It is an insane industry, where the Poet Laureate is commissioned to write an ode to the Beast's sales performance, where the war correspondent is fired over a quarrel about the date of the Battle of Hastings, and where the shy contributor of Nature Notes is mistakenly despatched (with cleft sticks, inflatable canoe and camp operating table) to cover an African civil war.
Conrad Black's decision to slash the price of the Daily Telegraph has a similar air of unreality. Like Copper's titanic clash with Zinc, Mr Black has decided to go head to head with Rupert Murdoch, who responded by reducing the price of his already cut-price Times still further.
Short term, at least, there seems to be no sense to either decision. Each newspaper would have to reap massive increases in circulation and advertising revenues to offset the lost cover-price income. The stock market certainly has been in no doubt about the self-inflicted damage. Publishing share prices across the industry have plunged.
Price wars are easy to start, much harder to stop. Only time will tell whether Mr Black has made a monumental blunder with his tactical U-turn. What is not in doubt is that his timing was appalling. Institutions are hopping mad that his holding company, Hollinger, sold them a chunk of Telegraph shares just a month before last week's bombshell. Now sitting on losses of pounds 30m, there is only one word to describe how they feel: duped.
You can tell how furious they are by the fact that some are taking the unusual step of speaking out publicly. It's rare that an institutional investor will lift his head above the parapet. Yet so far Framlington and Henderson have both complained publicly.
The row will not go away in a hurry. Mr Black naturally insists he had no inkling of the price cut when Hollinger sold. It was only when it emerged in the first week in June that the Times had enjoyed a further fillip to sales in May that he decided he had to act, he says. Characteristically, he backs up his defence with the threat of a lawsuit for anybody who suggests differently. And already the Stock Exchange has cleared him of any impropriety.
This is not the first time Hollinger's relationship with the Telegraph has come under scrutiny. Last year, the Telegraph purchased a chunk of Southam, a loss-making Canadian newspaper publisher, from Hollinger for more than the prevailing market price. The deal was approved by the Telegraph's independent directors, after seeking the advice of - of all people - Rothschild, Mr Black's advisers.
Being a Telegraph non-executive director is the ultimate ego trip. There's that nice warm feeling of rubbing shoulders with the super-powerful, perhaps even influencing government policy. It's the most exclusive club in the land - membership restricted to 20. The pay's handy too, for what amounts to four board meetings a year - between pounds 10,000 and pounds 45,000. Members include the former foreign secretary Lord Carrington; Rupert Hambro and Sir Evelyn de Rothschild of their eponymous banks; Sir Martin Jacomb, former head of Barclays de Zoete Wedd and chairman of the pension fund Postel; Henry Keswick, chairman of Jardine Matheson; Lord King, the former BA chief; Sir Frank Rogers; and Lord Swaythling of Rothmans.
Unbelievably, there was no board meeting to debate the price cut, though some directors were consulted (or should that be informed?). Shareholders have to ask what on earth the directors are there for, if they do not even properly debate a decision which the humblest investment tiro could tell them would smash the share price.
Lord Carrington and his fellow board members face a tough job convincing wounded shareholders they are not Mr Black's poodles.
Slick oil move
IT'S CRUNCH time, Lasmo shareholders. They have until Friday to accept or reject Enterprise Oil's hostile bid for the exploration company. Our view is that they should reject the bid. But I can exclusively reveal that two Lasmo directors, Michael Belmont and Richard Smirnoff, have accepted the Enterprise offer. Not on their own behalf, of course, but as trustees of a Lasmo company profit share scheme, which is the proud owner of 2,745 Lasmo shares. Someone, somewhere in Lasmo obviously likes the Enterprise offer] I wish the outcome of the entire bid was as easy to call. It looks likely to be close. Enterprise got off to a dreadful start and has still largely failed to demonstrate synergies to be had from combining the two companies. And its share price fall last week reduces the value of its paper bid.
Lasmo, while coaxing grudging support from shareholders with its recent rights issue, is still handicapped because many of the managers who got it into difficulties in the first place are still there.
Both sides spent the tail end of last week wooing US institutions, which account for 20 per cent of the stock. They'll play a key part in the bid's success or failure. But the real kingmaker will be Phillips & Drew Fund Management, with a whopping 16.5 per cent of Lasmo.
Pass Go and collect
MONOPOLIES are good for you. Or so the Monopolies and Mergers Commission, the watchdog responsible for rooting out anti-competitive practices, seems to think these days. It is getting into the habit of ruling that the industries it investigates, while technically monopolies, do not operate against the public interest.
In recent years luxury perfumes, ice cream and cars have all been given the same treatment, although with the latter the MMC did suggest some modest reforms. Last week, Graeme Odgers, the MMC chairman, added compact discs to the list of approved industries after an 11-month investigation costing pounds 1m. Yes, the industry is dominated by a tiny handful of powerful suppliers such as Sony, EMI, Polygram and Warner, says Mr Odgers. But no, they don't unfairly exploit that dominance.
Consumer groups and many MPs are increasingly worried that Mr Odgers, a former BT director, is more concerned with the interests of UK industry than of UK consumers. Of the last 10 investigations by the MMC into areas of significant consumer interest, only two have ended recommending real practical reforms to boost competition.
According to the Consumers' Association, the UK is considered a soft touch when it comes to abuses of market power. The competition laws are too complex, and the divided responsibilities of the Office of Fair Trading and the MMC are cumbersome.
Meanwhile, buyers of recorded music will continue forking out pounds 12 or more for a CD. So who can blame them if they believe that the pounds 13.5m annual pay of EMI head Jim Fifield, revealed last week in the Thorn EMI annual report, says more about the true nature of music industry economics than Mr Odgers's 400-page report?Reuse content