Black, Conrad (Profile)David Radler is on the phone from Vancouver. It is Saturday, but no matter, Radler is in the office anyway, the cruddy one on West 5th Avenue, the one littered with tacky memorabilia of the Grand Ole Opry and near-ancient business deals. He is blustering in that venomously verbal style of his. "It's the same crap all over again," he says of this latest request for interview time. "I'm starting to feel that I'm overexposed, and surely to God Conrad's overexposed." Any media treatment, he says - and this conversation was prior to the two-part series that ran recently on CBC TV's 10 o'clock newsmagazine slot - will only personalize BLACK, the newspaper baron, and his baronet, Radler. And what, pray tell, is wrong with that? "They expose us as human," he says. "That can't do any good. People lose their fear." David Radler is enjoying this.
Conrad Black moves smoothly into the French yellow, damasked and mahogany stateroom in the headquarters of Hollinger Inc. in downtown Toronto. It is true, as he has maintained, that he does not have horns, that he is not cloven-hoofed. But this is the only absolute.
He holds out a copy of an opinion piece, which he has written and is about to force-feed to the 58 daily papers he now controls in this country. He will even fax it to The Financial Post, which he does not control - he owns 20 per cent - but which will run it anyway. This is Black's response to the CBC and its two-part report, the one that, he says, attempted to "demonize" him as a horn-sprouting, ground-pawing extremist and annexationist out to contort the editorial views of the papers he now owns, which, tallied, account for 43 per cent of the country's newspaper circulation. "The prospect of the varying of the virtual monopoly the soft left has had on central outlets of information in Canada has presumably motivated them to this fantastic imputation of a conspiracy to a coup de presse," says the piece. It would be a mistake to describe the riposte as perfectly Conradian, for it fell flaccid compared with his other works. It is fair to suggest, judging from the letters it prompted, that someone should have told him not to write it. Many readers argued that Black's heavy-handed op-ed tactics only supported the fears that he would editorially storm-troop his papers.
But Conrad Black is not one for advisers, handlers or flunkies. He arrives for interviews buck-naked, in public relations terms. And he proceeds to present the predictable case for why newspaper readers have nothing to fear from Hollinger's takeover of SOUTHAM INC., which finally advanced the Black group in Canada from its collection of small to midsized papers to the mass market dailies that have been the Southam trademark. This week, Hollinger will mail to Southam shareholders an offer to purchase a further seven million Southam shares, which, if successful, will nudge Hollinger's stake above 50 per cent, a move that, says one industry analyst, will make Black "10 feet tall and bulletproof." Concurrently, Black has swept seven Atlantic papers, which he bought earlier in the year from THOMSON CORP., into the Southam group, giving the company coast-to-coast coverage. The long view is to build a worldwide paper chain, satisfying the advertising needs of 200 transnational companies. "Whether it's Chevrolet or Coca-Cola, we're going to have to satisfy them," says Radler. "That doesn't change the content, but as an organization we're going to have to have a world presence."
Ten years ago, Hollinger had not much of a paper presence at all, save for a smattering of West Coast titles huddled together as Sterling Newspapers. "Do you realize this whole company, as we know it, is only 10 years old?" asks Radler. "Now, we're the third-largest newspaper company in the Western world," after Rupert Murdoch and the Gannett chain. "And Gannett is only in the United States, and Murdoch is really only in Australia and England. I mean, we are serious players today."
Black and his cohorts got serious 11 years ago, to be precise, when they started buying into the Daily Telegraph in London. They picked up the Jerusalem Post in 1989, a 15-per-cent piece of Australia's Fairfax chain in 1991 (Hollinger has 25 per cent today), and, in 1994, bought out the Chicago Sun-Times, the number 2 daily in the third-largest U.S. market. The peripatetic Radler, based in Vancouver more than anywhere else, but not really based anywhere, is its publisher. Those papers have now been mixed in with the small to middling papers that Radler avariciously gobbled in the United States over the past decade to form Hollinger International.
