Dueling IGM owners offer to buy out the other

Associate publisher Michael Lorenca resigned, citing the ongoing strife among the media firm's six owners.
Associate publisher Michael Lorenca resigned, citing the ongoing strife among the media firm's six owners.
Posted: November 01, 2013

The battle among the feuding owners of The Inquirer's parent company escalated Wednesday, as each side offered to end the strife by buying out the other.

George E. Norcross III, who with three others owns 58 percent of Interstate General Media, said they would pay $29 million for the minority shares of the company, which runs The Inquirer, the Philadelphia Daily News, and Philly.com.

Lewis Katz and H.F. "Gerry" Lenfest, who own the other 42 percent, rejected the offer as a "publicity stunt" and put forth their own winner-takes-all bidding process to end the impasse.

The dueling offers emerged on a day when a top IGM executive resigned, citing the partners' dissension, and the union representing journalists and other employees offered to mediate a settlement but also said it was seeking new investors.

The war over control of the media company erupted into public view on Oct. 7, when Inquirer editor William K. Marimow was fired. Katz and Lenfest opposed Marimow's ouster and sued to block it. Norcross countersued, accusing Katz of meddling in editorial operations.

The way the partnership has unraveled so publicly may be unusual, but the outcome probably will not be, said Rick Edmonds, a researcher on journalism issues for the Poynter Institute, a journalism training and research center in Florida.

"I and others have said that the natural end game in this type of dispute is that one side buys the other out," Edmonds said Wednesday.

Edmonds, who once worked for The Inquirer, said he doubted there are many other investors willing to step in.

The offer to buy out the minority partners was disclosed in a news release signed by Norcross and another partner, William P. Hankowsky.

"We did not want or initiate the litigation that has created a sideshow that will ultimately waste hundreds of thousands, if not millions, of dollars in legal fees that could be used to further the strengthen and build the company," they said in their statement.

It said they would pay "immediate cash with no strings attached," and argued that their offer represented a 12 percent premium for Katz and Lenfest over the $26 million they invested in the company in April 2012.

Katz and Lenfest called the news release a stunt - and responded with their own statement saying they did not invest in the company for economic reasons. Then they proposed that the sides enter into a buy-sell agreement - "if the Norcross block is serious."

Such an agreement requires a partner to offer to sell his position to another co-owner at a specified price. If that offer is rejected, the partner who offered to sell would then have the option of buying the other partner out at the same price.

A spokesman for Norcross, Hankowsky, and the others said they were not interested in selling.

The rival offers emerged shortly after Michael Lorenca, the chief operating officer and general manager of IGM and associate publisher of The Inquirer, said he was resigning, effective next month, because of the ongoing turmoil. "It deteriorated into management by deadlock," Lorenca said in an interview. He said he was also swayed by an appealing offer to work for a beverage bottling company.

Later in the day, leaders of the Newspaper Guild, which represents 500 journalists and other employees, met with Lenfest at his West Conshohocken office, hoping to gauge his interest in selling his stake in the company.

The union leaders also backed away from a statement by Norcross and his allies that said the majority owners wanted the Guild as partners.

The Guild's executive director, Bill Ross, said the union wanted an ownership stake no matter who wins. "We would want a seat at the table with either side," he said.

Ross said he has offered to act as a mediator between the sides. He also said the Guild is working with potential outside investors to help put a buyout deal together, but he declined to name them.

The six businessmen who bought the newspapers and website last year paid $55 million, plus operating capital.

Katz, who made his fortune in parking lots and outdoor advertising, and Norcross, a New Jersey insurance mogul, comprise the company's management committee, the two-man board that was to approve all major business decisions.

In their lawsuits, pending in Philadelphia and Delaware, they have accused each other of breaching their partnership contract.




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