Black Sees Empire Diminished | The Canadian Encyclopedia

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Black Sees Empire Diminished

The plot is like something out of a Mordecai Richler novel. Sharp-eyed, compulsive-smoking Jewish guy from, of all places, small-town Manitoba goes nose to nose with equally sharp-eyed, private-school-educated WASP from Toronto for the big enchilada.

This article was originally published in Maclean's Magazine on August 14, 2000

The plot is like something out of a Mordecai Richler novel. Sharp-eyed, compulsive-smoking Jewish guy from, of all places, small-town Manitoba goes nose to nose with equally sharp-eyed, private-school-educated WASP from Toronto for the big enchilada. The characters, too, are larger than life: Israel H. Asper - "Izzy" to all who have met him - is a lawyer, former politician, philanthropist and self-made billionaire, who is determined to create a family dynasty and a media empire that stretches from Winnipeg to the ends of the earth; Conrad Black is the acquisitor's acquisitor, a Britannic baronial media mogul - in love with language and the sweep of journalism, though not necessarily journalists themselves - who had reached a stage in life when he wanted to change gears.

The dénouement, however, takes everyone by surprise - including Richler, a big-name columnist with Black's flagship Canadian newspaper the National Post. In most Richler novels, the Establishment nut proves too big to crack for the feisty outsider. In real life, Asper's CanWest Global Communications Corp. swallowed Black's biggest Canadian titles with barely a belch. This was the smaller fish by some standards (at just over $882 million, CanWest revenues in 1999 were less than a third of Black's Hollinger International Inc.), consuming a large chunk of the bigger one. And this was not the way it was supposed to happen.

When Hollinger put its North American newspapers up for sale at the end of April, it was anticipating selling 100 or so small regional papers in Canada for maybe a billion dollars - not its large metropolitan dailies in Montreal, Ottawa, Edmonton, Calgary or Vancouver and certainly not its pride and joy, the National Post. But when the dust cleared last week, CanWest ended up with almost the whole kit and caboodle - Hollinger's 13 major dailies, a phalanx of regional papers and its evolving Internet properties - in a blockbuster deal valued at $3.5 billion. "There comes a time to sell in any business," observed Peter Atkinson, the Hollinger vice-president who handled the negotiations. "Asper simply outgunned everyone else."

For Black, who has spent three decades amassing one of the world's biggest media organizations - the largest in Canada - he walks away with a much-reduced empire. He still has his beloved London Daily Telegraph, a proven money-spinner, the Jerusalem Post and the Chicago Sun-Times, among others. He also has a half-interest in the National Post, now to be shared with the Asper family: Black continues as the paper's chairman, casting the deciding vote, for the next five years at which point either party can trigger an auction to buy the other out. But there is no doubt that the man who bestrode the Canadian media world like an old-fashioned titan - who bought more than 400 newspapers in a decade, created the first new daily in the country (the National Post) in decades and who revelled in sparking ideological firestorms in his wake - is walking away from his home turf, albeit with a fistful of dollars.

The deal, which is expected to close by the end of September - pending Ottawa's approval - gives him $2.2 billion in cash, a 15-per-cent stake in the enlarged CanWest valued at $600 million (just under six per cent of the voting shares) and a $700-million bond from CanWest. Coupled with another roughly billion dollars Hollinger expects to gain by the sale of its remaining small-market papers in Canada and the United States, this should be more than enough to pay off Hollinger's haunting ($2.4 billion) long-term debt and still leave it with a sizable war chest for the future.

For the Aspers, however - that's Izzy and younger son Leonard, the company's CEO - taking over Hollinger's newspapers gives it the biggest combined media empire in the country, an estimated revenue of $2.6 billion and a market concentration that, in some cases, is nothing short of daunting. In southern British Columbia, the Aspers will own two of the largest television outlets in the region, including ratings giant BCTV, as well as the only three major dailies, The Vancouver Sun and The Province in Vancouver and the Victoria Times-Colonist. Its Global Television network already spans the country (last month, it won regulatory approval to take over eight of the former WIC Western International Communications Ltd. TV stations) and it will soon enjoy a commanding newspaper presence in every province but Manitoba and New Brunswick.

Is this worrisome? "From my audience's point of view it seems to be a general yawn," says Vancouver radio talk-show host Rafe Mair. "It may take a few days for people to get heated up, but I'm not sure they will. It's really just a transfer from one mogul to another."

The perennially crumpled Izzy may be a more likable media baron (to some) than the aloof Conrad. But complicating matters is that the Aspers - Izzy for sure - are known Liberals whereas Black is anything but. Izzy Asper led the Manitoba Liberal Party during the Pierre Trudeau years. And while he has fought his federal counterparts on such issues as Meech Lake and an elected Senate, a particular hobbyhorse of his, his allegiances have sent a frisson of anticipation through the ruling Liberal elite. But this changing of the guard is about more than whether the National Post will curtail the flow of flattering pictures of Canadian Alliance Leader Stockwell Day on its news pages. As Bruce Wark, a journalism professor at the University of King's College in Halifax notes: "There is the sense that our own [Hollinger-owned] local media have been cut to subsidize the big Toronto newspaper wars," and that local coverage will continue to suffer. Adds Wark: "You have an organization, Global, that has been doing a very poor job covering all three Maritime provinces from one outlet [Halifax]. So you've got a weak journalistic organization buying one that has experienced a lot of downsizing." In a blistering reply, Black wrote in the weekend edition of the Post that claims he "stripped little newspapers to feed large ones" are "lies and smears."

Still, this deal is not about newspapers so much as it is about the emergence of the Internet as the new highway of everyday entertainment and commerce. CanWest unveiled its Internet strategy only eight months ago, a network of Web sites tied to local television stations. But its prospects are making Izzy, who turns 68 on Aug. 11, feel "reborn." Adds son Leonard: "We have with this merger built our advertising strength, our content store and become a leader in the converged world of Internet content."

Buying out Hollinger flows from the same business thinking - control the pipeline and the content - that saw U.S. giants Time Warner Inc. and America Online Inc. merge at the beginning of the year; and that recently saw telephone conglomerate BCE Inc. of Montreal buy Toronto-based CTV Inc., CanWest's larger rival for $2.3 billion. Apart from the eat or be eaten imperative of Internet-inspired takeovers, this one is particularly shrewd, observes Brahm Eiley of Convergence Consulting Group in Toronto, because it takes direct aim at the local advertising and information market, seeking to draw people into Web commerce by virtue of how they get their community weather, sports or news.

Eventually, the analysts say, CanWest is going to have to live up to its TV moniker and go global, and this rule is not lost on the Aspers. Despite this deal raising corporate debt to nearly $4 billion (but a stock market rewarding them for the Hollinger purchase), they are already talking of more acquisitions. Possible buys include sports teams such as the Toronto Blue Jays or Maple Leafs, or the Montreal Canadiens to supply their broadcast needs; or new media alliances in Europe, possibly through the contacts of their new junior shareholder, Conrad Black.

Ironically (another Richlerean touch), it was Black who, perhaps inadvertently, set these events in motion. Earlier this year, with Hollinger stock wallowing, Black called Asper and tried to interest him in a partnership in Hollinger's new Canada.com Web site. The two had done business together 22 years ago, when Black sold Asper a trust company largely on a handshake. But the Aspers were tied up in long-running regulatory hearings over their WIC purchase and asked to put the deal off until later. Meanwhile, Black who bought his first Canadian paper in 1966 at the tender age of 22, put his smaller papers up for sale at the end of April. The big-city dailies were not directly on the table. But Izzy called up Conrad in London and said he might be interested in that dot-com deal now if he could also buy the major dailies. And Hollinger soon realized that CanWest was in a better position to break into the Internet game than it was.

Despite their outward differences, the two men have much in common, including a penchant for staying up well into the early hours of the morning to do long-distance wheeling and dealing. By May 16, the two men had mapped out the basis of the deal, which was then turned over to a select group of very surprised subordinates. But the owners had ways of making their presence felt. Black had a voice-activated computer into which he could dictate letters and have them faxed across the waters. "The only stumbling block was the National Post," Leonard Asper recalls. "There was a day or two where the Post was in 100 per cent, but a good night's sleep changed Conrad's mind. We settled on 50-50 because that's Conrad's baby." The final negotiations were interrupted by faxes that began: "It's intermission at the opera. . . . " Conrad and wife Barbara Amiel were attending the annual Wagner festival at Bayreuth, Germany, and an idea had just struck.

These missives lent a fittingly operatic tone to the biggest media takeover in Canadian history. But it would be wrong to see this event as the final curtain. The Aspers feel they are just beginning to build a truly global multimedia empire - begun 26 years ago with the purchase of an independent TV station in Winnipeg. Black told The New York Times, self-mockingly, that he was going to be like the cartoon character Scrooge McDuck and "get into his little bulldozer every morning and plow back and forth over his gold coins." It was time, he said, "to get rid of the debt, to get a little bit of a cash box to work from, to enjoy life a little more." But close associates dismiss any retirement ideas. There is talk of buying papers in New York City, Washington and San Francisco. So whether it is Black or Asper, there is still the whiff of a Richler-like sequel in the air. Maybe Duddy Redux? Or Conrad Then and Now?

Maclean's August 14, 2000

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