Revenge Of The Norcrosses

Jimmy Kempski/Photo: Thomas Carroll

By Ralph Cipriano
for Bigtrial.net

The big black billboard on the Walt Whitman Bridge promotes the new sportswriter for PhillyVoice.com: "All Birds. No Bull. With Jimmy Kempski."

That's the same Jimmy Kempski who used to be an Eagles blogger for philly.com. He jumped ship to join the rival media startup brought to you by George E. Norcross III and his daughter Lexie.

Just seven months after they lost the court-ordered auction of Interstate General Media [IGM] -- the parent company that owns The Philadelphia Inquirer, Daily News and philly.com -- the Norcrosses are back on the local media stage playing with house money.

Norcross, the Democratic boss of South Jersey, and two business partners, William P. Hankowsky and Joseph E. Buckelew, had invested a total of $35 million in IGM. The Norcross ownership faction walked away from the May 27th auction with $41.7 million after expenses; a net profit of $6.7 million. No wonder the ads for PhillyVoice.com brag that the new venture is a "well-funded media startup serving the Philadelphia and South Jersey region."

It's a stark contrast between media rivals. Over at PhillyVoice.com, George's daughter Lexie, the new managing director, is busy hiring. But at rival IGM,  owned by Norcross's former business partner, H.F. "Gerry" Lenfest, they're laying off 21 senior employees in a new round of buyouts that's the subject of a grievance filed by the Newspaper Guild.

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The Man In the Mirror

By Ralph Cipriano
for Bigtrial.net

Sometimes you can conduct an exhaustive nationwide search for a talented top executive and never realize that the perfect candidate is right under your nose.

Or in the case of H.F. "Gerry" Lenfest, that ideal candidate is staring back at you in the mirror.

After Lenfest and the late Lew Katz won the May 27th auction to buy the Inquirer, Daily News and philly.com for the inflated price of $88 million, Katz introduced Lenfest as interim publisher of the Inquirer. And then Lenfest announced that his first order of business was to find a new publisher.

Lenfest was quoted in the Inquirer as telling employees that he already had identified five potential candidates and that he expected the hiring process to take several months. But it didn't take that long.

In the interim, for the past couple months, Lenfest's name has appeared at the top of the Inky masthead alongside the title of interim publisher. Last Tuesday, "interim" was dropped from the title and Lenfest simply became publisher.

There was no public announcement, no installation ceremony. No smoke signals emanating from 8th and Market. Just the dropping of one word, interim, from the masthead. Talk about anticlimactic.

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Meet The New Boss

By Ralph Cipriano

Same as the old boss

for Bigtrial.net

On Thursday June 12th, the new owner of The Philadelphia Inquirer, H.F. "Gerry" Lenfest, was still on vacation in Europe. Meanwhile, back in Philadelphia, Brian Tierney was convening a meeting in the office of former Inquirer Publisher Bob Hall.

For an hour, Tierney questioned four top officials from Philly.com about a dip in numbers regarding website traffic.

The officials explained that two years ago in a re-design, Philly.com had eliminated some old gimmicks used to inflate web traffic. Gimmicks that use to fly back when Tierney was publisher. Such as counting each photo in a 20-page photo gallery as separate page views. And counting different pages of the same story as different page views.

But Tierney wasn't interested in hearing excuses. In a demeanor described by people in the room as "bullying" and "domineering," Tierney made it clear to the folks from Philly.com that he was only interested in hearing how they were going to raise those numbers.

"It was just frustrating," said Matt Romanoski, Philly.com's executive producer for sports. "Right off the bat, he [Tierney] almost sounded like he was preparing, like he seized on something that he could fire us for."

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Tears and Fear At The Inky

By Ralph Cipriano
for Bigtrial.net

The new owner of The Philadelphia Inquirer, H.F. "Gerry" Lenfest, wasn't back yet from his vacation in Vienna and Berlin.

While Lenfest was away, leaders of the Newspaper Guild of Greater Philadelphia, which represents approximately 500 of the newspaper's 1,800 employees, were trying to talk Drew Katz, son of the late Lewis Katz, out of his announced intention of selling his father's $16 million stake in the company to Lenfest.

