By Ralph Cipriano
In July, after he got through negotiating a new labor contract, H.F. "Gerry" Lenfest, the philanthropist who owns the Philadelphia Inquirer, Daily News and philly.com, celebrated by passing out $1,000 bonuses to his employees.
Today, a month after Terry Egger, Lenfest's hand-picked successor, took over as publisher, he will lay off 46 newsroom employees.
What the hell happened, union leaders want to know. When he was passing out bonuses, Lenfest bragged he had turned the company around, recalled Bill Ross, executive director of the Philadelphia Newspaper Guild. Then, "He [Lenfest] hires the guy" [Egger] . . . and has him do all the dirty work."
The layoffs begin a merger of what are now three distinct news operations, the Inquirer, Daily News and philly.com, into "a unified, one-newsroom approach," Egger wrote Monday in a letter to all employees.
Lenfest, along with the late Lewis Katz, were the winning bidders at a court-ordered auction in 2014, buying the city's only two daily newspapers and website for the inflated price of $88 million. But Philadelphia Media Network, the parent company that owns the two papers and website, has lost $90 million in advertising revenues since 2011, Egger said. The current layoffs are needed to save between $5 million and $6 million, Egger told employees.
That prompted union leaders to recall that Lenfest previously donated around that same amount, $5.8 million in 2010, to keep the SS United States, the rusting ocean liner docked on Delaware Avenue, out of the scrapyard.
"This isn't the only sinking ship Gerry's invested in," Ross cracked.
It costs $60,000 a month to keep the SS United States dry-docked on Delaware Avenue. When it was built in 1952, the ocean liner dubbed "America's flagship" was the world's fastest passenger ship with passengers that included JFK, Marlon Brando and Marilyn Monroe.
A conservancy named after the ship announced last week that it's raised $100,000, which for now will keep the ship out of the scrapyard. The conservancy has big plans to tow the ship to the Brooklyn harbor, and turn it into a floating office and restaurant complex. It would cost $2 million to move the ship, and between $50 million and $200 million to finance the entire project.
Without millions more in donations, however, the scrapyard looms for America's flagship. Lenfest, for one, has said he won't be donating any more money to the project.
"I've already put up a lot of money to give the conservancy reasonable time to restore it," Lenfest told Jeff Gammage and Matt Gelb of the Inquirer on Oct. 25th. "I have no plans to do anything further."
The Philadelphia Inquirer, founded in 1829, was once known as the city's "paper off record." It covered the Civil War, won 20 Pulitzer Prizes, and used to carry the bylines of Bartlett and Steele, George Anastasia, and Steve Lopez. But this year, the Inky needed a grant from the Wyncote Foundation to cover the mayor's race.
As with the SS United States, Lenfest's generosity with PMN appears to have a limit.
"As we look ahead over the next three years, we need to be self-sustaining, which means that our revenue needs to be greater than our expenses," Egger wrote employees. "In order for PMN to 'stay in the game,' we need to focus our energies with unprecedented precision and urgency."
On Sept. 30th, the Billy Penn website had a scoop, that Lenfest had discussed creating a nonprofit that would "align" the Inquirer, Daily News and philly.com with Temple University.
Could the Inky, Daily News and philly.com eventually be owned by a nonprofit?
Lenfest is already on record as saying it's a great concept.
"I think eventually it would be wonderful if nonprofits would own newspapers," Lenfest told Philanthropy magazine in an interview last year. "And they're allowed to do that in the U.S. code now, to take that in that kind of revenue. Eventually I foresee foundations taking ownership of newspapers."
This afternoon, Egger will meet with union leaders to disclose who's on the layoff list.
Union leaders feel betrayed.
"We spent eight months bargaining for a contract with no indication that this was afoot," said Howard Gensler, president of the Newspaper Guild.
"They've been hiring constantly throughout the year," he said of PMN. "Now all these people we've hired are in jeopardy."
Looking forward to the long game, Gensler said that if the papers are indeed going nonprofit, "I think they need to get this house in order before they bring another house into it."