A reorganization plan to transfer ownership of the Daily News and Inquirer to a group of 32 hedge funds and other investment firms won confirmation yesterday by a federal bankruptcy judge, and the new owners said they would close the deal by the end of next week.
"We are very committed to operating this great company, revitalizing the papers and building up the most valuable digital portal in the U.S.," said Gregory J. Osberg, chief executive officer of Philadelphia Media Network Inc., the company set up to take over the papers and their website.
Fred S. Hodara, the New York City attorney who represented the newspapers' secured creditors through 20 months of Chapter 11 bankruptcy proceedings, said the deal would close by next Friday.
All but one of the newspapers' 15 union bargaining units have agreed to new contracts, with varying, generally modest concessions in salaries, benefits and work rules.
Leaders of the remaining union, representing 340 Teamster delivery-truck drivers, met yesterday with Robert J. Hall, chief operating officer of the new ownership group. Teamsters Local 628, led by president John Laigaie, has balked at the new owners' insistence that they stop contributing to the unions' defined-benefit pension plans.
Hodara's statement yesterday suggested that the new owners were prepared to move to closing with or without an agreement with the Teamster drivers. Under the terms of a bankruptcy auction last week, the new owners have the legal right to fire unionized employees who do not agree to new contracts.
Another dispute between the new owners and the 306-member mailers' union appeared yesterday to have blown over. The mailers' attorney, Michael Katz, had accused the company's labor lawyers of trying to bully the union into accepting contract language that differed from the agreement that the mailers voted to approve a month ago.
The new ownership group includes all 32 of the financial entities that held $318 million in secured debt in the bankrupt newspaper company - the bulk of the money that a local investor group, led by Brian P. Tierney, borrowed in 2006 to buy the papers from the McClatchy Co.
At an auction last week supervised by the region's chief U.S. bankruptcy judge, Stephen Raslavich, the new ownership group bid $105 million in cash for the Philadelphia newspapers and their website, Philly.com.
The biggest owners are believed to be Angelo, Gordon & Co., a New York City firm that had acquired a major chunk of the newspapers' debt before they declared bankruptcy in February 2009, and Alden Global Capital, another New York firm whose interest in the Philadelphia papers became public earlier this year.
A disclosure statement filed with Bankruptcy Court identified six members of the new firm's board of directors: Osberg, the former president of Newsweek magazine; Hall, publisher of the Inquirer and Daily News from 1990 to 2003, when they were owned by Knight-Ridder Inc.; investment banker Martin R. Wade III, CEO of Broadcaster Inc.; David B. Hertzog, a corporate attorney with Winston & Strawn in New York City; Harold T. Epps, president and CEO of PRWT Services Inc.; and writer Jacob Weisberg, former editor of the online magazine Slate, owned by the Washington Post Co.