When Toronto financier Conrad Black began building a newspaper-publishing empire more than two years ago, industry experts warned him that nationally circulated British dailies were either low-profit or noprofit ventures. Undaunted, he promptly purchased control of the London-based Daily Telegraph. Later, experts advised him that small American dailies, with fewer than 10,000 subscribers, were difficult to manage and not very profitable. But Black ignored the warnings and now owns 44 such papers. Similarly, English-Canadian companies have traditionally avoided buying French-language papers. Yet in June, 1987, the bilingual Black acquired Montreal-based Unimédia Inc., publisher of three French-lan-
guage dailies and 20 weekly Quebecbased papers. “I’m not a professional renegade,” Black told Maclean’s. “We have a policy of buying papers that fit our plans.”
Although he now controls a diversified group of publications through Toronto-based Hollinger Inc., Black has consistently bought underpriced but potentially lucrative assets. And he has moved quickly since selling off Hollinger’s interests in farm machinery manufacturing, grocery stores, broadcasting and oil and gas. In 1986 he purchased a controlling interest in the Daily Telegraph for $66.7 million and paid $106 million for 22 American dailies.
Since last year Hollinger has acquired another 22 U.S. dailies, spent
$79 million to purchase Unimédia, and bought Saturday Night, Canada’s oldest surviving general-interest magazine, for $1.4 million before spending $7 million for a 15-per-cent interest in Toronto’s new daily Financial Post. Hollinger also owns Vancouver-based Sterling Newspapers Ltd., a chain of nine dailies founded in 1972 by Black and two friends, Peter White and David Radler, both of whom are now Hollinger executives.
The flagship in the empire is the Daily Telegraph, a perennial moneyloser which Black says began earning up to £1 million a week last fall. The turnaround occurred partly because the number of production workers was cut to 670 from 1,670. As well, the Telegraph’s circulation, which was already the largest in Britain for a broadsheet newspaper, rose by about 50,000 last year to hit almost 1.2 million daily.
Black said that the paper’s circulation within the United Kingdom can grow even more dramatically because most of its current subscribers live in and around London.
In his search for American assets, Black said that he has focused on
small dailies with circulations of 5,000 to 15,000 because they have been overlooked by the established newspaper chains. As a result, the papers are available at takeover prices, which are very favorable in relation to their annual revenues.
In some cases, operating costs have been cut by printing several papers on one press.
Black says that those
papers as a group now are making a profit.
In Quebec, Black has sold 16 of Unimédia’s 20 weeklies and some of its distribution operations. He will keep the daily newspapers—Le Soleil in Quebec City, Le Droit in the Ottawa-
Hull region and Le Quotidien in Chicoutimi. Le Droit has been a chronic money-loser, but the other two have been profitable, he said. And they were available at the right price. Black said that he bought the papers for the equivalent of three to four times their annual cash flow, By comparison, similar English-language papers would have cost
five times their cash flow, Black added.
Some observers have predicted that he will eventually use his newspapers and magazines to spread his own right-wing conservative economic and political beliefs, but Black describes such notions as “absolutely asinine.” He said that his editors are given a free hand to make editorial decisions. Indeed, Saturday Night editor John Fraser, a former Toronto Globe and Mail foreign correspondent, said that he wrote a clause in his own employment contract which gives him total editorial control. And industry observers say that as long as Black has a corporate plan, he is likely to continue buying up the presses regardless of their editorial philosophies.
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