Media group Hollinger International, which publishes Britain's Daily Telegraph and the Chicago Sun-Times in the US, has warned that its profits will be hit by the cost of a probe into executives benefits following a shareholder's complaint.
Hollinger, which is controlled by press baron Conrad Black and also publishes the Jerusalem Post, said in a US regulatory filing late last night that it expected a full-year operating income between $54m and $62m, about $10m below the previous range.
Legal costs and insurance premiums related to a special committee's investigation of executive compensation will cost between $6m and $8m, according to Hollinger, which has been besieged by investor complaints about its complex ownership structure.
Hollinger's board was forced to establish the special committee in June after heavy criticism from shareholders over the company's ownership structure and executive compensation packages. The review, conducted by three independent board members, is still under way, Hollinger said in its filing, and 'the timing and outcome of this process are uncertain'.
Toronto-based Hollinger Inc, a holding company controlled by Black, is the controlling shareholder of Chicago-based Hollinger International, despite owning only 30% of its equity.
Shareholders have criticised lucrative packages for management services paid by Hollinger International to Ravelston, Black's private holding company which controls Hollinger Inc. Black is also the chairman and chief executive of both Hollinger entities. Hollinger International paid $8.5m in stock options to Ravelston employees in the six months to June 30, according to the filing.
