Black and White and read all over

TOM FENNELL June 15 1987

Black and White and read all over

TOM FENNELL June 15 1987

Black and White and read all over


As he bought and sold his way through the giant Argus Corp. Ltd. in the early 1980s, Conrad Black frequently drew criticism

that he was destroying more than he created. But now the Toronto financier is building with a vengeance as he lays the foundation for a new newspaper empire. Late last month

he announced that he was buying into Quebec’s thirdlargest publisher, Montrealbased Unimédia Inc., which includes Quebec City’s Le Soleil in its stable. Then, last week he said that he hoped to sign a deal with another major publisher, Quebecor Inc., which would jointly establish a second English-language daily in Montreal. At the same time, Black is close to adding 10 new daily newspapers to the string of 22 dailies he already owns in the United States. Said Black: “We want to build a financially strong, well-managed international newspaper company.”

Through a Toronto-based holding company, Hollinger Inc., Black, 42, already owns 58 per cent of London’s Daily Telegraph and nine small dailies in Canada. Last year Black ended Hollinger’s investment in Dominion Stores Ltd. and Norcen Energy Resources Ltd. Since then, the

company has emerged as a newspaper company with a far-reaching strategy. Black said that he plans to consolidate his position in Quebec while buying up small U.S. dailies with circulations of about 15,000, which have been ignored by U.S. media giants. Black’s U.S. and Canadian newspapers are generally small and staid, but he points out that they are in the same company as the flagship Telegraph, “one of the greatest, most influential papers in the world.”

Black has been criticized over the past two years for his sale of the Dominion Stores grocery chain, which he claimed would never be very prof-

itable. Dominion was part of the massive Argus empire that Black took control of in 1978 by buying Argus shares from a group of aging widows. He made a personal fortune selling off its various assets, which also included Massey-Ferguson Ltd. and Standard Broadcasting Corp. In 1980 he acquired an interest in Norcen, a well-run oil company, then sold

it in 1986. Black said last week that he became “fed up” with both Dominion and Norcen and simply no longer wanted them. Said Black: “You really have to know what you’re doing to run an oil company.” But on the other hand, he said, “the newspaper business is extremely profitable, and it is fun.”

Black, a fringe player in the Canadian newspaper game for years, has long aspired to a bigger role. He jumped into the business in 1969, along with former university friends and business partners David Radler and Peter White—both of whom are now working for Hollinger—by pur-

chasing The Record, a Sherbrooke, Que., daily. And in 1972 the trio launched what was to become the nine-paper Sterling Newspapers Ltd. chain based in Vancouver. It was merged into Hollinger in October,

1986. But in 1980 the would-be press baron failed in his first bid to join the big leagues of Canadianpublishing when the Toronto-based Thomson family outbid him for the FP Publications Ltd. chain of newspapers, which included The Globe and Mail and the Winnipeg Free Press.

Black faced limited opportunities for growth in Canada due to the dominance of Southam Inc. and the 163-paThomson News-

papers Ltd., both of Toronto. As a result, he turned to England and December, 1985, paid approximately $60 million for 50.1 per cent of the Telegraph, one of the world’s most respected newspapers. Black had been invited by Telegraph publisher Lord Hartwell to help finance the prestigious but money-losing firm. Now White, who recently left Prime Minister Brian Mulroney’s office, where he compiled patronage lists, to work in Black’s Quebec operations, says the push into Quebec and the United States has brought the controversial financier back to “his roots.”

Black said that he expects to close the deal for about 10 new American papers within a few weeks. But by far his most aggressive gamble is a proposed joint venture with celebrated Montreal publisher Pierre Péladeau to launch a second English-language daily newspaper in Montreal, where it would compete with Southam’s venerable Montreal Gazette. Péladeau is president and chief executive officer of Quebecor Inc., publishing weekly and three daily papers, including Le Journal de Montreal, the city’s largest daily. Said Raymond Heard, a longtime Montreal newspaper executive who was involved in aborted attempt by the Toronto Sun Publishing Corp. to start a similar paper last fall: “Péladeau is motivated by his hatred for Southam.”

Péladeau’s anger at Southam, the

largest Canadian daily newspaper publisher, springs from its bankrolling of Le Matin, a short-lived Frenchlanguage Montreal daily that folded after just 38 issues last March. Péladeau complained that Southam broke an unwritten code by vaulting over Quebec’s linguistic gulf to compete head on against the cash-short Le Devoir—& francophone institution that Péladeau assisted by offsetting some of its printing costs.

Still, even if the deal with Péladeau goes through, Quebec media observers are speculating about how long two determined individuals like Black and Péladeau will be able to work together, particularly because they are

opponents in the Quebec City market where Péladeau’s Journal de Quebec faces Black’s newly acquired Le Soleil. Said White: “There would have to be a shotgun partnership, but we could be partners with Péladeau in Montreal, and beat his brains out in Quebec City.”

Black tested the strength of the potential partnership when he announced his Unimedia deal on the eve of a planning meeting with Péladeau late last month. Péladeau had also coveted Unimédia, but he said that he welcomed

the weighty competition. Indeed, their meeting went ahead as planned, and the two entrepreneurs agreed to set up a working group to study the possibility of launching a new Montreal daily. Quebecor officials have conducted numerous market surveys in Montreal and have concluded that a second newspaper would be profitable.

Meanwhile, Black’s involvement in Unimédia quickly prompted charges from Quebec nationalists of a sellout to outside interests. But Black is no stranger to the province. Fluent in French, he attended Laval University in Quebec City, where he received a law degree in 1970. He also developed

a deep interest in Quebec politics and wrote speeches for two premiers, Daniel Johnson and Jean-Jacques Bertrand. A book that he wrote about former Quebec premier Maurice Duplessis was published in 1977.

Unimédia owns three daily newspapers, 20 weeklies and four printing plants. While Black would not confirm the figure, he did not deny reports that Hollinger paid $50 million to Unimédia founder Jacques Francoeur and his partner, Jean-Guy Faucher. He will not be a general partner, and has assumed $29 million in Unimédia debts while injecting $12 million in new capital into a new company formed under the deal that will see Hollinger become a general partner.

Premier Robert Bourassa told the Quebec assembly last week that he worked aggressively behind the scenes to find a French-Canadian buyer for Unimédia. The then-65-year-old Francoeur made it clear two years ago that he was planning to retire, and none of his four children expressed any interest in running the family-owned company. But Black, calling his detractors impotent, said last week that Péladeau, former Le Devoir publisher Claude Ryan and even the editorial staff of the nationalistic Le Devoir had supported his purchase.

While Black’s Unimédia acquisition has raised deep concerns in Quebec, his expansion through Hollinger’s U.S. unit, the American Publishing Co., has largely gone unnoticed. Last December Hollinger bought 22 small-town dailies across a largely economically depressed swath of Illinois, Indiana, Missouri, Ohio, Pennsylvania and New York. The company combined the advertising and editorial departments of the papers into geographic groupings, streamlined their operations and in some cases boosted both circulation and advertising rates.

And Black’s shopping spree continues, even in the face of opposition. In Harrisburg, 111., Roy Small, president of the local Daily Register, has said he will

not sell to Black. He said that Black’s raiders were buying so many papers that competition is disappearing in the area. But since last November Hollinger has bought out most of the paper’s minority shareholders and now has a seat on its board of directors. With the determination and ambition that made him a Bay Street high roller earlier this decade, Conrad Black is now steadily becoming a major player in the North American newspaper business.