Local Investors Buy Philadelphia Newspapers For $55M
Get Breaking News First
By Pat Loeb and Jericka Duncan
PHILADELPHIA (CBS) — Philadelphia’s two major daily newspapers have been restored to local ownership. A group of business, civic, and political leaders have paid $55 million for the Inquirer, Daily News, and their web site.
It is the fifth time in six years the newspapers are being sold.
Managing partners of the new ownership group are South Jersey parking lot magnate Lew Katz and Cooper Hospital chairman George Norcross III, a pair whose political and business interests made journalists nervous as the sale was conducted in extreme secrecy.
“This newspaper hasn’t made money for years,” said new Philadelphia Media Network partial owner, George Norcross III.
The new owners of the parent company of the Philadelphia Inquirer and Daily News, plan to change the decline of the paper, without layoffs, for now.
Today, Katz sought to put their concerns to rest.
“The whole notion that I or any of our owners would in any way interfere with the management of the news, with the decision that you must make in what you print, will never happen,” he said.
The four other partners include philanthropist Gerry Lenfest, who will be the new chairman of the board.
The new owners say they have no plans for further layoffs or any management changes while they focus efforts on how to make the papers profitable.
“We don’t have all the answers,” said Norcross. “We hope to grow this enterprise, not to lay people off.”
“It struck me as a situation where I could give back,” said investor William Hankowsky. “It’s a business, but for me, it’s a civic venture.”
The purchase price — which includes up to $10 million from investors to fund operations — is less than 15 percent of the $515 million paid by a group of investors in 2006, and far less than the $139 million creditors paid at a 2010 bankruptcy auction.
The buyers established a new company, Interstate General Media LLC, to operate Philadelphia Media Network.
“I just walked through for the first time in my life, the daily news room,” said new investor Lewis Katz. “Sick my stomach, empty, empty, empty desk.”
The sale comes as Philadelphia Media Network has announced plans to cut 45 positions this month, including 40 in the newsroom (see related story). Last year, the newsrooms lost 20 jobs.
When asked how the new owners plan to change their business model Lewis replied, ” We have some ideas, but I don’t want to broadcast them. I don’t think that’s the best way to execute a business plan.”