Pierre Karl Péladeau’s has a reputation as an unreleting businessman, but it’s unclear how well that will play in politics.Jean-François Bérubé Photographe(r)
The morning after Pierre Karl Péladeau became a politician, raising his fist and declaring his impatience for an independent Quebec, the media mogul drove into the parking garage of Quebecor Inc. headquarters as if he were still the man in charge.
There was just one problem: Quebecor's board of directors had decided to build a firewall between the newborn politician and his company, a publicly traded enterprise that controls nearly half of the media Quebeckers consume. So when Mr. Péladeau cruised into the lot at 7:30 a.m., he found he no longer had a parking spot. When he arrived at his office, he was locked out. Earlier, he'd discovered company e-mail was no longer working on his mobile telephone. That, he was told, had been unplugged.
He blew a gasket.
"What is going on?" Mr. Péladeau bellowed at his assistant, peppering the question with curses, according to sources familiar with the scene. In short order, the office door was opened, e-mail restored and parking arranged.
The Parti Québécois leadership race is nearing an end, with the 53-year-old Mr. Péladeau likely to win in a first-ballot romp May 15, and Quebeckers still have no answer to a fundamental question: Can a man who has built a career micromanaging a family media empire into a model of convergence keep his hands off the company when his own political destiny hangs in the balance? The man known as PKP is determined to return one day and pass along Quebecor to his young children – is there a management team strong enough to treat him like any other politician? The initial signs were not promising.
Nor is there solid evidence to suggest that the headstrong, often ruthless businessman has the attributes of a politician facing a self-assigned, Herculean task: reviving a moribund Quebec independence movement and the Parti Québécois.
"He's no politician," said long-time friend Bertrand Ménard, echoing the exact words of several other friends and colleagues. "I have to admit, him jumping in as a candidate was a surprise. He was always well-read and engaged, but in more of an intellectual manner."
'Citizen Péladeau'
The first attempt to manage the political neophyte fell to his company. On the day he declared his candidacy 14 months ago alongside Pauline Marois, who soon lost the premiership, Quebecor's board of directors held an emergency meeting. The directors, led by chair Françoise Bertrand, decided Quebecor had to gain distance from Mr. Péladeau, controlling shareholder and then vice-chair, for the good of both the company and the candidate. Robert Dépatie, the man who had replaced the CEO one year earlier, was left to hastily arrange a firewall.
As PKP launched his campaign for a National Assembly seat, the company sent out a statement saying Mr. Péladeau had resigned his seats on the boards of all Quebecor-affiliated companies. Further, the company said, he would be placing his shares in a blind trust should he be elected. "Mr. Péladeau will no longer take part in any decisions respecting the corporation's daily or strategic management," Quebecor added.
Mr. Péladeau, it seemed, did not get the memo as he arrived at the office.
About a month later, he was an opposition member of the provincial legislature and already a presumed front-runner to replace the defeated PQ leader, Ms. Marois. Three weeks after the election, Mr. Dépatie was out as CEO. The company said he was retiring because of health issues, but he resurfaced seven months later to take another high-pressure job as head of the St-Hubert restaurant chain.
Board chairwoman and long-time PKP loyalist Ms. Bertrand followed Mr. Dépatie out the door a few months later, saying "events of the spring" had left her feeling uncomfortable in the role. Both company leaders were the target of Mr. Péladeau's ire over the firewall, sources say. She was replaced by another Péladeau friend and Quebecor board member Brian Mulroney.
Two sources in the Quebecor chain say the incident was poorly handled and caught Mr. Péladeau off guard. Still, the 24 hours after Mr. Péladeau entered politics summed up a potential conflict of interest between his business holdings and political ambitions that have led to comparisons to Italian magnate-turned politician Silvio Berlusconi – and the fictional Citizen Kane. His shares have still not been placed in a blind trust, as his company promised, and the National Assembly's lawyer has informed PKP his current plan to do so once elected leader – with instructions not to sell – is not really a blind trust.
"It's not that he could have total domination, not even Berlusconi had that," said Pierre Dubuc, a union and PQ activist who wrote a book blasting Mr. Péladeau's business acumen. "But there's a parallel there in the dangerous concentration of media and political power. Every time Mr. Péladeau has to choose between his interests and the interests of Quebec or the Parti Québécois, he picks his own. Are we really certain that will change when he becomes leader?"
