Two Philadelphia newspapers donated by owner to new non-profit media institute
The owner of the two Philadelphia newspapers, H.F. “Gerry” Lenfest, has gifted the newspapers to a newly formed organization, converting Philadelphia Media Network, LLC into a public benefit corporation. The move to non-profit status
The two newspapers, The Philadelphia Inquirer and the Daily News, as well as Philly.com. will now be published by the Institute for Journalism in New Media.
The papers have continued struggling to maintain their circulation and revenue levels this past decade. In 2009, Philadelphia Newspapers LLC filed for Chapter 11 bankruptcy protection. The ownership of the papers came up for bid with the lenders winning control, but failing to close the deal when they could not reach a deal with the paper’s unions. The papers were again up for bid, and the lenders again winning out. The media business was finally sold in 2012 for $55 million to a group headed by Lenfest.
Today the Inquirer has a daily circulation of just under 250K, down from 330K a decade ago, though the print portion is about half. But the paper has had more success with their digital editions that similarly sized papers, with around 90K in digital. The Daily News, a tabloid, has a far smaller circulation, with a daily circulation of 44,757 according to the last AAM audit.
“My goal is to ensure that the journalism traditionally provided by the printed newspapers is given a new life and prolonged, while new media formats for its distribution are being developed,” Lenfest, who is 85, said today.
“The distinctiveness of this structure and agreement between our organizations, coupled with the incredible generosity of Gerry, will contribute to the sustainability of great independent journalism for Philadelphia.” – Pedro A. Ramos, president and CEO of The Philadelphia Foundation
Lenfest has given the new nonprofit news organization $20 million to start off its life.
In October, the papers announced that they would combine their newsrooms in a cost cutting move. Last month, though, the publisher announced that 46 newsroom jobs would be cut.
The new ownership structure is both unique and a bit complicated. The legal owner of the newspapers has been The Philadelphia Foundation. The Institute has been created by the Foundation, with the newspapers donated to that new entity. By still being tied to the Foundation the new organization does not need to create a new legal entity, allowing the non-profit to take control of the papers immediately.
Here is the announcement regarding the formation of the Institute for Journalism in New Media:
PHILADELPHIA, Penn. – January 12, 2016 – H. F. (Gerry) Lenfest, the sole owner and Chairman of Philadelphia Media Network, the holding company for The Philadelphia Inquirer, Daily News and philly.com, today announced that he has donated these news organizations to a newly created tax-exempt organization known as the Institute for Journalism in New Media (“the Institute”) and will contribute $20 million to its newly established endowment. The Institute will operate under the TPF Special Assets Fund associated with The Philadelphia Foundation(“TPF”). Philadelphia Media Network, LLC, which has been converted to a public benefit corporation (“PBC”), will operate independently as a taxable subsidiary of the Institute.
In launching this historic new organization, Lenfest has created a structure to ensure that The Philadelphia Inquirer, Daily News and philly.com will remain committed to producing independent public service journalism and investigative reporting that positively impacts the community, while also creating innovative multimedia content that will attract audiences of every generation.
“My goal is to ensure that the journalism traditionally provided by the printed newspapers is given a new life and prolonged, while new media formats for its distribution are being developed,” Lenfest said. “Of all of the ventures I have been involved with in my life, nothing is more important than preserving the journalism that has been delivered by these storied news organizations.”
Lenfest continued, “The donation of these news organizations to the Institute establishes a creative path towards sustaining the journalism of The Philadelphia Inquirer, Daily News and philly.com. As we know all too well, the traditional business model of print newspapers is under significant pressure from digital competition, most notably because of free online content and growing advertising opportunities. To successfully evolve, we must meet our readers where they are – and where they are going in the future – as well as develop fresh ways in which advertisers can reach these engaged daily readers in print and online. The landmark agreement we have reached with The Philadelphia Foundation offers an innovative solution to the real challenges facing print journalism. What we have created here for Philadelphia, through the Institute, its endowment and future grants, will allow the journalism that is so important to our region to continue long-term in the new digital age.”
To protect the editorial independence of The Philadelphia Inquirer, Daily News and philly.com, Philadelphia Media Network, PBC, will continue to operate under its current management team and its current Board of Directors as a taxable subsidiary of the Institute. While still running the news organizations as a for-profitbusiness, the new ownership structure under the Institute allows journalism at The Philadelphia Inquirer, Daily News and philly.com to benefit more readily from philanthropic dollars, yet still be governed by those best equipped to manage and operate these news outlets.
“Today’s announcement is an outstanding development for our news organizations and for the evolution of print and digital journalism in the United States,” said Terry Egger, publisher and CEO of The Philadelphia Inquirer, Daily News and philly.com. “Since the founding of The Philadelphia Inquirer in 1829, great journalism has been our hallmark, as the entire region benefits from the critical role it plays in the health of greater Philadelphia. Millions across the Philadelphia region and South Jersey engage daily with The Philadelphia Inquirer, Daily Newsand philly.com and the public trust that we hold is one that we deeply value and respect. Thanks to Gerry’s bold vision for the future, we will not only be able to maintain our fierce journalistic independence, but we will also now be able to receive funding from new philanthropic revenue streams in support of public interest reporting that benefits the community.”
The Institute will draw upon the research efforts and innovation of universities, while leveraging the strong platform of The Philadelphia Inquirer, Daily News and philly.com, owned by Philadelphia Media Network, PBC, as resources for implementing best practices in a digital age. Journalism, Business and Communications schools all have an important stake in responding to the challenges facing journalism, especially as this profession is so necessary within local communities across the United States. By researching and implementing possible solutions, and by training students to become experts in this field, the Institute’s mission will be fulfilled and independent journalism sustained. The Institute will be governed by a Board of Managers. Its initial members include:
- Sarah Bartlett, Dean, Graduate School of Journalism, CUNY
- David Boardman, Dean and Professor, School of Media and Communication, Temple University
- Steven W. Coll, Dean & Henry R. Luce Professor of Journalism, School of Journalism, Columbia University
- Michael X. Delli Carping, Dean, Annenberg School for Communication University of Pennsylvania
- David W. Haas, Vice Chair, The Wyncote Foundation
- H.F. (Gerry) Lenfest, Chairman, Philadelphia Media Network, PBC
- Pedro A. Ramos, President and CEO, The Philadelphia Foundation
- Rosalind Remer, Vice Provost & Lenfest Executive Director, Center for Cultural Partnerships, Drexel University
- David Schemer, Dean Emeritus and Harvey R. Miller Professor, of Law and Economics, Columbia University Law School
- Leonard Tow, Founder and Chairman, The Tow Foundation
Lenfest will serve as the initial Chairman of the Board of Managers of the Institute and, as previously noted, will provide $20 million for its endowment. With this new organizational structure in place, the endowment for the Institute will be able to receive additional donations from individuals, foundations, corporations and other entities for the mission of continuing journalism, all of which will be tax-deductible through The Philadelphia Foundation.
“Gerry Lenfest has long been one of Philadelphia’s great philanthropists and The Philadelphia Foundation is proud to serve as the trusted partner of the Institute for Journalism in New Media in this landmark venture,” said Pedro A. Ramos, president and CEO of The Philadelphia Foundation. “The distinctiveness of this structure and agreement between our organizations, coupled with the incredible generosity of Gerry, will contribute to the sustainability of great independent journalism for Philadelphia. As a community foundation devoted to the well-being of our region and to supporting civic engagement, we are proud to be part of such an important legacy.”