Creditors ask oversight of newspapers
Philadelphia Newspapers L.L.C.'s senior lenders argued in a court document filed yesterday that "independent oversight" should be imposed on chief executive officer Brian P. Tierney during the company's bankruptcy reorganization.
Philadelphia Newspapers L.L.C.'s senior lenders argued in a court document filed yesterday that "independent oversight" should be imposed on chief executive officer Brian P. Tierney during the company's bankruptcy reorganization.
The filing set the stage for a hearing Monday in U.S. Bankruptcy Court in Philadelphia on the conditions under which the publisher of The Inquirer, the Philadelphia Daily News, and Philly.com may continue using the company's cash to fund operations.
The lenders demand that an adviser currently reporting to Tierney be given the title of chief restructuring officer with greater decision-making power. They also want two independent "directors/managers" to oversee the company's operations and its reorganization.
Reached by telephone, Tierney had no comment.
The secured lenders, owed nearly $300 million, said their interests were not adequately protected by the ongoing operation of the company without additional restrictions because of the rapid deterioration of financial results.
The fight between Tierney and creditors for control of the company comes as the weak economy is costing newspapers revenue, particularly in advertising dollars.
The 25 largest newspapers, in an informal arrangement, share monthly reports on total revenue. Of the 20 that reported in February, The Inquirer posted the third-smallest decline in total revenue, according to the newspapers' reports.
The filing said the company repeatedly failed to meet forecasts and cited the rapid decrease in 2009 projections from $25 million to $10 million, before paying interest and taxes and before the accounting deductions for depreciations and amortization.
For the first five months of this year, Philadelphia Newspapers is projecting to break even, according to the filing.
The company earned $36 million in 2008, according to court documents, amid the worst financial crisis in the industry in a generation.
Despite the economic pressure, The Inquirer has continued to win recognition for the quality of its journalism. In the last few weeks, it has won a National Headliner Award for "journalistic innovation" and a dozen first-place Keystone awards from the Pennsylvania Newspaper Association along with the group's Sweepstakes Award, emblematic of the top newspaper in the state.
A hearing on the crucial issue of a loan to sustain the company during bankruptcy is planned for next month.
