Inquirer Ownership Battle: “Darling … Eliminate the Daily News

As warring co-owners go to court Monday to argue about dissolving their company, a new email leak provides an insider’s view of the mess at the Inquirer, Daily News and philly.com.

Lewis Katz (center) walks to court in November. Photo | AP / Matt Rourke.

Lewis Katz (center) walks to court in November. Photo | AP / Matt Rourke.

According to an email leaked to Philadelphia magazine, Nancy Phillips, as her long-time companion Lewis Katz was contemplating purchasing a controlling interest in the city’s biggest media company, made sweeping recommendations about strategies for turning around the Inquirer, Daily News and Philly.com, including specific executive firings and the possible elimination of the Daily News.

“Darling,” the March 17, 2012 email, from Phillips to Katz, begins.


“Company needs a new publisher,” she writes.

“Paper needs a new editor.

“Philly.com needs a new leader.

Daily News has to be seriously evaluated with a view toward possible elimination or curtailment as in a move to the website with pared down staff and a paper product one day a week if at all.”

At the time, Phillips worked in the newsroom of the Inquirer as a reporter. And in roughly two weeks, George Norcross III would close a deal with Katz, her boyfriend, to acquire her workplace. In this sense, Phillips’s letter seems part business advice, a “honey do” list, and the fantasy of any working stiff made manifest.

In 10 paragraphs, Phillips advised Katz to fire or demote and replace her boss, editor Stan Wischnowski (for him, she advises, there is a “role… in this company” as he is “good, honorable and hard-working.”); publisher Greg Osberg; Philly.com chief Wendy Warren; and the COO, the CFO, and the head of the advertising department. She also alerted Katz to Mark Block, “the lovely PR guy,” because she’d just noticed he held a VP title and probably made too much dough. “Feels like a waste of money to me,” she wrote.

After Philadelphia contacted Phillips for an interview, Lewis Katz’s spokesman sent a statement that began: “First and foremost, this email has been altered and is not in its original form.”

I contacted Katz’s spokesman, Jay Devine, to inquire about any specific alterations between the original email and the one received by Philadelphia. He declined to cite any specific example of discrepancies between the two. I had, originally, cut and pasted the “Phillips” email into a separate email for Devine. But after receiving this statement, I hand-delivered a hard copy of the email. The next day, Devine sent over a revised statement, which no longer included any assertion that the email had been altered.

“This email is a private, confidential communication between two people using their personal email accounts. It was written at a time when the potential owners were weighing whether to invest in the company and contains a candid, dispassionate assessment of certain aspects of the company’s operations. It was never intended to be disseminated to others or made public, as that would have been hurtful to several people. It is deplorable that others have now made it public.”

The dispute between warring ownership factions—with Katz the main player on one side, and democratic power broker and insurance executive George Norcross III, his chief opponent, on the other—has included days of court testimony and a small pile of leaked emails.

This new leak provides a window into the odd shape of the new media company’s ownership structure, which included a reporter suddenly elevated into a position of first lady to the co-owner.

Phillips is a highly respected reporter, logging 20 years of blue-collar effort. She obtained a confession in the infamous murder of rabbi Fred Neulander’s wife. She is also winning plaudits in her new role as city editor, working late hours and peppering her charges with emails congratulating them on their good work. In short, she’s a good boss. And while, through Katz, a billionaire, she has access to the resources to be anywhere she chooses, she chooses to be in a big-city newsroom.

Looking back at this now nearly two-year-old email, some of what she called for came to pass: Most notably, Wischnowski is still in the company, but was replaced as editor by Bill Marimow, who mentored Phillips early in her career. But the most charged portion of this email, from the perspective of the average citizen, involves her suggestion that the Daily News might need to be closed entirely or shifted online with a one day per week print product. The Daily News has long been targeted for elimination, dating back to the ’90s, but remains open. So clearly, Phillips’s suggestion never gained terminal momentum. But it’s worth wondering if the revelation of Phillips’s take, even if it is a couple of years old, will cause support for Katz in the current ownership struggle to wane. If Norcross comes to be seen as the guy who would keep the Daily News open, and Katz as the guy who would close it, might that cause some groundswell of support to emerge for the oft-criticized Norcross?

I asked Devine, by email, if Katz had any intention of closing the Daily News, to which he replied: “There is nothing new at the Daily News and it will continue to operate.”

The new owners have been at odds almost since the moment the company formed. But the dispute went public over the firing of Inquirer editor Bill Marimow. A judge subsequently ordered Marimow reinstated but the papers remain in an untenable position: guided by an operating agreement in which Katz and Norcross, as co-managers, must agree on every major business decision yet no longer seem able to get along.

At the moment, the two sides are busy filing legal paperwork. Most recently, Katz petitioned the court to order that the entire business be made subject to a public auction. On Friday, Judge Patricia McInerney, ordered attorneys from both sides to appear in court at 10 a.m. today, to explain why she should not dissolve their ownership and approve a public auction. McInerney had earlier ruled in Katz’s favor to reinstate Marimow.

This latest order means Norcross’s attorneys must have spent a long weekend preparing arguments as to why a public auction should not be allowed. They have argued earlier, on behalf of Norcross, that the media company should be subject to a closed auction, restricted to bidding from the existing pool of co-owners.

The dispute has turned personal and while both sides have vowed to bid to retain the papers, Katz’s call for a public auction seems an attempt, on his part, to make it less likely his rival, Norcross, can win them.

Norcross’s attorneys have also argued that a third-party bidder might not be committed to maintaining the operations of all three properties, the Inquirer, Daily News and philly.com.

