ARCHIVED - Transcript, Hearing 9 May 2012
This page has been archived on the Web
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Providing Content in Canada's Official Languages
Please note that the Official Languages Act requires that government publications be available in both official languages.
In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.
Volume 3, 9 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
9 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
9 May 2012
- iv -
TABLE OF CONTENTS
PAGE / PARA
8. Frank Torres, on behalf of a corporationto be incorporated552 / 3343
PANEL OF INTERVENERS
1. Calabogie Peaks575 / 3451
2. John Worden578 / 3466
3. Dan Aykroyd582 / 3490
9. Rock 95 Broadcasting Ltd.635 / 3831
PANEL OF INTERVENERS
2. Vai Media Group652 / 3925
3. Matt Schichter654 / 3936
1. Fast Romantics656 / 3944
10. Family FM Inc.704 / 4256
11. 2308739 Ontario Inc.764 / 4628
- vi -
PAGE / PARA
Undertaking600 / 3600
Undertaking792 / 4821
--- Upon commencing on Wednesday, May 9, 2012 at 0912
3338 THE CHAIRPERSON: Good morning. I apologize for the delay.
3339 Madam Secretary, do you want to get us started, please?
3340 THE SECRETARY: Thank you, Mr. Chairman.
3341 We will start today with item 8 on the Agenda, which is an application by Frank Torres, on behalf of a corporation to be incorporated, for a broadcasting licence to operate an English-language commercial FM radio programming undertaking in Toronto.
3342 Mr. Ed Torres is appearing for Frank Torres. I would ask that you first introduce your colleagues for the record and you will then have 20 minutes for your presentation.
3343 MR. ED TORRES: Thank you.
3344 Good Morning, Mr. Chair, Members of the Commission and Commission staff. My name is Ed Torres. Welcome to Toronto. It's the city where my brother and I were born and where we founded our successful broadcast company, SkyWords over 20 years ago. I am President of SkyWords Media and Chief Executive Officer of CIDG 101.9 DAWG FM in Ottawa.
3345 My brother and I are also partners in a new broadcasting undertaking with Starboard Communications to serve Uxbridge. Thank you for the privilege of bringing a first service to Uxbridge and thank you for hearing our application for a new Blues format FM radio licence.
3346 Before we start our presentation I would like to present our panel.
3347 Seated to my right is my brother Frank Torres. Frank was born in Toronto three years after I was and four years after my parents emigrated from Spain seeking a better life for the family that they were planning and I am very proud that my parents are joining us today in the front row. Frank has been my business partner for over 20 years. Together we founded our national broadcasting company SkyWords here in Toronto.
3348 To my left is Yves Trottier. Yves is Operations Manager and Program Director of 101.9 DAWG FM. Yves has been a Program Director in English and French radio for over 20 years. He was a member of the 2012 JUNO Blues Awards jury. He is a member of the Maple Blues judging panel and Artistic Director for Calabogie Bluesfest.
3349 Beside Yves is Derek Andrews. Derek is one of Canada's most influential blues supporters. He is President of the Board of Directors of the Toronto Blues Society, Canada's largest blues society, and he is a co-founder of the Maple Blues Awards, Canada's national blues awards show.
3350 Beside Derek, to your far right, is Chuck Jackson. Chuck is a blues musician and lead singer of the JUNO award-winning Downchild Blues Band. That's the band that inspired Dan Aykroyd's "Blues Brothers" movie.
3351 Beside Frank is Todd Bernard. Todd is a partner in our Ottawa operation. He is a native Torontonian and the General Manager of 101.9 DAWG FM in Ottawa.
3352 To Todd's right is Jeff McFayden, Sales Supervisor DAWG FM Ottawa.
3353 In the second row, starting at your far right, Lisa Morales. Lisa is the Program Director of SkyWords Media.
3354 Beside Lisa, Kim Elliot. Kim has worked in various Toronto radio news departments and she is currently a Sales Manager for SkyWords Media.
3355 Beside Kim is Ron Ford. Ron is a chartered accountant and the Chief Financial Officer for SkyWords and Torres Media.
3356 To the right of Ron is Aubrey Clarke, Director of Business Development at SkyWords and our former National Sales Manager.
3357 Beside Aubrey is Catrina Bulbulian, another salesperson. She is the Vice-President of Sales for SkyWords Media.
3358 Beside Catrina is Rob Dawson, President of Concerto Research Inc. and Partner of Concerto Marketing Group Inc., joining us from Vancouver. Concerto Research is a marketing research firm that has conducted extensive consumer research of our blues format in Toronto but also across Canada in numerous markets.
3359 Beside Rob are two of our supporters:
3360 - John Worden, Director of Advertising for Hakim Optical; and
3361 - Paul Murphy, the President of Calabogie Peaks Resort, at your far left.
3362 The decision you are asked to make will be a landmark decision. For our company, for the Canadian blues industry, for Canadian record labels and most importantly Canadian blues artists, it's a GAME CHANGER.
3363 We strongly believe that our application is a quality application and it is in the best public interest for many reasons. It is our hope that at the end of this presentation we are able to cut through the clutter of this proceeding and leave you with a passionate belief that our blues radio format is the right one for this market.
3364 MR. FRANK TORRES: Our application illustrates that:
3365 - Toronto can easily sustain a new commercial music station;
3366 - We will increase plurality and provide a format that is not currently available in Canada's most populous city;
3367 - Our format will assist the careers and change the lives of Canadian blues artists;
3368 - We have maximized the full potential of 88.1. At 8000 watts we have the most powerful signal of any applicant. This power is necessary to penetrate the concrete and glass of the downtown core. In fact, many of the other applicants do not have technical acceptance from Industry Canada. Our projections are solidly footed in engineering that has been approved by IC;
3369 - Our CCD is focused on blues artists and will channel funds directly to these artists. More importantly, our CCD is in proportion to our business plan. The Commission must question how a standalone operator could manage excessive CCD contributions. We have seen applicants use this model to buy a licence, then sell out at the first possible opportunity. Our CCD is fiscally responsible and also yields the greatest impact on Canadian artists.
3370 MS MORALES: We believe we have the highest quality of public support in this proceeding. We have received over 540 expressions of support for DAWG FM Toronto, including:
3371 - over 50 Canadian blues artists, including Downchild Blues Band, MonkeyJunk, Jack DeKeyser and Shakura S'Aida;
3372 - the Toronto Blues Society;
3373 - Toronto City Councillors Mark Grimes and Gloria Lindsay Luby;
3374 - Member of Provincial Parliament Todd Smith;
3375 - Members of Parliament Sergio Mario and Matthew Kellway;
3376 - Senior VP, Radio Buyer, Mediabrands, Dave McDonald;
3377 - numerous potential advertisers such as Active Green and Ross, Hakim Optical, Remax and many others.
3378 MR. JACKSON: We are privileged to have the support of Academy Award Nominee, Member of the Order of Canada and Canadian Icon Dan Aykroyd, whose letter of support states, and I quote:
"Toronto is the center of development for blues musicians with a number of vibrant live venues and many consumers of this music. There is a need for artists and listeners to have a radio station devoted solely to this culture, an important part of the Canadian music industry. Local radio stations, as you are aware, are currently formatted for pop, rock, hip hop/rap/ house, techno, country, talk and sports. A Canadian blues radio station would add another great choice for listeners, advertisers and supporters..."
3379 There is a vibrant Canadian blues scene that DAWG FM Ottawa has just begun to help expose. The approval of this application is a potential game changer for Canadian blues artists.
3380 MR. BERNARD: The Greater Toronto Area is Canada's largest economic engine. The city's 2011 Gross Domestic Product of $152 billion accounts for 11 percent of national GDP. When the entire CMA region is considered, that number rises to over 20 percent.
3381 Toronto is the most profitable radio market in the country. When considering PBIT margins for Canada's three major markets in 2010, Toronto's PBIT margin of 35.2 percent outpaced Vancouver by nearly 8 percent and was higher than Montreal's by 8.6 percent.
3382 When Canada's six largest markets are compared in terms of PBIT in 2010, Toronto remains well ahead. In fact, when looking at margins for major and large markets combined dating back to 2006, Toronto's PBIT average over the five-year period of 34.5 percent is the largest of all nine major and large markets in the comparison.
3383 Toronto continues to be the most profitable radio market in Canada and therefore will be well positioned for a new entry on the 88.1 frequency.
3384 Toronto's only remaining frequency should be occupied by a commercial operator with a strong capital position and proven track record, accurate and realistic financial forecasts, and by one who will fill a demonstrated void in the music genre landscape. A blues format will fill that music void.
3385 CIDG -- DAWG FM in Ottawa -- has already demonstrated that there is appetite in the key adult 35-54 demographic for this type of format. DAWG FM Ottawa, in fact, ranks number one in time spent listening for males 35-54. It is reasonable to expect that in the larger Toronto market there would be a similar successful response to this format.
3386 88.1 DAWG FM will increase diversity in the musical landscape. The same cannot be said for the AAA format which exists in the market on CBC Radio 2 and derives a considerable amount of programming from musical selections already being played by existing AC stations.
3387 DAWG FM's unique format prominently features established and emerging artists who currently receive little or no airplay. Although we committed to 30 percent in our application, we expect that emerging artists will make up nearly 50 percent of DAWG FM's playlist.
3388 In addition, unlike some of the other submissions before you whose formats have not been previously tested in Canadian markets, the emerging artists featured on 88.1 DAWG FM have already been shown to be well received by listeners in Ottawa on CIDG.
3389 The first song played on DAWG FM was by local Ottawa blues band MonkeyJunk, a band that was playing casually on weekends in the summer of 2008. Since the inception of DAWG FM, MonkeyJunk has won 12 Maple Blues Awards, a Canadian Independent Music Award, a Blues Music Award -- which is won by just one other Canadian in history, Jeff Healey -- and this year they won their first JUNO Award. The band now tours North America, Europe and Scandinavia full time and is able to make a living playing Canadian blues.
3390 MR. McFAYDEN: The Toronto radio market is geared heavily towards targeting female audiences. There are very few formats that target male audiences. Of the 14 mainstream FM music-based radio stations rated by Toronto Central by BBM, only two have a male majority audience.
3391 Radio stations program based on their target and largest demographic portion of their audience. This not only influences music selection but also imaging, contesting, promotions and spoken word content. Not only does our research show that the Blues/Blues-rock format would be a welcome addition to the Toronto landscape, but it would display the void in the extremely underserved male 35-54 music-loving audience.
3392 According to BBM's latest analysis, the top 10-ranked music stations in the male 35-54 demographic are mostly female-driven formats. In fact, the only male-focused station in the top five is CILQ FM. The only other male-driven station in the market, CFNY, ranks 6th. This demonstrates the lack of available male content for this important demographic.
3393 Both CFNY and CILQ are owned by the same company, Corus Entertainment. This poses a potential problem for advertisers. The lack of competitive options for purchasing airtime means that the sole proprietor can dictate the cost of advertising to this sought-out demographic by controlling the rate. 88.1 DAWG FM's introduction to the marketplace would create an alternative, viable option for male-targeted advertisers and increase competition.
3394 MR. ANDREWS: Good morning.
3395 I have been a Director of the Toronto Blues Society for 27 years and as a concert organizer have produced 18 editions of a Toronto blues festival at Harbourfront, have attended blues festivals throughout Canada and the U.S. and have spent countless nights in blues venues in Canada, the United States and around the world.
3396 In Canada, there are hundreds of blues bands and performers, some of whom have achieved international prominence, such as Jeff Healey and Colin James. Unfortunately, many talented musicians receive little or no airplay on Canadian commercial radio, with the exception of DAWG FM in Ottawa. Blues music is available on satellite radio that originates from the United States and, accordingly, Canadian artists get minimal airplay.
3397 The Toronto Blues Society feels that a station in the heart of the Canadian blues industry would be extremely important to push the business of blues in a positive direction. Blues music lovers have organized themselves extremely well across Canada and internationally through blues societies. The Toronto Blues Society is the oldest and largest blues society in Canada and is the lead blues organization in Canada. We organize the Maple Blues Awards and the Maple Blues Summit through our resources and full-time staff.
3398 There are more than 30 blues societies in Canada, of which a dozen are here in Ontario. Each year there are many blues festivals that take place across the country. Blues festivals are a major growth area in Canada's festival landscape. RBC Bluesfest in Ottawa, Mont-Tremblant, Edmonton, Dartmouth, Thunder Bay, Kitchener, and in Toronto the Waterfront and Port Credit Blues Festivals are just a few examples.
3399 There are blues venues in all major cities and towns in Canada. Toronto has hundreds of live music venues and is the third most active live music scene in North America, next only to Los Angeles and New York. The Toronto Blues Society exists to help get this message to the blues audience.
3400 Toronto blues has a huge relationship with Canadian history in the form of the Underground Railroad that delivered escaped slaves a century and a half ago. Underground Railroad families such as the Braithwaites, Blackburns and Richardsons now all make up the fabric of Toronto blues music.
3401 Blues also has found an audience among the Aboriginal community and new Canadians as it has evolved as a part of contemporary music culture. "Rez Blues" artists such as Digging Roots, Murray Porter and Derek Miller are but a few of those making waves in the First Nations community, while Raoul Bhaneja, Elmer Ferrer and Carlos del Junco are a few of the new exciting examples of a new generation of Canadians creating vibrant blues music.
3402 A commercial blues radio format would be a game changer for the Toronto Blues Society and the Toronto blues scene and would give us the ability to promote artists, recordings, festivals, venues, the Maple Blues Awards and the Maple Blues Summit.
3403 MR. TROTTIER: 88.1 DAWG FM Toronto will be a music-driven station that showcases blues and blues-rock, but we will also foster our community of blues listeners, artists, industry and festival insiders through our on-air product and our social networking platforms.
3404 DAWG FM will create a direct connection between blues artists and blues fans in Toronto. Part of our strategy to build our audience loyalty revolves around education. Our announcers explore the history of all the Canadian blues artists that we play and promote their upcoming releases, shows and tours, making for strong relationships between station, artists, industry and listeners that in many cases develop into friendships.
3405 What truly makes us unique is that we play music other radio stations do not. Our playlist features 50 Canadian artists that are not currently played on any other radio station in Toronto. These artists play in prime time and they are not relegated to overnights or weekends. You can tune in to DAWG FM and hear Jack de Keyzer, Amos Garrett or Maple Blues Award winner Shakura S'Aida in the morning or drive shows beside blues greats like Stevie Ray Vaughan, Colin James, The Rolling Stones and B.B. King.
3406 Our station is different. Our studio DAWG concert series takes a major Canadian blues artist to a local bar. We hold an intimate and interactive question and answer session with the artist, with an acoustic version of the artist's songs. The show is recorded live and replayed on DAWG FM the following week. Our community of listeners get up close and personal with the artists we play and DAWG acts as facilitator. There is no cost to listeners for this concert series.
3407 In 2011 DAWG FM launched the Class Axe Guitars Calabogie Blues & Ribfest. Our three day celebration of Canadian Blues talent tripled the population of the region during the festival. This year our festival was recognized by the Provincial Government's Celebrate Ontario grant program.
3408 MS ELLIOTT: Toronto has a number of news-dominant radio options:
3409 - 680 News provides headline news, traffic and weather all day;
3410 - CFRB and AM 640 provide listener call-in segments to complement its news programming and editorial voice;
3411 - national and international news can be found on four CBC frequencies in both official languages;
3412 - two full-time sports stations update news, traffic and weather throughout the day;
3413 - news programming of an international flavour can also be found on 10 ethnic radio stations in the market;
3414 - local, regional and international news is also available on numerous TV, print and Internet portals that serve the Toronto market.
3415 Our newscasts will inform our listeners and keep them tuned to our station. DAWG FM will increase the plurality of news voices in Toronto by providing a new, distinct, independent news voice.
3416 Traffic is a growing concern among Toronto's population. Maclean's Magazine, January 2011, compares commuting times in 19 major cities. Toronto ranks DEAD LAST, worse than New York, London and even Los Angeles. Traffic reports are a key component of this application, and our SkyWords Traffic company is expert at gathering and disseminating traffic information.
3417 Social media is also an integral part of our application, which we will foster through our Active Engagement Social Media Strategy.
3418 MR. FORD: Financial sustainability is an extremely important yardstick by which to measure this application. Comparative analysis of the applicants would indicate that DAWG FM has made realistic financial projections.
3419 In terms of this proceeding, our financial projections fall within the average. Some applicants make very aggressive forecasts of revenue to mask heavily weighted CCD contributions, and yet, others show a minimal economic benefit. Review of the sales and net income for the first year and the total at the end of the term, which is the seventh year, reveals the Torres submission as pragmatic and sustainable.
3420 The operation is well financed with the support and partnership of Joe Dwek. Mr. Dwek has supported every one of the Torres applications financially and has acted as financial advisor and mentor to Torres Media for over 10 years. Joe is a chartered accountant and co-founder of Pathway Asset Management and Energy Fields group. Together MineralFields and Pathway have financed several hundred mining, oil and gas exploration companies, and have raised over $1 billion in their 10-year history.
3421 Joe is one of Toronto's eminent philanthropists, donating significantly to organizations, including The United Jewish Appeal and the Ohr HaEmet Sephardic School at Bathurst and Steeles that bears his name.
3422 MS BULBULIAN: Ed and Frank Torres started SkyWords 20 years ago in Toronto to provide traffic reports to radio stations. Both Ed and Frank are commercial pilots and began providing radio content at no cash cost to radio stations. The business model was a success: high-quality traffic reports, no out-of-pocket costs to the station and new revenue from non-traditional advertisers for radio.
3423 Today, SkyWords provides content to over 135 radio stations across Canada, including traffic, weather, marine, snowmobile and business reports. Most of the 135 radio station affiliates, however, are in small and medium-sized markets. This is a result of consolidation, which led to concentration of ownership in major markets. SkyWords was squeezed out of these major markets by the larger corporations who increasingly want to control ad rates and be the gatekeepers of commercial radio.
3424 This is why this station is a GAME CHANGER for SkyWords. Toronto is Canada's most sought-after advertising market and the anchor market for SkyWords' national business. Another anticipated wave of consolidation would seriously affect the cornerstone of SkyWords' business, the Toronto market.
3425 Over the past two decades, SkyWords has established solid relationships with clients. This includes local, regional and national clients as well as agency business. Let me state clearly that we have been selling radio in Toronto for over 20 years. Our clients are long-term loyal clients of SkyWords and they also support our proposed blues format in Toronto.
3426 MR. DAWSON: Our research into the Toronto market focused on providing an objective and unbiased assessment of this prospective format. As you can appreciate, our firm's reputation and the lifeblood of our business is in providing third-party objectivity, which means, unfortunately, sometimes giving clients news they don't want to hear.
3427 However, our research found a number of indicators to suggest that the DAWG format would be warmly received in the Toronto market.
3428 First, over half of our sample, 53 percent, was unable to recall any local stations that played a fairly recognizable list of blues artists, and another large group, 22 percent, could identify just a single station. This indicates that 75 percent of respondents are relatively unaware of blues content being available on the radio. Compared to other music formats we tested, including rock, top 40 and adult contemporary, this finding differs significantly.
3429 Our research also suggests that the Toronto market is fairly homogeneous. Fifty-seven percent of people surveyed agree that most stations offer the same type of programming, and 39 percent agree that there's often very little on the radio they like to listen to. However, more than half, 59 percent, agree that they would listen to the radio more often if they could find programming that they liked. This does indicate an acute need for something that is new and different in the market.
3430 Of course the question that's probably on everyone's mind is, "Well, how many people will this station appeal to?" Our survey does find a strong base of potential listeners for the DAWG blues music format. More than half of people surveyed answered that they would be likely to listen to the DAWG format. Of those, 27 percent expressed that they would be very likely to listen to the station. This tells us that there is a latent demand for a blues format station in the Toronto market.
3431 MR. CLARKE: We projected our share of tuning hours by carefully examining the market research conducted by Concerto Research, along with our own independent studies done through online surveys and population counts of our Industry Canada approved engineering brief.
3432 In addition, we looked at the PPM numbers of shows like CBC's "Saturday Night Blues." The show had 6.4 percent of tuning males 25-54.
3433 Lastly, we took into consideration our experience in launching CIDG FM in Ottawa, which gave us a good idea of what to expect in Toronto.
3434 One glance at the Toronto Blues Society's newsletter under "upcoming shows" clearly demonstrates how vibrant the blues scene is in Toronto. The slide on your viewer now is only a partial list of the blues shows on the go this month. Many other venues do not list in the TBS newsletter, as they may not be core blues venues, but still offer occasional blues performances.
3435 These are just a few reasons that we believe our share projections are very modest and attainable.
3436 MR. F. TORRES: Canadian content development is more than just dollars on a spreadsheet. Our format will spin almost 44,000 blues tracks from emerging artists every year. Close to 30,000 of these spins will be from Canadian blues artists.
3437 No other applicant at these proceedings even comes close to this level of support for Canadian content.
3438 With the pending transactions of Bell/Astral, Vista/Haliburton, and the rumoured transactions that may involve other players, the Commission needs to consider the windfall gains that the collectives and syndicates will receive.
3439 We maintain that our application has the most fiscally responsible and well directed CCD of any of the applicants. It balances an independent radio operator's ability to run a successful business while providing benefits in the most direct of ways to Canadian blues artists.
3440 Further, our application reaches out to a campus partner by making 15 hours available for campus programming under the guidance of our Program Director.
3441 MR. E. TORRES: Like the CRTC's CanCon regulations, this Toronto frequency could be a defining moment for the blues industry in Canada. Your decision can make Canadian blues artists leaders in this genre internationally.
3442 When our initial licence was appealed, we saw the CRTC make a choice for diversity by issuing a licence to the first commercial blues station in the world. In Decision CRTC 2008-222 the Commission indicated that, and I quote:
"...a blues/blues rock-based format would increase competition and enhance diversity in the market, by introducing a new voice and a music format not commonly found in the market."
3443 We have the experience, we have the buildings, we have the studios, we have the infrastructure, and, most importantly, our people. They are passionate, they are enthusiastic, and they are ready to get this station on the air quickly.
3444 This is our backyard. Your approval of this application is a game changer, for our format, our companies, for Toronto radio, and for the Canadian blues industry.
3445 This concludes our presentation.
3446 THE SECRETARY: Thank you, Mr. Torres.
3447 We will now proceed with the presentation by Mr. Paul Murphy from Calabogie Peaks.
3448 Mr. John Worden and Mr. Dan Aykroyd will be appearing as a panel, and Mr. Aykroyd will be appearing by teleconference.
3449 I would like to remind you that the panel has, collectively, ten minutes to make its presentation.
3450 Gentlemen, go ahead, please.
3451 MR. MURPHY: Good morning, Commissioners. My name is Paul Murphy, and I am the President and the owner of Calabogie Peaks resort.
3452 Calabogie Peaks is the largest tourism business in eastern Ontario. It is situated about an hour northwest of Ottawa. We enjoy about 100,000 guest visits in the wintertime, and about 20,000 in the summertime.
3453 I want to tell you about a relationship that our company developed with DAWG FM and SkyWords about a year and a half ago, and how their experience in the marketplace and their use of the radio brought significant benefits to both blues listeners and the economy of the Ottawa Valley.
3454 We collectively formed a partnership, and thought that the combination of the blues music and the beautiful venue of a ski resort was an ideal combination to host a blues festival.
3455 It turned out to be exactly what we had hoped it would be. In the first year, we enjoyed 8,000 blues festival visits, which is quite something for the first year of a festival in the Ottawa Valley.
3456 We attracted markets from Ottawa, the Seaway, Gatineau, and the Ottawa Valley in general. We expect that this year our attendance could double.
3457 Now, the key part of the story is that this festival would never have been a success without our partnership with DAWG FM. Our resort -- in fact, any resort -- can't pull something like this off on its own. We need the expertise of the marketing and the access to the market that a DAWG FM brings.
3458 And this organization actually created an economy in our local community.
3459 It was such a popular event that our reeve and our local council have made the blues festival a cornerstone of their economic policy going forward.
3460 Our township applied for and was successful in obtaining a Celebrate Ontario grant, and Calabogie, just in the last three months, has been given the award of a Premier Destination, which, in the Ministry of Tourism's parlance, is a place of very significant tourism activity in the province.
3461 A lot of that stems from what this festival has brought our community.
3462 Now, I will tell you that we host a lot of events at Calabogie Peaks. This is the only one where we have never had a complaint. Every single person in our community loved this event. It's the first thing in our community that has ever brought every business and every political group together to join in a common cause.
3463 We host a little warm-up. We get lots of great feedback from our community, and the SkyWords/DAWG organization is well admired in our community. Our partnership is very strong, and it's a great group for us to work with.
3464 I cannot speak highly enough of the quality of this organization and the benefits that they have brought a very wide population base in eastern Ontario.
3465 Thank you.
3466 MR. WORDEN: Good morning, Chairman, Commissioners and Commission Staff. My name is John Worden. I am the Director of Advertising for Hakim Optical, and I have held that position for about 14 years. I have been in the advertising business for about 25 years, starting with J. Walter Thompson in radio production.
3467 I am pleased to present my support for DAWG FM.
3468 In my capacity, I place media, including television, radio, print, online and out of home, in major markets, secondary markets, and tertiary markets across Canada. A major component of my advertising budget is radio, and I believe in the ability of radio to reach targeted audiences with brand building and call-to-action messages, and tend to favour radio stations with a loyal listener base that stays tuned in longer.
3469 A core target demo for Hakim Optical is males 35 to 54, a demographic that lines up nicely with the DAWG FM audience.
3470 Hakim Optical was an inaugural sponsor of DAWG FM in Ottawa, and also plans to support DAWG FM-Toronto, should the Commission award a licence to the Torres brothers.
3471 Presently, in Toronto, my radio spend is, I would say, proportionately lower than it should be for this market and demo, primarily because of the lack of choice of radio stations that are musically intense and serve males 35 to 54.
3472 Our present choices are CFNY, which, for us, skews a little young, and Q107 CLQ, which skews a little lower in listening time than we like, and a little lower in disposable income.
3473 I am looking for higher disposable income, a little more refined music taste, and an audience that will not flip from station to station looking for the next hit song.
3474 The DAWG FM format is similar to a country format, that I like as far as listeners' loyalties go. Listeners that tune to DAWG FM's blues-rock format have likely been repatriated to radio from satellite and cancelled their satellite subscriptions in favour of DAWG FM. I know that I would probably do something the same myself.
3475 This is exactly the brand loyalty that I am looking for in customers for Hakim Optical. If the listeners associate the Hakim brand of high-quality, affordable glasses with the DAWG FM brand of high-quality and unique music, then my advertising dollars are well spent on DAWG FM.
3476 I believe this is a perfect case of a new entrant in a radio market providing service that is not currently available in the market. Advertisers like Hakim Optical will not be dividing their current Toronto radio budgets to buy DAWG FM, and will be adding to their existing budgets, thus increasing the amount of spend in the market.
3477 I have reviewed several of the applicants in this proceeding, and although there are several good broadcasters, with good applications, from the perspective of the advertisers, the DAWG FM application brings a new choice and added competition to the market, particularly in the category that I am looking for, which is the male 35 to 54 demo, which is often ignored in favour of a younger, more female-skewed demo, and we know that there are lots of those.
3478 I have placed media with SkyWords Media for over five years, and although that started off as a simple traffic report type of sponsorship, SkyWords and DAWG FM have provided versatile formats for Hakim Optical to sponsorship, including cottage country reports, coffee time flip-to-win promotions, blues fests sponsorships, social media promotions, giveaways, and many more things that we have done together.
3479 All of the advertising platforms that SkyWords and DAWG FM provide are available to advertisers in a one-stop type of shop.
3480 The Torres brothers stress customer service and client relationships as their utmost qualities in dealing with their clients. I have had the pleasure of dealing with them firsthand, and can state that they make great on all of their promises by delivering a quality product.
3481 I don't give money to radio stations because they are popular. I prefer to give it to a station that I believe my commercials will be heard on, due primarily to the loyal listener base.
3482 It is because of all of these reasons, and more, that I wholeheartedly support the DAWG FM application to bring the blues to Toronto.
3483 Thank you for the opportunity to present my support.
3484 THE SECRETARY: Thank you, Mr. Worden.
3485 I believe that Mr. Aykroyd is already on the line.
3486 Can you hear us, Mr. Aykroyd?
3487 MR. AYKROYD: Yes, I can. Good morning.
3488 THE SECRETARY: Good morning.
3489 The panel is now ready to hear your presentation. Please go ahead.
3490 MR. AYKROYD: My name is Dan Aykroyd. I was born in Ottawa, Canada, on July 1, 1952. I am a part-time resident of Canada. I am a tax resident of the U.S., but I am a summer resident of Canada. I work in the United States in music, entertainment -- film, television and radio.
3491 DAWG FM would be a great asset to the City of Toronto, a new blues format which would help to counterbalance the preponderance in film and television and video games of violence. Adolescents and young people today are exposed to, I guess, a demeaning content in a lot of television and video games, and it is demeaning to the gender of both men and women.
3492 And a good, honest, blues station offers decent entertainment, which is free of profanity.
3493 There is a lot of talk radio, and some satellite radio, where the hosts are quite free with the language they use, and, frankly, DAWG FM would clean up the airwaves, in a fashion. It would be completely free of this type of cultural decline.
3494 What DAWG FM offers is music that is sourced from the African-American songbook, one of the greatest fonts of music and culture in the world, the music of the southern U.S., the electric blues of the Delta and Memphis, and then, in turn, Chicago, which brought us rock 'n' roll and all of the music that we listen to today.
3495 So, from a cultural point of view and a moral point of view, I guess that the establishment of DAWG FM -- one objective of theirs is to improve what young adolescents are seeing and hearing in the media, and from an educational point of view, just to teach them about blues music and culture, because the origins of this music, where it's from and where it's going, are quite rich, and I think this makes up the substance of a strong appeal.
3496 Then, of course, there are commercial applications. A blues station will encourage people to buy records online and at stores. It will encourage people, maybe, to pick up an instrument and play. Young people will want to find out more about this music.
3497 It will also encourage venue operators to bring live music to their pubs, their clubs, their arenas, and other places where blues music and blues musicians are engaged.
3498 Generally, it affects a whole range of industries, and that constitutes, really, the essence of the first part of my statement.
