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His house made news last summer—at $7.5 million, it boasted a record price tag for Calgary—but Jim Shaw saw a need for improvements. Some dark wood, leather and rows of books, to start with. "I'm doing a Winston Churchill room," declares the 51-year-old CEO of Shaw Communications, a history buff who cites the iconic British PM as an influence. "When you think about Churchill, you think about what? Powerful. Dark, lots of books—that sort of thing. And we put in a fan, just in case somebody wants to have a cigar."

Barely containing his excitement, Shaw moves the conversation toward the as-yet-unfinished pièce de résistance of his extreme home makeover.

"You ever see Batman? You know when Batman used to go to the phone, press a few buttons—da, da, da—and the library would open up and he'd slide down the pole to the Batmobile? Well, I don't have a pole, and I don't have a Batmobile or none of that, but that's where the washroom is going." He is almost in stitches over the concept of a hidden spy bathroom. "The whole wall will just kind of open up, then it closes." He shrugs unapologetically. "Hey, that's just how we think around here. We're just a little off the mark."

Shaw is laughing, but make no mistake—the Winston Churchill Wing isn't for recreation. It's a place where Shaw will meet with executives, investors, bankers and whomever else, at all hours of the day or night, seven days a week. The room is designed so that traffic coming in and out won't disturb his family in the rest of the house. It's a war room for a man who relishes a battle.

Over the past two years, Shaw has emerged as one of the most polarizing figures in Canadian cable and broadcasting. He has clashed with regulators, taunted the big TV networks and made life difficult for niche cable channels. But what many casual observers may have missed is that Shaw has been acting out from a position of steadily increasing power. In the convergence battles of a decade ago, content was supposedly king and the TV networks held all the cards. Yet today, cable companies have emerged the clear victors, holding the most important asset in the business: a near-monopoly over the biggest entertainment pipeline into homes—conveying not just TV, which was the original idea, but also Internet and phone service.

Even in a recession, Canada's second-largest cable company is having one of its most profitable years ever. Shaw Communications dropped $195 million last year just to stock up on wireless licences that will allow for expansion into cellphone service down the road. Its dividend has increased while other companies are slashing payouts. And last quarter, Shaw's subscriber growth began to accelerate despite a slowdown in consumer spending across the economy. In the year ahead, free cash flow at Shaw Communications is expected to reach half a billion dollars, the highest target the company has ever set for itself.

What's more, with the recent death of his ally and confidant, cable pioneer Ted Rogers, Shaw is thinking bigger. Not content to merely be one of the country's cable titans, he wants to be the cable titan. He's not planning to buy Rogers Communications, mind you. But soon enough, he can see his family-run company usurping Rogers at the top of the food chain in several key subscriber categories. "It just looks to me like there's a bit of the changing of the guard," he says. "With Ted gone, who is it that now leads the industry? It's Shaw. That responsibility falls to us now."

Shaw knows he is perceived as the Cowboy of Cable. The cliché sticks merely because he's from the West, rarely dons a suit and typically drops the g's from his sentences. "We're smokin' right now," Shaw recently told analysts on a conference call in his patented plain speak. Still, the label is not entirely unwarranted. For his entire life, Jim Shaw has been a shoot-from-the-hip kind of guy.

It's possibly the most significant trait that distinguishes him from his father, James Robert Shaw. The elder Shaw, who changed his name to JR, period (but no periods), is a gentle, soothing person to talk to—the sheriff to his son's outlaw.

JR started the company that would become a multibillion-dollar cable empire back in the '60s, after relocating to Edmonton from Southern Ontario to expand his family's industrial business. JR made a good profit from the oil and gas industry, coating steel pipes with polyethylene to protect them from corrosion. However, the advent of plastic piping for natural gas told JR he was in a sunset business.

Back in Ontario, JR's father, Francis, had started a cable TV operation, even though the thought of paying for television was still a novelty to most viewers. As a boy growing up near Sarnia, JR had been a fan of the U.S. networks he could receive via rabbit ears from Detroit, marvelling at the black-and-white episodes of The Lone Ranger. Now that he was living in Alberta, too far from the U.S. border to pick up a good signal, he saw the real opportunity for cable. Why should people living in cities like Edmonton not have access to the same channels people living next to the border did?

