TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TELECOMMUNICATIONS COMMISSION
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
BROADCASTING APPLICATIONS AND LICENCES/
DEMANDES ET LICENCES EN RADIODIFFUSION
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
December 8, 1999 Le 8 décembre 1999
Volume 3
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
Public Hearing / Audience publique
Broadcasting Applications and Licences/
Demandes et licences en radiodiffusion
BEFORE / DEVANT:
A. Wylie Commissioner/Conseillère
D. McKendry Commissioner/Conseiller
A. Noël Commissioner/Conseillère
B. Cram Commissioner/Conseillère
J.-M. Demers Commissioner/Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
P. Cussons Hearing Manager /
Gérant de l'audience
B. Batstone Legal Counsel /
Conseiller juridique
D. Santerre Secretary / Secrétaire
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
December 8, 1999 Le 8 décembre 1999
Volume 3
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE
PRESENTATION BY
Sportscope Television Network Ltd. 688
Questions by the Commission 702
Questions by Commission Counsel 759
INTERVENTIONS
NetStar Communications Inc. 767
Questions by the Commission 777
Toronto Blue Jays Baseball Club 793
Questions by the Commission 797
Harrison, Young Pesonen and Newell Media Management 803
Questions by the Commission 809
CIAU University of Alberta 825
Questions by the Commission 834
Toronto Argonauts Football Club 845
Questions by the Commission 850
Reply on behalf of 853
Sportscope Television Network Ltd.
Questions by the Commission 858
Questions by Commission Counsel 860
PRESENTATION BY
Larche Communications (Barrie) Inc. 864
Questions by the Commission 883
Questions by Commission Counsel 912
PRESENTATION BY
Rock 95 Broadcasting (Barrie-Orillia) Ltd. 918
Questions by the Commission 937
Questions by Commission Counsel 982
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE
PRESENTATION BY
CHUM Limited 986
Questions by the Commission 1004
Intervention by
Larche Communications (Barrie) Inc. 1068
Intervention by
Rock 95 Broadcasting (Barrie-Orillia) Ltd. 1076
Questions by Commission Counsel 1082
Questions by the Commission 1083
Hull, Quebec / Hull (Québec)
--- Upon resuming on Wednesday, December 8, 1999
at 0834 / L'audience reprend le mercredi
8 décembre, à 0834
3635 THE CHAIRPERSON: Good morning.
3636 MS SANTERRE: Thank you, Madam Chair. This morning we will hear the
application by Sportscope Television Network Limited, licensee of a national
English language specialty programming undertaking devoted exclusively to sports
programming with a particular focus on sports highlights, including video clips,
scores and updates (Headline Sports), requesting Commission approval to amend
two of its existing conditions of licence and to add a new one as described in
the Notice of Public Hearing 1999-10.
3637 Mr. Levy.
3638 THE CHAIRPERSON: Good morning, Mr. Levy.
PRESENTATION / PRÉSENTATION
3639 MR. LEVY: Good morning, Madam Chairperson, Members of the
Commission.
3640 Before beginning our presentation, let me introduce the members of our
panel. My name is John Levy. I am the founder and controlling shareholder of
Headline Sports.
3641 To my right is Michael MacMillan, Chairman and Chief Executive Officer
of Alliance Atlantis Communications Inc. Alliance Atlantis is our partner in
Headline Sports, with a 48 per cent interest in the company.
3642 To my left is Robert Malcolmson, Executive Vice President and General
Counsel of Headline Sports. Next to Rob is Peter Grant, our legal counsel and a
senior partner at McCarthy Tetrault.
3643 In the back row is Paul Williams, Executive Vice President, Headline
Sports. Next to Paul is Gerry Tymon. Gerry is in charge of sales at Headline
Sports and is the former President of NetStar Sales. Beside Gerry is Sarah
Hughes, Vice President Finance, and next to Sarah is Anthony Ciccone, our
Director of Programming.
3644 Headline Sports, Canada's sports news and highlight network is here
today seeking amendments to our licence which, if approved, will accomplish
three important objectives.
3645 First, Headline will dramatically improve the product which it delivers
to its viewers. As you will hear and see today, the blending of limited live
event coverage of our sports news and highlights will allow us to cover sports
the Headline way -- unduplicated by any other network.
3646 Second, live event coverage will expose more Canadian sports fans to our
network and allow them to sample our unique sports news and information
product.
3647 Third, the integration of live events into our sports highlight format
will assist in sustaining Headline's unique news and information niche over the
long term.
3648 We would like to begin by showing a brief video that tells you the
Headline Sports story.
--- Video presentation / Présentation vidéo
3649 As you have just seen, Headline Sports has come a long way from its
initial operation as an alphanumeric source of sports information. As the
concept grew into a national network, the one constant has been that we are
first and foremost a sports news and information network with a strongly
independent and entrepreneurial Canadian-based focus.
3650 Headline Sports has always been 100 per cent independently owned and
controlled by Canadians. With the recent approval by the Commission of Alliance
Atlantis' purchase of 48 per cent of Headline Sports, the company now has two
strong shareholders with a common entrepreneurial spirit and a commitment to the
growth and development of the network.
3651 I welcome Alliance Atlantis as a partner in the network and at this
point I would ask Michael to say a few words.
3652 MR. MacMILLAN: Thank you, John.
3653 Members of the panel, at Alliance Atlantis we are naturally very excited
about our future with Headline Sports. We are involved in a number of Canadian
specialty services that share our vision of the broadcasting future in Canada.
We want to be a part of networks that are committed to Canada and focus on
building programming that is attractive to Canadians. We also look to invest in
specialty networks that have a strong entrepreneurial drive behind them.
3654 That in a nutshell is exactly why we invested in Headline Sports. We
believe that the network has carved out a unique and meaningful programming
niche that adds further programming diversity to our Canadian Broadcasting
System.
3655 The drive and clarity of vision that John has shown over the years has
enabled this stand alone specialty network to emerge as a new player in an
intensely competitive environment. We are committed to the goals that Headline
Sports has set out in this application. We hope that the Commission will share
and encourage our vision by approving the changes that we have proposed.
3656 MR. LEVY: Thank you, Michael.
3657 The driving force behind this application is to provide Canadian viewers
with a more entertaining, more informative and different way to watch
sports.
3658 This application is a product of the information age. We live in an age
of real time news and information. Today's sports fans want all the news,
highlights and scores as they happen. Our viewers are simply not content just to
see the highlight or get the score, nor are they satisfied just to watch a
traditional broadcast of a live event. Our viewers want more and we intend to
deliver sports in a fashion never seen before.
3659 From the network that brought you the ticker that never goes away, now
we will present the game in an equally innovative fashion. True to our original
format, the game will never interrupt the score.
3660 Our goal is to deliver a unique product that appeals to an underserved
segment of the Canadian sports audience -- young viewers.
3661 Today's young sports fans are sophisticated and have a thirst for
in-depth data, news and sports information. They are a product of the
information age and they are not content to spend three hours watching a
traditional a live game broadcast. This is confirmed by Neilsen statistics that
show viewers of live event broadcasts tend to skew much older. In our view, this
is a function of the way the live events are presented by traditional
networks.
3662 Our vision is to take a limited amount of live events and incorporate
these games into the fabric of our news, highlight and information programming.
On Headline Sports, a game won't be a continuous three hour full screen start to
finish production dedicated strictly to the game. Instead, we intend to deliver
both real time sports news and highlights while the game goes on.
3663 Well, how do we intend to do this?
3664 First, we will provide breaking news and scores on our ticker. The
ticker will never leave the screen, emphasizing our commitment to our original
core mandate.
3665 Second, we will break into the games every 15 minutes and provide
viewers with simultaneous real time updates of all the news and highlights from
the world of sport.
3666 Third, our on air news hosts will not only deliver sports news as it
happens, they will also provide their commentary and insights on the game
coverage as it unfolds. In the information age, today's sports fans want to hear
more than just the play-by-play announcer. They want the underlying statistics,
stories, news and information about the teams, players and coaches as the game
goes on. Headline Sports will fill this void.
3667 Fourth, we will offer a seamless transition from the game to the news,
stories and highlights that flow from it. Experience tells us that this will
work. During last year's playoffs, we were the first to introduce live post-game
coverage of press conferences. Viewer response was overwhelmingly positive.
3668 Approval of this application will also allow Headline Sports to address
some of its shortcomings. Since our launch we have found that sports viewers are
very discerning and that journalistic credibility is very important. To attract
the serious sports fan over the long term, the network, must be perceived as an
authority in the world of sport. It must have its place as a destination for
sports. It is here that we are deficient.
3669 Without any live game coverage, Headline Sports is not considered as a
true authority on the Canadian sports scene. Our profile is lower than any of
the other networks because we don't cover live events. The limited live event
coverage will bring instant credibility and authority. In so doing, we will
increase the relevance of the network to our viewers. In a fragmented and
competitive world of sports television, this is critically important.
3670 Approval of the application will also increase our exposure. As a stand
alone network with no high profile destination programming, we are underexposed
to Canadian sports viewers.
3671 Limited amounts of live event coverage will solve this problem. Live
game coverage is destination programming at its best and it will allow us to
attract a broader audience base, particularly viewers who are not sampling our
product today. Live event coverage will serve as a platform to promote our new,
highlight and information programming. More viewers will learn what we have to
offer and programming will therefore be enhanced.
3672 We have always been committed to providing Canadians with in-depth and
affordable sports news, information and highlight programming. We see this
application as a necessary next step in maintaining that commitment.
3673 To give you a glimpse of how we will incorporate live event coverage
into our core news and information format, let's roll the video.
--- Video presentation / Présentation vidéo
3674 MR. MALCOLMSON: Madam Chair, members of the Commission, as you have just
seen, approval of this application will not result in a radical change in the
essence of what you have licensed. We re not moving towards becoming a
full-time, live-action licensee. We have developed a particular sports-related
niche that our viewers truly value. We want to enhance that loyalty, build a
truly Canadian brand identity and increase our audiences to more sustainable
levels.
3675 Headline Sports will remain the network that you licensed in 1996 and we
will continue to promote live-event programming on other networks.
3676 While our Headline format is unique it is also very labour intensive.
Our programming schedule consists of constantly updated coverage of sports as it
happens, 24 hours a day. Other sports networks run large blocks of live-event
programming. Our model is quite different. We will deliver all the sports
stories, scores and news during live game broadcasts. We will use our own
personnel to provide uniquely Canadian insights into the world of sport.
3677 MR. LEVY: At Headline, we firmly believe that we already offer Canadian
sports enthusiasts the best value for their money. At 10 cents on basic we are
one of the best bargains available and we are not proposing to change that very
low wholesale rate.
3678 However, in order to sustain our low cost news and information niche,
some flexibility is required. As we have indicated, the need to become a
longer-term destination for sports viewers. The Headline nature of our
programming tends to draw viewers for relatively brief time segments. This in
turn impacts our performance.
3679 First, Headline Sports currently ranks 23rd out of 25 English language
Canadian specialty networks that are on air today in terms of total hours
turned.
3680 Second, in terms of tuning, Headline Sports' share is 0.3 per cent of
total tuning.
3681 And, third, Headline Sports also has the smallest average weekly reach
of all English language specialty networks in Canada.
3682 To provide you with some comparisons, TSN ranks first in terms of share
of total tuning and audience reach. This combined with the highest subscriber
rate in Canadian television makes TSN the dominant incumbent. CTV Sportsnet,
which launched months after Headline Sports, already ranks tenth in terms of
total tuning and ninth in terms of reach. Moreover, it has the support and
synergies associated with being part of Canada's largest private television
network.
3683 The good news is that we have a recipe for success that will enable us
to maintain the integrity of our core format and indeed strengthen our news and
highlight product with limited amounts of live event coverage. We hope you will
see fit to grant us the flexibility we need to become a longer-term contributor
to the Canadian broadcasting system.
3684 Paul.
3685 MR. WILLIAMS: Thank you, John.
3686 Madam Chair, members of the Commission, we are extremely proud of what
we have accomplished to date. We are committed to the Canadian broadcasting
system and we are pleased to announce today three new amateur sports initiatives
that will be implemented upon approval of the application.
3687 They are, number one, "World Class"; number two, "Love of the Sport";
number three, "This Week in the CIAU".
3688 Our first initiative, "World Class," will showcase Canada's premier
female athletes and create homegrown role models for our female youth. "World
Class" will be a monthly feature which will air 40 times per week.
3689 Our second commitment, "Love of the Sport," will be a weekly three
minute feature on amateur athletes or community volunteers. This feature will be
the product of a web based interactive nomination system through which our
viewers will nominate candidates that best exemplify "Love of the Sport". "Love
of the Sport" will air 50 times per week.
3690 The third initiative, "This Week in the CIAU" will be a 30-minute
magazine show reviewing all sports activities in the CIAU; scores, standings,
game highlights, statistics, male and female athlete of the week.
3691 All three are annual commitments throughout the balance of the licence
term and represent a financial commitment by Headline Sports of $1.2
million.
3692 MR. LEVY: Granting the amendment to allow a modest amount of live sports
action will complement a well-accepted service, without encroaching in any
material manner on the licensees that are permitted to exhibit live action
sports without restriction.
3693 Similarly, the flexibility to split our feed on a regional basis will
facilitate rights acquisitions and provide more diverse programming. We
understand that this condition is identical to the one already in place for
TSN.
3694 We are also prepared to make a serious commitment to the exposure of
live event Canadian programming in prime time. We have put forward a condition
of licence that 50 per cent of all live-event programming in prime time will be
Canadian. We would be pleased to discuss this commitment at any time during the
hearing.
3695 Members of the panel, in closing we would ask you to affirm your support
for the entrepreneurial spirit that has guided Headline Sports from the outset
and the significant commitment to its future that has been made by its two
shareholders by granting the application. We are committed, as evidence by the
fact that in our 1996 application we projected cumulative losses over three
years of $576,000. Actual cumulative losses for years one to three are
anticipated to be approximately $10.3 million.
3696 Members of the Commission, approval of the application will benefit the
Canadian broadcasting system in a number of ways:
3697 First, our viewers will have an opportunity to watch sports as it has
never been seen before. This blending of sports news and highlights with
live-event coverage is new and different and meets the needs of our modern,
young viewers.
3698 Second, limited live-event coverage will enhance our core news,
highlights and information programming, rendering our unique product more
sustainable over the long term.
3699 Third, more viewers will come to know and use Headline's sports
information -- live-event coverage will expose our network to more
Canadians and allow them to sample our product.
3700 Four, self-imposed limits on hours of live event programming will ensure
that we have no material adverse impact on other sports specialty licensees.
3701 And, fifth, the flexibility we have requested can be achieved without
increasing our subscriber fees, thereby continuing to provide distributors a low
cost sports alternative.
3702 We are ready to discuss this application with you in greater detail and
look forward to receiving any questions that you may have.
3703 Thank you for your attention.
3704 THE CHAIRPERSON: Thank you, Mr. Levy, Mr. MacMillan and your
colleagues.
3705 Commissioner McKendry, please.
3706 COMMISSIONER McKENDRY: Thank you, Madam Chair, and good morning.
3707 Let me begin by asking you a couple of questions that relate to your
opening comments to us. I was taken by your comment, and I am quoting:
"Headline Sports will remain the network that you licensed in 1996 and we
will continue to promote live-event programming on other networks."
3708 It seems to me, and I would like your comments on this, that in fact you
won't remain the network that we licensed in 1996 because your existing licence
has a condition of licence which prevents you from offering live sports events.
I guess just to add to that point, on page 14 this morning you also said:
"We are also prepared to make a serious commitment to the exposure of live
event Canadian programming in prime time."
3709 So how do you reconcile the fact that your existing licence doesn't
allow you to do live programming and that you want to make a serious commitment
now to it with the statement that you are going to remain the same network?
3710 MR. LEVY: Thank you, Commissioner.
3711 The inclusion in our existing format of limited live-event coverage is,
in our belief, not a fundamental change to our existing programming format. It
is our belief that we are not in any way departing from our unique niche, and we
say that based upon a couple of specifics.
3712 Let me first point out to you that 85 per cent of our programming
will remain exactly as it is today.
3713 In our application we have indicated that we will limit the live event
coverage to a maximum of 15 per cent of our broadcast week.
3714 Secondly, and I think very important, is that we will be incorporating
the live event into the programming format that we already have. Hopefully, the
video demonstrated that to a certain degree, where our ticker never goes away;
our real time live updates will continue to happen every 15 minutes; our on-air
hosts will continue to break in with stories as they are happening.
3715 In effect, what we are doing is creating a seamless transition of sports
news before the game, during the game, and after the game so there is a seamless
transition.
3716 The reason that we are committed to staying within the format and within
our niche is because we have tapped in to a very young, energetic, specific
identifiable group of viewers. Sixty per cent of our viewers fall within the 18
to 34 age group. We skew younger than any other network.
3717 Traditional live sporting events -- just to quote a couple of
statistics, because I think they are pertinent. And I was quite surprised when
we came across these statistics.
3718 Of the entire viewership of Blue Jays baseball, for example, only 15 per
cent of it falls within the 18 to 34 category.
3719 The one that surprised me more, because I have had personal experience
with my kids playing hockey all these years and personally growing up with
hockey, is that when they do statistics on the coverage in national hockey
league, only 22 per cent of the viewers of hockey fall within this 18 to 34
category.
3720 That is the group that we are talking to. That is the niche that we are
in. That is the group that we want to bring and incorporate some of the live
event programming into that niche.
3721 To recap, while it is clear that we are here before the Commission for a
change in licence, in amendment to our licence by a condition of licence, it is
our contention that it is not a fundamental change, in summary for a couple of
reasons.
3722 One, we are in a different genre. We are in our own genre.
3723 Two, we have a different audience than traditional sports
broadcasts.
3724 Three, we are going to present the game differently.
3725 And four, as we will probably discuss later, we are in a different time,
when it is very important for networks to be directly responsive to their
viewers, to stay in tune with their viewers and to provide their viewers with
the type of programming that will continue to excite them and will continue to
have them view your network.
3726 COMMISSIONER McKENDRY: The 15 per cent of your schedule I think works
out to 25 hours a week of live programming. Is that right?
3727 MR. LEVY: At the maximum, that is correct.
3728 COMMISSIONER McKENDRY: That would be in prime time. So, on average,
assuming week nights, that would be five hours per evening. I think you have
included part of the Saturday in your prime time definition.
3729 I guess what I am driving at here is that most people watch television
during prime time, so that is what we have to focus on: that this will be
25 hours a week in prime time.
3730 I put to you that that is five hours in the evening.
3731 Do you have any comment on that?
3732 MR. LEVY: Yes. First of all, our ability to incorporate the live event
coverages is determinative by two factors. The first is what is available out
there.
3733 We have presented some evidence to the Commission that we have had
discussions with some of our partners that are part of our network today. And we
do understand that there is some product that we are going to be able to
secure.
3734 The issue is, until we actually sit down and finalize negotiations, we
are not certain as to what the blend and what the mix of this product is. Some
of it will be professional, that is true. But as we have also shown, and as we
have also presented, there is opportunity for us to present programming that
does not currently show on other networks.
3735 That program tends to skew in prime time, for example, on the weekends.
You mentioned Saturday. A lot of the CIAU that we are looking at incorporating,
and other amateur sports, don't fall within the traditional prime time
components.
3736 In addition to that, we are also looking at incorporating international
sporting events which fall outside of traditional prime time programming
hours.
3737 It is not our intention -- certainly not our intention on launch,
because what we are anticipating and hoping, depending on what is available, is
to launch with somewhere around 12 hours a week of live event programming again
being incorporated into our product.
3738 Again, that is based upon what may or may not be available.
3739 COMMISSIONER McKENDRY: Do you want to add something?
3740 MR. MALCOLMSON: I would like to add a point in terms of the
differences John has touched on.
3741 The other difference that we are quite proud of in terms of the live
event coverage that we hope to be able to do is that in addition to
incorporating it into the format as it exists and presenting it differently, we
have made a serious commitment to the live event Canadian programming in prime
time.
3742 We filed that as part of our reply; that 50 per cent of the live event
hours we would do in the prime time hours would be devoted to live event
Canadian programming.
3743 That is another difference. We think it is a significant difference and
will assist in differentiating us from the other live event broadcasters.
3744 COMMISSIONER McKENDRY: One of the things I am trying to get are
here -- if I listen to your comments this morning, what I take from them is
that it is your view that this is not a significant change to your licence; this
is a way to do what you do now better.
3745 When I take the 25 hours -- granted that you may start with 12,
nevertheless your licence would allow you to do 25, if we approve this --
that works out to something like three to five hours an evening in prime time,
which I would, on the face of it, say is a significant change to your
licence.
3746 What I am asking you is: Why isn't that much live programming in prime
time, when people watch television, a significant change to your licence?
3747 MR. MALCOLMSON: We certainly don't sit here before you today and deny
that we are not seeking a change in our licence.
3748 The message we are trying to convey to you, which I think we conveyed in
the presentation and in the video, is that the live events we hope to cover will
be done in a different way, in a manner that is consistent with the mandate we
currently have, in a manner that serves our target audience, which skews much
younger than the other networks.
3749 I think we have talked about those points and I won't repeat them.
3750 The other thing is that the nature of the change we are seeking has to
be considered in its overall context. We are not seeking to take a block of
programming in prime time and present a traditional three-hour broadcast.
3751 As you saw, we are going to incorporate the game itself within the news
and information format. I think that is a very important consideration.
3752 The other consideration that I think we need to talk about is that we
live in an era of change. We live in an era of significant change. We are trying
to stay with the growth curve and continue to serve our audience.
3753 The feedback we are getting from our viewers is that there is a gap in
our format. You heard yesterday and the day before from the other panel that
live professional sports events coverage and live coverage provides a source of
credibility; is a must-have product and is something that fills in a
schedule.
3754 We found that in our history there is a gap there. We are trying to fill
that gap but in a way that is new, is different, and that doesn't encroach upon
the territories of the other networks.
3755 I might just ask Peter to touch upon the pace of change issue which we
think is quite relevant to the proposal we have in front of you.
3756 MR. GRANT: Commissioner, the point you asked, of course, focused
primarily on the scheduling; that it would be focused in the evening hours.
3757 As I understand the intentions, there would in fact be a considerable
amount of product shown on weekends. So it might be only three evenings a week
in which you would see a live game. That might take up two or three hours on say
three, four evenings a week at the most, and you would see then some weekend
activity.
3758 Of course, being live, it has to be all configured around the actual
scheduling timing of the events themselves. The amateur timing is different and
the international timing is somewhat different than the conventional prime time
schedule.
3759 On the issue that Rob mentioned, though, about the change, it goes to
this question that this network is really evolving quite quickly to try and
respond to what they see as a niche demand, and it is driven by the demographic
they are in, which is a different demographic, a narrower demographic, a time
sensitive and challenging demographic than many others. So they are responding
to that.
3760 Normally, you might expect an application of this kind maybe to come
forward at renewal and then do the adjustments. I see the industry moving far
too quickly to sort of say, "Well, we only will countenance changes every seven
years."
3761 The digital framework proceeding will be going on next year. We saw just
yesterday and the day before a major change in the whole environment of sports
rights and sports broadcasting that may or may not be approved in whatever form.
All of those things are happening in mid term.
3762 In that context, it seems to me an application of this kind is quite
appropriate to bring forward to the Commission so that the adjustment can be
made right at the appropriate time so that this network has a chance to address
the financial problems it is in, where its cost structure has been far higher
than it anticipated, and do so in a time frame that can allow it to make these
adjustments before the rest of the industry moves beyond it.
3763 COMMISSIONER McKENDRY: The amendments you have or the changes to your
licence that you have in front of us raise another issue that I would like you
to comment on, and I think you have to a certain degree in your oral
comments.
3764 As you are aware, the Commission has a policy of licensing one service
per genre, and we have a policy of not allowing competition within those genres.
Now, in sports there is more than one sports specialty channel, but the policy
is that they complement each other, those channels. Bringing live sports events
to your service, on the face of it would appear to put you into direct
competition with the other services, TSN, Sportsnet, that are also offering live
sports events to viewers. Could you please respond to what I have just said?
3765 MR. MALCOLMSON: I will start, Commissioner McKendry, and others may jump
in.
3766 Just first of all, factually, 85 per cent of our programming
schedule remains unaltered if this application is approved, so I just think from
the standpoint of context that is important.
3767 Secondly, our wholesale fee is 10 cents, which has an impact on the
type of rights or the volume of major professional sports rights that one is
able to go out into the marketplace and attempt to secure. I think there are
differences in terms of quantum and there are differences in terms of the
economics of our business.
3768 So those are some commercial realities.
3769 In terms of the genre policy that you refer to, we are certainly
cognizant of it. As you said, it reads that you don't licence services that are
directly competitive. We don't believe that approval of this application will
put us into direct competition in a degree that would offend your policy.
3770 The other point is really I think at the core of the question, and that
is: What is a genre? Our view is that a genre is really the complete package of
product that you deliver to your viewer on a consistent basis. It is a function
of your audience as well as the programming. The two are related.
3771 We think we have a unique genre. We think that this application will
support that genre and serve the audience that is watching that particular
genre.
3772 I guess the other point I would make is that no genre is airtight in and
of itself. If you look at WTN, Life Network, Home and Garden Television, there
is programming that migrates among those networks. Does that mean that HGTV is
in WTN's genre when it is showing Martha Stewart? We don't think so.
3773 We think that you have to look at the complete package and make a
judgment based on the overall package. We think the package we have presented to
you keeps us in our genre and doesn't offend the policy.
3774 MR. LEVY: Perhaps I could just add one other specific point to what Rob
has mentioned.
3775 The timing is definitely right for us now to start to incorporate some
live event coverage. In addition to that, there is a very practical reason as to
why it makes sense now. In addition to allowing us to hopefully financially
correct ourselves over the next few years, by the end of the term of our
licence, to put us back on a footing where we had hoped to be, quite frankly the
third year, that is an obvious concern and hopefully live event programming will
allow us to attract our viewers to stay longer, which is really our issue. They
come to us, but we want to keep them there a little bit longer, and we want to
attract some of the other 18 to 34 year olds. So in that regard, increased
viewership translates to better numbers; it translates to our ability to
hopefully secure additional revenues from advertisers.
3776 Another very practical reason why it is right now is that there is a
whole bunch -- there is product that is available, but there are a lot of
rights that are coming up in the next three years. If the Commission, for
example, saw fit to grant this amendment at the end of our term as compared to
now, you know, the horses might be already out of the barn, for example, CFL,
NHL, Blue Jays come due in -- some of the rights relating to the Blue Jays
come due in 2001 -- Raptors, Grizzlies, Commonwealth games, sharing on the
Olympics, the next round of Olympics. There are all sorts of rights that will be
coming due prior to 2002. As we have heard over the last few days, these rights
tend to get picked up and sometimes these rights don't even make it to air.
3777 One thing I can assure the Commission is that if we are granted the
application, you know, we are not going to become a warehousing company. We
don't have shelves in our network, we have windows, and if we get the product I
can assure you it is going on air. In fact, one thing I would hope is that, as a
result of yesterday and hopefully our ability to have this limited inclusion of
live event programming, maybe some of that warehoused inventory has a new window
for exposure. We would be delighted.
3778 So I think that is significant in the context of why it is important for
us now. I think the overall impression should be that, in our belief, it is not
a substantial change. The timing is right for us, we are not infringing on the
ability of other people to do what they are going to do. We will be in the
marketplace for sure but, in terms of where we are versus where they are, I
don't think there is any significant concern, and that is evidenced by the fact
that nobody has intervened against us except some of the people that were here
yesterday.
3779 COMMISSIONER McKENDRY: With respect to whether or not you will be
competing with other services directly, you have made the point that 85 per
cent of your schedule will be as it is now. But isn't it more appropriate to
focus on what will happen to your schedule in prime time, because that is when
people watch television?
3780 I remember in the TV policy hearing Mr. MacMillan telling us that
you fish where the fish are. So while on the face of it there might be some
comfort that only 85 per cent of your schedule will remain unchanged, isn't it
the prime time period we have to focus on -- your schedule will change
significantly in the prime time period when people watch TV?
3781 MR. LEVY: Well, I think, you know, you are right, but I think what we
are trying to convey is that our network is a constant stream of information.
That is the niche we created when you gave us the licence six years ago --
three years ago. We started six years ago Sportscope as the alphanumeric
service. We have been streaming this information for a long time and we have
just been getting better at it.
3782 I think, quite frankly, you are still thinking in the context --
and rightly so, because the only way you have ever seen a game is in a big
three-hour block, you know, NHL on CBC, NHL on Global, NHL on -- I mean,
you don't know which network you are watching because, except for the odd host
that is different, it is the same presentation.
3783 We don't want to go there. We can't go there. The reason we can't go
there is because that is not our viewership. Most of our viewership don't watch
games that way. If we start doing it that way and just load up our prime time,
then you are right, then we are looking like all the other -- the networks.
We don't intend to do that.
3784 We intend to do it our way. I mean, there was some scepticism when we
started as to, you know, "What is this sports, news and information? What are
you going to do?" You know, "How are you going to create this niche? How are you
going to find these people?" We did it. We have a young, energetic viewership
and what we want to do is translate the way the game is traditionally shown into
a format that they are going to find attractive.
3785 So I think for you to think about it in the context of just another
three-hour block every night from 7:00 until 10:00, that is not what we are
about.
3786 One other point that my colleague just pointed out to me was that we do
something a little different than all the other networks, and we have always
done that. You saw it on our video.
3787 We direct people to the other networks. Nobody does that. We tell people
that while they are getting sports information from us, if they want to go see
the game on CBC, or if they want to go see the game on CTV, or if they want to
go just about anywhere but one network which we are not allowed to do it
with -- we are a barker. It's our view that we are going to continue to be
a barker and we will be a stronger barker.
3788 So even though we may have a game during prime time, the other networks
are still going to have their games on in their fashion, and we are going to
direct people to them. We are going to give them the scores, we are going to
give them some highlights -- we expect that relationship will
continued -- and we are going to tell them: Go over to Global, for whatever
that event is. Go over to CTV. Go over to Sportsnet.
3789 If you want to see the whole game and it's on at the same time we are
showing our game or other highlights, that is part of the information package
that our young, interactive viewers who don't sit in front of --
3790 My kids don't watch television like I watch television. They are all
over the place. They are watching television, they are on the phone, they are on
that chat line. I mean, they are doing six things -- they are all
multitasking and that is what our channel is. That is the natural reaction and
reason why we skew so young.
3791 We don't want to go there. We are going to compete for some product,
there is no question about that. But the question is: How do we translate that
product to the end result.
3792 Believe me, we really love where we are. We love the niche. We love the
people we are talking to. We want to stay right there. We don't want to
transgress. We don't want to become like the other guy. That's our mantra: We
are not the other guy. It's all over our office. So -- anyway.
3793 COMMISSIONER McKENDRY: But you do want people to stay longer at
your -- I was going to say your site, but at your service?
3794 As I understand it --
3795 MR. LEVY: I like that. "At our site", I like that.
3796 COMMISSIONER McKENDRY: As I understand it, you want people to stay
longer and that is one of the rationales underlying this is you need people to
stay longer in order to attract more advertising revenue. People are coming now
for a quick hit, leaving, and you would like them to stay longer. Is that
right?
3797 MR. LEVY: Absolutely.
3798 I'm going to turn it over to Rob, he wants to make a comment, but longer
to us doesn't mean three hours, you know. Longer to us means stay another five
minutes a day. Longer to us means another five or ten minutes a day.
3799 I mean, people come in and out of our network. They are in catching
highlights and then they are gone.
3800 So, you know, our version of "longer" isn't the traditional version of
"longer". By having the game on people are going to come to us, they will watch
part of the game, and then we are probably going to send them somewhere else
because they are going to want to see something else, or they are going to pick
up the phone or they are going to do whatever they are doing.
3801 So, hopefully, if we have the game on, in our fashion, they are going to
come back to us, and they will come back to us and stay for another five
minutes.
3802 We have information in the context of what that does to us. I mean, our
viewers don't -- we don't need a lot to make a big difference in our
context.
3803 Rob.
3804 MR. MALCOLMSON: Thanks, John.
3805 There are really two components to our audience objective here.
3806 The first is certainly we want to attract the type of numbers that a
live game broadcast will attract but, as we have said, we are going to do it in
a different way.
3807 But what is more important to us is increasing the audience to our
schedule as either the live game broadcasts -- we really see the live game
broadcast as an opportunity to bring people in to sample the rest of the product
and to see what it is we are delivering in the marketplace today.
3808 So our objective is really to boost the audience that surrounds the live
game as well. It's not to draw 500,000 viewers to the Grey Cup game, it is to
draw a significant -- you know, a good component of viewership to the live
event broadcast, but also to take that component and say: Here is who we are.
Here is what we have. Here is what is within the rest of schedule. Increase that
overall audience, increase the frequency of viewing to our news and information
programming.
3809 That is one of the key components of what we are trying to do from a
audience standpoint.
3810 COMMISSIONER McKENDRY: You mentioned that you would be starting off with
about 12 hours of live programming. Can you tell us a bit about what we
would see in those 12 hours if we approved the application?
3811 What specifically are you planning to start off with?
3812 MR. LEVY: Well, as I said before, it's difficult for me to have the
schedule out in front of you because we can't finalize deals until we --
obviously until we can prove to the suppliers and to the other broadcasters, who
hopefully we will be partnering with in buying product and presenting product or
distributing their warehouse product.
3813 Clearly our 12 hours will be at least -- if it's in prime
time, at least 50 per cent Canadian, because that's our commitment.
3814 We are anticipating that we are going to launch hopefully with some
amateur at the same time, which seems to be very under-served. We are hoping to
secure some professional rights as well.
3815 It is very difficult to nail down precisely what the product -- are
we going to have hockey? Are we going to have baseball?
3816 We have had discussions with the leagues, with the teams. You have heard
over the last few days there is product out there that is either, as I keep
saying, in inventory or not being sold.
3817 You heard about the CFL the other day, for example. I know they have
product that is in somebody else's inventory but that is available and dying for
a place to get out. We would love to be able to secure those sort of
arrangements.
3818 So we are going to have a mix. It's a blend of professional, amateur,
and it is very difficult for us to be very specific as to what it is.
3819 Rob.
3820 MR. MALCOLMSON: If I can just add to that.
3821 In terms of -- I think you asked directly what product are you
going to have on your screen.
3822 Firstly, we very much hope to be able to do something with the Canada
West Conference of the CIAU which tell us that they have 450 regular season
games available that aren't on television today. We think that is very
compelling product for our young audience.
3823 In terms of the professional sports, you have heard, I think, or at
least I heard in the last couple of days that -- I guess the example that
struck me was the CTV Sportsnet example where they only wanted to buy
30 Toronto Blue Jays baseball games and the club wanted them to buy 40. Had
we been there at that point in time, that is the type of buying we hope to do.
We would try to secure those 10 games that others don't want.
3824 Similarly -- I think you heard Sam Pollock say this -- even a
broadcaster picking up five games makes a difference to him in terms of his
revenue.
3825 That type of what I would call mini-package is something that makes
perfect sense given the number of hours that we would like to program and given
the way we want to program things.
3826 So those are some examples of where we think we could have a role in the
system that again doesn't sort of entrench on the traditional broadcaster's need
for product.
3827 COMMISSIONER McKENDRY: I think earlier, you pointed out that one of the
reasons you wanted to -- the import of this application now is there are
rights coming up over the next couple of years that you would be interested in
bidding on, and you cited the Raptors and baseball, and so on.
3828 I take it from that that you will be at the table to bid on major
professional sporting events in competition with conventional broadcasters and
other specialty services?
3829 MR. LEVY: I think the answer to that is: In the context of what we are
doing, yes.
3830 You know, they are in one level and we are at another level, but clearly
there is going to be common product out there that hopefully we will be able to
bid upon and be successful upon.
3831 I think the key is, once we get it, when we are fortunate enough to
secure it, what we do with it.
3832 Again I just want to repeat that there are two components to this plan
that we are talking about: One is securing the product and one is displaying the
product.
3833 Your specific question relates to: Are we going to secure it? And the
answer is: Of course. I mean, if we want some professional games we have to jump
into the market and bid and try to secure them.
3834 The next issue is: Once we get them what do we do with them? That is
where we go into a whole discussion about how we are including it in the format
and it won't look the same.
3835 MR. MALCOLMSON: I touched on this earlier and I just wanted to make sure
that it was clear. Given the economics of our businesses as they stand today at
10 cent wholesale fee, I think it is pretty clear that we would be
buying -- in the rights business we would probably be buying second or
third. I think someone talked the roast and the rump.
3836 I think the reality is that we are out there buying smaller packages of
rights, probably after the big guys have decided where and when they are
going.
3837 So we will be in the market for professional rights. I think the manner
in which we are in the market is going to be quite different.
3838 COMMISSIONER McKENDRY: In terms of the live programming that isn't
Canadian, where will you source that programming? Will it be American? Will it
be other countries?
3839 MR. LEVY: Our head of programming is a huge soccer fan and he has been
pushing us over the last few years. He has this dream about somehow
participating in our ability to get World Cup rights.
3840 Again, if you watch our network you will see that not only do we provide
information on the traditional professional sports, but we have world soccer
reports, we have world international reports.
3841 Our network is a 24-hour a day network. We serve a different audience.
We would love to be able to pick up not only some American programming but
international programming. That is very, very exciting to us.
3842 And there are other, perhaps partners out there, local stations and
various markets, who pick up some of that programming and maybe they would be
prepared to partner with us.
3843 So the answer is: We are not just picking up big professional American
sports. There may be some components of that, but we are going to be looking at
trying to expand the horizons of what is available and continue to be
distinct.
3844 COMMISSIONER McKENDRY: Coming back to Canadian live programming, to what
extent do you anticipate that regional programming will be an element of
that?
3845 MR. LEVY: Well, we are very excited about that actually. The reason that
we have a regional component as part of our application is really to facilitate
our ability to buy some amateur sports.
3846 You know, you will hear, and you have heard hints of, a lot of college
amateur sports in Canada that can't find a home on television, particularly some
western CIAU programming. That programming may not be appropriate for all of
Canada. Maybe Halifax doesn't care what happens between two universities out
west, but they certainly care out west.
3847 So we felt that buy sort of carving out a very limited amount of local
or regional -- regional programming similar to what TSN has, that would
make sense for us because then we go into that marketplace and provide that
programming.
3848 Again, the rest of the country would be seeing our usual streams, news,
sports and information. What also would be interesting is we would be able to
stream that regional programming into our broadcasts because, you know, we would
be flipping back and forth from what is happening at some amateur sporting event
out west and back to our network and our network back to them. So that's why
it's there.
3849 COMMISSIONER McKENDRY: The proposal to amend the conditional licence to
allow you to do live programming is coupled with two other proposed amendments.
Are these a package of amendments that you want considered together? If, for the
sake of discussion, we denied the ability to do live programming, are you still
seeking the ability to reduce your overall Cancon commitment?
3850 MR. LEVY: No. It's a complete approach to the way we want to do things.
It doesn't really make sense without the other.
3851 COMMISSIONER McKENDRY: Thank you. I want to discuss for a minute the
financial situation that you have experienced and that you are facing. You
obtained your licence in 1996 and the service started in 1997.
3852 Am I correct that the reason or the situation driving your application
is the fact that from a financial point of view you are not anywhere near as
successful as you hoped to be?
3853 MR. LEVY: That's not what is driving this application. What's driving
this application is that it's right for us to enhance the programming at this
point in time. The result of enhancing the programming will be that we will be
able to correct the situation that we are in. That's not the situation we
anticipated we would be in.
3854 The reason we are in that position is because the costs involved in
providing information, sports information, on a continuing basis to these
insatiable 18 to 34 year olds, and it's interesting because, you know, it skews
younger than 18 to 34. We always talk 18 to 34 year olds because that's who you
sell into. Who we are really talking to in addition to that are people who don't
even show up on those meters. It's the 10 year olds, 11 year olds, 12 year olds.
I mean they are all over this service.
3855 Unfortunately, they don't show up on that box and aren't the target of
what's increased -- you know what viewership numbers and advertising
dollars. The answer to your question, Commissioner, is that it's important for
us to reverse the trend. There's no question about that. We want to turn this
into a profitable -- we want to stem the losses. Let's put it that way.
3856 We are talking about, you know, anticipated losses of just over $500,000
and to date, or in the first three years of operation, we are in the whole by
over $10 million. We are supporting that. We are not complaining about the fact
we are supporting that. We love the niche we are in. We just think that it's
important to reverse that trend before it becomes a serious problem.
3857 COMMISSIONER McKENDRY: Can you elaborate on what has created the
situation that you are in? It's my impression that advertising revenues have
been strong, in fact I think better than forecast if I recall correctly, but
your expenses are much higher than forecast.
3858 What lead to that situation? What went wrong?
3859 MR. LEVY: Well, I think that you are right. Our advertising in the early
years has exceeded what we originally anticipated. There's no question about
that. I give that to hiring good people to go out and sell and we sold on the
basis of a promise.
3860 When you are a new network in a marketplace such as ours, creating your
own niche, you anticipate certain levels of viewership. You go to the market and
you sell based on those levels. We were young, we were exciting, and we were an
alternate that wasn't there before and we managed to secure those dollars.
3861 The problem happens when the viewership numbers don't support those
numbers. Then what you are doing is making good. In terms of the advertising
revenue, we did exceed it. We have trouble maintaining that unless the numbers
increase. That's number one.
3862 From a financial standpoint, what did happen, it was a lot more
expensive to continue to provide that level of programming for our customers. We
didn't back down from it. We continued to expand. We introduced live hosts
during the evening. We went out and got talent, as you saw. We keep rejigging
our format within our niche to try and provide better programming. We take
feeds. We have people all over the country.
3863 We didn't start with that. We didn't anticipate that we were going to
have to do that, but we did and we are committed to that. That's why our costs
were higher than anticipated and that's why we are in the position we are
in.
3864 We think that with the inclusion of limited amount of live programming
we are going to have the ability to boost the overall image of the network. We
are going to be able to have people coming to us, not just during the games as
Rob suggested, but all during the day.
3865 That marginal increase is going to give us a lift. It's going to be able
to just reverse this trend of losses that we otherwise are going to sustain, at
least until the end of the licence.
3866 COMMISSIONER McKENDRY: Just on the cost aspect of things, help me
understand how the cost of acquiring live programming will as factored into your
plans, I assume acquiring live programming and distributing live programming and
providing it to viewers is an expensive undertaking.
3867 What gives you confidence that you will be able to overcome those costs
with increased revenues? For example, I noticed between 1998 and 1999 your
advertising fees, you know, increased substantially from $6.5 million to $8.4
million under the current situation. Are you anticipating another leap like that
to compensate for the new costs? Just help me understand how the costs of
acquiring live programming fit into the jigsaw puzzle of your financial
situation.
3868 MR. LEVY: I think first of all you have got to understand it in the
context of we are not filling our schedule in the context of what we were
discussing before. We are not buying games. As Rob suggested, we are starting
with 10 or 12 hours a week of live programming events incorporated into our
format.
3869 We are talking, you know, about buying limited select packages of
rights. To think of it in the context of the traditional networks and having to
secure hundreds of games to fill not one, but maybe two networks, that's not
where we're at. We need selective purchasing.
3870 The second is that we have been very ingenious and hopefully
entrepreneurial and in tune with what the market is now doing in terms of how
rights flow from the creators of the rights to the broadcasters. You know, you
have heard over the last few days that there's people in the middle now who are
part of the formula. There's media buyers. There's other existing
non-broadcasting entities who are buying and packaging these rights and then
bringing them forward.
3871 There's no doubt that we are going to be having to step up and pay fair
market value for these things. Nobody is going to give us the games. We are
going to have to pay for them. I think it's correct in assuming, which we are
and we have had discussions with them and you will have certain people coming
forward as part of this process, and you have already heard about how creative
people can get when product "A" has a window on product "B"'s network. Sometimes
you look at sharing advertising and sometimes you look at other promotions.
3872 Sometimes these things supplement the costs of the rights fees. That's
how we are looking at doing it, in addition to which, I should add, there is,
and again I keep coming back to it, there's product out there that's sitting on
somebody's inventory that hasn't seen the light of day.
3873 As an opportunity, as a window to show that programming, there's
incremental gains that can be made without many incremental costs as long as the
production is handled and those costs are covered. I think you have to think
about that available product which is also part of the mix.
3874 The other thing is a lot of our programming is going to be amateur and
is going to be along the lines that we talked about before, which is CIAU. The
rights fees to attract that sort of inventory is obviously not the same as the
type of product that you are talking about.
3875 We looked at a complete blend, a complete mix. The one other factor is
that, you know, we don't need a lot to make it work. That's how we can afford to
do it on a dime.
3876 MR. MALCOLMSON: If I could just add to that. Rick Brace said something
yesterday or the day before about a sort of different rights market emerging. I
think he described it as today there's two rights currencies. One is the cash
component which I think you are referring to, but the other which is becoming
increasingly important is the level of exposure you as a broadcaster can offer
the sport that's looking to get its product on television.
