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:

Competing radio applications and other broadcasting

applications / Demandes concurrentes en radio et autres

demandes en radiodiffusion

HELD AT:                              TENUE À:

Provencher Room                       Salle Provencher

The Fort Garry Hotel                  The Fort Garry Hotel

222 Broadway Avenue                   222, avenue Broadway

Winnipeg, Manitoba                    Winnipeg (Manitoba)

June 3, 2008                          Le 3 juin 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

Competing radio applications and other broadcasting

applications / Demandes concurrentes en radio et autres

demandes en radiodiffusion

BEFORE / DEVANT:

Len Katz                          Chairperson / Président

Peter Menzies                     Commissioner / Conseiller

Marc Patrone                      Commissioner / Conseiller

ALSO PRESENT / AUSSI PRÉSENTS:

Cheryl Grossi                     Secretary / Sécretaire

Michael Craig                     Hearing Manager /

                                  Gérant de l'audience

Peter McCallum                    Legal Counsel

                                  Conseiller Juridique

HELD AT:                          TENUE À:

Provencher Room                   Salle Provencher

The Fort Garry Hotel              The Fort Garry Hotel

222 Broadway Avenue               222, avenue Broadway

Winnipeg, Manitoba                Winnipeg (Manitoba)

June 3, 2008                      Le 3 juin 2008

- iv -

           TABLE DES MATIÈRES / TABLE OF CONTENTS

                                                 PAGE / PARA

PHASE I

PRESENTATION BY / PRÉSENTATION PAR:

Evanov Communications Inc. (OBCI)                   5 /   27

Newcap Inc.                                        89 /  520

Native Communication Inc.                         157 /  919

YO Radio Management Inc.                          218 / 1243

PHASE II

No interventions / Aucune intervention

PHASE III

INTERVENTION BY / INTERVENTION PAR:

Jack Shapira                                      290 / 1722

Assembly of Manitoba Chiefs Secretariat Inc.      296 / 1745

Aboriginal Peoples Television Network             300 / 1770

Nostalgia Broadcasting Corporative Inc.           322 / 1875

PHASE IV

REPLY BY / RÉPLIQUE PAR:

YO Radio Management Inc.                          337 / 1949

Native Communication Inc.                         339 / 1967

Newcap Inc.                                       342 / 1978

Evanov Communications Inc. (OBCI)                 343 / 1989

             Winnipeg, Manitoba / Winnipeg (Manitoba)

‑‑‑ Upon commencing on Tuesday, June 3, 2009 at 0929 /

    L'audience débute le mardi 3 juin 2008 à 0929

1                THE CHAIRPERSON:  Good morning, ladies and gentlemen, and welcome to this hearing.

2                Je m'appelle Len Katz et je suis vice‑président des télécommunications au CRTC.  Je présiderai cette audience en compagnie de mes collègues, Peter Menzies, conseiller, et Marc Patrone, conseiller national.

3                Joining me on the panel are my colleagues Peter Menzies, on my left, Commissioner, and Marc Patrone, National Commissioner, on my right.

4                The Commission team is assisted by Hearing Manager Michael Craig who is also Senior Radio Analyst, Peter McCallum, our senior legal counsel and Cheryl Grossi, our Hearing Secretary.

5                Please speak with Ms Grossi if you have any questions with regard to hearing procedures.

6                At this hearing we will begin by examining four applications, three of which are to operate a new English‑language FM commercial radio station in Winnipeg and, the fourth, an application to operate an English and Aboriginal‑language native Type B radio station in the same market.

7                Some applications are competing technically for the use of the same frequencies.

8                Next, the Panel will consider an application to operate an English‑language FM commercial radio station in Humboldt, Saskatchewan.

9                We will then proceed to and examine an application to renew the licence of radio station CFAR Flin Flon.

10               In August, 2004 this station's licence was renewed for a four‑year term rather than the customary seven years due to its failure to comply with the radio regulations of 1986 relating to the broadcast of Canadian content for Category 2 music.

11               This decision was also based on the station's noncompliance with its condition of licence to broadcast a minimum of 2 hours of Cree‑language programming during each broadcasting week.

12               It appears the station may have failed once again to comply with the regulations and its conditions of licence during the broadcast week of November 5 to 11, 2006.  The Commission will examine the situation and expects the licensee to show cause as to why a mandatory order should not be issued at this time.

13               I will now invite the hearing secretary, Cheryl Grossi, to explain the procedures we will be following.

14               Ms Grossi.

15               THE SECRETARY:  Thank you, Mr. Chairman.

16               Before beginning, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.

17               Le service d'interprétation simultanée est disponible durant cette audience.  Vous pouvez vous procurer un récepteur auprès du technicien a l'arrière de la salle.  L'interprétation anglaise se trouve au canal 1, et l'interprétation française au canal 2.

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

19               We expect the hearing to take approximately two and a half days, starting today, until Thursday.  Starting tomorrow, we will begin each morning at 9:00 a.m., we will take an hour for lunch and a break in the morning, and in the afternoon.  We will let you know of any schedule changes as they may occur.

20               Salon A will serve as the examination room where you can examine the public files of all the applications being considered at this hearing.  As indicated in the agenda, the telephone number of the examination room is 204‑946‑6535.

21               There is verbatim transcript of this hearing being taken by the court reporting sitting in the table in front of me.  If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break.  Please note that a full transcript will be made available on the Commission's website shortly after the conclusion of the hearing.

22               Now, Mr. Chairman, we will now proceed with item 1, which is an application by Evanov Communications Inc. on behalf of a corporation to be incorporated for a licence to operate an English‑language FM commercial radio programming undertaking in Winnipeg.

23               The new station would operate on a frequency of 104.7 Mhz., channel 284B with an average effective radiated power of 6,500 watts, maximum effective radiated power of 10,000 watts, and an antenna height of 206.1 metres.

24               Appearing for the applicant is Bill Evanov.  Please introduce your colleagues and you will then have 20 minutes to make your presentation.  Thank you.

25               MR. EVANOV:  Thank you very much.

26               Before we begin, previously we have appeared in front of the Commission with the Commissioner Katz and Commissioner Menzies.  Today, for the first time we are meeting Commissioner Patrone, so we would like to say good morning and buongiorno.

‑‑‑ Laughter / Rires

PRESENTATION / PRÉSENTATION

27               MR. EVANOV:  So officially, good morning Mr. Chairman and commissioner, my name is Bill Evanov, and I am the President of Evanov Communications Inc.

28               On my left is Ky Joseph, Vice‑President of Sales; on Ky's left is Sean Moreman, former News Director and our in‑house legal counsel; on my right is Ted Silver, Ted is former PD News Director for 292 in Montreal for 15 years, and Ted currently is PD for The Jewel in Ottawa; besides Ted is Gary Gamble, our PD and News Director for The Jewel in Newmarket; in the back row to my left and on your right is Chris Edelman, Regional Sales Manager for ECI; next to Chris is Debra McLaughlin from Strategic Inc., the author of our consumer demand and economic research; next to Debra is Mike Kilbride, our Vice‑President of Finance of ECI.

29               We are here today to present an application for a new easy listening format to serve Winnipeg.

30               Ky Joseph will begin with some facts about the market that support our choice for format.  I will then walk you through how the music on our proposed station has been tailored to Winnipeg.  Gary Gamble will speak to our extensive plans for spoken word and news programming and our internet strategy.  Chris Edelman will then address the consumer advertiser demand and Sean Moreman will take you through our CCD initiatives. Finally, I will address why we are the best choice for this market.

31               MS JOSEPH:  The initial fact that jumped off the page for us when reviewing Winnipeg was the number of major corporate radio operators active in this market.  Not only are all the majors present, for the most part, they have reached their maximum FM ownership and none of them is a standalone in this market.  They offer a range of formats and, despite significant duplication in music across services, cover some to some degree all major music genres.

32               The fact that struck us was, despite having all of these choices, listeners were clearly not satisfied.  The decline in hours being spent with radio by residents is the clearest indication of this.

33               Beyond simply losing time spent with radio among youth, hours of tuning were lost in older demographics.  Tuning among those aged 18 to 49 years, as well as 25 to 54 and 55 plus was down.  And with just over 40 per cent of the population in the 40 plus age group, this results in a decline in Winnipeg overall.

34               Winnipeg is also a highly competitive radio market.  Although retail sales are forecast to increase at a rate that exceeds the provincial average, it is in fact only in the last two reporting periods that Winnipeg radio services have realized double digit PBIT margins.

35               So the challenge of Winnipeg was three‑fold; identify a format that provides variety with minimal duplication of existing services, create programming that addresses a dissatisfied demographic and, because of the intense competition, find a broad enough format that can attract sufficient levels of advertisers while at the same time not disrupt Winnipeg's radio profitability.

36               MR. EVANOV:  In order to determine what was possible in this market we looked at the formats currently available and did an extensive analysis of what they were playing.  Clearly missing from this market was a broad‑based easy listening service.  While there was smooth jazz, The Groove, many other component parts of the new easy listening format such as adult standard, soft pop, folk and international were missing.

37               Using Mediabase we also determined that the soft portion of the mainstream AC chart was the underrepresented.  In fact, at the time of filing less than 50 per cent of the Mediabase chart was covered.

38               Looking at the tracks charting nationally the week of May 14 we could see the clear absence of several light or soft AC songs listed in the top 120 tracks according to BDS but absent in this market we found soft AC songs like Josh Groban's Awake, Norah Jones The Story, Anne Murray and Nelly Furtado collaboration on Daydream Believer and k.d. Lang's I Dream of Spring.

39               These songs are not a fit for the formats of the existing stations, but they are clearly popular and present an opportunity for a new entrant.

40               The format that could provide these missing music selections and genres is contemporary or the new easy listening, a format we have both the understanding and experience to operate.

41               As the Commission knows, we have three stations playing variations of this format in markets both big and small.  Because the essence of the format is soft melodic music it transcends location.  Listeners from a range of cultures and ethnicities and from both major urban and small markets find it appealing.

42               The sound of the station is often familiar, highly engaging, even if it is not identified as a primary service by a consumer.  Because of the variety, familiarity and range, it is often listed as one of the stations listened to at some point of the week.

43               The inclusion of multiple genres and coverage of many eras means that the programming can be tailored to suit a market without losing the overall feel of the service.  For example, in Ottawa we tend to play more AC and AC gold.

44               On CKDX‑FM in Newmarket we play more instrumental and international music.  These programming skews are made in consideration of two important criteria; listener feedback and non‑duplication with other services.

45               In fact, one of the key elements behind our success, thus far, has been in finding music and creating formats that are both of great interest to listeners and unduplicated in the competitive landscape and we plan to create just such a service in Winnipeg.

46               Ted.

47               MR. SILVER:  Our proposal for Winnipeg, while falling under the same general format descriptor as some of our other stations, that is new easy listening, will be unique to the market and unique among our services.  For example, here we will play considerably less instrumental, no jazz and minimal blues.

48               In fact, our proposed breakout for the market is as follows:  65 per cent easy listening and 35 per cent soft AC.

49               The easy listening can be further defined as follows:  adult standard 25 per cent with music from artists like Tony Bennett, Frank Sinatra and one of the new crooners Carly Simon.

50               Soft pop, 30 per cent; artists such as the Carpenters, Neil Diamond and Air Supply would make that up.  Folk music, 5 per cent, with artists such as Winnipeg's own James Kellehan along with Joan Baez, Bruce Cockburn and others.  International, 5 per cent, with artists such as Julio Iglesias, Sarah Brightman and Andrea Bocelli.

51               As mentioned earlier, a weekly review of the BDS data over the past five months has consistently pointed to a section of the AC chart that is not being played and artists that, while already represented, have portions of their catalogue that we can play without duplicating that which is in the market.

52               Borrowing from the triple A programming strategy, we will look deeper into artists catalogues and play more cuts from even recent CDs.  Some softer AC services will play a single from a popular CD while we will play multiple tracks.

53               So while a classic hits station in Winnipeg may play Rod Stewart's Maggie May, we will play selections from his Great American Songbook, Volumes I through IV.  Cyndi Lauper's Girls Just Want to Have Fun is also a staple of AC classic hits, however we will play selections from her tribute to American Standards.

54               Similarly, Michael Bolton's When a Man Loves a Woman would be heard in the market, but his contemporary renditions of Summer Wind and That's Life would only be heard on an easy listening service.

55               We will play AC artists that, while still recording, get very little air time.  Bruce Cockburn, for example, has both a new album out and is touring.  His manager will tell you he is doing this without the support of Canadian radio.

56               As mentioned earlier, Anne Murray released a duet CD last year.  And yet coverage of this contemporary and current music is hard to find on radio in Canada.

57               Marc Jordan, Amy Sky, Joni Mitchell, k.d. Lang and even Susan Aglukark are talked about, but rarely heard.  Not surprisingly, these artists and their catalogues test remarkably well with consumers.  What is missing is a format that can incorporate both their current and classic performances.  New easy listening is that format.

58               On our new service you will hear music from such musical icons as Barbara Streisand, Toni Braxton, Frank Sinatra, Celine Dion and Bette Midler.  You will also hear contemporary artists such as Sarah McLaughlin, Dido, Josh Groban and Michael Bublé.  While you might hear the latter on other stations, you will not necessarily hear the same selections.

59               Michael Bublé is largely known on AC services for Save the Last Dance and Home.  On our service we will play his non‑charted music and rely on his voice and his unique sound to keep the listener engaged.

60               Groups such as the Bee Gees, Air Supply, ABBA, Bread and even Il Divo will be heard.  Canadian easy listening artists including Serena Ryder, Molly Johnson, Matt Dusk and Lhasa de Sela will be played.

61               Our commitment to play 40 per cent Canadian content over the broadcast week will in itself distinguish us from the others in the market.

62               Now, Gary Gamble will speak to our spoken word content.

63               MR. GAMBLE:  One of the opportunities that is clearly evident in this market is the provision of a  new independent news voice.  The consumer study indicated a demand for more local coverage.  And eight out of 10 respondents reported being interested in having greater diversity in their news sources.  ECI is well positioned to provide booth of these.

64               Our plans for spoken word include six hours of pure news over 84 newscasts, the highest of any applicant before you.  In total, aside from announcer talk, we will provide 14.1 hours of news, surveillance and spoken word features.  We expect that fully 60 per cent of our newscasts will be covering local and regional Winnipeg stories.

65               Winnipeg is culturally diverse.  ECI's experience in working in small and large communities and our track record of serving the multicultural population in markets like Toronto will serve us well in Winnipeg.  We will be able to bring full cultural representation to the stories that we air.

66               To accomplish this task we have six reporters and two interns in the market who will investigate and report upon what is happening in Winnipeg, providing a mature and balanced view of these local stories.

67               Having accurate, timely and comprehensive weather reports was especially important, ranking first among all programming elements.  Our new station will fill this station with enhanced weather reporting in both our on‑air and website presentation.

68               Our website will be a major component in providing our listeners with information.  Rather than viewing the internet as a competitor of commercial radio, we see it as an extension of our radio service featuring up‑to‑date local news stories, including school closures or urgent road closures as well as a news archive and sports scores.  We will also make interviews and other features available to be downloaded.

69               As part of our commitment to new and emerging artists we will also have a dedicated page with artist biographies and information about the recording of these artist albums.

70               MR. EDELMAN:  The emphasis on local news, enhanced surveillance and our choice of format was driven by consumer research.  We hired Strategic Inc. to test the music we propose, assess the satisfaction with existing services and to identify programming elements that contribute to the choice of radio stations.

71               Over 600 interviews were conducted and the research revealed that the majority of persons in Winnipeg were less than satisfied with the radio choices they had.  Four out of 10 agreed that radio stations sounded alike.  Five our of 10 agreed that they found themselves turning to other sources to find the music they like.  And only three out of 10 reported being very satisfied.

72               When asked about the music mix being proposed six out of 10 say that they were interested.  When asked if they would listen six out of 10 stated that they would definitely or probably listen.  Interest in the format was highest among females and correlated to age, with the oldest demographic reporting the greatest likelihood of listening.

73               Interest in this format was also evident among advisers.  I came into Winnipeg to meet with advertisers personally and to get a sense of what was missing and what a station would have to offer to attract advertising dollars.  As is the case with most markets where there is high concentration of ownership among the radio stations, there was interest in having more competition.

74               Secondly, interest in this demo was clearly evidence while at the same time there was a frustration at not being able to efficiently reach this group.  CBC and News Radio were identified as having the best reach in this demo. The first does not carry commercial content and the second was seen as being overly expensive.

75               MR. MOREMAN:  In addition to serving the interests of consumers the proposal by ECI advances the opportunities for Canadian artists and the development of content.  As Bill mentioned, we will play 40 per cent Canadian content over the course of the broadcast week.  We will commit 30 per cent of our Canadian content or 12 per cent of our total schedule to new and emerging artists.

76               Given the breadth of our format, we will be able to present more artists.  And more artists means more tracks and more music overall.

77               In addition to meaningful airplay, our proposed station for Winnipeg will invest $1.4 million into local Canadian content development.  The list of institutions we will support is detailed in our supplementary brief and we would like to highlight how truly local and diverse our proposals are.  They represent both large and small organizations in the City as well as established and fledgling events.

78               We have attempted once again to ensure the broadest inclusion of cultural influences and provide funding support to the widest group of eligible recipients.  Support has been given to education to through AMAF and the University of Manitoba.

