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 29, 2008                          Le 29 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 29, 2008                      Le 29 mai 2008

- iv -

           TABLE DES MATIÈRES / TABLE OF CONTENTS

                                                 PAGE / PARA

PHASE I (Cont'd)

PRESENTATION BY / PRÉSENTATION PAR:

Harvard Broadcasting Inc.                         576 / 3776

Radio CJVR Ltd.                                   661 / 4363

Touch Canada Broadcasting Limited Partnership     737 / 4812

CHIP Media Inc.                                   793 / 5212

PHASE II

No interventions / Aucune intervention

PHASE III

INTERVENTION BY / INTERVENTION PAR:

The Alberta Music Education Foundation            880 / 5755

Soul Side In                                      885 / 5767

PHASE IV

REPLY BY / RÉPLIQUE PAR:

Touch Canada Broadcasting Limited Partnership     900 / 5912

Radio CJVR Ltd.                                   902 / 5925

Harvard Broadcasting Inc.                         915 / 6009

L.A. Radio Group Inc.                             916 / 6020

Clear Sky Radio Inc.                              918 / 6034

Vista Radio Ltd.                                  920 / 6047

               Edmonton, Alberta / Edmonton (Alberta)

‑‑‑ Upon resuming on Thursday, May 29, 2008 at 0908 /

    L'audience reprend le jeudi 29 mai 2008 à 0908

3763             THE CHAIRPERSON:  Good morning.  I am sorry for the delay.

3764             I have an announcement, so I will go ahead with that.

3765             This is in regard to the L.A. Radio Group and the Lacombe application yesterday afternoon.  I had raised the question about the 3 millivolt and the 5 millivolt contour, and we did have it correctly described, as we discussed.

3766             However, we went back and looked at the initial application, and in that application the L.A. Radio Group said:

"Our immediate trading areas include, but are not limited to, Rimbey, Alix, Clive, Bentley, Mirror, Sylvan Lake and Blackfalds."

3767             We just wanted to clarify the record, so that people understood that those communities were included in their initial application.

3768             Thank you.

3769             Madam Secretary.

3770             THE SECRETARY:  Thank you, Madam Chair.

3771             For the record, Golden West Broadcasting has filed today, in response to undertakings, revised spoken word commitments.  These documents have been added to the public record, and copies are available in the Public Examination Room.

3772             We will now proceed with Item 9, which is an application by Harvard Broadcasting Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer.

3773             The new station would operate on a frequency of 100.7 MHz, Channel 264C1, with an average effective radiated power of 54,000 watts, maximum effective radiated power of 100,000 watts, antenna height of 161.1 metres.

3774             Appearing for the Applicant is Bruce Cowie.

3775             Please introduce your colleagues.  You will then have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION

3776             MR. COWIE:  Thank you.  Good morning, Madam Chair and Members of the Commission.  My name is Bruce Cowie, and I am the Vice‑President of Harvard Broadcasting.

3777             We are all very pleased to be here today to present our application for 100.7 The River, a new mainstream adult contemporary FM station targeting the 25 to 54 audience of Red Deer, Alberta.

3778             Before beginning our presentation I would like to introduce the members of our panel.

3779             Seated on my right is Michael Olstrom, Harvard Station Group Manager.

3780             Seated next to Michael is Karen Broderick, our National Sales Manager.

3781             On my left is Daryl Holien, Harvard's Director of FM Programming and Creative Services.

3782             As part of his current responsibilities, Daryl programs Harvard's mainstream adult radio station Lite 92 FM in Regina.

3783             In the back row, beginning on my far right, is Debra McLaughlin of Strategic Inc., the company that did comprehensive feasibility and consumer demand studies.

3784             Next to Debra is Rob Malcolmson, a partner in Goodmans, LLP, our legal counsel.

3785             Both Debra and Rob play key roles in the development and implementation of our Western Regional Growth Strategy.

3786             Next to Rob is Tina Svedahl, Vice‑President of Investments for Harvard Developments Inc., our parent company.

3787             Finally, on my left, in the back row, representing a modest change to our normal panel, is Rosanne Hill‑Blaisdell, a fourth generation member of the Hill family, and a Managing Director and Vice‑President with Harvard.

3788             Rosanne is here representing the Hill family in place of her father, Paul Hill, who was unable to be with us today.

3789             Rosanne will first speak to you about Harvard.  Then, I will describe why we have chosen to apply for a new radio station in Red Deer, and how this new FM station fits our regional growth strategy.

3790             Tina will give an overview of the rapidly growing Red Deer market, and Karen will speak to advertiser demand for the format we propose.

3791             Debra will then address the consumer demand research and our choice of the mainstream AC format.

3792             Next, Daryl will tell you about the kind of programming we are proposing.

3793             Michael will describe The River's feature, news and information programming.

3794             Finally, I will present our locally focused CCD package.

3795             Rosanne...

3796             MS HILL‑BLAISDELL:  Thanks, Bruce.

3797             Harvard Developments is a family‑owned diversified company that has been doing business in western Canada for 105 years.  The success of the Hill companies has been built on two principles, caring and commitment, principles which guide not only our business operations, but our attitude and our social activities in the communities we serve.

3798             As the Commission knows, Harvard is a regional broadcaster based in Saskatchewan.  We have been in the broadcasting business since 1976, and we have been proud and honoured to serve the residents of each of the markets where we are licensed.

3799             We believe that independent broadcasters play a critical role in providing balance and reflecting regional differences, and that smaller and mid‑size owners, like ourselves, offer an important diversity of voices to the Canadian broadcasting system.

3800             Bruce...

3801             MR. COWIE:  Harvard has been seeking growth opportunities in western Canada for several years.  Over the last two years the Commission has granted Harvard licences to operate in Calgary, Fort McMurray and Saskatoon, in addition to the three services we have successfully operated for many years in Regina.

3802             Red Deer represents another key step in our growth strategy.  Together with our stations in Calgary and Fort McMurray, a new station in Red Deer will increase diversity of ownership and editorial perspective, and, at the same time, improve our ability to achieve some of the same efficiencies and economies of scale as our competitors.

3803             Harvard is a proven and trusted company, and we know that we can establish and run successful new FM stations quickly and effectively.

3804             We hope the Commission will consider our unique qualifications and experience, and recognize the role we can play in adding to the diversity of ownership and editorial voices.

3805             We ask you to allow us to extend our tradition of community service to Red Deer by approving this application.

3806             Tina...

3807             MS SVEDAHL:  Thanks, Bruce.

3808             Red Deer is a prime candidate for a new radio station.  The city is situated in the middle of the booming Calgary‑Edmonton economic corridor, and is experiencing rapid growth.

3809             Per capita household income is 23 percent above the national average, and retail sales per capita are almost three times the Canadian average.

3810             There is no business tax, and unemployment is low.

3811             And the strength of the Red Deer economy is projected to continue at this powerhouse pace.

3812             Despite this growth, the market remains underserved, with only four mainstream commercial stations, controlled by just two ownership groups.

3813             All of this suggests that there will be a significant additional demand for advertising inventory, which, in turn, will support a new station in Red Deer without unduly impacting the strong incumbent services.

3814             Karen...

3815             MS BRODERICK:  Red Deer is growing at a rapid rate.  Its population has increased by 22 percent since 2001.  Over the last two years, it has enjoyed record sales of industrial and residential lands.

3816             Its economy is diverse, led by the booming oil and petrochemical industries, a growing manufacturing industry, strong retail and wholesale service sectors, agriculture, distribution, and tourism.

3817             Red Deer's central location means that it is the only market in the prairies with access to over two million people within a 160‑kilometre radius.

3818             Because of its ideal location, it is often called central Alberta's trading and distribution centre.

3819             Given the health of the local economy, its central location, and projections for further growth, we expect that advertising and retail spending will grow accordingly.

3820             Combined with the consumer demand identified in our research, we believe this means that more radio advertising dollars will be available to all stations in the market.

3821             Debra...

3822             MS McLAUGHLIN:  Thanks, Karen.

3823             Our research discovered that there is a significant gap in the Red Deer radio market.  Although mainstream adult contemporary is the most popular format in Canada, it is missing from the market.  Almost 80 percent of the 25 to 54‑year‑old age group expressed some level of dissatisfaction with existing stations.

3824             While the highest level of interest in a mainstream AC station was found among those aged 35 to 44, it is significant that more than three‑quarters of the respondents to our survey said that they would listen to such a station.  That is a very high level of consumer demand.

3825             In fact, our consumer research found that demand for this mainstream AC format was consistently high across all demos, indicating that this format presents the greatest opportunity to repatriate the largest group of disenfranchised listeners.

3826             Right now two commercial operators, Pattison and Newcap, account for almost two‑thirds of all hours tuned.  Our research found that spill is a significant factor, with just over one‑third of all hours tuned to radio being attributed to out‑of‑market stations.

3827             Notably, some of that out‑of‑market tuning is to mainstream AC stations.  As a result, a new station that meets consumer demand is likely to repatriate those listeners.

3828             Daryl...

3829             MR. HOLIEN:  Thanks, Debra.

3830             Our mainstream adult contemporary format will be distinctly different from what is available to listeners in Red Deer today.  This is a format that combines several different genres of music, ranging from classic and modern rock to pop, dance, urban, and even some crossover country standards and folk.

3831             This is the most popular music format in Canada, yet it is missing from the Red Deer radio spectrum.  In fact, over 75 percent of the songs on the AC chart are not heard on Red Deer radio.

3832             Newcap and Pattison currently offer four formats:  one country, two rock, and a hot AC.

3833             If we look at these incumbent stations from a demographic‑served perspective and use BBM audience data for comparative purposes, it is clear that 100.7 The River will attract an older audience.

3834             Our median age will be 40, while, according to spring 2008 BBMs, CIZZ, CKGY and CHUB all have a median age of 35 or younger.

3835             The only station in the market with a median age that is even close to The River is CFDV, The Drive, a classic rock station, which has minimal overlap with our proposed mainstream AC format.

3836             The River will be distinct from what is on air in Red Deer today in three important ways:  the range of music played, the eras covered, and the rotation of artists.

3837             By providing a broader range of artists, more titles, and less spins, 100.7 The River will offer a distinct new radio service that will hold some appeal for all demos, and therefore offer the greatest repatriation opportunity.

3838             Canadian mainstream AC artists like Sarah McLachlan, Bryan Adams, Kalan Porter, Michael Bublé, and Ron Sexsmith will be showcased throughout our regular playlist, and will receive meaningful airplay on the station as part of our commitment to 40 percent Canadian content.

3839             And 40 percent of our Canadian content will be dedicated to new and emerging artists.  That is 16 percent of the new station's total schedule.

3840             Michael...

3841             MR. OLSTROM:  We are also planning to do special feature programming initiatives that are designed to contribute directly to the exposure of Canadian artists.

3842             Each weekday, a Canadian mainstream AC artist will be profiled in a 60‑second feature called "Spotlight".  This will be aired six times throughout the day.

3843             "Spotlight" will provide background information on an artist or group, allowing our listeners to get to know the artists, or by giving context to a song, or a performance.  Each segment will immediately be followed by a song from that artist.

3844             Because of its placement within the regular rotation, we believe this is an ideal way to introduce new artists and releases.  Therefore, at least three of these features per day will be dedicated to new and emerging artists.

3845             Our second special programming initiative will be a music magazine called "Made in Canada".  It will air for two hours on Sunday afternoons, with a rebroadcast Wednesday evenings at 9 p.m.

3846             "Made in Canada" will focus on Canadian music ‑‑ who is making it, how they are doing it, what motivates the artists, and where the music is going.

3847             An examination of the latest trends, upcoming award shows like The Junos or the East Coast Music Awards, concert announcements and local performances are all subjects that the program will cover.

3848             Mainstream AC artists visiting or performing in Red Deer will be interviewed, and recording companies will be given the opportunity to showcase new talent.

3849             "Made in Canada" will be an important platform to introduce new and emerging artists to the Red Deer listeners.

3850             To give you an appreciation of what The River will bring to Red Deer, we would like to show you a brief video, produced by a new and emerging Canadian filmmaker, Josh Douglas.

‑‑‑ Video presentation / Présentation vidéo

3851             MR. OLSTROM:  I would like to turn now to The River's information programming.

3852             Our research shows that local news is very important to our target audience.  Eighty percent of news programming will therefore be devoted to local stories about Red Deer and its surrounding communities.  We will offer 75 newscasts each week, along with sports reports.  Our news, weather and sportscasts, together with our features, will total just under 8 hours of spoken word programming each week, and that is in addition to the almost 8.5 hours of announcer talk every week.

3853             Our plan is to be highly focused on community level news, from local politics and sports to community activities.

3854             Our Red Deer operation will employ three full‑time and one part‑time newsroom staff.  Three reader/reporters will be responsible for news gathering in the field, as well as on‑air reporting, while the news director will assign stories, supervise the two reporters, and also engage in some news gathering and on‑air reporting.

3855             I should also note that, beyond the airwaves, we will make all of our programming available on streaming audio through our website.  Our feature programming will be available in MP3 and broadcast wave format for downloading where the rights have been cleared.

3856             Bruce...

3857             MR. COWIE:  Finally, I am going to outline our plans for Canadian Content Development.

3858             Harvard's commitment of $1 million over seven years ranks at the top of the list among the applicants before you.  This substantial funding commitment will go to three local initiatives:  support for education, support for performance, and support for industry initiatives.

3859             Let me start with education.

3860             Harvard will donate $160,000 over seven years for scholarships to students studying music at Red Deer College, a comprehensive community college serving central Alberta and the prairies.

3861             Half of these scholarships will be earmarked for Aboriginal students.

3862             We also propose to contribute $135,000 to the Aboriginal Media Education Fund, which trains Aboriginal journalists and on‑air talent.

3863             Harvard will make a further commitment of $150,000 to create an opportunity for new and emerging artists at CentreFest, a three‑day festival held each summer in downtown Red Deer.

3864             CentreFest, the only festival of its kind in central Alberta, draws attendance from well beyond the city limits and presents both local and international performers.

3865             Through the funding that Harvard will provide, CentreFest will be able to realize its goal of adding music and new and emerging music artists to the lineup of entertainment.

3866             Our investment will be directed specifically to support artists' fees.

3867             In addition, Harvard will provide funding to the Red Deer Symphony Orchestra, a musical institution that has been delighting audiences in this region for more than 20 years.

3868             Finally, Harvard will provide support to industry associations.

3869             Through its Calgary application, Harvard established the Music Industry Travel Assistance Program with AMIA, the Alberta Music Industry Association.  This program, which provides funding for travel and tour support, has proved to be extremely popular and has been fully subscribed since its inception.

3870             To date, AMIA has funded 15 artists, for 15‑plus tours.

3871             We propose to enhance this program through $110,000 in additional funding.

3872             Harvard will also direct additional funds to FACTOR, over and above that required under the 2006 Commercial Radio Policy, with funds to be designated for Alberta artists where possible.

3873             In total, Harvard will contribute $147,000 over and above that which it is required to contribute.

3874             Madam Chair and Members of the Commission, in closing, I would like to summarize why we believe Harvard's proposal for a new mainstream adult contemporary radio station in Red Deer fulfils the Commission's licensing criteria.

3875             Harvard is a well‑established and well‑resourced company, with a solid business plan for this new service.  Calgary, Fort McMurray, Edmonton and Red Deer form a critical economic corridor in Canada's fastest growing province.

3876             With three stations in Alberta, and hopefully a fourth in Edmonton, Harvard will begin to achieve the efficiencies and economies of scale that are currently available to our competitors.

3877             Madam Chair and Commissioners, critical mass in Alberta is absolutely essential to our Western Regional Growth Strategy.

3878             The River will supply a mainstream adult contemporary format that is missing in the market and that responds to the high demand on the part of the 25 to 54‑year‑old demographic.

3879             We will also give these underserved listeners the musical variety, local news and information they identified as being important to their selection of radio station.

3880             We have committed to 40 percent Canadian content throughout the broadcast day and week.  Sixteen percent of our schedule will be devoted to new and emerging artists.

3881             We will promote the development of Canadian talent, both on‑air and off, through our feature programming and with a locally focused CCD package of $1 million.

3882             Granting our application will bring diversity of ownership, a new musical voice, and a fresh editorial perspective to a market that is currently served by just two owners.

3883             Finally, the Red Deer market is healthy, growing, and able to support a new radio station.  Red Deer listeners are clearly dissatisfied with existing choices, as evidenced by the fact that one‑third of them are tuning to stations outside of the market.

3884             Given this significant level of out‑of‑market tuning, the booming retail sector, and the fact that our proposed format will be distinctive from all other radio alternatives in Red Deer, we believe that 100.7 The River will repatriate radio listeners and create more hours of tuning overall, with minimal impact on the existing services.

3885             Thank you very much for your attention, and we will be pleased to answer your questions.

3886             THE CHAIRPERSON:  Thank you, Mr. Cowie and panel.  I am going to start the questioning.

3887             First of all, with respect to spoken word ‑‑ and you touched on it in your opening remarks ‑‑

3888             I want to be absolutely clear that you are proposing 40 percent Canadian content in Category 2 music between 6 a.m. and 6 p.m., Monday to Friday, as well as over the broadcast week.

