The Notorious PKP: How Pierre Karl Péladeau is doubling down on fortress Quebec

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Pierre Karl Péladeau stood before reporters on the afternoon of May 2, 2016, visibly distraught, to announce he was quitting politics after just a year as leader of the separatist Parti Québécois.

His voice cracking and his jaw trembling as he fought off tears, the man they call PKP told the hastily convened news conference in Montreal that, amid a bitter child custody battle with ex-partner Julie Snyder, he was forced to make ''an agonizing choice'' between his family and the pursuit of Quebec sovereignty. He would resign immediately, making his the shortest ever tenure for a PQ leader. Five minutes after dropping his bomb, the billionaire media magnate was gone, leaving a party in crisis and a province wondering what had just happened.

Two years later, PKP sits beside me in the 13th-floor chief executive suite at Quebecor's Montreal headquarters, where he is once again in control of Quebec's largest media company. Down the hall is the office that once belonged to his father, who started Quebecor in 1965 (it was in that office that Pierre père suffered a heart attack in 1997 that ultimately killed him). On the wall hangs a painting of a young René Lévesque, founder of Quebec's independence movement. As always with PKP these days, politics is never far away.

At first, I half expect Péladeau to lash out at me over questions he doesn’t like. His ego and temper are legendary—there was the Forbes ''Angry Son'' story that had him hurling chairs at his subordinates, and a piece in Maclean’s that described Péladeau grabbing the shirt of a Bell Media executive at a museum fundraiser and laying into him with ''a flurry of religiously themed Quebec swear words.'' More recently, a Péladeau PQ leadership rival recounted how he was confronted by a furious PKP—"Fire was coming out of his head"—after he dared to compare the media magnate to Citizen Kane at a party forum.

But today, PKP has an air of serenity about him—a calmness you might even mistake for disinterest—and the look to match: crisp blue shirt, no tie. He has grown out his hair and beard, giving the impression of a modern-day Don Quixote or a moodier Richard Branson. It suits him.

The company over which he now presides—again—was once an empire of publishing, media and telecom assets that stretched across North America to Europe. Gone is printer Quebecor World, which failed to refinance its debt during the credit crisis, and the Sun Media newspaper chain, sold in 2015 for barely a third of what PKP paid for it in 1998. The big money-maker now is the Vidéotron cable and wireless business, which Péladeau took over in 2000 with the help of pension fund Caisse de dépôt et placement du Québec.

Péladeau turned Vidéotron and Quebecor more broadly into a convergence machine, reshaping an old monopoly into one of Canada's most profitable telecom providers. From literally nothing, his team built out a wireless business that now has just over a million subscribers (though it's still No. 4 in the province behind Bell, Rogers and Telus).

PKP's media outlets have also set the pace for francophone Quebec's cultural self-preservation. The company controls TVA, the province's most popular television network; the Journal de Montréal, its most-read newspaper; and Musicor, one of its biggest music labels, among other properties. Shows like TVA's La Voix command a massive audience: During its 2015 season, 65% of Quebeckers watching French-language television tuned in. Éléphant, the company's biggest philanthropic project, is digitizing and restoring Quebec's heritage of feature films in a bid to make them available to a new generation.

Over the summer, a fresh chapter of independence opened up for Quebecor when it bought back the remaining 18% stake in its Quebecor Media subsidiary from the Caisse for $1.7 billion. The question is: Now that Péladeau is once again in sole control of Quebecor, what's next?

If you thought there would be a master plan to take him into retirement, a blueprint for the next generation, you’d be wrong. ''There is no such huge and big plan—the plan of the universe or the plan of the century,'' Péladeau says. ''I mean, we’ve been building on convergence, and we continue to build on it.''

No one at Quebecor seems particularly bothered by the absence of a grand multiyear scheme. With Péladeau, the company's controlling shareholder, in charge, there's a ''stronger, more definitional leadership'' at the helm, says the company's chair, Brian Mulroney, adding that no one understands Quebecor's market better.

Forget about taking on the rest of Canada, as Péladeau once seemed determined to do. Now, he’s doubling down on fortress Quebec. Because if he can’t rule his home province as leader of the Parti Québécois, maybe he can rule it through Quebecor instead.

How PKP’S father, Pierre Péladeau, parlayed a $1,500 loan into a publishing powerhouse is the stuff of legend in Canadian business circles. How Pierre fils is charting his own path is a story still in the making.