79               We have allocated funding to grassroots festivals such as the Winnipeg Folk Festival, Manito Ahbee and Folklorama.  We are offering support to Gay Pride and enhancing the investment in the Canadian catalogue of instrumental music, an initiative that is having terrific results and receiving rave reviews from musicians.

80               Finally, we are going to extend our capital concert program from Ottawa to Winnipeg.  This concert provides an opportunity for new and emerging Canadian artists to perform in a large concert, large‑venue format alongside headlining artists.

81               In addition to the obvious exposure, opportunities that events of this size create, there is also the promotional value new and emerging artists receive through being part of the marketing campaign associated with such an event.

82               MR. EVANOV:  In closing, I would like to summarize that distinguishes our proposal for this market from that of other applicants and why we feel we are the best use of the frequency.

83               First, we represent true diversity.  We have no other radio or media holdings in this market, so we are a new voice.  In the City where the interest from consumers and having a variety of sources of news is very high, this should be a key consideration.  We offer the best diversity in terms of our music, as the chart included in your materials indicates.  Our format is largely unduplicated.  The music we play is not available and, among the playlists of the applicants before you, we have the lowest duplication against that which is available in the market.

84               Our plans for spoken word will expand information programming by replacing pop cultural banter with relevant and mature dialogue. And we represent both the highest commitment to news and information programming.

85               We bring a heightened sensitivity and experience in bringing cultural diversity into mainstream radio.  Our music list includes international tracks and our news reports will draw on our connections with multicultural communities across Canada and abroad to fully represent and serve the cultural mosaic of the communities we serve.

86               We have the experience of successfully launching stations, competing in markets dominated by large broadcast interests that operate multiple formats.  Our CCD commitments are local and demonstrate the importance we place on the celebration of our multiculturalism.

87               ECI has the highest commitment to both Canadian content and new emerging artists of all the applicants.  ECI is financially very very strong, generating substantial positive cash flows over all and, as such, are sufficiently prepared to enter this market.

88               For all those reasons, we feel we are the applicant to be licensed in this market.  We thank you for the opportunity for presenting our application to you.  My team and I would be happy to answer your questions.

89               THE CHAIRPERSON:  Thank you very much.

90               I have a couple of questions initially, and my colleagues may have some as well.

91               I am going to start with your submission this morning.  On page 3, near the bottom, you talk about dissatisfied demographics, that your research has shown that notwithstanding all the radio broadcasting in this market that consumers and listeners are dissatisfied.

92               Can you expand upon that and elaborate on where you found this research and how you went about getting it?

93               MR. EVANOV:  Yes.  First, we have noticed a decline in listenership in the Winnipeg market over the last couple of BBMs.  And because of that, and we analyzed that, then we asked Debra, our researcher, to really look into it.  And I think I will ask her to really respond to the question.

94               MS MCLAUGHLIN:  Thank you, Bill.

95               There are two bases for our conclusion.  The obvious one up front is that if you look at what is happening in terms of the average hours per capita in this market you will see that there is a decline.  It is not over one survey, it has been a continuing decline.

96               When we filed the research the 12 plus all persons average hours per capita indexed at 97, so it was less than it was in fall 2004.  In the spring we checked again, obviously this was available post this filing, and the index had dropped to 89.

97               In terms of real hours, in fall 2007 there had been a loss of approximately .6 hours per week per population.  By spring that had changed to a two‑hour loss per person, so that is fairly significant.

98               We looked at it across the demographics and what we noted was, certainly among the older ones who tend to spend more time with radio, by comparison in 1994 teens spent 8.5 hours, adults 35‑64 spent 20.2.

99               So the largest group of people, both in terms of the population and in terms of the time they spent with radio, were indexing very low.  So that gave us concern or reason to believe that there was some sort of disconnect going on between the population and the radio services they had.

100              We went into the market through a standard customer research or consumer research peace and we asked satisfaction questions.  So we asked them how they felt about radio, did they think radio sounded alike, could they distinguish it?  We found that significant numbers thought all radio sounded alike.

101              We asked them if they had to go to other sources in terms of finding the music they liked.  Again, significant numbers found that they had to go to other sources.

102              And then we asked them, after this battery of questions, if they could describe their satisfaction with radio.  Only three out of 10 said they were very satisfied, and that's a very low score.  It isn't saying that radio isn't satisfying some people, but in terms of meeting all of their needs, the conclusion would have to be that they're not.

103              So coupled with the actual tuning behaviour as reported by BBM and our own further investigation we concluded that there was an opportunity.

104              THE CHAIRPERSON:  Okay, so if we accept that and then move forward on page 4 where you talk about clearly what is missing in the market is a broad‑based easy listening service.  And then you go on to identify certain genres I guess; light or soft AC songs, and you listed a bunch of songs.  And then you say toward the end of page 4:

"These songs are not a fit for the format of the existing stations, but are clearly popular and present an opportunity for a new entrant." (As Read)

105              If they are popular, wouldn't that be one of the reasons why the existing formats are looking at this type of music as well?

106              MS MCLAUGHLIN:  Maybe it would help if I just explained the sources of that data, because that may be the confusion.

107              In order to determine what isn't being played in the market we took BDS and Mediabase, both of those are syndicated services that record all of the music being played in the market based on playlists submitted by the stations.  They also create, based on national performance, a list of the top‑charting music.

108              So one of the ways to look at a market is to take those nationally charting songs and compare it to the list of the songs being played by the stations in the market.  And we can see what nationally is popular and then we can extract from the list of all the songs being played in the market those that are being duplicated on the chart, which leaves you a list of songs that do not get played.

109              And what we found when we ended up with this list of songs, that there was a group of songs that could all be classed into soft AC.  And Mr. Silver is probably better able to explain how those get classified.

110              But, in fact, there was a whole list of songs that a programmer could find a common thread in that would be available on a new easy listening station, but clearly had been decided by the programmers in this market not to be put on their stations.  Therefore, our conclusion was that they felt it didn't fit their format.  So it is popular nationally, not available in Winnipeg.

111              MR. SILVER:  If I can just elaborate a little bit on that.

112              In the AC market here you have a couple of stations that more or less play to that area, and each station has to make its own decision as to what its sound is going to be.

113              The mainstream AC station in the Winnipeg Market is CKY, it is a typical mainstream adult contemporary radio station and, if you look at its playlist, it is representative of what you will see pretty well across the country in terms of that style.

114              So they are making decisions.  They can't play all the records, for one, and they are making decisions as to where they want to be.

115              The evolution of AC, certainly over the last five to 10 years has been to a slightly more upbeat pop, contemporaries, light rock sound.  And these artists that we mention here that, although they appear on the AC charts, don't appear on the radio in Winnipeg, represent more the softer side that the local stations have chosen not to play, because their sounds are slightly more edgy.

116              So that would explain why these ‑‑ they may be popular artists and popular songs, but that would be the reason why they are not being played here.

117              THE CHAIRPERSON: Okay.  So CKY is one of those stations here that are offering a form of light music.  Would you say that CFWM and CFZZ and CFRW also play some form of light music format?

118              MR. SILVER:  Very different.  Perhaps light by definition, as opposed to a rock station.  CJZZ, which was actually the Groove, I believe it is CJGV now, it is a smooth jazz, instrumental based, very soft, but really very different to what a mainstream AC would be.  It really is much softer, much more relaxed and a little bit farther off the beaten path in terms of being the core of what AC is.

119              The other one was I think CFWM, which is Bob, that is one of those classic hits pop rock stations that is a lot more edgy than a mainstream AC station would be.  It is sort of in the middle between adult contemporary and rock usually, depending on the market and where you are.

120              The other one I believe was an oldies station, an AM oldies station, which is centred on 1960s rock oldies, Rolling Stones, Beatles, Mitch Ryder & The Detroit Wheels and that sort of thing.

121              Very different sounds relative to what AC is here in this market in CKY and what we are proposing.

122              THE CHAIRPERSON:  What age group are you targeting, what is your median age group?

123              MR. EVANOV:  Our median age group would be 53.  And if you take a station as the one mentioned, CKY, their median age is 43.  And our target demo would be 45 plus with the core demo being 55‑64.

124              THE CHAIRPERSON:  So you are looking at 55 to 64 ‑‑

125              MR. EVANOV:  As the core, but overall 45 plus.  Whereas CKY, as we have mentioned, the median age is 43, so they are definitely programming younger and much more edgier.

126              MR. SILVER:  And their core would be 35‑44 female.

127              MR. EVANOV:  Yeah.

128              THE CHAIRPERSON:  Okay.  Let me move onto getting a better appreciation for the 126 hours of primetime programming a week.  I am trying to understand how the hours all add up I guess.

129              You have identified 100 hours of local programming, including I think it is 18.3 hours of spoken word in your application.  Can you sort of fill in the gaps there as to how we go from those numbers to 126 hours of prime hour listening?

130              MR. EVANOV:  Yes.  Well, we start with the spoken word component and, as you mentioned, it is 18.3 hours.  The balance is basically made up with a format which is an easy listening format.

131              And even of that, that breaks down to 65 per cent would be easy listening, which would be adult standards, soft pop, show tunes, folk and the other 35 per cent would be a very light soft AC that is not played in the market by the other radio stations.  That is the music component.

132              If we go back to the adult standards, the adult standards would rotate on the basis of perhaps three or four per hour, but you have got a combination of two types of adult standards; one is the legends, whether it be Sinatra or Tony Bennett, and the other one whether it be Melissa Manchester or Rod Stewart or Barry Manilow also singing, you know, the music of Gershwin, Sammy Cahn, Jimmy Van Heusen.

133              So the music is the difference that makes up the balance.

134              THE CHAIRPERSON:  I guess what I am looking for is if there is 100 hours of local programming, as per your application, there is 26 hours ‑‑ if I take 18 hours, times seven days you get 126 hours ‑‑ there is still 26 hours there of I guess what would be ‑‑

135              MR. EVANOV:  Oh, okay.

136              THE CHAIRPERSON:  ‑‑ non‑local programming, if I can call it that ‑‑

137              MR. EVANOV:  No.

138              THE CHAIRPERSON:  ‑‑ is local?

139              MR. EVANOV:  Okay, all the programming is local.  There is 126 hours in the week, of which we said we will do a minimum of 100 hours per week of local.  We left the 26 hours more or less open in case ‑‑ you know, seven years is a long time in the life of a licence and certain challenges could come up from competition in the market or great opportunities could come up.

140              And I guess what we wanted was the flexibility, that should something maybe in year five or year six come up, that we don't have to go back to the Commission, that we have said that we will do a minimum of 100 hours of local.  As it is with all our stations now, even in the past when we have said we will do a minimum of 100 hours local, the fact is we have been doing 126 hours of pure local on all our stations.

141              So it is more than likely we will do 126 hours, and we are saying about a minimum of 100 hours.  And it is only for flexibility purposes.

142              THE CHAIRPERSON:  Okay.  You also have a component of live‑to‑air I would imagine?

143              MR. EVANOV:  Yes.

144              THE CHAIRPERSON:  Can you expand upon what will be live‑to‑air and what will not be?

145              MR. EVANOV:  Okay.  The full day, from 6:00 in the morning until 9:00 at night, we will be with live announcers.  We have set aside the evening program to do some voice tracking, which is limited voice tracking in terms of the schedule and also not at primetime.

146              Probably a number of reasons for this in terms of strategy of a radio station.  But one of the reasons is we work with a lot of interns and we bring a lot of co‑op students in and we mentor students.  And this is probably where we train them to be broadcasters.  We don't put them on the air live, but we work with them and we teach them how to do a break or a cut‑in or to announce.  It is pre‑recorded, they listen to it, once or twice they redo it, redo it, then we put it in as a voice track.

147              Whereas if you are a station in a major market you can't take the chance of putting ‑‑ let's say someone from the broadcast school just live and cold, I think it is unfair to them, so it is a perfect way of training them.  So we have kept that option open for voice tracking so that when we do have co‑op students we can, on a rotational basis, teach them how to announce, to record, to do the voice tracks.  And this is at night time.

148              THE CHAIRPERSON:  This would be the 9:00 to 12:00 slot at night?

149              MR. EVANOV:  The 9:00 to 12:00 slot at night.

150              THE CHAIRPERSON:  Okay, thank you.

151              You have identified amongst your CCD plans an outreach program.  Can you expand upon the outreach program as to how it would be managed, what would be included and how you believe it would qualify under our new policy as well?

152              MR. EVANOV:  Okay, what I will do is ask Sean Moreman, who is the author of our CCD, to comment on that.

153              MR. MOREMAN:  Commissioner Katz, I believe you are speaking about the outreach program associated with the Folk Festival, is that correct?

154              THE CHAIRPERSON:  Yes, I guess, among others.

155              MR. MOREMAN:  I mean, there are several ways that we have outreach programs associated to our CCD, I just wanted to know which one specifically you are talking about.

156              THE CHAIRPERSON:  Well, we have got a new radio policy I guess, and the issue here is there is an outreach program you propose I guess as part of the catalogue of instrumental music, among other things, the Folklorama.

157              And the way our new policy reads, there must be clear directive finishers and must be allocated to support, promote training and develop Canadian musical and spoken word talent, including journalists.

158              So I just want to get a better understanding as to how your proposal for the outreach program will meet those obligations and criteria.

159              MR. MOREMAN:  You mentioned in there the Folk Festival as well as the catalogue. Let met start with the catalogue.  Let me start with the catalogue.

160              The catalogue is, as you know, an initiative that we started with our Ottawa station.  Its purpose is to promote instrumental music to both radio programmers as well as the film and television industry.

161              Mr. Silver mentioned actually in the Owen Sound hearings that instrumental music is often a bit of a cottage country industry with people recording in their basements and not getting a lot of radio airplay.  So they don't have the exposure to programmers or other industries that would like to source instrumental music.

162              What the catalogue does is it gives them that meeting place where they can put up their music, sample their music, and the people who want to source it out can go and visit, find out the type of music they want and setup a meeting between themselves.

163              What the catalogue has been already quite successful in doing is getting a lot of artists to be included on the catalogue and there has been quite a bit of interest expressed from both radio and other media in the catalogue and it has been used for that purpose.

164              Where it stands right now, several of independent production companies are putting samples onto the website so that it can be heard on the internet.

165              However, you wouldn't be able to find that right now by going and accessing the website, because two aspects of it are still in beta testing.  Firstly, there is the artist uploading from their PC and then there is also consumer testing about how well it will work and how well it will be accessed.  So we are still in testing on that, but it is happening.

166              THE CHAIRPERSON:  Is there a timeframe for when the tests will be completed and it will actually be launched?

167              MR. MOREMAN:  I believe Debra would be able to answer that question, as she is our contact with that.

168              MS MCLAUGHLIN:  Yes.  Right now, there is a panel of users.  As you can appreciate, there has been a group of people who come in and used it a great deal, artists who have discovered in uploading it.  So the panel has been created and they are feeding back.  We think within a month both the upload feature and the actual consumer end listening.

169              What has happened is people ‑‑ it was ready to go, but it was setup so people could put samples up one at a time and these production companies want to dump 20 samples at a time, which is a different kind of system you have to set up to incorporate that sort of mass transfer of data.

170              So that is what has caused the delays, but we are hoping within a month it will be up.

171              THE CHAIRPERSON:  Okay.

172              MR. MOREMAN:  So carrying on, the people who have contributed to the catalogue, we have the full list of AMIA, the B.C. and Manitoba Music Association will be placing their links on the website soon, and CCIM.  The catalogue will also be making a pitch to the Alberta and B.C. groups at artist development seminars which are hosted by those organizations.

173              We have received a number of accolades from artists who have used the catalogue and have received contacts from both radio programmers and the film industry, such as James Cohen, Paul Blissett and established artists such as Canada Brass.

174              We have also been able to establish links with other similar cataloguing services in the United States, such as NewMusicLabel.com, which profile and upload music of artists down there.

175              And the catalogue has been promoted on the Ottawa contribution dollar at events such as POPCOM in Berlin.  The Department of Heritage took the catalogue with it on a trade junket to Japan and they just presented in the United Kingdom.

176              More locally, at the Toronto International Film Festival there was also a booth set up by the catalogue, so that the film and television industries could find out about the catalogue and start to source materials there.

177              And it's our understanding that Canada Brass has, in fact, received a contact from someone in the film industry through the Toronto International Film Festival.

178              So, all of that to get specifically to your question, what we're contributing now.  All of what I've just talked about is on the Ottawa media dollar.

179              What we hope to do is to improve the services, improve the promotion of the catalogue at going forward.

180              One of the plans is to make it a bilingual website, right now it's in English only.  Recognizing that, you know, we do live in a bilingual country, that is one of our objectives and that is somewhere where the money that will be contributed will definitely go.

181              But we feel that evidence has shown that it is a worthwhile endeavour, that there are instrumental artists who are seeing the benefits of the catalogue, however, everything, you know, every new endeavour takes time to set up, the process is rather slow and won't happen overnight.

182              We're just starting to see the benefits now and we feel that it's a legitimate and worthwhile effort to allow it to carry forward in order to improve.

183              THE CHAIRPERSON:  And you are confident that it fits within our new policy?

184              MR. MOREMAN:  Most definitely.  The policy requires the promotion of local Canadian talent.

185              That's exactly what the catalogue does.  It's a world wide medium that each of those artists can promote his or her works to the world by taking it to places like Japan, Pop Common, Germany, the United Kingdom and events in Canada.

