He's no chicken when it comes to change

"We have a great platform, huge sales and a great brand but we've just got to … bring it more in line with where we are today … We're fighting over the light and lapsed [customer]," he explains, referring not only to Priszm, but also rivals.

The Globe and Mail
March 15, 2005

He's no chicken when it comes to change
John Bitove Jr. has taken on two fields that are both in flux, RICHARD BLOOM wirtes - fast food and radio
Richard Bloom

TORONTO — It may not be perfect, but John Bitove Jr. has a pretty impressive record of bringing big things to Canada.

From spearheading successful bids for the world indoor track and field championships, world basketball championships and Toronto Raptors a decade ago to heading his hometown's unsuccessful Olympic bid earlier this decade, the entrepreneur is known as a guy who can close a deal.

Nowadays, his time is divided between two separate ventures — trying to launch satellite radio in this country and fried chicken. As different as they appear, they have one thing in common: Both are about to endure considerable change.

But the 44-year-old entrepreneur isn't nervous. He trusts his senior management, and he takes a long-term attitude toward both projects, which he insists will lead to success.

"It allows everyone to rally around a central goal, to attract higher talent because they can understand that this isn't some short-term thing and, in my mind, it stops stupid short-term decisions from being made," he explained in an interview from his office overlooking Toronto's harbourfront.

"Too many companies run quarter to quarter as opposed to what's in the long-term interest of shareholders and employees."

Mr. Bitove — who received an undergraduate degree in marketing from Indiana University and a law degree from the University of Windsor — has wanted to delve into the high-profile world of broadcasting for years, but found it difficult to break into the sector because it is controlled by a handful of families.

Then in 2001, only a few days after Toronto lost the Olympic bid to Beijing, he was on a plane to London and read a magazine article about satellite radio (a subscription-based service that beams out superior quality and mostly commercial-free audio programming to special receivers). He ripped out the article, and within two weeks was in New York meeting with the two big U.S. satellite radio players: XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc.

His company has since signed an alliance with XM while a competing bid by Canadian Broadcasting Corp. and private broadcaster Standard Broadcasting Inc. has teamed with Sirius. The CRTC is mulling licensing requests from Mr. Bitove's company, the CBC-Standard group and a bid for another type of digital subscription radio service from CHUM Ltd. and Astral Media Inc.

While it's unclear which way the CRTC is leaning, one thing is certain: The face of the Canadian broadcasting industry is about to change.

"If someone else has it, why shouldn't we have it?" asked Mr. Bitove, whose official title is chairman and chief executive officer of Canadian Satellite Radio Inc.

"Just because we live north of the Americans or west of Europe doesn't mean that we shouldn't have the same standard of living or benefits. I feel we have a lot more to contribute globally than some of those other places.

"There are rural Canadians who are going to get choice in audio programming, whether they're in Frobisher Bay or Whitehorse, that they're not going to get any other way. It's not fair that just because you live in Toronto you get more choice than if you live in Flin Flon."

It's that sort of passion that former partner Allan Slaight — who, coincidentally, is founder and executive chairman of satellite radio rival Standard Broadcasting — mentions over and over when discussing his dealings with Mr. Bitove.

"He's a good guy and a great partner … he's quite imaginative and quite fun to be with," Mr. Slaight says. "I can't say enough good things about him."

Mr. Bitove and Mr. Slaight each controlled 39.5 per cent of the Raptors during its early years. However, after a dispute over where the team would play, Mr. Bitove was booted out of the front office when Mr. Slaight invoked a "shotgun clause" in their partnership agreement that forced Mr. Bitove to sell his stake for $55-million (U.S.).

Today, Mr. Bitove describes his relationship with Mr. Slaight as amicable and notes that he is good friends with Gary Slaight, Allan's son, who now runs Standard Broadcasting's day-to-day operations.

But vying for satellite radio isn't the only thing on Mr. Bitove's plate: He is also the majority owner, chairman and CEO of Priszm Canadian Income Fund — one of the largest fast-food companies in Canada with 411 KFC outlets and 60 multibranded restaurants that combine KFC with Pizza Hut or Taco Bell peppered across seven provinces.

