October 25, 2013

H.F. “Gerry” Lenfest didn’t look happy to be sitting in a Philadelphia courtroom on Tuesday morning. The 83-year-old Lenfest is something of a Philadelphia pillar, a businessman who made a mint in the cable business with his firm Lenfest Communications, then proceeded to share it. He sold the property in 2000, taking away $1.2 billion. Since then, Lenfest and his foundation have given away about $1 billion to a wide range of causes — disadvantaged youth, the arts, Columbia University — as part of a plan to dispense with his fortune.

Think of the Philadelphia Inquirer as just another of Lenfest’s causes. He threw in with the team of businessmen, and outsize personalities, who purchased the Inquirer (along with the Philadelphia Daily News and Philly.com) in April 2012 for $55 million. At the time of the purchase, Lenfest told the Inquirer he’d joined the ownership team not “for an investment but for a public purpose.” His goal, he said, was “to place the newspaper back in local hands.”

A lot of local hands, as it turned out. The group that bought the Inquirer and other properties (PMN) includes Philadelphia mogul Lewis Katz and South New Jersey political force George Norcross, among others.

Ownership-by-group is always a perilous undertaking, as recent events surrounding the Inquirer attest. Here’s a rundown:

*On Oct. 7, the Inquirer’s top editor, Bill Marimow, was fired by the paper’s publisher, Robert J. Hall — an event that prompted a great deal of media attention. Marimow, a two-time Pulitzer Prize winner who’d served as the paper’s editorial boss from 2006 to 2010, resisted the dismissal, according to accounts of the day’s turmoil. Leaked documents explained how Hall had attempted to case-build against Marimow, citing his “recalcitrance,” the paper’s spotty coverage of New Jersey, among other alleged failings. Following Tuesday’s court hearing, Bill Chadwick, Marimow’s personal attorney, declared that his opponents had “chosen to smear, or attempt to smear, Bill Marimow.”

*On Oct. 10, Katz and Lenfest filed suit in the Philadelphia Court of Common Pleas seeking Marimow’s reinstatement as editor. The suit alleged that Hall had acted outside of owner’s operating agreement by firing Marimow without consulting one of the two members — Katz — of the company’s “management committee.” It also suggested that Hall didn’t have the authority to effect such a big decision in the first place: “There has never been mutual agreement to further renew his employment contract beyond August 31, 2013,” reads the suit.

*On Oct. 17, Norcross countersued, arguing that Katz had interfered with editorial decisions in violation of the owners’ agreement.

How did Lenfest get involved in this mess? He explained all that to the Erik Wemple Blog as he awaited the conclusion of a closed-door court session Tuesday morning in Philadelphia and in another conversation on Thursday.

Lenfest says it was a “letter” to the New York Times that prompted his accession to the ownership group. That’s apparently a reference to this Op-Ed by author and Philadelphia savant Buzz Bissinger, a former reporter for the Inquirer and author of “A Prayer for the City,” about the mayoralty of Ed Rendell. Around that time, Rendell himself — also a former Pennsylvania governor — was putting together a bid that included Katz, a regional parking magnate and a former owner of the New Jersey Nets, as well as Norcross, whom Bissinger described this way: “[A] Democratic kingpin who has basically owned South Jersey politics for years and yet is so thin-skinned that he has complained to reporters who called him a politico.” Way too many conflicts of interest in that group, argued Bissinger: “The newspapers will become their personal Gutenberg press, which effectively means that the one city in the country that needs a newspaper the most will not have one.”

“Bissinger was the catalyst for Gerry,” said Rendell today to the Erik Wemple Blog. Given how many reporters and commentators were hammering his prospective ownership group, Rendell and Katz “decided we needed somebody above reproach with no political ax to grind,” says Rendell. “Gerry is viewed as a saint.” Rendell pulled out of the group he was organizing: “I knew they were wrong,” he says, referring to critics. “But I just didn’t want the aggravation,” continues Rendell, who now works as an analyst for NBC News, works at a law firm, serves on “four or five” corporate boards, advises “three or four” companies, teaches at the University of Pennsylvania, is a Brookings Fellow, does a post-game TV show on the Philadelphia Eagles, serves as co-chair for three nonprofit organizations and writes a sports column for the Philadelphia Daily News.

So Lenfest jumped into the bidding for the Philadelphia news properties, over the objections of his wife, Marguerite Lenfest. “My wife was totally opposed to it,” says Gerry Lenfest. “At my stage of life, I should be retired.” The ownership agreement for the Philadelphia news properties codified the Lenfest family’s misgivings about the deal. An “out” clause stated that one year from the April 2012 purchase, Lenfest could sell back his stake to three other owners.

Having that parachute, says Lenfest now, provided him a degree of comfort as he signed onto what any onlooker surely knew was an unruly assortment of moguls. “The reason I got in was I knew I had the option to get out and I did it as a favor to Rendell, who I think has been a great mayor and a great governor,” says Lenfest.

The date by which Lenfest had to exercise his option to get out of the ownership group — this past April 23, he says — has come and gone. In anticipation of it, Lenfest says, “I agonized for a while because, you know, it’s not a situation you’re in to make money.” Agony notwithstanding, Lenfest sounds at peace with staying the course. “I went in to do my part and have the succession of the newspaper in the right hands because it’s so important for the community,” he says. The decision could well cost Lenfest a good chunk of the $10 million that pumped into the sale to begin with. Not only are the papers and Philly.com regional news properties — with all the attendant financial problems — but this legal ruckus doesn’t exactly buttress their market value. “That’s always possible, correct,” says Lenfest of the prospect of losing his money. “It’s a risk that I decided to take,” he says.

Says Rendell: “Gerry needs his $10 million back about the way you and me need $500.”

Lenfest’s decision to stay put is doubtless connected to the troubles that Marimow was experiencing with Hall — not to mention Norcross. As the New York Times’s David Carr has reported, the South Jersey big shot inserted himself in all manner of operational matters, including the vending machines, and research commissioned by Norcross was used to push Marimow to downsize the paper’s opinion offerings. “Yeah, I thought [The Inquirer] was in jeopardy — the way it was operated under the control of Norcross,” said Lenfest, before catching himself: “That’s what I shouldn’t have said.” Norcross has denied allegations of editorial meddling. When we rang up Norcross’s cell-phone number today, a man answered. After I explained who I was, the man transferred the call to an assistant, who explained, “I’m not able to reach him at this time.”

Whatever meddling Marimow faced “was only part of it,” says Lenfest, who declined to identify other aspects of the situation, citing the litigation. For his part, Marimow refuses to get into the specifics of the dispute, though he did say of Lenfest, “He is a great citizen, the most generous philanthropist in the history of this region.”

And this philanthropist dislikes civil litigation. Over 26 years in the cable business, he tried to avoid lawsuits and filed only two of them, he says. “But sometimes there’s no other choice, as in this instance.”

Erik Wemple writes the Erik Wemple blog, where he reports and opines on media organizations of all sorts.