186              That is nothing but promotion of Canadian talent.

187              Carrying on to the other aspects of the outreach program as you call it, from a pure policy point of view, we feel that all of our initiatives do qualify.  All the fees will be paid to Canadian talent directly.  Each of the initiatives has indicated that none of the monies will be used for administrative fees or to pay past liabilities.

188              THE CHAIRPERSON:  Can I assume that the back end of your presentation this morning speaks to a playlist in part or in total?

189              One of the things that we would like to see is a playlist from you.  I don't think you filed one with your application.

190              MR. EVANOV:  We thought we had filed one.  We didn't attach one today to the speech, but we will following ‑‑

191              THE CHAIRPERSON:  Could you ‑‑

192              MR. EVANOV:  We will submit one to the secretary.

193              THE CHAIRPERSON:  If you feel you have, perhaps at the break you can check with staff and just clarify that.

194              MR. EVANOV:  I will and if they haven't been, we will provide that.

195              THE CHAIRPERSON:  Thank you.

‑‑‑ Laughter / Rires

196              THE CHAIRPERSON:  Perhaps we can spend a bit of time talking about your audience projections and your share of market and how you went about coming up with these.

197              Maybe it's just my statistical background, but when I look at your seven‑year share of market it literally goes up the same amount every year over seven years to get to doubling from year one to year seven, I guess.

198              MR. EVANOV:  Yes.

199              THE CHAIRPERSON:  Is that just my math or there was some art behind that science?

200              MR. EVANOV:  There's some pretty good art behind the science.  And I think I'll ask Debra to first comment on it and then we'll go to Ky Joseph who's our Vice‑President of Sales.

201              So, Debra who did the research, perhaps you can talk about the share.

202              MS McLAUGHLIN:  I will speak to audience share and how that's developed.  How it translates into the revenue spread sheet, Ms Joseph will deal with.

203              When we go into the market and ask respondents to our survey their degree of interest in this service, we ask them ‑‑ they have five options:  definitely listen, probably listen, probably not listen, definitely not listen and no answer.

204              We take each one of those responses by demographic and project out a likely amount of people in the population.

205              So, for example, if 10 per cent of the people said they would definitely listen, we would apply to ‑‑ and the demographic in which the 10 per cent was reported and then we would discount it.  You obviously discount less for definitely listen and more for probably listen.  So, we have a higher discount level.

206              These discounts are applied.  They are added up to create a reach figure by demographic.  We do that for each gender and each demographic, we add it up, and what we get is a reach per cent for the market and that we have reported.

207              We then go back and look again by each demographic and gender and age based at the average hours tuned in the market and to this type of format where it exists, and then we create a relationship between the hours spent in this market with this potential format based on the tuning to a similarly formatted station in another market.

208              That allows us to project the total hours tuned.  From that we simply divide it by a projected total hours for the market at the time of launch and we get a share figure.

209              Now, that share figure is considered to be a mature share, which is not to say that it can't grow after that.

210              Obviously when you enter a market you are not going to get your mature share, you have to build your brand, you have to get the information out to consumers.  So, we discount that mature share to represent the first year and then we grow it.

211              Again, the growth rate on the audience share is based on experience within that format, that demographic and we look to other markets and, fortunately, in this format we can look to Canadian markets.

212              So, for example, the share estimate in this case was ‑‑ the mature share was discounted to being only 60 per cent in year one.  That was predicated on two understandings.

213              First of all, that this demographic, the 45 plus, are not necessarily early adopters or adopters, so they're not going to leap into this format if they are listening to other stations in the market.

214              But there is a group of listeners who are so disenfranchised, who have simply tuned out, that we think we can get right away.

215              So, we've taken that mature share and estimated year one share to be only 60 per cent.

216              We have estimated a significant growth in year two, a slightly declining growth in year three and then very minimal growth years four through seven.

217              Now, that's how we got to the audience share.

218              And then I give it to Ms Joseph who uses her experience in sales to say this is how it's going to translate into dollars, and I'll give it to her to answer that.

219              MS JOSEPH:  Thank you, Debra.

220              If you notice in our sales expenses, ours as compared to all of the applicants is the highest.  We incorporate the highest commissions of all broadcasters to develop new business.  As a matter of fact it's a strategy of being stand‑alone in every market that we serve.

221              To that point we train our sales reps to specifically locate the categories that fit the audience demographic and then we dig deep locally to find whatever business we possibly can to get them all on the station.

222              Our sales reps' budgets are ‑‑ we've got ‑‑ basically we've got a formula that includes a standard budget and a new business development budget and all bonuses and commissions are linked to both.

223              So, what I'm trying to say is that from a ‑‑ you know, as you had mentioned that the increase year over year has not decreased, like in year four for example like Newcap's has, and the reason for that is because of our template that we use from a direct local sales point of view.

224              We're going to have to come into this market and develop the local market and we've already seen national advertisers respond to the economic shift of the older demographics.

225              A perfect example of that would be, you know, five years ago Additionelle, for example, who targeted a mature female, they bought 25‑54, they're now buying the 35‑64 female specifically because they're realizing that they have to be more niche in their approach to target those specific consumers.

226              And in 2013 baby boomers will be over 50 per cent ‑‑ will be over 50, excuse me, and they will represent 55 per cent of all discretionary income.

227              And we're noticing that ‑‑ actually there's, you know, there's a million reports that you can find, research reports that indicate that it's actually the baby boomers themselves, in some cases, that are responding to starting up their new businesses.

228              And it is forecasted that they will be successful because one, they understand the needs of, you know, of the baby boomer because they're baby boomers themselves; and, two, they are people who have a lot of experience, they're executive that are perhaps in their third career at this stage in their life, but they realize that there's a real business opportunity.

229              And we're seeing that more and more and there's a lot of research to prove that.

230              THE CHAIRPERSON:  What do you forecast the annual growth in radio advertising revenue to be over the next seven years, roughly?

231              MS JOSEPH:  Well, we forecasted roughly three per cent would be the market growth.

232              THE CHAIRPERSON:  Year over year?

233              MS JOSEPH:  Year over year.

234              THE CHAIRPERSON:  Okay.  And what impact would your entry have on the existing incumbents in the marketplace?

235              I think I read somewhere 35 per cent is where you'd, I guess, borrow from their revenue sales and the rest will be incremental?

236              MS JOSEPH:  Well, there were two factors that we looked at.  First, obviously, was the research.  When trying to determine impact, you would identify the respondents that indicated that would probably or most likely listen to the station and of those 60 per cent, they said currently that their favourite radio station ‑‑ really it's a cross‑section of over 10 stations in the market with no one specifically standing out.

237              As a matter of fact, No. 1 was CJOB, but when we went out into the market ‑‑ and Chris Edelman can speak a little bit about this ‑‑ when we went into the market and talked to advertisers we got several stations that they're either currently advertising on or have advertised and, for one reason or another, they didn't get a response.

238              The response from those advertisers was very favourable to the station that we would bring to this market.

239              You'll notice also on page 20 in our impact survey that No. 2 was other, and other means that respondents couldn't name a specific radio station.

240              So, we've also ‑‑ in our research we've also realized that, you know, of the out‑of‑town, there's 10 per cent tuning out‑of‑market and we believe that based on drops in hours tuned and tuning out‑of‑market that we will be able to repatriate those listeners and, therefore, we believe that it wouldn't be so significant over all of those stations.

241              I mean, we're talking about $625,000, it represents about a per cent and a half of all radio revenue.  With the growth, we believe that it will be absorbed by the growth.

242              And, again, you know, we're looking to bring a station to the market that is not currently here and there is a real need from advertisers as I would like perhaps Chris Edelman to tell you a little bit about, what we found on the streets.

243              MR. EDELMAN:  Thanks, Ky.

244              Yeah, so going back to that 35 per cent of local radio stations based ‑‑ and, as I mentioned earlier on before, you know, I've been in Winnipeg making relationships with advertisers and retailers in the area, and based on my conversations with advertisers, there was a real cross‑section that came up.

245              So, our 35 per cent would not come from one particular service, but from six to 10.  I mean, I heard every radio station under the sun mentioned as being used occasionally, maybe, sometimes, even this year, not next year, et cetera.

246              And as Ky also pointed out, that this 35 per cent represents a mere 1.5 per cent of the total Winnipeg radio market.

247              So, it's really insignificant in the big picture things.

248              Now, specifically, I'll share with you a couple of stories that I came across with dealing with particular people that do make these decisions in the marketplace.

249              One being David from David Hoffman Optical.  He targets ‑‑ when I asked him if he would place a value on the baby boomer generation he described that the baby boomer generation is a very important segment to his business.

250              He uses newspapers and tries to reach this group with occasionally using CJOB but finds it too expensive.  So, he usually keeps his dollars to the Sun and the community newspaper.

251              So, that might be an example of how we might impact one service, but it's very marginal and very minimal, most of his dollars are going into newspaper and community newspaper.

252              He said that if affordable he would allocate a much larger percentage of his media dollars, so away from print, into radio stations that targeted specifically the baby boomer generation.

253              Now, there's a few other interesting stories that I came across that I'd like to share with you.

254              I spoke with Audra Lazoski(ph) who works for McKim, Kriegan, George(ph), previously known as McKim Communications.  She's a media planner and represents a whole bunch of clients within the area.  To name a few, Manitoba Hydro, Warehouse I, Polo Park Shopping Centre, the Blue Bombers.

255              And sometimes her plans include radio and sometimes they don't.  She was very engaged in our conversation about a possible new radio station that would specifically target the baby boomer generation.

256              I can quote her by saying, and she said that she might be listening here today, that:

"A radio station that targeted the baby boomer would open up a world of option for her clients.  It would give her the justification to increase her clients' budgets."  (As read)

257              MR. EDELMAN:  The first client that came to her mind immediately was the Lottery Casinos of Winnipeg.

258              Currently she recommends doing loyalty programs using print and direct mail and newspaper, radio has never been a part of the equation.

259              If your service were to be available, she would one hundred per cent include us in her plans.

260              So, after canvassing the area and speaking with the retailers, the evidence was clear, there's a true demand for something that specifically and cost effectively targets the baby boomer generation.

261              THE CHAIRPERSON:  And I don't want to put words in your mouth, am I to assume that you're saying that out of all the radio stations in the greater Winnipeg area, all 19, 20 or whatever, there are none that target the baby boomers right now?

262              MR. EDELMAN:  Yeah.  Okay.  I'm not saying that there are ‑‑ if I look at a BBM ranking on, you know, 45 plus demographic on a wide base, what we're speaking to today, CJOB does do a good job at delivering them.  The question in the mind of retailers is, do they get it cost effectively.

263              CJOB over all adults 12 plus is the No. 1 radio station in the market.  There's a premium to be paid to be associated with that service.

264              So, when we're coming in as an entry specific to the baby boomer or 40 plus demographic, we come in and be much more cost effective to reach their target audience.

265              Does that clarify it?

266              THE CHAIRPERSON:  What you're telling me is the advertisers will look at the audience, but then also look at price and will opt for a lower price if they can get the reach at a lower price.

267              MR. EDELMAN:  Yeah, it's a measure of efficiency.  So, with their dollar there's a higher likelihood that every investment, or everything that they put into advertising will in large part go to their target demographic.

268              So, it's a much more efficient buy at this point.

269              THE CHAIRPERSON:  So, how sensitive is your business plan to the notion that if you were licensed and CJOB did see some erosion of their advertising revenue because of the efficiency of the model, the cost price, that they'd lower their price of advertising and impact your business?

270              MS JOSEPH:  I think I can answer that question.

271              With ‑‑ just speaking about CJOB specifically, their efficiencies really lie in the younger end of the 45 demographic, where ours, our core demographic is 55 to 64.

272              You do need the broad range in order to bring in the revenue and to make the business plan, but it's unlike ‑‑ I can only say that it's unlikely that that would happen, that they would decrease their rates and, if they did, it really wouldn't impact our business plan whatsoever because ‑‑ because the impact is not sufficient on that station.

273              We're going to be ‑‑ as I mentioned, 65 per cent of our revenue is coming from completely new dollars to radio and that is the strength of our company, quite frankly, is to bring in local revenue.

274              THE CHAIRPERSON:  Where does the 35 per cent of other media come from, is that newspaper?

275              MS JOSEPH:  It comes from a cross‑section of media and, again, because Chris Edelman was the one who did the street level demand study, I'll ask him to speak on that.

276              MR. EDELMAN:  Okay. So, the 35 per cent as outlined coming from other media is, in our estimations, comprised of print, flyers, direct mail, outdoor media and TV.

277              Now, I guess I'm at a huge bias to say so, but radio in my opinion is the most cost‑effective media option to speak to a targeted demographic.

278              We teach this to retailers and get them to expand or take money from other media and place it into radio.

279              Now, also Winnipeg which is considered to be a mature or full market, we need to plan on taking money out of other media in order to realize our revenue goals.

280              Direct mail or flyers are very expensive and do not target specific demos.  And newspapers are simply not a part of everyday life of people as they used to be.

281              So, I would see us making a dent into the Winnipeg Free Press and the Sun specifically as the majority of the other media dollars.

282              THE CHAIRPERSON:  Okay.

283              MR. EVANOV:  The only thing I would like to add, if I could.  If you take our Newmarket station, and we've analyzed it, it's just a very strong local sell, but 70 per cent of the clients that advertise on that radio station are brand new radio.  They've never been on radio before, never spent their money on radio and we brought them into radio.

284              THE CHAIRPERSON:  Can you spend a few minutes providing us with an understanding of how correlated your business plan is with your format?

285              Is there a correlation there at all?  I mean, obviously it's audience, tied to audiences, but if your format changed tomorrow and you had the same level of audience, how would that impact your business plan?

286              MS JOSEPH:  Well, from a revenue standpoint, you'll see that 20 per cent of our revenue comes from national business.  National business is really the only thing that advertisers look at in terms of sheer numbers.

287              But even in our projections for national, we factor in national business that might not be traditionally considered national, and I know that sounds a little convoluted, but I'll try and explain.

288              Our experience with national advertisers and new business development opportunities, like we realize there's a real opportunity there for direct response business.  We have been able to fish in the U.S. for businesses that spend upwards of $600,000 on our stations.

289              They're national, they've actually ‑‑ we brought them in most cases to Toronto first and it spilled over on all of our stations that we've got, Halifax and Ottawa, Newmarket as well and even Hawkesbury.

290              So, they're a national advertiser that are now spending across the board, across Canada.  They would include products like Hero Tabs, which is a male enhancement product, perfect for this demographic; Zanarax, Intimax and they spend a heck of a lot of money in radio.  They didn't before.

291              This is the kind of thing I'm talking about, when you really push your sales team to develop new business, they go in and they develop it.

292              So, it's national but technically it's not national from an advertising agency point of view.

293              So, aside from that we, again, focus on local business.  The beautiful thing about local business is, I mean there are pros and cons, but the beauty is that it's not really tied to a ‑‑ it's not tied to a cost point, it's not even tied to an audience share.

294              What they're looking for is a return on their investment and if we can bring the audiences, and we've shown with all of our stations that play the same type of music, that the hours tuned are significantly high.  So, for that reason our advertisers are getting responses and we're seeing re‑bookings for, you know, two, three, four years on our stations because of that.

295              So, if we don't get the audience share, per se, the business will still be developed.  We stand strong with that claim because we've been able to do that.

296              THE CHAIRPERSON:  But there is a very high correlation between your target audience, the genre, the format you're playing and the advertisers that actually advertise on your station.

297              MS JOSEPH:  Yeah.

298              THE CHAIRPERSON:  You won't get people in the, I don't know, 55 to 64 age group looking at Vesta Motor Bikes.

299              MS JOSEPH:  That's correct.  You're correct.

300              THE CHAIRPERSON:  Okay.

301              MR. EVANOV:  But there is a whole a market.  They will look at Mercedes and Jags and everything else.

302              MS McLAUGHLIN:  Commissioner Katz, I might just be able to clear this up, because when we go into the market to do research, we don't just research one format.

303              So, I think the question that ‑‑ or the answer that might help you understand the possibilities for a new entrant in this market lies in the fact that we look in other areas to see if there were other opportunities.

304              Ultimately having examined tuning losses across several demographics, looking at what the playlists were currently in the market, the conclusion was that this filled that hole that existed.

305              Respecting the three issues, the three challenges that Ky identified in the outset of  the presentation, that being the fact that the market isn't particularly as robust as others that the Commission has looked at recently and, again, probably will look at this week.

306              It is a profitable market, it is not the most profitable market, it has had some challenges, it is in a growth phase, but how long that lasts we don't know.

307              So, you want to get a format that's going to have a solid base in terms of being able to develop a business plan, serve an under served demographic and not duplicate and cause unnecessary impact against the other stations.

308              Having said that, this was the ideal format, but there were other demographics where the tuning had declined, there were other opportunities,  they just weren't, given the competitive balance in the market, going to have as little impact as this one.

309              So, could the format shift, and could they achieve shares of similar levels and find an advertising base?  The answer is yes.

310              THE CHAIRPERSON:  Those are my questions.

311              Commissioner Menzies.

312              COMMISSIONER MENZIES:  Maybe just to follow up on that, Ms Joseph, could you help me understand a bit about how you would train the market ‑‑ the advertisers to be attracted to this 55 to 64‑year‑old age group, given that, traditionally, that is not an age group that is considered to be attractive to advertisers?

