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Here's an episode that's been in the works for a few years. In 2021, Paul Larsen was in the process of buying 103.9 The Lake in Kelowna. And I thought to myself, why on earth would anyone want to buy a radio station in the middle of a pandemic? Three years later, Paul is in the process of selling the station, and right now the two of us are about to embark on a really awesome radio conversation. Have you ever thought to yourself, "I'd love to own a radio station"? I know there was a point where I did. Paul got into the business of Canadian radio ownership at one of the very best times: When licenses were aplenty. He's been kind enough to offer up 80 some odd minutes of his career, career changes, ownership, and a radio playbook for the future. Paul Larsen joins me from Kelowna BC. Been wanting to have you on for so for so long and a couple of years now. The timing is always interesting and never perfect. But right now the timing seems to be good for you to come on the show. You're- you're closing one thing and who knows what you're starting next.
Yeah, it's overdue for sure. I mean, I've wanted to come on for a long time, too, and- and just connect with you. And part of it for me was always been in between projects. And even now, like, like coming on today, I was hoping that, you know, we'd have the CRTC decision for the sale of the radio station in Kelowna. But it's still pending. They they still haven't made a decision, even though Pattison and myself announced that back on the 31st of August, and we would have anticipated that deal being approved, or at least the decision, whichever way it's going to fall by now. And here we are on the fifth of December still waiting, so.
Well I don't want to start with the recent stuff. I want to go back to CKNL.
Yeah well, I started like many people of our generation, I always thought I was kind of unique. I started as a 16 year old in high school. And then I always read all these 50 plus guys that got into radio, and they all started at 16 years old in high school, at their local station. I mean, there's- there's a bunch of us that got started that way. And, you know, I was in Fort St. John growing up, which is in northern BC, 12 hours north of Vancouver. And we had one local AM radio station there. And like any small town radio station, it wasn't very good. But the cool thing was LG73 would skip over the atmosphere. So I had one of those yellow Sony Walkmans with an AM radio built into it. And I could ride around on my bike as a 14 or 15 year old kid listening to the LG morning zoo and Howie the Hitman and, and all these cool, you know, radio personalities, and that really got me, I don't know, pumped up about doing that as a career. And when I started high school, so at North P senior secondary school, when I went into grade 10, they had a radio club. And I thought, hey, cool, man, this is like, this is something I could do. And there was two of us in the radio club. And part of the deal with the radio club was the radio station gave you an hour on Sunday to do a show. So I thought, okay, there's two of us, there's four Sundays. Twice a month I can be on the radio and do a little hour and kind of, you know, see if I liked this or not. And I did my first show. And my dad owned a restaurant. And the Monday morning his sales rep came by and said, Hey, this kid on the radio has the same last name as you, do know who he is? And, you know, they connected the dots. And, you know, long story short, they offered me a job doing Saturday and Sunday nights permanently, you know, right out of grade 10. So, that's how I got kind of started at CKNL in Fort St. John.
You mean your dad didn't buy the advertising for the station?
No. So my- my dad was an advertiser, but he did not buy advertising on my particular show, which was kind of funny. But you know, you can imagine like, in a small city of 15,000 people with one station, and you're the DJ on Friday night and Saturday night, and everybody in town kind of listens to that. I was like this kind of local celebrity in a sense, or at least all my high school friends certainly listened to the show. And you know, I'd be on six till midnight Friday night, and then go to the bush party at midnight. And everybody had been listening to the tunes that were spinning. And I don't know, it was- it was such a cool way to kind of get a start in this business.
Do we need to talk about what a bush party is and, and then and how Nickelback conquered the bush party eventually?
That's a whole nother story. I don't know if kids have bush parties anymore. I mean, you know, those were such cool times. When I- when I was in high school. As a 16 year old, the parents didn't really worry, they knew where we were, we're all safe. None of us drove out there. You know, we just got together and a big bonfire. And it was a pretty regular occurrence back in- in 1986, when I was 16 years old.
Tell me about 1986 in Fort St. John, because I think it probably had a lot to do with- the word community is going to come up a fair amount here, in the radio work that you do. I know a lot of people are like, Oh, I can't wait to leave this place behind and go to a bigger place where there will be more success, but that's not who you are. It's certainly not how your LinkedIn reads. In that you've always been very community, you understand smaller communities. Yet here's a business that is largely driven by stations that were the size of LG73.
Yeah, it's funny when- when you start in a small town and you get a taste of being an important part of the community. And in those days, you know, the radio was one of the only, you know, sort of immediate connections that a community had. And you know, you could support a cause or something major happened in the city and the town would rally around, you know, the cause. And it was all because the radio made the connection. And so that, that kind of got into my blood really early. When I started, a fellow named Ken Garrett was the general manager, and he hired me. And three weeks after I started, he died tragically in a canoe accident. And, you know, the staff had all been longtime employees, they were really close to Ken. And so as a 16 year old kid, I was tasked with reading the newscast that announced that he had died in this boating accident, because they thought I could do it without the emotional attachment that they all had. And so you know, little little things like that, that just, you know, at the time, I never really thought much about it. But an experience like that is something that- you really gain some some interesting experience. And I think things like that stuck with me. And certainly the community involvement. You know, we had a- we had a trade show, for example, you know, that filled two arenas, you bring all these businesses together, and people would come down, and you're doing live broadcasts. And I mean, you said something on the radio, and moments later, you know, people were there to pick up on what you were talking about. And I really kin of- kind of got hooked on that connection. And small market, I find just is better at that than major market for a bunch of reasons.
So I'll echo that just a little bit. Because I went back to a small market that I worked in, in fact, I was the only one I really worked in, and that was the Annapolis Valley. But I go there 30 years later. And I'm still as welcome, as connected, as everything that I was when I was there when I was in my early 20s. And I can't say the same thing for Montreal, which is my hometown.
Sure. And I guess maybe it's- maybe it's the size of the city or the- you know, everybody sort of knows everybody kind of- kind of feeling. I have a similar experience. I have not been back to Fort St. John for 25 years. But the Fort St. John newspaper, when I sold my my company Clear Sky Radio a few years ago, picked up that story as like a hometown kid, you know, grew a radio company and sold out. And, you know, I really had no connection to Fort St. John, like I said, for the last 25 years yet, you know, they still picked up that story because somebody who still worked at the newspaper was somebody that I worked with at the radio station, back at that time. And, you know, my family had a connection there. My dad lived there for 30 some years before he retired. And it's just something you can't recreate in a big city. And I think a lot of it just has to do with with the intimacy of a smaller city and people knowing each other.
Talk about the relationship between those smaller newspapers or those local newspapers, with the radio stations. Back then it was the newspaper versus the radio station. Often you could find some things to work together with. And as the years have gone on, the 30 plus years, and here we are in this new digital age, the newspapers have not fared as well locally as the radio stations are. Radio stations, they're on the air, they're doing things, newspapers have largely gone away, including, I believe, the one in Fort St. John, that you referenced, just recently. Can you talk about media in a smaller town?
So back, you know, 30 plus years ago, in that mid 80s, when I started out, the newspaper and the radio station were monsters, they were gigantic. I'd say the newspaper was probably bigger than the radio station, you know, in terms of revenue generation, and exposure and that type of thing. You know, over the years, radio, being an electronic medium probably had a longer shelf life than newspaper. I doubt there's a newspaper CEO that would say, hey, we didn't screw up and botch the internet when when they had the opportunity to sort of own that space. And you know, we're so busy protecting their legacy business that they let other- others come around, and classified sites, and the Googles of the world and the Facebook's of the world and that type of thing. I mean, newspaper had the opportunity to be the dominant internet player, if they had just picked up that ball at the time. And you know, I know the newspaper in Fort St. John billed somewhere north of 10 or 15 million dollars a year in in revenue and they wanted to protect that business, you know? And at the time the radio station billed 2 or 3 million dollars a year, in a small town of 15,000 people, and you know, those days are long gone. You know, you did mention the newspaper, the Alaska Highway News, sadly just was shut down you know, a week or two ago. I think the end of November. And you know, it's sort of a trend that we've seen in newspaper now we're starting to see AM radio stations being tossed back and shut down and you know, I scratch my head and wonder is this the beginning of, you know, a bit of a downhill road for a radio? AM radio I'm sure has a shelf life and this might be the beginning of the end of AM radio in the next five or 10 years. You know a lot of countries in Europe have already shut off the AM band, and I think Canada is probably on that trajectory now, which is- you know, as a longtime radio guy is sad, but also I'm not one to kind of lament the past and you know, I think radio still has a future, it's just- we're slow at reinventing ourselves and keeping up with- with changing and technology.
