ARCHIVED - Transcript, Hearing 8 February 2012
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Volume 3, 8 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.
8 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.
8 February 2012
- iv -
TABLE OF CONTENTS
PAGE / PARA
10. 7954689 Canada Inc.587 / 3721
11. Rawlco Radio Ltd.658 / 4220
12. Corus Entertainment Inc., on behalf of its wholly owned subsidiary CKIK-FM Limited745 / 4792
4. Multicultural Broadcasting Corporation Inc.824 / 5218
5. Punjabi - World Network Ltd.845 / 5322
10. 7954689 Canada Inc.853 / 5366
--- Upon commencing on Wednesday, February 8, 2012 at 0909
3713 THE CHAIRPERSON: Good morning.
3714 Madam Ventura...?
3715 THE SECRETARY: Thank you, and good morning.
3716 We will now proceed with item 10 on the Agenda, which is an application by 7954689 Canada Inc. For a broadcasting licence to operate an English-language commercial FM radio programming undertaking in Calgary.
3717 The new station would operate on frequency 100.3 MHz, Channel 262B, with an effective radiated power of 7,800 watts, non-directional antenna with an effective height of antenna above average terrain of 298.5 metres.
3718 Appearing for the applicant is Mr. Jim Connell.
3719 Please introduce your colleagues, after which you will have 20 minutes to make your presentation.
3720 Thank you.
3721 MR. CONNELL: Thank you very much.
3722 Good morning, Mr. Chairman, Commissioners and CRTC staff members.
3723 Thank you for the introduction. I am Jim Connell and I would like to introduce the members of our panel, starting at my far right with one of the managing partners of Tietolman Tétrault Pancholy, Nicolas Tétrault.
3724 Sitting next to him is Mr. David Bray of Bray Partners Media Consultants.
3725 Another managing partner of the company Tietolman Tétrault Pancholy is Mr. Paul Tietolman.
3726 On my immediate left the third managing partner of the company, Rajiv Pancholy.
3727 Next to him, legal advisor, Arthur Hamilton of Cassels Brock and Blackwell.
3728 On the far end of the front table, Marco Perron, who is the CEO of Raymond Chabot Grant Thornton Consulting.
3729 Behind us, to my immediate right -- there he is -- is Dale Brown, partner at Grant Thornton in Calgary.
3730 Behind me is Erin Roulston, the Associate Vice President of Leger Marketing in Calgary.
3731 To her left is Corey Anne Bloom, a partner at Raymond Chabot Grant Thornton.
3732 We would like to thank the CRTC for the privilege and the opportunity of submitting our unique proposal to be granted a licence for the 100.3 FM frequency in order to better serve the broad cultural cross section of listeners in the dynamic city of Calgary.
3733 I am pleased to say that our panel consists of some of the pre-eminent broadcast, financial and creative professionals in this country and for your convenience we have included brief profiles of each of them in the annex to our presentation.
3734 We are proposing to create a radio station the likes of which has never been heard before in this country, a radio station that enthusiastically supports emerging creative talent and willingly promotes Canadian artists and our country's recording industry, a radio station built on true musical diversity spanning all genres of popular music, from pop to country, rock to folk to reggae, and yes, a few hits.
3735 Why would we want to do this?
3736 Well, because we feel the total lack of diversity in modern music radio formats is responsible for driving listeners away from the medium. Radio faces a crisis of relevance. The hours tuned for teens and young adults has decreased by in excess of over 30 percent over the last seven years. Radio's share of voice, if you will, has been diluted by competition from the internet to cell phones, MP3 devices, various gaming devices, on demand video programming, fragmented TV programming, hundreds of specialty channels and much more. The music industry itself has been imploding in a financial crisis as it struggles to reinvent itself.
3737 In short, people are searching out the diversity of musical content that radio used to provide but does not anymore. Most listeners can find very little to musically differentiate BOB from HITS, HOT whatever from COOL whatever, and of course we can't forget Jack.
3738 Well, we have a catchy branding word s well -- CHOICE.
3739 And if you study the surveys of this market recently conducted by Leger Marketing's Calgary office, Calgarians are craving a diverse choice on the radio.
3740 Here to take us through those numbers is Ms Erin Roulston from Leger Marketing's Calgary office.
3742 MS ROULSTON: Yes, hello.
3743 Leger conducted a telephone survey among over 500 radio listeners in Calgary aged 18 and over in September 2011. Eight of 10 Calgarians agree that existing radio stations tend to always play the same songs and they want more variety.
3744 One third of Calgary listeners cannot find a radio station with a music selection that suits their tastes.
3745 One half of the respondents think that the Calgary radio should offer a greater choice of music and music formats.
3746 Further, a total of 31 percent of listeners indicate that they would listen more if there was a better choice of music with less repetition.
3747 Further, Calgary radio listeners believe that if there was a new radio station in the region it should focus on music format -- fully 69 percent would vote for that -- rather than on a talk radio format.
3748 Finally, 35 percent of Calgarians believe that Calgary radio does not cover enough local issues.
3749 Thank you.
3750 MR. CONNELL: Thanks, Erin.
3751 You know, it used to be thought that radio listeners regularly sampled fewer than three radio stations. New rating methodology shows that that was probably incorrect, that they regularly surf at least half a dozen stations looking for the diversity that they are not finding.
3752 So that's the why; here is the how.
3753 By building a playlist that is four to five times longer than your typical commercial station these days. We are talking a playlist that may be 2,000 cuts deep or more;
3754 by playing a minimum of 40 percent Canadian content. Fifteen percent of the music we play will be from emerging talent;
3755 and by stocking that huge playlist with cuts from every category of pop music.
3756 The Choice, 100.3 FM, is being founded on the belief that listeners crave exposure to a format that delivers a much broader cross section of music than is currently being offered in the marketplace. We choose to take listeners on a journey that will allow them to discover diversity.
3757 We will deliver the very best music from a variety of genres, including folk, contemporary pop, R&B, Triple A, aboriginal, alternative rock, reggae, multicultural, country, classic rock and much more.
3758 In short, the Choice, 100.3 FM, in refusing to be limited by conventional programming ideologies, will take listeners on a path to new and exciting musical horizons. We will offer up an eclectic blend of the hits from the past, present and future, without being constrained by the old-fashioned chart-based definition of what constitutes a hit.
3759 Most importantly, we will be seeking out the next generation of up and coming Canadian artists. The Choice, 100.3 FM, is committed to playing a minimum of 15 percent emerging artists and a minimum of 40 percent Cancon overall.
3760 But enough explaining, we have something we would like you to hear.
--- Audio Presentation
3761 MR. CONNELL: A printed and much longer sample playlist is included in the annex to our application. I'm sure your analysts are doing the count already, but you will find that the Canadian content numbers, both in the audio and on the printed playlist, are extremely high, well over 40 percent.
3762 The Choice on the radio is also going to be extended to the CHOICE on the internet. It will involve online live streaming of audio and video, mobile apps, a comprehensive web site, an exciting social media presence and a commitment to highlighting emerging artists online as well as on the radio.
3763 We know we will be successful because this approach to supporting Canadian and emerging artists, going so far as to produce and finance their recordings, has been done by Paul Tietolman in the past and it led to great success for both the artists involved and the radio station, as you are about to hear.
--- Audio Presentation
3764 MR. CONNELL: Despite what you just heard, it's not just about the music. As you can see in our application, we are making a sizable commitment to a fully staffed news and information department in an era when many, if not most, music stations have stripped their news operations to the bare bones, we will be running a 24-hour a day, 7 day a week newsroom.
3765 On the weekends we will be working with Canadian comedy icon Mark Breslin to develop a Calgary comedy program. Much of this programming will be presented live in Mark's Calgary Yuk Yuk's comedy club location.
3766 The Choice, 100.3 FM, as a condition of license pledges to invest an amount of over $5 million in the initiatives mentioned above. This amount is budgeted over the first term of license.
3767 Showcasing Canadian and emerging talent in an inclusive musical environment that leads to people discovering artists and genres that they may never otherwise be exposed to is what gives us our diversity and gives Calgarians a choice, 100.3 FM.
3768 Mr. Chairman and Commissioners, thank you again for the privilege and opportunity of appearing before you today. Our managing partners and our expert panel are here and pleased to answer any and all questions you choose to ask at this time.
3769 Thank you.
3770 THE CHAIRPERSON: Thank you for your presentation this morning.
3771 I'm sure there will be some questions amongst the panellists.
3772 We are going to start with Commissioner Patrone.
3773 COMMISSIONER PATRONE: Thank you, Mr. Chairman.
3774 Thank you for your presentation this morning.
3775 Applicants will often tweak their applications before they appear before us. You have changed your Cancon, your emerging artist commitment, your CCD commitment. Your written application included a reference to a listener-driven format which I didn't hear too much about during your oral presentation.
3776 Normally making last minute changes in not acceptable, at least not changes that pretty much overhaul your application.
3777 I would like you to start this morning by telling us why we should accept these changes.
3778 MR. TIETOLMAN: Yes, Mr. Patrone.
3779 First, we have been in this business many, many years and we appreciate and understand and respect your words and you thoughts.
3780 Unfortunately, there must have been a typographical error when it comes to 30-35 percent versus 40 percent music content.
3781 We have always been known in radio for encouraging, promoting, discovering, launching throughout, on-air and off-air, new Canadian talent. Therefore, when we started doing the after research work from the application timeframe, we discovered a wealth of talent beyond what we even thought possible in new emerging talents and in Canadian content talent, and therefore we felt very comfortable to make that commitment to you today, previously in writing that we prepared and modified from 10 to 15 percent for new emerging talent.
3782 It's as simple as that.
3783 COMMISSIONER PATRONE: That's quite a typo.
3784 MR. TIETOLMAN: Thirty to 40?
3785 COMMISSIONER PATRONE: Going from -- a good proof reader might have come in handy --
3786 MR. TIETOLMAN: Right.
3787 COMMISSIONER PATRONE: -- because, as you now, our minimum is 35 percent.
3788 MR. TIETOLMAN: Right.
3789 COMMISSIONER PATRONE: And I fully expect and accept the fact that you have been in this business for a long time --
3790 MR. TIETOLMAN: Yes.
3791 COMMISSIONER PATRONE: -- you are aware that the regulations call for a minimum of 35 percent across the broadcast week, 35 percent between the hours of 6:00 a.m. and 6:00 p.m. Monday through Friday; correct?
3792 MR. TIETOLMAN: Absolutely, and that's why three to four -- if it was 35 to 40 it would be a different story, but somehow, some way it got through in the wrong way and we apologize.
3793 COMMISSIONER PATRONE: The 15 percent emerging market commitment, is that 15 percent of the total or 15 percent of the 40 percent?
3794 The reason I ask is, we have had applications --
3795 MR. TIETOLMAN: Yes. Fifteen percent of the --
3796 COMMISSIONER PATRONE: Yes, which one?
3797 MR. TIETOLMAN: I'm sorry. I understand what you're asking.
3798 COMMISSIONER PATRONE: Okay.
3799 MR. TIETOLMAN: Fifteen percent of the total.
3800 I have Mr. David Bray sitting next to me who can answer this even more elaborately than I can.
3801 COMMISSIONER PATRONE: Your written application talks a little bit, albeit in somewhat vague terms, about a listener-driven format.
3802 I understand that you many not want to give away any competitive secrets, but this really is your opportunity to sell this panel --
3803 MR. TIETOLMAN: Okay.
3804 COMMISSIONER PATRONE: -- on how you are going to do this.
3805 MR. TIETOLMAN: Okay. Well, first, no matter what we do we are there and we will respect Canadian content rules and regulations --
3806 COMMISSIONER PATRONE: Okay.
3807 MR. TIETOLMAN: -- and our obligation and our promise of performance.
3808 COMMISSIONER PATRONE: Fair enough.
3809 MR. TIETOLMAN: If you check our history you will always find out that that's where we have been that's where we are at.
3810 Second, what we want to do is basically measure the pulse, the tastes, the desires of Calgary listeners, but we also know that we have the responsibility ultimately as licensees and holders of that licence to respect the rules.
3811 Second, when it comes to Canadian content we have a very bold initiative where we are going to reward listeners when they do, whether it be from their iPad or from their cell phone, on the internet, by telephone, to encourage them to request Canadian content music.
3812 But when it comes to the new emerging talent, obviously they don't know what that talent is until we launch it on-air for the first time for each and every artist involved.
3813 COMMISSIONER PATRONE: Okay. I want to get to that a little later on.
3814 MR. TIETOLMAN: Right.
3815 COMMISSIONER PATRONE: I am aware that you are going to do that.
3816 I'm sorry, did you want to add more about -- I take it your social networking is going to play a role?
3817 MR. TIETOLMAN: Well, absolutely. I am not an expert on the internet --
3818 COMMISSIONER PATRONE: Nor am I.
3819 MR. TIETOLMAN: -- I'm in the broadcasting business of radio and I'm not going to try to venture into that arena at this point. I would prefer to stick to the fact that we are primarily radio broadcasters and the prime importance is doing well on the air for a listenership in this city of Calgary.
3820 COMMISSIONER PATRONE: Now, I have seen some diverse musical formats in my time at the Commission, but this probably takes the cake. As I read it, you can play a Bob Marley track, follow it with Arcade Fire and then over to Lady Gaga. It seems at first glance to be sort of programming by a roulette wheel, almost a non-format format. You describe it as eclectic and it is that.
3821 Did the Leger survey tell you anything about whether this type of thing would be embraced in Calgary?
3822 MR. TIETOLMAN: Well, first of all, if we go through the history of broadcasting, I remember when a gentleman by the name of Geoff Stirling launched a progressive rock station in Montreal called CHOM-FM and at that time people --
3823 COMMISSIONER PATRONE: Yes, we know of that operation.
3824 MR. TIETOLMAN: Yes. They were scratching their heads, they couldn't understand exactly what was going on at first, but basically, you know, when something new comes along people will always fall back on the true and the tried, but at the same time that's not diversity and that's not giving more choice to listenership and maybe that's why radio is losing listenership.
3825 So we are trying -- we are ready to try something bold and we truly believe when you take a look at the tastes of music by an individual it's like food, today you are eating Italian, tomorrow Greek, the day after Spanish, the day after that sushi. The same thing with music, we found by research that the average person has multiple tastes in music.
3826 And if you go to a wedding you are going to hear R&B, dance, reggae, you are going to hear old -- you know, solid gold standards, you are going to hear everything and why shouldn't a radio station be able to do the same thing to please their audience.
3827 COMMISSIONER PATRONE: But how do you choose? I mean is it throwing darts at a dartboard?
3828 MR. TIETOLMAN: Oh, no, absolutely not. Absolutely not.
3829 Obviously when it comes to new emerging talent, if it's playable and presentable on-air it's going to be played on-air.
3830 Obviously I still have a level of quality and a quantity value to it from the point of view of reaching out to listeners and being able to grasp and hold onto a listener.
3831 When it comes to the historical libraries of music, obviously there will be some popular and well-sold units, basically songs, but when you mix that with the new Canadian content, you mix that with the emerging talent, it gives a radio station a brand new unique sound. It's obviously not going to sound like anything else in the market, that's for sure.
3832 COMMISSIONER PATRONE: You have made no spoken word commitment that I could find, neither in your written or your oral presentation. I'm sorry if it's here somewhere, but I didn't see it.
3833 The 24-hour news --
3834 MR. TIETOLMAN: Yes.
3835 COMMISSIONER PATRONE: -- operation, that is new and a bold commitment, probably one that might fly in a city the size of Calgary.
3836 MR. TIETOLMAN: Yes.
3837 COMMISSIONER PATRONE: But can you provide us with a spoken word commitment?
3838 MR. TIETOLMAN: Absolutely.
3839 COMMISSIONER PATRONE: If not now, then perhaps --
3840 MR. TIETOLMAN: Absolutely, sir.
3841 First, one of the shows once a week we will be presenting from the Yuk Yuk club will be the encouragement to discover, develop, launch and support new comedy talent. When we scan the radio dial in every major city aside from the disk jockey basically adlibbing or they are playing clips from last night's David Letterman show, to me that's not Canadian content. To a lot of people it's not Canadian. It may be interesting, absolutely; it may be funny, but there are a lot of great Canadian comedy talents in this country.
3842 I mean you take a look at all the talents at Southwark(ph), we developed that comedy talent on our stations in Montreal and we won over audiences massively. I mean to reach almost 1.4 million people on (indecipherable) and a BBM is something that we did and we did it purely because we had that commitment to the over spoken talent that we created, we launched, we developed, we supported and, believe me, it works.
3843 COMMISSIONER PATRONE: Yes.
3844 MR. TIETOLMAN: And we have done it for many, many years and that's exactly what we plan to do in Calgary.
3845 COMMISSIONER PATRONE: Well, a spoken word commitment will consist of a number of hours.
3846 MR. TIETOLMAN: Yes.
3847 COMMISSIONER PATRONE: So do you have that number?
3848 MR. TIETOLMAN: Yes, absolutely.
3849 First of all, early in the morning when people are getting up at 4 o'clock in the morning to get on the road at 5 o'clock. If you want to call it the pre-morning show from 5:00 to 6:00, it's basically -- and you can see it in our schedule of programming -- it's news, news and comments and all of the different whatever type news happened the night before, early that morning, will be presented in a one hour format from 5:00 to 6:00 in the morning Monday to Friday. That alone is five hours of content right there.
3850 In addition to that, obviously morning drive, drive home, you will have spoken word content on a regular basis.
3851 We have a team of reporters, we want to serve Calgary. Radio is local, as we all agree on. Radio local means local news and happenings, events in the city. Where the people are, we will be.
3852 COMMISSIONER PATRONE: Sir, do you have an aggregate number that you could supply for us?
3853 MR. TIETOLMAN: Yes, absolutely. I would say it's going to be close to 10 hours a week.
3854 COMMISSIONER PATRONE: Close to?
3855 MR. TIETOLMAN: Ten hours a week. Absolutely. Definitely.
3856 COMMISSIONER PATRONE: Okay. Your CCD commitment is $5 million?
3857 MR. TIETOLMAN: Five million ninety thousand dollars.
3858 COMMISSIONER PATRONE: And it's going towards comedy, including the Calgary Comedy program, Calgary Yuk Yuk's?
3859 MR. TIETOLMAN: Right.
3860 COMMISSIONER PATRONE: And that is an improvement over your written application, but there are still questions around eligibility and those questions basically are on two grounds. It's comedy, which normally does not qualify, and in this case it appears it's intended to subsidize your own programming.
3861 As you're aware, being an experienced radio operator, CCD is intended for third-party contribution, not as a way to offset your own marketing expenses. It's not meant as a cost of doing business.
3862 But here, especially as you refer to the prizes, for instance, anywhere from $100 to $1,000 for Canadian requests; is that correct?
3863 MR. TIETOLMAN: No. The $5,090,000 is primarily for creative Canadian content, okay.
3864 COMMISSIONER PATRONE: Okay.
3865 MR. TIETOLMAN: This will be -- there won't be established stars put on air. This is not just a comedy club show. This is to discover, help develop, to launch new comedy talent in conjunction with a third party called the Yuk Yuk's Clubs. Mark Breslin is a very, very well-known entrepreneur in the comedy field in this country and around the world. We are basically putting this in his hands.
3866 So basically it's not just for programming, because to fill a one-hour or two-hour show once a week --
3867 COMMISSIONER PATRONE: Well, it can't be programming anyway.
3868 MR. TIETOLMAN: -- that's not going to get us, at average quarter-hour, 12 hours a day prime time. That is to encourage Canadian talent, new emerging talent in that field.
3869 COMMISSIONER PATRONE: Just for clarity's sake, you're going to offer anywhere from $100 to $1,000; is that correct?
3870 MR. TIETOLMAN: No. That's got nothing to do with comedy, absolutely nothing to do with comedy.
3871 COMMISSIONER PATRONE: No, I know that that's not, but that appears to have something to do with your CCD commitment.
3872 MR. TIETOLMAN: Well, no. Those amounts are really not -- shouldn't be considered cash amounts. The $5,090,000 is our formal and solid commitment to invest in -- and maybe it was misunderstood -- but to invest in discovery of new music talent as well.
3873 We've done this with a show called "Empire Future Stars." We've developed and we've launched, we've discovered dozens and dozens of talents who today make up 50 percent probably of the star system in French-Canada and in Europe, selling millions of units over the years. That's where that money is going.
3874 The comedy portion is a very small portion of the whole thing. The incentive to --
3875 COMMISSIONER PATRONE: Okay. Well, if that doesn't qualify, sir -- if the comedy does not qualify, and it may not, do you have a back-up plan, do you have somewhere else that you could possibly direct the funds or do you want time to think about that?
3876 MR. TIETOLMAN: Well, first of all, Mr. Patrone, I read the Regulation very clearly --
3877 COMMISSIONER PATRONE: Okay.
3878 MR. TIETOLMAN: -- and it states -- if I can get a copy of it or if you can maybe read it out loud for everybody's benefit.
3879 And it says very clearly "for creative oral content." Now, to me, comedy is creative oral content. If I'm wrong, please correct me, I misunderstand it completely. I don't think I do.
3880 I'm not trying to question your thought on that, but I read that policy very, very well a dozen times over to make sure, and over the many, many years with our stations that we used to own and operate we did this kind of effort and it was always qualified as, you know, a CCD initiative.
3881 COMMISSIONER PATRONE: I am going to ask the Chairman, do we need some kind of clarification on that policy as it applies to comedy?
3882 THE CHAIRPERSON: We'll set that aside and we'll get clarification on that, Mr. Patrone. You should maybe come back to it.
3883 COMMISSIONER PATRONE: Okay. Well, let's continue then.
3884 THE CHAIRPERSON: Yes.
3885 MR. TIETOLMAN: Mr. Patrone, if I can add just one thing.
3886 COMMISSIONER PATRONE: Yes.
3887 MR. TIETOLMAN: No matter what, if it's misinterpreted, you asked the question, we'll give you a clear answer. If it's not a qualified content, we still commit $5,090,000 to initiatives and/or third parties that would be acceptable to the Commission and we would be very happy to supply that in writing to you in the next day or two.
3888 COMMISSIONER PATRONE: Fair enough.
3889 You made some changes, as I mentioned, but you didn't alter your financials, is that correct, which raised some questions because normally one has an impact on your business plan. When you change CCD, CanCon, emerging artists, somehow that has to be factored in and numbers to sort of be crunched in order to resonate with the changes that you've made. But your business plan hasn't changed; is that correct?
3890 MR. TIETOLMAN: Not at all because when the accounts -- and I'll turn this over to Marco Perron in about 30 seconds.
3891 But to clarify it, when you do a business plan and projections you always put a buffer in for error, for miscalculation, 5 percent, 10 percent, which we did, okay.
3892 We still commit to that, to everything we've put into this document, the application, the presentation today, and we do know, and we've clarified that with our bankers, with our chartered accountants, that we have enough cash flow, that we have enough cash banking standby credit facility to keep every promise that we make, every commitment that we state to you today.
3893 COMMISSIONER PATRONE: Thank you. I will get to that actually. Of all our applicants, you've tabled the most optimistic financial forecast.
3894 As the format is untested -- no one appears to have ever done it quite this way before -- how do you justify profitability in year three of operation and how, further, do you justify the highest revenue figures relative to all our other applicants?
3895 MR. TIETOLMAN: Okay. I think that there has been a bit of a miscalculation.
3896 COMMISSIONER PATRONE: Okay.
3897 MR. TIETOLMAN: We included in our sales figures/sales projections an amount that we were being very, very transparent to show honestly and clearly that when we do reciprocal trade for whatever the reason, whatever the need, we show that as other revenue. Basically that can easily be stripped away because it's not a cash revenue.
3898 Therefore, our revenue projections, as Mr. Bray can confirm -- being former president of a committee for BBM and PPM, can clearly state where our figures lie compared to any other applicant and compared to the TRAM reports for the market of Calgary.
3899 Mr. Bray.
3900 MR. BRAY: Yes. Thank you for the privilege of speaking.
3901 We have calculated our figures on this basis. Looking at the TRAM figures for the end of December, as I'm sure you're quite aware, an average value of a share point in millions is .905. As you know, the market delivers about, at this point in time, $90.5 million.
3902 So you take the value, average value of a share point. I've done a detailed estimate of hours tuned, share of hours tuned for this format. I did that by looking at the last 14 PPMs, then did a comparative analysis of all other markets and looked in detail at the trending for all stations in the marketplace, looked where the shares were going to be drawn from, and came to the conclusion that the estimate in the first year, the estimated share of hours tuned would be 3.0.
3903 So if you take 3.0 times the average value of a share point, being .905, you're looking at approximately $2.7 million in the first year.
3904 In subsequent years, of course, that is only speculative. As I'm sure you have noted from looking at the TRAM figures, they've fluctuated significantly in the last three or four years, but I will say that I project probably about a 3 percent annual increase in terms of costs, et cetera, and revenue.
3905 COMMISSIONER PATRONE: On the expenses side, they're pretty high, presumably because you'll be giving away all that cash to callers; right?
3906 MR. TIETOLMAN: Well, it could be cash or it could be other items as well, but the point is that's a very small part of our total budget. If you look at it in perspective, it's what, 3-4 percent. It's not a massive amount -- 5 percent. Our commitment is to content, our commitment is to develop Canadian content, our commitment is to develop support, encourage emerging artists, emerging talent, and we make that solid commitment today.
3907 COMMISSIONER PATRONE: And if the revenue projections prove overly optimistic -- it's a very competitive market -- you've touched on this already, but I take it you will be able to absorb losses over an extended period were it to come to that?
3908 MR. TIETOLMAN: Yes, sir. If I can ask Mr. Marco Perron from Grant Thornton to answer that question.
3909 COMMISSIONER PATRONE: Of course.
3910 MR. PERRON: So yes, we work with the client to translate those financial projections into cash flow statements.
3911 So over the seven-year period, the financials actually are cash flow positive in year four, and at any given point in time there's enough cash on hand, of about $3 million, which is the lowest they will go. So they always have that $3-million threshold to play with over the seven-year period.
3912 We also ran a scenario to be pessimistic and say if the revenues are not there and they're 15 percent lower across the board, the company would still have at least $1 million on hand at any given point in time over the seven years.
3913 COMMISSIONER PATRONE: We found a $280,000 revenue source that didn't specify where that came from. Is that interest on the $3 million? Could you help us out with that?
3914 MR. TIETOLMAN: Okay. The $280,000, that was a reciprocal trade, in a transparent way to show you that if we, for example, acquire vehicles for a news department, we usually trade, as you know, you've been in the radio business yourself, some advertising exchange credits that we can and will develop, will be done in other markets.
3915 I've worked as a consultant in many markets in this country, in the States and elsewhere. I can tell you that that's common standard practice, but we wanted to be honourable and clear and transparent on that.
3916 It's not to be included really in total cash revenue. It's not part of cash revenue.
3917 COMMISSIONER PATRONE: Can you tell me the status of your Montreal AM talk station?
3918 MR. TIETOLMAN: Rajiv.
3919 COMMISSIONER PATRONE: You haven't launched?
3920 MR. TIETOLMAN: No.
3921 MR. PANCHOLY: We have not launched yet, but perhaps if you could just let me know in what context you would like me to comment on the Montreal talk station.
3922 COMMISSIONER PATRONE: Well, within the context of expenses going forward were you awarded a licence here, and not having launched in Montreal, the Commission wants some assurance that you're equipped financially to absorb that kind of burden on two fronts rather than just one.
3923 MR. PANCHOLY: That's correct. Let me answer that question, then I'll defer to Marco Perron to give you some more details.
3924 In our Montreal application we had actually earmarked approximately $8 million of capital expenses to two AM talk stations, and this was principally for setting up the infrastructure, acquiring the land, setting up transmitter towers, acquiring all the infrastructure.
3925 Now, since then, we've actually made some tremendous progress, and one of the most significant things that has happened is we've actually been able to sign an agreement with another operator, whereby we will be using their infrastructure on a leased basis, and that has effectively wiped away from us, from our sort of balance sheet about, you know, $5 to $6 million of up-front capex.
3926 So we are further ahead in our Montreal application by that amount, which is in a way almost the same amount as we need to launch Calgary.
3927 COMMISSIONER PATRONE: Okay.
3928 MR. PANCHOLY: Marco, do you want to add to that?
3929 MR. PERRON: If you want precise numbers, in the Montreal application we had budgeted $2.5 million per station for land and transmission, which was roughly $5 million for both stations.
3930 So given that new lease, those will be savings, but we did account for in the Montreal business case that there's about a million dollars of expenses to bring those leased towers up to the standards that they need. Therefore, it provides a savings of roughly $4 million on the Montreal business case.
3931 COMMISSIONER PATRONE: Okay. Let's move over to your choice of proposed frequency, 100.3.
3932 Did you attempt to get an agreement from Golden West in order to waive the requirement to protect the Golden West, High River and Okotoks stations from possible interference?
3933 MR. HAMILTON: We have made efforts, and I will let my colleague speak to the specifics of that.
3934 We're obviously looking as well at the content of the waiver that's been given to the other applicant and there is a danger here that the waiver could be misinterpreted.
3935 Evelyn's looking at the waiver and saying, well, that applies to Rawlco. It doesn't. It's a waiver that speaks to Golden's position. And because the waiver they're prepared to give to a different applicant which has a greater potential for interference is such that Golden has made a statement that they can give that waiver, looking at their business case. For that reason, the waiver has to apply equally and speaks to Golden's position here against 795.
3936 COMMISSIONER PATRONE: Okay. I will let Rawlco interpret it the way they choose. I'm not sure if it's exactly the same way as what you've described, but --
3937 MR. HAMILTON: And, sorry, let me just explain that.
3938 COMMISSIONER PATRONE: Yes.
3939 MR. HAMILTON: That's the danger. It's not for Rawlco to interpret it. Look at Golden and take them at their word. They're the ones making the decision about their business case and interference.
3940 And because 795's proposal has a lesser potential for interference, what Golden is saying is that the waiver they're prepared to give Rawlco should equally apply to the waiver that they should be required to give with respect to this application.
3941 COMMISSIONER PATRONE: Okay. Do you expect that there will be any possible interference as far as Golden West's operation is concerned?
3942 MR. PANCHOLY: We have done extensive studies on this question because of the issue involved here --
3943 COMMISSIONER PATRONE: Yes.
3944 MR. PANCHOLY: -- and I think we've come to a few conclusions.
3945 Number one, what we're proposing is a fairly modest power FM station, as mentioned, 7,800-watt switches, a lot less than other applicants are proposing for the same frequency.
3946 The second thing we've done is we looked at basically the contours and we have concluded that there's absolutely minimal chance of interference in the territories in which Golden West is providing those services. And that, I think, is a key point of the discussion.