313              MS JOSEPH:  It is actually not that it's not attractive to advertisers, it is attractive to advertisers.

314              Whenever we come into a market, we research the market from a street‑level advertiser demand point of view, and the demand is very strong here to target consumers 45‑plus in this marketplace.  So it is, in fact, there.

315              Another thing that we would look at, of course, is the baby boomer generation.  We have seen it already.  The shift has been very, very slow, but even from a national advertiser point of view, advertising dollars are now streaming upwards because these advertisers realize that there is a heck of a lot of money there.

316              There is a really interesting research piece that I found in Reuters Life! from Toronto.  It was the Canadian Newspaper Association that commissioned this poll through Ipsos Reid.

"The baby boomer generation, once the dominant influence on everything from fashion to haircuts to music, is getting older and feeling increasingly ignored by advertisers, even though boomers have money and are willing to spend it."

317              What has happened through this research is that we know that, in many cases, it's the baby boomers themselves who are getting inheritances.  There are trillions of dollars that the baby boomer generation will get from inheritances, not to mention their own wealth.

318              The saying is true, "Sixty is the new fifty," and people are working well into what would be considered retirement age.

319              Maybe not you, by the look on your face ‑‑

‑‑‑ Laughter / Rires

320              MS JOSEPH:  ‑‑ but it is a fact.

321              So these very clever, very smart executives and business people are going into business to respond to the economic shift.

322              There are, like I said, thousands of research pieces that you can find, even on Google ‑‑

323              COMMISSIONER MENZIES:  I wasn't disagreeing with that, I was more trying to get to ‑‑

324              What you said at the beginning was that there is no need to re‑train advertisers.

325              MS JOSEPH:  No.

326              COMMISSIONER MENZIES:  But we constantly get this 25 to 54 ‑‑ 25 to 54 is the market that is the most attractive to advertisers.

327              MS JOSEPH:  It would be easier to have a station that is 25 to 54, there is no doubt about that, but our company has never gone for easier.

328              We have proven that there are a lot of advertising dollars ‑‑ local dollars ‑‑ that no other radio stations go after, from the younger end to the older end, and we have found that there is a real market there, and we fish there and we get the money.

329              It's not training the advertisers, it's training our sales people to go out there and get the dollars.  The advertisers are already there.  They have told us that.

330              COMMISSIONER MENZIES:  This touches a little bit on Commissioner Katz' question.  If it is such a good idea, and there is demand by advertisers wanting this demographic, it kind of makes you wonder why nobody else is doing it.  But more important is, what if you convince us that it's really a good idea, but you also convince competitors currently in the marketplace that it's a really good idea, and somebody shifts, or more than one person shifts format and starts to fish in your pond?

331              Do you have the flexibility to adjust to that?

332              MS JOSEPH:  Absolutely, and I am saying that from experience, because we have been faced with that same situation in Toronto, with CIDC, with our station there.  Not one, not two, but four stations flipped format to try to compete against us because they realized that there was an opportunity there, and then they flipped again.

333              We are still there, and we are very, very strong in terms of audience share.

334              MR. EVANOV:  If I may add, if we are licensed and we begin the process, we will be entrenched, and once you are entrenched you are a little tougher to knock off.

335              Right now most people still have their eyes going down the middle, where the big money still is.  They feel that it's easier, but there are, maybe, a dozen people going down the middle, and we thought that we would go for the upper end.  There is probably just as much money there.

336              And slowly, as the whole market moves, down the road I can see what you are saying happening, to a degree.  Some people may say:  Let's go after the older market now, because they are the majority of the market.

337              But by then we will be solidly entrenched, and we are a good operator, and we have no fear of competition in the market.

338              COMMISSIONER MENZIES:  Okay.  Thanks.

339              How many additional licences do you think this market can bear, and how many did you assume in your business plan?

340              MR. EVANOV:  The other three applicants are targeting much younger than what we are targeting, so we don't see running into them on the streets very often, or running after the same advertisers.

341              I guess we assume that you will probably license two of these, and the two will probably ‑‑

342              We don't have a concern.  We know we are going to make it.  We know who the clients are that will spend money with us.  We know who we will convert and bring to radio.

343              We are not going there to take away major dollars from any particular radio station in town, so we don't have a concern in terms of reaching our projections.

344              Basically, you will decide ‑‑ I know that the PBIT for the last couple of years has been in the double digits.  It's a good market now.  We don't know what is coming down the road, but definitely, I think, there is room in the market for one station that doesn't duplicate anybody, which is ours, and then, I guess, there could be room for another station that does duplicate.

345              So I would say that perhaps you are looking at licensing two.

346              COMMISSIONER MENZIES:  Regarding your news and spoken word format, you said that you would replace pop culture banter with relevant and mature dialogue.  You also mentioned, in terms of your news, that it would be different, or that it would be a new, independent, voice.

347              I am always curious to know how it will be a new voice and not just another voice.

348              Do you understand what I mean?

349              MR. EVANOV:  Yes.

350              When we came into the market, we listened to all stations and the newscasts and what was going on ‑‑ and I think that I should really let Gary Gamble respond to that, because he did that part of the research.

351              COMMISSIONER MENZIES:  He had his light on first, too.

‑‑‑ Laughter / Rires

352              MR. GAMBLE:  Thanks very much.

353              When we first came in, as Bill said, we took a look at it and monitored the music stations, and noticed that, traditionally, most music stations have their three minutes at the top of the hour, where they provide you with news headlines, and they possibly have a news update at the bottom, and they fill in your basic traffic reports throughout the day ‑‑ throughout the morning clock, for example.

354              In our Newmarket and Ottawa stations, we have trained our announcers that, because we are doing such a mature format, our talk has to be of a mature nature, also.  We are not going to be talking about pop culture.

355              News and information programming ranks very, very high, especially here in Winnipeg, with weather being the top, at 93 percent.  That's what people want to hear.

356              What we do is, we provide a five‑minute newscast at the top of the hour, which, of course, is 60 percent local.

357              As I was listening and monitoring these stations, there certainly wasn't 60 percent on any of the music stations that I heard providing local news.

358              Let me draw a picture for you.

359              A five‑minute newscast at the top of the hour and a one‑and‑a‑half minute update at the bottom of the hour is what we are working on.

360              Then, our announcers, instead of talking about pop culture and entertainment and the usual type of morning show talk and banter that you hear on stations, across the country, not just here in Winnipeg ‑‑ we are replacing that with quick snippets of what people want to hear, whether that's weather updates, whether that's talk about the transit dispute that is on right now, lifestyle, a little bit about health, a survey ‑‑ that sort of thing, in very, very quick snippets ‑‑ school closings, and if there is a major traffic problem, we are going to get in with that.

361              It is more of the talk that people want to hear.

362              If we go on the air and say, "It's 15 minutes past eight o'clock.  It is 10 degrees outside.  Here are the current numbers for the dollar," that's more of a mature thing that people want to hear, who are driving to work in the morning, who don't necessarily want to hear about Britney Spears, for example.  They want to hear more about those types of things that are current to their lifestyle.

363              We will be running programming throughout the day, also, like "Health Watch", and book reviews, and that sort of thing.  If there is a health matter that should be of concern to people who are driving to work in the morning, and we can do a quick snippet about it, we will do that.

364              Our announcers are trained to work with the news department, to find out what they are working on, and if they can take those news stories and talk a little bit more about them throughout the hour, and add in some other community events, or things that are happening throughout the hour ‑‑ make it a little bit more of what people, we feel, in our demographic, who will listen to our type of music, really want to hear when it comes to news and information.

365              We also do that by backing it up with a full news staff of six people:  a news director, who also covers the morning show; an afternoon news person; two part‑time news announcers; and two stringers.

366              For example, if we have a five‑minute newscast and we have a stringer out on the road who has a report about Prince Edward's visit yesterday, or an update on the transit strike, or an update on sports, about the Blue Bombers' training camp opening this week, he will throw that in and make that five‑minute traditional newscast a little bit more full as to what we feel news really should be, and then, throughout the hour, keep expanding on news, school closings, bus cancellations and that sort of thing.

367              COMMISSIONER MENZIES:  Thank you very much.

368              I have one, quick, final question.

369              When you said that your business plan would stand up among two new licences, did you mean two or two plus the Native Type B?

370              MR. EVANOV:  We meant two plus the Native.

371              COMMISSIONER MENZIES:  Thank you.

372              THE CHAIRPERSON:  Thank you, Commissioner Menzies.

373              Commissioner Patrone.

374              COMMISSIONER PATRONE:  Thank you, Mr. Chair.

375              Good morning.  I want to start off with a couple of questions related to format.  Specifically, you spoke about the appeal of this particular format toward ethnicities, various cultural groups, that kind of thing.  Do you have any evidence to back that up, or is it largely anecdotal?

376              MR. EVANOV:  To begin with ‑‑ and I will ask Debra in a moment to address some of the research ‑‑ we operate a multicultural radio station in Toronto, broadcasting in 30 languages.  That station has tentacles, or a network, throughout the country, in terms of reaching various communities.

377              So that is available.  The sources and information are available to our staff here in Winnipeg, in terms of when we are on the air with this programming.

378              Also, we tailor the music to the particular market.

379              I will give you one little example.  In the Toronto area we play things that most English broadcasters don't.  If there is a great song by Andrea Bocelli in Italian, we will play it.  If Feliciano wants to sing in one of the Latin languages, in Spanish, or even in Italian ‑‑ Que Sera Sera ‑‑ we will play it.

380              We would take the same attitude here that relates to the population in this particular area, whether it be Ukrainian or German or whatever.  If there is something popular and something elegant ‑‑ Nana Mouskouri is another singer who sings in four or five languages.  We will play that particular music.

381              That relates to the people who live within the area, and that is how the music ties in with them.

382              It's not that we are an ethnic station, I am not saying that, but there is a respect for that type of culture.

383              Debra?

384              MS McLAUGHLIN:  We test for cross‑cultural appeal of formats by two measures.  One is based on mother tongue, another is ethnic heritage.  And within the context of the survey, with respondents on the phone, we asked them both of those questions.

385              So we can then take the answers to the mother tongue and ethnic heritage and cross‑tab them against interest.  When we do that ‑‑ on pages 16 and 17 of the consumer demand study, you can see that, for example, in mother tongue, only 76 percent of the core audience to this service actually had mother tongue English.  The rest were spread across several languages ‑‑ obviously, the second official language, French, and the rest were spread across Ukrainian, German, Dutch, et cetera.

386              If you just take that breakout and index it against the market, in terms of how the distribution falls out within the population, we actually index higher on our interest among cultural groups than many formats would, and that is, as Bill said, something that they have direct experience with, because the response ‑‑ and I often review the responses for them at the station ‑‑ from consumer feedback is typical of this type of format.

387              COMMISSIONER PATRONE:  Do you program some of the music to reflect that cultural diversity?

388              Is that correct?

389              The cultural makeup of, say, any given market.

390              MR. EVANOV:  That's what we do, wherever possible.

391              COMMISSIONER PATRONE:  Can you talk about how you would manage to incorporate diversity into your hiring practices?

392              MR. MOREMAN:  If you refer to our application, Commissioner Patrone, I believe that we have our Diversity and Employment Policy included in the application.

393              One of our strengths as broadcasters is to bring in a variety of people at the management levels.  Ms Joseph, here today, is a good example of women in senior positions within our company.  We don't see a lot of that, still today, in the broadcasting industry, and Ms Joseph certainly isn't the only one within our company.

394              We actively encourage applications from not only ethnic and gender backgrounds, but sexualities, religions ‑‑ and the list goes on ‑‑ not only, again, relating to our ethnic station in Toronto, but across the board.

395              And we believe that we are quite successful in attracting a variety of people within our ranks, and hope to do so in the future.

396              COMMISSIONER PATRONE:  You spoke about support groups like Gay Pride and that sort of thing.  Could you talk a bit about how that support tends to manifest itself?

397              MR. MOREMAN:  Specifically, to this application, it is a CCD initiative.

398              And I was going to say something before to your question about programming cultural diversity, so I will talk about the diversity within our CCD initiatives, as well, very briefly.

399              We believe that there is cultural diversity represented not only on‑air, but through our CCD initiatives.

400              One thing that stands out is, both the Folk Fest and Folklorama have people who perform not only in English, but in a variety of cultures and languages during the show, in 200 performances at Folk Fest.

401              And there are a number of international visitors who come to enjoy the Canadian talent in their home language.

402              So our funding will be there to support that cultural diversity.

403              We also have two Native Canadian endeavours that are being represented through AMEF and Manito Ahbee.

404              On the AMEF front, there is actually some cross‑over to the programming side in the news aspect.  We have an agreement in principle with AMEF to set up a mentoring program, so that a Native individual from Manitoba ‑‑ from Winnipeg ‑‑ will be in our newsroom as one of the interns that Mr. Gamble mentioned before.

405              Their sole job won't be only to find Aboriginal stories, but that certainly will be within the ambit of their responsibilities.  So that will be reflected in the newscasts ‑‑ perhaps not every single one, but there won't be an absence of Aboriginal stories.

406              To come back directly to your question about Gay Pride as a CCD initiative, we feel that cultural diversity goes beyond merely ethnicity, religion, or gender ‑‑ the obvious differences ‑‑ and that we need to support and celebrate other differences, as well.

407              So what this contribution does is, it certainly meets the objectives, as I explained to Commissioner Katz, of promoting Canadian talent on the stages, but it is there to show our support for the inclusion of an often under‑represented group.

408              COMMISSIONER PATRONE:  You spoke a little bit about news there, so I will ask a question related to that.

409              There will be six reporters, and those individuals will be out on the street, covering stories?

410              MR. GAMBLE:  There will be two full‑time on‑air staff, and one of them will be covering mornings and one of them will be covering afternoons.  Both of them will be covering the noon hour newscast, which will be ten minutes long.

411              The other two will be covering part‑time newscasts midday, and then we will have two stringers, who will be dedicated to being out on the streets and getting a call for an assignment to cover something and report back.

412              Also, as Sean mentioned, our mentoring program and internship program has worked out very well, especially for our station in Newmarket.  At any given time in our programming department we have two to four interns, who are available either for news or learning the board ‑‑ future broadcasters ‑‑ and what we do in the news department is that we take them from the beginning, directly out of college, and show them what a news story is all about, how a news department works, how to gather a story, how to follow up on it, how to chase after local news, which, of course, is not really available on a wire service, how to make those calls to the police department, and sit in on city council meetings ‑‑ how to work it right from the very beginning.

413              We have been very successful with the internship program.  I would say that in the last 18 months, in Toronto alone, we have hired 10 of the interns that we brought into the program.

414              COMMISSIONER PATRONE:  Do you have an evening reporter?

415              MR. GAMBLE:  News will run until seven o'clock in the evening, but our news department will always be on hand.  It's actually the part‑time reporters who will come in.

416              If something is breaking, and it is urgent information that has to get out, our announcers are trained, first of all, as they work closely with the news department, to get on the air and start not just introducing music, but now their focus turns toward getting this news story on the air.

417              And as soon as we can get a news reporter in to cover that on a more frequent basis, we will do that.

418              COMMISSIONER PATRONE:  Do you have any plans for longer form stories?

419              I know you said that one of your newscasts will be 10 minutes long.  That's a fair amount of airtime, as you know.

420              Will you have investigative pieces, and that kind of thing, or will it just be straight ahead?

421              MR. GAMBLE:  No, that ten minutes of news, especially at noon, and in all of our newscasts ‑‑ if there is news that is of a headline‑type delivery ‑‑ if it's on a national basis, first of all, that we are getting on the wire, we are going to take that story ‑‑ not rip and read it, but we are going to qualify it and make sure that what we are reporting, first of all, is accurate, and second of all, if it has any relation at all to Winnipeg, we will follow up on it.

422              Sixty percent of that newscast, also, which runs ‑‑ out of the ten minutes, about six minutes of direct news will be local stories.  Also, within that ten minutes, we will be focusing two minutes on an agricultural report, and also on sports.  Of course, weather will be included.

423              We feel that ten minutes of relevant information, which is not available on any other music station right now, is going to keep people updated.

424              If you are listening in the morning and you are getting music and information, and we are carrying it through midday, and following up in the afternoons, we feel that has pretty well got it covered.

425              COMMISSIONER PATRONE:  I want to ask a quick question about emerging artists.

426              To what degree will you be able to incorporate emerging artists into this particular format?

427              Obviously, you will be talking about older artists, in many cases.  Emerging artists being new, how do you face that challenge?

428              MR. EVANOV:  First of all, the people coming forward with new CDs and new recordings are no longer older.  They are much younger, yet they are singing this type of music.

429              And I will ask Gary, in a moment, to talk about a new Canadian emerging artist who sent music to Afghanistan.

430              Our commitment is probably the highest.  It is 12 percent overall new and emerging artists, and what we are planning to do in Winnipeg is that, when we launch emerging artists, we will not only play the song, but we will do, maybe, a 15, 20, 30‑second bio, or provide some information that is attached to that particular song, so that the audience understands that it's a new song, it's a new singer, and something interesting about it.

431              That will be done for about two to three weeks, and it will rotate as the new ones come in.

432              We have no trouble ‑‑ we have the highest commitment, I believe, of all the applicants for new and emerging, and we do that only because we are getting this input.

