About 500 unionized employees of The Philadelphia Inquirer and the Philadelphia Daily News had hoped to bid at the latest sale of the media company, with help from business tycoon Raymond Perelman. However, Perelman and other potential investors walked away after pondering bids pledged by two current owners.
"The $77 million figure is not something anyone is willing to go near," lawyer Lisa Lori, representing the local Newspaper Guild of America chapter, said Thursday. "Nobody believes the value is that (high)."
That could turn the auction into an ego-fueled showdown between local business magnates George Norcross and Lewis Katz, who lead rival factions among investors who paid about $55 million for the company just two years ago. They are locked in a stalemate over how to run the company, which also operates the Philly.com website.
The company has been left with absent or lame-duck leaders while the two men — and a fleet of lawyers — have squared off in court over various feuds since October.
Delaware Chancery Court Judge Donald Parsons Jr. complained Thursday that the parties claim to be in a hurry to move forward, but don't always act that way.
"It's a little frustrating to me, ... (that) every time I try to get something concrete out of both sides, I don't get it," Parsons said.
Asked about the status of Inquirer editor Bill Marimow, whose contract expires next week, Parsons warned the two sides to work something out. Katz wants Marimow to remain in place. Norcross had tried to fire him last year.
Parsons must soon decide whether to let outsiders bid at the auction, which would involve more of the company's time and money. Katz has proposed a sealed bid auction open to anyone, while Norcross wants a live auction limited to current owners. Parsons questioned Thursday whether anyone else was really interested.
"The news that this property is for sale has been out there for months, and nobody has come (forward)," he said.
The seemingly exuberant $77 million opening bid is designed to make all of the 2012 investors whole, but is eight times this year's projected cash flow, a heady valuation for the industry. The sale price could be influenced by the company's emotional, rather than financial, appeal.
However, Katz and Norcross could also be seeking to push the price higher before cashing out.
Norcross currently holds a 52 percent stake in the company, and his three-man faction a 58 percent stake. Katz holds a 26 percent stake, and ally H.F. "Gerry" Lenfest, a local philanthropist, a 16 percent stake.
The fight comes at a critical time, as the Philadelphia newspapers and industry at large try to reverse years of revenue declines and wrangle profits from digital operations. Digital revenues at the parent company, Interstate General Media, have fallen below what they were in 2006, according to testimony last week. The newspapers have changed hands five times during that time period.
Norcross is one of the most powerful figures in the Philadelphia-South Jersey region, with interests in media, health care, education, banking, insurance and politics.
Katz made his fortune investing in a parking empire and a sports TV network in New York City.