Meanwhile, in the absence of leadership, Brian Tierney, Lenfest's newly appointed sales consultant, was holed up in former Publisher Bob Hall's office, and reportedly throwing his weight around like he was running the place.

"I saw more people crying yesterday," said Bill Ross, executive director of the Newspaper Guild, after he toured the newspaper.

According to Ross, three top executives at the newspaper quit yesterday because they couldn't deal with Tierney, or his lieutenant, Mark Frisby.

At the Inky, sold last month at a court-ordered auction for $88 million, they're running Associated Press and Washington Post stories on the front page. While inside the newspaper offices at 8th and Market, it's panic and uncertainty over what will happen next.

The Partnership That Didn't Last Twenty Minutes

Auction winners Gerry Lenfest and Lewis Katz

By Ralph Cipriano
for Bigtrial.net

In the moments after Lewis Katz and H.F. "Gerry" Lenfest won the May 27th auction to buy The Philadelphia Inquirer for $88 million, Katz told Lenfest he wanted his son, Drew, to be a partner in the venture.

According to a source, Lenfest's reply, in the presence of Katz's son, was no way.

Less than 20 minutes in, the Katz-Lenfest partnership was already at loggerheads.

Four days later, when Lewis Katz was killed in a May 31st plane crash, relations between Drew Katz and Gerry Lenfest got worse.

Lenfest, according to the source, didn't pick up the phone to call Drew Katz to tell him he was sorry about his father's death. He didn't even call Drew Katz to discuss Lenfest's future plans for the company, plans that supposedly included Drew Katz taking over for his father.

Instead, on the eve of Lewis Katz's funeral, Gerry Lenfest left the country. He flew to Europe, from where he granted media interviews and issued edicts on what he was going to do with the Inky. Without discussing any of it with Drew Katz.

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Inky Sale Not Official Yet, But Interim Publisher Making Moves

By Ralph Cipriano
for Bigtrial.net

It's a tough time at The Philadelphia Inquirer.

First, new co-owner Lewis Katz, who just bought the paper in a court-ordered auction last week, died tragically in a plane crash Saturday night at an airport in Massachusetts.

Then, employees came in to work this morning and discovered that Brian Tierney, the guy who crashed the newspaper in bankruptcy court five years ago, was back at large in the building.

That's the same Brian Tierney who paid himself a $350,000 bonus while his two Philly newspapers were going under. The same Brian Tierney who as the former Inquirer CEO and publisher asked the bankruptcy court to dismiss a $50 million payment due the pension fund of the Newspaper Guild of Greater Philadelphia. [The Guild subsequently collected $170,000 on the debt of $50 million, while lawyers in the bankruptcy collected some $40 million.] The same Brian Tierney who was brought back as a sales consultant last year, collected $87,500 in salary over four months, and in exchange, brought in exactly $0 in revenues.

Yep, with those sterling credentials it's hard to believe anybody would want to bring Tierney back to the city's paper of record, except for target practice. But the new surviving co-owner, 82-year-old H.F. "Gerry" Lenfest, announced this morning that one of his first personnel moves was to bring Tierney back as "an advisor to me focusing on advertising."

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."

On Eve of Inky Auction, Reporters Reading Tea Leaves

Lewis Katz and George E. Norcross III

By Ralph Cipriano
for Bigtrial.net

One night last week, Lewis Katz strolled through the newsroom of The Philadelphia Inquirer wearing a T-shirt and jeans, yellow-green neon sneakers and Dr. Dre Beats headphones.

OK, so he may dress casually for a media mogul. But, a witness said, he acted like a guy ready to buy the joint.

But wait, there's a persistent rumor sweeping the building that Katz may have split up with his longtime companion, Inquirer City Editor Nancy Phillips.

Uh-oh. Another reason to think that Katz may be headed on his way out the door.

With the auction of the city's paper of record a day away, reporters can't be blamed for sifting through every new fact and rumor as they try to handicap Tuesday's long-awaited showdown between principal feuding owners Lewis Katz and George E. Norcross III.