3947 We've also mentioned to Industry Canada that we sign up as applicants to remedy any issue that may come up as long as it's based on valid and just claims of interference, and I think this is where one of the issues is, that there is, I would say, a disagreement on what constitutes the area over which this licence applies.
3948 COMMISSIONER PATRONE: Okay. Well, thank you very much.
3949 Those are my questions, Mr. Chairman.
3950 THE CHAIRPERSON: Thank you, Mr. Patrone.
3951 Commissioner Simpson.
3952 COMMISSIONER SIMPSON: Thank you very much. Very interesting, bordering on courageous, viewed programming.
3953 I would like to actually explore your views with respect to your programming proposal because one of the benefits of being as old as some of us are is that you get to see things coming around again and those things often are good ideas whose time has not necessarily passed but simply went into hibernation for a while, and I'm reminded by your programming outlook that it's not dissimilar to MOR back in the sixties and seventies.
3954 I was looking at the playlists from almost 50 years ago from MOR stations, you know, as reflected by Billboard, and tell me if this doesn't sound familiar with respect to your programming proposal.
3955 MOR stations in 1963 were playing Bobby Vinton, some select cuts of The Beatles, Louis Armstrong, Peter & Gordon, Dean Martin, The Supremes, Steve Lawrence, The Chiffons, The Singing Nun and Sergio Mendes, all, you know, on the same playlist, and in those days it wasn't considered radical.
3956 In proposals we've had in my years on the Commission, radio has had a tendency, a necessity to go niche because as radio loses its share, it tries to target using research, online tools and so on to refine its relationship with their audience and stake its claim to a particular audience portion and cling to it feverishly.
3957 And, you know, frankly, I'm of the opinion that radio operators today are some of the most highly innovative business people in the business because it's a question of, you know, quarters of a share point and it's a challenging business to be in.
3958 So where I'm going with this question is those MOR stations I spoke of in the sixties also had a very strong news presence because the audiences they were reaching for were middle of the road and often middle of the demographic and had a tendency and a need to understand what's going on in their communities.
3959 Therefore, music was not the be all and the end all in terms of a purpose for listening but it was part of what came with an MOR station, but you didn't have to drift away from that music station at the top of the hour to get your news.
3960 And so your offering, you know, what I think I understand, is a balance to the demographic you're after.
3961 But my question is this. MOR stations back then worked because there weren't 18 stations in a market the size of Calgary, there were four, and the slices of the pie were much bigger, and radio, although it pains me to say this, at that time was much more important, more relevant than perhaps it is today because of fragmentation and the way entertainment can be consumed in so many different types of mediums.
3962 So with all of that said and giving full marks to experience and having done it successfully, do you think that you can bring this back in the kind of market we're in today, with the kind of shares that you're looking at?
3963 MR. TIETOLMAN: Commissioner Simpson, we believe that profoundly for several different reasons. I'll try to enumerate and mention some of the logic and reasoning behind our thinking.
3964 If we look carefully at the habit of listenership in a car, for example, I've spoken to a lot of people. We've done some mini focus groups. I don't care about the age. I don't care if they're 18, 21 or 91. When they tell me, I punch in and out three, four, five, six radio stations in 15 minutes, in an hour easily, now, what does that tell us?
3965 That either people are not totally satisfied with what they're hearing, they are turned off by the monotony of hearing the same Black Eyed Peas -- nothing against them -- I mean all of these artists who are played over and over again to the point where it's overkill.
3966 As you mentioned, in the sixties, Cashbox, Billboard, then Record World, Radio & Records, Rolling Stone Magazine, they had -- those who were there originally had one music chart, CHUM Toronto. They played the gamut of everything and they were powerful. They were the voice of popular music, literally one of the most powerful, most important in North America.
3967 Mr. Watters, I met him many times and spoke to him. A fine gentleman. A fine organization. Moses Znaimer. We saw what they did. We were doing the same kind of thing and it worked.
3968 And nobody is doing that today. And you say to yourself, why not? There are maybe different reasons for it. If there's profitability already with what I'm doing, if it's not broken, I'm not going to try to fix it, I am happy with my bottom line profits. In addition to that, you've got a few players in the radio who control many properties and they say, if I'm profitable, I'm happy, I'm not going to play around with it.
3969 We come along and say, we're independent, we have to work harder, we have to work better, we have to work more creatively, we have to innovate, we have to take some risks and some chances, but that's what an entrepreneur is all about. We are ready and willing to do that.
3970 We've done it before. When we ran one FM station in Montreal, we had competitors controlling 10, 12, 15, 18 stations. They would walk in, sales-wise, and try to knock us on our rear end. We fought back hard. We knocked on doors. We worked it and we succeeded.
3971 We built an FM station with almost 1.4 million unduplicated reach, believe it or not, and it was the number one rated station in all of Canada. And we were rewarded for our efforts. We made many, many massive profit years at the time.
3972 So we believe -- when we try to do something new, we believe the public wants that. In the surveys by Léger Marketing it shows clearly people want diversity, they want choice, they don't want to have to punch in and out 15 times an hour.
3973 I hope that answers the question.
3974 COMMISSIONER SIMPSON: I think it certainly demonstrates conviction.
3975 MR. TIETOLMAN: Yes. Thank you, sir.
3976 Maybe Mr. Bray can add.
3977 COMMISSIONER SIMPSON: Yes.
3978 MR. BRAY: I will just add one quick point.
3979 It's interesting to note, as our speaker mentioned earlier, that based on the latest PPM findings the average listener tunes to approximately six stations. Moreover, it's interesting to note that the current reach of radio in Calgary is 99.3 percent, based again on the last 13-week survey.
3980 Again, if you take a look at the exclusive reach or the non-exclusive reach of the various stations, you will find, statistically speaking, the desire for a broad cross-section of formatic choices. So it's very easy to note that the desire is there for a cross-section as opposed to a niche format.
3981 COMMISSIONER SIMPSON: Yes. I am often tempted to draw the analogy to, you know, the experiences we've all encountered in personal selections that go onto the iPod. You know, the iPod playlist analogy keeps coming back again and again.
3982 But it sounds to me, as experienced broadcasters, that you're also not only going after a lucrative demographic but also going after more of an hours tuned, rather than a cume strategy, because one of the things that advertisers are finding is that it's harder to penetrate and get repetition of your ad in a high cume, low hours tuned environment. So that, I understand.
3983 But I just want to go back and I will end this with just coming back to the question again.
3984 Now, you're using the analogy of a restaurant and that, you know, we have a tendency to eat Chinese one day and Thai the next. And coming from Vancouver, I could -- you know, if it ends in Es, I've eaten it.
3985 The question, though, is still that thinking is admirable and understandable, but in an environment where you only had four restaurants in a town, I think the restaurant had to broaden its menu. When you have 18 restaurants, each restaurant has a tendency to specialize. And if you came in now with a restaurant with a menu that was trying to, you know, going across the board, do you think you really think that you'll cut it?
3986 What is going to make the station different that will get people away from specialty back to a general service station?
3987 MR. CONNELL: I think it's a situation where we are that restaurant that offers the full service menu insofar as even including regular news broadcasts for an FM station these days. Doesn't happen a lot.
3988 But it's the other restaurants in town that are giving us the opportunity, if you will.
3989 I think many of the popular music formats today, as I said in the presentation, for the normal listener, I think it's a very fine difference between what a hot AC plays and a regular AC plays and what a Jack station plays or a Bob station plays.
3990 The playlists, there's not much variety there. There's not much diversity there. And I think by doing that, they're creating the opening for us, for people who punch from one station to the other and basically hear the same wall of beat, if you will, of rhythm, of sound.
3991 And you went back to the '50s and '60s and talked about what MOR radio stations sounded like back then and the variety that they offered, and that's basically -- you're right. That's the same thing we're trying to do.
3992 COMMISSIONER SIMPSON: So you're saying that the niche stations are really niche, but they're all the same niche.
3993 MR. CONNELL: Yeah.
3994 COMMISSIONER SIMPSON: Okay.
3995 MR. CONNELL: Well, I mean, yeah, within the spectrum, but very close. They're all very close.
3996 MR. TIETOLMAN: I mean, we listen to radio today and you'll hear the same artists, the same songs on seven, eight, nine radio stations. If they didn't put their call letters and their jingle on the air, we wouldn't even know what the heck we're listening to, which station exactly.
3997 And that is probably one of the biggest problems that music radio is living through right now.
3998 Mr. Bray could just add something to all of that.
3999 MR. BRAY: Yes. I wanted to note that our commitment is to seek out and promote exciting new emerging artists as well as a wealth of outstanding Canadian talent that is given short shrift in the current Calgary radio landscape.
4000 We're playing a lot of material that's not being heard anywhere else. This is a distinctive choice. We're playing Canadian artists that have distinguished themselves with voices that deserve to be heard.
4001 A number of these have called Calgary home, including Jann Arden, James Keelaghan, Feist, Paul Brandt, et cetera, et cetera.
4002 I was speaking with James Keelaghan, one of our finest artists in Canada. He's not played on any -- he's spent 35 years in Calgary. He's not played on any station in Calgary. We are committed.
4003 My -- I have a personal background as a singer/songwriter. I'm committed to these people.
4004 COMMISSIONER SIMPSON: So I would have to assume that view would also apply to your CCD in terms of emerging artists previously undiscovered.
4005 MR. TIETOLMAN: Absolutely 100 percent.
4006 COMMISSIONER SIMPSON: Okay. Thank you very much.
4007 THE CHAIRPERSON: Good morning.
4008 There have been some changes and we're somewhat troubled by them. We'll sort of deal with that as we go forward.
4009 You know, I've been sort of -- we've been here for a week and I don't hide the fact that I'd like to hear something new. I'd like to hear something different. We've got a lot of similar formats and a lot of similar music, I agree with you.
4010 But I just have some questions here I'd like to flesh it out and I'd like you to sort of do your best to convince us that this is sort of the right formula.
4011 First of all, your 33 percent in your Leger poll mentioned that they couldn't find anything that they wanted to hear in Calgary, if you recall. I think it was 33 percent. I have the numbers here.
4012 Why this format? Why would those 33 percent of Calgarians that can't find anything that they like on the dial be interested in this kind of format?
4013 MR. TIETOLMAN: We first hired Leger Marketing to do a survey in the Calgary market. They're a Calgary office. And at first, the survey results were inconclusive.
4014 It was not easy to define what format would be missing, what format would fill the need in the marketplace.
4015 We finally, basically, understated the figures that the Leger market survey showed, and if you -- you'll see that in our application. We took an ultra conservative, very lowball figure to show what we think we could reach in the first full year of operation by the end of the first year.
4016 And at the same time, if I can turn to Erin Roulston to answer and add to that comment that I just made.
4017 MS. ROULSTON: Yes, hello. Thank you.
4018 The end of our survey, only 42 percent fully agree that radio stations in Calgary meet their needs, so for the most of radio listeners here in Calgary, there's something missing.
4019 We did ask some preferences for their music tastes in terms of format, and it was a wide range of varieties. That is also included in your information package appended to the application.
4020 THE CHAIRPERSON: Jim Connell's got a big voice, but he's also got a big head. I can't see Erin for the life of me there.
4021 MR. CONNELL: Thank you so much for that.
4022 THE CHAIRPERSON: Take it as a compliment.
4023 Speak to us a bit about demographics because, you know -- and I kind of listened to Steve Simpson, who's got a lot of experience in radio.
4024 Are we -- are you guys trying to skew the, you know, 30 to 50 year olds -- go ahead.
4025 MR. BRAY: I can address that.
4026 Our target is adults 25-54, with a 35 to 54 year old skew and a 52 percent female, 48 percent male skew.
4027 THE CHAIRPERSON: Okay. And would these be sort of the easiest demographic to move away from the iPod and bring back to the radio as opposed to the 18 to 29 year olds?
4028 MR. BRAY: Exactly right. I've studied it in some detail, and certainly the 35 to 54 year old demographic is certainly the easiest to move in that regard.
4029 THE CHAIRPERSON: And that 30 to 54 demographic, would they -- would this be the kind of music they'd have on their iPod? Is that how you came to this sort of format?
4030 MR. BRAY: Yes, but we are also exposing them to new and emerging artists.
4031 For those that haven't heard Stan Rogers, James Keelaghan and I could go on and on, we're adding a little spice there, things that we're excited about. Matt Anderson, we played him off -- just off the top, a new artist produced by Colin Linden.
4032 We're going to put some things in there that fit their tastes but maybe they haven't heard of before. We're excited about that.
4033 THE CHAIRPERSON: And would your studies also show that that age group would have -- they're shoppers, they're buyers. They've got not necessarily the greatest disposable income, but they shop.
4034 MR. BRAY: Exactly right. I was Chairman of the survey task force that worked on developing the qualitative methodology for BBM, and most certainly. If one looks at the disposable income and the purchasing practices of that demographic, absolutely it's a lucrative demographic.
4035 THE CHAIRPERSON: And is there anything in your study that shows that they're not well served by what's already on the market, the 18 frequency market in Calgary?
4036 Where in your studies or your thoughts do you see that they're not well served?
4037 MR. TIETOLMAN: Yeah, Leger Marketing shows that 42 percent -- I can go back to Erin again, if you can just reconfirm that.
4039 MS. ROULSTON: Yes, the demographics actually span with respect to that question with only 42 percent agreeing that radio stations meet their needs. The demographics -- it is the same for all demographics across the board, and as we know, the demographic -- the younger demographic is definitely trending down in terms of listening habits.
4040 THE CHAIRPERSON: Okay. We heard a lot about the need for two sticks in the market. Speak to us on that issue.
4041 I mean, how do you survive with one stick?
4042 MR. TIETOLMAN: Well, we've done it before. We were one FM station in --
4043 THE CHAIRPERSON: In a less fragmented sorted of environment, though.
4044 MR. TIETOLMAN: Yes, but it was fragmented then, too. Maybe a bit more so now. We always survived and we always went beyond the expectations of the marketplace and the competition.
4045 Sure, it can help certain stations more effectively sell their advertising inventory, but we have to remember, too, if you take a look at the national sales repping organizations in this country, they are representing more than one station owner in many cases.
4046 Nothing stops us from sitting down with other independents in this market and saying, you know what, let's present a combo buy for national advertisers in Calgary. And that is doable, plausible and can work and will work.
4047 Secondly, we have to remember very clearly the bulk of our advertising sales in radio, whether it be Calgary or anywhere else, is local advertising. And the local advertiser is interested in one thing; how many cars will you sell off your lot to me tomorrow morning.
4048 You can ask Mr. Patterson that question. That's what interests him.
4049 We had a station in Vancouver. I had the pleasure of meeting the man several times. What they want is bottom line results.
4050 You know, I walked in sometimes to a client who said, okay, so you're number one, big deal. I don't care about your ratings. I want results. That's how I run my business. That's what I count to get my cash flow at the end of the week.
4051 Same thing here. We know from hands-on experience when you sell an advertiser, sure, nationally, it's a different story. But remember to take a look at the first several years of our operation. It's local and local regional from local slush funds that we approach to get sales.
4052 THE CHAIRPERSON: I'm sure you've noticed that, you know, spectrum is not an unlimited commodity and in Calgary we're running out of racetrack. Some of the other people that picked up frequencies recently came back asking for second sticks.
4053 There isn't going to be a second stick.
4054 MR. TIETOLMAN: That doesn't bother us at all, number one. Number two, our philosophy is very simple, our version is very simple.
4055 To own an FM station in Calgary is a privilege, a privilege. But with that privilege comes a responsibility to audiences, to the city of Calgary and to the artistic communities that if radio doesn't support, nobody will support.
4056 Music video on television, even when it started, was not the driver behind success with, let's say, artists, singers, performers. Radio was and still is, and that's why we stake a lot of the importance on emerging talent.
4057 You know, you could discover, you could launch, you can support and promote, but if you don't play that artist on the air and you don't expose that artist on a logical, regular basis for a new emerging talent, it will not be a new emerging talent.
4058 If you go back, let's say, to a company that Mr. Bilodeau runs, he owns everything in Quebec, but he has a problem. He runs a Star Academy which is similar to an American Idol, and it's immensely successful and very profitable. But you ask him why he's frustrated the fact that when he discovers a new artist, he does not get the support, let's say, of radio, that artist basically disappears from the framework of things. Gone, finished. You never hear from the artist again.
4059 So that privilege that we are granted or anybody's granted, the responsibility that's attached to that has to be taken very, very seriously.
4060 THE CHAIRPERSON: We've asked this question before.
4061 What happens, you're launching -- you know, you won't be launching before 2013 and someone's already in the market and says wow, that's a great idea. I'm going to do more of what Tietolman propose. What happens to your business plan than?
4062 MR. TIETOLMAN: We've got lots of ideas. We have a vision. We have a creative team of people, ad we think and we know, we believe that no matter what competition can do, no matter what forces in the marketplace can play for, against, we think we can handle it.
4063 We've been around before. We've had the experience. Not the first time that we've been blind-sided by a competitor. We get up off the ground, dust ourselves off and move forward.
4064 I mean, we've done this in Montreal, in Vancouver. We've done it before.
4065 THE CHAIRPERSON: Your five percent market share in year 3, where is that market share coming from?
4066 MR. TEITOLMAN: Well, if we take a look -- and I'll let David Bray answer that in a second, but I just want to say something very quickly.
4067 When we look at ratings historically, and you may see it at a certain time of the day where 20 percent of the population is listening to radio, 80 percent is not. Why?
4068 Many different reasons, but part of those reasons would be they can't find what they want on radio. They go to other platforms, other mediums, whatever, or they're just turned off by it all or they put a CD in the car radio, in the system.
4069 What we believe in, there is a lot of audience out there and we can show it by track record and history where we came up with a new context, a new talk show concept, a new music format and another -- in certain markets, and it worked because we drew non-audience -- non-listeners back to radio to listen again.
4070 THE CHAIRPERSON: Aren't you afraid that, you know, I might like rock, country and pop but I hate reggae and as soon as I hear that reggae, I'm going to change channels, and that listener's not coming back? Is there a risk?
4071 MR. BRAY: I can answer both of those questions, if I may.
4072 THE CHAIRPERSON: Sure.
4073 MR. BRAY: One, I can --
4074 THE CHAIRPERSON: Give Mr. Teitolman a chance to catch his breath.
4075 MR. BRAY: Yes, exactly right.
4076 THE CHAIRPERSON: I can, with some specificity, talk about where the audience would be drawn from. I've done a detailed analysis of all the competitive stations.
4077 And because this is an eclectic format, you are quite correct, you're going to draw a little from each. So I could go into detail, but suffice to say a little bit from Q107, a little more from XL103, a little bit from Lite95.9, of course not so much from the news/talk stations, et cetera, et cetera.
4078 I could go down, but suffice to say you're not going to take a dramatic hit on any one of the individuals, so -- I'm sorry.
4079 THE CHAIRPERSON: But 33 percent of the people polled can't find anything they like anywhere else. I mean, isn't your market share going to come from people that don't listen to what's available right now?
4080 MR. BRAY: That is true, to an extent, but I've got to tell you, again, the current reach of radio is 99.3 percent. What I can say is we're going to increase their hours tuned. That's a different question.
4081 And I think that while the reach is very substantial, that is to say, people still crave radio -- we're going to give them more of what they want, increase the hours tuned and then take a little from the competitors.
4082 But suffice to say, it's not going to do any significant damage to the market; it's just going to give another option.
4083 And your second question was having to do with tuning in and out.
4084 Well, please remember, again, the average listener listens to six stations on an ongoing basis, so will they tune out to a degree? Most certainly. But again, we're offering a unique proposal and we are confident they will keep coming back.
4085 MR. CONNELL: If I could just jump in here and add one thing. I think the survey results from Leger Marketing that show this 35 to 40 percent factor of people who are unimpressed with what is currently available on the radio doesn't mean they're not listening. It just means they don't feel they're being served.
4086 So they're there, they're attempting to listen. They are the people who will be surfing up and down the dial looking for something and, hopefully, when they find us they will like us more than they like the other stations.
4087 THE CHAIRPERSON: And given that it's eclectic, the damage on any of your competitors, direct damage, will be minimal?
4088 MR. BRAY: Yes. I can be very specific and I can certainly submit a chart in that regard.
4089 But suffice to say, no station will take a hit in excess of .5 hours, .5 share. That is the most it will take from any one individual.
4090 THE CHAIRPERSON: Did you submit that study of those numbers?
4091 MR. BRAY: We did not. I can certainly do so. It's just I did this analysis so I could answer questions such as you've -- the ones you've posed.
4092 THE CHAIRPERSON: Just on the Yuk-Yuk story, do you have an agreement in principle with the -- sorry, go ahead.
4093 MR. BRAY: Yes. Mr. Mark Breslin is a long-time friend of mine. Mark and I have programmed comedy together, and yes, we do.
4094 We have not worked out all the financial arrangements, but suffice to say Mark sends his best wishes. He's down south today. But we have agreed that we're going to do live taping out of Yuk-Yuk's in Calgary.
4095 THE CHAIRPERSON: Okay. And we're going to add some more meat to that CCD bone later on, but you know what happened with a decision we put forth recently with respect to a comedy club -- comedy school in Montreal, and there were some changes made. And at the end of the day, that money's going to have to go directly to the artists and not to the Yuk-Yuk owner or to the school. But we're going to clear that up for you down the road.
4096 The point is that the money goes to the artist.
4097 MR. BRAY: Yes, of course. Whenever we've done things, we've done deals with the individual artists.
4098 I can tell you, by the way, Mark Breslin manages many of the comedians across Canada.
4099 But most certainly, we sign individual agreements with each and every comedian.
4100 THE CHAIRPERSON: Okay. And we're not crazy about managers and we're very weary of that. We -- you know, it's important that the monies go to the artists, and I think --
4101 MR. BRAY: That is a given, that the money will go to the artist.
4102 He is -- again, in comedy, he's provided the venue and there is no concern. We can show you what we've done in the past of providing the revenue to the artist.
4103 THE CHAIRPERSON: Yeah. The example in Montreal -- and I may be wrong, but I think I'm right -- we didn't want the money going to the school directly. It'll go to the student, and if the student wants to pay the school a tuition fee, that's fine. But you understand the distinction. It's money that should go towards helping artists develop their talent in this country.
4104 MR. BRAY: Absolutely.
4105 THE CHAIRPERSON: Okay. And Mr. Teitolman is right, that goes to the responsibility that comes with having, you know, public airways for private gain. Okay.
4106 On the -- I don't really want to touch on the Golden West issue that much, but I want to speak briefly on the watts issue, not being an engineer.
4107 The Rawlco proposal calls for 27,000 watts. You're calling for 7,800 watts.
4108 Can you explain that to us, Mr. Pancholy?
4109 MR. PANCHOLY: Yes, certainly, sir.
4110 We -- when we start to do the engineering studies for this frequency, it was evidence to us that we have an adjacent channel issue. And we kind of designed the emitted power to reach the audience that you're targeting without causing an undue interference.
4111 Now, what we have seen in competing applications is that the application is actually for a significantly higher level of power, which is great. However, from the point of view of interference, it's a bit perplexing because when we look at our contours and potential interference with Golden West, we will probably impact 100 times less with our signal at 7,800 watts than the other proposal, which is close to 30,000 watts.
4112 THE CHAIRPERSON: But won't -- are you going to be able to service the area with 7,800 watts?
4113 MR. PANCHOLY: Yes, we have. We believe we can, effectively.
4114 THE CHAIRPERSON: And that will give you access to, you know, the one million or 1.2 million Calgarians?
4115 MR. PANCHOLY: That's absolutely correct, sir. Yeah.
4116 THE CHAIRPERSON: And what would 27,000 watts give you access to?
4117 MR. PANCHOLY: Probably a lot better signal over a wider range, as the submissions are showing. The signal goes much further.
4118 THE CHAIRPERSON: Not a greater population reach, but a greater signal within Calgary?
4119 MR. PANCHOLY: Greater signal. With higher power comes better in-building penetration of signals and things like that. But we are quite convinced that with what we have, we can actually hit and reach that audience and hit the targets that we have in the business plan.
4120 THE CHAIRPERSON: It's sufficient for you.
4121 MR. PANCHOLY: It is sufficient for us.
4122 THE CHAIRPERSON: Yes.
4123 And just on the other issue, counsel Hamilton, you're -- is that an interpretive notion you're giving us of the waiver, or that has been discussed with Golden West? Would they agree with your interpretation of their waiver?
4124 MR. HAMILTON: I've not had direct discussions with Golden's counsel, so I can't promise you that I've done that.
4125 I'm looking from the direction we've been given from the Supreme Court of Canada, the Ivanhoe decision that I put in my January letter both to Industry Canada and the CRTC.
4126 It's about consistency, and we're away from the technical given the position that Golden now raises. When it's a strategic partner of theirs, they'll give a waiver even though, as you've heard, you know, the possibility for interference is 100 times greater with their strategic partner.
4127 So for the -- and this is my submission. But for the CRTC now to try and find a consistent position, don't put the focus on Rawlco versus 795. The focus with respect to this waiver is what Golden has said about its business proposition.
4128 And if it is prepared to waive for Rawlco in a much more extreme circumstance, it would be inconsistent for this panel, as I submit, to find that the lack of a waiver, if that's where we're left with with Golden, somehow defeats 795. And the Supreme Court of Canada would not endorse that.
4129 THE CHAIRPERSON: Yeah. Just to make it clear, I don't think that's the issue. You have your TA, you're responsible for any interference.
4130 MR. HAMILTON: Right.
4131 THE CHAIRPERSON: Move on from there.
4132 MR. HAMILTON: Right. And --
4133 THE CHAIRPERSON: Just to make it clear, it will not sort of disqualify Teitolman Tétrault --
4134 MR. HAMILTON: Understood.
4135 THE CHAIRPERSON: -- if that's the purpose of your presence here today.
4136 What happened to St. Croix, Mr. Teitolman?
4137 MR. TEITOLMAN: Recently?
4138 THE CHAIRPERSON: No, back in the day because you're not in -- with the exception of what you acquired in Montreal late last year, you're not in the radio business right now.
4139 MR. TEITOLMAN: Well, that station with the AIM station was sold originally to Selkirk Communications. We remember the name of that company. And then, in the middle of the whole process before the CRTC could even hear it and make a decision, along came McLean Hunter and gobbled up Selkirk, and then after that another company came along and gobbled them up, I think Rogers.
4140 THE CHAIRPERSON: Yes, okay.
4141 MR. TIETOLMAN: On and on it went. We got caught --
4142 THE CHAIRPERSON: Okay. At the end of the day, you sold CKOI --
4143 MR. TIETOLMAN: Absolutely, yes.
4144 THE CHAIRPERSON: -- you were profitable, it was still at the height of its success, okay.
4145 MR. TIETOLMAN: Very profitable, yes. They offered $34 million for that property.
4146 THE CHAIRPERSON: Well, that's your business.
4147 MR. TIETOLMAN: Just confirming what happened, you know.
4148 THE CHAIRPERSON: I have Simpson talking to me about his apple stock, I have you talking $34 million.
4149 THE CHAIRPERSON: We are on the ground level here, we can't even jump from our depression.
4150 THE CHAIRPERSON: Other questions? Steve? Peter?
4151 Oh, you know what, Commissioner -- I see another poor pauper out there, Gordon Rawlinson, laughing.
4152 THE CHAIRPERSON: Commissioner Menzies asked a great question, what will Choice -- how will Choice make Calgary a better place to live in? What will you contribute at the end of the day?
4153 MR. TIETOLMAN: Well, first, we will be a Calgary radio station that will be accenting local news and information, local events, being everywhere where it's pertinent and important for Calgarians to hear what is happening and what is going on. That can include even a national issue out of Ottawa whereby we will translate that in the language and in the thinking of a Calgarian how that affects him or her, okay.
4154 Second, musically speaking it's a new choice, it's a different makeup. From 150 to 50 songs on the average FM station today, we are going to have a basic library of over 2,000 selections.
4155 Third, when it comes to developing new talent, Canadian talent, support of Canadian talent, the discovery and the launch of new emerging talent, both in music and in comedy, who will be the beneficiaries directly, financially and the growth of their careers.
4156 Ironically, as we mentioned, we did some research, there are Calgary artists, performers who cannot even get on Calgary radio with 18 radio stations in this market and we have to be the ones to come along and offer that opportunity, that window of opportunity, that platform for them and we are committed to that. That is what we are all about.
4157 THE CHAIRPERSON: Between the two of us, the 18 to 29 demo, you are ignoring that, you are setting that aside. You are just not aiming for that?
4158 MR. TIETOLMAN: When we look at the conventional radio station operations in Calgary, I'm not criticizing them, they serve a purpose, they fill a need, the top 40, hit radio, whatever you want to call it. There were six, seven of them. As I said before, close your eyes, listen to all of them --
4159 THE CHAIRPERSON: Yes.
4160 MR. TIETOLMAN: -- on certain times of the day, weekends, you don't know what you're listening to unless you --
4161 THE CHAIRPERSON: No, but between the two of us, 18-29, you are setting that aside, you are forgetting that demo?
4162 MR. TIETOLMAN: Well, you can't serve everybody at the same time.
4163 THE CHAIRPERSON: That's fine.
4164 MR. TIETOLMAN: You have to be realistic.
4165 THE CHAIRPERSON: Tell me you are all moving to Calgary to run this thing.
4166 MR. TIETOLMAN: Mr. Tétrault, do you want to comment on that?
4167 MR. TÉTRAULT: As a matter of fact --
4168 THE CHAIRPERSON: If you actually are I mean.
4169 MR. TÉTRAULT: Pardon me?
4170 THE CHAIRPERSON: If you actually are moving.
4171 MR. TÉTRAULT: Yes. I already purchased a condominium four months ago in downtown Calgary, I have met with Mayor Nenshi on several occasions, I met with prominent businessmen and tried to establish if you award us, in all due respect, this beautiful frequency, one of my main concerns is establishing the best sales team and implementing it and to be extremely proactive in this city. I live here now, so...
4172 THE CHAIRPERSON: Your experience is not in radio programming, your experience is in sales from what you tell me?
4173 MR. TÉTRAULT: Exactly. My experience is in sales, absolutely.
4174 THE CHAIRPERSON: Not to minimize the importance of sales --
4175 MR. TÉTRAULT: Bringing a lot of income, negotiating deals.
4176 THE CHAIRPERSON: -- but who will be in charge of programming? Who is going to run the day to day or is that to be hired?
4177 MR. TIETOLMAN: We will hire people.
4178 MR. TÉTRAULT: Yes.
4179 THE CHAIRPERSON: Okay.
4180 MR. TIETOLMAN: There are some very good people available.
4181 THE CHAIRPERSON: Yes.
4182 MR. TIETOLMAN: Because of the fact there is contraction in the industry, consolidation, there are a lot of very good, quality people everywhere in this country, including Calgary, who are anxious to have that opportunity once again.
