Former Rogers Communications chairman Edward Rogers fired the latest salvo in his family’s ongoing Succession-like drama, filing a lawsuit in a Canadian court to uphold his decision to reconstitute the telecom giant’s board, a move family members strongly opposed.
“This is Canada’s Succession right now,” Richard Powers, an associate professor at the University of Toronto’s Rotman School of Management, told CBC News earlier this week, referring to the HBO show. “The fact that it's playing out in the media makes it all that more intriguing.“
According to a statement by the Rogers Communications board of directors, the British Columbia Supreme Court will hold a hearing on Nov. 1 to hear submissions by the company and the Rogers Control Trust (the Rogers family entity that controls 97% of the telecom company’s voting stock) regarding the legality of Edward Rogers’s attempt to replace five members of the Rogers Communications board. Edward Rogers, who also is chairman of the Rogers Control Trust, has argued that his action is compliant with British Columbia law and corporate bylaws. His family, sisters Martha Rogers and Melinda Rogers-Hixon and his mother Loretta Rogers have argued that the action is invalid because it was done through a written resolution and not a formal meeting of shareholders.
“The company welcomes the opportunity for the Court to consider the importance to shareholders and all stakeholders of conducting a shareholders meeting to change the board of directors,” Rogers Communications said in a statement.
The ongoing Rogers family soap opera surfaced back in September, when it was learned that Edward Rogers was maneuvering behind the scenes to replace Rogers Communications CEO Joseph Natale with his confidant, chief financial officer Anthony Staffieri. But according to reports in the Toronto Globe & Mail, (opens in new tab) that plan — which also included the ouster of nine other Rogers executives -- was brought to light prematurely when Staffieri accidentally pocket-dialed Natale while discussing the corporate coup attempt with former company legal counsel David Miller. Natale contacted an independent director at the company, which triggered an emergency board meeting on Sept. 26, where the majority threw its support to Natale and his team. Three days later, on Sept. 29, Staffieri resigned as CFO and was replaced by long-time Rogers finance executive Paulina Molnar.
But it didn’t stop there. The Rogers board of directors, at the urging of board member and Loretta Rogers, moved to oust her son Edward as chairman, replacing him on Oct. 21 with long-time lead director and chair of the board’s corporate governance committee, John MacDonald. Not to be outdone, Edward Rogers fired five independent members of the 14-member board on Oct. 21 and replaced them with nominees of the Rogers Control Trust, which moved to return him to the Rogers Communications chairman seat.
“We are in the unusual position in which there seems to be two boards of Rogers Communications, the board we knew last week and Edward’s new board. A very confusing situation,” McMaster University business professor Marvin Ryder said in an interview.
Drama Coincides with Deal-Making
The turmoil also comes as Rogers Communications is winding through the government approval process for its $20 billion takeover of Shaw Communications. Rogers had hoped the deal would close in the first half of 2022, and on Sept. 28 the Canada Competition Bureau issued a Request for Information asking for input regarding the effect of the merger on mobile services, residential and business broadband and the supply of programming to television service providers.
In an email message to Multichannel News, Canada Competition Bureau senior communications advisor Jayme Albert said the agency is aware of the media coverage of the governance issues at Rogers, but that it is concentrating on competitive issues.
“The Bureau’s objective in its review of the proposed Rogers/Shaw merger is to investigate whether it is likely to result in a substantial lessening or prevention of competition,” Albert wrote in the email message. “The Bureau is focused on assessing the impacts of the proposed transaction on mobile wireless, wireline internet and broadcasting services, as indicated in the Bureau’s recent public Request for Information. As the Bureau is required by law to conduct its work confidentially, I am unable to comment further.”
Ryder, the professor, said while the government may not be considering the Rogers management turmoil in its approval process, the family imbroglio could have other effects on the Shaw deal.
“This whole Shaw takeover is very much in question,” Ryder said. “I can almost guarantee you that other potential suitors for Shaw, assuming the deal was done, they just disappeared into the woodwork. Now that this is all back on the table, I guarantee you the Shaw family is getting phone calls.”
