PHILADELPHIA — Feuding owners of Philadelphia’s two largest newspapers must dissolve the company in Delaware, where they incorporated two years ago, a judge has ruled.
The ruling is a victory for majority owner George Norcross, a Democratic powerbroker who asked that the Delaware courts oversee a private auction involving only current investors.
Norcross has been locked in a court fight for control of The Philadelphia Inquirer, Philadelphia Daily News and the website Philly.com with rival owner Lewis Katz for nearly a year, after the wealthy entrepreneurs joined forces to buy the ailing media company from hedge fund owners.
Philadelphia Common Pleas Judge Patricia McInerney has handled previous court showdowns over their picks for publisher and top editor.
She ruled Friday, however, that Interstate General Media should be dissolved in Delaware’s Chancery Court.
Katz had sought a public auction in Philadelphia, arguing that the employees and newspapers are based there.
“We look forward to the opportunity to explain why any sale of IGM should be among its current owners as the agreement states,” the Norcross faction, which includes two other minority investors, said in a statement that boasted of the company’s “remarkable turnaround” in less than two years.
Norcross has proposed that any interested parties put up $4 million in escrow to take part in the auction.
Katz and his lone ally among the investors, philanthropist Gerald H.F. Lenfest, referred to the “impasse between the owner groups” in their response to McInerney’s latest ruling and called for an open auction to achieve the highest dollar for the company.
“This process will allow Philadelphia newspapers and Philly.com to thrive once again,” they said.
The local Newspaper Guild, which represents hundreds of editorial and advertising employees, has expressed interest in mounting a bid with an unidentified partner. Their officials have said the owners’ feud has resulted in “gridlock” at a critical time in the industry.
The company changed hands five times from 2006 to 2012. The long-simmering Norcross-Katz stalemate spilled into public view over the October firing of Inquirer editor Bill Marimow, whom Katz supports. McInerney later returned him to the job, although his contract expires in April.
The media company, purchased for $515 million in 2006, sold for about a tenth of that in 2012.