Tuesday, May 27, 2014

New Newspaper Owners Dump No-Meddling Pledge

H.F. "Gerry" Lenfest & Lewis Katz AP/Matt Rourke
By Ralph Cipriano
for Bigtrial.net

When you spend $88 million to buy a couple of floundering newspapers, you get to call the shots.

So when Lewis Katz and H.F. "Gerry" Lenfest came to the microphones today to address the media, they were ready to announce some immediate managerial decisions.

In was Bill Marimow, the editor of the Inquirer that Katz and Lenfest went to court last fall to reinstate, after he was fired by Inquirer Publisher Bob Hall.

Out was Publisher Hall, whom Lenfest said was "retiring." Also getting the boot was the much ballyhooed public pledge by the former owners of the paper, including Katz and Lenfest, that they would not interfere in the editorial operations of the two newspapers and the philly.com website.

"That will be gone," Lenfest said bluntly, when asked about the non-interference pledge. "It won't be necessary."

It wasn't exactly an auspicious start for a couple of conquering media moguls.

After all, Katz and Lenfest were the two owners who succeeded in closing today's newspaper auction to reporters. If a judge had granted all their requests, Katz and Lenfest would have kept the amount of today's winning bid a secret.

In that same imperial vein, an hour after winning the auction, the new owners -- a couple of old guys in really loud suits -- seemed incredulous that anybody would question their motives when it came to possible newsroom meddling.

Can you imagine any reason why I would want to interfere with editorial operations, Lenfest asked.

I sold my cable TV company, Lenfest told reporters. Now I devote my time and efforts to philanthropy. Why would I want to do anything to interfere with the editorial operations of a newspaper?

Besides, Lenfest would no longer be interfering. Later in the day, it was announced that Lenfest would be replacing Bob Hall on an interim basis as Inquirer publisher.

At the news conference, Katz told reporters that he too didn't have any ethical conflicts because, like Lenfest, he didn't operate a business in Philadelphia.

You do now, one reporter reminded him.

But the prevailing attitude of the new owners was hey, we know best. We're the champions of journalistic integrity in Philadelphia. We just spent a pile of money on the court fight to reinstate Billy Two Pulitzers as editor. We don't need no stinkin' pledges.

Lenfest dismissed the pledge as a "very sensitive reaction" by a bunch of owners who were being criticized by journalists at the time for being political partisans. Now that George E. Norcross III, the Democratic boss of South Jersey, was gone, so was the pledge.

Speaking of Norcross, he left town with a pile of cash.

He and his partners had invested a total of $35 million in the two newspapers, according to court documents. After the new owners pay off $15.3 million in debts, Norcross and his two remaining partners, William P. Hankowsky, and Joseph E. Buckelew, will walk away with $41.7 million, according to court documents.

"My view is, both parties won," said Katz, who made his fortune in parking lots, billboards and banking.

The winners get the challenge of restoring the Inquirer, as Lenfest put it, to once again being "one of the nation's finest newspapers."

And the losers got a "great return on their investment," Katz told reporters.

Neither side could discuss the details of the auction. We know the bidding started at $77 million and ended at $88 million. But what happened along the way couldn't be divulged, thanks to a gag order imposed by the judge, after those two champions of the First Ammendent, Katz and Lenfest, moved to close the auction.

Katz told the media he was "terribly sorry" about the very public ownership feud that began last fall in Philadelphia Common Pleas Court, with the lawsuit to reinstate Marimow, and ended in Delaware Chancery Court, with today's court-ordered auction.

Katz said the court battles and public feuding had taken a toll on the reputation of the newspaper, which has lost than 50,000 Sunday subscribers in the past year. The Inky ownership battle also put on a damper on the morale of employees already angry about surrendering $20 million in contract givebacks.

Today's big winner, however, was Bill Marimow, whose contract was supposed to expire at the end of April, but was extended by the courts until today's auction.

Asked if the new owners would be signing a new contract with Marimow, Lenfest replied, "I don't think Bill needs a contract with us."

Translation: Bill Marimow, editor for life.

Katz and Lenfest announced they will have equal shares and both be in charge of the new parent company that will own the two newspapers. But, Lenfest said, they would "have other investors come in." He did not specify who the new investors would be. But presumably, they too would come aboard without having any ethical conflicts.

Katz and Lenfest declined to discuss any further personnel moves, such as the expected departure of Norcross's daughter, Lexie, who was director of digital operations overseeing philly.com.

The only thing Lenfest would say about the website was, "We want to improve our digital content."

Whether that means posting more long Inky investigative stories on philly.com, and fewer stories about Kim Kardashian, Lenfest wouldn't say.

A reporter asked if the two new owners had taken on any extra debt to pay that winning bid of $88 million.

That question appeared to upset Katz, who stood up and shouted a hostile one word answer: "No."

On that happy note, the press conference was over.

The next stop on the victory tour for Katz and Lenfest was when they visited the grateful Inquirer newsroom, with their attorney, Richard A. Sprague, still in tow.

Katz still seemed dazed by the auction results.

"I just said to Gerry walking in, I would have bet anything that I would have been cashing this big check," Katz told reporters and editors.

Was that an admission by Katz that he had been baited by Norcross into overpaying for a couple of buggy-whip factories? In a newsroom full of professional inquisitors, nobody popped the question.

As they had said in their press conference, the winners reiterated that they had no plan for the future, no idea how to turn around the fortunes of the newspapers, other than to go out and hire the best publisher and CEO in the land.

"To be candid we've spent untold hours trying to figure out the bidding process," Katz told his subjects. "We've spent zero hours trying to figure out the management side."

When he left the auction, Norcross declined comment to reporters. A spokesman issued a statement wishing the new owners well, saying, "It is time to return the company's focus to journalism, and away from conflict among its owners."

That conflict had clearly upset Katz, who blamed Norcross for dragging Katz's longtime companion, Inquirer city editor Nancy Phillips, into the slugfest.

Last week, one award-winning Inky investigative reporter was overheard lamenting that he didn't know if he would have a job after today, if Norcross won the auction.

Now that Katz and Lenfest have won, the Inky's investigative reporters have a new lease on life. And maybe a new target over the bridge.

Because if Katz carries a grudge, look out, Mr. Norcross. Now, you're fair game.

Postscript: Jeff Blumenthal of the Philadelphia Business Journal has a scoop on the departure of George Loesch, a former Campbell Soup official who became senior vice president of sales and marketing for Interstate General Media, the parent company that owned the Inquirer, Daily News and philly.com.

Loesch left town but not before leveling a blast at the Inky's newsroom leadership and the arrogance that pervades the place. Loesch's memo, reprinted in its entirety in the Business Journal, is a classic screed.

An excerpt: "If our Inquirer product was a soup, it would have been taken off the store shelves," Loesch wrote. "As I've said, not enough chicken in the chicken noodle soup' and our readers told us that."