The Fourth Estate

Armstrong placed the pension fund checkbook on his desk and flicked open the cover. “When are you returning to London?” he asked as he waved Peter into his chair.

“Tomorrow’s Concorde,” Peter replied with a smile.

“Then you’ll have to explain to Sir Paul why I can’t make the board meeting on Wednesday, much as I’d like to. Just tell him that I’ve finally settled with the unions on excellent terms, and that by the time I report to the board next month we should be showing a positive cash flow.” He placed his hand on Peter’s shoulder.

“With pleasure, Dick,” said Peter. “Now, how many of these checks do you need signed?”

“You may as well do the lot while you’re at it.”

“The whole book?” said Peter, shifting uneasily in his chair.

“Yes,” replied Armstrong, handing him his pen. “They’ll be quite safe with me. After all, none of them can be cashed until I’ve countersigned them.”

Peter gave a nervous laugh as he unscrewed the top of the pen. He hesitated until he felt Armstrong’s fingers tightening round his shoulder.

“Your position as deputy chairman comes up for renewal in a few weeks’ time, doesn’t it?” said Armstrong.

Peter signed the first three checks.

“And Paul Maitland won’t go on for ever, you know. Eventually someone will have to take his place as chairman.”

Peter continued signing.

FINAL EDITION

Double or Quits

36.

Daily Express

8 February 1991

CABINET ESCAPES AS IRA BOMB EXPLODES IN GARDEN OF NO. 10

“Bitten Off More than They Can Chew” was the headline on the article in the Financial Times. Sir Paul Maitland, sitting by the fire at his home in Epsom, and Tom Spencer, traveling in from Greenwich, Connecticut, on a commuter train, both read the article a second time, although only half the contents were of any real interest to them.

The press barons Keith Townsend and Richard Armstrong appear to have made the classic mistake of leveraging their borrowings on far too high a ratio against their assets. They both look destined to become case studies for future generations of students at Harvard Business School.

Analysts have always agreed that Armstrong initially appeared to have pulled off a coup when he purchased the New York Tribune for only twenty-five cents while all the paper’s liabilities were underwritten by the former owners. The coup might have turned into a triumph had he carried out his threat to close the paper down within six weeks if the unions failed to sign a binding agreement. But he did not, and then he compounded his mistake by eventually giving such a generous redundancy settlement that union leaders stopped calling him “Captain Dick” and started referring to him as “Captain Santa.”

Despite that settlement, the paper continues to lose over a million dollars a week, although agreement on a second package of redundancies and early retirements is thought to be imminent.

But while interest rates continue to rise and the vogue for cutting the cover price of newspapers continues, it cannot be long before the profits of the Citizen and the rest of the Armstrong Communications group will no longer be able to sustain the losses of its American subsidiary.

Mr. Armstrong has not yet informed his shareholders how he intends to finance the second settlement of $320 million recently agreed with the New York print unions. His only reported statement on the subject is to be found in the columns of the Tribune: “Now that the second package has been accepted by the unions, there is no reason to believe that the cash flow of the Tribune shouldn’t prove positive.”

The City remained skeptical of this claim, and shares in Armstrong Communications fell yesterday by a further nine pence to £2.42.

Keith Townsend’s mistake …

The phone rang, and Sir Paul put the paper down, rose from his chair and went into his study to answer it. When he heard the voice of Eric Chapman, he asked him to wait for a moment while he closed the door. This was somewhat unnecessary, as there was no one else in the house at the time, but when you’ve been the British Ambassador in Beijing for four years, some habits die hard.

“I think we ought to meet immediately,” said Chapman.

“The Financial Times article?” said Sir Paul.

“No, it’s potentially far more damaging than that. I’d rather not say too much over the phone.”