Titans Clashed in Battle for Newspaper

By Nathaniel Popper

Published June 30, 2006, issue of June 30, 2006.
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During one particularly bruising round of negotiations over the future of The Jerusalem Post, Israeli businessman Eli Azur paid a 3 a.m. visit to the hotel room of Canadian newspaper magnate Leonard Asper.

According to just-released court papers, that night in January 2005 Azur was hoping to rescue his joint bid for the Post with Asper, after a midnight meeting a few hours earlier had ended with Asper “hurling” his Blackberry to the floor. Asper, a Canadian media heir, was furious at a suggestion from self-made Israeli businessman Azur that Azur would play a lead role in their deal to purchase the Post from the flailing empire of Conrad Black, another Canadian tycoon.

The late-night peacemaking efforts at the Hilton Hotel failed, and Azur assumed sole control of the Post and The Jerusalem Report, a weekly magazine also owned by The Palestine Post Ltd. A few days later, Asper took his case to a New York court, demanding a controlling stake in the company.

It took a year and a half, but two weeks ago the arbitrator presiding over the case decided to give complete control of the Post to Azur’s company, Mirkaei Tikshoret Ltd. In a humiliating slap, Asper was also ordered to pay all of Azur’s legal costs.

The arbitrator’s decision appears to settle the ownership of one of the Jewish world’s most famous brand names and the conduit through which many Diaspora Jews get their news about Israel. But the court documents suggest that the arbitrator was also settling a personal poker game between two of the Jewish world’s most powerful businessmen — one a fiery Canadian, the other a poker-faced Israeli.

The paper at the center of the battle was founded as the Palestine Post in 1936. For many years it was the primary English-language source of news from the Middle East. The editorial line was generally left leaning until Hollinger Inc., the media company owned by neoconservative media mogul Black, purchased it in the 1980s. Black shaped all the Hollinger papers, including the Post, the London-based Daily Telegraph and the Chicago Sun-Times, to reflect his views. But the whole company was put up for sale in 2004 after an internal investigation found that Black and a few of his board members were milking the papers to pay for private jet trips and enormous salaries.

In April 2004, with the Post up for sale, Azur and Asper showed up for their first meeting — a private lunch in Tel Aviv — carrying very different motivations.

Asper’s media fortune was built on a politically driven brand of journalism. The newspapers owned by the Winnipeg-based CanWest, including Canada’s National Post, are famous for reflecting the Asper family’s rightwing pro-Zionist views. In an effort to extend the family’s influence, CanWest made a failed bid to acquire The Jerusalem Post in 2000, when Asper’s father, Izi, was still alive. The arbitrator said that Leonard Asper wanted to make another bid to fulfill his father’s dream of owning a business in Israel.

Azur, on the other hand, is famous for keeping his beliefs to himself. He has focused on such profitable media ventures as talk radio stations and Russian-language newspapers. One of the primary points drawing Azur to the Post was not the newspaper’s history but its hefty debt, which his associates had calculated as a tax benefit for other profit-making ventures in Israel. In the court documents, it emerged that one of Azur’s chief concerns with Asper was the “extreme rightwing views” of the Asper family, which Azur feared might hurt the Post.

At their first get-together, a private lunch, Asper and Azur had a meeting of the minds on at least one point: the value of The Jerusalem Post’s real estate in central Jerusalem. Both men came to the table hoping to sell the real estate for a tidy profit — and Asper believed that he would need an Israeli partner to make it happen.

But Asper arrived with a number of conditions that threatened to scare away Azur. The Canadian mogul insisted on assurances that “the paper would not depart from its conservative political position.” More significantly, he said, CanWest would need to have a controlling financial interest in the new company, largely because its board perceived the Israeli market as being “turbulent and not ‘First World.’”

It would be the question of control that became the sticking point over the following months. At that first meeting, Asper “reluctantly agreed” to a 50-50 split, but when he returned home the CanWest board rejected the idea, angering Azur.

“When I had come back to Eli that 50-50 was a problem, he had said I was going back on my word, that we had a deal,” Asper testified. “I said no, that wasn’t the way we left it.”

The two men had not fully settled on how ownership would be divided, but they decided to go ahead with the bid anyway. The basic understanding was that MTL would buy the Post and the Report from Hollinger Inc. and then sell them to a company jointly owned by Azur and CanWest.

MTL’s successful bid for $13.2 million went through in November 2004. A few days later Asper flew to Israel, hoping to work out the kinks. At the first meeting “there was warmth and a real rapport,” according to the arbitrator. Azur testified that because he felt so good about the deal, he told Asper to travel on to the Post’s office alone and introduce himself to the staff. Post staffers from the time remember Asper holding a companywide meeting during which he promised that he had no plans to get rid of the paper’s recently hired editor, David Horovitz.

The good will was short lived.

At dinner that night, Azur asked Asper to begin contribution of resources immediately. When Asper flew home to Canada, the money did not start flowing. Back in Israel, Azur began to sober on the deal. The underling described as his “right-hand man,” Eyal Golan, found that the Post was in significantly worse shape than MTL had imagined. It was losing $400,000 a month. In clipped Israeli English, Golan said that on trips to the paper, he found that “employees are hiding things, no management, people are stealing things” — situations requiring all the more input from Asper.

In addition to the unexpected financial problems, Azur was humiliated to learn that Asper had been looking into his criminal history.

With tensions boiling, Asper planned another trip to Israel, soon after the start of 2005. He wrote a personal e-mail to Azur’s assistant, saying that Azur “needs to show me that he will be a good partner.”

“Right now we are both disappointed in each other, it appears,” Asper wrote. “Let’s spend the two days in Israel mending fences.”

The trip proved to be a feverish roller coaster ride of agreements and renunciations.

At their first lunch, Azur tried to sell an interim deal in which Asper would pay 25% for one year and have his father’s name at the top of page one. Later, Azur offered a 49% stake to Asper, leading to the Blackberry-throwing incident. Then Azur made his trip to Asper’s hotel room in the middle of the night, leading to a lunch at which the 50-50 plan appeared to be revived.

When the men drove back from lunch, everyone was in good spirits. “Mr. Asper entered first, while Mr. Azur parked the car,” Azur’s assistants told the arbitrator. “Mr. Asper was all smiles.”

That same afternoon, though, Asper’s lawyer put new conditions on the table — apparently because the lawyer was fearful that Azur was secretly trying to sell the Post’s real estate for an exorbitant sum. When the new conditions were refused, Asper again lashed out.

“I will open a new publication,” Asper threatened Azur, according to the court papers. “I’m ready to lose money on this publication, but I want to destroy you.”

It was Friday afternoon, and Azur had to go home for the Sabbath. On Saturday, Asper flew home to Canada and all bets were off. Two weeks later, CanWest took Azur to court. Asper argued that he was only requesting what the men had agreed to in the beginning: a right to buy half of the paper from Azur.

Asper and CanWest won an early legal victory when a New York judge issued a restraining order blocking Azur from making any significant changes at the paper. Post employees said that since then, the owners have not been able to invest in the paper, but advertising and circulation has actually increased under Azur’s more stable regime.

After sifting through 10,000 pages of documents and numerous testimonies, however, the arbitrator decided that Azur and Asper had left too many questions open to have a binding deal. Azur had paid for the paper, and the arbitrator decided he could do with it as he chose. In accordance with his posture throughout, Azur has not commented, but there is speculation that he may be planning to sell off parts of the paper. In a statement, Asper said that he was “extremely disappointed” and is reviewing his options.






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