You have this great affinity with- with AM radio, you spent most of your 90's at a place that I had forgotten about until just now. And that's NorNet. And just remember, like the people, some of the talent- though, I was working at The Bear in Edmonton. So imagine, you know, the NorNet station sort of surrounded, you know, around the city and across the prairie at that point. And, you know, some talent would eventually come and work for us as well, or in some cases, you know, head back, but AM at that time did reinvent itself in a different way. So tell me about the NorNet experience and what was going on, because it was clear in the 90s, that AM was going to do the talk and FM was going to play the records.
Yeah, so NorNet- What an interesting company. So the family that owned CKNL in Fort St. John was the family that owned NorNet. And so I started with that family, you know, right out of high school, I transferred to their sister station in Nanaimo. Did a little detour in Vancouver for a few years until somebody convinced me I wasn't going to be a daytime on air announcer to make a living in Vancouver, and convinced me I should get into management. So I moved from Vancouver to Westlock, Alberta. And Westlock was the headquarters of NorNet. And I became the operations manager or the program director for these 14 small market am radio stations scattered all over rural Alberta. We had Westlock, Athabasca, Slave Lake, High Prairie, and they were all networked together. The cool thing was we had a real innovative ownership. So in 1992, when I started at NorNet, we put in a satellite uplink in the backyard in Westlock, and linked all these ham radio stations together via satellite, our own uplink downlink system, and really took off on a progressive trajectory to kind of run AM radio stations the way that we thought they needed to be run to be successful for the long term. And, you know, the other benefit of NorNet was that these were small town stations. I mean, Athabasca was 2800 people, had its own radio station. Slave Lake, you know, maybe 5 or 6 thousand people. And the amount of talent and quality people that came through NorNet was astounding. So I always tell the story that Alberta, up until a few years ago, had five independent radio owners. So there's Terry Babbie in Peace River. There was Troy Stevens in Red Deer, Mark Tamagi in Leduc. Brian Hepp in Olds, Alberta, and myself. I had Lethbridge and Medicine Hat. Well, four of the five of us came through NorNet. Brian was a manager, Troy was an on air guy, Mark was the sales manager. I was the ops manager. So we all got this real entrepreneurial spirit ingrained in us at NorNet. Because the owner said, you guys run it like it's yours, and be innovative and creative. And- and we did everything. I mean, we did the technical, we did the on air, we did the programming, you know, we were responsible for everything. And, you know, that was like a university education from me, I- you know, I went right out of high school into radio, but I got a heck of an education at NorNet. But, you know, it's funny, you mentioned The Bear. So I remember when- when The Bear launched, and, you know, I'm sitting in Westlock. And, you know, here comes Scruff Connors on The Bear. And, you know, it was hard not to be a little bit envious and jealous and go, man, that is really cool, despite, you know, what we're doing in this little NorNet network in rural Alberta. But so it's funny, it's- it's all kind of connected, it's the same business, but you do it differently, based on the circumstances that you're in, right?
Yeah, you look back at 1992, The Bear needed to cut through about 13 other radio stations in Edmonton. Inversely, you had to find a way to bind those radio stations together with satellite technology, which was the way it was done. And how expensive was that back then? I think of satellite, I thought of a few things. But I also think of- Tom Joyner could have been doing his show satellite between Dallas and Chicago, but chose to get on an airplane every day. But how expensive was it to bind those stations together? And what were some of the technological challenges?
In those days, it was expensive. And we're fortunate that we had ownership that was willing to invest in making this a viable company and being innovative and doing things that nobody else was doing at the time. So we were, believe it or not, the first radio company to do automation with music on hard drive. And it was this DOS based system called DCS. And they had invented it only to playback commercials. And our head of engineering said, Well, if it can play commercials it can play music, but we need bigger hard drives. And we spent on a maybe 100 gigabyte hard drive which was you know, for rack units high in the rack, maybe 10 or $12,000 just just for the hard drives. I remember the satellite fees, because you paid a monthly fee to the satellite company, you know, over and above the capital expenditure, and it was north of five or six grand a month just- just for the satellite connection. And then our engineer invented this thing called ACS which stood for automatic commercial sending and it was on a 2400 baud dial up modem and once an hour this this modem would dial in it would grab a bunch of you know, WAV files off of a hard drive and move them over the dial up internet to a station in northern Alberta. So it was it was pretty innovative at the time because this is this is the stuff that we do now without thinking twice? You know, we're man, everything's delivered over the Internet nowadays. And it was it was pretty cool to, to learn all that stuff and be part of building something like that, you know, despite the fact that nobody really paid attention because you know you're in Westlock, Alberta, you're not top of mind in the radio business, you know, just based on the market size.
There's somebody out there saying, why would he do that with .wav files? Why doesn't he have .mp3? It wasn't invented yet.
It wasn't invented yet. I forget there was a compression system called I think it was called the APTX, A P T X. And it was like a precursor to mp3 and way better quality, but just never got the traction that mp3 got when it came around. But I think you're right. I don't think mp3 was invented yet at that time.
When did your NorNet days end? Or why did they end?
So I did a five or six year with a six year stint at NorNet. So it started in Westlock. Then we moved the headquarters to Wetaskiwin because it was a slightly bigger market.
Also cars cost less.
Cars cost less in Wetaskiwin. That's right. They were advertisers too. They did a little bit of time in Wetaskiwin, and then the owners of NorNet bought the Q stations from CHUM. So we had Drumheller, Stettler and Brooks and Q 91 was a 50 kilowatt AM with a transmitter in Strathmore just outside of Calgary. So it had a big booming signal. And they moved the network to Drumheller, and- I don't know, Drumheller was the first small town that I just couldn't live in. I just felt like I was closed in in this valley. I remember there was a snowstorm once and the RCMP actually blocked every exit out of Drumheller so you could not get out of town. And I just thought I got to do something different and, and kind of started looking at that point. And then our owners realize that Drumheller had that effect on most of the staff and, and opened a a nordnet office in Edmonton. So we actually opened up Broadcast Center in, in Edmonton, not far from from where K97 and CFCW where at the time, not- not in their building, but- but close by. And so I moved from Drumheller to Edmonton, and did a year there, and one day Terry Strain who was the president of Shaw radio at the time phoned me, and Shaw was trying to buy WIC at the time, and Terry wanted to bring program directors into Shaw, in anticipation of the WIC transaction and having good shot people ready to move into management roles. And so he recruited me to go to Calgary and I just had been in that small market run for 10 years and thought you know, I want to take a shot at major market and here's my chance to get in with- with Country 105 in Calgary a pretty successful radio station and maybe learn some different things and so it was really just a desire to move out of small market and get some major market experience and see if that was a world that I could- could work in.
And from Country 105 you went to the Breeze, which now a Stingray station, was a Newcap station at the time, and had- I'm just gonna say, that's when conditional licenses were being passed out like we retrieved them out of a cereal box. You get this license but it had- it came with a category three, you had to play X amount of- and it was a jazz station, the Breeze, and there are a lot of rules that came with that. And so here you go, you've got a program director's job and you've got all the rules that go along with it. So what were the challenges for the station?
It was actually a pretty cool station, and I only ended up there by circumstance. So in- when- when Shaw bought Wick, at the end of the day when the merger happened all the Wick people got the jobs, and a bunch of Shaw people got let go and and I became a very overpaid assistant PD music director on a spreadsheet in Toronto and got a Corus package in 2002, and it was right when- when Newcap- I think that station, if I recall, was like a Telemedia station, and there was that whole schmozzle of ownership changes from NorNet to OKS to Telemedia to Standard to Astral. So the Breeze was was part of that mix and Newcap ended up with it. And you're right, it was a category three specialty license, we had to play 80% Smooth Jazz music, and just as much CanCon as everybody else. So it was like, you know, commercial station in a major market with two hands tied behind your back. Surprisingly smooth jazz was kind of a thing at that time. And it was new for Canada, I think there was one station in Hamilton, Ontario, and we were sort of the second in Calgary and we caught a really big, engaged audience right out of the gate. And we came out maybe with a three share, which for a specialty station was great, but our expenses were running low because we didn't- you know, we didn't have a four person Morning Show and all of the things to- to compete at that level with- with some of the commercial stations. So we actually made money in the first year. And then somebody at Newcap headquarters in Halifax thought hey, if you can do it that well with, you know, that sort of talent. Maybe the station could take on CHFM and let's go out and hire a big- big name Morning Show, and run this like a mainstream AC station. And from that point, you know, the ratings slid and the expenses went up and the station started losing a couple million bucks a year and it became not as much fun as it was at the outset, and I think that was a- that was just a corporate decision where, you know, they're looking at having a major market station and wanting to make it even bigger and better and compete on that level. But again, forgetting they had two hands tied behind their back with the regulations.
