The Inquirer files: Philadelphia’s media soap opera

     The Philadelphia Inquirer and Daily News newspapers sit on display on a newsstand. (AP Photo/Matt Rourke, file)

    The Philadelphia Inquirer and Daily News newspapers sit on display on a newsstand. (AP Photo/Matt Rourke, file)

    It’s usually hard to get executives involved in a business dispute to air their complaints publicly. That’s not the case in ongoing the death struggle among owners of Philadelphia’s largest media company, Interstate General Media, which owns the Inquirer, Daily News and Philly.com.

    Within the past week the combatants have been sniping at each other in public, sharing internal emails, and openly competing for the affection of union leaders — yes, the damn union. This has led to some strange moments.

    In a remarkable open letter on Wednesday, Newspaper Guild Executive Director Bill Ross accused H.F. “Gerry” Lenfest of asking him to mediate the dispute, then backing out of committments he’d made and lying about their conversations. Lenfest quickly retored that Ross had his facts wrong, and that “as for lying, I will at any time stake my reputation for honesty against your own.”

    It’s enough to make you run screaming from the room.

    As a public service (or maybe disservice), I’m publishing the communications of the last eight days below.

    Some background

    If you’re new to the story, this is a nasty divorce among some high-profile investors who bought the company last year and promised not to interfere with journalistic decisions.

    When their publisher, Bob Hall, fired Inquirer editor-in-chief Bill Marimow last month, two owners, Lewis Katz and Lenfest, sued the company and co-owner George Norcross, saying Hall didn’t have the authority to fire Marimow without Katz’s consent. Norcross counter-sued.

    So the conflict breaks down this way: The pro-Marimow owners, Katz and Lenfest, see Marimow’s firing as the result of Norcross meddling in journalistic decisions of the company. Norcross says Marimow’s dismissal was a legitimate business decision by publisher Hall, and sees Katz and Lenfest as meddlers for interfering. Norcross’s side now says it speaks for the other three owners, who with Norcross control 58 percent of the company. Norcross’s statements are also issued on behalf of Bill Hankowsky, one of the owners and formerly a top city development official. The Newspaper Guild has remained neutral in the battle so far. On Sunday, Teamsters Local 628, which represents 325 drivers, dispatchers, building service and security employees at the company threw its support behind Katz and Lenfest in the dispute.

    Right? Wrong? ‘It’s very muddy.’

    Before sharing the past week’s love notes, I’ll say that I’ve talked to a lot of people at the company, mostly journalists, and I don’t see a clear right and wrong here. It’s very muddy.

    I know great reporters who revere Marimow and see his firing as a travesty. I’ve talked to a few who see him as a  bad manager, and others who say he’s a great journalist but the wrong leader for a digital age. And defining owner interference can be tricky, too. The line between business and journalistic decisions isn’t  always so clear. And it’s particular messy when the two principal antagonists have family, or family-like connections. Katz’s longtime companion Nancy Phillips is an Inquirer editor who is close to Marimow. Norcross’s daughter Lexie is an executive at Philly.com.

    What follows is this:

    Publisher Bob Hall and Associate Publish Mike Lorenca’s email to company employees last Friday aimed at proving Marmimow’s firing wasn’t sudden, and that it was Marimow who made the controversial decision to cut the space in the editorial section
    Ross’s open letter to Lenfest
    Guild President Howard Gensler’s comment on Ross’s open letter
    Lenfest’s reply to Ross
    A Wednesday letter from Norcross to company employees
    and Friday letters from Lenfest and Katz to company employees

    Here goes:

    Bob Hall/Mike Lorenca email to company employees — Nov. 1:

    To all IGM employees:

    We know you are busy and it is late on a Friday, but there are a pair of things we feel a need to speak up about and set the record straight on.

    When Interstate General Media purchased the Inquirer, Daily News and philly.com, there was a widespread concern about the issues an ownership group like theirs raises about journalistic and editorial independence. Hundreds of current and past journalists spoke up to say the owners must pledge to remain removed from the content of the paper — what most outsiders would describe as “news” coverage, but we know is much more. It was an important pledge and one that we, as Publisher and Associate Publisher, have certainly taken seriously.

    Whether all of the owners have kept that pledge is at the heart of the current litigation we find ourselves in, litigation no staff member sought nor wanted. We agree with those who have said it will unnecessarily cost the company significant amounts of money that could be better applied to continuing our turn around.

