Shaw Family

Shaw Family

Jim Shaw, the ebullient, redheaded president of Shaw Communications Inc. began to sprout a goatee about six months ago, about the time Emily Griffiths decided to shave off her family's controlling interest in WIC Western International Communications Ltd., the Vancouver-based media empire. Shaw recalls meeting Griffiths, a prim 75-year-old matriarch with two beardless sons, just after the deal to split the Griffiths's stake in WIC between Shaw Communications of Calgary and the Allard family of Edmonton. Once all the i's were dotted and the t's crossed in a Vancouver lawyer's office, Jim Shaw, goatee still in the stubble stage, went over to greet Emily Griffiths. "I said, 'Thanks for doing the deal' and she looked at me like I was some terrorist," says Shaw, stroking his now elegantly trim whiskers. "I think I shocked her."

Shock seems to have become the 40-year-old Shaw's trademark. He has certainly thrown a few surprises in the path of CanWest Global Communications Corp., of Winnipeg which is also vying for WIC. Witnessing the struggle between the two companies for the giant television and radio company has been like watching a splenetic tennis match between Jimmy Connors and John McEnroe, a competition marked by invective and agile moves. It has taken a few hits even the main players could not anticipate: it turns out, for example, that Baton Broadcasting Inc. of Toronto has a prior claim on WIC's largest TV station, BCTV, which will kick in if WIC's future owner tries to break it up. "This is very wild," Jim Shaw acknowledges. "I figure this will be a classic, something that will end up in all the Canadian business books."

Whatever the outcome, the vituperative volleying for WIC has thrust the Shaw family into national prominence and could turn its company into a multimedia titan. Until the 1980s, the family's cable operations were focused on Edmonton. That is when Jim Shaw's 64-year-old father, JR, who legally changed his name from James Robert a year ago - no periods between the J and the R - started aggressively expanding the company. He began buying up medium and small cable systems in British Columbia, Alberta, Ontario and Atlantic Canada. In 1994, Shaw purchased CUC Broadcasting Ltd., which owned a big chunk of YTV and operated a cable television system in suburban Toronto. By 1997, Shaw Communications was running the second-largest cable network in the country, with 1.5 million customers and assets of $2.45 billion. The company also was buying up radio stations - it now owns 11 - and setting up a direct-to-home satellite TV company, a digital music service and an Internet operation. It now owns YTV outright and 80 per cent of Country Music Television Canada.

The Shaw dynasty really started in the 1950s with Jim Shaw's grandfather, Francis. "We didn't just fall off the pumpkin truck," Shaw laughs during an interview in the company's art-bedecked, atrium-lit Calgary headquarters. Francis, he says, "was a real southern Ontario character," a redhead like Jim who started his career as a farmer but transformed himself after the Second World War into an entrepreneur dabbling in various businesses - trucking, pipe-coating, drive-in theatres, a construction company and the nascent cable business. "The construction company was eventually sold to Power Corp.," says Jim. "Don't ask me where the drive-in theatres went."

In 1953, Francis invested money in a London, Ont., cable system and encouraged his two boys, Les and JR, to get into the business, too. "Francis's businesses provided a knowledge base for my father and his brother," says Jim. "It allowed them to know what areas of business they liked and what they didn't like." Les and JR plunged into the pipe-coating business, Shaw Industries Ltd. But when JR moved west to Alberta to help expand that business, he saw there was opportunity for growth in cable. He established a company called Capital Cable TV Ltd., and won the licence to set up a cable system for the east side of Edmonton.

In the early 1980s, when Shaw Communications began to spread across the country, he invited his son Jim to join the company. Jim had dropped out of the University of Calgary and was selling Christmas trees. "When my father asked if I'd work for him I thought 'Wow, this is going to be a big move.' We don't get along all the time, like most fathers and sons. But one of the things my father is very good at, and was taught by his father, is that every individual needs to have some space to make their own decisions."

Jim started at the bottom, installing cable systems in Victoria-area homes. Later, JR brought his other children into Shaw: Heather (a Shaw director and president of Digital Music Express), Julie (the in-house architect) and Brad, who runs the B.C. cable operations. In his efforts to groom his children for succession, JR has behaved much like his Winnipeg-based rival, I. H. (Izzy) Asper, chairman of CanWest, who has involved his children, Leonard, David and Gail, in management and let them participate in his wheeling-dealing. Last month, JR and Jim met Izzy and Leonard for the first time at a business awards dinner. "It was a pretty good conversation for a first meeting," recalls Jim. "They were wondering 'Who are you?' and we were wondering 'Who are you?'. We talked about WIC, of course." Jim will not reveal exactly what was said about WIC. But it is ironic that the two media dynasties are now squabbling over an empire built by another family, the Griffiths, who did not transfer their business acumen to the next generation.

As Jim is recounting the family and corporate history, his executive assistant pokes her head into the small meeting room to tell him there is a conference call waiting his attendance. The topic to be discussed: a lawsuit launched by CanWest that morning. Every week seems to bring another twist to the takeover tango between the Aspers and the Shaws. On March 23, CanWest offered $39 a share to take over WIC's voting and non-voting shares. On April 17, Shaw made a counter-offer: $43.50 per share, a combination of cash and Shaw's own non-voting shares.

Four days later, the litigious Aspers stomped off to the Ontario court, angered by a WIC-blessed deal allowing Shaw to receive $30 million if WIC is broken up and also giving Shaw the option to buy WIC's 12 radio stations for $160 million. The deal is "an egregious and oppressive agreement," fumes Tom Strike, executive vice-president of CanWest. The Ontario, Alberta and B.C. securities commissions approved the deal and CanWest is also appealing those decisions, saying the securities commissions did not have complete information when they rendered their decisions. "The way this deal is crafted is that a lower bid for WIC can be successful and Shaw still gets all this stuff," Strike complains. "If we increase our bid and our bid is successful they get $30 million and the radio stations. If our existing bid of $39 a share is successful, they lose the $30 million but still get the radio stations, one of WIC's core businesses. So either way, we end up paying more for less of the company. The whole thing is unbelievable."

Jim Shaw says reasoning like that just makes him laugh. "I find this argument so funny. WIC is up at $41.50 a share. If they want out they can just sell their shares and make a profit or they can come and say 'Shaw, we want to do a private deal.' I find very little weight to their argument that they've been oppressed because there is a higher bid." Hoping to head off further CanWest legal manoeuvring, Shaw asked the B.C. Supreme Court last week to give the deal legal clearance.

Jim has been stickhandling the WIC deal ever since Shaw was approached by the Griffiths family's financial advisers last year. It is the first time JR has not been on the front line of a big Shaw business venture. He has been in Europe for most of April, but he phones Jim regularly to find out the latest on WIC. Jim's assistant appears at the door again. This time, JR is on the phone from Scotland. He was just about to be served a haggis dinner but decided to duck out and make a phone call to his son instead. "My father has been there as an adviser to me," Jim says, before going off to talk to Dad. "He has been in on all the strategy." Jim is sanguine everything will work out well for Shaw and seems confident that sooner or later his family and the Aspers will come to an agreement. "If JR was here he'd say, 'Never leave a table you can't come back to.' " Certainly a conciliatory stance for a bearded man who was once mistaken for a terrorist.

COMMUNICATIONS COLOSSUS:

If Shaw succeeds in its bid for WIC, it would become the country's largest cable and broadcasting company. Among its assets:

TV stations in nine cities, including Vancouver, Calgary, Edmonton, Montreal and Hamilton

Six pay and specialty channels, including YTV, Teletoon and Superchannel

One pay-per-view channel

Cable TV operations in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario

23 radio stations

Canadian Satellite Communications Inc. (53.7 per cent)

Star Choice direct-to-home satellite TV service (54 per cent)

Source: Shaw Communications Inc., WIC Western International Communications Ltd.

Maclean's May 4, 1998