The boy originally named Pierre Carl was born in 1961, the third of seven Péladeau children from three different mothers. Life wasn't easy. Pierre Sr.'s struggle with manic depression and alcoholism, together with his constant turnover of female companions, created great tension within the family.

PKP's mother, Raymonde Chopin, also suffered from depression, and was hospitalized and treated with Valium and electroshock therapy before committing suicide when her son was just 14.

''Pierre Karl might have been raised with a silver spoon in his mouth,'' Snyder once observed, ''but no one was ever there to hold it.''

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For much of his youth, PKP was raised by family friends in Montreal's north end, but he struck out on his own as a teenager, eventually changing the C in his middle name to a K, a nod to philosopher Karl Marx. (The decision was ''a bit of a lark,'' he would say later.) While at Collège Jean-de-Brébeuf, one of Canada's most elite schools, he refused to take money from his father, instead working as a dishwasher and waiter at a restaurant called Big Boy.

After doing a philosophy degree at the Université du Québec à Montréal, PKP went to Paris to immerse himself further in the world’s great thinkers—Hegel, Kant and Descartes, along with Deleuze and Foucault. But if he left for Europe a Marxist, he came back a resolute capitalist. Péladeau reconciled with his father, enrolled in law school and joined Quebecor part-time in 1985 as assistant to the CEO, just as his father was speeding up acquisitions, mostly of printing companies. Asked now what led to that dramatic transformation, Péladeau says: ''I don’t think I have an answer to this. Was I Marxist? Well, you know, yeah. I was reading all sorts of things.''

Whatever the case, the student who once devoured texts on the class struggle was later denounced by the Quebec Federation of Labour as ''a catastrophe for workers'' and one of the worst employers Quebec has ever known. Péladeau was widely criticized for locking out employees 14 times and using replacement workers, notably in the early 1990s, when the Journal de Montréal shut out its pressmen and set up printing down the highway in Cornwall, Ontario. His father later settled that conflict.

''Yes, I did things that were not always easy to accept,'' PKP says, but he insists it was for the greater good of the company.

A little over a year after his father’s death in 1997, PKP—then just 38—took the helm at Quebecor. At the time, it was largely a printing and publishing concern. The rise of the Internet would soon accelerate a fight for advertising dollars, sending the sector, and the company, into a deep dive. But an opportunity opened up a year later that would set Quebecor on a new course. In 2000, as merger mania gripped U.S. media firms, Montreal’s Chagnon family struck a friendly deal to sell its Vidéotron cable company to Toronto’s Rogers Communications. The Caisse objected. The pension fund, which had a shareholder agreement with the Chagnons, believed the asset, which also included a controlling interest in popular network TVA, was better off in Quebec hands.

Quebecor had a lot of things the Caisse was looking for: a solid Quebec presence, good management and the ability to generate content Vidéotron could sell. Never mind that PKP didn't know the first thing about cable. The Internet was bleeding into television and other media in ways that were just beginning to be understood, and Quebec needed a local digital champion. ''We said [to Pierre Karl], put in all you've got,'' says Michel Nadeau, a former Caisse executive who was at the centre of the negotiations. ''We emptied his pockets.''

Quebecor and the Caisse outbid Rogers, winning Vidéotron with a $5.4-billion all-cash offer after an epic sevenmonth battle characterized by acrimony and claims of political interference. Nadeau credits Péladeau for having the guts to see Vidéotron's potential: ''As much as his father built Quebecor into a printing and paper product powerhouse, Pierre Karl stands out as the one who jumped into the unknown and invested in the virtual world.''

PKP says Vidéotron was an operational mess, which he cleaned up through cost-cutting and a shrewd focus on customer service. The CEO himself would sometimes show up on sales and service house calls, shocking clients. When the dot-com bubble burst, Quebecor was forced to refinance $1.9 billion in Vidéotron debt, in part by tapping the U.S. junk bond market. That left it unable to bid on cellular provider Fido, Péladeau says. (Microcell eventually sold Fido to Rogers for $1.4 billion.) Desperate to get into the game, PKP struck a deal with Rogers that gave Quebecor access to the Rogers wireless infrastructure as a reseller. He also pleaded for the federal government to set aside spectrum—the radio waves used to carry signals between cell towers and customers—for new players. And he got it.

In the decade leading up to 2013, Péladeau perfected the convergence model, turning Quebecor into a multiplatform juggernaut. He launched Quebecor's wireless business in 2010 and the short-lived Sun News Network the following year. He broke ground on a new arena in Quebec City in 2012, spawning hopes of luring a National Hockey League team back to town. Six months later, he stepped down as CEO, saying his life had been enveloped by Quebecor to the exclusion of almost anything else. He was replaced by Robert Dépatie, keeping only his director's title.

