TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

                      SUBJECT / SUJET:

Various broadcasting applications /

Diverses demandes de radiodiffusion

HELD AT:                              TENUE À:

Quartz Ballroom                       Quartz Ballroom

Matrix Hotel                          Matrix Hôtel

10001-107th Street                    10001-107th Street

Edmonton, Alberta                     Edmonton (Alberta)

May 28, 2008                          Le 28 mai 2008

Transcripts

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.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

                 Transcript / Transcription

Various broadcasting applications /

Diverses demandes de radiodiffusion

BEFORE / DEVANT:

Elizabeth Duncan                  Chairperson / Présidente

Rita Cugini                       Commissioner / Conseillère

Candice Molnar                    Commissioner / Conseillère

Peter Menzies                     Commissioner / Conseiller

Marc Patrone                      Commissioner / Conseiller

ALSO PRESENT / AUSSI PRÉSENTS:

Cindy Ventura                     Secretary / Sécretaire

Lyne Cape                         Hearing Manager /

                                  Gérante de l'audience

Regan Morris                      Legal Counsel

                                  Conseiller Juridique

HELD AT:                          TENUE À:

Quartz Ballroom                   Quartz Ballroom

Matrix Hotel                      Matrix Hôtel

10001-107th Street                10001-107th Street

Edmonton, Alberta                 Edmonton (Alberta)

May 28, 2008                      Le 28 mai 2008

- iv -

           TABLE DES MATIÈRES / TABLE OF CONTENTS

                                                 PAGE / PARA

PHASE I

PRESENTATION BY / PRÉSENTATION PAR:

Vista Radio Ltd.                                  231 / 1588

Clear Sky Radio Inc.                              315 / 2075

Golden West Broadcasting Ltd.                     403 / 2574

L.A. Radio Group Inc.                             462 / 2964

L.A. Radio Group Inc.                             540 / 3543

               Edmonton, Alberta / Edmonton (Alberta)

‑‑‑ Upon resuming on Wednesday, May 28, 2008

    at 0930 / L'audience reprend le mercredi

    28 mai 2008 à 0930

1582             THE SECRETARY:  Good morning and welcome.  A few quick announcements.

1583             When you are in the hearing room we would ask that you please turn off your cell phones, beepers and blackberries as they are an unwelcome distraction and they cause interference on the internal communications systems used by our translators.  We would appreciate your cooperation in regard throughout the hearing.

1584             For the record, the interveners Newcap Inc. and Dean Scott listed on the Agenda have informed the Commission that they will not be appearing in Phase III for the Red Deer market.

1585             Madam Chair, we will now proceed with Item 4, which is an application by Vista Radio Ltd. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer.  The new station would operate on a frequency of 90.5 MHz, Channel 213C‑1, with an average effective radiated power of 13,500 watts, maximum effective radiated power of 20,000 watts, antenna height of 177 metres.

1586             Appearing for the applicant is Margot Micallef.

1587             Please introduce your colleagues and you will then have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION

1588             MS MICALLEF:  Thank you.

1589             Madam Chair, Members of the Commission, CRTC staff, good morning.  I would like to start, with your indulgence, with a bit of an introduction of our panel and get into a little bit more detail than we might otherwise, in light of the fact that we have some new members on the panel and that we are a relatively young company.

1590             Thank you.

1591             My name is Margot Micallef and I am the Chair and CEO of Vista Radio Ltd. and I am one of the founders of the company.  By profession I was a lawyer in the area of communications law.  In addition to private practice, I also worked as a Senior Vice‑President for a large telecommunications company and became a Queen's Counsel in 2002.  I am also currently an Adjunct Professor in governance and ethics for the MBA program at the University of Alberta and was a co‑instructor of a seminar on communications law for the Faculty of Law at the University of British Columbia.

1592             I currently sit on the board of Canadian Women in Communications and on the board of the B.C. Association of Broadcasters.

1593             Immediately to my right is Mr. Paul Mann, who is our Executive Vice‑President of Vista Radio and also a founder.  Paul's career started in Lethbridge 40 years ago at the age of 16 as the all‑night announcer on 1220 CJOC.  Since then Paul has worked in numerous radio positions, including news, copyright sales, sales management, and before founding Vista Radio was the General Manager of Standard Radio.

1594             Paul was the host of an award‑winning and distinctly Canadian agricultural news syndication called "The Canadian Farmer" which aired on 40‑plus radio stations across Canada for over 12 years.

1595             During his career, Paul has won numerous community service and creative awards from the BCAB, the CAB and other organizations.

1596             To my left is Vice‑President of Programming for Vista Radio and also a founder, Mr. Jason Mann.  Jason studied broadcasting at Lethbridge Community College.  Jason has worked since then for a number of small and large market radio stations, including CKRD in Red Deer.

1597             Before founding Vista Radio, Jason was the Director of Programming for the Standard Radio B.C. Interior group of stations.  Since joining Vista Radio initially as General Manager of CJSU in Duncan, Jason was the driving force behind a number of community initiatives which saw CJSU named as business of the year in less than eight months after it was acquired by Vista.

1598             To Jason's left is Joel Lamoureux.  Joel is the Program Director of Vista Radio for the four‑station Coast Group on Vancouver Island.  Joel started his career in radio in 1986, after obtaining his degree in broadcasting from Confederation College in Thunder Bay.

1599             Joel has worked in large and small markets for both large and small independent broadcasters.  Before joining Vista in 2006, Joel served as the Music Director of Y105 in Ottawa where he mentored younger broadcasters seeking advancement in their careers.

1600             Joel was a three times nominee as broadcaster of the year for the Province of Manitoba and a CCMA music director nominee.  He served as past President of the Powerview local Manitoba Métis Federation.

1601             In addition to serving as Program Director of Vista, Joel is a musician and, along with his wife Patty and his son Alex, he performs fiddle music in his well‑known family band.

1602             Behind Joel in our back row is John Yerxa, a former broadcaster who has been researching Canadian radio since the mid‑1980s.  John's research has been presented in previous CRTC hearings by such companies as Corus, Newcap, Pattison and Standard, amongst others.

1603             To John's right and directly behind Jason is Mr. Glenn Hicks.  Glenn is the Director of News and Information Services for Vista Radio.  Glenn has been a broadcast journalist for over two decades.  He started with the South African Broadcasting Corporation in Johannesburg.  He was also the Associate Producer of a long running TV family entertainment show that became iconic with South African viewers.

1604             Glenn eventually moved to London, England, where he spent three years producing and presenting programming for the BBC World Service and domestic national satellite TV news.

1605             To Glenn's right is Mr. Bryan Edwards, Vice‑Chair of Vista Radio and a founder.  Bryan has a 40‑year career in radio, television and cable in small and medium markets in British Columbia and Alberta.  Throughout his career he has served the broadcast industry as a director and was chair of the Radio Marketing Bureau, the CAB and the BCAB.

1606             In 1992, Bryan Edwards was named B.C. broadcaster of the year.

1607             Finally, to Bryan's right, behind Paul, is Ingrid Vaughan, our Director of Human Resources and Diversity.  Prior to joining Vista Radio, Ingrid was a consultant to small businesses in British Columbia in the area of marketing and communications and was a trainer in the area of human resources and business management.  She is a published author in the area of personal communications styles, having published a book entitled "I'm a Circle ‑ You're a Square".

1608             I'm pleased to tell you that everyone on this panel today is a shareholder of Vista.

1609             Before we start our presentation, I also would like to put on the record that we have submitted to you, and it is in your package, two letters, one from FACTOR outlining that our commitment will be directed towards Alberta musicians and that 50 per cent of our commitment will be directed to emerging artists; and also a letter from AMIA outlining what their intended use is of our CCD commitment to their program.

1610             We are now ready to start our presentation.

1611             Madam Chair, Commissioners, it is our pleasure to be appearing before you with an application for a new FM station to serve Red Deer.  In a number of decisions, the Commission has indicated the criteria it uses to evaluate applications for new FM services.  In the case of Red Deer, we believe that some of these criteria are more pertinent than others.

1612             First of all, you look at the capacity of the market to absorb new radio services.  The evidence submitted in our application and in each of the other applications attests to the strength of the Red Deer market.

1613             Neither of the incumbents has intervened on economic grounds.  We conclude that economics is not an issue in this market.

1614             Second, you look at the impact of licensing on the diversity of voices in the market.  In the case of Red Deer each applicant here is new to the market.  Each would add to the diversity of voices in the market.

1615             Third, you examined the impact of licensing on the level of competition in the market.  In each case the applicants before you bring a new competitor to the market.

1616             So what is left to distinguish the applicants in Red Deer?

1617             We believe it can be boiled down to two elements:  Who has the best idea?  Who has the track record to deliver on this idea?

1618             With respect, the answer is Vista.  Here's why.

1619             MR. P. MANN:  How many of us can remember how we felt at our high school prom?  A bit nervous perhaps, worried about how we looked.  Well, what about the emotion just before our first kiss: heart hammering and wondering if you or your date would get up the nerve.  And how about the night you proposed: afraid she would say no and equally afraid she would say yes.  Remember dancing for the first time as a newlywed: a little bit tipsy maybe but feeling the joy of everyone around you.

1620             Most of us can link those events to a song that was playing at that time.  And even today when we hear those songs the memories take us back to those moments.

1621             That is the feeling that Classic Hits 90.5 will provide to Red Deer listeners.

1622             MR. J. MANN:  Classic Hits 90.5's repertoire will focus on the 1970s and 1980s, with slightly greater emphasis on rock‑based hits, reintroducing many songs that are not being aired locally in any significant numbers.  Classic Hits 90.5 will play a mixture that is approximately 35 per cent music from the 70s, 40 per cent music from the 80s, 10 per cent from the 90s and 15 per cent current music that is compatible with the Classic Hits sound.

1623             This current music mix includes emerging Canadian artists like Liam Titcomb, Rex Goudie, Brian Melo and Jeremy Fisher.  We have provided a list of sample artists from each area in our supplementary brief.

1624             Classic Hits 90.5 will provide a diverse sound not currently available in Red Deer.  There will be very little song duplication between Classic Hits 90.5 and the incumbents because while some of the artists played on our station might appear elsewhere, the tracks we play will not.

1625             MR. LAMOUREAUX:  One of the challenges of a Classic Hits station is keeping the sound fresh and exciting.  Vista has had success with this format and we have a number of ways to keep the sound appealing and relevant.

1626             We will have a large music library with few repeats.  Much like a choreographer has dancers waiting in the wings to take centre stage or a hockey team that rotates its offensive lines, we will rotate music on and off our active playlist to ensure that we always have a fresh sweep of music on air.

1627             Our experience tells us that audiences want context and focus to the music they listen to.  We accomplish this through our special music programs.

1628             Classic Hits 90.5 will provide regularly scheduled music programs, including an '80s show, a '70s show, a daily interactive noon hour program and other programs.  We will also run special seasonal and weekend programs, for example, a One Hit Wonder weekend or a '70s weekend, the Top 500 of All Time and an All Number One Songs weekend.

1629             These special weekends provide excitement to our audience; a good example, our Canada Day celebration at our rock station in Prince George 94X.  Last year we rebranded the station "The Beaver" for July 1 and played 100 per cent Canadian music.  Reactions from our listeners varied, but everybody noticed.

1630             MR. HICKS:  As vital and essential as getting the music right, our experience tells us that local relevant news and information are also strong audience drivers.  At Vista, a central part of our operating philosophy is meeting our audience's needs for local connection.  This is a particular strength of our company.

1631             The research told us that there was a great deal of dissatisfaction with the amount of local news and information in the market, especially among Classic Hits partisans.  So we took this to heart and crafted a proposal that will address this need.

1632             We will spend $4.5 million on programming over the seven‑year term of the licence.  That's more than any other applicant at this hearing.  This will ensure comprehensive coverage of news and community events in Red Deer.  3.5 news people will provide five hours and 15 minutes of pure news each week, with the focus being on Red Deer.  This translates into 92 newscasts each week.

1633             While pure news is the centrepiece of our service, it will be complimented by a wide range of other information.  It goes without saying that Vista will provide a complete service of traffic and weather, with updates each and every hour.  Community messages are also a central part of our service with regular billboards.

1634             MR. P. MANN:  And we go beyond the usual when the community needs us.  One icy stormy morning this past winter a much loved and respected Burns Lake, B.C. school teacher and foster mother, Brenda Levick was driving four youngsters to Prince George for medical appointments.  Brenda and all four children were killed when her vehicle went out of control and hit a logging truck.  Communities we serve, from Prince George to Burns Lake to Smithers were devastated.  Brenda was highly respected by her peers in the Burns Lake school district not only for her work in the classroom, but also with aboriginal children throughout region.

1635             We felt that beyond the news coverage we could help the healing and provide the community with a way to honour Brenda's memory.  We set up a bursary fund in Brenda Levick's name, with recommendations from her family and peers on how best to award the funds annually.

1636             We are pleased that recipients each year will be aboriginal children exhibiting good citizenship within the school and the community.  An on air tribute to Brenda's life and good works helped to get the fund started.

1637             This is an example of Vista's leadership and investment in the communities it serves.

1638             MR. LAMOUREAUX:  We will also run a regular schedule of information reports on features to reflect the interests and lifestyles of our audience.  The Red Deer region is at the heart of Alberta's farm and ranch country and we intend to honour and reflect this population and their ongoing contribution.

1639             We will air a daily agribusiness feature.  Vista has significant experience in providing services to the farmers.  Our Executive Vice‑President, Paul Mann, wrote and hosted the Canadian farmer syndicated daily feature, running on up to 40 radio stations coast‑to‑coast from 1987 to 1995.  The program was born in Alberta and produced from Alberta most of its 12‑plus years on the air.

1640             In addition to the Red Deer Rebels western hockey league team, Red Deer is home to a year‑round sports crazy population.  There is a huge participation in minor hockey, city soccer, gymnastics, long‑distance running, high school basketball, volleyball and even a pond hockey league.  And because of the long history of farming and ranching, rodeo is not only a sport but it is also a way of life and a weekend activity for thousands in the city and surrounding communities.

1641             And finally, the book ends for Red Deer sports fans are the Edmonton Eskimos and Oilers to the north and the Stampeders and Flames to the south.

1642             This is why we will be doing 62 sportscasts per week.

1643             The outdoor lifestyle is an important part of Red Deer and central Alberta life.  In the winter snow sports are a key activity at Canyon ski and many other ski areas in the province; and in the summer central Alberta is lake country, with residents enjoying Sylvan, Pigeon and Gull Lakes.

1644             We will provide regular updates on conditions and events for our listeners.

1645             In all, Classic Hits 90.5 will provide almost 18 hours per week of relevant spoken word programming.

1646             MR. J. MANN:  How did we decide to choose this format for this station?

1647             There were three factors.  We gathered information from Banister Research to establish audience needs and interests, particularly for the music format.  We then analyzed the information they provided in view of information from BBM.  Finally, we considered this information in context with our own collective experience in the market and with the format, as well as our industry knowledge.

1648             When Vista approaches a new market, either through acquisition or a new licence application, we go in open‑minded with no preconception as to what the appropriate format would be.

1649             MR. YERXA:  In early 2006 a survey of 400 adult radio listeners was first conducted for Vista in Red Deer.  In this study, six mainstream formats were tested:  Country, Soft Rock, Modern Rock, Classic Rock, Classic Hits and Top 40.  All respondents were asked which music type they would listen to most often.  They were then asked to rate how difficult it is to find a local FM radio station which plays each option.

1650             Once we compared each music type's popularity with its current availability, we saw two viable format opportunities: Classic Hits and Adult Contemporary.

1651             However, analysis of the impact on the other local stations led us to conclude that Classic Hits was the best new FM format option in Red Deer at that time.

1652             Then last fall, once the Commission issued its call for new Red Deer applications, we retested the Classic Hits and AC options among 400 local adult respondents and found that tremendous opportunity still existed for either format.  Yet, once again, we saw that Classic Hits would have a smaller impact on the incumbents.  Therefore, it remained the best format option.

1653             MR. J. MANN:  There was one more issue to be checked before Vista made its decision.  We noted that the Commission had licensed a new station to serve Lacombe in 2006 and that the decision indicated it would be Classic Hits.  Yet we wondered why our second wave of research didn't show that the format was available, since the signal is easy to receive in Red Deer and the station makes its presence known through bus boards and other promotions.

1654             However, once we checked CJUV‑FM's website, known as Sunny 94, we found that it calls itself Central Alberta's Light Favourites.  In addition, a number of station monitors over time made it clear that CJUV‑FM is not a Classic Hits station but is clearly a softer, Gold based AC.  Our most recent monitor is included in your package.

1655             That is also why last fall's BBM survey showed that the least served group is men over 35, confirming that a rock‑based Classic Hits station is the best choice for Red Deer.  We have provided the chart here for your reference.

1656             This year the Juno Awards were held in Calgary.  If you watched, you saw a committed and dynamic Alberta music scene.  Vista will reflect the same commitment to the Alberta music community through our support of emerging artists.

1657             The Commission has recognized that 35 per cent Canadian content is a challenge for a Classic Hits format.  Part of our response to that challenge is to put a strong emphasis on new and emerging artists.  We will ensure that one of every four Canadian songs we will play will come from new and emerging Canadian artists.  This translates to 9 per cent of all music played on the station.

1658             This commitment leads the industry at three times the national average, and it is eight times the reported industry average for rock‑based formats.

1659             We will meet this commitment by working with emerging Canadian artists whose music is compatible with the format.  We will also feature local and regional artists in our weekly program Songwriter's Cafe.

1660             Our commitment to these artists includes additional off‑air initiatives.

1661             In B.C. we write a monthly column in "B.C. Musician" magazine aimed at developing musicians.  We would look for a similar partnership opportunity in Alberta.

1662             We decided to make a substantial investment in Alberta, with $777,000 over the term of the licence.  The money will be split between two recognized third party music industry organizations, FACTOR and the Alberta Music Industry Association, AMIA.