3889             MR. OLSTROM:  That is correct.

3890             THE CHAIRPERSON:  Is Harvard willing to accept a COL to that effect?

3891             MR. OLSTROM:  Yes, we are.

3892             THE CHAIRPERSON:  Thank you.

3893             You have proposed a mainstream adult contemporary music format, and you have described it here and in your brief.  I am wondering if you have had a chance to look at the other applications, and I would first like to deal with the Clear Sky application.

3894             Clear Sky has proposed a gold‑based adult contemporary format, which they indicate would cover the biggest adult contemporary hits, spanning 40 years, from 1965 to date; and that their gold music selections would cover the sixties, seventies and eighties, with the seventies as the core decade; and that approximately one‑third of their musical selections would come from the nineties to date.

3895             Could you describe for us what the similarities and differences would be between your proposal and theirs?

3896             MR. OLSTROM:  Madam Chair, thank you very much.  I will start, and then I would like to turn it over to Daryl Holien, who will give you a breakdown of the differentiation in music between ourselves and Clear Sky, in particular.

3897             Our format, which is a mainstream adult contemporary format, is the most popular format in the country, and it spans a broader range in the demographic skew of 25‑54 adults, so we skew a little bit younger.

3898             The Clear Sky application, in addition to the Classic Hits application that is before you, skews older, primarily 35‑plus.

3899             I would like to turn to Daryl.  Maybe Daryl could give you a breakdown of the actual musical component of the radio station and give you the differentiations.

3900             THE CHAIRPERSON:  Thank you.

3901             MR. HOLIEN:  If we look at the Clear Sky application, we would be playing approximately 20 percent current.  Our new and emerging would be 16 percent, as opposed to Clear Sky's application, where their new and emerging is about 5 percent.

3902             If we look at the Clear Sky application, they would be playing songs from Neil Diamond, Barry Manilow, The Hollies, The Stampeders, King Harvest, The Guess Who.  Those songs you certainly wouldn't hear on The River.

3903             If you look at our breakdown, we are 20 percent current.  We are 10 percent from the seventies, 30 percent from the eighties, 25 percent from the nineties, and 12 percent recurrent.

3904             THE CHAIRPERSON:  I just want to make sure that I have those percentages correct.  Would you mind giving me those again?

3905             MR. HOLIEN:  Sure.  We are 20 percent current, 10 percent from the seventies, 30 percent from the eighties, 25 percent from the nineties, and 12 percent recurrent.

3906             THE CHAIRPERSON:  That probably doesn't add to 100, but it's close.

3907             That doesn't add to 100, I don't think, does it?

3908             It's good enough.

3909             MR. HOLIEN:  Maybe it's 28 percent, I'm sorry.

3910             It is 28 percent from the nineties.

3911             THE CHAIRPERSON:  Okay.  Good.  That's fine, I just thought that maybe I had heard the number incorrectly.

3912             That's good.  Thank you.

3913             I didn't mean to cut you off.  That is how you would describe the ‑‑

3914             MR. HOLIEN:  Yes.  Described.

3915             THE CHAIRPERSON:  Thank you.

3916             With respect to Golden West ‑‑ and you may have heard their presentation yesterday.  They are also proposing an adult contemporary music format, which they describe as a lighter variety of music.

3917             I am just wondering, again, if you could sort of discuss the similarities and differences with your proposal.

3918             MR. OLSTROM:  It is difficult for us to do a comparison, because we don't know ‑‑ a playlist was never submitted.

3919             So, for us to compare, it would be difficult.

3920             They did say that their target audience, or target demographic, was 25 to 50 years of age, with a focus on 35‑49 as the core.

3921             As I said, it is difficult, unless you take a look at the music, to do a comparative between ourselves.

3922             THE CHAIRPERSON:  Okay.  I appreciate that.  Thank you.

3923             I just want to review ‑‑ I made a note when I looked at your brief.  At paragraph 30 ‑‑

3924             Let me turn to it.

3925             At paragraph 30 you indicate 3 hours and 45 minutes of pure news.

3926             When I did that calculation, I didn't come up to that number, I came to 3 hours and 2.5 minutes.

3927             Would you mind ‑‑ you don't have to do it right now, unless you can point me to what my mistake is ‑‑

3928             MR. OLSTROM:  The mistake was the fact that at noon, from Monday to Friday, there is a 10‑minute news package.

3929             THE CHAIRPERSON:  Okay.

3930             MR. OLSTROM:  There is a more comprehensive news package at noon.

3931             That should add up to the 3 hours and 45 minutes.

3932             THE CHAIRPERSON:  It would actually be more than that, then, I think, wouldn't it?

3933             MR. OLSTROM:  Pardon?

3934             THE CHAIRPERSON:  I had 3 hours and 2.5 minutes.  So you want me to add ‑‑

3935             MR. OLSTROM:  The noon package is actually 10 minutes in length, Monday to Friday, so adding those up, according to my math ‑‑ which we hope is okay ‑‑ it should be 3 hours and 45 minutes.

3936             THE CHAIRPERSON:  All right.  We will go with that.

3937             MS McLAUGHLIN:  If I could correct that, it is only adding 8 minutes for the five days, because there is a 2‑minute count at noon already.

3938             THE CHAIRPERSON:  Okay.  Thanks.

3939             MR. OLSTROM:  I'm sorry.

3940             THE CHAIRPERSON:  No, that's all right.  That would make more sense to me.

3941             Thank you very much.

3942             In your presentation today, too, you mentioned that in the last two years ‑‑

3943             You have had a lot of expansion in the last two years ‑‑ Calgary, Fort McMurray and Saskatoon.  Those would be large markets, especially Calgary and Saskatoon.  Fort McMurray would be smaller than the other two, I think.

3944             What would the population be of Fort McMurray and Saskatoon?

3945             MR. COWIE:  The order would be Calgary, Saskatoon, Fort McMurray ‑‑ diminishing numbers.

3946             THE CHAIRPERSON:  I am wondering two things:  when each of those systems would have launched ‑‑

3947             MR. OLSTROM:  Pardon?

3948             THE CHAIRPERSON:  When they would have launched.  When you would have started operations.

3949             MR. OLSTROM:  Saskatoon we just launched in the last couple of months.

3950             Fort McMurray was earlier this year.

3951             And Calgary launched on New Year's a year and a half ago.

3952             THE CHAIRPERSON:  So now you are proposing to take on another licence, and, if you were approved, would you be looking a year or a year and a half out?

3953             Is that what you would be thinking?

3954             MR. OLSTROM:  Within a year we anticipate that we would be able to launch.

3955             THE CHAIRPERSON:  Do you anticipate ‑‑ I understand that you are a good‑sized company, but do you see any problem with absorbing four good‑sized systems at ‑‑

3956             MR. OLSTROM:  Maybe I could have Bruce weigh in on that.

3957             MR. COWIE:  No, this is part of a well‑planned approach to a western regional broadcasting presence, and we can manage this fine.

3958             THE CHAIRPERSON:  Your three stations in Regina you must have owned for a long while, have you?

3959             MR. COWIE:  We have owned the three stations in Regina since 1981.

3960             THE CHAIRPERSON:  So this is quite a stepping out, as far as radio goes.

3961             MR. COWIE:  It is, but "Modest Michael" will not have told you to this point that the alternative rock station in Calgary is doing extremely well.

3962             THE CHAIRPERSON:  Oh, I am anxious to hear that.

3963             MR. COWIE:  Its ratings are up there.

3964             To describe the e‑mail I got, it said:  "Awesome.  We rule."

3965             I think that might have been a touch of an overstatement but by and large this station is doing extremely well.

3966             Both Fort McMurray and Saskatoon had technical problems going in that had to be rectified before we could actually go on the air.  Fort McMurray is the station of all three that has surprised us.  It is doing very well.  Now, there are extraordinary costs for operating in that market, as you can understand, but we clearly made the right decision to apply for and launch that radio station.  It's being met with huge audience acceptance and the business book looks pretty good too.

3967             THE CHAIRPERSON:  And the formats then of the Fort McMurray and Saskatoon, what formats are those stations?

3968             MR. OLSTROM:  The format for Saskatoon is a youth contemporary format, and the format in Fort McMurray is an adult contemporary format with a skew to a younger audience in the evenings.

3969             THE CHAIRPERSON:  Younger than you are proposing here?

3970             MR. OLSTROM:  Oh, yes.  No, this is a mainstream AC.

3971             THE CHAIRPERSON:  So it would be different ‑‑

3972             MR. OLSTROM:  In Fort McMurray we have skewed a little bit younger to cover a wider ‑‑ or breadth, I guess, of audience.  With Fort ‑‑ or, sorry, with Red Deer, Red Deer is already being served at the younger end of the spectrum with a hot AC and a rock station.  So the mainstream AC is going at the upper end of the 25‑54 demographic.

3973             MR. COWIE:  Madam Chair, what might make our application look a little different than some others is that we believe we need to build the infrastructure of this western regional service in the new west, establish it, invest in the early years to make sure that they become relevant stations as quickly as possible and then fold the synergies in that we know are there as step two.  That's not always the wisest way to do it but in our case until you know what the pieces are it's difficult not to do it that way.

3974             THE CHAIRPERSON:  It actually segues well because I was interested in how your synergies were incorporated in your projections, and maybe we could just look at the projections at the same time then, because it does look like a different approach than some of the others.

3975             It's not apparent that there is a lot of synergies in there because you are forecasting large losses for the first ‑‑ large at least for the first two to three years.  Some of the competing applications, as you know, even forecasted a profit in the first year.

3976             So perhaps you could maybe expand a bit on ‑‑

3977             MR. OLSTROM:  There are synergies, but they tend to be in the backend.

3978             So I will turn to Tina in just a moment to speak a little bit further with respect to that, but we do believe in invested programming and that's where a lot of our expenses are.

3979             And Tina, if you could elaborate on that?

3980             MS SVEDAHL:  Thanks, Michael.

3981             As Michael just said, our programming costs are on the higher end of $4.2 million but we are committed locally and we do spend the money upfront to get the stations underway.

3982             The synergies that we see are solely projected in our G and A costs.  We expect there that ‑‑ I projected the G and A savings to be about 5 percent of the total revenue, or about 30 percent of G and A costs but we do focus on centralizing those reporting and accounting functions from a centralized perspective.

3983             THE CHAIRPERSON:  Those would be from day one, centralized I expect, will they?

3984             MS SVEDAHL:  Yes, yes.

3985             THE CHAIRPERSON:  And so all of your programming, all your news, obviously ‑‑ you talked about your news staff.  So everything, music programming, is all done ‑‑ will all be done in Red Deer?

3986             MR. OLSTROM:  It's all local programming, yes.

3987             THE CHAIRPERSON:  And your revenues ‑‑ I don't ‑‑ how do you go about calculating your forecast revenues?  Maybe you could tell us that.  It's a little bit different than the ‑‑

3988             MR. OLSTROM:  Madam Chair, if I could turn to Karen Broderick to speak a little bit about that, about forecasting the revenues.

3989             MS BRODERICK:  Actually, I think we will start with Tina first and then I can add to that if I need to.

3990             MS SVEDAHL:  Thanks, Karen.

3991             From Harvard's perspective our budgeting process for Red Deer is no different than what we have presented to you in the past applications.  We take the top‑down and the bottom‑up approach.  In Red Deer the advertising sales are not public information so we had to take it one step further and look at the retail sales.

3992             The retail sales in Red Deer for 2009 are projected to be $2.6 billion and we extrapolated a share point value to be around $182,000 and we grew that further to account for our first year of operation.  So our share point for year one, we are projecting to be about $185,000.

3993             And in our consumer demand study the share point is projected ‑‑ was demonstrated to be at maturity around 9.2.  Given the broader demographic, as Michael has said, they are older and they take longer to adopt.  Therefore, our first year share point is 5.5 to arrive at our million dollar projection.

3994             But I think it's important for Karen to speak specifically to the bottom‑up approach because we take that from in‑market studies.

3995             MS BRODERICK:  Thanks, Tina.  Yes, we do both approaches.  We do the top‑down and the bottom‑up and that's just to substantiate what we determine the share point value as based on the research.

3996             So we take our individual day parts, their estimated sell outs and unit rates and then we multiply that by 52 weeks.  So when we did this in this particular case the difference was actually less than $40,000.  So we feel both top‑down/bottom‑up that the revenue projections are realistic for the Red Deer market.

3997             THE CHAIRPERSON:  So you are comfortable with your revenue figures.

3998             Your sales, advertising and promotion, I wonder, that looks high.  I don't know if you compared it to any other applicants or it's based on your experience to date in your other systems?

3999             MR. OLSTROM:  As you know, in a start‑up situation it takes significant dollars to get a radio station off the ground and market it within the area.

4000             Tina, would you like to speak to that?

4001             MS SVEDAHL:  Sure.

4002             Relatively speaking, it is high based on the numbers before you.  If you look at the Alberta statistics, sales and advertising is around 25 percent.  So we are definitely a little bit high but, as Michael said, a significant ‑‑ well, 25 percent of our costs in sales and advertising is in promo upfront.

4003             So again we are, you know, focusing on getting our radio station underfoot in the local market and spending that money in that area.

4004             THE CHAIRPERSON:  And I see that you have got a steady increase in advertising dollars even out over the whole period ‑‑

4005             MS SVEDAHL:  And it's a fragment of the way we budget because it's a percentage of our revenues so you do see growth in that area.

4006             THE CHAIRPERSON:  And ‑‑

4007             MS SVEDAHL:  And also in the sales commissions.  I guess I have to comment on that too, sorry, because we have sales people on commission.  Of course, their commissions are going to go up as our revenue gets higher, so we would expect that to occur.

4008             THE CHAIRPERSON:  And obviously, I notice that the funding is all in‑house.  So there is no interest showing here.  So you don't ‑‑

4009             MS SVEDAHL:  That's correct.

4010             THE CHAIRPERSON:  ‑‑ record any interest in here?

4011             MS SVEDAHL:  That's correct.

4012             THE CHAIRPERSON:  And I understand from the application that carrying these losses is not an issue, financially?

4013             MS SVEDAHL:  Not all, no.

4014             MR. COWIE:  I just might add without going on too long about this, but the ‑‑ our vision of this infrastructure in the new west is that there is a growing connective between the Prairie provinces and, as a minimum, eastern British Columbia.  If you draw lines north, south, east and west, agriculture flows right across through to southern Manitoba.  In Alberta the economic corridor that will drive this country if not the North American continent over the next 30 or 40 years, starts in Medicine Hat, moves its way north through Calgary, Red Deer, Grande Prairie, Fort McMurray, and all of that provides the energy that will drive the economy over time.

4015             So if you look at that same kind of structure in Saskatchewan, Regina sits in the middle of the Prairie bread basket, so to speak.  South of that are oilfields and a significant contributor to energy as long as we are using those kinds of fuels.

4016             And if we are not, north of Regina has the other answer, which is all kinds of field crops and so on, and off to Yorkton to the east of us which picks up the parkland and very expensive farmlands that are growing canola seeds and that sort of thing over there.

4017             But follow it straight north through Saskatoon, Saskatoon has become the industrial centre in Saskatchewan, and then north to the higher grade uranium deposits in the world.

4018             So there are two north‑south corridors.  We are interested in both of those because these will be the growth areas in the west.

4019             And agriculture, you know, everybody sitting at this table has been waiting for Saskatchewan to be a strong, healthy economic province for a long time.  If you read the Post the other day and read the story on Saskatchewan, the numbers are incredible.  Farm income has never been at these levels in my lifetime that I can recall.

4020             We always had an axiom in Saskatchewan that said that when wheat was worth $12.00 the bins were empty; when the bins were full wheat was worth $3.00.  That isn't happening anymore.  I mean the land prices in Saskatchewan are sky high, and so on and so on.

4021             So we think we need to occupy the east‑west corridors that provide food.  The east‑west corridors also provide water that supplies all of the basics to get the economy going and also feed stocks into the United States.

4022             So the new west is real and we think that we need to be there, participants in that, supporting smaller markets who have to find their way into this new regionalized kind of thinking.  We are not proposing that but that's in fact what is going to happen.

4023             Red Deer is going to be a different place.  Red Deer is a key element in the north‑south corridor in this province.  And the Red Deer region because of its distribution abilities and so on is going to be a very important cog in Alberta over time.

4024             So we see kind of a bigger picture and it's not going to be for the timid to go and fill in all those spots, but the rewards we know are there, and that we can be of a service to western Canada and the country by being relevant radio stations in those corridors in the markets that are there.

4025             THE CHAIRPERSON:  What type of ‑‑ or what period of time are you looking at, are you talking about here as far as growing out your radio station in parallel with the way you see the economy going?

4026             MR. COWIE:  Well, I would like to hear Mr. Menzies on that point at some point but the ‑‑

4027             THE CHAIRPERSON:  You probably will.

‑‑‑ Laughter / Rires

4028             MR. COWIE:  Because he knows.

4029             But it is happening much faster than even we thought it would.  Nobody could have predicted what is going on in Saskatchewan a year ago.  Well, maybe a year ago, but two years ago couldn't have.

4030             And the ideas, you know, about economic union across the west which makes so much sense are beginning to percolate.  There have been reports.