3877 He talked about rightsholders looking at the number of promotions on a
weekly basis, the amount of feature programming that the broadcaster can offer,
the amount of shoulder programming, I think he called it, that the broadcaster
can offer. We think we can provide very attractive feature programming
promotional avails to a sports league that wants to target our audience. So we
think we deliver, (a) a younger audience and, (b) with our format significant
opportunities to meet the exposure requirements of the rightsholder.
3878 COMMISSIONER McKENDRY: Again, just to make sure that I understand, the
outcome of this is that people will stay with you longer and you can charge more
for advertising, that's the heart of it?
3879 MR. LEVY: That's our model.
3880 COMMISSIONER McKENDRY: Yesterday we had a discussion with Mr. Pollock
about rights and that's when the 10 baseball games that you referred to came up.
I recall him, and correct me if I am not recalling him correctly, that the
rights for one game were in excess of $100,000. I don't recall the specific
number, but I seem to recall $140,000 or something like that.
3881 If you bought those 10 games that would be a substantial increase in
your program expenditures that you have experienced historically. Last year you
spent $4 million on programming. If you bought those 10 games that would be
bumping you up substantially in terms of a percentage of your historical
programming expenses.
3882 Then, if you are going to bid on Raptors' games, as I take it, and other
professional sports, including American sports, what do you forecast your
programming expenses to grow to next year, assuming we approve your
application?
3883 MR. LEVY: I will answer the specifics in terms of what the number is,
but when you are in the rights' market, when you think, for example, of Raptors
and the fees that are paid, there are deals currently out there where certain
products, certain packages of products you don't pay rights fees for. You share
inventories or you cover programming costs and you mentioned the Raptors, so
there are specific opportunities in that regard.
3884 In our first year of operation our business plan basically shows a
continuing -- basically, no impact, but with the addition of live games
into our format and we are looking at an increment of around $3.5 million to $4
million in extra revenues and, incidentally, extra costs that will basically put
us in a scenario where we have managed to incorporate into our format live games
and not impact the bottom line.
3885 From that point forward we see it increasing marginally where our
revenues are exceeding our costs and, therefore, pulling ourselves out of this
losing equation that we have for the next couple of years.
3886 So, the terms of the magnitude we are talking about, in the first year,
the first full year of introducing live-event coverage we are looking at
increasing our revenues by approximately $3.5 million to $4 million.
3887 Again, I think that you have to understand it in the context of the mix
of the programming we are talking about. It's not all going to be major
professional sport.
3888 COMMISSIONER McKENDRY: Staying with the financial area, what will happen
if we don't approve your application?
3889 MR. LEVY: Well, our projections show that we are going to continue to
lose money for the balance of the term. It's going to become more and more
difficult for us to continue to improve and strive to fill this insatiable
appetite which is out there for our niche.
3890 It's going to put us in a position where we are going to have to think
about continuing to expand the level of sports information, news and highlights
and keep growing the way we are because at some point you will have to say
that's not in the best interest of continuing to lose money like this.
3891 So I think from our context we will continue to work very hard to try
and live within the format -- in the context of sports, news and
information without any inclusion of a limited amount of live games. We will
continue to try to be responsible, continue to try to grow, but our estimates
show, based on our history, that we are not going to turn the corner until at
least the end of our licence and thereafter we are not sure.
3892 COMMISSIONER McKENDRY: If we don't approve the application, I take it
from what you have just said, it means it will take longer to turn the corner
than if we do approve your application. You will turn the corner, if we don't
approve your application, is that what you are telling us?
3893 MR. LEVY: Our business plan shows that we won't until the end, well, we
have projected out to the end of our licence and past that for another year or
two, and we don't see it turning unless we can dramatically increase the
audience.
3894 COMMISSIONER McKENDRY: I wanted to ask you about the wholesale rate in
that context. Would you consider raising your whole rate if we don't approve the
application?
3895 MR. LEVY: We have prided ourselves, as you saw in the video, with being
a low-cost alternative. The whole nature of this service was to be a low cost
sports alternative, to provide distributors a way of supplementing and providing
new sports information to its viewers.
3896 We have no intention of raising the rates over time. I can't tell you
what the future holds in terms of if we are not granted this licence
application, whether it means we will have to come back and think about that as
a source and strap it on the backs of subscribers, like the other networks do.
That wasn't our game plan.
3897 As some of the Commission may be aware, in my previous lives in the
cable industry, it gets continuously harder to just keep pushing fees on the
subscriber like that. So, we want it to be accessible. I don't know,
Commissioner, if you remember, we sort of pictured ourselves as the scooter and
that was sort of inexpensive and we were there for a dime and we want to
maintain that.
3898 COMMISSIONER McKENDRY: If we do approve your application are you making
a commitment that you won't raise your wholesale rate?
3899 MR. LEVY: Yes. I assume you are saying for the balance of the term. Is
that what you are saying?
3900 COMMISSIONER McKENDRY: You tell me.
3901 MR. LEVY: Let's talk in the context of the balance of the term and then
we will have this discussion again when we are here for renewal.
3902 COMMISSIONER McKENDRY: Just for a second, going back to the programming
in relation to live events, once you put live events on what
comes off?
3903 MR. LEVY: In our context, nothing. That's the beauty of our network.
3904 COMMISSIONER McKENDRY: And that's because the ticker is still running
and because you are going to break into the programming with the split screen
and so on?
3905 MR. LEVY: It's hard to visualize it and it's hard to present it in the
context of a two-minute video. We tried and, hopefully, that's a bit of what we
are looking at, but we are not dumping other product to put this product on. Our
viewers are going to get the current information and more.
3906 COMMISSIONER McKENDRY: I just have a question now about the amendment
you made where you said that 50 per cent of all the live programming in prime
time will be Canadian. I want to ask you if in light of this commitment are you
still seeking to reduce your evening Cancon requirement to 60 per cent and your
overall requirement to 80 per cent?
3907 MR. LEVY: Yes.
3908 COMMISSIONER McKENDRY: Another question with respect to the live
programming and the Canadian content commitment of 50 per cent. As I understand
it, it's restricted to prime time. Have you given any consideration to extending
it to live programming outside of prime time?
3909 MR. MALCOLMSON: I think, Commissioner McKendry, we did that a little bit
by virtue of the definition that we put forward. In reply I think we expanded
the definition of prime time, or at least tried to, to track when sports events
happen.
3910 We defined it as, I believe, 6:00 p.m. Monday to Friday and noon to
midnight on Saturday and Sunday. So I think it's a wider definition of prime
time than one might normally think of when you think of prime time.
3911 COMMISSIONER McKENDRY: Given that you have proposed a limit on your live
programming on a quarterly basis, 15 per cent of the quarterly program schedule,
why are you proposing to measure the Canadian content of live programming on an
annual basis?
3912 MR. MALCOLMSON: Our Cancon commitments have always been measured, since
we were licensed, over the broadcast year. Originally, it was 100 per cent of
the broadcast year, so we were seeking consistency.
3913 COMMISSIONER McKENDRY: Those are my questions for you. Thank you very
much.
3914 THE CHAIRPERSON: Thank you, Commissioner McKendry.
3915 I have a couple of questions.
3916 We spoke about genre of programming, and obviously that is a very broad
word. The Commission's intent is to try to see some diversity for
subscribers.
3917 So if genre is not enough, whether it be sports or to ensure that
diversity, it uses very specific conditions of licence to limit what one can do.
It is usually based on what is before the Commission at the time of an
application, whether it is "we won't do films" or, in this case, "we shall not
broadcast any live sports event coverage".
3918 So I don't think you can underplay the fact that this is an amendment;
it is a change. As Commissioner McKendry pointed out, it is even more so because
it is in time prime. So the 15 per cent becomes a much higher percentage of
those hours of prime time viewing.
3919 In light of that, as was pointed out, we look at the length of time you
have had this licence. You speak of history and of a trend on the basis of which
you make very pessimistic projections into the future.
3920 Do you think the amount of time you have been building an audience and
trying to make a go of this amounts to creating a trend or a history sufficient
to say "we know from this history and this trend that there is no other way but
this to keep this viable and to do what we told the Commission we would do to
add diversity and which the Commission accepted"?
3921 MR. LEVY: I think the short answer to that is yes. History shows us that
where we are in our niche we have to continue to improve, we have to continue to
be responsive. We don't want to lose what we have accomplished, which is to
capture this young, new audience.
3922 We have to continue to improve our product. If we don't, we are in
jeopardy perhaps of losing it.
3923 THE CHAIRPERSON: When we talk of a genre or different programming that
would offer diversity to the subscriber, it is obvious that this is a different
service offered to the subscriber.
3924 Do I understand from the change you are going to make that it won't be
like what one would see on TSN because there will be break-ins, there will be a
continuation of the news, a break-up of the screen other than advertising, and
just a simple attracting the consumer who may want to use your service for the
type of information that it provides immediately and watches long form sports
programming or live programming events on another channel where that type of
interruption is not present?
3925 I will ask Mr. MacMillan, who says you fish where the fish are: Are you
not going to be neither fish nor fowl in perhaps trying to catch chickens with a
fishing pole?
--- Laughter / Rires
3926 MR. LEVY: I am trying to think of an appropriate way to continue that
metaphor, but I am unable to.
3927 I think the first thing with prime time in this regard is that Headline
Sports can only use live events when they are live. I know that sounds like a
silly tautology, but it is true. Under its current licence it could replay an
event that had already happened, but we are looking at live events here.
3928 By and large, they happen on weekend days, through the day and in the
evenings.
3929 I frankly think that the young audience has interest in watching a
screen where more than one type of information is coming at them at the same
time.
3930 The success of CP24 has a variety of different types of information,
some of which overlap with other channels, like The Weather Channel, and so on.
Young people today are increasingly doing that on their PCs. That is my
response.
3931 Frankly, I think they will be quite interested in watching a
multi-signal image.
3932 THE CHAIRPERSON: Have you tested that at all in focus groups, or some
means of seeing whether you would lose most of your audience because those who
like to watch live events, interrupted only by advertising if possible, are
going to keep watching them where they are available and they won't tune into
you at all because that is not what they are looking for; they are looking for
immediate information?
3933 There must be some business, other than this, of making a go of this
when one looks at the cost, as Commissioner McKendry pointed out, of buying
interesting live sports that will be broken up, and the danger of losing an
audience that you are just in the process of building for a different type of
service. That is my question.
3934 And of course, as a regulator, then I ask: What is going to prevent you
from saying well, people don't like this, so out with the screen and out with
the information. We are going to play a total game only with advertising
interruptions.
3935 There is nothing in your proposal that would prevent you from doing
that.
3936 MR. LEVY: I am going to ask our soccer fanatic at the back to talk about
the viewer feedback.
3937 THE CHAIRPERSON: I hope he is a regulatory expert too.
3938 MR. LEVY: I will kick it back up here.
3939 THE CHAIRPERSON: My question is: If you do find that being neither fish
nor fowl doesn't quite work, what would prevent you then from moving away during
those many hours from your core mandate, which is to not provide live sports at
the moment, and provide live sports exactly the way the other channels provide
it?
3940 The reason I am asking this question is because you have made a big
point in your presentation today and in your answers that you are not moving
away from your mandate that much because it won't look the same. It will have
these interruptions.
3941 MR. LEVY: Okay. We will change direction here for a second since
you --
3942 THE CHAIRPERSON: No "Mr. Soccer"...?
3943 MR. LEVY: "Mr. Soccer" is going to have to wait a minute because of the
regulatory part.
3944 It is counterintuitive to what we are trying to do to duplicate what
others are doing. If we were doing that, we would probably would not even be
here today in the context of having a serious network.
3945 The only reason we have managed to create what we have is by getting in
this particular zone. We have to guard that very cautiously, and we have to be
very aggressive in trying to continue to promote it.
3946 Rob wants to make a comment on this.
3947 I think it would be naive to think that if we just started to look and
feel and taste and smell like the other guys -- first of all, we would lose
our fish. You are right. They would be gone.
3948 Second, it would be very difficult for a network such as ours to be able
to try and attract the type of fish that are swimming in their tank.
3949 Let me turn over to Rob.
3950 THE CHAIRPERSON: Before you answer, Mr. Malcolmson, you did say --
someone did say -- that what we want to do is that we are trying to attract
the audience available to a live game broadcast. Presumably, that is one type of
audience, who is used to seeing a live game broadcast in a certain fashion.
3951 What makes you so sure that seeing it in that fashion is what that type
of audience is looking for?
3952 MR. LEVY: Our predominant target is not the viewer that is watching the
traditional game. Somewhere in our presentation you may have heard that there
may be some spillover from that viewership in the context of people wanting to
come to us to try our new format.
3953 What we want to do, what our intention is, is to present the game the
way our viewers want to see it; get them to stay longer; get some of these other
18-to-34 year olds who are out in the marketplace, who are not watching the
games now.
3954 Statistics show that the kids are not watching the games the same way
they historically have, not the way I watched it.
3955 So what we are trying to do, first and foremost is integrate it into our
plan to give our existing customers more to make them stay longer, number one;
attract other 18 to 34 year olds, these other interactive young viewers, to get
them to start to watch the game.
3956 In fact, Commissioner, it may work the other way. We may get these young
guys and girls in watching and they might say, "Hey, you know what? This is
good", and maybe they will flip over to the traditional way of watching games
because now we have started to excite them. That is really our barker format to
the ultimate, because now we are not just directing existing people over, we are
helping the leagues to reconnect with the young audience.
3957 Every one of them will tell you, if they come up before you again, that
the reason a lot of them are in trouble -- I know the reason the CFL is in
big trouble is because they lost contact with my kids. You know, they ignored
them. I couldn't drag my kids to those games. They lost a whole generation.
3958 I think they are realizing that those skewing above 34 years old or 49
years old and north of that, they are not going to be around forever,
unfortunately. I say that hesitatingly because I'm starting to get into that age
group but, you know, they are not going to be there forever. They better get in
tune with the young people and they better excite them about their sport,
otherwise, you know, they are going to have a lot of empty living rooms.
3959 Anyway, is there anything else you wanted to add to that, Rob?
3960 MR. MALCOLMSON: Just hopefully a practical answer to your regulatory
question, which is what assurance do you have that we are going to be what we
say we are going to be, which I think is a fair summary of your question.
3961 I think what you have is certainly the ability at licence renewal time,
when we are back before you in 2003, to test on us on whether we have done what
we have said we were going to do and perhaps, if you feel it is necessary, an
expectation in your decision that we are going to present the games in the
different fashion that we have tried to articulate today would give you some
level of assurance that we are going to deliver what we say we are going to
deliver.
3962 MR. MacMILLAN: May I just add one more thing? I was so busy trying to
complete that metaphor that I forgot to really answer your question.
3963 THE CHAIRPERSON: You started it. Aren't you the one who said you will
have to fish where the fish are, so you will have to make sure that you are not
pitching something which is neither and losing both?
3964 I understand your point, that even ordinary sports games are broken up
now and younger people are used to doing many things at the same time.
3965 MR. MacMILLAN: But the context, when I first started that metaphor, was
one of expressing concern in that case that television drama might not be
presented when most people actually find it convenient to watch TV. The reason
that live sporting events happen in the evenings and on weekends is that is
because it is when people find it convenient to attend those events. It's the
easy time. It's not during working hours. That's why those events happen
then.
3966 It seems to me that our proposal, in this sense, is a very good thing.
It is making available those events when it is convenient. It is doing it in the
Headline way, it is doing it in a different way, but that is actually delivering
greater diversity, greater choice, especially considering that a lot of this
programming is currently on the shelf, not in the window, as it were.
3967 So I think in fact we are fishing where the fish are, creating an
opportunity to have these programs viewed at the convenient time. It makes more
sense to do it this way, or to do it any way, in prime time, in the weekends,
instead of at midnight or at 5:00 p.m. In fact, I think this does create a
better, more useful service for our viewers.
3968 THE CHAIRPERSON: My last question. Although your proposal is for 25
hours, when that is raised the answer is often, "Oh, yes, but we are only going
to do 10 to 12 at the beginning." Would the beginning be until 2003? Would that
be acceptable?
3969 MR. MALCOLMSON: I just want to make sure I understand your question.
Your question is --
3970 THE CHAIRPERSON: Your proposal is for 25 hours, and as Commissioner
McKendry has discussed with you, because of the fact that it is concentrated in
a particular time frame, it is a big change within that time frame, but at the
beginning you will do 10 to 12 hours. That is supposed to give us some comfort.
Would that be sufficient if the Commission weren't prepared to accept 25
hours?
3971 What is the beginning? You say "at the beginning", which would be,
presumably, if we had a positive decision in 2000 or perhaps halfway through
2000, and then 2003 would be your renewal. Would that be a beginning, at 12
hours, so we can see how things are going in 2003, which is also a suggestion if
we are concerned that we can review this at renewal?
3972 You don't have to answer. The application is for 25 hours, but
incrementalism is always a bit of a problem.
3973 MR. LEVY: I think, Commissioner Wylie, the reason we went 15 per
cent is to provide flexibility in the context of the type of product that is out
there and when we are going to show it. We are estimating that we are going to
watch, in 2001, the year ending 2001, which would be our -- hopefully, if
we get a positive decision, that would be our end of the first year of
operation. We can't integrate this thing all at once, nor do we want to
integrate it all at once. We are talking about a ramp-up within the 15 per
cent.
3974 So our object and the plan is to start with the 10, 12 hours a week and
gradually and our business plan shows that depending on the availability of
product, depending on our success, depending on our ability to sell, we are
going to ramp to a maximum. Our plan shows that we get fairly close to the 15
per cent by the end of our term, which is August 2003. At that point, we will be
back in front of the Commission and hopefully we will be saying, "We are very
happy. It has worked. Let's renew and go forward." That is our plan.
3975 THE CHAIRPERSON: Commissioner Cram.
3976 COMMISSIONER CRAM: I'm sorry, I was caught up in fish and aquariums and
chickens --
--- Laughter / Rires
3977 COMMISSIONER CRAM: -- but I did want to hear from Mr.
Soccer --
3978 MR. CICCONE: Finally. I thought you forgot about me.
3979 COMMISSIONER CRAM: -- Mr. Ciccone as to the issue of the audience
reaction and the concept of the acceptability to your demographic of the format
and the live programming. I didn't hear that answer.
3980 MR. CICCONE: Just to give you a profile of who is watching Headline,
basically, as John has mentioned, it is 18 to 34 predominantly and younger.
These guys have a huge appetite for sports and they are used to doing many
things at many times, multitasking, as John said.
3981 They sit at their computer, probably have their CD player playing a disc
with their headsets on and watching television at the same time. We know this
because on many occasions, via feedback segments on our channel, we ask the
viewers about certain topics and about certain subjects and within minutes we
are getting responses hitting our computer back. So it proves to us that they
are watching television and sitting at their computers surfing the Web at the
same time.
3982 On a daily basis we receive phone calls and e-mails at my office to
suggest alternative programming ideas, new angles, what the appetite is, and we
feel we have a good grasp on what the young viewer at home wants to see.
3983 Sorry, just to add to that, more soccer has been a predominant
theme.
3984 COMMISSIONER CRAM: How about soccer from Regina?
3985 THE CHAIRPERSON: You won't have too many problems getting rights to
those world games?
3986 MR. CICCONE: I'm sure I can persuade John.
3987 THE CHAIRPERSON: Oh, maybe you will have to persuade other people
besides John.
3988 MR. CICCONE: You have to start somewhere.
--- Laughter / Rires
3989 THE CHAIRPERSON: Counsel.
3990 MR. BATSTONE: Thank you, Madam Chair.
3991 I wanted to start with a question about the regional programming. Just
to clarify something, are we talking about separate feeds here?
3992 MR. LEVY: Yes. One separate feed.
3993 MR. BATSTONE: One separate feed. In one particular region?
3994 MR. LEVY: Correct.
3995 MR. BATSTONE: The west?
3996 MR. LEVY: No, not necessarily the west.
3997 MR. BATSTONE: Oh, okay.
3998 MR. LEVY: It will be wherever the region -- wherever the
programming is coming from.
3999 MR. BATSTONE: I see. Okay.
4000 I would just like to ask a couple of questions about the amateur and
under-represented sports coverage. You addressed this issue with
Commissioner McKendry earlier.
4001 I would just like to first get your sense of whether you would be
willing to accept a commitment towards amateur and under-represented
sports -- I'm talking about a conditional licence here -- and, if you
would, what level would be appropriate?
4002 MR. MALCOLMSON: Counsel, we are certainly excited about the
opportunities for amateur sport, particularly the Canada West Conference at the
CIAU. To accept a condition of licence, it would be difficult for us, just from
the practical standpoint of rights acquisition. Until we are out in the
marketplace with an ability to negotiate a rights deal, it is difficult to make
a commitment by way of condition of licence.
4003 Perhaps if we are successful in having this application approved, the
issue could be revisited at licence renewal time when we have been in the
marketplace, we know what is out there and we know what we can do.
4004 MR. BATSTONE: My next question goes to the potential impact of the
changes on local broadcasters. Just specifically, if you looked at what the
potential impact might be. If you are offering me some programming in a
particular area, is that likely to have an effect on the broadcasters?
4005 MR. MALCOLMSON: First I would note that no local broadcaster per se has
intervened in opposition to this, nor has the CAB.
4006 The type of product that we are talking about, counsel, again, is
product that isn't on television today. Our CIAU example is product that isn't
being carried in a local market today, so that suggests to us that it is not
going to have an impact.
4007 MR. BATSTONE: Similarly then, are you projecting that there would be
much of an impact in terms of advertising revenue on other services? I'm
thinking again of conventional services.
4008 MR. LEVY: With regard to the amateur sport? Is that what you are
referring to?
4009 MR. BATSTONE: Not necessarily, just in terms of if we allow this
additional programming?
4010 MR. MALCOLMSON: The answer with respect to conventional services is no.
We think the order of magnitude of what we are doing will have minimal impact,
if any.
4011 MR. BATSTONE: I only have a few more questions.
4012 Just in terms of you were discussing earlier with Commissioner McKendry
the proposed conditional licence for Canadian content in prime time. He had
asked you: Would you still need -- or would you still want to reduce the
evening Cancon level to 60 per cent and the overall Cancon to 80 per
cent with this additional commitment to 50 per cent Canadian content for
live events.
4013 I would just like to explore with you why in fact that is the case. If
50 per cent of the stuff you are going to do -- or the live event
anyways, in prime time, is going to be Canadian content, couldn't that reduction
in the amount for the prime time period and the overall be less?
4014 MR. LEVY: I am just trying to understand. If you are specifically asking
if we are committing to do 50 per cent of our prime time Canadian, which we
are, are you suggesting that we don't need the requirement of 60 per cent
in prime?
4015 MR. BATSTONE: That's what I'm wondering.
4016 MR. LEVY: Fewer conditions are better. I don't think we need that,
unless I'm misunderstanding something.
4017 Rob.
4018 MR. MALCOLMSON: The condition of licence with respect to 50 per
cent in prime time is in relation to live event programming, so that is based on
an assumption that there will be live event programming within that block.
4019 That assumption will be, again, a function of the rights that are out
there and what programming we are able to acquire. If we are not able to acquire
live event Canadian programming and put it in our schedule, then the flexibility
that we are looking for may in fact be required.
4020 MR. BATSTONE: I guess that's sort of where I'm going with this.
4021 If you weren't airing live event programming -- because if you are
we would have the assurance that 50 per cent of it would be Canadian in
prime time -- then there is that 40 per cent block and I would kind of
like to explore what would be there.
4022 Would you be airing non-live, non-Canadian programming in prime time and
do you need a full 40 per cent to do it?
4023 MR. LEVY: I think what we are looking at is some of the feature
programming perhaps surrounding the live event which may necessitate that
requirement as to why we need that other condition.
4024 MR. BATSTONE: Let me just clarify one thing then: Will there be
non-live, non-Canadian programming? I guess given your nature of service right
now, like I'm thinking this would be like a news magazine format or something
from one of the U.S. broadcasters for instance. Is that something that would be
there?
4025 MR. MALCOLMSON: That's a possibility.
4026 MR. BATSTONE: All right.
4027 Just in terms of the other question that Commissioner McKendry raised
with respect to the different timeframes for measuring between the Canadian
content on live and the overall commitment, one is on an annual basis, one is
measured on a quarterly basis.
4028 What I'm wondering is what is the best way to measure it, I guess? Is
there a need to have the averaging over the year as opposed to the averaging
over the quarter?
4029 MR. LEVY: I think the short answer to that is, yes, it is important for
us to have the ability to average over the course of the year, particularly in
these three years as we are developing how we are incorporating this product,
what product is available. You know, are we going to be able to incorporate some
programming that may fill up larger blocks in terms of special olympics and that
sort of programming.
4030 So as we build I think we need that flexibility.
4031 MR. BATSTONE: Are you suggesting, then, then -- I would like to
explore all the possibilities here.
4032 Are you suggesting, then, that it would be appropriate that everything
be measured on an annual basis?
4033 Similarly, the flip side of that is, would it unduly restrict you or
would it cause problems if it was all measured on a quarterly basis?
4034 MR. MALCOLMSON: Our original Canadian content condition of 100 per
cent, if I'm not mistaken, was measured on an annual basis. So the reduction in
terms of 100 going to 80 that we have asked for we put forward as an annual
basis.
4035 I believe, again, the prime time Canadian content condition again, for
purposes of consistency of measurement, we put forward on an annual basis.
4036 MR. BATSTONE: But I guess the question -- now we are talking about
quarterly in some cases to do with the -- I'm sorry.
4037 It's just the regional programming that is quarterly. Is that right?
4038 MR. LEVY: Correct.
4039 MR. BATSTONE: Yes. I was confused.
4040 Is there a particular reason, then, why that is quarterly as opposed to
annual?
4041 MR. MALCOLMSON: The regional condition, counsel, was prepared to mirror
the split feed condition that TSN has in decision -- I think it's 97-290.
It is the exact wording, unless I have transcribed it wrong.
4042 MR. BATSTONE: Thank you.
4043 Those are all my questions.
4044 THE CHAIRPERSON: Thank you, Madam and gentlemen.
4045 MR. LEVY: Thank you.
4046 THE CHAIRPERSON: We will now take a 10-minute break and come back for a
second phase with the intervenors.
4047 Thank you.
--- Upon recessing at 1021 / Suspension à 1021
--- Upon resuming at 1038 / reprise à 1038
4048 THE CHAIRPERSON: Madam Secretary.
4049 MS SANTERRE: Thank you, Madam Chair.
4050 Before I announce the first intervenor, I just want to make a change to
the order of appearance of the intervenors. CTV Inc. just advised us that they
will be non-appearing today. Therefore, we have moved the Toronto Blue Jays
Baseball Club with Mr. Pollock to be second on the agenda after NetStar.
4051 Now I would like to invite NetStar Communications Inc. to present their
intervention.
4052 Monsieur.
INTERVENTION / INTERVENTION
4053 THE CHAIRPERSON: Welcome back.
4054 MR. CRAIG: Thank you. Madam Chairperson, Commissioners, ladies and
gentlemen. My name is Gordon Craig and I am the Chairman and CEO of NetStar
Communications. On my left is Jim Thompson, President of the NetStar Sports
Group. On my right is Paul Brown, NetStar's Vice President of Business Affairs
and beside Paul is Chris Johnston, our legal counsel and partner in the firm
Johnston and Buchan.
4055 For the record, I would like to note that the comments and responses
that we will make today solely express the views of NetStar.
4056 Madam Chair, our appearance today is an effort to balance the
information before you and to offer you some facts. Put simply, the application
by Sportscope is not an application for an amendment to its conditions of
licence. It's an application to fundamentally alter the nature of Headline
Sports service. It's an application for a new specialty programming network.
4057 The Commission's decision approving Headline Sports three years ago
clearly outlined the nature of the new licence, and I quote:
"The licensee shall provide a national English-language specialty service
that is dedicated solely to the broadcast of sports results and
information --"
4058 And a further quote:
"The licensee shall not broadcast any live sports event coverage."
4059 No doubt it was a conscious and deliberate decision on the part of the
Commission to include the word "solely" in the nature of the service to ensure
for viewers a Canadian headline sports news service, a service which the
applicant emphasized throughout the process would not broadcast any live
events.
4060 It was to add diversity to the Canadian television lineup and to live
within the Commission's policy framework of not licensing two services within a
specific program genre that are directly competitive. In the applicant's own
words:
"Sportscope Plus is not in the sports event coverage business and hence not
directly competitive with the live sports event coverage offered by local,
regional or national broadcasters."
4061 Sportscope also points out that this application is the next stage in
the evolution of a service that began as a non-licensed alphanumeric offering,
then applied for a licence to turn that service into a new Headline Sports
service news channel and now is seeking its third incarnation into a prime time
live sports event network with regional cut-in capabilities.
4062 MR. THOMPSON: Madam Chairperson, Commissioners and staff. Sportscope
continuously echoes that it will remain a sports-oriented news network. It
claims that event coverage will not affect the provision of up-to-date sports
information that lies at the heart of their nature of service.
4063 In our respectful view, this is not at all possible under the proposed
amendments. Scores and highlights are the very core of Headline Sports. During
prime time and on the weekends, when peak sports viewing occurs, Headline Sports
would become a live event sports specialty service under this proposal. That's a
total departure from their current nature of service.
4064 The reality is that this is the very time when television news coverage
of up to the minute sports scores and information is most valued by viewers. All
major events are in progress at that time of the evening. That's the beauty of a
headline sports service. It serves a real need for sports fans at critical
viewing times. It adds diversity and complements existing live events sports
programming on other networks.
4065 Were Headline Sports permitted to broadcast live events, there would, in
fact, be no established sports wheel throughout this key prime time period for
sports viewers.
4066 Let's look at the math for a minute. The proposal to broadcast live
events 15 per cent of the time equates to 3.6 hours per day. That's an average
of more than one event per day in prime time for a total of over 500 live events
per year. It's hardly headline sports. It's TSN.
4067 Sportscope calls its proposals "relatively minor amendments to its
condition of licence" including "a modest amount of live sports events
coverage". Clearly, as you have heard, this is simply not the case.
4068 The applicant goes further to request a reduction in the service's
Canadian content level to 60 per cent in prime time. This again is hardly a
modest move from a 100 per cent Canadian headline service.
4069 All this in the first licence term. All this despite exceeding their
performance and revenue projections. And all this without the benefit of the
essential elements of any licence application like a business plan to
demonstrate that the concept is viable and allow the Commission to properly
evaluate the application; a program schedule to prove the feasibility of the
proposal, and consumer research to support the proposal based on viewer
interest.
4070 In particular, without consumer research, the Commission has no basis to
evaluate subscriber and viewer reaction to a fundamental change in the program
format and prime time schedule. The proposed program changes also contradict the
consumer research provided in appendix 1 of the original application which at
that time concluded:
"Sports enthusiasts are interested in having a dedicated source for sports
information."
4071 What viewer demand is this application trying to address? We have
already seen that it takes away the core headline sports service for viewers in
prime time every day, a service that has had success with Canadian viewers.
4072 What does it add to programming diversity? Headline states that it:
"-- intends to compete vigorously with TSN and CTV Sportsnet for
programming, audiences and advertising."
4073 In essence, it will be looking to move existing programming from other
networks on to its service. That's not diversity. That's a new outlet, simply
creating incremental revenue for professional sports properties that already
have a home on Canadian television. This cannot be viewed as beneficial to the
viewer or the Canadian broadcasting system.
4074 It should come as no surprise then that the positive support for this
application comes solidly from professional sports organizations who have these
very rights to sell. The result is more competition for professional sports
rights rather than enhanced service for Canadian viewers.
4075 We think you have heard enough about this over the past few days. Let us
say that keen competition already exists in many forms for these rights and will
continue to exist without the Headline Sports proposal.
4076 While we understand that professional sports generally would support a
potential competitor for their rights, we are at a loss as to what the specific
intervening sports teams actually have to gain. The Blue Jays already have 162
games on Canadian television. The Argos have no games to sell and neither do the
Maple Leafs.
4077 What is clear to us is the lack of commitment anywhere in this
application to amateur sports or independent production. To that end, there is
only one letter of stated support by amateur sport and none from Canadian
independent producers.
4078 MR. CRAIG: Madam Chair, I would like to depart from the script that you
were handed to get on the record some points in response to what we heard this
morning.
4079 Number one, it was a very interesting new presentation that we observed
on tape. However, I would like to suggest to you that no sports team or league
would permit their product to be presented that way in terms of preserving the
integrity of their sport. We urge the Commission to ask the sports intervenors
who are following us if in fact they would permit their sport to be presented in
such a fashion. Other broadcasters are prohibited by contract to in fact do such
things.
4080 Commissioner McKendry got into the cost on those ten Blue Jays games. I
would just like follow up a little bit on that. If they did pay $150,00 a game
for rights and $50,000 a game for production, they were into a cost base of
about $2 million. I would like to share with you that TSN is able to get less
than $100,000 a game in advertising revenue on our network with a larger reach
and a full game presentation.
4081 Even if they were somehow able to get $100,000 a game, those ten games
would put them into the red by at least a million dollars, just for ten
games.
4082 We commend them for their amateur sports initiatives, the world class
program this week in the CIAU and the love of sport. However, they need no
licence amendment to include those types of programming in their current
schedule.
4083 It's interesting to know that every network that comes before you
seeking a sports licence identifies all those CIAU games out there that aren't
covered by television. I think if you go back in the record probably every one
of us have done that. However, when you get the licence you find out that they
are not very commercial, there isn't an audience that will sustain the cost of
production and they seem to fall by the wayside.
4084 Mr. Levy also mentioned that he does have a business plan incorporating
a ramp up in live sporting events, and we are wondering why that business plan
wasn't filed with the Commission, so that we could all understand the economics
of this new proposal.
4085 The research component, they haven't supplied any research, but they
talk about the 18 to 34-year old demographic not being satisfied with
traditional sports broadcasting and I think used as an example only 22 per cent
of viewers from that demographic watch hockey.
4086 However, the population of Canada in the 18 to 34 age group is only
about 24 per cent, so that seems to me to be fairly representative of the
population. The 18 to 34-year olds have less tuning than other age groups, we
know that, at 22 per cent of viewing. That's the same percentage Headline Sports
says view hockey. However, Nielsen's "Hockey Night in Canada" numbers are about
26 per cent of their viewers come from the 18 to 34 viewing category.
4087 The conclusion in all of this is that there is no evidence that the 18
to 34-year old doesn't like traditional sports broadcasting. We urge the
Applicant if they do have research or focus groups to please file it, but we are
concerned that they have perhaps made a miscalculation on the format value again
and could very well, as the Chair suggested, be back for another bailout if this
particular format doesn't work as well.
4088 In conclusion then, this is a very big country with a small market, and
the Commission in its wisdom has created an orderly Canadian sports broadcasting
market which serves the Canadian viewer well. There is a national sports
specialty service, a regional sports specialty service and a headline news
sports specialty service.
4089 The combination of these three levels of service together allow the
Canadian specialty broadcasters to compete effectively with all the sports
programming that is available from Canadian conventional broadcasters, U.S.
conventional broadcasters, U.S. cable networks and U.S. superstations.
4090 Approval of the Headlines Sports application as tabled would
significantly dilute the strength and the contribution of all three networks
going forward.
4091 Madam Chair, what is clear to us is that had Sportscope put forward this
component of programming in its original application three years ago, the
Commission would not have licensed it. Why then should the Commission be
expected to deviate from its stated policies today.
4092 Thank you for the opportunity of expressing our views. I would be happy
to answer any questions.
4093 THE CHAIRPERSON: Thank you, Mr. Craig.
4094 Mr. Craig, if there was not a contractual impediment to showing live
events the way we saw them on the screen, let's put that aside, the contractual
ability to do it because, presumably, contracts can be changed, do you
see -- with your experience in sports do you agree with an older person's
comment that this may be unattractive to the viewers, against the previous
panel's comments that that's not the way young people watch sports?
4095 I am talking here not of the contractual impediment to do it, but the
appeal of it because you do some split screening as well. What is your
experience about what the viewer will actually find attractive of live
sports?
4096 MR. CRAIG: Madam Chair, I hope it's not the demographic that I find
myself in, but I do believe --
4097 THE CHAIRPERSON: As old as me is a big problem?
4098 MR. CRAIG: No, no. I was being very cautious not to refer to the Chair's
demographic.
4099 But I personally believe that the presentation as demonstrated would not
develop large audience followings. In my opinion it wouldn't attract large
components of advertising dollars, but I think you will have an opportunity to
ask one of the members of the advertising community whether or not that's true
when he comes up as an intervenor.
4100 But it certainly would be a very small component of the audience that
would find that attractive, but what would be missing, in my opinion in that,
and what is there now with the carefully constructed orderly market, that a
viewer in Canada can be watching a Blue Jays game on some other channel and if
wants to get at any time of the evening the up-to-date scores and the highlights
from other games, has an automatic switch to Headline Sports for a minute or 90
seconds and then back to the game and that's the element that is going to be
missing.
4101 It was a very strategic component, I think, of the Commission's building
of the Canadian specialty marketplace that put that component in place. What I
see throughout prime time is that that component for the viewing public will be
missing.
4102 THE CHAIRPERSON: Mr. Craig, if there were a way of insisting that this
the way it would look -- in other words, they wouldn't depart from their
mandate quite as much as they would if they showed live events the way you show
them, if we could request that and insist that that's kept -- that that's
the way it is done, would that remove your concern?
4103 MR. CRAIG: If there was a condition of licence that live sports didn't
ever occupy maybe more than one-third of the screen, why not.
4104 THE CHAIRPERSON: And would it matter whether it would be script or
actual voice? In other words --
4105 MR. CRAIG: For the other portions of the screen?
4106 THE CHAIRPERSON: A reporter with a microphone talking about something
else. If it were just alphanumeric superimposed that would be enough to
alleviate your concerns of having changed the format?
4107 MR. CRAIG: I think I would leave that production decision to them. I
think what they would be concerned about is limiting the disruption for the
viewers, whether they are seeking sports information or whether they are
actually looking at the game.
4108 THE CHAIRPERSON: But your concern is that they not be TSN?
4109 MR. CRAIG: Absolutely.
4110 THE CHAIRPERSON: So I am asking you what is it that we could do to
prevent them from being TSN and to make good their claim that they are not
moving away that much from their format.
4111 MR. CRAIG: Well, they told us that they would be running the scores
underneath on the banner throughout their entire presentation of the game. In
fact, all sports networks do squeeze backs and do headline and score
superimpositions at the bottom of the screen. Sportsnet does it, TSN does it,
RDS does it. That's a normal technique to keep people watching your game and the
presentation that's on your network.
4112 So that in itself isn't the uniqueness of what attracts the viewer to
headline sports. It's the up-to-date highlights and comment that occurs inside
that 15-minute wheel on an ongoing basis throughout prime time. That, I think,
is what the missing element will be in the presentation.
4113 THE CHAIRPERSON: You have been involved with a sports channel for a long
time. What is your view of the ability to sell time to advertisers on the basis
of a demographic that is even -- even if you could show that you have it
below 18? Well, I guess measurements are made from 12 on. Right?
4114 What is the ability to sell advertising in sports programming on the
basis of a demographic below 18?
4115 MR. THOMPSON: Madam Chair, if I may answer that, all advertising is sold
on the size of the audience.
4116 THE CHAIRPERSON: Not pitched to a particular --
4117 MR. THOMPSON: Well, we certainly focus to where we have a strong
demographic. In our situation it would be men 18 to 49. However, there are other
demographics, adults 25 to 54 is a very popular demographic for sport, as women
viewers actually count for over 40 per cent of our viewing audiences.
4118 But regardless of that, we have to have large numbers and good, very
solid demographic numbers in order to attract the advertisers and in order to
give them the value that they believe they have acquired from us.
4119 THE CHAIRPERSON: Mr. Craig?
4120 MR. CRAIG: Madam Chair, I don't believe there is a market in sports
broadcasting for below 12, or the 12-to-18 even. But again, that is another
question perhaps that the intervenor coming behind us could respond to more
categorical than I.
4121 The other thought that this format conjures up -- and I don't know
where it is. I know that there are all kinds of difficulties at the moment with
someone offering broadcast signals on the Internet.
4122 I do believe that on your own Web sites exactly what we saw presented
this morning is what most broadcasters are going to be presenting on their Web
sites, on the Internet, with the copyright intact for those young people who are
into the computers and the Internet to watch and keep an eye on sports while at
the same time they are doing other things. We don't need a channel to do that.
That is where the Internet is going to take every one of us as broadcasters.
4123 THE CHAIRPERSON: Mr. Craig, in your presentation you skipped part of a
page, the part about the CBC. Was that in the interest of having enough
time?
4124 MR. CRAIG: Time.
4125 THE CHAIRPERSON: Not because you are abandoning that proposition.
4126 MR. CRAIG: No, not at all.
4127 THE CHAIRPERSON: In that case, would you expand on your question marks
about their proposed program supply agreement with the CBC.
4128 MR. CRAIG: Madam Chair, we are curious about that proposed program
supply agreement. In fact, the Canadian Broadcasting Corporation has
conventional broadcast rights in most of the professional categories of NHL
hockey, CFL football, Olympics, Blue Jays baseball, curling and auto racing.
Those are the ones that we listed. But they have no ability to offer those
programs or elements of those programs to a cable network.
4129 I guess our question mark was that that must mean that the CBC's
proposed program supply with this organization, with the applicant, probably
falls more in the category of amateur sport.
4130 We are still wondering, without a program schedule from the applicant,
exactly what those components might be.
4131 I guess recognizing -- and this is not cast in a disparaging way,
but Mr. Thompson and I both know anyway, from personal experience, that the
CBC's cost of production is the highest in the industry. Hopefully in any supply
agreement that the CBC might have with the applicant they would be at least
recovering all of their costs and not subsidizing this applicant in the area of
amateur sport.
4132 THE CHAIRPERSON: Can we take it from -- let me first say that some
comments have been made in interventions and again this morning in the
questioning about the fact that we don't really know, and the Sportscope panel
didn't seem to be able to provide very much detail about what it is that they
are going to show. And it is obviously based on acquiring rights, et cetera.
4133 Can we take it from the fact that NetStar has not only intervened in
writing but stayed with us longer -- I know you like us -- that you
are concerned, and in fact they will be able to achieve that to buy rights to
interesting programming that will be competitive with what you show?
4134 MR. CRAIG: Madam Chair, the answer to that is yes.
4135 THE CHAIRPERSON: That you like us.
4136 MR. CRAIG: That we like you. And a yes to your question.
4137 We know there are some contracts -- and in fact, I would suggest
the urgency of this application rather than going through the process of
applying as a new specialty service that is open to the applicant at any point
in time or waiting until licence renewal, which is when usually a modification
of this magnitude might be considered in a licence, there are, as we speak,
rights coming up in major league baseball that are under negotiation right
now.
4138 We know that this applicant has some direct ties with major league
baseball.
4139 It is very difficult not to suspect that this would be an area of
interest for the applicant almost immediately.
4140 THE CHAIRPERSON: By the interest, you mean through the radio rights.
4141 MR. CRAIG: Yes, and past associations.
4142 THE CHAIRPERSON: I know that you have made it clear that you were
appearing here just on behalf of NetStar. Nevertheless, NetStar was before us
yesterday asking to change its ownership, which would have some result
obviously.
4143 Would your answer to the ability to get rights be any different if that
application were approved?
4144 MR. CRAIG: No, not at all.
4145 THE CHAIRPERSON: Then would you have the same view of this application
if the other proposal were approved?
4146 MR. CRAIG: Madam Chair, the answer to that is yes, because I see a
balanced and orderly broadcasting market being disrupted. I liken it
to --
4147 THE CHAIRPERSON: That's what we heard yesterday.
4148 MR. CRAIG: I liken this applicant's request to expansion in the NHL. It
seems like a good thing at the time, but the result is a diluted product across
the board.
4149 I believe that that will happen if this applicant's request is supported
by the Commission.
4150 THE CHAIRPERSON: Commissioner McKendry?
4151 COMMISSIONER McKENDRY: Just a quick question to help me understand the
world of making money from acquiring sports rights.
4152 You mentioned that the Blue Jays game cost you, I think in total,
$200,000: $150,000 for the rights and $50,000 to produce it.
4153 MR. CRAIG: Our rights -- because I think you heard yesterday from
both the Blue Jays and major league baseball that we were able to negotiate a
slight reduction in our per-game rights cost. It is over $100,000 but it is
slightly less than $150.000.
4154 It is worth noting, as we go through that, that the clause that allowed
us to do that was negotiated with major league baseball at a time when the Blue
Jays and TSN had common ownership, and it was put into our contract with the
Blue Jays, with Labatts' full knowledge, to in fact provide the broadcast side
of the Labatts' arm with some latitude if product decreased in viewer appeal and
market appeal.
4155 That happened and we exercised that clause, much to the Blue
Jays' -- and at the time Mr. Beeston's -- chagrin.
4156 I believe the 40 games that Sportsnet purchased were in the
neighbourhood of $130,000 to $150,000.
4157 COMMISSIONER McKENDRY: My question related to the fact that you went on
to say, I think, that at most you collected $100,000 in revenues.