They might try to use the Phillips email to suggest Katz himself is not committed to all three properties.

Longtime Daily News columnist Stu Bykofsky says the email doesn’t concern him: “I am surprised at Nancy’s analysis,” he says. “I respect her… but I think it’s wrong-headed. I think it reflects the always existing, shall we say, ‘tension’ between the two newsrooms. It’s no secret that the Daily News has a deficit of respect from the Inquirer and it’s a burden that we’ve managed to live with and hopefully will continue to live with.”

Bykofsky also relates a conversation he had with Katz, directly, about a year after the current ownership group had taken over. Katz was standing in the Daily News newsroom with Inquirer editor Bill Marimow, when the new co-owner told both men he had begun reading the Daily News regularly. “I like it better than the Inquirer,” he said, and added that the cost of publishing the Daily News is actually very low.

The upshot, of course, is that Katz, like Bykofsky, might have read Phillips’s March 2012 assessment and found it, simply, wrong.

Follow @SteveVolk on Twitter.

Be respectful of our online community and contribute to an engaging conversation. We reserve the right to ban impersonators and remove comments that contain personal attacks, threats, or profanity, or are flat-out offensive. By posting here, you are permitting Philadelphia magazine and Metro Corp. to edit and republish your comment in all media.

  • Lafollette

    It would make more sense to shutter the Inquirer.

    • Bob Frump

      It make more sense to shutter neither, but this is not a big issue anyway. The big issue is: How did a private email get leaked to Philly.mag. Answer? Norcross campaign.

  • Earl J

    Stu Bykofsky is a neanderthal (e.g. anti-bikes). I would have spoken with someone who already does not have one foot out the door.

    • Dave Lieber

      Stu is an amazing columnist who works hard and is pretty damn smart. So there.

  • DavidG

    Why not print or include the entire email, Steve?

  • franklin dogood

    Steve, there’s no denying you’re a good writer and reporter. But I think, like a growing number of people out there you are succumbing to leaks and spins of the vicious New Jersey smear politics being applied to The Inquirer these days. Talk to investigative reporter Alan Guenther about how he and his father were smeared after he did a three part series on George Norcross or activist and former state senator Alene Ammond. South Jersey political boss George Norcross 3d is known to be a past master at “destroying” opponents. He now seems to be skillfully applying machine politics techniques to Inquirer/Daily News internal politics. I worked with Nancy Phillips for close to 30 years. She has always been one of the toughest and smartest journalists I’ve ever met. She always had exacting standards for herself and those around her. I was never exposed to any of these airhead romance novel depictions being smeared all over her these days. I came to learn of Katz and her relationship fairly late in the game. I scrutinized this relationship carefully and found no conflicts. Phillips was the type of reporter who fearlessly interviewed Camden’s biggest drug kingpins at his lair in Camden and then interviewed numerous lesser dealers in jail. This was after that well-known a murderer confession to her in the case of the Cherry Hill rabbi’s wife. Her blunt reporting went after powerbrokers including George Norcross. Once again, I repeat, she is not the bon bon eating bubblehead that your headline depicts. The closest thing to a true picture of her emerged in the 14th paragraph of your story that began: “Phillips is a highly respected reporter, logging 20 years of blue-collar effort…..”
    Her recent investigative piece with Craig McCoy which helped reform Philadelphia courts verifies this.
    She is blunt and plain-spoken and sometimes her bluntness can be impolitic, but she is a quick study whose clarity of vision quickly brings her down from careless offhand expressions like the Daily News comment. I don’t know about that comment other than that those close to her said the statement may have been taken out of context. Anyone who read the Daily News Pulitzer Prize winning police probe knows how high quality the Daily News is. I doubt that Katz is planning to get rid of it, just as I don’t think he is planning to get rid of the Inquirer. I have never heard Nancy advocate for a reductioin in any kind of journalism put out by PNI. Her goal, like Marimow’s and Katz’ has been to illuminate the community with as much excellent journalism as possible. Both she and Katz — who himself was an investigative reporter for Drew Pearson — love journalism and, I’m sure, would like the Inquirer and Daily News to continue to live up to those standards, even with austerity cuts and hi-tech updates. Katz’ stance on the Daily News was probably best expressed by the vignette quoted in your article, which he made while standing with Marimow. I don’t expect my statement here to have much credence. But I hate to walk by a situation where someone is down and being kicked without saying something. Phillips has become another victim of George Norcross’ despotic propaganda steamroller. Though she and Katz are disinclined to research and leak Norcross’ personal life, don’t be misled by Norcross’ crude approach to muscle-flexing.

    • Bob Frump

      I’d sure like to see a reply from the author here.

    • Bob Frump

      frumped.org

    • Bob Frump

      “Why does the world need Generalists now, more than ever? Because beat reporters, with their urgent need to keep a steady supply of copy coming, sometimes get too cozy with their sources, or simply lose sight of the forest for the trees.” This is Mr. Volk talking about reporting. A shame he does not follow his own stated path. He’s caught up in the Norcross slime machine now, and a part of the misdirection that has digitally assassinated Phillips and Marimow. It is a deft bit of negative public relations on Norcorss part, but it can be executed only where there are hack journalists who do not question whether they are being used and who are willing to go for the salacious “scoop” over the meaningful, contextual story. I challenge the author to provide that — to deconstruct how the Norcross folks have turned their aggression against good journalism into a story about the supposed shortcomings of two excellent journalists.

  • Bob Frump