It's really hard to understand jazz. As we've gone through the years, they launch well, lots of hype. And then people no longer want to write down that they listen to the station in the ballots anymore. Maybe they're just uncool. Maybe nobody wants to tell anybody they listen to jazz. We do research, and if you ask anybody about their favorite radio station, the music format arrives at being some sort of cool jazz fusion station with no commercials, and no disc jockeys, and nobody listens to it. So it's- it was odd.
It was odd. There were some huge success stories in the United States. You know, like the Wave in Los Angeles. I think WNUA and Chicago, they were huge smooth jazz stations, before ppm sort of killed smooth jazz in the States. And- and I think the- you know, the thing in Canada was, you know, we- we still had, CanCon to play and there was no such thing as Canadian smooth jazz music, you know, we just had to make that up on the fly. And I think you're right, I think it's got a loyal passionate audience, it's probably smaller than what maybe diary ratings would have indicated in the first place. And then PPM came to Canada, and we followed the same trend, you know, with, with those stations disappearing, or moving to the HD band or whatnot. I love the format, because I thought the music was cool, the vibe of the station was cool. And if we had just stuck to our guns, and not tried to commercialize the crap out of it to compete with CHFM, I think we would have had a really neat niche, three show radio station that made money.
Maybe that's always been our mistake in radio, is that we spend all this time competing against one another, and never really competing against the other things out there. I know we can say that about today's media world, but- but back then, 2001-2002, maybe that's what we should have done, we should have paid more attention to everybody but ourselves.
I think we're still doing that, you know, like, assuming the CRTC approves the sale of this station in Kelowna, you know, I'm looking at the sunset of my radio career, for sure. You know, and I look at the challenges that we still have in this business. And you know, you're talking about 1992 or in 2002. And here we are in 2024. And a lot of the same issues we're still talking about today. And it's- that- that's the only thing that- that sort of bothers me exiting this business, is that we haven't really evolved where we can take our thinking and apply it and, again, quit competing with ourselves, right? It's- it's- maybe it's just human nature, that if you're in the same business or the same industry, but radio's infamously famous for it, you know, the enemy is the station across the street, and- and you know, we just we got to clobber the enemy and- and I don't know, to a large degree, that's- that's still the mentality.
Are you sure you're exiting?
I thought I was exiting in 2019, when I sold Clear Sky. And then, you know, we can get into the story of how Kelowna came around at some point. But I'm exiting as an owner for sure. This will be my my last kick at the can as a radio owner, maybe there'll be some opportunities to continue to work in the business in a consulting role or an employee role. But ownership, I'm definitely at the end of the line here. Again, assuming we get a positive approval from the CRTC. They could still say no and, and I can still have a bit of a run in ownership, too, you never know.
And how did you make that jump, by the way, from Calgary to island radio? Aside from the fact the weather's better.
So I grew up in Fort St. John, from age eight, till- so I left at age 18. But I was born and raised in Victoria, and I always wanted to go back to Vancouver Island. And the NorNet owners happened to own island radio in Nanaimo. And I got my taste of major market, you know, I did four years of overnights at CKNW in Vancouver as a kid, which, you know, major market and neat experience. But really, Calgary was my taste of major market where I got exposed to, you know, music testing and research and ratings and, you know, stations that made big revenue and that type of thing. And while it was enjoyable, I just didn't see myself thriving in that world, like, especially as major market radio started to consolidate and companies got bigger and bigger and bigger, and local decisions got less and less and less. And I remember sitting in my office at Country 105, and I walked down to talk to our general manager and begged him to let me do more, because I thought I had skills to offer and frankly, I could schedule music in an hour and a half, and I had six and a half other hours of my day to- to do nothing, and they just said no, your- your job is this, this is your box, do your music and enjoy the rest of the day. And you know Newcap was- was interesting too. I think I could have probably stayed along with- with Newcap had there been opportunities, but they just didn't have an opportunity to sort of advance beyond that- that smooth jazz station. And Hugh McKinnon, who was one of the principals of the family that owned NorNet, called me one day and they were looking for a general manager in Nanaimo. And so I've done PD Now, sort of general management seemed to be the next step. And I get to go back to Vancouver Island. And it was a challenge because the stations were really struggling financially. And- and so, you know, I flew up to Vancouver, I remember I met Hugh at- at the Keg in West Vancouver, he scratched out a deal on a napkin. We shook hands. And I flew home and told my wife that- that we're moving to Vancouver Island and- and in January of 2002, I think- or no, 2004, January 2004. I landed in Comox on WestJet in the biggest snowstorm in the history of Vancouver Island. And it's, you know, normally a 45 minute drive from Comox to Nanaimo. It took us four and a half hours to get from Comox to Nanaimo. I got to the radio station, the lights were off, everybody was going home. Nobody was on the radio, talking about this weather emergency and I was freaking out. I'm like, what the heck, man? Like we should be- where's all the staff? We gotta get on the radio, we got to tell the community what's going on. And I quickly learned that, you know, Vancouver Island sort of operates at its own pace. And, you know, when there's a snowstorm on Vancouver Island, you just shut the city down for a few days, and nobody, you know, gets too concerned about things.
And what about the culture in the radio station? So you've already, you know, the NorNet experience, you could bind together a bunch of radio stations, and here you are, now you're on a much smaller regional area. Clearly, they move at their own speed there, a lot of people want to move there so they can move at that very same slow speed. Things are different. It's not Alberta. So what were some of the challenges that you had to do when- you know, as President?
My first challenge was to dial my own enthusiasm down a couple of notches, because that was going to be an uphill battle of pushing that staff. I inherited a real heritage staff, like people that get to Vancouver Island, they just want to live there for the rest of their lives. So I had a morning guy that had been there 25, 30 years, I had writers that had been there even longer. The stations prior to my arrival, were run by one of the co-owners. So the GM was actually an owner and- and ran it like an owner, like, you know, keeping track of the toilet paper in the pencils and all that stuff. And so I remember getting there and trying to push this staff and quickly realizing that, okay, I'm gonna need a different approach than just coming in, like, you know, this is how we do it in Calgary, and let's- let's get off our butts and move this along. So one of the first things I did was, they actually had a coffee machine in the staff room that you had to put 50 cents in to get a cup of coffee. And I said, this is BS, man, like, I need my coffee, and I'm not paying for it. So you know, I put in free coffee in the staff room. And I'm not joking, man, like that single decision galvanized the staff around my leadership more than any other thing I could have possibly done. And okay, that's a pretty small, little thing, but it's something that they appreciate, and just sort of picked up on that. And- and then I really- you know, it was my first time as a general manager, and I thought, maybe these guys can teach me something. So you know, I didn't know much about management I got thrown into that role. With- with no- I didn't know what- you know, how to budget, or- I had no experience with that stuff. And so I didn't know what one on ones were, even. And I just thought, Okay, I'm just going to meet each of the staff individually, and later learned that those are called one on ones. And, you know, and let them tell me about this company and this culture and Vancouver Island and how things are done. And even through that experience, asking them for their input. Again, just galvanized the staff, like, holy crap, man, we got a boss that cares about what we think and- and how we contribute to this. And my time on on Vancouver Island really set me up for my future ownership in Clear Sky because I learned so much in those few short years at Island radio about how to treat staff, how to engage with people, how to work cooperatively, how to motivate people, how every single staff person has a different button to push to motivate them. You know, that was a really cool learning experience. And for me, what happened was the staff got so engaged. And through their help, we turned that company around inside six months, like it went from losing money to making a lot of money in a really short period of time. And it was kind of like lightning in a bottle where, you know, sometimes you just walk into those situations and a few light bulbs go off, and you go, cool, this is cool. And had that station group not been sold to Pattison, I probably would still be there as the General Manager, making my 80-90k a year, living the Vancouver Island lifestyle. But you know, shortly after I got there and turned it around, Jimmy came knocking on the door, and it quickly got sold.
