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Quebecor sans Péladeau? Don’t bet on it

Pierre Karl Péladeau couldn't read his prepared statement in one go. Overcome by emotion, the Quebecor CEO paused and paused again as he explained why he was stepping away from his empire's daily operations.

The hesitation was utterly uncharacteristic of this fiery executive who always knows where he is headed. But before the conference call with investors had ended, "PKP," as everybody calls him in Quebec, had reclaimed his assertiveness. He answered most of the questions as his anointed successor, Robert Dépatie, faded into the tapestry.

You would have to be deluded to believe that Mr. Péladeau, a hands-on manager whose fingers are stained after 14 years on the job, can distance himself from the company his father founded. The 51-year-old executive is leaving his corner office to Mr. Dépatie. But as long as Mr. Péladeau is alive and kicking, he is – and will remain – Quebecor's only real boss.

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It is that fighting character that brought Mr. Péladeau to transform Quebecor, the sprawling printing empire he inherited at age 37, into a telecom and media giant. He accomplished this by outmanoeuvring Rogers Communications to buy cable company Vidéotron Ltée with the generous help of the Caisse de dépôt et placement du Québec.

The Caisse lived to regret the $5.4-billion transaction, which was signed right before the Internet and media bubble burst. But Vidéotron proved to be a once-in-a-lifetime business opportunity, and Mr. Péladeau never looked back – even when telecom rival BCE Inc. disavowed the no-longer-trendy convergence theory (only to change their minds several years later).

Quebecor invested heavily in its telecom network and its customer service, which was so notoriously poor that recordings of angry client confrontations went viral on the Web. From its traditional TV and Internet services, the third cable operator in the country extended its activities to residential telephony and mobile. It even beat Bell and Astral to the market and countered Radio-Canada's popular Tou.Tv with a Netflix-like service that has garnered 35,000 subscribers in just two weeks.

Telecom and cable services now account for 87 per cent of Quebecor's operating profits. The flip side to this is that Quebecor's traditional media activities are now in a downward spiral, as newspapers, magazines, and conventional TV chains struggle to adapt to changing consumer habits and new advertising platforms.

Profits in media are in freefall, but Mr. Péladeau is not one to stay idle. However, his relentless pursuit to cut costs and to defeat his competitors revealed an aggressiveness that is unrivalled in Quebec Inc.

He crushed the unions at Quebecor's flagship tabloids, the Journal de Montréal and the Journal de Québec. He sued CBC executives at every turn, for such petty schoolyard fights as the French-services president saying that he had "acted as a thug" when withdrawing from a public television fund. He used his newspapers to expose day in, day out the extravagant lifestyle and the political connections of the Desmarais family, which publishes the rival La Presse and Le Soleil newspapers.

Simply put, there is not a cell in Mr. Péladeau's body that is not downright fanatical about Quebecor and its success. Which is why media and telecom observers are having such a hard time imagining how such an excessive character could detach himself from his company, retiring to Quebecor's boards and to the elevated spheres of business strategy.

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Quebecor directors and colleagues took turns yesterday to say that Mr. Péladeau has matured, that he is a changed man, as he is now adhering to the equivalent of a workaholics anonymous. They also swore that his new calling did not come from a life-threatening illness.

They gave examples of CEOs such as Serge Godin, founder of CGI, and even Bill Gates – men that have left the nuts and bolts of operating a business to others while they focus on charitable work and family time. And for Mr. Péladeau, it is easier to depart knowing that he can rely on a shrewd and proven operator such as Mr. Dépatie.

Mr. Péladeau didn't prove his colleagues wrong – at least not yet. When asked about his thoughts about the second incarnation of the Bell and Astral merger, he even refrained from saying anything nasty, saving his opinion for the CRTC hearings.

But should the telecom and media regulator approve this merger, just wait until the competition truly heats up in the Quebec market. Just wait until Bell has the artillery to challenge Quebecor's dominance.

Mr. Péladeau might encourage book writers or filmmakers in Quebec. He might well travel to Asia or to Africa with his family to assist in the fight against aids or malaria. But at the first sight of trouble, you can bet your Quebecor shares that he will be on the first flight back to Montreal.

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About the Author
Chief Quebec correspondent

Sophie Cousineau is The Globe and Mail’s chief Quebec correspondent. She has been working as a journalist for more than 20 years, and was La Presse’s business columnist prior to joining the Globe in 2012. Ms. Cousineau earned a master’s degree in journalism from the University of Illinois and a bachelor’s degree in economics and political science from McGill University. More


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