When Jim Shaw passed away in 2018 at the age of 60, Edward Rogers, his family and Joe Natale boarded a Challenger corporate jet and flew to Calgary from Toronto for the funeral service.
At an outdoor tribute in Stampede stadium, on a -25 C January day, the chair of Rogers Communications Inc . and Mr. Natale, the company’s chief executive officer, sat with two rivals, JR Shaw and Brad Shaw, to grieve the unexpected loss of a son, brother and former CEO at Shaw Communications Inc .
Mr. Rogers, 51, and Jim Shaw were close. They are sons of billionaire cable company founders, who compared notes on making their own marks in their fathers’ empires.
Brad Shaw, Shaw’s CEO for the past 11 years, said those shared experiences – two clans that bonded over five decades of funerals, elaborate practical jokes and battles with phone companies and regulators – were what prompted him to call Mr. Natale early this year, to strike a deal that puts one family’s legacy in the hands of the other.
“We have a long, deep history with Rogers,” Mr. Shaw said. “We know and we respect each other, and one of the things we both recognize is we’re at an important inflection point for our industry.”
Shaw Communications, the country’s fourth largest telecom player, faced the daunting prospect of keeping pace with far larger rivals at a time when Canadian companies are expected to invest more than $25-billion over the next five years building 5G networks. Mr. Shaw said: “5G and our urban and rural networks are critical to our customers, and we can move more quickly together than either of us could on our own.”
Mr. Shaw and Mr. Natale first talked about combining forces last August, over dinner in Calgary. They picked up those negotiations this winter in a Calgary airport hangar, and hammered out a Shaw acquisition valued at $26-billion, including debt.
“This is not simply a deal,” said Dale Lastman, chair of law firm Goodmans LLP, which is advising Rogers. “This union is a reflection of a series of relationships, all based on trust and integrity, and all driven by a desire to honour the legacy of the founders.”
Executives at both companies said founders JR Shaw, who passed away last March at 85, and Ted Rogers, who died in 2008 at 75, were two ghosts in that Calgary hangar. Rogers has pitched takeovers at Shaw for decades, and was turned down, prior to finally getting a yes. Mr. Shaw said: “JR, and Jim, were top of mind as I talked to Joe.”
“Edward is as happy as I have ever seen him,” said Mr. Lastman, who has worked with the Rogers family for decades. “He has delivered what his father desperately wanted.”
To put the timing in perspective, Mr. Natale was breaking bread with Mr. Shaw last summer at the same time Rogers was putting the finishing touches on a hostile, $10.3-billion takeover bid for Cogeco Inc. that was launched after Labour Day, and rebuffed. The guy can walk while chewing gum. Mr. Lastman said Rogers’ CEO has a rare combination of operating and strategic skills. “Joe’s always got one eye on the present, and one eye on building Rogers for shareholders in the future,” he said.
Mr. Natale, 55, took the reins at Rogers four years ago. Previously, he was CEO at Telus Corp., which sued in an unsuccessful attempt to prevent him from taking the top job at Rogers. He’s the third CEO since Mr. Rogers passed away, and the first to execute on the founder’s vision of building a national telecom champion.
Mr. Natale delivered a long-sought prize at Rogers by tapping respect built across a telecom industry that boasts rivalries to match the Hatfields and McCoys. Former Shaw president Peter Bissonnette, who is now on the company’s board, frequently ran up against his opposite number Mr. Natale at Telus and said: “There were times we had to reach out to each other and I thought, wow, he’s kind of like us. … He has the same cultural, people-come-first DNA. It’s something that drew me to him.”
Mr. Natale strikes a good balance between being a strategic thinker and an empathetic leader, Mr. Bissonnette said. “Frankly that’s very much how JR was and it’s very much like Brad is. They share those same kinds of values. That’s huge when you’re putting two companies the size of Rogers and Shaw together – to have common values,” Mr. Bissonnette added.
Monty Carter, an Alberta-based former senior vice-president at Telus who spent roughly a decade reporting to Mr. Natale, describes him as an astute leader, who goes to great lengths to show his appreciation for employees. Mr. Carter recalled how when he and his wife travelled to southern Italy to celebrate their 25th wedding anniversary with cooking lessons and vineyard tours, Mr. Natale tracked down the farm where they would be staying. The couple arrived to find a bottle of Champagne and a bouquet of flowers from Mr. Natale in their room.
“That endeared Joe to my wife forever,” Mr. Carter said. “There are many instances of him doing things like that. It wasn’t just for me. He did that for lots of people.”
Mr. Natale’s strong people skills – including his ability to always get the right people from his team into the right roles – will help him navigate a thicket of political and regulatory challenges, Mr. Carter said. “I’m confident they’ll get through this.”
Bundling Shaw with Rogers is expected to face significant scrutiny from a federal government that has been pushing to increase wireless competition and reduce cellphone bills, as it would eliminate Canada’s fourth-largest wireless carrier, Shaw-owned Freedom Mobile. Rogers may have to sell off some mobile assets, such as customers or licences for airwaves used to transmit wireless signals, to get the deal past regulators, according to analysts.
In announcing the transaction last week, Mr. Natale pledged to continue offering affordable wireless plans, with no overage fees, along with $6.5-billion of spending on telecom projects in Western Canada. Industry sources say Rogers’ CEO has already launched a charm offensive with government officials, including deputy finance minister Michael Sabia, the former head of BCE Inc.
To win approval from both regulators and Canadian consumers, Rogers and Shaw are attempting to reframe the national conversation around telecom, by getting the focus off cheap cellphone service for city dwellers. Last week, Mr. Natale stressed the need to bridge the “digital divide” where half of rural homes and two-thirds of Indigenous communities in Western Canada lack the high-speed internet that urban Canadians take for granted.
Federal Liberals are coming around to this argument, according to analyst Jeff Fan at Scotia Capital. In a report, he said by the end of the year, wireless prices in Canada are expected to have fallen by 25 per cent on the Liberals’ watch, which would meet the government’s goals.
Mr. Fan said the government has already signalled it wants to encourage investment in new networks. He said in January, Prime Minister Justin Trudeau issued a mandate letter to new Minister of Innovation, Science and Industry François-Philippe Champagne “that did not emphasize wireless affordability and focused instead on broadband availability.”
However, convincing regulators that a Rogers-Shaw merger will be beneficial for Canadians is not an easy task, said Phillip Huang, a former Barclays telecom analyst and co-founder of street-guru.com, a social platform that crowdsources insights on stocks.
“There’s no political party in Canada that currently thinks having one fewer wireless brand is a good thing for Canadians, so he would need to really address that.”
But Mr. Natale’s years of Canadian telecom industry experience, including a 12-year stint at Telus, puts him in a better position to navigate those talks than the company’s previous CEO, British import Guy Laurence, Mr. Huang said. “He’s your quintessential veteran in the industry. … He’s in a better position than most to handle this.”
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