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Broadcasting Decision CRTC 2002-90
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Ottawa, 19 April 2002
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Astral Media Inc., on behalf of 3903206 Canada Inc., Telemedia
Radio Atlantic Inc. and Radiomedia Inc.
Montréal, Chicoutimi, Trois-Rivières, Sherbrooke, Gatineau and
Québec; Quebec;
Hawkesbury, Ontario;
Grand Falls, Plaster Rock, Woodstock, Fredericton, New Maryland,
Oromocto and Bathurst, New Brunswick;
Truro, Nova Scotia
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Applications 2001-0811-9, 2001-0812-7, 2001-0813-5, 2001-0932-3,
2001-0933-1, 2001-0934-9, 2001-0935-7, 2001-0936-5,
2001-0937-3
19 November 2001 Public Hearing
Montréal, Quebec
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Transfer of control of 3903206 Canada Inc., of Telemedia Radio
Atlantic Inc. and of 50% of Radiomedia Inc. to Astral Radio Inc.
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The Commission approves the applications by Astral Media
Inc. (Astral Media) for authority to acquire effective control of
3903206 Canada Inc., of Telemedia Radio Atlantic Inc., and of 50% of
Radiomedia Inc. (Radiomedia), by acquiring all shares held directly
or indirectly by Telemedia Radio Inc. (Telemedia) in these
corporations. A list of the broadcasting undertakings involved in
these applications is provided in Appendix I.
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Introduction
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1. |
This transaction is related to the recent decision by Telemedia
to divest itself of all its radio broadcasting assets across Canada.
The present decision of the Commission concerns the transfer of
control of Telemedia's radio broadcasting assets in Quebec, New
Brunswick and Nova Scotia. At the same Montréal Public Hearing, the
Commission examined applications to transfer other radio
broadcasting assets of Telemedia in Ontario and western Canada.
Those applications are dealt with in separate decisions also issued
today (Decisions CRTC 2002-91,
2002-92 and
2002-93). |
2. |
The Commission considered this transaction in the context of the Broadcasting
Act (the Act) and the Commercial Radio Policy 1998,
Public Notice CRTC 1998-41, 30 April 1998 (the Commercial Radio
Policy). In its review, the Commission took into account the
cultural, social and economic objectives set out in the Act and the
Commercial Radio Policy, as well as the goal of a strong and
competitive communications industry in Canada.
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3. |
The Commission has concluded that these applications are
consistent with the objectives of the Act and of the Commercial
Radio Policy, and that their approval is in the public interest.
Moreover, the Commission is of the view that approval of this
transaction will improve the competitive position of private
French-language radio in Quebec and will enhance the quality of
programming, especially news. Further, the emphasis to be placed by
the applicant on musical diversity will assist in promoting the
works of Canadian Francophone artists and musicians. The Commission
also considers that the synergies that Astral Media has identified
between its AM and FM stations will revitalize the French-language
radio industry as a whole, and will ensure greater stability for AM
radio in the long term.
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4. |
To ensure that the benefits of this transaction are realized and
that the public interest is served, the Commission has decided to
make its approval subject to conditions precedent. One such
condition requires that ownership of CFOM-FM Lévis be transferred
to a third party not associated with Astral Media. The second
stipulates that an application be filed to add conditions of licence
related to the operation of the Quebec radio stations involved in
this transaction. These conditions precedent are set out in Appendix
II to this decision.
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5. |
Finally, the Commission is satisfied that the financial package
of $15.3 million proposed by the applicant as tangible benefits
is commensurate with the size and nature of the transaction.
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Background
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6. |
Astral Media is a leader in the Canadian specialty, pay
television and pay-per-view services sector. Astral Media is also a
significant participant in Quebec’s radio broadcasting industry,
with direct and indirect holdings in 12 AM and FM radio
stations located in all areas of the province. These holdings
include a 50% interest in two AM stations held through Radiomedia.
Astral Media is also active in the billboard advertising sector. |
7. |
This transaction follows a growing co-operation in recent years
between two major private radio broadcasters in Quebec—Telemedia
Communications inc. and Radiomutuel inc. (Radiomutuel). In 1994 and
1995, these broadcasters undertook a major restructuring of their AM
radio undertakings necessitated by the difficult economic situation
and the substantial losses experienced by this radio sector in the
early 1990s. They decided to combine forces and maintain a single AM
station in each region of Quebec. This decision involved the closure
of six AM radio stations, one each in Montréal, Québec,
Trois-Rivières, Sherbrooke, Chicoutimi and Gatineau. They also
created a new AM network, the Radiomedia network, anchored by two
stations owned equally by Telemedia and Radiomutuel, namely CKAC
Montréal and CHRC Québec. The purpose of the network was to
provide a news service throughout the province, operating
24 hours a day, seven days a week (see Revocation,
Decisions CRTC 94-845 and 94-846, 2 November 1994; Transfer
of assets of CKAC and new French-language news network –
authorized, Decision CRTC 95-118, 27 March 1995, and; Transfer
of control and assets of CHRC – authorized, Decision CRTC 95-119, 27 March 1995).
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8. |
Subsequently, the broadcasting interests of Radiomutuel were
transferred to Astral Communications inc. These interests included
eight French-language FM radio stations and three French-language AM
radio stations in Quebec, the Radio Énergie FM network and
Radiomutuel's 50% interest in CKAC and CHRC. They also included the
two specialty television services, Canal Vie and Canal Z, and a 50%
interest in MusiquePlus inc., licensee of the specialty services
MusiquePlus and Musimax (see Decision CRTC 2000-5, 12 January 2000).