4183 MR. TÉTRAULT: And this is not a theory, it's a fact. The results of the mergers and acquisitions in the radio industry is quite severe. There are a lot of unemployed people of great talent, some a bit older, some younger with less experience, and there are a lot of people also coming out of colleges and universities that can't find jobs. They don't even have the chance nor the opportunity to be tested or given their chance, a fair chance.
4184 THE CHAIRPERSON: Even in Calgary?
4185 MR. TÉTRAULT: Even in Calgary.
4186 MR. TIETOLMAN: We know of certain people that share our vision, share our philosophy the way we see things in radio for the future and these are the people we will bring onboard.
4187 In addition, just one thing that I would like to add.
4188 THE CHAIRPERSON: Sure.
4189 MR. TIETOLMAN: We are very conscious about the multicultural importance of this city of Calgary and you can believe, just by seeing the managing partners -- Erin, who runs the Calgary officer her for Leger, I think her father is from Finland and her mother is from Ireland. We take that very, very sincerely and very respectfully.
4190 We are in this framework of our news why we will be a better -- if Mr. Menzies would like to have another answer on that, we are planning on hiring one full-time and one part-time news person from the multicultural community and the same with the aboriginal communities of greater Calgary. That is part of our commitment as well. We are taking this very, very seriously, very sincerely.
4191 THE CHAIRPERSON: We have to take a break to do a little consulting on some issues and we would like for Tietolman and Tétrault to stick around and we will come back with you in a few minutes.
4192 MR. TIETOLMAN: Okay.
4193 THE CHAIRPERSON: Maybe 10 minutes.
4194 Ça va, Moira? Great.
--- Upon recessing at 1030
--- Upon resuming at 1048
4195 THE CHAIRPERSON: Hi, guys, nice to have you back.
4196 I'm going to ask Madam Létourneau to clean up a few issues and then we will be done.
4197 MS LÉTOURNEAU: Thank you, Mr. Chair.
4198 Just a couple of things. The Commission notes the amendments you made to your application and will reserve its decision on whether to accept those amendments.
4199 Pursuant to section 22 of the Broadcasting Act a TA was received in this application, so just to make sure you understand that as long as we have a TA, technical acceptance from Industry Canada, we are fine.
4200 Thank you.
4201 THE CHAIRPERSON: Are we are done? Well, that was painless.
4202 You know, you ask lawyers to clear things up and usually it takes like a day and a half.
4203 THE CHAIRPERSON: So I thought we were good for a little while.
4204 At least we have you in the front row there. Everybody else is in the back, in the corner somewhere.
4205 Thank you very much. I guess we will see you tomorrow.
4206 MR. TIETOLMAN: Thank you very much.
4207 THE CHAIRPERSON: Enjoy the rest of the day.
4208 MR. TIETOLMAN: Have a good day. Thank you.
4209 THE CHAIRPERSON: So we have to take a longer break than usual so we will take 15 minutes to allow Rawlco to set up. So we will see you in 15.
4210 Thank you.
--- Upon recessing at 1050
--- Upon resuming at 1114
4211 THE CHAIRPERSON: Good late morning. Nice to see you. I see you have a decorating job on the room.
4212 THE CHAIRPERSON: So we can't wait, we are all ears.
4213 Madam Ventura...?
4214 THE SECRETARY: Thank you, Mr. Chairman.
4215 We will now proceed with item 11 on the Agenda, which is an application by Rawlco Radio Limited for a broadcasting licence to operate an English-language commercial FM radio programming undertaking in Calgary.
4216 The new station would operate on frequency 100.3 MHz, Channel 262C1, with an average effective radiated power of 27,000 watts, maximum ERP of 100,000 watts, with an effective height of antenna above average terrain of 266 metres.
4217 Appearing for the applicant is Ms Pam Leyland.
4218 Please introduce your colleagues, after which you will have 20 minutes to make your presentation.
4219 Thank you.
4220 MS LEYLAND: Thank you.
4221 Mr. Chairman, Members of the Commission, Commission staff, I am Pam Leyland, President of Rawlco Radio.
4222 On my far left is Rawlco's Director of FM programming, Doug Pringle.
4223 On my left, the CEO of Rawlco, Gordon Rawlinson.
4224 To my far right is Kent Newson, Vice President and General Manager of our station in Calgary.
4225 To Kent's left is Mark Hunter, Program Director of NOW! Radio in Edmonton. Mark is going to be the Program Director of our new station if this application is approved.
4226 To my right is the Executive Vice President of Rawlco, Doug Rawlinson.
4227 One of the most important things I want you to know about the Doug Rawlinson you see sitting next to me is, he's not the real Doug Rawlinson. The real Doug Rawlinson stays away from the spotlight. He loves nothing better than hanging out in a radio station creating fabulous radio. You will find him in the Program Director's office, dreaming, scheming, designing and creating truly great radio.
4228 The real Doug Rawlinson is famous for asking the most insightful, blindingly obvious questions that make us all stop and say, "Why didn't I think of that?"
4229 The real Doug Rawlinson can take the most painstakingly crafted concept, idea or plan and, without seeming to give it much thought, make it amazingly better.
4230 The real Doug Rawlinson has the unique ability to identify the next big thing, the next idea, opportunity, way of thinking. Doug Rawlinson loves big ideas, in fact, the bigger, the better.
4231 There is nothing more exciting for Doug than creating a new radio station. For months and months and months Doug immerses himself in what this new radio station will be. We call it being in launch mode. Then you see the real Doug Rawlinson.
4232 I would like to begin by directing your attention to the graphic on my left. It's the cover of Rolling Stone magazine, the most important music magazine in the world. On the cover are The Sheepdogs, from Saskatoon, Saskatchewan. They are the first unsigned band ever to appear --
4233 MR. HUNTER: On the cover of the Rolling Stone.
4234 MS LEYLAND: The cover was also voted Cover of the Year.
4235 We are so proud of these guys, and especially proud that Rawlco helped them get their start with a grant from our 10K20 program in Saskatchewan.
4236 They used the money to record a CD called Five Easy Pieces as a way to promote themselves during the Rolling Stone cover competition. The first single, became a Top 3 hit in Canada and was played across the world. Ewan Currie, the lead singer, told me without 10K20, they wouldn't have been able to put out a professional product.
4237 The Sheepdogs stopped by our radio stations in Saskatoon just last Thursday to present Rawlco with a plaque to commemorate their debut CD going Gold in Canada.
4238 We just found out yesterday, The Sheepdogs have been nominated for three Junos, new group, single and rock album of the year. And I have to tell you, I'm a fan, not only of their music, but how hard these guys have worked. It was a thrill to see them open for Kings of Leon in Saskatoon last fall in front of thousands of their hometown fans, because not long ago they were literally a garage band.
4239 If you haven't listened to The Sheepdogs, you know, you really have to. It's southern '70s rock for the next generation and I loved that kind of music the first time around.
4240 Here is one of my prized possessions, my own personally autographed copy of Rolling Stone.
4241 The guys are in the studio now in Nashville recording their first album for Atlantic. It's going to be out this spring and I can't wait for it.
4242 But, The Sheepdogs aren't the real story. They were an unexpected and delightful bonus.
4243 The real story is the 266 CDs you see around the room. Every one of them was produced by a local artist in Calgary or Edmonton. For every one of these artists, making a professional CD is a life-changing event. For the first time they have a CD that really showcases their talent. It gives them that essential calling card on the path to becoming real, professional artists.
4244 If this application is approved, 10K20 will change the lives of 40 local Calgary artists each year. It really is the best CCD initiative ever conceived by Canadian broadcasters.
4245 Rawlco Radio is really a Tale of Two Brothers. One brother, the one to my left, Gordon, you know quite well. That's because, in part, for any success we have achieved, Gord does a great job of taking credit for it.
4246 MS LEYLAND: But, behind the scenes our creative mastermind, Rawlco's secret weapon, is Doug.
4247 So today it's Doug that's going to tell you about our plans for an innovative, incredible new radio station for Calgary. Doug invented the NOW! Radio interactive format and he is the reason this format exists in Canada today.
4248 MR. DOUG RAWLINSON: Thanks, Pam.
4249 As Pam said, I'm not usually in the spotlight so I hope you will forgive me because I am a little nervous, but I wanted to be here today to tell you all about the NOW! Radio interactive format.
4250 It's the story of the creation of the FIRST FM format specifically designed for the next generation.
4251 What do I mean by "next generation"? Well, it's those aged 25 to 44.
4252 As you know, baby boomers have been in control. The next generation have spent their lifetimes living under the shadow of the all-powerful baby boomers.
4253 But the world has changed and in astonishing ways and amazingly quickly. Before it was mail, then it was email. Before it was the telephone, today it's texting. Before it was around the water cooler, today we have Facebook. Before it was broadcasting, today it's carrying on a conversation with a family of listeners.
4254 We couldn't even imagine this just a few years ago. It's a new world out there, a post-baby boomer world.
4255 This new Calgary radio station will be designed for the next generation using the NOW! Radio interactive format.
4256 You know, I have been in radio for 43 years, a long time, and I have seen and heard a lot. It's rare to see a totally new concept in radio; it's even more rare to see it becoming very successful.
4257 Our radio station in Edmonton using the NOW! Radio interactive format is working. It has been on the air less than two years and people have responded like never before to this new format. BBM ratings show NOW! Radio, in its target demo of 25 to 44 year olds, is so far and away number one it's amazing. Number one. It's astonishing and significant.
4258 So what is going on here? Why have people flocked to this format? At first listen it sounds kind of normal, it plays music, it has announcers, it runs commercials.
4259 Many people in the radio industry have been monitoring the station commenting on it. There have been articles written about it in the trade press. It's a significant departure from normal radio.
4260 It's my opinion that eventually most radio stations in North America will adopt many of the things we have done on NOW! Radio.
4261 So why am I talking about an Edmonton station at a hearing for Calgary? Because we are applying for a similar format here in Calgary. If approved, our new station will be based on the proven substantial success of NOW! Radio in Edmonton, but designed for the people of Calgary.
4262 So what is this NOW! Radio interactive format? Where did it come from and why will it be successful in Calgary?
4263 A few years ago Rawlco had a new FM license in Edmonton and we wanted to appeal to the next generation, but what would do it? There were stations that were playing music that was targeting that age group, but I felt radio wasn't giving the next generation what they wanted and needed.
4264 One day I happened to listen to BBC Radio 1 in London. Almost immediately I knew they were doing things that North American radio was not doing. It was the missing link to the next generation, a dramatic change from what I was used to in North America.
4265 There were four things that were remarkable:
4266 First, the announcers were real people with no radio shtick.
4267 In contrast, let me describe what North American commercial radio sounds like and, let me tell you, I have programmed many stations to sound exactly like this:
--- Audio clip
4268 MR. DOUG RAWLINSON: That is why Mark Hunter is no longer on the radio.
4269 MR. DOUG RAWLINSON: But I hear disk jockey after disk jockey and station after station all over North America that sounds exactly like that.
4270 Second, I noticed, the complete lack of hype on the BBC. Radio in North America continuously says things like: The most music; the best this; the greatest that. There was none of that. How refreshing. Listeners could make up their own mind what was great and what wasn't.
4271 Third, all day long there were personalities. Here in North America most stations have personalities in the morning show, but then disk jockeys the rest of the day told to shut up and play as much music as possible.
4272 Finally, and to me by far the most significant, texts. Texts. Reading lots and lots of texts on the radio from listeners. The announcers commented on the texts and read both positive and negative ones, just like a real conversation.
4273 I suddenly realized that they were listening to their audience, what the audience wanted, what they had to say, what they thought. It was a real conversation between the announcer and their listeners and between listeners and each other through the radio station.
4274 So it was announcers with interesting personalities, connecting with their listeners and having conversations with them through social media. It was what we needed to do.
4275 I have said things are changing -- we all see it; we all know it -- but radio has been slow to react. Sure, radio stations have websites and are on social media, but their approach is the same as it's always been: radio broadcasts, you listen.
4276 We will take a new, unprecedented approach in Calgary to appeal to the next generation.
4277 Most FM music stations have slogans like: the most music or classic rock or today's best music or Ottawa's country station. We won't have a music slogan, but rather an interactive positioned "join the conversation". That is what is at the central core of this new format: join the conversation.
4278 The NOW! Radio interactive format is different because of "join the conversation". Our success will not be the music we play, it's all about the conversations we will have with our listeners and they will have with us and with each other.
4279 The next generation demands more control and more participation. Take a look at Apple. iPods, iPhones and iPads have revolutionized the way the next generation interacts with the world and Apple has become the world's most valuable company.
4280 Then there is Facebook. It's all about sharing and has even changed what a friend is and what they feel is important and worth spending time discussing.
4281 Interactivity. Social media is the key for this next generation.
4282 I have four kids -- except they aren't kids anymore, the youngest is well into his 30's -- they would much rather use their Smartphones to text than to actually phone someone and talk to them.
4283 MR. HUNTER: Let me tell you about the hosts we will have on the new Calgary station.
4284 First, why do we call our announcers "hosts"?
4285 Well, traditionally DJs are expected to present the music. The NOW! hosts will be social. NOW! hosts will participate with the audience as equal partners. Our listeners will feel involved in the creation of NOW!.
4286 Our hosts will have freedom. Most DJ's have never even heard that word, but we will tell our hosts, "You can say anything you want, as long as it's in good taste."
4287 And just as important, we won't tell them what they have to say, they will be saying exactly what they want to say, relating directly to their listeners and not saying what the Program Director told them they had to say. It will make a enormous difference.
4288 We talk a lot on NOW! Radio. Our hosts probably talk more in an hour than most disk jockeys say in their entire 5 or 6-hour shift.
4289 Is that too much talk? Well, no it isn't, for a number of reasons:
4290 First, our hosts actually talk about something that our family of listeners really care about. More often than not listeners will have suggested the topic.
4291 Second, our hosts aren't spouting the station slogan or client messages or other radio shtick.
4292 And we decided to limit the number of commercials we run. In fact, by actual count we run less than half the number of commercials most other stations do. So we can talk a lot about the things people in Calgary are really interested in, not fill the air with a lot of BS about how great the radio station is and -- and we can still play a lot of music.
4293 We did focus group research. We asked listeners what they thought of the station. Listeners told us:
"The Hosts are awesome. They can talk about anything."
"I really like the interaction."
"It's a long chat."
"It's one big conversation all day long."
"I feel like I have friends all over town."
4294 They love it. They feel like the radio station is listening to them. Listeners say the spoken word programming is the key reason for NOW! being their favourite station.
4295 The next generation wants to belong. They want to take part and they want to be heard. They want to join in the conversation. And today they can do all of that using the NOW! Radio interactive format. And that's why they have responded like they have.
4296 MR. DOUG RAWLINSON: There are now more texts sent between people than phone calls. Think about that for a minute, more texts than phone calls. What a change in how people communicate. Texting is so popular laws are needed to prevent texting and driving.
4297 To join the conversation the easiest way is to send us a text.
4298 Early on we decided to answer every text no matter what it took. The first day we signed on we got 150 texts and it was quite easy to answer every one. Within a couple weeks we were getting hundreds daily, then it became hundreds hourly. We now average between 4,000 and 5,000 texts a day.
4299 NOW! Radio has been on the air for less than two years and we are well over our one millionth text received! That's one for every man, woman and child in Edmonton.
4300 Answering all these texts is a huge job. In addition to all of our hosts spending much of their time answering texts, we have a team of full time people answering them. Our goal, answer every text. Continue the conversation. We feel a huge part of our success is this constant conversation with the our listeners, who we call the NOW! family. Despite the cost and effort required, we believe it's all worth it.
4301 In the old days -- just a few years ago -- we would put a few phone calls on the radio. Perhaps we would get to a couple of calls an hour. Today, with reading texts on the air, we will hear from many, many more people. It's exceptional. All these opinions, moving the conversation forward, changing the direction of the conversation.
4302 At NOW! Radio you are the star. Where do you want the conversation to go? We want your opinions, good or bad. We will air your opinions, good or bad.
4303 People send us texts saying they hate this song or "What you just said was totally wrong." People are amazed we actually have the courage to say something negative about ourselves.
4304 You can't have a conversation with your TV, you can't have a conversation with normal music radio, you can have a conversation with NOW! Radio. We won't talk at you, we will talk with you. It's not a monologue, but a dialogue.
4305 We want to have the social media position in Calgary for radio. Not the most music position, not the top 40 position, not the classic rock position, but the social media position.
4306 Mark and I have often joked that NOW! Radio is like News/Talk Lite. In other words, we play music but, just like a true News/Talk station, we have information and topics and reactions of direct interest to our listeners on the air all day long. It's astonishing, really, that a music station can have that kind of impact and importance.
4307 Many conversations will be about important issues and news events of the day. Other times the conversations are about relationships or money or work. The topics are the conversations that our listeners want to have, because they suggest the topics and drive the conversations.
4308 And just like a News/Talk station, it's hard to do. We need great on-air hosts capable of carrying on meaningful conversations with our listeners. We will have 2-person teams as hosts on the radio all day -- morning show calibre talent all day long -- and with a full team of people to help the hosts answer all the texts. It's expensive, but it's worth it.
4309 So that's our plans for this amazing new station.
4310 Join the conversation, Calgary. It's an exciting time to be in radio and I love it.
4311 Radio can appeal to the next generation in a way that hasn't been possible up to now. I am inspired and pumped up about the opportunity to bring this new kind of radio to Calgary.
4312 MR. GORDON RAWLINSON: In conclusion, I have six points:
4313 First, a bit about our company. Rawlco is a radio-only company.
4314 Our proposed station will be locally owned. I live in Calgary and I have lived here for almost 30 years. I am very proud of our track record of great community service.
4315 And our company has the resources and the expertise to launch the NOW! Radio interactive format.
4316 My second point, the need for competitive balance.
4317 There are 11 commercial FM radio stations in Calgary. Four national companies, Corus, Rogers, Astral and Newcap, each own two FM stations. The other three stations are owned by Bell, Harvard and Rawlco. Bell also has significant TV ownership in Calgary and this leaves Harvard and ourselves as the only true standalone stations.
4318 We think competitive balance is a desirable goal.
4319 My third point, our proposed format.
4320 The NOW! Radio interactive format is revolutionary. It's the first format to treat the internet as a partner rather than as a competitor.
4321 It's the first format designed specifically for the next generation, those 25 to 44.
4322 It's the first FM format to take the news out of the newscast and make it an all day experience, and it's the first FM format to make spoken word programming and on-air personalities the primary attraction.
4323 My fourth point, PPM's chilling effect.
4324 In 2009 BBM switched from diaries to Purple People Eaters.
4325 MR. GORDON RAWLINSON: No, no, I mean Personal People Meters or PPM's.
4326 One of the fallouts was the chilling effect it had on spoken word programming on FM. Radio programmers could now measure tuning minute-by-minute and when listeners switched stations. Often they found listeners left the station exactly when the music ended and the DJ started talking. As a result, music sets have gotten longer and longer and DJ talk shorter. That's why there is even less talk and information on FM stations. So that proves that meaningless irrelevant talk does tune people out.
4327 However, NOW! Radio's success in Edmonton proves that interesting, relevant talk, tunes people in.
4328 My fifth point, our Canadian Content Development Plans.
4329 Our CCD plans are, I believe, the best initiative ever for helping local talent. We will provide $4 million to local emerging artists through our proven 10K20 program and our Breakout Artists plan, as well as $1 million to FACTOR.
4330 And my sixth point: Bringing Listeners back from the Internet to Radio.
4331 Actually, it's quite interesting. We have had a huge amount of anecdotal evidence that NOW! radio brings listeners back to radio. Since NOW! radio signed on, many people tell us they listen to radio more than they used to.
4332 But there is also some very interesting PPM evidence that NOW! radio may have helped overall radio tuning. PPM shows that Edmonton's total tuning has stayed constant over the last couple of years, while Calgary's tuning has dropped 19 percent. We think the difference could be NOW! radio.
4333 MS LEYLAND: So, to sum up, Rawlco is locally owned with the experience and resources to make NOW! radio a success.
4334 Competitive balance is important. With two FMs, we will compete on a level playing field.
4335 The NOW! radio Interactive Format is truly innovative and very local. It is also the first FM format to make spoken-word programming and the hosts the primary reasons for listening to the station.
4336 Our CCD plan, 10K20, is proven and extremely effective.
4337 And we will repatriate the Next Generation back to radio.
4338 Most Internet music services play very little Canadian music. NOW! plays 40 percent.
4339 I say Calgary needs the NOW! radio Interactive Format.
4340 This concludes our presentation. We would be happy to take your questions and have you --
4341 RAWLCO PANEL IN UNISON: Join the conversation.
4342 THE CHAIRPERSON: Okay.
4343 THE CHAIRPERSON: Menzies was bugging me because I was asking for music and I meant a band. I didn't mean sort of Hunter doing bad Karaoke.
4344 THE CHAIRPERSON: Great! Appreciate it. Madam Cugini will start off with the questions. Thank you.
4345 COMMISSIONER CUGINI: Thank you, Mr. Chair, and good morning. We won't be asking our questions in unison, so you're going to have to bear with me.
4346 Your billboards here are quite impressive. We know of Rawlco's commitment to Canadian artists and how proud you are of those accomplishments, and so you should be.
4347 One question I do have is after the CDs are printed, what happens to that music? Is there a commitment on the part of Rawlco to continue playing the music on your stations for a period of time, for a number of spins? What happens after all this work is done?
4348 MS LEYLAND: Absolutely. I mean that's a great question because we know how important air time is to the development of these artists, and coming into the hearing I thought that perhaps there might be a question, you know, to that effect. So I was asking our managers in Calgary and Edmonton, what happens to the CDs, I mean, how many of these tracks get spun?
4349 And the answer is 80 percent of the CDs that you see around the room -- and this is going back many, many years, now I think we're into our eighth year in Edmonton -- have received airplay. You know, 80 percent have received airplay on our three stations in Edmonton and Calgary.
4350 COMMISSIONER CUGINI: Because, of course, you know, the question comes from the fact that oftentimes we will have artists in front of us who tell us they can't get on the radio and unless they get on the radio -- it's fine to have all sorts of other kinds of support behind them, but if they don't get airplay, they don't have any success. So that was the context of the question. So I'm happy to see that you do follow up.
4351 MS LEYLAND: Yes.
4352 COMMISSIONER CUGINI: You are not the only applicant in these proceedings to spend their CCD on the promotion of local artists, and another slice of that, of course, is on local emerging artists. You're not the only applicant who has a track record in that area in these proceedings.
4353 So what kind of weight should we put on your CCD proposal in comparison to what has been brought forward to us in this hearing?
4354 MS LEYLAND: Yes. I think the most effective way to talk about 10K20 and to try to help you appreciate, you know, what's going on and what the artists think about is to give you a few examples of some Calgary artists that we have funded over the last number of years.
4355 So let's take Makeshift Innocence as an example, and this is a quote from them about the weight that they gave to being a 10K20 recipient:
"Being a recipient of the 10K20 funding is such an honour. It's helped bring our visions and dreams to life. Without the 10K20 funding, it would have been far more difficult to get to where we are now. In an industry that can sometimes be more than difficult, the 10K20 funding acts as a light in the dark. Thank you so much for allowing us to be part of such an elite group." (As read)
4356 Lindsay L:
"I'm so proud to say that I belong to the group of 10K20 projects. The fearless initiation by Rawlco to put such a program into place has made a huge impact on local musicians around the province and is spreading across the country. For once a station is trying to help everyone out instead of just one band. I can only hope that they continue this program and that their positive influence spreads to many other stations." (As read)
4357 Dan Vacon, lead singer of The Dudes, talking about his most recent 10K20 CD:
"It sounds amazing. You're barely going to believe it." (As read)
4358 You know, in fact, all of the six groups you saw on the weekend are 10K20 recipients. I mean this program has cast a very wide net.
4359 The producer, now manager, of Makeshift Innocence, Trey Mills, says:
"As the music industry is shifting there's more pressure on independent artists to record and produce their own music at a high level. Rawlco's direct participation with songwriters has made it possible for a number of Alberta's most promising artists to deliver high-quality recordings not only to Rawlco but to many radio Internet stations across Canada and around the world. Rawlco can proudly take partial credit for Alberta's burgeoning music scene." (As read)
4360 And in the intervention phase you will have a chance to speak to Trey directly.
4361 So those are some of the examples of Calgary 10K20 artists funded so far.
4362 And over eight years, if we're licensed in Calgary -- pre-launch year, seven years of the first licence term -- we will fund another 320 CDs, more than you will see around the room today.
4363 COMMISSIONER CUGINI: So it's a combination of proven track record and, going forward, absolute commitment?
4364 MS LEYLAND: Absolute commitment.
4365 COMMISSIONER CUGINI: You know that we have asked everyone else who already have a presence in the market why it is that you should be licensed and what kind of diversity you bring to the market.
4366 Mr. Rawlinson, I heard you say that competitive balance is important. I understand why it's important for Rawlco, but why is it important for the radio business in Calgary and why is it important to Calgarians?
4367 MR. GORDON RAWLINSON: I guess the first thing I would say is that I think it's a factor. I don't know that it's the most important factor. I think the most important factor is, is it a truly great application and is it really going to make a difference in the city?
4368 But it will help our radio station, our existing radio station. There are many synergies that are created having two stations. The biggest single one is in the sales area.
4369 Am I on the right track of what you're asking about competitive balance?
4370 COMMISSIONER CUGINI: Well, you said it's going to make a difference, and the first thought I had, of course, was how, and I suppose the answer to that question is going to be to join the conversation platform of your radio station.
4371 But the real question is how is it going to enhance, strengthen the Calgary radio market, which is already robust. We know how many radio services there are in Calgary. So how is it going to make that better?
4372 MR. GORDON RAWLINSON: Are you asking how our new station will do that or having two stations?
4373 COMMISSIONER CUGINI: Both.
4374 MR. GORDON RAWLINSON: Well, I think the bigger question is how our new station will make a difference to Calgary and I would like to ask brother Doug here.
4375 MR. DOUG RAWLINSON: I would like to take a minute, if I could. When we were preparing for this hearing, I was trying to figure out how I was going to explain what NOW! radio is all about and what the benefits were, so I decided to tell you a story. So if you will give me a minute.
4376 It's the kind of story we hear over and over and over again through texts that come in, through people that we talk to, the research that we do. But this story I'm going to tell you is actually the story of someone I've made up, but it's similar to what happens.
4377 It's the story of Christy and her kids and it shows how NOW! radio works and why it works. So if you will just give me a minute.
4378 So Christy is a 31-year-old woman. She's got two kids. They live in Rutherford in Edmonton. She owns a smartphone. She's got an iPod. She's got the iPod full of songs that she loves. She put every song on there that she loves and she listens to it a lot.
4379 One day she finds NOW! radio. How she found the radio, I don't know. Maybe a friend told her about it. Maybe she saw some of our advertising or maybe she just stumbled across it going across the radio dial.
4380 And there's some music playing and it's not her favourite songs, but they're okay. It's not rap, that she doesn't like, and it's not hard rock, that she doesn't like. So she keeps listening.
4381 The song ends and two announcers come on and they start talking and they're talking about bullying. And she perks up right away because her six-year-old son has been having bullying problems and doesn't want to go out to the school bus anymore to get on the bus because he's being bullied.
4382 So she thought that was kind of interesting. And the radio station is inviting people to text in and to join the conversation. And she thought, well, as a lark, maybe I should give them a text and tell them what I think about bullying. And so she does.
4383 And the radio station plays another song and they come back on after that song. And the two announcers start talking again and they start reading texts. They read a text from someone who thinks parents should do more and they read a text from someone who says the kids should stand out for themselves.
4384 And then, lo and behold, they say, NOW! radio family member Christie from Rutherford thinks this, and they read her text. Well, she couldn't believe it. She thought, whoa!
4385 And then they keep on and they keep reading other texts. And then they go back and put on another record and she thinks the music's pretty good, so she keeps listening.
4386 When her husband gets home she tells her husband about this and they keep listening to this and the conversations are still going on. And the next morning they listen to the radio and there's still more conversations going on.
4387 So then Christy decided to go on her Facebook page and tell her friends about it. And then she decides to go onto the NOW! Web site and she sees there's all kinds of conversations going on on the NOW! Web site to do with bullying and so she makes some contributions to that. And on and on it goes.
4388 I think you can see from this example that it's the spoken word that is the primary driver of our radio station, it's not the music, and that is going to be the main difference between our radio station and the other radio stations.
4389 This is a music-based radio station -- we play lots of music -- but it's the spoken word that drives the programming. It's the conversation that people have on our radio station.
4390 And where the bullying topic that we were talking about came from, it came out of the news. There was a story in the paper that day about bullying and so our host picked up on that and pretty soon the whole -- but our conversation went on all day long about bullying, the good, the bad and so on. And so it made the radio station just come alive.
4391 COMMISSIONER CUGINI: I found it interesting that you added there, during your story, that it is a music-driven radio station, because in my mind I was thinking, why not apply for a talk radio station?
4392 MR. DOUG RAWLINSON: Right. We need both. We need the conversations and we need the music. And what the music is -- and I'll ask Doug to talk about this for a minute, Doug Pringle. What the music is is the sound track to these conversations that are going on.
4394 MR. PRINGLE: It's interesting that we've heard so much about having to narrowcast because there are so many different signals, and in putting the music together for this station it was so different because normally music is the format. I mean that's what drives it.
4395 In this case, it was a question of what do you put together that complements the conversation, also has validity in its own right, and what we've come up really is not a narrowcasting format but somewhat of a mass appeal format simply because so many people come from different places on the dial, from different music stations. They've got different music tastes and they come for the conversation.
4396 So what this format needs to be, it needs to be an inclusive format. It needs to be a format that when people come for the music, they like it. They don't necessarily love it, it's not necessarily their favourite format, but they like it well enough that they stay with it as the music transitions from conversation point to conversation point.
4397 It also acts as the sound track, if you will, to the conversation. In my mind, I was thinking of it in terms of the way a great sound track enhances a hit movie. You can't imagine that movie without the sound track. You take one away from the other and it wouldn't be nearly as effective. You need both of them.
4398 But in this particular case, the whole driver of this is for the music to complement the conversation.
4399 Now, in terms of, you know, the technicalities of where it is, we're based about 75 percent in the last 10 years and if you look at the Calgary stations that are based in the 2000s you generally see on one side you've got kind of rap/dance pop and on the other side you've got the hard rock.
4400 What our music, our all-inclusive music is, it's basically guitar-based music with melody, but it's not too hard. So really, it falls right in the middle of those two extremes. And what we don't play is the rap extreme on one side and the hard rock on the other, which would drive people away and force them to leave the conversation.
