The Philadelphia Deal
Local businessmen are buying the Inquirer and Daily News. They’re sounding all the right notes, but conflicts of interest loom. Posted May 24, 2006
By Rem Rieder
Is the glass half empty or half full?
Rem Rieder (email@example.com) is AJR's editor and senior vice president.
That's the question about the Philadelphia newspaper deal.
A group of local movers and shakers who call themselves Philadelphia Media Holdings is buying the Inquirer, once a Pulitzer machine regarded among the nation's best newspapers, and the Daily News, an aggressive, irreverent tabloid with a sure sense of the wonderfully quirky city it calls home. The dailies had been left as orphans after McClatchy bought parent Knight Ridder and decided that the proud Philly properties were among 12 it would kick to the curb.
On the surface there's a lot to like about this deal. The new owners, led by ebullient public relations and advertising whiz Brian Tierney, say they have no plans to mothball the eternally endangered Daily News. In fact, they say they don't intend to make any cuts at either of the papers. The staffs of both are already pretty lean, bleeding from the ax-wielding of their Knight Ridder corporate masters.
In fact, rather than cut, cut, cut — the entirely bankrupt Knight Ridder "strategy" — Tierney and Co. say they plan to invest in the papers. There's a concept: trying to make your way in a very competitive marketplace by offering a stronger product.
After years of chain ownership, the papers will be locally owned. And since they will be privately held, they won't be subject to the merciless demands of Wall Street. The Philly papers have a profit margin of about 10 percent, chump change to The Street but perhaps not so bad to people who say they a) believe in newspapers and b) care about the ones in their hometown — and also happen to have a lot of money already.
(Quick aside: Isn't it great that these two dailies, viewed as underperforming turkeys even by the sainted McClatchy, drew six, count 'em six, serious suitors?)
So with all that upside, why not just break out the champagne and be done with it?
Three words: conflict of interest.
Start with Tierney, known as an extremely fiery advocate of his clients — notably the Catholic Archdiocese of Philadelphia--and not bashful about doing serious battle with the newspapers when the spirit moved him, which wasn't altogether infrequently. Maxwell King, a former Inquirer executive editor and now president of the Heinz Endowments, told the Inky that Tierney, who will be the papers' CEO, "was always a very aggressive and passionate advocate." King said he would be concerned "about the independence and integrity of the news coverage" of newspapers under Tierney's command.
And Tierney's lengthy roster of partners includes all manner of Philly players whose activities and interests are constant fodder for the papers. For example, the papers' chairman will be Bruce E. Toll, who is vice chairman of Toll Bros., a major developer, and owns two car dealerships.
To their credit, the new owners are acknowledging the potential problems and falling all over themselves to promise they will be hands-off. In fact, Tierney said he and his merry band have signed a non-interference pledge.
How will said pledge be enforced? Tierney, who grew up just outside the city in Upper Darby, responded in a quintessentially Philly way. He told the assembled staffers of the two papers, "I'll beat the crap out of anyone" who misbehaves.
So they're sounding all the right notes. That's easy to do now. The test will come when the papers, as they inevitably will, begin to gore some of the new owners' favorite oxen.
Not to worry, says Zack Stalberg, who ran the Daily News for so long that it became hard to tell where one ended and the other began. Stalberg, who now heads up a civic group, told the New York Times that Tierney is "an honorable guy, and he knows the world will be watching."
Pardon me if I find that less than reassuring. The whole world was watching while Knight Ridder was systematically gutting the papers, and it was still watching when Knight Ridder went away.
The last time the Philadelphia papers had local ownership, the lucky guy was the fabulously wealthy Walter Annenberg, who sold the Inky and Daily News to the forerunner of Knight Ridder in 1970. Annenberg ran a clinic on how to use your newspapers as personal playthings, punishing enemies and rewarding friends. But in that primitive, pre-Romenesko landscape, much less of the world was watching.###