Volume 2, 8 May 2012
TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2012-126, 2012-126-1, 2012-126-2 and 2012-126-3
Room 200 ABC
105 Princes' Boulevard
8 May 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 2012-126, 2012-126-1, 2012-126-2 and 2012-126-3
Crystal HulleyLegal Counsel
Lyne CapeHearing Manager
Room 200 ABC
105 Princes' Boulevard
8 May 2012
- iv -
TABLE OF CONTENTS
PAGE / PARA
4. Michael Wekerle, on behalf of a corporationto be incorporated295 / 1764
PANEL OF INTERVENERS
3. Robyn Dell Unto 313 / 1862
2. Starfish Entertainment 315 / 1870
1. Phil Fontaine 318 / 1886
5. Bhupinder Bola, on behalf of a corporationto be incorporated380 / 2302
PANEL OF INTERVENERS
1. Frank Scarpitti, Mayor, Town of Markham 397 / 2387
2. Markham Arts Council 401 / 2403
3. Robert Kadlovski 405 / 2420
6. Durham Radio Inc. 447 / 2726
7. Stanislaus Antony, on behalf of a corporationto be incorporated513 / 3086
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PAGE / PARA
Undertaking327 / 1954
Undertaking351 / 2099
Undertaking352 / 2108
--- Upon commencing on Tuesday, May 8, 2012 at 1033
1759 THE CHAIRPERSON: Go ahead.
1760 THE SECRETARY: Thank you, Mr. Chairman.
1761 We will start today with item 4 on the Agenda, which is an application by Michael Wekerle on behalf of a corporation to be incorporated for a broadcasting licence to operate an English-language commercial FM radio undertaking in Toronto.
1762 Appearing for Michael Wekerle is Mr. Paul Sparkes.
1763 Please introduce yourselves for the record and you then have 20 minutes for your presentation.
1764 MR. SPARKES: Thank you very much.
1765 Good Morning, Mr. Chairman, Commissioners and Commission Staff. My name is Paul Sparkes and together with Michael Wekerle, we are pleased to appear before you to present our application for something different and, in our opinion, something necessary for Toronto and for Canadian artists, Tower 88.1.
1766 Now let me introduce our panel.
1767 Most recently I served as Executive Vice-President of CTVglobemedia, where I was responsible for corporate affairs for all of CTV's regulated undertakings: conventional television, specialty television and the 34 radio stations that we acquired from CHUM in 2007. I currently serve as President and Managing Partner with Difference Capital, a newly established alternative investment firm.
1768 Seated to my immediate right is Michael Wekerle, our controlling shareholder. Known as "Wek" and dubbed the Wayne Gretzky of Bay Street by Report on Business Magazine, Michael was the lead equity trader at GMP for over 20 years. In that role, Wek consistently led the market in terms of capital raised and return on investment performance. Today, Michael is an active investor in many Canadian sectors, including radio and television. His current holdings include interests in Blue Ant and Newcap, a leading radio player, which he has held for the past 15 years.
1769 Seated next to Michael is Eric Boyko. Eric is well known to the Commission as the energetic leader of an innovative Canadian media company, Stingray Digital. Stingray has revolutionized the digital music business in Canada and abroad. Today Stingray serves over 70 million subscribers in 48 countries and has developed a well deserved reputation as a major supporter of Canadian talent.
1770 Seated immediately to my left is Dan Barton. As a radio broadcaster for 23 years, Dan's experience ranges from news and on-air hosting to sales, marketing, programming and management. Dan has programmed a multitude of formats, including AC, CHR, Country and Rock. He is currently a radio consultant.
1771 Seated next to Dan is Debra McLaughlin. Debra owns and operates Strategic Inc., a company that has been providing insights into consumer behaviour and market forecasts for over 15 years, with specific expertise in the media space.
1772 Next to Debra is Ivan Fecan. Ivan is well known to the Commission, having presided over CTV's conventional, specialty television and radio undertakings for many years. Under Ivan's leadership, CTV became an iconic Canadian brand and took a leadership position in the creation and presentation of Canadian programming. Ivan is known as a passionate champion of Canadian culture and we are honoured that he has agreed to assist us with our vision for Toronto radio, a vision that will showcase Canadian talent on the country's biggest stage.
1773 In the back row are the two Robs, Rob Malcolmson, our regulatory counsel from Goodmans, and Rob Braide, Vice-President Content and Regulatory Affairs with Stingray Digital. Rob Braide has been in the broadcasting business for 35 years and has a long track record in the areas of station management and regulatory affairs. He is the former Chair of the Canadian Association of Broadcasters and has been inducted into both the CAB and the Canadian Broadcast and Music Halls of Fame.
1774 Seated next to Rob Braide is Spencer Miller. Spencer hosts a very popular late night online show called "Spencer Miller Tonight" and is an author, formerly the Ambassador for Canada representing people with disabilities. He has also worked with dignitaries such as Princess Diana and the Queen of England. Spencer is also a great inspiration to us all.
1775 Seated in that same row are interveners:
1776 - Robyn Dell'Unto, who is a Toronto singer-songwriter;
1777 - Susan de Cartier, who is President of Starfish Entertainment, is also the manager of Blue Rodeo; and
1778 - Phil Fontaine, who we all know.
1779 Mr. Chairman, Commissioners, there are more than 20 applications for the last remaining Toronto frequency and every applicant has an argument that they believe in. So how do you sort through this?
1780 By asking the following questions:
1781 - What application best reflects Toronto?
1782 - What format is in most demand and will grow the radio market?
1783 - What applicant will bring listeners back to radio?
1784 - What proposal maximizes opportunities for Canadian emerging and heritage artists?
1785 - What ownership group combines the benefits of a new editorial voice with the capital necessary to compete?
1786 - What application sees Toronto as a key building block in a long-term plan to create a new independent national radio voice?
1787 In Toronto, two out of every three hours tuned is to a Rogers, Corus or Bell/Astral station. Toronto radio is in dire need of diversity of ownership and editorial perspective. This new voice must, however, have the resources, managerial expertise and track record necessary to compete.
1788 Let's begin with a review of the options before you.
1789 Five of the applicants already successfully operate Toronto stations and are seeking to improve their signals or add to their asset base. By licensing any one of them you can improve their financial positions but no real diversity would be added to the system.
1790 Five applicants are looking to introduce ethnic or religious services into a market where the incumbents have still not reached consistent profitability. Licensing these services could actually undermine existing operators.
1791 Three applicants propose FM news/talk in a market already well served with five stations currently operating in the format. Approval of any one of these proposals will simply shift radio listening, but not build it.
1792 And, of course, one is the original licence holder, who is seeking to obtain a licence that was previously revoked.
1793 Our application offers committed ownership, the highest commitment to Canadian content, the highest commitment to new and emerging artists, strong, experienced management and a new, independent local voice capable of competing with established players.
1794 MR. WEKERLE: The CRTC is all too familiar with people who enter the system believing they can deliver diversity and provide competition over the long term. In many instances, these operators, despite their best intentions, exit the market a short time later.
1795 That is not me. I'm here for the long haul. I'm a builder, not a seller. I have the capital and the personnel that is required to compete. I made this application on my own behalf. I assembled this team because I'm passionate about Canadian music and my local Toronto community. Under my ownership and control, Tower FM will make Toronto a showcase for underexposed Canadian musicians.
1796 I also have a plan to invest in the radio space. Toronto is first because of the timing of this call. This is only the beginning.
1797 We are neither unfamiliar with the industry nor deterred by the capital needs of start-ups. We have the proverbial deep pockets required to build a business and we have access to the talent needed to sustain a successful operation. Our innovative approach made us successful on Bay Street and we are confident it can be successfully applied in the media space.
1798 MR. FECAN: Good morning, Commissioners and staff.
1799 For obvious reasons, I can't be critical of concentration.
1800 MR. FECAN: But the system needs balance and that requires independent new voices with the financial and managerial resources to succeed.
1801 In my opinion, innovation is also more likely to come from a small private player, such as Wek, with a personal vision than a large corporation that is primarily focused on short-term profit consistence and consequently tends to play it safe.
1802 For virtually all of my professional life, I have championed Canadian artists.
1803 It is astounding to me that artists such as Feist, who have had breakout hits with massive airplay around the world, can barely get played in Toronto today. Ditto for Rufus Wainright, Kathleen Edwards and even Blue Rodeo. How is this possible?
1804 How can we be satisfied with a Canadian broadcasting system in Toronto when there is hardly any room for the kinds of singer/songwriters that dominated the Junos just a few months ago?
1805 There is definitely a gap in Toronto radio. This application's belief in Canadian music artists is what attracted me to this team. And I think Wek is the real deal. He's got the passion, tenacity and financial capability to see it through.
1806 MR. BARTON: So we have covered the "why us" from a system perspective and I will now begin to explain why our proposal is the best use of Toronto's last frequency.
1807 First and foremost is our choice of format. Triple A is a format that is presented a lot at hearings but in some markets has not made it to air. The reason for that is pretty clear: post-licensing in several markets a broader format became available. Particularly in markets smaller than Toronto where competition is fierce and ad dollars scarce, broadcasters sometimes made the "safe" call for their bottom line and chose a bigger "reach" format for their new service.
1808 However, in Canada's largest market there's room for the right Triple A format. The fact is that all of the "traditional formats" are covered in Toronto and in some cases in multiple ways. The opening -- the only opening -- is for Triple A. And most importantly, Toronto has the population base to support this format.
1809 Let's look at Vancouver as a proxy. At less than half Toronto's population, it supports two Triple A formats. In the past nine months these stations in combination have never earned a 12-plus share below four and in their key selling demographic of 35 to 64 have hit combined shares of 7.1. They are showing steady growth in time spent listening. Our business plan in an arguably more music-oriented market calls for a 12-plus share of only 3.2.
1810 This format is suited to Toronto and you need look no further than the rich and diverse club scene to verify this claim. Every Triple A artist in Canada makes their way to Toronto because they know they will find a fan base here and the venues they play will be sold out night after night, but they get little or no airplay on Toronto radio.
1811 MS McLAUGHLIN: Toronto is the country's largest and among the most profitable radio markets. Market revenues are estimated at $250 million and stations here have some of the highest PBIT margins in Canada, delivering average PBITs of over 30 percent year after year. Retail spending, which is the bellwether for radio revenues, is expected to grow by 28 percent by 2017. This is a very healthy commercial radio market.
1812 The introduction of our Triple A format will increase hours tuned to Toronto radio and have a stimulative effect on an already healthy market.
1813 Our research showed high levels of dissatisfaction among Toronto radio listeners. They described current formats as formulaic and observed that radio is fast becoming irrelevant, while others have simply tuned out, opting for music they download, find online or pirate.
1814 In focus groups, participants did not view Toronto as at the forefront of new music, nor was it seen as representative of the interests of music fans in the city.
1815 We asked consumers in our focus groups and consumer demand research to design a station that they would listen to. They asked for more artists from across the spectrum, less repeats, more intelligent discussion of music and an independent news voice to counteract the major station groups.
1816 Our format design was driven by what Torontonians say is missing. Tower 88.1 will bring listeners back to Toronto radio.
1817 MR. BARTON: Our programming approach is unique:
1818 - a playlist that is twice the size of the average Toronto Hot AC;
1819 - an unmatched commitment of 45 percent to Canadian artists;
1820 - better representation of new and emerging acts than any other station or applicant; and
1821 - the absolute lowest level of duplication with other stations.
1822 Our introduction of new music and a wider representation of artists' catalogues, combined with music-focused talk, will provide Torontonians with something that is distinctive in the radio spectrum and fills the gap in the market that they identified.
1823 In preparing our application we undertook extensive duplication analysis using a leading Triple A station, KINK-FM in Portland, Oregon as a proxy for Tower FM and compared it to what was being played in Toronto.
1824 We found that only 4.2 percent of the Triple A tracks being played on KINK-FM were getting airplay in Toronto. And we discovered that Canadian artists such as Feist and Kathleen Edwards were playing in heavy rotation on the U.S.-based Triple A stations but were getting little or no airplay in Toronto.
1825 Our playlist will rectify this problem. Of all the Triple A applicants before you, we offer by far the lowest level of music duplication. Our playlist's duplication will not exceed 5 percent of what's currently on the air in Toronto.
1826 Compare this to the playlists proposed by Newcap, Larche and Rock 95 and the diversity of our proposal comes into sharp focus. Twenty-five percent of Newcap's playlist duplicates what is already on air in Toronto. Rock 95 duplicates the market by 42 percent and Larche provides the highest level of duplication at 54 percent.
1827 Mr. Chairman, Commissioners, we think the lack of Toronto airplay for Canadian Triple A artists is a huge oversight, an opportunity missed. The artists think it is unforgivable and the audiences have reacted by going online. But don't take our word for it. Let's hear from the music community.
1828 Video, please.
--- Video presentation
1829 MR. BARTON: Addressing this gap in airplay for Canadian artists is what distinguishes our Triple A proposal from all the rest.
1830 Our application identified the problem facing Canadian artists and we provide the solution, a true Triple A format committed to Canadian artists featuring 45 percent Canadian content, an unparalleled commitment to Canadian new and emerging artists and led by a local owner with a passion for Canadian music.
1831 MR. BOYKO: At Stingray we have had great success in exporting Canadian content to countries across the world. Today 70 million subscribers worldwide enjoy our digital music platform and have access to Canadian artists and their music. In Canada, our reach is 22 million people.
1832 Tower FM's musical line-up will be added to our platform should it be licensed. This will provide a major benefit to Tower FM's Canadian artists who will receive exposure locally in Toronto and also nationally and internationally on our digital music platform. Tower will provide the world with a window into Toronto's Triple A music scene and will promote Canadian Triple A content abroad.
1833 We have the most diverse music collection in the country, 15 million songs, and our 20 inside programmers have deeper knowledge of the artists to be featured on a Triple A format than anyone in Canada.
1834 With 60 in-house engineers, we are also known as innovators in the development of music-based apps and new media platforms. All of this music, programming and research and development expertise will be made available to Tower FM.
1835 We have strong relationships with the labels, the managers and the artists and will be able to build bonds between the radio station and the music industry that would otherwise take years to form.
1836 Together with Wek, we will combine the stability and reach of traditional radio with the growth and innovation of our digital platform, all for the benefit of Canadian artists and Toronto audiences.
1837 MR. SPARKES: We have committed $5 million to Canadian Content Development and will deploy it in a manner that creates opportunities for Canadian artists.
1838 The Entrepreneur Program with Coalition Entertainment will give talented performers insights and skills needed to self-produce and navigate the business industry.
1839 Canadian Blast will give recording artists access to international markets and open export opportunities for them.
1840 And the Great Big Concert will put rising artists on stage in the same program as headliners, giving them invaluable experience in live performances.
1841 Our Ryerson Scholarship Internship Program will provide students with the financial incentive to realize their goal of being a broadcaster.
1842 Our funding proposal also makes special provision for Aboriginal artists, allocating scholarships in the Coalition Entrepreneur Program and through support of the Aboriginal Media Education Fund.
1843 MR. MILLER: Working with Accessible Media Inc., we will fund the production of the recording of artists who because of physical challenges might otherwise not conceive of following their dream of a musical career. Windows for broadcast of their music will be made available on the national AMI service and on Tower 88.1.
1844 This type of commitment to the physically challenged community is typical of Wek. For years Wek has actively sought out ways in which he can help the disabled community, be it through personally supporting individuals like me, making charitable donations or by launching initiatives like this one.
1845 Wek is an exemplary community partner and will bring his passion, determination, dedication and humanitarian spirit to Toronto radio should this application be approved.
1846 MR. WEKERLE: In conclusion, I would like to thank the over 5,200 interveners who tracked us across Twitter, Facebook and our Web site and made their interest in our service known to the Commission.
1847 Our supporters range from iconic Canadian artists to national and local Toronto emerging musicians, all of whom recognize the need for a station in Canada's largest city that is dedicated to showcasing Canadian talent.
1848 The support we have received from the Canadian and Toronto music communities, members of the public and businesses was overwhelming and speak to the demand and need for this proposal.
1849 Mr. Chairman, Commissioners, we are the new voice that is needed here in Toronto. We are independently and locally owned, well financed and have the industry experience that will be necessary to compete here.
1850 MR. SPARKES: In summary, our proposal represents the best use of the frequency because:
1851 - We provide a platform for disenfranchised Canadian artists. Our partnership with Stingray means that Tower FM's artists will not only be heard in Toronto but available across Canada where Stingray reaches 22 million Canadians per month and internationally, around the world, in 70 million homes;
1852 - We offer by far the lowest level of music duplication as compared to the other Triple A applicants;
1853 - We offer local Toronto ownership, financial depth and an experienced management team;
1854 - We fulfill the Broadcasting Act's call for diversity through our news, spoken word and especially our music; and
1855 - Finally, our commitment to 45 percent Canadian content, 50 percent of which will come from new and emerging artists, is the highest of all the applicants and demonstrates our dedication to showcasing Canadian artists on the country's largest stage.
1856 So to go back to where we started, over 20 applicants, one frequency, and we believe only one choice.
1857 We look forward to your questions and thank you for your attention. Please direct your questions to me and I will ensure that a member of our team provides a full response. Thank you.
1858 THE CHAIRMAN: Thank you.
1859 THE SECRETARY: Thank you very much.
1860 We will now proceed with the presentation by Phil Fontaine, Starfish Entertainment and Ms Robyn Dell'Unto, who are appearing as a panel.
1861 This panel has 10 minutes to make its presentation. You are welcome to start, anyone. I don't know what your order of presentation is. You may proceed now.
1862 MS DELL'UNTO: Yes. Okay, great. I can sing into a microphone but not speak into one.
1863 MS DELL'UNTO: My name is Robyn Dell'Unto and I'm a singer-songwriter and recording artist based in Toronto. Last year I released my debut solo record "I'm Here Every Night." I toured Canada coast to coast and received significant support in the form of licensing with features on CBC's "Being Erica," MuchMusic's "Degrassi" and "Harriet the Spy."
1864 My record received radio support in many Canadian cities like Ottawa, Montreal and Calgary on their Triple A stations. I also received radio support outside of Canada, such as on American college radio and South African public radio.
1865 I was not played in my hometown of Toronto, however, despite having a large fan following at live shows in this wonderful city. I have so many fantastic local artist friends who have enjoyed support in the form of licensing in radio but, as I, were not played in Toronto because their music was deemed not conducive to the available formats.
1866 I also found this to be true of established artists, especially the women I look up to, like Jill Barber, Melissa McClelland, Good Lovelies, Feist and Kathleen Edwards, who do not receive Toronto airplay despite their years and years of overwhelming critical acclaim.
1867 I think it is of great concern that many of our award-winning and celebrated Triple A genre artists are so underexposed on Toronto radio to the degree that a friend recently asked me if I had ever heard of a new artist named Ron Sexsmith, which is Canadian blasphemy.
1868 Tower 88.1 would be an invaluable gift for emerging artists like me and a well-deserved radio home for established artists like those aforementioned.
1869 A 45-percent Canadian content, half comprised of emerging artists, is music to my ears, not to be too cheesy. I'm so excited about this proposal, both as an artist and a listener, and I look forward to listening to Tower while singing along loudly in the shower.
1870 MS de CARTIER: Good morning. My name is Susan de Cartier and I am the owner of Starfish Entertainment, a Toronto-based artist management company. My clients include Blue Rodeo, Jim Cuddy, Greg Keelor, The Sadies, Oh Susanna, Skydiggers, as well as developing artists Belle Starr and Daniel Romano.
1871 I am here to support Tower FM because Tower will fill a huge hole in Toronto's commercial radio market. The blunt truth is, a vast majority of artists, including mine, are completely shut out of radio airplay in Toronto, as there is simply no format that will play Triple A music.
1872 Blue Rodeo, one of the artists on my roster, is a band that, for 25 years, has helped to create and define a uniquely Canadian sound. They have won 11 Junos, have a star on the Walk of Fame, and earlier this year the band was inducted into the Canadian Music Hall of Fame.
1873 However, there is no radio station in this market that will play their current album.
1874 We simply do not get airplay for new albums, albums that are being critically received as among the best of the band's career.
1875 It is important to note that in supporting a band, radio stations do more than spin records. They present shows. They have on-air contesting. They host live remotes, and they conduct interviews.
1876 However, it all begins with the station playing your song. Without that, all of these ancillary but critical levels of support are unavailable to the artist.
1877 The same is true for Jim Cuddy. Jim released a solo album in September 2011 that garnered three Juno nominations, and we toured over 45 shows, including a sold-out Massey Hall, yet his single "Everyone Watched the Wedding" could not be found on Toronto radio.
1878 This is not just about the Starfish roster, it's about all of the talented Triple A artists across the country who have no access to commercial radio in Canada's largest and most influential market.
1879 The licensing of Tower FM can change that.
1880 I support Tower FM for a number of reasons: one, their goal of 45 percent Canadian content; two, their commitment to play upwards of 20 percent of new and emerging talent; and three, Tower FM can help bring diversity back to Toronto radio. Not only will they play artists like Blue Rodeo and Jim Cuddy, but artists like Whitehorse, Steven Page, Gord Downie, Kathleen Edwards, Sarah Harmer, and so many more.
1881 There is a significant audience for this genre of music in this, the largest city in the country, and yet radio, one of the best tools at our disposal for reaching large numbers of people, is unavailable to these artists.
1882 Despite this, artists are working hard to find audiences, and through talent and hard work, many are succeeding.
1883 Whitehorse, for example, just played a sold-out Winter Garden Theatre, and is planning to play Massey Hall in 2013. Imagine what these artists and their managers, agents, record labels and promoters could do with support from radio.
1884 It is time that these disenfranchised artists had a radio voice, a voice that is distinct, and not merely another radio station duplicating what is already available on Toronto radio.
1885 Thank you for this opportunity to share my thoughts.
1886 MR. FONTAINE: Mr. Chairman and Commissioners, my name is Phil Fontaine. I am the former National Chief for the Assembly of First Nations, but I am here not so much as a former politician, but as a fan of Canadian music, by Canadian artists; in particular, Aboriginal music, by Aboriginal artists.
1887 I want to say a quick word about my dear friend "The Wek".
1888 When I first heard of Mike Wekerle, he was, as noted by Paul Sparkes, the Wayne Gretsky of Bay Street. Gosh, I thought, this guy must be absolutely the best, and I have learned that he is and has been the best.
1889 I want to make a few quick points about why I support Tower 88.1.
1890 It's about, one, the Wek, a proud Torontonian, a very successful Canadian citizen, and it's about what the Wek will bring to Toronto radio, his business savvy and his passion for Canadian music; for example, his work with disadvantaged youth in the Jane-Finch area of Toronto.
1891 Tower FM's strong and impressive First Nations' oriented Canadian Content Development initiatives: one, the Aboriginal Education Fund; two, Coalition Artists/Entertainer Program, which will offer two scholarships per year to promising Aboriginal artists; and three, of course, this is consistent with Wek's support for our people, Aboriginal people, and especially for the music, which is a vital part of First Nations' culture.
1892 Tower FM will be supporters of First Nations' musicians such as Derek Miller, Digging Roots and Eagle & Hawk.
1893 The fact is that a lot of First Nations' music is the kind of music that Tower FM will be playing in the station's mix.
1894 Thank you.
1895 THE CHAIRPERSON: Thank you.
1896 We will begin our examination with Commissioner Simpson.
1897 COMMISSIONER SIMPSON: Good morning.
1898 I am going to start with dessert and get to the vegetables last.
1899 COMMISSIONER SIMPSON: Ms Dell Unto, could you tell me what makes an artist an alternative artist?
1900 And speak from the perspective of an artist. I am going to ask the programming question later.
1901 As a songwriter and singer, what makes that classification as an individual, in your mind?
1902 MS DELL UNTO: As long as I'm dessert, I will answer your question.
1903 MS DELL UNTO: Firstly, for me, it's a format where the production -- I feel like it's very much production-based, but also based on the storytelling in the songs, which you do find in pop music and in electronic music and rock music, and all those things, but it's the specific storytelling.
1904 I think that is supported by a certain type of production that isn't dance-oriented and is, maybe, based on more acoustic instruments.
1905 But you find electronic music that is in the Triple A format, such as some things that Feist does, or Bon Iver.
1906 I think it really depends on kind of, like, the outside grey region from what is acceptable in the dance format and pop format, and what falls outside of that, really. It's what it's not, not what it is, to me.
1907 COMMISSIONER SIMPSON: Ms de Cartier, I believe you said that you are an owner or a manager of a record label or an artist management company.
1908 Is that correct?
1909 MS de CARTIER: An artist management company, yes.
1910 COMMISSIONER SIMPSON: When you are counselling your stable of talent, do you feel compelled to guide them into a choice, or do you, as a business planner, make a conscious effort to steer away from the mainstream, or do you feel compelled to try to go to what has traditionally been the mainstream, so that your artists and yourself can be successful?
1911 Are you walking the high or the low road, and why?
1912 MS de CARTIER: Well, that's interesting. There was a time when I managed Blue Rodeo -- I have managed Blue Rodeo for 23 years now, and there was a time when I managed Blue Rodeo when they were played on all four formats of radio. So they were considered a mainstream band.
1913 As radio has gotten into narrower and narrower classifications, Blue Rodeo is unable to find a home on any radio station in this market.
1914 So it's less that I am classifying my artists -- I guess it's my taste. As an artist manager, I am not making -- you know, it's more like a marriage. I mean, whose music do I want to go and see 40, 60, 150 times and still enjoy myself and be able to sell that.
1915 This seems to be that genre for me, and yet, in this market certainly, there is no home for it on radio.
1916 And I don't think that I am alone in wanting -- that's the music I want to listen to, there just isn't a place to listen to it here.
1917 COMMISSIONER SIMPSON: Mr. Fontaine, I take your commentary with respect to the goodwill and work of Mr. Wekerle at face value.
1918 I would like to ask you, from your position in representing First Nations, are First Nation artists shut out, or are they starting to be brought into more of the mainstream in Canadian broadcasting?
1919 MR. FONTAINE: I look to Robbie Robertson and Buffy Sainte-Marie as distinct stars, and they are of international renown.
1920 I believe that there are many, many Robbie Robertsons and Buffy Sainte-Maries in the Aboriginal communities. What they have lacked is exposure, dedicated exposure, so that music fans from every part of the country are actually able to access music by Aboriginal artists, distinctive Aboriginal music.
1921 They just haven't received the kind of exposure that I believe they merit, and Tower 88.1 will, in my view, afford them the opportunity to become stars.
1922 COMMISSIONER SIMPSON: Just as a side note, I was at the Aboriginal Achievement Awards and I experienced firsthand some pretty amazing talent that I think is well-deserved of more airplay.
1923 This is a question for Mr. Boyko.
1924 Mr. Boyko, do you have a Triple A format channel on your music service?
1925 MR. BOYKO: We don't have that format exactly, but we have many Canadian channels. We have 16 channels, but not this format exactly.
1926 So it would be the first one that we would have.
1927 COMMISSIONER SIMPSON: How do you monitor what is listened to and what isn't, because, obviously, you are a programmer as well as a provider. How do you make your programming determinations, to the extent that you are obviously interested in the Triple A format today?
1928 MR. BOYKO: Luckily, because of IPTV, over the last year we have been able to really get all of the listeners, because on IPTV, with SaskTel, with Bell Fibe, with TELUS, everything is measured with IP.
1929 So now we not only know what people listen to, but every song, when they switch channels.
1930 So we are just, for the first time in the history of our company, gathering information.
1931 COMMISSIONER SIMPSON: From my reading material, I get the impression that you came into this proposal a little later than some of the others, but I was curious as to what your relationship will be.
1932 Are you going to be a vendor, a consultant, a partner?
1933 Is that a fair question?
1934 MR. BOYKO: I have been friends with both Paul and Michael for more than ten years, so we have done many different ventures together.
1935 In this case, no, we are looking to become partners in the future. Nothing has been established yet, but I am happy to be with Paul and Wek.
