Why Quebecor has little to celebrate as Quebecor and Corus teams up

Rogers Communications Inc. is stealing a march on Quebecor Inc. by announcing a deal with Facebook Inc. just as Quebecor is beginning to dig out from the saga surrounding the departure of its CEO….

Why Quebecor has little to celebrate as Quebecor and Corus teams up

Rogers Communications Inc. is stealing a march on Quebecor Inc. by announcing a deal with Facebook Inc. just as Quebecor is beginning to dig out from the saga surrounding the departure of its CEO. On Monday, Rogers announced a deal with Facebook to “offer users access to a range of premium content from Rogers’ owned and operated content partners”.

Quebecor’s Corus Entertainment Inc. is facing a similar situation as its new CEO, Jim Shaw, took the job as president and CEO in September of last year. For a brief moment, Shaw said his first priority would be to help improve morale after the exodus of top executives at the company. The shakeup left Corus with a new CEO, Claude Galipeau, who was also Shaw’s predecessor. The company’s stock plunged more than 20% on Shaw’s first day of work in October, wiping out a great deal of Shaw’s $3 billion worth of stock holdings.

Why did so many top executives leave Corus? While many a business executive has left at the drop of a hat to take a job elsewhere, the nature of the executive exodus at Corus was a bit unusual. The departures were linked with the departure of former Corus chief executive – former CEO! – Will Keenan. Not only had Keenan risen through the ranks to become chief operating officer, he was also one of the most powerful men at Corus. Keenan, who had kept his hands in other parts of the business including television, recorded a $355 million pay package at Corus.

At the time, Shaw was already set to inherit the $3 billion he had accumulated in Corus shares. The fact that a board majority of Shaw’s choosing – led by majority shareholder John Bitove – had tapped Shaw to take over from Keenan seemed to lay a foundation for the tumult to come.

Since Shaw and his board have so far avoided headlines and avoided the chase of the embarrassing stories that is certain to follow when Quebecor’s CEO Shaw Ladner steps down, there is no imperative for him to front the corporate public and explain to shareholders how his predecessor failed to nurture the talent pool necessary to maintain his company’s position in the media sector.

However, without giving Shaw away as the reason for his predecessor’s departure – the main difference between Shaw and Ladner was that Shaw was not being forced to do the deal – it is unclear that Shaw may have inherited a company in a better state than that of Quebecor, which sports only a small slice of Canada’s media market (of the 1.06 trillion dollars of market value that can be attributed to media in the GICS sector , Quebecor has only about 0.32%).

By announcing its own deal with Facebook and with Rogers, Quebecor is left with a lot of questions to answer. “The market is a serious” –but not “anymore” or “quite yet” – – Kevin O’Rourke, managing director at D.A. Davidson in Portland, Ore. “We have some expectations,” he said, referring to Shaw and Quebecor’s ability to unlock value, but “on that front they really haven’t made much progress”.

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