What prompted the dramatic move? Pollster and current TVA Group director Jean-Marc Léger says the Nordiques gambit gave Péladeau a taste of how popular he could be. ''For a businessman, it's very rare to be adulated to this extent,'' Léger says. ''He became very popular in Quebec City because he was the only one with the means to bring the Nordiques back. That's all people were talking about.''

Until then, popularity was something associated more with PKP’s father. The first billionaire born in Quebec, he was a larger-than-life character whose charisma and communication skills more than made up for his below-average looks. In many ways, Pierre Karl—a glamorous, six-foot-tall wunderkind—has spent his life trying to live up to the Péladeau name.

''He feels the weight of what he inherited. It's a gift, and it might be a burden,'' says Lucie Laurier, an actor who dated Péladeau in 2017. ''But I think it gives him drive. He needs to prove something. I think it's in his blood. He doesn't want to prove it because he feels he's under [his dad's shadow]. He wants to prove it because he's capable of it.''

When he approached then premier and Parti Québécois leader Pauline Marois in 2013 to ask how he could serve the public, she made him chair of Hydro-Québec—the utility’s only senior leader to drive an electric car (at that time, it was a Chevrolet Volt; today, it’s a blue Tesla Model X). Léger remembers trying to talk Péladeau out of running for office, saying he would have much more power at Quebecor. ''He didn’t want to hear it,'' says Léger. ''Each time, he said no, that he thought he could serve society.''

''Quebecor is my father's company,'' Péladeau told him. ''If I can do something different for Quebec, I'm going to do it.''

Péladeau’s journey from media magnate to Parti Québécois candidate and, later, party leader, was fraught with awkwardness and hazard.

When Péladeau announced on March 9, 2014, that he would run for the PQ , he caught more than a few people off guard.

Rumours had abounded that he would make the jump, but he firmly denied them all. And then suddenly there he was, standing next to Marois in his St-Jérôme riding and raising his fist, declaring his desire to make Quebec a separate country.

That simple gesture uncorked the separatist genie Marois and the PQ had been careful to keep in the bottle, having sensed that the Quebec zeitgeist had turned against yet another referendum. It also sent Quebecor's board scrambling. By all accounts, Péladeau had neglected to inform his directors of his intentions, forcing them to hold an emergency meeting and hastily erect a firewall between the company and the candidate. They also issued a news release stating he had resigned as a director and would no longer take part in the company's daily or strategic management.

The next day, Péladeau walked into Quebecor headquarters as if nothing had happened, unaware that his access to the company's email and offices had been blocked. He went haywire, and his access was at least partially restored.

While Quebecor struggled to balance the interests of its controlling shareholder with its own, the PQ campaign went downhill. In the April 2014 election, Péladeau cruised to victory in St-Jérôme, but the party itself lost badly, as the Liberals and their leader, Philippe Couillard, rallied anti-separatist voters. Marois resigned. A year later, Péladeau easily won the leadership of the PQ. To many party loyalists, he was the strongman saviour who might give them one last chance at an independent Quebec. ''It was the first time since Jacques Parizeau that a big business name joined the sovereigntist movement,'' says Léger. ''And that struck an emotional chord with people.'' To others, he was political dynamite: a unionbusting, big businessman—one whose company owned a huge chunk of the province’s media—leading a unionfriendly party suspicious of big businessmen. In the end, the new hope he brought to the sovereignty movement prevailed.

There are few moments from PKP’s political career that stand out. Sure, there were some decent speeches and solid bodychecks on the Couillard government, and even a few times when PKP showed the kind of flair that made you think he might be in it for the long haul. The highlight has to be the night he spoke to people laid off by manhole cover maker Mueller Co. from the back of a pickup. But his time as leader was remarkable more for what was happening in his tumultuous personal life. Five months after marrying his on-again, off-again partner, Snyder, in a lavish ceremony in Quebec City, the power duo broke up, setting off what would be a bitter feud over money and their two children (Péladeau has a third from a previous relationship).

And so Péladeau found himself at that podium, choking back tears. Mulroney says Péladeau genuinely feared Snyder could get exclusive custody of their children if she could show that his political career had turned him into a distracted dad.

Snyder—a celebrity TV producer and host—later appeared on Radio-Canada’s popular talk show Tout le monde en parle to cast doubt on Péladeau’s stated motives for resigning. (She declined to be interviewed for this story.)

