Skip to main content
Welcome to
super saver spring
offer ends april 20
save over $140
Sale ends in
$0.99
per week for 24 weeks
Welcome to
super saver spring
$0.99
per week for 24 weeks
save over $140
// //

Business continues at Cogeco the internet, television, home phone providers', location in Lime Ridge Mall in Hamilton on September 30, 2020.

Glenn Lowson/The Globe and Mail

Early in what is proving to be an unsuccessful hostile run at Cogeco Inc. and subsidiary Cogeco Communications Inc., U.S. cable kingpin Dexter Goei made a telling comment about family businesses.

In September, Mr. Goei, chief executive officer at New York-based Altice USA Inc., said for his bidding partner at Rogers Communications Inc., a $1.6-billion stake in the two Cogeco Cogeco businesses was “effectively dead money.”

Mr. Goei simply meant that investors give Rogers Rogers no credit for owning a minority stake in Cogeco for the past two decades. Rogers is a telecom company, and its stock trades at a multiple to the profit per share it earns from cable and mobile phone networks. Rogers shareholders don’t award that multiple for an investment in a rival. Mr. Goei said that when it comes to the Cogeco investments, Rogers would “like to be able to sort out their situation, one way or the other.”

Story continues below advertisement

However, for Rogers CEO Joe Natale and the company’s board, the concept of “dead money” has a different meaning. As Rogers and Altice Altice hit the Nov. 18 deadline for withdrawing their Cogeco offer, something that seems a foregone conclusion, it’s important to recall what Mr. Natale is trying to achieve.

Rogers hired Mr. Natale away from Telus three years ago and tasked him with building on the legacy of company founder Ted Rogers, who passed away in 2008. Ted – somehow, it doesn’t feel right to call him Mr. Rogers – was a true original, a legendary Canadian entrepreneur, consistently able to spot shifts in the telecom sector ahead of everyone else. Visit Rogers’s Toronto head office and talk to long-time employees, and there’s a sense that Ted is still just down the hall. At some point, the reverence can get in the way of making smart decisions.

Rogers’s stake in Cogeco is part of Ted’s legacy. He built the toehold investment in hopes of some day convincing the Montreal-based companies' founding family, the Audet clan, to sell him their birthright. Prior to Mr. Natale’s arrival, two Rogers CEOs held on to the Cogeco stake rather than mess with something that Ted put in place. (It helped that over time, the Cogeco investments increased in value.)

Mr. Natale, with the support of a Rogers board that includes the founder’s widow and offspring, showed in September that he is willing to move on from what the founder created. On several occasions in the past three months, Rogers’s CEO said he moved on Cogeco to “resolve” the long-held investment. He did so knowing full well that hostile takeovers of family-controlled companies are likely to fail.

If the hardball tactics worked – if the Audet family decided they preferred banking $900-million to controlling a cable company or if minority investors pushed for a sale – Rogers would win a prize it long coveted. The synergies that would come from blending Cogeco’s networks into Rogers are staggering.

If the bid fails, as now seems likely, Mr. Natale still gets resolution. He recently said: “If it’s not accepted, we would do what you would expect us to do.” Rogers is universally expected to eventually sell the Cogeco stakes and plow that cash into buying more wireless spectrum, building out 5G networks and winning away customers from the Audets and other rivals.

Rogers currently has a strong balance sheet – another shift away from the way Ted ran the company – and has the luxury of timing the sale of its Cogeco shares. However, as the deadline arrives on Rogers’s bid for its Quebec rival, Mr. Natale is on the verge of clearing away an investment that’s dead money and establishing a culture that’s no longer beholden to a revered founder.

Story continues below advertisement

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies