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Under the new leadership structure, Annenberg school dean Michael X. Delli Carpini is a member of the Board of Managers, with oversight over Philadelphia Media Networks. 

Credit: Ming Zha

While local newspapers nationwide struggle to keep afloat with the increased competition from free online news platforms, Philadelphia’s top journalistic publications bet last week on a rather uncharted strategy: going nonprofit ... sort of.

On Jan. 13, owner H.F. “Gerry” Lenfest announced his donation of the Philadelphia Media Network — the holding company of the Philadelphia Inquirer, Daily News, and Philly.com — to a newly created organization called the Institute for Journalism in New Media. The new Institute, which Lenfest endowed with $20 million, was created as a tax-exempt subsidiary of the existing Philadelphia Foundation, a nonprofit organization. Despite PMN's transfer to a nonprofit entity, the three media outlets will continue to operate as independent, for-profit corporations in order to ensure editorial independence.

“My goal is to ensure that the journalism traditionally provided by the printed newspapers is given a new life and prolonged, while new media formats for its distribution are being developed,” Lenfest said in a PMN press release. “The donation of these news organizations to the Institute establishes a creative path towards sustaining the journalism of The Philadelphia Inquirer, Daily News and Philly.com.”

The new ownership structure emerged in the hopes of opening new revenue streams for the subsidiary news companies. The Institute — governed by a Board of Managers which includes Dean of the Annenberg School for Communications Michael X. Delli Carpini — is in charge of managing tax-deductible donations from donors who wish to support public interest journalism at The Inquirer, the Daily News, and Philly.com.

Delli Carpini, a 1975 College graduate, specified he was approached by Mr. Lenfest at some point in the last six months to sit in on meetings discussing what a new PMN ownership structure would look like. Carpini noted that PMN's board, which is also composed of faculty from Columbia, Temple and Drexel University, has not formally met yet.

“This is very much something that I am interested in the scholarly way,” said Delli Carpini, whose research focuses on the impact of media on democratic engagement. “I’m also deeply committed to the city of Philadelphia. This seems like an opportunity to have a small voice in improving the information environment in a city I care a lot about.”

PMN’s bold move didn’t occur without raising concerns.

1983 College graduate and Daily Pennsylvanian alumnus Howard Gensler, a Daily News columnist and President of the Newspaper Guild of Greater Philadelphia, recognized that PMN’s new structure opens the way for high quality journalism and complicated ethical dilemmas. He questioned whether PMN’s cash-strained publications will be able to maintain their editorial independence and avoid conflicts of interest with private donors.

“Newspapers, unlike a lot of businesses, deal with ethical issues virtually everyday. It’s part of doing the job. You're always deciding if you're crossing a line; if you’re being fair [or] if you’re not being fair,” Gensler said. “I think institutionally we are better prepared than most to deal with these kind of ethical issues. That being said, as the economics of the industry get worse, there is a bigger premium on money.”

English Department faculty member and writer-in-residence Dick Polman, a journalist who spent 22 years at the Inquirer, acknowledged the grounds for concern. Polman said that PMN’s journalistic integrity would be at stake if the newspapers’ shrinking bottom line altered their impartiality in order to receive funding from certain outside donors.

Delli Carpini said maintaining journalistic independence was one of Lefest’s major concerns when devising the new business structure. Under the new model, PMN’s three subsidiaries have complete control over their operations and the power to veto any funding from the Institute that they find to be in conflict with their editorial impartiality.

Delli Carpini was quick to point out that all newspapers face issues of editorial independence.

“Everyone on [PMN's] board is aware that line that shouldn’t be crossed,” Delli Carpini said. “That is true whether the money is coming from advertisers or whether it is coming from a public institution. Vigilance is crucial, but vigilance is always necessary regardless of the funding structure.”

The Annenberg Dean went further by clarifying that his position within the Institute's Board of Managers should not be regarded as a “Penn initiative," but separate from any of his functions at the University. However, he did not discard the possibility of academic collaboration between Annenberg and PMN in developing innovating ways of disseminating media.

Lenfest’s donation was finalized in the midst of financially turbulent years for PMN. Like other news companies across the country, PMN has been plagued with a dwindling circulation and a $90 million decrease in advertising revenue since 2011, according to the Philadelphia Business Journal. In late October, Terrance C.Z. Egger, publisher and CEO of PMN, announced the merger of the company’s three newsrooms in order to save more than $5 million. The move resulted in the layoff of 46 employees.

“The old business model with commercial advertising is pretty much dead,” said Polman. “The nonprofit [model], for lack of better options, has to be tried. And nobody really knows whether it will work. This had better work, because I don’t know if they have a Plan B at this point.”

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