4031             In fact, the first one that was done by the Conference Board of Canada, Paul Hill, our owner, was one of the authors of that.  It got lost in some political milieu somewhere but the economic idea made all kinds of sense.

4032             Those arguments are going to be brought forward and so on.  Our job as we said to you before, as we are doing in Fort McMurray, was to have people who come, work and live there, understand what they are a part of, what they are contributing to and what good they can do not only Alberta, Saskatchewan, Manitoba; North America, for the world.

4033             This is an exciting place to be and, you know, as Jessica Simpson says, I don't really understand any of this but I want it.

‑‑‑ Laughter / Rires

4034             THE CHAIRPERSON:  Well, maybe you will send a little back out to the far east for the rest of us.

4035             But I actually was trying to focus in as well, just following on in parallel with your comment about the growth in the economy here, your longer term future plans then for your radio operations as a whole.  I mean we are here today talking about Red Deer.

4036             MR. COWIE:  Right.

4037             THE CHAIRPERSON:  But you have a longer term strategy that you see planned out five, ten years?

4038             MR. COWIE:  Yes.

4039             THE CHAIRPERSON:  Or how far ahead have you gone?

4040             MR. COWIE:  Well, I guess it's about how long I last.  I don't know.

4041             Really, the main ‑‑

4042             THE CHAIRPERSON:  You want to be sure to enjoy the fruits of all your labours, so hang around for a long time.

4043             MR. COWIE:  The main pieces of this strategic plan we will have before the Commission within a three‑year period.  Three to five years is when most of this change in the west is going to take place and some of the markets might surprise you.

4044             But our focus currently is on ‑‑ where we think the main driver will be is the north‑south corridor in Alberta.  That will be the economic driver of this country for a whole bunch of reasons.  I mean, there is everything there.

4045             Now, currently it's based on mostly fuels.  The truth be told, I think the tarsands probably has a larger deposit in Saskatchewan than it does in Alberta; hasn't been touched yet.

4046             And so the migration will move with ‑‑ I think there will be a highly skilled workforce, productive workforce that will move freely throughout this western region and it will be a powerhouse, you know, for our federal place in the world.

4047             THE CHAIRPERSON:  It's interesting too ‑‑ and I can see my colleagues and I can see Peter is moving up in his chair.  They are going to have questions for you ‑‑ it's interesting too because when we are looking at what information staff has given to us on the prospects for this market, you know, you have to ‑‑ you tend to be a little conservative.  Is it going to continue on ad infinitum?

4048             And it does seem, at least from your remarks that it's going to continue on for some long time.  So that's encouraging.

4049             MR. COWIE:  And it's going to have to take on a leadership role.

4050             THE CHAIRPERSON:  Just to lead into another aspect more specific to Red Deer then, how many say systems or licensees do you think that the market could sustain at this point in time?

4051             MR. COWIE:  Every city in this country would like to have the growth possibilities of Red Deer.  We think you could safely licence two radio stations in this market.

4052             THE CHAIRPERSON:  Two.

4053             I notice, just to get back to the market itself, you indicate that you expect to take 35 percent of your year two revenues, or about $456,000 from existing radio stations.  And I was just wondering if you had attempted to break that down or could give us a breakdown by station?

4054             MR. OLSTROM:  Commissioner Duncan, yes, we believe the revenues will be split amongst the radio stations.

4055             I would like to turn to Karen to give you a breakdown of where we believe those revenues would come from.

4056             MS BRODERICK:  We have predicted approximately 35 percent would come from existing stations in the market.  In a market this size it's unrealistic to think that we are not going to take a little bit from everyone.  Given, though, that advertising revenues are driven by demographics we will probably take the most revenue from those stations that skew a little bit older.

4057             So if you want a breakdown in that order we would think that it would be CFDV, the Drive, would be ‑‑ you know because they skew, the oldest that would probably be at the top, followed by CKGY, KG Country, and then CHUB Big 105 ‑‑

4058             THE CHAIRPERSON:  I just want to make sure I don't miss anything.  CFDV is classic rock?

4059             MS BRODERICK:  Yes.

4060             THE CHAIRPERSON:  And did you offer a percentage or are you just saying ‑‑

4061             MS BRODERICK:  I haven't broken it down specifically into percentages.  This is just based on ‑‑

4062             THE CHAIRPERSON:  By sort of the order?

4063             MS BRODERICK:  ‑‑ their demographics and ‑‑

4064             THE CHAIRPERSON:  Okay.

4065             MS BRODERICK:  ‑‑ who they serve.  It would be the Drive, KG Country, Big 105 and Z99 in that order.

4066             But having said that, the projected growth for retail sales in Red Deer is 37 percent over the next five years, so with that comes increased advertising revenue in the marketplace.  So we don't feel, because of the growth and the robustness of the marketplace that a new station whether it's one or two new licences would have undue impact on any one of the existing stations.

4067             THE CHAIRPERSON:  I thought perhaps you would have your biggest impact on CHUB, the hot AC.  You don't ‑‑

4068             MS BRODERICK:  Well, we look at it this way because ‑‑

4069             THE CHAIRPERSON:  You are using their local names like Big 105 and Z99 and I just don't convert that quickly, sorry.

4070             MS BRODERICK:  Sorry.

‑‑‑ Laughter / Rires

4071             MS BRODERICK:  CFDV probably has the closest target audience to our station, our proposed station.

4072             THE CHAIRPERSON:  Yes.

4073             MS BRODERICK:  So that's why we feel that they would be the most impacted.

4074             THE CHAIRPERSON:  Okay.

4075             MR. OLSTROM:  And if I could just turn to Daryl for a moment to speak in turn musically, which differentiates us from the hot AC and the duplication, we found between what we are proposing with the River and what CHUB currently programs, that may help you gauge the impact.

4076             MR. HOLIEN:  If you look at our playlist and what CHUB is playing we actually only have an 11 percent duplication across the market and that duplication was most prevalent in the currents and the 2000 to 2006 years.

4077             When it comes to a hot AC station they typically repeat their most popular tracks around 35 to 40 spins a week.  A mainstream AC station, on the other hand, we are only looking at about 20 to 25 times a week and this allows for the service to have a larger library which in turn means less repetition, broader range of artists, fewer spins.

4078             Also, with the hot AC station they tend to play tracks from the Bon Jovis and the Aerosmiths and they also play some modern rock tracks from Linkin Park and Fall Out Boy.  They also play some urban like the Black Eyed Peas or Akon which you certainly wouldn't hear on the River.  So I think that shows how we are totally different from what they are.

4079             THE CHAIRPERSON:  Okay.  Thank you.

4080             In your deficiency response on March the 5th you identified 90.5 MHz as an alternative frequency but you indicated that it's not capable of meeting your overall objectives because it doesn't provide the same coverage.  You also indicated that use of this frequency would have some impact on your business plans.

4081             So I am just wondering if you could elaborate on those statements.

4082             MR. OLSTROM:  Commissioner Duncan, if I could ask Tina Svedahl to speak to what it will do with our business plan?

4083             THE CHAIRPERSON:  Thank you.

4084             MS SVEDAHL:  Thanks, Michael.

4085             When we looked at the difference between the two frequencies there definitely is a difference there but it's pretty modest.  So our projections wouldn't change.

4086             THE CHAIRPERSON:  Oh, they wouldn't?

4087             MS SVEDAHL:  No, like a very modest change, if any.

4088             THE CHAIRPERSON:  Oh, okay.  So maybe when you answered the question you just hadn't really had the chance?

4089             MS SVEDAHL:  Yes, when we really looked at the coverage in a little bit more detail it was clear that it was pretty modest.

4090             THE CHAIRPERSON:  Okay.  All right.

4091             That's great then.  Thank you.

4092             Turning to CCD, I am just wondering if Harvard Broadcasting is willing to accept the imposition of a transitionary Canadian Content Development condition of licence which will expire when the amendments to the radio regs come into force?

4093             MR. OLSTROM:  Yes.

4094             THE CHAIRPERSON:  Thank you.

4095             And just wondering on an ongoing basis, what steps you will take to ensure that the beneficiaries of your CCD contributions continue to comply with the regulations and the disbursement of the funds?  Would you be actively involved with them on an annual basis just to make sure the funds are going as you ‑‑

4096             MR. OLSTROM:  Well, for example, with AMIA and the travel systems plan that we are involved in actually in our Calgary radio station which has ‑‑

4097             THE CHAIRPERSON:  Yes.

4098             MR. OLSTROM:  ‑‑ exceeded our expectations, we through our CCD coordinator in Calgary have an ongoing communication with AMIA to ensure that the funds are being distributed and there is an ongoing dialogue there.

4099             THE CHAIRPERSON:  And the other part ‑‑ let me just turn to ‑‑

4100             MR. OLSTROM:  If I could also add, Commissioner Duncan, that the recipients will also be required to file a report with us on an annual basis.

4101             THE CHAIRPERSON:  Okay.

4102             But I guess I am concerned that you don't want to hear after the fact they have done it, disbursed the funds differently than what you anticipated.  So will you be in contact with them sort of as a reminder?

4103             MR. OLSTROM:  No, there will be ongoing discussion as there is ‑‑ as we currently do with our CCD contributions in other markets.

4104             THE CHAIRPERSON:  Thank you.  Thanks.

4105             MR. COWIE:  I might just add, Madam Chair, that on that point we have letters of agreement from the recipients of these funds to in fact make those reports available to us on an annual basis.

4106             THE CHAIRPERSON:  And have those been filed or would you file them with the Commission?

4107             MR. COWIE:  They have not been filed, but we will.

4108             THE CHAIRPERSON:  Okay, that's great.  Thank you.  I suppose we would need that by the end of the day today, if that's possible.  Thank you.

4109             Now, I think that's all the questions that I have right now but I reserve the right to come back if I think of something else.

4110             MR. OLSTROM:  Commissioner Duncan, if I could just follow up on one of your initial questions with respect to the comparatives between Vista and Clear Sky, and I don't think we got on the record the differentiation with Vista and I would like to ‑‑

4111             THE CHAIRPERSON:  Oh, I didn't ask about Vista but I'm happy to hear it.  Okay, go ahead.

‑‑‑ Laughter / Rires

4112             THE CHAIRPERSON:  Just a minute there.  Okay, go ahead.

4113             MR. OLSTROM:  I would like to have Daryl speak.

4114             THE CHAIRPERSON:  Certainly.

4115             MR. HOLIEN:  If we look at the Visa application it's a breakdown of the eras and the currents and the new and emerging that will be the difference between us and them.

4116             Just to give you some numbers, the Vista application they are projecting 75 percent from the eighties whereas we would be 40 percent from the eighties.

4117             The River will be 20 percent current and the Vista application appears to be 15 percent current.

4118             The Vista will be 35 percent Cancon, the River will be 40 percent, and 40 percent of that or 16 percent of our total broadcast schedule will be new and emerging artists.

4119             THE CHAIRPERSON:  So now I think you had told me earlier that the eighties would be 30 percent; is that correct?  Did I get that right?

4120             MR. HOLIEN:  No, if you look at ‑‑ what they should be.  I'm sorry.  It should be the seventies and the eighties the Vista will be a total of ‑‑

4121             THE CHAIRPERSON:  Oh.

4122             MR. HOLIEN:  ‑‑ a total of 75 percent, and if you take the seventies and eighties our total will be 40 percent.

4123             THE CHAIRPERSON:  Okay, thank you.

4124             MR. HOLIEN:  Okay, thank you.

4125             THE CHAIRPERSON:  Appreciate that.  Thank you, thank you.

4126             So now Commissioner Cugini will start.

4127             COMMISSIONER CUGINI:  Thank you, Madam Chair, just a couple of follow‑up questions.

4128             I heard you when you said this is the single most popular format, over 75 percent of the songs on the AC chart are not being heard on Red Deer radio; out‑of‑market tuning a lot of that is going to AC stations.  You used the word "more" a lot even in your video.  But then when I look at your share projection you are at the bottom of the pack.  You are actually second to last of all the applicants.

4129             So I have a little bit of a disconnect there that I would like you to fill in for me.  If this is the most popular format in radio why are your share projections so low for this market?

4130             MR. OLSTROM:  Commissioner Cugini, I would like to have Debra McLaughlin weigh in on that based on the research.

4131             COMMISSIONER CUGINI:  Thank you.

4132             MS McLAUGHLIN:  Our share projections are of course based on the consumer demand we did.  And when we looked at the responses by demographic in the survey and factored in the discounts that we typically do, the mature share, not the potential for the mature format but the mature share is 9.2.

4133             Because there is some service to the older demographics, because CBC for example takes up quite a bit of hours of tuning in the market, it's unreasonable and it's typical actually for older portions of the market to tune or to switch as quickly.  So if we were doing a younger format here that share or the discount we would apply would be less, but we have only assumed that 60 percent in year one of that mature share would come to us.

4134             So if we look at what is happening in the market, the shares that are there, those are established listeners.  We are counting on getting people, a large proportion of our audience in fact, from out of market.  When we look at it, 36 percent of our core audience, our overall audience actually, will come from end market tuning.  We are going to have a tough time converting from people who are established in like what they want.

4135             24 percent of our total hours tuned are going to come from bringing people back to radio.  That's a big chunk of numbers to convert people back to a medium.  40 percent is going to come from out of market.

4136             Because we are not thinking we are going to take from people who are using radio in the market, we are going to take it from people who are tuning out, getting people to tune back in, we have to be more conservative in that approach.  We are actually trying to bring people back to radio and to the market, which is a little tougher angle than simply taking it from another station that's already in the market or converting people who are listening to radio now.

4137             COMMISSIONER CUGINI:  And the assumption on the 24 percent who are currently not using radio, I guess on a sociology basis, are you assuming that these are people who are listening to their CDs, listening to their iPods, listening to internet radio?  Where is that 24 percent of the population getting their music?

4138             MS McLAUGHLIN:  Well, all of those in fact.

4139             In terms of estimating that 24 percent we didn't just pull that number out of the air.

4140             COMMISSIONER CUGINI:  I didn't think you did.

4141             MS McLAUGHLIN:  We actually asked people if they had the format that they ‑‑ a format that they liked, if the music they wanted with local news was provided to them what was their likelihood of tuning more to radio.  So that encaptured people who currently aren't tuning at all, people who are tuning less.  And over two‑thirds of the people who were interested in our format said that they would tune more to radio, so we know we can convert them.

4142             The conversion in that kind of ‑‑ if they are on satellite radio, for example, they have a subscription.  They are not going to dump out of that because there is one single commercial station.  If they have a robust iPod collection and an MP3 and their car can handle it they are not going to come to us.

4143             So realistically and watching how the performance in other markets has laid out when people introduce new formats, we know that this format has the greatest potential, which is why we think you need a format like that, frankly, in this market.  But it's also going to take some time to build to that potential.

4144             COMMISSIONER CUGINI:  Because of course the context of the question is you could be underestimating your potential and therefore underestimating your impact on the incumbents.

4145             MS McLAUGHLIN:  Well, again, we are only expecting just slightly more than one‑third of our core audience to be coming from them.  So what would the range there possibly be, 10 percent?

4146             And we are talking ‑‑ if you just look at the numbers in a real sense CHUB, for example, would lose 1.7 rating, like they are close to 19 rating or share points.  That's not a big loss.  I have got to think that with an aggressive sales team with two stations in the market already entrenched and relationships in place that that isn't going to really impact their revenues all that much.

4147             COMMISSIONER CUGINI:  Okay, fair enough.

4148             I just want to hone in a little bit on your core audience.  I know in response to deficiencies when you were asked this question you did say that the target and core audience is the 25 to 54 demo and you did also in your oral presentation today say that the two age groups noted 25 to 54 and 35 to 44 as having expressed a level of dissatisfaction with the existing services.  But that's pretty broad.

4149             What is your core audience, and you have been asked this question before.  Therefore, what is the median age of your average listener?

4150             MR. OLSTROM:  Median age is ‑‑  median age, Commissioner Cugini, is 40.

4151             COMMISSIONER CUGINI:  Are you skewing male or female?

4152             MR. OLSTROM:  Female, obviously, with an AC format which tends to skew female.

4153             COMMISSIONER CUGINI:  Okay, and just one parting remark, Mr. Cowie.

4154             I guess I'm going to have to suck it up.  Toronto is going to be the former centre of the universe or already is.

‑‑‑ Laughter / Rires

4155             COMMISSIONER CUGINI:  Thank you, Madam Chair.

4156             THE CHAIRPERSON:  Commissioner Molnar?

4157             COMMISSIONER MOLNAR:  Thank you, good morning.

4158             And I wasn't really clear from your comments if you were thinking Saskatchewan was going to be the centre of the universe or if it was here in Alberta.

4159             But I did want to speak to you about your regional expansion plans.  I understand your desire to grow within this region and there is many people in this room today who have a desire to grow within the region.  You mention in your statements, and I am just looking at page 14 of your comments right now where you mention that you will begin to achieve the efficiencies and economies of scale that are currently available to our competitors.

4160             You spoke briefly of some, I would suggest, relatively minor synergies that you would achieve with this station at this point and back office, but as you talk about your strategy for expansion, regional expansion, do you have a strategy as it relates to those efficiencies and economies of scale?

4161             MR. COWIE:  We do, and it's being built in parallel with our plan to build the system.  It goes beyond just economics.

