“Mr. Willis joined The Globe and Mail in September, 1995. His career has included stints at a number of publications, including The Financial Post, The Financial Times of Canada, Dow Jones/Wall Street Journal, and MacLean’s magazine. He appears on television for Business News Network and CBC Newsworld. He is co-author of The Bre-X Fraud.”
Whither indeed. I posted a question to the online debate hosted by the Globe’s Report on Business, and Catherine McLean and Andrew Willis. The answers are typical of a rigid ideology in which only the status quo is possible. Pension funds running companies? It’s just natural. Government regulation of a key industry – key because of the implications of corporate ownership of the means of discussion- don’t be silly. To read the entire exchange, click here. The following is my question and then the answers of the columnists:
Paul Chislett from Sudbury, Ont., writes: Most of what I read is about the game of the acquisition itself. Can you provide more depth and context as to why the government will not step in to make sure this sale will not harm employees, pensioners and customers? How does this play out in terms of the impact of convergence and media ownership in Canada? And how can a pension fund run a telecommunications company?
Andrew Willis: The government has made it clear that they are not going to try to pick winners as industries consolidate — this is true in telecom, mining and every other sector. That’s a sensible approach. The federal Conservatives, in particular Industry Minister Maxime Bernier, have made it clear that they will take steps to promote competition and give consumers choices. That’s the over-arching framework for the phone companies. Convergence is a bit of a discredited business concept. Clearly, media ownership is going to rest in fewer hands in this country, as it does in most others.
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And when you step back, the pension funds and mutual funds already directly and indirectly own most of the companies in Canada. Individual shareholders own less than 30% of Bell Canada, and that’s a relatively high percentage. BCE didn’t prosper with broad-based ownership. A small shareholder group may prove better stewards of the company.
Catherine McLean: That’s an interesting question. The deal does require approval by the government since BCE’s valuable broadcasting licenses and wireless spectrum, or airwaves, will change hands. However, since the new owners are private equity firms, there will be less regulatory scrutiny than say if Telus bought BCE.
I know it may seem surprising to think of a pension fund running a telephone company, but this is nothing new. We’ve seen private equity money snap up phone and cable companies across Europe and United States, and now they’re heading to Canada. And remember, the pension fund won’t be in charge of Bell’s operations. They will recruit the best management team they can find and let them do their thing.
Mr Willis nonchalantly shrugs off regulation, while saying that it is OK for Pension Funds and like entities to own companies. What is left out of any discussion is that while regulation is the bare minimum the working class should accept, the real issue is that resource and technology firms should be worker controlled.
Then Mr Willis seems confused about the term convergence. The concept isn’t dead – the word is. Convergence is now termed as “synergistic”. Convergence is ownership by the few, and this is dangerous to the concept of participatory democracy. With fewer voices making and debating opinion, then we are truly on the road to fascism. Finally, BCE failed to prosper because Jean Monty was allowed to run the company into the ground by the force of his personality. The dream of a multi-media empire raking in billions of dollars fed the greed of every shareholder. This is why government (read: the people) needs to have real oversight of important industries.
As for McLean’s comment about regulatory scrutiny should be less because the new owner is NOT a telecommunication entity is just like stepping into an intersection assuming one won’t get hit by a car. Her line that the new owner will “recruit the best management team they can” is simply more proof of the need for regulatory scrutiny with teeth.