Australian election could put Black in front in Fairfax race

MATHEW HORSMAN

Labor's weekend defeat in the Australian election will give a boost to the Telegraph group, which has been locked in a high-stakes battle with media barons Kerry Packer and Rupert Murdoch over control of Fairfax, the Sydney-based newspaper company.

The Telegraph, whose chairman and majority owner is Conrad Black, the Canadian press baron, has been lobbying fiercely to be allowed to raise its stake in Fairfax to above 25 per cent, but has been stymied by strict ownership rules.

According to Telegraph insiders, the victory of the Liberal Party in elections on Saturday is likely to lead to a relaxation of the limits, allowing the Telegraph, publishers of the Daily Telegraph and the Sunday Telegraph, to build up its stake.

Leading the company's campaign for changes to the limits has been Daniel Colson, the vice-chairman and Mr Black's main UK-based lieutenant.

Mr Packer, who owns the Nine television network, has amassed a 15 per cent holding but has been barred from going higher because of media cross- ownership limits. Mr Murdoch has about 5 per cent, but is also barred from going higher than 15 per cent because of his Australian television interests.

Fairfax had pre-tax profits of A$205m (pounds 102) in 1995, on revenues of A$947.9m. Profits in the second half of the year were affected by high newsprint costs and the sluggish economy. But Telegraph management is convinced the company has a bright future, and aims to win outright control if permitted.

Fairfax is near the end of a three-year A$500m capital investment programme, which will culminate in the opening of a state-of-the-art printing complex in Sydney this year.

The company publishes several high-selling titles, including the Sydney Morning Herald, the Age and the Australian Financial Review. It is also a large regional newspaper publisher.

It is also a player in the country's embryonic pay-TV market, through a joint venture with the Australian Broadcasting Corporation and Cox Communications. Last year, it bought 50 per cent of an independent production company.