And for those who owned radio stations back then 2006, 7, 8 roughly, it's a great time to get out of the business. Listen, this is just when the age of acceleration kicks in, social media kicks in, YouTube becomes established, Facebook is already beginning to get started. So this is when the encroachment starts to happen. But you go back to Alberta and you were talking a little bit about about Clear Sky. So what was at Clear Sky that you got to work with? What were the stations? And where'd you live?
Yeah. So you talked about that time period, where was a great time for owners to exit, right? It was the beginning of consolidation of Canadian radio stations were trading at 10 or 12 times your profit margin. So you know, in Nanaimo, for example, we had a million dollar profit margin, and it sold for 12 times and the owners got $12 million. Those stations might sell for six times, you know, EBITDA today, you know, 17 or 18 years later. So it was a great time. And I remember when that transaction happened, and I thought, okay, I've helped the NorNet family, build radio stations and sell them and make a bunch of money several times now, including here in Nanaimo, and- and I'd like to maybe take my crack at ownership. I think I always had the itch to be an owner. But I didn't have the risk profile to go borrow money from the bank and kind of put myself in that much debt and do it on my own. So actually, I went to- to the McKinnon family and said, hey, I'd love to be an owner. I'd love you to be my partner, would you consider a partnership? And they said, yeah, put it on paper, and come back and talk to us. And I remember I was walking around mowing my lawn in Nanaimo and the CRTC issued a call for applications in Lethbridge and Calgary at the same time. I thought this is- this is the opportunity. So I went back to the McKinnon's and I pitched them on, you know, let's start a new company. We'll buy in Calgary and Lethbridge and roll our dice and see what happens. And they said, okay, how much is this going to cost? And I said, well, we need to hire a consultant to write the application and technical briefs and blah, blah, blah, so maybe 100 grand. And they said, no way, we're not interested. And I just was deflated, I was like, what the heck, right? So I came back a few days later. And it dawned on me that, you know, if we hired a consultant to write the application, I'm the guy that's going to have to feed that consultant all the information, and he's going to put it down on paper. Why don't I just write the application? And so I went back to McKinnon's and said, okay, here's- here's the deal, let's do the company. I'll do all the work. Alright, the CRTC application, the only thing we need with professional help is a little bit of research, to find the right format hole, and a technical brief. And so I scoped those two things out, the grand total was going to be 15 grand to make these applications if I did everything, and they said, great, now you're talking how- how we do business. What percentage of the company do you want? And I boldly said, you know, I'd like 50%, thinking I might end up with 20 or 25. And on the spot, they agreed 50/50, you're the operating partner, you're the president. You're the decision maker, we're your support, and Clear Sky was born. And I went off and wrote applications for Calgary and Lethbridge. Put a little team of three together and made a pitch in front of the CRTC at a public hearing in Calgary. And I was scared to death man, like, I mean, it was like going to court, right? You got all these CRTC commissioners, and I'm sitting there, and all the other applicants are CHUM and, you know, Corus and Rogers and these big companies with massive teams of people and 20 chairs and-
And lawyers. Don't forget lawyers, because you mentioned your team. And I'm like, I didn't hear a lawyer in there.
My team was me, Mary Mills and Hugh MacKinnon, brother and sister that owned NorNet at the time. And Carrie Pelzer from DEM Allen in Winnipeg that did our technical brief. And that's how we made the pitch. And I don't know man, like, again, you talked about lightning in a bottle. I made that pitch, Rick Meany who was my general manager at Country 105 And who had had to package me out at Corus- and was not the greatest boss in the world, we did not have a super good relationship- was in the audience. And he came up to me at the end of my presentation, and he said, I made the biggest mistake of my professional career letting you go and not letting you do more at Corus, and you should be, you know, having a high level position at Corus based on what I just saw. And Gord Rawlinson, who owns Rolco, came up and said, blown away. Like if you don't get this, and you ever want to come work for Rolco, let's talk and it just gave me confidence. And this sort of inclination that I do sort of know what I'm doing in this business, and- and maybe if- if we get this opportunity to own stations, we can be successful. And I remember the day the CRTC decision came out, we were declined Calgary, and we won Lethbridge. And my wife happened to grow up on a farm 45 minutes from Lethbridge, and we're living in Nanaimo and I just won this radio station in Lethbridge. And she looked at me and said, you know follow your dreams. Follow your passion. There is no way in hell I am moving back to my hometown of Lethbridge. So figure out how you're going to do this without us as a family living in Lethbridge. And I'm like, okay, so you know, kind of a little deflation, figure that out. So we did- we did eventually go to Lethbridge, but I knew I wanted to build a bigger company and I didn't want to get, you know, roped into being the on site local general manager of my one radio station in Lethbridge. I wanted to build something bigger. So we went to Lethbridge for a year and set it up. But I built it in such a way that I could sort of extract myself out of Lethbridge to pursue other applications. And you know, those opportunities came. In that time period, the CRTC was calling for new licenses in markets like candy. It was- almost every other week, there was a call for applications.
They did come fast and quick, but I just want to go back to the hearing, because you said you were very nervous. And I've done- I've done one of these before. I only did the programming side of an application and only had to defend that part. So you had to do the whole thing. But you go, there are 12 commissioners in front of you. I don't know how many you had. And then you're introduced, and then one of their lights goes on. And that's the person you're going to be spending the next hour with, talking about your application. Do you remember who the CRTC commissioner was you spoke with?
I absolutely do, because he was the hardest guy in the room. Stewart Langford.
Oh, boy, okay. Yeah.
Right? So I think he was a lawyer. And I think he was a CBC background. And he asked the hardest questions and tried to trip you up, and make you make mistakes, and prove to you that you had no business applying for a radio station at your young age with no team and no lawyers, and so on and so forth.
Well, that could have been the first question is like, what makes you think you can do this with no team and no lawyers? Because that's what it was probably like- it could have gone longer than 60 minutes. Could have been 90.
I remember sweating bullets. And I remember the questions and I'll never forget who it was that questioned me. Because it was a hard time and I answered honestly, the one thing NorNet taught me, and Hugh MacKinnon in particular, he had two rules in business in life, and it's, you know, never lie to me, be honest, and don't steal from me. And you know, as funny as those two things sound, they're they're pretty basic, you know, values for human beings and, and he's just- just get up there and answer honestly, and be yourself, and see where it goes. And even with a guy like Stu Langford grilling me for that hour, you know, it panned out because we ultimately won- won Lethbridge.
And so you had to do a few of these in the future. Did you have any markets where- we want to be in that market, but there's no call for applications, or did you just have to wait for the called applications to show up?
So at that time that the calls for applications were coming so fast and furious, we didn't have time to think of anywhere other than where these calls were. So shortly after that hearing, there was a call for Fort McMurray and then a call for Medicine Hat. And the Fort McMurray hearing was in Edmonton, and the Medicine Hat hearing was in Regina, and I think Fort Mac came first. And we hadn't got the decision for Lethbridge yet. So now I'm presenting again, now to get a station in Fort McMurray. And I can't remember the commissioner that questioned me but I remember the question. One of the questions was, what is your worst fear? Your worst possible outcome as you consider this hearing? And I just honestly answered, I said, you give us Fort McMurray and nothing else. That's- that's like, going to be a problem for us, because Fort McMurray is expensive to operate and hard to get staff, and a single station operator with no other infrastructure. That- that's probably a way to go bankrupt and lose your enthusiasm for being a radio owner.
And for those who are listening to this and don't know Fort McMurray, it's an oil town, predominantly with a lot of people from from Newfoundland who come in to make 80-100,000 dollars a year, but the housing prices, minimum wage is not minimum wage. It's maximum wage. It's- the economy is completely different. And for somebody who is in Edmonton, like myself, we would see a lot of young men come down to see the Godsmack concert and blow hundreds and hundreds of dollars on a weekend that I could only dream of on my $60,000 a year salary that I was making at The Bear. So it's- yeah, I can totally see that.
