Last updated: May 25. 2014 11:50PM - 2791 Views
By David Sell Philadelphia Inquirer



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PHILADELPHIA — George E. Norcross III and Lewis Katz made many of their millions while being in charge.


So when they began talking about buying The Inquirer’s parent company in 2011, they had concerns about the kind of business marriage theirs might be.


Norcross had already been turned down once in a bid to buy the company, he would later tell a Delaware judge, and he was willing to share control with Katz only if the deal allowed for an “amicable divorce.”


Katz didn’t recall having that discussion before the deal closed. “It wasn’t the time to talk about divorce,” he testified last month. “I mean, we were both putting up a lot of money… . There was a lot of respect going back from both of us.”


Now, little bliss remains among the men who, with four others, formed Interstate General Media Holdings LLC in 2012 and, as co-managing partners, evenly shared control of major business decisions.


After months of turmoil at the privately held company - much of it spilling into public view - the divorce is scheduled to occur Tuesday at a private auction with an opening bid of $77 million.


What happens that morning is likely to have a lasting impact - and not just on the 1,800 employees who work for The Inquirer, Philadelphia Daily News, philly.com, and at a plant IGM owns outside Conshohocken. Through hearings in Philadelphia and Delaware, court filings, and public statements, both men have made clear they have different visions for the company, long a dominant local news source for hundreds of thousands in the region.


On Friday, Katz toured the plant with several men, but declined to say why or comment on the auction. The same day, Norcross’ spokesman, Daniel Fee, said: “We are looking forward to Tuesday as an opportunity to put this litigation behind everyone and return the company’s focus to where it should be: providing outstanding journalism for the readers and advertisers of the papers and philly.com.”


The auction is to start at 9:30 a.m. at the Dechert law firm, with William B. Chandler III as the trustee.


Norcross and co-owners Joseph Buckelew and William Hankowsky form one group, with 57.45 percent of the company shares. Katz and H.F. “Gerry” Lenfest form the other, with 42.55 percent. Each will occupy separate conference rooms, and the bidding will decide which group buys out the other.


During his testimony, Norcross said $77 million should be the minimum bid — which represents the owners’ initial $61.1 million investment and existing debt, $15.3 million in mid-May.


The Delaware judge presiding over the case, Vice Chancellor Donald F. Parsons Jr., agreed, and set that as the first bid from the Norcross group.


Parsons’ order said each side must raise the bid by $1 million within 10 minutes or drop out. Within an hour after the auction ends, the two sides or Chandler will announce the winner and price.


How high the bids might rise is unclear. Fee, the Norcross spokesman, described the increments as at least $1 million.


The newspapers sold for about $562 million, including pension liabilities, in 2006, but the company has since had several owners and a bankruptcy, as the industry financials have tanked.


At a hearing in Delaware last month, an investment banker testified that IGM had many problems, but also said the company forecast 2014 earnings before interest, taxes, depreciation, and amortization of up to $10 million.


During the same hearing, Norcross testified that IGM was unprofitable in 2012 and 2013. He said the company “is not meeting my expectations, nor has it ever met my expectations.”


In an interview last week, Alan D. Mutter, a former newspaper executive-turned-consultant, said the real question is “how badly someone wants to be the owner of The Inquirer.”


Both men have vowed to win, and have records to match.


The son of a South Jersey labor leader, Norcross attended Rutgers-Camden and went into business. Today, at 58, he’s executive chairman of one of the country’s largest insurance brokerage firms, Conner, Strong & Buckelew.


He was the second-largest individual shareholder of Commerce Bank when he led its $9 billion sale to TD Bank in 2007, according to his testimony. He is chairman of the board of Cooper University Hospital in Camden. A longtime Democratic Party leader in New Jersey, Norcross is helping his brother, Donald Norcross, run for Congress.


Like Norcross, Katz has deep roots in Camden. Katz, 72, graduated from Temple, then Dickinson School of Law. Katz made his money in banks, billboards, parking lots, and through his ownership of the New Jersey Nets, the New Jersey Devils, and the YES sports network.


Katz once spent a reported $937,000 for the only known signature of President Abraham Lincoln at Gettysburg in 1863. At a Sotheby’s auction in 2008, he testified, he bought papers signed by President Grover Cleveland solely because a competing bidder had treated him rudely.


Both Katz and Norcross pledged after forming IGM not to meddle in newsroom affairs - and have since accused each other of doing so. Both also have personal ties in the company. Norcross’ daughter, Alessandra, is an IGM director and vice president of digital operations and corporate services. Katz’s son, Drew, is an IGM director. Katz’s longtime companion, Nancy Phillips, is The Inquirer’s city editor.


Their dispute erupted publicly Oct. 7, when publisher Robert J. Hall fired Inquirer editor William K. Marimow at the behest of Norcross and over the objection of Katz. A Philadelphia judge reinstated Marimow but denied Katz’s request to dismiss Hall.


The fate of both is likely to be shaped by the outcome Tuesday.


“Frankly, that’s been the reason that Gerry and I have spent all this money, trying to right what we think was a wrong,” Katz testified.


Lenfest, a philanthropist and former cable company owner, was the last to join the ownership group. Only later, he testified, did he learn his title of IGM chairman held no power. Still, he tried several times to broker peace or a deal between Katz and Norcross.


In April, Lenfest was asked if he had ever been involved in a business deal as strange as IGM.


“Never,” Lenfest said. “And I never will again.”

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