After negotiating with the newly formed Canadian Radio-television and Telecommunications Commission for two years, JR in 1970 struck an agreement to bring CBS and PBS north from Spokane, Washington, into a hub in B.C., whence signals could be microwaved across the mountains into Alberta. Shaw Cable was born. It was a revolutionary move: JR had won in Ottawa by arguing that consumers deserved choice. The CRTC's ruling foresaw the possibility of offering as many as 27 channels—though no one had any idea where all those stations would come from. "People would say to me, 'Why would you build something with 27 channels. I can only watch one at a time,' " he says, laughing. "And I would say, well, you've got to have a choice."

How much of a pioneer was Shaw? A month before Ted Rogers died last year, he sent a signed copy of his freshly published memoirs to JR, with thanks for letting Rogers piggyback on some of his best ideas. But despite being a path breaker for cable in Canada, JR has a sort of wide-eyed disbelief at how the industry has unfolded. He marvels at the 999-channel digital universe, with its video-on-demand movies and crystal-clear high-definition channels. "We had no idea about satellite or fibre optics back then," JR says. "It was a new world."

Still, young Jim wasn't itching to join the family business. The Shaws had moved to a farm outside of Edmonton; Jim spent his days pitching hay and trucking grain, his nights tuning up a blue 1970 Chevy Malibu, which he raced on the back roads. His rough-and-tumble, never-back-down side was already well developed.

"The first time I ever saw Jim was the first day of Grade 6," says Ken Heintz, now a lawyer in Edmonton who was one of Shaw's closest friends growing up. "He was fighting flat-footed, John Wayne-style, slugging it out with the other biggest kid in school. That's how he operates. Jim was a good fighter. I've never known him to go looking for a fight, but I've never known him to walk away from one."

True, as a youngster, Shaw was big for his age. He was a reluctant student, but instinctively good with numbers and possessed of a considerable drive. By his high school years, Shaw wanted to be out making money. "I wouldn't say we were the bad boys, but certainly we were on the rebellious side," Heintz recalls. "Jim was much the same way back then as he is now in business. The next ass he kisses will be the first one."

Barrel-chested like his father, Jim appeared destined for a career running his own construction company or landscaping outfit, rather than managing the pipe-coating business or getting involved with the nascent cable operations. He enrolled briefly at the University of Calgary, but lost interest. Instead, he and Heintz concocted a Christmas tree business. From there, Shaw dabbled in tree delivery, installing evergreens and weeping willows around Edmonton as new housing developments sprang up.

His entrepreneurial ideas were almost always off the wall. As a promotional strategy for Jim's Tree Moving, he grabbed a chicken from the family farm and entered it in a race at the local fair in Camrose. The chicken, which Shaw dubbed Tree Trucker, was a crowd-pleaser that Shaw carried around in a beer case. But his plan fell apart at race time. "Tree Trucker ran very poorly that year," Heintz recalls. He did, however, do well at dinner.

Shaw went to work for the pipe-coating business—a tough factory job, particularly in the heat of summer. Then, feeling the need to strike out on his own, he dabbled in rock-hauling. However, by now—the 1980s—cable TV was starting to take off. People were paying to get more channels and better reception. And new-fangled specialty channels such as MuchMusic and TSN were about to launch. The business itself was being transformed by consolidation: Like Ted Rogers in the East, JR was buying up guppy-size players across the country.

It was an exciting time to be in the business, and Jim was still in his early 20s. JR suggested—strongly—that Jim come aboard. Still craving independence, Jim did join, but moved to Edmonton and began on the ground with the family's operations there, installing cable boxes and driving a truck. Eventually, JR began moving him up the ranks.

Meanwhile, JR kept expanding his reach, often mortgaging the company to make acquisitions. He believed that the more a company could cluster communities together, adding hundreds of thousands of subscribers with each deal, the stronger it would be.

In 1994, the deal that would ultimately define the modern cable industry in Canada was forged in a dining room at the Toronto Club, an old-money establishment where Rogers had summoned JR for a meal. Ted had the room cleared, save for one table, covered in white linen.

JR had been asked by the media company Maclean Hunter to step in as a white knight against a takeover bid by Rogers. Ted was not pleased. JR liked the thought of having Maclean Hunter's western cable operations, particularly in Victoria and Calgary. But fighting Ted was risky. If Shaw won, it gained a powerful enemy. If Shaw lost, it walked away with nothing, and still gained Rogers as an enemy. On the other side of that table, Rogers knew Shaw could drive up the price of the assets in a bidding war. Over dinner, the two 60-year-old men decided to partner on the deal, and divide up the Maclean Hunter assets.