1663             We strongly believe in FACTOR and we have asked them to direct our money to Alberta musicians.  AMIA has a wide range of programs to support the province's music industry and our presence in Red Deer will allow them to expand their activities in this area of the province.  Our contributions to each of these organizations are larger than any other applicant for a Red Deer licence.

1664             MS MICALLEF:  So now you have heard a summary of our idea for a new station, Classic Hits 90.5, and here is why Vista will deliver on its promises.

1665             MR. P. MANN:  We have the experience, commitment and financial resources to compete with two strong incumbents, the Pattison Group and Newcap.  We successfully compete with Pattison, Rogers and Astral in many of the markets we serve.

1666             MR. J. MANN:  How do we do it?  By researching, investing the capital necessary to provide high quality sound and recruiting, training and keeping good people to deliver on our programming philosophy.

1667             MR. EDWARDS:  Vista has achieved a significant amount of success by focusing on local service.  In many of the stations we acquired local service had disappeared.  Vista realizes that being open to the community is not only the right thing to do, but it is clearly the smart thing to do.

1668             At our recently launched Grande Prairie station we connected to the community in a way that it had not experienced before.  Just as one example, we were approached by a young aboriginal student who wanted to do a weekly community affairs program aimed at high school students.  He was turned down by the incumbent stations, in one case because the station didn't believe that a blind person could succeed on radio.

1669             We gave him that opportunity.  His program has been well received by kids in the community and by the community as a whole.

1670             That's what industry and community leadership means to us at Vista.

1671             MS VAUGHAN:  One of the biggest challenges in our industry is finding, hiring and keeping good people.  At Vista we lead by example.  We have been able to attract a strong and committed workforce by taking a proactive and innovative approach to our staffing needs.

1672             One example is developing talent from non‑traditional places.

1673             We recently launched an immigrant internship program that we call "Opening Vistas".  Vista has collaborated with immigrant support groups such as Journalists in Exile, Journalists For Free Expression and Success to identify foreign trained broadcasters who have fled their countries of origin and who, despite their relevant professional experience, have been unable to find work in our industry in Canada.

1674             A brochure that describes the program is provided in your package, as well as an article from the Vancouver Sun about the program.

1675             Vista has also demonstrated its leadership in going beyond the traditional job‑related training by offering its employees training on how to understand each other's differences and work positively to improve communication with each other.  This is an important success factor as we continue to build our diverse workforce.

1676             We also offer all employees an opportunity to become shareholders in the company.  All of our senior and middle managers and one in four of our general employee population have become Vista shareholders, another key factor in attracting and retaining employees.

1677             MS MICALLEF:  In conclusion, the Commission has set out its criteria for licensing new services.  We believe that once past the economic criteria, you essentially are looking for the best new idea.  In deciding on the best new idea we believe you should bear in mind the track record of the applicants to deliver on their promises.

1678             We submit that Vista's application best meets these two basic criteria because we undertook two rounds of research to determine the largest format opportunity in Red Deer and two formats emerged, Soft AC and Classic Hits.  We retested following the launch of the new AC station in nearby Lacombe, confirming that Classic Hits was still the largest opportunity.

1679             Our research also indicated significant dissatisfaction with the amount of local news and information.  We have answered that call with a proposal for well‑funded strong, local programming, the largest spending on programming over seven years of any of the applicants.

1680             We have committed a direct substantial cash contribution to two large proven third parties, FACTOR and AMIA, the largest contribution to these organizations of any of the applicants for Red Deer.

1681             We have promised a significant commitment to emerging artists.

1682             Vista has a track record of expanding service when it comes into a market, whether this is restoring local service to small markets in B.C. that we acquired or launching a new service in Grande Prairie against strong incumbents.

1683             In Red Deer we face two strong competitors, Pattison Broadcasting and Newcap.  We have experience competing with the large consolidated broadcasters in various combinations in several markets and are successful.

1684             We are well funded, experienced and passionate about service and radio.

1685             We are a human resources success story.  We place a strong emphasis on HR issues and diversity is a core value for us.  You have heard from our Director of HR and Diversity Ingrid Vaughan, who has recently published a book entitled "I'm a Circle ‑‑ You're a Square" and trains our staff in the area of communications and sensitivity to diversity issues.

1686             In addition, we are most proud of our immigrant internship called "Opening Vistas" and our historical aboriginal recruitment practices that have allowed us to identify, recruit and train five aboriginal employees in on‑air positions.

1687             We are on record to our employees, the media, the industry and the Commission that we want to be a leader in our industry, a leader in service, in reflecting our communities and in supporting Canadian musicians.

1688             We believe that we have demonstrated our leadership and we would be proud to bring our brand of radio to Red Deer.

1689             Earlier in this presentation we talked about the connections that Classic Hits songs will make for our listeners.  Madam Chair, Commissioners, this station is already in the air: we hope you will let us put it on the air.

1690             Thank you.  We are happy to answer questions at this time.

1691             THE CHAIRPERSON:  Thank you, Ms Micallef.

1692             Commissioner Patrone will be asking the questions initially.

COMMISSIONER PATRONE:  Thank you, Madam Chair.  Welcome all.

1693             Yes, I do remember my prom.  I'm not sure I want to, but ‑‑

‑‑‑ Laughter / Rires

1694             COMMISSIONER PATRONE:  You promised to have and keep a large library of music and offer few repeats.  Can you give me some more specifics in terms of numbers of spins, that kind of thing?

1695             MS MICALLEF:  Sure.  I'm going to ask Jason and Joel to answer that question.

1696             Jason...?

1697             MR. J. MANN:  Absolutely.  I guess there are many different ways you can approach it and look at it.  Active titles in the library we would anticipate being in the neighbourhood of 1,200 active titles at any given time.  That doesn't mean that there are only 1,200 songs, though, that would be suitable or available or make sense to play on the air, but with the nature of the gold based music format we find that the best approach or strategy is isolating a certain percentage, somewhere in the neighbourhood of 20 per cent of your active library in the gold portion of your library and setting aside different platoons; so resting 20 per cent, bringing in a new 20 per cent, resting another 20 per cent, bringing in a new 20 per cent, doing that three or four times a year.

1698             But at any given time active about 1,200.

1699             Because we have indicated that we play 15 per cent music from our current decade, most of which would be Canadian music, most of which would be relatively current and emerging music, we are going to have categories representing in the neighbourhood of 15 to 20 current artists, and those will spin roughly around three times a day.

1700             And the reason why you would want to do that is you would want to begin creating familiarity around those artists.

1701             So the highest rotation or spin per day would be three; on the low end would be, you know, once a week or once every 10 days, somewhere in that neighbourhood.

1702             COMMISSIONER PATRONE:  Did you have more to add to that?

1703             MR. J. MANN:  No.

1704             COMMISSIONER PATRONE:  You spoke a little bit about the all Canadian weekend and you talked a little bit about the reaction.  I think you described it as mixed.

1705             Can you talk about some of the reactions that you did get from listeners?

1706             MR. J. MANN:  Sure.  I don't have specific comments, but I think the comments ‑‑ any comment that was maybe on sort of the negative side wasn't necessarily about the music; it was just that we had changed the name of the station, and 94X in Prince George has established a very passionate following.  It is a market leader in the BBMs, and so that kind of a change sent up a lot of signals in the P1 or core audience.

1707             That said, once people realized what we were doing, they thought it was fantastic, and so that's where I guess the celebration of Canadian music came in play.

1708             MS MICALLEF:  It's sort of like the situation with Coca Cola when they changed coke and they ended up with new Coke and old Coke and the controversy that flowed from that actually turned out to be good for everyone.

1709             COMMISSIONER PATRONE:  From what I remember from new coke, though, it wasn't very popular.

‑‑‑ Laughter / Rires

1710             COMMISSIONER PATRONE:  I want to jump over to news very briefly.

1711             You spoke a little bit about the financial commitment to news and information, $4.5 million.

1712             What is the breakdown in the average newscast between local, regional, national and international news?  Are you able to provide that for me, roughly?  I'm not asking for the ‑‑

1713             MS MICALLEF:  Sure.  Just to clarify, the $4.5 million is not all to news; it is also partly to programming.  So it is programming and news.

1714             COMMISSIONER PATRONE:  Thank you.

1715             MS MICALLEF:  Thank you.  And I'm going to ask Glenn Hicks, our Director of News and Information, to speak on that.

1716             MR. HICKS:  To answer your question, Commissioner Patrone, precisely, we have a minimum standard of 80 per cent local news in all our newscasts.  A perfect way of you visualizing that ‑‑ and you are familiar with newscast running orders ‑‑ four out of every five stories in every single newscast that we broadcast live throughout the day would be local with local audio; the fifth story in five would be of a regional, provincial or national bias.

1717             Sometimes we would also have extra stories that would bounce on local angles from that.

1718             But 80 per cent minimum local content, allowing up to 20 per cent for the other news stories.

1719             COMMISSIONER PATRONE:  How many reporters will you be able to put on the street?

1720             MR. HICKS:  Well, we would have a news team of 3.5 and I will break that down for you.

1721             We would have a news director.  In this sort of market typically a news director may anchor the morning news, but not necessarily.  We would decide on the personnel we have.  But a news director would certainly be in charge of the strategy and getting as much local content as possible, driving the news room and his or her team.

1722             The second reporter/news producer and third reporter/news producer, the second and third fulltime staff, would be out on the street, some hours in the office generating calls.  All flexi hours, going out in the evenings.  In fact, the news director ‑‑ my experience is that the news director also gets out at night, covers meetings, covers any community meetings that may be going on.

1723             COMMISSIONER PATRONE:  So you will be able to have ‑‑ sorry.  You will have a reporter late as well?

1724             MR. HICKS:  Yes.  Yes, we would have a reporter who would cover stuff at night.  Now, I'm not saying that the reporter would necessarily be sitting in the newsroom through the evening, but they would go out and handle community events or news gather in the community by phone or directly with the community in the evening.

1725             And the .5, that half a person, would be a part‑timer, looking after the weekends predominantly.

1726             COMMISSIONER PATRONE:  So stringers, volunteers, that kind of thing, will they be utilized at all?

1727             MR. HICKS:  No.  In this sort of market, from my experience running the news for all of our Vista stations, I'm very comfortable that 3.5 people deployed properly can carry and handle the local news‑gathering operation.

1728             COMMISSIONER PATRONE:  Will the agribusiness segment be sponsored; and if so, what safeguards will exist as far as issues around editorial fairness and non‑bias?

1729             MR. P. MANN:  I think fair to say that just as sportscasts are sponsored, for example, in our Grande Prairie operation we have both an agribusiness feature as well as a resource industries feature that reflect the oil and gas industry in that region as well.  Sponsorships are available and our editorial policy across the company stays intact, no different than it would in any newsroom.

1730             In fact, in the Grande Prairie market, one newsperson is responsible each week for generating the resource feature, another is responsible for the agribusiness feature, who has a farm directorship background in another market, and they treat it just like any other editorial policy in terms of story gathering.

1731             here is no crass commercial content I guess is sort of where you are going with that.  It's true editorial content.  It's not media release stuff.

1732             COMMISSIONER PATRONE:  You spoke at length about your format and your selection of the Classic Hits format over others.  You also talked a little bit about the Lacombe based station CJUV.

1733             Could you talk a little bit at length about how you are going to ensure as little overlap in terms of music as possible?

1734             MR. J. MANN:  Well, first of all, we deeply believe that by providing diversity in music in the community, that is our greatest opportunity to carve out our own audience.

1735             So I guess, you know, as a matter of regular practice, what we do is we do monitor what the other radio stations are doing, and there is a balance between being reactionary, I suppose, if anybody were to make a change to their format, but as it stands right now the overlap is quite minimal actually.  They have a pretty focused Soft AC sound.

1736             COMMISSIONER PATRONE:  And in terms of your competition, or possible competition, right in Red Deer?

1737             MR. J. MANN:  Yes.

1738             COMMISSIONER PATRONE:  You don't anticipate much in the way of musical overlap as far as those stations?

1739             MR. J. MANN:  I think that, you know, we do anticipate some musical overlap, but it comes to context, and so ‑‑ if you want, I could speak maybe specifically about Lacombe and what we sort of have determined, listening to the radio station and doing monitors.

1740             You know, in terms of Lacombe, 21 per cent of the music, in the last monitor anyways, was based in the '50s and '60s.  So right there that is a full 20 per cent of non‑duplicated material.

1741             Four per cent was from 2000 on.  So that is another 10 per cent that we are going to be doing that is from that decade.  So that is now 30 per cent non‑duplicated just by nature of era.

1742             Then if you look at the music from the '70s, '80s and '90s, the percentage of the music that they would play that would be not duplicated is significant, leaving a pretty small piece of repertoire that we might have some shared audience in.

1743             Maybe to just give you some context around that even further, some of the artists that they would be playing that we wouldn't be playing would be The Supremes, The Bee Gees, Paul Anka, Captain and Tennille, Nat King Cole, Melissa Manchester, The Nylons, Aretha Franklin, Billy Ocean, Wilson Phillips, Amy Grant, Anne Murray and Celine Dion.  So as you can tell, even if we are sharing some of the same music, when they go in to play something like that, the audience that we are trying to attract isn't going to want to listen to that.

1744             Further, I would say that in listening to Lacombe, they do an excellent job of serving Lacombe with information.  You know, our focus is going to be primarily on Red Deer, so it goes beyond the music.

1745             Then as far as in market, maybe the one that you are referring to that you would be most curious about would be The Drive as it is a Classic Rock station.  As you know, the Commission has licensed a number of Classic Rock and Classic Hit stations in the same market, and there are a number of Classic Rock and Classic Hits stations that have emerged in markets by existing companies and they exist and they work together.

1746             The Drive is a Classic Rock based station playing slightly more older rock than the other rock station in town, which is a very heavy rock station, but it too plays a heavier amount of modern music.  Notice that there has been some migrating happening there, so it is maybe a little bit difficult to put the finger on it exactly, but we know this.  We know that The Drive plays artists like Everlast, Offspring, Soundgarden, Seether, Six am, The Raconteurs, Matthew Good Band, Stone Temple Pilots, Against Me! and Smashing Pumpkins as examples of songs that we wouldn't play.

1747             And again, just as it was true for CJUV, the context of moving from those songs that we may share into those harder songs, if the listener and the audience that we are trying to attract isn't interested ‑‑ and they are not ‑‑ in hearing that edgier, harder music, you know, we are going to be the option for them, not that other station.

1748             I would suggest that some of the songs or the artists that we would play that The Drive wouldn't be playing, to further sort of show you how they would differ, would be Classic Hits 95 would play artists like Prince, Men at Work, Corey Hart, Gino Vannelli, Jeremy Fisher, Liam Titcomb, Brian Melo and Gavin DeGraw, which in any time that we have listened and monitored The Drive, they don't.

1749             They play pure rock.  We generally, as a Classic Hits station, would play rock, a lighter rock, and a pop‑based rock blend.

1750             They are heavier; we would be lighter.  Their music is more strident; ours less.

1751             I think that hopefully illustrates it for you.

1752             COMMISSIONER PATRONE:  I want to speak a little bit about the CCD commitment.

1753             Vista is committing $770,000 total cash to support Canadian Content Development, direct contributions to FACTOR and the Alberta Recording Industry Association.  This works out to $110,000 per year over seven years?

1754             MS MICALLEF:  That's correct.

1755             COMMISSIONER PATRONE:  Can you confirm that this amount is the over and above contribution and do you accept this as a condition of licence?

1756             MS MICALLEF:  Yes, it is, and we do.

1757             COMMISSIONER PATRONE:  Also another note of clarification, I know you spoke about it during your presentation.  The Commission normally requires applicants to commit to 20 per cent of their total over and above CCD contributions to be directed to FACTOR or MUSICACTION.

1758             Are you proposing to direct 60 per cent of your over and above contribution toward FACTOR as a condition of licence?

1759             MS MICALLEF:  Yes, we are.

1760             COMMISSIONER PATRONE:  You are proposing 11 hours of spoken word content?

1761             MS MICALLEF:  Yes.

1762             COMMISSIONER PATRONE:  You have committed to five hours and 15 minutes to news?

1763             MS MICALLEF:  Yes.

1764             COMMISSIONER PATRONE:  What percentage of that will be ‑‑ actually, I think you answered that.  I believe it was 80 per cent.  Is that correct?

1765             MR. HICKS:  That's right, yes.

1766             COMMISSIONER PATRONE:  Why do you feel it is so important to designate so much time to news?

1767             MS MICALLEF:  Actually, news is our passion.  Not only do we feel it's a duty to ensure that we reflect the community through our news and through our spoken word and through our various programs, we actually feel that it is what drives audience to us and differentiates us from any of our competitors, especially in this particular demographic.

1768             I will also ask Glenn to add to that and you'll notice how passionate he is about news.

1769             MR. HICKS:  Passionate but controlled.  You know, as a news guy you want to be passionate, but when you're on the air anything but.

1770             No.  You know, since Vista came on the scene I think it completely understood and acknowledged the sort of desperate state that perhaps some commercial radio stations had got themselves into, perhaps for financial reasons.  News is an investment, but it is absolutely the cornerstone of every Vista station.

1771             Yes, the music is important, but news is monstrously powerful ‑‑ there's passion for you ‑‑ is very, very powerful in terms of engaging the community.  The more local news you do, the more local news you get, the better you are with your community.  The advertisers love it, the listeners relate to you.

1772             You know, an awful lot of the communities that we are in ‑‑ in fact Red Deer, for example.  People come from all over the world to populate towns and cities across Canada and they have come with some knowledge of big‑city ideas, some knowledge of news that is relevant to them.  Well, they move to a town, they want to hear about that town.  They want to feel important.  That town has an awful lot to reflect.

1773             While we would never ignore a national or an international story, 80 per cent as a minimum for local content we think is absolutely bang on.  Many of our newscasts every day are 100 per cent local.  We think that's right in the markets that we operate in.

