Groupe CHCR sells ethnic station CKIN-FM 106.3 to Neeti P. Ray for $500,000

There was no announcement of the transaction, so the CRTC application for a change in ownership is the first we hear of the sale of CKIN-FM 106.3 by Marie Griffiths to Mississauga-based businessman Neeti P. Ray, owner of Mississauga’s CINA 1650 AM and Windsor’s CINA-FM 102.3.

According to the application, the purchase price is $500,000. Add in an $18,000 consulting contract ($1,500 per month) and $22,500 over five years for the assumed lease for the transmitter, and the total cost for CRTC purposes is $540,500.

Griffiths and CHCR will keep ownership of CKIN’s sister station CKDG-FM (Mike FM 105.1) and use the proceeds of the sale to help the financial situation of CKDG.

The sale doesn’t include the offices of CKIN, which are shared with CKDG. “The purchaser has an option to co-occupy Groupe CHCR Inc.’s existing premises for a period of up to one year to permit an orderly transition of ownership and operations for CKIN FM,” the application reads.

Ray says the transfer of ownership won’t result in a loss of local programming:

Centralized management will not detract from the essentially local nature of CKIN’s ethnic radio station. The station will continue to be operated from offices located in Montre?al and day-to-day responsibility for programming on the station will remain in Montre?al. The principal synergies relate to the centralization of management and ownership, not operations.

For CHCR, the transaction represents a much-needed cash infusion. The company is privately held, so this is a rare glimpse into its finances (emphasis mine):

At the same time, approval of the current application will enable Groupe CHCR Inc. to refocus its resources to maintain and build on the strength of its original FM radio station, CKDG-FM. Groupe CHCR Inc. has developed a particular expertise in creating multicultural programming with a mainstream appeal (the Radio Culture Fusion format) and in serving Montre?al’s Greek-language audiences.

The sale of CKIN-FM is taking place at a critical time for Groupe CHCR Inc. Despite years of effort and investment, it has become apparent that the company requires an injection of capital to reach its potential in the current financial climate. The programming, operating and capital requirements of both stations have proved to be quite challenging for Groupe CHCR Inc. to meet on its own.

It has become apparent that building on CKIN-FM’s success will require additional investment and a focused management effort to improve the station’s visibility and realize its potential. Regrettably, this investment is beyond Groupe CHCR Inc.’s means at this time. Without this investment, there is a real likelihood that the station will continue to be a strain on Group CHCR Inc. as a whole.

From the perspective of Groupe CHCR Inc., the proposed transaction will enable the company to revitalize CKDG-FM, its flagship station; to retire most of its third-party debt, which has accumulated with the launch of the two stations; and to focus its management effort on a single radio station, the Radio Fusion Format, and the linguistic and cultural groups served by that station.

 

CKIN-FM was first licensed in 2007 and launched in 2010. Like CKDG, it offers ethnic programming in several languages, and uses non-ethnic programming during peak hours to subsidize that. While CKDG’s rush-hour programs are in English, CKIN’s are in French. CKIN offers programming in Arabic, Creole, French, Hindi, Mandarin, Punjabi, Spanish and Urdu. Ray says he will continue serving those groups, which makes sense because South Asian is Ray’s specialty.

The contract comes with non-compete clauses for both sides. Ray agrees not to broadcast any Greek-language programming on CKIN, while Griffiths agrees not to broadcast any South Asian programming (Hindi, Punjabi, Urdu, Tamil, Bengali, Gujarati) for five years after the sale. This clause does specify that it doesn’t apply if the other station ceases programming in that language.

Ray has proposed a standard tangible benefits package of 6% of the cost of the transaction ($32,430), distributed to Canadian content funds, the Community Radio Fund of Canada and other approved initiatives.

Though he only owns two stations, Ray has applied unsuccessfully to start several others, including in Montreal. In fact, he competed with Griffiths for the 106.3 frequency in 2007. In 2011, the CRTC denied an application by Ray to start a new ethnic radio station in Montreal (250W at 600 AM) mainly because of the negative impact it would have on the then year-old CKIN-FM. And he complained when the commission went through with applications in 2013 for two new ethnic stations in Montreal, saying he missed the notice that the commission was accepting applications.

He has an application pending for an AM station in Brampton, Ont. He also applied for a station in Calgary in 2011, but missed the deadline.

The CRTC will hold a hearing on this proposed purchase (and others, including Radio Classique) on July 22 in Gatineau. The parties are not expected to attend. People wanting to comment on the application can do so here until June 19 at 8pm ET. Note that all information submitted becomes part of the public record.

12 thoughts on “Groupe CHCR sells ethnic station CKIN-FM 106.3 to Neeti P. Ray for $500,000

  1. Dilbert

    The churn in community stations seems to be about par for the course. There are many who want to run these things, but most seem to realize after a while that they absorb lots of time and resources, and return very little. The CHCR group realized this quite a while ago, and moved their stations towards a much more mainstream commercial operation at key times of the day (morning and drive) while retaining their ethnic nature. They appear to have hit on at least a somewhat more workable formula, and both of their FM stations are apparently doing okay. Paying the bills and then a little is something almost unique in the field, it seems.

    However, they figured out they cannot do it with two stations at the same time. Selling one and developing the other is perhaps the better way to get things done.

    The real question will be if the CRTC will allow the sale and the “non-overlap” agreement.

    Reply
    1. Fagstein Post author

      The real question will be if the CRTC will allow the sale and the “non-overlap” agreement.

      Unless the commission has some issue with Ray, there isn’t much of a reason to deny the sale. Non-compete clauses are pretty standard and this one hardly goes against the public interest. And this deal would increase diversity of voices in Montreal by bringing in a new owner.

      Reply
      1. Dilbert

        Considering that Ray has had more than a few negative results with the CRTC (in part due to his own tardiness) there is always the potential for some friction.

        “this deal would increase diversity of voices in Montreal by bringing in a new owner.”

        If the new owner is to be believed, the change of ownership won’t change the on air product at all. There would be no change or increase in the diversity of voices. In fact, with a non-compete clause, it could be said that such an agreement would materially limit what would appear on the stations. As an example, the greek community could not as a whole try to move from one to the other, as there is a non-compete which would block them.

        Considering (a) the number of applicants in Montreal for ethnic stations, (b) the shortage of viable frequencies on FM in Montreal, and (c) the quest for true diversification, the CRTC could always choose another path or push for “more” from the deal.

        Reply
        1. Fagstein Post author

          If the new owner is to be believed, the change of ownership won’t change the on air product at all. There would be no change or increase in the diversity of voices.

          The CRTC’s definition of voices refers to ownership, not on-air staff.

          As an example, the greek community could not as a whole try to move from one to the other, as there is a non-compete which would block them.

          They could move to CFMB or another ethnic station in Montreal, or they could just wait a few years. Under the same owner, I don’t see why Greek programming would be on both stations.

          the CRTC could always choose another path or push for “more” from the deal.

          Like what? It could set conditions, though for major changes the commission has lately preferred to simply deny the application and ask people to re-apply.

          Reply
          1. Dilbert

            “The CRTC’s definition of voices refers to ownership, not on-air staff.”

            Yes, and having someone (or group) that already runs ethnic / community stations come to own more community stations doesn’t add voices, any more than selling to Bell or Quebecor would “add” voices. With the on air material set to remain the same, the true benefits for the community so far appear to be nil – but the CRTC gets to extract their 6% pound of flesh, I guess.

            “They could move to CFMB or another ethnic station in Montreal, or they could just wait a few years.”

            The miracle of free speech is that you should not be required to wait a few years to use it. The Greek community loses it’s rights to choose by a commercial agreement between other parties. That doesn’t seem particularly good for encouraging free speech or encouraging the individual stations to do their best. Rather, it sounds more like a duopoly that won’t be beneficial to anyone except perhaps the station owners.

            “Like what? It could set conditions, though for major changes the commission has lately preferred to simply deny the application and ask people to re-apply.”

            The CRTC could in fact deny the purchase, or require the purchase to go through without the restrictive commercial aspects. They could deny the purchase and suggest that one or more of the other groups looking to operate a community station might be better suited. Again, if the CRTC gets their 6% pound of flesh and continue to justify their existence for a while longer, perhaps they just will let it slide through, no matter how good or bad it is for the communities served by these two stations.

            Reply
            1. Fagstein Post author

              having someone (or group) that already runs ethnic / community stations come to own more community stations doesn’t add voices, any more than selling to Bell or Quebecor would “add” voices.

              Neeti P. Ray does not own any radio stations in Montreal. Bell owns six. Also, CKIN-FM is not a community station.

              With the on air material set to remain the same, the true benefits for the community so far appear to be nil

              In this particular case, the fact that a money-losing station remains on the air seems to be the main benefit of this transaction.

              The miracle of free speech is that you should not be required to wait a few years to use it.

              Free speech isn’t a miracle. Nor does the freedom of expression guaranteed by the Charter guarantee a right to use a particular radio station, nor does it prevent you from entering into contracts that restrict said speech as part of a commercial transaction.

              Reply
              1. Dilbert

                “Free speech isn’t a miracle. Nor does the freedom of expression guaranteed by the Charter guarantee a right to use a particular radio station, nor does it prevent you from entering into contracts that restrict said speech as part of a commercial transaction.”

                Sadly, what you describe is not free speech, it’s commercially viable speech. The public airwaves, especially when used for “community” broadcasting should not have a door shut to a group based on their greed, religion, or such… it’s pretty much black letter law. Saying “we won’t take Greek people on our station to support the sale price of this station” is to put commericial benefit ahead of meeting the needs of the communities they have agreed to serve.

                Running a community station and then denying some communities to pump up the sale price isn’t to the public’s benefit.

              2. Fagstein Post author

                The public airwaves, especially when used for “community” broadcasting

                CKIN-FM is a commercial ethnic station, not a community station.

                it’s pretty much black letter law

                In that case, feel free to file an intervention, citing relevant case law. Or ask the federal court to intervene.

                Saying “we won’t take Greek people on our station to support the sale price of this station”

                No one is saying this.

                Running a community station and then denying some communities to pump up the sale price isn’t to the public’s benefit.

                How is it “denying” a community when your remaining station devotes a large part of its schedule to that community?

              3. Dilbert

                “No one is saying this.”

                it’s exactly what they are saying. The agreement is clear, the sale price includes staying away from each others markets, regardless of how that affects the people in those markets.

                Let me put it another way: Replace “Greek” with “Gay & Lesbian” and let me know how long before a human rights case could be built.

              4. Fagstein Post author

                The agreement is clear, the sale price includes staying away from each others markets, regardless of how that affects the people in those markets.

                Nothing in the agreement suggests the sale price would be different if that clause was removed. And it comes with conditions, so it’s not “regardless of how that affects the people”.

                But as I said, if you think this is the biggest scandal in the history of the universe, file a comment with the CRTC and say so. This is why they open these things up to public comment.

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