GAVIN O’REILLY was in tub-thumping form in Gothenburg, Sweden, last week.

Fresh from sealing another emerging-markets investment, the son and likely heir to Sir Anthony O’Reilly at the head of Independent News & Media (INM) was busy defending the continuing strength of newspapers and warning publishers not to be seduced by the promise of soaring revenues from the internet and mobile phones.

“The internet is a wonderful place if you know what you are looking for,” he told the annual congress of the World Association of Newspapers (WAN), of which he is president.

“But we run the risk that running headlong into digital will turn our dollars into pennies.”

O’Reilly’s caution was backed up with WAN figures that show newspaper circulation is still growing. Worldwide, it rose 2.6% in 2007, or 3.7% if free dailies are included with paid-for publications.

The increase is being driven by emerging markets such as India, where internet penetration is lower than in the West and the middle class is expanding.

Away from the familiar industry debate, the future of INM will once again be in focus on Wednesday.

Due to persistent stake-building by Denis O’Brien, the Irish telecoms entrepreneur, O’Reilly’s INM, which publishes The Independent, the Belfast Telegraph and titles in South Africa, India and Australia, can expect a broadside over how it runs its affairs at its annual shareholders’ meeting.

The O’Brien camp, which has amassed a 25% stake in INM, promises an “update” on a corporate-governance report by Stephen Davis of Yale University that was detailed at last year’s meeting.

It accused INM of having a “crony” board with not enough independent directors, adding more fuel to O’Brien’s campaign, which has called for O’Reilly Sr, whose family controls 29% of the company, to stand down. He also wants the company to sell the perennially loss-making Independent.

Glass Lewis, a voting advisory service for American funds, has concerns about the 20-strong board — not least the £333,000 paid to directors for consultancy services over and above standard non-executive fees.

Meanwhile, ISS, another voting adviser, is recommending that shareholders vote against the re-election of three long-serving directors.

The company has got its retaliation in early. Its own arm’s-length governance report, carried out by Harvard Business School professor Jay Lorsch, gives it a clean bill of health.

“The dissident shareholder can’t beat something with nothing and, frankly, that’s exactly what he’s offered shareholders,” O’Reilly said of O’Brien.

“He has offered no alternative vision, strategic or otherwise — no directors, no bid, nothing. All he’s done is pursue a Don Quixote-like campaign in an area where he has no experience and, to judge from his less-than-stellar Communicorp results, no expertise either.”

The rivalry between O’Reilly and O’Brien goes back to 1995, when O’Brien, then only 36, led a consortium that defeated O’Reilly to win Ireland’s second mobile-phone licence, later sold to BT.

O’Reilly struck back in 2002 to take private Eircom, Ireland’s main fixed-line operator, after he won support from employees ahead of O’Brien.

Now, spurred on by what he sees as negative newspaper coverage of his business affairs, O’Brien’s scaling of INM’s shareholder register threatens to become a big distraction.

INM’s profits last year were down 0.7% at €248m (£198m) on sales up 2.3% at €1.67 billion.

It is unclear how the spat will resolve itself. Due to a 40% slide in INM’s share price over the past year, O’Brien’s investment is under water. However, he shows no signs of budging.

The position has been made even more intriguing since Carlos Slim, the Mexican telecoms tycoon who is the world’s second-richest man, began buying shares in INM as well. Slim and O’Brien are competitors in the Caribbean mobile-phone market.

O’Reilly’s side doubts that O’Brien could afford to launch a takeover bid. One solution would be to hand him a division in exchange for his stock.

Like the future of newspapers, this promises to run and run.

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