A proposed mutual sale of radio stations between Cogeco Media and Arsenal Media will have to get over a hurdle to get approved by the CRTC, and it depends a lot on how many people live in a small region between Saguenay and Alma.
First announced in May, the agreement sees Arsenal sell CILM-FM (O 98.3) in Saguenay to Cogeco, while Arsenal in turn buys all of Cogeco’s radio stations in the Abitibi region, namely Capitale Rock (CJGO-FM 102.1 La Sarre, CJGO-FM-1 95.7 Rouyn-Noranda and CHGO-FM 95.7 Val-d’Or) and WOW FM (CHOA-FM 95.7 Rouyn-Noranda, CHOA-FM-1 103.5 Amos and CHOA-FM-2 103.9 La Sarre). Arsenal will keep its other Saguenay station, CKGS-FM Hit Country 105.5.
On Tuesday, the CRTC published the applications related to the transfers of ownerships of these stations, and we have more details on the sales:
- Arsenal pays $1.5 million to acquire CHOA-FM , CJGO-FM and CHGO-FM in Abitibi
- Cogeco pays $600,000 to acquire CILM-FM in Saguenay
- The Wow station will be rebranded Plaisir and Capitale Rock rebranded O to join Arsenal’s branded networks (Cogeco keeps the Wow brand)
- Cogeco will rebrand the Saguenay station to Rythme FM and have it join that network as an owned-and-operated station (it used to be an affiliate), putting it back in the largest market that network was missing in Quebec
- The transactions are separable — if the CRTC approves one but not the other, that transaction will still go through
- RNC Media, which provided local news services for the Abitibi stations as part of the agreement when it sold them to Cogeco in 2018, will continue to provide them for Arsenal
- Cogeco will add CILM-FM to its Cogeco Nouvelles network and add another journalist in the Saguenay region
- Both organizations are proposing standard tangible benefits, with 3% of the value going to Fonds Radiostar, 1.5% to Musicaction, 1% to discretionary initiatives and 0.5% to the Community Radio Fund of Canada
For Arsenal, the deal should not pose much of an issue since it doesn’t have any assets in the Abitibi region.
But in Saguenay, it’s a different story. Cogeco owns one radio station in Saguenay, CKYK-FM (Kyk 95,7), but it also owns CFGT-FM (Planète 104,5) in Alma, 45 kilometres away near Lac-Saint-Jean.
According to the CRTC’s common ownership policy, one owner normally can’t have more than two stations in the same language on the same band in the same market. Cogeco argues that according to CRTC policy CILM-FM and CFGT-FM are not in the same market (Kyk has a more powerful transmitter and a retransmitter in Alma, so covers both).
The CRTC actually has a policy for cases like this, and it depends on how much overlap there is between stations, measured both by their markets and their signals.
Under CRTC policy, if there’s more than a 15% overlap, then they are considered part of the same market, and if there’s less than a 5% overlap they aren’t. In between, it depends on where advertisers are from and what news the station broadcasts.
Cogeco’s coverage maps show that CILM-FM Chicoutimi does not cover Alma and CFGT-FM Alma does not cover Chicoutimi, bolstering its claim that they should not be considered to overlap.
The two signals do overlap between the two cities, but it’s in a mostly rural area of St-Nazaire and St-Ambroise, with a population under 8,000.
In its application, Cogeco argues the overlap is less than 5% of the population of the primary contour of CILM-FM and about 13.6% of the population of the primary contour of CFGT-FM, and that less than 1% of ad sales from the Alma station come from this area.
The commission counters that Cogeco should have based the percentage on the size of the market (Alma) and not the size of the station’s signal. Using that calculation, the overlap is within that 5-15% grey zone. Cogeco notes in a response that less than 1% of CILM-FM’s ad sales are from Alma.
Setting aside the CRTC’s specific rules, common sense can make both cases in such an argument. On one hand, CFGT-FM clearly markets itself as an Alma station, while CILM-FM clearly targets Saguenay. On the other hand, the overlap in signals is not insignificant, CKYK-FM targets both markets, and plenty of people outside a station’s primary signal contour will still listen to it, especially in an area like Saguenay where there aren’t a plethora of neighbouring markets.
Viability at stake
There’s also the matter of the station’s future. CILM-FM is not a very profitable station (except just barely last year thanks to government pandemic subsidies), and never really has been. In fact, it was the one station owned by Corus in 2010 that wasn’t sold to Cogeco because Cogeco didn’t want it at the time. Corus was considering shutting the station down before a local group of investors stepped in. They eventually resold the station to Arsenal.
Arsenal makes it clear in the application that it would be “difficult” for CILM-FM to reach profitability under its control. The two say that Cogeco, with its bigger pockets and its synergies with other stations in the region, would have a better chance at making the station work.
Similar arguments were not made about the Abitibi stations being sold to Arsenal.
The CRTC will hold a pro forma hearing Dec. 6 to consider the applications. No presentations are planned, unless the commission is convinced of the need for them by the interventions submitted. The commission is accepting comments from the public until Nov. 4, which can be submitted here. Note that all information submitted, including contact information, becomes part of the public record.