Ivan Fallon: The 'Telegraph' sale is the most bizarre media story since Maxwell's death

I must begin by declaring an interest: Independent News & Media, owner of The Independent on Sunday, is not bidding for The Daily Telegraph. That makes us part of a small elite: every other publishing house in town - and quite a few from outside - put in their offers before close of play on Thursday, breathless in their rush to gain what has suddenly become the most highly prized asset around.

On Wednesday, a full day before the deadline for indicative offers closed, the Daily Express proprietor, Richard Desmond, let it be known he was in the ring as he submitted his offer of £450m-£500m. His much more powerful rival the Daily Mail group, in partnership with a private capital company, Cinven, offered more than £550m. From the US, Gannet, owner of USA Today as well as countless regional newspapers in Britain, expressed its interest in the Telegraph's Chicago sister newspaper, the Sun-Times, which is also on the auction block.

These were just for openers. Behind them were every known venture capital company in the City of London: Apax teamed up with the former Tory politician Norman Fowler; 3i group made a bid; so did Candover - and on and on. The stockbroker Collins Stewart disclosed its plan to float the Telegraph on the stock market, even though it doesn't even own it yet - and is unlikely to. And the Berry family, who owned the paper for two generations before tragically losing it to an unknown Canadian called Conrad Black, looked for their revenge with an offer as doomed as their former proprietorship.

It's an academic exercise, and most of the bidders know it. The fate of the Telegraph was decided a month ago when the now Lord Black, facing a battery of lawsuits and potential investigations, agreed to sell his controlling shareholding in Hollinger Inc, the company that ultimately owns the Telegraph titles, to Sir David and Sir Frederick Barclay. The boards of the various Hollinger companies may dispute his powers to make the transfer, but at the end of the day the bidders mostly acknowledge privately they have been scooped: the Barclays pulled off a coup by negotiating directly with Black while they were bogged down in the process of submitting their bids to the City bank Lazard.

Ironically, as Lazard ploughed ahead with the bid procedure, the Telegraph's commercial fortunes suffered another dip. The latest ABC circulation figures, published on Friday, revealed that its circulation had dropped to just over 900,000, its lowest since D-Day in 1944. To put that into context, when I joined the Telegraph as a young financial journalist in the 1960s, the Fleet Street newsroom featured a giant chart that went right around the four walls on which was recorded each day's sale. In those days it varied between 1.4 million and 1.5 million copies.

This weekend brought further develop-ments in what is unwinding as the most extraordinary drama in the newspaper world since Robert Maxwell fell off his boat. Yesterday in Canada the beleaguered Black lashed back with a bizarre lawsuit against his former directors, claiming C$850 (£350m) in damages for seeking to destroy him "personally, professionally and financially and to transform him from a respected media owner of a successful media chain into a loathsome laughing stock". Only Black could use that kind of language in a formal writ.

Yet there is truth in what he says. Just a year ago Black was still a respected media owner and the Telegraph was part of a (relatively) successful media chain. Today he might not necessarily be loathsome - in fact, he is very likeable - but he is right to believe he has become a figure of ridicule, his antics a source of endless fascination to all of us in the media world. His wife, Barbara, did not help when she recently showed a magazine journalist around her house in Palm Beach, where part of her enormous wardrobe is housed. Gesturing towards her endless racks of shoes, she explained in a way Marie Antoinette might have envied: "My extravagance knows no bounds."

How the Blacks have come to this sorry pass is a story that may be best left to the historians (several books are being written about it). What matters is the fate of the Telegraph and its future in the British media world. Without an owner it is in a state of paralysis, its decision-making processes frozen. When The Independent launched in compact form on 30 September, the Telegraph announced it, too, had similar plans, but five months later they have not progressed. By contrast, within days Rupert Murdoch had ordered The Times to follow suit, while The Guardian editor told staff on Friday he has made the decision to remain broadsheet only.

The Barclay brothers still have to push through a complex web of suits and cross-suits before they can assume control. They have to clear the regulatory hurdles lying in the way of any newspaper bid. There is much speculation on what they will do with their new toy. In their only interview since their bid was announced, David Barclay hinted they might even change the age-old loyalty of the paper to the Conservative Party. "Where the Government are right, we shall support them," he told The Guardian, only to retreat the next day from such a radical change of allegiance.

The lesson of the Telegraph auction, however, may be a different one. In 1985 the Berry family desperately tried to raise £29m to save their flagship title and, after weeks of hawking themselves around the City, came up £10m short. Today that same title, albeit with a lower circulation, is valued by at least a dozen hard-nosed financial institutions, as well as rival groups, at more than £500m. For a supposedly mature and old-fashioned industry, that's not bad.

Ivan Fallon is chief executive of Independent News & Media UK, the parent company of 'The Independent' and 'The Independent on Sunday'