4401 MR. DOUG RAWLINSON: So my example of Christy, who is this 31-year-old woman, she doesn't want a talk station. There are talk stations. She doesn't want that. She wants a combination of music that she enjoys, and I'll tell you, the music on our station is probably not as good as the music on her iPod, but we provide this interaction, this conversation that intrigues her, that makes her feel like she's being heard.
4402 And let me tell you one thing about these texts. We have, you know, over a million texts received. In fact, Mark, what is it? About a million?
4403 MR. HUNTER: 1.3 million as of now.
4404 MR. DOUG RAWLINSON: 1.3 right now in the time we've been on.
4405 The vast majority of our audience never texts us, but yet, because of all this conversation going on, when you listen to our radio station it's like we're listening to people, they're listening to me. When I listen to our radio station, it's like my opinions are put forward.
4406 They're listening to me, what I think, what I want, and combined with the music that we're playing it's a very powerful combination. And the ratings have proven it. I mean it's staggeringly successful.
4407 MR. GORDON RAWLINSON: If I could just get back to a thing which I didn't properly answer and that was about the two stations versus one station.
4408 It is hard to compete against two stations when you only have one. We're not saying we can't survive without it, but it is harder. Plus each of these two station combinations are owned by big companies and they're very good at what they do. They're strong, tough competitors. Some of them have even other AMs that are also a factor.
4409 The biggest factor is in the sales area, where if you have two stations, let's say you've got six salespeople on each station, well, all of a sudden, you've got 12 people that are out there and working together as opposed to six people against 20 or 25 salespeople for a three- or four-station combo, and in presenting solutions for advertisers it just gives you that much more impact.
4410 So a second station for us would improve the sales of our existing station as well as what sales we generate on the --
4411 COMMISSIONER CUGINI: No, and I understand that. From a listener point of view, I mean, of course, you tune into the radio station that you like. You don't really care who owns it. But I also --
4412 MR. GORDON RAWLINSON: I'm sorry. And I agree actually. I think the number one factor should be what's best for the listener and not what's best for the radio companies.
4413 COMMISSIONER CUGINI: What effect does multi-station ownership have to a single station owner in terms of branding your station to listeners? Whether it's through even the presence of billboards in the market or of sponsoring events in a market, what effect does that have on the branding of your station?
4414 MR. GORDON RAWLINSON: Very little. We promote our stations and program them very separately. So most people wouldn't necessarily know that we would have a second station or that one station is owned by the same people as the other station. They're both independent entities and have usually different targets and different philosophies and so on.
4415 COMMISSIONER CUGINI: So it's primarily in the area of sales?
4416 MR. GORDON RAWLINSON: Yes.
4417 COMMISSIONER CUGINI: And that's where you mentioned there would be synergies with the two stations?
4418 MR. GORDON RAWLINSON: There are some cost synergies. You would still have just one General Manager. Kent, we're not going to get a second General Manager. And, you know, it's one receptionist. There's some areas where it's just more efficient.
4419 Currently, the space that we have, that we're renting, is big enough to accommodate two stations and so we've been shouldering all of that cost in one station.
4420 So there are those factors, but the single biggest thing is in the sales area. And as I say, the incumbent big operators are very strong, so it would be helpful.
4421 But we are bringing a different voice with this station because we really think we're bringing the people of Calgary a voice, the Next Generation. And you could say, well, gee, there's talk stations already, but most talk stations tend to appeal to an older demographic or are very male-oriented. And there's a sports talk station here too.
4422 So they're very older demographics, whereas this one is a younger demographic. So it's bringing a new voice. It's like a diverse voice. It's almost, you could -- it's maybe a bit of a stretch to say it's a totally separate voice than our existing station.
4423 MS LEYLAND: Commissioner Cugini, if I can just jump back in on this because this is a really exciting point for us, you know, that obviously we're really trying to get through. But, you know, it's a very solid question. Like how will Calgary be a better city for people living here if we license you? What are you going to bring to the party that isn't presently on offer?
4424 And it is that what we're doing -- which is proven, we have a track record of success in Edmonton -- is completely new, completely different, unique, revolutionary. I mean it is unlike anything else.
4425 Imagine an FM station that does play music and plays great music, hit music, popular music, also talking so much where the audience is leading the conversation. There's co-hosted shows all the way through. Sometimes the hosts start the conversation and it's picked up by the listener.
4426 I mean it is different and that's hopefully what we're explaining to you.
4427 MR. DOUG RAWLINSON: It is amazingly different.
4428 COMMISSIONER CUGINI: I understand how different it is, trust me.
4429 MR. DOUG RAWLINSON: Okay. It's --
4430 COMMISSIONER CUGINI: Trust me. Just so you know, it really struck home in the sense of understanding what this is when you, Mr. Pringle, said imagine the sound track of a movie and how enhanced a movie becomes with the sound track. So I get it.
4431 I also appreciate the fact that throughout your application you stayed away from using any of the format descriptors that we are accustomed to seeing and you've invented a format essentially. So I get it.
4432 MR. DOUG RAWLINSON: Yes.
4433 COMMISSIONER CUGINI: But I don't want to cut you off.
4434 MR. DOUG RAWLINSON: All right. That's okay.
4435 COMMISSIONER CUGINI: But I just wanted to let you know that.
4436 MR. DOUG RAWLINSON: That's good. I am just enthusiastic about this format.
4437 You know, one of the things that drives me crazy is when my kids, who are now all in their thirties, right in the centre of this Next Generation demographic, when they do things to me -- like I will phone them up and say -- phone one of them and say, I just heard there is an Italian ship that capsized in Italy, and they will say, Dad --
4438 COMMISSIONER CUGINI: You would use that example.
4439 MR. DOUG RAWLINSON: Yes.
4440 MR. DOUG RAWLINSON: And they will say, Dad, I knew about that four hours ago. Then they will say, and do you realize the captain has been accused of jumping ship? And I will say, no, I didn't really even know that. They will know more about what is going on than I know.
4441 This Next Generation polls content. They also want to be heard. My kids spend their lives texting, surfing the Internet. The knowledge that they have is staggering, on a wider variety of topics.
4442 They have opinions on topics, and yet they never watch Peter Mansbridge, they never read The Globe. But they know what's going on. I think they know more about what's going on than I know, and I try and make a big effort to know what's going on. They just somehow absorb that.
4443 And that's exactly what this radio station can do.
4444 Our audience, our regular, Now! family listeners, are better informed about a wide variety of topics listening to our radio station than they are listening to any music FM station, I guarantee it.
4445 The topics we talk about, the wide variety of topics, the variety of opinions that come in through these texts that we read on the air, it's amazing the breadth of topics and the depth of opinions that we have on our radio station.
4446 It is a -- it's a radio station I'm very proud of, and I think it's an amazing radio station.
4447 COMMISSIONER CUGINI: Now, when you were trying to work out whether or not this radio station could find an audience in Calgary, I understand from your application that your demand survey -- you -- the demand survey that you conducted, you played for the people you surveyed a montage of five songs.
4448 Did you also play for them an example of the conversation that could occur on this station?
4449 MR. D. RAWLINSON: No, we did not.
4450 COMMISSIONER CUGINI: Can I ask you why you didn't because it is such a fundamental part of this format?
4451 MR. G. RAWLINSON: Could I give you a quote from a fellow that you may have heard of, Steve Jobs? He said, "A lot of times" -- this is an actual quote, "A lot of times, people don't know what they want until you show it to them".
4452 Another thing I can tell you is that they -- somebody said that, you know, 100 years ago when they were doing a survey, they said, well, how could we get from one place to the other faster. They said, "How about a faster horse?" And that's not in -- nobody thought of inventing a car.
4453 It's -- the research that we've got is two types of research as far as the conversations. First of all, the PPM or BBM evidence out of Edmonton, so the exact format, we've done a dress rehearsal, in effect, for Calgary and Edmonton, and so we've got, you know, quantitative research showing that there's a great demand for this type of thing.
4454 And then we did quite a bit of focus group research in -- again in Edmonton.
4455 But to do research about a concept that there were people who've never heard it, it's just too hard to do. It's just too hard to explain.
4456 So what we want to make sure is that the music mix that we're putting together would be compatible with this station, and it was really, quite honestly, to prove that -- what we already knew because we were already doing it. But we felt we had to have some research, to be honest.
4457 MR. D. RAWLINSON: And let me tell you, when I first started coming up with this concept and it was starting to form in my mind and I started talking to Gord and Pam about it and then started talking to Mark about it and whatever, it took a bit of convincing to everybody that we should make this leap because it was a big leap and it was an expensive leap, you know.
4458 Most music FM stations these days have, you know, three or four or five announcers. We've got 10. It's -- and it's hard to do, to balance the right amount of talk, the spoken word with the right amount of music, put the whole thing together.
4459 And I just want to say that I thought it was amazing that Gord and Pam and whatever took that leap and said, "Let's do this" and -- 'cause it was hard to do and it was expensive to do, and -- but it really worked out.
4460 MS. LEYLAND: I think, Commissioner Cugini, too, on your point about the research, I think it would be impossible to research the concepts without the hosts, which -- so a researcher over the phone to a respondent just wouldn't be able to frame the topics the way the hosts frame the topics or interact with the listener the way the hosts interact with the listener.
4461 I mean, the hosts are just about, you know, the most important asset that we have on the radio station.
4462 MR. D. RAWLINSON: Let me tell you, the first, very first meeting we had with our on-air people when -- after we'd found them, which took Mark, you know, months and months and months of crossing the country and listening to hundreds and hundreds of tapes. But we finally got everybody together and we had our first meeting.
4463 And the first thing I said out of my mouth was, "You can say anything you want as long as it's in good taste, and you don't have to say anything at all that we tell you to". And there was like dead silence in the room.
4464 These were all professional radio announcers.
4465 The other thing I told them is, "We're never going to call you disc jockeys, we're never going to call you jocks, we're never going to call you DJs; we're going to call you hosts because we want you in the mental attitude of hosting the city of Edmonton in a conversation". You're not going to be talking at people. You're not going to be spinning tunes and being a disc jockey.
4466 And so it took quite a while. We had -- we did a whole bunch of in-house testing, we called it, before we signed the radio station on where you -- the only people listening were the people at this table to the radio station. We were running it 24 hours a day to actually convince our people that we'd hired before we signed the radio station on that they actually did have the freedom, that they didn't have to do the shtick, they didn't have to say a slogan name and say the radio station name over and over again and they didn't have to do all of this stuff that radio has built up the over years that that's what you have to do.
4467 And so it was quite a shock to them, and now they think -- they just love it because when they turn their microphone on, they've got something interesting to say. They're not just a shill for the radio station or for some client.
4468 They're actually talking about things that their audience is interested in because the audience has probably suggested the topic.
4469 MR. G. RAWLINSON: For example, we don't do remote broadcasts, you know, where the guy's down at the car dealership and says come on in, we got a special on today and so on and so forth. And we don't do sponsorship of any features.
4470 We don't do so that was the weather brought to you by such and such open late until now and 20 percent off if you rush in and so on.
4471 Announcers don't have to say anything about that. They don't have to say the station name, they don't have to say their own name. In fact, we don't want them to do any of that.
4472 What we want them to do is have a conversation. It's a very unique concept, and it just frees up -- and it makes the listeners who we call the Now! family, it makes them feel comfortable and safe to have a conversation with a friend.
4473 MR. D. RAWLINSON: I can't believe, quite honestly, that music radio on FM has kind of got as far off track as it has.
4474 You know, when Doug Pringle started SHOM FM in Montreal back in 19 -- when was that? A long time ago. Back in the '60s.
4475 The announcers then did exactly what we're doing now. They didn't talk about, you know, how great the radio station was. They were talking about what the audience was interested in, and that's what we're doing.
4476 And you know, now when I listen to what I call normal radio, it kind of drives me crazy because you hear all of this stuff that the announcer says over and over and over and over and over again before they even get to something of interest. And we just eliminated all that.
4477 When the mike goes on, they have something interesting to say that the audience is interested in and, boy, does that -- you know, if the first thing out of the announcers' mouths is, "Is your child being bullied?" or, you know, something like that, immediately you're into the conversation.
4478 And maybe the next topic is something nowhere near as serious, or maybe it's something in the news or whatever. It's -- we go through a whole wide gamut of topics. But they are always talking about something interesting.
4479 When the mike goes on, there's something of interest.
4480 COMMISSIONER CUGINI: And part of what is interesting to listeners and part of spoken word programming is news, and it is in our radio broadcasting policy.
4481 You say throughout your application that the delivery of news on this station, for lack of a better term at this point, may be non-traditional. So can you please briefly run through for me how it is that you will present news to your listeners that complies with our commercial radio policy?
4482 MR. D. RAWLINSON: We feel we have a lot of news on Now! radio. It's not traditional, as you say.
4483 The definition of radio -- in music radio of news is 50 years old, and ---
4484 COMMISSIONER CUGINI: Commercial Radio Policy 2006.
4485 MR. D. RAWLINSON: Yeah, I'm not talking about the policy; I'm talking about in radio's mind. Not your mind, in radio's mind.
4486 And -- but if you ask our listeners do they want news on Now! radio, they say no. We've asked them.
4487 On the other hand, if they -- if you talk to them about the spoken word and they say -- what do you find important about the spoken word, they'll say things like, "It keeps me up to date. They're plugged into the city. You really know what's going on in town and around the world. I feel informed. I get the information I need and want. It's my city talking to itself".
4488 So we feel that while it's not the traditional way of doing news at the top of the hour and whatever, there is a lot of our spoken word, a lot of our 16 hours of spoken word is news.
4489 MR. G. RAWLINSON: We actually -- in our application, we promised 16 hours of spoken word, and that was somewhat of a guess, but we actually did a -- took a stopwatch and actually listened for -- to our existing station. And on a weekday we were three and a half hours of talking, and that's not counting commercials, not counting music, not counting any station promotion. Just straight announcers talking.
4490 So three and a half hours on a weekday times five is 17 ½ hours from Monday through Friday. It's less on the weekends, to be honest. And so we think we're at a minimum of 20, and probably 22 hours a week of actual spoken word.
4491 How much of that is news? I would say that our audience would probably say it's half, but we think it's approximately about 30 percent of that is news. It's --
4492 COMMISSIONER CUGINI: And that news will comply with the definition as this must include local news, weather, sports coverage and the promotion of local events and activities.
4493 MR. D. RAWLINSON: Yes.
4494 MR. G. RAWLINSON: And in a lot of cases, it's not just what's going on; it's also a discussion of it in more depth, which gives you -- you know, from more -- different points of view.
4495 COMMISSIONER CUGINI: No, I understand. And like I said, the question was really to ensure that --
4496 MR. D. RAWLINSON: Yes.
4497 COMMISSIONER CUGINI: -- the news provided on this station would comply with our policies.
4498 MS. LEYLAND: Yes.
4499 COMMISSIONER CUGINI: So thank you for that.
4500 Another less conventional way -- less conventional area is your advertising. You say you're going to have 50 percent less advertising, less commercials on this radio station.
4501 It's really a technical question for my knowledge. Does that mean 50 percent fewer breaks or 50 percent shorter breaks?
4502 MR. G. RAWLINSON: Well, the easiest way to say it is 50 percent fewer commercials, but that's not really quite true. We've actually done, again, a stopwatch and gone from 6:00 a.m. to midnight on our station and taken the exact same day on three or four of our competing stations and timed the actual number of minutes where they were talking about a sponsor or there was a commercial running or whatnot.
4503 And it was -- they were more than double what we were doing, what we were running. So we limit the number of breaks and we limit the number of commercials and, of course, on top of that, our announcers never talk about commercials. They never say, "This is brought to you by".
4504 We don't do remotes. We don't do what they call 20-word lives in our -- in the vernacular. Our announcers don't do any of that, so all -- you take all the commercial activity on other stations. We are less than half of that by actual stopwatch.
4505 COMMISSIONER CUGINI: And how has that been received by the advertisers in Edmonton?
4506 MR. G. RAWLINSON: Well, it's been tough. I'll tell you, it's -- in one way, it's been helpful to the other radio stations and it's been tough on us because we have to charge a premium because we run a lot less commercials and we don't do a lot of things that the other guys do.
4507 But we have had two -- at least two of the competing operations say to us, "Well, at least you're not in like most news stations where you come in and flood the market with a lot of cheap inventory. At least you're limiting the inventory and you're helping keep the rates up, so you've actually been a positive influence". Whereas most new stations come in, sell their commercials at 10 or 20 or 25 dollars apiece and it just wrecks the -- it brings down the whole market.
4508 We sell fewer at a higher price, and there are quite a few station -- or quite a few clients that you would think would be -- that you would recognize are not on our stations, like Sleep Country that you hear on the radio a lot or The Bay or Home Depot.
4509 I mean, there's a number of big radio advertisers that are not on our station because we have limited inventory so we -- they just won't pay the rate.
4510 So I guess, in a way, it's tough on us but, in a way, it helps the other market because we keep the rates up and those advertisers buy time on other stations.
4511 COMMISSIONER CUGINI: I mean, the reason I asked the question as well is because, as you know, there is no limit on the amount of advertising on radio. And --
4512 MR. G. RAWLINSON: Yes.
4513 COMMISSIONER CUGINI: -- you know, you're experiencing this in Edmonton now and you're continuing to do it, but you don't have to.
4514 You can go back -- you can go to the traditional way of selling advertising just like every other radio station in the market.
4515 MR. G. RAWLINSON: Well, you see, the whole concept of this radio station is that we talk a lot more than normal music stations and we don't want to play a lot less music, so what had to give, it was the commercials.
4516 So we play less commercials so the music quantity we play is very similar to the competing stations so that you don't get people saying, "Oh, they hardly play any music".
4517 We play a reasonable amount of music. It's just that we've cut back on that commercial account to allow for the spoken word.
4518 MR. D. RAWLINSON: You know, another thing that the next generation is -- they can smell hype and smell baloney a mile away, and BS. And they hear radio station after radio station saying, you know, 45 minutes commercial free or 10 in a row or all of this kind of radio shtick.
4519 One of the things that we decided to do because we wanted to eliminate hype on the radio station is we just said we're going to promise to play as much commercial-free music as we can.
4520 MR. G. RAWLINSON: I found -- sorry. I found my list of other big advertisers that aren't on our station. Do you want me to read it? Which we regret, but --
4521 COMMISSIONER CUGINI: I'm going to move on now to the issue of your frequency choice for this radio station.
4522 Just one question. Do you believe that the waiver that you have received does not require you to make any adjustments or remedy any interference that may occur?
4523 MR. G. RAWLINSON: No. Could I just give a little bit of history on the frequency? I just think it's kind of interesting, if I may.
4524 You know, in 2007 we successfully applied for a station and were granted a licence on 100.3, the frequency in question, so we actually were granted 100.3 five years ago.
4525 It's a good frequency, but it's not perfect, and it wasn't quite as good as we were hoping to get, so we did some very imaginative engineering and some complicated agreements and expensive agreements with other broadcasters. We were able to create a new full power frequency at 97.7 for our existing station.
4526 And so as a result, 100.3 was still available. If we hadn't done that, none of this would have been an issue.
4527 So in preparing for the hearing, we just -- we naturally looked at 100.3 again. And we believe that we will have to do whatever is necessary to protect that -- any interference.
4528 We asked Golden West for their permission and, you know, I've done -- had business dealings with Golden West and Mr. Elmer Hildebrand for many, many years. And I trust him and he trusts me.
4529 And I think that his first thought was, well -- he knew he could count on me if there was any interference problems, I would fix them, I wouldn't be complaining. I would do whatever it took to make sure that it was properly fixed, and so he said okay.
4530 COMMISSIONER CUGINI: What -- my last question. My colleagues, of course, may have others, and I'm sure you're probably ready for this question.
4531 Other than yourselves, how many more commercial radio licences do you think Calgary can sustain?
4532 MS. LEYLAND: Well, I think -- as you know, I live in Saskatoon, of course, and Saskatoon's population is less than 250,000 people and we have seven stations. We have five FM stations.
4533 In Calgary, population of a million and 15 stations, including 11 FMs, so you know, there you have approximately twice the number of stations here and four times the population, so I guess from my perspective, there's room.
4534 MR. G. RAWLINSON: And --
4535 COMMISSIONER CUGINI: For at least two, three?
4536 MR. G. RAWLINSON: Commissioner Cugini, I believe you were there the last time I got asked that question, and -- but some of these other gentlemen haven't heard my answer. So if you -- my answer is, if you think our application is the best, then there's clearly room for only one.
4537 If our application is second-best --
4538 COMMISSIONER CUGINI: That's why I started it by saying "other than yours".
4539 MR. G. RAWLINSON: Then clearly you should give two.
4540 But my more serious is this, is that I think you have to look at it from what's best for the people of Calgary. And if there are two great applications, then you could give two licences. We agree with most of the other people. And if not, then you shouldn't do it.
4541 It's less about the industry and more about what's best for the people of Calgary.
4542 COMMISSIONER CUGINI: Well, thank you very much for your answers this morning, and those are all my questions.
4543 THE CHAIRPERSON: Thank you, Madam Cugini.
4544 Your magnanimity and generosity is well known, Mr. Rawlinson.
4545 That being said, I'm going to try and spend a few minutes on a couple of questions. If we go over, we'll have to come back after lunch and we'll deal with it.
4546 When did you -- you relaunched in Edmonton recently, did you not, to this format? This is not the original format you had?
4547 MR. G. RAWLINSON: No, this is the original format. This is the Now! radio -- this was the licence granted to us two and a half years, three years ago, and we launched it in February.
4548 MR. HUNTER: Just about two years ago now.
4549 MR. G. RAWLINSON: So it was a brand-new licence and it's all -- and on that licence, our promise was hits for adults, which we -- which is exactly the music we played. We promised 16 hours of spoken word. Interestingly enough, we're exceeding that.
4550 We feel that we're --
4551 THE CHAIRPERSON: I'm sorry. You relaunched in Calgary; is that it?
4552 MR. G. RAWLINSON: Well, we had a station in Edmonton that was a smooth jazz station that --
4553 THE CHAIRPERSON: Oh, the smooth jazz station.
4554 MR. G. RAWLINSON: -- in the last year, yes, we --
4555 THE CHAIRPERSON: You relaunched that last year.
4556 MR. G. RAWLINSON: And we -- yes. And we relaunched that station. We were -- went through a full licence term and then we were able to --
4557 THE CHAIRPERSON: So on your 10K20 plan, you've got basically two years under your belt --
4558 MR. G. RAWLINSON: Yes.
4559 THE CHAIRPERSON: -- in Edmonton.
4560 MS. LEYLAND: In Edmonton with Now!, including pre-launch, it's -- we're in year 4.
4561 THE CHAIRPERSON: Okay.
4562 MS. LEYLAND: 2012 is Year 4.
4563 MR. G. RAWLINSON: Because we do, of course -- before we launch, we do a full set as well so that we've got some local artists to play when we start.
4564 THE CHAIRPERSON: And is that the kind of music you're playing on Now!, or would it be a softer kind of music? I mean, you're not -- some of these bands are not --
4565 MR. PRINGLE: No, we're guitar-based music, but it has melody and it's not noisy. I mean, that's really -- so there's a pretty wide swath.
4566 THE CHAIRPERSON: You're paying these artists?
4567 MR. PRINGLE: Yes. Most of them. Not all of them.
4568 THE CHAIRPERSON: Some of that would be sort of heavier rock, edgier beat?
4569 MR. PRINGLE: Yeah. If it doesn't fit the format or it's -- the quality isn't there, then obviously it's tougher to play.
4570 THE CHAIRPERSON: Okay. So you're not necessarily playing the bands that you've sponsored, so to speak, on the Now! station in Edmonton.
4571 MR. PRINGLE: Yes, we're playing a -- yeah.
4572 THE CHAIRPERSON: All of them?
4573 MR. PRINGLE: No, not all of them.
4574 THE CHAIRPERSON: Okay. You know, you mentioned you went back to the '70s, and I remember when I was a kid in the '70s, I was really young, I remember Ted Tevan and he would do sports, right. And Ron Fournier does something similar to that today, but people would be calling in.
4575 There wouldn't be any calling in under your format.
4576 MR. D. RAWLINSON: There is some.
4577 THE CHAIRPERSON: Some.
4578 MR. D. RAWLINSON: Some. The main thing is our texting and our -- and the conversations that carry on on the Facebook.
4579 THE CHAIRPERSON: So you'd be reading texts --
4580 MR. D. RAWLINSON: Yes.
4581 THE CHAIRPERSON: -- to the public.
4582 MR. D. RAWLINSON: We'll read, you know, 15, 20, 25 texts an hour. I mean, it's -- there is a lot of input coming in all the time. And there's phone calls.
4583 We take phone calls on the morning show.
4584 MR. HUNTER: Well, we take phone calls all day, but people just don't use the phone any more.
4585 They don't. If they can text in and make a comment, it's way quicker as opposed to dialling away.
4586 MR. DOUG RAWLINSON: You know, the interesting thing about texting of course is it's, you know, short, and it's amazing how somebody can state what they want to say in about 10-15 words and just send it off and, boy, it makes for interesting conversations.
4587 THE CHAIRPERSON: Okay. But, you now, other radio stations and television stations and networks are using texting and reading texts, there is nothing that revolutionary about that.
4588 MR. DOUG RAWLINSON: Other radio stations are talking about texts, other radio stations are talking about social media. We are the only radio station that has taken social media and made it the centrepiece of what we do on the radio. There has been no other radio station that I know in North America even close to doing what we do with text and having conversations with our audience.
4589 THE CHAIRPERSON: Okay. No one doubts the depth of your pockets, but when we look at your submission -- and this is not confidential -- there is a $5.5 million bond that has come with your submission and when we look at your annual expenses as of year one, you are basically in that ballpark.
4590 Would it have been wiser to de bonifier, to add something to that bond and to your financial commitment for the early years?
4591 MR. GORDON RAWLINSON: We are very fortunate to have no debt, have money in the bank and if you want us to show you a bond that is $15 million, we will. I mean we are very fortunate.
4592 THE CHAIRPERSON: We just have to get you on record. There are some questions that we have to get on record that we have done with other applicants.
4593 MR. GORDON RAWLINSON: Thank you.
4594 THE CHAIRPERSON: So noted. Great.
4595 MR. GORDON RAWLINSON: Thanks.
4596 THE CHAIRPERSON: You spent a lot of time talking about direction and the fact that radio management gives a lot of direction to DJs.
4597 Is that as prevalent as you have sort of made it out to be? When you hire somebody, aren't you hiring them for what they have to say in terms of hosts and not DJs, if I can use your term?
4598 MR. DOUG RAWLINSON: I would say that that's somewhat prevalent if they are a morning show. The rest of the day most disk jockeys are told to shut up and play the music.
4599 THE CHAIRPERSON: Okay.
4600 MR. DOUG RAWLINSON: So it's perhaps in the morning show.
4601 But our announcers, our hosts in this meeting were just -- you could hear a pin drop. They couldn't believe that I was giving them that kind of freedom.
4602 THE CHAIRPERSON: When do you ID yourselves? Because I have listened to the direction you give to your hosts that they don't have to mention your station at all.
4603 MR. DOUG RAWLINSON: We do that all in production, in produced pieces of production. We don't -- so when the announcers talk, they don't do any of that stuff.
4604 THE CHAIRPERSON: So you won't be ID'ing yourselves any less than any other station --
4605 MR. DOUG RAWLINSON: That's right. There's lots of --
4606 THE CHAIRPERSON: -- just that the host won't be doing that.
4607 MR. DOUG RAWLINSON: That's right. When the hosts come on they are talking about something interesting.
4608 THE CHAIRPERSON: That's good. It's better that way, they probably can't mess it up.
4609 MR. DOUG RAWLINSON: That's right.
4610 THE CHAIRPERSON: A lot of confidence in those hosts.
4611 THE CHAIRPERSON: You know, you sort of came out in your original submission, there is a talk element but you are basically a music station and I'm hearing more that you are kind of more of a talk format than a music format.
4612 MR. DOUG RAWLINSON: Let me try and change your mind.
4613 We are not basically a music station, we are basically --
4614 THE CHAIRPERSON: A talk station.
4615 MR. DOUG RAWLINSON: -- a station about joining the conversation.
4616 THE CHAIRPERSON: Okay.
4617 MR. DOUG RAWLINSON: And it's a combination of the two that makes this radio station come alive, okay.
4618 THE CHAIRPERSON: But the emphasis and the strength of your station is going to be the talk element, at least that what I understood?
4619 MR. DOUG RAWLINSON: The primary element is the talk. That's why we think -- Doug Pringle and I have had this discussion. He is our music expert. We have had the discussion that we think if we played exactly the same music that we do on NOW! Radio, but if we didn't have the talk element we would be, at best, a mid-pack player. You add the talk element in and we are number one in like a 15 or 20 station market. I mean it's that staggeringly different.
4620 THE CHAIRPERSON: No one is really going to care about the music, it's all going to be about the talk. Is that clear?
4621 MR. DOUG RAWLINSON: The music is the soundtrack, right.
4622 THE CHAIRPERSON: Right.
4623 MR. DOUG RAWLINSON: And it enhances and is a bridge between the conversations, okay. It's a fine art, you know. Sometimes we think, well, maybe we are talking too much, or sometimes we feel like maybe we are not playing enough music, and so we are constantly kind of listening for that, but it's the combination of the two with the driving force being the talk and the spoken word.
4624 THE CHAIRPERSON: And will people be listening to you for the music or for the talk? I think it's the talk, I mean that's what makes you different.
4625 MR. DOUG RAWLINSON: It's mainly the talk really. You know, I was talking to you about Christie and her iPod. The music on her iPod, she loves that better than the music on our radio station, but the radio station -- the music on our radio station is good enough for her. What's really got to Christie is the talk about bullying or whatever it happens to be.
4626 THE CHAIRPERSON: Yes. Given the limited availability of FM on the spectrum, is this the best use of frequency or should you guys be looking at an AM stick?
4627 MR. DOUG RAWLINSON: This format would not work on AM.
4628 THE CHAIRPERSON: Why not, Mr. Rawlinson?
4629 MR. DOUG RAWLINSON: Number one reason, the next generation doesn't listen to AM. They might listen to news talk or sports talk, you know, but that's an older demographic. The next generation listens to FM.
4630 They think this music is okay, but if it was on AM the sound qualify of the music would be just, you know, no good.
4631 And let me remind you, you know, we are putting the emphasis on talk, but this is a long way from a talk radio station. It's the combination of the two.
4632 MR. GORDON RAWLINSON: And a very important point here, and I mentioned it briefly earlier, but we believe that there is some evidence that we have significantly helped the total tuning in the Edmonton market and we will do the same thing in Calgary and getting people to listen to radio as opposed to their iPod gets people listening to 40 percent Canadian music as opposed to very little, 5 or 10 percent Canadian music, if any, on their iPod. So maybe it's 15 per cent, I don't know.
