WILMINGTON, Del. (AP) — A politically-powerful investor in Philadelphia's two largest newspapers pledged Monday to pay at least $77 million to wrest control of the company from rivals.
George Norcross, a wealthy insurance executive and influential New Jersey Democrat, testified before a Delaware judge overseeing the latest sale of The Philadelphia Inquirer and Philadelphia Daily News. The current owners, split into two warring factions, are selling the company at auction to regroup.
The court hearings this week will determine whether the sale will be open only to insiders or also to the local newspaper guild and other potential bidders.
"I intend to bid a minimum of approximately $77 million," Norcross testified, in perhaps an opening lob to rival investor Lewis Katz, the former New Jersey Nets owner.
Norcross called the company's financial situation "tenuous," and said advertising and circulation revenue continues to fall each year. The company lost money in both 2012 and 2013, he said.
Nonetheless, he said he thought a product built around "hyper-local" news could be successful, especially in a sports-crazed town like Philadelphia.
"I believe there's a thirst in this region for local news," Norcross testified. "If properly executed, we could be successful in rebuilding this in a different form."
The newspapers are being sold for the fifth time in eight years, a turbulent period that included a prolonged bankruptcy sale. The company had sold for $515 million in 2006, before the newspaper industry nationwide imploded.
Norcross, Katz and others paid $55 million, plus about $5 million in assumed debt, for the company in 2012. They soon realized the company was in far worse shape than advertised, forcing them to assume an active role, and cut staff and other expenses, Norcross said. The investors then began feuding over key managers, including editor William Marimow and publisher Bob Hall.
"I'm sure we both wanted this to work successfully, but, unfortunately, that has not come to bear," Norcross testified.
The stalemate has paralyzed the company as it tries to set its future course, and keep and retain talent, witnesses testified. Several key executive positions are vacant, and Marimow's contract expires this month.
Katz, a real estate magnate, is aligned with cable TV mogul and philanthropist H.F. "Gerry" Lenfest.
The local newspaper guild, which represents about 550 employees, also hopes to mount a bid with an unnamed backer.
The hearing in Delaware, where the company incorporated, is expected to last several days. The auction would then most likely be held within a month or two.
Norcross is one of the most powerful figures in the Philadelphia region, with interests in media, health care, education, banking, insurance and politics. He is chairman of the sprawling Cooper Hospital system, based in his native Camden, N.J., where Norcross-linked charities are building a new charter school. Norcross once negotiated the $9 billion sale of a bank, he testified.
His daughter serves as an executive in the newspaper company's digital operations. His brother Donald, a New Jersey state senator, is now running for Congress.
Norcross wants an ascending-bid auction, while Katz has pushed for a sealed-bid auction, open to anyone.
Even as the company's problems were detailed in the courtroom, there was cause for celebration back in the Inquirer newsroom Monday, with word that architecture critic Inga Saffron had won the Pulitzer Prize for criticism.