Rogers family moves to consolidate control of namesake company
When Joe Natale stepped into the CEO role at Rogers Communications (RCIb.TO), he wasted little time highlighting what he felt mattered most.
“I believe teams only succeed if they obsess – truly obsess - over the customer experience,” he told shareholders at the company’s annual meeting on April 19th, his first official day at the company.
Eight months into the job, Natale has placed Rogers’ money where his mouth is, focusing on improving the experience for wireless customers and ramping up for its new Internet-protocol television (IPTV) offering, while shifting some attention away from glitzier parts of the business such as the Toronto Blue Jays and the company’s high-profile partnership with Vice Media.
“He has come in and he has really put forward his commitment to the customer, and getting the customer service working effectively,” said Rob Goff, a telecom analyst with Echelon Wealth Partners, in an interview with BNN.
So far, the focus seems to be paying off.
In its latest quarter, Rogers added 129,00 new wireless postpaid customers – its strongest wireless growth eight years – with plans to continue spending significantly on its wireless network.
Rogers’ stock has risen 25 per cent in 2017, compared to 12 per cent for Telus shares and six per cent for BCE, which is BNN’s parent company.
And heading into 2018, there will be plenty of focus on Rogers’ IPTV efforts. After pulling the plug on its plan to build an in-house offering, it is aiming to begin the rollout of its product on the Comcast X1 platform in the new year – an initiative Natale described as the “revenge of cable TV” at a Scotia Capital conference in May.
Getting back to its core wireless and cable businesses has been a priority for Rogers after former CEO Guy Laurence was ousted last fall. At the time, BNN reported on tensions between Laurence, a British-born executive known for his brash style, and members of the Rogers family, which controls the company.
“Guy was an agent of change. I believe he stirred things up. And maybe that was a healthy thing,” according to Goff.
While outgoing Rogers Chairman Alan Horn recently described Natale as an “outstanding” CEO, the family will be watching closely from the boardroom: on January 1st, Edward Rogers will take over as chair, while his sister Melinda will assume the role of deputy chair.
Along with Natale’s customer obsession, there have been clear signs of a shift away from some of Laurence’s headline-grabbing efforts.
Last month, The Globe and Mail reported Rogers no longer plans to financially support VICELAND TV. Plans for that channel were unveiled in October 2014, when Rogers and Vice Media announced a $100-million joint venture to create a new TV channel and open a production studio in Toronto.
“We’re going to create Canadian-focused content that we will use exclusively on our mobile phones as well as distributing more generally across the web,” Laurence told reporters at the time.
Now, according to one telecom analyst, Rogers could pull the plug entirely on its joint venture with Vice.
“I wouldn't be surprised to see Rogers push away from its partnership with Vice," Edward Jones analyst David Heger told BNN in an email. "Natale appears to be reviewing all of the media assets with a thought of improving the media division's financial performance. If he feels that Vice is not delivering a financial benefit to Rogers, I would not be surprised to see him end the relationship."
“We won't comment on speculation," Chris Ball, a spokesperson for Vice Media, told BNN in an email when asked about the company’s partnership with Rogers. "As far as expectations go for VICELAND, the channel is hitting its creative stride here in Canada. We're confident that our audience will continue to find us as we head in to 2018."
In a statement provide to BNN, Rogers Media, which oversees the Vice partnership, declined to comment.
Rogers also made headlines recently when its chief financial officer discussed whether the company would consider selling the Toronto Blue Jays.
“We’re looking at ways to better surface value for the Blue Jays,” Rogers CFO Tony Staffieri told a group of investors at a recent UBS media conference. “There isn’t anything imminent that we are about to announce, but we’re certainly looking at the alternatives,“ he added. “We would like to get the content without necessarily having the capital tied up on our balance sheet.”
“I don’t think you float that idea in a public forum without having some real intent to test the market at some point,” said Brian Cooper, a former VP of business development and operations at Maple Leaf Sports & Entertainment, in an interview with BNN.
“As we have said there are no plans to sell the Jays,” Rogers spokesperson Sarah Schmidt told BNN. “We continue to look for the best way to get credit for our incredible sports portfolio in our overall company valuation.”
Some investors aren’t surprised by Natale’s perceived willingness to shift some focus from areas like Vice and the Jays, given his previous role as the chief executive at Telus – a company which has avoided owning media assets and whose current CEO, Darren Entwistle, is known for his own obsession with customer service.
“Natale comes from the school of Darren Entwistle, which is infrastructure and services,” said Stephen Takacsy, portfolio manager with Lester Asset Management, in a phone interview with BNN.
“Telus never wanted to get into the content business. Sports franchises can be valuable, but they can also lose a lot. Logically, Natale is going to follow that playbook,” added Takacsy, whose firm currently owns shares of Telus and BCE, but not Rogers. “It’s a good time to monetize assets.”
Indeed, Forbes recently estimated the Blue Jays to be worth US$1.3 billion. Ultimately, however, former Rogers executive Ken Engelhart believes the Jays will stay in the Rogers fold.
“The broadcasting assets - the sports assets - don’t make a big difference in the bottom line,” he told BNN.
“But they’re part of the culture of who Rogers is.”