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Broadcasting
Decision CRTC 2006-458
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Ottawa, 31
August 2006 |
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MZ Media Inc.
Toronto and Cobourg, Ontario |
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Application 2006-0253-3
Public Hearing in the National Capital Region
1 August 2006 |
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CFMX-FM-1 Toronto,
CFMX-FM Cobourg and CFMX-DR-1 Toronto – Acquisition of assets
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The Commission approves the
application by MZ Media Inc. for authority to acquire the assets
of the English-language specialty radio programming undertaking
CFMX-FM-1 Toronto, its transmitter CFMX-FM Cobourg and of the
English-language transitional digital radio undertaking CFMX-DR-1
Toronto, from Trumar Communications Inc., and for broadcasting licences
to continue the operation of these undertakings. |
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The application
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1. |
The Commission received an application by
MZ Media Inc. ("MZ Media" or "the applicant") for authority
to acquire the assets of the English-language specialty radio
programming undertaking CFMX-FM-1 Toronto, its transmitter CFMX-FM
Cobourg and of the English-language transitional digital radio
undertaking CFMX-DR-1 Toronto, from Trumar Communications Inc., and for
broadcasting licences to continue the operation of these undertakings. |
2. |
The vendor, Trumar Communications Inc., is
currently owned and controlled by Mr. Martin Rosenthal. MZ Media is
wholly-owned and controlled by Mr. Moses Znaimer. |
3. |
The applicant stated that the value of the
proposed transaction would be $12 million. MZ Media explained that the
purchase price was not based on multiples of Profit Before Interest and
Tax (PBIT) or multiples of sales. Rather, according to MZ Media, the
value of the transaction was arrived at after negotiation and was based
on MZ Media’s estimate of the vendor’s investment over the years. MZ
Media explained its plans to increase the station’s advertising and
other revenues, stating that it intends to attract more youthful
listeners, increase the perceived value to advertisers of its older
listeners, and grow via new licences and the Internet. |
4. |
In its application, MZ Media asked to be
exempt from paying benefits in the form of a minimum direct financial
contribution to Canadian talent development (CTD) of 6% of the value
of the transaction, as stipulated in Commercial Radio Policy, Public
Notice CRTC 1998-41,
30 April 1998 (Public Notice 1998-41).
According to the applicant, a strong case could be made that CFMX-FM-1
is not and has not been profitable and, therefore, that the benefits
policy should not be applied with respect to this ownership transaction.
MZ Media submitted financial information in support of its contention
that the station was not profitable. |
5. |
MZ Media stated, however, that should the
Commission decide to require that tangible benefits representing a
minimum of 6% of the value of the transaction be contributed to CTD, it
would do so but would direct the $720,000 to youth concert series and
outreach groups, subject to certain conditions. MZ Media specified that
the funds would be expended over a seven-year term and that they would
not be spent equally on a year-by-year basis. Rather, the applicant
proposed to make smaller contributions in the initial years, with larger
expenditures in years 3 to 7, when in its view, the station would
achieve financial stability. MZ Media further indicated that it would
increase the station’s current CTD contributions from $20,000 to $27,000
a year and that it was prepared to file annual reports with the
Commission in regard to ongoing progress with these projects. |
6. |
With respect to the broadcast of Canadian
musical selections, MZ Media proposed to increase its commitment by
devoting, in each broadcast week, during the first broadcast year that
the station is owned by the applicant, 14% or more of its musical
selections from content category 3 to Canadian selections and schedule
those selections in a reasonable manner throughout each broadcast day.
The applicant has also committed to make annual increases to this level
(14%) of 1% per year thereafter, reaching a level of 20% by year 7. |
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Interventions
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7. |
The Commission received interventions in
support of this application and one intervention from the Canadian
Independent Record Production Association (CIRPA) commenting on certain
aspects of the application. Although CIRPA offered qualified support for
MZ Media’s application, it stated that it would prefer that CTD
commitments made to organization such as the Shaw Festival and the
National Ballet of Canada, which are not focused on music, be redirected
to groups that fund the production, distribution and marketing of
Canadian classical music. |
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Applicant’s
reply
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8. |
MZ Media stated that it was pleased that
its application received support from the interveners and that not a
single intervention was received in opposition. With respect to CIRPA’s
concern regarding the direction of some of the station’s CTD funds, MZ
Media submitted that CFMX-FM-1 was more than just an outlet for recorded
music and that it provides listeners with commentary and contextual
information concerning the fine and performing arts in general. |
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Commission’s analysis
and determinations
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9. |
The Commission approves the
application by MZ Media Inc. for authority to acquire the
assets of the English-language specialty radio programming undertaking
CFMX-FM-1 Toronto, its transmitter CFMX-FM Cobourg and of the
English-language transitional digital radio undertaking CFMX-DR-1
Toronto, from Trumar Communications Inc., and for broadcasting licences
to continue the operation of these undertakings. |
10. |
In Public Notice 1998-41,
the Commission stated that it would expect that, in the case of all
transfers of ownership and control of radio undertakings, commitments
be made to implement clear and unequivocal benefits representing a
minimum direct financial contribution to CTD of 6% of the value of
the transaction. The Commission stated that it would forgo benefits
requirements for unprofitable undertakings, and that it would measure
profitability according to the average PBIT of the undertaking over
the three years preceding the filing date of the application. |
11. |
After reviewing all of the station’s financial
information, the Commission has determined that CFMX-FM-1 has been
profitable over the past three years. Therefore, in accordance with
the policy set out in Public Notice 1998-41,
MZ Media is required to pay clear and unequivocal benefits contributions
representing a minimum direct financial contribution to CTD of $720,000,
or 6% of the value of the transaction. Consistent with Public Notice
1998-41, the Commission
will expect financial contributions to be distributed as follows:
$360,000, representing 3% of the value of the
transaction, to be allocated to the Radio Starmaker Fund;
$240,000, representing 2% of the value of the transaction, to be
allocated, at the discretion of the purchaser, to FACTOR or MusicAction;
