Sun-Times Media Group Inc – ‘10-K’ for 12/31/99

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         96    449K 
 2: EX-23.1     Consent of Kpmg LLP                                    1      6K 
 3: EX-27.1     Financial Data Schedule                                1      6K 

10-K   —   Annual Report
Document Table of Contents

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

 FORM 10-K

 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
 For the Fiscal Year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
 For the transition period from _____ to _____
 Commission File No. 0-24004

HOLLINGER INTERNATIONAL INC.
----------------------------
(Exact name of registrant as specified in its charter)

  Delaware                                      95-3518892
  --------                                      ----------
(State or other jurisdiction of                         (I.R.S. Employer        
incorporation or organization)                       Identification Number)   

401 North Wabash Avenue, Suite 740, Chicago, Illinois                 60611     
-----------------------------------------------------                 -----     
    (Address of Principal Executive Office)                       (Zip Code)

 Registrant's telephone number, including area code (312) 321-2299

 Securities registered pursuant to Section 12(b) of the Act:

                                                        [Enlarge/Download Table]


Title of each class:                           Name of each exchange on which registered:
--------------------                           ------------------------------------------
                                                                                         
Class A Common Stock par value $.01 per share  New York Stock Exchange                   
9 1/4% Senior Subordinated Notes due 2006      New York Stock Exchange                   
8 5/8% Senior Notes due 2005                   New York Stock Exchange                   
9 1/4% Senior Subordinated Notes due 2007      New York Stock Exchange                   

 Securities registered pursuant to Section 12(g) of the Act:
None

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the preceding 12 months and (2) has been subject to such filing     
requirements for the past 90 days. Yes [x] No [ ]                               

       Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,  
to the best of registrant's knowledge, in definitive proxy or information       
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this Form 10-K. [ ]                                                

The aggregate market value of Class A Common Stock held by    
non-affiliates as of March 20,2000, was approximately $726,102,000. As of such  
date, non-affiliates held no shares of Class B Common Stock. There is no active 
market for the Class B Common Stock.                                            

    The number of outstanding shares of each class of the registrant's
common stock as of March 20, 2000, was as follows: 86,749,943 shares of Class A 
Common Stock and 14,990,000 shares of Class B Common Stock.                     

 DOCUMENTS INCORPORATED BY REFERENCE

                                                        [Enlarge/Download Table]


Document                                                                                                   Location
--------                                                                                                   --------
                                                                                                                   
Proxy Statement for 2000 Annual Meeting of Stockholders filed pursuant to                                          
Regulation 14A under the Securities Exchange Act of 1934...................................................Part III

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HOLLINGER INTERNATIONAL INC.
1999 FORM 10-K

--------------

                                                        [Enlarge/Download Table]


                                                     PART I                                              PAGE
                                                                                                         ----
                                                                                                             
Item 1.  Business.......................................................................................    1
Item 2.  Properties.....................................................................................   18
Item 3.  Legal Proceedings..............................................................................   19
Item 4.  Submission of Matters to a Vote of Security Holders............................................   19

                                                     PART II                                                 

Item 5.  Market for the Registrant's Common Equity and Related                                               
           Stockholder Matters..........................................................................   22
Item 6.  Selected Financial Data........................................................................   23
Item 7.  Management's Discussion and  Analysis of Financial Condition                                        
           and Results of Operations....................................................................   25
Item 7A. Quantitative and Qualitative Disclosure about Market Risk......................................   39
Item 8.  Financial Statements and Supplementary Data....................................................   41
Item 9.  Changes in and Disagreements with Accountants on Accounting                                         
           and Financial Disclosure.....................................................................   41

                                                    PART III                                                 

Item 10. Directors and Executive Officers of the Registrant.............................................   42
Item 11. Executive Compensation.........................................................................   42
Item 12. Security Ownership of Certain Beneficial Owners and Management.................................   42
Item 13. Certain Relationships and Related Transactions.................................................   42

                                                     PART IV                                                 

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................   43

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PART I

ITEM 1.  BUSINESS                                                               

OVERVIEW                                                                        

        Hollinger International Inc. (the "Company"), through subsidiaries and
affiliated companies, is one of the leading publishers of English-language      
newspapers in the United States, the United Kingdom, Canada and Israel. In      
addition, the Company has web-sites supporting each of its major newspapers and 
is continuing to develop a strategic on-line new media presence. Included among 
the 77 paid daily newspapers, which at December 31, 1999, the Company owned or  
had an interest in, are the Chicago Sun-Times, The Daily Telegraph, the Ottawa  
Citizen, The Jerusalem Post and the National Post. These 77 newspapers had a    
worldwide daily combined circulation of approximately 4,015,000. In addition,   
the Company owned or had an interest in 302 non-daily newspapers as well as     
magazines and other publications. The Company's strategy is to achieve growth   
through acquisitions and improvements in the cash flow and profitability of its 
newspapers. Since the Company's formation in 1986, the existing senior          
management team has acquired over 300 newspapers and related publications (net  
of dispositions) in the United States, The Daily Telegraph in the United        
Kingdom, The Jerusalem Post in Israel, and has made significant investments in  
newspapers in Canada, including the acquisition of Southam Inc. ("Southam"),    
Canada's largest newspaper publisher and the acquisition of the Canadian        
Newspapers in 1997 from Hollinger Inc.                                          

       The operations of the Company consist of its Chicago Group, Community
Group, U.K. Newspaper Group, and Canadian Newspaper Group, which accounted for  
18%, 4%, 26% and 52%, respectively, of the Company's total operating revenues of
$2,147.4 million for the year ended December 31, 1999.                          

     Unless the context requires otherwise, all references herein to the
"Company" mean Hollinger International Inc., its predecessors and combined      
subsidiaries, "Publishing" refers to Hollinger International Publishing Inc. and
"Hollinger Inc." refers to Hollinger Inc.                                       

CHICAGO GROUP                                                 

      The Company's Chicago Group consists of three daily and 77 non-daily
newspapers including the Chicago Sun-Times, the eighth largest circulation      
metropolitan daily newspaper in the United States, the Post Tribune in Gary,    
Indiana and the Daily Southtown. The Chicago Sun-Times is published in a        
tabloid format and has become Chicago's best read newspaper, attracting some    
1,684,000 readers every day. The suburban papers include Pioneer Newspapers     
Inc. ("Pioneer Press") which currently publishes 48 weekly newspapers in        
Chicago's north and northwest suburbs, and Midwest Suburban Publishing Inc.     
("Midwest Suburban Publishing") which currently publishes the Daily Southtown,  
one weekly newspaper, 20 biweekly newspapers and two free distribution papers   
in Chicago's south and southwest suburbs. The Chicago Group also publishes      
Digital Chicago magazine and in 1999 added Digital New York which appears both  
on newsstands and on-line.                                                      

COMMUNITY GROUP                                               

The Community Group consists of 46 newspapers and related     
publications. At December 31, 1999, the Community Group published 13 daily      
newspapers with a total paid circulation of approximately 144,000, 9 paid       
non-daily newspapers with a combined paid circulation of approximately 115,000  
and 24 free circulation publications with a combined circulation of             
approximately 315,000. For accounting and management purposes, the Community    
Group also includes the Company's wholly-owned subsidiary ("Jerusalem Post")    
which publishes The Jerusalem Post, Israel's most important English-language    
daily newspaper, with a paid daily circulation of approximately 14,000. The     
related weekend edition of The Jerusalem Post, including the English and        
French-language international weekly editions, have a combined paid circulation 
of approximately 109,000.                                                       

U.K. NEWSPAPER GROUP                                          

 The Company's U.K. Newspaper Group consists of its wholly owned
subsidiary, The Telegraph Group Limited and its consolidated subsidiaries ("The 
Telegraph"). The Telegraph publishes The Daily Telegraph which was launched in  
1855. The Telegraph also publishes The Sunday Telegraph, The Weekly Telegraph,  
the Electronic Telegraph and The Spectator magazine. The Daily Telegraph is the 
largest circulation quality daily newspaper in the United Kingdom with an       
average daily circulation of approximately 1,038,000, representing a 37% share  
of the quality daily newspaper market. The Daily Telegraph's Saturday edition   
has the highest average daily circulation (approximately 1,221,000) among       
quality daily newspapers in the United Kingdom. The Sunday Telegraph is the     
second largest circulation quality Sunday newspaper in the United Kingdom with  
an average Sunday circulation of approximately 814,000.                         

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CANADIAN NEWSPAPER GROUP                                      

        At December 31, 1999, the Company's Canadian Newspaper Group primarily
consisted of Southam and the Company's 85.0% interest in Hollinger Canadian     
Newspapers, Limited Partnership ("Hollinger L.P."). During the first quarter of 
1999, the Company acquired the remaining shares of Southam that it did not      
already own.                                                                    

 In April 1999, the Company formed Hollinger L.P. Hollinger L.P.
acquired 48 daily newspapers, 180 non-daily newspapers and shopping guides and  
106 magazines and specialty publications located across Canada from Southam,    
UniMedia Inc. and Sterling Newspapers Company in exchange for promissory notes  
due April 29, 2020 of $309.5 million (Cdn. $451.2 million) and 135,945,972      
units in Hollinger L.P.                                                         

   On April 30, 1999, Hollinger L.P. completed a Cdn. $200.0 million
($137.2 million) private placement and investors subsequently received 20       
million partnership units of Hollinger L.P. During July 1999 Hollinger L.P.     
completed its initial public offering issuing 4 million units at Cdn. $10 per   
unit for total proceeds of Cdn. $40.0 million ($27.0 million). All partnership  
units, including the 20 million units issued through the April 30, 1999 private 
placement, are now listed on the Toronto Stock Exchange. After the initial      
public offering the Company continued to hold indirectly approximately 85% of   
the equity of Hollinger L.P.                                                    

    At December 31, 1999, Hollinger L.P. published 48 daily newspapers
with a total paid circulation of approximately 974,000, 19 paid non-daily       
newspapers with a combined paid circulation of approximately 79,000 and 115     
free circulation publications with a combined circulation of approximately      
3,925,000.                                                                      

         Southam has operations in newspaper publishing, and to a lesser extent,
in business communications. Southam is Canada's largest publisher of daily      
newspapers with 9 daily newspapers with a total paid daily circulation of       
approximately 1,238,000. Southam's principal publications include the National  
Post, The Gazette (Montreal), The Ottawa Citizen, the Calgary Herald, The       
Vancouver Sun, The Province (Vancouver) and The Edmonton Journal. In addition,  
the Southam Magazine and Information Group publishes Canadian business magazines
and tabloids for the automotive, trucking, construction, natural resources,     
manufacturing and other industries. During 1998, Southam acquired the Financial 
Post Company, which published the Financial Post. In October 1998, Southam      
launched the National Post, a new national daily newspaper in Canada,           
incorporating the Financial Post as the business section of the National Post.  
In 1999, the National Post achieved daily readership in excess of 800,000 with  
average paid circulation of 285,000. The National Post has become Canada's      
leading national daily.                                                         

PRIDES EXCHANGE                                               

   In July 1998, pursuant to an exchange offer, 19,993,531 Preferred
Redeemable Increased Dividend Equity Securities ("PRIDES") were exchanged for   
18,394,048 shares of Class A Common Stock, leaving 706,469 PRIDES outstanding.  
At December 31, 1999 353,234 Series B Shares were outstanding, which underlie   
706,469 PRIDES. In January 2000, these PRIDES were converted into 596,189 shares
of Class A Common Stock of the Company.                                         

TOTAL RETURN EQUITY SWAP                                      

       In August and September 1998, the Company entered into an arrangement
with four banks, pursuant to which the banks purchased 12,640,305 shares of the 
Company's Class A Common Stock. 2,522,600 of these shares were purchased on the 
open market at an average price of $15.40 and 10,117,705 were purchased from    
affiliates of the Company at an average price of $13.88. During 1999, an        
additional 1,469,600 shares were purchased on the open market at an average     
price of $13.96. The Company has the option, quarterly, up to including         
September 30, 2000 to buy the shares from the banks at the same cost or to have 
the banks resell those shares in the open market. In the latter case, any gain  
or loss realized by the banks will be for the Company's account. Until the      
Company purchases the shares or the banks resell them, dividends paid on the    
shares belong to the Company and the Company pays interest to the banks at the  
rate of LIBOR plus a spread. If the Company's stock price falls below the       
average purchase price of these shares, the Company is required to deposit cash 
or shares into an escrow account as additional security.                        

SHARE REPURCHASES                                             

      During 1999, the Company repurchased 9,978,600 shares of its Class A
Common Stock on the open market.                                                

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OWNERSHIP BY HOLLINGER INC.                                   

    At December 31, 1999, Hollinger Inc. directly and indirectly owned
41.1% of the combined equity interest and 75.2% of the combined voting power of 
the outstanding Class A Common Stock and Class B Common Stock of the Company    
(without giving effect to the future issuance of Class A Common Stock in        
connection with the Company's remaining PRIDES or upon conversion of the        
Company's Series C Preferred Stock or remaining Series E Preferred Stock or the 
Special Shares of HCPH as defined in Note 6 of the Consolidated Financial       
Statements). As a result, Hollinger Inc. will continue to be able to control the
outcome of any election of directors and to direct management policy, strategic 
direction and financial decisions of the Company and its subsidiaries. Hollinger
Inc. owns all of the outstanding Series C Preferred Stock which shall convert   
into Class A Common Stock of the Company automatically on June 1, 2001 pursuant 
to the conversion formula set forth in its Certificate of Designations and      
Series E Preferred Stock of the Company, which is convertible at any time into  
shares of Class A Common Stock based on a formula set forth in its Certificate  
of Designations.                                                                

       Hollinger Inc. is effectively controlled by The Hon. Conrad M. Black,
Chairman of the Board and Chief Executive Officer of Hollinger Inc. and of the  
Company, through his direct and indirect ownership and control of Hollinger     
Inc.'s securities. Mr. Black has advised the Company that Hollinger Inc. does   
not presently intend to reduce its voting power in the Company's outstanding    
Common Stock to less than 50%. Furthermore, Mr. Black has advised the Company   
that he does not presently intend to reduce his voting control over Hollinger   
Inc. such that a third party would be able to exercise effective control over   
it.                                                                             

SALES OF COMMUNITY GROUP OPERATIONS                           

 In January 1998, the Company completed the sale of 80 community
newspapers for proceeds of $310.0 million. In February 1999, the Company sold 45
community newspapers for approximately $460.0 million, of which $441.0 million  
was cash. On a pre-tax basis, the sales generated capital gains of approximately
$201.2 million in 1998 and approximately $249.2 million in 1999.                

GENERAL                                                       

       The Company was incorporated in the State of Delaware on December 28,
1990 and its wholly owned subsidiary Hollinger International Publishing Inc.    
("Publishing") was incorporated in the State of Delaware on December 12, 1995.  
Each of the Company and Publishing has its executive offices at 401 North Wabash
Avenue, Chicago, Illinois 60611, telephone number (312) 321-2299.               

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BUSINESS STRATEGY                                                               

       The Company's strategy for achieving growth in its newspaper business
is based on achieving two principal objectives: improvements in the cash flow   
and profitability of its newspapers principally through cost reductions and     
revenue enhancement and growth through acquisitions. The approach of both the   
Company and Hollinger Inc. to improving profitability typically includes        
measures to reduce costs, improve efficiency and enhance product quality,       
including the visual quality of printed pages.                                  

       The Company's newspaper operating strategy in the Community Group has
been to operate newspapers in regional clusters where feasible. This enables the
Company to market advertising on a regional basis and allows for regionalized   
management that results in cost savings from reduction in overhead, centralized 
purchasing and, to the extent practicable, regionalized printing. The Company   
intends to generate additional cost savings opportunities through operating     
efficiencies and automation in the Community Group. Further, improvements in    
profitability at properties acquired during the past three years will be        
emphasized.                                                                     

In Chicago, the focus on overall cost reduction will continue.
Significant emphasis on continuing to increase circulation at the Chicago       
Sun-Times and the continued focus on deploying human resources to sales and     
marketing, both locally through a combined network of all Chicago Group         
newspapers, and nationally by bringing national salesmen in-house and opening   
national sales offices in major business centers. In addition, efficiencies     
through automation and an upgrade of printing facilities are in process.        

     The focus for The Daily Telegraph will continue to be to retain its
circulation dominance in its market and to increase the resulting advertising   
revenue. The successful prepaid subscription program will continue, albeit at   
higher subscription prices. The Company will continue to focus on maintaining   
and increasing the circulation for The Sunday Telegraph. Operationally,         
continued efficiencies in producing the newspapers through joint ventures in    
West Ferry Printers and Trafford Park Printers are expected. Through its more   
recent joint venture with Express Newspapers, Newsprint Management and Supply   
Services, Ltd. ("NMSS"), The Telegraph expects to realize efficiencies in the   
control of waste with a resulting decrease in newsprint costs.                  

    At the Canadian Newspaper Group, the Company continues its current
efforts to improve the profitability of the papers through the centralization of
newsprint purchasing and certain other functions, such as accounting and        
personnel. The Company coordinates, to the extent practicable, its newsprint    
purchases for its United States newspapers with those of the Canadian           
newspapers. To achieve greater product quality and cost reductions, the Company,
where justified by economic and operational criteria, may regionalize production
operations at its Canadian community newspapers and may explore the feasibility 
of such regionalization with Southam's newspaper operations in Canada. The      
Company also intends to enhance advertising and circulation revenues by focusing
on the natural circulation and readership advantages of the particular          
newspapers.                                                                     

         Southam intends to continue to improve profitability of its newspapers,
magazines and other publications through the implementation of the previously   
announced labor cost reduction program, the decentralization of certain         
administrative and corporate functions, and enhancements to editorial and       
product quality. In October 1998, Southam launched the National Post, which     
suffered anticipated start up operating losses; however, increases in           
advertising and circulation revenue in 2000 are expected to reduce the level of 
operating losses and increase long-term profitability of the National Post. New 
printing equipment at Pacific Press, which became operational in 1997, has      
improved product print quality and is expected to continue to reduce labor and  
other operating costs.                                                          

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         The Company remains vigilant for the opportunity to purchase newspapers
that are underperforming in terms of cash flow but have a long history of       
publishing within a community, possess strong readership and advertiser loyalty,
have the potential for increased gross operating profit through cost reductions,
revenue enhancements and synergies with the Company's existing operations; and  
are available at attractive prices. The Company expects that its future         
acquisitions in the United States and Canada will be principally of community   
newspapers; however, the Company may consider the acquisition of selected larger
circulation publications that meet the Company's acquisition criteria.          

  The Company and Hollinger Inc. have historically agreed that the
Company will be Hollinger Inc.'s principal vehicle for engaging in and effecting
acquisitions in the newspaper business and in related media businesses in the   
United States, Israel and, through The Telegraph, the United Kingdom and the    
rest of the European Community. Hollinger Inc. reserved the ability to pursue   
all media (including newspaper) acquisition opportunities outside these areas   
and all media acquisition opportunities unrelated to the newspaper business     
throughout the world.                                                           

       The Company has developed a comprehensive Internet strategy. Internet
activities fall into three main areas: (1) web sites related to the various     
print publications, which are 100% owned and reported within the traditional    
segments; (2) joint ventures between our print publications and                 
non-publishing-related outsiders, where each party adds value and where the     
Company has a certain amount of control; and (3) minority investments in        
unrelated third parties.                                                        

The print-related and joint venture strategies represent an   
opportunity to fortify the newspapers in their local markets by providing them  
with the necessary tools to offer a complete suite of on-line and print options 
for their clients. The Company has stayed competitive by building significant   
web sites at all our major divisions. The strategy is specifically designed to  
achieve rapid acceleration of the Web activities. The Company is building a     
solid foundation for expansion and growth, an even more valuable asset base,    
and technology and services which further strengthen the print and online       
publications. All the metropolitan newspapers will be commerce-enabled by the   
middle of the current year.                                                     

       The Company's strategy regarding minority investments is primarily to
identify promising Internet opportunities and make investments that are         
eventually expected to be monetized. The cost of early entry in the Internet    
business is not high and discriminating investors, which Hollinger has so far   
proved to be, can enjoy an impressive return on investments. A significant part 
of the consideration for these investments can be in advertising.               

RISKS                                                                           

     Certain statements contained in this report under various sections,
including but not limited to "Business Strategy" and "Management's Discussion   
and Analysis", are forward-looking statements that involve risks and            
uncertainties. Such statements are subject to the following important factors,  
among others, which in some cases have affected, and in the future could affect,
the Company's actual results and could cause the Company's actual consolidated  
results for the first quarter of 2000, and beyond, to differ materially from    
those expressed in any forward-looking statements made by, or on behalf of, the 
Company:                                                                        

o        International Holding Company Structure - The Company is an            
international holding company and its assets consist solely of
        investments in its subsidiaries and affiliated companies. As a result,
   the Company's ability to meet its future financial obligations is
      dependent upon the availability of cash flows from its United States
    and foreign subsidiaries through dividends, intercompany advances,
         management fees and other payments. Similarly, the Company's ability to
  pay dividends on its common stock and its preferred stock may be
         limited as a result of its dependence upon the distribution of earnings
of its subsidiaries and affiliated companies. The Company's   
      subsidiaries and affiliated companies are under no obligation to pay
    dividends and, in the case of Publishing, and its principal United
        States and foreign subsidiaries, are subject to statutory restrictions
     and restrictions in debt agreements that limit their ability to pay
       dividends. Substantially all of the shares of the subsidiaries of the
    Company have been pledged to lenders of the Company. The Company's
         right to participate in the distribution of assets of any subsidiary or
   affiliated company upon its liquidation or reorganization will be
    subject to the prior claims of the creditors of such subsidiary or
     affiliated company, including trade creditors, except to the extent
  that the Company may itself be a creditor with recognized claims
against such subsidiary or affiliated company.                

o        Growth Strategy - The Company's strategy is to achieve growth through  
         acquisitions and improvements in the cash flow and profitability of its
       newspapers, principally through cost reductions. The Company's growth
        strategy presents risks inherent in assessing the value, strengths and
         weaknesses of acquisition opportunities, in evaluating the costs of new
 growth opportunities at existing operations and in managing the
     numerous publications it has acquired and improving their operating
   efficiency. While the Company believes that there are significant
       numbers of potential acquisition candidates, the Company is unable to
     predict the number or timing of future acquisition opportunities or
    whether any such opportunities will meet the Company's acquisition
      criteria or, if such acquisitions occur, whether the Company will be
able to achieve improved operating efficiencies or enhanced   
   profitability. In addition, the Company's acquisition strategy is
  largely dependent on the Company's ability to continue to obtain
financing on acceptable terms.                                

o        Restrictions in Debt Agreements and Other Restrictive Arrangements -   
The Company and its subsidiaries have substantial leverage and
       substantial debt service obligations as well as obligations under the
        preferred stock of the Company. The instruments governing the terms of
  the principal indebtedness and redeemable preferred stock of the
 Company, Publishing and its principal United States and foreign
     subsidiaries contain various covenants, events of default and other
       provisions that could limit the financial flexibility of the Company,

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       including the payment of dividends with respect to outstanding common
stock and preferred stock and the implementation of its growth
strategy.                                                     

o        Cyclicality of Revenues - Advertising and, to a lesser extent,         
        circulation revenues of the Company, as well as those of the newspaper
       industry in general, are cyclical and dependent upon general economic
  conditions. Historically, increases in advertising revenues have
   corresponded with economic recoveries while decreases, as well as
   changes in the mix of advertising, have corresponded with general
    economic downturns and regional and local economic recessions. The
        Company believes, however, that the geographic diversity of its global
     operations may mitigate, to some degree, the effects of an economic
downturn in any particular market served by the Company.      

o        Newsprint Costs - Newsprint represents the single largest raw material 
        expense of the Company's newspapers throughout the world and, together
      with employee costs, is one of the most significant operating costs.
       Newsprint costs vary widely from time to time. For example, newsprint
cost increased approximately 40% per metric ton in 1995 on an 
       industry-wide basis, and the average cost per metric ton of newsprint
      was substantially higher in the first half of 1996 than in the first
       half of 1995. However, newsprint costs decreased significantly in the
         second half of 1996, continued to decline through the second quarter of
   1997 and increased slightly in the second half of 1997. Newsprint
   prices increased slightly through 1998 but decreased in 1999. The
         Company expects that newsprint prices in 2000 will likely be marginally
       higher than 1999. Although the Company has implemented measures in an
     attempt to offset a rise in newsprint prices, such as reducing page
   width and managing its return policy, price increases have had an
adverse effect on the Company's results of operations.        

o        Foreign Operations and Currency Exchange Rates - Operations outside of 
      the United States accounted for approximately 77.3% of the Company's
       operating revenues and approximately 82.6% of the Company's operating
     income for the year ended December 31, 1999. Generally, the Company
    does not hedge against foreign currency exchange rate risks except
      through borrowings in those currencies. As a result, the Company may
         experience economic loss and a negative impact on earnings with respect
    to its investments and on dividends from its foreign subsidiaries,
solely as a result of currency exchange rate fluctuations.    

o        Newspaper Industry Competition - Revenues in the newspaper industry are
     dependent primarily upon advertising revenues and paid circulation.
      Competition for advertising and circulation revenue comes from local
        and regional newspapers, radio, broadcast and cable television, direct
      mail, and other communications and advertising media that operate in
         the Company's markets. The extent and nature of such competition is, in
        large part, determined by the location and demographics of the markets
    and the number of media alternatives in those markets. Some of the
       Company's competitors are larger and have greater financial resources
      than the Company. For example, in the Chicago metropolitan area, the
        Chicago Sun-Times competes with a large established metropolitan daily
       and Sunday newspaper that is the fifth largest metropolitan daily and
         Sunday newspaper in the United States. In the United Kingdom, The Daily
    Telegraph competes with other national newspapers, principally The
Times, which over the past several years has from time to time
    substantially reduced its cover price in an effort to increase its
       circulation. The Telegraph has met this competition and has from time
        to time engaged in its own price reduction or promotional initiatives.
    Electronic media is becoming a larger factor in newspaper industry
         competition. Management continues to hold the view that newspapers will
  continue to be an important business segment. Among educated and
        affluent people, indications are that strong newspaper readership will
        continue. In fact, it is possible that readership will increase as the
      population ages. Alternate forms of information delivery such as the
     Internet could impact newspapers, but recognition of the Internet's
 potential combined with a strong newspaper franchise could be a
      platform for Internet operations. Newspaper readers can be offered a
    range of Internet services as varied as the content. Virtually all
newspapers are now published on the Internet as well as in the
     traditional newsprint format. The concern most frequently expressed
         regarding the commercial viability of newspapers is that they will lose
  their classified advertising revenue. We have put our classified
      advertising on the Internet and linked this with other newspapers to
      make regional or national networks. These competitive activities can
  and have from time to time had an adverse effect on revenues and
operating costs.                                              

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CHICAGO GROUP                                                                   

   SOURCES OF REVENUE. The following table sets forth the sources of
revenue and the percentage such sources represent of total revenues for the     
Chicago Group during the past three years.                                      

                                                        [Enlarge/Download Table]


                                         YEAR ENDED DECEMBER 31,                            
                   -------------------------------------------------------------------------
                            1999                     1998                      1997         
                   ---------------------     ---------------------     ---------------------
                                            (DOLLARS IN THOUSANDS)                          

                                                                                            
Advertising ...... $294,124         75 %     $281,615         74 %     $243,301         71 %
Circulation ......   80,551           21       82,534           22       79,574           23
Job printing                                                                                
   and other .....   15,798            4       14,960            4       18,493            6
                   --------     --------     --------     --------     --------     --------
Total ............ $390,473        100 %     $379,109        100 %     $341,368        100 %
                   ========     ========     ========     ========     ========     ========

     ADVERTISING Substantially all advertising revenues are derived from
local and national retailers and classified advertisers. Advertising rates and  
rate structures vary among the publications and are based, among other things,  
on circulation, penetration and type of advertising (whether classified,        
national or retail). In 1999, retail advertising accounted for the largest share
of advertising revenues (46%), followed by classified (42%) and national (12%). 

     The Chicago Sun-Times offers a variety of advertising alternatives,
including full-run advertisements, geographically zoned issues, special interest
pull-out sections and advertising supplements in addition to regular sections of
the newspaper targeted to different readers, such as arts, food, real estate, TV
listings, weekend, travel and special sections. The Chicago area suburban       
newspapers also offer weekly both separate and special sections. Management has 
also developed the Sun-Times Newspaper Network, an advertising vehicle that can 
reach the combined readership base of the Chicago Sun-Times and the Chicago area
suburban newspapers, including the Daily Southtown. During 1999, the Company    
joined with two other Chicago-area publishers, Copley Chicago Newspapers and    
Paddock Publications, to create a regional classified-advertising web site.     
The new site, www.classifiedschicago.com, pools classified advertisements from  
nearly 100 daily and weekly newspapers including three of the Chicago           
metropolitan area's biggest dailies, to create a valuable new venue for         
advertisers, readers and on-line users.                                         

         CIRCULATION Circulation revenues are derived from single copy newspaper
sales made through retailers and vending racks and home delivery newspaper sales
to subscribers. Approximately 65% of the copies of the Chicago Sun-Times sold in
1999 were single copy sales. Approximately 70% of 1999 circulation revenues of  
the Chicago area suburban newspapers were derived from subscription sales.      

