In June 2006, Brian P. Tierney (right, in suit) came to the beautiful white art deco building that houses the troubled Philadelphia Inquirer and vowed to restore it to its Pulitzer-winning glory. Now the entrepreneur is watching his fledgling media empire slip from his grasp.
A hearing set for September 15 may help determine if Tierney, who led a $515 million purchase of the now-bankrupt Philadelphia Newspapers L.L.C., which also owns the tabloid Philadelphia Daily News, will be booted out by the media company's creditors. Among the senior lenders are Citizens Bank, a unit of the Royal Bank of Scotland Group Plc (RBS-F); Angelo, Gordon & Co., a major creditor of the bankrupt Tribune Co. and Star-Tribune of Minneapolis); CIT Group Inc. (CIT); and Eaton Vance Management.
Tierney is in the fight of his professional life, trying to keep control of his papers while repaying creditors pennies on the dollar. His problems are hardly unique: "Mr. Tierney sliced almost $100 million from annual operating costs that stood at $461 million in 2006," according to The Wall Street Journal. "He cut nearly 400 of the company's 2,600 full-time-equivalent jobs and persuaded unions to ease work rules. He also replaced most of the papers' ad-sales staff, ended cut-rate subscriptions, and started a glossy magazine to attract luxury-goods ads that the company says brings in $1.5 million in annual revenue." (Tierney declined an interview request for this story.)
Tierney wound up with little to show for his efforts. Earnings before interest, taxes, depreciation, and amortization at The Philadelphia Inquirer and The Philadelphia Daily News came to $36 million, about half its level in 2005. Tierney told the Journal that he has personally lost $10 million in the bankruptcy.
Creditors, already angry that Philadelphia Newspapers defaulted on some obligations, became furious over Tierney's Keep it Local P.R. campaign, touting the benefits of keeping the papers and Phily.com under local control. The company has taken its case directly to readers in print and online; there's even a Keep it Local Facebook page with more than 900 friends, some of them company employees.
The response to Tierney's campaign among Philadelphia' s political and business leaders has been underwhelming. The Greater Philadelphia Chamber of Commerce had no comment, and even readers don't seem to care much, either. (Local delicacy Tastykake, by comparison, has 12,491 Facebook fans.)
Pennsylvania Gov. Ed Rendell has no position on the Keep it Local campaign, although Rendell's press secretary says the governor believes that "local ownership is preferable if it is doable." Interestingly, though, The Philadelphia Inquirer was a perennial Pulitzer winner when its owner was based in Florida.