Changing channels at Rogers: A creative cost cutter navigates a TV industry under threat

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It was early 2015, and Colette Watson, new to her job as vice-president of broadcast television at Rogers Media Inc., had just been handed an ugly assignment.

For decades, Rogers had run multicultural television stations under the OMNI name. They were losing significant amounts of money – and there was little hope it would get better. OMNI had become a big financial drag on a media company that was still trying to digest its $5.2-billion contract with the National Hockey League for 12 years of broadcast rights.

Ms. Watson’s marching orders from then-president Keith Pelley: “Shut it down.”

“The entire broadcast media group at Rogers was losing a ton of money,” Ms. Watson recalls now. “I chased Keith around saying, ‘Please let me do this. I think this can be fixed.’”

Fix it she did, with the sort of hard-headed approach that has become her calling card. It involved massive cost-cutting, followed by successful lobbying of the federal broadcast regulator for a new arrangement for OMNI that would force cable subscribers to cover a greater share of the bills.

Such has been the pattern for Ms. Watson over a 28-year career at Rogers. When company founder Ted Rogers was still alive, he would frequently dispatch her to deal with problems that needed immediate attention, telling her, “Go fix this.” She did, with little fanfare and a single-minded approach to meeting her budget targets.

That ability to get things done has quietly propelled her up the ranks at Rogers – despite the fact she’s virtually unknown outside the industry – and made her a serious candidate for president of Rogers Media the next time the job is up for grabs.

That day may not be far off. The current president, former CTV executive Rick Brace, was brought out of retirement in the summer of 2015 on a three-year deal. Though he may stay longer, and Rogers has said nothing about his timeline, no one believes he is there for the long term.

Whoever gets the job will face a tough set of challenges. Rogers is a legacy media company, highly reliant on traditional forms of advertising and subscription revenue – from television and radio, primarily. Streaming services such as Netflix are winning over millions of viewers, and cable and satellite companies are shedding some of the subscribers that have always kept the broadcast system afloat.

Under Mr. Pelley, the company had an expansionist mindset: It tried to deal with these megatrends by launching new services such as Shomi, a Netflix competitor, and by snatching the NHL rights away from the CBC and Bell Media’s TSN.

But Mr. Brace’s tenure has been one of retrenchment. Shomi and a broadcast venture with Vice Media were shut down because of losses; Texture, a digital-magazine service that Rogers owned with some U.S. publishers, was sold off to Apple; print publications such as MoneySense and Sportsnet Magazine were closed and other titles scaled back. Rogers has focused more on making the hockey deal pay off and squeezing the most out of the Toronto Blue Jays.

Those sports assets have helped make Rogers Media a larger company – revenue grew from $1.7-billion in 2013 to $2.2-billion last year – but it isn’t a more profitable one. In fact, adjusted operating profit fell from $161-million to $139-million in that span. One reason could be that the NHL deal has escalating costs.

Ms. Watson’s division, which includes the City television network, remains a fixer-upper, and the threats to the television industry are grave. But finding solutions in a business under such severe pressure is not always about grand visions; sometimes it is about cost-cutting. Ms. Watson has proved herself the cost-cutter-in-chief, and the wellspring of red ink at Rogers’ TV stations has abated considerably.

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The first year after her promotion to VP of broadcast was a good illustration of her methods. She brought down the axe: Within six months, Rogers cut 110 broadcast positions, combining many behind-the-camera roles at City and OMNI, such as editors and videographers. The multicultural stations’ newscasts – broadcast in Punjabi, Mandarin, Cantonese and Italian – were cut and reporters fired. Show hosts remained, but in place of news segments, they would conduct on-air conversations with community representatives about the issues.

All of this took costs at OMNI to a third of what they were, bringing them more in line with revenues. But the move drew criticism from community groups for eliminating an important multilingual news resource.

Ms. Watson and her team then took the case of the hollowed-out OMNI channels to the country’s broadcast regulator. Rogers argued that the programming it had just gutted comprised a crucial service that deserved a very rare kind of broadcast licence granting the stations mandatory carriage on cable and satellite services.

“Everyone said, ‘You’re never going to get that,’ ” Ms. Watson recalls.

