Upstairs Downstairs At The Inquirer

Mr. & Mrs. Egger visit the newsroom

By Ralph Cipriano
for BigTrial.net

At Philadelphia Media Network, they're staging an Upstairs Downstairs revival with no end in sight.

In the newsroom of the Inquirer, Daily News and philly.com, members of the NewsGuild of Greater Philadelphia have posted signs commemorating the grim fact that they've gone more than 3,500 days without a raise. And now management wants 30 union members to take a buyout next month, or else more layoffs may be on the way.

But for the independent contractors and officers of the fat nonprofit that owns PMN, the cash bequeathed by the late philanthropist, Gerry Lenfest, never seems to run out.

Even when management's grand plans for reviving the hometown papers don't pan out, nobody who lives upstairs has to worry about taking the hit.

Diane Mastrull is an Inquirer business reporter and weekend editor who's president of the NewsGuild. When asked about how her members were reacting to the latest round of buyouts, she wrote in an email, "The reaction has been utter disgust -- in the newsroom, finance, circulation and advertising."

"My members in each department have endured reorganizations time and time again and have embraced change like champs," Mastrull wrote. "They are appalled that when leadership mandates fail, it is they who are punished, not the 'Publisher of the Year' or other managers who are architects of those changes."

Mastrull was referring to Publisher Terry Egger, who last year was named Editor & Publisher's Publisher of the year. Egger did not respond to a request for comment. In February, the NewsGuild, which represents more than 300 employees, including reporters, editors, photographers, and sales reps, declared that it had no confidence in Egger's leadership.

And things are getting worse according to the union president.

"Over and over I have heard a fear I've never heard before -- that we really have no viable plan," Mastrull wrote. "That's a scary environment in which to marry, buy a house, have children, and plan for retirement."

The No. 1 guy on the newsroom seniority list has his own doubts about what management is up to.

"It's fair to say there's a sense of betrayal," wrote Inky columnist Stu Bykofsky in an email.

"We haven't had a raise in more than a decade, and dozens of new people have been hired over the past year -- young quality people -- and now the company wants to shed dozens," said Bykofsky, who has no plans to take the buyout.

"People are free to draw their own conclusions."

But for the officers and contractors employed by The Philadelphia Foundation, the nonprofit that owns Philadelphia Media Network, it's a different story. According to a 990 tax return filed in 2017 with the IRS on behalf of The Philadelphia Foundation's $60 million Special Assets Fund, its officers and independent contractors are thriving.

They include:

-- Douglas K. Smith of LaGrangeville, N.Y., who collected $501,675 for project management of the Knight-Lenfest Initiative;

-- Burt Herman of New York, N.Y., who got paid $273,250 for program management;

--  Brian Communications of Conshohocken, which was paid $261,908 for donor development and web site services;

-- Herts Consulting LLC of West Windsor, N.J., was paid $234,636, for program management;

-- Permit Capital of West Conshohocken, collected $129,018 for investment advisor services.

Brian Communications is the PR agency headed by former Inquirer publisher Brian Tierney. Tierney's continued employment at the new Inky is a subject that rankles the NewsGuild.

"It's just outrageous," said Bill Ross, executive director of the NewsGuild. "When does it end? Our pension fund is projected to run out of money in five years. And the failed publisher that bankrupted the company and withdrew from our pension fund and failed to pay the $50 million withdraw liability . . .  is still drawing money from both entities."

Tierney did not respond to a request for comment. Besides being a contractor for The Philadelphia Foundation, Tierney's also a member of PMN's board of directors. PMN is a for-profit enterprise owned by a nonprofit.

According to the 990, the officers of the Philadelphia Foundation are also doing quite well, including:

-- James Friedlich, CEP and Manager, Institute, who was paid $284,328 in compensation plus other compensation of $43,961;

-- Pedro Ramos, president, CEO & manager, Institute, who collected $323,432 in reportable compensation plus $43,500 in other compensation;

-- Mark Forehlich, chief financial officer, $134,976 in reportable compensation, and $19,283 in other compensation;

-- Annie Madonia, chief advance officer, institute, $150,933 in reportable compensation, and $19,283 in other compensation.

Meanwhile, the Inky's latest circulation figures are not as impressive as the big bucks that the contractors and officers are pulling down.

As of May 7, the Inquirer's Sunday circulation was down to 201,024; circulation of the daily Inquirer was at 101,818. The circulation of the Daily News has dwindled to 19,192. And behind its paywall the philly.com website has only 30,000 paid subscribers.

Amid the downturn, Ross credits Egger with inspiring the troops.

"His actions helped mobilize and engage our membership like never before," Ross said. "The newsroom is filled with signs and Guild logos."

As far as Ross is concerned, Egger is "an absentee publisher and pretty much a fraud."

The latest round of buyouts, Ross said, "is just another example of Egger's failed leadership. It's the same playbook he's brought over from his disastrous stops in St. Louis and Cleveland where he devastated both papers. Well at least he got $9 million in stock options from St. Louis when he was asked to leave."

"Our membership has endured enough pain since 2006 when Brian Tierney bought the company and failed big time," Ross said. Now, he added, the membership "is ready to fight and get what is rightfully theirs."

Egger announced the latest round of buyouts in a May 23rd email to "colleagues" that was filled with buzz words and bad news.

"We continue to make important strides on our critical path toward becoming a sustainable business that's built upon the trust and support of our readers and advertisers," Egger began, before bragging about "our high-impact journalism and our marketing solutions."

"But being a nonprofit with a "unique ownership structure" does not make the company "immune to the dramatic challenges that weigh heavily on the news industry," Egger wrote. "Declines in revenues," he said require that "we must constantly adapt and adjust our expenses while also making strategic investments necessary for our future."

Despite making "transformative progress," management must still "have difficult decisions to make regarding where to reduce expenses and where to invest," Egger said, before rolling out the "voluntary separation program."

More than 100 employees, including 74 in the newsroom, are eligible for buyouts that offer about 27 weeks of pay plus six months of paid health insurance, and the hope of collecting unemployment when the buyout money runs out.