Thu, Apr 15, 2010 - Page 9 News List

Fighting the newspapers, then fighting for them

A former public relations executive is relying on the savvy and rhetoric that characterizes his previous career in an attempt to save his new vested interest and business — the US newspaper industry

By David Carr  /  NEW YORK TIMES NEWS SERVICE

This is the kind of shape the newspaper business is in: Brian Tierney, a former public relations executive with a reputation for going after reporters, has become the last man standing in a fight to keep Philadelphia’s newspapers out of the hands of bankers.

Tierney, who ran his own communications company before buying the Philadelphia Inquirer and the Philadelphia Daily News in 2006, is the kind of newcomer longtime newspaper veterans love to hate. He’s slick, he cut his teeth in public relations and he loves to wrap his mouth around a catchy phrase.

Right now, rhetoric is all he has left. Philadelphia Newspapers, the company that owns the two papers, entered into bankruptcy in February last year after laboring under declining performance and US$318 million in debt. Tierney maintains he (and not the debt holders) should hang on to the papers as a civic good and he has prevailed in court so far.

The issue may seem local — Tierney has suggested the future of news in Philadelphia is at stake — but it resonates across the country. Many newspapers were sold in the past few years in deals that involved a great deal of debt. As the recession deepened in 2008, media watchers wondered what the world might look like if lenders owned newspapers.

We’re finding out: As revenue servicing all that debt has evaporated, there have been 13 major bankruptcies in the newspaper industry. The Star Tribune in Minneapolis is being operated by its creditors, and just last Thursday executives at the Tribune Co, which was bought by Sam Zell with US$13 billion in debt, said they had reached an agreement to hand the keys to its creditors.

Tierney wants to hang on to the keys, or at least, he says, to deliver the Philadelphia newspapers to “someone who wants to be in the business, not somebody who bought the debt for 12 cents and is trying to flip it for a little more.”

“I have a fiduciary duty, not just to the lenders, but to the employees and other people who depend on this paper,” he said.

An auction for the property had been set for April 27, and Tierney’s lawyers argued that the senior lenders, which include CIT Group, Angelo, Gordon and Credit Suisse, should not be allowed to use the debt they are owed to bid for the company, a so-called credit bid. Improbably, Tierney’s position won the argument in front of a federal appeals court that disallowed the credit bid on March 22, but last Wednesday the plot thickened again when lenders asked that the auction be delayed to give them time to appeal.

In the months of brawling, Tierney has accused lenders of illegally taping him and exercising bad faith in and out of court. At a news conference last week, he took particular aim at Angelo, Gordon, a hedge fund that specializes in distressed assets. In addition to a senior debt position in Philadelphia, Angelo, Gordon has a significant stake in the Tribune Co, which owns the Los Angeles Times and the Chicago Tribune, and also owns a large stake in the Star Tribune in Minneapolis.

He called Angelo, Gordon “a secretive hedge fund that has its fingers on the throat of the Los Angeles Times and the Chicago Tribune and will someday, they hope, basically control the news in three of the four largest news markets in the country if they are able to capture Philadelphia as well.”

The judges denied the debt holders’ request on Thursday, and the decision was upheld on Friday. The auction will go off as scheduled and be followed by a confirmation hearing to investigate whether all parties received fair value for their interests in the newspapers.

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