1936 COMMISSIONER SIMPSON: I have a few housekeeping questions on your application.
1937 Just for the record, although I think it's clear, in your supplementary brief, Mr. Sparkes, there was a question on a condition of licence commitment with respect to Canadian content, and you, on page 11, I believe, made a definitive commitment to accepting a condition of licence of 45 percent of Category 2 Canadian content, and it seems fairly clear to me that you are accepting that as a condition of licence.
1938 But it was brought to my attention that, on page 19 and a few other places in the document, you hadn't made that definition of commitment to COL.
1939 So I was just wondering, for the record, if you are prepared to commit on the record to 45 percent of Category 2 music, specifically between the hours of 6:00 a.m. and 6:00 p.m., Monday through Friday.
1940 MR. SPARKES: Yes.
1941 COMMISSIONER SIMPSON: Great. That was easy.
1942 I have another housekeeping question. With respect to CCD -- and this may have been an oversight, but, again, it was brought up. There is a requirement on stations that are producing certain revenues -- I think it's $1.25 million per annum -- there is a requirement that 15 percent of your CCD contribution is to go to the Community Radio Fund, and this did not appear anywhere in your submission.
1943 If it didn't, for a reason, are you asking for an exemption from this to perhaps put that money into something like FACTOR?
1944 I was wondering if you could clear that up.
1945 MR. SPARKES: No, we are not asking for an exemption. We believe that this is a CCD package that is needed in Toronto, and we fully support it.
1946 COMMISSIONER SIMPSON: But under the amended section 15 of our regs, it is a requirement.
1947 I will read it to you: "In 2011, the Commission amended section 15 of the Radio Regulations, 1986, which now requires a licensee whose total revenues are more than $1.25 million to make at least 15 percent of its basic CCD contributions to the Community Radio Fund of Canada."
1948 Were you aware of this?
1949 MR. SPARKES: Yes, absolutely.
1950 COMMISSIONER SIMPSON: It seems to be a deficiency that escaped perhaps you and us, so I am looking for acknowledgement that you would amend your CCD and file to have it either include the Community Radio Fund or ask for an exemption.
1951 So, which is it?
1952 MR. SPARKES: Yes, we will come back to you with our full answer on that.
1954 MS McLAUGHLIN: Yes, we will amend it. We are not asking for an exemption.
1955 COMMISSIONER SIMPSON: Okay. Like I said, it's housekeeping.
1956 There is obviously something happening in the music business, and I am trying to come to a determination in my own mind as to whether it's an anomaly because of Toronto or it is something that is more broadly sweeping.
1957 In your orals this morning, you brought up something that I was going to bring up, which is the fact that two radio stations in Vancouver have adopted a Triple A format, perhaps more stringently than the other, but both of these stations -- one having deeper pockets than the other -- are still -- you know, the needle was moving with at least one of the two broadcasters in the right direction, but it's obviously going to take a long time.
1958 I guess my first question is: The Triple A format that you have identified through your research and your programming instincts, coupled with your business plan, which shows that you are going to turn the corner in Year 3, is this because you are going to be operating, potentially, a licence in the largest market, or in a market large enough to support Triple A, with a greater chance of financial success than what we are seeing in Vancouver?
1959 Or, is there something else?
1960 MR. SPARKES: Well, Toronto is the largest market in Canada, and we believe that it can sustain the format that we are proposing.
1961 I will turn it over to Debra, who has done the research to support that.
1962 MS McLAUGHLIN: It's actually a combination of both the financial realities of this market -- it's a very healthy market. The PBITs are excellent, and the reason the PBITs are excellent is because the demand for airtime in Toronto is so large that it just pushes the rates up and it shuts out a lot of advertisers on the retail level who simply cannot afford to get onto radio.
1963 So there is the financial aspect of the market, but then there are also the realities that this is the largest music market in Canada.
1964 As you saw in our video -- and we have heard time after time -- people migrate -- artists migrate to Toronto, because when you don't get airplay, how you have to make your money is in actually playing clubs, and going grassroots to get support. And they sell out night after night after night.
1965 When we did our research, we brought people in, totally open-minded, to see -- I mean, I suspected, and a lot of people suspected, given the artists that were being played and the type of formats they hear, that the hole would be Triple A. But we didn't go in and test that specifically. We asked people to design it, and they sat there and they named clubs and artists that they have seen, and airplay that they didn't get.
1966 And the way they were getting that music was by going on the internet to search for it.
1967 So when you take the financial aspect, the interest of the consumers, and the narrow gap in the market for an entrant, and you put that all together, I think it is the best market in Canada.
1968 If there is any market in Canada in which Triple A will thrive, this is it.
1969 COMMISSIONER SIMPSON: Just following on the programming issue -- and it really goes back to my very first question -- I have heard Triple A artists and their music described as a little bit quirky. You know, I think all the way back to perhaps one of the first artists -- you know, the whole college band -- you know, Dave Matthews and that group were an example of that.
1970 But we all know that they are a success now -- Bruce Hornsby and all of that.
1971 Now we are into a whole new artist group.
1972 What are you going to do that is going to be different to be able to bring audience to your station who are attracted to that type of music?
1973 You know, it's the chicken and the egg thing. It's like the internet. You know, you first have to drive them to the internet.
1974 How are you going to drive the market to your product offering by externalizing your message to those who aren't listening to you yet?
1975 MR. BARTON: Mr. Commissioner, I think that Robyn did a fantastic job in explaining what a Triple A artist is.
1976 When you are looking at Triple A, it is on the fringe of pop music, and that has shifted over the past few years. It used to be that adult contemporary was a safe haven for the singer/songwriter, and we are seeing that that's not the case any more. Adult contemporary as a format, and Hot AC in particular, is so influenced by Top 40 that artists that used to thrive on Hot AC and adult contemporary, like a Sarah McLachlan or a Bruce Cockburn, are just not getting the exposure any more.
1977 They now find themselves in the Triple A tent because they are of that singer/songwriter genre.
1978 When it came to the research, as Debra mentioned, we allowed the focus group to design the format. This is the format that they said would draw them back to radio. We know from our research that we have the right format.
1979 If I could just take a moment to compare us to the other Triple A applicants; we mentioned that we have the lowest duplication with existing stations. We are under 5 percent. The next closest contender would be Newcap, with 25 percent of their playlist already represented in the marketplace.
1980 We have the highest CanCon commitment because we know that Canadian artists are such a huge part of this format, particularly today. When we are taking a listen to KINK FM in Portland, to calculate our duplication with what it would be in the marketplace, to hear all of these great Canadian artists being played there, like a Kathleen Edwards, like a Feist, that aren't being played in Toronto -- if CanCon can be a huge part of the format in the United States, we know that it is going to be an enormous part of the format here in Canada.
1981 In terms of our spoken word, it really, really reflects Toronto, not just because we are the only Toronto owner/operator to come to the table with a Triple A format, but because, with our spoken word commitments, we are really going to reflect what Torontonians think.
1982 We have features like our Toronto Street Beat, which airs on the half-hour each weekday morning, where we have Torontonians speaking back to us about the issues of the day.
1983 One spoken word feature that we are very, very proud of is Toronto Heroes, and I am going to ask Spencer to talk about that for a moment.
1984 MR. MILLER: Toronto Heroes is an initiative that we are going to do with the radio station, which will focus on Torontonians that don't necessarily get the spotlight.
1985 In my career, and with my show that I have now, I have been very fortunate to interview Bon Jovi and all of these big musical acts, but with Toronto Heroes, it will give me another platform to focus on Torontonians like the Emergency Room nurse, like somebody that coordinates a soup kitchen, or, more specifically, like the person who is spearheading this application today, Wek, because I know firsthand that, without his support, I would not have been able to do my job to the capabilities that I am able to do them at today.
1986 It is because of people like him that continue to contribute to me time and time again that allows me to do what I can.
1987 So that is what I am going to focus on with Toronto Heroes.
1988 COMMISSIONER SIMPSON: Excellent.
1989 Mr. Sparkes, on the issue of distinctive voices and news and spoken word content, this is going to be a standalone operation, at least initially, and aside from what burdens and responsibilities you are going to put on your presenters with respect to content, what is the plan for the news voice for the station?
1990 MR. SPARKES: We are going to have news and spoken word, as we just talked about through Spencer.
1991 We are not going to be a news talk channel, we are going to have sufficient news and information that every person in Toronto, every listener, wants to hear, on the hour.
1992 Dan, could you just run through exactly what we are going to do there?
1993 MR. BARTON: Sure. I will very quickly take you through what our newscasts are and explain the logic behind it.
1994 We will have three-minute newscasts weekday mornings at 6:00, 7:00, 8:00 and 9:00. Our Toronto Street Beat will air on the half-hour in the morning, 6:30, 7:30 and 8:30.
1995 Again, this is a news presentation, as well, but it includes the view of the street, of local Torontonians.
1996 In the afternoons, weekdays, we will have a one-minute newscast at 4:00, 5:00, 6:00 and 7:00. Saturdays and Sundays we will have five-minute newscasts at 7:00 a.m. and noon.
1997 When we were designing our newscasts, and our spoken word content in particular, we were very conscious of the fact that it was the quality of the spoken word that was most important versus the quantity. I know there can be a tendency to appear before the Commission and promise crazy hours of spoken word, that we are going to do 25 or we are going to do 30.
1998 We didn't take that approach. We are responsible broadcasters, and we understand, being in the Toronto market, a market that has lived with PPM for a while now, that too much talk generates tune-out.
1999 What we need to do is have very focused, specific talk that is going to reflect Torontonians, but doesn't go to the extreme that they are dial hunting.
2000 COMMISSIONER SIMPSON: Your primary demographic is 35-44 skewed middle aged, I suppose, or actually it's not by my standards -- young people.
2001 COMMISSIONER SIMPSON: But in your financial projections going back to the turning the corner scenario of Year 3, what stood out for me was in the second year of revenue there was an indication that you were going to be relying on about a 20 percent bump in revenues from -- you are calling it new revenues from new advertisers.
2002 I'm curious as to whether that is new advertisers to the station from another radio station in terms of cannibalization, or are you thinking about new revenue from advertisers who haven't had a product advertised that fits their profile as an advertiser?
2003 MS McLAUGHLIN: I'll take that.
2004 What we are talking about is the pent-up demand that I was speaking to earlier. There really is -- this is the most expensive market and so there really is a whole class of retail advertisers that are just shut out for reasons of price and for reasons for format suitability.
2005 You know there are clubs that --while the dance clubs are well looked after in this market, but there are clubs who have artists in the triple A format that would find no point to advertise on a large number of the stations that are available to them.
2006 There are also, you know, music-oriented businesses.
2007 There are also just simply businesses of general interest, clothiers, restaurants, that because of the price and because of the need to buy three or four stations these stations because of the concentration of ownership it's very hard to find a single station.
2008 One of the advantages we bring to this market is, as a single owner -- and I know you hear all the time that there is no advantage to being a single owner but, in fact, if you are highly efficient, if you have a brand, then advertisers will come to you because what they really are looking for is to put their product and their placement on a station or a media vehicle that speaks to their audience and will be highly efficient in reaching our core demographic.
2009 People, because of the type of format we have without the high repeat, will be able to spend longer times with us, which is a really important aspect for advertisers.
2010 You don't have to buy a tonne of ads across the weeks to try and reach people because they are tuning in and out to get a decent frequency. You can actually place it in a small short campaign and have the impact that on those collective buys you have to buy a lot more weight on.
2011 MR. WEKERLE: I also think that the music industry, outside of the musicians, also will have a voice.
2012 I think, you know, having been a musician, not very commercial obviously -- but in the past, you know the music stores, the area where people get together in coffee shops, I think that voice in certain areas of grassroots-oriented Toronto, having been a Torontonian for 48 years -- I have not seen that. And I think now is the time.
2013 We have seen there is a shifting in North America and parts of the U.S. and other parts of the world. I think there is a large area that will come to the station and advertise because of the demand and musicians are going to react towards this format.
2014 COMMISSIONER SIMPSON: Your business plan -- and I would have expected nothing less from this group -- is aggressive. It's ambitious and it's expecting revenue returns and PBITs that are in the neighbourhood of a lot of the established broadcasters which, I think, is totally predictable given the fact that if they weren't you wouldn't be here.
2015 But, going back to your CCD commitments, we heard yesterday from Newcap that when they came out of the box for the $12 million commitment they thought they were going to be in the middle of the pack.
2016 And I'm not trying to put you into a corner here but I'm just curious as to -- giving you full marks for prudency and good business judgment, where did the 5 million come from as it applies to your business plan, because it's landing right now on the short side of what we have seen at the table.
2017 MR. SPARKES: Well, we think that the 5 million is a reasonable amount for CCD based on the projected performance of the station over the number of years that we have run our numbers.
2018 COMMISSIONER SIMPSON: It's prudent, in other words?
2019 MR. SPARKES: Yeah, absolutely.
2020 COMMISSIONER SIMPSON: Okay. Now the vegetables -- I'm sorry, Mr. Wekerle, I don't mean to -- broccoli is good, full of antioxidants.
2021 COMMISSIONER SIMPSON: You are big game hunting for squirrels with a bazooka. I'm curious. It takes quite a lot to bring the likes of a Mr. Fecan or Mr. Boyko to the table and I'm just curious. This obviously is part of a bigger strategy, but we'll talk about that in a minute.
2022 Coming out of the box, if you are successful, are you going to be -- aside from being the guy with the chequebook and the biggest skin in the game, are you going to be hands on in running this business for a while?
2023 MR. WEKERLE: Thank you, Mr. Commissioner. The answer is yes.
2024 Again, my career in being affected by music goes back to a very young age. You know, I remember being a road hand for Gasworks and when Coney Hatch came out with Monkey Bars, you know.
2025 This dates me back a bit in time but I have been passive about music and I have been passive about Toronto for a long time. And the guys in the band I saw them grow up, whether it be Andy Curran or Steve Shelski or my good friend, Paul van Remortel, prior to being replaced by Carl.
2026 I think that there is room for a format of this nature not just in Toronto but outside of Toronto. I do have ambitious plans.
2027 Again, I started working at 18 years old in the Toronto Exchange floor as a runner for orders. You know 15 years later I owned my own firm.
2028 I believe that hard work, dedication and entrepreneurial spirits will give the emerging artists a place, and there is place both for emotional dollars and physical dollars to be placed in this business.
2029 I strongly believe that with the passion and the wherewithal of this group we are going to be a success and we are going to make a difference. You know the only thing that distinguishes anything from everything, the one word that comes out is difference. We want to make a difference. We want to do something that is going to be different.
2030 We want to take these emerging artists that have great reviews -- I know personally many of these artists and, you know, that's what I listen to. Again, I believe the convergence not just from other stations to this listening platform is from other mediums. I think this is a successful format and it has been proved outside of Canada.
2031 Thank you.
2032 COMMISSIONER SIMPSON: All right. You are more than welcome.
2033 Given your relative success in other -- let's say Bay Street as opposed to Main Street activities -- would you describe to me what the management structure is going to look like for the first few years?
2034 I'm giving you full marks for stewardship of the enterprise as a businessman but, you know, go back and explain to me a little bit about how the management structure is going to look more from governance than an operations standpoint.
2035 MR. WEKERLE: Sure.
2036 Again we're a builder or I'm a builder. I believe in the best place to start is finding people that are better at their specific job than you could be. You know I think control is relevant in the sense that you have to have ownership of your own domain.
2037 But I think that following on and handing the mantle over to people that have a long track record like Dan or people that can come alongside and help us that have an experienced background in technology like my friend Eric to the right of me...
2038 I think Paul is my partner in difference capital and I think his experience -- and I have known Paul for over 15 years. I have followed his career with admiration from politics to the entrepreneurial spirit which he joined Ivan with.
2039 I believe that, you know, team building is the reason for success and team building is the reason for prosperity and it also creates a long term strategy that I hope to employ here.
2040 And, as I have proved in previous operations, you know, we build the business. It takes three to five years to build a business and 10 years to build a brand. We believe we can do that in this market in a shorter timeframe and a more profitable timeframe because of the introduction of this format.
2041 Thank you.
2042 COMMISSIONER SIMPSON: Will you be president and CEO or chairman?
2043 MR. WEKERLE: I will take the role of CEO, unless we find someone that is more sufficient that has more talent and more experience in that area. I will always be a director. I will always be very much involved.
2044 Again, if you look at my tenure at First Marathon or GMP Securities I never had a title.
2045 I lead by example in all my businesses. I never had a title that elevated me that I needed to walk around with. I believe that you lead by example. You provide the titles for the people that need the titles for their business practice and the business practice is both commercial and also artistic and cultural.
2046 Thank you.
2047 COMMISSIONER SIMPSON: You had indicated in your submission that one of the other activities you will be working on will be the establishment of a technology fund. How is that going?
2048 MR. WEKERLE: It's going excellent.
2049 Again, you know, we are in the process with our funding partner, Dundee Corporation. We always look to be prudent in business. So we brought in a partner, sharing the economics in our technology business.
2050 We found an innovative tax vehicle that has $155 million of operating tax losses, $11 million of operating losses. We think that provides the benefit.
2051 We have now engaged in one investment that is going to be a standalone investment. I think we will be a leading edge for Canada on a platform that involves a New Age demographic that goes from 16 to 45.
2052 And I believe that, you know, in looking at that specific business we are now undertaking which we have now on a confidential basis hired an individual from another major brokerage firm that has European and Canadian experience in banking.
2053 Again, we want to build the best team in anything we do. We want to do it with prudence and we want to make sure we are capitalized.
2054 In doing so, I have always been one that has overseen whether it be from a compliance point of view, an operational point of view or even a spiritual point of view. I think you have to be there. You have to be committed to make a success.
2055 COMMISSIONER SIMPSON: Doing a follow-on to that and looking into your growth plans, there had been an indication that you were contemplating at some point that this particular asset might become part of that fund and I was curious as to why.
2056 MR. WEKERLE: Not of this fund, no. We have not contemplated that at this point.
2057 I'm making the application 100 percent on my own. In the future we have talked about a media fund to be rolled out over the latter part of this year or in the new year.
2058 Again, you know, we talk about a corporate reorganization at some point in the future. You know it will always be controlled, the buck stops here. I'm always going to be the person that's going to put their headline to this initiative and I will always be the controlling shareholder.
2059 So therefore, you know, again, hopefully time and some smart initiatives and luck will take our way to make us a definite player in this industry. We would like to take that opportunity in this application to make this a first step.
2060 COMMISSIONER SIMPSON: I think this is going to be my last question unless it brings otherwise.
2061 But I believe it's not confidential with respect to some of your other holdings and other broadcast entities. Was that made public?
2062 MR. WEKERLE: Yes.
2063 COMMISSIONER SIMPSON: Okay.
2064 You are actually in the interesting position of pitching against a company you have a shareholding in, and I was just curious as to how that's playing in your area.
2065 MR. WEKERLE: I think they think I'm a different vegetable right now.
2066 MR. WEKERLE: No, I have a great relationship. I have a lot of respect for the Steele family. 28 years ago was the first annual meeting of the directors there that I attended.
2067 I have been a long term shareholder. I have been involved with the family for 28 years. I respect what they have done.
2068 When this came available I made it clear my intention to operate something, having seen the industry from afar. And I strongly believe that as a Torontonian the passion of the music that's being presented here, that's as much of a reason other than the fact that I have a long term investment in Newfoundland Capital Corp.
2069 I respect my investment. I am dedicated to the long term investment of the team. They are an excellent team and this is really a start into an environment where I believe strongly and passionately about the music, the musicians and the vision that this team has brought.
2070 COMMISSIONER SIMPSON: I think I do have one more question.
2071 You're obviously very passionate. What is very cool today in the world we are in is that we have generations that have grown up with rock and roll. Everybody has or plays a guitar and it's not uncommon to see very established business people have a very strong concurrent passion with music and the arts, the likes of which our fathers didn't. So I don't question your enthusiasm for the industry.
2072 But as -- you know you are a Bay Street guy. What is it that you like about radio and broadcasting in general?
2073 MR. WEKERLE: Well, I look at this as the arts in general. I also sponsor the Opera Atelier and I have for the last few years as the major sponsor, the largest sponsor. We are bringing a performance to Paris and the Palace of Versailles this weekend coming up.
2074 I believe the arts is underserved in Canada and it's, you know, almost a duty and a passion to take it further. Again, there is emotional dollars and physical dollars, as I said before.
2075 What I believe that is important is that you give back. You know I'm a very major sponsor of Bloorville MacMillan; CAMH, Canadian Association of Mental Health; a very strong initiative of Youth Unlimited and Jane and Finch where I have been involved for 10 years and adopted a foster son.
2076 I'm a single father with five kids ranging from 11 to 21. My children listen to music and they adopt my music just because of the parental guidance that I show them. I'm excited -- hopefully they do.
2077 Radio is local. It's a good business. I have seen it from afar. I have seen it from within as we have had strong analysts throughout my career covering the area.
2078 I know most of the radio players in Canada. They have been friends of mine for many years as being on the south side of the brokerage industry and I saw how the interesting and business aspects of that industry make it profitable.
2079 And, again, Toronto is my town.
2080 COMMISSIONER SIMPSON: Thank you, those are my questions.
2081 THE CHAIRPERSON: Thank you.
2082 I have got a couple questions and I think my fellow Commissioners and the Vice-Chair has some as well.
2083 I want to go back to the issue of structure and governance. I think I heard you say you are 100 percent shareholder right now and you will continue to exert control over the company in the years to come.
2084 When you applied for this licence you were also part of Galileo Global Equity Advisors as well which you no longer are and now you and Mr. Sparkes are part of another organization called Difference Capital, I guess.
2085 To what extent was your application part of your relationship with Galileo back then?
2086 MR. WEKERLE: It was just the timing. It had zero influence. It was the timing.
2087 We had looked in January to establish a partnership with Galileo. We couldn't agree on some fundamental partnership issues and we decided with the team that we walked in with -- the primary nucleus of that team was Paul Sparkes, Henry Kneis and Michael Wekerle and we decided to go out on our own. Hence, we started Difference Capital.
2088 The timing of the application was at the time in the middle. Had it been two weeks later it would have not said Galileo on it.
2089 It had no -- did not resonate in our funding. It didn't resonate in our ideas. It didn't resonate in our future plans for both this application and within the business within Difference.
2090 THE CHAIRPERSON: Do you have a full and complete severance from the relationship in Galileo or can -- for whatever reason someone decided at some point in time to come back at you for whatever reason, various purposes or otherwise with regard to this application.
2091 MR. WEKERLE: Absolutely.
2092 MR. SPARKES: We didn't close the partnership. The partnership didn't close.
2093 MR. WEKERLE: We didn't sign any documentation and, in essence, we severed ourselves prior to leaving and we are, again, with counsel on our side we have no undertaking or relationship or any liability that's associated with Galileo.
2094 THE CHAIRPERSON: Has Galileo confirmed that in writing that they see no relationship between this application and your relationship with them in previous life?
2095 MR. WEKERLE: Yes, they have. They have provided a termination notice that we had pushed them towards. And, yes, we have received the terminated relationship notice even though I don't think we even got a pay cheque.
2096 MR. SPARKES: No, the partnership didn't close.
2097 THE CHAIRPERSON: But what I am looking for is a document that you could file with us that they indicate that they will have no recourse at all.
2098 MR. WEKERLE: Yes, we can file that.
2099 MR. SPARKES: Sure.
2100 THE CHAIRPERSON: Okay.
2101 The information that we have indicates that your relationship with Newcap is at a level -- your investment with Newcap in the -- can I use a number? Is that number public?
2102 MR. SPARKES: Yes. I think it's 9 percent. Yeah.
2103 THE CHAIRPERSON: Okay, so it says about 10 percent.
2104 MR. WEKERLE: Just below that. It's just below, between 9 and a quarter percentage. It has some variations based upon some of my family holdings.
2105 THE CHAIRPERSON: Okay. Well, that's what I was interested in, was it above 10 percent or not because sometimes 10 percent draws certain --
2106 MR. WEKERLE: No, not at this point. It's below 10 percent. That is correct.
2107 THE CHAIRPERSON: Okay. Can you confirm that in writing as well just so we have that on record?
2108 MR. WEKERLE: Yes.
2109 THE CHAIRPERSON: There are a number of type A personalities in this front row and you continue to say that you are going to be 100 percent investor and call the shots on everything. Somehow I find it hard to believe that with the principals that are on this front row they are going to sit back and take a back seat and have no call on anything at all.
2110 MR. WEKERLE: Well, I don't think it's going to be someone -- I said the buck stops here, meaning that I am going to take responsibility for the vision that we are presenting here.
2111 But I'll pass it on to my good friend, Ivan, to discuss you know his role. He is a legend. He is an icon. I'm very honoured and it's a pleasure to have him sit on this panel.
2112 But in looking at the people that we assembled, we tried to find the best and most successful group, including everyone sitting at the table in behind me.
2113 THE CHAIRPERSON: I guess the reason I'm asking the question, and I'll let Mr. Fecan answer the question, is if you are selected one day and suddenly we know that on record that you have got 100 percent equity in this, and then the day after there is a reorganization and suddenly there is five more people that are there, may all be Canadian, they all meet the Broadcasting Act obligations. But it's sort of we are making a decision based on the facts in front of us and right after those facts are -- the ink is dry on this thing there is a structural change that we have to approve or whatever has to happen.
2114 I just want to get clearance as to whether the structure you are putting forward before us today is definitive or whether it's fluid.
2115 MR. WEKERLE: I'm going to be in control. We do not intend to do anything that is going to be untoward towards revocation.
2116 And, again, if you look at everyone here they are coming in as an advisor to me and they have a long term relationship with me. I believe that, you know, growth is dependent upon strength in management and strength in vision and that's what I have tried to accomplish here.
2117 And, yes, I will be in control and, yes, I am the 100 percent owner. I have proceeded down this path to do that.
2118 THE CHAIRPERSON: Okay, thank you.
2119 Mr. Pentefountas, Vice-Chairman...?
2120 COMMISSIONER PENTEFOUNTAS: Good morning, gentlemen and ladies.
2121 Mr. Wekerle, I appreciate your passion about the music and about the artists creating that music. But why short change them on CCD?
2122 MR. WEKERLE: Paul, do you want to answer that?
2123 MR. SPARKES: I don't think we are --
2124 MR. WEKERLE: Yeah, I don't think that it is -- again, we as a Torontonian I believe in giving back. I believe the number is prudent. I believe that a profitable station has more to give back to the community.
2125 If you look at our initiatives and you look within the initiative like the Great Big Concert it has a charitable end to it as well. Not only are we going to support the artists but we are going to support the Toronto community and not only are we going to go outside -- and I have done this in the past where I have supported the Toronto Music School here and a Toronto music program in some of the roughest areas in Toronto.
2126 I believe we are not short changing anybody. I just think you have to approach it with a view that you are going to be profitable. I think three years is an environment where I think we can -- we need to be aggressive with our business plan as it is.
2127 COMMISSIONER PENTEFOUNTAS: The initiatives you mentioned, is that above and beyond your CCD contributions?
2128 MR. SPARKES: Well, I think -- well, you know, I wouldn't say we are short changing Canadian artists at all.
2129 I think we are giving them a platform that they don't have currently. We are going to give them a platform that they aspire to be on which we feel they are not today. In the U.S. it is -- there is 132 triple A stations in the United States. In Canada there is three.
2130 When you have Toronto artists or Canadian artists that are getting played more in the U.S. than they are in Canada, I think what we are offering is a platform that they will finally get the audience that they deserve.
2131 COMMISSIONER PENTEFOUNTAS: I understand the platform. Above and beyond that there is a CCD contribution.
2132 Back to my question, Mr. Wekerle, the initiatives you mentioned is that above and beyond your CCD contribution?
2133 MR. WEKERLE: Again, you know, it's not above and beyond but I think from a cultural and a community environment it has the ability to provide a wider reach to other charities that I think will have a positive impact not just on the artists but also on the CCD contribution.