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9. |
Currently, Astral Media directly or indirectly owns
12 French-language radio stations in Quebec. These include CFOM-FM
Lévis whose licence is held by Entreprises Radio Etchemin inc.,
eight other FM stations and three AM stations. Astral Media also
owns the Radio Énergie network. Telemedia owns eight
French-language radio stations (six FM and two AM), one
English-language AM station, and the Radio Rock Détente network
that are involved in this transaction. Telemedia also holds a 20%
interest in Genex Communications Inc., licensee of CHOI-FM Québec
and CKNU-FM Donnacona; these holdings are not involved in this
transaction. Finally, Astral Media and Telemedia each own 50% of
CKAC Montréal and CHRC Québec and of the Radiomedia news network.
They thus serve a large portion of the province, including the two
main centres of Montréal and Québec, as well as the
Trois-Rivières, Sherbrooke, Chicoutimi and Gatineau regions.
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The Astral Media proposal
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10. |
Astral Media stated that this transaction reflects a corporate
strategy adopted some years ago of concentrating its activities in
the specialty and pay television industry, in radio and in billboard
advertising. It added that the transaction will enable it to
strengthen its position in French-language radio and to establish a
presence in English-language radio in eastern Canada.
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11. |
The applicant argued that, with approval of this transaction, a
radio group would emerge that would have the critical mass and human
and financial resources required to meet the challenges facing radio
today. It noted that the sale of advertising is the sole revenue
source available to commercial radio. With respect to the
concentration of different media in recent years, Astral Media noted
that, in Quebec, both AM and FM radio have lost considerable ground
to television and to the daily and weekly newspapers. As an example,
it noted that, even in a market as dynamic as Montréal, radio today
accounts for only 9% of the spending on advertising in all media.
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12. |
According to Astral Media, radio stations with formats based
predominantly on talk programming, and news in particular, are under
the greatest threat. It noted that French-language AM radio has
experienced a decade of decline marked by a pronounced drop in the
total number of listening hours and an increase in deficits. The
applicant stated that radio news programming has serious problems of
appeal and credibility. It indicated that this was due to
insufficient resources, especially when compared to the revenues
available to its two principal competitors, television and
newspapers.
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13. |
With this in mind, Astral Media proposed a three-point plan
designed to benefit the public and the Canadian broadcasting system
as a whole. The plan had the following goals:
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- to revitalize French-language AM radio in Quebec;
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- to ensure greater complementarity among the different formats
of the Radio Énergie, Radio Rock Détente and Radiomedia
networks; and
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- to improve the capability of radio to compete with the other
media.
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14. |
To revitalize AM radio in Quebec, Astral Media proposed to invest
in the quality of news programming by establishing in each market a
common newsroom that would be better equipped and staffed by a more
effective team of journalists. It noted in this regard that, since
1994, it has successfully employed such a model in Montréal, where
CITÉ-FM and CKMF-FM are both served by the CKAC newsroom. The
applicant also plans to make use of its newsrooms in Montréal,
Québec, Ottawa/Gatineau and in other regions to collect, process
and disseminate news that is more comprehensive and in depth. These
improved newsrooms will supply the stations of the Radiomedia
network and of the Radio Énergie and Radio Rock Détente networks,
taking into account their formats and specific needs. The newsrooms
will also serve other independent affiliated stations.
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15. |
Astral Media also intends to strengthen the complementarity of
the three networks by minimizing the amount of overlap and by
emphasizing the distinctive nature of each network, its tone, local
roots, personality, music, news service and its community
involvement. The applicant stated that Radio Énergie is directed to
listeners in the 18-34 age group, providing a music mix based
on contemporary hits. For its part, Radio Rock Détente is aimed at
listeners in the 25-54 age group with light music for adults.
Radiomedia targets listeners in the 50-plus group with a talk format
focussed on news and current events. To achieve complementarity, the
applicant will establish an organizational structure in which each
network will have its own vice-president as well as its own music
director or news director. Each region will have a product
management unit for each network and three separate, independent
local sales forces.
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16. |
Astral Media indicated that its goal of improving the
competitiveness of radio comes in response to recent trends toward
heavy concentration in the print media, as well as among media
buyers, advertising agencies and advertisers. It also noted the
recent emergence in the television broadcasting sector of vertically
integrated "mega-companies" that benefit from a high
degree of multimedia cross-ownership. The applicant maintained that
greater concentration of radio and the establishment of strong radio
networks with Quebec-wide coverage are essential if radio is to
compete with these other, already highly concentrated media sectors
and to avoid seriously compromising the Quebec radio industry’s
capacity for growth.
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Procedures
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17. |
The Commission announced these applications in Notice of Public
Hearing CRTC 2001-10, 14 September 2001 (the Notice). The Commission
indicated in the Notice that it wished to examine certain questions
including, in particular, the diversity of voices in Quebec, the
potential market dominance resulting from the transaction, and media
cross ownership. The Commission also invited interested parties to
submit their comments on the applications.
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18. |
In response, the Commission received almost 300 letters, the vast
majority of which supported approval of the applications. Certain
interveners, however, had concerns or reservations, and five of
these opposed approval of the applications. The concerns raised by
interveners were essentially the same as those raised by the
Commission in the Notice.
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19. |
The part of the transaction relating to Quebec broadcasting
undertakings raised certain questions with respect to Astral Media’s
significant position in French-language radio. The principal
questions of interveners related to the increased concentration of
media ownership resulting from this transaction, and to the
potential consequences of Astral Media's increasingly expanded
position in French-language radio in Quebec. Concerns were also
expressed about the consequences of this expansion for the quality
of programming, the diversity of voices and the diversity of music
available on radio, and for the relevance of the tangible benefits
package proposed by the applicant. These matters are discussed
below.
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20. |
On 21 December 2001, pursuant to section 92 of the Competition
Act, the Commissioner of Competition filed an application with
the Competition Tribunal opposing the proposed acquisition of the
eight French-language radio stations in Quebec and of Telemedia’s
50% ownership interest in Radiomedia. Astral Media and Telemedia
then filed their own motions with the Federal Court of Canada
challenging the applicability of the Competition Act to this
transaction. These actions do not affect the Commission’s
jurisdiction under the Broadcasting Act to issue decisions on
the present applications.
