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Cable Tech

Canada's Rogers mired in family feud

HBO's Succession, a fictitious series about family infighting at a big corporation, just kicked off its third season. What's going on at family-controlled Canadian operator Rogers Communications these days shows that real life can sometimes be stranger than fiction.

Tensions are at a high boil at the Canadian cable/mobile operator after the company board ousted Edward Rogers as chairman last Thursday (October 21), and slotted in John MacDonald, a member of the Rogers Communications board since 2012. And that's just scratching the surface of what's been going on below.

Amid all this, Edward Rogers, the person in charge of the family trust that controls the Toronto-based company and remains on the company board, moved to replace five company directors (John Clappison, David Peterson, Bonnie Brooks, Ellis Jacobs and MacDonald) with his own handful of nominees (Michael Cooper, Jack Cockwell, Jan Innes, Ivan Fecan and John Kerr).

"The Control Trust Chair is disappointed with recent events and commentary regarding the governance of [Rogers] and has lost confidence in the board of RCI as currently constituted," Edward Rogers said in a statement to The Globe and Mail. "The Control Trust Chair believes that it would be in the best interests of [Rogers] to reconstitute the board."

The move would effectively remove the majority of independent directors of Rogers Communications with nominees of the Rogers Control Trust. And it would attempt to toss out the directors who are against Edward Rogers' plan to overhaul the management of the company, notes The Globe and Mail.

The move also came after a meeting of the family trust where Edward Rogers' mother and his two sisters supported a motion to restrict his ability to exercise voting control over the company, the paper said, citing a person close the company and its board.

Failed ouster

This also comes about after Edward Rogers reportedly tried, but failed, to oust Rogers Communications CEO Joe Natale and replace him with then-CFO Tony Staffieri. In another strange twist, Natale reportedly learned of the plan through an accidental "butt dial" from Staffieri. Staffieri stepped down in late September after a majority of the board and the Rogers family stuck with Natale. Paulina Molnar is Rogers' interim CFO.

Against this backdrop and board clashing, Rogers is plowing ahead with a proposed merger with fellow Canadian cable and mobile operator Shaw Communications.

Rogers Communications was taken aback by the attempted move by Edward Rogers, noting that it's being attempted via written resolution without convening a meeting of shareholders. The company said it's also concerned that its controlling shareholder, the Rogers Control Trust, would try to alter the company's "independent governance framework in this unprecedented manner."

"The Company is not aware of this mechanism ever having been utilized in respect of a public company in Canada," Rogers Communications said in a statement issued Friday (October 22). "Directors of public companies are invariably removed at meetings of shareholders that are convened after proper notice and disclosure has been provided to all shareholders, and they have had an opportunity to consider the information and make an informed decision. This process generally takes several months or happens at the company's annual meeting."

Rogers said then that it had yet to receive any documentation or resolution from Edward Rogers or the trust, but would "consult with its counsel" about the legality of the action if and when it's received.

Melinda Rogers-Hixon, deputy chair at Rogers, stated to The Global and Mail that her brother "miscalculated his legal position. There is no precedent by which he can simply fire five independent Rogers directors and replace them at a whim."

"This has been a challenging time for the Corporation and I want to reaffirm on behalf of the majority of the Board our support for and total confidence in the management team and CEO of Rogers Communications," MacDonald said in a statement.

Oh, yeah… earnings

And next to all this drama, Rogers posted Q3 earnings last Thursday.

When pressed about the board spectacle, Natale stressed that he has "strong unequivocal support from the board" to direct the company. He was also confident that Rogers would get the Shaw deal pushed through. "So, I feel supported."

Cable revenues rose 3%, as the company added 17,000 broadband subs. Natale said the company is pleased with the DOCSIS roadmap, noting that DOCSIS 4.0 will help support multi-gigabit speeds, and help the company expand beyond current high-end offerings that deliver up to 1.5 Gbit/s, thanks in part to some targeted use of GPON.

On the video end, Rogers continued to expand the reach of Ignite TV, a relatively new IP-based TV platform powered in part by an X1 syndication deal with Comcast. Rogers added 64,000 subs to the Ignite TV platform in the quarter, expanding the base to 730,000, up 55% from a year ago.

In wireless, Rogers added 175,000 postpaid net subs, a 27% increase from the year-ago period, and due in part to the continued reopening of the economy. Rogers is also pursuing a fixed wireless access (FWA) strategy, but admitted it's eight to 12 months behind its peers on deployment as FWA accounted for less than 1,000 of its total net adds in the period.

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— Jeff Baumgartner, Senior Editor, Light Reading

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