Marc Smith is acting editor of Families in Business.
Rogers Communications is today Canada's foremost provider of cable, telecoms and wireless services. But, as Marc Smith finds out from Edward Rogers, the family business's story begins with the invention of a world first …
Following in the footsteps of famous forefathers can either be a privilege or a pain for next generation members of family-owned businesses. But when your grandfather invented a world first and your father is credited with turning it into the country's largest communications and media company, the pressure is turned up a notch or two. Throw in the fact that you have the same name as both your father and grandfather, and you may wonder about an alternative career path.
Not so Edward Rogers, the very calm and self-effacing 38-year-old president of Rogers Cable. "They are hard acts to follow," he exclusively tells Families in Business. "It may be impossible to live up to them, but my ambition is to build the company, help it to grow and keep alive the work they have done."
So what was the magic ingredient that convinced him to throw his lot behind the family name? "When I was growing up I saw the excitement that my father had for the company – it was both a hobby and a passion for him," explains Rogers. "I wanted to do something that would provide me with that same passion and excitement." This passion meant business didn't stop at the office door and, as Rogers grew older and gained first hand experience of the company, he got the bug. "The more I got into it, the more I felt that same passion and excitement," he says.
Rogers Cable is just one strand of Rogers Communications, a $10.2 billion (€7 billion) company headquartered in Toronto. Today it is split into three business units: Rogers Wireless (Canada's largest wireless communications service provider with over 6.8 million subscribers), Rogers Cable & Telecom (Canada's largest provider of cable TV, high speed internet access, home phone services, business telecommunications and retailing) and Rogers Media (comprising 51 radio stations, over 70 magazines and the Toronto Bluejays baseball team).
The latest financial results (from the second quarter of 2007) show that the wireless arm contributes 52% of the overall group's revenue and 70% of its profits, with cable and telecom 36% and 26%, and media 12% and 4% respectively. With traditional media struggling, as elsewhere in the developed world, does Rogers envisage a time when the firm won't be involved in this sector? Not a bit of it. "There are lots of parts to our media arm and while some areas are under pressure other areas are still doing well," says Rogers. "In our radio business, for instance, when you look at the cost per impression, it is still the best value for a person looking to sell their products."
One of the cornerstones of the business throughout its history is that it has remained – despite a brief dalliance with expansion into the US – resolutely Canadian. "We're proud of the country we have, but we live next to the biggest country in the world in terms of business and we feel like a mouse in comparison," says Rogers. "We've tried to protect our culture, even though Canada is a culture built up of people moving from all over the world."
This kind of talk is currently a hot topic as Canada still practises foreign ownership restrictions in cable TV, telecom, wireless and media industries. "We support a relaxing of foreign ownership but not an all-out change where we abandon all the rules," says Rogers. "We'd prefer an easing up on the existing caps."
The company splits the cable and telecoms division four ways: cable and internet, home phones, business solutions, and retail – and Rogers is keen to talk up the growth potential that the sectors have. "People used to say that cable businesses were in their later innings but today we still see strong growth in cable TV and high-speed data despite having a penetration that is among the highest in the world," he explains. "What is exciting about cable is almost as soon as you get into one business it opens possible doors for future businesses."
For example, the advent of digital TV has led to on-demand services, where customers can pick from a library of thousands of movies and shows that will start whenever you're ready; personal video recorders, which let you pause, rewind, and instantly replay live TV; and timeshifting, which gives customers the freedom to watch shows at their convenience, at up to five different times during the day. Rogers has embraced them all.
Another initiative that is commonplace in the industry, and one of the things Rogers focuses on in particular, is the bundling up of its cable and telecom services to customers to bring down the net costs. But it doesn't stop there. "Now people have modems in the house for voice and data, we're looking at other things we can do with that such as 'smart house' fire and theft monitoring," says Rogers.
Despite its separation from the other business units on company balance sheets, the cable and telecoms division doesn't work in a vacuum. "As we are also in the wireless business, and as people carry a wireless phone or PDA, you can now talk to that customer about their home needs," he continues. "If you think that we have almost nine million internet screens made up of almost seven million wireless customers, over 1.4 million high speed internet customers and 2.3 million TV customers, of which 60% have gone digital, then we have a huge amount of customers who have some sort of datacom activity. We don't think of different products, but one platform with multiple access points. The possibilities are endless."
Unsurprisingly, one of the biggest and fastest growing of these is high-speed internet access, which led to the firm's link up with Yahoo! in 2004. Essentially, there are two benefits that the ISP brings to the Rogers brand, as Rogers himself explains. "First, the relationship brings a very stable platform, especially for e-mail. They have huge scale and are generally ranked at the top end." This enables Rogers customers to have the benefits of an @rogers.com address, but with the reliability of the back end Yahoo! portal. "Second, our product development is on a much bigger scale than if it was just Rogers Cable, so we can accommodate the growth in what customers want to do on the net."
