That Old Black Magic

Canada Day, 1996: Black (right), in jaunty military regalia, escorted Quenn
Elizabeth (Reuters/Andy Clark/Archive Photos)

He once called journalists 'ignorant and lazy.' But now Conrad Black runs the
planet's third largest newspaper empire and is the field's most relentless
shopaholic. The Big Question: what's he really after?

by Tim Jones

Jones is the media writer on the Chicago Tribune financial desk

In Conrad Black's sprawling multi-continental Hollinger International Inc.,
newspapers are bought and sold like car dealerships, grocery stores or, as some
of his many critics charge, real estate on a Monopoly board. With a total
circulation of 4.3 million Black operates the planet's third largest newspaper
empire after News Corp. and Gannett. Hollinger holdings include The Daily
Telegraph of London, The Jerusalem Post, the Chicago Sun-Times, and the
Montreal Gazette. Since the spring of 1996, Black has bought a controlling
interest in almost 60 percent of Canada's daily newspapers. After acquiring
nearly 400 newspapers in the United States since 1986, Black sold 160 of them in
November, reducing his U.S. circulation base by 900,000. He also sold his
minority interest in Australia's John Fairfax Holdings Ltd. In October, Black
bought the 70,000-circulation Post-Tribune in Gary, Indiana, for a fire sale
price of about $40 million. And in Canada, Black is doing nothing to discourage
speculation that he will launch a new national newspaper, based in Toronto.

Black already is the newspaper industry in Canada, owning 58 of the
nation's 106 daily newspapers, or about 37 percent of the country's total daily
circulation. He owns all the major dailies in the provinces of Saskatchewan,
Prince Edward Island, and Newfoundland, as well as the largest English-language
dailies in Montreal, Calgary, and Ottawa. (The writings of Black's wife,
conservative columnist Barbara Amiel, regularly appear in Black's Canadian
newspapers.)

Is his rapid expansion in the newspaper business a straight financial play
or does Black, with an estimated personal worth of $350 million and a stable of
friends including conservatives Margaret Thatcher, William F. Buckley, and
George Will, have a political agenda he wants to push through his newspapers?
Should Black be taken at his word when he says he wants newspapers based on
"literacy, balance, and a reasonably clear segregation between reporting and
opinion"? And just where does journalism fit amid allegations that Black is
squeezing the operating budgets of dozens of smaller papers in his quest to make
Hollinger a paragon of profitability?

These are the dominant questions about the 53-year-old Black, the erudite
media baron of aristocratic bearing who once bluntly described many journalists
as "ignorant, lazy, opinionated, intellectually dishonest, and inadequately
supervised." Black insists that those words were spoken a long time ago. But
please note: he has not backed away from them.

At the prime of his professional life, he embodies the old-line bombast of
his publishing predecessors and the new age attention to the bottom line Ð what
might best be described as that old Black magic. In manner and in speech, he has
overtones of the nineteenth century about him, and there is a trace of mild
amusement in his voice as he talks about business, politics, and journalism. He
instinctively uses five-dollar words when twenty-five-cent terminology would
suffice. ("Stockholders should not be disconcerted by the stertorous bellicosity
of our adversaries," he wrote in Hollinger's 1996 annual report.) His
fascination with the military appears to have influenced his speech and his
aggressive business behavior. He is a student of Napolean's career and has
written a biography of the Quebec political titan, Maurice Duplessis. And when
he was 48, Black wrote his autobiography, a rambling, windy tome.

The outspoken Black is an avowed champion of corporate interests and
unrelenting critic of labor unions, government regulations, and welfare in
Canada. By American political standards he'd be a moderate Republican; in Canada
he's the enemy of the political left.

Understand that Black is a fervid ideologue, but don't get carried away with
all the talk about an aggressive ideological agenda. Realize that he has a
serious problem with some journalists, but accept that most of that stated
animosity is ammunition he joyfully fires at reporters as part of a game of
provocation. Recognize that he has an outsized ego and a desire to be noticed.
But never forget and never underestimate the importance of money as a guiding
light in the newspaper empire of Conrad Black. As one Canadian reporter observed
a few years ago, "He'd publish a communist newspaper if he thought he could make
money with it."