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Analysis
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21. |
The Broadcasting Act establishes the Commission’s
mandate for regulating and supervising all aspects of the Canadian
broadcasting system with a view to implementing the broadcasting
policy for Canada. In fulfilling its mandate, the Commission must
balance various social, cultural and economic objectives to ensure
that Canadians have a strong and competitive broadcasting system.
Section 5(2)(a) of the Act also stipulates that the Commission’s
regulation and supervision of the system should be flexible and
"readily adaptable to the different characteristics of English
and French language broadcasting and to the different conditions
under which broadcasting undertakings that provide English or French
language programming operate." The Commission took these
matters into account in its assessment of the present transaction.
The Commission also examined whether the transaction was consistent
with the Commercial Radio Policy, particularly in regard to the
provisions relating to common ownership of radio stations in the
same market.
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22. |
In the Commercial Radio Policy, the Commission indicated that it
would determine whether the position of dominance held by an
applicant could affect the level of true competition available in
the market. The Commission indicated that it would also investigate
any concerns about the potential for gate keeping with respect to
information, and the concentration of the advertising market in the
hands of a single person.
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23. |
The Commission recognized in the Commercial Radio Policy that the
radio industry operates as part of a competitive environment in
which some of its competitors in other media have been allowed to
consolidate. The Commission also acknowledged that increased
concentration of ownership would reduce the number of competitors in
some markets. On the other hand, the Commission stated that it was
convinced that increased consolidation of ownership within the radio
industry would enable the industry to strengthen its overall
performance and attract new investment. It added that this, in turn,
could assist the industry to compete more effectively with other
forms of media and enhance its contribution to the support of
Canadian cultural expression.
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24. |
The Commission also indicated that it had sought to strike a
reasonable balance between the benefits of increased concentration
of ownership within the radio industry and its concerns for
preserving the diversity of news voices in a market. It noted that
recent years have seen a considerable increase in the number of
local, regional and national news sources available in most markets.
These include new conventional radio and television stations,
specialty programming services, community radio stations and
regional newspapers, as well as emerging alternative sources of
information such as the Internet.
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25. |
The Commission's review of applications such as these by Astral
Media encompasses an assessment of the potential impact of the
transaction on the market, on the level of competition and on the
capacity of other existing radio broadcasting undertakings to meet
their regulatory obligations. In its deliberations, the Commission
also weighs the impact of the transaction on the diversity of voices
in the market, on the access that artists and performers have to the
airwaves, and on the promotion of Canadian talent. Further, the
Commission determines whether the circumstances warrant conditions
and safeguards to preserve the current balance in the marketplace.
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Common ownership
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26. |
According to the Commission's policy on common ownership, in
markets with fewer than eight commercial stations operating in a
given language,
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…a person may be permitted to own or control as many as three
stations operating in that language, with a maximum of two
stations in any one frequency band. In markets with eight
commercial stations or more operating in a given language, a
person may be permitted to own or control as many as two AM and
two FM stations in that language.
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27. |
The present transaction is consistent with the above policy in
all markets except Québec. In that market, which has fewer than
eight commercial stations, Astral Radio would have ownership of four
stations, namely CHIK-FM, CITF-FM and CHRC in Québec and CFOM-FM in
Lévis. However, the applicant has committed to divest itself of
CFOM-FM should its applications be approved.
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28. |
Accordingly and consistent with the policy set out in Ownership
transfers – Application of a condition precedent where approval is
predicated on the divestiture of another business asset or interest,
Public Notice CRTC 2001-75, 5 July 2001, this approval is
subject to a condition precedent stipulating that the
approval will only be effective provided a third party not
associated with Astral Media or any of its affiliates files an
application for authority to acquire CFOM-FM Lévis, the Commission
deems said application to be complete, and the station is placed in
trust to the satisfaction of the Commission. This condition
precedent must be fulfilled in accordance with the conditions set
out in Appendix II. The Commission notes that an approval that
is subject to a condition precedent becomes null and void if the
terms of that condition are not met.
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Position of Astral Media in the French-language radio sector
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29. |
This transaction brings an end to Telemedia’s participation in
the radio industry. Telemedia has been an important and experienced
player in the radio industry for many years, particularly in Quebec.
The transaction also increases significantly the presence of Astral
Media, another major player in the radio sector. Astral Media will
have a substantial presence in all regions of Quebec. In Sherbrooke,
Trois-Rivières and Chicoutimi, Astral Media will be the only major
player in private radio. In the Ottawa/Gatineau area, it will be the
only operator of private French-language stations, although a new
private French-language FM station in this region was approved in
principle last year (New classical music FM station in
Ottawa/Hull, Decision CRTC 2001-626, 4 October 2001). In
Montréal and Québec, Astral Media will have a revenue and audience
share among Francophones of more than 50%. This transaction will
position Astral Media as the largest player in Quebec’s radio
industry, whether measured by the number of radio stations owned,
audience share, or revenues.
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30. |
In response to the questions raised by opposing interveners
regarding the position it would hold in the French-language radio
industry, the applicant emphasized that its commitment to sell CFOM-FM
Lévis brought the transaction into compliance with the Commission's
policy on common ownership. Astral Media contended that, in this age
of convergence, the radio industry cannot be considered in isolation
from the global competitive environment, given the choice that the
public and advertisers have for news, entertainment and advertising
across a wide range of media.
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31. |
Given the recent movement toward consolidation of media ownership
in Quebec, the Commission considers that the central position Astral
Media will have in the radio industry, and the resources available
to it following this approval, will revitalize French-language radio
in Quebec and bring a new balance to the market. Astral Media will
be better able to compete with other media and will have the means
to implement its plans for improving the quality of radio, both at
the local station level and on its radio networks.
