companies say, "We can't compete and if we don't have another station we're going to go bankrupt" when, you know, they spend $1 billion to buy two sports franchises.
3691 But it's different circumstances.
3692 THE CHAIRPERSON: We are going to get into that Thursday.
3693 MR. LARSEN: Sorry. No, no, no. And I don't -- if I have gone off to some extent, please -- sorry, sir.
3694 THE CHAIRPERSON: A little off the reservation there.
3695 MR. LARSEN: Sorry, sir, but I was just trying to express how we are different from the big companies.
3696 COMMISSIONER MENZIES: Yes, understood. Thank you. I just thought I would give you that chance to address that straight on.
3697 MR. LARSEN: I might have to come back and backpedal on Thursday.
3698 THE CHAIRPERSON: You don't have a lawyer sitting in the second row, that's the biggest issue.
3699 MR. LARSEN: Yes, that's my problem, I know, so there you go.
3700 THE CHAIRPERSON: Well, thank you. I think that wraps it up.
3701 Madame Létourneau, est-ce qu'il y a des engagements?
3702 Thank you so much.
3703 MR. LARSEN: Thank you.
3704 THE CHAIRPERSON: Have a great day.
3705 MR. LARSEN: Thank you.
3706 THE CHAIRPERSON: Madam Ventura, tomorrow 9:00 a.m. --
3707 THE SECRETARY: Tomorrow 9:00 a.m.
3708 THE CHAIRPERSON: -- with Tietolman, Tetrault --
3709 THE SECRETARY: That's correct.
3710 THE CHAIRPERSON: -- following by Rawlco tomorrow morning.
3711 THE SECRETARY: That's correct.
3712 THE CHAIRPERSON: Great. Thank you so much. Enjoy the rest of the day.
--- Whereupon the hearing adjourned at 1636, to resume on Wednesday, February 8, 2012 at 0900
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