That first day in politics also offers a portrait of the man poised to become PQ leader. Impulsive, he brushed aside years of ambivalence carefully crafted by party leaders, loudly proclaiming his objective is an independent Quebec – and surprising everyone, including Ms. Marois. Insensitive, he showed up at Quebecor headquarters the next day despite obvious questions about how his new status as a politician could harm his publicly traded, sales-oriented company and its federally regulated wireless ambitions. Hot-tempered, he angrily kicked down the firewall between him and the Quebec corporation his legendary father launched.
Quebecor spokesman Martin Tremblay said the transition was handled with "courtesy and respect" and that suitable transitional measures were taken. He said Mr. Péladeau's management company continues to rent office space in the Quebecor building. "To our knowledge, Mr. Péladeau is rarely [there]," Mr. Tremblay said, adding that PKP no longer has a Quebecor e-mail address but that messages are automatically forwarded to him out of courtesy. "He is no longer in the list" for receiving documents from the board or management, Mr. Tremblay said.
People who know PKP laugh when asked if behind the cold-blooded businessman lurks a politician skilled at building bridges, healing wounds, inspiring the masses or negotiating consensus.
While former premier Bernard Landry, an outspoken PKP backer, admitted Mr. Péladeau is no professional politician, he added: "You don't learn politics in a university faculty. You learn it in action. He's an intelligent man. He'll learn, he is learning."
Friend and former adviser Luc Lavoie lists PKP's chief leadership qualities this way: "Determination. Focus. And boundless energy. He's a workaholic. And more than that, it's like he never stops. Whether it's family time or work time, it's constant motion, whether it's cross-country skiing or bicycling and water skiing. He never stops. Never ever stops."
Mr. Péladeau's arrival in politics has also pounded the wedge in familiar political fault lines in Quebec.
Federalist Montreal businessmen describe getting smacked down by prominent leaders in the community for saying the slightest nice thing about Mr. Péladeau. Sovereigntists who object to his status as a union-busting, right-wing candidate are booed by nationalists who see PKP as the strongman who might give them one last chance at an independent Quebec. Many one-time allies of Mr. Péladeau were stung by his sudden political conversion and are keeping a distance.
Mr. Landry argued that big and influential federalist media and telecom companies – think Bell, Desmarais-owned Gesca, along with public broadcaster Radio-Canada – provide a hefty counterweight to Quebecor's power. "I think there's a balance there," he said, adding that Mr. Péladeau should keep his Quebecor shares. "Who could he sell them to? Rogers?"
Divisive as he is, Mr. Péladeau is ascending to party leader with just a whimper. Federalists are mostly standing back; separatists either support him or don't want to get in the way of a runaway train.
"It's not healthy," said Pierre Céré, a labour activist who is among Mr. Péladeau's opponents in the leadership race. Along with Mr. Dubuc, he is one of the few party stalwarts unafraid to speak his mind about PKP's candidacy. Mr. Céré called him "Citizen Péladeau" at one party forum, later earning a private, profanity-laced tirade from PKP. "Every critique of the conflict Mr. Péladeau finds himself in is met with an avalanche of abuse," Mr. Céré said. "I faced it. I'm not afraid, but I see fear all around me."
Prominent federalist businessmen, speaking on condition of anonymity, gleefully predict Mr. Péladeau will destroy the PQ and say establishment figures are encouraging them to stay out of the way.
"If he ever gets close to winning an election, you will see people come out of the woodwork," said a federalist well-connected to the Bronfman and Desmarais clans that still carry big sticks in the province. "Nobody thinks that's going to happen. He will destroy that party, and it will be good for Quebec."
Mr. Péladeau declined to be interviewed for this story and his spokesman referred questions about his Quebecor role to the company. Quebecor maintains Mr. Péladeau's involvement in the company now consists only of exercising his voting rights at shareholder meetings. He has no day-to-day role, a spokesman said. Still, his presence causes obvious discomfort.
Late last summer, PKP strode out of Quebecor headquarters with a folder under his arm, interrupting the photo shoot of Manon Brouillette, the newly installed CEO of Quebecor cable subsidiary, Videotron. Once Mr. Péladeau finished mugging for the camera and strode off, Ms. Brouillette turned to the photographer: "You can't use that."
Mr. Péladeau appeared unconcerned.
Taking over the empire
The start of the Péladeau empire has become legend in Quebec business. Pierre Péladeau, who died in 1997, was a 25-year-old budding entrepreneur in 1950 when he purchased his first Montreal neighbourhood newspaper, the Journal de Rosemont, with $1,500. Within 10 years he owned a publishing powerhouse.
