Scandal rocks Hollinger empire

LONDON, Jan. 4 (JTA) — One of the world’s most vocally pro-Israel newspaper barons looks set to lose his media empire. In the wake of financial scandals, Conrad Black, who controls the Jerusalem Post, the Chicago Sun-Times and the Daily Telegraph of London, along with more than 140 smaller newspapers, almost certainly will have to sell at least some titles. Black’s Hollinger International is the third-largest newspaper group in the world in number of readers, behind Rupert Murdoch’s News Corporation and Gannett. Its 23 daily newspapers have a worldwide combined circulation of about 2 million, according to company figures. The Daily Telegraph is Britain’s best-selling quality daily, with about 900,000 copies printed per day. It also is one of the strongest supporters of Israel — so much so that many people assume Black is Jewish, which he is not. Under Black, the Telegraph was one of the first British newspapers to call attention to the resurgence of anti-Semitism, media commentator Alex Brummer said. “The Telegraph latched onto this stuff much earlier than some of the rest of the press and has tried to redress the balance,” said Brummer, a financial journalist at Britain’s Daily Mail who also writes a media column for the Jewish Chronicle in London. Eric Moonman, president of the Zionist Federation in Britain, praised the Telegraph for “providing a platform for a balanced approach” to the Middle East, “unlike the Guardian and the Independent,” which many Israel supporters see as hostile. But that may be about to change. In November, Black admitted that he accepted unauthorized payments of $7.2 million from companies he runs. David Radler, Hollinger’s president and chief operating officer, received a further $7.2 million, and two other Hollinger executives took smaller unauthorized payments, according to a company statement released Nov. 17. The money came from rival newspaper groups in exchange for promises not to set up competing publications. An internal investigation demanded by Hollinger shareholders found that the funds should have gone into company coffers, not executives’ pockets. Radler has resigned and Black has agreed to pay the money back with interest, the company statement said. But the internal investigation uncovered other irregularities that Black seems unlikely to weather. The scandal allegedly involves shifting money and debts between various companies Black controls and is now under investigation by the Securities and Exchange Commission, Wall Street’s financial regulator. A criminal investigation in New York also is possible. Black stepped down as CEO of Hollinger International on Nov. 21 after admitting to the unauthorized payments. He remains chairman of the Telegraph Group and non-executive chairman of Hollinger International. Hollinger has hired the Wall Street investment bank Lazard to review the company’s future. Brummer, the media commentator, said retaining Lazard was an indication that Black would not be able to hang onto his newspapers. “He has essentially admitted defeat by handing over to Lazard,” Brummer said. “It is possible he will be able to hang onto one or two titles, but it looks very unlikely.” A spokeswoman for Hollinger rejected Brummer’s analysis. “It is not a foregone conclusion that newspapers will be sold,” Molly Morse of corporate-communications specialist Kekst told JTA. “Lazard’s mission is to determine what’s best for shareholders,” she said, adding that the sale of some or all Hollinger titles was possible — but that none necessarily was on the block. A change in ownership could affect the newspapers’ editorial stance, since Black takes a strong interest in the content of his publications. Max Hastings, a former editor of the Telegraph, has written that Black regularly phoned him at home to discuss current events for an hour or more. Stephen Glover, a media columnist for the Spectator magazine, which is published by the Telegraph Group, also said the proprietor helped set editorial tone. “He hasn’t involved himself in the day-to-day sense in the editorial, but has been a presiding presence and a guiding hand,” he told the BBC. Possible buyers have been circling since word of Hollinger’s difficulties leaked out over the summer. Only one potential white knight has been mentioned as a possible buyer for the entire empire, the American financier Nelson Peltz. But many publishers — many of them Jewish — would be interested in buying some parts of the Hollinger stable. Richard Desmond, the publisher of Britain’s Daily Express and a Jew, is considered a leading contender for the Telegraph because he is co-owner of the printing presses the newspaper uses. Desmond reportedly has the right to buy the Telegraph’s share of the printing plant if the paper changes hands — which could leave any other new owner with no place to print the paper. Desmond’s status as a donor to Britain’s governing Labor Party may work in his favor if government-competition regulators consider a bid from him, experts say. The Zionist Federation’s Moonman said Desmond had been friendly and supportive of Israel as proprietor of the Express. But though he is unlikely to change the Telegraph’s pro-Israel stance, some Jews are wary of Desmond because he owns a number of adult magazines and television channels. New York media mogul Mortimer Zuckerman, a past chairman of the Conference of Presidents of Major American Jewish Organizations, has been mentioned as a possible buyer for some of Hollinger’s North American titles. Zuckerman, the chairman of the New York Daily News, is reported to be interested in the Chicago Sun-Times and the New York Sun, in which Hollinger holds a minority stake. Zuckerman is reported to be working on a joint bid with Associated Newspapers, the publisher of the Daily Mail in Britain. Zuckerman could not be reached for comment. The Washington Post also is considered a potential buyer of at least some Hollinger titles. Brummer said he doubted a change of ownership would substantially affect the editorial line of the right-leaning Jerusalem Post, which Hollinger has owned since 1988. He said that stance was partly a result of market forces, with the Jerusalem Post staking out territory on the right and the left-leaning Ha’aretz occupying the ideological left with its English edition. Similar market pressures could keep the Telegraph in Britain’s pro-Israel camp, he said. Moonman, for his part, said it was critical for any new owner to retain key members of the Telegraph’s editorial staff. “The essential point is that it provides some balanced journalism. A lot will depend on the quality of the columnists remaining” if the paper is sold, he said. “And anybody who is taking over would want to maintain the team.”