Mr. O'Reilly's Independent Newspaper Group provided $5.5 million along with a $1.4 million loan to Irish Press in exchange for a 29.7% share of the publisher just before last Christmas. The funds saved the three titles in the ailing group that were "within weeks of closing" when Mr. O'Reilly came to the rescue.
While Mr. O'Reilly appears to be trying to picture himself as a savior with his stake in Irish Press, the government sees his motive as a blatant attempt to expand his empire as a media baron both at home and abroad.
Mr. O'Reilly's Independent Newspaper Group already owns three market-leading newspapers, as well as a stake in three of Ireland's five morning papers and four of the five Irish Sunday papers. He also owns a big minority stake in London's The Independent, as well as interests in newspapers in Australia and South Africa. Mr. O'Reilly is also in discussions for an ownership stake with a publisher in New Zealand.
In a report completed in mid-April, the government's Competition Authority accused the Independent Group of "abuse" of its dominant market position. Mr. O'Reilly's flagship Irish Independent has a circulation of almost 150,000.
The report goes on that every newspaper group in Ireland is potentially at risk from the activities of the Independent, in which Mr. O'Reilly is the largest single shareholder with a 28% stake. The government appears particularly concerned that the Irish Press turned down an even more generous bailout offer from a consortium including Canada's Daily Telegraph owner Conrad Black in favor of Mr. O'Reilly.
Under Section 11 of the 1991 Competition Act, the Authority has urged the government to take the Independent Newspaper Group to court to force it to divest itself of its Irish Press holding if it does not do so willingly. The Irish Press has said it will fight any such action.
The Minister for Enterprise and Employment who commissioned the report, Richard Bruton, invited comment from all interested parties. The government has the power to force Mr. O'Reilly to sell his Irish Press stake; Mr. Bruton is now considering the options.
Mr. O'Reilly has so far refused to comment, but in a January 1994 interview with the Sunday Trib, a paper 29.9% owned by Mr. O'Reilly's Independent Group, he indicated his motive was to salvage an Irish institution.
"Employees and unions have a stark choice. They can have brutal rationalization by a British publisher .*.*. or they can have an Irish solution to an Irish problem."
Part of the problem for Mr. O'Reilly is that he and the Competition Authority have very different interpretations of what that Irish problem is. For Mr. O'Reilly, it is the problem of Irish publications competing against the English newspaper giants. But the Competition Authority sees it as Irish papers competing against each other.
After 70 years of independence, Ireland maintains close ties with Britain. The official language is Irish, but the 3.5 million population is almost totally English speaking. British newspapers and British broadcast media are readily available; Rupert Murdoch's Sunday Times publishes an Irish edition.
"It's hard for Irish papers to compete," said Paul Cullen, media director for Arks Ltd., a Dublin agency. "Our people are bombarded with the best [media] in the world."
For advertisers, ownership isn't the issue. Instead, the ad industry is more concerned about low technology investment in newspaper publishing here. Because it is impossible to get good color, and production costs are sky high, the ad industry's concern about ownership is that whoever ends up owning the presses modernizes them.