        The average paid daily and Sunday circulation of the Chicago Sun-Times
is approximately 472,000 and 405,000, respectively, the daily and Sunday paid   
circulation of the Daily Southtown is approximately 52,000 and 60,000,          
respectively, the daily and Sunday paid circulation of the Gary Post-Tribune is 
approximately 63,000 and 68,000, respectively, and the aggregate non-daily paid 
and free circulation of the Chicago area suburban newspapers is approximately   
254,000 and 492,000, respectively.                                              

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        COMPETITION. Each of the Company's Chicago area newspapers competes in
varying degrees with radio, television, direct marketing and other              
communications and advertising media as well as with other newspapers having    
local, regional or national circulation. The Chicago metropolitan region is     
comprised of Cook County and six surrounding counties and is served by six daily
newspapers of which the Company owns two.                                       

       The Chicago Sun-Times competes in the Chicago region with the Chicago
Tribune, a large established metropolitan daily and Sunday newspaper, which is  
the fifth largest newspaper in the United States. In addition, the Chicago      
Sun-Times and other Chicago Group newspapers face competition from other        
newspapers published in adjacent or nearby locations and circulated in the      
Chicago metropolitan area market.                                               

        EMPLOYEES AND LABOR RELATIONS. As of March 20, 2000, the Chicago Group
employed approximately 3,100 employees (including approximately 700 part-time   
employees). Approximately 1,400 employees are represented by 15 collective      
bargaining units. Employee costs (including salaries, wages, fringe benefits,   
employment-related taxes and other direct employee costs) equaled approximately 
38% of the Chicago Group's revenues in the year ended December 31, 1999. There  
have been no strikes or general work stoppages at any of the Chicago Group's    
newspapers in the past five years. The Chicago Group believes that its          
relationships with its employees are generally good.                            

    RAW MATERIALS. The basic raw material for newspapers is newsprint.
Newsprint costs equaled approximately 16% of the Chicago Group's revenues in the
year ended December 31, 1999. Newsprint prices for the Chicago Group decreased  
about 10% during 1999. The Chicago Group is not dependent upon any single       
newsprint supplier. To ensure an adequate supply of newsprint, the Chicago Group
has newsprint supply contracts with certain minimum purchase requirements. The  
Chicago Group, like other newspaper publishers, has not entered into any        
long-term fixed price newsprint supply contracts in the current environment of  
newsprint costs. The Chicago Group believes that its sources of supply for      
newsprint are adequate for its anticipated needs.                               

COMMUNITY GROUP                                                                 

       The Community Group consists of smaller newspaper publications in the
United States and Israel. The Community Group's United States daily newspapers  
are typically the only paid daily newspapers of general circulation in their    
respective communities. Circulation for community newspapers range from 3,400 to
32,200 for paid dailies and from 2,300 to 31,800 for paid non-dailies.          
Generally, the Company's community newspapers combine news, sports and features 
with a special emphasis on local information and provide one of the primary     
sources of such community information for the towns in which they are           
distributed. In addition to reaching the local population through paid daily and
non-daily community newspapers, the Company also publishes free circulation     
"total market coverage" publications, including shoppers, with limited or no    
news or editorial content. As a group, these publications provide the Company   
with a stable and established circulation within the communities they serve,    
which it believes provides an effective medium for advertisers to reach a       
significant portion of the households in these communities.                     

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   SOURCES OF REVENUE. The following table sets forth the sources of
revenue and the percentage that such sources represent of total revenues for the
Community Group, including Jerusalem Post, during the past three years.         

                                                        [Enlarge/Download Table]


                                           YEAR ENDED DECEMBER 31,                     
                     ----------------------------------------------------------------- 
                             1999                  1998                    1997        
                     -------------------    -------------------    ------------------- 
                                          (DOLLARS IN THOUSANDS)                       
                                                                                       
Advertising ........ $ 57,535         60%   $135,216         64%   $190,215         65%
Circulation ........   26,618         27      49,449         24      69,499         24 
Job printing                                                                           
   and other .......   12,521         13      25,442         12      32,551         11 
                     --------   --------    --------   --------    --------   -------- 
Total .............. $ 96,674        100%   $210,107        100%   $292,265        100%
                     ========   ========    ========   ========    ========   ======== 

         ADVERTISING. Substantially all of the United States community newspaper
advertising revenues in 1999 were derived from local retailers and classified   
advertisers, which management believes are less subject to fluctuation than     
national advertising. Advertising rates and rate structures vary among the      
publications and are based, among other things, on circulation penetration and  
type of advertising (whether classified, display, or retail). In 1999, United   
States local and regional advertising accounted for the largest share of        
advertising revenues (49%), followed by classified (27%), preprinted inserts    
(18%) and national (6%).                                                        

   Management intends to continue to develop new advertising revenue
sources such as regional and national display advertising, co-op advertising,   
national classified advertising and other targeted advertising. The Company     
believes its existing sales, editorial and distribution resources provide it    
with significant cost advantages in developing new shoppers, other "total market
coverage" and targeted publications in these markets.                           

        CIRCULATION. Circulation revenues are derived from home delivery sales
of newspapers to subscribers and single copy sales made through retailers and   
vending racks. Approximately 74% of the 1999 United States community newspaper  
circulation revenue was derived from subscription sales. When possible          
subscription and single copy sales rates are increased in an effort to increase 
circulation revenues. Single copy cover prices currently range from 35(cent)to  
75(cent).                                                                       

JOB PRINTING. Job printing revenues are derived from utilizing
available press capacity for printing customers' orders for newspapers, fliers, 
retail store advertisements and real estate listings. The Company currently has 
a substantial number of printing customers and believes that its growth         
potential for job printing exists mainly in low volume (less than 100,000       
copies) offset printing.                                                        

   COMPETITION. Each of the Company's community newspapers and total
market coverage publications competes in varying degrees with radio, television,
direct marketing and other communications and advertising media as well as with 
other newspapers having local, regional or national circulation. The Company    
also competes with other commercial printers for job printing orders.           

         The Company's United States community publications are located in small
towns which, for the most part, are not suburbs of larger cities but are either 
county seats or are located on significant transportation corridors. The        
Company's community dailies are typically the only paid daily newspapers of     
general circulation published in their respective communities. The Company      
believes that distribution of its total market coverage publications with nearly
100% penetration levels in conjunction with community daily or non-daily        
newspapers strengthens its competitive position in the relevant market areas.   
Some of the Company's dailies face competition from dailies published by others 
in adjacent or nearby locations and circulated in the markets where the Company 
publishes a newspaper.                                                          

       The Company's total market coverage publications, including shoppers,
compete primarily with direct mail advertising, shared mail packages and other  
private advertising delivery services. The Company believes that because of its 
significant presence in the small towns served by its community publications,   
which are predominantly in rural areas, not close to metropolitan areas, and its
established distribution network, it has been able to compete effectively.      

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    EMPLOYEES AND LABOR RELATIONS. As of March 20, 2000, the Community
Group employed approximately 1,100 employees (including approximately 470       
part-time employees) at its community publications in the United States.        
Approximately 5% of these employees are represented by unions. Total Community  
Group employee costs (including salaries, wages, fringe benefits,               
employment-related taxes and other direct employee costs) equaled approximately 
35% of the Community Group's revenues in fiscal year 1999. There have been no   
strikes or general work stoppages at any of the Company's community newspapers  
in the past five years. The Company believes that its relationships with its    
employees are generally good.                                                   

    RAW MATERIALS. The basic raw material for newspapers is newsprint.
Newsprint costs equaled approximately 10% of revenues for the Community Group in
1999. The Community Group is not dependent upon any single newsprint supplier   
and does not have long-term fixed price contracts with newsprint suppliers for  
its community publications. It currently obtains newsprint from a number of     
suppliers, foreign and domestic. The Community Group believes that its newsprint
sources of supply are adequate for its anticipated needs.                       

JERUSALEM POST.                                               

     Over 42% of Jerusalem Post's revenues of $20.3 million in 1999 were
derived from circulation, with 31% from job printing and other and 27% from     
advertising. Jerusalem Post derives a greater percentage of its revenues from   
job printing than the Company's United States newspapers. Jerusalem Post has    
entered into a long-term contract to print and bind copies of the "Golden       
Pages", Israel's equivalent of a "Yellow Pages" telephone directory. Newsprint  
costs relating to publication of The Jerusalem Post equaled approximately 9%    
of Jerusalem Post's revenues in 1999. Newsprint used in producing the "Golden   
Pages" is provided by the owners of that publication.                           

       Newspapers in Israel are required by law to obtain a license from the
country's interior minister, who is authorized to restrain publication of       
certain information if, among other things, it may endanger public safety. To   
date, Jerusalem Post has not experienced any difficulties in maintaining its    
license to publish or been subject to any efforts to restrain publication. In   
addition, all written media publications in Israel are reviewed by Israel's     
military censor prior to publication in order to prevent the publication of     
information that could threaten national security. Such censorship is considered
part of the ordinary course of business in the Israeli media and has not        
adversely affected Jerusalem Post's business in any significant way.            

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ENVIRONMENTAL                                                 

  The Company, in common with other newspaper companies engaged in
similar operations, is subject to a wide range of federal, state and local      
environmental laws and regulations pertaining to air and water quality, storage 
tanks, and the management and disposal of wastes at its major printing          
facilities. These requirements are becoming increasingly more stringent. The    
Company believes that compliance with these laws and regulations will not have a
material adverse effect on the Company.                                         

U.K. NEWSPAPER GROUP                                                            

THE TELEGRAPH                                                 

         THE UNITED KINGDOM NATIONAL NEWSPAPER INDUSTRY. The newspaper market in
the United Kingdom is segmented and, within each segment, highly competitive.   
The market segment in which The Daily Telegraph competes is generally known as  
the quality daily newspaper segment. This segment consists of all the           
broadsheets and none of the tabloid daily newspapers. The Daily Telegraph and   
its competitors in this market segment appeal to the middle and upper end of the
demographic scale.                                                              

    Newspapers in the United Kingdom differ from their counterparts in
North America in several respects. First, they have substantially fewer pages.  
The Daily Telegraph is printed in one section on Tuesdays, Wednesdays and       
Fridays, two sections on Mondays, three sections on Thursdays, and nine         
sections plus a magazine and television guide on Saturdays. The Sunday Telegraph
is published in six sections with two magazines. Second, pre-printed advertising
inserts, which have been a major source of revenue growth in North America, are 
less common in the United Kingdom but there has been an increase in advertiser  
interest in such supplements. Third, the advertising to news ratio in British   
newspapers is far lower. Fourth, British national newspapers more closely       
resemble North American magazines in that they have broad distribution and      
readership across the country and derive a much larger portion of their         
advertising revenue from national advertisers - unlike North American newspapers
which, because of their relatively small geographical distribution, derive a    
substantial portion of their advertising from local advertisers. Finally,       
newspapers in the United Kingdom generally have charged higher cover prices,    
which in turn leads to higher circulation revenues than North American          
newspapers with similar circulation bases. However, since September 1993, when  
The Times, the nearest direct competitor to The Daily Telegraph, first          
substantially reduced its cover price on its weekday newspaper, the national    
newspaper market in the United Kingdom has experienced intense cover price      
competition.                                                                    

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   SOURCES OF REVENUE. The following table sets forth the sources of
revenue and their percentage of total revenues for the Telegraph during the past
three years.                                                                    

                                                        [Enlarge/Download Table]


                                            YEAR ENDED DECEMBER 31,                           
                   ---------------------------------------------------------------------------
                              1999                      1998                     1997         
                   -----------------------   -----------------------   -----------------------
                                   (IN THOUSANDS OF BRITISH POUNDS STERLING)                  

                                                                                              
Advertising ...... L. 225,326         66 %   L. 221,167         66 %   L. 204,498         68 %
Circulation ......     98,071         29         98,488         30         82,917         28  
Other ............     16,575          5         12,403          4         12,232          4  
                   ----------   ----------   ----------   ----------   ----------   ----------
Total ............ L. 339,972        100 %   L. 332,058        100 %   L. 299,647        100 %
                   ==========   ==========   ==========   ==========   ==========   ==========

---------------------------                                                     
(1) Financial data is in accordance with U.K. GAAP.                           

  ADVERTISING. Advertising is the largest source of revenue at The
Telegraph. The Telegraph's display advertising strengths are in the automobile  
and travel sections. The level of classified advertisements, especially         
recruitment advertisements, fluctuates with the economy. The Telegraph's        
strategy with respect to classified advertising is to improve volume and yield  
in four sectors: recruitment, property, travel and automobiles. Classified      
advertising revenue, which represents 28% of total advertising revenue,         
decreased in 1999 primarily due to a slowdown in recruitment advertising.       
Recruitment advertising is the largest classified advertising category,         
representing about 52% of all classified advertising in terms of revenue.       

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   CIRCULATION. The target audience of The Telegraph's newspapers is
generally conservative, middle and upper income readers, with an increased      
emphasis on gaining new younger readers. The editorial strengths of The         
Telegraph's newspapers provide national and international news, financial news  
and features and comprehensive sports coverage.                                 

        In May 1996 the Telegraph introduced the first United Kingdom national
advance purchase subscription program. In the past, newspaper subscribers in the
U.K. dealt directly with independent newsagents for the purchase of newspapers. 
A significant portion of the newspaper readers did not take the paper every day 
and this was especially true for Sunday. This program has proven successful in  
driving circulation increases although there has been some inevitable           
cannibalization of circulation revenues. By the end of 1996, the plan had added 
about 100,000 new weekday and 200,000 new Sunday average sales and the average  
prepaid subscription was for a period of about 40 weeks. In order to gain broad 
acceptance of this revolutionary plan, the subscriptions were offered at a      
significant discount. The amount of that discount was reduced throughout 1997   
and continued to be reduced thereafter. The program currently has approximately 
300,000 subscribers. By obtaining long term subscribers, The Telegraph expects  
to reduce its traditional promotional spending.                                 

        OTHER PUBLICATIONS AND BUSINESS ENTERPRISES. The Telegraph is involved
in several other publications and business enterprises, including The Spectator,
The Weekly Telegraph, and the Electronic Telegraph. The Electronic Telegraph has
more than a million registered users with some 80,000 logging on every day. The 
Telegraph utilizes its brand in developing third party revenue opportunities    
including Reader Offers and Books Direct.                                       

 During 1999, the Company, in cooperation with The Boots Company
plc--UK's leading beauty and health retailer, launched a new web site focusing  
on the women's on-line market, www.handbag.com. The site deals with, among other
things, health, beauty and the arts.                                            

     COMPETITION. In common with other national newspapers in the United
Kingdom, The Telegraph's newspapers compete for advertising revenue with other  
forms of media, particularly television, magazine, direct mail, posters and     
radio. In addition, total gross advertising expenditures, including financial,  
display and recruitment classified advertising, are affected by economic        
conditions in the United Kingdom.                                               

         EMPLOYEES AND LABOR RELATIONS. At March 20, 2000, The Telegraph and its
subsidiaries employed approximately 1,100 persons and the joint venture printing
companies employed an additional 1,100 persons. Collective agreements between   
The Telegraph and the trade unions representing certain portions of The         
Telegraph's workforce expired on June 30, 1990 and have not been renewed or     
replaced. The absence of such collective agreements has had no adverse effect on
The Telegraph's operations and, in management's view, is unlikely to do so in   
the foreseeable future.                                                         

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       The Telegraph's joint venture printing companies, West Ferry Printers
and Trafford Park Printers, each have "in-house" collective agreements with the 
unions representing their employees and certain provisions of these collective  
agreements are incorporated into the employees' individual employment contracts.
In contrast to the union agreements that prevailed on Fleet Street when         
Hollinger Inc. acquired control of The Telegraph, these collective agreements   
provide that there shall be flexibility in the duties carried out by union      
members and that staffing levels and the deployment of staff are the sole       
responsibility of management. Binding arbitration and joint labor-management    
standing committees are key features of each of the collective agreements. These
collective agreements may be terminated by either party by six months' prior    
written notice.                                                                 

There have been no strikes or general work stoppages involving
employees of the Telegraph or the joint venture printing companies in the past  
five years. Management of the Telegraph believes that its relationships with its
employees and the relationships of the joint venture printing companies with    
their employees are good.                                                       

     RAW MATERIALS. Newsprint represents the single largest raw material
expense of the Telegraph's newspapers and, next to employee costs, is the most  
significant operating cost. Approximately 170,000 metric tons are consumed      
annually and in 1999 the total cost was approximately 18% of its newspaper      
revenues.                                                                       

  The Telegraph has a new joint venture with Express Newspapers, a
subsidiary of United News & Media plc to manage the newsprint resource. The new 
joint venture company, Newsprint Management & Supply Services Ltd. ("NMSS"), has
as its main purpose the control of specifications, sourcing and the monitoring  
of usage through the printing plants operated by the joint venture partners, and
other locations where the partners' publications are printed on a contract      
basis. NMSS commenced operations on January 1, 1998. Through close liaison with 
printing management, the benefits of common newsprint specifications and better 
control over inventory levels, reductions in operating waste are becoming       
evident. NMSS is responsible for about 360,000 tonnes per annum of newsprint    
consumption and 74,000 tonnes of magazine paper consumption.                    

The newsprint supply agreements entered into by NMSS provide  
for tonnages from individual suppliers of between 30,000 and 65,000 tonnes.     
Prices are fixed throughout 2000 at levels some 2% below the average price paid 
during the last year. Inventory held at each printing location is sufficient for
three to four days production and in addition, suppliers' stock held in the     
United Kingdom on behalf of NMSS represents a further four to five weeks        
consumption by the joint ventures.                                              

      PRINTING. All copies of The Daily Telegraph and The Sunday Telegraph
are printed by The Telegraph's two 50% owned joint venture printing companies,  
West Ferry Printers and Trafford Park Printers. The Telegraph has a very close  
involvement in the management of the joint venture companies and regards them as
being important to The Telegraph's day-to-day operations. The magazine sections 
of the Saturday edition of The Daily Telegraph and of The Sunday Telegraph are  
printed under contract by external magazine printers.                           

      The managements of both joint venture printing companies continually
seek to improve production performance. Major capital expenditures require the  
approval of the boards of directors of the joint venture partners.              

         There is high utilization of the plants at West Ferry and Trafford Park
Printers, with little spare capacity. At Trafford Park Printers, revenue earned 
from contract printing for third parties has a marginal effect on The           
Telegraph's printing costs. West Ferry Printers also undertakes some contract   
printing for third parties, which results in increased profitability.           

       West Ferry Printers has eighteen presses, six of which are configured
for The Telegraph's newspapers, eight are used for the newspapers published by  
The Telegraph's joint venture partner, Express Newspapers, and the remaining    
four for contract printing customers. Trafford Park Printers has four presses,  
two of which are used primarily for The Telegraph's newspapers.                 

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DISTRIBUTION. Since 1988, The Telegraph's newspapers have been
distributed to wholesalers by truck under a contract with a subsidiary of TNT   
Express (UK) Limited. During 1996, the Express titles and The Daily Telegraph   
and The Sunday Telegraph, which are all printed at West Ferry Printers in       
London, began distribution to wholesalers on the same trucks. At Trafford Park  
Printers in Manchester, where The Daily Telegraph, The Sunday Telegraph and The 
Guardian are printed, a joint distribution service was arranged. Previously, the
Express titles and the Guardian were distributed separately from the Telegraph  
titles. The Telegraph's arrangements with wholesalers contain performance       
provisions to ensure minimum standards of copy availability while controlling   
the number of unsold copies.                                                    

         Wholesalers distribute newspapers to retail news outlets. The number of
retail news outlets throughout the United Kingdom has increased as a result of a
1994 ruling by the British Department of Trade and Industry that prohibits      
wholesalers from limiting the number of outlets in a particular area. More      
outlets do not necessarily mean more sales and The Telegraph's circulation      
department has continued to develop its control of wastage while taking steps to
ensure that copies remain in those outlets with high single copy sales. In      
addition to single copy sales, many retail news outlets offer home delivery     
services. In 1999 home deliveries accounted for 41% of sales of The Daily       
Telegraph and 42% of sales of The Sunday Telegraph.                             

    Historically, wholesalers and retailers have been paid commissions
based on a percentage of the cover price. Prior to June 1994 when competitive   
pressures caused The Telegraph to reduce its cover price, wholesaler and        
retailer commissions amounted to approximately 34% of the then cover price.     
Notwithstanding the reduction of the cover price, the commissions paid were not 
reduced. In line with other national newspapers, The Telegraph has recently     
moved away from a commission paid on a percentage of cover price to a fixed     
price in pence per copy and has reduced the amount paid to wholesalers and      
retailers in terms of pence per copy.                                           

    REGULATORY AND ENVIRONMENTAL MATTERS. United Kingdom companies are
subject to various competition laws, including the Restrictive Trade Practices  
Act 1956-1976 (the "RTPA"), which requires the registration of certain          
restrictive or information-sharing agreements with the Office of Fair Trading   
and, under certain circumstances, prohibits such agreements. In common with     
other major newspaper publishers, The Telegraph has given undertakings in       
proceedings under the RTPA to the Restrictive Practices Court in respect of,    
among other things, both daily and Sunday papers. These undertakings include a  
general undertaking not to enter into any kind of agreement registrable under   
the RTPA of which particulars are not furnished to the Office of Fair Trading   
within the prescribed period. The Telegraph has also given a number of specific 
undertakings (concerning pricing, wholesaler discounts and other conditions upon
which newspapers may be supplied) which prohibit the entering of agreements     
containing the restrictions specified in the undertakings or any agreements to  
the like effect. A breach of any of the undertakings may result in The Telegraph
(and potentially any individuals involved) being held in contempt of court. The 
Telegraph has instituted procedures designed to ensure that all personnel in    
relevant managerial positions are required to acknowledge quarterly that they   
have been reminded of the requirements of the RTPA, the meaning and scope of the
undertakings given, the necessity of obtaining legal advice in case of doubt and
the consequences and seriousness of any breach. A code of conduct, which        
contains this information, has been circulated among relevant personnel.        

    The Telegraph and its joint venture printing companies, West Ferry
Printers and Trafford Park Printers, in common with other newspaper publishers  
and printers, are subject to a wide range of environmental laws and regulations 
promulgated by United Kingdom and European authorities. These laws are becoming 
increasingly more stringent. Management of The Telegraph believes that          
compliance with these laws and regulations will not have a material adverse     
effect on The Telegraph.                                                        

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CANADIAN NEWSPAPER GROUP                                                        

    SOURCES OF REVENUE. The following table sets forth the revenue mix
of the Canadian Newspaper Group for the three years ended December 31, 1999:    

                                                        [Enlarge/Download Table]


                                                       YEAR ENDED DECEMBER 31,                                   
                     ------------------------------------------------------------------------------------------  
                                1999                            1998                              1997           
                     -------------------------   ---------------------------------    -------------------------  
                                                 (IN THOUSANDS OF CANADIAN DOLLARS)                              
                                                                                                                 
Newspapers:                                                                                                      
   Advertising       Cdn.$ 1,207,673       73%    Cdn.$ 1,118,248              71%     Cdn.$ 1,051,292        70%
   Circulation               313,817       19             315,746              20              314,998        21 
   Job printing and                                                                                              
   other                      69,380        4              80,193               5               61,393         4 
Business                                                                                                         
Communications                56,350        4              64,368               4               75,852         5 
                     ---------------    -------   ---------------         --------     ---------------   ------- 
           Total     Cdn.$ 1,647,220      100%    Cdn.$ 1,578,555             100%     Cdn.$ 1,503,555       100%
                     ===============    =======   ===============         ========     ===============   ======= 

   ADVERTISING. Advertisements are carried either within the body of
the newspapers, and referred to as run-of-press (ROP) advertising, or as inserts
and other. ROP, which represented 87% of total advertising revenues in 1999, is 
categorized as either retail, classified or national. The three categories      
represented 40%, 28% and 32%, respectively, of ROP advertising revenues in 1999.
A full year of operations of the National Post contributed to the increase in   
advertising revenue.                                                            

         CIRCULATION. Circulation revenue is derived from subscription sales and
single copy sales. Approximately 85% of circulation revenue was from            
subscription sales.                                                             

         COMPETITION. The majority of revenues are from advertising. Advertising
linage in the company's newspapers is affected by a variety of factors including
competition from print, electronic and other media as well as general economic  
performance and the level of consumer confidence. Specific advertising segments 
such as real estate, automotive and help wanted will be significantly affected  
by local factors.                                                               

   EMPLOYEES AND LABOR RELATIONS. As of March 20, 2000, the Canadian
Newspaper Group had approximately 10,600 employees (including approximately     
1,200 part-time employees). The Canadian Newspaper Group has approximately 100  
union contracts in its newspaper operations. The percentage of unionized        
employees varies widely from paper to paper. For Southam's nine largest         
newspapers, which represent 70% of the total number of employees in the daily   
newspaper operations, approximately 63% of the workforce is unionized.          
Approximately 30 contracts were                                                 

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renegotiated in 1999. The Calgary Herald has continued publishing despite a     
strike by journalists starting in November 1999 over questions of seniority and 
editorial control. The financial impact on the Herald has been, and is expected 
to continue to be, negligible. The Company does not expect that the strike will 
impact other Canadian newspaper operations. With the large number of contracts  
being renegotiated every year, labor disruptions are always possible.           

     RAW MATERIALS. The basic raw materials for newspapers is newsprint.
Newsprint consumption in 1999 was 287,000 tonnes and newsprint costs represented
approximately 13% of total revenues. The average price per tonne decreased      
approximately 10% compared to prior years. The newspapers within the Canadian   
Newspaper Group have access to adequate supplies to meet anticipated production 
needs. They are not dependent upon any single newsprint supplier. The Canadian  
Newspaper Group, like other newspaper publishers, has not entered into any      
long-term fixed price newsprint supply contracts in the current environment of  
newsprint costs.                                                                

REGULATORY MATTERS. The publication, distribution and sale of 
newspapers and magazines in Canada is regarded as a "cultural business" under   
the Investment Canada Act and consequently, any acquisition of control of       
Southam by a non-Canadian investor would be subject to the prior review and     
approval by the Minister of Industry of Canada. Because Hollinger International,
Inc. is controlled by Hollinger Inc. that in turn is controlled by Canadians,   
the current ownership is acceptable.                                            

  In August 1988, Hollinger Inc. and UniMedia Inc., a wholly owned
subsidiary of Hollinger Canadian Newspaper Holdings Inc. ("HCPH") entered into  
an agreement with Sodec (Societe de development des enterprises culturelles),   
an agency of the Quebec government, pursuant to which Sodec was granted an      
assignable right of first refusal in the event of the proposed acquisition by a 
person not resident in Quebec of the assets of LeSoleil and Le Quotidien or of  
the proposed direct or indirect acquisition by a person not resident in Quebec  
of control of UniMedia Inc.                                                     

   RELATIONSHIP WITH THE COMPANY. The Company and Hollinger Inc. now
directly own a combined 100% interest in Southam through HCPH, a New Brunswick  
holding company. The Company's interest in Southam, is held by HCPH in which    
Publishing and Hollinger Inc. own, directly or indirectly, the following        
interests; (i) Publishing and its subsidiaries own 100% of the non-voting equity
shares and non-voting preference shares and (ii) each of Publishing and         
Hollinger Inc. (through its wholly-owned subsidiary) own 50% of the voting      
preference shares which have only nominal equity value. Hollinger Inc. has      
pledged its interest in HCPH as collateral for bank financing arrangements of   
the Company and its subsidiaries.                                               

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ITEM 2.  PROPERTIES                                                             

         The Company's management believes that its properties and equipment are
in generally good condition, well-maintained, and adequate for current          
operations.                                                                     

CHICAGO GROUP                                                 

       All editorial, pre-press, press, marketing, sales, and administrative
activities for the Chicago Sun-Times are conducted in a 535,000 square foot,    
seven-story building owned by the Chicago Sun-Times. The Company is in the      
process of constructing a new press facility, at an expected total cost of      
approximately $115 million. It is anticipated that the new press facility will  
be operational in the latter part of 2000.                                      

      Pioneer Press utilizes and owns a building in north suburban Chicago
for editorial, pre-press, sales and administrative activities. Production       
activities occur in a 65,000 square foot leased building in a neighboring       
suburb. Midwest Suburban Publishing utilizes one building for editorial,        
pre-press, marketing sales and administrative activities. Production activities 
occur at a separate facility. Both facilities are located in Chicago's south    
suburbs. The Post-Tribune owns and utilizes a building in Gary, Indiana for all 
activities. Construction is underway on a new business office in                
Merrillville, Indiana to house all editorial, marketing, sales and              
administrative functions. The Gary location will continue to be used for        
production.                                                                     

COMMUNITY GROUP                                               

         The Community Group has various operating and production facilities for
its community publications in the United States. The group uses modern data     
processing equipment in its business management operations and in its           
typesetting. The group believes that all of its properties are in generally good
condition, well maintained and adequate for their current operations. The       
group's operating and production facilities for its community publications are  
owned or leased by its subsidiaries, with lease terms ranging from two to five  
years.                                                                          

 The Jerusalem Post is produced and distributed in Israel from a
three-story building in Jerusalem owned by Jerusalem Post. The Jerusalem Post   
also leases a sales office in Tel Aviv and a sales and distribution office in   
New York. The Jerusalem Post also owns certain properties held for investment in
Jerusalem.                                                                      

U.K. NEWSPAPER GROUP                                          

  The Telegraph occupies five floors of a tower on Canary Wharf in
London's Docklands under a 25-year lease expiring in 2017. Printing of The      
Telegraph's newspaper titles is carried out at fifty percent owned joint venture
printing plants in London's Docklands and in Trafford Park, Manchester.         

CANADIAN NEWSPAPER GROUP                                      

The Canadian Newspaper Group's newspapers and magazines are   
published at numerous facilities throughout Canada. The Group publishes         
predominantly all of its newspapers and performs all pre-press work on its      
magazines in facilities owned by the Company. Southam's magazines are printed at
facilities owned by third parties. Southam has constructed new production       
facilities in Vancouver and Windsor, Ontario, which began production in late    
1997. New presses have been commissioned in Montreal, Regina and Saskatoon. The 
Company believes that its facilities are adequate to meet production needs.     