    That said, there are two things that have become public in the last few weeks that need correction. The first is that Bill Marimow’s removal as editor of the Inquirer was in any way sudden. At this point, many, if not all, of you have read the email we wrote to the owners explaining our decision to remove Marimow. But you may not know that was not the first time we alerted them to Bill’s shortcomings as editor. There were multiple meetings and every owner was informed in writing by us of ongoing concerns over the period of a few months. We believed then, and continue to believe, that the decision about who the editor should be is a decision reserved for the publisher and associate publisher under the terms of the company’s operating agreement.

    The second thing we must respond specifically to is the allegation some have made to reporters at other publications that George Norcross was behind the decision to reduce the size of the Inquirer’s editorial page. That is simply false — and demonstrably so. Although we are not a fan of the sharing of internal documents, we recognize their importance when disproving a falsehood. That is why we are attaching with this message a series of emails about the reduction. As the attached emails make crystal clear, the claim that the decision to reduce the editorial page was not a decision dictated by the ownership group and when pressed to reverse it, they said no. It was a recommendation by Bill to us, one we accepted in our roles as Publisher and Associate Publisher. We hope to never hear the falsehood again.

    In closing, let us state one final thing: we understand that when someone gets fired or lawsuits are filed, there are hard feelings and sometimes harsh rhetoric. But the Philadelphia Inquirer, the Daily News and philly.com are journalism outlets. We should all – whether an owner, manager or employee, union or non-union — be committed to the truth. That is why we felt it was important to speak out to correct these two falsehoods.

    Sincerely,

    Bob and Mike

    Norcross, Lenfest, Katz, Jackson email exchanges

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    Newspaper Guild Executive Director Bill Ross’s Open letter to Lenfest — Nov. 6:

    Dear Mr. Lenfest,

    It is with great disappointment that I write you today.

    As you know, the Newspaper Guild Executive Board has remained neutral and not allied itself with either the minority or majority owners in the ongoing dispute over control of Interstate General Media.

    But I can no longer refrain from telling my membership about your actions over the past few weeks in which you have misled me, lied to me and attempted to cast doubt on my credibility to the other owners of the company.

    First, you and Lewis told our board that George Norcross made the decision to cut the Inquirer editorial pages, which was later proven to be a lie when Bob Hall sent a string of owner emails to employees last week.

    Then, early last week it was Lewis Katz who asked me to invite George Norcross to a meeting in which I would act as mediator to try and resolve your litigation. To get a feeling of what your side wanted to propose as a settlement I spoke with Lewis by phone and met with you in your office Wednesday. That was when you said you and Lewis would sell your interest in IGM once you felt the company was in capable hands. To reach that point you said that Lewis and George would each nominate two members to a Board of Directors and you would appoint a tie breaking member. That board would work together to hire a new publisher who would then hire a new editor for the Inquirer. I asked if you understood that Bill Marimow would not be the editor and you said yes. You also stated several times that you wished to serve as the publisher on an interim basis.

    After we spoke I approached Lewis with the idea and he also understood what I would convey to George. Once I did so, and confirmed that the majority owners saw this overture as a positive basis for settlement discussion, you both changed your minds. You told me you were emboldened by Judge McInerney’s decision to hear the case in Philadelphia and you backed off your settlement talks and denied ever indicating you would sell your shares and also referred to a scenario in which Marimow did not return to the Inquirer as a deal breaker. You both denied making any offers to sell your shares and acted as though I had concocted this idea out of thin air.

    Through conversations with Lewis it has become clear that his only plan for the company is to waste money on legal fees to bring his friend Bill Marimow back to a position in which many of my members, as well as industry observers, feel he is not equipped for, to bring back Brian Tierney who drove the company into bankruptcy and has nothing but distrust from my members, and to make sure his companion returns to a Guild job in the Inquirer newsroom. The last of which is amusing because she once conducted a byline count of her colleagues, breaking down how much each earned per story written and told the owners that her fellow journalists were paid too much.

    You say the fight is not about money, and that the newspapers are a “public trust,” but it was only a few months ago you threatened to liquidate the company if our union didn’t agree to wage cuts and other concessions to help the company get on solid footing. How can I believe you have a long term vision for the future of this enterprise further than your own self interest to serve as publisher?

