Philly Inquirer minority owners win control

The ownership of Philadelphia's two largest newspapers changed hands again Tuesday after minority owners Lewis Katz and Gerry Lenfest emerged victorious in a bidding war against other owners.

In an auction held at a local law firm, Katz and Lenfest grabbed control of Interstate General Media Holdings -- the parent company that operates The Philadelphia Inquirer, The Daily News and Philly.com -- by agreeing to pay $88 million, including about $15 million in debt.

George E. Norcross, Joseph Buckelew and William Hankowsky – the other investors who joined to form a local investor group that bought the papers in 2012 for $55 million – initiated the bid with a $77 million offer but chose not to counter Katz and Lenfest's offer.

"Although we declined to submit a higher bid and will not purchase the shares of Interstate General Media owned by Messers. Katz and Lenfest, we are happy for the company's employees, readers and advertisers that this issue is now resolved," said a statement from the Norcross' group. "It is time to return the company's focus to journalism, and away from conflict among its owners."

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The working relationship among the owners deteriorated quickly after the 2012 purchase as the two camps collided over their editorial philosophies and personnel issues. Katz, who emphasized investigative reporting over the hyper-local news approach favored by Norcross, filed a motion in January to dissolve the ownership structure and called for an auction to settle the matter.

The owners' infighting reached a boiling point last October, when the Inquirer's editor Bill Marimow, was fired by Publisher Bob Hall. Katz went to court to reverse the move, and a local judge reinstated Marimow.

While the fogginess surrounding ownership has cleared, the newspapers' financial challenges remain. Despite the owners' additional investments and ! several rounds of layoffs to cut cost, the newspapers, which hadn't been profitable for years, are still losing money.

In the decade before Katz, Norcross and others assumed control, the company's revenue had fallen from about $500 million to about $200 million. It went from generating $145 million in profit to losing as much as $50,000 a day, Norcross' group pointed out Tuesday.

"We always understood that no matter who won the auction, there was a great deal of work to be done. Now, with this chapter ended, we hope the company can return its focus to accomplishing that needed work," it said. "We wish Messrs. Katz and Lenfest the best of luck moving forward."