Blatstein group: If we can't buy PMN, we might start a publication

Developer Bart Blatstein.
Developer Bart Blatstein.
Posted: February 11, 2012

An investor group led by the developer Bart Blatstein said Friday it would explore developing a new digital and print publication should it fail to acquire The Inquirer, Philadelphia Daily News, and Philly.com.

Blatstein and four partners from the local business and legal communities announced this week they intended to pursue an acquisition of "some or all of the assets" of Philadelphia Media Network Inc. (PMN), which is owned by a number of hedge funds and financial institutions.

However, PMN management has said it was "not in discussions" with Blatstein or his Philly Hometown Media L.L.C.

PMN's current owners have retained Evercore Partners Inc., a New York investment-banking firm, to conduct a sale of the company.

In a statement released Friday, Blatstein said his group remained "perplexed as to why the out-of-town hedge funds which own the assets of PMN seem uninterested in hearing our ideas." In an interview, Blatstein said his group remained excluded from the sale process.

In the statement, Blatstein outlined an "intended plan of action" should PMN's ownership group decline to enter into discussions with Philly Hometown Media. Those plans could include a daily newspaper as well as some type of digital newspaper, he said.

A spokesman for PMN said the company had no comment on the Blatstein group's statement.

John Morton, a newspaper-industry analyst, said launching a digital and print paper in an urban area like Philadelphia would be a "very daunting thing."

Newspapers are expensive to operate. Morton said covering a region like Philadelphia's would require at least 25 reporters and from 10 to 15 editors. Assume $60,000 to $80,000 salaries for each, and "you're talking fairly big money," he said. "Week after week."

Philly Hometown Media says it has plenty of money.

"Our preliminary modeling indicates that this venture would be successful," the statement says. "Prior attempts at competition have been frustrated by a lack of committed long-term capital. Philly Hometown Media suffers from no such disability."

Besides Blatstein, the group's investors include beverage-industry giant Harold Honickman; Gerard H. Sweeney, president and chief executive officer of Brandywine Realty Trust; William A. Harvey, managing partner of Klehr Harrison Harvey Branzburg L.L.P.; and the class-action securities lawyer Andrew L. Barroway.

If Philly Hometown Media were to proceed with new publications, a digital version could be launched within five months, with a print newspaper available three months later, according to its statement.

Only one investor group has confirmed that it is participating in the possible purchase of PMN. That group, which includes New Jersey businessman Lewis Katz and Comcast-Spectacor chairman Edward M. Snider, as well as former Gov. Ed Rendell, said Feb. 3 that it had submitted a nonbinding letter of interest.

Another businessman who has expressed interest in making an offer is philanthropist Raymond G. Perelman, who sent a letter to the PMN board this week in which he said he was "surprised and dismayed" that he and other bidders had been excluded from the sale effort, according to a copy of the letter obtained by The Inquirer.

"This whole thing is very weird," Perelman told the Daily News on Thursday. "I'm not a quitter, but there's nothing else we can do. You can't make a guy do something that he doesn't want to."

Perelman and his son, the billionaire Ronald O. Perelman, were part of a failed 2010 effort to acquire the newspapers and website. The elder Perelman is not sure why he is being excluded from the current sale process, according to a person familiar with his efforts who spoke only on the condition of anonymity.

In his letter, Perelman called on Alden Global Capital and Angelo, Gordon & Co., the two largest shareholders of PMN, to "run a fair and open sale process for all credible bidders."

Blatstein said he was in contact with Perelman, but declined to comment on whether Perelman might join his efforts. Perelman "shares Philly Hometown Media's concerns and . . . he remains committed to preserving PMN for Philadelphia," according to the statement the Blatstein group issued.


Contact staff writer Mike Armstrong at 215-854-2980, marmstrong@phillynews.com, or @PhillyInc on Twitter.

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