when Shaw Communications Inc. decides it's time to find a suitor, the
Shaw family will likely want a partner rather than a buyer.
This makes a deal with Rogers Communications Inc. the most logical scenario,
even if both sides are denying they got together for an informal date or
two before the holidays. A merger of equals between Rogers and Shaw makes
sense because it offers the Shaw family a way to boldly position the company
for the future while still giving them a major role in its operations.
Make no doubt, this would be a merger because Shaw chairman and founder
JR Shaw has made it clear he's not a seller. Mr. Shaw has spent 40 years
building the Calgary-based company into Canada's second-largest cable-service
provider, and it does not seem likely he will just walk away from his pride
and joy with a truckload of Rogers stock.
Instead, a more likely scenario will see Ted Rogers and Mr. Shaw get
together for another dinner date to make a deal before they let the
out the final details. The new company would continue to operate in much
the same way, with Rogers running its cable and media businesses in Eastern
Canada and Shaw operating its cable and satellite-TV operations in the
The Rogers and Shaw brands will both stick around. You won't see the
Calgary Flames playing their home games in the Rogers Centre West.
And this will
not be a Telus Corp.-Clearnet Communications Inc. deal in which Clearnet's
well-known brand disappeared shortly after it was acquired in 2000.
Over time, Rogers and Shaw will meld their cable systems to maximize
efficiencies and drive out operational and programming costs. The companies
work together to create a major national phone company that will offer
local service in Ontario, Manitoba, Alberta and B.C.
This would be the dream alliance," said Iain Grant, managing director
with the Seaboard Group. "It would put together the two cable dynasties
so they could take on the behemoths (BCE Inc. and Telus) on an equal footing."
While Rogers appears to have the inside track on courting Shaw, it
would be a mistake to discount BCE's interest. If BCE wants a strong
in Western Canada, it needs a deal with Shaw because its current strategic
initiatives -- Bell West and Bell Mobility -- have not flourished.
BCE could structure the same kind of arrangement that would let the
Shaw family run the Western Canadian business. But BCE is a different
from Rogers. An ingrained part of its corporate DNA is bureaucracy
and multiple layers of management, which doesn't seem to lend itself
shoot-from-the-hip, maverick approach. Then again, a BCE-Shaw deal
would make the Shaw family the largest single shareholder in Canada's
telecom company, which is not necessarily a bad place to be.
Then, there's Telus, which has been trying to reduce debt as it grows
its wireless business and expands into Eastern Canada. But Mr.
Grant said a
Telus-Shaw deal is unlikely because the federal government would
see it as anti-competitive.
The biggest questions facing Shaw are whether it needs to make
a deal and, if so, how quickly it has to happen. In the short
is no urgency
because Shaw's cable, high-speed Internet and telephony businesses
are doing well.
In the long term, however, Shaw may have little choice because
of its size and geographic focus to become part of a more powerful
is clear: Shaw is not going to be sold. If a deal is going
to happen -- whether with Rogers or Bell -- it will be done on terms
meet the Shaw
family's financial, business and family-legacy objectives.