Hollinger's Fuzzy Math

It's been a few months now since long-suffering shareholders have had to endure any self-righteous contempt from Hollinger International's (NYSE: HLR) former czar, Conrad Black. After he was ousted from most of his positions of responsibility following investigations into multiple, questionable, and undisclosed compensation deals, The Washington Post Co.'s (NYSE: WPO) namesake newspaper reported on a directors' investigation that unearthed this beautiful example of Conradspeak.

We have said for some time that [Hollinger International] served no purpose as a listed company other than a relatively cheap use of other people's capital.... We think [shareholders] are a bunch of self-righteous hypocrites and ingrates who give us no credit.

This condescending gem -- which dazzled Bill Mann back in January -- bears repeating this week because news out of Chicago indicates that Hollinger management may have had an equally low opinion of its advertising customers.

Yesterday, Hollinger announced that its Windy City tabloid, the ChicagoSun-Times, had inflated circulation numbers. It did not disclose the magnitude of the problem or the nature of the scheme, but it did mention that the problem had been going on for years, putting it under the watch of former publisher David Radler.

What this means for the future is unclear. The 10% drop in the stock's price today may be only the beginning. Fudging your circulation numbers is a big no-no when you're selling ad space based on the number of readers you can deliver. It's also a sure way to spook the would-be buyers who might otherwise consider making an offer on London's Daily Telegraph or The Jerusalem Post.

Though Hollinger officially stopped trying to get rid of its U.S. assets late last month, this kind of news won't make managing those properties any easier. If I had been purchasing ads from the Sun-Times, I might be pretty angry right now. I might even make a call to my lawyer.

The only winner in this scenario is the Chicago market's No. 1 media machine, Tribune Company (NYSE: TRB). Its lead is better than ever, and it has been posting solid operating numbers, despite a difficult climate for revenues.

For further related Foolery:

• Check out a classic article on Uncovering Dirt on Management.
• Take a peek at Fool fave, The Washington Post Co.
• See if powerhouse Gannett (NYSE: GCI) measures up.

Fool contributor Seth Jayson owns no company mentioned. View his Fool profile here.