Conrad Black: press baron or ‘robber baron’?

WAS IT JUST A COINCIDENCE that Conrad Black launched a

$2-million defamation action against Peter C. Newman just two days before he was indicted by a grand jury on charges alleging that he and three former colleagues pocketed $84 million (U.S.) that rightfully belonged to investors?

We think not.

For one thing, the civil action, which was served on Mr. Newman as he arrived at a 100th anniversary party for Maclean's magazine that was also attended by Mr. Black and his wife Barbara, involves claims that he was libeled in a 2004 autobiography, "There Be Dragons: Telling Tales of People, Passion and Power."

Normally, anyone who feels he has been defamed by a publication moves immediately, not a year after the alleged wrong has been committed.

In this case, the statement of claim alleges that the book “falsely and maliciously” accused Mr. Black of engaging “in a wide range of criminal acts spanning many years, including mail and wire fraud, interstate transportation of stolen property and money laundering.”

To that extent, the libel action has all the appearance of a bid to have a Canadian court examine many of the same facts that will be presented at a criminal trial in the U.S., the main difference being that in Canada Mr. Black will be a plaintiff while in the U.S. he’ll be a defendant facing the possibility of a long jail term if he is convicted.

(A National Post story quoted Mr. Black's lawyer as saying the suit had been filed so long after the book's publication in part because of difficulty locating Mr. Newman.)

Much of the offending chapter — titled, “Black Magic: How Conrad Black became a Weapon of Mass Self-Destruction” — concerned Lord Black’s widely publicized legal problems.

Our deep, dark suspicion is that the timing had a lot to do with the indictment — that in all likelihood Mr. Black’s U.S. lawyers had advance notice that the U.S. prosecutor, Patrick Fitzgerald, was about to come up with his long-expected sequel to the deal he reached in September with David Radler, Lord Black’s former righthand man, under which Mr. Radler pleaded guilty to a single count of fraud and promised to co-operate with the U.S. authorities in exchange for a relatively short (29-month) sentence.

Of one thing there is no doubt: having renounced his Canadian citizenship so he could become a British peer, Lord Black is indeed a baron. The big question now to be determined is whether the man who was seen as a press baron long before getting the peerage is going to go down in history as also a modern-day “robber baron” (defined by Webster as “a feudal noble who lived by robbing people passing through his territory or holding them for ransom.”)

We’ve little doubt that the successful bid for the British peerage had a lot to do with history, Mr. Black seeing himself as properly following in the footsteps of Lord Beaverbrook and Lord Thomson of Fleet, two Canadians who wound up including some important British dailies in their international newspaper holdings.

But unlike Max Aitken and Roy Thomson, Mr. Black seemingly lacked the financial acumen required to possess both great newspaper titles and unchallengeable personal wealth.

The contrast is particularly evident when one compares his actions with those of Roy Thomson and his son Kenneth.

Although both Roy Thomson and Mr. Black started out modestly — Roy in Timmins and Conrad in Sherbrooke — the Thomson family fortune was built from the enormous profitability attained from small daily and weekly newspapers in an era when they had relatively little competition for the advertising dollar. For many years, the Thomson chain’s papers managed to have 30 per cent profit margins at a time when large dailies that faced local competition had to settle for much less, and in some cases couldn’t break even.

Initially, Messrs. Black and Radler seemed to be doing almost as well, picking up dailies and weeklies in Canada and the U.S. and making them at least marginally profitable despite the high purchase prices, by cutting staffs and shrinking news holes.

As one small example, purchase of the Orangeville Banner from Thomson was quickly accompanied by a drastic shrinkage of the paper’s editorial staff and converting the advertising staff’s compensation from salary plus commission to pure commissions (so as to make the selling more aggressive).

Just a few years ago, Lord Black was clearly Canada’s leading press baron, having achieved control of Southam Corp. and its collection of major dailies across the country as well as ownership of most of the former Thomson papers.

Today, Mr. Black’s Hollinger Corp. still has some Canadian newspaper holdings, but in most instances they are in small cities where they face strong competition from community papers as well as radio, TV, flyers and billboards.

As we see it, there’s little doubt that Lord Black was richly rewarded for whatever work he actually did for his newspaper empire, or that the rewards came in an era when the heads of other large corporations were collecting millions from their firms, even when the companies were on the verge of insolvency.

The big issue to be determined is whether the line was crossed between reasonable payment for work done and deals made and the unlawful conduct now alleged in the indictment.

Of one thing there is no doubt: Lord Black sees himself as wrongfully accused and his lead Canadian lawyer, Eddie Greenspan, undoubtedly summed up his position succinctly when he said his client “asserts his innocence without qualification with respect to each and every one of the charges set forth in the indictment.”

Like all other accused, he must indeed be considered innocent until proven guilty.