"Acquiring is essentially a matter of what's available at prices that are
enticing to us," Black explained in an interview with cjr. Hollinger's
president, chief operating officer and longtime Black confidante David Radler
puts it a little differently. "There is no strategy here," he insists. "Just
opportunity."

Hollinger is "a kind of a mystery," newspaper analyst John Morton says. "For
a while it seemed willing to buy anything. But I don't think anybody has a real
fix on what they do and how they do it. They're a different animal among the
major publicly traded newspaper companies."

Described by some of his publishing peers as "a bottom feeder," Black is
newspaperdom's most relentless shopaholic. He is a master at gathering up small,
financially-challenged newspapers and, with prodding and pruning, turning them
into little cash machines, with profit margins averaging around 30 percent,
almost twice the industry average.

Journalistic wariness about Black is based not so much on what he has done
with his newspapers Ð beyond improvements at the Daily Telegraph, the
Ottawa Citizen, and the Gazette in Montreal, most of them are
editorially forgettable. Rather, it reflects his years of self-generated
overexposure in Canada, where Black has earned the reputation of a brazen
corporate swashbuckler and advocate of politically conservative causes.

"He is perceived in Canada as a bad guy because he shoots off his mouth and
people here don't go for that," says Richard Siklos, a correspondent for the
Toronto-based Financial Post and author of the biography Shades of
Black: Conrad Black and the World's Fastest Growing Press Empire. "He is a
guy who continually pushes the envelope, and in that regard he is like Murdoch."

Ahistorian, financier, author, commentator, and linguistic pugilist, Conrad
Black, by virtue of the strength of his personality and the unpredictability of
his company (revenue: almost $2 billion), may be the most watched man in the
newspaper business. "He wants to be very influential through newspapers," says
William Thorsell, editor-in-chief of the Globe and Mail, in Toronto.
"It's personal. I don't think he wants to do it because of his ideology. He
wants to play a great role, and he wants to express his power, like an
un-elected politician."

That was echoed by Jim Travers, the executive managing editor at the
Toronto Star and former editor of the Ottawa Citizen, who left the
paper shortly after Black bought it in 1996. "He wants to be the dominant media
baron of his age. He wants to influence politics without experiencing the
discomfort of running for office."

Much like his father George, a wealthy investor and brewery executive, the
precocious Black grew up in the comfortable surroundings of Toronto's upscale
neighborhoods and studied politics and military history. He was expelled at
fourteen from a Toronto private academy for selling exams, then went on to
Carleton College in Ottawa to study journalism but soon switched to history. His
budding interest in politics flowered during his school years in the Canadian
capital.

Black began his newspaper career in 1966, writing editorials for the
Eastern Townships Advertiser in Quebec. In 1969, he, Radler and a college
pal named Peter White scraped together $20,000 Ð most of it from loans Ð to buy
the money-bleeding Sherbrooke Record, a Quebec weekly. By adhering to
religious and ruthless devotion to cost-cutting, the Record was reporting
annual profits of over $150,000 in 1971. It was the Sherbrooke Record
where Black established his dedication to tightfistedness and the foundation of
modern day Hollinger. As Black wrote with pride in his autobiography:
"Practically every invoice led to an inquiry worthy of Torquemada. Every
conceivable item necessary to newspaper production was rationed, economized, and
made the subject of intense haggling. All disposable personnel expenses were
violently pared."

Still, newspapers remained a sidelight until Black obtained majority control
of the money-losing Daily Telegraph in 1986. Then, the conservative daily
had a staff of about 3,900. By 1993 it was slashed to 1,000. By 1990, the
Telegraph was one of the most profitable and widely read newspapers on
earth. Today it is one of the largest broadsheets in the world (circulation: 1.1
million).

The cost-cutting pattern would be continued in Israel, where Black bought
The Jerusalem Post in 1989; and in Chicago with his 1994 purchase of the
Sun-Times, where staffing was cut 20 percent within the first year. The
reporting staff of the tabloid is now 10 percent smaller (220 employees) than
when Black bought it, reports The Newspaper Guild. There has been no significant
shift in the Sun-Times's moderate editorial positions.

