Edward Rogers voted out as chairman of board at Rogers amid corporate family fued – Financial Post

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Directors of Rogers Communications Inc. have voted to oust Edward Rogers, son of the company’s founder, as chair of the board after a fractious few weeks that began with his attempt to replace chief executive Joe Natale in a major management shakeup, according to sources close to the board.

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In a brief statement released late Thursday, Rogers Communications confirmed that Edward Rogers “has moved from the role of Chairman effective today,” though he will remain on the board as a director.

John A. MacDonald, a board member since 2012, who also served as lead director and chair of the corporate governance committee “has assumed the role of Chairman of the Board of Directors,” according to the statement.

“This has been a challenging time for the Corporation and I want to reaffirm on behalf of the majority of the Board our support for and total confidence in the management team and CEO of Rogers Communications,” MacDonald said.

In an initial attempt to quell the corporate disruption, which has divided the Rogers family, the board had created an executive oversight committee to “establish clear protocols” to manage interactions between senior leadership and the board chair.

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The new three-member committee — whose members included Rogers’ sister, deputy-chair Melinda Rogers-Hixon, MacDonald, a long-time industry leader who held roles at BCE Inc. and Allstream Business Inc., and another independent director John Clappison  — was made public in management discussion accompanying Rogers’ third-quarter financial report Thursday, but had been in the works for weeks and came amid reports that Edward is now seeking to replace at least some of the company’s independent directors.

Sources familiar with the situation say Edward has obtained a list of the company’s shareholders, which would be needed to pursue board changes. Independent directors had objected to handing it over, due to uncertainty about whether Edward was acting with support of the voting trust through which his company controls Rogers Communications, these sources say. The directors also expressed concern that the ongoing disruption was hurting the company and could be detrimental to its planned $26 billion (including debt) purchase of rival Shaw Communications Inc., the sources said.

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The dispute has divided the Rogers family, with Edward’s mother Loretta Rogers and sisters Martha Rogers and Rogers-Hixon opposing his plan to oust Natale.

Sources familiar with the situation who were not authorized to speak publicly about it say the advisory committee to the Rogers Control Trust, the entity through which the family controls the company, has held discussions over whether conditions should be placed on how Edward, who is chair of the trust, can vote the class A shares it holds.

It was not immediately clear how his departure as chair of Rogers will affect those discussions, or whether it would halt any efforts to reshape the board.

Bloomberg News reported Thursday that Edward had produced a list of preferred candidates to replace independent directors at the company. According to the report, the list contained five names including former CTV media chief executive Ivan Fecan and Jan Innes, a long-time communications and government-relations adviser at Rogers. She remains a director of the Rogers Group of Funds, which supports film and television funding, according to her LinkedIn page.

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Natale, who has said little since Edward attempted to replace him with chief financial officer Tony Staffieri, responded to questions about the dispute on a conference call with analysts following Thursday morning’s release of the company’s financials.

“I’ve got strong, unequivocal support from the board to direct the strategy of the company,” he said, adding that he will “keep driving the operational initiatives … and continue to drive the improvements and momentum that you’re seeing.”

He told analysts the corporate drama has not changed his views on the company’s proposed transformational takeover of rival Shaw Communications.

“I’m feeling as comfortable as I have been in the past with the Shaw transaction, both in terms of our ability to get it approved and the synergies that stand behind it,” Natale said.

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I’ve got strong, unequivocal support from the board to direct the strategy of the company

Joe Natale

Rogers’ revenues grew marginally in the third quarter from a year ago. The Toronto-based telecom reported sales of $3.67 billion for the three months ended Sept. 30, led by growth in the wireless business and lower churn rates. Rogers added a net 175,000 postpaid wireless subscribers, all in the cellphone category, which helped boost wireless service revenues by three per cent.

Meanwhile, the cable division’s revenues grew three per cent as more internet customers moved over to higher speed and usage tiers.

The company has also experienced its lowest churn rate on record, it said in its release. David Fuller, president of Rogers Wireless attributed it to improvements at the base management level and within the retail spaces and call centres. As well, the shift of more customers onto unlimited data plans has caused them to stay. “The final one I’d point to is the material and significant network investments that we have made, improving the quality and capability and coverage of our 5G network,” Fuller told analysts.

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There is still plenty of turf for Rogers to regain despite blended average revenues per user increasing four per cent sequentially. The metric will tick up as the economy reopens and people can begin travelling again, which would boast roaming charges for the telecom, Fuller said. The company is “in the range of 50 per cent” of 2019 roaming levels, he added, despite year-on-year growth and quarter-on-quarter growth.

Though it’s dealing with some supply chain issues for its cable business and from mobile phone producers such as Samsung Electronics Co. Ltd. and Apply Inc., which are facing chip shortages, Natale said the company is well suited to weather global backlogs for its 5G network expansion. “We’ve been stockpiling and building up inventory to make sure we don’t have a challenge,” he said, adding that in its 4G rollout, Rogers had installed 5G radios on its towers.

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“While messy boardroom and family discussions continue to play out in the media, the Q3 results from Rogers show meaningful signs of improvement on many key metrics,” TD Securities analyst Vince Valentini wrote in a note to clients.

Net income dropped four per cent in the quarter to $490 million on lower adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which fell two per cent to $1.6 billion largely due to a drop in the media line of the business. Diluted earnings per share dropped seven per cent to $0.94.

Rogers shares closed down 1.75 per cent to end the trading day at $60.19.

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