4158 MR. CRAIG: I believe this year it was $85,000 a game.
4159 COMMISSIONER McKENDRY: My question, just to understand how this world
works, is: Why would you show baseball games?
4160 MR. CRAIG: Because we need that product in the summer, as we need NHL
hockey in the winter, to gain carriage with our cable partners and DTH partners,
to get on to the dial in an advantageous way, to attract viewers.
4161 That kind of product allows us to command the type of subscriber fee
that we get from the cable industry, that allows us then to provide the mandated
programming, the amateur sports programming that costs a lot to produce as well
but doesn't attract the advertising dollar.
4162 The NHL and the Blue Jays are must-have product. And that is why,
wearing another hat yesterday or the day before, Monday, my colleagues and I
expressed to you that the teams offering regular season games in Canada, whether
that is the Blue Jays or the Leafs or Canadians or Ottawa, have a ready-made
buyer because we have to have that inventory in our schedule.
4163 Our bargaining power, in terms of the rights to those properties, is
minimal.
4164 COMMISSIONER McKENDRY: Why wouldn't the same model, then, work for
Sportscope?
4165 You have made a point that it would cost them more to acquire these
rights than the revenues they could generate. The situation you are in, you
said, as I understand your answer, "It is integral to our ability to offer an
overall product that will drive our subscriber rates and allow us to fill our
schedule" and so on. So why isn't that model applicable to Sportscope as
well?
4166 MR. CRAIG: Principally, because that is the model that we applied for a
licence to in fact deliver and a business proposition that we in fact applied
for. That is not the business proposition that Headline Sports applied for and
was granted a licence.
4167 COMMISSIONER McKENDRY: Thank you.
4168 THE CHAIRPERSON: Commissioner Cram.
4169 COMMISSIONER CRAM: Thank you.
4170 I'm really interested in this demographic, the 12-to-18-year old, the
babies of babyboomers who I think are going to overwhelm us one of these days,
and the concept that, if I understand correctly, a lot of American sitcoms are
doing is sort of targeting them and essentially grooming them in terms of
viewership because they believe that they have a lot of disposable income and
will have more. It seems to me that that is sort of almost intrinsic in this
business plan. Do you not believe that that concept has merit?
4171 MR. CRAIG: I think it is a risky business proposition with the high cost
of sport. I can tell you -- at the risk of getting into WTN and prime
discussions about carrying sports -- I can tell you --
4172 THE CHAIRPERSON: Absolutely no convent will have me. Don't worry.
--- Laughter / Rires
4173 MR. CRAIG: I can tell you of an actual example where YTV looked at
carrying some Blue Jays games and putting some youngsters into the broadcast
booth to talk to that demographic of viewer in their own language and abandoned
it predominantly because of the cost and perhaps some research that they did to
see whether it would float.
4174 I think the same thing has been done with MBA. Jim, is that right?
4175 MR. THOMPSON: Yes.
4176 MR. CRAIG: But it doesn't prove to be a viable business proposition.
4177 COMMISSIONER CRAM: I guess my question is, then, you are saying only
with sports it is not a viable proposition?
4178 MR. CRAIG: I don't know about the sitcoms. I really can't speak to that,
Commissioner.
4179 COMMISSIONER CRAM: Because, frankly, it would seem to me that what you
are worried about is getting my nephew, who does multi-task -- and I wonder
if he has an attention span of more than a nanosecond -- you are trying to
get him to, in 10 years or 15 years, watch, for example, TSN. I don't know if
you can tell now -- you would have to do a longitudinal study almost over
10, 15 years to find out if the investment paid off.
4180 MR. CRAIG: I can tell you, Commissioner Cram, that one of the ways
that we are attempting to address that issue, and I believe other broadcasters
are too, is through the Internet. We are using the Internet to retain viewers,
to have viewers interface with our commentators throughout the program, ask
questions, be answered questions, give them specific statistical information to
different demographics and utilizing the Internet extensively to in fact: (a)
attract that youngster, first of all, as a viewer, and then give him the
interactivity that he is looking for with our programming and hopefully hook him
on Blue Jays baseball, as a young adult, through his adult life.
4181 THE CHAIRPERSON: Thank you very much.
4182 MR. CRAIG: Thank you.
4183 THE CHAIRPERSON: Madam Secretary.
4184 MS SANTERRE: Thank you, Madam Chair.
4185 Now I would like to invite the Toronto Blue Jays Baseball Club with Mr.
Pollock to present his intervention.
4186 THE CHAIRPERSON: Welcome back, Mr. Pollock.
4187 MS SANTERRE: Mr. Pollock, could you open the -- is the microphone
open? Okay.
4188 MR. POLLOCK: I'm sorry.
INTERVENTION / INTERVENTION
4189 MR. POLLOCK: Madam Chair, Commissioners, thank you very much for this
opportunity to intervene this morning.
4190 First of all, let me say that we support the application of Headline
Sports. But before I get to that, I want to make sure that everybody understands
that this doesn't conflict in any way with our submission yesterday that we
strongly oppose the joining of Sportsnet and TSN and we certainly feel that they
should remain separate and not create a monopoly.
4191 We view Headline Sports as a niche network and, as described by Mr.
Levy, they are certainly well down the chart at this time in viewership, but
they expect and I'm sure will grow that through time.
4192 I have heard a great deal of talk here about the Blue Jays and I
certainly want to clear up a few points. I keep hearing about 10 Blue Jays
games. I don't know where that is coming from or what the rationale for it is
because we don't have 10 games to sell. We have sold all of our games this
year.
4193 I think how this came in was that Sportsnet is covering the first
elimination series to the National Hockey League, which conflicts with about two
weeks in April and possibly three or four games. So I think when Mr. Levy was
referring to teams -- his organization acquiring shelf inventory, he was
talking about acquiring shelf inventory from broadcasters, not from us.
4194 Also, I was very interested in NetStar's comments about their existing
contract. First of all, the contract -- and you can read it very clearly,
it is in black and white -- had nothing to do with viewing audience, as to
the reduction in the rights fees they paid. It had all to do with no
competition. If there had have been competition, they couldn't have reduced the
rights.
4195 They also, I think, to me, left the impression that Major League
Baseball was the ones who negotiate contracts. Major League Baseball, the
National Football League, the National Hockey League doesn't negotiate
individual teams' rights. The teams do that. But all leagues have to approve all
television contracts of their various members. So I wanted to make that point
very, very clear.
4196 You might ask me where do I see Headline Sports acquiring any Blue Jays
games? Certainly in the next two years the only possibility that I could see
would be in the renegotiating of some party, some existing broadcaster, to that
contract.
4197 Another situation that -- and this is like one game type of
thing -- CBC, being a conventional broadcaster, has a force majeure
contract. For example, if there was a coronation of the Queen or something or a
death of the Queen, or something of that nature, they could opt out of a
particular game. Now, obviously, if that game was like a July the 1st game or a
prominent Saturday afternoon game or something, I'm sure that, being the good
partners they have always been, they would come and talk to us and explore with
us other opportunities. But, as I said, that is a remote -- that is, you
know, a one-off situation.
4198 What can happen in 2002 and onward, of course I'm not able to predict.
But I very, very much doubt that Headline Sports would be able to acquire any
more than three or four games and then they would probably acquire them
through -- from existing broadcasters who had those rights, and they would
first have to negotiate with us to offload those games.
4199 Having said that, the strength I think of this application to a sports
club is that one of the things that intrigues me the most is that when you are
watching Headline Sports they always say: Tune in to CTV/Sportsnet or CBC and
watch the game live. That is a big thing for us. They are promoting our game
literally on another network. So if they were to have a live broadcast as part
of that, whether it be amateur or some professional sport -- like, if it
was CFL or a Raptors local game or something like that -- that would drive
more viewers to watch our game, and, in any event, it would give us more
publicity that we are playing and the Toronto Blue Jays' name keeps getting
mentioned.
4200 I'm certainly not an expert in the demographic field and that, but I'm
sure Headline Sports have done their homework carefully, and if, as they say, I
have no reason to doubt it, that this skewed towards young fans, then that also
benefits us greatly because children tend to get their parents to take them to
games and of course that is a very, very interesting and important aspect for
us.
4201 I guess it's the case, the more times your name is mentioned the better
it helps you to sell your product.
4202 But we see them very much as a niche network, a very important network.
We feel they should be given the opportunity to grow. If they can acquire some
professional sport -- it will be difficult for them because, as I said,
there is not much shelf inventory out there right now other than, I think, the
CFL and probably Toronto Raptors home games, and I'm not even sure of that. But
it will give them an opportunity to grow. They are not going to be able to get
in there extensively, as they have outlined, it will have to grow in time and
they will have to see what rights are available.
4203 I think that is the important thing, that rights are contracted usually
for three or five year periods so it is going to take them time to find out what
is out there for them, whether it be amateur or professional, and it is going to
take them time to negotiate and acquire the various inventory that they
need.
4204 I think that basically sets out our position, and I hope I have
clarified some points that were previously mentioned that weren't on target and
I would be very pleased to answer any questions.
4205 THE CHAIRPERSON: Thank you, Mr. Pollock.
4206 Commissioner Noël.
4207 COMMISSIONER NOËL: I think you have answered a couple of the questions I
had before I even had time to put them to you.
4208 So you don't have any games to sell, or game rights to sell for the time
being or not for the next future years?
4209 MR. POLLOCK: Not in the next two years.
4210 COMMISSIONER NOËL: Not in the next two years, okay.
4211 You and other rightsholders have stated that Headline Sports has a very
innovative and unique and attractive approach.
4212 Could you comment on whether the live programming is necessary or
essential to a successful headline highlights sports service?
4213 MR. POLLOCK: Well, you know, I am not a broadcaster, that is not my
niche, but I think I have had a lot of experience, over 50 years in
professional sport, and change has always taken place. You know, the old saying
that kids go marching on is pretty true.
4214 I think that what they are proposing is something new. It's not totally
and completely new, but it is something new. I think it is a good idea and I
think it would appeal to young people.
4215 But, you know, as far as professional sports -- and I'm answering
another question that may be asked -- seeing it on the screen there right
now, yes, it looks good, but it would certainly take some negotiating, you know,
and some further study just to see how it would impact professional sport.
4216 Like we see a different -- I see a different situation here. They
have been very clear on what they have said. It's very limited. They are talking
maybe five games, three games for example -- I will stay with Blue Jays
baseball -- then they are going to acquire that from one of our existing
partners.
4217 Well, the only way that one of our existing partners is going to want to
do that is for some reason they have a stumbling block. That stumbling block,
for example, could be -- in the present instance the only stumbling block
is really Sportsnet because they have this two week window in April and if the
other two networks, the CBC and NetStar, if they make a selection of games and
leave these guys sitting with those two weeks, obviously they have a problem.
Right now the only thing they can do is offload that onto their CTV network.
That is maybe difficult.
4218 So I can't say what Sportsnet would do in that -- right now that's
all they can do. They would have to come to us if they wanted to offload those
games to Headline Sports.
4219 But basically what we have said, we would like to have all of our games
on TV. We want full exposure. I think it's important to note here that we do
have full exposure now for the first time. Previously, you know, TSN has made
the statement: Well, they have to have baseball. Yes, they have to have
baseball, but how many games? They restrict themselves to a certain number of
games.
4220 When Sportsnet came along we were able to sell that other inventory in a
large block, in a block of 40 games. Not three games, not eight games or
10 games but in a block of 40 games.
4221 So it is the exposure that we like and we don't think that at least
some of our partners would want to have a black Blue Jays game because they are
in a particular bind than have it shown. That is only my assumption. I can't
speak for them.
4222 COMMISSIONER NOËL: You heard Mr. Craig mentioning that maybe the
professional sports teams would not like the kind of format. You have seen some
of the format that has been proposed on the video.
4223 Could you comment on that?
4224 MR. POLLOCK: Well, I mean, I have only seen it for the first time here
and it is very generic, to say the least. I would want to see it further. I
would want to see just how it would apply to our product.
4225 What they might do for us might be completely different than what they
would do in an amateur situation. If we negotiate -- if one of our current
partners, for example, came to us and had a particular reason that they needed
to offload a game or two and we were to agree with that, we would certainly want
to participate in exactly the format that would be shown. You know, it's
possible they could deviate a little bit to meet our needs.
4226 So on basis, you know, the current -- it looks interesting but, as
I said, when it happens it would be up to the negotiation.
4227 I don't like to deal too much in hypothetical possibilities at this
point.
4228 COMMISSIONER NOËL: Thank you.
4229 Do you have any assurances that Headline Sports would eventually compete
for coverage of your events? Did they give you such assurances past 2002 when
you have some rights to sell?
4230 MR. POLLOCK: We have never talked to Headline Sports about them
acquiring Blue Jays rights, as we haven't talked with anybody else, because, as
I said, we have three excellent current partners and that just wouldn't be the
right thing to do.
4231 We wouldn't enter into talks at this time with anybody else, including
Headline Sports, about acquiring our games because, as I have said, we have sold
those games right now and it is our hope that we are able to retain these three
wonderful partners that we have.
4232 COMMISSIONER NOËL: You expect repeat business with them?
4233 MR. POLLOCK: We would love -- we want very much and I'm sure we
will have it if there is no monopoly created.
4234 COMMISSIONER NOËL: Thank you very much, Mr. Pollock.
4235 MR. POLLOCK: Thank you.
4236 THE CHAIRPERSON: Thank you, Mr. Pollock.
4237 MR. POLLOCK: Thank you.
4238 THE CHAIRPERSON: I understand you are leaving us now.
4239 MR. POLLOCK: Yes. Not that I don't like your company at all. I enjoyed
the hearings very much.
4240 Thank you very much.
4241 THE CHAIRPERSON: I'm sure we will need at least some illumination from
the magi before we give any decisions on these applications, but we have enjoyed
having you.
4242 MR. POLLOCK: Thank you.
4243 THE CHAIRPERSON: Thank you.
4244 Madam Secretary.
4245 MS SANTERRE: Thank you, Madam Chair.
4246 The next intervention will be by Harrison, Young Pesonen and Newell
Media Management.
--- Pause / Pause
4247 THE CHAIRPERSON: Good morning, Mr. Newell.
INTERVENTION / INTERVENTION
4248 MR. NEWELL: Good morning. It is still morning.
4249 My name is Doug Newell and I am a Vice-President with Harrison, Young
Pesonen and Newell.
4250 Our company is involved in the advertising business. We buy advertising
of all sorts from television, radio, outdoor newspaper, magazines, the Internet.
If can advertise it, we will buy it.
4251 As a result of our interest in these hearings -- I think this is
the tenth time that I have appeared in front of the Commission -- our
appearance here is -- we wrote in support of the application and we asked
to appear in person.
4252 Our appearance here is in support of Headline Sports. It is not against
anyone else. In fact, in the previous nine times that I have appeared before the
Commission, I think every time we have been trying to do good as opposed to
build -- to build as opposed to tear down something that already
exists.
4253 In that regard I would like to make a comment about competition.
4254 I read with a great deal of concern about the Air Canada battle,
takeover, merger, whatever it was that happened recently, and about the concerns
that the union have expressed about destructive competition.
4255 In my viewpoint and to my experience and knowledge, I don't think
competition is destructive. I believe in fact competition is what has resulted
in our western economy being the leading in the world. It has done great things
for Canada and for North America and for western culture. To have competition
described as being destructive I think is wrong.
4256 I'm not opposed to growth or I'm not opposed to growth by merger. In
fact, our company itself was acquired by another company, so it would be very
hypocritical of me to stand here before you and say that this is a bad thing. I
don't think it is, but I think a reaction or a concern about competition being
destructive is totally off target.
4257 I do support competition. I think I have appeared here before many times
saying I would like to have more stations.
4258 Lastly, I would also like to say that we support commercial broadcasting
in Canada. I think the fact that we are different than Americans, that we have
huge hours of tuning to American programming and foreign programming that it's
important that the work that the Commission does to foster Canadian identity and
Canadian culture and I support very much these hearings and the work that you
do.
4259 Thank you.
4260 Now to my presentation.
4261 Conventional broadcasters have been reducing their coverage of Canadian
sports. We did a study that started in 1995-1996 broadcast year. We did it in
Toronto because it's very difficult the way that audiences are recorded in
Canada to have homogeneous information across the country, so we restricted our
study to the Toronto area only.
4262 We studied CBLT, CFTO and Global. We used the Nielsen 52 week
measurement data. What we discovered was in the 1995-1996 broadcast year, there
were 930 hours of live sports, Canadian sports, that were broadcast. By
1998-1999, those hours had been reduced to 721 hours.
4263 The point I'm making is that I think as a result of this there is
certainly an opportunity to increase the amount of current sports, Canadian
sports, that is being aired.
4264 Secondly, live sports, live Canadian sports as a program genre performs
very well. The same technique that we used to find the number of hours we used
to study the top ten Canadian live sports shows. On average in the Toronto area,
they averaged a rating of 5.5 adults 18 to 49.
4265 If you study the top ten U.S. sports in that same geography and against
that same target audience, the average rating was 4.3. Therefore, Canadian
sports performed very well vis-à-vis the American sports counterpart.
4266 I think that's interesting because if you take a look at the drama genre
or the comedy genre and compare Canadian comedy or Canadian drama with American
comedy or American drama, you don't see the same situation at all. In fact, we
did the top ten Canadian drama or comedy shows in the same period and it
averaged a 2 adult 18 to 49 audience while the top ten Canadian drama or comedy
shows averaged a 7.7.
4267 The conclusion that we are drawing is as a program genre, Canadian
sports is very popular, much more popular than comedy or drama. Therefore, it is
being underserved at the present time because conventional broadcasters have
reduced their coverage on it.
4268 We think that this is an important piece of information for the
Commission to consider. We think that approval of the applicant's request to
change the licence will correct this situation. They have indicated that they
will by promising at least 50 per cent Canadian coverage.
4269 The last point I think I would like to make is that if they do this,
will this be a good thing for them? I believe the answer is yes because if they
run live coverage instead of the 100 per cent headline news coverage that they
are currently running, I believe that their audience will go up.
4270 We took a look at the top ten Canadian sports shows. They averaged a 5.5
rating against adults 18 to 49. Now, trying to isolate sports news out of a
newscast is a difficult thing to do, but we took some news programs, some
pre-show games, post-show games, press coverage, that kind of programming that
was run during the year and the average of the top five shows, the top five not
the top ten, was a 1.1 or about one fifth of the size of a live game coverage
show, the point being that live games are going to increase the audience that
Headline Sports will garner.
4271 As a result of increased audience I think, therefore, there will be
higher advertising revenues that will be attracted to that station.
4272 Reduced competition in specialty will, I think, further erode the
availability of live sports programming in the genre. While I am saying I'm not
against what TSN and CTV and Sportsnet are trying to do, I am against anything
that would reduce competition. I don't think that it's in the interests of
Canadian broadcasters, the Canadian broadcast system or Canadian
advertisers.
4273 Higher commercial audiences are good for the Canadian broadcasting
system. Advertiser spending chases higher audiences. It always has, it always
will. Higher commercial audiences mean higher advertising revenues and higher
revenues means that Headline Sports will have more money to invest in Canadian
programming, and that's not a bad thing.
4274 In summary, there is room for more live sports coverage, especially
Canadian coverage. Live Canadian sports is more popular than comedy or drama or
sports news and live sports will increase Headline Sports' audience and revenue.
Therefore, we are asking you to approve the application.
4275 Thank you for your attention.
4276 THE CHAIRPERSON: Thank you, Mr. Newell.
4277 Commissioner Noël.
4278 COMMISSIONER NOËL: Mr. Newell, I have a couple of questions that maybe
relate to what has been said earlier.
4279 You heard Mr. Pollock saying that his rights are sold until 2002. From
what Mr. Thompson was saying, apparently the Toronto Argonauts and not the
Astronauts as I was saying yesterday -- I'm a football fan, you see.
4280 The Argonauts or the Maple Leafs don't have any inventory to sell either
or inventory of rights to sell. What do you think could be purchased in terms of
live sports that would attract advertisers in the short term in view of the fact
that all these rights are already committed for at least a two year window?
4281 MR. NEWELL: I am not familiar with the details that you have outlined.
I'm assuming that what you have said and what I have heard being said is
absolutely correct, so I will respond with that knowledge.
4282 COMMISSIONER NOËL: I take it from their presentation of this
morning.
4283 MR. NEWELL: Yes. I will too. I don't have information to the
contrary.
4284 The acquisition of rights, whether it be sports rights -- for
broadcast rights -- whether they be sports rights or programming rights of
other genres are generally done over a longer period than one year. I think this
is a case that is being discussed currently.
4285 The rights that are in existence have a term to expire. I think Mr. Levy
indicated that -- he said that he would be active in the renewal. I
understand that Mr. Pollock said that he would like to renew his incumbencies. I
think that's a standard programming process. The incumbents get first rights and
competitors are allowed to bid for rights at the expiry.
4286 I don't think that that is an unusual situation. As to what they will
do, it sounded to me like Mr. Levy and his group were saying that they would go
slowly and acquire what they could acquire on a relatively short term basis so
that they would be in a position to bid aggressively and competitively, which I
think are good things, for properties that are going to get high audiences.
4287 Did I totally avoid your question?
4288 COMMISSIONER NOËL: Let's put it another way. What would be the
attractiveness to advertisers of amateur sports rights?
4289 MR. NEWELL: If amateur sports produce large audiences, then it will be a
good thing. If they produce small audiences, we will pay small money to do
them.
4290 There are some circumstances where either because the produce is so much
affiliated with the sport in particular, perhaps footgear or some of the
implements that they might use in the sport themselves, in those circumstances
there perhaps might be a must buy type of situation and, therefore, the amount
of money that advertisers would be willing to pay would be premium, as opposed
to the norm.
4291 But I would think that amateur sports is not well represented currently.
I think, initially, the audiences would be rather small and I think the revenue,
therefore, would be small also.
4292 COMMISSIONER NOËL: You mentioned that with more viewership there would
be a possibility for Headline Sports to attract new advertising dollars to
television, or --
4293 MR. NEWELL: I didn't mean to say that, I am sorry if I gave you that
impression.
4294 I said that they would increase their advertising revenues.
4295 COMMISSIONER NOËL: Would it be new advertising dollars, or would it be
taken out of other broadcast --
4296 MR. NEWELL: I understand your question.
4297 New advertising dollars are not generated, I don't believe, by new
licences. I think new advertising dollars are generated by new products, new
need, new consumers, and the advertising dollars will chase those media that
deliver those customers.
4298 So, no, I do not believe that your licence decision will result in
increased, substantially increased advertising dollars. I think the evidence
that the Commission has in the past is that whenever you have given a licence
there hasn't been that kind of upsurge, but certainly the decisions that you
have made in the past 10 years with regard to specialty have changed the face of
Canadian broadcasting and television in particular for the positive.
4299 COMMISSIONER NOËL: In your written intervention you mentioned that you
had some concern over the proposed consolidation of TSN and Sportsnet. Could you
emphasize on that?
4300 MR. NEWELL: Do you want my final answer?
4301 COMMISSIONER NOËL: Yes.
4302 MR. NEWELL: Do I have a lifeline?
4303 My concern is simply in the matter of reduced competition. It is not in
any way reflecting on the application that they made or in any way reflecting on
their ability to manage their businesses.
4304 I believe, as I said at the beginning of this presentation, in
competition and I am against things that reduce competition and that was the
substance of my comment.
4305 COMMISSIONER NOËL: Would you say that the approval of this application,
the Headline Sports proposal would alleviate some of those concerns that you
have?
4306 MR. NEWELL: Yes.
4307 COMMISSIONER NOËL: You have stated that you support Headline Sports'
application because it will add to the competitive landscape and increase the
amount of live sports events inventory available to advertisers. Can you comment
more on the pros and cons of having multiple sports services and whatever it is,
more attractive to advertisers when those services are competitive or
complementary?
4308 MR. NEWELL: Well, I don't want to make a speech here, but for some
reason or other in Canada we believe in the family compact, and that is if we
can control things and reduce competition and keep it all amongst ourselves it
will be good and the country will survive and flourish.
4309 I don't think that is what our history is all about at all. I think our
history is about globalization. Certainly, we have a large country. We have a
small population. We have unique problems in Canada. One of the ones we face
right now is we need electronic measurement in all the markets across Canada and
it's just not going to be affordable.
4310 So, there are proposals for monopolies and industry supported tripartite
organizations and whatever and we do have special solutions and special needs in
Canada.
4311 I am in favour of competition. I think it makes us all more creative. I
think it provides things for the future of our country and to our population and
the Canadian public that wouldn't be done under a controlled and uncompetitive
environment.
4312 So, I support competition. I don't particularly like it, but I support
it. I think it's good for us. I think it keeps us healthy and smart and
producing the best that we have to offer in a world environment.
4313 COMMISSIONER NOËL: I will ask you to extrapolate a little bit. We have
been talking about sports for most of the last few days. Would you say that your
perspective applies only to sports or would it apply to all programming genres
should we have competing programming genres in different types of specialty TV
or conventional TV, more competing or more complementary?
4314 MR. NEWELL: I think we do have that already, Madam Commissioner. I mean,
as a viewer I know that the specialty licences are up the dial to a large
extent, in that the conventionals are down the dial to a large extent, but as a
viewer my kids know where to find the WB on the cable channel. They know where
to find the superchannel out of Atlanta. They know -- they find their way
around. I don't think that they see a difference between the various windows of
communication that are available to them.
4315 So, I think we already have competition in drama and in comedy and in
the other programming genres that you regulate. I think it also applies to
sports though as well.
4316 Certainly, you can get a lot of sports through pay per view and I think
that's worrisome to me to a certain degree because it takes hours of tuning away
that could be supported by advertising revenues which do provide jobs to people,
helps sell products, put a lot of money in the Canadian economy and when hours
of television are non-commercial that's not beneficial to our country or to the
Canadian broadcast system.
4317 COMMISSIONER NOËL: Thank you.
4318 I have no more questions.
4319 THE CHAIRPERSON: Commissioner McKendry.
4320 COMMISSIONER McKENDRY: Did you have an opportunity to take a look at the
video that was shown this morning?
4321 MR. NEWELL: Yes, I did.
4322 COMMISSIONER McKENDRY: From your perspective as an expert in advertising
does that format appear to be an attractive format from the advertising
perspective?
4323 MR. NEWELL: I'm in Mr. Pollock's demographic, not the Chair's
demographic of course.
4324 Do I personally find it -- you didn't ask me that. You asked me
professionally. Yes, I think it is. I think it's an inventive, creative way of
presenting information.
4325 I don't like it personally, but it has its place. It is used not only in
sports, but in financial reporting as well. CTV uses it, CNBC uses it, CNN uses
it and, as Mr. Craig said, enlarging the screen and popping down the size of the
screen are techniques or production values that are not new.
4326 When you put it all together from where I was sitting and watching the
screen over here, it looked rather busy, but television, as you know, is not a
family viewing situation any longer. It's a personal viewing situation. We tend
to be quite close to the monitor when we are watching. So, I am assuming that
it's going to be acceptable to -- as an advertiser I would assume that it's
going to be acceptable to the audience.
4327 What I might say though and you haven't asked me and I will get my
negotiating hat on here, is that it probably won't be as attractive financially
to me because a big page might be worth more to a print advertiser than a small
page, even though a page is a page. So, therefore, a busy screen may not be as
attractive as an unbusy screen.
4328 TSN might be able to get a higher per unit rate than Headline Sports
might be able to get per viewer because they've got a larger screen and Headline
Sports has got a smaller screen. I am sure I will be negotiating with these
people on those kinds of basis as in the future should you grant their
application.
4329 COMMISSIONER McKENDRY: Would you have expected that this would be the
kind of research that Sportscope would have undertaken in developing this
format?
4330 MR. NEWELL: I am absolutely sure. I don't know why they haven't revealed
it, but I am convinced that before they make these recommendations to you that
they have done research that would make this viable, or that would prove that
this is viable.
4331 I am sure this isn't Mr. Levy's grandmother research. There is just too
much at stake for it not to be done.
4332 COMMISSIONER McKENDRY: We have a grandmother on the panel, so we need to
be a little careful here.
4333 MR. NEWELL: Grandperson.
4334 COMMISSIONER McKENDRY: I wanted to ask you one question about
competition because you have emphasized that's very important from your
perspective. The Commission's current policy is not to allow competition within
a genre, so even though there are three sports channels, Headline Sports, TSN,
Sportsnet, they were licensed to complement each other, not compete with each
other and that's the environment that exists today.
4335 If Sportscope's application was approved it would tend to, or some might
argue that it would tend to erode that complementarity and allow more
head-to-head competition, in the sense that they would be programming live
sporting events in prime time against TSN or Sportsnet who are also programming
live sports event in that period. Does that expand the audience, the total
audience for sporting events, or does that contract the total audience for
sporting events by breaking down those complementarity divisions we have put in
place?
4336 MR. NEWELL: That's a very good question. My experience is that audiences
have a given number of hours a week or a day -- a week is probably a better
time frame to look over it. They have a given number of hours that they are
prepared to spend doing something with media, whether it be newspapers, whether
it be magazines, outdoor radio, whatever.
4337 What we have found is that -- and I think this does support what
Headline Sports has been saying, is that younger audiences have been spending
less time with mass media, with television and radio and spending more time with
new media, and it is a problem for the mass media that they have to address. I
think they are addressing it to a large extent.
4338 Specifically to your question, in the 25 hours or 22 hours, or depending
upon the demographic that you are looking at, in the given the number of hours
that the audience is prepared to spend with the medium, I think the number of
hours that are spent with a program genre will depend upon the individual, the
cyclographic attitudes of the individual and also the quality of the programming
that is available.
4339 If everybody does a good job, I think sports audiences could increase.
If the job is less attractive than competitive alternatives, then it could
benefit drama or comedy.
4340 But right now I would bet on the sports thing going up, if they do a
good job.
4341 COMMISSIONER McKENDRY: Thank you.
4342 MR. NEWELL: My pleasure.
4343 THE CHAIRPERSON: Commissioner Cram.
4344 COMMISSIONER CRAM: Thank you.
4345 Mr. Newell, I am not the grandmother, just for the record. However, I
did want to talk about babies and babies of babyboomers, as you have heard me
before.
4346 If I have it correct, you are using Nielsen data here. Does that track
from 12 up?
4347 MR. NEWELL: The data is 2-plus.
4348 COMMISSIONER CRAM: You are talking about younger audiences and spending
less time on the media.
4349 Do you think this kind of a format would attract a younger audience and
would essentially, as I was talking about before, sort of groom them to stay
with that service from here to eternity, for the quick hit?
4350 MR. NEWELL: I am going to answer the question, but I just want to tell a
little story first, if I could.
4351 It is actually an interesting hearing. Mr. Pollock used to be my boss,
very indirectly, way back when. Mr. Craig and I were owned by the same people at
one point in time. This is quite an incestuous little gathering we have
here.
4352 At any rate, at one point in time one of my clients was interested in
advertising on Blue Jays baseball, but the demographic of Blue Jays baseball was
quite old at the time. It was 25-plus as opposed to the younger 18-to-34.
4353 I know, but that is considered old. I am in no one's demographic
myself.
4354 THE CHAIRPERSON: It's a good thing you are only an intervenor.
--- Laughter / Rires
4355 MR. NEWELL: At any rate, to finish the story off and not delay the
hearing, the particular client wanted an 18-to-24, 12-to-34 type of audience
demographic. And they said: Well, baseball isn't that. We need to get in some
other kind of sport, because baseball will not attract that kind of
audience.
4356 And then along came all the Fox games in the United States, and suddenly
the way that CBS and NBC had broadcast those games in the United States changed
dramatically and Fox brought a whole new presentation of baseball.
4357 Suddenly baseball became a hip advertising vehicle. That happened not
immediately, but it happened in 18 months.
4358 I think the answer to your question is that it depends on the
presentation. There are some sports where it is a difficult sell. If you are not
involved in it and don't understand it, it is a difficult sell.
4359 But I think if it is done well and aimed at an audience -- most
things are aimed at very broad audiences. But these people are niche players, as
has been said 15 or 16 times so far this morning. They should know what you are
doing.
4360 If you don't know what you are doing in a niche environment, you are not
going to be around very long.
4361 COMMISSIONER CRAM: If I added to that the fact that they were going to
broadcast university games, would that add to the attractiveness in terms of
getting that demographic and holding them?
4362 MR. NEWELL: I understand your question. I have been amazed at why
college sports have such a tremendous following in the United States and such a
non-tremendous following in Canada. It can't be just explained by the difference
in population, the ten times factor.
4363 I think that there probably are some national rivalries in Canada
between college games that, if properly promoted, would gain audiences.
4364 There are some rivalries that would certainly be regional and that would
not do that. And there are going to be some other events and types of sports,
and things that are broadcast, that will have very niche audiences.
4365 In many ways that is what the specialty channels are all about. When TSN
runs a Blue Jays baseball game, they do as well as a conventional broadcaster.
When they run darts, they don't.
4366 COMMISSIONER CRAM: Thank you very much.
4367 MR. NEWELL: My pleasure.
4368 THE CHAIRPERSON: Thank you, Mr. Newell.
4369 MR. NEWELL: Thank you for having me.
4370 THE CHAIRPERSON: Madam Secretary.
4371 MS SANTERRE: Thank you, Madam Chair.
4372 The next intervention will be by CIAU University of Alberta.
4373 THE CHAIRPERSON: Good morning, Mr. Reade. Go ahead when you are
ready.
INTERVENTION / INTERVENTION
4374 MR. READE: Madam Chairperson and Members of the Commission, thank you
very much for giving me this opportunity.
4375 My name is Ian Reade. I am the Vice-President of Marketing for the CIAU,
which is actually an elected position. I am also a past president of Canada West
and have been working with Canada West for three years directly now on
television broadcast deals with western Canadian universities.
4376 I am also the Athletic Director at the University of Alberta in
Edmonton, which is Canada's best university sports program.
4377 You might as well get a plug in while you are here.
4378 I will say, first, that I am speaking in the best interests of the
members of the CIAU, and I am not speaking on behalf of the CIAU as an elected
member of the organization. I think it is important to understand that, because
the CIAU is, in one way, a legal entity; and it is in another way an
association -- or actually the "U" at the end it is for union. It is a
union of very autonomous individual institutions in this country that all do
business their own way and take pride in doing business in their own way.
4379 So I will come from that perspective. Having been involved with it for
ten years, I do very much know how those members think and what their common
goals and interests are.
4380 The CIAU is a Canadian -- and I want to stress Canadian --
organization, with Canadian athletes and Canadian products. It is really the
only national coast to coast sports organization in this country, with
universities all the way from Memorial in Newfoundland to Victoria in
Victoria.
4381 It is very much a gender-equitable organization which we take great
pride in. We have ten national championships for women and nine for men.
4382 It is a multi-sport league with 19 different championships. That
league needs exposure very, very badly to assist in the justification of our
existence on campus and in Canada.
4383 University sport in this country has changed dramatically, even in the
last five years. And that is because university presidents are starting to
understand the value of university sport as a vehicle to promote the Canadian
universities on campus.
4384 It is changing dramatically, and I think a lot of the world is lagging
behind that change.
4385 The major objective in the CIAU right now is to promote the CIAU as a
brand. And to do that, we must be on television. We know that, and we are doing
everything in our power to do that.
4386 The final thing I will say about the CIAU is that we probably --
and I am nearly sure of this -- contribute more to amateur sport in this
country than any other organization in this country.
4387 For example, Basketball Canada has two fulltime coaches. The CIAU has 68
fulltime coaches, coaching amateur athletes, athletes that want to aspire to the
national team or, in some very rare occasions, the NBA.
4388 I think that is very important, because it shows that the resources are
there. If we have a common purpose and a common direction, we can do whatever we
want.
4389 It is obvious that because we now are more concerned with the CIAU as a
brand and our profile, that we will take steps in that direction.
4390 The reason I am here is because I am very, very happy with Headline
Sports and the initiative they took this year to put the CIAU and the scores of
all of our games on to Headline Sports. That is something that we have been
trying for ten years to have happen, and it is something that has been sporadic
until this year.
4391 It is something where we have had pretty good success in men's football.
We could never get a women's soccer score on if we tried. We consider women's
sport to be every bit as important as men's sport in the CIAU, and it has been
very difficult for us to get the profile unless the media leads.
4392 Headline Sports is an important component of the media leading in this
particular case.
4393 The other thing that it has done is every university in this country has
a full-time sports information person. We have heard the words "sports
information" at this table probably as many times as we have heard a few other
things reiterated.
4394 Sports information has been a difficult sell on campuses because you
have to spend $25,000 to $30,000 to have a person there moving scores and moving
stories every day, all the time. When nobody at the other end picks those scores
and stories up, it is not that easy to justify having that expenditure on
campus.
4395 When Headline Sports took this initiative on and agreed to put video
highlights of some of our games on, it helped to justify a lot of those
expenditures and it has made a really practical difference. When I sit around
the table and look across at my colleagues and say "We need to have a sports
information person to report our scores because somebody actually wants to put
them on", it is a whole different argument. It is a whole different
argument.
4396 To my perspective, you know, it -- I don't know all about
regulatory things and policies and history and all that kind of stuff, but it
seems like a bit of a no-brainer that if you have more people that want to put
your game on, the chances of getting your game on are better. We have, over the
course of history, tried to even make contact with people at times to get
particular games on.
4397 For example, I'm just going to give one example which is a self-serving
example, and I won't apologize for it. At the University of Alberta we have a
volleyball tournament which is the four best CIAU teams against the four top
NCWA Men's Division 1 teams, Penn State, UCLA, USC, et cetera. We have beaten
them every year, and people would think that the NCWA Division 1
couldn't -- we wouldn't even compete with them. Well, there is a couple of
sports we can't compete with them in: men's football, men's basketball, maybe
their women's basketball. Everything else we can compete with them. We can
compete with them, but people don't believe that we can, and until people
believe it we won't be able to do it.
4398 Our men's volleyball program last year had a person who went to the
National Team, played in the World Cup, played in the Olympics -- this was
the number three middle blocker in the world -- and was playing that
same -- the next weekend came back and played in the CIAU national
championships. People don't know that unless there are people like Headline
Sports helping us to cover those events. It is very, very important to us.
4399 I will also say, in support of other people that are in this room
associated with TSN, that TSN was the first broadcaster in to support the CIAU
and was extremely important in the evolution and the history of the CIAU. But
that doesn't mean we don't need another person. That doesn't mean we don't need
somebody else at the table so that when we knock on the door or their phone line
is busy there is not another phone that we can call.
4400 The CIAU Week in Review, which Headline Sports is proposing, would be an
absolutely huge step for us, because the stories that I'm telling you here
today, which I think are somewhat interesting, at least nobody has fallen asleep
in the last five minutes, would be I think very interesting for the Canadian
public and I think that young demographic is very interested in those
studies.
4401 But, you know, unless the media is doing it, it is not cool. That is
what I have to tell you. If the media ignores you, then the rest of the country
ignores you, and the rest of the country ignores you because the media is
ignoring, and they tell you that back and forth and back and forth, and you are
in this media ping-pong game until you literally have a headache.
4402 So it is very important for us, a thing like a CIAU Week in Review. We
have made a commitment -- if Headline Sports puts that on, we will help
them to put it on. We are not going to sit there and say, "Well, that's great.
Okay. Away you go. You guys do all the work and we will sit and be the
beneficiaries." Those 48 sports information people out there will be the people
that will help to put that on.
4403 So, you know, I do think it adds strength to the viewer's choice. I
think it does add Canadian content, I mean, with apologies to the Raptors and
all of their American players, and with apologies to the Blue Jays and all of
their American players, it is a little bit difficult for a person who is in the
CIAU with all Canadian players to figure out exactly how that is Canadian
content, but I know I'm probably getting off of my mandate and onto my soapbox
here, so I'm not going to do that, because I'm a very unopinionated person and I
will not stoop so low as to criticize that.
4404 The other thing is, there were a lot of questions here about rights fees
and, you know, it was me that had the little giggle in the back because the
rights fees that we charge for regular season institutional games -- I
don't mean the CIAU championships, which were a much different thing --
that the institutional rights fees that we charge are either zero or lower. In
fact, we have been paying people, we have been paying people to put our games on
television. Headline Sports could probably put a little line in their budget to
say "Here is the money that the U of A will send me to put that game
on television."
4405 So I want to say that there are hundreds of games out there. Many of
them I wouldn't want to put on television if you gave me a camera because there
is nobody in the stands, it's not that good. But there is lots of it that is
very, very good.
4406 When UBC plays the University of Victoria in Victoria's gym, it is
absolutely jam-packed, noisy, crazy and very high calibre basketball. If it was
on television it would look good. Sometimes when, you know, we play the
University of Lethbridge in women's basketball down in -- you wouldn't want
to put that on television, but, you know, you can't paint the whole CIAU with
that brush.
4407 I think that is really all I have to say. There is lots of content.
There is lots of property available. We are willing to partner with Headline
Sports in putting that property on television, and if they can't get Blue Jays
games for a couple of years, baby, that's a window of opportunity for us. That's
great news that Sam Pollock just gave me.
4408 So I will leave it at that. I just want to say that -- I don't want
to be harsh in saying this, but a vote against this application is very much a
vote against amateur sport. I don't want you to feel bad about that, if you have
to go and vote against it later, but I want it to echo through the halls of the
Commission at some point.
4409 Thank you.
4410 THE CHAIRPERSON: Thank you, Mr. Reade.
4411 Commissioner Cram.
4412 COMMISSIONER CRAM: Thank you, Mr. Reade.
4413 You said that TSN supported you initially. Has that support decreased
or --
4414 MR. READE: I think it decreased somewhat, but maybe for a good reason. I
mean, we are not -- we haven't been, over the course of the years, exactly
the most professional partner to deal with. We haven't made all the good
decisions and all the right decisions because we weren't necessarily --
didn't have the right people around the table all the time. But let me just say
this.
4415 The facts are that one time TSN did broadcast a number of men's football
league games that led up to the semi-finals that led up to the Vanier Cup. As a
result of poor ratings, I guess, they now just do the semi-final games and the
Vanier Cup. But the Vanier Cup's ratings this year were outstanding and, you
know -- anyway, that is another story. It's not answering your
question.
4416 Their support of us has been very, very good and very much appreciated.
In fact, the CIAU would be in a lot of trouble if TSN didn't support us. As a
result, I'm in a bit of an awkward position here because they don't support this
and I do, and all that kind of stuff. But they have been very good. They have
never put any pressure on me one way or the other. But they are a very, very
important partner for us and do a very good job. But they don't do the whole
job. We don't expect them to do the whole job.
4417 What Headline Sports is proposing is a niche that will do some of the
job that will then promote the finals that are on TSN. I would think TSN would
love this idea. In fact, I would bet 80 per cent of the people at TSN love this
idea.
4418 But, what I would like to say is, if we put the regular season games on,
the ones that look exciting, the ones that are good, when the CIAU championships
are on TSN, the ratings are going to be way bigger. They are going to make more
money. It is a no-brainer that you want to have your lead games to lead up to
your play-offs to lead up to your championships. That's how you build it. It
doesn't happen by just putting the final game of the season on and saying,
"Okay, everybody, we have the championship on", and people go, "Oh, did you see
that yesterday? That was good. I wish I would have seen it", and it's over. To
me, this is very complementary and it's perfect.
4419 COMMISSIONER CRAM: So what is happening now on Headline Sports with the
CIAU is scores, some video clips --
4420 MR. READE: Yes.
4421 COMMISSIONER CRAM: -- and regularly. Is that the concept?
4422 MR. READE: Yes. It rolls, it's regular, it's up to date. If we did a
better job of getting them video highlights, they would play them. We are still
ramping up the whole area of video highlights, but I think in the next year to
two we will be much better at that job and they will play those highlights for
us. So that is another really big step in the direction we are trying to go, but
they have been really regular in reporting scores, up-to-date scores, and
rolling them on a regular basis.
4423 COMMISSIONER CRAM: So do I understand that habitually the sports
information person collects this and then sends it on to Headline?
4424 MR. READE: Right.
4425 COMMISSIONER CRAM: With this week in the CIAU, which will be including
scores, standings, game highlights, statistics, male and female athlete of the
week, is it the sports information person who will be collecting that?
4426 MR. READ: Well, that's a little bit more complicated because that
requires a lot more editorial work, it requires identifying the right stories.
So, no, I don't think it will be the sports information people in the middle
step. The first step would be the sports information people identifying the good
stories. We will work with the local television outlets to make sure the stories
are produced, and to some extent then try to help send those things on.
4427 But Headline Sports is going to be the editorial board and the producer
and, you know, all of that, so they are obviously going to have a major role in
quality and production and everything else. I don't think it is a feasible
project with a country this size and the diversity of things that we do to
expect them to do the whole thing. That is why I think it would be a great
opportunity to work together.
4428 COMMISSIONER CRAM: With the live sports coverage that they are
considering, are you anticipating that the coverage -- the other coverage,
the up-to-date kind of news coverage will decrease or that it will remain the
same?
4429 MR. READE: Oh, it will increase because people will be more interested
in it and they will be demanding it. As far as I know media outlets, to a huge
extent, do react to public demand.
