Part 31 (1/2)

”Disliking Ken Thomson, let alone detesting him, is wholly impossible,”

confessed Richard Gwyn, a leading Canadian commentator who once worked for him. ”He radiates niceness from every pore, down to the holes in the soles of his shoes. He's self-effacing, shy, unpretentious, soft-spoken. He peppers his conversations with engaging archaisms, like 'golly' and 'gee whiz.' But then you stop feeling sympathetic, because you realize that his innocence is just a synonym for timidity. And you realize at the same instant that the YOUNG KEN 5 13.

reason Thomson newspapers are bland is that they are led by the bland.”

The Thomson operational code had been set down bV Roy but it didn't initially change much under Ken. B oth Thomsons regarded editors as expendable eccentrics, and Clifford Pilkey, then president of the Ontario Federation of Labour, once called their company ”a vicious organization, certainly not compatible with what I describe as decent, honourable labour relations.”

Reporters did not receive free copies of their own newspapers, and earnest bargaining went on to deprive delivery kids of half a cent in their meagre take-home pay. Most positions had fixed salary limits, so that anyone performing really well would inevitably work himself or herself out of a job. In pre-computer days, Thomson papers sold their used page mats to farmers as chicken-coop insulation and Canadian Press printers were adjusted from triple to double s.p.a.cing to save paper. Each newsroom telephone had a pencil tied to it, so there would be no wasteful stubs floating around. ”G.o.d help us if they ever realize there are two sides to a piece of toilet paper,” one publisher was heard to whisper at a management cost-cutting meeting. In a thesis he wrote for the Carleton School of Journalism, Klaus Pohle, the former managing editor of the Lethbridge Herald, doc.u.mented the Thomsonization of his former paper and coined the name for a sadly relevant and increasingly frequent process.

In January 1980, Thomson had used some of his North Sea oil proceeds to purchase, for $130 million, a major Canadian newspaper chain, FP Publications Limited, but that projected him into new and unfamiliar ter- ritory. FP had fielded an impressive Ottawa news bureau under the inspired direction of Kevin Doyle (later the editor of Maclean'V) that included such stars of Canadian 514 FAREWELL TO GLORY.

journalism as Allan Fotheringham, Walter Stewart and Doug Small. The bureau regularly beat the Parliamentary Press Gallery to the news, but it didn't fit in with Thomson's usual barebones operation. When FPs Edmonton bureau chief, Keith Woolhouse, who was working out of his one-bedroom apartment, asked for a wastebasket, that was enough to trigger the costefficiency instincts of Thomson's executive vice-president, Brian Slaight. Doyle tried to defuse the situation by offering to send out an extra wastebasket from the Ottawa office.

”Is it excess to the Ottawa bureau?” Slaight, ever the champion of independent editorial control, sternly demanded.

Doyle, about to break the news of Prime Minister Pierre Trudeau's resignation, calmly replied, ”Well, if you mean, do we need it, no, we don't.”

At last, a triumph for head office. Slaight could barely contain himself ”We have a truck that goes from Ottawa to Toronto to Winnipeg, then on to Edmonton. If we put the wastebasket on the truck, it will hardly take up any room, and won't cost us a cent!”

So the wastebasket journeyed jauntily across the country, and it took only a week and a half to reach its destination. But the Edmonton Bureau's troubles were far from over. Woolhouse wanted to rent an office and needed furniture. Slaight vetoed the initial $1,600 estimate but later approved a bid of $1,100 from a local repossession centre. That didn't save Woolhouse.

He permanently blotted his copy book by purchasing his pens and paper clips on the open market instead of from the repossession house. The Edmonton bureau was soon closed, as was the entire FP news operation.

The FP purchase had also thrown the Thomson organization into the unusual position of having to operate newspapers against local compet.i.tion, especially in YOUNG KEN 515.

