COVER

THE ROOT OF AN EMPIRE

PATRICIA CHISHOLM August 1 1994
COVER

THE ROOT OF AN EMPIRE

PATRICIA CHISHOLM August 1 1994

THE ROOT OF AN EMPIRE

The spectacle of Conrad Black taking on the likes of Rupert Murdoch in a no-holds-barred newspaper war may seem incongruous: at about $873 million, the revenues of Black’s Vancouver-based Hollinger Inc. pale beside Murdoch’s News Corp. Ltd. at $10 billion. But the Canadian-born Black, 49, has a long history of accomplishing the unexpected. From a single money-losing paper that he and a friend bought in the mid-1960s, Black has created an international empire of newspapers with daily circulation of almost five million.

In his most spectacular acquisition, Black paid $75 million in 1985

for a controlling interest in London’s then-ailing Daily Telegraph. He hired new editors, cut tough deals with unions and slashed costs. The moribund Telegraph rebounded, and was, until recently, responsible for almost 75 per cent of Hollinger’s earnings. Black has been on a buying binge ever since. In 1986, Hollinger— which is run by president and longtime Black friend David Radler— bought the American Publishing Company, a string of small U.S. papers. In Canada, it added Saturday Night magazine in 1987. The next year, Black took a 15-per-cent interest in the Toronto-based daily The Financial Post, later upping it to 19.9 per cent

Between 1991 and 1993, Black’s The Telegraph PLC gained control of Australia’s second-largest newspaper group, John Fairfax Holdings Ltd. Then, in 1992, Hollinger bought a 22.5-per-cent interest in Torontobased Southam Inc., Canada’s largest newspaper chain. A financing arrangement with Paul Desmarais’s Power Corp. of Canada later reduced that stake to 18.7 per cent, but established Black as part of the most pow-

erful alliance on the Southam board. Last March, he bought the Chicago Sun-Times, a daily ranked ninth in the United States by circulation.

Although it was only formed in 1985, Hollinger’s roots are deep. It grew out of the remnants of Toronto

financier Bud McDougald’s Argus Corp., which held extensive interests in farm machinery, supermarkets and natural resources. Shortly after McDougald’s death in 1978, the 33-

year-old Black used $18 million of his own—and his brother Montegu’s—inherited wealth to gain control of Argus, with assets then valued at about $4 billion. Black gradually sold most of the Argus properties, and Canadian assets are now just a small part of Hollinger’s business. But Black’s fascination with newspapers goes even further back. He and two friends began investing in small Canadian newspapers in the 1960s. They cut costs to the bone and began realizing healthy returns. “We said to ourselves, ‘God, where’s this business been all our lives,’ ” Black once remarked to Maclean’s columnist Peter C. Newman. Despite the twists and turns of his career, Conrad Black, it seems, is just where he has wanted to be all along.

PATRICIA CHISHOLM