    The fact that you and Lewis waged a court battle over the Publisher’s decision to fire an editor, after pledging not to interfere with the editorial operations of the newspapers, has once again forced this company into a situation of turmoil and uncertainty that negatively impacts your employees, advertisers and community. My members have been through enough drama at this company. I cannot demand you and Lewis sell your interest in the company, but I must demand that you treat my members with the respect and honesty they so greatly deserve.

    Bill

    Union President Howard Gensler’s note to members about the Bill Ross open letter — Nov. 6

    The Guild Bulletin Bill Ross sent out earlier today was an unfortunate result of weeks of meetings, lying, truth-twisting, private memos, politicking and more leaving our company and our membership hanging in the balance. The thoughts in the bulletin were Bill’s and Bill’s alone and he sent this out without the permission or knowledge of the Executive Board.

    As it is the Executive Board’s belief that the warring ownership groups would like nothing better than to divide and weaken our membership, it showed a significant lapse in judgment that this unauthorized bulletin has done the work for them.

    The Executive Board urges all members to remember, regardless of your personal opinions on the company matters before us – and there are many, varied views — as a group we are neutral in this fight. Both sides have good points and bad points. The only positive outcome that we can all agree on is one that is the fastest and least costly.

    Both have surrogates…if a dopey story about Cherry Hill leads Philly.com, people will think it’s George, whether it is or not.

    In Unity,Howard Gensler, PresidentThe Executive Board of the Newspaper Guild, Local-38010

    Gerry Lenfest response to Bill Ross — Nov 6:

    Dear Mr. Ross:

    Your “open letter” of today is filled with falsehoods, distortions and complete fabrications.

    A few examples: I never stated I would sell my interest in the company “when it was in capable hands” or otherwise.

    I said that Marimow should return as editor to the end of his term and his renewal would be up to the new publisher.

    I never told you I was emboldened by Judge McInerney’s decision.

    Your facts are incorrect and your email belligerent. As for lying, I will at any time stake my reputation for honesty against your own. I have great respect for members of the Guild, but, unfortunately, not for you. I note with great interest that the president of the Guild today said that your statement was issued without the permission or the knowledge of the union’s executive board and represented “a significant lapse in judgment”.

    Gerry

    George Norcross and Bill Hankowsky letter to company employees — Nov. 6:

    To All IGM Employees:

    Over the past few weeks you’ve been reading a good deal about what has been going on with the ownership of the paper. Let us take a few minutes and give you our take.

    In fiscal year 2000, Philadelphia Newspapers Inc. (PNI) was a business that grossed $604 million. We’re not telling you any secret. At that point the company was owned by Knight Ridder and you can look up the figure. In 2012 this company grossed a little more than $220 million. You can do the math as well as we can but that is a drop of almost 2/3 in revenue.

    A little more than ten years ago this company had over 3,700 full time employees. Today that number is approximately 1,700.

    And more than ten years ago, 1,050,000 Sunday Inquirers were sold each week. The Inquirer daily circulation was over 500,000. And the Daily News was selling 200,000 copies per day. You’re probably even more aware of what the numbers are at this moment – a devastating drop in each of these three editions.

    When our group bought the papers and the website, the first question we asked when we saw all these numbers was … why? Certainly if you own a business or if you are an employee of a business, or – in the case of public companies – a shareholder of a business, and the revenue of that business dropped every year for 13 straight years (with one exception) you would be very curious and would be anxious to find out the answers.

    We know many of these answers … newspaper readership around the country is declining, people are getting their information from other sources, etc. But that still left the question about why people in the Delaware Valley were not purchasing the Daily News and Inquirer with the same frequency they used to even though philly.com was growing significantly.

    We suggested to our co-owners and the senior management of the papers that we undertake some significant market studies to try to find out some answers about our situation here. Over the past year and half we’ve done that. We’ve surveyed thousands of people in the Delaware Valley and we’ve conducted scores of focus groups.

    And while there’s no magic bullet in what the survey results and the focus groups showed, one thing clearly came through: what people want from the Philadelphia Daily News, The Philadelphia Inquirer and philly.com is an emphasis on coverage of local news. Of course that doesn’t mean that you completely exclude national and international coverage from the papers. But, unfortunately, many people we surveyed are turning to other outlets, a problem journalism outlets across the country face. For those whose emphasis is business, they’re buying The Wall Street Journal. For those who want international coverage, they’re buying The New York Times. But if you want local coverage of Philadelphia and the suburbs on both sides of the Delaware River you turn to us.