In 1961, a boy originally named Pierre-Carl was born, the third of seven Péladeau children from three mothers. Life wasn't easy. Pierre Péladeau's struggle with manic depression and alcoholism was a source of tension, along with his constant turnover of female companions. PKP's mother, Raymonde Chopin, was in hospital for depression and he spent much of his youth boarding with family friends.
Ms. Chopin died by suicide, he revealed for the first time in February. Mr. Péladeau described how at the time in the 1970s she was treated with Valium and electroshock; he visited her once during her convalescence in Switzerland, where she took him in her arms and said she loved him, he recalled.
"I stopped saying 'Maman' when I was 14," Mr. Péladeau wrote on his Facebook page during the PQ leadership race. "I suffered enormously from her absence," he added in a radio interview later, choking up. "It left an indelible mark, and I couldn't even talk about it with my father." Friends say Mr. Péladeau never talked about it with them either.
The ensuing years were marked by rebellion against his father even as PKP studied at the prestigious private school, Collège Jean-de-Brébeuf. He moved into a flat in the neighbourhood when he was 16, paying $200-a-month rent while working in a restaurant called Big Boy, according to the memoirs of Bernard Bujold, a long-time adviser to Pierre Péladeau. PKP drove a beaten-up Chevrolet Chevette while some of his classmates tooled around in Mercedes and BMWs. "That Chevette was abominable," Mr. Ménard said. "He's never placed any importance in such things and he still doesn't."
PKP studied at the leftist hotbed Université du Québec à Montréal while living in a slum apartment. The complete furnishings consisted of mattresses on the floor and a toaster, Mr. Bujold wrote. It was at UQAM that Carl became Karl in honour of the original Marxist theorist he had come to admire. Mr. Péladeau describes the name change as "a bit of a lark."
While the name stuck, Marxist convictions did not. By the early 1980s, Mr. Péladeau was completing law school. In 1991, his father named 29-year-old PKP to head Quebecor Communications, where he embarked on his trademark cost-cutting and in-your-face management.
Three years later, his father sent Pierre Karl off to Europe, where he launched the global printing business that made the company a world player but almost led to its downfall. PKP returned to Quebec shortly after his father died on Christmas Eve, 1997. "I always thought Pierre Péladeau admired Pierre Karl, but I never understood why he couldn't say it," Mr. Bujold wrote.
The big chair would be passed on to PKP less than two years later.
Even before Pierre Karl Péladeau officially took over Quebecor at age 37, his stamp was on the company. He had engineered the dramatic expansion of the company's global printing business in the creation of Quebecor World. He flanked Quebecor CEO Charles Cavell in 1998 when the company took over the national Sun chain of newspapers. "It's a big day for Canada," Mr. Péladeau said. In hindsight, it wasn't such a great day for Quebecor.
Quebecor World would end up in bankruptcy protection and sold off at a deep discount. A month ago, the Sun newspapers were sold to Postmedia for about a quarter of the nearly $1-billion Quebecor paid. What was once a global enterprise is now back to mainly being a Quebec concern.
A move into cable in 2000 secured the company's immediate future. Mr. Péladeau used major backing from the Caisse de dépôt et placement du Québec to outbid Rogers to purchase Groupe Vidéotron Ltée. Videotron had been a fat regulated monopoly which, in Mr. Péladeau's hands, was turned into an efficient and competitive TV provider. Most recently, the company has shifted into landlines and mobile telephones, sectors that drove growth in recent years.
Mr. Péladeau's business successes are the main underpinning of his credibility among supporters, but his critics point at the aborted ventures that have at times put the company's future in peril. Plus, they note, he inherited it from his father. "This is no self-made man," Mr. Dubuc said.
Mitch Garber, a casino executive recently named chairman of the Cirque du Soleil, went on the highly rated talk show Tout le monde en parle and said Mr. Péladeau's company had actually underperformed compared with North American competitors. "People think that, just because he has the name Péladeau, he must be a great CEO," Mr. Garber said. "I want to tell those people that I hope if he wants to manage our economy that he manages it better than he has the company since the death of his father."
Mr. Garber soon experienced the chill that descends when Mr. Péladeau is criticized: Separatists picked apart his numbers and Mr. Péladeau's wife, Julie Snyder, herself a producer and one of Quebec's biggest TV stars, said he was telling lies. Her massive army of social media followers rode in with a barrage of invective. Mr. Garber was taken aback. "You take the comments I made and apply them to any other state or province in North America, the reaction would have been a non-reaction," he said in an interview. "The reaction was extraordinary."