4162             There will be a speak in this part of the world which requires strong local broadcasters who have a different voice than some of the large national players and so on.  That's also part of the expansion that we are working on here, is that there be a diversity of voices in the west from strong, regional broadcasters like ourselves.  And this is not to deter anyone else.

4163             But I just thought, and I really probably shouldn't have gone off as quickly on that as I did, but the perspective at the root of what we are trying to do is important because we have been around broadcasting a long time and the fact is ‑‑ and you will hear this from Elmer Hildebrand, you will hear it from others ‑‑ we cannot compete with large publicly‑funded companies in the acquisition of licences.  We just can't.  They have ‑‑ to put it more clearly, they have a lot more money than we do.

4164             We can build local stations.  And you will note from a descriptive of what the Harvard stations are they are different in every market because they are built around the research that tells us what the people in those markets want.

4165             So some synergies are lost, I guess, in not having a cookie cutter format but we have no intention of doing that.  We have ‑‑ our single focus has always been to serve the local markets, which is what we are doing.

4166             But we will put into effect all of the synergies that are available to us, that are available to others in the broadcasting industry today, short of in any way giving up our local service.  And that will follow.  You know this is not, as I said to Madam Chair, this is not for the timid.

4167             I suppose our vision could be completely wrong but I don't see ‑‑ there is nothing on the horizon that tells me that.  You drive into Calgary today and there are signs right on the highway now, "Welcome to the New West".  I mean it's ‑‑ what is going on here is real.

4168             We need to acquire synergies both in programming, because this will become ‑‑ will have a regional aspect to it, the western ‑‑ at least the Prairie provinces.  British Columbia will be part of that but to a lesser degree.

4169             So we will want to get all the synergies we can in programming.  We will make sure that we have ways of finding training and retaining the best people we can get and so on, but all of the stations will be local but they will, as an over kind of umbrella to all of that, be tuned into what part they play in the larger area which is the west.  We will not go east of the Manitoba/Ontario border.  They have their own reasons to deal with there.

4170             This is more of an opportunity and in our case it's something that we feel we have to do.  We can be very comfortable with three radio stations in Regina that do very well but there is ‑‑ we are all born and raised in the west.  You know, we have a great passion for our future.  We see it before us now beginning to unfold as we always wanted it to but never thought it might.

4171             So the synergies will be there.  We are already very well advanced in our connectivity in terms of computer systems and that sort of thing.  But the real hard synergies of making sure that our costs are in line with where they need to be ‑‑ and I am reminded about this from others, just so you know, and the daughter of one of them is sitting at the table.

4172             But we made a hard conscious decision that you can't do it one or two stations at a time and try to put synergies there.  Now, we are doing accounting right now out of Calgary for Saskatoon and Fort McMurray.  So we have started.  But really, there is more to it than that in the long run.  There is a philosophy that has to be part of the synergistic thinking and so on, and getting the right people and the right programming and so on that's over and above the intensely local service.

4173             MR. OLSTROM:  And if I could add too, some of the synergies obviously come when you add more licenses.  So it allows you as you grow ‑‑ as you acquire each licence there is more synergies that can develop from that as well.

4174             COMMISSIONER MOLNAR:  Right.

4175             And I think synergies can occur on two sides and you have touched on both.  One are the costs, the operational efficiencies, being more productive and cost‑effective and you have touched on that and that will grow over time.  The other one that I am not perhaps understanding well, and you mentioned it, is on the programming side.

4176             If you are to grow to become a regional ‑‑ you know, to really cover that north‑south corridor or the east‑west corridor within this economic region, do you see being able to contribute something particular, something new as it relates to programming or news or something by having that base, you know that coverage base?

4177             Do you see being able to cover things differently to add additional programming or what do you see being the advantage to our broadcasting system by having ‑‑ you know, you have that regional coverage?

4178             MR. COWIE:  Well, the benefit to our listeners is that the connectivity to any one of our markets in the west from a news point of view is instant because, you know, presuming that we are able to acquire the licences that we propose to acquire; and that stories generally on the political level, public level will affect most of the stations in this region.

4179             So those will be dealt with by local stations, but if the big news story of the day is in Saskatoon, that will be instantly available in the other the stations throughout the west and so on.

4180             But, you know, these are automatic ways to proceed with those kinds of synergies.

4181             But the one that appeals to me too is that we will have some very small markets.  We have acquired, subject to CRTC approval, the Yorkton market north and east of Regina which is a very small market and they're right in the middle of this huge agricultural boom in Saskatchewan right now.

4182             So, there's a story to be told there that's of interest across the west.

4183             So, you know, we're not going to do regional newscasts or anything like that.  All newscasts will remain local in all of our markets, but they will have input from anywhere in the west that's all part of the region we live and work in.

4184             MR. OLSTROM:  Ms Molnar, if I could just add a little bit.

4185             One of the choices we make when we go into these markets is to focus locally and local programming on those markets.  So, when you do that there tends to be lesser on the synergy side of things from a programming perspective.

4186             We'd share ideas on a programming perspective, our programmers within our company do conference calls and we have an FTP site where they share ideas.  There may be an opportunity to share ‑‑ if a feature's on our Red Deer station is created, we may want to share that of relevance to some of the other stations that fit formatically.

4187             But we do focus on the local market.  So, from a programming perspective, you will find lesser synergies because we are so heavily focused and, as you can see by our business plan, we invest in programming.

4188             COMMISSIONER MOLNAR:  Okay.  Thank you very much, and I think I do understand.  So, where you say here:

"Critical mass in Alberta is absolutely essential to our western regional growth strategy..."  (As read)

4189             COMMISSIONER MOLNAR:  That is simply for operational efficiency purposes?

4190             MR. COWIE:  Well, in providing critical mass and making sure that our decision to stay in the west, to be a part of the ‑‑ and most of us were born and raised in the west ‑‑ be a part of this next time is important for us to be able to operate at a very high level, provide those local services and be a distinctive regional voice where we need to.

4191             And there will still be large national companies who own licences in western Canada, many of the markets we're talking about, and they're good local citizens by and large, but there is a different perspective, we think, of people who live and work out here, were born here.

4192             It's not any different than the Atlantic provinces, it's not any different than Ontario, Quebec.  There is a need within those regions to talk to each other on the basis that you always have.

4193             So, it's a little bit of ‑‑ I guess we're dreaming a bit ‑‑ but at the same time, we're trying to face the realities of what's really going on here and things are changing very fast.

4194             COMMISSIONER MOLNAR:  Thank you.

4195             That's all I have, Chairman.

4196             THE CHAIRPERSON:  Commissioner Menzies.

4197             COMMISSIONER MENZIES:  How big do you expect this market to get in terms of economic growth, and how much it can handle?

4198             Because it strikes me that, quick math in my head, there will be 125,000 people in Red Deer in 10 years if growth continues and that we might be back doing this again at some point.

4199             But what sort of economic growth do you foresee in the next five to six years?

4200             MR. OLSTROM:  Well, I guess if there's frequencies you may be back here again at some point in time.

4201             I'd like to turn to Debra McLaughlin, and maybe Debra can give you some background on that, Commissioner Menzies.

4202             MS McLAUGHLIN:  Well, we certainly looked at all of the publicly available data, all of the bank information and Stats Canada and, of course, Financial Post.

4203             Just in their 2007 document they predicted an increase of 37 per cent in the next five years on retail sales.

4204             The population trends for this market, we're sitting at about five per cent.  That was the difference year‑over‑year in census and they have sort of flat lined it, I believe, between three and four.

4205             But, having said that, average incomes were expected to increase by 23 per cent in that same five‑year period I was talking about.

4206             And my most recent conversation with the Conference Board of Canada said that when it comes to this area, particularly with the changes that we've seen globally and the importance of the production of food, that they're having a tough time making those predictions because when you have one sector exponentially change, it doesn't allow you to use those projections out based on historical trends.

4207             So, right now we're all sitting here saying, is it the three, the four population growth, is it the 37 per cent, does it continue longer or are we going to have a big bubble?

4208             What they can say for sure that in terms of being an economic driver within the country, this area, not just Red Deer, is certainly forecast for the next 10 to 15 years to be it.

4209             Given the opportunities in this area and the fact that there are so many industries and expanding at that, you know, I'd like to put a number on the record, but I ‑‑ you know, I would probably end up saying, you know, I'd under estimate it.

4210             COMMISSIONER MENZIES:  That's fine.  I didn't need number, I just wanted an assessment of whether it was a bubble or not.

4211             MS McLAUGHLIN:  There's a bubble happening right now.  How long that continues, we don't know.

4212             I mean, you know, does it become a trend or is it a bubble?  But it's definitely a bubble at the moment, only time changes it into a trend.

4213             COMMISSIONER MENZIES:  Yes, yes, I know.  Economists have accurately predicted the price of oil three times in the last 30 years.

‑‑‑ Laughter / Rires

4214             COMMISSIONER MENZIES:  Thank you.

4215             THE CHAIRPERSON:  Commissioner Patrone.

4216             COMMISSIONER PATRONE:  Thank you, Madam Chair.

4217             Good morning.

4218             I'm going to start by expanding on some of the questioning that was made concerning news and information programming.

4219             You spoke about the need to provide balance and reflect regional differences and an editorial perspective.

4220             Why did you feel the need to stress that in your presentation, and how will that be reflected in your news programming?

4221             MR. OLSTROM:  Well, we believe that ‑‑ we conducted extensive consumer demand research on Red Deer.  The research came back to us telling us the single most important element, and this comes up a lot of times, is local news and I believe in this survey it was over 94 per cent.

4222             There's a demand for local news.  It's evident across all demos, young and old.  The research we had conducted by Strategic Inc. showed us that 75 per cent of those surveyed believed that there was a need for diversity in sources of radio news and that that was important.

4223             We found there to be a clear void within the marketplace to serve that.

4224             Red Deer is not necessarily in need of more hours of news, it is in need of a different perspective, different sources of news.

4225             One of the key distinguishing features that we believe we'll have is our 10‑minute noon package, Monday to Friday, which will give us an opportunity to focus more in depth, it gives our reporters an opportunity to delve into stories a little bit more and, at the same time, gives us an opportunity to speak to the things that impact this market and this region which, petro chemical and oil industries, the service sector that Red Deer is, there will be a business report, an ag report, because agriculture obviously another important driver in this area.

4226             So, that will give us an opportunity to expand on that type of news and information as well within the market.

4227             You know, if I can speak to Harvard in particular.  We operate in communities like Red Deer, Saskatoon, Fort McMurray, Regina which are all agricultural resource‑based communities.

4228             For example, 620 CKRM in Regina, our heritage AM radio station, is known as a community leader in news and information and we believe we're going to bring that passion, that focus to the Red Deer market and I guess give our perspective, Harvard Broadcasting's perspective on the west and on Red Deer.

4229             COMMISSIONER PATRONE:  You're talking about longer formed stories, like investigative journalism?

4230             MR. OLSTROM:  I don't know if ‑‑

4231             COMMISSIONER PATRONE:  Do you have the staff for that?

4232             MR. OLSTROM:  I believe we do have the staff.  In these day and ages, you know, we multi‑task and we work harder and we believe that there's an opportunity to do more in‑depth stories.

4233             We're not talking 10‑minute stories, we're talking a story, instead of the headlines you're going to get maybe a minute and a half of a story that has a little bit more focus with an interview and that sort of thing that, you know, there is some more depth to it.

4234             COMMISSIONER PATRONE:  Three reporters that you'll be able to put on the street?

4235             MR. OLSTROM:  Well, yes, absolutely.  Three and a half, there's a part‑time reporter ‑‑ news reporter/reader.

4236             COMMISSIONER PATRONE:  I love those 0.5 reporters.

4237             You refer to your editorial staff as reader/reporters.  Does that mean that they report as well as anchor.  Are these people sort of interchangeable?

4238             MR. OLSTROM:  Absolutely.  There will be a news director, but he as well, or she as well  will be involved in managing that department, but also doing the reading/reporting as well.

4239             COMMISSIONER PATRONE:  Can you speak about your plans for monetizing the streaming audio part of your operation relative to news and information programming?

4240             MR. OLSTROM:  We're looking at the website for the River as an extension of our brand and our on‑air product.  It's an opportunity for us to do polls ‑‑ listener polls.

4241             For example, in Regina we're doing that currently on a couple of our radio stations where we have listener polls, both musically and say topic of the day and we are able to take that information and feedback and use that in our on‑air programming.

4242             So we're a link to the community, it's a 24/7 link.  We're looking at this as more of a ‑‑ at least in Red Deer in the initial stages in terms of monetization, it is an added value for advertisers, so that we are able to offer something a little bit more because of the ‑‑ you know, maybe there's some incremental spending that we can acquire by giving that added value for our website.

4243             So, in terms of monetization, that's more where that's going to come out, at least in the initial stages with the website.

4244             We'll be streaming and providing community information, a lot of typical things that a website does.

4245             We've been involved with websites, starting in Regina, for a number of years, 10 years ‑‑ pretty close to 10 years and they've strictly been used as a listener benefit more than anything else, an extension of the radio station.

4246             So, the monetization, as I said, here in Red Deer is focused on adding that value for incremental spending potentially.

4247             COMMISSIONER PATRONE:  Do your reporters file directly to the web ahead of ‑‑ I understand that you're going to have streaming audio but, for instance, if your reporter were to break a story ahead of the next scheduled newscast, would that individual be encouraged to file directly to the web or wait until the newscast goes ‑‑

4248             MR. OLSTROM:  Potentially, yes, but I believe if the story is of significance, that is as you say a breaking story, that we would go to air with that immediately, or within ‑‑ you know, we're not going to cut the song off but we're going to, you know, as soon as we can we're going to jump in.

4249             Because if there is relevance to a story and importance to a story of that nature, absolutely, that's what we're there ‑‑ we're there to serve the community, not only from a music perspective, but from an information perspective as well.

4250             COMMISSIONER PATRONE:  Will there be many opportunities for your reporters to be filing live from the scene?

4251             MR. OLSTROM:  Absolutely, yes.  I ‑‑ you know, I use that as example ‑‑ again, example, our heritage AM station in Regina.  We do that all the time.

4252             If there's something happening, the reporter's out and at the scene and filing a report and  getting it on the air as quickly as possible.

4253             COMMISSIONER PATRONE:  I'd like to ask you a couple of questions concerning your initiatives as far as emerging artists are concerned.

4254             Your Made in Canada show, that's two hours on Sunday and then aired again...?

4255             MR. OLSTROM:  On Wednesdays, yes, Wednesday evening.

4256             COMMISSIONER PATRONE:  How will the Canadian artists be chosen?  Who makes that decision; is it done by a committee, or is there one individual who will be designated with the job of screening CDs and that kind of thing?

4257             MR. OLSTROM:  Maybe I'll turn to Daryl who's actively involved I guess in this aspect as it is right now and have Daryl explain to you how that process works.

4258             MR. HOLIEN:  In Regina we receive a lot of great music from the recording companies and we're also on the street actively trying to encourage new and emerging artists to drop off their CDs, drop off their tapes, whatever they've got, and we select them as with their compatibility obviously to the format.

4259             If you look at the radio station in Regina right now, a new and ‑‑ you know, you hear there like Hayley Sales, you hear Justin Hines, Brian Melo, Susan McNeil.  So, we would look at the same process at the station in Red Deer as well.

4260             COMMISSIONER PATRONE:  And what percentage will be Alberta artists versus other artists, and will that show be aired at your other stations?  Will the same show be aired in Fort McMurray and Saskatoon?

4261             MR. OLSTROM:  The show is locally focused and developed and created for Red Deer.  I guess if there was a desire to carry it in Fort McMurray, for example, where there would be some correlation with the Alberta artists, that would be worked out between the program directors.

4262             And I guess it's a potential, but also in Fort McMurray, you got to remember that, you know, we have our own programming, we're creating all our programming locally there as well.

4263             So, sometimes it doesn't work from a programming perspective.

4264             MR. HOLIEN:  The percentage I'm not sure you can ‑‑ you have a control of the amount of music that is released.  We don't ‑‑ we don't have the ability to say "x" number of per cent is going to be from here because we don't control the supply.

4265             COMMISSIONER PATRONE:  I understand.

4266             Now, I see your scholarships will be awarded to ‑‑ well, half of your scholarships will be awarded to Aboriginal students.

4267             MR. COWIE:  That's correct, yes.

4268             COMMISSIONER PATRONE:  Can you talk a little bit about any other corporate or programming initiatives aimed at promoting diversity?

4269             MR. COWIE:  Well, if we're talking across the face of what we do, we're active in three of our markets in mentoring programs for editorial youth in the news end of the business, so that would be young reporters and that's done in association with APTN.

4270             In addition to that we are supporters and founding supporters of ANF, which is the larger fund which is operated or also funded by APTN which is broader than just news mentoring for news reporters and writers.  So, we're active in that.

4271             In Calgary, I'm not sure this would fall in the same category here, but in Calgary, one of the main cogs there of introducing new and emerging talent is a very widely cast program to bring new artists into a contest on an annual basis.

4272             And I'm going to have Michael explain that, because we were pretty sure going into it it would be a success, but it's been even more so than we thought at the beginning.