2134 So it is not above and beyond. Our contribution as stated in the application is what it is.
2135 COMMISSIONER PENTEFOUNTAS: So that excludes charitable donations, obviously. You know charitable donations have very little to do with CCD contributions.
2136 MR. SPARKES: I think what Wek is speaking with in terms of our Great Big Concert, the proceeds that we are going to raise from those concerts will be given to local Toronto charities.
2137 Debra, can you please add to that? Thanks.
2138 MS McLAUGHLIN: I just wanted to add, I have been involved in many of these applications over the year and not just triple A but other formats. I think there is a tendency to look at the market as it exists today and presume that all of those factors that contribute to your decisions will stay in place.
2139 And it's been my experience that in promising CCD amounts, people tend to aim very high and live to regret it in the long run.
2140 You don't regulate formats, and one of the challenges of being a stand-alone station in this market is that when the station becomes a success, if you license it, there's going to be a temptation for other people to move into that format, which might leave a smaller audience to go after, it might leave an equal audience to go after. But it will cause the station to start to re-brand again.
2141 That's just a reality of radio in Canada today. So to commit to a large amount of money might jeopardize this format somewhere in the future should those market realities take over.
2142 So the question in our mind when we put together the business plan is how do we make a big impact. So we selected initiatives that would have far-reaching impact from our assessment and we worked with the artist community and, you know, groups like SIMA and AMIF and AMI to see what we could do to make a big difference and to do it affordably.
2143 So we wouldn't be coming back to you in three or four years asking for relief. I think that's really important to understand.
2144 COMMISSIONER PENTEFOUNTAS: I understand that.
2145 So the lower CCD contribution will allow you to remain loyal to the format and emerging Canadian artists, which is going to be at the core of your station's business.
2146 MS McLAUGHLIN: Absolutely. Absolutely.
2147 COMMISSIONER PENTEFOUNTAS: Okay. Two other quick questions.
2148 One, I asked the question yesterday about sort of a plan being in place to get the demographic you're going after to spend less time on their MP3 player, their iPod, and more time listening to the radio.
2149 How does this format and how does your plan plan on bringing more people into licensed radio?
2150 MR. SPARKES: Well, I think I'll turn it over to Debra in a sec, who's done the research.
2151 I think there's a lot of disenfranchised listeners in Toronto today that are seeking out what they want to listen to on iPods and on the internet, and this format will allow them to hear their favourite artists on the radio.
2152 We have done extensive study that supports how listeners will come back to our platform.
2153 MS McLAUGHLIN: I believe that it's very often the case that people presume that it's the young people, 24 to 34, who are not tuning to radio any more, but it -- when we track the audience, the average time spent, we found that it was really 25 to 49 that was declining in Toronto, and that's because there's been a rush to that format across several stations where you play a higher ratio of hits or you play the same songs over and over. And that's good for short-term listening.
2154 So we noted that the loss was in the 25 to 49, and that's a pretty important demographic because they have the money to spend and advertisers are after them.
2155 So we went into the marketplace to form our focus groups and we asked people who were -- who rated their dissatisfaction with radio from moderate to extreme, and we brought them in.
2156 We didn't just bring people in who had their favourite radio station or were content. We actually sought out those people who weren't listening to radio as much as they once did and we asked them to design it.
2157 When we did our full survey, we went out to the marketplace entirely, so we did an 800 sample. And we asked people about their levels of satisfaction and, again, it replicated what the BBM data showed us, that people were tuning out.
2158 You know, 50 percent of people approximately, you know, weren't very happy with radio and they were changing frequently, changing their channels frequently. They were tuning less.
2159 When we presented them with the format, close to eight out of 10, 79 percent, said they would listen.
2160 We then went back to the data and we looked at what their satisfaction scores had been, and we found that over 80 percent of them were the people who were not very satisfied at all. And about the same number, 70 percent, said that they would listen more.
2161 So when you've created a format that actually gives the people who aren't happy, who probably aren't listening as much and are finding other sources of radio or music to listen to and they say they'll listen more, we've actually hit the sweet spot in terms of finding that format because we can create more hours of tuning, we can bring people back to radio, and their satisfaction levels will go up.
2162 COMMISSIONER PENTEFOUNTAS: Yeah. The other thing that I did hear in your presentation, I almost call this a sort of hyper-urban contours to this particular station, right. Two things come out.
2163 One, it's very urban, and two, you're not really going to have access -- well, you may, but primary contours will not allow you to reach sort of five million Torontonians.
2164 I would think that this format would be hyper-urban if you look at the contours that are available to this station. Was that taken into consideration?
2165 MS McLAUGHLIN: It absolutely was. I mean, the sample went through the whole GTA, and that's really because of the type of measurement system we have now. PPM travels. It's a personal meter, so people coming into the market or travelling out of the market will still be registering their audience tuning. So we had to sample the whole market.
2166 But in terms of projecting our audience --
2167 MS LEVASSEUR: Yeah.
2168 MS McLAUGHLIN: -- we reduced it to a smaller area. And while our shares are based on the full Toronto CMA because that's how the rating service will present us to advertisers, in fact, we did reduce our potential reach.
2169 COMMISSIONER PENTEFOUNTAS: And that reduced area is very 25 to 49 rich.
2170 MS McLAUGHLIN: Yes, it is.
2171 COMMISSIONER PENTEFOUNTAS: Demographics being.
2172 MS McLAUGHLIN: Yes, it is.
2173 COMMISSIONER PENTEFOUNTAS: And was that a consideration in this particular format?
2174 MS McLAUGHLIN: Well, it actually was an affirmation of the format rather than a consideration because the consumers told us what they wanted and we designed it. But it was one of the points of verification that it would work.
2175 COMMISSIONER PENTEFOUNTAS: Okay. And I didn't get -- I wasn't clear on who's actually going to run this baby, Mr. Wekerle. Is there a -- who's going to be in charge of sort of the day to day programming and staff and --
2176 MR. SPARKES: Well, if licensed, we will certainly build a management team, I think from the people you see here today.
2177 COMMISSIONER PENTEFOUNTAS: So you're not there yet.
2178 MR. SPARKES: We've identified people who will be part of it, absolutely. That's why you see us all here today.
2179 Dan, of course, will be part of it, we hope. We hope that Stingray will be part of it as well, but we will be building a strong management team. Absolutely.
2180 COMMISSIONER PENTEFOUNTAS: And do you have an idea of how many people may be employed at the tower?
2181 MR. SPARKES: Yes, I believe we have --
2182 MR. BARTON: Twenty-four (24).
2183 MR. SPARKES: -- 22.
2184 MR. WEKERLE: About two dozen people, we believe, will be --
2185 COMMISSIONER PENTEFOUNTAS: And have you thought about a launch date?
2186 MR. SPARKES: Well, where are you going with that?
2187 COMMISSIONER PENTEFOUNTAS: Don't get too excited. I'm just asking the question.
2188 MR. SPARKES: We would launch probably within the year of the -- if you were to announce within this year, within probably -- within 12 months of being licensed.
2189 COMMISSIONER PENTEFOUNTAS: You haven't thought about it.
2190 MR. SPARKES: Yeah.
2191 COMMISSIONER PENTEFOUNTAS: The answer haven't thought about it.
2192 MR. SPARKES: Yes.
2193 COMMISSIONER PENTEFOUNTAS: Mr. Wekerle, you wanted to add something?
2194 MR. WEKERLE: Yeah. You know, respectfully saying given the opportunity, granted this licence, you know, I've always been in the favour of moving full steam ahead. There's an opportunity both from a personnel point of view with what's going on in the radio industry. I think for our team and our relationships within our team to attract talent, the best talent is now.
2195 And again, we're saying if we do get granted this licence, we'd move full steam ahead as quickly as possible that we would be there.
2196 COMMISSIONER PENTEFOUNTAS: Final question. Did you get Braide's permission before putting on the public record that he's been in this business about 300 years?
2197 MR. SPARKES: He actually wrote it in.
2198 COMMISSIONER PENTEFOUNTAS: He wrote it himself?
2199 MR. SPARKES: Yes.
2200 COMMISSIONER PENTEFOUNTAS: Wow. Thank you.
2201 THE CHAIRPERSON: Thank you.
2202 Commissioner Molnar.
2203 COMMISSIONER MOLNAR: Thank you.
2204 I've been listening here and I just need a little help in understanding a bit your vision because there's sort of two things being discussed here.
2205 One is a single market station, you know, one station, stand alone with a unique format here in Toronto, and the other thing that keeps coming up is you are a builder and this is part of something larger, bigger. And I don't know what that is.
2206 So I feel that I need a little more of the bigger picture to be able to slot in how this Toronto station actually fits into a broader industry -- industry move, if you will.
2207 MR. WEKERLE: Excellent. Excellent question.
2208 I believe that, again, being Torontonian and being the first of this call in Toronto, I'm very pleased to say that I'm proud to say that this will be a stand-alone station if that is where we end up.
2209 Building this format is a passion of mine, so I do believe that this will be a brand and that will carry throughout Canada. Whether we'd look at this from an organic basis, which we will continue to provide ourselves the ability to do, we make moves with prudent moves.
2210 We're not looking to do this overnight. We're looking to make this a success and follow a successful format in Toronto. We would like to roll that format out and make sure we identify areas that have the population and have the musical interest to roll out this format or other formats that we find that is needed at the time.
2211 I do say I'm a builder, but I'm a builder within reason. My vision is to create something that is going to be lasting and have a long-term effect on the Canadian radio industry.
2212 COMMISSIONER MOLNAR: So you're talking about building in radio. You're not talking about building this format across multiple platforms. Your building strategy is building a further radio empire, if you will, or are you talking -- again, that's where I was having some trouble in understanding what we're talking about here.
2213 MR. SPARKES: If you just take this platform, this platform we're here for today and this licence that we're applying for, what makes us different from everyone else is what you'll have to determine who is the best applicant.
2214 And one of the reasons why Stingray is here today because we're thinking a bit out of the box in terms of how can we take our platform and export it to other markets. Not in a commercial sense because you can't put advertising in this, but it's a building of a brand.
2215 And so we're always thinking about what else can we do to help enhance our current business model, and that's why Stingray are here today.
2216 In terms of other markets, sure, if things become available, we like the radio business. Michael likes the radio business. And we're building -- we're going to build a radio network across the country.
2217 We're going to look at assets that come up. We're going to look at calls across the country. I notice there's a call in Winnipeg. We look at that.
2218 And we'll look at every opportunity to build -- to build a radio empire. This is just the first.
2219 THE CHAIRPERSON: Commissioner Menzies.
2220 COMMISSIONER MENZIES: Menzies. Yeah, that's the guy.
2221 It's good to hear your Winnipeg application.
2222 Just a broader point that I just want to touch on with everybody. This last piece of spectrum, it's -- I think I'll stick with the analogy it's like the last piece of Crown land or something and would we build a business on it, let somebody build a business on it, build a church on it, build a community hall on it, build a school on it. All of those things contribute to society in its -- you know, a civic aesthetic for Toronto.
2223 Why is your commercial proposal the best way to contribute to Toronto society as opposed to the others?
2224 MR. SPARKES: Well, I think there's a whole bunch of reasons why we stand out from the rest. The biggest reason is our commitment to Canadian content and our commitment to new and emerging artists, which we feel is very important in this market.
2225 We don't take the last remaining frequency, if we were to be awarded that privilege, lightly. It is the last remaining frequency and you, as a Commission, need to make sure that the custodian of that is going to carry it on and not come back to you in another couple of years with some financial problems or we can't operate for whatever reasons.
2226 I think we have an extensive diversity voice that will continue to be heard in this city. We have a great CCD package that will help out emerging artists and new artists who want to get in the business.
2227 We're going to offer -- you know, we believe Ryerson still has a voice in Toronto and should still have a voice, and we're going to offer them three hours per week to continue to be heard on their campus. I think that's important.
2228 And we have the strong management team that's going to be there financially and to be able to support a station such as this.
2229 It's the last signal with adequate coverage of the city, the last remaining signal. And I think it should go to a commercial viable entity like ours.
2230 MR. WEKERLE: And you know, again, respectfully saying I believe that, you know, things happen sometimes for a reason. And we're here at a very unique situation for the last frequency that has a great reach.
2231 And we believe that our application not only will serve as a -- the best for the Commission from the reach stand -- point of view, but also we think very much on the community and the local community as well.
2232 We believe that the education system as well needs to have their own internal voice, which we will provide for them.
2233 But does that reach really meet all the objectives of this Commission or do you need to have a further reach where the business can provide a longer-term benefit to not just Toronto, but other areas as well, which is why we've introduced some of the technology and some of the partners here.
2234 Thank you.
2235 COMMISSIONER MENZIES: Thank you.
2236 THE CHAIRPERSON: Commissioner Poirier?
2237 COMMISSIONER POIRIER: Yes. Good morning, everybody.
2238 Well, probably you followed yesterday's hearing. We had Newcap. Newcap owns about 80 radio stations. Larche has four. They have passion like you have. They have a great team like you have. They've got a lot of experience in the radio business. A lot of experience.
2239 They, too, have money, and they have, most of the time, a format that is similar to the format you're presenting to us.
2240 So when I look at your business plan, I see you have a great team, you have money, you have passion. You have almost everything they have, but you have no experience in managing a radio station on the field, from what I know.
2241 It's a stand-alone, and it would be your first radio station.
2242 I know -- and I'm tempted to call you WEK, okay, Mr. Wekerle, but I know you think big and probably you think big as usual. But targeting the Toronto market as your first market and as your first radio station is quite a big challenge.
2243 And because we've been in some different analogies, I'm a sport freak, I would compare it to a marathon.
2244 When I look at your project, I have the feeling that it is as if you were running a first marathon at the London Olympics. You have the shoes, you have the ticket, air flight, you have the good trainer, you have almost all of it, but you never ran a marathon before going to the Olympics. And you're asking us to send you as the representative of the Canadian team to the Olympics, okay.
2245 So with all that background, because we're -- have to compare you to the others, too, okay.
2246 MR. WEKERLE: Yes.
2247 COMMISSIONER POIRIER: Why would we give you your first chance on a radio -- in the radio business in Toronto? Tell me why.
2248 MR. SPARKES: So I'll throw it over to WEK in a second.
2249 Just in terms of -- and Newcap, I know those guys as long as WEK, and they're great. Great fellows. Larche I don't know, but they're also, I hear, a great operator, so I'm not -- you know, you've got a challenge in front of you to make the right decisions.
2250 In terms of not having any experience on the table, I beg to disagree. A lot of us do have experience and, you know, Dan -- if I just want to throw it to Dan for a minute, who has over 23 years' experience in the radio business who will be part of this team moving forward.
2251 Go ahead.
2252 MR. BARTON: Yeah, I'll be the one who will be tying WEK's sneakers for him as he runs the marathon.
2253 When it comes to comparing the formats, and you'd mentioned that we have a few applicants proposing Triple A that are the same, they do have similarities, but they're not exactly the same.
2254 I can take a look at four applicants and say there are some similarities in terms of being Triple A based, and those would be ourselves, Larche, Rock 95 and Newcap. But there are some fundamental differences among those four.
2255 Of the four, we are far and above the highest commitment to Canadian content, at 45 percent. Our new and emerging is most aggressive; 50 percent of our Can con, or 22 ½ percent of our overall commitment, will be new and emerging talent, again because the format not only supports it, but demands it.
2256 Our duplication in the marketplace, I think it's really something worth examining again.
2257 COMMISSIONER POIRIER: Yeah, but I'm sorry, but that's not the main idea in my question.
2258 The main idea is not to compare format; it is to make sure Canada is sending the right Olympian to the Olympics, okay, because --
2259 MR. BARTON: I agree.
2260 COMMISSIONER POIRIER: -- it's his first station.
2261 And I know you've got experience in radio, but you've never worked together in the same office to manage one radio elsewhere in the world.
2262 MR. WEKERLE: Excellent question, Madam Commissioner.
2263 I think that, again, you have to look at my skillsets. I've never taken a challenge that I couldn't deliver on. Failure's not an option.
2264 In looking at this station, you are correct. I do not have radio experience. I have been involved with radio for 30 years, whether it be through a group of people that have given me guidance, but again, that is not the same.
2265 What I've done very well, which I can do better than anyone in this application, is be able to access and build, I believe.
2266 I believe that I can find the radio talent, as I have in previous business, and advise radio stations in certain areas on capabilities of financing in the past.
2267 I believe that my strengths and my skillset is in building. Like I said, I'm a one-trick pony, but it's a good trick.
2268 I believe that looking outside of the box, we've brought in people that have superior skillsets in building teams and have proven to the community here and to Canada that they can build a world-class operation.
2269 I believe we can build a world-class operation, whether it be the Toronto licence, which I think I am the only Torontonian applying for a licence.
2270 I have passion. I have belief that there is a group of individuals that would repatriate back to Canada into Toronto and to be there to go with the format that they believe has excitement. It's emerging. It is unique.
2271 I believe team building is the success of any business. I don't think any one of the individuals in the application, you know, do everything. I think everybody has to have a skillset where I do applaud the fact that, you know, there are some great competitors here and they've got a great track record.
2272 And I truly appreciate your dilemma in looking at me. But you know, everyone had to start once.
2273 This is my first entre, 47 years young. I want to make this a career. I want to make this a future.
2274 I believe with the team that I can assemble and the wherewithal that I can bring to the table is unparalleled in going forward.
2275 I know it's going to be a tough decision, but I hope we come to terms. Thank you.
2276 MR. BOYKO: And I see this sport more as sailing than running, so I see this as the Americas Cup, so I think we should be chosen to go to represent Canada for the Americas Cup. And WEK makes a great captain.
2277 COMMISSIONER POIRIER: Well, I'm not in charge of the sailing team; only the running team, so sorry.
2278 MR. FECAN: And Commissioner Poirier, I just wanted -- you started with the Olympic example.
2279 You know, when we got -- when CTV got the rights to the Olympics, we hadn't covered an Olympics for a very long time and I think it's fair to say that neither CTV or TSN at that point in time was able to.
2280 But the challenge forced us to grow, forced us to be great, and I think what we ended up delivering was the best Olympics coverage this country has ever seen. And the IOC has recognized it as the best in the world in terms of coverage.
2281 And so I think you have to look at the distance travelled, not necessarily where somebody is at a particular moment in time.
2282 THE CHAIRPERSON: Commissioner Patrone?
2283 COMMISSIONER PATRONE: Thank you, Mr. Chairman.
2284 I appreciate your presentation today, and forgive me if you've sort of addressed this. It is -- has to do with the 45 percent Can con commitment. And the Commission is looking for some assurances that you know what you're getting into, specifically in terms of availability of suitable content because what may appear as a great selling point later on can translate into a very challenging business issue.
2285 So I just want to throw that out there and get your response.
2286 MR. BARTON: Sure. As I had mentioned, Mr. Commissioner, this 45 percent is not just a commitment that we're throwing out there. This format not only supports it, but demands it.
2287 When we take a look at KINK-FM in Portland, again, a United States radio station that we used as a proxy just to measure comparison with the Toronto market and we see great Canadian artists like Joni Mitchell being played, like Feist, like Kathleen Edwards. New and emerging artists like Great Lake Swimmers, Deep Dark Woods, Gents Overhead. They're all being played on an American radio station, but not in Toronto.
2288 There's a huge amount of Canadian talent, both established and new and emerging, that begs for Toronto exposure, so we know that 45 percent isn't just a number to reach for. We know that it's a number the format provides easily.
2289 COMMISSIONER PATRONE: And you know that that's -- it's -- that it's a COL that would apply at all times.
2290 MR. BARTON: Yes, we understand that.
2291 COMMISSIONER PATRONE: Great. That's my question.
2292 Thank you, Mr. Chairman.
2293 THE CHAIRPERSON: Thank you. I think that completes our examination. Thank you very much.
2294 Madam Secretary, we'll break for lunch.
2295 THE SECRETARY: We'll break for lunch. It's now 12 after 12:00. Is 1:30 all right?
2296 THE CHAIRPERSON: Yeah.
2297 THE SECRETARY: So we'll reconvene at 1:30. Thank you.
--- Upon recessing at 1212
--- Upon resuming at 1336
2298 THE CHAIRPERSON: Madam Secretary, let's begin.
2299 THE SECRETARY: Thank you, Mr. Chairman.
2300 We are now ready to hear item 5 on the Agenda, which is an application by Bhupinder Bola on behalf of a corporation to be incorporated. Appearing for this panel is Mr. Bola.
2301 Mr. Bola will introduce his panel for the record, and you will have then 20 minutes to make your presentation.
2302 MR. BOLA: Good afternoon, Chair, Commissioners and Commission staff.
2303 My name is Bhupinder (Pip) Bola. I have over 35 years of experience in the broadcast industry with both large and small companies ranging from Rogers to WOW TV. I have overseen the management of the technical side of the business as well as helped launch several new services. For the past several years, I have provided consulting services to a broad range of clients.
2304 I am pleased to be here today to present my own application for a new radio licence to serve Markham York.
2305 With me here on the panel are several broadcast professionals who will help me walk you through our proposal and I will start by introducing them.
2306 Seated to my left is Nelson Millman. Nelson's career in radio has spanned 37 years and a range of positions: on-air, producer, music director, promotions and management. Nelson was most recently the VP and GM of The Fan and The Fan Network. Nelson began his career at a community station that was just like the one we propose, full service with something throughout the day for most members of the community, including multicultural programming. He is acting as a consultant on this project.
2307 Next to Nelson is Chuck Yeung. Chuck is the President of WOW TV, a service that launched in 2008 and provides Mandarin, Cantonese and Vietnamese programming. Chuck has produced local programming in all of these languages, with the goal of connecting the Canadian Chinese and Vietnamese communities with their new home. With a background and personal computing and electronics, Chuck has been leading the way in developing new media delivery platforms, an important part of the evolution of broadcasting. He will be producing the Mandarin and Cantonese programming for Markham York Radio.
2308 To Chuck's left is John Stubbs. John has both launch and operational experience in radio, having worked at CFCF and Mount Royal Broadcasting in Montreal for years. John helped start both Toronto Star television and the precursor of AMI, Voiceprint. If licensed, John will be overseeing the launch of Markham York Radio.
2309 To my right is Debra McLaughlin, President of Strategic Inc. and the author of our consumer demand, market analysis and business plan.
2310 To Debra's right is Eddy Lelievre. Eddy has both radio and television advertising for over 38 years and managed sales at CHIN Radio and TV for over 10. With management experience at OMNI, Telelatino and now Polish radio, he is an expert in third-language media sales and advertising in general. He helped craft the rate card and projections.
2311 Next to Eddy is Noah Al Saleh. Noah speaks several languages, including his mother tongue Arabic. Born in Lebanon, Noah will be developing our Farsi and Arabic programming. Noah worked on "Salam," one of OMNI's original Arabic programs.
2312 In the back row, seated to my left, is Audrey Au, Vice-Chair of Markham Getting Together, a non-profit youth organization. This is a unique grassroots organization that is active in promoting volunteerism as well as an annual charity talent show.
2313 Next to Audrey is Bhupinder Toor, the producer of our South Asian programming. Bhupinder owns and operates Dhamaal Enterprises Ltd., which produces programming in Urdu, Punjabi and Hindi. With over 12 years of production experience he currently provides programming for both Toronto and Winnipeg South Asian listeners. He is a journalist as well as a contributor to many South Asian news and lifestyle publications.
2314 Seated to Bhupinder's right is His Worship, Frank Scarpitti, Mayor of Markham.
2315 To his right is Helen Argiro, Executive Director of the Markham Arts Council.
2316 To Helen's right is Robert Kadlovski, a local resident and business owner.
2317 I will now begin our formal presentation.
2318 By all criteria, the York Region, and in particular Markham, is separate and distinct from its larger neighbour to the south, Toronto. In obvious ways such as having its own government, law enforcement and municipal infrastructure, including transit, the York Region stands alone. And in not so subtle ways, it is distinct. For example, despite the highly diverse culturally, it is more homogeneous in its ethnic composition than Toronto. Similar ratios of English to ethnic language exist but there are actually fewer language groups of critical size.
2319 The rapid growth in Markham specifically is also unique. According to Statistics Canada, between 2001 and 2006 the area grew by over 25 percent, and between 2006 and 2011 it further expanded by over 15 percent. This places Markham among the fast-growing urban centres in the country and the increase is largely based on immigration.
2320 Rapid expansion strains infrastructures, but most importantly it also stresses residents. We heard that frustration from the market, both in our conversations with residents and through our research.
2322 MR. MILLMAN: A radio station that provides insights into what is happening in the community and connects residents with news and information about their market would be of immeasurable benefit. Currently, residents have to wait until the "end of the week" or "weekend" paper comes out to catch up with what is happening in their community and in their neighbouring towns. In an age when information travels around the globe in seconds, this somehow seems sadly out of step.
2323 Importantly, residents have told us that radio which ties the distinct cultural groups together would be very welcome. To quote from our focus groups:
"The Markham of my youth is long gone. There are no open fields anymore. Old buildings are being torn down and new ones put in their place. And neighbours are no longer born in Canada. It is changed and we need help in understanding what it all means and how we can live and work together."
2324 All residents need access to news and information and the radio service we propose ensures the largest number of people will receive it. Our blend of English and third languages will offer the widest scope of service and ensure that the frequency is used to serve the largest possible cross-section of the population.
2325 MR. AL SALEH: Similar to many ethnic services operating in Canada today, our cultural programming will be offered in regularly scheduled time blocks. The big difference is that our content will be produced locally so residents, regardless of their language preference, can hear about Markham York first and foremost.
2326 We will offer Mandarin, some South Asian languages, Arabic and Farsi and Tagalog. While this is not a typical full complement of third languages you generally find on many radio services, it is reflective of the balance of languages in the market.
2327 Our proposal is for an English-language station and within the definition provided by the CRTC we would address the newly immigrated population through programming that sounds like home but is locally focused and produced.
2328 The vast majority of our programming, including morning and afternoon drives, as well as day, will be in English. This aligns closely with the composition of the market. Although there is a significant number of residents, 58 percent, who report a mother tongue other than English or French, in fact only 39 percent report speaking a language other than an official language at home.
2329 The most important factor in our decision, however, was that Stats Can reports that 87 percent of the population are able to speak, read and understand English. Our proposal for Markham was for a first service English station that would provide the greatest number of people reflection in the broadcast system. Our choice of language and format supports this.
2330 MS McLAUGHLIN: As one would expect in markets near large urban centres in Canada there is not a huge gap in terms of the musical formats that spill in. Our key differentiation is the Markham-York centric news and information content. So while we believe in developing a distinctive sound, being highly diversified in terms of music was viewed as being less critical. Our goal is to be a full-service station, which means at some point in the day we plan to provide programming to each member of the community.
2331 In order to have music that is listenable to the largest audience, we had to select a broad format that we could maintain throughout the schedule, but at the same time tailor the song selections to specific demographics. AC is the only format that has this type of flexibility.
2332 We fully expect that radio listeners will continue to tune to their current favourite at some point in the day and we do not expect our broad music selection to fill all of their needs for their favourite genre. We believe that the driver to our service will be its strong identity with a reflection of the York Region.
2333 Similar to VOCM in St. John's, this radio station will combine popular music with talk throughout the morning show and drive. During the day it will be more music-intensive and in the evening it will be dedicated to third-language programming. Each day, Monday through Friday at 9:00 a.m. there will be a call-in show where topics of local interest or local reaction to broader topics will be discussed.
2334 The music, however, will be Adult Contemporary, which means several genres of music will be covered, presenting a wide range of artists and a large variety of tracks. A review of the audience profile to this type of format demonstrates the wide-reaching appeal.
2335 Eighteen percent of the audience is drawn from people under the age of 34 years, 43 percent from people between the ages of 35 and 54 years and 39 percent from people over 55 years. Of all the formats, it is probably the most diverse in terms of the age range of the listening base. Importantly, our research concluded that this would be the best fit for the area.
