This article was originally published in Maclean's Magazine on August 5, 1996
Péladeau, Pierre (Profile)
Pierre PÉLADEAU does a short-stepped shuffle out of his black chauffeur-driven Cadillac and into, of all places, the Cyber-Bistro in downtown Montreal. In the bowels of the building 18 Internet-linked computers await eager cyber-cruisers, one of whom today plays a video game in which the object is to blast stripper babes off those poles they writhe on. It is not clear whether Péladeau is surprised to hear the computer speak - "shake it baby," it says - but he admits he is completely out of his depth. Péladeau is 71. He stares blankly at the screen. Pierre Péladeau does not do computers.
But Quebecor Inc., his $6-billion printing, publishing and pulp and paper company, is into multimedia, which is why Péladeau's son Erik has opened the Cyber-Bistro and explains why Péladeau père comes here for lunch. He perches himself on a cyber-stool, an elfin francophone George Burns, a little shaky but still very much in the game. On Friday, Péladeau made an all-cash bid for 100 per cent of Toronto Sun Publishing Corp., which includes Sun papers in Toronto, Edmonton, Calgary and Ottawa, and 60 per cent of The Financial Post. Given the vertically integrated style and scope of the Quebecor empire - from the tabloid daily Le Journal de Montréal to 218 printing plants to pulp and paper maker Donohue Inc. - the TorSun group would seem to be a logical fit. And Péladeau has been lusting after The Toronto Sun ever since it was founded in 1971. If he can get his hands on the group now, he says, he will make it a real performer. "We have the people who can handle that business inside out," he says, criticizing its existing management, its "lousy" distribution, its skinny profits. "Five million on $360 million," he says, referring to last year's financial performance. "It's a joke. It's really a joke." Quebecor makes a yearly profit of upwards of $15 million on Le Journal de Montréal alone. About the only kind word Péladeau has for TorSun is for its wholly owned Bowes Publishers Ltd., a community newspaper group. "The management of Bowes is different from the management of the Sun, very much. They've got good management."
Ever since Rogers Communications Inc. put TorSun on the block in May, Péladeau has been seen as the heavyweight contender, which has not sat at all well with some inside the Sun group. Columnist Allan Fotheringham wrote in The Financial Post and Toronto Sun that the idea of having Péladeau for a boss "would be too much to stomach. ... He is, for starters, an ex-alcoholic, a closet separatist, and has slurred Jews." In an earlier column, Post editor Diane Francis started with a simple declaration. "I don't want a separatist like Pierre Péladeau buying the Sun newspaper chain and its control of The Financial Post," she said, concluding that, "Péladeau may be able to legally buy this chain but he won't own a single soul who works here."
Péladeau has been swimming in this controversy for years. As Quebecor has grown aggressively by acquisition, starting 46 years ago with a moribund newsweekly, it has become as powerful a symbol of Quebec Inc. as the Caisse de dépôt et placement du Québec, Hydro Québec and the Groupe Desjardins. Péladeau personally has aligned himself with former Caisse chairman Jean Campeau, whom he once considered a possible corporate heir, and Quebec Deputy Premier Bernard Landry. He has stayed far afield from the likes of Laurent Beaudoin, the loudly federalist chief of Bombardier Inc. At the time of the referendum last fall, when Beaudoin exhorted his employees to vote "non," Péladeau criticized what he saw as Beaudoin's interference. "I said I wouldn't do that and I said it's not your job to do so either. You have nothing to do with it. Get the hell out of there."
Today, Péladeau, a philosophy and law grad, is arguing semantics. "I have not supported independence in Quebec," he says. "What I have said is I would not be frightened if Quebec could or would become independent." He will not entertain a post-independence economic chaos theory: "There's nothing to prove that. Nothing at all. Shit. It's a big joke." He likens such thinking to what he calls "fright movies, Dracula, Jack [sic] Frankenstein." The talk of separation leads to the more discomforting issue of ethnic nationalism, which has been fuelled by a six-year-old story in l'Actualité magazine in which Péladeau was quoted as saying: "I have a lot of respect for Jews, but they take up too much space." The profile caused a storm of controversy, and the magazine quickly apologized for a number of misrepresentations. But Péladeau stands by the contentious quote. "I had nothing to retract," he says. "In my mind I was not attacking anybody. I was not attacking Jews, only one particular Jew."
Still, Péladeau has been stung by the most recent criticisms. "It's cheap stuff," he says of the Toronto editorials. "The funny thing is, there couldn't be a better racist than what they're doing. That guy [Fotheringham]; that girl [Francis]." In her column, Francis says Quebecor should be concerned that, should its bid be successful, readers could boycott the paper. "I think she should boycott herself, I really do," says Péladeau. Later, he muses that, for Francis's sake, he hopes someone else bids for the Post.
In the end, the spitting match, which has made for good media sport, may come to nothing at all. "I think frankly some of the media stuff is bullshit," says a TorSun board member who happens to be Jewish. "For anybody to suggest that the Jewish community is driving Péladeau out of this is preposterous." Peter Worthington, a founder of The Toronto Sun who still writes a column for the paper, says it's "fair to say that [Péladeau] is every Sun journalist's worst nightmare. One of the problems of Péladeau apart from the political perceptions, which are probably overstated, is that he's efficient, and any newspaper that gets an efficient proprietor has a lot of people worried."