4273             COMMISSIONER PATRONE:  Sorry, you jumped back from the diversity question to the emerging artists.  Are you referring to ‑‑

4274             MR. COWIE:  No, I'm sorry, but I lost the question.

4275             COMMISSIONER PATRONE:  Well, my question was about diversity and corporate initiatives aimed at fostering.

4276             MR. COWIE:  Well, diversity in a market can be presence alone.  If, for example, a broadcaster like us goes into a market where there are two or three large national companies own literally all of the licences, we provide diversity by just being there.

4277             But, again, and the diversity comes from our locally focused programming which is both in news and musical programming.

4278             So, we believe that ‑‑ and that is at the root, by the way, of this whole strategy in the west, is making sure that companies like ours that are a different voice, we don't ‑‑ you know, and while we don't do editorials as programming, we do have an editorial voice that speaks to the west and that's heard as part of the diversity in the things we do.

4279             But within the basic of diversity is making sure we're in a place where we can be heard with a distinctively western view of what we're talking about on our radio stations.

4280             MR. OLSTROM:  Commissioner Patrone, if I could just add to that.  In our application points form on cultural diversity, 9‑11, following with the CAB best practices that we have a fairly detailed diversity policy.

4281             And we believe with this format in Red Deer, spanning as wide a demographic as it does, encompasses many cultural groups as well just with the format itself.

4282             COMMISSIONER PATRONE:  Thank you very much.  I have no more questions.

4283             Madam Chair.

4284             THE CHAIRPERSON:  Thank you.

4285             Actually I do have a few questions.

4286             I'm just wondering, first of all, if your projections ‑‑ your financial projections were prepared on the basis of one or two licences on that assumption?

4287             MS SEVDAHL:  Yes, they were prepared on the basis of two licences.

4288             THE CHAIRPERSON:  Two.  Okay, thank you.

4289             And I'm curious, I want to take advantage of the fact that Ms McLaughlin is here.  I'm looking at a T chart, I guess I'll call it that, that shows the applicants and the existing players in the market and the formats that they have.

4290             And nobody serves the older demographic for men, they call older 35 plus, there's nobody in that block.

4291             And I'm curious to know, it seems all of the applicants are applying for ‑‑ well, not all of, I shouldn't say all of ‑‑ but many are applying for older women, 35 plus, nobody is in the men.  Some people say it's heavily skewed female or lightly skewed.

4292             I'd like to understand that, because in evaluating the applications, you know, it perhaps is a significant point.  I just ‑‑

4293             MS McLAUGHLIN:  I, of course, don't have the chart you have, so I'll just speak generally to how we identified the skew to female.

4294             When we looked at the per capita tuning and the declines, we actually found that it was balanced between men and women, probably just slightly marginally more against men.

4295             And when we looked at the potential of introducing a service, we looked to the out‑of‑market tuning to find out what per cent of that out‑of‑market tuning was done by each of these groups.

4296             And what we found was that within ‑‑ and actually I'll just read some numbers for you so if anybody else would like to compare they can.

4297             In fall, yes, 2007 there were 412 hours of spill tuning or 412,000, rather, hours of spill tuning.  Of that 206,000 or 50.1 per cent were in adults 25‑54.  Within that, the majority came from women.

4298             So, we then recalculated this based on the spring numbers and the hours of tuning to out‑of‑market had increased, they went up to 430,000.  Within that the hours tuned out‑of‑market by adults 25‑54 went up to 217,000 or 52.7 per cent.

4299             When we broke that down by female/male, again, the females represented the highest amount of that tuning.

4300             So, from an opportunity to bring people back to the market, it seemed that the greatest amount of tuning that was available to us was amongst women.

4301             When we looked at the profiles of the stations in the market, they were equally balanced against male and female.  We have two male services, the rock, the classic rock and the modern classic rock and then we have a country and a hot AC.  They tend to skew female and the others male.

4302             So, there was a balance that existed in the market and then the opportunity was the greatest amongst females.

4303             So, putting those two pieces together, plus the fact that AC is the highest in demand, made us choose this format.

4304             THE CHAIRPERSON:  In your opinion, then, because I see some of what you are saying and what I'm looking at here, although both the classic rock stations, the rock classic and the classic rock stations in the market now ‑‑

4305             MS McLAUGHLIN:  Mm‑hmm.

4306             THE CHAIRPERSON:  ‑‑ they both show men younger, 35 and younger, but would you disagree with that; do you think there may be ‑‑ one or both of them is more middle appeal to older men?

4307             MS McLAUGHLIN:  Again, as a researcher I'm hesitant to disagree with the numbers that you have there because I haven't seen them, but I would say that a classic ‑‑

4308             THE CHAIRPERSON:  I don't actually have numbers, it's just in a big block.

4309             MS McLAUGHLIN:  Okay.

4310             THE CHAIRPERSON:  You're either under 35 or over 35 and these guys are all under 35, these two stations.

4311             MS McLAUGHLIN:  If you look at the profile to a classic rock station, either by virtue at looking at how it does over the entire country using BBM data, or looking at an individual market basis, the skew is always male.

4312             If the skew is somehow not as strongly male in this market, I would suggest that the classic rock here is trying to fill part of that void of the AC by playing softer selections.

4313             In the introduction of an AC format into this market, we'll realign what people are playing.  The classic rock already has a brand as a classic rock and, therefore, they are likely to fill that void serving males by skewing more towards a traditional classic rock format.

4314             THE CHAIRPERSON:  So I'm trying to put more emphasis on the younger or older than 35, and from what I'm hearing you say, that maybe is just not a major consideration for advertisers or listeners.

4315             MS McLAUGHLIN:  It's a younger market, Red Deer is a younger market.  You can't come into this market and not recognize that.  I believe it's six years difference between the median age in this market and the Canadian average.

4316             But the question becomes, if you skew too young you've got two issues.  One, can you really recover sufficient hours of tuning amongst that group.  Two, with the population base being as small as it is, to develop a solid business plan.

4317             Secondly, if you do that you're going to lose service to the upper end entirely because, unlike an AC format that can pick up some of the younger by simply including some more current hits as we have proposed, the older demographics are not going to tune to a younger program station.

4318             And, in fact, we asked ‑‑ recognizing the dynamics of this market, we asked not only, will you listen to the station, but if we added more current, would you listen to this station more, would your likelihood increase?

4319             And, in fact, the highest interest in the station when you add more current actually moves down in age.

4320             So, what we were trying to do is balance the loss of tuning across all demographics recognizing that that 12‑24 needs very specialized programming that we couldn't provide and have a business plan.

4321             By serving the 18‑49 and the 25‑54, principally 25‑54, with a skew somewhat older, we altered ‑‑ if you look at the typical classic or our AC format, the distribution as between hours of music would be around 10 per cent for current.  We're offering 20 per cent, which means we're going to pull a little bit from that other end.

4322             Are we going to get the 35 plus, absolutely, because AC is their format of choice.  But you can mix in ‑‑ and I shouldn't speak for Daryl or Michael ‑‑ but you can mix in the currents in such a way as to not turn it into a completely youth station and yet offer them something of interest.

4323             THE CHAIRPERSON:  And your 35 plus is slightly female, then?

4324             MS McLAUGHLIN:  Yes.

4325             THE CHAIRPERSON:  Okay.  Thank you very much.

4326             Thank you.

4327             I just ‑‑ if we were to decide on two licences, who would you ‑‑ which of the applicants would you consider to be the most competitive and which the least competitive, if you'd like to comment on that?

4328             MR. COWIE:  Well, Madam Chair, we've  debated that question in our group and our thinking is that the format we're proposing is broad enough that it can come into the market and sit in the middle and we would be able to compete against the incumbents in the market.

4329             THE CHAIRPERSON:  That's fine.  Thank you.

4330             Counsel, any questions?

4331             So, this is your two minutes to sum up.  Thank you.

4332             MR. COWIE:  Well, thank you, Madam Chair, and for listening to that long ‑‑

4333             THE CHAIRPERSON:  It was very helpful and interesting.  Thank you.

4334             MR. COWIE:  ‑‑ discussion of the new west.  I presume you'll be hearing more about it.

4335             THE CHAIRPERSON:  I wonder if we'll both live long enough for me to give the return speech about Nova Scotia.  I'm just not quite sure.

4336             Do you have any vision along those lines?

4337             MR. COWIE:  Yes, I think Nova Scotia is doing just fine.

4338             Madam Chair, Members of the Commission, we firmly believe that 100.7, the River,  is the right choice for Red Deer.

4339             Why?  Our format main stream AC is by far the most popular musical format in Canada today, yet it is not available to the residents of Red Deer.

4340             Licensing Harvard will fill this void and provide the Red Deer radio audiences with access to a format that enjoys unrivalled popularity in the rest of the country.

4341             Our choice of formats creates a real opportunity to repatriate tuning.  The River will bring back those who are tuning less to radio in Red Deer and repatriate tuning that is going to out‑of‑market stations.  In fact, the proposed main stream AC format offers the greatest opportunity to repatriate the largest group of disenfranchised listeners.

4342             The River alone among the proposals before you can draw our audiences back to local radio from both the 25‑54 and the 18‑49 demographics.

4343             Our consumer demand research showed that interest in this format was consistently high across all demos, not just our core of 35‑54 target audience.

4344             Our commitment to CCD is uniquely  local, providing both Red Deer only organizations and regional associations with the funding they need to develop artists from this area.

4345             Our investment ranks at the top of the list among competing applications, $1‑million over seven years.

4346             The River is also committed to Canadian content and new and emerging Canadian artists.  Our commitment of 40 per cent CanCon, with 40 per cent of that being dedicated to new and emerging Canadian talent will provide meaningful exposure to Canadian artists within a highly popular format that will attract large audiences.

4347             And, finally, licensing Harvard in Red Deer will provide us with an opportunity to bring our western independent perspective to consumers who say they want choice in news and music.

4348             With the addition of Red Deer to our other markets, we will be able to enhance our service to all of our western stations, recognizing the growing synergies between Alberta and Saskatchewan and roots that go well beyond shared economic bases.

4349             Red Deer is a key contributor to the economy of Alberta, all of the applicants agree, and evidence supports that this is one of the fastest growing markets in the province.

4350             To that end, a company serious about being a western regional broadcaster, such as Harvard, needs this market to provide the service that is both locally and regionally reflective for all of the markets we serve.

4351             The synergies we have begun to develop through our recent expansions will be increased and our entire operation will be enhanced well beyond that which will show up on a balance sheet.

4352             Madam Chair, Commissioners, Red Deer is another important step in our western regional growth strategy, a step that we hope you will allow us to take.

4353             So, we thank you for your consideration and we look forward very much to participating in the remainder of this very important hearing.

4354             Thank you.

4355             THE CHAIRPERSON:  Thank you, Mr. Cowie, Mr. Olstrom and your team.  I appreciate it.

4356             And we're going to take a 15‑minute break, so we'll be back around 11:10.

4357             Thank you.

‑‑‑ Upon recessing at 1051 / Suspension à 1051

‑‑‑ Upon resuming at 1112 / Reprise à 1112

4358             THE SECRETARY:  We will now proceed with Item 10, which is an application by Radio CJVR Ltd. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer.

4359             The new station would operate on Frequency 100.7 MHz, Channel 264C1, with an average effective radiated power of 56,000 watts, maximum effective radiated power of 100,000 watts, antenna height of 161.1 metres.

4360             Appearing for the Applicant is Gene Fabro.

4361             Please introduce your colleagues.  You will then have 20 minutes for presentation.

4362             Thank you.

PRESENTATION / PRÉSENTATION

4363             MR. FABRO:  Good morning, Madam Chair, Commissioners and Staff.  Thank you for allowing us this opportunity to appear before you again.

4364             Before we begin our presentation for a new FM licence in Red Deer, I would like to introduce the members of the team.

4365             I am Gene Fabro, President and owner of Fabmar Investments Ltd. of Calgary, Alberta.  My family and I have been in business for over half a century, and through our holding company, Fabmar Investments Ltd., we have, for the past 25 years, invested heavily in a broad cross‑section of industrial activities, including land development and home building, manufacturing, woodlot management, oil and gas exploration, coal resource holdings, office and retail buildings, and, for the past 18 years, radio broadcasting.

4366             To my left is Dean Sinclair, a broadcast veteran, whose 30‑plus year career includes programming, on‑air, sales and senior management experience.

4367             Dean has provided input and direction for our proposed pop/CHR musical format.

4368             Next to Dean is Robert Hutton, Executive Vice‑President and General Manager of one of Canada's leading research firms, Pollara Research.

4369             Robert's team conducted a consumer demand and advertising study to assist us with this application.

4370             On my far right is Linda Rheaume, Administrative Manager for Radio CJVR's two Melfort stations, CJVR‑FM and CKJH‑AM, and our FM station in Whitecourt, Alberta, CIXM‑FM.

4371             Linda has been a part of our team for the past 17 years.

4372             Next to Linda is Kevin Gemmell, Station Manager and General Sales Manager of our two Melfort stations.

4373             Kevin has been with our company for over 12 years.

4374             And to my immediate right is Ken Singer, who is Radio CJVR's Vice‑President of Broadcast Operations.

4375             Ken has been in the broadcast business for over 40 years, and is currently a member of the Canadian Association of Broadcasters' Radio Sector Board.

4376             Ken...

4377             MR. SINGER:  Thank you, Gene.

4378             Good morning, Madam Chair and Commissioners.  CJVR's proposed new station, Hot 100 FM, will have a highly beneficial impact on listeners within Red Deer and the surrounding corridor communities.  It will strengthen Alberta's private radio sector, and further advance the objectives of Canada's Broadcasting Act.

4379             Hot 100, with its unduplicated pop/CHR music format, will yield many important benefits to Red Deer's underserved 18 to 44 demographic, to new and emerging Canadian artists, to the region's arts and cultural organizations, to the local business community, and to Red Deer's radio market as a whole.

4380             Through its unique programming format, Hot 100 will bring fresh diversity and greater listener choice to the local radio market, while fulfilling many of the stated listening needs and preferences of Red Deer's 18 to 44 listenership spectrum.

4381             Our music format will attract back to local radio the high percentage of listeners 18 to 44 who currently turn to non‑radio sources for their music.

4382             As well, Hot 100 will repatriate a significant number of the 52 percent of Red Deer residents aged 18 to 44 who tune to out‑of‑market stations in search of their music preferences.

4383             The net effect of repatriating former radio listeners from alternative audio sources, and from out‑of‑market stations, will increase local tuning hours and strengthen Red Deer's private radio sector at no expense to existing stations.

4384             Hot 100 will, in effect, complement rather than compete with Red Deer's other radio stations.

4385             Further, the appeal of Hot 100's unique format will attract new advertising dollars to Red Deer's radio market, with minimal impact on local stations.

4386             Beyond the music, our spoken word programming will provide daily reports on the relevant news, events and activities happening within Red Deer and the surrounding communities.

4387             As a further means of keeping our listeners well informed, CJVR will produce a series of daily, special, spoken word features, focusing on a range of topics of interest and relevance to Red Deer's steadily growing population.

4388             MR. GEMMELL:  Madam Chair, approval of Hot 100 will result in the direct expenditure of a minimum of $1 million on locally focused Canadian Content Development initiatives over the licence term.

4389             CJVR has also committed to a $1 million, indirect, on‑air expenditures budget to assist local arts and cultural groups in their endeavours to promote and support local talent within Red Deer and central Alberta.

4390             CJVR brings to Red Deer a rich legacy of accomplishment and commitment to talent development.  Hot 100 is equally dedicated to maintaining that legacy through the implementation of a creative and inclusive game plan that reaches out to local talent across an eclectic mix of artistic endeavours.

4391             The promotion and exposure of new and emerging artists has been a priority of CJVR for decades.  Hot 100's commitment and sense of priority in this regard is no less, as evidenced by the initiatives set out in our supplementary brief.

4392             By way of example, Hot 100 has committed to play a minimum of 40 percent Cancon.  Of this figure, no less than 40 percent will be by new and emerging artists.

4393             Hot 100 will further enhance the careers of these new and emerging artists through the creation of a series of special, music‑based programs, totalling over 17 hours of in‑studio productions, all of which will air in prime time across the broadcast week.

4394             In keeping with CJVR's deep‑rooted sense of community, Hot 100, through its daily program schedule, special musical and spoken word programs, newscasts, specially produced vignettes, and numerous other initiatives, will ensure that Red Deer's growing cultural diversity is well reflected.

4395             Also, in recognition of Red Deer's pride in its vibrant cultural industries, and its designation as cultural capital of Canada, CJVR will establish a full‑time Arts and Culture Coordinator to cover the area's many cultural activities and events.

4396             MR. FABRO:  Madam Chair, the establishment of Hot 100 will provide Red Deer's business community with an alternative advertising vehicle that will enable them to target and serve the various age groups within the region's underserved 18 to 44 demographic on a more cost‑efficient basis.

4397             As well, the addition of CJVR's proposed new pop/CHR formatted station will increase ownership diversity, establish a competitive balance within Red Deer's highly concentrated radio market, and provide a distinct, alternative, editorial voice.

4398             From CJVR's perspective, approval of Hot 100 for Red Deer will ensure the presence of a strong, independent, radio voice, at a time when smaller broadcasting entities are rapidly disappearing through increasing ownership concentration.