1774             The community loves it.  The communities feel proud that they have a radio station that actually talks about them and everything that they do.

1775             COMMISSIONER PATRONE:  You spoke at length in your application about the economy in the area, and I believe you said it was not an issue as far as Red Deer is concerned.  But as you are aware, I mean Alberta has gone through its boom and bust cycles.

1776             How well equipped is Vista in case economic and the situation around the economy should happen to deteriorate?

1777             MS MICALLEF:  We are actually very well funded.  We have quite a bit of liquidity available through our bank credit facilities.  We have a very strong shareholder base.  We are profitable in every one of our markets.

1778             Our projections for the Red Deer market actually took into account the possibility of two radio stations, so we are realistic in our expectations.  We are realistic in our projections.  We are very good operators and we are very comfortable that the Red Deer market could very well support an additional radio station.

1779             And if we were wrong on that and it needed more time for us to actually penetrate the market and become profitable, we are very confident that we have the ability to sustain any delay in profitability.

1780             COMMISSIONER PATRONE:  You also spoke ‑‑ and I apologize for jumping around a little bit here.  But in terms of music you are planning to repatriate some of the listeners who are now tuning into out of market stations.

1781             What percentage of those listeners do you anticipate Vista will be able to repatriate?

1782             MS MICALLEF:  I'm going to ask John Yerxa to respond to that.

1783             MR. YERXA:  According to the second wave of research that we conducted, approximately 44 per cent of a Classic Hits core audience would come from in market stations and the other 56 per cent would come from out of market stations.

1784             MR. J. MANN:  I may have something to add to that.

1785             COMMISSIONER PATRONE:  Go ahead.

‑‑‑ Pause

1786             MR. J. MANN:  What I would like to maybe just add to that ‑‑ and I don't have the specific number right now ‑‑ but if my memory serves me correctly, the latest BBM research indicated that Red Deer's 35‑plus audience had a pretty low amount of time tuned to local radio stations.  It was somewhere in the neighbourhood of 65 or 68 per cent to local radio, whereas interestingly, and perhaps somewhat counterintuitive because of what we see across the rest of the nation, the younger audience actually had a higher percentage of tuning to local radio, the 12 to 34 demographic.  That was somewhere in the neighbourhood of 83 per cent, I believe.

1787             COMMISSIONER PATRONE:  A question around revenues.

1788             You expect to derive 30 per cent or $536,000 of your second year's revenues from incumbent stations?

1789             MR. P. MANN:  That's correct.  We have always taken a very pragmatic approach to what the true on the street impact is when we go into markets.  I know presentation numbers vary dramatically, but the truth is there are always early adopters in those core businesses who are radio clients in any market, the low hanging fruit if you will, who always want to be on the radio.  Therefore, there is going to be an automatic pick‑up.  They want to be a part of it.  They want to be a part of the hot new brand.

1790             We have certainly found that anywhere we have re‑branded and certainly most recently in Grande Prairie with the new station launched just a year ago.  The early uptake to a great extent comes from the existing core radio users of the market.

1791             COMMISSIONER PATRONE:  Are you able to specify and quantify which stations you expect those revenues to come from?

1792             MR. P. MANN:  We think that obviously in terms of how you look at the share ‑‑ I mean, between the two incumbent companies we think it's going to work out fairly evenly in total dollars, but obviously the two brands, one on each company, that skews to the male side, The Drive, in the case of Pattison Z99, they would take more of that total share than the other formats would.  But when you put the whole pie together, it is two stations per company and the dollars I think are going to be fairly even on a corporate basis.

1793             COMMISSIONER PATRONE:  Just a few more questions left before I pass you on to my colleagues.

1794             Cruiser reports.  Will the community cruiser be a green option hybrid vehicle ‑‑

‑‑‑ Laughter / Rires

1795             COMMISSIONER PATRONE:  We have all seen these massive SUVs that are often employed by stations to spread the message, sort of drive‑by billboards really.

1796             So I pose that question to you.

1797             MR. P. MANN:  I will start on that one.

1798             Sorry, we only laughed because it's actually something we have been discussing of late in several of our markets, particularly ones where climactically, on the coast and so on, these vehicles do function fairly well on an all‑year‑round basis.  We just haven't figured out how we would get to the ski hill in it in some cases.  But we are looking at it and we are serious about it.

1799             In fact, I might just take a moment on the green initiative to just point something out.  It doesn't apply to the vehicles per se, but it does to overall conservation of our planet.

1800             Very recently we had the opportunity to move into a strategic partnership, an alliance if you will, with a resort in Nemo Bay on the Pacific mainland coast, and in conjunction with that the local First Nations people, as well in a partnership that's airing on every one of our Vista stations, not only in B.C. but Alberta and the Northwest Territories, simply urging our listeners in all of those markets to conserve energy, conserve our planet.

1801             So I don't know how many companies have, you know, company‑wide use of those kinds of programs, but to do it in partnership with a First Nations group I think might be a first, and it has been just an amazing thing.

1802             COMMISSIONER PATRONE:  I appreciate the answer.

1803             I was asked not to ask that one, so I...

‑‑‑ Laughter / Rires

1804             COMMISSIONER PATRONE:  The Rock Report.  Will The Rock Report be locally produced in terms of it being a segment or will that be produced outside?

1805             MR. J. MANN:  Locally produced and talking about general happenings about music that is on our playlist.

1806             COMMISSIONER PATRONE:  Finally, your one in four songs from newer artist commitment, how will these artists be chosen?

1807             MR. J. MANN:  Well, obviously we need to start with compatibility of format, with the format, and, you know, we are beginning to see ‑‑ this is, you know, obviously a challenging question to answer very specifically because there are no defined parameters around what is an emerging artist yet.

1808             Based on the CAB definition, based on the fact that BDS is providing now some emerging artist information ‑‑ it is not entirely conclusive, though, because it is a fairly short chart and I believe that a number of the artists on, say, the Hot AC or the AOR charts below the sort of Top 20 that BDS is providing are also emerging artists.

1809             So it is going to be obviously looking through those usual channels and doing what we do and reaching out to the music community very actively.

1810             Our programmers are passionate about music.  They have roots in music in many cases, are musicians in many cases themselves, more than just Joel here, and we also have outreach programs and campaigns on the air and also in other media, with our example in British Columbia, B.C. Musicians magazine.  So we are committed, passionate and we do a lot.

1811             MS MICALLEF:  I might just add that in your package are two examples of two articles written, one by Jason and one by one of our other programmers for B.C. Musicians magazine.  The focus of those articles is always to assist emerging artists.

1812             The last thing I would mention as well is that it is one of our stated objectives to promote emerging artists in Canadian music.

1813             COMMISSIONER PATRONE:  Thank you all very much for your answers.

1814             Madam Chair...?

1815             THE CHAIRPERSON:  Commissioner Cugini.

1816             COMMISSIONER CUGINI:  Thank you and good morning.  Just one question.

1817             This is a very popular format.  This is a format that appeals to a broad age group.  It might skew female, but it's pretty well split between male and female, if I have that correct, and yet your share projections are middle of the road in comparison to the other applicants.

1818             I guess my question is:  How can we be assured that you haven't underestimated your share projections and therefore your impact on the market and your overall business plan therefore?

1819             MS MICALLEF:  We have actually done quite a bit of research in this area and I'm going to ask John to respond to your question.

1820             MR. YERXA:  Two factors:  Number one, it reflected the favourite genre status that came through on the research.  The second consideration that I know Paul took into account was the fact that it is very likely that the Commission could license two stations and that really should be reflected in the business plan.

1821             COMMISSIONER CUGINI:  So you in your business plan have said ‑‑ when you put together your business plan, do you create two scenarios:  what if we are the only ones licensed or what if the Commission licenses two?

1822             Based on Mr. Yerxa's answer, this is a sure projection based on the possibility that we might license two in Red Deer.

1823             MR. P. MANN:  Correct and I think it's fair to say some number of applications back in time we in fact were building our business plans based on the assumption of one new re‑licence.  The pattern of late in several recent decisions has been two.

1824             COMMISSIONER CUGINI:  It's always dangerous to predict what we are going to do.

1825             MR. P. MANN:  That's right.

‑‑‑ Laughter / Rires

1826             MR. P. MANN:  So we began to revisit that.

1827             In this case there was really almost what I would call the half station rationale.  In effect, in reality there is business being done by the Lacombe station out of Red Deer, albeit passively, but there is marketing of the entity in the marketplace in Red Deer.  So we almost looked at that with a view that it's 4 and a half stations or 4 and a quarter, and what are the odds that it's really not going to be two, depending on how things work out.

1828             So we went a touch on the conservative side, as John stated, both on the share and treated that slice of the pie a little more conservatively on the revenue side as well.

1829             I can say to you I think that in Grande Prairie, where you did award two licences, yes, we are doing better than we imagined.  But again, from a banker's philosophy, we try to go with what we believe we can achieve.

1830             COMMISSIONER CUGINI:  And if we were to only license one, what would be the difference be in your share projections?  And you would of course be the only ones that we would license.

‑‑‑ Laughter / Rires

1831             MR. P. MANN:  John, do you want to answer the share question?

1832             MR. YERXA:  Well that's a first question considering where this province has been.  Although it has softened somewhat, I think we were looking at an inflation rate a year ago of about five to 6 per cent, but we are still just marginally above 3 per cent and, you know, if we end up with stagflation then we are in real trouble.

1833             I still think honestly that it's just more prudent to go forward, recognizing the impact of new technologies and so on.  I really think that although the share percentage could jump somewhat, my advice to Vista would be to stick with the 12 per cent figure.

1834             COMMISSIONER CUGINI:  Okay.  Well, thank you very much.

1835             Those are my questions, Madam Chair.

1836             THE CHAIRPERSON:  Commissioner Menzies...?

1837             COMMISSIONER MENZIES:  I'm just curious on your 80 per cent for local news.

1838             Does that include the whole package, the news, weather, sports broadcast?

1839             MS MICALLEF:  That's our pure news.

1840             COMMISSIONER MENZIES:  That's just news?

1841             MS MICALLEF:  Yes, it is.

1842             COMMISSIONER MENZIES:  Okay.  So sports, et cetera, is that in addition to that?

1843             MS MICALLEF:  Yes, it is.

1844             COMMISSIONER MENZIES:  And that 3.5 person newsroom, will they also cover your business and sports news or are they just news?  Where would you get your sports, for instance, from?

1845             MS MICALLEF:  The answer is yes.

1846             I will just ask Glenn if he has anything he would like to add to that.

1847             MR. HICKS:  Yes.  If I can break down a typical 3.5 news team, there would be preferred beats.  So logically I would say one of the three reporter/producers, including the news director, would have a beet that may include the Chamber of Commerce.  Somebody else may have a city beat.  One of those three will most certainly have a sports bent.

1848             And to answer your earlier question, 80 per cent of the sports we deliver, 80 per cent of the sports news we put on the air is local audio sports news.  It is not the NHL, the NBA.  That again falls into that 20 per cent category.

1849             So I know where you are coming from in the pure new sense.  There is kind of an argument that news is pure news, hard news, local.  But given that our sports news in every single newscast is also 80 per cent on what the local coach is talking about, what the local team captain is talking about, previewing tonight's game or the weekend's game, 80 per cent of that is local as well.

1850             So from my perspective we have approaching five hours of local pure news.

1851             COMMISSIONER MENZIES:  Okay. I'm just trying to get a handle on it.  So one of your 3.5 would have a sports bent and they would be ‑‑ so in addition to their news assignments, they would also be covering the junior hockey team?

1852             MR. HICKS:  Yes.  So, for example, we would have to work out a flexi‑shift pattern, as we do with all our staff.  But, for example, the third fulltime person would have a working day that might start at 1 o'clock in the afternoon.

1853             The first four or five hours of the day is on a beat news‑wise or in the newsroom preparing or getting the calls out and doing local stories.  They then go off to the hockey game on the Tuesday night or the Thursday night, the junior hockey game, come back, put together a report, a voice report, some audio clips for the next morning's news, and by 10 or 11 o'clock at night that is the end of their eight‑hour shift.

1854             COMMISSIONER MENZIES:  Okay.  So you have to know the school board and you have to know calf roping?

‑‑‑ Laughter / Rires

1855             MR. HICKS:  You know, there would be ‑‑ you know that in all the markets like this you could probably go to a structured board meeting every single night.  You could do councils on a Monday or Tuesday, school boards, regional districts, hospital boards.  You have to be selective.  Sometimes you can't get to absolutely every single thing, you know.  Every night you look at the agendas, you check.  Are there things you could do telephonically?

1856             Sometimes I have people who, yes, go out in the evening.  I send reporters in my ‑‑ in the Kootenays, I send reporters out to a council meeting, come back and immediately follow up by telephone a council meeting that's an hour and a half drive up the road.  I can't send them to two because at the same time I have somebody doing a volunteer meeting on the West Kootenay Eco Society, for example, or a hospital board meeting.

1857             If you manage your team, you can get a lot done.

1858             COMMISSIONER MENZIES:  Yes, I used to work for a guy like you.

‑‑‑ Laugher / Rires

1859             MR. HICKS:  So I hear.

1860             COMMISSIONER MENZIES:  What is it about your spoken word package, your news and sports package like that that makes you new, that makes you different, not just ‑‑ I quite often hear that this will be a new news voice, and I kind of wonder well, will it just be another news voice doing the same things that other people do?

1861             Why would I tune to your news and sports package instead of any of the other guys?  I mean, I can listen to Calgary, Edmonton, everything in that market.

1862             MR. J. MANN:  I might start anyways by just saying that if you are listening to Z99 as a listener per se, or maybe even listening to a station out of market because that's your only other option, this is going to be a new local news option because it's a new local music option.  So people who might be tuning outside of the market now have a local news option that they might not have otherwise been able to palate.

1863             And the news covered on other stations may be somewhat different based on their demographic skew as well.  Younger skewed radio stations probably aren't going to be covering some of the topics or issues that are relevant to the older 35‑54 demographic.

1864             From the programming chair, that's the way I look at it.  I don't know if anybody has anything else to add to it.

1865             MS MICALLEF:  The other thing I would like to add as well is our commitment to the quality of the newscasts and the fact that we don't just sit and receive the information; we actually go out and make stories.

1866             Also, our timeliness with the news is also significant.

1867             I'm going to ask Paul to tell you a story about a situation recently where we were the first to break a news story, and then Glenn also has something he would like to add.

1868             MR. P. MANN:  I'm sure everybody has caught it on national television, or there was even The Post this morning.  The biggest fire in the history of the city of Prince George occurred two nights ago.  We lost a Canfor plant, about 350 jobs, and the wind drove that to other buildings, some of it as far as a mile away and the entire, as I said, city was on fire.

1869             You know, we have a competitor with radio and television in that market.  There are newspapers in that market.  I can tell you without hesitation our team broke that story.  Our team was on that scene.  We have an emergency preparedness program in every one of our stations that ensures first line of contact.

1870             Not only was our entire news team on the scene, but our programmers and air staff were there and worked through the night and into the next day non‑stop.

1871             So when Glenn speaks about our passion for news, it carries down to the very detailed level.  I think in a market that size to break one of the bigger stories this week speaks for our teams.

1872             MR. HICKS:  Commissioner Menzies, you will also know from your background that news organizations love breaking stories.  I mean, heck, if you don't react to a breaking story, you're not worth your salt.

1873             But what is also important ‑‑ you asked the question:  Well, what makes you different?  That is I make it a point in every Vista news market to say to the people you cannot rely on the breaking stories and you cannot rely on stories to land in your lap.  That's not how it works.

1874             In metropolitan news‑gathering centres that is going to happen all day long.  You are going to get pedestrians being knocked over on the corner of First and Third, and if you want to report that all day long, well, tragic as it is, those are the things that you are surrounded by.

1875             In smaller markets where Vista specializes, that is not the news agenda.  The news agenda is issue‑driven stuff.  And if you are going to follow the issues, you have to have people out in the community all the time talking to volunteer groups, talking to city councillors, people on boards to find out the story behind the story.  That is very much what makes us different.

1876             Yes, breaking news; yes, if there is a forest fire over the hill; yes, if there is a major highway smash; yes, if there is a killer on the loose.  But that doesn't happen, tragically for newsrooms, often enough.  In small newsrooms, we don't get the exciting juicy stuff day in, day out.

1877             Why people come to you in a small market in the news is because day in, day out four of those five local stories every newscast, with a new running order for the morning and a new running order for the afternoon.  It's about the issues, it's about the issues that are affecting your listeners, what it means to them economically, socially, for their future, for their environment.

1878             That's exclusively what we train our news directors to do every day.  That's why we are different.

1879             COMMISSIONER MENZIES:  Okay.  Ideas are hard in that sense.

1880             You mentioned in your presentation and it is in your application that your programming expenses are the highest of others, and I'm just trying to get a sense from you as to where you think that gives you an edge, because spending more money in and of itself isn't always seen as a good thing.  I expect you go through that yourselves from time to time.

1881             So where specifically is that investment made?  Is it in the recruitment of your people?  Is it elsewhere?  And where would that give you an edge?

1882             MS MICALLEF:  First, it shows our commitment to the local community and to local programming and to new programming.  We are not a company that spends money idly.  We put our money to very good use.

1883             You may recall in previous applications we would have spoken about the first group of 19 stations that we acquired.  All of them were underperforming, all of them were losing money.  We had to spend money to turn them around to make them profitable, and we are happy to say that they are all profitable today.

1884             But just to illustrate the fact that we take our responsibility to the community seriously in the manner in which we spend the money.  It is always put to good use.

1885             There are a number of different people who can comment on this because it really goes to the foundation of who we are and our commitment to local.

1886             I'm going to ask Jason to speak on it and Bryan as well.

1887             MR. J. MANN:  Our philosophy is to first build the audience and to attract the audience and in order to do so you need to be competitive.  And with additional station, possibly two, maybe two and a half into the marketplace, it is going to become a pretty competitive market.