Judge Bans Media From Inky Auction

By Ralph Cipriano
for Bigtrial.net

A Delaware judge today banned the media from attending next Tuesday's auction of the parent company of the Philadelphia Inquirer, Philadelphia Daily News, and philly.com.

Vice Chancellor Donald F. Parsons Jr. of the Delaware Court of Chancery, which is overseeing the dissolution of the parent company -- Interstate General Media [IGM] -- granted the request for a closed auction from owners Lewis Katz and H.F. "Gerry" Lenfest.

A rival group of owners -- George E. Norcross III, William P. Hankowsky, and Joseph E. Buckelew -- had asked the vice chancellor for an open auction, as had the Newspaper Guild of Greater Philadelphia. The Guild was a party to the litigation over the dissolution of the parent company, but couldn't come up with an investor willing to spend $77 million, which will be the auction's opening bid.

Even if the judge closed the auction to the media, the Newspaper Guild had sought access to the auction because the Guild was a party to the litigation, and has some 500 jobs on the line. Vice Chancellor Parsons, however, also banned the Newspaper Guild from showing up at the 9:30 a.m. May 27 auction at the law offices of Dechert LLP, at 2929 Arch Street in Philadelphia.

Will Inquirer's "English-Style Auction" Be Closed To The Media?

By Ralph Cipriano
for Bigtrial.net

All the details are set regarding the auction of Interstate General Media [IGM], the parent company of The Philadelphia Inquirer, Philadelphia Daily News and philly.com.

The "English-style auction" will begin at 9:30 a.m. May 27 at the law offices of Dechert LLP, at 2929 Arch Street in Philadelphia, according to documents filed in Delaware Chancery Court.

Trustee William B. Chandler III, a former chancellor of the Delaware Chancery Court, will officiate. The two warring ownership groups will be seated in separate rooms so that "each Group can consult with each other regarding bidding outside of the presence of the other Group."

The first bid will be made by General American Holdings Group, the majority ownership faction that includes owners George E. Norcross III, William P. Hankowsky, and Joseph E. Buckelew. Norcross has previously told the chancery court that the opening bid will be $77 million, an amount subsequently agreed to by the court. Then, the Intertrust Group comprised of minority owners Lewis Katz and H.F. "Gerry" Lenfest will have exactly 10 minutes to submit another incremental bid in writing that must be "exactly $1,000,000 higher than the prior bid."

It could all be over in 10 minutes if Katz and Lenfest don't bid $78 million. According to court documents, the bidding concludes when "either group fails to submit an Incremental Bid within the ten-minute time limit."

The only remaining question is whether the media will be allowed to sit in on the auction and report the results. Amazingly, the Katz-Lenfest faction wants the auction closed; they don't even want the amount of the winning bid to be divulged, according to a letter filed late Friday in Delaware Chancery Court by a lawyer for the General American group.

In the letter, the Norcross faction asks for "an open and transparent process."

Star Witness In State Supreme Court Justice's "False Light" Suit Against The Philadelphia Inquirer: Inky Publisher Bob Hall

Inquirer Publisher Robert J. Hall

By Ralph Cipriano
for Bigtrial.net

State Supreme Court Justice Seamus P. McCaffery and his wife, Lise Rapaport, have filed a lawsuit against The Philadelphia Inquirer, claiming that a series of articles on referral fees paid to Rapaport portrayed the justice and his wife in a false light, and also defamed them.

The lawsuit, filed Tuesday in Philadelphia Common Pleas Court by Dion G. Rassias of The Beasley Firm, the sponsor of this blog, is unusual because it quotes as the star witness against the defendants Robert J. "Bob" Hall, publisher of the Inquirer.

The lawsuit pans the first article in question, published on on March 4, 2013, as "heinous, untrue and savage in its portrayal of the Plaintiffs." The article was so bad," Rassias writes, "that even the publisher of the newspaper, Robert J. Hall, had to admit under oath that he was so appalled by the story, and the lengths The Inquirer had gone to in order to 'make Justice McCaffery and his wife look bad,' he called [Inquirer Editor William K.] Marimow ... and expressed deep concern over the placement of the article."

