Rendell says he's assembled group offering to buy PMN

Posted: February 04, 2012

Former Gov. Ed Rendell says he has assembled a group of corporate and political leaders that has offered to buy the owner of The Inquirer, the Daily News and Philly.com.

Rendell's group includes New Jersey businessman Lewis R. Katz; Comcast-Spectacor chairman Edward M. Snider; William P. Hankowsky, chief executive of Liberty Property Trust; George Norcross, insurance executive, New Jersey Democratic leader, and chairman of the board of Cooper Health System and Cooper University Hospital in Camden, and Krishna "Kris" Singh, president and chief executive officer of Holtec International in Marlton.

In a conference call with reporters, Rendell said the group was motivated to take over the financially struggling Philadelphia Media Network Inc. more out of a sense of civic duty than a desire to earn profits.

Singh, whose company supplies equipment and systems for the power industry, said Rendell organized the group in recent weeks by telephone.

"The Philadelphia Inquirer is a great newspaper, and I've been reading it since 1968," he said. "It should be saved. It should prosper."

Philadelphia Media Network (PMN) is now owned by a consortium of short-term investors - hedge funds and investment banks - that bought the company out of bankruptcy in 2010.

Sources close to the process said that the current owners are in the early stages of gauging interest from prospective buyers, and that an immediate sale is not certain. A spokesman for the company declined to comment.

"I think this is going to be an ongoing process," Rendell said. "There is no guarantee the newspaper is going to be sold. This is an ongoing expression of interest."

Rendell's group is one of several that are said to be interested in bidding.

Raymond Perelman, the 94-year-old Philadelphia businessman and philanthropist who wanted to buy the newspapers and website two years ago, told the Associated Press on Friday that he might bid "at the right price and the right situation."

The bidders have signed nondisclosure agreements with the company, and Rendell on Friday expressed irritation that rumors of his involvement had leaked out.

The New York Post reported Friday that the company's owners had hired Evercore Partners, a New York investment-banking firm, to find a buyer after two of the hedge funds expressed an interest in selling.

Representatives of Evercore and the two hedge funds, Alden Global Capital and Angelo, Gordon & Co., declined to comment.

Greg Osberg, chief executive of PMN, told employees Monday that the company's ownership shares had traded privately as a matter of routine since the company was created in 2010.

On Friday, Osberg issued a statement to employees that did not deny PMN had engaged an investment banker to sell the entire company.

"Given the quality of our local media franchise, we receive frequent inbound interest," he said in an e-mail to employees. "We will not comment on rumors as we continually evaluate the operations and prospects for the company to determine the best course of action for our shareholders and the company.

"The best thing for PMN, our customers and our shareholders is to continue to enhance the products, editorial and operational excellence that we deliver to the Philadelphia region every day. Let's continue to work hard to make 2012 a success."

Traditional media companies have struggled in recent years as advertising revenue and readership have shifted and diffused from print, radio and broadcast to online resources. The value of media companies has declined in response to the shrinking ad revenue and circulation.

In 2006, The McClatchy Co. sold Philadelphia Newspapers Inc. for $515 million to advertising executive Brian Tierney, who assembled a group of local investors to form Philadelphia Media Holdings L.L.C.

Tierney's company declared bankruptcy in 2009; the assets were purchased for $139 million by hedge funds that had bought discounted debt from the bankrupt company's creditors.

According to a New York Post story last week, the current owners are seeking $100 million for the company, which sold its iconic North Broad Street building in October for $22.7 million, according to public records.

"If they want to sell it, I'm sure they will find a buyer," said lawyer Lawrence G. McMichael, who represented the former owners during its bankruptcy battle with lenders. "If you hope to get $100 million, I'm sure you won't find a buyer."

But "vanity buyers" are sometimes willing to pay inflated prices for properties such as media outlets and sports teams because the prestige of ownership has an intangible value.

"A newspaper does not necessarily have to be a profit-focused objective," said Singh, the New Jersey businessman. "It has a public purpose."

The company's owners, conversely, may be willing to sell at a loss because it faces a cash-draining move from its old building to new premises at Eighth and Market Streets in July, even with the help of $2.9 million in low-interest, city-backed loans.

The investors that Rendell has assembled would presumably have little difficulty funding the venture.

Katz, a lawyer who funded construction of the Penn State University law school building, made his fortune from parking garages and real estate. Ed Snider, founder of the Philadelphia Flyers hockey team, has deep investments in sports and entertainment.

Hankowsky heads one of the largest office- and industrial-property firms. Norcross, chairman of Conner Strong Companies Inc., is a Democratic power broker in New Jersey.

"I don't think there will be a dearth of capital," said Singh. "People are not looking at their last nickel to invest here."


Contact staff writer Andrew Maykuth at 215-854-2947, @Maykuth on Twitter or amaykuth@phillynews.com

Inquirer staff writer Joseph N. DiStefano contributed to this article.

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