1888             So we have anticipated being a leader.

1889             Music to an extent comes and goes, cycles.  It is also to an extent a commodity.  But what we can do and what we can control the most is the quality of what we do between the records and the service that we provide the community.  And that does come with a cost.

1890             But we believe, and historically have proven, that with that investment you can turn it and monetize it.

1891             COMMISSIONER MENZIES:  Just help me a little bit.  Is it a human resources investment?  Is it a marketing style investment?

1892             MR. J. MANN:  Some of it is marketing, some of it is quality of people.

1893             COMMISSIONER MENZIES:  All right.  Thank you.

1894             I have no more questions.

1895             THE CHAIRPERSON:  Commissioner Molnar, then.

1896             COMMISSIONER MOLNAR:  Thank you.

1897             I would first like to just follow up on some questions that Commissioner Cugini was asking related to your financials.

1898             You mentioned, and I just want to confirm, that the financial projection that you have put forward, the business case you have put forward, is based on an assumption that there are two additional radio stations licensed for Red Deer.

1899             MR. P. MANN:  That's correct.  And in effect using the current Lacombe information best we can is almost as if it's four and a half stations currently.

1900             So I guess we are saying six and a half regardless of how that all plays out, yes.

1901             COMMISSIONER MOLNAR:  Okay.  You spoke about the extensive market research you did to identify the format of your music and, you know, to ensure you got it right here moving forward.

1902             Did you do similar research on the economics to understand ‑‑ how is it you came to feel some comfort that this market would be able to support two additional stations?

1903             What is the economic basis for that assumption?

1904             MR. P. MANN:  In every one of our applications we take kind of, at minimum, two different approaches on the financial model:  a bottom‑up approach and then a top‑down approach.

1905             Interestingly enough, over about eight of these now, we have always come in within about $100,000 of each other on the various approaches when we mix all the criteria together.

1906             So yes, we are pretty comfortable about it.

1907             We also talked to a number of business people in the community about the format specifically, about the dynamics of the market, and so forth.  In fact, some of them have letters on our file, you know, supporting that direction.

1908             I think if we again look at similar scenarios, particularly in Alberta with our newest station in Grande Prairie over the past year, and we have a full fiscal year of history there now, and a fairly similar model of community, if you will, based on the ag and the resource industry dynamics, albeit a smaller market.

1909             You know, literally the number of radio operators in that market changed, doubled ‑‑ more than doubled in fact with the Christian station now on the air ‑‑ doubled and then some overnight.  And as we have seen, the ability to absorb it has played out better than probably anyone would have imagined.

1910             So we have some fairly good on the ground history, as well as the specific research in this market.

1911             We sometimes will discount based on an anticipated audience share, by the way, in terms of revenue.  This particular market, as you saw in the graphs, the end of the market that is being better served and better sold perhaps, leaves a fairly interesting hole for the 35 to 54 audience, and also for potential advertisers who want to target their business to that client base.

1912             So in this case we actually, taking all other factors in Red Deer, took what came out as best we can get ‑‑ obviously, with no certainty of the absolute numbers, but as best we can get it ‑‑ what we said would come out about 1.4 million in the first year, and we actually premiumed that up by about 150,000 given that void in 35‑54, because it's typically a high demand advertiser category.

1913             MS MICALLEF:  Let me also add a couple other things.

1914             First, we have amongst us in this group over 200 and something years of experience in this industry.  We actually are as old as we look up there.  And we budget for each one of our stations on a line by line basis.  We have 23 stations currently and we spend a lot of time every year.  In fact, we are running a five‑quarter budget.

1915             So what we do when we prepare our projections for these applications is not that dissimilar to what we do day in and day out in terms of all of the markets that we serve.

1916             We also look at economic information that is published by Financial Post and other economists about the area as well.

1917             COMMISSIONER MOLNAR:  Okay.  Thank you for that because my question wasn't ‑‑ I certainly wasn't questioning the financial forecast you put forward as much as I was wondering what information you had regarding the economic capacity of Red Deer to be able to hold or support two additional stations.

1918             MR. P. MANN:  Perhaps just one additional comment, again not necessarily all that dissimilar from the Grande Prairie model where inventory is tight, for example, at many times of the week, many times of the year in the current incumbent operations in Red Deer, as our research would tell us at least.

1919             So we believe there is pretty significant room for new inventory uptake in the market as well, based again on some of the interview processes with some of the client base in the market.

1920             MS MICALLEF:  Let me also refer you to our supplementary brief where we actually go into quite a bit of detail about the economic situation in Red Deer, and John Yerxa also through his research can add some assistance here.

1921             MR. YERXA:  Well, the only thing that I would like to add is that certainly we looked at a lot of economic research and one of the most startling striking quotes that came out of it was from TD Economics.  Don Drummond I believe, the Chief Economist, stated that Red Deer was at the centre, at that time last fall of, I think as he said, one of the hottest economic regions in the world.

1922             So while I considered there would be a slowdown, certainly given the recent history of the Commission it would seem likely that going in there one might anticipate there would be two licences granted.

1923             COMMISSIONER MOLNAR:  Thank you.

1924             Another question I have relates to synergies.

1925             There are, you know, two well‑established, well‑financed, well‑run incumbents operating in that market and if you go in as a single station what sort of synergies are you potentially going to lose by being a single station within that market?  Or conversely, perhaps you would like to tell me what synergies you have with some of your other operations that would help you be successful and run efficiently and effectively in that market.

1926             MS MICALLEF:  I will just start here and then I will ask Bryan Edwards to also add some comments.

1927             First, in terms of synergies, the synergies that we share amongst our various radio stations would be the back office synergies, synergies with respect to traffic, with respect to some sales advice, HR, admin, you know, that sort of synergies.  We don't share programming amongst our various stations at all.

1928             But there are benefits that we could pass on to our Red Deer station just by the strength of it being one of our group of stations.

1929             I will ask Bryan to chime in here.

1930             MR. EDWARDS:  It's the story of my life.  She answers the question and then asks me to repeat it.

‑‑‑ Laughter / Rires

1931             MR. EDWARDS:  We really have a remarkable back office system.  When Vista was created, there happened to be a brand new traffic system that hit the marketplace and we were the first in Canada to deploy it.  It is an Internet based central server.  So a lot of day‑to‑day activity that would normally happen in a marketplace is actually done remotely.

1932             Jason has a laptop with him today and if we wanted to, we could pull up any station in our chain and give you the last hour of sales that occurred.  That's how user friendly it is.

1933             So that is an infrastructure that we have.

1934             We have the same kind of infrastructure on the financial side, almost a clone of the traffic system in the financial world.  So that's a huge support system that we have which allows us whether we are the standalone or two in a market ‑‑ and I guess this is a roundabout way to answer the previous question.

1935             One of the reasons on a percentage basis our programming costs are higher is because that's where we spend our time and attention.  In fact, sometimes it's easier to focus on one product stream when you are kicking it off because there are no other distractions.  So when we launch Red Deer, this one station will be the only thing we care about in Red Deer.

1936             COMMISSIONER MOLNAR:  Just to ensure I'm understanding, you mentioned you have 3.5 people for news.  So there is no back office support for them?

1937             All of the news is created locally within the Red Deer market.

1938             MR. EDWARDS:  Absolutely.

1939             COMMISSIONER MOLNAR:  Okay, thank you.

1940             I have just two more questions.

1941             First off, I have a question related to your CCD.

1942             I noticed that you had proposed that the monies going to FACTOR would be directed to Alberta, and I had not seen that before.  Is that something new?

1943             MS MICALLEF:  It's actually not uncommon.

1944             COMMISSIONER MOLNAR:  Oh, okay.

1945             MS MICALLEF:  We do try to work with FACTOR in all of our markets.  We are a very strong supporter of FACTOR.  In fact, I believe in every one of our applications for new licences we had indicated that our CCD support would primarily go to FACTOR.

1946             It started out when we were a new company about three years ago.  We had come up with a program that was very similar to FACTOR's but we were going to run it on a local basis, and FACTOR intervened and asked us if we would reconsider the creation of a new program which would have some duplicated services and therefore not be as efficient and instead direct our support to them.

1947             It was as part of that commitment to FACTOR that we were able to solicit their commitment back to supporting the stations in the various communities that we serve and the various markets that we serve.

1948             We have done this in every one of our applications.

1949             MR. P. MANN:  And that is the updated letter that was announced and filed this morning, that we received from them.

1950             COMMISSIONER MOLNAR:  Just a question.  The Alberta Recording Industry Association where you would also direct some of your monies, is there any opportunity for artists to be going to both of these different funds?

1951             So would you have the same artist being funded through two different funds?

1952             MS MICALLEF:  They actually do two different things, and Jason can provide some further assistance here.

1953             MR. J. MANN:  AREA, which is now actually known now as AMIA, their focus is really on providing support and assistance and knowledge and training and information to artists who really haven't figured out how to make this crazy music business work yet.  So they bring in high‑powered, high profile music leaders, producers, engineers, successful musicians and put on seminars and sessions and invite their membership to come and learn more about how to make a record and how to get it heard on the radio and that kind of stuff.

1954             So it is really early seed stage support that AMIA provides and not necessarily direct funding.

1955             In the instance of our contribution, they have indicated that they don't have enough funding to really do this type of work in the Red Deer area.  They largely stay in the larger centres.  This is something that they would like to achieve, is to be able to provide more localized support in some of these secondary markets, and Red Deer is a huge opportunity for them, they see.

1956             COMMISSIONER MOLNAR:  Thank you.  So this would be directed into the Red Deer market?

1957             MR. J. MANN:  They have indicated that this is where they would like to create it.  They don't have really any programs happening in the Red Deer market yet.  We have talked about it and I have told them about the importance that we have placed on helping local musicians, and they agreed that in fact that would match with their mandate as well.

1958             COMMISSIONER MOLNAR:  Thank you. Just one more question.

1959             I noticed in your application that the question on use of new distribution platforms was ‑‑ you indicated that you would not be looking at new distribution platforms.

1960             I wondered if you perhaps either had ‑‑ you know, is there any sense at all of using the Internet or other alternate distribution and new media to complement and promote your station?  Where are you on that?

1961             MS MICALLEF:  Actually, we said no to that question because we didn't have anything that we could put forward that was very specific, which is what the question was looking for.

1962             I can tell you, we have been a company now in existence for about three years.  When we first started Vista radio the stations that we acquired were in bad need of repair.  Technically often they were not functioning properly, they had lost touch with their communities, they were losing money.  You know, there were a lot of problems.

1963             So the first thing we focused on for the first three years of operations really was turning these radio stations around and really building them up so that they could be strong competitors, strong contributors to the community.

1964             We are happy to say that we have doubled our revenues in the three years that we have operated these stations and they are all profitable stations.

1965             A year ago we turned our attention to new media, new media platforms, and we have created a task force to look at this and we actually are quite far along in that process.

1966             Jason is going to speak to that because this is something he has been working on very diligently.

1967             We also have some Internet‑based strategies already in place that support our various stations, and I will ask Glenn to speak specifically to what it is that we do.

1968             MR. J. MANN:  I guess I was tagged as I have a bit of a background in the Internet and have been actively involved since about 1998 and have spent a lot of time on it, in fact.

1969             There are a number of things that we have been looking at.  The Internet obviously, including streaming and podcasting and downloads, but also cell phone technology, WiMAX, texting and other mobile devices.  So we have a pretty good understanding of what is happening.

1970             It is interesting, as we begin to fully understand what one new technology might be able to provide us as an opportunity and a new one emerges, so it is at a very interesting stage; a lot of evolution, a lot of change happening right now.

1971             So we have sort of been a little bit more reserved and not jumped right in.

1972             That said, we are moving forward specifically on a couple of initiatives.

1973             One is in the area of texting, mobile texting, and we see this as an add‑on feature that will benefit our advertisers.  We are going to do some trialling and if we find it successful, we are going to apply it to station promotions as well.

1974             There are a couple of barriers in our way as far as engaging it right at this very moment, but we have a plan and we will be moving forward with it fairly quickly, I understand.

1975             With respect to the other one, that is of course the Internet.  Our Internet strategy is articulated and we are moving forward with development right now.  Really, at the heart or the core of our strategy, one of the first things that we recognize is we create a lot of local proprietary content and that is going to be our focus in what we do.  We are going to leverage off of that.

1976             It will enable to us strengthen our existing relationships with our listeners through a new channel and build new relationships with new listeners and audience and viewers.

1977             It will also give an opportunity for more of a collaborative approach, I guess, or collaborative relationship with our audience.  It won't be broadcasting; it will be two way, interactive, engaging, and not only engaging with us, but we will be able to connect our audience with each other as well through the platform.

1978             Of course, with respect to all of that and user generated content, we do anticipate moderating, moderating such user generated content.  In the end, once we have all of this functioning and happening and the audience builds and the traffic flows, there will be a monetization opportunity for us as well that we believe.

1979             We have been working on the strategy officially for over a year now.  We developed a task force internally, programmers, newspeople to talk about what we wanted to achieve as a company.  We have held three strategic planning sessions.  We have met with people not only inside our own company, but inside the industry, outside the industry as well, such as ISP providers, software designers, database technology companies, other broadcasters, both inside and outside of Canada, mad scientists, if you will, and other people who are on the fringe of technology.

1980             We know how we want to move forward and we are very close to launching our corporate strategy.

1981             MS MICALLEF:  Glenn, can you speak to what we are currently doing on the Internet to support our stations?

1982             MR. HICKS:  Sure.  Because we generate so much unique locally‑based news and information that nobody else does in our market, isn't it nice to show it off.  Wouldn't it be nice to get it out there to a bigger audience.  So that is certainly the goal that Jason has spoken about.

1983             But at the moment we are already doing some perhaps elementary stuff.  We put our headlines up on our website.  Every week we podcast the entire news highlights of the week.  We call it "The Week in Review", people who are out of market, people who are away from home, people who have family and friends in that area, they have moved on.  Hey, what is happening back home?  They can check that out.  People who aren't necessarily tuning in to the radio at a specific time.

1984             We have a podcast at the end of every week called "The Week in Review"; all the highlights of local news, bang, in one shot every week.  So there is a podcast there.

1985             We have jock profiles.  We have a community calendar that we already put up on the web and that is refreshed every week, local community events that are going on, charitable causes, issues that are going on in the community more on the community level rather than news level.  That is already up on our websites; and contests; and, of course, important surveillance information.

1986             In particular, for example, the last month is provincial emergency preparedness week, you know, forest fires, flooding, et cetera.  Emergency and important preparation websites we would put up on the web so people can just get links to them.  So that is what we are doing already.

1987             MS MICALLEF:  I will just add that with respect to the Red Deer market, the demographic that that are catering to, the 35 to 54‑year‑old demographic, is most familiar or comfortable in respect of the new technologies with the Internet.  So at the very least we would have the same sort of Internet strategy, maybe a more robust version of what we have in place right now to support our stations.

1988             We are anticipating that by the time that we would get licensed and launched that we would have our full‑blown Internet strategy which, as Jason describes, is a very robust, interactive strategy, in place and that we would launch that in Red Deer as well.

1989             COMMISSIONER MOLNAR:  Okay, thank you. That was my last question with it, because I know it was a strategy under development yet to launch.

1990             So your plan ‑‑ I don't want to say an expectation ‑‑ is that you would launch an interactive web portal, if you will, an interactive strategy at the same time that you launched your stations.

1991             MS MICALLEF:  Yes, we would.  We are going to roll out our corporate Internet strategy in the next few months.  It will be done on a test basis and we will roll it out to our various markets over the next 12 to 18 months.  By the time we launch Red Deer, we would be ready to roll it out in Red Deer as well.

1992             COMMISSIONER MOLNAR:  Okay.  Thank you.  Those are my questions.

1993             THE CHAIRPERSON:  Thank you very much.

1994             I have a few questions, but that certainly just took care of one of them.  That's very helpful.

1995             I wanted to just know, first of all, on the little diagram that you included with your presentation where the Lacombe station would fit.

1996             MR. J. MANN:  We didn't specifically add it in the chart because it's a licence for Lacombe and not considered as ‑‑ oh, but you would like to still know where it would fit?

1997             THE CHAIRPERSON:  Yes, just in terms of appeal to audiences.

1998             MR. J. MANN:  It would be in the quadrant most closely related to where CKGY would be there.  It is definitely female skewed and it would be older.

1999             THE CHAIRPERSON:  Okay.  Thank you, that helps.

2000             MR. J. MANN:  Average year of music on the station on the last monitor was 1979.

2001             THE CHAIRPERSON:  So when you say that, is there a percentage of music?  What do you mean by that exactly?

2002             MR. J. MANN:  When you sort of take the average of all the years from every song ‑‑

2003             THE CHAIRPERSON:  Oh, that they are playing?

2004             MR. J. MANN:  Yes.

2005             THE CHAIRPERSON:  Okay.  Thank you.

2006             Just housekeeping here.

2007             With respect to your CCD commitment, is that a typo in your paper?  Is it $777,000 as you said and as is written in your paper here, or is it 770,000?

2008             MS MICALLEF:  It is $110,000 times seven.

2009             THE CHAIRPERSON:  $770,000, thank you.  So we will just note that.  That's all the housekeeping.

2010             I gather, first, that 60 per cent of your $770,000 is going to go to FACTOR.

2011             MS MICALLEF:  Yes.

2012             THE CHAIRPERSON:  That is your intention.  And I notice they do have that usual sentence in their letter that if there are no qualifying Alberta artists, which is the best we have seen to date anyway.

2013             MS MICALLEF:  Right.

2014             THE CHAIRPERSON:  But do you have any way to influence that?  Are you on committees that might assess the entries?

2015             MR. J. MANN:  I think the best way we can influence it ‑‑ and I have been observing a fair amount of success ‑‑ and that is through educating and informing our audience that this funding is available. I have been quite amazed by the number of people who I have been in contact with at the musician base who just weren't aware of the funds or how to apply for the funds.