433              Gary is going to tell you about one now.  Gary received a phone call ‑‑ and it's a fascinating story.

434              MR. GAMBLE:  About a month ago I received a call from a friend of mine in a local studio in Newmarket.  She said, "Look, I've got this young singer ‑‑ "

435              And we receive a lot of music.  We have a lot of music that comes our way.

436              She said, "You've got to hear this young kid sing."

437              He won the York region talent competition, which is called "The Rising Star Competition", just north of Toronto.

438              So I got a hold of his CD.  I was further told that he had done this song ‑‑ it was around Mother's Day that we received it.  The song is a cover of the Il Divo's "Mama".

439              He sent a few copies ‑‑ I think about 100 copies to Afghanistan, to the troops over there, mothers of Canadian soldiers.  The song was so popular that he ended up sending 5,000 copies of this particular song.

440              I thought, "I have to find out more about this young kid and what it is that he is doing."

441              We interviewed him on the air.  He has not released to the public a song yet.  What got me was, when I heard him, this young kid sounds ‑‑ he is the next Josh Groban.  He should be on Canadian Idol.

442              To top it all off, he is 16 years old.

443              We had him on the air.  He had never recorded anything before, except for this one song, and he is just ecstatic about how well he is being received.

444              This is one young kid, who is 16 years old.  We are going to follow him and help him out as much as we can.

445              MR. EVANOV:  And his name ‑‑ because we have talked about him, we should recognize him ‑‑ his name is Daniel Panetta.

446              COMMISSIONER PATRONE:  I will listen for him.

447              Could you talk a bit about your efforts to monetize new media, and your success as far as that is concerned, as it is directed to that particular platform?

448              MR. EVANOV:  We will start with the internet, obviously.

449              Gary, I think you can elaborate on that, as well.

450              MR. GAMBLE:  Our internet ‑‑ our websites have grown drastically, as with any other internet website, but especially in radio.  People in this day and age are looking for as much information as they can get.

451              Our internet background ‑‑ we consider it a companion of our radio station, a total extension of what it is that we do on the air.

452              Our website will feature local news, as we are reporting it on the air.  Immediately, as soon as we can, we get it on our website.

453              Also, there will be archived stories.  So if you want to check on what it was that we reported on two or three months ago, you will be able to click on the date and find that news story.

454              Along with that are our community events, weather updates to the minute, links to traffic cameras, and, of course, our emerging artist bios and that sort of thing.

455              It is a complete information website, more than just putting up our logo and "Here is what we play," and "Here is the next time you can win a car."  It is more of a direct portal for information, which we will load on there as much as we possibly can.

456              COMMISSIONER PATRONE:  Are you selling ads directly through the web?

457              MS JOSEPH:  I can answer that.

458              We will not sell advertising on the web that will not include an on‑air component.

459              It is obvious that the younger demographic spends a lot more time with the internet than the older demographic.  Having said that, though, the older demographic is certainly using it a lot more than they used to, and it is actually one of the categories that stands out for new business ‑‑ electronics, computers ‑‑ that category.

460              To answer your question, we believe that there will be revenue linked to the internet.  However, it's within our revenue projections.

461              COMMISSIONER PATRONE:  Thank you.  Those are my questions.

462              THE CHAIRPERSON:  Thank you very much, Evanov Communications.

463              MR. McCALLUM:  Mr. Chair, could I ask a question or two?

464              THE CHAIRPERSON:  I'm sorry.  Yes, please, counsel.

465              MR. McCALLUM:  I have a couple of very fast questions, if I may.

466              Your Schedule 5 is your financial plans, and there is a line for over‑and‑above contributions.  I would assume that you would have no difficulty in making the line "Over‑and‑above contributions to Canadian Talent Development" a Condition of Licence, if the Commission wished you to do that?

467              MR. EVANOV:  Yes.

468              MR. McCALLUM:  Thank you.

469              Vis‑à‑vis the Outreach Program for the Winnipeg Symphony, could you explain, first of all, what that initiative is, and where the money for that initiative is going?

470              MR. EVANOV:  I will ask Sean to comment.

471              MR. MOREMAN:  When we spoke with the symphony, we understood that not only do they play music, but they try to engage people in music, which is what they call their Outreach Program.

472              We believe that the money that will be used for the Outreach Program will basically be a forum for them not only to play music for people, but to engage the audience and educate them about the music and that sort of thing.

473              To answer what I presume will be your next question, how does it qualify, we believe that it is part of the promotion of music, and that it will engage people in their performances and encourage them to go and see them.

474              MR. McCALLUM:  If, by chance, the Commission determined that it did not qualify, could you say how you would redirect the money?

475              MR. MOREMAN:  We would have to engage in new conversations with the symphony to see whether they could use the funds in a manner that would qualify, perhaps through the purchase of instruments or another way.

476              And if they were unable to apply the money to ways that qualify, we would redirect it back to FACTOR.

477              MR. McCALLUM:  Thank you.

478              The same question vis‑à‑vis the Canadian Catalogue of Instrumental Music.

479              You may be aware that, in the case of Fairchild, CJVB Richmond, in a decision issued in 2007, the Commission looked at something that was maybe not identical, but similar.  It was the Canadian Association of Ethnic Broadcasters.  The Commission said that the initiative proposed by CJVB Richmond, Fairchild, would not qualify for Canadian Talent Development.

480              Can you say whether your catalogue is similar or different to that initiative?

481              MR. MOREMAN:  Our understanding is that it is different, in both its approach and its purpose.

482              Debra, I believe, will speak more to the differences.

483              Without repeating my answer to Commissioner Katz on the catalogue from before, I will refer you back to the transcript on why we believe that this particular initiative, the Canadian Catalogue of Instrumental Music, qualifies under the policy.

484              MS McLAUGHLIN:  My understanding ‑‑ obviously, I am not privy to the thinking of the Commission in terms of why it disqualified, but my understanding in terms of the catalogue for ethnic music is that it stalled because of limited participation.  There wasn't really the promotion or the response being received.

485              But in terms of the Canadian Catalogue of Instrumental Music, it is actually putting money in artists' pockets.

486              We have people responding, saying they have made sales, they have made contacts.  They now are in talks regarding providing their music, or licensing their music for soundtracks.

487              I would think that that is the goal of the policy, to actually increase opportunities for Canadian artists, and exposure.

488              I am not sure if that track record existed for the Catalogue of Ethnic Music.  I cannot comment on that, but I do know, having spoken with broadcasters who participated in it, that they were somewhat disheartened by the progress in the ethnic music catalogue.

489              MR. McCALLUM:  Thank you.

490              If, by chance, the Commission decided that that initiative did not qualify, how would you redirect the funds?

491              MR. EVANOV:  FACTOR.

492              MR. McCALLUM:  Thank you.

493              Thank you very much, Mr. Chair.

494              THE CHAIRPERSON:  I would like to follow up on one question that I think I asked you a couple of weeks ago in Ottawa, and that is with regard to the third adjacent frequency issues.

495              Should your frequency bump up against that policy, can you confirm that you do recognize that there are some implications there, as well, that may cost some funds, all the way through to, if it can't be rectified, you don't have priority on that frequency?

496              MR. EVANOV:  We have looked at the frequencies.  We have identified three available frequencies in this market that could be used, which would not alter our business plan.  They would be 106.3, 104.7, and then, also, 88.7.

497              MR. MOREMAN:  To answer your question perhaps more directly, Commissioner Katz, we are aware of the policy as it relates to third adjacencies, and we will do everything necessary to rectify those situations, even if it includes moving or fixing it on the frequency we have actually applied for.

498              MR. EVANOV:  I'm sorry, I misunderstood the question.

499              Mr. Chair, before we leave, we would like to read something into the record as part of our presentation, just to wrap up, if that's possible.

500              THE CHAIRPERSON:  Certainly.  By all means.

501              MR. EVANOV:  Thank you.

502              Evanov Communications is a strong, well‑financed broadcaster.  We believe that the proposal we have presented is the best of all the applicants before you.

503              In addition to benefiting the market by introducing diversity of ownership and news voices, as well as the highest levels of Canadian content and new and emerging talent, we believe that licensing ECI's application will benefit the system in the long term by strengthening an independent voice in a crowded radio spectrum.

504              As we told the Commission during the Vancouver hearings in February, ECI needs to become a national broadcaster to remain competitive in the age of consolidated ownership.  Large markets, such as Winnipeg, are integral to the national business strategy.

505              ECI sees the importance of setting stakes in these markets in three distinct ways.

506              Firstly, we would gain critical mass of listeners that would allow us to compete with large broadcasters for increasingly valuable national advertising dollars.

507              Secondly, the spectrum is becoming more and more limited in larger numbers.  In the two largest English markets, Toronto and Vancouver, there are no more frequencies available to be used.

508              As a result, the only way for us to expand will be to purchase assets, which we can only do with the revenues generated through large market revenues.

509              Thirdly, the revenue generated through large market stations will allow us to serve the less lucrative, underserved markets across the country.

510              ECI has the financial means, as well as the desire to plant roots in these markets.  We have competed with the large five corporate broadcasters in Toronto and other large markets, and have overperformed our share in smaller markets.

511              We are able to recognize what our listeners want from their local radio station, and we are prepared to deliver it to the markets across the country.

512              Thank you very much.

513              THE CHAIRPERSON:  Thank you very much.

514              It is 11:10.  We will reconvene at 11:20.

‑‑‑ Upon recessing at 1110 / Suspension à 1110

‑‑‑ Upon resuming at 1125 / Reprise à 1125

515              THE SECRETARY:  We will now proceed with Item 2 on the agenda, which is an application by Newcap Inc. for a licence to operate an English‑language commercial FM radio programming undertaking in Winnipeg.

516              The new station will operate on Frequency 106.3 MHz, Channel 292C1, with an effective radiated power of 100,000 watts, non‑directional antenna, antenna height of 223 metres.

517              Appearing for the Applicant is Rob Steele.

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

519              Thank you.

PRESENTATION / PRÉSENTATION

520              MR. STEELE:  Thank you very much.

521              Good morning, Mr. Chair, Commissioners and Commission Staff.  I am Rob Steele, President and Chief Executive Officer of Newcap Radio.

522              Before we begin our presentation, I would like to introduce our team.

523              Seated to my immediate left is David Murray, Newcap's Chief Operating Officer.

524              Next to David is Randy Skulsky.  Randy is the General Manager of our Winnipeg stations CKJS‑AM and CHNK‑FM, known as Hank FM.

525              Randy has 15 years in radio, all of them here in Winnipeg.

526              Next to Randy is Simone Gillies, the News Director for our Winnipeg station.

527              Simone is a native of Gimli, Manitoba, and a graduate of Red River College's Creative Communications Program.

528              In addition to her work with us, she also has worked with Global News in Winnipeg, as well as in radio sales.

529              Next to Simone is Steve Jones, Newcap's Vice‑President of Programming.

530              To his left is Jen Traplin.  Jen is the afternoon drive announcer of our alternative rock station in Ottawa, Live 88.5, and is involved in the planning and promotion of our CCD initiative known as "The Big Money Shot".

531              We propose to bring that initiative to Winnipeg with this application, and Jen is here to explain the programs.

532              In the second row, to your left, is Glenda Spenrath, Newcap's Director of Operations.

533              Next to Glenda is Scott Broderick, who is Director of our Central Canadian Radio Operations.

534              Beside Scott is Mark Kassof, who conducted research for us into this market.

535              Winnipeg is a very important market for us.  We have invested over $6 million in capital expenses in this market, acquiring an ethnic AM station, CKJS, and a specialty music station, Hank FM.

536              This application represents a substantial increase in our investment in this city.

537              We will inject an additional $1 million in new capital spending in the marketplace.

538              We will also make a significant investment in program spending, with $5 million in program spending over the course of the licence term.

539              We will also make a serious investment in Canadian Content Development of $2.8 million over the next seven years, providing support to the many emerging artists in this community.

540              Our CCD contributions will also fund the development of new Aboriginal journalists in our industry.

541              Our investment will increase our newsroom to five full‑time persons, along with stringers and our network of news gathering in the 18 ethnic groups that we serve.

542              This strengthened newsroom will allow us to provide an enhanced news alternative to the CBC, CTV, Canwest, Corus, Rogers and Astral.

543              I would now like to call upon Randy Skulsky to describe the market of Winnipeg to you.

544              MR. SKULSKY:  Thanks, Rob, and good morning, Commissioners.

545              Winnipeg is an important Canadian centre, with a long cultural, social and economic history as the gateway to the west.

546              Winnipeg is the seventh largest market in the country.  Its population continues to grow at a good pace.  According to Statistics Canada, the CMA population was 694,000 people in 2006.  It is projected to grow to 730,000 by 2012.

547              The population in the city skews younger than the national average, and one of the fastest growing segments of the population is young Aboriginal people.

548              The 2006 census reports that about 10 percent of the population has reported Aboriginal identity.  This is two and a half times the national average.

549              The Manitoba economy has been quite robust over the past few years, and the Conference Board projects GDP increases of 3.4 percent in 2007 and 3.8 percent in 2008.  This strength has been led by significant increases in exports, a substantial increase in farm receipts, and growth in a number of manufacturing sectors.

550              Retail sales have been strong in Winnipeg, and are projected to increase by 21 percent over the next five years.

551              The Winnipeg radio market has shown steady growth in terms of radio revenues, with an average annual growth rate of 5.6 percent between 2002 and 2006.  We are confident that the market can support a new station, particularly one that can rely upon its existing operation to share facilities and back office functions, and, of course, one that has picked a viable format opportunity.

552              MR. JONES:  Mr. Chair and Commissioners, when we started to review this market last May, we commissioned research from Kruger Media and concluded that the format to propose was alternative rock.  That research was conducted over a year ago.

553              Six months later, Mr. Asper commissioned research from the same researcher, and the conclusion was a different kind of alternative format, as I am sure they will outline for you.

554              When these applications were Gazetted and we had a chance to review the only two studies that looked at more than one format, we realized that the opportunity is clearly some kind of alternative format.

555              When we examined the music playlists that we had proposed and that Mr. Asper proposed, we saw that there would be significant overlap.  Many of the core artists would be the same.

556              What would set our station apart is that we will focus exclusively on alternative rock, while the Asper application includes elements of hip hop, rap and pop.

557              In January of this year we commissioned Mark Kassof & Company to do some ongoing research for our existing FM station, Hank FM, to get a sense of how it fit in the market.  In the process, we discovered an opportunity for a classic‑based alternative in Winnipeg.

558              However, this ongoing research wasn't specifically designed to find format opportunities.

559              After the Winnipeg applications were Gazetted, we commissioned additional research from Mr. Kassof, the same type of format‑finder research that we presented in many of our applications.

560              He tested nine formats, including four alternative formats:  Triple A, pop alternative, alternative rock, and classic alternative.  What he found was that the best opportunity for an alternative station was in classic alternative.

561              We took his research and Mr. Kruger's research into account when we decided that our best opportunity was a classic‑based alternative station, devoting about 80 percent of its playlist to the alternative songs that Generation X and Generation Y grew up with, the alternative rock of the eighties and nineties, along with strong support for new music, including local artists and emerging Canadian artists.

562              We also confirmed the format opportunity by looking at various tuning trends in various age groups from BBM.

563              The chart below shows the declines in hours tuned by various age groups, and by gender, from 2005 to 2008, for both Winnipeg and for Canada nationwide.

564              We also checked the hours tuned in each of the demographic groups.  What they show are declines in tuning in almost every group except 45‑plus.

565              The biggest declines in tuning are among 18 to 34 men, the core of an alternative rock station.

566              While women in this group have also declined in tuning, the decline is considerably less than among men.

567              The station we propose, which we are calling Live 106.3, will appeal to a broad alternative rock audience.  Young men and women aged 18 to 34 find both today's alternative rock and the alternative rock of the eighties and nineties of interest.

568              For the generation who were forming their musical tastes in 1990, when a new sound emerged from garages and basements across North America and, in fact, the world, alt rock is their mainstream.

569              While the epicentre of this new sound may have been Seattle, with grunge acts like Pearl Jam and Nirvana, many others came from around the U.S. and the U.K.

570              Canada's contribution to this sound is immense.  In the early 1990s, music critics and fans dubbed Halifax as Seattle of the North.  Moncton's Eric's Trip became the first Canadian act signed to Sub Pop Records, the legendary record label, home to Nirvana, Soundgarden and Mudhoney.

571              While bands like Sloan and Thrush Hermit led the way on the east coast, Econoline Crush, Bif Naked, Crash Test Dummies, and The Watchmen all put Winnipeg's thriving alternative rock scene on the map.

572              This generation loves rock, but they don't find what they want on Winnipeg radio.

573              Over the past two years, the classic‑based alternative format has grown across Canada and in the United States, and is led by successful, classic‑based, alternative stations in Boston, Los Angeles, Philadelphia, Cincinnati, Kingston, and Calgary, where Newcap's Fuel 90.3 is experiencing solid growth.

574              Live 106.3 will derive its music from a number of sources and eras.  Fifteen percent will be classic alternative rock from the late seventies and eighties, with bands like The Clash, The Payola$, U2, The Ramones, The Police and Depeche Mode.

575              Alternative rock acts from the nineties will make up the biggest part of our playlist, at 50 percent.  This includes Nirvana, The Tragically Hip, Weezer, Our Lady Peace, Pearl Jam, The Matthew Good Band, and Stone Temple Pilots.

576              And alternative acts who emerged in the past eight years will make up about 15 percent of the playlist, including bands like Coldplay, The White Stripes, Three Days Grace, and Arcade Fire.