Ryder said potential suitors could include smaller Canadian telecom companies like Telus and American companies like Verizon and T-Mobile.
Shaw representatives did not respond to a request for comment.
Ryder added that while Natale isn’t the perfect CEO — Rogers’s performance has been steady, even though the pandemic when its competition was adding hundreds of thousands of subscribers — his real value could be in securing financing for the Shaw deal. Now with the family’s dirty laundry being aired almost daily in the Canadian press, that could give some potential lenders pause.
“Rogers, in the last year, has not had tremendous performance,“ Ryder said, adding that although the company has added about 175,000 new wireless subscribers in Q3, its total revenue and profitability hasn‘t risen much. “Me, as a business school professor, knowing that we've been on a rollercoaster because of COVID, I'm not sure I would be upset with performance like that.”
Ryder added that while other telecom companies performed better as customers stayed home during the pandemic, “I’m not sure that's enough to have triggered all of the drama we've seen over the last week-and-a-half.”
According to reports, in the Oct. 26 suit Edward Rogers said he lost confidence in Natale’s ability to lead Rogers through the Shaw deal and that his mother agreed with him, speaking before the board in late September to back up her son’s assertion. Loretta Rogers, in a statement, said she had been given inaccurate information by her son and board member Alan Horn, and after hearing from independent directors, changed her mind and backed Natale.
Ed Rogers’s actions also have opened a rift in the family, with his sisters Melinda Rogers-Hixon and Martha Rogers and his mother coming out publicly in support of Natale.
In an Oct. 24 statement, Roger-Hixon, Martha and Loretta Rogers, along with board members MacDonald, John Clappison, David Peterson, Bonnie Brooks and Ellis Jacob, said they “unequivocally support Joe Natale as CEO and support his management team,” adding that they remain board members and constitute a majority of board members of the company. “No other group of individuals has any authority to purport to act as the Board of Directors of Rogers Communications.”
In a series of tweets, Martha Rogers lambasted her brother, saying his self-reappointment as chairman “should be taken as seriously as if he appointed himself King of England.” She also likened his behind-the-scenes meetings to playdates with the “Old Guard,” adding that her late father, Rogers Communications founder Ted Rogers, would “be so disappointed to see how Ed and his puppet masters are behaving, destroying the company he built.”
While the battle is headed to court, that might only delay the inevitable: Martha Rogers said in later tweets that the family would “spend every penny defending the company, employees & Ted’s wishes, nothing you can do will deter us. Bring. It. On.”
Bloomberg opinion columnist and former Goldman Sachs investment banker and M&A lawyer Matt Levine wrote that the Rogers sisters and their mother may have won the battle in removing Ed from the Rogers board, but lost the war.
“Edward Rogers lost at the board but won at the trust, meaning that he will eventually get to kick his sisters and mother off the board, reinstate himself as chairman and fire the CEO, but meanwhile his sisters and mother and the CEO probably have a few months to run the company and try to head him off,” Levine wrote.
Ryder wasn’t convinced the outcome would be that simple, adding that although Ed Rogers may have his own backers on the Trust board, Loretta Rogers’s influence should not be underestimated. The 82-year-old widow is the daughter of late British politician and Governor of Bermuda John Roland Robinson, who gave Loretta $450,000 shortly after she married Ted in 1963 to help finance his son-in-law's business endeavors.
“Part of Ted Rogers’s success was his wife,” Ryder said. He said Loretta Rogers’s money was what helped her husband Ted form the company in the first place. “It’s really her money that is the backbone of Rogers.”
It appears that the ongoing soap opera is far from over. Just how it ultimately plays out will depend on how long Ed Rogers can hold on to his board support and how long the companies are willing to let this Canadian version of Festivus (the airing of the grievances) continue.
Don’t care you’ll come for me, you have 3 wks straight, & we still get up every time you knock us down. My mother−the co-founder−is 82, what gentlemens. We’ll spend every penny defending the company, employees & Ted’s wishes, nothing you can do will deter us. Bring. It. On.October 23, 2021
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Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.
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