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ITEM 3.  LEGAL PROCEEDINGS                                                      

      The Company becomes involved from time to time in various claims and
lawsuits incidental to the ordinary course of its business, including such      
matters as libel, defamation and invasion of privacy actions. In addition, the  
Company is involved from time to time in various governmental and administrative
proceedings with respect to employee terminations and other labor matters,      
environmental compliance, tax and other matters.                                

Management believes that the outcome of any pending claims or 
proceedings will not have a material adverse effect on the Company taken as a   
whole. See Note 16 to the Consolidated Financial Statements.                    

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    

None                                                          

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EXECUTIVE OFFICERS OF THE COMPANY                                               

    The following table sets forth the names and ages (as of March 20,
2000) of each of the Company's current executive officers, followed by a        
description of their principal occupations during the past five years and       
current directorships of public reporting companies and investment companies in 
the United States, Canada and the United Kingdom. Unless otherwise indicated,   
each of the executive officers has held his or her position with the Company, or
a similar position with the Company, for at least the past five years.          

                                                        [Enlarge/Download Table]


                 NAME      AGE                       POSITION WITH THE COMPANY                    
                 ----      ---                       -------------------------                    
                                                                                                  
The Hon. Conrad M. Black,                                                                         
  P.C., O.C.               55   Chairman of the Board, Chief Executive Officer and Director       
F. David Radler            57   Deputy Chairman, President, Chief Operating Officer and Director  
Daniel W. Colson           52   Vice Chairman and Director and Deputy Chairman and Chief Executive
                                Officer of The Telegraph                                          
Cindy E. Horowitz          45   Executive Vice President and Chief Financial Officer              
J. A. Boultbee             56   Executive Vice President                                          
Frederick A. Creasey       49   Group Corporate Controller                                        
Barbara Amiel Black        59   Vice President, Editorial and Director                            
Paul B. Healy              36   Vice President, Corporate Development and Investor Relations      
Peter Y. Atkinson          54   Vice President                                                    
Mark S. Kipnis             52   Vice President, Corporate Counsel and Secretary                   
John D. Ferguson           58   Vice President, Production                                        
Frederic R. Lebolt         46   Vice President, New Media                                         
Robert T. Smith            56   Treasurer                                                         
Jerry J. Strader           63   President, American Publishing Company                            

THE HON CONRAD M. BLACK, P.C., O.C., Chairman of the Board of 
Directors, Chief Executive Officer and Director. Mr. Black has served as        
Chairman of the Board of Directors and Chief Executive Officer since October 25,
1995, and has served as a Director since 1990. Mr. Black served as Deputy       
Chairman of the Board of Directors from 1991 to October 25, 1995. Mr. Black     
serves as the Chairman of the Board and Chief Executive Officer of Hollinger    
Inc. and Hollinger Canadian Publishing Holdings Inc. ("HCPH"), both of which are
public reporting companies in Canada. He currently serves as the Chairman and a 
Director of The Telegraph, Southam and Jerusalem Post, as Chairman of the Board,
Chief Executive Officer and a Director of Argus and Hollinger Canadian          
Newspapers G.P. Inc. ("HCNGP"), the general partner of Hollinger Canadian       
Newspapers, Limited Partnership, a public reporting company in Canada, as a     
Director of EdperBrascan Limited and the Canadian Imperial Bank of Commerce,    
both of which are public reporting companies in Canada, and as a Director of    
Sotheby's Holding Inc. and as a Member of the Advisory Board of Gulfstream      
Aerospace Corporation.                                                          

      F. DAVID RADLER, Deputy Chairman, President, Chief Operating Officer
and Director. Mr. Radler has served as President and Chief Operating Officer    
since October 25, 1995, as Deputy Chairman since May 1998, and a Director since 
1990. Mr. Radler was Chairman of the Board of Directors from 1990 to October 25,
1995. Mr. Radler currently serves as President, Chief Operating Officer and     
Deputy Chairman of Hollinger Inc. He currently serves as a director of The      
Telegraph and HCNGP, and as Deputy Chairman, Associate Chief Executive Officer  
and Director of Southam. Mr. Radler also serves as Vice Chairman, President and 
Chief Operating Officer and as a Director of HCPH and as Director of Argus,     
Dominion Malting Limited, and West Fraser Timber Co. Ltd., all of which are     
Canadian public reporting companies. Mr. Radler also serves as a Director of the
Jerusalem Post.                                                                 

        DANIEL W. COLSON, Vice Chairman and Director of the Company and Deputy
Chairman, Chief Executive Officer and a Director of The Telegraph. Mr. Colson   
has served as a Director of the Company since February 1995 and a Vice Chairman 
since May 1998. He has served as Deputy Chairman of the Telegraph since 1995 and
as Chief Executive Officer of the Telegraph since 1994 and was Vice Chairman of 
the Telegraph from 1992 to 1995. Mr. Colson currently serves as Vice Chairman   
and as a Director of Hollinger Digital Inc., Southam and HCNGP. He also serves  
as Vice Chairman and a Director of Hollinger Inc. and Hollinger Canadian        

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Publishing Holdings Inc. and as Director of Argus and Molson Inc., all of which 
are Canadian public reporting companies, Mr. Colson also serves as Deputy       
Chairman and Director of Interactive Investor International Limited.            

 CINDY E. HOROWITZ, Executive Vice President and Chief Financial
Officer. Ms. Horowitz has served as Executive Vice President and Chief          
Financial Officer of the Company since July 19, 1999. Prior to that, Ms.        
Horowitz was Vice President and Chief Financial Officer of Primedia Inc.'s      
Information Group for five years. From 1986 to 1994, Ms. Horowitz was Vice      
President of Citibank, N.A. where she served in various financial management    
positions including Chief Financial Officer of the Consumer Development         
Division.                                                                       

      J. A. BOULTBEE, Executive Vice President. Mr. Boultbee has served as
Executive Vice President since June 14, 1996 and as Chief Financial Officer from
1995 to 1999. Mr. Boultbee served as a Vice President from 1990 to June 13,     
1996. Mr. Boultbee served as a Director from 1990 to October 25, 1995. Mr.      
Boultbee has served for the past five years as a Director and as the            
Vice-President, Finance and Treasury and Executive Vice President and Chief     
Financial Officer of Hollinger Inc. Mr. Boultbee serves as a Director of        
Southam. Mr. Boultbee also serves as Executive Vice President and Chief         
Financial Officer and as a Director of HCPH and as a Director of Argus, Iamgold 
International African Mining Gold Corporation and Consolidated Enfield          
Corporation, all of which are Canadian public reporting companies.              

   FREDERICK A. CREASEY, Group Corporate Controller. Mr. Creasey has
served as Group Corporate Controller since June 14, 1996. Mr. Creasey also has  
served for the past five years as the Controller of Hollinger Inc. Mr. Creasey  
also serves as Controller of HCPH.                                              

         BARBARA AMIEL BLACK, Vice President, Editorial and Director. Mrs. Black
has served as Vice President, Editorial since September 1995 and as a Director  
since February 1996. Mrs. Black is the wife of Mr. Black. Mrs. Black is         
currently a columnist for The Daily Telegraph. After an extensive career in both
on and off air television production, Mrs. Black was the editor of The Toronto  
Sun from 1982 to 1984, a columnist of The Times and The Sunday Times of London  
from 1986 to 1994 and a columnist of MacLean's magazine since 1976. Mrs. Black  
also serves as Vice President, Editorial and as a Director of Hollinger Inc.    
and HCPH and as a Director of Southam, HCNGP and the Jerusalem Post.            

   PAUL B. HEALY, Vice President, Corporate Development and Investor
Relations. Mr. Healy has served as Vice President, Corporate Development and    
Investor Relations since October 25, 1995. Mr. Healy also serves as a Vice      
President of HCPH. Mr. Healy was a Vice President of The Chase Manhattan Bank,  
N.A. for more than five years prior to October 1995, serving as a corporate     
finance specialist in the media and communications sector.                      

    PETER Y. ATKINSON, Vice President. Mr. Atkinson has served as Vice
President since 1997. Mr. Atkinson has served as Vice President and Corporate   
Counsel of Hollinger Inc. since 1996. Mr. Atkinson also serves as Vice President
and General Counsel and as a Director of HCPH. Mr. Atkinson was previously a    
partner at the law firm of Aird & Berlis, which he joined in 1976.              

        MARK S. KIPNIS, Vice President and Secretary. Mr. Kipnis has served as
Vice President and Secretary since January 1998 and as a Director of Jerusalem  
Post since 1999. Mr. Kipnis also serves as a Vice President of HCPH. Mr. Kipnis 
was previously a partner at the law firm of Holleb & Coff, which he joined in   
1974.                                                                           

       JOHN D. FERGUSON, Vice President, Production. Mr. Ferguson has served
as Vice President, Production since 1996. Mr. Ferguson served as Vice President,
Production at Southam from 1993 to 1996. Mr. Ferguson was previously Deputy     
Managing Director of Mirror Group PLC, which he joined in 1966.                 

     FREDERIC LEBOLT, Vice President New Media. Mr. Lebolt has served as
Vice President New Media since February 1999. He has served as Publisher of     
Digital Chicago Magazine since 1998 and as Vice President of Hollinger Digital  
Inc. since 1997. Mr. Lebolt was previously Director of Online Publications of   
the Chicago Sun-Times , which he joined in 1994.                                

     ROBERT T. SMITH, Treasurer. Mr. Smith has served as Treasurer since
May 1998. Mr. Smith was Vice President of Chase Securities, Inc. and The Chase  
Manhattan Bank in the Media and Telecommunications Group from 1987 to 1998 and  
1976 through 1982. From 1983 to 1987, Mr. Smith served as Assistant Treasurer   
for AT&T Long Lines and AT&T Communications, AT&T's long distance subsidiary.   

       JERRY J. STRADER, President, American Publishing Company. Mr. Strader
was appointed President of the Company's Community Group (American Publishing   
Company) in February of 1996. He served as Senior Vice President of American    
Publishing Company from 1994 to 1996 and as a Regional Manager of American      
Publishing Company and as publisher of The Meridian Star, one of the Company's  
daily newspapers from 1990 to 1994.                                             

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 PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER      
MATTERS                                                       

         The Class A Common Stock is listed on the New York Stock Exchange under
the trading symbol "HLR." At March 20, 2000 there were 86,749,943 shares of     
Class A Common Stock outstanding and held by approximately 250 holders of record
and approximately 6,000 beneficial owners. The Class B Common Stock of the      
Company is not publicly traded. As of March 20, 2000, 14,990,000 shares of Class
B Common Stock were outstanding and owned by Hollinger Inc. In 1999, 134,126    
shares Series D Preferred Stock held by Hollinger Inc. were converted into      
134,126 shares of Series E Preferred Stock. The shares of Series E Preferred    
Stock are convertible into 955,404 shares of Class A Common Stock (as of March  
20, 2000). In 1996, the Company issued 20,700,000 Preferred Redeemable Increased
Dividend Equity Securities ("PRIDES"), each of which represented one-half share 
of the Company's Series B Preferred Stock, par value $.01 per share. In 1998,   
19,993,531 PRIDES were exchanged for 18,394,048 shares of Class A Common Stock. 
The remaining PRIDES were exchanged in January 2000 for 596,189 shares of Class 
A Common Stock of the Company. The PRIDES were listed on the New York Stock     
Exchange. The Company has issued 829,409 shares of Series C Convertible         
Preferred Stock, par value $0.1 per share ("Series C Preferred Stock") to       
Hollinger Inc. The Series C Preferred Stock was issued at $108.50 per share and 
pays a dividend of 9.5% per annum. The Series C Preferred Stock is convertible  
into 8,181,788 shares of Class A Common Stock (as of March 20, 2000).           

       The following table sets forth for the periods indicated the high and
low sales prices for the Class A Common Stock, as reported by the New York Stock
Exchange Composite Transactions Tape for the period since January 1, 1998, and  
the cash dividends declared per share on the Class A Common Stock.              

                                                                [Download Table]


                                            PRICE RANGE          CASH DIVIDENDS
                                        -------------------         DECLARED   
CALENDAR PERIOD                         HIGH            LOW         PER SHARE  
---------------                         ----            ---         ---------  
                                                                               
1998                                                                           
First Quarter                             $17.188       $13.625         $0.1000
Second Quarter                             17.125        14.875          0.1000
Third Quarter                              18.313        13.438          0.1375
Fourth Quarter                             14.375        12.125          0.1375

1999                                                                           
First Quarter                             $14.938       $11.125         $0.1375
Second Quarter                             16.813        11.875          0.1375
Third Quarter                              13.250         9.813          0.1375
Fourth Quarter                             13.625         9.750          0.1375

2000                                                                           
First Quarter (through March 20, 2000)    $13.563       $10.438         $0.1375

     On March 20, 2000 the closing price of the Class A Common Stock was
$11.813 per share. Each share of Class A Common Stock and Class B Common Stock  
is entitled to receive dividends if, as and when declared by the Board of       
Directors of the Company. Dividends must be paid equally, share for share, on   
both the Class A Common Stock and the Class B Common Stock at any time that     
dividends are paid. Up until the first quarter of 1996, the Company paid a      
quarterly dividend of $0.025 per share of common stock. As a result of the 1995 
Reorganization, the Company had greater financial capacity to support           
substantially higher level of dividends with respect to its common stock. From  
the first quarter 1996 through the second quarter of 1998, the Company paid     
a quarterly dividend of $0.10 per share of common stock. Since the third quarter
of 1998, the Company has paid a quarterly dividend of $0.1375 per share of      
common stock.                                                                   

       As an international holding company, the Company's ability to declare
and pay dividends in the future with respect to its Common Stock will be        
dependent, among other factors, upon its results of operations, financial       
condition and cash requirements, the ability of its United States and foreign   
subsidiaries to pay dividends and make payments to the Company under applicable 
law and subject to restrictions contained in existing and future loan           
agreements, the prior payments of dividends to holders of Series C Preferred    
Stock and Series E Preferred Stock and other financing obligations to third     
parties relating to such United States or foreign subsidiaries of the Company,  
as well as foreign and United States tax liabilities with respect to dividends  
and payments from those entities.                                               

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ITEM 6.  SELECTED FINANCIAL DATA                                                

                                                        [Enlarge/Download Table]


                                                                 YEAR ENDED DECEMBER 31,                          
                                          ----------------------------------------------------------------------- 
                                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                  

                                             1999            1998           1997          1996            1995    
                                          -----------    -----------    -----------    -----------    ----------- 
                                                                                                                  
STATEMENT OF OPERATIONS DATA: (1) (2)                                                                             
Operating revenues:                                                                                               
    Advertising                           $ 1,557,033    $ 1,565,790    $ 1,567,897    $ 1,364,527    $   699,434 
    Circulation                               487,002        517,629        523,591        562,122        301,724 
    Job printing                               48,207         70,461         80,024         80,132         58,750 
    Other                                      55,160         43,880         40,018         67,241         18,606 
                                          -----------    -----------    -----------    -----------    ----------- 
Total operating revenues                    2,147,402      2,197,760      2,211,530      2,074,022      1,078,514 
Operating costs and expenses                1,787,146      1,774,661      1,783,995      1,782,053        951,187 
Infrequent items                               22,046         26,172         25,243         41,567          8,000 
Depreciation and amortization                 125,408        114,848        114,570        102,435         57,463 
                                          -----------    -----------    -----------    -----------    ----------- 
Operating income                              212,802        282,079        287,722        147,967         61,864 
Interest expense                             (131,600)      (105,841)      (113,558)       (84,356)       (44,727)
Amortization of debt issue costs              (16,209)        (5,869)       (13,466)       (16,640)          (168)
Equity in earnings of affiliates               (2,106)        (1,199)         5,807         12,050         14,356 
Other income, net (3)                         349,939        337,470         77,644         70,917         18,199 
                                          -----------    -----------    -----------    -----------    ----------- 
Earnings before income taxes, minority                                                                            
  interest and extraordinary item             412,826        506,640        244,149        129,938         49,524 
Income taxes                                  155,203        223,099         93,655         51,865         20,564 
                                          -----------    -----------    -----------    -----------    ----------- 
Earnings before minority interest and                                                                             
  extraordinary item                          257,623        283,541        150,494         78,073         28,960 
Minority interest                               7,088         81,562         45,973         33,138         22,637 
                                          -----------    -----------    -----------    -----------    ----------- 
Earnings before extraordinary item            250,535        201,979        104,521         44,935          6,323 
Extraordinary item                             (5,183)        (5,067)             -         (2,150)             - 
                                          -----------    -----------    -----------    -----------    ----------- 
Net earnings                              $   245,352    $   196,912    $   104,521    $    42,785    $     6,323 
                                          ===========    ===========    ===========    ===========    =========== 
Basic earnings per share                  $      2.30    $      1.65    $      0.93    $      0.41    $      0.09 
                                          ===========    ===========    ===========    ===========    =========== 
Cash dividends declared per common share                                                                          
                                          $      0.55    $     0.475    $      0.40    $      0.40    $      0.10 
                                          ===========    ===========    ===========    ===========    =========== 
BALANCE SHEET DATA:                                                                                               
   Working capital (deficit)              $  (113,115)   $  (141,688)   $    56,365    $  (695,760)   $  (390,673)
   Total assets (5)                         3,503,024      3,251,724      3,023,921      3,425,544      1,737,980 
   Minority interest                          155,901        107,002        203,034        109,943         97,298 
   Total long-term debt (4)                 1,653,936      1,499,518      1,428,415        711,348        475,048 
   Redeemable preferred stock                  13,591         31,562         75,891        605,579        306,452 
   Total stockholders' equity (6)             902,225        817,921        687,602        686,326        159,973 

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                                                        [Enlarge/Download Table]


                                                YEAR ENDED DECEMBER 31,                   
                            --------------------------------------------------------------
                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)          

                               1999         1998         1997         1996         1995   
                            ----------   ----------   ----------   ----------   ----------
                                                                                          
SEGMENT DATA:                                                                             
Operating Revenues:                                                                       
  Chicago Group             $  390,473   $  379,109   $  341,368   $  333,632   $  332,575
  Community Group               96,674      210,107      292,265      273,740      226,638
  U.K. Newspaper Group         550,474      550,525      492,270      451,902      405,038
  Canadian Newspaper Group   1,109,781    1,058,019    1,085,627    1,014,748      114,263
                            ----------   ----------   ----------   ----------   ----------
Total Operating Revenues    $2,147,402   $2,197,760   $2,211,530   $2,074,022   $1,078,514
                            ==========   ==========   ==========   ==========   ==========
Operating Income (8):                                                                     
  Chicago Group             $   45,234   $   34,093   $   37,862   $   16,723   $   12,634
  Community Group                9,471       38,312       53,453       47,158       27,491
  U.K. Newspaper Group          70,007       66,458       49,224       33,928       27,000
  Canadian Newspaper Group     110,136      169,388      172,426       91,725        2,739
                            ----------   ----------   ----------   ----------   ----------
Total Operating Income      $  234,848   $  308,251   $  312,965   $  189,534   $   69,864
                            ==========   ==========   ==========   ==========   ==========
EBITDA (7),(8):                                                                           
  Chicago Group             $   65,189   $   54,404   $   53,093   $   34,268   $   54,851
  Community Group               18,571       57,579       79,880       72,439       27,288
  U.K. Newspaper Group          88,964       85,871       67,300       48,245       37,374
  Canadian Newspaper Group     187,532      225,245      227,262      137,017        7,814
                            ----------   ----------   ----------   ----------   ----------
Total EBITDA                $  360,256   $  423,099   $  427,535   $  291,969   $  127,327
                            ==========   ==========   ==========   ==========   ==========

-----------------------------------                                             
(1)      The financial data presented above is derived from the Consolidated    
        Financial Statements of the Company. Such financial statements include
         the accounts of The Telegraph and the Canadian Newspapers on an "as-if"
pooling-of-interests basis.                                   

(2)      Results of Southam are included in the statement of operations data as 
    equity earnings for 1995 and consolidated for 1999, 1998, 1997 and
1996.                                                         

(3)      Other income, net primarily includes the gain on the sale of Fairfax,  
      gain on the sale of marketable securities, gain on sale of newspaper
         operations, gain on the dilution of interest in Hollinger L.P., foreign
currency gains (losses) and interest and dividend income.     

(4)      Long-term debt does not include intercompany indebtedness owed to      
Hollinger Inc.                                                

(5)      Includes intangible assets, net of accumulated amortization, which     
       amounted to $2,031,610,000 at December 31, 1999 and $1,858,750,000 at
   December 31, 1998. Such intangible assets consist of the value of
      acquired subscriber and advertiser lists, noncompetition agreements,
       archives and goodwill. The amortization periods for intangible assets
do not exceed 40 years.                                       

(6)      See Consolidated Statements of Stockholders' Equity.                   

(7)      EBITDA represents earnings before interest expense, income taxes,      
         depreciation and amortization, minority interest, equity in earnings of
      affiliates, amortization of debt issue costs, foreign currency gains
      and losses and certain other income items. EBITDA is not intended to
represent an alternative to operating income (as determined in
 accordance with generally accepted accounting principles) as an
         indicator of the Company's operating performance, or to cash flows from
  operating activities (as determined in accordance with generally
        accepted accounting principles) as a measure of liquidity. The Company
     believes that EBITDA largely determines its ability to fund current
  operations and to service debt, due to the significant number of
  acquisitions made by the Company which have resulted in non-cash
        charges for depreciation and amortization. These non-cash charges have
adversely affected net earnings, but have not affected EBITDA.

(8)      Excludes infrequent items.                                             

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OVERVIEW                                        

OVERVIEW                                                                        

         The Company's business is concentrated in the publication of newspapers
in the United States, Canada, United Kingdom, and Israel. Revenues are derived  
principally from advertising, paid circulation and, to a lesser extent, job     
printing. Approximately 18% of the Company's total operating revenues in 1999   
were attributable to the Chicago Group, approximately 4% were attributable to   
the Community Group, approximately 26% were attributable to its U.K. Newspaper  
Group, and approximately 52% were attributable to its Canadian Newspaper Group. 
The Company's Chicago Group is comprised of the Chicago Sun-Times and suburban  
newspapers in the Chicago metropolitan area. The Company's Community Group is   
comprised of 22 newspapers and related publications and the Jerusalem Post. The 
Company's U.K. Newspaper Group consists of the operations of the Telegraph Group
Ltd. ("Telegraph"), its subsidiaries and joint ventures. The Canadian Newspaper 
Group consists of the operations of Southam Inc. ("Southam") and the Company's  
investment in Hollinger Canadian Newspapers Limited Partnership ("Hollinger     
L.P.").                                                                         

 In addition, the Company has developed a comprehensive Internet
strategy for the year 2000. Internet activities fall into three main areas: (1) 
web sites related to the various print publications, which are 100% owned and   
reported within the traditional segments; (2) joint ventures between our print  
publications and non-publishing-related outsiders, where each adds value and    
where the Company has a certain amount of control; and (3) minority investments 
in unrelated third parties.                                                     

        The print-related and joint venture strategy represents an opportunity
to fortify the newspapers in their local markets by providing them with the     
necessary tools to offer a complete suite of on-line and print options for their
clients. The Company has stayed competitive by building significant web sites at
all our major divisions.                                                        

   The Consolidated Financial Statements include the accounts of the
Company and its majority-owned subsidiaries. At December 31, 1999, 1998 and     
1997, the Company's interest in Southam was 100.0%, 71.0% and 58.6%,            
respectively. The Company's interest in Hollinger L.P. was 85.0% at December 31,
1999. Investments in less than majority-owned affiliated companies are accounted
for using the equity method of accounting. All intercompany balances and        
transactions have been eliminated on consolidation.                             

SIGNIFICANT TRANSACTIONS                                                        

       In January 1999, Hollinger Canadian Publishing Holdings Inc. ("HCPH")
acquired 19,845,118 outstanding Southam common shares which had been tendered   
pursuant to HCPH's offer to all Southam shareholders to acquire the shares for  
Cdn.$25.25 cash per share after payment by Southam of a special dividend of     
Cdn.$7.00 per share. The aggregate consideration paid was $327.5 million and    
this purchase of shares brought the Company's ownership interest in Southam to  
approximately 97%. The purchase price was funded through HCPH's portion of the  
Southam special dividend together with borrowings by HCPH under the Bank Credit 
Facility. In February 1999, HCPH purchased the remaining Southam common shares  
pursuant to applicable Canadian law for aggregate consideration of $36.5        
million.                                                                        

         During 1999, the Company solicited consents from the registered holders
of the Senior Notes and Senior Subordinated Notes to amend the indentures       
covering said notes to (i) make the limitation on restricted payments covenant  
less restrictive, (ii) make the consolidated cash flow ratio under the          
limitation on indebtedness covenant more restrictive, and (iii) make the        
limitation on sale of assets covenant less restrictive. The requisite consents  
were obtained in March 1999 and the indentures governing the Senior Notes and   
Senior Subordinated Notes were so amended.                                      

       In February 1999, the Company completed the sale of 45 U.S. community
newspaper properties for approximately $460.0 million, of which approximately   
$441.0 million was cash. The proceeds from the sale were used to pay down       
outstanding debt on the Bank Credit Facility. A pre-tax gain resulting from this
transaction of approximately $249.2 million was recognized on this transaction. 

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    During 1999, the Company sold to Horizon Publications Inc. 33 U.S.
community newspapers for $43.7 million resulting in a pre-tax gain of           
approximately $20.7 million. Horizon Publications Inc. is managed by former     
Community Group executives and owned by current and former Hollinger            
International Inc. executives. Throughout 1999, the Company acquired five       
community newspapers in the U.S. for total consideration of $24.5 million.      

 In April 1999, the Company formed Hollinger L.P. Hollinger L.P.
acquired 48 daily newspapers, 180 non-daily newspapers and shopping guides and  
106 magazines and specialty publications located across Canada from Southam,    
UniMedia Inc. and Sterling Newspapers Company in exchange for promissory notes  
due April 29, 2020 of $309.5 million (Cdn.$451.2 million) and 135,945,972 units 
in Hollinger L.P. The transfer of properties to Hollinger L.P. has been         
accounted for at historical carrying values and no gain was recognized on the   
transfer.                                                                       

  On April 30, 1999, Hollinger L.P. completed a Cdn.$200.0 million
($137.2 million) private placement and investors subsequently received 20       
million partnership units of Hollinger L.P. During July 1999 Hollinger L.P.     
completed its initial public offering issuing 4 million units at Cdn.$10 per    
unit for total proceeds of Cdn.$40.0 million ($27.0 million). All partnership   
units, including the 20 million units issued through the April 30, 1999 private 
placement, are now listed on The Toronto Stock Exchange. After the initial      
public offering the Company continued to hold indirectly approximately 85% of   
the equity of Hollinger L.P. The net proceeds of the offerings were applied to  
reduce bank debt of the Hollinger International group of companies. The         
reduction in the Company's indirect ownership interest in Hollinger L.P. due to 
the sales of partnership units resulted in the recognition of dilution gains of 
$77.3 million. The Company's indirect ownership in the equity of the Hollinger  
L.P. was 85.0% at December 31, 1999.                                            

On April 30, 1999, Hollinger International Publishing Inc     
("Publishing"), HCPH, Telegraph, Southam, Hollinger International Finance Corp. 
("HIF") and a group of financial institutions entered into a Fourth Amended and 
Restated Credit Facility ("Restated Credit Facility") for a total of $725.0     
million consisting of a $475.0 million revolving credit line maturing on        
September 30, 2004 and a $250.0 million term loan maturing on December 31, 2004.
This facility replaced the previous Bank Credit Facility. The Loans under the   
Restated Credit Facility bear interest, at the option of the respective         
borrower, at a rate per annum tied to specified floating rates or a reserve     
adjusted Eurocurrency rate, in each case plus a specified margin determined     
based on leverage ratios. On June 4, 1999, the revolving credit line was        
increased by $50.0 million. On September 30, 1999, the Restated Credit Facility 
was increased to $875.0 million when the revolving credit line and the term loan
were each increased by $50.0 million.                                           

   In January 1998, the Company completed a sale of approximately 80
community newspapers for aggregate cash consideration of approximately $310.0   
million. The proceeds from the sale were used to pay off notes at the Community 
Group and pay down $175.0 million of outstanding debt on the Bank Credit        
Facility. A pre-tax gain of $201.2 million was recognized on this transaction.  
In addition, its Canadian subsidiaries, in three separate transactions in 1998, 
sold a magazine and four newspaper properties for total proceeds of $267.4      
million resulting in pre-tax gains of $161.8 million.                           

In three separate transactions in 1998, the Company and its   
subsidiaries acquired five daily and certain community newspapers for a total   
cash consideration of $250.3 million. Included in these transactions was the    
acquisition by Southam of the Financial Post Company, which published the       
Financial Post. In October 1998, Southam launched the National Post, a new      
national daily newspaper in Canada, incorporating the Financial Post as the     
business section of the National Post.                                          

 During 1998 the Company issued an exchange offer to convert the
Preferred Redeemable Increased Dividend Equity Securities ("PRIDES') into Class 
A Common Stock. 19,993,531 PRIDES were exchanged for 18,394,048 shares of Class 
A Common Stock.                                                                 

    During 1997, HCPH acquired 6,552,425 additional shares of Southam,
increasing its ownership interest to 58.6% from 50.7%. During 1998, HCPH        
acquired 8,268,900 additional shares of Southam increasing its ownership        
interest to 69.1%. Subsequently, Southam repurchased some its own common shares 
increasing the Company's ownership interest to 71.0%.                           

