New owners discuss details of the sale
Following are some details about of the purchase of Philadelphia Media Network:
Question: Who are the new owners of The Inquirer, Philadelphia Daily News, and Philly.com?
Answer: They are six businessmen with particularly strong ties to South Jersey - entrepreneurs who have made fortunes in cable television, parking garages, insurance, nuclear-energy technology, and real estate. Many of them devote a significant amount of their time and money to civic and charitable causes.
Q: How much did they pay?
A: The price was about $55 million, plus more than $7 million to fund operations. That amount could increase as the books are settled with the former owners. The total amount of equity raised was more than $63 million, said William P. Hankowsky, a member of the new ownership group.
Q: How much money did they borrow to buy the company?
A: None, though that could change. "At the moment, it's all equity," Hankowsky said.
Q: When did the sale process start?
A: The group made an unsolicited offer for Philadelphia Media Network in October, after former Gov. Ed Rendell contacted Lewis Katz about assembling some investors to buy the company. "His intent was never to own this venture," Katz said. "He made it real clear that his intent was to try to save this venture from what he perceived to be outside financial interests that really had little or no interest in the city of Philadelphia's civic life."
Q: Does Rendell have a role in the ownership group?
A: No, said Katz: "He hasn't been paid a nickel for putting us all together, and he won't be anything but a continued friend."
Q: Who is the majority owner?
A: There is none, but the equity stakes are not equal. H.F. "Gerry" Lenfest is chairman. Katz and George E. Norcross III are managing partners. Hankowsky, Joseph Buckelew, and Kris Singh are partners. Individual percentage stakes were not disclosed.
Q: Why did the new owners buy Philadelphia Media Network?
A: They emphasized that, with the exception of Lenfest, the purchase was not a philanthropic act. "It's a business decision," Hankowsky said. "This is not a civic decision, but I think there's a capacity to be patient that this team has that prior teams didn't," a reference to the absence of a heavy debt load and any pressure to sell quickly.
Q: Will the new owners interfere with news coverage?
A: Recalling his work as a journalist in the 1960s, Katz said the value of the business depends on the quality of the content. "We're not going to interfere," he said. "No one's going to intimidate anybody or tell anybody how to write a story. That would be suicidal - for the enterprise." Norcross, a South Jersey political leader, said: "My interest is on the business side of making this a success."
Q: Will Greg Osberg remain as chief executive and publisher?
A: Yes. Osberg "was never given the chance to focus on the job he was given to do," Katz said. Instead, Osberg spent a significant amount of his time on efforts to sell the business.
Q: Are more layoffs planned?
A: The new owners made no promises. They said they do not yet have a full picture of the company's financial condition. "We want to grow this enterprise, not lay people off," Norcross said.
Q: What is known about the company's financial condition?
A: Katz said revenue has fallen by 50 percent from about $500 million six years ago. "Unfortunately, expenses have not dropped anywhere close to that," he said. As a result, Norcross said, the company has been losing money, even by the measure of operating income before interest payments and other non-operating expenses.
Q: Will the Daily News still be published?
A: As a self-described "sports junkie," Norcross spoke up as an enthusiastic supporter of the Daily News. "I believe that the Daily News, with the proper plan, vision, investment, and otherwise, will return to its circulation success of the past," he said. Katz said the Daily News appeals to a different reader than The Inquirer. "We have to serve that reader because this is probably the only newspaper that reader will bump into in the course of his day. We have to make extra effort to try to preserve that institution for the city."
Q: Do the new owners have specific plans for changes?
A: "I would say Day Two is going to involve talking to the people that are intimately involved in this enterprise" and find out what they think, Norcross said. "I've learned the hard way over the years occasionally that if you start out thinking you know everything, a lot of times you're going to fail."
Contact Harold Brubaker at 215-854-4651 or firstname.lastname@example.org.