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Peladeau as Candidate Risks Alienating Quebec Separatists

Quebec Premier Pauline Marois’s success in luring former Quebecor Inc. (QBR/B) Chief Executive Officer Pierre Karl Peladeau to be a candidate in the provincial election may alienate the separatist Parti Quebecois’ traditional union supporters.

Peladeau, 52, spent 14 years as CEO of the Montreal-based media and cable company before relinquishing executive duties last year to become vice chairman. He announced yesterday he would run for the Parti Quebecois in the April 7 election in the district of Saint-Jerome, north of Montreal.

“It’s a risky move,” Harold Chorney, a political science professor at Montreal’s Concordia University, said yesterday by telephone. “The base is going to be very upset. It opens Ms. Marois up to all sorts of charges that she’s betraying the party’s ideals.”

Marois, 64, called an election last week after 18 months leading a minority government, saying she needed a majority in the legislature to push through an agenda that includes a charter of “Quebec values.” A survey conducted for Radio Canada by polling company CROP shows her short of the support needed to form the party’s first majority government in more than a decade -- a crucial step on the way to another of the party’s long-stated goals: winning independence from Canada.

“Every party has baggage, and Mr. Peladeau’s history with labor is their baggage,” Chorney said.

The Quebec Federation of Labour, the province’s largest union, issued a statement yesterday saying Peladeau “won’t be a positive asset” for Marois and her party. In previous elections, the group -- which has more than 500,000 members -- has often backed the separatists for their pro-labor policies.

High Unionization

Quebec has the country’s highest unionization rate. About 40 percent of all Quebec workers belonged to a union in 2012, compared with a national average of 32 percent, Employment and Social Development Canada data show.

Peladeau’s time as head of the company his late father founded saw a 48 percent return for the company’s Class B stock and the C$5.7 billion ($5.1 billion) acquisition of cable operator Groupe Videotron in 2000. It also saw a succession of labor disputes that left unions embittered.

In the past decade there have been lockouts at the Journal de Montreal and Journal de Quebec newspapers, two of the province’s most-read dailies. Videotron also locked out technicians, office workers and call-center employees in 2002.

Peladeau said charges of union-bashing are unjustified.

“I never wished for a lockout,” he told ICI Radio-Canada television in an interview yesterday. “I negotiated until the last minute.”

Media Holdings

Peladeau and his brother Erik had a net worth of C$938 million as of 2013, ranking 86th in Canada, according to a list of the 100 richest Canadians published last month by Canadian Business magazine. Marois named him chairman of Hydro-Quebec, the state-owned utility, after he gave up executive duties at Quebecor. He said yesterday he has resigned that post.

Peladeau’s jump into politics complicates Prime Minister Stephen Harper’s campaign to foster a fourth wireless operator in each region of the country. Harper wants new competition to challenge BCE Inc., Rogers Communications Inc. and Telus Corp. in a bid to drive down prices. Industry Minister James Moore last month pointed to Videotron’s purchase of airwaves for C$233 million ($210 million) in a government spectrum auction as proof the policy is working.

Moore’s office didn’t immediately reply to a request for comment.

More Freedom

Quebecor could sell the spectrum and abandon any plans for a national network said Bob Decker, fund manager at Aurion Capital Management Inc. in Toronto. The bottom line is that CEO Robert Depatie is now freer to run the company the way he wants, Decker said.

“They will have more confidence there won’t be any meddling by the family members,” said Decker, whose firm manages about C$6.6 billion, including shares of Quebecor.

“We expect the stock to do well now.”

Quebecor was little changed at C$25.20 at 10:46 a.m. in Toronto after falling as much as 1.9 percent earlier.

Besides Videotron, Canada’s third-largest cable operator, Peladeau and his family control media assets such as TVA Group Inc. (TVA/B), the owner of the province’s most-watched television network and Sun Media, which owns English-language newspapers across Canada.

Peladeau’s move has prompted questions about how Sun Media, known for its patriotic editorials, will cover the Quebec election campaign.

Sun Editorial

In a Toronto Sun editorial entitled “We wish PKP well...but not too well,” Glenn Garnett, Sun Media’s vice president, editorial, said their newspapers won’t change their stance just because their boss wants an independent Quebec.

Peladeau says he wants to “give his three children ‘a country they can be proud of,’” Garnett wrote. “With all due respect, we believe that country already exists. It’s called Canada.”

Peladeau will place his financial interests in the company in a blind trust or under a blind management agreement if he is elected, according to a company statement. Peladeau and associated companies in his name own 89.5 percent of Quebecor’s 39 million Class A shares, which carry ten votes per share and 0.5 percent of the 84.1 Class B shares, which have just one, according to data compiled by Bloomberg.

Recruiting Coup

Recruiting Peladeau is a coup for Marois because the separatists have never had such a successful -- and high-profile -- businessman among their ranks, said Michel Nadeau, executive director of the Montreal-based Institute for Private and Public Governance.

“Pierre Karl is the first billionaire in PQ history,” said Nadeau, who was a vice president of the province’s state-owned pension fund manager, the Caisse de Depot et Placement du Quebec, when it teamed up with Quebecor to buy Videotron.

Peladeau “will bring ideas that appeal to a lot of people, and help the party shift from the left to the center,” Nadeau said. He predicted Peladeau could be named finance or industrial-development minister if he wins his riding and the separatists return to power.

When the vote was called March 5, the Parti Quebecois held 54 of the 125 seats in the National Assembly, nine short of a majority. The Liberal Party had 49, the Coalition Avenir Quebec had 18, Quebec Solidaire had two and two seats were held by independent lawmakers.

The Parti Quebecois and Liberal Party, which advocates remaining within Canada, each had 36 percent support among the 1,400 Quebeckers in the online Radio Canada-Crop poll taken March 5 to 8. Had a referendum been held last week, 61 percent of respondents would have voted against separation and 39 percent would have backed it.

To contact the reporters on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net; Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editors responsible for this story: Paul Badertscher at pbadertscher@bloomberg.net Jacqueline Thorpe

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