Nothing taken for granted at the Telegraph

Published on Thursday 15 July 2004 01:03

DESPITE my best efforts to calm the fevered brows of media correspondents and commentators desperately speculating about who will do what when the Barclay brothers take over the Telegraph group, the frenzy continues. So it falls to me to explain again why nothing much will happen very quickly.

The brothers thought they had the papers when they bought Conrad Black’s controlling stake in Hollinger, their US parent company, way back in January. But the Hollinger board took Black to court, where the judge ruled that Black had acted wrongly in selling his stake. Now that the Barclays have bought the Telegraph from Hollinger, Black is in that same Wilmington, Delaware court before the same judge this week arguing that the board cannot dispose of the Telegraph without a vote of the shareholders (in which he would control a blocking 70 per cent of the votes).

So you can hardly blame the brothers for not wanting to count this particular chicken until it is well and truly hatched. The judge will not rule until later this month. The last time he had to consider this case, Judge Leo Strine delivered a damning indictment of Black. I understand the senior judiciary of Delaware, which decides matters of US corporate law, was not entirely impressed by its carte blanche condemnation.

He might be a bit more sympathetic this time, especially since Black is posing as the defender of shareholders’ rights - an unlikely defender, to be sure, but shareholders’ rights are something Delaware courts feel strongly about.

Hollinger board members have assured me privately that their lawyers are adamant they will win, but Black’s lawyers will argue that the sale of the Telegraph will constitute "substantially all" of Hollinger’s assets, which means, under company rules, that it has to go to a shareholder vote.

It could all come down to what is meant by "substantially". The Telegraph is certainly the jewel in the Hollinger crown, and Black’s lawyers will argue that the value of its other major asset, the Chicago Sun-Times, has been seriously degraded because of a scandal surrounding its sales figures. Indeed, Hollinger has decided not to sell the Sun-Times because (unlike for the Telegraph) it never got a decent offer.

But that does not make the Telegraph "substantially all" of the assets. The Sun-Times is still worth several hundred million dollars, even if it is among the walking wounded. Hollinger also owns some suburban Chicago papers which make as much money as the Sun-Times. They must be worth a fair amount too. And it owns the Jerusalem Post and some local Canadian papers.

Moreover, when Black wanted the right to sell to the Barclays, he told David Barclay in a letter that the sale of the Telegraph out of Hollinger International would probably not, in itself, trigger a shareholder vote. Now he’s claiming it would; that will not go down well with a judge already ill-disposed to him.

If Black were to win in Delaware, I have little doubt that, despite protestations to the contrary, he would use his victory to cut a deal with Hollinger’s shareholders: drop your 650 million lawsuit against me or at least let’s come to a settlement which helps restore my reputation and I’ll let the Barclay bid go through.

There is one more complication. The shareholders do not really want to settle. They have their eye on suing the board - because the board is sitting on $150 million of liability insurance. At that point, things really could get messy.

But on the whole, I think the best Black can do is delay the sale. I am in little doubt that, whatever happens in Delaware, the Barclays will end up controlling the Telegraph. But you can’t blame them for being once bitten, twice shy. Until we get the keys to the door, one of the brothers said to me last week, we don’t really want to take any decisions about the papers.

So whatever everyone else does in August, the Barclays and I have a quiet summer to enjoy.

Are they really top of the media pops?

THE Guardian’s annual list of the British media’s top 100 movers and shakers was published on Monday, with Rupert Murdoch in the number-one spot. Hardly surprising: the list is meant to evaluate economic, political and cultural power and Murdoch, who controls four national newspapers and BSkyB, has all three in spades.

The only British figure with anything like the same media clout was Greg Dyke when he was director general of the BBC and, indeed, he was in the top slot last year; now, a victim of the Hutton inquiry, he’s been demoted to 89th. How the mighty fall.

There are some strange choices in the top 20. Peter Burt, a banker, comes from nowhere to take fourth place because he’s been made chairman of ITV. But does he really have more economic and cultural power than his chief executive, Charles Allen (No 30), who actually runs ITV?

Similarly, I can understand why David Currie, as chairman of media regulator Ofcom, would be in anybody’s top 20. But is he really the third most powerful media figure in the country, well ahead even of Ofcom’s chief executive Stephen Carter (ten), who will be a bigger influence on most regulatory matters.

Daily Mail editor Paul Dacre (seven) is deemed to be the most powerful editor in the country, which is understandable; but is Guardian editor Alan Rusbridger (22) really the most important broadsheet editor (and worth promotion from 38th position last year)? He’s a fine editor but you can’t help feeling the panel’s been a bit partial here.

Women were well-represented on the panel but not on the list. Other than Culture Secretary Tessa Jowell, only Trinity Mirror chief executive Sly Bailey makes it into the top 20. Indeed, there are only 13 women in the top 100.

Some say this list is just a bit of froth and nonsense, but the panel is not without its wisdom. I make my debut on the list and, even though it is on the lowly 85th rung, it is the accolade for which I have striven throughout my career. More important, it’s satisfying to be ahead of Bob Shennan, who fired me from Radio 5 Live, and columnist Stephen Glover. Not that I am one to gloat.

CD sales help Indy climb the compact mountain

THE Independent continues to have the only sales figures of any national newspaper to die for: last month, its compact was up more than 18 per cent on June last year (and actively purchased copies - excluding bulks and dodgy foreign sales - were up an impressive 33 per cent).

The Indy, however, only sold a few hundred more in June (261,575) than it did in May (261,009), which suggested to some commentators that its strategy has started to stall.

Maybe. But I can reveal that trade estimates for July show the trend is still upwards: it averaged 262,000 in week one, 269,000 in week two.

The jump is at least partly explained by a free-CD promotion. Most newspapers find sales gained by CD promos evaporate as quickly as they’re gained. If the Indy can hold on to its gains, then its tabloid strategy really will be a continuing success story; if not, it will have to think of something different for an encore.

Meanwhile, the Times is at last beginning to bear some fruit from its troubled tabloid experiment. Last month, its sales were up year-on-year by a very respectable 5 per cent, at 661,330 - which means recent fears of slipping towards the 600,000 mark have been banished.

Editor Robert Thomson has every right to feel vindicated after the bashing he’s taken for his cull of editorial jobs - though I hear that cull is not yet over and that the departure of another senior executive is about to happen.

Springer eyes British titles

MATHIAS Dpfner, the impressive chairman and chief executive of German publishing giant Axel Springer, was in town last week to speak to a lunch club of interested Brits on the sorry condition of Germany - a towering symbol (he’s as tall as a basketball player) of his company’s continued interest in acquiring British publishing assets, even though it found the bidding for the Telegraph too rich.

Springer is so big in Germany that any further major expansion would likely be thwarted by that country’s competition authorities. Hence the appetite for international acquisitions.

Dpfner has already expanded into Poland, but it is the open British market which attracts his attention. I suspect he would look at anything major that comes onto the market. If Trinity Mirror, for example, finally decided to dispose of its national titles, Springer would no doubt run the slide-rule over them.

Much more up its Strasse would be the Financial Times, if Pearson could ever be persuaded to part company with it. But the day the FT is put on the block, Springer would find itself (just as it did with the Telegraph) in line with a long list of suitors and would need to be prepared to pay a high price. British newspapers - even loss-making ones like the FT - don’t come cheap.