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        In 1997 the Company and Hollinger Inc. announced that they had reached
an agreement for the transfer by Hollinger Inc. of its Canadian publishing      
interests to HCPH for an aggregate consideration of approximately $382.0 million
(Cdn.$523.0 million). The purchase price was satisfied by payment of cash in the
amount of $250.0 million, by the issuance of a new series of preferred stock of 
the Company, which was converted into 829,409 shares of Series C Preferred      
Stock, a new series of mandatorily convertible preferred stock of the Company   
similar to the PRIDES issued by the Company in August 1996 having a face value  
of $90.0 million, and 3,207,245 shares of Class A Common Stock of the Company   
having a nominal agreed value of $42.0 million. The mandatorily convertible     
preferred stock was issued for a price of $108.50 per share and pays quarterly  
dividends of 9.5% per annum.                                                    

      In March 1997, Publishing issued offerings of $260 million of Senior
Notes due 2005 (the "Senior Notes") and $290 million of Senior Subordinated     
Notes due 2007 (the "Senior Subordinated Notes"). Both the Senior Notes and the 
Senior Subordinated Notes are guaranteed by the Company. Publishing and its     
restricted subsidiaries utilized the proceeds of these offerings to repay bank  
indebtedness, to repay the redeemable preference shares of DT Holdings Limited  
("DTH") and First DT Holdings Limited ("FDTH") and for general working capital. 

SUBSEQUENT EVENTS                                                               

       At December 31, 1999, 353,234 Series B shares were outstanding, which
underlie 706,469 PRIDES. In January 2000, these PRIDES were converted into      
596,189 shares of Class A Common Stock of the Company.                          

At December 31, 1999, the Company owned 51.7 million shares in
Interactive Investor International (III) at a cost of approximately $15.0       
million and representing an approximate 47.0% equity interest. On February 17,  
2000, III had its initial public offering (IPO) issuing 52.0 million shares at  
(pound)1.50 ($2.42). The Company sold 5.0 million shares of its holding into the
IPO. After the IPO, the Company now owns 46.7 million shares representing 28.5% 
of the equity of III. Shares in III have traded substantially above their issue 
price indicating a significant gain to the Company. However, the Company is     
precluded from selling its holding for a period of six months from the date of  
the IPO.                                                                        

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    The following table sets forth, for the periods indicated, certain
items and related percentage relationships included in the Company's            
Consolidated Statements of Operations.                                          

                                                                [Download Table]


                                           Year Ended December 31,               
                                ------------------------------------------------ 
                                    1999              1998              1997     
                                ------------      ------------      ------------ 
                                            (dollars in thousands)               
                                                                                 
Operating revenues                                                               
      Chicago Group             $    390,473      $    379,109      $    341,368 
      Community Group                 96,674           210,107           292,265 
      U.K. Newspaper Group           550,474           550,525           492,270 
      Canadian Newspaper Group     1,109,781         1,058,019         1,085,627 
                                ------------      ------------      ------------ 
     Total operating revenue    $  2,147,402      $  2,197,760      $  2,211,530 
                                ============      ============      ============ 
Operating income (4), (5)                                                        
      Chicago Group             $     45,234      $     34,093      $     37,862 
      Community Group                  9,471            38,312            53,453 
      U.K. Newspaper Group            70,007            66,458            49,224 
      Canadian Newspaper Group       110,136           169,388           172,426 
                                ------------      ------------      ------------ 
     Total operating income     $    234,848      $    308,251      $    312,965 
                                ============      ============      ============ 
EBITDA (2), (4), (5)                                                             
      Chicago Group             $     65,189      $     54,404      $     53,093 
      Community Group                 18,571            57,579            79,880 
      U.K. Newspaper Group            88,964            85,871            67,300 
      Canadian Newspaper Group       187,532           225,245           227,262 
                                ------------      ------------      ------------ 
     Total EBITDA               $    360,256      $    423,099      $    427,535 
                                ============      ============      ============ 
Operating revenues                                                               
      Chicago Group                     18.2%             17.3%             15.4%
      Community Group                    4.5%              9.6%             13.2%
      U.K. Newspaper Group              25.6%             25.0%             22.3%
      Canadian Newspaper Group          51.7%             48.1%             49.1%
                                ------------      ------------      ------------ 
     Total operating revenue           100.0%            100.0%            100.0%
                                ============      ============      ============ 
Operating income                                                                 
      Chicago Group                     19.3%             11.1%             12.1%
      Community Group                    4.0%             12.4%             17.1%
      U.K. Newspaper Group              29.8%             21.5%             15.7%
      Canadian Newspaper Group          46.9%             55.0%             55.1%
                                ------------      ------------      ------------ 
     Total operating income            100.0%            100.0%            100.0%
                                ============      ============      ============ 
EBITDA                                                                           
      Chicago Group                     18.0%             12.9%             12.4%
      Community Group                    5.2%             13.6%             18.7%
      U.K. Newspaper Group              24.7%             20.3%             15.7%
      Canadian Newspaper Group          52.1%             53.2%             53.2%
                                ------------      ------------      ------------ 
     Total EBITDA                      100.0%            100.0%            100.0%
                                ============      ============      ============ 
EBITDA Margin (3)                                                                
      Chicago Group                     16.7%             14.4%             15.6%
      Community Group                   19.2%             27.4%             27.3%
      U.K. Newspaper Group              16.2%             15.6%             13.7%
      Canadian Newspaper Group          16.9%             21.3%             20.9%
     Total EBITDA                       16.8%             19.3%             19.3%

(Footnotes following tables)                                                    

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    The following table sets forth, for the periods indicated, certain
items and related percentage relationships included in the Company's            
Consolidated Statements of Operations.                                          

                                                        [Enlarge/Download Table]


                                           Year Ended December 31,             Year Ended December 31,        
                                     ----------------------------------  ------------------------------------ 
                                       1999         1998         1997      1999          1998          1997   
                                     --------     --------     --------  --------      --------      -------- 
                                        (dollar amounts in thousands)                                         
                                                                                                              
Chicago Group                                                                                                 
      Operating revenue                                                                                       
           Advertising               $294,124     $281,615     $243,301      75.4%         74.3%         71.3%
           Circulation                 80,551       82,534       79,574      20.6          21.8          23.3 
           Job printing and other      15,798       14,960       18,493       4.0           3.9           5.4 
                                     --------     --------     --------  --------      --------      -------- 
      Total operating revenue         390,473      379,109      341,368     100.0         100.0         100.0 
                                     --------     --------     --------  --------      --------      -------- 
      Operating costs (1), (4), (5)                                                                           
           Newsprint                   64,408       71,101       60,254      16.5          18.8          17.7 
           Compensation costs         147,951      145,635      131,256      37.9          38.4          38.5 
           Other operating costs      112,925      107,969       96,765      28.9          28.5          28.3 
           Depreciation                 8,929        9,207        8,603       2.3           2.4           2.5 
           Amortization                11,026       11,104        6,628       2.8           2.9           1.9 
                                     --------     --------     --------  --------      --------      -------- 
      Total operating costs           345,239      345,016      303,506      88.4          91.0          88.9 
                                     --------     --------     --------  --------      --------      -------- 
      Operating income (1), (5)      $ 45,234     $ 34,093     $ 37,862      11.6%          9.0%         11.1%
                                     ========     ========     ========  ========      ========      ======== 
Community Group                                                                                               
      Operating revenue                                                                                       
           Advertising               $ 57,535     $135,216     $190,215      59.5%         64.4%         65.1%
           Circulation                 26,618       49,449       69,499      27.5          23.5          23.8 
           Job printing and other      12,521       25,442       32,551      13.0          12.1          11.1 
                                     --------     --------     --------  --------      --------      -------- 
      Total operating revenue          96,674      210,107      292,265     100.0         100.0         100.0 
                                     --------     --------     --------  --------      --------      -------- 
      Operating costs (1), (4), (5)                                                                           
           Newsprint                    9,355       23,173       29,048       9.7          11.0           9.9 
           Compensation costs          35,665       70,496       98,738      36.9          33.6          33.8 
           Other operating costs       33,083       58,859       84,599      34.2          28.0          28.9 
           Depreciation                 3,956        7,185       10,485       4.1           3.4           3.6 
           Amortization                 5,144       12,082       15,942       5.3           5.8           5.5 
                                     --------     --------     --------  --------      --------      -------- 
      Total operating costs            87,203      171,795      238,812      90.2          81.8          81.7 
                                     --------     --------     --------  --------      --------      -------- 
      Operating income (1), (5)      $  9,471     $ 38,312     $ 53,453       9.8%         18.2%         18.3%
                                     ========     ========     ========  ========      ========      ======== 

(Footnotes following tables)                                                    

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    The following table sets forth, for the periods indicated, certain
items and related percentage relationships included in the Company's            
Consolidated Statements of Operations.                                          

                                                        [Enlarge/Download Table]


                                              Year Ended December 31,                   Year Ended December 31,           
                                     ----------------------------------------  ------------------------------------------ 
                                        1999           1998           1997        1999            1998             1997   
                                     ----------     ----------     ----------  ----------      ----------      ---------- 
                                           (dollar amounts in thousands)                                                  
                                                                                                                          
U.K. Newspaper Group                                                                                                      
      Operating revenue                                                                                                   
           Advertising               $  365,005     $  366,742     $  335,115        66.3%           66.7%           68.1%
           Circulation                  158,683        163,206        137,073        28.8            29.6            27.8 
           Job printing and other        26,786         20,577         20,082         4.9             3.7             4.1 
                                     ----------     ----------     ----------  ----------      ----------      ---------- 
      Total operating revenue           550,474        550,525        492,270       100.0           100.0           100.0 
                                     ----------     ----------     ----------  ----------      ----------      ---------- 
      Operating costs (1), (4), (5)                                                                                       
           Newsprint                     97,045        101,750         89,851        17.6            18.5            18.3 
           Compensation costs            91,870         88,604         86,887        16.7            16.1            17.7 
           Other operating costs        272,595        274,300        248,232        49.5            49.8            50.4 
           Depreciation                   8,522          8,739          7,535         1.5             1.6             1.5 
           Amortization                  10,435         10,674         10,541         1.9             1.9             2.1 
                                     ----------     ----------     ----------  ----------      ----------      ---------- 
      Total operating costs             480,467        484,067        443,046        87.2            87.9            90.0 
                                     ----------     ----------     ----------  ----------      ----------      ---------- 
      Operating income (1), (5)      $   70,007     $   66,458     $   49,224        12.8%           12.1%           10.0%
                                     ==========     ==========     ==========  ==========      ==========      ========== 
Canadian Newspaper Group                                                                                                  
      Operating revenue                                                                                                   
           Advertising               $  840,369     $  782,217     $  799,266        75.8%           74.0%           73.6%
           Circulation                  221,150        222,440        237,445        19.9            21.0            21.9 
           Job printing and other        48,262         53,362         48,916         4.3             5.0             4.5 
                                     ----------     ----------     ----------  ----------      ----------      ---------- 
      Total operating revenue         1,109,781      1,058,019      1,085,627       100.0           100.0           100.0 
                                     ----------     ----------     ----------  ----------      ----------      ---------- 
      Operating costs (1), (4), (5)                                                                                       
           Newsprint                    140,042        147,785        132,857        12.6            14.0            12.2 
           Compensation costs           408,879        394,391        419,272        36.8            37.3            38.6 
           Other operating costs        373,328        290,598        306,236        33.6            27.4            28.2 
           Depreciation                  42,746         34,711         35,012         3.9             3.3             3.3 
           Amortization                  34,650         21,146         19,824         3.1             2.0             1.8 
                                     ----------     ----------     ----------  ----------      ----------      ---------- 
      Total operating costs             999,645        888,631        913,201        90.0            84.0            84.1 
                                     ----------     ----------     ----------  ----------      ----------      ---------- 
      Operating income (1), (5)      $  110,136     $  169,388     $  172,426        10.0%           16.0%           15.9%
                                     ==========     ==========     ==========  ==========      ==========      ========== 

(1)      Percentage relationships are expressed as a percentage of related      
revenues.                                                     
(2)      EBITDA represents earnings before interest expense, income taxes,      
         depreciation and amortization, minority interest, equity in earnings of
      affiliates, amortization of debt issue costs, foreign currency gains
        and losses, extraordinary items and certain other income items. EBITDA
     is not intended to represent an alternative to operating income (as
         determined in accordance with generally accepted accounting principles)
       as an indicator of the Company's operating performance, or cash flows
       from operating activities (as determined in accordance with generally
        accepted accounting principles) as a measure of liquidity. The Company
     believes that EBITDA largely determines its ability to fund current
        operations and to service debt. The significant number of acquisitions
        made by the Company have resulted in non-cash charges for depreciation
      and amortization, which have adversely affected net income, but have
not affected EBITDA.                                          
(3)      EBITDA Margin represents EBITDA divided by related operating revenues. 
(4)      Includes allocation of corporate expenses.                             
(5)      Excludes infrequent items.                                             

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RESULTS OF OPERATIONS                                                           

1999 COMPARED WITH 1998                                                         

       NET EARNINGS The Company had net earnings of $245.4 million, or $2.30
per share in 1999, compared with net earnings of $196.9 million, or $1.65 per   
share in 1998. Earnings in 1999 and 1998 include a number of infrequent and     
non-recurring items. For the year ended December 31, 1999, earnings excluding   
infrequent and non-recurring items were $62.1 million compared to $95.8 million 
in 1998. Assuming all instruments are dilutive, diluted earnings per share      
excluding infrequent and non-recurring items were 53 cents per share in 1999    
compared to 78 cents per share in 1998.                                         

       OPERATING INCOME Operating income in 1999 was $212.8 million compared
to $282.1 million in 1998. The decrease in operating income is due to several   
factors. Community Group newspaper operations sold during 1998 and 1999         
contributed $30.6 million to reported operating income in 1998 and $1.2 million 
in 1999. In addition, operating income in both 1999 and 1998 was affected by    
start-up losses at the National Post of $48.7 million and $7.9 million,         
respectively. Operating income in 1999 was also affected increased amortization 
of intangibles related to the acquisition of the remaining Southam shares in    
January 1999 and increased losses from Internet activities.                     

     OPERATING REVENUES Operating revenues were $2,147.4 million in 1999
compared to $2,197.8 million in 1998, a decrease of $50.4 million. The overall  
decrease in revenue is primarily due to the 1999 and 1998 sales of newspaper    
operations at the Community Group and the Canadian Newspaper Group. Newspaper   
operations sold contributed $204.3 million to operating revenues in 1998 and    
$17.9 million in 1999. The decreases in operating revenues resulting from these 
sales were offset, to a large extent, by operating revenues from the National   
Post, which commenced operations in October 1998 and 1998 acquisitions at the   
Canadian Newspaper Group..                                                      

     OPERATING EXPENSES Total operating costs and expenses were $1,934.6
million in 1999 compared to $1,915.7 million in 1998. Newsprint expense         
decreased over the prior year by 9.6%. The decrease in newsprint expense is     
primarily due to the decrease in newsprint price. Newsprint prices decreased by 
9.8% at the Chicago Group, 10.5% at the Community Group, 5.7% at the U.K.       
Newspaper Group and 9.9% at the Canadian Newspaper Group. Lower consumption as a
result of the sale of newspaper operations at the Community Group was largely   
offset by an increase in consumption at the Canadian Newspaper Group primarily  
resulting from the National Post. Compensation costs decreased year over year by
$14.8 million or 2.1%. The overall reduction in compensation costs was due to   
the sales of newspaper operations at the Community Group offset in part by      
increased compensation resulting from the full year of operation of the National
Post. Other operating costs increased $60.2 million year over year mainly as a  
result of 1999 including a full year of operations of the National Post offset  
by lower other operating costs at the Community Group as a result of the sale of
newspaper operations. Amortization increased year over year by $6.2 million     
primarily as a result of increased amortization of intangibles related to the   
acquisition of the remaining Southam shares in January 1999, offset by reduced  
amortization at the Community Group as a result of the sale of newspaper        
operations. Operating expenses included $22.0 million of infrequent items in    
1999, which consisted primarily of costs related to the start-up of the new     
plant in Chicago and accounting adjustments related to pension liabilities.     
Operating expenses included infrequent items of $26.2 million in 1998, which    
included $13.1 million of start-up costs relating to the National Post and other
one-time charges.                                                               

         OTHER INCOME Other income of $326.3 million in 1999 consisted primarily
of gains on sales of newspaper operations at the Community Group and the gain on
the dilution of the Company's interest in Hollinger L.P. Other income of $331.4 
million in 1998 consisted primarily of the gains on sales of newspaper          
operations at the Community Group and Canadian Newspaper Group.                 

    INTEREST EXPENSE Interest expense increased 24.3% primarily due to
interest on additional debt incurred related to the acquisition of the Southam  
minority in January 1999 and the repurchases in 1999 of the Company's common    
stock.                                                                          

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   AMORTIZATION OF DEBT ISSUE COSTS Amortization of debt issue costs
represents debt issue costs on the Senior Notes, Senior Subordinated Notes and  
the Bank Credit Facility. Amortization of debt issue costs in 1999 included     
regular amortization of these costs and a one-time write-off of issue costs     
related to debt incurred to buyout the Southam minority in January 1999.        

     MINORITY INTEREST Minority interest in 1999 represents the minority
interest in the earnings of Hollinger L.P. and in 1998 represents the minority  
interest in earnings of Southam.                                                

CHICAGO GROUP                                                                   

      Operating revenues for the Chicago Group were $390.5 million in 1999
compared with $379.1 million in 1998. Operating revenues for operations owned in
both years were $388.0 million in 1999 compared to $379.1 million in 1998. The  
"same store" revenue growth is driven by a 3.7% increase in advertising revenues
primarily at the Chicago Sun-Times offset by a 2.8% reduction in circulation    
revenue due to both price competition and lower circulation volume.             

      Total operating costs and expenses, excluding infrequent items, were
$345.2 million in 1999 compared with $345.0 million in 1998. Operating income   
was $45.2 million in 1999 compared with $34.1 million in 1998. This improvement 
was driven by increased advertising revenue and a newsprint price improvement   
year over year of 9.8% across the group. For newspapers owned in both years     
EBITDA increased 19.1% to $64.8 million in 1999 from $54.4 million in 1998 and  
operating income increased 33.1% to $45.4 million from $34.1 million in 1998.   

COMMUNITY GROUP                                                                 

       Operating revenues for the Community Group were $96.7 million in 1999
compared with $210.1 million in 1998. The decrease in operating revenues was the
result of the sale of newspaper operations in 1999. Operating revenues for      
newspapers owned in both years were $50.7 million in 1999 compared with $50.1   
million in 1998; EBITDA was $14.3 million in 1999 compared with $13.4 million in
1998 and operating income was $9.6 million in 1999 compared with $8.0 million in
1998. This improvement in operating income and EBITDA results from a slight     
improvement in operating revenue as well as a 10.5% year over year reduction in 
newsprint prices. Newspaper operations sold contributed $17.3 million to        
operating revenue in 1999 and $139.2 million in 1998.                           

U.K. NEWSPAPER GROUP                                                            

     Operating revenues for the U.K. Newspaper Group were flat year over
year. However, when expressed in British pounds sterling, total operating       
revenues increased by 2.4% and advertising revenues increased 1.9%. Advertising 
revenues continued to increase primarily a result of a continued buoyant        
advertising market in all sectors except recruitment advertising. However, the  
slowdown in recruitment classifieds was more than offset by growth in other     
classified categories and display advertising. Also, recruitment advertising    
turned the corner, showing a year-over-year increase of 3.0% for the fourth     
quarter 1999. In British pounds sterling, circulation revenues were flat year   
over year and other operating revenue in 1999 increased 33.6% over 1998. The    
increases are primarily due to increased revenue from Telegraph Enterprises, a  
division of Telegraph Group Limited, which uses the Telegraph brand to          
facilitate sales of goods and services to readers.                              

      Total operating costs and expenses, excluding infrequent items, were
$480.5 million in 1999 compared to $484.1 million in 1998. Newsprint expense was
$97.0 million in 1999 compared with $101.8 million in 1998, a decrease of $4.8  
million. This reflects a 5.7% year over year price decrease offset in part by a 
consumption increase. The newsprint price improvement, although less than       
reported for United States properties, reflects the longer term purchasing      
methodology in the U.K. which usually causes a delay in realizing the effect of 
newsprint changes and should result in smaller price swings during periods of   
increasing newsprint prices. Operating income, excluding infrequent items,      
increased $3.5 million from 1998.                                               

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CANADIAN NEWSPAPER GROUP                                                        

  Operating revenues in the Canadian Newspaper Group were $1,110.0
million in 1999 compared with $1,058.0 million in 1998, an increase of $52.0    
million or 4.9%. Most of this increase resulted from revenues from the National 
Post, in its first full year of operation and 1999 revenues from operations     
acquired during 1998 offset by lower 1999 revenue resulting from operations     
which were sold in 1998. Revenues from newspapers owned in both years were      
$914.5 million in 1999 and $910.9 million in 1998.                              

    Total operating costs and expenses excluding infrequent items were
$999.6 million in 1999 compared with $888.6 million in 1998, an increase of     
$111.0 million. Newsprint prices decreased 9.9% year over year, but overall     
consumption increased primarily as a result of the National Post. Total         
newsprint expense decreased $7.7 million or 5.2% from 1998. Compensation costs  
increased $14.5 million year over year almost entirely as a result of 1999      
including a full year of costs related to National Post. Compensation costs for 
newspapers owned in both years were virtually flat. Other operating costs       
increased $82.7 million to $373.3 million in 1999 from $290.6 million in 1998.  
The majority of this increase results from a full year of other operating costs 
of the National Post and an increase in Internet expenses. EBITDA from          
newspapers owned in both years was $217.8 million in 1999 compared with $215.0  
million in 1998. The National Post 1999 EBITDA loss was $44.3 million compared  
with $7.2 million in 1998. In 1998 the National Post commenced publication      
October 27.                                                                     

      Depreciation in 1999 increased $8.0 million over 1998 as a result of
fixed asset additions and the National Post. Amortization increased $13.5       
million from $21.1 million in 1998 to $34.6 million in 1999 primarily due to the
additional amortization of intangible assets resulting from the 1998 and 1999   
acquisitions of Southam shares.                                                 

1998 COMPARED WITH 1997                                                         

       NET EARNINGS The Company had net earnings of $196.9 million, or $1.65
per share in 1998, compared with net earnings of $104.5 million, or $0.93 per   
share in 1997. Earnings in 1998 and 1997 include a number of infrequent and     
non-recurring items. For the year ended December 31, 1998, earnings excluding   
infrequent and non-recurring items were $95.8 million compared to $72.6 million 
in 1997. Assuming all instruments are dilutive, diluted earnings per share      
excluding infrequent and non-recurring items were 78 cents per share in 1998    
compared to 61 cents per share in 1997.                                         

       OPERATING INCOME Operating income in 1998 was $282.1 million compared
to $287.7 million in 1997. The operating income at the U.K. Newspaper Group     
increased $33.5 million to $60.2 million in 1998 from $26.7 million in 1997,    
principally as a result of increased advertising revenue and increased          
circulation revenue due in part to higher subscription prices under the direct  
subscription campaign. The decrease in operating income at both the Community   
Group and the Canadian Newspaper Group was primarily due to sales of newspaper  
operations. On a "same store" basis, operating income at the Community Group was
$37.4 million in 1998 compared to $35.0 million in 1997. Operating income on a  
"same store" basis for the Canadian Newspaper Group was $184.9 million in 1998  
compared to $176.8 million in 1997.                                             

     OPERATING REVENUES Operating revenues were $2,197.8 million in 1998
compared to $2,211.5 million in 1997. The overall decrease in revenue is        
primarily due to sales of newspaper operations at the Community Group and the   
Canadian Newspaper Group. Operations sold during 1998 contributed $218.7 million
to operating revenues in 1997. The decreases in operating revenues resulting    
from these sales were offset, in part, by increases in advertising and          
circulation revenues at the U.K. Newspaper Group of 9.4% and 19.1%, respectively
and operating revenues from 1998 acquisitions at the Chicago Group, Community   
Group and Southam totaling $103.6 million.                                      

     OPERATING EXPENSES Total operating costs and expenses were $1,915.7
million in 1998 compared to $1,923.8 million in 1997. As a percentage of total  
operating revenues, operating costs remained fairly consistent at 87.2% in 1998 
compared to 87.0% in 1997. Newsprint expense increased over the prior year by   
18.0% for the Chicago Group, decreased by 20.2% for the Community Group,        
decreased by 0.5% for the U.K. Newspaper Group (including $12.4 million of      
newsprint in 1997 related to the prepaid subscription campaign) and increased by
11.2% for the Canadian Newspaper Group. The increase in newsprint expense is due
to both increased newsprint prices and increased consumption. Newsprint prices, 
which after declining in 1996 and early part of 1997, started to                

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increase through the latter part of 1997 and continued to increase slightly     
throughout 1998. Operating expenses included infrequent items of $26.2 million  
in 1998, which included $13.1 million of start-up costs relating to the National
Post and other one-time charges. Operating expenses in 1997 included infrequent 
items of $25.2 million that consisted primarily of $22.2 million for costs      
related to the direct prepaid subscription campaign at the Telegraph.           

         OTHER INCOME Other income of $331.4 million in 1998 consisted primarily
of the gains on sales of newspaper operations at the Community Group and        
Canadian Newspaper Group. Other income of $73.1 million in 1997 consisted mostly
of the gain on sale of Fairfax interest of $66.1 million and the gain on sale of
several U.S. community newspapers of $2.3 million.                              

  INTEREST EXPENSE Interest expense decreased by $7.7 million. The
decrease in interest expense resulted from a decrease in long-term debt         
resulting from the paydown of the AP-91 Senior Notes in January 1998 and lower  
interest rates on the Bank Credit Facility.                                     

   AMORTIZATION OF DEBT ISSUE COSTS Amortization of debt issue costs
represents debt issue costs on the Senior Subordinated Notes issued in February 
1996, the Senior Notes and Senior Subordinated Notes issued in February 1997 and
the Bank Credit Facility. Amortization of debt issue costs in 1997 included     
regular amortization of these costs and a one-time write-off of balances in the 
amount of $4.6 million.                                                         

      INCOME TAXES Income tax expense for 1998 was $223.1 million compared
with $93.7 million in 1997. Income tax expense for 1998 included tax on the gain
on sale of newspaper operations and other non-recurring items and in 1997       
included tax on the gain on sale of Fairfax.                                    

         MINORITY INTEREST Minority interest represents the minority interest in
earnings of Southam and dividends paid on redeemable preferred stock of two     
subsidiary companies until they were redeemed in 1997. The amount attributable  
to minority interest in earnings of Southam increased to $81.6 million in 1998  
from $41.1 million in 1997, primarily as a result of the increase in earnings of
Southam from the gains on sales of certain newspaper properties, offset, in     
part, by an increase in the Company's ownership in Southam.                     

CHICAGO GROUP                                                                   

         Operating revenues of the Chicago Group were $379.1 million in 1998 (or
17.3% of total operating revenues) compared with $341.4 million in 1997, an     
increase of $37.7 million. Most of this increase is as a result of acquisitions.
For newspapers owned in both years, revenue was $343.9 million in 1998 compared 
with $341.4 million in 1997, an increase of $2.5 million. Advertising revenue   
increased $10.1 million or 4.1% while circulation revenue decreased $3.5 million
or 4.4%. The circulation revenue decrease was due to both price competition in  
the Chicago market and lower circulation volume.                                

      Total operating costs and expenses, excluding infrequent times, were
$345.0 million in 1998 compared with $303.5 million in 1997 an increase of $41.5
million. This increase relates to acquisitions, an increase in the year over    
year cost of newsprint of 5.6% and also an increase in the consumption of       
newsprint.                                                                      

         Operating income, excluding infrequent items, was $34.1 million in 1998
compared with $37.9 million in 1997.                                            

COMMUNITY GROUP                                                                 

       Operating revenues at the Community Group were $210.1 million in 1998
(or 9.6% of total operating revenues) compared with $292.3 million in 1997, a   
decrease of $82.2 million. This decrease in operating revenue was primarily the 
result of the sale of newspaper operations in January 1998. Operating revenues  
for newspapers owned in both years were $169.4 million in 1998 compared with    
$165.0 million in 1997, an increase of $4.4 million. Advertising revenues       
increased $5.0 million or 4.5% while circulation, printing and other revenues   
decreased $0.6 million year over year.                                          

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      Total operating costs and expenses, excluding infrequent items, were
$171.8 million in 1998 compared with $238.8 million in 1997, a decrease of $67.0
million. This decrease relates primarily to the sale of newspaper operations    
offset by an increase in newsprint expense resulting from both price and        
consumption increases.                                                          

         Operating income, excluding infrequent items, was $38.3 million in 1998
compared with $53.5 million in 1997. As a percentage of operating revenue,      
operating income was 18.2% in 1998 compared with 18.3% in 1997. The sale of     
newspaper operations in January 1998 resulted in the decline in operating       
income.                                                                         

U.K. NEWSPAPER GROUP                                                            

       Operating revenues in the U.K. Newspaper Group were $550.5 million in
1998 (or 25.0% of total operating revenues), an increase of 11.8% from 1997.    
When expressed in British pounds sterling, revenues increased by 10.6%.         
Advertising revenues for 1998 increased $31.6 million to $366.7 million, or 9.4%
over 1997. When expressed in British pounds sterling, advertising revenues      
increased 8.2%. Circulation revenues for 1997 were $163.2 million, an increase  
of $26.1 million, or 19.1% from 1997. When expressed in British pounds sterling,
circulation revenues increased by 17.7%.                                        

     Total operating costs and expenses, excluding infrequent items were
$484.1 million in 1998, an increase of 9.3%, over 1997. Total operating costs   
and expenses, excluding infrequent items, as a percentage of Telegraph revenues,
were 87.9% in 1998, compared with 90.0% in 1997. Newsprint expense decreased    
0.5% from 1997 (including $12.4 million of newsprint in 1997 related to the     
prepaid subscription campaign). The decrease is due to lower newsprint prices in
the U.K. offset, in part, by increase consumption as a result of increased      
advertising.                                                                    

   Operating income, including the infrequent items, increased $33.6
million from 1997. As a percentage of revenues, operating income increased to   
10.9% from 5.4%. The increase in operating income was primarily due to          
participants in the direct subscription campaign renewing at higher prices and  
increases in advertising revenues.                                              

     During 1996 the Telegraph began a program to solicit direct prepaid
subscriptions. In the past, newspaper subscribers in the U.K. dealt directly    
with independent newsagents for the purchase of newspapers. A significant       
portion of the Telegraph's newspaper readers did not take the paper every day   
and this was especially true for Sunday. In the summer of 1996 the Telegraph    
began a direct mail campaign to solicit prepaid seven-day-a-week subscriptions. 
In order to gain broad acceptance of this revolutionary plan, the subscriptions 
were offered at a significant discount. The amount of that discount was reduced 
throughout 1997 and continued to decrease during 1998. During the first three   
quarters of 1997 the net costs associated with the campaign amounted to $22.2   
million and were grouped together and deducted separately in arriving at        
operating income. In the fourth quarter of 1997, the net costs associated with  
the campaign had declined and advertising revenue had increased, sufficient that
no separate charge was necessary.                                               

CANADIAN NEWSPAPER GROUP                                                        

  Operating revenues in the Canadian Newspaper Group were $1,058.0
million in 1998 (or 48.1% of total operating revenues), a decrease of 2.5% from 
1997. The decrease in revenue is primarily due to the sale of certain newspaper 
properties in the second and third quarter of 1998. For properties owned in both
years, total revenues in Canadian dollars increased 5.7%.                       