4430 I think if our game is on live it is perfect to flip away from our game
and go to rolling scores of other games in the CIAU and then back to our game.
You know, even it happened to be, God forbid, a Blue Jays game or something,
they could flip away and still go to our scores.
4431 So I think it would be -- I'm a bit of a sarcastic person so I will
try to stay away from that, but it would still be a good thing for us
4432 I mean, any time you put the CIAU logo on a TV screen and broadcast it
across this country it is a huge thing for us, because it hasn't been there.
4433 COMMISSIONER CRAM: Do you have any concerns, especially when they are
saying 50 per cent Cancon, that there would be a fair bit of American
programming or programming from elsewhere?
4434 MR. READE: Well, again, I can go back to my comment about Canadian
content and I am really having a hard time figuring out how what we have on now
is Canadian content.
4435 But given that we have said that the Blue Jays are in Toronto and
therefore they are Canadian content --
4436 I'm always concerned about the Americanization of our Canadian children.
I mean to me it is huge problem. I think we have created it ourselves. It's an
opportunity for us to show real Canadians doing sport for the right reasons, and
that is an opportunity that we shouldn't miss. We have to promote that
opportunity in Canada. It's a wonderful opportunity.
4437 I mean, the Canadian content side to me is absolutely -- it's
absolutely critical. But I am a very vociferous Canadian, so --
4438 Did I answer your question or did I just get off on another tangent?
4439 COMMISSIONER CRAM: That's all right.
4440 What do you anticipate in terms of the coverage that the CIAU games will
get? Have you any idea of a quantum?
4441 MR. READE: I'm sure that we will be on every Saturday afternoon and
every Friday night and every Sunday afternoon and most Wednesdays. I'm joking
again.
4442 COMMISSIONER CRAM: What is the basis for this belief?
4443 MR. READE: Well, I don't know. Coffee.
--- Laughter / Rires
4444 MR. READE: No, actually I --
4445 THE CHAIRPERSON: Is it that good?
4446 MR. READE: Well, coffee, yes, with lots of sugar. No.
4447 Actually, I would be very, very happy if for, let's say, 12 weeks
of the year we could get one game on a week. If we got the CIAU week in review
and we got the rolling scores, I mean I could almost retire. I would have
thought I died and went to heaven.
4448 COMMISSIONER CRAM: So do you have any basis to believe how much air time
the CIAU will be getting if this amendment were granted?
4449 MR. READE: Based on previous experience I don't have any basis to
believe it. But based on what I believe is the future of this channel and niche
programming I absolutely believe that it will happen, it will be on, and we will
not necessarily expect Headline Sports to take the initiative.
4450 You know, now with speed dials on phones and cell phones and everything
else we can be in their face enough that we will remind them that they have made
that promise.
4451 All I can say is that I believe that it is an important part of the
niche and the rights fees are very good.
4452 COMMISSIONER CRAM: Thank you.
4453 THE CHAIRPERSON: Commissioner McKendry.
4454 COMMISSIONER McKENDRY: You said that in the CIAU women's sports are as
important as men's sports. In terms of what would be carried forward to Headline
Sports, would that balance between women's and men's sports be carried through
to the screen, do you think?
4455 MR. READE: I believe there is more of an opportunity in women's sports
than there is in men's. If you knew -- I don't expect you to -- I'm
actually not being sarcastic this time.
4456 If you knew anything about the University in Alberta in Edmonton and the
Pandas and the programs that we have you would know that we are a national power
in virtually all of our women's programs.
4457 I am a firm believer, and have proven it through budgets and everything
else at our institution, that women's sports is an unfulfilled niche and I think
women's soccer World Cup proved that.
4458 Women's volleyball is very, very popular in a certain niche. Women's
basketball I think lags behind women's volleyball but there is an opportunity
there. I think women's soccer there is a huge opportunity there.
4459 Believe me, in the CIAU if you do not live gender equity you hear about
it every single day.
4460 So we don't need Title 9 in Canada because 50 per cent of the
people at our meetings are women and therefore they make sure they keep us
honest.
4461 You know, I always say that -- in fact, they are always concerned
about whether or not people will support women's sports, but most men are
married to women and those women make decisions and in almost every -- in
the demographics, 50 per cent of the fathers and mothers have girls for
their children.
4462 You know, it flies in the face of reason that if given the opportunity
people won't support women's sport. It flies in the face of any kind of
reason.
4463 If you want to talk demographics, you know that is an unfulfilled niche.
There is almost no women's sports in television in Canada at all. None, except I
think WWF has introduced some women to their events.
--- Laughter / Rires
4464 MR. READE: But I don't watch it so I wouldn't be able to tell you, but I
heard it.
4465 COMMISSIONER McKENDRY: You are assuming WWF is a sport.
4466 MR. READE: No, it's not, it's theatre actually. But I'm just using the
definitions that we seem to be going by nowadays.
--- Laughter / Rires
4467 COMMISSIONER McKENDRY: I guess what I really want to get at here is: Are
you confident and comfortable that Headline Sports will reflect the balance that
exists within the CIAU in terms of what they actually put on the screen?
4468 MR. READE: They certainly have done that from day one. They put the
scores on that we send them, they put the highlights on that we send them, they
run the stories that we send them. I have no reason to believe, especially given
that it is a niche network, that if there has ever been a niche opportunity this
is it and I believe that once I am done nattering at them enough they will
believe it too.
4469 COMMISSIONER McKENDRY: Thank you very much.
4470 MR. READE: You're welcome.
4471 THE CHAIRPERSON: It was interesting, though, that when you made a
comparison between what would attract viewers and what would not, what would
not, if I recall, was a women's basketball game in Lethbridge.
4472 MR. READE: Well, I'm sorry, but I have seen their team this year.
--- Laughter / Rires
4473 THE CHAIRPERSON: So I shouldn't --
4474 MR. READE: We are not live in Lethbridge I hope.
--- Laughter / Rires
4475 THE CHAIRPERSON: So I shouldn't rush to Alberta and start "The Flying
Grandmothers"?
4476 MR. READE: I'm not going to get into anything about grandmothers around
here at all. I can't be dragged.
--- Laughter / Rires
4477 THE CHAIRPERSON: Thank you, Mr. Reade.
4478 MR. READE: You're welcome.
4479 THE CHAIRPERSON: Madam Secretary.
4480 MS SANTERRE: Thank you, Madam Chairman.
4481 The next intervention will be by Toronto Argonauts Football Club with
Mr. Nicholson.
4482 THE CHAIRPERSON: Good afternoon, Mr. Nicholson.
INTERVENTION / INTERVENTION
4483 MR. NICHOLSON: Good afternoon.
4484 Madam Chair and Members of the Commission, thank you for the time here
today.
4485 I am Bob Nicholson, President of the Toronto Argonauts Football Club. I
guess my comments today will reflect some of my other sporting experience as
well, although I am here representing the Argonauts but have served for
17 years with the Toronto Blue Jays as well.
4486 We are here in support of the application by Sportscope Television
Network.
4487 I would just like to say off the top that we are not a seller of sports
rights. The current agreement in the CFL with TSN is that local teams have the
rights to sell their own broadcasts. However, I am a member of the Board of
Governors and certainly have my own personal opinions and vote as one member of
eight teams in terms of our broadcast rights.
4488 We are very fortunate in having a very good relationship with TSN, who
is the broadcaster for the CFL. They, however, have about 50 per cent of
the inventory that is not broadcast and so I certainly -- in my own
personal view we have opportunities within the CFL to have other broadcasts
placed in other locations.
4489 I'm here supporting this application really for, I guess, four reasons.
First of all really comes down to the good business partner that I have found
Headline Sports to be and having worked with a number of their personnel,
knowing Paul Williams for 17 years and working with him as a rightsholder
for the Blue Jays on the radio; John Levy in the last couple of years as the
major shareholder of the rightsholder of the Blue Jays, the radio rights.
4490 So I feel that in my relationship with them I have come to believe that
Headline Sports has demonstrated a very good understanding of the marketplace
and has done a great job in trying to promote sport, certainly within our
community in Toronto.
4491 Despite the fact that Mr. Levy is a resident of Hamilton and not a
big supporter of the Toronto Argonauts personally, needless to say, Headline
Sports, despite not being a rightsholder, has worked with us with the football
team and been very co-operative in trying to help promote us, covering some
press conferences, showing some highlights of players, talking about some of the
things around it, things not related to live broadcast but in terms of helping
build support for the CFL in our city, which is a difficult CFL marketplace.
4492 They as well, I guess, have overall promoted CFL games, as evidenced, I
guess, recently in terms of promoting the Grey Cup, leading up to it, and where
possible have promoted the fact where viewers can turn to to see CFL
broadcasts.
4493 Secondly, I have found them to be a very innovative and creative
organization, not only through the acquisition of sports rights. In this case my
dealings with them have been on the radio side where they worked with us in
terms of dealing with a cash and inventory and a revenue-sharing arrangement.
This is with respect to the Blue Jays radio rights.
4494 On the production side I have found their approach to be innovative. I
guess they have showcased some things today, but certainly what they have done
up to now with their updated ticker, the streaming of video highlights and news
and information.
4495 I found it extremely important that they have taken time as part of some
of their deals to include production about players and sort of their activities
off the field to try to bring a personal face to the team, as well as promoting
what the clubs are doing within their own communities. I think this all helps to
help us build our marketplace in our various communities.
4496 I found it too wonderful, on a personal note, just to see them develop
some hire and develop some young broadcast talent that we now see come to the
screen.
4497 Thirdly, I guess the audience demographics, which has been touched on
fairly significantly over the proceedings today, certainly we view the
demographic in the 18 to 34 as an extremely important segment to help grow
interest in sport and in particular in the CFL, in football, where we feel it's
a very important demographic.
4498 I see this really as an opportunity not only to supplement and
complement our traditional broadcasts with another form of broadcast that can
specifically target that particular age group.
4499 Fourthly, and finally, I guess is the fact of the reference to
competition. We have seen, as I think Mr. Newell referred to talking about the
shift away from the over the air coverage of sports in the last couple of
decades to a cable-based sort of delivery of sports broadcasts. If this, our
application, would be approved, we would have three networks I guess that would
be cable carrying live coverage which we believe in the ever expanding cable
universe is extremely important for building the sports industry and
maintaining, I believe, healthy competition.
4500 I guess when I say competition I say not only in terms of the
marketplace for sports rights, which of course we have extreme interest in, but
I believe as in sports itself when competition brings out the best in business
as well.
4501 In summary, I am supporting this application really for the following
reasons. I believe it's in the best interests of growing and developing sports
in Canada. I believe it creates and maintains an important competition in the
marketplace.
4502 I have come to know the people involved with Headline Sports and
consider them to be reliable, innovative business partners. Finally, I believe
with the consumer focus the bring, it's ultimately in the interest of the
consumer, the viewing public.
4503 Thank you.
4504 THE CHAIRPERSON: Thank you.
4505 Commissioner Noël.
4506 COMMISSIONER NOËL: Mr. Nicholson, I'm not too familiar with football, as
you may see. I tend to confuse Astronauts and Argonauts.
4507 MR. NICHOLSON: Astronauts and Argonauts.
4508 COMMISSIONER NOËL: I'm a grandmother too, you see.
4509 You have commented on Headline Sports' creative, innovative and unique
approach and stated that live programming will supplement the format. I am not
at the right line here. Yes, I am.
4510 Do you see the addition of some live programming as a necessary and
essential part of success for headline and highlight service of sports?
4511 MR. NICHOLSON: I think I concur with the opinion that they have
expressed in that it causes people to spend more time there and to learn more
about not only the sport that we are trying to promote, but certainly other
sports as well. It's certainly an added feature to bring people back to it.
4512 Given the target market that they are focusing on, clearly it's an
audience that probably isn't as likely to stay there as long as they might on a
broadcast that's being carried by TSN or CBC or one of the other networks.
4513 COMMISSIONER NOËL: You suggest in your intervention that approval of the
Headline Sports' application should provide increased exposure for live coverage
of sporting events from a Canadian perspective. Are you concerned that Headline
Sports' proposals in combination may allow it to rebroadcast U.S. feeds?
4514 MR. NICHOLSON: I certainly have no idea what the balance would be.
Obviously the guidelines of the Commission would dictate the level of broadcasts
that they can have. Certainly I am looking at it from the point of view of some
additional inventory in the Canadian Football League that could be available to
be broadcast.
4515 COMMISSIONER NOËL: Has Headline Sports provided you any assurance that
they would increase coverage of your events?
4516 MR. NICHOLSON: They are certainly going to be subject to the contractual
arrangements that exist right now. The current television deal runs through the
year 2002, so it would have to be them negotiating arrangements to access the
inventory that's not currently being televised. It wouldn't be necessarily under
the control of the league or certainly not under the control of the Toronto
Argonauts.
4517 COMMISSIONER NOËL: You mentioned that there are some rights available in
the CFL.
4518 MR. NICHOLSON: There's some inventory available. There are no rights now
to broadcast, so that's strictly under the control of TSN who is the CFL's
broadcaster.
4519 COMMISSIONER NOËL: I see. Okay.
4520 Thank you very much.
4521 THE CHAIRPERSON: Thank you for your participation.
4522 MR. NICHOLSON: Thank you very much.
4523 THE CHAIRPERSON: This completes, I believe, phase two of this
application.
4524 Unless I hear groans of disapproval, my plan is to take a 15 minute
break and then come back with the reply. Then we will have lunch and we will
shift to the radio applications. This would allow those who are not involved in
the rest of the hearing to leave us if they so choose.
4525 Alors nous prendrons une pause de 15 minutes.
--- Upon recessing at 1226 / Suspension à 1226
--- Upon resuming at 1255 / Reprise à 1255
4526 THE CHAIRPERSON: Welcome back to the third phase of this particular part
of the hearing.
4527 Madam Secretary.
4528 MS SANTERRE: Thank you, Madam Chair.
4529 We will now hear the reply to the intervention by Sportscope Television
Network Inc.
REPLY / RÉPLIQUE
4530 MR. LEVY: Thank you.
4531 Madam Chair, members of the panel, we believe the Canadian broadcasting
system overwhelmingly supports this application. There is implicit support from
the fact that not one Canadian off-air broadcaster, other than the CTV Network
has intervened to oppose what we seek.
4532 Clearly, we do not present a threat to off-air operations. To quote Ms
McQueen from Monday morning, others expressed no opinion, which suggests they
think life will go on.
4533 CTV itself supports this application, provided that you grant its
application. We dealt with that issue in our reply to the written interventions
and will not repeat our response.
4534 You have heard from the intervenors. There is a demand for more sports
programming. You have also heard that Headline Sports has been a committed
partner in television and other radio collaborations.
4535 And, finally, you also heard that we are innovative in the way that we
structure our rights deals. Our proposal will work at 10 cents.
4536 Clearly, the professional leagues and amateur groups believe that there
is a void that we will be filling with our innovative approach to rights
acquisitions and the manner in which we will deliver live sports packages to our
viewers.
4537 We want to stress that our application, if granted, will make available
to Canadians live sports events simply that they can't get now. Mr. Reade from
the University of Alberta came from Edmonton all the way to tell you how
frustrated he is with the lack of coverage of his events.
4538 Despite whatever else may have been said, the fact remains that not one
University of Alberta or Canada West Conference regular season games are being
televised, only the playoffs which are carried on TSN. We intend to correct
that.
4539 Even though we cannot offer the playoffs, we will carry the regular
season games. Frankly, and as you have heard, that will act as a barker channel
or a scooter for TSN and its playoff games big time.
4540 We have consistently televised the highlights of CIAU games in the past
and we will continue with that level of support in the future. But now we hope
it's time to take the next step in putting tomorrow's Canadian professional
athletes on TV.
4541 In our opening oral presentation we spoke of the need to have live
sports events in our lineup in order to be considered an authority. Our proposal
will allow us in fact to do that. We hope it will allow us to become one of the
authorities on amateur sports in Canada as well.
4542 Mr. Reade has confirmed that the rights are available and he is most
anxious to provide them to us.
4543 Our plan does make sense to the advertisers. These are the people that
we are asking to pay for this additional enhancement to our programming, not our
viewers.
4544 Mr. Newell has told you that there is room within the advertising market
for this type of service and that his clients will support it. Our proposal will
not only generate additional ad revenues within the actual live event itself
but, more importantly, it will raise our viewer levels across the board. This
will go a great distance to making us a more vibrant contributor to the Canadian
broadcasting system in the long run.
4545 Really, the only opposition came from TSN. We understand that it may not
relish the prospect of any other form of competition. Indeed, some intervenors
expressed the view that the CTV/NetStar application will reduce the existing
level of competition for live sports events programming.
4546 However, TSN has attempted to support this opposition by portraying the
application as a radical departure from one licence per genre because we seek
the opportunity to exhibit up to a maximum of 15 per cent live sporting events.
TSN takes this position even though it also continues to maintain that it will
not be able to acquire rights to display this type of programming.
4547 As to the change of format question, you have noticed broad support and
agreement that our proposal is extremely innovative. Our service will continue
to be distinct and we will continue to deliver on our original mandate and our
original promise.
4548 We would also like to reply to the larger issue of access or the issue
of access to programming and there is really probably five specific points that
we would like to raise.
4549 First of all, it has been confirmed this morning that there is product
being warehoused and that product is available to find a window should you grant
the licence we are talking about.
4550 There is also a whole lot of product that is not yet warehoused and
that's the more interesting product to us, and that product is looking for an
opportunity for exposure into the Canadian market and is looking specifically to
the age group that we represent. You have heard specific examples of that from
the CIAU.
4551 There are three other sources of very specific programming that will be
available that were touched on this morning that we would like to reiterate. We
have filed with the Commission a letter from the CBC in which there is a
commitment that we will partner together and be able to provide live
professional sports on our network.
4552 Currently, next year, there is some foreign product available as well.
There is a U.S. football package available that comes up next year. And in terms
of baseball, even though you heard from one of our positive intervenors who came
up and said that there was only a few games available in terms of the Blue Jays,
there is in fact a full Major League Baseball package that is available in the
upcoming year, which not only includes regular season games, it also includes
playoffs and World Series.
4553 So there is product available to us. We have tried to build the
flexibility to look at it on a gradual basis and we appreciate the opportunity
of being here and we are here to answer any further questions that you may have.
Thank you.
4554 THE CHAIRPERSON: Thank you, Mr. Levy.
4555 Commissioner McKendry.
4556 COMMISSIONER McKENDRY: When NetStar was advocating that we should deny
your application they said that we should take into account that, according to
NetStar, you haven't provided us with a program schedule, a business plan or
consumer research. I am wondering if you have any reply to that argument put
forward by NetStar?
4557 MR. MALCOLMSON: In terms of the program schedule, I will deal with that
first. We think in effect we have put a plan in front of you that gives you a
very good insight into the type of live event programming that we are planning
to do.
4558 You have heard from Mr. Reade that that's the type of product he would
like to get onto our screen and we'd like to put it there.
4559 You have seen our commitment to live event Canadian programming in prime
time. We think that is strong evidence of our commitment to the type of
programming that we will air in prime time.
4560 So we think that the program schedule issue is a little bit of a red
herring, in the sense that we obviously can't tell you today with any certainty
what particular rights we will be able to go out and acquire and that's a fact
of life. So to the extent that that uncertainty exists, it exists.
4561 A business plan. We believe that we have a model that will work. We know
that we filed our application, we went through the deficiency process and the
application was deemed complete by the Commission.
4562 Research. We do research every day, as you heard from Mr. Ciccone. We
believe that's the best research available. We talk to our viewers every day and
we are quite confident that the type of product we are talking about in the
configuration that you saw here is something that our viewers will really value
and it's different. It's not encroaching on the traditional three-hour block of
a live game.
4563 COMMISSIONER McKENDRY: Thank you.
4564 THE CHAIRPERSON: Counsel.
4565 MR. BATSTONE: I would like to take you back to the conditions of licence
again. Do you have a copy in front of you?
4566 MR. MALCOLMSON: Just give me one second.
4567 MR. BATSTONE: Yes.
--- Pause / Pause
4568 MR. BATSTONE: I am going to go through them and make sure we are on the
same page here. The overall commitment for live sports programming is 15 per
cent on a quarterly programs basis, like on a quarterly basis. That's correct?
Right?
4569 MR. MALCOLMSON: That's correct.
4570 MR. BATSTONE: And then, skipping down to 2(c), during prime time then
there is the 50 per cent Cancon requirement and it is stated to be in any
year. That's correct?
4571 MR. MALCOLMSON: You are talking about the live event prime time Cancon
condition?
4572 MR. BATSTONE: That's right. Yes.
4573 MR. MALCOLMSON: It's expressed in a 12-month period, yes.
4574 MR. BATSTONE: I guess that's what I would like to reconcile. One,
obviously, is quarterly and the other, the prime time one, is annual. I would
like to -- I can understand why in respect of the overall Cancon
requirements you stated in terms of the broadcast year because that's the way
the existing condition is. For the new conditions there seems to be a bit of a
discrepancy there and I wanted to explore that with you.
4575 MR. MALCOLMSON: Perhaps, and I am by far not a mathematician, perhaps
you can explain what you see the discrepancy to be and we can talk about it.
4576 MR. BATSTONE: For instance, the 15 per cent live sports coverage
overall, condition one, means that in each quarter you could do up to
15 per cent live sports programming. Okay?
4577 But then when you come to the prime time commitment, where it is 50 per
cent live sports coverage shall be Canadian, that is over the entire year.
4578 What I am wondering is could you load up prime time live sports coverage
in one particular portion of the year? For instance, could you satisfy that
commitment by showing all CFL in the summer and nothing else, but then all NFL
in the winter?
4579 That is what I am trying to get at: whether there is a particular reason
for that, whether it is necessary; if it is necessary to make those
consistent.
4580 MR. MALCOLMSON: It is certainly not our intention to. We had not thought
of your example, quite frankly. That was not our intention.
4581 MR. BATSTONE: Would it be a problem if it was quarterly for the live
sports programming in prime time?
4582 MR. LEVY: No.
4583 MR. BATSTONE: Those are all of my questions; thank you.
4584 THE CHAIRPERSON: Thank you very much, Mr. Levy, Mr. MacMillan, Mr.
Malcolmson.
4585 MR. LEVY: Thank you very much.
4586 THE CHAIRPERSON: Have a Merry Christmas, and the same to the other
sports people.
4587 As I said, we will need the Magi before we can decide on this, so don't
expect anything before Christmas.
4588 Thank you very much.
4589 We will now break for lunch, come back at 2:30, and begin with the
application for Barrie.
--- Recess at 1306 / Suspension à 1306
--- Upon resuming at 1433 / Reprise à 1433
4590 THE CHAIRPERSON: Good afternoon.
4591 Madam Secretary.
4592 MS SANTERRE: Thank you, Madam Chair.
4593 I will start by reviewing the procedure for the competing radio
application that we have on the agenda.
4594 Phase I will be 20 minutes maximum for the presentation, including the
audiovisual materials, and questions by the Members will follow.
4595 In Phase II the applicants will re-appear in the same order, but to
intervene to competing applications. Ten minutes will be allowed.
4596 Phase III is appearing interventions from the public, with ten minutes
maximum allowed for each intervenor.
4597 In Phase IV in reverse order, but using Phase I, applicants will
re-appear at this time to comment on or rebut interventions filed to their
application. Once again, ten minutes will be allowed.
4598 I will now introduce the first application.
4599 It is by Larche Communications (Barrie) Inc., for a broadcasting licence
to carry on an English-language FM radio programming undertaking at Barrie. The
new station would operate on frequency 97.7 MHz, with an effective radiated
power of 10,560 watts.
4600 The applicant is proposing a classic rock music format.
4601 THE CHAIRPERSON: Welcome to our hearing and proceed, if you are
ready.
PRESENTATION / PRÉSENTATION
4602 MR. LARCHE: Thank you very much, Madam Chair.
4603 I would like to, first of all, introduce our panel. Joining me, to my
immediate left, is Mora Austin, who is the General Sales Manager for our Midland
operation --
4604 MS SANTERRE: Mr. Larche, could we stop for a minute to change your
microphone, because it is very annoying.
4605 MR. LARCHE: It is not me, though.
4606 MS SANTERRE: No.
--- Pause / Pause
4607 THE CHAIRPERSON: We will take a five-minute break to change it, just to
make sure that we are not annoyed.
4608 MR. LARCHE: We appreciate that.
--- Recess at 1437 / Suspension à 1437
--- Upon resuming at 1439 / Reprise à 1439
4609 THE CHAIRPERSON: We will start again.
4610 MR. LARCHE: To my left is Mora Austin, who is our General Sales Manager
in our Midland operation, CICZ-FM. Mora has been with the station for 12
years.
4611 Next to Mora is our company's Program Director, Derm Carnduff.
4612 Seated to Derm's left is our News Director, Rosalee Buonpensiero.
4613 Immediately behind me is our Technical Advisor, Gary Hooper, President
of HP Services. Mr. Hooper was Vice-President of Engineering for Telemedia for
16 years before starting his own company.
4614 Next to Gary is Jeff Vidler, who is Vice-President of Media Research for
the Angus-Reid Group.
4615 To Jeff's left is our Promotions and Marketing Director, Sean
Ruscitti.
4616 Now I will start our presentation.
4617 Madam Chairperson and Commissioners, in your preambles to licensing
decisions for Kelowna, London and Victoria you outlined the elements that you
would consider in licensing new stations. I believe our application meets and
exceeds these elements. Today we will review the five most compelling reasons
this application should be approved as it relates to the criteria you have
outlined.
4618 One, our business plan: We are the only applicant proposing a format
that will truly increase diversity and respond to the market's wishes.
4619 Two, diversity in news and opinion: We are the only applicant that will
provide a new and distinct news voice for Barrie, bringing a fresh approach to
the community.
4620 Three, Canadian talent development: We propose unique and meaningful
initiatives valued at over $460,000 over the licence term.
4621 Four, diversity of voices in the system: Approval of this application
will promote competitive balance and ensure the survival of our small and young
company.
4622 Five, market impact: Approval of our application will have the least
negative impact on the other broadcasters in the region.
4623 We are proposing a classic rock format for Barrie. We chose classic rock
for one simple reason: it is unquestionably what the market wants and will bring
the most listeners back to Barrie radio.
4624 With further explanation, here is Mr. Jeff Vidler.
4625 MR. VIDLER: Thanks, Paul.
4626 Just over a year ago LCI commissioned us to look at some possible
formats for a new FM station in Barrie. The objectives were to find which format
would generate a sufficiently large audience to sustain high quality service and
would best contribute to diversity in the market.
4627 A total of 300 18-54 year olds were surveyed by telephone in Barrie. Of
the three formats tested, our findings showed that classic rock had the best
potential to deliver high loyalty, a large weekly reach and would increase
diversity in the market.
4628 We estimate that a classic rock format would achieve a 12 per cent share
of hours tuned among 18-to-54 year olds, and a 15 per cent share among those
aged 18 to 34.
4629 In terms of diversity, only 37 per cent of potential classic rock
listeners said they were aware of a Barrie station that currently plays classic
rock.
4630 Listeners attracted to a classic rock format were more likely than other
18-54 year olds to say that they were less than fully satisfied with the station
they listen to most often, and to feel they can't find a Barrie station that
suits their music tastes.
4631 Potential classic rock listeners were more likely than prospective
listeners to other formats to say they would spend more time with radio if their
format were licensed.
4632 A classic rock station can also be expected to repatriate listening.
4633 Among prospective listeners, only 38 per cent named a Barrie station as
they one they tune most often, leaving roughly 6-in-10 spending most of their
time listening to out-of-market signals. This, in turn, suggests that a classic
rock station would have only a modest impact on local broadcasters.
4634 We also researched the effects of playing newer rock that fits in with
the overall genre. The research confirmed that although classic rock should be
the main focus of the proposed new station, newer rock could also play a key
role in the station's music mix.
4635 To give you a better perspective of what the station will sound like,
here is Derm Carnduff.
4636 MR. CARNDUFF: Thank you very much, Jeff.
4637 It is my privilege to introduce to you WILD 97.7, Barrie's classic
rock.
4638 Wild 97.7 will be the most anticipated radio to ever hit Barrie. We will
have the perfect balance of music, along with entertainment, news and
information tailored specifically to the community.
4639 WILD 97.7 will first and foremost play the best classic rock with about
10 per cent from the 1960s, 30 per cent from the 1970s, and 25 per cent from the
1980s. We will also play newer rock that fits the genre, with about 15 per cent
from the early 1990s and 20 per cent from the past 12 months.
4640 Core artists will include Canadian classic rock stars like Steppenwolf,
the Guess Who, April Wine and Rush, as well as the Rolling Stones, Led Zeppelin,
Supertramp and Def Leppard.
4641 Our research does show us that newer Canadian rock, such as Moist,
Sloan, Our Lady Peace and Wide Mouth Mason will also fit in well.
4642 We do plan to showcase these new Canadian rock artists. We want to
provide a more in-depth look at their CDs than is normally received on radio.
For example, four times per day we will air a "New Artist Spotlight", featuring
alternative tracks and interview clips.
4643 This illustration shows a sample hour of programming on WILD 97.7.
4644 To explain several key non-music portions of WILD 97.7's programming,
here is Rosalee Buonpensiero.
4645 MS BUONPENSIERO: Thank you, Derm.
4646 Madam Chair and Commissioners, I am thrilled to have the honour to tell
you about the news and information components of WILD 97.7.
4647 First of all, let me reiterate that our application is the only one in
front of you today that will truly provide a new voice in Barrie. CHUM Limited
owns Barrie's only television station, CKVR. The second applicant, Rock 95 Ltd.,
already owns and operates CFJB-FM in Barrie. It is also relevant to note that
CFJB-FM derives its afternoon newscasts from the CKVR television newsroom.
4648 We should note that also CORUS, owners of CHAY-FM in Barrie, have
applied to purchase CIQB-FM Barrie, leading to further concentration in news
voices. CORUS's parent company, SHAW, also owns Barrie's only cable company,
which derives its local news from the CHAY-FM newsroom.
4649 News and information will play a very important role in WILD 97.7's
programming. The Angus Reid research clearly indicates that local news will be
an important tool to repatriate out-of-market tuning.
4650 To accomplish this, we will build a newsroom in Barrie and hire two
fulltime and two part-time news people. These four new people will broadcast
news every half hour in the mornings and again during selected hours in the
day.
4651 I want to make it clear that LCI will not change the structure or staff
levels of its CICZ-FM Midland news facilities. Where it is practical, some news
information will be shared between both stations creating greater efficiency in
covering, for example, regional news.
4652 WILD 97.7 will devote much of its spoken work content reflecting the
community. For example, we will air six community-focused features per day
titled "Focus on Barrie". This feature will deal with everyday issues, such as
family, health, relationships and investments, but from a local and regional
perspective.
4653 WILD 97.7 will also develop a new Web site with an interactive community
calendar, listing details of community activities and events. Community groups
will be able to post information of their event at this heavily promoted
site.
4654 WILD 97.7 will also install a voicemail system devoted to providing
community information and activities. Anyone with a telephone will have instant
access to local weather, road conditions, community events and much more. This
system will also allow our newsroom to conduct polls and solicit comments on
local issues.
4655 MR. LARCHE: Thank you, Rosalee.
4656 WILD 97.7 is totally committed to promoting and developing Canadian
talent. Our application outlines several initiatives aimed at supporting
Canadian talent, which we will review in a moment.
4657 This spreadsheet shows our initiatives and their respective
costs -- the spreadsheet is attached at the back of your presentation, by
the way -- totalling $463,500 over the licence term. We believe some of
these costs do not qualify under the Commission's new definitions for CTD, and
therefore we did not reflect such costs in our application.
4658 However, because the competing applicants placed a value on similar
initiatives, we believed it was important that you compare apples to apples. In
any event, we would accept the higher figure as a condition of licence.
4659 I will now turn the floor over to Sean Ruscitti to further explain our
CTD initiatives.
4660 MR. RUSCITTI: Thank you, Paul.
4661 Madam Chair and Commissioners, we are looking forward to putting into
place what we believe are some innovative and groundbreaking plans to promote
and expose Canadian talent.
4662 With the approval of this application, WILD 97.7 will commission the
construction of a state-of-the-art mobile recording studio at a cost of $75,000.
The mobile studio will allow WILD 97.7 to broadcast and record a minimum of six
live musical performances by new artists every year. The broadcast and studio
will also be made available at least once per quarter to artists who have never
been recorded professionally.
4663 Finally, the mobile studio will permit us to broadcast for extended
periods of time at various events throughout Barrie -- such as Kempenfest
on the shores of Kempenfelt Bay, and the Barrie Fall Fair, both of which attract
over 100,000 people. Both of these groups have wholeheartedly supported our
application in their positive letters of intervention.
4664 Other meaningful initiatives we are proposing include Rock-Fest. New
artists and groups from throughout central Ontario will be invited to perform at
an outdoor concert. Participants will receive a digital copy of their
performance, which will be judged by industry professionals. The winner will
receive an additional 20 hours of recording time with the mobile studio to
produce a professional demo.
4665 WILD 97.7 will also commit to sending two local musicians to Canadian
Music Week, held in Toronto every March. WILD 97.7 will also participate in the
CAB's Music Marketing and Promotion Fund by committing $3,000 annually.
4666 Another exciting initiative we put forward is a Canadian talent
development Web site, which will be promoted as a meeting place and industry
resource for aspiring musicians and songwriters. The site will include
information on securing available funds, listings of available venues to perform
and more. Aspiring artists will be able to upload their demo work in MP3
format -- allowing music industry professionals and the general public an
opportunity to hear new talent from the Barrie area.
4667 MR. LARCHE: Thank you, Sean.
4668 Madam Chair, another initiative we are proud to introduce will be the
WILD 97.7 Aboriginal Broadcasting Apprenticeship Initiative.
4669 This program will be a very exciting and unique collaboration between
the WILD 97.7 and the Beausoleil Band First Nation's low-powered station
CHIM-FM, situated on Christian Island near Barrie. This station, operated by
volunteers, is aimed at promoting the First Nations culture and events of
interest in the aboriginal community.
4670 As part of this application, WILD 97.7 will create a position for summer
employment for an aboriginal person pursuing a broadcast career. The apprentice
will receive three months of work: 50 per cent devoted to working with WILD 97.7
in a broadcasting and promotions function -- and 50 per cent devoted to
working at CHIM-FM.
4671 Additional benefits to this initiative will include airtime on WILD 97.7
available to CHIM-FM. WILD 97.7 will also make available the mobile studio at
least twice per year to CHIM-FM.
4672 Madam Chair, I submit that the CTD initiatives we have proposed are
progressive, unique and, more importantly, will truly assist aspiring Canadian
talent in reaching their goals.
4673 LCI has operated CICZ-FM Midland for just over two years. Our plan was
to turn the money-losing station into a respectable business, and I'm pleased to
announce that at the end of our most recent fiscal year we turned a modest
profit. This was accomplished by repatriating several Midland advertisers and
selling our station using the greater Barrie Extended Market BBM cell, which
includes Midland, Barrie and Orillia.
4674 The bad news is that our current stability may be fragile as the
competitive balance of the marketplace changes. As previously mentioned,
consolidation is already under way with CORUS. Furthermore, CKDX-FM Newmarket
changed its format from dance to new country a few months ago. This station's
signal is well received in the southern portion of our 3 millivolt contour
and they are actively promoting the station in central Ontario. They have even
hired a salesperson for the region and they currently broadcast live from Barrie
once per week.
4675 But our worse-case scenario is the licensing of a new station by one of
the competing applicants. If CHUM Ltd. is approved, they will have the added
benefit of owning the only television station in the area. This advantage will
allow them to cross-promote and cross-sell their media properties.
4676 The other applicant is Rock 95 Ltd., owner of CFJB-FM. Over the past ten
years, this station has become both a financial and a ratings force. CFJB-FM has
been the leader in the Barrie Extended Market BBM cell and the Midland central
market cell, by nearly a two-to-one margin over the nearest competitor in the
lucrative 18 to 54 age demographic. Giving this applicant another station would
allow them to virtually dominate the 18 to 54 demographic. The Rock 95 Ltd.
application projects a 9 per cent share of hours tuned in Barrie for their
proposed new format. These graphs project this anticipated share to the Barrie
Extended Market and Midland CA. When placed alongside the new CORUS combo, you
can appreciate the competitive unbalance CICZ-FM will face.
4677 Madam Chair, the stability of two stations in central Ontario will place
our company on a more equal footing within the marketplace. That is why we
initiated this licence call. Technology will allow us to consolidate several
functions between CICZ-FM and WILD 97.7, while continuing to serve two
communities within one region. However, LCI will be in the unique position of
being able to cross-promote local events and cultural activities between two
neighbouring communities. We believe this is a unique benefit to the public that
cannot be duplicated by current local broadcasters.
4678 We urge that you consider competitive balance as one of the several
compelling reasons we are putting forth today.
4679 The Angus-Reid Research states that 38 per cent of WILD 97.7's tuning
would come from existing Barrie broadcasters. This would translate into a modest
3.5 per cent decline in market share for CFJB-FM, a .7 per cent drop
for CIQB-FM, and a .4 per cent drop for CHAY-FM. This graph illustrates the
impact on each station using as a point of reference the most recent BBMs.
4680 Any short-term loss in hours tuned experienced by the Barrie stations
will be readily replaced by new listeners as the population in Barrie continues
to grow at an unprecedented rate. This next graph illustrates an overall
increase in hours tuned for the current stations, based on population increase
projections. It clearly demonstrates that the Barrie stations will continue to
gain hours tuned, despite the entry of the WILD 97.7.
4681 We are convinced that the audience impact on existing stations will be
minimal in the short term and inconsequential in the medium to longer term as
the market continues to grow at an unprecedented rate.
4682 To review the financial impact on existing broadcasters, I wish to turn
the microphone over to Mora Austin.
4683 MS AUSTIN: Thank you, Paul.
4684 First, I think it's important that we spend a few minutes discussing the
unprecedented growth of the market. Barrie is Canada's fastest growing market,
growing at 3.25 per cent annually. The population has increased by 65 per cent
since 1988, and is expected to continue to grow at this rate for the foreseeable
future. This population growth alone will support the addition of a new FM radio
station.
4685 To consider the economic impact on existing stations, we projected
advertising revenue growth using several key indicators, including population
and retail sales growth. Our data was analyzed by noted researcher David Oakes,
who said:
"I regard the possible radio advertising revenue impact (on current Barrie
stations) as very small. The economic growth in the Barrie region will generate
a large enough increase in radio revenue to more than compensate the existing
stations for revenue possibilities lost because of the introduction."
4686 Based on the tangible market data and the analysis by Mr. Oakes, we
submit that the Barrie market can readily sustain the entrance of WILD 97.7
without unduly affecting the current broadcaster's financial position.
4687 MR. LARCHE: Thank you, Mora.
4688 Madam Chairperson and Commissioners, I am extremely proud of the
excellent job the young broadcasters in our company have accomplished in such a
short period of time. CICZ-FM's ratings have increased from 20,000 to just under
100,000 listeners in just two years. Our revenues have tripled and we are now
making money. We accomplished this by living our mission, which is: to provide
entertaining, informative and compelling programming targeted to our listeners
wants and needs; to meeting advertisers' needs by executing results-oriented
marketing strategies; and, to fulfil the needs and interests, and reflect the
circumstances and aspirations of the communities we serve.
4689 Examples of this include Derm and Sean raising money for the Salvation
Army by broadcasting atop a 50-foot crane for 18 hours, or promoting Canadian
talent by hosting our own StarQuest talent competition, which draws huge crowds
to cheer on new local talent, or giving exposure to Canadian country talent by
presenting artists such as Jamie Warren and Farmer's Daughter at Barrie Colts
hockey games.
4690 That's why we were so honoured and delighted to be chosen as Radio
Station of the Year by the Ontario Association of Broadcasters last March. Our
StarQuest promotion was also chosen by the OAB for Best Canadian Talent
Initiative in Ontario. In September, the Canadian Country Music Association
chose Derm Carnduff as Music Director of the Year.
4691 Madam Chair and Commissioners, we definitely have what it takes to make
WILD 97.7 a success. We are a small independent broadcast company committed for
the long term. We want to grow and play an active role in the broadcast business
as an alternative to the larger companies that seem to be getting larger by the
week. At this year's CAB convention Madam Bertrand made it clear the Commission
considers that smaller independent broadcasters have an important role to play
in the future of Canadian broadcasting.
4692 I therefore submit to you that the five compelling reasons we have put
forward today clearly fulfil the Broadcast Act and your criteria for licensing
new stations:
4693 Approval of this application will fulfil the need of the market and
increase diversity.
4694 Approval of this application will introduce a new voice in the City of
Barrie, enriching the community's diversity and distinctiveness.
4695 Approval of this application will result in tangible and meaningful
Canadian talent development initiatives, including the advancement of aboriginal
peoples in the broadcast industry.
4696 Approval of this application will ensure the prosperity of a young
broadcast company at a very fragile point in its evolution.
4697 And finally, approval of this application will have a minimum impact on
existing broadcasters.
4698 Approval of this application is unquestionably in the public
interest.
4699 Thank you.
4700 We would be more than happy to answer any questions.
4701 THE CHAIRPERSON: Thank you.
4702 Commissioner Demers.
4703 COMMISSIONER DEMERS: Bonjour, Mr. Larche.
4704 MR. LARCHE: Bonjour.
4705 COMMISSIONER DEMERS: I will ask a few questions, maybe starting with the
oral presentations, especially at the end when you indicate that "this will
fulfil a need of the market and an increase in diversity." Could you comment on
that in light of the fact that your station in Midland is or is not heard in
Barrie.
4706 MR. LARCHE: Yes. Our station is heard in Barrie, our Midland operation,
which is a country format. We applied a couple of years ago to the CRTC to
increase the power of our station to allow us to compete on an equal playing
field with the other broadcasters in the area. However, our mandate is to
service the Midland market and that is where we focus most of our news and
marketing attention, and that is where most of our revenues come from is from
the Midland market.
4707 We don't have a newsroom in Barrie; we don't have reporters in Barrie.
We will, on occasion, cover Barrie news if it is relevant to the region, but we
try to focus primarily on what is going on in our market.
4708 Rosalee, I don't know if you want to comment on that.
--- Off microphone / Sans microphone
4709 MR. LARCHE: Turn your mic on.
4710 MS BUONPENSIERO: You don't want to hear me, do you?
4711 We have a formula that works for Midland. It's 60 per cent Midland and
Penetanguishene, which communities are very close together, almost as one. We
focus 60 per cent of our news attention to Midland and Penetanguishene and the
rest to the rest of the area. We cover what we like to call central Ontario, and
we would like to use the same formula for Barrie: 60 per cent for Barrie and the
rest would go towards the rest of the region.
4712 COMMISSIONER DEMERS: So you take the view that there would be no
duplication in service?
4713 MR. LARCHE: Duplication in...?
4714 COMMISSIONER DEMERS: In service. In the news service or in other
community services.
4715 MR. LARCHE: Our plan is to run two separate newsrooms. One would be
based in Barrie, it would have its own news director. One would be based in
Midland, as it is currently, with its own news director.
4716 But we do plan to consolidate a lot of the operation between Midland the
proposed new station in Barrie.
4717 I would be the General Manager of both radio stations. We would have a
combination sales force. We would combine some functions like creative writing
and accounting and the trafficking of commercials.
4718 That is again why we initiated this call, because we will realize
efficiencies that will allow us to get on a stronger financial footing.
4719 COMMISSIONER DEMERS: Thank you.
4720 Maybe turning to another point which was at the beginning of your
presentation.
4721 You made a survey -- Angus-Reid did a survey for you and, of
course, one of the options in the survey was classic rock. What were the other
options or the description of the other types of services that people could
answer?
4722 MR. LARCHE: I'm going to pass it over to Jeff Vidler in a second, but
just before that, when we decided to apply for a new radio station the first
research we looked at was BBN numbers in the Barrie market and we looked at what
people were listening to in particular outside the market. We found that classic
rock-type format stations were attracting the most listening out of town, or
adult rock-type formats.
4723 We also took a look at the listening patterns of people under the age of
35 versus over the age of 35 and we found that people over the age of
35 were listening to out-of-market radio more than they were listening to
local radio. So from that we had a hypotheses that the format that would attract
the largest audience would be attractive to that age group.
4724 Jeff, do you want to take it from there?
4725 MR. VIDLER: Yes. Just to clarify maybe some of what Paul was saying, the
fact that out-of-market tuning, both over the age of 35 and under the age of 35,
was roughly the same -- in fact a little bit higher I believe over the age
of 35, classic rock or adult rock formats seemed to be the largest single format
category in terms of out-of-market tuning in the market -- it led Paul and
ourselves to try to identify three different formats that might be the problem
there.
4726 So we looked at three formats. One was classic rock, one was a softer
classic hit-style format, and a third was what the industry calls a hot AC
format, which is an up-tempo AC format. But the kind of -- each of these
formats is the kind of format that appeals to listeners in around the age of 35
and, you know, consummate with the classic rock or adult rock tune that we saw
coming from out-of-market.
