Philly media owner explored a nonprofit path

The Philadelphia Inquirer and Daily News building is seen in Philadelphia, Tuesday, Jan. 2, 2007. (AP Photo/Matt Rourke)
The Philadelphia Inquirer and Daily News building is seen in Philadelphia, Tuesday, Jan. 2, 2007. (AP Photo/Matt Rourke)
The owner of The Philadelphia Inquirer, Daily News and Philly.com has given thought to shifting to non-profit ownership status, aligning with Temple University.

It was unclear Thursday whether discussions held by H.F. "Gerry" Lenfest  go beyond the theoretical at this point . But it's now reported that he's considered the possibility.  He told Philanthropy magazine in an interview last year that non-profit ownership could be "wonderful" for newspaper organizations.

Several sources with knowledge of the situation declined to discuss it. If such a change of ownership did occur, the Inquirer would be the largest big city northern newspaper to go such a route.

There are newspapers and magazines that are owned by educational institutions and churches, although they are exceptions.

The Tampa Bay Times and nonprofit Poynter Institute are jointly operated. The paper, the largest in the country with such ownership, is for-profit but the two institutions share a corporate structure.

A variety of nonprofit counterparts have included the Christian Science Monitor; the Manchester, New Hampshire Union Leader; The Day in New London, Conn.; and Alabama's Anniston Star. Well-known nonprofits in the magazine sector have included Harper's Magazine, The Washington Monthly, Ms. Magazine and Mother Jones.

There are several broadcast examples including, KAET in Phoenix, Arizona, the PBS station, which is owned and operated by Arizona State University. WAMU in Washington, an NPR outlet, is operated by American University.

Considerations of nonprofit alternatives are far from new, including turning papers into nonprofit trusts while presumably trying to raise sizable endowments to support the maintenance of strong local newsrooms.

Rick Edmonds, Poynter's expert on the business of media, noted both advantages and problems.

There's the upside of a model that removes the pressure of shareholders demanding maximum profitability. The structure also can be a vehicle for maintaining local ownership and civic commitment.

If you hooked up with a nonprofit that was doing something other than the educational or religious activities, the Internal Revenue Service might well determine that it was all a shell and deny the desired nonprofit status, said Edmonds.

At the same time, if you have a public company (Lenfest's Philadelphia Media Network is not), there's the challenge of satisfying existing shareholders that they are getting a decent deal to buy them out. Broaching the subject, and then actually effecting the change, are very different matters.

It's no great surprise that Lenfest, 84, a local billionaire entrepreneur-philanthropist with deep civic pride, would at least mull the pros and cons of change in control of media properties he bought with a partner Lewis Katz in 2014.  (Katz died in a plane crash within days of the purchase and Lenfest acquired his estate's interest).

It's a difficult time for legacy print media and, while several for-profit newspaper chains might be interested in buying the Philadelphia properties for the right price, Lenfest may prefer to maintain local ownership and see if a tax-advantageous, non-profit structure were viable.

In cities such as Minneapolis and Boston, wealthy businessman have purchased the major local paper with the goal of maintaining quality operations despite their financial difficulties and sharply declining value.

In New York City, Daily News owner Mort Zuckerman recently took the paper off the block confronting an apparent lack of interest in buying it. That's a sign of the times, too.

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    James Warren

    New York City native, graduate of Collegiate School, Amherst College and Roosevelt University. Married to Cornelia Grumman, dad of Blair and Eliot. National columnist, U.S. News & World Report. Former managing editor and Washington Bureau Chief, Chicago Tribune.

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