Quebecor sent out a press release the next day attacking Mr. Garber's analysis and defending Mr. Péladeau's record in business – an unusual step in defence of a man who supposedly has no active role in company decision-making.
The art of politics
Mr. Lavoie, a staunch federalist who advised Mr. Péladeau through much of his business career, said critics miss Mr. Péladeau's essential entrepreneurial spirit.
"He's a risk taker, he's a gambler. He's a winner. He didn't get this far by sitting on an inheritance," Mr. Lavoie said. They also don't give Mr. Péladeau enough credit for having the good judgment to walk away from loser enterprises and for getting his hands on Vidéotron, which is now central to the business, he said. "It required a hell of a lot of courage to get through this storm, and now you have a very healthy high-performing company because of those structural changes he engineered," Mr. Lavoie said.
Bay Street has long posed questions over Mr. Péladeau's leadership as a constant stream of executives were hired and quit or were dismissed as they chafed under his domineering leadership style. But Mr. Lavoie says many people miss that PKP is open to the fieriest of debates – as long as he can count on loyalty in the end.
"I've known other political leaders who had a temper," said Mr. Lavoie, without mentioning by name another of his high-profile former bosses, Brian Mulroney. "You have to have something boiling in your stomach to keep going in this business of politics. We'll see. Pierre Karl has immense determination. If he decides to control this side of him, he will. He learns fast."
On the left, a traditional key PQ block, Mr. Péladeau is mostly noted for engineering frequent lockouts. Mr. Landry said Mr. Péladeau did what he had to do to keep the businesses healthy. "A responsible owner can't always agree with its unions. Newspapers have all been in difficulty. Péladeau had to face it. He did his duty courageously," Mr. Landry said.
Quebecor is sticking to a convergence strategy that has made the company a dominant player in Quebec media and raised the profile of Mr. Péladeau and his wife, Ms. Snyder, who has created some of Quebec's most popular television shows for Mr. Péladeau's TVA network. The company controls a large portion of airwaves, book and music publishing along with the dominant Journal de Montréal and weekly glossies.
"Julie is a very positive force in his life," Mr. Lavoie said.
That partnership created yet another symbol of the slippery ground where politics and business converge. The Liberal government reversed a PQ decision in 2014 to allow Ms. Snyder's production company to claim the tax credits of an independent production company, even though her work is sold almost exclusively to her husband's network. (The PQ decision, supported by nine letters penned by Mr. Péladeau, according to La Presse, went against the advice of Finance officials.)
Ms. Snyder, who declined to be interviewed for this story, blasted the government for a "sexist and discriminatory" decision. "They're applying a formula anti-Julie Snyder," she told le Devoir. She threatened to sue. Premier Philippe Couillard explained he was creating a level playing field for other truly independent producers. Mr. Péladeau kept his mouth shut this time, suggesting he may be learning the art of politics.
Still, the collection of gaffes, displays of thin skin and disregard for normal boundaries of politics illustrate how the couple "live in some kind of dream world," said one senior Liberal operator. "They really don't know what they've gotten themselves into."
A 'PKP moment'
Right from the start, Mr. Péladeau was not exactly following the standard script of a front-runner. His insistence that he was in politics for one reason – to turn Quebec into a country – sent voters running toward the Liberal Party. The moment is widely blamed for sending the PQ to its worst result in decades when it appeared to be in a position to win.
Mr. Péladeau declared redundant the PQ's federal partner, the Bloc Québécois, stating the party was useless. While the Bloc was left a rump after the last federal election, the Quebec separatist movement doesn't appear quite ready to bury the Bloc yet. PKP backtracked.
Mr. Péladeau threw a tantrum because a La Presse reporter dared call him on his personal cellphone. He accused another reporter from La Presse (owned by the staunchly federalist Desmarais family) of harassing his donors. The reporter was making routine inquiries on the source of PKP's campaign funds – a pertinent line of questioning given recent political financing scandals in Quebec.
In December, the provincial ethics commissioner found Mr. Péladeau violated the ethics code twice when he tried to influence the sale of Vision Globale television and film studio to Quebecor last May, early in his time as a member of the legislature. Still, the commissioner found Mr. Péladeau was "acting in good faith" and did not sanction him.
In January, Mr. Péladeau heckled a rock band named Groenland at a concert in Rouyn-Noranda for singing in English instead of French.
In March, he declared the immigrants flooding Quebec and swearing "allegiance to the Queen" are steadily putting independence out of reach – an echo of Jacques Parizeau's declaration after his failed 1995 referendum campaign that money and ethnic votes had sunk the cause of independence. PKP apologized a day later.