4727 COMMISSIONER DEMERS: Thank you.
4728 Now if we get to the proposition you have here, classic rock.
4729 Would it have any duplication with, let's say, the Barrie station
CFJB-FM.
4730 MR. LARCHE: Derm, do you want to talk?
4731 MR. CARNDUFF: Many of the artists that we will be playing and many of
our core artists that we will be playing on our classic rock format are also
played on CFJB in Barrie. However, CFJB covers, as far as the artists that they
play, such a -- they cast such a wide net as far as artists that they play
through different formats, a rock format and also a hot AC format, that what we
are going to be able to do, though, is we are going to be playing and being able
to play alternative cuts that are not by many of the same artists but songs in a
library that will not be played on CFJB.
4732 COMMISSIONER DEMERS: Then do I conclude that there is no
duplication?
4733 MR. CARNDUFF: I wouldn't be able to say that there will be absolutely no
songs that we would play that CFJB doesn't currently play.
4734 MR. LARCHE: To answer your question, there would be some duplication but
we believe that about 70 per cent of what we play would not be currently
played on CFJB-FM.
4735 COMMISSIONER DEMERS: Thank you.
4736 MR. VIDLER: Again, perhaps looking at the research helps to put some
clarification on this.
4737 Again going back to the three formats that we looked at in Barrie, the
three hypotheses that we tested, classic rock, classic hits or hot AC format,
after asking the market, the 18 to 54 year olds we surveyed, whether they
would be interested in listening to these stations and how often they would
listen to them, we then asked whether they felt for each of these formats there
was currently a station in the market that was specialized in this kind of
music. This was asked of those who would listen to each of the formats.
4738 The classic rock format, only 37 per cent could name any station as
being one -- would name a station as being one that specialized in the
format.
4739 The classic hits format, 52 per cent identified a station as
playing -- specialized in that format now.
4740 The hot AC format, 55 per cent identified a station specializing in
that now.
4741 So in terms of relative terms, classic rock seemed to add the most
diversity to the market.
4742 COMMISSIONER DEMERS: So if I put the question differently: What would
differentiate you from CFJB-FM?
4743 MR. LARCHE: I think probably the biggest thing would be that we would be
a very focused radio station. We would be going for a classic rock sound.
Classic rock obviously revolves around core artists from the 1970s and 1980s,
but newer rock today that is coming out in particular from Canadian artists that
really fit that genre.
4744 So to answer your question about what the difference would be, CFJB-FM
has cast, again, a wide net and they play a lot of music by a lot of artists
running from adult contemporary-type artists to classic rock artists.
4745 Our station would be focused. It would be a focused classic rock
sounding radio station. We would, for all intents and purposes, be a niche
format.
4746 COMMISSIONER DEMERS: This, in a sense, would answer the questions or
what people in your survey said about the fact that they didn't find their sound
in Barrie?
4747 MR. LARCHE: The reason we are proposing classic rock is because we did
research and that is what it told us to do.
4748 Again, we are a small company, we only have one station, I would be
foolish to go with anything else than what good research like Angus-Reid told us
to do.
4749 That research clearly stated that the market did not perceive that there
was a classic rock station available and that about 15 per cent of the
Barrie audience 18 to 54 was listening to classic rock stations outside of the
market. So the research went on to ask people if this format was provided to
you, would you come back to Barrie radio, and they said they would.
4750 That is why Angus-Reid, in their projections of the make-up of the
audience of our new radio station, showed that 60 per cent -- more
than 60 per cent of our new audience would be people in Barrie who are not
listening to Barrie radio, they are listening to Q.107 in Toronto.
4751 The remaining 40 per cent would come from Barrie radio stations and
we outlined the impact that that would have on those radio stations.
4752 COMMISSIONER DEMERS: So in fact the Q.1 station is the one that you are
aiming at, or the listeners you are aiming at?
4753 MR. LARCHE: There are three stations in particular that play a lot of
classic rock, Q.107, which is -- I'm sorry, I know them by their -- I
think it's CILQ, there is CKFM in Toronto as well, and there is Y95 out of
Hamilton which is a classic rock station.
4754 These three stations are taking about a 16 per cent share of
listenership in Barrie out of the market. We believe that we can bring back
12 per cent of that.
4755 Now, that 12 per cent would be made up of some of that
out-of-market tuning, mostly from that, and some of it would come from the local
radio stations.
4756 COMMISSIONER DEMERS: Okay. Thank you.
4757 If you have these listeners, could the new station sell that new
in-market tuning to local advertisers?
4758 MR. LARCHE: Absolutely.
4759 Mora, do you want to comment at all on that?
4760 MS AUSTIN: I think that with there being a hole in the market for
classic rock, I think we are able to give our advertisers a whole new customer
base that they haven't perhaps been able to reach before. So I think that puts
us in a unique position in sales to be able to do that.
4761 COMMISSIONER DEMERS: In your projections, if I remember correctly, that
increase was in the same proportion as the type of listeners you would
repatriate? The percentage of advertisers who would be advertising on your new
station would comprise part of the budget that equals the repatriation of
listeners?
4762 MS AUSTIN: Part of it, yes. Most of it would come just out of the growth
of the market. The markets -- by the time we would actually get on the air
the market would be growing by a million four for radio revenue. So most of that
revenue would -- our revenue would come from the growth alone.
4763 COMMISSIONER DEMERS: That's where you mostly expect to get your
revenues?
4764 MS AUSTIN: Yes.
4765 COMMISSIONER DEMERS: You projected at least -- well, I haven't been
able to reconcile your oral presentation with this, but large projected at
29 per cent impact on CFJB-FM audience. Is that still your projection?
4766 MR. LARCHE: I think what we said is that our audience, if we captured a
12 share of listeners 18 to 54 in Barrie, 29 per cent of that 12 per
cent would come from CFJB-FM. There would be a little bit more that would come
from the other two radio stations, and 60 -- correct me if I'm wrong, Jeff,
but I think approximately 60 per cent would come from people who are
currently listening to radio outside the market.
4767 Does that answer your question?
4768 MR. VIDLER: They aren't the actual figures, Paul, because I have them at
my fingertips, you don't.
4769 It's 29 per cent of the people who have identified said that a
classic rock station would be the one they listen to most often. The station
they currently listen to most often is CFJB.
4770 So it's not unreasonable to extend that to say that the station, of its
audience 29 per cent of its core tuning will come from CFJB. A small
proportion, roughly 6 per cent, would come from B101 and an even smaller
proportion would come from CHEZ-FM.
4771 In total about roughly 38 per cent of those who identified they
would make this classic rock station their favourite station are currently
listening to Barrie stations and leaving roughly 6-in-10 who are currently
tuning out-of-market.
4772 COMMISSIONER DEMERS: Synergies. You have made some remarks on that in
your oral presentation.
4773 Could you elaborate on the synergies which would be available with the
Midland station should this application be approved? Now, maybe elaborate more
than you have done in your oral presentation.
4774 MR. LARCHE: Okay. Well, as I mentioned earlier, we wouldn't hire another
general manager, I would be managing both radio stations. Our sales department
would be a combo sales department so that the people who are currently selling
for CICZ-FM would also be selling for the new radio station. We would add some
sales people.
4775 A lot of the administrative functions of running a radio station would
be centralized, for example accounting and the trafficking of commercials, and
so on. Our creative writing would come out of one office as well, and some
programming functions as well.
4776 We could have an announcer that is currently working for CICZ who may
voice a commercial for the new radio station. There's definitely synergies
there.
4777 For all intents and purposes, this would be very similar to basically
owning two radio stations under one roof, the exception being that we would have
two rents because we would have our studios and current operation and would
remain in Midland with its distinct newsroom and one in Barrie. Rents are pretty
cheap up there.
4778 COMMISSIONER DEMERS: You have some tuning, important tuning, significant
tuning level in Barrie at the moment. How much of Midland's revenues are
attributable to Barrie in percentage?
4779 MR. LARCHE: We currently have about an eight share of the Barrie
audience and we have about a 15 share of the Midland audience. Are you asking
what our current revenue breakdown is in terms of what we are taking out of
Barrie?
4780 COMMISSIONER DEMERS: Right.
4781 MR. LARCHE: It's approximately 20 per cent of our overall revenue.
4782 Mora, you can give the overall breakdown.
4783 MS AUSTIN: Basically you are looking at about 60 per cent of our revenue
comes from Midland, 20 per cent from Barrie and the other 20 per cent is made up
of Orillia and some of the other surrounding areas in central Ontario.
4784 COMMISSIONER DEMERS: You have referred to the consolidation in the area.
Do you have anything to add to that? What would the implications be for your
competitive situation in Barrie?
4785 MR. LARCHE: Well, I think it's very relevant in our case. Again, as I
mentioned in the oral presentation, I initiated this call. The reason I did it
is because we have one radio station. We just got it on its feet.
4786 Frankly, you know, it scares me because I know that I am in the company
of companies like Shaw, which is now CORUS, Telemedia within our marketplace. I
anticipated that there would start to be some consolidation that would be going
on that could make it difficult for us to continue to compete.
4787 We decided to be proactive. Barrie is the fastest growing market in
Canada, so we put an application in for a radio station in that market because
we found a hole there as well. We knew that we would realize some synergies
between both operations.
4788 It's interesting that since we put our application in, consolidation is
already starting to go on. Again, CORUS, which owns CHAY-FM in Barrie, has an
application in to buy CIQB-FM which we refer to as B101. They also own the cable
channel there, Shaw Cable. CHAY-FM supplies the news for the cable channel that
Shaw owns. That is going on.
4789 Also in the market, the two other applicants that are proposing one as
CHUM that owns the local television station, CKVR. Again, that scares us. Again,
we just don't have the financial resources and the might to be able to fight
those types of companies, especially if they decided to come after us on a
format basis.
4790 COMMISSIONER DEMERS: Again in your presentation you spoke about the role
of news and information, but if we come back to that, can you be more precise as
to any percentage of news and information in relation to music? Have you
something quite precise on that?
4791 MR. LARCHE: Yes, we do. Rosalee can talk to you about that.
4792 MS BUONPENSIERO: I'm sorry, are you asking how much news will be focused
on Barrie or how many listeners will tune in because of local news?
4793 MR. LARCHE: How much news we are going to carry.
4794 COMMISSIONER DEMERS: Right, compared to music since you are music
driven.
4795 MS BUONPENSIERO: We are music driven. Our rock music listeners
technically aren't really interested in the world news, but they want to know
what's going on in their own community as well as local weather, road
conditions.
4796 With our two full time and two part time employees, it works out to
about six hours of news per week, the typical morning drive with news, on the
hour and half hour and again at noon and five and six as well as on the
weekends, focusing of course on the community and making sure people can get
around town and find out what's going on as well.
4797 MR. LARCHE: Just to add to that, the Angus Reid research told us that
providing local Barrie news to classic rock listeners would assist us a lot in
repatriating those out of market listeners. In other words, they felt that that
would be very important to come back and listen in to Barrie radio.
4798 We believe that it's a competitive advantage for us to be very focused
on Barrie news with this new radio station.
4799 COMMISSIONER DEMERS: Thank you. Now, as you indicated, there are
competitive applications. Technically there's a possibility from the
applications that we hear that two stations could be licensed in Barrie. Could
the market support two new additional stations?
4800 MR. LARCHE: If we were one of them? When I looked at the Victoria
decision, I knew this question might come up. If, for example, we were licensed
and the Rock 95 application was licensed, or frankly the CHUM application, we
would be fine with that.
4801 We believe that the market is growing and will continue to grow at such
a rate that it will be able to absorb that type of impact. The only other radio
player in the market would be CORUS. You know, they may not be too happy about
that, but they would be in a better position to take that hit than an
independent would, for example.
4802 The CRTC figures for Barrie show the market revenue in 1998 at $6.5
million. It shows that the market is growing at an average of 10.4 per cent. If
we take a two year span, that's $1.4 million in new revenue that will be in that
market between, let's say, 1998 and the year 2000 when a new station would
probably go on the air.
4803 Our projection is about $725,000 in revenue for our first year. That
means there's still an additional $750,000 in new revenue that the other
stations will enjoy. If two stations were licensed, it would probably mean that
the third party, which would be CORUS in this case, would probably not lose
money, but they probably would have a flat year until the market continued to
grow some more.
4804 COMMISSIONER DEMERS: Thank you. Turning back now to the Canadian talent
development proposals. When you were reading your presentation, I hadn't been
able to find the sheet. Now I have it.
4805 Could we go through it, let's say, from my perspective and see. So you
have the CAB annual minimum of $3,000.
4806 MR. LARCHE: Correct.
4807 COMMISSIONER DEMERS: You have an annual concert of $1,000. I found in
your application anyway a concert of $1,000. Is that --
4808 MR. LARCHE: We have outlined what we consider to be the direct cost in
our definition of Canadian talent development as $1,000. In reality, it costs
more money than that to put on that type of talent contest.
4809 We have firsthand experience with that because we currently do one for
CICZ-FM called "Starquest". That is the promotion that won us the OAB award for
Canadian talent development initiative of the year.
4810 COMMISSIONER DEMERS: Two local musicians would attend a music week at
$1,000 for the two. On air promotion of local concert and artists program for
$50,000. Do you agree with that?
4811 Let's go to it anyway. The aboriginal broadcasting apprenticeship
initiative of $2,500 a year for seven years, $17,500. Now, you spoke about a
mobile studio for $50,000.
4812 MR. KING: Capital cost of $75,000.
4813 COMMISSIONER DEMERS: $75,000. Okay. Could you rationalize that as being
something that is spent directly for Canadian talent and that it is not
self-serving for your enterprise?
4814 MR. LARCHE: Yes, I can.
4815 First of all, in our original application we did not put a dollar figure
on it because we did not feel that it would count as direct CTD expenses as
outlined in Notice 95-196. We are showing you a value now because, obviously,
there is a value in putting this on and we want the Commission to understand
that this studio is going to be a state-of-the-art recording studio. It will be
in a mobile setup and we anticipate that about 70 per cent of its use will be
geared towards the promotion and development of Canadian talent development.
4816 If you review our application you will see that we refer to it a lot as
contest winners would receive recording time with it. They would be able to take
demos from it, pressed CDs and so on and so forth. We also would make it
available to the folks at CHIM-FM on Beausoleil Island.
4817 So most of the use that that studio would see would be for the promotion
of Canadian talent development. Would we use it to also cover additional events?
Absolutely.
4818 We mentioned that we would have it at events such as Kempenfest, which
draws 200,000 people to Barrie. We would have it there for two or three days to
broadcast from and we would also have it at other big events, such as the Barrie
Fall Fair.
4819 COMMISSIONER DEMERS: My concern really is the difference between the
figures we had in the application and the figures that we now have. I am
wondering if I should go to each point, but I think it would be up to you to
indicate where you feel that there is no doubt that these are direct --
these monies will go directly to talent and not the part of the undertaking you
are putting into place.
4820 MR. LARCHE: Again, a lot of what this studio will do, we did not put it
down as direct Canadian talent development expenditures. We are showing you that
there is a cost in doing that which we have incorporated into our marketing,
promotion and capital costs for the radio station, but when you have to record
an act you have to hire technicians who will operate the facility and be able to
mix it down properly.
4821 We are not ourselves in the recording business. We are not recording
engineers. That goes across that we would have to go out and incur it, but the
equipment that they would be using would be our equipment.
4822 COMMISSIONER DEMERS: I will leave it there. I thought I would have a big
question at the end, but you touched it, the commercial radio policy. You have
already very clearly indicated your approach to it and you referred to the
Commission's decision in Kelowna, London and Victoria.
4823 I leave it open to you because I have no other questions, whether you
would want to add anything to what you have already said in your introductory
remarks.
4824 MR. LARCHE: I would like to touch on a few points with regard to the
criteria that was set out in that decision. There are five or six points and I
think that our application meets most of those points, more so than any of the
other applicants you will hear today.
4825 First of all, our business plan, we are the ones who are offering a
format that the market truly wants. Our research shows that, BBM research shows
that and I believe that our competitor's research also shows that.
4826 The second point has to do with bringing a distinct voice to the market.
We are the only applicant in front of you today that will bring truly a new and
distinct news voice and opinion and presence to the marketplace.
4827 The third is with the issue of market balance. If we don't get this
station and one of the other applicants do, it will be very difficult for us to
compete and to survive in that central Ontario market.
4828 We showed you some graphs. They are attached to the presentation that we
gave you today and they are within our original presentation that show that up
against two or three combos it will be very difficult for us to survive. For
example, in national sales right now all of the Barrie stations are represented
by one national company and we are on our own. If another station is added to
that, all these stations will be here and we will be down here.
4829 Again, we only have an eight share in Barrie. We are not a major player.
We don't have the 15 and 20 shares that the Barrie stations have, but that's
where the growth is going. It's not happening as much in Midland, which is where
most of our money comes from.
4830 We think that another radio station coming into the market would also
affect some of our Midland revenue. There is no doubt that it would have an
impact because all of the stations in central Ontario sell on the Barrie
extended market, BBM sell or try to sell on that sell which we showed you today,
which includes Midland and Orillia and Barrie. So market balance we think we
meet that criteria very well.
4831 Finally, just impact on the marketplace, if we receive this decision we
think that that will have the least negative impact on the other players in the
market versus the other way around. So those four in particular we feel we meet
and exceed that criteria.
4832 COMMISSIONER DEMERS: Maybe a last, last question. Looking at these
criteria is there one that you think supersedes them in your situation?
4833 MR. LARCHE: I think if I look at the criteria and I look at the
Broadcasting Act I would think that two of them would. I think it's the business
plan making sure that you are truly offering something that the community wants
and will add diversity to the market and in our case bring back a lot of
out-of-market listening.
4834 The second one would be to introduce a new news voice, a new opinion
voice and a different perspective on what people in the Barrie market would get
from news, especially in light of the fact that there are some large companies
that are broadcasting out of Barrie.
4835 COMMISSIONER DEMERS: Thank you, Mr. Larche.
4836 Thank you, ladies and gentlemen.
4837 These are my questions, Madam Chair.
4838 THE CHAIRPERSON: Thank you.
4839 Commissioner Cram.
4840 COMMISSIONER CRAM: Thank you.
4841 Mr. Larche, I am not an engineer, and God forbid I would ever even think
about it, but I look at where your antenna is going to be and it looks like it
is going to be almost half way between Midland and Barrie.
4842 MR. LARCHE: The antenna would be where our current antenna is, which is
just north of Barrie, between Barrie and Midland, if you want to call it that,
roughly. That's the highest point in the land and we are on a tower there and
what we are proposing is that we would replace the current antenna we have with
a combined antenna which would allow us out of the same technical facility to
put both signals out.
4843 Gary, I don't know if you have anything else to comment on here.
4844 MR. HOOPER: The location of the antenna, the CICZ antenna right now, is
on a very high point of ground and Barrie's topography dictates that you have to
have a high perspective in order to put a good signal into it. It is much better
to be high than even to be close and low. So it geographically looks as though
you are some distance from Barrie, but actually that's a very high point of
ground and puts an adequate signal into Barrie.
4845 COMMISSIONER CRAM: And into Midland?
4846 MR. HOOPER: It would also reach Midland, yes.
4847 COMMISSIONER CRAM: So is part of your business plan then that you will
be getting into Midland with a new voice also?
4848 MR. LARCHE: Again, we would be selling this radio station in what we
call the Barrie extended market, but in our business plan we projected that
about 70 per cent of our revenue would come from Barrie. The remainder would be
from Midland, Orillia and we also think that we would have an opportunity to
bring in some new advertising from possibly television and print because we
would be repatriating a lot of out-of-town tuning, so radio listeners that
currently nobody has been able to reach in the market.
4849 COMMISSIONER CRAM: I find your argument about being the voice in the
market very interesting and repatriating market tuning because it appears from
our numbers, and possibly yours, that you are the number one out-of-market tuned
to person right now in the Barrie market. So how do you reconcile that, if
you've got you say an eight share in the Barrie market and our numbers show
that's about the highest out-of-market tuning, how do you reconcile that you
would then be a new voice in that market?
4850 MR. LARCHE: What age demographic are you looking at because I know for a
fact that Q107 in 18 to 54 has over a 10 share in Barrie. We know that CKFM has
about a six share in Barrie.
4851 COMMISSIONER CRAM: If I am looking at them all, that's the numbers that
we had, I believe, of spring 1999. All, the highest was you with a nine share
and then CALQ with an eight share.
4852 MR. LARCHE: In what age demographic, does it say?
4853 COMMISSIONER CRAM: Total.
4854 MR. LARCHE: Total, 12 plus.
4855 COMMISSIONER CRAM: Yes.
4856 MR. LARCHE: That's right then, I am sure.
4857 COMMISSIONER CRAM: So are you a new voice then in Barrie?
4858 MR. LARCHE: Well, we believe we are because the Barrie radio stations
have approximately 15 to 20 per cent of the tuning in those radio stations
and our programming is not focused on Barrie.
4859 People listen to us in Barrie right now because we are the only country
station available in central Ontario. Well, we were up until Newmarket switched
formats. So, yes, people do listen to us in Barrie because we offer a format
that they can't or couldn't get anywhere else. But they don't listen to us for
news. They don't listen to us for information because we are not providing that
level of service that they would require to listen to us for that.
4860 We don't offer enough Barrie news and information.
4861 COMMISSIONER CRAM: Then, on the other hand, on the competitive side, you
appear to be using what I call the double market. The Greater Barrie Extended
Market BBM cell and that's the one that you use when you say that CFJB-FM has a
two to one margin over its nearest competitor. Am I hearing that -- is that
the argument that you are presenting on the competitive equity side?
4862 MR. LARCHE: Yes, because that is the market that we are competing
against them in, the Barrie extended market. When we are going out and selling
to an advertiser in central Ontario, we are not showing them our Midland market
audience. We are showing them the audience we have in central Ontario.
4863 When we are showing -- and I believe that CFJB does the same as
well. They are showing their regional audience, because they have a very
significant regional audience.
4864 That is why we use that.
4865 COMMISSIONER CRAM: Should we then be considering the population of that
very extended market BBM sell for the purposes of assessing the demand for
licensing in this set of applications, in this competitive set of
applications?
4866 MR. LARCHE: Barrie is the most concentration of population in central
Ontario. Outside of Barrie you have smaller communities such as Orillia,
Midland, Penetanguishene, 14,000, 15,000, and then you have a lot of rural areas
spread out.
4867 The area is what we call a macro community, in that a lot of people who
live in Barrie may shop in Orillia on the weekend, or vice versa. People live in
one town and they go to church in another town. There is not much space --
30 to 40 kilometres -- between all these communities. So people move
around.
4868 We did our research based on Barrie, not on the entire market. We knew
that if whatever we proposed did not work in Barrie, it would not work in the
region.
4869 COMMISSIONER CRAM: For the purposes of this set of applications, you
think we should be considering the extended BBM area and population and its
economic circumstances?
4870 MR. LARCHE: I can't speak for the other applicants. In our case, we
projected that most of our revenue will come from Barrie, 70 per cent of it, and
another 30 per cent will be made up of the rest of central Ontario.
4871 The signal we are proposing will allow us to cover that area to a
certain extent. But we are primarily going to focus on Barrie.
4872 COMMISSIONER CRAM: Thank you.
4873 THE CHAIRPERSON: Thank you.
4874 Counsel?
4875 MR. BATSTONE: I have a couple of questions on the CTD initiatives,
specifically the ones that you raise subsequently in your reply to
interventions.
4876 On the question of the CTD director, you would allocate $11,000 a year
for that position. Could you tell me what the duties and responsibilities of
that person would be?
4877 MR. LARCHE: That figure is primarily -- we put that in there
because another applicant put it in there. We honestly believe, and we say in
our application that we don't believe a lot of these things truly are Canadian
talent development.
4878 Your promotion director -- in our case Sean -- would be
responsible as part of his job to carry on a lot of these functions.
4879 MR. RUSCITTI: I am getting a raise.
4880 MR. LARCHE: No, you're not.
4881 We felt that if another radio station could use $11,000, which is part
of their promotion director's salary, as Canadian talent development, we would
want to as well.
4882 MR. BATSTONE: This would not be creating a new position. It would simply
be augmenting the duties of somebody who is --
4883 MR. LARCHE: Actually, we would be adding one person to our promotion
department if we had a radio station. It would be a portion of that.
4884 MR. BATSTONE: But that person would have other duties at the station as
well.
4885 MR. LARCHE: That's right. But they would make more than $11,000 a
year.
4886 MR. BATSTONE: Just to be clear, then, the $11,000 is just an allocation
of the salary that would be devoted to the CTD functions.
4887 MR. LARCHE: Correct.
4888 MR. BATSTONE: Turning, then, to the CTD Web site that you mentioned in
your application, you have now assigned a dollar figure to it.
4889 Could you tell me a little bit about the content of that Web site. What
exactly will be on there?
4890 MR. LARCHE: The Web site will be part of the overall radio station Web
site. Radio and the Internet are truly amalgamating. We are very proud of what
we have currently done with CICZ and the web. We have a very active Web site
that gets a lot of traffic. We have people who respond to what the radio station
is doing in terms of comments.
4891 They can join our Country Club, which is a thing we do there. We also
allow them to purchase CDs and so on. So we are using it now as a new source of
revenue.
4892 With this radio station, I really want to take it a step further. I
budgeted $40,000 in our overall promotional cost to operate a Web site that
would have a radio station component, where people could listen to us via the
web and find out what the radio station is doing; a community component where
people could not only find out what is going on in the community but could also
upload information about their specific events.
4893 So the Salvation Army in Barrie could access this community event Web
page. They themselves could type this in, which would go to this calendar which
is very heavily promoted. Then the Canadian talent development portion of it,
which we put $10,000 of this $40,000 towards, we think would be very unique. It
would allow Barrie artists that fit the genre of music that we would be playing
to profile themselves on this Web site; so some pictures, some bio material.
4894 Also, if they have done some demo material themselves, we would put it
on our Web site in a compressed MP3 format, and that would allow the general
public to hear how some of these bands are doing, even though they don't have a
record contract.
4895 MR. BATSTONE: Would it be a case of the bands coming to you, asking to
be profiled?
4896 MR. LARCHE: We would on the Web site have a form that if you want to be
profiled, please send us your information. We would take a look at it, and if we
feel they fit with what we are doing, then yes, we would profile them.
4897 All of the winners we would have -- we say we make the mobile
studio available four times per year or six times per year. All of the
recordings from that we would also put on that Web site to profile these
artists.
4898 MR. BATSTONE: My last question, then, relates to the expense you had
indicated for an audition party. Could you tell me a little bit about that.
4899 MR. LARCHE: We will host Rock-Fest, which is a talent contest. From
that, we will have a first, second and third place winner that will receive some
recording. Then what we will do is we will hold what we call an audition party,
and we will bring record executives from Toronto, people within the industry, to
this. It would just be a social event where these people would be allowed to
meet these new artists, hear the material they are playing, and possibly a live
performance.
4900 MR. BATSTONE: I think that is it. Thank you very much.
4901 THE CHAIRPERSON: Thank you very much -- unless you have something
more to add.
4902 MR. LARCHE: We will be up again in a little while. So thank you very
much.
4903 THE CHAIRPERSON: Thank you.
4904 We will take a ten-minute break while the panels change.
--- Upon recessing at 1547 / Suspension à 1547
--- Upon resuming at 1605 / Reprise à 1605
4905 THE CHAIRPERSON: Welcome back.
4906 Madam Secretary.
4907 MS SANTERRE: Thank you, Madam Chair.
4908 We will now hear the application by Rock 95 Broadcasting Ltd. for a
broadcasting licence to carry on an English-language FM radio programming
undertaking at Barrie. The new station would operate on frequency 107.5 MHz with
an effective radiated power of 26,000 watts.
4909 The applicant is proposing a Top 40/Contemporary Hit music format.
4910 Mr. Bingley.
4911 THE CHAIRPERSON: If you will excuse me, Mr. Bingley. Before you
start, I intended to tell you what our agenda was for today.
4912 We will hear the CHUM application before leaving as well as the
Phase III, the intervention that -- Phase II, excuse me, that the
competing applicants may want to make against each other, and we will start each
other's application and we will start with the other intervenors tomorrow
morning at 8:30.
4913 Thank you.
PRESENTATION / PRÉSENTATION
4914 MR. BINGLEY: Thank you, Madam Chair.
4915 Members of the Panel and Commission Staff, my name is Doug Bingley. I'm
President and General Manager of Rock 95 Broadcasting. I would like to introduce
some of the other members of our panel that are with me today.
4916 To my left is Sue Leighton. Sue is the Morning Show co-host of Rock 95.
She is also the assistant program director of Rock 95. If we are successful in
launching our new radio station, she will be the program director of Z107.5.
4917 To my left, at the other end of the table, is Linda MacGregor. Linda has
been the host and producer of Spirit Winds. That is a show we have run on Rock
95 for the last eight years. It is a one-hour native program that -- the
program has been running actually since we launched the radio station. Linda is
a former judge for the Juno Award category Music of Aboriginal Canada. As well
as producing the show for Rock 95, she is a community facilitator for the
Union of Ontario Indians.
4918 Immediately behind me is David Oakes. David is the President of Oakes
Research of Toronto. He conducted a format and advertisers survey for our
proposed new operation.
4919 Beside David is Roy Hennessy. He is President of Hennessy & Bay
Communications in Toronto. He runs Radio Works, one of their divisions, which is
a radio specializing advertising agency; also a company called Ethnoworks, which
is a multicultural advertising agency; and he is a past president of FACTOR and
has been a program director at a number of stations across the country. Hennessy
& Bay conducted our revenue forecast and economic impact study for us.
4920 Now, this afternoon, what I want to talk to you about is our new radio
station Z107.5. I would like to demonstrate for you what this station would do
for the people of Barrie. But I will also be taking a few minutes to tell you
about our existing station, Rock 95, and how we conduct business there because I
think it is very relevant. The best predicator of future action is what you have
done in the past. I hope you will bear with me as we go through that part
because it does relate directly to the proposed operation.
4921 To begin with, the new radio station, Z107.5, will provide a number of
public benefits. First, it will give teens and young adults in Barrie their own
local Top 40 radio station.
4922 Second, the station will play all new music, promoting Canadian talent.
We will air Cancon levels higher than CRTC requirements and we will donate
$1 million in direct and $600,000 in indirect benefits to Canadian talent,
and we will help fund and develop five native community radio stations.
4923 Finally, we will be able to continue as Barrie's only locally-owned and
operated station. This really is no small benefit. It will maintain diversity in
the marketplace, and as an ownership group that actually lives and works in the
community, we have been able to do some pretty amazing things.
4924 To begin with, I would like to give you a little bit about my
background. It's a bit of a cliché but, like most people, I have wanted to work
in this business since I was a kid. When I was 12 years old I can remember
dragging some turntables and amplifiers down to our basement to set up my own
little radio station. But, as my staff is quick to point out, unfortunately, I
have a voice that is made for newspaper --
--- Laughter / Rires
4925 MR. BINGLEY: -- so I was really unable to pursue an announcing
career. I said to Sue earlier, "Please try to talk at least a little bit higher
than I am here."
4926 But I did get into broadcasting at the age of 18 and I worked as a
summer student for TV Ontario. I later joined them full time after I left
university and I moved to CBC where I worked as a videotape editor working on
shows such as the National and The Fifth Estate.
4927 In the mid-1970s, I was living in Barrie and that's when Q.107 launched
in Toronto. At the same time in Barrie we got our own FM station. It was a soft
AC called CHAY-FM and the younger people in the market, including myself at the
time, were a little bit disappointed with that because Toronto got Pink Floyd
and we got the Swingle Singers. So that's when I first got the idea for
launching a rock-based station in the marketplace. That was 1977 and I was 23
years old.
4928 Almost 10 years later the Commission issued a call for applications for
Barrie. I still saw the need for a rock-based station, so I attended a hearing
to see what went on in this very room, as a matter of fact, reviewed a few
applications, and wrote my own application, presented it and here we are today
11 years later. I have to tell you, it wasn't easy to launch a station from
scratch. We were a small group of investors. To give you an idea, my wife and I
had to put our house on the line in order to obtain bank financing.
4929 It was just very difficult. We were always undercapitalized it seemed.
But we were right in our choice of format and the station did very well right
out of the box. We billed over a million dollars in our first year in the
marketplace.
4930 Then the recession hit and, like many other radio stations, it was
pretty tough for four or five years. It wasn't unusual for me to do without a
paycheque or for that mortgage to get a little bit bigger at the end of any
given month. But we were successful. We have been able to build a very
successful radio station and that is due to three major factors.
4931 The first is we have a commitment to major market programming quality.
We have always had that commitment and we will carry that through to the new
operation.
4932 Second, Rock 95 was launched as a rock-based radio station. We have
remained true to our format and currently we program 50 per cent classic rock
and 50 per cent new rock material.
4933 Third, we actively work in the community. Now, any broadcaster would
tell you that it is essential to be a part of the community. To us it is more
than just a cliché because we actually live and are very much involved in the
community. So, for example, when the station supports the Barrie Central High
School Band, my kids remember that band. So I want it to be successful.
4934 Similarly, when we support the Rotary Club of Barrie project, well, I'm
a member of that club so I want it to work out as well.
4935 A good example of the type of project we have done, it is occurring
right now, we have a toy drive. We have run this for 11 years. We raise over
$50,000 in toys for needy children in the area. The last couple of years, we
have worked in conjunction with CKVR Television to expand the base of that.
4936 Those are just numbers, but the fact is when you see someone come in
with their small child and they are making a donation to that toy drive, it says
a lot about the community and it really says a lot about the radio station. When
you support the community in that way, the community always comes back and
supports you.
4937 Now, just to shift gears for a couple of moments, what I would like to
do is talk about the programming of the new station, and Sue Leighton, our
Program Director, will address that.
4938 MS LEIGHTON: Thank you so very much, Doug.
4939 Madam Chairperson and Commissioners, I would like to begin by speaking
briefly about how we chose our format.
4940 Before we could build a format, we had to answer one very important
question: What group of people in Barrie are not being served by local radio?
Now, to answer this, we first turned to BBM. As we can see by this BBM graph,
the 12 to 24 age group in Barrie is largely underserved with over 65 per cent
out-of-market tuning. In particular, teens have over 80 per cent out-of-market
tuning.
4941 Now, having determined who is underserved, we then contracted Oakes
Research to survey what format this demographic wants. The answer: CHR Top 40
radio. That is the format that we are proposing to you today.
4942 Top 40 radio embodies the very essence of radio, the spirit of radio,
you may say. A generation grew up with Top 40 radio and it truly is the format
that built radio to what it is today. But for various reasons, broadcasters have
dropped the format and in doing so we risk losing the next generation of radio
listeners.
4943 Top 40 can rejuvenate our industry. It brings new, young exciting
announcers into the business, it gets people excited about Canadian music, it
has the power to carry radio into the next millennium as a vibrant, relevant
medium.
4944 Z107.5 is going to be exciting, up tempo and relevant to the younger
members of the Barrie community. Our programming will be fast-paced, focused on
the biggest hits of today, and include topics of interest to our target
audience. Now, so far I have been talking about bringing back Top 40 radio.
4945 You see, I grew up in a small little town just north of Orillia and I
missed out on Top 40 radio because it was never there in the first place. There
wasn't a Top 40 station in our market and there still isn't one today. Because
of this fact, Commissioners, I am extremely excited about the opportunity to
program this station and bring this format to our market.
4946 Let's focus for a moment on how our format can benefit Canadian
talent.
4947 As Doug mentioned to you earlier, the CHR format is the very best for
promoting Canadian artists. That's because CHR is almost 100 per cent new music
based. Most other formats are at least 50 per cent gold based.
4948 Frankly, this does very little to promote new Canadian talent.
4949 Our promise of performance includes 37 per cent Canadian content
for all selections played, a content level higher than the CRTC regulation and
the highest level of the three applicants appearing here today.
4950 I would also like to point out to you, Commissioners, that our Canadian
content commitments are based on a 24-hour day.
4951 Further benefits include an indy's show for independent artists, daily
features like the Canadian spotlight that highlight Canadian music, and live
broadcasts of local bands.
4952 Now, let's discuss our $1.6 million in direct and indirect benefits
for Canadian talent.
4953 Here is the reality for your average Canadian musician: They love to
play music, they love to perform, but Canada is not a large market. There is not
a lot of money in the business. There is enormous competition and often a
musician has to play for next to nothing in seedy little bars just to get
exposure or just to build up a following.
4954 If they are lucky they will get a contract with a big record company.
The record company will lend them the money to cut an album, and then claw it
back from the sales of their first album. In all likelihood they won't see a
cent from that first release.
4955 For those lucky few who do make it to the top, the money isn't what the
general public thinks. For the rest, it's a marginal living playing in the
evening or maybe driving a cab or waiting on tables, always hustling to build
their careers. It's a very tough business, Commissioners. It is a little
familiar to me because it sounds a lot like radio.
4956 Our Canadian talent program recognizes all of these problems. Our main
objective is to provide local support that augments all of the efforts these
musicians put into their own careers.
4957 First, we will make donations to industry funds that are double the
voluntary contribution levels of the CAB program.
4958 Next, we will fund an annual compilation on CD highlighting local bands.
The CD will be distributed to radio stations and record companies all across the
country. A key concern with local bands is that many venues no longer feature
live music.
4959 To encourage more establishments to get onboard with live music, Z107.5
will air bi-monthly broadcasts from local clubs. We will pay musicians talent
fees for taking part in these broadcasts and we will underwrite the cost of
having a professional studio record, produce and mix down the show.
4960 We will develop an annual "Barrie in Sun" music festival, bringing live
music to an outdoor venue and to clubs all across town. We want to make Barrie
"music central".
4961 In today's world a band simply must have its own Web site to promote
their music. We will build and maintain free Web sites for local talent
4962 Finally, Commissioners, we will hire a co-ordinator to make sure that
these and our other CTD commitments are met.
4963 Our seven-year direct commitment to these initiatives totals $448,000.
With the addition of indirect dollars, this total grows to $833,000.
4964 The new artist program encompasses only half of our Canadian talent
initiatives. The other half is related to the development of native
broadcasting.
4965 My friend Linda MacGregor will give you an overview of that program.
4966 MS MacGREGOR: Thank you, Sue.
4967 Madam Chair, Commissioners, I would like to speak to the public benefit
of this application which commits five native-owned and operated radio stations
on First Nations territory.
4968 Now, as a member of the native community I can say on good authority
that the impact of this application is G,Nadjiwon. That means -- it's that
feeling that you would have if you were to see the Rocky Mountains for the first
time, how beautiful that is. That is how beautiful this application is to us and
it would have a long-term -- immediate plus long-term positive impacts on
our communities by all ages.
4969 Now, first I would like to focus on the most important benefit: How we
are portrayed.
4970 Historically we have been challenged by a general mindset. This mindset
was introduced to me as a child by television and it began like this:
"One little, two little, three little Indians...".
4971 Now, as innocent as that song may seem, I heard it differently as a
child. Even as a child I felt minimized. It didn't feel right.
4972 Now, this song speaks to the reality of the world that I grew up in, and
the world that we all grew up in, our perception of who we are as we look out
and then those on the outside looking in for their perception of who we are as
native people.
4973 I'm sure these early perceptions, these early introductions of who we
are influenced everyone in this room about native people. We have all been
impacted in some way. I was impacted about who I was as a native person through
these early introductions.
4974 Now, the Canadian talent initiatives contained in this application will
help to build a bridge between these two worlds, to turn around stereotypes, to
turn around the misconceptions. The five proposed native radio stations will
provide an incredibly effective forum for us to tell our own stories, to sing
our songs, to hear about our heroes and to discuss our issues locally,
regionally, nationally. Who better to speak to those issues than us, the native
community?
4975 I want to say how important it is to me, to the native community, that
this mainstream broadcaster, the Applicant, who has for over a decade helped us
through his commitment to aboriginal broadcasting moved beyond "One little, two
little, three little Indians" to developing community radio.
4976 Today he is prepared to extend that commitment even further. Here are
the commitments from Z107.5:
4977 They will provide all the necessary equipment to set up and operate five
native radio stations in the Barrie region. Here is a picture of a proposed
studio. You can see that it is the state-of-the-art and includes this station
automation package.
4978 Z107.5 will also provide maintenance for all five stations and, in
addition, provide guaranteed funding for an incredible seven years. This would
allow for permanent hiring of co-ordinators for each station to ensure that it
stays on-air.
4979 They will set up a permanent training program, bringing students into
the station on a regular basis and these students would produce a weekly
one-hour show which would be broadcast on Z107.5. The direct and indirect
benefits of this program come to over $800,000 -- just under
$1 million.
4980 Now, if I may, I would like to review how a series of CRTC policies and
the Broadcasting Act itself confirm why granting this licence is indeed in the
public interest.
4981 Now, first, the importance of native radio. I couldn't put it better
myself than the CRTC's Native Broadcasting Policy of 1990 when you had this to
say about native broadcasting:
"These services have taken on a role akin to other publicly mandated services
such as the CBC." (As read)
4982 So it seems we are in agreement: Native radio is a great thing.
4983 But there is one problem, up least up until today, and that is lack of
funding.
4984 Here is what the Therrien report, also commissioned by the CRTC and
written over 20 years ago, said about fair access.
"It is not enough to give access. Access alone is of little practical value
without the assistance of trained staff, technicians and funds to produce
programs." (As read)
4985 Over 10 years later in the Native Broadcasting Policy of 1990:
"In the Commission's view it is essential that aboriginal broadcasters
receive sufficient funds to enable them to fulfil their responsibilities."
(As read)
4986 And again it seems we are in agreement. Without money or training the
right to apply for a broadcasting licence by us, the native community, will
remain a nice theory. It is like having car keys and no car.
4987 Now, in addition, the Broadcasting Act implicitly recognizes this
problem with this:
"Programming that reflects the aboriginal cultures of Canada should be
provided within the Canadian broadcasting system as resources become available
for the purpose." (As read)
4988 That is exactly what you have before you today at this time.
4989 This Applicant is placing before you, placing before the native
community the resources to make possible five new aboriginal radio stations. We
look forward to this incredible partnership.
4990 We also have a wealth of content. Z107.5 will assist with the
development of aboriginal music, the preservation of the original languages
spoken in Canada -- the original languages, encourage journalistic and
artistic expression, as well as deliver a much needed first level of service in
the native communities by the native communities.
4991 I think you would all agree that these are very compelling public
benefits.
4992 Meegwetch.
4993 MR. BINGLEY: Thank you, Linda.
4994 Commissioners, we have a long term commitment to native radio. Since
launching Rock 95, we have provided over $100,000 for that purpose.
4995 At this time there is one more element I would like to touch upon and
that's economic impact within the market. Our proposal will have minimal impact
on other stations. As a combo, the Shaw CORUS stations, B101 and CHAY, will see
a profit of close to one and a half million dollars. They have all of the
resources of Shaw behind them.
4996 With respect to large broadcasting, our top 40 format will not appeal to
CICZ new country listeners and our advertisers will be those who seek a younger
audience while their clients tend to skew older, so we will not be targeting
their sales either.
4997 To ensure that we minimize any impact on CICZ, the large radio station,
our application proposes a condition of licence to not sell in the Midland
market.
4998 That's a brief overview of our application.
4999 I would like now to summarize our public benefits. First, we will
provide a local station for the most underserved group in Barrie, teens and
young adults.
5000 Second, our CHR format will provide a natural benefit for Canadian
talent. This will be augmented by 37 per cent Cancon commitments and features
that focus on Canadian talent.
5001 Third, we will provide over one million dollars in direct benefits and
another $600,000 in indirect benefits to support Canadian talent. That's broken
into two major initiatives, half to support Canadian musicians through a series
of carefully planned effective initiatives and the second half will be the
development of five native aboriginal community radio stations.
5002 The final benefit is ensuring continued diversity of ownership in the
Barrie market with all of the benefits to our community that naturally
follow.
5003 There's one final question that must be answered. Why are we applying
for this licence in the first place? Eleven years ago I launched Rock 95 and the
experience of building and launching a new radio station simply cannot be
described. When you build a radio station from scratch and you see something
that you have put a lot of effort into become so important to so many people,
that really is the ultimate work experience.
5004 Although we have been successful in facing down three very large chains,
our two major competitors, CHAY and B101, are about to merge together and, quite
frankly, it's going to be extremely difficult to survive with them targeting us
in concert.
5005 A second licence for Rock 95 will restore a level playing field yet
maintain competition. It will allow us to compete and to continue as an
independent.
5006 On a personal note, I got into radio because I love this business and I
want to stay in this business. That's why I'm here today.
5007 That concludes our presentation. We would be pleased to answer your
questions at this time.
5008 THE CHAIRPERSON: Thank you, Mr. Bingley.
5009 Commissioner Cram, please.
5010 COMMISSIONER CRAM: Thank you. I'm going to ask the same issue and not
engineering questions about your antenna, but is your antenna on the same hill
or the same geographic area?
5011 MR. BINGLEY: Yes. It's within a few kilometres.
5012 COMMISSIONER CRAM: So again you have access to Midland, your antenna, it
broadcasts to Midland.
