The Fourth Estate

32.

Wall Street Journal

12 November 1986

NEW YORK STOCKS DIVE RECORD 86.61 POINTS

“Ladies and gentlemen,” Armstrong began. “I have called this press conference to announce that I informed the Securities Exchange Commission this morning that it is my intention to make an official takeover bid for the New York Star. I am delighted to report that a major shareholder in the paper, Mrs. Nancy Summers, has sold her stock to Armstrong Communications at a price of $4.10 per share.”

Although some journalists continued to write down Armstrong’s every word, this piece of news had been flagged up in most papers for over a week. Most of the journalists’ pencils remained poised as they waited for the real news.

“But I am especially proud to announce today,” continued Armstrong, “that Mr. Lloyd Summers, the son of Mrs. Summers and the director of the foundation which bears her name, has also pledged the 5 percent of the company held in trust to my cause.

“It will come as no surprise to you that it is my intention to continue to support the outstanding work the Summers Foundation does in prompting the careers of young artists and sculptors who would not normally be given the chance to exhibit in a major gallery. I have, as many of you will know, had a lifelong involvement with the arts, in particular with young artists.” Not one journalist present could remember a single artistic event Armstrong had ever attended, let alone supported. Most of the pencils remained poised.

“With Mr. Summers’s backing, I am now in control of 19 percent of the Star’s stock, and I look forward in the near future to becoming the majority shareholder and taking over as chairman of the paper at the AGM next month.”

Armstrong looked up from the statement that had been prepared for him by Russell Critchley, and smiled at the sea of faces. “I shall now be happy to answer your questions.”

Russell felt that Dick handled the first few questions well, but then he pointed to a woman seated in the third row.

“Janet Brewer, Washington Post. Mr. Armstrong, may I ask for your reaction to the press release issued this morning by Keith Townsend?”

“I never read Mr. Townsend’s press releases,” said Armstrong. “They’re about as accurate as his newspapers.”

“Then allow me to enlighten you,” she said, looking down at a sheet of paper. “It seems that Mr. Townsend has the backing of the bankers J.P. Grenville, who have pledged 11 percent of their portfolio stock in support of his bid to take over the Star. With his own shareholding, that gives him over 15 percent.”

Armstrong looked straight at her and said, “As chairman of the Star, I shall look forward to welcoming Mr. Townsend to next month’s AGM—as a minority shareholder.”

This time the pencils wrote down his every word.

* * *

Sitting in his newly acquired apartment on the thirty-seventh floor of Trump Tower, Armstrong read over Townsend’s press release. He chuckled when he came to the paragraph in which Townsend praised the work of the Summers Foundation. “Too late,” he said out loud. “That 5 percent belongs to me.”

He immediately gave instructions to his brokers to buy up any Star stock that came on the market, whatever the price. The shares rocketed as it became clear that Townsend had given the same order. Some financial analysts suggested that because of “a strong personal animosity,” both men were paying well above the real value.

For the next four weeks Armstrong and Townsend, accompanied by a battery of lawyers and accountants, spent every waking hour in planes, trains and cars as they zigzagged across America, trying to convince banks and institutions, trusts and even the occasional wealthy widow to support them in the battle to take over the Star.

The chairman of the paper, Cornelius J. Adams IV, announced that he would hand over the reins of power at the AGM to whichever contender controlled 51 percent of the shares. With only two weeks to go before the Star’s AGM, the financial editors were still unable to agree on who had the largest shareholding in the company. Townsend announced that he now controlled 46 percent of the stock, while Armstrong claimed that he had 41 percent. The analysts therefore concluded that whichever one of them was able to capture the 10 percent held by the Applebaum Corporation must surely carry the day.

Vic Applebaum was determined to enjoy his fifteen minutes of fame, and declared to anyone who cared to listen that it was his intention to see both would-be proprietors before he came to a final decision. He chose the Tuesday before the AGM to conduct the interviews which would decide on whom he should bestow his favor.

The two rivals’ lawyers met on neutral ground, and agreed that Armstrong should be allowed to see Applebaum first, which Tom Spencer assured his client was a tactical error. Townsend agreed, until Armstrong emerged from the meeting clutching the share certificates which proved he was in possession of Applebaum’s 10 percent.

“How did he manage that?” Townsend asked in disbelief.

Tom didn’t have an answer until he read the first edition of the New York Times at breakfast the following morning. Its media correspondent informed readers on the front page that Armstrong had not spent a great deal of time explaining to Mr. Applebaum how he would manage the Star, but had concentrated more on telling him in Yiddish that he had never really recovered from losing his entire family in the Holocaust, and that he had ended their meeting by disclosing that the proudest moment in his life had been when the prime minister of Israel had appointed him as the country’s roving ambassador to the US

SR, with a special brief to assist Russian Jews who wished to emigrate to Israel. At this point Applebaum apparently broke down in tears, handed over the stock and refused to see Townsend.

Armstrong announced that as he now controlled 51 percent of the company, he was therefore the new owner of the New York Star. The Wall Street Journal concurred, declaring that the Star’s AGM would be nothing more than an anointing ceremony. But it added a postscript pointing out that Keith Townsend shouldn’t be too depressed about having lost the paper to his great rival. Because of the huge rise in the share price, he would make a profit in excess of $20 million.

The New York Times arts section reminded its readers that the Summers Foundation would be opening an avant-garde exhibition on Thursday evening, After the press barons’ claims of support for Lloyd Summers and the foundation’s work, it said, it would be interesting to see if either of them bothered to turn up.

Tom Spencer advised Townsend that it might be wise to drop in for a few minutes, as Armstrong was certain to be there, and you never knew what you might pick up on such occasions.

* * *