Fishbowl6thBorough: One Bidder Down, Staffers Disgruntled As Philly Newspaper Auction Rolls Along

The auction for Philadelphia Newspapers LLC’s publictions (the Inquirer, Philadelphia Daily News, and Philly.com) began early this morning here in New York.

Canada’s Stern Group has not made a bid, but still has the option to re-enter the auction later on. According to Philly.com, this leaves the bankrupt company in the middle of a bidding war between two groups – the firm’s senior lenders and a Philadelphia-based investment group. We previously reported that California-based businessman Rob Burkle had dropped out of the auction.

Earlier, disputes threatened to derail the bidding process, as Brian P. Tierney, chief executive officer of Philadelphia Newspaper called a provision that would result in “the media firm’s employees to be fired with a guarantee that only just more than 50 percent would be rehired” the worst of his fears:

The senior lenders accused Tierney of “unfair and despicable” tactics by airing the provision, which one lawyer said was common in such sales and was meant only as a starting point for establishing new levels for employment and compensation.

Almost all of the company’s unions support Tierney and his effort to assemble local investors. On Tuesday, those unions issued a statement decrying the possibility of mass layoffs and warning they would fight back.

To put it in industry terms: Yikes. We’ll keep you updated on the bidding process as it moves along or doesn’t, as the case may be.