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32. |
Nevertheless, given Astral Media’s current position in the
Quebec radio market, coupled with its many interests in specialty
and pay television and billboard advertising services, the
Commission believes that questions will remain concerning the
applicant’s increased prominence within Quebec’s French-language
radio market following this transaction. The present quality of news
and information, diversity of news sources, plurality of voices, and
radio market equilibrium are the consequences of competition in the
market between two major broadcasters. At issue is how these various
characteristics will be affected by the transaction.
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33. |
In view of its concerns regarding this matter, the Commission
discussed with the applicant at the Public Hearing the possibility
of establishing safeguards and monitoring mechanisms relative to the
implementation of its commitments. The concerns raised by the
Commission and by some interveners related in particular to the
transaction’s potential impact on local advertising sales, on the
maintenance of an adequate level of local programming, and on the
diversity of spoken word and music programming offered by each
network. These questions are examined in the following sections.
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Advertising
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34. |
The prominence of Astral Media in Quebec’s French-language
radio industry raised questions about the transaction’s potential
impact on advertising sales, particularly its effects on the price
of local advertising. This issue was the subject of opposing
interventions submitted by two organizations involved in the media
placement sector, namely Radio Unie Target and the Conseil des
directeurs médias du Québec inc. The latter organization submitted
that [translation] "this transaction is very likely to prompt
an increase in rates due to the concentration of supply and the fact
that it is often difficult to use other media as alternatives to
radio."
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35. |
In response to these interventions, the applicant indicated that
it and Telemedia have operated an integrated national radio
advertising sales force since 1994. Approval of the transaction will
thus have no effect on the present situation. As for the sale of
local advertising, Astral Media stated that its proposal to maintain
three separate sales teams in each market would stimulate
competition among the networks and ensure growth for the radio
industry.
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36. |
Astral Media also referred to a study it had filed with its
applications entitled Quebec French Local Media by Markets.
According to the applicant, the study clearly demonstrates that
competition among the various media is very strong, not only in
Montréal and Québec, but also in Chicoutimi, Trois-Rivières,
Sherbrooke and Ottawa/Gatineau. Each of the last four markets has at
least three local television stations, three commercial radio
stations, including Telemedia and Astral Media stations, as well as
a daily newspaper.
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37. |
Astral Media also provided a study with the applications entitled
Overview of Quebec's Local Media Offering, as conducted by
the Carat Expert firm. This study compares the cost that advertisers
pay for each thousand listeners or viewers (cost-per-thousand or CPM)
in Quebec’s primary and secondary markets.
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38. |
The Commission has examined the arguments presented by the
applicant and the interveners. With respect to the Carat Expert
study, the Commission finds that there is a substantial difference
between the CPMs of radio and television in the French-language
markets of Montréal, Québec and Ottawa/Gatineau. The study clearly
demonstrates, however, that in the markets of Sherbrooke,
Trois-Rivières and Chicoutimi, the CPMs are almost identical,
having radio-to-television CPM ratios of 0.97, 0.98 and 0.94,
respectively.
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39. |
With approval of the present applications, Astral Media gains a
significant position in French-language radio in Quebec,
particularly in the Sherbrooke, Trois-Rivières, Chicoutimi and
Ottawa/Gatineau markets. The Commission notes, however, the various
daily newspaper, television and other media operating in each of
these markets. The Commission considers that, while these media do
not substitute perfectly for radio as advertising outlets, they do
serve as effective alternatives. The record of the proceeding thus
demontrates that television offers local advertisers inventories and
costs that are competitive with those offered by radio, particularly
in the markets of Sherbrooke, Trois-Rivières and Chicoutimi.
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40. |
The Commission also notes that there are prospects for expansion
of radio in these markets, which would produce further competition
to Astral Media for advertising dollars. The Commission has received
applications to operate new French-language radio stations in each
of Sherbrooke, Trois-Rivières and Chicoutimi, and has issued calls
for further applications to serve those markets.
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41. |
The Commission will wish to closely monitor the development of
this competiton and its potential impact on other broadcasting
undertakings in these regions. Consequently, the Commission expects
Astral Media to provide the Commission with a report, before
1 November following the end of each broadcast year, detailing
the annual variation in rates for local advertising sales for each
of the Radio Énergie, Radio Rock Détente and Radiomedia networks
and in each of the markets of Trois-Rivières, Sherbrooke,
Chicoutimi and Ottawa/Gatineau. The Commission may wish to discuss
these reports with Astral Media at the time of licence renewal.
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Local programming
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42. |
In the Commercial Radio Policy, the Commission maintained the
requirement that FM stations devote at least one-third of the
broadcast week, or 42 hours per week in most circumstances, to
local programming. The Commission indicated that AM stations should
make commitments in their licence renewal applications to a minimum
level of local programming. The Commission added that conditions of
licence would be imposed in cases where the Commission deems them
appropriate.
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43. |
Astral Media has committed to maintain the current level of local
programming for each of the AM stations it is acquiring in this
transaction. For the FM stations, Astral Media has committed to a
level of local programming that is 50% greater than the required
level, or a minimum of 63 hours per week, for all Quebec FM
stations affiliated with the Radio Rock Détente network.
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44. |
Certain interveners, including Members of Parliament for
Lotbinière-Les Érables and for Jonquière, la Fédération
nationale des communications and le Syndicat des employé(e)s
CKRS-CJAB, pointed out that the commitment made by the applicant
regarding FM stations amounts to a reduction from the current number
of local programming hours for stations of the Radio Rock Détente
network. They said they feared this commitment would result in a
decline in local news content and local program production.
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45. |
According to the data provided by Astral Media in reply to the
Commission's questions, all of Telemedia's FM stations currently
generate at least 83 hours of local programming per week, which
is almost double the minimum requirement. When questioned at the
hearing, the applicant confirmed this figure. It explained that the
difference between the current level of local programming and its
commitment was designed to provide it with a reasonable measure of
flexibility. It added that it did not intend to reduce the current
number of local programming hours and argued that it should not be
penalized by a conversion of its voluntary efforts in this regard to
a minimum requirement.