    The research was pretty conclusive – both quantitatively and qualitatively.

    Unfortunately, we’ve lost some readers to publications outside the Delaware Valley. Stand at a Wawa on a Sunday in Lower Merion, Abington or Ocean City, and watch people come out with just the Sunday New York Times… not the Times and the Inquirer. We have also lost a lot of readers to the local papers in the region. The Delaware County Daily Times covers high school sports in that county in a much more in-depth way than we can. The same holds for lots of other areas around Philly. And even though the circulation of those papers has decreased, you can stand at a Wawa in Cherry Hill or Media and watch people walk out with the Camden Courier Post or Daily Times on a Sunday but without an Inquirer. (In a great profile of Donald Graham in the New Yorker a number of years ago, he said whenever a local beats a metro, it’s very hard for the metro to get the readers back.)

    What’s happened among the owners is that some of us have pushed for change to try and do something to stop the bleeding in advertising, circulation and revenue because the business model is not sustainable. These might be cold numbers on a ledger sheet: $604 million gross revenue in 2000. $510 million gross revenue in 2003. $443 million gross revenue in 2007. $291 million gross revenue in 2010. $220 million gross revenue last year. What those numbers mean is that people have lost their jobs. Not just in the newsroom, but people who deliver and print the papers, administrative staff, and people who answer phones.

    That’s the tragedy of this Philadelphia business. It’s the loss of jobs – both white collar and blue collar. Some have discussed the papers and philly.com as part of a “public trust”. We agree. But it is also a business and must be thought of as one or else it will go out of business as it was in danger of doing before we purchased it.

    So our fight is this. Let’s try something different. Let’s try to make some changes. Let’s see if any changes work and we can stop the revenue decline and job losses here at this company. Let’s figure out a way to have more people buy the Inquirer every day and on Sundays, buy the Daily News every day, advertise in both papers, monetize the websites and advertise on the websites.

    That’s all we’re trying to do.

    W’e’re not trying to interfere with the journalism in the newsroom. We still believe the Daily News and Inquirer can win Pulitzer Prizes in the future covering Harrisburg and City Hall and Atlantic City and the County Courthouses and everything in between. There’s plenty of stuff going on here for great journalists to continue doing what you’ve been doing and producing great journalism.

    But it won’t matter if this company keeps losing revenue because that means we lose jobs.

    That’s the nature of this dispute among the owners.

    Let us also make this clear: we respect Lew Katz and Gerry Lenfest, but we have very different ideas of how best to ensure the company’s survival going forward and what it will take.

    We don’t want to interfere with the newsroom. We made that pledge along with the other owners when we bought the papers. We have one main job which the majority owners have tried to focus on — to improve the operations of the company and increase revenue, including bringing advertising into this company. And we have made a pretty good start.

    The great thing about our situation right now is that we don’t have a $500 million bank loan we have to pay back and some banker breathing down our necks every month for their payment. We don’t have hedge fund people screaming at us because they want their 20 percent return. We have local investors who are willing to continue to grow the paper without having to worry about some monthly bill that has to be paid. But not withstanding that, we can’t keep going down the same path.

    Thanks for hearing us out.We have provided our responses below to frequently asked questions.George E. Norcross, III & William P. Hankowsky

    Frequently Asked Questions About Interstate General Media, the Inquirer, the Daily News, and philly.com

    Q. What is the status of Interstate General Media and the journalism outlets it owns?

    A. After more than a decade of turmoil, Interstate General Media, the new owner of the Inquirer, the Daily News, and philly.com, has put the company on the path to profitability. When IGM purchased the three journalism outlets in early 2012, the company was losing almost $50,000 a day, every day. While many were asked to make sacrifices in recent years, the improving condition of the company could not have been achieved without those sacrifices and the hard work, commitment and talent of the employees of the company. But we all must recognize there is more work to done as the company continues to transition to the new age of print and digital media, a process that will take the ongoing commitment, hard work and talent of staff and leadership.

    Q. How is/are the Inquirer/Daily News/philly.com doing?

    A. The combined reach of the three entities continues to far outpace other media properties in the region and market research reveals they do not compete for readership. Together, the Inquirer, the Daily News and philly.comreach an average of 1.95 million readers each week, more than double the next closest media property. The Inquirer is the largest newspaper – by far – in the region, with the Daily News at number two.

