Financial Probe Impacts On Hollinger Profits

Hollinger International, the US-based publisher of the Daily Telegraph and the Sunday Telegraph, has issued a profits warning. The costs of a special investigation into executive payments are being blamed for a prospective shortfall of 17%.

In a US regulatory filing, Hollinger said that operational income for the full year would be in the $54 million to $62 million range, below the previous estimate of $65 million to $75 million.

The company also admitted that profits will be affected by the sluggish advertising market. At the Telegraph Group alone, ad revenues were down by 6.5% in the first quarter of 2003, rising to 11.8% in the second quarter.

Hollinger faces up to $8 million in legal fees and insurance premiums after a special committee of directors was established to investigate the complaints of a prominent shareholder, Tweedy Brown.

The investment firm has drawn attention to $74 million earned by senior Hollinger directors, including chairman Conrad Black, in the form of non-compete agreements. Meanwhile, talks aimed at restructuring the company and its debts are ongoing but the outcome remains unclear.

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