Fallen media baron Conrad Black lost a round yesterday in a running feud with Hollinger International, the newspaper company he once led.
Seeking to block Hollinger's sale of the Daily Telegraph, one of Black's firms had argued in Delaware Chancery Court that the London newspaper is Hollinger's "crown jewel" and a source of special cachet.
"You can have dinner with the Queen when you own that newspaper," Black's firm quoted a Hollinger executive as having testified.
But the judge, Vice Chancellor Leo E. Strine Jr., was unimpressed.
"It may be that there exists somewhere a . . . stockholder (other than Mrs. Black or perhaps some personal friends of the Blacks) who values the opportunities that Conrad Black had to dine with the Queen and other eminent members of British society because he was the Telegraph's publisher," Strine wrote in ruling issued yesterday.
But even if some "peculiar" investor is swayed by such "aberrational sentiments" there is no reason to block the sale, Strine wrote.
Black resigned as head of Hollinger International last year amid allegations -- which he denies -- that he received millions of dollars in unauthorized payments. His firm, a holding company called Hollinger Inc., had been seeking a shareholder vote on the proposed newspaper sale, which it could have won by virtue of its voting power. Instead of Black, independent directors at Hollinger Inc. are directing the battle, the company said in a news release.
In a court filing, Hollinger Inc. had argued that selling the Daily Telegraph would leave the newspaper company a shadow of its former self. Investors who bought into "a world class newspaper company" would instead find themselves owning a piece of something entirely different, "a back bench newspaper operation whose leading publication, the Chicago Sun-Times, is the second place newspaper in a two-newspaper town," it said.
To prevail, Hollinger Inc. had to convince the court that selling the Daily Telegraph and other publications in Britain would have stripped Hollinger International of substantially all of its assets. Strine disagreed with that argument on economic grounds as well.
"The Telegraph sale does not strike at International's heart or soul, if that corporation can be thought to have either one," he wrote.
Black's holding company said it filed an appeal late yesterday.