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2000.08.12
Further questioning of Péladeau's... style and the solidity of Canoe's management. The Post:
Quebecor has attempted to reassure analysts, stating it can turn Canoe around by cutting costs and strengthening the company. However, analysts say it's difficult to believe things can improve when they don't even know who is running the company.
"It's an issue Mr. Péladeau has to work on," says [an] analyst.... But hiring a team to turn things around at Canoe, where demoralized employees are said to be dusting off résumés, may be difficult for someone with Mr. Péladeau's colourful reputation. "People describe him, even his friends, as a surgeon that works without anæsthetic," said one analyst who asked not to be identified.
Mr. Péladeau is simply too headstrong to change his my-way-or-the-highway management style, the analyst said, adding that talented executives needed to run struggling new media companies don't generally go looking for the kind of aggravation that reputedly comes with working for Mr. Péladeau.
2000.08.09
Well, well, well. Much of what we wrote yesterday turned out to be reiterated in the Legitimate Press. (Thereby making it real, we suppose.) Canoe's CFO, Benjamin Vaughan, resigned "just two weeks after chief executive officer and president John Paton stepped down." Apparently goodwill is in even shorter supply than we'd thought.
[An unnamed "analyst"] cited as a possible reason for the departures the hard-driving style of Mr. Péladeau, 38, who took over as CEO a year ago. "Pierre Karl is not an easy guy to work with. Either people are leaving because they can't deal with him or others are just asked to leave because they don't fit in," he said.... ¶ "We're not backing away from our Internet strategy. Canoe and Canoë remain big successes, despite the second-quarter financial results," [a Quebecor fonctionnaire] said. "Canoe... posted unsatisfactory results and that will be corrected. There will cuts [sic] or an increase in revenues, one or the other or both," he added.
Major media oligopolies are engaged in a game of chicken online. You start a portal, so I gotta. You buy newspaper chains and aggregate their "content" into a portal, and I gotta, too. At present, these Übersites aren't making tons of cash, but you can't afford to shut your sites down, and by "afford" we do not refer to money. Shutting down a site is swerving out of the way. As anyone who's seen Rebel Without a Cause knows, whoever swerves first loses. Portals, in other words, are mogul ego trips. Whose is bigger?
2000.08.08
We note that Quebecor supremo Pierre Karl Péladeau, unsatisfied with digging his own grave, has now gone so far as to lower the casket. We wrote previously that the printing/media juggernaut peremptorily shut down two of its newspapers' Web sites, tarnishing Quebecor's reputation as the least-clueless Canadian newspaper oligopolist.
Reputedly hot-tempered, we can imagine Péladeau engaging in what the satirical press would describe as ashtray-heaving shitfits over the unprofitability of Quebecor Internet "properties." Ominous news reports, deploying careful Business English® that fails to camouflage the underlying bloodthirst, hold that:
News of a "reorganization" came as Quebecor said two of its new-media units, Canoe.ca, the Internet portal, and Nurun Inc., a Web-enabling and Web-integrator company, produced nearly $11-million in losses in the second quarter.
"We're not satisfied with the results and we plan to take the appropriate action to turn the situation around as quickly as possible," [...] Péladeau told financial analysts.
"Growth is important but it is not the only component to consider," Mr. Péladeau said. Goodwill serves its purpose, "but we need to get profitability on an accounting basis."
Both companies lost a combined $10.7-million during the second quarter, including $8.1-million at Canoe, and $2.6-million at Nurun.
Despite the new media losses, parent Quebecor reported strong profitability and revenue growth in the second-quarter and for the first six months.
Canoeists would be encouraged to duck the flying ashtrays. "Turn the situation around as quickly as possible" is synonymous with "sack vanloads of employees." After all, Péladeau's "goodwill" is running out. (And Canoe executives are running out – of the building. Rats, sinking ships, etc.?)
Continuing to miss the point
By Quebecor's own admission, its new-media "properties" are growing. Individual newspapers can take a decade or more to become profitable. The National Post burned through almost $100 million in two years, as confirmed by Lord Tubby of Fleet Himself. An $8.1 million loss is mere lunch money by comparison. Just what is the big rush with new media?
Moreover, the underperforming "properties" are not hurting the company. Péladeau, pushing a rock uphill, is locked in an ongoing battle to spend $5.9 billion – 728 times Canoe's operating loss – to buy Quebec cable oligopolist Videotron. (Priorities, anyone?)
Most importantly, Canoe is the only credible Canadian portal, at least for now.
Péledeau seems in a sudden rush to throw away that lead. Canoe actually offers something resembling worthwhile "content," a point asserted by Péladeau himself in previous Quebecor piffle:
- In a Canoe chat, Péladeau, addressing the topic of working with archrival Rogers, said "We've been trying to convince [Ted] Rogers about how good and Canadian our content is on Canoe." (Rogers is a cable oligopolist, hence provides cable-modem access for which Quebecor is hungry enough to spend nearly six billion bucks on a regional competitor.)
In a Canoe article, Péladeau declares:
"We thought that Canoe could be a very good home page for [Rogers'] broadband service[...]. Why? Because it's linked with a very strong content company. We really believe that content, if it's not king, at least it's key and drives a lots of traffic."
Péladeau said Canoe's strength is that it is a very strong content provider of Canadian news. "There's a need for this country to have a national portal, like there is a need for this country to have national newspapers," he said. He figures Rogers Communications wants to its Excite.ca portal the gateway of the Internet world. "And I understand that, but we think...that [Canoe] is a better product than Excite.ca," Peladeau said.
If the country needs national newspapers, doesn't it need national Web sites?
The archrival National Post, whose potentate, Conrad Black, had only just finished selling off half its limbs to CanWest, quoted Péladeau as saying:
"We strongly believe in that model [of combining print and broadcasting assets with Internet assets]," Mr. Péladeau said. "That's why we've been pushing so hard on Vidéotron." Mr. Péladeau welcomed any competition on the Internet portal side from the CanWest/Hollinger combination. Quebecor's "pending acquisition" of Vidéotron "will strongly cover Quebec, which is 20% of the Canadian market and that is stronger than CanWest and Hollinger will have [through portals such as Canada.com] in the rest of Canada."
Not rocket science
We don't know why we have to be the ones to speak truth to Péladeau's power, to adopt the quaint activist locution. First by killing two newspaper Web sites, and now by kvetching about unprofitability as an overture to firing ranks of employees, all under the shadow of an obscenely overpriced takeover that does more to symbolize Péladeau's mogul delusions than serve any rational business interest, Péladeau puts the lie to his own PR. Content not only is not king in the Quebecor castle, it's not even important enough to continue to invest in.
A typical malaise
We don't have any golden-egg-laying geese around here. We are quite aware of what's been going on with high-profile Amerkanski content sites. (They've been tanking, as we've documented on various occasions.)
We believe, though, that very expensive content sites won't make money for quite a long time. Inexpensive content sites, however, will. Pretty simple.
Under this model, Quebecor's new-media "properties," situated as they are in the very-expensive category but with revenues on the upswing by Quebecor's own admission, will continue to creep toward the high-water mark of profitability over time – possibly within the next few years.
So bolt the damn ashtrays to the desk, keep doing what you're doing, stop shutting down papers, fire no one, bide your time, and quit shooting yourself in the foot.
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