Canadian newspaper company Hollinger Inc. has quietly become the third-largest chain
in the world. Among its titles are the London Daily Telegraph, Jerusalem Post and Chicago
Sun-Times. Some aspects of Hollinger's operations have alarmed observers, however. Its
strategy of making drastic job cuts and its imposition of a right-wing editorial stance
on its newspapers has also been seen.

Introduction
 
The third-largest newspaper chain in the world, by circulation, is also the fastest-growing. Hollinger
Inc. has outgrown its native Canada and gone international, boasting some of the world's most prestigious
titles, including the London Daily Telegraph, the Jerusalem Post and the Chicago Sun-Times. Unlike some
newspaper owners who are hedging on the electronic side, Hollinger is betting heavily on print and is
expected to soon add a prestige title to its U.S. holdings, probably in New York.

Hollinger's 1997 profits topped US$100 million, more than double the previous year's earnings.  Headed by
the controversial Conrad Black, who has been called "the Darth Vader of Canadian Journalism,"  Hollinger
owned more than 340 newspapers in the U.S. through its subsidiary American Publishing Co. before selling off almost half its titles late in 1997, mostly smaller weeklies and free-distribution papers. The divestiture reduced Hollinger's world-wide circulation by 900,000 to 4.3 million , behind only Gannett, with 6.6 million, led by its national newspaper, USA Today, and Rupert Murdoch's sprawling News Corp., which spans three continents and sells 7.1 million issues daily,  including the New York Post and five national newspapers in England, from the upmarket Times to the downmarket Sun. Although most of Hollinger's remaining U.S. titles are smaller concerns, the centerpiece is the 500,000-circulation Sun-Times, the eighth-largest daily in the country.

But two aspects of Black's proprietorship have many worried in towns whose newspapers he acquires. First, his far-right politics have a way of trickling down to his newspapers. But what troubles journalists most is how Hollinger cuts a swath through every newspaper it acquires, eliminating jobs and trimming costs to fatten the bottom line. The effect on journalism everywhere Black has gone has been detrimental, with a few notable exceptions, such as at his prestige title, the million-selling Telegraph, where payroll cuts were made mostly on the production side after the unions were eliminated and money has actually been injected into the editorial side.

As a youth, Black became enamored of William Randolph Hearst and has since shown a Midas touch in business that may soon see him surpass his role model both financially and politically. Those who know him best doubt he will stop until he's surpassed every possible rival.

Perhaps due to Hollinger's reputation as a job-slashing, reactionary proprietor, Sun-Times publisher Sam McKeel saw fit to issue a full-page statement on the subject shortly after the Canadian company bought the paper for $180 million in late 1993.
 

American Publishing and its parent, Hollinger, have a well-deserved reputation for letting local management make operating decisions ranging from the editorial policy of the newspaper to dealing with labor unions... During the last five years, we have positioned the Chicago Sun-Times as an independent newspaper with a conservative approach to fiscal policy and a more populist viewpoint on social issues. We plan to continue that philosophy.
 

After acquiring the Community and Star chains of weekly newspapers along with the Sun-Times, Hollinger acquired another Chicagoland title, the 60,000-circulation Daily Southtown, from the Pulitzer chain. The result has been some sharing of stories between the papers and fears that production will be similarly consolidated.  Then, in October, 1997, Hollinger further expanded its Chicago-area empire by adding the 70,000-circulation Post-Tribune of Gary, Indiana.

On the editorial side, Radler installed Nigel Wade from the Telegraph as editor of the Sun-Times, then appointed Black's wife, Barbara Amiel, vice-president of American Publishing in charge of improving editorial quality. A self-styled "fascist bitch,"  Amiel is a former Toronto Sun editor who now writes a column for the Telegraph and is at least as right-wing as her husband, whom Margaret Thatcher once commented was even more conservative than herself.

The Sun-Times scenario is beginning to look familiar to those acquainted with Hollinger's modus operandi and what lies ahead there can perhaps best be predicted by looking at what has happened with the company's other acquisitions.

This paper will chronicle the rise to international prominence of a small Canadian company. It is a case study of how quickly and quietly a newspaper chain can ride the twin economic trends of ownership concentration and chain expansion inherent in the newspaper industry to the point where it becomes a dominating force in the industry world-wide.

Canada

Black prides himself on the fact he started his newspaper empire with his own money, buying a small paper in his native Quebec along with Radler and another school chum in 1969. Sterling Newspapers grew into a modest nine-paper chain during the next 15 years while Black spun his $7-million inheritance from the death of his father, a brewery magnate, into a $300-million fortune.
 