3499 If you have any questions, please forward them to me.
3500 THE SECRETARY: Thank you very much.
3501 THE CHAIRPERSON: Thank you very much.
3502 I am going to ask Marc Patrone, our Commissioner for the National Region, to lead the questioning.
3503 COMMISSIONER PATRONE: Thank you, Mr. Chairman.
3504 I want to thank the panel and the intervenors for their presentations this morning.
3505 Mr. Aykroyd, I know that it must be very early in California, so we appreciate you calling in.
3506 MR. AYKROYD: Thank you. It's really worth it. It would be great if this thing happens. I know that Ottawa has benefited greatly from it, so I am happy to weigh in and assist. Not a problem, thank you.
3507 COMMISSIONER PATRONE: I have a lot of questions.
3508 There has been a kind of recurring theme over the course of this hearing thus far, and it centres on a perception that there is a void in the Toronto market, and you are going to get every opportunity this morning to tell the panel and staff why it is that Toronto really needs DAWG FM.
3509 I admire your commitment to the music, but how does a blues station increase plurality and diversity, as you say it does on page 9 of your oral presentation, given the ethnic mix of the city right now?
3510 As you are aware, the demographics cut right across the board. We have the United Nations here, in terms of the ethnic mix.
3511 You want to bring blues here. How does that increase diversity?
3512 MR. AYKROYD: That's one of the principles of the company, right?
3513 MR. E. TORRES: Dan, I will start the answer, and then, certainly, if you want to jump in...
3514 MR. AYKROYD: Sure.
3515 MR. E. TORRES: In terms of diversity, representing Spain, here am I.
3516 In terms of adding diversity to the marketplace here in Toronto, we have just about every other genre on radio represented. What we are going to add, in terms of the ethnic appeal of this music -- and maybe I will ask Derek Andrews and Dan Aykroyd to speak about the ethnic appeal.
3517 MR. ANDREWS: As a concert producer in Toronto, I can appreciate your question, Commissioner. I worked at Harbour Front and developed world music programming from the late eighties through to when I left in 2003. I currently work at Luminato Festival, where I organize the free concert program that features a range of diversity for the stages that will feature that festival in June.
3518 I can tell you, most immediately, that I was at a club last night on Dundas called Lula Lounge, watching Khaira Arby, a musician from Mali, playing desert blues, and the audience was completely diverse. It represented the universality of blues.
3519 Ms Arby is the cousin of Ali Farka Toure, who recorded with Ry Cooder.
3520 These are artistic developments that have gone on in the last 20 or 30 years that represent what happens in Toronto in music, and I feel that that is a reality in blues.
3521 We mentioned Raoul Bhaneja, the South Asian blues singer here in Toronto, as an example of one of the representations of cultural diversity that are active in blues.
3522 Blues is penetrating into all of the cultures. That is what we see today, and I think that a signal on the radio would only strengthen that.
3523 MR. E. TORRES: Dan, would you like to add anything to that?
3524 MR. AYKROYD: Yes, sure. I just hearken back to a night a few years ago at the Rainbow Room in Ottawa, the great blues club there in the ByWard Market, and I was looking around the room and there was the full range of government employees, native French-Canadian, native English-Canadian, Indian, Pakistani, Asian, African-Canadian, Jamaican-Canadian -- just a sea of diverse faces, all listening to the JW-Jones Band from Ottawa, and enjoying it.
3525 I think, from an audience perspective, blues does penetrate to everyone who loves music. Everyone who likes rock 'n' roll, everyone who listens to hip hop or house, or anything that is on radio now, appreciates blues as being the origin for these forms of art and culture that are so popular.
3526 I was struck by the diversity of the audience that night, and how everybody was just grooving to JW-Jones in unison.
3527 MR. E. TORRES: Chuck Jackson, I think that you have something to add.
3528 MR. JACKSON: Yes. I am Chuck Jackson, a singer with the Downchild Blues Band. The band has been performing in Canada for 42 years, and we now perform all around the world. In the last eight years we have been playing in Costa Rica, we have played in Europe, and some of the largest blues societies in the world are in places like Norway and different parts of Europe. So the music is reaching everyone.
3529 We find now, with the internet, that we are getting -- I get messages from people from all different parts of the world, saying how much they love the blues. So it certainly is reaching out to all ethnic groups.
3530 MR. E. TORRES: Just to wrap up on that point -- and I won't linger, but our Facebook fan page has fans from over 115 countries, and there are 85 different countries that stream our live DAWG FM feed from CIDG.
3531 COMMISSIONER PATRONE: I can remember seeing Downchild play at an outdoor venue, going way back to when "Flip Flop and Fly", I believe, was still on the charts. It was a good show.
3532 I want to ask about your BBM analysis on page 10 of your oral presentation. I just want some clarity around how you interpret the fact that the top 10-ranked music stations in the male 35 to 54 demo are female-driven formats.
3533 I didn't quite understand that. Are you saying that radio is dominated by female formats?
3534 And I know it's a chicken and egg kind of thing, but is that because it's what radio thinks the audience wants, or is it because the audience really wants that?
3535 MR. E. TORRES: It is what the advertisers, for the most part, demand. That is where everyone tries to be.
3536 That always creates an opportunity for an outlier, and I overheard somebody at this hearing, in a back room, call us that, and we are happy with that.
3537 But, overwhelmingly, the applicants for this frequency are chasing the most crowded part of the spectrum. You can see on our slide that we have, to the left of that arrow, your female skewed, and to the right your male skewed. That's important for us, and that's a reason that we succeed in Ottawa, and that's a reason that we will succeed in Toronto.
3538 COMMISSIONER PATRONE: As I understand it, you believe that Corus has a kind of monopoly around male formats, and that somehow that allows them to dictate the ad rates.
3539 Is that correct?
3540 MR. F. TORRES: Again, I think the slide shows it pretty clearly, and the PPM numbers do agree with that.
3541 I think, if you can envision this slide, this is pretty much what we are all about. This slide is in relation to demographics, but this slide really reflects our format and our company. We are in the mainstream, but we are not going where the herd is going. We are going close enough that we think we can be mainstream and we can bring a mainstream sound, but we are providing something different, and certainly adding competition and plurality in the male segment of the population.
3542 MR. McFAYDEN: I have spoken with many agencies in Toronto who have stated that they have a hard time buying male music stations because they have to go to Corus. Corus is the only one. So, if they want to buy a male music station for a male-driven client, they have to go to Corus, and Corus can set the cost point at what they want.
3543 COMMISSIONER PATRONE: And you feel that the rates are inflated for that reason.
3544 Is that correct?
3545 MR. McFAYDEN: Absolutely.
3546 COMMISSIONER PATRONE: Regarding page 19 of your oral presentation, if a majority of radio listeners think that they are hearing the same music across the radio dial -- and we, of course, do not regulate formats -- why haven't any other stations filled in what you see as a void in the market? Why are you seeing something that no one else is seeing?
3547 MR. E. TORRES: It is, of course, a function of risk, and risk is a function of the size of your corporation. So the larger corporations will tend to go where the consensus is.
3548 That is the first part of the answer.
3549 However, we did see, when we launched our station in Ottawa, that stations started to program against us.
3550 One of the first things that happened when you awarded us that licence was that Astral locked in a deal with Bluesfest, to sponsor that and keep us out of it for seven years.
3551 And then CHEZ added a bunch of blues tracks. They also locked in their House of Blues show.
3552 So stations will definitely program against us, and I think that is part of the appeal of this format, and it is why we will be least impactful.
3553 The stations, if you license us, will expect us. They won't occupy the space. Nobody is going to flip into that blues format, it's too much of a risk -- and, frankly, it's too much work. It's a lot of work.
3554 We have had to rip thousands of CDs, and that's just not how radio operates now. You download that stuff from the U.S. You download your music from a U.S. service, and there is your playlist, all researched.
3555 We get 15 CDs a week at DAWG FM, and we stick them in a CD player or on a computer and we listen to them, and we decide if they go on the air. The large mainstream operators are just not going to do that kind of work.
3556 COMMISSIONER PATRONE: I ask you this question every time you appear before me, so I imagine that you are going to get pretty good at answering it. It has to do with how SkyWords fits into your business plan.
3557 Is it a separate company?
3558 MR. E. TORRES: Yes, it is totally separate, totally arm's length. We derive synergies from SkyWords because it's a broadcasting company that we have operated for 20 years.
3559 But, certainly, the strength of SkyWords is its affiliate base.
3560 We have gone through the ebb and flow of consolidation a number of times, and that is tough for our company, because when stations are bought, contracts are cancelled, new program directors are brought in, and we have to re-pitch the service again.
3561 So, as part of our strategy to support SkyWords, we started the application process five years ago.
3562 But, still, SkyWords is its own separate company, its own separate profitable enterprise that just keeps on going in and of itself apart from the radio stations.
3563 MR. F. TORRES: And I think one difference -- and I'm very glad you asked that question because there is a marked difference between how we are going to answer today as to the other times -- you are in our hood, right?
3564 MR. F. TORRES: This is where SkyWords was born. So we flew airplanes out of the island airport starting at three o'clock in the morning 20 years ago. So for 20 years not only have we been broadcasting out of this market but we have been selling in this market.
3565 So from Toronto we not only have reached to every ma and pa that has a storefront and some that don't to pitch them on radio and on traditional radio, we are in with all the advertising agencies. We create agencies. We are in with the advertisers that are large enough and well established enough like Hakim that they do their advertising in-house.
3566 We have a story to tell these clients for 20 years and we have been telling it. That story originated from SkyWords and it originated right here where we are sitting right now.
3567 COMMISSIONER PATRONE: You say that your CCD commitment is fiscally prudent. But why shouldn't the Commission favour applicants whose CCD commitments are, well, imprudent, high and, in some cases, dramatically higher than yours?
3568 MR. E. TORRES: A number of reasons.
3569 First of all, you have to look at share projections when you frame that question. So we have seen applicants across Canada inflate share projections on different formats to get a licence, to buy a licence in essence.
3570 Then the reality sets in. You are an independent and you have to operate a licence and pay $2 million a year or a million a year in CCD. What happens of course is your share projection was inflated for the purpose of your application and it just never works out so you sell at the first opportunity.
3571 So our CCD is in proportion in Ottawa. It's $750,000 in Ottawa. We have increased it by 50 percent here.
3572 But, also important about the CCD and we don't want to get this point lost at these hearings, is that CCD is more than just about dollars. So when we talk about 30,000 spins of Canadian blues artists, again you can ask Chuck Jackson or you can ask Dan Aykroyd what that means to a Canadian blues artist to hear his music on the radio like J.W. Jones.
3573 MR. JACKSON: I'd just like to say, it's basically when you think about the Olympics in 2010. Now, you know, we were all wanting our athletes to win many medals. You know we built better training facilities and poured money into that and we also saw what the outcome was for that.
3574 It's the same thing for the blues artists here in Canada. We need a platform. We need a training centre. DAWG Radio is going to supply that to a lot of young artists that are looking for places to spin their records for people to hear them and get into the Canadian market.
3575 You know we saw what happened in the sixties. It's quite funny that this building right here when I was 15 years old I saw Buddy Guy in this building in 1968. It's kind of a neat thing.
3576 But you know we saw what happened when the blues artists went to England in the mid-sixties. It helped with the British Invasion. Bands like the Rolling Stones, the Animals, Van Morrison, Led Zeppelin all performed blues music. Through that look what happened. We were introduced to all these artists.
3577 The same thing can happen here in Canada. We have some of the best blues players in the world in Canada and many great blues players and musicians here just in Toronto.
3578 We have a fabulous history of blues music in Toronto from the days in the sixties when you could go up Yonge Street and see Muddy Waters and Howling Wolf and all the greats and you could go to Yorkville and see, you know, Sonny Terry and Brownie McGhee.
3579 We just have such a great history in Toronto it's a shame that we don't continue it and help build a stronger blues industry here in Toronto and in turn all of Canada.
3580 COMMISSIONER PATRONE: Yeah.
3581 MR. ANDREWS: If I could add to that, for a moment, Commissioner, because Chuck and I are here to speak for a community of artists that we see and we live with and would benefit from the contribution of a successful application.
3582 Having grown up in this town and watched how blues music ebbs and flows and having started the Blues Society in 1985 to help that ebb and flow from ebbing away in an unfortunate way, we have seen the media play a huge role in that contribution.
3583 Many people know the name B.B. King because he is probably the one artist who gets played on commercial radio. When we talk about these many, many CDs that are being recorded what we are talking about is something that is completely woven into the music culture but is unrepresented in the media. But it goes back in Toronto culture history.
3584 When Chuck mentions Yorkville there was a terrific book published this year by Globe and Mail critic Mark Miller on Lonnie Johnson's final five years of living in Toronto, Lonnie Johnson is the guy who influenced B.B. King. He lived in Toronto for five years and died here and is a landmark figure in international culture.
3585 The Toronto Island Blues Festival in 1973 was just a massive infusion of blues interests. You know no support and it went away.
3586 The Robert Cray blues artist that got success with a hit called "Smoking Gun" sold 25,000 copies in this market. There was huge interest and then it went away.
3587 Eric Clapton sells out the Air Canada Centre.
3588 These are spikes of interest that come and go and there is a lack of consistency and we need support to keep the message consistent.
3589 Thank you.
3590 COMMISSIONER PATRONE: The Commission is looking for some clarity and I have a few vegetable-type questions concerning your application, so bear with me.
3591 The minimum of 30 percent of musical selections that will be derived from emerging artists, will that be a challenge meeting that level given the available blues artist who might fit that category as new and emerging artists in that particular genre?
3592 MR. E. TORRES: 30 percent is not a challenge. 50 percent is not really a challenge, but I'll ask Yves to comment on that because he listens to the CDs.
3593 MR. TROTTIER: Yeah, well, I mean, blues artist doesn't have any airplay in Canada so they are all considered emerging artists. So basically 40 and 50 percent it's easy to do. That's what we are doing, is around 50 percent in Ottawa.
3594 MR. E. TORRES: I think if you look at the support that we have from blues artists over 50 blues artists supported our application by going to the CRTC website and navigating that, which is not easy for a scholar to do much less you know a musician, no pun intended -- no insult intended.
3595 So we have great support and there is hundreds and thousands of other artists that are out there so it won't be a challenge.
3596 MR. BERNARD: I would just add that from a hands-on perspective on a weekly basis at CIDG in Ottawa we do see, you know, week over week a steady submission of CDs from Canadian emerging artists. We could probably program the whole station exclusively from those, which we don't of course.
3597 But there is, because of the lack of airplay and the difficulty of getting their music exposed, there is an inpouring that we receive again from Canadian emerging artists. So, yeah, 30 percent would not be difficult at all.
3598 COMMISSIONER PATRONE: The Commission is looking for a specific breakdown of your Canadian selections under each category. We noticed you didn't have that.
3599 Can you either provide that for us now or file it later, selections for each category?
3600 MR. E. TORRES: Yes, we'll undertake to file that at your convenience by tomorrow.
3601 COMMISSIONER PATRONE: Can you further confirm that 35 percent of the popular musical selections aired between -- that will be aired between six a.m. and six p.m. Monday through Friday would be in fact Canadian?
3602 MR. TROTTIER: Yeah, we confirm, yeah.
3603 COMMISSIONER PATRONE: You have indicated that 25 percent of the music selections will be from subcategory 34, jazz and blues, and it always struck me as odd that we lump those two genres together because they are completely differently.
3604 MR. F. TORRES: Us too. If we can make a policy adjustment there, we are all for that.
3605 COMMISSIONER PATRONE: But that 20 percent struck me as a little low for a blues station. Am I missing something?
3606 MR. TROTTIER: It's a minimum of 20 percent but we are playing around 28 percent of Cat 3 blues music. But what is particular in blues is you have some blues in Cat 2 and some blues in Cat 3.
3607 Also, we have to consider that blues hits are considered as Cat 2 music. Like to give you know a perfect example of that, "The Thrill is Gone" from B.B. King --
3608 COMMISSIONER PATRONE: Of course.
3609 MR. TROTTIER: -- it's a typical Cat 3 song but because it's a hit it is considered as a Cat 2 song. So we have a lot of songs like this that we play and consider as Cat 2 songs.
3610 And blues rock is in Cat 2 as well. All the rock songs like Stevie Ray Vaughan are Cat 2, so that's why we are playing around, like I say, 72 percent of Cat 2 blues rock, blues music and 28 percent of Cat 3 blues music.
3611 COMMISSIONER PATRONE: Where would a song like "Lay Down, Sally" by Eric Clapton --
3612 MR. TROTTIER: Cat 2.
3613 COMMISSIONER PATRONE: That's Cat 2.
3614 MR. TROTTIER: Yeah.
3615 COMMISSIONER PATRONE: And can you explain how your station would distinguish itself from existing radio stations in the market, namely CJRT, CFMY?
3616 Because if you are playing 20 percent, and I take your point that you might go substantially higher than that, then the rest of your line-up is going to include sort of classic rock type songs. As you know, that's well represented in Toronto at the moment.
3617 MR. E. TORRES: Let me start that answer, Yves. I know that it's a programming question,
3618 So if you listen to -- and classic rock makes up about 11 percent of our playlist but we don't play Jump by Van Halen. We play Ice Cream Man which is a 12-bar blues song with a little bit of rock blues -- which has a rock blues bent on it.
3619 So when you look at our playlist even the classic rock selections which are duplicated with Q107 we are talking about only 11 percent. So one listen to our station and you will see it's different.
3620 If you put up the repatriation slide, Jeff, there is a bunch of Facebook comments here and they just speak to just how different it is. You know we are unlike anything that's on the radio.
3621 Jazz FM that is -- I mean Yves programmed a jazz station in Gatineau and we are absolutely nothing like jazz. We don't play any jazz songs. We have no inclination to play a jazz song ever. We are strictly a rock blues radio station.
3622 So that talks to the overall sound.
3623 I don't know, Yves, if you want to talk about categories and percentages?
3624 MR. TROTTIER: Sure.
3625 MR. E. TORRES: Yeah, and CFMY is closer to an Indie, you know, emerging artist. It's very straight ahead rock, grunge.
3626 We would never play any of that stuff. Again, the demographic that we are going for is 35-54, males, people that grew up with rock and roll but they just don't want to hear Hotel California again. So we won't play that.
3628 MR. JACKSON: Just a good example is, you know, Downchild has 21 albums out and a lot of the oldies stations all they play is Flip, Flop and Fly. I know we get a lot of our fans phoning them up and saying, "You know, Downchild did record more than one song in their history".
3629 So it would be -- you know this is an opportunity for a lot of the other songs and not the hits to get out on the radio. I think that happens with a lot of the blues bands playing these days.
3630 COMMISSIONER PATRONE: Last year the Commission amended section 15 of the radio regs requiring licensees if total revenues were more than $1,250 million to make at least a 15 percent basic contribution to the Community Radio Fund of Canada. Was that an oversight in your application, one that you can either rectify or ask for an exemption?
3631 MR. E. TORRES: No, it wasn't an oversight. When we filed the application form, section 8.1, it didn't specify that that was a requirement, but we are willing to accept that as a COL.
3632 COMMISSIONER PATRONE: If you are awarded a licence in Toronto how soon do you think you think you would be able to launch given that you also have Uxbridge now and of course, on top of that, all the demands in Ottawa?
3633 MR. E. TORRES: Well, Ottawa is now, we are about to complete our second year. We are almost two and a half years into Ottawa on the air in September.
3634 So Ottawa is established. In fact, we just got the last of our on-air lights working. So we can say that that station is fully built and ready to go.
3635 The answer to your first question is six months. We put Ottawa on the air in nine months and we think that with our infrastructure in Toronto we can get that up and running in six months. We are willing to commit to that.
3636 In terms of Uxbridge we are partners in Uxbridge. We are partners with a very strong broadcasting corporation, Starboard Communications. John Sherratt is in the room today.
3637 John Sherratt is an expert at that format that we have proposed. It's a classic hits format. He is expert at operating in small markets and John is going to do the heavy lifting on Uxbridge.
3638 COMMISSIONER PATRONE: Your revenue forecasts appear fairly reasonable, relative to what we have seen, but on the expenses side as you are aware, being Torontonians, this is an expensive place to operate.
3639 You are predicting profitability in Year 3. Is that doable?
3640 MR. E. TORRES: Yeah, I believe Year 4 is -- Year 3 is close to profitability. Year 4 is where we think we will turn the corner.
3641 So if our experience in Ottawa is true to Toronto which we expect it to be, yes, we could achieve profitability at three or four months ahead of our business plan. That's where we are at with Ottawa. So it is reasonable.
3642 And, again, this is our backyard. Frank talked about our pedigree about how we started a flying company here 20 years ago to provide traffic reports but he missed an important fact.
3643 Frank and I started the Radio Club at Danforth Technical High School. So our pedigree in radio and our knowledge of this market goes way back into the eighties.
3644 MR. F. TORRES: It burned down last week, just to let you know. We won't be going back there.
3645 COMMISSIONER PATRONE: I have a couple more questions before I get to a few questions for interveners.
3646 What kind of synergies do you anticipate on the news and staffing front with either SkyWords, DAWG in Ottawa or the Uxbridge station?
3647 MR. E. TORRES: I'll start that question and then I will pass it on to Yves, Todd and maybe Catrina and Kim.
3648 So we expect, obviously -- and with CIDG we'll start synergies in production. We have one producer that produces for one radio station. You know if you look at other stations in that market they are producing -- their one producer produces for five radio stations.
3649 So we have production synergies. We have traffic synergies. SkyWords will provide news and surveillance synergies.
3650 We will also achieve synergies from our head office in Toronto in terms of HR, IT support.
3651 So there is plenty of synergies to be gained.
3652 Yves, I don't know if you have --
3653 MR. TROTTIER: I mean, if you want an answer directly to your question about reporters and journalists, I don't think, you know, the journalists here in Toronto will do their own. The same thing in Ottawa.
3654 But, I mean, if there is a big story in Toronto or in Ottawa it will be able to be live directly from one of the other cities; the same with Uxbridge.
3655 COMMISSIONER PATRONE: Yeah, that was my next question about whether you will be mixing, swapping stories between your various stations and whether you will have the capability to go live.
3656 MR. TROTTIER: Yeah, we will do that. With the 2012 world it's easy to do in terms of programming from Ottawa, like we have the Top 20 that we are doing in Ottawa that will probably be here in Toronto. But outside of that I don't think there will be more shows coming from -- and through DAWG of course.
3657 COMMISSIONER PATRONE: Thank you.
3658 I have three questions for our interveners.
3659 For Mr. Murphy, congratulations on your blues festival and the success of that.
3660 As you know, blues has great appeal as a live venue. Blues live is great. Do you think that there will be as much appeal in Toronto for radio that is blues-based?
3661 MR. MURPHY: Thank you for that question. I am also a native of Toronto and so I have long roots in this city, a little longer than the Torres brothers, a little older than they are.
3662 But I do. I have been -- my eyes have been opened watching the extent of the blues audience and how far it cuts across different backgrounds, different age groups.
3663 The festival atmosphere of course is, as you point out, a day event or a two-day event and it brings people together. But what I observed is it's the kind of music that even families can absorb and enjoy together. So a big demographic is just families.
3664 I listened to this marketplace and the description of what's happening and I do think there would be a wide blues audience. I hear people in Ottawa and I ask the question all the time, "Do you know DAWG FM?" They smile and they say, "Yeah, it's a great station". So it has burst onto the scene in Ottawa and become a real fixture in the city.
3665 Although the cities are quite different, Toronto to Ottawa, I can only imagine just with my experience and having grown up here that that type of response would be even greater in the City of Toronto.
3666 COMMISSIONER PATRONE: Mr. Gordon, you are an advertiser with Hakim.
3667 MR. WORDEN: Sorry, Worden.
3668 COMMISSIONER PATRONE: Oh, sorry.
3669 MR. WORDEN: That's okay.
3670 COMMISSIONER PATRONE: Do you agree with what Torres is saying about Corus having kind of a virtual monopoly in that -- with male-oriented listeners and that it's somehow inflating rates? Do you find that?
3671 MR. WORDEN: Well, with regards to the rates, they are slightly inflated due to that.
3672 COMMISSIONER PATRONE: Okay.
3673 MR. WORDEN: But for us, I think advertising is becoming more sophisticated. I think the issue here is do I want to put my money somewhere I know my commercials are going to be heard, not somewhere where, you know, I don't want to hear another Stairway to Heaven.
3674 You know, I don't want to go after a customer that's not interested in our product that's 18 to 25 years old. Our core customers skew a little older and a little more sophisticated.
3675 There is just too many hot ACs in this market and I know that my commercials -- they are spending big money on them and they are not being heard. They are flipping as soon as they hear that song they have heard 10 times today. So I would rather have a more sophisticated listener.
3676 COMMISSIONER PATRONE: Yeah, I take it you would like some more choice as well, Mr. Worden. Is that correct?
3677 MR. WORDEN: Absolutely, yes.
3678 COMMISSIONER PATRONE: Yeah.
3679 Mr. Aykroyd, are you still with us?
3680 MR. AYKROYD: Yes. Hello?
3681 COMMISSIONER PATRONE: Hi.
3682 MR. AYKROYD: Yeah.
3683 COMMISSIONER PATRONE: I have a question about your statement. I found it quite interesting that -- this is the first time I have heard that blues is needed to clean up the airwaves because -- I mean to me blues is a raw, gut-level music. It doesn't pull punches and goes for the throat. It doesn't mince words.
3684 Do you really think that we need more blues in Toronto because of other stuff that's on the airwaves that is --
3685 MR. AYKROYD: Well, yeah. I'm not going to judge anybody's musical taste but, certainly, a lot of the rap music that's played is demeaning to women, it's openly profane. Then you have, of course, the preponderance of talk show hosts like Howard Stern who in their own way they pull no punches with profanity, using that as their common vernacular.
3686 Blues music also is full of humour. You know, Willie Dixon wrote that song Dead Presidents. It's about money. You know everywhere in blues music there is irony and humour and double entendre.
3687 So not only does the blues music address some of the disadvantages and the inequities in life in terms of education and economics, depending upon what the status of the artist is; how hard he worked to come up like Watermelon Slim and the Workers. This is a guy who was a truck driver. He worked in a -- as a sheriff for a while and did all kinds of other things until he found a career in blues.
3688 You have cases throughout the blues community where you have got people who have really built a legacy upon their past work and day jobs. They like to sing about it in a kind of ironic and humorous manner.
3689 So I believe apart from the lyrics and that but just this music in all its forms, whatever song, may it be just a 12-bar blues or something with a more staccato beat like Messing with the Kids that we used to play, it cleans the ears. It's just -- to me that's what it does for me. It just cleans out the ears and makes music appreciation much more palatable and accessible.
3690 COMMISSIONER PATRONE: And are you still doing the odd gig yourself?
3691 MR. AYKROYD: Yes, sir. In fact, we are playing at the Ravinia Highland Park Festival in Illinois this summer with -- that's Jim Belushi and myself. We will be doing the Blues Brothers formal classic revenue -- formal because we wear the suits, classic because we do the old songs. We will be playing there.
3692 We just did San Francisco. We were playing for Costco in Seattle and, you know, there are great venues in Toronto. We play the Rama Casino and also the Niagara Falls Casino.
3693 And I just think back to some of the venues that we've just come in and jammed with informally over the years, The Silver Dollar, the Mocambo in its time, the Molson Ampitheatre, which is run by Live Nation, and House of Blues is a division of Live Nation.
3694 There's lots of places we can play in Toronto, and if asked, we will come, and we will come on the radio and we'll go on DAWG FM and we'll talk about our music, we'll talk about who our influences are.
3695 You know, you take an interview with a blues artist, say Bonnie Raitt comes to town or Matt Anderson, a Canadian artist from the east, or anybody touring through, be it Canadian or American, you can build solid hours of programming around that interview because you can play music teasing the interview. Then during the interview you're going to be playing songs and influences and just have the artist on there, and then there's sort of the follow-up once the artists leave of playing the music and the influences again.
3696 So you know, one artist comes to town to publicize a show on DAWG FM, there's hours of great, positive and supportive programming that can come out of that.
3697 COMMISSIONER PATRONE: Thank you very much. Your work with John Belushi, of course, remains iconic. I mean, everybody --
3698 MR. AKROYD: I miss him every day. We walk into those House of Blues, you know, I do -- I do think of him. He would have loved the Blues Palaces.
3699 Of course, we're contemplating bringing a House of Blues to Toronto. I think that the Live Nation people are now seeing that that's something that should be done, and Toronto's come right to the top of our list of places where we could put a House of Blues.
3700 And obviously, you know, DAWG FM is going to be instrumental in getting us going there and we're going to be, you know, partners in the enterprise.
3701 COMMISSIONER PATRONE: Good for you. Thanks again.
3702 Those are my questions, though my colleagues may have some.
3703 Mr. Chairman?
3704 THE CHAIRPERSON: Thank you. I've got a couple of questions, and perhaps my fellow colleagues do as well.
3705 I want to go back to your financials. And when I take a look at your forecasts, you dig a hole for yourself in the first two and a half, roughly three years of about $1 million, and then you also are forecasting capital costs of about three-quarters of a million dollars and start-up costs of 130,000. I guess you do about $2 million before you start to dig your way out.
3706 You're still in your second year in Ottawa, and that has not turned around as yet to positive, as far as I know.
3707 So my concern is that, notwithstanding the fact that you have some support behind you, it's a meaty piece of market you're biting into and if things slow down economically in Canada or the rest of the world, what degree of insurance do you have that you can sustain and weather another year or two years if things slow down that much?
3708 The concern that I have is that you've done a great job in Ottawa, but you're still not positive yet in Ottawa. And now you're trying to bite off something in this market with your forecasts that show that it'll take two, three years to get there with some heavy investments as well.
3709 MR. E. TORRES: And we've tried to address that in a number of ways, and most importantly, our Skywards company continues to be profitable.
3710 And you asked us if Skywards could support and backstop DAWG FM in Ottawa, and it's done that.
3711 With Ottawa now, when we close the books on Ottawa in September around the time that you're making your decision or that decision goes public, we will be very close to profitability.
3712 That means that in the year that we start to launch DOG, we will have two profitable operations; we'll have DAWG FM in Ottawa and we'll have Skywards, of course, as the engine that drives it.
3713 The last -- second-last thought on that is that we need -- we need the station. We need the synergies. We need the synergies for Ottawa so that we can, you know, drive revenue.
3714 And importantly, and it's -- this is where all the agencies are. And we have a tough time explaining our format to agencies. And they don't understand it because this format doesn't exist in Toronto.