Yeah, so Fort McMurray, and then the Medicine Hat hearing came and when all the dust cleared, we had applied for five markets and we won stations in Lethbridge and Medicine Hat. And then we were tasked with- with going out to build these radio stations. And that's how Clear Sky started in 2007, Lethbridge first. I remember we were- we were days away from launching Lethbridge and the Medicine Hat decision came down. I didn't even know about it. A buddy of mine phoned me and said hey, congratulations. And you know, I was ripping my hair out trying to figure out how to run, you know, one radio station in Lethbridge. And now- now we've got to go build another one in Medicine Hat.
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What are CRTC commissioners really asking you and they're asking questions? Always got the feeling they were trying to ask the questions to make sure you were not going to fail if we gave you this.
I think that's exactly right. And part of the success of Clear Sky, and I think why we got so many licenses in such a short period of time, was that I wasn't just a guy with a giant bank loan, you know, trying to float this thing. I had a family that was a 50% partner, that were financially, you know, backing- backing the company, but also had 30-40 years of radio ownership experience. And so they knew that we had sort of a depth of experience and at the same time, had a young guy at the- at the lead to go out and build this company that maybe could be a strong regional small market player, which at that time was what they were really trying to promote. They were trying to promote, you know, diversity of voices, consolidation had kind of tilted pretty far in favor of 90% of the radio stations owned by- by four or five companies. And so in that stretch of time, they were really trying to get some new voices in and you know, we just it was the perfect timing for a new company to come along. And I think they saw that we had enough experience and depth behind us to make a go of it. And you know, so we got we got Lethbridge, Medicine Hat. And then, you know, I wanted to expand- it's funny when- when you have something good, but it's never good enough. And you want to get bigger and, you know, at that time, Lethbridge and Medicine Hat were doing well, man, like Lethbridge came out of the gate as the number one rated radio station right out of the gate. We made money by month two. Medicine Hat was almost as easy. And life was great man, I had 20 employees, two stations, two markets that are only two hours apart. And it was really humming. And we had a tight staff, and it was a lot of fun. And then we wanted to expand and grow. And it became less fun, the bigger that we got, you know, partly because the economy shifted, partly because you're now spread out over three or four communities, partly because now you have 40 people instead of 20. But I remember when we expanded, we bought a second station in Lethbridge. And what we bought was a Christian radio station in Lethbridge, but we bought it conditional on being able to flip the format out of Christian to- to a mainstream format. And it had never been done in Canada, and everybody thought, there's no way. They've never granted one of these ever, in the history of the CRTC. Because they don't want to give carte blanche to all the Christian stations to just flip their formats. So Lyndon Friezin, who was the president of Golden West at the time, and myself, we flew to Ottawa and we met the CRTC in a big boardroom, we had head of ownership there, commissioners, staff. And we basically said, this is what we want to do. And they looked at us and said, well, here's one thing for absolute certain, we will not just carte blanche give you a license to flip that Christian station to mainstream. But here's a path that does kind of make sense for the CRTC. And you know, without writing the application for us, obviously, or telling us that it would be a positive decision. What they said was, if you take this path and some of these ideas and this input from us, there's a possibility that we might approve this. And so we went back and wrote an application that was very specific to Lethbridge and the circumstances of that Christian station in Lethbridge. And we won the ability to purchase that station, and we flipped it from Christian to modern rock. And I will tell you this in my lifetime, I will- this is one experience I will never forget, is taking a Christian radio station and turning it into a modern rock station, because I was not popular with the Christian station listeners whatsoever. It was nasty for a period of time. From a- from a personal standpoint, but from a business standpoint, to be able to pull that off with the CRTC was pretty pretty substantial, to the point that I got calls within days from a bunch of Christian radio owners asking me to write applications for them to- to flip their stations. And it was- it was a pretty exciting time, too.
Is that how CJUI comes into it?
CKBN was the call letters there. That was actually in Lethbridge. So that's how we got two stations in Lethbridge. And then just to wrap up the Clear Sky end, we had applied in Cranbrook, BC, at the same time. So within two weeks, we got approval to buy the station in Lethbridge. And then we got approval in Cranbrook right behind that. And it was around 2014. The oil economy had just started to crash in Alberta. And about a month or two after those two approvals, the NDP government came into power, and- and Alberta became a lot tougher place to run business. And so yeah, but that's how Clear Sky got- got to be up to five- five radio stations at the end.
So, is there a B part to that story about the Christian radio station flipping in Lethbridge, that involves CFEQ here in Winnipeg? Which I think Golden West and Lyndon Friezin purchased at some point. And they- I think they had to do a very similar shimmy. So I think what you did was the blueprint to what happened here with a station that was called Freak 107 but had a Christian license and was overly Christian later.
Yeah, I think that transaction in Lethbridge triggered a few future kind of format changes. But the commission was still pretty adamant- like even- even today, I know a Christian station and medicine had just sold for $20,000. Because Vista tried two or three times to flip it to a mainstream and the Commission turned them down every time. So it just got bought by a Christian operator. And I think the CRTC- everybody bashes the CFTC, and is afraid of the CRTC. I will say one thing about the commission, despite, you know, the challenges of sort of waiting for them to make decisions, and they're not always business friendly, and that type of thing. If you pick up the phone and ask the CRTC for advice, they will give you advice. And they are the most helpful organization, because ultimately, they do want to see you succeed. They don't want to see stations struggling or companies struggling. And I built a really good relationship with a few key people at the CRTC that, you know, have have since moved on. But my experience with the Commission was actually quite- quite positive. And- and I have a lot of good things to say about- about the CRTC, which is an organization that does take a lot of- a lot of heat sometimes.
Yeah, and Rob Braid, who I got to work alongside for four years, he taught me so much about the CRTC, but also about how it- how it integrates as well with the province of Quebec, and language, and many of those things that you said, you know, we're looking for diverse voices, we're looking for, you know, owners who aren't going to go broke. And I think there was some quiet advice that might have been given, it may or may not have been Rob who said it, but he said, don't load them up with work. You can ask them the question, as long as you're willing to follow through and do the work that is needed to accomplish what you need to accomplish. So yeah, it's great to have friends and a phone line where you can just pick up the phone and call, and a few times I did.
Yeah. And I mean, they will- they will never tell you- I could pick up the phone today and ask about the Kelowna application. They're not going to tell me if it's going to be approved or not approved, they may tell me that it's coming down the pipe within a certain period of time, right? But you just have to be respectful, ask questions that you know they are able to answer, and not try and ask them questions that you know for a fact they cannot answer for- for, you know, legal reasons or just regulatory reasons. Right? But, you know, if you have a general question, yeah, pick up the phone and talk to the CRTC.
Was one of those questions like, ever, like, when are you going to do a review for radio?
Yeah, actually, I got invited not to the last radio review, but the one before that. So this is early in the Clear Sky days, I went to Gatineau and did a verbal presentation for the radio review. My frustration is they do these reviews, they take forever been like 2, 3, 4 years, you're waiting for this review to come out. And at the end of the day, the decision comes out and they don't do anything. Like the last radio review was an opportunity to really look at some of the core issues that impact our business, right? So ownership limits, Canadian content limits, you know, just flexibility to put a talk FM radio station on the air without making it a specialty license. Like things that we ought to be able to do in 2024. And, you know, it took them three and a half or four years to put out the decision of the radio review. And the only thing they gave was okay, companies can own one more FM station in a market. CanCon's still the same. Oh, and by the way, we expect every station regardless of format to play 5% emerging artists and 5% Indigenous music. And I scratch my head and go okay, I own a classic hits based soft AC station in Kelowna, you know, our music cuts off in about 1995. My listeners don't want to hear new music, they certainly don't want to hear new music from artists they've never heard of before. You know, so I just look at the layer of rules sometimes that the Commission lays on us and goes, you know, sometimes I scratch my head and wonder, are they trying to force listeners out of you know, conventional tradi- you know, terrestrial radio onto streaming platforms, by hampering us to be able to deliver formats that are competitive with- with the Spotifys and Apple Musics of the world? Or do they just not get it? Do they just really truly believe that Canadians, that's what they want to hear? And that's just the world that the bureaucrats live in. And so, you know- you know, I- you know, I'm positive about the CRTC and my relationship that I had with them over the years, but I am critical of- of some of the decisions and head scratchers that come out of some of those policy hearings.