A "Vanity Asset" Heads To The Auction Block

By Ralph Cipriano
for Bigtrial.net

The Philadelphia Inquirer is a "vanity asset" that should be disposed of at a private "English-style" auction.

That auction should feature "open, ascending serial bidding" restricted to the two current feuding ownership factions, who presumably between servings of tea and crumpets, would have the option to buy each other out.

With an English-style auction restricted to the current owners, continuity and confidentially would be preserved, and the struggling newspaper would have a chance to succeed economically, according to the ownership faction led by South Jersey Democratic boss George Norcross.

The rival ownership faction of  Lewis Katz and H.F. "Gerry" Lenfest disagrees. They seek court appointment of a receiver, who would oversee a public auction with sealed bids. After all the envelopes are opened, the city's paper of record would be sold to highest qualified bidder. The primary goal of the Katz-Lenfest faction would be to obtain the highest sales price. Katz and Lenfest say the limited English-style auction proposed by Norcross would "artificially restrict" that sales price.

The two alternative auction proposals were outlined in court papers filed today in the Delaware Court of Chancery, where Vice Chancellor Donald F. Parsons Jr. will oversee the sale of Interstate General Media [IGM], owner of the Inquirer, the Philadelphia Daily News, and the philly.com website. Predictably, the feuding ownership factions can't agree on anything.

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Philly Judge Ships Inky Dispute To Delaware

By Ralph Cipriano
for Bigtrial.net

Philadelphia Common Pleas Court Judge Patricia McInerney has declined a petition to preside over the dissolution of Interstate General Media [IGM], owners of The Philadelphia Inquirer, the Philadelphia Daily News and philly.com.

In a one-paragraph order entered into the record Friday afternoon, Judge McInerney wrote, "It hereby is ordered and decreed that this court declines to exercise jurisdiction" over the petition for dissolution sought by IGM minority owners Lewis Katz and H.F. "Gerry" Lenfest.

Although it does business in Philadelphia, IGM was incorporated in Delaware. According to its governing agreement, the company is to be dissolved under Delaware corporate law. That means it will be up to Vice Chancellor Donald F. Parsons Jr. of the Delaware Court of Chancery to decide how to proceed with the dissolution of IGM under its feuding owners.

Friday's decision was a victory for a majority group of IGM owners that includes Jersey Democratic boss George Norcross, William P. Hankowsky and Joseph Buckelew. In Delaware, Vice Chancellor Parsons will now have to decide whether to order an open auction, as sought by Katz and Lenfest, or a private auction, as sought by Norcross, Hankowsky and Buckelew.

An open auction would be open to outside bidders; a private auction would be limited to the feuding owners.

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Judges In Two States Wrestle Over Fate Of Inky

By Ralph Cipriano
for Bigtrial.net

A Philadelphia Common Pleas Court judge has to decide whether she has  jurisdiction to preside over the dissolution of Interstate General Media [IGM], owners of The Philadelphia Inquirer, the Philadelphia Daily News, and philly.com.

IGM is a Delaware corporation doing business in Pennsylvania. The question is, which state's courts should preside over the dissolution of IGM, and the auctioning off of the two newspapers and website?

In a 16-page memorandum of law filed Jan. 16th, attorney Richard A. Sprague, writing on behalf of a minority ownership faction headed by Lewis Katz and H.F. "Gerry" Lenfest, states that the Delaware Courts do not have "exclusive jurisdiction over the dissolution of IGM."

The Delaware Court Of Chancery has stated that sister jurisdictions may "adequately address dissolution issues relating to Delaware companies," Sprague writes.

"IGM's sole business is the operation of Philadelphia newspapers and media, its principal place of business is Philadelphia, and all of its operations and assets are in Philadelphia," Sprague writes. "Dismissal is unwarranted in this case where the company is a local concern." Sprague asks Philadelphia Common Pleas Court Judge Patricia McInerney to take jurisdiction over the case, and appoint a trustee to "dissolve IGM."

