Wednesday, February 25, 2009

Looks like Tierney is in the ejection seat

Brian Tierney’s days appear to be numbered as the chief executive of Philadelphia’s Inquirer and Daily News.

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 Although Tierney Tuesday rescinded the raise for himself and two top aides, the move will not soon be forgotten by either the creditors or the short-handed staffs of his struggling newspapers.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.

3 Comments:

Blogger News4Less said...

Though most can't get past his politics, at least Tierney had a passion for newspapers. The guy put up a greater percentage of his own personal wealth than say, Sam Zell, and didn't buy the papers just to rape them and flip what was left of the company in 10 years. Indeed, Tierney gave a shit. Just not in the way his staffers would have it.

Hindsight shows that he overpaid for, and seriously underestimated the challenge of running, a newspaper that was already in bad shape. Just remember one thing: As bad a company as McClatchy wanted nothing to do with Philly, and it would probably be out of business if Tierney and his partners didn't give it a shot.

5:31 AM  
Anonymous Anonymous said...

Bullshit. Tierney saw an opportunity to get revenge on his nemesis, the Inquirer, and turn it into a more conservative newspaper. It backfired. I mean really, Santorum? He talked smack about improving local coverage and did the exact opposite by laying everybody off so he could make a payment. He's a just another phony, like Zell, who had no business buying a newspaper.

9:06 AM  
Anonymous Anonymous said...

Alan, what do you make of Will Bunch's disagreement with you regarding fate of Daily News? Will is an admirer of yours.... but thinks the Daily News has stronger market position worth building on instead of scrapping

6:00 AM  

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