It is therefore perhaps a little surprising, given this potential growth, that the family has no plans to return to international expansion as it did in the 1980s when it acquired and built a number of cable television systems in the US. "We're hoping to stay in the business as a family and so you never say never," says Rogers. "Our first preference would be expansion in Canada as we still have a lot of room there, but the future is a long time and we wouldn't rule anything out."
But growth can also be accommodated via diversification. Along with many other wealthy families – think of the Glazers, Kroenkes and Steinbrenners – the Rogers' have added a sports team to their business portfolio. The family acquired the Toronto Blue Jays baseball team in 2000 but Rogers admits that a love of the sport was not the dealbreaker when it came to signing on the dotted line. "We enjoy the sport but we're not fanatical about it," he says – in other words, it was a purely business decision. This was backed up by the purchase of speciality sports TV service Sportsnet and the FAN 590 sports radio station in 2001, which gives the company an allround leverage in this sector. And the icing on the cake was the BlueJays' stadium, the largest covered indoor entertainment complex in Canada, which was purchased in 2004 and swiftly renamed the Rogers Centre.
But what of the Rogers' own family team? It all began back in 1925, when Rogers' grandfather invented the world's first alternating current (AC) radio tube, which enabled radios to be powered by ordinary household current. This was a dramatic technological breakthrough and became the key factor in popularising radio reception. In 1931, he was awarded an experimental TV license and was working on radar when, in May 1939, he died aged just 38 and his business interests were sold.
His son, however, was determined to carry on his father's work and set about rebuilding the Rogers name and establishing a business empire that would become an important legacy to his father. He started Rogers Radio Broadcasting Limited, which acquired the nation's pioneer and most popular and profitable FM radio station, CHFI-FM.
His interests in radio led him to cable television. In 1967 he was awarded various licenses and, in 1974, set up Rogers Cable TV, which became the first cable company to expand past 12 channels. Entry into the mobile telephone and wireless industries expanded the company's interests in 1985. Digital TV was launched in 2001, providing Canada's most advanced digital network, while the internet soon followed in 2004.
Despite the fact that it was his pioneering grandfather who set the family on its way, Rogers calls himself second generation in recognition of his father's contribution to building up the current business. It was he who had to start the firm from scratch, and enabled his son to be born into a thriving business.
Unsurprisingly, there are now plans in place to ensure the next generation avoid having to start at the bottom. "There are two parts to the succession question: ownership and management," says Rogers. "On the first, there is a [succession] structure in place because, as a family, we are keen to continue to the Rogers name in Canadian business. On the second, we have a board committee who make the decisions on CEO succession.
Succession is a topic that Rogers has on his mind given that his wife gave birth to his third child just a few weeks prior to our meeting. "My advice is if you get in, work, and work hard," he reflects. "Learn by doing different jobs and earn your way up the ladder. If you work here, you have an obligation to a public company – to our customers, to our shareholders and to our employees."
As a young man growing up himself, he is keen to extol the values of gaining experience outside of the family business. After graduating, Rogers spent two years at US-based cable and cellular company, Comcast – owned by the Roberts family – where he worked in sales, marketing, new product development and strategic planning. "Most people I worked with didn't know my father owned a major cable company in Canada," he explains. "I gained a strong work ethic, learnt the cable business and what it was like to be a regular employee, get the job done, and have a boss." The relationship didn't stop when Rogers left, however, and the two families have kept in touch. "We were just there this week," he says.
Helping others runs deeper than just other business-owning families, however. In May this year, Ted and Loretta Rogers made a gift of $15 million to Ryerson University. The donation is directed towards the Faculty of Business, which in recognition will be renamed the Ted Rogers School of Management. The majority of the gift will be used to establish 52 new undergraduate and graduate student awards and scholarships, at unprecedented levels for the university. The gift also aims to establish a new Research Chair to seed academic initiatives that will attract outstanding faculty and create centres of excellence in management research.
"Philanthropy is extremely important to us, fun to get involved in and rewarding," says Rogers. "My parents have done their part and, in doing so, have inspired me and my wife. We look particularly at causes with young kids both here in Canada and aboard." One campaign they are currently involved with is OneXOne, a non-profit foundation committed to supporting, preserving and improving the lives of children of which they are the founding sponsors. "They have an annual fundraising event dinner and concert that takes place around the Toronto International Film Festival," explains Rogers. "Matt Damon has been the host for the last couple of years and we raised $3.5 million in 2006."