4633 But this is a very important thing for Canadian radio, to get people to listen to the radio. If we can get people listening to the radio instead of on their iPods, that's a tremendous thing for Canadian music.
4634 THE CHAIRPERSON: No question.
4635 MR. GORDON RAWLINSON: And if I can state that again, the PPM evidence shows that in the last two years there has been quite a bit -- since PPM started in Canada there has been quite a decrease -- and again I'm talking only 25-44, there has been quite a decrease in total tuning in that demographic.
4636 In Calgary the total tuning has dropped 19 percent in two years of the 25 to 44 year olds, of all the radio stations in Calgary.
4637 In Edmonton it has gone up slightly. The difference, if you add NOW! Radio's tuning in the 25 to 44 demographics and said, okay, if we got that same in Calgary it would put Calgary almost even again.
4638 So it's that big of a factor. It's huge.
4639 THE CHAIRPERSON: No doubt about the fact that getting people back to the radio station is great, great for CCD contributions, great for Canadian artists. It's a win-win. I appreciate that.
4640 And you are also explaining to us that you are not -- given the fact that you are increasing listenership, you are not necessarily taking away from anyone else, given the concept.
4641 Is that my understanding?
4642 MR. GORDON RAWLINSON: In fairness, there will be some impact, but because the main drawing card is the spoken work it's not -- there will be people come from a country music station to listen to this, there will be people coming from a hard rock station to listen to this, there will be -- because the spoken word is the thing. So it will have a very small impact on any given station, but there will be some impact.
4643 But a big chunk of our audience we believe will be getting people back from the iPods and internet music services, which we think is really valuable to the system.
4644 THE CHAIRPERSON: We have a list of stations here that our staff feels may be impacted if you were to acquire a licence.
4645 When you look at the market, who are you taking market share away from?
4646 MR. GORDON RAWLINSON: First of all, the biggest thing would be the impact would come from the getting people -- you know, more tuning. It's not just people who never listen to the radio, but getting people to listen to the radio more.
4647 THE CHAIRPERSON: But will you be drawing from adult contemporary stations, will you be --
4648 MR. GORDON RAWLINSON: Well, the top three stations 25 to 44 right now are Virgin, which is owned by Astral, and Jack which is owned by Rogers, and CJAY which is owned by Astral. Those are the top three stations, so they are big corporations that are pretty darn good and they will find a way to --
4649 But we don't think that we will take much out of any one station, we think we will also get some audience from people who are maybe not that strong in that demo, but they have some listener that we will get some tuning. We won't necessarily steal them all away completely, but we will get some tuning.
4650 MR. DOUG RAWLINSON: If you look at the BBM figures in Edmonton where we are operating, no one station took a big dive when we came on, you know, they all kind of hung in there.
4651 MR. GORDON RAWLINSON: And the biggest thing is, the total tuning in the market in Edmonton as compared to any other PPM market stayed constant, in fact it went up slightly over that two years. Toronto went down, Vancouver -- Vancouver went down quite a bit, Calgary went down 19 percent and Edmonton didn't.
4652 There is no way to prove that it was because of that station, but it's more than, as they say, coincidence, I think it's perhaps circumstantial evidence.
4653 THE CHAIRPERSON: So circumstantial and coincidence, that's fine. Look, you made your point.
4654 Briefly, your submission, your projections, your year one, five market share, are you comfortable with that?
4655 MR. GORDON RAWLINSON: Yes. We think it's very achievable.
4656 THE CHAIRPERSON: Year one?
4657 MR. GORDON RAWLINSON: Year one our market share, yes, of what we projected, yes. We projected I think a five share. Yes.
4658 THE CHAIRPERSON: And given that it's so different, so new, so revolutionary, so attractive, and given the track record in Edmonton, you are only projecting a seven share in year seven.
4659 MR. GORDON RAWLINSON: Well, we are being conservative. We are projecting something that we are very confident we can do.
4660 Our experience has been that when we launch a new radio station -- a lot of people go in and build slowly we tend to launch with a big amount of promotion, a big explosion and we get the market's attention so that we hopefully get some sampling.
4661 As Doug mentioned earlier, we do a lot of -- quite a period of time of in-house testing so that the day we sign on it sounds like we have been on the air forever. Many new stations sign on and they are still working out the kinks and so they don't sound as professional as they will a month or two later. We get all that out of the way so that when we sign on we sound great, if I may say so, and we promote it really enthusiastically.
4662 THE CHAIRPERSON: We wouldn't expect anything less from you.
4663 MR. GORDON RAWLINSON: And we promote it enthusiastically right off the bat.
4664 So it's not so much as a growth thing, as that we go in and say, "Here is how we are, give us a try" and if people like it they will listen.
4665 THE CHAIRPERSON: Rumour has it you moved to Edmonton to run the NOW! Station there, or was that Doug Rawlinson that moved to Edmonton?
4666 MR. GORDON RAWLINSON: It seemed like it for both of us.
4667 MS LEYLAND: It seemed like they moved to Edmonton.
4668 MR. GORDON RAWLINSON: We spent a lot of time there, yes.
4669 MS LEYLAND: Where are Gord and Doug? In Edmonton.
4670 MR. GORDON RAWLINSON: We sent a lot of time there, but no, I live in Calgary and that's my base.
4671 THE CHAIRPERSON: Great.
4672 Mr. Simpson...?
4673 COMMISSIONER SIMPSON: Thank you.
4674 At the beginning of the hearing in your oral presentation, Mr. Rawlinson, Doug, you intrigued me with your revelations when you were in London about BB and then went on to create the impression, with me at least, that the idea of having a conversation with the audience was indeed something to explore.
4675 The way I thought I heard you presenting it was that you were sort of unleashing guys behind the mics so they weren't in a heavily formatted scenario such as Mr. Hunter portrayed and they could be less structured.
4676 But I have been listening to the station in Edmonton for the last 40 minutes and I have a few questions.
4677 MR. DOUG RAWLINSON: All right.
4678 COMMISSIONER SIMPSON: Do you have different degrees of talk versus music at different times of the day or is your programming philosophy consistent throughout the 24 hour broadcast wheel?
4679 MR. DOUG RAWLINSON: It's relatively consistent. It does go up and down depending on the topic.
4680 We play a relatively consistent amount of music and have a relatively consistent amount of talk.
4681 COMMISSIONER SIMPSON: In the first three tunes -- this is anecdotal, I'm not trying to bust you, but one of the things about coming to the hearing with a format that exists is that it gives us one of the rare opportunities to really hear for ourselves what you're talking about and I'm a little confused.
4682 In the first three music -- in one sweep each piece of music that I listened to when I tuned in about noon was -- the only thing that was between the records was a bumper that was a production piece of a call-in of someone that was praising the station for being interactive and that was the only thing. It was about a 10-second bumper and it was not the host but a call-in person. That happened once between the first pairs of music and then once again.
4683 And then, when the host came in the third time it sounded like it was live, but essentially it was over music and pretty heavily paced.
4684 In other words, I'm getting the impression after listening for about 40 minutes that the pace of a produced environment is still there. I don't think I have heard your host talk for more than 10 seconds and most of the time over music. And I just finished listening to a nine commercial stop set with a promo that ended with:
"Our promise to you is we will play as much music as we can. That's the NOW! Promise." (As read)
4685 MR. DOUG RAWLINSON: Right.
4686 COMMISSIONER SIMPSON: So it just seems incongruous with what you are saying about being a conversation radio station.
4687 MR. DOUG RAWLINSON: Okay.
4688 During the noon hour we do a program called the NOW! Takeover which is a request show. Sometimes it's phone calls, sometimes it's texts. More often than not that it's text. And there are produced elements on the radio station all the time, that's for sure, but that particular show from noon to 1:00 is a music-based show that we -- and it's one of those kind of programs where we step out from our normal music format.
4689 We take requests and will actually play songs that aren't on our playlist. You know, most requests from audience members, they just play the normal songs, we step out and do different things, but the amount of talk does go up and down.
4690 The nice thing about NOW! Radio, it is on the air and I would invite all of your to give it a listen -- just Google NOW! Radio Edmonton and it will come up -- and I invite you to keep listening and I would love to hear how you feel it sounds over time.
4691 COMMISSIONER SIMPSON: That was why I prefaced my question with, you know, do you have different programming parameters because I really wanted to be fair about that.
4692 Actually, I'm watching your host right now, which is also -- it reminds me of play care, being able to look at your kids --
4693 COMMISSIONER SIMPSON: -- and make sure they are doing their job.
4694 MR. DOUG RAWLINSON: That's another thing that we did that we found quite interesting, was we have this NOW! TV we call it.
4695 COMMISSIONER SIMPSON: Yes.
4696 MR. DOUG RAWLINSON: It's a live shot of the control room.
4697 COMMISSIONER SIMPSON: Yes.
4698 MR. DOUG RAWLINSON: When we talk to some of our NOW! Family members, they found it fascinating to watch our hosts, because they are often on their computer answering texts and dealing with computer issues to do with texts.
4699 COMMISSIONER SIMPSON: Yes.
4700 MR. DOUG RAWLINSON: And they found to be, "Oh, now I get it, that's how they get to respond to all of these texts."
4701 We do all kinds of things to do with NOW! TV where we show things to the camera and talk about them on the air and do all kinds of things. We felt that was another way of making a great interaction with our audience.
4702 MR. GORDON RAWLINSON: Commissioner --
4703 COMMISSIONER SIMPSON: I will get to you, but I just wanted to ask, if you could give me some other day parts to listen to, because I really will take you up on that.
4704 MR. DOUG RAWLINSON: Sure.
4705 COMMISSIONER SIMPSON: I was to hear, you know, the full thing.
4706 MR. DOUG RAWLINSON: Okay. From 1:00 to 3:00 this afternoon, 1:00 to whenever.
4707 COMMISSIONER SIMPSON: I won't do that to our other presenters. I will --
4708 MR. DOUG RAWLINSON: Listen tomorrow morning.
4709 MS LEYLAND: Listen tomorrow morning.
4710 MR. DOUG RAWLINSON: Listen through the day.
4711 MS LEYLAND: Listen to Crash & Mars.
4712 MR. DOUG RAWLINSON: Yes, our morning show --
4713 COMMISSIONER SIMPSON: Sure.
4714 MR. DOUG RAWLINSON: -- Crash & Mars tomorrow morning.
4715 COMMISSIONER SIMPSON: I will. I will do that tomorrow morning.
4716 MR. DOUG RAWLINSON: Or listen to -- is Adam McKale on tomorrow?
4717 MR. HUNTER: Adam is on until 3:00 and then we have Rachel on this afternoon.
4718 MR. DOUG RAWLINSON: Great. Great.
4719 COMMISSIONER SIMPSON: I was just a little surprised because they sounded an awful lot like --
4720 MR. GORDON RAWLINSON: A couple of things. A couple of weeks ago when we said we checked it out, there was 7 minutes of talk in the noon hour, which was the lowest hour of the mid-day -- you know, between 9:00 and 5:00 was the lowest hour of talk, but there was still seven minutes, so I don't know, you maybe caught a weird thing there.
4721 MR. DOUG RAWLINSON: And if you -- sorry, Gord, just to interrupt.
4722 That seven minutes of talk is not that production or whatever elements that you heard, or it is seven minutes of the announcer talking about interesting things.
4723 Now, the noon hours particularly he talks a lot about music because it's a request show, that's the whole point of the noon hour, but don't think that that seven minutes is part of the production or whatever, it's --
4724 COMMISSIONER SIMPSON: No, I understand. I already made that assumption, but I'm glad you said it.
4725 Sorry, Mr. Rawlinson.
4726 MR. GORDON RAWLINSON: And you said you counted a number of commercials, but we run fewer commercial breaks.
4727 COMMISSIONER SIMPSON: Yes.
4728 MR. GORDON RAWLINSON: So yes, we clump them together, it's just, again, trying to do everything we can to maximize the audience and that's what we found works better than, say, stopping twice and playing five commercials each time, you just play 10 in a row and then you are done for a good period of time.
4729 COMMISSIONER SIMPSON: Yes. Again, I only was drawing on this anecdotally to get the conversation going. There is no judgment.
4730 MR. GORDON RAWLINSON: You should know that many other stations would have two breaks of 10 or 11 or 12 commercials.
4731 COMMISSIONER SIMPSON: Yes.
4732 If I may just indulge one or two more questions and I'm done.
4733 To the social media side of things, I like very much what you are doing. I think radio -- all media has to be dialogue, not monologue, but along the lines of the business plan you said that you had interaction now of something like a million conversations via text over the period of the station's life.
4734 Is that correct? Okay.
4735 Is the ability to now know who your audience is by the ability to capture some conversations in terms of who they are coming from, is it part of your business plan -- I know that you don't participate, you have said this already, in the toll cost, if there are any, with respect to the text messaging, but the ability now to interact with your audience other than through the radio signal, is that part of your business plan in terms of your sales?
4736 Where I'm going with this is not just the precision of what you are doing, but is this part of how radio has to look at its whole business plan in the future, is to create revenue opportunities off of these other conversations?
4737 MR. GORDON RAWLINSON: Our salespeople keep saying we have to be monetizing this, but we are very careful to not do anything that offends or that has our audience feeling like they are -- I mean, this is the NOW! Family, what we think of it, and we just -- we haven't figured out a way to do it that is acceptable this generation --
4738 COMMISSIONER SIMPSON: Without betraying trust.
4739 MR. GORDON RAWLINSON: -- that is very leery.
4740 MR. DOUG RAWLINSON: We do not want to spam them.
4741 COMMISSIONER SIMPSON: Yes.
4742 MR. GORDON RAWLINSON: Yes. They are very leery of anything commercial and they feel that they can text us and it's safe and we are not using their information and, et cetera. So we have completely stayed away from it so far. And if we could find a way to do it and still keep that integrity, but we haven't figured it out.
4743 COMMISSIONER SIMPSON: I'm intrigued with the NOW!Can(ph) because as radio moves away from what little spectrum there is left -- you know we are seeing a migration away from AM to FM and some day potentially even away from FM to the Wi-Fi -- the demand is going to be placed on radio broadcasters to start being more picture-oriented as well as audio-oriented and I think you are getting there very nicely.
4744 My question is this: Do you see yourself at some point competing with local television or being more of a multimedia broadcaster -- because you are already sort of getting into that space now -- and as you look at radio broadcasting down the road are you going to be able to take what you are learning from interactivity, multimedia, television capabilities as part of your plan?
4745 Not yours in specific, but I'm talking in generality. I'm very pleased to be talking to Mr. Rawlinson, "D".
4746 MR. DOUG RAWLINSON: I don't think so, quite honestly. What we do is radio.
4747 But, on the other hand, when you ask people about NOW! Radio, it has become a brand onto itself and when you ask them, "Tell me about now", they might start off by talking to you about our Facebook page, or they might start off by talking to you about NOW! TV, "I saw your host did this" or "You did something for charity where you stuffed the studio full of cans of food or whatever", some of the things that we do for NOW! TV, but I don't think we are -- at least we haven't even considered going that way and I don't --
4748 But video is becoming more and more prevalent. I mean, look at You Tube.
4749 We do create our own videos in-house. Besides the live ones our announcers all have video cameras that they take around with them. We are going to do a big promotion with our morning team where they are -- I guess I can't tell people about that, can I.
4750 UNIDENTIFIED SPEAKER: No, no no.
4751 MR. DOUG RAWLINSON: No, that's secret, sorry.
4752 MR. DOUG RAWLINSON: But it involves video.
4753 We are getting more and more into that, but we look at the whole thing as just a method of creating a bigger connection between the radio station and the NOW! Family of listeners. That's the way we look at it.
4754 MS LEYLAND: It has changed the old line "a face made for radio" though.
4755 MR. DOUG RAWLINSON: That's true, yes. Yes.
4756 COMMISSIONER SIMPSON: Thank you very much.
4757 THE CHAIRPERSON: Just briefly before we go, to understand your business model you have half the number of commercial minutes basically, but you charge twice the rate.
4758 Is that correct, or is the same number of minutes only fewer breaks?
4759 MR. GORDON RAWLINSON: We wish --
4760 THE CHAIRPERSON: You could charge twice the rate for that.
4761 MR. GORDON RAWLINSON: It's half the number of minutes and we wish we could charge twice, but we can't.
4762 THE CHAIRPERSON: That's clear.
4763 MR. GORDON RAWLINSON: Yes.
4764 THE CHAIRPERSON: The number of staff that would be hired?
4765 MR. GORDON RAWLINSON: I believe it's 26.
4766 THE CHAIRPERSON: New staff.
4767 MR. GORDON RAWLINSON: Twenty-six new people.
4768 THE CHAIRPERSON: Twenty-six new people. Great.
4769 MR. GORDON RAWLINSON: Yes.
4770 THE CHAIRPERSON: Just in terms of the history, you mentioned that you had already acquired this licence in '08?
4771 MR. GORDON RAWLINSON: Sorry, the --
4772 THE CHAIRPERSON: The 100.3 licence.
4773 MR. GORDON RAWLINSON: Yes. The station we have in Calgary today we originally were licensed on 100.3, coincidentally, and then we found a frequency that was even better and made a deal with that person and so that left 100.3 still available in this marketplace.
4774 THE CHAIRPERSON: You never launched 100.3?
4775 MR. GORDON RAWLINSON: No. So we feel like it's kind of -- I'm saying anything. I'm trying to make a joke.
4776 THE CHAIRPERSON: Jokes are allowed.
4777 THE CHAIRPERSON: I have been telling legal jokes are allowed since I got here.
4778 Okay. Thanks. I think we are done in terms of questions. We really appreciate your presentation and I think we should take a lunch break.
4779 If we could come back at 2:15, would that be okay, Madam Ventura?
4780 THE SECRETARY: That would be perfect. Thank you.
4781 THE CHAIRPERSON: So we will see everyone back at 2:15. Thanks.
4782 THE SECRETARY: Thank you.
4783 MR. DOUG RAWLINSON: Thank you.
--- Upon recessing at 1250
--- Upon resuming at 1418
4784 THE CHAIRPERSON: Good afternoon.
4785 Madam Ventura.
4786 THE SECRETARY: Thank you, Mr. Chairman.
4787 I just wanted to make a reminder that after the Corus presentation and questions, we will be following with Phase II of the hearing. If you know whether you're appearing or not at this time, at break please advise me, and if not, I will call upon you and you can state your intention there.
4788 We will now proceed with item 12 on the Agenda, which is an application by Corus Entertainment Inc., on behalf of its wholly owned subsidiary CKIK-FM Limited, to amend the broadcasting licence for the AM radio programming undertaking CHQR Calgary.
4789 The licensee proposes to add an FM transmitter in Calgary to broadcast the programming of CHQR in order to adequately serve the population of Calgary.
4790 The transmitter would operate on frequency 106.9 MHz (channel 295A) with an effective radiated power of 1,000 watts (non-directional antenna with an effective height of antenna above average terrain of 243.6 metres).
4791 Appearing for the applicant is Chris Pandoff. Please introduce your colleagues, after which you will have 20 minutes to make your presentation. Thank you.
4792 MR. PANDOFF: Thank you.
4793 Good afternoon, Mr. Chair, Commissioners and Commission staff. My name is Chris Pandoff and I am President of Corus Radio.
4794 Before we begin our presentation, I would like to introduce the members of the Corus team who are here with me today:
4795 - to my immediate left is Doug Rutherford, Vice-President, Corus Radio Alberta;
4796 - to Doug's left is John Vos, Program Director of CHQR-AM;
4797 - beside John is Sylvie Courtemanche, Vice-President, Government Relations, Corus Entertainment;
4798 - to my right is Greg Landgraf, Senior Engineering Manager, Corus Western Radio;
4799 - beside Greg is Gary Maavara, Executive Vice-President and General Counsel for Corus Entertainment.
4800 Mr. Chair, we appreciate the opportunity to present our application for an amendment to the radio broadcasting licence of CHQR, known as QR77. This amendment would allow for the addition of an FM transmitter in Calgary, permitting the rebroadcast of QR77's signal on the FM band as a means of correcting the existing and growing coverage deficiencies in downtown Calgary.
4801 The current proceeding has the potential of resulting in further changes in the Calgary radio market, and with QR77's ongoing signal problems, we believe that this hearing has provided a unique opportunity to address this issue.
4802 QR77 has been serving the Calgary community for 47 years. A leader in local news, public affairs and information programming, this station is a critical public asset that is losing its ability to fulfil its mandate.
4803 As we will demonstrate during this presentation, QR77 operates with an AM frequency that is incapable of properly serving a significant segment of its audience in Calgary's downtown core. Without an amendment to our licence, our station will struggle to keep up with existing players in the market and with any new players that may be licensed in connection with this proceeding.
4804 More importantly, our audience will not have full and ready access to Calgary's best source of timely local news and information. We have more than 40 supporting interventions that attest to this fact.
4805 Our brief comments will start with the motive for this application, which is to correct the severe signal quality problems QR77 is facing.
4806 Then we will provide the Commission with an overview of the five options we examined, following which we will describe why this station is so vital to the City of Calgary.
4807 And finally, we will explain why we are convinced that the retransmission of the AM signal at 106.9 MHz is the most compelling solution that best serves the public interest.
4808 MR. RUTHERFORD: QR77 has always prided itself as being a reliable, timely and accurate source of information. The tremendous growth and development that characterizes downtown Calgary, especially in the last 10 years, has made it increasingly difficult for the station to maintain this status.
4809 Broadcasting on 770 kHz at 50,000 watts, 24 hours per day, the signal provides extensive rural coverage outside of Calgary both day and night.
4810 In downtown Calgary, it's a very different situation. The proliferation of high-rise condominium towers and office buildings, built with steel and cement components, as well as the expansion of Light Rail Transit routes seriously inhibit our ability to reach listeners in the downtown area. This problem gets worse each day.
4811 Earlier this week, you heard from one of the applicants that their engineering report confirmed the downtown reception problems.
4812 This large-scale development has changed the downtown density of the city. As we noted in our Supplementary Brief, the 2011 Civic Census reports that more than 37,000 people now live in Calgary's inner core. With projected growth of more than 25 percent in the number of residential towers, this number is expected to increase substantially. These people can't hear our signal.
4813 Audience surveys we commissioned between 2007 and 2011 confirm the gravity of the downtown signal problem.
4814 In 2007, Solutions Research Group found that 30 percent of QR77 listeners had "frequently" or "sometimes" had problems receiving the signal inside large buildings or driving in the downtown core.
4815 In 2009, Vision Critical reported that 51 percent of radio listeners didn't listen to AM stations at all; 58 percent of those respondents cited reception as the primary reason.
4816 Again, in 2011, a survey by Vision Critical revealed that only 39 percent of adults who had listened to QR77 reported "never" having trouble receiving the signal.
4817 Problem areas include apartment blocks, office towers and the area around LRT.
4818 QR77 recently undertook a listener survey to better understand the extent and nature of the reception problems. The station's core listeners were invited to report signal deficiencies through an online survey and to call the station's reception desk to report problems.
4819 The volume of responses was revealing. Over 700 listeners reported signal difficulties through the online survey and another 50 phoned our studios.
4820 The results of the survey can be summarized as follows:
4821 - two-thirds experienced difficulties with reception in the previous 90 days;
4822 - two-thirds experienced problems in their cars;
4823 - over half experienced problems in their home; and
4824 - over half experienced a poor signal at work.
4825 The comments we received confirmed the specific locations in Calgary where listeners had experienced reception problems. This included residential and commercial areas in the downtown core and along LRT tracks.
4826 These statistics are compelling. Equally compelling are the results of a spot audit of QR77's signal in the downtown core. In December of 2011, Greg Landgraf set out on the streets of downtown Calgary to record the signal at 9 different locations, all within close proximity of each other.
4827 This is a shortened version of the recordings.
--- Audio Presentation
4828 MR. RUTHERFORD: These audio clips demonstrate that reception problems are, in some places, very acute. In some cases, our station is simply inaudible. And as you heard, we can't even hear our signal in the building in which the station studios are located.
4829 MR. LANDGRAF: Our application to add an FM transmitter to rebroadcast QR77's signal reflects what we believe to be the best technical solution to our acute reception problems in downtown Calgary.
4830 We considered a series of options:
4831 (i) a power increase;
4832 (ii) antenna relocation;
4833 (iii) moving to another frequency on the AM band; or
4834 (iv) a new drop-in AM rebroadcaster.
4835 QR77 operates at a power level of 50,000 watts, the maximum allowable under Industry Canada rules. Therefore, a power increase is not possible.
4836 Moving the antenna is also not a viable option as there is no location that could offer a better signal than our current site.
4837 We also considered moving to another frequency on the AM band. In evaluating this option, we determined that 770 kHz is the best frequency we could have on the AM band.
4838 The option of adding a drop-in AM repeater also proved to be inadequate. This is because a transmitter site close to the downtown core would not be able to overcome the penetration problems faced by all AM frequencies in high density urban areas.
4839 After considering all options, we submit that the only solution that can adequately correct QR77's signal deficiencies is the one we propose today: to rebroadcast the station's AM signal on the FM band.
4840 To this end, our technical consultants conducted an extensive frequency search and confirmed that the optimum FM frequency for this purpose is 106.9 MHz. This frequency has the added benefit of having virtually no impact on existing radio services.
4841 MR. VOS: The signal problems we experience undermine our ability to provide a quality service. QR77 first went on the air in 1964 and has been one of Calgary's leading stations ever since.
4842 Today, QR77 offers information, news, opinion, sports, traffic and weather, providing listeners with up-to-the minute information about what is happening in the community. And community is what we value most. While national and international news sources abound, reliable, in-depth local news and information is harder to find. Our station has been filling this niche since it adopted a news/talk format more than 20 years ago. No music-based station can provide the level of in-depth news coverage that QR77 does.
4843 In a typical week, 50 percent of our news is local. Close relationships with the police, the fire department and emergency medical services allow us to deliver local news that is also breaking news. In emergency situations, such as weather warnings, amber alerts and power failures, QR77 is able to provide comprehensive, up-to-the minute information in a manner that is unparalleled by other media outlets. We can do this because we operate a locally staffed newsroom 24 hours a day.
4844 The severe windstorm that hit Calgary the weekend of November 27th, 2011, illustrates the need for a local news service that can reach people in the city's downtown core. This extraordinary weather event caused debris and cladding to fall from downtown high-rise buildings, jeopardizing the safety of those in the immediate area. Police actually shut down the entire downtown area and urged residents to stay indoors.
4845 As this event was unfolding, we broadcast news updates and emergency alerts. The reception problems with our signal would have made it difficult, even impossible, for those in the downtown core -- the very people who would need the information most -- to access QR77 updates and alerts.
4846 But delivering valuable local news and information to Calgarians is only part of our story. Since its inception, our station informs Calgarians and enriches their lives and the city they live in.
4847 QR77 has also demonstrated its commitment to the community through extensive philanthropic efforts. In the past 30 years, we have devoted countless hours to our marquee charity, the Calgary Children's Foundation, an organization that raises money for local children's charities that focus on the physically, mentally and economically disadvantaged. Through radiothons, we have helped raise nearly $2 million for the benefit of Calgary's most vulnerable.
4848 We have also partnered with groups like Little Warriors, Calgary Philharmonic Orchestra, Kids Up Front and The Alberta Adolescent Recovery Centre. All of these efforts, both big and small, are what make up the fabric of QR77, and what, in turn, have created a radio station that is both a reflection and a pillar of the Calgary community.
4849 Finally, QR77 has been a leader in the area of sports broadcasting. The station became home to Flames hockey when the franchise came to Calgary in 1980. We are the home of Stampeders for the past 20 years. In addition to play-by-play coverage, the station broadcasts the show "Sportstalk," which airs each weeknight.
4850 MS COURTEMANCHE: To ensure QR77 continues to play a vital role in the life of Calgarians, a technical solution to the signal's reception problems must be found.
4851 We believe the addition of an FM transmitter at 106.9 MHz provides this solution. We also believe that this solution makes efficient use of the FM spectrum for two reasons.
4852 First, the characteristics of 106.9 make it more suitable for a nesting application than for a new radio licence because of its limited coverage. Second, 106.9 is second adjacent to another Corus-owned station, CFGQ-FM, known as Q107, and, as such, would not be accessible to other applicants to this proceeding without Corus' consent.
4853 We would like to elaborate on these two points. When looking for an appropriate frequency, we focused on those frequencies that could help correct the station's signal problems in the downtown core. 106.9 fits this description. It is a Class A frequency that is limited in terms of the power levels it is permitted to broadcast. Used at our proposed ERP of 1,000 watts, the frequency's 3mV coverage is the City of Calgary. This characteristic makes it perfect for the purpose of a "nesting" application like ours.
4854 As we noted, 106.9 is second adjacent to the Corus station Q107, which operates at 107.3 MHz. Our direct experience with second adjacencies tells us that they can be appropriate, but only in limited circumstances.
4855 Stations operating on two second-adjacent frequencies should be operated by the same company. With common ownership, modifications to technical parameters can be made expeditiously and judiciously when correcting potential interference problems faced by either station.
4856 Second, the stations should transmit from the same antenna location. This further avoids undue interference between two second-adjacent stations.
4857 We propose to co-locate the transmitter of the new FM rebroadcast station on the tower used by Q107. This is the same transmission site used by CBC radio in Calgary, and CBC has confirmed that they are prepared to negotiate a similar site-sharing arrangement for a rebroadcasting transmitter. Co-locating the new transmitter at the existing Q107 site, along with the technical parameters we have chosen for the retransmitter, will allow QR77 to operate successfully without undue interference issues.
4858 MR. PANDOFF: In closing, Mr. Chair, QR77 is a vital public asset whose impact and relevance to the City of Calgary is being eroded day by day. The irony of the situation we face is that the development in the downtown core makes it more and more critical that the station be available to Calgarians in this part of the city, and it is this very development that prevents us from reaching them.
4859 We believe that QR77's coverage difficulties can best be rectified through a nested FM rebroadcast transmitter.
4860 We have explored a variety of options. As we have demonstrated, this solution corrects technical problems in the downtown core without over-reaching into rural areas. It is the best solution. It makes our station available to the growing number of people who live and work in downtown Calgary.
4861 For these reasons, Mr. Chair, and Members of the Commission, we believe that approval of our application for an amendment to QR77's licence would best serve Calgarians and hence the public interest will be best served.
4862 This concludes our presentation. We thank you for your time and consideration.
4863 THE CHAIRPERSON: Thank you for your presentation. Interesting proposition.
4864 I'm going to ask Commissioner Simpson to start the questioning.
4865 COMMISSIONER SIMPSON: Thank you very much.
4866 I will just direct all my questions to the panel and you can decide who best to answer, with the possible exception of some technical questions, in which case I will direct them to your engineering expert.