When I ask Péladeau why he really quit the PQ , bracing myself for a tongue-lashing, he laughs. It’s for the reasons he gave, he says, and he builds up his case: He had progressed from backbencher to party leader in just 13 months, and his popularity was verging on 30%—hardly crisis proportions.

''It's swim or sink'' in politics, Péladeau says in quick-tempo English, adding that he made a lot of effort to learn the political craft and remains very much a political being. ''I am a former leader of the PQ. It is what it is. I'm not just [some guy]. I was the leader of the Parti Québécois. And I'm proud of what I did in politics.''

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Roughly nine months after stepping down as PQ leader, Péladeau returned to Quebecor as CEO. That meant pushing out interim leader Pierre Dion, who had replaced Dépatie in 2015 and under whose guidance the corporation’s Class B shares rose by roughly 70%, vastly outperforming its four telecom rivals.

Since then, Quebecor's moves can only be characterized as a full retreat into its Quebec stronghold.

For now, at least, the company still has plenty of runway, thanks largely to the quirks of the 8.2-million-strong Quebec market, which favours hometown heroes. While rivals in other parts of the country are starting to max out market share, Quebeckers have been slower to adopt smartphone technology, with 15% lower penetration than in Canada as a whole. Vidéotron continues to sign up mobile customers at a rate of 125,000 a year, and its overall telecom subscriptions grew by 2% in 2017. That helped Quebecor rack up earnings of $503 million on $4.1 billion in revenue last year.

Though Quebecor has 17% of the province's wireless market (compared to around 30% for its Quebec-based rival Bell), it still has a leg up, thanks to its French-language content. ''Our goal is essentially to sell subscriptions,'' says chief financial officer Jean-François Pruneau. ''And how do we accomplish that? By putting in front of our customers content they like and that differentiates our distribution platforms.''

In a study published last year, market research company eMarketer found that French-speaking Quebeckers watch significantly more TV, spend less time on the Internet, and devote slightly more time to radio and newspapers than other Canadians. They’re also fiercely loyal to locally made content and celebrities. Quebecor has carefully placed itself at the centre of both. It creates a tremendous amount of content—its TVA network spent more than $260 million on Canadian programming in 2017 alone—and it sells and cross-promotes that material with machine-like precision. Bonus content from its new reality series XOXO, for example, is available only to its mobile subscribers, while the movies and shows on its Club Illico service are free for premium customers.

Its sports content has been a less successful part of the convergence plan. Blame the Montreal Canadiens: Under a multiyear deal with Rogers, TVA Sports is paying $65 million for the rights to broadcast 22 Habs games a year, plus other regular-season games and the entire playoffs. But the Canadiens have failed to qualify for the post-season in two of the past three years, and lost in the first round the other year. With advertisers tuning out alongside viewers, profits at TVA Sports have vanished. As for the Nordiques, it’s possible the NHL will never allow PKP to revive the team, which would leave the company scrambling to fill its underused—and taxpayer-funded—Centre Vidéotron.

There are other challenges too. Competition is intense among TV providers and broadcast distributors. Newspaper circulation continues to decline and TV audiences to fragment, which means advertising revenue is falling as well. Digital technology is hitting sales in Quebecor's book and music business. Perhaps most alarming of all, the significant growth in telecom subscribers that investors have become used to in recent years will eventually slow and maybe even stop.

There was a time when Quebecor had serious intentions of becoming Canada’s fourth national wireless player. But it abandoned the effort, saying the federal government had moved too slowly on wholesale roaming rates and towersharing rules—two conditions it needed to move forward. While Ottawa dithered, Shaw moved into the regions Quebecor was eyeing (notably Alberta and B.C.), and Quebecor eventually sold off its spectrum licences outside Quebec and the Ottawa region for a net gain of about $330 million.

The company has, by its own estimate, four years of growth ahead in the wireless market, where it's aiming to boost its share to 25%. To help get there, it is launching a discount wireless brand called Fizz, aimed at the lower end of the mobile market, that will offer an all-digital service, with no call centres or stores.

Quebecor’s other big project is a new Internet TV product. Based on Comcast’s Xfinity X1 platform, the technology (also used by Rogers and Shaw outside Quebec) promises to give Vidéotron customers a superior TV and Internet experience through voice-recognition control. Pruneau isn’t expecting a huge bump in subscribers; he’s just hoping to hang on to the ones Quebecor already has. Longer term, the company will try to set up its assets for the yet-undefined opportunity in next-generation 5G networks, which are 10 times faster than what’s currently available.