3715 And we just spent 20 minutes here and we've just scratched the surface, so if they had access to this frequency, if they could listen to DAWG FM in Toronto, that would give them an immediate comfort level of what they're buying and what they're getting in Ottawa.
3716 Further to that, Commissioner Katz, this is our backyard. This is where we have the bulk of our clients.
3717 We've been here for 20 years, and we have advertising relationships that go back deep, 20 years. We've sold the Toronto market on its own, hodgepodge of stations, and we've been successful.
3718 So we think that DAWG FM in Toronto will get us to profitability a little bit faster.
3719 And then, of course, we've got the support of Joe Dwek.
3720 MR. F. TORRES: And that's what I wanted to comment on, that we have -- we have built our business plan for that exact question and that exact situation, so Uxbridge, if you look at that application, we're 50 percent owners in that because we didn't want the responsibility of a 100 percent ownership of a smaller market station, which we're not expert in. And that's why our relationship with Starboard Communication is so important in that aspect.
3721 And here in Toronto, our relationship with Joe Dwek, so we -- he's a 10 percent owner in this operation and he has forever wanted to come to the table to support us financially.
3722 We didn't need his support in Ottawa We didn't ask for it. And we did it completely as a stand-alone. In Toronto, it's there for us. So financially, we have our own internal backstops, we have a partner here in Toronto that's willing to provide the financing and we've developed this business plan so that we can get the station up and running within six months, and sounding good, as good as the DAWG FM in Ottawa, if not better.
3723 MR. E. TORRES: Ron, do you want to add to that?
3724 MR. FORD: Well, I think that the question always is that what will happen if the economy turns down. And you know, we'd love to be able to say yes, we have a crystal ball and we will be able to weather all these storms, but I think that we've been around for so many years under Skywards, which has been able to backstop the Ottawa station.
3725 And I think we -- our projections are realistic, and that's -- in Ottawa, we were able to come within the original projections as to the time line as to profitability.
3726 So I don't see that this would be any major issue for us as well as what Frank has said about Joe being able to come to the table, if necessary.
3727 We haven't had to use it before, but I'm very confident we wouldn't have to. But that's in our back pocket, I think.
3728 MR. E. TORRES: Yeah. And there's two things that occurred in Ottawa that, when you asked us that question, we never would have anticipated.
3729 One was the global economic crisis of 2008, and the second was the appeal of our licence decision, which cost us close to $300,000 worth of additional capital.
3730 So the question back then was, who's going to pay for that. Who's going to put that money in? And it was Skywards, and it'll be Skywards again.
3731 MS BULBULIAN: I wanted to just add to that.
3732 For the recession 2008-2009, Skywards actually did phenomenal in the recession. We actually set records for January and February, which is the slowest quarter of the year.
3733 And I read an article a couple of years ago, and it said in a recession -- when times are good, you should advertise. When times are bad, you have to advertise. And that's exactly what we found happened.
3734 And I know we have a very strong sales team here for Skywards that knows the Toronto market very well, has built relationship with clients, both local, retail and agency and national clients. And a lot of these solid relationships that we have built for years can definitely help with that.
3735 THE CHAIRPERSON: Mr. Torres, did you say that Ottawa's going to be profitable this year?
3736 MR. E. TORRES: It'll be close to being profitable this year, yes.
3737 THE CHAIRPERSON: So hypothetically, if you get a licence, by the time you go up, Ottawa will be contributing positively to your operations?
3738 MR. E. TORRES: Yes. And it goes to, again, our financial forecast and our modest CCD, our fiscally responsible CCD in Ottawa that we're able to achieve that.
3739 So yes, by the time we get on the air in Toronto, we'll be cash flow positive in Ottawa.
3740 THE CHAIRPERSON: My last question is, you put up a slide here on comparison, I guess, of yourselves and Astral Media and the Ottawa market, but there was something that struck me as interesting.
3741 You had an opening BBM percent of 1.8 for DAWG FM. That's on their 1.8 share on the left-hand side, third from the bottom.
3742 What is it today?
3743 MR. E. TORRES: Today it's 1.6.
3744 THE CHAIRPERSON: And where does that fit in the Ottawa market in terms of players?
3745 I think you said something this morning in your opening remarks that I actually highlighted that, in fact, Ottawa ranks number 1 in time spent listening males 35 to 54.
3746 MR. E. TORRES: Yeah. So if you would allow me just to develop that answer a bit. Jeff, if you can put up the comparison slide again.
3747 And essentially, we launched at the same time as Astral and --
3748 THE CHAIRPERSON: I'm not interested in the Astral side.
3749 MR. E. TORRES: Okay.
3750 THE CHAIRPERSON: I'm interested in your side --
3751 MR. E. TORRES: Yeah.
3752 THE CHAIRPERSON: -- and where you are relative to the Ottawa market, forgetting about Astral. They're one player amongst 20 or whatever.
3753 MR. E. TORRES: Okay. In our key demographic, which is males 35 to 54, we rank about middle of the pack in terms of reach. So -- but reach is difficult for us because we have the smallest signal in Ottawa, and that's why I wanted to put up that first slide.
3754 We only operate with 4500 watts in Ottawa, so it's tough to achieve reach when you have an impaired signal. You have to make your money on TSL, which is time spent listening.
3755 But if you look at time spent listening, it turns out we're number 1 in that key demographic of males 35-54, so that means our listeners are more loyal to our station. It means advertisers can reach them more efficiently and with more frequency. And that's really the backbone of our sales pitch with DAWG FM.
3756 So in terms of the overall market in our key demographic, we do well. Consider also that we only reach 43 percent of the CMA.
3757 By comparison, this frequency, the way we've engineered it with 8000 watts, will reach close to 90 percent of the CMA.
3758 THE CHAIRPERSON: And what makes you different than anybody else in terms of being able to have a broader reach?
3759 MR. E. TORRES: In terms of a reach, it's just the fact that this music really isn't on the air anywhere else. And it has to do with connecting with our audience.
3760 So we, first of all -- we have to be an outlier because we can't compete head to head with one of the major chains. There's no way that a stand-alone can compete with a four-station cluster or a five-station cluster.
3761 We have to connect with our audience. We have to sell the merchandise. We have to put on a blues festival, which is an enormous undertaking for a radio station. And we have to get the hard money.
3762 MR. F. TORRES: And I think to make maybe an anecdotal translation from Ottawa and that share number that you mentioned, Chairman, to our Toronto situation, this is our Toronto coverage, so this frequency has been approved by Industry Canada at 8000 watts. So it's 100 percent more powerful than our frequency in Ottawa.
3763 And as you can see very clearly, it covers the entire Toronto CMA that goes as far as east as Oshawa, as far west into about 50 percent of Oakville. And certainly at 8000 watts things like concrete penetration and those types of things are non-factors.
3764 So at our anticipated share in Toronto, frequency impediments or impairments, if you will, will not be an issue.
3765 We did have that issue in Ottawa. We still deal with that issue in Ottawa. That issue won't be here in Toronto, so we think that will look favourably upon our Toronto application.
3766 THE CHAIRPERSON: Those are my questions.
3767 Any other questions?
3768 Commissioner Poirier?
3769 COMMISSIONER POIRIER: Yes, I have probably two of -- two questions. Thank you, gentlemen and ladies, for the nice presentation.
3770 I was listening to the discussion you had with the Commissioner Patrone, and what I remember of what you said about synergies, I think you stated that there would be some sharing of some programs between Ottawa, Uxbridge and Toronto stations.
3771 However, we're here to remind you that retransmitting a program from Ottawa station couldn't count as a local program because we have some rules on that, and I'll read it to you:
"Local programming includes programming that originates with the station or is produced separately and exclusively for the station. It does not include programming received from another station and rebroadcast simultaneously or at a later time, nor does it include network or syndicated programming that is five minutes or longer unless it is produced either by the station or in the local community by arrangement with the station."
3772 So my question is, in light of this, how does it affect the number of local hours to be offered by your Toronto station on a weekly basis because right now you have committed to 126 hours of local programming?
3773 MR. E. TORRES: It won't affect. We'll do 126 hours of local programming.
3774 Yves, do you have anything else to add to that?
3775 MR. TROTTIER: No.
3776 COMMISSIONER POIRIER: I have something to add to that.
3777 MR. F. TORRES: And for clarification, the synergies that we are seeing are not in programming, are not in the programs. Our synergies are our back office types of synergies.
3778 So we can schedule traffic out of our existing schedule programmer in DAWG FM in Ottawa. We can do things like production, which again is not programming, but the production of things like commercials and that out of Ottawa instead of Toronto.
3779 So again, for clarity, 126 hours of local programming is what we're doing. All of the programming will be out of Toronto. Synergies would only deal with non-programming issues.
3780 Kim, did you have something there?
3781 MS ELLIOT: I think you just said it.
3782 COMMISSIONER POIRIER: Okay, thank you. I'm done.
3783 THE CHAIRPERSON: Commissioner Simpson.
3784 COMMISSIONER SIMPSON: Good morning, guys. Always good to see you.
3785 A quick question on advertising demographics.
3786 I, too, came from the advertising business and have always been extremely curious as to why the programmers in this world in radio always seem to want to skew to the female side of the demographic regardless of whether it's 18 to 54 or 18 to 49 or 33 to 49. It just doesn't make a lot of sense to me because I know in the old days, you know, perhaps the female side of the equation was the individual who was responsible for household acquisitions, but I think the world's changed.
3787 Can you tell me why -- I mean, the format, obviously, lends itself to a male skew, but why you're willing to build the organization around that propensity and what your beliefs are on the male side of the audience?
3788 MR. F. TORRES: Yeah. And I have to put it on the public record, my wife buys all my clothes, so everything I'm wearing, everything I've worn for the last 20 years has been a product of my wife. But I buy the beer in my house, and I buy that every week. And this is a beer audience.
3789 And I'd like to -- for a more succinct answer, I'd like to throw it to John and maybe Dan if he can give us a perspective of radio in the U.S. because you listen to that quite frequently.
3790 We -- you can't ignore the female buying power. Certainly it exists in my life. But I do still get some discretionary money that I'm allowed to spend, and I would spend it on DAWG FM.
3792 MR. WORDEN: Yeah, they've been talking about female skewed for as long as I can remember, you know, everything's been female skewed.
3793 So it's a tough battle when you're looking for a certain demo that you're trying to fit in and accomplish. And for us, it is males. It is -- this is the right demo for us. The age is right. You know, the propensity to wear glasses at this age is right for us. So it really fits with us.
3794 That's pretty much it. The other two in the market don't really work for us. They're a little young. The other one, you know, not a fan, not a big believer in that product, but I really do believe -- and it really is about time spent listening for us.
3795 I want to know that my commercials are being heard. I don't want to spend a lot of money on stations I know that as soon as that song comes on, they're going to be flipped off and they're going to be changed.
3796 MR. E. TORRES: If I can just add and maybe, Jeff, we'll get your perspective.
3797 When you're an independent stand-alone or when you're operating with an impaired frequency, the reality is, your ratings are going to be low. So in terms of your national buy, they're going to set your cost per point in the basement and you're not going to get on 90 or -- 90 to 85 percent of the buys. You just won't get it because agencies buy top down.
3798 So if you want to achieve 300 points in Toronto, you buy the first five radio stations in that demographic and then, all of a sudden, your guys are the bottom never see any of those national dollars.
3799 So when we engineered and when we look at what we're doing in DAWG, there's not as many choices. So when you've got a beer company or when you've got an insurance company -- for some reason, men buy insurance. So that's it. That's -- you know, we can make it onto that buy because there's fewer choices.
3800 They're only going to go top three and then they're going to find us.
3801 Jeff, any thoughts on that?
3802 MR. McFAYDEN: Well, for Toronto there is the only two male music stations as well. Almost every major market in Canada has at least three, and in Ottawa it's four, so there's a -- definitely space for our type of demographic for males because, I mean, the majority of national buys are female or adults 25-54.
3803 But I would still say about 25 to 30 percent of all buys are male-targeted products like Home Depot, Canadian Tire, anything like that.
3804 So I mean, for the amount of -- if you can see the chart again, for the amount of female-driven music stations how many there are, and there's only two, there's definitely space for us proportionate.
3805 MR. E. TORRES: Jeff, I think Rob wants to add a point in, and he did fly in from Vancouver, so we should let him get some air time.
3806 MR. DAWSON: Thank you.
3807 Yeah, I just wanted to speak to something that came out of the research, and it talks as well to the question around filling a void in the marketplace.
3808 So we looked at people that said that they were likely to listen to this format, and 62 percent of them said that they are also likely to, therefore, increase their listenership of radio. So this is about bringing an audience back to radio or about increasing the amount of time that they're listening to radio on a daily or weekly basis.
3809 COMMISSIONER SIMPSON: Just out of curiosity, from your experience in Ottawa, what are your hours tuned looking like? And if they are longer, I think as Mr. Akroyd indicated -- or someone did -- is that showing up as being more efficient in terms of the advertising because you're getting greater frequency?
3810 MR. E. TORRES: Go ahead, Todd.
3811 MR. BERNARD: Yeah. It definitely is. And I think it's important to consider when we're looking at the male demographic, specifically the portion of that male -- or the males that we are attracting, you know, they typically are trending above the market average index for things like income, owning investment, stocks, bonds, RRSPs, use of financial planner, post-secondary education.
3812 So you know, within the male component of the demographic, you know, it's a well-heeled, affluent bunch which, of course, is appealing to advertisers.
3813 And then you combine that with the strong time spent listening showings that we do have like we've been talking about, our strong TSL positions in males 35-54, but in fact, again, in Ottawa for the 25-64 group, which is obviously quite a wide range, we're also number one in time spent listening within that group.
3814 So when you combine, you know, the loyalty that, you know, that you interpolate from time spent listening with the well-heeled, affluent male listener that we do attract, it all comes out to a very attractive package for advertisers.
3815 MR. McFAYDEN: And also, if you have a large viewership, a large listenership, but the hours tuned are a lot lower, there's a lot less chance that the -- an advertiser's ad is going to be heard.
3816 So for us, there's a greater chance because they're listening more often so they're hearing the ad more often, which makes it more effective.
3817 COMMISSIONER SIMPSON: Those are my questions. Thank you.
3818 THE CHAIRPERSON: Commissioner Pentefountas.
3819 COMMISSIONER PENTEFOUNTAS: Good morning. Nice to see you guys again.
3820 Sad day when the hard living, hard drinking blues crowd has no interest in buying insurance, but I guess it's a sign of the times. Thanks so much.
3821 THE CHAIRPERSON: I guess that completes our examination of your application. Thank you all very much for coming, and your supporters as well.
3822 Thank you.
3823 MR. AKROYD: Thank you very much.
3824 THE CHAIRPERSON: Madam Secretary, are we going to take a break?
3825 THE SECRETARY: Fifteen minutes?
3826 THE CHAIRPERSON: Thank you.
--- Upon recessing at 1047
--- Upon resuming at 1110
3827 THE CHAIRPERSON: Madam Secretary.
3828 THE SECRETARY: Thank you, Mr. Chairman.
3829 We will now hear item 9 on the Agenda, which is an application by Rock 95 Broadcasting Ltd. for a broadcasting licence to operate an English-language commercial FM radio undertaking in Toronto.
3830 Mr. Bingley, please introduce your panel for the record. You will then have 20 minutes for your presentation.
3831 MR. BINGLEY: Thank you, Madam Secretary.
3832 Mr. Chairman, Vice-Chairman, Panel Members and CRTC staff, it's my pleasure to introduce our panel. My name, first, is Doug Bingley. I am President and General Manager of Rock 95 Broadcasting Limited.
3833 To my far right is Todd Palmer, our Senior Promotions Manager.
3834 Beside Todd is Jenn Hadfield, our Music Director.
3835 To my immediate right is Dave Carr, who is VP Programming for Rock 95 Kool FM, and David also supervises programming at our Russian station.
3836 On my other side is Megan Bingley, who is a Director of our company. Megan has extensive experience in radio, the ad agency and new media fields.
3837 Beside Megan is Paul Tuch, Director of Canadian Operations for Nielsen BDS.
3838 To the far left is Larry Campbell, President of Campbell Media Research. Larry has conducted research around the world, including France, Germany, Russia, Sweden, the U.K., and last but not least Canada, most notably for CHUM Limited and ourselves. He has a unique position in that he has actually owned and operated radio stations.
3839 Back to the other side is Tom Manton, our VP of Sales. Tom has operated as a General Manager at radio stations. He was also VP of Sales for Newcap, responsible for 65 stations across the country.
3840 Beside Tom is Dan Blakely, who is our News Director. Dan has been in news since 1978, working at CHUM, CFTR, 680 News, CFNY, and News Director for XM Satellite Radio.
3841 Finally, beside Dan is Karen Bliss, a music journalist who has submitted and works with Billboard, MSN, Rolling Stone Magazine. Karen has also launched her own record label, Daycare Records.
3842 I will introduce our interveners at the intervention stage.
3843 Well, before we get to the opening video I'd like to just take a few seconds to set the stage and ask you to imagine for a moment that it's not the year 2012, it's 1956, and you're not members of the CRTC, you're members of the regulatory board of that time.
3844 And there you are, a fine-looking group, and someone has come before you to propose a brand new radio format, one that's never been done before, it's called Rock 'N Roll. But it's only 1956, so you're not exactly sure what rock music is, what the demand for it is or even if you could build a successful radio station around it. All valid concerns.
3845 Okay, let's get back to 2012, and in retrospect we can see that licensing a rock station back then would not have been an easy decision, but it certainly would have been the right decision.
3846 And here in 2012 we are proposing a new format, the Indie format. And I'm sure you have many questions, such as: What exactly is Indie music, what is the demand for it, and can an Indie station actually succeed here in Toronto?
3847 Well, let's begin with two fundamental questions. What is Indie music and what are the public benefits of an Indie station?
3848 We will let the musicians and the public answer that question.
--- Video presentation
3849 MS BLISS: Here is a more formal definition of Indie: Indie is a distinct genre of music largely composed of music from artists who are not signed to major record labels and who, in many cases, produce and market their music themselves.
3850 An Indie artist is generally an emerging artist. In most cases the terms "Indie" and "emerging" are synonymous.
3851 Indie has a distinct sound. If you play three songs from our proposed playlist to Indie fans, they would identify it as Indie music.
3852 In other words, this isn't a new format, it's something that already exists in the minds of consumers. It's just not on the radio yet.
3853 There is a clear demand for Indie music, but there is no station in Toronto that plays this music. From a public policy standpoint this presents two problems.
3854 First is support for Canadian Talent. The single biggest factor leading to commercial success for Canadian emerging artists is radio airplay, and without an Indie station they can't get it.
3855 Second are the needs of listeners. According to independent market research, an Indie station will attract over 600,000 listeners, many of whom feel just as shut out of Toronto radio as the artists themselves.
3856 And regardless of their music preferences, the general public strongly supports emerging artists. Almost 75 percent of the general public believes that the CRTC should consider the needs of emerging artists when making a licensing decision.
3857 MS HADFIELD: Research also shows that half of those who prefer Indie music said they can't find a radio station they would like to listen to. Almost 40 percent added that they are listening to radio less than they used to. They have to turn to MP3 players and unregulated Internet stations to hear the music they love.
3858 Over 90 percent of Indie supporters felt that Toronto radio stations repeat songs so often that they have to change the station or turn off the radio.
3859 When asked, "What's the one thing you would like to see changed in Toronto radio," the single biggest concern was that Toronto stations all play the same music. Listeners want more choice in the music they hear.
3860 Now let's look at the typical Indie listener. The audience profile of the station is quite broad-based, with an almost 50-50 split of male to female listeners. Indie is a niche format but it has very broad demographic appeal.
3861 This is a station for all of Toronto. It cuts across cultural lines, with broad support for the format across a number of ethnic groups.
3862 Sixty-seven percent of listeners of European descent said that they would listen often or once in a while to the Indie format.
3863 This was followed closely by Asian and Middle Eastern radio listeners at 56 percent, and by Central American, South American, Hispanic, African and Caribbean listeners, with almost half of each group saying that they would listen often or once in a while to such a station.
3864 In Toronto, Indie is a format that will truly appeal to all Canadians.
3865 MR. CARR: We then asked listeners what they wanted from an Indie station. A large majority want solid news, weather and traffic. They also want a wide variety of musical styles and a mix between Canadian and foreign tracks. Listeners also felt that mixing in some gold music that complements the Indie material would make the station better.
3866 Sixty percent of respondents felt that in addition to music it is important to have fun and engaging DJs and lots of interaction with listeners. Feature programming and the ability to interact with the station through mobile devices were also considered important.
3867 Finally, we see the importance of the local aspect of radio, with three-quarters of the listeners saying support for local festivals, community events and charities is important. Clearly, this local content has to be a key component of the new station.
3868 To summarize, listeners want all of those great things that radio provides: quality news, feature programming and engaging on-air talent. That's good news to us because it's our belief that faced with competition from new technologies, music radio's key competitive component is its complementary, spoken word material, content that is local in nature and presented by great on-air personalities.
3869 MS HADFIELD: Let's take a look at our musical styles and how we will schedule and source the music.
3870 The station will reflect a distinctive Canadian Indie sound that has developed in recent years. Just as in the '60s there was a British invasion style and in the '90s there was the Seattle sound, there is now a truly Canadian sound. It draws upon Indie pop, Indie rock and Indie folk genres, which will form the core musical styles of the station.
3871 While the format is unique, we will use established programming practices. For example, songs will be in high, medium and wide rotations. We will have a carefully controlled playlist, and approximately 50 percent of selections aired in a typical hour will be Canadian, the majority of that from emerging artists.
3872 Our minimum Promise of Performance commitments are 40 percent Cancon, with 60 percent of that coming from emerging artists, bringing Canadian emerging artist totals to 24 percent of all music played. To our knowledge, this will be the highest commitment to emerging artists of any commercial radio station.
3873 We are very committed to the Indie format and will be happy to accept a condition of licence requiring that 60 percent of all music come from emerging artists.
3874 Here's how we will source our music.
3875 We will use SoundScan to track paid digital downloads. BDS will also create custom reports. These will act as a proxy for an Indie chart.
3876 We are strong believers in the use of research and we will use online as well as conventional auditorium music testing to define the exact mix of musical styles and to rank our songs.
3877 We have already put together an online station where we can adjust and modify our sound. We put that site up after gazetting so that potential interveners could find out what the station would be like. You can check it out at Indietoronto.ca.
3878 MR. TUCH: I would like to talk a little bit about two models that are currently driving the music and broadcasting industries.
3879 Here's the traditional model. The record company discovers potential talent and then markets the music to radio stations. If just one station picks up the song, there is a beginning position on a chart. As other radio stations pick up the song, it moves up the chart. This radio airplay leads to public exposure and sales of albums.
3880 Here's the new model. Musicians record and market their music directly to the fans, which is largely done through concerts and the Internet, including social media.
3881 But although this model works to some extent, it just can't compare to radio airplay. Because of this disconnect between the two models, commercial radio is missing much of the music that is popular with a large segment of the listening public.
3882 An Indie station located in Canada's largest market will bridge these two industry models. It will provide a gateway onto the charts for Indie bands and also channel new music that's currently only available on the Internet onto the Toronto airwaves.
3883 I will illustrate how this works. We looked at digital downloads measured through SoundScan. Most of these downloads are tracked from iTunes and other pay download sites.
3884 In its first week of release, the album "Adventures in Your Own Backyard" by Patrick Watson sold almost 15,000 copies, making it the number two album by sales in Canada, but virtually no radio stations played that album. That's a great example of the disconnect between the two industry models.
3885 Commissioners, in this hearing you have heard again and again that the public wants more musical variety. The music is there, it just doesn't fit the current radio model.
3886 MR. CARR: Let's look at our CCD commitments.
3887 The single biggest benefit any radio station can bring to emerging Canadian talent is to actually play their music, and the core benefit of Indie 88.1 is that airplay. So when we looked at CCD benefits we were very careful to ensure that our financial commitments would not jeopardize our ability to maintain an Indie format in Toronto or our ability to maintain our status as an independent station.
3888 Fortunately, our CCD program is very efficient. We will work with established organizations that already have an infrastructure in place, thus avoiding the normal overhead represented by costs of staging new talent contests, concerts and so on.
3889 To further improve efficiencies, we will solely focus on programs that primarily support emerging artists. This includes the Canadian Indie Awards, the Polaris Music Prize, the North by Northeast Music Festival, Indie Week International, and of course FACTOR.
3890 Our Artist of the Week program will provide significant exposure for Canadian talent, and once again, all of the CCD funds that we put into this program will flow directly to the artists.
3891 Our commitments are effective and realistic. They provide the public benefits of a strong CCD program while working within the constraints of a prudent business plan.
3892 MS BINGLEY: In this format we have a happy convergence between CRTC policy and a commercial opportunity. There are obvious public benefits to the Indie format, but as a private broadcaster we see a business opportunity. There is an enormous pent-up demand for a station that plays Indie music, and support for emerging artists is not something that we have tacked on in order to get a licence. We can't run an Indie radio station without that.
3893 Let's look at our business plan, which is quite conservative. For example, we took the potential audience for the format and reduced it by 20 percent to reflect the signal. Based upon that reduction in audience we then calculated potential revenue for the format and discounted that by close to 50 percent. This was to take into account other variables associated with a new format.
3894 We put together a budget which reflects available revenue while ensuring that we can provide high-quality programming. This was made easier due to synergies between the Toronto station and our existing Barrie stations, where we can share traffic, accounting and other administrative functions. Please note there will be no sharing of on-air content.
3895 As mentioned, our CCD commitments are achievable and match the scale of the operation.
3896 Finally, we tested our financial model to determine the impact of a revenue shortfall in Toronto. We then went further than that and looked at a worst-case scenario to see what would happen if we had a simultaneous reduction in sales in Toronto as well as at our Barrie operation. Even with a major decline in both markets we would have no difficulty in meeting all of our commitments. We submitted that worst-case scenario with our application.
3897 Toronto is a very competitive market, and we are an independent broadcaster. If the Commission has any concerns about our ability to succeed in this market, here are some of our core competencies.
3898 We have a track record of over 24 years of success. We have competed successfully in our home market with Telemedia, Power Broadcasting and Corus Entertainment.
3899 In the Barrie market we not only have to compete with local stations but with most of the Toronto stations as well. Their signals all come into Barrie. We have competed successfully with those Toronto stations largely due to our commitment to major market quality programming.
3900 As a result, in our core target of adults 25 to 54, Rock 95 has held the number one position since 2002 and Kool the number two position since 2007.
3901 Like any successful organization, over the years we have built a number of skills in programming, promotion and marketing. These abilities have become institutionalized through our highly skilled managers and wonderful on-air talent, many of whom came to us from Toronto radio.
3902 We have strong cash-flows and lots of working capital, as well as a substantial credit facility. The shareholders have also committed to inject additional working capital if necessary.
3903 MR. CARR: Another component of our success will be the tight integration between social media, Web-based technologies and over-the-air broadcasting. We have extensive experience in these areas.
3904 For example, we note that one applicant proposes to use listener-driven radio software, as do we. But we're not just "proposing" LDR, we have been using it in Barrie for almost a year.
3905 Another applicant proposes to introduce customized traffic reports delivered through mobile devices. Two years ago we invested in a company to develop such an app and launched the industry's first mobile service. We are using it in Barrie, it has been picked up by CP24 for Toronto, we are ready to launch in Vancouver, and we are starting to market the product across Canada and into the U.S.A.
3906 MR. MANTON: We mentioned before the signal is a limiting factor that we have carefully considered. Although coverage is limited, 88.1 will very effectively deliver listeners within the boundaries of the City of Toronto proper, a population of over 2.5 million people.
3907 Our sales target is small and medium business accounts within the City. Due to our rate structure, we will be able to sell to accounts who currently cannot afford radio. That will provide us with a potential market of approximately 54,000 businesses and we only need a couple of hundred accounts to be successful.
3908 The client size and marketing sophistication of these small and medium businesses is similar to a medium market. We have extensive experience dealing with these types of accounts, where we provide an agency approach.
3909 MR. BINGLEY: Finally, in addition to our medium market experience, we have been operating in a major market for a number of years. In 1998 we entered into a joint venture with a Russian company and launched a station in St. Petersburg, market size 4.6 million.
3910 We had to build that station from the ground up, including hiring and training staff in all of the principles of broadcasting. The station has been successful and has grown to a network of eight stations in Northwest Russia.
3911 Commissioners, we have put together a prudent, achievable business plan. We have the necessary experience and resources to turn that plan into reality.
3912 And one last thing. Twenty-four years ago I applied for a licence for Barrie, Ontario, market size 50,000. At that time conventional wisdom said that a rock station could not survive in a market of that size.
3913 We were a small group of investors. The only equity we had was locked up in our homes. But the CRTC was intrigued by the thought of a rock station in a smaller market. They took a little bit of a chance and they awarded us the licence.
3914 But here's the key thing, almost 25 years later when I talk to long-term listeners they can describe to me the first time they heard the radio station. They can tell me the time, the place, what they were doing. And it goes like this: "A friend came over to my house and told me about this new station. So I tuned it in and I couldn't believe that we actually had a rock station here in Barrie."
3915 And that's what happens and that's the public benefit that comes when the CRTC rewards innovation.
3916 And I guarantee you, if you award us this licence, 25 years from now you will be able to talk to the people of Toronto and they will tell you about the first time that they heard Indie 88.1, where they were and what they were doing at the time. And when you hear that, you'll have no doubt that you made the right decision in licensing this station.
3917 Thank you for your attention.
3918 THE SECRETARY: Thank you very much, Mr. Bingley.
3919 We will now hear the presentations of your interveners in support and I believe you wanted to introduce them yourself. Please go ahead.
3920 MR. BINGLEY: Thank you very much.
3921 Right behind me is Vanessa -- to my right behind me is Vanessa Vai, who is the principal in Vai Media Group. Vanessa specializes in concert and event promotion and brand management.
3922 Beside Vanessa is Matt Schichter, who is a journalist for MSN and he has been a Music Director in a number of stations, including AAA stations in Calgary and Edmonton.
3923 Finally is Alan Reain, an accomplished musician and drummer for the Fast Romantics.
3924 Our interveners...
3925 MS VAI: Thank you, Doug, and thank you to the CRTC. It's an honour to be here today.
3926 Let's look at the Toronto entertainment industry that has grown out of Indie music. As a booking agent and promoter, I can tell you that this city is absolutely spilling with talent right now. Bands are coming in from all over the GTA, loading school buses with hometown fans just for a chance to play at one of our venues.
3927 A musical movement is definitely upon us and people in the know can feel it. We are already talking about something special happening right here in Toronto.
3928 There are more Indie fans than ever supporting local music and they want to hear a wide variety, something that simply isn't available on Toronto radio.
3929 Their hearts are being won by amazing Indie artists that are filling up Toronto venues, but often the only way to hear them again is to search for them online.
3930 The growth of attendance at these Indie shows just over the last two years is staggering. I see it at venues like the Mod Club, Lee's Palace, the legendary Horseshoe Tavern, Sound Academy and El Mocambo all the time, not to mention the hundreds of Indie bands and thousands of Indie fans that flock to Toronto for our various Indie festivals every year.
3931 There is Canadian Music Week, Indie Week with our affiliate Indie Week Ireland, North by Northeast, with their affiliate festival in Austin, Texas, South by Southwest. North by Northeast alone draws over 300,000 fans and now spans seven days and nights. It's one of the world's leading festivals for the best in new music and it is based right here in Toronto.
3932 These clubs and festivals bring huge spinoff benefits to the Toronto economy as well. Indie music has become a very important aspect in the cultural component of our economy.
3933 There is ample evidence of broad support for Indie music. You just have to look at the attendance at the various concerts and Indie venues around the city. Toronto truly has become a hub for Indie music. Like London in the '60's and Seattle in the '90's, Toronto is poised to become recognized as an international musical centre, the musical equivalent of "Hollywood North."
3934 An Indie music station in Toronto is a necessary component in developing the Toronto and Canadian music industries. It would become one of the most important radio stations in the country.
3935 With the music scene in Toronto alone growing at this rate, I know the demand is there. I see it every day at every live show. Toronto loves Indie.
3936 MR. SCHICHTER: As you just heard from Vanessa, Indie has a strong fan base in the city. As a journalist for MSN I have witnessed firsthand the growth in the number and quality of Canadian Indie bands, many of which have a worldwide following. I have also seen the parallel growth in interest from Indie fans. This is truly a format that will be responding to public demand.
3937 Now, I have worked for several Canadian radio stations and as a Music Director I have had the privilege of working in a variety of formats, including two AAA stations, both of which struggled to find their place and ultimately failed. That's because, in my opinion, AAA stations are based upon an American format. The original American format depends strongly upon an Americana style of music that does not resonate with Canadian listeners.
3938 We are a separate country and a separate culture, and Canadiana, if I may coin a phrase, is Indie: Arcade Fire, Broken Social Scene, Zeus, Dan Mangan, Fast Romantics, Yukon Blonde, Hey Rosetta!, Feist. I could go on forever. When you ask what's Indie, it's the sound of Canada. It's music discovery. It's what the radio used to be and should be about.
3939 Cancon and the Indie world are essentially synonymous. There are literally hundreds, if not thousands, of Indie bands in southern Ontario that deserve airplay here in Toronto, bands that sell out performances across the country. It's a travesty that some of our best talent goes unnoticed on the radio.
3940 Bands are small businesses. As such, they market themselves through a myriad of different outlets: the Internet, touring, film placements and social media, among others. I have talked to countless musicians who still feel that radio airplay is the best way to connect to Canadians on a large scale and gives credibility to their career.
3941 An Indie radio station in Toronto would provide a great asset to not only local musicians but to all Canadian Indie musicians. Radio airplay is that critical first step in an artist's career, fostering local and national talent and helping to build the careers of Canada's future stars.
3942 These bands are D.I.Y's, Do It Yourselfers. They can access various funds and receive grants for music production, videos, distribution, even Web sites, but when it comes to radio there's nothing. That's why Toronto needs an Indie station.
3943 Now, you may be wondering, are these bands really that good, and if they are so good, why aren't they on the radio? Well, Commissioners, these are great bands and they deserve to be on the radio. Here's an example of just one of them, Fast Romantics.
--- Video presentation
3944 MR. REAIN: Hi, I'm Alan Reain. I'm the drummer for Fast Romantics. I would like to relate a little bit of our experience as a band and why it leads us to support Indie 88.1's application.
3945 Listening to the rest of the presentation it's actually amazing to me how much the presentation mirrors our own experience and I think you will see that in the next couple of minutes.
3946 Our band was formed in Calgary in 2006, and in 2008 we were named one of the winners of the X92.9 Xposure contest in Calgary. But the best thing about this contest was the opportunity to receive commercial radio airplay in prime listening hours on even footing with the rest of the station's playlist. And the listeners responded to this by voting two of our singles into the top 10 on the station for numerous weeks, alongside hits by national and international artists.
3947 The impact on our careers was instantaneous and transformative. There is nothing else that we could have done that could have had the same impact.
3948 So from this experience we knew that we had a good product that people were connecting with. So we hired a professional radio tracker to help us promote our music to Canadian radio nationwide. What we found out from this experience was that most stations across the country were reluctant to take a chance on an emerging act.
3949 I have a tracking report from that campaign and I will read you some direct quotes from it:
"This station is chart-driven and doesn't usually add anything unless it's in the top 30."
"The MD really likes the song, but unfortunately needs to see some chart numbers."
"The MD has listened to the song and just needs to see some movement on the Rock Charts."(As read)
3950 Yet since that time, several songs from both of our records have been licensed for major U.S. network television and have been heard in the U.S. and around the world.
3951 "Cool Kids," which you just heard, was used on "Vampire Diaries." Other songs have been used on "One Tree Hill," "Pretty Little Liars," and I just got word today about a placement in the new Claire Danes movie.
3952 So we have seen that our music is of high enough quality to make it, so what's going on? To me it seems that there is a disconnect between music consumers and the radio establishment. I know from speaking to our fans that they are unsatisfied with what is being offered on radio.
3953 You will hear some people say that young people don't listen to radio anymore, but that's not really true. The truth is that young people don't have to listen to radio that doesn't give them what they want anymore because they have other options. They are moving to YouTube and Internet radio because the music they want to hear is simply not being played on-air.
3954 The station that leads by example by putting out quality musical content is going to be rewarded with the loyalty of a ready-made listener base that is hungry for change.
3955 And what we need as artists is pretty similar to what the fans want. What we need is radio play that puts us on an equal footing with established artists, that treats our music as primary content, not as second-rate filler, and radio stations that are bold enough to lead and put out high-quality musical content and trust their listeners.
3956 Finally, I'm going to put something out there that may sound a little grandiose or almost ridiculous but is actually true.
3957 What the Commission decides to do with this piece of frequency spectrum actually has the potential to profoundly impact my life, and not just me but scores of other musicians and others in the independent music industry.
3958 To have a station that offers us the opportunity to get commercial airplay in Canada's biggest market could literally transform our careers. Toronto is known not only nationwide but now worldwide as a hub of world-class talent and music, and success and radio play here means that the sky is the limit from that point on.
3959 So that's why to us this application is so important. In the radio market in Canada today we have a lot of people following and hardly anybody leading. Indie 88.1 is talking about leading and that is extremely important and that is why I urge you, and we all urge you, to accept the application. Thanks.
3960 THE CHAIRPERSON: Thank you all very much. I have a couple of questions and I'm sure my colleagues do as well.
3961 Let me start with understanding the definition of "Indie." You say on page 3:
"[It's] a distinct genre of music ... composed of music from artists who are not signed to large ^^record labels and who ... produce [in most cases] ... their music themselves."
3962 So it's not a genre. A genre is a format. This is a group of artists who aren't being signed or have chosen not to sign a record label. Is that what we're talking about?
3963 MR. BINGLEY: Well, Mr. Chairman, to a certain extent it's not a genre, but to a certain extent it is, and that's because this music flows together. It has a distinct sound. And that's why we use the term "genre."
3964 And it's not so much choice they haven't -- well, it is choice they haven't signed with major labels, but it also reflects the state of the industry. There is so much content and the labels are slowly shrinking, the major labels. So they don't have a lot of resources to bring to bear on these artists.
3965 THE CHAIRPERSON: But the reality is that they come from varied genres, varied formats. You have rock in there, you have contemporary in there, you have instrumental in there, you have everything in there. It just so happens that these artists have either chosen or have not been chosen to record labels.
3966 MR. BINGLEY: Sure. And I guess if you use that definition that's correct. I would add that instrumental is not a big part of this format and we are not playing every single Indie artist out there. So we don't, for example, play Indie jazz, we don't play Indie hip-hop.
3967 The Canadian mainstream Indie sound is pretty well what you heard on the screen there -- saw on the screen.
3968 THE CHAIRPERSON: Okay. Compared to other people that have come in here with an emerging artist genre application, how do you differentiate yourself from them?
3969 There was one here last night, for example -- in the afternoon, there are other applicants as well that come in with an emerging genre, emerging artist genre.
3970 MR. BINGLEY: Well, I think the primary difference, as Megan mentioned, is that emerging artists are core to this format. It's not something that we have tacked on, that we have added on. Without those emerging artists you don't have Indie, you don't have an Indie format. That's the first thing.
3971 In terms of how does Indie compare to other formats -- is that the question?
3972 THE CHAIRPERSON: Well, to other applicants who are coming in with a similar format.
3973 MR. BINGLEY: Well, let's talk about the AAA format for a second. Would that be one that you would be referring to, for example?
3974 THE CHAIRPERSON: That's one of them.
3975 MR. BINGLEY: Okay. The AAA format, it's an example of a format that plays emerging artists, but the emerging artists are roughly 20 percent of the content on this station, Indie artists are 20 percent. The other artists are more mainstream and that's where the other 80 percent draws from.
3976 Jenn, maybe you could talk to that.
3977 MS HADFIELD: When we get specific with the kind of playlist that we would be doing, if you think of it as a circle, we would definitely have at the top and at the bottom -- say you've got like the top and then 15, 30, 45, so we would have core Indie here.
3978 I think a part of the thing that you might be looking for maybe from yesterday with the emerging artists is that we will have a good portion of emerging artists in it, but there will also be anchors.
3979 So, as I was saying, we would have our core Indie, say Arcade Fire here, down here half an hour later core Indie, say the new single from Feist or Mumford & Sons, and then at 15 and 45 we would have -- mainstream compatible would be one category that we would have, something like a Florence + the Machine or Black Keys. They do have more mainstream appeal. That would play on a AAA.
3980 And then we would have roots of Indie, say like a Radiohead or a Pixies, but we do have formatics to it. But then the rest of the songs in that hour, say a 12- to 13-song hour, the rest of those would be emerging and a lot of Canadian.
3981 MR. BINGLEY: Excuse me, perhaps I could ask Paul Tuch, who is the chart expert, to talk to that as well, if that's okay.
3982 THE CHAIRPERSON: Sure.
3983 MR. TUCH: Yes. In the research that we do, in the charts that we do across North America we find that artists that are considered AAA artists are more along the mainstream that an Indie station or Indie sound doesn't -- it doesn't match up with that.
3984 An artist such as John Mayer or Sheryl Crow is considered a core artist for AAA. That is a sound of the types of artists that would not be played at an Indie station. An Indie station tends to be -- I wouldn't say edgier, but the core artist of AAA would not be the core artist of an Indie format.
3985 THE CHAIRPERSON: I'm glad to see, Mr. Bingley, you have the same grey hair as I do, so I may be speaking a little into my past here.
3986 But initially I always thought that alternative music, alternative rock was the opportunity to express oneself as an independent or emerging artist. You state in here on page 7 of your submission you filed earlier:
"Most recently these stations, alternative stations, have migrated towards a modern rock format."(As read)
3987 And then you say:
"Although they play the occasional Indie song, much of that airplay is to maintain the image of the station."(As read)
3988 So they have migrated and they migrated presumably because they wanted more audience or there was a bigger opportunity there.
3989 What would change if you got one of these frequencies? Why would you not fall into that same trap, if I can call it that, of moving where the money is in three-four years from now?
3990 MR. BINGLEY: Sure, valid question. First, I do share your pain with respect to the grey hair.
3991 MR. BINGLEY: And when you talk about the history, I guess, of some of these alternative formats and other formats, what you are really talking about is a market space for almost avant-garde type of music, the latest, the leading edge of music. So that goes right back to the 1960s with the progressive rock stations. We think of them as format, but they are almost a market space for listeners who want the new and different.
3992 And what happened, Toronto, you had CHUM-FM, it was in that space. Over the years it grew up. It sought higher revenues.
3993 And this isn't unique to our industry. I often say in the automotive industry you start with the compact car, you add an inch every year and eventually you wind up with a Buick.
3994 And that's what happens with some radio formats. That's what happened with CFNY.
3995 Now, to your question, is that going to happen with us, I think signal is an important factor with respect to this. We cannot go head-to-head with those major broadcasters. That was one of the key decisions in picking this format, was we had to have a market space that was our own, that perhaps wasn't big enough to attract the major players but that we could make a reasonable profit with.
3996 So that's really -- the market reality, I think, is the best assurance you would have.
3997 MS BLISS: Commissioner, can I -- I have been a music journalist for close to 20 years and I could probably speak to what, you know, the Indie sound is. And we are talking about, I guess, two different things, just the way the word cool, you know, has two different meanings.
3998 There is distinctly an Indie sound. I used to do Indie columns in our trade paper "The Record" before that was defunct and I did an Indie column in another respected national music publication. The same way someone would have a jazz column or, you know, a blues column, I did the Indie column.
3999 And I guess as a sound it's not as slick. The production values perhaps aren't as high because these artists are independent and are recording it themselves, but it's kind of a cooler sound that people gravitate towards. Indie rock, Indie pop is something I have frequently written in articles that describe certain artists.
4000 And at the same time Indie is a business. These people have taken charge of their lives, they have chosen music as their career and they are taking, you know, their career in their own hands and, you know, trying to make a living.
4001 THE CHAIRPERSON: So is the difference between Indie and alternative simply those that in alternative music have signed to a record label and Indies has not?
4002 MS BLISS: They could. Alternative artists very definitely could have deals with, you know, multinational major labels, and, as I'm sure you're aware at the end of this year there's only going to be three major labels and they are not signing very many artists. So the vast majority of artists are going to be independent.
4003 MR. BINGLEY: And I think, if I may add, the issue of alternative, again it's a label. Initially you had CFNY, the Spirit of Radio. Everyone knew what that was. That was in that market space of a new and different.
4004 It became alternative as in not like what was played on other radio stations, but over time alternative morphed and changed into a format that was very limited. It was very tightly regulated in terms of the playlists and that's why we refer to it more as modern rock. It may still have that label alternative, but it's very different from where it was 20 years ago.
4005 THE CHAIRPERSON: So if you were to receive this licence and you would be playing Fast Romantics as an example and a year down the pipe they become phenomenally successful and they get signed to a record label, are you going to play less of them because they are no longer an Indie?
4006 MR. BINGLEY: No. And that's one reason in our commitments we are committing to 60 percent Indie, because we wouldn't want to be able to have to say to an artist, hey, sorry, you no longer apply.
4007 THE CHAIRPERSON: But they wouldn't be independent anymore at that point in time?
4008 MR. BINGLEY: In the minds of the fans they are still independent. So a good example of that would be Arcade Fire. They might no longer be considered emerging, but they are still considered Indie bands in the minds of fans. So they do fit with the music of the station and would continue to be played.
4009 THE CHAIRPERSON: So the definition of Indie, which is those who have not signed to a large record label, is not what you're looking at, because once you -- you're going to take them from cradle to grave basically, is what you're saying, regardless of whether they are still independent or not and you are going to classify them as independent even though they are signed to a record label?
4010 MS BLISS: There's only going to be three major labels by the end of this year, only three multinationals. There's large independent labels, you know, but there's not going to be any more than three multinationals that are considered a major label. So the chance of signing with a major is very, very slim. And also, even those major labels are licensing independent artists or signing deals with the actual Indie label as a whole.
4011 THE CHAIRPERSON: So are you distinguishing between major international labels and others? And so your 60 percent is anybody who isn't signed to one of these three large major labels?
4012 MR. BINGLEY: Well, I think that, first, when I say 60 percent, that is the definition of emerging artist, the CRTC definition of emerging artist, and it is very much chart-driven, it is not label-driven. That's that 60 percent emerging artists, which is a commitment across the board not only to Canadian but foreign as well.
4013 I suspect your question kind of is, are you going to morph over time into something that's very mainstream? Well, that 60-percent commitment will prevent that. There will be artists --
4014 THE CHAIRPERSON: But it won't prevent it if you are going to continue to define those people as Indie even though they have become successful and signed to a record label, albeit perhaps not a large record label or international record label?
4015 MR. BINGLEY: Well, the 60-percent emerging artist definition though is not a label definition, it is a chart-driven definition.
4016 And the other aspect of that is some of these artists will move on to the big time and they will become so popular they will get on top 40 stations, they won't fit on this station anymore.
4017 THE CHAIRPERSON: Okay. You comment on your strong record of innovation on page 17 of your supplementary brief. Can you expand upon that record of innovation?
4018 MR. BINGLEY: Yes, certainly.
4019 Did you want to talk to that, Megan?
4020 MS BINGLEY: Sure.
4021 We have developed several applications that will work in conjunction with our existing radio stations.
4022 THE CHAIRPERSON: Can you speak closer to the microphone?
4023 MS BINGLEY: Oh, I'm sorry.
4024 THE CHAIRPERSON: Thank you.
4025 MS. BINGLEY: I guess I'm soft-spoken. It's never happened to me before.
4026 So essentially we have a -- we work with a company that develops mobile apps and we have launched one into the marketplace, which we spoke to in our opening presentation, that helps with radio traffic reporting and helps people as they drive to and from work. You can download that, it's on the iTunes Store as well as on the Android store and the BlackBerry store as well.
4027 In addition to that, we have integrated listener-driven radio within our programming schedule. Dave can talk a little bit more about that soon, but what I do want to say is we believe that this will become a larger portion of -- more tightly integrated with radio in the future.
4028 If you imagine for a second, you wake up in the morning, your alarm goes off, the radio comes on, it greets you by name and it tells you what the weather is and it tells you that there's construction along your route and then starts to play the music that is on the radio.
4029 Well, we have been piloting a program like that in beta test right now and soon we hope to be launching it into the market on Android and Apple stores.
4030 THE CHAIRPERSON: So it will be individualized to the extent that if my travel route is different than your travel route, it will be distinct for myself?
4031 MS BINGLEY: Yes. It programs -- you program in your route and it can tell you if there is any obstruction to that route in the morning.
4032 THE CHAIRPERSON: So if I have different music interests than you do in terms of Indie music, you will play different music for me than for --
4033 MS BINGLEY: No. It would be playing the music that would be on the radio.
4034 THE CHAIRPERSON: So it's not streaming at all?
4035 MS BINGLEY: No. Well, it's --
4036 MR. BINGLEY: It is streaming the radio station, yes.
4037 THE CHAIRPERSON: You are streaming your radio station.
4038 MR. BINGLEY: It does all of that and then it streams the radio station.
4039 THE CHAIRPERSON: Okay. Okay, I understand.
4040 Coming back to Indie, one of the things that I have heard in the past is when independent musicians can't get radio time they go on campus radio, community radio stations.
4041 Are you infringing upon that space by asking for an Indie station that would cater to that constituency of artists?
4042 Because that's where they are right now, they are on the campus radio stations, they are on community radio stations and they are emerging and that's where they find a home right now. Whether there's enough listeners there or not is a secondary issue obviously, but that's where they are.
4043 And my question, I guess, to you is: If in fact you are given this licence and that's where you go, are you going to be attracting those people away from that constituency into yours?
4044 MR. BINGLEY: Well, I think there's a couple of parts to answer that question.
4045 The first is we will be considerably different from them. We are a commercial radio station. We will use the principles of programming, as Jenn mentioned, and a key difference between us and them is the amount of spoken word and the amount of flexibility.
4046 So if you want to go back -- and here's the difference. If you want to go back again, back to 1968, there were radio stations that were doing progressive rock and they put a bunch of albums in the control room and the announcers picked whatever they wanted to pick. Some days it was great, some days it was not so great.
4047 The next phase, the next iteration of that was again music that wasn't being played everywhere else but with some sort of control over rotations and what songs you played, and that produced a much better product. That is what we will be producing.
4048 But in terms of infringing upon those radio stations, I think when you consider the totality of what they do, the spoken word, the way it is presented, not in the same style as we would present, no, I think we would complement them rather than displace them.
4049 THE CHAIRPERSON: Okay. My last question is, on page 110 of your supplementary brief you talk about sources of revenue that will be generated, and in there you have "Increase in Advertiser Spending", which is a large component of your forecasted Year 2 revenues.
4050 What makes you think that advertisers will grow their revenue that substantially and that it will all fall into your bailiwick?
4051 MR. BINGLEY: Tom, could you address that?
4052 MR. MANTON: I think we heard a great real-life example this morning with the marketing director from Hakim, who mentioned that he would be adding on top of his SkyWords budgets.
4053 So there is a new opportunity, and we will be attracting new advertisers with a new format, with a demo that is difficult for them to reach.
4054 So they will, indeed, be increasing their ad spend, they won't necessarily be replacing it, which is what we heard directly from the horse's mouth, if I may, this morning.
4055 THE CHAIRPERSON: But this relates to an economy that continues to flourish and grow and prosper, and people will spend more money, rather than reallocate their funds.
4056 Because you also have here people reallocating, I would imagine.
4057 MR. BINGLEY: Yes, sir, the reallocation, we feel, is primarily in the national sphere. We don't have a lot of national in our forecast, but agencies tend to buy a market. They set a certain amount of money for the market, and if you add a new radio station in, you are going to be moving money around. That's just a reality of that.
4058 There are other opportunities, though. There are specific advertisers that specifically target indie. For example, we submitted a letter of support from Steam Whistle Brewery, and that particular brewery is all about indie. Anything to do with indie music, they want to be part of that scene, and they are quite excited with what we are doing.
4059 It's the same thing with Live Nation. I was speaking with them, and they have a real problem. They bring in these great acts, but they can't get support from radio. It's not being played on the radio.
4060 So there are some real opportunities to grow there.
4061 Does that answer your question?
4062 THE CHAIRPERSON: It does in that case, yes.
4063 Are there markets where indie, as a genre as you call it, has been successful in North America, that you are aware of?
4064 MR. BINGLEY: Indie is relatively new to the radio waves. It exists on satellite radio. It's on Sirius Satellite. It's also on Radio 3, of course.
4065 It really hasn't been used, it hasn't been experimented with. I don't believe it's a format that would fit a smaller market. You are talking about a limited number of larger markets.
4066 So, to my understanding, I think we would be the first.
4067 THE CHAIRPERSON: I have a question that I think every group has been asked that has come before us. There was a change in 2011 with regard to section 15 of the Radio Regulations, which now requires a commitment to the Community Radio Fund of Canada.
4068 Were you aware of that? Is it in your CCD?
4069 MR. BINGLEY: When we put that together, we hadn't considered that, but we are aware of it now, and we would certainly accept that as a condition of licence.
4070 THE CHAIRPERSON: I think that is the last of my questions.
4071 Vice-Chairman Pentefountas.
4072 COMMISSIONER PENTEFOUNTAS: Hi, how are you?
4073 MR. BINGLEY: Fine, thank you.
4074 COMMISSIONER PENTEFOUNTAS: That was a very nice presentation, I really enjoyed it. I really liked the Mojo piece, as well, on Montreal, Toronto, and even Ottawa-Gatineau. It's fantastic.
4075 You talked about Arcade Fire, which is an amazing indie, Canadian success story. I remember Roscoe and Butler going at it in `01, and then they split up, and I missed the Reed concert, where Reed walked out.
4076 I can't remember the venue, but I wish I could have been there. That would have been sort of, you know, Canadian indie history, but I missed it.
4077 They still don't get airplay.
4078 Here is my question: Are you going to be willing and ready to play 12-minute songs?
4079 MR. BINGLEY: Yes, we will. I think that's what this particular fan base is after. They want something different.
4080 Now, we are not going to be playing 12-minute songs every hour, but, yes, we would play some 12-minute songs.
4081 COMMISSIONER PENTEFOUNTAS: When?
4082 MR. BINGLEY: Throughout the day.
4083 COMMISSIONER PENTEFOUNTAS: I'm serious.
4084 Because, you know, Arcade Fire made it without any airplay or any support from any radio stations, pretty much, in the country.
4085 Like I said, I remember in `01 when they were playing in art houses -- like, literally, galleries and stuff. I mean, it was amazing.
4086 It's good to pay lip service to it, but if you are not willing to play those songs, and other indie songs that run past 2:30, it's going to be hard for you to be taken seriously.
4087 MR. CARR: Yes, I agree, and that's what it's all about. It's about finding the right songs for the audience and, you know, we always use extensive research to find out what songs they want played.
4088 The interaction that you have with any radio station, which we would certainly have with Indie -- you know, through mobile devices, through websites, through auditorium research -- finding out the right songs that they want to hear, and if they want to hear a 12-minute song by a band that could be the next Arcade Fire, then they would really want to hear that and you would have to play it.
4089 COMMISSIONER PENTEFOUNTAS: That may be necessary if you wish to repatriate listeners from conventional radio.
4090 MR. CARR: Correct.
4091 With Arcade Fire, it was a really hard-fought battle, for sure, for a band like Arcade Fire to get radio play, as it is for a lot of them.
4092 There are exceptions to the rule, where some do make it without radio airplay. The reality is, there are so many of them -- you know, thousands that produce this music in their basements, and they could get it out there. They use the internet to get it out, to distribute. The wall is the radio airplay. That's where they hit that wall and just can't go any further in what they are asking.
4093 So we certainly have to find those artists and expose them.
4094 COMMISSIONER PENTEFOUNTAS: All right. Thanks.
4095 MR. BINGLEY: Excuse me, if I could just add to that -- because I can tell that perhaps we haven't answered, totally, your question to your comfort level -- and it's the grey hair again.
4096 Going back to the sixties, it wasn't uncommon on an AOR station -- album-oriented rock -- to hear a longer song, and we are not afraid of them.
4097 I do a feature every day -- I am one of the lucky ones, I get to do something called "The President's Pick" at 4:45 every day, and every once in a while I do play a song that is 8 or 9 minutes in length. We do that now, and that is on a tightly formatted mainstream rock station.
4098 It is something that you actually can do, so we are not afraid of it.
4099 COMMISSIONER PENTEFOUNTAS: Speaking about those long songs, it's a good thing that Cleveland and Columbus were around, otherwise Rush would still be playing in somebody's basement.
4100 Anyways, let's see.
4101 THE CHAIRPERSON: Thank you.
4102 Commissioner Simpson...
4103 COMMISSIONER SIMPSON: Thank you very much.
4104 I think that we are probably witnessing a change, not just in the music, but in the format of radio, which is going to be affected by music.
4105 I am another grey-hair, and I remember the days in the sixties when CKLW never played a song over 3 minutes, and then one day, on a Sunday, which was blasphemous, WXYZ all of a sudden started playing albums. I think the Woodchopper's Ball was 21 minutes long, and it just drove everybody crazy because the Sales Department had nowhere to put commercials. But it was getting a lot of listeners.
4106 Normally business is Chairman Katz' bailiwick -- and I will be brief, but I would like to spend a couple of minutes trying to understand the business model of Indie.
4107 And I will tell you what I think is happening, and you can correct me if I am wrong.
4108 That was an excellent presentation, by the way, to the back row guys and gals.
4109 There was a comment made that indie bands have become, essentially, small businesses. They have had to. They haven't seen --
4110 I think one of the questions that I am going to want to ask is, as you run into the conventional radio genre, and you are told by your consultants that because you are not charted, you are not played -- because a lot of radio turns its playlist over to consultants who are thousands of miles away.
4111 The billboard charts have molecularized in the last while, and how come there isn't an indie chart then?
4112 Question number one is, I want to talk about charting, as the music industry is doing it, and is this deliberate discrimination, because the music industry doesn't have control of the indie industry, if you want to call it that?
4113 My second question is, is the radio industry too reliant on the music industry, the old music industry, and they are sort of walking arm-in-arm down a path that may be not where the market wants to go, and the wake-up call that is being delivered to radio and to this Commission is that there is not only a new kind of music, but a new kind of listener?
4114 What is making me think that this is a legitimate question is where I am hearing indie music pop up is in other people's business models. I am hearing it pop up in Claire Danes' movies, pop up as -- jingles are no more. What I am hearing are indie ditties; you know, 30-second grabs that are in Toyota commercials and the like.
4115 It's everywhere, but on the periphery, it seems, of an older, more established radio broadcasting music industry that is in the centre and is trying to -- or perhaps not conscious of the fact that they are rather immovable.
4116 Could I get answers to those three questions? I will let you figure out how to answer them.
4117 Question number one is charting. Number two is, is there a monolith that needs to be moved with respect to radio and the music industry. And number three is, are we witnessing a new business model that is made up of smaller businesses that are hard to detect, but are pervasive because there are so many of them now?
4118 MR. BINGLEY: I am going to farm part of this out. I think, if I could answer the second question -- is the model going to have to change for radio, how we pick it? Absolutely. Absolutely, because the model has basically been driven by sales reps from the record companies. The record companies send radio reps out there, sales reps, to try to get that song on the chart, and then everyone plays follow the leader. They see who else is adding it, and then, as it adds, it builds up.
4119 In the new world, where you have these major record labels not able to send those sales reps out, not being able to market the music, something has to give.
4120 So I think it is going to happen. There is going to be a change.
4121 I mean, that is one thing we want to see with this, what impact can we have on that model. That is one thing we can do.
4122 As we add these songs, they will get picked up on the charts, and there is going to be some migration there.
4123 To your first question, about the charts, I would like to ask Paul to talk about that.
4124 MR. TUCH: If I could understand your question a little bit better, you want to know how charting affects --
4125 COMMISSIONER SIMPSON: Are charts being manipulated, to the extent that indies are frozen out because they are not part of the industry that the charts serve?
4126 MR. TUCH: I work with the company that runs SoundScan and Brockhouse Data Systems, so our charts are based on truth and there is no manipulation at all.
4127 As far as whether indies are being shut out, we are basing our charts on what is selling and what is being played.
4128 On the sales front, we see every day that there are indie artists that are achieving a large amount of sales, on both sides of the border. A lot of it has to do with the new digital way of business, the digital downloads, as opposed to physical music sales.
4129 We are also tracking streaming audio, and we are finding that this is a new form of broadcast that is helping a lot of these artists who can't get airplay on over-the-air terrestrial radio. They are getting streamed on streaming audio.