While satellite radio is something new for Mr. Bitove, the food services industry is not. In fact, he's been in it for decades. Mr. Bitove's parents started a small café in Toronto called the Java Shoppe in 1949. His father later held the franchise rights to Big Boy and Roy Rogers restaurants.

The Bitove family eventually became a prominent and controversial name in Toronto's catering industry. They went to court in disputes with Ottawa over the food concession at Pearson International Airport, with Metro Toronto over taxes at the Guild Inn, with Rank Organization PLC over the Hard Rock Cafe logo, and with many of the biggest corporations in Canada over the price of catering the corporate boxes at the SkyDome.

Interestingly, Mr. Bitove didn't want to get into his current fried chicken venture.

Because of his food services background, he was approached by investment bankers about buying major KFC franchisee Scotts Restaurants Inc. in 1999 but turned them down because he wanted to try his hand in broadcasting.

After the bankers persuaded him to take another look, he put radio on the back burner and bid for Scotts — taking control of the company for $236.8-million.

In 2003, amid income trust mania on Bay Street, he spun the KFC outlets into Priszm, going public at $10 a unit and a monthly distribution of 10 cents. Last October, the company boosted the payout to 10.5 cents; yesterday, the units closed at $13.70, shy of their 52-week high of $14.99. What's more, the Canadian chain has grown to 471 outlets from 338 KFC locations at the time of the Scott's acquisition.

Even though dieticians and restaurant industry experts say fried chicken is falling out of favour among increasingly health-conscious consumers, Bay Street is bullish on the fast-food operator.

"I have a positive outlook on the company," says Walter Spracklin, an analyst at RBC Dominion Securities, who praises the multibranded restaurant concept. He's not alone. Analysts at CIBC World Markets and Dundee Securities have "outperform" ratings on the stock.

But what about the argument that putting multiple fast-food banners under one roof may have a cannibalizing effect on operations?

Mr. Spracklin disagrees: "Effectively, what that does is actually draw more people in because you may have someone in the family who doesn't like KFC but they may like Pizza Hut or Taco Bell."

These are pivotal times for the food services industry as consumers' tastes have changed dramatically in recent years. The surge in popularity of weight-loss programs, such as the Atkins and South Beach diets, as well as increasing demand for healthier food, has sideswiped operators, prompting some to overhaul their menus.

KFC also will be changing its menu, beginning this spring, Mr. Bitove says.

"Our goal is that within four or five years, when people look back, they'll say that's not the KFC I remember." He said consumers are more about "limiting, not eliminating" their fried food intake — that's why adding an extensive line of side dishes will help woo the person who eats at KFC once in a while to visit more often.

"We have a great platform, huge sales and a great brand but we've just got to … bring it more in line with where we are today … We're fighting over the light and lapsed [customer]," he explains, referring not only to Priszm, but also rivals.

A bucket full o' Bitove
Name: John Bitove Jr.

Age: 44

First job: Newspaper carrier for The Globe and Mail

Current job: Chairman and CEO of Canadian Satellite Radio Inc. and Priszm Canadian Income Fund.

Background: Born in Toronto to John Sr. and Dotsa, who started an independent coffee shop in 1949 and transformed it into a large Toronto catering firm with contracts at Pearson Airport, SkyDome and Ontario Place. Attended Indiana University for marketing, with his sights also set on playing college football, and University of Windsor for law. Articled at Gowling Lafleur Henderson LLP in Ottawa, then worked for federal Industry Minister Sinclair Stevens. Moved back to Toronto in 1980s to work for family business.

Major accomplishments: Spearheaded successful Toronto bids for world indoor track and field championships, world basketball championships and Toronto Raptors NBA franchise in early 1990s. Headed losing Toronto bid for 2006 summer Olympics. Bought KFC franchisee Scotts Restaurants Inc. for $237-million in 1999, spun it off into Priszm. Currently trying to win CRTC licence for satellite radio and fulfill dream of getting into the broadcasting business.

Outside of the boardroom: Created flag football league in Toronto so his three teenaged sons could play the sport.

Management mantra: Think long term and hire good people.

Favourite item on KFC menu: Big Crunch sandwich

Favourite satellite radio channel: Top Tracks


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