Britain: Can journalistic integrity survive big business?

The future of the Sunday Observer is stirring a new and bitter controversy about the ethics of big business organizations attempting to take over influential British newspapers.

Only a month after The Times and Sunday Times were purchased by the Australian newspaper magnate Rupert Murdoch, the British government rejected a bid for the Observer by the multinational corporation Lonrho.

But within hours Lonrho's millionaire chief executive Roland "Tiny" Rowland responded with a revised bid to buy the paper in his own name and thus try to avoid referral of the deal to the Monopolies Commission.

This maneuver inspired a remarkable editorial by Observer editor Donald Trelford, who placed his own job on the line by declaring: "To attempt to circumvent the minister of trade's opinion by clandestine devices is the unacceptable face of multinationalism."

At the same time the Labour opposition trade spokesman demanded an early statement by Trade Secretary John Biffen, who threw out the original Lonrho bid for the Observer.

Mr. Biffen must now decide whether a personal bid by Mr. Rowland for the paper, which has been published for 190 years, should or can be blocked.

Meanwhile, Observer journalists have condemned Mr. Rowland's switch of tactics and urged that the future of their paper be considered urgently by the Monopolies Commission.

Declared a senior Observer executive: "Our paper may be in the marketplace, but it is not a tin of baked beans or a used car. We are dealing here with a great paper whose integrity is under threat."

The Times and Sunday Times deal was given the go-ahead by Mr. Biffen, who took the view that both papers would benefit commercially from Murdoch ownership. According to the Observer editor, his paper is trading profitably, and it appears to have been this that led Biffen to block Rowland's initial bid.

The trade secretary seems to have been taken aback by Rowland's sudden switch of tactics. Some legal experts say Rowland has found a way around monopoly laws designed to prevent takeovers of the type he is attempting.

Lonrho placed its original bid for the Observer when the paper's American owners, the Atlantic Richfield Company, decided to sell. Lonrho has extensive mineral assets in Africa and owns a number of newspapers, including the Glasgow Herald, in Britain.

At the root of Fleet Street misgivings about Rowland and his newspaper ambitions is his reputation as a ruthless business operator. It is feared he would not respect the editorial freedom of the Observer.

In the early 1970s former Conservative Prime Minister Edward Heath described the activities of Lonrho and Rowland as "the unacceptable face of capitalism." The words stuck, and they were directly echoed in Trelford's heavily critical editorial.

The British law on monopolies dates from the Heath era and is designed to curb massive accumulation of business power without proper restraint. With the Observer, Rowland stands accused of attempting to exploit a loophole in the law's provisions.

His other newspaper assets are owned formally by Lonrho. He seems to believe that if he makes a personal bid for the Observer, it will be the only publication he will own on a personal basis. Thus considerations of monopoly would not arise.

But a large part of Fleet Street does not agree, and considerable political opposition is building up against Rowland's tactics.

Labour trade spokesman John Smith said: "If this deal does not come under scrutiny we might as well fling the Fair Trading Act into the Thames. If Rowland gets away with this he will have got away with cocking a snook at the law and the government."

The watchdog Press Council has expressed deep concern, and the leader of an important print union has spoken of "deplorable tactics" on Rowland's part.

There is a widespread belief in Fleet Street that the switch of ownership of The Times and the Sunday Times was enough to be getting along with, without Rowland's entry upon the scene.

The Observer is also a paper of high editorial reputation and independence, as Trelford's leading article attests.

Biffen will be under heavy pressure to step in and thwart Rowland's clever plan, but he faces a problem: to acquire a personal interest in the Observer, Rowland has decided to buy 50 percent of the equity in the holding company which owns the paper.

The holding company has its headquarters in the United States, and it is by no means certain that Biffen would be able to do anything -- even if he were to wish to inte rvene.