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46. |
The Commission considers that it would be unfair to penalize the
applicant in view of the exemplary efforts of the FM stations
affiliated with the Radio Rock Détente network in the production of
local programming. However, considering the possible reduction in
local programming hours and the concerns raised by the interveners,
the Commission considers it appropriate to incorporate the
applicant's commitments concerning local production and local news
as conditions of licence. Accordingly, this approval is subject to
the submission, within 60 days of the date of this decision, of an
application to add a condition of licence reflecting the
requirements for local programming and local news for the Quebec
radio stations involved in the transaction, as stipulated in
Appendix II to this decision.
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47. |
With respect to news, Astral Media stated that its first
challenge would be to repatriate radio audiences by offering large
amounts of high-quality news programming from various sources. It
also indicated that, during peak morning hours, separate teams of
journalists for the three networks would ensure diversity in the
delivery of news. Further, the Commission notes the applicant's
statements concerning the broadcast of news on weekends as part of
the overall improvement in local content and news that will result
from the establishment of a central newsroom in each local market.
Astral Media has also formally committed, for the next seven years,
not to close down any of the existing stations of the Radiomedia,
Radio Énergie and Radio Rock Détente networks in any of the Quebec
markets where these three networks are currently operating.
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Diversity of programming and access to the airwaves
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48. |
Certain interveners representing the cultural community, such as
l’Association de l’industrie du disque, du spectacle et de la
vidéo (ADISQ) and l’Union des artistes (UDA), supported approval
of the applications. They, however, offered comments concerning the
maintenance of diversity in musical formats on the Radio Énergie
and Radio Rock Détente networks, and the importance of ensuring
that the works of Canadian Francophone artists have equitable access
to the airwaves. They also suggested the establishment of monitoring
mechanisms to help ensure that these objectives are attained.
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49. |
One of the major objectives of the Commercial Radio Policy is to
ensure pride of place for Canadian artists on Canada's airwaves. In
its policy, the Commission noted that, historically, radio has
played an important role in promoting Canadian artists and music,
and that the radio industry in Quebec has been particularly active
in this regard. The position Astral Media will hold in Quebec's
French-language radio industry together with its participation in
French-language specialty television through its interests in the
specialty music services MusiquePlus and MusiMax, will give it
considerable influence in the careers of Francophone artists in
Quebec and across Canada.
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50. |
In response to the comments of interveners, Astral Media
committed to strengthen the complementarity of formats among the
three networks it will own and to develop programming that will
further differentiate the stations of the Radio Énergie network
from those of the Radio Rock Détente network. It also stated that
its objective was to gradually increase diversity in the range of
Canadian Francophone artists whose works are aired on its networks.
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51. |
Regarding monitoring mechanisms, Astral Media proposed to file an
annual report on the diversity of musical selections and Canadian
Francophone artists aired during the previous year on each of its
predominantly music-based network services, Radio Énergie and Radio
Rock Détente. The applicant stated that this would serve as an
uncomplicated mechanism that would enable the Commission and the
public to follow its progress in this regard. At the hearing, ADISQ
stated that this kind of report could be satisfactory if the report’s
parameters were established in co-operation with representatives of
the artistic community.
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52. |
The Commission accepts in principle Astral Media's proposal
concerning submission of an annual report, and makes its approval of
the transaction subject to the submission of an application to add a
condition of licence requiring such annual reporting.
However, Astral Media must consult beforehand with ADISQ and UDA, as
representatives of the artistic community, to ensure that the
parameters established for the annual report will allow adequate
monitoring to take place of access to airwaves and increases in
diversity. Accordingly, the condition of approval set out in
Appendix II stipulates that Astral Media must, within
90 days of the date of this decision, submit to the Commission
a document setting out the parameters for its annual report, as
developed through consultations with ADISQ and UDA.
|
53. |
In addition, the Commission notes Astral Media's commitment to
keep the Commission informed about concerns or complaints expressed
by artists or associations of artists on the subject of equitable
access to the broadcasting system. The applicant also committed to
make available to the public all correspondence related to these
concerns or complaints, and to provide copies of such correspondence
to the Commission for its evaluation in considering the renewal of
Astral Media's broadcasting licences.
|
|
Package of tangible benefits
|
54. |
Because the Commission does not solicit competing applications
for authority to transfer ownership or control of broadcasting
undertakings, the onus is on the applicant to demonstrate that the
proposed benefits are commensurate with the size and nature of the
transaction. In the Commercial Radio Policy, the Commission stated
that it expects applicants to commit to implement clear and
unequivocal benefits representing a minimum direct financial
contribution to Canadian talent development of 6% of the value of
the transaction. The Commission added that it would forgo benefits
requirements for unprofitable undertakings. However, where an
applicant is applying to acquire a group of stations, some of which
are unprofitable, the Commission will consider profitability on an
aggregate basis.
|
55. |
The total value of the transaction is almost $255 million.
Of this amount, $227 million is assigned to assets located in
Quebec and $28 million to assets in New Brunswick and Nova
Scotia. In accordance with the Commercial Radio Policy, Astral Media
proposed tangible benefits having a value of $15.3 million,
representing 6% of the value of the transaction. The applicant also
proposed to distribute the tangible benefits between the
French-language and English-language radio sectors in the manner
described below.
|
|
Benefits for French-language radio
|
56. |
As tangible benefits for the French-language radio sector, Astral
Media proposed a financial package of $13,620,000 over a seven-year
period. The applicant further proposed to distribute this amount as
follows:
|
|
- $6,810,000 (3%) will be directed to Fonds RadioStar;
|
|
- $4,540,000 (2%) will be directed to MusicAction;
|
|
- $2,270,000 (1%) will be earmarked as support for other
projects whose goals are focussed upon the development of
Canadian Francophone talent nationally, regionally and locally.
