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This profile considers the Hollinger group and Conrad
Black.
This page covers -
It
is complemented by a profile on David & Frederick
Barclay.
introduction
Conrad Black, following in the footsteps of fellow-Canadian
Max Aitken (Lord Beaverbrook),
made a fortune at home before swallowing newspapers in
the UK and other countries.
His Hollinger group
at one stage owned around 60% of the daily newspapers
in Canada (with around 37% of the daily circulation),
over 400 in the US and major papers in the UK and Israel.
Although it downsized, as at January 2004 the group still
had major US and UK holdings. In the years prior to November
2003 - when founder Conrad Black stood down as chief executive
- it was recurrently pictured as on the hunt for plums
such as the Washington Post.
Beset by financial woes, disagreements with his board
(which announced that it was suing him over US$200 million
non-compete fees, management fees, expenses and other
monies) and pending legal action by shareholders and corporate
regulators, Black attempted to sell his controlling interests
in the Hollinger group to David & Frederick Barclay.
From the tax haven of Jersey the Barclay brothers controlled
newspapers in Scotland, property interests such as the
Ritz hotel and major mail-order operations.
The deal between Black and the Barclays evaporated in
early March 2004, with Lazards subsequently entertaining
offers from a range of media groups. The Barclays made
the winning bid - some £665 million - for Hollinger's
UK titles (inc the Daily Telegraph and Spectator)
in July 2004.
UK satirical magazine Private Eye sniped that
Allowing
the Barclay twins to control the Telegraph
titles is like hiring a militant temperance campaigner
to run an off-licence, since they are fiercely hostile
to the main function of journalism - disclosure
Conrad Black
Conrad Black was born into a wealthy Canadian establishment
family (unrelated to the family controlling the Black
Press group). His father's dying words to his son
were supposedly "life is hell, most people are bastards
and everything is bullshit".
Black displayed an entrepreneurial bent by selling exam
papers at his private school. As a young man he combined
academic study (he has Bachelors and Masters degrees in
history, along with a law degree), with work as a newspaper
proprietor and success as a corporate reengineer - leveraging
stakes in some of Canada's largest retailing, manufacturing
and resources companies.
He also found time to write a respectable biography of
politician Maurice Duplessis - Duplessis (Toronto:
McClelland & Stewart 1976) - and play an active
part in national politics. Margaret Thatcher subsequently,
if somewhat unfairly, quipped that
I
like Conrad Black because he is the only person I have
ever met who makes me feel positively 'wet'.
Black
subsequently authored a well-regarded biography of FD
Roosevelt (building a notable collection of FDR archives
for £8 million) and gained attention for his interest
in Napoleon - critics were quick to notice a similarity
with Northcliffe - and collection
of nautical models to accompany four portraits by Warhol,
the Alfred Munnings of the 1980s. All in all, very much
the model of a 1920s media mogul.
The Financial Times commented in 2004 that
Conrad
Black's business ambitions probably always ran second
to his urge to be an intellectual force of conservatism.
He did not want to simply own newspapers. He wanted
to use them to help to reshape the political culture
of his native Canada, and to influence that of the United
States, Britain and Israel. The irony is that he may
well end up being far more successful at enhancing the
stature of a great liberal figure - Franklin D Roosevelt
- than at creating a lasting legacy of conservatism.
Conrad Black is sometimes compared with another right-leaning
media mogul, Rupert Murdoch.
But the two are very different. Financially, Black was
never in Murdoch's league. Temperamentally, Murdoch
is a leader of the dis-establishment; scornful of titles
and institutions, while Black has been famously pro-establishment.
Avid for a peerage, which he finally achieved, he created
a company board that included both Henry Kissinger and
Richard Perle. More importantly, he was always much
more overtly politically motivated than Murdoch, who
has supported governments of the centre-left and the
centre-right, depending on his prevailing commercial
judgments.
Paul
Osborne commented
that
Black
became the kind of newspaper proprietor whom Evelyn
Waugh's Lord Copper would have respected as a social
and business equal. He had an undeniable physical presence,
with hairy knuckles and paddle-like hands which he would
use expressively. Conrad Black was always fond of the
sound of his own voice, and with good reason: he often
had interesting things to say. When he met Tony Blair
in Downing Street or elsewhere, he would dominate the
conversation, the Prime Minister indicating glassy acquiescence
while the tycoon expounded the merits of the transatlantic
alliance, the virtues of low taxation, the lessons to
be learnt from Napoleon's career as a war leader, and
other matters of equal consequence
Business
journalist Bryan Burroughs, writing about Black's fall
in the New York Times, said that
What distinguishes this scandal is Black's jaw-dropping
sense of entitlement. By almost every account, he thought
of shareholders as sharecroppers, bugs on his corporate
windshield. He ran Hollinger as a personal fief, doling
out favors to directors while accumulating the usual
clutch of mansions, private jets and billionaire baubles.