2336 MR. STUBBS: The approach we are proposing is not unlike radio prior to the era of niche formats where stations tried to provide a little something to everyone. This is still the case in markets where there is only one station and we have adopted this strategy for a first service to Markham York. It has proven very successful over the years and our research shows it will work in Markham.
2337 One of the complaints we heard frequently during the focus groups was that the repetition of songs and artists made radio services indistinct from each other and in some cases only listenable in short durations.
2338 In our filed brief, we refer to borrowing from the AAA format inasmuch as we will play more artists and go deeper into their catalogs rather than stick to just their hits, but in every other way we will be a true AC because our focus groups identified this format as the one most likely to satisfy the largest portion of the audience.
2339 To give you a sense of what the station would sound like, we assembled some of the artists and tracks that you would hear if this radio station was on air today:
2340 - "Fallout" by Marianna's Trench;
2341 - "Dance With Me Tonight" by Olly Murs;
2342 - "Nothing Is Real But Love" by Rebecca Ferguson;
2343 - "Eyes Open" by Taylor Swift.
2344 Canadian content such as:
2345 - "Set It Free" by Sarah Slean;
2346 - "Talk Me Down" by Alyssa Reid.
2347 And new and emerging artists such as:
2348 - "Butterflies" by Liz Coyle;
2349 - "Every Red Light" by Shawn Hook.
2350 These currently charting songs would be played as well as selections from the recurrent and gold category. Approximately 50 percent of the playlist would be charting AC currents, 25 percent recurrents and 25 percent gold.
2351 We will use the AAA programming strategy of having more artists, more tracks and fewer repeats to make sure people can listen longer and more often. We will play 35 percent Canadian content, and of that, 10 percent will be designated for new and emerging artists.
2352 MR. YEUNG: The most obvious and important difference is that it will have a focus on Markham-York. In the average newscast we will lead with a story from York Region and we anticipate that at least half of the headlines in our newscasts will be dedicated to local content.
2353 We will of course provide regional, national and international stories, but the majority of our time will be spent discussing events and news stories that originate in and around Markham and the broader York Region.
2354 Tying into the news, our information programming will also be focused on local. So whether it is a bus cancellation, a community event calendar, focus on the activities of a local charity, traffic conditions or changes to municipal services, residents will know it is our station they can tune to to get answers about their hometown. No other radio service can provide this type of coverage.
2355 We anticipate that given the interest in local reflection, our promotion of the festivals and events such as the Unionville Heritage Festival, the World Music & Dance Festival, the Markham Fair or the International Food Festival will draw the community together.
2356 Our coverage of local sporting events, theatre and even municipal politics will make us unique and raise awareness throughout the community of what is going on.
2357 We will coordinate with all our content producers, giving them access to our local news. So regardless of language there will be consistency in the type and range of stories covered.
2358 This will introduce diversity to the spectrum as residents from all language groups reported having little or no access to local news through the current radio stations. Even the existing third-language services are described as having content that is more international than national, and focus group participants suggested that truly local news cannot be found.
2359 MR. LELIEVRE: Another of the differentiating elements of this station will be the advertisers who support it.
2360 The local retail market is estimated to be worth $3.4 billion. It is forecast to grow by 36 percent over the next three years. By 2017, it is estimated that it will be in the area of $4.7 billion. These are retail dollars spent in Markham at local Markham stores.
2361 In advertising terms, the markets should be generating approximately $100 million worth of advertising spend annually. Radio share is in the area of $10 million.
2362 Spill stations currently taking money out of York Region will likely continue to do so, and to be on the safe side, we have estimated our first-year revenues at less than 10 percent of the available funds. Our estimate of approximately $800,000, growing to $1.6 million by year seven, falls comfortably within the range of what is available.
2363 The real source of our revenues is filling the pent-up demand for local advertising. As the CRTC knows, there are many markets much smaller than Markham that support at least one and sometimes multiple radio services.
2364 We have the advantage of drawing revenue from two distinct markets: mainstream advertising and ethnic languages. We filed letters that show the revenue commitments we have for our language blocks. So a portion of the revenue we are forecasting has already been pre-negotiated. This gives us a distinct advantage in launching this service.
2365 We will be able to grow mainstream advertising news in pace with the market retail growth while at the same time have consistent investment by producers who, because of their ties with the community, will manage and sell the ethnic blocks of programs.
2366 MS AU: The interveners were quite clear and passionate about their support for this station. As people who live and work in Markham we know firsthand about how fast the market has grown and how challenging this can be.
2367 We are also frequently and sometimes painfully aware of the lack of immediate or convenient information available. We miss out on events, finding out only after the fact that something has taken place. We know more of what is happening on Toronto City Council than we do of municipal decisions which affect our daily lives.
2368 Traffic within York is not sufficiently covered in detail or in a timely manner. Commuters are without meaningful assistance each morning. Follow-up on stories that originate in the market has to be deferred until the weekend when the local paper comes out, and when it does there is only one perspective presented.
2369 The focus groups revealed that people often were unsure of who was running in any level of elections in their area. Yet, every one of them reported listening to radio at some point during the week. Clearly, local radio would fit into our schedules.
2370 MR. BOLA: Toronto has more radio stations than any other market in Canada, and yet, it is difficult for them to serve each of the smaller areas captured by the GTA definition.
2371 And yet, some of these areas like Markham and York Region are very much communities unto themselves. It is only their proximity to Toronto that allows them to be defined as something other than an independent municipality.
2372 In fact, Markham is larger than many markets that support a radio service, and the future growth prospects suggest it is only going to become more in need and better able to support a service.
2373 The timing is right for our proposal:
2374 - it addresses the critical need for access to local news and information;
2375 - it alone proposes to cover the largest language group within the population -- those who understand and speak English;
2376 - it recognizes, however, the importance of connecting with the new residents in the language best understood by providing local content in several third languages;
2377 - the revenue projections are easily understood, aligned with the expectations for this market and demonstrably achievable;
2378 - it is supported by the municipality, the business community and, most importantly, the residents;
2379 - it invests above and beyond the required CCD contributions, a total of $60,000 over seven years;
2380 - finally, it will provide music that appeals to many and can be crafted to fit the needs of smaller demographic groups as single stations in a market must do.
2381 We are grateful for the support we received from all parts of the community and rather than belabour our view of the market and how our proposal fits, we will ask residents to share with you their reaction to our proposal.
2382 Run video.
--- Video presentation
2383 MR. BOLA: Thank you for your time and attention. We would be happy to address any questions you may have.
2384 THE SECRETARY: Thank you, Mr. Bola.
2385 We will now proceed with the presentation from your interveners in support, which is Mr. Frank Scarpitti, Mayor of Town of Markham; Markham Arts Council; and Mr. Robert Kadlovski.
2386 This panel has 10 minutes in total to make its presentation. You may now proceed.
2387 MR. SCARPITTI: Well, thank you very much. Good afternoon. It's a pleasure to be here to provide my support for the establishment of a radio station to service Markham.
2388 The 2006 Census Canada survey defined Markham as they most ethnically diverse municipality in all of Canada, showing over 63 percent of our residents representing visible minorities. In Markham diversity is our advantage and we see the evidence of this through the skills, new ideas and the rich cultural experience manifested in our communities and in the arts and entertainment. We have seen how diversity in our business community has served as a major advantage in our recent trade missions to India, Dubai, China and Israel.
2389 Now, Markham is a thriving urban community of over 310,000 people, with over 9,000 businesses, including 400 corporate head offices and 900 high-tech and life sciences companies. Markham is no longer a suburb serving the commercial district of Toronto but a major urban centre in the making.
2390 In fact, the Province of Ontario has designated Markham as a major growth centre as part of the Ontario Places to Grow Act. The Province has projected our population to increase by over 35 percent to the year 2031.
2391 As well, we have been chosen as a venue to host for the Pan Am 2015 Games and we are currently in the process of attracting a 20,000 seat world-class sports and entertainment cultural centre to our community.
2392 In short, we are a thriving, vibrant, self-sustaining community with a diverse workforce and population, and our community either has or is building highly valued infrastructure that enhances our population's life, work and play.
2393 But there is one essential component missing: a relevant media voice that can serve the needs of the Markham area. Currently, we do not have a radio station that approximately serves the needs of our community, a radio station that can serve as a key communications link to our highly diverse population, and the increasingly sophisticated needs of our community.
2394 A radio station to serve the Markham area could provide this essential voice and ensure our residents are connected and informed on relevant news and activities.
2395 This application was brought to my attention by Mr. Pip Bola and he has outlined his desire to service Markham with an FM station, FM 105.9. He has explained that this station would offer broadcast primarily in English but would also offer about 40 percent of programming in six other languages, namely Chinese, Punjab, Hindu, Urdu, Tamil and Farsi.
2396 While I leave it to the due diligence approvals process to ensure the technical merit of this application and also ensure that there is no frequency interference with other already established stations, I support this new opportunity for Markham, yet also request that the CRTC ensure that there is a responsible plan that meets this application's technical requirements as well as the continuance of other stations in the same frequency range that are currently serving our diverse community.
2397 I extend my support and also ask for the CRTC's support in allowing Markham to gain broadcast radio that fits our local community's communication and multilingual needs.
2398 You should know that Markham's Leisure Master Plan has identified that increased local communications sources is absolutely of interest to our populace, and of course helping new Canadians integrate, reaching seniors where language is a barrier is a top priority.
2399 I am aware of other nearby municipalities actually having more than one radio station, for example, Brampton hosting 530 AM and 102.1 FM, while Mississauga citizens have 1320 AM and 1650 AM.
2400 With a large and thriving business community and a growing population, I am proud to support the request for a local Markham radio station to engage, inform and educate our population on local issues in the language of their choice.
2401 I hope that we may look forward to your favourable decision in putting Markham on the broadcast media map so that our citizens can benefit from local broadcast programming.
2402 Thank you for your time and consideration.
2403 MS ARGIRO: Good afternoon. I'm Helen Argiro and I'm speaking on behalf of the Markham Arts Council.
2404 The Markham Arts Council works closely with our town's Department of Culture and the three major arts and culture pillars in our community: Markham Theatre, the Varley Art Gallery and Markham Museum.
2405 The Markham Arts Council is comprised of more than 400 individual members, 290 member organizations, which translates into a total membership of almost 2,000.
2406 Markham Arts Council is also directly responsible for programming in our community. That includes the Markham Teen Arts Council; Markham at the Movies; the International Festival of Authors touring event in Markham; York Slam, which is a monthly poet and spoken word artist event; the World Music & Dance Festival. In addition, we stage art shows, literary events, performing arts programming, to name just a few.
2407 Both our Department of Culture and the Markham Arts Council strongly believe that having an effective media option, our own designated radio station, is important to community engagement and cultural participation.
2408 In the Hill Strategies Report, dated August 17th, on culture and municipalities it states that:
"Arts and culture can demystify community differences and bring diverse cultures together.
Arts and culture can engage communities and encourage active citizenship.
Arts and culture can engage marginalized groups to take part in collective action and help them to achieve their potential."
2409 The above illustrates why arts and culture is vital to the well-being of any community and especially to a community as diverse as Markham.
2410 What follows are the reasons why a designated Markham radio station would help us to advance our cause and achieve our goals with respect to a focus on arts and culture.
2411 In Markham we face a serious challenge when it comes to communicating information with our community. The only major town-wide vehicle for communicating information and events is the Economist & Sun Newspaper, which is distributed twice a week.
2412 Unfortunately, the Economist & Sun is more interested in generating advertising revenue than disseminating information about arts-and-culture-related programming news and community events. As well, the Economist & Sun is cost-prohibitive for the Markham Arts Council and the majority of our members.
2413 So, except on rare occasions the Economist & Sun is not an option that the Markham Arts Council or our members can use as a vehicle to disseminate information.
2414 The promise of having a designated talk show that discusses artistic programming, covers local talent, and communicates information and announcements about upcoming educational workshops, seminars and events would be extremely helpful to our cause.
2415 Markham is a unique place and a vibrant town with a well-developed sense of community that is multicultural and diverse and this is directly reflected in the artistic endeavours, programming, festivals and events that take place year-round in our town. Our population is rapidly growing and we definitely need more ways to communicate with our citizens beyond a local newspaper that is not necessarily read by everyone.
2416 A Markham-designated radio station would bridge the gap by providing an opportunity for local news and information to be widely disseminated in an easily accessible English radio format.
2417 I believe that Markham both needs and has the ability to support a local radio station that reflects the unique diversity of our town and provides an open forum for discussion of arts and culture in our community.
2418 For all of the above-mentioned reasons, the Markham Arts Council strongly supports the CRTC application for Markham Radio 105.9 FM.
2419 Thank you.
2420 MR. KADLOVSKI: Good afternoon. My name is Robert Kadlovski and I live, work and play in the Town of Markham. I would like to provide you with some of my personal background.
2421 My wife and I have been residents of Markham for the majority of our adult life and have raised our family in the Markham community. I own and operate a chain of retail stores known as Nicholby's in the Province of Ontario and Alberta and a four-year-old concept called Old Fire Hall Confectionery operating out of a building I own on Main Street Unionville in Markham. I also operate my corporate headquarters from this building.
2422 I am the previous Chair and currently the Vice-Chair of Central Counties RT06, the provincially mandated tourism organization which includes Markham, which is part of York Region, and in addition I am the Chair of the Unionville BIA.
2423 And as for play, Markham is filled with outstanding arts, culture and sport.
2424 I have witnessed many changes in our town over the past couple of decades as a result of the vision for the town which began 20 years ago. We have witnessed significant intensification. Today we are over 300,000 strong. We have grown and will continue to grow both organically as well as our commitment to the provincial government's Places to Grow Act.
2425 We are one of the most culturally diverse communities in Canada. We have grown from being a bedroom community due to our proximity to Toronto. However, we are uniquely separate and apart from our larger neighbour. Markham is a high-tech mecca with more than 900 technology and life sciences companies. The largest employer is IBM with over 7,000 employees, followed by AMEX with 3,500 employees.
2426 Currently, the Markham Pan Am Centre is being built for the Toronto 2015 Pan/Parapan American Games, and just in the last week Markham has approved a 20,000-seat sports, culture and entertainment arena.
2427 Our community has grown and many like myself live, work and play here instead of commuting. Our community has followed a blueprint for success, providing residents with all of the essentials, from the outstanding healthcare facilities, transportation, shopping, entertainment and dining, an all-encompassing infrastructure which implies that there's very few reasons and incentives to drive to Toronto.
2428 Markham has a distinct cultural mix of visible minorities. As a result, we have our own set of integration opportunities and communication needs.
2429 As a local resident and businessman, I am very excited about having a radio station that will address Markham's challenges and opportunities by providing local insight for residents, businesses and institutions that are shaping our vibrant community which we call home.
2430 A local radio station that focuses on Markham instead of including it as an afterthought is something the community would welcome. It will provide local news stories that are affecting us, the opportunity for the local promotion of festivals and events. It would be particularly helpful to have traffic reports that are relevant to commuters who work in our town as well as local weather reports, that can differ from our neighbours.
2431 We at the Unionville BIA are currently limited in our ability to market ourselves and in many cases are challenged to connect with our local community to promote and advertise as there is primarily one local paper which is published twice weekly.
2432 Markham has a vibrant and growing business sector which would capitalize on having a local audience listenership. Reaching a culturally diverse community would allow a business such as my own to market and advertise to that audience.
2433 Many within our community, such as Thornhill and neighbouring communities such as Richmond Hill surprisingly don't know about our Heritage Main Street in Unionville, though some of the buildings have existed since the early 1800s. A local radio station would allow us to inform and educate those within miles of this destination and beyond.
2434 Radio would be an attractive venue because it is local and I am certain that it will be an effective, affordable, and accessible targeting marketing tool. I am assured by Mr. Bola that the rates will be affordable.
2435 For many, current radio advertising is priced beyond what is affordable because stations cover the whole GTA. Advertisers such as myself who are attempting to market to certain groups and demographics feel that Toronto radio advertising return on investment does not commensurate with rates charged.
2436 Having our own radio station would provide us with insights into what is happening in our community. I particularly like that the proposed radio station will be providing programming in languages that are reflective of the community. This means that all of Markham can have a radio service that we can call our own. News and information between our diverse communities can be more easily shared and communicated.
2437 In conclusion, Markham has grown to be one of the greatest and best communities to live in Canada. Our landscape has changed. Our needs, challenges and opportunities are no longer connected to Toronto as they have been in the past. A local radio station will provide, educate and inform our diverse community of local events, be a voice for local information and enhance business and service awareness.
2438 Thank you.
2439 THE CHAIRPERSON: Thank you all very much.
2440 I would ask Commissioner Menzies to lead the questioning.
2441 COMMISSIONER MENZIES: Thank you.
2442 I have a few questions and I will direct them generally and leave it to you, Mr. Bola, to direct who should answer it. Most of them have to do with understanding what you are doing and your business plan. There are a couple of technical questions, too.
2443 Most of your third-language programming, from what I understand, is non-primetime and I'm just trying to get a sense of what you are targeting with -- who you are targeting and how you are targeting them through your third-language programming.
2444 Are you targeting a listener primarily as a Markham resident who is speaking a third language or as a third-language speaker who lives in Markham?
2445 MR. BOLA: We are targeting 87 percent of the English-speaking people.
2446 COMMISSIONER MENZIES: But I'm talking about your third-language programming. You have 36.9 percent of your programming is going to be in third languages. By that, I mean that the languages you listed were Chinese, Punjabi, Hindu, Urdu.
2447 MR. BOLA: Yes, that is correct, 36.9 percent is third language.
2448 COMMISSIONER MENZIES: Right. So when you have that programming on, it's mostly in the evenings, right, non-primetime areas?
2449 MR. BOLA: Yes, that is correct. I'm going to pass it over to --
2450 COMMISSIONER MENZIES: If I speak Punjabi when I'm listening to your programming, right, are you speaking to me primarily as somebody with a Punjabi heritage who lives in Markham -- if you get the difference -- or are you speaking to me primarily as somebody who lives in Markham who happens to speak Punjabi?
2451 MR. MILLMAN: Well, I think that would be the characterization. The majority of the population in Markham speaks English and the third language would be -- I'm a Markham resident. I speak English. I also speak Punjabi and I know that at a specific time of the day or week I can get Punjabi programming.
2452 I think the daytime programming being primarily in English is a way that we can reach out to the entire community, knowing what we do know about the language spoken amongst the majority of the residents.
2453 So the characterization of I'm a Punjabi-speaking resident of Markham who also speaks English.
2454 COMMISSIONER MENZIES: Okay. I was just trying to get to the local nature of the content that I will be listening to. So if I'm -- because that is a very large block of your programming, this third language and I sort of have another question on that.
2455 So to differentiate this from -- which is a really interesting concept that you have, but to differentiate this as a local -- as a Markham commercial radio station from, say, an ethnic radio station, you are using the third language.
2456 MR. MILLMAN: The English-language content would also, you know, cover across all of the elements that are important to each of the individual groups that we would speak to in a language in off prime hours.
2457 COMMISSIONER MENZIES: But it would be in Punjabi or does the English-language content blend in with the --
2458 MR. MILLMAN: No, it would be English-language content, but you can specifically direct it towards a group that we do know speaks English. So if it's an issue that's important to the community and it happens to reflect something in the Punjabi community, we have the ability.
2459 COMMISSIONER MENZIES: So there's no set block of time when all I will hear is Punjabi or Urdu or whatever the program is?
2460 MR. MILLMAN: Not between 6:00 a.m. and 6:00 p.m.
2461 MS McLAUGHLIN: But there is in the evening.
2462 COMMISSIONER MENZIES: Right. That's what I'm trying to ask you.
2463 MS McLAUGHLIN: There are specific language blocks and all of those will be locally produced with local content.
2464 COMMISSIONER MENZIES: Okay. Good, okay. That's what I'm trying to get to.
2465 So how do you do one language from 6:00 a.m. to 6:00 p.m., right, then take all that news-gathering information and turn it into five or six other languages each evening? Where do you get the talent to do that, because you are going to need -- I'm trying to figure at your business.
2466 How many people are you going to be able to employ to do that? If I'm listening to the news at 7:00 p.m. and the program is in Urdu, how am I getting -- who is putting the news that was on at 6:00 p.m. in English into Urdu at 7:00 p.m.?
2467 MR. MILLMAN: Well, the news will be in English, you know, the scheduled newscasts, and then, through our news director, working with the independent producers -- you know, the objective is to take the stories that are relevant to the community and transfer them throughout the day and night, no matter what the language is.
2468 And that is simply communication --
2469 COMMISSIONER MENZIES: Okay. But the newscast in the evening will just stay in English.
2470 MR. MILLMAN: Yes.
2471 COMMISSIONER MENZIES: I don't really care what language it's in, I was just trying to figure out your business plan, how you would be able to afford to have people doing your news in that many different languages. But that helps me understand that.
2472 MR. BOLA: Excuse me, could I add something?
2473 COMMISSIONER MENZIES: Sure.
2474 MR. BOLA: Just for clarification, the programs that we have scheduled in the evening, the third language programs, they are produced by our associated producers, and there are no English segments in those programs.
2475 COMMISSIONER MENZIES: Right.
2476 MR. BOLA: What we do is, we provide certain events -- we provide guidelines. During the day we have developed a number of stories, and we basically put those stories together that are relevant, and those stories can then be translated to each one of the languages, so that the producer can use that as part of his programming.
2477 In other words, we are reflecting all of the happenings that are taking place, the events, the news, information, from our main programming, and then we are identifying information from that that would be relevant and that would be able to -- the producer from each different language would be able to translate that into their own programming, whether it's Punjabi, whether it's Hindi, whether it's Chinese, and so on.
2478 COMMISSIONER MENZIES: Okay. I think I get that. I was just trying to, like I said, get a grip on how you were going to manage it from an expense point of view.
2479 But the discussions and the content in the third language programs, they will be primarily focused on Markham?
2480 MR. BOLA: Yes, that is correct. The entire content will be locally relevant content. So any developments that are taking place in the Markham region, those are the stories -- the whole focus is to service that market.
2481 COMMISSIONER MENZIES: My next question is a little vague, but I would ask you to humour me and try to be as specific as you can, with some specifics about how you do this.
2482 The Census information on Markham is very interesting, in the sense that there is no visible majority of any kind. Everybody is a visible minority in the community, and you are broadcasting in a number of languages, and I would like to know what you have in place within your charter or specific plans on programming to contribute to a broad sense of cross-ethnocultural identity in Markham.
2483 MS McLAUGHLIN: Actually, one of the advantages of this station is that it is the perfect environment for it.
2484 The news that Mr. Bola and Mr. Millman were talking about -- there is a news director that will meet with each of the producers, to make sure that stories are not just traded from English, but also brought through from the individual producers.
2485 There may be a story that is unfolding in the Arab community, for example, and Mr. Saleh will bring it forward to the news director, and that is where it will be determined where it gets carried through.
2486 It is segmented on language, but it is brought together as a complete view of the market, so it's only the language in which there is any sort of division.
2487 In the focus groups, one of the prime needs that was revealed was for a better understanding amongst the community itself of these cultures. So simply by having those producers in-house and contributing to the overall programming, we have a leg up in being able to provide to the community a true general reflection, instead of any specifics.
2488 The choice of language is only because it is the most commonly spoken language, but in every sense there is a belief and an aspiration to work with the community, and all of its various cultural groups, in this one station.
2489 In fact, the only thing that consumers seemed to be absolutely certain on is that it couldn't be either a third language station or it couldn't just be English. They recognized amongst themselves that there was a greater understanding.
2490 So there are elements within the programming, like Markham Minutes and other small spoken word segments, that will highlight the variety, the challenges, the opportunities that come with a highly diverse community.
2491 COMMISSIONER SIMPSON: Thank you.
2492 Your application forecasts, after Year 1, a 15 percent audience share, growing to 18 percent in Year 7.
2493 This would be unparalleled, to have numbers of that size in any place. There are English-language stations in Montreal that, maybe, have achieved numbers like that, but it is very rare for anybody to get a 15 percent share anywhere, let alone in their first year.
2494 I need you to convince me that that's a credible forecast, because I am not buying it right now.
2495 MS McLAUGHLIN: With all due respect, Commissioner Menzies, stations do.
2496 In our reply to interventions, we pointed out several stations.
2497 While the Commission -- to my surprise, I might add -- deemed this a competitive application within the context of the Toronto hearing, this has always been treated like a first service, and if you look at the audience data for first service markets, or single service markets, or even small markets with two stations, those stations sometimes achieve as high as a 30 percent share.
2498 I think the lowest that I found is 9 percent. The average is 15, which is what we came up with.
2499 It's not 15 percent of the Toronto market --
2500 COMMISSIONER MENZIES: I know that.
2501 MS McLAUGHLIN: -- it is 15 percent of Markham, and it is not unusual, and I would be happy to file with the Commission those data, so you can see what we are talking about.
2502 This is the most recent BBM data from Fall 2011.
2503 COMMISSIONER MENZIES: That would be good, if there were data for comparative markets, because there are a lot of signals going into Markham --
2504 MS McLAUGHLIN: Yes.
2505 COMMISSIONER MENZIES: -- and your signal isn't going to go very far out of it.
2506 MS McLAUGHLIN: That's correct.
2507 We did look at specific markets that had a lot of spill in, so markets that were in the shadow --
2508 COMMISSIONER MENZIES: Yes, please do, and with anything that is comparable, as opposed to --
2509 MS McLAUGHLIN: Yes.
2510 COMMISSIONER MENZIES: -- Wetaskiwin, which wouldn't be quite the same.
2511 MS McLAUGHLIN: No.
2512 COMMISSIONER MENZIES: Your programming expenses from Year 1 to Year 7 -- I was trying to figure out the business case on this. You have budgeted $760,000 in programming expenses in Year 1, and that was going to give you a 15 percent market share.
2513 And, then, as you grew, your expenses were going to grow to $1.4 million by Year 7, but you are only adding 3 percent more to your market share.
2514 So, basically, your programming expenses are growing by 80, 90 percent, somewhere in there, almost -- not quite doubling -- but you are only adding 3 percent in market share.
2515 As an investor, I would be trying to figure out why that makes sense. Why would you grow your programming expenses when your audience is not going to grow at the same pace?
2516 It sounds like you would actually be making -- it's an investment in programming expenses that you might not need to make.
2517 If you can get a 15 percent share for under $800,000, why would you spend $1.4 million to get an 18 percent share?
2518 Or, is there a tipping point on advertising revenue at that stage?
2519 MR. McLAUGHLIN: I think in probably 70 percent of the markets you will hear that audience share is very relevant to developing revenues. That's not the case in first service markets. The station probably won't even be measured. It won't because they won't have an interest. BBM is not able to split the PPM sample to allow for sufficient audience measurement in the area.
2520 The reason that the programming expenses go up, quite frankly, is because we think the market is going to grow considerably. There will be other needs. We do believe that the composition of the market will require more investment in spoken word programming.
2521 Right now there are, really, just plans for the two-hour call-in show that is a big part of our local reflection, but we think it's going to require more.
2522 It's tied to our revenues, that investment in programming. It's what the revenues will allow to be invested. It's not tied to audience share, because that's not a factor in generating those revenues.
2523 COMMISSIONER MENZIES: But these are actually programming expenses, not necessarily higher commissions that you are paying --
2524 MS McLAUGHLIN: No.
2525 COMMISSIONER MENZIES: -- or administrative costs or marketing costs? This is actual investment in programming?
2526 MS McLAUGHLIN: That's right. Our marketing budget is 4 percent of revenues in Years 1 and 2, and drops down to 2 percent thereafter. So, you know, it is actually programming, investing in what we think will need to be more spoken word.
2527 COMMISSIONER MENZIES: What percentage of your programming expenses are involved in your third language programming, or have you broken that out?
2528 MR. BOLA: No, we haven't broken that out. Actually, there are really no expenses there, because most of the programs are produced by associated producers. We make the facility available to them. They have their own staff. They have their own talent. So there is, primarily, no in-house cost to us.