Certainly Quebecor, led by Charles Cavell, president of Quebecor Printing Inc., has Sun cost-cutting in mind, should it win. It had been the hope of controlling shareholder Ted Rogers to start a high-priced auction with the Sun sale. That has not happened yet. As of Friday, Conrad Black's Hollinger had not stepped forward, though president David Radler, on his way from Baltimore to Philadelphia pumping Hollinger stock, said he was still interested in The Toronto Sun and The Financial Post. Hollinger already has 19.9 per cent of the Post. Bay Street financier Andy Sarlos took a look last week, sent representatives into the war rooms of both the Post and the Sun, and gave it a pass. "If someone is going to buy it at those prices we are going to enjoy it very much from the sidelines," says Sarlos. Winnipeg broadcaster Izzy Asper, who talked with TorSun CEO Paul Godfrey early on and toyed with a buyout of his own, gave it a pass, too. Says Asper: "The world is overpriced at this hour." Bay Street analysts speculated last week that a buyout could be priced at $17 a share, or $440 million.
A management group led by Godfrey did put in a bid Friday. Management has its privileges. The amount of information made to outside bidders is always, as Asper says, "pretty thin." Certainly Cavell, who would take a leading role in TorSun's future under Quebecor, has been unable to give the boss a clear fix on the fiscal state of The Financial Post, which does not report earnings separately. Péladeau says he can't "get too excited about the Post. In as much as it's not profitable, I'd be pushed to get rid of it. Black wants it. Others want it, too. If they want it, they get it."
It has been the stated intention of the management group to keep the Suns and the Post as one. Godfrey will not illuminate just how he intends to do that and increase profits, which the management group's equity investors, and its lenders, will surely be expecting. It is often an irony of management buyouts that those who promise increased profits are often the same people who have failed to deliver them to date. "It creates the speculation that maybe the fat is wielding the knife," says Worthington. "Maybe the people who should be cut are doing the cutting." Paul Godfrey does not take the bait. "There is no doubt that anybody who invests will be seeking better profits," he says, without revealing how they are to be realized.
"I don't give a damn about Paul Godfrey," says Péladeau. "I got a phone call this morning from a very important shareholder in the Sun. He wants to sell his shares at a decent price. He was hoping to tell me that Godfrey didn't have it at all. He said, 'These guys are jokers.' "
Péladeau makes it sound as though he has already bagged this latest acquisition. His arrogance has not been recently acquired. Péladeau is still, in his dotage, the brash entrepreneur. He talks freely of all foibles, including the past alcoholism that Fotheringham has damned him for. "He's an alcoholic all the way!" says Péladeau of the columnist. ("Bullshit," says Fotheringham.) "He was picked up off the street dead drunk by Mr. Conrad Black." ("Untrue," says the columnist.) "I haven't taken a drink since 22 years," says Péladeau. He says he self-diagnosed his manic depression 16 years ago. "If you have the desire, the need, for killing yourself, there is something wrong." But he refutes a much-repeated theory that he made intemperate business decisions before he started taking lithium carbonate to smooth the mood swings. The Philadelphia Journal, which he started in 1977, was not manic folly, he argues. "I just made a bad move," he says, adding that his lawyer and accountant supported the plan. "There were a lot of similarities with Montreal, except there were a lot of black people." That, he says, was the readership group he was seeking. "We had a very strong sports section and black people are interested in sports.... What I didn't know know is that black people are very conservative people. Did you know that? They will not move from the paper they are already in." And, he says, the Teamsters kept blowing up the tires of delivery trucks. Quebecor took a loss of $15 million on the short-lived Journal.
Péladeau's lifestyle has been examined as thoroughly as his verbal blunders: the Laurentians spread he flies in and out of each day via helicopter; the M-16 rifle he keeps under his zebra-skinned bed; the various amorous liaisons and the offspring they have produced. He talks about his guilt after the death of his first wife, Raymonde, who died in a Swiss clinic in 1976 after a long battle with valium and booze. (That marriage produced two daughters and two sons. Both sons, Erik and Pierre Karl, are key Quebecor executives today. Erik runs Quebecor Multimedia from Montreal; Pierre Karl, who, like his father, studied law and philosophy, runs Quebecor Printing's European operations from Paris.)
The eccentric life of Pierre Péladeau has often overshadowed his business accomplishments. Last year, Donohue bought pulp and paper maker Quno Corp. for $1.1 billion. Péladeau says he will "go again," that is, make another acquisition, in pulp and paper. Quebecor Printing's revenues surpassed $3 billion, with contracts to print People magazine, TV Guide, Maclean's, Canadian Tire catalogues and on and on. It was a wily Péladeau, who, before British publisher Robert Maxwell's tumble from a yacht deck, scooped up printing plant assets from Maxwell for a song.
Péladeau has a reputation for getting assets "at my price, the way I want them." He will not, of course, reveal what his final price is for TorSun. "There's no way I'll go crazy to buy a paper," he says. This week, Rogers and its financial advisers, Rothschild Canada Ltd., will review the bids. Ted Rogers is not bound to lock his shares into any of the bids, nor, for that matter, to even enter into negotiations with any of the bidders. By week's end, there was some street speculation that, disenchanted with any offers, Rogers could instead choose to bust up the Sun group and sell it piecemeal. That presumes that the bids are of the lowball variety, and that Rogers himself is not in any hurry to sell. Neither assumption may be accurate. When Paul Godfrey notified his staff on Friday that the management bid had been made, he acknowledged that for Sun and Post-ites there will be "sleepless nights ahead" as all await Rogers's next move. This does not apply to Péladeau, who, having made his bid, turned quietly to other matters, donating $1 million to the flood victims of the Saguenay, then retreating to his Laurentians home.
Maclean's August 5, 1996