4399             Approval of Hot 100 will result in the creation of 16 full‑time and 2 part‑time jobs within Red Deer's radio market, having a positive impact on the local market economy, which has a growing concentration of small businesses.

4400             For all of the foregoing, Hot 100, more than any other applicant, will best optimize the utilization of the 100.7 frequency through the implementation of its unduplicated music format, which will fulfil the programming needs and preferences of Red Deer's underserved 18 to 44 listenership spectrum.

4401             Madam Chair, a comprehensive consumer demand study, conducted by Pollara Strategic Insights, one of Canada's leading market research companies, clearly illustrates the need for a new FM station that will fulfil the programming voids and listener preferences of Red Deer's underserved and ever‑growing 18 to 44 demographic grouping, and, in particular, those 18 to 34.

4402             MR. HUTTON:  Pollara's survey of 506 Red Deer residents between 18 and 64 brought to light the extent of local audience fragmentation, in terms of the number of listeners turning to non‑radio sources for their music, and the extent to which local listeners are tuning to out‑of‑market stations in search of their musical preferences.

4403             Pollara's survey did not start out with any preconception of market needs or format.  We looked at the market comprehensively to understand satisfaction, loyalty, and the gaps and alternatives driving demand in the marketplace, and then connected the dots to determine where the market could best be served.

4404             We started by measuring the listener satisfaction level of Red Deer residents relative to their current radio choices.  Pollara found that radio dissatisfaction levels are notably higher among adults 18 to 34, at 31 percent, as compared to those listeners 35 and older.

4405             Evidence of the overall level of dissatisfaction with existing local radio choices is reflected in the fact that 69 percent of residents stated that they would listen to radio more often if the programming they liked was available.

4406             Fifty‑nine percent agreed that most radio stations do not provide enough musical variety, and 63 percent said that they choose sources other than radio to find the music selections they like.

4407             In identifying by age group those listeners who are turning to alternative sources to find their musical preferences, Pollara's study shows that 52 percent of adults 18 to 34 go elsewhere to find their music, followed by 32 percent of those 35 to 44.

4408             With such a high proportion of residents 18 to 44 turning to other sources for their music preferences, there is both a significant need and an exciting opportunity to attract these disenfranchised listeners back to radio.

4409             This reality is borne out by Pollara's study, which indicates that 74 percent of listeners who currently turn to non‑radio sources for their music said that they would frequently or occasionally listen to Hot 100's music format.

4410             With respect to out‑of‑market tuning, Pollara asked respondents the question:  During the last week, what radio stations did you listen to?

4411             While Red Deer's four originating stations were at the top of the 17 most mentioned stations, 44 percent said that they listen to out‑of‑market stations.

4412             Next, respondents were asked the question:  Of these radio stations, which station did you spend the most time listening to?

4413             The end result showed that 52 percent of out‑of‑market tuning is done by adults aged 18 to 44, which represents both a format and a repatriation opportunity within this age grouping.

4414             Combined with the finding that, across all demographics, no significant loyalty to current stations exists, clearly there is unmet demand, causing pockets of dissatisfaction, driving this key and growing segment out of the market and to non‑radio sources.

4415             Indeed, given the trends and growth in this key demographic, we believe that this disenfranchisement can only continue, unless a strong alternative is provided.

4416             MR. GEMMELL:  Madam Chair, Red Deer's strategic location midway between Calgary and Edmonton affords local businesses easy access to a trading area of more than 200,000 people, and a distribution capacity of over 2 million people within a 90‑minute drive.

4417             Among the many key indicators which reflect the area's vibrant and growing local market economy are the following:

4418             The population of the Red Deer central market area grew by 11 percent between 1996 and 2001, compared to Canada's national average of 4 percent, and is projected to grow to 125,000 by 2010.

4419             Red Deer's employment growth rate of 4 percent in 2006 exceeded the national growth rate of 2 percent, while the region's unemployment rate, as of February 2007, was 3 percent, compared to 4 percent for the same period in 2006.

4420             Investment in rural and urban real estate development has sustained record levels, with permit values ranging from $250 million to $300 million over the past four years, and a similar pace of development is expected to continue.

4421             Local retail sales are estimated by FP Markets to be $2.3 billion for 2007, some 142 percent above the national average, and are projected to increase to $2.6 billion in 2009, and grow to $3.2 billion in 2012.

4422             And FP Markets estimates the average family income in Red Deer in 2007 at over $96,000, while the average household income is estimated at more than $86,000, and a per capita income of $35,000, which is 23 percent above the national average.

4423             Madam Chair, FP Markets estimates that total market advertising expenditures are approximately 4 percent of retail sales.

4424             CJVR, in using a conservative retail sales figure of $2.25 billion, anticipates that total advertising dollars available to all media in the Red Deer market in Year 1 of operation will be $90 million.

4425             Based on the FP Markets report, CJVR estimates that 16 percent, or $14.4 million of that $90 million, should be obtainable by local radio.  We believe that the four existing stations garner approximately $12 million of that amount, which leaves $2.4 million in untapped radio advertising dollars available to new market entrants.

4426             Given the strength of the local market economy, CJVR is confident that the Red Deer market can readily accommodate our proposed new FM station, with very minimal impact on the four existing stations, which are owned by Newcap Broadcasting and the Pattison Broadcast Group.

4427             MR. SINCLAIR:  Madam Chair, Hot 100's pop/CHR music format was born out of the diverse musical tastes of Red Deer's underserved 18 to 44 listenership spectrum, which, in large part, is forced to tune out‑of‑market or seek other audio sources to satisfy their musical needs and interests.

4428             In assessing the music voids in Red Deer's radio market, Pollara employed a multi‑level approach to identify the most preferred music format for a new local station.

4429             Ultimately, three musical montages were tested ‑‑ pop/CHR, pop music, and Top 40 ‑‑ of which pop/CHR was the clear choice by a wide margin.

4430             CJVR's Hot 100 will be a current‑hit music station, aimed at the 18 to 44 female pop music fan.  With a core 25 to 34 audience, the median listener will be a 29‑year‑old female, who loves the latest pop music, news and trends.

4431             Hot 100 will focus more on the pop side of the CHR spectrum, in contrast to a full‑service CHR, which includes many of the rock sub‑formats.

4432             The station will concentrate on newer releases, with a basic catalogue that spans the past 15 years.

4433             Its pop/CHR format will include a skilful blending of pop, hot AC, light urban and Top 40 product.

4434             Further, Hot 100's hit‑driven format will concentrate on breaking new music, with most of the airtime devoted to the past three years.

4435             The station will feature weekly and daily music countdown shows, and special programming to highlight the latest new and emerging Canadian talent.

4436             Given Red Deer's current menu of FM music formats, which include two rock stations, a country station, an AC station, and a nearby classic hit/soft AC station, Hot 100, with its pop/CHR format, will be a very different radio station that will nicely complement Red Deer's local radio spectrum.

4437             Here is Hot 100 AM.

‑‑‑ Audio clip / Clip audio

4438             MR. SINGER:  Madam Chair, a further key component to Hot 100's unique musical agenda centres around the creation of a series of special music‑based programs that will be produced in‑studio and aired in prime time across the broadcast week.

4439             These windows of opportunity within Hot 100's program schedule will be devoted to the on‑air promotion and exposure of Canadian music, and will feature many new and emerging artists.

4440             As detailed in our supplementary brief, these special programs include Hot 100 FM's "Release Party", "Hot Canadian Coast‑to‑Coast", the weekly "Canadian Hot 20", and "Hot Canadians on Track".

4441             Over the course of a week, Hot 100 will have a total of 17 hours and 15 minutes of special programming dedicated to exposing 100 percent Canadian music.

4442             Hot 100 commits through its Canadian 40/40 initiative to play a minimum of 40 percent Cancon, applied to both the entire broadcast week and the period between 6 a.m. and 6 p.m.

4443             Of the 40 percent Cancon, no less than 40 percent of the selections played will be by new and emerging artists.

4444             In an average week, this represents 16 percent of Hot 100's total weekly playlist.

4445             MS RHEAUME:  Madam Chair, Hot 100 will provide its listeners with inclusive, locally relevant, community‑focused informational programming that will accurately reflect Red Deer, its people and its culture through the daily coverage of local events and activities happening within the city and the surrounding corridor communities.

4446             In the same fashion that Hot 100's pop/CHR format will meet the musical needs of Red Deer's underserved 18 to 44 age groups, we will fulfil the spoken word priorities that local residents have told us about through our extensive research.

4447             To ensure that its objectives are met, Hot 100 has devised an inclusive plan to keep a finger on the pulse of activities within Red Deer and the surrounding area.  This will be achieved in a number of ways, including the production of a series of special spoken word features that will be aired daily on Hot 100.

4448             In addition to reflecting the Red Deer region's cultural diversity on a daily basis through its musical and spoken word programming, Hot 100 will also employ a full‑time Arts and Culture Coordinator to keep residents well informed of the many cultural events and activities happening throughout the area.

4449             In total, Hot 100 will provide 2 hours and 22.5 minutes of pure news, and a total of 12 hours and 19.5 minutes of spoken word programming each week.

4450             MR. SINGER:  Madam Chair, approval of CJVR's application will significantly impact local Canadian talent, as Hot 100 implements its creative and meaningful array of direct and indirect spending initiatives and special program undertakings designed to develop, promote, and expose local talent.

4451             CJVR brings to Red Deer in Hot 100 a proud legacy of excellence, achievement and commitment to talent development that has significantly impacted the careers of many successful Canadian artists.  It will be Hot 100's goal to further that legacy, which first took root on the Saskatchewan prairies 41 years ago.

4452             CJVR's CCD plans over seven years call for a minimum direct expenditure of $1 million, indirect on‑air expenditures of $1 million, plus the daily, hard, on‑air currency afforded to new and emerging artists.

4453             The nine direct expenditure initiatives include the FACTOR Talent Fund, "Music Business 100.7", "Opening Act", "Horizons Unlimited", the Red Deer College Steinway Project, Red Deer College music scholarships, Red Deer Symphony, Red Deer Canada Day, and Red Deer Discovery Diversity Day.

4454             MR. FABRO:  Madam Chair, our Red Deer proposal is the tenth application that CJVR has presented to the Commission over the past two years in our ongoing efforts to expand our radio business beyond Melfort, Saskatchewan and Whitecourt, Alberta.

4455             When my family established CJVR as the broadcast arm of Alberta‑based Fabmar Investments Ltd., our intent was always to grow the business by expanding CJVR's brand of radio to other markets.

4456             We are successful business people, who think strategically, and have used our financial resources and management expertise to develop solid business plans and many enterprises for more than 50 years.

4457             We have a tremendous passion for radio, a tenacious will to succeed, and have no doubt whatsoever that we will be successful should we be granted a licence in Red Deer.

4458             My family has ensured that each of the 10 applications placed before the Commission has been very complete and highly competitive, with many significant public events and serious financial commitments to Canadian Content Development.

4459             This is evidenced by the fact that, despite having only three radio stations, CJVR consistently puts $1 million in direct Canadian talent expenditures on the table.

4460             CJVR's 41 years of broadcast experience, when coupled with Fabmar's business acumen, financial resources and creative entrepreneurship, places our company in a better position than most to assume new broadcasting responsibilities.

4461             Approval of Hot 100 is very important to CJVR in its need to grow, enhance its competitiveness, achieve operating efficiencies, and position itself as a viable licence alternative with a strong, independent, radio voice.

4462             Madam Chair, after decades of serving a coverage area in northeastern Saskatchewan that is geographically over 1.5 times the size of Vancouver Island, CJVR is up to the task of successfully operating in any radio market.

4463             We, therefore, urge the Commission to afford us that opportunity in Red Deer by approving Hot 100 FM.

4464             My colleagues and I will be happy to answer any questions the panel may have.  Merci, thank you.

4465             THE CHAIRPERSON:  Thank you, Mr. Fabro.  Commissioner Patrone will be leading the questions.

4466             COMMISSIONER PATRONE:  Thank you, Madam Chair.  Good morning, all.

4467             I am going to start by asking some questions based entirely on the oral presentation, and then move on to some more formal questions.

4468             First off, how do you appeal to both an 18‑year‑old and a 44‑year‑old radio listener?

4469             MR. SINGER:  Thank you for that question, Commissioner Patrone.

4470             When you look at the initiatives that we have incorporated into our programming, we have tried to be as inclusive as possible.  I would have to say that there are more things in common amongst those demographics than there are dissimilarities.

4471             Most definitely, because we have distributed our features throughout our broadcast week, we are not giving a steady diet focused at one particular aspect of the demographic, and then, at another time of the day, switching to another demographic.

4472             We think it is an important reflection of the community that we have incorporated into our application, and we have carefully looked at the distribution of those elements.

4473             If you would like to address, other than the spoken word initiatives, how the music encompasses the broad demographic, I could certainly ask Dean to comment on that, as well.

4474             COMMISSIONER PATRONE:  Having an 18‑year‑old at home, and me being in my forties, I can say that there is a fairly wide gap there in terms of musical tastes.  That's why I asked you the question.

4475             MR. SINGER:  Do you want us to elaborate on the musical component of that appeal?

4476             COMMISSIONER PATRONE:  Please.

4477             MR. SINGER:  Dean, could I ask you to comment on that?

4478             MR. SINCLAIR:  Sure.  Thanks, Ken.

4479             Commissioner Patrone, one of the things to think about with this format is what we are going to do with the market.  It is a reflection of bringing more balance back to the market.

4480             The way the market sits right now, in terms of the four incumbent stations, is that each of those radio stations has a very wide base.  If you look at the generality of the formats they serve, and look at the rating success they enjoy, one could argue that they enjoy a lot more success than normally you would afford that format in markets where there is more competition.

4481             One of the things that we look at with the 18 to 44 audience ‑‑ and we talk about that ‑‑ and we really talk about a core of 18 to 34, and we talk about our median and our bullet of a 29‑year‑old female ‑‑ is that, when we develop a format, we start from the inside and work out.

4482             It is daunting if you look at both ends.  As you talked about personally, from one end of an 18‑year‑old to somebody in their forties, it is a bit of a stretch.

4483             However, if you start from the middle and work outward, it is a little easier to take into play.  You will find that there are more similarities and commonalities than there are differences that way.

4484             That is how we work with it.  We really focus on 18 to 34, 25 to 34, and spread it out a little bit beyond that.

4485             COMMISSIONER PATRONE:  You also spoke about growing the advertising pie.  We have seen relatively recent signs of retail sales growth levelling off in Red Deer.  Does that give you cause for concern, in terms of your own advertising projections?

4486             MR. SINGER:  I think the number one belief that we have in growing the advertising pie is that traditionally we have seen, when new players have entered the marketplace, that radio revenues have actually increased.

4487             Also, you must remember that our focus is largely on attracting an audience that has gone away from local market radio.  So by attracting those listeners and those hours tuned back into the market, we are certainly offering some value to the local advertising market that isn't there currently.

4488             I could ask Kevin, if you wish, to elaborate further on that.

4489             MR. GEMMELL:  I would like to elaborate on perhaps the retail sales standpoint.

4490             As was stated FP markets indicates 2009 retail sales will be 2.6 billion.  But we actually, in noticing the slowdown as we prepared this business plan, the slowdown coming although we don't anticipate it's going to last much more than the next six months, we went with a retail sales figure for 2009 of 2.25 billion and then extrapolated the 4 percent and the radio share of the pool.  It still left plenty of headroom based on our analysis of the Red Deer radio stations.

4491             The other side of things, and we have talked about this at previous hearings that Commissioner Cugini has ‑‑ I will sound like a broken record to you.

4492             In the case of the Edmonton market between 2004 and 2006 three new licences signed on in that market and in 2003 the average market revenue was 4.3 million per station.  At the end of 2006 according to CRTC reports the market revenue grew with the addition of stations and it was still 4.3 million, average per station.

4493             So new radio dollars are spurred with the excitement of a new radio station signing on.

4494             COMMISSIONER PATRONE:  I want to ask you a little bit about your programming.

4495             MR. FABRO:  Can I just finish off ‑‑

4496             COMMISSIONER PATRONE:  Sorry.

4497             MR. FABRO:  ‑‑ what you had asked about the recent slowdown?

4498             COMMISSIONER PATRONE:  Yes.

4499             MR. FABRO:  In an economy ‑‑ we had predicted this in some of our other businesses about eight months ago that it's going to be a flat spot.  We think that it will probably be another, anywhere from eight months to 18 months when we start ‑‑ the economy starts to rock and roll again.

4500             But I think in the long term, as mentioned by a number of the applicants here today, that Alberta and western Canada certainly are very strong and we don't have any concerns whatever over the long term.

4501             And if there was to be ‑‑ if we predict wrong we have the financial resources to handle any slowdown.

4502             COMMISSIONER PATRONE:  Thank you.

4503             In terms of your daily features ‑‑ moving over to programming ‑‑ could you talk a little bit about the topics that are going to be discussed in these features?  I understand that these will be produced locally.  Will they be produced by your editorial staff, your reporters, that sort of thing?

4504             MR. SINGER:  Yes, they will be produced locally by our local ‑‑ our staff that's at Hot 100 FM, and it will be a combination of our news staff ‑‑ we have plans to hire a fulltime arts and cultural coordinator which will ‑‑ he or she will be taking on a lot of those responsibilities.  But within our pool of on air talent they all will have some responsibilities for various features, the production of those, even some of the writing duties.

