Strategy

Why content is king ... again

On his final day as the CEO of Rogers Media, Tony Viner looks back on a volatile decade of unprecedented change.

(Photo: Sean Kilpatrick/CP)

Tony Viner was named CEO of Rogers Media in 1999. What was then a relatively small collection of magazines, local TV stations and a few dozen radio stations has since grown into an industry leader, with $1.5 billion in annual revenue, and assets including Citytv, Sportsnet and the Toronto Blue Jays (and Canadian Business). Viner sat down with editor Steve Maich on his final day as head of the company — the same day Bell Canada announced its $1.3-billion purchase of CTV.

Q: The first thing I wanted to ask is what you’ve told incoming CEO Keith Pelley to expect.

A: You know, the only advice I’ve offered Keith is to take advantage of the luxury of us having a really good year and the company being in really good shape. He should take the luxury of learning the business, getting to know the people, evaluating the changes that he wants to make and then, you know, he can really launch the Keith Pelley era. He has strong people in the roles at the divisions, and we’re having a good year, so take advantage of that, learn as much as you can.

Q: Right. Now, you took over the role of CEO in 1999. I believe it’s fair to say you’ve presided over maybe the most volatile and change-laden decade in generations.

A: Yeah, absolutely.

Q: So what’s been, from your perspective, the biggest and most important change in the past decade?

A: The biggest change that has influenced everything — and will continue to change — is the transition to digital. Turned out the Internet bubble, in my view, burst only because broadband wasn’t as highly penetrated as it is now, and now that broadband’s ubiquitous, that’s going be the biggest change. The media business has gone from push to pull. You know, consumers want, and believe they can have, content anywhere, any time, at their own convenience, and we have to adapt to that.

Q: For the past five years, we’ve been reading death-knell notices for traditional media companies, and suggestions that content is never going to be as important or profitable as it has been in the past. I’m interested to know what your think about that.

A: Well, it’s certainly going to be every bit as important. There’s no question. It may not be as profitable. You know, video on demand actually drives more viewing, for example. These things, in the hands of people much more clever than me, will, I think, enhance traditional media, and the margins will stay in traditional media. There aren’t margins on the web — there just aren’t. There’s too much competition.

Q: One of the things that has come up and taken a lot of us by surprise is the sudden rise of tablets and the app world. There’s lot of optimism in the industry that maybe that is a way of delivering digital content that’s going to deliver better profit margins. What do you think?

A: You know, Steve, if I knew I’d tell you. I really don’t. I’m wary of silver bullets, but like you, it makes me optimistic. It’s still hugely competitive, and the proliferation of apps in itself makes that a challenge. Still, in my view, you’re going to need strong brands and credible content. I think we have a unique opportunity, if we exploit it. People know what Maclean’s stands for, Canadian Business stands for, Citytv stands for. Those are going to be credible sources. What you can’t do is give it away. This is valuable content, and to the extent that we devalue it, I think we’re making a mistake.

Q: Does it worry you that the industry has gone so far down the road of creating the impression that all the content is free?

A: Yeah, absolutely. I think it’s a terrible mistake. And look, I was part of that. I think people — young people especially — believe that if it’s on the web, it’s free and it belongs to you and it’s to be shared. I think Hulu is a horrible mistake for the television industry. I think we have to make our content available on multiple platforms, and probably in multiple forms because, you know, what’s appropriate on a tablet may not be appropriate on a cellphone. But it all has value, and to the extent that one platform is devalued, it devalues everything. So I absolutely believe that we’ve made a mistake, and I count myself in that because I never anticipated that this would be a significant part of people’s consumption of media.

But the reason for that started with the music industry, because they steadfastly held to the old model. And we can’t do that. We have to find models that provide opportunities for people to access our content on multiple platforms in an easy, convenient manner. We can’t devalue the product.

Q: I was thinking back to the arrival of the digital specialty channels back in 2000. Did you have a sense of how important they were going to be even then?

A: Yes, I think we did. I’ve been around so long, Steve, I was there for the application for the analogue specialties. The CRTC did not allow distributors to own specialty services. We applied as — at the time — Rogers Broadcasting Ltd., saying that we were, you know, hugely separate from Rogers Cable. I’m a superb salesman, but even I, Steve, couldn’t hoodwink anybody into believing that.

I’m not whining about this, but by regulation we were forbidden. You know, [Rogers regulatory executive VP] Phil Lind was the one responsible for even getting YTV off the ground, getting Sportsnet off the ground, but we could only own 19.9%. Then there was a ruling by the CRTC that said there was sufficient competition with Bell and other satellite services that now distributors could own, and that’s when we upped the take on Sportsnet. And would we buy some now if some were available? You bet your life.

Let’s look at the announcement today that Bell bought CTV. There’s only one reason they did: once again, the importance of content is underscored by that acquisition that was announced today.

Q: I wanted to ask you about Citytv as well. At the time, there were people who said that the price was high. Any regrets looking back on that?

A: No regrets, no regrets. Steve, you know, when the CRTC announced that CTV would not be able to hold the Citytv licences, the announcement came out at 11 in the morning, and at 11:07 Ted Rogers called me and called me into his office: “Tony, what do you think they’re worth?” And I said, “Ted, the street would value it at about $220 million. I don’t think you’re going to buy it for less than something that starts with a three. So I think, you know, less than $310 [million] and you’ll be OK.” He said, “Thank you, Tony. You’ve been my trusted media adviser for 20 years,” picked up the phone and called Ivan Fecan and said, “How does 375 sound?” But he wanted to avoid a long, drawn-out auction — he truly felt that it would hurt the brands and hurt the employees. They’d already been in trusteeship for a year and a half, and there was a concern that good people would leave, so he probably agreed to pay a little bit more than — a lot more than — I thought it was worth. But you know, when we opened the box it was in a lot worse shape than we had ever anticipated. And that was 2?? years ago, and we’ll be profitable this year, and that company — that over-the-air television part of the CHUM empire — hadn’t been profitable for almost a decade.