Now, Radler and Black are clarifying the vision in Canada. Southam is its centrepiece, which is why Radler and Black are now perusing the 1997 budgets for the likes of The Ottawa Citizen, The Edmonton Journal, the Montreal Gazette, The Vancouver Sun. The power of these Southam papers has long tantalized Black. In November, 1992, he picked up a 23-per-cent stake from TORSTAR CORP. What Black had not counted on was the subsequent arrival of Paul DESMARAIS's POWER CORP. Each wound up holding just shy of 20 per cent of the company. Last August, Hollinger took Power out. Now, Black and Radler have it all. And no, says Black, that does not mean there has suddenly grown cause for concern about media concentration. "Newspapers don't have as much influence to alter or lead public opinion as they once did," he says, citing the increased power of electronic media. Besides, he adds, the price of playing editorial dictator is far too great. Look at The Observer in London. "When Tiny Rowland got hold of it and used it as a flying carpet for all his vendettas, the circulation steadily declined," says Black, repeating almost word for word what he wrote in his 1993 autobiography, A Life in Progress. "You can't use franchises in that way in a serious country without paying a heavy price."
In an earlier telephone interview, Black was somewhat more florid, lamenting what he views as the press monopoly of the "bland, uncontroversial, victim-culture left," including the CBC, which has cast him as an "odious," "monstrous," "extreme," "overbearing," "authoritarian," who "puts on funny uniforms with arm bands and marches around the room with a riding crop." Rather he sees in himself a newsprint savior. "There isn't exactly a queue or stampede of people to buy these papers," he says. Hollinger is anteing up, while "Ken THOMSON, Desmarais and Ted Rogers are running for the exits and Torstar and [Pierre] Péladeau are sitting on their hands." He finds it a "bit rich" to have to take "this flak from the left" while answering to an investment community that is questioning the very big bet that Black has made on the newspaper trade. In the past year, Hollinger has spent $500 million on acquisitions, $294 million of that on Southam.
The flak from the left comes in part from Maude Barlow and the COUNCIL OF CANADIANS. In September, Barlow's group sued the federal government, seeking a judicial review of the Competition Bureau's approval of the Southam takeover. "They rubber-stamped it," says Barlow of the bureau's advance ruling. "I think it's because they all went out for drinks at some nice restaurant in Hull." The result, she says, is that the diversity of the country's media is getting squeezed. The Hollinger style, which in Barlow's view consists of staff reductions from such crucial beats as labor, health and education, leaves news holes fed by stock national chain footage of the type produced by rightist columnists Andrew Coyne of Southam News and Black's wife Barbara Amiel, who, says Barlow, "sits in her mansion and writes." And so, Barlow says, "The whole notion of a plurality of voices is not carried... . I think you're going to see a groundswell of concern across the country. There's nothing to stop this guy from buying your paper, and that's not right. That's not democracy. That's an illusion of democracy." Barlow's group wants to see the Southam takeover rolled back. Barlow says that under the right legislation even Southam itself could be seen as too mighty.
But it would be a mistake to cast this story as simply about left versus right, as much as that battle fuels Black's own verbally combative bent. It is more about the evolution of newspapering. In Read All About It!, American Pulitzer Prize-winning journalist James Squires lamented the passing of the era of entrepreneurial paper proprietors into the maw of faceless, multimedia corporate titans that replace investigative reporting with lightweight entertainment stories. Black is not that, says Squires. Instead he is an industry oddity, focusing almost solely on newspapers, at least thus far. While Black muses about buying in big to other media one day, he is, for now, a press man. And that is what gives him the look of the press barons of early American journalism, of William Randolph Hearst and Col. Robert McCormick, the proprietors who did shape public opinion. Black, says Squires, "is probably the lone remaining press baron in the world."
But Black is not solely that. He is, rather, a hybrid. On behalf of Hollinger, Radler squeezes profits from the small circulation papers, turning them into cash spinners, then financing further purchases on that cash flow. Yet Black has been true to his word of maintaining high journalistic standards at the Daily Telegraph in London. At least in some markets, Black recognizes that the readers are as important as the shareholders. Now, he has started to play his hand with Southam. As Squires sees it, having so many papers in the control of one company is certainly not ideal for Canadians. But it is not necessarily bad, given the rather bleak alternatives. And newspapers could have a strong future, if you believe, as Squires does, that even with competing media "we're still a poorly informed society in terms of knowing things we ought to know." Squires spent 8 ½ years as editor of the Chicago Tribune. He knows the recipe for good newspapering. "The essence of journalism," he says, "is journalists and space."