2016             So we are proactive.  We believe that FACTOR can provide a very strong infrastructure and worthy service and, to some extent, really it's not about how they go about it; it's just that nobody knows about it or not enough people know about it.

2017             If you are a struggling emerging musician, it's kind of one of those things that you are not necessarily thinking about.  So we are taking that as part of our responsibility to make sure that those funds ‑‑ that people in our listening area are aware of those funds and help them reach them.

2018             We have done that through on air messaging, just through casual conversation, when we speak with musicians when they come to the station looking for advice, and through outreach in appropriate magazines.

2019             THE CHAIRPERSON:  That's very helpful.

2020             Yesterday Mr. Hildebrand made a comment that he was quite disappointed in the box of CDs that was recently sent around by FACTOR; that there was only one, I think, with an Alberta artist.  But perhaps you have hit the nail on the head and that that is what is lacking.

2021             Thank you, that's helpful.

2022             How will you stay involved on an ongoing basis with the Alberta Music Industry Association to ensure the funds that you give to them are handled in accordance with the policy?

2023             MR. J. MANN:  We would expect an annual reporting of the funds from them.

2024             THE CHAIRPERSON:  So will you sort of contact them in advance to make sure before they give it out there doing it, reminding them of what the policy is?  Is that the kind of involvement?

2025             MR. J. MANN:  Well, we will have an ongoing and we do have an ongoing relationship with them.  We have talked to them on several occasions.  They understand what we want to achieve.  We believe that our objectives are aligned and they have indicated that on an annual basis that they would be prepared to let us know how the money is being used.

2026             THE CHAIRPERSON:  Thank you.

2027             MS MICALLEF:  They have also, Madam Chair, indicated that they are looking for an opportunity to expand their service to the Red Deer market.

2028             THE CHAIRPERSON:  It's not available to the whole of Alberta as it is?

2029             Maybe you can just describe to me what you mean by that, sir.

2030             MR. J. MANN:  It is.  Any musician could go to where they have the seminars and the sessions, but again ‑‑

2031             THE CHAIRPERSON:  Oh, I see.

2032             MR. J. MANN:  ‑‑ if it's in the middle of winter, the roads are bad, any kind of number of reasons why somebody might not be able to leave their hometown long enough, if they have day jobs, et cetera.  So to be able to bring these seminars and sessions into secondary markets, they are going to reach way more people than they would be by being able to do it in, say, either just Calgary or Edmonton.

2033             THE CHAIRPERSON:  Thank you.

2034             I just want to make sure I didn't miss anything here.

2035             I was just going to ask you, just following on your discussion with Commissioner Molnar, the programming of the music, will that all be done in Red Deer?  It's not done as part of your back office.

2036             MR. J. MANN:  Correct.

2037             THE CHAIRPERSON:  And it's clear that you think the market can support two stations?

2038             Can I conclude that from your comments?

2039             MS MICALLEF:  We do. The economic data with respect to Red Deer is still very strong, notwithstanding that there is, to a degree, a slowdown in the Alberta marketplace generally.  We think it's a minor slowdown.  We don't think it's going to be sustained.

2040             We are very bullish about the Red Deer market and would be very comfortable with having two new stations there.

2041             THE CHAIRPERSON:  How many stations ‑‑ I think you said you have 26 or 23 now?

2042             MS MICALLEF:  We have 23 now.

2043             THE CHAIRPERSON:  And how many in Alberta at this time?

2044             MS MICALLEF:  We have the Grande Prairie station in Alberta.

2045             THE CHAIRPERSON:  just that, okay.

2046             I'm just wondering, if we were to license more than one, which of the applicants would you consider to be the most competitive with your proposed format and which the least?

2047             MS MICALLEF:  We actually believe that we would be competitive with every applicant.  We don't feel that we would have a disadvantage with any applicant that you licensed at all.

2048             So we would be quite comfortable competing with any one of the other applicants.

2049             THE CHAIRPERSON:  Okay.  That's great.

2050             So now this is your two minutes to sum up and tell us why it should be your group, Vista.

2051             MS MICALLEF:  Thank you.

2052             We started out the presentation by saying that once all of the basic criteria are met, what is there left to distinguish the applicants?

2053             And we proposed to you that what was left was to ask who had the best idea and then to look at the track record of the applicant and say who was most likely to be able to fulfil those promises.

2054             It is our view that you will not see a better idea than the idea that Vista has put forward. You won't see a better idea that is more grounded in research than the idea that Vista has put forward.  And we don't believe that you will see an idea that is more in tune with the audience and what the audience is looking for in Red Deer than the idea that Vista has put forward.

2055             We also believe that Vista is the best applicant to fulfil these promises.  We have talked a bit today about the 19 stations that we first acquired about three years ago and the challenge that we had in each of those communities in not just turning the stations around to become profitable, which in itself of course was a large challenge, but more than anything to create the sorts of stations that we wanted to create.

2056             When Bryan, Paul, Jason and I founded Vista Radio four years ago, we did so on the basis that we wanted to make a difference in the communities that we served.  With respect to the 19 stations that we acquired, a lot of them had lost touch with their communities.  They were not making a commitment.  They were not making difference in those markets.

2057             We turned everything around in those stations.  We introduced better programming.  We hired more people.  We introduced training sessions for our staff.  We moved studios into better locations and we rebuilt studios.  We improved the technical sound of the stations.

2058             We in essence made a difference in the communities and became relevant to the communities that we served.

2059             We believe also that we are fulfilling our goal to be leaders in the industry as well.  We have introduced a new immigrant internship program a few weeks ago at the BCAB.  We invited our fellow broadcasters to join us in a similar program, either join us in furthering our program or we invited them to come up with similar programs of their own.

2060             We are happy to report that we were very well received in respect to this announcement and that many of our fellow broadcasters indicated that they would in fact either join us or start similar programs.

2061             So the two goals that we had when we first started this company, which was to make a difference in the communities that we served and to be leaders in the industry itself, we believe that we are well on our way in fulfilling those commitments.

2062             So we would then ask you to please allow us to make the commitment, to make a difference in the community of Red Deer and to bring our leadership to Red Deer.

2063             Thank you.

2064             THE CHAIRPERSON:  Thank you.

2065             I didn't ask if counsel had any questions either.  Sorry about that again.

2066             MS MICALLEF:  Thank you.

2067             THE CHAIRPERSON:  Anyway, it was a very helpful presentation.

2068             MS MICALLEF:  Thank you.

2069             THE CHAIRPERSON:  We are going to take a break now for 15 minutes and we will reconvene at 11:25.

2070             Thank you.

‑‑‑ Upon recessing at 1107 / Suspension à 1107

‑‑‑ Upon resuming at 1129 / Reprise à 1129

2071             THE SECRETARY:  We will now reconvene.

2072             We will now proceed with Item 5, which is an application by Clear Sky Radio Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer.  The new station would operate on a frequency of 90.5 MHz, Channel 213B, with an effective radiated power of 4700 watts, maximum effective radiated power of 9000 watts and an antenna height of 190.1 metres.

2073             Appearing for the applicant is Paul Larsen.

2074             Please introduce your colleagues and then you will have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION

2075             MR. LARSEN:  Thank you, Madam Secretary.

2076             Madam Chair, Commissioners and CRTC staff, good morning.  My name is Paul Larsen and I am President of Clear Sky Radio.  We are very excited to be before you as we continue to try to build Clear Sky Radio, this time with an application for a new FM radio station to serve Red Deer.

2077             I was asked to state on the record that we filed a letter this morning from FACTOR that confirms their acceptance of our CCD funding to FACTOR in earmarking the funds that we will be providing to Alberta artists.  We filed that with the Hearing Secretary earlier this morning.

2078             Also, before we begin our presentation I would like to introduce you to our panel.

2079             To my right is Casey Wilson.  Casey is the General Sales Manager of our Lethbridge, Alberta, radio station CJOC‑FM.  Mr. Wilson joined us here ago when we launched CJOC.  He joined us from Newcap Radio in Red Deer, where he was a Senior Account Manager.  Casey has extensive management experience, including positions with Paramount Theatres and the Forzani Sports Group, as well as owning and operating his own restaurant business, all in Red Deer.

2080             If we are licensed to serve Red Deer, Casey's knowledge, both in radio and as a business person in Red Deer, will help us establish our radio station and business quickly and with precision.

2081             Next to Casey is Pat Siedlecki.  Pat is our News Director in Lethbridge, as well as the play‑by‑play voice of the Lethbridge Hurricanes WHL franchise, which we are the official broadcaster of.

2082             Since last year's launch, Pat has established CJOC as the news leader in Lethbridge, overseeing a team of four dedicated news journalists who combine to write, produce and deliver over 100 newscasts on CJOC each and every week.  By far, it is the most news coverage on radio in Lethbridge.

2083             Pat joined us last year when we launched CJOC after 10 years working in newsrooms on Vancouver Island.

2084             To my left is Lorene Halseth.  Lorene is our Director of Administration for Clear Sky, responsible for our business functions, including accounting, traffic and human resources.  Lorene also joined us last year when we launched our first station in Lethbridge and has been instrumental in helping us establish our business infrastructure at both CJOC and our second radio station, CJCY‑FM Medicine Hat, which we officially launched last week.

2085             Lorene has over 15 years' experience in radio administration, mostly with CKRY‑FM Calgary, where she started in accounting and eventually rose to become the Executive Assistant to the former owner and General Manager.

2086             Casey, Lorene and Pat are key members of the young and dynamic founding management team that we have assembled for Clear Sky Radio.

2087             Also joining us on our panel is Mr. Kerry Pelser.  Kerry is the principal of D.E.M. Allen & Associates, the firm that conducted our technical brief.  Kerry will be available to answer any questions specific to the frequency that we have chosen, should you have any.

2088             Finally, I believe the Commission is getting to know me, but as we have never presented to a number of you on this panel I would like to just quickly recap my history.

2089             I started in radio at age 16 as an all‑night announcer in Fort St. John, B.C., and over the past 22 years have progressively built my experience, moving from on‑air into programming and general management.

2090             In mid‑2005 I took the opportunity to attempt and achieve a career long goal of moving into ownership and formed Clear Sky Radio, responding to calls for applications in Calgary, Lethbridge, Fort McMurray and Medicine Hat.

2091             Clear Sky Radio is now an operating broadcasting company with two licences serving Lethbridge and Medicine Hat and we are ready to continue our growth in Alberta, which brings us to our Red Deer application.

2092             Today we will touch on one of the most unique and vibrant economies in all of Canada.  We will tell you about the rapid population growth in Red Deer and how this dynamic city is underserved on radio. We will show how our full service Gold based Adult radio station will complement the Red Deer market and fill a service void with the 35‑plus audience, with a particular focus on those 45 and older.

2093             In terms of our company, Red Deer is the single‑most important market in our growth strategy.  The map on the screen shows the geographic proximity to the two Alberta markets that we currently serve, offering tremendous opportunities for operational and programming synergies.

2094             Red Deer's population size, demographic make‑up and economic drivers are all quite similar to Lethbridge and Medicine Hat.  Clear Sky is an Alberta‑based radio company with regional infrastructure, making us an ideal candidate to offer and operate a new FM radio licence, targeting Red Deer's mature 35 to 64‑year‑old adult audience given our presence and experience in similar Alberta markets.  This triangle would represent an exceptionally strong regional broadcasting company.

2095             If licensed, our radio station will be known as 90.5 RED‑FM.  Our target audience is adults 35 to 64, with a focus on those 45 and older, one of the fastest‑growing population segments in Red Deer.

2096             Musically our proposed format is Gold based Adult Contemporary.  That means the biggest songs from the mid‑'60s through the mid‑'80s.  It is a 20‑year span of music that our target audience grew up listening to, is very familiar with and very passionate about.

2097             In addition, approximately 20 per cent of the RED‑FM playlist will be music from the '90s and today.  Featuring some new music in our programming mix will allow us the opportunity to play some emerging Canadian artists, even though our format is Gold based.

2098             Canadian music will be prominently featured in our programming, scheduled evenly throughout each hour.

2099             Further, we are committing that 5.25 per cent of our music will be emerging Canadian artists.  That represents 15 per cent of our total Canadian content commitment.  Because this music is not available on Red Deer airwaves today, we believe that we will attract many listeners not currently tuning in to local radio, those who are listening to satellite or cable music channels, out of market radio signals, Internet radio, personal CDs and MP3s, as those have been the only sources for this music format to date.

2100             We have seen this in real life with the two stations that we operate.

2101             In Medicine Hat, for example, we have come to find out that that market was the number two market in all of Canada for satellite radio subscriptions.  Literally the day that we got our test signal on the air we began receiving phone calls from listeners thanking us for providing the music that they were looking for, combined with local information.

2102             It is a very simple formula for success.

2103             There is strong demand for RED‑FM. Our research shows that 84.3 per cent of those 35‑to‑64 year old adults in Red Deer would definitely or probably listen to our new station and, of those, 43.1 per cent said RED‑FM would become their favourite radio station.

2104             MR. WILSON:  Red Deer is currently served by four commercial radio stations owned by two major broadcast companies, Newcap and Pattison.  Relative to other cities of similar size, Red Deer is underserved on the local radio dial.

2105             For example, Lethbridge, with a population of 15,000 fewer people than Red Deer, has five commercial stations, one more than Red Deer.  And Medicine Hat, with a population of 25,000 fewer people than Red Deer, now has four commercial stations.

2106             Red Deer is ready for more radio.

2107             Virtually all economic data we studied indicates a very vibrant Red Deer economy with solid and sustainable growth going forward.  Some of the key indicators that Red Deer can sustain new radio services include:  incredibly strong retail sales, estimated to be 142 per cent above the national average by Financial Post markets; strong retail sales growth forecasts.  Retail sales are forecast to increase 37 per cent between now and 2011.

2108             Employment, housing, transportation and steady population growth all point to the fact that the Red Deer economy has been growing rapidly, with no signs of slowing down.

2109             The correlation between retail sales and radio advertising sales is well documented and we believe that Red Deer's stronger than average retail sales, coupled with the fact they are forecast to continue growing significantly, indicate Red Deer can sustain new radio service at this time without impacting the service levels or business plans of the existing stations.

2110             TD Economics found Red Deer at the centre of one of the hottest economic regions in the world.  The Red Deer region is strategically positioned midway between Alberta's two largest cities on the Highway 2 corridor, providing local companies with easy access to a massive trading area.

2111             The Calgary‑Red Deer‑Edmonton corridor is recognized around the world as a major economic force.  The corridor produces a per capita GDP second only to Luxembourg.

2112             Our proposed radio station format is the right one for Red Deer.  The demographics absolutely support this statement.

2113             According to the 2006 Federal Census, the city population grew an incredible 22.2 per cent between 2001 and 2006.  The largest population increases have occurred within the 35‑to‑64 age groups and, more particularly, with the 45‑plus demographic.

2114             As you can see on the graph on the screen, they Red Deer population of adults aged 35 to 64 increased 23 per cent in the five years between 2001 and 2006, and those aged 45‑plus grew 35.8 per cent during the same period.

2115             The other significant population growth is at the other end of the demo, those aged 0 to 35 in particular, those aged 15 to 35.  These stats clearly show two fast‑growing and underserved population segments and opportunities for new radio stations to serve Red Deer.

2116             According to the 2006 Federal Census, 37.9 per cent of City of Red Deer residents are between 35 and 64 years of age and they total over 30,000 people.  This audience deserves a new radio station custom tailored for them.

2117             Local businesses that market to this impressive demographic deserve a targeted radio station to reach this audience.  RED‑FM will be both.

2118             RED‑FM will open up new advertising opportunities for retailers and manufacturers who, until now, had limited radio choice on which to advertise their products and services to the mature adult population.  This audience grew up listening to radio and radio is one of the most effective advertising mediums to reach these active, mature consumers, but only if there are new radio stations that appeal to them.

2119             RED‑FM will be that radio station in Red Deer.

2120             MR. SIEDLECKI:  Clear Sky Radio and RED‑FM will bring a new independent news and information voice to Red Deer, increasing the editorial balance in the market.  Our proposed station would be an important and substantial contributor to providing local news and information on the Red Deer airwaves.

2121             If licensed, RED‑FM will provide hourly locally produced newscasts between 6:00 a.m. and 6:00 p.m., Monday to Friday, and 8:00 a.m. to 4:00 p.m. on weekends.  That is 98 newscasts weekly, totalling six hours and 21 minutes of new diverse news content each and every week on Red Deer's airwaves.

2122             We will accomplish this with three fulltime and one part‑time dedicated news staff.  Our news focus will be on the City of Red Deer.  95.8 per cent of total respondents to our research said news and information specific to Red Deer is important and we will provide it for them.

2123             Other spoken word, including sports, weather, business news, oil and gas reports, arts and entertainment, will total another 4 hours and 14 minutes a week.

2124             Red Deer's adult audience enjoys an active lifestyle.  Topics important to them include health and wellness, finance, travel, fine food and wine, and more.  To satisfy the desire for lifestyle information, RED‑FM will air a weekly one‑hour program called "Red Deer This Week", featuring local experts discussing these topics and others.

2125             Our scheduled spoken word programming totals 12 hours and 56 minutes weekly, approximately 10 per cent of the broadcast week.  Now this is a significant commitment to spoken word programming, but one we know we can deliver.

2126             We made similar commitments when we applied for stations in Lethbridge and Medicine Hat.  We are now providing those commitments and even more in those two communities, with great response.

2127             One example is the recent Alberta provincial election.  Our Lethbridge station CJOC was the only local electronic media outlet, radio or television, to provide live election coverage with three hours of wall to wall reporting and analysis.  We will bring that same commitment to news and information programming to Red Deer if licensed.

2128             Red Deer would benefit from the synergies of strong, fully staffed newsrooms that we operate in Lethbridge and Medicine Hat.  Using our server based newsroom software, all three newsrooms and news staff would be linked together, contributing to create important news and information programming that would benefit all three communities.

2129             We have delivered on our previous commitments and you have our promise that we will execute the spoken word commitments presented in this application if we are licensed in Red Deer.

2130             In this competitive media landscape, music alone will not ensure a successful or relevant radio station.  Our spoken word and news content is what differentiates our radio stations from our competitors and ensures we will build a large and loyal audience that will come to rely on us as their source for immediate and timely local information.

2131             MR. LARSEN:  Turning to Canadian Content Development, 80.1 per cent of respondents to our research said that exposure and promotion of local and Canadian artists is important.  Even though we are proposing a Gold based format, we have committed that 15 per cent of our total Canadian content, or 5.25 per cent of our overall music mix, will be devoted to emerging Canadian talent.

2132             While it is much easier for current based radio formats to play a higher percentage of emerging artists by the very nature of playing new music, our audience did indicate their desire to see us support these emerging artists and we are pleased to make this commitment.

2133             Our direct Canadian Content Development contribution will be $140,250 over the initial licence term.  100 per cent of our direct CCD will stay in the Red Deer region.  Our annual proposals include:  post‑secondary music and journalism bursaries for Red Deer students; funding of the Red Deer Festival of Performing Arts; funding to FACTOR with our contributions earmarked to Alberta artists; and our original song competition which will be of direct benefit to local and regional independent Canadian artists.

2134             If licensed in Red Deer, we will be operating this competition in three Alberta markets, truly becoming a regional competition for local emerging artists.

2135             Our direct CCD commitments will be supported with significant on‑air promotion, website exposure and other marketing.  We also propose to air a weekly one‑hour program focusing exclusively on independent Canadian music called "Maple Leaf Music". While we will be highly supportive of Canadian music throughout our programming, "Maple Leaf Music" gives us a platform to explore emerging and independent Canadian artists more thoroughly.

2136             MS HALSETH:  On the community front 90.5 RED‑FM will be highly engaged, broadcasting live from many annual local festivals, including Westerner Days, Red Deer International Air Show, Winterfest, Heritage Day and many others.

2137             Red Deer is a culturally diverse city with a strong not for profit and social community. There are many individual organizations that promote and offer activities and services relating to multicultural interests, including the Cultural Development Association of Red Deer, the Community Information Referral Society, United Way of Central Alberta and the Red Deer Native Friendship Centre Society.

2138             We have already reached out to many of these organizations, ensuring our support through no charge public service announcements and interviews, if we are licensed.  This will be invaluable in assisting them with fund raising and general awareness.

2139             Further, the on‑air exposure of these diverse groups and events will ensure that our programming is inclusive of Red Deer's entire population.

2140             If licensed, we will endeavour to create relationships with the area's First Nations, to ensure we are able to include their events and news within our programming.  We are committed to reflecting diversity within our company, as well through employment, and provided information to this in our application.

2141             The administrative synergies that will be achieved if we are licensed are significant.  A station in Red Deer will allow us to further diversify our depth and administration, allowing us to add another position to the department.  As we add new people, we try to bring a new skillset into the company.

2142             Our stations are linked together with a virtual private network, enabling the entire department to work as a single unit even though the staff are physically located at different offices.

2143             The Red Deer station would also benefit from the administrative infrastructure we already have in place at our other stations.  For example, traffic may be scheduled by a staff member in Lethbridge, while accounts payable are processed by our Medicine Hat admin staff.

2144             As we are working from a common server, I am able to oversee each area, even though my staff are not necessarily in the same office.

2145             Gaining another licence will allow us to enhance the opportunities for our current and future employees, enabling them to take on bigger responsibilities and new challenges without having to move to another company.  It will allow them more choices in where they would like to be based.

2146             As we grow and get bigger, we are able to offer better benefits, such as a more comprehensive medical plan.

2147             As one example, we have an excellent health plan now that offers 80 per cent reimbursement. With more staff cost sharing the benefits, we will be able to increase coverage to 100 per cent and add new components without significantly increasing the premiums.

2148             Another benefit may include extending our vacation policy to include more flex time.  With more staff, coverage of vacations and personal flex time becomes much easier.

2149             These are all small but important benefits of company growth that are often overlooked.  Growth for our company means new opportunities for our current employees, and opportunity for new staff to join a dynamic and exciting young company that believes in empowering its people and allowing them to grow with us.

2150             MR. LARSEN:  We have given this Red Deer application particular thought and extensive planning, with research confirming our instincts.  We have built a solid business plan which is based solely on serving the City of Red Deer.  We will bring a new format to Red Deer, one with virtually no overlap with the existing Red Deer stations and one that won't infringe on the incumbent station formats.

2151             RED‑FM will provide a fresh and focused choice for the fastest growing demographics in Red Deer.  We will provide significant local news and other spoken word elements that are important to our target audience.  Our station will bring a new independent news and information voice to the community and increase the diversity of spoken word voices in Red Deer.

2152             We will be highly active in the community.  Community service is one of the core values of Clear Sky Radio and our radio stations.  We have chosen a frequency that serves the city of Red Deer and our business plan well without impacting stations serving rural communities to the north and south of Red Deer.

2153             We are licensed in two southern Alberta markets and have strong regional infrastructure in place at our Lethbridge and Medicine Hat operations that would support and benefit a new radio station in Red Deer.

2154             Clear Sky Radio is an emerging radio company.  Approval of this application will further strengthen a new regional western Canadian broadcaster and contribute to ownership diversity in Red Deer.  We have the experience and the expertise to continue to grow our company.  We have successfully launched two radio stations and, with that accomplished, we are now ready to take on our next station.

2155             Our only opportunity for growth is really through this application process.  We are delivering exceptional local radio in two Alberta communities already and we are hopeful to do the same in Red Deer.

2156             We thank you very much for this opportunity to present our application for 90.5 RED‑FM, and we look forward to your questions.

2157             THE CHAIRPERSON:  Thank you very much, Mr. Larsen.

2158             Commissioner Menzies will do the questioning initially.

COMMISSIONER MENZIES:  Thank you.

2159             In terms of your news, you indicated that about 90 per cent of your news would be local and regional.

2160             Can you just clarify for me what you mean.  How much of that would be what you would call strictly local?  And then I will get you to describe what you see as regional.

2161             MR. LARSEN:  Sure.  Maybe I will ask Pat, our News Director, to address that question.

2162             MR. SIEDLECKI:  Thanks, Paul.

2163             About 75 per cent truly local is what we foresee specific to the city of Red Deer; another 15 per cent from southern Alberta.  We really see both of these categories as being local, so roughly 90 per cent.

2164             And the rest of that, of course, will be devised of provincial, national and international news.

2165             COMMISSIONER MENZIES:  I think you answered it there, but your definition of region was southern Alberta, then, east, west, not just the Edmonton‑Calgary corridor?

2166             MR. LARSEN:  Pat is used to reading our news in Lethbridge so he probably meant to say central Alberta.

2167             MR. SIEDLECKI:  Yes.

2168             MR. LARSEN:  We are trying to reflect the same commitment that we would do in Lethbridge.  In Lethbridge our local news specific to the City of Lethbridge would be 75 per cent and then 15 per cent in southern Alberta, the communities surrounding Lethbridge.

2169             And Red Deer would be the same:  75 per cent specific to the City of Red Deer and 15 per cent specific to the region of central Alberta, so Sylvan Lake and up and down the corridor between Calgary and Edmonton.

2170             COMMISSIONER MENZIES:  Okay, thank you.

2171             In your contributions in your application you indicated that 100 per cent of your basic would go to FACTOR and I just want to check.

2172             Do you want to capture that as a condition of licence or do you want to retain some flexibility, given that you are only required to give 60 per cent to FACTOR or MUSICACTION?

2173             MR. LARSEN:  Because in our case, the basic based on our revenue projections is not a lot of money, we determined that 100 per cent would be adequate and we would accept that as a condition of licence for the basic.

2174             COMMISSIONER MENZIES:  Thank you.

2175             Now, in your view, what do you have most in common with the Vista application, which appears quite similar?

2176             At the same time, what do you think most distinguishes you from them or them from you in terms of helping us figure out which of you is best suited for this market with this format?

2177             MR. LARSEN:  Sure.  I would say in terms of the most similarity between the two applications is the demographics that we are targeting.  We are both going for the 35 and older end of the demographic pool.  So that is the most obvious thing that we have in common with each other.

2178             They define their format as Classic Hits with a Rock lean; we define ours as a full‑service Gold based AC.  So we would play probably a little softer music than what they are proposing to play as a Classic Hits station.

2179             We took that approach given in Red Deer that there is a Rock station in Z99 and a Classic Rock station in The Drive, and we felt that the Rock market specifically was quite well served, which is why we put the branding of ours as a Gold based Adult Contemporary.

2180             We would play ‑‑ and again it's hard to define because some people would say the Doobie Brothers are Pop music from the 70s, some say they are Rock music from the 70s.  So it is difficult for us sometimes to put music labels.

2181             You know, we wouldn't play Led Zeppelin, but we would certainly play a Genesis or a Fleetwood Mac.

2182             So I think in terms of the differences between us and Vista would be truly more on the Gold based AC side.

2183             I would suspect that we will play an artist like Neil Diamond and they likely would not.  We would play an artist like Seals & Crofts or The Carpenters and they likely would not.

2184             So I think we will be a little softer musically than what they are proposing.

2185             COMMISSIONER MENZIES:  What would be the overall impression?

2186             You are both going after the same market in different ways, as you described.  What would be the thing that would make you sound really unique and diverse and distinct, that would make you, in a very competitive market where there is all kinds of out of market tuning, one or more perhaps new competitors, what would make you stick out among the pack?

2187             That speaks to your business plan and your business viability.  What would be the one or two or three things?

2188             MR. LARSEN:  Unquestionably first and foremost it's our commitment to information programming.  There is no question.  We do more news in the two markets that we are in currently and we would do more news and information programming than is currently on the air in the Red Deer market.

2189             That aspect of programming ‑‑ as stations over the years have converted from AM to FM, we have seen news and information almost disappear from FM radio stations and it has only been in more recent times that companies have attempted to bring that programming back to radio.

2190             We have taken the approach ‑‑ I often say to our guys that we are doing old fashioned AM radio.  It just happens to be on the FM band.

2191             And it really does make our station distinct and different.

2192             We are the only radio station in Lethbridge that has news every single hour at the top of the hour, from 6:00 in the morning until 6 o'clock at night, and it truly does differentiate us from the pack.

2193             We have fun with our imaging, the way that we market the station and image it.  We think that RED will be a catchy brand in Red Deer, given that the Red Deer River is there.  It can play off the city.

2194             I think the news and information programming to me is the one that just stands out clearly as what will differentiate us from the competitors, whether it's a new competitor or an existing competitor and a service level that ‑‑ the election coverage Pat mentioned in the speech is a perfect example.

2195             We live in a city of some 70,000 people in Lethbridge and we had a provincial election, Ralph Klein had stepped down.  We have a new Premier.  It is his first attempt to get officially elected by the populous.  And in the city that size we have two television stations based in Lethbridge, Global Lethbridge and CTV has a Lethbridge office as well that this local programming.

2196             Neither of those television outlets, nor any of the other four commercial radio stations in the market, did any election and in fact Global didn't even run their 11 o'clock news that night.  We did wall‑to‑wall election coverage from 8 o'clock when the polls closed until 11 o'clock at night with our team of four reporters that work for us, and we brought in two broadcast journalism students from the Lethbridge College journalism program.

2197             The next morning in the Letters to The Editor people had actually complimented us ‑‑ or it might have been the day after, I guess, because the newspaper deadline might have been too tight for it to get in.  But there were comments in the newspaper thanking us for actually providing that news and information and election coverage and chastising, you know, not only the other radio stations but particularly that then didn't even get an 11 o'clock update on the local television station.

2198             So really we do put a lot of emphasis on news and information because it makes us different, and that is one of the advantages that we would have against the existing competitors or any new licensed stations.

2199             COMMISSIONER MENZIES:  Thank you.

2200             I understand from the audience size perspective with the StatsCan demographics, the 35‑to‑64 year old thing ‑‑ although I think we all noticed that 35‑year‑olds are now described as older women ‑‑ it's a huge gap between a 35‑year old and a 64‑year old.  I mean, there are very different things going on in their lives.

2201             So I need to understand more fully what your perfect listener looks like.  Is it a he or a she?  Is it 45, is it 37, is it 62?

2202             MR. LARSEN:  We now have some sort of real world statistics because we are rated in BBM in Lethbridge.  This music format is very similar to what we do in Lethbridge, so I kind of use that as a gauge of how we expect our audience share to develop in Red Deer.

2203             We are virtually a 50:50 split male to female.  We do very well with the 45‑plus demographic.

2204             In our first book we were number two in BBM, adults 35‑to‑64, and in our second book, after being on the air less than a year, we are the number one station in Lethbridge for adults 35‑to‑64.

2205             We are finding the younger end of the demographics, say the 35‑year‑olds, just find this music fresh and refreshing and new, partly because they haven't heard it on the radio for a long time.  These kids probably grew up listening to it; their parents were listening to this music.  So they do have that connection with the older end of the demographic.

2206             The older end certainly are more loyal listeners.  I would say that they are with our station all the time.  The younger end comes and goes between the mainstream AC station, perhaps a Country station and the Rock station in our market.

2207             But we are finding the younger end, the 35‑to‑40 year olds, are really adopting to this music.  We play a fair amount of music from the '80s, which I think helps solidify that.  You know, 1986, '87, '88 is 20‑year old music now, and then we play from the '70s and the '60s.

2208             And it's hard to believe.  I mean, I hire staff now that were born in the late '80s and it always flabbergasts me that, you know, these people are over the age of 20 years old.

2209             So the mix of music just seems to work with that 35‑to‑64 group.

2210             I would say our average listener is either a man or a woman in their early to mid‑40s, say between 43 and 46 years of age, but the loyalty of the 45 and older group, simply because we are the most Gold based sounding station on the radio dial, really has a passion for our radio station as well.

2211             So we are serving both ends of the spectrum very nicely.

2212             COMMISSIONER MENZIES:  So your listener is just as likely to be a parent of young children as a grandparent?

2213             MR. LARSEN:  It's funny, in Alberta we have 40‑year olds that listen to us that have children graduating from high school or perhaps even entering university that started their families young.  We have audience that is in that same age group of 45‑year old, man or woman or family, that have young children at home.  It is really diverse.

2214             We always say that when we are doing our programming, we imagine a family sitting at the breakfast table, husband and wife, a couple of kids, doesn't really matter what age group.  That's who we are targeting.  We want to speak to the adults that are sitting at the table, but we don't want to present anything that would be offensive to the family as a unit.

2215             So it's an interesting audience and it is a very dynamic audience.  No two of the people are the same age or exactly the same.

2216             COMMISSIONER MENZIES:  Is there any particular income bracket that this would be aimed at designed for advertisers?  Is it a household income of $50,000 and above, $100,000 and above, or as much as you can possibly get?

2217             MR. LARSEN:  I will let Casey add to my comments here in a moment.

2218             Again using the BBM data from Lethbridge, which is really the only statistical data that we have to reference, we do very well with the higher income earners.  We do well with average income earners as well, but in Lethbridge I do believe we would be the highest rated stations with people in the $100,000‑plus income bracket and perhaps even with the $75,000‑$100,000 000 range.

2219             Casey might have more information off the top of his head.

2220             MR. WILSON:  It is definitely targeted more to a mature, fluent disposable income audience.  We have seen that in our BBM data, where the $100,000 plus is quite high in the family income.

2221             To answer your question, yes.

2222             COMMISSIONER MENZIES:  Okay. Thanks.

2223             What sort of synergies do you expect with your Lethbridge and Medicine Hat operations?

2224             MR. LARSEN:  In relation to Red Deer or between ‑‑

2225             COMMISSIONER MENZIES:  In relation to Red Deer.

2226             MR. LARSEN:  The synergies we see as really ‑‑ there is a lot of operational backend synergies which everybody talks about.  Lorene spoke about it in the section of the speech about our administration.

2227             We have a virtual private network that links our two existing stations together ‑‑ we would bring Red Deer into that mix as well ‑‑ which allows us to have our staff spread at each location and have a healthy amount of staff at each location, but those administrative people may be working on tasks that are common to the entire company.

2228             So, for example, accounts receivable would be tied to Clear Sky as a whole, not a particular radio station.

2229             Somebody in Medicine Hat might be scheduling traffic for two stations or vice versa.  It gives us great flexibility with vacation coverage, that type of thing.

2230             COMMISSIONER MENZIES:  Does that explain your relatively low admin and general expenses as a percentage of revenue?

2231             MR. LARSEN:  It allows us to spread those expenses.

2232             For example, we just launched Medicine Hat.  We launched that station with fewer staff than we have in Lethbridge on the administration end because in Lethbridge we needed a Director of Admin with Lorene, who does all of our accounting and bookkeeping and company‑wide functions, and we needed a reception/traffic person.  In Medicine Hat we only needed the reception/traffic position.

2233             So as we get more radio stations, certain budgetary departments do lessen because we can spread the cost between the multiple stations.

2234             The other synergies that I really do see are in the news and information side, and not that any of our radio stations would produce newscasts for each other, but it does offer us the opportunity, when there is a large news story in Lethbridge or Medicine Hat or Red Deer, for those reporters to interact with each other and provide the information back to the market if it's relevant.

2235             The biggest example I can think of off the top of my head is there is a trial coming up for a young person that he and his young girlfriend had murdered her family in Medicine Hat.  It's a national story, it's a big story.  His trial has been moved to Calgary.  It is a news story that is of interest to the whole province.

2236             If we had a reporter from Lethbridge or Medicine Hat ‑‑ likely it would be a Medicine Hat reporter now ‑‑ that would go cover that story, they would share that with our existing stations.

2237             So that is another area of synergies that we definitely see.

2238             On the sales side, training.  You know, as we get more stations we are able to bring in better training and guidance and, you know, we do work with a sales consultant, and again those costs get spread each time we have another station and hopefully strengthen the company as a whole over time.