With this pact, Canada's cable industry essentially became an East-West duopoly, barring Quebec (where the Péladeau and Audet families would ultimately control the Vidéotron and Cogeco cable empires, respectively). Rogers and Shaw have become complementary companies, sometimes swapping assets and strategy as if they were two arms of the same operation. "Over the years, we've kept in very close touch with the Shaw organization," says Phil Lind, vice-chairman of Rogers Communications. "We saw it not so much as a rival, but as another strong, emerging cable company. We recognized it very early on."

Soon after, another major deal redefined Shaw by expanding it beyond the confines of cable. By the mid-'90s, the company had begun assembling a media division, fearing that the convergence of broadcasting and telecommunications companies happening across North America would steamroll Shaw. "Those were scary days," JR says, sitting in his Calgary office, pantomiming trembling hands to emphasize his point.

When Western International Communications went on the block in 1997, Shaw moved on the assets, but found itself in a bitter fight against a tough rival: Izzy Asper at CanWest Global Communications, who coveted WIC's western TV stations as building blocks for a national network. After two years of mudslinging, the two companies split the WIC assets. Shaw walked away with a stable of specialty channels and radio stations, while CanWest took nine local TV stations.

It was during those years that JR began executing his plans to turn over the reins to the company, which he had relocated to Calgary in 1995. Jim was named CEO of Shaw in 1998. And in 1999, Shaw spun its new radio and TV assets off into publicly traded Corus Entertainment, turning a $400-million initial public offering into a $2-billion stable of assets in the frothy markets of the time. Daughter Heather Shaw was named chairman of Corus. (Her sister, Julie, an architect by trade, is not on staff but sits on the board of Corus and also designs Shaw's buildings.)

Lastly, as Jim moved up through Shaw, his brother, Brad, who is seven years younger, followed in his brother's footsteps, starting in B.C., then rising up though the ranks to senior vice-president of operations. On the brothers' watch, Shaw has grown to 10,000 staff and a market capitalization of $8 billion, with a dual-class share system ensuring that the family retains tight control. Shaw boasts 2.3 million cable accounts and 893,000 customers subscribing to the StarChoice satellite service. Shaw also provides Internet service to more than 70% of its customers—one of the highest rates among North American cable companies.

The smooth generational handover stands in stark contrast to sputtering succession efforts at Rogers. At Shaw, JR, the chairman, has long since stepped back from the daily operations; he flies into town from his winter home in Hawaii for important meetings.

From the start, JR let Jim be a truly in-charge CEO, says Ken Stein, the head of regulatory affairs for Shaw. "JR made a very conscious effort when people would come to him and say, 'I've got a problem that I've got to deal with you on.' He'd say, 'No, you've got to talk to Jim,'" recalls Stein. "JR never let anybody come to him. Now, do JR and Jim talk every day? Probably. But does JR tell Jim how to do anything? No, I don't think so."

Now that cable has arguably gained the upper hand over the phone companies and broadcasters, there are concerns that the industry has become too powerful. And Shaw is the magnet for this argument.

Since in their respective markets the cable companies hold near-monopolies—built over the years by consumer tithes—they are the gatekeepers of content. Today, more than 90% of the country subscribes to cable or satellite TV, including services such as Shaw's StarChoice. Any new channel launching in Canada—no matter how big or powerful the broadcaster—must be given carriage by the cable companies before they can reach most of the country.

Not only are broadcasters reduced to supplicants, but there is little prospect of relief in the form of increasing competition in cable. The high barrier to entry—the cost of wiring the country—means that no company is likely to step up and challenge the dominant players. Even the threat of the Internet as a delivery mechanism for TV programming does not daunt the cable firms, since they are also the ones who sell Internet service to homes, albeit with competition from the phone companies.

In the rare cases when cable companies do apply to build competitive lines in an area occupied by another player—a strategy known as the "over-build"—it's usually a calculated strategy to force the other firm to sell. Rogers did it in 2007 with Aurora Cable, headquartered in the Ontario town of the same name, threatening to start laying wire, until the smaller company finally buckled and sold for $80 million. And last year, after failing to persuade a small cable co-operative in Campbell River, B.C., to sell, Shaw applied for an over-build in the region. The CRTC, knowing it could not refuse the right to build—since that would by definition be anti-competitive—granted the licence. Campbell River was one of the few remaining areas in Western Canada with an independent cable supplier. Residents finally cracked in August, accepting $46 million from Shaw. A policy designed to increase competition achieved the opposite.

Those most concerned about cable's power, however, are the small specialty broadcasters who struggle to lock up channel placement. VisionTV, a multifaith channel, has complained several times to the CRTC in recent years, saying it has been repeatedly bumped around the dial by Shaw, costing the channel viewers. "We were averaging once every four to six months," says Bill Roberts, CEO of the channel's parent company, S-Vox.