2529 COMMISSIONER MENZIES: Okay. Now, 36.9 percent of your programming you propose to be third language, but in your proposal you say, "third language, including English".
2530 Maybe something got lost in that.
2531 Just to clarify, the CRTC definition of third language means that programming in that category -- third language -- can be neither English, French nor Aboriginal.
2532 And I think it was the news that we were talking about, right?
2533 MR. BOLA: It's a typo.
2534 COMMISSIONER MENZIES: It's a typo? Okay.
2535 It's just a typo and it's still 36.9 percent?
2536 MR. BOLA: Yes, that is correct.
2537 COMMISSIONER MENZIES: Okay. And no English is counted within that figure.
2538 Okay, thanks.
2539 Now, a lot of your programming is open line and, as you mentioned, some of it is -- I'm not sure if brokered is the right word, but contracted out in the other areas.
2540 As you know, some of the open line programming is governed in our policies, regarding balance and delays and interdiction on abusive comments and other items.
2541 What measures do you have in place, or planned, to be in compliance with that policy?
2542 Or, maybe the easier answer: Will you, if granted a licence, go on the record as promising to have such measures in place before you launch?
2543 MR. MILLMAN: Certainly, after 20 years of sports talk radio, we recognize the need for a delay system, with the passion, certainly, for sports. We will put in a digital delay system.
2544 All of the producers will be educated in terms of --
2545 COMMISSIONER MENZIES: All you have to say is yes.
2546 MR. MILLMAN: Yes.
2547 COMMISSIONER MENZIES: Thanks.
2548 MR. BOLA: The answer is yes.
2549 MR. MILLMAN: I'm sorry, what was the question?
2550 COMMISSIONER MENZIES: You may have heard this question come up with some others, too. Last year the CRTC amended section 15 of the Radio Regulations, so that we now require those with revenues over $1.25 million to direct at least 15 percent of their basic CCD to the Community Radio Fund.
2551 Were you aware of this?
2552 It just happened last year, so a lot of people missed it.
2553 MR. BOLA: The answer is yes.
2554 COMMISSIONER MENZIES: I'm sorry, you were aware of it or you weren't aware of it?
2555 MR. BOLA: I just became aware of it today.
2556 COMMISSIONER MENZIES: Do you intend to comply with that regulation --
2557 MR. BOLA: Yes.
2558 COMMISSIONER MENZIES: -- or are you asking for an exemption?
2559 MR. BOLA: No, no exemptions. Thank you.
2560 COMMISSIONER MENZIES: Okay. Yes is always a good answer.
2561 How will you market this? Given the number of signals that are going into the Markham area from outside, how will you muscle your way into that?
2562 I find it particularly -- from a business point of view, the third language aspect in the evenings is interesting, but if I have been listening to your radio station all day, and I go home and I am listening to it, and then I go out to take the kids to a hockey game that night, or a soccer game, or whatever, and I turn the radio on and it's in Arabic, and I am not speaking Arabic, I am changing the channel.
2563 So, when I get up the next morning, your radio station isn't going to be on my car radio. That's the first thing.
2564 That creates a particular opportunity in the third language, but it creates an issue, too, in terms of maintaining your brand and your audience loyalty.
2565 So I would like to know what you have in mind in terms of launching and marketing that would help you muscle your way into people's psyche.
2566 MR. BOLA: Debra is going to respond to that. Thank you.
2567 MS McLAUGHLIN: Actually, I think several of us will.
2568 The brand of the station --
2569 COMMISSIONER MENZIES: If it's going to be several of you, share it.
2570 MS McLAUGHLIN: Yes.
2571 The brand of this station is Markham, and by virtue of Markham being multicultural, the station has to be multicultural. It has to have an element in it --
2572 COMMISSIONER MENZIES: Yes.
2573 MS McLAUGHLIN: People wouldn't recognize it.
2574 We asked the focus groups, both the ethnic language groups and the English, how we would reach them, and their number one piece of advice was to show up and be local, to be at all of the events, to be on the transit system, to be in the malls, to do outreach, because that's where they live, work and play.
2575 I am not sure if any of the language producers would have anything to add to that, but, you know, the communities are tight, the word will spread.
2576 MR. YEUNG: Maybe I could add a few words.
2577 I think that being in the multicultural, very diverse community that Markham is -- at least, I can speak on behalf of the Mandarin-speaking and the Cantonese-speaking people living in Markham. They will, for sure, be able to identify and follow what time slots such programming will be available.
2578 So there will be, I would say, loyalty being developed, so long as it is being exposed.
2579 And last, but not least, I go back to the very important point that it covers a lot of local pertinent information that the community is dearly looking for.
2580 So, in terms of following it, in terms of brand equity, I don't worry about it at all.
2581 MR. STUBBS: There was a question about tuning back into the station.
2582 My wife worked in Markham for four years and never heard a traffic report dealing with the area. She spent 45 minutes, quite often, trying to get out of Allstate Parkway onto Highway 7, and the Toronto stations never said a word about it.
2583 So if there was a source that she could turn to to find out what is happening with traffic -- and even the weather systems are different in Markham than they are in Toronto.
2584 COMMISSIONER MENZIES: The local, local, local that you would generally find -- less Rob Ford, more Frank Scarpitti --
2585 MR. SCARPITTI: Could I just add a quick comment?
2586 COMMISSIONER MENZIES: In terms of news?
2587 MR. SCARPITTI: In terms of the commitment of Markham people finding this station and listening to it.
2588 There is a great amount of civic pride in Markham. I speak to the torch run that we had with the Winter Olympics. It was the second-largest turnout in the GTA, only second to the City of Toronto, because ours was during the day. If ours had been at night, I think we would have surpassed the Toronto turnout on the torch run.
2589 We were one of three municipalities to host festivities centred around the IIFA awards that were here in Toronto. Other than the IIFA awards themselves, which took place in the Rogers Centre, we had an incredible turnout and participation of three major events in Markham.
2590 I just point to those as recent examples, but there is great civic pride, there is great engagement on behalf of the community.
2591 We are just undertaking a major expansion of Markham Stouffville Hospital. We have to raise $50 million for the expansion of Markham Stouffville Hospital. We are over 78 percent of our goal, and in large part it has been the various multicultural communities that have helped us get to that goal.
2592 So there is a great sense of civic pride, and I think they will have, at least, this station preset, so that when they want to go there, they know exactly where it is going to be.
2593 COMMISSIONER MENZIES: And while I have you, sir, I have a question about the arena. A 20,000-seat arena is rather big, sort of NHL size.
2594 COMMISSIONER MENZIES: I was wondering who your primary tenant is, and the reason for its construction.
2595 Because that is a big arena for -- I mean, Markham is growing very quickly, but that is a big arena for a municipality of that size.
2596 MR. SCARPITTI: Here is something I am sure you have never heard: No comment.
2597 MR. SCARPITTI: Just very quickly on that point; we have approved the financial framework, so we now have to put together all of the legal arrangements.
2598 But just on the facility -- and I think, again, it speaks to some of the pent-up demand that exists within the GTA, and within Markham itself.
2599 Live Nation, which is the largest concert promoter in the world, has been involved in the development of this arena. It will be the only arena in North America that has been designed from the ground up.
2600 I don't want to get into all of the details, but there will be eight loading docks for tractor trailers, which will make the setup time and takedown time of special events one of the quickest ever.
2601 With the amount of pent-up demand that exists within the GTA -- there are many events that are brought to the ACC that could be there a second and sometimes a third night, and they can't because of the occupancy of some other tenants within that building.
2602 COMMISSIONER MENZIES: I understand. Thank you.
2603 MR. BOLA: May I add a couple of points regarding marketing and --
2604 COMMISSIONER MENZIES: Quickly.
2605 MR. BOLA: I think it's very important to see the number of values that we have here. We have checked with WOWtv, and we already have a place to promote our station.
2606 We have Bhupinder Tour, which has Punjabi and Hindi programming.
2607 So it will be easy for us to already use the existing sources that we are currently working with.
2608 And we will work with other producers, as well, because they are already established in the market.
2609 And having that existing audience creates a great awareness of the service we are providing.
2610 Plus, on our mainstream programming, we will have promotional segments with regards to what is happening in the community and what is happening in the other cultures, and so on, and we will work with local organizations and events to create awareness and build our brand.
2611 Thank you.
2612 COMMISSIONER MENZIES: I was going to ask you about advertising, because you mentioned 95 percent local revenue, but you answered a lot of that, and you appear to have the Mercedes Benz dealership signed up already.
2613 My broader question is to you, specifically, Mr. Bola. You are known to us. This is the first time we have met you, but you have a large number of Category B licences, and I am concerned that, should those launch and this licensing go ahead, you might not have the financial capacity to manage all of that.
2614 I would like your response to that concern.
2615 MR. BOLA: Sure. First of all, on the Category 2 side of it, most of those applications have expired. That is a totally separate project altogether.
2616 For the Markham radio station, the money is set aside. This is a totally separate project. It has no bearing with regards to any other Category 2 licences.
2617 My focus is going to be on this radio station. It is a much better business case than a Category 2, simply because it is local, there are no barriers, other than getting a licence to entry.
2618 Without Category 2 you have all kinds of barriers. You need a number of BDUs to access a number of BDUs in order to make your business case.
2619 So primarily coming back to Markham Radio, I'm dedicated to this project and I really believe in this project. There is a gap in the market and I want to serve that gap. I'm totally committed to this project.
2620 COMMISSIONER MENZIES: Okay, thank you very much. I don't have any more questions.
2621 THE CHAIRPERSON: Thank you.
2622 I have got a couple questions and maybe my fellow Commissioners do as well.
2623 I have taken a look at your sample block schedule and I have tried to marry it with your financial statements or projections. It becomes clear to me that you have got a substantial amount of revenue coming in from what you call time sales. I think you mentioned the notion of passing on the time slots that are on here, Mandarin, Cantonese, Urdu, Arabic, Punjabi and others to other people.
2624 So are you looking at syndicating a large component of your radio station?
2625 MR. BOLA: Nelson, do you want to --
2626 MR. MILLMAN: No, there is no plan to syndicate the programming. Everything will be produced locally for the Markham-York region.
2627 THE CHAIRPERSON: So it's just going to be for yourselves?
2628 MR. MILLMAN: Yes.
2629 THE CHAIRPERSON: Okay.
2630 And when you sell these slots you are going to basically handover the control of the station between, I don't know, between seven and eight o'clock on Monday to Friday to the Mandarin producer and it's his show to develop and his advertising to generate?
2631 Is that how that works?
2632 MR. MILLMAN: It will be his show. Mr. Bola will retain the control.
2633 They will retain -- the independent producers will retain some of the inventory and we will keep some back.
2634 THE CHAIRPERSON: But the revenues that are in here, are they Mr. Bola's or are they the Mandarin coordinator for that hour?
2635 MR. BOLA: They are our revenues.
2636 THE CHAIRPERSON: They are your revenues.
2637 MR. BOLA: Yes. The revenues that we have, you know pre-negotiated, that's for the airtime and the producers, you know, generate their own advertising, their own revenues from various advertisers.
2638 THE CHAIRPERSON: Okay, so I'm confused. If there is a slot between, I don't know, Monday to Friday, seven till eight is Mandarin, are you selling advertising during that period of time or is your Mandarin producer selling that advertising revenue during that time?
2639 MR. BOLA: Eddy will answer that.
2640 Thank you.
2641 MR. LELIEVRE: The Manderin producer will sell that advertising. We will retain two minutes per hour.
2642 THE CHAIRPERSON: Okay.
2643 MR. LELIEVRE: For the radio station.
2644 THE CHAIRPERSON: Okay. So you keep two minutes per hour.
2645 MR. LELIEVRE: Yes.
2646 THE CHAIRPERSON: Assuming he can sell out his entire inventory.
2647 MR. LELIEVRE: That's correct.
2648 THE CHAIRPERSON: He keeps the rest of it?
2649 MR. LELIEVRE: That's right.
2650 THE CHAIRPERSON: And so he is turn-key. He has got a key to the broadcast studio. He walks in from seven to eight. That's his. From eight to nine it's Cantonese; from nine to ten it's Urdu?
2651 MR. LELIEVRE: That's correct, yes.
2652 THE CHAIRPERSON: And so your area of control, if I can call it that, is Monday to Friday from six a.m. until six-thirty p.m. and then on Saturday and Sunday the Markham weekly wrap ups.
2653 And other than that everything else is ethnic and it's all handled through an arms-length relationship to a producer of that ethnicity and he will generate his revenues.
2654 If he doesn't get the revenues then he is out the work he has done and the money he has spent. Is that the way it works?
2655 MR. LELIEVRE: Well, not exactly. It's kind of like that, though, because they are responsible to get advertising for their shows because that's what they know and that's how all of ethnic radio works.
2656 However, we will be there, as we heard earlier, with a program -- with news so that they will have a newsperson feeding these ethnic programmers stuff to do to put into their programming in the evening or on the weekend, whatever the case will be. So there will be somebody running it.
2657 However, as all or almost all ethnic programming is done, the producers are responsible for the sales of their programs.
2658 THE CHAIRPERSON: So when I look at this financial statement then, and it has time sales and internet in Year 1 of roughly 50 percent of the total revenues, you don't retain the majority of that revenue. You are getting two minutes out of whatever, 20 minutes of advertising.
2659 MR. LELIEVRE: But 20 minutes of the ethnic component.
2660 THE CHAIRPERSON: Right.
2661 MR. LELIEVRE: I mean two minutes, I'm sorry, of the ethnic component.
2662 THE CHAIRPERSON: Yeah, but I would assume this is all ethnic. The other income line here called time sales is all ethnic.
2663 MR. LELIEVRE: Yes.
2664 THE CHAIRPERSON: So in Year 1 to be clear, there is $829,400 of revenues coming in, in Year 1, from those ethnic producers who are selling time.
2665 MR. LELIEVRE: That's correct.
2666 THE CHAIRPERSON: It's their revenue and not your revenue. You are getting two minutes of it.
2667 MR. LELIEVRE: No, this is the revenue we will get from the producers. These are the pre-arranged agreements we have literally already that this is the money the radio station will get from the producers.
2668 THE CHAIRPERSON: So you are selling the hour for a certain amount of money and it's a fixed amount of money plus two minutes of advertising revenue?
2669 MR. LELIEVRE: That's correct.
2670 THE CHAIRPERSON: And the rest of it goes to them?
2671 MR. LELIEVRE: Yes, whatever they can produce. They have to come up with some type of guarantees and they in turn go out and sell it.
2672 THE CHAIRPERSON: So what happens, hypothetically, if one of these communities -- I won't name anybody but one of these communities falls flat and can't generate advertising revenue? You have got the hour back suddenly and it happens to be, I don't know, from 11 p.m. till midnight on Monday to Friday. Do they just close up shop and say can't meet the conditions? I'm out of here. I can't pay you anymore.
2673 MR. LELIEVRE: That's right, exactly.
2674 But the fact is that we will have other producers waiting for shows. This is an on-going situation in ethnic radio where they are all producers constantly coming to look for a show. So whatever that programming is there will be somebody waiting to take it over.
2675 THE CHAIRPERSON: So let me understand this.
2676 We are the CRTC. We are going to licence to you. Then you are going to be the quasi-Markham CRTC and you are going to issue a licence to the various ethnicities for a slot in that community?
2677 MR. LELIEVRE: Yes.
2678 Oh, no, not that way. But the thing is that we have looked -- no, no, I'm saying we have looked at the communities in the Markham area, the large ones. So all of these languages are feasible and will work.
2679 But any one of the producers may have a bit of a difficult time. So we would have to help, number one, and if what you just said, if he can't make it at all, there is no way; well, that's fine. We would take it back but we would find somebody else to do this, to do the same --
2680 MR. MILLMAN: I think right across the country there are many radio stations that sell off hours of programing to independent producers. We did so in Toronto at the AM station that I ran. This is no different.
2681 THE CHAIRPERSON: But this is the majority of your hours. I mean from what I'm looking at this page here, I have 126 hours or 45 of them, 46 of them are being sold off. That's 40 percent of the hours are being sold off.
2682 MR. MILLMAN: Well, we felt that was the best way to reach the community by having the producers who already have experience in producing programming for their communities to allow them access to the airwaves. We bring the revenue in through them.
2683 I think Mr. Bola's point and Eddy's point; these aren't the only producers that are out there. There are other companies and businesses who are willing to make the investment.
2684 THE CHAIRPERSON: There are all sorts of codes of conduct that we have to abide by, that you have to abide by as well. And now you are going to be contracting it to somebody else and holding them responsible for meeting whether it's racial or any other types of conditions on the licence.
2685 Then when we get a complaint we have got to reach into you and say one of your producers has crossed the line.
2686 MR. MILLMAN: Yes, and again no different from any other radio station that turns out blocks of hours over.
2687 It will be incumbent on us to ensure that the independent producers are aware of all the Canadian Broadcast Standards Council and the other regulations. That's incumbent on any radio station. The station -- ultimately, Mr. Bola will be responsible for the content on the radio station.
2688 THE CHAIRPERSON: Okay.
2689 MR. BOLA: May I just add? I think this point needs to be very, very clear.
2690 We will have a programing committee. We will have agreements between our producers that clearly understand the requirement of the CRTC.
2691 In addition to my day-to-day consulting business I also have airtime that I purchase/resell and we have managed this. We have agreements already in place with a number of producers in the marketplace. We are well aware of the regulation requirements and the producers are well aware of the regulation requirements.
2692 These are people that are currently producing programs in the market and they completely understand what is the requirement and how to meet that requirement.
2693 Again, we will have a programming committee and we will monitor the shows. If there is any complaint we will address those to maintain the system.
2694 We are well aware of the requirement and we will adhere to those requirements.
2695 THE CHAIRPERSON: Okay. So just so I understand and I think I do now, that if I just look at Year 1 -- and you have got the numbers in front of you -- that more than 50 percent of the revenues are coming from the contracted time arrangements that you are making and that amounts to almost 40 percent of the hours.
2696 So you are selling off 40 percent of the hours and you are forecasting to get 50 percent of the revenue from those hours based on your forecast?
2697 MR. LELIEVRE: Yes.
2698 MR. BOLA: Yes.
2699 THE CHAIRPERSON: Okay. So then I understand what you are doing.
2700 Thank you very much. Those are my questions.
2701 Anybody else? Commissioner Poirier...?
2702 COMMISSIONER POIRIER: Yes.
2703 Well, I understand you are some kind of a hybrid radio station, hybrid meaning for me that you will dedicate all the information to the Markham public mostly, okay, maybe some others might listen to it from elsewhere in Toronto, okay. But usually the information will be dedicated and you will do it mostly in English but also part of it will be done in some other -- on third languages and you will be brokering that part, not the English part.
2704 MR. BOLA: That is correct.
2705 COMMISSIONER POIRIER: Okay.
2706 But you know as a commercial English radio station usually you have not to exceed 15 percent of a foreign language. So would you want us to add a condition of licence allowing you to broadcast 36.9 percent of foreign language because you are well above the limit we usually accept for an English commercial radio station?
2707 MR. BOLA: Yes.
2708 COMMISSIONER POIRIER: Thank you very much.
2709 And my second and last question is I was told, reading many of the documents that were provided to us by some other ethnic groups, that brokering has been difficult these days in Toronto because of the recession. Many close their doors or didn't pay the radio station.
2710 So are you sure you have enough producers to support your programming?
2711 MR. BOLA: Yes. The simple answer is yes. In the Markham area there is a much larger demand. We are going to be focused to that community.
2712 I just want Chuck to elaborate a little bit on just an example from the Chinese community that there is a demand and we can, you know, serve that demand.
2713 MR. YEUNG: Certainly, thanks.
2714 I think one thing for sure is it's no secret with the recent growing economy of the Chinese being blah, blah, blah without elaborating.
2715 There is a growing demand as far as advertising, promoting the products addressed directly to that community as well as the Canadian size.
2716 So we do see there is a -- I speak on that particular segment. There is a growing demand and opportunity for such products, for such advertisers to seek other media which allow them to address directly to a certain market sector such as the Markham area.
2717 So we are experiencing, for instance, even food importers, even some of the big banks who might have discretionary revenue or advertising revenue which might not allow them to advertise and promote in the Greater Toronto radio because of the rate issues. They would try to go and address that and market it through the local ethnic radio segment.
2718 MR. BOLA: I would also like Bhupinder Toor to comment on that on South Asian programming as well.
2719 MR. TOOR: Just as by my broadcasting experience, Indian retailers are also unserved because we are receiving so many calls from there and now there are so many big companies from India they are more than happy to advertise there.
2720 COMMISSIONER POIRIER: Okay, thank you.
2721 THE CHAIRPERSON: Thank you. That completes our questioning of this panel. Appreciate it very much.
2722 We will take a 10-minute break.
2723 MR. BOLA: Thank you very much. Thank you.
--- Upon recessing at 1530
--- Upon resuming at 1522
2724 THE SECRETARY: All right. We are now ready to hear Item 6 on the Agenda which is an application by Durham Radio Inc. for a broadcasting licence to operate an English-language FM commercial radio programming undertaking in Toronto.
2725 Appearing for Durham Radio is Mr. Doug Kirk. Please introduce yourself for the record. You will then have 20 minutes for your presentation.
2726 MR. KIRK: Thank you, Ms Roy.
2727 Good afternoon, Acting Chair Katz, Vice-Chairman Pentefountas, Commissioners Molnar, Poirier, Menzies, Patrone and Simpson, Hearing Secretary Roy, legal team and Commission staff.
2728 My name is Doug Kirk. I'm the President of Durham Radio Inc., an independently owned company operating four radio stations in Hamilton and Oshawa.
2729 I have been deeply involved in the broadcasting business for over 30 years and a station owner for over 25. I am also serving my fourth year as President of the Ontario Association of Broadcasters.
2730 I am here today with my team to help you determine the best use of the 88.1 frequency in Toronto and, by elaborating on our proposal for a New Easy Listening radio format, we hope to make your job easy.
2731 Before we share the highlights of our application I would like to take a moment to introduce our panel.
2732 In the front row here is our Presentation Panel. To my right and your left are:
2733 - Mary Kirk, my wife and partner in Durham Radio;
2734 - Next to Mary is Alexander Zonjic, a Canadian artist, event producer and broadcaster;
2735 - And to Alexander's right, Greg Kavanagh, a Juno-award winning producer and artist.
2736 - To my left and your right are Steve Kassay, Vice President, Programming and Operations of Durham Radio;
2737 - And Andrew Forsyth, our consultant.
2738 Behind us are our interveners in support:
2739 - Karen Cummings is immediately behind me;
2740 - Michael Williams behind Mary;
2741 - And Rob Tardik behind Steve.
2742 We are delighted to be here today to explain how important The Lake will be for Toronto. 88.1 The Lake will be very different from existing Toronto stations and from the stations being proposed by other applicants.
2743 Our unique new easy listening format significantly increases the diversity of the musical and spoken word choice available in Toronto and offers an exciting, widely appealing mainstream format, something the Commission has not licenced in Canada's largest market for 20 years.
2744 In addition, Durham Radio guarantees to enhance diversity throughout its licence term by making the format's distinctive instrumental component a condition of licence.
2745 Approving this application makes good sense for many reasons:
2746 First, the introduction of 88.1 The Lake will have no material economic impact on local stations, and we mean that.
2747 Secondly, it significantly increases musical diversity and spoken word choice for an under-served but important demographic,
2748 Thirdly, it will provide substantial new Canadian Content Development Initiatives and, in particular, will support new and emerging Canadian talent currently ignored by radio in Toronto.
2749 And, finally, it will increase the diversity of ownership in the Toronto market by adding the presence of an experienced and successful independent radio broadcasting company committed to this format and in a position to grow.
2750 This licence is strategically important to Durham Radio. We apply to the Commission only when it makes strategic sense to grow our company. We were last granted a licence in 2000, the year 2000, over 12 years ago.
2751 Let me go back to elaborate on our first point. The Lake will have no material impact on existing local stations. Let me articulate two thoughts to you.
2752 Number one, Durham Radio operates in and around this market, and recognizes that there is a void in the music selections offered to radio listeners today. Because The Lake will be filling that void with a format unique to Canada and completely different from any of the present choices, it will attract a disenfranchised audience that has less interest in today's contemporary music formats, and is presently fragmented in its listening choices. Thus, it will result in little negative impact on other stations' audiences.
2753 Secondly, let's look realistically at the impact of the 88.1 signal. It is not the equivalent of other mainstream signals, in that it will service a much smaller coverage area.
2754 Thus, we have proposed realistically conservative revenue expectations over the first few years to take into account the limited potential of this signal. Our prudent financial forecasts mitigate any negative impact on existing stations.
2755 Other applicants forecasting substantial revenues from the outset would indeed have a negative impact on the other stations in the market were their forecasts in fact realistic. However, we see these forecasts as completely unrealistic, given the size of the 88.1 signal and the specialized nature of the formats proposed.
2756 To show the pressing need for a new, fresh choice in the Toronto market, let's look at our research findings and the format itself.
2757 Over to Andrew.
2758 MR. FORSYTH: One of radio's greatest strengths is its ability to adapt to listeners' and advertisers' changing needs. Its resilience guarantees that it will remain alive and well in Toronto. For that reason, we are all here to help you determine the worthiest applicant for 88.1 FM.
2759 The Hendershot research in this application takes a look at the Toronto radio audience, and in particular the changing listening habits over the years of our target 45+ boomer demographic.
2760 We now see the older 45+ demographic moving away from contemporary music listening and spending more time with spoken-word based radio formats. These Baby Boomers, who are now 47 to 65 years old, represent 1.6 million persons or 25 percent of the Toronto CMA population, a very large and underserved demographic.
2761 In the research, our 45 to 64 target group ranked new easy listening as the music style that has the most appeal and is their preferred music style. New easy listening was selected ahead of CHR and AAA in terms of this audience's intent to listen.
2762 So, what is the new easy listening format? Who makes up the playlist and why, as a new entity, does it have such solid support from its target audience?
2763 To be clear, we are not talking about the mid-60's instrumental music from James Last, Paul Mauriat or Ferrante and Teicher or the vocalists like Frank Sinatra, Tony Bennett or Barbra Streisand or artists like that heard on adult standard stations.
2764 What we are talking about is a contemporary blend of vocals and predominantly pop instrumentals. Significantly different from the old easy listening or jazz-based instrumental formats, new easy listening gives much greater emphasis to vocalists, many of whom are familiar, like Lionel Richie, Daryl Hall, Luther Vandross and Sting; artists missing from Toronto radio playlists today. Other newer singer-songwriters like Matt Dusk, Chris Smith and Julie C. are rarely presented to the Toronto radio audience.
2765 This is adult music for adults by new and emerging artists who bring a sense of style and innovation, balanced by established performers with rich catalogues that are hallmarks of great music; artists whose repertoires coincide with this audience's life memories.
2766 Such is Durham Radio's faith in this unique instrumental/vocal blend of musical genres, that The Lake has committed to a minimum requirement of 30 percent instrumental as a condition of license.
2767 So what about the Canadian connection at 88.1 The Lake?
2768 There is a large universe of performers from across Canada who can provide music and in return benefit from exposure in the nation's metropolis.
2769 For example, Toronto artists like Emmy award winner Don Breithaupt, Andrew Scott, and Rob Tardik who is with us today. Other artists include internationally recognized Canadian stars Jesse Cook, Rik Emmett, Warren Hill and Alexander Zonjic who is also joining us today. None of these artists are presently receiving any meaningful airplay on Canadian radio.
2770 The Lake is committing to a minimum of 35 percent Canadian content, in both Category 2 and Category 3 selections and a minimum of 10 percent of all airplay to emerging artists spread evenly across the day. That's one in 10 songs will be from an emerging artist.
2771 Minimum commitments are just that, minimums. Durham Radio has a record, acknowledged by the Commission, of going over and above its commitments at its stations. It is standard practice for radio to commit to levels of airplay, new artist exposure and monetary investments in Canadian talent.
