The recent drama of the power play within the Rogers family may be winding down, but the theatrics of getting the family-run company’s massive takeover of Shaw over the finish line have only just begun.
It would take a sector that is already in the hands of a very small number of companies and make it even more top-heavy, affecting millions of Canadians who consume television and radio, or subscribe to high-speed internet or cellular telephone services.
Although the families that control the two companies both back the deal, it needs the OK of three different regulatory agencies to become official. And the first of those approval processes begins today in Gatineau, Que., as the Canadian Radio-television and Telecommunications Commission (CRTC) holds hearings on what the deal would entail.
Partha Mohanram, an accounting professor at the University of Toronto’s Rotman School of Management, is among those hoping the regulator takes a long, hard look at the deal because of what it would do to Canada’s already-concentrated telecom landscape.
“The regulator has to look at whether … the benefit to the shareholders outweighs the cost,” he said in an interview. “Because it becomes worse every time there is a merger.”
Focus on broadcast
Officials from Shaw and Rogers are slated to appear first before the committee on Monday, to lay out the case for why they should be allowed to sell themselves. For the three days after, they’ll be followed by those against the plan, including consumer rights groups, independent broadcasters — and most tellingly of all, Rogers’ main competitors, Bell and Telus.
Newly minted Rogers chair Edward Rogers reportedly set to attend. It would be the first time he has publicly appeared since the ugly fight for control of the company came to light last month.
While the merger involves a complex handover of broadcasting, cable, internet and wireless assets across the country, the only issues the CRTC will pay attention to are the impact on the broadcasting side, which mostly consist of 16 television channels across B.C., Alberta, Saskatchewan and Manitoba; all of Shaw’s cable, satellite and pay-per-view television services; and a 25 per cent ownership in CPAC, the public affairs channel.
The real thorny issues of what happens to Canada’s wireless landscape once Rogers swallows Shaw’s two million wireless subscribers will be largely ignored by these hearings.
The fact that Canada’s telecom regulator won’t really pay much attention to the most pressing telecom issues shows how bizarre the industry’s landscape is, says researcher Ben Klass, who studies telecom policy as a PhD candidate at Carleton University.
“We have this siloed system in Canada, with two ships passing in the night,” he said of the CRTC. “But they don’t intersect as far as the regulator is concerned.”
While the CRTC does have jurisdiction over the wireless market, tasked with ensuring there’s a healthy competition for consumers to choose from, they’re also in charge of broadcasters, too. And the regulator made it explicit in its notice for the hearings that the impact of the deal on Canada’s broadcast landscape would be its main focus, Klass said.
Instead, the regulator is leaving the review of the impact on the wireless market and related issues to other watchdogs — namely Canada’s Competition Bureau, and the federal department of Innovation, Science and Economic Development (ISED).
“They wanted to get out of the gate and say, ‘Don’t talk to us about this thing that’s probably pretty important to you and implicated in this merger … you can try somewhere else,'” said Klass. “I think it’s unfortunate.”
On the broadcast side alone, there are reasons for concern, said Klass.
“Independent broadcasters are very concerned that instead of being able to market their content to Rogers on one half the country and Shaw on the other — and generating some bargaining power in the process — they’re only going to have the one door to knock on,” he said.
“That’s what this is about for the CRTC, primarily,” he said. “Making sure that this merger doesn’t throw the [TV] industry too far out of whack.”
WATCH | Why this telecom critic says the deal is bad for Canadians:
Why regulators should block the Rogers Shaw deal
3 days ago
Ben Klass says cable, internet and wireless plans at Shaw are much different from those at Rogers, and he worries what will happen to them if the merger is approved. 0:48
Klass gives the CRTC credit for at least making its hearings public, unlike the other two regulators, who usually announce the start of a probe — and then announce the result.
“The Competition Bureau, to my knowledge, has never successfully opposed a merger outright,” Klass said.
A major driver for the deal from the perspective of Rogers and Shaw is that their businesses are so complementary.
Rogers is a force in the Ontario market, where it is next to impossible to not have to interact with at least one branch of the media conglomerate. But the company is nowhere near as dominant in Western Canada, where Shaw has more than five million cable and internet customers, and two million cellphone subscribers through its Freedom Mobile brand.
Rogers is seeking to add millions of Shaw cable, internet and wireless customers to its telecom empire, giving it more dominance in Western Canada. (Shamil Zhumatov/Reuters)
The appeal for Rogers is obvious, said Bloomberg Intelligence telecom analyst John Butler.
“Rogers can leverage Shaw’s … subscriptions to offer multi-service bundles and use its network as a foundation for 5G expansion in the region,” he said in a recent note to clients.
Impact of family drama
Butler said he thinks the deal will ultimately go ahead in one form or another, but the messy family battle for control of Rogers Communications likely didn’t do the company any favours.
“While we don’t believe the Shaw deal that’s under review is in imminent danger of being derailed, the spat could taint regulators’ opinion on Rogers’ ability to integrate Shaw,” he said.
Mohanram also doubts the regulator has the appetite to block the deal outright, but he’s among those who think the telecom industry in Canada is in desperate need of overhauling.
“You’ve got to ask yourself, ‘Where is that kind of competition going to come from?'” he said.
At a minimum, Rogers could be forced to sell off assets, like Freedom Mobile, to get Ottawa’s stamp of approval. But that, too, is not without its problems.
“The value that Rogers sees in the Shaw assets, if you start eating away at that number, eventually they’re going to walk away,” Mohanram said. “[Regulators] don’t need to scuttle the deal, but they’ve got to make the deal less attractive for Rogers.”
Any sort of rubber-stamping would be bad for Canada, but good for the telecom companies, he said. “They have this kind of comfortable, cozy oligopoly among themselves.”
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
