It was the dying wish of Ted Rogers that the telecom giant he poured his life into would look much different today from the one he left behind 13 years ago. In the time since his death, the founder of Rogers Communications believed the company might have diversified into new lines of business and even cemented itself as a big player in the U.S. market.
One thing is certain. The iconic entrepreneur would be horrified to see his children and wife at each other’s throats in a high-profile battle that exposed the inner workings of both the family and the company to intense public scrutiny.
We know all this because he said so himself in private internal documents filed with the B.C. Supreme Court last month as part of the power play for control of the company.
That case, which was decided in favour of son Edward Rogers against his mother, Loretta, and sisters Martha Rogers and Melinda Rogers-Hixon, culminated this week in the departure of chief executive officer Joe Natale. Tony Staffieri, the company’s former chief financial officer and Edward’s favoured choice to replace Mr. Natale, took over as interim CEO and is in the running to be the next permanent CEO.
Mr. Rogers’s vision for the company after he was gone and how its affairs should be managed with regards to his family are laid out in a 25-page document he titled “memorandum of wishes.”
Headlined “Strictly private and confidential” in all-caps, the document was included in an affidavit filed by Mr. Rogers’s widow, Loretta, along with a full copy of his control-trust will. The will, one of five Mr. Rogers left, dictates how the voting trust that holds the family’s controlling shares should be managed, and how the trust chair, trustees, the company’s board of directors and CEO, should interact, all in byzantine legalese.
On the other hand, the memorandum of wishes, if not exactly a For Dummies version of the will, was written in simple, straightforward language, and even included instructions for the maintenance of his burial plot. It’s impossible to read it and not conclude that Mr. Rogers would be disappointed with both the state of the company and the state of his family.
As the document makes clear, Mr. Rogers’s great fear was that after he died his four children might carve up the company into four parts, or sell off significant chunks of the business. Doing so would deprive family members of the “rare opportunity” to build “character traits of leadership” through working at the combined company. (Indeed, the middle-management ranks at Rogers are dotted with what other employees dub ROTs, or Relatives of Ted.) This anxiety fuelled the creation of the control trust, with its labyrinth of checks and balances and consultation clauses that made the recent power struggle even more complicated.
But he also saw family ownership of the empire he built as a bonding exercise and a safeguard against the corrupting influence of untethered wealth. Families that own active businesses and work together are “more serious-minded and family oriented,” he wrote, and have so much of their financial resources tied up in the business that it imposes a dose of moderation.
On the other hand, families that have sold off their businesses tended to lack unified purpose, and “the plentiful cash spoiled the families and robbed the young of initiative.”
Mr. Rogers tried to head off the arguments his descendants might make for splitting up the company, in particular the need to raise cash or a desire to diversify their holdings. It’s here that Mr. Rogers hinted at what he saw for the company in the years ahead. Rogers was already highly diversified, he wrote, both by industry and geography. He marvelled at how the company had morphed from a radio and cable TV operator relegated to Toronto in the late 1970s into a diverse national telecommunications giant. “It will be interesting to contemplate the reshaping we will see over the next ten to twenty years,” he wrote.
With only seven years left in that time horizon, the Rogers of today looks strikingly similar to how it did when he died. It has dabbled in banking, through the launch of a credit card, and now offers home alarm systems, but it’s also cast off the publishing division Mr. Rogers acquired when he bought Maclean-Hunter in 1994, including Maclean’s and Chatelaine magazines. The rest of the media division, including the sports teams, has been kept more or less intact, though it has struggled to deliver content in the streaming age. (Anyone remember Shomi?)
Certainly there has been no bold venture into a new “technology-oriented, regulated, high capital-cost business with new innovative products.” Some will argue the massive investment under way in 5G networks should count for something, but that is a necessary extension of its wireless business if the company hopes to remain relevant.
Likewise, Mr. Rogers anticipated in 2008, when the memorandum was updated, that the company would diversify further by expanding outside of Canada “during the next 10 years. … Long term, I would hope that Rogers Communications Inc. would have some significant non-Canadian assets.”
That never happened, of course. In the 1980s, Rogers had briefly become a major player in the U.S. by buying control of UA-Columbia Cablevision, one of the country’s largest early cable providers, but sold it to focus on growing its Canadian wireless business. At various times since then, the company has contemplated U.S. expansions, but with the pending $26-billion acquisition of Shaw’s Canadian cable and wireless assets, a foreign excursion seems unlikely.
As for family ownership being a bonding exercise, the public brawl of the past two months suggests the strategy failed. Mr. Rogers knew that tensions would inevitably arise from time to time over the direction of the company, and he tried to conceive of different scenarios that might create divisiveness, focusing in particular on the prospect of the Rogers board of directors finding itself at odds with the family.
“Heaven forbid there arises a situation when the majority of the board of Rogers Communications Inc. are totally opposed to the interests of the Rogers family as represented by the Control Trust Chair,” he wrote. What Mr. Rogers didn’t contemplate, at least in the memorandum, was a family breakdown that pitted Edward, the chair of the trust since his father died, against his own family – mother against son, sisters against brother – in public courts. For more than two weeks one of the largest companies in Canada had two separate boards, one for each warring faction of the family, a perverse way to sidestep the hypothetical quandary he foretold.
Mr. Rogers tried to offer guidance, but it fell on deaf ears. In the event a conflict arose between the board and the Rogers family, Mr. Rogers called on whoever held the position of chair of the trust to “give considerable thought to whether the issue is important enough to the Rogers family to risk a very public spectacle.” If the chair could not negotiate a solution “with honour and respect for all involved” then he would have to “go through the public gauntlet of immediately calling a special shareholder meeting” to replace the board.