David Radler and Peter White are being chauffeured in a Lincoln Town Car by a guy named Bill from the stately Hollinger manse at 10 Toronto St. to the brick bunker offices of Southam at the top end of the city. It was Black, White and Radler who started the paper caper in the first place, in 1969, when they bought the Sherbrooke Record. Of the threesome, White has been the least visible, his official title executive vice-president of Ravelston Corp., a private holding company. While Black has been the front man, Radler has been the human chain saw, the operative who moves into newly acquired properties and gets them right-sized. This is not how he describes it. "I make trips. I visit publishers. I try to bring a little bit of Hollinger into their lives." Mr. Black, Mr. White and Mr. Radler: corporate Reservoir Dogs.
Earlier in the day, Radler had addressed the Maude Barlow charges. There is no right-wing agenda, he says. "It would be dumb business to do what she suggested and we're not dumb businessmen. You've got to be relevant in the community. Let's assume we eliminated any liberal thought from The Edmonton Journal. We'd pay a terrible price. People would stop reading it."
But then, Radler is a bit of a Journal fan, as opposed to his broader take on the Southam group. "They were zero newspapers," he says. "What really bothered me about half those newspapers is that they really didn't have a view. They were sitting there with no views at all." He describes Journal publisher Linda Hughes as "one of the brighter stars in the Southam stable." Hughes moved up to publisher after Don Babick went west to manage Southam's Vancouver properties, the Sun and The Province. Radler and Black are keen on Babick, who is now president of Southam. Hughes says she and Radler talked in only the most "general way," when he toured through that newsroom in mid-October. There has been no high Black handedness there, she says. And while "it's fair to say that when ownership changes, people worry," change is nothing new to Southam.
That is putting it politely. Southam had been a mess since the mid-'80s. The company lost its leadership keel when Gordon Fisher died of cancer in 1985 after running the Southam shop for a decade. Southam quickly sold a near-quarter share of the company to Torstar, publisher of The Toronto Star, a defensive manoeuvre by the Southam board, which spied such corporate intruders as Conrad Black waiting to swoop in on the vulnerable paper empire.
The subsequent years were torturous. The recession brought collapsing advertising revenue. Circulations fell and chains such as Southam and Gannett desperately sought solutions from management consultants and readership task forces. Newspapers were once a business of immovably fat profit margins. They were no longer. In 1991, Southam lost $153 million.
In stepped a fellow named Bill Ardell as chief executive officer, the first non-Southam family member to run the firm. Ardell had come up through Southam via the low-rent Coles bookstore chain, which he had turned around, in large part by what corporate types call "cost containment." Ardell's appointment to the top job caught insiders and outsiders by surprise, chiefly because Southam was always seen as an ardent defender of editorial quality, a subject about which Ardell admittedly knew nothing. He quickly spooked the Southam ranks by describing the company as "mediocre." It was Torstar then that was demanding that Southam get fixed, that it get some return on its investment. It didn't. Torstar sold its bit to Hollinger. "As much as they didn't love us," says Radler of the Southam directors, "they didn't love them." Adds White of Torstar: "They'd had it."
Three months after Hollinger stepped in, Ardell announced a three-year plan for Southam staff reductions of 1,550. Two months after that, in March, 1993, Power bought into Southam. "Let's get this straight," says Radler. "We were more than willing to have a fifty-fifty deal with Power. We were reconciled to a fifty-fifty deal, OK?" But the Hollinger group wanted faster improved returns; the Power group was more the patient investor. Says White: "The way I look at it, Paul Desmarais has always been a passive investor his whole life. He never invested in a company to run it. He always says, 'Let management do their job.' The trouble was management wasn't doing their job."
That would be Ardell, whom White calls a "generalist," and whom Black refers to as someone who "didn't have any particular feel for newspapers as a product, or particularly strong views on how to write or edit or promote them." White suggests that hiring a generalist would not be Hollinger's style, but the company had done just that in Australia, where Bob Mansfield, a telecommunications type, was put in the CEO's chair at Fairfax. He lasted six months, before "retiring" at the age of 44, to be replaced by someone from Rupert Murdoch's News Corp. Worse, in the narrow sights of the number-crunching Radler, Ardell had hired a bunch of highly paid generalist lieutenants. "Let me give you a statistic," says Radler. "Southam's costs of operating their head office was about four per cent of sales. We can operate the Hollinger group of companies at about 1.1 per cent. Somewhere along the line there was a $25-million nut. That had to be addressed."