4130 The difference there is that the consumer has to go out and search for it; whereas, on radio, you don't necessarily have to search for it, it's coming to you.
4131 On the airplay front, we find that there are less indie artists charting, because it is harder for the indies to get on the radio.
4132 COMMISSIONER SIMPSON: That is because...?
4133 MR. TUCH: It is because, as you said, with consultants thousands of miles away, they are programming based, maybe, not necessarily on the market, but on what is charting.
4134 COMMISSIONER SIMPSON: Oh, so perhaps -- not to put words in your mouth, but the indie artists are actually cottage industry, and the sales and activity is harder to measure.
4135 MR. TUCH: That's part of it.
4136 One thing that always kind of amuses me is that radio stations don't often look at sales as a guide to programming their station. They might look at a consultant before they look at sales, and if there is an artist that is selling thousands of downloads in the City of Toronto, why wouldn't you play that artist? Is has a fan base already. You don't have to develop that fan base, that fan base is there.
4137 Does that answer your question?
4138 COMMISSIONER SIMPSON: Yes, I think so. I still get the sense that what we are seeing is that indie is a cottage industry, but it is thousands of cottage industries that -- you know, it's like small business. For every one large business, there are ten small ones, and small business employs 90 percent of the people in a country, but it's harder to measure their economic productivity.
4139 I think that is where I am going with a lot of these questions.
4140 MR. TUCH: But if it does sell, we are going to capture it. We capture artists who are selling 10 downloads and artists who are selling 10,000 downloads, and there are, obviously, more that sell closer to the bottom, but that's because they are not getting the exposure in more mainstream areas like radio.
4141 MR. BINGLEY: I think you are correct, Commissioner, it is a new industry model that is developing. It is fragmenting, in terms of market grunt, if you will.
4142 Who is marketing these indie artists? They are marketing themselves.
4143 How do they get into those radio stations? It's a big problem for them.
4144 COMMISSIONER SIMPSON: Okay. I think I have run the clock out. Thank you.
4145 THE CHAIRPERSON: Thank you.
4146 Commissioner Molnar...
4147 COMMISSIONER MOLNAR: Thank you.
4148 MR. REAIN: Actually, sorry, could I address some of Commissioner Simpson's points?
4149 COMMISSIONER MOLNAR: No, it's my turn.
4150 MR. REAIN: Oh, sorry.
4151 COMMISSIONER SIMPSON: He who hesitates...
4152 COMMISSIONER MOLNAR: Frankly, I think that my question might be somewhat related, so perhaps you will have a chance.
4153 We have heard throughout this week about the large musical talent here in Toronto that is not having access to the airwaves, and this is one of the opportunities for them, for indie music.
4154 What I want to understand -- because I see that on page 12 of your presentation you say: "We will have a carefully controlled playlist."
4155 As I go forward, in sourcing the music, it is quite a carefully controlled means of sourcing this new and emerging indie music.
4156 I just want to have some sense or confidence that, in fact, we aren't changing one set of charts -- and we heard your intervenor speaking about the challenges, if you are not charted, of getting any radio play today, and, as I look at this, you are still talking about charting. You are going to look at different charts, but you are still talking about charting before these new and emerging artists will get onto your station.
4157 I just want to get a sense, when you are saying that you have a very controlled playlist, that, in fact, it will be a playlist that will be open to the newest and emerging talent here in this market, both Toronto's market and the Canadian market.
4158 Help me understand the control and the sourcing, and how that actually will open up the airwaves to this new music, if you don't mind.
4159 MR. BINGLEY: Sure. That is a very fair question.
4160 To begin with, let me give you an example. We receive, regularly, literally a bucket of CDs from FACTOR. It is really difficult for the radio station to go through each of those CDs, each of those tracks, and try to determine what is suitable for airplay.
4161 It is physically impossible for a radio station to go through all of these indie tracks that are being produced every year, so we looked at: How would we source them? How would we actually implement such a system?
4162 The first component of that is to take a look at what people are downloading.
4163 It's really not driven by us, it is driven by downloads by the fan base out there. That is where Nielsen BDS comes in, the SoundScan. They can give us that information.
4164 The other aspect is on our website. We have a component of listening-driven radio that allows independent bands to upload their songs, and also for our listeners to sample them, sample hooks of the songs, and vote upon them.
4165 So that's another stream coming into us.
4166 So really what you are talking about is some way of filtering the huge universe of music out there and getting it onto the radio station, and we use that as a proxy for a chart, not as a chart.
4167 COMMISSIONER MOLNAR: Mr. Reain, I think, was the one who was going to speak, and I interrupted.
4168 So, if you have anything that you want to say, either as it regards access to these airwaves through the mechanisms that are in place, or in response to Commissioner Simpson's questions -- I really didn't mean to cut you off, I just had my mic on at the time.
4169 So, please, go ahead.
4170 MR. REAIN: Thanks for the opportunity, and, I'm sorry, I can't really address your direct point. That is a bit more industry-related than I am able to address.
4171 I just wanted to say that a lot of what Commissioner Simpson said sounded like a big, resounding yes to me, when he was saying that -- I do believe that the industry is letting itself be left behind by the fan base.
4172 It sort of gives the impression that, you know, record companies and a lot of the existing stations are basically overwhelmed by what has happened in the music industry in the last few years, and they don't know what to do, and they are sort of retreating to the core, a couple of things that they know they can make money at.
4173 Meanwhile, there is a huge segment of listeners that aren't being served by that, and they are running away to other places.
4174 And like you were saying, things like commercials on TV are being, you know, much more active in seeking out new artists and new content. They have sort of filled that void, but there is a need for that.
4175 And you were talking about indie bands functioning like small businesses, and that is exactly the case for us. We have invested a large amount of cash, basically all of our savings and earnings, into the goal of putting together a product that is going to be able to stand shoulder-to-shoulder with what the major labels put out, and we have done that.
4176 We may have a different model from some people, but we don't record in our basements, we record in top-class studios. There is a huge cost associated with doing that, but that means that there is prime product that doesn't need to be looked at as second class, it can stand up on radio. It has the technical, audio and musical quality to do that.
4177 I guess, basically, I wanted to say yes to a lot of the questions that you were asking, and say that they basically hit the nail on the head, in my opinion.
4178 MR. CAMPBELL: May I jump in, just for a second, please?
4179 About four years ago, in Vancouver, Mr. Bingley applied for an indie format, and at that hearing I mentioned the demand for that format in Vancouver, the indie format, and the size of the hole, the size of the unfilled niche in the marketplace.
4180 I have been doing research projects like this since 1980, thousands of them.
4181 That opportunity was bigger than the largest one I had ever seen in my experience, which was a project that I did for WKHK in New York, years ago, which was a .6 share country radio station that was losing money, owned by Viacom.
4182 We found a soft AC format in New York, and the station charged into first place, and it has been first place in New York ever since they put it on the air. It has a 7/6 share today and it bills over $1 million a week.
4183 The opportunity in Vancouver was in that neighbourhood, in terms of the size of the opportunity.
4184 Now, I don't know whether you could monetize it that way or not, but here we are in Toronto, and the demand is bigger than it was in Vancouver.
4185 The interesting thing that I have learned in this particular study is that the study we did in Vancouver was a 16 to 34 study. It had a small demographic range because we thought intuitively that that would be where the support was.
4186 But we learned in that study that the 25 to 34 year old group liked it better than the 18 to 24 year old group who liked it better than the teens. So this year we did an 18 to 54.
4187 And to your question about college radio, 83 percent of the demand is between 25 and 54 and they are not in college any longer. I mean, this is a genre of music for which there is a huge demand in two of your markets where you can make a major change in radio all across the planet if you can just embrace it, endorse it, and understand it.
4188 I want to point out one other thing too. A lot of people have been applying for triple A. I know you don't have a lot of them up here and I know that the ones you have licensed haven't done particularly well. I just want to point out that there are 221 of them in the United States. They have been around a long time.
4189 Every year Arbitron puts out a report called "What America Listens to" and it's based on the results of all of the surveys they do in the fall, both the PPM markets and the diary markets. And there are 23 different formats that Arbitron takes a look at and triple A is last.
4190 COMMISSIONER MOLNAR: Excuse me. I'm just going to --
4191 MR. CAMPBELL: I just want to get that on the record.
4192 COMMISSIONER MOLNAR: Yeah, probably part of your opening statement because certainly not in response to any question that I asked. So I want to go back to my questions if that's okay.
4193 My other question related to your website. I have looked at it. I see right now it doesn't appear that you have advertising on your website.
4194 MR. BINGLEY: That's correct. It's a demo site.
4195 COMMISSIONER MOLNAR: Right.
4196 Would you see maintaining that website regardless of the outcome of this hearing?
4197 MR. BINGLEY: We have looked at that. The short answer is yes. The question is how much money could it make? That is another issue.
4198 I believe that -- and I have looked at this -- that there is -- at this point most people get their music radio from RF-based services. Really, to have any impact you need the RF in today's marketplace to have a significant impact.
4199 COMMISSIONER MOLNAR: So you are going to consider retaining it but it won't have a large impact. Is that what you are saying?
4200 MR. BINGLEY: That's correct, yes.
4201 COMMISSIONER MOLNAR: Okay, thank you.
4202 Those are my questions.
4203 THE CHAIRPERSON: Thank you.
4204 Commissioner Poirier...?
4205 COMMISSIONER POIRIER: Good morning.
4206 We all know it's difficult to change habits and the younger generation we believe listen less to radio than the previous generations. So how could radio like yours bring back the new generation to radio listening?
4207 Do you have a number, Mr. Campbell, to provide us with about this -- on this subject?
4208 MR. CAMPBELL: You know the arithmetic as set forth in our application shows that there were -- 50.8 percent of the 18 to 54 year olds would listen often or once in a while to this format.
4209 We played them a sample of the music, a montage. We described the format and of that 50.8 percent who would listen often or once in a while, 55 percent of them said it could be their very favourite or second-favourite station to listen to.
4210 COMMISSIONER POIRIER: But do you know if they were listening to any other radio station? Was it a question asked?
4211 MR. CAMPBELL: Yes, it was. Most of these folks are getting their indie music from their own private sources, their own personal libraries on their iPhones, the internet, you know, but not from commercial radio because it's not available. And so much of the listening will come from other media other than radio.
4212 There are some people who will come over to this format from radio stations that are currently in existence but they are what we call P4 and P3 level listeners who tune a particular station but they don't spend much time listening to it, and like 90 percent of the stations' average minutes tuned come from the P1 and 2 listeners. So these folks will be, you know, marginal listeners coming over to this and people who are coming from other media.
4213 COMMISSIONER POIRIER: Yeah, but it's not only because you are there that they are going to listen to radio.
4214 So my question is to Matt and Alan: Do you listen to radio?
4215 MR. SCHICHTER: Yeah, sure I'll go first.
4216 No, not really. I mean I listen to the stations I used to work at but no one plays what I want to hear so why would I listen to it? CBC kind of does. So I'll go there the odd time.
4217 COMMISSIONER POIRIER: Yeah.
4218 MR. SCHICHTER: But I don't hear what I want. If I wanted to hear the same music over and over, yeah, I would go to the radio. I have friends that listen to the radio that dig Top 40, but that's not what I listen to.
4219 So, I guess, to answer your question simply, no, I don't, not anymore.
4220 COMMISSIONER POIRIER: Alan?
4221 MR. REAIN: Well, my answer is a little bit different from Matt.
4222 I do listen to radio and I guess I'm like a lot of the listeners in that I sort of listen to their one or two commercial stations but I'll check out -- that I check into every, you know, week or so just to see what's on there. Then, once I have listened to them for a couple of days and heard it enough then I go back to my own listening.
4223 And I do listen to a couple of CBC stations because they actually do make an effort to bring out some of this music that we are talking about here.
4224 COMMISSIONER POIRIER: M'hmm.
4225 MR. REAIN: Same experience with a lot of our fans where they sort of listen, you know, to their one or two stations that are common that they listen to a little bit but the common complaint is that they don't hear enough of what they want and they hear too much of the same.
4226 But I guess, to follow on to that, also I have spent a lot of time working in pretty blue-collar jobs in order to pay the bills to do this kind of thing and in those environments there is a radio on, you know, 8 to 10 hours a day. So people are always listening to radios there.
4227 COMMISSIONER POIRIER: Okay.
4228 MR. REAIN: And a lot of those people are, you know, whatever, 20-25 years old. So they are listening to radio and they want to hear what they want to hear.
4229 COMMISSIONER POIRIER: Thank you very much.
4230 Mr. Bingley, do you believe you would bring back a new audience to radio with your station, radio station?
4231 MR. BINGLEY: Yes, absolutely. I think you heard -- from what you heard there it's not that younger listeners and listeners -- and by the way, to Larry's point, this isn't an 18-24 station although it does have a significant number of listeners in that area.
4232 It's not that listeners are abandoning radio. It's just that they are listening to it less.
4233 It's like any other product. If it isn't delivering what you want you are not going to consume that product as much. So in this case we are going to be delivering a product they are after.
4234 In terms of can we get their attention, can we get them to tune in that's one of the beauties of this format. From a marketing standpoint if you wanted to launch a new hot AC for example, you would have to say, "Well, it's some music that's new, some that's old, some Madonna, some Katy Perry" really difficult to explain.
4235 In this case you put up a sign that says "Indie is here, Indie 88.1". Really simple.
4236 COMMISSIONER POIRIER: And my last question, Mr. Chair.
4237 I went on your website probably as all the Commissioners did. While I didn't support you because it would put me in a conflict --
4238 COMMISSIONER POIRIER: -- situation but I was wondering how many supporters. Have you got the name -- the number of supporters you got on the website?
4239 MR. BINGLEY: I think on the website -- what was the number, David?
4240 MR. PALMER: (Off microphone)
4241 COMMISSIONER POIRIER: And since when?
4242 MR. PALMER: Sorry, I wasn't prepared for the microphone there.
4243 COMMISSIONER POIRIER: Yeah.
4244 MR. PALMER: Since our start-up date the first week in March we have received, I think, somewhere around 200 letters and I believe we were in the realm of around 1,500 signatures online.
4245 COMMISSIONER POIRIER: Thank you very much.
4246 MR. PALMER: No problem.
4247 THE CHAIRPERSON: Any other questions -- no?
4248 Thank you. That completes our examination of you. Appreciate it.
4249 Do you want to break for lunch?
4250 THE SECRETARY: We will break for lunch. We will reconvene at two p.m.
4251 Is that all right? It's currently 12:30. It gives you an hour and a half.
4252 So two p.m.
--- Upon recessing at 1233
--- Upon resuming at 1406
4253 THE CHAIRPERSON: Madam Secretary, let's begin.
4254 THE SECRETARY: Thank you. We will now hear Item 10 on the Agenda which is an application by Family FM Inc. for a broadcasting licence to operate an English-language FM commercial radio programming undertaking in Toronto.
4255 Appearing for Family FM is Mr. Paul Fredericks. Please introduce your colleagues for the record, after which you will have 20 minutes.
4256 MR. FREDERICKS: Thank you.
4257 Mr. Chairman, Commissioners and CRTC staff members, my name is Paul Fredericks and I am President of Family FM. On behalf of the Family FM team I would like to thank the CRTC for the privilege of submitting our unique proposal for a brand new radio station to serve the people of Toronto.
4258 Before we begin our presentation I would like to introduce a team that is unparalleled in its expertise, a stellar group of Toronto broadcasters and media professionals with a wealth of experience and practical knowledge of this market. For your convenience we have included brief profiles of each member.
4259 Seated beside me on the panel we have on my left:
4260 - David Bray, one of Canada's most respected and frequently published radio and music authorities. He is our General Manager and Music Director;
4261 - Next we have Marc Charlebois, most recently the General Sales Manager for CHUM FM and the Flow in Toronto, acting as our General Sales Manager;
4262 - And further to the left we have Tony Tobias. He is a pioneer producer of interactive media and trans-media storytelling. He is our Online/Social Media Manager;
4263 - And on my right, Jane Hawtin, an award-winning journalist is our Program Director and Manager of News & Spoken Word Content;
4264 - We have Mr. Reza Ally, musician, producer and songwriter. He is our Director of Community Relations;
4265 - And finally we are very honoured to have Mr. Michael "Pinball" Clemons on our extreme right. He is the Vice-Chair of the Toronto Argonauts who is well known for his many charitable activities. He serves as our Community Relations Ambassador.
4266 In the back row our interveners are:
4267 - Bruce Davidsen from Tanglewood Group;
4268 - Marion Korn. She is our top Toronto mediator;
4269 - Ann Merriam from Wexford Collegiate School for the Arts.
4270 We will now begin our presentation.
4271 There is an old African proverb that says: "It takes a village to raise a child". I am part of a first generation immigrant family that came to Canada approximately 20 years ago.
4272 Coming to Toronto from Georgetown, Guyana as a teenager was one of the most trying times in my life. The physical and emotional challenges as I matured into a young man were compounded by my feelings of alienation from my entire community. These feelings, I believed, were due to my cultural and ethnic differences.
4273 As an avid reader and music lover, my comfort was found in the few treasured books I possessed, my collection of music favourites which I brought with me to Canada, and most importantly, the magic of listening to my radio. These simple things were the life lines of my support. They also provided me with the hope and encouragement I needed in my journey in becoming an adult in Canada.
4274 Today, I am proud to say I am successful businessman. I am the owner of Inspire Brands, a company that manages and operates a chain of more than 20 restaurants across Canada. I am happily married and I am the proud father of three young children.
4275 Furthermore, I love Toronto with all its diversity and multicultural communities.
4276 For a number of years I have been struggling with the notion of doing something that gives the same family and community connection I so craved when I first came here. The most important questions for me now are:
4277 How can we make Toronto a better place to live?
4278 How can we deliver songs with wholesome and uplifting messages, that is with no swearing or violence?
4279 Where can we find relevant spoken word that addresses the needs of families?
4280 The answer is the radio. The solution is: Family FM.
4281 Life is easier when you are part of a network of friends and family, acting as a community. Community begins at home.
4282 Our team is here to propose a station that will cater to Toronto's largest yet most underserved group, families. Our family-friendly format guarantees content suitable for all ages, starting with a playlist of positive songs and complemented by a schedule of enriched and relevant spoken word.
4283 With our programs parents can rest assured that their families will never be exposed to content or themes they wouldn't approve of.
4284 We will now give you some insight into Family FM starting with David Bray who will tell you more about our format and programming strategy.
4285 MR. BRAY: Thank you, Paul.
4286 Having lived and worked in the media and music business in Toronto for over 25 years, I have seen the need and I want to help deliver a truly innovative and unique radio format, a format that will stimulate radio tuning in Toronto. Family FM will be a station unlike anything previously heard in the marketplace.
4287 As a musician myself who has had the privilege to work with some of the top talent in the country, I can assure you that Family FM has a deep commitment to Canadian music and has adopted a unique approach to the music it will program. Instead of slavishly following any one musical genre, the emphasis is on thematic content.
4288 Family FM is committed to playing songs that touch on topics relevant and pressing to our target audience, positive messages that deal with issues currently faced by families in Toronto.
4289 In short, Family FM's playlist will be defined firstly by the lyrical content and secondarily by the music, regardless of genre. The result will be an unprecedented eclectic music mix. Folk, country, adult contemporary, R&B, blues, multicultural, et cetera, all will be embraced if the song's message speaks to family issues in a positive fashion. All will be tied together by the compelling nature of the themes, sometimes serious, sometimes light-hearted, never inappropriate and always making a positive contribution to the listener.
4290 With its unique approach to music, Family FM will make an important cultural difference to radio listeners in Toronto.
4291 Important artists normally lost in traditional radio will be given the voice that they have earned and richly deserved. Underplayed Canadian artists will find their rightful place side by side with other forms of contemporary music on the Family FM playlist.
4292 The cross-pollination of musical genres will serve to breed acceptance, understanding and enthusiasm for a diverse musical palette.
4293 We want to stress Family FM's commitment of 40 percent CanCon and a minimum of 15 percent emerging artists.
4294 Given Family FM's emphasis on lyrical themes, a number of the songs we play will be preceded by the artist relaying the stories behind the songs. Alternatively, we will feature reflections on songs by members of our audience, why the song touched them or became relevant to them. These segments will be sourced online and could prove to be a powerful social media strategy tool.
4295 In respect to the world's most multicultural urban centre, we will reach across cultural boundaries to create daily spotlight hours featuring music from various communities; South Asian, Chinese and Caribbean.
4296 Family FM will offer a much broader playlist than has ever been aired in the Toronto marketplace. As opposed to the conventional library of 200 to 600 songs we will have an active playlist of over -- listen to this -- 2,000 songs. That is unprecedented for a commercial station in this marketplace.
4297 The Family FM concept has been thoroughly researched. Working with BBM Analytics, Family FM undertook a survey of 1,000 Toronto listeners aged 25 plus. The results indicated that 44.5 percent of respondents would listen either "fairly often", "often", or "all the time" to a station such as Family FM. An additional 33.4 percent of respondents indicated that they "would listen occasionally". This amounts to a potential listenership of 77.9 percent of Torontonians aged 25 plus.
4298 Family FM will offer an approach currently unavailable in the market. We are confident that we can win back listeners who are currently disenchanted with the current programming in the GTA.
4299 We conservatively project that by the end of the first year of operations Family FM will secure a 1.8 percent share of hours tuned for persons 12 plus.
4300 Family FM, by its unique nature, will inspire an intense loyalty from its target group and will create the only safe haven for those demanding positive, uplifting content for their families.
4302 MS HAWTIN: As of June of this year I will have been a radio broadcaster in Toronto either full or part-time for 35 years. I was at Q107 when it went on the air and became the first female news director in Canada.
4303 A few years later at CFRB I became this country's first female talk show host.
4304 Since 2002 I have been the fill-in host on the CBC morning show in Toronto while producing television shows, running my four production companies and doing media training for the senior officers who deployed on the last three missions to Afghanistan.
4305 However, Family FM, if you give us the licence, will bring me back to radio fulltime.
4306 The Family FM concept is so simple; it's so enlightened and so necessary for this time in our history that I got chills when Paul told me about it and I said, "I'm in".
4307 As one of our supporters put it, the majority of Canadians perceive the world to be a good place, but they are over-served content that is negative and frightening. That has to change.
4308 Family FM's unique music mix that David has told you about will be blended with a schedule of spoken word that will be not only appropriate for the whole family to listen to but heartening.
4309 We will dedicate over 35 hours a week or 27.8 percent of our program schedule to newscasts and speciality programming. It will be made up of reliable, interesting, forward-thinking information and insight into the issues that families care most about, so parenting, health (traditional and alternative), education, relationships, finances, community, pets; any and all issues that impact family life in Toronto.
4310 Our research showed that close to 60 percent of the audience expressed positive interest in the kind of current affairs and talk programming that we are planning for Family FM. We will be providing over 13 hours a week.
4311 On the weekend we will feature radio shows especially for children, which have all but disappeared from the airwaves). The "Children's Hour" on Family FM will be similar to "rb kids" which I hosted for many years with my own children on CFRB. We will schedule three hours of songs and stories from the likes of Robert Munsch, Raffi, all the talented children's authors and musicians that we have in this country. It's going to be delightful for the whole family to listen to.
4312 It's our plan to end the week with laughter, family-friendly comedy from seven p.m. to midnight every Sunday night.
4313 And we expect Family FM to become a community, a destination for people who will come and share their joys on-air, tell us stories about how they are building their neighbourhoods, offer solutions to challenges and feel better, more hope-filled after listening for even a short time.
4315 MR. CHARLEBOIS: Toronto radio is expensive. I have first-hand knowledge of this based on my 30 years of radio sales experience and recently with CHUM FM.
4316 We will be an inclusive advertising partner versus exclusive as we will not be trying to serve the needs of a cluster but more importantly the needs of our customers.
4317 We have already identified local clients who are not currently radio advertisers and our research concluded that 44 percent of respondents indicated they would patronize this station's advertisers. We will bring new advertisers to radio.
4318 Our appeal will be the highly coveted adult 25-54 demographic with a female skew with a unique approach to multi-platform ideas that help our customers achieve a greater share of market versus our share of their ad budget.
4319 Think about Family FM populating our constituents on-air and digitally building a community around Agincourt that can be partnered with the Agincourt Business Improvement area.
4320 We have not underestimated the challenge of the Toronto market. Our business plan is conservative, built for long term success and sustainability. We have accounted for the limitations of the frequency, the competitiveness of Toronto and, of course, the clout of large national rep shops.
4321 Toronto radio is expensive. Family FM offers the market an effective, unique and affordable option. Tony will now elaborate on our cross-platform concepts that convincingly generate new market revenue.
4322 MR. TOBIAS: Thank you, Marc.
4323 I have been a producer, writer and copyright manager working across multiple entertaining platforms for more than three decades. For the last 20 years I have been immersed in producing interactive digital and social media. I have helped such brands as the Juno Awards and CHUM FM take their first online steps.
4324 For me Family FM is an example of radio daring to be different. That's why I joined the team.
4325 From a digital media perspective I look at radio as both content and platform. When I view Family-FM through a cross-platform and social media lens the world of radio explodes with possibilities.
4326 In today's mobile world radio is community, conversation and storytelling. It takes place everywhere. It can no longer be a one-way medium that is only listened to. Public engagement is critical; radio must now be experienced.
4327 Community must be allowed to join the conversation and engage in the story at any time and place. In social media language, "They are us and we are them."
4328 Radio of course is Family FM's primary platform. The community narrative will be told through the diverse programming noted by my colleague Jane. It will be enhanced with the addition of rich content -- rich media shared across other platforms.
4329 Family FM will build a web platform that will serve not simply as a promotional brochure, but as the mother ship of our community engagement. It will employ rich media including video to enhance community engagement and interactivity.
4330 Mobile applications will amplify the Family FM conversation on tablet and smartphone platforms.
4331 Social media will be strategically managed for continuity of message and guided by editorial policy.
4332 The Family FM web platform will feature the living community atlas. This atlas will be developed as an interactive map that will allow GTA families to virtually populate the map, proudly indicating their neighbourhoods and communities.
4333 As the Family FM community grows so will the density of the atlas. It will be alive with activity including audio-video profiles of families that have stories to tell, mini documentaries that will be experienced by clicking on coded points on the living community atlas. These profiles will capture the voices of the mosaic that is Toronto, the voices of Family FM.
4334 I really do believe that radio can fly again, enabled by internet technology with trans-media storytelling across multiple platforms and applying new approaches to portability.
4335 Family FM is new radio. It has spread its wings. It is now ready to fly.
4337 MS ALLY: Thank you, Tony.
4338 Family-FM is committed to giving back to the community.
4339 In order to complement this new and innovative radio format, our CCD package comprises of the following elements, payable over its first licence term:
4340 - $1,090,000 for Family Day Celebration in Toronto;
4341 - $1,290,000 for music education programs for Toronto's up and coming musicians.
4342 - $792,000 for the promotion and support of Canadian talent;
4343 - $1,860,000 for FACTOR, The Community Radio Fund of Canada and other initiatives.
4344 We are proud to say that our commitment of over $5 million for Canadian Content Development is the highest of any independent applicant before you. Thank you.
4346 MR. CLEMONS: Thank you very much.
4347 Einstein suggested that if you can kiss a pretty girl and drive a car safely then you are not focusing on the kiss enough.
4348 For me the kiss is family. Family is the foundation for our existence as human beings. Regardless of where you are born in the world, the very first thing you are born into is a family. For me, as a professional athlete and football coach, I stopped coaching after six consecutive years of being nominated for the Coach of the Year and finishing in first place that year in 2007. I stopped.
4349 Why? Not because I didn't love it; because my oldest daughter was beginning high school. I had told them three years before that it was going to be my last year. They didn't believe me. Things were going too well. I was already the second-winningest coach in Argonauts history, a team that's 100 years old. And they said, "Surely you're not going to stop".
4350 What they didn't understand is that I have a greater desire to be in the dads' hall of fame than the coaches' hall of fame. And for me, family is paramount. It is first.
4351 We pay a lot of lip service to it, but it is paramount. And even as a dedicated father with a daughter who now is going into university in September, my oldest daughter, I still wonder, am I doing this right.
4352 At home, when we watch television, the youngest daughter, the nine year old, controls the television and family television is on most of the time. When we get to the car, the older girls control the radio.
4353 I'm not totally comfortable with everything that they hear. However, as a dad I try to exercise a little bit of levity, give them the opportunity to choose for themselves and to be able to cipher.
4354 Yes, I ask questions, but I am not convinced that I'm always doing the right thing. What I am sure of, I don't have the experience that's on this Board, but one thing I am sure of as a player and coach is that what goes in will come out. It will manifest itself in some way.
4355 And so I am here today because of experience in our community, philanthropically and because of my love for family, understanding that the greatest things that represent us, whether it be the Olympics, Canada Day, cottage country. Yes, there's pride in being Canadian, but it's also because it's centred in family.
4356 FAMILY-FM is needed in Toronto. Thank you.
4357 MR. FREDERICKS: Thank you, Pinball.
4358 Mr. Chairman, Commissioners, we've assembled an outstanding team of experienced broadcasters and media professionals who are passionate about bringing this unique opportunity to Toronto, as you can hear.
4359 FAMILY-FM's programming will fill a void in the marketplace, a station that delivers uplifting music and relevant spoken word concerning the multitude of issues faced by families, a station that is local, vital and compelling. A station that embraces our multi-cultural mosaic and one that will give back to the community with over $5 million in CCD contributions.
4360 In summary, awarding the 88.1 frequency to FAMILY-FM will bring the following benefits to the community and the broadcast system.
4361 (1) New ownership and diversity. (2) A unique format providing a new listening experience. (3) Provide thorough ethnic and cultural diversity on a mainstream English-language station. (4) A solid business plan backed by an experienced team. (5) Forty (40) percent Can con, 15 percent emerging artists. And (6) over $5 million committed to Canadian content development.
4362 In closing, I would like to thank the over 50 organizations in the GTA and our community who stands with us. They, too, share our vision and passion.
4363 The research is clear. The time is now. FAMILY-FM is the future. FAMILY-FM is new radio.
4364 Thank you for your time, and we will now go to our intervenors.
4365 THE SECRETARY: Thank you very much. We'll now hear Tanglewood Group, Ms. Marion Korn, and the Wexford Collegiate School for the Arts.
