Business mogul mulls new bid for Philly newspapers

(AP Photo)

February 3, 2012 12:37:00 PM PST
Business mogul Raymond Perelman is mulling another bid for Philadelphia's two largest newspapers, more than a year after creditors outbid him at a bankruptcy auction.

Perelman bid $129 million, mostly cash, for The Philadelphia Inquirer, the Philadelphia Daily News and at the September 2010 auction. Earlier this week, the New York Post reported that Philadelphia Media Network was again in play because two hedge funds want to sell their stakes.

The 94-year-old Perelman said Friday that he's looking at the situation but conceding that the newspaper industry is "deteriorating."

"I think Philadelphia should have a newspaper, but how far do you go to do that, you know? That's the key question," he said. "At the right price and the right situation, it would happen. But at a price that's really high, you have to think about it."

Philadelphia Magazine, meanwhile, reported that former Gov. Ed Rendell, a former Philadelphia mayor, is also interested. His spokeswoman didn't return a message Friday.

Perelman, whose wealth comes from manufacturing, mining and financial concerns, together with his late wife has donated $225 million to the University of Pennsylvania medical school and made sizable gifts to the Philadelphia Museum of Art and other causes. His son, Revlon Inc. Chairman Ronald O. Perelman, joined him in the 2010 newspaper bid.

The Post reported earlier this week that Alden Global Capital hoped to sell the company for $100 million and cash out its 30 percent stake. On Friday, the Post said another key stakeholder, Angelo Gordon, also wants to cash out. The newspaper reported that Evercore Partners, a New York investment bank, has been hired to handle the sale. Evercore, through an external spokeswoman, declined to comment Friday.

Philadelphia Media Network officials aren't commenting on the reported sale, spokesman Mark Block said Friday.

The creditors paid $139 million for the company after forcing the sale when local investors who paid $515 million for the company in 2006 missed debt payments in early 2009. The creditors have since sold the iconic newspaper building and plan to move staff to much smaller space in a long-vacant department store this year.

Some editorial functions will be merged, but the company wants to maintain separate brands for the broadsheet Inquirer and tabloid Daily News, along with the website and a new weekend publication called SportsWeek, according to Bill Ross, executive director of the local newspaper guild.

In a memo Friday, Publisher Greg Osberg urged staff to stay focused on their work in 2012.

"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," he wrote.

Lawyer Larry McMichael, who represented the former owners during their bitter bankruptcy fight with lenders, said he's gotten a few calls this week from local parties. He could not disclose specifics.

"There is interest in the community about buying the papers and re-establishing local ownership," McMichael said.

Perelman noted that The New York Times reported a 12 percent quarterly drop in earnings Friday. He said he believes that newspapers are "cutting their own throats" by posting their work on the Internet. The Times and other news companies now charge for some online content, while Philadelphia Media Network charges for digital products for mobile phones and other devices.

"It's a crazy situation," Perelman said. "There's a long drink between 'interested' (in the Philadelphia company) and 'buying it.'"