    While print publications continue to struggle everywhere, we have focused on rebuilding single issues sales for both papers and believe we have turned a corner, with subscriber and readership loss leveling off. Since substantial changes were made at the end of last year, home delivery revenue has been increasing in a fairly substantial way. We are investing resources and believe we have the appropriate leadership to do what needs to be done: guaranteed delivery every day, on time, without interruption.

    Unfortunately, as other print publications have seen, the marketplace continues to decline for advertising for the papers. We’ve rebuilt the entire advertising apparatus and recruited new leadership and talent. It’s been a difficult process, but we are beginning to see positive results, obtaining and growing in some case new or expanded contracts with, among others Comcast, Independence Blue Cross and Susquehanna Bank.

    We also recognize that how people consume news continues to change. The new websites for the Inquirer and Daily News are finding an audience and an amazing 105,000 of our 270,000 daily subscribers are enrolled and receive daily via email the Inquirer or Daily News. That is a huge percentage enrollment in less than a year.

    And philly.com is and will remain the largest – by far – media website in the region and continues to see massive growth of unique users, up over a million in just the last two years (from 2.6 million in 2011, to as many as 4.1 million visitors monthly in 2013 according to ComScore). The website is one of the 10 largest newspaper affiliated websites in the country.

    Q. What changes or improvements are responsible for the turn-around of the company, and what will be done going forward?

    A. In addition to the ongoing improvements listed above – the focus on single issue sales and home delivery, with a rebuilt advertising apparatus – we have implemented a disciplined pricing model that values the journalism our company produces. In essence, if you want to buy the Inquirer or the Daily News, you are going to pay a fair price.

    Before we purchased the papers and philly.com, the company was giving away, for in some cases, pennies, or a dollar a week, our publications. That is a foolish strategy that devalues our journalism. A year ago we implemented a pricing structure that was based on full price for our product with a modest offer of 50 percent off for 8 weeks. That has, of course, caused some subscribers to leave because they didn’t want to pay for the journalism we produce. Overall, it has been met with little resistance.

    The desire – or more accurately, the need – to properly value our journalism is a key reason why we established paywalls for the two papers. As mentioned above, the two sites are finding an audience and we will continue to work to build them.

    Finally, and not to diminish its importance, the redesign and re-launch of the Inquirer, along with a new advertising campaign “More You”, has been met with strongly positive impressions by our readers and advertisers. Although it took too long, it is something of which we are all very proud.

    Q. What does the improving condition of the company mean for readers and IGM staff?

    A. For readers, it means a continued focus on the local coverage they need and want as well as improved customer service and delivery. For our employees, there are numerous ways they will benefit, beginning with a better work environment when the company reaches profitability. We have already invested millions of dollars in capital investments at the production plant and the company’s new headquarters at 801 Market Street. As soon as feasible, we anticipate that the Inquirer, Daily News and philly.com will, for the first time in years, add – not replace, but add – reporters in the field specifically focused on local coverage.

    Q. In the last month, there have been two lawsuits filed by the owners of IGM against each the company and each other. What are those lawsuits about?

    A. As you know, on October 7, 2013, Publisher Bob Hall removed Bill Marimow as editor-in-chief of the Inquirer. The decision to remove Mr. Marimow was one made by Mr. Hall and Mike Lorenca, the Associate Publisher, after months of discussion with Mr. Marimow and the ownership of the company about the direction of the paper. The publisher has traditionally had the ability to remove an editor, something Mr. Marimow publicly recognized when he was removed by a previous publisher at the Inquirer and one at the Baltimore Sun.

    That same week, two of the minority shareholders, Lewis Katz and Gerry Lenfest, filed suit against the company and Publisher Hall alleging that Mr. Marimow’s termination was not allowed under the terms of the IGM operating agreement. Their suit alleges that Mr. Marimow’s dismissal required the approval of two members of the Board of Directors (specifically Managing Members Lewis Katz and George Norcross). Their suit asks that Mr. Marimow be reinstated and that Mr. Hall be terminated.

