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Selling the Observer: an editor protests

By Colin LegumColin Legum is an associate editor of the London Observer. / April 30, 1981



Britain's oldest Sunday newspaper, the Observer, has fought many battles for survival over the last 190 years but none as crucial as the one in which it is currently engaged. Hearings began in secret this week before the Monopolies Commission in London to decide the paper's future.

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The issue is whether the present owner of the paper. Atlantic Richfield of Los Angeles (ARCO), should be allowed to sell its controlling interest to another multinational, the London-based Lonrho company, which has considerable interests in Africa as well as in the Arab Gulf states, in South America, and to a lesser extent in Europe.

ARCO bought the paper from the Astor Trust about four years ago at a time when the Observer was in serious financial difficulties. Thanks to ARCO's open-handed generosity, the Observer not only climbed out of its financial hole but is, once again, a profitable concern. Moreover, it has attracted more readers over the last few years than any other serious British newspaper.

ARCO proved itself to be not only financially generous but also a model newspaper owner inasmuch as its directors never once sought to interfere in the paper's editorial independence.

So all seemed set for a bright future when, literally overnight and without any word of explanation or consultation (not even with the paper's board of directors), ARCO's chairman, Robert O. Anderson, announced that he had sold a controlling interest to Lonrho.

Both the method of the deal and the proposed new ownership have been severely criticized by the former owner-editor, David Astor; the recent editor-in-chief, Conor Cruise O'Brien; the present editor, Donald Trelford; and the majority of the paper's senior staff. All are now engaged in a lastditch stand to try and prevent the deal from going through.

Their hope lies in persuading the Monopolies Commission to withhold its consent to the proposed transfer of ownership. The Monopolies Commission is something of a misnomer. While its primary purpose is indeed to prevent the concentration of newspaper ownership in too few hands, its powers give it a much wider latitude in being able to decide on the appropritateness of a particular newspaper owner.

A number of submissions, still confidential, have been made to the commission in which two particular points are argued. First, that Lonrho's ownership would destroy the independent character of the Observer. Second, that the paper should be offered for sale on the open market to determine what other bidders might be available.

This second point is crucial since the commission is likely to pay less attention to the first argument if refusal of the bid might mean the closure of the paper. Although no new bidders have yet publicly disclosed an interest in acquiring the Observer, there is at least one serious potential buyer who is acceptable to the staff. But this bidder is unwilling to come into the open until after the commission has given its ruling.

The case against the sale to Lonrho is, I believe, a substantial one. The company is largely controlled by its executive director."Tiny" Rowland, who is, to say the least, a controversial figure. A few years ago he was at the center of a serious boardroom row when a number of his fellow directors sought to remove him. He won that fight very largely by getting a number of African leaders to support his claim that Lonrho's substantial interests in Africa would be expropriated if Rowland were removed from the board.

A British Board of Trade inquiry into the company's affairs produced a report which was in many ways critical of Rowland. It disclosed a state of affairs which led the then prime minister, conservative Edward Heath, to speak of the company's activities as "the unacceptable face of capitalism."

Rowland differs from most other modern entrepreneurs in that he personally has a deep love for Africa and a remarkable capacity for getting on well with many of the continent's leaders, among whom he can claim close friendships. But his methods have also made him enemies. A few years ago Lonrho's interests were expropriated by Tanzania's president, Julius Nyerere, who accused Rowland of interfering in the continent's political affairs.

Mr. Rowland admits that his chief interest in wishing to own the Observer is because of its reputation in Africa. Yet, when questioned by the paper's staff, he emphatically denied that he had any intention of wishing to use the paper to promote Lonrho's interests in Africa. So why else would he want to buy the paper?

However, it is not just because of Lonrho's interests and role in Africa that the paper's staff have their doubts. The paper's financial writers have on a number of occasions criticized his deals in Britain. Following one such recent attack, Rowland ordered that no Lonrho advertising would be placed in the Observer so long as John Davies remained as its city editor.

Although Rowland has given firm pledges that he is prepared to provide guarantees for the paper's editorial independence, the staff has looked on this guarantee with a degree of skepticism in view of his known reputation for being a dominant and interfering chief executive -- a characteristic remarked upon by the Board of Trade inquiry.

Besides, the Lonrho-appointed board of directors would have the right to appoint or dismiss the editor -- and, as every working journalist knows, it is the editor who, in the end, decides what goes into a newspaper and what stays out.

For all these reasons, the paper's senior staff will argue before the commission that the Observer will cease to be regarded as a paper of fearless independence if its ownership should pass into "Tiny" Rowland's hands. The question is whether they can convince the Monopolies Commission that their fears are well founded. We have been promised an an swer within the next two months.