Hollinger mulls shifting big papers to its American Publishing unit p. 13

By: Mark Fitzgerald

CONRAD BLACK'S HOLLINGER Inc. says it is considering moving its big international newspaper properties ? including the publisher of the London Daily Telegraph and an interest in Canada's Southam Inc. chain ? into its American Publishing Co. unit.
American Publishing owns 97 dailies ? the second-most among U.S. chains ? and has recently been on another acquisition tear. In the past year it has bought two of Chicago's four dailies: the Chicago Sun-Times and the Daily Southtown.
In a joint statement, Hollinger and American Publishing said the move helps both entities by dramatically increasing the capitalization and liquidity of American Publishing while insulating individual properties from the effects of local competition.
Certainly, one impetus for the proposed reorganization is the brutal price war between the Daily Telegraph and Rupert Murdoch's Times of London for supremacy in Britain's upscale broadsheet market.
Hollinger indirectly holds 58.3% of Telegraph publisher, Telegraph plc, and holds options to acquire another 5%.
Under the reorganization proposal, Hollinger would transfer its holdings in Telegraph plc to American Publishing and receive American Class A common shares for its stake. Hollinger already owns 64.2% of American.
All remaining stock in Telegraph would be acquired with cash and Class A common stock of American Publishing. American said it expected to issue about $555 million for the Hollinger stake. Another $375 million more would be needed to buy up the remaining outstanding shares.
American indicated the reorganization may be followed by an equity issue. American went public last May.
In addition to acquiring the Daily Telegraph, the reorganization would put other big international media holdings in the American Publishing fold.