The irony is clear. As Mr Al Fayed famously battles for British citizenship, he is resurrecting a title which, in its heyday, was avowedly anti-establishment. Steven, now Liberty's chairman, insists it is nothing personal: "Mohamed Al Fayed is first and foremost a businessman. There is a place for a grown-up magazine for grown-up people, an adult magazine that isn't top- shelf."
Punch was launched in 1841. It took its name from the puppet that featured on the magazine's cover until 1954. A radical from birth, Punch attacked both political parties. It was republican, anti-Papist and, Mr Al Fayed take note, against foreigners (notably the French and Germans). In an attempt to control his unruly contributors, the magazine's first editor, Mark Lemon, instigated a weekly meal at which everyone discussed the next edition while carving their initials into Punch's dining table; the tradition survived until the magazine folded in 1992. Journalist Jaci Stephen called it the "most unmourned demise of the year", but once upon a time the Punch stable of writers read like a literary Who's Who: Twain, Thackery, Dickens, Wodehouse, Waterhouse. Still, some argue that it was an artist, John Tenniel, whose drawings made Punch stand out.
The inevitable happened: Punch became respectable; it became associated with the attitudes and values of the old ruling classes: its cartoons depicted the concerns of Victorian England - and seemed to get stuck there. The magazine had to ease itself into the 20th century, and finally did, introducing sharper captions and better "gags". Circulation in the Forties peaked at 175,000.
Subsequent attempts to modernise itself were less successful. Malcolm Muggeridge's editorship in the Fifties was brief. "Trying to produce a humorous magazine for the British was the worst task known to man," he declared. After Punch was bought by United Newspapers in 1969, further face-lifts followed - most successfully under Alan Coren, editor from 1978 to 1987.
But by the late Eighties, Punch was tired, stuffy and out of touch, the staple fare of dentists' waiting rooms. In 1988, editor David Thomas joined to target younger readers. He failed and lost most of the old readership. When Punch closed in April 1992, sales had fallen to 33,000. Subsequent attempts to salvage it failed, including ex-staffer Steve Way's fortnightly broadsheet, the Cartoonist, which lasted just eight months in 1993. "There just wasn't an appetite for it," says an associate.
And that was that - until, that is, last month when Al Fayed bought the title from United. The pounds 500,000 price-tag included the extensive Punch archives and memorabilia including the dining table, complete with carved autographs by the Prince of Wales and PJ O'Rourke.
Peter McKay will be Punch's 14th editor. The Evening Standard columnist ("The world's worst," says Private Eye) starts work on the magazine's relaunch next month. He is convinced Punch's death was premature. "Its last metamorphosis was a joke magazine on glossy paper," he says. "David Thomas took on Private Eye and Viz without doing what they do. You can't be offensive among ads for BMW. The subsequent boom in men's style and leisure magazines underlines the demand for amusing material, nicely presented."
Steven agrees: "Look at the New Yorker; it has a circulation of over half a million. There's no reason we can't have our own equivalent - witty, urbane, smart, sophisticated." The new Punch will not resort to jokes for jokes' sake, McKay says, adding with emphasis: "We don't want a magazine aimed at old bores." So who will it court? McKay says it will showcase "the best writing and cartoon talent" and it will, of course, be topical, timely and stylish. We are talking "quality" and "entertainment" rather than comedy. Hardly surprising.
Will it be enough? "English humour is a sensitive animal. It must be pitched carefully," says Coren. The relaunched magazine will have to account for Paul Merton, Ben Elton and Reeves and Mortimer as well as more traditional tastes.
All of this makes success in the humour business elusive. Lack of advertising and distribution problems doomed the Cartoonist. Private Eye has a loyal following, but faces competition from the satirical monthly Scallywag and Richard Ingrams' the Oldie - regarded by some as "like Punch used to be, before the rot set in". The Oldie sells around 25,000 an issue, half the figure it needs to break even. Even Viz is in decline: five years ago it was selling 875,408; today it is 505,865.
Still, Punch's return is welcomed by the advertising industry. "It remains a strong brand," says Jerry Fielder, chairman of advertising agency Leagas Delaney. "Old Punch was a product steeped in history, which forgot that while it can be rooted in heritage, it must be focused on the future. However, if New York magazine values can be translated here, there's a ready market for new Punch."
Others are sceptical. Ingrams is brisk: "A pointless exercise." He argues Punch has been dead too long. "There is a danger it will be a hodgepodge of the old Punch, the Oldie and Private Eye. Far better for them to start up a new magazine and call it something else." Cartoonist Gray Jolliff adds: "Punch has had its day. The idea's too intellectual for the younger market."
Coren questions whether McKay is sufficiently "in touch". As he says: "I wish him luck - and I wish him talent." As for Al Fayed and Steven: "They think there is some residual affection left for the title. There isn't." National newspaper columnists and lifestyle magazines such as GQ and Esquire have moved to close the gap. "They already boast clever, intelligent, informed, witty writing," Coren says. "Why do we need Punch?"
Why indeed? But exhumation is under way. And it will not come cheap. Sources suggest it will take at least pounds 5m to get Punch back on its feet. Steven says: "We will spend whatever it takes." Coren believes this may well be so: "If Al Fayed is desperate enough to make a go of it, who knows? He may put in enough money to make it work."
Fighting for Liberty: Al Fayed's assault on the media
Mohamed Al Fayed is driven by a sense of injustice. Last year, he tried to buy Today from Rupert Murdoch, the Daily Express from United News & Media and London News Radio from its former owner Reuters. Each time he failed, knocked back by the media establishment or Government- appointed regulators.
After the Today deal collapsed - he is suing for defamation of character over a News International statement that Today was closed for lack of "a credible buyer" - Al Fayed put together a team to see if he could launch his own daily paper.
More recently, he has tested dummies for Life on Sunday, a tabloid to challenge the Mail on Sunday. Both that and the daily tabloid are on hold.
Instead, he created Liberty - his new media vehicle headed by Stewart Steven. Steven says: "To start a new publishing company and launch a national newspaper straight away seemed an act of folly."
Apart from relaunching Punch, Liberty will build interests in print, radio and TV. "I see all sorts of concerns in need of clear management," Steven says.
Al Fayed will not be involved in the day-to-day running of Liberty, an associate insists. "As the name suggests, Liberty has freedom. Mr Al Fayed is not a journalist and does not aspire to be." He has, however, built up "an incredible insight into media", learning by the example of Tiny Rowland and Robert Maxwell.
That, of course, is "the kind of proprietorial interference that just doesn't work in the Nineties," says Steven. Perhaps. But as a determined and shrewd businessman, Al Fayed is likely to ensure that his money is well spent.
And as part of his wider ambitions, Al Fayed has offered to buy the loss- making Observer newspaper for pounds 15m from the Guardian media group.