Wednesday, February 15, 2012

Has Quebecor benefited from government money?

To many Canadians, it appears Pierre Karl Peladeau has declared war on the CBC, attacking the government supported broadcaster with a vicious campaign of disinformation. But this is not the only battle Peladeau is fighting. There are others, just not as well publicized.

For instance if you believe the reporting in Montreal's La Presse, Peladeau is using Quebecor Media to attack the Montreal paper and its owners, the Desmarais family, with a vicious campaign of disinformation. Sound familiar?

I read a recent column by Andre Pratte in La Presse in which he went on the attack. Pratte claimed  Quebecor was the formidable media power that it is today thanks, in part, to the financial support of a Quebec investment fund with strong Quebec government ties --- support that in retrospect seems to have been badly misplaced, at least when it comes to financially benefiting the fund.

I admit I know very little about fund in question: The Caisse de dépôt et placement du Québec. But, a quick look at the fund's website seems to substantiate Andre Pratte's position.

The Caisse de dépôt et placement du Québec was established on July 15, 1965 by an Act of Québec’s National Assembly to manage the funds of the Quebec pension plan, a public pension plan also created by the Québec government. (In the following years, the Caisse was entrusted with managing the funds of other public pension and insurance plans.)

At that time, it was described by Jean Lesage, Premier of Québec, as “an instrument of growth, the most powerful economic lever ever seen in the province.” Future events would prove him right.

Canoe, the Sun Media online arm, reported that for an original investment of $3.2 billion Caisse got 45 percent of the Videotron deal concluded Oct. 23, 2000. Quebecor took the remaining 55 percent.

Why was Caisse so interested in climbing in bed with Quebecor over the Videotron purchase? Jean Laporte, the former president of Rogers in Quebec, is quoted by Canoe as believing, "It was a political decision. The (Quebec) government and the Caisse didn’t want Videotron falling into the hands of an Ontario company."

Ten years later the Caisse investment in Videotron had lost 1.5 billion dollars. Despite the large losses incurred, the former Quebec Premier Bernard Landry maintained the Caisse made the right call. Canoe quotes Landry, "It would have been a catastrophe to sell Videotron and TVA to Rogers. If the U.S. bought the BBC, there would have been an outcry in Britain."

La Presse columnist Pratte reports that even Peladeau admits the financial assistance Quebecor got from the Caisse in purchasing Videotron, prevented the cable company from passing into than Ontario hands of Rogers.

It does appear Peladeau has managed to subsidize the growth of his media empire thanks, in part, to a big infusion of money carrying more than a hint of government involvement.

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