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The warring owners of the Philadelphia Inquirer finally held a court ordered private auction yesterday for the newspaper and its parent company Interstate General Media Holdings. The auction was held at a local law firm, behind closed doors.
Private investors Lewis Katz and Gerry Lenfest, previously holding about 43% of the company, won the company with an US$88 million bid – on a 100% valuation basis. This brought to an end a knock-down legal battle for the company that has led to the business’ sixth change of control in just eight years.
In an unusual twist the structure of the auction was designed by the Delaware court as one where the price increased by US$1 million every ten minutes until one of the two bidding groups declined to continue. When it hit US$88 million a group led by George Norcross III, and until then holders of about 57% of the stock, stopped bidding leaving Katz and Lenfest holding the spoils as the victors.
The two groups had joined together, in happier circumstances, to buy the Inquirer in 2012 and they then only paid US$61 million for it. So at least Norcross is coming out with a nice share of the difference – but without control of the newspaper.
For their money Katz and Lenfest are picking up The Inquirer, the Philadelphia Daily News, three websites, a printing plant in the Conshohocken suburb of Philadelphia – and about 1, 800 employees.
At least the new owners are buying the business with their eyes wide open, in an environment of continuing struggles for print media generally as it tries to adjust to the digital age.
After winning the bid Katz gave a morale boosting speech to employees at the company’s headquarters, saying, ”We know more than anybody how difficult this business is, ” adding, ”We’re going to give it our best. We’re going to try to bring in the best. And, hopefully, we’ll have a wonderful result.”
Katz and Lenfest said they would rename the company and each own an equal participation, though they hope to secure other investors as well later.
Norcross himself initially declined to comment as he left the auction after it was concluded. He issued a statement later though, saying, “We are happy for the company’s employees, readers, and advertisers that this issue is now resolved, ” adding, “It is time to return the company’s focus to journalism and away from conflict among its owners.”
Lewis Katz, 72, grew up in the Camden suburb of Philadelphia and made his fortune in bankings, advertising billboards, and by renting out parking lots. His son, Drew Katz, who is 42, is CEO of a billboard company and he is also expected to play a role in the new venture representing the new generation.
Gerry Lenfest, 83, became a billionaire after selling his cable company to Comcast fiteen years ago and in recent years has spent a lot of his time, and his fortune, dedicated to philanthropic causes.
With the Katz and Lenfest victory the Inquirer’s Editor William Marimow, now gets to keep his job, after being fired last Fall by Norcross. His firing was one of the triggers precipitating the ownership crisis, representing as it did a major difference in editorial outlook. With a strong preference for in depth, and sometimes investigative, journalism Marimow represents the best American tradition of print journalism. That is considered a luxury by some these days aid it is something that requires a well-stocked newsroom and costs a lot of money. Now he has been endorsed by the new ownership in a clear way.
Marimow expressed his own personal sense of relief that the war was now over, saying “I’m really pleased that Gerry Lenfest and Lewis Katz prevailed, ” he said in an interview later with his own newspaper the Philadelphia Inquirer “I believe they are committed to the kind of public-service journalism that Philadelphia, its suburbs, and South Jersey really require.”
Gerry Lenfest will himself serve as interim publisher on a temporary basis, until a new one is found, replacing the current publisher Robert Hall who will now retire – it was Hall who had agreed to fire Marimow at the demand of Norcross, and who now is falling on his sword.
Finally, Gerry Lenfest also commented, ”We feel very fortunate we were able to prevail in the auction, ” adding, “We want to return The Inquirer to the great newspaper it has been for many years.”
Of course it remains to be seen whether they can make a profit at it, especially after paying so much for the privilege of ownership. The Philadelphia Inquirer this morning also quotes Bill Ross, executive director of the Newspaper Guild, the union representing almost 500 people at the company, guardedly saying,
“We look forward to moving forward, rebuilding the company, and making it very clear to the new owners that they better not come looking for concessions from our union, ” adding to make sure the message was received, “We’ve done enough to help them, and we will continue to help, but we’re done giving.”
However after having gone through bankruptcy once, in 2009, he is obviously not anxious to experience it again though, one can also readily imagine so the union may have no choice now there is a real chance for stabilisation in a transaction that, while expensive, at least adds no new debt to pay for it according to the new 100% owners.