Business

Philly papers fetch $55M

A group of powerful local business leaders announced yesterday that it had bought Philadelphia’s two largest newspapers from hedge funds for approximately $55 million, a fraction of what investors paid for them in 2006.

It is the fifth time in six years the newspapers were sold.

The buyers, who include influential New Jersey Democrat George Norcross III, former Nets owner Lewis Katz and cable TV mogul H.F. “Gerry” Lenfest, said they plan to keep the newspapers’ tradition of strong journalism alive in the digital age.

The group also emphatically pledged not to meddle with content, though some of the new owners frequently make headlines. The Inquirer published a huge article last month on how Norcross uses his “political muscle” to run a local hospital.

“Nobody is going to interfere with the news,” Katz said at the announcement yesterday. “They would be crazy to do that.”

The investors had an exclusive option to bid for Philadelphia Media Network, which also operates the Philly.com website and a weekly sports publication. Norcross said he and Katz put the sale in motion by making an unsolicited offer for the papers last fall.

The purchase price is less than 15 percent of the $515 million paid by a group of investors in 2006, and far less than the $139 million creditors paid at a 2010 bankruptcy auction.

The industry has been savaged for years by rising costs and declining advertising revenue as readers increasingly consume news online.

The sale comes after Philadelphia Media Network cut 45 positions last month, including 40 in the newsroom. That leaves about 320 journalists at the two newspapers and website — one-third of the editorial staffing level during the 1980s.