2239             COMMISSIONER MENZIES:  Okay.

2240             Now, your supplementary brief indicated, to me anyway ‑‑ this is my reading of it ‑‑ that you were only looking for markets within which your format worked.

2241             So my question in terms of that:  If Telelink had come back and given you information that Gold based AC wasn't the best format, would you have developed a different format and still applied for Red Deer, or would you just have said that market is not for us and backed away?

2242             MR. LARSEN:  As a fiscally responsible small company, we have taken the approach with our research to try and use our gut instinct to initially identify the market hole and then invest in research to go either prove us right or prove us wrong.

2243             In three cases so far it has proven us right so we haven't had to face that challenge.

2244             But to answer your question, if Telelink had come back and said 35‑to‑64 is full, there is no void there whatsoever, we absolutely would have come back and gone into the market with a format targeting a younger ‑‑ or perhaps at that point taken the more traditional route of trying to put a format finder in the market and determine what the holes were.

2245             Looking at BBM data as our first gauge, the 35‑to‑64 audience has tremendous out of market tuning and very low tuning of some 61 per cent, where the younger and up to the age of 35 had 82 per cent loyalty to the local station.

2246             So it was an immediate clear signal to us that the 35‑to‑64 was a definite hole.  The research supported that.

2247             But we are not devoted specifically to always targeting the mature audience.  It just happens to be what we have become good at and it just happens to be what we believe to be the biggest hole in this particular market.

2248             COMMISSIONER MENZIES:  Just help me if that's slightly different.  In your brief, I think I was quoting you, your plans were to be "the experts small/medium focused on the mature audience".

2249             MR. LARSEN:  Right.  So in looking at these opportunities so far, including Red Deer when I wrote this application, that was still the case and we do remain focused on that.

2250             But if there is an opportunity for us to branch out, we do have the expertise and programming knowledge in other areas.

2251             I guess all I'm trying to say is that while we are becoming the experts and we are focused on that business plan and it is working well for us at this point in time, as we continue to grow and those holes do get filled by either us or other broadcasters, we won't look exclusively at that demographic.

2252             COMMISSIONER MENZIES:  Okay.  That's what I'm trying to get a sense of, is your ability as a small obviously emerging company to grow more branches on your tree in that sense.

2253             MR. LARSEN:  Right.

2254             COMMISSIONER MENZIES:  Because on the one hand where you are at right now shows a very clear sense of focus; on the other hand, I suppose it could be critiqued as saying it's too narrow and doesn't have this flexibility.

2255             MR. LARSEN:  Right.

2256             COMMISSIONER MENZIES:  So I guess ‑‑ how to put the question?

2257             What happens if you get a licence for Red Deer and one of the incumbents or another licensee switches its format ‑‑

2258             MR. LARSEN:  Right.

2259             COMMISSIONER MENZIES:  ‑‑ to Gold based AC, says "Hey, this is great research, this is great stuff; 35‑to‑64 is where it's at.  Boom, we are going there."  They take all their incumbency and institutional strength.

2260             How do you respond?

2261             MR. LARSEN:  And that could very well happen in this environment where format is not regulated.  Somebody could very well fill that void in the meantime.

2262             Our staff, by and large, would probably be ecstatic because our staff are quite young and would probably be more excited about presenting a youth oriented format that Gold based.

2263             Myself, my experience prior to becoming an owner, was in programming and I spent many years in Country music as one format.  I was the assistant program director of Power 107, the CHR station in Calgary, for a number of years.  So I personally have depth and experience in youth‑based formats, and we certainly have a young and dynamic staff that would be eager to jump in and be all over pursuing that opportunity as well.

2264             COMMISSIONER MENZIES:  Okay.  Thank you.

2265             Now in your first year you have given 8.6 per cent as a share and it strikes me, or it could strike somebody, as being a fairly ambitious start, particularly as in the following years you are anticipating annual market share to grow about an average of 0.7 per cent.

2266             I mean, I understand these things are ballparkish, but it seems a pretty quick start out of the gate and I would like to know what it is that makes you so confident you can achieve that size of share that quickly and then hold it.

2267             MR. LARSEN:  The 35‑to‑64 void in Red Deer and the minimal or lack of tuning to the existing stations by that demographic clearly shows that there is going to be an instant impact whoever fills that void in that market.

2268             In Lethbridge, we signed that station on July 1st, BBM started September 1st so we were only on the air for two months until the BBM period started.  The results came out and we were immediately the second station with that demographic 35‑to‑64 and the number three station out of five, adults 12‑plus.

2269             We filled such a void there right out of the gate.  We went right back into ratings in 2008 S1 survey and solidified that even further.  We are still number one with adults 12‑plus, which makes sense.  We have really solidified at number three, adults 25‑to‑54 and are now the number one station adults 35‑to‑64, all in less than a year.

2270             I see the same pent‑up demand for an adult 35‑plus station in Red Deer and truly believe that you will see that sort of immediate impact, just like we did in Lethbridge, which took some of the competitors a little by surprise, but when you sit back and look at that service void that is there, it will be an immediate and a large impact right away.

2271             Medicine Hat is not rated, but the early reaction that we have had to that radio station has been exactly the same.  It is:  Thank you so much.  Finally somebody is coming to play music for people over the age of 40, generally is what we are getting.

2272             This music, the '70s and '60s music, has been void on Canadian radio for a long time, partly because of regulation.  As the '80s are now quite far behind us, we can add enough '80s music to meet the hit/non‑hit rule which is still in place.  It has allowed development of this format to really come out in the last couple of years.

2273             And as the audience gets a little bit older, the '80s music becomes more palatable to that 35‑year‑old crowd, because we all grew up listening to it.

2274             I mean, I graduated high school in 1986 ‑‑ sorry, 1988 and that's the music I grew up listening to.  I'm 38 years old now, so I'm just into the early part of the demographic that we are targeting.

2275             COMMISSIONER MENZIES:  But what happens if it doesn't happen?  What happens if the first number comes in and it's 4 per cent or 3 per cent?

2276             I guess what I'm asking here is:  Do you have the human resource strength and the financial strength to adjust and adapt?

2277             MR. LARSEN:  I think first off, to answer the question from a sales perspective ‑‑ and I will get Casey to help fill in a little more detail here ‑‑ the market share that we forecast or that comes out in BBM really only, by and large, impacts our national sales revenue and we specifically go very, very conservative on the national revenue.

2278             Approximately 10 per cent of our revenue forecast is national.

2279             Local retailers and local businesses, by and large, are buying on the passion of loving the radio station; it's their favourite station.

2280             We say in our station profile that we target the citizens that are business owners and moms and dads that live in the community, and by and large the business owners tend to be in the age bracket that we are targeting so they see it as a good fit locally.

2281             Regardless of where the BBM market share comes out in the first place, we think we will do very well and we would make our bread and butter on local revenue.

2282             If we ran into some challenges where we weren't hitting the revenue forecast that we put forward ‑‑ when I formed Clear Sky I ensured that I got a good investment partner to become my business partner in this company.  I'm the operating partner and I'm a 50 per cent owner, but I do have a strong investment company behind me that absolutely guarantees that the funding will be there if we ever do fall short.

2283             With two radio stations now in Lethbridge and Medicine Hat, we also believe that our revenue generation and having been able to spread some costs over the two stations will allow us to get into a positive cash flow and be able to be self‑funded.

2284             We have line of credit with our bank that has extended us some credit facilities.  So we are well‑funded and well prepared to see these stations through the start‑up.

2285             And believe me, the first few months require that extra ‑‑ we don't break even right away, that's for sure.

2286             COMMISSIONER MENZIES:  No.  That sort of segues a little bit into my next question.

2287             You have $1 million in revenue for year one for Red Deer in your plan.  That's fully two‑thirds of what your year seven total.  Again, it is sort of a quick start out of the gate so it would be helpful to have a fuller understanding of how you sell and how you anticipate picking up that large a percentage of what you see as your eventual market opportunity that quickly.

2288             MR. LARSEN:  Sure.  I come from the programming side and Casey's expertise ‑‑ he has sold in Red Deer for one of the existing radio companies, so he will have a lot better idea of how we are going to accomplish that goal and we've discussed it a lot.

2289             MR. WILSON:  I guess to start off, from our experience in another market, in Lethbridge, with actually more radio stations, we have been able to come quite close to that number in Lethbridge already and we still have another quarter to go.

2290             From my personal experience of selling radio advertising in Red Deer and then moving to Lethbridge, it was a treat selling in Red Deer, the economy and the aggressiveness of businesses.  People will come on board to new things just in a general sales atmosphere, I found with them.

2291             The national advertising was estimated quite low with this.  I think there is a chance where that could even come in higher.

2292             But with the audience that we target, most national advertisers are focused on the 25‑to‑54, so it is really passionate of going after the business owners, the local people who tend to be, as Paul alluded earlier, our listeners as well in that business owner, affluent, disposable income.

2293             I would venture to say that most business owners, if they could have an eight share of a 35‑plus audience versus an eight share of a 15‑to‑35 audience, with the spending power of that 35‑plus audience, they would probably choose that.

2294             It makes sense that people have in our audience disposable income, so to target that as an advertiser, it fits.

2295             COMMISSIONER MENZIES:  Okay.

2296             Now, just on news, a couple questions here.

2297             I'm trying to get a feeling to what extent you would be a new voice as opposed to another voice in terms of the market.  You have a lot of newscasts planned, 96 I believe.  What is innovative about your approach that is different from the status quo?

2298             MR. LARSEN:  Sure.  I will let Pat speak to this.

2299             COMMISSIONER MENZIES:  Oh, and are you are going to cover rodeo?

2300             MR. LARSEN:  Rodeo is big in central Alberta.  Yes, we would definitely cover rodeo.  In fact, we have the Medicine Hat Stampede coming up and we purchased a tarp for the chuck wagons there and in Lethbridge, which is quite funny because people associate rodeo reports and the rural lifestyle very much to Country music.  By and large a lot of the farmers ‑‑ and my father‑in‑law is one of them ‑‑ grew up listening to Rock'n Roll music, and he gets on my case that we don't play enough Elvis Presley, but also wants to hear the farm reports and the ag reports and rodeo and that type of thing.

2301             So we do blend it in.

2302             I will let Pat speak to how we are going to be a new voice.

2303             From my perspective, we are a new voice in the sense that we are actually doing news on the radio.

2304             I know in Red Deer, I believe CKGY, the Country station, does do a very good job of local news and information.  They have a very strong news director and an established newsroom.  What we will find is we bring in a different format and by and large what we saw in Lethbridge, the only station that was doing any kind of a bit of news ‑‑ and it was in breakfast and at noon and in the afternoon ‑‑ was the Country music station.

2305             People were tuning to that station to get to the newscasts, not because they liked the music but because they could get local information, and then they would tune back to their favourite station.

2306             So when we came into Lethbridge ‑‑ and we expect the same to happen in Red Deer ‑‑ there will actually be a radio station that has news on the hour, just like in the old days of AM radio.

2307             I keep coming back to that.  In Lethbridge in the year 2000, the last AM station switched from AM to FM.  It went from a full‑service Country music AM station.  CJOC‑AM was the call letters.  It became Rock 106 and they have no news staff or newscasts whatsoever.

2308             So between the year 2000 and the year 2007 when we launched, that city had no local radio newscast whatsoever.

2309             QR77 out of Calgary had an 11 share audience in the city of Lethbridge because it was an AM news station that penetrated the market.  Since we have come to town, that share has dropped in more than half and I truly believe we are quickly established as that large market share that you alluded to earlier because we are providing that local news.

2310             I will let Pat speak a little bit to the amount and the passion that we have for information.

2311             MR. SIEDLECKI:  As Paul mentioned earlier about the fact of what we have done with the provincial election, with three hours of wall to wall coverage, with our reporters everywhere, with the capabilities of taking political scientists from the local college to comment at the top and bottom of each hour, numerous times throughout the course of the day if there is any breaking news, whether it be local, whether it be national or international ‑‑ because there are things that happen around the world that affect many, many people here ‑‑ we will break into local programming.

2312             One of the things we tag our newscasts, "The next news when it happens".  And that's what we do.

2313             We are relevant, we are local, we are timely.

2314             You know, I think nowadays that is all important, not waiting; if something happens 10 minutes after your newscast at 2 o'clock, not waiting until 3 o'clock to have that information on.  If there is something big that breaks, whether it be locally, nationally, internationally, provincially, we will cut into programming saying "This is what has just taken place.  We will have more for you as we get more information".

2315             So that is one of the things that we really strive ourselves and work hard to produce.

2316             Our newscasts, you know, usually newscasts nowadays on FM stations are 90‑second updates or maybe 60‑second news headlines.  On our major newscasts, 6:00, 7:00, 8:00 in the morning, noon, 4:00 and 5:00 in the afternoon, and the minors on the bottom hours ‑‑ the minor newscasts are three minutes of news. The top of the hours are five minutes of news.  This is throughout the day, 6a to 6p.  And we take a lot of pride in that.

2317             For instance, we have a very dedicated news staff in Lethbridge.  We had three and a half to start.  We have just added another part‑timer who actually has a lot of experience working with Global Lethbridge, who is a freelancer for us, because the demand is there and, you know, we are growing in that department.

2318             We all foresee this happening as well as we continue to grow in Medicine Hat, and of course if we are licensed in Red Deer as well.

2319             MR. LARSEN:  I think when you ask about how we are going to be new and not just providing the same information as everybody else, by having ‑‑ probably not in Red Deer.  We won't have the largest newsroom in the market.  I think CKGY, because they do support news for a lot of their Alberta radio group stations in southern Alberta, do have quite a few news staff that are based in Red Deer.  I'm not sure if they are working on Red Deer stories or not.

2320             But we will have a large enough staff to be out generating stories, covering meetings, and finding news stories.

2321             Pat can maybe talk about a couple of the big stories that we have broken in Lethbridge.  We break some really big news stories in that market that again is new content that the other stations were not getting or perhaps were getting after a newspaper reporter broke the story.

2322             We will be a new news voice in that sense of going out and finding stories that just aren't being covered now.

2323             MR. SIEDLECKI:  You know, we had an incident a few months back where there was a major house manufacturing company that was on the south end of Lethbridge.  It was a very windy day and there was ‑‑

2324             COMMISSIONER MENZIES:  No!

2325             MR. SIEDLECKI:  Yes.  Surprise, surprise.

2326             COMMISSIONER MENZIES:  In Lethbridge?

‑‑‑ Laughter / Rires

2327             MR. SIEDLECKI:  Surprise. I guess what happened was there was something happened within the plant sparking a major blaze and that spread quickly.  Well, we had a reporter on the scene there within 15 minutes of that happening.

2328             That happened because a listener happened to be travelling in the area and saw what was going on and thought of us first to call because, you know, we ask them ‑‑ one of the questions I asked that listener myself was, "Why did you call us?" And they said, "Because you guys are the news leader in Lethbridge."  And that is word for word.

2329             So that gives me the indication that people take a pride in what we do and that is what we want to bring to Red Deer as well, and I take a lot of pride in that myself.

2330             COMMISSIONER MENZIES:  Okay. Thank you.

2331             In part of your business plan you described fully 45 per cent of your advertising coming from new radio advertisers.  I understand that to be people who haven't advertised on radio before.

2332             In that, I am trying to get a sense of where they are advertising now and sort of whose lunch are you eating when that moves along.

2333             MR. LARSEN:  Again I will let Casey expand on it.

2334             he one thing that jumps immediately to my mind was in Lethbridge I remember our very first client who was a significant client spending upwards of $35,000 to $40,000 with us, and I saw the traffic order come in and it was for a podiatrist or a company that specializes in podiatry.

2335             I phoned Casey and I said, "I have never heard a podiatrist on the radio before.  Is this true they are going to spend that amount of money?"  They are still one of our most substantial and large clients on the radio in Lethbridge.

2336             There are a lot of clients that haven't had a focused radio station to market on.  They are using newspaper a lot, they are using magazines, and some of them, frankly, were just not advertising at all.

2337             They were going by word of mouth and Casey probably has some more examples.

2338             MR. WILSON:  You hit on most of the points I was going to make, Paul.

2339             But newspapers is probably one of the biggest people that we are going to take from, if they are not advertising on radio already, just with the fact that is really who newspapers target, is the 35‑plus audience.

2340             We have seen some magazine spending as well come to us.

2341             We have also had some great success with higher ticket items that people really haven't traditionally had an avenue on radio with kind of the general focus in the 25‑year old range, you know, high‑end RVs, high‑end vehicles, be it Lexus or things like that.

2342             We have actually even had Calgary auto dealers that we have spoken with in regards to advertising their products in Lethbridge, just due to the fact that the Lethbridge market has never had an opportunity for them to go after.

2343             High‑end jewellery, things like that, where there just has never been a place for these people to advertise effectively on radio.

2344             COMMISSIONER MENZIES:  Okay.  Thanks.

2345             MR. LARSEN:  When he talks about jewellery, we actually have a Rolex dealer in Lethbridge and they buy a full‑page back cover on a semi‑monthly city magazine that comes out.  We certainly didn't take all of their budget from magazine, but they cut their magazine to a half page and put to rest on our radio station.

2346             I don't want to suggest either that we are taking all of the newspaper's advertising money but, you know, we try and encourage our clients to be multi‑faceted in their marketing.  If they are going to add radio and they don't have money to increase their budget, we try and help find ways to reshape some of their other advertising.  So they might take their half‑page newspaper and cut it to a quarter or they might take the colour out of the newspaper to a black‑and‑white to find money to spend on radio.

2347             And they are spending on radio for the very first time with our station in Lethbridge.

2348             COMMISSIONER MENZIES:  Okay. Thank you.

2349             Just one quickly ‑‑ two more questions.

2350             The first one is you spoke about diversity in your presentation.  Can you just briefly describe what you see as the cultural make‑up of Red Deer.

