Philadelphia’s Newspapers Are Almost Profitable Again
After years of declining revenues and weeks of bitter infighting among owners, one bit of good news emerged Tuesday about the the Philadelphia Inquirer and Daily News: The newspapers may be nearly profitable again.
That “cusp of profitability” had been rumored in the city’s media circles for several weeks. Philly Mag this month posed the question to Mark Block, spokesman for Interstate General Media, which owns the newspapers and Philly.com; he declined confirmation at that time, citing IGM’s status as a “privately held company.”
But confirmation of a sorts emerged Tuesday, as part of an explanation from Bill Ross, executive director of the Newspaper Guild, as to why the guild had publicized its bid to buy out one or all of IGM’s warring owners.
“They’re just about to turn the corner and become profitable,” Ross said of the newspapers. Guild members had already negotiated a profit-sharing program to begin in 2014, he said, and don’t want to see that money that could go to journalists instead spent on lawyer’s fees in the ownership battle. “We’d like to have this dispute settled.”
Profitability, if it occurs, would be a stunning development for a newspaper group that has been through multiple ownership changes and steady layoffs over the last decade, even entering a bankruptcy in 2009 that temporarily placed ownership of Philadelphia’s newspapers in the hands of a New York-based hedge fund, which in turn sold the operation to the current, rich-but-contrary group of local owners. Ross said that in order to help the papers right their finances, the company’s 11 unions together made $28 million in givebacks, with $6 million coming from guild members.
A further insight into the company’s health should emerge later this week: The Alliance for Audited Media will release circulation figures for most of the country’s largest newspapers, including the combined circulation of the Inquirer and Daily News. While Philly circulation has declined steadily in recent years, April’s numbers hinted at a possible turnaround: This week’s numbers should show if that spike was an isolated outlier, or the beginning of an actual growth trend.
On Tuesday night, Ross spoke with Philly Mag by phone and answered several questions about the guild’s attempt to broker peace—or buy it—in the battle between the current owners.
“We had discussions over this weekend, Friday, Saturday and Sunday,” he said, speaking first to the majority ownership group led by George Norcross, then the minority group featuring Lewis Katz and Gerry Lenfest. “It was a good discussion, but both sides at the time indicated that they did not want to sell.”
Daniel Fee, a spokesman for IGM’s majority ownership group, confirmed the talks, and said that group “applauded” the guild’s efforts to bring peace. But, he added: “The majority owners neither wanted nor began this litigation. Their mission was and is to make this a successful company and provide the type of quality journalism that will make every employee proud and that our community deserves.”
Ross declined to name the other potential new owners the guild would bring to the table. “They will be named if one of the groups decides they want to sell,” he said. Ross did say, however, that the union itself might be willing to buy into ownership. He declined to specify how much the guild might pay to do so.
“The guild would contemplate using guild assets if approved by the guild executive board to make an investment of such,” he said.
In a memo announcing the guild’s effort to buy out one of the warring ownership groups, Ross said the ongoing battle—triggered by the firing of Inquirer editor Bill Marimow—was compromising the credibility of the newspapers. Tuesday night, he added that guild members are also worried about the money being spent on litigation.
“ Anytime there’s 16 lawyers in the courtroom, that’s a lot of money,” Ross said.
“We’ve been neutral, we remain neutral, but we’re trying to broker a deal to get things done,” he added. “I think these are very smart businessmen that have a tremendous asset. They need to to resolve their differences and move on.”