4505             So it's an all encompassing plan utilizing the talent in our building.

4506             COMMISSIONER PATRONE:  Everybody pitches in.

4507             MR. SINGER:  Everybody pitches in and I think we have ‑‑ you know, we have planned carefully because it is a substantial amount of spoken word programming ‑‑

4508             COMMISSIONER PATRONE:  Yes.

4509             MR. SINGER:  ‑‑ we are planning.  But we have also taken into account the other duties within the radio station and it's well within our grasp to do this.

4510             COMMISSIONER PATRONE:  You have spoken about your emerging artists initiative ‑‑ confirm that is 40 percent of the 40 percent Cancon designated towards emerging artists.

4511             MR. SINGER:  Right.

4512             COMMISSIONER PATRONE:  What constitutes in your view an emerging artist?

4513             MR. SINGER:  I will ask Dean to give you our definition for that.

4514             MR. SINCLAIR:  Sorry, Commissioner Patrone, I want to make sure I have it verbatim.  Pages ‑‑

‑‑‑ Laughter / Rires

4515             MR. SINCLAIR:  No, I'm just kidding.

4516             Our definition is we consider an artist emerging until about 12 months after they have achieved a Top 30 hit chart in Canada or a certified gold record for the first time.

4517             COMMISSIONER PATRONE:  And how are these artists chosen as far as your staff is concerned?  Will there be one person who picks the artist featured on any given day?

4518             MR. SINGER:  Well, we will have a program director and music director who will be ultimately responsible for all of the music we play on the station, but our practice has been that our music is ‑‑ it's certainly managed by our program director who is often the same as the music director.  But we also involve other members of our on air staff in a consultative basis in the music meetings.

4519             Further to that, we have plans to reach out and talk to other new and emerging artists in the marketplace as well and engage them in some of our assessment of the new music.  With the scope of our over 17 hours of new and emerging programming I am quite confident that once those features hit the air our phone will be ringing and our emails will be coming that are suggesting, "Hey, include me in this as well".

4520             We also plan, through some of our new media planning, to engage the listeners in evaluating their favourites in some of these programs, for example.  There are some exciting opportunities on that platform to receive more one‑on‑one listener feedback than we have in the past.

4521             So it will be a collaboration of a number of areas and most definitely we are going to be promoting on the air, not just playing the music but promoting opportunities to be parts of these specialized programs, no different than we promote the availability of FACTOR funding to make a new and emerging artist aware of our scope.

4522             Later today in fact we are going to have appearing, thankfully on our behalf, a new group from the Lacombe/Red Deer area, Soul Side Inn, who are a new emerging artist who just in our discussions with them are very excited about the possibility of such a radio station.  So the groundwork has already begun even though we don't have a licence as of yet.

4523             But just in our discussions out there I think the news will spread fairly quickly that there is opportunities for exposure on Hot 100 FM.

4524             COMMISSIONER PATRONE:  You will be hiring the 16 full‑timers and two part‑timers locally; is that correct?

4525             MR. SINGER:  Yes, our intention is of course to begin with a station manager and a program director who then will recruit and develop their talent, with the focus on local.  It's been our experience that, you know, within our marketplaces if we can develop people they have a better feel for what is going on in the communities that we serve.  Without question talent is going to be the number one thing we are looking for but we always give preference to people that have some experience in the market in terms of growing up there and knowing other people in the market.

4526             COMMISSIONER PATRONE:  Could you talk about your initiatives relative to encouraging diversity and your hiring practices?

4527             MR. SINGER:  M'hm.

4528             Well, there is no question that because our focus is local that we consider the community to be its own ethnicity.

4529             I knew I was going to have trouble with that today.  No more hard words.

‑‑‑ Laughter / Rires

4530             MR. SINGER:  But you know, in our efforts to reflect what is going on in the marketplace, in our mind it's very difficult not to do that in terms of being all inclusive.  Certainly, from our viewpoint of hiring and wherever we can have a reflection of that local culture, again, we will take that into account.

4531             It's not a challenge to reflect what is going on in the community if we are as inclusive as our plan is.  That's our feeling, is that we are not ‑‑ I don't think we could be accused of being fairly narrow in our approach.  We are very broad in that approach.

4532             And also, you know, we have a policy with our on‑air programming and our news to be balanced and fair and give a fair representation in our content.

4533             COMMISSIONER PATRONE:  Back to format for a minute.

4534             How does your application ‑‑ could you please differentiate ‑‑ I'm having trouble with words too ‑‑ your application from say that of CHIP Media and L.A. Radio's proposals?

4535             MR. SINGER:  Well, I will speak in general terms and perhaps Dean can talk about the specifics in the elements of the music programming.

4536             But we believe on a general basis that our application offers a more diverse approach than the others on several levels; number one, high quality musical programming that will fill existing voids in the market, and our particular pop/CHR format offers an 80 percent component of music that's currently not available in the market.

4537             We offer the best musical choice to repatriate listeners back into local Red Deer listening, thus strengthening the Canadian broadcasting system.  We feel our diverse CCD initiatives, a million dollars in direct expenditures for those initiatives, is all encompassing in the market and our diverse line up of special programming also offers much more diversity than the other applicants.  And our locally‑relevant community focused programming is again very diverse.

4538             In comparing format to format I can ask Dean to comment further on that.

4539             COMMISSIONER PATRONE:  Please.

4540             MR. SINCLAIR:  Thanks, Ken.

4541             Commissioner Patrone, the way I would describe it for Hot 100, it's a hit radio station, hit‑based radio station, a female draw, plays the hits, plays them a lot, really draws from the pop side of the Top 40/CHR culture, whatever term you want to put on it today.

4542             My understanding of ‑‑ you referred to the other two new music applications before you.  The CHIP Media one, my understanding is it's an urban alternative format.  So it would skew a little bit more to the left than us and really make ‑‑

4543             COMMISSIONER PATRONE:  To the left?

4544             MR. SINCLAIR:  To the left.  If you were ‑‑ I'm sorry.  If you were drawing a graph on the scale and let's say you went to ‑‑ you took a bullet point in the middle and went to the left and said this is rock all the way to the left, so you took the left side of your gauge as rock, and if you went down that term you would start off with light rock, modern rock, new rock, alternative rock and then you would eventually get down to classic rock.

4545             And if you went to the other side of the scale you would go along the pop venue all the way to folk and instrumental music down the road.

4546             So the way that we understand that particular application borrows a couple of the elements that we researched in the market.  But our finding was that there wasn't enough of that type of music that would sustain a format for us in terms of the audience we wanted to go after.  And I would say that it's probably a little more male leaning and younger, 12 to 34.

4547             With respect to the L.A. Radio Group application I had a little bit of trouble trying to follow the bouncing ball whether it was new rock or Top 40 or the combination of modern rock and CHR because it changed a little bit.  But my understanding is in terms of new music, which would be a focus, a lot of that is offered currently in the market by Z99.

4548             COMMISSIONER PATRONE:  Moving over to CCD contributions, as you probably know, the Radio Regulations as they now relate to CCD development or CC development are being amended.  Is CJVR willing to accept at this time a transitional condition of licence as it applies to CCD contributions until the changes are fully implemented in the Radio Regulations?

4549             MR. SINGER:  Yes.

4550             COMMISSIONER PATRONE:  Going back to the listeners that you intend to target, how much more evidence have you been able to glean that this group is underserved in Red Deer?

4551             MR. SINGER:  Well, our very comprehensive survey conducted by Roberts' company POLLARA, uncovered that very, very clearly and I will ask Robert to elaborate on that if you wish.

4552             MR. HUTTON:  Sure.

4553             Commissioner Patrone, our study found that across the board there were high levels of satisfaction, but when we divided it by age group and by genre we found that there were certain pockets of dissatisfaction where there were an opportunity.  And when we looked at it in the sense of where people were and which groups were looking out of market and to alternative sources, that's really what drove our choices.

4554             For example, we found that there was a dissatisfaction with the level of urban music played in the marketplace.  However, when we looked at that in terms of the size of that market and that particular demographic there wasn't sufficient to support a station on its own.

4555             So in effect what we did is we took pieces here, pieces there, pieces there; put it into a format that best served what we felt was a demographic that had a certain level of dissatisfaction and where the demographic ‑‑primarily tuning out of market to alternative sources, which was also by the way a demographic that is key to the Red Deer market and one which is increasing in the Red Deer market, and looked at that in terms of our genre choices.

4556             Does that answer your question?

4557             COMMISSIONER PATRONE:  Yes, it does.  Thank you.

4558             From which specific existing Red Deer stations does CJVR expect to garner its tuning and how much would it garner from each source?

4559             MR. SINGER:  Well, from a ‑‑ I guess we can start that discussion, and I can ask Dean to chime in here.  From a musical point of view, I guess that is likely a good place to start in terms of the sharing of audience and, again, reminding you that our first focus is on those listeners that are tuning to out of market and non‑traditional forms of radio.  But certainly, there will be some spillage within the market.

4560             I will ask Dean to comment on that.

4561             MR. SINCLAIR:  Thanks, Ken.

4562             Commissioner Patrone, I would say that the majority of the music this radio station will play isn't offered on any radio station in the market right now.  So in terms of where we would get audience from I think ‑‑ and also using the landscape of each of the stations enjoying a wide range of audience right now whether it be male or female, we would get some tuning from probably three of the stations, say for the country station to some degree, but I think it would be quite limited.

4563             This opportunity is really about bringing something new to the market.  So if you were singling out a station you could say, well, there is a couple of tracks you would hear maybe on the current rock station, maybe a couple of tracks on, you know, the AC station.  If there were music on the AC station that we would share with it would probably result from our gold universe, the stuff that we would go back into which isn't really a main thrust of the radio station.

4564             Does that help?

4565             COMMISSIONER PATRONE:  Yes.  And further to that, given the possibility that there will be some overlap ‑‑

4566             MR. SINCLAIR:  Sure.

4567             COMMISSIONER PATRONE:  ‑‑ why do you think in year two that only 1 percent or $16,000 will come from existing Red Deer stations?

4568             MR. SINGER:  I will ask Kevin to comment on that.

4569             MR. GEMMELL:  Thank you, Ken.

4570             Mr. Commissioner, in year two we expect most of our dollars to come from renewals, first off.  Year one our anticipated local budget is 1.15 million plus national 1.296 and then an increase.  We will see a re‑signing of most of our year one revenues or approximately, actually, 70 percent of our year one revenues or 811,000 of our year two revenues.

4571             We will see an increase in new radio revenues as we continue to repatriate listeners from out of the market and those new radio revenues will come from other non‑regulated sources, television, newspaper, et cetera, outdoor.

4572             We see a small amount from the existing radio stations because we are just not taking a large amount of their listeners because of out of market repatriation.

4573             So you know our second year is going to cause very minimal impact.  The more significant impact would actually come from the first year, but in our case that's only 5 percent.

4574             COMMISSIONER PATRONE:  And further to those ‑‑ oh, I am sorry, sir.

4575             MR. SINGER:  I would just like to add too and perhaps, Robert, if you feel you wanted to add something ‑‑ good.

4576             Part of our consumer demand study included a retail advertiser study which also questioned some agency buyers as well.  There were clear references to dissatisfaction with the number of choices in the market and a number of advertisers indicating that they don't use radio currently, they would be coming back to radio should there be a station such as Hot 100 FM introduced.

4577             COMMISSIONER PATRONE:  That speaks somewhat to my next question but I will ask it anyway, given the strength of the two incumbent ownership groups in the Red Deer market.

4578             How do you expect to achieve a PBIT of 37 percent between years four and seven, such that it would outperform the market?  Are these overly rosy projections?

4579             MR. SINGER:  I don't think ‑‑ I think the projections are solid.  They are based also on the projected growth for the market.  You know, as mentioned at the outset, we used Financial Post projections and intentionally slowed those projections down because of what is currently going on in the market in Alberta.  There is a levelling off after ‑‑ I think in our year three we are ‑‑ I think we did the slowdown on the first couple of years.

4580             In fact, FP had projected increases of 15 ‑‑ for the years '07 through '09 they had projected increases of retails growth of 15 percent, 13 percent and 12 percent.  We downsized those to 12 percent, 10 percent and 10 percent and then by the year 2010 we have projected or we have used their projections, I guess, as our forecast.

4581             So we have pulled back on the throttle for the first few years and then evened it out down the road, anticipating that this is a bubble and that things will level off.

4582             Again, you know, our projections are again based on creating new advertising dollars for the market.  We are encouraged with the anticipated growth of the market, not just from population but also the retail growth which of course drives the advertising plan for all radio stations.

4583             MR. HUTTON:  And I would just like to jump in on that for a moment, Ken, just to connect with your previous question, Commissioner.

4584             And indeed, our advertising demand study showed that there is pent‑up demand in the key demographic that we are addressing.  The advertisers are happy with the radio choices in the market but they don't have enough choices addressing that particular demographic.

4585             So we strongly feel, based on the advertiser demand study that we did, that we will actually be growing the market here and that there is demand and advertising dollars either not being spent in the marketplace or going elsewhere that we will be attracting.

4586             COMMISSIONER PATRONE:  You are talking about the demographic that you are currently targeting?

4587             MR. HUTTON:  Exactly, yes.

4588             COMMISSIONER PATRONE:  Advertising wise?

4589             MR. HUTTON:  Exactly.

4590             COMMISSIONER PATRONE:  Over to the news operations side:

"CJVR is committed to establish a network of trained community correspondents."  (As read)

4591             COMMISSIONER PATRONE:  Is that correct?

4592             MR. SINGER:  Yes, that is correct.

4593             COMMISSIONER PATRONE:

"They will file regular reports on events and activities within Red Deer."  (As read)

4594             COMMISSIONER PATRONE:  Are we talking about stringers?  Are they paid, are they part‑timers or from broadcasting or journalism schools?  Who are these individuals?  Where will they come from?

4595             MR. SINGER:  They are not paid.  They are volunteers.  Who they are is anything and everything.  I guess within our planned coverage area we anticipate there is a lot of people out there with pride in their communities and their organizations that they belong to.  They may be retired school teachers; they may be any walk of life.  Some may have some background in some form of communication.  We are not anticipating that there is a bunch of ready‑made broadcasters and journalists out there.  Really, what we are looking for is a contact, somebody that is on the ground in those communities.

4596             You know, as much as we would love to have the resources to have a man in the field out there in every particular sector it's impossible.  But we can draw on these eyes and ears of the radio station in these communities as people that ‑‑ I guess they are the ones being interviewed is what they are.

4597             We are not expecting that we would find people that could write readymade ‑‑ made for broadcast stories but they certainly would make good interviewees and they can feed information to us about things going on in their community.  And we plan to filter that into the various features that we have planned as a part of our overall gathering mechanism because ‑‑ I mean, clearly our focus is on local.  And who is more local than the people that actually live and work in those communities?

4598             Now, from a training point of view, yes, we will offer some type of training, sort of the "What are we looking for 101" lesson in terms of these are things and the ideas that we have but, you know, certainly we want to leave the content up to them to feed to us.  But the idea is our news team, our news director will go out to these markets, visit these communities and talk about our idea to incorporate some local community eyes and ears, give them some sense of how the information will be used and encourage them to give us as much information as they can as it occurs in these communities.

4599             And I suppose, you know, through this whole exercise we may find others that say, "Hey, I would like to do that too".  So we plan to start small and grow this community, this pool of community correspondence.

4600             MR. GEMMELL:  And if I might just interject, Mr. Commissioner, this is based entirely on the model that works in our operations in Saskatchewan and also in Whitecourt.  We have been running features from community correspondence for the 10 ‑‑ well, close to 15 or 20 years or more and we currently have a list in excess of 40‑plus communities.  We do serve 100 communities in Saskatchewan but we do have stringers in at least 40 communities that we can call on regularly and that file reports regularly with us.

4601             COMMISSIONER PATRONE:  I'm sure they come in handy.  I think I heard Mr. Singer say that you leave the content up to them.

4602             Is that correct, sir?

4603             MR. SINGER:  Well, I mean, we are not going to handout assignments like we do in our newsroom, I guess is what I am saying, because they are volunteers but they are go tos.  I mean, just recently we had a very serious natural gas explosion in Nippiwin just an hour away from Melford in our coverage area and we dispatched a news person over there immediately.  But in that hour that it took our news person to get to the scene we had a number of people that we contacted by phone.  We had them on the air long before our reporter got to the scene, which was tremendous.

4604             And then, you know, again just naturally people that have been, as Kevin mentioned, giving us their information of what is going on in their community.  We are phoning the radio station.  We were using their ‑‑ in some cases putting them on the air with us, giving their point of view of what had happened.

4605             It was a tremendous day.  It was one of those A‑plus days for radio because it was happening in the market.  It was an unfortunate situation but most definitely it demonstrated the connection we have with the communities we serve and we didn't ‑‑ you know, we didn't really have to make any announcements about, boy, if you are in the market let us know what is going on.  It was coming in, in spades.

4606             COMMISSIONER PATRONE:  I understand the use of eyewitnesses when you are talking about a breaking story like the one you just described.  I am just wondering how you managed to maintain a level of editorial integrity when you are talking about unpaid stringers who are partially trained.

