Morale is busted, advertisers uncertain, and Philadelphia’s newspapers are edging closer to another bankruptcy, lawyers for the papers’ feuding owners said in documents filed with the Delaware court that will revolve the fracas.
Ralph Cipriano reports at BigTrial.net that the Inquirer’s feuding ownership factions have filed their proposals on how to dissolve their partnership and sell the paper—along with the Daily News and Philly.com—to a potentially new owner. The dire state of the newspapers was detailed in those documents. Cipriano quotes P. Clarkson Collins, a lawyer for the ownership faction led by George Norcross, who said the deadlock has delayed the hiring of new key personnel for the newspapers and website.
“The current management deadlock goes beyond selecting a new publisher and new editors for The Philadelphia Inquirer and philly.com,” Collins writes. “It extends to being unable to retain key employees and to attract able executives. It delays the implementation of the negotiated profit sharing agreement” with the newspaper’s unions. “Talented people do not want to endure a protracted management impasse and the uncertainty it engenders.”
“The same is true of key revenue sources like advertisers,” Collins writes. “Uncertain about advertising polices going forward, advertisers are reluctant to enter into renewal agreements and can easily decide to move to other outlets. The fact is that the company needs to act quickly to stem the loss of advertising revenue. Delay will make that extremely difficult.”
IGM "is not currently in bankruptcy with creditors knocking on its door but the current management deadlock puts it in immediate peril," Collins concludes.
As reported previously, Norcross's faction wants a "closed" auction restricted to the current ownership factions, while the group led by Gerry Lenfest and Lewis Katz want to open bidding to the public.
The Lenfest-Katz option would take 30 to 90 days after the court approved, giving potential bidders time to investigate the newspaper company's finances before offering a single, sealed bid. Norcross's option, meanwhile, might be finalized within two days of the judge's order.