However, in a 30-page opposing memorandum of law filed Jan. 22, attorney Robert C. Heim, writing on behalf of a faction of majority owners headed by George Norcross, states that the Sprague memorandum "is premised upon the deeply flawed assumption" that Judge McInerney "has jurisdiction to issue a judicial decree pursuant to Delaware law dissolving a Delaware limited liability company."

Heim warns of dire consequences if Judge McInerney decides she's in charge of the dissolution.

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Inky Lawyers Huddle With Judge As Auction Block Looms

Inky, Daily News And Philly.com Head For Auction Block

By Ralph Cipriano
for Bigtrial.net

Lawyers gathered in Philadelphia Common Pleas Court this morning to consider whether Judge Patricia McInerney has the jurisdiction to auction off the city's two daily newspapers.

Owner Lewis Katz started the current round of litigation by filing a motion in Philadelphia Common Pleas Court. Katz seeks to dissolve Interstate General Media [IGM], and publicly auction off the company's assets that include The Philadelphia Inquirer, the Philadelphia Daily News, as well as the philly.com website.

Rival owner George Norcross responded by filing a petition in the Court of Chancery in the State of Delaware to compel a private auction restricted to the company's five feuding owners.

Norcross filed his petition in Delaware, where IGM was incorporated, rather than in Philadelphia, where the company does business. The Norcross ownership faction has argued that if the judge allows a public auction, hedge funds may come in and bid up the price, increasing the likelihood that the new owners will be saddled with heavy debt.

Judge McInerney met behind closed doors with lawyers for a brief conference on what the judge described as "housekeeping matters." When they emerged from chambers, Judge McInerney gave Katz's legal team until Jan. 16th to file their brief; and the Norcross team until Jan. 22 to file their response.

The decision over whether the IGM dispute should be resolved in the Delaware or Pennsylvania courts, however, is a potentially tricky issue. There are several legal reasons why the war over the Inky could be transferred to the Delaware courts. Or, in a nightmare scenario, the dispute could be simultaneously contested in both the Pennsylvania and Delaware courts, if judges in both states decide they have jurisdiction.

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Feuding Inky Owners Seek Auction

By Ralph Cipriano
for Bigtrial.net

The new owners of The Philadelphia Inquirer are at it again, suing each other in the courts of two different states.

First, Lewis Katz, leader of a minority group of owners, filed a motion in Philadelphia Common Pleas Court, seeking to dissolve Interstate General Media [IGM], and publicly auction off the company that owns the Inquirer, Philadelphia Daily News and philly.com.

Then George Norcross III, leader of a majority group of owners, filed a petition in the Court of Chancery in the State of Delaware that would compel a private auction of the company that would be restricted to the current owners.

The war in two state courts was revealed by the Norcross side in a letter made public from owners Norcross and William P. Hankowsky to Katz. In the letter, dated Jan. 3, owners Norcross and Hankowsky accuse Katz of putting the survival of the city's only two daily newspapers at risk.

Norcross and Hankowsky wrote Katz that they had hoped to avoid going to Delaware's Chancery Court, "but your surprise decision to file a motion to dissolve the company risks not just the progress the company has made, but presents a real threat of another bankruptcy and additional job losses for our employees."

"It is clear from your actions," Norcross and Hankowsky wrote Katz, "that you are focused, and have been for many months, on creating a crisis in the company, risking the progress the company has made since its purchase and threatening the jobs of IGM employees."

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Newspaper Guild Complains About Meddling, Standing Ovation

By Ralph Cipriano
for Bigtrial.net

After a judge ordered his immediate reinstatement on Nov. 22nd, Philadelphia Inquirer Editor Bill Marimow made a triumphant return to the newsroom, where he was greeted by a standing ovation from staffers.

Now, the union that represents those staffers, the Newspaper Guild of Greater Philadelphia, is complaining that the standing ovation wasn't  a spontaneous event.

In a Dec. 7th email to Chris Bonanducci, vice president of human resources, Bill Ross, the Guild's executive director, wrote, "when Bill Marimow's return to the newsroom was announced, [Inquirer City Editor] Nancy Phillips went around the newsroom telling employees to give him a standing ovation."