|
57. |
According to the applicant's proposal, the last amount of
$2,270,000 noted above would be distributed as follows:
|
|
- $1,675,000 would be devoted to the creation of a new fund (Fonds
Radio Astral Media) whose purpose would be to assist in mounting
performances and tours by new Canadian Francophone artists;
|
|
- $175,000 would be allocated to organizing meetings of
professionals in the Quebec recording industry, under the auspices
of ADISQ; and
|
|
- $420,000 would be allocated to the organization of a new
annual event, Les Grands Prix Astral de la chanson francophone
d'ici, to support the development and promotion of Canadian
French-language songs.
|
58. |
Regarding the amount of $1,675,000 earmarked for the creation of
a new fund, the policy on contributions to Canadian talent is set
out in Contributions By Radio Stations To Canadian Talent
Development – A New Approach, Public Notice CRTC 1995-196,
17 November 1995. The policy is based on a funding model
proposed by the Canadian Association of Broadcasters (CAB). The
policy is intended to establish a level of funding that would ensure
the availability of a sufficiently large pool of Canadian music and
other Canadian creative material for broadcast, and to reduce the
administrative burden related to the process of evaluating proposals
for Canadian talent development.
|
59. |
Under this policy, licensees accept conditions of licence
requiring them to remit their contributions directly to eligible
third-party organizations, including MusicAction, FACTOR, national
and provincial music organizations, performing arts groups, schools
and scholarship recipients.
|
60. |
In addition, with respect to benefits associated with transfers
of ownership of radio undertakings, the Commission, in its
Commercial Radio Policy, replaced the benefits test and adopted the
principle of requiring financial contributions equal to 6% of the
value of the transaction. Under the policy, contributions must be
distributed as follows: 2% to FACTOR or MusicAction; 3% to a
Canadian music marketing and promotion fund, which gave rise to
Fonds RadioStar and the Radio StarMaker Fund in 2000; and 1% to
other Canadian talent development projects or to other eligible
third parties directly involved in the development of Canadian
musical and other artistic talent, in accordance with Public Notice 1995-196.
|
61. |
Under the circumstances, the Commission considers that Astral
Media's proposal to create a new fund does not accord with the
spirit of the existing policy. This policy has, as a specific
objective, the reduction of the administrative burden related to the
process of evaluating Canadian talent development projects. The
policy is also intended to recognize and employ funding structures
already established by the industry. Accordingly, as a condition
of approval, Astral Media must confirm to the Commission, within
60 days of the date of this decision, that the proposed amount
of $1,675,000 will be paid to Fonds RadioStar, to MusicAction or to
other existing, eligible funds. In addition, as proposed by the
applicant, the Commission expects these existing, eligible funding
structures to allocate this amount to the development of new artists
performing in all genres of music, and to the support of the
Canadian sound recording sector, for the purpose of promoting the
careers of emerging stars of Canadian French-language music.
|
62. |
In its intervention, ADISQ proposed that the financial package
related to tangible benefits be increased from 6% to 9% of the value
of the transaction because of the size of the transaction and the
degree of concentration of ownership it gives to Astral Media.
Moreover, Atelier Radio Enfant, in an intervention submitted jointly
with the Association des radios communautaires du Quebec (ARCQ), the
Alliance des radio communautaires du Canada (ARC du Canada), the
Centre des ressources en éducation des médias (CREM) and the
Société de communication Atikamekw-Montagnais (SOCAM), suggested
that the financial package allocated to French-language radio be
distributed differently, more specifically that a new fund of
$7 million be created for local expression in radio and for the
development of Aboriginal and French-language broadcasting services.
|
63. |
In reply, Astral Media argued that it would be unfair to impose
requirements on it that exceed those established in the Commercial
Radio Policy, since its applications comply in all respects with the
existing policy on common ownership of media. The applicant also
noted that the proposals of these interveners would represent a
departure from the Commission’s existing policy on tangible
benefits, as adopted in 1998, and that the current public hearing
was not the appropriate forum for revising a policy.
|
64. |
Astral Media also recalled that a portion of the proposed
tangible benefits is intended to provide support for Aboriginal
broadcasting. It indicated that these amounts will be paid to the
Canada-wide Aboriginal Voices Radio (AVR) network, which, among
other things, has recently been authorized to carry on a new FM
radio undertaking to serve the Ottawa-Gatineau area.
|
65. |
Having considered the proposals made by Astral Media and those of
the interveners, the Commission is satisfied, subject to the
aforementioned conditions, that the tangible benefits proposed by
the applicant are clear, unequivocal and commensurate with the size
and nature of the transaction.
|
|
Radio stations in New Brunswick and Nova Scotia |
66. |
The Commission notes that the part of the transaction relating to
the radio stations in New Brunswick and Nova Scotia did not raise
any particular concerns. At present, Astral Media does not own radio
stations in these two provinces and will therefore assume the
responsibilities currently held by Telemedia. Following its
examination of this part of the transaction, and of the tangible
benefits proposed by the applicant that are set out below, the
Commission concludes that approval is in the public interest. |
67. |
As tangible benefits for the English-language radio sector,
Astral Media proposed a financial package of $1,680,000 over a
seven-year period. The applicant proposed to distribute this amount
as follows:
|
|
- $840,000 (3%) will be directed to the Radio StarMaker Fund;
|
|
- $560,000 (2%) will be directed to FACTOR; and
|
|
- $280,000 (1%) will be earmarked as support for other projects
whose goals are focussed on the development of Canadian
Anglophone talent nationally, regionally and locally.
|
68. |
According to the applicant’s proposal, the last amount of
$280,000 noted above will be distributed as follows:
|
|
- $70,000 will be used to fund an award presented annually in
connection with The Canadian Radio Music Awards;
|
|
- $70,000 will be used to support other Canadian Music Week
activities, in particular the Gold Sponsorship;
|
|
- $35,000 will provide for annual grants of $2,500 to each of
the Music Industry Association of Nova Scotia and the Country
Music Association of New Brunswick; and
|
|
- $105,000 will be allocated to support the development of
Canadian Aboriginal broadcasting services.
|
69. |
With respect to the proposed financial support of $105,000 for
the development of Canadian Aboriginal broadcasting services, the
Commission considers that the proposed support to AVR will
contribute to the implementation of section 3(1)(o) of the Act. This
section stipulates that programming that reflects the Aboriginal
cultures of Canada should be provided within the Canadian
broadcasting system as resources become available for the purpose.
