A seemingly innocent phone call amongst friends launched one of Canada’s largest technology empires into chaos consumed by betrayal, sibling rivalry, deceit, and split family factions attempting to claim power. Over the course of a few weeks, the Rogers Communications board room has spun out of control and has had their dirty laundry aired in the middle of a twenty-six billion dollar merger with Calgary-based Shaw Communications Inc. Rogers is a powerhouse telecom wireless network company that enables millions of calls throughout Canada, as one in four Canadians use Rogers powered devices. The unravelling of drama and potential merger instability sheds light on issues with Canada’s legalized “bigness” structure.
On 11 September 2021, Joe Natale (Rogers’ CEO) surreptitiously overheard a phone conversation between Tony Staffieri (the company’s long time chief financial officer) and David Miller (a prior chief legal officer of Rogers). Mr. Natale was shocked to overhear the imminent plan to remove Mr. Natale and replace him with Mr. Staffieri. Mr. Natale was leading the Shaw merger and with the approval of regulators Rogers would be set to transform into the Canadian national carrier. After overhearing this conversation, Mr. Natale spoke with Edward Rogers (Ted Rogers’ son & chairman) about firing the CFO. Mr. Natale discussed his reasons for wanting to let go of Mr. Staffieri to Mr. Rogers, and it was during this conversation that Mr. Rogers revealed his plan to remove Mr. Natale. Mr. Rogers, attempting to minimize company disruption and the subsequent media circus, worked with Mr. Natale on a resignation package and transitional plan for Shaw’s acquisition. Supposedly, Mr. Rogers disclosed his growing concerns with Mr. Natale’s performance with long-time family friends and directors Alan Horn and Philip Lind, independent director Robert Gemmell, his mother Loretta Rogers, and his sister Martha Rogers. It wasn’t until September 15 when Mr. Rogers divulged his concerns to his other sister, deputy chair Melinda Rogers-Hixon. At a board meeting on September 22, Loretta Rogers read a statement she later confirmed was written by her son, “To start, this proposal has my full support—Joe retiring, the election of Tony Staffieri to CEO and the hiring of Robert Dépatie as president of cable,” Loretta Rogers said. “Joe is a good man. We all like him. He has been here four-and-a-half years and he has had his chance. I am hopeful Edward and John MacDonald can still come to terms with Joe, but however that turns out we must move forward.” She went on to affirm Mr. Staffieri’s position as CEO. “He is all about results and execution and that is what we need as we have a tough five years ahead of us with integrating Shaw and achieving the objectives of that deal.” At a meeting on September 24, the board approved Mr. Natale’s resignation.
Mr. Rogers carefully-crafted web began to unspin on September 25. Martha Rogers’ mixed emotions of suspicion and concern were affirmed after learning that multiple independent directors had varying facts surrounding Mr. Natale’s performance than what was disclosed to the family. Subsequent conversations unfolded between Ms. Rogers-Hixon, Martha Rogers, and independent directors over concerns with Mr. Roger’s behaviour in the past few years. Within less than forty-eight hours of Mr. Natale’s resignation being approved, he changed his mind and agreed to continue in the CEO position.
A dramatic unveiling of a resolution to rescind the approval of Mr. Natale’s resignation and terminate Mr. Staffieri took place at the next board meeting during Mr. Rogers agenda. As reported in the Globe and Mail’s article, “Inside the battle for control of Rogers and the ensuing family feud,” “The resolution would also establish a new executive oversight committee to restrict Mr. Rogers’s interactions with management and appoint John Clappison to the board.” The vote on the resolution was deferred to the next board meeting. In the meantime, Mr. Rogers proposed a compromise where Mr. Staffieri and Mr. Natale would work collaboratively to close the merger. This idea was dismissed. Mr. Rogers attempted to delay the next board meeting to October 1 from September 29, but this effort was denied.
On September 29, “the resolution to rescind Mr. Natale’s resignation, terminate Mr. Staffieri and put in place the other measures were passed.” Mr. Rogers and a couple of other board members were not present as they were attending a 10-person advisory committee that oversees the Rogers family trust. The trust controls the company through its ownership of 97.5% of the voting class A shares. Shortly after Mr. Rogers proposal of compromise was abjured, himself along with a few other directors have teamed up and retained legal representation.
These events may have taken place a month ago, yet the deleterious details have unfolded in front of the voracious eyes of the media within the past week or so. The subsequent effect was the Rogers stock dropping from $61.26 per share on October 20 to a low of $56.31 per share on October 26. This family feud drama calls into question the probability of a successful merger between Shaw Communications and Rogers. Barry Schwartz, chief investment officer and co-owner at Baskin Wealth Management, explained, “Bottom line is Shaw’s share price should be trading at $38 or $39 right now. The fact that it’s trading at $35 means that there’s significant concern that this deal is not going to happen: Shaw better have a plan B.” Currently, Mr. Rogers is attempting to have the legitimacy of “his reconstituted board confirmed in court” following his mother and two sisters, and several other independent directors, firing him as chair. This merger is the largest Rogers has ever seen and requires complete dedication, focus, strong leadership, and lack of internal turmoil.
There are issues that lie with this merger that have little to do with its success. Whoever comes out as champion leader of Rogers will virtually answer to no one. If the merger is successful (knowing Canada’s regulatory insatiable appetite for growth and capitalism, it will be) Rogers will control nearly half of the internet and cable services in the country. Subsequently, this control will dominate decisions on what millions of Canadians “will be able to watch and listen to, not to mention whether research funds will be allocated to help Canada stay, or get ahead, in the telecoms technology game” according to Financial Post writer Diane Francis. The result of Canada’s lack-lustred anti-trust regulations that create a “government-dominated hybrid of monopolies, dynasties, a bank oligopoly, and large state-owned enterprises” is a country of economic elites. Concentrated wealth circulated within a few powerful families, banks, pension fund managers, monstrous electric utilities having free reign under the legalization of “bigness”. The rich get richer and the middle and lower-class plateau. This persistent, protected, and vicious cycle results in further brain drain to the United States, where there are more opportunities for free enterprise and creativity.
The government can use this merger and situation as a warning flag. It’s time to actively reduce the power concentration problem through imposing stiff anti-trust rules to enhance competition, continuing to engage with teaching entrepreneurship, and supporting that spirit by considering inviting foreign banking rivals to shake up our oligopolist tree. We’re being put on a dangerous road created by the dynastic elite, but it is not too late for public policy to take the wheel and go off course through unknown yet opportunistic terrain.