Hollinger Profits Warning Blames Turbulent Investor

19 August 2003

Hollinger International, holding company for a chain of newspapers including the Chicago Sun-Times, the Jerusalem Post and Britain’s Telegraph Newspapers, on Monday night issued a profits warning – blaming this in part on a troublesome shareholder, New York investment firm Tweedy Browne, owner of nearly 18% of Hollinger stock.

Hollinger, the fiefdom of quondam Canuck Lord Conrad Black of Crossharbour, warned that full year profits would fail to meet the group’s forecast by some 17%.

It attributed this to the legal cost of investigations demanded by Tweedy and other shareholders into the payment of $74 million (€66.75m; £46.71m) by third parties to Black and certain Hollinger co-directors including Barbara Amiel, a Daily Telegraph columnist, aka Lady Black.

The directors concerned insist the payments relate to individual non-compete agreements; Tweedy Browne disagrees, arguing that the money should rightly have gone to the company and its shareholders.

Hollinger claims the legal costs and additional insurance premiums involved in the investigations could reach $8 million. But it also concedes that the current advertising drought is a key factor in its lowered profit expectations.

News of the profits warning accompanied Hollinger’s Q2 numbers. Net earnings for the quarter reached $23.5 million, compared with a net loss of $3 million in the same period last year. But UK revenues were down 11.8% due to a falloff in advertising income.

Data sourced from: Times Online (UK); additional content by WARC staff