    On October 17th, Managing Member George Norcross, through his holding company, General American Holdings, Inc, filed a complaint in the Court of Chancery of the State of Delaware against Intertrust GCN, LP (Lewis Katz’ company) and Mr. Katz. The suit was filed in Delaware because both IGM and Intertrust GCN are Delaware companies. In his suit, Mr. Norcross asked the Court for three things:- “Declare that Katz cannot prevent IGM’s Board from taking the action necessary to enable IGM respond to the litigation he himself instigated against it.”- “… a declaration that under the LLC Agreement controlling IGM’s governance and management, Hall had every right to terminate Marimow’s employment and Katz cannot meddle further with that decision.”- “end all other efforts by Katz both to exercise his rights under the LLC Agreement to the detriment of IGM while encumbered with an unavoidable conflict of interest.”

    On Thursday, October 31st, Philadelphia Judge McInerney issued a ruling keeping the jurisdiction of the case in Philadelphia.

    Bill Ross, the Guild president, has offered to mediate any negotiations if both sides are willing. All cases are pending.

    Q. Didn’t the owners pledge to not interfere in the journalistic and editorial operations of the paper(s)/philly.com?

    A. Yes. Shortly before the owners of IGM purchased the papers and philly.com, more than 200 current and past employees of the three outlets signed a petition stating that any new owners “must guarantee that the integrity of our reporting will never be sacrificed….”. The owners of IGM pledged – publicly, in writing, and in their operating agreement – to remove themselves from editorial and journalistic decisions of the company. At its heart, this case will hinge on the interpretation of the non-interference clause in IGM’s operating agreement. We believe this language is clear that the owners were to separate themselves from the journalistic and editorial operations of the papers and philly.com.

    Q. One of the allegations the lawsuit makes is that Bob Hall did not have the authority to fire Marimow because he does not have a contract. Does he?

    A. Bob Hall is the Publisher and CEO of Interstate General Media, with all the responsibilities that entails. His name appears on the masthead of the papers every day, as it has been for more than a year. All owners have recognized Mr. Hall’s role repeatedly.

    Q. Another of the allegations in the Katz lawsuit is that there was not sufficient notice given to Board members before Marimow was removed. Is that correct?

    A. No. There were emails written to Board members and meetings held months before Mr. Marimow’s termination that made it clear that Messrs. Hall, as publisher, and Lorenca, as associate publisher, were not satisfied with Marimow’s performance and his failure to follow the path planned for the Inquirer. It has been documented that Mr. Lenfest told Mr. Marimow that he would be dismissed if he didn’t follow the Hall/Lorenca plan. The majority owners, who together control 58 percent of the company and 4 of 6 directorships, have stood firmly behind the work of both Hall and Lorenca.

    Q. Didn’t Katz and Lenfest file a separate injunction against the company after the Norcross suit?

    A. Yes. They sued to get a court injunction prohibiting the company from moving forward with the investigations into Mr. Katz’ efforts to influence the journalistic and editorial operations of the papers and philly.com.

    Q. What do these lawsuits mean for the future of the papers/philly.com?

    A. The lawsuits are not expected to impact the operations of the papers and philly.com, although they will, at a minimum, cost the company hundreds of thousands of dollars that could be put to better use improving our services and coverage. The majority shareholders of Interstate General Media are committed to the continued production of the quality journalism our readers expect and rely on from the Inquirer, Daily News and philly.com. In fact, the termination of Mr. Marimow as Inquirer editor, from which the lawsuit resulted, was a journalistic and editorial decision Publisher Hall and Associate Publisher Lorenca made in large part in the pursuit of strengthening the journalism produced by the Inquirer.

    Q. There is a great deal concern about whether philly.com is using content from the Inquirer and Daily News while also competing with them. How can that be?

    A. Upon its purchase, the company began a substantial survey and planning process to learn more about who our readers are and what they want. It identified challenges for each entity, but it also revealed one piece of extremely good news: we discovered that the three journalistic entities, they appeal to different audiences and do not materially complete with each other for readership. Their readership is largely different, and therefore so too can be their focus be different. Moreover, we have learned that philly.com is a key outlet for re-engaging readers who left reading our papers years ago.

    It is true that in addition to material from its own news gathering division and partners across the Internet, philly.com publishes content from the Inquirer and Daily News. As organizations under the same parent company – IGM — the newspapers and philly.com have long been able to utilize content from one another. Just like philly.com will use content from the newspapers, there are occasions that the Daily News or Inquirer will utilize something that may have first appeared on philly.com. More than 85 percent of philly.com’s page views are either from their own original content or non-Inquirer/Daily News partner content.

    Q. One of the issues that Katz and Marimow supporters raise is the involvement of Lexie Norcross, the daughter of George Norcross, in the operation of Philly.com. What is her role there?

