Rival owners fighting for control of Philadelphia's two largest newspapers have each pledged $77 million to take control of the company.
The Philadelphia Inquirer and Philadelphia Daily News are being sold as investors who bought them in 2012 argue over newsroom management and corporate strategy.
Wealthy businessmen George Norcross and Lewis Katz lead the rival factions, and testified at a hearing underway in Delaware this week to determine who can bid at the planned auction.
"There are people interested in this newspaper," Katz testified Tuesday. "Whether or not they will come forward to bid is, in my mind, still problematic."
He supports a sealed-bid process open to all, while Norcross wants an ascending-bid auction open only to current investors and the newspaper guild.
Norcross, an insurance executive and powerful New Jersey Democrat, currently owns 52 percent of the stock.
He said that he had not expected to take a hands-on role in the newspapers, but jumped in when the investors learned the company finances were more dire than advertised.
Norcross and Katz made up the two-man management committee that controlled all major business decisions under the purchase agreement. Norcross testified that he expected "an amicable divorce" if one man wanted out. Instead, their relationship soured, but neither left.
As the stalemate dragged on last year, key executives and some newsroom talent have left.
In some ways, though, the company appears to be on firmer footing than it was in 2012, when investor paid about $55 million for it. Operating expenses improved from a $5 million loss in 2012 to a $10 million gain in 2013, thanks largely to wage and benefit cuts, according to the testimony.
"The union saved the company," Katz said of the local newspaper guild, which represents about 550 employees and hopes to mount a bid with an unidentified backer.
But digital revenue has foundered in recent years, amid frequent ownership changes and a prolonged bankruptcy.
"Digital revenue in 2013 is lower than it was seven years ago. That is a remarkable statement," investment banker John Gregory Chachas testified Tuesday.
Both sides want the next ownership change resolved quickly. Norcross said Monday that he planned an opening bid of $77 million, enough to cover the purchase price plus assumed debt. Katz vowed to match the bid.
Chancery Court Judge Donald F. Parsons Jr. said it's unclear if any other bids will materialize.
"If not, it's these two gentlemen," Parsons said. "I'll be happy to have somebody else come out of the woodwork, in the form of the guild, or someone from the outside. But I don't see that we can leave too much time for that to occur."
A union executive is expected to testify Wednesday when the hearing concludes.
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