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Norcross Group Takes Over Philadelphia Inquirer

In a move that sent shock waves through the journalism world, South Jersey Democratic leader George Norcross II yesterday added the region’s largest newspaper to his growing political, business and civic empire.

Norcross, arguably the most powerful Democrat in New Jersey, and Lewis Katz, a former parking lot magnate who helped engineer the rise of former Democratic Gov. Jim Florio, will serve as managing partners of Interstate General Media Company L.L.C., the partnership that purchased the Philadelphia Inquirer, Philadelphia Daily News and its website, Philly.com, for $55 million yesterday.

Norcross said there is no majority owner. The four principal owners are Dr. Krishna P. Singh, the Holtec International Corp. CEO who serves on the board of Camden’s Cooper Medical Center, which Norcross chairs; and Gerry Lenfest, a Philadelphia cable TV tycoon who will serve as chairman of the board. Joseph Buckelew, a former Ocean County Republican freeholder director and chairman of the Conner Strong & Buckelew insurance company of which Norcross is majority owner; and real estate developer William P. Hankovsky, CEO of Liberty Property Trust, a Malvern, Pa., firm with $6.2 billion in office and industrial space, are minority owners.

In an interview, Norcross said he viewed the purchase as a good business opportunity, and that “it’s the dot-com that’s most valuable” because the future of media is in the web and digital applications. The $55 million that the Norcross team paid for the media group is a fraction of the $515 million that it sold for in 2006 before plummeting circulation and the loss of display and classified advertising to the Internet sent newspaper values plunging downward.

However, what the New York Times, the Washington Post and the Poynter Institute have been writing about, and what Philadelphia Inquirer and Philadelphia Daily News reporters have been talking about on blogs and Twitter accounts -- although not in the Inquirer, Daily News or Philly.com -- is the question of what impact Norcross and his co-owners will have on coverage.

“If George Norcross thinks he’s going to have his way with the newsroom, he’s sadly mistaken,” said Donna Shaw, associate professor of journalism at The College of New Jersey and a former Inquirer reporter who has been talking with her ex-colleagues about the implications of the pending Norcross purchase for months. “The journalism community has really rallied around the newsroom. If there is any move on his part or the other owners to affect coverage, there will be a hue and cry throughout the tri-state area.”

Kelly McBride, senior faculty for ethics at the Poynter Institute, the nation’s leading independent journalism institute, said the purchase of a major newspaper by a political and business leader as important to his region as Norcross may be unprecedented. “If you’re asking for an exact analogy, I can’t think of any,” she said, noting that while New York City Mayor Mike Bloomberg owns Bloomberg News, he doesn’t own The New York Times, Daily News or New York Post that are the main papers that cover him.

Despite being based in Philadelphia, the Inquirer’s Sunday circulation of 96,397 is the largest in Norcross’ core political base of Camden, Gloucester, Burlington and Salem counties, and trails only Gannett’s Camden Courier-Post, 49,702 to 44,369, in daily circulation there. Its Philly.com website is generally regarded as the strongest in the region, and it has a strong reputation for investigative reporting.

There are few important political leaders in South Jersey who did not come up through the Norcross ranks, from Senate President Stephen Sweeney (D-Gloucester) and Assembly Majority Leader Lou Greenwald (D-Camden) to Camden County freeholders, and there are few major issues on which Norcross has not taken a lead role, from the planned merger of Rowan University with Rutgers-Camden to charter schools and the proposed creation of a countywide police department.

However, Norcross noted in an interview last night that he and other co-owners signed a one-sentence statement drafted by the editors of the Inquirer, Daily News and Philly.com promising that "The editorial function of the business shall at all times remain independent of the ownership and control of the company, and no owner shall attempt to influence or interfere with editorial policies or news decisions."

“You’re not reading the Inquirer if you suggest that the folks who work in this enterprise are afraid to write about me,” Norcross said, referring to the publication of a major investigation last week titled “Powerful Medicine: How George Norcross Used His Political Muscle to Pump Up Once-Ailing Cooper Hospital.” and another front-page story on the $410,000 he was allegedly paid as a finder’s fee for arranging a Delaware River Port Authority contract for another insurance broker -- an allegation he denies.

“You can’t control the media,” Norcross said. “The media is too big, there are too many sources of news with all of the blogs out there, and owning a newspaper is not going to stop anything because reporters will go out of their way to show their independence. When I bought the paper, I gave up all rights to talk to editors at the Inquirer about anything affecting me.”

Nevertheless, Norcross has been known to try to influence coverage. In an interview with The New York Times in February about the pending Inquirer purchase, Norcross said he talked to editors at the Inquirer about the then-unpublished “Powerful Medicine” story; he told The New York Times in an e-mail that the reporter’s research “contained significant factual errors and incomplete data about the hospital and health care industry.”