4867 The issue of degradation of AM signal has been going on for some time now. I see entire sections of websites for ABC broadcasting in Australia for example who are putting together a crash course to help their listeners improve reception of their AM stations through either getting better AM radio stations or going back to the old days of applying antennas and other means.
4868 But I'm curious as to if you can give me -- it's like saying, "When did your toes start to hurt?" If you can give me a rough idea, in even years or decades or half decades, when you really started to feel this was becoming a problem you couldn't manage anymore?
4869 MR. PANDOFF: Well, to answer your question, I think that there is really two things sort of fundamentally happening with the AM band.
4870 First of all, the migration of tuning of large portions of audience to the FM band. In 1999 AM represented just about 30 percent of the tuning across Canada, today that number sits at about 20 percent, so we have essentially a long-term process happening, compounded by the fact that because of the difference in the quality on an AM, particularly for music stations and for coverage on news/talk stations that people are finding it much easier to gravitate to the FM band.
4871 Add to that receiver manufacturers are producing receivers that actually have pretty good FM components in them, but are somewhat lacking on the AM side of the technology that they put in.
4872 MR. MAAVARA: I think if I could add to that, Commissioner Simpson --
4873 COMMISSIONER SIMPSON: Yes. Yes.
4874 MR. MAAVARA: -- with respect to Calgary in particular there has been two elements which have really occurred and, as we put in the application, we showed you some of the pictures of the skyline to illustrate the point.
4875 There is two things happening here which are quite distinctive in the context of the service that this station renders, and that is that as the downtown has become more dense and there is a lot more construction, both with office buildings and with condos, coupled with that is a shift of the demographic going back into the core of the city. There are a lot more people that live here and, as we said in our application, I think it's about 37,000 people. Actually, a Stats Can report came out this morning which indicated that that has now compounded, there are more people moving here.
4876 So it's really in the last few years we have had the double whammy of lots of development and more people, the result being that the proportion of people who can't hear our signal has dramatically increased.
4877 MR. VOS: If I might, what we experience with some frequency is feedback from our audience that they use our service commuting into the downtown core and can't get our signal so they tune out and then will feedback to us after saying, "Gee, it would be really good if I could listen continuously on my drive in and not lose the signal" and, secondarily, "I would like to be able to have the signal outside of a computer-base offering on a radio." So those are the two things that we get feedback on pretty consistently.
4878 MS COURTEMANCHE: But I guess if you are looking for a point in time, which I think was the nature of your question, I think it's fair to say that in the last 10 years is when it started to become a problem, but right now we are looking at 37 residential towers in downtown Calgary with that going up by 25 percent in the coming years.
4879 So, you know, it started 10 years ago and probably fair to say that in the last two to three years is basically when -- well, when we did our Vision Critical in 2007, that's when we really saw we have a problem and that's why we started our survey, so that's probably the real kicker and we said, "We have to start doing some date, we have to do some research." I think that's probably your pinpoint in time.
4880 COMMISSIONER SIMPSON: Okay. Thank you very much. That was what I was looking for.
4881 Legacy broadcasters such as yourself, the CFRB, CJADs, which I know have gone -- this one has gone by the wayside as well, but into the big sticks like WABC, WLS, KHJ, how are they dealing with this problem when they are in an incredibly dense, densely build area?
4882 Have you looked at what your brethren are doing in other parts of the world?
4883 MR. PANDOFF: From a technical standpoint they certainly are experiencing the same issues we have on the AM band, but I would probably cite WTOP in Washington which is simulcasting AM and FM and when you look at the composition of their audience they have been able to (a), you know, build a must more robust audience, but be able to bring the composition of the audience into the younger demographic.
4884 So that would be the ideal situation, is simulcast on FM.
4885 COMMISSIONER SIMPSON: Okay.
4886 There are four AM stations in Calgary I believe. That's my count. Let's say there are three or four. We haven't heard from the others and I know at least one of them is a country station relying on AM to carry music.
4887 Why do you suppose we haven't heard from them?
4888 MR. PANDOFF: Well, I wouldn't profess to know what other broadcasters are thinking with regard to the long term strategy for their AMs, but Corus Entertainment, as the Commission is well aware, operate a number of heritage news/talk stations across the country so the Calgary situation is not endemic to this market, it's a long-term corporate strategic issue that we have.
4889 And I suppose the short answer would be, you know, the best time to start would be sooner rather than later so that the audience decreases don't continue at the rate that they are continuing now.
4890 MS COURTEMANCHE: But I think it's safe to say that, you know, if Corus was operating a music station on the AM band it would be less likely to look for this nesting solution.
4891 As you know, Commissioner, Simpson, the news/talk format is the single most expensive format to operate in radio, so we have invested a lot of money -- we do every day -- in this format and it is because of that investment that we want to nurture it. We want to make sure that we are available.
4892 We also look at this as making sure that we could repatriate those audiences that we lost through no fault of our own, it's just, you know, through these technical problems that we are having.
4893 So yes, I think that it's safe to say that it is a consideration because of the investment we make in that particular format and other formats don't make that same kind of investment. So I think that is the crux of it.
4894 COMMISSIONER SIMPSON: Just for the enlightenment of all, would it be fair to make the statement that your problem is exacerbated somewhat because of the nature of your format in that your audience type takes your product from the home to the car to the office on a greater ratio basis than perhaps other types of stations so the issue of downtime receptivity both outside and inside the buildings is greater?
4895 MR. PANDOFF: Well, yes. That's an interesting point because if you look at the quality of the audience that news/talk delivers, you know many of those people are urban professionals working in the very offices we have described in Calgary that it's difficult for it to be received in.
4896 So, you know, if you are in your car in the morning and you are listening to the station, by 9 o'clock when you go into the parking lot you lose the signal and the earliest you can then pick it up on a conventional radio is when you leave that afternoon from work. So we think there is a large portion of audience not being served as a result of that.
4897 MR. RUTHERFORD: It's also fair to say that the news/talk format against almost any other format in the market is more interactive. The listener tends to engage him or herself in the topic, they are listening, they are actively involved in it, and what we do as they are driving into downtown Calgary is frustrate them because they can no longer participate or engage in the conversation on the radio because they simply can't hear it.
4898 MR. MAAVARA: I guess it's also worth noting that the target audience tends to be older.
4899 You have heard a lot of presentations over the last couple of days about as lot of these great new ideas, the fact is that people really aren't targeting the listening audience and the core audience of the news station effectively you could say is under served with virtually everything else that's in the market, and of course the information that they are getting is pretty crucial to their day-to-day lives. So that's why we think it's really imperative that we try to solve this.
4900 I should also add to your question about how to solve the problem.
4901 One of the things that we were looking at three years ago, which we had some hope about, was the advent of the IBOC, so-called HD radio. You will remember that there were a few units available in the electronic stores and that sort of thing and a lot of stations were experimenting with it. Of course that would have been on AM and sort of an enhanced AM. But unfortunately it just hasn't gotten any traction anywhere and it is probably not going to.
4902 I guess the second thing in terms of the approach on this is that in fact the very reason for this hearing has been the propensity to start mining the spectrum a lot more efficiently than has been the case in the past. Just in the last five years there is a lot more use of the spectrum, both in terms of the big pieces that are left, but also the fitting in the little pieces. We have heard a lot about that over the last few days and I think the receptivity to the Commission to say, "Okay, let's see if we can fit in these new things." As the technology of receivers and whatnot gets better there is an opportunity to do this kind of thing that wasn't there even three years ago.
4903 COMMISSIONER SIMPSON: That's an excellent segue opportunity to talk about opportunities.
4904 It has crossed our mind, and I know yours through your presentation, taking lemons and turning them into lemonade. The opportunity to contemplate going to FM opens up an avenue for you to a younger demographic because of that migration, Mr. Pandoff, that you spoke of earlier. AM may have started mobility back in the transistor radio days, but FM onboard mobile devices is definitely the way the future is going so that would be a concern for you as well as us.
4905 So talk to me, if you might, about what those last five or six -- I think you said 2007?
4906 MS COURTEMANCHE: 2007 is when we did the first survey, yes.
4907 COMMISSIONER SIMPSON: I don't want to get into the revenue because we had a nasty batch of time there that really skewed all of the revenues of radio, but from an audience perspective, you know, have you done research that can actually pinpoint audience loss as a result of signal loss?
4908 MR. PANDOFF: Well, probably the best proxy for it is through the revenue stream given -- you know, we can predict market revenues or we have historical data on market revenues and we can make, with some reasonable accuracy, some predictions. So if we sort of marry that up with our revenue streams virtually on all the news/talk stations that we operate across the country, two things are happening.
4909 Number one, the revenue is declining but at sort of a moderate rate on a year-by-year basis, while the expenses are increasing.
4910 You know, as you know, news/talk is a very expensive format to operated, fixed costs, particularly in personnel, is high. You don't operate a 24-hour news department without some level of cost, technology notwithstanding.
4911 So I think in terms of being able to give you a hard number in terms of what the algorithm might look like, that would be difficult.
4912 Save to say that when you look at AM station margins and the erosion on the revenue side, as well as the cost increases, that's a pretty good proxy for what we think is happening long term to our industry.
4913 COMMISSIONER SIMPSON: So looking at the prospect of a nested FM alternative, do you have any ideas as to what your expectations might be -- because this would be a cost item for you -- in terms of what that might do to increase your audience to that younger demographic?
4914 Have you thought about that at all?
4915 MR. PANDOFF: Well, we haven't filed any financial projections because we are not expecting any significant measurable financial gain over the next three years. It's really the beginning of establishing a foothold in the core of downtown Calgary.
4916 No doubt at some point in the future listeners, by virtue of the fact that they can receive the signal, will gravitate towards the station and have the opportunity to grow.
4917 One of the interesting things about when you think about the revenue side on a news/talk station, generally news/talk stations out perform their hours tuned share for two reason.
4918 Number one, actually when you calculate hours tuned share relative to your competitors you only go up to the age of 54 and there is a fair amount of money that actually gets spent on products and services to people over 55.
4919 The second thing is, because the commercials tend to fit the programming from the standpoint of a talk segment, AM stations tend to be more affordable and therefore smaller groups of advertisers had the opportunity to advertise on them and they get the kind of results that are measureable for the most part that in an FM buy on music you sort of, you know, capture it among the total group of stations. So we have that benefit for sure.
4920 MR. RUTHERFORD: Just building on Chris's comments, AM tends to be more of a local buy. We have national business on QR, but a lesser degree than on the FM stations. It's pretty difficult to sell an AM client on a really good package that we think could help him if he can't hear our station.
4921 COMMISSIONER SIMPSON: I guess why I'm asking --
4922 MS COURTEMANCHE: Commissioner Simpson, if I -- sorry.
4923 COMMISSIONER SIMPSON: Yes, absolutely. Go ahead.
4924 MS COURTEMANCHE: Sorry. I was just going to say, the best proxy that I could give you with respect to what we could expect with respect to audience tuning is not necessarily through our experience because we haven't had the experience, but there has been that experience in the market which is CBC. So CBC has nested its signal and flipped the news/talk format. There are some audience data on that.
4925 So to me that would be your best proxy as to what you can expect to happen.
4926 COMMISSIONER SIMPSON: Right.
4927 MR. VOS: Part of filing indicates that the Vision Critical study that CBC's audience has migrated over to the FM. Their established audience has gone from listening on AM to FM because of its superior offering.
4928 MS COURTEMANCHE: But it's a slow progression and in our case, because we are looking just to correct a downtown problem, although we could see a migration within the downtown core, it remains that the outlying area in Calgary won't be covered by -- or won't have an adequate signal so that we will still have to rely on the AM band. So that's how it's going to work, at least for the medium and short and long term I guess.
4929 COMMISSIONER SIMPSON: All right. I'm asking this line of questioning because I'm trying to really come down in my own mind as to whether we are talking about a lifeboat solution or a speedboat solution, or a lifeboat that turns into a speedboat and I think you have given me some good food for thought with respect to looking at CBC.
4930 I know in Vancouver they are doing the same thing where they are -- I guess 690 and one-oh-something, I can't recall, but it would give us a good idea based on their audience figures what that has done for them.
4931 Can I move into some technical stuff for a second, please?
4932 I don't know a lot, I know a little to be dangerous, but is it, like television, not possible to operate nested AM, low-power on the same frequency to bolster your signal in nulls?
4933 MR. LANDGRAF: You can, but the major problem that we have is in the null -- say if you call the downtown core a null, if you drop in a synchronous rebroadcaster you are still dealing with the same issues that you do with your main transmitter. You have buildings that are absorbing the signal, reradiating the signal so, you know, absorption is a problem because you lose your signal. Reradiating is a problem because you amplify the signal beyond the capability of your radio, so in effect it's doing the same thing.
4934 So a synchronous drop in null filler is not an option because the problems still exist.
4935 COMMISSIONER SIMPSON: And they might beat off each other as well and all that stuff.
4936 MR. LANDGRAF: Yes. Yes.
4937 COMMISSIONER SIMPSON: There is no doubt that in radio the industry has been moving away from AM and some jumped sooner than others.
4938 With respect to the migration to FM, I guess I have to go back and ask the question: When you were given your licence it comes with a certain understanding that, you know, it has a value, it is a piece of public property with an inherent value.
4939 Do you feel that those who grant you the license -- and I don't think it's us per se, but you know that whole consortium of regulatory beasts that's out there -- are doing enough to ensure that the integrity of that AM signal is being protected so that what you got is what you remain with or do you think that more can be done to protect degradation?
4940 Because we can't go out and tell builders not to build, but going down in the direction of other issues that affect propagation like RF from transit and that sort of thing.
4941 Do you think we are being good police in protecting the quality of AM?
4942 MR. PANDOFF: Well, in my own personal view, I think the degree to which you have the power to be police you are. However, with every new iPad that's available in a market, the radiation from that has an impact and I think if you get enough of them together you get the same impact on AM. So the world of electronics I think is probably preventing you from having the kind of police power that you would like to be able to have.
4943 Unless -- I am not aware of certainly any regulatory issue or technical that the Commission and/or Industry Canada has prevented us from trying to improve our signals, in fact they are probably pretty good to work with.
4944 COMMISSIONER SIMPSON: There was an instance that's fresh in my mind, I think it's Kamloops, where a substation or a telco operation was significantly impeding an AM signal in that market and when recourse wasn't available through a more direct means the broadcaster went to Industry Canada and Industry Canada said, "No, it's not our problem."
4945 MR. PANDOFF: Do you want to take that one?
4946 MR. MAAVARA: Commissioner Simpson, I think your question is a huge one in the broad public policy sense and one of the fascinating things about the discussion about the advent of all of these new technologies is the fact that there hasn't been a lot of public policy discussion about spectrum in Canada yet as it relates to -- there is a lot of discussion about the 700 MHz spectrum and how is it going to be auctioned off and all the rules about that, but there is some debate about the white noise issues and who is going to get that.
4947 But we really do need -- and I know the Commission is not looking for things to do, but as between the Commission and Industry Canada and the government at large, we do need to have that public policy debate about what is going to be the optimal allocation and use spectrum and what are the public policy interests in each of those buckets.
4948 Because when you think about it, we really haven't had that discussion as a matter of public policy for about 60 years.
4949 Everybody is always quick to point out that the Broadcasting Act is a certain age and maybe it's not doing what it's supposed to do in these days. I don't share that view. I think sections 3 and 5 are still pretty darned appropriate.
4950 But we never talk about spectrum in terms of public policy issues. And AM and the use of AM is a big one and how are we going to use FM efficiently and, for example, what are we going to do with channels 5 and 6? We haven't had that discussion at all and we need to have that relatively soon.
4951 COMMISSIONER SIMPSON: That's a bit broader than I wanted to go because I'm sort of right up standing at the edge of the building right now on that line of questioning and I think I would like to just keep it to the issue of monitoring and policing and protecting where possible the -- I have a degree of dissatisfaction with I think we could be doing better, but that's a separate issue on a technical level as opposed to a policy level, you know.
4952 So moving back, if you were to find yourself with an FM nested transmitter, it's a little bit like getting a get out of jail card compared to operating an AM station in that you have significantly less policy restrictions on FM.
4953 For the record -- although I think I have a pretty good idea what the answer is -- if you all of a sudden found yourself with an FM transmitter, would you find yourself tempted to go out and change the format of your AM station to take advantage of those relaxed policies? Would you be doing that tomorrow and giving up your AM licence probably to boot?
4954 MR. PANDOFF: The quick answer and the real answer is no. In fact, if we were to consider changing as a result of being on the FM band would mean that we are not confident in the service that we are supplying in news talk today, and, you know, this is just simply a capability of being able to reach the audiences that we were originally licensed for as an AM station long before the population grew to what it was or the buildings became the size they were.
4955 The other thing about Corus Entertainment, particularly in news talk, is that some of panelists earlier today made the case that the differentiation today in Canadian broadcasting is the content that we provide in a music station sometimes between the records and certainly on a news talk station entirely. That's something that will differentiate us a great deal from the plethora of signals that are available to us in the digital world. And I think that if we are going to have a successful business in the world, it is that kind of content that will move us forward. We feel that, particularly because we have established brands like QR77, that we have a bright future, notwithstanding the technical challenge that we have today.
4956 COMMISSIONER SIMPSON: Now the ballot question: If you were to be successful in persuading the Commission to see the wisdom in a nested FM transmitter, would you be willing to accept a fairly tight condition of licence that would give us your assurance that your answer would be upheld in terms of staying the course?
4957 MR. PANDOFF: Yes. I don't think there would be any question.
4958 COMMISSIONER SIMPSON: I am just looking for any other questions I might have.
4959 Are you aware of any other -- well, no, I'm not going to ask that question. That gets back to the lime.
4960 Clean up time, folks. Back to alternate media types. You had mentioned that white space, digital white space -- and there are new frequency types opening up, but I'm thinking specifically of unregulated spectrum like WiFi. Have you been dabbling in the voodoo arts of super WiFi yet and looking at what it might do to help the transfer of your signal?
4961 MR. PANDOFF: As most Canadian stations are aware, we are streaming our audio signal on the web. Interesting enough, when we first started experimenting with the web, we thought it was a way to connect with listeners in another forum to be able to, you know, develop that one-to-one relationship, very much like they have on a one-to-one relationship in a car.
4962 As technology improved and the capability to stream became more prevalent, we realized that actually people are accessing all of our stations on stream more often. Experimenting might be the best word I guess I could choose, not knowing what the future will hold and the availability of devices, but we are all sort of doing that today, waiting to see what the future provides for us.
4963 COMMISSIONER SIMPSON: Well, I think I have pretty much run the course on this subject.
4964 If I can ask any of my commissioners if they have any other questions.
4965 THE CHAIRPERSON: Great. Thank you, Mr. Simpson.
4966 I have jotted down a few notes here. But let me start with something that isn't quite clear in my head. Bear with me.
4967 What would you say to those that would argue that what Corus is attempting to do is basically offer a duplication of service that's already in the market; no one is going to argue with that. But as a consequence of that, you offer little in the way of diversity, you bring nothing new to the market, and you are basically attempting to do what other broadcasters may have tried to do over the last couple of days, and that is introduce this two-stick approach; the point being basically that you shout down spectrum or other uses without the benefit of something new for the spectrum that is available in Calgary.
4968 That actually came out better than I thought it would. But if it makes sense, great.
4969 MR. PANDOFF: No, I understand the context of the question. Here's my point of view. That if you were to -- as we have heard earlier today among all of the applicants for the FM frequencies, nine out of ten or ten out of ten are for some music or service that is not news talk. If you believe that news talk on the AM band is a viable service, it's an important service to the local community, that it does reflect the values and the feelings of the community, then it is not really a question of not adding diversity to the market. It's really a question of continuing to support a very viable product in the market that Calgarians depend on.
4970 MR. RUTHERFORD: And if I could just add to Chris' point, we are not really attempting to net QR in order to grow our audience. It is to repatriate audience that we feel that over the last several years we have lost as a result of their inability to hear us on the AM band.
4971 MS COURTEMANCHE: But we do believe that we do bring diversity to the market for two reasons.
4972 First of all, you know, that type of a format is not a popular format because of the fact that it is the most expensive format to produce in and of itself. And the demographics that we serve is, you know, a very specific demographic. So we provide diversity to those people and we are trying to sustain that.
4973 THE CHAIRPERSON: Speaking of the demographics briefly, I think -- I should call him Mr. Maavara, but I have met Gary a few times -- I think Gary spoke to the issue at some point, not because you are old but because you are wise, that's why I should call you Mr. Maavara, but speaking to the demographics for your frequency here, what are we looking at? You are not aiming for 18 to 29; you don't have 18 to 29.
4974 MR. VOS: No, we do not. We are mainly focused 35-64 adults, in that range. I mean, we dabble in the younger demo, but I would say that's primarily our home.
4975 THE CHAIRPERSON: Okay. And the 35,000 people that live in the downtown core of Calgary, would that skew be younger or older? Is that young people that are starting off their careers or is that people that have sold their house in the suburbs, sent their kids off, and are moving back into the city?
4976 I didn't get that feel. I was in downtown Calgary yesterday. I didn't get that feel, but speak to that issue.
4977 MR. VOS: I think you have captured both. Some of that group obviously is going to be the younger demo that is looking to start out. But when you look at some of these high-end residential towers, they are also targeted on their older demo that is looking to downsize and be located in the core. So there is that piece that is also available.
4978 It is also looking for places that are in those downtown residential towers because they are very expensive.
4979 THE CHAIRPERSON: Yes, but you are 35,000 of a market of, for your signal, 50,000 watts when you get out of the downtown core. I mean, you have, I don't know if you could call yourselves a clear channel, but you have a certain range. You are looking at at least 1.2 in terms of your total population that's available; am I correct?
4980 MR. VOS: Yes.
4981 MR. MAAVARA: But that is the resident population. The other thing, if you look at it from a listener standpoint, the people who are in the office or are just getting in the car or getting out of the car, you know, when the cladding is coming off the building, if they can't hear the emergency alert system that is out there, then for them there is no diversity. They are not getting the signal.
4982 And as Commissioner Menzies will know, we made the point about the newsroom. You know, there are 18 radio stations in this market, but when we were in the newspaper business, people started up the local websites and all that sort of thing, it was clear that, notwithstanding the fact there's a million websites and there's a million sources of news, if you didn't have a bum in the seat at 11:00 o'clock at night, when the tsunami hit Japan, there wasn't anybody who was going to report on it. There's been some comments by some of the other applicants about how they were going to have their announcers sit in front of the mic and cover the news.
4983 Well, frankly, that ain't possible. You need people who are gathering news who are on the phone, who are finding out what's going on from the fire department, the police, or whatever to feed the person who is at the mic. And that is what a news talk station gives you.
4984 MR. VOS: If I might double back to your original question about, you know, the age demo of that population that is living in those residential towers, what you also have to keep in mind is that there is 160,000 people that are commuting into the core every weekday, and that represents a broad cross-section of the demo from, you know, youngest to oldest.
4985 THE CHAIRPERSON: Yes. Two things. One, if there is an emergency and they can't hear your station, they are listening to something else and the other stations will inform them of the emergency, I would think.
4986 MR. MAAVARA: But my point is there isn't anybody at the other station for big parts of the day to do that report. There is just no newsroom. You know, the station is broadcasting, but they are broadcasting music or even where you are reading tweets or whatnot, you are still not determining whether the story is real or not.
4987 You have to have that person in the newsroom who is responsible for news to be able to provide that kind of service, and that is why the news talk stations are so critically important in information dissemination.
4988 The newspapers aren't going to be able to tell the community. The television stations, after they go off the air at night, there is nobody in their newsroom. And for all intents and purposes there aren't local websites. Radio is the purveyor of instant information in, you know, every centre in Canada.
4989 THE CHAIRPERSON: Back to the issue of shutting down spectrum for other uses, anything you want to add to that?
4990 MR. PANDOFF: No, I don't think so.
4991 THE CHAIRPERSON: Okay. Back to the signal and sort of an engineering question. You have 50,000 watts -- you're driving in -- are you telling me you are having a hard time picking up your signal in the car?
--- Off microphone
4992 THE CHAIRPERSON: Okay.
4993 The tests you did, was that during the day or in the evening?
4994 MR. LANDGRAF: That was during the day.
4995 THE CHAIRPERSON: During the day?
4996 MR. LANDGRAF: Yes.
4997 THE CHAIRPERSON: And the signal should be stronger during the day than in the evening?
4998 MR. LANDGRAF: Yes.
4999 THE CHAIRPERSON: So the signal at night is even worse?
5000 MR. LANDGRAF: Yes.
5001 THE CHAIRPERSON: Which makes it impossible -- are you still broadcasting the Calgary Flames?
5002 MR. LANDGRAF: No, we are not.
5003 THE CHAIRPERSON: So your sports talk show is on in the evening?
5004 MR. LANDGRAF: Sports talk, and we are also the voice of the Calgary Stampeders.
5005 THE CHAIRPERSON: Okay. Interesting. Commissioner Menzies has a question. I'm going to come back with a couple.
5006 COMMISSIONER MENZIES: I found that conversation kind of interesting because I am sure you guys know about the Alberta emergency warning system; right? You don't have to be on the air for people to receive an emergency alert. I mean, you have to be on the air, but you don't have to have staff there. That just breaks into your broadcast. That is how I heard when the windstorm that you referred to was going on. That is how I heard about it. I was watching TV or when I hear a possible tornado warning, I'm driving in the car and listening to the radio and you guys don't even know it is coming. It just interrupts. It is the only province in the country that has it.
5007 MR. RUTHERFORD: And it is a good system, absolutely, and all of our stations subscribe to it and participate in it.
5008 But what we are talking about is expanded coverage of a breaking story that allows our radio station to very broadly describe in real time what is happening. The alert happens, everyone runs it. If you happen to miss the alert, now what do you do?
5009 On a station like QR77, it is extended coverage and consistent coverage.
5010 COMMISSIONER MENZIES: I don't want to underestimate that. People do want information when there is an emergency going on and that sort of stuff. But it is not like they won't hear about the emergency the way it has been articulated so far.
5011 I mean, it might be in other cities. And by the way, thank you for bringing the kinder, gentler Rutherford.
5012 MR. VOS: We have the other one locked up.
5013 MR. RUTHERFORD: Thank you. I will pass that on to him.
5014 MR. VOS: Those alerts, as I am sure you are aware, only give a snapshot of what is going on and provide no context. They wouldn't have provided the information that the downtown core is closed, nor had the ability to go out and have a close look and report back to our audience to say, okay, these are the areas, this is what police are saying, this is the proximity, the duration, the context that people are looking for beyond just, hey, there's a bad windstorm.
5015 COMMISSIONER MENZIES: No, I understand that. But I did know that I should not go downtown, that it had been closed, that glass was falling off the TD Building and that would hurt if I was there.
5016 The other thing is you are familiar with the Calgary City Centre city plan?
5017 MR. VOS: Yes.
5018 COMMISSIONER MENZIES: No?
5019 MR. VOS: To a degree.
5020 COMMISSIONER MENZIES: I mean, that calls for new density levels in the downtown core that we are talking about, right, and it calls for a lot of new multi-family structures, condos, towers, et cetera, and it also calls for an increase in the downtown core of somewhere between, I think the bottom end is maybe 25,000 and the top end is 70,000 people with density levels similar to Manhattan in the downtown core. Was that taken into consideration when you were looking at that at all?
5021 MR. VOS: Our estimation doesn't include some of the ambitious plans that the city has for both West Calgary, Victoria Park, the beltline, Bridgeland, because some of that is already happening.
5022 COMMISSIONER MENZIES: And the East Village?
5023 MR. VOS: The East Village is also a burgeoning area that has that residential component across many demos.
5024 COMMISSIONER MENZIES: But this plan is regardless of -- because we are talking 35,000 people in this proposal, but ten years from now we are actually talking about 100,000 people, which is like Red Deer.
5025 MR. PANDOFF: I think we would make the case that densification in Canada's largest cities is going to continue and that, for AM stations, becomes a progressively increasing problem. So while we might not have taken into consideration in terms of the next three years of this particular licence, certainly the gravitation to FM, that becomes a very large part of it.
5026 COMMISSIONER MENZIES: I am trying to get a grasp on the urgency. I mean, I understand your predicament and I am not insensitive to it, but, I mean, we have a policy regarding how many sticks you can have in this and that, and you would have three, one way or another or two and a half or whatever you want to -- I am not quite getting -- and you either lead the ratings or you are top three.
5027 THE CHAIRPERSON: We have been running for about an hour and 15. Maybe we can take five and come back.
--- Upon recessing at 1517
--- Upon resuming at 1529
5028 THE CHAIRPERSON: A lot of health breaks. Given the age, not of the panel, but of the Chair, we have to go often.
5029 Where were we? Commissioner Menzies.
5030 COMMISSIONER MENZIES: Yes. So, as I was saying, I understand your want. I listen to the radio myself and I do listen to AM radio and I listen to your station and when I drive downtown it fades. So that is a problem for you.
5031 What I don't understand is the need at this time because you do very well on the ratings and I am guessing that you make lots of money because you do very well on the ratings, even though you have an expensive format; I understand that. So help me understand the need beyond the emergency thing that we just talked about, economic need.
5032 MR. PANDOFF: Yes. Perhaps the best way that I can characterize it is the need, it exists and has existed for some time in terms of the issue with AM signals in metropolitan areas. So the timing for us particularly was concurrent with the current hearing and the call for licences.
5033 We had originally thought about a different frequency. So once the call was made, we did engineering studies and said, okay, probably the best thing is to precipitate an application now and have the opportunity to have discourse and discussion with the Commission with regard to what is a long-term problem for us.
5034 MR. MAAVARA: I guess just to add to that, looking at it from the perspective of the public interest, the public interest starts with the listener and we are increasingly hearing from the listeners that in fact they can't hear us, and that is a fundamental problem that literally gets worse each day.
5035 MS COURTEMANCHE: Yes, when you have a --
5036 COMMISSIONER MENZIES: Sorry, I just wanted to follow up with Gary before we go there. How many phone calls?
5037 MR. MAAVARA: Well, as we filed in the application, just on the survey that we did, we had an extensive response very quickly from people when we asked them and it was --
5038 MS COURTEMANCHE: It was over 700 people came on line to complain and identify the locations where they have problems -- and it is all in the application so you can see -- as well as 50 phone calls.
5039 COMMISSIONER MENZIES: Right. Do you get unsolicited --
5040 MR. VOS: Be careful what you ask for is what I have learned from this experiment, because we have been monitoring this since 2007, and when we cast afield and say, tell us about your dealings with the radio station, it is consistent because people are now saying, oh, they are listening, they are anxious to feed back. So you get that first bump where you will have a significant response, and then following that it is pretty consistent, either telephone or e-mail: I know you guys were asking; I am still having difficulty here in the downtown core, I can't get it in my office. So you open the door and you have this kind of a floodgate phenomena.
