Peladeau as economic saviour? Quebecers should take a closer look
Track record: Media baron’s success has been largely achieved through the province’s cable monopoly
In Le Journal de Montreal on Friday, columnist Michel Beaudry described Pierre Karl Peladeau as “one of the most prolific businessmen of the last 20 years,” and praised him for having “suddenly decided to not work anymore for his pocket. He has decided to serve.”
Beaudry was writing about his boss, because PKP, the Parti Quebecois candidate in the suburban Montreal riding of Saint- Jerome, is also the controlling shareholder of Quebecor, which owns Le Journal de Montreal and a lot of other Quebec media outlets.
( Peladeau has resigned from Quebecor’s board. But Peladeau wants to keep his shares in Quebecor, which means Beaudry and the hundreds of other Quebecor journalists don’t know when the boss will be back.)
Peladeau’s candidacy was initially seen as a big win for PQ Leader Pauline Marois, since he has such a great economic resumé, at least compared to her. In a news quiz in Friday’s La Presse, for instance, she wasn’t able to say how much Quebec will receive in equalization payments from Ottawa in 2014- 15. The answer’s $ 9.3 billion.
Many commentators — not all of whom work for Peladeau — predicted he would add strength to Marois’s campaign because of his economic track record, although not all in such flowery language as Beaudry, who Thursday praised the boss as a “visionary.”
“The extraordinary rise of Quebecor since his arrival is the proof,” Beaudry wrote.
A cursory look at the balance sheet suggests otherwise.
In Quebecor’s financial statements in 1996 — the year before the death of PKP’s father, Pierre Peladeau — Quebecor had revenues of $ 6.2 billion. According to the 2013 financial statements, last year Quebecor had revenues of $ 4.2 billion, quite a lot less.
PKP has been running Quebecor since 1999, when he bought an American printing company for $ 2.8 billion, briefly becoming the world’s largest printer.
It was not a good time in the printing business, though, and soon the subsidiary, Quebecor World, was in big trouble.
PKP took over the reins personally in 2004. A spokesman, Luc Lavoie, said at the time: “He’s the obvious choice to bring the company back to its glory days.”
Or not. In January 2008, Quebecor World filed for protection under the Companies’ Creditors Arrangement Act and a lot of shareholders lost a lot of money. PKP turned his hand to the rest of his empire, which, thankfully for him, had gained in value since a 2000 hostile takeover of Videotron.
If PKP is a business success, it is chiefly as a result of the complex legal, political and financial manoeuvres that brought Quebec’s cable monopoly under his control.
Peladeau started by launching a lawsuit to stop a planned sale of the company to Ontario’s Rogers Communications Inc. He did that with the backing of the Caisse de depot et placement du Quebec, a massive public- pension fund managed at arm’s length from the provincial government.
The Caisse put $ 2.9 billion into the $ 5.4- billion takeover, which presumably pleased Bernard Landry, then Quebec premier, since it kept Videotron out of the clutches of Ontarians.
The deal worked out well for Quebecor, but not so well for the Caisse, which took a $ 1.1- billion writedown on the deal, or for its CEO, who left under fire.
Peladeau deserves credit for the way he has cross- promoted his media properties, with the help of his TV producer/ estranged spouse Julie Snyder, building a Quebec star system that is a source of pride for Quebecers and a source of publicity for PKP.
But the golden goose is the stream of cable fees that the Caisse arranged for him to receive, a financial windfall backstopped by Quebec pensioners under the political supervision of Landry.
Peladeau, having failed in the printing business, may have concluded that politicians are a softer touch. In recent years, he has aggressively sought tax dollars, winning $ 400 million from Quebec City and the province to build a new stadium for a possible return of the Nordiques.
He also pushed the CRTC hard for a place on the dial for his Sun News Network, perhaps hoping his Tory- boosting channel would win him favour in Ottawa.
Last month, Quebecor bought seven licences for wireless data transmission in a federal auction, getting them for the bargain price of $ 233 million. Industry Minister James Moore expressed the hope Quebecor would enter the market in a big way, increasing competition.
On Thursday, though, days after its biggest shareholder expressed the desire to break up Canada, Quebecor said it might not expand its wireless services outside Quebec unless the “right conditions could be implemented” by Ottawa.
Meanwhile, PKP seeks winning conditions for a referendum on the campaign trail.
We must hope Quebecers take a good look at the balance sheet before they mark their ballots.