So we all have different goals though. And I'm not here to apologize for them certainly. But I think the best thing for radio is to have the most listeners possible and to make it so that everybody can listen to it. Yet in come the music people who want more CanCon or more airplay in some capacity. In comes the broadcast act which says that it has to be in- in the- in the best interest of other groups and in come the interventions that come in saying, well, we have too many radio stations, we don't have enough radio stations, this will affect the local economy. I don't think they know who they're serving, and what is best. And most of them, by the way, don't have a broadcast background. And radio is number three. One is phone. Two is television, and visual, and three is radio. And I kind of feel like radio is sort of like the pain in the ass for them.
I can't disagree with that. I think- I think you know, when you say they don't know who they're serving may- or maybe just don't realize that, it's because in those public hearings, you're right, it's opened up so radio people can intervene, and the public can intervene, and the music royalty companies can intervene and the record companies can intervene. And all of those parties have their own agenda and their own sort of purpose. Right? And- and so, yeah, they get this whole jumble of information and have to try to make a decision out of it. When you say radio, maybe it's a pain in the ass, I have to scratch my head and wonder if that's not true. Because, you know, the- the most recent decision that they laid down is, hey, we're not going to do anything in radio for two years. And just- you know, because they have to focus on- on this new streaming act and the- and the online news act. So they actually put out a- an- out of the blue that caught everybody off guard, you know, a directive a month ago that said, we will not process a radio decision for the next two years, other than purchase transactions, which, you know, is the CRTC not in charge of regulating radio? And how do you put a- an industry on pause for two years and expect us to do business? Like I just- those- those things baffle me.
Well, come on, Paul, we all take sabbaticals, they've just decided to take a two year one.
Yeah. And force the rest of our industry to take one along with them. Right? So.
Yeah, and I've actually- I'm pretty sure that there's been a few hirings by Corus and Bell to reflect that two years, okay, we better get down to some serious work, there have been some hires. And I thought, okay, that's an interesting hire. But it's obviously there to manage and keep things afloat for for the next two years. And I guess, what should the role of the CRTC be going forward? Is it for the people? Is it for the broadcast act that is put in front of them? And how can it really best serve the medium? Because, you know, the medium is the message, and we're going to have nothing to regulate shortly.
I think they're trying to figure it out. I wonder, you know, what- what is the mandate of the CRTC going forward? This online streaming act, and the- and the online news act, are going to totally distract the CRTC because the federal government's basically said, that's your mandate, you know, and it's almost like they've said, that's your mandate at the expense of traditional media. Like just put those guys aside for now, television included, and just focus on Google and Meta and, you know, on these new bills that we've put in place to try and regulate the internet, which I mean, that horse left the barn a long time ago. And, you know, I think we've seen that in some of the reaction from a company like Google or- Well Google came back to the table, I guess, but Facebook that basically said, you know what, we'll just- we don't need to be regulated, we'll just get out of the news business entirely. You know, and the government, sometimes it's easy to be a bystander and say, you know, government is going to play roulette with Meta, who's going to win that, right? I think we- we sort of saw the endgame of that, and a little backpedaling now by the government to try and smooth things over. Because what's- what's happening is actually going to hurt the industry far more than than help it in the long run.
Yeah, and especially with- with stations, and I know we didn't touch on Black Gold Broadcasting, but I look at some of the stations there. They really need Facebook. Smaller communities across North America need Facebook, it's just where people gather, they're not on Instagram, they're not on Twitter. They just don't spend nearly as much time on those other platforms. Facebook has a great- is really, really strong in smaller communities, and it's just affecting the newsrooms.
It is, and it's unfortunate, because the government framed it as Facebook is stealing your news. And we need to compensate the journalists. Well, Facebook is not a platform that goes out to radio station websites and scrapes news and posts it on Facebook with their banner, and they take credit for it. Facebook is a platform where we as broadcasters have given our content for the past decade or more out of our own- you know, we just do it willingly, we post content on Facebook, because that's where the audience is. And that's where they expect to see our content. And guess what, when- when the audience clicks that link, it comes back to our website, and we get traffic from it. Why on earth would Facebook pay me money for all that free advertising? You know, I saw an executive from Facebook actually said, you guys have it backwards, man, the radio station should be paying us for all the free traffic that we generate back the other way. Like, you guys voluntarily put your content on our platform. And you want us to pay you money for that. Like what planet do you live on? Where Google, who just came back to the table with their 100 million dollars- Google is a platform that goes out and you know indexes websites and- and posts content on their own and- and, you know, so those two parties act differently. They're different models. And maybe one should compensate for news where the other shouldn't. And- but there's no level thinking at the government level, you know, in terms of some of those decisions. And I just- I just have trouble wrapping my head around all that stuff.
Okay, so run with my idea. Anyone, any business, any Canadian who purchases digital ads on Facebook or Google has to pay a 4% levy. Goes into the news fund.
Sure.
Who's with me?
That's a pretty simple solution.
But it's- it's as old as Canada is. That's what we used to do when we didn't like the fish coming up from New England. That's what we- Listen. The Liberal government does not need to be tagged with another- we're the tax people. And I can understand why you're trying to sneak this through the backdoor by blaming Facebook. But if we're really interested in saving news, a levy on digital advertising seems like a possibility.
It's a viable possibility for sure. I mean, there's lots of good ideas out there, I think the government thought, hey, we're going to hold these guys hostage, tell them what to do. They're going to show up at our hearing and just agree to give us $180 million. And this is like, you're telling an American company that makes trillions of dollars in revenue that you have to play ball in Canada, you know, because we're a sovereign country, and you should do as we tell you to do. Come on, man. Like how about you just sit down, have an adult conversation with them and try and figure out some sort of formula that works for all parties. And- and is a win-win-win at the end of the day for for everybody involved? Right? The thing that killed me the most about this was, so the uproar of the big media companies, when Facebook turned the news off, how dare they and whatnot. And you know, we're gonna- we're gonna quit advertising on Facebook. So you got the Bells and the Rogers and the federal government all saying that, you know, we're not going to spend any money advertising on Facebook. Well, up until this point, you have spent millions of dollars supporting this arch enemy that you think you have. And secondly, you all have divisions in your sales departments that sell Google and Facebook ads, are you going to quit selling that to your customers too? Oh, no, that's- that's important for our customers to be able to advertise on Facebook and Google. So it's this- this sort of two faced kind of circular argument that just at the end of the day, you kind of have to laugh at it and go, what are you guys thinking man? Like-
I can't tell you how many breaks ended with, "For more, go to our Facebook page."
Correct.
I mean, I can't get that sort of plug for- for anything anywhere.
It's funny. So I mean, we've done it to ourselves, and- and we find ourselves in a in a real predicament. And there's no clear end to that- that whole debate, for sure.
You know, when I first wanted to have you on the podcast, I just wanted to ask one question. Why on earth would you buy a radio station in January of 2021, when we're eight months or nine months into a pandemic? And I don't mean that, like, are you crazy? I'm just like, what did you see when you wanted to make that purchase of The Lake?