He intimidated inquiring journalists with lawsuits;
when the Canadian Prime Minister Jean Chretien moved
to block his entrance into the British House of Lords,
the combative Black sued him, too.
Black
more succinctly forecast that he would recover, commenting
I
have no doubt that mothers in America use my name to
frighten children into finishing their vegetables. But
this is not a permanent state of affairs.
early career
Black's early career as a proprietor was marked by strong
antipathy to journalists and, like some of his peers south
of the border, an aptitude for stripping out costs. Most
of the papers were ailing at the time of acquisition but
enjoyed monopoly or duopoly status in their local market.
In 1971 he co-founded Sterling Newspapers, coming to national
prominence midway through the decade through ingenious
takeovers and restructuring of holding companies with
stakes in companies such as Dominion Stores and agricultural
machinery giant Massey-Ferguson.
His Hollinger group bought and sold Standard Broadcasting
while acquiring a large number of papers under the Sterling
banner and a controlling stake in Southam, one of the
two largest Canadian chains (in competition with that
of the Thomson family).
Hollinger expansion
Like many entrepreneurs with global ambitions, Black faced
the challenge of expansion through acquisition and investment
without loss of control. He responded in three ways: reduction
of costs (and strategic disinvestment), debt-funded acquisition
and use of a pyramid structure that featured differential
voting stock.
Ravelston, holding the personal interests of Black and
close associates, held a 78% stake in Hollinger Inc, a
publicly-traded Canadian company. That entity had 30%
of the equity in Hollinger International, a publicly-traded
US company that controlled most of the newspapers. Ravelston
held a 73% voting interest in Hollinger International.
By the early 1990s the Hollinger group controlled over
four hundred newspapers in the US and Canada (having leapfrogged
over 'McPaper' chains such as Ingersoll
and Gannett), had acquired the
UK Daily Telegraph group after its controlling family
fumbled a move to London's Docklands, had taken the Spectator
off Warwick Fairfax's hands during the disastrous privatisation
of John Fairfax and subsequently
scored a 25% stake in that group.
CanWest and Osprey
Although he significantly improved the circulation and
profitability of the Daily Telegraph, his North
American empire slipped towards the end of the decade.
After disposing of some of the US papers - for example
to CNHI - he sold the Canadian
arm to Izzy Asper's CanWest (the
group that has effective control of Australia's TEN
television network).
The sale involved 14 major daily and 126 other daily and
weekly newspapers in Canada. That brought in US$3.2 billion
and 15% of CanWest's equity (later sold for C$271m). Hollinger
subsequently sold Asper its remaining 50% in loss-making
Canadian broadsheet the National Post, Black's
version of Murdoch's The
Australian. Competition from the Post had
woken Thomson's somewhat sleepy Globe & Mail
but consumed several hundred million dollars.
In 2001, after unsuccessfully suing the Canadian government
over a request for dual nationality, Black renounced his
citizenship (perhaps without much regret, given characterisation
of Canadians as "whining, political conformist welfare
addicts''), became a British subject and was subsequently
received a peerage.
Hollinger spun off most of its remaining Canadian titles—notably
16 daily and 13 weekly newspapers such as the Kingston
Whig-Standard, Timmins Daily Press and
Sault St Marie Star—in an MBO by Osprey
Media Group for C$220m. Osprey was headed by Michael Sifton,
whose family had owned the Manitoba Free Press
(subsequently the Winnipeg Free Press), Saskatoon
StarPhoenix and the Regina Leader-Post.
Osprey subsequently acquired other newspapers from CanWest.
Hollinger retained around 150 titles worldwide, of which
97 were in the Chicago area.
Black's Canadian rival, the multinational Thomson
group, in mid-February 2001 had announced that it was
essentially abandoning print in favour of electronic publishing
and in mid-July 2001 disposed of its travel business for
several billion dollars.
Black's Waterloo?
