Philadelphia Media Holdings
Encyclopedia
Philadelphia Media Holdings LLC was an American holding company
located in Philadelphia, Pennsylvania
, United States. Founded by Brian Tierney
in 2006, the company owned The Philadelphia Inquirer
and Philadelphia Daily News
. After The McClatchy Company
bought Knight Ridder
in 2006 it announced it would sell, among other newspapers, The Philadelphia Inquirer and Philadelphia Daily News. Interested in buying the papers, Brian Tierney assembled a group of Philadelphia businesspeople and investors to make a bid. In May 2006 Philadelphia Media Holdings bought the papers for US$515 million plus the assumption of the newspaper's liabilities. Dropping circulation and ad revenue for The Inquirer and Daily News caused financial strain resulting in the filing of Chapter 11 bankruptcy protection
. The company's creditors acquired the newspapers at auction and established a new holding company, Philadelphia Media Network
in 2010.
's stock
dropped to US$52.42 from US$80 in 2004. This drop in stock price prompted the company's three top stock holders to pressure Knight Ridder's board of directors
to sell the company to raise the price of its shares. Knight Ridder was put up for sale in November 2005, with The McClatchy Company
announcing it was purchasing the company in March 2006. Along with the purchase, the McClatchy Company announced it was selling twelve of the least profitable Knight Ridder newspapers, including The Philadelphia Inquirer
, the Philadelphia Daily News
and the website Philly.com.
Before the announcement of the sale of Knight Ridder, Brian Tierney
, the founder and former CEO of the public relations and advertising firm Tierney Communications, had expressed interest in purchasing the Philadelphia papers. After the announcement of McClathcy's plan to sell the paper's Tierney began to assemble a group of advisers and investors to purchase the papers with. Tierney formed a group of Philadelphia area investors and businesspeople to form Philadelphia Media Holdings. Almost all of the investors were either former clients of Tierney's or were with him of the board of directors of The Episcopal Academy
. While Tierney found investors Citizens Financial Group
's president Stephen Steinour arranged financing. Working with Tierney a month before they even knew if the Philadelphia paper's would be for sale, Steinour arranged US$450 million in financing from Citizens Financial Group's owner the Royal Bank of Scotland
.
Competing with Onex Corporation, Yucaipa Cos.
, Avista, and Daily News L.P.
for the Philadelphia newspapers, Philadelphia Media Holdings submitted its bid on May 16. On May 17 Tierney was told Philadelphia Media Holdings had the best bid, but they needed more money. After two days of negotiations, on May 19 McClatchy chairman Gary Pruitt told Tierney they had a deal. The deal was announced May 23, Philadelphia Media Holdings paying US$515 million and the assumption of the paper's liabilities including US$47 million in pension
liabilities.
There was excitement that The Philadelphia Inquirer and the Philadelphia Daily News would be under local ownership for the first time since Walter Annenberg
sold the paper to Knight Newspapers in 1969. The buyout was also met with skepticism at The Inquirer who feared the new owners might threaten the editorial independence
of the newspaper. Concerns were especially directed to Brian Tierney who has in the past criticized Inquirer reporters doing negative stories about his clients during his time at Tierney Communications. Tierney allayed fears by having the members of Philadelphia Media Holdings sign a pledge not to interfere with the paper's editorial independence. Tierney said he would combat The Inquirer's decreasing revenue and circulation by spending millions on advertisements and promotions and not by laying off staff.
's and Philadelphia Daily News' circulation has been steadily dropping years before Philadelphia Media Holdings bought the papers. In 2007 The Inquirer's weekday circulation slightly rose, however its Sunday circulation continued to drop. The rise in circulation was only temporary and the newspaper's circulation has since continued to fall. Not helping the financial situation is the unexpected large drop in advertisement revenue. To help cut cost and repay debt Philadelphia Media Holdings cut jobs at The Philadelphia Inquirer in January 2007, and again at The Inquirer and the Daily News in February 2008.
On June 1, 2008 Philadelphia Media Holdings missed its interest payment on US$85 million in junior loans
. Philadelphia Media Holdings missed the payment because it didn't maintain debt-to-cash flow ratio its senior lenders required so they blocked the payment. The company began negotiations with its lenders to restructure its debt and in October 2008 Philadelphia Media Holdings deferred paying its interest payment despite having the money to do so. Charged $13.4 million in penalty interest and fees, Philadelphia Media Holdings continued negotiations with lenders until February 20, 2009 when the talks collapsed. Late the next day Philadelphia Newspapers LLC, the subsidiary of Philadelphia Media Holdings that owns the papers, filled for Chapter 11 bankruptcy protection
. Philadelphia Media Holdings hoped to restructure its US$390 million in debt it incurred when buying the newspapers.
