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News agency financial scandals

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  • ummyakoub
    Hollinger Woes Casting a Pall Over Future of Neocon Papers By NATHANIEL POPPER FORWARD STAFF NOVEMBER 21, 2003 A convergence of unrelated financial scandals is
    Message 1 of 1 , Dec 6, 2003
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      Hollinger Woes Casting a Pall Over Future of Neocon Papers
      NOVEMBER 21, 2003

      A convergence of unrelated financial scandals is threatening to sink
      the tiny but influential boat of Jewish-flavored conservative

      At the center of the controversy is Hollinger International, a media
      company that owns dozens of conservative newspapers, including the
      hawkish Jerusalem Post. An internal investigation into improper
      payments allegedly made to Hollinger's majority owner and CEO, Conrad
      Black, and its president, F. David Radler, has triggered a major
      reorganization of the company.

      Radler, who oversaw the Jerusalem Post, has resigned. Black has
      stepped down as CEO, but will continue to play a role in planning
      what is expected to be a mass sell-off of the company's media

      Many media insiders are predicting the shakeup will lead to the sale
      of most Hollinger-controlled newspapers, including The Jerusalem
      Post, The Daily Telegraph of London and the Chicago Sun-Times.
      Hollinger also owns a piece of The New York Sun, which was launched
      in 2002 by former Forward editor Seth Lipsky. Though ostensibly a
      general interest newspaper, the Sun is best known for its pugnacious
      coverage of Jewish-related issues, as well as its neo-conservative
      policy positions.

      Hollinger's stake in the Sun is relatively small, but financial
      problems have also threatened Roger Hertog, the newspaper's main
      financial backer and also a part-owner of The New Republic, a highly
      influential Washington-based opinion journal with a heavy interest in
      Jewish issues. Hertog's potential troubles relate to his post as vice
      chairman of Alliance Capital. The company is being investigated by
      New York Attorney General Eliot Spitzer for improper trading moves
      and has put aside $190 million to cover restitution and legal costs
      relating to the case.

      Alliance Capital is also being investigated by the Securities and
      Exchange Commission for payments to Morgan Stanley to obtain
      preferred status with investors.

      Some of the allegations at Alliance Capital surround suspicious
      trading activity at mutual funds it purchased from the company of the
      late Jewish philanthropist Zalman Bernstein, where Hertog was
      formerly president and CEO.

      A financially induced collapse at the Sun or political shift to the
      left at The Jerusalem Post would represent a severe blow to
      conservative Jewish activists who have come to depend these
      publications as dependable allies in various policy fights. Since it
      is not yet clear how, and whether, the troubles at Alliance Capital
      will affect Hertog, for now the more furious speculation is focused
      on Hollinger and the fate of The Jerusalem Post.

      "This is one of the most famous brand names in Israel alongside Jaffa
      oranges," said one former employee. "And there is a major change
      coming to the Post; a fundamental change in the way the paper

      The Post was historically known as a left-wing newspaper, until its
      acquisition by Hollinger in 1989. Since then it has become a leading
      conservative outlet for opponents of the peace process throughout the
      world, thanks to its highly popular Web site.

      While the political future of the newspaper remains unclear, most
      observers are predicting the newspaper will be sold.

      Rumors about an impending sale were rippling through a gathering in
      Israel this week of 4,000 North American Jewish communal
      leaders. "The air at the General Assembly [of the United Jewish
      Communities] is thick with rumors of potential buyers," said David
      Landau, editor of the English edition of the Israeli daily Ha'aretz.

      "I think that obviously you are looking at wealthy Jews who are
      interested in extending their influence," one Israeli media insider
      said. "I don't know that any Israelis would buy it."

      Speculation has focused in part on Michael Steinhardt, the New York-
      based Jewish philanthropist with stakes in the Sun and The New
      Republic. Formerly a part-owner of the Forward, Steinhardt has
      previously displayed interest in buying the Post. Another name being
      mentioned is that of Ronald Lauder, the cosmetics heir who already
      has holdings in Israeli media. Russian investors Vladimir Gusinsky
      and Roman Abramovich also have been rumored to be interested.

      Given Hollinger's $730 million of debt, observers see no way for the
      company to survive without selling at least some of its assets.
      Numerous parties have expressed interest in The Daily Telegraph, and
      The Washington Post Group has been repeatedly mentioned for its
      interest in the Chicago Sun-Times. An Israeli media insider said the
      assumption is that the Post will be sold separately from the rest of
      the Hollinger papers.

      In the past, Black, who gave up his Canadian citizenship to become a
      British lord, has defended his company's dealings with a brashness
      for which he is famous. When minority investors called for an
      investigation at Hollinger earlier this year, he called
      them "zealots" who were caught in the "fad" of corporate governance.
      But on Monday he released a statement recognizing that "the present
      structure of the group clearly must be renovated."

      Many former employees of the Post say the departure of Radler as
      chairman of the newspaper's board does not come soon enough. When
      Hollinger first bought the Post, an ensuing editorial clash led to
      the resignation of 30 members of the Post's editorial staff,
      including the top two editors.

      Landau, who resigned as managing editor at the time, said that after
      this exodus of employees, "the rump paper lurched 180 degrees to the
      right, and plummeted from journalistic excellence to journalistic non-
      credibility." The free-market-oriented and hawkish editorial policies
      that Radler brought to the Post were staples of other Hollinger

      The early resignations brought on by the heavy-handed editorial
      policy were followed by a number of firings and a vigorous effort to
      break the newspaper's labor union.

      On hearing of Radler's resignation, Landau said, "I remembered the
      biblical injunction against rejoicing at the downfall of people who
      deserve to fall down."

      Radler has not shied away from admitting the "ruthless" cost-cutting
      measures he used to turn a profit. In one interview in Maclean's, he
      said: "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, forty-two desks, I know I can put that paper out with
      thirty people, and that means a dozen people will be leaving payroll
      even though I haven't seen their faces yet."

      An internal investigation at Hollinger, the results of which were
      released Monday, found that Black and Radler had each been paid $7.2
      million in 2000 and 2001 from a $73.7 million "non-competition"
      agreement with a chain of Canadian papers. The payments to Black and
      Radler were not authorized by the Hollinger board, and were
      inaccurately reported to the Security and Exchange Commission,
      according to the company's internal report.

      A company statement said Black will continue in a non-executive
      capacity while helping to formulate a plan for the future that could
      include "a possible sale of the company" or "a sale of one or more of
      its major properties."

      It would appear that the problems at Hollinger will have less of an
      impact on The New York Sun: The company reportedly owns just a 12%
      stake in the paper. "Conrad Black, who represents Hollinger
      International Inc. on the board of The New York Sun, is an active and
      trusted director, and we value his leadership enormously," Lipsky,
      the newspaper's president and editor, said in a statement.

      Sun publicist Charlotte Ibarra said of Hollinger, "We wish them luck,
      but as far as we're concerned they have a small stake in the Sun."

      One media observer in New York downplayed the potential impact on the
      Sun, saying, "I don't see it as having a big impact except as a
      matter of perception."

      If Hertog becomes entangled in the problems at Alliance Capital,
      however, the consequences for the Sun could be greater. Hertog is the
      chairman of the Sun, and it has been reported that he owns close to
      half of the conservative newspaper.

      The Sun declined to comment on the problems at Alliance. Hertog did
      not return phone calls.




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