5013 MR. BINGLEY: Yes. The full coverage signal of all of these stations
basically encompasses Barrie, Midland, Orillia and into the south part of
Muskoka, including Bracebridge.
5014 COMMISSIONER CRAM: So then for the purposes of these competing
applications, should we be considering sort of the demand of the market of the
extended BBM area that we were talking about with LCI?
5015 MR. BINGLEY: Well, in terms of audience research, we included some
research -- we included some respondents in Midland and in Collingwood. We
thought that was important because naturally we are spilling into those
markets.
5016 Moreover, most of those markets are out of the range of Toronto radio.
The 500 microvolt contour of Toronto radio stations crosses almost right through
Barrie. While you can receive some Toronto FM stations on car radios, in house
and with small portable stereos you can't receive them.
5017 I think any new service that is provided in Barrie will provide a very
valuable service in those outlying communities as well.
5018 COMMISSIONER CRAM: The first issue that I would like you to address,
aside from the extended area, is our decisions in London, Kelowna and Victoria
and the factors that we talked about that should be considered in competitive
cases for radio.
5019 I'm wondering if you would like to have the opportunity to address those
factors as they apply to you and what you think is the most important factor
here in the Barrie or the extended Barrie market?
5020 MR. BINGLEY: Are you discussing the concept of economic impact or are
you saying in the decision, the criteria for selecting an applicant?
5021 COMMISSIONER CRAM: Yes. If you can talk about each of the criteria as
they refer to you. The first was the quality of the application and there was
format in that. Then there were the competitive issues. If you would wish to
discuss them as they apply to you.
5022 MR. BINGLEY: Yes, Commissioner. I think the first one you discussed, the
concept of quality of application, you mentioned the concept of quality of the
business plan. I think we have put before you a pretty thorough business plan.
Certainly a lot of effort went into that. There was a lot of research and a lot
of detail, as you may have noticed, that went into our application.
5023 You also mentioned quality in terms of a number of issues. One of the
key ones was Canadian content. With respect to the other applicants here today,
and are you asking me with reference to the other applicants?
5024 COMMISSIONER CRAM: You can be as self-serving as you wish.
5025 MR. BINGLEY: All right. Thank you very much.
5026 COMMISSIONER CRAM: Be careful though.
5027 MR. BINGLEY: All right.
5028 COMMISSIONER CRAM: If I find people that are exaggerating or
contradicting --
5029 MR. BINGLEY: No, I won't wave the flag.
5030 COMMISSIONER CRAM: You tend to mention that to them.
5031 MR. BINGLEY: All right. Basically on our side of the ledger, we are
proposing Canadian content levels that are 37 per cent. They are higher than
CRTC minimums. That's a higher level in terms of measuring up public benefits
compared to other applicants.
5032 We have a million dollars in direct Canadian talent initiatives. On
their side of the ledger, CHUM has $600,00, Larche's file had approximately
$35,000. I'm not quite sure where that sits. Maybe we will save that for the
intervention phase.
5033 With regard to our Canadian talent initiatives, I believe we have the
most carefully laid out and planned series of initiatives. We took a lot of time
to examine what things would work together. Sue was talking about the problems
that face Canadian musicians getting air play, being involved in local clubs,
for example. That's where the music festivals come in.
5034 It's very important for Canadian bands today with the Internet to be
able to have a presence on the net just as Canadian bands 20 years ago all of a
sudden had to have a music video. Now they have to have a Web site.
5035 We are providing those and there's other examples in our application,
but we have tried to present a well rounded series of initiatives.
5036 The other half of our initiatives have to do with native radio. This is
something that I have very much been a proponent of for a number of years. When
we first filed our application in 1986 for Rock 95, we had that. We have had a
native show since that time. We have maintained that. As I say, there are a
number of public benefits that kind of stack higher there.
5037 Another issue that you mentioned in your decision was impact in the
marketplace. We have designed our station so that it will have minimal impact on
other radio stations. It's true the market is growing and it's growing rapidly,
but you can't say just in a blanket form oh, it won't have impact on anyone else
because the market is growing.
5038 Certainly if I was to launch a country station, it would have a massive
impact on Mr. Larche. An AC station, for example, would have much less impact
because it's spread between a couple of other stations.
5039 Finally, I think it's very important and it really should be the
starting point of all of this is what members of the Canadian public are being
underserved. What's the public benefit of all of this?
5040 We have identified teens and young adults as needing this type of
service. Certainly there's a lot of out of market tuning. All of these criteria
I think are all public benefits and they all do match your standards.
5041 COMMISSIONER CRAM: And in terms of the Barrie market, what should be the
most important criteria that we should be looking at out of those as listed in
those three decisions?
5042 MR. BINGLEY: Well, I guess if you were to rank them, it would be a toss
up. It is radio. The first thing you have to address is the market, what members
of the Canadian public are going to be served. I think that's the first thing we
have to address. Everything else sort of flows from that.
5043 We talk about diversity of voices and all of those things, but if you
don't have a radio station there in the first place that suits your needs, all
of those issues become a moot point.
5044 I think the second issue has to be Canadian talent development. This is
something that the Commission has always placed a high value on. Canadian radio
stations really do depend upon the music industry for support. That's our
product, so I think it's appropriate that we support the industry. I think those
are the two real key criteria there.
5045 The third is economic impact on other stations because it does no good,
quite frankly, to launch a station if everyone gets into a difficulty. If you go
down to the United States where they have had a pretty laissez-faire attitude to
issuing licences, I like to say there's so many stations, so little choice. You
can drive for 500 miles and not know what the weather is. It's like one massive
good time oldie satellite station from New York state to the edge of Florida
almost.
5046 I think that the industry loses if we over-licence in a market as
well.
5047 COMMISSIONER CRAM: Why do you think in terms of your target, the 12 to
24, why do you think the present local stations aren't programming for this
demographic, including yourself?
5048 MR. BINGLEY: Well, there's a couple of issues here. The first has to be
and maybe I could address them on a case by case basis. You have to address the
heritage of some of these stations.
5049 CIQB, B101 was originally CKBB. It was an AM station. It was the
heritage station in the market launched in 1949. It has been an adult
contemporary station for more than my life.
5050 CHAY-FM was launched as a soft AC. Personally, as I mentioned at the
time, I thought there could have been a better format for the marketplace, but
for better or worse, that's what they were launched as. There's certainly an
economic reason for AC. It's the most popular market in terms of raising ad
dollars in the country. I think there's some very good financial reasons for
those broadcasters to stay there. It's also one of the most popular formats and
the public is well served by that as well.
5051 In the case of Rock 95, we do have a significant component that is teen
based. A problem we run across the last few years when we launched the station,
it was pretty easy to say we were a rock station and that's going to be
teenagers and it's going to be young adults,
5052 Something happened about five or six years ago and the teen market
started to split. It went into a couple of directions. We started noticing that
teens and younger people were starting to tune to more rhythmic based formats
and more pop based formats.
5053 As a consequence, we can't follow that. We are either a rock station or
we are not. We would have had to change our format and become a pop based
station to follow that aspect of it.
5054 Really what you have, I guess to summarize it, you have two ACs that
specialize in adults and you have a rock based station that's not as popular
with teenagers as the pop and rhythmic based material.
5055 MR. HENNESSY: Doug, with regard to the advent of CHR radio, there are a
number of issues. One of the key economic factors is that you go where --
the market tends to go where the revenue is. The vast majority of dollars spent
on radio are in 25 to 54 demographic, so the teen -- even if you have a
large share in the market, it tends to be diminished in value because there's
less revenue driven to that market.
5056 That was one of the things that hindered the development of CHR. Another
was regulatory and the fact that to do a true CHRN-FM was prohibitive. I think
there was a desire for it in the marketplace and stations that were doing it on
AM attempted to continue to do that, but the market had shifted from music to
FM. That also had an impact in slowing down the evolution.
5057 I think if you see the impact across the country where this format has
been introduced, one of the interesting things about this format that makes it
more immediately viable is the rapid acceptance in the marketplace. The younger,
the more active the listener, the easier it is to attract them to your station
with the appeal of your format.
5058 An example of that would be the recent launch or re-launch of KISS-FM in
Toronto. I don't know if the Commission is aware of a rating service called
Mobil Track. In fact, it's an electronic measurement of radio tuning. It was
developed by an American company but developed in Toronto as a test because
Toronto is a very stable radio market.
5059 What they do is measure approximately 100,000 cars a day at about a
dozen different locations around the city. They measure the RF frequency that is
exuded by your radio as you drive by. So you can get a daily measurement 24
hours a day accurate tuning of every car. In home tuning according to U.S.
research is very, very similar. It parallels each other.
5060 When KISS launched -- my agency uses this mobile track service
because we are involved in buying ethnic advertising and the ethnic radio
stations don't tend to subscribe to BBM ratings, so it is difficult to know who
has what and so Mobile Track helps us with this.
5061 Anyway, we tracked the launch of KISS in Toronto and it was amazing.
Compared to the launch of a country station, which can be quite rapid because
it's a unique format, launched in adult contemporary format, it seems like it is
going to take forever to get where you are going to go.
5062 But with CHR the word is out and you are there, and I think Toronto is
the perfect example of that.
5063 COMMISSIONER CRAM: Just by you saying that, Mr. Hennessy, I have to ask
the next question because it seems that when you look at things like this you
talk not only about attractiveness, but to a certain demographic, but also the
durability of that demographic, the fact that they will stay with you. Does this
demographic stay or does it flit on fairly quickly?
5064 MR. HENNESSY: If you program the station well it will stay with you for
a long time and grow with you and you will find this evidenced in the CHR
stations. When they launch they tend to be very young, very core and --
5065 COMMISSIONER CRAM: And then they grow old, do they?
5066 MR. HENNESSY: Yes, don't we? Don't I? Sorry, Doug.
5067 MR. BINGLEY: Nice recovery, Roy.
5068 MR. HENNESSY: Was that a good one?
5069 The audience will immediately be the young, core top 40 listeners, and
then as the word gets out and spreads to people who are less involved, less
intense about their music, less intent about their pop stars, they become
familiar with the station and they will try sampling.
5070 If the average person listens to three radio stations a week and you've
got five buttons on your car radio, eventually, probably, your son or daughter
will get that station onto that button and you will end up hearing it and you
will become accustomed to it and you will see the audience grow. It tends to
grow more with women than it does with men because they have more of an affinity
to pop music, as opposed to music to weld by.
5071 So, it will grow and with the younger audience they are fickle, but they
will stay with you if you truly serve that audience and that's what some of the
initiatives that Sue is outlining will address, that you truly can measure that
audience, monitor it, communicate with it and build your audience base from
there.
5072 COMMISSIONER CRAM: Thank you.
5073 MR. HENNESSY: You are welcome.
5074 COMMISSIONER CRAM: What about duplication, Mr. Bingley, in terms of CFJB
and your new proposed station?
5075 MR. BINGLEY: Well, there is a number of factors that differentiate the
two. The first is a rock-based station in terms of musical style works
vertically. You are talking format. You are talking rock from a number of
different ages, so you are talking about 50 per cent classic rock or gold-based
material and the balance being current and recurrent, or music less than a
couple of years old.
5076 A contemporary hit station, if you will, programs horizontally. In other
words, it plays new music and that is its defining factor is new based music.
Typically, most of the music is under a couple of years old, so that is the key
factor that differentiates it in terms of musical style.
5077 Now, with regard to programming elements -- Sue, do you want to
cover that off?
5078 MS LEIGHTON: Thank you, Doug.
5079 One thing I wanted to add with the CHR format not only does it focus on
new music, but it focuses on the biggest and the best songs, those songs that
have clawed their way to the top of the charts and those songs that have proven
themselves to what our younger audience wants, what our demographic wants.
5080 There may be some repetition on some songs. Obviously, if there is a
huge rock song, Rock 95 will be playing it, but Z107.5 will also be playing it
because that's what our listeners want.
5081 One of the main programming elements, one of the most important elements
with Z107.5 is taking care of the needs of our listeners. Our listeners will let
us know what they want to hear. These young people know what they want and they
will tell us, whether it be through requests, opinion polls, our Internet web
site and we will listen to what they want. That's the whole idea behind CHR.
5082 COMMISSIONER CRAM: So are you thinking, can you give us a number in
duplication, five, ten, twenty, 500 per cent?
5083 MR. BINGLEY: If you don't mind, I think the key component is the
rhythmic component. If you are taking a look at a CHR station, we would say
probably 75 per cent of that music will be rhythmic or pop based.
5084 For example, you would be looking at an artist like Madonna or Celine
Dion. If I was to put Madonna on Rock 95 I would have to have the phone system
removed. It just is inconsistent with the rest of the music around it. So in
that sense, let's say 75 per cent of the music would not be duplicated.
5085 The other way around, some of the current material on Rock 95 would be
duplicated on the station and there is no doubt about that, but the key to
finding factor in any given hour, of course, is the aging of the music as well.
So, for example, while Rock 95 is maybe playing a Pink Floyd track, the CHR
station might have a rock track by Pearl Jam that is common to the two stations,
but the next track on the CHR station might be The Spice Girls, for example, and
you certainly wouldn't hear that on Rock 95.
5086 COMMISSIONER CRAM: So you can't put a number them to the amount of
duplication?
5087 MR. BINGLEY: It's going to vary from time to time, 20 to 25 per cent
maximum.
5088 COMMISSIONER CRAM: All right.
5089 You said, and you did a lot of financial scenarios -- you said that
a stand alone CHR had a limited chance of success. Did you mean by that that a
stand alone had a limited chance of success, or a CHR format had a limited
chance of success?
5090 MR. BINGLEY: Definitely a stand alone CHR. If you take a look at our
revenue projections, it would be very difficult in the Barrie market, at least
in our opinion, to run it as a stand alone, if you start to add in all of those
general and admin expenses and technical expenses and so on. They can add quite
a bit to that. There is a lot of savings in running two stations in combo and
that's what we meant by that.
5091 COMMISSIONER CRAM: Sop it has to be both, stand alone and CHR. Is that
the point?
5092 MR. BINGLEY: No, I'm sorry, it has to be a combo and CHR. I'm sorry,
depending on the angle, yes.
5093 COMMISSIONER CRAM: You said in your presentation that a lot of the
impact would come from CFJB in terms of audience share. Where else would the
audience come from?
5094 MR. BINGLEY: A large proportion of the audience would come from
out-of-market stations, in particular Hits 103.5, KISS-FM out of Toronto and
that's where most of the material or the audience would be repatriated from.
5095 Roy, did you want to comment on that from your research?
5096 MR. HENNESSY: At this point in time when this analysis was done, but
because it is CHR it does change rapidly, but when this was done the teens in
Barrie -- Orangeville had a reach of 57.9 per cent of that market. So there
is 57.9 per cent of the teens in Barrie are going out of market to a station
that is also formatted more urban, more uptown, if you like, more Toronto
because that's ultimately where they want to be, and still almost 60 per cent of
the teens in Barrie are going there.
5097 Repatriation of that group would be rapid and I think you would see an
immediate impact there.
5098 It also reflects young women in Barrie, that we have got a number there
of a reach of 19.3 per cent who looking for the CHR format are going to the
Orangeville station.
5099 COMMISSIONER CRAM: You do know that it is technically possible for us to
licence two stations. In your belief could the market sustain it?
5100 MR. BINGLEY: I have some concern with that. The fact is two years ago
there were three stations operating out of the Barrie market; Rock 95, B101 and
CHAY.
5101 Two years ago Mr. Larche was granted the transmitter move and he has in
terms of marketing become a de facto fourth radio station. This past summer the
Commission licensed a Christian contemporary radio station and that won't take a
lot of money out of the market, but it will take some money.
5102 If you were to issue another licence today, that is a fifth, and
following that that is a sixth. So that's doubling the number of radio stations
in the market in less than two years.
5103 I have some concern, as someone who has helped build this market, that
it could become balkanized. It could become something like a Niagara Falls/St.
Catharines where there is a lot of difficulty. While the revenue base is
growing, if you introduce too many stations in the market you run the risk of
introducing rate cutting and rate competition that can drive down the overall
rate and stop and even reverse that growth and that's the concern I have.
5104 MR. HENNESSY: I also think it would be important that if there were two
licences that it generate diversity and not duplication.
5105 COMMISSIONER CRAM: So you don't want two CHRs to be licensed at the same
time. Is that --
5106 MR. HENNESSY: Or two classic rocks.
5107 COMMISSIONER CRAM: So if either Larche or CHUM were licensed and you
were not what would be the impact on CFJB?
5108 MR. BINGLEY: We outlined that. We responded to an intervention that the
Commission sent to us.
5109 We are projecting, for example, that our new CHI will pull about a
quarter of a million dollars of revenue from Rock 95. It would pull even more,
but we will have some synergies by combos selling the two stations. So it won't
have that impact.
5110 If you launch a CHR in the market, it would take maybe a share point or
two from Rock 95. So there is that potential for damage.
5111 The other thing you have to recognize is the combo situation of CHAY and
B-101 and the ability of them to refocus their programming to more directly
target us. That is something we are very concerned about.
5112 In the case of licensing a classic rock station, that station has a
significant component of current rock, in my opinion -- and we will get
into that in the intervention phase. It is pretty similar to our format. That
would be devastating to us. Quite frankly, they are exactly the same client
base. They are the same group of listeners.
5113 They are talking about removing 30 per cent of our audience right off
the top, a 3 per cent market share. So that now knocks us down from no. 2
in the market to no. 4, behind CHAY and B-101.
5114 So we would lose, just there, probably a few hundred thousand dollars to
CHAY and B-101, because we have suffered relative to them. And that is before
the other stations started targeting our advertisers.
5115 So you could see within a two- or three-year period our revenues
dropping by close to a million dollars. Certainly we would make up some of that,
and it would not be as bad if we were a joint licensee. We would have the CHR.
But it would be very difficult.
5116 I do believe the market would have some difficulty. It is growing, but
it is still only just over 100,000 people.
5117 COMMISSIONER CRAM: In the same scenario, though, you would be able to
survive.
5118 MR. BINGLEY: I hope so.
5119 COMMISSIONER CRAM: When you were talking about the consolidation in the
market and the impact on your revenues, it wasn't necessarily the consolidation
you were worried about, was it?
5120 Or was it the consolidation and then a sort of directed formatting at
your present station?
5121 MR. BINGLEY: When you talk consolidation -- and let's just talk for
a moment, if we may. There are no entries in the marketplace.
5122 There are two impacts. First, the combined sales force could go out and
offer deals, packaged deals, for the two radio stations. That makes them more
competitive compared to our station.
5123 Second, they would be able to adjust their programming, and I suspect
they would adjust their programming. They have done it in the past, for example.
There are a number of opportunities open to them.
5124 So right off the top you have the impact of the combo sales.
5125 The second thing is: What are they going to do with the programming?
5126 So it is both.
5127 COMMISSIONER CRAM: Can you quantify the financial impact of both of
those individually?
5128 MR. BINGLEY: Bear with me for a moment.
5129 COMMISSIONER CRAM: Sure.
--- Pause / Pause
5130 MR. BINGLEY: We estimate -- and I am assuming that they would
adjust their programming. I think that is the first assumption.
5131 We estimate that within two years CHAY and CIQB would draw approximately
half a million dollars from our radio station.
5132 COMMISSIONER CRAM: Then when we were talking about your scenarios and
your projections with the new station, I think you were saying your revenues
were going to be -- did you say today a quarter of a million the first
year?
5133 MR. BINGLEY: For the new station?
5134 COMMISSIONER CRAM: Yes.
5135 MR. BINGLEY: No. The impact of the station on Rock 95, we have assumed
in all of our forecasts that it is -- we use the word "cannibalization". It
has removed about a quarter of a million dollars from our existing station.
5136 COMMISSIONER CRAM: In terms of your projections for the new station,
your most likely scenario shows your revenues, especially at the local sales,
the lowest of all of the three of the applicants.
5137 Why do you project relatively such low revenues?
5138 MR. BINGLEY: Well, there are a couple of parts to that.
5139 First, I would like to address that to Mr. Hennessy, who came up with
our base revenue projections.
5140 MR. HENNESSY: I think the optimum word here is conservatism. It is
better to go in anticipating what might be at the end of the tunnel.
5141 Certainly the projections for the growth in the market -- and we
are looking at projecting a share of 9.2 per cent of audience, and then if you
depreciate that or weaken it because it is a CHR rating and give it a 60 per
cent value, it would decrease the revenue that would be available to the
station.
5142 The half million dollars allows for a start-up period. And I stated that
it would be a quick acceleration in the market.
5143 There still is a period of time to convince the advertisers to wait for
BBM ratings to show up to prove what you have done. You could do things to
counter that.
5144 You can guarantee delivery; make sales in advance and if you don't
deliver the audience, do make goods. You can do combo sales, a number of things.
But there still is a reluctance and a drag period before the advertisers come on
board.
5145 There are also a number of advertisers who have not used radio to reach
teens for a period of time, and it is going to require re-education for them as
well.
5146 So I think going in conservatively, $500,000 is the safe side.
5147 COMMISSIONER CRAM: The other part about your projections, Mr. Bingley,
is that your expenses in programming are relatively the highest.
5148 Is this as a result of your emphasis on program, or what?
5149 MR. BINGLEY: I think actually the medium, Commissioner -- I believe
CHUM's programming expenses are higher than ours. We are higher than Larche.
5150 We built them based upon what our actual expenses are in Rock 95, in our
experience.
5151 We think, relative to the market -- we know we can achieve on that
budget, and that is what we need to order to do the job.
5152 COMMISSIONER CRAM: The Cancon, 37 per cent, category 2: You say 24 hour
a day, seven days a week.
5153 MR. BINGLEY: Yes, that is correct.
5154 COMMISSIONER CRAM: And you would commit to a COL to that effect?
5155 MR. BINGLEY: I'm sorry, COL...?
5156 COMMISSIONER CRAM: Condition of licence.
5157 MR. BINGLEY: Sorry. Yes, I would, most definitely.
5158 COMMISSIONER CRAM: A year ago I wouldn't have even know what that
meant.
5159 You agree with that.
5160 MR. BINGLEY: Yes, I do.
5161 COMMISSIONER CRAM: Does that extra 2 per cent affect you
financially? Is that an additional cost?
5162 MR. BINGLEY: No, it is not an additional cost.
5163 I would like to point out at the start that typically we run our radio
station at 2 to 3 per cent over our POP to begin with. We always want to be in
compliance and that's our way of doing it.
5164 So when we say 37 per cent, we are really pushing 39 to 40 per cent.
5165 We don't believe we are going to have a problem with that vis-à-vis the
out-of-market stations that are 35, 36 per cent themselves.
5166 Sue, did you want to comment on that?
5167 MS LEIGHTON: Yes. One thing we want to pass along, Commissioners, is
that our listeners favour the phrase "Canadian content". We really, truly stand
behind this.
5168 It is no longer viewed as a negative by any means. Some of the best
music in the world is coming out of Canada. What our musicians are producing is
incredible.
5169 I think the thing to keep in mind with our application is that our
listeners really want to hear a very wide variety of musical styles. Therefore,
that gives us a much wider universe of Canadian content to draw from.
5170 For example, Rock 95 would be drawing new Canadian rock. With Z1075 we
can draw from all styles.
5171 Like I said, on the rock station we can play the very latest song from
eurhythmic pop or hip hop artist. We can also play the very latest from the
Headstones, the Tragically Hip, Moist, and we don't see any difficulty in
meeting our Canadian content requirements. There is plenty of material out
there.
5172 MR. BINGLEY: I think another point is that our CHR station is going to
be more in tune with our local audience in terms of their listening habits. And
they are different from Toronto. The entire make-up of our community is
different than Toronto.
5173 So while perhaps we lose a bit of flexibility vis-à-vis the Toronto
stations because we have a higher Cancon commitment, we will be able to focus
more closely on the musical styles that our listeners are after.
5174 COMMISSIONER CRAM: I must say, actually, I read that research of yours,
Mr. Oakes, and I was very pleased to see that Canadian actually has a cache. I
was very pleased to see that.
5175 Anyway, you are saying you are hiring a news director and then I heard
LCI say, earlier today, that you have your afternoon news -- you get your
afternoon news through CKVR TV.
5176 MR. BINGLEY: Yes. For the last two years we have picked up in the
afternoon three newscasts that are provided through the CKVR newsroom. We didn't
reduce our news staff when we did that. We didn't reduce our news
commitment.
5177 We did it because, quite frankly, we thought it would make the product
better. They have the largest newsroom in the marketplace and we are very happy
with the content of that.
5178 I think the key factor, though, is that we are in control of what
actually goes on the radio station. So we don't have to take their newscasts,
but I believe it is a quality piece of programming that we are providing.
5179 COMMISSIONER CRAM: So what do you propose to do on 107? Have your own
news?
5180 MR. BINGLEY: Yes. It definitely has a different news style than an album
rock station would have.
5181 Sue, do you want to address that?
5182 MS LEIGHTON: Thank you, Doug.
5183 What we are proposing, Commissioners, we will be doing hourly newscasts,
just over a minute and a half in length. We will be hiring a separate news
director. We will be building a separate news staff, however, they will be
located in the same newsroom. So Rock 95 will have their news staff, Z107.5 will
have theirs but they will be housed in the same room.
5184 They will be sharing information. We will be using separate presenters
writing up their own copy. Each news department will select their own
line-up.
5185 Again, they will have their own news director. We truly believe --
it is a best-of-both-worlds situation. The information will be shared back and
forth. It works towards affordability. But, obviously, news that is presented on
Rock 95 and news that is presented on a CHR will have two completely different
feels and tempos to it. I mean, when a big story comes in they can share it
around and get it on the air very, very quickly.
5186 COMMISSIONER CRAM: So, then, do I understand you that -- you know,
different news on the two, but on Rock 95 you are still going to retain the CHUM
news in the afternoon?
5187 MR. BINGLEY: We will, yes. Yes, we will.
5188 COMMISSIONER CRAM: Okay.
5189 You were talking about features called I believe Barrie Links.
5190 MR. BINGLEY: Yes.
5191 COMMISSIONER CRAM: Would you be using those on both stations or just the
107?
5192 MR. BINGLEY: They would be on 107.
5193 COMMISSIONER CRAM: And you talked about sharing of staff. What staff
would you be sharing? You have talked news sort of semi in terms of space.
5194 MR. BINGLEY: Yes. I think if you are talking -- are you talking
news or programming in general?
5195 COMMISSIONER CRAM: Totality.
5196 MR. BINGLEY: Okay. First, let's start with the news, if we may.
5197 We will have separate news directors and separate news staff. The news
directors really are -- I have always had a hands-off policy -- they
are the ones who set the tone for the news programming on the radio station.
5198 In terms of on-air staffing, there won't be much overlap except on a
couple of occasions, overnight periods, we will be doing some voice tracking
between the two stations, the voice is shared between the two stations, and I
believe we actually have two air shifts Monday and Tuesday evenings where an
announcer from Rock 95 will work on Z107.5. That is because we are kind of half
an announcer over at the present time. So that works out very efficiently.
5199 In other departments there is a great deal of duplication. Obviously,
there is only one general manager. There is a lot of savings there, you save in
reception, for example, you save in traffic, and Mr. Larche talked to those.
There is a whole host of savings in the radio station.
5200 A savings in the technical department, for example, one of my partners
is our station engineer and he will maintain both facilities.
5201 COMMISSIONER CRAM: I understand you have a contract for surveillance. Do
you have a contract for traffic surveillance or something that --
5202 MR. BINGLEY: Yes, we do.
5203 COMMISSIONER CRAM: You would be using that on both stations. Is
that --
5204 MR. BINGLEY: Yes, we will.
5205 COMMISSIONER CRAM: Would there be any difference in the content?
5206 MR. BINGLEY: Typically, that service has a couple of different
announcers and we would work with them to ensure that the style is
different.
5207 In terms of the content, it really wouldn't be different because the
traffic on the 400 is the traffic on the 400.
5208 COMMISSIONER CRAM: I want to move to your CTD now.
5209 You talked about, on 107, having an aboriginal music program I believe
Sundays at 10:00 with an intern and making it available to other stations. CFJB
would also continue the Spirit Winds?
5210 MR. BINGLEY: Yes, we would.
5211 COMMISSIONER CRAM: Okay.
5212 And this is the original commitment you made in 1988?
5213 MR. BINGLEY: Yes.
5214 COMMISSIONER CRAM: If I understand the five reserves that you are going
to be assisting, which reserves are they?
5215 MR. BINGLEY: Linda, do you want to address that?
5216 MS MacGREGOR: Yes, Commissioner. Those five reserves are Christian
Island, also known as Beausoleil First Nation; Georgina Island; Parry Sound,
also known as Wasuuksing; and Rama, also known as M'njikaning. Those would be
the five First Nations.
5217 MR. BINGLEY: You left out one and that's Whata which is located near
Bala, Ontario.
5218 MS MacGREGOR: Sorry. And Whata, which is -- interestingly enough,
although four of those communities are Ojibwe, the fifth community is Mohawk, so
even among the other four communities which are Ojibwe, there still is a
variation within the linguistic flow of the language, so it does create
uniqueness. We have a similar multiculture within our own culture. So there is
still a great diversity.
5219 COMMISSIONER CRAM: That first one you were talking about, the
Beausoleil, is that the one that you have been assisting in the past?
5220 MR. BINGLEY: Yes.
5221 COMMISSIONER CRAM: Is that the one that Mr. Larche was referring to in
his --
5222 MR. BINGLEY: Yes, it was.
5223 COMMISSIONER CRAM: And you have given him, if I read it correctly, some
used machinery or something.
5224 MR. BINGLEY: A combination of new and used. Some used cart machines, a
new console, a low-power transmitter -- a very low-power
transmitter -- as well as an antennae that was brand new, some new
microphones and so on.
5225 COMMISSIONER CRAM: Here is your chance to explain to us why you believe
that the Radio Initiative should be considered as a CTD benefit.
5226 MR. BINGLEY: Okay. Are you talking the -- okay.
5227 Linda, do you want to start with that?
5228 COMMISSIONER CRAM: I know you referred to it in here. I would like you
to summarize it so we are obviously going to have to make a decision on whether
it would be included and here is your chance.
5229 MR. BINGLEY: Yes. Okay. Fine.
5230 Linda.
5231 MS MacGREGOR: Now, when we speak to the aboriginal component of this
application of course the question arises: Is this a Canadian talent initiative?
I would have to say wholeheartedly, yes, it is for these reasons.
5232 The first, this application could donate money to FACTOR and earmark it
for the production of native CDs. In that in itself there would be no question
that it would be a Canadian talent initiative. But there is one problem with
that and that is up until this point there really isn't an outlet for the CDs,
so, again, it is similar to having the keys and no car.
5233 In addition to that, what compounds accessibility, what now is more
viable for native musicians is about the five-year old new introduction by the
Juno Awards of the category Music for Aboriginal Canada.
5234 Now, in programming Spirit Wind for the past eight years, the most
significant change I have experienced is that with our initial beginning I only
had music on cassette and until the introduction of that category I now have, at
my resource in the Aboriginal Music Library, a vast selection of music by
aboriginal artists on CD. With the introduction of that category it is much more
viable.
5235 But without mainstream access, it still isn't exposure for these
artists. You can literally win a Juno in Music for Aboriginal Canada but not be
heard on mainstream radio.
5236 So the introduction of the five native radio stations provides this
amazing forum an outlet for these artists.
5237 In addition, it has had a tremendous impact on the way I programmed
"Spirit Wind".
5238 Initially it started out as a talk program. With the introduction of the
category in the Juno Awards then came an incredible influx of music. Because the
artists don't have mainstream exposure they are looking to the limited forums
that there are through radio to be able to play their music.
5239 So now to be able to accommodate those artists, I have to --
because the show also is community-driven, the request comes from the artist to
play our music and so now to be able to meet that artist's need, the Canadian
aboriginal talent, I am almost in a position where I am predominantly music. So
I am attempting to reach that market.
5240 We have artists who have been nominated and have won in the Toronto
Blues Society category. So we have a wide variety of music.
5241 MR. BINGLEY: I think if I can add to that, what we are talking about is
grants to native communications societies. We would equate that to grants to
local arts groups. There is certainly an arms-length association.
5242 There is no doubt about it, as Linda so eloquently put, that they do
support native musicians, they provide the outlet for air play, creating the
demand -- never mind about the market-at-large, within aboriginal
communities. It is difficult for aboriginal musicians to -- how do you
break a record? Do you mail it to a Reserve 500 miles away? So that is an
issue.
5243 The radio stations will focus on aboriginal languages, they will provide
storytelling and a variety of artistic and journalistic expression on those
radio stations.
5244 So while the outlet is different from what we would normally consider a
Canadian talent initiative, if we were, for example, to give money to a local
symphony orchestra, the outlet, the medium is the hall. In this case the outlet
or the medium is the radio station.
5245 I guess to a certain extent that is coincidental, but that is why we
feel it is a valuable Canadian talent initiative.
5246 Having said that, I would hope you would accept it as a CTD initiative
because if you do I think other broadcasters will come forward. But if you do
not support it as a CTD initiative, I don't think there is any doubt that it is
a very valuable public benefit.
5247 MS MacGREGOR: If I may add one more point to that.
5248 Currently across Canada we have one mainstream aboriginal broadcaster,
Carla Robinson. There is an aboriginal media college program delivered by First
Nations Technical Institute at Tyendinaga and I have spoken to some of the
employers of those graduates and they are not employed in their field of media
relations. We have not been able to absorb the graduates.
5249 A number of them, if they are looking for employment, the catch-22 is
experience. There are a lot of factors affecting that -- gaining that work
experience.
5250 So once again, the First Nations aboriginal radio stations would provide
that comfort level for them, also provide the very -- probably the most
important aspect of this, even though the funding is incredible, is the training
component. So that in addition to the college education in the media area, which
is again geared to aboriginal reporting, that this also becomes a vehicle to
provide that valuable experience for those people in that area, but also for
community members who want to begin to look at this maybe for the first time as
a means, a practical means of employment.
5251 I know myself and people like Carla Robinson are invited to First
Nations for career days to speak to the students to say this is now a viable
career for us and to bring the role models into the community so that we create
that diversity.
5252 So that is a very critical point as far again as providing the
development of Canadian talent to report on aboriginal issues.
5253 We say there are two stories, there is history, or "his story" and then
there is "our story" and they are two very different stories. It's our story
told by us compared to someone else's version, as best as they can deliver,
about what they think happened. There have been many instances in our recent
events, even within the last five years in Canada which spoke to those different
news stories.
5254 Thank you.
5255 COMMISSIONER CRAM: Would you say it is sort of analogous to the London
decision where CHUM/CTD was going to a college for training and for some capital
expenditures. Would you say it would be sort of analogous to that?
5256 MR. BINGLEY: A large proportion of it would be, yes, because there is a
high training component to it.
5257 COMMISSIONER CRAM: Yes. And then the capital is the machinery that you
are donating.
5258 MR. BINGLEY: Yes, absolutely.
5259 COMMISSIONER CRAM: We then have to go to the issue of the CTD Director,
the $11,000.
5260 You do understand that there are some concerns by the Commission as to
why we would find that acceptable.
5261 Can you tell us the salary of $11,000, is that a full-time job,
full-time salary?
5262 MR. BINGLEY: No. That is a part-time position.
5263 A few years ago we applied for a Kitchener licence and the Panel was
very concerned. We had some pretty good Canadian talent initiatives that we were
proposing and the issue was: How are you going to be sure that these things
actually happen?
5264 In this case we are talking a wide range of initiatives to support
Canadian musicians, we are talking working with five native radio stations, we
are talking about co-ordinating training for the radio stations, so there is a
lot of background work to that. For that reason we believe that this is an
incremental expense.
5265 We are proposing $11,000 a year. We think it is a relatively modest
amount relative to the work that will be provided. If anything, it's a low
amount. We will probably be spending more money for that purpose.
5266 It is definitely an incremental position.
5267 COMMISSIONER CRAM: So this individual would be sort of co-ordinating the
maintenance and everything else of the stations?
5268 MR. BINGLEY: Well, there are a number of aspects to it. You are talking
about bringing interns into the radio station, setting up the training
program.
5269 I have been involved in this. We have provided training, for mostly
First Nation as well as Georgina Island. We also have a joint venture Russian
station in St. Petersburg, Russia, and we have brought a number of Russian
trainees to the radio station. That is a massive job: It is 9:00 in the morning,
we are here. What do we do now?
5270 So that is not an insignificant job. It is quite important if you are
going to have a successful outcome from that training.
5271 COMMISSIONER CRAM: Now, if -- I'm sorry.
5272 MS MacGREGOR: I'm sorry, Madam Chair -- pardon me,
Commissioner.
5273 COMMISSIONER CRAM: Go ahead.
5274 MS MacGREGOR: If I may add to that, to compare where we are with radio,
in First Nations we are probably in the same place where Canadian broadcasting
was in the 1940s.
5275 Right now there are two radio stations which are attempting, on their
own initiative, in addition with the kindness of Mr. Bingley to assist with
the donation of equipment and training on a volunteer basis, is that right now
we have a situation where you can turn on the community radio and it is at a
very low, experimental stage, very low frequency, but even with that there isn't
consistent programming. It's up, it's off. It's primarily on a volunteer
basis.
5276 So for the first time this would have some funds towards -- even if
it were a part-time position -- to be able to have some consistency with
the program.
5277 In addition, the strength of this is that with the automation package
that you saw on the screen earlier, what is different about what's at, for
example, Christian Island right now and Georgina Island, is that is a manual
operation. So someone has to physically be there for that program to be up and
running.
5278 Now, the uniqueness of this automation package is that the music can be
programmed in, interviews and any other programming can be programmed in and it
can air 24 hours. Someone wouldn't have to physically be at that station to make
it happen.
5279 So for us that is comparable to putting someone on the moon. Even though
it is a relatively small amount of money it is still a giant step forward for
us.
5280 In addition, once we -- which is usually our catch-22 in that there
are other areas where we could apply for additional funds, and the terms for
those additional funds is usually always to have a percentage of whatever we are
applying for.
5281 This contribution in the form of a grant also provides for that base for
funding to be able to access funds from other supporting programs.
5282 Thank you.
5283 COMMISSIONER CRAM: I wanted to talk about your Web site. I think I heard
you saying that you would be building and maintaining this Web site.
5284 MR. BINGLEY: That's correct.
5285 COMMISSIONER CRAM: Your application referred to 5 per cent of it being
in relation to the native stations.
5286 MR. BINGLEY: I'm not sure of the actual percentage. We will provide Web
pages for the radio stations. There's a service called Real Audio. Ultimately we
would like to get them on that Web page Real Audio so they could broadcast
around the world.
5287 At the present time though, we are not quite sure how to get there from
here because we are not sure of the coverage area of those stations. Typically
how you get in on to the net is you have an off air receiver connected to a
local server and then on to the net.
5288 We did not include that component in our application because in some
cases, for example, in Whata that may physically be impossible, but that is a
long term objective of that, yes.
5289 COMMISSIONER CRAM: And then you talked about 75 sites for bands. You
would be developing them and maintaining them.
5290 MR. BINGLEY: Yes. We would work with the bands to develop them and
maintain them. The maintenance, by the way, is a very important issue with any
Web site.
5291 COMMISSIONER CRAM: Yes. When you say -- you are using the present
tense, so are you doing that right now?
5292 MR. BINGLEY: No. When I'm saying the present tense, I'm saying even just
developing our own Web site. For anyone to maintain that Web site is quite a
challenge.
5293 COMMISSIONER CRAM: Okay. One last question. If you can look at page 17,
schedule 5, or maybe you can tell us because you might know, Mr. Bingley.
There's a table about indirect expenses and there's a reference to contra
expense Internet. Any idea what that means?
5294 MR. BINGLEY: Yes. We have some --
5295 COMMISSIONER CRAM: I knew you would know.
5296 MR. BINGLEY: I'm so relieved. That's to cover the cost of the access
line into the Internet service and Web hosting. We have worked with Internet
service providers. We have worked out a plan so that we will be able to contra
those facilities. That's why we show that as an indirect benefit.
5297 COMMISSIONER CRAM: Thank you very much.
5298 MR. BATSTONE: Just one very quick followup on the CTE director. You said
it was part time, but is it one person working just on a part time basis or is
it a part of a full time position?
5299 MR. BINGLEY: That would depend upon the resources that are available at
the time. For example, I was talking to Linda the other day "You want to be
Canadian talent director", but she has a full time job right now. So that very
much will depend upon the resources. Probably it will start as a part time
position. I could see that expanding and growing as time goes by.
5300 MR. BATSTONE: But I assume it would have to be somebody with some
experience and sort of knowledge of the general area. I guess the question in my
mind is it seems to me it would likely be somebody who has a job already doing
something else.
5301 MR. BINGLEY: Well, what we are seeking and what we are thinking about,
for example could be a broadcaster who is semi-retired. There are many examples
of that type of individual.
5302 This ideally would be someone -- I guess the perfect match is
someone who has worked in the industry for a number of years, has a passion for
the industry and would be able to push forward that point of view and provide
that level of training.
5303 MR. BATSTONE: Thank you.
5304 MS MacGREGOR: If I may add to that, currently there is a graduate from
the media "mainstream program". She is from Christian Island. She hasn't been
able to secure full time employment in her field. She is currently employed by
the Barrie Native Friendship Centre just a kilometre down the road from the Rock
95 currently.
5305 Actually from time to time there are graduates of programs like that
from our communities, aboriginal communities in the area who do call me and ask
me if there is anything. Although they are doing something else, they always
have their ear open as to "Are there any opportunities for me? This my love. I
want to do this."
5306 Once this starts to become a reality, as the saying goes, build it and
they will come, that will be the scenario in our communities. There are
resources to draw on.
5307 Thank you.
5308 THE CHAIRPERSON: But it won't be an $11,000 raise for any of your
current employees to do this on Saturday.
5309 MS LEIGHTON: No.
5310 THE CHAIRPERSON: Conversely, is there any chance that it will represent
one part of the current salary they have and they will also perform this
function?
5311 MR. BINGLEY: No, it does not because we are pretty well running full
steam with what we have got in the programming department. As I mentioned, that
was one position that was sort of a position and a half, but no, it doesn't
represent that.
5312 THE CHAIRPERSON: So it will clearly be incremental.
5313 MR. BINGLEY: Yes, it definitely will.
5314 THE CHAIRPERSON: To the operational expenses that you have to operate
the station were it not that you have the CTD commitment.
5315 MR. BINGLEY: Absolutely, and if you should request it or require it, we
would be happy to provide proof of that after the station was on the air.
5316 MS MacGREGOR: And if I could speak to Mr. Bingley's integrity, when I
looked at the application and it's --
5317 THE CHAIRPERSON: I wasn't questioning it.
5318 MS MacGREGOR: No. Actually I would like to speak to his integrity
because when I look at this application, it's so unheard of for us to be
partnered with mainstream society. There are more stories coming like this. It's
really quite na inspiration for us in the native community.
5319 When I saw this I was so, I guess, impressed by it, I went to Mr.
Bingley. I'm thinking also in terms of cost effectiveness, profit and loss. I
offered to him that if he could save some funds by doubling up Z1075 native
programming and deliver "Spirit Wind" with the same vehicle, I wouldn't have a
problem with stepping aside for the sake of cost effectiveness and for what he
is putting on the table for the betterment of the native community and all of us
in our listening area.
5320 I didn't think I would be recounting this conversation, but he declined.
He has said that the commitment that Rock 95 made through "Spirit Wind" and that
I have had the privilege to work with for the eight years that he would have
that remain as it is and Z1075 would function as a separate entity.
5321 Thank you.
5322 THE CHAIRPERSON: It was a very good question, Mr. Bingley, wasn't
it?
5323 MR. BINGLEY: Thank you, Commissioner.
5324 THE CHAIRPERSON: Thank you very much.
5325 We will take a ten minute break and we will come back and hear the CHUM
application.
--- Recess at 1730 / Suspension à 1730
--- Upon resuming at 1745 / Reprise à 1745
5326 THE CHAIRPERSON: Madam Secretary.
5327 MS SANTERRE: Thank you, Madam Chair.
5328 The next application is by CHUM Limited for a broadcasting licence to
carry on an English-language FM radio programming undertaking at Barrie. The new
station would operate on frequency 97.7 MHz with an effective radiated power of
9,960 watts.
5329 The applicant is proposing a Contemporary Hit Radio music format.
5330 THE CHAIRPERSON: Good afternoon. I am told this is still afternoon in
Toronto.
PRESENTATION / PRÉSENTATION
5331 MR. SHERRATT: Most importantly, it's still afternoon we hope in
Ottawa.
5332 Good afternoon, Madam Chair, members of the Commission.
5333 For the record, I am Fred Sherratt, Executive Vice-President and Chief
Operating Officer of CHUM Limited. With me today in the front row are Jim
Waters, President CHUM Group Radio; and on his right is Ross Davies,
Vice-President Programming CHUM Group Radio. On Jim's left is Duff Roman,
Vice-President Industry Affairs for Radio and CHUM Limited; and on Duff's left
Shelley Sheppard, CHUM Limited Corporate Accounting. In this row with me on my
extreme right is Kerry French, Director of Research CHUM Group Radio Sales.
