Conrad Black Sees Value in Top Newspaper Brands
Conrad Black, the former media baron who once ran the world’s third-largest newspaper chain, says there’s value in top newspaper brands if publishers can adapt to the changing demands of readers.
Black says investors such as Warren Buffett are finding it’s a “buyer’s market” for some newspapers that can make the transition to the Internet and tailor newspapers to targeted readers.
“There is a huge amount of goodwill in those great newspaper titles,” Black said in an interview with Bloomberg Television yesterday. “The goodwill can be exploited if it’s approached in a different way.”
While the former Hollinger International Inc. chairman says he has no interest in buying publicly traded companies, he says there will be demand for papers such as the Los Angeles Times, Chicago Tribune or the New York Times.
“There should be buyers for great trademarks like that,” Black said in an interview from Toronto with Erik Schatzker and Sara Eisen. “In a market of infinite choice, a great respected newspaper name, even if the media itself is becoming obsolescent, is still a powerful draw and is worth a lot.”
Black, 68, says newspapers need to tailor their product to specific users, and can save costs by having subscribers print out their own copy at home.
“We can’t go just converting trees to newsprint and printing them on huge presses and delivering them at enormous expense all around the great cities of the world,” Black said in a separate interview at Bloomberg’s Toronto office. “We’ve got to make the Internet transition and have a printed product for those who want it, but the burden of the printing is going to have to be carried in the homes of the subscribers.”
Buffett’s purchase of papers in states including Virginia, Texas and Oklahoma may succeed because he’s targeting smaller markets where the penetration of the Internet isn’t as deep, Black said. Buffett’s Berkshire Hathaway Inc. (BRK/A) has acquired more than 25 daily newspapers in the last two years. Black doesn’t think investors like Buffett are adding papers to stroke their egos.
“Many people are afflicted by vanity but they have less self-punitive ways of indulging it than throwing money out the window,” he said.
Newspaper readers will pay for news if they see it offers value, Black said. By hiring big-name writers, providing exclusive content and providing links to videos and other content, newspapers can attract more readers.
“There is a place for raising the cover price for producing a better product and even at times a designer product for certain types of subscribers,” he said. “You have to give the people value for money.”
Black, munching on a bowl of muesli at the Bloomberg office, says he can spend hours checking videos and speeches on YouTube of historical figures he’s written about, such as former Quebec Premier Maurice Duplessis.
“Am I the only person who finds YouTube absolutely addictive?” Black said. “You look up something you might be interested in and before you know it three hours have gone by. Well you can make a newspaper like that.”
Black led Hollinger as its chairman and chief executive officer from October 1995 to November 2003, during which time it was the world’s third-biggest publisher of English language newspapers including the Chicago Sun-Times, the U.K.’s Daily Telegraph and Canada’s National Post.
He and other Hollinger executives were accused of skimming money from the Chicago-based company as it sold more than $3 billion in assets between 1998 and 2001.
Black successfully appealed two of three fraud convictions and won a three-year reduction of his original 6 1/2-year sentence. He was released from federal custody last year and is now living in Toronto. His latest book, “Flight of the Eagle” is a strategic history of the U.S.
Black said he has started a “soft and quiet” re-launch into the world of business, including advising Michael Wekerle on some projects for his merchant bank. Wekerle, former head of equity trading at GMP Capital Inc. (GMP), is chairman of Toronto-based Difference Capital Financial Inc.
After serving time in a Florida prison and years of court battles, Black has no interest in working with publicly traded companies that have to answer to shareholders every quarter.
“As a result of the persecution I have endured at the hands” of the U.S. justice department, “I have learned the lesson that I won’t deal in public companies,” he said. “I spent three, I must say relatively civil and in a way quite interesting, years as a guest of the American people in one of your less commodious guest houses.”
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