But his takeover tactics gained him little but scorn in his home and native land. He wrested control of a giant holding company, Argus Corp. -- in which he inherited an interest -- from the widows of its principals, then sold it off piecemeal for profit. One of his more questionable moves involved the skimming of a $38-million surplus from the pension fund of the Dominion supermarket chain he controlled through Argus, which led a court to order him to put the money back -- with interest. Following negative publicity resulting from this debacle, Black penned a column in the Toronto Sun in which he characterized investigative reporters as "swarming, grunting masses of jackals."  Of one particular journalistic nemesis, Black opined on radio that she should have been "horsewhipped."
 
His lack of affection for reporters has been on the record for almost 30 years, as he weighed in with this unsolicited submission to the 1969 Canadian Senate Committee on Mass Media shortly after becoming a newspaper proprietor:
 

My experience with journalists authorizes me to record that a very large number of them are ignorant, lazy, opinionated, intellectually dishonest and inadequately supervised. The so-called "profession" is heavily cluttered with abrasive youngsters who substitute what they call "commitment" for insight and, to a lesser extent, with aged hacks toiling through a miasma of mounting decrepitude. Alcoholism is endemic in both groups.
 

Their first major purchase, the near-bankrupt Sherbrooke Record for $18,000 in 1969, saw its payroll immediately cut more than 40 per cent.  The money began rolling in and Black and Radler became sold on the profitability of newspapers. By 1973 Sterling was worth $20 million and owned 42 per cent by Black and 25 per cent by silent partner Peter White.

Third man Radler, who has been described as a "human chain saw"  for his cost-cutting prowess, once explained his strategy as manager:

I visit the office of each prospective property at night and count the desks. . . . That tells me how many people work there. If the place has, say 42 desks, I know I can put that paper out with 30 people, and that means a dozen people will be leaving the payroll even though I haven't seen their faces yet.

Under Thomson, reporters were expected to write 40 stories each, per month. Under Hollinger, this has doubled, "plus editorials and taking pictures and writing opinion columns," she said. As for local news content, she said: "They have people there who are doing nothing but re-writing press releases and tossing these off as local news."
 

In March, 1996, Hollinger bought two the two largest dailies in Saskatchewan from the Sifton family, which had owned the Regina Leader-Post and Saskatoon Star-Phoenix since the 1800s. Two days after the deal closed, 182 jobs were eliminated, including 89 of 350 employees and 24 of 63 in the newsroom at the Leader-Post. More disturbing to some was the way the firings were executed. One fired reporter described the scene at an off-premises site:
 

They told us Friday of a big meeting Saturday. When we showed up, we were all shuttled into four different rooms. One problem was, some people were sent to the wrong rooms. Two of my newsroom colleagues were among those who ended up going out of the Death Room.

But while Black was achieving newspaper success outside Canada, the major prize in his own country kept eluding him -- the Southam chain of 18 quality dailies. Fearing a takeover in the mid-1980s, Southam had devised a "poison pill" agreement with the Toronto Star which made it less attractive to predators. Black bided his time but continued to covet Southam, which includes such titles as the Vancouver Sun and Montreal Gazette.

In the meantime, he purchased the prestigious monthly magazine Saturday Night for $1.4 million in June, 1987, as insurance against the day Southam would be available. In his autobiography, Black explained the move as "partly to quiet the Canlit set in the event that we assaulted the unholy and uneasy (poison pill) alliance between Southam and Torstar."  Black had wanted to retain the magazine's esteemed editor, but he quit when Black's intentions became obvious.

 
He was particularly put off when White and Black each pulled out copies of the magazine's payroll list and asked the editor to go through it and grade employees as Excellent, Good or Fair.
 

Also in 1987, Hollinger bought 20 per cent of the weekly business newspaper The Financial Post from the Toronto Sun chain. Black unsuccessfully urged his new partner to turn the paper into a daily, to be marketed nationally in competition with the nationally-marketed Toronto Globe and Mail and its included Report on Business.

Black made his assault on Southam gradually, first buying Torstar's 20 per cent after the poison pill arrangement expired, then buying a similar share from another stockholder in 1996 for $294 million (Canadian) which, although less than 50 per cent, gave him effective control. That was not enough, however, and in 1997 Black moved to acquire majority ownership with a twice-sweetened offer to shareholders, about the same time buying the hitherto-independent Halifax Daily News.
 
That gave Black control of 58 of Canada's 104 dailies, prompting one staff member of the 1980 Royal Commission on Newspapers to comment that the "nightmare scenario" that body had feared was finally unfolding.  Later that year, following a Canadian Broadcasting Corporation television documentary on him entitled "The Paper King," Black drew fire for ordering his papers to print his reply, even to the point of dictating the headline.  Black's stewardship has brought criticism that "homogeneous right-of-centre views had become the order of the day at Southam papers."
 
A 1997 analysis of content changes in Hollinger papers in Canada concluded they showed:

 
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 [and] a significant decline in quality in the smaller monopoly markets.
 

But Black wants more and, unable to convince the Toronto Sun chain to sell him The Financial Post, in which he held a 20-per-cent interest, he instead sold his share and plans to start his own national daily.
 

For Black, the idea of a Toronto-based national daily has two attractions: it would finally give him a paper in the country's largest market, and it would be relatively cheap to print and distribute elsewhere thanks to Hollinger's 51-percent stake in the venerable Southam.

Black moved into the newspaper major leagues in 1985 by buying the then-troubled Daily Telegraph and its sister publication The Sunday Telegraph for $60 million. After having lost money for five years before Black bought it, thanks to the his cost-cutting measures, Telegraph plc's annual profit soon exceeded its purchase price and the acquisition is widely regarded as a stroke of genius.

The fortunate part was getting in just as others were taking on the powerful unions and moving out of Fleet Street to cheaper premises. By riding that movement and simultaneously computerizing operations, Black was able to cut costs enormously. He also effected economies of scale by combining operations with the previously-separate Sunday Telegraph.
 

The transformation was remarkable. Before March, 1986 the Telegraph staff had numbered 3,900, including part-time casuals and about 500 journalists. By 1993, the total staff would be slashed and whittled down to roughly 1,000.

It was the death of Fleet Street and the dawn of a newspaper cash machine capable of funding its owner's desire to pursue the acquisition of practically any newspaper in the world.

Hastings felt a growing sense of terror as he realised he had marked off about half the names on the list. . . . Hastings reckons most of the names he had ticked off on the train ride home were gone within six months.
 

Meanwhile, the profits kept rolling in to finance Black's acquisitions elsewhere -- L37.5 million in 1992, L42.9 million in 1993, L27 million in 1995. But then Black was drawn into a murderous price war with rival Rupert Murdoch, who had achieved circulation success by slashing the cover price of his downmarket Sun tabloid. Murdoch tried the same tactic with his upmarket Times and almost doubled its 350,000 circulation, to the point where Black moved to cut the Telegraph's price to match in 1993. The marketing campaign to keep circulation above the psychological million mark -- which included free cases of wine and tickets on the "Chunnel" train to Europe -- has cost Telegraph plc an estimated L19 and almost wiped out profits, which came in at only L940,000 for 1996.

Jerusalem

When the owners of the financially-troubled Jerusalem Post got a fax from Canada in April, 1989, making an offer to buy the paper, they thought the bid of $20 million was a typographical error. After all, the the highest offer to that point had been $8 million. When the figure was confirmed, it aroused suspicions that there were political motives behind the purchase.

But when Radler, who is Jewish, visited from his offices in Vancouver, he assured the editor that Hollinger would not interfere with the paper editorially.
 

Its policy, he said, was to leave editors alone. It wanted profitable newspapers, but it did not impose itself on editorial content. What was important about Hollinger, he said, was the absence of middle management... "There's nobody available to interfere with your editorials," he quipped. "And you guys live here."
 

Things changed quickly at the previously-liberal Post. The new publisher installed a time clock in the newsroom and began referring to the newspaper as a "factory."  It was not long before the editor, who had been promised freedom from interference, was being pressed to run right-wing editorials by the new publisher.
 

He wanted a newspaper that served and reflected the prevailing nationalist temper and did not criticize occupation or settlement of the West Bank or Gaza. Like his bosses, he had little respect for journalists and what he considered their pretensions to know better.
 

Radler installed a new editor more to his way of thinking and soon the paper had "shifted sharply to the right, in editorials and, more subtly, in the choices and accents on its pages."

The publisher, for his part, explained the change in editorial direction this way on the occasion of his retirement seven years later.
 

We have changed the habit of allowing reporters to insert their political views in their reports and we have made room for the full range of legitimate political views to be expressed on our pages.

Black's reputation preceded him Down Under, and all hell broke loose in 1991 when word got out that the Canadian was about to buy an interest in the John Fairfax Group, Australia's largest newspaper chain. 
 

On Oct. 16, nearly 500 striking journalists in Sydney were busy handing out thousands of inflammatory handbills titled "A Black Day for Australia"... The protesting employees fear massive layoffs and a rightward shift in the papers' editorial direction... Following the handbill incident in Sydney, he sued four journalists for defamation.
 

Black became the central character in one of the most vicious and highly-politicized takeover battles that Australia has ever seen. By the time it was over, Black would have crossed swords with no less than three prime ministers, legions of journalists and bitter corporate rivals.
 

The published remarks caused an uproar in Australia, especially as several weeks after Keating was re-elected the previous year, Black had been allowed to increase his stake in Fairfax to 25 per cent, "amid protests from some journalistic and parliamentary quarters that the papers had declined in quality since Black's group had taken control."

Black then claimed in an article he wrote for the Fairfax papers that Keating had only said he might support increasing his ownership to 35 per cent. But his use of quote marks around the word "balanced" was not meant to show that the prime minister had used that word, Black said, adding that the word was instead his own interpretation of what Keating meant.
 

With a single word, he set off a massive public and political controversy, culminating in a full-blown senate inquiry that would dominate the headlines in Australia or weeks in early 1994.

We're disppointed that we were sandbagged. But we're highly consoled by a tax-favored capital gain of nearly $300 million... It's not a politically mature jurisdiction and foreigners should understand what they're getting into there. I'm not one who has an exaggeratedly lofty view of politicians, in general, but politicians in Australia as a group are at another level altogether.
 

By far the majority of the newspapers Hollinger has acquired have been in the U.S. By 1995, it ranked as the 12th-largest chain in the U.S. by circulation, but second-largest by number of titles.  Late in 1996, however, Hollinger sold off fully half its titles, mostly smaller newspapers, including 77 free distribution weeklies. The sale of 170 titles to a Los Angeles-based bank netted the company $310 million, which was to be used to pay down debt.

Hollinger's strategy had been to buy smaller papers, typically in the 4,000-15,000-circulation range, then cut costs. Its rule of thumb has been that labor costs should not exceed 30 percent of revenue, compared with 40-50 percent throughout the industry.

Most of the acquired titles were in the U.S. Midwest "rust belt," leading Black to have translated into Latin the phrase "In Rust We Trust" for the motto of Hollinger's American Publishing subsidiary.  According to Black, Hollinger's owners
 

always essentially believed in Reaganomics. We always believed in the economic recovery of the so-called Rust Belt, and we knew that daily newspapers could be profitable down to 4,000 circulation or even less.
 

Hollinger's right-wing politics haven't hurt the company acquire papers, at least in the South, according to Radler.
 

One of the reasons their conservative owners let us buy them is that they felt more comfortable selling to us than someone else. We now own seven papers in Mississippi and I know we got the Meridian Star over two higher bids strictly because we're so conservative. Our ideological reputation has been a real plus for us.
 

Radler will cut costs anywhere. When he assumed control of the Sun-Times he found one six-figure expense staring back from the balance sheet that he had no problem cutting. "We were spending $350,000 on the American Newspaper Publishers Association. Do I have to tell you? I'm no longer a member."

Of the friction at the Sun-Times that saw eight senior editors leave within a year, Radler mused:
 

Some of my American Publishing executives are a little rough around the edges, okay? In mean, they come from a background of entrepreneurship, okay? They don't have the style or the presence –  presence isn't the word, there's probably too much presence -- that these kind of people are used to.

We give the people what they want. I don't try to determine what's good for them - and that's the difference - because so many publishers put in all that liberal nonsense and then wonder why circulation's dropped.
 

They don't have to take her copy. But they aren't stupid. Not publishing her column is hardly a career-advancing move. Also, the papers are far more supportive of free enterprise than they used to be.

Those who have watched Black's relentless rise to power the longest harbor the least doubt he will use his newspapers as vehicles for his reactionary views. Peter C. Newman, arguably Canada's foremost journalist, who wrote the first biography of Black in 1982 and has tracked him closely in print ever since, says there "isn't the slightest doubt that he intends to use his newspapers to influence public opinion to back his conservative view of life."

Newman sees Black's effect on journalism as deletirious and insidious. "The extent to which Black interferes with editorial departments (is) he appoints editors whose ideology he trusts, then allows them their freedom."  The greatest danger in his control of the press stems from Black's cost-cutting mania, according to Newman.
 

That penny-pinching syndrome allows Black to control the contents of his papers in another essential way: reducing their budgets means they can't afford any investigative initiatives.
 

He is one of the few people I know for whom attaining power is an all-consuming goal... he will apply his economic clout to repress what he considers the moral wrongs of the world.

With the Blacks increasingly residing in New York, it is only a matter of time before another large American acquisition joins the Hollinger fold.
 

The United States Constitution was designed to extend rights to American citizens, but its First Amendment states: "Congress shall make no law . . . abridging the freedom of speech or of the press." The effect has been to open unfettered press ownership not only to Americans, but also to non-Americans. Perhaps a question to be asked is what percentage of the U.S. press can acceptably controlled by foreign interests before restrictions are considered.