Last week, Gregory J. Osberg, chief executive and publisher of the Philadelphia Media Network, which publishes The Inquirer, The Daily News and Philly.com, summoned the news organization’s three most senior editors to his office.
Over three hours, he told them he would be overseeing all articles related to the newspapers’ impending sale. If any articles ran without his approval, the editors would be fired, according to several editors and reporters briefed on the meeting who did not want to be identified criticizing the company’s leadership.
In a telephone interview Wednesday morning, Mr. Osberg said the meeting did not happen. But Larry Platt, editor of The Daily News and one of the editors in attendance, said that it did. Late Wednesday, Mr. Osberg acknowledged that the meeting had taken place but denied interfering in the editorial decisions, saying he only wished to be notified of further coverage. Mr. Platt declined to comment on specifics, but said, “We fought for what we believed in,” referring to editorial independence, “and we didn’t get all that we wanted.”
The meeting was the latest incident pitting the management of the papers against the newsroom over the proposed sale to an investor group primarily made up of the area’s most powerful Democrats.
Edward G. Rendell, the former Philadelphia mayor and Pennsylvania governor leads the group, which includes George E. Norcross III, a Democratic powerbroker in South New Jersey; the parking lot and banking magnate Lewis Katz; and Edward M. Snider, chairman of the Comcast subsidiary that owns the Philadelphia Flyers. Mr. Rendell recently told reporters he has asked the union leader John J. Dougherty Jr. (or Johnny Doc as he is known locally) to join the group.
Reporters and editors believe that coverage has been steered to favor the prospective buyers and fear what might happen once they control the papers. On Feb. 6, The Inquirer killed an article about a real estate developer who had put together a competing bid to buy the company, which went on the market earlier this month. Then, on Feb. 7, a company spokesman removed a post on The Daily News’s PhillyClout blog that mentioned other potential buyers.
The spokesman, Mark Block, said those actions were mistakes that would not be repeated. Mr. Osberg denied any editorial interference. “There is no pattern here. It doesn’t exist,” he said, adding “I have not been managing coverage of the sale and I am not doing that going forward.”
The situation in Philadelphia speaks to the vulnerability of regional newspapers. Long operated as functional monopolies with attractive margins, local papers have undergone a nosedive in earnings and advertising revenue. Having ceased to be sure-fire financial investments, these newspapers, the reporters fear, could still be attractive as a tool to advance new owners’ political and business interests.
The proposed sale could still fall through, but a completed deal with Mr. Rendell’s group would give Democrats control of the most influential newspaper in one of the most important states on the electoral map just before the 2012 elections.
“You have a former mayor and governor, the owner of a local sports team and George Norcross, who is a power player in South Jersey politics,” said Buzz Bissinger, who writes for both Philadelphia papers and wrote the book “A Prayer for the City” about the mayoralty of Mr. Rendell. Of The Inquirer, he said, “I believe it will effectively cease to be a real newspaper and become a house organ for these guys and their friends.”
The Inquirer, a 183-year-old paper with a legacy that includes 18 Pulitzer Prizes, has been battered harder than most regional papers, and its parent company ended up being bought in 2010 for $139 million, by two hedge funds, Angelo Gordon and Alden Global Capital, along with banks that held the company’s debt.
The new owners installed Mr. Osberg, who had been the president and publisher of Newsweek magazine, but the financial picture has continued to decline. According to sales documents obtained by The New York Times — marked as “highly confidential” — the company had a 13.9 percent drop in advertising revenues last year and earnings were less than $5 million. On Wednesday, the company announced a round of buyouts and potential layoffs that will eliminate 37 positions.
“The last time we were up for sale, we had a bankruptcy judge whose role was to give the orphan the best possible parents he could find,” said Karen Heller, an Inquirer columnist. “But in this sale, no one cares how people will take care of the house.”
In an interview, Mr. Rendell said his only intention in putting the group together was to save the newspapers and keep them under local control. “Any ownership group may have some interest in controlling the content of the newspaper, but ours is no more or less than that,” he said. He added that Mr. Snider is a conservative Republican. Mr. Norcross said the idea that they would buy the newspapers to push an agenda was “just silly.”
But several incidents have reinforced fears in the newsroom. An investigation about conflicts of interest among board members of the Cooper University Hospital in nearby Camden, N.J., remains unpublished after months. Mr. Norcross serves as the hospital’s chairman.
In an e-mail Mr. Norcross, who has called The Inquirer and The Daily News in the last week to discuss other coverage, said the reporter’s research “contained significant factual errors and incomplete data about the hospital and health care industry.”
Stan Wischnowski, The Inquirer’s editor in chief, said Mr. Norcross’s potential ownership has no bearing on the story. Mr. Wischnowski said that the newsroom was unhappy with the initial oversight of articles about the sale but that the issue was now being covered aggressively and without interference.
“We have a very daunting, imposing possibility in front of us,” he said. “But nothing has happened or will happen in terms of ownership that will change our rich, 183-year legacy of accountability journalism.”
On Feb. 4, a paragraph in an article on Philly.com that said the newspapers had a value of about $40 million based on historical valuations was removed from the Web site. Other media reports had said the owners were seeking $100 million.
In articles about the company’s move to an old department store building across town from its current offices, reporters were asked by management not to mention the $2.9 million tax credit the company had received for relocating within Philadelphia, according to several employees involved in the coverage.
Meanwhile, other legitimate bids for the newspapers have been blocked. Three weeks ago the billionaire investor Ronald O. Perelman approached Angelo Gordon and said his father, Raymond G. Perelman, a Philadelphia philanthropist, wanted to buy the company.
“They said, ‘Well, we’re not interested in selling it to your father,’ but they didn’t give a reason,” Raymond Perelman said. A spokesman for Angelo Gordon declined to comment.
Bart Blatstein, the local real estate developer who owns The Inquirer’s current building, said Mr. Osberg and Evercore Partners, the investment bank handling the sale, rebuffed his offers.
“It doesn’t make sense,” Mr. Blatstein said, explaining that an open auction would drive up the price. “If you’re selling a house, you’d put a sign on the lawn and let everyone know it’s for sale.”
On Tuesday, nearly 75 Teamsters marched in protest of a possible sale of The Inquirer to Mr. Rendell’s group. “They’ve stacked the deck in favor of the Rendell group and suppressed stories about other buyers, and they haven’t even bought it yet,” said John Laigaie, president of the Local 628 chapter of the Teamsters union, which represents the media group’s security guards, truck drivers and other employees.
Mr. Rendell has a complicated relationship with the media, which may have reached a low point in 1994 when he clamped his hand around the neck of Amy S. Rosenberg, an Inquirer reporter who was questioning him about potentially losing federal money for the homeless. The outbursts became so frequent the press called them “Edruptions.”
In an apology letter to Ms. Rosenberg’s editor, Mr. Rendell wrote, “Touching a reporter is inexcusable and inappropriate no matter what the circumstances.” Ms. Rosenberg, who kept the letter, said he added: “You know how Amy can get. I was just trying to slow her down.” (Mr. Rendell’s spokeswoman, Kirstin Snow, said the former governor is “an extremely engaging, friendly person and his intent has never been to harm anyone.”)
In late October, Mr. Osberg met with Mr. Norcross and Mr. Katz to discuss the Rendell group’s plans. Mr. Rendell has said Mr. Osberg is “doing a fine job” and signaled his group would keep Mr. Osberg on as chief if the deal went through.
“They can talk about civic duty all they want, but it would be naive to think they don’t want influence over a company they’re putting such significant money into,” said the Inquirer columnist Monica Yant Kinney.