Will Ofcom cut its teeth on Telegraph succession?

Lord Black’s resignation as Hollinger ceo has put newspaper ownership in the spotlight. By Torin Douglas

So farewell, Lord Black. That at least is the verdict of the vultures now circling the Daily and Sunday Telegraph, measuring the newspapers up for size. Though their owner has resigned as chief executive of the papers’ holding company, Hollinger International, he remains its chairman and chairman of the Telegraph Group – but already the industry is looking to the succession.

Conrad Black, who renounced his Canadian citizenship to become Lord Black, is a press baron of the old school, keen to use his newspapers for political influence as much as profits. As well as the Daily and Sunday Telegraph and The Spectator in Britain – all papers of the right – he owns the Chicago Sun-Times and the Jerusalem Post. Now it seems the whole group, or some of its parts, could soon be under new ownership.

Black has controlled the holding company Hollinger International through a complex share structure that has long been criticised by large institutional shareholders. His resignation as chief executive – and those of two other executives – follows the discovery of almost &£20m of payments that had not been authorised by the company’s board or audit committee. Black has fiercely denied any allegations of wrongdoing and has said he will pay that money back with interest.

But the investment bank Lazards has been appointed to look at a number of “strategic alternatives” for Hollinger including “a possible sale of one or more of its major properties or other possible transactions”. The juiciest of those major properties is the Telegraph Group.

Potential bidders in the UK include Associated Newspapers, which publishes the Mail titles, and Richard Desmond, who owns the Express group of newspapers – though both would have to clear competition hurdles to buy the papers. The same would apply to the Barclay brothers, owners of The Business and The Scotsman. If the entire group were to be sold, the papers might be bought by an overseas publisher, such as the Washington Post.

Suddenly the issue of newspaper ownership is a hot topic again. Only last week, in a BBC interview, Rupert Murdoch declared that his papers might be prepared to switch their allegiance from Labour to the Tories, following the coronation of Michael Howard as leader. Some were surprised at this openness, since publicly he tends to insist that his editors edit their papers, even though everyone knows he takes a very close interest in those decisions. Others regarded it as a typically opportunistic chance to keep Labour on its toes, particularly over the issue of Europe, about which Murdoch – like Black – feels extremely strongly.

Chris Bryant, a Labour member of the culture, media and sport select committee, who takes a close interest in media policy issues, said Murdoch’s comment was worrying: “In the past it was assumed that his four national newspapers came to their own views, but he seemed to be suggesting he would swing all of his newspapers behind one party or another. If we go further down that route, that’s bad for British politics and social life.”

Others thought the real significance of the remark was that The Sun likes to back winners. If Murdoch thought Labour might be losing the support of the country, that would be bad news for Tony Blair.

Throw into this mix a possible takeover battle for one of the most successful – and politically aligned – national newspaper groups, and the whole issue of newspapers and politics is about to be thrust into the spotlight again.

The last big newspaper takeover was that of the Express titles by Desmond. He is now in a strong position again. The City believes he has the cash – with no debt, and strong lines of credit – to buy the Telegraph Group. He also jointly owns the West Ferry printing plant in east London which prints the Telegraph – and has first claim if the Telegraph should want to sell its 50 per cent stake. That means he has one foot in the door in any negotiations.

Black would not welcome a Desmond takeover. There has been criticism of the way the Express owner does business, his support for Labour, and some of his other publications, such as Asian Babes. At a lunch some months ago, with the former Mirror editor Roy Greenslade and others, Black, when asked if he might sell the Telegraph to Desmond, declared after a long pause: “Never, never, never, never, never.”

Black may not have the power to stop it, even if he retains his chairmanship of the Telegraph Group. More interesting is the question of who might have that power. For the Telegraph takeover – should it come to that – will take place just as the Government’s long-heralded shake-up of media regulation takes effect. On December 29, Ofcom opens for business, and it is still not entirely clear exactly what role it will play in newspaper takeovers.

Any takeover of a national newspaper by an existing UK publisher is automatically referred to the Competition Commission to see if it is in the public interest. But under the Communications Act, Ofcom will be required to assess any merger’s effect on “accurate presentation of news and free expression of opinion”.

We are still waiting for the Government to publish its guidance on how such an assessment might be made. With a takeover of the Telegraph imminent, that guidance will be scrutinised with even greater interest.

Torin Douglas is media correspondent for BBC News

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