Not wildly profitable, not close to an ROI, but, you know, strategically it’s very important to the company, and I think again, you know, the CTV acquisition, and the Shaw acquisition of Global, goes to show how important content is going to be. Television is, right now, the dog, and all of the other platforms are the tail. That’s going to change over time, but right now, CTV pays the U.S. studios $400 million a year, and we pay $120 a million a year, and wireless and Internet rights usually accompany that for an add-on price. No rights holder currently is going to, in the words of the Harvard Business School, piss in their own soup, you know, because that revenue stream is so important to them. So the NFL can’t sell me the rights to the football games and then the streaming rights to those same football games to somebody else. So it’s important for Rogers and its distribution platforms to have access to the rights to those big network television shows, and this is how we can do it.

Q: I wanted to ask about the Blue Jays too — that was another deal that had lots of sceptics who suggested this was really more about civic pride than business. What’s your take on the Blue Jays purchase now, all these years later?

A: Boy, it’s really changed. It’s similar to the City story. Ted called me and asked me whether or not he should buy the Jays and I said, “No, don’t do it, because at least the urban myth is that Molsons, their beer share used to drop when the Montreal Canadiens lost,” and I said, “Look, people are going to be saying, ‘I pay you 250 bucks a month for my cellphone and my Internet. Can’t you get me a switch-hitting third baseman?'” And, again, he said, “Tony, you’re my trusted media adviser,” and he bought them the next day. And he bought them for civic pride, and because he believed that they might leave the city. Turns out, you know, across the breadth of our holdings, Steve, there’s two things where we actually produce content that we own, we don’t just aggregate it, we don’t just buy it, we don’t acquire it. One is the Toronto Blue Jays — every time they trot on the field there’s 3-1/2 hours of copyrightable video programming — and the other is publishing. And so the Jays have proven to be the underpinning of Sportsnet. I think it did tremendous things for our brand in the most important area of the country for us, southern Ontario. I was wrong, and Ted, I’m not sure he could see around corners, but I think he had an instinct that this was going to be important, and it’s proven to be very beneficial.

Convergence got a bit of a bad rap, you know, the first time around with Bell Globemedia and with Canwest, and that’s a term that kind of fell into disfavour. And people seem to avoid the word “convergence” now, but it seems to me we’re seeing it all around us.

Well, yeah, I don’t use “convergence” either, because it is a bad word now, and that’s because we executed it poorly. You know, the idea that you’d be sitting here with a microphone and a camera and writing a story, which was sort of the original idea of convergence, is not a good one. But if you look at Rogers Communications as a company, the mission is to provide customers with access to content or entertainment or news whenever they want it, however they want it. Owning a content platform is increasingly important to distribution, and Comcast-NBC, Shaw, Canwest, you’re seeing content integrated with distribution everywhere. You know, the analogy I use is the relationship between Loblaw’s and President’s Choice. You know, President’s Choice aren’t the only products that Loblaw’s stocks. They make sure the full array of products are available to their customers, but they also ensure that their customers have access to high-quality, appropriately priced products. And as technology becomes less differentiated, we’re going to have to differentiate on, in part content, in part access to that content, how you get it, where you get it, the ease with which you get it. You know, we had this wonderful advantage for so many years with GSM, and now everybody’s got high-speed networks, everybody’s got reliable networks, everybody’s got the iPhone. Content is going to be an important differentiator because the technology’s not going to be the reason anymore. That time has passed.

Q: Looking back on your time with Rogers, what are you most proud of?

A: I’m most proud of the company I helped build, the people I work with. We did a lot of good things for the shareholders, and in my opinion, we did a lot of good things for Canada. You know, an all-news service on 680 News. Omni Television: it’s a profitable television service that does a tremendous social good for Canada. We didn’t cave on publications. We’ve supported them, and Maclean’s is an example of how we have maintained Canadian voices, and that’s, to me, that’s a significant achievement. It’s especially significant in publications where there are no licenses and other barriers to entry, and where there’s an array of alternatives from all over the world on any newsstand. So I’m proud of that.

Q: So what’s next?

A: Yeah. You know, I’m going to gain a bit of weight. [laughs] Look, Steve, my hope is to remain engaged. My first 90-day plan is to have no plans. People have been very kind to suggest that I might make a contribution to their companies or organization or whatever, as a member of a board or in some other capacity. But I know that I’m going to continue to be engaged. People say, “You’re going to be bored.” Well, I’m a bit bored of working 60 hours a week. I’m a bit bored of, you know, the 20th year in a row of a budget cycle. So I want to do some different things. I’d like to be involved in a not-for-profit organization, and I’d like to be involved in a for-profit board.

Q: How does it feel?

A: You know, it hit me last night. I was flipping between the football game and the U.S. Open tennis, and I realized when I walk out of here today I won’t be president anymore. So I’m feeling a bit sad. I’ll be here another week, but I’ll just be another guy in the hall. You can elbow me aside in the coffee lounge.

Q: Well, I won’t.

A: [laughs] You’re very kind.