CALGARY — The CEO of Shaw Communications Inc. is set to hand over the reins to his younger brother at a time of enormous change for the Western Canadian telecommunications powerhouse.
The Calgary-based cable, satellite, Internet and soon-to-be wireless firm said Friday that Jim Shaw will step down early next year, and will be replaced by his brother Brad, currently senior vice-president of operations.
News of the management shift coincides with a CRTC decision later Friday on whether Shaw (TSX:SJR.B) will be allowed to buy the broadcasting assets of Canwest Global Communications for $2 billion.
“We started talking about this about the time when we really started getting serious about Canwest,” Jim Shaw said.
“I think that given what we’ve got in front of us, it’s a good time to put more legs under the weight of the load ’cause the load’s pretty big, you know,” he said.
The family-controlled public company also announced Friday that its revenue was $939 million in the three months ended Aug. 31.
That’s up nearly eight per cent from a year earlier when revenue was $872.9 million, but below analyst expectations according to Thomson Reuters.
Shaw’s fourth-quarter profit declined slightly, falling to $121.5 million or 28 cents per share of net income — down from $124 million or 29 cents per share a year earlier.
Analysts had expected earnings of 33 cents per share, and a profit of nearly $150 million.
“Looking forward to fiscal 2011 we expect continued growth in our core cable and satellite business,” Jim Shaw said.
He issued preliminary guidance that the company expects organic growth on its core cable and satellite businesses will grow less in fiscal 2011, which began Sept. 1, than the 7.5 per cent growth achieved in 2010.
Cash flow is expected to be $550 million, excluding cash that’s expected to be brought in from the Canwest businesses, while the company expects to spend $200 million on its strategic move into the wireless phone business, he added.
“We caution that this is preliminary guidance and may change in light of competitive market dynamics and other factors. Also, this guidance does not incorporate the new media assets which will immediately be accretive to free cash flow.”
The change of leadership did not come as a complete surprise to Canaccord Genuity analyst Dvai Ghose, who notes Brad Shaw has been given a higher profile lately, especially in dealing with the investment community.
Aside from potentially fewer wise-cracks on analyst conference calls, Ghose does not see much of a shift in direction under Brad Shaw’s leadership.
“I think (Jim Shaw) has left an excellent company, which has really dominated in Western Canada, but is going through some challenges it’s never had to in the past,” said Ghose.
Competition with Vancouver-based Telus Corp. (TSX:T) is intensifying on the television and Internet front.
And as Shaw prepares to roll out its own wireless phone business a year from now, it will find itself competing regionally with Rogers Communications Inc. (TSX:RCI.B), which has Canada’s largest base of mobile subscribers.
“The company may be looking at more of a hands-on CEO because they’re clearly now committed to this wireless strategy. And I think that they decided that Brad was the guy to help to deliver that,” Ghose said.
Brad Shaw started his career with the company in 1987 as a customer service representative and he has held various management positions in the following years, including senior vice-president of operations for Shaw Cable since 2004.
Shaw president Peter Bissonnette, who has been with the company for two decades including 10 years in his current role, remains in that position and as a director of the company.
The patriarch of the Shaw family and founder of the company, J.R. Shaw, continues in his role as executive chairman.
Shares in Shaw Communications were down $1.02, or nearly 4.4 per cent, to $22.43 in midday trading Friday on the Toronto Stock Exchange.