The Commission considers that the financial support allocated to AVR
by Astral Media will benefit the Canadian broadcasting system.
|
70. |
The Commission notes, however, that the purpose of the benefits
requirements for commercial radio stations is to promote and support
Canadian musical and other artistic talent through contributions to
third parties. Consequently, Astral Media must, as a condition of
approval, submit a report within 60 days of the date of this
decision on how the financial support for AVR will be allocated
among third parties for improving and promoting the development of
Canadian talent, and Aboriginal talent in particular.
|
71. |
Regarding the radio stations in New Brunswick and Nova Scotia
involved in this transaction, the Commission indicated in its
Commercial Radio Policy that the purchaser of an undertaking must
fulfil any benefits commitments that the current licensee of the
undertaking has not fulfilled. In this connection, the Commission
notes Astral Media's commitment to proceed with the implementation
of all of the tangible benefits resulting from previous transactions
involving the radio stations in New Brunswick and Nova Scotia to be
acquired in this transaction.
|
|
Issue of licences to Astral Radio
|
72. |
Upon approval of these applications, Astral Media will undertake
a corporate reorganization to transfer its holdings in 3903206
Canada Inc., Telemedia Radio Atlantic Inc. and Radiomedia to Astral
Radio Inc. (Astral Radio). This will be followed by the dissolution
of Radiomedia, and new broadcasting licences will be issued to
Astral Radio for the undertakings currently held by Radiomedia.
Accordingly, upon surrender of the existing licences, the Commission
will issue new licences to Astral Radio to continue the operation of
the undertakings now operated by Telemedia. These will expire on the
expiry date of the existing licences, namely 31 August 2002 for
digital radio station CKAC Montréal, 31 August 2003 for CHRC
Québec, 31 August 2006 for CKAC Montréal and the Radiomedia
network, at the end of the 2001-02 hockey season for the Réseau de
hockey des Canadiens de Montréal, and at end of the 2002 baseball
season for the Réseau de baseball des Expos de Montréal. The
licences will be subject to the existing conditions, to the
conditions set out in section 2 of Appendix II to this decision, and
to the conditions stipulated in New licence form for commercial
radio stations, Public Notice CRTC 1999-137, 24 August 1999.
|
|
Conclusion
|
73. |
In its Commercial Radio Policy, the Commission stated that one of
its major objectives was: "… to ensure a strong,
well-financed radio industry that is better poised to achieve its
obligations under the Act and to meet the challenges of the 21st
century." Following its examination of the current
applications, the Commission has concluded that they conform with
the relevant objectives of the Act and of the Commercial Radio
Policy. Taking into account Astral Media's commitment to divest
itself of CFOM-FM Lévis, these applications are also in accordance
with the Commission's policy on common ownership of radio stations
in the same market.
|
74. |
The Commission also examined these applications taking into
account the distinctiveness of French-language broadcasting and the
particular environment in which it operates. The Commission is
satisfied that the proposed synergies among the Radiomedia, Radio
Énergie and Radio Rock Détente networks will improve the
competitive position of private French-language radio in Quebec and
will enhance the quality of programming, particularly of news.
Moreover, the proposals to strengthen the presence and personality
of the predominantly music-based networks Radio Énergie and Radio
Rock Détente, and to give greater emphasis to musical diversity,
will assist in further promoting the works of Canadian Francophone
artists and musicians.
|
75. |
Considering the decline in the financial situation of
French-language AM radio in recent years, as evidenced by falling
revenues and increased deficits, considering as well the commitments
of the applicant, the Commission is satisfied that the synergies
that Astral Media has identified between its AM and FM operations
will revitalize the whole of French-language radio and will ensure
greater long-term stability for AM radio in particular. The
Commission also considers that the applicant’s plan to give the
local AM station in each market a central role in the collection and
processing of news, will better serve both AM listeners and
listeners of the local FM stations of Radio Énergie and Radio Rock
Détente. It should also represent an improvement in the management
of available resources and will raise the quality of local news.
|
76. |
The Commission is aware that the movement toward greater
consolidation in Canada's media continues to raise concerns. Because
of the significant position Astral Media will have in
French-language radio, the Commission has deemed it appropriate to
establish safeguards and monitoring mechanisms relative to the
implementation of its commitments, as set out in Appendix II.
The Commission will monitor implementation of each of the
commitments made by Astral Media and will review the progress
achieved at the time it considers the licence renewal of the
stations concerned.
|
77. |
Further, the Commission has taken into account the presence in
Quebec broadcasting of other dynamic and experienced industry
participants, such as Cogeco Radio-Télévision inc. and Corus
Entertainment Inc. The Commission has also noted the prospects for
an expansion of this market, as indicated by recently-filed
applications to operate new private radio stations (see Call(s)
for applications for a broadcasting licence to carry on a radio
programming undertaking to serve Montréal, Chicoutimi, Sherbrooke
and Trois-Rivières, Public Notices CRTC 2002-2,
2002-3, 2002-4
and 2002-5, 17 January 2002; and Notice of Public Hearing CRTC
2001-14, 14 December 2001 concerning the establishment of a new
radio station at Québec). All things considered, the Commission
finds that the benefits to be derived from this transaction,
particularly for French-language radio, outweigh the potential
negative aspects associated with the significant position of Astral
Media in this sector, and concludes that approval of these
applications is in the public interest.
|
78. |
The Commission thanks the many people who took part in this
proceeding by submitting written interventions or by appearing at
the Public Hearing.