Black had faced recurrent criticism from 2000 about alleged
disregard of the interests of other shareholders and management
fees paid to Ravelston. Management fees as such were not
unusual - they have been employed by several of the entrepreneurs
featured on this site - and as Black noted were more tax
effective than salaries or dividends.
Hollinger International reported a net loss of US$335
million in 2001 and US$238 million in 2002. In November
2003, following several months of speculation that Hollinger
faced a financial crisis, Black resigned as chief executive
of the group amid suggestions that some fees had been
unorthodox (albeit perhaps not illegal) and not properly
disclosed. Resignation coincided with announcement that
the group was seeking advice about sale of assets.
Concern about fees, improper or otherwise, might have
been more muted if there was good news about circulation
and revenue. In 1985 the Daily Telegraph enjoyed
daily sales of 1.2 million copies and the Sunday Telegraph
had 687,000. By the end of 2003 the Daily Telegraph
had fallen to 920,000, with the Sunday Telegraph
up to 711,000. Critics noted that Murdoch's Times
had climbed from 477,000 to 630,000 in that period, with
the Sunday Times up from 1.26 million to 1.36
million. Peter Newman's Here Be Dragons: Telling Tales
of People, Passion & Power (Toronto: McClelland
& Stewart 2004) sniped that
Conrad
had turned himself into a latter day Citizen Kane. He
looked like a young Orson Welles but behaved like an
old William Randolph Hearst.
In January 2004 Black lost support of the Hollinger International
board and ceased to be chairman. The Barclays announced
that they had an "irrevocable" agreement to
buy Ravelston's 78% stake in Hollinger Inc and 73% voting
stake in Hollinger International for £260 million,
preempting action by the latter's board. That sale was
characterised by some observers as an apparent significant
discount on Hollinger's worth, eg what shareholders might
expect to receive if the various assets were unbundled
and sold. Such notions of value are contentious: we have
noted that owners tend to be more optimistic than lenders.
It was suggested that the brothers, consistent with a
reputation for secrecy and controlling-shareholder provisions
in the US companies code, would seek to buy out other
shareholders (presumably funded by offloading non-UK assets
such as the Jerusalem Post and the US papers).
The agreement, however, proved not to be irrevocable -
complicated by litigation in the US and UK - and Hollinger
International moved to auction off its assets through
the Lazard investment bank.
Interest
was expressed by Axel Springer, the Daily Mail and other
groups before Lazard sold the Hollinger International
UK titles (eg the Daily Telegraph, Spectator
and Apollo) to the Barclays for some £665
million in July 2004. Apparent lack of interest resulted
in the US titles and Jerusalem Post being taken
off the auction block.
Ongoing litigation, reports and inquiries included a report
to the US SEC by Richard Breeden for Hollinger International,
claiming that Hollinger
had been run as a "corporate kleptocracy", with
The aggregate cash taken by Hollinger's former chief
executive officer, Conrad M Black and its former chief
operating officer, F David Radler and their associates,
represented 95.2 per cent of Hollinger's entire adjusted
net income during 1997-2003.
Ravelston responded that the report featured "exaggerated
claims laced with outright lies".
In November 2004 Hollinger International announced the
sale of the Jerusalem Post to Israeli media group
Mirkaei Tikshoret for US$13.2 million, with CanWest
to acquire a 50% stake from that group.
A chronology is here.
Holdings
An
indication of Hollinger and Barclay print holdings is
here.
studies
Conrad Black: A Life In Progress (Sydney: Random
House 1993) is an immensely admiring biography of the
ex-Canadian mogul by noted journalist Conrad Black. It
is full of scorn for journalists and business rivals,
and recounts - at length - Black's cleverness in financial
reengineering.
His prose can perhaps be better savoured in annual reports
to Hollinger's shareholders, in public statements -
Fine-tuning
Hollinger Inc to be a stable controlling shareholder
would be simple in any environment less hostile than
that created by the oversights of underlings and the
character assassination effort of our enemies in the
competing press
and
email disclosed during litigation, such as -
Some
... think that we are running a gravy train and a gerrymandered
share structure, and we think they are a bunch of self-righteous
hypocrites and ingrates, who give us no credit for what
has been a skilful job of building and pruning a company
in difficult circumstances.
