Looks like Tierney is in the ejection seat
If and when he departs, drastic cost cutting is sure to follow as Tierney’s beloved dailies come under the control of the evidently frustrated creditors who are on the hook for $412 million in debt and additional accumulated interest payments.
“This is a company in need of parental supervision,” one of the attorneys representing the newspapers' top creditors said in a hearing Tuesday on the Chapter 11 bankruptcy filing by Philadelphia Newspapers, L.L.C., according an article in the Philly Daily News.
Tierney and fellow hometown investors founded and funded Philadelphia Newspapers in 2006 to buy the papers during the liquidation of Knight Ridder, its long-time owner. As a consequence of this week’s bankruptcy filing, Tierney’s investors lost $150 million, with the flamboyant former press agent himself taking a $10 million hit.
Bankruptcy documents and the oral arguments in court reported by the Daily News indicate there has been a fair amount of friction between Tierney and his lenders. With the company long in default on its obligations and now in bankruptcy, creditors will have considerable leverage to change management if they deem it to be recalcitrant.
The comment calling for “parental supervision” suggests that at least one creditor thinks a change is in order.
Tierney did himself no good when he boosted his pay by 38% to $850,000 a year in late 2008 at a time when the company was unable to pay its loan obligations. Although Tierney Tuesday rescinded the raise for himself and two top aides, the move will not soon be forgotten by either the creditors or the short-handed staffs of his struggling newspapers.
According to unnamed sources cited by the Daily News, Tierney also has rejected the suggestion from “some of the company's creditors” who have proposed shutting the tabloid to save money at a time the company’s cash flow is projected in court documents to be on track to plunge 30.5% this year to $25 million from $36 million in 2008.
“As long as I'm running the place, the Daily News will never be closed and we'll never rescind our contracts,” Tierney told the Daily News.
The tab’s staff can take small comfort in such bravado, given Tierney’s slippery grip on his job.