4366 You're welcome to start your presentation. You have 10 minutes collectively.
4367 MR. DAVIDSEN: All right. I guess I'm starting because I'm the tallest.
4368 My name is Bruce Davidsen, and I have been in the entertainment business all my life. I have been producing concerts and music and CDs for families for the last 20 years. That's family music. Not kid music, family music. Stuff that's built for families. And that's why I'm here today to support the licence for FAMILY-FM.
4369 They're going to speak to my audience, the family. Mom, dad, children, boys and girls.
4370 You know, in the world of entertainment, it's fact Canadians are the best and control only one entertainment genre worldwide. It's not rock and roll, it's not country, it's not classical, it's not jazz and it certainly isn't girl singers, although Celine Dion thinks she's got her own category. It's family. Family music.
4371 It's family music run and produced by Canadian entertainers who sold millions and millions and millions of pieces of product. People like Raffi, Sharon, Lois & Bram, Fred Penner, Matt Seagruff, Glen Bennett, the list goes on and on.
4372 And let me tell you something, Anne Murray, our biggest icon, she who must be obeyed -- Anne Murray is -- what's her biggest-selling LP in the world, ever? It's not Snowbird and it's not May I Have This Dance for the Rest of My Life? It's an LP called "There's a Hippo in my Bathtub".
4373 And just as an aside, and it's not in my notes, but yesterday we lost one of the world's greatest, Maurice Sendak, and he wrote Little Bear and produced Little Bear. It's on television. It's in millions of albums we've sold. And all music for Little Bear is made about a mile and a half from this office.
4374 Today, if any of the folks I've just talked about tried to walk into a radio station anywhere in Canada, they wouldn't make it past the front desk with their music because everyone's going to say, "Family, no; forget it". And this is why I'm here today supporting FAMILY-FM.
4375 FAMILY-FM goes on air and there's a chance for our product to be played. And if we get it played, we've got exposure. And in our business, it's called you get it played, you get exposure, it's like getting a -- location, location, location. Ours is exposure, exposure, exposure.
4376 One of the most exciting things about this licence is that they're actually going to program scheduled music placement for children. There are two blocks, Saturday and Sunday, devoted to young audiences. That's young audiences ages zero to about 10 and their parents because it always comes down to the family listens together or one parent is in the room while it's on.
4377 Programming for FAMILY-FM is going to be built for integration and interaction.
4378 The programming is also going to be built for community involvement and community engagement. I can't stress that enough. That whole thing about community is so important.
4379 Programming will also deliver something that the current radio stations across this country have forgotten what is their most powerful commodity. FAMILY-FM is going to deliver theatre of the mind.
4380 FAMILY-FM deserves our support, it deserves your support. Give them the licence, please.
4381 MS KORN: Good afternoon, and thank you for this opportunity.
4382 My name is Marion Korn. I'm a collaborative family lawyer, a mediator, and I own a company called Mutual Solutions that is a rather unique company. It delivers services to couples, not individuals, who are contemplating separation and divorce.
4383 As well, I have a law degree in -- I have a Masters in Law specializing in dispute resolution, and I'm accredited as a family mediator in Ontario. I've been practising law for about 25 years, and for the last 12 years exclusively just helping families reach respectful resolutions.
4384 The reason that I really feel passionate and want to speak in support of this application is because Toronto needs this service, and it's not otherwise available.
4385 Toronto is a very big and a very complicated city, and families need a pathway that leads them to helpful information about the things that really matter to them, relationships, parenting, local resources, local activities, health and education, just to name a few.
4386 Professionally, I'm dedicated to helping these families stabilize during their separation, and they're really brave families. They're working hard to preserve good parenting.
4387 Being able to find resources, getting information about local activities for kids and families and feeling part of the community is part of normalizing.
4388 Good radio programming for children is long overdue. I have grandchildren, and they love music. They're introduced to great music through children's movies, and they also love the sound of the human voice and story-telling will be a wonderful component of family radio.
4389 As a parent and grandparent, I strongly support good listening, music suited to the whole family. We spend a lot of time in cars, at least I do, driving my two little grandchildren around, and the sound of the radio -- the sound of radio that positively celebrates family benefits everybody.
4390 This radio station is a fit with the work that I do. I'll be able to refer my clients to helpful programming that is about them and their kids and -- at the time that they need it most.
4391 And on a personal note, I'd like to say that I think music is multi-generational and I think it's inter-generational. I give the same music to my grandchildren as was given to me and I gave to my children, and I imagine that this radio station will be the place that we can all listen to that music together.
4392 Thank you.
4393 MS MERRIEM: Hello. Thank you again for letting me be here today because I am skipping school.
4394 My name is Anne Merriem, and I'm the artistic director of Wexford Collegiate School for the Arts and the Wexford Gleeks, who won the national championship for show choir for all of Canada in 2011. And we were definitely audience favourite in 2012.
4395 I bring up this right away because of what Glee has brought to my school, my community and the families therein.
4396 Because of the music of Glee, it pulls in many generations, for example, a mash-up, which is a mix of different music from different eras. We had a mash-up where we had an Adele song, which is 2012, and a song Marvin Gaye, which you all know, "You Heard It Through the Grapevine".
4397 What that did was it interested the parents, it interested the kids because it was in that simple example of a mash-up, you bring in different generations.
4398 With a family channel which brings in all music that is already out there but people don't understand that it's -- hey, what do you mean, you listen to it. Didn't -- "I Heard It Through the Grapevine", isn't that 2012? No, it's not. It's -- actually was from the late '60s, early '70s.
4399 What this has brought to our community is the parents are actively interested in everything we do now, so all of a sudden, the parents are very involved in what we're doing for Glee.
4400 We did the presentation at the Sony Centre. We had 3,000 people there, parents, kids, grandparents, children. All there why? Because they wanted to share the family experience.
4401 Everybody wants to talk to their kids about their music, but then what we're just finding out that it's become really relevant now with a family channel that would be gifting all of that. We have it on Glee on TV.
4402 This would give parents an opportunity to share music with their kids which goes right back to my conversation with my students earlier today.
4403 I borrowed an iPod to listen to what's on the air from one of my students, and this is very racy, but the first thing I heard was, "They're all the same, money hos".
4404 And I talked to my kids about that, how did they feel about that. How would their parents feel about that?
4405 And the reason I bring that up is because of the fragmentation now. It's so fragmented, and parents are loving sharing this Glee experience. I've never seen so much interest from my parents. They're giving me money to keep going because they're coming -- they're dancing.
4406 I've never -- I mean, it's really crazy at my school right now, but in the lobby at the Sony Centre when we came in after the competition, the whole lobby of all ages, old and young, sang the song, "I Hope You Had the Time of Your Life" with us.
4407 We -- as our Gleeks sang it on the stairs coming down, it was the most spontaneous movement of all. But everybody -- how come everybody knew that?
4408 There were grandparents and kids singing together. So to me, there is such a need. We want to come together, which brings me to the next place, which is why I started an adult ensemble.
4409 It starts at age 6, my adult ensemble, and goes to 60. I have mothers and daughters in there, and I don't want to embarrass her, but Jane was there with her daughter performing on stage in Grease.
4410 Why? Because they want to come together.
4411 We did a show just recently, I had a father and son, who had a very acrimonious relationship, sing "Try to Remember" from The Fantastics. The son is very hip and happening, but for whatever reason, they wanted to come together because we want to come together.
4412 Before dinner, we want to come together. Where did I hear that song? That's from my generation.
4413 Your song? No, that's from my generation. That was from the movie Moulin Rouge. No, that was actually Elton John who wrote that.
4414 It's all about communicating and getting excited about music that they don't even know is actually of us, so we become relevant again. That's what's exciting.
4415 I'm very relevant right now. I can't believe how relevant I've become. Only because we're so lonely. We just want to be with our kids and family, but you -- our music, by the way, was very cool in the '60s, I might add, and it's so much re-runs and re-mashes and -- but that's what a family channel will bring.
4416 And I personally would much rather have my kids listen to that and my kids at school than what I listened to this morning, which was really depressing.
4417 So I want to uplift. We have to shine lights. He's right about the kiss. We've got to shine on our joy and our life and our light.
4418 So my pack ensemble has become successful only because I'm bridging a gap. There is a huge gap. We don't need anything any more. We need to bring back the families. We do. It's so important.
4419 So then I move on to my next piece, which again will be covered by family channel. Rent, the musical. And I'm sure you're all familiar with the themes. Very difficult.
4420 I had my videographer, who is a man in his 40s, with his son, who was -- who was gay, and the father was having a very difficult time with it. And through the discussion of this and doing the play and the father getting involved with the son, the son came crying to me the night after the show and he said, "I finally get it. I finally get what you were trying to teach me".
4421 Not the kid. The kid got it. The father didn't get it. That because of that musical, because of the family, because he was videoing it -- he had no idea of the content. He actually was going to opt out and not video it because he was so against it. He was very religious.
4422 He's still working for me and his son is working on this new show, Hairspray. You're all invited at the end of May at my school.
4423 The mothers are coming in to do the daughters' hair. This is how much we need to come together as family, and this is what this station will allow.
4424 So thank you so much for giving them the licence.
4425 THE CHAIRPERSON: Thank you all very much for your presentations.
4426 I'm going to ask Commissioner Poirier to lead the questioning.
4427 COMMISSIONER POIRIER: Well, I feel the hearing is over now. You are all wonderful story tellers, let me tell you.
4428 And you know, during this hearing, we've heard many creative, different formats, and yours is the family format, but we heard about the indie format, the emerging genre format and many others. And it's always difficult for us to understand what you really mean describing your format.
4429 I could read you talk about mostly folk singing, country singing, adult contemporary, maybe blues, and you say you're going to have a 2,000 song list long, so I wonder because it seems to be very eclectic music with a positive message, how are you going to determine what song is going to be on the list?
4430 Is it the lyric that will count, the music, what?
4431 MR. BRAY: Yes. Thanks very much for the question.
4432 We're very excited about this. I think it's unprecedented in Canada.
4433 To perhaps repeat myself, the music, the playlist will feature songs with positive messages that touch on topics relevant and pressing to our audience. They will firstly be defined by lyrical content, and secondarily by the music.
4434 This leads to eclecticism if you look at it from a music perspective, but certainly the key is on the -- the key is the message.
4435 For example, if you were to listen to -- talk about a traditional listener and say you listen to, say, Q107 or whatever over the last hour, "What were the songs about?" And most people go, "I don't know".
4436 The key here is that the content is positive, it's uplifting and we're -- from everything from "Dance With My Father", if you're familiar with a song like that or -- but songs that are touching, that are moving, that are uplifting. That will determine their place on the playlist.
4437 COMMISSIONER POIRIER: I know in your schedule you have a block reserved for hot hits between 7:00 and 9:00 p.m.
4438 Tell me how you're going to eliminate, exclude hot hits or keep them on your list.
4439 MR. BRAY: Well, again, we will talk about things that are on the pop charts, but only that material which fits our criteria in terms of suitability for families --
4440 COMMISSIONER POIRIER: Tell us more about your criteria, yeah.
4441 MR. BRAY: The criteria is largely the suitability for family audiences so, for example, clearly we're not going to do anything that is disturbing in terms of language, subject matter, et cetera, et cetera.
4442 Conversely, songs that are positive reinforcement, let's just say songs about fathers and sons, mothers and daughters, songs about positive family relationships. And there are many, many, many such songs. Those are the things that we will focus on.
4443 So for example, we would stay away from a Rihanna cut that was perhaps overtly sexual even within the context of the hot hits. We would -- but conversely, we would talk about Luther Vandross doing songs -- rather, "Dance With My Father", if you're familiar with that cut. But there are many such things. That's the key, the hot hits that suit our format.
4444 COMMISSIONER POIRIER: If I were to launch a station radio like yours, I would determine my values first.
4445 What are the values, the core values of your business case here relating to families?
4446 MR. FREDERICKS: Well, first of all, I think it comes back to our theme and our message that family is basically -- we want to be able to impart positive, uplifting and a message that we believe would be able to resonate in all our next generation as a legacy that we leave behind.
4447 And based on that format, we will select songs that are relevant to that.
4448 COMMISSIONER POIRIER: Okay. To me, values are honesty, things like that --
4449 MR. FREDERICKS: Integrity.
4450 COMMISSIONER POIRIER: -- so I was wondering if you had a discussion about the value you want to project in your radio station because, in a way, I'm not saying it's similar, but there are maybe some kind of -- there is a direction in which you want to go that could be similar to religious stations.
4451 It's not a religious station.
4452 MR. FREDERICKS: That is correct; it's not a religious station.
4453 COMMISSIONER POIRIER: Anyone who wants to add on the values that you will try to promote on your radio station?
4454 MS HAWTIN: Well, I'm not sure that it's correctly placed to say that specific values that we would be promoting. I've had long conversations with Paul, and this is an idea that he started working on a long, long time ago because of the concerns that he felt for the music and the kind of information that his children were being exposed to that he felt was negatively impacting on them, and them as a family.
4455 So I think that certainly we have a philosophy and a mandate which I think each of us has tried to articulate in our particular areas that goes to the idea that this would be non-stressful to listen to. I think that that's one of the first things in terms of the spoken word.
4456 We're certainly getting constant feedback that people are upset with what they're hearing in the newscasts, the detail, the graphic nature of what they're being exposed to as a family. And that's obviously a particular area of concern for me because there's a lot who are now saying, "I'm not listening any more". They're starting to opt out of listening to news because they do find it too stressful.
4457 And that's a threat to democracy. If people stop listening because they are finding it so distressing, that's not good for any of us.
4458 So I think that what we're looking at is coming back to presenting the kinds of music and the kinds of information that people want in their lives. And the idea is that they would feel better after listening to this station, either listening to the music or listening to the spoken word content.
4459 COMMISSIONER POIRIER: Okay. But I'm trying -- still trying to find a way how are you going to keep one song and exclude another one.
4460 MS HAWTIN: Based on the lyrics.
4461 COMMISSIONER POIRIER: Only.
4462 MS HAWTIN: Basically.
4463 MR. FREDERICKS: That's correct.
4464 COMMISSIONER POIRIER: Even though people don't listen to lyric. You told us they listen mostly to music.
4465 MR. BRAY: Oh no, no, no, no. I said there has been not a sufficient emphasis on the lyric. That's quite incorrect to say that people don't entertain the importance of the lyrics. I can cite many such songs, talk about the country genre, talk about the folk genre, talk about many such genres. No, not at all.
4466 I think we are going to bring the lyric and the content to the forefront. That isn't to say the music is irrelevant, not at all, it's part of the package, but most certainly we are going to focus on the lyric.
4467 As I mentioned, in some instances we are going to have the artist talk about the story behind the song. We are going to have members of our audience working with my colleague Tony Tobias write in, email in, send in videos, audio clips about why the song means something to them. This will give an added emphasis to the lyrical content, more so than has ever been done in Canada.
4468 COMMISSIONER POIRIER: And you are the one going to do that? Who is going to do that in the station?
4469 MR. BRAY: Well that, yes, I would be the music director, but of course we will have a team working on it.
4470 COMMISSIONER POIRIER: Okay. Are there any other places in the world where they launched a radio station that is similar to the one you are planning to launch here in Toronto?
4471 MS HAWTIN: We have been looking to find one that's similar. The only similarity that I can cite is that I spent a lot of time in Europe and I know that several of the French stations -- Chérie FM certainly has the kind of eclectic mix of music that we are talking about, but it certainly isn't always positive. It's more hit-related, but you do hear the same kind of multi-mix of genres going from country to jazz to folk to rock, that way.
4472 We haven't found anything that is similar to what we are proposing in terms of the kind of experience that you would have listening to this music.
4473 MR. BRAY: The emphasis on lyrics is unprecedented in North America at this time.
4474 COMMISSIONER POIRIER: Okay. So it's innovative.
4475 There are, I guess, about 1.4 million families in the Greater Toronto Area and you say today that almost 78 percent of Torontonians aged 25-plus would be interested -- would listen occasionally.
4476 So how many families does that represent? Do you have an idea? Out of the 1.4 million families, how many would you reach?
4477 MR. BRAY: I will speak to that.
4478 Yes, that was one of the statistics. By the way, we did a couple of things, if I can -- because you are making reference to the research.
4479 Yes, 77.9 percent of Torontonians have expressed their very positive interest in the family concept. In addition, we measured the eclecticism of the music base. We tested the respondents with the eclectic artist base, and that in fact came out with an even more positive, 83 percent of listeners responded that they would listen to the station.
4480 So in terms of the specifics as far as families, well, that would amount to of course approximately 83 percent.
4481 But I have to go back into the research, which is quite detailed, and do some analysis and I would be very happy to file that in a few days, go back and say of those 83 of respondents which of those are in families.
4482 But lastly, I would like to stress that family is not simply the traditional family. We are all inclusive. We embrace all colours, creeds, cultures and backgrounds, and to us family is community. I never want to forget that. So we are all part of one -- a large family and we are going to attempt to reinforce that.
4483 OMMISSIONER POIRIER: Thank you.
4484 Let's talk about your CCD contribution. I wonder, does the Family Day already exist in Toronto?
4485 MR. ALLY: Yes. The Family Day exists in Toronto, but this is a special event that we would be doing on Family Day.
4486 COMMISSIONER POIRIER: Okay. And you intend to give them $360,000 over seven years?
4487 MR. ALLY: Yes, that is correct.
4488 COMMISSIONER POIRIER: That's correct, okay.
4489 Could you please describe the specific duties of the coordinator, because you proposed a CCD coordinator? What would that person do?
4490 MR. ALLY: The coordinator would actually be looking after the whole event, ensuring that all the musicians are Canadians and planning the event. As soon as the year is finished he or she is going to start planning the event all over again. So the coordinator is basically responsible for the entire event.
4491 COMMISSIONER POIRIER: No other job in the radio station?
4492 MR. ALLY: No.
4493 COMMISSIONER POIRIER: Okay. If ever we found that this initiative or the funding of the coordinator wouldn't suit our regulation, would you be willing to devote it to some other organization?
4494 MR. ALLY: We would be happy to do so.
4495 COMMISSIONER POIRIER: Okay. What is the final amount of your CCD, because it was mixed up in the written document we got?
4496 MR. ALLY: The total final amount is $5,030,000.
4497 COMMISSIONER POIRIER: And $30,000?
4498 MR. ALLY: Yes. $32,000, sorry.
4499 COMMISSIONER POIRIER: You decided to allocate part of the money for a discretionary envelope. What is that? What would you do with that money allocated in the discretionary envelope?
4500 MR. ALLY: David...?
4501 MR. BRAY: Sure, I will address that.
4502 That's a discretionary amount of $100,000 annually to assist with the planning and organization of the event to allow the CCD coordinator the flexibility to select venues, performers and other organizations who can contribute to this exciting event. In our application we have discussed the individual contributions of each organization and participant.
4503 COMMISSIONER POIRIER: Yes. So you can certify that this amount of money will be allocated only to eligible initiatives?
4504 MR. BRAY: Incontrovertibly.
4505 COMMISSIONER POIRIER: Thank you very much.
4506 Let's talk about the financial now.
4507 You target maybe 1.8 to 2 shares of the Toronto market and it seems reasonable your PBIT margin will be positive probably after four years, that's what you expect. And I think you will invest personal money in this. You will have a loan. You will, though, be a standalone station in the market and it's the first time ever you will be managing a radio station.
4508 So I wonder, do you really have the capacity to absorb bigger losses than these expected in your business plan, because it could happen?
4509 MR. FREDERICKS: Thank you. You are correct, yes. It could happen in any business, but we are prepared for that.
4510 COMMISSIONER POIRIER: Tell us how.
4511 MR. FREDERICKS: Well, first of all, I do have other businesses as well that I could leverage. I have assets that I could leverage and also use towards subsidizing something of that nature in the third or the fourth year if that happens.
4512 COMMISSIONER POIRIER: So the money would come from loans?
4513 MR. FREDERICKS: It would come from loans. It would come from revenue streams from my other business that I currently operate as well.
4514 COMMISSIONER POIRIER: Okay. And why have you targeted the Toronto market? It's your first radio station and we need to be really reassured that you can manage that and that you can go through all the difficulties, because it is going to be a very competitive market. Even though the format seems interesting it doesn't mean that it will -- the money will flow in.
4515 MR. FREDERICKS: A very good question, thank you.
4516 First of all, I'm not a radio broadcaster, I'm not a Bay Street trader or lawyer, and I am certainly not a football star.
4517 MR. FREDERICKS: I'm just a regular guy. I'm just a father with a family of three beautiful children, a beautiful wife, a dog and a cat and, you know what, it's always the same.
4518 I believe I am what -- I represent Toronto in everything in every shape and form, because in Toronto we all share the same issues in our family and one of the reasons, to be very frank, why we are doing this, this actually is not a way of backfilling an empty licence, we actually were working in this from before.
4519 So this is something that we have been talking about, myself and a few of my colleagues here for more than two years. I would say. The opportunity presented itself as a frequency becoming available and we decided this would be the best way for us to share our vision. Our vision basically is to impact families.
4520 The fact is Toronto is my hometown. As I mentioned, I'm a father. You know, I have children that I believe in that would benefit from this as well. So as a result of that we have done a lot of research. We did some ad hoc research, we did some formal research, and the evidence is very clear, family has been underserved in Toronto.
4521 So basically I have decided that I will hire, as I have done -- we have a group of one of the best teams that you can find here in Toronto. They are all very experienced, and most of all they understand the Toronto market. So we have the best team that we can work with, and from the research that we have done it very clear this is what's needed for Toronto. Thank you.
4522 COMMISSIONER POIRIER: Yes, but what will happen if the money you have to put in the station -- if you lose money more than two years? Do you have such deep pockets you can survive five, six years losing money in that station?
4523 MR. FREDERICKS: I certainly hope that isn't the case. Well, like any business, in due time, you know, we have to look at the bottom line. We look at ways we can, you know, use synergies in our business from, you know, basically reallocating staffing from our different business to subsidize that. Also, if the business is losing money we will also look at the possibility of potential investors probably down the road as well.
4524 COMMISSIONER POIRIER: Okay.
4525 MR. BRAY: Perhaps I could add to that?
4526 COMMISSIONER POIRIER: Yes.
4527 MR. BRAY: I want to say that in terms of our projections you will note that we have been very conservative, both in terms of our revenue projections, our expenses are very realistic.
4528 So yes, we do see that we will lose money in the first three years, break even in the fourth. We have included in the budget -- we have accounted for the shortfall. We have also plans for scalability of expenses if need be. Lastly, if need be we can register with you a letter to show that we do have the financing in place to cover the shortfall.
4529 COMMISSIONER POIRIER: Well, we got some letters and I think the file is okay with that. We don't need any other. Thank you.
4530 I was surprised to see that you expect from your advertising revenue 85 percent to come from local revenue. Usually in the Toronto market it's a little bit smaller than that. It's around 70 percent if we look at the CARB Report. So why 85 percent of revenues from local advertising?
4531 MR. CHARLEBOIS: That's a great question and having spent a lot of time in this marketplace and out seeing a number of clients, there is so much homogeneity in the marketplace I can't tell you how many times I would be in front of a client that would say to me, "Tell me what the difference is between these five Toronto radio stations." And I was getting to the point, because everybody was playing so much of the same music, that I was having difficulty and struggling with what made us different.
4532 As we have learned now with the way the ratings are done in PPM and an even higher degree of duplication than we realized, our belief is that there are a lot of businesses in Toronto that, one, can't afford the Toronto radio market in terms of the expense level, have turned to other media vehicles to market, three, don't want to be next to sexually suggestive lyrics and songs and will, with open arms, love to be in the environment of family FM.
4533 So it is our belief that our opportunity is going to be with a lot of direct businesses and a lot of more direct local type ad agencies.
4534 COMMISSIONER POIRIER: Yes. And you have tested all those ideas, it's not only a belief?
4535 MR. CHARLEBOIS: Well, I can't sit here and say to you that I have gone out and chatted with a bunch of people. I would like to suggest that based on my knowledge of the marketplace and having spent some time at a great brand like CHUM-FM, I certainly understand the dynamics of how this market operates.
4536 MR. BRAY: And I would like to include that he was the top billing sales manager in Canada for the last number of years. If anyone knows the answer, it's going to be Marc Charlebois.
4537 COMMISSIONER POIRIER: Yes, okay.
4538 But generally when we ask people would you put your money in a radio station, generally they say yes, but when it comes the time to really give the money they don't all -- they are not always there to support the radio station and I'm sure you know that, too.
4539 MR. CHARLEBOIS: I have learned over 30 years how often the word "no" has come up and that then becomes part of the challenge and the opportunity.
4540 COMMISSIONER POIRIER: Yes.
4541 MR. CHARLEBOIS: When Paul first chatted with me about this and I thought about what the angle would be and what the story would be, and the fact that our belief is that our audience will be more exclusive to Family FM and we won't share a lot of audience with a lot of the other radio stations, I quickly said I like this opportunity.
4542 COMMISSIONER POIRIER: Okay. When I look also at the schedule I see that you have maybe around 18 hours of ethnic music. What percentage of your advertising revenues could be drawn from the other ethnic stations in the Toronto market?
4543 MR. CHARLEBOIS: We really haven't sat down and looked at how we would appropriate from them. I'm sure there may be some impact, but all of our music and all of our programming, especially around those areas you mentioned, will be environment-based.
4544 I think that some of these communities will welcome the opportunity that they now have more than just one option of where they can market their services. I think we chatted a little bit earlier about something like that, where, you know, it starts to grow the pie.
4545 So they may have just done -- let's say in Toronto maybe they were on a station like CHIN. They will now have a second option that they can have a more effective radio campaign in the marketplace.
4546 MR. BRAY: And please note that we have filed with you a projected weekly tuning and where our tuning will be drawn from. You will find that actually a very low percentage share is drawn from any individual station.
4547 COMMISSIONER POIRIER: Children when they wake up, the ones I know, they turn on the TV, watch TV or now play with their video or whatever device they have. Why would they tune into radio now if ever you get the licence?
4549 MS HAWTIN: I can take it first if you like.
4550 COMMISSIONER POIRIER: Yes, take it.
4551 MS HAWTIN: I think that when you are talking about -- Bruce, do you want to take it?
4552 MR. DAVIDSEN: You have already started.
4553 MS HAWTIN: All right.
4554 So I think that parents are quite anxious to have their children away from all the screens that they are engaged with and I think that if there was something on radio for children, I think parents would love to be able to listen to that with their kids because the idea of having three hours on Saturday morning and Sunday morning, it lets you do other activities, it lets you get breakfast ready.
4555 When people are doing radio it's a much -- we all know it's a warmer medium than television or any kind of screen. You can kind of talk while it's going on, you can make the breakfast, you can make the meals, you can even take it with you outside if you're gardening or throwing a ball or whatever.
4556 I think it has really been missed by parents and I think they are going to love it. I think they are going to love listening to it and I think their kids are going to love it, too.
4557 MR. DAVIDSEN: One of the things that we get in our business -- excuse me, Jane, for just talking over you.
4558 One of the things we get in our business is a huge request from people who say we need more CDs, we need more stuff because we want to play stuff in the house. We want something to do -- for the kids to do. We don't want them to watch television. The biggest problem we have is having kids getting up, as you just said, getting up and go sit and stare at a television set. It does nothing for them.
4559 If you are listening to something, as I said before, it's theatre of the mind. Everything you do -- and we all grew up in Canada with an amazing plethora of great family programming. I don't care if you're thinking -- I mean we had "Chez Hélène." I grew up in Québec and I had "Chez Hélène" and I had all kinds of wonderful programming and I had the English programming. I had American programming, "Big Giant Sparky."
4560 I mean we had all kinds of family programming. It was built there and you got involved with it and it was all in your head. It was all in your head. It was wonderful. And we have --
4561 COMMISSIONER POIRIER: But your competition is television, okay. Your competition is television.
4562 MR. DAVIDSEN: Right. And if there's nobody there to compete with, then television wins. If you give people the opportunity, they're going to move. They're going to move a lot of them there. Because we have -- I know for a fact there are lots of parents who are saying what can we do with our kids and get them away from the damn television set, especially in the morning. And you know that from watching what's been going on. Pinball will support me, I know.
4563 MR. CLEMONS: Yes. You can't get dressed and watch television. That doesn't work. You can do that with the radio.
4564 COMMISSIONER POIRIER: It depends where the TV is. It all depends where it is.
4565 MR. CLEMONS: No, it doesn't matter at all. Because I have three kids and if the television is on they don't get dressed.
4566 COMMISSIONER POIRIER: Yes. While you are there, Mr. Pinball -- I will call you Mr. Pinball --
4567 MR. CLEMONS: Yes.
4568 COMMISSIONER POIRIER: It's easier for me. Do you really think your older daughter would choose Family FM instead of choosing whatever hot radio station her other friends want to listen to?
4569 MR. CLEMONS: No, because it's not a part of her culture, right. So the question is, what would happen if she would have grown up with the radio station, if it would have been part of her DNA?
4570 We have our girls now, they watch family television. Our daughter, our nine-year-old controls the media in our house and the family is watching reruns. Didn't I see this like three days ago, Reilly? Not three weeks ago but like three days ago, but it's still on there. Why? Because it is part of them. They are okay with it. They listen to it as part of who they are. And I'm not suggesting that any family is going to listen to it all the time.
4571 I listen to several stations. You know, I go over to 680 News and I get the traffic and see what's going on. Then I click over to another station and another station. And so I'm not suggesting that it's going to be predominant for anybody, but now, at this point, my family never listens to family radio, period, in the car. There is none.
4572 COMMISSIONER POIRIER: Okay.
4573 Mr. Davidsen, where is the kind of music you are involved in and you like? Where is it presented? Where is it played presently?
4574 MR. DAVIDSEN: On stage, in theatres, on television as background music for "Little Bear" or any of those shows. No radio. Zero.
4575 COMMISSIONER POIRIER: Zero.
4576 MR. DAVIDSEN: You know, I mean -- no, no, no.
4577 COMMISSIONER POIRIER: Not even CBC?
4578 MR. DAVIDSEN: Excuse me. Excuse me.
4579 COMMISSIONER POIRIER: Not even CBC?
4580 MR. DAVIDSEN: Excuse me. There's a song -- Leslie Feist, who just won the JUNO awards and everybody loves her and knows her and she got to be a big star, and then one day the nasty secret came out. "1234," her biggest song, they saw her singing it with Miss Piggy and Grover on "Sesame Street" and they all went, oh my God, it's a kid's song.
