CBS Philly reports that minority owner Lewis Katz has pledged to pay at least $77 million to acquire the Inquirer and Daily News outright. The pledges emerged during testimony Tuesday as a Delaware judge tries to decide the process by which the papers will be sold.
Lewis Katz promises to match rival owner George Norcross’ $77-million minimum bid. Katz and co-owner Gerry Lenfest favor a public, open, sealed bid. Katz says that will drive up the price, rather than “bluffing, starting low and then raising bids.”
Norcross, who leads a majority owner group of three, wants a private auction limited to the current owners, and the Newspaper Guild, if deemed qualified, with ascending back and forth bidding.
Of course, that $77 million would represent an increase from the $55 million the owners jointly paid in 2012 for the newspapers and Philly.com. It does raise a question: Does anybody think the value of those properties has increased by $22 million in the last two years?
Maybe not. Newsworks reports suggest that Katz and Norcross might be overpaying:
However, John Gregory Chachas, an investment banker who testified on Tuesday, hinted that the company’s price might not attract wealthy third-party buyers, based on the company’s tremulous revenue figures.
While he noted that the overall media industry continues to experience a decline, the figures presented by the papers represent an “unheard-of decline.”
The Inquirer, though, reports that the union representing the papers’ journalists wants a piece of that action:
The Guild’s attorney said executive director Bill Ross will testify Wednesday that the Communications Workers of America national office is prepared to bid.
“Bill will testify that the Guild has multiple potential investors, including very wealthy individuals, in the Philadelphia area, and, while we are not at liberty to say their names, we can say that the Guild’s parent, the CWA, is prepared to make a separate bid,” attorney Lisa Lori said after the session in Delaware Chancery Court had adjourned for the day.
Lori said the financing would not come from the local union’s pension fund or through salary reductions.
The Daily News adds that the ownership battle is wounding the company:
George Loesch, IGM’s senior vice president of sales and marketing, testified that the company is struggling to retain digital salespeople and sell advertising due to the instability created by the ongoing ownership dispute.
“This company is in distress,” Loesch said. “It is at a breaking point. A serious breaking point.”
But Katz, sporting a snazzy blue pinstripe suit on the witness stand, said the company has “done reasonably well,” winning two Pulitzer Prizes in three years while regaining its financial footing.