    A. The leader of philly.com and digital strategy is Robert Cauthorn. Currently the position of editor in chief is open, and the company needs to hire one.

    Lexie Norcross serves as a VP of Digital Operations and Corporate Services. She does not control the editorial decisions of the website.

    In Lexie’s role as VP of Digital Operations and Corporate Services, she not only works with the executive staff of IGM, but serves as the liaison between advertising and the product and content groups, making sure the correct people are looped in as we implement ad positions or develop proposals for new advertisers. She is a coordinator of large digital advertising pitches and/or sponsored content (i.e. the Shore guide) to make sure the people and departments with responsibility of each piece are moving along on schedule and that any collateral elements are in place. Lexie has daily oversight of the budget and is responsible for keeping tabs on the expense budget. As most know, Lexie coordinated the entire move from Broad Street to 801 Market Street and continues to be involved with corporate services, which includes the management of the facilities at 801 Market Street.

    Gerry Lenfest and Lew Katz letters to company employees — Nov. 8:

    To: All IGM EmployeesFrom: H. F. Gerry LenfestDear IGM Employees:

    Over the last few weeks you have read repeated accounts of the disagreements among the owners of this company. I know that this is difficult to witness because in the end it is your livelihood that is at stake. But I also believe that there is an important principle at stake – a principle that affects how you do your job every day and a principle that is at the heart and soul of a free press. This principle is independence. It is important not only to you but to every citizen of our community.

    For any newspaper or media outlet to be credible, it must be viewed as truly independent and free of interference. This integrity is what is at stake in our lawsuit. Over the last several months, this principle has been seriously eroding at The Philadelphia Inquirer. My record will substantiate that I am not a litigious person, but in the end, I and Lewis Katz agreed to file a lawsuit at our expense to defend the integrity and independence of our Philadelphia newspapers.

    Bill Marimow was fired because he resisted the interference of George Norcross in the editorial and journalistic decisions of the Inquirer. While there are countless examples of Mr. Norcross’ interference, among the most egregious was his pressuring of Bill Marimow to purge the Inquirer of opinion on the basis of research conducted by a polling firm with strong ties to his political organization. However, I believe and the recent daily circulation numbers (up by 8.9%) now prove that Bill Marimow is an outstanding editor and leader of The Philadelphia Inquirer. His wrongful termination was the result of his resistance to interference. He stood up for the principle of independent journalism and I fully support him.

    Moreover, in the course of his aggressive campaign to seize exclusive control of the company, Mr. Norcross has engaged in a pattern of misrepresentations and distortions. For example, in repeatedly asserting the interests of the “majority” of shareholders, he ignores that the partnership agreement – an agreement that he entered into voluntarily – requires that Mr. Norcross and Mr. Katz agree on all major decisions affecting the company.

    Now, how do we move ahead from here?

    I believe that the best path to future success is to provide the resources to strengthen our core print products – The Philadelphia Inquirer and Daily News as well as philly.com. At the same time, it is critically important that we commit ourselves to mastering all the tools of the multimedia world so that our content flows to readers through the iPad, the iPhone and all other devices. Whether people get our news and information in print or online, this is what draws readers. Credible content will attract new readers which in turn attracts new advertisers. To that end, I am committed to finding the best new publisher available – one who can effectively increase our advertising revenue which is now at the bottom of our peers and our circulation online and in print while also supporting the principle of independent journalism.

    Under Bob Hall’s failed leadership, we have dropped to last place among the nation’s top newspapers in overall and national advertising. I’m told that our philly.com page views have fallen from a high of 90 million page views per month in 2009-10 to between 50-60 million page views per month now. Clearly, we cannot continue to manage the company with a part-time publisher and a philly.com “president” who is a full-time resident of San Francisco.

    I know that yesterday you received a communication from George Norcross. The misstatements in that email are too numerous to mention here but let me suggest to you that in my experience, if someone does not tell you the truth on small things then how can you trust him to tell you the truth on the big issues?

    Finally, I ask you to look around and consider whether you think things are getting better given all the claims in Mr. Norcross’ email. If not, I hope that you will share your ideas with me on how we can improve this company. As a person who has chaired and invested in many of our successful civic institutions in Philadelphia, I look forward to working with you to do the same for these great Philadelphia newspapers and Philly.com.