"Some members were uncomfortable with this request, which of course seemed like an order when asked by the city editor," Ross wrote. "Others have asked about her credibility after she admitted concocting a cover story about Marimow's rehire during her testimony in the recent court case."

"As you might imagine, people are fearful for reprisal or punishment so I am not attaching any members names to this," Ross wrote, "but I thought you should know what is out there, while also trying to help avoid anyone feeling like they are working in a hostile environment."

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More Meddling In Inky Newsroom

Hands-On Inky Owner Lewis Katz

By Ralph Cipriano
for Bigtrial.net

At The Philadelphia Inquirer on Tuesday, owner Lewis Katz raised eyebrows by sitting in on a morning news meeting attended by at least 10 editors. Katz, according to two sources, discussed a story that ran in that morning's paper about the surprise resignation of Peter Luukko, president of Comcast-Spectacor, the company that owns the Philadelphia Flyers.

Owners don't usually attend news meetings. Katz, however, has asserted previously in court that he has an "open door" to visit the Inky newsroom whenever he wants.

And Katz doesn't have to stop by the newsroom to influence news coverage. Last week, an Inky obit writer was informed by a funeral director that Katz had personally Ok'd an obituary to run in the paper; the funeral director claimed that Katz was a "personal friend" of a relative of the deceased. The obituary was for the father of actress and Philadelphia native Kim Delaney. The obit writer, concerned about editorial interference, reported the incident to the Newspaper Guild.

Both incidents occurred at a newspaper where all six new owners, including Katz, made a public pledge not to meddle in editorial operations. The same owners who are busy suing each other over allegations of past meddling, by recently filing three appeal briefs in Superior Court over a period of nine days.

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How To Meddle In a Meddle-Proof Newsroom

By Ralph Cipriano
for Bigtrial.net

The new owners of The Philadelphia Inquirer have made a public pledge not to interfere in the editorial operations of the newspaper.

Last week, however, owners, editors, and publishers of the Inquirer were placed under oath in Courtroom 630 at City Hall, and asked to explain what that pledge really meant.

To editor Bill Marimow, it meant that although Publisher Bob Hall had basically accused him of being a racist and a sexist, there was no need to worry, because under the new regime, the two principal owners had to be in agreement to fire him.

To Nancy Phillips, the Inquirer city editor and girlfriend of owner Lewis Katz, the pledge was carefully constructed so that it didn't apply to important decisions -- like hiring the editor of the Inquirer-- because that was a business decision rather than an editorial decision.

To owner Lew Katz, that non-interference pledge didn't put a wall up around the newsroom; instead the pledge amounted to an open door. Katz explained on the witness stand that he had the right to show up in the newsroom whenever he wanted to. And when it came to hiring and firing any editor in the newsroom, Katz had a "blocking right."

Welcome to Courtroom 630, where the Inky's much-publicized non-interference pledge was revealed to be a license to meddle. And where we learned that two award-winning journalists conspired to spin a story to conceal that meddling.

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Judge Reinstates Inquirer Editor

By Ralph Cipriano
for Bigtrial.net

Philadelphia Common Pleas Court Judge Patricia McInerney today granted an injunction to immediately reinstate Bill Marimow as editor of the Inquirer.

Shortly before 5 p.m., Marimow returned to the newsroom on Market Street where he was fired Oct. 7 by Publisher Bob Hall. The editor was greeted by a standing ovation from staffers. He made no speeches, but walked around shaking hands and accepting congratulations.

Condolences may have been more appropriate. Marimow is returning to a hostile work environment at what may be the most dysfunctional newspaper in America. Just last week, the judge granted a separate injunction to reinstate Publisher Hall, so now he and Marimow can resume their daily wrestling over who's in control of the Inky newsroom.

Both Hall and Marimow are lame ducks. Hall was reinstated by the judge until Dec. 31; Marimow's contract expires April 30th.

So welcome back, Bill. The publisher who fired you last month is still here. He'll be watching your every move. So will George Norcross, who heads up the majority slate of owners, and who's already said that hiring you was the biggest mistake he ever made.

Have a nice day.

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