      Total operating costs and expenses, excluding infrequent items, were
$888.6 million in 1998, a decrease of 2.7%, from 1997. Total operating costs and
expenses, excluding infrequent items, as a percentage of revenues remained      
relatively flat at 84.0% in 1998 compared to 84.1% in 1997. Depreciation and    
amortization increased $1.1 million to $55.9 million. This increase was due to  
amortization of circulation and goodwill on the purchase of additional interests
in Southam in September 1998 and July 1997, partly offset by lower depreciation 
due to sales of newspaper operations.                                           

        Operating income in 1998 was $152.3 million compared to $171.6 million
in 1997. As a percentage of revenues, operating income was 14.4% in 1998        
compared to 15.8% in 1997. The decrease in operating income was due to the sale 
of newspaper operations during 1998 and the special charge of $13.1 million for 
start-up costs for the National Post. On a "same store" basis, operating income 
for the Canadian Newspaper Group increased 4.6%;                                

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however, the results were affected by foreign currency rates. When expressed in 
Canadian dollars, operating income on a "same store" basis increased 12.1%.     

LIQUIDITY AND CAPITAL RESOURCES                                                 

         WORKING CAPITAL Working capital consists of current assets less current
liabilities. Current assets were $417.0 million and $469.9 million at December  
31, 1999 and 1998, respectively. Current liabilities, excluding debt            
obligations, were $489.4 million and $509.9 million, respectively, at December  
31, 1999 and 1998. The Company's consolidated working capital at December 31,   
1999 and 1998, excluding debt obligations, was a deficit of $72.4 million and   
$40.0 million, respectively.                                                    

        EBITDA EBITDA, which represents the Company's earnings before interest
expense, income taxes, depreciation and amortization, minority interest,        
amortization of debt issue costs, certain other income items and extraordinary  
items was $338.2 million in 1999, $396.9 million in 1998 and $402.3 million in  
1997, respectively. The Company believes that EBITDA largely determines its     
ability to fund current operations and to service debt. EBITDA excluding        
infrequent items was $360.3 million, $423.1 million and $427.5 million in 1999, 
1998 and 1997, respectively.                                                    

        CASH FLOW Cash flows on a consolidated basis from operating activities
were $106.2 million, $53.7 million and $242.8 million in 1999, 1998 and 1997,   
respectively. Excluding changes in working capital (other than cash), cash      
provided by operating activities was $62.0 million, $104.1 million and $265.1   
million for 1999, 1998 and 1997, respectively. Working capital changes provided 
cash of $44.2 million in 1999 and required cash of $50.4 million and $22.3      
million in 1998 and 1997, respectively. Changes reflect normal variations from  
year to year in inventory, accounts receivable, short-term liabilities and other
working capital items.                                                          

    Cash flows used in investing activities in 1999 were $59.6 million
principally reflecting the capital expenditures at the Chicago Group for the new
production facility, acquisition of the remaining minority of Southam and       
Internet related spending offset, in part, by proceeds from the disposition of  
certain U.S. community newspapers. Cash flows used in investing activities were 
$92.3 million in 1998 principally reflecting the acquisitions of the additional 
interest in Southam, capital expenditures at the Chicago Group for the new      
production facility, offset, in part, by net proceeds from dispositions of      
certain newspapers at the Community Group and the Canadian Newspaper Group. Cash
flows provided by investing activities were $8.5 million in 1997 principally    
reflecting proceeds from the disposal of Fairfax offset by capital expenditures 
and acquisitions at the Community Group and Southam and the purchase of the     
additional interest in Southam.                                                 

     Cash flows used in financing activities in 1999 were $91.0 million,
principally reflecting the payment of by Southam of a special dividend, the     
repurchase of Class A Common Stock by the Company offset, in part, by the       
issuance of partnership units by Hollinger L.P. Cash flows used in financing    
activities in 1998 were $15.8 million primarily reflecting changes in           
borrowings, dividend payments and repurchase of its own shares by Southam. Cash 
flows used in financing activities in 1997 were $276.9 million reflecting       
changes in borrowings offset by the redemption of preference shares at DTH and  
FDTH, payment of dividends and payments made to Hollinger Inc. for the Canadian 
Newspapers.                                                                     

        CAPITAL EXPENDITURES AND ACQUISITION FINANCING In the past three years
the Chicago Group, the Community Group, the U.K. Newspaper Group and the        
Canadian Newspaper Group have funded their capital expenditures and acquisition 
and investment activities out of cash provided by their respective operating    
activities and borrowings under their bank credit facilities.                   

      Capital expenditures at the Chicago Group amounted to $40.9 million,
$75.6 million and $17.9 million in 1999, 1998 and 1997, respectively. The       
Company began construction of a new printing facility in Chicago during 1998 at 
an estimated cost of approximately $115.0 million, to be operational in 2000.   
The capital expenditures in both 1999 and 1998 are primarily related to the     
construction of this production facility.                                       

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       Capital expenditures at the Community Group amounted to $4.9 million,
$8.8 million and $8.8 million in 1999, 1998 and 1997, respectively.             

       Capital expenditures at the Telegraph were $5.6 million, $7.1 million
and $5.6 million in 1999, 1998, and 1997, respectively.                         

 Capital expenditures at the Canadian Newspaper Group were $72.4
million, $69.2 million and $84.3 million in 1999, 1998, and 1997, respectively. 
The capital expenditures in 1999 include new presses at Montreal, Saskatoon,    
Regina and new equipment at the Vancouver press facility. The amounts in 1997   
include $79.3 million for Southam, relating to the construction of a new press  
facility in Vancouver, which was put into service in 1997.                      

         DEBT OBLIGATIONS The Company, Publishing and its principal subsidiaries
are parties to various debt agreements that have been entered into to fund      
acquisitions, working capital requirements and other corporate purposes. At     
December 31, 1999, the indebtedness of the Company was $1,653.9 million.        

         1997 NOTE OFFERING On March 4, 1997, Publishing filed both a Prospectus
and a Prospectus Supplement offering $200 million of Senior Notes due 2005 (the 
"Senior Notes") and $200 million of Senior Subordinated Notes due 2007 (the     
"Senior Subordinated Notes"). On March 12, 1997, Publishing increased the size  
of the offerings to $550.0 million, closing on March 18, 1997. Both the Senior  
Notes and the Senior Subordinated Notes are guaranteed by the Company.          

         The Senior Notes are unsecured and senior obligations of Publishing and
rank pari-passu with all other senior unsecured indebtedness of Publishing      
including Publishing's bank credit facilities, mature on March 15, 2005 and bear
interest at 8.625% per annum. The Senior Subordinated Notes are unsecured senior
subordinated obligations of Publishing and rank pari-passu with all other senior
subordinated indebtedness of Publishing including its existing 9.25% Senior     
Subordinated Notes due 2006. The Senior Subordinated Notes mature on March 15,  
2007 and bear interest payable semi-annually at a rate of 9.25% per annum. The  
Indentures relating to the Senior Notes and the Senior Subordinated Notes       
contain financial covenants and negative covenants that limit Publishing's      
ability to, among other things, incur indebtedness, pay dividends or make other 
distributions on its capital stock. The Company is in compliance with its       
covenants.                                                                      

     Publishing and its restricted subsidiaries utilized the proceeds of
these offerings to repay bank indebtedness, to repay the redeemable preference  
shares of DTH and FDTH and for general working capital.                         

     1996 NOTE OFFERING Publishing sold $250 million aggregate principal
amount of Notes (the "Notes") on February 7, 1996. The Notes mature on February 
1, 2006, and are unsecured senior subordinated obligations of Publishing. Each  
Note bears interest at the rate of 9.25% per annum payable semiannually on      
February 1 and August 1 of each year, commencing on August 1, 1996. The Notes   
may be redeemed at any time on or after February 1, 2001, at the option of      
Publishing, in whole or in part, at a price of 104.625% of the principal amount 
thereof, declining ratably to par on or after February 1, 2004, together with   
accrued and unpaid interest to the redemption date. Payment of the principal,   
premium, and interest on the Notes is guaranteed by the Company on a senior     
subordinated basis (the "Guarantee"). The Notes and the Guarantee are expressly 
subordinated to all senior indebtedness of Publishing and the Company, including
all indebtedness and other obligations under the Publishing Credit Facility and 
the Company's guarantee thereof.                                                

The indenture relating to the Notes (the "Indenture") contains
covenants that, among other things, limit the ability of Publishing and the     
Restricted Subsidiaries (defined to include the United States subsidiaries of   
Publishing, the Telegraph, the Canadian Newspapers and Jerusalem Post) to incur 
indebtedness, pay dividends or make other distributions on its capital stock,   
subject in each case to certain exceptions. The Company is in compliance with   
the covenants.                                                                  

   CONSENT SOLICITATION On February 19, 1997, Publishing completed a
solicitation of consents from the holders of the 9.25% Notes with respect to    
certain amendments (the "Amendments") to the Indenture governing the 9.25% Notes
dated as of February 1, 1996 between Publishing and Fleet National Bank, as     
trustee (the "Trustee"). The primary purpose of the Amendments was to facilitate
the inclusion of certain international subsidiaries of the Company as Restricted
Subsidiaries of Publishing and to enhance its corporate and financing           
flexibility.                                                                    

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         During 1999, the Company solicited consents from the registered holders
of the Notes, Senior Notes and Senior Subordinated Notes to amend the indentures
covering said notes to (i) make the limitation on restricted payments covenant  
less restrictive, (ii) make the consolidated cash flow ratio under the          
limitation on indebtedness covenant more restrictive, and (iii) make the        
limitation on sale of assets covenant less restrictive. The requisite consents  
were obtained in March 1999 and the indentures governing the Notes, Senior Notes
and Senior Subordinated Notes were so amended.                                  

      BANK CREDIT FACILITY On April 30, 1999, Publishing, HCPH, Telegraph,
Southam, HIF and a group of financial institutions entered into a Fourth Amended
and Restated Credit Facility ("Restated Credit Facility") for a total of $725.0 
million consisting of a $475.0 million revolving credit line maturing on        
September 30, 2004 and a $250.0 million term loan maturing on December 31, 2004.
This facility replaced the previous Bank Credit Facility. The Loans under the   
Restated Credit Facility bear interest, at the option of the respective         
borrower, at a rate per annum tied to specified floating rates or a reserve     
adjusted Eurocurrency rate, in each case plus a specified margin determined     
based on leverage ratios. On June 4, 1999, the revolving credit line was        
increased by $50.0 million. On September 30, 1999, the Restated Credit Facility 
was increased to $875.0 million when the revolving credit line and the term loan
were each increased by $50.0 million.                                           

     The Bank Credit Facility was first entered into on April 7, 1997 by
Publishing, HCPH, the Telegraph and a group of financial institutions. The      
purchase price of the Canadian Newspapers was financed in part through a $175.0 
million borrowing by HCPH under the Bank Credit Facility. During 1997, the      
parties to the Bank Credit Facility entered into several amendments to the Bank 
Credit Facility which permitted HCPH to bid for the remaining shares of Southam 
not currently owned by it and allowed Publishing to pay up to $20.0 million in  
dividends to the Company for Class A Common Stock repurchases.                  

   During 1998, the Bank Credit Facility was changed through several
amendments to decrease interest rates, expand the capital expenditures          
limitations, increase the amount of dividends Publishing can pay to the Company 
for Class A Common Stock repurchases from $20.0 million to $30.0 million,       
increase the permitted regular quarterly dividend from Publishing to the Company
to $0.1375 per common share from $0.10 and permitted the sale of 45 U.S.        
community newspapers. This Bank Credit Facility was subsequently replaced by the
Restated Credit Facility.                                                       

     The Restated Credit Facility contains both affirmative and negative
covenants, and various financial covenants. The Company was in compliance with  
all covenants at December 31, 1999.                                             

    REDEEMABLE PREFERRED STOCK The Company issued to Hollinger Inc. in
connection with the 1995 Reorganization in which the Company acquired Hollinger 
Inc.'s interest in The Telegraph and Southam, 739,500 shares of Series A        
Preferred Stock. The Series A Preferred Stock was subsequently exchanged for    
Series D Preferred Stock. During 1998, 408,551 shares of Series D Preferred     
Stock were converted into 2,795,165 shares of Class A Common Stock. In February 
1999, 196,823 shares of Series D Preferred Stock were redeemed for cash of      
$19,362,000. In May 1999, the remaining 134,126 shares of Series D Preferred    
Stock were converted into 134,126 shares of Series E Preferred Stock. The shares
of Series E Preferred Stock are redeemable in whole or in part, at any time and 
from time to time, subject to restrictions in the Company's credit facilities,  
by the Company or by a holder of such shares.                                   

    TOTAL RETURN EQUITY SWAP In August and September 1998, the Company
entered into an arrangement with four banks, pursuant to which the banks        
purchased 12,640,305 shares of the Company's Class A Common Stock. 2,522,600 of 
these shares were purchased on the open market at an average price of $15.40 and
10,117,705 were purchased from affiliates of the Company at an average price of 
$13.88. During 1999, an additional 1,469,600, shares were purchased on the open 
market at an average price of $13.96. The Company has the option, quarterly, up 
to and including September 30, 2000 to buy the shares from the banks at the same
cost or to have the banks resell those shares in the open market. In the latter 
case, any gain or loss realized by the banks will be for the Company's account. 
Until the Company purchases the shares, dividends paid on the shares belong to  
the Company and the Company pays interest to the banks at the rate of LIBOR plus
a spread. If the Company's stock price falls below the average purchase price of
these shares, the Company is required to deposit cash or shares into an escrow  
account as additional security. During 1999, the Company has issued 4,846,370   
shares of Class A Common Stock                                                  

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as additional security of which 3,250,900 shares were required to be deposited  
in the escrow account at December 31, 1999. Consequently 1,595,470 shares, which
had been issued during 1999, were returned to the company after year-end.       

      HCPH SPECIAL SHARES HCPH issued 6,552,425 Cdn.$10 Non-Voting Special
Shares in July 1997 for a total issue price of Cdn.$65.5 million.               

         On July 18, 1997 HCPH, the Company and Montreal Trust Company of Canada
as trustee, entered into an Exchange Indenture providing for the exchange of the
HCPH special shares at the option of the holder ("Optional Exchange") at any    
time after December 23, 1997 but prior to June 26, 2000, into Class A Common    
Stock of the Company based on an exchange ratio set out in the Exchange         
Indenture. Each HCPH special share will be automatically exchanged ("Mandatory  
Exchange") on June 26, 2000 into a number of Class A Common Shares of the       
Company equal to a) US$8.88 divided by b) 95% of the current market price of the
Class A Common Stock. Upon either an Optional Exchange or a Mandatory Exchange, 
the Company will have the option in lieu of delivering all or any of the Class A
Common Stock issuable on exchange, to make a cash payment.                      

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK             

       NEWSPRINT Newsprint prices continued to fluctuate throughout 1999 and
on a consolidated basis newsprint expense amounted to $310.9 million ($343.8    
million in 1998 and $312.0 million in 1997). Management believes that while     
newsprint prices could continue to show wide price variations in the future,    
prices in 2000 will likely be marginally higher than they were in 1999.         
Operating divisions take steps to ensure that they have sufficient supply of    
newsprint and have mitigated cost increases by adjusting pagination and page    
sizes and printing and distributing practices. For the Company and subsidiaries,
total newsprint usage in 1999 was about 600,000 tonnes per annum. At those      
levels of usage and based on properties and ownership levels at December 31,    
1999, a change in the price of newsprint of $50 per ton would increase or       
decrease net income by about $17.6 million.                                     

         INFLATION During the past three years, inflation has not had a material
effect on the Company's newspaper business in the United States, United Kingdom 
and Canada.                                                                     

      INTEREST RATES The Company has significant debt on which interest is
calculated at floating rates. As a result the Company is vulnerable to changes  
in interest rates. Increases in interest rates will reduce net earnings and     
declines in interest rates can result in increased earnings. Based on debt at   
December 31, 1999 which is subject to floating interest rates and December 31,  
1999 ownership levels and foreign exchanges rates, a 1% change in the floating  
interest rates would increase or decrease the Company's net earnings by         
approximately $4.4 million.                                                     

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         FOREIGN EXCHANGE RATES A substantial portion of the Company's income is
earned outside of the United States in currencies other than the United States  
dollar. As a result the Company's income is vulnerable to changes in the value  
of the United States dollar. Increases in the value of the United States dollar 
can reduce net earnings and declines can result in increased earnings. Based on 
1999 earnings and ownership levels, a $0.05 change in the important foreign     
currencies would have the following effect on the Company's reported earnings:  

                                                        [Enlarge/Download Table]


                                                       Actual Average                                                               
                                                          1999 Rate                      Increase/Decrease                          
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
         United Kingdom                                    $1.62/L.                          $970,000                               
         Canada                                          $0.67/Cdn.$                        $5,600,000                              
------------------------------------------------------------------------------------------------------------------------------------

        ELECTRONIC MEDIA Management continues to hold the view that newspapers
will continue to be an important business segment. Among educated and affluent  
people, indications are that strong newspaper readership will continue. In fact,
it is possible that readership will increase as the population ages.            

    Alternate forms of information delivery such as the Internet could
impact newspapers, but recognition of the Internet's potential combined with a  
strong newspaper franchise could be a platform for Internet operations.         
Newspaper readers can be offered a range of Internet services as varied as the  
content. Virtually all newspapers are now published on the Internet as well as  
in the traditional newsprint format. The concern most frequently expressed      
regarding the commercial viability of newspapers is that they will lose their   
classified advertising revenue. We have put our classified advertising on the   
Internet and linked this with other newspapers to make regional or national     
networks.                                                                       

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                            

        The information required by this item appears beginning at page F-1 of
this Form 10-K.                                               

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND        
FINANCIAL DISCLOSURE                                          

Not applicable.                                               

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PART III                                                                        

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                    

       The information required by this item is incorporated by reference to
the Company's Proxy Statement for the 2000 Annual Meeting of  
Stockholders.                                                 

ITEM 11.  EXECUTIVE COMPENSATION                                                

       The information required by this item is incorporated by reference to
the Company's Proxy Statement for the 2000 Annual Meeting of  
Stockholders.                                                 

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        

       The information required by this item is incorporated by reference to
the Company's Proxy Statement for the 2000 Annual Meeting of  
Stockholders.                                                 

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

       The information required by this item is incorporated by reference to
the Company's Proxy Statement for the 2000 Annual Meeting of  
Stockholders.                                                 

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PART IV                                                                         

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K      

(a)  DOCUMENTS FILED AS PART OF THIS REPORT.                                    

(1)  FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES.         

               The consolidated financial statements filed as part of this
report appear beginning at page F-1.                                            

(2)  EXHIBITS.                                                

                                                        [Enlarge/Download Table]


                                                                                PRIOR FILING OR     
EXHIBIT NO.  DESCRIPTION OF EXHIBIT                                          SEQUENTIAL PAGE NUMBER 
-----------  ----------------------                                          ---------------------- 
                                                                                                    
   2.1       UniMedia Class A Stock Purchase Agreement dated as of April  Incorporated by reference 
             18, 1997 among Hollinger Inc., UniMedia Holding Company and  to Exhibit 2.01 to Current
             Hollinger International Inc.                                 Report on Form 8-K dated  
                                                                          April 18, 1997.           

   2.2       UniMedia Class B Stock Purchase Agreement dated as of April  Incorporated by reference 
             18, 1997 among Hollinger Inc., UniMedia Holding Company and  to Exhibit 2.02 to Current
             Hollinger International Inc.                                 Report on Form 8-K dated  
                                                                          April 18, 1997.           

   2.3       Sterling Purchase Agreement dated as of April 18, 1997       Incorporated by reference 
             among Hollinger Inc. and Hollinger Canadian Publishing       to Exhibit 2.03 to Current
             Holdings Inc.                                                Report on Form 8-K dated  
                                                                          April 18, 1997.           

   2.4       Purchase Agreement relating to the Senior Notes, dated       Incorporated by reference 
             March 12, 1997                                               to Exhibit 1.01 to Current
                                                                          Report on Form 8-K dated  
                                                                          March 18, 1997.           

   2.5       Purchase Agreement relating to the Senior Subordinated       Incorporated by reference 
             Notes, dated March 12, 1997                                  to Exhibit 1.02 to Current
                                                                          Report on Form 8-K dated  
                                                                          March 18, 1997.           

   3.1       Restated Certificate of Incorporation                        Incorporated by reference 
                                                                          to Exhibit 3.1 to Current 
                                                                          Report on Form 8-K dated  
                                                                          October 13, 1995          

   3.2       Bylaws, as amended and restated.                             Incorporated by reference 
                                                                          to Exhibit 3.2 to         
                                                                          Registration Statement on 
                                                                          Form S-1 (No. 33-74980)   

   3.3       Certificate of Designations for Series B Convertible         Incorporated by reference 
             Preferred Stock                                              to Exhibit 3.01 to Current
                                                                          Report on Form 8-K dated  
                                                                          August 7, 1996.           

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                                                                               PRIOR FILING OR     
EXHIBIT NO.  DESCRIPTION OF EXHIBIT                                         SEQUENTIAL PAGE NUMBER 
-----------  ----------------------                                         ---------------------- 
                                                                                                   
   3.4       Certificate of Designations for Series C Convertible        Incorporated by reference 
             Preferred Stock                                             to Exhibit 1.1.3.2 to     
                                                                         Current Report on Form 8-K
                                                                         dated May 5, 1997.        

   4.1       Fourth Amended and Restated Credit Agreement dated April    Pursuant to S-K           
             30, 1999 among Hollinger International Publishing Inc.,     601(b)(4)(iii), the       
             Telegraph Group Limited, Hollinger Canadian Publishing      Registrant has not filed a
             Holdings Inc., Southam Inc., HIF Inc., various financial    copy of this exhibit but  
             institutions, The Toronto Dominion Bank, as Issuing Bank,   will furnish a copy upon  
             the Bank of Nova Scotia, as Syndication Agent, Canadian     the Commission's request. 
             Imperial Bank of Commerce, as Documentation Agent, and                                
             Toronto Dominion (Texas), Inc., as Administrative Agent.                              

   4.2       Senior Indenture, dated as of March 18, 1997                Incorporated by reference 
                                                                         to Exhibit 4.01 to Current
                                                                         Report on Form 8-K dated  
                                                                         March 18, 1997            

   4.3       Senior Subordinated Indenture, dated as of March 18, 1997.  Incorporated by reference 
                                                                         to Exhibit 4.03 to Current
                                                                         Report on Form 8-K dated  
                                                                         March 18, 1997            

   4.4       Exchange Indenture, dated July 17, 1997, among Hollinger    Incorporated by reference 
             Canadian Publishing Holdings Inc., Hollinger International  to Exhibit 4.01 to        
             Inc. and Montreal Trust Company of Canada.                  Registration Statement on 
                                                                         Form S-3 (No. 333-35619)  

   4.5       Indenture dated as of February 7, 1996 among Hollinger      Incorporated by reference 
             International Publishing Inc., Hollinger International Inc. to Exhibit 10.4 to Current
             and Fleet National Bank of Connecticut as Trustee.          Report on Form 8-K Dated  
                                                                         February 7, 1996          

  10.1       Services Agreement between the Company and Hollinger Inc.,  Incorporated by reference 
             as Amended and Restated as of February 7, 1996.             to Exhibit 10.4 to Report 
                                                                         on Form 10-K for the year 
                                                                         ended December 31, 1995   

  10.2       Business Opportunities Agreement between the Company and    Incorporated by reference 
             Hollinger Inc., as Amended and Restated as of February 7,   to Exhibit 10.5 to Report 
             1996.                                                       on Form 10-K for the year 
                                                                         ended December 31, 1995   

  10.3       Employment and Noncompetition Letter Agreements with        Incorporated by reference 
             executive officers.                                         to Exhibit 10.9 to        
                                                                         Registration Statement on 
                                                                         Form S-1 (No. 33-74980)   

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                                                                                PRIOR FILING OR       
EXHIBIT NO.  DESCRIPTION OF EXHIBIT                                          SEQUENTIAL PAGE NUMBER   
-----------  ----------------------                                          ----------------------   
                                                                                                      
   10.4      American Publishing Company 1994 Stock Option Plan.          Incorporated by reference   
                                                                          to Exhibit 10.10 to         
                                                                          Registration Statement on   
                                                                          Form S-1 (No. 33-74980)     

   10.5      Hollinger International Inc. 1997 Stock Incentive Plan.      Incorporated by reference   
                                                                          to Annex A to Report on     
                                                                          Form DEF 14A dated March    
                                                                          28, 1997                    

   10.6      American Publishing Management Services, Inc. Executive      Incorporated by reference   
             Benefit Plan.                                                to Exhibit 10.11 to         
                                                                          Registration Statement on   
                                                                          Form S-1 (No. 33-74980)     

   10.7      Share Exchange Agreement dated as of July 19, 1995 between   Incorporated by reference   
             Hollinger Inc. and American Publishing Company.              to Exhibit 2.1 to Current   
                                                                          Report on Form 8-K Dated    
                                                                          July 18, 1995               

   10.8      HTH/FDTH Share Exchange Agreement dated as of July 19, 1995  Incorporated by reference   
             between Hollinger Inc. and First DT Holdings Limited.        to Exhibit 2.1 to Current   
                                                                          Report on Form 8-K Dated    
                                                                          July 18, 1995               

   10.9      Deposit Agreement dated August 1, 1996.                      Incorporated by reference   
                                                                          to Exhibit 10.01 to Current 
                                                                          Report on Form 8-K dated    
                                                                          August 7, 1996              

  10.10      Exchange Agreement dated as of April 18, 1997 among          Incorporated by reference   
             Hollinger International Inc., Hollinger Inc. and UniMedia    to Exhibit 10.1 to Current  
             Holding Company.                                             Report on Form 8-K dated    
                                                                          April 18, 1997.             

  10.11      Amendment, dated as of March 18, 1997, to the Share          Incorporated by reference   
             Exchange Agreement.                                          to Exhibit 10.1 to Current  
                                                                          Report on Form 8-K dated    
                                                                          March 18, 1997.             

  10.12      Hollinger International Inc 1999 Stock Incentive Plan        Incorporated by reference to
                                                                          Annex A to Report on Form   
                                                                          DEF 14A dated March 24, 1999

  10.14      Amendment, dated as of March 18, 1997, to the HTH/FDTH       Incorporated by reference   
             Share Exchange Agreement.                                    to Exhibit 10.2 to Current  
                                                                          Report on Form 8-K dated    
                                                                          March 18, 1997.             

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                                                                               PRIOR FILING OR    
EXHIBIT NO.     DESCRIPTION OF EXHIBIT                                      SEQUENTIAL PAGE NUMBER
-----------     ----------------------                                      ----------------------
                                                                                                  
   21.1         Significant Subsidiaries of Hollinger International Inc. Incorporated by reference
                                                                         to Exhibit 21.1 to Report
                                                                         on Form 10-K for the year
                                                                         ended December 31, 1995  
   23.1         Consent of KPMG LLP.                                                              
   27.1         Financial Data Schedule                                                           

       (b)  Reports on Form 8-K.                                                                  

                         None                                                                     


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SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this 10-K to be signed on  
its behalf by the undersigned, thereunto duly authorized.                       

Date:    March 30, 2000                                                         

                    HOLLINGER INTERNATIONAL INC.
    (Registrant)

                    By:      /s/ Conrad M. Black
                                             -----------------------------------
                                   Conrad M. Black, Chairman
                                     and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the     
registrant and in the capacities on the dates indicated.                        