4581 But you know what? There are lots of those kinds of songs. There is lots of that music out there.
4582 I always talk about the fact that -- you talked about children's music. Children's music is sung by a fat lady who plays the guitar and sings songs about brushing your teeth, self-esteem or saving the whales and it's always condescending.
4583 COMMISSIONER POIRIER: Okay.
4584 MR. DAVIDSEN: Family music written by the pros is not. And family music written by the pros can compete like Leslie Feist, and Ann has -- I mean there are all kinds of songs, I won't waste your time. But we need something like this just to get it out there and to get it exposed.
4585 COMMISSIONER POIRIER: Madam Korn, you said good radio programming for children is long overdue. Do you think radio is the media of the future for the children?
4586 MS KORN: I think that what I see children bringing away from the other medium, which is videos on television or videos on small screens, is often the music.
4587 So when I watch young children, they don't have anything else that they can actually take away from that experience, and they repeat the music and they sing the music and they want to hear the music. And at the end of the day I know my own granddaughter wants to go to sleep listening to the music that she's familiar with from the movies that she has seen.
4588 So I think that there is a transition there and I think that there are -- I think that there is a huge opportunity to reacquaint children with something that they love and that they are taking away in any event from the other medium.
4589 COMMISSIONER POIRIER: Madam Merriem, do you really believe that kids of all ages would be tempted if they were alone in the house and they would have the choice to listen to whatever they want, they would choose Family FM?
4590 MS MERRIEM: Yes, and they wouldn't tell anybody.
4591 MS MERRIEM: But they do, because the kids -- what is great is that children, teenagers especially, don't want to be seen to in a more -- in the beauty of who they really are. They want to be what I told you about.
4592 When I told those kids about what I listen to today and that we talked about what they listen to, how is it that -- I mean I hang around with a lot of kids from many ages, but they all -- when we all come together they know songs that are so innocent and so sweet, but they never get to share that.
4593 I really -- like your song is a perfect example, an Elton John song. It translates through the ages and everybody sings it. I had a whole lobby at the Sony Centre and there were 3,000 people there. There were at least 400 or 500 in the lobby singing "I Hope You Had the Time of Your Life."
4594 How uplifting is that and how come everybody knew the lyrics? In fact, I didn't even know the lyrics as well as a lot of the parents, grandparents and kids. Something magical. It's Pete Seeger all over again. There is a resurrection of the '60s in a certain way. I completely know it can work.
4595 COMMISSIONER POIRIER: Thank you very much.
4596 Maybe my last question, Mr. Chair.
4597 You brought no sample of the kind of music or storytelling we would have on your radio? You brought nothing?
4598 MR. BRAY: We did register a playlist and that's part of our application.
4599 COMMISSIONER POIRIER: Okay. Thank you very much.
4600 I'm finished, Mr. Chair.
4601 THE CHAIRPERSON: Thank you. Any other questions from the panel?
4602 Commissioner Patrone...?
4603 COMMISSIONER PATRONE: I just have one.
4604 Thank you for your presentation this afternoon.
4605 It is a question about your news content because, as you all know, especially you, Ms Hawtin, news is not always G-rated.
4606 Do you sugarcoat reports -- I'm not trying to be glib, but do you sugarcoat reports of violence, death, natural disasters, that are an unfortunate part of the normal new cycle for the audience that you are going to have listening to you?
4607 MS HAWTIN: Let me answer it in two ways. We are not talking about censorship, so we would never be saying that we would not cover a story that's in the news. All stories would be covered.
4608 I think that they will be covered carefully if it is a story that is graphic by nature, but I don't think you can eliminate any story because even if it is something about a pedophile or a rapist, that may be information that those families need to protect themselves if it is something in their neighbourhoods.
4609 I think that everybody on every radio station makes choices based on their mandate about what is appropriate to be in the newscast.
4610 I remember when I was News Director at Q107 we were tearing our hair out because the morning newscaster led with the price of gold every morning as the lead story and nobody listening to Q107 cared about the price of gold and the fact that it had gone up.
4611 So it's understanding the mandate and presenting it in such a way that you are providing people with the information that they need without excluding information that they do need.
4612 COMMISSIONER PATRONE: Because of course you can't bubblewrap your audience.
4613 MS HAWTIN: No. No, you can't, but you don't have to have the graphic detail. I think that we all -- a lot of people are very uncomfortable with some of the coverage of the recent trial that's going on in London, Ontario, because of the detail that we were provided about exactly how the rape was performed and what was done to the little girl who was the victim and I think people find that distressing and also unnecessary.
4614 Depending on the length of the newscast, you will see our newscasts are fairly short.
4615 COMMISSIONER PATRONE: Well, I guess that's one way to do it. But I'm a former journalist myself and I can't imagine telling stories in a way that respects the audience and tells the truth and yet still tries to frame it in such a way that sanitizes it -- and I don't know if that is the correct word -- that is really cognizant of the fact that you have a family audience tuning in. That would be a challenge, I guess.
4616 MS HAWTIN: I don't think it would be that much of a challenge, I really don't. It's all in the writing, it's all in the presentation, and if you know the audience that you are talking to -- and these newscasts will not be directed at children, you know.
4617 We're talking about -- we have spent a lot of time talking about our children's programming, which is basically just Saturday on Sunday morning, but we are talking to a family audience. And the reason this is called Family FM is because people understand what family is.
4618 So there may be challenges in covering certain stories from time to time, but I don't think it will be very difficult.
4619 COMMISSIONER PATRONE: Okay. Thank you very much.
4620 MS HAWTIN: Okay.
4621 THE CHAIRPERSON: Thank you. I think that concludes our questioning. Thank you very much for appearing.
4622 Madam Secretary, we will take a break.
4623 THE SECRETARY: Yes, 15 minutes, Mr. Chairman.
--- Upon recessing at 1518
--- Upon resuming at 1541
4624 THE SECRETARY: I'm sorry, I had a problem with my microphone.
4625 We are ready now to hear item 11 on the Agenda, which is an application by 2308739 Ontario Inc. for a broadcasting licence to operate an English-language commercial specialty FM radio programming undertaking in Toronto.
4626 Mr. Cal Millar is leading the panel. Mr. Millar, please introduce your colleagues for the record and you have 20 minutes.
4627 THE SECRETARY: The presenter's microphone doesn't work.
4628 MR. MILLAR: Good afternoon. We're good. Okay, let's start again.
4629 Good afternoon, Mr. Chairman, Mr. Vice-Chairman, Commissioners and Commission staff. My name is Cal Millar. I am President of Channel Zero.
4630 To my right is Bryan Woodruff, our General Manager of Biz88.
4631 To his right is Chris Fuoco, Vice-President, Sales and Marketing, for Channel Zero.
4632 To my left is Donna Skelly, Journalist and News Anchor with CHCH and Channel Zero.
4633 Behind me, starting on my far right, is Mike Katrycz, Vice-President News, for Channel Zero.
4634 Beside Mike is Marty Tully, Director of Sales for Biz88.
4635 Beside him is Joel Fortune, who you are familiar with, our regulatory advisor.
4636 Finally, on the far right is John Handel, our Senior Research Manager.
4637 We are here today to talk about money or, more to the point, how we talk about money.
4638 MS SKELLY: "In midday trading the TSX is down 42 points to 12,465. New York is off by 26 points. The dollar is trading at 101.4 U.S. and oil is $104 a barrel..."
4639 MR. MILLAR: We hear that kind of information every day, but how many of us understand what those numbers really mean?
4640 When was the last time you made an important decision based on a market update heard on your radio station? Probably never.
4641 Have you ever committed to a mortgage rate based on a brief radio business update stuffed between news, sports and the weather? Probably not.
4642 The business information Canadians get from radio today is so limited and so sporadic it is of little value.
4643 Biz88 will put real meaning into business reporting and provide useful, consistent and valuable information to Torontonians.
4644 Our programming will have broad appeal. It is a format that crosses cultures. It reaches out to all communities and virtually all demographic categories. It will satisfy a pent-up demand.
4645 And it's critical -- critical to the lives of millions of people. Household debt in Canada is at historically high levels. In fact, our personal debt-to-income ratio has surpassed that of the United States and Britain, with the Bank of Canada citing it as the largest threat to our economy. Our federal Finance Minister is so concerned that he created a task force on financial literacy.
4646 We have a short video to introduce you to Biz88.
4647 Please roll tape.
--- Video presentation
4648 MR. MILLAR: As you just saw, Biz88 is not just about Bay Street, it's about making Bay Street understood on Main Street.
4649 Canadian consumers are discovering the sobering reality that they must take control of their own finances to secure their future and they need information that is both accessible and understandable. There is a clear need.
4650 We commissioned a survey by Harris Decima research. Eighty-six percent of respondents said that they had investments, including pension and retirement savings funds. This is not surprising. What was disturbing was that 81 percent felt that they don't have an understanding of financial matters.
4651 The current radio landscape is not addressing this problem. Radio gives us more information about NHL trades than personal finance and business. We know much more about the Kardashians and Lindsay Lohan than we know about Toronto's thriving business community.
4652 We have found that in the current Toronto radio market, on existing news and talk stations, less than 4 percent of information presented on a given weekday is business news.
4653 Yet, in Toronto, business matters a lot, and business and financial news and information is important to radio listeners.
4654 Respondents to our Harris Decima survey favoured business news over sports when tuning to radio for news and information. Sixty percent of those surveyed said that business news was important to them.
4655 In comparison, only 41 percent of respondents said that sports was important. Yet, despite the smaller overall interest, Toronto has two sports radio stations and no business news station.
4656 MS SKELLY: There is ample evidence of demand for the programming format that Biz88 will offer.
4657 Primetime television schedules contain dozens of business-themed shows. Now, these shows are watched by hundreds of thousands of viewers each week.
4658 "Undercover Boss" and "Dragon's Den" are television hits that deal with human resource management and entrepreneurism.
4659 "Princess" and "Til Debt Do Us Part" focus on debt reduction and household budgeting.
4660 "Property Virgins" and "Buy Herself" profile the emotions and challenges facing first-time homebuyers.
4661 David Chilton's commonsense guide to personal investing, "The Wealthy Barber," has sold over two million copies, making it one of Canada's bestselling books ever.
4662 Canada's practical financial advice magazine "Money Sense" is read by over 800,000 Canadians.
4663 When complex financial concepts are presented in an easy to understand, accessible way, people listen. The problem with Toronto's soundscape today is that there is nothing to listen to.
4664 Half of the respondents to our survey said they were likely or very likely to listen to a business news radio station if one were available.
4665 What Channel Zero is proposing is a format that will give Torontonians information that is actually meaningful and relevant in their lives.
4666 There is a large potential audience in Toronto for business news and information. Toronto ranks 10th among global financial centres, ahead of Seoul, Frankfurt, Paris and Beijing.
4667 Almost 250,000 people in Toronto work in the financial services industry. Business news matters to them because they deal with it every day at work, and they face one of the longest commutes in North America, listening to their radios all the way.
4668 There are more than a 170,000 small businesses in Toronto. These businesses, as the Prime Minister says, are the backbone of the Canadian economy. People who own and run small businesses are our natural audience.
4669 Just as important, consumer spending makes up 60 percent of economic activity in Canada. All of us are consumers and make financial decisions every day. The content on Biz88 will be relevant to every home in the city.
4670 The need, demand and potential audience for reliable, credible and timely business information is clear.
4671 MR. WOODRUFF: How will the station work? We will make it our job to go behind the headlines, to take the fear out of finance and the confusion out of market activity, and to make it understandable.
4672 We will provide the information that helps:
4673 - people to better succeed at their jobs,;
4674 - families to better decide their household spending;
4675 - young people to plan their education and careers;
4676 - small business and entrepreneurs to get ahead; and
4677 - all of us to avoid and to deal with financial risk.
4678 For example, in the past 24 hours you may have heard this business headline elsewhere on radio:
4679 MS SKELLY: "The value of Canadian building permits unexpectedly climbed in March, jumping 4.7 percent from February, climbing to $6.5 billion, confounding the market expectations of a 2.8 percent decline. The increase followed a 7.6 percent gain in February."
4680 MR. WOODRUFF: Well, that sounds like good news, yes? The economy, it's on a roll? Well, actually no, it's not.
4681 Here's what a Biz88 listener would learn as we go beyond the headline. Yes, there was an overall gain, but residential homebuilding, the largest construction sector, softened for the third straight month, down 1.3 percent. The drop was masked by a massive 88.4 percent increase in government construction projects and a 15 percent increase in permits for commercial buildings.
4682 So what on the surface looks like a gain is actually a decline in residential construction.
4683 Now, hearing just that headline anywhere else, a listener might mistakenly conclude that the economy is hot, perhaps now is a good time to buy that rental property or maybe some shares in Home Depot, but the complete story paints a very different picture and the Biz88 listener will know that.
4684 This is the approach that Biz88 will take to all of our programming, going behind the numbers to explain what it really means in simple to understand language.
4685 MR. KATRYCZ: Now, let me take you quickly through a broadcast day.
4686 The drive is about hitting the road and getting the information we need on our way to and from work. It features a fast-paced news wheel along with expert analysis on current, breaking and anticipated business news stories, dealing with these topics in plain English and explaining their significance to you and me. As well, one listener a day will get 60 seconds to pitch their résumé to prospective employers, live on the air.
4687 Daytime programming will include talk shows and long form programs about career advice, family and household finances, consumer goods, retirement planning and more focused discussion of stories that are directly relevant to Toronto business.
4688 Evening programming will include more in-depth examination of Toronto business information, real estate and financial market analysis from the day, and looking forward as well. We will invite the audience to call in and interact with our hosts and guest speakers.
4689 We plan long form programs in the early evening. For example, our sample grid includes "The Entrepreneur," which will feature emerging and high-profile entrepreneurs sharing their experiences and advice with listeners.
4690 Now, we wouldn't be an effective all-business station if we didn't cover the other half of the world's economy. Our live overnight programming will dive into the business and market issues originating from India, China, Japan and Europe, providing information not found anywhere else on the dial.
4691 But understanding finance and business sometimes requires that we step back and get perspective. Biz88 will produce special monthly features, documentary features providing in-depth analysis. Now, this will include "The Story Behind," which is a documentary approach examining the history of a fascinating Canadian business or entrepreneur.
4692 MR. FUOCO: Our service will be about business and it will also be about locally produced and locally relevant information and news.
4693 Full up-to-the minute newscasts will air every 30 minutes at the top and bottom of the clock, with additional headline briefs twice an hour throughout the day.
4694 The Biz88 newsroom will be located in the heart of Toronto's financial district close to the newsmakers. It will have a dedicated staff of 21 professionals. Our on-air and editorial staff will include experienced business journalists, producers and hosts dedicated to delivering the most relevant stories of the day to Toronto.
4695 Biz88's parent company, Channel Zero, is located in Toronto and has been a broadcast innovator for more than a decade. In fact, the accumulated radio and television broadcast experience at these tables alone amounts to more than 100 years.
4696 We know a great deal about local news and information. Our station CHCH produces more local TV news than any other station in North America. Biz88 will provide the same quality of timely and relevant local information about Toronto as CHCH does for its local audience. Biz88 will be supported by CHCH's newsroom and resources and that station's 60 years of experience in delivering outstanding local news.
4697 By adapting best practices from CHCH and building on its resources, Biz88 will become one of the top local newsrooms in the country.
4698 MR. WOODRUFF: The business plan for the station will focus on advertisers who have expressed an interest and a desire to reach their clients in this unique format.
4699 These clients presently see little value in using radio as part of their marketing plan due to its lack of relevant editorial content that speaks to their customers.
4700 Due to the innovative nature of the business news format, we expect to see new radio advertising dollars come in from accounting firms, public relations companies and other B-to-B businesses which currently focus their advertising budgets on print and non-broadcast media. This will bring new advertising revenue that cannot be accessed by current radio programming formats.
4701 MR. MILLAR: We have told you about how the station will work and the audience it will serve. There are other important elements of our application that we should highlight for you.
4702 Biz88 will add diversity to the Toronto radio market. We represent a stable and growing ownership group. We would represent a new voice in the radio industry.
4703 This station will not be just another music station serving a niche audience. Biz88 will be about high quality news and information programming that will contribute in the most powerful way to the diversity of editorial content in the Canadian broadcasting system.
4704 Commentators and analysts will be sourced anew, not simply re-purposed from other products within the same media conglomerate.
4705 We have proposed a large CCD package, commensurate with our business plan, amounting to more than $1.2 million over the first licence term.
4706 Our CCD initiatives include multiple annual scholarships to support journalism students and the creation of an integrated training, mentorship and content development program that will provide direct support to emerging talent, with an emphasis on the creation of new audio content.
4707 The Biz88 format is ideally suited to online content and multiple applications. Canadians already use the internet to obtain business and news information, but for in-depth, constantly updated, business-only information that is focused on Toronto, the sources of supply are limited. Our content will be mostly proprietary and, therefore, available for us to archive and exploit on all platforms. This creates more opportunities for interacting with and engaging our audience whenever and however they wish to access our programming.
4708 Not to overstate it, but we think that Biz88 is a very big idea. We have every reason to believe that a business news format radio station, with its roots in Toronto, can easily be exported to other markets across Canada.
4709 We have heard the Commission state clearly that 88.1 is both valuable and rare. Therefore, we believe that the station which ends up being successful in the bid for this frequency must make a significantly different contribution to the Toronto soundscape than the addition of yet one more niche music service.
4710 With a record number of applications for this frequency, there will be hundreds of different perspectives to consider in making this decision, but, ultimately, this hearing boils down to one simple question: Which application represents the best use of 88.1 for the widest number of Torontonians?
4711 We believe that Biz88 will serve the broadest community with a unique format that they both need and want.
4712 I thank you for your time this afternoon, and we welcome your questions.
4713 THE CHAIRPERSON: Thank you.
4714 I would ask our Vice-Chairman, Tom Pentefountas, to lead the questions.
4715 COMMISSIONER PENTEFOUNTAS: Thank you, Mr. Chairman.
4716 Thanks so much. A great video, by the way. It was really slick, nicely done.
4717 So Biz88 is going to keep us from overspending? Is that what I understood from your first page?
4718 MR. MILLAR: We are going to try.
4719 COMMISSIONER PENTEFOUNTAS: You are going to save our savings-to-debt ratio, and everything is going to be hunky-dory?
4720 MR. MILLAR: Yes, I think so, and I think because the audience is going to -- as Bryan demonstrated in the example, it is going to get behind the numbers.
4721 One of the questions that people are asking themselves right now is: Are interest rates likely to rise over the short or near term?
4722 That is of interest to all of us, whether you are an investor in mortgages or a homeowner with a mortgage coming due.
4723 COMMISSIONER PENTEFOUNTAS: Okay. I am not sure that Biz88 -- well, we'll see -- is going to be able to counteract the sort of hypercommercialization of North American society, but maybe you will be able to do that.
4724 And maybe, if you do that, that won't be very good for the economy, because people have to spend to keep things rolling.
4725 But there is nothing wrong with reaching, it's all good.
4726 I think it was in paragraph 12 where you were talking about how 81 percent of people don't understand financial matters. Given all of the information that is available on financial issues -- and you mentioned the books -- people that are really interested in financial matters will listen to BNN and will listen to CNBC and a whole bunch of other sources on their laptop and their iPad to get informed. If they are not informed, maybe they don't want to be informed, and maybe they won't listen to Biz88 to get informed.
4727 It's a simple question: There are a lot of other sources out there. Why Biz88?
4728 MR. MILLAR: That's a terrific question. I will take a first stab at it.
4729 One of the things I would say is, you pointed out two very glaring sources. One thing is that Bloomberg and CNBC are both available on satellite radio.
4730 COMMISSIONER PENTEFOUNTAS: Yes.
4731 MR. MILLAR: Those are American stations. There is nothing focused on local Toronto news that is business oriented, and nothing that is Canadian.
4732 We cited a number of other media, none of which are radio, and that's what we think is the opportunity.
4733 The sheer fact that we have a very popular television series, which we named, and print media that focus on business, would lead us and the respondents to our survey to say that, yes, they watch these things, and there would be an interest in listening to them on radio.
4734 MS SKELLY: I would have to challenge you that there isn't a lot of information out there available to consumers, information that is relevant and information that they understand. I think some of it is just too sophisticated perhaps.
4735 What we want to do is, we want to explain it. We want to make it more relevant to their lives. We want to make it more appealing to a broader audience.
4736 We referenced a couple of shows, and I want to speak to one specifically, "Princess". It's about how young people -- specifically, in this program, girls -- get into debt. They don't even understand what they are doing when they are getting their first credit card, et cetera. They are showing them how to get out of debt and how to take back control of their finances.
4737 There is another show that I know a lot of women watch, and a lot of my friends watch, and it's called "Til Debt Do Us Part". It highlights and focuses on couples who have overspent, and on how to get their finances back in order.
4738 I don't think that there is an awful lot of programming, and certainly not on radio in this market, that would deal specifically with issues like that, which would be of interest to people like me.
4739 COMMISSIONER PENTEFOUNTAS: If I understand your project correctly, Madam Skelly, it is that this station would be consumer oriented --
4740 MS SKELLY: Yes.
4741 COMMISSIONER PENTEFOUNTAS: -- more so than the professional that is working on Bay Street.
4742 You mentioned that there are 250,000 people who work in the financial district of Toronto, and who are in the financial world of Toronto. They wouldn't be listening to 88.1.
4743 MS SKELLY: They would and they wouldn't. I think that they would be listening because we are also going to be tapping into a lot of their colleagues for expert advice when we are talking about markets, when we are talking about investments.
4744 Many of us have to plan for our own futures. Not all of us are part of pension plans, et cetera, so we do have to rely on information, and we will be tapping into those experts on Bay Street.
4745 COMMISSIONER PENTEFOUNTAS: I put it to you that you may be tapping into them, but these experts won't be listening to 88.1. They are well informed. They have their laptops and their iPads, and they are on them 24 hours a day. I mean, I know people in the business --
4746 MS SKELLY: Correct.
4747 COMMISSIONER PENTEFOUNTAS: -- and they don't listen to radio, and they don't get their information from radio.
4748 So I put it to you that either you are going to be aiming your product toward the people that are in the financial services community or the layman/woman, and I understand that it is more of a layman/woman kind of approach that you want to have. If that is the case, then you have to exclude those 250,000 eligible listeners that are in the financial services community.
4749 MS SKELLY: I would have to disagree, and I am going to ask Bryan to respond to that.
4750 MR. WOODRUFF: I think, if we look at the financial community, or people on Bay Street -- I mean, I have worked on Bay Street. I have been a business journalist for 15 years. I ran Reuters radio in Canada, the Wall Street Journal radio here in Canada, along with CNBC business radio. One thing that I know from people on the financial -- on the street, so to speak, is that they want to hear more information. They do want more. They want to hear another perspective.
4751 Also, they want to hear what the Zitegeist is. They want to hear what their customers are hearing.
4752 If you are a financial planner and, say, for example, a Biz88 listener walks into your office, and you don't know what's on Biz88, and they come up with an issue or problem that you're not aware of, I think that you are disadvantaged as being their financial advisor.
4753 We provide information to consumers, but, yes, we also serve the financial community by the sheer nature of a business news station on radio.
4754 COMMISSIONER PENTEFOUNTAS: Yes, but people are interested in sports -- and you mentioned that, as well, in your presentation -- because they like sports. They like listening to sports. They are fanatics about sports.
4755 They are not fanatics about financial issues, and if they were fanatical about financial issues, someone may have filled that void.
4756 That goes to another question that we have asked before: Why hasn't someone else filled that void? If so many Torontonians want to listen to --
4757 MR. MILLAR: If I could address that, I think that we might do it by analogy. Because a particular category or genre hasn't been filled doesn't mean that there isn't pent-up or latent demand for it.
4758 We discovered that firsthand when we acquired CHCH. There was a huge pent-up demand for news, and local news, in the Hamilton and surrounding area. The question could have been asked: Why didn't the previous proprietors take advantage of that?
4759 I think that it's a fair question to ask, but opportunities get missed, and other people come along and find those opportunities.
4760 COMMISSIONER PENTEFOUNTAS: Great. Let's hope that this is another case.
4761 Let's go a bit closer to programming -- and I want to get away from today's presentation and go back to your submission from earlier this year, I guess it was.
4762 Section 8.3 of your application says that there are 68 hours -- I am just going to sort of globally give you an idea of what I read and what I understood.
4763 You have 68 hours and 12 minutes of local programming.
4764 Now, in reviewing the sample program schedule that you provided on page 14 of your supplemental brief, I saw that you had 36 hours of syndicated programs, 4 hours of what you have identified as "Listed Radio", 6 hours of paid programming, and if I do the calculations, that's where I get my 68 hours and 12 minutes of local programming. Added onto that you would have 114 hours and 12 minutes, leaving us with 11 hours and 48 minutes of programming for which I was unable to identify the source or the content.
4765 You are going to tell me that you know my submission better than I do, but that's --
4766 MR. MILLAR: We most certainly are.
4767 I guess what I would do is ask you to just, if you wouldn't mind, go back over the question a little bit to --
4768 COMMISSIONER PENTEFOUNTAS: I just gave you an overview, and I am going to give you the questions one-by-one.
4769 MR. MILLAR: Okay, perfect. Thank you very much.
4770 COMMISSIONER PENTEFOUNTAS: First of all, syndicated. Will the syndicated programming be Canadian or foreign, or a mixture of the two; and, if so, what is that mix going to be? What is the ratio?
4771 MR. WOODRUFF: At this point we are not sure where we would source the syndication from. When we launch, what is available six months from now, or a year from now, in the radio market, whether it be U.S. or Canada, we would make the decision then.
4772 But we do know that there is syndicated programming out there, and ultimately, to be upfront, what we have in there, some of it is coming from the U.S.
4773 COMMISSIONER PENTEFOUNTAS: I appreciate you being upfront.
4774 So you can't really answer the question; you can't give me the ratio.
4775 So note 36 hours, we will start doing the math, and we will get to where I was trying to get to.
4776 So we have 36 hours there. We have listed radio. Can you tell me the source of the programming for your listed radio?
4777 MR. WOODRUFF: Sure.
4778 COMMISSIONER PENTEFOUNTAS: Before you do that I have four hours here, okay? Put that down as well.
4779 MR. WOODRUFF: I can let Marty --
4780 COMMISSIONER PENTEFOUNTAS: Stick with new math or old math.
4781 MR. WOODRUFF: -- Marty Tully jump in on that because it's his magazine and he is the publisher.
4782 COMMISSIONER PENTEFOUNTAS: Okay.
4783 MR. TULLY: Thank you for the question.
4784 Listen Magazine is a magazine aimed at people from publicly-traded companies in Canada. It's a new magazine. It's been out for two years.
4785 Just a side-bar, part of my background is also Vice-President of the Radio Bureau for a number of years.
4786 COMMISSIONER PENTEFOUNTAS: Okay.
4787 MR. TULLY: So we found everybody is looking for a niche of something new and how come nobody has done it before?
4788 We created Listen Magazine. Listen Magazine has recently been nominated for two National Magazine awards and also three nominations for Kenneth R. Wilson Business to Business writing awards.
4789 COMMISSIONER PENTEFOUNTAS: Okay. So the four hours of Listen are going to come from content in that magazine?
4790 MR. TULLY: Correct.
4791 COMMISSIONER PENTEFOUNTAS: And that's a Canadian publication.
4792 MR. TULLY: Correct.
4793 COMMISSIONER PENTEFOUNTAS: Right here in Toronto, I guess, published, right?
4794 MR. TULLY: It's published here.
4795 COMMISSIONER PENTEFOUNTAS: How long have you been publishing Listen?
4796 MR. TULLY: Two years. It's a national publication.
4797 COMMISSIONER PENTEFOUNTAS: Okay, great. So that's done.
4798 Paid programming of six hours. You can put that down.
4799 The only thing I want to ask you about the paid programming and obviously you are responsible for what is on the paid programming and what measures you are going to take, a standard question. You have heard this before.
4800 MR. WOODRUFF: Sure. Sure.
4801 COMMISSIONER PENTEFOUNTAS: So as for the record --
4802 MR. WOODRUFF: Mr. Vice-Chair, the paid programming, even though we don't want to let the cat out of the bag, so to speak, but we have had conversations with the Rotman School of Business. Whereas, we would like to take case studies and explore the case studies on our weekend programming, ultimately exposing our listeners to what an MBA program might bring to the table.
4803 We would create that into a program that ultimately would be --
4804 COMMISSIONER PENTEFOUNTAS: And the School of Business would pay for that time?
4805 MR. WOODRUFF: That's our hope, sir. That's our hope.
4806 COMMISSIONER PENTEFOUNTAS: And their interest in that is that they will promote the school?
4807 MR. WOODRUFF: Yes, sir.
4808 COMMISSIONER PENTEFOUNTAS: Okay. Okay, interesting.
4809 And back on your standards, you are still responsible for what is on the air. Is there anything -- are there any fail safes in place to make sure that the standards meet up to the --
4810 MR. WOODRUFF: Well, yes, sir. The paid programming would be live tape or taped.
4811 So it wouldn't necessarily be live programs. We would obviously review the program before it went to air. We would do edits on it.
4812 Obviously it adds some production value to it because, as you know, some case studies and universities aren't exactly the most exciting things in the world.
4813 So we would dress it up and make sure the content, the core content within the hours of programming on the weekends is delivered in that program.
4814 COMMISSIONER PENTEFOUNTAS: Okay. So I will let you do the math.
4815 MR. WOODRUFF: Sure.
4816 COMMISSIONER PENTEFOUNTAS: And maybe you can come back on this one as an undertaking if you do not have an answer for that right away.
4817 MR. MILLAR: If I could just clarify?
4818 COMMISSIONER PENTEFOUNTAS: Yeah.
4819 MR. MILLAR: On the paid or you are asking on the syndicated?
4820 COMMISSIONER PENTEFOUNTAS: On all the hours together and why I'm seeing 11 hours, 48 minutes.
4821 MR. MILLAR: We would absolutely take that as an undertaking, yes.
4822 COMMISSIONER PENTEFOUNTAS: Great, and that's all out of your submission.
4823 COMMISSIONER PENTEFOUNTAS: The other thing I noticed what you had, 68 hours of local programming. If I'm off correct me on that, but I would think that one of your primary responsibilities as a radio licensee is to provide locally-oriented programming.
4824 But I think from what I heard from the other programming most of that would be local, ergo you would be fulfilling your obligations towards local.
