The source of his agitation was not immediately apparent. But a few hours later all became clear. Daily Mail and General Trust (DMGT), the £3 billion newspaper company that Rothermere chairs, had withdrawn its bid to buy the Daily and Sunday Telegraph.
It was a bitter blow to the ambitions of Rothermere, scion of the eponymous publishing dynasty. By seizing the Telegraph, Britain’s largest broadsheet daily, with a circulation of just over 900,000, he had hoped to recreate the family’s glory days and form an immensely powerful and influential stable of British titles.
But the game had become too rich. DMGT and its financial partner, the venture-capital house CVC, baulked as the bidding went past £625m.
The Telegraph, up for sale largely because of the fall from grace of another Tory peer, Lord Black, had slipped from Rothermere’s grasp.
The race to win the Telegraph titles has become the most expensive newspaper bidding battle in history and this weekend it enters its final phase. Gordon Paris, chief executive of Hollinger International, the group that is selling the papers, is expected within days to present the name of a preferred bidder to the company’s board for rubber stamping. The winning bid is likely to come in at just under £700m.
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Two parties remain in the running. In one corner are the Barclay brothers, reclusive billionaire twins who have assiduously pursued the Telegraph titles for more than a year. In the other is a financial consortium led by Britain’s largest venture-capital company 3i. The latter’s bid team includes the American media bank Veronis Suhler Stevenson, and has been marshalled by David Montgomery, the former Mirror Group chief executive who in recent years has advised 3i on media matters.
Last week most pundits were tipping the Barclays as favourites, citing their ability as private buyers to raise the money without having to answer to querulous shareholders.
But last night, sources close to the negotiations said a 3i victory could not be ruled out. Baroness Hogg, the former head of John Major’s policy unit who now chairs 3i, is understood to be particularly keen to secure the Telegraph titles.
But the venture capitalist’s secret weapon is Montgomery, who earned a daunting reputation as a cost-cutter during his time in charge of the Mirror Group titles.
City sources who have spoken to Montgomery about his plans say that he will take a “radical” approach if 3i wins. Nervous Telegraph staff interpret this as an omen of swingeing job cuts, but some believe it may mean that 3i is intending to back Montgomery in a drive to assemble a larger media group. There may even be a bid to take over Trinity Mirror.
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The soaring price is music to the ears of Hollinger shareholders. “It’s funny how things have worked out,” said one shareholder. “It looks to us like the Barclays have a real craving for these titles. If they think they can make it work at close to £700m, God bless them.”
The extent of the Barclays’ craving was revealed earlier this year in a Canadian court hearing. Sir David Barclay first set out his interest in a letter to Black in May last year.
He wrote again in June, and again in September when he expressed the desire “not to be a bore”, and, despite being rebuffed by Black, again in November. Black replied: “I am happy to hear from you, but not on this subject again, please.”
But Black had to eat his words. Just eight days after his acerbic reply, and with a Securities and Exchange Commission inquiry and shareholder actions looming, he wrote to the Barclays saying he had now had “a thought worthy of discussion”. This thought led to an abortive attempt by the Barclays to buy Hollinger Incorporated, a Black-controlled company that in turn controlled Hollinger International and the Telegraph titles.
Few doubt the Barclays’ ability to pay — particularly in concert with their long-term banker, HBOS — but their acumen as newspaper managers is open to question. They bought Robert Maxwell’s European and took a £74m loss on closing the title. The Business newspaper seems to be heading for the same fate. The Scotsman has recently had a circulation boost after turning tabloid, but its sales have been in steady decline since a price cut came to an end. Last year the paper was selling almost 75,000 copies, the latest ABC circulation figures now put it at 68,178.
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Black could yet have a say in the Telegraph’s fate. His Hollinger Inc may have a veto on the sale of assets if they amount to more than half of Hollinger International’s worth — but proving that condition, and arguing that the sale had not been conducted properly, would be a formidable legal hurdle, according to one shareholder.