The bankruptcy declaration was the beginning of a year long dispute between Philadelphia Media Holdings and creditors. The group of creditors, which include banks and hedge funds, wanted to take control of Philadelphia Newspapers LLC themselves and oppose efforts by Philadelphia Media Holdings to keep control. Philadelphia Media Holdings received support form most of the paper's unions and launched a public relations campaign to promote local ownership. A bankruptcy auction was held on April 28, 2010. The group of lending creditors and a group of local investors allied with Brian Tierney both bid for Philadelphia Newspapers, but the lenders had the winning bid. On May 21st Brian Tierney stepped down as CEO of the Philadelphia Media Holdings and was replaced by Joseph Bondi, the company's restructuring adviser.
The deal fell through after the group of lenders, under the name of Philadelphia Media Network
, was unable to agree on a contract agreement with the union representing the company's drivers. The papers went up for auction again in September with Philadelphia Media Network competing with Raymond Perelman, father of Ronald Perelman
. Philadelphia Media Network again won the auction and, after successfully negotiating a contract with the all of the papers' fourteen unions, the US$139 million deal became official on October 8.
, United States two major morning daily newspapers, The Philadelphia Inquirer
and Philadelphia Daily News
. The company also published three suburban weeklies, The Trend, the Northeast Times
, and Star Publications. The magazine publishing division of The Philadelphia Inquirer was called Broad Street Magazines and published six magazines. The magazines were Home & Living, Adult 55+, Beach & Bay, My Wedding, Communities, and Phillycars.
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
located in Philadelphia, Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
, United States. Founded by Brian Tierney
Brian Tierney
Brian P. Tierney is an American a former advertising and public relations executive and publisher of The Philadelphia Inquirer. Born in Upper Darby Township, Pennsylvania, Tierney created Tierney Communications, one of the largest and most successful public relations and advertising firms in...
in 2006, the company owned The Philadelphia Inquirer
The Philadelphia Inquirer
The Philadelphia Inquirer is a morning daily newspaper that serves the Philadelphia, Pennsylvania, metropolitan area of the United States. The newspaper was founded by John R. Walker and John Norvell in June 1829 as The Pennsylvania Inquirer and is the third-oldest surviving daily newspaper in the...
and Philadelphia Daily News
Philadelphia Daily News
The Philadelphia Daily News is a tabloid newspaper that serves Philadelphia, Pennsylvania, United States. The newspaper is owned by Philadelphia Media Holdings which also owns Philadelphia's other major newspaper The Philadelphia Inquirer. The Daily News began publishing on March 31, 1925, under...
. After The McClatchy Company
The McClatchy Company
The McClatchy Company is a publicly traded American publishing company based in Sacramento, California. It operates 30 daily newspapers in 15 states and has an average weekday circulation of 2.2 million and Sunday circulation of 2.8 million...
bought Knight Ridder
Knight Ridder
Knight Ridder was an American media company, specializing in newspaper and Internet publishing. Until it was bought by The McClatchy Company on June 27, 2006, it was the second-largest newspaper publisher in the United States, with 32 daily newspapers sold.- History :The corporate ancestors of...
in 2006 it announced it would sell, among other newspapers, The Philadelphia Inquirer and Philadelphia Daily News. Interested in buying the papers, Brian Tierney assembled a group of Philadelphia businesspeople and investors to make a bid. In May 2006 Philadelphia Media Holdings bought the papers for US$515 million plus the assumption of the newspaper's liabilities. Dropping circulation and ad revenue for The Inquirer and Daily News caused financial strain resulting in the filing of Chapter 11 bankruptcy protection
Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
. The company's creditors acquired the newspapers at auction and established a new holding company, Philadelphia Media Network
Philadelphia Media Network
Philadelphia Media Network is an American media company. It owns The Philadelphia Inquirer, Philadelphia Daily News and the web portal Philly.com, acquiring out of Chapter 11 bankruptcy protection from the prior owner, Philadelphia Media Holdings....
in 2010.
Founding
In 2005 media company Knight RidderKnight Ridder
Knight Ridder was an American media company, specializing in newspaper and Internet publishing. Until it was bought by The McClatchy Company on June 27, 2006, it was the second-largest newspaper publisher in the United States, with 32 daily newspapers sold.- History :The corporate ancestors of...
's stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
dropped to US$52.42 from US$80 in 2004. This drop in stock price prompted the company's three top stock holders to pressure Knight Ridder's board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
to sell the company to raise the price of its shares. Knight Ridder was put up for sale in November 2005, with The McClatchy Company
The McClatchy Company
The McClatchy Company is a publicly traded American publishing company based in Sacramento, California. It operates 30 daily newspapers in 15 states and has an average weekday circulation of 2.2 million and Sunday circulation of 2.8 million...
announcing it was purchasing the company in March 2006. Along with the purchase, the McClatchy Company announced it was selling twelve of the least profitable Knight Ridder newspapers, including The Philadelphia Inquirer
The Philadelphia Inquirer
The Philadelphia Inquirer is a morning daily newspaper that serves the Philadelphia, Pennsylvania, metropolitan area of the United States. The newspaper was founded by John R. Walker and John Norvell in June 1829 as The Pennsylvania Inquirer and is the third-oldest surviving daily newspaper in the...
, the Philadelphia Daily News
Philadelphia Daily News
The Philadelphia Daily News is a tabloid newspaper that serves Philadelphia, Pennsylvania, United States. The newspaper is owned by Philadelphia Media Holdings which also owns Philadelphia's other major newspaper The Philadelphia Inquirer. The Daily News began publishing on March 31, 1925, under...
and the website Philly.com.
Before the announcement of the sale of Knight Ridder, Brian Tierney
Brian Tierney
Brian P. Tierney is an American a former advertising and public relations executive and publisher of The Philadelphia Inquirer. Born in Upper Darby Township, Pennsylvania, Tierney created Tierney Communications, one of the largest and most successful public relations and advertising firms in...
, the founder and former CEO of the public relations and advertising firm Tierney Communications, had expressed interest in purchasing the Philadelphia papers. After the announcement of McClathcy's plan to sell the paper's Tierney began to assemble a group of advisers and investors to purchase the papers with. Tierney formed a group of Philadelphia area investors and businesspeople to form Philadelphia Media Holdings. Almost all of the investors were either former clients of Tierney's or were with him of the board of directors of The Episcopal Academy
The Episcopal Academy
The Episcopal Academy, founded in 1785, is a private, co-educational school for grades Pre-K through 12. In 2008, it relocated from its Merion, Pennsylvania campus and Devon, Pennsylvania satellite campus to its new campus in Newtown Square, Pennsylvania...
. While Tierney found investors Citizens Financial Group
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned...
's president Stephen Steinour arranged financing. Working with Tierney a month before they even knew if the Philadelphia paper's would be for sale, Steinour arranged US$450 million in financing from Citizens Financial Group's owner the Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
.
Competing with Onex Corporation, Yucaipa Cos.
Yucaipa Cos.
The Yucaipa Companies, LLC is a Los Angeles-based holding company, focusing on private equity investments. The firm was founded in 1986 by its billionaire chairman, Ronald Burkle....
, Avista, and Daily News L.P.
New York Daily News
The Daily News of New York City is the fourth most widely circulated daily newspaper in the United States with a daily circulation of 605,677, as of November 1, 2011....
for the Philadelphia newspapers, Philadelphia Media Holdings submitted its bid on May 16. On May 17 Tierney was told Philadelphia Media Holdings had the best bid, but they needed more money. After two days of negotiations, on May 19 McClatchy chairman Gary Pruitt told Tierney they had a deal. The deal was announced May 23, Philadelphia Media Holdings paying US$515 million and the assumption of the paper's liabilities including US$47 million in pension
Pension
In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.The terms retirement...
liabilities.
There was excitement that The Philadelphia Inquirer and the Philadelphia Daily News would be under local ownership for the first time since Walter Annenberg
Walter Annenberg
Walter Hubert Annenberg was an American publisher, philanthropist, and diplomat.-Early life:Walter Annenberg was born to a Jewish family in Milwaukee, Wisconsin on March 13, 1908. He was the son of Sarah and Moses "Moe" Annenberg, who published The Daily Racing Form and purchased The Philadelphia...
sold the paper to Knight Newspapers in 1969. The buyout was also met with skepticism at The Inquirer who feared the new owners might threaten the editorial independence
Editorial independence
Editorial independence is the freedom of editors to make decisions without interference from the owners of a publication. Editorial independence is tested, for instance, if a newspaper runs articles that may be unpopular with its advertising clientele....
