The 'Mirror' vents its spleen, but will Wall Street shout it down?

Sonia Purnell reports on the threat posed by US investors to the tabloid's new campaigning stance

Philip Graf, the chief executive of Trinity Mirror, owner of the Daily Mirror, likes to portray himself as that rare sort of newspaper boss who does not play at being editor.

Under his regime, the still- youthful editor Piers Morgan has been allowed to fashion the title as his own in a way not seen in tabloids since the heady days when Kelvin Mackenzie ruled The Sun.

But while Mr Graf may have been happy so far to let Mr Morgan pursue an agenda of hard-hitting, campaigning journalism, some of his shareholders are not so keen. And Mr Graf, already stung by the apparent failure of the Mirror price-cutting initiative, is coming under increasing pressure to rein in Mr Morgan and take closer control of his paper.

Even Rupert Murdoch, owner of arch-rival The Sun, has commented on the leeway Mr Morgan enjoys at Trinity Mirror. In an interview in June, he described him as "a bright editor who needs a newspaper boss".

Mr Morgan responded in kind: "Mr Murdoch sounds like a newspaper boss in desperate need of a bright editor." But the words of the world's biggest media baron have not gone unheeded in the City.

And now, in an extraordinary tale of claim and counter-claim laced with accusations of yet another Murdochian conspiracy, Mr Morgan's anti-President Bush editorial line has been blasted by a vocal American investor with 4 per cent of Trinity Mirror's shares.

Although only one shareholder has so far complained publicly, there is concern in the City that the other three big US Trinity Mirror inves- tors (collectively owning a third of the shares) may share its displeasure at what they see as an anti-American campaign.

At the Independence Day party held at the US Embassy in London earlier this month, there was even talk among the diplomats and businessmen present of an advertising boycott against the Mirror by such American icons as Wal-Mart, Toys'R'Us and Disney.

One guest was heard saying: "There's going to be a backlash. Uncle Sam's arm is long. [US advertisers] don't want to be associated with a 'rogue' newspaper."

US patriotism has never been so sensitive as since the atrocities of 11 September, but such emotions have not been allowed to spill over into stock market investment. That has now changed.

Tom Schrager, one of five owners of Wall Street investment house Tweedy Brown, phoned Mr Graf on 5 July, the day after Independence Day. In what appears to have been a lively conversation, Mr Schrager expressed his anger at a Mirror piece by John Pilger, the radical journalist, referring to the US as the world's leading rogue state.

Mr Pilger had gone on to describe President Bush's administration as a criminal gang that had killed twice as many people as died at the World Trade Centre, and compared his leadership to Nazi Germany's.

No one disputes that Mr Schrager was cross about what he described as a "factually inaccurate" piece that made "outrageous" claims about America's record in Afghanistan and elsewhere.

As Mr Schrager himself said afterwards: "We made our views known as shareholders. We felt that management should know how we view such editorial material." But he also told The Wall Street Journal that Mr Graf had said he "disagreed completely" with the Pilger piece and that his management team would in effect be reviewing the Mirror's editorial line.

Mr Schrager has since refused to be drawn further on the subject. But Trinity Mirror, clearly concerned at the extent of the coverage of the affair in the US, rushed out a statement with a totally different slant on the story.

"It is regrettable that a private conversation has subsequently been misreported by certain US newspapers," said the group. "As a company, we encourage two-way communication between our institutional shareholders and chief executive. Naturally, we take comments on board, but we would not discuss the contents of a particular conversation."

Mr Morgan's comments were more colourful. Mr Schrager was "entitled to his opinion", he said, before citing Teddy Roosevelt's dictum that to re- frain from criticising a bad pres- ident was "morally treasonable to the American public".

"We're not anti-American, we're anti-George Bush," he explained, before claiming to have "jolted" the "deplorably neutered" US media into more objective reporting of the Bush administration's conduct.

Mr Morgan described Mr Schrager's comments as "highly unusual and very mysterious", before once again blaming his troubles on his old sparring partner and former boss Mr Murdoch. "This has all been whipped up by News Corporation in New York. Murdoch would like to cause problems with our investors if he could. The fact is that most of our investors, Americans included, like what we do, which is attitudinal tabloid journalism at its best."

But Mr Morgan will still have to tread carefully. As Anthony de Larrinaga, media analyst at SG Securities, put it: "Piers's mandate is to stabilise and grow the core national newspaper titles. That includes maintaining the taste and credibility of the brand. Damaging that by inappropriate editorial would obviously be of great concern."

Mr Morgan has made much of his new, more serious Mirror since the events of 11 September. The red masthead was dropped and serious contributors such as John Pilger and Jonathan Freedland have been given space and prominence. A lengthy report on problems in Malawi was splashed all over one recent front page, a bravely non-commercial editorial decision which earned the scorn of Mr Morgan's competitors but which he defends.

He has described his policy as a long-term rebranding exercise "based on great journalism and not tits". This goes against the perceived wisdom of tabloid journalism that one should "never overestimate the intelligence of the reader". His strategy has won him awards and friends. But will it be at the cost of losing investors and readers?