If Conrad Black turns to Wall Street to finance his shares buy-back, it’s not because the City of London no longer loves him, says George Pitcher

Newspapers have been in the business of making the news this year. So it was little surprise last week that The Daily Telegraph overshadowed its financial results with news that proprietor Conrad Black intends to buy back the 42 per cent of the company that trades on the London stock market.

Some old City bores would like to think Black has been “blackballed” by the respectable chaps, who thought that his sale of 12.5 million shares in The Telegraph shortly before slashing its cover price was not the sort of thing we do in London.

But the City isn’t like that any more. Witness controversial manoeuvres such as Swiss Bank’s “contracts for differences” device in its bid for Northern Electric, and Morgan Stanley’s attitude to the sacred British institution of pre-emption rights for shareholders.

No, Black hasn’t been blackballed. He needs to raise capital and perceives that it will be easier on Wall Street than in London. Notice how and where American Publishing – the quoted Hollinger subsidiary charged with acquiring The Telegraph – goes about raising the necessary ú250m .

The cash is certainly not coming from earnings at the newspaper. Last week’s figures showed a 16 per cent drop in pre-tax profits in calendar 1994 and operating profits more than halved to just over ú20m. The dividend remained unchanged. Shareholders are counting the cost of the price war with Rupert Murdoch’s Times Newspapers.

Yet The Telegraph’s shares jumped 54p to 434p on the back of the prospective bid from American Publishing. Remember that The Telegraph was the model for The Daily Beast in Evelyn Waugh’s Scoop. So is Black a busted flush in the City of London? Up to a point, Lord Copper.

Elsewhere in the media sector, news has been thin. New media is not always good at making its own news, and it has been a week of small earthquakes with not many killed. Take BSkyB, whose shares fell back last week following heady flotation after-market trading. The quote is knocking around the 250p mark after a post-issue high of 279p.

Some ascribed this to nervous wobbles relating to BSkyB’s “downstream” potential in terrestrial operations. But it was not so long ago that the market was talking about BSkyB’s real future being in the trading of global programming rights. BSkyB’s recent share price flaccidity is about profit-taking. It’s no more complicated than that.

Reed International, by contrast, has been rather buoyant of late. Again, there is no sexy story behind this, no hostile takeover bid being mooted around City parlours. What pushed Reed’s price up 15p to 746p is the growing recognition that the stock has not, as common perception would have it, been oversold. In fact, the company is offering long-term growth opportunities.

So I can exclusively reveal that Conrad Black is not about to bid for Reed.

George Pitcher is joint man- aging director of media con-sultancy Luther Pendragon.


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