5041 COMMISSIONER MENZIES: How far away from Calgary can I hear your signal? Because I seem to recall being almost in Edmonton before --
5042 MR. VOS: Oh, the AM signal goes -- Greg can speak more accurately, but the AM signal is very strong outside of Calgary.
5043 MR. LANDGRAF: My engineering department does get two or three calls a week complaining about signal deficiencies in the area.
5044 MS COURTEMANCHE: But we did the survey in 2007 as a result of the public sort of alerting us to that, and then we followed up two years later because we were continuing to get that complaint, and then obviously we followed up again in 2011.
5045 So it has been consistent and we have been monitoring it. That's why we did those surveys. So it is a growing problem.
5046 MR. RUTHERFORD: Commissioner Menzies, if I could just say, building on your question, one of the big challenges we have is we are asking our audience to be incredibly patient. If you are a radio listener who is being frustrated daily trying to listen to a show that they enjoy hearing and there seems to be no sense of improvement or recovery, they go somewhere else.
5047 So while the station is performing well now in terms of its total share and so on, and that is great, because of the compelling nature of its programming, we should expect consistent erosion just simply by frustrating our audience.
5048 COMMISSIONER MENZIES: What sort of forecast do you have on the erosion? Are you going to lose 5 per cent of your audience a year, 1 per cent, 2 per cent, 10 per cent, 20 per cent? Give us some idea of --
5049 MR. RUTHERFORD: I think that will probably be just an estimate. I could guess at 5 per cent and BBM would have to be the one that would tell us that through the surveys.
5050 COMMISSIONER MENZIES: How different is your audience today from 2007?
5051 MR. VOS: We have also gone through the ratings change, so at the time in 2007 we were still in the diary mode of BBM. Now we are in PPM --
5052 COMMISSIONER MENZIES: Pick any two apples.
5053 MR. RUTHERFORD: I would think right now our total cume, John?
5054 MR. VOS: Is 250 plus, and I would say that because I have my foot in both worlds. I came back to QR when we were still in the diary method and adopted the ppm method. What you see consistently is there isn't any astronomical growth. It is either flat or, depending on the books, some decline.
5055 So we haven't seen or enjoyed any sort of, okay, we have this huge uptake, we have changed our programming in order to be more attractive, we have used other platforms to bring the audience in. We haven't enjoyed that kind of clarion moment where, oh my gosh, we are doing something right.
5056 I would say quite to the contrary. We have been consistent, as I use with my management team, flat, and at times we are declining.
5057 MR. PANDOFF: So just if I could quote some hard numbers. If you look at our circulation that the station has, in the fall of 2006 it reached 17.3 per cent of people 12 plus. As of the fall of 2009 that represented 14.1.
5058 So you saw an erosion there over that period, and that is the last portion where the diary system was used in Calgary. We then went to the ppm and the cumes actually changed. But you saw the same erosion in the ppm world as in the diary world.
5059 So the issue is that fewer and fewer people are spending less and less time on the radio station. It is not always a linear relationship between the two because of the fluctuation and variability you get in ratings, but there clearly is a downward trend.
5060 COMMISSIONER MENZIES: I heard a couple references this week to the fact that overall listenership in Calgary was down during that period. Is that a factor or is it different than that? I understand that it is probably very difficult to tell.
5061 MR. PANDOFF: Yes. You are referring to the previous presentation where the applicants were implying that the increase in Edmonton was perhaps attributed to their format. The caveat I would say to that is that is a fairly sweeping statement to be made.
5062 I am on the board of BBM, and one of the concerns that we have at the board level in Calgary specifically, both for television and radio, ppm tuning, is diary compliance, diary distribution, and so the tuning changes that we see in Calgary are not necessarily reflective of the program services available here, that there may be a research answer in terms of the distribution of the people meters.
5063 So I wouldn't necessarily draw the conclusion between both markets that they did.
5064 COMMISSIONER MENZIES: Do you hear from advertisers about it?
5065 MR. PANDOFF: Yes. In fact, the way it reflects to us on advertising is two ways. Number one, either they pay a reduced rate for the advertising they buy on the station, or they simply don't purchase use. So advertisers vote with their wallets. We get that almost exactly in lock step in terms of the declines.
5066 COMMISSIONER MENZIES: Thanks very much for answering the questions.
5067 THE CHAIRPERSON: Just briefly for our understanding, acquiring the nested FM at 106.9 would not have any impact on your revenues?
5068 MR. PANDOFF: Correct. In the next three years we would see no meaningful impact in terms of the revenue. Our station, CHQR in particular floats with the economy in Alberta and specifically in Calgary. If I could cite sort of 2008, the high water mark for radio revenues in Calgary, from that point to today, that number has shrunk by about $14 million, $2 million of which was on CHQR.
5069 So as the market declined, CHQR has declined. So we are not projecting a 5 per cent increase the way some broadcasters are in this market. In fact, we are looking at --
5070 THE CHAIRPERSON: So, setting the market aside, if you were to acquire the nested 106.9, nested FM signal, 1,000 watts, 35,000 people in the downtown core growing to twice that over the next few years, you are telling us that wouldn't add any revenues to Corus' revenue line?
5071 MR. PANDOFF: Well, it would probably take the better part of a year to begin to see it materialize in terms of share, but it wouldn't be a significant increase in terms of the share that we would get that it wouldn't increase our revenues a huge amount over the next three years.
5072 THE CHAIRPERSON: You are asking for the nested FM because you want to serve? I mean, I don't understand.
5073 MS COURTEMANCHE: Exactly. We want to be able to serve those people who we think deserve to have and want to --
5074 THE CHAIRPERSON: And that won't help you increase revenues in any way whatsoever?
5075 MS COURTEMANCHE: Well, not in a material manner. I mean, I think that is the issue. The issue is are we going to have a substantial increase in revenues? I am not saying that we won't have any and I don't think that is what Chris is saying.
5076 THE CHAIRPERSON: Your supplement brief indicates there will be no impact on the revenue market.
5077 MS COURTEMANCHE: We should have said not material, no.
5078 THE CHAIRPERSON: So maybe you should change that to have no material impacts upon the revenue market.
5079 MS COURTEMANCHE: If you would like us to do that, we would be happy to do that.
5080 THE CHAIRPERSON: I wouldn't like you to do that. This is your document. I am just asking you a simple question: Will there be an impact, yes or no? If you are telling me no, then it is no. I will take you at your word.
5081 MR. RUTHERFORD: No, we do not foresee that. What we do see is doing what we said we would do, which is to serve all of the city of Calgary, not just parts of it.
5082 THE CHAIRPERSON: Noted. I think Commissioner Patrone has a question.
5083 COMMISSIONER PATRONE: Yes, that was my question, Mr. Chairman, but further to that, I take it that going forward you would hemorrhage less of your revenues, if you know what I am saying. In other words, the way you are approaching this is not so much as a new source of revenue but in order to maintain integrity of your current?
5084 MR. PANDOFF: That would be the exact assumption. In fact, over the last three years the station is nearly $2 million less in revenue than it was in 2008, and it progressively -- if you look at the long-term relationship of the station, the same is true.
5085 So the impact on revenues, I guess to answer the question previously by the Chair, is that it would slow the decline.
5086 COMMISSIONER PATRONE: So by slowing the decline suggests to me that you expect a decline anyway. You just expect it to slow down.
5087 MR. PANDOFF: Yes. In fact, if you look at where most of the advertising dollars are cast at this point and the competition among broadcasters for it, the markets are obviously a lot more competitive. As more and more of our audience is outside of the 25 to 54 range, we are required to develop local retailers on a one-to-one direct basis, and that pool quickly is shrinking as the competition increases in the market.
5088 The station is essentially on two fronts competing in the transactional world with the FMs on the music side, as well as the newspaper on local advertisers on a direct basis.
5089 COMMISSIONER PATRONE: Have you done any five-to-ten year projections that show were you to stay on the AM band the downward slope of your revenues going forward, say from five to ten years out, what does that look like?
5090 MR. PANDOFF: Well, a couple of things. Notwithstanding the long-term decline in tuning and the variability in the economies, because radio markets tend to be a pretty good proxy for what the economy is doing and consumer sentiment, because better than 75 or 80 per cent of our business comes from the retail markets, the way it would manifest itself in terms of Corus' operations is that we would continue to try to maintain a cost base that is, you know, fairly flat while watching the revenues decline.
5091 At some point or other the line meets the horizon both in audience and in revenue, and that is the point at which we would be faced with a strategic decision as a company on any one of our stations for that matter in all the markets we operate.
5092 COMMISSIONER PATRONE: For my own understanding, you can't charge any more -- you can't charge your current advertisers any more were you to flip on to the FM band?
5093 MR. PANDOFF: No. In fact, there is a bit of a miscommunication with some of the applicants that they have a way of selling that is significantly different.
5094 Understand economics play a role here. We are price takers. In Calgary there is 17 reporting stations to the Commission. So that would mean there is probably something like 20 to 25,000 minutes of inventory per week available. If you have two stations or three stations you have a very small portion of that. Supply and demand has a huge impact on our business.
5095 So while I would like to be able to charge a premium, in some cases if I provide a differentiated view of my listeners to an advertiser or align myself with that advertiser a little bit better base on product fit, I may be able to get a higher share of their revenue but the whole market economics prevent me from getting exorbitant rates relative to what the market will allow.
5096 COMMISSIONER PATRONE: But you would have access to a new audience on the FM side though; is that fair?
5097 MR. PANDOFF: Yes.
5098 COMMISSIONER PATRONE: And you would probably skew a little younger?
5099 MR. VOS: If I might add, or also reaching out and repatriating the audience that leaves us because they can't get our signal.
5100 COMMISSIONER PATRONE: I understand. They would be staying with you.
5101 MR. VOS: Yes.
5102 COMMISSIONER PATRONE: As your signal would have normally faded on the AM band, you wouldn't lose those listeners to another station?
5103 MR. VOS: Correct.
5104 MR. PANDOFF: If I could add to that, over the long period, we would expect that there would be an opportunity for younger people to be able to perhaps become news talk listeners, but they don't start at 25 and quite often they don't start at 35. It seems to be an older age because, you know, as we get older, we are more concerned about our livelihood, our communities, politics, the taxes we pay.
5105 So the news talk listeners sort of become news talk listeners later in life. And the way I know that is that if you look at virtually all of the dominant news talk stations across the country, the composition of audience in terms of the hours by demographic is almost exactly what it was 25 or 30 years ago.
5106 COMMISSIONER PATRONE: But as you presumably start to skew a little younger; fair?
5107 MR. PANDOFF: Only if we change the programming dramatically, and we would not do that.
5108 COMMISSIONER PATRONE: And that was the second part of that question, was whether or not you would then start to, I will use the term update your programming in response to an audience that maybe is younger and yet you may want to access.
5109 MR. PANDOFF: No, we would not do that. The place where we have the opportunity to repatriate younger audience is in the sports talk programming. So you get hybrid stations like CHED in Edmonton or CHQR in Calgary that do that, and that is the way in which you are able to green your demographics, if you will, is by providing the sports coverage and the sports talk, but not the core presentation of the station.
5110 Dave Rutherford is Dave Rutherford on the radio, and the people he appeals to, we would not attempt to change his content or the way in which he presents his shows or the guests that he has in order to facilitate a younger audience because, quite frankly, that would be failure for sure.
5111 COMMISSIONER PATRONE: So Dave is Dave whether it is on AM or FM.
5112 MR. PANDOFF: The less kind and gentler than my partner here, yes.
5113 MR. RUTHERFORD: I can attest to that, Mr. Commissioner.
5114 COMMISSIONER PATRONE: Thank you.
5115 THE CHAIRPERSON: Thank you, Mr. Patrone. I think I started listening to talk radio when I was ten, but that only speaks to the fact that I'm some kind of freak.
5116 MR. PANDOFF: Mr. Chair, but you quoted Woody Allen yesterday, and that is good in our books for sure.
5117 THE CHAIRPERSON: I won you over. Great. Yes, I think I started reading Gertrude Stein when I was, like, 12. So that goes to another problem I may have had.
5118 Listen, back to business. Maybe a last question, and I get back to the spectrum question, I guess back to my first question. Is that the best use of frequency, given the fact that I think we heard earlier in the week, and I can't remember who it was, but one or two of the ethnic applicants would like to use 106.7, and if you were to be nested at 106.9 or .5, obviously that would take that frequency off the table. That goes to a part of my question with respect to spectrum and reserving spectrum and not allowing diversity of voices, given that spectrum, we just can't make it up. The availability is what it is. We are not going to dig for and find any more of that gold.
5119 So is that, at the end of the day, the best use of spectrum? How do you justify, how do you defend your position of allowing a nested FM in that frequency which impedes someone else with a different message, because you are already here, from joining the spectrum parade, so too speak.
5120 MR. PANDOFF: Sure. Let me just say, as we said a number of times, in the public interest we think it is a best solution for CHQR to continue to serve its audience.
5121 The other thing implicit in this is that a second adjacent, a third adjacent, in some cases a fourth adjacent can cause problems technologically.
5122 I am going to ask Doug maybe to spend to couple of minutes on experience we had in Edmonton when third adjacent stations were licensed and not co-located.
5123 THE CHAIRPERSON: I know, because we are running out of time, that is sort of an IC issue and we are not going to step on anybody else's toes there and people might have their issues with IC and TAs and everything else. But strictly speaking, the best use of frequency, when we have a chance potentially to licence an ethnic voice in Calgary and we deny that voice to offer a nested service to someone that is already here and who is sort of number one in the ratings and doing very well.
5124 MS COURTEMANCHE: Understood, but we were thinking, when we found 106.9, it is not a big booming frequency. It is really meant to cover the downtown core. I would think that a diverse service such as an ethnic service would want to reach the entire area, the surrounding area. So this isn't the best frequency to do that.
5125 So I think that from a spectrum use, now, could they offer primary service, yes, but if you want to have everybody possible to hear that, they're probably better on another one of the two FM frequencies that are currently before the Commission.
5126 They will be sandwiched in. Because of the third adjacency there will be potentially interference problems, so they are going to have to sort of squeeze in and their coverage will be limited as a result. So that is why we thought it was very suited to that use and there is only one applicant that looked at that particular frequency. Everybody else in this proceeding walked away from that I think for that particular reason, because it wouldn't provide that extended coverage.
5127 So I am just putting that on the record.
5128 MR. PANDOFF: If I could add one thing. We certainly respect the concerns the Commission would have, and our goal today really was to underscore the importance of CHQR rather than to have either the Commission or Industry Canada just assume that, you know, life is wonderful at CHQR and that there are no problems for the future.
5129 This is a very real issue for us that we really wanted to get your attention on and explain that there is a very real possibility that news talk stations may not survive in the future unless we have a way to be able to have a technological solution to the problems that we have. But we do respect the concern that you have.
5130 THE CHAIRPERSON: We understand that. Thank you so much. I know we took a fair bit of your time. We appreciate it.
5131 We are going to take ten minutes. We are going to come back with Phase II.
5132 THE SECRETARY: That is correct.
5133 THE CHAIRPERSON: Thank you, Madame Ventura.
--- Upon recessing at 1551
--- Upon resuming at 1610
5134 THE CHAIRPERSON: Good afternoon. Nice to have you here.
5135 Madame Ventura.
5136 THE SECRETARY: Thank you, Mr. Chairman.
5137 We have now reached Phase 2 in which applicants appear in the same order to intervene on competing applications if they wish.
5138 For the record, Diversified Society of Alberta, Unison Media Inc., Jim Pattison Broadcast Group Limited Partnership, Harvard Broadcasting Inc., Bell Media Calgary Radio Partnership, Clear Sky Radio Inc., Rawlco Radio Inc. and Corus Entertainment Inc. have all said that they will not be appearing in Phase 2.
5139 We will now proceed with Alberta Mosaic Radio Broadcasting Inc. Please reintroduce yourselves for the record, after which you have 10 minutes for your presentations.
5140 MR. BADH: Thank you. My name is Suki Badh. To my right is Peter Fleming; to his right is Sharn Buttar. To my left is Jasprett Gill, and my other partner is actually on air right now back in Edmonton.
5141 Good afternoon, Mr. Chair, Commissioners. I am Suki Badh. I am here for Phase 2 with my partners.
5142 We are here to provide comments on the other applications at this hearing, but first, if you would allow me, I can report back on some of the homework that you gave me on Monday as concerning commitment to local programming. In fact, I drew a blank when asked hat question.
5143 Section 8.3(a) of the application form indicated that we would provide a minimum of 120 hours of local programming per week. Upon reflection, however, we would prefer a wee bit more flexibility, say 10 percent per week. Therefore, our minimum commitment would be 114 hours per week.
5144 Now to start our intervention, here is Peter Fleming.
5145 MR. FLEMING: Calgary is already well served with English-language pop, rock and country radio. There re six proposals for new English radio stations before you. Each one of them is essentially trying to find a place between two or three other stations and take a narrow slice of the pie.
5146 The formats proposed are a softer Triple A, a couple of hot hit or CHR formats, a third country station and a mainstream AC.
5147 The difference between the proposed stations and the existing stations in the market are shadings, at best, particularly when compared to the difference to the over-air market that a new ethnic station brings.
5148 Debra McLaughlin's research showed you that most Calgarians, other than ethnics, are relatively happy with the stations available and don't really see a crying need for a new English station.
5149 Not surprisingly, 87.5 percent of the ethnic panel that we recruited to interview thought that a new ethnic station would be a good addition to Calgary but, interestingly enough, 73.4 percent of the general Calgary panel also agreed.
5150 Moreover, 68 percent of the people from the non-ethnic panel felt that Calgary did not need a new English-language music service. 65 percent of the ethnic panel concurred.
5151 There were four stations licensed in the last round in Calgary, with differing formats. Only two are still in the same format or, as Pattison told you yesterday, there have been seven format changes in the market recently.
5152 You have absolutely no guarantee that if you grant a licence to a new English-language station that any of them will be in the new niche formats that they have discovered some time down the road; however, if you license us, we will be in a specialty format that is a condition of our licence.
5153 Some applicants who were licensed in 2006 are playing the "we need a second station to be able to compete in the market" card. Frankly, we believe this should be rejected as a reason to licence a second station to them.
5154 First, none of them told you in 2006 that a stand-alone station would not flourish. Secondly, two of them are applying for the same frequency, with no back-up, so whichever one doesn't get the licence will be left with no synergies other than the ones they already have, facing everybody else with synergies.
5155 If you licence none or only one of them, they may have a better chance and might seek out alliances, as just happened in Edmonton.
5156 You've heard how applicants need a station to solidify either in Alberta or a western province. Well, one of them told you they have 10 or 12 stations in Alberta alone, and the other has 11 in Alberta and Saskatchewan, so how much more solid do they really need to be?
5157 It stretches credibility for us to read in Bell's supplementary brief that a second FM station will, and I quote, "help create a more equitable competitive environment".
5158 Bell receives 27 percent of all hours tuned in Calgary on television and has a top-rated radio station. I would urge you to look closely at all these broadcasters' annual return information for Calgary and for all their station together before trying to solidify them or to make the Calgary market more equitable.
5159 Some applicants have told you that stand-alone stations are doomed, but look at the records of the stand-alones in this city alone.
5160 Fairchild has thrived for many years. Harvard's alt rock station is number one in males 18 to 24 and males 18 to 34, and it's second in males 18 to 49.
5161 Bell's CKCE FM is drawing a 4.1 share of the lucrative 25 to 54 year old demo, and a 4.2 share, 18 to 49.
5162 Rawlco's UP FM draws a 5.1 share 18 to 49 and a 7.7 share 18 to 34.
5163 In our first phase comments, we pointed out to you that 16 commercial radio stations plus the CBC plus CKUA plus student radio are available to the three-quarters of a million people who speak English and have origins in Canada. The other, faster-growing portion of the population has but one radio station to serve them.
5164 MR. BUTTAR: The second point we want to make is in reaction to those who believe that the ethnic community can make do with a relatively low-powered AM station, a low-powered FM station or an FM station that doesn't cover the whole city well since everyone knows that the ethnics all live in the northeast.
5165 One ethnic applicant actually said that the ethnic population of Calgary doesn't warrant an FM frequency.
5166 First of all, in fact, the ethnic population is not confined to one quadrant of the city. We can be found all over the city, and this is an extremely large city.
5167 The AM frequencies in play here are not an acceptable solution. In the case of the AM applicant, it must reduce its power to one kilowatt at night. This will mean that the programming in the evening will not be available to the whole market; therefore, this will not resolve the issue for all the other people not served.
5168 Section 6.2 of Multicultural Broadcasting's first proposal, 106.7, indicates that the three millivolts per metre contour covers 687,843 people, about two-thirds of the Calgary population.
5169 The low-power FM application will only provide a three to 10,000 people.
5170 Only the applications for 95.3 will provide a three signal that will reach the one million plus people that the 2006 census indicated live in Calgary. Pattison indicated that only they can make full use of the 95.3 frequency since they can waive interference concerns with their Lethbridge station.
5171 First of all, it is kind of offensive that they will waive these concerns for themselves but not for the other applicants, but more importantly, this is really not an important distinction. Most of the 95.3 applicants are able to cover all of the Calgary market with the three millivolt per metre contours.
5172 For example, our three millivolt contour will reach 1,013,793 people, while theirs will reach 1,029,368, all based upon 2006 data.
5173 MR. BADH: A word from the academic in me. I've taken statistics, econometrics at the Bachelors level, Masters level and at the Doctorate level, so you can understand why my eye would be drawn to the research studies.
5174 First of all, as a Skylabs research piece for RED FM points out, qualitative data like focus groups is not statistically valid. Quantitative research is the what and the qualitative is the how.
5175 So when you look at quantitative piece to provide direction, the first and foremost important thing to look at is what is the sample.
5176 In the case of Media Stat's otherwise excellent research, we would note that 580 percent sample was limited to south Asians, Filipinos and Arabs. The NRG study submitted for Unison looked at a 300-person sample made up of south Asians, east Asians, Latin Americans and Middle Easterners.
5177 Neither Diversified Society nor Punjabi World submitted research.
5178 So the RED FM research ignored the over 30,000 people with origins in Africa and the Caribbean, the 40,00 Latinos and the 25,000 plus people who report mother tongues from eastern Europe.
5179 NRG ignored the Afro-Caribbeans and eastern Europeans.
5180 Our researcher developed two panels of 400 each. One was statistically representative of the entire Calgary population, while the other was statistically representative of all of ethnic Calgarians minus the Chinese communities. No wonder we found the Latinos, the Afro-Caribbeans and the eastern Europeans, a minimum of about 100,000 people that others did not choose to serve.
5181 Just as a last note, Stats Canada released some preliminary census data today, unfortunately not providing anything beyond broad population figures.
5182 However, just based on that, the CMA population increased by 12.6 percent from 2006 to 2011, or some 135,529 people.
5183 You may remember that the special report done by Stats Canada estimated the visible minority group community to rise from 22.2 percent in 2006 to 28.8 percent in 2011. Note that this does not include the eastern Europeans, who are not visible minorities even if they are culturally and linguistically distinct.
5184 If we apply these percentages to the overall CMA population figures, we can estimate relatively accurately that the visible minority population grew from just under 240,000 people in 2006 to approximately 350,000 people in 2011.
5185 And if we add the eastern European population to that number, we can state with some degree of confidence that the ethnic population in the market is now at least one in three rather than one in four. That's a lot of people to integrate and to help over or through the Deerfoot wall.
5186 Thank you for your attention. We'd be pleased to reply to any questions you may have.
5187 THE CHAIRPERSON: Thank you very much. Interesting statistics, interesting document.
5188 Commissioner Menzies has some questions for you, and we'll go on from there.
5189 COMMISSIONER MENZIES: I really just have one comment. Thank you for clarifying on local for the 114 hours.
5190 In terms of the stations, your comments about the AM option, what are your thoughts -- what would be your thoughts if someone were to suggest that there was room for two, an FM ethnic and an AM ethnic?
5191 MR. BADH: That's a thought that is always in the back of your mind, that -- in terms of what the Commission is going to choose to do.
5192 I think we -- obviously it's a preference to have one, and if you choose to licence another, we prefer it to be on 95.3 because that can cover the entire population of all four quadrants, and ethnics are no longer isolated in one area. And it leaves the option, as I've been sitting here through the hearings, that perhaps a nested frequency can be used for downtown. Perhaps that leaves another frequency for mainstream.
5193 As to a second AM ethnic, our business plan is pretty cautious and conservative. We would survive. It's going to be a battle for both of us, but again I think we will survive. We will do relatively well. And, you know what, if you were to say, "Suki, take the 95.3 and we will give the AM", I would never say no to an FM in Calgary.
5194 COMMISSIONER MENZIES: Okay. That sounds like the Gordon Rawlinson response, if I'm number one there's room for one; if I'm number two, there's room for two.
5195 MR. BADH: I have been watching him for the last numbers of hearings, he's very good.
5196 COMMISSIONER MENZIES: Okay. You make a good point.
5197 MR. FLEMING: Might I just add one thing?
5198 COMMISSIONER MENZIES: Sure.
5199 MR. FLEMING: If you are envisaging that, just bear in mind that we are the least vulnerable to a second South Asian station in the market because we have the least amount of South Asian programming. Our business plan is heavily reliant on South Asians, but we have some 60 hours a week of non-South Asian programming.
5200 COMMISSIONER MENZIES: Right.
5201 You make a good point on the distribution of the community we are talking about throughout Calgary, because I am familiar with the demographic maps of the city and there is a bulk of population in one area, but it certainly is not the entire -- there is distribution throughout the city in other words.
5202 In terms of your talk about your statistics regarding your study, that people don't want a new English station, as you put it, that seems different from a lot of the other statistics that we have seen this week.
5203 If anything it might give you -- I don't know what you can say about that, other than that you appreciate the difficulty of our job, but how do we square that with the commercial applicants that we have seen who have studies showing a need for this or a need for that or a dissatisfaction in the market with the current offerings and the need for something new?
5204 MR. FLEMING: It's a good question. I asked this question to Debra McLaughlin -- my researcher who unfortunately had to be back in Toronto today -- and what she told me was it depends what you're measuring as to what you find. For example, if you study people age 12 to 24 you are very likely to come up with a CHR station and you are going to find there is some eagerness for that.
5205 What we studied were all people of all ages -- sorry, 18 to 64, a broad demographic group from all backgrounds, so we have more of a, I don't know, 35,000 foot bird's eye view than perhaps those who are looking at it more narrowly in a format finder. We didn't really do a format finder, we did: What does the population want in general terms.
5206 COMMISSIONER MENZIES: Okay. Thanks.
5207 I don't have any more questions.
5208 THE CHAIRPERSON: That's about it. Thank you.
5209 This is a lot of document here, almost as long as your Phase I. You challenged a lot of what was said by some of the other applicants and you made your case for your station.
5210 Thank you very much. Enjoy the rest of the day.
5211 MR. BADH: Thank you, Commissioners.
5212 THE CHAIRPERSON: We appreciate it.
5213 Madam Ventura, who is next.
5214 THE SECRETARY: Thank you, Mr. Chairman.
5215 I would now invite Multicultural Broadcasting Corporation Inc. To come forward.
5216 THE SECRETARY: Please reintroduce yourselves for the record, after which you will have 10 minutes for your presentation.
5217 Thank you.
5218 MR. SANGHERA: Good afternoon.
5219 My name is Kulwinder Sanghera of Multicultural Broadcasting Corporation. With me today are Bijoy Samuel, General Manager of RED FM Vancouver, and Mark Lewis, our legal counsel. We are pleased to provide comments in this phase of the hearing.
5220 MR. LEWIS: Chairman, Members of the Commission, you have heard a wide variety of proposals and most of the applicants have stated that they have done extensive research to determine the wants and needs of Calgary radio listeners. In a perfect world there would be room for licensing one, perhaps two English-language radio stations on FM and an ethnic radio station on FM. That is in a perfect world.
5221 Some of our comments are directed to English-language applicants who do not in any way imply that their individual proposals are not worthy of licensing, but our concern is that an FM ethnic radio service may be the odd man out, simply because the large consolidated radio companies believe that the ethnic community deserves less than first class service on FM.
5222 To be clear, we applied for 106.7 MHz, which several English-language applicants have characterized in the past few days as an inferior frequency relative to their business plans.
5223 106.7 FM is by no means inferior for our business plan or in terms of the level of service that we can deliver on FM to Calgary listeners. Bear in mind, we operate in Vancouver on an FM frequency that has coverage restrictions and it works extremely well. The 106.7 frequency, as you already know, would not be available for our ethnic station if Corus is granted a license for the so-called nested transmitter on 106.9 in order to enhance their market-leading CHQR 770 coverage.
5224 Our alternative choice of 95.3 also works perfectly well and we would welcome the opportunity to utilize that frequency in a heartbeat. But we understand the dynamics of the market and market consolidation relative to English-language broadcasting.
5225 On Tuesday, during questioning of an English-language applicant, Commissioner Cugini said:
"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."
5226 She went on to ask how the applicant, who is currently in the market, will provide diversity because the applicant is:
"Proposing a format that at least three other stations in the market already have one of the terms to describe their format."
5227 And she went on to ask:
"But what is it that you bring to this market that will enhance what some may call an already robust radio market?"
5228 Well, you have before you several English-language applicants seeking some variation of formats that are already in large measure here in the market. If it comes down to denying our FM application in order to accommodate yet another niche English-language music format, we do not believe that the Calgary radio market will be enhanced or the Commission's goals for diversity will be achieved.
5229 As for diversity of editorial voices, many of the English-language applicants are already here, they already have a voice on radio, and several applicants also have a local editorial voice on television in Calgary.
5230 Many of the 23 cultural groups whom we propose to serve have no voice on radio and their languages are never spoken on the air. Their music is never played on the air in Calgary and their community news which reflects Calgary issues is not heard.
5231 So RED FM provides a diversity of ownership in this market and a diversity of programming content that is not duplicated by three or four similarly formatted stations chasing the same listeners for a three or four share.
5232 As we stated Monday, it is our expectation that our reach within the large South Asian community, and other communities whom we propose to serve, will exceed, at maturity, 50 percent of listeners. That is based on our own business experience.
5233 To put this into context, rock music listeners have four, five or six stations that they sample in a week and, as several Commissioners observed, a new English-language entrant into Calgary will get a relatively small piece of the pie.
5234 So if it comes to the exclusion of an ethnic FM station, do any of the English-language applicants make the best use of the scarce 95.3 frequency, our alternative choice? Do they provide a diversity of programming and editorial voice to those who are truly underserved? Or are they simply going to provide one more iPod app, one more Twitter feed, in a robust market that is saturated with similar content?