|
|
Secretary General
|
|
This decision is to be appended to
each licence. It is available in alternative format upon
request, and may also be examined at the following Internet site: http://www.crtc.gc.ca
|
|
Appendix I to Broadcasting Decision CRTC 2002-90
|
|
List of Undertakings Involved in the transaction
|
|
Quebec
|
|
CHLT Sherbrooke |
|
CITÉ-FM-1 Sherbrooke and its transmitter CITÉ-FM-2 Sherbrooke |
|
CITF-FM Québec |
|
CHRC Québec |
|
CFIX-FM Chicoutimi |
|
CIMF-FM Gatineau and its transmitter CIMF-FM-1 Hawkesbury,
Ontario |
|
CHLN Trois-Rivières |
|
CHEY-FM Trois-Rivières |
|
CITÉ-FM Montréal |
|
CKAC Montréal |
|
CKTS Sherbrooke |
|
Digital radio station CITÉ-FM Montréal |
|
Digital radio station CKAC Montréal |
|
Radio Rock Détente network |
|
CHLN/CKSM network, Trois-Rivières/Shawinigan |
|
Radiomedia network |
|
Réseau de hockey des Canadiens de Montréal |
|
Réseau de baseball des Expos de Montréal
|
|
New Brunswick
|
|
CFXY-FM Fredericton |
|
CIBX-FM Fredericton |
|
CIKX-FM Grand Falls and its transmitter CJCJ-FM-2 Plaster Rock |
|
CKBC Bathurst |
|
CKHJ Fredericton and its transmitters
CKHJ-FM-1 New Maryland and CKHJ-FM-2 Oromocto |
|
CJCJ-FM Woodstock |
|
CKHJ/CJCJ-FM network, Fredericton/Woodstock
|
|
Nova Scotia
|
|
CKTO-FM Truro |
|
CKTY-FM Truro
|
|
Appendix II to Broadcasting Decision CRTC
2002-90
|
|
Conditions precedent
|
|
Approval of Astral Media Inc.'s applications on behalf of 3903206
Canada Inc., Telemedia Radio Atlantic Inc. and Radiomedia Inc. for
authority to acquire effective control of these companies will only
be effective provided the following conditions precedent have been
met to the satisfaction of the Commission:
|
|
1. A third party not
associated with Astral Media Inc. or any of its affiliates files an
application for authority to acquire CFOM-FM Lévis, the Commission
deems said application to be complete, and the station is placed in
trust to the satisfaction of the Commission. |
|
Unless the Commission
otherwise directs, this condition will be considered as having been
met if the following terms are fulfilled within 90 days of
the date of this decision: |
|
- Submission of a proposed
trust agreement for approval by the Commission, within 10 days of
the signing of an agreement in principle for the sale of the
station; |
|
- Submission of confirmation
that the trust has been established, within 15 days of
acceptance by the Commission of the trust agreement; and |
|
- Submission by a third party
of an application deemed complete by the Commission for authority to
acquire CFOM-FM, within 15 days of acceptance by the
Commission of the trust agreement. |
|
2. Unless the Commission
otherwise directs, this condition will be considered as having been
met if the following terms are fulfilled within 60 days of
the date of this decision: |
|
- Submission of applications,
to be satisfaction of the Commission, to add conditions of
licence for the Quebec radio stations involved in the
transaction and requiring the following: |
|
- A commitment reflecting the following requirements for local
programming by the Quebec radio stations involved in the
transaction:
|
|
- For the AM stations: maintenance of current levels of local
programming and local news, as follows:
|
|
Station
|
Location
|
Minimum local programming (hours/minutes)
|
Minimum local news (hours/minutes)
|
|
CKAC |
Montréal |
31:00 |
10:54 |
|
CHRC |
Québec |
51:00 |
13:02 |
|
CHLN |
Trois-Rivières |
36:30 |
12:34 |
|
CHLT |
Sherbrooke |
35:00
|
14:12 |
|
- For the FM stations: a minimum level of 63 hours of
local programming and maintenance of the current level of local
news, as follows:
|
|
Station
|
Location
|
Minimum local programming
(hours/minutes) |
Minimum local news
(hours/minutes)
|
|
CITÉ-FM |
Montréal |
63:00 |
2:44 |
|
CITF-FM |
Québec |
63:00 |
2:06 |
|
CITÉ-FM-1 |
Sherbrooke |
63:00 |
2:48 |
|
CIMF-FM |
Gatineau |
63:00 |
2:41 |
|
CFIX-FM |
Chicoutimi |
63:00 |
1:46 |
|
CHEY-FM
|
Trois-Rivières |
63:00 |
1:41 |
|
- For the FM stations, submission by the licensee, in each
broadcast year starting in 2003 and until expiry of the
implementation period for the benefits related to this
transaction, of a report, in a form acceptable to the
Commission, on the diversity of musical selections broadcast by
the two predominantly music-based FM networks, Radio Énergie
and Radio Rock Détente.
|
|
Conditions of approval
|
|
- Submission by Astral Media, within 90 days of the date
of this decision, for approval by the Commission, of a document
developed through its consultations with ADISQ and UDA,
accompanied by the proposed parameters for its annual report on
the diversity of musical selections and Canadian Francophone
artists aired during the previous year on each of its
predominantly music-based networks, Radio Énergie and Radio
Rock Détente.
|
|
- Submission by Astral Media, within 60 days of the date
of this decision, of written confirmation stating that the
amount of $1,675,000 that had been allocated for the creation of
a new fund for the development of new Canadian artists will be
paid to the Fonds RadioStar, to MusicAction or to other,
existing eligible funds.
|
|
- Submission by Astral Media, within 60 days of the date
of this decision, of a report on how the financial support for
Aboriginal Voices Radio will be allocated among third parties
for improving and promoting the development of Canadian talent,
and Aboriginal talent in particular.
|
Date Modified: 2002-04-19
|