PHILADELPHIA (AP) — The owner of Philadelphia's two largest newspapers and their joint website, philly.com, has handed them off to a nonprofit created to help them survive the digital age with help from foundation grants, university partnerships and other boosters.
Local philanthropist H.F. "Gerry" Lenfest, who bought the media company 19 months ago, will give the struggling properties to the new Institute for Journalism in New Media and donate $20 million to endow the enterprise.
Lenfest pledged the newsroom would continue to produce "independent public service journalism and investigative reporting that positively impacts the community, while also creating innovative multimedia content."
The broadsheet Inquirer has won 20 Pulitzer Prizes for excellence in journalism, and the tabloid Daily News has garnered an additional three. Recent awards include the Inquirer's 2014 prize for criticism and 2012 Public Service award and the Daily News' 2010 prize for investigative journalism.
Readers will not see any immediate changes, and the company's contracts with its labor unions will remain in force, Lenfest said.
Lenfest, 85, sold a cable empire he had built to the Comcast Corp. in 2000, leaving him a $1.2 billion fortune.
"Money is a responsibility when you have that kind of wealth. I've tried to do right by it. Perhaps the greatest opportunity came with the ownership of these newspapers," he said Tuesday. "What would this city be without the Inquirer and Daily News?"
Last year, Philadelphia Media Network consolidated its rival newsrooms in a move that capped a decade of cutbacks, bankruptcy sales and management upheaval. A week before Christmas, 46 journalists were let go.
Lenfest said the remaining staff "must meet our readers where they are — and where they are going in the future — as well as develop fresh ways in which advertisers can reach these engaged daily readers in print and online."
The institute might accept funding from corporations or other benefactors to support specific journalism projects, a model that company officials compared to endowed university chairs.
Local Newspaper Guild President Howard Gensler, a gossip columnist, holds out hope but thinks a $100 million endowment might be needed to stabilize the operation. He also worried about potential conflicts with outside donors.
"Today was nice. Tomorrow the work starts," Gensler said.
Philadelphia Media Network will remain a self-governing, for-profit company, owned by the institute and run by current management and directors.
The hybrid set-up is designed to let the nonprofit institute accept charitable donations without stifling its ability to publish editorials or endorse political candidates.
It will join a small number of newspaper operations run by such nonprofits or trusts, such as the Tampa Bay Times in St. Petersburg, Florida, a for-profit operation owned by the Poynter Institute, and The Day, a New London, Connecticut-based newspaper held in a public trust.
"It's just a funding mechanism through philanthropy to support our journalism," said Terry Egger, Philadelphia Media Network's publisher and CEO. "Hopefully it will underwrite some of our business. It's not a bailout."
The Philadelphia media company saw its value plunge from $515 million in 2006 to $50 million in 2012 before Lenfest and partner Lewis Katz paid $88 million to buy out a rival in May 2014. Katz died in a plane crash days later.
"It's still going to be scrambling for ever-diminishing revenues, but there is now a bit of a safety net," said Victor Pickard, a professor who studies media institutions at the University of Pennsylvania.
Sarah Bartlett, the dean of the CUNY Graduate School of Journalism, sits on the board of the new institute in Philadelphia.
"I think this kind of model could become a very popular approach," she said.
Associated Press business reporter Tali Arbel in New York contributed to this report.