2772 But it's more than say, play and pay at Durham Radio. It is just do it; get down to the clubs, recording studios, kitchens, backstage, rehearsal spaces, the concert halls, arenas and open air recitals to work with the artists face to face; help artists with their goals and contribute to their success.
2773 The Kirks, the owner/operators of Durham Radio, bring their own unparalleled, one-on-one, hands-on participation with the performers to a level unrivalled by any licensee in Canada.
2774 So why new easy listening now?
2775 It is easy to understand the support and interest in new easy listening shown by the respondents in the research.
2776 This endorsement reflects AC radio turning its attention to a younger 25-34 segment of the 25 to 54 audience. Effectively, AC has recalibrated its music library disposing of "older" stars and relying more on a new generation of pop stars.
2777 A recent look at the Top 40 chart for Canadian AC showed that all of the titles are or have charted at the younger targeted hot AC format and 60 percent are or have been on the CHR Top 20 chart. There is a lot of crossover at these three pop-based formats.
2778 A recent study by Nielsen Research in both the United States and Canada shows that over 60 percent of the Top 100 AC artists of 2007 are no longer in the Top 100 today. Former AC superstars like Celine Dion, Rod Stewart, Billy Joel and Phil Collins see their former place at the top of the charts now filled with New Pop artists like Lady GaGa, Katy Perry, Bruno Mars, Nickelback and Pink.
2779 The last 13-week PPM results show the market's leading adult contemporary station owns not only its traditional adult 25-54 cell but also wins the 18 to 34 year-old group. That would have been unheard of five years ago.
2780 The 45+ audience is pushing away from new pop and tuning stations with spoken-word content or specialized music. Its tastes are refined, with more choosing CBC Radio One, All-News AM680, Classical 96, Q107 and Jazz-FM over the new pop-based stations.
2781 New Easy Listening is a music format that fills the void for adult music at the centre of the musical spectrum acknowledging a mature audience's appreciation for pop-based music that meets its sensibilities.
2783 MR. KASSAY: Though music is the central focus of The Lake, we know that spoken word is also a crucial element for this discerning over-45 Toronto audience. Thus, over 20 hours of spoken word programming will deliver intelligent, relevant content that enhances our music mix and the sophisticated on-air style.
2784 We'll present over 10 hours of news and information weekly, with pure news accounting for three and a half hours of that weekly total. Covering local, national and international news stories, Durham Radio's independent perspective on the news will add a fresh editorial voice and increase the diversity of choice in the market.
2785 The Lake News will devote 75 percent of news airtime to items of local importance and interest.
2786 Our Toronto audience's accessibility to news will be enhanced considerably by our online news and information service, thelakenews.com. Our template for this supplementary online information service is provided by our Oshawa experience where the launch of durhamradionews.com was spectacularly successful.
2787 Our Durham news service will be further strengthened by information from thelakenews.com.
2788 So The Lake's listeners will be fully served on-air, online, through mobile applications and social media, all independently administered by Durham Radio using our existing resources.
2789 Music information and entertainment news will be key components of The Lake's spoken word programming. They broaden the listening experience. They add relevance and context. The Lake will effectively connect its audience with its artists online and on air.
2790 Our on-air personalities will present information about music-related topics and local events in a way that reflects Toronto's downtown cosmopolitan lifestyle targeting the 45-plus audience demographic, which is under served by Toronto commercial radio.
2791 Durham Radio is proud, too, of its community initiative, which is a local information program that we've developed over the years to support charity and non-profit organizations in the neighbourhoods that we serve.
2792 The Lake will apply that existing Durham blueprint in order to share with our audience important information about the local community. We'll welcome local groups to our stations and offer opportunities for live primetime interviews, regularly scheduled on-air promotions, online listenings, too, which give the users the ability to post their own messages and events.
2793 We'll regularly send out station personnel to promote events on-site and provide live on-air reports, all at no cost.
2794 The Lake's Events Coordinator will execute all aspects of this program and basically get out into the neighbourhoods. Our Community Initiative will be easy to implement because at Durham Radio, we're already doing this every day at all our stations.
2795 On-air, on-line, on site and through social media channels, The Lake Community Initiative, like all aspects of our spoken word programming, is our commitment to connect our audience with its local community.
2796 MR. KIRK: Thanks, Steve.
2797 Let's look at another of the many good reasons to grant this licence to The Lake, the overall value of our Canadian Content Development initiatives.
2798 Our proposals will have direct benefits to many Canadian artists whom we'll feature in our programming, both emerging and established, not to mention the benefits to our listeners and to the music industry as a whole in Canada.
2799 We have committed to spend $100,000 over and above the basic required CCD expenditures in three initiatives.
2800 Number 1, an annual Seminar/Workshop Series in Toronto for musicians. Number 2, The Lake's Music Store in Toronto, and (3), the Canadian N-E-Z Awards Show.
2801 Our monetary expenditures will provide maximum benefits to the artists and to the entire Canadian broadcasting system, but the true value of our initiatives cannot be measured solely in dollars.
2802 One initiative that will be of high value to emerging artists is The Artist Development Seminar Series.
2804 MR. KAVANAGH: I'm really excited about this. The Lake will organize and present an annual free workshop in Toronto for all musicians and others interested in the music industry. Topics explored would include recording, mixing and arranging, live performance, artist management, music publishing and funding for projects from FACTOR and other similar organizations.
2805 These workshops will provide a chance for budding artists to meet outstanding experts on a broad range of subjects related to the music business. As an artist and producer, I can tell you that such opportunities for learning and networking prove invaluable.
2806 MR. KIRK: Thanks, Greg.
2807 A second initiative will particularly benefit emerging artists, most of whom do not have major label distribution. This is The Lake Music Store.
2808 This is easy for us to implement in Toronto, as we already have the model to do this on the internet; we've been doing it for years. It makes the music we play accessible to the audience by providing them a service that addresses today's consumer needs. The purchasing of CDs, the downloading of singles, promotional tracks, podcasts and artist interviews can all be accomplished on-line, with one click.
2809 In the store, all proceeds from music sales go directly to the artists. No money from sales is used to fund the operating expenses.
2810 Our commitment of $15,000 per year will cover the costs of setting up the store for on-line and over-the-counter purchasing. It will also cover the cost of advertising. We will offer ongoing promotion for the Store on-air and on-line, with an indirect expenditure valued at $100,000 per year.
2811 Our third major CCD initiative will benefit all Canadian artists associated with The Lake, whether they are well established or just starting a career in music. We will produce a world-class awards show, The Canadian N-E-Z Awards, similar to the one we've produced for the last seven years. The benefits of exposing this music to a worldwide audience is invaluable. In the past, Canadian artists have performed on stage with legends such as George Benson, David Sanborn, Larry Carlton, Spyro Gyra and others.
2812 David Marsden, who you may know, founder of the CASBYs, now the Junos, has described our show as "offering a support system that has not been seen since the CASBY Awards."
2813 Our panelist, Alexander Zonjic, will attest, this show offers tremendous benefits to our artists. Alexander.
2814 MR. ZONJIC: Thank you, Doug. Absolutely.
2815 I am a Canadian artist still living in Canada who is certainly lucky enough to make his living in the music business. And I have been pursuing my passion for a lot of years and yes, I've avoided, I think, what some people call a real job, but I've certainly not avoided real work. This music business, as we've all found to be the case, is a very tough business.
2816 An awards show like this is invaluable to artists, giving them an opportunity to gather with their contemporaries and feel like part of a family, play with musical legends and, most of all, receive the broad mainstream media exposure they need to make an impact. Bringing world class artists together annually has given many a chance to network and learn from the best. And certainly for a young musician, this is a dream come true. Winning or even being nominated is a credential we all display proudly.
2817 Promotion and airplay are certainly our lifelines. We contemporary instrumental artists, I particular, have few outlets to showcase our music. We need the media exposure to develop fan bases, concert appearances, CD sales, things that keep us in this business we love so much. And Durham Radio provides all this for artists not supported anywhere else.
2818 In a business lacking in passionate people who promote and do things for the love of the music, that's certainly what Doug and Mary are, truly unique. I, along with many others, have sincere gratitude and respect for the Kirks and their commitment to the music we all love so much.
2820 MS KIRK: Thanks, Alex.
2821 The show will also indirectly support budding music students through its annual charitable donation to Musicounts, which supports school music programs in Canada.
2822 I've been executive producer of both the live and televised awards shows since 2005 and am well aware of the physical, emotional and financial costs of putting together an international event of this calibre. Our past experience with this will make it easy to launch an internationally-recognized awards show.
2823 The Lake commits $50,000 of qualified CCD expenditures a year to cover the show's production costs and the costs of presenting Canadian performers from across the country on our Toronto stage. The indirect expenditures to The Lake would be several hundred thousand dollars in promotion and advertising costs and Durham Radio resources.
2824 Clearly, the true merit of our Canadian Content Development initiatives is not able to be measured by dollars alone. The positive impact of all these initiatives on the artists associated with our format is immeasurable. We look forward to playing a very rewarding role in helping these artists achieve success.
2825 MR. KIRK: Thank you, Mary.
2826 To be most effective in helping Canadian artists develop full-time music careers, we must be able to deliver their music to the largest major market in the country, Toronto. Our independently owned company, Durham Radio, has competed in the GTA market since 1994 and strategically needs to move into the downtown Toronto market in order to grow and compete against the gigantic multi-station competitors who are, every day, consolidating their widespread influence on the radio industry.
2827 Our stand-alone operations in both Hamilton and Oshawa, immediately adjacent to the CMA of Toronto, offer many synergies through their production, management and administrative resources. This will help make The Lake start-up easy and allow us to operate it more efficiently with less overhead and thus lower cost than operators without proximity to this market, who will have, inevitably, a higher cost point. We are also more nimble and much more "hands-on" than larger corporations with more burdensome corporate structure who dominate the GTA.
2828 The Commission is faced with difficult decisions almost every day, amongst them determining the outcome of the ongoing consolidation of our industry. At one time, we had much greater diversity of ownership than we have today. We feel it's important that experienced regional operators have the opportunity to participate in the major markets such as Toronto. We think our proposal speaks to this opportunity.
2829 We have a solid record with the Commission, we apply for licences only where it is strategically sensible for our company. Durham Radio's proposal for 88.1 fits our growth imperative.
2830 Our new station in the Toronto market with its engaging personalities and relaxing, uplifting music mix will offer listeners a soothing antidote to road rage. Anybody from around here knows about that. It's here. And the therapy they need to get through their stressful day. We offer merit, not millions. With the benefits we bring, we think your choice should be easy.
2831 Thank you.
2832 Our intervenors in support will now present now, and I'll turn it over to the first to speak, who is Robert Tardik.
2833 THE SECRETARY: I'd just like to remind you that you have collectively 10 minutes.
2834 MR. TARDIK: Thank you very much. Thank you, Doug.
2835 Hi. My name is Rob Tardik. Good afternoon to everyone.
2836 I'm an award-winning guitarist from Mississauga, and I support Durham Radio's application for 88.1 The Lake 100 percent.
2837 I have known Doug and Mary Kirk since my early years as an artist, and specifically from the day Mary heard me performing on the patio at the Boulevard Club in Toronto and she dropped her business card in my open guitar case. Recognizing her from the Wave, I gave her a CD. This was a great moment for me, as an artist, to meet someone in radio who was sincerely interested in my music.
2838 Shortly after that, my music started to air on the WAVE and it's a feeling as an artist I will never forget.
2839 Durham Radio has been very important to my music career ever since. I have been hired to play on Durham Radio stages at many promotional events, like the Toronto Wine and Cheese Show, Taste of the Kingsway and the Toronto International Golf Show, where I have gained exposure to a larger fan base where the market is specifically attuned to the eclectic range of music that I play.
2840 For the last seven years, Doug and Mary Kirk have produced The Smoothies Awards, live, on television and broadcast on the radio. Being nominated for and winning an award, performing and meeting many world-renowned artists at this show have helped my name to grow in the business and expanded my fan base.
2841 Winning the 2010 Canadian Contemporary Guitarist of the Year award has been instrumental in helping me make connections with a lot of other key artists in the genre, in Toronto and also in the U.S.
2842 I've performed with and co-written Billboard charting songs with Paul Brown, for instance, a two-time Grammy award-winning producer and guitarist from Los Angeles; Toronto born Warren Hill, now living in LA, and a Canadian, Darren Rahn, who now resides in Colorado
2843 Darren and I wrote a Billboard charting song recently which is still on the top of the charts right now as we speak.
2844 The Kirks have facilitated this invaluable networking opportunity for myself, a connection-based vehicle for artists to show kinship towards each other and show gratitude to the fans who support the genre. This awards show has legitimate credentials if we look at the amazing artists who've been there, the likes of George Benson, Larry Carlton, Spyro Gyra, Bob James, David Sanborn and a host of others.
2845 I see the Toronto radio market in vital need of a station that will promote us artists overlooked by the mainstream pop/rock/top 40 "hit of the month" type stations. Having a forum for my music has had a monumental effect on my career.
2846 Now, looking back as an artist who has hit songs and charted on Billboard Radio in the U.S., I see that this has all been through the initial connection with Durham Radio and their ongoing support right from the very beginnings for my career.
2847 I please urge you to accept and grant their application for a new radio station for the people of Toronto.
2848 The applicant's proven track record of developing and promoting Canadian music and a written promise to play a minimum of 30 percent instrumental content will be an immense help to us artists who are not supported by any other local media outlets here in the GTA.
2849 Durham Radio's effort to create a local station that will combine a unique blend of music with local information will be able to attract an audience desirable to advertisers in the Toronto radio market and ensure that the voice of so many talented local Canadian artists will be heard. It is this type of support that has allowed me and many others to continue to produce music and promote Canadian content here and internationally.
2850 Thank you very much.
2851 MR. WILLIAMS: My name is Michael Williams.
2852 There is and always has been a lack of diversity in music and radio formats in Canada. This new proposed format that has been tried and tested by Durham has brought back to life music long left dead by others. It brings people back to the radio like myself who left music radio for talk radio, where I currently work. The reason why I left music radio was because of the empty music calories and the formats and announcers. No foreground, no mosaic, no information.
2853 Many artists would not even have a career in Canada if it were not for Durham Radio and their loyalty to them over the last 11 years with award shows like The Smoothies. As broadcasters, Mary and Doug, their dedication to the music, the musicians and audience is legendary. I know about this firsthand. I've worked with many artists who have only been able to be played on the WAVE.
2854 This is their commitment. It's clear. Thirty percent of instrumental music, and they will also develop -- help to develop new artists and play established older artists in the demographic to which I belong currently, which is their demographic or cyclographic.
2855 In a city like Toronto, with a mature audience who is musically and socially sophisticated, they deserve a station to reflect the many areas of music they grew up with and enjoyed and discovered, a choice of music that is not often heard on commercial radio today. By updating the easy listening format, Durham delivers the past, the present and the future music of my life and possibly yours.
2856 It's not one genre, it's not one format, but it's a cross-cultural mix never before heard on the radio in this country.
2857 This easy listening format deserves a place on the dial. The music will die and the audience will continue without it. The music will die and the audience will continue to tune out and program their own environment electronically, with less and less need for radio.
2858 Radio must be allowed to grow up with its audience.
2859 MS. CUMMINGS: And I'm Karen Cummings.
2860 In my letter of support, I explained that as an Event Producer for Taste of the Kingsway, a Stage Manager for The Canadian Smoothies Awards and a person who fits squarely into The Lake's target demo of the 40 to 64 age group, I have several perspectives of the Durham's application.
2861 As an Event Producer, I wish picking talent for venues was as simple as putting what I like on the stage, or even who my technical crew always says is the most talented, but it's not. It's about my market. Who's going to entice them to the festival? Who will make them engage, which basically means push product at the bar. That's why I dedicate an entire stage at the Kingsway festival to The Lake's style of music, because that's what works.
2862 As a marketer and a writer I have often questioned just why this is the case. I mean, I always thought that younger, new music listeners were the most loyal, the most dedicated to their artists. I've also noted that the under 30 market in Toronto is a very well represented, especially in comparison to other urban centres. And of course, a logical deduction would be to try and target this population-rich segment.
2863 But my new research shows me why this isn't the wisest choice.
2864 Young people don't listen to radio. Older people do. So it doesn't matter how many of them are in the market if they're not using the medium.
2865 According to marketing plan research I've done for several events, radio listenership is declining in all age groups but one, the over 45 demo. So using a station like The Lake to market and sponsor my event really works.
2866 And there's another reason my stage works at the Kingsway. We give our specific audience something they can't get at any other festival. We give them the opportunity to see their favourite artists live. As a result, that seating area is always packed.
2867 I believe other festivals don't understand the true appeal of the artists in this format and overlook them in trying to please everyone. They end up pleasing very few.
2868 These are the kinds of artists featured at Durham Radio's Canadian Smoothies awards that I have stage-managed for seven years. The technician who mixes the Canadian Smoothies awards show for broadcast, Todd Farhood, wrote me just last week and said, "I really like recording that one. Some amazing musicians on that show."
2869 I actually have technicians who volunteer to work the show -- yes, for free -- just because they say the calibre of music and musicians is so high.
2870 I can't help but think that kind of dedication and loyalty would translate to The Lake's prospective listening audience.
2871 In conclusion, I'd like to ask you a question. What music and what radio station do you listen to? Do you find yourself channel surfing to get what you want to hear?
2872 Right now, I certainly do. I have no choice but to flip from one good program on the CBC to Jazz.FM to CHFI, only to want to flip again as soon as they start playing Rihanna or Katie Perry. This station is needed and, in my opinion, what Toronto listeners are missing.
2873 Thanks for your time.
2874 MR. KIRK: Thank you, Karen, and our other intervenors.
2875 We'd be pleased to take questions.
2876 THE CHAIRPERSON: Thank you very much. I've got a couple of questions that I'd like to start with.
2877 I guess my first question is, many parties have come before us, today, yesterday, and there's more to come and they all say the same thing. There's a void in the marketplace and we need to fill that void, and our solution is the best solution.
2878 If there's a void in the marketplace, why hasn't somebody already filled it? We don't regulate genres today, and so anybody who's out there, and there's a number of people out there with AC formats, easy listening formats in Toronto. And if there's a demand for it, why haven't they migrated into that space?
2879 MR. KIRK: That's an excellent question and I think it brings together a number of factors.
2880 There are numerous formats. I'll have Andrew and Steve comment on this as well, and possibly Alex if he can bring some perspective in the Windsor and Detroit market.
2881 There isn't any format any more that appeals to everybody, and I think in looking at a market like Toronto, there are all sorts of formats available in the market. It's driven in the commercial space by large operators who have quarterly objectives for their shareholders and they gravitate to the largest and most profitable formats that they can run on their radio stations.
2882 That may not appeal to everybody and it may leave niches unserved. This is one that we have determined makes sense to be served.
2883 So when a frequency becomes available, of which there haven't been any in a while in Toronto, we all line up for it and say, "Hey, we'd like to take a shot at that because we think we can fill a void in the market", a style of music, a group of listeners that aren't getting what they want.
2884 Andrew, would you like to comment?
2885 MR. FORSYTH: I think what Doug is talking about as well is, in a sense, the economy of scale. The large organizations, as he's indicated and I've worked and consulted with many of them, do have a mandate to provide a certain amount of revenue, to deliver a certain amount of growth every quarter. And they do so by playing, for lack of better terms, the middle of the field, the most popular music formats that they can that will attract the largest audience.
2886 And so it's generally segmented into pop, rock and dance and country. That's kind of the way it works.
2887 And outside of those realms, there are other formats. And certainly you've heard applications for Triple A as an example, which was one format we had looked at. And certainly there is this new easy listening format that Doug and Mary had been running as well.
2888 The economy of scale comes from to do a format well and to be able to execute it well, you don't necessarily have to expect that you're going to draw in the Toronto market a five share, a six share, a seven share. But if you can comfortably draw a one to a two share, keep your operating costs down, be able to bring in synergies from other operations you've got, then you have an opportunity to run a reasonably good business.
2889 And at the same time, you're obviously going to be playing music that there is a demand for and is not available presently in the market.
2890 MR. KIRK: Steve, did you have something you wanted to add?
2891 MR. KASSAY: I would, thank you.
2892 I don't know if I know why they do what they do, but we can see what they do. And we can see that over the last few years in the Toronto market that what you referred to as the AC stations and I would say, respectfully, possibly formerly regarded as easy listening, have moved up and, as Andrew says, play these current popular artists.
2893 We've seen and documented a shift where the biggest stars of the AC format five years ago are nowhere in the top 100 plays in today's playlists in AC radio.
2894 So we don't need to have the biggest share on the block. We take comfort and, you know, seriously enjoy serving a market that needs service. That is, the backbone of what the Act is looking for from licensees, and it's a defined hole, in our view, and that's why we wish to serve it.
2895 MR. KIRK: I don't think anyone certainly at this table is expecting the type of radio station being proposed for 88.1, we certainly aren't, seeing that as a huge competitive number one radio station.
2896 It doesn't have the signal and, you know, as you mentioned, Toronto is the biggest market in the country. It has the biggest operators fully booked out here. They have their full station allotments. They have a lot of extremely good, smart programming people and research and everything else and they have picked the best spots to commercialize the Toronto market. There is no question, it's all there, it's done.
2897 We are trying to find a piece of the market that can provide real benefit to an underserved area and our research supported this. We found this hole. It's been happening over the last five years and there is a significant underserved market.
2898 That will provide what we can believe to be a viable business opportunity to put into the Toronto market. It's not going to make a 5 share, it's not going to make a 7 share or an 8 share. You have basically a signal that covers a third to a half of the market and we are predicting a 1 to 2 share over the evolution of the first seven years of licence. And with that you can make a viable business.
2899 We have done it, we can do it. We have resources on either side of this market that will help us run this station in Toronto. There are synergies that we have. We don't have to have anybody in administration. They're in Oshawa and Hamilton. They can accommodate this with no additional administrative costs.
2900 So we see that as the real opportunity and we, frankly, can't see how you can make some of these bigger proposals that are coming forth today workable in this market.
2901 For example, if you have a 5 share, if you are predicting a 5 share and you are covering a third of the market, it's sort of anticipating that you are going to get about a 15 share in your primary coverage area, and no station in Toronto gets a 15 share.
2902 And you've got all these big operators and stations that have been here for 30-40 years. They are well run, well established. How can you even think you will do that? That's our view.
2903 So we have -- we have tried to be prudent. If you look at our numbers, they are not as big as the average, but we know what we can sell in this market. We know how tough it is to get in this market. We have operated in this market and we think we can do this and it will provide a real big benefit to the people of Toronto.
2904 THE CHAIRPERSON: I guess -- and I hear what you're saying, there's a void out there and there's an opportunity to garner a 1 or a 2 share and that's what you're going after. But like everything else, once you get into business it's going to be the bottom line that's going to attract an awful lot of attention and so you are going to go where the audience is because that's where the money is as well.
2905 I think that's why you and others are coming in saying that there's a void in a certain demographic or a certain Canadian artist component that aren't getting the attention they should be getting.
2906 But the reality is these are Canadian stations that are promoting presumably Canadian artists as well and if they are not carrying them and they are not putting them on the air it's because they feel, I guess, that they are not getting the audience to support the business.
2907 Now, I hear you saying you are going to come in and you're going to do it, and I think you have actually committed to a condition of licence on 30 percent instrumental.
2908 MR. KIRK: Yes, we have.
2909 THE CHAIRPERSON: So you are prepared to sort of put your money where your mouth is or your mouth where your money is, whichever. But that's the concern that I have at the end.
2910 MR. KIRK: I'll take the 20 out of my mouth now.
2911 THE CHAIRPERSON: But that's the concern that I have at the end of the day. Once we license somebody the reality is we don't regulate genres, so people are going to migrate where they can best maximize their return, subject obviously to their listenership and who they are trying to attract as well.
2912 MR. KIRK: Well, look, I have no trouble with the paradigm. You do not regulate formats per se, but through conditions of licence you can obtain commitments and guarantees from licensees before you, and that's why we propose that this will be serving a differentiated market segment.
2913 For as long as you, the Commission, think we should have this conditional licence, we'll take it. That is what we are committing to right here.
2914 We are not going to in two years say, well, that didn't work, so we'll just hop onto classic rock or, you know, whatever is out there. You will let us know when that's time and our plan is that it not be time. We are going to take that condition because we think -- and we have developed the intelligence to know that this will work in a segment of the Toronto market.
2915 It won't attract much national advertisers. And I think we have tried to give -- we have an example if you would like to see how it works and why our revenues are what they are. If you would like we can distribute it to you if it's worth --
2916 THE CHAIRPERSON: I don't think you can enhance your application at this stage. So giving us something else that will add to your application, I think would be unfair to other participants.
2917 You can certainly talk to some of these issues, but adding more to the record I don't think is appropriate at this point in time, subject to my lawyers telling me differently and they are not.
2918 MR. KIRK: Well, it's not talking about our application specifically, but I will talk to you about how the market works, if you would like.
2919 THE CHAIRPERSON: Sure.
2920 MR. KIRK: I can give you that.
2921 You have heard about it here a couple of times yesterday and people today starting to talk about this gigantic $250-million radio market which is Toronto. Well, yeah, it's big, you know. It's twice as big as any other market in the country and it's a quarter of the radio revenue in the country or thereabouts, 20 percent of the radio revenue in the country.
2922 But it's not just one big bucket of revenue. It segments into three specific streams of revenue.
2923 Approximately a third of the market is made up of national advertisers' money being placed by advertising rep firms. These are the very largest advertisers interacting with their advertising agencies and placing this money through the national channel. That's about a third of the market.
2924 There are also local agencies which place around 35 to 40 percent of the money in the Toronto market.
2925 The local retail advertisers in Toronto account for about 30 percent of the revenue in the market.
2926 If you looked at it as a market with $250 million, national would account for roughly $75 million-$80 million; agency, this is the local agency placed revenues, at about $90 million-$95 million; and local retail about $75 million.
2927 Those would be the three segments of this $250-million pie that's called the Toronto radio market. It's not spread -- that pie is not spread out evenly between stations. You have to totally understand how this works.
2928 The national advertisers -- and I think I recall Mr. Larche talking about yesterday -- the national advertisers buy a few of the top stations, they don't buy all the stations. They will buy a few top stations to get what they call the weight.
2929 That would be the frequency of advertising that would be placed would give them what their marketing research people say is an effectively delivered message. We have to buy enough announcements on those stations to get what we need. We will have heard about Home Depot enough times if we buy five radio stations so many times a week.
2930 Therefore the top-rated radio stations significantly overachieve in terms of revenue and the Commission can verify that, that there are radio stations in Toronto -- I don't want to attribute the names because I don't know the specific information, but the very top names, the top AC and rock stations -- that will be outbilling their rating shares by 50 to 60, sometimes almost double their rating shares. For example, a 5-rated station may be getting close to 10 percent of the revenue in the market.
2931 What it says on the back half of that is with all the national advertising basically going to the very largest players in the Toronto market there isn't much left for the bottom half and the bottom half of the stations have to live in a different environment. They have to get it from local retail advertisers.
2932 You have to go out, have your own sales force go out and talk to them and you are selling them one by one. It's a harder game, but that's the way it is for the smaller players in the market.
2933 And it becomes very asymmetrical. As you take the ratings numbers down from your top stations in the market, the revenue shares will be much higher for the top radio stations, and about halfway down the market it then goes the other way and the lower-rated stations severely underachieve their rating shares in the market. They don't make that much revenue. You can't say that a 3-rated radio station in Toronto instantly gets $7.5 million. It just doesn't work that way.
2934 So those smaller stations will be having to work a lot harder to make revenue and, again, provide for their programming and the commitments they are proposing before you today.
2935 THE CHAIRPERSON: Okay. So what you are proposing is a minimum requirement of 30 percent instrumental?
2936 MR. KIRK: Yes.
2937 THE CHAIRPERSON: Tell me about the instrumental genre and how successful it is elsewhere, either in Canada or in North America, that you sort of latched onto this and you are prepared to make it a condition of licence?
