The troubled Philadelphia Inquirer and its sister tabloid the Daily News have new owners this week after a fierce bidding war between a consortium of creditors and a billionaire business figure.
The consortium of lenders won with a bid of $139 million, but this price is a fraction of the value in the company the last time it changed hands.
In 2006 the Inquirer and the News were sold for $515 million. That could have been an inflated price at the time, but the fall is indicative of the way that newspaper companies have been hemorrhaging value over the last five years.
The sale removes the threat of bankruptcy from the papers, but as one local Inquirer staffer and union rep said, it may be out of the frying pan and into the fire. The question remains: What will the new owners do with two newspapers in an urban market that clearly cannot sustain them?
“There is certainly a tremendous sense of relief in that this long and complex and rather torturous bankruptcy process may finally be at an end,” said Diane Mastrull, a reporter for The Philadelphia Inquirer and a chair of The Newspaper Guild of Greater Philadelphia. “But we are also somewhat worried because now we enter possibly another new and terrifying phase, and that is new ownership without much of an idea of what their expectations are for their business and what their commitment to the businesses will be.” [Papers sold to creditors group]
The Inquirer group has been in trouble for some time and has been facing closure for months. Even so, the Daily News won a Pulitzer Prize for investigative reporting in 2010.
The new owners are already calling for “concessions” from the newspaper unions representing staff on the mastheads.
You can reasonably interpret this as more job cuts, less staffing and budget for news operations, more advertorial, etc. etc.
The papers seem safe-ish for now, but their long-term future is far from certain. There are likely to be similar fire sales in other American news markets too.
Circulation figures released this week show an overall decline of around 9 percent across most major markets in the US.
The San Francisco Chronicle – already under the threat of closure from owners the Hearst Corporation, showed a decline of over 20 percent.
While the decline has not yet proved terminal for some titles, year on year for the past three years it has been steady and shows no sign of turning around.
That’s why the sale of the Inquirer to creditors could still be dangerous. If they want to cut their losses and get back whatever they can on their investment, closure could still be on the cards.