So you wouldn't be the first person to ask me that or call me crazy. It's actually worse than that, because the station went off the air in March 2020, like within weeks of COVID-19 really becoming a real clear thing. And the bankruptcy trustee process started in June of 2020. So I actually jumped both feet in like two or three months into the pandemic, realizing that local advertising had just been obliterated, like I was doing some consulting for that radio station, prior to it going off the air. And I saw 90% of its revenue disappear in a week in March of 2020, and still jumped in and put in a bid to buy the thing in June or July of that same year. And I think for me, what I got caught up in was, you know, we sold Clear Sky in 2019. Clear Sky, we sold because my business partners were a decade or more older than me, and they both really wanted to sort of shift into retirement and I had the option to buy them out, or we sold the company, and I just didn't have the guts to go borrow four or $5 million and go into that kind of debt to buy them out. So that's why we sold Clear Sky in- in 2019. So you know, I've lived in Kelowna for 11 years. So through a big chunk of the Clear Sky ownership, I was just a citizen here and quietly living here not working in the media. And I had been helping cast the net with the radio station with- with 103.9 when they- when they bought it, and then Castinette got sold to Glacier Media, in a very large blockbuster deal. And Glacier was supposed to buy the radio station as well. But there was something with their publicly traded shares that couldn't guarantee 80% of the float would always be in Canadian hands. So the CRTC wouldn't approve the sale of the radio station to Glacier because they couldn't guarantee that it would meet the foreign ownership rules at all times. And then COVID-19 came right at the same time. And I think, you know, Castinette that had already been sold, the radio station was sitting there by itself. 90% of the advertising went away, and so I think bankruptcy was just a quick way to kind of make a problem go away. And I'd become kind of close with some of the staff that were working at the station I had sold, not knowing what I was gonna do with the rest of my life yet. And I think I just got caught up in- crap, here's a radio station that just got thrown away with some good people and had decent ratings, and I live here. And in bankruptcy, I should be able to buy it cheap. So, you know, I threw a bid together, sort of half thinking I might have a shot at it. And I remember when- when- when the bankruptcy trustee phoned me and said, hey, you're the winning bid, congratulations. And I'm like, Oh, my God, what have I done? What have I done, because it was not my intent, when we sold Clear Sky, to ever be a radio owner again, you know, maybe work in the business, but certainly not on a station. And now shit, I've got a- I got a radio station in the middle of a pandemic, that's now off the air. So I have to re launch it like- like a brand new radio station, which is going to take a hell of a lot of effort in a time when when traditional media is sort of, you know, going the other direction. And, yeah, it's been- it's been a adventure. But I remember when I did it, the only thought I had in my head was what a shame that this resource is just going to get tossed away. And, you know, can I be somebody that can rescue this community resource? I knew I wasn't going to, you know, own it for 10 or 15 years and sort of get back into that long term radio ownership. But if I have the opportunity to buy it, save it, revive it, and you know, potentially the ownership rules change, when the radio review comes out, that happened, you know, which opens up an opportunity for one of the larger companies to own three stations in the market, then maybe it's not such a bad short term business plan after all. And honestly, it's gone better than I expected. But we run this station differently than I've ever run a radio station in my life. Like we don't have studios, we don't have a local office, all the talent work from home. But all these things became possible because of the pandemic, right? Because the automation systems and the technology changed so quickly, to allow you to do high quality professional broadcasting from a home a studio like you could never do before. And so we came up with that model thinking, okay, let's survive COVID and broadcast from home. And all the talent actually loved it, because they didn't have to go fight parking and go sit in an office with people they didn't like every day and- and all that kind of jazz. And we put out a product in this non traditional operating way that is on par with every other radio station in town, and has developed a really significant audience.
Wait, what? There's no physical address for this? Like, where do I send my like reel-to-reel PSAs for your station?
Yeah, we do have a post office box service, which is in a UPS Store on Dilworth. So you know, we can- we can accept physical check payments and stuff like that in a mailbox.
I'm sorry, wha- why was this not more of a story? And why didn't I know about this?
We've been pretty quiet about it. It's not something that I was sort of jumping up and down publicizing, but also, it's not a secret either. Like they're- they're certainly- all of our clients know. So, you know, to give you an example, the Staples, the- the office supply store, they did a retrofit of their store in Kelowna, just before the pandemic and in the back, they built a shared office space called the Staples Studio. And so there's- there's hot desks and shared offices and a professional podcast booth with soundproofing, and a little Rode board and microphones and video cameras and all sorts of stuff. So-
I did the voiceover ad for it.
Oh, very cool. Very cool. So we- we rent a little office there and have access to the podcast booth. And that's where we have our sales meetings and meet clients, and clients who want to voice their own commercials come into the podcast booth. And we lay down the spot there just like it was our own studio. And it has worked extremely well, to the point that I know the history of this frequency. So CJUI was- was the original call letters. It goes back to 2008 when Vista won the new license in Kelowna.
Why am I thinking of The Juice?
The Juice, that's- that's the station that Vista launched. So the- the station that I own now, which is The Lake, was once upon a time The Juice owned by Vista. And then it sold to Castinette and became an oldies station. And then out of bankruptcy, I bought it. But I know the history of the station, every owner prior to me has lost high six figures annually on that radio station for over a decade. And we've turned it into a profitable radio station that's in the black, and- and partly it's just it's the way we're running it, because we keep our costs down without physical plant, right?
Which, you know, if I'm at the CRTC- and sometimes I like to think like a CRTC. Commissioner. And by the way, I applied to be the CRTC Commissioner a number of years ago, and I have not heard back on my application- But I would be thinking danger. That if there's no physical address, there's nothing to stop a radio station from foreign ownership. Which is- and you pointed it out, that they will find an imbalance at the table that involves foreign ownership and they will flag it, and they will get rid of it pretty quickly. So here you are with no physical address. What's to stop this thing from being run out of Winnipeg or Minnesota or another country? I mean, I'm not saying, but I'm saying, in the US the FCC has diddled around with the- the Main Street Law. I know that when Tucker and Maura were on the radio in Hamilton, they were broadcasting from Toronto. Yeah, we'll let that slide, and- but yeah, do you think that there's precedent here for something in the future? Is it something or nothing?
No, I know, for a fact, we're not the only company doing this. I know of other radio stations that through the pandemic, closed their local offices. I know a lot of companies are certainly downsizing their physical presence just because of the pandemic. Nobody worked in the office for two years. And they realized they didn't need as much real estate. I think what protects the Canadian ownership is that I, as the individual, have to prove that I am a Canadian citizen, and I hold the broadcast license, and I'm responsible for it. The transmitter site still has to be physically present in the community, obviously. And that- that becomes the sort of anchor for it. But the CRTC several years ago eliminated the actual regulation that you had to have a local studio in the community of service. That- that regulation doesn't exist anymore. And right here in this- in this very town, there are morning shows that originate in Kelowna, that broadcast into multiple markets outside of Kelowna. So I think it's just- it's part of the future of our business. And I don't think it takes away from the product. Like I said, if you turn on our radio station today, we sound at par with- with any other station in town. You know, when we launched, we launched with- with a 20 year heritage morning show that Bell had cut loose here, Andy and TJ, they had just built a professional studio in their spare office in their home, and they're husband and wife. They loved it, man. They roll out of bed and walk downstairs to their professional studios turn on the mic and do their show for three hours from their spare bedroom without having to commute and spend two extra hours of their day.
Yeah, I liked it better when I was the only one who did that.
I will say that the technology made it possible. We use- we use this automation system called Playout One, you know the voice tracking is browser based so the talent doesn't have to install software. It's just like this- this connection that you and I made today, open up a browser, click a link, boom, we're talking right? So- so radio automation's come a long way in the last two or three years, that allows that type of connectivity. And it's not all just for voice tracking. The Playout One has a thing called Live Mic built into it. So where we used to need a tie line and a codec and an ISDN line and all these connections, it's all built into the browser now. You click- you click Live Mic, and you are live on the radio with the codec built into the browser, controlling the station. So- and I think partly it's the future, certainly in small markets, it can save radio stations from- from going out of business, because it's just a cost saving measure that doesn't impact the product at the end of the day.
So we touched on it earlier about AM transmitters. I would not buy one for $1. They just feel expensive to run. Costs a lot of hydro, I can't do it. However, what is the future of the transmitter in this country?
We will see a day, I think in the next five, maybe 10 years at the outside, where AM band has gone. They just need the bandwidth to repurpose for something more important in today's- in today's age. Right? FM, I think, will stay. HD, this this Eibach HD that, you know, we inherited from the United States, maybe has a future but I don't know, it's so hard to get the radios and get people to understand how it works and all that. But I think FM transmitters will be around for a long time, and will be part of the ecosystem of radio for a long time. But they will not be the primary way that people listen to radio. They just won't. I think we've probably already tilted where better than 50% of the audience- even the local audience- listens via streaming, versus listens over the FM band, right? And I'm talking, you know, office workers that sit in front of a computer all day, don't have an FM radio at their desk, but they certainly have a browser and the ability to click Listen Live. And they're right here in Kelowna. And, you know, the IP tracking technology, the analytics that we can get from our streaming audio shows us that, you know, 85% of our online audience are actually right here in the Okanagan, and not in some third world country halfway around the world, you know, listening, and I think FM will be around, but I don't think it'll be the primary way of listening to radio.
Do you think Apple or Google would ever be interested in a transmitter?
