Canada’s newest media mogul likes to joke that his career has been built largely on luck, not intelligence.
“My mother said to me when I was quite young: ‘When you have your choice in life between smart and lucky, take lucky all the time,’” says Paul Godfrey, chief executive of Postmedia Network Canada Corp. “I sort of thought about that all the way through. From politics, to sports, to the OLG, to running the National Post, this all sort of fell in my path.”
The 75-year-old newspaper boss has told that story many times before and it’s part of a well-worn mythology he has created about his life in which he plays the role of an everyman blessed with above-average people skills. Over the course of 50 years in politics and business, Mr. Godfrey has used those skills to cultivate a sprawling network of contacts in Toronto and beyond, famously returning every phone call. “I was never the smartest kid in class,” he says during an interview in his Bloor Street office in Toronto. “But if you’ve got the ability to get along with people, doors will open for you that may not open for other people.”
Many doors have opened for Mr. Godfrey over the years and he has also developed a knack for getting out just in time. He left city politics before costs to build Toronto’s SkyDome, now called the Rogers Centre, spiralled out of control, emerging later at Rogers to buy the stadium at a steep discount. He departed Sun Media just before a round of 300 layoffs that signalled the start of more than a decade of job cuts. And he was on the board of Canwest Global Communications Inc. when it went under, once again emerging later with investors to buy key newspaper assets.
Through it all Mr. Godfrey has done well financially, pocketing close to $30-million on one newspaper deal and earning nearly $2-million last year from Postmedia.
“People see him glad-handing around, but he’s pretty disciplined and he’s very strategic,” says Edward Sonshine, chief executive of RioCan Investment Trust who is a close friend.
Mr. Godfrey will need that discipline – and luck – to help him in his latest task: overseeing Postmedia’s $316-million purchase of 175 Sun Media Corp. newspapers from Quebecor Inc. The deal has already raised concerns about media concentration in Calgary, Edmonton and Ottawa, where Postmedia will own both major dailies. There are also questions about the influence of a group of U.S. hedge funds, which own large stakes in Postmedia. And with print advertising revenue falling at a relentless pace, the chain remains under pressure to cut costs. On Friday, Postmedia posted a $50-million fourth-quarter loss and said print revenue fell 21 per cent in the period.
For now, he is taking everything in stride. The Sun deal “gives us the scale to compete digitally with these foreign-based giants and we’ve given the bondholders some comfort that our leverage derisks the company. Now, we’ve got to convince the Competition Bureau that this makes sense for Canadians,” he says. “I’m not saying it’s going to be easy, but I think we have a very logical argument.”
The consummate strategist, Mr. Godfrey begins planning his next moves early each day during solitary walks along Toronto’s Bay Street. His Labrador retriever nudges him awake around 5:30 a.m. and they set out from his home at the Four Seasons Private Residences, where a penthouse condo once sold for $28-million.
He grew up nearby, in a rented home close to the Kensington Market area. The family eventually scraped together enough money to buy a house in suburban North York and that was where Mr. Godfrey’s long political career began in the early 1960s.
He’d just graduated from the University of Toronto with a degree in chemical engineering when his mother stepped in with different plans. Bess Godfrey had been a long-time Progressive Conservative party operative and during a political meeting in the family’s living room one day, a neighbourhood ratepayer group asked her to run for city council. Ms. Godfrey suggested someone else: Her son.
Mr. Godfrey ran and won a seat as an alderman in North York in 1964 and, by 1973, he had been appointed chairman of Metropolitan Toronto, a now-defunct role that involved co-ordinating the city’s patchwork collection of independent boroughs. It was a high-power position but he was making just $69,247 a year, not enough to support the life he and his wife, Gina, wanted. So, when Douglas Creighton, founding publisher of the Toronto Sun tabloid, asked him to run the Sun newspaper in 1984, Mr. Godfrey jumped.
He had no journalism experience but recalls, “My wife was saying: ‘We can’t live on what you make as a politician.’” And Mr. Creighton was persistent, eventually offering to pay Mr. Godfrey three times what he was making. “I finally succumbed.” By then the couple’s oldest son Rob was already in private school and their two younger boys Noah and Jay would soon follow.