577              The remaining 20 percent of the music we will play will be new releases and emerging artists.  Many of the artists noted above are still making great music.  Every day there are new Canadian and international songs to profile.

578              There is also great music being made by Winnipeg artists like The Weakerthans, The Inward Eye, Hot Live Guys, Quinzy, Sick City and The Details.

579              The Winnipeg Alt Rock scene as many acts that will be natural fits for this station.  We have seen this same trend emerge in Ottawa where our alternative rock station, LiVE 88.5 has played over 100 Ottawa area artists over the past three years.

580              Alternative fans live and breathe new music.  They know the artists and their songs and they are constantly on the lookout for new trends and new bands.  We will meet this need with a full range of speciality programs and with a very active website.

581              On Live 106.3 we will take an aggressive interactive approach, as we do with our alternative rock station in Ottawa, LiVE 88.5, and our Calgary classic alternative station, Fuel 90.3.

582              Using our website, various social networking tools, SMS text messaging and many other aspects of new media we will become completely integrated with our active audience.

583              Here to speak about our CCD is Jen Traplin.

584              MS TRAPLIN:  Before I talk about our CCD initiatives I would like to describe some of the other ways in which we support the local music community and I will speak directly in terms of what we do in Ottawa.

585              LiVE 88.5 currently has a minimum of seven local bands in steady rotation through all day parts.  Each local act receives up to 15 radio spins a week on LiVE 88.5 as well as a heavy promotion for upcoming shows.

586              We also have a daily feature we call the Indie Spotlight which highlights other local musicians who otherwise wouldn't be receiving any radio promotion in Ottawa.  We also have created a strategic alliance with an Ottawa venue called the LiVE Lounge, a music venue in which we are responsible for booking talent and recording live shows.

587              When a band is scheduled to perform with the LiVE Lounge they receive at least two weeks of radio and web promotion, they are paid for each show and they take home recordings of their entire set free of charge.

588              In addition, in Ottawa our major CCD initiative is called the Big Money Shot, in Calgary, it is Big Rock Star.  In both cases working bands and solo musicians perform at music venues.  In Ottawa's case, at the LiVE Lounge, in front of a live audience and a panel of judges.

589              Annually 45 local bands compete in Ottawa and every year 15 of them win at least $5,000 or more.  In Calgary 25 bands compete annually with every single band walking away with at least $1,000.  All prize money in spending is approved by Newcap representatives to ensure the funds are used for the purpose of developing the careers of local musicians.  Funds awarded to the winners are used to provide what is needed for each specific band.

590              For instance, in Ottawa, St. Joe's Mission used some of their $50,000 prize money to develop a USB drive that delivers the latest band info, tour dates and new songs directly to their fans.  Currently, they are negotiating with representatives at Sony for the use of this technology for other Canadian artists.

591              They also recorded a new album with producer Russ Mackie who has worked with Alanis Morisette and Kim Mitchell and they have signed a contract with Indie label Bhurr Records.

592              After winning $40,000 in talent development funds, the members of The Prefect quit their day jobs to become fulltime working musicians.  Currently, they are recording full‑length album with Juno Award Winning producer Gavin Brown.  Gavin has worked with Billy Talent, Three Days Grace, Thornley and The Tea Party.

593              The money has also allowed them to hire one of the country's top radio trackers to work one of their singles in the next few weeks.

594              As well as the extensive support these winning bands receive from Newcap, we also provide them with great opportunities to showcase their talent with performances at HOPE Beach SummerFest in front of 30,000 people, and a Canadian music week where they perform in front of hundreds of industry reps.

595              We propose a Big Money Shot in Winnipeg as well.  Each year we will hold contests over a period of six months at local venues.  Our listeners will then choose the top 10 bands who will each receive $6,000 to advance their careers. The grand champion will receive $100,000 in talent development funds.

596              The band will also have airplay support from Newcap stations across the country, from St. John's to Halifax, Moncton, Fredericton, Ottawa, throughout Alberta and hopefully in Winnipeg.  We have committed $1.12 million over the term of the licence to the Winnipeg Big Money Shot.

597              In all, we propose to contribute $2.8 million for the term of the licence to CCD over and above the basic amount here in Winnipeg.

598              Simone.

599              MS GILLIES:  Before I begin to discuss some of the proposed news components on LiVE FM, I would like to explain how our newsrooms currently operate and in detail how LiVE 106.3 will contribute to create news programming and will provide a fresh alternative to other local news providers.

600              Within our existing stations we have two distinct newsrooms in operation.  Mr. Bob Harris and I worked to produce news on Hank FM providing primarily local news with some reporting on national and international issues.

601              Now, at CKGS we broadcast in several languages other than English.  Filipino director Lito Taruk plays the largest role in CKJS's news programming.  His primary focus for the station is providing relevant news to Winnipeg's almost 40,000 person‑strong Filipino community.

602              However, because of the diversity of the remaining ethnic programming on CKJS, we essentially have 17 other people working in the news department.  They cater to the distinct cultural and ethnic groups in Winnipeg providing not only local content, but community news and information regarding their respective homelands.

603              With Live 106.3's news staff we will employ a news team of five journalists and several stringers.  This gives us the opportunity to better provide coverage of local, provincial and international news.

604              While each station will continue to have its own focus, our capabilities to gather news will be greatly expanded allowing us more overall coverage off issues and more depth in reporting.  News staff will have the ability to tap into existing station resources and ensure a continued connection and sensitivity to the diverse nature of our city.

605              With LiVE's larger news team we will have time to spend in the community provide live in‑person interviews and instant feedback.  As well, by operating 24 hours a day we will have the opportunity to have constant feedback from our audience through text messaging, email and phone.

606              LiVE FM will provide seven hours of newscasts a week with a total of 94 newscasts. The station will provide news in the evenings, Monday to Friday, as well as throughout the day on the weekend with full newscasts at times that many stations either don't have news or are reliant on broadcast news.  In contrast, our news team will be constantly active with 75 per cent of the news we broadcast being locally focused.

607              In addition, we also plan a full range of services to the community throughout the day and evening.  In fact, each night at midnight we are going to offer a special feature, Arrive Home Safe, with information, advice and, most importantly, discounted fares home from Winnipeg clubs, concert halls and other venues.

608              We also offer a unique interactive program we are calling Realtime.  Every Saturday night we will invite listeners to takeover the radio station, talking to us about topics and issues that concern them.  In all, we will provide over 20 hours of spoken word each week.

609              MR. MURRAY:  At the beginning of this presentation Randy mentioned that the fastest growing segment of Winnipeg's population is Aboriginal people.  And Aboriginal youth make up an ever increasing part of this growth, yet there is little reflection of this presence in radio and television, other than on NCI's station.

610              Part of the problem is that we do not have trained staff that can step into jobs in our industry.  For this reason, we propose an annual contribution of $160,000 over a seven‑year licence term.  That money will be used to fund Aboriginal students to follow a two‑year course in broadcasting journalism at Red River College.  We expect that this will support the development of over 50 new young journalists for our industry.

611              As Rob mentioned at the outset, Winnipeg is an important market for Newcap.  We have invested here by acquiring two stations with difficult mandates an ethnic station and a niche speciality service.  We knew going in that we faced a challenge.  We invested in improvements in our technical plant, in our radio facilities and we have expanded service with more service to more ethnic groups and in better programming on Hank FM.  We are ready to devote additional investments in the market.

612              We have examined the market both through analysis of tuning trends and through ongoing surveys using two different research companies.  The conclusion is clear to us, the underserved audience in the market is the 18 to 44 group and particularly 18 to 34.  Within this group tuning by men has fallen significantly.

613              The clear need is for an alternative format that appeals to this group.  And the best format to reach them is a combination of classic alternative and local emerging alternative artists.  We will provide a new music alternative that Winnipeg wants.

614              With three new journalists supported by stringers we will provide a reinforced newsroom with newscasts throughout the day, evenings and weekends.  We are particularly proud of our CCD initiatives that are double the amount proposed by the next closest applicant.  And we are not merely throwing money, but taking an active role to develop both new alternative rock acts with a program that will make a difference in the careers of hundreds of Winnipeg artists and to develop over 50 Aboriginal journalists over the course of the licence term.

615              Newcap knows the Winnipeg market well.  Our AM station, CKJS, serves 18 different ethnic groups every week and we have a good understanding of the concerns of over 20 per cent of the community whose mother tongue is other than English or French.  We believe that we can marry that knowledge with our expertise in providing rock formats across Canada to ensure an excellent station that can reflect the diverse makeup of the City.

616              We would be pleased to reply to your questions.

617              THE CHAIRPERSON:  Thank you very much.

618              Commissioner Menzies is going to lead on this application.

619              COMMISSIONER MENZIES:  Thank you. You mentioned $1 million capital investment that you would make if this application was successful. What would that $1 million build, what would it look like?  It is a capital investment, not an operating investment, right?

620              MR. MURRAY:  Well, most of the money would go towards the technical plant itself, the transmitter and the facilities around that.  We, of course, would need a lot of new studio equipment as well and we are also anticipating that we would have to move from our existing location to new studio facilities.

621              COMMISSIONER MENZIES:  Okay, thank you.  In your research, I know it is a pretty narrow difference, but the research you filed with us said your format had good appeal in the 35 to 44 crowd.  But then you downplayed them in your primary target zone, went with the younger group, I think it was about a 1 per cent difference between the older group and the younger.  And I want to know why you went with basically your one and three, your first and third place audiences, and moved the second down as a lower priority?

622              The reason I am asking is because it is helpful in determining impact on CJKR and CITI.

623              MR. MURRAY:  Right.  I think I will ask Steve Jones to answer that question.  Thank you.

624              MR. JONES:  The alternative format traditionally has its strongest appeal, 18‑34.  It does reach higher than that, it does go up to 44, there is a significant 35‑44 component, especially as that generation we spoke of, that generation that was forming musical taste around the time that the Seattle grunge explosion happened, that group of people is now almost 40.

625              And so there is a significant amount of tuning in that older demographic.  But the core of the format I think remains 18‑34 and that is why we speak probably more about that demographic than we do about the 35‑44.

626              I can address the specific overlap and how that might impact City or Power.  And Power is a unique radio station.  It is a very successful radio station that manages to cover a lot of  different territory from new alternative rock to Eric Clapton's Cocaine and Led Zeplin and AC/DC and it marries all those together in one radio station.  Traditionally, that is a difficult task, but they manage to do it very well.

627              But because they are so broad they are not devoting a lot of their playlist to the classic alternative and new alternative music that we would be playing.  There is some cross‑appeal between classic rock and new rock and they manage to do it, but there definitely is an opportunity for a radio station here focusing strictly on the alternative music and not playing any of the traditional classic rock acts, like the Led Zeplins and AC/DCs and Pink Floyds and Aerosmiths.

628              And our crossover with Power would likely be about 30‑40 per cent and that would be primarily in the new music, the new artists.

629              With City, the crossover is maybe about 5 per cent maximum, it is very small and that is because our format would focus almost exclusively on music from 1990 and newer.  There is only a small component of our music that is pre‑1990.

630              City, being a classic rock station, is based heavily in the 1970s and 1980s, plays a lot of classic rock by bands like Zeplin and Aerosmith and Pink Floyd and other ones we have mentioned.  They only touch on the grunge era and hardly pay any homage to that kind of music and that is because it just doesn't fit their format perfectly.  So the crossover with City would be about 5 per cent and that would be primarily in the Police, REM and the Clash and that kind of thing.

631              COMMISSIONER MENZIES:  Okay, so 5 per cent on City and you said 30‑40 per cent on Power?

632              MR. JONES:  Yes, about that.

633              COMMISSIONER MENZIES:  That is a pretty high percentage.  Can you help us as to how that qualifies as diversity?

634              MR. JONES:  It is a fairly high percentage, but what we are focused on ‑‑ and, sorry, that high percentage is based primarily on that newer music that they are playing.  We are focused exclusively on alternative rock and almost exclusively on classic alternative rock.  And a lot of that classic alternative rock isn't being played consistently on Power.

635              There is a large chunk of music that is not being exposed.  They are playing songs by Nirvana.  But playing Smells Like Team Spirit or Come As You Are is pretty standard at rock radio.  But going deeper into the Nirvana catalogue, going deeper into the Pearl Jam catalogue and other bands like that, that doesn't happen on those radio stations.

636              There is a significant diverse component to what we are offering here and 70 per cent is a fairly significant number.

637              COMMISSIONER MENZIES:  You mentioned in your presentation your radio's application in terms of similarities along those lines.  Do you have similar percentages where you could breakdown in terms of similarity and differences between them?

638              MR. JONES:  Yes.

639              COMMISSIONER MENZIES:  We need to get an understanding of how you are the same as them and how you are different from them and vice versa.

640              MR. JONES:  Absolutely.  It is difficult, because in the application we put forward a three‑hour sample playlist.  And to take two‑three hour snap shots and compare them for exact overlap probably isn't fair.

641              What we did do is looked at the three‑hour sample playlist they provided and the actual playlist on our classic alternative station CFUL in Calgary and compared.  And about 62 per cent of the songs on the YO group's application were being played on our classic alternative.  And those were, again, mainly bands like Pearl Jam and Weezer, Blink‑182, The Cult and Beck.

642              What was substantially different is that the YO application takes a different turn and combines components of hip hop and rap, and I am sure they will have a better grasp on exactly what that entails.  But that is the kind of music that we would simply not focus on.  Exclusively on alternative music.  We don't see the correlation as strong between those two kinds of music.

643              COMMISSIONER MENZIES:  Okay, thank you.  I have a series of specific questions here. You have been pretty good, actually, at answering a couple of my question with one answer so far.  But these next ones, just try to keep reasonably specific on or we will be here all morning. Actually, we have already been here all morning.

644              Now, you have outlined a fairly sharp philosophy for programming.  But this is where we need some specifics on how it applies.  For instance, how will your content be designed to reflect the tastes of an audience that subscribe to an extreme lifestyle?

645              MR. JONES:  Well, the lifestyle is hardly extreme by their standards.  I think it is what you measure it against.

646              COMMISSIONER MENZIES:  But it is the marketing name for it.

647              MR. JONES:  Right.  So how will we reflect that?

648              COMMISSIONER MENZIES:  Yes.

649              MR. JONES:  Our programming on all our stations, again I will keep it brief, reflects the audience thereafter.  The country music audience demands a certain kind of approach and we taken that approach on our country stations to be successful.

650              So with a station like this, in Ottawa for example, we do a lot of promotion that appeal to that kind of listener.  In fact, our motto in Ottawa is "live for the moment" is "live for today."

651              And one of our most successful promotions there is a flyaway promotion called 24 Hours in Vegas where we take a planeload of listeners and we fly to Las Vegas and we don't provide hotel room.  You have 24 hours to live for the moment in Las Vegas and fly home the next day, and accomplish what you can while you are there.

652              It is the kind of for better or for worse, right?

‑‑‑ Laughter / Rires

653              MR. JONES:  And I can't talk about it, because apparently what happens there stays there.

654              COMMISSIONER MENZIES:  Of course.

655              MR. JONES:  But other promotions like that that involve ‑‑

656              COMMISSIONER MENZIES:  Let me be more specific.  How would it influence news, sports, entertainment, surveillance packages, lifestyle, health and education fillers, that sort of thing?

657              MR. JONES:  Really, it influences everything we do.  We have to put everything we do through that filter.  So while the news stories on Hank FM may focus one direction, the news stories on this station would focus on another.

658              And maybe, Simone, you are best qualified to answer that question.

659              MS GILLIES:  Yes.  We are looking at having our news be different from other stations by providing news that targets and identifies with our target demographic, which is a younger demographic.

660              News being reported on other stations, however, it is not necessarily ‑‑ the news now is not necessarily reflecting the interests of this younger demographic.  For instance, if you were looking at gang violence in the city it affects everybody, it affects young and old.

661              But our demographic might be more interested in knowing who gang violence is affecting people in clubs or whether they are going to go downtown, in the downtown area, rather than how it is affecting, you know, a homeowner in St. Vital.

662              COMMISSIONER MENZIES:  Are there any specific challenges that building your content around this type of audience ‑‑ are there any specific challenges you face by doing that?

663              MR. JONES:  I don't think the challenges in this demographic are any different than they are in ‑‑ they are different challenges, they are no more difficult than they are with any other demographic.  You put yourself in that mindset, you have a keen understanding of who you are speaking to and a keen understanding of the issues that affect them locally and you go forward with that in mind.  And the challenges are there, but they are no more difficult to overcome than they would be for any other specific.

664              COMMISSIONER MENZIES:  Okay. If you are trying to build something edgy that means you get toward the edge on things.  So what sort of safeguards do you have in place to make sure you don't fall over the edge?

665              MR. JONES:  Well, it goes back to educating your staff, to understand what the target of the radio station is and what the mission of the station is.  You know, with on‑air interaction it would involve recording listeners who call in and not taking live calls, you know, on the air.  And it really does go back to understanding your audience and understanding your market.

666              COMMISSIONER MENZIES:  So your interactive content won't be live?

667              MR. JONES:  I am saying if someone calls into the radio station to request a song you would probably record that call and play it back in between two songs as opposed to taking that call live on the air.

668              COMMISSIONER MENZIES:  Okay.  And you are going to use online content on the air as well?

669              MR. JONES:  Absolutely, online content is completely integrated with a radio station like this, yes.

670              COMMISSIONER MENZIES:  Is there anything traditional about your newsgathering format or is it non‑traditional?

671              MS GILLIES:  We are going to be using text messaging, online, email, all the latest technologies that are, you know, kind of a platform for the generation and the target demographic for the station.  So we are hoping to get response and feedback from our listeners and make them a part, give them a voice, make this forum for them to discuss topics.

672              It will be traditional newsgathering.  We will be adding three fulltime reporters.  We are going to use Hank FM's ‑‑ myself and Bob Harris as well, to create a five‑person new steam with a news director sending us out, going out and reporting on different stories, assigning stories.  And then we will come back, reconvene and split the news essentially between the two stations for what is appropriate for each station.

673              Obviously, people how are listening to Pearl Jam and Depeche Mode will have a different interest than people who are listening to Hank Williams Jr. and Carrie Underwood.

674              COMMISSIONER MENZIES:  Okay, thank you.  Can you explain the transition of your scholarship program, how it was originally in your written application and then in your clarification response it went from 20 students to 8, for instance.

675              MR. MURRAY:  Yes.  I am going to ask Glenda Spenrath to answer that question.

676              MS SPENRATH:  Yes.  When we initially put the application together and we contacted the college we came out with a general amount that would be, you know, appropriate and serve their purposes and fulfil their needs.

677              When we returned later to flesh out the details of how we could precisely put the scholarships together, it was felt that ‑‑ and in discussions with the dean of that college as well as other Aboriginal industry people that I discussed ‑‑ that providing these scholarships alone would not help these students to get through the program.  It was more another challenge that they have as being able to afford to leave home to move into Winnipeg to take the classes.

678              So it was felt that more of a full scholarship would enable the students to enter and continue through and finish the program.  So in that regard we decided to reduce the number of scholarships to provide larger scholarships to make it a full coverage for the students.  And again, this was in consultation with the people from Red River College.

679              COMMISSIONER MENZIES:  Okay, thank you.  Are those one‑year or two‑year scholarships? Are the students supported, once they are selected, are they supported for one year and then have to reapply for a second year or when they are accepted do they get pushed right through?

680              MS SPENRATH:  They would be one‑year scholarships, but they would be open to either entering students or returning students.

681              COMMISSIONER MENZIES:  Okay.  And how is the funding administered and how are the recipients selected?  Who is going to do that?

682              MS SPENRATH:  On the second part of your question, on how the recipients will be selected, that will be something that we will discuss with the college, but it would be the college representatives that would do the selecting, because they understand the requirements of the program and the criteria as far as the administration of the scholarship goes.

683              The details haven't been finalized.  It would be myself dealing with the college on that.  I envision that probably I would recommend setting up a trust account because it is a very large amount when you take a look at the term of the licence.  We are talking about $1.12 million going towards these Aboriginal students, so it is substantial.  And so I think if we had a trust account set up that, between ourselves and the college, that we administer and disperse the funds throughout the program.

684              COMMISSIONER MENZIES:  Okay, so you would just send the college the money and then the students would apply to the college and..?

685              MS SPENRATH:  Well, we would be putting money into the account and the students would apply.  The college would consult us and advise us as to who the candidates are.  I mean, I need to know that all of the expenditures are qualifying.

686              COMMISSIONER MENZIES:  Right.

687              MS SPENRATH:  And so we would have the student submit a budge and review the budget in advance so that we have an opportunity to make sure that they are going to be qualifying expenses.

688              And then typically the expending of the funds would be direct to ‑‑ primarily, as much as we can ‑‑ direct to the supplier, whether that be the college for the tuition, whether that be to the college for the room and board of the dormitory or whether it be for rent or for laptop or any other books or equipment, as much as possible our expenditures would be to the supplier from the account.

689              And we would keep track, per student, on the expenditures so that we know that we have reached the total individual scholarship amount.  And then there would also be a per diem living allowance as well.

690              COMMISSIONER MENZIES:  Okay, thank you.  If your application was successful, would you accept this over and above program as a condition of licence?

691              MS SPENRATH:  I am not sure if I understand the question.

692              COMMISSIONER MENZIES:  Would you accept having your dedication to this program being written in as a condition of licence?

693              MS SPENRATH:  If it counts as qualifying CCD, yes.

694              COMMISSIONER MENZIES:  Thank you. You touched on this a little bit, but it is a pretty health city in terms of steady economic growth, but not sort of a universally vibrant advertising market.  What convinces you that your impact on Power and City will be as small as you predict?  I think it was one point that you predicted on each of them.

695              MR. MURRAY:  You talking about 1 per cent audience or I don't quite understand.

696              COMMISSIONER MENZIES:  I think that is what I have, just let me check.  Yes, you have ‑‑ yes, audience share.

697              MR. MURRAY:  Steve.

698              COMMISSIONER MENZIES:  You have City at 12.5 share before launch and 11.5 after.

699              MR. JONES:  Yes.  We impact City I think rather minimally.  City's a classic rock radio station rooted in the 1970s and 1980s, the music is based on heritage artists like Rush and Led Zeplin and Pink Floyd and Aerosmith and our listeners really are looking for a different sound than that.  So the impact, although they are rock stations, the impact is relatively small.

700              And the impact on Power, again, Power as I mentioned earlier is a very very broad radio station and, you know, they are able to be that because they don't have any kind of competition for that audience.  They will need to focus their radio station if there is another competitor licensed in this market.

701              And so our impact ‑‑ they will be able to maintain a strong audience, a very healthy share.  At the same time we will, we believe, you know, gain a fairly reasonable share as well.

702              COMMISSIONER MENZIES:  But if you have got a 30‑40 per cent crossover in playlists ‑‑

703              MR. JONES:  I prefer to think of it as a 60‑70 per cent unique playlist, but...

704              COMMISSIONER MENZIES:  Well, just help me understand how you arrived at the two points for Power.  I can understand one point, with the 5 per cent crossover with City, I just need to understand more about how you come to two points with the 30‑40 per cent crossover.

705              MR. JONES:  Right.  And I think the best answer I can give you on that is that they focus their radio station and they will maintain a strong audience.  They are a heritage radio station with far more elements going for it than just music.  A radio station needs a lot more than just a music playlist to be successful.  So they will continue to be a very strong radio station after we launch.

706              COMMISSIONER MENZIES:  Okay, thank you.  In terms of advertising, according to the TRAM report, radio advertising in Winnipeg has fallen.  Can you explain that?  Is it a negative bubble or is it a trend?

707              MR. MURRAY:  I think it is clearly just a trend.  Now, if you look at the last five years it has grown by I think 5 per cent per year, so quite often you see the ups and downs in markets.  And, you know, Montreal is down as well and I think Ottawa has minimal growth, you know, and that growth moves around the country, you know, from time to time.  So I would say it is just a trend.

708              COMMISSIONER MENZIES:  I suppose you wouldn't be here if you thought otherwise.

709              MR. MURRAY:  Well, no.  I think the answer to that question is we would be here anyway.

‑‑‑ Laughter / Rires

710              MR. MURRAY:  We certainly believe in the long‑term potential of Winnipeg.  You know, you have 700,000 people, you have the $8.5 billion in retail sales and projected to grow 21 per cent. So, you know, Winnipeg is going to be very healthy and a great market to do business in.

711              COMMISSIONER MENZIES:  Would your business plan stand up if we licensed say, as indicated in the previous conversation, handed out two new licences plus a Native Type B or is your business plan built on a different expectation?

712              MR. MURRAY:  Right.  Our business plan, it assumes you would probably licence two.  We were aware of a couple of frequencies being available.  I would like just to say a little bit about those frequencies though.

713              Like the question of frequencies is an important one and, you know, 106.3 is a C class, full‑power frequency, it would provide full coverage to basically everybody in the coverage area.  And 104.7 is an option, that it is limited in power and height and would not necessarily provide reliable coverage to everyone in Winnipeg.

714              We have experience right now operating Hank FM on a low‑power frequency and, you know, we felt that we have suffered on revenue growth on that basis.  So 104.7, rather than 106.3, could dramatically affect our business plan.  I think we have said that in our deficiency.

715              But if you are asking sort of how many ‑‑ you know, are we comfortable that two licences could be approved ‑‑ like you said, Winnipeg is a bit of a mysterious market in that, you know, 700,000 people, retail sales of $8.5 billion, and with only $35 million in radio revenue it is certainly much lower per capita than other cities that we operate in like Edmonton and Calgary, Edmonton with $82 million, Calgary with $96 million.  You know, we are not quite sure why this is, but it is real and it is also supported low impeded margins.

716              So when you look at the financial results for the market ‑‑ having said this, Newcap believes that in the long‑term the market can sustain two new licences.  However, what the statistics might be suggesting is that you should be careful in licensing independent operators.

717              In 2002 the Commission licensed two independent operators for Winnipeg, one of them was CKVN‑FM and it struggled significantly. Eventually, we purchased that station and it became Hank FM.  And, as I suggested, we are still struggling with that.

718              But we have approval now to increase its power, the speciality licence is still a little bit of a challenge but, you know, we are committed to continuing to provide service, you know, just like we did in Newfoundland and Charlottetown where we lost millions of dollars for many years, we stuck with it until we found a solution and kept going.

719              The second licence that was approved in 2002 to an independent operator was a smooth jazz licence licensed to the Asper Family. And even with the synergies and power of Canwest Global they also struggled financially and ended up selling that to Corus in 2007.  Newcap was also in on the bidding for that station so, you know, we are aware of what their financials were.

720              So in summary, we believe that our application is the best use of 106.3.  And with the synergies, you know, provided by two existing stations in Winnipeg and also the support of a national radio company, listeners will be well served for many years.

721              COMMISSIONER MENZIES:  I kind of served you a fat pitch there, didn't I?

722              MR. MURRAY:  Thank you.

‑‑‑ Laughter / Rires

723              MR. MURRAY:  Did that seem contrived?

724              COMMISSIONER MENZIES:  Just to clarify.  What percentage do you see being shaved off your business plan if 104 was the only one available?

725              MR. MURRAY:  Twenty to 30 per cent.

726              COMMISSIONER MENZIES:  Okay.  And just on independent, I mean, did you have anything to support that beyond just these two incidents?  I mean, it could be argued that the format on the smooth jazz was the issue, not independent local ownership.  I mean, independent local ownership, one would think, would have its appeals in some areas, it would have its plusses, maybe it has its minuses, but it would have its plusses too.

727              What I need is maybe a little bit more to go on than just these two local incidents. Is it a trend across the country that you are trying to point us to or..?

728              MR. MURRAY:  No, not at all.  I think what I am suggesting is that Winnipeg, you know, with 20 some radio stations, 700,000 people and only $35 million in revenue just seems very odd to us.

729              We don't know, you know, we can't really tell you why that is but, you know, we do see, you know, Calgary growing sometimes at double digit rates and everything growing rapidly.  Vancouver and Toronto and Montreal and Ottawa, Winnipeg just seems to be very slow to grow.

730              Now, like I say, we strongly believe in Winnipeg and we know we can do a good job for listeners here, but we are just throwing that caution up.  We also recognize that, you know, diversity and ownership is something that the Commission values.  So that is ‑‑

731              COMMISSIONER MENZIES:  Okay, but is it just that all the bigger companies can easily gang up on a small independent or is there something else ‑‑ some hard data reason for it, or is it just that's been the experience in Winnipeg?

732              MR. MURRAY:  Yeah, I think, I don't know.  Perhaps Randy could talk a little bit about, you know, the competition that he's feeling in Winnipeg in that regard, but there's nothing that we can put our ‑‑ we don't have any research or statistics that would tell us exactly why that exists.

733              COMMISSIONER MENZIES:  Okay, that's good enough.  That's what I needed.

734              What would you do ‑‑ well, let me skip to this.  Your programming expenses are higher than YO's but several points lower than Evanov's, I think 1.25‑million over seven years.

735              What explains the difference in that area.

736              MR. MURRAY:  I think I'll hand this to Glenda to talk about how our programming is built.  I don't think we can comment too much, we don't have a lot of detail on the other applicants other than just the raw numbers.

737              COMMISSIONER MENZIES:  Yeah.

738              MR. MURRAY:  So, you know, we know we've invested significantly in programming in this market and, Glenda, perhaps you could give some of the details of that.

739              MS SPENRATH:  Yes.  I can't speak to how Evanov's numbers were derived, however I do know that our numbers are based on our experience, not only with our stations here in Winnipeg, but with all of our stations, we know that it takes a certain number of people to operate a programming department.  We're looking in this case at a staff of 14 in total, three in the news, nine in programming and then part time as well, so the equivalent of 14.

740              And, in addition, there's all the other trappings that go with the programming department, yeah, having the vehicles, the promotion, you know, having some of the programming features that we may purchase from time to time.

741              So, I mean for ours it was more based on our experience in operating our stations and the salaries and the people that are involved in that.

742              COMMISSIONER MENZIES:  Okay.  And just wanted to ask, when you said in your presentation that in Ottawa LIVE 88.5 has played over a hundred Ottawa area artists over the past three years, then you went on to talk about sort of how much play.

743              In that instance in Ottawa, is that part of your CCD initiative?

744              MS TRAPLIN:  Absolutely.  It is part of the CCD initiative, it's part of the ‑‑ the overall package that these winning bands in the Big Money Shot will receive.

745              They're guaranteed radio play not only in Ottawa, but on other Newcap stations as well.

746              And it's also not just the competing bands, it's local bands that we have booked for shows at the Live Lounge, the venue which we promote and we help operate.

747              So, we've had ‑‑ in the past we've been running the Big Money Shot, we're in our third year now, so already we've seen just under a hundred competitors and on top of that have had a dozen more local bands who have not been in the competition as of yet who are also receiving radio air play based on the shows that we book for them.

748              COMMISSIONER MENZIES:  Okay.  And who's going to be the next big hit band out of Winnipeg?

749              MS TRAPLIN:  Out of Winnipeg?

750              COMMISSIONER MENZIES:  Yeah.

751              MS TRAPLIN:  Hard to say.

752              MR. JONES:  There are a lot of really good candidates.  Winnipeg has a great rock scene.  There's a band called The Mission Light.  We mentioned in our opening statement a variety of live bands.  The Quinzy, the Hot Live Guys.

753              There's a great alternative rock scene here and I think that if we're licensed, we'll help you catalyst to ‑‑ Winnipeg's an amazing town, and not to buy up more time.

754              COMMISSIONER MENZIES:  It's got a great tradition for that.  I'm wondering who the next big one would be.

755              MR. JONES:  It's an incredible city for creating new music.

756              COMMISSIONER MENZIES:  According to Ron Evans, 25 per cent of Manitoba's youth population under 15 is Aboriginal.

757              Now, you spoke about some of your commitment and the Aboriginal student's fund in journalism at Red River College.

758              Do you see these students becoming part of your staff down the road and have you created any internship opportunities for them as part of this?

759              MR. MURRAY:  Yes, we certainly hope that they will become part of our staff and an intern program will be part of our initiative.

760              COMMISSIONER MENZIES:  Okay.  How do you see that demographic trend forming your programming and your business plan in the years to come?

761              MR. JONES:  I think as far as our programming goes, it's important as we started out with in this line of questioning earlier which is that you recognize who your audience is and who your community is and how to reach them.

762              The issues that that growing group of people are faced with and how those issues impact the rest of the community would certainly impact our programming as far as our news selection, as far as the kind of stories we're able to talk about.

763              The challenges or problems they face, if there's things we can do as a radio station to be involved in various solutions to those problems and challenges.  There's a lot we can do from a content point of view, from a publicity point of view, from a public service point of view to help communicate with that group of listeners.

764              As far as our business plan, I don't know if I can comment on that.

765              MR. BRODERICK:  I think just as an example one of the best prediction of future behaviour is past behaviour.

766              In Ottawa we have access to just a wonderful asset in terms of the students at Algonquin College in the broadcast program there,and so ‑‑ and whether this is popular thinking or not, I mean, rather than have internships, we prefer to pay them.

767              So, our street team, so while they're going to school they work part time for the radio station.  We give them training.  Some of them actually will host programs while going to school, usually late at night, we don't give them a morning show right out of the gate.

768              But I think we've had a lot of success, and then we place those people in other Newcap stations.  We just placed a producer in Thunder Bay.  There's a young man working here in Winnipeg that came through that program.  We just placed here with Hank FM.

769              So, we've had a lot of success doing that, not as much as an internship, but actual paid work while going to school.

770              COMMISSIONER MENZIES:  But I assumed that there would be some pay with the internship.

771              MR. BRODERICK:  Generally, no.

772              COMMISSIONER MENZIES:  But is that part of your ‑‑ okay.  At least we cleared that up.

773              So, would you ‑‑ let me put it this way.  Would you see those students working part time for your station and eventually full time, in terms of it's one thing to plant the seed and it's another thing to reap the harvest, right.

774              And I'm assuming that you're going to be doing that.  But, if you're not, let me know.

775              MR. SKULSKY:  Recently we just had an intern from Red River College come and work with us in the past three months in the sales department, promotions, in creative.

776              We've gone back to him because we now have a sales position available and asked him if he would be interested in applying because we found that he would be a valuable asset to our team.

777              So, from the internship we now see that we can bring him into the sales department.

778              COMMISSIONER MENZIES:  Do you see that, like that demographic trend being reflected in your staffing, say 10 years from now?

779              MR. SKULSKY:  Yes, I believe we would continue to do that.

780              COMMISSIONER MENZIES:  I'm not asking for a sort of condition of licence, I'm just trying to get a sense of your ability to adapt to the community's needs.

