PUBLISHING

HOLLINGER INC. AGREES TO SELL THE JERUSALEM POST

Hollinger International Incorporated has agreed to sell the Jerusalem Post to an Israeli company for $13.2 million, leaving the publishing company with the Chicago Sun-Times and a number of community newspapers. The price was well below the $21.5 million that the company paid for the newspaper, which it acquired in two stages in 1989 and 1990. As part of the two-way deal announced yesterday, CanWest Global Communications Corporation, the largest newspaper publisher in Canada, will take a 50% interest in the Jerusalem Post along with the buyer, the Tel Aviv-based Mirkaei Tikshoret Group. Hollinger International has been selling assets after ousting Conrad Black as its CEO along with several of his associates last year. An internal investigation found that the Canadian-born press tycoon and others siphoned tens of millions of dollars from the company, and the company is suing him to recover the funds. The sale of the Jerusalem Post came one day after the Securities and Exchange Commission filed a civil fraud lawsuit against Mr. Black and his former top deputy, David Radler, accusing them of misleading their board and misappropriating company funds. The SEC wants Mr. Black’s voting shares in Hollinger International placed in a trust. It’s also seeking an order barring Messrs. Black and Radler from ever serving as a director or officer of a publicly held company. Messrs. Black and Radler have denied any wrongdoing. In July, Hollinger International sold the Daily Telegraph of London to the Barclay brothers for $1.2 billion after a Delaware court blocked an effort by Mr. Black to circumvent an auction process by privately selling his voting shares, also to the Barclays. Hollinger is a minority investor in The New York Sun.

– Associated Press

AUDIT: NEWSDAY OVERSTATED CIRCULATION BY 17%

Newsday overstated its daily circulation by nearly 17% and its Sunday circulation by 14.5%, a report by a newspaper-auditing group said yesterday. The Audit Bureau of Circulations reported weekday circulation of 481,816 copies at the Long Island tabloid for the year ending in September 2003, down from the 579,599 copies originally reported by Newsday. Auditors also reported Sunday circulation of 574,081, down from Newsday’s original estimate of 671,820. Newsday’s parent, the Tribune Company, said earlier this year that an internal probe of Newsday and the Spanish-language daily Hoy had found poor record keeping and programs that deliberately violated the audit bureau’s regulations. Among the penalties imposed on Newsday by the bureau are twice-yearly audits and exclusion from its recent report on the top-circulation papers in the country. The audit bureau is still looking into Newsday circulation figures for the year that ended September 30, 2004. In a statement, Newsday noted the 2003 numbers fell within revised estimates released in September and said it had implemented tougher internal controls and fired circulation workers who contributed to the overstatements.

– Associated Press

NATIONAL

HEWLETT- PACKARD 4TH-QUARTER NET RISES ON SERVER REBOUND

Hewlett-Packard Company, the world’s second-largest personal-computer maker, said fourth-quarter net income rose 27% as sales of servers and storage devices rebounded.

Net income increased to $1.09 billion, or 37 cents a share, from $862 million, or 28 cents, a year earlier, the Palo Alto, Calif.-based company said in a statement. Sales in the quarter ended October 31 rose to $21.4 billion, compared with analysts’ estimates of $21.1 billion.

The chief executive, Carly Fiorina, reversed a decline in the company’s server and storage unit by halting shipping delays and stemming price cuts. Profit from the unit was $107 million, compared with a loss of $208 million in the third quarter. Hewlett-Packard lost sales of PCs to Dell Inc. after deciding not to match Dell’s lower prices. Shares of Hewlett-Packard rose 26 cents to $19.68 in New York Stock Exchange composite trading. They’ve dropped 14% this year. Ms. Fiorina, 50, fired three executives in the unit that sells servers, computers that run corporate networks, and storage units to businesses. She tapped Executive Vice President Ann Livermore to fix the problems. Ms. Fiorina in August said the unit will be profitable in the fourth quarter.

– Bloomberg News

IN THE COURTS

DISNEY’S EISNER SAYS OVITZ HIRE DISCUSSED WITH BOARD

Walt Disney Company’s chief executive, Michael Eisner, testified yesterday that the 1995 hiring of Michael Ovitz as president was “thoroughly discussed” by the board. The statement counters shareholders’ claims that the board deferred too much to Mr. Eisner in connection with Mr. Ovitz’s hiring and firing. Investors are seeking to have Mr. Ovitz’s $140 million severance returned to Disney, the no. 2 American broadcasting and entertainment company. Mr. Eisner said he called every director the weekend before the hiring in August 1995, when he and Mr. Ovitz had a “handshake” agreement. The board approved Mr. Ovitz’s hiring the following month and he started work as president of Burbank, Calif.-based Disney on October 1. Mr. Eisner fired Mr. Ovitz in December 1996.

– Bloomberg News

PHARMECEUTICALS

MERCK’S DEBT RATING LOWERED BY S&P ON VIOXX RISKS

Merck & Company, the second-largest American drug maker, lost its AAA credit rating from Standard & Poor’s because of revenue losses and potential liabilities from the company’s September recall of the Vioxx painkiller. Merck’s corporate credit and senior unsecured debt ratings were cut three levels to AA-, S&P said in a statement yesterday. The downgrade came a week after Moody’s Investors Service lowered Merck’s long-term debt rating two levels to Aa2.

The Whitehouse Station, N.J.-based drugmaker was one of seven American industrial companies with a triple-A rating, given to companies considered least likely to default on loans or obligations. Merck’s liabilities from Vioxx, which was pulled after a study linked it to heart attacks and strokes, may range from $4 billion to $18 billion, Merrill Lynch has estimated.

“Nobody knows exactly what (Vioxx) is going to cost them,” said Jack Lafferty, an analyst at U.S. Trust in New York, which manages about $10 billion, including Merck shares. “It’s going to be a long time before we really know.” Merck shares rose 39 cents, or 1.4%, to $27.48 at 4 p.m. in New York Stock Exchange composite trading. They have fallen 39% since the Vioxx recall, wiping out about $39 billion in market value.

– Bloomberg News

MARKETS

OIL FALLS TO 2-MONTH LOW AS SUPPLIES EXPECTED TO GAIN

Crude oil fell to a two-month low amid speculation that an Energy Department report today will show that American inventories rose last week. Supplies of distillate fuel, a category that includes heating oil and diesel, probably climbed 800,000 barrels from 115.7 million barrels, according to the median of forecasts by 16 analysts surveyed by Bloomberg. Crude-oil stockpiles probably rose by 1.5 million barrels from 291.5 million last week, the eighth straight weekly increase. “Tomorrow’s inventory report should show the first increase in distillate stocks that we’ve had in many weeks,” said the vice president of energy risk management with Fimat USA in New York, Michael Fitzpatrick. Crude oil for December delivery fell 75 cents, or 1.6%, to $46.12 a barrel at the 2:30 p.m. close of trading on the New York Mercantile Exchange. Oil has declined 17% from the record of $55.67 on October 25. Prices are up 42% in the past year. In London, the January Brent crude-oil futures contract fell 79 cents, or 1.8%, to $42.25 a barrel on the International Petroleum Exchange. Brent futures touched $51.95 on Oct. 27, the highest since the contract began trading in 1988.

– Bloomberg News