Magazine article The Spectator

How Incredible, How Depressing, That Richard Desmond Might Buy the Telegraph

Magazine article The Spectator

How Incredible, How Depressing, That Richard Desmond Might Buy the Telegraph

Article excerpt

Most people are assuming that Conrad Black will lose control of the Daily Telegraph, the Sunday Telegraph and The Spectator. He has been forced to resign as chief executive officer of the New York listed company Hollinger International, which owns these titles in addition to the Jerusalem Post and Chicago SunTimes. Lord Black and fellow executives face probable investigation by the Securities and Exchange Commission, the American financial regulator. Hollinger has admitted that a total of $32.15 million in so-called 'non-competition payments' was made to Lord Black and senior colleagues without the authorisation of the audit committee or the full board. Lord Black has personally agreed to pay back more than $7 million to shareholders. Other payments made to Lord Black and his associates will now come under scrutiny.

It is possible that Lord Black will somehow hang on to the Telegraph Group, of which he remains chairman for the time being, but even his friends do not think this is very likely. Though he remains the controlling shareholder in Hollinger International, his shares are effectively frozen. Hollinger has instructed Lazards to look at a possible break-up and sale. Lord Black was the moving spirit of Hollinger and its raison d'etre, and if he is off the playing field, the company would seem to make little sense without him. He appears to have been undone by two factors: the worldwide advertising recession and the new passion in America for corporate governance. Tweedy Browne, which owns 18 per cent of Hollinger International, has led the campaign against Lord Black. On Monday it called Hollinger's board 'a disgrace'.

I am certainly not going to join those who are dancing on what they think is Lord Black's grave. He has been a good proprietor. In 1986 he rescued the Telegraph titles from bankruptcy. Despite the price war and the advertising recession, they are financially in good shape, with the Telegraph Group making £39.7 million last year. This explains why so many companies are queuing up in the hope that they may be able to buy it. The Spectator, which Lord Black acquired in 1988, has more than doubled its circulation under his watch, and for the first time in its history has become handsomely profitable. Lord Black has generally given his editors a remarkably free rein and, when he disagrees with them, is more likely than not to say so in the letters column. He is more intellectually sophisticated than any other proprietor one can think of, and than nearly all of his critics. In the midst of this crisis he is publishing what sounds like a formidable biography of FDR. Most press barons can barely write a newspaper article.

Those who are rejoicing at Lord Black's tribulations should consider this question: who is the most likely new owner of the Telegraph Group? The queue I mentioned is a long one. There are the venture capital boys - Apax, Candover, 3i, and so forth. The name of Michael Green, the outgoing chairman of Carlton Television, has been whispered. One wonders how many of these suitors have the £500 or £600 million which would be the likely cost of the Telegraph Group. An American buy-out specialist called Nelson Peltz is already studying the company's books. In the end an existing publisher is more likely than not to emerge as the eventual owner because it can probably pay more than the non-publisher. Think of the financial advantages if you are already a large buyer of newsprint and have a publishing infrastructure. There may well be foreign newspaper companies already circling the Telegraph Group, but they are as yet difficult to identify. …

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