2938 MR. KIRK: I will start that answer and certainly we have an expert here in Alex, who is a North American pop instrumental artist, and he would be well equipped to speak to that.
2939 The instrumental component is one that we have familiarized ourselves with and we know that it is an appealing component of programming on our station. Maybe, Andrew, you can fill in on the research.
2940 We did look at a number of formats in formulating this and tested N Easy and that's why we did end up with the components that we have proposed in our application.
2941 MR. FORSYTH: We took a look at N Easy, we took a look at AAA, top 40 and AC, AC more from the viewpoint of trying to get a benchmark of where that format is in Toronto and respecting these stations that have performed well in that format in Toronto.
2942 But looking at New Easy Listening we discovered that -- you know, from the point of view of style when we talk to particularly the 45-plus audience we discovered that that was a style of music that they were very comfortable with.
2943 And it's interesting, because you say, well, how can these people like this style of music if this radio station doesn't exist in Toronto? There are two aspects to that.
2944 One aspect is that certainly the western side of Toronto did have over-the-air exposure to the WAVE out of Hamilton when it existed as a smooth jazz station there.
2945 Secondly, when people heard the music samples we played for them it was very recognizable. It was, oh yeah, get this style, understand what it is, kind of like this.
2946 Because as Michael had mentioned in his intervention, there is a whole genre of music, series of genres of music that we as we get older really appreciate.
2947 You know, when we were kids we used to listen to top 40 radio and in my day it was The Beatles, you know, and as we've gone on you get to appreciate classical, you get to appreciate jazz, you get to appreciate all sorts of different styles of music. That is reflected here.
2948 The second part of this was when we looked at this we said, okay, we know that we can probably make this work, but let's be very seriously sure relative to AAA.
2949 There would appear to be an opportunity to do that. The Oshawa-based rock station plays a certain amount of that music. There is always a demand from some of that audience for newer and more interesting music slightly out of the rock genre, so we thought we would try that and test that.
2950 And we discovered two things doing that. When we did the research, it was, well, it stacks up okay, but only okay and nowhere near as solid from an appeal point of view as the New Easy Listening did. New Easy Listening appealed -- around about 60 percent of our target audience said they'd like that. AAA was around about 40 percent, so it wasn't completely shut out.
2951 But the other part of the AAA was we looked at it and we looked at the format and went, well, where has it worked? And when we look at it, you know, in reality, it hasn't.
2952 You know, it hasn't worked in Vancouver. There is one station that's doing reasonably okay, another one that's not. It hasn't worked in Calgary. It hasn't worked in Edmonton. It really hasn't been a successful format.
2953 So we pushed that aside and said, let's focus back on this and explore the opportunities that I already mentioned to you.
2954 There are synergies. There is a familiarity with the music. There is a familiarity with the artists. There is that relationship.
2955 And we know from looking at the last set of numbers that the WAVE had in Hamilton that in fact that station from its inception to the last book that it had actually grew. And the reason it grew, by the way, was not necessarily in the Hamilton area, it wasn't in the central market, which is what it was licensed to, it was in the outside market.
2956 And the full coverage grew for the Wave on the simple basis that the technical got better. As the signal went eastward into Oakville and Mississauga there was a lot more audience who tuned to that format and really appreciated what it was. That's where the growth was.
2957 So that gave us again another -- that was another piece of research we looked at and said, okay, this gives us an opportunity to move ahead.
2958 Perhaps Alexander would like to speak to --
2959 THE CHAIRPERSON: Before you move off --
2960 MR. FORSYTH: Certainly.
2961 THE CHAIRPERSON: -- you said that the AAA genre didn't work in Vancouver, didn't work in Calgary, didn't work in Edmonton. Is that what I heard you say?
2962 MR. FORSYTH: That is correct.
2963 THE CHAIRPERSON: When you say it didn't work, give me an idea of what the audience share was when you say it didn't work, because you are only looking for a 1- to 2-percent share you're saying and so I'm just trying to put things into perspective.
2964 Were they looking for a 6- or 7-percent share and they ended up with a 1-percent share? I just need to understand what you mean when you say these things.
2965 MR. FORSYTH: Okay. I think if we can use -- and again, I'm not pointing fingers as such, but if we look at Vancouver and we look at one of the AAA's there, that radio station turned in about a 1.9 share. That's the Vancouver market.
2966 There are fewer stations in Vancouver than Toronto, so shares of a total audience will change somewhat. But the point is that that radio station was unable to achieve anything beyond that and it was a standalone. It was totally a standalone radio station. There was no other support for it.
2967 The other stations, I can't really speak to what the operators would have done with it, but one station in Calgary has since gone from Triple A to top 40. I think that was one of the Newcap stations. That I will assume was on the basis of they were not able to generate enough revenue in the market with that station, which currently as a top 40 does generate about a 3.8 share.
2968 And in Edmonton one of the operators was licensed -- started up as a Triple A. There was an opportunity for them in the marketplace to go to the old AC and they moved over to the old AC with a 2.6 share.
2969 I think though, you know, again speaking of shares -- and I understand what you're -- I think I understand where you're trying to take this, when you look at a share in a marketplace it really does depend on the total depth of stations and the number of stations you have in the marketplace and what the mix is.
2970 Toronto, because it is a much larger mix of stations and we have many more competitive formats here than you would in, let's say, Edmonton or Calgary, the performance that we would expect would be lower than we would expect to see in a market like that.
2971 THE CHAIRPERSON: Okay.
2972 MR. ZONJIC: Would you mind just to back up now because the question about instrumental music was a little while ago now. Was it specifically -- was your question specifically do we think there's an audience for that and how --
2973 THE CHAIRPERSON: Where is it being applied today, I guess, is the question. Are there markets in North America today and Canada particularly where there is an abundance of instrumental music being played and attracting a good audience and a reasonable business?
2974 MR. ZONJIC: Well, let me speak first of all about the United States market because I work a lot in the American market and did 12 years of CBS radio in the Detroit-Windsor area.
2975 Certainly, I wouldn't have a career if there wasn't a market for instrumental music, so it is large. There are large festivals all over the country.
2976 On a lot of levels, many of us artists are looking to Doug and Mary because of their passion for the music and their reasonable expectations, because these are reasonable expectations they have of that size of an audience.
2977 And there are many -- there are huge audiences for it. The Detroit market has -- there is probably in this genre five-six major festivals in that market that are specifically programming instrumental music, the kind that we're looking at airing certainly on The Lake.
2978 I can't speak for the rest of Canada, but I can certainly speak to the idea that it's a huge genre still. It's reasonable expectations, though, and it is -- I hate to use the "underserved" word because apparently you have heard it quite a bit this week, but it is an -- you know, when you speak of why hasn't anyone done it, I think when you get outside of passionate people like Doug and Mary and people who don't have reasonable expectations, the natural instinct for a CBS or a Cumulus or a Clear Channel is going to be we want bigger numbers, we want younger -- younger seems to be the thing.
2979 If you are looking for that 45 and up audience there's no question there's a huge underserved audience. The audience will come when the station is here.
2980 I think the success they had before was a real testament to the fact that there is an audience for this in spite of the fact that it didn't have the coverage in what I think is even more an underserved area, which is right in Toronto itself. I think this signal is right in that sweet spot in terms of where we think there's a big audience.
2981 I know there is an audience for instrumental music because I have been doing it my entire life and I continue to do it. And companies like Warner Brothers and Concorde, who I'm with right now, sign record deals with instrumental artists.
2982 When I say instrumental artists, not necessarily -- certainly the jazz word comes along, but so does easy listening. I mean no one offends me when they find my music relaxing. The only thing that offends me is when they don't buy my records.
2983 They buy them, and they buy a lot of them, and dare I use one of the greatest examples certainly of the last couple of decades, Kenny G. Kenny G has sold 70 million records. I don't think he sold 70 million records because people don't particularly care for instrumental music.
2984 I think instrumental music has a huge audience and sometimes we get a little too preoccupied with the names of genres and all the different words. I think there is a huge audience for this, but when I say huge with the kind of expectations that Doug and Mary have.
2985 And I think the way it really works -- and I'm not trying to overly flatter them here -- I flew in here, it really takes this kind of passion. I mean their commitment to this obviously is not revenue, it's they love this format, they love this genre. They have created an amazing award show that I hosted for seven years. We saw the results of it.
2986 So I think it's quite viable and if no one else has done it is probably because it doesn't reach -- it doesn't meet their expectations in terms of what they would like to possibly make. I think Doug and Mary have very realistic expectations.
2987 THE CHAIRPERSON: Okay.
2988 MR. KIRK: Andrew wanted to add some supplementary information to his previous point.
2989 THE CHAIRPERSON: Sure.
2990 MR. FORSYTH: Just to sort of get you some statistics on the American experience to back up Alexander's point, I guess the best example in the United States is a station called The WAVE in Los Angeles, which is presently ranked number nine in the market over all. It has a 3.3 share, and again I caution that that share -- that's a 3.3 share out of 80 stations. So it's ranked number nine and has done exceptionally well.
2991 It too, like many stations, has undergone what we see happening. I discussed it with AC, where I said AC radio has changed format -- not the format has changed, it has modified itself for its audience.
2992 The same thing has happened to country. The same thing has happened to rock. The same thing has happened to what used to be smooth jazz and is now really the new easy listening.
2993 And the WAVE has done that and it has radically changed how they present. And what they have done is exactly the model that we have looked at, is much more vocal, much more familiar vocal.
2994 Also, The WAVE in Cleveland is number 12 in that market. There are 30 stations in that market. It has a 4 share.
2995 KIFM in San Diego, which is another one of the pioneer radio stations, has made modifications, has made the change. It has evolved over the last 12 to 15 years as well. It is number seven in that market, with a 4.5 share.
2996 So there is a lot of room for growth and the availability to bring in a format that doesn't exist, I think will work here.
2997 THE CHAIRPERSON: I want to move on to some of your commitments for CCD over and above. I presume that all the monies that you are earmarking will all go to the artist or to third parties for all these commitments?
2998 MR. KIRK: Yes. They will be qualified -- fully qualified expenditures spent the proper way to third parties.
2999 THE CHAIRPERSON: And if they don't qualify, you are prepared to reappoint them to other areas that do qualify?
3000 MR. KIRK: Yes, we would or we -- yes, we would just make it up to -- if there was anything that was offside we would make that up to an additional grant to FACTOR or some other qualified expense.
3001 THE CHAIRPERSON: Can you expand on The Lake Canadian N-E-Z Awards Show in terms of how are the artists nominated, how do they participate, how is this thing -- how do you perceive this thing happening?
3002 MR. KIRK: I'm going to let the producer of the award show, Mary, and the director of the show, Karen, talk to those points.
3003 MS KIRK: Thank you.
3004 Nominations are developed -- were when we were running the WAVE and there were several other stations in Canada that were attempting to do something similar with an instrumental component that we shared with our station on the WAVE.
3005 We had a committee that included representatives from those other stations and representatives from our station, as well as several Canadian Internet operators who were operating very well-known worldwide Internet platforms that played this mix of music as well.
3006 And all of the nominees and all of the categories were Canadian artists and they had had a recent product on the market, usually a CD that had been produced within that past year that qualified them, and they received some sort of airplay on commercial radio during that year that they were nominated for awards.
3007 We had several categories of international nominees from all over the world, many of them American international instrumental artists and international vocalists, and as well a lifetime achievement award each year that was given to a pioneer in the industry, somebody that over the decades has popularized what once was more of a sort of jazz niche format and brought it to a pop audience.
3008 Our very first guest to receive the international lifetime achievement award was George Benson, and since then we have had a number of outstanding artists who are pioneers in this area, many of them -- most of them instrumentalists.
3009 The voting was completely fan-based voting. It was operated on the Internet over a period of time early in the new year, prior to the awards show, and fans around the world were able to vote and that's how all the winners were determined in all those categories.
3010 THE CHAIRPERSON: Okay. Thank you. I think you have covered off on that issue.
3011 My last question is just one of your financials. I guess you are saying you have made a realistic attempt to capture markets that you thought was reasonably attainable. When I look at your financials you have a seven-year payback basically. You don't receive your breakeven until year seven, based on the PBITs anyways.
3012 My question is, you are suggesting or you are identifying some synergies with your existing operations. I assume that wasn't part of that. So the benefits would come at your other operations, your other four stations, that would see a reallocation of, I don't know what, your billing costs or some other systems costs that would be spread over to Toronto, which would make those markets more profitable?
3013 MR. KIRK: Not really. We wanted to take, again, a prudent look at it. We take a very long-term view of what -- I mean you have to build, it's not an easy market to start. So you are quite correct, we anticipated losses for three years and then basically gaining that back by the end of the seven-year period.
3014 Administrative expenses do get allocated out among the four stations that we have now. For example, centrally we have -- for example, payroll, administration and so on are divided equally per station.
3015 Our engineering folks, our technical folks are divided up by station so that the station would benefit from being able to take a quarter or a fifth of the cost and not have to have an onsite full-time engineer, for example. So it has benefitted to that extent.
3016 And to a small extent the other stations would allocate it over five instead of four stations.
3017 THE CHAIRPERSON: Okay.
3018 MR. KIRK: But, you know, there isn't a big pot of gold in this. It's not allocating out a big profit back to the station in Hamilton or Oshawa.
3019 THE CHAIRPERSON: Besides the losses over the first three years in your PBIT, which is about $1 million, how much deeper do you have to dig before you can turn it around again? How much investment do you have to make over and above this in terms of assets or whatever you would need to invest in Toronto in order to open up a station?
3020 MR. KIRK: The synergies are obvious in that area. We don't have to have a full suite production facility, for example.
3021 We have two full production suites in Oshawa. We have a full production suite in Hamilton and they now do production, commercial production and promotional production work interchangeably for all the stations.
3022 This station in Toronto would not have to have a standalone production suite. That work can be done in Hamilton and Oshawa.
3023 So the assets on the ground to start the station in Toronto are lighter than you would have if you had a standalone operation. You can do it, you just need basically a master control and some interview type operations, a facility to do news. So it's quite a modest fixed asset expenditure to get it going.
3024 The transmission systems here, it's a fairly low power station and it again isn't -- it's on a rented rooftop at First Canadian Place. You don't have to build a lot. You can get on the air for $200,000 or $300,000.
3025 So I think, to answer your question, the assets, the additional assets employed are quite low because of the synergies that we have putting this station in with the other adjoining market stations.
3026 THE CHAIRPERSON: So you bottom out at about $1.5 million?
3027 MR. KIRK: Yes. Well, I have committed from my personal resources to back it, to put in another million and a half dollars, and there is ongoing profitability of Durham Radio that will lower that.
3028 And in addition, we have spoken to our bank, who are more than well prepared to finance the capital costs should we get a licence. We just didn't -- you know, it's there if we -- we just have to give them the projections and go for it.
3029 THE CHAIRPERSON: Okay. Those are my questions. Any other questions?
3030 Commissioner Simpson...?
3031 COMMISSIONER SIMPSON: Mr. Kirk, should this application be successful, in taking the entire southwestern Ontario market into consideration, what would your guess be in terms of the audience reach combined by your stations be?
3032 MR. KIRK: I'm sorry, are you talking about the five stations together?
3033 COMMISSIONER SIMPSON: Yes. I'm exploring the synergy. What kind of coverage would you get -- I'm trying to get an idea how this would be a set piece in terms of your coverage throughout your entire broadcast footprint.
3034 MR. KIRK: Yes. Well, currently our country stations -- and we are not talking PPM, we are talking about the old BBM diary method, which you have to equate, you know, pomegranates and pineapples here because they don't have the same bases -- but in the diary method our country stations have between 115,000 and 150,000 weekly listeners.
3035 COMMISSIONER SIMPSON: Yes.
3036 MR. KIRK: Our rock station has about 100,000 weekly listeners. We have a locally based kind of news classic hit station in Oshawa on AM; it gets around 30,000 to 40,000 listeners. And we would expect this station would be in the middle of that range, probably to start, you know, 50,000 listeners.
3037 Again, you would have to convert that into PPM and that would probably in the PPM base turn out to be 512 million listeners the way you seem to get this huge lift, you know, when you go from the diary to PPM because of the way it's measured.
3038 But let's look at it on the old method to try and compare apples to apples. We would expect 50,000 to maybe 80,000 listeners to start, to grow up to 100,000, a little over 100,000 listeners in this market.
3039 Of note, when we were operating CIWV out of Hamilton in the smooth jazz -- which is not the same as N-E-Z, it has pull-throughs of it, but it's not the same at all -- we found out that the audience in Hamilton when we started out grew for the first two or three years, and then it flattened out, and then it was starting to drop, and the audience, as Andrew and Steve had mentioned, as we move it, we would increase the power a bit.
3040 We got into the edges of the west side of Toronto and the audience for CIWV was just growing very, very strongly there. It wasn't a big enough size without the central Toronto core to commercialize it. It just wasn't big enough.
3041 But at our last measurement, I guess fall of 2010, CIWV had about just over 90,000 total listeners, of which 20,000 were in the Hamilton CMA, and there were a few little slices from Niagara and Kitchener, but the bulk of that, probably about 60,000 listeners, were in the Toronto area, primarily on the west side.
3042 So I think that's a base to start with. That was there. If we can ramp it back up, that's a good place to start and then you can build it up to there and get the shares.
3043 CIWV would produce in the .5 to .7 share at that time, again not big enough. If you can get up to 1 or through 1 you can get more traction in terms of getting local retail on and that's the basis. So I think we have a base to start with here if we are licensed.
3044 Does that answer the question?
3045 COMMISSIONER SIMPSON: It does. It does. There's obvious synergies. I'm understanding that, you know, a country market is different than an easy listening market, it's different than a jazz market, but there still is too some types of retail and national advertising, there is an efficiency there and I was just trying to explore that.
3046 Last question and really just a shorter answer would be, I think, preferable because we are kind of running out of time here.
3047 But going back to again the other synergy of your news network, let's call it that, talk is not cheap and yet talk is important to older audiences because they have a propensity for more information.
3048 Would your existing news groups be able to sufficiently feed the kind of information and talk -- would they be good contributors to this new operation or would you have to really perhaps reverse the flow and build your news operation to be more substantial in this new licence and feed the other stations?
3049 MR. KIRK: Steve will take that. The short answer is yes, but we want to make it just a touch longer.
3050 MR. KASSAY: Yes, and I'll try to speed it up.
3051 Commissioner Simpson, indeed. This would be a case where no, we add people to the news wheel by getting a licence in a station in Toronto. This increases it to, you know, nine full-time people that are working things throughout the GTA.
3052 The Oshawa stations are technically GTA and, you know, as it stands now listeners are scattered throughout Durham, into Toronto. Basically all sides gravitate to Toronto and we have systems in place right now that are interactive and helpful.
3053 I mean the news comes to us these days in a lot of ways. Sure we subscribe to CP and the BN and are in that circle so that we understand what the influencers are doing, but I mean news comes in with Twitter and social media. It's much easier for us to touch the street-level common bases.
3054 And we have systems in play where when we post we have our own dedicated durhamradionews.com. I mentioned in the opener we would get thelakenews.com because we do this already. We do this. You post there, automatically goes in tweets information, the followers continue to increase, it flows over to Facebook.
3055 I mean these things just kind of happen now. It's really neat because it's different from the old days of radio where you had to -- you know, if you didn't go get it, you didn't have it.
3056 MR. KIRK: Just to recap -- I know you're short of time -- but two additional news positions in Toronto, complemented by seven in the other two markets, make nine to cover -- that will all be contributing to all the stations, if you will.
3057 THE CHAIRPERSON: Thank you.
3058 Commissioner Poirier...?
3059 COMMISSIONER POIRIER: And please also a very short answer.
3060 I was surprised by the fact that Ms Cummings said young people don't listen to radio, older people do.
3061 So I was wondering, do you have numbers that prove that in the Toronto market, the one you're targeting?
3062 The question might be for you, Ms Cummings, but mostly for Mr. Kirk and Mr. Forsyth because they are the ones doing the research.
3063 And then I would ask, is it a lucrative market, more lucrative than the young audience?
3064 MR. KIRK: Okay. Did you want Karen to talk to that first?
3065 COMMISSIONER POIRIER: If she wants to.
3066 MR. KIRK: Karen, did you want to make a comment?
3067 MS CUMMINGS: Certainly. The research that I was doing was actually specifically for events and I was getting my information from Stats Can and BBC and I was actually exaggerating a bit.
3068 I'm not saying that they don't listen to radio. I did say that and I admit it, openly admit it, but really what I meant was that the market research that I did showed that the over 40 to 45 market is growing, while under that is declining. So therefore, for my event, where the demographic is over 40, it's smart for me to play the kind of music. Thank you.
3069 COMMISSIONER POIRIER: Thank you very much.
3071 MR. KIRK: Andrew, quickly.
3072 MR. FORSYTH: Yes. In fact, I would refer to the CRTC's Communications Report of last year and if you look at a figure of 4.2.3 it very clearly shows the fact that a younger audience spends, number one, less time than the older audience and, number two, it is falling off faster than the older audience, to be very brief.
3073 COMMISSIONER POIRIER: And specifically to the Toronto market. you don't have numbers?
3074 MR. FORSYTH: I don't have numbers on that, but I do know that from our research that we filed with the Commission you will see that the average number of hours spent is more as you get older.
3075 COMMISSIONER POIRIER: Okay.
3076 MR. FORSYTH: The older the audience, the more average hours they are spending with radio, based on our research as well. So these two complement each other.
3077 COMMISSIONER POIRIER: Okay. Thank you.
3078 THE CHAIRPERSON: I think that concludes the examination of Durham Radio. Thank you very much.
3079 We will switch over to the next group. Just a five-minute switchover.
3080 MR. KIRK: Thank you very much and --that was easy.
3081 THE SECRETARY: Yes. I will invite the next presenter to take place at the presentation table, please.
--- Upon recessing at 1642
--- Upon resuming at 1649
3082 THE CHAIRPERSON: Madam Secretary, we can now reconvene.
3083 THE SECRETARY: Thank you.
3084 We will now hear item 7 on the Agenda, which is an application by Stanislaus Antony on behalf of a corporation to be incorporated.
3085 I would ask that you start by presenting your panel for the record and you will then have 20 minutes for your presentation.
3086 MR. ANTONY: Thank you.
3087 Mr. Chairman, esteemed Commissioners, CRTC staff, members of the public gallery and supporters of Canadian radio, I am honoured to be here today to present our application for a fresh new FM radio station to serve the City of Toronto.
3088 Our station will be known as the Sounds of Toronto Audience Network or STAN FM 88.1 and will bring a much-needed bold new format to the GTA.
3089 My name is Stan Antony and I am with a promising new team.
3090 Starting from my far right, Ragavan Paranchothy. He is the Chief Operating Officer of the Sound of Toronto Audience Network. He brings over 20 years of experience managing musicians, 10 years of broadcasting and broadcast management experience. Ragavan will be talking about our proposed music and spoken word programming.
3091 Bret Snider is our Community Outreach Advisor. Bret brings more than three decades worth of experience providing research, strategy planning and communications advice to government, corporate and not-for-profit clients. Bret will be talking about our target audience.
3092 Jennifer Antony, Manager, CCD Initiatives and Human Resources. Jennifer is a passionate artist and an expert in Human Resource Management. Jennifer will be speaking about our proposed CCD initiatives.
3093 Also joining us today is Tom Carter. He is a Music Advisor. Tom is an accomplished artist, musician, instructor and a curator. Tom runs a music school for some 500 students. Tom is also a broadcaster.
3094 Next, Jai Bhatti, Financial Officer. Jai is a young community leader and a powerful personality. He is very passionate about music, economy and politics.
3095 Richard Cavanaugh, Broadcast Consultant. Richard is a partner at Connectus Consulting Inc.
3096 Gary Jessop, Legal Counsel. Gary is a partner at Blakes Ottawa.
3097 Dr. Peter Silverman, Advisor. He is an award-winning journalist. He holds a PhD in history and was appointed to the Order of Ontario in 2008.
3098 Ryan Carter is a student, an instructor and an emerging artist.
3099 Unfortunately, Lady Pista is not here with us today.
3100 The next one is Cameron Watt. He is an emerging artist, singer, songwriter and producer.
3101 Mr. Chairman, there is a real need for a dedicated platform for emerging artists, especially here in Toronto. And more importantly, there is a dire need for a platform for emerging genres of music. My team is passionate about these ideas. We hope to leave you with a lasting impression. Thank you.
3103 MR. PARANCHOTHY: Hello, everyone. I am very excited to present our idea here today.
3104 When people of various backgrounds live in harmony, like here in Toronto, cultures blend and new traditions evolve. A lot of definitions will need to be rewritten. Even dictionaries need to be updated constantly.
3105 Music is not exempt from this reality. Genres emerge, artists emerge, audiences change, and radio will certainly need to adapt as well.
3106 We present you a video that speaks to the reality of the music scene in Toronto.
--- Video presentation
3107 MR. SNIDER: Mr. Chairman, STAN FM 88.1 will not only bring a fresh new sound to Toronto radio it will unite the community of youth with the community of radio in bold new ways.
3108 Our commitment is first and foremost to the young people of Toronto:
3109 - Like Ryan Carter who is with us today, a musician and composer;
3110 - Like Cameron Watt who is with us today, a songwriter, an artist, a producer and a sound engineer.
3111 They are the emerging, Toronto-based artists and part of our city's exciting, diverse cultural scene.
3112 They are also reflective of our target audience and that audience is between the ages of 18 and 34, second and third generation Torontonians largely left behind by traditional radio but so important to our city and our local culture.
3113 These young Torontonians represent enormous diversity. They embrace both the traditions of their cultural roots and other vast English-language contemporary content.
3114 It is a group that is large in number, now one and a quarter million strong, and one that will continue to grow in the future.
3115 In fact, the 20 to 34-year old demographic in Toronto is expected to grow by more than 10 percent from current levels by 2015, more than double the rate of the general population of the city.
3116 Our audience is here and it is waiting.
3117 MR. PARANCHOTHY: But what is the audience waiting for?
3118 Mr. Chairman, young adults in Toronto are like those everywhere. They are engaged in technology but they are even more engaged in content.
3119 They are especially engaged in music. In the minds and hearts of most young adults, music is number one. And we in Toronto are in an incredibly unique position with respect to music, talent, and youth.
3120 First, we are awash in some of the most talented young artists that you will find anywhere in the world. Toronto's music scene has always been vibrant and it is also vast.
3121 Second, we are indeed fortunate to have such an incredible array of culturally diverse music talent in our city. Just think about Josh, Little Empire or Shad, just to name a few.
3122 And third, you get something very special when you blend the ethnocultural traditions of local music with all that Canada has to offer in emerging genres of English language contemporary music.
3123 STAN FM 88.1 is proposing to do just that: offer a unique emerging genres format that will promote new talent, honour the heritage of that talent, and bridge the gap between the traditional and the contemporary.
3124 In doing so, Mr. Chairman, we will capture the attention, imagination and abiding interest of Toronto's young adults and we will provide a tremendous boost to emerging talent in our great city.
3125 MS ANTONY: Mr. Chairman, beyond our commitment to airplay, STAN FM 88.1 will provide a much needed number of unique opportunities for Toronto's young artists to showcase their talent.
3126 We will present numerous opportunities for emerging artists in their very neighbourhoods, with our annual "Your Neighbourhood Music Festival" and on the street local talent shows.
3127 We will fund music video production for up to four local emerging artists per year, in partnership with a university media production program. We know Ryerson University has a great program and we intend to work with them.
3128 We will also hold talent shows in local secondary schools and provide extensive, in-depth, on-air showcase for local artists.
3129 And, Mr. Chairman, with an increment in funds directed to FACTOR, STAN FM 88.1 commits to a total contribution of $700,000 to Canadian Content Development over and above our base contribution, over the course of a seven year licence term.