Ottawa, where its Journal was up against the Southamowned Citizen; in Winnipeg, where its Free Press was head to head with Southams Tribune; and in Vancouver, where its Sun had to compete with Southam's Province. That ran strictly against Thomson's publis.h.i.+ng philosophy, which perpetuated his father's dictum that what's important ”isn't the circulation of one's own newspaper, it's the circulation of the opposition's. Even second-largest is no good. Only the largest is worth buying.” The dilemma was neatlv resolved on August 2 7, 1980, when Southam's closed tl~e Winnipeg Tribune while Thomson shut the Ottawa Yournal-th rowing eight hundred employees on the street-and Southam's bought out Thomson's inter- est in the Hancouver Sun. The Ottawa move was particularly puzzling because the journal's circulation had climbed 25 percent in the previous six months and its advertising linage was the highest in eight years. But looking back on that Black Wednesday, Thomson wouldn't change a thing.

”n.o.body likes to see people lose their jobs,” he says. ”We didn't take any satisfaction in that. But the situation at the journal was hopeless and it was never going to get any better. We couldn't give the paper away for a dollar. We tried nine different buyers. n.o.body else wanted it. Somebody had to draw the curtain. So when Gordon Fisher of Southam's told us he was going to close his paper in Winnipeg, he suggested we close thein both on the same day. I thought it was a good idea because I knew if he closed his paper first, people would come to me and ask, are you going to close yours, and I didn't want to lie to them. So when he said, 'Why don't we do it the same day?' I said, 'Oh boy, we'll be in real trouble-but let's do it.”'

Trouble came in the form of a Royal Commission, headed by Tom Kent, a former Economist and Winnipeg Free Press editor, who labelled the'rhomson publications as ”small-town monopoly papers [that] are almost 5 16 FAREWELL TO GLORY.

without exception, a lackl.u.s.tre aggregation of cashboxes” and suggested the organization be forced to sell its flags.h.i.+p publication in Toronto, the Globe and Mail, purchased in 1980. The recommendation was not followed up, but the hearings brought into the public consciousness Thomson's utilitarian code of editorial independence. ”We run our newspapers in a highly decentralized manner, delegating operating authority to publishers,” Ken Thomson told the Commission's opening session. ”We have vested in our publishers the responsibility and the autonomy to decide what news, information and comment should be published daily in their newspapers.” That was true enough, and there was no more eloquent witness to that philosophy than Harold Evans, the former editor of both The Times and The Sunday Times, who wrote in his memoirs that the difference in owners.h.i.+p between the Thomsons and Rupert Murdoch was ”a transition from light to dark.” Neither of the Thomsons have, in fact, cast much of an editorial shadow over their publications. The problem is that editorial budgets ultimately decide any publication's content, and that was-and is-how the Thomsons exercise control. Since the Kent hearings, John Tory has impressively improved both the quality of Thomson papers and the working conditions under which they're produced.

The severest test of Thomson's hands-off att.i.tude was the Globe story about the newspaper closings written by Arthur Johnson, quoting the press lord's heartless comment on the plight of those who had lost their jobs: ”Each one has to find his own way in this world. ”Johnson firmly stuck to his version, but Thomson categorically denies having made the comment.

”I explained for twenty minutes how we had gone way beyond our statutory obligations in severance arrangements, but that we were not prepared to see the company's a.s.sets dissipated because YOUNG KEN 517.

Southams Gordon Fisher consoles Ken Thomson during the 1981 Royal Commission on Neuspapers.

we didn't have the guts to face up to the flak. I never said anything about everyone having to make his own way in the world, even though that quote will go down in history with me. I would never say that. I know I'm not brilliant, but even I can figure that one out,” He didn't phone the Globe to complain, but six weeks later he met publisher Roy Megarry at a Royal York Hotel reception and let him have it. ”Jesus, Roy, the Globe misquoted me terribly,” he complained. ”They put the worst words in my mouth. I never phoned you about it, but I wish I had.”

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”Geez, Ken,” Megarry replied, ”I wondered at the time why you'd make such a statement and I talked it over with the editor involved, but he insisted that you had said it.”

”You'll have to take my word for it. I didn't. I'm not that stupid.”

Megarry, who persuaded Thomson to invest $65 million in turning the Globe into a national newspaper, insists there has been no editorial interference from the Thomson head office, a few blocks away. ”It's one thing to own the Barrie Examiner and not interfere editorially,” he says. ”It's another to own the Globe in the city where you reside and resist the temptation to put on pressure. But they haven't.” On Thomson's sixtieth birthday, Megarry edited a special one-copy issue of the Globe, subst.i.tuted on his doorstep for the real thing, that had a front page with Ken's picture on it and several feature stories about Gonzo. ”That morning, Ken did phone me,”

Megarry recalls, and said, ”'What are you doing, you rascal?'-he frequently refers to me as a rascal-and admitted he had been stunned, because for a split second he thought it really was that day's Globe. 'It was a cute thing to do,' he told me, 'but I hope it didn't cost the company too much money.”'

