10 Burning Questions About the Inquirer‘s New Nonprofit Ownership

Who’s in charge? Why not sink that $20 million right into the papers? Is Gerry Lenfest going to be involved? Will it work? What does it all mean?

Gerry Lenfest enters Tuesday's ownership announcement at the National Constitution Center | Joel Mathis for Philly Mag.

Gerry Lenfest enters Tuesday’s ownership announcement at the National Constitution Center. Photo | Joel Mathis

Three themes emerged from Tuesday morning’s formal announcement that Philadelphia Media Network — owner of the Inquirer, Daily News, and Philly.com — is being placed under the ownership of a new non-profit institute.

First: The new ownership structure will halt the revolving-door ownership that has afflicted the company with five different ownership groups over the last decade or so. That, in turn, should provide stability for a news organization that has been mired in chaos and, at times, bankruptcy during that time.

“It is, I think, a perfect combination for the future of journalism in Philadelphia,” said Gerry Lenfest, who created the nonprofit — the Institute for Journalism in New Media (IJNM) — and “donated” the papers to it.

Second: The non-profit structure will make it easier for the papers to seek financial sustainability by attracting grant funding to help pay for their journalism.

And third: There’s still a lot of work to be done to figure out how to make large-scale journalism pay for itself in the 21st century. Today’s announcement doesn’t preclude the possibility that there could be layoffs at the papers later this year if advertising revenues continue to decline.

In the short term, PMN publisher Terry Egger said, the new ownership structure “doesn’t solve our problems.” Richard Fox, the Dilworth Paxson attorney who oversaw the arrangements, added: “This is not a short-term measure. It’s a long-term measure.”

So what does the new ownership structure do? We’ll try to answer the biggest questions raised by this situation based on public documents and discussions with various officials involved in the transaction, including Egger and Fox.

• So who is in charge?

It’s complicated. The new Institute for Journalism in New Media — which will be a subsidiary of the Philadelphia Foundation, but with its own board of managers — will own 99.9 percent of PMN’s stock. PMN’s board will own the remaining stock, which also happens to be the only voting shares; it will oversee the business and editorial decisions of the company.

• The PMN board is in charge of day-to-day operations, then, including picking the publisher. Who picks the PMN board?

Answer: The PMN board. It’s “self-perpetuating,” and will have a committee to recommend new members to replace outgoing members. A similar structure is in place for the IJNM board.

• What involvement or control does Gerry Lenfest, who’d owned PMN since 2014, retain under the new arrangement?

He’s on both the IJNM and PMN boards. But he no longer has any ownership of the newspapers.

• If the job of the PMN board is to run the papers, what’s the job of the IJNM board?

It has several missions. First, it’ll be a conduit for that aforementioned grant funding to the papers. Second, it’ll try to grow the $20 million endowment that Lenfest gave it. Third, it will spend the income from that endowment to make grants for reporting projects at PMN — and other news organizations — as well as on journalism education projects.

• Why not spend that $20 million directly on the newspapers?

Placing it in the endowment gives IJNM a chance to look for long-term solutions to the news industry’s problems. Giving directly to the paper, it was thought, would only patch over short-term issues instead of fixing problems.

• Wait. Didn’t the papers already receive grant funding to cover last year’s mayoral race? Why do they need an ownership change to attract more grants?

They did receive grant funding, but the process was complicated. Donors can’t get a tax break if they funnel grants to for-profit businesses like newspapers; some granting foundations refuse to give any funds to for-profit organizations. The new ownership widens the array of grant-receiving possibilities for the papers.

• Philly already has one grant-driven news organization, WHYY. Is the philanthropic pie big enough to support a relative newcomer?

We’ll see. Officials at the newspapers have their eyes on other news organizations — like the Washington Post and L.A. Times — which have received grant funding from national organizations like the Ford Foundation and the Gates Foundation to fund reporting projects. The papers won’t just be looking to local funders, in other words.

• Will expanded grant funding create conflicts of interest at the papers? After all, grant-makers will have agendas in making the grants,right?

PMN says it has editorial independence, and can reject any grant it believe infringes on that independence.

The paper’s journalists are less sure. They’re worried that newsroom staffing decisions will be based on where grant funding flows, rather than from independent judgments made by editors.

“This whole thing requires a lot of trust,” said Howard Gensler, the Daily News gossip columnist and president of the Newspaper Guild that represents journalists at PMN. “And journalists are not known for being trusting.”

• When will the transition to new ownership be finalized?

It already was, on December 28th. “We were just waiting for the right time to announce it,” Fox said.

• If newspapers are dying, why does all this matter?

The irony, Egger said, is that even though the traditional ad-driven business model is failing, PMN’s audience — largely thanks to traffic at Philly.com — is the largest it’s ever been.

“More people read our PMN content today than ever have,” he said. “We’re just not getting paid for it.”

If you believe that journalism is essential to the health of democracy — a truism affirmed repeatedly during Tuesday’s announcement — then it’s tough not to root for the future of PMN, which (even in its diminished, post-layoff state) still employs roughly 230 journalists. The organization still sets a large part of Philadelphia’s journalistic conversation.

The papers are a “critical endeavor for the civic health of our community,” said Pedro Ramos of the Philadelphia Foundation. Tuesday’s announcement, he said, “is a huge win for the city and the region.”

Follow @JoelMMathis on Twitter.

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