2351             MR. LARSEN:  By and large ‑‑ I have the statistics in my package here and I forgot to mark the page, but we do know one of the largest visible minorities is Asian.  There are significant First Nation populations.

2352             When I say "significant", it is probably 5 or 6 per cent of the population.  In the small cities you don't see the same ethnic diversity that you see in the big cities.  There is a diverse population there.

2353             Our commitment is really to not exclude anybody in our programming.  For example, if a First Nations is having a pot luck supper or a fund raiser or a news story they want to get out, we will put that story on the radio, because we believe it is of interest to more than just that particular population.  It is, in our estimation, a news event.

2354             We know there is a healthy population of diversity in Red Deer.  It is by no means the majority, but enough that we want to reach out and make sure that we establish contact with the community associations that are in place in that city.

2355             COMMISSIONER MENZIES:  Okay.  How many licences would you recommend the Commission consider issuing from this hearing for Red Deer?

2356             MR. LARSEN:  I mean, with all the economic analysis that we have done and looking at the two holes, we believe there is definitely room for two licences.  There are two frequencies and we would be comfortable with two new licences.

2357             COMMISSIONER MENZIES:  Thank you very much.  That concludes my questions.

2358             THE CHAIRPERSON:  Commissioner Patrone...?

2359             COMMISSIONER PATRONE:  The new guy. Thanks, Madam Chair.

2360             Good afternoon.

2361             What, if any, differences do you see between the Red Deer market in comparison with Lethbridge and Medicine Hat?

2362             Are there unique aspects about the Red Deer market that Clear Sky feels it can capitalize on?

2363             MR. LARSEN:  The most obvious one for me is there is an entrepreneurial spirit in Red Deer that doesn't seem to be as prominent in southern Alberta.  In southern Alberta a lot of businesses have been generationally handed down, so we have car dealers that the grandfather started it, the father is retiring, it's going to the son now.

2364             In Red Deer ‑‑ and I think it is because of the proximity between the two major cities ‑‑ we have young people coming to start new car dealerships.  So the entrepreneurial spirit and what Casey spoke to in terms of that willingness to just jump in and get it done and spend lots of money, it really is more prominent in Red Deer.

2365             Casey spent quite a few years in Red Deer, so he can probably add a little more to that as well.

2366             MR. WILSON:  I think the key point is Red Deer is more aggressive.  They are competing with Calgary, they are competing with Edmonton.  You have two major markets.  It is virtually impossible not to compete with those people as well.

2367             But it's just an aggressiveness.  People in Red Deer, they love the city, it's growing, you know, it's ‑‑ booming is probably a better way to put it ‑‑ and they are taking part in that.  It is not booming for no reason.  People are aggressive.  They are taking chances; they are coming on board.

2368             MR. LARSEN:  I was going to say Casey grew up in Lethbridge, went off to Red Deer, moved back to Lethbridge.  When we hired him coming from Red Deer radio and he told me the unit rates they are getting in Red Deer, I thought, "Great, we are going to be super wealthy in Lethbridge".  And it is just not the same.  Red Deer is a more established market in terms of that avenue as well.

2369             COMMISSIONER PATRONE:  Is that why you see Red Deer as the most important link in the growth strategy for your company?

2370             MR. LARSEN:  Well, I think for us it is the most important link in the sense that it is geographically close by.

2371             You know, we have applied for a lot of radio stations in the last few years.  This is our sixth appearance for a radio application.  This one strategically geographically makes so much sense in that we have a station in Lethbridge, one in Medicine Hat and one in Red Deer.  So for our key staff to be able to get to each location ‑‑ myself included ‑‑ it's a major freeway that goes from Lethbridge up through Calgary to Red Deer, back down again to Calgary, over to Medicine Hat.

2372             That triangle represents for us really in any other market in this country, or certainly in Western Canada, the best opportunity for us to grow if we are fortunate enough to be licensed there.

2373             It is a key one for us.  Not to say we won't continue existing as a company if we don't get it, but it is very important and strategically ‑‑ the fact that we are already operating in similar sized markets in the same province with economic drivers that are similar, it just makes so much sense for us to be pursuing this one.

2374             COMMISSIONER PATRONE:  Has your economic research found that the labour force is, to a degree, fairly transitory and does that give you any source of concern considering that your targeted demographic consists of many that may very well decide to leave the area to go back to whatever area of the country they may have come from?

2375             MR. LARSEN:  We did quite a bit of analysis and spent a fair amount of time in Red Deer and using Casey's experience from the market.  The transient aspect of the workforce tends to be really a lot specific to the service industries that serve the oil and gas industry.  So those people are coming in and out.

2376             Red Deer is one of the largest hubs for service industry for oil and gas.  So those people, some live in Red Deer but work in Fort McMurray, so they might be considered transient even though they live there.  But their spouse, their wife, their children actually reside in Red Deer.  So perhaps that person's wife is working in local retail and she is not at risk of picking up and moving to Fort McMurray because they have chosen to reside in Red Deer.

2377             So with the businesses that we are targeting and the locally owned and operated businesses, we have found, like everywhere else, yes, there is a labour crunch and it's hard on everybody, but the transient nature of employees coming and going seems to be more specific to the oil and gas service industries which aren't traditionally advertisers that we would go after.

2378             COMMISSIONER PATRONE:  I would like you to speak a little bit about your new music show "Maple Leaf Music" and how you intend to incorporate an hour of new music within the context of a largely Gold based radio format.

2379             MR. LARSEN:  It is challenging in the aspect that our audience doesn't really demand a lot of new music.  So we have to be pretty careful, as you have indicated, of how we mix this music into our programming.

2380             The show we run in Lethbridge runs on Sunday mornings and it runs between 8 and 9 o'clock.  So it is an off prime show in the sense that it is not at 2:00 in the afternoon on a Friday.  But we promote it throughout the week.  We make sure people are aware of it.  We have plans to put it up on our website.

2381             So people who are interested in finding that style of music and finding out about some new Canadian music definitely know where to find it, when to find it and how to get there.

2382             By putting it on on a weekend, you know, we are at no risk of it pushing our BBM numbers out of whack, for example, and putting our business plan, you know.

2383             And those artists do get airplay throughout the day as part of our commitment to play Canadian content, but it gives us an opportunity to sit down with an artist, interview them, put them on the radio, play two or three of their tracks and really talk a little bit more about their career, plug their website and let them feel engaged in the process.

2384             We found, by and large, the most interest from a listener standpoint happens to be when we put artists who are from that particular town or region.  When we put a local artist who is from southern Alberta on that show, we know there is huge audience and we have done one or two live where we actually take phone calls and that type of thing as well.

2385             COMMISSIONER PATRONE:  You spoke a little bit about your team coverage in the last provincial election.  Do you have any audience listener numbers from that day?

2386             How would that, if you do in fact have those numbers, compare to the average listenership on, say, a day like that?

2387             MR. LARSEN:  We don't have a specific numbers.  I asked BBM if they would drill down and give me a one‑day report and they won't do that, unfortunately.

2388             The only indication we really got was the listener response after the fact.

2389             I suspect that by and large we had more listeners that night than we would traditionally have, though as the western hockey league broadcaster we have spoken word sports programming on almost every other night of the week for six months during that same period and our night time audience, we are, with all demographics I believe ‑‑ and I don't want to get in trouble with the BBM folks.  But I believe we are number one with all but one demographic on nighttime radio, which I think has a lot to do with hockey and special programming like election coverage.

2390             COMMISSIONER PATRONE:  Were you able to successfully monetize your election coverage with respect to selling ads and marketing and that sort of thing?

2391             MR. LARSEN:  Well, our sales manager was all over me about trying to accomplish that.  For the purpose of maintaining ‑‑ we really want to be careful about maintaining integrity during our news programming.

2392             I certainly resisted, you know, selling the election coverage to a sponsor, for example.  We didn't do any of that type of thing.

2393             We ran our regular nighttime commercials, but I think we probably went 90 minutes or so before we actually stopped down and took a commercial break.  Our nighttime load is not that heavy so we just had to catch up and play what was regularly scheduled.

2394             COMMISSIONER PATRONE:  I'm just curious as to whether the economics of this might justify ongoing similar type of practices going forward.

2395             MR. LARSEN:  In terms of...?

2396             COMMISSIONER PATRONE:  Well, cost, relative to costs.  I mean, you are bringing in extra reporters.  Presumably you are hiring extra people for that night.

2397             MR. LARSEN:  Right.  Yes.

2398             COMMISSIONER PATRONE:  You are spending more in order to bring that level of coverage to your listeners.

2399             How do you justify it economically I guess I'm asking you?

2400             MR. LARSEN:  Things like election coverage and those special events happen fairly rarely so it is not really an ongoing additional cost.  The extra staff that we brought in that night were first and second year journalism students from Lethbridge College.  We are fortunate in Lethbridge that we have a broadcasting school and a college in our community that has a radio program, so we brought two young people in.

2401             We put them at the constituency offices that we thought were least likely to win.  So they weren't key people on our programming, but were able to file reports and interview those candidates.

2402             We didn't pay them cash money.  We bought them pizza and some beverages afterwards and really chalked it up to some excellent experience for them.

2403             The political scientist we had on the air, he is a Professor at Lethbridge College as well and we didn't offer ‑‑

2404             COMMISSIONER PATRONE:  You gave him pizza as well.

2405             MR. LARSEN:  We gave him pizza as well, yes.  And he was quite happy for that.

2406             COMMISSIONER PATRONE:  To what degree do you think you will be able to monetize a marketing demographic which at the top end I guess features people in their sixties and, as you are all well aware, advertisers traditionally view that particular demographic as kind of a non‑starter and compare that also with some of the lack of success that we have seen from some of the Oldies stations fairly recently.

2407             How are you going to monetize that group?

2408             MR. LARSEN:  I think in terms of some of the lack of success with some of the Oldies stations that have been on the air partly has to do with the fact that by and large those stations have been on the AM band.  We find the local retailer age is not a detriment per se.

2409             I remember going into ‑‑ our second big client was Eldorado RV and I went in to meet the owner of that dealership and I said, "Who do you want to target?"  He goes, "Well, the people with the money are my age."  He was 61 years old.

2410             So by and large those local advertisers don't look at the demographics as closely.

2411             We did not get really a ‑‑ maybe we got $5,000 in national revenue before we had a BBM.  We do miss on some buys because we do skew 35 and older and a lot of the buys are based on 25‑to‑54.  A lot of the buys are based on females 25‑to‑54, so unless you are very specific in that....

2412             That is why we have been careful to only allot 10 per cent in our first year for national advertising, and I think at the back end, at year seven, it might grow to 18 or 19 per cent, which is still 15 points less than a station that is traditionally targeting 25‑to‑54.

2413             COMMISSIONER PATRONE:  Thank you very much.

2414             Those are my questions, Madam Chair.

2415             THE CHAIRPERSON:  Commissioner Molnar...?

2416             COMMISSIONER MOLNAR:  Thank you.

2417             I have been told that folks can't necessarily hear me in the back of the room so I'm going to try to speak a little louder this time.

2418             I just have a couple of questions.

2419             First of all, I just wanted to ask you a bit about your very aggressive expansion plans. I heard what you said about the benefits that come with growth, both for the employees you have and what you can deliver to your existing employee base, but obviously some of the additional synergies and cost efficiencies that come with growth.

2420             You appear to be on a very, very aggressive growth curve here.  However, having started, I was just looking, Lethbridge started in July of 2007.  So how many employees would you have there?

2421             MR. LARSEN:  Lorene can correct me if I'm wrong.

2422             I think we have ‑‑ what are we, 16 fulltime ‑‑ 16 fulltime and three part‑time.

2423             Medicine Hat just launched with nine fulltime and we are adding a couple more positions there.  Again, that station will have a slightly smaller staff then Lethbridge, because Lethbridge is our head office.

2424             So we are employing a substantial number of people.

2425             We have been able to attract some really great people who are excited about working for an independent company, one that gives them a lot of flexibility to be engaged in their job.

2426             In terms of aggressive growth, the CRTC calls for applications come and we don't control the timing, unfortunately, so sometimes the timing may seem aggressive because we are responding to calls for applications.

2427             I wouldn't think we are any more aggressive than any of the other applicants at this hearing, with the exception of a couple of the local guys that are here for their first time, in the sense that I have gotten to know a lot of these other companies and their people quite well because we all seem to appear at the same hearings over and over again.

2428             There have been a lot of calls for applications in the last two years.

2429             I think the fact that we won Lethbridge and got it on the air within a year of the decision, we won Medicine Hat and got it on the air within a year of the decision while we were building our first station at the same time, shows our ability not necessarily in a negative way to accomplish this growth.

2430             People are amazed at some of the staff that we have attracted to this company and it is because we are entrepreneurial, we are excited to give back to a career that we have all been in for years.

2431             Again, I can't reiterate enough the fact that I didn't just go out and start this company on my own.  I'm not independently wealthy and millions of dollars in the bank to fund everything.  I made sure that I was going to build a company that was well‑funded with partners that I have been associated with for over 20 years.  They gave me my first job in radio in 1986.  So we have a great working relationship.

2432             They are in it as an investment partner; I'm in it as the operating partner and the person who spent my whole career in this business.

2433             But from a funding perspective, we have no issues with the growth strategy and we have people who want to work for us and we are getting pretty full in the two stations that we already have.

2434             COMMISSIONER MOLNAR:  Okay.  Fair enough.

2435             I was thinking about this more from an operational perspective, because I know you did mention that financially you were capable of launching this and carrying it through.  I was thinking more just the operational perspective, as you said.

2436             And congratulations for being able to launch within a year and do it a second time.  I expect now Medicine Hat, being a new market, you need to put some particular attention to getting everything up and going there.

2437             MR. LARSEN:  Sure.

2438             COMMISSIONER MOLNAR:  You know, you are looking at getting into Red Deer with a 9 per cent audience share in your first year.  As well, I would expect that would take particular attention.

2439             So I was just worrying more ‑‑ "worrying" ‑‑ I guess questioning the operational capacity to move this all so quickly.

2440             Perhaps two questions.  First of all, would your expectation be to launch Red Deer within a year as well; and, if so, what is the capacity?  Where does that capacity come to give the attention to this market?

2441             MR. LARSEN:  I'm glad you expanded on the question because maybe I went off on a direction that you weren't really asking in the first place.  So I'm pleased to expand on the direction that you wanted to take the conversation.

2442             In terms of the operational capacity, we are hiring outstanding people.  I worked with Lorene in Calgary for five years at CKRY.  Casey is born and raised in Lethbridge, grew up there, got experience in Red Deer, and I had a year, this past year, to work together with him to express my philosophies and how I would like our company to be built.

2443             Frankly, I have walked away from Lethbridge in large part over the last four or five months to focus on Medicine Hat and have spent most of my time and attention there and Lethbridge hasn't missed a beat.

2444             We are having months where we are beating our revenue forecast.  We just achieved our annual budget with a quarter to go.  The staff are very self‑sufficient and very dedicated and focused.

2445             We're putting that same infrastructure into our second station.  So in Medicine Had we have hired a local retail sales manager who is on the ground and hopefully over this next year will be a person again that I can mentor, and that individual can take over that radio station as the leader.

2446             The same thing for me.  If we get Red Deer, my time and attention will shift from Medicine Hat to Red Deer at the appropriate time and create that infrastructure and self‑sustainment at that station as well.

2447             You know, it hasn't been officially announced to all of our staff yet, but Casey is about to be promoted to the General Manager of our Lethbridge operation.

2448             I'm sure they are all listening on line now and having a heart attack.

‑‑‑ Laughter / Rires

2449             COMMISSIONER MOLNAR:  It has now been announced.

2450             MR. LARSEN:  It has now been announced, I guess.

2451             MR. WILSON:  So it's on the record.

2452             MR. LARSEN:  You know, in Medicine Hat my hope and goal is that the Sales Manager we have hired there will evolve into that same position within the first year.

2453             I didn't create Clear Sky Radio to move to a market and become the on‑site General Manager for the rest of my life.  I mean, I had a great job as a General Manager with a great broadcasting company, and I created Clear Sky to build a small regional company and empower some young people.

2454             I have been very fortunate in my career to have opportunities when I was young and people that took a chance and that's what I'm trying to give back and create these radio stations that are by and large self‑sufficient with local management, but tied together with a common corporate philosophy or a company‑wide philosophy that ties everything together.

2455             We are putting great people in place and I have no concerns whatsoever.

2456             We launched Medicine Hat on Friday.  I was there Sunday night until 2:00 in the morning, back at 5:00 a.m. for the first morning show, drove up here for the hearing, and I have no hesitation in taking a three‑week vacation at the end of this hearing and leaving the radio stations in good hands.

2457             So I think operationally we are fine.

2458             If we get the Red Deer licence, we are committed to getting that station on the air within the first year, partly because we go to these communities and we see a lot of people and we promise that we are going to ‑‑ if we are fortunate enough to be licensed by the government, we are going bring this new, exciting radio station to town and we get people all keyed up and geared up for it.  And if it takes us two years to launch (a) we lose that momentum and (b), as I think Commissioner Menzies pointed out, somebody else is probably going to fill the void on us.

2459             If you license two, depending if it is a youth and an old one, it's not so bad.  If you license two going after the same demographic, there is a bit of a rush to be first on.

2460             In Medicine Hat Rogers launched their new Rock station approximately two and a half months before us, so we are the second new station coming in after they have been on the ground for three or four months.

2461             It hasn't hurt us because they are a Rock station going after 18‑to‑34 and we are a Gold based station going after 35‑to‑64, so we have been able to coexist.

2462             But we do want to get the Red Deer station up definitely within one year, if we are fortunate enough to be licensed.  And I think we have the people to do it.  In fact, I know we have the people to do it.

2463             COMMISSIONER MOLNAR:  Thank you.

2464             I wanted to just ask one question about the second station, assuming we were to launch two stations.

2465             You know, you mentioned that you felt that your distinctive ‑‑ what sets you apart is your news and information.  That's w