I don't think so. I just don't think they sort of see the value of the analog world. You know, Google once owned a radio automation company. They bought Scott Studios and- and what is- what is now Wide Orbit, prior to being Wide Orbit, was Google Automation. And Google had this grand idea that if we own the computers that broadcast on the radio, we can push commercials onto radio stations all over North America and make money selling- just like you buy Google ads, you can buy radio ads. They paid a billion dollars for that company, and they sold it for like 200 million when they decided they didn't want to be in that- in that space anymore, so.
You realize that this podcast has only gone on this long so that Marty Forbes said, you- said that you missed something. So I wanted to make sure that we didn't miss anything, you know, when we did this.
Marty will be the first guy. I have a ton of time for Marty. So you know, flipping all the way back to your days at the Bear in Edmonton and my days in Westlock at NorNet. There was a an association, I think the Alberta Broadcasters Association. They used to meet in Edmonton all the time, and it was all the Calgary and Edmonton guys, and we'd show up there from NorNet. And Marty was the only guy that would come up and say, hey, how's it going? What are you guys doing? I'm really interested in what you guys are doing, and talk to us and make us feel like we belonged in broadcasting with with our peers in that room. And I had a ton of respect for Marty for sure.
Do you really think you're done? Or are you just waiting for, like, the next two years of the CRTC to see how that shakes out, and then be able to consult and dabble a little bit more?
The interesting thing for me is, I mean, when you've done something for 35 or 40 years, and it's part of your DNA, it's hard to say you're done. I think absolutely, if the CRTC approves this ownership sale of The lake to Pattison, I'm done as an owner. I have a very small percentage of the Black Gold stations in Leduc, Stony Plain and Ponoka. But I'm a very small minority shareholder, just a friend of mine owns those stations. And instead of paying me money he gave me shares a long time ago. So it was just his way of not having to pay me any money at the time. But for all intents and purposes, yeah, done as an owner, but I still feel like I have a lot of passion for this business, I don't think radio is dead, I'm not exiting because I think radio is gonna die, or go off a cliff, or doesn't have a future. I just think our business needs to keep reinventing itself. We need younger leadership, we need people in charge of some of these big corporations that understand today's media, instead of guys like me with gray hair that lived through the heyday of radio when it was a 35% EBITDA business and just trying to figure out how to hold on until I retire. But I get excited when I see young people with bright ideas, floating some ideas of how to sort of transform this business or save this business or set it up for the future. You know, if I could find one young guy to figure out a radio ratings system for the modern world, I pay that guy a billion dollars. I'd go work for them for free. Because we've been talking about that problem since I started in 1986. And I got to think, you know, something that small, but so critical to our existence, has to be solvable. And it's because we've put up all these walls, you know, that protect these legacy sort of ways that we've done things. How are we still filling out a diary, to tell you what you listened to a week ago? I just- I- you know, meanwhile, Spotify can tell you how many listeners I have right now, and where they are. It's crazy to me.
Spotify can tell me what I listened to after I've consumed alcohol in my Spotify Wrapped. And it means I drank a lot of alcohol this year.
Exactly, right? Like- anyway, I think the business has a heck of a future ahead of it, not to tout Pattison as a company, but you get to be a little bit close to a company when you're selling a radio station to them. And, you know, I don't- I don't know any of their internal sort of secrets or mechanics or anything. But here's what I do know, is they're not publicly traded. They're a private company. They're investing in this business. Unlike any other broadcaster that I've seen in Canada in the last five or 10 years, some of the things that they're building for the future actually give me some excitement that there is a hope for this medium, 10 years, 15, 20 years down the road. And so I think there are innovative companies out there. And I think radio's got a strong future. And if there was an opportunity for me to still play in that field, some- somehow, some way? Yeah, I'm absolutely sort of keen and interested to do that. But I also have a real strong desire to do something completely different too. And maybe it'll be a combination of both and- and an ability to sort of keep one finger in while- while trying some different stuff, too.
When you listen to a podcast, this podcast or any podcast, what app do you use?
You know what, I just say, hey Google, play the Sound Off Podcast. And it figures out what to deliver it on. Right? Sometimes it's delivered on iHeart, sometimes on TuneIn, sometimes on Spotify. Yeah, for the most part, I don't have to say listen to this podcast on this delivery mechanism. I can just say hey, listen to the name of this podcast, and it just plays it for me and tells me what service it's being delivered on.
That is cool, because I worked hard at that. I mean, this podcast started in 2016. But I realized my great mistake when I used the words sound and off, not thinking that- not thinking that we were going to have these devices that would use those words for other purposes. How many smart speakers in your house?
Too many. Too many. We have- So- so the main Google thing upstairs, my daughter's got one in her bedroom, there's one in the garage. So three- three in the house, I guess. The smart speakers are interesting. So we run some imaging that promotes the fact that we're on smart speakers, right? And in the early days, we'd write the imaging to say, hey, Google, play 103.9, The Lake. And if somebody had the radio on, it would trigger their smart device. And we'd get complaints from listeners that, you know, you're- you're telling my smart speaker to turn itself on, you know, because it would pick that up off the radio. So we've had to sort of change a little bit of that. The other thing I'll say about smart speakers is, and it gets back to this competitive nature of radio stations thinking the other guy's the arch enemy. My station is on Radio Player Canada, it's on TuneIn, it's on iHeart, it's everywhere somebody could possibly listen to my radio station. My competitors are not. So in Kelowna, if you want to listen to the Bell stations, you have to have the iHeart app. If you want to listen to the Newcap- well actually, sorry, the Stingray stations just came on iHeart too, smartly. But not everybody is on- on both platforms. And I'm like, why are we not platform agnostic? Like, who cares?
Oh, you gotta be everywhere.
Be everywhere, right? But it comes back to when Radio Player came into play, right? Every broadcaster in Canada got on board, except Bell, because Bell wanted to go down their own path. But I'm like, why didn't everybody just go on Bell's platform and Bell came on our platform, and radio was everywhere for the listener? Like, that's what was good for our business. Versus this competitive B.S. of, oh, Bell might have some data on our station of how many listeners we have. Who gives a shit? Like at the end of the day, listeners are going to listen to the radio station they choose to listen to, that's the name of the game, right? Like, the audience is going to go where the product is good. And the audience is not going to work hard to find the damn radio station. Man, if- if they don't have the iHeart app, and they want to listen to the Bell station, the Bell station's just not getting that radio listener, plain and simple.
Paul, you've been very generous with your time, thank you, thank you very much for doing this. And I'm in awe of the work you've done. I always wanted to be an owner myself. I didn't have that business acumen to do it. And I got sidetracked down into this wonderful podcast space. And that's- it's all worked out well.
I appreciate the kind words. I mean, I can ramble on, sorry we've gone an hour and 20-some minutes here. But, you know, hopefully, it's been listenable and somewhat interesting. You know, as much as you wanted to be an owner, I'm in awe of the company that you've built, like, you know, you're legacy media guy that went off and built a podcast company. And a very successful one. And saw a future in that medium. And again, it's- it's- it's guys with- with bright ideas that are- that are going to be the future of- of this audio business, whether it's radio or podcasts or whatever label we tend to put on it. So thank you for the opportunity too, I appreciate it.
Yeah, and done with the help that you pointed out earlier, that it takes other people, and you ask questions, and people helped along- when people say well, how'd you get here? It's like, well, I had a lotta help.
100%. 100%. And for me, a lot of luck along the way too. Timing, luck, help, connections, all of it right? Nothing's easy, man. I'll tell you, I have a few people that said, you're so lucky, you're so fortunate, you know, you own a radio station, you know. A lot of sacrifice, a lot of hard work, but that's part of life, right? If you're gonna build any company in anything, it's- it's- there's- there's work and sacrifice and luck and timing and all that involved. So it's- I just feel fortunate that I was able to do it in the business that I grew up loving, and- and had an opportunity to get as far as I did with it, so.
Thanks, Paul.
Yeah, thanks, and appreciate you waiting so long for me to finally connect and make this happen. That was appreciated.
The Sound Off Podcast is written and hosted by Matt Cundill. Produced by Evan Surminski. Edited by Chloe Emond-Lane. Social media by Aidan Glassey. Another great creation from the Sound Off Media Company. There's always more at soundoffpodcast.com.