Radler started "getting in management's hair," as he puts it, to accomplish that and more. But when Power initiated a proposal to have Hollinger assume ownership of the smaller papers, leaving Power with a larger piece of the remaining company, Black and Radler jumped at it. Or so it seemed. Smaller papers are Radler's forte. He built the company's U.S. publishing group to more than 100 daily papers; more than 340 papers when the biweeklies and shopping guides are added. And they would be rid of the Southam headache.
"These guys are used to stuff they own outright and don't have to ask anyone else," says Adam Zimmerman, an outside Southam director at the time. The plan, he says, "reduced the basic business of the company to satisfy the differences of a couple of shareholders." On May 9, Southam chairman Ron Cliff sent a letter to Black and Desmarais, notifying both that any further contact with Southam management would be conducted only through himself. Black's subsequent version of events is this: "After Ron Cliff's letter, Mr. Desmarais phoned me and said, 'Somebody's going to have to clean this place up. I'm 69 years old and I don't feel like having a go at it, so you should do it. I'll sell you my stock.'" Says Radler: "One day, the independent directors - who were obnoxious, OK? - and who worked against the interests of the company in our opinion - OK? - they overstepped to the point where even Desmarais quit." Says Zimmerman, who has closely studied the Black strategy: "The world is unfolding as he had it in mind."
On May 24, Hollinger announced its buy-out of Power. On July 22, Southam shareholders gathered in a basement hotel conference room to vote the removal of the independent directors. "We've had tragedy and we've had disagreement," said Adam Zimmerman, capturing for a brief moment the Southam torment. Across the room sat Radler, all buffed and polished and looking as though he had just flown in from Palm Beach, beside retired Chief Justice Charles Dubin of the Ontario Court of Appeal, who was about to be voted on to the board. Bill Ardell chaired the meeting, saying something very strange about having had "no indication that Hollinger is not satisfied with the plan." One shareholder rose to quote 1960s radical Abbie Hoffman, which, had Black been there, might have seemed a bit rich. "Don't tell me what you believe," he said. "Tell me what you do and I'll tell you what you believe." Three weeks later, Bill Ardell was gone, even though, says Radler, he tried to "accommodate" himself to Hollinger. "People like Ardell are very accommodating professionally," Radler says.
Four months before the Southam gathering, the employees of the Regina Leader-Post were called to appear at the Queensbury Downs racetrack, where they were divided into two rooms. Across town, Michael Sifton, scion of the Sifton paper clan that had sold The Leader-Post and the Saskatoon Star Phoenix to Hollinger, announced the layoffs of 173 workers, more than 20 per cent of the staff. At the racetrack, one room served as a catchment area for the group to be kept on; the other for those to be removed.
"If we had the faintest idea that it was going to be handled like that, we would have intervened," says Black. Being the new owner, why did he not have the faintest idea? "Because we believe in local control of these papers and Michael Sifton said, 'There's room for demanning and I'll do it,'" says Black.
Demanning is very much a Hollinger word, and one used by Black, Radler and White since the Sherbrooke days. And had the situation in Saskatchewan been handled differently from a public relations point of view, the result would have been the same. In order to get margins up at papers of this size, Hollinger ratchets costs down.
Some staffers have bounced to two new tabloids started by Bill Peterson, who quit his post as publisher of the Kingston Whig-Standard in August. He has installed Ardell on his board. "I decided I'm not a Hollinger kind of guy," says Peterson, whose papers, one in Saskatoon, the other in Regina, will debut in the middle of November. Both papers will run twice weekly, but will nevertheless compete with Hollinger's papers for advertising revenue. "If they start playing with a rubber rate card," says Peterson, referring to the advertising rates set by all papers, "we have the financial backing to fight back."