                                                        [Enlarge/Download Table]


SIGNATURE                               TITLE                            DATE           
---------                               -----                            ----           
                                                                                        
/s/ Conrad M. Black                     Chairman, Chief Executive        March  30, 2000
--------------------------------------  Officer and Director (Principal                 
Conrad M. Black                         Executive Officer)                              

/s/ Cindy E. Horowitz                   Executive Vice President and     March  30, 2000
--------------------------------------  Chief Financial Officer                         
Cindy E. Horowitz                       (Principal Financial Officer)                   

/s/ Fredrick A. Creasey                 Group Corporate Controller       March  30, 2000
--------------------------------------  (Principal Accounting Officer)                  
Frederick A. Creasey                                                                    

/s/ F. David  Radler                    Deputy Chairman, President,      March  30, 2000
--------------------------------------  Chief Operating Officer and                     
F. David Radler                         Director                                        

/s/ Daniel W. Colson                    Vice Chairman and Director       March  30, 2000
--------------------------------------                                                  
Daniel W. Colson                                                                        

/s/ Barbara Amiel Black                 Vice President - Editorial and   March  30, 2000
--------------------------------------  Director                                        
Barbara Amiel Black                                                                     

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SIGNATURE                               TITLE     DATE           
---------                               -----     ----           
                                                                 
/s/ Dwayne O. Andreas                   Director  March  30, 2000
--------------------------------------                           
Dwayne O. Andreas                                                

/s/ Richard R. Burt                     Director  March  30, 2000
--------------------------------------                           
Richard R. Burt                                                  

                                        Director  March    , 2000
--------------------------------------                           
Raymond G. Chambers                                              

                                        Director  March    , 2000
--------------------------------------                           
Henry A. Kissinger                                               

/s/ Marie-Josee Kravis                  Director  March  30, 2000
--------------------------------------                           
Marie-Josee Kravis                                               

                                        Director  March    , 2000
--------------------------------------                           
Shmuel Meitar                                                    

/s/ Richard N. Perle                    Director  March  30, 2000
--------------------------------------                           
Richard N. Perle                                                 

/s/ Robert S. Strauss                   Director  March  30, 2000
--------------------------------------                           
Robert S. Strauss                                                

/s/ A. Alfred Taubman                   Director  March  30, 2000
--------------------------------------                           
A. Alfred Taubman                                                

/s/ James R. Thompson                   Director  March  30, 2000
--------------------------------------                           
James R. Thompson                                                

                                        Director  March    , 2000
--------------------------------------                           
Lord Weidenfeld                                                  

/s/ Leslie H. Wexner                    Director  March  30, 2000
--------------------------------------                           
Leslie H. Wexner                                                 

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INDEPENDENT AUDITORS' REPORT

To the Board of Directors                                                       
Hollinger International Inc.:                                                   

We have audited the accompanying consolidated balance sheets of Hollinger       
International Inc. and subsidiaries as of December 31, 1999 and 1998, and the   
related consolidated statements of operations, comprehensive income,            
stockholders' equity, and cash flows for each of the years in the three-year    
period ended December 31, 1999. These consolidated financial statements are the 
responsibility of the Company's management. Our responsibility is to express an 
opinion on these consolidated financial statements based on our audits.         

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of Hollinger           
International Inc. and subsidiaries as of December 31, 1999 and 1998, and the   
results of their operations and their cash flows for each of the years in the   
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.                                                          

KPMG LLP                                                                        

February 16, 2000                                                               

Chicago, Illinois                                                               

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Statement of Significant Accounting Policies                                    

December 31, 1999 and 1998                                                      

--------------------------------------------------------------------------------

1.       PRINCIPLES OF PRESENTATION AND CONSOLIDATION                           

 Hollinger International Inc. (the "Company") is a subsidiary of
         Hollinger Inc., a Canadian corporation. At December 31, 1999, Hollinger
   Inc. owned 41.1% of the combined equity and 75.2% of the combined
      voting power of the outstanding Common Stock of the Company, without
 giving effect to conversion of the Company's remaining Series B
    Convertible Preferred Stock ("Series B Preferred Stock"), Series C
      Convertible Preferred Stock ("Series C Preferred Stock") or Series E
      Redeemable Convertible Preferred Stock ("Series E Preferred Stock").

         In 1997, the Company and Hollinger Inc. announced that they had reached
   an agreement for the transfer by Hollinger Inc. of certain of its
         directly or indirectly owned Canadian publishing interests to Hollinger
 Canadian Publishing Holdings Inc. ("HCPH"), a subsidiary of the
Company, for an aggregate consideration of $382,000,000       
      (Cdn.$523,000,000), (the "Hollinger Inc. Transaction"). The purchase
       price was satisfied in cash in the amount of $250,000,000, and by the
      issuance of preferred stock of the Company, which was converted into
       (i) 829,409 shares of Series C Preferred Stock having a face value of
         $90,000,000, and (ii) 3,207,045 shares of Class A Common Stock having a
     nominal agreed value of $42,000,000. The Hollinger Inc. Transaction
    represented a combination of entities under common control and was
accounted for on an "as-if" pooling-of-interests basis.       

   The consolidated financial statements include the accounts of the
        Company and its majority-owned subsidiaries. The Company's interest in
      Southam Inc. ("Southam") was 100.0%, 71.0% and 58.6% at December 31,
        1999, 1998 and 1997, respectively. The Company's interest in Hollinger
         Canadian Newspapers Limited Partnership ("Hollinger L.P.") was 85.0% at
  December 31, 1999 (see Note 1 of Notes to Consolidated Financial
     Statements for discussion of partnership formation). Investments in
       less than majority-owned affiliated companies are accounted for using
the equity method. All significant intercompany balances and  
transactions have been eliminated on consolidation.           

2.       DESCRIPTION OF BUSINESS                                                

        The Company is engaged in the publishing, printing and distribution of
        newspapers and magazines through subsidiaries and affiliates primarily
 in the United States, the United Kingdom, Canada and Israel. In
   addition, the Company is developing a strategic on-line new media
      presence. The Company's raw materials, mainly newsprint and ink, are
     not dependent on a single or limited number of suppliers. Customers
      range from individual subscribers to local and national advertisers.

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Statement of Significant Accounting Policies, Continued                         

December 31, 1999 and 1998                                                      

--------------------------------------------------------------------------------

3.       USE OF ESTIMATES                                                       

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
     liabilities, disclosure of contingent assets and liabilities at the
       date of the financial statements and the reported amounts of revenues
       and expenses during the reporting period. Actual results could differ
from those estimates.                                         

4.       CASH AND CASH EQUIVALENTS                                              

    Cash equivalents consist of certain highly liquid investments with
original maturities of three months or less.                  

5.       INVENTORIES                                                            

    Inventories consist principally of newsprint that is valued at the
     lower of cost or net realizable value. Cost is determined using the
        first-in, first-out (FIFO) method, except for newsprint inventories of
 certain subsidiaries which are accounted for using the last-in,
      first-out method (LIFO). At December 31, 1999 and December 31, 1998,
     approximately 18% and 16%, respectively, of the Company's newsprint
       inventories were valued using LIFO. If the FIFO method had been used,
        such newsprint inventories would have been increased by $1,336,000 and
$1,573,000, respectively.                                     

6.       IMPAIRMENT OF LONG-LIVED ASSETS                                        

        The Company assesses the recoverability of its long-lived assets, such
         as property, plant and equipment and intangible assets, whenever events
      or changes in business circumstances indicate the carrying amount of
       the assets, or related group of assets, may not be fully recoverable.
       The assessment of recoverability is based on management's estimate of
       undiscounted future operating cash flows of its long-lived assets. If
        the assessment indicates that the undiscounted operating cash flows do
not exceed the net book value of the long-lived assets, then a
 permanent impairment has occurred. The Company would record the
       difference between the net book value of the long-lived asset and the
         fair value of such asset as a charge against income in the statement of
       operations if such a difference arose. The Company determined that no
   material permanent impairments had occurred at December 31, 1999.

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Statement of Significant Accounting Policies, Continued                         

December 31, 1999 and 1998                                                      

--------------------------------------------------------------------------------

7.       DERIVATIVES                                                            

      The Company is a limited user of derivative financial instruments to
         manage risks generally associated with interest rate market volatility.
         The Company does not hold or issue derivative financial instruments for
         trading purposes. Amounts receivable under interest rate cap agreements
        are accrued as a reduction of interest expense and amounts payable are
       accrued as interest expense. Interest rate differentials on all other
 swap arrangements are accrued as interest rates change over the
contract periods.                                             

8.       PROPERTY, PLANT AND EQUIPMENT                                          

         Property, plant and equipment are recorded at cost. Routine maintenance
        and repairs are expensed as incurred. Depreciation is calculated under
         the straight-line method over the estimated useful lives of the assets,
       principally 25 to 40 years for buildings and improvements and 3 to 10
         years for machinery and equipment. Leasehold improvements are amortized
         using the straight-line method over the shorter of the estimated useful
    life of the asset and the lease term. Construction in progress for
       production facilities is not depreciated until facilities are in use.

9.       INTANGIBLE ASSETS                                                      

      Intangible assets consist principally of circulation-related assets,
      non-competition agreements with former owners of acquired newspapers
      and the excess of acquisition costs over estimated fair value of net
        assets acquired (goodwill). The fair market value of intangible assets
  purchased is determined primarily through the use of independent
       appraisals. Amortization is calculated using the straight-line method
      over the respective estimated useful lives to a maximum of 40 years.

10.      DEFERRED FINANCING COSTS                                               

Deferred financing costs consist of certain costs incurred in 
connection with debt financing. Such costs are amortized on a 
        straight-line basis over the remaining term of the related debt, up to
10 years.                                                     

11.      DEFERRED REVENUE                                                       

      Deferred revenue represents subscription payments that have not been
         earned and are recognized on a straight-line basis over the term of the
related subscription.                                         

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Statement of Significant Accounting Policies, Continued                         

December 31, 1999 and 1998                                                      

--------------------------------------------------------------------------------

12.      INCOME TAXES                                                           

       Deferred tax assets and liabilities are recognized for the future tax
         consequences attributable to the difference between financial statement
carrying amounts of existing assets and liabilities and their 
        respective tax bases. Deferred tax assets and liabilities are measured
    using enacted tax rates expected to apply to taxable income in the
         years in which those temporary differences are expected to be recovered
    or settled. The effect on deferred tax assets and liabilities of a
         change in tax rates is recognized in income in the period that includes
the enactment date.                                           

13.      FOREIGN CURRENCY TRANSLATION                                           

  Foreign operations of the Company have been translated into U.S.
      dollars in accordance with the principles prescribed in Statement of
        Financial Accounting Standards No. 52, "Foreign Currency Translation."
  All assets, liabilities and minority interests are translated at
year-end exchange rates, stockholders' equity is translated at
   historical rates, and revenues and expenses are translated at the
       average rates of exchange prevailing throughout the year. Translation
        adjustments are included in the accumulated other comprehensive income
    component of stockholders' equity. Translation adjustments are not
  included in earnings unless they are actually realized through a
      reduction of the Company's net investment in the foreign subsidiary.
Gains and losses arising from the Company's foreign currency  
transactions are reflected in net earnings.                   

14.      EARNINGS PER SHARE                                                     

         For the years ended December 31, 1999, 1998 and 1997 earnings per share
   was computed in accordance with Statement of Financial Accounting
        Standards No. 128, which the Company adopted during the fourth quarter
of 1997. See note 10 for a reconciliation of the numerator and
   denominator for the calculation of basic and diluted earnings per
share.                                                        

15.      STOCK-BASED COMPENSATION                                               

         The Company utilizes the intrinsic value based method of accounting for
its stock-based compensation arrangements.                    

16.      RECLASSIFICATIONS                                                      

        Certain 1998 and 1997 amounts in the consolidated financial statements
have been reclassified to conform to the 1999 presentation.   

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Consolidated Balance Sheets                                                     

December 31, 1999 and 1998                                                      

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]


                        ASSETS                                             1999           1998   
                                                                         ----------    ----------
                                                                              (in thousands)     
                                                                                                 
Current assets:                                                                                  
     Cash and cash equivalents                                           $   39,903    $   57,788
     Accounts receivable, net of allowance for doubtful accounts                                 
        of $23,346 in 1999 and $14,784 in 1998                              334,383       333,706
     Due from affiliates                                                          -        27,246
     Inventories                                                             28,217        32,312
     Prepaid expenses and other current assets                               14,448        18,872
                                                                         ----------    ----------
Total current assets                                                        416,951       469,924
Investments (note 2)                                                        208,166       143,338
Property, plant and equipment, net of accumulated depreciation (note 3)     711,627       661,611
Intangible assets, net of accumulated amortization of $230,479 in 1999                           
     and $236,908 in 1998                                                 2,031,610     1,858,750
Deferred financing costs and other assets                                   134,670       118,101
                                                                         ----------    ----------
                                                                         $3,503,024    $3,251,724
                                                                         ==========    ==========

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Consolidated Balance Sheets                                                     

December 31, 1999 and 1998                                                      

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]


         LIABILITIES AND STOCKHOLDERS' EQUITY                                    1999            1998     
                                                                              -----------     ----------- 
                                                                                     (in thousands)       
                                                                                                          
Current liabilities:                                                                                      
     Current installments of long-term debt (note 4)                          $    40,695     $   101,691 
     Accounts payable                                                             119,481         137,691 
     Accrued expenses                                                             229,110         285,859 
     Income taxes payable                                                          61,259          13,890 
     Deferred revenue                                                              79,521          72,481 
                                                                              -----------     ----------- 
Total current liabilities                                                         530,066         611,612 
Long-term debt, less current installments (note 4)                              1,613,241       1,397,827 
Deferred income taxes (note 18)                                                   213,753         207,667 
Other liabilities                                                                  74,247          78,133 
                                                                              -----------     ----------- 
Total liabilities                                                               2,431,307       2,295,239 
                                                                              -----------     ----------- 
Minority interest (note 6)                                                        155,901         107,002 
                                                                              -----------     ----------- 
Redeemable preferred stock (note 7)                                                13,591          31,562 
                                                                              -----------     ----------- 
Stockholders' equity (note 8):                                                                            
     Convertible preferred stock                                                    6,377           6,377 
     Class A common stock, $0.01 par value. Authorized 250,000,000                                        
     shares; issued and outstanding 99,759,469 and 95,572,430 shares in 1999                              
     and 1998, respectively                                                           998             956 
     Class B common stock, $0.01 par value.  Authorized 50,000,000 shares;                                
     issued and outstanding 14,990,000 shares in 1999 and 1998                        150             150 
     Additional paid-in capital                                                   652,705         610,440 
     Accumulated other comprehensive income:                                                              
         Cumulative foreign currency translation adjustment                       (21,920)        (65,799)
         Unrealized loss on marketable equity securities                           (2,572)              - 
     Retained earnings                                                            475,315         301,133 
                                                                              -----------     ----------- 
                                                                                1,111,053         853,257 
     Class A common stock in treasury, at cost-11,962,462 shares in 1999                                  
         and 1,403,400 shares in 1998                                            (147,955)        (16,744)
     Issued shares in escrow-4,846,370 in 1999 and 1,363,293 in 1998                                      
         (note 11)                                                                (60,873)        (18,592)
                                                                              -----------     ----------- 
Total stockholders' equity                                                        902,225         817,921 
                                                                              -----------     ----------- 
Commitments and contingencies (note 16)                                                                   
                                                                              $ 3,503,024     $ 3,251,724 
                                                                              ===========     =========== 

See statement of significant accounting policies and accompanying notes to      
consolidated financial statements.                                              

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Consolidated Statements of Operations                                           

for the Years Ended December 31, 1999, 1998 and 1997                            

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]


                                                                      1999            1998            1997     
                                                                   -----------     -----------     ----------- 
                                                                       (in thousands, except per share data)   
                                                                                                               
Operating revenues:                                                                                            
     Advertising                                                   $ 1,557,033     $ 1,565,790     $ 1,567,897 
     Circulation                                                       487,002         517,629         523,591 
     Job printing                                                       48,207          70,461          80,024 
     Other                                                              55,160          43,880          40,018 
                                                                   -----------     -----------     ----------- 
Total operating revenues                                             2,147,402       2,197,760       2,211,530 
                                                                   -----------     -----------     ----------- 
Operating costs and expenses:                                                                                  
     Newsprint                                                         310,850         343,809         312,010 
     Compensation costs                                                684,365         699,126         736,153 
     Other operating costs                                             791,931         731,726         735,832 
     Infrequent items (note 12)                                         22,046          26,172          25,243 
     Depreciation                                                       64,153          59,842          61,635 
     Amortization                                                       61,255          55,006          52,935 
                                                                   -----------     -----------     ----------- 
Total operating costs and expenses                                   1,934,600       1,915,681       1,923,808 
                                                                   -----------     -----------     ----------- 
Operating income                                                       212,802         282,079         287,722 
                                                                   -----------     -----------     ----------- 
Other income (expense):                                                                                        
     Interest expense                                                 (131,600)       (105,841)       (113,558)
     Amortization of debt issue costs                                  (16,209)         (5,869)        (13,466)
     Interest and dividend income                                        7,716           8,231           9,924 
     Foreign currency gains (losses), net                               13,774          (3,336)            459 
     Other income, net (note 13)                                       326,343         331,376          73,068 
                                                                   -----------     -----------     ----------- 
Total other income (expense)                                           200,024         224,561         (43,573)
                                                                   -----------     -----------     ----------- 
Earnings before income taxes, minority interest and extraordinary                                              
     items                                                             412,826         506,640         244,149 
Income taxes (note 18)                                                 155,203         223,099          93,655 
                                                                   -----------     -----------     ----------- 
Earnings before minority interest and extraordinary items              257,623         283,541         150,494 
Minority interest                                                        7,088          81,562          45,973 
                                                                   -----------     -----------     ----------- 
Earnings before extraordinary items                                    250,535         201,979         104,521 
Extraordinary loss on debt extinguishments                              (5,183)         (5,067)              - 
                                                                   -----------     -----------     ----------- 
Net earnings                                                       $   245,352     $   196,912     $   104,521 
                                                                   ===========     ===========     =========== 
Basic earnings per share before extraordinary items                $      2.35     $      1.70     $      0.93 
                                                                   ===========     ===========     =========== 
Diluted earnings per share before extraordinary items              $      2.13     $      1.47     $      0.87 
                                                                   ===========     ===========     =========== 
Basic earnings per share                                           $      2.30     $      1.65     $      0.93 
                                                                   ===========     ===========     =========== 
Diluted earnings per share                                         $      2.09     $      1.43     $      0.87 
                                                                   ===========     ===========     =========== 

See statement of significant accounting policies and accompanying notes to      
consolidated financial statements.                                              

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Consolidated Statements of Comprehensive Income                                 

for the Years Ended December 31, 1999, 1998 and 1997                            

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]

                                                         1999         1998         1997    
                                                      ---------     ---------    --------- 
                                                                 (in thousands)            

                                                                                           
Net earnings                                          $ 245,352     $ 196,912    $ 104,521 
Other comprehensive income:                                                                
     Foreign currency translation adjustments            43,879       (37,821)     (50,973)
     Unrealized loss on marketable equity securities     (2,572)            -            - 
                                                      ---------     ---------    --------- 
Comprehensive income                                  $ 286,659     $ 159,091    $  53,548 
                                                      =========     =========    ========= 

See statement of significant accounting policies and accompanying notes to      
consolidated financial statements.                                              

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Consolidated Statements of Stockholders' Equity                                 

For the Years Ended December 31, 1999, 1998 and 1997                          

------------------------------------------------------------------------------- 

                                                        [Enlarge/Download Table]


                                                                        Accumulated                                                 
                                      Convertible   Common   Additional     other                              Issued               
                                       preferred     stock     paid-in  comprehensive Retained    Treasury     shares               
                                         stock    Class A & B  capital      income    earnings      stock     in escrow     Total   
                                       ---------   ---------  ---------   ---------   ---------   ---------   ---------   --------- 
                                                                        (in thousands)                                              

                                                                                                                                    
Balance at December 31, 1996           $ 195,104   $     876  $ 336,609   $  22,995   $ 130,742         $ -        $  -   $ 686,326 
Shares issued for acquisition                  -           -      1,000           -           -           -           -       1,000 
Cash dividends - Class A and                                                                                                        
     Class B, $0.40 per share                  -           -          -           -     (34,150)          -           -     (34,150)
Dividends on redeemable                                                                                                             
     preferred stock                           -           -          -           -      (1,060)          -           -      (1,060)
Dividends on convertible                                                                                                            
     preferred stock                           -           -          -           -     (22,408)          -           -     (22,408)
Contribution by Hollinger Inc.                 -           -     17,986           -      (1,843)          -           -      16,143 
Translation adjustments                        -           -      3,276     (50,973)          -           -           -     (47,697)
Net earnings                                   -           -          -           -     104,521           -           -     104,521 
Common shares repurchased                      -           -          -           -           -     (15,073)          -     (15,073)
                                       ---------   ---------  ---------   ---------   ---------   ---------   ---------   --------- 
Balance at December 31, 1997             195,104         876    358,871     (27,978)    175,802     (15,073)          -     687,602 
Stock option exercise                          -           2      1,966           -           -           -           -       1,968 
Preferred stock conversion to Class A   (188,727)        186    188,541           -           -           -         - -             
Series D conversion to Class A                 -          28     39,222           -           -           -           -      39,250 
Cash dividends - Class A and                                                                                                        
     Class B, $0.475 per share                 -           -          -           -     (46,985)          -           -     (46,985)
Dividends on redeemable                                                                                                             
     preferred stock                           -           -          -           -        (736)          -           -        (736)
Dividends on convertible                                                                                                            
     preferred stock                           -           -          -           -     (18,726)          -           -     (18,726)
Deemed dividend                                -           -          -           -      (5,134)          -           -      (5,134)
Translation adjustments                        -           -      5,079     (37,821)          -           -           -     (32,742)
Net earnings                                   -           -          -           -     196,912           -           -     196,912 
Interest on forward share purchase             -           -     (1,619)          -           -           -           -      (1,619)
Common shares repurchased                      -           -          -           -           -      (1,671)          -      (1,671)
Escrow shares on total return equity                                                                                                
     swap                                      -          14     18,380           -           -         - -                         
                                                                                                                             18,394 
Shares issued in escrow                        -           -          -           -           -           -     (18,592)    (18,592)
                                       ---------   ---------  ---------   ---------   ---------   ---------   ---------   --------- 
Balance at December 31, 1998               6,377       1,106    610,440     (65,799)    301,133     (16,744)    (18,592)    817,921 
Stock option exercise                          -           1      1,303           -           -           -           -       1,304 
Share issue                                    -           -         92           -           -           -           -          92 
Cash dividends - Class A and                                                                                                        
     Class B, $0.55 per share                  -           -          -           -     (55,360)          -           -     (55,360)
Dividends on redeemable                                                                                                             
     preferred stock                           -           -          -           -        (262)          -           -        (262)
Dividends on convertible                                                                                                            
     preferred stock                           -           -          -           -      (9,221)          -           -      (9,221)
Deemed dividend                                -           -          -           -      (6,327)          -           -      (6,327)
Translation adjustments                        -           -     (1,420)     43,879           -           -           -      42,459 
Unrealized loss on securities                  -           -          -      (2,572)          -           -           -      (2,572)
Net earnings                                   -           -          -           -     245,352           -           -     245,352 
Interest on forward share purchase             -           -     (6,042)          -           -           -           -      (6,042)
Common shares repurchased                      -           -          -           -           -    (123,497)          -    (123,497)
Escrow shares on total return equity                                                                                                
     swap                                      -          41     48,332           -           -      (7,714)          -      40,659 
Shares issued in escrow                        -           -          -           -           -           -     (42,281)    (42,281)
                                       ---------   ---------  ---------   ---------   ---------   ---------   ---------   --------- 
Balance at December 31, 1999           $   6,377   $   1,148  $ 652,705   $ (24,492)  $ 475,315   $(147,955)  $ (60,873)  $ 902,225 
                                       =========   =========  =========   =========   =========   =========   =========   ========= 

See statement of significant accounting policies and accompanying notes to      
consolidated financial statements.                                              

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Consolidated Statements of Cash Flows                                           

for the Years Ended December 31, 1999, 1998 and 1997                            

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]


                                                                                  1999          1998           1997   
                                                                               ----------    ----------    ---------- 
                                                                                           (in thousands)             
                                                                                                                      
Cash flows from operating activities:                                                                                 
     Net earnings                                                              $  245,352    $  196,912    $  104,521 
     Adjustments to reconcile net earnings to net cash provided by                                                    
        operating activities:                                                                                         
           Depreciation and amortization                                          125,408       114,848       114,570 
           Deferred income taxes                                                    6,086        75,530        62,016 
           Amortization of debt issue costs                                        16,209         5,869        13,466 
           Minority interest                                                        7,088        81,562        45,973 
           Equity in earnings of affiliates, net of dividends received              1,734        (3,674)       (5,851)
           Gain on sale of investments                                                  -             -       (66,128)
           Gain on sale of assets                                                (336,708)     (363,074)       (3,286)
           Amortization of deferred gain                                           (1,616)       (1,616)       (1,616)
           Other                                                                   (1,541)       (2,228)        1,408 
     Changes in assets and liabilities, net of acquisitions and dispositions:                                         
        Accounts receivable                                                       (17,922)       (8,566)       (4,556)
        Inventories                                                                 3,224          (662)       (3,064)
        Prepaid expenses and other current assets                                   6,817       (12,072)      (10,405)
        Accounts payable                                                          (44,016)       38,809       (14,614)
        Accrued expenses                                                           48,259       (38,064)       16,701 
        Income taxes payable                                                       55,716       (21,232)       (7,209)
        Deferred revenue and other                                                 (7,865)       (8,604)          854 
                                                                               ----------    ----------    ---------- 
Cash provided by operating activities                                             106,225        53,738       242,780 
                                                                               ----------    ----------    ---------- 
Cash flows from investing activities:                                                                                 
     Purchase of property, plant and equipment                                   (125,283)     (163,997)     (118,291)
     Proceeds from sale of property, plant and equipment                           12,087        22,098         5,613 
     Purchase of subsidiaries' stock and other investments                       (441,689)     (223,967)      (67,344)
     Acquisitions, net of cash acquired                                           (28,659)     (332,507)      (58,839)
     Proceeds on disposal of investments and assets                               520,040       601,980       247,418 
     Other                                                                          3,950         4,068          (104)
                                                                               ----------    ----------    ---------- 
Cash provided by (used in) investing activities                                $  (59,554)   $  (92,325)   $    8,453 
                                                                               ----------    ----------    ---------- 

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Consolidated Statements of Cash Flows, Continued                                

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]


                                                                         1999            1998           1997    
                                                                      -----------     -----------   ----------- 
                                                                                    (in thousands)              
                                                                                                                
Cash flows from financing activities:                                                                           
     Repayment of debt                                                $(1,363,351)    $  (246,140)  $  (141,623)
     Proceeds from issuance of bank debt                                1,476,323         349,513       877,942 
     Repayment of bank loans                                                    -               -      (495,835)
     Payment of debt issue costs                                          (37,964)        (12,343)      (38,988)
     Change in borrowings from affiliates                                  12,334           5,247      (302,587)
     Net proceeds from issuance of equity                                   1,396           1,968             - 
     Issuance of common shares by a subsidiary                            154,463             758         8,119 
     Repurchase of common shares                                         (123,497)         (1,671)      (15,073)
     Repurchase of common shares by a subsidiary                                -         (36,124)            - 
     Redemption of preference shares                                      (19,362)              -      (116,863)
     Dividends paid                                                       (64,843)        (66,447)      (57,618)
     Contributions by Hollinger Inc.                                            -               -        16,143 
     Deemed dividend                                                       (6,327)         (5,134)            - 
     Dividends paid by subsidiaries to minority stockholders, net of                                            
        related swap income                                              (112,539)         (3,735)      (10,443)
     Other                                                                 (7,664)         (1,667)          (98)
                                                                      -----------     -----------   ----------- 
Cash used in financing activities                                         (91,031)        (15,775)     (276,924)
                                                                      -----------     -----------   ----------- 
Effect of exchange rate changes on cash                                    26,475           4,766       (15,475)
                                                                      -----------     -----------   ----------- 
Net decrease in cash and cash equivalents                                 (17,885)        (49,596)      (41,166)
Cash and cash equivalents at beginning of year                             57,788         107,384       148,550 
                                                                      -----------     -----------   ----------- 
Cash and cash equivalents at end of year                              $    39,903     $    57,788   $   107,384 
                                                                      ===========     ===========   =========== 

See statement of significant accounting policies and accompanying notes to      
consolidated financial statements.                                              

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements                                      

December 31, 1999 and 1998                                                      

--------------------------------------------------------------------------------

(1)      ACQUISITIONS AND DISPOSITIONS                                          

(a)  In April 1999, the Company formed Hollinger L.P. The Hollinger L.P.        
    acquired 48 daily newspapers, 180 non-daily newspapers and shopping guides
 and 106 magazines and specialty publications located across Canada from
Southam, UniMedia Inc. and Sterling Newspapers Company in exchange for
    promissory notes due April 29, 2020 of $309,500,000 (Cdn.$451,200,000) and
     135,945,972 units in Hollinger L.P. The transfer of properties to Hollinger
   L.P. has been accounted for at historical carrying values and no gain was
recognized on the transfer.                                           

     A Cdn.$200,000,000 ($137,200,000) private placement was completed April 30,
1999 and private placement investors subsequently received 20,000,000 
partnership units of Hollinger L.P. During July 1999, Hollinger L.P.  
  completed its initial public offering issuing 4,000,000 units at Cdn.$10
per unit for total proceeds of Cdn.$40,000,000 ($27,000,000). All     
    partnership units, including the 20,000,000 units issued through the April
   30, 1999 private placement, are now listed on The Toronto Stock Exchange.
     After the initial public offering, the Company continued to hold indirectly
   approximately 85% of the equity of Hollinger L.P. The net proceeds of the
   offerings were applied to reduce bank debt of the Hollinger International
group of companies.                                                   

   As a result of these investments by others in Hollinger L.P., the Company
 recognized dilution gains of $77,297,000 recorded in other income (note
   13). The Company's indirect ownership in the equity of the Hollinger L.P.
was 85.0% at December 31, 1999.                                       

(b)  In January 1999, HCPH acquired 19,845,118 outstanding Southam common shares
which had been tendered pursuant to HCPH's offer to all Southam       
shareholders to acquire the shares for Cdn.$25.25 cash per share after
payment by Southam of a special dividend of Cdn.$7.00 per share. The  
   aggregate consideration paid was $327,500,000 and this purchase of shares
brought HCPH's ownership interest in Southam to approximately 97%. The
 remaining Southam common shares were purchased by HCPH in February 1999
pursuant to applicable Canadian law for an aggregate consideration of 
  $36,500,000. Of the aggregate purchase price of these 1999 acquisitions,
$329,700,000 was ascribed to intangible assets.                       

