The owner of The Philadelphia Inquirer, the Philadelphia Daily News and Philly.com has turned over the media company to a nonprofit institute in the hope that a new business model will help them survive the digital age and stanch years of layoffs and losses.
Local philanthropist H.F. "Gerry" Lenfest, who bought the media company 19 months ago, will give the struggling properties to the newly formed Institute for Journalism in New Media and donate $20 million to endow the enterprise.
"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 Tuesday.
He pledged the new endeavor would continue to produce "independent public service journalism and investigative reporting that positively impacts the community, while also creating innovative multimedia content."
The broadsheet Inquirer has won 20 Pulitzer Prizes for excellence in journalism, and the tabloid Daily News has garnered an additional three. Recent awards include architecture critic Inga Saffron's 2014 prize for criticism, the Inquirer's 2012 Public Service award for a series on school violence and a Daily News duo's 2010 investigative prize for stories on rogue Philadelphia drug cops.
Readers will not see any immediate changes, and the company's contracts with its labor unions will remain in force, Lenfest said.
Lenfest sold a cable empire he built to the Comcast Corp. in 2000, leaving him with more money than he knew what to do with, he said.
"Money is a responsibility when you have that kind of wealth. I've tried to do right by it. Perhaps the greatest opportunity came with the ownership of these newspapers," he said g. "What would this city be without the Inquirer and Daily News?"
Last year, Philadelphia Media Network announced a consolidation of its newsrooms in a cost-cutting move following a decade of cutbacks and management upheaval. The move to a single newsroom was expected to save $5 million to $6 million annually.
The company also laid off 46 journalists just before Christmas. It continues to publish both morning newspapers.
Lenfest bought the news company at auction with a partner for $88 million in May 2014, only to have the partner, businessman Lewis Katz, die in a plane crash days later.
The staff, he said, "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 institute might accept funding from corporations and other benefactors to support specific journalism projects and reporting efforts, a model company officials compared to the way university chairs are sometimes endowed.
Philadelphia Media Network will remain a self-governing, for-profit company, owned by the institute and run by the news organizations' current management team and board of directors, Lenfest said.
The hybrid set-up is designed to let the nonprofit accept charitable contributions and pass them on to the for-profit news company, supplementing its financial ability to pursue investigative journalism. At the same time, the media company will not be hampered by political restrictions that come with being a nonprofit, and it will be forced to remain a viable financial business.
It would join a small number of newspaper operations run by nonprofits or trusts, such as the Tampa Bay Times in St. Petersburg, Florida, a for-profit operation owned by the Poynter Institute, and The Day, a New London, Connecticut-based newspaper held in a public trust.
Terry Egger, Philadelphia Media Network publisher and CEO, said Lenfest's announcement is "an outstanding development for our news organizations and for the evolution of print and digital journalism in the United States."
"Thanks to Gerry's bold vision for the future" he said, "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."