Paper Tiger

A maverick gets the Observer

Britons were horrified last month when Rupert Murdoch, the sensation-mongering Australian publisher, bought London's revered though unprofitable Times newspapers. Now another Fleet Street stalwart, the 190-year-old Sunday Observer, has been sold to an improbable new owner. He is Roland ("Tiny") Rowland, the chief executive of a $5 billion. London-based conglomerate called Lonrho Ltd.; his secretiveness and taste for takeovers have led him to be described by a former Prime Minister as "the unacceptable face of capitalism."

The trendy, left-of-center Observer had been in danger of failing until it was bought in 1976 for the token price of -L- 1--plus its outstanding debts--by Atlantic Richfield Co., the U.S.'s seventh largest oil company. Arco spent about $14 million to modernize production facilities, and under its ownership, circulation rose from 600,000 to nearly 1 million. Arco Chairman Robert O. Anderson had been eager to sell it, partly because he was finding it burdensome to oversee the paper's operations from his Los Angeles headquarters more than 5,000 miles distant. Said an Arco spokesman: "Even routine phone calls were difficult because of the eight-hour time difference."

Anderson insisted that Rowland, who paid $14 million in stock for the Observer, would maintain its "high standards." Others are not so sure. Though Rowland publishes papers in Scotland, he is primarily a corporate empire builder. He has expanded Lonrho, originally a small African mining and land company, into a multifaceted colossus, typically by buying shares in target companies, then joining the board of directors and fighting other members for control. He is now embroiled in such a battle for the House of Fraser, which owns London's Harrods and 109 other department stores.

Rowland, who wanted to buy the Sunday Times, promises a time of "sleeves-up change" for the "tired" Observer. Says he: "I like competition and so does Mr. Murdoch. Let's see what happens."

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