When I ask Pruneau what the plan is for 2022, when Quebecor expects to top out in its home province, he says: ''To be determined.'' Péladeau will only say this: ''We've got ideas that we're working on. It's far from being a slam dunk.''

By far Péladeau’s most definitive move since his return to Quebecor has been buying back the last piece of Quebecor Media from the Caisse. The purchase, completed this past summer, gives Quebecor complete control over its destiny and puts an end to the 18-year partnership (though Caisse CEO Michael Sabia hasn’t ruled out partnering with Quebecor again in the future). With full control over the company’s cash flow—notably the money machine Vidéotron—Quebecor’s board promptly introduced a plan to pay out 30% to 50% of earnings as dividends over the next four years.

That will change the game for Quebecor, says Desmond Lau, a Veritas Investment Research analyst. He sees the company becoming a meaningful dividend payer over time (playing catchup to its telecom peers) and attracting investors interested in those distributions. The potential is there for double-digit returns over the next three years, Lau says, and a share price of $48.50 by 2021, up 88% from its current level. ''There is no question that we will go to the roof with it,'' Péladeau says of the dividend payout. (Incidentally, the CEO owns about 30% of Quebecor's equity and, at last count, controlled 75% of the voting rights.)

But paying out dividends isn’t exactly a strategy for growth. And with the company also in deleverage mode, there don’t appear to be any major acquisitions on the horizon, either.

''We're going through a period where we're buying back stock,'' says Mulroney. ''Once that's done, with a cleanedup balance sheet, a strong, strong financial position, I think Pierre Karl and the board will sit down and say, 'What do we do for an encore?' And there wouldn't be any hesitation at all, in my judgment, for him to say, 'Look, let's do this internationally' or 'Let's do this in the rest of Canada.'''

Analyst Maher Yaghi of Desjardins Group thinks it’s unlikely Péladeau and Quebecor will venture far from home. ''They have to double up on Quebec,'' he says. One potential target is Cogeco, the Montreal-based telecom provider, but it’s not for sale. And sources in the banking sector say in recent months, Péladeau has been approached about potential media deals outside Quebec but has declined.

As for the man himself, he says: ''We're never going to be able to build what we've been able to build in 40 years in one acquisition. Things like Rome are built in many years.''

His closest associates say that kind of patience is more evident in PKP since his return from the Parti Québécois. ''Before, he was the man in a hurry,'' says longtime friend Bertrand Ménard, a partner with Stikeman Elliott. ''He had his business, his objectives. Now he’s different.'' Ménard adds that he exhibits an empathy and a capacity to listen that wasn’t as obvious before his political run.

Mulroney says this more thoughtful PKP is reflected in Quebecor’s recent philanthropic work. The company gave $42 million to various charities and cultural groups in 2017, including a $15-million donation to Montreal’s French-language health care network. ''It’s adding a new dimension to his personality,'' Mulroney says. ''It’s making him—how would I put it? A more rounded man.''

Yet, Péladeau clearly misses the political fray. He jumps on Facebook and Twitter with stunning regularity for a CEO, most recently attacking the Trudeau government over its trade deal with the United States and calling out former premier Philippe Couillard for ''doing nothing'' to protect Quebec companies from hostile takeovers. La Presse mused in a headline on the subject earlier this year: ''PKP, opposition leader.''

If PKP were to officially wade back into politics, it’s not clear where he would run. It’s possible that Péladeau’s reign marked the beginning of the end of Quebec’s sovereigntist dream—the Parti Québécois saw just 10 members elected on Oct. 1, down from 28, and they held their first caucus meeting in what looked like someone’s living room.

Still, Léger believes PKP's heart is set on a political comeback. ''I'm convinced this remains an unfinished project for Pierre Karl,'' he says. ''Will he do it? That's another question.''

Evolution of a politician

2000

''I don’t think it’s my role to comment on politics. It’s not even of interest to me. I run a global company. I don’t care what’s happening in Quebec or Canada.''

- PKP to Report on Business magazine in 2000

2014

''My joining the Parti Québécois is support for my deepest and most intimate values, which are to make Quebec a country."

- announcing his candidacy for the PQ in the riding of St-Jérôme

2016

''Today, I’m faced with a lack of alternatives that is forcing me to make a choice, an agonizing choice between my family and my political project. I have chosen my family.''

- announcing his retreat from politics

2018

''Only God knows.''

- on whether he might return to politics