Tuesday, March 4, 2008

Tubby checks in to the Crowbar Hotel

Conrad Black is officially a jailbird! His Tubbyness showed up as scheduled yesterday to begin serving his 6 1/2-year sentence for fraud and obstruction of justice after being found guilty late last year of defrauding Hollinger shareholders out of millions. Typically, The Verbose One maintained his innocence to the end. In his case, he has several mouthpiece newspapers to use in proclaiming his mistreatment, including the New York Sun, in which he penned an exculpatory column to coincide with his incarceration.
It is a terrible thing to be falsely accused, and wrongly convicted, even of a fraction of the original charges, and unjustly incarcerated. For persisting in seeking the recognition of my innocence of these charges, I have been portrayed as defiant, or at least in denial. I defy and deny unjust charges, not the practical difficulties I have faced for the last four years and am facing now.
In Canada, of course, the National Post he founded almost a decade ago provided a platform for Black's rationalizing, in which he blamed his plight on "a factional dispute between groups of shareholders" in his former newspaper company, Hollinger International. Some wanted the company "broken up or sold for a quick gain," according to Black. Others, he claimed, agreed with him and others in the company's management, who were conducting "an orderly withdrawal" from the tanking industry.
To prevail, the dissident shareholders had to remove the controlling shareholder. To destabilize my position, they began giving hostile interviews to competing publications, and attempted to depress the share price. In the commercial atmosphere after Enron and other accounting fraud cases where billions were lost and tens of thousands of people thrown into unemployment, the most effective way to force out an incumbent management was to attack their integrity.
The account provided by Black might convince someone who hasn't read the 500-page report of the independent directors committee of Hollinger, which chracterized the company's pillaging by Black, David Radler, and others as a "corporate kleptocracy." Unfortunately I have, as I had to digest it on short notice for a conference paper I was presenting in Sweden a few years ago. In piecing off the Hollinger empire, Black and Radler not only kept a percentage of the sales price -- typically 10 percent -- for themseves as "non-compete" payments. Hollinger shareholders figured that money should have gone to the company instead of its senior executives, but that's not what Black was convicted of. Even more egregious was the sale of newspapers to companies controlled by Black and Radler at arm's , often through relatives, such as Radler's father-in-law. The prices were a bargain indeed, as low as $1. Often they were re-sold in short order for a huge profit. If that isn't fraud, I don't know what is!

Sunday, January 27, 2008

Having your cake and eating it

It seems Rupert Murdoch isn't crazy after all. He'd like to hang onto as much as possible of the $65 million in subscription revenue the Wall Street Journal pulls in annually. Murdoch announced last year, after acquiring the crown jewel in business journalism, that he was going to tear down the subscription wall and make WSJ Online content free for all in pursuit of increased revenues from advertising. But it seems the Dirty Digger would like to have it both ways, as much as possible, adding last week that some things online will remain available only to subscribers.

Mr. Murdoch made his latest comments at the World Economic Forum in Davos, Switzerland, in answering a question. "We are going to greatly expand and improve the free part of The Wall Street Journal online, but there will still be a strong offering" for subscribers, he said. "The really special things will still be a subscription service, and, sorry to tell you, probably more expensive."

The partial climb-down came the same days as news that readership of online newspapers jumped six percent in 2007, to 60 million visitors per month. The jump for December was nine perent over the same month a year earlier, boding even better for online journalism. Now if only advertising revenue follows suit the woes that seem to beset the newspaper business won't seem quite so severe. The head of the Newspaper Association of America, which sponsored the report by Neilsen Online, gave his best sales pitch in delivering the news.

"Newspapers' expanding print and digital portfolio offers value to advertisers by providing a targeted, comprehensive menu of choices for today's discriminating consumer," said NAA President and CEO John F. Sturm. "As our industry's transition accelerates, it is clear consumers recognize newspapers as
their trusted source of information in an increasingly digital environment."

The thing to watch will be what happens to advertising revenues, both in print and online, as the reession deepens and the full magnitude of the sub-prime mortgage fiasco reverberates throughout the economy.