5235 Let us then turn to Corus for a brief moment. We have already filed an extensive written brief prior to the hearing relating to the competitive Corus application for 106.9 MHz. We have driven the same downtown routes cited in Corus' application night and day and we cannot duplicate the reception problems that they claim afflict their CHQR 770 signal. We understand the building issue, but we also understand the concept of a nested FM signal, but at the present time Corus is an overall market leader on AM 770, signal impairment or not.
5236 So if the opportunity to provide a new editorial voice in Calgary and a diversity of programming to minority groups that is not currently available, is to be sacrificed in order to facilitate the FM rebroadcast of identical CHQR content that is on AM, then we ask whether you will have achieved the objective of ensuring a diversity of ownership and a diversity of programming which is the foundation of the call for radio applications for Calgary.
5237 Bear in mind that Corus already has 37 radio stations throughout Canada and three radio stations in Calgary.
5238 Corus of course thinks that the solution is simply to shunt us over to AM. But isn't it ironic that Corus, which as a 50 kilowatt AM station, takes the position AM is no longer suitable to reach all Calgary residents, yet AM is suitable for RED FM or other ethnic applicants.
5239 We also know -- and this was not spoken of earlier today -- that there is full-time news coverage and breaking news is covered very well on 660 KHz, which is owned by Rogers and is an all news station.
5240 So it isn't a matter of only one station providing news and talk in this market.
5241 Our view is that several ethnic applicants missed the mark in terms of their capacity to provide high quality spoken word programming and to adequately fund CCD relative to the business plans they have submitted.
5242 Another applicant, Punjabi World, doesn't fulfil the broad level of service objective in terms of languages, cultural groups to be served, that is central to the Ethnic Broadcasting Policy.
5243 We have prepared a table which is attached to our presentation comparing some of the elements of the other ethnic applicants. We assume that you have done your own analysis.
5244 Here are some items we believe distinguishes our application very briefly.
5245 We propose the largest CCD initiative, which is not only targeted to the South Asian community, in fact larger expenditures will be made for the multicultural talent contest supporting ethnic groups other than South Asians.
5246 In questioning Unison the Chairperson asked:
"Is there anything inherently unfair about contributing $20,000 a year strictly to Hindi/Urdu when you are responsible for 19 languages according to your proposal?"
5247 It appears that Unison believes its CCD initiative that favours South Asians is sufficient. We do not.
5248 Unison has proposed a format that is 70 percent talk and 30 percent music. It also proposes over 21 hours a week of news. We know that local high quality news and talk programming is expensive to produce and takes a significant human resources. Look carefully at their business plans.
5249 During the questioning Unison said that they will have five or six staff for what they called "news translations". They propose 21 and a half hours of news a week, 150 news broadcasts a week with only five or six staff, plus additional spoken word programming on a programming budget that is considerably less than RED FM. We are sceptical that this level of spoken word programming can be provided.
5250 And even if the quantity of hours could be produced, can Unison produce high quality spoken word content that deals with local issues important to Calgarians?
5251 We do not believe that their projected programming expenditures are sufficient to produce that level of spoken word content. Our programming expenses are higher than Unison, with a realistic amount of news and spoken word programming, given what we know the costs of producing high quality, localized programming are.
5252 There is also the issue of want versus need which was discussed. Punjabi World did not file any consumer or advertising research whatsoever. In view of its failure to file any qualitative market research, is its proposal for such a narrowly focused South Asian service valid?
5253 In contrast, we filed independently produced research from StatsCan as well as consumer and advertiser surveys by Mediastats and consumer and business focus groups by StyleLabs that canvassed more than 600 respondents.
5254 There was a lot of discussion about achievability of each applicant's business plan and that led to the question: What if you don't attain your revenue projections?
5255 Unison, Alberta Mosaic and Punjabi World have provided projections for very high and uniform sell out rates from morning until night. We know from experience that sell out rates vary throughout different day parts.
5256 RED FM provided very detailed revenue projections for each day part in our application. Our projections are very different relative to those of the other three applicants. We think that our business plan is credible, achievable and reflects what we have learned in over six years of operating an FM ethnic station.
5257 In summary, Mr. Chairman, we believe that we have addressed each of the factors that the Commission uses to evaluate applications for new radio services and we can deliver on each of our promises and conditions of license.
5258 Thank you.
5259 THE CHAIRPERSON: Thank you very much.
5260 If we knew you were going to be quoting us we would have been more careful. An excellent presentation, thank you very much.
5261 Mr. Simpson...?
5262 COMMISSIONER SIMPSON: Thank you very much.
5263 It is tough, this part of the hearing process, because quotes start emerging, factums need to be reread, multiple presentations rather than one has to be in front of you because everyone is at everybody and it makes for an interesting afternoon.
5264 In the previous presentation that was made by Mr. Badh and his organization, he had illustrated that in your research, from his perspective as a statistician practitioner of some repute that a lot of your research was qualitative, and in particular had omitted research concerning the South Asian, East Asian and Latin American and Middle Eastern markets, but essentially he was illustrating there were some deficiencies in the quantum of groups that you talked to.
5265 Given that you are going to be programming to these groups that he illustrated, do you feel that you have sufficient data to be able to satisfy the needs of those markets?
5266 MR. LEWIS: Commissioner Simpson, a couple of things.
5267 One was that the StyleLabs and the Mediastats research is only in part the work that was done on the ground here.
5268 The management group met with dozens and dozens -- and I'm not exaggerating, dozens of community leaders in all walks of life, including -- and I will let Kulwinder comment on some of the groups that he met with -- whether those groups -- and some of them are Eastern European and there is Eastern European programming, but whether they have the capacity to produce programming and whether their communities had the businesses to support the programming as well.
5269 So that was just one of the lightning rods that was used.
5270 Unfortunately, I'm at a disadvantage because Ms Wicks is not here this afternoon, but we will for rebuttal in Phase IV have some information on that.
5271 Mr. Sanghera has some comments on the research.
5272 MR. SANGHERA: Based on our experience what we did was, we wanted to know first: Is there a need?
5273 Me and Bijoy, we went to Croatia, Hungary and Serbia, Romanian, we went to each community ourselves, talked to the organization, "This is what we want to do, is there a need for it?" Everyone showed so much interest.
5274 The second phase was: Is there a business case for it?
5275 In our survey, we wanted to make sure we are making a business case so we chose the prime community who will be backing up financially and our survey mostly was based on the financial aspect point of view.
5276 We learned in Edmonton that the business case financially has to make sense, so we chose the right path.
5277 Bijoy can update on that.
5278 MR. SAMUEL: So what we did was, in terms of a primary audience, the South Asian. We have a secondary audience which is Arabic, Vietnamese and Filipino. We said essentially that is where the revenue is going to come from, because for the other languages you are going to be providing it free to them.
5279 So if we were to make a business case out of all the languages that are there, then probably we will be failing in our business plan.
5280 We wanted our plan to be so solid that all the revenue should just come from these primary and secondary audience that we have. For that reason, we went over and above what other applicants would do.
5281 Normally you will have a consumer survey and you may have an advertiser survey, we really wanted to find out for ourselves, and also for the Commission: Is there a real need and is there a real demand for it? Will the market support it? For that reason we went and did a consumer survey which had 580 consumers complete. Five hundred and eighty in terms of the survey for the consumers, which is not qualitative, that was the quantitative one.
5282 So the quantitative one was the larger one with 580 completes.
5283 In terms of the -- then we did an advertiser survey with 100 -- I can just read the exact number -- 139 businesses in terms of -- this is again quantitative.
5284 When it comes to why did we do the focus group, we could have left it at this. We thought we need to go and talk to people. We have gone on the road, spoken to communities, but we wanted to do a third party view of what is really needed. Do people really need something or is it just us who is thinking that yes, it's needed.
5285 For that reason we organized two consumer focus groups again in a mix of audiences, South Asian, Arabic, Vietnamese, Filipino, and we wanted to find out what are their needs. We did a creative exercise with them and said, "Tell us, if you were to design a radio station, what would you want to hear?", because that's when you would hear their exact needs come out. And they give -- and it's all listed here in the book that we have provided, the needs that they came up with, news, music, news, stock -- and I wouldn't go through all of them, but we came across those needs through the real people.
5286 We heard it from the horse's mouth that the quantitative will give you the numbers, but qualitative gives us the what and the how. So we came to know, yes, there is a need.
5287 But why is there a need? What is it that is missing? What can we do? How can we fulfil it? All that was answered through the focus groups that we did.
5288 The same as we did with the business group. We said, "Is there something missing? How can we fulfil it to you?" And they came up with some fantastic ideas which we thought we are already doing in Vancouver.
5289 A concept like having a person who is just not a salesperson if you would look at it. Something that businesses found good was we said they are going to have an account manager, someone who is not just going to go and get your advertising dollars, but who would work with you and help you build your brand for a local shop, a retail shop, someone who has skills and developing them in day to day through sales, through contests that they would come up with, through helping them brand themselves. That is real value.
5290 All these advertisers found this real value. They said if there is something like this available it will enhance why we should come to you beyond the reasons of just for the sake of doing ad. They found real value in that.
5291 Apart from that we said there is another component, the national ethnic advertisers. We hadn't done that before. None of the others have done it. We went to local and national advertisers and did interviews. This was not us, but StyleLabs who did this interview, to ask: Is there really -- are you going to advertise if there would be a multicultural radio station?
5292 Thank you.
5293 COMMISSIONER SIMPSON: Thank you.
5294 I just have one more question, and it reflects on my most esteemed colleague, Commissioner Cugini, who you quoted. Her point was exceptional in that as much as broadcasters are essentially relatively free to program to the best interests of their own financial performance as well as the marketplace, when it comes to spectrum and best use from a diversity standpoint and tying that together with the program equation, I heard something new today and I will frame it like this: When you are in the gambling casino and you are playing roulette, it's not a black and red game, it's not a 50:50 proposition. The outlier is always zero double zero which tilts the odds in the favour of the house.
5295 And the outlier here is Corus in that this is not an ethnic versus commercial undertaking I hear you saying and that -- if I'm paraphrasing incorrectly please correct me, but I think I hear you saying that in the fullness of the decisions we have to make, if it comes down to a decision that may or may not involve Corus, don't pre-empt you, you are willing to stand -- because of the nature of your programming and your percentage of news content, spoken word and the like, you are prepared to be considered as -- I don't want to use the term inappropriately, but as an equal to a commercial broadcaster and not just an ethnic broadcaster if it really comes down to it.
5296 Is that correct?
5297 MR. LEWIS: Absolutely. And I think we have demonstrated in Vancouver, Surrey, that we are a full service station like other stations in the market.
5298 One of the things that struck us when we heard Corus this afternoon -- so I couldn't script it because I was just doing it on the fly -- was their suggestion that this is such an inferior frequency that it just won't work.
5299 We went up and got our maps out again and it puts a really lovely signal into parts of Calgary that haven't been developed yet.
5300 We are concerned when we heard numbers this afternoon, again reiterated, that this population, this population where the signal problem is is about 35,000.
5301 We think there is another solution. I know they alluded to the fact that they have looked at other technical solutions, but 107.9, which with high power has often NavCom problems, out engineer, who is not in the room today, says it could be made to work on a downtown building with a very low power transmitter to fill in. I know you were speaking about fill in, we think that may be a viable option because it's not a commercially usable frequency for an ethnic station or, for example, a full-power station. So that may be the balancing act that can be done. But I take your point.
5302 MR. SAMUEL: If I can add in terms of --
5303 You're absolutely right, we think we are a commercial radio station on par with any other commercial station. The reason is we wanted to raise the standard of broadcasting when we started in Vancouver and from the very outset that is the philosophy that we have. Everything we do, we want to be the best out there, whether it's programming, whether it is a contest.
5304 Every year we've been giving out cars as prizes and people love it. None of the other ethnic stations can give out a car. Why do we do it? Because we want people to be proud and say that yes, this is a station that's up there.
5305 Talk to many Caucasian people in Vancouver and they will say, oh yeah, I know about Red FM. That's what we've done. We've have so many instances through radiothons and many events where we have -- we have something under the Surrey Board of Trade where what we do is we promote that on Red FM. It brings a lot of South-Asians into mainstream events and that's how people come to know about us as well.
5306 So yes, we operate as a commercial radio station on par with any other English-language station.
5307 MR. SANGHERA: May I add something? If you want to know the strength of ethnic radio stations, raising $1 million in a day, you can imagine. I have not seen any mainstream radio station raise $1 million in a day for a charity cause.
5308 MR. LEWIS: Commissioner, if I can sort of close off a thought.
5309 When we looked at the call -- and this is, I think, an important point that we perhaps didn't make earlier in the early presentation on Monday -- we knew that there would be a flood of English-language applicants. It comes as no surprise to us.
5310 And so we looked long and hard at the frequency options and we thought, you know, (a) we didn't want to create a radio station that would be second-class to the advertisers or the listeners, and 106.7 actually is a first-class signal -- it's a better signal than we have in Vancouver -- and that's why we chose that frequency as our primary frequency, thinking that we wouldn't displace someone else.
5311 So we know you have a very, very difficult decision. We would not pretend for a moment that you have a very difficult decision to make and we thought that we could ameliorate some of the problem.
5312 COMMISSIONER SIMPSON: But if it came down to it, what I was attempting to say was that you would go head-to-head on the alternate frequency to be considered for that if your 106 was not available?
5313 MR. LEWIS: Oh, 95.3 is a better frequency. We've looked at it. It's a very, very large contour out into, if I can call it, Calgary ranch country, because it does have a massive signal, and that's not where the ethnic population necessarily resides today.
5314 So we came forward with what we thought was reasonable under the circumstances and could do the job and could meet the conditions of licence.
5315 THE CHAIRPERSON: The Southeast Asian community is not in ranch country yet.
5316 Thank you so much for your document. Thank you so much for your contribution to try to find a solution for yourselves and for everyone else and for the system. You're right, no one said it was going to be easy and it just keeps getting harder and harder. So thank you very much. Enjoy the rest of the day.
5317 MR. SAMUEL: Thank you for giving us the opportunity.
5318 Who's next?
5319 THE SECRETARY: Thank you, Mr. Chairman.
5320 I would invite Punjabi World Network Ltd. to come forward. Thank you.
5321 THE SECRETARY: Please reintroduce yourselves for the record, after which you will have 10 minutes for your presentation. Thank you.
5322 MR. CHERA: Good afternoon, Commissioners and Mr. Chairman. My name is Joti Chera, I'm the Station Manager.
5323 To my left we have Mr. Amandeep Doad, who is the President, and to my right, we have Mr. Amandeep Dhanda, who has helped us with strategy and marketing.
5324 MR. DHANDA: We have appreciated the high quality of our counterparts' presentations. We are the only application for 1670 AM and the only application asking for an AM slot as primary. However, there are three items we wish to raise. They relate to the size of the market, the nature of the AM band and Unison Media's insistence that their SurSangam station is the number one SCMO in the market.
5325 MR. DHANDA: First, regarding the size of the market, Unison made repeated reference yesterday to population figures for 2031. Calgary is booming and the South-Asian community is exploding, but 2031 is 20 years and three licence terms away. It is possible that in 2031 we will all still be listening to analogue over-the-air radio. But, with respect, that issue isn't before the Commission.
5326 We think the more relevant figures are probably the 2016 Stats Can numbers that Multicultural Broadcasting put in. They show South Asians being up to 114,000 people and 7.9 percent of the market by 2016.
5327 If an FM station was catering to South Asians 24/7, then in order to figure out whether that FM station is sustainable by 2016, you would look at what market share they can expect out of up to 114,000 people.
5328 For an FM station catering to South Asians plus to smaller ethnic groups, obviously the addressable audience shrinks from 114,000 during those hours to whatever the 2016 projection is for that community.
5329 Now, we told you yesterday that we thought it would be tough for two stations relying on revenue from South-Asian Calgarians to co-exist in the marketplace.
5330 But Unison told you that the way the Calgary market is structured there are two completely different levels of advertising revenue and they are going for the higher level.
5331 And we heard similar things from Multicultural, that they are going for higher-paying advertisers that want to pay quite a bit more than the kinds of rates that we are proposing to charge.
5332 We are not shooting for the FM market, so we don't really have a position on whether it is doable, although the revenue scenarios seem very optimistic to us. At the same time, we are coming to see that what we have proposed is simply on a different track than the ethnic radio that has been proposed for the FM band.
5333 For example, we heard Alberta Mosaic say that smaller community businesses cannot afford to go onto an FM station or on an open-air station because it costs too much. Well, we agree with Alberta Mosaic in terms of FM, but we don't agree with them that smaller community and ethnic businesses cannot afford to go on an open-air channel. They can. They can go on an AM station that has an AM radio business model. In fact, our financial model would let them pay exactly what they are paying right now to advertise on SCMO, and then only modest increases after that.
5334 MR. CHERA: That brings us to our second point, which is about the comments other applicants have made about the nature of the AM band.
5335 We heard Unison Media talk about how AM is challenged where there are tall buildings or by Bluetooth or other wireless devices. Well, that may be, but it doesn't mean that you can't provide improved service by being on the AM band. Even Unison Media would have to admit that moving from the constrained bandwidth of an SCMO operation to the AM band is a huge boost in quality.
5336 What Unison Media's point about the AM band does mean, though, is that it is going to be very hard for their proposal or for Multicultural's proposal to work on that band. The financial projections they have put out are aggressive. They are looking at some very significant increases in what South-Asian advertisers pay to be on ethnic radio.
5337 Like we've said, that may or may not work on FM, but it is not going to work on AM. They are looking at a pretty inefficient type of AM transmitter setup for reaching the Calgary ethnic audience and at charging high prices for the ads they push across it.
5338 - As a baseline, our AM model would start at $6 per local spot and $10 per national spot, and rise to $7.20 and $10 by end of term.
5339 - By comparison, Unison's model would start at $10 local and $14 national, rising to $12 and $16 by end of term, so ad rates that are 40-60 percent higher in Year 1 and more than that by end of term. And that's for FM. We're not sure if we saw any allowance at all for the need to lower rates if Unison is licensed to their backup AM plan.
5340 - Multicultural has submitted some alternative projections in the event they are licensed to the AM band, but those projections remain extremely high relative to the Calgary ethnic market: $12 to $15 per spot in Year 1, rising to $16 to $21 range by end of term. In other words, their AM rates are double our rates and about 20 percent higher than Unison's FM rates, and they are projecting losses on AM through to Year 6.
5341 Bottom line, two other ethnic radio applicants have asked for backup on the AM band, but what they are pitching in terms of revenues look more like premium FM services. If they can sustain it, more power to them, but they are not going to be able to do it on AM.
5342 When we talked to advertisers, we talked to a lot of smaller businesses which simply cannot afford to pay the kinds of high rates that an FM style of operation requires. Those small businesses are still going to need a place to go and ought to have a place to go. We think that that is where the AM band fits in, the innovative AM band fits, not as the alternative frequency for what is really an FM radio plan.
5343 MR. DHANDA: Final point. Unison Media said a number of times that they are the number one or even that they are "generally acknowledged" as the number one SCMO in the Calgary market. Well, they are certainly the oldest and we do think it is generally acknowledged that they are in the top two, but as we said in our written intervention, the study they filed that tried to show that is contradicted by other studies that were also filed in this proceeding.
5344 The study in which they tried to show they are number one was based on a small sample size of 300 respondents, compared to the other study which arrived at a different conclusion. It also included a large number of don't knows and didn't provide much methodological information.
5345 We don't want to get into quibbling about market studies on the popularity of SCMOs in Calgary. This is a hard thing to demonstrate. As was discussed yesterday, no study done for any reasonable amount of money is going to be conclusive on this. That is why we didn't think it would add value to file one. Even if we had a conclusive study, there is a big difference between trying to prove you are number one and being generally acknowledged that way. We simply don't agree here.
5346 That said, we do want to congratulate SurSangam for the following. They are "generally acknowledged" as one of the top two South-Asian SCMOs in all of Calgary. They couldn't be in better company.
5347 MR. DOAD: We would be pleased to answer any questions that you might have.
5348 THE CHAIRPERSON: Thank you. Again, interesting document, interesting solutions. We appreciate it.
5349 Commissioner Patrone, do you have a question?
5350 COMMISSIONER PATRONE: Just a couple, Mr. Chairman.
5351 I thank you for your presentation again. You pretty much addressed the issue about concerns on the AM band as it may pertain to your business case going forward, and as I understand your presentation, you're going to compete on price point; is that right?
5352 MR. DOAD: Yes, that's correct.
5353 COMMISSIONER PATRONE: Could you elaborate just a little more for me? I mean you've given me some prices. You're confident that given what you intend to charge for your ad rates, you feel that that's going to be able to sustain your business?
5354 MR. CHERA: Yes, sir, because what we're proposing here is we have basically graduated from our SCMO station. So we already have a strong clientele.
5355 I personally grew up in this community. I've educated myself in broadcasting in this community, in Calgary, and I want to take our station and take it to the next level. So I've taken the proper steps.
5356 And we really understand the market here. We have been in the market since 2002, so we have a really good understanding of what the ethnic business community offers or what can they pay for advertising dollars. So that's why we came up with the projections that we have presented here.
5357 COMMISSIONER PATRONE: There was the matter of your sellout rates being perceived as overly ambitious. That has come up. Did you have any response to that?
5358 MR. DOAD: No. I think our sellout rates are almost in line with what our experience with SCMO is. So we are continuing from there. So we are quite confident about that and the market can bear that.
5359 COMMISSIONER PATRONE: Okay. Well, those are my questions. Thank you, Mr. Chairman.
5360 THE CHAIRPERSON: Thank you very much. We appreciate it.
5361 Do you have any questions? No, that's it. Thanks again, guys. Enjoy the rest of the day.
5362 Madam Ventura.
5363 THE SECRETARY: Thank you, Mr. Chairman.
5364 I would now invite 7954689 Canada Inc. to come forward.
5365 THE SECRETARY: Please reintroduce yourselves for the record, after which you have 10 minutes for your presentation. Thank you.
5366 MR. BRAY: Thank you very much for entertaining our comments.
5367 THE CHAIRPERSON: Thanks for coming back to see us.
5368 MR. BRAY: Let me preface our statement by saying we have the utmost admiration for our colleagues and friends who have presented over the last few days, but with that in mind we would like to offer a few comments for your consideration.
5369 As you might expect, we would oppose the concept of awarding a second frequency to an existing broadcaster in order to provide economic advantage or greater cost efficiencies, i.e. --
5370 THE SECRETARY: I'm sorry to interrupt, but I need you for the record to introduce yourselves for the court reporter. Thank you.
5371 MR. BRAY: Oh! My apologies. We had to reintroduce ourselves.
5372 This is the Tietolman Tétrault team. I will let each of the participants introduce themselves.
5373 MS ROULSTON: Erin Roulston, Associate Vice-President with Léger Marketing here in Calgary.
5374 MR. BRAY: I am, of course, David Bray from Bray and Partners.
5375 MS BLOOM: Corey Anne Bloom, Partner with Raymond Chabot Grant Thornton.
5376 MR. TÉTRAULT: Nicolas Tétrault.
5377 MR. TIETOLMAN: Paul Tietolman, same company.
5378 THE SECRETARY: Thank you. You may now proceed.
5379 MR. BRAY: Is that sufficient?
5380 THE SECRETARY: That's sufficient. Thank you.
5381 MR. BRAY: Okay. Thank you very much. Sorry for the oversight.
5382 Just to go back to my last comment.
5383 As you might expect, we would oppose the concept of awarding a second frequency to an existing broadcaster in order to provide economic advantage or greater cost efficiencies, i.e., economic sustainability.
5384 The key criteria should remain providing diversity and cultural benefit to the listeners of Calgary, and we heartily support that mandate.
5385 Along those lines, we would like to say that we would be willing to accommodate a qualified applicant as a secondary carrier on the 100.3 frequency should we be granted a licence. We want to make sure that all voices in the community are being heard. Most especially, the ethnic community deserves to be heard, and we would certainly welcome the same sort of application from all existing FM broadcasters.
5386 A few other key points.
5387 Talking about the diversity of applicants -- because that is a primary consideration, diversity -- over the last few days we've heard you entertain applications for hip hop, country, yet another AC niche, et cetera, et cetera.
5388 We would like to offer up the fact that we are seeking to offer the greatest artistic diversity of all the applicants. As such, we would like to point to the fact that, among other things, our music library will contain over 2,000 cuts as opposed to the conventional 150-500 you would find with all existing broadcasters. This is just one component of establishing the artistic diversity that we propose.
5389 As far as some of the other applicants, looking at Rawlco's presentation, I would like to point out that our survey noted that 69 percent of those surveyed by Léger Marketing preferred a new music station. It would appear that Rawlco is proposing what amounts to a talk station with, of course, complementary music, but as such is primarily a talk station, and, as such, we would question the viability of utilizing the FM frequency for such a circumstance.
5390 I would like to note that, for example, we were listening to Corus a little earlier on today. QR77 has been overwhelmingly successful on the AM band. Most notably, they are the number one rated station for those listeners 12+, delivering a 10.4 share, proving overwhelmingly the viability of the AM band for talk in Calgary, and, of course, we've seen that evidenced elsewhere.
5391 We would suggest that -- again, with regard to Rawlco, we have proposed in excess of $5 million for our CCD commitment, and they have made a comparable suggestion, which is admirable. My only question would be -- and I think Ms Cugini noted this -- of those CDs that are played, what component of those artists are in regular heavy rotation?
5392 We have gone over the playlists, et cetera, et cetera. While producing the CDs is no doubt admirable, and I come at it from an artistic point of view, I think it's a wonderful thing, but I would also contend that if one looks at our suggested playlist, our unreserving commitment to Canadian artists and emerging Canadian artists is unduplicated anywhere.
5393 Rawlco's successful operation in Edmonton is undoubtedly admirable and it is very commercially successful. My only question is, is it the most viable way of providing cultural diversity to the Calgary marketplace? I would ask you to compare their playlist in terms of their contribution to the artistic community to the Tietolman and Tétrault application.
5394 Moreover, with regard to their share target for Year 1, it's a 5. We would suggest that that perhaps is a little bold, not terribly but a little bold. So that should be taken into consideration.
5395 Secondly -- or thirdly, I suppose, Rawlco was fortunate enough to be awarded the 100.3 frequency, and deservingly so, certainly a tremendous organization. My question is, is it the fairest set of circumstances to award it to them yet again or is it perhaps time to give another budding broadcaster an opportunity?
5396 And we would also like to say, how inclusive can this format be when it is for the most part talk? Certainly, from a musical standpoint it's problematic.
5397 So in summation, we would simply ask that you consider the diversity that we have tabled in comparison with what we believe to be -- while viable formats are being proposed, they are perhaps not as good as our application at addressing the diversity that will reward Calgary listeners.
5398 THE CHAIRPERSON: Well, thank you for your presentation.
5399 Marc Patrone is getting all the glory this afternoon.
5400 COMMISSIONER PATRONE: I deserve all of it too, Mr. Chairman.
5401 THE CHAIRPERSON: Much deserved.
5402 COMMISSIONER PATRONE: Well no, I don't, of course not.
5403 Thank you. Unless I misconstrue what you've said to me, it appears that you've revised your application again by proposing to accommodate a second carrier.
5404 MR. BRAY: I'm going to turn this question over to Rajiv.
5405 MR. TIETOLMAN: I will answer that question.
5406 MR. BRAY: Or Mr. Tietolman will take it.
5407 MR. TIETOLMAN: No, we are not revising our application. What we are saying, if we are fortunate enough to be awarded that frequency, we do know that technically it is a possibility for any FM frequency to provide and accommodate a facility for a sub-carrier for the multicultural communities, for one of the communities.
5408 And we also say that would be a great initiative by all FM broadcasters in this city, after listening to these fine people and their concern for adding diversity of voices to the Calgary community on radio.
5409 We've seen that in other markets. We're familiar with what happened with the Greek community in Montreal for many years, where they reached out to the Greek community and they did successfully operate and broadcast and serve that community very, very well.
5410 Why not make that an available facility in Calgary and that could solve some problems, because, unfortunately, FM frequencies are a rare commodity.
5411 COMMISSIONER PATRONE: But you would be taking on extra cost, would you not, Mr. Tietolman?
5412 MR. TIETOLMAN: Well, the extra cost would not be dramatic in any way, shape or form, and it would be so miscellaneous in comparison to our total annual budget of operation that we're not concerned in any way, shape or form. That would be a price that we would be willing to pay to make this accommodation available to the community.
5413 COMMISSIONER PATRONE: Okay. Those are my questions, Mr. Chairman. Thanks.
5414 THE CHAIRPERSON: Would you be raising revenue from this offering to the cultural community?
5415 MR. TIETOLMAN: That would not be our prime objective in any way, shape or form, no.
5416 We are trying to basically suggest that we can see that there is, you know, a potential lack in the marketplace to accommodate the communities, and there's not just one community, there are many different multicultural groupings in the community and that's why we suggested that.
5417 THE CHAIRPERSON: You spoke quite a bit about diversity of voices and your playlist and the different kinds of music and you're not really pigeonholed to a genre.
5418 Some might argue that you need to have a type of genre to be a successful radio broadcaster. You've got to be either adult contemporary, you've got to be Triple A, you've got to be rock, you've got to be easy listening. I mean how do you respond to that?
5419 MR. BRAY: Fairly easily. That's traditional thinking and I think it is perhaps narrow in interpretation.
5420 I go back to the BBM figures. The average listener listens to a minimum of six stations on an ongoing basis. So they're pushing from format to format.
5421 Moreover, I've looked at, in some detail, the exclusive reach and non-exclusive reach of all the stations in the marketplace. You will find once again that the average listener, again, entertains a variety of different tastes and looks to satisfy a variety of different needs.
5422 As such, we are trying to provide that diversity, but moreover, we're trying to provide that diversity with a spice that will reward emerging Canadian artists, accessible music that is -- and I challenge you to find James Keelaghan, Matt Anderson, Stan Rogers, some crucial Canadian artists, I challenge you to find them on any other station in the marketplace.
5423 We are going to provide this diversity but not simply provide it but reward the deserving artists that need our assistance.
5424 THE CHAIRPERSON: Thank you very much. I think that -- any more questions? No. That's it. Great. Thanks so much.
5425 MR. TIETOLMAN: Thank you very much.
5426 THE CHAIRPERSON: Thank you for coming by to see us again.
5427 Madam Ventura.
5428 THE SECRETARY: Thank you, Mr. Chairman.
5429 This completes Phase II of this hearing.
5430 I would like to indicate for the record that intervener number 1 tomorrow morning, Dewett Law Office, has informed us that they will not be appearing. So we will begin tomorrow morning with the panel of interveners, intervener 2, 3 and 4.
5431 Thank you, Mr. Chairman.
5432 THE CHAIRPERSON: Thank you, Madam Ventura. See you tomorrow at nine. Enjoy the rest of the day.
--- Whereupon the hearing adjourning at 1717, to resume at 0900 on Thursday, February 9, 2012
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