Terms Of Estrangement

Brian Tierney leaves with $300,000.

by Ralph Cipriano

[ the end of an era ]

At The Philadelphia Inquirer and Daily News, the transition from the old ownership to the new comes with a price tag of at least $300,000.

That's the amount of severance pay that departing Philadelphia Newspapers LLC CEO Brian P. Tierney negotiated from the new owners of the two daily newspapers, according to two sources familiar with the deal. Tierney had sought as severance a year's salary, or $618,000, the sources tell City Paper, but settled for about half of that.

Tierney, scheduled to leave the papers this Friday, will be paid $300,000 in exchange for his services as a consultant after the newspapers formally change hands in June, the sources say. In addition, the new owners agreed to pay at least two months salary to 21 top managers who served under Tierney, the sources say — some of whom will likely remain with the company under the new ownership.

The $300,000 amounts to a final payday for Tierney, who, until the consultant agreement, had been engaging in brass-knuckle bargaining with the new owners, a group of senior lenders headed by the New York investment firm Angelo, Gordon & Co. that won control of the papers at an April 28 auction for $139 million.

(Tierney led a group of local investors that purchased the papers in 2006 for $515 million, but filed for bankruptcy in February 2009.)

While Tierney had pledged a smooth transition, union leaders and a lawyer for the new owners publicly claimed that he had been playing hardball.

On May 12, The Newspaper Guild of Greater Philadelphia put out a bulletin alleging that Tierney had "blocked access" to financial information that the guild had been seeking to present a contract proposal to the new owners.

Per the Guild's version of the story: "Further hampering productive negotiation, Mr. Tierney will not allow Philadelphia Newspapers' human resources executives to attend bargaining sessions with the incoming ownership group, despite his pledge for a smooth transition."

This month, Tierney's lawyers filed a motion in bankruptcy court seeking more documents related to a 2008 meeting between Tierney and his lenders that was tape-recorded without Tierney's knowledge. In response, lawyers representing the lenders who later bought the two papers charged Tierney with "harassment," and said that his real intention for filing the motion was to secure severance packages for himself and his top managers.

Fred S. Hodara, the new owners' attorney, told the Inquirer this month that Tierney's severance demand was the equivalent of a request for "ransom" in exchange for ensuring a smooth transition. Hodara did not respond to a call for comment.

Tierney's defenders at 400 N. Broad St. were happy to hear of the severance: They say at least he got something out of the deal. Rick Edmonds, who writes the Biz Blog for poynter.org, a top journalism website, publicly speculated on April 29 that "Brian Tierney's original group of local buyers ... lost their entire investment of $100 million or so" when they were outbid by the lenders' group.

According to the Inquirer, it's now all sweetness and light between Tierney and the new owners.

"For the sake of the 4,500 employees here, I have pledged all along to make this a really smooth transition," Tierney told the paper last week.

"We are very pleased with the resolution, which assures a smooth transition to the new owners," added Hodara.

Jay Devine, a Tierney spokesman, did not return repeated phone calls from City Paper.

(editorial@citypaper.net)