4825 MR. MILLAR: Absolutely.
4826 COMMISSIONER PENTEFOUNTAS: CCD, it's a question that has come up before. If you have been here for a couple of days you have heard it. There is a change.
4827 You are going to accept to comply with section 15 of the Radio Regulations?
4828 MR. MILLAR: Absolutely.
4829 COMMISSIONER PENTEFOUNTAS: Once you are north of 1.25 million -- 25 percent I think it is has to go to -- 15 percent, sorry, has to go specifically.
4830 MR. MILLAR: Yes.
4831 COMMISSIONER PENTEFOUNTAS: Okay, great.
4832 Yeah, I also noted in your CCD initiatives some of that would be going to journalism schools. Are you asking for an exception there or will you comply?
4833 MR. MILLAR: We will comply and we think that we may have structured it in the Appendix 8A to make it fully compliant but we are open to hearing whether --
4834 COMMISSIONER PENTEFOUNTAS: It will obviously respect --
4835 MR. MILLAR: Of course.
4836 COMMISSIONER PENTEFOUNTAS: -- the undertakings you might have with respect to those contributions and that funding.
4837 Yeah, I think -- you know I had a question and I think it's sort of been answered in part it that, you know, how you would differentiate yourself.
4838 Toronto, obviously, it's no surprise to anyone; highly competitive. The biggest and the best are already on the field. You have got CFTR, you have got CFRB. You have got CFMJ -- I'm doing my French/English there because the pronunciation is different.
4839 But, yeah, how do you compete? I think you have answered that already but I will give you a second crack at it because it's important. How do you differentiate yourselves from them?
4840 MR. MILLAR: Thank you for the opportunity to address it again because it actually can be addressed in three or four aspects.
4841 The stations you identified by name are the ones that we or the three that we monitored prior to submitting our application. It's important to note that, you know, in aggregate less than 4 percent of the airtime was spent on business news. That's important to say how do we differentiate? Because they are news talk but they are not digging into the news of business and finances and money.
4842 That's why the repetition and even the one station that hits business news twice an hour, they hit headlines only and repeat those headlines hour after hour. It's a big point of differentiation.
4843 I'm going to let some --
4844 COMMISSIONER PENTEFOUNTAS: And they don't explain the headlines, it just dawned on me. It means nothing. It could mean anything. Unemployment figures mean anything and even housing starts could be deceiving.
4845 MR. WOODRUFF: Yeah, Mr. Vice-Chair, if I could add one more thing?
4846 COMMISSIONER PENTEFOUNTAS: Yeah.
4847 MR. WOODRUFF: One of the little, I guess, phrases that we dance around here at Biz88 is that we are trying to end the culture of the 30-second market update. You said it --
4848 COMMISSIONER PENTEFOUNTAS: I thought you were going to give us a tip on how we could all become multimillionaires.
4849 MR. WOODRUFF: I can do that after, sir.
4850 COMMISSIONER PENTEFOUNTAS: I would listen to Biz88 for that. Great.
4851 Listen, my other question, is your market share dependent on you recovering some listeners from the three stations I mentioned or is there a plan in place to repatriate people that don't listen to radio?
4852 MR. MILLAR: I think our plan is pretty clear. The repatriation we touched on in our presentation.
4853 COMMISSIONER PENTEFOUNTAS: Yeah.
4854 MR. MILLAR: And those are new advertisers and some of them are examples that are advertising in listed and print media and out of home.
4855 The other thing is that --
4856 COMMISSIONER PENTEFOUNTAS: That goes to your revenues in terms of your audience, though. Are they coming from the three other stations, the CFTR, CFRB and the CFMJ?
4858 MR. MILLAR: Actually, I'm going to, if I could -- Bryan? Yeah, thanks.
4859 MR. WOODRUFF: It is a good question and it is one of the concerns of the Commission, of course. I think I'm going to step back to some of the research that we presented in our application or supplementary brief.
4860 Our Harris Decima survey asked: Where do listeners currently find or where do people currently find business news? 58 percent responded "Online". 39 percent responded "Television". 36 percent responded "Newspaper" and only 26 percent responded "Radio". It gets back to the whole issue that headlines for business news don't necessarily work.
4861 So we believe we will be repatriating some audience from other forums, even satellite radio. And when we get even further down to the point of repatriation of audience, I'm sure there are listeners on CFRB and Talk 640 or 680 News who are looking for more business news and unfortunately we might take some of those listeners away.
4862 But we believe in our numbers. It's not significant to hurt 680 News to be upfront.
4863 MR. KATRYCZ: And I think we can also add the experience with the sports stations in Toronto as a good example.
4864 We have two sport stations in Toronto but that doesn't hurt the other talk and news information stations from reporting on it. It doesn't seem to have hurt their audience.
4865 COMMISSIONER PENTEFOUNTAS: The other question I had was whether you had modelled yourself or if there is another service in Canada that is similar. But you answered that during your presentation there is not.
4866 In the States you mentioned there were 34 services, if I'm not mistaken. Is there a particular model that we could look at that you would more closely affiliate yourselves with?
4867 MR. MILLAR: Actually the 34 U.S. stations, and I should say that there is one -- I guess there is 35 because CNBC doesn't show up in that count because these are the Arbitron count of, and self-identified, business new stations.
4868 They do run the gamut and, you know, that category -- the number of self-identified business new stations is growing. So we think there is a success model in there. I don't think that there is any one that we have modelled after.
4869 Bloomberg would be one that we wouldn't. It really goes at the hard-core Wall Street audience and relies on sort of a secondary business model which is the Bloomberg terminals. So you know that would be -- I hate to answer your question by saying the reverse but that's probably not the one.
4870 Some of the other ones -- and you know most of them stream online and we had the opportunity to review them -- they run the gamut. But I think the ones that we like are sort of the half that have a consumer orientation.
4871 COMMISSIONER PENTEFOUNTAS: No, but by telling us what you are not gives us a pretty good idea of what you may be. That's not an issue.
4872 Back to Toronto; specifically Toronto, you will be a single stick and all the challenges that come with that.
4873 MR. MILLAR: Well, we'll be a single stick radio broadcaster but we do have some of the advantages of being a mid-sized broadcaster coming from the television world.
4874 There is a fair bit of duplication in weather forecasting, for instance, that is well shared, synergies that we are not ashamed of sharing. There is no sense to having separate weather forecasting facilities.
4875 It will also give us the opportunity to cross-promote between the two, between CHCH which does come into the Toronto market to, well, an extent and Biz88 which will lead into the western side of Toronto or outside of Toronto.
4876 You know that cross-promotion gives us the opportunity to use the CHCH newsroom to do those news updates. We currently operate a 24-hour a day phenomenally successful business in CHCH. It runs 24 hours a day and we would like to be able to leverage those.
4877 COMMISSIONER PENTEFOUNTAS: I was going to get to a question on synergy with CHCH.
4878 Anything else besides the news and the weather? Would there be some accounting? Would there be -- go ahead.
4879 MR. MILLAR: Yes. No, thank you.
4880 Technical infrastructure is one. We have engineers and monitoring staff that we can leverage and don't have to duplicate that.
4881 We touched on those 21 fulltime professionals. Those are the newsmakers, the writers, the producers; the on-air staff. The back office from accounting to technical to --
4882 MR. WOODRUFF: Others.
4883 MR. MILLAR: Yeah, overhead like me don't have to be duplicated.
4884 COMMISSIONER PENTEFOUNTAS: Better than being over your head.
4885 COMMISSIONER PENTEFOUNTAS: Okay. There are other synergies --
4886 MR. FUOCO: If I may add?
4887 COMMISSIONER PENTEFOUNTAS: -- that you will be able to bring in from Hamilton.
4888 MR. FUOCO: If I can I think there is one other important point that, you know, although we still consider ourselves to be a small broadcaster we are growing. We are very proud of what we have achieved and we are starting to gain some financial scale that will obviously be of importance to the launch of Biz88 in this market.
4889 So we have the ability to see a venture like this through and can weather the challenges that a new radio station would have in this market.
4890 COMMISSIONER PENTEFOUNTAS: CHCH coming to the rescue?
4891 MR. FUOCO: All of Channel Zero.
4892 COMMISSIONER PENTEFOUNTAS: All of Channel Zero. I'm sorry, yeah.
4893 Just add to that and maybe for clarification -- I don't want to get into numbers. I don't like getting into people's numbers but I think this is on the public record.
4894 There is a shareholder loan there in support of this application. I think it's 2.6 million. Your first year losses according to your figures are at two, and I think it's another 600,000 in Year 2. Yeah, so you're already there.
4895 Does that seem a little tight?
4896 MR. MILLAR: We don't believe so, and you have heard other people talk about this. Our history is that we tend to budget fairly conservatively.
4897 We like surprises. It's a private company. We don't have to set expectations in the marketplace. We like to budget conservatively so we think we have done that.
4898 But that said, Channel Zero in aggregate is about a $45 million business and we can sustain you know additional losses above that if we are wrong.
4899 COMMISSIONER PENTEFOUNTAS: Another issue I had with some of the numbers, you had in your expenses a programming cost of $850,000, Year 1.
4900 It seems to me, without getting into people's business, would you think that that might be a little on the low side for the equivalent of talk radio, even if it's business talk radio?
4901 MR. MILLAR: No, I wouldn't because I think it's important to count the programming salaries and the on-air staff in those. There is -- in Year 1 there is $1.2 million of direct salaries.
4902 COMMISSIONER PENTEFOUNTAS: You are not including that in your programming expenses? It's not separate from?
4903 MR. MILLAR: I am looking at our -- the income statement, the detailed income statement that we filed.
4904 COMMISSIONER PENTEFOUNTAS: Yeah.
4905 MR. MILLAR: And I see programming salaries of 1.248397 about seven or eight lines down in the expenses.
4906 COMMISSIONER PENTEFOUNTAS: I think I just lost my paperwork here. Listen, I'll take a look at that.
4907 1.24 is that what you have?
4908 MR. MILLAR: Yes. In addition, there are other salaries and --
4909 COMMISSIONER PENTEFOUNTAS: You are still considerably lower from what most talk radio stations show.
4910 MR. MILLAR: I take that as a compliment. We are a business-oriented radio station and we are fairly responsible, I think, with both our estimations and our costs.
4911 We do operate a 24-hour news room now that is staffed with significantly more than 21 people. I'm fairly confident -- now, there are salaries. For instance, some of the creative services there are additional salaries there as well.
4912 COMMISSIONER PENTEFOUNTAS: You are not a good payer, is that what you're telling us?
4913 MR. MILLAR: I would also take that as a compliment.
4914 COMMISSIONER PENTEFOUNTAS: Well, your shareholders would.
4915 Yeah, even amongst the other people that have similar formats -- and that is on the public record, -- you are still way, way off in terms of your programming expenses and salaries. But if you are comfortable with that, you are comfortable with that. We will take a look at that.
4916 MR. MILLAR: Yeah. We are very comfortable with these numbers and we provided a significant amount of detail, down to the line items. I don't know if this is maybe the right forum but --
4917 COMMISSIONER PENTEFOUNTAS: And you think you can provide the kind of quality programming that you are talking about in your video and during your presentation on a $1.2 million budget for programming?
4918 MR. MILLAR: Yeah.
4919 Bryan, do you want to jump --
4920 MR. WOODRUFF: Yes, Mr Vice-Chair, absolutely.
4921 I think one of the important things to look at with a business news station which, I guess, in this case very important to mention, a lot of the content and a lot of the people that we'll have will be guests from Bay Street.
4922 So in the sense that it seems like in your opinion; though we disagree that it is light, I think it's important to remember that a lot of the people that will be providing content won't be paid employees. They will be guests. They will be advisors, experts.
4923 And, again, on a business news station that will make up a fair bit of our content.
4924 COMMISSIONER PENTEFOUNTAS: That's a good answer. That's the kind of answer I was looking for.
4925 MR. WOODRUFF: Thank you.
4926 COMMISSIONER PENTEFOUNTAS: The other issue is that your programming and salaries increase minimally from Year 1 to Year 7. I mean it's hardly the inflation rate. We don't know what it's going to be, but you are hoping for a downturn on those seven years?
4927 MR. MILLAR: No, no.
4928 COMMISSIONER PENTEFOUNTAS: Deflation -- deflationary pressures.
4929 MR. MILLAR: Well, we have got interest rates running at about 1 percent and inflation at 2.
4930 COMMISSIONER PENTEFOUNTAS: For now; for now.
4931 MR. MILLAR: I think it's a fair question.
4932 You know we --
4933 COMMISSIONER PENTEFOUNTAS: Your revenues are growing.
4934 MR. MILLAR: Well, they do. It takes a little bit of time to establish the business but they do grow.
4935 Again, in the detailed revenue assumptions that we went through -- one of the things I should say about revenue and the growing of that is that we took the opportunity before putting in the application and filing it, to go out to the advertising agencies and speak to them directly.
4936 We talked to them about rating points. We talked to them about expected audience, acquisition. We talked to them about the appeal of the station itself and whether they would in fact buy on it.
4937 I heard you say in the previous presentation, you know, sometimes people overestimate what they will do for you. But these are our existing customers and we do a significant amount of business with them.
4938 So they are estimates for us when we went out, went to them four years ago almost for CHCH -- have proven to be good and perhaps even conservative. So we are very confident in our revenue projections.
4939 COMMISSIONER PENTEFOUNTAS: And on the 1.7 of revenue, just under 1.7, you have only got 21,000 in bad debt. Are you seeing the world through rose-coloured glasses?
4940 MR. MILLAR: No, actually I have to say that our financials we collect everything --
4941 COMMISSIONER PENTEFOUNTAS: You are collectors.
4942 MR. MILLAR: Bruno in the back is --
4943 COMMISSIONER PENTEFOUNTAS: They are not in the room. The collection agency is not in the room. Okay.
4944 You also make a point in your original submission. There is a barter system that you are going to be putting forward. Do you want to sort of speak to us about that?
4945 MR. MILLAR: Yes, I would.
4946 Bryan, would you...?
4947 MR. WOODRUFF: Again, because we are a business station our financials were fairly detailed. I'm sure other people might have left that out.
4948 But when we look at syndicated programming there is a barter inventory payout that we have to account for. We put in the financials to be responsible in making sure that was reflected.
4949 COMMISSIONER PENTEFOUNTAS: Okay, okay. That would help to sort of explaining the sums.
4950 And is there any other -- besides the programming is there any other bartering that is part of the plan here?
4951 MR. WOODRUFF: Other than my new pool, not that we are showing on the books, sir.
4952 COMMISSIONER PENTEFOUNTAS: Okay, okay.
4953 Thank you, Mr. Chairman.
4954 THE CHAIRPERSON: Thank you.
4955 I have got a couple of questions. I am going to stay on that topic.
4956 I still don't understand the barter revenue and the offsetting barter expense. So you are going to have to explain to me what it is.
4957 MR. MILLAR: I would be happy to.
4958 With some syndicated programming, as you are well aware there is paid programming, there is created programming. There are syndicated shows. All broadcasters access them to some greater or lesser extent. You might be more familiar with seeing a fishing show or an automotive show in television on the weekends.
4959 There are existing syndicated business shows that in exchange for -- you know, obviously we are responsible for them in vetting the content. But if they fit our format in exchange for airing them we provide them with several minutes of airtime. That's the offsetting calculation.
4960 It's based on if we give them, for argument's sake, two minutes in a given hour over a period of time over the year, we would accumulate that at our existing rate card and we would charge rate card to rate card for those minutes.
4961 That would be offset against the cost of the programming itself which, again, Vice-Chairman Pentefountas touched on, you know, programming. I neglected to point out that the barter is an element of that programming cost. So that should be added to the programming and that's why you see exactly offsetting numbers both in the barter revenue and the first line of barter expenses.
4962 Does that help?
4963 THE CHAIRPERSON: So you will go out and barter with CNN a financial story and put it on the radio on Saturday afternoon and you will give CNN two minutes of your advertising?
4964 MR. MILLAR: CNN might be --
4965 THE CHAIRPERSON: A bad example but --
4966 MR. MILLAR: Yeah, that's exactly it.
4967 So if CNN -- if we commit to a deal with them that extends, you know, for argument's sake it's eight o'clock at night for a half-hour, 52 weeks or 260 days a year during the weekdays, yes, we would account for the minutes that they use on the assumption they have got something to advertise.
4968 THE CHAIRPERSON: Who sells the advertising, you or them?
4969 MR. MILLAR: In that case, they would sell the advertising and we would not. The rest of the surrounding minutes, obviously, we do with our sales force.
4970 THE CHAIRPERSON: Okay. So as long as they are able to secure an audience in order to solicit listeners so then they can go to an agency and sell the time, the two minutes an hour or whatever you are giving them?
4971 MR. MILLAR: Yes, and very often it's sponsorship revenue.
4972 Bryan might want to add to this.
4973 MR. WOODRUFF: Yeah, and Cal is exactly right.
4974 I would only add one other thing, again getting back to the seriousness we took to doing these detailed financials.
4975 One of the things, when you track inventory as a radio station you say, "Here is what I have got. Here is -- you know it's an 80 percent sell out". If we didn't include, say, 10 percent of barter revenue in that then our calculations would be off.
4976 So we had to ultimately reflect barter inventory, taking it away from the available inventory on the station for sales and then put that in our financials.
4977 So we know, for example, if we are taking a weekend program and we are taking it back at two minutes an hour, when we add that up in a year that show might cost us $30,000 or $40,000. Then we can look at reflecting when we add more money to replace that show you are tracking --
4978 THE CHAIRPERSON: You are putting the same amount of money into revenue as expense. So you are assuming it's breakeven.
4979 MR. WOODRUFF: Right, but generally, sir, it has to be reflected in our overall inventory amount that we have, as you know, of 100 percent or 80 percent or whatever it is.
4980 When we take that barter inventory out of the equation for actual sale when we get revenue out of it, you know, we are left with 70 percent or, say, 65 percent of the sell-out rate.
4981 MR. MILLAR: Let me re-expand on that just a little bit.
4982 The reason it's an equal amount isn't to say that that show, itself, would be breakeven. It's that the cost of programming and the amount of revenue generated in the barter minutes is a complete offset.
4983 THE CHAIRPERSON: Yeah, so what you are saying is for those minutes that you barter --
4984 MR. MILLAR: Yes.
4985 THE CHAIRPERSON: -- you are better off at a breakeven proposition than trying to manage those time slots yourselves because you don't think you can recover your costs.
4986 MR. MILLAR: Yes, but we wouldn't be -- we wouldn't be bartering all the minutes in that hour.
4987 THE CHAIRPERSON: I understand that.
4988 MR. MILLAR: Right. And it's not that you are better off.
4989 For instance, there is some very good syndicated programming that we would want and we could do it without using the barter system but it would be the equivalent of -- we would look at it and say, "Well, there is our rate card and if we sell it at" -- if we generate $3,000 an hour in that programming and we buy it for $2,000, it has margin in it. It's the exact same thing when we barter it because we are bartering it for a portion and then we retain the rest of the minutes to sell at margin.
4990 THE CHAIRPERSON: And how many hours a week are you looking at bartering?
4991 MR. MILLAR: The barter -- if I can take you to the schedule for a moment, our sample schedule which you will find on page 14.
4992 MR. MILLAR: Go ahead, Bryan.
4993 MR. WOODRUFF: Right now, the way we have the proposed schedule planned there's two hours of syndicated programming each day Monday through Friday at 10 o'clock and 11 p.m. And on the weekends we look at one, two, three hours -- seven hours each day on the weekends. That is again getting back to what Cal was saying, shows that we think are valuable for weekend listening for business news, like a boating show or a travel -- business travel show.
4994 THE CHAIRPERSON: Seven hours on Saturday and Sunday and two hours Monday to Friday?
4995 MR. WOODRUFF: Yes, sir.
4996 THE CHAIRPERSON: So that's 10 and 14, 24 hours out of a 126-hour week.
4997 MR. WOODRUFF: Yes, sir.
4998 THE CHAIRPERSON: Okay. I understand it.
4999 Now, you are applying for an FM frequency, 88.1. Have you considered looking at an AM frequency?
5000 MR. MILLAR: We have. Let's start with why FM is better than AM.
5001 Toronto is a city of high-rises, especially around the waterfront right now, condominiums, apartment buildings and multi-storey commercial buildings. FM, as you well know, is a much better penetrating frequency.
5002 AM is interfered with by streetcars, by underground parking, and we see an audience -- notwithstanding the earlier comments, we do see an audience for financial and business professionals to leave Biz88 running on their computer or perhaps on an app on their iPod, but also just on the radio in the office.
5003 So we think it is important to be able to use a high-quality frequency. It may not be the biggest signal, but it is FM and it penetrates better.
5004 THE CHAIRPERSON: Okay. Those are my questions.
5005 Does anybody -- Commissioner Molnar.
5006 COMMISSIONER MOLNAR: I'm sorry and it seems a bit ironic that with a business literacy, business news radio station in front of us and the most detailed set of financials that I have seen from any applicant we are focusing upon your financial results, but I mean the notion of enhancing financial literacy is wonderful and there truly is some public benefit and I think, for me at least, one of the real questions I have is, can this actually be deployed?
5007 I know that you have provided a lot of details around your financials and there have been a number of questions asked about them, but I still feel this discomfort where you are saying you are going to run, if I understand right, 7/24 business news with 21 people and you are going to generate the kind of revenues which will enable you to be PBIT-positive by year three on a 7/24 all-talk station. So it leaves me a little bit uncomfortable that it seems like a wonderful business plan nobody else has engaged him and sometimes things almost look too good to be true.
5008 So, first of all, you had the discussion, I know, with the Vice-Chair about your 21 people being able to produce all the content to allow you to go 7/24 and I understand that you do have your barter programming or syndicated programming as part of that schedule, but maybe just convince me again that these operating expenses and these 21 people are going to enable you to have full and rich content 7/24.
5009 And I did hear but I have to say not fully convinced that a lot of this content is going to be free content because we are going to get all the experts from the business community to fill our schedule for free, so give me more.
5010 MR. MILLAR: Sure. Well, listen, I appreciate the opportunity to try to convince you of that because as an overall starting point, you know, this is our 12th year in business and we have heard that same comment on every business plan we have put together and so I am very happy to take that comment and work with it because I think our track record speaks for itself.
5011 We have been told that you couldn't break into the specialty business, it wasn't going to work out that way. We were told that we wouldn't be able to get into the OTA business, the film distribution business, and so on, and always with our same model, which is, I will say --
5012 COMMISSIONER MOLNAR: And I didn't say you couldn't --
5013 MR. MILLAR: I know.
5014 COMMISSIONER MOLNAR: -- I just said convince me how you are going to do it.
5015 MR. MILLAR: Thank you.
5016 I think part of that convincing is that our track record says we can do it. Our business plans have always been very lean. And I joked with the Vice-Chairman about it being a bit of a compliment, but we do run a very lean organization and a very efficient one.
5017 Now, Bryan is chomping at the bit, so I'm going to let him comment on the financials for a second and then I will come back in.
5018 Go ahead, Bryan.
5019 MR. WOODRUFF: I agree with Mr. Millar about his frugalness, but ultimately when we put this together and we looked at the talent, we put together a list of programming, and again getting back to some of my background in business news and syndication, I ran Canada's business network, we syndicated 113 market updates to 35 stations in Canada, including CFRB, CJAD in Montreal and QR77. We did that with a lean staff.
5020 Business news in its true genesis isn't news talk where we have to hire John Moore or John Oakley to be an entertaining and wildly funny morning show, even though it will be. We are dealing with people who are coming from newspaper, we are dealing with journalists who are coming not from radio or television, we are dealing with experts who aren't looking for $400,000 or $500,000 salaries a year to be involved in our morning show.
5021 It is lean, but ultimately when we put together the staff schedule, we looked to people in the marketplace, people who I have worked with before. I knew what they were getting paid, I knew what I paid them before, and we built the schedule based with talent in mind and based with a budget that we paid that talent before.
5022 I mean I hope they get rich off the station, I hope we do really well and we can pay everybody very well, but again, where we are starting from now is lean, mean and getting it done and making sure we can survive and the business news station itself will be as successful as we think it will be.
5023 MS SKELLY: I think for years people have thought that news was a loss leader and it was too expensive to produce and for so long -- and we saw it of course in the crisis in the television industry a few years ago that so many networks shied away from news because they claimed that it was just too expensive a model in terms of production.
5024 We proved with CHCH that that wasn't the case, that there was an audience and it was affordable.
5025 I was involved in a program for years, for many years, that was built around having a host or two hosts and guests. Never paid for a guest, never. And it was highly rated and high quality. And I think that it speaks to the value of news and that it is affordable programming and there clearly is a demand.
5026 And of course it also speaks to our record. We did it in Hamilton. We have turned it around. We have shown -- we have proven that a news model is affordable and that we can do it again in radio.
5027 COMMISSIONER MOLNAR: Let me ask another question. You have emphasized again the guest nature of filling this, but the other important element is your syndicated -- your barter programming. I think if I -- I just haven't referenced it, but I caught when you were giving your opening statement you said we expect to be able to syndicate or barter some of this time and I thought you made a comment about expect, for example, the MBA colleges to come forward and take some of your time.
5028 How much of this is expect and how much of this is based on more feet on the ground or quantitative analysis? How real are these numbers?
5029 MR. MILLAR: So we think they are very real and they are real because we are not coming from outside the business into broadcast. By the same token, without a licence it's a little bit dicey to go and try to secure programming for something you don't have. Your choices are either give away the secret and get a wishy-washy answer or commit to the dollars sight unseen.
5030 We have mentioned that we're frugal and efficient. So this isn't, you know, a briefcase and a business plan, this is a real business coming forward with an opportunity to break into radio broadcast, but it is a new business and there are conversations to be had.
5031 So I think the word "expect" is the right word because it is based on experience. We do expect it to happen. We can't guarantee it, we haven't already done it, but we are not just wishing for it.
5032 MR. FUOCO: If I can add to that as well.
5033 As an organization over the last -- pre-dating our acquisition of CHCH, we feel very proud of the accomplishments of our sales team. We have a multilayered sales force that has significant relationships with all the national and regional advertising agencies based in Toronto. We have a retail sales force of a dozen reps on the ground, some based in Toronto, the majority of them based in Hamilton.
5034 So we have that layer in our sales force, but when we were looking at Biz88, one of the things that Marty and Bryan brought to the table is their experience in radio and I think, very importantly, Marty brings an ongoing business-to-business advertising relationship into the fold that's new for us and that's going to be our lead list of clients for this station.
5035 So given what we already have in place at Channel Zero and our new relationship with Marty and Bryan joining the fold, we feel very confident that we are going to hit the ground running on the advertising dollar front.
5036 COMMISSIONER MOLNAR: Can you remind me what percentage of your anticipated revenue is from new advertisers?
5037 MR. MILLAR: Can I just ask for clarification around "new"? New to radio? New to us?
5038 COMMISSIONER MOLNAR: New to radio.
5039 MR. MILLAR: Thank you.
5040 COMMISSIONER MOLNAR: I'm just saying are not advertising with others today on radio in this market.
5041 MR. MILLAR: So thank you for that clarification.
5042 At best this is our estimation. We believe 40 to 50 percent come from outside of radio. However, I have to say that we didn't build our revenue models based on that aspect. We actually did it the other way.
5043 We talked about how many spots were available, what our expected ratings would be, what the sellout would be, what the agencies would pay for those spots and how many they would buy and which clients they would put into them, and then we built the revenue up.
5044 So we didn't actually -- you know, to be frank, we didn't just start -- because I don't know how you start from how many come from elsewhere. So our revenue is basically -- we have estimated it.
5045 We believe a significant proportion comes from some of the advertisers and the agencies where they have said that they would -- you know, here's a client who isn't in broadcast or isn't in radio specifically, perhaps they are on BNN, that we would put in. So it's an estimate at best.
5046 Bryan, do you want to -- Chris? No? Okay.
5047 COMMISSIONER MOLNAR: Okay. Thank you, those are my questions.
5048 THE CHAIRPERSON: Thank you.
5049 Commissioner Simpson...?
5050 COMMISSIONER SIMPSON: Commissioner Molnar stole my line of questioning, but I shall forge on.
5051 Mr. Millar, I would have been a lot more skeptical of your financial projections and your operational costs a couple of years ago, but seeing what independent operations in television can do when they have to, you know, I'm quickly changing my view as to the real cost of running an operation with a stick in the air and I will give you full marks for that from my perspective.
5052 What I would like to -- in looking at -- you know, this is the last piece of real estate in the big city and there is a lot of hemming and hawing regarding, you know, best use, and what this particular application is coming forward with is something completely different and that's good.
5053 You have a very cautious audience projection, which I think is prudent, but with respect to your financial achievement, and picking up on Commissioner Molnar's last question, do you think that if you are successful at reaching a business-minded audience, which traditionally in other mediums like magazines and newspapers are often regarded as a premium audience, that you might be able to break the mold on how radio is sold on a pure headcount basis, you know, a CPM or GRP basis, and actually have the audacity, if you like, to actually start putting a different kind of rate card together based on the quality of what you attract?
5054 MR. MILLAR: Bryan, why don't you go ahead with that.
5055 MR. WOODRUFF: I think you are 100 percent bang on. I mean the business news audience is qualitative. Even though we hope to have the quantity at some point, it's a qualitative audience.
5056 And I can go by my experience. I worked for MBC Universal CMBC in the U.S. CMBC is the best example of how you charge more for inventory because of an audience. Nine-dollar CPMs in the U.S. was the going rate. CMBC in its peak was charging $70.
5057 So there is a different way to sell it. There is a different audience that we are delivering that is not delivered currently, and yes, we will eventually, as we get traction, charge more for it.
5058 COMMISSIONER SIMPSON: If you look at a financial offering on specialty cable you are seeing advertisers that you would never see in the traditional radio spectrum. So I presume that's going to be a major target for your revenue projections?
5059 MR. WOODRUFF: Yes, sir, absolutely.
5060 COMMISSIONER SIMPSON: Great. Thanks.
5061 THE CHAIRPERSON: Any other questions for this panel? No?
5062 Thank you very much, that completes our questioning.
5063 Over to you, Madam Secretary.
5064 THE SECRETARY: Thank you very much.
5065 We will resume tomorrow morning at 9:00 a.m.
--- Whereupon the hearing adjourned at 1652, to resume on Thursday, May 10, 2012 at 0900
- Date modified: