Stephen Glover

Don’t assume that Conrad Black is about to meet his Waterloo

Don't assume that Conrad Black is about to meet his Waterloo

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Before I start this piece, which is about the future of the Daily Telegraph, I should make clear that it is written by me. When I last wrote at length about the Telegraph – rather controversially, perhaps – I appear to have caused palpitations in the heart of at least one banker. The Spectator is owned by the same company as the Daily Telegraph, namely Hollinger International. And this banker, who may have been a somewhat unsophisticated individual, formed the view that anything appearing in The Spectator about the Telegraph must carry some sort of proprietorial stamp of approval, and reflect in some way the thinking of its higher management. This is completely untrue. What appears here are only my thoughts. I have not even spoken to Conrad Black, chairman of Hollinger International, or Dan Colson, chief executive of the Telegraph Group, before writing this article. Unlike the aforementioned banker, both men understand perfectly well that this column has nothing to do with Hollinger save for the fact that it happens to appear in a space in a magazine which the company owns.

The question which the whole of Fleet Street is asking is whether Lord Black will be forced to sell the Daily Telegraph and the Sunday Telegraph, as well as other assets including the Jerusalem Post and the Chicago Sun Times. The question arises because of recent events at Hollinger International, which have been extensively reported in the British press. No one can deny that Hollinger has had its difficulties. At this point I am going to have to ask you to tie a wet towel around your head. I will tell you when you can take it off.

The affairs of Hollinger International are complex, and I wonder whether many of the journalists who have written about the company fully understand it. I certainly don't claim to. The Ravelston Corporation, a privately held group largely owned by Lord Black, holds 78 per cent of the shares of Hollinger Incorporated, a holding company listed in Toronto. Hollinger Incorporated's primary asset is its 30 per cent equity holding in Hollinger International, which gives it a 73 per cent voting stake. On 14 April Standard and Poor's, the credit-rating agency, drastically downgraded its long-term credit ratings for Hollinger Incorporated after the company warned that it might not be able to meet its obligations on outstanding preferred shares. Its rating of Hollinger International remained unchanged. The downgrading of Hollinger Incorporated was variously interpreted. Lord Black dismissed it to the Sunday Times on 20 April as 'nonsense'. One bond-rating expert described it as 'a cashflow management issue', and asserted that Hollinger International's titles 'are doing reasonably well'.

Last week Hollinger International held its annual general meeting in New York, where it is listed on the stock exchange. Journalists were excluded (it always amuses me that in respect of their own interests media groups are invariably as secretive as any other company) but we know that it was a lively meeting. There was a difference of opinion as to whether $73 million in management fees should have been paid to Lord Black and other executives or to Hollinger International's shareholders. A special committee of independent board members was set up to investigate the matter. More significantly, Lord Black agreed to convert Hollinger Incorporated preferential B shares into A shares over the next four years. The effect of this will be to reduce Hollinger Incorporated's – and therefore Lord Black's – voting rights in Hollinger International from 73 per cent to around 40 per cent. This has led to speculation that Lord Black will no longer control Hollinger International, and therefore its titles including the Daily Telegraph. This is questionable. Rupert Murdoch controls BSkyB with significantly less than 40 per cent of its shares.

Many journalists – perhaps most – who have followed this saga assume that the Telegraph is slipping from Lord Black's grasp. It is certainly a widespread view among journalists on the paper, most of whom are seriously uninformed about the company for which they work. Are they right? In agreeing to reduce his voting rights in Hollinger International, Lord Black has undoubtedly suffered a setback. On the other hand, he was surely right in telling the Sunday Times of 25 May that 'if you can't control the company with more than 40 per cent of the stock you should try another occupation'. It is also true that, although Hollinger International's titles have suffered from the advertising recession, they are mostly making profits. Whether the difficulties of Hollinger Incorporated in respect of its outstanding preferred shares will necessitate some restructuring is beyond my competence to judge. But I certainly would not bet on Hollinger International relinquishing the Daily Telegraph in the foreseeable future.

Why, then, the widespread assumption that it will? (You may now remove the wet towel if you have not already done so.) Partly because Hollinger International has been hopeless at explaining its difficulties to its staff. Journalists tend to have an apocalyptic turn of mind, and will generally assume the worst unless they are given good reasons not to. It is also true that many people want Lord Black to lose the Telegraph because they abhor his political beliefs. My view is that he is every bit as much a businessman as he is an ideologue. For nine years he put up with the Europhile and Tory 'wet' Sir Max Hastings as editor of the Daily Telegraph, for which he certainly deserves a medal. When Max left of his own volition, Lord Black toyed with other possibilities before appointing the staunch Tory, Charles Moore. Mr Moore has given the newspaper an intellectual and political backbone which it lacked under Max. Some may not like this – I sometimes jib at its increasingly neoconservative tones – but let us agree that the Telegraph is sui generis.

It would be nice to say that the Telegraph will always be the Telegraph, regardless of who owns or edits it. Alas, it is not so, as the rapid decline of newspapers which once seemed inextricably woven into British life, such as the Daily Express and Daily Mirror, should remind us. If it fell into the hands of a German conglomerate, or was taken over by businessmen spivs, the Daily Telegraph could be transformed in no time at all. Hurrah! some people will say, as they dance on what they hope is Lord Black's grave. Not me.

Frank Field, the Labour MP, is leading a cross-party move to have Jack Profumo reinstated to the Privy Council on the grounds that he has more than made reparation for what was a less than heinous offence. Tony Blair is said to be resisting this because he fears the clobbering which he would get from the Daily Mail. Of course he wouldn't.