The Philadelphia Inquirer, Philadelphia Daily News and Philly.com were sold at bankruptcy auction Wednesday for $139 million.
Three groups vied for control of the media institution -- a local group of investors led by current Philadelphia Newspapers L.L.C. CEO Brian Tierney, a Canadian media company and a group amassed by the company's creditors.
The creditors came out on top with the highest bid at the auction which began at 4 a.m. The sale, which is broken down as $70 million in cash, $40 million in debt and $29 million in real estate, was first reported on Philly.com.
Tierney, 53, didn’t seem happy to let the papers go.
"We didn't make it," Tierney said in a statement shortly after the sale. "I think I'll go home tonight and sleep like a baby, which means I'll wake up every hour crying."
Tierney's group of investors made a final offer of about $129 million, which included $95 million in cash and turning over control of the company's headquarters to its lenders. Unfortunately, that offer fell a few million dollars short of the final price.
"It wasn't for a lack of money," Tierney said after arriving back to Philadelphia. The sale, which was approved by a bankruptcy judge in New York shortly after the final bid was cast, ended months of speculation about the future of the city's two historic newspapers, its online entity and 4,500 employees.
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"It's the highest price paid for a newspaper in decades," Tierney said. The publisher went on to say that the media company was sold for nine times last year's earnings.
Sharp words and fears of layoffs spread like wildfire in the weeks leading up to the auction.
The lending group, which includes investment firm Alden Capital, Angelo Gordon & Co. and the CIT Group, had previously said they would terminate all the company's employees and force them to reapply for positions. Only half of the previous positions were going to be offered.
The group changed its tune at the auction Wednesday saying they would enter into collective bargaining with the company's unions.
"I am also proud that I have preserved the jobs of our 4,500 employees and the commitment that the new owners have preserved as well," Tierney said. "None of this would have been possible without the hard work and respect that these bidders have for our company and for our employees."
In a statement to union members, Newspaper Guild President Dan Gross wished Tierney the "best of luck" and reassured that their current contract still stands.
"Our contract is still in effect and throughout the confirmation and bargaining process there should be no changes to our working conditions," the statement read.
But it seems that statement does little to assuage the fears of what may come once control is transferred.
"There’s a lot of concern as to what happens, do we have jobs, do we have jobs we can afford to keep…I have two kids in college," said Metro columnist Daniel Rubin.
Diane Mastrull, Inquirer business writer and a Guild officer, says she just hopes the new owners don't try to save money through cost cutting.
"I think we would just like to see changes that make sense that are relevant for the future, but changes that aren’t made for the sake of cutting."
Tierney and a group of lenders bought the media company in 2006 for $515 million with the goal of keeping local control of the papers. Included in that purchase was almost $400 million in borrowed debt and it was that debt that ultimately led to Wednesday's fire sale.
Tierney says he lost $10 million in the bankruptcy auction, but would do it all again. "I'm a self-made guy, it's a lot of money, but I'd 100-percent do it again."
The deal is set to be confirmed at a bankruptcy hearing on May 25.