The political fates would have buried another politician. As it is, some damage has been done as PKP has faded slightly in polls while maintaining a long gap between his nearest PQ rival, young upstart Alexandre Cloutier. "He learns, and he corrects course," Mr. Landry said.
Still, alarm bells should be ringing, even in a party that has taken leaps of faith before. In 2005, the PQ took a flyer on young, urbane André Boisclair. His leadership was a disaster, the party making its second-worst showing in 40 years. (The worst was last year under Ms. Marois, with PKP at her side.) Mr. Boisclair was more popular going into his leadership than Mr. Péladeau is right now.
Mr. Péladeau also lags in popularity behind Mr. Couillard, who has introduced two difficult cost-cutting budgets. Usually leaders about to be elected get a honeymoon. There's no evidence PKP is enjoying that kind of bump.
As former cabinet ministers Jean-François Lisée and Bernard Drainville said as they dropped out of the race early, PQ members appear to be determined to have their "PKP moment." It's far from clear it is a moment Quebeckers will share.
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Quebecor's reach
Quebecor Inc. controls 75.4% of operating asset Quebecor Media. The rest is held by the Caisse de dépôt et placement du Québec. Pierre Karl Péladeau controls the company through his 89.7-per-cent ownership of the multiple voting shares. Quebecor Media's assets are broken down into three main businesses.
I. Telecommunications.
The main assets in this business are:
1. Vidéotron.
The largest cable operator in Quebec with 1.78 million subscribers at the end of 2014. The company has a household and business penetration rate of 64%, (that's the percentage of people who subscribe versus those who could subscribe given that the Vidéotron network reaches them). This is way higher than anything else in Canada, according to Desjardins Securities analysts. (Rogers is 48%, Shaw is 46%).
Vidéotron also has a five-year-old wireless business that offers the latest smartphones and a significant coverage network. Estimated current market share: 12%. Desjardins predicts Vidéotron will double that market share over the next two years. Vidéotron is also weighing a national rollout of its wireless service, which depends on regulatory changes.
2. Archambault Group.
The largest retailer of recorded music in Quebec, according to Quebecor, with 14 stores. Also a major retailer of books, software, DVDs and gifts. Archambault's e-commerce site is the largest French-language online retailer in North America, according to Quebecor.
3. Le SuperClub Vidéotron
Largest remaining video store chain operator in Canada, with operations in Quebec and New Brunswick.
II. Media Group.
The main assets in this business are:
1. Tabloid Newspapers:
Journal de Montréal, Journal de Québec, 24 heures Montréal. Combined aggregate circulation of 2.9 million copies per week as of Dec. 31, 2014, according to Quebecor. Journal de Montréal has been the most read daily in Quebec for 28 years.
2. Websites.
micasa.net, autonet.ca among others.
3. Outdoor advertising.
Management of ads on Montreal and Laval bus shelters.
4. Book publishing
Assets include CEC Publishing, Messageries ADP.
5. TVA Group
It is controlled through multiple-voting shares and is publicly traded. TVA's main assets are:
TVA television network. Largest private-sector French-language broadcaster in North America. TVA and its specialty networks (including TVA Sports) held a 33.2% share of Quebec French-language viewership, according to fall 2014 data by Numeris. That's way ahead of anyone else, says Desjardins. Certain TVA shows are the most watched in Quebec, like La Voix, which pulled in an average audience of 2.6 million viewers during its 2014 run. More than one in two Quebeckers watching French-language TV during that time were watching that show, according to Quebecor.
TVA Publications and Les Publications Charron & Cie. Biggest magazine publisher in Quebec. Publishes about 50 titles in all, including celebrity gossip magazine 7Jours, and English titles Canadian Living and The Hockey News.
Global Vision. Sells studio, soundstage and equipment services to the film and television industries. Also does post-production.
TVA Films + TVA Access. Film and television production and distribution.
III. Sports and entertainment unit.
The main assets in this business are:
1. Musicor.
One of Quebec's largest music labels. There's also a separate business called Musicor Spectacles that does concert promotion.
2. Distribution Select.
The largest independent music distributor in Quebec. Unit Select Digital distributes music to Internet download services.
3. Les Productions Select TV Inc.
Does recording of live concerts, production of concert videos and television commercials.
4. Two Quebec Major Junior Hockey League teams.
5. Activities of new hockey arena in Quebec City.
This comes after ratification of a 25-year deal between Quebecor Media and Quebec City to use the arena. Quebecor is trying to get an NHL hockey team.
By Nicolas Van Praet
Les Perreaux