She did get it. Last year, the CRTC provided OMNI with fees of 12 cents for every subscriber every month for three years, or roughly $15-million annually at current levels. The change took effect in September, 2017, and the newscasts returned. In October, Rogers will go before the CRTC again, hoping to renew that licence for a further five years.

The move demonstrates her ability to navigate the regulatory system. Twenty years of dealing with the CRTC have made the fluently bilingual Ms. Watson an expert in Ottawa’s byzantine broadcasting regulations, giving her the ability to think creatively within their strictures.

This could serve Rogers well in the coming years. Heritage Minister Mélanie Joly has indicated she wants to review Canada’s Broadcasting Act, and Rogers will be arguing that it is time to overhaul the system and regulate digital-streaming players such as Netflix in Canada. As the distinctions fade between an Amazon or Netflix show and one on a TV channel, Rogers wants to convince the government that everyone should be contributing to a system that pays for Canadian content – or nobody should.

“She knows that stuff cold,” said Ken Whyte, who spent more than a decade at the company as editor of Maclean’s magazine and later as a senior vice-president of public policy for Rogers Media. “Regulatory people rave about her.”

That may be part of the reason why Ms. Watson was rumoured to be a dark horse candidate for the top job at CBC-Radio Canada – before television and film executive Catherine Tait was named its first female president in April.

She has her hands full in her current job. She took over from Scott Moore in late 2014, as he shifted his duties to focus on Rogers’s sports properties. That year, the conventional stations (City and OMNI) lost a combined $84.9-million before interest and taxes; by last year, the loss had narrowed to just $16-million, according to documents submitted to the CRTC. City no longer loses money, said Ms. Watson, who credits cost controls as well as the advertising sales division for the financial turnaround.

“She took over at a very challenging time. … There was no question that the conventional business certainly needed an overhaul,” Mr. Pelley said. “She was the perfect person to do so.”

The media division occupies an odd place within Rogers Communications. The overwhelming focus of the parent company is on wireless and cable services, not the content side, but many senior executives still have a soft spot for the media business, the roots of a company that started as an operator of radio stations.

But there are few owners whose affection for media assets is sufficient to tolerate consistently losing money. Sports businesses can be volatile – the financial performance of Sportsnet can vary widely depending on how the Blue Jays are doing and whether a Canadian team makes the NHL playoffs – so the rest of the business faces pressure to maintain stability.

Ms. Watson “very quickly made the necessary economies and restored predictability to [her division’s] financial performance,” Mr. Whyte said. “That has been recognized and appreciated within the company.”

City now has a better mix of programming, having previously bet too heavily on comedy in the lineup, Ms. Watson said. There are indications the network overspent on programming during the annual excursions to Hollywood, where Canadian broadcasters negotiate for rights to the U.S. shows that draw most of their viewership and ad spending.

“It is very easy to get caught up in the aura that is Hollywood,” Mr. Pelley said. “She has a very practical approach to her.”

When she stepped into those Hollywood negotiations, she set a new goal: not to be No. 1 in ratings (an unrealistic goal for City at the best of times, with its smaller geographic footprint and less money than the big networks) but No. 1 in profit margins.

“I can go blow our brains out and buy all the big starry shows,” Ms. Watson said. “We will lose our shirt. … We don’t have the kinds of budgets that Global and CTV do.

“I have never, in my career, missed a budget,” she said, knocking on a coffee table at Rogers headquarters in Toronto. “Knock on all the wood in the room, because I don’t want to jinx it.”

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Whether she has a grand vision for media – beyond meeting budgets – is the question. She certainly has no illusions about where the business is going. Sketching out a graph on a sheet of paper, she describes the 20-year process of internet service taking over cable as a bigger driver of Rogers’ business and says she was one of the people advocating for building bigger pipes to consumers’ homes to offer better internet speeds.

She now believes the same graph will apply to streaming overtaking broadcast television. If she seems obsessed with meeting budget targets, it’s because she’s shepherding a business in upheaval. Ultimately, she may care about the content, but her main preoccupation is with the bottom line.

That, too, may be a reflection of her modest start in the television business.

She joined Rogers in 1990, working in the cable division. Based in Otttawa, she went on to run the company’s community channels in the late nineties.

