Prized trophy assets are eyed up by rival media barons

Conrad Black's dramatic ousting as chief executive of the Hollinger empire has left his Telegraph titles facing an uncertain future. The Daily Telegraph, and its sister Sunday title, were Lord Black of Crossharbour's most prized assets but now they are being greedily eyed by potential bidders. Rival newspaper barons and financial institutions are sensing a rare opportunity to buy one of the British media's trophy assets.

Hollinger has been hit by crushing debts and a scandal concerning $32m (£19m) of unauthorised payments made to Lord Black and certain of his close colleagues. Although the Telegraph has suffered circulation problems, falling below the crucial one-million level this year, the two titles remain a valuable business, likely to be worth at least £600m.

The Telegraph has long struggled against Rupert Murdoch's Times to become the paper of choice for the British establishment, but its core readership lies in the right-wing voters of the English shires.

After yesterday's appointment of Lazard, the investment bank, to consider the financial future of Hollinger's assets, rival newspaper owners will be examining how well the Telegraph fits with their operations. But any takeover approach will also be closely monitored by Downing Street and the Department for Media, Culture and Sport. Lazard could still organise a financial restructuring of Hollinger and keep the group together.

The biggest worry for readers and employees of the Telegraph is that the newspaper will fall into the hands of a rival owner who takes the paper downmarket or reduces investment in its editorial content. Public enemy number one for the Telegraph is Richard Desmond, owner of the Express titles and a string of adult magazines and television channels. He would have no trouble raising finance for a bid, and has long expressed a desire to buy the newspaper.

But any British newspaper proprietor who makes a bid for the Telegraph titles faces an automatic referral to the Competition Commission, which takes a hawkish view on control of the UK press. It will apply strict measures over any putative bidder's share of newspaper advertising and circulation figures.

But regulators may not be able to save the Telegraph's fate being dictated by Mr Desmond, a Labour Party donor. He will still a have a huge say over what happens even if he does not bid himself. Mr Desmond holds an ace: he owns Westferry Printers in a 50/50 joint venture with the Telegraph group. This plant in London's Docklands prints the Telegraph titles as well, as his Express ones. If the Telegraph ownership changes, Mr Desmond has the automatic right to buy the 50 per cent he does not own. Any new owner of the Telegraph would have to negotiate a new printing contract with Mr Desmond. That is likely to prove highly expensive. Building a new plant for the Telegraph, would be too expensive for any potential bidder. So Mr Desmond is likely to profit, whatever happens.

Far more palatable to Telegraph readers and journalists is Lord Rothermere's Daily Mail. A combination of the Mail and The Daily Telegraph would enjoy huge commercial benefits, and pose a massive threat to Mr Murdoch's News International, which also owns The Sunday Times, The Sun and the News of the World.

The Mail and Telegraph together would still have a smaller share of the UK newspaper market than News International, so that could be allowed. But bidders such as The Washington Post and The New York Times will also be eyeing theTelegraph, as well as private equity buyers, who may prove more acceptable to the Labour Government.