Philadelphia newspapers lose $16 million, seek $28 million in cuts

Philadelphia Magazine | Jim Romenesko
Interstate General Media is looking for $28 million in cuts from operations at the Philadelphia Inquirer and the Philadelphia Daily News, Newspaper Guild officials Dan Gross and Bill Ross wrote in an email to members obtained by Victor Fiorillo. That follows an emailed update to all employees from Interstate General Media CEO Bob Hall Wednesday, in which he informed employees that revenue in the first half of 2012 was down $16 million over the same period the year before when the company posted a net loss “in excess of $17,000,000,” Hall wrote.

“Our owners are willing to invest in future growth, modifying presses, technology, and marketing campaigns, but they cannot be expected to fund operating losses,” Hall wrote. He promised an “extensive research project” will lead to “substantial changes to both our newspapers and Philly.com” and said negotiations on labor contracts will reflect the company’s need to “change many practices and cost structures to meet industry standards.”

“[T]hese talks will be the toughest challenge we have ever encountered as a company,” Hall wrote, and they’re off to a tough start. Gross and Ross write:

We understand that revenue is down, but also question why a group of successful local businessmen did not anticipate this possibility when they bought the company in April and pledged to invest “patient capital” and revitalize the Inquirer, Daily News and Philly.com.

The Newspaper Guild contract doesn’t expire until next October, and Guild leaders say, “We are in no hurry to bargain a concessionary agreement and cause more pain on our members and their families. We are not interested in being used as the company’s bargaining chip with the other union workers who help produce and deliver our newspapers.”

Interstate General Media bought the papers four months ago. In an interview with Poynter at the time they purchased the paper, new owner Lewis Katz laid out a three-point plan for the newspapers:

“First, you build employee morale,” said Katz. “You get a team going, the team buys into the business model or recommends changes. Secondly, you have patient capital so the banks don’t get in the way. Third, you need luck. Luck that your business model doesn’t face terrible economic times or terrible high interest times.”

George Norcross III, another new owner, said, “We’re not cutters, we’re
people who want to grow.”

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  • Anonymous

    How can you give away content for free on Philly.com, yet peddle a subscription for it AND expect to make money?!