Inquirer Editor-in-Chief Stan Wischnowski confirmed at the time that the story needed additional work before publication, but the story’s delay fueled reporter concerns within the newspaper over potential interference.

Shaw, the former Inquirer reporter who is now a journalism professor, said the publication of the “Powerful Medicine” investigation the week before the Norcross purchase was “undoubtedly intended to let the public know that they’re not going to pull punches. It’s not the last time we’ll see him on Page 1. I hope a political pro like George Norcross knows he can’t be thin-skinned.”

However, McBride said Norcross and the new co-owners are going to have to work hard to convince reporters and readers that they intend to stick to their non-interference pledge.

“The problem is that there has been interference already,” McBride said, referring to the editors’ meeting that Publisher Gregory J. Osberg called to make sure that he saw all articles pertaining to the pending sale before they were published. Osberg initially denied holding the meeting in an interview with The New York Times, then had to call back to acknowledge that the meeting had indeed occurred after another editor confirmed it. Osberg said he was just trying to make sure that the stories were accurate.

But Shaw said the fact that “the immediate past management has been so ham-handed at times in the way they reacted to coverage of themselves won’t make it any easier,” and McBride noted that the new ownership group’s decision to keep Osberg as publisher “has the potential to send the wrong signal.”

“I know that certainly the purchase by private ownership complicates matters because it becomes more difficult for the newsroom to know what’s going on,” Shaw added. “When it was a publicly held corporation, it was so much more transparent.”

Norcross and Katz insisted that their acquisition of the Philadelphia Media Network was based upon their belief that they could turn around a media company that has been losing money and dropping in value.

“These newspapers have an historic tradition of outstanding journalism in our city, and we want to preserve that tradition and marry it to the exciting digital opportunities that are revolutionizing the news business,” Katz said.

Since 2003, the Philadelphia Inquirer’s daily print circulation in New Jersey has dropped 41 percent from 74,954 to 44,369, and its Sunday sales in New Jersey from 150,054 to 96,397. (See Table) The Inquirer’s nosedive in circulation – coupled by a sharp decline in retail advertising during the recession and the loss of most classified advertising to the Internet – forced major layoffs in the newsroom that has left the winner of 18 Pulitzer Prizes “a shadow of its former self,” McBride said.

The Inquirer’s decline in circulation and advertising -- and the deep cuts in staffing -- were typical of the New Jersey newspaper industry as a whole, according to audited circulation figures reported by the New Jersey Press Association. These numbers do not reflect online readership, which are beginning to provide substantial revenues.

The Star-Ledger, the state’s largest newspaper, has dropped from 605,290 Sunday and 405,997 daily to just 341,026 Sunday and 226,098 daily -- a 44.3 percent decline. The Newhouse group, which owns the Ledger and six other dailies that represent one-third of the state’s overall daily newspaper circulation, has lost 40.8 percent of its daily sales over the past eight years.

The Asbury Park Press, Gannett’s flagship newspaper, suffered a 37.6 percent circulation decline from 167,359 to 104,483 daily. The Asbury Park Press and the five other Gannett New Jersey newspapers, which represent a quarter of the state’s daily circulation, have lost 34.6 percent of their daily sales since 2003.

Interestingly, the major independent regional dailies, The Record and the Herald-News in Bergen and Passaic counties, have held their circulation better, dropping just 18 percent from 180,547 to 153,043 daily – a record matched by The Press of Atlantic City, whose circulation dipped 17.8 percent from 74,575 to 61,278.

The circulation drops, however, do not reflect the rapid growth in on-line readership for newspaper websites like Newhouse’s NJ.com and the Philly.com website, said John Pavlik, chair of the Journalism Department at Rutgers University.

Commenting on the Philadelphia Media Group purchase, Pavlik said, “There may be a real opportunity to do something innovative and maybe launch a new digital product, a real tablet-based newspaper. It’s projected in 2012 that newspaper online advertising nationally will exceed print advertising. That’s what the data show -- that print is now slightly ahead of online, but online is catching up.

“If you add in the rapid growth of pay walls to require readers to pay for content at The New York Times and Gannett, there are two new sources of revenue for newspapers that may be taking off. I see this as a real opportunity for growth. I can’t imagine the new buyers are doing this solely to control public opinion, they have to be looking at it as an investment too -- in digital, paywall, tablet, Smartphone, the whole combination. And they have a strong market in Philadelphia and New Jersey to test it in.”

Mark J. Magyar is an editor-at-large for NJ Spotlight.

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