Beside Kerry is Hans Jansen, Partner, Bay Consulting Group. On my immediate left
is Millet Salter, Bandshell By The Bay and on his left Doug Garraway,
Vice-President and General Manager CKVR-TV Barrie.
5334 We are here today seeking your approval for a new FM station to serve
Canada's fastest growing city, Barrie, Ontario. This is not our first
application for Barrie. We applied in the first wave of FM licensing in the
mid-seventies. The successful applicant at that time was CHAY-FM, which was
later sold to Shaw Communications.
5335 We believe that the reason we were unsuccessful at that time may well be
the reason that we may be successful a quarter of a century later. CHUM is the
licensee of CKVR-TV "The New VR", the local television station for Barrie,
Simcoe County and the broad rural region of central Ontario.
5336 Back in 1975, no one had even thought of multiple licensing ownership,
and, given the limited number of licences then granted, it was generally deemed
that a new player would be the best way to ensure diversity in a given market.
Thus, Barrie's first FM station was not a CHUM station.
5337 Today Barrie is served by three conventional commercial local FM
stations and following regulatory process, two of those stations could well be
owned by Shaw.
5338 CHUM's involvement in CKVR-TV goes back to 1965 and we have been an
active, involved, corporate citizen of the community since that time. It is our
belief that if this Commission elects to licence our application for a new FM
service, both the station, and the community will benefit from the synergies
that can be achieved through co-operation with CKVR. It will be a dynamic,
involved, local, news, information and community radio station.
5339 CHUM has its roots in radio. Allan Waters bought a daytime only AM
station in Toronto in 19564, 55 years ago. It became a full time, 24 hour a day
station in 1957 and was relaunched as Canada's first Hit Parade radio station.
That's what we called it in those days, not top 50 or top 40.
5340 In the intervening 42 years, CHUM has grown to include 27 radio
stations, nine specialty services, six television stations in Ontario and
ACCESS, the educational television service in Alberta. Three or four years ago
we were considered a big player. Today we are medium-sized player.
5341 I believe the record shows that we have been responsible custodians of
the public airwaves and have made strong contributions to, and become an
integral part of, the communities we serve.
5342 One of our intervenors captured it very well and I quote:
"The personnel of The New VR have been generous, co-operative and
enthusiastic when solicited, and their private, usually anonymous, contributions
to the many activities within our society have enriched and strengthened its
very fabric.
Through its resources, its creativity and its professional high standards,
and through its dedication to positive ideals, The New VR has garnered a loyal
audience and the sincere respect and admiration of the social, cultural,
business and political leadership of our city."
5343 Should you approve this application, we look forward to adding to the
CHUM tradition of strong community service in Barrie. Jim Waters, President CHUM
Group Radio, will quarterback our presentation to you today. Jim.
5344 MR. WATERS: There have been several calls from the CRTC for new FM
licences in different markets across Canada. CHUM has picked its spots to apply
carefully. We have only applied in markets where starting a new FM radio service
made sense for CHUM and at the same time would benefit the community.
5345 It has been 12 years since the licensing of the last new station in
Barrie, and when the call came for a new FM service, we did not hesitate to
file.
5346 CHUM is no stranger to Barrie. CKVR Television has been serving Barrie
and the surrounding area for 44 years. We believe there are many ways in which
we can develop synergies between The New VR and our proposed FM radio station to
be known as 97.7 The Bay.
5347 We wanted the name of the station to mean something to the people in the
Barrie community. Barrie is at the head of Lake Simcoe's Kempenfelt Bay, thus
the name, "The Bay". People in Barrie relate to the bay and we are convinced
they will relate to the station we propose.
5348 It is our intention to build on the excellent track record The New VR
has in local news by having our radio news people work closely with our
television newsroom to broadcast a more aggressive news schedule than you would
normally do on a music intensive radio station.
5349 All of that said, we first had to do an extensive analysis of the
economic circumstances of the Barrie market to show that it could support
another FM radio service. Our analysis shows the population in the Barrie CMA
grew 29 per cent between 1991 and 1999 -- faster than anywhere else in
Canada.
5350 Another key factor is that radio revenues in Simcoe County, of which
Barrie is the major market, grew 10.6 per cent in 1997 over 1996. these are key
indicators that the market can support the entry of a new radio station. CHUM
retained the Bay Consulting Group to do the market analysis. Hans Jansen will be
presenting the highlights.
5351 Possibly the clearest indicator that the Barrie market can support a new
radio station is found in the Spring 1999 BBM figures. All persons 12-plus
tuning shows 59.4 per cent is to out of market stations. Further to that, out of
market tuning by females 12 plus is 54.1 per cent and by females 12 to 34 is
60.7 per cent. these numbers clearly indicate that there is an opportunity
repatriate these listeners to local Barrie radio.
5352 CHUM also did research to determine the programming needs of the
community. It is very clear from the research that there is a programming void
in the market for a female skewed youth oriented radio station. Ross Davies will
provide details of the key findings from that study.
5353 Finally, 97.7 The Bay will team up with the City of Barrie and the
Barrie Rotary Club for a very exciting local talent development initiative
called "Bandshell By The Bay". Duff Roman will talk more about this later.
5354 Hans.
5355 MR. JANSEN: Madam Chair and Commissioners, Bay Consulting Group was
asked to conduct an economic analysis of the Simcoe Country radio market and
develop a professional opinion about realistically achievable sales targets for
a new FM radio station for the 2001-2007 period.
5356 We found that the Barrie, Ontario radio market is sufficiently large to
be able to justify another station.
5357 In 1997, the Barrie, Orillia, Midland and Collingwood stations combined
achieved sales of $7.6 million, an increase of 10.6 per cent over the previous
year. Local sales accounted for $6.3 million or 84.2 per cent of the total and
national sales for $1 million or 12.9 per cent of revenue.
5358 Barrie has been growing much more rapidly than any of the 17 other major
markets in Canada we compared it with. From 1991 to 1999, its population
increased 29.2 per cent. That is much faster than the growth in cities we
normally think of as being the rapidly-growing ones. Toronto and Calgary, for
instance, grew a more modest 18 and 17 per cent during the same period.
Vancouver, meanwhile, grew 20 per cent; and Edmonton, 6 per cent.
5359 The retail sector of the Barrie economy is benefiting from this
population growth and from the resulting diversification in the rest of the
economy. Retail sales in the Barrie CMA will be $1.28 billion in the year
2001 and $1.41 billion in 2004.
5360 In summary, the outlook for the FM sector's development in the Barrie
market is excellent.
5361 Shelley.
5362 MS SHEPPARD: The introduction of a new radio station is expected to have
several effects on the dynamics of the advertising industry in the Barrie radio
market. Local radio spending in the area will be stimulated in response to:
5363 1) the ability of listeners to get another local signal;
5364 2) the addition of new radio advertisers who want to reach the core
target group of the new station;
5365 3) the addition of new salespeople in Barrie and the Simcoe County
market; and
5366 4) increased emphasis on market development activities by the
salespeople of the existing FM stations.
5367 Additional advertising will be rerouted from print to broadcast because
advertisers will now have a better opportunity to reach their targeted local
customers and clients.
5368 Taking into account all of the results of the Bay Consulting Group
study, we believe that a new local radio service can achieve a sales volume
sufficient to ensure viability without unduly impacting the other existing
stations.
5369 In other markets, CHUM Group Radio has found that when a new station is
launched, a tremendous opportunity is created to not only attract new business
categories and retailers to radio, but also to repatriate listeners back to the
local market. The radio station also improves relationships in the community by
providing better access to community groups for fundraising and building
projects.
5370 In summary, our economic profile and inherent knowledge of the radio
business indicates that the Barrie CMA has the fastest growing population base
in Canada and that the Simcoe County market is sufficiently robust to allow the
introduction of a new radio station.
5371 Ross.
5372 MR. DAVIES: The current radio landscape in Barrie offers listeners a
choice of three popular music radio stations, plus a specialized commercial
Christian station, all on the FM band.
5373 CHAY-FM plays soft adult contemporary music targeted to adults 35 to 64.
CIQB-FM, or "B-101", plays mainstream adult contemporary music and targets
adults 25 to 54; and CFJB-FM, or "Rock 95" plays a combination of current rock
and classic rock, appealing predominantly to males 18 to 54.
5374 There is no station in Barrie that offers a musical format targeted
primarily to the younger adult demographic between the ages of 15 to 35,
directed towards women. 97.7 The Bay will fill that void.
5375 In the radio business this format is generally referred to as the
"mainstream contemporary hit radio". The station will primarily focus on the hit
music of today and the past few years by such Canadian artists as The Moffats,
Debra Cox, (Barrie's own) VIP, and international performers like The Backstreet
Boys, Brittney Spears, and Ricky Martin, and will not focus on older or classic
gold songs. The station will not be confused with any existing station in
Barrie.
5376 We identified this vacuum and initiated a detailed research study
designed to examine the existing formats, confirm that an opportunity existed,
and then explore various formats for their potential appeal in fulfilling that
need. The project was conducted earlier this year, with a sample of over 400
people selected to reflect the Barrie market.
5377 The results of the study clearly confirmed that the "mainstream
contemporary hit" format provided the largest opportunity in Barrie, with over
33 per cent of those interviewed saying this would be their favourite
station -- a clear indicator that the market is without a station like "The
Bay".
5378 "Music, News & Community" will define the true personality of our
radio station.
5379 While 97.7 The Bay will be first and foremost a music intensive radio
station, it must also be totally involved with the community. It is for this
reason that the station will feature a significant presence of news and
information throughout its weekly schedule.
5380 The Bay will broadcast 82 newscasts every week, in mornings, mid-days
and afternoons, on a regular seven-day-a-week basis, including the CHUM National
news at 12:00 noon each weekday.
5381 The Bay's close working relationship with our sister television station
"The New VR", and its dedicated news staff of 28 people, will be of great
assistance in making sure the radio station is keeping its audience fully
informed on what matters most to them in the Barrie region.
5382 97.7 The Bay will also be responsive to the needs of the cultural and
entertainment community in Barrie. Twice each day the station will air the "The
Bay Events Calendar", where we publicize the various activities taking place,
whether it is the local theatre company or the live club scene.
5383 We will also implement the "Barrie Lakefront Lifestyle Initiative" in
conjunction with the Mayor's office of the city of Barrie to promote tourism and
downtown revitalization. To facilitate this initiative, 97.7 The Bay has
guaranteed the city of Barrie, at no cost, a weekly schedule of 28 thirty-second
commercials which represents a value of over $280,000 over the seven-year term
of the licence.
5384 "The Bay Watch Program" will be introduced to the community with a
mandate to look after and respond to the "real life" issues of our young adult
audience, combining interactive phone lines and web links to the city of
Barrie's many community and social service programs. Everything from school and
road closures, emergency weather updates, traffic accidents and news bulletins
will be instantly available to the audience.
5385 To complement The Bay's on-air music programming, we will also take our
music "to the streets", or in this case "to the bay". Each summer 97.7 The Bay
will stage a free outdoor concert featuring 100 per cent Canadian talent,
including local area performers originating from "The Bandshell By The Bay",
CHUM's key Canadian talent initiative.
5386 Duff.
5387 MR. ROMAN: We have talked about the advantages of our presence in the
Barrie community through CKVR-TV. Our Canadian Talent Development project grew
out of discussions with Doug Garraway and his staff at The New VR. We wanted an
initiative that would be meaningful to the citizens of Barrie, address a real
need in the local music community, and provide tangible benefits on a realistic
scale.
5388 Our CKVR people responded very swiftly from the perspective of long time
local residents who are plugged into the needs and aspirations of their
community. They made us aware that the citizens of Barrie had been seeking a way
to build a bandshell somewhere adjacent to the city's waterfront.
5389 Doug introduced me to Millet Salter, a lifetime resident of
Barrie -- and who is with us today. Doug has been spearheading the project
on behalf of the Barrie Rotary Club.
5390 The Bandshell by The Bay initiative will involve a partnership of the
Barrie Rotary Club, the city of Barrie and other community and business
stakeholder groups who will provide ongoing, long lasting benefits to the city
of Barrie.
5391 It will be an open-air performance centre at Memorial Square on the
shores of Kempenfelt Bay. Here Canadian local and regional bands, orchestras,
choirs, musicians and singers will provide cultural enrichment and animate the
summer months. It will bring local residents and tourists to the lakeside and
the adjacent downtown business core, and provide an arts celebration centre into
the millennium.
5392 CHUM has a history of developing Canadian talent initiatives.
5393 In 1982, we spearheaded the founding of FACTOR, the Foundation to Assist
Canadian Talent on Records. To date, our contribution to the foundation exceeds
$2.5 million.
5394 We provided all the initial funding for MusicAction, which addresses the
supply of Canadian Francophone musical recordings.
5395 We were the first to seriously address the production of Canadian music
videos by establishing VideoFACT, which to date has provided over $15 million
for the production of approximately 1,600 videos. We established Artsfact in
British Columbia and, with the launch of Bravo!, established BravoFact.
5396 In this context, we believe "The Bandshell by The Bay" fulfils all of
the Commission's criteria that distinguishes these outstanding Canadian Talent
Development initiatives, providing a lasting home for the exposure and promotion
of Canadian musical performing talent.
5397 CHUM Limited, with the launch of 97.7 The Bay, will undertaking the
capital funding of $450,000 for "The Bandshell by The Bay".
5398 In addition, 97.7 The Bay will underwrite the costs of annual Canadian
musical events to be presented at the Bandshell, featuring both local and
regional and established Canadian musical performers, consistent with the space
and environmental concerns.
5399 The total commitment for the concerts is a minimum of $210,000, or
$30,000 a year over seven years.
5400 These commitments are in addition to our contribution to FACTOR under
the Canadian Association of Broadcasters CTD guidelines totalling $21,000 over
seven years.
5401 We can further quantify the indirect costs of the activities which will
contribute to the success of these initiatives. 97.7 The Bay will undertake an
on-air advertising campaign of no less than eight weeks duration comprised of
370 30-second occasions leading up to each event, an approximate value of
$129,500 over seven years.
5402 Our sister station, The New VR, will also commit promotional activities
in support of these concerts through on-location updates and concert coverage.
The New VR will also provide on-air advertising campaigns of 20 spots a week
over three weeks, valued at $140,000 over seven years.
5403 In summary, Madam Chair, CHUM will commit a total of $950,000 in direct
and indirect Canadian talent development funding for the "The Bandshell by The
Bay" initiative. We are further committing to provide year round on-air
promotion of Canadian musical talent appearing at local Barrie venues through
the twice daily "Bay Events Calendar", that Ross mentioned earlier, which
represents an indirect value of $255,500 over seven years. The grand total of
combined direct and quantified indirect initiatives represents a minimum value
of $1,206,000 over the seven-year term of licence.
5404 Jim.
5405 MR. WATERS: Madam Chair and Members of the Commission, I would like to
summarize thee benefits that approval of this application for a new FM
broadcasting service in Barrie will bring to the community and to the
system.
5406 First, it will fill a confirmed void in the market for a radio station
designed to satisfy the needs of the large unserved audience of young adults
between the ages of 15 to 35, targeted to women.
5407 Second, CHUM promises an aggressive local news presence with 82
newscasts per week with a consistent seven-day-a-week schedule.
5408 Third, the station will reflect the local community with the Bay Events
Calendar which will publicize local cultural activities, and the Bay Watch
Program which will respond to real life issue of our young adult audience
through a combination of interactive phone lines and Web links to Barrie's
community and social service programs.
5409 And, fourth, as part of its commitment to the development of Canadian
music and the Barrie community, CHUM will support the City of Barrie and the
Barrie Rotary Club to build the Bandshell By The Bay to provide a lasting home
for the exposure and promotion of Canadian music.
5410 Madam Chair, Members of the Commission, we respectfully ask for your
approval of this application and will be pleased to answer any questions you may
have.
5411 THE CHAIRPERSON: Thank you, Mr. Sherratt, Mr. Waters, Mr.
Roman.
5412 I don't have many questions, but they will be around your financial
projections, your commitments for the community on the radio station and then
your Canadian talent development.
5413 So, first, I would like to ask you, when you prepared those projections
you looked at the format and how it would likely get an audience by filling a
void, and you told us later on, in answer to a deficiency letter, that you
counted on repatriating an audience from Toronto stations.
5414 Do you get any revenue from the CHUM stations that reach Barrie? Does it
improve your revenue in Toronto sales because you have listenership in Barrie of
your CHUM services?
5415 MR. WATERS: Oh, 1050 CHUM and CHUM-FM?
5416 THE CHAIRPERSON: Yes. One of them is oldies, I can see that, but the
other one is adult contemporary.
5417 MR. WATERS: Yes.
5418 THE CHAIRPERSON: And it is heard in Barrie and it has a rating in
Barrie. Correct?
5419 MR. WATERS: Yes.
5420 THE CHAIRPERSON: Does it have any impact on your Toronto station that is
heard in Barrie, the AC one?
5421 MR. WATERS: Madam Chair, I would like to get Kerry French, if she would,
to answer that question.
5422 Kerry.
5423 MS FRENCH: Madam Chair, I think there is an indirect effect. All of the
radio stations that reach into the Barrie market out of Toronto, they account
for about 60 per cent of the tuning. A lot of advertisers, more in years past
than today, look at that and if they are buying a certain level of advertising
across Canada, they may buy a little less in Barrie because they have the spill
points out of Toronto.
5424 But all of the current Barrie licences have worked very hard, along with
their national representative, to talk advertisers out of doing that because it
is not in their best interests.
5425 So it is happening less and less as the years go by, but there is an
indirect effect.
5426 THE CHAIRPERSON: Which of these stations? I suspect that you will tell
me the oldies wouldn't have any impact, but the adult contemporary, with your
proposed format of contemporary hits, would there be some possibility of
repatriating this audience?
5427 I'm asking the question because I think in your consulting Bay research
it says that there is a good opportunity for a new radio station in Barrie as
long as it is a local signal. I get that from page 16 of The Bay Consulting
Group.
5428 So, presumably, to the extent that there is an overlap between your AC
station in Toronto, which reaches Barrie, and what you propose in Barrie, there
is a possibility of some repatriation?
5429 MR. WATERS: Of our own listeners. At our own expense.
5430 THE CHAIRPERSON: Of your own listeners.
5431 But to the extent that it is a local station that is identifiable with
the community.
5432 Those who listen possibly to your AC Toronto station would listen to
your new station if it were very distinctively local is what your consultant
says.
5433 MR. WATERS: Yes. We believe that. Yes.
5434 I think in any other experience that I have had I guess the best that I
can speak to would be in Kingston. When we reprogrammed the station there some
years ago, the problem was that the American stations in Watertown were taking
audience and revenue out of Kingston. So we adjusted the format, repatriated
those listeners back to the local station in Kingston.
5435 I think that the tendency is for the listener to stay with the local
signal if it is what they want and it is what they feel is the best for the
community, for them, I think. If they are not getting that service, which 60 per
cent of the people in Barrie are saying they are not getting, they are tuning
out of the market. They are going somewhere else to get it. So I think that they
are crying out for a new local signal and I think that is what we are proposing
here, Madam Chair.
5436 THE CHAIRPERSON: Which other radio station that reaches Barrie would be
a source of repatriation for you? Of the stations that now are -- some 58
per cent -- you said 60 -- of the listening to Toronto stations, which
other stations would you see --
5437 MR. WATERS: Madam Chair -- I'm sorry. I'm sorry to interrupt.
5438 THE CHAIRPERSON: Yes. Go ahead.
5439 MR. WATERS: Madam Chair, I think Kerry French has the numbers. But
I think the ones that we would directly effect would be Rogers' station,
CISS-FM; our own, CHUM-FM.
5440 Kerry, you probably have the numbers there and the list, but --
5441 MS FRENCH: Yes, Jim.
5442 I think that one of the stations that we would repatriate listening from
the most would be the CIDC-FM out of Orangeville, which has a similar format to
what we would propose.
5443 Another one would be CKFM out of Toronto. I think there would be a small
impact on a lot of the Toronto signals that get into the market currently.
5444 THE CHAIRPERSON: And not particularly -- I think CILQ-FM was
mentioned by the previous --
5445 MS FRENCH: Yes, CILQ, Q.107.
5446 I don't think we would repatriate a lot of that listening because that
is a very definitive format, classic rock, which is --
5447 THE CHAIRPERSON: More like the former applicants.
5448 MS FRENCH: Yes.
5449 THE CHAIRPERSON: I see.
5450 Now, when you prepared your financial projections, you were looking at
what amount of listening you could repatriate and also a loss to the local
station in Barrie as well. I'm looking at your response to the deficiency letter
at number 5. You have the largest -- well, local loss by radio stations, it
ranges from 22 per cent in year one to 11 per cent in year seven in descending
order that would be lost to the local stations because of your entry into the
market. Correct?
5451 So you were looking there at one station?
5452 MR. WATERS: Yes, that's correct.
5453 THE CHAIRPERSON: Just you getting a licence?
5454 MR. WATERS: That's correct.
5455 THE CHAIRPERSON: Did you try to see what would happen if two stations
were licensed and which one of the proposals before us?
5456 MR. WATERS: Well, certainly ours would be one.
5457 THE CHAIRPERSON: No. I mean yours, yes, of course, otherwise it
wouldn't worry you, would it.
5458 MR. WATERS: I'm kind of answering the question the same as
Mr. Larche did earlier.
5459 THE CHAIRPERSON: Because you would still be in Toronto.
5460 But if you are in Barrie, you were looking at yourself in Barrie and the
three current stations paying a bit of a price for your arrival.
5461 We will discuss the other components of this, but that is how you
prepared your financial projections?
5462 MR. WATERS: Yes, it is.
5463 THE CHAIRPERSON: But you know that there are two frequencies
available.
5464 MR. WATERS: Yes.
5465 THE CHAIRPERSON: And possibly the Commission could give two
licences.
5466 MR. WATERS: Yes.
5467 THE CHAIRPERSON: What effect would it have on your projections? Because
presumably not only would you -- now you would be sharing the market with
more takers.
5468 MR. WATERS: Yes. We have considered certainly that possibility. We have
also run some numbers ourselves putting in two stations being licensed.
5469 But I actually think that the market can handle -- could handle two
stations in the long run. I think it would just take a longer period of time for
everyone to recover. I think that the economic growth that has been shown in the
market and the activity in the market I think dictates that probably it could
handle two more licences. I think it would take a little longer period for
everyone to get back up to the revenue levels that they may be experiencing
right now.
5470 But, Hans, I know you have the numbers there. If you could maybe share
those with the Commission.
5471 MR. JANSEN: Madam Chair, it might be helpful to read the results of an
analysis into the record which looks at the revenue available to the other
stations, assuming two new stations are licensed.
5472 Under that scenario, in year one 7.99 million would be available to
all stations. We estimate that 1.6 million of that total would be available
to the two new stations, which is 20 per cent, and 6.39 million to the
other stations.
5473 Now, the 6.39 million figure would increase to 7.41 million in
the year 2004. This 7.41 million can be compared to a current volume
available to the other stations of 7.3 million. In other words, it would
take three years for the existing stations to be at a higher level of total
revenue than they will realize in the current broadcast year.
5474 THE CHAIRPERSON: When you did this analysis, did you focus on one or the
other of the two stations -- of the two applicants that are before us?
5475 MR. JANSEN: No. We looked at the total market and the potential dollars
available from that total market to two new licensees, rather than one.
5476 THE CHAIRPERSON: But not the effect -- well, let me ask you: Would
there be a larger effect on your ability to achieve your projections if one or
the other of the two applicants before us, absent frequency problems?
5477 MR. WATERS: I think, Madam Chair, what we -- well, what we would
hope for, I suppose, or the local community would be hoping for is diversity. So
if it were us to be licensed as one, I suppose the application that at least
competes with ours is Larche because he has applied for a totally different
format than we have.
5478 So I'm not promoting anything here, I am just saying that if you are
asking the question: Licensing two people who are applying for a very similar
format I think would be not in the best interests of the people in Barrie.
5479 MR. JANSEN: Madam Chair, we have done a similar analysis for the
scenario where you would license only new station. If that is helpful we can
read those figures into the record as well.
5480 THE CHAIRPERSON: I imagine that we would get results similar to what you
have in your application.
5481 MR. JANSEN: They are slightly better of course. The existing stations
would recover more quickly.
5482 THE CHAIRPERSON: At No. 6, at paragraph 6 of the deficiency
letter, am I correct in understanding that the manner in which your application
is filed is we don't have to worry too much about what would happen to the
existing stations because the growth in sales would increase to, I think it says
4.1 million, and it would make up for what they lose?
5483 MR. JANSEN: That's correct.
5484 MR. WATERS: Yes.
5485 MR. JANSEN: That's correct, Madam Chair.
5486 THE CHAIRPERSON: In doing your projections did you take into
consideration the fact that one station -- two stations that are now owned
by two owners may end up being owned by one owner, Shaw, and that possibly if we
were to license Rock 95 there would be two -- there would be again two
stations and you would be a sole licensee.
5487 Does that have an impact?
5488 MR. JANSEN: We had that information, Madam Chair, and we did take that
into account, yes. This scenario takes into account the fact that maybe
there --
5489 THE CHAIRPERSON: The scenario that is before us?
5490 MR. JANSEN: The scenario that I just read into the record --
5491 THE CHAIRPERSON: I see.
5492 MR. JANSEN: -- does take a sale of one of the existing stations
into account.
5493 THE CHAIRPERSON: And the fact that there may be two owners with two FM
stations, if we were to license Rock 95 and if Shaw were to be approved for
the transfer of --
5494 MR. WATERS: Yes.
5495 MR. JANSEN: That's correct.
5496 THE CHAIRPERSON: Now, you talk about synergies and the fact that CKVR is
there and that there will be, from what I gather in your assumptions, a
co-location, at least of the studios, with the TV stations.
5497 MR. WATERS: We are hoping that Doug Garraway can find space for us in
the building that houses The New VR, although a lot of our capital expenses that
we have outlined in the application actually allow for a new building.
5498 THE CHAIRPERSON: Oh, it does?
5499 MR. WATERS: Or a building to be built outside of, yes.
5500 THE CHAIRPERSON: It does. Because considering synergies and the possible
co-location of the staff, which makes synergies easier, obviously --
5501 MR. WATERS: Yes.
5502 THE CHAIRPERSON: -- from an administrative perspective, and so on,
if you are in the same locale, presumably the antennas could be co-located
too.
5503 MR. WATERS: Yes -- no. I'm sorry. The antennas can't be, no.
5504 THE CHAIRPERSON: No?
5505 MR. WATERS: No. It is going to be located on an antenna in Edgar, which
is in the Township of Oro.
5506 THE CHAIRPERSON: This is so that you get a better coverage?
5507 MR. WATERS: Yes. It's a high point.
5508 The location is actually between the point where the Rock 95 site
is and where the LCI site it. It's in between. That's the best way I can
describe the geographical location.
5509 But we are all going for the high ground.
5510 THE CHAIRPERSON: But your capital expenditures, which are high, don't
consider any of the synergies that you mentioned today?
5511 MR. WATERS: That's correct.
5512 THE CHAIRPERSON: So they may be lower actually. They are much higher
than anyone else.
5513 MR. WATERS: I think what we have done is -- I think the capital as
far as the transmitter is concerned would not change, but the building may very
well change. Part of the capital as far as the building and the studios is
concerned is bricks and mortar, so that would probably go down somewhat, yes, if
we were able to locate in the building with The New VR.
5514 THE CHAIRPERSON: When we talk about synergies, I looked at the
assumptions and at paragraph 16 of your assumptions you say that:
"There is 2% of total revenue charge included in administration as a
chargeback because CHUM corporate is providing some administrative help."
(As read)
5515 MR. WATERS: Yes.
5516 THE CHAIRPERSON: You list some of the support:
"... access to emergency engineering services, creative services, personnel
and fringe benefits, insurance, research, et cetera, and access to all
senior management at CHUM who are not separately charged to this licence
application." (As read)
5517 Paragraph 17 says:
"There are no other intercompany or corporate charges."
5518 So presumably there is not. If you build the different buildings, and so
on, you are not taking into consideration synergies to a great extent when we
look at your financial projections.
5519 MR. SHERRATT: Jim, if I might, there are two factors here. One is that
we want to be in proximity to CKVR because of this big news machine they have.
They have 28 people working in the repertorial roles and getting it on the air.
There are another 15 or 20 involved in news.
5520 There really are about 55 people who make the news programming at
CKBR.
5521 You need to be in proximity to those people and they are outside of
town. Conversely, CKBR would like a downtown location. The question is do we put
half the radio station downtown and make that facility available to them because
you really like to have a radio station downtown. That is a scenario that we
looked at. Then the newspeople would work in tandem with them perhaps up on the
Hill.
5522 I know when the numbers went into the application for the construction,
we thought DR was full, but Doug has found a little bit of space up there
because I think they see the advantage of those synergies as well.
5523 I think both scenarios are correct, but both are going to benefit. CKBR
will benefit from that kind of a synergy just as The Bay will benefit from its
association with CKBR.
5524 THE CHAIRPERSON: And despite those synergies, your administration and
general expenses are way higher than the other two applicants. Do you have any
comment? You have obviously looked at the other two applications.
5525 What I'm driving at is when I look at this, this is going to be a
division of CHUM. Right? Assuming that your accountant has looked at that, I
find it difficult to understand why this is a winning proposition when you look
at the operating margins. Even by year five, it's still a deficit position. It's
a deficit position before tax, after tax for the five years. Your revenues are
much higher, but your expenses are way higher.
5526 I don't understand why these three applications with presumably similar
hardware and needs, that yours would be so different and lead to such negative
results for you. Why do you want to have a radio station in Barrie under these
circumstances? What are you going to do with programming that requires so much
more money?
5527 MR. WATERS: Well, first of all, I think it's important that we say again
that we have been in Barrie for many, many years, 44 years, so it's a community
that CHUM Limited is very familiar with.
5528 If I might just take a second to throw in a quick story, a quick
anecdote about CHUM and Barrie. In 1972 I was working at CHUM. I was working in
the music library. It was Christmas Eve. It was a Friday afternoon. I remember
it extremely well.
5529 Someone came into the library and said "It's great. CHUM just got
Commission approval to buy CFCF Television in Montreal and the Marconi radio
stations", but the condition that the Commission put on that decision was that
CHUM would have to sell the Marconi radio stations and also to sell CKVR
Television which had a --
5530 THE CHAIRPERSON: Very difficult in those years.
5531 MR. WATERS: Which CHUM had actually taken ownership of about seven or
eight years previously. I know Mr. Sherratt can fill in the holes here, but I
know that he and my father had a discussion about that. The decision was a very
simple one: We will not desert the people in Barrie who have worked for CHUM for
seven or eight years and put long, hard hours in for us in favour of taking out
a new licence in Montreal.
5532 I think that's the dedication that CHUM feels to Barrie, which is why we
immediately responded when you made the call for a new FM service in Barrie.
5533 I think it's also worth pointing out that CHUM -- my cohort from
the accounting department will remind me that CHUM usually overspends in
programming. I think that it's an area that we pride ourselves on, on our track
record in programming across the country. I'm not so sure that's because we
spend a lot of money. I think we have some great people that work in programming
across the group, but we do tend to spend maybe more than other operators would
do.
5534 I think we are considered a pretty major player in the radio business. I
think we are here for the long term in the radio business. We think that a
new -- as I said in our presentation, I think this is a good opportunity
for CHUM. We do have a great television station there. There are things that we
can do together to benefit the community. If it costs us a little more, we are
prepared to undertake that commitment.
5535 Shelley, you might want to comment on the way you try and hold Ross and
I back on programming expenses across the company.
5536 MS SHEPPARD: Just to add to your comments. I put together the numbers
that are before you today. CHUM does operate 26 radio stations, soon to be 27.
We do have a very good expertise on what it costs to run a good quality radio
station.
5537 In putting together our numbers, we have had a look at all of our other
properties, similar stations in similar formats, the kind of money that we spend
in promotion. These numbers are consistent with the kind of money we would put
forward for those operations.
5538 THE CHAIRPERSON: I assume that you are making some margin on those other
stations eventually.
5539 MR. WATERS: Yes.
5540 MS SHEPPARD: Yes, eventually. Obviously we are here for the long term
and from an accounting viewpoint it does look dismal at the beginning, but we
are in here for the long term and are very confident that we will do well in the
Barrie market.
5541 THE CHAIRPERSON: Well, it doesn't look dismal at the revenue level
because your projected revenues are very optimistic if I compare to the other
two stations. It's your expenses that are even proportionately higher, therefore
giving rise to operating margins that are dismal -- well, dismal initially
or comparatively.
5542 Now, how realistic the other stations are, I gather some of them know
Barrie too because one of them is operating in Barrie.
5543 MR. SHERRATT: Madam Chair, this is a unique experience I think
in -- it seems like hundreds of years I have appeared before these
tribunals -- that spending too much money has been considered a
problem.
5544 THE CHAIRPERSON: Well, not really because it can give rise to questions
about how realistic things are. This is why I'm asking.
5545 MR. SHERRATT: These numbers are based on our experience in various size
markets across the country. We do try to operate all of our radio stations at
the highest possible level in quality of service and it takes money.
5546 It takes money to have good people, to have good programming and to
provide good service to the community. That we think is the number one thing
required in the Broadcasting Act. The people that we are all here talking about
are the public, the people that we are going to serve.
5547 If you just look at the columns, if you want to compare them, our
programming costs alone are more than twice the one that's closest to us. That's
based on experience and doing it right. We are here for the long haul. CHUM has
been --
5548 THE CHAIRPERSON: You will have to help them project their revenues
better too. You are going to tell me it's related to programming.
5549 MR. SHERRATT: Well, I looked at one category. Alone just in transmitter
site rental and power, our costs under technical in those two categories are
more than one of the other applicant's total costs for technical over a five
year period. I don't know how they do it. They must have a ouija board much
better than any I have ever discovered.
5550 THE CHAIRPERSON: I'm not here to tell you that you are spending too much
money. I'm here to try to see of those three applications which one is realistic
and which one is based on one's ability to withstand years of having negative
operating margins and how realistic is that.
5551 It's simply to try to understand why there is such a difference in the
three. Radio stations, of course, can spend or more or less, but they are radio
stations in the end. I hear your explanations.
5552 Now, tell me another one. There's a very sexy word here that I have
never seen. Your largest component or sources of your revenue at that same
answer five to the deficiency is: "base dollars traceable by population growth".
What is that? Is it more simple than it looks?
5553 MR. WATERS: I hope it is. They had to work me over on this one a little
bit, Madam Chair, but --
5554 THE CHAIRPERSON: Ah, you too.
5555 MR. WATERS: Yes. Well, it's the 50 per cent represents the out of
market tuning that we will repatriate back into the market. Have I got that
correct?
5556 MS SHEPPARD: Yes.
5557 THE CHAIRPERSON: And it's obviously then related to the accuracy of your
projections as to population growth?
5558 MR. WATERS: Yes.
5559 THE CHAIRPERSON: As is the $4.1 million --
5560 MR. WATERS: Yes.
5561 THE CHAIRPERSON: -- that would replace what the local stations
would have made possibly had you not come into the market, simply because of
growth?
5562 MR. WATERS: Yes.
5563 THE CHAIRPERSON: Assuming that they could perform as well as they did
before.
5564 In the service to the community area you tell us some of the things that
you will be doing and some of them I would like to understand better. It is the
same question to the other applicants. This is going to be a music driven
station and pitched to a fairly young audience.
5565 So, would you expand a little more as to how you are going to make it a
local station. I am looking mainly at your Schedule 16 and the proposals you
have there to turn this station into a local station, which your consultant has
told you is crucial to carving a place in the market, repatriating audience from
the stations that are there and those that at the moment account for almost 60
per cent of listening.
5566 MR. WATERS: Madam Chair, Ross Davies is going to --
5567 THE CHAIRPERSON: You look delighted with this question.
5568 MR. DAVIES: No. I just want to get my turn.
5569 MR. WATERS: They have been studying hard. We have all been studying
hard, but I think Ross is ready for this one. Ross.
5570 MR. DAVIES: I think one of the main means of repatriating tuning into a
market is to talk about that market. When you have over 60 per cent tuning going
elsewhere there is clearly an indication that there is something wrong there. So
if we are going to repatriate those people there is a number of things that we
can do. One of them is to provide a service or a format, if you will, in this
case that is not being served right now, and in this particular market there is
no contemporary radio hit format.
5571 By that alone we are going to attract people who are tuning elsewhere
back into the community.
5572 I think another way of doing it is to make sure we service the needs of
that audience and one of the main ways of doing that is provide news content for
these people. We need to talk about Barrie, and so when we provide a music
service it's one component, but we also have to back that up and reinforce that
by providing a consistent, significant news schedule for them to know and learn
about their community and we will be doing that.
5573 We have the great advantage, talk about synergies, of being associated
with CKVR. They have 28 people and their award winning newsroom who have got
cameras all over Barrie and Huronia, who have captured that market inherently
and they know that market. We are lucky to be able to draw on that resource, to
be able to provide targeted information in the news sense to our new audience.
We are really excited about that.
5574 I think the other areas that we get in touch with them are in such areas
as community service when we talk about things like our Bay Watch program where
we are concerned about today's youth and all the challenges they have growing
up. We all have kids and we can see what they are facing and we want to make
sure that we can provide the people of Barrie, the young people of Barrie an
opportunity to be in contact with the areas of concern to them.
5575 By doing a Bay Watch program where we can go out and connect with them
and they can connect through us to the various social outreach programs in
Barrie, we think that's an important vehicle to again keep people listening
locally. We want to become their best friend and their ally. I think those are
just some of the areas that we can help become a local service to the
community.
5576 MR. WATERS: I think, Madam Chair, it is worth saying that CHUM --
it's in the CHUM culture to be intensely local wherever we operate, whether it
be radio or whether it be television. I think that's a CHUM trait and it's
something that we are quite proud of and something we have done in all of our
operations.
5577 THE CHAIRPERSON: This Bay Watch program with interactive phone lines et
cetera, will that be like an open line with the radio station or with an
operator separate from on air? How will this work?
5578 MR. DAVIES: Madam Chair, we envision it as a number of different things.
I think in this day of technology we have to be so savvy in that area, so it
will be a combination of everything. It will have people in our building
virtually throughout the day constantly updating and downloading information
onto the phone lines and to the web sites.
5579 So it will be manned continually in that sense. As someone said earlier,
anything having to do with web sites has to be updated continually, and that's
in this particular case because of its context that's absolutely essential to
that.
5580 So we will be having people on staff dedicated to that. Again, the
resources of CKVR's newsroom will be a tremendous resource to that.
5581 The phone lines will be a combination of being able to dial in and get
information instantly. If they don't happen to hear about a major snowstorm
coming on the radio at that particular time because we may be playing a
song -- well, they can dial up on the phone and get instant information
that way. So that will be a recorded type of phone, but it will be a combination
of all those things.
5582 THE CHAIRPERSON: And this will be advertised or made known to your
listening public?
5583 MR. DAVIES: It will not work unless we do that. We have to commit to a
regular schedule of daily announcements, seven days a week, 365 days of the year
in order for this program to work. If they don't know about it it won't have any
effect, so you are absolutely right about that.
5584 THE CHAIRPERSON: And you will have, I think either you said today or I
read some 28 -- yes, some 28 newscasts a week?
5585 MR. DAVIES: No. Eight-two newscasts.
5586 THE CHAIRPERSON: Where do I get 28?
5587 MR. DAVIES: Twenty-eight news people in the CKVR newsroom.
5588 THE CHAIRPERSON: Yes. So that's how many a day, newscasts?
5589 MR. DAVIES: It will be -- oh, per day, hang on a second.
5590 MR. WATERS: Madam Chair, while Ross is looking that up there was another
28 that you heard. I think it's a schedule of 28 spots a week for the Barrie
lifestyle initiative.
5591 THE CHAIRPERSON: Yes.
5592 MR. WATERS: That is the on-air schedule that we give to the City of
Barrie, so they can promote.
5593 THE CHAIRPERSON: Yes.
5594 MR. WATERS: That's actually an initiative we have used in Windsor and in
Kingston and in Brockville and it's a very successful one, so it's an initiative
that we --
5595 THE CHAIRPERSON: Let's understand this one and then we will go back to
the number of newscasts. How many news breaks and how long they will last.
5596 So, you call it today -- this is --
5597 MR. WATERS: The Barrie lifestyle --
5598 THE CHAIRPERSON: This is made available to the mayor's office.
Right?
5599 MR. WATERS: Yes.
5600 THE CHAIRPERSON: And you call it today, I think, commercials and in
Schedule 16 you called them announcements, 28 announcements a week over the term
of a licence and you establish a price for that or the value of the benefit. So
what will this be? Announcing -- why do you say commercials today? What
will it be? Give me examples.
5601 MR. ROMAN: If I could, Jim.
5602 MR. WATERS: Sure.
5603 MR. ROMAN: I have had some experience with these initiatives in Windsor,
in Kingston and other CHUM markets. I think essentially to set this up as
distinct from public service announcements. They are public service, but here is
the really significant difference.
5604 We turn over this schedule of 28 announcements, commercials, you can
call them what you want, to the mayor's office. They are in essence a client. We
do not dictate the content of those PSAs. It's not like a charity or a
fundraising group coming and saying would you please give us some help with our
charity. We have no control over the content. That's why they are more like
commercials than PSAs.
5605 If the mayor's office says that it is a good idea to do an anti-drug
campaign, he doesn't have to ask for the air time. He says, "Please devote my 28
announcements per week to the anti-drug campaign." If it is about road closures,
"Please devote a portion of those announcements to road closures."
5606 This has changed the interaction, the dynamic between the mayor's office
and any of the cities or locations I mentioned and the local radio station
beyond belief. It has taken it out of the realm of us doing them a favour.
5607 Once the announcement schedule is in place, they are like a large
client. They have the schedule and they take the content and this has worked
tremendously because there is no down time or up time. It is not dependent on
whether we are busy commercially or whether we have time for PSA announcements.
It's locked into the schedule. These are guaranteed. If they choose to use them
they have 28. If not, yes, they can revert back to us, but they tend to use them
all up. They will find a way to use those 28 announcements.
5608 THE CHAIRPERSON: The script is provided.
5609 MR. ROMAN: We do all the production free of charge. If they want to give
us supplied creative, fine; if they want to give us copy points and us create in
fact quite highly produced spots, with sound effects or music, whatever, we will
do that too on a donation basis.
5610 THE CHAIRPERSON: And it could be simply announcing an event as well.
5611 MR. ROMAN: Yes.
5612 THE CHAIRPERSON: Or an emergency or any number of things.
5613 With the newscasts, how long will they be and how many will there
be?
5614 MR. DAVIES: Madam Chair, they will be --
5615 THE CHAIRPERSON: I didn't just divide by seven, because I don't think it
works that way.
5616 MR. DAVIES: It almost does, and that is why I got caught. I had to go
and check.
5617 Monday to Friday, there are 12 newscasts a day; and on Saturday and
Sunday there are 11 newscasts per day. That makes up the 82 over the course of
the week.
5618 THE CHAIRPERSON: How long is each?
5619 MR. DAVIES: There will be a combination of what we call in the industry
major packages and shorter update packages.
5620 For example, in the morning drive period the packages will be five
minutes in length, on the hour and half hour; and in the middle of the day they
would be more like 97 seconds to go along with our frequency, more just kind of
keeping people informed.
5621 That will go throughout the day.
5622 THE CHAIRPERSON: In the local service to the community, would it be fair
to say that those are the three main efforts over and above -- we are not
talking here about Canadian Talent Development. But it would be The Bay Watch
program, these services, the newscasts.
5623 MR. WATERS: Yes. But I think there is something that we are forgetting
here, and that is The Bandshell by the Bay initiative.
5624 THE CHAIRPERSON: Yes. Besides the Canadian Talent Development.
5625 MR. WATERS: Okay.
5626 THE CHAIRPERSON: I am talking here about -- we are told, and your
consultant told you that your success eventually, after many years of not making
any money, is dependent on localizing your station. And you know that it is
important to the Commission also in its policy. That, I don't think has
necessarily much to do with Bandshell on The Bay. It is how does this local
station on the air serve the community. That is one aspect.
5627 They are not discrete. There is overlap.
5628 But over and above the music, what else does one get that makes the
station local? Are those three initiatives --
5629 MR. DAVIES: In addition to those that we have mentioned, Madam Chair, I
think it is important that we don't forget the relationship we have with
CKVR.
5630 We have been in this community for over 40 years, as you heard Jim say.
And CKVR, as Mr. Sherratt outlined when he quoted the intervenor, is an
outstanding community provider in that area with CKVR.
5631 Going back to the synergy thing, there is an automatic connection where
we will be aligned with Doug and his staff for such things as their annual
Christmas program that they are doing that you heard referenced earlier today
with one of the other applicants.
5632 It only makes sense for us to join forces with those people, to make it
even better for kids at Christmas.
5633 Doug, you may want to elaborate more on this.
5634 The New Year's Eve program that they do, the first night for children
every year where CKVR televises this event, it is a natural event for a station
like The Bay to hook in to CKVR and provide all that much more exposure into the
community.