of the newspaper. Concerns were especially directed to Brian Tierney who has in the past criticized Inquirer reporters doing negative stories about his clients during his time at Tierney Communications. Tierney allayed fears by having the members of Philadelphia Media Holdings sign a pledge not to interfere with the paper's editorial independence. Tierney said he would combat The Inquirer
Bankruptcy
The Philadelphia InquirerOn June 1, 2008 Philadelphia Media Holdings missed its interest payment on US$85 million in junior loans
Subordinated debt
In finance, subordinated debt is debt which ranks after other debts should a company fall into receivership or bankruptcy....
. Philadelphia Media Holdings missed the payment because it didn't maintain debt-to-cash flow ratio its senior lenders required so they blocked the payment. The company began negotiations with its lenders to restructure its debt and in October 2008 Philadelphia Media Holdings deferred paying its interest payment despite having the money to do so. Charged $13.4 million in penalty interest and fees, Philadelphia Media Holdings continued negotiations with lenders until February 20, 2009 when the talks collapsed. Late the next day Philadelphia Newspapers LLC, the subsidiary of Philadelphia Media Holdings that owns the papers, filled for Chapter 11 bankruptcy protection
Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
. Philadelphia Media Holdings hoped to restructure its US$390 million in debt it incurred when buying the newspapers.
The bankruptcy declaration was the beginning of a year long dispute between Philadelphia Media Holdings and creditors. The group of creditors, which include banks and hedge funds, wanted to take control of Philadelphia Newspapers LLC themselves and oppose efforts by Philadelphia Media Holdings to keep control. Philadelphia Media Holdings received support form most of the paper's unions and launched a public relations campaign to promote local ownership. A bankruptcy auction was held on April 28, 2010. The group of lending creditors and a group of local investors allied with Brian Tierney both bid for Philadelphia Newspapers, but the lenders had the winning bid. On May 21st Brian Tierney stepped down as CEO of the Philadelphia Media Holdings and was replaced by Joseph Bondi, the company's restructuring adviser.
The deal fell through after the group of lenders, under the name of Philadelphia Media Network
Philadelphia Media Network
Philadelphia Media Network is an American media company. It owns The Philadelphia Inquirer, Philadelphia Daily News and the web portal Philly.com, acquiring out of Chapter 11 bankruptcy protection from the prior owner, Philadelphia Media Holdings....
, was unable to agree on a contract agreement with the union representing the company's drivers. The papers went up for auction again in September with Philadelphia Media Network competing with Raymond Perelman, father of Ronald Perelman
Ronald Perelman
Ronald Owen Perelman is an American business magnate. Through his company MacAndrews & Forbes Holdings Inc., he has invested in various companies in grocery, cigar, licorice, makeup, car, photography, television, camping, security, lottery, jewelry, banks, and comic book industries.-Early...
. Philadelphia Media Network again won the auction and, after successfully negotiating a contract with the all of the papers' fourteen unions, the US$139 million deal became official on October 8.
Publications
Philadelphia Media Holdings owned and published Philadelphia, PennsylvaniaPennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
, United States two major morning daily newspapers, The Philadelphia Inquirer
The Philadelphia Inquirer
The Philadelphia Inquirer is a morning daily newspaper that serves the Philadelphia, Pennsylvania, metropolitan area of the United States. The newspaper was founded by John R. Walker and John Norvell in June 1829 as The Pennsylvania Inquirer and is the third-oldest surviving daily newspaper in the...
and Philadelphia Daily News
Philadelphia Daily News
The Philadelphia Daily News is a tabloid newspaper that serves Philadelphia, Pennsylvania, United States. The newspaper is owned by Philadelphia Media Holdings which also owns Philadelphia's other major newspaper The Philadelphia Inquirer. The Daily News began publishing on March 31, 1925, under...
. The company also published three suburban weeklies, The Trend, the Northeast Times
Northeast Times
The Northeast Times is an American newspaper, in Philadelphia, Pennsylvania, that primarily targets the Northeast Philadelphia community. After being owned by The Philadelphia Inquirer parent company, it was sold to a newly formed company, Broad Street Media.-External links:* *...
, and Star Publications. The magazine publishing division of The Philadelphia Inquirer was called Broad Street Magazines and published six magazines. The magazines were Home & Living, Adult 55+, Beach & Bay, My Wedding, Communities, and Phillycars.