Louis Audet plans to step aside as chief executive officer of Cogeco Communications Inc. later this year, marking the first time a non-family member will take the reins in the company’s six-decade history.
Mr. Audet has been at the helm since 1993 after taking over from his late father, Henri Audet, the founder of the Montreal-based cable company. Philippe Jetté, a senior executive with Cogeco who has run its troubled business services division since 2015, will become CEO and president on Sept. 1, at which point Mr. Audet will become executive chairman.
The management changes, announced Tuesday, could prompt renewed speculation about the fate of the family-controlled company, although Mr. Audet dismissed any suggestion that his family plans to sell.
“This is fantasy land. This is totally not relevant to us,” he said in an interview with The Globe and Mail regarding the prospect that Cogeco could sell to Rogers Communications Inc. The Toronto-based cable and wireless giant owns shares in Cogeco worth about $1.16-billion, originally purchased when its late founder Ted Rogers hoped to negotiate a takeover (Rogers controls less than 6 per cent of Cogeco Communications’s voting shares and less than 12 per cent of holding company, Cogeco Inc’s, voting shares).
“The family retains control and is very motivated about keeping this company independent, alive, vibrant,” Mr. Audet said, adding that his family, which owns more than 70 per cent of Cogeco Inc.’s voting shares, sees it as a “non-issue if it’s a family member or not” running the company.
He said there is not currently any family member prepared to assume the role but that there could be in the future. Mr. Jetté was selected by the board of directors after a two-year succession-planning process.
Mr. Audet said he is “passing the baton in a spirit of continuity” and noted that he will be 67 years old in a few weeks and 70 by the time he transitions out of being executive chairman, a role in which he will maintain some operational responsibilities. “I think it’s a reasonable time for me to start distancing myself slowly. ... I’ll pass on to [Mr. Jetté] what I know and then he’ll do a very good job.”
Mr. Audet credited his successor with “stabilizing“ the company’s business services division, which has struggled with integration and revenue growth issues since purchasing cloud services provider Peer 1 Hosting five years ago.
Mr. Jetté has been with the company since 2011 and prior to his current role as president of Cogeco Peer 1, he was a senior vice-president responsible for technology and strategy. He spent close to a decade with BCE Inc.’s Bell Mobility business earlier in his career, followed by a stint running his own consulting company.
Cogeco has looked to the U.S. market for growth in recent years, acquiring Quincy, Mass.-based Atlantic Broadband in 2012 and completing a US$1.4-billion ($1.8-billion) deal to buy out Pennsylvania-based MetroCast earlier this year. Pension giant Caisse de dépôt et placement du Québec made a bet on Cogeco’s U.S. strategy, taking a US$315-million equity stake in the company’s U.S. business as part of that transaction.
Its Canadian cable operations have faced tougher times, however, losing television customers to cord-cutting as well as competitive pressure as BCE has expanded its faster, fibre-optic-based services.
Canaccord Genuity analyst Aravinda Galappatthige said in a research note on Tuesday he does not believe a sale of the business is “imminent,” pointing to Mr. Audet’s consistent messages in recent years that the family does not plan to sell.
But he added, “we see a compelling case that it could be sold over the longer term,” noting that Cogeco’s Canadian operations have been under increased pressure in the past few quarters and suggesting that a sale to Rogers could still one day be a possibility.
Barclays Capital’s Phillip Huang praised Cogeco’s move toward professional management, saying it likely means “less emotional attachment to assets, more disciplined/rational capital allocation,” but similarly said, in a note to clients, that he does not expect a sale of the company’s Canadian assets in the near term.
Henri Audet, who died in 2012, founded the company in 1957 with one television station in Trois-Rivières, Que. He made his first cable acquisition in 1972 and by 1989, Cogeco expanded to Ontario, buying cable operations in Burlington and Oakville. The company went public in 1993 and after an expensive and failed entry into the Portuguese market (it bought Cabovisao for $658-million in 2006 and sold it for $59-million in 2012), it ventured into the United States with the Atlantic Broadband acquisition.