Sale of Philly newspapers ends owners’ feud; speculation turns to ‘what comes next’

Philadelphia’s two biggest newspapers were sold Tuesday morning for the fifth time in just eight years.

Businessman Lewis Katz and philanthropist H.F. “Gerry” Lenfest made the winning bid of $88 million at an auction, allowing them to take control of the company.

Katz said he wants the size of the Philadelphia Inquirer, as well as its coverage of local issues, to grow.

“Hopefully, it’ll get fatter,” he said.

The current ownership team outbid George Norcross, a powerful South Jersey political and business figure.

In 2012, Norcross, Katz and four other investors bought the company for $55 million. A management dispute between the two men led to Tuesday’s auction, which was closed to the public.

Bill Ross, executive director of the newspaper company’s largest union, said he is glad this chapter of its history is over.

“It’s been hell for all our members,” he said.

Ross’ members also have undergone several rounds of layoffs and buyouts in recent years. The new owners would not say if they are considering additional downsizing. Whether they’ll have to resort to more cuts will depend on reversing the decline in advertising revenues.

“In the industry, both print circulation and print advertising revenues have fallen by more than half in the last decade,” said newspaper consultant Alan Mutter. “And there’s no indication that that trend is about to reverse.”

Mutter said growing ad revenues at the Philadelphia newspapers will be an uphill battle. But on the plus side, he added, the owners are no longer fighting.

“With management focused and coordinated and working together, I would think that they have a better chance of achieving their goals,” he said.

Lenfest, when asked about his plan to boost ad revenue, said the first step is enhancing the newspapers themselves.

“If we have a better product, we give the support the staff needs to have a better product, and we increase readership,” he said, “that would be the basis for improvement in advertising.”

Tension in the newsroom

Beyond the auction site, it was also a tense day in the newsrooms of Philadelphia’s two daily newspapers.

Daily News columnist Stu Bykofsky said the mood at the Daily News wasn’t exactly celebratory.

“There’s a sort of a mood of apprehension. We don’t know what’s going to happen next,” Bykofsky said. “We do know after all the preceding sales, generally we’ve taken a hit — the employees — we’ve lost our pension, we have to take a two-week furlough, our pay has been cut.”

Veteran Inquirer columnist Karen Heller said people she’s heard from are relieved.

“They were very anxious. In the morning, we were all joking about how little work seemed to be getting done. We normally have a 10:30 news meeting, which is the first of the two daily meetings, to plan the paper,” she said. “It was not held. There was just too much distraction because the auction was going off.”

Heller said the tensions between two of the old owners — Katz and Norcross — also were distracting.

“George Norcross issued a statement — a very eloquent statement — hoping for the best for Lew Katz and Gerry Lenfest,” Heller said. “And really this ongoing fight between these two men who could not work with each other — Lew Katz and George Norcross — I don’t think it’s been productive for anyone.”

Bykofsky remains worried about the papers’ future. One thing is clear, he said. For the Inquirer and Daily News to be strong, the owners must find a way to make money from the papers’ Internet presence.

“It’s inescapable,” he said. “The Internet can no longer be free if we are to survive.”

Gossip columnist Molly Eichel summed up her feelings: “As a proud member of the Daily News, I would have appreciated any owner who recognized the importance of what we do, the readership we serve and my colleagues who work tirelessly, with little fanfare, to publish a paper every day.”

Former owners bid goodbye, good luck

Norcross and the other former owners — William Hankowsky and Joseph Buckelew — declined to submit a final bid in the Tuesday auction and agreed to sell their majority share of Interstate General Media, the parent company of the Philadelphia Inquirer, the Daily News and philly.com, to Katz and Lenfest.

In a written statement, Norcross, Hankowsky and Buckelew said they are happy for the company’s employees, readers and advertisers.

“We have greatly valued our time as owners of the company and are proud of the remarkable turnaround begun under our ownership. In the decade before we took over, the company had gone from generating over $500 million of revenue with 3,000 employees to generating just over $200 million and with just 2,000 full-time and temporary employees,” according to the statement. “It went from making $145 million in profit to losing as much as $50,000 a day.

“In the first 18 months of our group’s ownership, IGM made millions of dollars of investments in its long-term future, including provisions for improvements at the production plant,” the statement continued, as well as a move from the iconic white tower at Broad and Callowhill streets to new headquarters at Eighth and Market streets.

Now that the dispute between Katz and Norcross is settled, the former owners said, “It is time to return the company’s focus to journalism, and away from conflict among its owners.”