Last week, Rogers Communications Inc. president and CEO Ted Rogers met in his glass-walled Toronto office with Editor-in-Chief Robert Lewis, Assistant Managing Editor Berton Woodward and National Business Correspondent Katherine Macklem for a wide-ranging interview about his company (which owns Maclean's) and where it fits in the rapidly changing media landscape. Excerpts:
Maclean's: Can you explain what this buzzword 'convergence' means?
Rogers: Convergence is not a conglomerate buying a whole lot of separate businesses. It's extraordinarily difficult to bring together different businesses. We do that. Our background is that we've started a lot of different businesses.
People are expecting service anywhere, anytime. The computer and the TV set are coming together. You're putting together different media through one instrument. That's technological convergence. You've seen how the phone company can take a small wire and they can cram more and more things into it and provide new services. And the cable company's done exactly the same thing.
And then there's the convergence we might call marketing convergence, where you're packaging together people's needs in a way to make it easier for them, where they get one bill, say, and call in on one number and get an answer for the entire package. In Rogers's case it will be all the services - telephony, long distance, high-speed Internet, low-speed Internet, cable, paging, etc. - and we will offer all those services to people in the home.
Maclean's: You've put together a baseball team, a cable company, a wireless firm - the possibilities seem endless.
Rogers: Your question is now from a business standpoint: how does a baseball team fit into all this? There we're talking co-promotion and mutual advertising support where all of the Rogers businesses will be supporting the baseball team, selling tickets, promoting it. Likewise, the ball team can be promoting our products - with signage, displays of prices, every kind of promotion you can think of. Let's put it this way: they'll know they've been visiting Rogers Land, if I can call it that, when they go in there.
Maclean's: Will you put more money into the Blue Jays?
Rogers: We have to put up enough money so that we have an opportunity to at least be in the playoffs. I don't think the fans want to go if they have absolutely no chance. We've got to get the fans in the seats and watching the TV and really supporting the team. There's a great opportunity, and a risk, that if we don't do a good job with the Blue Jays, the Rogers brand would be harmed in southern Ontario.
Maclean's: You seem to be talking about co-branding, co-promotion. So that's marketing. But what does that mean in the context of convergence?
Rogers: You're absolutely right, it's a different issue entirely. You take Izzy Asper: when he buys the newspapers and he owns TV stations, that's not convergence. It's promotion - the TV stations will promote the newspapers and the newspapers will promote the TV stations. That's synergy.
Maclean's: Was BCE's purchase of CTV a smart move?
Rogers: Well, I have great respect for Jean Monty, and he has a unique and marvelous record of smart moves in everything he's done, so I suspect this is a smart move. If I was a phone company, would I buy a TV network? I don't think it's been done anywhere else in the world. So it's really awkward for me to criticize that sort of decision, that's up to him.
Maclean's: Are you feeling boxed in, as some people suggest?
Rogers: Well, I hope not. I certainly didn't feel boxed in when I spoke to the CRTC, saying that it just made no sense at all to think that Bell could own six or eight or 10 specialty channels when Rogers couldn't own one. I argued as strenuously as I could that if Bell is allowed to buy CTV, that any restrictions on Rogers compared to Bell should be removed. And it's hardly equal, because they are the largest corporation in the country by far and they dominate everything they're in. They dominate local telephony, 99.9 per cent. They dominate long distance. There are corpses where there used to be competitors of Bell and long distance. So it's not easy.
Maclean's: Do you share the skepticism that's been expressed about a lot of the major deals we've seen, going back to AOL-Time Warner?
Rogers: No, I think some are going to make enormous sense. And I think astutely done, a collection of media and communications assets such as Rogers, and there are others, makes enormous sense and they provide the public with an opportunity for better service, for innovation and for lower prices. In others, they'll make little sense and time will show that. AOL-Time Warner does make sense, because the Internet is the future and they do have magazines, as we do, and they've got cable television and television specialty channels. It's a great company.
Maclean's: But you don't have a television network.
Rogers: No, but if Bell gets this approved you can bet your buck Rogers is going to be out hustling to get one or start one. We prefer to start things. Don't forget, I was there in the founding of CFTO, CTV Channel 9 Toronto. Good luck, Mr. Monty, we'll start a new one!
Maclean's: Can you tell us what acquisitions and partnerships you hope to pursue?