4607             MR. SINGER:  Yes.

4608             COMMISSIONER PATRONE:  Does that give you any source for concern?

4609             MR. SINGER:  Well, I think our news director is going to have to and will take that into account, that these are what you say; eyewitnesses.  They are not news experts.  According to what this eyewitness saw that's ‑‑ you know, receiving information from the listening public is nothing new to our news teams.

4610             And for sure, it goes beyond news.  I mean there ‑‑ I mean information about what is going on at the school in a community is again maybe not as news‑oriented but it still is news to our listeners, you know, in terms of it is useful; it's relevant.

4611             COMMISSIONER PATRONE:  Right.

4612             Can you talk a little bit about possible cost savings and other synergies created from the addition of a new station to your group?

4613             MR. SINGER:  Yes, I can, and just on a general basis.  I will ask Linda to comment on this in specifics.

4614             But on a general basis, you know, one of the synergies that ‑‑ we have heard this question asked of many this week ‑‑ that I don't think has been raised yet, and that is the synergy created by adding another radio station in the human resources area.  And we work hard to recruit locally and to recruit a strong staff, but one of the real opportunities is by adding another station and a team is to offer more of a choice for our future employees, our current employers, that we have opportunities within our company to expand and use your talent in other markets.

4615             You know, when we launched our Whitecourt station a couple of years ago we implanted a couple of our senior people from our Saskatchewan operations into there but, you know, there is a great deal of opportunity as we recruit now just by adding one more station to say we have other choices.

4616             So it gives us a little strength when we are competing with the bigger players who can offer, you know, a dozen different opportunities to grow within.  As I say, it's a real value to us in terms of attracting and developing and maintaining strong people, is by adding to the stable.

4617             So it's an unmeasurable ‑‑ from a monetary point of view I can't measure what that is worth but Linda can certainly give you the specifics of the measurable components of those synergies.

4618             MR. FABRO:  And just before you do, Linda, I just wanted to kind of comment on what Ken said there.

4619             In all our businesses we like to show our employees opportunity and growth and it kind of goes the other way.  If you don't have opportunity you tend to start losing employees.  They get picked off by those that do.

4620             I think we are trying as hard as we can to grow our business in radio.  We have been stymied quite a bit lately but it's very important for us to survive.  We have a growth opportunity so that kind of relates to what Ken answered earlier.  We want to show growth.

4621             COMMISSIONER PATRONE:  Is there an employee ownership program in the works here?

4622             MR. FABRO:  In terms of equity, ownership?

4623             COMMISSIONER PATRONE:  Yes.

4624             MR. FABRO:  No.

4625             COMMISSIONER PATRONE:  Go ahead, please.

4626             MS RHEAUME:  Thanks.

4627             As far as the synergies that we will realize with the addition of Red Deer to our existing stations, synergies will come from the accounting, accounts receivable ‑‑

4628             COMMISSIONER PATRONE:  Okay.

4629             MS RHEAUME:  ‑‑ accounts payable department which will be handled centrally out of our Milford location.

4630             We will have some synergies with traffic department by having the ability of having backups from each station, you know, in the event that holidays, sickness, those kind of things, because our computers are tied together.

4631             We don't really anticipate cost‑savings synergies per se with our programming and news department as each station has their own fleet of staff.  But you have the synergies of sharing ideas, knowledge, voices; news stories.

4632             Technical duties will be shared.  We do have a chief engineer that will oversee all of the areas and then have a part‑time engineer in each area.

4633             And then the HR synergies as Ken has already said, you increase staffing pool, training, knowledge; the ability to promote from within.

4634             We will see as far as dollar‑wise, if you were to run Red Deer as a standalone station compared to adding it to our chain that we already have, we would save about three and a half people at roughly $190,000 to $200,000 a year.

4635             COMMISSIONER PATRONE:  In wrapping up, further to that, do you see any benefit in reinvesting any potential savings from that synergy, those synergies you were referring to back into programming?

4636             MR. SINGER:  That is our intention, that it certainly would assist us in raising the level of talent in providing more locally‑relevant programming.  It all goes back to improving the operation to make us that more competitive.

4637             Just one more ‑‑ and Linda touched on it briefly, just the sharing of ideas.  You know, with our station in Whitecourt and a station in Red Deer if we were fortunate enough to get a licence, it really just doubles the number of ideas for Alberta stories.  You know, we sometimes ‑‑ we try to use those synergies between our Saskatchewan and Alberta station now but, you know, there would be more things in common between two Alberta stations most definitely.

4638             And without question news, you know, every minute it's a changing situation.  I think that the synergies between Red Deer and Whitecourt would certainly be greater than what we are enjoying now between our Saskatchewan stations and Alberta.

4639             MR. FABRO:  Commissioner Patrone, just to comment on the reinvestment, we have done that in Saskatchewan.  We have taken very little money out of that operation.  But in fact, we invested heavily in it to make sure that we had a good operation both in terms of hard capital assets as well as training and development of our staff and we would do the same thing here because we believe in the business and every nickel we put in we are going to get 7 percent back.

4640             So it's about growing the business and that's why, for example, in Saskatchewan I believe we have the largest coverage area in Canada, as I mentioned in our opening that we have the FM coverage area that we expanded a number of years ago to be right now one and a half times the size of Vancouver Island.

4641             So we have put our money where our mouth is and we continue hopefully to do that.

4642             COMMISSIONER PATRONE:  Those are my questions.  Thank you very much.

4643             Madam Chair.

4644             THE CHAIRPERSON:  Commissioner Molnar.

4645             Thank you.

4646             COMMISSIONER MOLNAR:  Thank you.

4647             I just wanted to follow up a little bit on what you were just saying, Mr. Singer, about expansion and the values of having for example two stations in Alberta.  I have been trying to understand.  I understand why there is a desire to expand the number of locations where, you know, broadcasters can be and I appreciated the discussion, the obvious, very clear discussion on the synergies from an operational perspective that are there.  I'm trying to understand.

4648             You mentioned in your opening remarks that this was, I think, the 10th application you made and I wondered if you actually had an expansion ‑‑ a strategic expansion plan that would, say ‑‑ you know, besides simply increasing the number of stations that we have we are trying to do this in some kind of manner where we are going to be able to have some synergies as it relates to the news gathering, to the programming we collect, to the emerging artists we can support; or what else is there besides the cost savings that could occur with your expansion plans?

4649             MR. SINGER:  Well, I will begin and Gene can certainly give you his point of view of our overall plan.

4650             These synergies are ‑‑ even the ones that we are enjoying now between Saskatchewan and our station in Whitecourt, we have realized some good savings there already.  So we have got a taste for this in terms of ‑‑ you know, Linda's administration area is better utilized now because we are now operating three radio stations from that hub.  We definitely have ‑‑ you know, we have senior management that ‑‑ like I'm involved with all of the stations and I'm able to do that because we have another station now with three in our group.

4651             Our plans are, of course, still to have ‑‑ our program director and our programming staff will make their own decisions in the marketplace based on the CJVR corporate philosophy of course.  But definitely, that backroom synergy every time we add a station becomes more effective to us.

4652             We see our competitors utilizing shared programming synergies, I guess, by you know combining news operations and so on.  We do that in Melford between our AM and our FM but we don't have an intention.  We think those local markets are that different that we can't really do that kind of a synergy, at least the way we view it today.

4653             One of the things that, as I say, gets back to the value of all of this is being a more attractive group of ‑‑ we are more attractive as a broadcasting group because we have other choices within our stations.  It's difficult to attract people to Melford, Saskatchewan when they can work in Kelowna and, you know, nice markets ‑‑ with bigger markets.

4654             I must say that we have got a great track record but, you know, we have a number of senior people who have been with us in excess of 30 years in our company, many 15 and in the 20‑year range.

4655             You know, we are only going to be able to sustain those kinds of human resources if our company grows.  It's very important.  And it seems our business when I got into the business was all independents and now there is a handful of us left.  It's increasingly difficult to attract people to job opportunities within a small group compared to a bigger group.

4656             So the human resources thing is ‑‑obviously, the most important thing we have got going for us is our people and we feel that given another licence just makes us stronger and we can also develop our craft of serving the markets we serve and being better at it as we increase the level of talent.

4657             MR. FABRO:  Maybe I can just comment on your strategic comment.

4658             I think what ‑‑ we made a strategic decision to stay west of the Ontario/Manitoba border and to work in markets less than those major cities of Vancouver, Calgary, Edmonton, Winnipeg.  We believe we can operate more effectively in the smaller markets until such time as we have enough horsepower to move into the big ones and maybe that's five to ten years out but you never know.  And the number of calls that came out in the last two years were significant, and so that's why we have been before you so many times because actually the opportunities rose.

4659             We believe in Western Canada, my family is from here.  As mentioned by many of the applicants here during the terms of the hearing, it's strong, it's going to be very strong, it's not going away.

4660             There's $60‑billion of investment in the oil sands alone and there's another hundred billion, that's like a hundred thousand million, if you realize how big that is, and it's just like a bomb going off in Alberta and across Western Canada.

4661             And, so, it's very safe here compared to the rest of Canada, the rest of the world in terms of what's going to happen with the economy.

4662             So, we want to stay in this area, we want to grow this business.  So, strategically we'd like to stay in the west and we'd like to concentrate on the smaller market.

4663             So, that's kind of ‑‑ I think that's what you're getting at.  It's hard to ‑‑ we're also in the development business and we go everywhere and we find dirt ‑‑ what we call dirt ‑‑ everywhere.

4664             You can't do that in radio, you have to go where the radio opportunities lie and, so...

4665             And I guess from a management's perspective ‑‑ Ken didn't touch on this ‑‑ but we can easily travel from, now with the way the airlines have set it up and WestJet came in, we can easily travel quickly to a bunch of markets in Western Canada very quickly and manage this.

4666             So, it's not as difficult as it may sound to manage these operations as a group in Western Canada.

4667             MR. SINGER:  Commissioner Molnar, if I could just add one more, and we were just talking about this this morning about synergies.

4668             One of the areas that ‑‑ you know, we do these things without sometimes realizing that they are in fact synergies.

4669             For years our Melford radio stations have run a country music show called Canadian Coast to Coast which just last year, we're proud to say, won the Canadian Radio Program of the Year Award and basically it's exposure of new and emerging artists in the country genre.

4670             And we have been doing that show ‑‑ it began in our AM days when our AM station played country, and when we launched the FM we moved our format to the country format ‑‑ to the FM.

4671             That program really has been a showcase for a tremendous amount of new artists and they're not just Saskatchewan, but preference has been, of course, to the local new and emerging artists.

4672             When we launched our Whitecourt station with a country format, we decided to broadcast ‑‑ that program is now broadcast on both stations, but now it's a melding of Saskatchewan and Alberta new and emerging artists, and we certainly play artists from all over Canada in the program.

4673             But, again, our focus now is two regions and it's doubled the exposure for these artists.

4674             I mean, in fact I just got some numbers from our music director.  In our active library of ‑‑ in our Saskatchewan stations right now we have 105 Saskatchewan artists that are actively played on our playlist each week.

4675             And our Alberta library, in less than two years has now amassed 40 active Alberta new and emerging Canadian artists.

4676             So, you know, when you talk about combining the resources to offer better exposure for, in this particular case, Canadian artists, I mean, it's very powerful.

4677             And the attraction of those artists to our radio station, I mean we've won many awards for our Canadian programming.  It's because obviously we're doing something different than the others, and we're being recognized.

4678             So, it's a valued and recognized synergy that now we have two country radio stations ‑‑ we're not proposing that for Red Deer, of course ‑‑ but just as an example, where we've, you know, used the talent and we've used just the concept of offering exposure, now it's got that much greater because we have another licence.

4679             COMMISSIONER MOLNAR:  Thank you.  And I think that's an excellent example of the kind of thing I was looking for, to see if there were ways besides the operational ways where, in fact, expansion could be used, you know, to enhance some of the objectives of the broadcasting system.

4680             I think that's an excellent example.

4681             I have just one more question.

4682             It's just a question of clarification.

4683             On page 10 of your opening remarks you speak of your CCD, the direct expenditure, and beside it in the table is indirect expenditure.

4684             Could you explain to me what the indirect expenditure is?

4685             MR. SINGER:  Well, in formulating our Canadian talent plans, we ‑‑ we've heard it mentioned in the past, and I think again at this hearing, that the Canadian talent initiatives shouldn't become an auction item.  We look at it as a science more than an auction.

4686             We feel that to make our Canadian ‑‑ our CCD plans as inclusive as possible is very, very important, and we feel that there's far more to it than the direct expenditure.

4687             These artists ‑‑ and you've heard it from other applicants ‑‑ they're after ‑‑ they need exposure, air‑time exposure is tremendously valuable to them, so it isn't just the cash.

4688             In our plans we've kind of got three levels.  I'd just like to clarify that our indirect expenditures is one level of non‑cash commitment, but there's also the hard on‑air currency, we call it, and that is the exposure of artists through programs like our new and emerging program, 17 hours and 15 minutes a week.

4689             Those have a value and, you know, we've estimated roughly $200,000 a year is the value of the exposure, the resources we need to put those special programs on the air, and we don't include that in our indirect because we feel that's a cost of producing some programming.

4690             But just, you know, in terms of quantifying, you know, there is tremendous value there to artists for exposure.

4691             Now, you were asking the question about our indirect.  With each of our nine projects we have direct expenditures, but we are also committing another million dollars to help those organizations promote themselves.  So, it isn't just, here's the cheque, go away, don't bother us anymore.

4692             As an example, with FACTOR where we're committing $225,000 in direct cash expenditure to FACTOR, we're also committing $6,000 a year for air time for FACTOR to promote the idea that, hey, these funds are out there, why aren't you taking advantage of them?

4693             You know, we've heard people complain that FACTOR ‑‑ we're putting money into FACTOR but, you know, none of that money is flowing back into my market.

4694             Well, I think we as broadcasters have to take a stand and make people aware of this and promote it one‑on‑one as well with our new and emerging artists in the area to say, are you applying for FACTOR funds?

4695             So, every one of these initiatives is ‑‑ it's very important to offer the on‑air promotion as well.  And our letters of support, as you'll see from our CCD partners, have all acknowledged how important that is.

4696             So, we feel that one goes hand‑in‑hand with the other, and these are all minimums.

4697             I mean, our experience in Canadian talent and promoting local community‑driven events is that things come up that nobody ever planned before and if, you know, the help is needed, it's our role as a local broadcaster to see what we can do to make this a success.

4698             So, all of our initiatives need an on‑air component, they won't stand alone, and the FACTOR program is an example of that.

4699             MR. FABRO:  Commissioner Molnar let me just add to that.

4700             What we've also indicated is that with our computer system we can actually track how much air time we give to the promotion of these nine initiatives and we're willing to submit that to the CRTC as a piece of information.  I know ‑‑ and we would be willing to make that a condition of licence, of course, but I know right now it's not regulated, but we can do that.

4701             And that's what we said in our opening, we'd like to do that to show you how much we are committing in addition to the million dollars of hard cash, another million dollars in actually promotion events on the radio.

4702             COMMISSIONER MOLNAR:  Thank you very much.

4703             I'm not certain that there's a need for a condition of licence.  I'll leave that to our legal.

4704             THE CHAIRPERSON:  I have a few questions for you.  And I'd just ‑‑ I apologize if some of them have been answered and I've missed it, but I'm interested, first of all, with respect to the Pollara research.

4705             You indicate on page 9 of your opening remarks that you'll,

"... fulfil the spoken word priorities that local residents have told us about through our extensive research."  (As read)

4706             THE CHAIRPERSON:  And I was just curious to know exactly what you found there, how you asked the question, what type of information people were looking for.

4707             MR. SINGER:  Well, I'll ask Robert to cut in any time you like with any additional information but, just generally, one of the questions in addition to measuring the musical tastes was developed to get a sense of what attitudes towards radio are concerning things like news and information, local content, even the question of independent and locally owned was posed to our over 500 respondents.

4708             And I don't know, Robert, do you want to give specifics on that aspect?

4709             MR. HUTTON:  Well, sure, Ken, I'll jump in on that.

4710             Madam Chair, the question was how important would you say the following are to you in choosing a station and it was relatively open‑ended in that sense, and we read them a list on rotation of the various elements.

4711             No. 1, of course, was weather updates, very important, 62 per cent said weather updates are very important, which perhaps is not surprising.

4712             And going down the list of in terms of relative importance, news and information about the City of Red Deer was next, 67 per cent found that very important, 44 per cent somewhat important.

4713             So, clearly ‑‑ and, again, going down the list, community reports on events and activities in and around Red Deer, 35 per cent very important, 49 per cent somewhat important.

4714             Diversity in the sources of community news, information, and activities, news and information about the Calgary/Edmonton corridor, arts and entertainment news from Red Deer and area.

4715             So, quite clearly what people were telling us is community‑based news, news about the area, news and information about not only the area but the corridor that they're in was a very important factor, extremely important factor, in fact, in choosing a radio station to listen to in this market.

4716             THE CHAIRPERSON:  Now, in making those comments, is that specific to the age group that you're proposing to target?

4717             MR. HUTTON:  That was across the board.

4718             THE CHAIRPERSON:  Across the board.