Group of investors may close deal on April 2 to purchase Philadelphia's two largest newspapers, group lead by cable TV mogul H.F. "Gerry" Lenfest has exclusive bid option; price expected to be less than US$70M
March 30, 2012
– Philadelphia's two largest newspapers could trade hands Monday for the fifth time in six years.
Several powerful local businessmen are trying to close a deal to buy The Philadelphia Inquirer and Philadelphia Daily News from New York hedge funds.
Cable TV mogul H.F. "Gerry" Lenfest, the group's chairman, told The Associated Press an announcement could come Monday.
His partners include powerful New Jersey Democrat George Norcross III and former New Jersey Nets owner Lewis Katz. The price is expected to be less than $70 million.
The group has an exclusive option to bid for Philadelphia Media Network, which also operates the Philly.com website and a weekly sports publication.
The sale comes as 45 people are closing out their careers at the company this week. They are the latest group taking buyouts or being laid off as the newspapers deal with industry-wide declines in advertising and circulation in the digital era. The cutbacks include 40 newsroom jobs.
And the new owners could seek more cuts sooner rather than later, according to a memo obtained by the Daily News.
According to a recent letter of intent obtained by the Daily News, the sale would include $200,000 to fund severance pay for an additional 35 people, and $500,000 to pay for the departure of senior managers. Some key officers would remain, the memo said. It's unclear if they include publisher Greg Osberg, who was criticized by newsroom employees for allegedly censoring stories about the sale.
The March 20 letter of intent puts the sale price at about $60 million, the Daily News reported.
That's a fraction of the company's $515 million purchase price in 2006, or even the $139 million creditors paid at a 2010 bankruptcy auction. The hedge-fund creditors include Alden Global Capital and Angelo Gordon.
Philadelphia business magnate Raymond Perelman bid against the creditors until the end.
He was denied the chance to mount a rival bid this year against the Lenfest group, and briefly joined them. But Perelman withdrew when he learned he wouldn't be the majority owner.
"I didn't want to be a minority (investor)," the 94-year-old philanthropist told the AP on Friday.
He is still hovering over the sale. He said he and a partner remain interested if the Lenfest deal doesn't go through.
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