Press release details


For immediate release
COGECO unveils its radio strategy –
Local information, support for the radio industry and job creation
Montréal, August 3, 2010 – In connection with the acquisition of the Cor us Entertainment Inc. radio
stations in Québec by COGECO Inc. (TSX : CGO), COGECO unveiled a solid and well thought-out
strategy that offers the strongest development prospects for the Québec French-language radio
industry. This announcement comes after the Canadian Radio-television and Telecommunications
Commission (CRTC) has announced it will hold public hearings in Montréal on September 28. The
CRTC at the same time made public the application filed by COGECO requesting approval for the
proposed transaction.
“COGECO has presented a plan that focuses on local content to ensure the recovery and
sustainability of regional stations that face serious financial difficulties, and on restoring competitive
balance in the French-language commercial ra dio industry in Québec,” stated Cogeco Diffusion Inc.
Vice President Richard Lachance.
The strategy proposed by COGECO includes:
The creation of a major news agency to be fed and accessed not only by all of the group’s
own radio stations, but also by independent stations and community radio stations
A request for an exception to the common ownership policy in t he Montréal French-lan guage
radio market to allow it to own three FM stations and one AM station in the French languag e
instead of two FM stations and two AM stations, and thus support the money losing r egional
stations that are being acquired
The sale of two FM stations in Québec City and the conversion of one FM station in
Sherbrooke into a retransmitter of another station in order to comply with the common
ownership policy
The allocation of a contribution of 9% of the total transaction value, namely $ 7.2 million, to
various organizations and initiatives to support the Canadian broadcasting system if the
transaction is approved in its entirety.
A news agency for relevant local information
The news agency that COGECO proposes to set up will play a key role in enriching local information
and will provide a complement to the other information sources available in Québec. All of the
stations of the COGECO group as well as independent stations in the regions and community
stations will be asked to contribute to the content available through the agency. In return, they will be
able to select the most relevant news for their respective listening audiences and prod uce their own
news bulletins locally.
Pooling resources through the news agency, which will be coordinated by FM 98.5, will create a full
information source available 24/7 – because news happens nights and wee kends, too.
Furthermore, sharing information resources will allow regional stations CHLN-FM Trois-Rivières,
CHLT-FM Sherbrooke and CJRC-FM Gatineau, which will remain predominantly spoken-word radio
services but will now primarily target men between the ages of 25 and 54, to devote their resources
to producing local shows. Most significantly, this means the return of local public affairs
programming in the morning and at noon, as well as locally produced news bulletins.
Finally, a night-time show and a weekend morning public affairs show will be produced and offered
to all stations of the group. Community stations and independent stations in the regions will also
have the benefit of these new resources and information content.
“We want to put information radio in Québec back on top,” commented Mr. Lachance. “Since
COGECO is a business that is close to its people, it is a natural fit for us to make local information
and local interest content the heart of our strategy. The decision to include independent stations in
the regions and community stations in the agency aligns with that, and we think this is great news for
radio in Québec.”
A solid base in Montréal is vital for supporting regional radio
To ensure success for its initiative, COGECO is requesting an exception under the CRTC’s common
ownership policy, which limits to two the number of same-langu age FM stations one person can o wn
in a single market. The proposed exception affects only FM 98.5 in Montréal’s French-language
radio market and would allow COGECO to operate three French-language FM radio stations, each
in its own niche. It would bring the number of commercial stations COGECO owns in Montréal to
five, although the common ownership policy would allow in principle up to eight – four French-
language stations and four English-language stations. There are currently 13 private commercial
radio stations and some 30 radio stations of all types in Montréal.
“The distinctiveness of the bilingual Montréal market and the importance of keeping talk radio like
FM 98.5 strong in order to ensure the sustainability of French-language spoken-word radio in
Québec justify our request for an exception,” continued Cogeco Diffusion’s Vice President. “Without
that exception, it will be next to impossible for COGECO to indefinitely support regional spoken-word
radio stations that have been running heavy deficits for many years.”
The limited exception sought by COGECO would breathe new life into stations in the regions by
providing them links to strong programming sources – to FM 98.5 primarily, for information and
public affairs, and to CKAC-AM for sports and CKOI-FM for its expertise and music content. This
would allow local stations in the regions to concentrate their resources on producing relevant, qualit y
local programming, which is their core mission.
Tough decisions that cannot be avoided
The application requests an exception to the CRTC’s common ownership policy specifically for the
Montréal French-language radio mark et because of the unique characteristics of that market, where
only one AM radio station – CKAC – r emains, which is part of th e transaction, and where a very hi gh
number of francophone listeners tune in to English-language music stations. That being said,
COGECO had to make difficult choices and develop other proposals for the Québec City and
Sherbrooke markets to comply with the CRTC's common ownership policy.
In the Québec City market, COGECO has undertaken to sell two stations – Rythme FM Québec
(CJEC-FM) and CFEL-FM. It made this choice based on the complementarity of the two other
stations in its current and future portfolios, FM 93 (CJMF-FM) and CFOM-FM.
In the Sherbrooke market, COGECO proposes to convert CKOY-FM into a retransmitter for CKAC,
thereby ceasing to sell advertising. The solution has the threefold advantage of ensuring that
Sherbrooke receives a full radio service focusing on sports and sports information, which is a
complementary service to the current market, of not overburdening the local advertising market
where most stations, including CKOY-FM, have been unable to achieve profitability, and of
complying with the CRTC’s common ownership policy.
“We are aiming to support jobs in the Québec French-language radio industry,” maintains Richard
Lachance. “If the CRTC approves our overall plan, for the first time in many years, there will be a net
creation of jobs in the private French-language radio industry in Québec, particularly with the
creation of the news agency.
An outstanding contribution to the broadcasting system
COGECO is proposing an exceptional contribution of 9% of the total transaction valu e, an amount of
$7.2 million, to various organizations and initiatives to support the radio system, in particular for
Musicaction, Fonds Radiostar, the Community Radio Fund of Canada, and for many others, if the
transaction is approved in its entirety.
A win/win strategy for all stakeholders
“Our plan is without a doubt the best opportunity to increase diversity of voices across Québec that
the broadcasting system has seen in many years. We are confident that the CRTC will recognize its
value and the immediate and long range benefits it will have for all elements of Québec society,”
concluded Mr. Lachance.
The stations involved in the transaction are: CFQR-FM 92.5, CHMP-FM 98.5, CKOI-FM 96.9 and
CKAC-AM 730 in Montréal; CFOM-FM 102.9 and CFEL-FM 102.1 in Québec City; CJRC-FM 104.7
in Gatineau; CHLT-FM 107.7 and CKOY-FM 104.5 in Sherbrooke; CHLN-FM 106.9 in Trois-
Rivières; and CIME-FM 103.9 in St-Jérôme.
The CRTC hearing will take place on September 28, 2010, and the decision should be made public
some time in November 2010. The transaction should be closed before the end of calendar year
The full application filed by COGECO before the CRTC for the acquisition of the Corus, radio
stations in Québec is available in the Press Room of COGECO’s web site at:
COGECO is a diversified communications company. Through its Cogeco Cable subsidiary,
COGECO provides its residential customers with Audio, Analogue and Digital Television, as well as
HSI and Telephony services using its two-way broadband cable networks. Cogeco Cable also
provides, to its commercial customers, data networ king, e-business applications, video conferencing,
hosting services, Ethernet, private line, VoIP, HSI access, dark fibre, data storage, data security and
co-location services and other advanced communication solutions. Through its Cogeco Diffusion
subsidiary, COGECO owns and operates the RYTHME FM radio stations in Montréal, Québec City,
Trois-Rivières and Sherbrooke, as well as the FM 93 radio station in Québec City. COGECO’s
subordinate voting shares are listed on the Toronto Stock Exchange (TSX: CGO). The subordinate
voting shares of Cogeco Cable are also listed on the Toronto Stock Exchange (TSX: CCA).
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Information: Catherine Pleau
Advisor, Corporate Communications