B5

David George-Cosh
Canwest News Service

Stumble Upon

del.icio.us

Digg

Facebook

Print

Email

Speak Up

TORONTO - With the loss of Ted Rogers, the question on many people's minds is what will be the next chapter for Rogers Communications Inc., one of Canada's largest and most successful companies?

This much we do know: Whoever takes the reins at Rogers will have the benefit of running the conglomerate in quite possibly the best financial position it has ever been in. Gone are they days when Rogers had to borrow billions of dollars to support its investments. With a market capitalization of $22.1 billion, the company made a profit of more than $1.1 billion in the last fiscal year.

"Nobody would have predicted Ted would be as successful as he was, I don't think. You have to give Toronto-Dominion Bank credit for bankrolling him," said Joseph Martin, business professor at the Rotman School of Management at the University of Toronto. "Rogers saw the value of cash flow; he didn't worry about debt. He knew cash was king."

While Rogers chairman Alan Horn will assume temporary control of the company, as per Rogers' wishes, the two main contenders for the top job are Nadir Mohamed, president and chief operating officer of Rogers' communications unit, and Rogers' son, Edward, who runs the company's cable business and will control the family's controlling interest of Class A preferred stock for the first two years after his father's death.

"The company has a lot of bench strength when it comes to management," said Dvai Ghose, an telecom analyst with Genuity Capital Markets. "Ted has done a good job of planning his successor in terms of creating a very strong balance sheet and leaving a strong management team to take over."

Although industry observers view Edward's heritage as a factor that may sway the board of directors to consider him for the corner office, company insiders have said that Mohamed - who since arriving in 2000 from Telus Corp. helped steer Rogers Wireless to becoming the company's crown jewel - would be the more likely pick. He was responsible for running the company in Rogers' absence for the better part of this year.

"As Ted got ill, he slowed down considerably, and he hasn't been as sharp and crisp in his decision-making," said a close associate of Rogers who asked not to be named.

But aside from who will be the next CEO of Rogers is a much bigger and more important question: Without Ted's vision, how will the company continue to drive innovation forward as it has done for so many years?

"The fact is Rogers Communications Inc. is now so much bigger than its founder," Rogers wrote in his autobiography, Relentless, released this fall.

"I know I will not be around forever. No one is.

"But I am comfortable in the thought that the next Rogers CEO and the one after that and the one after that will take the company beyond where it is today."

In a recent interview with the Financial Post, Mohamed said that "the marriage of broadband and mobility is going to drive our industry and the future of Rogers."

Indeed, that future may wind up being the company's biggest organizational challenge yet, said Lawrence Surtees, vice-president of communications research for IDC Canada.

"The technologies and trends may call for a transformation of the organization," he said.

Industry analysts maintain that it will become tougher for Rogers to maintain its hold on the wireless business, which in the most recent quarter accounted for $1.7 billion in sales. Its golden goose is being fought over by several new wireless players and revitalized incumbents BCE Inc. and Telus.

Internet-based TV offerings from telecom operators and online content are also beginning to dent Rogers' cable business, while eroding advertising dollars have decreased the profitability of its media and publishing holdings.

"This company was founded on growth and leverage," Ghose said.

"If you're a growth company, you've never stressed cost cutting because it's always been about the top line.

"But with all these pressures, you've got to start cutting costs."