DURING THE LATE 1970s, Ken Thomson enjoyed a unique problem. With oil prices up to as much as $34 a barrel, his share in the North Sea fields purchased by his father was throwing off annual revenues of $200 million. That's not the kind of sum you keep in a savings account. Tax reasons plus the wish to get into hard a.s.sets dictated new acquisitions, but the chain had run out of cities, towns and even villages where they could maintain monopolies.

Thomson went shopping for a safe, timeless investment for his family.

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While on a flight to London, John Tory pa.s.sed over to Ken an annual report of the Hudson's Bay Company, with the comment, ”This is one you should think about.” That struck Thomson as a weird coincidence because he had been thinking about The Bay, ever since Fred Eaton at a party had mentioned that the HBC was lucky because so much of its profit flowed from non-merchandising sources. ”It was like mental telepathy,” Thomson recalled of the airplane conversation.* At first glance, the Hudson's Bay Company seemed a perfect takeover target. It certainly carried the kind of historic pedigree that would please a British-Canadian lord, it was widely held with no control blocks that would have demanded premium prices, and it was a well and conservatively managed enterprise, ideal for the Thomson habit of acquiring companies that turned decent profits without requiring day-to-day involvement. ”It looked to me like a business that in the inflationary environment of that time would do quite well, because the top line was pushed up by price increases while many of the costs, including store leases, were fixed,” John Tory recalled. ”Also I knew that Simpsons, which they had just taken over, was not well managed, so that a turnaround would have impressive bottom-line results.”

On March 1, 1979, Ken Thomson and John Tory called on Don McGiverin to announce they were bidding $31 a share--36 percent over market value-for 51 percent of the Hudson's Bay Company. At The Bay's board meeting two weeks later, Governor George Richardson reported that in a meeting with Thomson

*There is another theory why Thomson settled on The Bay. He walked Gonzo most often through Craigleigh Gardens, near his Rosedale home, and at night the most visible object from the shrubbery is the ochre neon sign at Bloor and Yonge, announcing-rhe Bay! The Bay!”

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the previous Sunday evening he had failed to persuade him to buy less than 51 percent. The board decided that the premium offered for control was not high enough and that $37 to $40 would have been a more appropriate amount.

That consideration was aborted by the sudden entry into the bidding of grocery magnate Galen Weston, offering $40 for the same percentage, though part of it would ha-,e been payable in stock. Unlike Thomson, Weston hinted that he intended to fire most of the FIBC executives, replacing them with his own.

In typical Establishment fas.h.i.+on, the first telephone call Thomson received after word of his intended takeover leaked out was from Fred Eaton. ”I wish you luck. Welcome to the world of merchandising.” The second was from Galen Weston, advising him of the competing bid.* By April 2, Thomson and Tory had raised their bid to $35 for 60 percent of the HBC stock. Weston countered with an improved offer ($40 for 60 percent), but once Thomson came in with an unconditional cash offer of $3 7, for 75 percent of the shares$276 million more than he had originally been willing to pay (although for 75 percent of the shares rather than the original 51 percent)-the bidding was over. The Bay board met on April 4 to approve the takeover formally. The Thomson group made only three demands: a pledge that its equity position wouldn't be diluted by the issue of extra treasury shares; two seats on The Bay board for Thomson and Tory; and alteration of the

*It was a project the fathers of both men had desired. Galen's father, Garfield, had purchased 200,000 f IBC shares in preparation for making his own bid, just before he died; Rov Thomson had told his sidekick Sid Chapman and his granddaughter Sherry that he someday wanted to own the Hudson's Bay Company.

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Company's banking arrangements so that the two banks on which they sat as directors-the Toronto-Dominion and the Royal, which had financed the deal-could get some of the business. There was so little board discussion on these issues that when Richardson pointed out it was Don McGiverin's fifty-fifth, the directors burst into ”Happy Birthday.”