    Enough is enough. It is time to reshape the future of this company in a way that respects independent journalism, promotes the excellence of our newspapers and philly.com and advertising revenue and is supported by owners who live up to their pledge of non-interference.

    I look forward to hearing from you. You can contact me at gerry@lenfestgroup.com

    Thank you very much.

    Sincerely,

    H. F. Gerry Lenfest

    ___________________________________________________________________________To: IGM employeesFrom: Lewis Katz

    It’s time to tell the truth.

    Over the past few weeks I have remained relatively quiet in the hope that our current management impasse would get resolved and that Bill Marimow would be restored as editor. But I cannot remain silent any more.Let me first tell you why I entered into this partnership. I believe in strong, independent journalism, and I trusted that my partners did as well. Now, after just 19 months of ownership, I understand that not all of the partners entered into this agreement with the same motives.

    I believe in an independent and free press, and that’s why I filed the current lawsuit to defend that freedom and to protect my right to participate in the management of the company, including the right to approve the hiring and firing of The Inquirer’s editor.

    I also want to explain to you how our partnership agreement is structured, how my right to participate in the management of the company has been violated, and what I am trying to accomplish in court because there have been numerous misrepresentations. No one owner of the company has a majority share. In fact, the stock ownership is more or less irrelevant to the company’s governance.

    George Norcross and I are the sole members of a two-person management committee and our agreement is structured so that both members of that committee must agree for action to be taken on all business and operational decisions. I entered into this agreement to be a co-manager of the company. Over the past 19 months, however, I have been elbowed out of its management and now Mr. Norcross is using company resources to hire lawyers to fight against me. I am simply asking the court to restore my rights to co-manage the company as our management agreement stipulates.

    Saying that Mr. Hall had the authority to fire Mr. Marimow without consulting with the two of us is simply ridiculous. Mr. Hall knew my position on this subject and promised that he would give me advance notice before any action was to be taken. He fired Mr. Marimow early on the morning of Monday, Oct. 7 without notice to Gerry Lenfest or me.

    Now, let me tell you how the business is really doing. As you know, advertising and circulation are the fuel of our business. We need both to be performing strongly if we are to be successful. No doubt, you saw last week’s circulation report, which stated that The Inquirer’s daily circulation was up by 8.9%. This is a major turnaround and one that I credit directly to Mr. Marimow and The Inquirer staff.

    The advertising story is very grim and must change. We are currently ranked dead last among top U.S. newspapers in terms of overall and national advertising revenue. In fact, in a recent memo of corrective action by Mr. Hall, he pointedly omitted any reference to advertising sales for obvious reasons. There is no way to sugarcoat it. We must sell more advertising. I believe that a new, strong and experienced publisher can turn this situation around, particularly in light of our recent positive circulation increase. We must capitalize on this opportunity now.

    Another important measure of success is philly.com page views and our digital strategy. Unfortunately, you have not gotten the full truth on this one either. In addition to a part-time publisher, we also have a part-time president of philly.com who is not an employee of the company. Our philly.com “president” is a consultant and a full-time resident of San Francisco, and our page views have fallen from 90 million per month in 2009-10 to 50 to 60 million per month today. Clearly, philly.com needs a full-time president who works in Philadelphia.

    I believe that the current strategy of giving away Inquirer and Daily News content on philly.com undermines and cannibalizes the two newspapers’ paywall-protected sites. Who wants to pay for content that they can get for free on philly.com? I also believe that readers come to philly.com for news and information primarily and that we need to be investing more in news content than in pure entertainment.

    My management philosophy has always been to hire great people and let them do their jobs. I note with sadness the recent resignation letter of Mike Lorenca, which speaks to the lack of his ability to do his job independent of interference. When the facts come out, you will see who in fact interfered with his ability to do his job.

    I would be remiss if I also didn’t comment on the scurrilous charges leveled against Mr. Lenfest yesterday. It is unfathomable that a man of his stature who has given away a billion dollars to philanthropic institutions would be accused of fabricating a story for his own self-interest. I sincerely regret that this legal battle has devolved into these tactics.

    I have enormous respect for each of you and the job that you do every day. I am relying on the court to restore my right to co-manage the company so that Mr. Marimow can return as editor and we can find a dynamic new publisher who can lead the company into the future – a future characterized by independent journalism, growing advertising revenue and continued increases in readership, online and in print.

    Sincerely,

    Lewis Katz 

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