Rogers: Not really, because I emphasize we start businesses and we're going to start a telephone business. Peter Ciceri, the president, just started. He's going to put together an opportunity for our customers to be able to receive local and long-distance telephone service from Rogers on our own cable system. It will be a fantastic service. It's going to be better than what Bell has in the sense that you can have upwards of four lines, you can have a data line, and we will tie long distance in on it.
Maclean's: Why go into the telephone business?
Rogers: If we are going to compete in the home with Bell, we have to offer everything Bell offers.
Rogers: You see, newspapers are not part of the communications products delivered to the home, although I guess you could argue they are. Let's put it this way: I'm a bit of an environmentalist, and one of the reasons that I sold the papers was that I just felt that in the long term, tearing down all those trees and making newspapers wasn't going to last. We may dispute that in Maclean's. I also thought that all those boxes chained together on the street corners, five of them now in Toronto, were ugly and they were rusting. Some day, somebody is going to do something about them.
Maclean's: You recently met Quebecor's Pierre-Karl Péladeau and held open the possibility of working together. What kind of partnership can you see?
Rogers: Oh, from the simplest case of just sharing technology, research and ideas, to common switching, common billing, whatever makes sense.
Maclean's: Was there some kind of understanding that made the Vidéotron deal end when it did?
Rogers: No, there wasn't, and it just seemed to be the right thing to do and not subject the Chagnon family, which I have great respect for, to any more litigation and so on. They have worked for 40 years building that company and I didn't think they deserved having to end it by being dragged through the courts.
Maclean's: You also meet with the Aspers from time to time. What kind of partnerships could you do with CanWest?
Rogers: Oh, in the simplest case just co-promotion where our radio stations promote their products and their products promote our products, that's the simplest bedrock sort of deal, to almost anything, merge all the companies. But when you have two family companies, it's pretty hard to understand who's going to give up control, so that's probably not practical.
Maclean's: In the case of Rogers Media, do you foresee any changes? Partnerships or an IPO or anything of that nature?
Rogers: Well, we certainly are looking at all of those options. At one point in the negotiations with Vidéotron, we thought it might make sense to have their media and our media go together in a separate company. And we're looking at that and it could well make sense. You could have it as a separate IPO company - it might be 80 per cent owned by RCI and 20 per cent by the public. It would be another source of capital for us. And it probably would unlock values that are now covered up in the overall RCI. Would we spin it off completely and have a separate company? I'd hope not. Because I think the relationship with the cable and the wireless and the media are worth far more than the sum of the parts.
Maclean's: You've also talked about bringing the National Football League to Toronto.
Rogers: First, it was a fabulous opportunity for us to get Paul Godfrey to head up Rogers Sports. He's Mr. Canada and he's the man to do this. He feels confident that Toronto can handle an NFL team financially. It's a huge undertaking, it's maybe a billion-dollar undertaking. Certainly Rogers is not going to finance it, but we will be the catalyst that causes it to happen.
It would be done so that the Canadian Football League was apart and was protected - the farm teams for this NFL team or something like that - so that we add, we augment, we don't destroy and replace it with something.
Maclean's: What kind of time frame do you see?
Rogers: It's sort of like Rogers moving to investment grade, isn't it? So I say five years, and it may be three or it may be 10.
Maclean's: There are complaints sometimes about the installation of cable Internet. Some people have billing problems. Do you think you have work to do on your public image and on service?
Rogers: I think that any company with 2.3 million customers is going to have handfuls of people who have issues. The high-speed Internet service has been more successful than we anticipated; there have been some growth pains, but I understand that is being solved.
But if you're saying, is there still work to be done? Of course there's still work to be done in all of these things. And I've got a few ideas also for the magazines. I think you spend 80 per cent of your circulation revenue on bugging people to be renewed and sending out letters and phone calls, and if you think Rogers Cable has a few handfuls of people who are annoyed, I think not just Maclean's, all magazines annoy the hell out of their loyal customers by this constant bugging for renewal. Now my solution is to take the annual rate - you give a discount if you buy it annually - and I divide that by 12 and I give my VIP program customers a chance just to sign up and they can get that one-twelfth rate each month. They can start when they want and stop when they want and there's no renewals, there's no bugging people, there's no cost. Everybody wins.
Maclean's October 2, 2000