It was Edward’s refusal as chair to call a special shareholders’ meeting that spurred Loretta to release the full text of Mr. Rogers’ control-trust will and memorandum, though it failed to sway the court to stop Edward from ultimately ousting five independent directors and replacing them with his own slate.
The twisting Rogers saga is made worse by the fact Mr. Rogers was acutely averse to the family’s secrets being laid bare. As Loretta stated in her affidavit, “Nothing worried [Ted] more than a needless public spectacle.”
At least one uncomfortable part of Mr. Rogers’ last will and testament was never supposed to be seen by anyone outside of family, lawyers and trustees. In the definitions section, between “special control” and “subsidiary,” is his outdated stipulation of who should be considered a “spouse” under the will. “Spouse … for the avoidance of doubt means a spouse within the meaning of section 1 of the Family Law Act, R.S.O. 1990, c.F.3., as it provides at the date of this my Control Trust Will, and does not include a common law spouse or same sex spouse,” he wrote.
As the CEO of Rogers for more than 40 years, Mr. Rogers was by nature someone who tended to take the long view on running a business. That’s reflected in his will and memorandum, in which the phrase “long term” makes several appearances, and in his autobiography, Relentless, released just weeks before his death. “One of the great advantages of a family-controlled company is that its horizon for strategy and planning is normally much longer term than that of widely held public companies, whose managements, by necessity, have to concentrate on the current month’s and quarter’s profits and loss – sometimes at the cost of long-term growth,” he wrote.
This is where Mr. Rogers might be most dismayed by the way the company has been overseen since his death. There have been three permanent CEOs, none of whom managed to complete a full five-year term, and another on the way with no certainty of his fate should he cross trust chair Edward Rogers. In the case of Mr. Natale’s recent ouster, it was explicitly short-term metrics such as stock-price performance that Edward cited as the reason for changing CEOs.
The only permanent CEO in the post-Ted era to match the share performance of BCE and Telus was Guy Laurence, under whom both Edward and Melinda were moved out of management positions. The feeling of mistreatment by family members laid the groundwork for Edward to force Mr. Laurence out in 2016 in the same fashion he dispatched Mr. Natale, the only difference being that this time some in his family tried to stop him.
As for the intense spotlight that’s been shone on the family, the next chapter of the company will be telling. The fate and execution of the merger with Shaw under the presumed leadership of Mr. Staffieri will eventually answer the question, for Edward and the rest of his family, whether the public spectacle was worth it.
In Ted’s own words
On his children’s financial liquidity: “In addition to having received a significant distribution of assets in 2005, our children may be allocated other liquid assets over the years based on their needs and aspirations. Therefore, there is no need to sell the Rogers Companies in order to provide for Rogers family needs for some time to come.”
On family businesses: “My experience over my lifetime makes me conclude that families owning active businesses seem on balance to be more serious-minded and family-oriented. The businesses often take most of the family resources so there is not as much cash to spoil the family. As well, the opportunity to work together seems to result in more benefits than negatives. On the other hand, I have often seen wealthy families whose businesses were sold to be devoid of a unified purpose after a time with portfolio investments. In many cases, the plentiful cash spoiled the families and robbed the young of initiative.”
On the role of the control-trust chair (currently Edward Rogers): “The main reason for the Control Trust is to facilitate one person, the Control Trust Chair being responsible, subject to various checks and balances, for voting the Rogers family’s control position. … My lifetime experience has been that committee and shared decision making often leads to slow, if any, decision making.”
On the duty of the control-trust chair: “The Control Trust Chair must consult widely and earnestly with [beneficiaries, the advisory committee and trustees] before making a final decision – always subject to the necessity from time to time to react swiftly due to external events.”
On board members who annoy: “From time to time the Control Trust Chair may be confronted by a well meaning director of Rogers Communications Inc. who causes continuous bickering and obstruction. In such a case, the Control Trust Chair should express his or her views to the Chairman and the Lead Director of Rogers Communications Inc. and recommend that the Board request that director’s resignation.”
On the benefits of owning Rogers: “Control of a business, particularly a media and communications business, does have significant day to day collateral benefits to the whole family. Some of these benefits have a financial value while others have a leadership, social or public service value. In my opinion, these represent extremely important collateral dividends to the future generations of our issue.”
On the benefits of nepotism: “Pride of accomplishment – ownership – and building the character traits of leadership and responsibility can be accomplished through members of the family working their way upwards in a family group of businesses. This has a unique value. Increasingly, this is a rare opportunity and one not easily replaced if the businesses are ever sold. Put simply, the continued ownership of the businesses offers meaningful career options and board membership opportunities with the opportunity for fulfilment.”
On foreign expansion: “It is anticipated that Rogers Communications Inc. may expand outside Canada during the next ten years. We withdrew from cable in the United States in the late 80s in order to concentrate our resources on developing our Wireless Company. However, long term, I would hope that Rogers Communications would have some significant non-Canadian assets.”
On naming Edward the control-trust chair: “I am told that if I leave allocation of these voting shares on a totally discretionary basis, it is likely they would be divided equally among my four children. I would not like to see this. … I therefore have to make a choice which, however, is subject to being changed to someone else if so decided by the Advisory Committee. I have specified Edward to act as the initial Control Trust Chair. … My wish is for Edward’s designation to carry on during and after the First Interim Period [of one year].”
On interim CEOs: “In order not to prejudice any of the internal candidates, I would recommend not appointing any one of them as Acting Chief Executive Officer. It can become awkward if one of the contenders for CEO is appointed acting CEO as it tends to indicate a preference before a financial choice is made.”
Excerpts from Ted Rogers’ “Memorandum of wishes”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.