Incorporated: 2006
NAIC: 511110 Newspaper Publishers and Printing; 516110 Internet Publishing and Broadcasting
SIC: 2711 Newspapers
Philadelphia Media Holdings LLC is the parent company of the Philadelphia Inquirer, the Philadelphia Daily News, and the online accompaniment www.philly.com. Philadelphia Media Holdings (PMH) was formed in 2005 as a union of investors seeking to purchase local media assets from the McClatchy Company after McClatchy completed a major buyout of the Knight-Ridder Company in early 2006. During its first year of operation, PMH initiated measures to increase circulation and profitability, including reducing the budget and staff for both papers. As of 2007, the Philadelphia Inquirer was the eighth largest newspaper in the United States and revenues from all PMH assets totaled over $180 million annually.
History of the Philadelphia Inquirer: 1829-1969
The Philadelphia Inquirer was founded in June 1829, under the name Pennsylvania Inquirer, by John Norvell, a lawyer and former editor of the Baltimore Whig, and John R. Walker, a newspaper printer. In its own right, the Inquirer is the third-oldest printed paper in the nation; however, as a result of a merger with the Philadelphia Public Ledger in 1931, which itself merged with the Pennsylvania Packet, which began publication in 1771, the Inquirer holds claim to the oldest continuous newspaper lineage in the United States.
Jesper Harding, a Philadelphia native and publisher of religious materials, purchased the Pennsylvania Inquirer from Norvell and Walker several months after the newspaper began production. In the 1830s, Harding began publishing editorials against the presidency of Andrew Jackson, after Jackson began his attack against the Central Bank. The Inquirer was thereafter known for its editorial support of the opposing Whig Party. In the 1840s, Harding achieved another milestone for the Inquirer when he obtained the exclusive serial rights to publish several of the novels of Charles Dickens in the paper. Harding also published, in 1845, the Edgar Allan Poe poem, "The Raven."
Ownership of the Inquirer passed from Harding to his son William White Harding in 1855, while Jesper Harding went on to serve the federal government as Collector of Internal Revenue under President Abraham Lincoln. William Harding changed the paper's name to the Philadelphia Inquirer in 1860. Under the younger Harding's leadership, the Inquirer gained national fame for its coverage of the Civil War, when the paper was circulated to Union troops. In addition, Harding instated new distribution routes that significantly increased the paper's reach within the Philadelphia area.
In 1889, ownership passed to James Elverson, a British-born publisher and entrepreneur who was an avid supporter of the Republican Party. Elverson utilized the Inquirer to support and report on developments in politics and to organize Republican Party events. When Philadelphia hosted the Republican National Convention in 1900, Elverson had a sign constructed across Broad Street, the city's largest north-south thoroughfare, which contained over 2,000 lightbulbs spelling the message, "Philadelphia Inquirer: Largest Republican Circulation in the World."
Elverson was the first to add a Sunday edition to the Inquirer, which quickly became the paper's most popular publication. Ownership eventually passed to Elverson's son, James "Colonel" Elverson, Jr., whose innovations greatly increased the scope and influence of the paper. From 1900 to the 1920s, the Inquirer was known as the most prominent Republican publication in the nation and was often called the "Republican Bible."
After the death of Colonel Elverson the paper was passed to his sister Eleanor who sold the paper in 1930 to Cyrus Curtis, the publisher of the Public Ledger, for the sum of $10 million. Curtis' son, John Martin, assumed control after the death of his father in 1931 and merged the Inquirer with the Public Ledger. Martin was forced to sell the paper back to Eleanor Elverson when the merger failed to turn a profit. In 1936, Moses Annenberg purchased the Inquirer for a reported sum of $4 million and the assumption of $6.8 million in debt.
Moses Annenberg and his son Walter managed the paper together and invested heavily in increasing the paper's circulation and advertising revenues. The Annenbergs already owned a substantial media business with interests and ownership in newspapers, radio, and television, and used funds from their established media businesses to fund the expansion and rehabilitation of the Inquirer.
In 1939, Moses Annenberg was convicted for evading federal income taxes amounting to over $3.2 million and was sentenced to three years in prison. Annenberg died just over a month after his release from prison, and the business was inherited by his son. Walter Annenberg became famous on a national level for his investments and his interest in politics. Under his leadership, the Inquirer continued to expand, and in 1957 Annenberg purchased the Philadelphia Daily News, a tabloid-format paper that had come under financial strain and was thereby available at a reduced price.
Annenberg had a long history of involvement in national politics and in 1969 was asked to serve as ambassador to Britain under President Richard M. Nixon. Annenberg decided to sell both the Inquirer and the Daily News to John S. Knight, whose company, Knight Newspapers, Inc., had become one of the largest media ownership companies in the nation. The sale of both papers was completed in 1969 for a sum of $55 million.