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(c)  In February 1999, the Company completed the sale of 45 U.S. community      
newspapers for proceeds of approximately $460,000,000 of which        
   approximately $441,000,000 was cash. The proceeds from the sale were used
    to pay down outstanding debt of the Bank Credit Facility. The pre-tax gain
    of approximately $249,171,000 resulting from this transaction was recorded
in other income.                                                      

(d)  During 1999, the Company sold to Horizon Publications Inc. 33 U.S.         
community newspapers for $43,700,000 resulting in a pre-tax gain of   
   approximately $20,672,000. Horizon Publications Inc. is managed by former
Community Group executives and owned by current and former Hollinger  
International Inc. executives.                                        

(e)  Throughout 1999, the Company acquired five community newspapers in the U.S.
for total consideration of $24,505,000. The excess purchase price of  
   $16,900,000 over the estimated fair value of tangible assets acquired was
recorded as identifiable intangibles and goodwill.                    

(f)  In January 1998, the Company sold 80 community newspapers for total        
proceeds of $310,000,000 resulting in a pre-tax gain of approximately 
$201,245,000.                                                         

(g)  In May 1998, Southam sold American Trucker magazine and related            
   publications and a paid daily circulation newspaper in Western Canada for
   total proceeds of $93,672,000 resulting in a pre-tax gain of $56,058,000.

(h)  In July 1998, the Company acquired two community newspapers for a total    
  cash price of $41,800,000. The excess purchase price of $39,350,000 over
the estimated fair value of tangible assets acquired was recorded as  
identifiable intangibles and goodwill.                                

(i)  In August 1998, HCPH acquired 8,268,900 additional shares of Southam for   
    $168,620,000, increasing its ownership interest at that time to 69.1% from
58.6%. Subsequent to August 1998, Southam repurchased some of its own 
common shares, increasing the Company's ownership interest to 71.0%.  

(j)  In September 1998, in two separate transactions Southam acquired 100% of   
 The Financial Post Company, which published The Financial Post, a daily
newspaper in Canada. In addition, in July 1998, Southam acquired the  
  Victoria Times Colonist and the Nanaimo Daily News and certain community
    newspapers on Vancouver Island in British Columbia, Canada. The total cost
of these acquisitions was $208,535,000. The excess purchase price of  
    $197,728,000 over the estimated fair value of tangible assets acquired was
recorded as identifiable intangibles and goodwill.                    

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

In a related transaction, in September 1998, Southam sold the Hamilton
   Spectator and The Record (Kitchener-Waterloo) and HCPH sold the Cambridge
    Record and the Guelph Mercury for total proceeds of $173,765,000 resulting
in a pre-tax gain of $105,771,000.                                    

All of the above acquisitions are accounted for using the purchase method of    
accounting. Based on estimated fair values of the acquired assets and           
liabilities, the purchase price including direct costs is allocated to working  
capital, property, plant and equipment, and intangible assets. The results of   
the newspapers acquired are included in the consolidated results of operations  
from the date of acquisition. The pro forma effect of the above acquisitions is 
immaterial.                                                                     

(2)      INVESTMENTS                                                            

                                                                [Download Table]


                                                          1999          1998   
                                                       ----------    ----------
                                                            (in thousands)     

                                                                               
3396754 Canada Limited (note 6)                        $   28,710        26,966
Joint ventures                                             25,237        24,768
Notes receivable from joint ventures                       10,117        10,542
Advances under printing contracts with joint ventures      55,742        51,623
Investments in Internet related companies                  58,691        21,737
Other                                                      29,669         7,702
                                                       ----------    ----------
                                                       $  208,166       143,338
                                                       ==========    ==========

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(3)      PROPERTY, PLANT AND EQUIPMENT                                          

                                                                [Download Table]


                                                     1999          1998   
                                                  ----------    ----------
                                                       (in thousands)     

                                                                          
Land                                              $   51,815        55,333
Building and leasehold interests                     230,414       242,941
Machinery and equipment                              724,322       668,168
Construction in progress                             139,889        94,867
                                                  ----------    ----------
                                                   1,146,440     1,061,309
Less accumulated depreciation and amortization       434,813       399,698
                                                  ----------    ----------
                                                  $  711,627       661,611
                                                  ==========    ==========

        Depreciation and amortization of property, plant and equipment totaled
  $64,153,000, $59,842,000 and $61,635,000 in 1999, 1998 and 1997,
 respectively. The Company capitalized interest in 1999 and 1998
      amounting to $5,739,000 and $2,999,000, respectively, related to the
       construction and equipping of production facilities for its newspaper
    in Chicago. In 1997, the Company capitalized interest amounting to
    $6,039,000 related to the construction of a production facility in
Canada.                                                       

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

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(4)     LONG-TERM DEBT                                                          

                                                                [Download Table]


                                                            1999           1998  
                                                         ----------    ----------
                                                              (in thousands)     
                                                                                 
Hollinger International Publishing Inc. ("Publishing"):                          
     Senior Subordinated Notes due 2006                  $  250,000       250,000
     Senior Notes due 2005                                  260,000       260,000
     Senior Subordinated Notes due 2007                     290,000       290,000
     Bank Credit Facility due 2004                           95,012       198,528
Hollinger International Finance Corp. ("HIF"):                                   
     Bank Credit Facility due 2004                          299,985             -
United States Newspaper Group:                                                   
     Amounts due under non-interest bearing                                      
        non-competition agreements due 2000-2007              4,282         4,277
     Other due 2000-2009                                                         
        (at varying interest rates up to 9%)                  3,007         2,413
Telegraph Group Ltd. ("Telegraph"):                                              
     Obligations under capital leases (note 5)                6,367        10,877
HCPH:                                                                            
     Bank Credit Facility due 2004                          244,864       291,965
Southam:                                                                         
     Bank Credit Facility due 2004                          100,574             -
     Unsecured bank credit facility                               -        56,390
     Promissory notes                                                            
        (at varying interest rates up to 6.0%)                    -        34,759
     Notes due 2000-2007                                                         
        (at varying interest rates up to 8.5%)               92,098        95,677
Other:                                                                           
     Other debt                                               6,895         4,632
     Other capital leases                                       852             -
                                                         ----------    ----------

                                                          1,653,936     1,499,518
Less current portion included in current liabilities         40,695       101,691
                                                         ----------    ----------

                                                         $1,613,241     1,397,827
                                                         ==========    ==========

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

     (a)     The following table summarizes the terms of the Publishing notes:

                                                        [Enlarge/Download Table]

-----------------------------------------------------------------------------------------------------  
                                                                          Early           Early        
               Interest     Issue                                       Redemption     Redemption      
  Principal     Rate        Date           Status        Maturity          Date           Price        
-----------------------------------------------------------------------------------------------------  
                                                                                                       
$  250,000,000  9.25%  February 1,1996   Senior          February 1,     February 1,    2001-104.625%  
                                         Subordinated    2006            2001 or after  2002-103.085%  
                                                                                        2003-101.545%  
                                                                                        Thereafter-100%
-----------------------------------------------------------------------------------------------------  
$  260,000,000 8.625%  March 18, 1997     Senior         March 15, 2005  None                  -       
-----------------------------------------------------------------------------------------------------  
$  290,000,000 9.25%   March 18, 1997     Senior         March 15, 2007  March 15,      2002-104.625%  
                                          Subordinated                   2002 or after  2003-103.083%  
                                                                                        2004-101.541%  
                                                                                        Thereafter-100%
-----------------------------------------------------------------------------------------------------  

            Interest on these notes is payable semi-annually and the notes
are guaranteed by the Company.                    

    The Indentures relating to the Senior Notes and Senior
        Subordinated Notes contain similar financial covenants and
          negative covenants that limit Publishing's ability to, among
           other things, incur indebtedness, pay dividends or make other
              distributions on its capital stock, enter into transactions with
         affiliates, and sell assets including stock of a restricted
              subsidiary. The Indentures provide that upon a Change of Control
              (as defined in the Indentures), each noteholder has the right to
       require Publishing to purchase all or any portion of such
              noteholder's notes at a cash purchase price equal to 101% of the
               principal amount of such notes, plus accrued and unpaid interest.

          On January 28, 1999, the Company solicited consents from the
            registered holders of the Senior Notes and Senior Subordinated
               Notes to amend the indentures covering said notes to (i) make the
               limitation on restricted payments covenant less restrictive, (ii)
           make the consolidated cash flow ratio under the limitation on
        indebtedness covenant more restrictive, and (iii) make the
         limitation on sale of assets covenant less restrictive. The
               requisite consents were obtained in March 1999 and the indentures
              governing the Senior Notes and Senior Subordinated Notes were so
amended.                                          

      (b) On April 30, 1999, Publishing, HCPH, Telegraph, Southam, HIF
         and a group of financial institutions entered into a Fourth
               Amended and Restated Credit Facility ("Restated Credit Facility")
      for a total of $725,000,000 consisting of a $475,000,000
        revolving credit line maturing on September 30, 2004 and a
        $250,000,000 term loan maturing on December 31, 2004. This
            facility replaced the previous Bank Credit Facility. The Loans
under the Restated                                

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

            Credit Facility bear interest, at the option of the respective
               borrower, at a rate per annum tied to specified floating rates or
       a reserve adjusted Eurocurrency rate, in each case plus a
   specified margin determined based on leverage ratios.

         On June 4, 1999, the revolving credit line was increased by
              $50,000,000. On September 30, 1999, the Restated Credit Facility
              was increased to $875,000,000 when the revolving credit line and
the term loan were each increased by $50,000,000. 

               At December 31, 1999 Publishing had borrowings under the Restated
    Credit Facility of $95,012,000, HCPH had borrowings of
              $244,864,000, HIF had borrowings of $299,985,000 and Southam had
            borrowings of $100,574,000. At December 31, 1999, the interest
             rates on the Restated Credit Facility ranged from 6.8% to 9.4%.

              On April 7, 1997, Publishing, HCPH, the Telegraph and a group of
         financial institutions entered into a long-term bank credit
          facility (the "Bank Credit Facility"). At December 31, 1998,
            after a number of amendments and restatements, the Bank Credit
            Facility was for a total of $625,000,000. At December 31, 1998
         Publishing had borrowings under the Bank Credit Facility of
               $198,528,000 and HCPH had borrowings of $291,965,000. At December
               31, 1998, the interest rate on the Bank Credit Facility was 6.7%.

          On February 2, 1999, the Bank Credit Facility was reduced by
            $380,000,000 with part of the proceeds from the sale of the 45
     U.S. community newspapers. The Bank Credit Facility was
   subsequently replaced by the Restated Credit Facility

  (c)(i) During December 1998, Southam entered into a six-month,
           unsecured Cdn.$700,000,000 bank credit facility to facilitate
             payment of an extraordinary dividend, to repay borrowings under
           the previous Cdn.$310,000,000 credit facility and for general
            corporate purposes. The Restated Credit Facility, described in
           (b) above, replaced the six-month, unsecured Cdn.$700,000,000
    facility. The amount borrowed at December 31, 1998 was
$56,390,000.                                      

       (ii) Southam has converted a portion of its variable rate
         interest exposure to fixed rate by entering into a ten year
            Cdn.$25,000,000 fixed rate interest swap at 8.7%, maturing May
           2004. Southam pays interest at the fixed rate and it receives
               interest based on the three-month banker's acceptance rate, which
is reset quarterly, on the nominal principal.     

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

       (d) The Company's agreements with banks and other debtors contain
               various restrictive provisions relating to maintenance of certain
        financial ratios, restrictions on additional indebtedness,
             occurrence of certain corporate transactions and limitations on
               the amount of capital expenditures and restricted payments (which
               generally include dividends and management fees). At December 31,
         1999, the Company was in compliance with the aforementioned
restrictive provisions.                           

(e) Principal amounts payable on long-term debt, excluding
               obligations under capital leases, are: 2000 - $37,041,000; 2001 -
         $6,293,000; 2002 - $2,145,000, 2003 - $1,752,000 and 2004 -
$496,925,000.                                     

 (f) Interest paid for 1999, 1998 and 1997 was $132,534,000,
$118,563,000 and $89,661,000, respectively.       

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(5)  LEASES                                                           

The Company leases various facilities and equipment under   
        noncancelable operating lease arrangements. Rental expense under all
    operating leases was approximately $ 14,936,000, $16,724,000 and
$15,422,000 in 1999, 1998 and 1997, respectively.           

Minimum lease commitments together with the present value of
obligations at December 31, 1999 are as follows:            

                                                                [Download Table]


                                                         Capital         Operating 
                                                         leases            leases  
                                                      -------------     -----------
                                                               (in thousands)      
                                                                                   
2000                                                  $       4,189     $    15,370
2001                                                          3,732          14,407
2002                                                           -             12,220
2003                                                           -             11,702
2004                                                           -             12,218
Later years                                                    -            121,905
                                                      -------------     -----------
                                                              7,921     $   187,822
                                                                        ===========
Less imputed interest and executory costs                       702                
                                                      -------------                
Present value of net minimum payments                         7,219                
Less current portion included in current liabilities          3,654                
                                                      -------------                
Long-term obligations                                 $       3,565                
                                                      =============                

 Minimum lease payments have been reduced for rental income from
noncancelable subleases by approximately $94,000 in 2000.     

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(6)      MINORITY INTEREST                                                      

                                                                [Download Table]


                                 1999         1998 
                               --------    --------
                                  (in thousands)   

                                                   
Common shares of subsidiary    $  2,364      36,421
Partnership units                78,453           -
Special shares of HCPH           74,084      69,581
Other                             1,000       1,000
                               --------    --------
                               $155,901     107,002
                               ========    ========

         In July 1997, HCPH issued 6,552,425 Cdn.$10 Non-Voting Special Shares
          for a total issue price of Cdn.$65,524,000 ($47,564,000). These shares
    are exchangeable, at the option of the holder, at any time after
        December 23, 1997 and before June 26, 2000 into newly issued Class A
        Common Stock of the Company. During that period the number of shares
       that will be issued on exchange was 0.510 for the first six months,
          increasing by 0.020 for each six-month period thereafter until June 8,
      2000. At December 31, 1999, the exchange ratio was 0.590 shares of
       Class A Common Stock per special share. For the period from June 9,
          2000 through June 25, 2000, the exchange ratio will be 0.602 shares of
        Class A Common Stock per special share. On June 26, 2000 any special
        shares not previously exchanged will be exchanged for that number of
         shares of Class A Common Stock equal to US$8.88 divided by 95% of the
         then current market price of the Class A Common Stock. Upon either an
         optional exchange or a mandatory exchange, the Company has the option
        of paying cash in lieu of issuing Class A Common Stock. During 1999,
        1,966 HCPH special shares were tendered for exchange and the Company
 opted to pay $1,900 cash in exchange for the shares tendered.

          In September 1997, an additional 4,146,107 Special Shares of HCPH were
      issued for a total issue price of Cdn.$41,500,000 ($29,000,000) in
   exchange for 4,146,107 special shares in 3396754 Canada Limited
          ("3396754"), a subsidiary of Hollinger Inc. These shares have the same
        terms and conditions as the special shares described in the previous
         paragraph. The Company's obligation to issue Class A Common Stock is,
 however, offset by an obligation of Hollinger Inc., through a
        subsidiary, to deliver those shares of Class A Common Stock from its
         holdings. As a result, these shares do not represent an obligation of
          the Company and will not ultimately lead to any increase in the number
of issued shares or to any dilution of earnings.            

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(7)      REDEEMABLE PREFERRED STOCK                                             

        In 1995, the Company issued 739,500 shares of Series A Preferred Stock
      to Hollinger Inc. and these were subsequently converted into 739,500
    shares of Series D Preferred Stock. On September 30, 1998, 408,551
     shares of Series D Preferred Stock were converted by Hollinger Inc.
     into 2,795,165 shares of Class A Common Stock and these shares were
         purchased from Hollinger Inc. by a group of banks pursuant to the Total
    Return Equity Swap described in note 11. In February 1999, 196,823
shares of Series D Preferred Stock were redeemed for cash of  
 $19,362,000 leaving 134,126 shares outstanding. In May 1999 the
  remaining shares of Series D Preferred Stock were converted into
134,126 shares of Series E Preferred Stock.                   

    Shares of Series E Preferred Stock are redeemable at the option of
     either the holder or the Company at a price of Cdn.$146.63 ($101.54
        based on December 31, 1999 exchange rates) plus accrued dividends. The
   holder of these shares may, at any time, convert such shares into
        shares of Class A Common Stock of the Company at a conversion price of
        $14.00 per share of Class A Common Stock. The Series E Preferred Stock
       ranks senior to the Series C Preferred Stock as to dividends and upon
         liquidation. The Series E Preferred Stock is non-voting and is entitled
        to receive cumulative cash dividends, payable quarterly. The amount of
      each quarterly dividend per share is equal to the product of (a) the
redemption price of Cdn.$146.63 divided by the Canadian dollar
        equivalent of the conversion price and (b) the per share amount of the
    regularly scheduled dividend on Class A Common Stock. In 1999, the
       dividend on the Series E Preferred Stock amounted to $1.95 per share.
       At December 31, 1999, 134,126 shares of Series E Preferred Stock were
     outstanding and based on exchange rates in effect on that day these
      were exchangeable into 973,000 shares of Class A Common Stock of the
Company.                                                      

(8)      STOCKHOLDERS' EQUITY                                                   

         The Company is authorized to issue 20,000,000 shares of preferred stock
 in one or more series and to designate the rights, preferences,
 limitations and restrictions of and upon shares of each series,
        including voting, redemption and conversion rights. In addition to the
       Series E Preferred Stock referred to in note 7 above, the Company has
        issued Series B and Series C Preferred Stock. The terms and conditions
of these shares are described below:                          

SERIES B                                                      

  These shares underlie an issue of Preferred Redeemable Increased
         Dividend Equity Securities ("PRIDES"). The PRIDES are depository shares
     and each one, in effect, represents one-half of a share of Series B
 Preferred Stock. Each PRIDES has a stated value of $9.75 and is
       entitled to cumulative dividends at a rate of 9.75% per annum payable
    quarterly. In July 1998, pursuant to an exchange offer, 19,993,531
         PRIDES were exchanged for 18,394,048 shares of Class A Common Stock. At
   December 31, 1999, 706,469 PRIDES were outstanding. The remaining
    PRIDES were converted to 596,189 shares of Class A Common Stock in
January 2000.                                                 

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

SERIES C                                                      

         Pursuant to the January 1997 transaction wherein HCPH acquired Canadian
   publishing assets from Hollinger Inc., the Company issued 829,409
     shares of Series C Preferred Stock. These shares are similar to the
       PRIDES described above. The stated value of each share is $108.51 and
      cumulative dividends are payable quarterly at 9.5% per annum of this
       amount. Between June 1, 2000 and June 1, 2001, the Company can redeem
         the Series C Preferred Stock based on the market value of the shares of
      Class A Common Stock for no less than 8.503 shares of Class A Common
Stock per share of Series C Preferred Stock. If not previously
    redeemed, the stock will mandatorily convert into 9.8646 shares of
    Class A Common Stock on June 1, 2001. The Series C Preferred Stock
       ranks junior to the Series E Preferred Stock as to dividends and upon
        liquidation. The holders of Series C Preferred Stock have the right to
         vote together as a single class with the holders of Class A and Class B
      Common Stock in the election of Directors and upon each other matter
         coming before the stockholders of the Company on the basis of ten votes
       per share of Series C Preferred Stock. At the 8.503 conversion ratio,
   these shares will convert into 7,052,464 shares of Class A Common
     Stock. This conversion ratio will be in effect at any time that the
market value of the Class A Common Stock is $12.76 or higher. 

CLASS A AND CLASS B COMMON STOCK                              

     Class A Common Stock and Class B Common Stock have identical rights
    with respect to cash dividends and in any sale or liquidation, but
         different voting rights. Each share of Class A Common Stock is entitled
 to one vote per share and each share of Class B Common Stock is
        entitled to ten votes per share on all matters, including the election
      of directors, where the two classes vote together as a single class.
  Class B Common Stock is convertible at any time at the option of
         Hollinger Inc. into Class A Common Stock on a share-for-share basis and
is transferable by Hollinger Inc. under certain conditions.   

      During the year, the Company repurchased 9,978,600 shares of Class A
Common Stock for approximately $123,500,000.                  

        The contributions by Hollinger Inc. in 1997 represent amounts paid for
     by Hollinger Inc. and net distributions prior to the Hollinger Inc.
Transaction.                                                  

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

GENERAL                                                       

 A significant portion of the Company's operating income and net
         earnings is derived from foreign subsidiaries and affiliated companies.
        As an international holding company, the Company's ability to meet its
        financial obligations is dependent upon the availability of cash flows
from foreign subsidiaries and affiliated companies (subject to
         applicable withholding taxes) through dividends, intercompany advances,
    management fees and other payments. The Company's subsidiaries and
affiliated companies are under no obligation to pay dividends.

(9)      STOCK OPTION PLAN                                                      

       During May 1994, the Company adopted the Hollinger International Inc.
        1994 Stock Option Plan (the "1994 Plan"). The 1994 Plan was amended in
         September 1996 to increase the number of shares authorized for issuance
     up to 1,471,140 shares. In 1997, the Company adopted the 1997 Stock
        Incentive Plan (the "Incentive Plan"). The Incentive Plan provided for
         awards of up to 5,156,915 shares of Class A Common Stock. The Incentive
       Plan is administered by an independent committee ("Committee") of the
      Board of Directors. The Committee has the authority to determine the
       employees to whom awards will be made, the amount and type of awards,
        and the other terms and conditions of the awards. In 1999, the Company
 adopted the 1999 Stock Incentive Plan ("1999 Stock Plan") which
supersedes the previous two plans.                            

      The 1999 Stock Plan provides for awards of up to 8,500,000 shares of
   Class A Common Stock. The 1999 Stock Plan authorizes the grant of
      incentive stock options and nonqualified stock options. The exercise
    price for stock options must be at least equal to 100% of the fair
       market value of the Class A Common Stock on the date of grant of such
option.                                                       

         Southam had a stock option plan under which options had been granted to
         executives and employees. At December 31, 1998, all options granted had
been exercised.                                               

       The Company applies APB Opinion No. 25 and related Interpretations in
      accounting for its plans. Accordingly, no compensation cost has been
   recognized for its stock option plans. Had the Company determined
     compensation costs based on the fair value at the grant date of its
      stock options under FASB Statement of Financial Accounting Standards
      No. 123 (FAS 123), the Company's net earnings and earnings per share
   would have been reduced to the pro forma amounts indicated in the
     following table. The pro forma effect includes compensation expense
related to stock options at Southam in 1998 and 1997.         

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

                                                                [Download Table]


                                           1999           1998            1997   
                                        -----------    -----------    -----------
                                         (in thousands except per share amounts) 

                                                                                 
Net earnings as reported                $   245,352        196,912        104,521
Pro forma net earnings                      242,704        194,017        102,469

Basic earnings per share as reported    $      2.30           1.65           0.93
Diluted earnings per share as reported         2.09           1.43           0.87

Pro forma basic earnings per share      $      2.27           1.62           0.90
Pro forma diluted earnings per share           2.07           1.41           0.85
                                        -----------    -----------    -----------

     Pro forma net earnings reflect only options granted in 1995 through
       1999. Therefore, the full impact of calculating compensation cost for
   stock options under FAS 123 is not reflected in the pro forma net
         earnings amounts presented above because compensation cost is reflected
       over the options' vesting period of 4 years and the compensation cost
 for options granted prior to January 1, 1995 is not considered.

     Calculating the compensation cost consistent with FAS 123, the fair
   value of each stock option granted during 1999, 1998 and 1997 was
       estimated on the date of grant using the Black-Scholes option-pricing
       model with the following weighted-average assumptions used for grants
      in fiscal 1999, 1998 and 1997, respectively: dividend yield of 4.5%,
         3.4% and 2.9%; expected volatility of 32.7%, 43.3% and 25.7%; risk-free
         interest rates of 6.4%, 5.1% and 5.4%, and expected lives of ten years.
      Weighted average fair value of options granted by the Company during
1999, 1998 and 1997 was $3.81, $5.12 and $5.80, respectively. 

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

       Stock option activity with respect to the Company's stock options was
as follows:                                                                     

                                                                [Download Table]


                                              Number of        Weighted Average
                                                Shares          Exercise Price 
                                            ---------------     ---------------
                                                                               
Options outstanding at December 31, 1996          1,281,500     $         11.65
Options granted                                     832,000               10.06
Options canceled                                    (14,000)               9.71
                                            ---------------     ---------------
Options outstanding at December 31, 1997          2,099,500               11.01
Options granted                                   1,383,000               15.09
Options exercised                                  (167,125)              11.78
Options canceled                                   (167,750)              11.43
                                            ---------------     ---------------
Options outstanding at December 31, 1998          3,147,625               12.74
Options granted                                   3,475,000               12.27
Options exercised                                  (116,000)              11.24
Options canceled                                 (1,357,125)              14.93
                                            ---------------     ---------------
Options outstanding at December 31, 1999          5,149,500     $         11.88
                                            ===============     ===============
Options exercisable at December 31, 1997            601,875     $         12.22
Options exercisable at December 31, 1998            915,375     $         11.65
Options exercisable at December 31, 1999          1,190,625     $         11.36
                                            ===============     ===============

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(10)     EARNINGS PER SHARE                                                     

      The following table reconciles the numerator and denominator for the
         calculation of basic and diluted earnings per share for the years ended
December 31, 1999, 1998 and 1997:                             

                                                        [Enlarge/Download Table]


                                                      Year Ended December 31, 1999       

                                                Income           Shares      Per-Share   
                                              (Numerator)    (Denominator)     Amount    
                                             ------------    ------------    ------------
                                               (in thousands, except per share data)     
                                                                                         
Basic EPS                                                                                
Net income available to common stockholders  $    235,869         102,553    $       2.30
Effect of dilutive securities                                                            
     Convertible preferred stock                    9,221           8,778                
     Series E Preferred Stock                         262             973                
     HCPH Special Shares                                -           4,930                
     Stock options                                      -             376                
Diluted EPS                                                                              
Net income available to common stockholders                                              
     and assumed conversions                 $    245,352         117,610    $       2.09
                                             ------------    ------------    ------------

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]

                                                   Year Ended December 31, 1998          

                                               Income           Shares       Per-Share   
                                             (Numerator)     (Denominator)     Amount    
                                             ------------    ------------    ------------
                                               (in thousands, except per share data)     
                                                                                         
Basic EPS                                                                                
Net income available to common stockholders  $    156,541          94,839    $       1.65
Effect of dilutive securities                                                            
     Convertible preferred stock                   18,726          18,763                
     Series D Preferred Stock                         736           4,350                
     HCPH Special Shares                                -           4,661                
     Stock options                                      -             521                
Diluted EPS                                                                              
Net income available to common stockholders                                              
     and assumed conversions                 $    176,003         123,134    $       1.43
                                             ------------    ------------    ------------

        For 1998, net earnings available to common shareholders has been reduced
     by $20,909,000, which represents the conversion premium on the PRIDES
exchange.                                                       

                                                        [Enlarge/Download Table]


                                                   Year Ended December 31, 1997          

                                               Income           Shares       Per-Share   
                                             (Numerator)     (Denominator)     Amount    
                                             ------------    ------------    ------------
                                               (in thousands, except per share data)     
                                                                                         
Basic EPS                                                                                
Net income available to common stockholders  $     81,053          87,130    $       0.93
Effect of dilutive securities                                                            
     Convertible preferred stock                   22,408          24,521                
     Series D Preferred Stock                       1,060           5,421                
     HCPH Special Shares                                -           2,237                
     Stock options                                      -             177                
Diluted EPS                                                                              
Net income available to common stockholders                                              
     and assumed conversions                 $    104,521         119,486    $       0.87
                                             ------------    ------------    ------------

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(11)     TOTAL RETURN EQUITY SWAP                                               

       In August and September 1998, the Company entered into an arrangement
   with four banks, pursuant to which the banks purchased 12,640,305
         shares of the Company's Class A Common Stock. 2,522,600 of these shares
     were purchased on the open market at an average price of $15.40 and
        10,117,705 were purchased from affiliates of the Company at an average
    price of $13.88. During 1999, an additional 1,469,600, shares were
         purchased on the open market at an average price of $13.96. The Company
      has the option, quarterly, up to and including September 30, 2000 to
     buy the shares from the banks at the same cost or to have the banks
         resell those shares in the open market. In the latter case, any gain or
         loss realized by the banks will be for the Company's account. Until the
      Company purchases the shares, dividends paid on the shares belong to
       the Company and the Company pays interest to the banks at the rate of
   LIBOR plus a spread. If the Company's stock price falls below the
    average purchase price of these shares, the Company is required to
       deposit cash or shares into an escrow account as additional security.
    During 1999, the Company issued 4,846,370 shares of Class A Common
         Stock as additional security of which 3,250,900 shares were required to
       be deposited in the escrow account at December 31, 1999. Consequently
       1,595,470 shares, which had been issued during 1999, were returned to
   the Company after year-end. At December 31, 1998, the Company had
 issued 1,363,293 shares of Class A Common Stock to the banks as
       additional security. Such escrow shares are shown as a deduction from
    stockholders' equity. The total interest paid to the banks, net of
     dividends paid on the shares, is shown as a reduction to additional
paid in capital on the balance sheet.                         

