Delaware court to handle Philly newspaper sale
- Article by: MARYCLAIRE DALE
- Associated Press
- February 10, 2014 - 8:30 PM
PHILADELPHIA — Feuding owners of Philadelphia's two largest newspapers must dissolve the company in Delaware, where they incorporated two years ago, a judge has ruled.
The ruling is a victory for majority owner George Norcross, a Democratic powerbroker who asked that Delaware courts oversee a private auction involving only the two warring factions.
Norcross has been locked in a court fight for control of The Philadelphia Inquirer, Philadelphia Daily News and the website Philly.com with rival owner Lewis Katz since October, after the wealthy entrepreneurs joined forces to buy the ailing media company from hedge fund owners in 2012.
Philadelphia Common Pleas Judge Patricia McInerney has handled previous court showdowns over their picks for publisher and top editor. She ruled Friday, however, that Interstate General Media should be dissolved in Delaware's Chancery Court.
Katz had sought an open auction in Philadelphia, arguing that the employees and newspapers are based there.
"We look forward to the opportunity to explain why any sale of IGM should be among its current owners as the agreement states," the Norcross group, which includes two other minority investors, said in a statement that boasted of the company's "remarkable turnaround" in less than two years.
The media company, purchased for $515 million in 2006, sold for about $55 million in 2012.
Katz and his lone ally among the investors, philanthropist Gerald H.F. Lenfest, called for an open auction to achieve the highest dollar for the company. "This process will allow Philadelphia newspapers and Philly.com to thrive once again," they said.
The local Newspaper Guild, which represents hundreds of editorial and advertising employees, also hopes to mount a bid with an unidentified partner. However, union officials said they have not been given access to company books to evaluate the finances.
Guild president Howard Gensler, a Daily News columnist, said the current owners demanded $28 million in givebacks from workers six months after the purchase, an amount equal to half of what they paid. The guild therefore wants an ownership share this time, he said.
"So far, it seems like their robust 'turnaround' was achieved by our salary givebacks," Gensler said Monday.
Workers do not want to see the next owner overpay and follow suit, he said.
"That trick only worked once. Nobody forced these rich guys to buy the papers the last time," Gensler said.
The company changed hands five times from 2006 to 2012. The Norcross-Katz stalemate spilled into public view over the October firing of Inquirer editor Bill Marimow, whom Katz supports. McInerney later returned him to the job, although his contract expires in April.
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