Pierre Karl Péladeau returning as Quebecor’s CEO by Christine Dobby

Feb 16, 2017

Source: Globe and Mail

Pierre Karl Péladeau is officially back in control at Quebecor Inc.

His return to the company four years after leaving as chief executive officer follows a bruising period in his political and personal life – he stepped down as leader of the Parti Québécois in mid-2016 after separating from his wife, TV producer Julie Snyder. At the time, Quebecor said he was focused on family issues and had no immediate plans to come back.

But the company announced Thursday that Mr. Péladeau is returning to the job of president and CEO, effective immediately, displacing Pierre Dion, who will assume a number of board roles, including chairman of Quebecor Media Inc., the parent company’s main subsidiary and owner of its Videotron Ltd. telecommunications business. Former prime minister Brian Mulroney will remain Quebecor’s chair.

Investors are hoping Mr. Péladeau’s homecoming doesn’t derail the company’s momentum. Buoyed by its burgeoning wireless operation, Quebecor’s Class B shares have gained about 70 per cent since Mr. Péladeau’s departure, compared with increases of about 15 per cent at Rogers Communications Inc. and Shaw Communications Inc. and 25 per cent at Telus Corp. and BCE Inc. over the same period.

Quebecor’s stock was down 1.6 per cent on Thursday. But analysts don’t expect major changes in direction at the company. Besides which, the controlling shareholder retained a degree of influence during his official absence. In his early days as a member of the National Assembly of Quebec, he remained actively involved in the company’s operations, blurring lines of responsibility and leading to the departure of his first replacement, Robert Dépatie, who was in turn replaced by Mr. Dion. When Mr. Péladeau eventually became leader of the PQ, he never finalized a blind trust of his assets.

“Mr. Péladeau is back. Figuratively, we’re not sure he ever really left,” said National Bank Financial Inc. analyst Adam Shine. “Will anything materially change with his arrival? Not really. We’ll watch for executive turnover, but none is truly expected.”

During Mr. Dion’s tenure, management refocused the company on Quebec, selling assets outside the province, retreating from a possible expansion of its mobile business beyond the provincial boundaries and focusing squarely on its primary telecommunications business.

“Quebecor kept on divesting out of non-core assets and concentrating more and more on the telecommunications side of things, and now Videotron is practically 98 or 97 per cent of profits of the company,” Desjardins Securities Inc. analyst Maher Yaghi said in an interview.

He said Videotron has been adept at increasing revenues and capturing market share – it now has close to 15 per cent of Quebec wireless subscribers – while using promotions to stave off a precipitous decline in its television business.

The company has largely followed a path set out by Mr. Péladeau when he was CEO, and Mr. Yaghi agrees it isn’t likely to make major changes in direction now.

Nonetheless, Mr. Dion is well liked by employees at Quebecor and Mr. Péladeau’s return will undoubtedly be a period of transition for the company, a telecom-industry source said.

Mr. Péladeau will face decisions on some key issues, including the sale of wireless spectrum outside Quebec and the company’s repurchase of the remaining interest in Quebecor Media held by the Caisse de dépôt et placement du Québec, which helped fund the $5.5-billion acquisition of Videotron in 2000.

Quebecor has also been slow to counter the threat of BCE Inc.’s Fibe TV, an Internet protocol television (IPTV) product that has steadily tempted cable subscribers away from Videotron. While other cable operators in Canada have scrapped in-house development plans and licensed technology from U.S. players, Quebecor has yet to indicate any direction on an upgraded television platform to replace its current clunky product.

“They need to do something soon, because it takes a year before you can integrate it into your system,” Mr. Yaghi said. He noted, however, that the responsibility will not fall squarely on Mr. Péladeau – Videotron CEO Manon Brouillette is well respected for her marketing skills and “her decisions are highly viewed inside the company,” he said.

None of Mr. Péladeau, Mr. Mulroney or Mr. Dion were available for interviews Thursday.

© Globe and Mail