History of the Philadelphia Daily News: 1925-57
The Philadelphia Daily News, a tabloid-style newspaper focusing mainly on local news and sports, published its first issue in 1925, under owner and publisher Lee Ellmaker. Although Ellmaker is often credited as the newspaper's first owner, the Pennsylvania Historical Commission published, in 1937, a guide to the history of Philadelphia, which claims that William Scott Vare, a local construction industry leader and Republican Party politician, reportedly funded the establishment of the newspaper to aid in his 1925 election campaign for the U.S. Senate.
According to the Historical Commission, Ellmaker and Vare were friends and associates and Ellmaker served as general manager of the paper although he owned only a minority of the stock shares. After his election to the Senate, Vare sold stock in the Daily News to media mogul Bernard McFadden, who also published Physical Culture and True Romance magazines. McFadden sold his shares to Ellmaker in 1934, who was then the majority owner of the newspaper.
The Daily News had a long history of financial difficulty. Although the paper's circulation exceeded 200,000 in the 1930s, readership dropped during the 1940s and Ellmaker was faced with discontinuing publication or seeking loans to keep the paper in print. Ellmaker eventually decided to sell the Daily News to Matthew McCloskey, a construction industry contractor and a leading fund-raiser for the Philadelphia Democratic Party.
McCloskey tried to reverse the paper's financial collapse by reducing the budget and staff, after a series of negotiations with the unions. Although McCloskey had some minor success in increasing readership, the Daily News was still losing revenue and, in 1957, McCloskey sold the paper to Walter Annenberg, publisher of the Inquirer. In an effort to revitalize the paper, Annenberg transformed the Daily News into an afternoon edition format with an increasing focus on local news.
Knight Newspapers Ownership: 1969-2006
After purchasing the Inquirer and the Daily News, Knight Newspapers, Inc., substantially altered the formats for both papers. The Daily News was returned to its initial morning publication format, while the Inquirer was shifted toward a more politically focused news format.
In 1972, Knight hired Eugene L. Roberts as executive editor for the Inquirer. Roberts had previously worked for the New York Times covering the civil rights movement as the paper's "Southern Correspondent," and later providing battlefield coverage during the Vietnam conflict. Under Roberts' leadership, the public perception of the Inquirer gradually improved and the paper's writers and editors were lauded by the journalism community for their efforts. In 1975, the newspaper received its first Pulitzer Prize, when writers Donald Bartlett and James Steele won the award for National Journalism. Between 1975 and 1990, writers at the Inquirer received a total of 18 Pulitzer Prizes. In 1982, when the Evening Bulletin ceased publication, the Inquirer and the Daily News were left as the sole daily newspapers in Philadelphia.
In 1974, Knight Newspapers merged with Ridder Publications to become Knight-Ridder, which was the largest newspaper publisher in the United States during the 1980s until it was surpassed by the Gannett Company, owner of USA Today magazine. While the acquisition and leadership of Roberts helped to elevate the Inquirer, the Daily News also gained recognition and won two Pulitzer Prizes in 1982 and 1992, for editorial writing and cartooning respectively. Despite its increased success, the Daily News continued to suffer from financial difficulties and it was often speculated that Knight-Ridder would abandon the paper.
During the 1990s, the national newspaper industry suffered from a decline in readership and subscriptions, partially linked to the advent and proliferation of Internet journalism. Knight-Ridder attempted to keep abreast of the trends by shifting to the online market. In 1993, Knight-Ridder began working with America Online to develop newspaper content for Internet readers and in 1995 they launched www.philly.com, a web site that gave readers access to the Inquirer and the Daily News through the World Wide Web. By the late 1990s, much of the content of both newspapers was available in online format.
By 2005, Knight-Ridder's profits had fallen to unacceptable levels and the company was considering selling off its media holdings. Although management was approached by several companies seeking to purchase portions of the company's assets, Knight-Ridder preferred to sell the company as a single unit. In late 2005, it was announced that the company was negotiating an outright sale to the McClatchy Company. In June 2006, negotiations were concluded and McClatchy bought the company's assets for a combined sum of $6.5 billion, which included assuming over $1 billion in debt. At the conclusion of the sale, McClatchy operated 32 daily newspapers with a combined circulation of over three million.
Philadelphia Media Holdings: 2006-07
Shortly after the announcement in 2005 of the impending sale to McClatchy, the company released an announcement that it would consider selling portions of the assets acquired from Knight-Ridder to interested companies. Brian Tierney, a public relations representative turned investor, began seeking partners to invest in purchasing the Philadelphia-area assets after the completion of the sale. In preparation for the bidding process, Tierney and partners formed Philadelphia Media Holdings LLC (PMH).
Following the completion of the June 2006 sale, McClatchy immediately resold twelve of its newspaper acquisitions. Tierney and partners at PMH acquired the Inquirer, Daily News, and the accompanying web site for a total of $562 million.
