If the Philadelphia Inquirer were an auto maker, the deal offered by one of the warring factions in its ownership struggle might have some appeal. Today George E. Norcross III and William P. Hankowsky, two of the partners in the majority ownership of Interstate General Media (IGM), offered $29 million to Lewis Katz and H.F. “Gerry” Lenfest in return for their retirement from co-ownership of the newspaper plus two other properties (Philly.com and the Philadelphia Daily News).
As the statement from Norcross and Hankowsky makes clear, the offer would represent a 12 percent profit over 18 months, for struggling regional media properties, no less. What sane owner wouldn’t take that deal?
Perhaps Lenfest and Katz, that’s who.
The $29 million offer comes as an attempt to resolve ongoing litigation that erupted after the Oct. 7 dismissal of Bill Marimow as the top editor of the Philadelphia Inquirer. With six directors sharing an ownership stake, serving as editor is a complicated task, and Marimow’s departure prompted allegations of meddling from both factions — one consisting of Lenfest and Katz and the other of Norcross, Hankowsky and two others. Katz and Lenfest have sued for Marimow’s reinstatement, and Norcross has sued back, claiming that Katz has meddled in the operations of the Inquirer, in contravention of a thick ownership agreement that bound the partners not to intervene in “the editorial or journalistic policies and decisions of the Company.”
Lenfest, as discussed in this post, is a wealthy philanthropist who got into this deal not to make any money, but rather to safeguard the integrity of the Philadelphia Inquirer. It’s clear that he doesn’t consider such integrity compatible with Norcross’s ascension to a plenipotentiary position at the Philadelphia news properties. Earlier this year, Lenfest declined to exercise an out in his ownership stake because he felt the Inquirer was “in jeopardy — the way it was operated under the control of Norcross,” he told the Erik Wemple Blog.
Katz has already rejected the offer amid talk of having an outside manager to take over the company.
Here’s the release from the Norcross group:
FOR IMMEDIATE RELEASE:
October 30, 2013
PHILADELPHIA: Today, the majority owners of Interstate General Media (IGM), who together hold 58 percent of the company and represent four of six directors, announced they are offering to purchase the minority share of the company owned by Lewis Katz and Gerry Lenfest in order to end the current dispute between the groups and provide stability to the company.
The following is a statement from George E. Norcross, III and William P. Hankowsky, two of the majority owner group of IGM.
“We did not want or initiate the litigation that has created a sideshow that will ultimately waste hundreds of thousands, if not millions, of dollars in legal fees that could be used to further the strengthen and build the company. We are, however, prepared to end it by purchasing the minority share of the company owned by Messrs. Katz and Lenfest for immediate cash, with no strings attached.
We are offering to purchase their shares for $29 million, which represents a nearly 12 percent profit over their investment in just over 18 months, not a bad return this economic environment. We will wire the funds to their accounts within 24 hours of an agreement.
We will seek to have as our partners in this effort the newspaper Guild, which represents staff members at the Inquirer, Daily News and philly.com. We believe it is good for the company to have the interests of its leaders and professionals workers aligned. We are pleased that in their public comments, the Guild has recognized that our majority ownership group not only better understands the operations of the company, but that we have a clear path forward.
More than two-and-a-half years ago, when we first met to discuss purchasing the papers and philly.com — a group that did not at the time include Mr. Katz — we did so because we saw clearly troubled journalism properties of great value and importance to the community.
In 18 short months, we have reversed the direction of the company, taking it over when it was losing almost $50,000 a day, every day, to being on the path to profitability today. That turn-around is due in large part to the hard work and sacrifices of the employees of the company, investments in our infrastructure and a dramatically improved home delivery revenue. As we made clear when we purchased the company, we have always been in this for the long-haul.
As our employees know, when we purchased the company we undertook significant market research that showed not only do the three properties not materially compete with each other, they reinforce each other. Together, the Inquirer, the Daily News and philly.com reach an average of 1.95 million readers each week, more than double any other local media property. The papers and philly.com are the undisputed news leader in the area and one of the biggest journalism organizations in the country.
It is time to end this impasse and litigation and return our focus to continuing the remarkable turnaround of the Inquirer, Daily News, and philly.com. It is the right thing to do for the company, our readers, our workers, and the community.”