Australians Don’t Like News About Pair’s Bid for Large Chain of Papers : Media: The government is under pressure to halt the sale to the country’s richest man and a Canadian mogul. Critics complain that the power of information dissemination is falling into too few hands.

To hear Australia’s three most prestigious newspapers tell it, nothing less is at stake than the fate of democracy Down Under.

The villains? The papers’ prospective new owners.

So went the hostile reaction last week after Kerry Packer, Australia’s richest man, and Conrad Black, the Canadian media mogul, announced a joint bid to buy the John Fairfax Group Ltd., the country’s oldest and second-largest newspaper group, for $865 million in equity and debt.

Packer and Black are the most controversial of four groups vying for Australia’s most vigorous and influential papers. Fairfax owns the Sydney Morning Herald, the Age in Melbourne and the Australian Financial Review, the nation’s only financial paper.

The papers have excelled in covering their own troubles. The 150-year-old family-controlled company was put in receivership last December after a disastrous takeover by young heir Warwick Fairfax three years ago left it with $1 billion in debts.

Bankers and accountants also run two of Australia’s three commercial TV networks. Both were put in receivership and up for sale after their owners ran up huge debts on easy credit prior to the 1987 stock market crash. But with Australia in the depths of the worst recession in decades, Network Ten’s chief creditor, Westpac Banking Corp., announced that it would run the network itself rather than take a huge loss in a sale.

That’s left all eyes on the Fairfax fight.

“What we’re contemplating is the equivalent of having one owner of the Los Angeles Times, the New York Times and the Wall Street Journal,” said Paul Chadwick, head of Melbourne’s nonprofit Communications Law Center.

The problem with Packer and Black, said Chadwick and other critics, is that most of Australia’s media is already owned by two people: Packer and media mogul Rupert Murdoch.

Murdoch’s debt-strapped News Limited isn’t bidding for Fairfax. But Murdoch already controls 62% of Australia’s newspaper circulation, owns the second-biggest book publisher, half the only news wire service and other media properties.

“That’s a level of ownership that’s not tolerated in any other democracy in the world,” said Michael Smith, editor of the Age. “The only strong competition Murdoch has is the Fairfax press.”

Packer has no papers. But he owns the largest and most profitable private TV network, the only pay-TV channel, more than half the magazines, including the most prominent news weekly, and a string of radio stations.

His critics say Packer is a hands-on owner who fires editors, discourages investigative journalism and uses his media to promote his myriad business interests. He has sued the Fairfax papers for stories questioning his land dealings.

“People are scared of his power and influence . . . from journalists on the floor to prime ministers,” said one senior journalist who asked not to be identified.

Letting Packer buy Fairfax would mean “effectively handing over your entire free media” to him and Murdoch, complained Stephen Bartholomeusz, associate editor of the Age. “You’d have two people sitting around the table deciding what an entire democracy reads, hears and sees. We see this as nothing less than motherhood.”

The reclusive Packer hasn’t spoken publicly about the bid. But his proposed partner has talked plenty.

Black’s Toronto-based group owns a $1.2-billion chain of 242 newspapers, including Britain’s conservative Daily Telegraph, Israel’s Jerusalem Post and scores of small dailies and weeklies in the United States. He flew here accompanied by a flattering cover story in Packer’s Bulletin magazine.

“I hope,” he told the magazine, “that my arrival will dispel the notion that I have cloven feet and pointy ears.”

Since then, Black has appeared on Packer’s TV network complaining of the “febrile paranoia” of “completely neurotic” critics. He denied that he was Packer’s “minion” and said he would drop him if necessary.

Still, Prime Minister Bob Hawke’s government is under growing pressure to block the deal.

Officials are looking first at whether Packer’s ownership of TV stations in Sydney and Melbourne should disqualify him from controlling major newspapers there. Current cross-ownership laws limit him to a 15% interest; his proposed stake in Fairfax is 14.99%.

The other problem is Black is a foreigner. Under his proposal, Black would own 20% of Fairfax, and a U.S. investment bank, Hellman and Friedman Capital, would own 10%. Government officials have said that level of foreign ownership is too high.

“I don’t think anyone in Australia is saying that there is no room for some overseas ownership,” Hawke told reporters. “The question would be what extent? And we will be looking at that closely.”

Ironically, however, Australia’s biggest media owner is also a foreigner.

Murdoch became a U.S. citizen in 1985 in order to buy the Fox TV network.