Black's tight-fisted reputation and run-ins with Canadian labor unions
generated concern among the Post-Tribune's 300 employees when Knight
Ridder announced it was selling the Gary paper to Hollinger. Hollinger had fired
an employee at the Benton Harbor, Michigan, Herald-Palladium who refused
to report to Chicago to be trained for possible strike-breaking duty at the
Sun-Times. About one-third of the Post-Tribune employees are
represented by three unions, including The Newspaper Guild.

Employees wanted to know if they'd have to reapply for their jobs. They got
no answer then, but many of their worst fears were realized in January when
Hollinger sent notices to employees telling them that, yes, they must reapply if
they wanted to work for the new management. No longer would employees be
required to join the union, and no longer would Hollinger continue the Knight
Ridder pension programs. As Hollinger prepared to close on the sale in early
February, about thirty employees Ð 10 percent of the workforce Ð had been
notified that their services were no longer needed.

Jerry Strader, who runs Hollinger's operation of small U.S. newspapers, says
Hollinger typically cuts the production and accounting staffs when it buys a
newspaper. In most cases, the company invests in technology upgrading Ð new
computers and presses Ð and increases the size of advertising staffs. Hollinger
profit margins are high. Strader says margins are about 30 percent at papers
between 5,000 and 10,000 circulation; 35 to 37 percent at papers between 10,000
and 50,000; and 23 to 27 percent at the weeklies. The papers are left to run
themselves Ð editorially as well. But each has a clear profit target and each is
expected to meet it. When the papers reach the peak of their profitability, they
are sold Ð as the November sale of 160 newspapers indicated.

The company's actions regarding The Jerusalem Post stand as a singular
and stunning example of financial and ideological restructuring. When Hollinger
bought the Post in 1989, the paper was politically liberal, over-staffed,
and losing money. The Post's editorial policy abruptly shifted to the
political right of the Likud party (to reflect the readership more accurately,
Radler argues). More than thirty reporters resigned in protest over the shift in
editorial leadership, and reporting positions were cut in half. Overall staffing
was reduced by more than half, to 210, from 450. Hollinger invested $10 million
in technological upgrades and the paper, Radler says, is making more money than
ever before.

Black describes Hollinger as "the greatest corporate friend Canadian print
journalists have." After taking majority control of the Southam newspaper chain
in 1996, he said: "We are, as far as I can see, practically the only buyers in
Canada of daily newspapers."

At a time when Black has become the juggernaut of Canadian journalism, his
record in Jerusalem has fueled some strong oversight of Hollinger newspapers in
Canada. A 1997 report by the Campaign for Press and Broadcasting Freedom, a
coalition funded by labor unions and The Council of Canadians (an advocacy group
for the preservation of Canadian culture), reported a series of significant
changes in the content of Hollinger papers since 1996. Among the findings:

¥ Heavier emphasis on business and parliamentary affairs and far less
coverage of labor, women's issues, and native affairs.

¥ Fewer stories and more pictures on the front pages of the papers.

¥ More lifestyle-type stories.

¥ Fewer female reporters

¥ A significant decline in quality in the smaller monopoly markets.

Critics and even those who admire Black, such as the Globe and Mail's
Thorsell, say the small papers are stripped of resources, with money saved there
funneled to the showplace cities like Ottawa, Montreal, and Vancouver, the
centers of power, commerce, and prestige. "If you're a reader in one of the
smaller towns or cities owned by Hollinger, you're finding your newspapers
aren't containing very much local news because they have downsized the staffs,"
said Ryerson's Miller. "Don't look at what Black says. Look at what he does.
There is zero training for editorial employees, no mid-career training, no
interest in professional development at Hollinger."

Black dismisses the criticism as "absolute bunk, a rear trench in the
inexorable retreat of our critics." His attackers have been guilty of
scaremongering, he says, with allegations that he would turn the papers into
extremist publications. And anyone who claims he's stripping his smaller papers
to upgrade the larger ones is dead wrong, he insists. "None of that is true."