781              MR. SKULSKY:  Absolutely.  Presently we have three Aboriginal people on our staff, so if the need is there, is the opportunity is there, absolutely we will.

782              COMMISSIONER MENZIES:  Sorry, how big is your staff?

783              MR. SKULSKY:  We have 30 full time.  We have an additional 20 part time, and then we have our ethnic producers which are a volunteer base.

784              So, we have, if you put them all together, a staff of around 76 for both radio stations.

785              COMMISSIONER MENZIES:  Okay, thank you.  That concludes my questions.

786              THE CHAIRPERSON:  Thank you.

787              Commissioner Patrone.

788              COMMISSIONER PATRONE:  Thank you, Mr. Chair.

789              Good afternoon.

790              I want to start with an economic question.  You spoke about being slightly perplexed about the relatively modest growth of the ad market in Winnipeg relative to other markets.

791              What has your research found about being able to derive advertising revenue from the targeted demographic that listens to this particular type of format.

792              MR. MURRAY:  I think I'm going to start, ask Glenda Spenrath to start the answer to, you know, where our revenues coming from sort of thing, and then Randy will, you know, add some colour to that as well.

793              MS SPENRATH:  I guess from, you know, the pure mechanical point of view when we take a look at what kind of revenues we could possibly generate out of a market we start first, I guess, with a bottom‑up approach.  We take a look at what inventory we have available to us, what our experience has been in launching stations as far as what we could realistically ‑‑ the volume that we could sell in our initial years.

794              And from there discussing with the general manager in this market, for example, discussing with ‑‑ what an appropriate rate would be, given that we have no ratings and given that, you know, that it is an entry level station.

795              From there, you know, the math tells us that we can ‑‑ we can reasonably expect to maybe $1.9‑million in revenue.

796              From that again we take a top‑down approach afterwards where we would take a look at other market indicators.  Retail sales for example in this market are $8.5‑billion in 2008, I think 9.2 is expected in 2009.

797              So, that would give us, based on industry standards and what happens, a certain portion would be ‑‑ would naturally go to the radio market from that.

798              Based on the market research we've done, we expect to get, you know, a five, six market share which again would give us a certain portion of the pie.

799              Both of these happen to bring us to the same point which is always good.

800              From there we look for other corroborating sources of information.  We look at like  the Conference Board of Canada, they tell us that the revenues should grow ‑‑ the retail market should grow over the next five years in this market by approximately five per cent per year.

801              If you look at where the retail sales are now, the incremental growth alone would give another half billion dollars in revenues to this market.

802              And our share of that, based on historical trends in radio, would been that there's available another $1.8‑million for radio advertising.

803              As far as how we go and make ‑‑ how we expect to generate that considering that our audience is 18 to 34, which I think is really your question there.

804              COMMISSIONER PATRONE:  Mm‑hmm.

805              MS SPENRATH:  I'll maybe have Scott speak to that aspect.

806              MR. BRODERICK:  I think that really was what you were asking, right, it wasn't the amount ‑‑

807              COMMISSIONER PATRONE:  It was, yes.  Go ahead.

808              MR. BRODERICK:  It was specifically that demographic.

809              COMMISSIONER PATRONE:  Yes.

810              MR. BRODERICK:  And I think that we have some experience selling this demographic.  Both of our stations in Ottawa are youth targeted, one is a CHR station, one is an alternative and we've gone from almost ‑‑ well, zero revenue in five years to close to $10‑million this year.

811              And the story that we tell is really ‑‑ because people say, oh they have no money.  Why would I advertise with you, they have no money.  And our answer is, that's because they spent it.

812              But the good news is they get paid this Friday and they will spend it again.

813              And, so, it's really knowing which advertisers to talk to because these people do have money and they spend it and, in fact, it's the first generation that has negative savings, minus three per cent savings.

814              And, you know, they're not afraid of debt whatsoever.  So, they are a more attractive group than first glance would provide.

815              COMMISSIONER PATRONE:  You spoke a little bit about realizing some synergies between your other properties.

816              Can you talk a little bit about those savings, how you intend to realize those savings and would it be possible for you to re‑invest any savings back into programming?

817              MS SPENRATH:  We do experience synergies.  The synergies are typically in the areas of the technical and administration, not so much sales because sales is variable.  At this point in time I think we're probably re‑investing all of those synergies into our existing stations based on their results today.

818              But the synergies that we would expect to enjoy have been built into schedule 7.1 and 7.2 already.

819              COMMISSIONER PATRONE:  Will there be any back and forth interchange of reporters as far as the news team is concerned?

820              MS GILLIES:  Yes.  We are planning on hiring three more that would make three plus Bob Harris and myself.  We're going to split the responsibilities for going out and collecting news between the five, come back and spend time discussing which report would applicable for either station.

821              It just gives us more resources at this time, there are just two of us there.  It doesn't give us enough opportunity to get out and collect stories as much as I would like to.

822              I'm a recent graduate of the creative communications program, so I certainly would love to get out.

823              COMMISSIONER PATRONE:  So, they're filing to all radio stations, all Newcap stations?

824              MS GILLIES:  Well, we file within the three.  The two FM stations and, as well, if there were international stories or stories within the ethnic community that are being reported on CKGS, certainly those would be made available to the two FM stations as well.

825              COMMISSIONER PATRONE:  And would Newcap stations outside the region also have access to those items, assuming there was some national interest?

826              MR. MURRAY:  Yes.  I think you've heard us say at other hearings that, you know, all of our stations use KLZ News System, so we ‑‑ all of our stories are posted on somewhat of a bulletin board on the Intranet and all of our stations across the country have access to them.

827              Now, radio being a very locally focused business ‑‑

828              COMMISSIONER PATRONE:  Mm‑hmm.

829              MR. MURRAY:  ‑‑ you know, we're not sharing a whole lot of stories on the local side, but if somebody has a particular interest or spin on a national or international story, then that would be available to all of our stations.

830              COMMISSIONER PATRONE:  Right.  So, if there was a story in Winnipeg that had an impact on someone in Halifax, then...

831              MR. MURRAY:  Absolutely.

832              COMMISSIONER PATRONE:  Q104 could access that story.

833              MR. MURRAY:  That's right.  And our news people would ‑‑ you know, are well aware of, you know, where we are in our station.

834              So, if they see that, they would also contact Halifax and say, you know, we've got this great story that we know you're going to be interested in.

835              COMMISSIONER PATRONE:  I'd like you to tell me a little more about the Aboriginal journalism program.

836              Was Newcap in contact with the Aboriginal population in regard to developing this program?  How did that come about?

837              MS SPENRATH:  Well, I have been in contact with a fellow from the National Aboriginal Recording Industry Association and I basically, unsolicited, I just gave him a call and asked, you know, what it is that is needed, you know, please tell me.

838              And we had a good conversation and what came out of the conversation was that we need an opportunity to help ourselves and to be able to just throw money at us and without training, it does nothing for us.

839              And, so it come out of basically my discussions with him, with Curtis and they said, you know, like if we can get to the point where we can start training our own people, that would be fantastic, but first of all we need to get the initial people trained.

840              Another discussion that we have had with some of our Thunder Bay people is that we've had a couple of organizations ask if they could come and have their people job shadow and just come and learn about our practices and our jobs from just coming in and watching.

841              COMMISSIONER PATRONE:  That was my next question as to whether or not Newcap will be able to apply a more hands‑on approach apart from funding a program like this as far as incorporating Aboriginal journalists, young journalists into their news operations.

842              MS SPENRATH:  Yes, and it's something we've been doing for quite some time in other areas.  Like I think over to Alberta where I live and we routinely have people in from the Aboriginal communities to job shadow.

843              We also bring schools in, Aboriginal schools in for tours and we sit down and have discussions with them about careers in broadcasting.

844              MR. BRODERICK:  If I could just add further to Commissioner Menzies' question, I think they relate, which is we're going to have to compete for these people, like I said, because I think that they're going to be sought after.  I mean, they'll be young talented people with a great education, graduating.  We compete with all the other broadcasters.

845              So, as opposed to us making room for them, I see it a little differently, I see we're going to have to compete for these people because I think that they're going to have a lot of options available to them.

846              COMMISSIONER PATRONE:  A question about the music choices.  You spoke about Newcap's commitment to play more album tracks than, say, perhaps other stations.

847              How are these other album tracks chosen, is there one individual who makes that call or is it a corporate decision?

848              MR. JONES:  Very few of our programming decisions are made corporately.  Our company's very much on the local level.

849              These are ‑‑ the people who work in the community we serve know the market best.  So, the music decisions are made in local music meetings, the music director, the program director often times there are producers.  We really do have a very kind of collaborative approach to the music meeting.

850              The people who know the target best and know what we're trying to accomplish get together, decide what songs are added each week.

851              For the Gold Library and we talked about some of the album cuts or maybe ‑‑ you know, more deeper cuts by these bands, we do a significant amount of investing in music research in every market we serve, especially in major competitive markets like this.

852              We do ongoing music testing and call‑out style research that allows us to get a better handle on what songs from the past remain popular today, because a hit sometimes 20 years later doesn't taste quite as good, but certain songs taste even better.

853              COMMISSIONER PATRONE:  My last question.

854              Have you been able to monetize Newcap's websites in other markets and to what degree do you anticipate being able to do so here?

855              MR. JONES:  Just to start with, our online strategy corporately is pretty aggressive and on radio stations that target a younger listener, it's not even a matter of thinking of the Internet or new media as something separate.

856              For these younger listeners who grew up with this technology, turning on the computer and firing up the Internet is as second nature as taking a deep breath of fresh air, it's just what happens when you get up each morning.

857              So, we try to look at it like that and make sure that what we're doing is reaching those people, using the latest technologies, integrating what we do into the website, streaming our signal, you know, just taking advantage of it at every turn to serve the audience.

858              Now, there are opportunities where that can be monetized.  To date it hasn't been extremely significant, but Glenda can probably address, or Scott can address how we're attempting to do that.

859              MR. BRODERICK:  Yeah.  I think that one of the interesting things, I was just on a panel last week at Algonquin, there was a publisher of the Ottawa Citizen, myself and then the general manager for CTV Ottawa, and that was one of the questions that was asked there.

860              And the truth is, of all those three major media, none of us have yet to really significantly monetize it, and my fear is that it's going to be a difficult proposition because there's not new consumers avail ‑‑ there's new media and as Steve mentioned, I mean.  So, we're going to use these tools, we're going to develop relationships with our listeners, but they're still the exact same consumer.

861              So, I think that it's going to be difficult for all of the media.  To suggest that somehow there's new revenue opportunities for the advertisers when it's the same consumer, we're just finding new ways to interact with them and I think that that's going to be the challenge.

862              Where we have monetized is with text messaging.  We've registered three short codes, two in Ottawa specifically for those radio stations and that is a preferred method of communication with a younger gener ‑‑ they would rather text you than call you.

863              And, so, we've ‑‑ for generations we said, phone us, phone us.  Well, they'd rather text us.  And, so, we have been able to monetize that.  And I see some potential there as far as the websites, say, minimal banner, that sort of thing and not a lot different than what the newspaper and television people are going through right now.

864              COMMISSIONER PATRONE:  So, you're not selling ads directly to the web?

865              MR. BRODERICK:  Not as a separate...

866              We've just recently reclaimed, but we were on a national basis but, frankly, it was ‑‑ it was an eye opening experience where GM in 2006 bought 72 weeks worth of radio.  In 2007 they bought six weeks worth of radio, but in 2007, they had a front page banner on our website for the entire year.

867              And that was sort of a bell weather for us and so we reclaimed that inventory just recently, we put it in the hands of our local sales people as a tool that they can use on behalf of the local clients since 80 per cent of our revenues come from local sources.

868              So, we would be sort of usurping our own efforts and the efforts of our clients by separating that inventory and allowing separate access.

869              So, that's a decision we've just come to this year after, frankly, some eye opening experiences last year.

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

871              Mr. Chairman.

872              THE CHAIRPERSON:  Thank you.

873              I've got a few questions as well.

874              Just picking up on this topic of text messaging and SMS, how do you validate when something comes across, the accuracy of the information that's being sent to you by some of these people?

875              MR. JONES:  If you're thinking from a news point of view, if a news tip came in ‑‑

876              THE CHAIRPERSON:  Yes.

877              MR. JONES:  ‑‑ via SMS text messaging?  I think the responsibility falls back on us to make sure that we treat that as a lead and not a story.

878              If we receive a tip that a building is on fire, the responsibility comes back on the journalist to make sure that's actually happening and not to go on the air and report it.

879              THE CHAIRPERSON:  Okay.  I want to spend a few minutes on your economic and financial data, and I believe I had heard Ms Spenrath talk about the derivation of the market share statistics in getting to six per cent, but I also notice that you have the six per cent running flat across all seven years.  Was that an art or a science that you came to that number?

880              MR. JONES:  The 6 percent audience share, as in previous applications, we don't believe that when you bring a new service to a market that it takes seven years to necessarily achieve a significant audience.  If you are bringing a new service to a market that's hungry for that service you can achieve your ratings projections relatively quickly and sustain them give or take with some up books and some down books over the course of seven years.  So that's why we project that to be steady across that period.

881              MR. MURRAY:  If I could just add, I mean those 6 percent shares are average annual shares.  There is four books a year in a city like Winnipeg.  So you know you are going to have ups and downs all the time.

882              But when you launch and you spend, you know, several hundred thousand dollars making that initial additional launch and you are out telling everybody about it, the share comes immediately.  That has been our experience.

883              THE CHAIRPERSON:  Okay.  So then when I look at your financial projections and I notice, as you have indicated, your strong commitment to CCD, Canadian Talent Development, of $2.8 million but I also look across your seven years and your net income over the seven‑year period is negative and doesn't seem to breakeven until, based on this trend, until probably year 10 or 11 or 12.

884              It sort of strikes me as odd that you would go into a business that wouldn't see accumulative breakeven until year 10 or 12 based on this data and yet you have got strong, strong commitments to Canadian talent and to programming as well.

885              MR. MURRAY:  Right.  Clearly, you know, we believe that our projections are somewhat conservative.  We hope to do better than this.  However, we certainly would not compromise any of our commitments.

886              As you have indicated, you know, if you add up the seven years we are operating seven years at a loss, but we run our business on cash flow and this is projecting to be cash flow neutral at year three and then continuing from there.  So we are fairly happy with a $300 or $400,000 positive cash flow in year seven and growing from that period on.

887              I hope that answers your question.  I mean, it's what ‑‑ it is what it is.

888              THE CHAIRPERSON:  All right.

889              Some people think they are very aggressive and you are obviously looking at the first couple of years very aggressively, which is why you are digging a hole for yourself but it's taking a long time to come out of it.  And that's your decision and your business plan, obviously, as well.  I would imagine that given the size and scope of Newcap you have got the financial wherewithal to carry you through, unlike a smaller player who perhaps couldn't.

890              MR. MURRAY:  Yes, there is no question.  I mean, I can give you an example.  You know, we bought stations in 1989 in Newfoundland at a bargain price it appeared, but by the time the dust settled we had ‑‑ you know, we were $17 million in the hole until, you know, we purchased our competitor and started to turn that business around, broke even in 2001 and now are making substantial profits.

891              But we are in the business for the long haul.  We have been doing it now for 23 years and ‑‑ pardon?  Yes, since 1985 and, you know, we have our share of success and we have our share of stations that are in the development stage.  And we are very happy with that, providing those services.

892              THE CHAIRPERSON:  Those are my questions.  I believe Commissioner Menzies has got a follow‑up question.

893              COMMISSIONER MENZIES:  I just had one point of clarification.  When I asked the question regarding the airplay in Ottawa I just want to clarify that airplay ‑‑ I asked the question if that was part of your CCD and I'm not sure if your answer contained the clarity that it needed.

894              You understand that airplay doesn't have a monetary value, so that ‑‑ I just wanted to clarify that.

895              MR. MURRAY:  Yes, clearly ‑‑

896              COMMISSIONER MENZIES:  You haven't calculated that into the ‑‑

897              MR. MURRAY:  No, absolutely not.  But I would like to make the point that, you know, we are providing with no charge hundreds of spins to all of these emerging artists in Ottawa.

898              Perhaps Jen or Steve can talk a little bit about this.  I think this is an amazing program.

899              MS TRAPLIN:  This would be ‑‑ the radio spins would be over and above what they are receiving in terms of the money that they would be awarded for winning in a competition.  It's just one of those added bonuses.  We also have a feature which we call the Indie Spotlight which is more opportunity.

900              And of course none of this ‑‑ we are not charging the bands for any of this.  You know, there are a number of different services that we provide for them that are over and above the prize money that they would win.

901              MR. JONES:  And may I add just to close this, that that's the one case, kind of coming back to Commissioner Patrone's question from earlier, that the one case where there is mandated airplay corporately, where we do say to the radio stations on a local level, "This is a project that this company believes in and here is the song and it should be played on the radio station."

902              COMMISSIONER MENZIES:  Okay, thank you.

903              THE CHAIRPERSON:  Does counsel have any questions ‑‑ no?  I tried.

904              MR. MCCALLUM:  No, thank you, Mr. Chair.

905              THE CHAIRPERSON:  Would you like to wrap up at all with a final statement?  You are certainly free to.

906              MR. MURRAY:  Yes, that would be great.  Thank you very