Witness for the Prosecution

Once fast friends, David Radler and Conrad Black got rich together in the newspaper business. Now, as Lord Black endures a criminal trial in Chicago, his old partner’s testimony may well send him to prison.

By Suzanne Brewster

THE PLEA AGREEMENT that Vancouver businessman David Radler signed with the U.S. Attorney for the Northern District of Illinois in September 2005 marked the startling end of a fruitful friendship. Radler promised to testify against Conrad Black, his business partner of over 30 years; in exchange, prosecutors allowed him to plead guilty to a single count of mail and wire fraud, and recommended a jail term of 29 months. At this writing, Radler was preparing to step into a Chicago courtroom and explain how he and his partner stole over $60 million from the company they’d spent a lifetime building. “Conrad took the glory on the way up,” he said. “He can take the crap on the way down.”

Radler and Black met in 1969. They made a strange pair, Radler a curmudgeonly Jewish hypochondriac, Black a haughty WASP intellectual. They began buying small community newspapers in rural Quebec. Radler’s parents ran a restaurant in Montreal, where he was born, and he thought he knew what made a business profitable: cost cutting. At the first newspaper he and Black bought, The Sherbrooke Record, he fined a reporter two cents for wasting a piece of paper by writing a grievance on it. He also fired half the staff, let Black write the editorials, and personally sold ads, did page layouts, and even delivered the paper when necessary. He once joked that his contribution to journalism was the advent of the “three-man newsroom—with two guys selling ads.” Within two years, the Record had gone from spilling red ink to earning $150,000 in annual profits. Spurred by success, the partnership began using the paper’s profits to buy up other community papers. They called their venture Sterling Newspapers.

In 1972, Radler and his wife Rona moved to Prince George to focus on Sterling’s Western Canadian operations. They also bought the Slumber Lodge chain of 14 motels in the B.C. interior, to which Radler brought his cost-cutting zeal. As Black recalls in his autobiography: “Shortly after we bought the company, David called and said, ‘There is prima facie evidence that our motels aren’t doing well. The president of the company committed suicide yesterday.’” Under Radler, the motels were soon turning a handsome profit. He eventually sold the chain for more than $10 million.

Eight years after investing $20,000 in the Sherbrooke paper, Radler and Black sold it for $875,000. In addition, they’d retained all of the paper’s earnings over that period, and used them to scoop up more papers. Unlike Black, who used his position as burgeoning press baron to further his own political and social views, Radler made no pretense of being in the newspaper business for any reason other than money. As a former managing editor of the Chicago Sun-Times recently put it: “I hated to see him come into the newsroom, not because I dreaded him, but because I wanted to keep him away from the staff. He seemed to enjoy agitating people. He would come in on Saturdays and personally go through stacks of invoices, complaining about toner costs. He had a calculator in his head.”

By 1984, keen to expand Sterling’s reach, Radler took out an ad in an American trade publication: “Newspapers wanted: Well respected, growing Canadian daily newspaper with cash seeks to purchase smaller newspapers (5,000-10,000 circulation). Write or phone Arthur Weeks, Sterling Newspapers Ltd. Box 10079 Pacific Centre, Vancouver, BC V7Y 1B6.”

Over the next 10 years, from that office in Pacific Centre, Radler orchestrated the purchase of 300-odd U.S. community newspapers for over $300 million. He often got the papers at bargain prices; cost-cutting enhanced their profitability. Warren Buffett once likened ownership of a monopoly or market-dominant newspaper to owning an unregulated toll bridge: “You have relative freedom to increase rates when and as much as you want.”

It was a model that served Radler well. While Black was busy re-arranging his empire through mergers, buyouts and name changes, Radler was squeezing every nickel out of his little publications. Black had christened his new conglomeration Hollinger Inc., and Radler was named president of the U.S. community newspaper division, American Publishing. It was eventually run from Illinois, to which he commuted from Vancouver.

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