Ms. Diane Rhéaume
Re: The Legality of a Business Arrangement between Rogers and Newcap in Sudbury
Dear Ms Rhéaume:
1. FRIENDS of Canadian Broadcasting has become aware of an arrangement in the Sudbury radio market that may contravene CRTC policy and regulation.
2. In an article in the June 7, 2002 edition of Northern Life, it was reported that Newcap laid off its Sudbury sales team and contracted advertising sales for Z-103 (CHNO-FM) to Rogers. According to Newcap's President, "It's basically that simple, they're going to do all our sales for us and all of the sales-related functions". The layoffs reported included news positions as well sales positions.
3. In another article of Northern Life, dated July 10 2002, Rogers general manager Hamm stated "the sales situation with Z-103 was simply a corporate decision between Newcap and Rogers".
4. FRIENDS believes that the present business arrangement between Rogers and Newcap in the Sudbury radio market is a de facto Local Management Agreement that has not been approved by the Commission. In its research, FRIENDS was unable to find any evidence of an approved LMA between the two companies. A review of the public files on the stations in question did not reveal any approved condition of licence. CRTC staff were also unaware of any such arrangement being approved.
5. In our view, this practice is therefore inconsistent with the Commission's Public Notice CRTC 1999-176 - Local Management Agreements. In this Public Notice the Commission established a new policy "that any radio broadcaster wishing to enter into an LMA with another radio licensee will be required to seek Commission approval to amend its radio licence by adding a condition of licence to that effect". The Public Notice goes on to state that any such application would be evaluated in the context of a public process.
6. FRIENDS supports the Commission's view that LMAs are appropriate tools for radio broadcasters. However, as the Commission noted, LMAs may have a detrimental effect in a given market. The Commission indicated its concern "that the increased market power of the LMA parties over other radio licensees in that market or potential new entrants could have a negative impact upon the ability of those licensees to meet their broadcasting obligations."
7. We recommend that the Commission require Newcap and Rogers to cease their business agreement until such time as they satisfy the Commission that their corporate behaviour conforms with PN CRTC 1999-176.
June 7, 2004 - CRTC Transcript of Proceedings [see paragraphs 1288-1438]
June 8, 2004 - CRTC Transcript of Proceedings [see paragraphs 1439-2223]
May 11, 2004 - Submission to CRTC re Sudbury LSA between Newcap Inc. and Rogers Broadcasting Ltd. [Applications 2003-1691-0, 2003-1061-5, 2003-1062-3 & 2003-1064-9]
FRIENDS invites CRTC to investigate a dramatic reduction in local news, and an advertising monopoly, resulting from the June 2001 implementation of a local sales agreement in the Sudbury market.
July 24, 2003 - CRTC Letter