3130 And it is our local, Toronto-based talent that will benefit most from our focused approach to emerging genres of music.
3131 MR. PARANCHOTHY: Commissioners, we recognize that young adults engage music like no other type of content. But they also crave information, especially stories about them that matter to them.
3132 This is why STAN FM 88.1 will present spoken word programming that will showcase local citizenship, leadership, civic pride and of course diversity. In doing so, we will touch many, many aspects of life in Toronto's neighbourhoods.
3133 For example, we will use journalism students to present vignettes about stories that matter to individual neighbourhoods in our segments entitled "Sounds from the Street".
3134 We will present in-depth daily profiles of young Torontonians who are making a difference in our city, whether in politics, culture, technology or other facets of life.
3135 We will showcase young musicians from Toronto, the rest of Canada and even internationally in our segments entitled "Up and Coming".
3136 And we will delve more deeply into today's emerging music genres with "The Story Behind the Track".
3137 Together with our daily news segments, our spoken word programming is designed to speak directly to our audience and with our audience, another way that STAN FM 88.1 will engage the young people of our city.
3138 Mr. Chairman, our application for STAN FM 88.1 has received tremendous support from the local community. We are grateful for this support and it underscores the need for our new service. Based on this support there is a strong sense that we will bring something very different and very important to Toronto radio.
3139 Our commitment to emerging music and emerging talent, to innovative spoken word programming, to growing as a vital presence in Toronto communities and especially to the young people of Toronto presents a fresh, unique proposal for Toronto radio.
3140 MR. ANTONY: And behind all of this is our tremendous STAN FM 88.1 team. In short, we bring a lot to the table: experience in the radio business, a deep passion for radio, a willingness to learn, and an unwavering commitment to our format and to our audience.
3141 We are not new to radio or new to Toronto and we know both very well. We are in a unique position to deliver a new service that will fulfil a need in Toronto radio and we will be a successful and contributing member of Toronto's radio family.
3142 This is truly an exciting time for culture in Toronto, and we at STAN FM 88.1 are truly proud to be a part of it.
3143 Thank you for the opportunity to present our application for STAN FM 88.1 to you today. We would be pleased to answer any questions you may have.
3144 Thank you.
3145 THE CHAIRPERSON: Thank you, I would ask Commissioner Molnar to lead the questioning.
3146 COMMISSIONER MOLNAR: Good afternoon everyone.
3147 I want to begin just by making sure I fully understand the STAN team. This is a new organization, a new operation to be set up as I understand and you have listed -- you have a number of people with you today.
3148 I want to know which of these actually would be part of the operational unit should STAN be licenced, if you can help me between who is part of the team and some of these people perhaps work with you today on your existing radio station here in Toronto.
3149 Just help me out and let me understand who is going to be working at STAN should it be licenced.
3150 MR. ANTONY: There is two employees here. They are from Canadian Multicultural Radio as well. There is Ragavan and Jennifer.
3151 The rest of them is a complete new team for this proposal.
3152 COMMISSIONER MOLNAR: It's a team you have put together to make the application or it's a team you are proposing will be operating this licence?
3153 MR. ANTONY: Well --
3154 MR. PARANCHOTHY: Sorry, Stan, if I may jump in?
3155 Yes, this is a team that came together to work on this particular proposal and we have intentions to actually have a lot of these people work with us continually when you decide to grant us the licence.
3156 COMMISSIONER MOLNAR: So the experience -- you will be Chief Operating Officer, if I understand that?
3157 MR. PARANCHOTHY: That is correct.
3158 COMMISSIONER MOLNAR: And you will work within the CCD and human resources?
3159 MS ANTONY: That's correct.
3160 COMMISSIONER MOLNAR: For both stations that would be the -- and would that be your position as well, working across both the existing ethnic station as well as this new operation if it's licensed?
3161 MR. PARANCHOTHY: That is correct. That is correct. In the ethnic -- in the existing radio station I am the Director of Public Relations and here I will take on a bigger role.
3162 COMMISSIONER MOLNAR: And your total staff complement that you project to operate the station would be what?
3163 MR. PARANCHOTHY: We are looking to have five fulltime and a few part-time employees and also looking to find some synergies within the senior management level and possibly some of the technical aspects as well.
3164 COMMISSIONER MOLNAR: Okay, thank you.
3165 I want to begin just speaking a bit about your choice of an emerging music format. You have been very clear that your commitment is first and foremost to the young people of Toronto.
3166 It's a bit ironic but I'm sure as you were sitting through the last applicant you heard that in fact young people don't listen to radio. It's only, you know, old folks like me that listen to radio. So it is a bit ironic that you are coming up right behind with a focus on the youth.
3167 And you have made a number of comments about your commitment to the emerging genre format and to promote new talent within Toronto and across Canada.
3168 So one of the things that I just need to understand a little better, in that you are proposing a genre that is all new music and emerging music, I see that what you have identified as a commitment is that you have a commitment to 35 percent Canadian content and commit that no less than 5 percent of all musical selections will come from emerging Canadian artists so that no less than 5 percent would come from emerging Canadian artists.
3169 It sounds very -- well, very low, yes, but a bit contrary to the promise that you have just delivered here to us today. So could you help explain that, please?
3170 MR. PARANCHOTHY: Right, I certainly can do.
3171 That 5 percent is what we target in terms of emerging genres in music. Again, we think it's a very conservative number. There is an abundance of that music out there.
3172 But, just to be safe, we committed to 5 percent and we planned to do possibly more than 5 percent of emerging genres of music.
3173 And then, of course, the 35 percent Canadian content commitment is yet another conservative commitment that we provided. We believe that we will certainly do way more than 35 because our focus is really on Toronto and music produced here in Toronto.
3174 Just to sort of touch on one of the points that you said earlier on is, yes, we are after the youth market and we know for a fact that they are underserved in the sense that -- well, I shouldn't use the term underserved but in a sense that they are more tuned to their iPhones and iPads and other gadgets as opposed to radio and we think that we can repatriate them to radio.
3175 COMMISSIONER MOLNAR: I still need a little more help because you said that 5 percent is related to emerging genres of music. And yet I am looking at your supplementary brief here, and I can read it for you.
3176 I'm sure you are aware that in trying to understand in fact what it is you are proposing to deliver, I read this that in fact that is what you are going to deliver is emerging genres.
3177 This is on page 5 of your supplementary brief. It says:
"From our deep knowledge of the Toronto market a music format based on a blend of emerging genres, essentially a mix of sub-category 21, sub-category 33 and sub-category 34 is a type of bold new format that will broadly appeal to our target market attracting today's youth to the radio dial." (As read)
3178 So I had understood that what you were proposing was in fact emerging genres.
3179 MR. PARANCHOTHY: Yes. You know, just looking at the CRTC Commissioners sitting in front of me it's a little intimidating. That's probably why.
3180 But, no, I'm just kidding.
3181 Yes, I might have fumbled upon it. Yes, our proposed format is emerging genres of music and we intend to provide 35 percent Canadian content of the same genre.
3182 Does that answer your question?
3183 COMMISSIONER MOLNAR: Yeah, I think I was just struggling as to what it meant that no less than 5 percent will come from emerging Canadian artists, because it would seem that most artists within that 35 percent would be emerging artists.
3184 Am I misunderstanding something within what you are proposing to do here?
3185 MR. PARANCHOTHY: Let me take a look at Richard for some help.
3186 MR. CAVANAUGH: Just allow me to clarify a little bit.
3187 The format is indeed an emerging genres format which blends -- is very non-traditional and blends various types of sub-categories of music as we indicated in our supplementary brief.
3188 The 35 percent CanCon and the 5 percent emerging artists, especially the latter, would seem to fly a little bit in the face of what we are proposing. After all, aren't we looking to tap into all kinds of new talent, new local talent and so on?
3189 It's very exploratory. I think that the way to look at it is the 35 percent and the 5 percent are starting points. They are existing benchmarks in policy. They are our starting point and adhering to the policy as it exists is obviously something that we intend to do.
3190 But we see it growing organically over the life of the licence period so that the first six months of the service or first eight months of the service you might see 5 percent emerging artists as the format works itself out and the tracks become obvious and we tap into the existing local talent. But it's a very -- we would see it as a very rapid growth in terms of exposing emerging artists to the airwaves on our station.
3191 COMMISSIONER MOLNAR: So it's really just there as the policy minimum to make the commitment --
3192 MR. CAVANAUGH: It is a commitment to the policy minimum but it's really meant to be ephemeral in that we see it as growing fairly rapidly as the station's service and its playlist becomes more sophisticated and we begin to tap into the very broad base of talent that we have around us here in Toronto.
3193 It's a starting point.
3194 COMMISSIONER MOLNAR: Okay. I have a few questions related to details of your application.
3195 There is one question you have maybe heard asked here the last few days related to the basic CCD.
3196 As you may have heard over the last few days a number of applicants have been asked the policy changed last year and required that basic CCD where total revenue is greater than one and a quarter million dollars a year, at least 15 percent of the basic CCD contribution must go to the Community Radio Fund of Canada.
3197 Are you prepared to make that commitment?
3198 MR. PARANCHOTHY: Absolutely, absolutely. We will certainly play by the rules as set out by CRTC and if required we can file another amendment to what we have said already.
3199 COMMISSIONER MOLNAR: Not required, no, that's fine. Thank you.
3200 One more question related to your CCD. You had promised over and above CCD of $700,000 and I have one question related to the On the Street initiative.
3201 You had stated related to this initiative that the winners of the talent show would have the opportunity to perform live in your studios.
3202 I just want to confirm that in determining the -- I think it's $10,000 a year that's going to this initiative -- if any of that money related to them having airplay within your studio.
3203 MR. PARANCHOTHY: Jennifer, you were going to take that?
3204 MS ANTONY: No, you go ahead.
3205 MR. PARANCHOTHY: All right.
3206 No, that $10,000 would actually be spent on recruiting the artist or finding -- providing something back for the artist. But the studio time that we are going to provide will not be -- will not cost them anything.
3207 COMMISSIONER MOLNAR: Okay. And so also the live performance of that talent show is not part of the designated monies?
3208 MS ANTONY: No, it will not be.
3209 COMMISSIONER MOLNAR: Okay, thank you very much.
3210 A couple of questions about the financials and business plan that you have provided.
3211 I note that in your financials you did not commission or it does not appear that you have commissioned any market research to demonstrate the demand of your proposed service.
3212 Can you tell us how you came to determine your demand for this service without doing any market research?
3213 MR. PARANCHOTHY: Absolutely. This answer is going to be a bit long and I will tell you that ahead of time.
3214 COMMISSIONER MOLNAR: Just as long as it's necessary to explain.
3215 MR. PARANCHOTHY: Okay, absolutely. Absolutely.
3216 COMMISSIONER MOLNAR: Thank you very much.
3217 MR. PARANCHOTHY: And I don't like talking too much either.
3218 This comes from many years of observing patterns in Toronto. As a musician myself, I fall into the same category. I have peer musicians that talk about the same thing. And from experience running events for the CJSA-FM, the other multicultural radio, and from experience running various useful events in Toronto, we know when an artist of an emerging genre or when a music of an emerging genre is put out there, the reception that gets or the number of audience that attracts is far more than playing an established genre of music, and a growing number of ethnically diverse but yet Canadian youth in Toronto will definitely be our target audience.
3219 I can even have one of our young artists here, perhaps Cameron, to speak a little about the reception they get in terms of their music.
3220 MR. WATT: Well, being an artist myself, I was proposed the opportunity to go to a school as an engineer and be schooled on how to come out of the school and find jobs, but there really just is no job and no voice for people in our position.
3221 So I spent the money that I would have on the college on establishing myself a studio and putting out these emerging artists, and there is a plethora of youth in dire need of a voice in the city. And I just -- everybody I know is requiring this much-needed service.
3222 COMMISSIONER MOLNAR: Okay, I'm going to ask two questions separate.
3223 One is your estimates of tuning share. You estimated a 5-percent tuning share. Now, I expect, and I see in your video lots of people are interested in emerging music and active, but coming up with a 5-percent tuning share would place you about 10th in the market, which is quite an aggressive -- and I'm not quite sure on what basis you have made the assumption that you would achieve a 5-percent tuning share.
3224 Do you have any research or quantitative analysis that would back that?
3225 MR. PARANCHOTHY: Again, going back to my original point about the vast market that's available, the demographic of 18 to 34 who don't really listen to radio -- well, I shouldn't say they don't listen to radio, they do for news and traffic and nothing beyond that, and perhaps the odd song they like, but they are tuned into their iPhones or iPads or their BlackBerrys or gadgets, and we are saying if you take a look at the number of people that are out there with their smartphones listening to music that they like, if we can have them listen to our apps, STAN-FM app on their smartphones, we are reaching a far bigger target than what we've proposed.
3226 COMMISSIONER MOLNAR: Did you do any work just to -- you know, back of the envelope calculations? You noted in your opening comments the size of this youth market within Toronto. Have you done anything to rationalize that number?
3227 MR. PARANCHOTHY: No, nothing beyond what we found from Stats Can and past trends that we have seen based on our experience with CMR or Canadian Multicultural Radio.
3228 COMMISSIONER MOLNAR: Okay. And as it regards your revenue estimates, can you tell me your basis for that?
3229 MR. PARANCHOTHY: Yes, indeed. Again, we rely on our experience from running another radio station and when that started how we were able to reach the market. So we sort of started off with a very conservative estimate in terms of both national and local revenues and then we have sort of increased that by .5 percent going forward to make sure that we are still being viable and conservative.
3230 COMMISSIONER MOLNAR: On the conservative side, your PBITs are actually not that conservative. You have come up with some pretty healthy PBITs within the later years of your financial projections, in the 34 to 51 percent range, but it's based on what appears to be some very low -- relatively low operating expense projections.
3231 I say low comparative to what is in the market today and what you will have seen has been filed within the applications of others here as to what it costs to operate a radio station here in Toronto.
3232 MR. PARANCHOTHY: Again -- I'm sorry.
3233 COMMISSIONER MOLNAR: Yes. If you can explain it because clearly they are very low relative to what appears to be a more standard number for this market.
3234 MR. PARANCHOTHY: Once again, we are going to draw from our experience running CJSA-FM and a lot of the numbers here would also sort of correlate to how CJSA-FM is operated.
3235 If you take a look at CJSA-FM, it has far more -- a bigger facility than what is required for STAN-FM. It has much more higher costs in terms of human resources and technical infrastructure, but we are still able to operate that. So we have done that in the past, we know it works and the numbers are not too far off, in my view.
3236 COMMISSIONER MOLNAR: Okay. Well, you mentioned five full-time employees and some part-time to run a rare -- I'm quoting from yesterday where they said a rare and valuable piece of spectrum here in Toronto. And you are using -- often comparing this to your ethnic radio station.
3237 Is it your expectation that you are going to run this similar to an ethnic radio station?
3238 MR. PARANCHOTHY: Absolutely not. This is an entirely new proposal. The target audience is going to be very new, and the content and concept, everything is new. But I keep referring back to that because that is where we draw our experience from in terms of running a radio and in terms of costing out a few things.
3239 COMMISSIONER MOLNAR: Yes. So you are going to actually hire sales folks to hit the street?
3240 MR. PARANCHOTHY: Absolutely.
3241 COMMISSIONER MOLNAR: I mean I see your sales and promotion, for example, I think are something like 10 times below the average, 10 times lower than those of commercial stations and half of those of ethnic stations right now, your sales and promotion -- your projected sales and promotion.
3242 MR. PARANCHOTHY: Expenditures, you mean?
3243 COMMISSIONER MOLNAR: Projected expenses. And I'm looking here just at your average over the licence term.
3244 So I'm just trying to get a sense, are you running it differently or are you able to somehow extract some efficiencies others are not capable of or how can these financial projections that you have laid out here actually be realized?
3245 MR. PARANCHOTHY: I don't want to say we are superpowered than most others, but I think we have found a niche in how to do this efficiently, once again, based on the experience running another radio station for the past 7-8 years in a very stable and profitable way.
3246 I will also look to Jai Bhatti to chime in with some answers here.
3247 MR. BHATTI: Here at STAN-FM we expect to control our costs and that is something we specialize in. Through our experience we have been able to limit cost control and basically we are going to take that experience and bring it to here.
3248 In terms of other efficiencies, because we are going after emerging artists we have other venues. The newer venues younger people are using are social media, which don't cost a thing in terms of advertising.
3249 In terms of advertising -- I'm going on an example -- suppose we get a student at some high school, some college, and get them on the radio, those are going to be listeners -- he or she will bring -- advertise for us. It's the credibility that an artist gets. They are going to do some of the work for us in terms of advertising and promoting themselves and we are helping them.
3250 COMMISSIONER MOLNAR: So these five employees that you are going to have, are they going to be on-air personalities? Are they going to be sales? What are you going to have?
3251 MR. PARANCHOTHY: We are looking at on-air personalities first. We need to be able to attract our audience, we need to be able to attract our musicians, so on-air personalities is where we are focusing first.
3252 Of course, sales personnel is who we are looking at on a part-time basis, on a commission basis.
3253 COMMISSIONER MOLNAR: Okay. Thank you. Just one more question.
3254 I note that you did not file any confirmation of funds to support this station.
3255 Mr. Antony, I believe you are designated as 100 percent shareholder for this licence application. If this was to be approved, you would be the 100 percent shareholder in this organization?
3256 MR. ANTONY: Yes, I am.
3257 COMMISSIONER MOLNAR: So we have just had a bit of a conversation questioning the integrity of the revenue numbers and the validity of the relatively low operating expenses to run a radio station here in Toronto and I guess what I would like to know from you is if you could share with us some assurance that should the profitability not materialize at the levels expected or in the timeframes expected that you would have, I guess, two things: first, the financial capacity to weather the storm and carry this through, and secondly, not just the financial capacity but also the willingness, I mean the commitment to do that.
3258 MR. ANTONY: Yes, I will. The same thing happened with CMR initially. Like when we started, four investors, we committed together. Finally, the other three pulled out, they withdrew, and I completely supported myself and made the licence work.
3259 So again, the same thing, if anything happened in that end, I will be the completely full support.
3260 COMMISSIONER MOLNAR: And it's personal finances that enable you to support this station or the financial returns from the ethnic station or how is it that the numbers --
3261 MR. ANTONY: From my personal finances.
3262 COMMISSIONER MOLNAR: Your personal finances are sufficient to carry this through for --
3263 MR. ANTONY: Yes.
3264 COMMISSIONER MOLNAR: Okay. Those are my questions.
3265 THE CHAIRPERSON: Thank you.
3266 I have a question and a couple of Commissioners also have some questions.
3267 I think I heard you just say a few minutes ago you are going to be paying commissions on the revenues you are going to be getting. Is that correct?
3268 MR. ANTONY: That's correct.
3269 THE CHAIRPERSON: What assumption have you made for commission rates?
3270 MR. ANTONY: Fifteen percent.
3271 THE CHAIRPERSON: How much?
3272 MR. ANTONY: Fifteen percent.
3273 THE CHAIRPERSON: Fifteen percent. And where would I find that on your expenses?
3274 MR. ANTONY: That would be the sales advertising and promo. A portion of that would be the --
3275 THE CHAIRPERSON: Yes, but if your total revenues in year seven -- I'm just looking at it -- is $3.3 million, 15 percent of that is much higher than $141,000 in sales, unless my math is wrong. Ten percent of $3 million is $300,000. All you have in sales advertising and promotion in year seven is $141,000.
3276 MR. PARANCHOTHY: I'm going to look to Jai. He's the math whiz.
3277 MR. BHATTI: I'm sorry, I'm just going to make an adjustment to what my colleague said. The expenses have not -- the commissions have not been included. They have already been adjusted in the revenues. Our revenue -- that revenue is net of commissions.
3278 THE CHAIRPERSON: Good answer. Those are my questions.
3279 COMMISSIONER PENTEFOUNTAS: Just a follow-up on what Commissioner Molnar had to say.
3280 You know, you are projecting a 5 market share as of year one and a steady 5 market share right to year seven. Your year one revenues projected are $485,000. Is that correct?
3281 MR. BHATTI: Yes, sir.
3282 COMMISSIONER PENTEFOUNTAS: Okay. We heard it before and it's almost common knowledge in the radio business that when you have a 5 share and you are 10th in a market like Toronto you are going to get the lion's share of revenue. It has even been suggested that you can double that share in terms of the revenue.
3283 The Toronto market has $267 million in annual revenue, which would mean $26.7 million in revenue on a 5 share and your projected revenue is $485,000. I add to that the fact that your total CCD contributions over the term amount to $21,000 or $22,000. Newcap this morning, with similar projections of market share, put $12 million on the table.
3284 Do you see a problem with your proposition when you are offering us $20,000 over seven years and a 5 share in the most lucrative market in Canada?
3285 MR. PARANCHOTHY: In fact, we are offering $700,000 over seven years, $100,000 each year to CCD.
3286 COMMISSIONER PENTEFOUNTAS: What I see here on CCD is $500 year two down to $9,400 year seven, unless you have something else.
3287 MR. PARANCHOTHY: That's the base.
3288 MR. SNIDER: That's the base contribution. That's the base contribution. In addition to the base, the commitment is $100,000 per year over the course of the seven years.
3289 COMMISSIONER PENTEFOUNTAS: Okay. So you are at $700,000?
3290 MR. SNIDER: And change, including the base, yes, $721,499.
3291 COMMISSIONER PENTEFOUNTAS: Okay. You are still a long ways off from $12 million.
3292 And explain to me how you get $485,000 in revenue on a 5 share in Toronto.
3293 MR. PARANCHOTHY: We were being very cautious and conservative in our numbers. Perhaps some of these numbers might need a little bit of revision.
3294 COMMISSIONER PENTEFOUNTAS: There's no revision, there's no improvement of the offer, as you know. You have to live with what you put down on paper. Okay, thank you.
3295 THE CHAIRPERSON: Commissioner Poirier...?
3296 COMMISSIONER POIRIER: Good afternoon. I just want to pursue a line of questioning made by Commissioner Molnar because I really don't understand one thing in your application.
3297 From the video I saw, you promote this new station as being an emerging music, emerging artist radio station, and from the beginning of this hearing we had many other companies who came in front of us and as a condition of licence they asked for 15 percent of emerging artist -- Larche, Wekerle, 15 percent; Bhupinder Bola 10 percent; Durham 10 percent; and tomorrow Torres 30 percent; and you are asking only for 5 percent of emerging artist music on-air.
3298 So how can your radio station be an emerging artist radio station without a bigger percentage as conditions of licence of emerging artists? There is some kind of disconnection or maybe there is something I missed in your application.
3299 MR. PARANCHOTHY: I think the 5 percent and the 35 percent is -- like Richard said earlier on, we just stuck to the numbers that the Commission put out, but in fact we are going to be doing far more than that because our format itself is talking about a lot of emerging stuff and a lot of young artists, emerging artists produce a lot of emerging music. And on top of that, there might be established artists who are still producing emerging music.
3300 COMMISSIONER POIRIER: Yes, but you know that a format can be changed and the only way we have to control the real orientation or the real format of a station, the minimum we can do is put a condition of licence.
3301 So if you ask for five, and because we cannot change your application you would get a five, but this means you would be allowed to play whatever you want. So to prove to us that you really wanted to be an emerging artist, you would have had to ask for a bigger amount of emerging artist music playing on your station.
3302 That's why to me there is a disconnection between what you are really asking and the condition of licence you asked for.
3303 MS ANTONY: If I may add. The 5 percent is only the music that we are going to be putting out for these emerging artists, so the music that they are coming up with.
3304 The 5 percent is going to be solely that, but for our programming and our segments we are constantly promoting and having interviews with these emerging artists. So we are focusing more than 5 percent obviously on these artists, but it's just that the music is only going to be that 5 percent concentration minimum.
3305 COMMISSIONER POIRIER: But are you a talk radio or a music radio?
3306 MS ANTONY: It's interviews, so it's -- it's not going to be a talk show that we are going to be having -- for example, when we discussed earlier in our video the background to the tracks, so let's say we bring, for example, Lady Pista for an interview, she will be discussing her tracks but it's more of a background.
3307 And the 35 percent Canadian content, it's focusing on Canadian artists who made -- who are able to make it bigger than the 5 percent that we are going to be putting out for the other artists.
3308 MR. PARANCHOTHY: Richard, do you want to chime in?
3309 MR. CAVANAUGH: If I may just clarify something. I think we are being haunted slightly by overuse of the word "emerging" here.
3310 The format, the music format for the station is something that Ragavan and my other colleagues developed and termed an emerging genre format. Now, an emerging genre format can't be confused with the artists who play it and the artists who are professionalized in it. It's not simply emerging artists who play this type of music, it's other traditional more established or more mainstream artists who may play it as well.
3311 While the emerging genre is the format, the emerging artist component is as a starting point 5 percent. Now, again, that adheres to existing policy, but I think the vision of the station has always been that that number would simply grow organically and very rapidly going forward.
3312 We didn't put any projections down on it because it is very difficult to, frankly speaking, project into the future what the percentage of emerging artists receiving rotation on the station will be 12 months down the line.
3313 The starting point is 5 percent. The genre is an emerging music genre that blends various subcategories of music and I think you got a little bit of a flavour of it in the video that we played at the beginning of our presentation.
3314 COMMISSIONER POIRIER: Yes. And is the genre described in your application? Do you really put the meat around the title of being a genre?
3315 Because it's a new genre and in this hearing I have to admit we get plenty of new genres, so everybody has them in their head, but we need to have something on paper.
3316 MR. CAVANAUGH: Right. Apart from the -- and I understand your question and I understand your point as well.
3317 Tapping into the various subcategories and using those against some real world examples, some of which were portrayed in the video, it's true, it's about as far as we went.
3318 I think it's partly reflected as well in something else that we have not raised yet but that goes back to a point Commissioner Molnar made a little while ago, and that is the absence of any kind of market research that we did on this particular format.
3319 I have to say that I think Ragavan and my other colleagues have underplayed the vast amount of field research that they have been engaged, fully engaged in, in the course of running CMR over the past several years.
3320 Month after month after month of receiving overtures from local artists, music from local artists, that simply doesn't fit the format of that station and, frankly, doesn't fit the format of any other type of station.
3321 I think a question that we have heard raised quite often with other applicants to this point in time is: Is there enough content for you to float this format and to keep it alive and sustain it going forward?
3322 And I think the answer to that is -- to ask and answer the question, is absolutely there is no doubt about it, simply because -- and again, I think the passion and mixed with the fieldwork, mixed with being engaged, fully engaged in the local music scene by my colleagues has led them -- has led us down this road to a format that we think will work very effectively --
3323 COMMISSIONER POIRIER: Yes.
3324 MR. CAVANAUGH: -- and an emerging artist component that is simply, as quoted and as stated in our submission, a starting point.
3325 COMMISSIONER POIRIER: Yes. May I ask legal if we have enough information on what is emerging genre music format described by this applicant or could we ask them at this point to file more information so we would know what they really mean by that new genre of emerging music format?
3326 MS HULLEY: I would say there is enough on the record.
3327 COMMISSIONER POIRIER: There is enough, okay. Thank you very much.
3328 THE CHAIRPERSON: Any other questions?
3329 That completes our investigation of your application. Thank you very much.
3330 Madam Secretary...?
3331 THE SECRETARY: Thank you very much. We will adjourn tomorrow at 9:00 a.m., Mr. Chairman.
3332 THE CHAIRPERSON: I'm sorry?
3333 THE SECRETARY: We will resume tomorrow at 9:00 a.m.
3334 THE CHAIRPERSON: Yes.
3335 THE SECRETARY: Thank you.
3336 MR. PARANCHOTHY: If I may say something, I know it has been a very long day for you and thank you for hearing us. We want to leave you with a little surprise.
--- Audio presentation
3337 THE CHAIRMAN: Thank you.
--- Whereupon the hearing adjourned at 1752, to resume on Wednesday, May 9, 2012 at 0900