But some of it is true, which Black later conceded in our interview. "It is
true that we haven't gotten around to the smaller ones in terms of editorial
upgrading, but you start with the big ones first . . . and we'll get around to
all of them eventually."

To the surprise of many, Black has put big money into some prominent papers.
In Ottawa, the once gray and dull Citizen has been re-energized. The
newshole is larger and the paper is brighter than it was under the Southam
leadership. The paper has a new weekly Sunday magazine, with lengthy book
reviews and essays. The newsroom staff is larger. "Hollinger poured a lot of
resources into the paper, and it certainly shows," says Peter Calamai, the
editorial page editor who was fired by Black in 1996. "Prior to Hollinger, I had
two editorial pages Ð an editorial page and an op-ed page. Now they have five
editorial pages every day."

Neil Reynolds, the Citizen's new editor, acknowledges the paper has
"definitely swung to the right (on the editorial page) from where we were
before. But overall, we're trying to provide a broad spectrum of views in the
newspaper."

"What the papers have is a ton of cheesecake," observes Travers. "It's tits
and analysis. Whoever has a big chest. Some days it will be the page one photo."

Skin is a part of the British tabloid heritage, although not carried in the
broadsheet press to the barest extreme it is in the tabloids. Black's Daily
Telegraph, the 142-year-old conservative standard-bearer in Britain,
recently had a Spice Girl displaying her cleavage on the paper's op-ed page.
That same issue had a lengthy feature front story, with a color photo covering
half the page, headlined why this oxford student became a stripper.

Black told Siklos in Shades of Black that the success he has had is
due in part to cutting non-editorial costs and "presenting Britain's gamiest,
kinkiest, most salacious, and most scatological news with apparent sobriety, but
with the most explicit, almost sadistic detail (involving) the indiscretions of
deviant clergy, the activities of paid flagellators, and the rest of the vast
English supermarket of unconventional sexual titillation."

This formula is certainly transferable to Canada, Black says. "I mean, for
God sakes, there is nothing that says these newspapers need to be completely
boring, you know," he told cjr. "We're not talking about exploitation or
anything demeaning or debasing to women." Regarding his critics, Black asks,
"Are we suddenly being taken over by a bunch of puritanical Victorians saying
that women have to cover their limbs?"

In Montreal, the Gazette has also had a face-lift. Joan Fraser, the
former Gazette editor who was ousted by Hollinger, praises what Black has
done since buying the paper. The newshole is larger, she says, and the Sunday
paper is better.

Through newspapers, Black's presence in Canada is pervasive. The front page
of the Citizen covering the 1996 Canada Day celebration featured a photo
of Black Ð all dolled up in broad-striped trousers, military jacket, and jaunty
cap Ð escorting Queen Elizabeth. "Mr. Black got his chance at pageantry and
appeared to perform admirably," noted the Citizen, which somehow
neglected in the 1,242-word story to mention that Black owns the Citizen.
Black insists he was not pleased with the photo of himself, and claims he would
have "been happy to pay five hundred bucks to anybody to keep my picture in that
get-up out of the Ottawa Citizen . . . . [But] what am I supposed to do?
Tell the Queen to get lost?"

Black also dismisses the ownership concentration concerns, arguing that
newspapers aren't the influential force they were in earlier decades. "I think
it would have been far more dangerous thirty or forty years ago when newspapers
had a far greater impact on the formation of opinion than they do now."

The potential for abuse, though, is inescapable, says Lou Clancy, the former
managing editor at the Toronto Star. "It may not necessarily be bad, but
the potential is always there for it to be dangerous."

Meantime, Hollinger is trying to convince Wall Street that it is more than
just a newspaper curiosity. While most newspaper stocks have ridden the crest of
the bull market, Hollinger stock has languished in the $10 to $14 range,
changing little from when the company went public in 1994. Quarterly earnings
are modest. Hollinger has jettisoned newspapers that didn't fit into its
long-term plans and reduced debt in an effort to satisfy Wall Street.

Black is undeterred. There is no master plan, no ideological agenda. "I don't
go around trying to stir up foreign wars," he says. "I want to be identified
with a high class operation, professionally and financially high class. It's not
so much influence, but a low level, unjarring notion of prestige."

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