Shaw maintains it must reserve the right to shuffle channel packages at will, especially as more high-definition services are added—bandwidth must be carefully managed. But other broadcasters have lodged the same complaints. OUTtv, aimed at gay viewers, said that it, too, was being constantly moved, and that Shaw's salespeople weren't offering the channel in their pitches to customers. At one point, the company even placed OUTtv amidst a set of pornographic channels.

What angers these small channels most is that they are powerless against the big cable companies. OUTtv eventually took its complaint to the CRTC, pointing out that its subscriber levels were disproportionately lower on Shaw than on any other carrier. In most markets, between 8% and 18% of digital subscribers take OUTtv, says Brad Danks, chief operating officer for the channel, while in Shaw's markets, it's less than 1%.

Danks doesn't believe his channel is being pushed around any more than Vision, or other smaller broadcasters such as APTN, the aboriginal channel. "They are an equal opportunity offender," he says of Shaw. The CRTC agreed with the complaints, and ordered Shaw to change the way it was treating the broadcasters.

True to its founding emphasis on consumer choice, Shaw Communications has argued it should be allowed to offer channels based on market demand, carrying popular channels and dropping ones that don't draw big audiences.

By emphasizing the market and effectively dismissing niche audiences, Shaw is eschewing the politically correct playbook that is normally embraced in Canada's cultural industries. And he's been consistent about it: When not annoying minority broadcasters, he's bashed the $250-million Canadian Television Fund as a waste of consumer dollars.

Cable companies are required to collect money from subscribers each month to send to the CTF. In 2006, Shaw temporarily pulled his payments, upset that the company had no say in how the money was spent, and that the fund could not show to his satisfaction where the dollars were going. How many hits was the fund producing, anyway? All-out war ensued.

CRTC chairman Konrad von Finckenstein responded by calling a public hearing to discuss the concerns. But when Shaw heard von Finckenstein wouldn't be attending in person, he too backed out, declaring that he wasn't going to Ottawa to debate with the CRTC's "B team."

Shaw knows he is considered the bad guy, the redneck and the rebel because of his stances, but he refuses to apologize to regulators. "When it comes to the business side of the equation, we're pretty definite about what we want. We think we know what sells well," Shaw says. "We question sometimes channels getting licensed that are way off the mainstream…if the channels get too narrow, nobody takes them. There's nothing worse than going through 200 channels and going, ugh, and having a hard time deciding." (Shaw once told the CRTC that some French channels carried on his service had only 40 subscribers, and that he should be allowed to drop them. That drew a backlash in Quebec.)

Ken Stein, Shaw's regulatory deputy, laughs at how he sometimes must keep the CEO on a short leash. He recalls a 2006 CRTC hearing to discuss cable regulations, where Shaw launched into an attack on the television fund, saying,

"Our view of the CTF is that it is not a very effective organization, it is basically…"

At that point, Stein, who'd been a high-ranking bureaucrat in Ottawa, jumped in because he knew what was coming. With a frown and a shake of his head, he conveyed his message to Shaw: "Don't use the word trough."

The CEO happily obliged, instead embarking on a detailed description of the unnameable object: "What do you call it on a farm when you have a big thing and everybody goes and eats there?"

When Shaw failed to show up at the next round of important industry meetings, in April, 2008, a few months after he had boycotted the CTF hearing, von Finckenstein saw an opportunity to fire back at the CEO. "Let me say that I am somewhat disappointed in not seeing Mr. Shaw here," the CRTC boss told Stein and other Shaw executives. "I thought he would have done us the courtesy of showing up personally. Sending you, which in his terminology I would characterize a 'B team,' I don't think adds to the process…I would have appreciated the opportunity to deal with him on some of these issues one on one."

Instead of renewing Shaw's licence for the standard seven years, the regulator shortened Shaw's licence to two years. The change came after 17 years of Shaw simply having its licence renewed through the mail. "The commission felt that the file was thick enough to have special conditions, and a special warning," CRTC vice-chair Michel Arpin said at the time. "If there had been only one or two instances, the commission might not have been as upset."

But nobody at the CRTC knew that day where Shaw was, and the profound changes the first few months of 2008 would have on him. Shaw wasn't staying away out of spite. He was laid up in bed.

Every once in a while, if a guy can't hear the wake-up call, that's the way it goes," Shaw declares. By "that," Shaw means getting hit with health problems. This realization has led to a personal renaissance over the past year—or, as he calls it, "a regeneration of Jim."