The Saskatchewan economy is booming, so Peterson's timing may be just right. For Hollinger, it will mean editorial competition from some of the same columnists who used to appear under the Star Phoenix and Leader-Post banners. Nick Russell, a professor at the school of journalism in Regina, says he has not seen substantive changes yet in the quality of The Leader-Post. "We've gone from one owner owning the one paper in town to another owner owning the one paper in town." Still, the journalism students at the University of Regina have started what Russell calls a six-month "number-crunching" review of both papers, a compare-and-contrast exercise that will study the size of the "news hole," the amount of wire copy as opposed to fresh reporting, and so on.
But the large-circulation dailies that Hollinger now holds in Canada are a more complex puzzle. In the first place, they hold editorial interest for Black, something that the Marion Daily Republican, in Marion, Ill., does not. And so, since the Southam takeover, Black has been personally and directly involved in the affairs of the Montreal Gazette, where editor Joan Fraser was quickly fired, and The Ottawa Citizen, where editor Jim Travers resigned. There is an unearthly silence in some newsrooms as staff await the next announcement. Jay Bryan, a business columnist with The Gazette, was called for a one-on-one with Black in September. He dutifully reported to the headquarters of UniMédia Inc., Hollinger's French-language paper based in Montreal. There was Black in shirtsleeves. He seemed very normal. Hornless. "I kind of expected some guy who would be 20 feet tall, and he would be standing there with a flaming sword with 15 or 20 journalists impaled on it," says Bryan. "And instead there's this sort of rumpled, tired-looking guy who didn't know how to turn off the lights." From what Bryan has seen, Black is "anything but a grinder of journalists' bones."
But the Black group does not necessarily move with speed. While publisher Sam McKeel departed soon after Radler stepped in to the Chicago Sun-Times, it took 18 months before Radler turfed Dennis Britton from the editor's chair, replacing him with Nigel Wade from the Telegraph. At about the same time, Barbara Amiel took on the role of vice-president, editorial, for all of Hollinger; Radler took over as Sun-Times publisher. Radler wants a 25-per-cent profit margin in Chicago. He is getting less than 15. Richard Siklos, a reporter with The Financial Post who wrote a biography of Black, says he is surprised the Southam papers have not seen more Conradian moves. "I would have expected him to bring in some heavyweights from the U.K.," says Siklos. "In the context of the overall Hollinger empire, it almost looks as though they're running Southam like a part-time job. Where's the militant force?" This was a takeover, after all.
Back at 10 Toronto St., Black speaks to the need to claw back circulation gained by The Globe and Mail in Montreal and Ottawa and, less so, Vancouver. Black is 52 now, and there is so much left to do. Bay Street expects him to spread his assets around, to sweep more properties into Southam, which is relatively light with debt, from the debt-heavy Hollinger, as he did with those East Coast papers he bought from Thomson. And there remains a handful of independent paper plums to be picked. Hollinger still has no presence in Toronto. Black intends to fix that. Hollinger's offer to acquire The Financial Post is still on the table. If Hollinger gets the Post, the company in Canada will look whole, though still lacking a paper of political influence in Toronto. "Do you really think Conrad's losing sleep over not getting The Globe and Mail?" says Radler, in answer to the obvious.
South of the border, Hollinger International still needs a big-circulation star paper or two. "Obviously," says Black "a lot depends on whether our predictions for the comparatively bright future of the newspaper industry are proved to be accurate or not." Doug Kirk, a telecommunications and media analyst at Nesbitt Burns in Toronto, thinks Black has bet right. "We believe it's a propitious time to have purchased newspaper businesses," he says. Kirk cites four factors: advances in technology; the effects of consolidation (the "big wins" theory); the fact that it's a good time in the newsprint cycle, as paper costs have fallen dramatically; and the moderate increases in newspaper advertising revenues and circulation.
Sitting outside Southam headquarters, David Radler starts prattling numbers. "It is the right bet!" he says. "Every day, there are 66 million people in North America who spend anywhere from 25 cents to four bucks to buy a paper. In addition there are another 20 million who buy weeklies. Eighty-six million people. I don't think that's so terrible. I don't think that's the sign of a dying industry."
Maybe so. But Radler is the stats end of Hollinger, the Robert McNamara of newspapers. It's up to Black to ensure that getting the numbers right is merely a manoeuvre; that producing top-quality papers is what counts in the end. If he doesn't, readers will vote with their quarters.
Maclean's November 11, 1996