Murdoch vs Black is the match of the day in New York

They are the two of the most powerful newspaper magnates in the world and they are at each other's throats. In one corner is Rupert Murdoch, owner of The Times and The Sun and much else. In the other, Lord Black, whose prized possessions in Britain are The Daily Telegraph and The Spectator.

The battleground is New York, where Mr Murdoch's raucous tabloid the New York Post has launched an outspoken attack on Conrad Black's company, Hollinger International, which was yesterday immediately condemned as "a complete lie" by one of the peer's most senior lieutenants.

The Post claimed that 80-year-old Henry Kissinger, the former US secretary of state and Nobel Peace Prize winner, was about to quit the Hollinger board, as was the Israeli media chief, Shmuel Meitar.

But as soon as the report was published in Manhattan, it was slapped down in London by Lord Black's camp. Dan Colson, a vice-chairman of Hollinger, said: "It's a complete lie. A malicious invention by the New York Post. There's no truth in it at all. Dr Kissinger is a very happy director, as is Shmuel Meitar."

But there are problems in Lord Black's media empire. If rumours of Dr Kissinger's departure prove true, it would be the second high-profile boardroom exit. This month, Marie-Josee Kravis, wife of the billionaire financier Henry Kravis, had abruptly left.

Lord Black is charged with running the business like a personal fiefdom, using it to finance his lavish international lifestyle, with homes in New York, Florida, Toronto and London, where he owns a handsome villa in Kensington.

He is a proud and formidably articulate media baron with a quick mind and a fascinating past. As a child, he come home one day to find his father had installed a fruit machine in the family drawing room.

It was explained to the boy the new toy was there for him to learn that gambling offers a poorer rate of return than investing in the stock market. Consequently, the young Conrad bought his first shares - $60 in General Motors issue - when he was eight. He went on to make many millions, though it is unlikely he has caught up with Mr Murdoch's billionaire status. Whatever his riches, Lord Black is unhappy when the gaze of the world's press is turned on the intricacies of his financial dealings.

Critics of the Canadian-born Tory peer accuse him of misappropriating company funds, including nearly $300m in fees paid to him and other top executives in recent years, through a mysterious private company called Ravelston.

Lord Black, chairman and chief executive of Hollinger International, describes these claims as "fantastical" and accuses "scavengers" in the press of trying to portray his business empire as a "mini-Enron".

Enemies say the complex structure of Lord Black's business interests means that, should there be any disruption to the web of interconnected companies, it could all fall apart, an idea dismissed by the peer as a "smear campaign".

There is much speculation about what is going on behind the scenes at Hollinger International, where an investigation is being made by a committee of non-executive directors into the disputed management payments. They are to report within weeks.

Hollinger International's board of directors is packed with luminaries. Alongside Dr Kissinger are Richard Perle, the arch-hawk close to the present Bush administration, and James Thompson, the former governor of the state of Illinois. Barbara Amiel, the Telegraph columnist and Lord Black's wife, is a vice-president.

Hollinger International is a publicly listed company, controlled by Lord Black, but it has outside shareholders too. Lord Black has said he "vehemently denies" any impropriety but this committee's report is eagerly awaited by his many detractors. Some scent blood.

Robert Curry, Tweedy Browne's lawyer at the New York firm of Kirby, McInerney & Squire, said: "The reported resignations of three board members may be due to their unwillingness to deal with the issues they could be presented with, on completion of the special committee's report." The immediate issue for Lord Black is finding $15m to plug a funding gap. The peer is talking to an outside investor about putting money into the business, though he has made clear he has no intention of giving up control. It is thought he is in talks with Bain Capital, a major private equity finance company. Some business experts have raised doubts about a deal. Last May, Lord Black announced a similar proposed transaction with another investor, Southeastern Asset Management, but it seems to have disappeared. The financial crisis has got people excited about the possibility of trophy properties, such as The Telegraph, coming on the market.

Lord Black insists he would "never" sell the newspaper, and $15m is such a small sum for a man like him. Mr Colson said: "Private equity wouldn't get out of bed to talk about $15m. Neither would we."