Early last year, the CEO was felled by a series of bleeding ulcers that crept up on him and suddenly forced the long-time workaholic to take time off. He's reluctant to elaborate, but the affliction was serious enough to inspire industry chatter about the possibility of Brad being groomed to be the next Shaw in charge of the family business, should Jim feel the need to step back. But it never came to that.

Shaw has since overhauled his lifestyle. He's gone from cheeseburgers and steak to salads—and more salads. He's more active than he's been since the early days on the farm, and he's dropped 50 pounds. When Bay Streeters saw him on the business news channel BNN last year, jaws dropped at how different he looked.

Gone was the heavy-set CEO who once donned biker gear at a cable convention—and who genuinely looked the part. In his place was a trimmer version, wearing glasses and a suit.

"Basically, all the doctor said to me is, 'Jim, you can't keep going that way or you'll just fall over dead one day,'" Shaw says of his work-hard, play-hard lifestyle over the past two decades. "I was getting pretty heavy, and then you don't eat right. There's all sorts of things, drinking too much—a whole bunch of everything. So it's just like, okay, we shut all that down. We got all moderated."

A helpful inspiration was his marriage a few years ago to an investment banker in Calgary. "I had got divorced, and I was just hanging around like a regular single guy, and we just started dating," Shaw says. "And I said, what are you doing, Jim, man? You've got this great-looking young gal. So I said I better put the name on the shingle or else she'll be leaving town." He credits Meg Nicholson, who is 18 years his junior, with getting him back in form.

The company is now preparing to tackle its most radical transformation since those days in the '90s when it was acquiring cable operations and broadcast properties by the armload. Shaw's purchase of wireless licences opens the door for the company to step into the cellphone business whenever it wants.

In another sign of the power the company now wields, it has decided to sit on those assets, rather than overextend itself to launch a cell company in a soft economy. Few companies have the luxury to stockpile real estate, then let it sit. The mere thought of a power player like Shaw getting into the wireless market is enough to make the likes of Bell, Rogers and Telus quiver. Shaw can easily take a big bite out of the Western market by offering to bundle its cellphones with cable and Internet.

Former BCE chief executive officer Michael Sabia figures Shaw has been underestimated. About five years ago, Sabia began exploring potential partnerships with Shaw, having become a fan of the company. While he's careful to say they weren't merger or takeover talks, "we had a very high regard for what they were doing," Sabia says.

The company's strength is discipline, he argues. The resolve to stay out of the cellphone market for now, waiting until maybe a year or two down the road when the market picks back up, is an example of this. Meanwhile, new entries into the wireless business could be rushing into the market at the worst possible time. "There's no kind of Field of Dreams 'Build it and they will come' thinking about how they run their business," Sabia says.

He also thinks Jim Shaw's plain-spoken ways are less cowboy and more calculated than most people give the CEO credit for. "My take on that is that every time Jim cranks that up, grab your wallet."

But is the recent transformation of Shaw's CEO a sign the gunslinger is mellowing? "I don't know," Shaw himself says. "Are people going to say he's all quiet and mellow now? I'm not sure if you'd get that out of Jim. Maybe I'm just Jim 'light' now, as opposed to Jim full-strength."

As evidence that he has not gone soft and matured, he points to the fact that he sent out 500 Christmas cards this year, each denoting the donation of a goat to an impoverished village in the Third World on behalf of the recipient. "A whole herd!" Shaw bellows. "Is that mature? I don't know. Maybe I should send people a Rolex or something."

Most of his job, he insists, just isn't that fun. "I get to go with Ken Stein tonight to a regulatory dinner," he says, intentionally phrasing out "reg-yooo-la-tor-eee" for effect. "It will be painfully dull." But the fire is burning, as it always has, to build out the cable business, and jump past Rogers in subscriber numbers one day. "Just the other day, I was looking through the stats on the largest cable operators in Canada," he says. "And I think we're only like 60,000 behind Rogers."

Still, the evidence of Jim Shaw's mellowing is there. He ran into von Finckenstein at a social event in Ottawa several months back, and the two men agreed to disagree. They even shared a laugh. Shaw has largely left his concerns about the CTF alone of late, and he recently sat down with Bill Roberts, CEO of S-Vox, at Shaw's head office to discuss VisionTV's issues in person. It was a cordial meeting, complete with a viewing of the extensive collection of Canadian art that JR has amassed at the headquarters over the years. Roberts says there are now even tentative plans to have lunch this spring with Jim. "I'm optimistic," chuckles Roberts of his recent détente with Shaw. "If there is an epiphany, I'd like to be part of it."