He quickly climbed the corporate ranks, becoming president and chief operating officer of Toronto Sun Publishing Group in 1991 and CEO a year later, when then-majority owner Maclean Hunter Ltd. ousted Mr. Creighton. By 1999, he had led a management buyout of the Sun’s newspaper assets, taken that company public and arranged its sale to Quebecor. The end result essentially tripled the company’s value and put an estimated $28-million into Mr. Godfrey’s pocket.
He left Sun Media in 2000 amid questions of a dispute with Quebecor owner Pierre Karl Péladeau and just months before layoffs began. He landed at Rogers, orchestrating the purchase of the Toronto Blue Jays at the request of company founder Ted Rogers and later overseeing the purchase of the SkyDome for $25-million, a fraction of its $600-million construction cost. The controversial stadium was built with a combination of public and private funds and Mr. Godfrey was still on council when it approved an initial contribution of $30-million. Construction costs soared to more than three times initial estimates and the stadium ran into revenue trouble once it opened, eventually falling into bankruptcy.
After the Blue Jays, Mr. Godfrey took on the job of running the National Post in early 2009, shortly before its owner, Canwest, went insolvent. Leonard Asper, CEO of Canwest, which owned the former Southam chain of newspapers, asked him to take on the money-losing National Post. After making high-profile sales calls, he says he was able to get the Post into the black, but it wasn’t long before the entire company was under creditor protection. The Aspers “got themselves into difficulty,” is how Mr. Godfrey puts it. Well-placed once again, he resigned his seat on the Canwest board to make a play for the company. He put together a successful offer with the backing of one of the company’s biggest bondholders, New York-based hedge fund GoldenTree Asset Management. The group bought Canwest’s publishing assets in a $1.1-billion deal that left the chain with close to $700-million in debt.
Hedge funds love money, not newspapers, Mr. Godfrey says, noting his initial apprehension about working for the U.S. lenders. GoldenTree has a representative on the board and Mr. Godfrey is in regular communication with the company’s lender. He insists they have been “inquisitive” while hands off, but some say he doesn’t make major moves without consulting the fund managers.
Management admits that Postmedia’s high-yield debt, which carries certain conditions about the margins the company must operate under, has led it to cut costs faster than other Canadian newspapers. Postmedia’s investors have received an estimated $300-million since 2010 on bonds with interest rates ranging from 8.25 per cent to 13.3 per cent. The chain has cancelled certain print editions, eliminated publishers, outsourced printing and page production and put most of its real estate on the market, slashing $109-million or 16 per cent of its annual operating costs since July 2012.
The one major black mark on Mr. Godfey’s career came recently, during his tenure at Ontario Lottery and Gaming Corp. He’d been appointed chair by Ontario’s Liberal government in 2009 and soon began championing a downtown Toronto casino complex.
Like the SkyDome before it, Mr. Godfrey saw the high-profile project as good city-building, but the idea met stiff opposition. He also oversaw soaring executive pay hikes, up to 50 per cent in some cases, and got in hot water over a controversial move to cancel the slots at racetracks.
Mr. Godfrey had a remarkably close working relationship with Premier Dalton McGuinty and then-finance minister Dwight Duncan but the political tides shifted when Mr. McGuinty left. A change in government led to Mr. Godfrey’s dismissal in May, 2013, and he left on bitter terms, calling out Premier Kathleen Wynne for the way she handled it. The whole board soon followed, leaving the OLG in disarray, but he maintains today he has no regrets, insisting his plans had the support of the former administration.
“Ms. Wynne had every right to pick her own person. If she would have told me that, I would have handed in my resignation the day after she became premier.”
Mr. Godfrey says the OLG job was time and energy-consuming. Now free to focus entirely on Postmedia, he will have to work hard to continue to appease bottom-line-obsessed hedge fund managers. As he closes in on the end of a long career, this chapter stands in stark contrast to his first foray into publishing. “The most fun was working at the Sun in the early days. Business was booming. Even the board meetings were fun,” he says, adding. “It’s changed now. You can’t call the environment fun today.”
But he is compensated well for the task and maintains a characteristic optimism, signing off each of the company’s often grim quarterly earnings calls with a chipper “Talk to you next time!”
Ultimately, Mr. Godfrey thrives on being part of the conversation, and “buying ink by the barrel,” helps ensure people will take his call, says close friend Robert Prichard, head of Metrolinx and former CEO of Torstar Corp. “He’s built his whole life around being part of the action. And there’s no better vehicle for staying relevant and part of the action than running the biggest newspaper company in Canada.”
With files from James BradshawReport Typo/Error