“Once a month, it was Martha’s knitting show, and it could be 50 minutes or 38 minutes – depending on how Martha felt that month. Or it would be a monthly call-in show with the mayor. I was given these channels and thought, how do you market this?” she recalled.

She decided to do daily programs that could be broadcast more widely than a hyper-local show, taking costs down significantly. By marketing a consistent schedule, she increased viewership 25 per cent.

“Ted says, ‘Go do that elsewhere!’ ” she recalled.

Through the years, she has also excelled in navigating the dynamics of the founding family – a crucial skill at Rogers. “Ted had a huge amount of respect for her,” said Ken Engelhart, former head of regulatory affairs, who spent 25 years at the company.

In 1998, Phil Lind – Ted Rogers’s second-in-command and a mentor and supporter of Ms. Watson – had a stroke. While he was in recovery, she stepped into his place on the board of the Cable Public Affairs Channel Inc., or CPAC, which broadcasts parliamentary proceedings and is funded jointly by the cable companies.

She began asking why they didn’t make more daily programming and insisting it could be done without increasing the channel’s funding. “I guess I spoke too much at that meeting,” she said. She was tapped to run CPAC while continuing to run Rogers’ community channels. The plan was to begin daily news programs on CPAC on Sept. 17, 2001.

Then two planes slammed into the World Trade Center. The studio wasn’t ready. Anchor Peter Van Dusen stood behind a reception desk on a milk crate and they went live, using feeds from C-SPAN in the United States. Just after the second tower collapsed, Ms. Watson was on the phone with CNN negotiating a contract for their broadcast feed.

“Our ratings that week were the best CPAC ever had,” she said. “That day proved that our strategy was the right strategy.”

The biggest news event of that decade notwithstanding, most Canadians would probably characterize running CPAC as a boring task.

“These are things some people take for granted, but if you don’t do it right, there’s a lot of finger-pointing,” Mr. Lind said. “If you do it right, nobody knows.”

That may be why, when asked for stories about her, many of her past and present colleagues come up short.

“You work with media people generally – and TV people more so – you run into a lot of big egos,” Mr. Whyte said. “She’s all about the job. She never puts herself forth as a personality. … There are never any crises, there are few memorable moments. There’s just this calm, cool efficiency.”

That efficiency has propelled her to a rare position in a largely male-dominated corporate environment at Rogers. (Of the 10 people on Rogers Communications’ senior executive team, only one is a woman – chief digital officer Lisa Durocher.)

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Ms. Watson’s efficiency has come with some difficult decisions. In 2016, she asked the CRTC for the flexibility to allocate some of the money formerly required for community channels to local programs on other channels, such as City. In the largest markets – Vancouver, Calgary, Edmonton, Toronto and Montreal – where more programming in general is made for the local audience, more of that money could be redirected.

As a result, Rogers launched more local CityNews broadcasts, but also cut back on the community stations significantly.

“That was a really tough day for me because I grew up on community television,” she said of telling staff their positions would be eliminated. “I will look you in the eye and I will tell you I’m doing this. … It was not easy. There were tears. They felt betrayed by me, personally. But it was the right thing to do.”

In addition to the conventional stations, Ms. Watson also oversees Rogers’s non-sports specialty channels, two of which have been shuttered during her tenure: G4 and Viceland. Specialty channels used to be a safe haven in the TV business but are now in decline as well.

“There will be a streamlining. There has to be,” she said. “Our competitors haven’t done that yet, but they will get there. … You’ve got to wonder how many home renovation and cooking shows people are going to pay for.”

Preserving the health of the TV business will depend on attracting younger viewers, something the deal with Vice Media Canada Inc. – which former Rogers CEO Guy Laurence announced in 2013, to the tune of $100-million – failed to do. Ms. Watson believes in making it easier for younger viewers to watch shows (which will mean competing to buy more of the on-demand and streaming rights that digital players covet) rather than trying to create content specifically aimed at their tastes.

“I’m not going to pretend that I need to create shows for 18-year-olds. That’s condescending,” she said. “What we need to do is focus on how we deliver the content.”

She is confident in the future of the business, however.

“Everyone says television is dead. I don’t believe that for a second.”