2010-05-01 11:44:24

Newspaper giants sold to lenders

1. Newspaper giants sold to lenders

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Written by Kevin Smith Collegian Editor

Philadelphia’s newspaper giants, the Philadelphia Inquirer, the Daily News and Philly.com, have been sold to their lenders for $139 million, according to Brian Tierney, CEO of Philadelphia Newspapers L.L.C.

The senior lenders of the news organizations, Angelo Gordon Co. and Credit Suisse among them, now have approximately $10 million of liquidity to operate the business. However the attorney for Philadelphia Newspapers, Lawrence G. McMichael, said that the new owners would need loans to continue operating the business. The local ownership offered the senior lenders of the newspapers the $129 million deal based on $32.9 million in debt, $69 million in cash equity and $30 million for real estate properties.

The jobs of many current employees are at stake as the new owners attempt to clarify the financial standing of the company.

Reactions from local officials generally expressed concern for the employees as well as the future of the paper.

“I'm a strong believer in local ownership—it is the best and most impactful thing for a newspaper to be owned by people who live in the region,” Rendell said.

Robert J. Hall, a former publisher of the Inquirer and Daily News and future chief operating officer, said that cuts would likely be made to the publishing company’s unions.  Hall isn’t the only former employee acknowledging cuts to Philadelphia Newspapers. Huntly Collins, assistant professor of journalism and long-time employee of the Inquirer is devastated at the news of the newspapers’ auction.

 “No matter who ends up the new owner of Philadelphia Newspapers, further budget cuts are inevitable and will affect the quality of the product,” Collins said. “There’s just no way you can produce world-class journalism on a shoestring.”

The newspapers have been in financial trouble for some time now. Collins left the paper in 2001 because she “could see the writing on the wall.” Budget cuts had significantly diminished the foreign and national bureaus of the paper. According to Collins, when her former colleague Bill Marimow took over the executive editor position, the paper took a turn for the better.

“He’s done a yeoman’s job maintaining the paper’s commitment to good journalism under very trying circumstances,” she said.

While the Inquirer and Daily News deal affects local citizens, newspapers nationwide are feeling the effects of budget cutbacks in the news industry. To many, the fear that America is drifting toward a country without decent journalism is becoming all too real.

“[These deals are] happening to newspapers all over the country and that only underscores what’s at stake,” Collins said. “Without robust journalism you can’t have a robust democracy.”