(12)    INFREQUENT ITEMS                                                        

                                                        [Enlarge/Download Table]


                                                         1999           1998          1997   
                                                       ----------    ----------    ----------
                                                                   (in thousands)            

                                                                                             
Pension and post-retirement plan liability adjustment  $   11,943             -             -
New Chicago plant pre-operating costs                       4,398             -             -
National Post launch costs                                      -        13,112             -
Costs related to direct subscription campaign                   -             -        22,191
Other                                                       5,705        13,060         3,052
                                                       ----------    ----------    ----------
                                                       $   22,046        26,172        25,243
                                                       ==========    ==========    ==========

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(13)     OTHER INCOME                                                           

                                                        [Enlarge/Download Table]


                                                       1999          1998           1997   
                                                     ---------     ---------     --------- 
                                                                 (in thousands)            

                                                                                           
Net gains on sales of publishing interests (note 1)  $ 270,017       363,074        66,128 
Gain on sales of assets                                  3,561             -         2,768 
Gain related to dilution of Hollinger L.P.                                                 
  interest (note 1)                                     77,297             -             - 
Equity in earnings (loss) of affiliates                 (2,106)       (1,199)        5,807 
Other                                                  (22,426)      (30,499)       (1,635)
                                                     ---------     ---------     --------- 
                                                     $ 326,343       331,376        73,068 
                                                     ---------     ---------     --------- 

(14)     SEGMENT INFORMATION                                                    

 The Company operates principally in the business of publishing,
 printing and distribution of newspapers and magazines and holds
        investments principally in companies that operate in the same business
     as the Company. Southam, the Canadian Newspapers and Hollinger L.P.
         make up the Canadian Newspaper Group. The following is a summary of the
segments of the Company:                                      

                                                        [Enlarge/Download Table]


                                                    Year ended December 31, 1999                         
                               ------------------------------------------------------------------------- 
                                                                 U.K.          Canadian                  
                                 Chicago        Community      Newspaper       Newspaper                 
                                  Group           Group          Group           Group           Total   
                               -----------     -----------    -----------     -----------    ----------- 
                                                            (in thousands)                               
                                                                                                         
Revenues                       $   390,473          96,674        550,474       1,109,781    $ 2,147,402 
                               -----------     -----------    -----------     -----------    ----------- 
Depreciation and amortization  $    19,955           9,100         18,957          77,396    $   125,408 
                               -----------     -----------    -----------     -----------    ----------- 
Infrequent items               $     5,512             301          7,891           8,342    $    22,046 
                               -----------     -----------    -----------     -----------    ----------- 
Operating income               $    39,722           9,170         62,116         101,794    $   212,802 
                               -----------     -----------    -----------     -----------    ----------- 
Equity in earnings (loss) of                                                                             
  affiliates                   $      (482)              -         (2,140)            516    $    (2,106)
                               -----------     -----------    -----------     -----------    ----------- 
Total assets                   $   457,613         162,887        580,078       2,186,931    $ 3,387,509 
                               -----------     -----------    -----------     -----------    ----------- 
Capital expenditures           $    40,941           4,925          5,555          72,425    $   123,846 
                               -----------     -----------    -----------     -----------    ----------- 

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]


                                                     Year ended December 31, 1998                        
                                ------------------------------------------------------------------------ 
                                                                   U.K.        Canadian                  
                                   Chicago       Community      Newspaper      Newspaper                 
                                   Group          Group          Group           Group          Total    
                                -----------     -----------    -----------    -----------    ----------- 
                                                             (in thousands)                              

                                                                                                         
 Revenues                       $   379,109         210,107        550,525      1,058,019    $ 2,197,760 
                                -----------     -----------    -----------    -----------    ----------- 
 Depreciation and amortization  $    20,311          19,267         19,413         55,857    $   114,848 
                                -----------     -----------    -----------    -----------    ----------- 
Infrequent items                $       825           2,000          6,250         17,097    $    26,172 
                                -----------     -----------    -----------    -----------    ----------- 
 Operating income               $    33,268          36,312         60,208        152,291    $   282,079 
                                -----------     -----------    -----------    -----------    ----------- 
 Equity in earnings (loss) of                                                                            
   affiliates                   $    (1,199)              -              -              -    $    (1,199)
                                -----------     -----------    -----------    -----------    ----------- 
 Total assets                   $   429,882         409,604        619,637      1,685,960    $ 3,145,083 
                                -----------     -----------    -----------    -----------    ----------- 
 Capital expenditures           $    75,647           8,825          7,114         69,211    $   160,797 
                                -----------     -----------    -----------    -----------    ----------- 

                                                        [Enlarge/Download Table]


                                                     Year ended December 31, 1997                   
                                  ------------------------------------------------------------------
                                                                 U.K.       Canadian                
                                    Chicago     Community     Newspaper     Newspaper               
                                     Group        Group         Group         Group        Total    
                                  ----------    ----------    ----------    ----------    ----------
                                                            (in thousands)                          

                                                                                                    
Revenues                          $  341,368       292,265       492,270     1,085,627    $2,211,530
                                  ----------    ----------    ----------    ----------    ----------
Depreciation and amortization     $   15,231        26,427        18,076        54,836    $  114,570
                                  ----------    ----------    ----------    ----------    ----------
Infrequent items                  $    1,662           192        22,567           822    $   25,243
                                  ----------    ----------    ----------    ----------    ----------
Operating income                  $   36,200        53,261        26,657       171,604    $  287,722
                                  ----------    ----------    ----------    ----------    ----------
Equity in earnings of affiliates  $    5,807             -             -             -    $    5,807
                                  ----------    ----------    ----------    ----------    ----------
Total assets                      $  313,170       489,595       642,563     1,457,387    $2,902,715
                                  ----------    ----------    ----------    ----------    ----------
Capital expenditures              $   17,894         8,763         5,627        84,313    $  116,597
                                  ----------    ----------    ----------    ----------    ----------

     Capital expenditures for the corporate entities were $1,437,000, $3,200,000
and $1,694,000 in 1999, 1998 and 1997, respectively.                  

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

Reconciliation of segment assets to total assets:             

                                                                [Download Table]


                           Year ended December 31,        
                    --------------------------------------
                       1999          1998          1997   
                    ----------    ----------    ----------
                                (in thousands)            

                                                          
Segment assets      $3,387,509    $3,145,083    $2,902,715
Corporate assets       115,515       106,641       121,206
                    ----------    ----------    ----------
Total assets        $3,503,024    $3,251,724    $3,023,921
                    ==========    ==========    ==========

(15)     FINANCIAL INSTRUMENTS                                                  

        The Company has entered into various types of financial instruments in
        the normal course of business. In addition, on September 30, 1998, the
       Company entered into forward purchase contracts to purchase shares of
its Class A Common Stock (see note 11).                       

      For certain of these instruments, fair value estimates are made at a
        specific point in time, based on assumptions concerning the amount and
  timing of estimated future cash flows and assumed discount rates
         reflecting varying degrees of perceived risk and the country of origin.
        These estimates are subjective in nature and involve uncertainties and
   matters of significant judgment and, therefore, may not represent
      actual values of the financial instruments that could be realized in
the future.                                                   

         At December 31, 1999 and 1998, the comparison of the carrying value and
        the estimated fair value of the Company's financial instruments was as
follows:                                                      

                                                                [Download Table]


                                      1999                        1998          
                            ------------------------    ------------------------
                             Carrying       Fair         Carrying       Fair    
                              value         value         value         value   
                            ----------    ----------    ----------    ----------
                                               (in thousands)                   

                                                                                
Long-term debt              $1,646,718    $1,430,554    $1,488,641    $1,403,588
Interest rate swaps                  -         1,586             -         2,784
Forward purchase contracts           -        17,251             -         3,216
                            ==========    ==========    ==========    ==========

The fair value of the interest rate swaps and forward purchase
 contracts is the estimated amount that the Company would pay to
     terminate the agreements. It is not practical to determine the fair
  value of redeemable preferred stock held by related parties. The
        carrying value of all other financial instruments at December 31, 1999
and 1998 approximate their estimated fair values.             

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(16)     COMMITMENTS AND CONTINGENCIES                                          

          (a)  The Telegraph has guaranteed the printing joint venture partners'
              share of leasing obligations to third parties, which amounted to
       $9,254,000 ((pound)5,730,000) at December 31, 1999. These
           obligations are also guaranteed jointly and severally by each
joint venture partner.                            

       (b)  In connection with the Company's insurance program, letters of
       credit are required to support certain projected workers'
               compensation obligations. At December 31, 1999, letters of credit
in the amount of $5,218,000 were outstanding.     

(17)     RELATED-PARTY TRANSACTIONS                                             

    (a)  Amounts due from affiliates represent cash advances, net of
             management and administrative expenses billed by Hollinger Inc.
               and corporate affiliates of Hollinger Inc. Hollinger Inc. and its
               affiliates billed the Company for allocable expenses amounting to
               $38,239,000, $31,954,000 and $26,506,000 for 1999, 1998 and 1997,
respectively.                                     

        (b)  On September 30, 1998, Hollinger Inc. sold 10,117,705 shares of
   Class A Common Stock to various banks. As part of the
             transaction, a subsidiary of Hollinger Inc. sold 408,551 shares
          of Series D Preferred Stock to such banks and the banks then
               tendered such shares to the Company for conversion into 2,795,165
            shares of Class A Common Stock. In an independent transaction,
           the Company entered into forward purchase contracts with such
               banks to purchase 10,117,705 shares of Class A Common Stock for a
           price of $13.88 per share. The terms of this transaction were
       reviewed and approved by a special committee comprised of
     independent outside directors of the Company's Board of
              Directors. Credit Suisse First Boston acted as financial advisor
for the special committee.                        

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(18)     INCOME TAXES                                                           

         U.S. and foreign components of earnings before income taxes, minority
interest and extraordinary items are presented below:       

                                                                [Download Table]


                 1999              1998              1997    
             ------------      ------------      ------------
                              (in thousands)                 

                                                             
U.S.         $    263,600           192,191            12,148
Foreign           149,226           314,449           232,001
             ------------      ------------      ------------
             $    412,826           506,640           244,149
             ============      ============      ============

Income tax expense for the periods shown below consists of:   

                                                                [Download Table]


                                      Current        Deferred        Total    
                                    ------------   ------------   ------------
                                                  (in thousands)              
                                                                              
Year ended December 31, 1999:                                                 
     U.S. Federal                   $     82,184          9,056         91,240
     Foreign                              53,067         (4,264)        48,803
     State and local                      13,866          1,294         15,160
                                    ------------   ------------   ------------
                                    $    149,117          6,086        155,203
                                    ============   ============   ============
     Year ended December 31, 1998:                                            
     U.S. Federal                   $     58,635         13,528         72,163
     Foreign                              76,492         60,069        136,561
     State and local                      12,442          1,933         14,375
                                    ------------   ------------   ------------
                                    $    147,569         75,530        223,099
                                    ============   ============   ============
Year ended December 31, 1997:                                                 
     U.S. Federal                   $      3,019          6,713          9,732
     Foreign                              27,856         54,344         82,200
     State and local                         764            959          1,723
                                    ------------   ------------   ------------
                                    $     31,639         62,016         93,655
                                    ============   ============   ============

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

         Income tax expense differed from the amounts computed by applying the
    U.S. Federal income tax rate of 35% for 1999, 1998 and 1997 as a
result of the following:                                    

                                                        [Enlarge/Download Table]


                                                                   1999            1998             1997    
                                                                ------------    ------------   ------------ 
                                                                               (in thousands)               

                                                                                                            
Computed "expected" tax expense                                 $    144,489         177,324         85,452 
Increase (reduction) in income taxes resulting from:                                                        
     Nondeductible expenses for income tax purposes                   12,904           9,676         11,083 
     Tax gain in excess of book gain                                       -          22,869              - 
     U.S. state and local income taxes, net of federal benefit         9,669          10,041          1,409 
     Impact of taxation at different foreign rates                     4,429           3,626         (2,639)
     Dilution gain related to Hollinger L.P.                         (29,327)              -              - 
     Minority interest earnings in Hollinger L.P.                     (2,728)              -              - 
     Other                                                            15,767            (437)        (1,650)
                                                                ------------    ------------   ------------ 
                                                                $    155,203         223,099         93,655 
                                                                ============    ============   ============ 

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

        The tax effects of temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities are
presented below:                                              

                                                        [Enlarge/Download Table]


                                                               1999             1998      
                                                           ------------      ------------ 
                                                                   (in thousands)         
                                                                                          
Deferred tax assets:                                                                      
     Accounts receivable, principally due to allowance                                    
        for doubtful accounts                              $      1,337             1,934 
     Accrued expenses                                            10,909            10,541 
     Net operating loss carryforwards                            33,071            13,476 
                                                           ------------      ------------ 
Gross deferred tax assets                                        45,317            25,951 
Less valuation allowance                                              -            (1,107)
                                                           ------------      ------------ 
Net deferred tax assets                                          45,317            24,844 
                                                           ------------      ------------ 
Deferred tax liabilities:                                                                 
     Property, plant and equipment, principally due to                                    
        differences in depreciation                              57,253            47,664 
     Intangible assets, principally due to differences in                                 
        basis and amortization                                   64,334            84,714 
     Foreign exchange basis differences                           8,664             8,998 
     Long-term advances under printing contract                  16,615            15,487 
     Deferred gain on exchange of assets                         24,187            21,128 
     Unremitted earnings of a foreign equity investment          47,878            41,708 
     Other                                                       40,139            12,812 
                                                           ------------      ------------ 
Gross deferred tax liabilities                                  259,070           232,511 
                                                           ------------      ------------ 
Net deferred taxes                                         $    213,753           207,667 
                                                           ============      ============ 

At December 31, 1999, the Company had approximately $86,900,000 of Canadian net 
operating loss carryforwards. The Canadian net operating loss carryforwards will
expire in varying amounts through December 31, 2006.                            

Total income taxes paid in 1999, 1998 and 1997 amounted to $158,618,000,        
$160,182,000 and $31,181,000, respectively.                                     

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(19)     EMPLOYEE BENEFIT PLANS                                                 

DEFINED CONTRIBUTION PLANS                                  

          The Company sponsors six domestic defined contribution plans, three of
         which have provisions for Company contributions. For the years ending
 December 31, 1999, 1998 and 1997, the Company the contributed
         $1,722,000, $501,000 and $471,000, respectively. The Company sponsors
          twelve defined contribution plans in Canada and contributed $2,524,000
and $2,362,000 to the plans in 1999 and 1998, respectively. 

     The Telegraph sponsors a defined contribution plan, The Telegraph
       Staff Pension Plan, for the majority of its employees, as well as a
    defined contribution plan to provide pension benefits for senior
       executives. In 1999, contributions to the defined contribution plan
         are included as part of the service cost of the defined benefit plan.
Contributions to each of the plans were as follows:         

                                                                [Download Table]


                                              1999          1998           1997 
                                            --------      --------      --------
                                                       (in thousands)           

                                                                                
The Telegraph Staff Pension Plan            $      -         6,120         5,780
The Telegraph Executive Pension Scheme      $    514           550           724
                                            --------      --------      --------

        The Telegraph plans' assets consist principally of U.K. and overseas
equities, unit trusts and bonds.                            

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

DEFINED BENEFIT PLANS                                       

      The Company and subsidiaries have seven domestic and seven foreign
   single-employer defined benefit plans and contribute to various
   union-sponsored, collectively bargained domestic multi-employer
     pension plans. The Company's contributions to these plans for the
years ended December 31, 1999, 1998 and 1997 were:          

                                                                [Download Table]


                             1999             1998            1997   
                           ----------      ----------      ----------
                                         (in thousands)              

                                                                     
Single-employer plans      $   14,954           9,263           5,146
Multi-employer plans       $    6,888           4,959           2,185
                           ----------      ----------      ----------

       The Telegraph has a defined benefit plan that was closed on July 1,
1991 and provides only benefits accrued up to that date. The
       liabilities of the plan have been actuarially valued as at December
  31, 1999. At that date the market value of the plan assets was
          $143,735,000, representing 97% of the estimated cost of purchasing the
    plan's benefits from an insurance company. The actuary assumed a
        discount rate of 6%. Increases to pension payments are discretionary
       and are awarded by the trustees, with the Telegraph's consent, from
         surpluses arising in the fund from time to time. Contributions to the
         trust were $6,469,000 and $1,896,000 for 1999 and 1997, respectively.
There were no contributions made in 1998.                   

         Pursuant to the West Ferry joint venture agreement, the Telegraph has
         a commitment to fund 50% of the obligation under West Ferry's defined
benefit plan.                                               

SINGLE-EMPLOYER PENSION PLANS                               

        The benefits under the subsidiary companies' single-employer pension
          plans are based primarily on years of service and compensation levels.
    The Company funds the annual provision deductible for income tax
        purposes. The plans' assets consist principally of marketable equity
securities and corporate and government debt securities.    

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

          The components of net period benefit cost for the years ended December
31, 1999, 1998 and 1997 are as follows:                     

                                                                [Download Table]


                                       1999             1998         1997    
                                     ----------      ----------   ---------- 
                                                  (in thousands)             

                                                                             
Service cost                         $   15,552           9,064        8,444 
Interest cost                            35,938          30,372       34,554 
Expected return on plan assets          (49,659)        (43,615)     (45,481)
Amortization of prior service costs         564             859          631 
                                     ----------      ----------   ---------- 
Net periodic (benefit) cost          $    2,395          (3,320)      (1,852)
                                     ==========      ==========   ========== 

The table below sets forth the reconciliation of the benefit
obligation as of December 31, 1999 and 1998:                

                                                                [Download Table]


                                                    1999             1998    
                                                 ----------       ---------- 
                                                        (in thousands)       

                                                                             
Benefit obligation at the beginning of the year  $  490,946          483,972 
Adjustment to opening balance                       116,339                - 
Service cost                                         15,552            9,064 
Interest cost                                        35,938           30,372 
Participant contributions                             7,809            3,227 
Exchange rate differences                            17,994          (24,310)
Curtailment (gain) loss                              (2,465)               - 
Changes in assumptions                              (50,151)          10,394 
Actuarial (gain) loss                                (2,855)           8,508 
Benefits paid                                       (37,927)         (30,281)
                                                 ----------       ---------- 
Benefit obligation at the end of the year        $  591,180          490,946 
                                                 ==========       ========== 

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

      The table below sets forth the change in plan assets for the years
ended December 31, 1999 and 1998:                           

                                                                [Download Table]


                                                          1999             1998   
                                                        ---------       --------- 
                                                             (in thousands)       

                                                                                  
Fair value of plan assets at the beginning of the year  $ 504,721         527,047 
Adjustment to opening balance                             103,326               - 
Actual return on plan assets                               77,707          21,908 
Change in assumption                                      (10,044)              - 
Exchange rate differences                                  23,543         (26,443)
Employer contributions                                     14,969           9,263 
Participant contributions                                   8,122           3,227 
Benefits paid                                             (37,927)        (30,281)
                                                        ---------       --------- 
Fair value of plan assets at the end of the year        $ 684,417         504,721 
                                                        =========       ========= 

                                                                [Download Table]


        Year ended December 31,     1999              1998  
                                 ----------       ----------
                                       (in thousands)       

                                                            
Funded status                    $   93,237          13,775 
Unrecognized net actuarial loss     (28,366)         46,003 
Unrecognized prior service cost       2,776             578 
                                 ----------      ---------- 
Prepaid (accrued) benefit cost   $   67,647          60,356 
                                 ==========      ========== 

The ranges of assumptions were as follows:                    

                                                                [Download Table]


                                    1999            1998          1997   
                                -------------  ------------  ------------
                                                                         
Discount rate                    6.0% -  8.0%   7.0% - 7.5%   7.0% - 7.5%
Expected return on plan assets   7.0% - 10.0%   7.0% - 9.0%   7.0% - 9.0%
Compensation increase            3.0% -  4.0%   3.0% - 4.0%   3.0% - 4.0%
                                =============  ============  ============

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

MULTI-EMPLOYER PENSION PLANS                                

        Certain U.S. employees are covered by union-sponsored multi-employer
        pension plans, all of which are defined benefit plans. Contributions
        are determined in accordance with the provisions of negotiated labor
        contracts and are generally based on the number of man hours worked.
  Pension expense for these plans was $2,402,000, $2,325,000 and
    $2,185,000 for the years ended December 31, 1999, 1998 and 1997,
respectively. The passage of the Multi-employer Pension Plan
      Amendments Act of 1980 (the Act) may, under certain circumstances,
       cause the Company to become subject to liabilities in excess of the
 amounts provided for in the collective bargaining agreements.
    Generally, liabilities are contingent upon withdrawal or partial
         withdrawal from the plans. The Company has not undertaken to withdraw
        or partially withdraw from any of the plans as of December 31, 1999.
 Under the Act, withdrawal liabilities would be based upon the
         Company's proportional share of each plan's unfunded vested benefits.
          As of the date of the latest actuarial valuations, the Company's share
of the unfunded vested liabilities of each plan was zero.   

POST RETIREMENT BENEFITS                                    

       The Company sponsors two foreign defined post retirement plans that
        provides post retirement benefits to certain employees. The benefits
    are accrued in accordance with Statement of Financial Accounting
         Standards No. 112 "Employers Accounting for Postemployment Benefits."

     The components of net period post retirement benefit cost for the
       years ended December 31, 1999 and December 31, 1998 are as follows:

                                                                [Download Table]


                                                  1999             1998   
                                               ----------       ----------
                                                     (in thousands)       

                                                                          
Service cost                                   $      895              794
Interest cost                                       2,600            2,372
Settlement/curtailment                             (1,549)               -
                                               ----------       ----------
Net periodic post retirement benefit cost      $    1,946            3,166
                                               ==========       ==========

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

         The table below sets forth the reconciliation of the accumulated post
   retirement benefit obligation as of December 31, 1999 and 1998:

                                                                [Download Table]


                                                       1999             1998    
                                                    ----------       ---------- 
                                                           (in thousands)       
                                                                                
Accumulated post retirement benefit obligation                                  
     at the beginning of the year                   $   37,987           43,361 
Adjustment to opening balance                            3,339                - 
Service cost                                               895              794 
Interest cost                                            2,600            2,372 
Actuarial gains and losses                              (4,338)          (4,296)
Benefits paid                                           (1,425)          (1,223)
Other                                                      291           (3,021)
                                                    ----------       ---------- 
Accumulated post retirement benefit obligation                                  
     at the end of the year                         $   39,349           37,987 
                                                    ==========       ========== 

         The table below sets forth the plan's funded status reconciled to the
amounts recognized in the Company's financial statements:   

                                                                [Download Table]


                                             1999              1998   
                                          ----------       ---------- 
                                                 (in thousands)       

                                                                      
Unfunded status                           $  (39,349)         (37,987)
Unrecognized net gain (loss)                  (6,611)          (1,530)
                                          ----------       ---------- 
Accrued post retirement benefit cost      $  (45,960)         (39,517)
                                          ==========       ========== 

          The weighted average discount rate used in determining the accumulated
       post retirement benefit obligation was 7.25% and 6.25% for 1999 and
       1998, respectively. All benefits under the plan are paid for by the
       Company's contribution to the Plan. For measuring the expected post
          retirement benefit obligation, a 9% annual rate of increase in the per
          capita claims was assumed for 1998 and a 8% annual rate of increase in
        the per capita claims was assumed for 1999. This rate was assumed to
decrease 1% per year to 5% in 2002 and remain at that level 
thereafter.                                                 

         Assumed health care cost trend rates have a significant effect on the
         amounts reported for health care plans. If the health care cost trend
   rate were increased 1%, the accumulated post retirement benefit
          obligation as of December 31, 1999 would have increased $2,316,000 and
      the effect of this change on the aggregate of service and interest
cost for 1999 would have been an increase of                

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

       $221,000. If the health care cost trend rate were decreased 1%, the
          accumulated post retirement benefit obligation as of December 31, 1999
       would have decreased by $2,084,000 and the effect of this change on
         the aggregate of service and interest cost for 1999 would have been a
decrease of $184,000.                                       

(20)     SUMMARIZED FINANCIAL INFORMATION                                       

    Summarized balance sheet and income statement data for Hollinger
International Publishing Inc. is as follows:                

                                                                [Download Table]


                                 1999           1998          1997   
                               ----------    ----------    ----------
                                           (in thousands)            
                                                                     
Balance Sheet Data:                                                  
         Current assets        $  417,439        73,596       500,914
         Total assets           3,500,523     2,823,034     3,019,473
         Current liabilities      720,935       503,027       797,392
         Total liabilities      2,607,680     2,186,654     2,405,899
         Minority interest        155,901       107,002       203,034
         Stockholder's equity     736,942       529,378       410,540
Income Statement Data:                                               
         Operating revenues     2,147,402     2,197,760     2,211,530
         Operating income         215,549       285,268       297,904
         Net earnings             213,675       244,057       107,982
                               ----------    ----------    ----------

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(21)     QUARTERLY FINANCIAL DATA (UNAUDITED)                                   

      Quarterly financial data for the years ended December 31, 1999 and
1998 are as follows:                                        

                                                        [Enlarge/Download Table]


                                                              1999                            
                                   -----------------------------------------------------------
                                     First           Second          Third            Fourth  
                                    quarter          quarter        quarter          quarter  
                                   ----------      ----------      ----------       ----------
                                               (in thousands, except per share data)          

                                                                                              
Total operating revenues           $  524,702         546,390         499,215          577,095
Total operating income             $   58,275          67,073          17,972           69,482
Net earnings                       $  147,167          91,047              86            7,052
Basic earnings (loss) per share    $     1.35            0.91           (0.02)            0.05
Diluted earnings (loss) per share  $     1.20            0.81           (0.02)            0.04
                                   ----------      ----------      ----------       ----------

                                                        [Enlarge/Download Table]

                                                             1998                             
                                   -----------------------------------------------------------
                                      First          Second          Third             Fourth 
                                     quarter        quarter         quarter           quarter 
                                   ----------      ----------      ----------        ---------
                                              (in thousands, except per share data)           

                                                                                              
Total operating revenues           $  537,969         569,171         512,303          578,317
Total operating income             $   61,844          94,914          49,998           75,323
Net earnings                       $  128,003          31,181          17,529           20,199
Basic (loss) earnings per share    $     1.39            0.28           (0.06)            0.16
Diluted (loss) earnings per share  $     1.05            0.25           (0.06)            0.16
                                   ----------      ----------      ----------       ----------

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HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES                                   

Notes to Consolidated Financial Statements, Continued                           

--------------------------------------------------------------------------------

(22)     SUBSEQUENT EVENTS (UNAUDITED)                                          

At December 31, 1999, the Company owned 51,700,000 shares in
       Interactive Investor International (III) at a cost of approximately
         $15,000,000 and representing an approximate 47.0% equity interest. On
        February 17, 2000, III had its initial public offering (IPO) issuing
        52,000,000 shares at (pound)1.50 ($2.42). The Company sold 5,000,000
      shares of its holding into the IPO. After the IPO, the Company now
          owns 46,700,000 shares representing 28.5% of the equity of III. Shares
         in III have traded substantially above their issue price indicating a
      significant gain to the Company. However, the Company is precluded
        from selling its holding for a period of six months from the date of
the IPO.                                                    

F-46

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		4/29/20		4		63
		3/15/07		39		68
		12/31/06		87					10-K,  10-K/A,  NT 10-K
		2/1/06		39					3
		3/15/05		39		68
		12/31/04		28		68			10-K,  8-K,  NT 10-K
		9/30/04		28		68			10-Q,  NT 10-Q
		2/1/04		39
		3/15/02		68
		6/1/01		5		74
		2/1/01		39		68
		9/30/00		4		80			10-Q
		6/26/00		41		72
		6/25/00		72
		6/9/00		72
		6/8/00		72
		6/1/00		74
Filed on:		3/30/00		49		50			4
		3/20/00		1		24			SC 13D/A
		2/17/00		29		96
		2/16/00		51
For Period End:		12/31/99		1		96			4,  5,  5/A
		9/30/99		28		69			10-Q,  4
		7/19/99		23
		6/4/99		28		69
		4/30/99		4		68
		3/24/99		47					DEF 14A
		2/2/99		69
		1/28/99		68
		12/31/98		26		95			10-K405,  5
		9/30/98		73		84			10-Q
		1/1/98		16		24
		12/31/97		27		92			10-K
		12/23/97		41		72
		7/18/97		41
		7/17/97		46
		5/5/97		46					8-K
		4/18/97		45		47
		4/7/97		40		69
		3/28/97		47					DEF 14A
		3/18/97		39		68			8-K
		3/12/97		39		45			S-3MEF
		3/4/97		39
		2/19/97		39
		12/31/96		60					10-K,  DEF 14A
		8/7/96		45		47			8-K
		8/1/96		39		47			S-3MEF
		6/14/96		23					S-3
		6/13/96		23
		2/7/96		39		46
		2/1/96		39
		12/31/95		46		48			10-K/A
		12/12/95		5
		10/25/95		22		23
		10/13/95		45
		7/19/95		47
		7/18/95		47
		1/1/95		76
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