and
$120,000, representing 1% of the value of the transaction, to be
allocated, at the discretion of the purchaser, to either of the
above initiatives, to other Canadian talent development initiatives,
or to other eligible third parties directly involved in the development
of Canadian musical and other artistic talent, in accordance with
Contributions by radio stations to Canadian talent development
– A new approach, Public Notice CRTC 1995-196,
17 November 1995, as may be amended from time to time.
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12. |
With respect to the $120,000, should the
licensee decide to allocate this amount to other eligible third parties
directly involved in the development of Canadian musical and other
artistic talent, the Commission requires that the licensee file a report
detailing the ongoing progress of these initiatives with its annual
return. |
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Issuance of the
licences
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13. |
The Commission will issue broadcasting
licences to MZ Media Inc., upon surrender to the Commission of the
licences issued to Trumar Communications Inc. |
14. |
The licence for the English-language
specialty radio programming undertaking CFMX-FM-1 Toronto and its
transmitter CFMX-FM Cobourg will expire 31 August 2010,
the current expiry date. The licence for the English-language
transitional digital radio programming undertaking CFMX-DR-1 Toronto
will expire 31 August 2007, the current expiry date. |
15. |
The licences will be subject to the conditions
set out in New licence form for commercial radio stations,
Public Notice CRTC 1999-137,
24 August 1999, with the exception of conditions 5 and 8. The
licences will also be subject to the conditions specified in
the appendix to this decision. |
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Employment equity
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16. |
In accordance with Implementation of an
employment equity policy, Public Notice CRTC 1992-59,
1 September 1992, the Commission encourages the applicant to consider
employment equity issues in its hiring practices and in all other
aspects of its management of human resources. |
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Secretary General |
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This decision is to be appended to each
licence. It is available in alternative format upon request, and may
also be examined in PDF
format or in HTML at the following Internet site: http://www.crtc.gc.ca
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Appendix to Broadcasting Decision CRTC 2006-458
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Conditions
of the licences
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1. The licences are subject to the conditions set out in New
licence form for commercial radio stations, Public Notice CRTC
1999-137, 24
August 1999, with the exception of conditions 5 and 8.
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2. The stations shall be operated within the Specialty format as
defined in A review of certain matters concerning radio, Public
Notice CRTC 1995-60,
21 April 1995, and Revised content categories and subcategories
for radio, Public Notice CRTC 2000-14,
28 January 2000, as amended from time to time.
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3. In each broadcast week, a minimum of 70% of all musical
selections broadcast shall consist of musical selections drawn from
subcategory 31 (Concert).
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4. The licensee shall, as an exception to the percentage of
Canadian musical selections set out in section 2.2(3) of the Radio
Regulations, 1986, in any broadcast week, during first broadcast
year that the station is owned by the licensee, devote at least 14% of
all musical selections drawn from content category 3 (Special Interest
Music) to Canadian selections and schedule those selections in a
reasonable manner throughout each broadcast day. This percentage (14%)
will increase by 1% per year thereafter, reaching a level of 20%
Canadian musical selections drawn from content category 3 by year 7.
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For the purposes of this condition, the terms "broadcast week,"
"Canadian selection," "content category," and "musical selection"
shall have the same meaning as that set out in the Radio
Regulations, 1986.
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5. The licensee shall contribute $27,000 during each broadcast year
to direct initiatives for the development of Canadian talent.
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The Commission reminds the licensee that all Canadian talent development
expenditures must be made in accordance with the Commission’s policy
on qualifying contributions to CTD, as set out in Appendix 1 to
An FM policy for the nineties, Public Notice CRTC 1990-111,
17 December 1990.
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6. The licensee is authorized to use Subsidiary Communications
Multiplex Operations (SCMO) channels for the purpose of distributing a
commercial Tamil-language service and a commercial Persian-language
service, produced by Radio Sedaye Iran.
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With respect to the condition set out above, the licensee is expected
to adhere to the guidelines set out in Appendix A to Services
Using the Vertical Blanking Interval (Television) or Subsidiary
Communications Multiplex Operation (FM), Public Notice CRTC
1989-23, 23
March 1989.
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Date Modified: 2006-08-31 |