Testing times for Black

First-quarter results at Telegraph, publisher of the Daily Telegraph and the Sunday Telegraph, remained flat year-on-year, despite a fillip of £7.5m from the sale in March of the company's stake in Carlton Communications and sharply higher returns from the Fairfax group of Australia.

Pre-tax profits were £16.2m, compared with £16m a year earlier. Operating profits fell to £4.5m from £12.1m, reflecting the newspaper cover-price war and rising newsprint costs.

The results were at the low end of analysts' estimates, and the shares lost 4p to close at 449p.

The decline also reflected doubts about a planned restructuring of Telegraph by 58.5 per cent owner Hollinger, the holding company of Canadian media baron Conrad Black.

The restructuring, announced in February, would include an offer by Hollinger's US subsidiary, American Publishing, to buy out Telegraph's minority shareholders. To date, however, Hollinger has refused to reveal details, as it attempts to set an offer price acceptable to independent committees at Telegraph and American Publishing.

Commenting on the results, Stephen Grabiner, Telegraph's managing director, said profits had suffered since the Telegraph joined the cover price war last spring, but said the company had no intention of raising prices before the competition. Rupert Murdoch's News International, publisher of the Times and the Sunday Times, is Telegraph's main threat, Mr Grabiner conceded.

"Mr Murdoch is trying to undermine the strength of our franchise, and we will do everything to protect it," he said. Advertising revenues were 8 per cent ahead of last year, largely on the strength of classifieds.

A 20 per cent stake in John Fairfax Holdings, the Australian media company that publishes the Sydney Morning Herald, helped push up Telegraph profits before tax and extraordinary items to £10.5m.

Fairfax, announcing nine-month results yesterday, posted operating profits of A$161.6m (£74.8m), 34 per cent higher than a year earlier.

Both Fairfax and Telegraph warned that further increases in the price of newsprint would affect earnings. Mr Grabiner said he expected two further price rises before the market begins to stabilise in 1996.