5635 MR. GARRAWAY: I might just elaborate on that, Madam Chair.
5636 We have had a history of community involvement as long as I have been
there, which is since 1962. But we have also had a very good relationship with
all of the other radio stations that are in our city as well, including Rock 95
and CHAY, and B-101 at different times and for different projects.
5637 It is a pretty exciting prospect to imagine being under the same roof
with a radio station in our company and imagining the kinds of things we can do
together for the community.
5638 THE CHAIRPERSON: So that's why you are making such an effort to find
some space in that building.
5639 MR. GARRAWAY: I have found it.
5640 THE CHAIRPERSON: Save on capital costs.
5641 What about synergies because of the proximity of your Toronto stations
and activities as well?
5642 MR. WATERS: No. We want to be local Barrie. So we would not be working
with our stations in Toronto.
5643 THE CHAIRPERSON: Would you not use the possibility of joint promotion or
even selling?
5644 MR. WATERS: I will say this -- and it is not quite fair to say no,
we won't do that.
5645 CHUM and CHUM-FM just did a promotion with the new VR for the hospital
in Newmarket, the York County Hospital, and it worked extremely well. They
raised over $250,000 for the hospital.
5646 I suppose in a situation like that, where a group effort by a proposed
new FM, the new VR, and maybe CHUM and CHUM-FM in Toronto could do it to help a
hospital or some such good cause like that -- I suppose we could do that. I
suppose it is not fair to blanket and say no, we would never do that.
5647 I guess there is the odd opportunity where that could be beneficial to
everyone.
5648 THE CHAIRPERSON: In your presentation today you have talked about
looking at new opportunities in radio and one very clear criterion you looked
at, according to page 8, is whether the market is sufficiently robust to allow
the introduction of a new radio station.
5649 Apart from that, what else do you look at since you say that you have
only applied where starting a new FM radio made sense for CHUM considering your
financial expectations -- if I look at your projections?
5650 MR. WATERS: I think -- I just want to make sure I have the question
right.
5651 I think, first of all, when we do look at the opportunities that are
available to all the broadcasters, including CHUM, across the country it made
sense to us that Barrie was a community and a market in which CHUM had operated
in. We were familiar with the market. We felt that putting a radio station with
the new VR up there would be beneficial, not only to the community but it would
make sense as being able to operate that way.
5652 I think it is something we certainly gave consideration to in London,
which is the other place that we applied for the licence.
5653 It was terrific that we got it, but we also have a television station
there. We have television in Ottawa. In fact, in Ottawa, for the first time
radio is going to live with television in the same building, in the Byward
Market.
5654 I don't know.
5655 Ross, help me.
5656 MR. DAVIES: Madam Chair, I think Jim gave a great example of the
hospital in Newmarket. Sometimes big is good. I think when we combine the
resources of CHUM, and in this case CHUM-FM in Toronto, and CKVR, and hopefully
a new radio station, I think the big winner in that particular area is the
hospital.
5657 That is an example of the big company helping out the little player.
5658 But we also should not forget that Barrie is going to be heard, as a
result of CHUM's association, through things like the CHUM National news. We
undertook the commitment years ago to broadcast a national news service every
day on our radio stations from Halifax to Vancouver. It is important that each
one of our radio stations supplies news content to that national newscast.
5659 And that will be the case here in Barrie if we are successful. Barrie
News will make it on the CHUM National news.
5660 I think that is another example of it working kind of in reverse, and I
don't think we should lose sight of that. I think that is a very good benefit
for the community of Barrie.
5661 THE CHAIRPERSON: As you know, one of the areas that we look at as well,
when we look at competing applications, is Canadian Talent Development.
5662 Mr. Salter, can I ask you what your profession in life is?
5663 MR. SALTER: Madam Chair, I am an architect and have been for almost 40
years.
5664 I might say, also, that I am obviously not a broadcaster, and I am
obviously not a part of the targeted 97.7 By the Bay station. I think I have
slipped over the edge of that demographic.
5665 THE CHAIRPERSON: And I suspect you are not a rising Canadian talent
either -- a musical Canadian talent. Or maybe you are.
5666 MR. SALTER: I might say that, musically, all of the talent is with two
of my four children and with my wife. I have the proverbial tin ear.
5667 THE CHAIRPERSON: Convince me, Mr. Waters, that it makes sense that
we need an architect to talk to your Canadian Talent Development.
5668 MR. WATERS: Convince you that we need an architect?
5669 THE CHAIRPERSON: To speak to your Canadian Talent Development.
5670 Why is this an appropriate expenditure for the development of Canadian
talent? I need to be convinced that it is not a little bizarre that we need an
architect on the panel to talk to us about Canadian talent development.
5671 MR. WATERS: Madam Chair, I understand totally, but I would like Mr.
Salter to answer, if he would.
5672 THE CHAIRPERSON: Well, no, I don't think Mr. Salter is a broadcaster.
You are the broadcaster, you are before us, these are three competing
applications. I want to understand how you fit this into the Canadian talent
development better.
5673 We can speak after about the architectural details of your Canadian
talent development.
5674 Do you know what I mean?
5675 MR. WATERS: I do know what you mean, but --
5676 THE CHAIRPERSON: Explain to me why this is -- convince me that this
is a Canadian talent development commitment that we should take into
consideration to its full value. I just need to be convinced, and I don't think
an architect can do that. The broadcaster has to.
5677 MR. WATERS: Okay.
5678 I think it is important to note that Mr. Salter is an architect. The
idea came to us through the Barrie Rotary Club, of which Mr. Salter is a member.
That is the connection.
5679 He is not here as an architect. He is --
5680 THE CHAIRPERSON: I was being facetious. I want you to get --
5681 MR. WATERS: Okay. Oh, I'm not sure. I was --
5682 THE CHAIRPERSON: I want you to explain to me why, in our policy, we want
broadcasters to show us how, over and above building a radio station that will
serve the public, provide local community service and hopefully diversity, also
have Canadian talent development, which I always understood as being musical
talent development -- I'm not saying that I don't think this is
appropriate. I want more explanation.
5683 I was being facetious that it is a bit of an indication that it is not
quite obvious when we have an architect to explain why it is a CTD
commitment.
5684 I like you, Mr. Salter, but --
--- Laughter / Rires
5685 MR. SALTER: But you hate architects.
--- Laughter / Rires
5686 THE CHAIRPERSON: -- do you understand? No, but do you
understand?
5687 What I would like you to do is --
5688 MR. WATERS: I think I do.
5689 THE CHAIRPERSON: -- is justify this as something we should take
fully into consideration within our policy in its complete value.
5690 MR. WATERS: Okay.
5691 I may ask for a little bit of help here, but, to begin with, I think
when we go to a new market, such as Barrie, it is our usual practice to contact
someone locally to talk about whether there is a specific need or something that
we can do in the community that we could put together as our Canadian talent
initiative.
5692 In this case, fortunately we have a local television station which CHUM
owns. And Duff, who is usually our point person on developing our Canadian
talent initiatives, called Doug Garraway and I think, Duff, from that point on,
Doug talked about the bandshell and kind of pointed you towards Millet Salter. I
think I'm correct to that point.
5693 MR. ROMAN: Up to that point. Yes, Jim.
5694 I guess I'm glad you asked this question. I hope, Madam Chair, I can be
helpful to you.
5695 To pick up where Jim left the story, I did indeed contact Doug Garraway
and indicated to Doug, who is also obviously a broadcaster on the television
side, that our initiatives, when we go in to apply for a new licence, have to
have meaning at the local level. We don't believe in simply shovelling in money
in terms of certain funding initiatives. We do that anyway. That is a commitment
we have made to organizations such as FACTOR.
5696 What we need are initiatives that work on a variety of levels. One, they
have to be unique, they have to be realistic and they have to be ultimately
effective. From the standpoint of where we went in our discussion with building
an initiative, Doug said "A musical initiative?" I said, "Yes. It has to have a
meaningful commitment that will enhance and develop and promote local Canadian
talent."
5697 As far as I know, I wasn't in his office, but a light bulb went off over
his head at that point and he said to me, "We have a project that has been in
the works for 30 years in Barrie. For a variety of reasons, it has not advanced
to the stage where this project can take form." He at that point said, "I'm
going to put you next to a gentleman named Millet Salter who" --
5698 At this point, I didn't learn that Millet Salter, in fact, was an
architect until many, many weeks after discussions with regard to the project. I
was talking to him as a fellow who is part of a committee that has been trying
to develop the funding for a bandshell which would feature concerts, choirs,
musicians at the local level who are not yet recording artists, in many cases.
These are the citizens of Barrie and in these ranks are the music and stars of
tomorrow. These are the people that have to start somewhere.
5699 It is one thing to do CDs, it is one thing to apply to FACTOR for a
grant, but it begins much earlier than that. It begins at the community, where
someone who has an interest in music has to have a venue.
5700 At this point, and I really -- if you will permit me, I would like
to get Millet in here somewhere, but I'm being told that a lot of these
activities in downtown Barrie, when it is, oh, a festive occasion or Canada Day,
take place on the back of a flatbed truck. That is the status of not having a
venue in which to celebrate your local Canadian musical talent.
5701 So when I talked to Millet and he laid out what the considerations were,
it seemed quite consistent with the approach we had taken in London and in other
markets, that we had an initiative that the people of Barrie wanted, we had an
initiative that would deal with something I think the Commission has been
looking for, and that is: start earlier in the talent process.
5702 You have on-air commitments at 35 per cent, you have mature
organizations such as FACTOR and Music Action funding and helping produce
recordings. We are very much a part of the CARMA project, which is taking the
significant benefits package and turning it into the marketing of Canadian
music, but how do we start at the beginning of it all?
5703 So that is what made us excited, that we would have something that would
have lasting value, that would be a gathering point, a focal point for citizens
in Barrie. It would help in terms of bringing people to the lake shore and to
help rejuvenate the downtown area, but, most importantly, it would be a showcase
for local Barrie musical talent.
5704 Now, if you want me to explain again about the architect's --
5705 THE CHAIRPERSON: No. My question would not be of course at the costs of
annual musical events, at the costs of hiring talent, the costs of producing and
staging the concert. The associated promotion and publicity don't raise any
questions. It is the large amount to the bandshell.
5706 I'm old enough to remember how Mr. Lombardi started his musical
talent concerts. You know, it is not a new idea. I don't know where he staged
them, but I can't remember him -- it is just that building a bandshell,
whether that is -- it is very laudable of course and it is lovely, and I'm
sure Mr. Salter will make sure it stands up well to the weather, et cetera.
The question is more: Is that an appropriate amount? The amount of the capital
necessary to build it, is it necessary for promoting local artists and concerts,
et cetera?
5707 I understand that if it rains it will be better -- well, slightly
better. So that was my question.
5708 MR. ROMAN: I understand. But I think in the context of coming in with a
new FM radio service, essentially we were starting with a blank page, and what
attracted us, in our discussions with Millet Salter and other activists in the
Barrie community, was that they had an unfilled need for a musical venue. It
wasn't a hockey rink and it wasn't a lacrosse field, it was a musical venue.
5709 So for us it all clicked into place and it just seemed an eminently
useful way to contribute that amount of money, because it will have lasting
benefits.
5710 THE CHAIRPERSON: I think it is a wonderful endeavour on the part of
CHUM. I'm not questioning that any more than I'm questioning the beauty of the
bandshell. I'm just asking you to justify or explain how that fits into our
Canadian talent development which is supposed to -- for the development of
talent.
5711 MR. DAVIES: Madam Chair, if I can confuse it maybe more or hopefully
help it a little bit more. I think Millet can speak passionately about this when
he talks about some of the issues you are actually referring to.
5712 I also serve on the Canadian Academy of Recording Arts and Science,
CARAS, on the board of directors there, and I'm currently involved in the music
education committee.
5713 As you may or may not know, CARAS have identified a huge problem with
teaching young people to get music instruments and to get the instruments into
the schools.
5714 I can't emphasize -- as you probably know, these programs are being
cut out in schools across the country and we at CARAS are now putting money into
the schools and actually buying musical instruments for these schools. We just
did one recently up in Nunavik where Susan Iglucart(ph) went up there and
presented the school that she went to with a whole bunch of musical
instruments.
5715 It is really a problem for the music industry. And Duff is right, we
need to get it at the grassroots level. We need to get young people playing and
having instruments to have the opportunity to play.
5716 In addition to that, though -- and this is where CARMA comes in
with the CAB initiative with this marketing fund money.
5717 In discussions with the music industry, they have identified that one of
the key areas that they need to help our industry, their industry, is to get
their bands playing. They need to get them out on the road.
5718 Duff, you know, they have identified tour support as a very, very
important issue. We have to get our musicians to play. That is the only way they
get better. They need to be put in front of people.
5719 That brings us back to Barrie and the "Bandshell by the Bay". We found
out that there was a real need in Barrie to have the musicians play. They don't
have that opportunity. This is what Millet brought to us, and there is the
opportunity for them to perform.
5720 MR. SALTER: Madam Chair, I wonder if I could just beg your indulgence
for a moment. We will put the architectural mantle aside.
5721 I am really here as a stand-in. Bob Hunter originated the concept of a
bandshell venue in Barrie some 33 years ago. My first letter on file to Bob
was February 4, 1967.
5722 Bob, I might add, was a retired broadcaster, the manager of radio
station CKVB and a very dear friend who passed away suddenly on May 4th of
this year. I'm sorry if I get a little emotional about this.
5723 One of the presenters in the previous submission coined the phrase
"Build it and they will come". I would suggest to you in this instance, as Bob
always said, "Build it because they are already here." That is exactly the
situation.
5724 As an architect it is a source of pride and it is the proverbial loss
leader. But I committed to Bob's wife and children the day after he passed
away -- and I'm really sorry about this -- that somehow I would make
this thing happen.
5725 Quite frankly, Rotary has committed $250,000, the project will cost
about $550,000 in the inflationary environment in which we live. No CHUM
support; no project.
5726 We were to acquire the other $250,000 from millennium grants and, quite
frankly, we have not been successful.
5727 The committee -- and it's a small committee -- agree
unanimously either CHUM wins and we win or CHUM loses and we lose.
5728 I am not here specifically to support CHUM's application for 97.7 on The
Bay, but I am, quite frankly here for the good of the people of Barrie because I
believe this thing would be a jewel and would help to revitalize a very tired
downtown, compliments the lakefront, is, as Bob always said to me, and it was
his idea as to the location, this is a natural amphitheatre. The sun east to
west will be not in the performer's eyes, not in the audience's eyes. The
prevailing winds are protected, the drop from Dunlop Street to the bandshell is
a natural eight foot amphitheatre, buildings on each side flank and control the
sound.
5729 It was a brilliant idea and, Madam Chair, I can say nothing more
sincerely to you than I would dearly love to see this happen because I think it
is one of the finest things, one of the best opportunities, small though it may
be, that Barrie has had in many years.
5730 Thank you.
5731 MR. GARRAWAY: I wonder if I could just add to that, just very briefly.
I'm not an architect, but I am kind of a musician and so I know the musical
community in Barrie very, very well.
5732 There is something I think you should know about this and that is that
the actual cost to create what is seen in that picture actually is more than
$550,000, because there is grading, there is the closing of a road, there is the
preparation of the site which apparently is going to cost in the area, I think,
$300,000 to $350,000 which will be borne by the City of Barrie.
5733 I know the Mayor and the Mayor's office and the people who run the city
recognize that this is something that the citizens of Barrie really could
use.
5734 As a musician I have never had to play on the back of a flatbed
trailer -- which is just as well, I guess, because they could have hauled
me away -- but we had a visiting youth band from Europe this summer and the
only place that they could play outside was in a little gazebo in a park on the
waterfront.
5735 You know, that reminded me that this -- you know, in terms of the
opportunity to display talent for it to be there for all the people all the
time, that this is really an important development in the City of Barrie.
5736 Just to put it into context, we have all seen the graphs and charts
about Barrie growing, it is the fastest growing city in Barrie. That's when you
are talking about housing starts and so on.
5737 We are very lucky because not only has the City of Barrie recognized
that and added the infrastructure necessary, but there are so many other
initiatives that they are bringing the city of age. The city is coming of
age.
5738 We have just opened a brand new grand library just adjacent to the
downtown. The library vacated the old Carnegie library building which is now
being redeveloped as the new MacLaren Arts Centre.
5739 We have just opened, about a year and-a-half ago I guess, a new rink in
the Civic Square, an artificial ice rink that is available, unfortunately, in
Barrie for quite a long time through the year.
5740 So these kinds of things are starting to go along with the increase in
business, the increase in population.
5741 This could be just a wonderful component of that. It fits perfectly in
an initiative the city has undertaken, and that is a 10-year, $20 million
commitment to improve an already beautiful waterfront. Key to that development
are linkages that will link the waterfront with various neighbourhoods and the
downtown. This area here is the key linking area between downtown and the
waterfront. So for a whole bunch of reasons it is a perfect fit and, of course,
we hope it happens too.
5742 Back to the synergies, I can see all kinds of ways that VR can become
really involved in this venue.
5743 THE CHAIRPERSON: Thank you, Mr. Garraway and Mr. Salter and Mr.
Roman and Mr. Davies for more explanation on how you connect this.
5744 You may want to explain to Mr. Salter, I know you know what I'm
driving at, if you are broadcasters is where does this stop.
5745 When we talk about competitive applications and putting forward a
proposal to develop Canadian talent it is important that we are satisfied that
it is linked to such development and if the -- to be considered a larger
size commitment and whether or not we should only consider the actual money
spent on the concerts and -- but you have provided some linkage, and even
your architect has spoken almost like a broadcaster.
5746 Thank you very much.
5747 Yes, Commissioner Cram.
5748 COMMISSIONER CRAM: I am going to go on on the same topic because I have
a very difficult time.
5749 What if a drama, if Shakespeare was in the bandshell, how does that
promote Canadian talent development in music?
5750 MR. WATERS: I think it promotes -- in music.
5751 Well, maybe not if they are not singing it I suppose it
doesn't --
5752 COMMISSIONER CRAM: So should we take some off the capital cost for
that?
5753 MR. WATERS: No, I -- no. I think it still --
5754 COMMISSIONER CRAM: What if the Mayor were giving the July 1st
speech there and there were firecrackers, but there was no music?
5755 MR. WATERS: Commissioner Cram, I think that we envision that the
facility will be used for those reasons.
5756 I think that there certainly will be musical talent playing there
frequently, but I think it would be unreasonable for us to think that they
wouldn't be using it for other things. I hope that they do. It's in the middle
of the city.
5757 As was explained by Millet and Doug that it's kind of a connector in the
middle of the city and it's a place where we hope that a lot of activity takes
place, whether it be music or not.
5758 COMMISSIONER CRAM: So if the Queen visited, or if it was an American
band, how does that promote Canadian talent development? Where I'm coming from
is we need money for Canadian talent development, but I think we have to have a
causal link.
5759 When I hear this is to be a multipurpose building, it looks very nice
for CHUM to do it for the city, but does it meet the Broadcasting Act and its
requirements and what we're looking for? If you are saying it's a multipurpose
bandshell, not solely for Canadian development, then I'm saying how much of the
time do you believe that will be used for bands to play in?
5760 If it's 10 per cent, then maybe we should be talking about 10 per cent
of the capital cost to be put into CTD. I mean in reality because we are talking
about a scarcity of money for Canadian talent development. I understand your
concerns and the concerns of the city, but our job is to worry about the
broadcasting system and developing talent for that.
5761 MR. DAVIES: Commissioner Cram, if I can perhaps elaborate a bit. I don't
think we can expect to fill the bandshell 365 days a year. I don't think Air
Canada Centre in Toronto expects that or the Corel Centre here when they bring
performing bands in.
5762 We are actually thrilled to be able to offer this bandshell for the
other uses, some of which you have outlined. Clearly, we have got the one major
concert that we want to put on every year, but that doesn't prohibit many other
concert activities that may take place on the normal regular routine with a
radio station throughout the year.
5763 I think you heard Doug Garraway, and perhaps Millet can answer you,
there's a number of other musical activities taking place in the Barrie
community. As you have heard them say, they don't have a venue. Now they will
have a musical venue, but we can't expect to fill it 365 days a year. We would
like to and maybe we can eventually, but we are happy to be able to offer it to
other places.
5764 COMMISSIONER CRAM: So it will be as a public service, do I have it
right, and hopefully it will be a venue for music, but also for other
things.
5765 MR. SHERRATT: Commissioner Cram, it's a bit like the act. If you want to
link it to the act, the act says it will be "predominantly".
5766 COMMISSIONER CRAM: I understand.
5767 MR. SHERRATT: It's our hope that this will be predominantly a music
venue and predominantly a music venue for amateur local performing talent.
That's the fundamental thrust of the process.
5768 A big American name established act isn't going to play the bandshell.
They can't charge $75 a ticket there. They will do that out at Molson Park which
is a commercial money driven venue. This is a venue to drive local involved
talent.
5769 Yes, if the theatre can use it, that would be terrific if there isn't a
concert going on there tonight. It would be wonderful if it was working every
day that it wasn't below zero in Barrie. If it wasn't all music, I don't think
that's going against the development of Canadian talent, but contributing beyond
just musical talent.
5770 COMMISSIONER CRAM: Mr. Sherratt, I hear you. I understand the
"predominantly". My point is I am talking directly. When we are talking about
what I would see as a multipurpose building, I have a difficulty with that and
particularly, as you know, it's going to be a multipurpose building. I
understand your hopes that it will be used primarily for music.
5771 I have a difficult problem when we are talking about something that is
really a matter for the community. I think it's a wonderful donation, but I have
a problem with it being -- the total capital cost being attributed to
CTD.
5772 You tell me how you think because that's -- you were going to say
something, Mr. Roman?
5773 MR. ROMAN: Well, I was, Commissioner Cram. I was just going to say that
what helps sort of keep our focus and our integrity with regard to this
initiative is the genesis of the initiative.
5774 The genesis of the initiative is bandshell. Obviously if it's in a
public green space, it is going to be multipurpose, but the person whose idea it
was, was known, and is deceased now, as a musician. That is the genesis of the
bandshell by the bay. It all flows from that.
5775 As Mr. Sherratt said, the predominant use I think really drives this,
but we want a bandshell that's going to be used all the time and bring people
together. We hope that the portion is predominant and significant in terms of
musical talent, but it's first purpose -- I know Millet is going to help me
with this one -- is as a musical venue. It is by definition a
bandshell.
5776 MR. SHERRATT: I think you are under a pretty important discussion here,
Commissioner Cram, because, you know, take a dollar in FACTOR and break it down.
How much of it goes to music as such vis-à-vis what goes to recording studios,
what goes to acetates, what goes to the whole process.
5777 There are a lot of things that make up music. Run through it.
5778 MR. ROMAN: Well, I could tell you this. Where an artist, however
accomplished that artist is and whether or not that artist has a real
opportunity of making money, but I can go very simply and tell you a royalty
artist, in other words, an artist who has some hope of return if the record
sells in fact usually doesn't get paid.
5779 Most of that money through FACTOR goes into the production of the
recording. Yes, the studio musicians, the side musicians, they will be paid, but
essentially if a four or five person band, group, is going to make a recording
with commercial hopes, essentially they make a contribution to that recording
and hope to take their end of it out of sales. The rest of it, as Fred Sherratt
is saying, has to go to infrastructure. It has to go to a recording studio, it
has to go to rehearsal space, it has to go to the rental equipment.
5780 It's the business of doing music. This may be the first time that we
have really found a way of addressing the introductory phase of the development
of musical artists.
5781 I know you are hearing about CD production and homegrowns and song
contests and indeed contributions to FACTOR, but here's something that starts
the process, that begins all the other good things that together with the music
industry broadcasters have been able to build.
5782 You know, you just have to look at the Canadian star system to know that
a lot of good things are working in conjunction with the Canadian on air
commitments, the sound recording development program of Heritage Canada, FACTOR,
Music Action.
5783 We are the envy of the world. We are next door to the most powerful
nation in the world and we export this model. I hope you don't mind me going on
a bit, Commissioner Cram.
5784 COMMISSIONER CRAM: No, no. I think you should.
5785 MR. ROMAN: Oh, okay.
5786 COMMISSIONER CRAM: I think you should try to make your best shot.
5787 MR. ROMAN: Okay. Well, I'm sure going to try. You know, I don't have to
get into the fact that I have been in the music business as well and I know what
a long shot it is with regard to where you go with the record.
5788 Sometimes you can produce a record in your garage or do it by yourself
like the Barenaked Ladies, have no success with record companies, put it out
there and people love it and buy it. Most of the time it's as our other
competitive applicants have been saying, you don't see any money at all. The
first CD or first recording that a group makes goes right back to the cost of
all the things I have talked to you about. It's taken out of the hide of the
artist.
5789 Where we are coming from is the very beginning of this process. It's
part of the Canadian sort of public-private approach that we take to things.
That's the model of export I was talking about.
5790 Australia is using the FACTOR model. EC countries have been in touch
with FACTOR and with Music Action to say "How do you do this? How does it
work?". The greatest export that the Americans have now is intellectual and
entertainment products. I mean there are countries that have the barrier of a
different language, but they can't escape this largest cultural monster that
stalks the world.
5791 Getting an identity and a culture that can survive in that kind of
environment has created an expertise for us Canadians. We have been building on
it. This is a very important piece that has never been covered before, I think,
as directly as we have. The beginning of it all.
5792 As someone once said, "How do I get to Carnegie Hall?" The response is
"Practice". This is part of that first step. They have to have somewhere to show
what their practice has done for them.
5793 COMMISSIONER CRAM: I'm just paraphrasing. Your argument is that the
facilities, even though they be general purpose facilities, are the place to
start for Canadian talent development. Is that your point, even though it's
based on a hope, as Mr. Sherratt says, that it will be used primarily for
music.
5794 MR. ROMAN: No, the initial purpose is primarily music. I think the
bandshell defines it. Bandshell to me says a shell for a band.
5795 MR. SHERRATT: A general purpose facility is the Air Canada Centre and
yet it is designed specifically for hockey and secondarily for basketball. That
is a general purpose facility. The bandshell at the CNE doesn't have a lot of
hockey games or basketball games and the bandshell by the bay won't have a lot
of those either.
5796 It will be talent performing and by its very nature it is going to be
principally musical and by its size and its location will be predominantly
low.
5797 COMMISSIONER CRAM: So you start with a building, you don't start with
people. Is that --
5798 MR. SHERRATT: Well, you --
5799 COMMISSIONER CRAM: No, because that was what Mr. Roman said. You start
with infrastructure in terms of buildings as opposed to people.
5800 MR. SHERRATT: I thought Millett put it best when he said, "We have the
people, we need the place for them to get into".
5801 COMMISSIONER CRAM: No, no. Talent development is what we are talking
about.
5802 MR. SHERRATT: Oh, okay.
5803 COMMISSIONER CRAM: Yes.
5804 MR. ROMAN: Well, can I say, Commissioner Cram, that we have been at this
talent development thing for a long time and it is time for other creative and
imaginative initiatives to build the entire movement toward better and, we hope,
prosperous Canadian talent.
5805 We contribute annually a quarter of a million dollars to FACTOR. We do
it on behalf of our 26 radio stations. Similarly, we support Music Action. We
are involved in what Ross talked about and that is the Marketing Fund that goes
to the promotion and the marketing of music rather than the cost of production
of records.
5806 So we can't leave this out, you know. There is something to be said for
that expression, "Build it and they will come". Right now there isn't a
bandshell green space facility predominantly devoted to presenting music in
Barrie. It seemed to us like a great natural fit.
5807 COMMISSIONER CRAM: Thank you.
5808 THE CHAIRPERSON: Thank you very much, ladies and gentlemen.
5809 We will take a 10-minute break and I think since everybody has stated we
will proceed with those interventions and start tomorrow morning with
interventions other than the competing applicants.
5810 So I guess it is in reverse order. No, it is not, I am sorry. So you
have to vacate, unfortunately.
5811 Thank you.
--- Upon recessing at 1928 / Suspension à 1928
--- Upon resuming at 1940 / Reprise à 1940
5812 THE CHAIRPERSON: Madam Secretary, please.
5813 MS SANTERRE: Thank you, Madam Chair. We will now hear the oral
intervention by Larche Communications Inc.
INTERVENTION / INTERVENTION
5814 MR. LARCHE: Thank you very much.
5815 I guess I should say good evening again, Madam Chairperson and
Commissioners. Thank you for this opportunity to discuss the applications by
CHUM Limited, and Rock 95 Limited, owner of CFJB-FM.
5816 Both applicants today have applied for a CHR format to serve Barrie.
Both claim the market hole is "underserved" youth. The reality is that this
assertion does not hold up under analysis.
5817 First of all, to our knowledge, and we have just reviewed the
application, CHUM did not file any audience research. Now, they did mention in
their oral presentation, but we have not had an opportunity to see it. I have
checked with the other applicant, he has not seen it, and we have just checked
the public file and we did not see any in there.
5818 So I have to go under the assumption that there was no research done by
CHUM because I didn't have an opportunity to see any audience research.
5819 So for this reason we can only rely upon our own research which was
conducted by Angus-Reid and upon Rock 95 Ltd.'s research which was undertaken by
David Oakes and Associates.
5820 The fact is this: Barrie wants a Classic Rock station -- plain
and simple. Our research shows it, Rock 95 Limited shows it, and BBM figures
show it.
5821 I would like Jeff Vidler from Angus-Reid to elaborate.
5822 MR. VIDLER: Thank you, Paul.
5823 Madam Chair, Commissioners. As pointed in the research findings included
with LCI's application, Classic Rock with a new rock component will meet an
underserved need in the Barrie marketplace. It will also generate a large
audience, particularly among youth aged 18 to 34.
5824 Our research also indicated that the proposed Classic Rock format would
repatriate a significant amount of out-of-market tuning. In fact, it suggest
that roughly 60 pour cent of the station's hours tuned would come from out-of
market stations.
5825 Corroborating research further indicates that a Classic Rock format
would provide greater diversity and repatriate more out-of-market tuning than a
Contemporary Hits or CHR format.
5826 This chart that you have in front of you now is from the Spring 1999 BBM
and it compares Barrie tuning to out-of-market Rock stations and with tuning to
out-of-market CHR stations and this is based on 12 to 49 year-olds. It shows
that combined out-of-market tuning to Rock stations CILQ-FM and CKFM-FM in
Toronto and CJXY in Hamilton is 50 per cent higher than it is to CHR stations,
CIDC-FM Organgeville, CING-FM Burlington, and CISS-FM Toronto.
5827 The only other listener research submitted for this hearing also
demonstrates an unmet need for Classic Rock. In the David Oakes Research,
listener research study conducted for CFJB-FM, respondents were asked, on en
open-ended basis, which type of music was not played often enough on radio.
Among 15 to 44-year-olds, more mentioned Classic Rock than any other style. This
was true even among those identified in the research as making up the potential
"cume" audience for their proposed Contemporary Hits of CHR format.
5828 MR. LARCHE: Thank you, Jeff.
5829 Now, let's deal with the perception that Barrie youth are underserved.
The research and facts not only don't support this argument, they refute it.
This second chart that you are looking at is from the Spring BBM figures for
out-of-town tuning, this time divided by age group.
5830 What we are seeing here is in-town tuning -- and there is a
typo on the paper you have in front of you -- by listeners under the
age of 35, which is the bar on your left, and over the age of 35, which is the
bar on the right. In reality, there is more local tuning in the younger
demographic. These listeners are obviously getting more out of Barrie radio than
the over-35 group. That is because the music that they want to her is currently
being played by Barrie stations.
5831 CHUM's application listed as core artists Ricky Martin, Backstreet Boys,
Will Smith, TLC, the Moffatts, Brittney Spears, Jennifer Lopez, N'Sync, Love
Inc., Debra Cox, Cher, Savage Garden, 98 Degrees, Jewel, Lauryn Hill, Sky and
Amanda Marshall. We submit that either CFJB-FM and/or CIQB-FM are currently
airing all of these artists.
5832 Then why is Rock 95 Ltd. applying for a CHR format? The answer is
simple: it is a tactical ploy to protect the market position of their existing
station. CFJB-FM dominates the market with a format that runs from rock to Top
40. Applying for a CHR licence will allow them to solidify their younger
audience. In their Schedule 16, the Rock 95 Ltd. application acknowledges that
CFJB-FM does not currently serve the rock market well by indicating that one of
the benefits of giving them a CHR station is that it will now allow them to
better serve the rock audience on CFJB-FM.
5833 Rock 95 Ltd. made the decision to shift CFJB-FM away from serving the
rock market towards a broader Classic Hits and Hot New Music format, leaving a
big hole in the market. But at the same time, they think they deserve have it
protected from a rock station.
5834 I would like to now turn our attention to the issue of Canadian Talent
Development and the significant dollars proposed by both CHUM and Rock 95 Ltd.
We believe that we have proposed an exciting package of initiatives that are
locally focused and appropriate to the market. We recognize that the total
dollar amount is lower than those of the competing applicants.
5835 Should the Commission base its decision in whole or in part on the size
of the CTD proposals, the message will be clear: small independent broadcasters
need not apply for competing FM applications.
5836 CHUM's application projects that the station will lose money for the six
first years of the license term, accumulating over $4.8 million in pre-tax
losses before turning a profit. How can an independent compete against that?
CHUM can afford to look out 20 years before making the business viable, but we
can't.
5837 Rock 95 Ltd. projects a marginal profit in Year 4 of their business
plan. These figures do not take into account the cannibalization that their
proposed new CHR will have on CFJB-FM. The Rock 95 Ltd. application states that
CFJB-FM would be affected negatively somewhere between $250,000 and $500,000 per
year. First of all, this is a clear indication of the duplication of formats
between his existing and proposed stations.
5838 The overall impact of adding a new station will be close to a zero sum
gain. The revenues from the new station will come largely from the existing
station. But Rock 95 Ltd. will have ensured that no new competitor enters the
market.
5839 The impact on the market: more duplication.
5840 Our point here is simple: If licences are issued on the overall
financial CTD proposals, broadcasters with the financial resources will outbid
the small independent broadcaster every time, even if the business models don't
make any sense.
5841 We are extremely proud of the job that we have done to help promote
Canadian talent without having to spend considerable dollars. Our StarQuest
promotion was chosen as the OAB's Canadian Talent Development promotion of the
year. We have given several aspiring Canadian country artists an opportunity to
expose their music and talent to a captive audience at OHL hockey games.
5842 We regularly have local artists like Jason McCoy and Stephanie Beaumont
participate in our morning shows. We also recently participated in the North of
Toronto music convention in central Ontario as one of the presenting stations.
We spearheaded a panel of local program directors that gave advice to aspiring
artists.
5843 These types of initiatives don't cost much but they go a long way in
promoting Canadian talent.
5844 The CTD initiatives we are proposing will have a real impact on the
careers of local artists and on the system in general, and we can implement all
of our proposals within the framework of a realistic business plan that
investors would support.
5845 Thank you.
5846 THE CHAIRPERSON: Thank you, Mr. Larche.
5847 We have no questions. We will see you again tomorrow, of course.
5848 MR. LARCHE: Thank you.
5849 THE CHAIRPERSON: Madam Secretary.
5850 MS SANTERRE: Thank you, Madam Chair.
5851 The next intervention will be by Rock 95 Broadcasting
(Barrie-Orillia) Ltd.
--- Pause / Pause
5852 THE CHAIRPERSON: Mr. Bingley, you look lonesome there.
5853 MR. BINGLEY: It was the only way I could be assured that my voice would
be the lowest on the --
5854 THE CHAIRPERSON: You are like me. You are intimidated by all these
broadcasters' voices; correct?
5855 MR. BINGLEY: There is some degree of intimidation.
5856 Actually, if I want to ruin my program director's day, I say I want to
talk on the radio.
5857 THE CHAIRPERSON: Please go ahead.
5858 MR. BINGLEY: Thank you very much, Madam Chair.
INTERVENTION / INTERVENTION
5859 MR. BINGLEY: First, I would like to say that this intervention is
against the applications presented here today, not the applicants. In the case
of both CHUM Ltd. and Larche Communications, I think it is obvious that these
are hard-working responsible broadcasters, but nevertheless there are some very
important points that I think should be addressed.
5860 First, with regard to the CHUM application, the new FM policy allows
multiple ownership in a market. The net effect of this has been that large
broadcast chains have rapidly been growing by buying up small independent
operators. But most of the benefits of the new policy flow naturally to these
large chains. There is no benefit for small operators to consolidate.
5861 For example, in Barrie we certainly could not find $105 million so we
could consolidate with B-101. And that is the number that the power station sold
for.
5862 The Commission has always sought to maintain balance in the broadcasting
system, and the only way to maintain any degree of balance, the only option that
small operators have is building stations up from the ground up. That can only
happen through the licensing process. That is the only way that we can enjoy the
benefits of consolidation, if you will, multiple ownership in a market.
5863 That is our concern with the CHUM application.
5864 Turning to the Larche application, first with regard to public benefit,
the target audience proposed by LCI has the least amount of out-of-market tuning
of any age group.
5865 We included a graph with our presentation. It is in our application.
5866 If you talk about an underserved group of listeners, the Larche
application has minimal benefit.
5867 Moreover, LCI states that they are filling a format hole. The hole does
not exist. The format they tested in their questionnaire is not pure classic
rock; indeed, today they have talked about current plus classic rock. This very
much shadows our existing radio station.
5868 They have implied that Rock 95 is not a rock based radio station, yet we
have approximately 50 per cent classic gold base and Larche Communications is
proposing 15 per cent more gold. That is the only difference.
5869 As a frame of reference, LCI says that there is no classic rock in the
market. They have a table that shows only 27 per cent of those interviewed
identified Rock 95 as providing classic rock. But this number means nothing
without a frame of reference.
5870 Of that group of people, how many identified some other station that is
providing classic rock in or out of market? They only asked in market.
5871 In our survey, the survey filed with their application shows 42 per cent
of those surveyed identified Rock 95 as playing classic rock, versus 13 per cent
who identified Q.107. And that is the station that LCI mentioned they would find
most of their tuning from.
5872 Moreover, we did music testing in March of 1998 and we engaged the Angus
Reid Group to do a survey. The results of that survey are before you.
5873 The survey showed that of total respondents in the group -- and
this is a group of people aged, I believe, 25 to 44 -- 40 per cent
identified Rock 95 as classic rock versus 35 per cent other stations.
5874 Similarly, 42 per cent of Q.107 listeners thought that Rock 95 played
classic rock, versus only 45 per cent for Q.107.
5875 I can't explain the discrepancy, but we think it is fairly clear that we
do provide a significant classic rock component.
5876 The applicant further implies that Rock 95 is not a rock station, yet 29
per cent of their new tuning will come from Rock 95 versus only 23 per cent for
Q.107, which they say is a rock station. Well, if we are not a rock station, why
would the biggest source of their tuning come from Rock 95?
5877 We have also provided for you the latest chart from the record. This is
the source that the Commission uses, of course, for identifying hits and so on.
Rock 95 is currently playing 80 per cent of the music on that chart. We are
clearly a rock radio station.
5878 We provided a CD-ROM that was filed with our application. You received a
copy of that today. That is a web page on CD-ROM. It includes a scope taken
off-air of the local stations, including Rock 95. And I will let you be the
judge of that yourselves. I think it shows exactly what we are.
5879 Just in case there is still any doubt, here are some of the artists on
our play list: Pink Floyd, Jimmy Hendrix, Kim Mitchell, Rush, Metallica, Pearl
Jam, Moist, Tragically Hip and The Who.
5880 LCI claims most of their tuning will be repatriated from Toronto
stations, yet Barrie is commuter central. We have been trying to repatriate that
tuning for the last 11 years, and it is really difficult to repatriate
tuning.
5881 If someone gets in their car, as 30 per cent of our workforce does, and
commutes to Toronto, they commute out of range of your signal. So it is pretty
difficult to repatriate that.
5882 Moreover, what gave Q.107 a real boost in our marketplace was when they
started playing Howard Stern. Again, that is something that a local station
can't -- and I certainly said would not -- do is run a Howard Stern to
try to counter that.
5883 The final point is that it is difficult to compete with a Q.107 simply
because of the loyalty of those people who are moving up to the marketplace.
5884 So we would contend that most of their tuning will come at the expense
of Rock 95. Similarly, the economic impact, as I mentioned earlier, will fall
squarely on our radio station. They are talking about us losing only 3 per cent
of our market share, going from 13 per cent to 10 per cent.
5885 That, as I mentioned earlier, would knock us down relative to the CORUS
stations. That would cost us a few hundred thousand dollars. The new radio
station definitely would cost us a few hundred thousand dollars, and that's a
downward spiral. That's just in Barrie.
5886 When you take a look at the surrounding areas, for some reason LCI says
that they will have a 9 per cent market share in Barrie, but only 3 per
cent in Midland. The fact is when you look at Midland and the region to the
north, they don't have to compete with Q.107. So all their tuning will come from
Rock 95. So, again, another couple of hundred thousand dollars would disappear
as a consequence of that.
5887 Basically, what we are saying is, this is a station that targets us for
listeners and it targets us for revenue, and I think it understates that
fact.
5888 Finally, I would like to make a brief comment, which I'm sure at this
time of the evening you would be happy for, with respect to the Canadian talent
initiatives of LCI.
5889 It appears to us that they have changed their promise of performance or
attempted to do this after filing. We have made written response to that in
response to their intervention against our application and we will let that
stand.
5890 That concludes our intervention.
5891 THE CHAIRPERSON: Counsel.
5892 MR. BATSTONE: Just to clarify on that last point, are you
suggesting -- because I'm not sure it was entirely clear in the response
that you made on the written record -- that the Commission shouldn't
consider those initiatives?
5893 MR. BINGLEY: My belief is that the process of filing with gazetting is
very analogous to a sealed bid for a government contract. Of course after you
have seen the other guy's bid you can't go back and change that. So, no, we
believe it constitutes a change in their POP and for that reason we don't
necessarily feel that that is appropriate.
5894 MR. BATSTONE: I guess what I'm asking is: Are you asking the panel to
rule that that information should not be accepted on the record?
5895 MR. BINGLEY: Yes, I am, sir.
5896 THE CHAIRPERSON: Are you making a distinction, Mr. Bingley, between the
initiatives that were mentioned but that there was no dollar value attached to
them and those that were not mentioned at all in the application or --
well, there was another category too. There could be some that, even if
procedurally we were prepared to accept them, they may not be acceptable under
the policy.
5897 Do you see the difference? One would be to say no from a procedural
perspective, which is what you are saying, and the other would be simply
because, even if they had been filed with the application, they are just not
eligible for whatever reason.
5898 Do you see a distinction between those areas that were mentioned in the
application but on which no numerical value was assessed because --
Mr. Larche's argument, I guess he can make it himself in reply -- he
didn't realize that you could do it until he read your clever application.
5899 Do you see my point? Are you against the whole package --
5900 MR. BINGLEY: Yes, I do see. There is the two issues and I do see
that.
5901 THE CHAIRPERSON: -- or do you separate these issues?
5902 MR. BINGLEY: I guess there are two levels.
5903 The first level is that Mr. Larche is an experienced broadcaster. He
submitted, for example, one initiative that was $1,000 for a band search that
was not a CAB type of initiative, wasn't part of that CAB program. Yet, as
justification for bringing in all these other things, he said, "Well, I didn't
understand that you could accept things that weren't part of the CAB
program."
5904 So, in procedural terms, yes, we are saying if he didn't assign a value
to it certainly maybe he didn't understand this, but it certainly was not in
that original application.
5905 And you have raised a valid second point. We did mention that in our
written intervention that there are some of his initiatives that we felt,
specifically the mobile vehicle, wouldn't qualify in any event.
5906 THE CHAIRPERSON: Any further comments to make on that at this stage?
5907 MR. BINGLEY: No, Commissioner. I would stand by what we have submitted
in written format.
5908 THE CHAIRPERSON: Thank you.
5909 Thank you, Mr. Bingley.
5910 Madam Secretary.
5911 MS SANTERRE: The next intervention will be presented by CHUM Ltd./CHUM
Ltée.
5912 THE CHAIRPERSON: We didn't scare your colleagues off, did we?
--- Off microphone / Sans microphone
--- Laughter / Rires
5913 MR. WATERS: They are all still here.
5914 THE CHAIRPERSON: Don't look so glum.
--- Laughter / Rires
5915 MR. WATERS: Madam Chair and Commissioners, thank you very much for your
questions into the three applications, the three competing applications for
Barrie today. Some were tougher than others, some questions were tougher than
others, but that is the process and we are happy to be a part of it, and CHUM
does not intend to intervene either of the other applications but we may have
some thoughts in rebuttal.
5916 Thank you.
5917 THE CHAIRPERSON: Thank you very much.
5918 I hope everybody has a nice evening.
5919 We do apologize for being so late. We have a very heavy week, so we are
trying to keep to our schedule, obviously at your expense in part. We apologize
for that.
5920 Thank you very much and we will see you at 0830 tomorrow morning.
--- Whereupon the hearing adjourned at 2003,
to resume on Thursday, December 9, 1999
at 0830 / L'audience est ajournée à 2003,
pour reprendre le jeudi 9 décembre 1998
à 0830 |