A
less reverent and more succinct portrait is given by Richard
Siklos in Shades of Black: Conrad Black & the World's
Fastest Growing Media Empire (New York: Touchstone
1998) and the incisive The Fall of Conrad Black
(London: Allen Lane 2004) by Jacquie McNish & Sinclair
Stewart. Other works include Lord Black: The Biography
(Montreal: BT Publishing 2004) by George Tombs - marketed
as "by the only journalist who had unprecedented
access to the man himself!" - and Democracy's
Oxygen: How Corporations Control the News (Toronto:
Black Rose 1997) by James Winter.
An earlier rendition is provided by Peter Newman's The
Establishment Man: A Portrait of Power (Toronto:
McLelland & Stewart 1982), centred on the Argus takeover
and gentler than the 2004 Here Be Dragons: Telling
Tales of People, Passion and Power or Tom Bower's
Conrad and Lady Black (London: HarperCollins
2006). Newman was hit with a US$1.8 million defamation
suit by Black in November 2005, charging that he had falsely
and maliciously written that the mogul
engaged
in a wide range of criminal acts spanning many years,
including mail and wire fraud, interstate transportation
of stolen property and money laundering.
Newman
subsequently commented that
Since
the quote Conrad Black found so offensive is taken from
a court document, and in my book is contained within
quotation marks, I am puzzled why he launched a suit
against me, particularly since within hours, he was
indicted on some of the same charges.
Black subsequently sued Bower for £4.8m, arguing
that the biography is "vindictive, high-handed, contemptuous,
sadistic, pathologically mendacious and malicious".
Maude Barlow & James Winter's The Big Black Book
(Toronto: Stoddart 1997) may strike some readers as perhaps
as self-righteous and shrill as the great man himself,
who had commented to Siklos that his success in the UK
was attributable to cutting non-editorial costs and
presenting
Britain's gamiest, kinkiest, most salacious, and most
scatological news with apparent sobriety, but with the
most explicit, almost sadistic detail (involving) the
indiscretions of deviant clergy, the activities of paid
flagellators, and the rest of the vast English supermarket
of unconventional sexual titillation.
In 2000 he more pithily described Roman Catholic archbishop
Frederick Henry of Calgary as a "jumped-up little twerp
of a bishop" for criticising Black's union-busting. Black's
dissatisfaction with much of humanity - in particular
regulators and employees - is a trait shared with many
of the leading magnates and as a guest or partner he appears
greatly superior to Maxwell.
Few, however, were as articulate or as injudicious in
making public statements; few of Northcliffe, Pulitzer
or Scripps' denunciations seem to have been disclosed
to the public at large.
There is an adoring account by Nicholas Coleridge in Paper
Tigers (London: Heinemann 1993) and a more recent
profile in Michael Wolff's Autumn of the Moguls
(New York: HarperCollins 2003). Ego and Ink: The Inside
Story of Canada's National Newspaper War (Toronto:
McClelland & Stewart 2004) by Chris Cobb covers Black's
establishment of the National Post, its acquisition
by the Aspers and battle with the Globe. The
2004 Breeden report
to the SEC is essential reading; its conclusions have
been disputed by Ravelston but inspired action by the
SEC against Hollinger International directors. Earlier
concerns were expressed in the 1975 Canadian Royal Commission
on Corporate Concentration study Argus Corporation
Limited - A Corporate Background Report.
Black's Duplessis biography is unfortunately out of print.
His 1,360 page Franklin Delano Roosevelt: Champion
of Freedom (New York: Public Affairs 2003) was apparently
penned as Ravelston unravelled.
Perspectives on the rise and fall of Hollinger are provided
by Robert Picard's lucid The Economics & Financing
of Media Companies (New York: Fordham Uni Press 2002)
and The Rise & Fall of Communication Empires
(PDF).
A vantage point on Black's proprietorship of the Daily
Telegraph is provided by Max Hastings in Editor:
A Memoir (London: Macmillan 2002).
For Southam and its antecedents see Marc Edge's impassioned
Pacific Press: The Unauthorized Story of Vancouver's
Newspaper Monopoly (Vancouver: New Star Books 2001),
Douglas Fetherling's The Rise of the Canadian Newspaper
(Oxford: Oxford Uni Press 1990), Minko Sotiron's From
Politics To Profit: The Commercialization of Canadian
Daily Newspapers, 1890-1920 (Montreal: McGill-Queen's
Uni Press 1997) and Paul Rutherford's The Making of
the Canadian Media (Toronto: McGraw-Hill Ryerson
1978).
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