Among Tierney's co-investors were NutriSystem CEO Michael Hagan and Eastern Technology Fund, a King of Prussia, Pennsylvania-based investment group that owned technology and healthcare companies, and the Regional Carpenters' Union Pension Plan. Tierney took control of the papers as publisher and CEO and in November 2006 brought Mark Frisby from the Courier-Post in Camden, New Jersey, to serve as the company's executive vice-president.
A 2006 analysis by the Audit Bureau of Circulations reported that the circulation of the nation's newspapers had fallen by an average of 2.8 percent per year, while the circulation for the Inquirer had dropped by approximately 7.6 percent during the same period. Falling circulation posed a threat to PMH investments and forced Tierney and partners to initiate a broad strategy for company development.
Early in 2007, PMH announced that it would be reducing the staff at the Philadelphia Inquirer by 68 editorial employees. The employment cutbacks came at the end of strenuous negotiations with the Newspaper Guild of Greater Philadelphia. Employment reductions were part of a plan by PMH to increase the profitability of the newspapers, which also included curtailing sick pay and seniority benefits. According to official press releases, cutbacks would save approximately $6.8 million in annual expenditures.
In the wake of the 2007 layoffs, PMH came under criticism by organizations representing the city's African American journalists. According to the Philadelphia Association of Black Journalists, over 20 percent of persons removed from the Inquirer staff were African American, of the 11.3 percent of African Americans working on the Inquirer staff. Accusations of racial bias were lodged against PMH for the disproportionate representation of African Americans laid off during the company's restructuring.
In May 2007, Executive Vice-President Mark Frisby was asked to take over the helm as publisher of the Philadelphia Daily News, while Tierney remained publisher and CEO of the Inquirer. Frisby maintained his role as executive vice president of labor and production while focusing on increasing the circulation and relevance of the Daily News. The announcement of Frisby's appointment came along with announcements that the yearlong decline in circulation for both papers had begun to subside.
In June, Tierney organized a partnership with Monster Worldwide, Inc., the parent company of the national employment web site www.monster.com. In 2007, Monster Worldwide commanded over 50 percent of web-based employment searches. According to press releases, Philly.com received over two million unique visitors each month and was the fastest-growing portion of PMH. In order to capitalize on the web site's popularity, Tierney announced that the company would spend $20 million to improve the web service.
In August, PMH announced that it would be selling the historic Inquirer Building at the corner of Broad and Callowhill Streets. Tierney said that the sale was a result of a number of factors including the mismatch between the size of the building and the company's staff. Tierney said further that revenues from the sale would be reinvested in developing the company and paying down debt.
Principal Subsidiaries
Philadelphia Inquirer; Philadelphia Daily News; Philly.com.
Principal Competitors
Gannett Co., Inc.; Journal Register Company; South Jersey Publishing Company.
Further Reading
Campisi, Gloria, "Exec Exits Papers to Become Head of N.Y. Lottery," Philadelphia Daily News, September 19, 2007.
DiStefano, Joseph N., "Tech Fund Joins Group Buying Inquirer, Daily News," Philadelphia Inquirer, June 8, 2006.
Fernandez, Bob, "68 to Lose Jobs at Philadelphia Inquirer," Philadelphia Inquirer, January 2, 2007.
"Job Web Site Forms Venture with Two Philadelphia Papers," New York Times, July 26, 2007, p. C5.
Klein, Julia M., "Dark Days: Labor Loses More Ground in the Newsroom," Columbia Journalism Review, March/April 2007, pp. 16-17.
Lucey, Catherine, "Inquirer, News Building Up for Sale," Philadelphia Daily News, August 22, 2007.
------, "Mark Frisby Named People Paper Publisher," Philadelphia Daily News, May 24, 2007, p. 4.
Manly, Lorne, "Seeking to Cash In on the 'Hyperlocal,'" New York Times, December 31, 2006, p. 4.
Seelye, Katherine Q., and Andrew Ross Sorkin, "Newspaper Chain Agrees to a Sale for 4.5 Billion," New York Times, March 13, 2006.
Shapiro, Howard, "We're Still Here, and Still Asking Why," Philadelphia Inquirer, May 24, 2006, p. A14.
Steel, Emily, "Newspaper Circulations Slide More; Broad Decline May Hasten Move to Hone Web Focus; New York Tabloids Log Gains," Wall Street Journal, October 31, 2006, p. B2.
Steinberg, Brian, "Questions with ... Brian P. Tierney," Wall Street Journal, November 29, 2006.
Toomer, Regan, "Philly Paper Demotes Stephen A. Smith," New Pittsburgh Courier, September 5, 2007, p. C5.
Washington, Rhodes E., "Layoffs Take Media in Wrong Direction," Philadelphia Tribune, January 16, 2007, p. 6A.
— Micah L. Issitt
