Telegraph chief spurned high-tech golden egg

MATHEW HORSMAN

Conrad Black's Hollinger group turned down a chance to earn more than $100m (pounds 65m) in pre-tax profits by deciding not to invest in Netscape, a high-flying American high-tech company, at bargain-basement prices last year.

The Toronto company, which owns 58 per cent of Telegraph group, was offered the equivalent of 4 per cent of Netscape for $4m. The company was floated at $28 a share earlier this year, rising as high as $74 3/4 on its first day. The stock declined to the high 40s, and was trading last night at about $50, valuing the company at $2bn.

At its high, a 4 per cent stake would have been worth $112m. That would have left Hollinger with a paper profit of $108m, equivalent to 3.5 times 1994 operating profits at Telegraph group, or enough to give away every copy of the Daily Telegraph free for 209 consecutive days, or roughly seven months. Even at last night's price the stake would be worth $75m.

"With hindsight, it would have been a brilliant portfolio investment," Daniel Colson, chairman of Telegraph group and a director of Hollinger, conceded yesterday. "But we took the decision that we would have little or no control over the strategic direction of the company."

All the same, it appears that Hollinger had been offered the prospect of board representation and a chance to get Netscape technology early to develop its own multimedia applications, including the "electronic" Telegraph. Mr Colson added that Hollinger and Telegraph group continue to look at investment opportunities in the multimedia sector.

Netscape, which provides "navigation" software for the Internet, went through three financings before the initial public offering on 9 August. In the first, Netscape founder James Clark made his initial investment. A second issue, consisting of preference stock convertible into common shares, was bought principally by venture capital company Kleinwort, Perkins, Caufield and Byers, a San Francisco firm.

In the third issue, also of convertible preference stock, Netscape and its New York advisers offered stakes convertible into as much as 5 per cent to various media and software companies, concentrating on those that did not compete directly with Netscape or that were essentially "content" providers, such as newspaper publishers. Several well known US companies took stakes of between 1 and 2 per cent. They included publishing giants Knight-Ridder, the Hearst Corporation and Times-Mirror as well as software developer Adobe and cable giant TCI.

Hollinger was given its chance to buy shares in the third stock issue by US investment firm Morgan Stanley, acting for Netscape. A team from London did due digilence and recommended that Hollinger and/or its associate companies buy the stock.

But concerns about the cost of funding the group's Australian aspirations, as well as the then-mooted buyout of Telegraph minority shareholders, persuaded Mr Colson and Mr Black not to proceed.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Recruitment Consultant

competitive + incentives + uncapped comms: SThree: Did you know? 98% of our di...

SThree: Trainee Recruitment Consultant

competitive: SThree: Did you know? 98% of our directors started with SThree as...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sa...

Recruitment Genius: Junior Sales Executive - OTE £28,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen