Region's Business 18 October 2012

FIVE MISTAKES STARTUPS OFTEN MAKE MIXED REACTION TO ABATEMENT PLAN

REMEMBERING ARLEN SPECTER: LAST OF RESPECTED MODERATES

REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

INVESTORS’ MONEY SAYS PRINT ISN’T DEAD JUST YET Newspapers’ values have plummeted and the competition for ad dollars continues to increase, but the death knell for newspapers may have been a bit premature.

WHY MARSHA BROWN CHOSE CREOLE OVER STEAKS IN NEW HOPE MORE PRESIDENTIAL DEBATE FALLOUT BUCKS COUNTY’S B&Bs ADAPT, CUT WINTER’S CHILL RegionsBusiness.com $2.00 U.S.

18 OCTOBER 2012

18 OCTOBER 2012

REGIONSBUSINESS.COM

CONTENTS

3

26

5 Mistakes Made by Most Startups

! Sometimes entrepreneurs get too focused on their launch and forget some little things that can make a big difference.

36

1900 Arch Street

Bucks B&Bs Beat Back Winter Blues Expanded offerings, creative marketing and constant innovation have helped Bucks County inns boost business in the traditionally slow winter months.

Savvy Investors Turn to ... Newspapers?

!

21

28

Yes, newspapers. So put away those obituaries, because it looks like local newspapers have plenty of life - and profit - left in them.

!

41

Debates Redux

Will the second presidential debate have an impact similar to the first one? !

Back To Her Roots

38

Marsha Brown owned three wildly successful Ruth’s Chris steakhouses. So why did she attach her name to a Creole restaurant in a renovated church? !

Developers Split on City’s Tax Abatement Plan

! Developers consider the ramifications of Philadelphia’s plan to scale back on the benefit.

REGION’S BUSINESS Independence Media Corp.

600 West Germantown Pike, Suite 400 Plymouth Meeting, PA 19462 610.940.1656 | feedback@regionsbusiness.com Online: RegionsBusiness.com To subscribe: 877.700.6245 or 215.627.6397 Circulation and Distribution managed by CCN - www.ccndelivery.com

1900 Arch Street is a premier mixed use development project in the Logan Square section of Philadelphia.

Scheduled for completion in Fall of 2013, the project will feature 280 luxury apartments, private parking, and 16,333 SF of ground floor retail.

PRESIDENT AND PUBLISHER James D. McDonald EDITORIAL DIRECTOR Karl M. Smith

Two Penn Center-Suburban Station Located just steps from City Hall, Suburban Station features some of the premier retail locations in the city.

Availabilities exist from 900-2,700 SF with neighboring tenants including McDonald’s, Dunkin Donuts, Au Bon Pain, and TD Bank.

ASSOCIATE EDITOR Terrence Casey CONTENT TEAM Brandon Baker, Emily DiCicco, Victoria

Marchiony CONTRIBUTORS Michael Jacobs, Anthony Wible, Brenda

Jankowski, Timothy Holwick, Don Lee ADVERTISING DIRECTOR Larry Smallacombe ACCOUNT MANAGER Charles Coltan, Rachel Sollberger

© Copyright 2012 Independence Media Corp. All rights reserved. Use of material within without express permission of publisher is prohibited.

Region’s Business is published weekly on Thursdays and online at www.RegionsBusiness.com.

The publisher makes no representations or warranties regarding the advertising appearing in its pages or its websites.

www.precisionrg.com 1429 Walnut Street Suite 1200 Philadelphia, PA 19102 866-Walnut 4

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18 OCTOBER 2012

REGIONSBUSINESS.COM

EDITOR’S DESK

Newspapers Aren’t Being Railroaded

Karl Smith is the Editorial Director for Region’s Business.

You can contact him at ksmith@regionsbusiness.com.

We learned a lot on our family vacation to the U.S. Southwest this past summer about dinosaurs, erosion, Native Americans, horses and, among many other things, Fred Harvey.

Fred Harvey, you say? Yes, Fred Harvey. Harvey Houses, Harvey Girls, that Fred Harvey.

OK, maybe not a household name here, but Fred Harvey built a business, actually, an empire at the turn of the 20th century.

The long and short of it is, he revolutionized the idea of eating while traveling, establishing Harvey Houses all along the Santa Fe Railway. He did this with impeccable standards - for food, for his dining rooms, for his employees and his reputation spread far and wide.

The Harvey Houses were established in small towns along

the Santa Fe lines, places with names like Emporia, Dodge City, Hutchison.

These places - all featuring a dining room and lunch counter, some including hotel rooms and other amenities, became social hubs for these small towns, a seemingly indispensible part of life.

There’s no real twist in the plot here, rail service improved to the point where you could get a decent meal on board and, soon after, air travel became more affordable and the interstate system made it easy for people to move across the country. Just like that, most of the Harvey Houses, once cornerstones of many a small town, disappeared.

A few survived the transition, including El Tovar on the South Rim of the Grand Canyon. It still

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retains much of its charm and beauty after all these years, even amongst the more modern hotels in the Grand Canyon Village.

Now we make the transition from Fred Harvey’s establishments to this week’s cover story on newspaper investments.

A stretch, you say? Hardly.

At the same time Harvey was building an empire, small newspapers were entrenched in towns all across the country. Like Harvey’s lunch counters, they were an important part of every day life.

However, much as people’s habits - both in travel and eating - forever altered the Harvey legacy, so, too, has the way we gather, consume and share information changed. With that has come undeniable and unstoppable changes to the newspaper industry.

The changes have not brought a death knell, though we’ve seen plenty of printed publications shuttered over the past few years and many others become a shadow of their former selves. Instead we are seeing a radical change and in that change, some have seen opportunity.

While some newspapers have closed and others have seen their value in freefall, some newspapers have been snatched up by savvy investors who do not see former glory, but potential.

More newspapers will disppear in the years to come, some will change beyond recognition, but there will be some who will not only surivive, but like the El Tovar on the edge of the Grand Canyon, thrive.

Either way, it’s not the end of the line.

18 OCTOBER 2012

REGIONSBUSINESS.COM

WEEKLY BRIEFING

CONSTRUCTION

Single-Family Homes Built At Fastest Rate Since July 2008

Single-family homes and apartments were built in September at the fastest rate since July four years ago, The Associated Press reported.

The improved market is another sign of an improved housing market.

Builders broke ground at an adjusted annual rate of 872,000 in September, according to the Commerce Department, up 15 percent from the month prior.

Apartments construction increased more than 25 percent; the pace of single-family homes increased 11 percent, according to The Associated Press.

The annual rate of applications for building permits increased 12 percent to 894,000, the highest since July 2008.

ENERGY

PECO Mails Outdated Voter ID Information PECO sent its energy@HOME newsletter to about 1.3 million customers containing incorrect information regarding the upcoming election.

Commonwealth Court Judge Robert E. Simpson has ruled earlier this month to delay the controversial Voter ID requirement for the 2012 election, but PECO’s newsletter tells its customers that they will need to present a valid photo ID when they go to vote.

A PECO spokeswoman told The Philadelphia Inquirer that the newsletters were printed a week before the Supreme Court sent the case back to Judge Simpson.

Voters can visit the Department of State’s website, www.votespa.com, or call the state at 1-877-868-3772.

5

EDUCATION MEDIA

Perelman Invests in Independence Media, Region’s Business Independence Media Corporation, publisher of Regions’ Business, announced philanthropist Raymond Perelman has invested in the media company.

Independence Media president and CEO James McDonald said the investment would allow his company to increase circulation for Region’s Business, as well as rebuild the publication’s Web presence and expand its market in Philadelphia and beyond.

“We’re excited to have access to Mr. Perelman’s business acumen and experience, which we know will be valuable to us as we build upon our initial success,” Mr. McDonald said. “We’ve been overwhelmed at the reader and advertiser response to our product since we launched and are more confident than ever about our plans for growth and expansion.”

Region’s Business is a weekly news magazine focused on business and politics in the Philadelphia area that began publishing in August. The RegionsBusiness.com website launched around the same time and Mr. McDonald said the process to revamp the website is already underway.

Mr. Perelman has long expressed an interesting in the print industry and was one of several suitors for the parent company of The Philadelphia Inquirer during its most recent sale.

Mr. Perelman is a trustee at the University of Pennsylvania Health System. Penn’s medical school is named after him and his wife, Ruth, after the couple donated $225 million last year.

“I look at it as Penn Medicine gave me a gift,” The New York Times quoted Mr. Perelman as saying.

“They offered me an opportunity to have my name on one of the best

Raymond Perelman

medical schools in the country.”

Upon Mrs. Perelman’s death last year, The Philadelphia Inquirer noted some of the couples other major donation, including “$6 million for the Perelman Theater at the Kimmel Center, $15 million for the Perelman Building at the Philadelphia Museum of Art and $3 million for the Perelman Jewish Day School.”

Mr. Perelman remains engaged in litigation with his youngest son, Jeffrey, regarding the transfer of businesses to the younger Perelman.

Last year, Forbes magazine listed Mr. Perelman’s oldest son, Ronald, as the 69th richest person in the world and the 26th richest American with a net worth of $12 billion Forbes featured an interview with Mr. Perelman and his elder son last year.

“Well, we’re alike; we both have fires in our belly. We both won’t quit, you know?” the magazine quoted Mr. Perelman as saying. “At 94 I’m buying a company. What’s my window? If I have five years it’s a lot. I’ll be 99. Until I get there I’m acting like I’m 50. And he has that fire in his belly. He ain’t gonna quit.

And I ain’t gonna quit.”

Penn Receives Donation, Establishes New Center The University of Pennsylvania has received was officials call one of the top gifts in Penn Medicine’s history, though the total amount was not disclosed, the Philadelphia Business Journal reported.

The Smilow Center for Translational Research in the Perelman School of Medicine will be established as a result of the gift from philanthropists Joel and William Smilow.

The William Smilow professorship in the field of cardiology and the William Smilow award for innovation in clinical excellence will also be established, according to the Journal.

ECONOMY

Higher Gas Prices Drive Improved Spending Data The consumer price index rose an adjusted 0.6 percent in September, according to the Labor Department.

However, the Associated Press reported, that number is inflated by gas prices. Without gas prices and food, the number drops to 0.1 percent.

Prices overall have risen 2 percent in the last year, which matches the inflation target set by the Federal Reserve.

RETAIL

Five Below Continues Growth Philadelphia’s Five Below Inc. continues to demonstrate significant growth, signing a lease for a new warehouse in Memphis, Tenn. and taking out an additional lease on a vacant retail space in Talleyville, Del. It began offering public stock in July, expanding its stock value from $17 per share to around $37.

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18 OCTOBER 2012

REGIONSBUSINESS.COM

WEEKLY BRIEFING

RETAIL

INSURANCE

Walmart Celebrates Citrus Successes

Nationwide Agrees to Settle $26M Suit

Walmart marked the success of its South African citrus import program last week at its Levittown, Bucks County store.

American citrus producers can’t supply fruit during the summer months, so retailers like Walmart turn to countries Walmart Store Manager Alan McWethy and Gugulethu Gingqi, Consul like South Africa. for Trade Affairs, South African Consulate, New York (SUBMITTED) “The seasons compliment each other “So this gives work to people in the U.S. and and that allows us to offer affordable, safe, high-quality citrus all year long,” said Don Fox, creates jobs in South Africa.”

Ms. Conradie said the partnership with Walmart’s Director of Global Food Sourcing.

“Right now this program is focused on the Phila- Walmart works well for her group, adding she’d delphia area and parts of the Northeast, but we’d like to see it expand, but knows the limitations.

“Walmart is very powerful all over the world like to extend it to other parts of the country.”

About 90 percent of the South African fruit and it’s help us grow our program,” she said. shipped for American consumption comes in “We’d like to expand in the U.S., but we don’t through the Gloucester City, N.J. port. That’s want to compete with local producers.”

Mr. Fox agreed, noting that South Africa the start of an economic ripple effect.

“That employs a lot of people at the port,” said farmers and U.S. growers have “seasons that Suhanra Conradie, CEO of the Western Cape compliment each other.”

Walmart purchases 15 percent of the South Citrus Producer’s Forum. “Some of it is repackaged and bagged, which is all done in the states, African summer citrus crop, amounting to roughly 6.2 million tons. all based on the requirements of the retailer.

HOSPITALS

FOOD SERVICE

Roxborough CEO Tapped to Lead Lower Bucks Also

Campo’s Denied Trademark: ‘Philadelphia’s Cheesesteak’

Roxborough Memorial Hospital announced CEO Peter J. Adamo will now also serve as CEO of Lower Bucks Hospital, located in Bristol Township, Pa. Each of the two hospitals is owned and operated by Prime Healthcare Services of Ontario, Canada.

The new hire enters the picture as Lower Bucks Hospital plans to put $10 million into its facility for capital improvements and aesthetic changes during the next two years.

HOTELS

Campo’s won’t be claiming the phrase “Philadelphia’s Cheesesteak” any time soon.

Mike Campo, owner of Campo’s cheesesteak restaurant in Old City and South Philadelphia, was denied a filed request to trademark the phrase “Philadelphia’s Cheesesteak,” being denied by the U.S. Patent and Trademark Office because the phrase was “geographically descriptive” of the sandwich.

In response, Mr. Campo has filed suit against David Kappos, director of the office, claiming in his complaint that his cheesesteak is “gloriously gluttonous.”

City’s 47th Hotel Opens

CHEMISTRY

Philadelphia’s 47th hotel offering opened October 11 in the Lafayette Building on 433 Chestnut Street in Old City.

The hotel is Kimpton Hotels & Restaurants second venture in the city, adding to Hotel Palomar on South 17th Street.

Citywide in 2012, the 268-room hotel is the second to open in the city, following the 136-suite Homewood Suites by Hilton, which opened in University City.

Nobel Winner Has Local Connection Robert Lefkowitz, founder of King of Prussia, Pa.based Trevana Inc., was awarded the Nobel Chemistry Prize by the Royal Swedish Academy of Sciences for cell research involved G-protein-coupled receptors.

Mr. Lefkowitz founded Trevana in 2008. It has proceeded with two particular molecules that it has taken into the clinical testing stage — one to treat post-operative pain, the other to address acute heart failure.

Nationwide Insurance Co. has agreed to settle a $26 million lawsuit with Harleysville Mutual Insurance Co. as a means to trim litigation costs.

Expressing in a statement that the company is pleased to put “litigation behind it,” Nationwide has received criticism as Harleysville policyholders claim they will not see a payout as their stakes fold into Nationwide.

Nationwide agreed to merge with the Harleysville, Pa.-based mutual for no cash consideration, with Nationwide paying twice the trading share at the time — roughly $60 — to Harleysville Group shareholders.

Nationwide maintains there was no wrongdoing on its part.

TELECOMMUNICATIONS

U.S. House Report Claims Comcast Involved in Possible Security Threat The House Intelligence committee recently released a 52-page report identifying a potential national security threat by Comcast Corp.’s involvement as a customer of Huawei Technologies Inc., a Chinese telecommunication firm.

The committee urges all U.S. telecommunication companies to cease business with the Chinese firms, concluding that their “provision of equipment to U.S. critical infrastructure could undermine core U.S. national security interests,” the report said.

Comcast claims that the Chinese firm, in addition to another it works with, ZTE Inc., are small suppliers of the company, and would not specify what equipment it purchases from the firms.

WHO TO FOLLOW

@ChrisBrogan CEO and President of Human Business Works, a business design company “You can worry about your competitors or you can work on your success.

One pays you.”

— October 7, 2012

@MichaelHyatt Author of the New York Times bestseller, Platform: Get Noticed in a Noisy World “My problem with the Kindle Paperwhite? Dull, splotchy screen and sluggish performance.

Disappointing.”

— October 10, 2012

@rachelbotsman Social Innovator.

Speaker. Author on the power of collaborative technologies to transform business, public services and the way we live.

“Researching great quotes on trust: ‘The people when rightly and fully trusted will return the trust.’ Abraham Lincoln” — October 16, 2012

@ chrisstanchak Founder and CEO of TicketLeap.com. We make event ticketing simple for busy people.

“Hey @comcastcares what do we do when you have not showed up for a critical installation for our business account @ticketleap? #annoyed” — August 31, 2012

18 OCTOBER 2012

REGIONSBUSINESS.COM

BUSINESS PROFILE

9

Aardvark Event Logistics A Rising Force in Advertising, Marketing Behind every great advertising campaign is an even greater logistics crew.

Aardvark Event Logistics, based in Huntingdon Valley, Pa., is an experiential event logistics company that provides equipment and mobile truck units — “Aardy” trucks, as they’re referred to — for grassroots marketing campaigns in four different countries.

The company came in at No. 165 on the Inc. 500’s list of fastest-growing, privately-held companies, demonstrating three-year growth of 2,018 percent and increasing revenues from $103,864 in 2008 to $2.2 million in 2011. Aardvark is a rising force in the advertising and marketing industry, placed at No. 22

Mr. Borden recounted nationwide. his most recent — and “People generally don’t personal favorite — experieven realize a company like mine exists,” said Larry ence working with adverBorden, CEO and founder. tising agencies, the Bacon Aardvark was founded Barter Tour. The national in 2008 by Mr. Borden, tour involved work with an who was previously the advertising agency promothead of the Borden Agency, ing Oscar Mayer thick-cut an experiential event marbacon, giving a single man 3,000 pounds of bacon and keting agency and consulstripping him of cash and tancy that landed on the credit cards, forcing him to Inc. 5,000 list at No. 683 barter with bacon across in 2009. the country alongside a Mr. Borden said that, mobile unit and crew prowhile working at The Borden Agency, he was Virgin Mobile employees market the wireless communication vided by Aardvark. inspired to create a “red company at a recent Aardvark event.

“So basically, the agency (SUBMITTED) phone” logistics company came up with this idea, after noticing competi“We launched [Aard- months later, we landed the and the agency said... ‘How tors would quickly turn vark] two weeks after Coca-Cola Olympic Torch are we going to do it? We’re into customers, not fully Lehman Brothers went Relay. The rest, as they say, going to put a website understanding how to bankrupt, and everyone is history — you name a together, but how are we implement advertising thought I was crazy,” Mr. Fortune 1,000 brand, and going to move a guy across the country with 3,000 campaigns.

Borden said. “Three we’ve worked with them.”

Perspective.

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REGION’S BUSINESS A JOURNAL OF BUSINESS & POLITICS

pounds of bacon?’ Boom — call Aardvark.” Mr. Borden said.

Mr. Borden described the success of the event, measured in media impressions and activity on Twitter and Facebook, as representative of a larger trend of agencies running out of authentic marketing ideas.

Aardvark, Mr. Borden said, has grown tremendously through word of mouth rather than large advertising expenditures, heralding five campaigns that have shut down Times Square, including an experiential event launching a Reese Witherspoon perfume.

“You come up with the idea, and we’ll make it happen.”

10

18 OCTOBER 2012

REGIONSBUSINESS.COM

WEEKLY BRIEFING

DEVELOPMENT

City Catholic School Slated to Become Apartment Site A traditional Catholic grade school owned by the Archdiocese of Philadelphia since the 1940s will soon be transformed into a bustling, upscale collection of loft apartments, according to development group Wharton Street Lofts.

The $2.9 million school building — indicated by city records to be sold at a price of $3.1 million — will consist of 48 apartments, with one-bedroom apartments renting for about $1,000 per month and two-bedroom apartments renting for approximately $1,500 to $2,000 per month.

HEALTH CARE

Region’s Top-Performing Hospitals According to a recent Joint Commission’s report: — Delaware County Memorial Hospital — Riddle Memorial Hospital — St. Mary Medical Center — Paoli Hospital — Grand View Hospital — Chestnut Hill Hospital

MUST-HAVE APP

CityHall App The CityHall App, created by Councilman Bobby Henon, provides Philadelphia residents, business owners and tourists with City Hall’s services at the touch of a button.

With the free app, users can report problems with their neighborhood which will be directed to the office of Councilman Henon.

Users can then track the progress from their phone.

GOTTA-HAVE-IT GADGET

Gigabyte X11 At 975g, Gigabyte introduces the lightest 11.6-inch laptop in the world ($1313).

It also features LED-backlit screen and “hi-fi” speakers for an advanced experience, especially in multimedia. At its thickest, the X11 is only 16.55 mm when closed. Its thinnest part is only 3 mm.

ECONOMY

Beige Book Report Shows Improvements in Housing The Beige Book, released eight times each year by the Federal Reserve as a tabs-keeper on the progress of the economy, demonstrates stronger-than-usual performance in the housing market — including in Philadelphia — leading to an optimistic outlook for the country as a whole.

Further bolstering the strength of the housing market is improved growth in a 10 of 12 regional banking districts between the time period of mid-August through September, slowing down in another and flattening in the other.

Spending and hiring were notably stagnant, with half of reporting manufacturing districts posting a slight uptick with the remainder showing no change.

The report also shows an increase in Philadelphia bank lending, existing home sales, retail sales and auto sales, with service-sector firms reported mixed results akin to manufacturing.

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18 OCTOBER 2012

REGIONSBUSINESS.COM

WEEKLY BRIEFING

HOSPITALS

ENTERTAINMENT

ARCHDIOCESE OF PHILADELPHIA

Riddle Memorial Breaks Ground on Emergency Department Expansion

Old City Launches Marketing Campaign with Brighter Banners, New Street Lights

City’s Parishes Considered for Consolidation, Closure

Old City officially lifted the veil on its new marketing campaign at a cocktail event at Hotel Monaco last week, a makeover championed by the Old City-based marketing agency Mighty Engine.

New banners represent a more contemporary image for the special services district, featuring a block-lettered,

shadowed font that uses a neoncolored backdrop.

The banners are in addition to added street lights that brighten otherwise dark corners of the city section, as well as “wayfinding” signs, a new website and a new brochure that features the slogan “Independent by Design.”

ENTERTAINMENT (U.S. GREEN BUILDING COUNCIL)

Riddle Memorial Hospital, a 79,000-square-foot hospital located in Media, Pa., broke ground late last week on a two-year construction project meant to culminate in the creation of a $15 million emergency department expansion.

The expansion will create 24 private patient rooms, with the number of emergency patients treated per year estimated to rise to 40,000 from 32,000.

The expansion is in addition to the opening of a rapid evaluation unit in the hospital, introduced in July, which is used to reduce wait times for patients with lesser needs.

OBITUARY

Sage Financial Group CEO David Cohn Dies The CEO of Sage Financial Group, a West Conshohocken, Pa. wealth management group, passed away early last week at age 77.

David M. Cohn, a native of Blue Bell, Pa., co-founded Sage Financial with his sons Alan and Stephen nearly two decades ago, finding success in 2000 as Multex acquired Sage Online.

Prior to this success, he had served as the executive vice president of international management for Decision Sciences Corp., an international management consulting firm.

Mr. Cohn is survived by, in addition to his two sons, his wife Harriet and seven grandchildren.

Anthony Bourdain dines with Shawn Moreland at Chef Ken’s Cafe, 7135 Germantown Avenue, in Philadelphia this past summer.

(THE LAYOVER)

Bourdain’s The Layover to Display Philadelphia Eateries in November Anthony Bourdain, star of the Travel Channel’s urban tourism show “The Layover,” stopped by Philadelphia in July to film the season premiere of the show’s second season.

Bourdain made it a point to

visit Di Bruno Bros. and Paesano’s in the Italian Market during his trip, along with Dirty Frank’s, the Mutter Museum and the Barnes Foundation.

Tune in November 19 to see which locales made the cut.

RETAIL

David’s Bridal Increases Loan to $520M David’s Bridal Inc., located in Conshohocken, Pa., has increased its term loan from $500 million to $520 million as part of a loan intended to be used for a buyout by Clayton, Dubilier & Rice

L.L.C., as reported by the Philadelphia Inquirer.

Clayton, Dubilier & L.L.C. acquired David’s Bridal for $1.05 billion, according to Bloomberg data.

Fifty-nine parishes within the Archdiocese of Philadelphia are undergoing an evaluation that will lead to the merging of some parishes.

Catholic Parishes in Restructuring Process — St. Alice, Upper Darby — Blessed Virgin Mary, Darby — St. Cyril of Alexandria, East Lansdowne — St. Laurence, Upper Darby — St. Louis, Yeadon — St. Philomena, Lansdowne — St. Joseph, Aston — St. John Fisher, Boothwyn — St. Katharine Drexel, Chester — Holy Savior, Linwood — Immaculate Conception, Marcus Hook — Our Lady of Charity, Brookhaven — St. Francis de Sales, Lenni — All Saints, Philadelphia — St. Bartholomew, Philadelphia — St. Bernard, Philadelphia — St. John Cantius, Philadelphia — St. Leo, Philadelphia — St. Matthew, Philadelphia — Our Lady of Consolation, Philadelphia — St. Timothy, Philadelphia — St. Athanasius, Philadelphia — St. Benedict, Philadelphia — Holy Cross, Philadelphia — St. Madeleine Sophie, Philadelphia — St. Raymond of Penafort, Philadelphia — St. Therese of the Child Jesus, Philadelphia —St. Vincent de Paul, Philadelphia — Holy Innocents, Philadelphia — St. Hugh of Cluny, Philadelphia — St. Joachim, Philadelphia — St. Joan of Arc, Philadelphia

— Mater Dolorosa, Philadelphia — St. Veronica, Philadelphia — Visitation B.V.M., Philadelphia — St. Barbara, Philadelphia — St. Callistus, Philadelphia —St. Donato, Philadelphia — St. Ignatius of Loyola, Philadelphia — Our Lady of Lourdes, Philadelphia — Our Lady of the Blessed Sacrament, Philadelphia — Our Mother of Sorrows, Philadelphia — St. Rose of Lima, Philadelphia — St. Cyprian, Philadelphia — St. Agnes-St. John Nepomucene, Philadelphia — St. Augustine, Philadelphia — Holy Name of Jesus, Philadelphia — Old St. Joseph’s, Philadelphia — St. Laurentius, Philadelphia — Old St. Mary’s, Philadelphia — St. Michael, Philadelphia — St. Peter the Apostle, Philadelphia

Catholic Parishes in Dialogue Process — Corpus Christi, Lansdale — Epiphany of Our Lord, Plymouth Meeting — St. Helena, Blue Bell — St. Maria Goretti, Hatfield — Mary, Mother of the Redeemer, North Wales — St. Rose of Lima, North Wales — St. Stanislaus, Lansdale (CATHOLICPHILLY.COM)

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18 OCTOBER 2012

REGIONSBUSINESS.COM

WEEKLY BRIEFING

RETAIL

Visionworks Opens 10 Stories in 2012 with Philadelphia Site

PHARMACEUTICAL

HIGHER EDUCATION

J&J Profits Fall Despite Sale

S&P Downgrades Penn State Rating

In the third quarters, Johnson & Johnson profits fell 7.3 percent even though sales grew 6.5 percent after the company recently acquired medical device maker Synthes, the Philadelphia Inquirer reported.

ENTERTAINMENT

(PENN STATE)

Visionworks hosted the grand opening event for its Columbus Commons eyeglass store on Friday in South Philadelphia, which is one of 10 stores the company has opened in 2012.

Visionworks has slated 25 total stores in the region by the end of 2013, adding as many as 10 more stores within the next few years.

In addition to that, more than $30 million will be invested in new construction, President and CEO David Holmberg of HVHC Inc. — subsidiary of Vision Works’ parent company Highmark — told the Philadelphia Business Journal.

The company has expressed an intention to employ at least 600 workers when it finishes construction of its stores.

BANKS

Malvern Continues Transition to Stock-Holding Company Two-tier mutual holding company Malvern Federal Bancorp will continue its conversion into a complete stock-holding company, hoping to garner more than $36.4 million in new funds as a result.

Because of the bank’s offering, Malvern Federal Mutual Holding Co. will no longer exist, with Malvern Bancorp Inc. — initially formed to facilitate the conversion — taking a new role as the public shareholder-owned parent holding company.

As of now, the company owns 55.5 percent of outstanding stock, with 3.63 million shares to be sold for $10 a share.

Email business news tips to Brandon Baker at bbaker@regionsbusiness.com

(SUBMITTED)

Oval Converting to $4.5M Skate Park Eakins Oval in Philadelphia will soon be home to a $4.5 million skatepark called “Paine’s Park.”

The 2.5-acre park will be constructed alongside the Schuylkill Banks trail near the Philadelphia Museum of Art using both public funds as well as funds from Franklin’s Paine

Skatepark Fund.

The aforementioned nonprofit organization lists the park on its website as being, in addition to a skatepark, a critical step toward “the development of new ideas about recreation and public space in cities.”

The park is targeted to be complete by spring.

BANKS

PNC Benefits From Income Boost in Q3 A $137 million pretax gain helped PNC Financial Services Group Inc. in the third quarter, the Associated Press reported.

Its net income available to

shareholders increased to $1.64 per share for a total of $876 million. That number is up from $1.55 per share ($826 million) a year prior.

HOTELS

Marriott Plans to Leave New Jersey Capital The Trenton-owner Marriott, suffering an occupancy rate of about 50 percent, will leave the city when its contract is up in June, according to The Associated Press.

Trenton is spending almost $1.5 million annually just to pay off the building of the hotel, and it has been struggling financially since construction ended a decade ago.

Standard & Poor’s has downgraded Pennsylvania State University’s long-term bond rating to AA, following a year filled with a child molestation scandal and corresponding fines and penalties.

Penn State has diverse sources of revenue and a good financial history, but S&P believes the university faces a “constrained” future with regard to state funding, according to an Associated Press report.

TRANSPORTATION

Amtrak Establishes New GM Position Amtrak has named Michael J. DeCataldo, Jr., to the new position of general manager, Northeast Corridor (NEC) Services, the company announced this week.

He will have accountability for safety, customer satisfaction, ridership, on-time performance, and financial results for the Northeast Corridor business line.

Mr. DeCataldo is currently Amtrak general superintendent, Northeast Division.

CABLE TELEVISION

Comcast Set to Add Atlantic City Station Atlantic City’s WACP will now be added to Comcast’s lineup in Philadelphia, the Philadelphia Inquirer reported.

The station, which can be found on Channel 4 in most area, was previously available through DirecTV and Dish.

18 OCTOBER 2012

REGIONSBUSINESS.COM

DEALBOOK BENEFITS

MEDICAL INDUSTRY

RETAIL

Benefits Group Merges With Digital Insurance of Atlanta

Princeton Company Purchases Gummy Vitamin Producer

Marshalls to Open 18th Store, Hire At Least 75 Employees

Jenkintown, Pa-based Montgomery Benefits Group of Philadelphia has merged into Atlanta, Ga.based Digital Insurance and will now operate under the banner of Digital Benefit Advisors/Philadelphia.

The goal of merging with Digital Insurance, which describes itself as the nation’s largest employee benefits-only agency was to better help clients navigate the complexities of health care reform.

The Montgomery Benefits Group has been representing small to midsize businesses in various industries operates in the five-county Philadelphia area, as well as South Jersey, since 1996.

MONEY MANAGEMENT

Blackstone Group Buys Company Formerly Based in King of Prussia New York based-buyout fund Blackstone Group has agreed to pay $600 million for Newspring Capital portfolio company GCA Services Group Inc. The formerly King of Prussia based-GCA was started by Philadelphia investor Graeme Crothall and is now headquartered in Chicago.

15

Marshalls will open its 18th location in the region next month in the growing “discount district” of East Market Street that currently hosts Burlington Coat Factory, Ross Dress for Less, Kmart, and Old Navy.

The store will occupy 28,000 square feet on the first two floors of 1026-1044 Market St. for a lease price of $12 per square foot.

The store expects to hire 75 full-and part-time workers and invest a minimum of $2 million in the space.

BANKS

Princeton, N.J.-based Church & Dwight Co. Inc. has completed purchase of Avid Health Inc., the leader in “gummy” form vitamins and supplements, for $650 million.

The deal was financed with $400 million in aggregate senior notes that come due in 2022.

Church & Dwight Co. Inc. manufactures and markets a variety of personal care, household and specialty products under the Arm & Hammer brand name and other trademarks.

Crozer-Keystone, Philly Hand Center Establish Partnership, Expand Services Crozer-Keystone Health System has formed a partnership with the Philadelphia Hand Center to expand the medical and surgical services it provides for patients with hand injuries and disorders.

Crozer-Keystone operates five hospitals and a network of outpatient care centers in Delaware County.

Terms of the partnership were not disclosed.

East River Bank Opens in Old City East Falls, Philadelphia-based East River Bank opened a branch at 36 N. 3rd St. in the Old City corridor known as “nerd” (N3rd) street, hoping to attract the entrepreneurs and small businesses that commonly frequent the area.

East River Bank purchased the branch from VIST Financial earlier this year.

National Penn Bank Plans New Branch National Penn Bank is building an 11-story, 300,000-square-foot office in Allentown and will relocate its headquarters from Boyertown after 130 years.

Additionally, the bank will build a 48,000-squarefoot office in Spring Township, it announced Tuesday.

National Penn Bank earlier announced it will open a full-service business center and retail banking branch at 2040 Market Street in Center City next March, according to the Philadelphia Business Journal.

National Penn Bank is the 10th-largest bank by deposits in the area.

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18 OCTOBER 2012

REGIONSBUSINESS.COM

DEALBOOK

AIRLINES

CONSTRUCTION

ENERGY

Unions Support Merger Between American, US

Deal Reached to Rehabilitate Strawberry Mansion Apartments

President: No Layoffs Planned After Buying Mechanical Group

Enterprise Community Investment, Inc. and 1260 Housing Development Corporation have closed their fourth deal together, to rehabilitate the 28-unit MPB School Apartments in the Strawberry Mansion neighborhood of Philadelphia as affordable housing.

The new apartments will meet Enterprise Green Communities Criteria, the first national

Cherry Hill, N.J.-based Hutchinson Mechanical Services has acquired AMS Mechanical in South Jersey.

Hutchinson provides plumbing, heating, cooling and energy services to more than 50,000 customers in the region and employs more than 200 employees and has grown from $29 million in revenue in 1998 to $40 million last year, according to the company’s president, Ed Hutchinson.

Mr. Hutchinson said he looks forward to gaining “talented people” and “an attractive list of clients,” while AMS president George Thomas said the merger will “broaden our product offerings and technical capabilities” and is “truly a win-win.”

AMS will retain its managers and no layoffs are planned for the 35-employee company.

The union representing the 10,000 American airlines reiterated strong support for a merger with US Airways.

“We want new leadership here at American,” Tom Hoban, spokesman Allied Pilots Association, told The Philadelphia Inquirer Mr. Hoban also said he lost 50 percent of his paycheck in 2003 after the carrier extracted nearly $2 billion in employee concessions to avoid bankruptcy.

Conditional contracts have been signed by US Airways and the three major unions, in preparation for a possible merger.

HEALTH CARE

Universal Health Services Completes $517M Purchase King of Prussia, Pa.-based Universal Health Services completed the $517 million acquisition of New Yorkbased Ascend Health Corp., first announced in June.

Ascend’s nine psychiatric hospitals in five states are expected to generate an additional $200 million in revenue for the Universal Health network, which includes 197 behavioral health-care facilities in 37 states, Washington, D.C., Puerto Rico and the U.S. Virgin Islands.

In connection with receiving antitrust clearance for the transaction from the Federal Trade Commission, Universal Health has agreed to sell its Peak Behavioral Health Services in New Mexico within six months.

Universal Health sold a 159-bed acute care facility in Auburn, Wash. earlier this month.

Temple University Opens Women’s Care Center at Salus University Temple University Health System recently opened the Temple Health Women’s Care center on the campus of Salus University at Old York and Township Line roads in Elkins Park, Pa. The center, headed by medical director Dr. Rosalind Kaplan, will initially provide primary care, imaging services, gynecology, psychology, and urology services and has plans to expand care in the near future.

framework for creating and preserving green affordable housing, while preserving the nationally registered historical landmark.

Construction of costs for each apartment will total approximately $200,000 and will financed in part by $9 million in Low Income Housing Tax Credits syndicated by Enterprise

ENTERTAINMENT

Philadelphia Film Society to Occupy Roxy Theater Starting January 1, the Roxy twinplex at 2023 Sansom St. will be occupied by the Philadelphia Film Society.

The 16-year lease will replace the previous tenant, Bernard Nearey, who closed the cinema last week after managing it for 15 years.

PFS, the nonprofit group behind the Philadelphia Film Festival, has been searching for a home to “bring the best in cinema to Philadelphia year-round- to basically extend the film festival from 10 days to 365 days,” the society’s executive director, Andrew Greenblatt told the Philadelphia Inquirer Tuesday.

The Roxy will receive upgrades including new seating and screens, which will be installed as funds become available.

Instead of mainstream films, the PFS will work with a booker to program new art-house, specialty, and independent American and foreign-language films in addition to repertory programs, educational series, midnight movies, and work by local filmmakers.

Email dealbook news tips to Victoria Marchiony at vmarchiony@regionsbusiness.com

Penn Virginia Corporation Makes Pipeline Operational, Buys Land Radnor, Pa-based PVR Partner L.P. announced that it has begun full commercial operation of its newest 30-mile long, 240-inch diameter Wyoming Pipeline serving Marcellus Shale producers in northcentral Pennsylvania.

The trunkline can carry 750 million cubic feet of natural gas from northern Wyoming County to Luzerne County each day.

Penn Virginia Corporation also recently announced that it has acquired approximately 4,100 Eagle Ford Shale acres in Gonzales and Lavaca Counties, Texas for approximately $10 million.

The 3,200 net acres of leasehold in Gonzales County is estimated to contain approximately 20 horizontal well locations, while the acquired 895 net acres in Lavaca County provide the opportunity for an estimated 10 new horizontal well locations.

The purchase increases the company’s Eagle Ford Shale acreage position by approximately 3,000 acres to a total of approximately 30,000 net acres.

CONSTRUCTION

Construction Begins on Flex Site High demand has prompted RedGo to begin construction on a 21,000-square-foot flex building on 40 Three Tun Road in Malvern, Pa. The property has a 15-year pre-lease agreement with Animal Critical Care and Specialty Group Inc. and is expected to be completed in the first quarter of next year.

RedGo also plans to begin construction on another 24,000-square-foot flex building late next year.

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18

18 OCTOBER 2012

ELECTION 2012

REGIONSBUSINESS.COM

POLL ROUNDUP

CAMPAIGN ADVERTISING

DCCC Cancels Ads for Bookcvar In Region The Democratic Congressional Campaign Committee has cancelled all plans to advertise on television in the Philadelphia media market, meaning that no congressional Boockvar challenger will have national air support for the duration of the campaign.

The committee had reserved $1.4 million in the expensive Philly market, earmarked for Kathy Boockvar, the woman challenging Rep. Mike Fitzpatrick (R-Bucks) and a candidate in New Jersey.

Three media buying sources — two Republican and one Democratic — confirmed the move.

It follows a similar cancellation last week, when the DCCC withdrew its ads from the second-to-last week of the election (the week starting October 23). In this recent move, the DCCC cancelled the final week of TV ads (from October 30 to November 6).

— PoliticsPa.com U.S. SENATE

Smith Closing Gap, Out-Raising Casey HARRISBURG — Polls show the U.S. Senate race in Pennsylvania has tightened considerably, and finance reports released Monday from the two campaigns show Republican challenger Tom Smith might be in position for a final advertising push.

Incumbent Democrat U.S. Sen. Bob Casey once held a commanding lead in polls, but that has narrowed considerably as Mr. Smith is making gains. Financial reports filed with the FEC on Monday show Mr. Smith now has more cash-on-hand as well.

Mr. Smith raised $1.64 million during the third quarter, which ended September 30. He has more than $7 million in his war chest for the final weeks of the campaign, a total that includes $10 million of his own money.

Sen. Casey reported raising nearly $1.52 million during the third quarter and has $5.21 million on-hand.

Should Mr. Smith pull ahead, the race could prove to be a nationwide game-changer.

— Pa Independent

PRESIDENTIAL ELECTION

PA Senate

Johnson: GOP Investigator Used ‘Dirty Tricks’ An attorney for Gary Johnson’s campaign is accusing a private investigator hired by state Republicans of “Watergatestyle dirty tricks” related to a recent ballot challenge.

In a letter to Philadelphia District Attorney Seth Williams, Johnson General Counsel Alicia Dearn alleges the agent posed as a law enforcement official and attempted to bribe or intimidate witnesses.

Each of half a dozen witnesses, Ms. Dearn wrote, was approached by a man showing a badge and “giving the implied or express impression” that he was an FBI agent to pressure circulators into testifying they had falsified signatures on Mr. Johnson’s behalf.

The state Republican party dismissed the allegations.

— PoliticsPA.com

Romney Spokeswoman Leaves Temporarily Mitt Romney’s Pennsylvania spokeswoman has been working in Virginia in a reportedly temporary move.

Kate Meriwether has been the Pennsylvania Communications Director since June, but she has recently been promoting in Virginia, according to The Daily Beast. A GOP source confirmed this to PoliticsPa. com, but added that the move is a temporary one.

This is the second recent temporary transfer of staff from the Romney camp; five campaign employees were recently moved to Ohio.

The gap in polls has recently tightened in the race for Pennsylvania, though President Barack Obama still holds a slim lead.

Libertarian Secures Spot on Ballot A state judge ruled last week that Libertarian Party presidential candidate Gary Johnson will remain on the Pennsylvania ballot for November’s general election.

Commonwealth Court Judge James Gardner Colins determined that Johnson had collected 20,730 valid signatures, just above the threshold of 20,601 signature required by state law for third parties to get on the ballot.

Along with Mr. Johnson, the Libertarians will have their candidates on the ballot for U.S. Senate, state auditor general, state attorney general and state treasurer.

“Now the voters of Pennsylvania will have an opportunity to have a real choice in who to vote for in statewide and national elections this November,” said Tom Stevens, chairman of the Pennsylvania Libertarian Party.

— PA Independent Libertarian Presidential candidate Gary Johnson, left, and Jim Gray. (SUBMITTED)

Pa. Supreme Court Loosens Petition Requirements

The state Supreme Court ruled last week that a signature to nominate a candidate still counts, even if the person signing neglects to write the year.

Essentially, Pa. election law expert Adam Bonin said, as the year of the petition is clear (on the petition heading and included by at least some signatories), the signatures are valid.

— PoliticsPA.com

Bob Casey (D): 46 Tom Smith (R): 44 While SP&R, a GOP backed poll, showed a tight race, the most recent Philadelphia Inquirer poll gave Sen. Casey a double-digit lead: 48 to 38. The average of polling by Real Clear Politics shows the senator ahead by 5.8 points.

Source: Susquehanna Polling & Research October 10, 2012

President Barack Obama (D): 47 Mitt Romney (R): 45 LFR’s poll, like the most recent Rasmussen poll, shows that Mitt Romney has made some headway in the polls since the debate.

The average of polling by Real Clear Politics gives President Obama a 4.2-point lead.

Source: Let Freedom Ring

Attorney General Kathleen Kane (D): 41 David Freed (R): 29 This is almost the exact findings of the last Inquirer poll in August, in which Ms. Kane was ahead 40 percent to 29.

Source: Philadelphia Inquirer

PA Senate Governor Corbett Approval: 45 Disapproval: 42

Governor This poll is an improvement from August, when 52 percent disapproved of the job Gov. Corbett was doing and 38 percent approved.

Source: Philadelphia Inquirer

18 OCTOBER 2012

REGIONSBUSINESS.COM

POLITICS ETHICS

PHILADELPHIA

GAMING

Complaint: Representative Enriched Self With Grants

Nutter Signs Legislation Requiring Updated Alarms

Casinos Inch Closer to Using Mobile Devices for Gambling

Jay Schiliro, mayor of Marcus Hook in Delaware County, filed a complaint with the State Ethics Commission this week accusing longtime state Representative Thaddeus Kirkland, D-159th District, of using taxpayer-funded grants to benefit nonprofits and community organizations with which he and his family members have a personal connection.

Among the organizations to have benefited from the state’s largess in recent years is the Community Baptist Church in Chester, where Rep. Kirkland serves as pastor.

Smoke detectors with increased longevity are the new requirement for one- and two-family homes in Philadelphia.

Under legislation primarily sponsored by Majority Leader Curtis Jones Jr., these homes must have smoke detectors with built-in batteries; the new batteries last for around a decade.

While the special detectors are more expensive than previously used detectors, they save users money by not having to replace the batteries over 10 years.

Since the early 1980s, the fire code has required

In a letter to the State Ethics Commission, Mayor Schiliro detailed a “variety of questionable activity related to nonprofit and other organizations funded with hundreds of thousands in state tax dollars.”

Kirkland told the Delaware County Daily Times that the accusations would be “laughable” except for the fact that Mayor Schiliro was trying to drag his family’s name “through the mud.”

He told the paper he welcomed any investigation by the ethics commission.

— PAIndependent

smoke detectors on every floor of one- and twofamily homes.

However, 25 percent of the city’s fires last year were in homes that did not have working smoke detectors, fire officials told the Philadelphia Inquirer.

Mayor Nutter signed the bill into law this week; the new detectors will become part of the city’s fire code

by January 9.

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New Jersey gamblers may no longer need to sit down at a table to get their gambling fix.

State legislators already passed a bill allowing gamblers to place bets right from their mobile device. While it has not yet been enacted at any state casinos, temporary regulations established by the Gaming Enforcement

19

Division last week bring legislation one step closer to being enacted.

Conditions require that the devices be used on casino property.

Additionally, the user must already have an account with the casino and the technology must be able to allow only those who are 21 and over to participate.

20

18 OCTOBER 2012

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Obama/Biden Show Weakness, Immaturity in Debates

Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Dr. Albert Mehrabian, a pioneer in the study of non-verbal communication, published a study on the impact of words and their delivery.

An oversimplified summary of his thesis is that 93 percent of communication is non-verbal.

Maybe the Obama/Biden team didn’t read his book. They certainly haven’t mastered the power of the visual images on the split screen.

Barack Obama’s dismal performance in the first debate was punctuated by the image of him glumly looking at his notes while Mitt Romney tried to look him in the eye.

Joe Biden made it a point to grimace, grin, frown and even cackle at virtually every statement Paul Ryan made in their debate.

Perhaps one chuckle at a Paul Ryan assertion would have worked.

But the constant barrage of dismissive or jesting facial expressions

surely didn’t.

At a time when the American people were looking for serious answers to the nation’s problems, their vice president was chortling like a junior high school kid.

While viewers and voters might have been forgiving of a snide snicker when the issue was tax policy, it’s doubtful they felt the same when the subject turned to sending America’s sons and daughters into harm’s way. Veteran newsman Tom Brokaw (not exactly a conservative shill) stated flatly “...I just don’t think you should be laughing during a discussion about thermonuclear war with Iran.”

Being combative and on the offensive was clearly the strategy the Biden team had developed in the wake of their ticket’s lackluster opening performance in Debate One. Most voters see a vast difference between being on offense and

being offensive. Tone matters. Body language does, too.

On both these points, Joe Biden failed. He interrupted Paul Ryan more than 80 times. He whined over the amount of time that Paul Ryan spoke, even though the running clock showed that at no point had Ryan chewed up more speaking time than the vice president. But most significantly, he left a lingering image of a dismissive, mocking, sneering and jesting vice president of the United States.

The Democratic base may be enthused that he displayed the energy that President Obama did not. But the vital swing and persuadable voters were not. Numerous polls show that the smirk hurt him, especially among women. The bottom line: To those who have not yet made up their minds, he didn’t appear vice presidential.

Americans have disdain for

politics when it looks like this.

Voters know that we can do better.

A political food fight may be fun to watch, but they know civility is required to get the nation’s business done. Good manners don’t mean that you’re not tough. Mitt Romney put that truism on full display in his first debate. He challenged President Obama and his record consistently and tenaciously. He did it with respect.

Joe Biden no doubt fired up his base. Former Democratic National Chairman Howard Dean even said he provided a good role model for Obama. But that’s not how elections are won. They are won by expanding your base and attracting undecided, persuadable and non-traditional voters. There’s still a long way to go to November 6, but Joe Biden’s body language and non-verbal messages made his team’s job tougher.

18 OCTOBER 2012

REGIONSBUSINESS.COM

POLITICS

21

Romney, Obama Go Toe-to-Toe in Town Hall Debate QUOTABLE

ON TWITTER

Mitt Romney

Barack Obama

“I think you know that these last four years haven’t been so good as the president just described and that you don’t feel like you’re confident that the next four years are going to be much better either.”

“I am ultimately responsible for what’s taking place there [in Libya] because these are my folks, and I’m the one who has to greet those coffins when they come home.”

(PHILLY.COM)

Tom Ridge, Former Pa. Governor “I think [Pennsylvanians] see a President who is perhaps well-intentioned, but has kicked a lot of decisions down the road.”

(PATCH.COM)

(CNN.COM)

Stephanie Cutter, Obama’s Deputy Campaign Manager “At the end of the day, we are absolutely confident that we’re going to win [Pennsylvania]” (MCALL.COM)

Rep. Chaka Fattah, D-2nd District @chakafattah “Romney misleading saying something he knows that [is] not true. 23 millions unemployed — untrue! [And] he know it. He [said] he meant underemployed.”

Michelle Obama, First Lady of the United States @MichelleObama “Tonight Barack showed, as he has every day as president, that he’ll fight to ensure everyone has a fair shot at the American Dream. –mo”

Terry Madonna, Director, Center for Politics and Public Affairs at Franklin and Marshall College @terrymadonna “Okay no big winner but Obama wins narrowly.

Romney weak on Libya response. Obama weak on defense of the economy.

Strong closing by Obama.”

Republican Party of Pennsylvania @PAGOP “@MittRomney: ’If I become President I will get our economy back on track and get people back to work.’ #CantAfford4More”

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18 OCTOBER 2012

CAPITOL REPORT

REGIONSBUSINESS.COM

LEGISLATIVE

House Bill 869 Allows funeral directors to display a flashing light in their vehicles during funeral processions.

— Sponsored by Representative Ronald Marsico, R-105th District

House Bill 2065 Amends the Tax Reform Code of 1971 to establish the Vets First Tax Credit Program. The program honors veterans for their service through tax credits and employment incentives.

— Sponsored by Representative Bryan Barbin, D-71st District

Senate Bill 920 Titled the Carbon Monoxide Alarms Standards Act, it sets standards for carbon monoxide alarms in residential buildings. Those who do not comply with the requirements would suffer a $50 penalty.

— Introduced by Senator Patrick Browne, R-16th District

Senate Resolution 342 In this resolution, the Commonwealth of Pennsylvania formally recognizes the Nation of Israel’s right to live in peace and to defend itself. It notes Pennsylvania’s support for the nation and support for the United States’ relationship with the nation.

— Introduced by Senator Stewart Greenleaf, R-12th District

House Bill 1830 Calls for special plates in honor of members of the U.S. Merchant Marine and special registration for veterans and members of U.S. airborne units.

— Sponsored by Representative John Bear, R-97th District

23

GUN LEGISLATION

OPEN RECORDS

Officer’s Killing Renews Pressure on Gun Buying Bill

Some Lobbyists Could Be Subject to Open Records Legislation

In 2008, a Pennsylvania court decision stripped the straw-buyer gun law of its harshest penalties; under the revision, no matter the number of guns involved, the culprit could receive anywhere from zero to seven years in at House Bill 898.

The legislation would prison. establish a five-year Republican State mandatory minimum Representative Marcy sentence for “straw-buyToepel, of the 147th ers.” It would also deem District, is hoping to those convicted of selling change all of that. more than one weapon a After the murder of “repeat offender.”

Plymouth Township “Multiple straw purOfficer Bradley Fox, Toepel chases are the reason who was killed by an illegal gun, Rep. Toepel wants why a criminal possessed legislators to take another look multiple guns, including the

one that fatally shot Plymouth Township Police Officer Bradley Fox last month,” Rep. Toepel said in a statement. “I’ve been a staunch advocate of my legislation since I introduced it last year and I’m hoping my colleagues in the Senate will move this legislation as soon as possible.”

The bill was re-referred to the Appropriations Committee Monday.

REGULATION

DCNR

Auditor General Targeting Pennsylvania’s Tattoo Parlors

Director Fired Before Resignation

Auditor General Jack Wagner hopes to establish minimum training requirements for tattoo artists and require all 750 operating parlors to have liability insurance.

Those without insurance or those who don’t follow safety and sanitation standards would receive fines.

Mr. Wagner sent his argument to the health department, Governor Tom Corbett and state lawmakers.

PENNSYLVANIA TURNPIKE

Reimbursed Lawmakers Immune to Turnpike Toll Fare Increases HARRISBURG — In 2011, dozens of state House lawmakers were reimbursed for more than 3,600 parking and toll transactions at a price of more than $111,000.

At least 450 of those reimbursements were directly related to more than $9,800 in Turnpike tolls, according to expense records. The exact amount of toll reimbursements could be higher, as around $60,200 was not categorized and listed under “Parking and Tolls.”

— PA Independent

Parks Director John Norbeck told the Pittsburgh Post-Gazette that he was fired for “philosophical differences” regarding cutting trees, mining and Marcellus Shale gas drilling in Pennsylvania parks.

Mr. Norbeck, who has Norbeck been in that role since 2006, said he received a termination letter telling him that his resignation would be considered if he preferred. He submitted a resignation, declaring that October 19 would be his last day.

“DCNR also does not plan to make any changes to policies related to commercial timbering or mining on state park lands.

We have no intention of allowing anyone to cut timber solely for revenue generation on state park lands. We would not allow surface mining where we control the mineral rights,” DCNR spokeswoman Chris Novak wrote in an email to the Associated Press.

Democratic Representative Bud George, of the 74th District, plans to hold a hearing on Mr. Norbeck’s departure.

The Pennsylvania State Association of Township Supervisors may now fall under Pennsylvania’s Open Records law and be required to comply with requests for certain information, according to a recent Associated Press report.

In a September 4 decision, the Open Records office deemed that because the association is a “local agency,” it must make public requested information. As Open Records Appeals Officer Benjamin Lorah noted, the association itself was created by the state General Assembly.

The ruling is currently being appealed in Cumberland County Court by the East Pennsboro Townshipbased association.

If this decision is upheld, it could cause similar lobbyists, such as The Pennsylvania County Commissioners Association, to be held to the same standard.

PROPERTY TAXES

Legislation Would Eliminate Taxes on Properties House Bill 1776 and Senate Bill 1400 have one common goal: Replace property taxes with increased sales and income levies.

Introduced by Republican Representative Jim Cox in the House, the bill would not immediately take effect; it would be enacted over two years.

If it were made law, the income tax would increase from 3 percent to 4 percent, and the sales tax from 6 percent to 7 percent.

The Pennsylvania Department of Revenue said the plan would leave a $3.5 billion deficit, and the Pennsylvania Budget and Policy Center has vocally spoken out against the bill.

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PHILADELPHIA POLITICS

REGIONSBUSINESS.COM

Council Improve to City’s Web Accessibility CITY COUNCIL MATTERS

Timothy Holwick is a freelance writer covering Philadelphia government.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

A bill introduced to Philadelphia City Council last week would optimize all city websites and online services for a variety of popular internet browsers.

According to the bill introduced by Councilman Bill Green, city websites and online services should be accessible when using popular browsers such as Google Chrome, Microsoft’s Internet Explorer, Mozilla Firefox and Apple’s Safari.

The bill points out that many websites for certain City of Philadelphia departments function only on Microsoft’s Internet Explorer and therefore, certain interactions and transactions may only be conducted using Internet Explorer. The bill goes on to state that no one browser holds enough of the market share to justify being the only browser for which the city’s online content is optimized.

This is particularly true when

considering users on a smartphone, as the popular Android and iOS operating systems use Chrome and Safari respectively.

The bill also deals with the element of perception and even states that “by preventing the use of popular, widely-available technology tools, the City feeds into the perception that it is an antiquated, inefficient, and difficult place to do business.” In another section of the bill, the text refers to Internet Explorer as “outdated and sub-optimal technology.”

It is no surprise that Councilman Green is one of the main sponsors of this piece of legislation as he continuously searches for changes that will make Philadelphia a more attractive place to do business. Aside from his efforts to lessen tax burdens on new businesses through changes to the Commercial Activity License requirement

RegionsBusiness.com Philadelphia, 24/7

and the Business Income and Receipt Tax, he also advocates for building the city’s reputation as a place to incubate technology start-up companies.

For example, last year, he teamed up with Technically Philly to promote Philly Tech Week, a week of events showcasing Philadelphia as a place of technological innovation.

Information technology is a huge part of business and some council members felt it was embarrassing for the city to force users of its web services — including the city’s announcement page for contractor and business opportunities — to start up IE. The bill will require that all city websites, online city-related interactions and transactions — “including, but not limited to, the promulgation of business opportunities by and with the City” — be usable with other

browsers without “unreasonable effort.”

The bill also names other services to be targeted for multibrowser optimization including form completion, applications for licenses, and the payment of bills, taxes, fees, and fines.

The city has 180 days after the bill’s passage to make websites compliant.

It is understandable for the city to address a functionality issue in that the requirement of people to use IE was making city online services harder to use.

What comes as a surprise is the bill’s clear understanding that browsers other than IE are considered cooler or better to some degree, and that is what makes this bill an interesting play to make Philadelphia more attractive to new businesses, especially in the tech field.

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IDEAS

Five Common Errors Made by Startups

James A.J. Revels, CPA, MST is a partner with the accounting, tax and business consulting firm Citrin Cooperman in Philadelphia. Contact him at jrevels@citrincooperman.com

HOW TO SHARE Send contributions to feedback@regionsbusiness. com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Starting a business is exciting and can also be overwhelming. There are many things to consider like the location, name and brand, type of legal entity, funding and staffing, just to name a few. Keeping all of this in mind, there are five critical mistakes entrepreneurs typically make when launching a small business.

By avoiding these issues, you will create a much stronger foundation for higher profitability and long-term success.

A sound business plan was never developed. Many entrepreneurs are very anxious at the onset of any business venture and believe they can cut corners in order to open the doors faster. Typically, the business plan is one of those items cut from the list of the voluminous tasks to get the business running. A detailed business plan is the blue print for any business to become successful. They provide a wealth of information from estimating cash flow needs and requirements to understanding the competition. A well drafted business plan can make the difference in obtaining alternative financing not to mention all of the other benefits.

Not having alternative sources of capital.

Many businesses do not succeed because they underestimate cash flow requirements.

Businesses tend to wait until the last minute to begin the process of looking for alternative sources to fund cash flow shortages. Maintaining several banking relationships can be helpful as not every bank has the same lending practices and some banks incur internal changes that you may not have anticipated. Depending on your business, there may be a bank that specialzies in loans to your industry.

Not hiring qualified professionals at the beginning. When entrepreneurs (especially small businesses) begin a business, they tend to be frugal and spend the least amount possible on qualified professionals. However, great talent is a valuable resource. Typically, new business owners hire generalists to accomplish a variety of tasks because they tend to have lower fees. A small business must have an experienced Certified Public Accountant, a knowledgeable business attorney, and a diverse banker. These professionals should be involved in the organization and formation of the business from its inception. Their professional

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REGION’S BUSINESS A JOURNAL OF BUSINESS & POLITICS

guidance and business relationships will pay for their fees many times over.

Not having mentors. Entrepreneurs tend to keep their business secrets to themselves and not get the opinion of others on critical issues. Taking the time to seek mentors who are willing to give their time to inform you of the business strategies that made their business successful is priceless. Successful people tend to want to help others and they are almost always willing to talk about those things that have helped them reach their business objectives as well as the pitfalls to avoid.

They don’t get involved in the community.

Many business owners are so busy running the day-to-day operations of the business that they forget what will keep the business running even when they are not there. The community can provide limitless opportunities for your business to be a success. Other entrepreneurs in your community can provide you with resources, partners, and media attention, to name a few. Most importantly, it will generate new business and years of experience that you may not have in the community.

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POLITICS

Arlen Specter: 1930-2012 The long time Senate moderate succumbed to complications of non-Hodgkin’s lymphoma.

BY REGION’S BUSINESS STAFF When Arlen Specter succumbed over the weekend to non-Hodgkins lymphoma, he left behind a legacy that may never be matched.

That’s because he’s one of the last of his kind - a moderate who often infuriated his own party while perplexing those on the other side of the aisle.

Former Pennsylvania governor Tom Ridge may have summed it up best: “At the end of the day, he was one relentless, unapologetic fighter. Republicans and Democrats may not like how he voted, but they certainly had to respect his mindset.”

That mindset had little to do with party politics as proven by his switch from the GOP to the Democratic party late in his career.

Sen. Specter carried many labels over the course of his career, but partisan was never one of them. As a member of the U.S. Senate’s judiciary committee, he earned the wrath of his GOP brethern when he helped thwart the Supreme Court nomination of Robert Bork.

On the flip side, when Clarence Thomas was bombarded with sexual harrassment charges during his confirmation hearings, Sen. Specter assailed Anita Hill, Mr. Thomas’ accuser, saying she committed “flat-out perjury” during her testimony.

That’s because Specter never looked at issues through a partisan lens.

“Arlen Specter was always a fighter who loved the battle over public policy,” said state Rep. Sam Smith, R-Punxsutawney. “He loved Pennsylvania, and he loved public service.”

Former governor and Philadelphia mayor Ed Rendell went quite a bit further.

“Sen. Specter did more for the people of Pennsylvania over his more than 30 year

career with the possible exception of Benjamin Franklin,” said Mr. Rendell, who served as an assistant prosecutor during Sen. Specter’s stint as district attorney.

As reaction to Sen. Specter’s death began to roll in, the

theme echoed Gov. Ridge’s comments, with a focus on respect and the ability to cut through partisan bickering to get things done.

“Arlen was driven by a common-sense pragmatism that advocated for a revitalization and advancement of the political center,” said Sen. Olympia Snow, R-Maine, adding that “time and again he reached across the aisle to build consensus on vital legislation.”

Current Senate majority leader Harry Reid, D-Nevada drew on the same theme.

“Sen. Specter was a man of moderation; he was always passionate, but always easy to work with,” Sen. Reid said. “America is better today because of Arlen Specter.”

Washington’s polarization helped push Sen. Specter to the margins.

When pressured by the mounting Tea Party movement in the GOP, he switched parties before running for re-election. He didn’t make it past the Democratic primary.

That ended a decades long career of centrist work and erased a moderate voice in the partisan rhetoric of the day. From the heated Supreme Court nomination hearings to his seminal work on the Warren Commission to tireless work on the Veterans Affairs Committee to challenges to the Bush Administration as a member of the Select Committee on Intelligence, Sen. Specter left an indelible footprint.

“He was a moderate who put the needs of his constituents and country before politics — something seen all too rarely now,” said congressman Steny Hoyer, D-Md.

ARLEN SPECTER

A legacy of public service 1951-1953: Arlen Specter served stateside in the U.S. Air Force during the Korean War. 1963:Named to the Warren Commission, charged with investigating the assassination of John F. Kennedy. He is the proponent of “the single bullet theory.”

1966-1974: District Attorney for Philadelphia.

1976: Defeated by John Heinz in the Republican primary for U.S. Senate.

1978: Defeated by Dick Thornburgh in the Republican primary for governor.

1980: Elected to the U.S. Senate. He won the Republican primary by 37,000 votes and won the general election by less than 2 percent.

PHOTO BY KYLE CASSIDY

Senate highlights include: * He is the longest-serving Pennsylvania Senator in U.S. history. * Made headlines for his opposition to conservative Supreme Court nominee Robert Bork. * During the confirmation hearings for Clarence Thomas, accused Anita Hill of “flat-out perjury.”

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HOLD OFF ON THAT OBIT

Some newspapers have closed while others have undergone radical transformation savvy investors are betting big money on newspapers, and it’s not to pay for their Newspapers have been writ-

THE CONTENT THAT LOCAL NEWSPAPERS PRODUCE IS GOING TO BE IN DEMAND FOR A LONG TIME.’ —MARK CONTRERAS CEO, CALKINS MEDIA

Story by Michael Jacobs Illustrations by Don Lee

ing their own obituaries for so many years that the decline of the news business has itself become old news.

Long before Craigslist and online editions and smartphones filled barrooms and chatrooms with ink-stained wretches pining for the good old days when breaking news meant a banner headline in the morning paper and not a tweet linking to three paragraphs on a website, newspapers were losing readers to other news and entertainment media and to a lost sense of community in an increasingly mobile world.

Remember, The Philadelphia Bulletin shut down in 1982, more than a decade before anyone heard of the World Wide Web. But a funny thing has happened on printing presses’ way to the scrap yard: Smart businesspeople and investment funds are buying newspapers.

“That is kind of hard to understand,” said Rick Edmonds, a former Philadelphia Inquirer reporter who now writes about the news business for the Poynter Institute in St. Petersburg, Fla. “For whatever set of reasons, there has been a fair interest and quite a few papers changing hands.”

Edmonds sees two kinds of newspaper investors these days: ÉKb\a bg]bob]nZel hk Z `khni h_ i^hie^ pah have a lot of money who just think their hometown should have a newspaper.”

IkboZm^ ^jnbmr Õkfl ehhdbg` mh ngeh\d lahkm& term value or reinvigorate businesses that had long been cash cows. “Part of what has gotten the market going is the prices are so cheap.”

Those investors often split along the great divide in the newspaper business in the Philadelphia area and beyond. On one side are the big-city dailies that write the headlines for the region but find competition on every real and virtual corner, including their own websites; on the other are the community newspapers, daily or weekly or something in between, which often are the only sizable fish in

their small ponds.

“The content that local newspapers produce is going to be in demand for a long time,” said Calkins Media CEO Mark Contreras, who joined the publisher of the Bucks County Courier Times and other newspapers, as well as PhillyBurbs.com, in December. “It’s not that easy to replicate.”

Philadelphia Media Network, the parent of the Inquirer, Philadelphia Daily News, Philly.com and related websites, is trying to wring concessions from its unions, most of whose contracts expired Oct. 8, and is reassigning staff while revamping its coverage.

The Journal Register Co., which runs small and midsize newspapers such as the Delaware County Times and the Pottstown Mercury in Pennsylvania and nine other states from headquarters in Yardley and New York City, is in bankruptcy for the second time in three years, trying to mop up rivers of debt.

But New York hedge fund manager Alden Global Capital is poised to come away from the Journal Register bankruptcy with full, lower-debt ownership of a company positioned to lead at least one way into newspapers’ digital future.

Family-owned Calkins Media, operating from its base in Levittown, has brought in Contreras and others in the past year to secure the news company’s future.

And Philadelphia-based equity firm Versa Capital Management has combined four chains of community newspapers, ranging from the Wilkes-Barre Times Leader to the Xenia, Ohio, Daily Gazette, into a 12-state conglomerate called Civitas Media.

“Smaller newspapers have less legacy high-cost issues. … Metros have a high cost structure that’s very difficult to change,” said Michael Bush, the CEO of Civitas. “There’s an opportunity through consolidation for smaller papers to improve operations while reducing expenses, primarily through back-office functions.”

Investors in such newspapers have more than the financial details on their side; they also have

Warren Buffett.

The octogenarian billiona the nation’s biggest newspa past year as his Berkshire Ha hometown Omaha World-H time ownership of the Buffa most of Media General’s new of Texas dailies.

“Newspapers are a very att fett told a gathering of his ne mid-September, according t one of them, Tom Silvestri of Dispatch. “The people who n it tomorrow.”

Mr. Buffett also said new driving down the prices for t be able to buy more comm wrote Jeff Green, the publis new Buffett newspaper, the ston-Salem Journal.

But Mr. Green reported that the Oracle of Omaha foresees doom for major metropolitan newspapers because they can’t create a community connection with readers anymore.

That’s not good news for the six businessmen behind Interstate General Media, which bought Philadelphia Media Network in early Apr Gerry Lenfest, Lewis Katz cross III, Joseph Buckelew kowsky and Kris Singh paid the company, less than 11 per million Brian Tierney and p buy the company from new in 2006 and less than 40 pe

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18 OCTOBER 2012

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TUARY

ions, but some ir burial.

lionaire has become one of wspaper publishers in the re Hathaway first bought its orld-Herald to join its longBuffalo News, then added ’s newspapers and a couple

ery attractive business,” Bufhis newspaper publishers in ding to a report printed by tri of the Richmond Timeswho need it today will need

d newspaper naysayers are s for the businesses, so he’ll community newspapers, publisher of another r, the Win-

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ia y April.

Katz, George Norkelew, William Hanh paid $55 million for 11 percent of the $515 and partners paid to new owner McClatchy 40 percent of the $139 mil-

NEWSPAPER NEWS

Changing times, changing owners Recent newspaper news has been mixed.

New Group Formed In September, Versa Capital Management announced the creation of Civitas Media, which includes three media groups publishing community newspapers in 21 states, including Pennsylvania.

Bankruptcy Sought In September, Journal Register filed bankruptcy, something it did just three years ago. The Yardley, Bucks County-based chain is owned by Digital First Meida, which also owns MediaNews Group and Digital First Ventures.

Another set of new owners downtown The company that includes The Philadelphia Inquirer, The Daily News and philly. com was sold for the second time in less than two years. The price tag in 2010 was $139 million; the price tage this year was $55 million.

New CEO in Bucks Late in 2011, Calkins Media announced that former executive at E.W. Scripps would be the company’s new CEO. Calkins owns three newspapers in the Philadelphia market, as well as PhillyBurbs.com.

Scaling back In May, New Orleans’ major daily, the Newhouse-family owned Times-Picayune announced it would scale back to printing just three days a week. Three months later, Advanced Publications announced the same would happen to Harrisburg’s Patriot-News and Syracuse’s Post-Standard.

30 lion a group of creditors paid in a bankruptcy auction for the company in October 2010.

Another way to look at it: All the components of Philadelphia Media Network sold in April 2012 for the same price Walter Annenberg got for the Inquirer in 1969.

“Clearly, it’s a dubious investment for commercial value,” said Mr. Singh, the CEO of Holtec International. “I got all kinds of emails from my friends all over the country saying, ‘Well, I guess next time you’ll buy the U.S. post office.’ ” But while “it doesn’t appear that print media is a great business,” he said, “Philadelphia does need a distinct organ that speaks to the collective needs of people in the area.”

How the Inquirer and its sister publications speak to those people, which people they speak to and what they speak to them about remain open questions, playing out in public for the privately held company.

Want to find out about the negotiations Philadelphia Media is having with all of its unions except the Newspaper Guild, whose contract for reporters and editors runs another year?

You can check out the free, quick-read daily Metro in print or online [metro.us/ philadelphia], where you’ll find that the Teamsters, who represent the delivery truck drivers, are talking about a strike.

Curious about voluntary staff buyouts and involuntary reassignments of veteran newspeople to new beats?

Philadelphia Magazine’s free Philly Post blog [blogs.phillymag.com] tells you that you won’t see Howard Shapiro’s byline on any more theater reviews in the Inquirer because he took a buyout after being reassigned to South Jersey.

Eager to read the latest memo to the staff from CEO Bob Hall, such as the Aug. 8 letter in which he said the company lost $17 million in 2011 and saw revenues fall $16 million in the first half of 2012?

Odds are that Jim Romenesko’s free media blog [JimRomenesko.com] has posted a copy or will link you to a site that has.

(You also could pick up a copy of Region’s Business or visit regionsbusiness.com.)

Those are just some of the alternative ways to get Philadelphia news and the reasons Philadelphia Media Network needs to change.

“Newspapers are, of course, less and less relevant as a source of news; we all know that,” Mr. Singh said. “But a newspaper in a city of our size, Philadelphia and the sur-

18 OCTOBER 2012

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rounding metro area — it’s bigger than many countries in the world. … If it doesn’t have enough information on a typical day to fill a newspaper, then there is something that is very wrong.”

Interstate General Media spokesman Mark Block said the company recently completed more than three months of research on advertisers and readers, including an extensive readership survey.

“We’re almost at the point where we’ve reached some clarity” about how to respond, he said. Mr. Block anticipates being able to discuss the results by mid-November.

Changes already are coming to the newsroom.

Management announced in a memo Sept. 28 that the company must “dramatically bolster” coverage of business and of the South Jersey and Pennsylvania suburbs.

The message was clear: Many people will have different jobs, and everyone will have to do more.

Some editorial staffers reportedly have received new assignments, and editorial employees have until Oct. 19 to apply for a new round of voluntary buyouts, which 21 employees took in March. The newspapers also laid off three full-timers and 16 part-timers in March.

“We all need to recognize the very difficult decisions and limited choices that are presented to us under the current circumstances,” Mr. Hall wrote in a follow-up Oct. 2, in which he said the company fell more than $1 million short of revenue projections for August and September.

“If print media is to survive, we must keep our loyal

readers, while reaching new and enthusiastic audiences,” he added.

“I think that it all depends on the leadership,” Mr. Singh said. “If it has proper leadership, it can survive and prosper under the most difficult circumstances.”

He said the new owners are prepared for transitional losses for a couple of years. “If it’s well-managed, the media company will hold its own,” he said. “You just have to be responsive to the needs of the people, be responsive to the community.”

He used the examples of Kodak and Fujifilm: Fuji has adjusted to technology and changing consumer needs and is doing fine, while Kodak has watched the photography world pass it by and is on its last legs.

The newspaper equivalent of Fuji, Mr. Singh said, is to provide content, including advertising, wherever people want to get it — the daily print paper, the Web, smartphones, tablet computers — and ensure the content “becomes more attuned to what people need.”

Philadelphia Media’s content changes are a work in progress, but some of the revised delivery methods are clear.

In print, the page will get thinner as soon as next month with a change from 48-inch-wide rolls of paper to 44-inch rolls. Online, Mr. Hall wrote that Philly. com is being redesigned, distinctive websites for the Inquirer and Daily News will be relaunched, and a free replica e-edition of the daily paper will be available to print subscribers beginning in January.

Mr. Singh said that unlike New Orleans, Harrisburg and other markets served by the Newhouse family’s privately held Advance Publications, the Inquirer and Daily News won’t stop printing daily papers. “That will represent a path to extinction.”

But it’s a path the Journal Register might follow out of bankruptcy for some of its 20 daily newspapers, Edmonds reported in mid-September after an email interview with the company’s CEO, John Paton.

“I would consider and am considering a reduction in print frequency in some markets,” Mr. Paton wrote to Mr. Edmonds. “I think it makes sense to think about the frequency of print as print revenues decline and digital revenues increase.”

The Journal Register dailies close to Philadelphia are the West Chester Daily Local News, Delaware County Times, Pottstown Mercury, Lansdale Reporter, Norristown Times Herald, and Trentonian, which have a combined daily circulation of about 125,000, out of almost 410,000 for the company as a whole, according to Journal Register’s bankruptcy filing.

By comparison, the Inquirer and Daily News combined to average sales of 325,000 copies a day for the six months that ended March 31.

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Mr. Paton’s goal is to drive ever more newspaper readership online, creating a bigger, more committed audience for digital advertisers.

Before taking the Journal Register Co. into Chapter 11 bankruptcy Sept. 5, Paton used his blog (jxpaton.wordpress. com) to defend Advance’s decision to cut the New Orleans Times-Picayune to three days a week in print while continually publishing news online. “I support them because their industry is my industry and it will not survive without dramatic, difficult and bloody change. … Like them I am willing to do what it takes to make our businesses survive.”

Mr. Paton became CEO in early 2010, after the company emerged from Chapter 11 bankruptcy as a privately held company largely owned by Alden Global Capital.

Mr. Paton is a leading advocate of committing to digital ahead of print, so much so that in September 2011, almost exactly a year before re-entering bankruptcy, the company joined with privately held MediaNews in a partnership managed by the new Digital First Media, also led by Mr. Paton.

The latest bankruptcy filing says Journal Register is losing about $1 million a month, and some see Chapter 11 as an indictment of the digital-first strategy.

But Mr. Paton blames the leases, pensions and other obligations the company incurred years ago to support its print operations.

The company’s revenues this year are projected to be half what they were in 2005, Paton wrote on his blog, but the company would be profitable if not for a 52

percent jump in pension liabilities, the service on $162 million in debt (down 28 percent since the last bankruptcy), and old leases and other print-related expenses.

The bankruptcy gives the company a way to strip away more of those obligations, especially the leases and pensions.

“After the sale, the businesses will not be burdened with the extensive secured and other debt and the costs of the Debtors’ legacy operations, which will make such businesses currently better able to compete and to weather the current stresses in the industry,” the bankruptcy petition reads.

Journal Register has cut more than a quarter of its staff since 2009 to 2,107 full-time equivalents and expects annual operating expenses to be $27 million less this year than in 2009, even after adding $12.8 million in costs tied to digital growth.

Digital revenues have increased from $9 million in 2009 to $30 million in 2011 and a projected $40 million this year, but even though print advertising has fallen even faster, digital advertising still accounted for only 15.3 percent of the company’s 2011 ad revenue.

“From all I can tell, they want to keep on doing what they’re doing,” Mr. Edmonds said.

At least 94 percent of Journal Register’s outstanding debt, more than $152 million, is owed to Alden Global Capital, whose affiliates have owned all of the company’s stock since June 2011. Another Alden Global affiliate, 21st CMH Acquisition, is the stalkinghorse bidder to buy the company out of bankruptcy and has a huge advantage over any other potential bidders because it can apply the debt as part of its bid.

Alden will still own Journal Register,

SMALLER NEWSPAPERS HAVE LESS LEGACY HIGHCOST ISSUES. … METROS HAVE A HIGH COST STRUCTURE THAT’S VERY DIFFICULT TO CHANGE.’ —MICHAEL BUSH, CEO CIVITAS

Journal Register Works Through Bankruptcy Proceedings - Again

BY MICHAEL JACOBS So far, so good for the Journal Register Co.’s Chapter 11 bankruptcy case.

The company received final approval Oct. 4 from U.S. Bankruptcy Judge Stuart Bernstein for financing from Wells Fargo to ensure business as usual during the case, which the company expects to be resolved within 90 days of the Sept. 5 filing by Journal Register and 28 direct and indirect subsidiaries.

The company has faced a few objections to its motions from utility companies and leaseholders, but Bernstein denied the only one, from a Michigan landlord, that the company didn’t resolve.

The bankruptcy case has revealed worse-than-expected print results for Journal Register. Print advertising declined a combined 19 percent in 2010 and 2011 from what the company saw in 2009, the year it previously went through bankruptcy. Because print ads still accounted for 56.7 percent of Journal Register revenue in 2011, explosive growth in a small base of digital ad sales (107.7 percent in 2010, 61 percent in 2011, 32.5 percent in the first six months of 2012) couldn’t stop the company’s overall revenue slide.

While Journal Register has blamed legacy costs such as pensions and leases from print operations, the company’s bankruptcy petition points to “events of default” on its main loans as triggers for its second bankruptcy in three years.

Basically, the company lacked cash flow.

“After the sale, the businesses will not be burdened with the extensive secured and other debt and the costs of the Debtors’ legacy operations, which will make such businesses currently better able to compete and to weather the current stresses in the industry,” Executive Vice President William Higginson wrote in an affidavit.

The company has operated with three secured loans since emerging from bankruptcy as a privately held company in 2009. As of Sept. 5, the company

owed $13.3 million on a revolving loan with Wells Fargo, $112.3 on a loan from the two Alden Global Capital funds that own all Journal Register stock, and $40 million on a second loan from Alden funds. The Alden funds paid off the other lenders involved with those loans in June 2011 so that the hedge fund manager became its own primary creditor.

Another Alden fund, 21st CMH Acquisition Co., has agreed to buy the company out of bankruptcy, using the loan debt for credit. Anyone else could bid for the company, but the price would have to exceed the debt-enhanced Alden bid. The auction date has not been set.

Keeping watch on Journal Register’s spending is a committee of unsecured creditors: the Pension Benefit Guaranty Corp., because the company’s pension liabilities have grown 52 percent since 2009; Newspaper Guild Local 38010, represented by Executive Director Bill Ross; advertising production company Affinity Express of Elgin, Ill.; paper supplier Xpedx of Clinton, N.J.; and pressroom supplier Flint Group North America of Plymouth, Mich.

Ross also served on the creditors committee when the Philadelphia Inquirer and Daily News went through bankruptcy in 2009. “It’s our third time around,” Ross said in a union statement.

“We’ve had some real experience with Chapter 11.”

Journal Register’s two biggest unsecured creditors are the state of Connecticut, owed $4.34 million in taxes, and the company pension fund, owed $3.2 million. Vendors Kruger Inc. of Chicago ($402,709) and Affinity Express ($300,091) are next on the list.

Philadelphia businesses among the top 50 unsecured creditors are landlord Carey, Kramer, Pettit, Panichelli & Associates ($107,542); law firm Montgomery, McCracken, Walker & Rhoads ($77,032); business intelligence firm Competitive Media Reporting ($28,305); and administrative services firm ADP ($19,645).

32 but with less debt and lower long-term obligations.

Hedge funds typically look to cash in their investments in three to five years, but Alden has invested heavily in public and private newspaper companies since at least 2008.

“The way these firms operate, you’re not going to make good money on every deal,” Mr. Edmonds said.

Alden held a stake in Philadelphia Media Network until its April sale. But nothing came of speculation that Alden hoped to merge Philadelphia Media and Journal Register.

Both of those companies remain privately held, as do newly formed Civitas and family business Calkins Media — unlike the Philadelphia newspapers during more than three decades of Knight Ridder ownership and Journal Register from 1997 until 2009.

While some newspaper companies, such as USA Today publisher Gannett and the New York Times, and online-only news companies such as AOL, owner of the Huffington Post and Patch, must deal with the bad economy and the digital transformation of information and advertising while keeping their eyes on stock prices, the daily papers throughout the Philadelphia region answer only to private owners and lenders.

“I think being private gives you a good deal more maneuvering room. You don’t have to keep getting approval from the market at large,” Mr. Edmonds said.

On the other hand, “it doesn’t remove the most basic business problems.”

Michael Bush, the first CEO of Civitas Media, said the goal of equity firms to unlock value and make a profitable sale can be beneficial.

He and his employees are dealing directly with the owners at Versa, rather than managers answering to many owners with different goals.

“Sometimes with publicly traded companies, you end up doing some stupid things for very short-term results,” Mr. Bush said. “Versa’s not going to do anything for shortterm gain that hurts the long term for the franchise.”

At Calkins, Mr. Contreras has an even more stable situation, working for the third generation of family owners, after his two most recent jobs were with public news companies, E.W. Scripps in Cincinnati and Pulitzer in St. Louis.

In April, he brought in Guy Tasaka, a veteran of the New York Times Co. working in the Pacific Northwest, to be the chief digital officer “courageously experimenting with solutions for our consumers and advertisers across a variety of platforms,” then added new Columbia M.B.A. Myra Cortado as director of business development in June.

Mr. Contreras declined to go public with the private com-

18 OCTOBER 2012

REGIONSBUSINESS.COM

pany’s plans, but he explained the business appeal of community newspapers: “There’s a brand that resonates with people and will create demand for products for a good, long time.”

One of Mr. Contreras’ earlier stops was the Wilkes-Barre Times Leader, where he was publisher.

Now that newspaper is part of Civitas Media, the chain Versa Capital unveiled Sept. 11.

Civitas combines four chains that Versa bought over the previous 15 months: Freedom Central, Heartland Publications, Impressions Media and Ohio Community Media.

The new company has 1,650 employees in 12 states; its businesses include 35 daily newspapers, generally with paid circulations below 10,000.

Operating in so many markets spreads risk and presents the opportunity to share best practices and thus do an equity firm’s job of creating value, Versa CEO Gregory Segall said.

“We’re not permanent owners; we’re investment managers,” Mr. Segall said. Versa will own a business until it has maximized the value for a new buyer, a process that typically takes five years but could be as quick as three years or as long as eight.

That means Versa depends on small-town newspapers being long-term successes to attract buyers.

Versa uses a contrarian strategy and looks for businesses or industries that are out of favor without falling into what Mr. Segall called the value trap: “Just because

it looks cheap doesn’t mean it’s not still expensive.”

Civitas owns newspapers that are the No. 1 or No. 2 advertising outlets in their markets, Segall said.

They generate solid cash flow, have low maintenance costs, don’t require major equipment investments, can benefit from the consolidation of business functions, and don’t face big-city competition for advertising.

Small-town newspapers, he said, just need a stronger economic recovery so local businesses advertise again.

Advertising analyst Gordon Borrell of Borrell Associates predicted during a NetNewsCheck webinar this month that 2013 will mark a turnaround for newspapers under 50,000 circulation, with some growth in print advertising after years of declines in the 8 percent range. Print revenues will be flat for newspapers with 50,000 to 100,000 daily circulation and will fall 4 percent to 6 percent at large papers, Mr. Borrell said.

Some of that is the difference in competition for ad dollars.

The Inquirer faces competition from TV stations, radio stations, free weeklies and other media appealing to the entire metro area, plus established daily newspapers run by the likes of Calkins and Journal Register in specific suburbs — perhaps some of the suburbs the Inquirer will target under its revamped coverage strategy.

But Mr. Bush, who led Heartland until Versa created Civitas, said he can count his newspapers’ competitors on his hands; “you don’t have to use your toes.”

Civitas rarely faces TV competition, he said. Sometimes a town has a local radio station or a small weekly. Phone books are barely hanging on as rivals for ad dollars. Occasionally, someone will set up a news blog or one-person, online-only newspaper, but it’s hard to cover everything in town and sell ads by yourself.

Smaller populations limit the Internet’s disruption for community papers.

“In Philadelphia there might be a thousand different voices out there. It’s very loud, and a major metro (paper) gets heard less and less among the chorus,” Mr. Bush said, noting the low-cost of launching online. “In a smaller market, technology can be our friend.”

He cited the example of a car dealer who would have advertised on local television if it existed in Mount Airy, N.C. Instead, the car dealer now sponsors live online streaming of local high school football on the Mount Airy News website.

“We got a thank-you from a soldier in Afghanistan who

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18 OCTOBER 2012

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A GREAT CITY HAS TO HAVE A GREAT PAPER.’ —KRIS SINGH

was able to watch his kid play his Friday night football game live,” Mr. Bush said.

By next year, he said, Civitas will be live-streaming football games on cellphones. One of the four chains that now make up Civitas is finishing up a smartphone news app that now will roll out across the company.

“If we’re smart, and I plan to be smart, we can do all kinds of things,” Mr. Bush said.

His goal is to make Civitas a great investment for Versa by embracing smart changes across the company. Versa then would get a handsome reward for its faith in local newspapers, while Bush would work with the next owners to keep pushing Civitas ahead as a small-town industry leader.

“They are honest about saying at some point they’d like to make money off their investment,” he said. “The scary ones are the ones who want to come in fast and rip cost out and flip it right away. These guys aren’t like that.”

He said Civitas is embracing rapid change. “Because the management are people who are very engaged with local operations, it gives you a chance to see what works in one place and quickly roll it out elsewhere.”

Being truly tied in to a community is key, Mr. Contreras said.

“There’s great value in connection with local communities.”

Newspapers without that connection aren’t good investments, Mr. Segall said.

That’s the problem underlying Philadelphia Media Network’s shrinking value.

“Metro papers have a difficult time being really local to the whole readership,” Mr. Edmonds said.

The Inquirer and Daily News don’t have the staff to cover the chili cook-off in West Chester and the production of “Li’l Abner” in Phoenixville and the YMCA controversy before the Lower Providence Board of Supervisors and the inflatable rhino stolen in Churchville and the house fire in Newtown — and most of the newspapers’ readers, in print or online, don’t care about those stories happening outside their own communities. (All of those stories appeared recently on Patch Media websites that aim to bring highly local news to specific communities in the Philadelphia area.)

“It’s a weird market,” Mr. Contreras said, “a whole collection of individual communities.”

Still, Mr. Singh sees the flip side: the value in having a unifying voice for the Philadelphia area.

“The newspaper represents the soul of this region. It looks after the interests of the region and the people,” Singh said. “A great city has to have a great paper.”

The big question is whether a great city will support a great paper enough to resurrect it as a great business.

Freelance journalist Michael Jacobs lives in the Alanta area.

Report From Edge of Digital-Print Divide model because it values quantity Remember in “The Princess Bride” over quality. That’s probably true, when Vizzini (Wallace Shawn) and just as it is true for those revenueWestley (Cary Elwes) have a battle of rich Sunday newspapers that wits to the death? could double as doorstoppers.

Vizzini uses flawless logic to argue “There remains a question against drinking from either of the cups … of how important a really before him, one of which is poisoned. journalistically strong report, When he finally chooses, he cackles whether in print or another platabout never going against a Sicilian when death is on the line, then drops form, remains. I tend to think it dead, and we learn that Westley poiis still important,” said Poynter Institute writer Rick Edmonds, soned both cups.

Freelance journalist Michael who worked with the PhiladelI’m reminded of that scene amid the Jacobs lives in the Alanta area. latest debates over charging for newsphia Inquirer from 1977 to 1982. paper content online, inspired by the Chapter Especially as newspapers charge more for online 11 bankruptcy of free-digital proponent Journal content, “you really need to be sure that what Register Co., and over cutting print to focus on you have there is recognized and really has some digital, sparked by Advance Publications’ decision enhanced value for readers.”

Journal Register CEO John Paton is stickto switch from daily publication to three days a week in New Orleans and elsewhere. ing with a no-paywall approach even though his The arguments on all sides make perfect sense, company’s bankruptcy filings extol the revenue of and after working along newspapers’ digital divide single-copy newspaper sales, which will decrease the past 15 years, I can’t help wondering whether, anyway if he follows Advance’s example and stops as with Vizzini, the decision itself means doom. printing some newspapers a couple of days a week.

My boss in 2005 explained that a dollar of print Philadelphia Media Network co-owner Kris revenue was worth only a dime to the bottom line Singh said the company has no plans to back away because of the cost of ink, newsprint, presses, from daily distribution of the Inquirer and Daily trucks, mail and labor, but a dollar of digital News. “I think as long as people who grew up with revenue went almost straight to the bottom line. the paper are around, there will be a print edition.”

Then he spent more money to build print circulaThe company is relaunching distinct online tion and nothing to develop online ads that were identities for the Inquirer and Daily News, but worth even 10 percent of print ads, and his media the free websites at Journal Register’s suburban newspapers will make it tough for the Philadelphia dreams crumbled.

I worked for a start-up online news company, newspapers to implement paywalls.

Civitas Media, owned by Philadelphia-based Patch, that embraced free content in part because it didn’t carry the overhead of a print publication. Versa Capital, isn’t committing to a final answer But it has failed to carry its innovative editorial on digital issues.

CEO Michael Bush said the newspaper websites spirit to the ad side of the business. Advertising analyst Gordon Borrell of Borrell Associates pre- are free, but a paid e-edition is coming. Eventually, dicts 30 percent growth in newspapers’ digital he said, each website is likely to offer a mix of paid video advertising in 2013, but Patch’s video ad and free content. That’s what, for example, ESPN. com does. options remain almost nonexistent.

Mr. Bush doesn’t see print going away, although I’ve listened to people with dizzying intellects lament the “original sin” of newspapers — posting it might not be daily in many places. “The Web is articles free online, thus undercutting print sales great if you know what you’re looking for,” he said.

— while ignoring the fact that newspapers never “But if we didn’t know what we were looking for, print is a really great way to look for it. You scan made their money on circulation.

Still, billionaire Warren Buffett says it makes no quickly the things you don’t know.”

If only, like Vizzini, we knew the poison for sense to charge for print and be free online, and paywalls, though easily circumvented, are spread- newspapers choosing their digital future (Disconing through the newspaper business. nect with communities? Lack of good ad products?

Columbia Journalism Review’s Dean Starkman Arrogance? Bias? Lack of bias?) and how to stop it argues that free online news is a flawed business (Great journalism? Hilarious cat videos?).

34

18 OCTOBER 2012

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Union OKs Strike Against Interstate General The Teamsters represent about 300 employees of the company that owns The Philadelphia Inquirer and Daily News

BY MICHAEL JACOBS Teamsters Local 628 has authorized a strike against the Philadelphia Inquirer and Daily News.

The Teamsters, representing some 300 delivery drivers, dispatchers, security guards and others employed by the newspapers’ owner, Interstate General Media, are one of nine unions whose contracts with the company expired Oct. 8. The others have not announced strike votes.

Local 628 President John Laigaie did not return phone calls for comment about when the Teamsters might walk out.

Negotiations between the company and the unions continue, and Interstate General Media spokesman Mark Block expressed optimism a few days before the Oct. 14 strike vote. “Everyone’s committed. … We’re still moving in the right

direction.”

The only union with an active contract is Newspaper Guild Local 38010, which represents editorial employees, such as reporters and photographers.

The Guild contract expires Oct. 8, 2013, but that hasn’t stopped Interstate General Media from seeking concessions now.

The Guild local’s president, Dan Gross, and executive director, Bill Ross, notified members Aug. 8 that Interstate General Media CEO Bob Hall is seeking $28 million in cuts from the union contracts, including $8 million from Guild workers, through buyouts and a wage cut of up to 13 percent.

“We understand that revenue is down, but also question why a group of successful local businessmen did not anticipate this possibility when they bought the company in April and pledged to invest

‘patient capital’ and revitalize the Inquirer, Daily News and Philly.com,” Gross and Ross wrote.

One of those new owners, Holtec International CEO Kris Singh, said he expected labor relations to be more cordial.

At Holtec, he said, the unions “understand that we are all in the same boat. If the factory is not profitable, it’s eventually going to follow the laws of physics and go under.”

With the newspaper unions, “I don’t see the same sense of shared destiny.”

For newspapers going through the upheaval of relying more on digital readers and advertisers, a union structure built around newsprint can stand as an obstacle as surely as old, oversized headquarters buildings. The Inquirer and Daily News moved out of their iconic, 87-year home on North Broad Street in July after the newspapers’ previous own-

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ers sold it to developer Bart Blatstein.

The Inquirer and Daily News aren’t the only big-city newspapers in tense negotiations. Editorial employees walked out of The New York Times one afternoon this month to protest their position with management. And union contracts and pensions at the Delaware County Times, Norristown Times, Pottstown Mercury and Trentonian, among others, are potential issues in the Journal Register Co. bankruptcy case Dealing with unions “makes the whole process of transforming the business … that much more difficult,” said former Inquirer reporter Rick Edmonds, who covers the news industry for the Poynter Institute. Both expense and lack of flexibility are factors. “You’re changing how things are done. It’s not unusual for there to be quite a few clashes.”

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18 OCTOBER 2012

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Bucks B&Bs adapt to seasons There was a time when once the colorful leaves faded and fell, Bucks County’s bed & breakfasts hunkered down for a long, cold winter. Now expanded offerings and marketing have them bustling.

BY REGION’S BUSINESS STAFF

F

or three seasons out of the year, Bucks County offers the perfect setting for a bed and breakfast. The weather is temperate, the scenery is beautiful and the activities calendars are overflowing with a wide variety of things to see and do.

Then there’s winter.

For years, the transition from fall to winter brought an end to the busy season.

“January, February and March, that’s typically our slowest season, not just here, but across the mid-Atlantic,” said Carl Glassman, who runs New Hope’s Wedgewood Inn along with his wife, Dinie. “We’re not known for skiing, the weather hasn’t been good for ice skating recently. And there arent’ nearly as many activities in the area.”

The basic solution to that problem, Mr. Glassman said, was the solution most any businesses uses on any major challenge.

“Innovation is one of the keys to our success,” he said. It took

more than one simple idea to keep the inn humming throughout the year.

His multi-pronged approach includes hosting business travelers. Like most things, though, that didn’t come easy.

“We had to do a lot of research and marketing to reach that niche,” he said. “Now we do a lot of business to business bookings.”

Another factor is building off of some of the basics of how he and his wife run the Wedgewood.

“We treat everyone like royalty and that’s not easy to do, because that doesn’t mean the same thing to all people,” Mr. Glassman said. “You treat them the way they want to be treated.”

That includes answering the phone. Simple, right?

“We strive to answer every call before the second ring,” he said.

“That’s part of the reason for our success. Some inns won’t even answer the phone at all if they’re booked.”

That personal touch can pay

Carl and Dinie Glassman, innkeepers of New Hope’s Wedgewood Inn, have adapted their business plan to combat seasonal drops in bookings. REGION’S BUSINESS STAFF

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18 OCTOBER 2012

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off, especially during the slower months. While there’s plenty of demand in October when the Bucks County landscape explodes with color, the last two months of the year can be a tougher sell. While Mr. Glassman said he turns away eight people for every room, those phone calls present an opportunity.

“We try to convert the October ‘leaf peepers’ to November and December,” he said.

And where the holidays were once a problem, they are now an opportunity.

“We’re open Thanksgiving and we’ve found that some people want to stay four or five days to visit family,” Mr. Glassman said. “We also host off-site holiday parties.”

That’s become standard fare for inns and B&Bs across Bucks County, many of which have facilities to handle small weddings, business meetings and/or off-site business retreats. Some inns, like the Black Bass Hotel, open their dining rooms seven days a week for breakfast, lunch and dinner.

That extra effort helps boost Bucks County tourism, and that’s good for everyone, according to Jerry Lepping, Executive Director of Visit Bucks County, the Bucks County Conference & Visitors Bureau.

“This industry creates jobs, fuels our local economy and saves on average $400 a household in tax relief a year,” Mr. Lepping said. “Traditionally known as an “inn” destination, Bucks County has more than forty bed & breakfasts and are an essential part of our bucolic destination.”

Teaching Aspiring Innkeepers

BY REGION’S BUSINESS STAFF

Carl Glassman, owner of The Wedgewood Inn in New Hope, Bucks County, helps aspiring innkeepers get real world experience before taking the plunge on their own. REGION’S BUSINESS STAFF

Carl Glassman has one of the three “dream jobs” so many people cherish.

“Ask most people what kind of business they’d like to open and they’ll probabaly say a bookstoore, a restaurant or a bed and breakfast,” he said.

However, when dreams are met with reality, the unprepared can get into trouble fast.

“It’s a lifestlye business, it’s not a job,” he said. “Successful inkeepers are passionate about it and then it’s not work. If it’s work, it becomes a drudge and guests can see it.”

After years of staying at B&Bs, he and his wife learned things the hard way. He figured he could make it easier for the next generation of innkeepers.

A guest wanted to get into the business and asked Mr. Glassman for some training.

“I didn’t even charge at first,” he said.

From there, it went to a continuing education course, then on to Bucks County Community College, then the New York University School of Hospitality.

“At the same time, I developed a twonight, three-day course, a ‘how-to’ for aspiring innkeepers,” Mr. Glassman said.

Between that course and internships or working as a “fill in” innkeeper (inn sitters), valuable experience is gained.

“These give people a real world experience, a toe in the water,” Mr. Glassman said. “You also separate yourself from others because you can tell a bank, you’re not just a dreamer. You’ve studied the business and, more than that, you’ve actually ‘done’ the business.”

This helps would-be dreamers decide if a B&B is for them.

That decision has little to do with the economy, Mr. Glassman said, adding that he and his wife opened the Wedgewood during a recession, then did a major expansion during a recession.

“There is no good time, there is no bad time,” he said. “It’s whatever works for you.

The macro economic issues aren’t that important if you’re being innovative and creative in finding ways to make it work.”

And to be clear, it is work.

“It takes two to run an inn, innkeepers come in pairs,” Mr. Glassman said. “One is the first one up, the other is the last one to go to sleep. You can’t clock in or clock out.”

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18 OCTOBER 2012

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PROPOSED CHANGES

Current Tax Abatement Plan:

100%

DEVELOPING OPINIONS Developers Split On Impact of Tax Abatement Proposal

Exemption for 10 years

0%

Exemption in the eleventh year and beyond

Councilman Goode’s Reduction Plan:

100%

Exemption in the first year

80%

Exemption in the second year

60%

Exemption in the third year

40%

Exemption in the fourth year

20%

Exemption in the fifth year

0%

Exemption in the sixth year and beyond

BY ANDREW WIBLE Bill Loonstyn cannot get the vision of abandoned properties out of his mind.

A partner with Loonstyn Properties in the Art Museum and Spring Garden areas, he sees an increase in vacant lots and unoccupied buildings in Philadelphia’s future.

The main cause for his concern is a potential City Council proposal to change the city’s property tax abatement laws.

In the mid-1990s, Philadelphia was in need of a jump-start. Five straight decades of declining population, coupled with an aging and dwindling work force, had pushed the city into an economic and cultural hole.

To provide the shot of energy needed to entice young professionals with deep pockets to move downtown, the city enacted a 10-year abatement in 1997, which taxed property at its pre-improved rate for a decade. During its lifetime, the plan has encompassed an estimated 15,000 properties and helped Philadelphia experience its first population growth since the 1950s.

Now, City Councilman Wilson Goode Jr. has called for a reduction of the plan to a fiveyear abatement that decreases yearly from 100 percent in the first year to 20 percent in year five.

The proposal, which would go into effect in 2014, would come at a time when the city plans to cut both wage and gross-receipts taxes. It could also, supporters say, help relieve some of the burden on residents living in older, non-exempt properties who have had to weather three straight years of tax increases while also seeing their property values rise.

Developers, meanwhile, argue a change in the abatement would halt the growth that pushed Center City’s population over 90,000, which ranks third in the country in downtown population.

“The plan changes a lot, because something we may have considered renovating, if the numbers are too high, we may not do any work at all,” Mr. Loonstyn said. “It could also force rental and housing prices to go up, which would mean less demand, because the customers can’t afford the higher prices.”

Supporters of the 10-year plan argue the initial loss in tax revenue is eventually recouped by the residents’ personal economic contributions to the city, including through

IF THE NUMBERS ARE TOO HIGH, WE MAY NOT DO ANY WORK AT ALL.’ — BILL LOONSTYN

Construction on the 58-story Comcast Center, Philadelphia’s tallest skyscraper, began in 2005, and Comcast employees began moving in December 2007.

(B. KRIST FOR GPTMC)

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18 OCTOBER 2012

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Controller: Contractor Enforcement Inadequate at Construction Sites A review by City Controller Alan Butkovitz of construction in North Philadelphia revealed inadequate monitoring and enforcement of contractors and developers.

Sparked by allegations that contractors were not complying with applicable building regulations, Mr. Butkovitz’s report brought to light the public health and safety concerns of residents of North Philadelphia area, notably around Temple University.

“The lack of proper enforcement has allowed contractors to violate various codes and negatively impact the quality of life for surrounding residents,” said Mr. Butkovitz at a press conference.

Violations found by the review included illegal short dumping of construction debris in surrounding vacant lots, lack of dust screens and filters (which can allow for pollution in the air and waterways,)

missing air vacuum hoses, street lane closures without proper permits and stairs built beyond code.

Additionally, the review found that the Water Department was not monitoring smaller construction sites, for debris run-off and suggested that Licenses & Inspections and the Health Department were not communicating about issues.

“As our city continues to grow and new construction projects take place, the city needs to take an aggressive approach to protecting the quality of life for citizens in the surrounding neighborhoods.”

The report gave several suggestions on how to improve the situation including the development of a Memorandum of Understanding among the five departments and the creation of a mobile app for department employees to communicate with each other more easily.

BY THE NUMBERS

Center City:

2.1%

Change in property tax collection, 1 2012-2013

15.5%

Change in wage and earnings tax collection

-68.5%

Change in business privilege tax collection

$20M

(REGION’S BUSINESS)

However, Mr. Loonstyn wage, sales and other taxes. said his company would Mr. Loonstyn said he has seen be forced to make a lot of a rise in the number of homechanges if the measure is owners choosing newly restored approved. homes since the change, leadThe firm would become ing to more long-term residents. much more selective in its He added that the 10-year plan decision-making and potencreates an incentive for renovation and enhancement that tially less likely to invest increases property value, leadin the most run-down of buildings that need the most ing to higher tax rates when the work. There would also be abatement expires. additional costs passed onto Lowering the abatement, he the customer. said, lowers the incentive to Ultimately, he said, renovate. numerous properties that But not every developer is would have been renovated in agreement. Prominent real will simply go untouched. estate owner and developer One developer said that if a proposed tax abatement plan is put into action by City Council, The resulting real estate Michael Karp believes the time fewer city apartment buildings will be renovated.

(FRANK CARROLL) environment could not only is right for a change. hurt Philadelphia’s overall The 10-year abatement was only meant to be a quick stimulation policy to would be if the change were enacted over- property value and tax base, but have a lasting help make Philadelphia a more attractive des- night, which could have harsh effects on the effect on potential investors as well.

“One of the reasons why the city has been tination, he said. Now that the higher earners real estate community and homeowners.

But since the proposed plan would not be doing as well as it has is because there is are here, he said it is time to scale back the put in place until 2014, he said developers a lot of income being generated through abatement because it has done its job. development,” Mr. Loonstyn said. “With the “People have moved to Center City, and have more than enough time to prepare.

“If you do everything at one time, you’ll have new abatement, you may have some projects there are clusters of people that have invested in the city and can afford to pay the taxes,” he a rush,” Mr. Karp said. “But if you don’t have that may not work financially, and the land said. “Philadelphia is doing pretty well right an unnatural change, everything should be or building may go underdeveloped or comfine. The new plan is similar to the one we had pletely undeveloped. This could cost the city now.”

The one potential pitfall, Mr. Karp noted, before, so it shouldn’t change much.” a lot in lost revenue.”

Planned revenue and support for the 2013 Center City District budget

$25M

Planned revenue and support for the 2017 Center City District budget

11,204

Net natural population increase in Philadelphia County between 2000 and 2010

12,782

Net natural population increase in Bucks, Chester, Delaware, Montgomery, Burlington, Camden and Salem counties combined between 2000 and 2010

$711M

Demand for shoppers’ goods within one mile of City Hall (CENTER CITY DISTRICT)

Q&A

18 OCTOBER 2012

REGIONSBUSINESS.COM

MARSHA BROWN’S

CREOLE

MESSAGE

The recipes of her childhood are part of what makes her namesake restaurant a special place in New Hope.

PHOTO BY BRENDA JANKOWSKI

What’s the elevator pitch on Marsha Brown’s Creole Kitchen in New Hope?

What I hope is the first impression when you enter the restaurant is to be amazed. I wanted to elevate the building to its potential. I always wanted to bring authentic Creole food to the area, to the Philadelphia region and when I walked into this building, it was a no brainer. For all my off time (from the Ruth’s Chris steakhouses), I would come to Bucks County because I really enjoyed the area. I figured if I wanted to be here more, I have to work here. I figured maybe I could open a little 20-seat establishment, and maybe not even be open every day, just serve friends, you know? But then I saw this place. The location really came to me.

The building is an old church. What did it take to make it into a restaurant?

I’ve always tried to think big and go beyond. And, honestly, this just happened. I had about seven lawsuits when I closed on this building and my lawyer said, “stop, let it go.” I said, “let me call you back in 10 minutes.” I hung up. I cried. I yelled. Then I called him back and said, “There’s no going back.” My accountant was against it, too. But look at the stained glass windows and you’ll see fleur de lis, which are a symbol of New Orleans. And when we were doing the renovations, we found all sorts of relics, wishing good health and fortune on whoever occupied the building. It was like, “Zing! This is it!”

Attaching your name to a restaurant is very personal. Why do that with this restaurant?

There’s a spiritual aspect in this building. In New Orleans, it’s not unusual to see religious relics - crucifixes, crosses, things like that – in restaurants. I never had any fear about putting my name on this restaurant. Growing up, I was always Marsha Brown. Never just Marsha, always Marsha Brown. And, you know, I like to say that I’m the complaint department, because if someone’s having an issue, if there’s a way we can improve, I want to know about it.

How big a role does tourism in Bucks County play in your business?

You know, you stroll through New Hope and you’ll be surprised to find people from all over the country. I like to say it’s my version of The Accidental Tourist Tourist. And we have such a great relationship with the local B&Bs and hotels. And you know, there’s such a strong word of mouth in the tourism industry and just so many small periodicals out all the time.

It’s not even going out and advertising in some national publication. Still, you’d be shocked at the number of tourists in New Hope and I’m surprised we get visited by so many of them.

You have three hugely successful restaurants in your Ruth’s Chris steakhouses. Why a Creole restaurant?

Almost every recipe here is a family recipe – it may look a little prettier, but this whole place has its roots in New Orleans, every detail is a taste of New Orleans, a blend of all the things that make it what it is. From the time you walk through the front door, it’s such a unique experience. The food is just the finishing touch.

41

How to connect Marsha Brown is the keynote speaker at the annual meeting of the Bucks County Conference and Visitors Bureau on Friday, October 19.

Connect with Marsha: MarshaBrownRestaurant.com Connect with Visit Bucks County: VisitBucksCounty.com Twitter: VisitBucksPA Facebook: VisitBucksPA

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18 OCTOBER 2012

REGIONSBUSINESS.COM

FINE ESTATES PREVIEW

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Hardwood floors throughout first and second floors. Beautiful two-story foyer, 9-foot ceilings.

Take a moment to unwind in the divine living room, enjoying the lovely light streaming through the windows illuminating this fabulous space.

Entertain guests comfortably in your dining room, complete with stunning hardwood floors.

Cooking in your gourmet kitchen is extended with

elegant 42-inch custom cabinets, pantry, granite counters and backsplash and upgraded appliances.

Two-story family room with gas fireplace, magnificent butler’s pantry with granite counter and refrigerator drawers.

Expansive master suite with elegant master bath with onyx counters.

This level has four additional bedroom with baths and a laundry room.

The basement is finished with bar area and wine rack; home theatre; recreation area; workout space complete with full bath to relax in with a soaking tub.

For complete real estate information, call Linda Gedney, of Prudential Fox and Roach, at 215-205-0181

EastSide,West Side,We’reAllAroundTheTown

East side condos: Pier 3, Pier 5, 22 Front, Society Hill Towers, The Bank Building,The Lippincott at Locust Walk,Independence Place, Hopkinson House, 220 W. Washington Square, Center City One.

West side condos: Academy House, The Rittenhouse Savoy, The Lanesborough,The Warwick, Parc Rittenhouse,The Barclay, The Dorchester, 250 S.18th Street,1820 Rittenhouse Square, 1830 Rittenhouse Square,1900 Rittenhouse Square, 220 W. Rittenhouse Square, The Rittenhouse, Rittenhouse Plaza, Wanamaker House, 250 S.17th Street, The Philadelphian.

The Bank Building: Brand new 2 bedroom plus den, 2.5 bath condo with high-end contemporary kitchen and baths, custom finishes throughout. 2025 square feet. $1,100,000.

220 West Washington Square: Entire floor home with 360 degree views including a Washington Square vista, amazing entertaining space, no detail has been left undone. 3720 square feet. $1,995,000

Society Hill Towers: Completely renovated and furnished corner one bedroom with dramatic city views, chef’s kitchen and designer bathroom. 803 square feet. $379,900.

The Barclay: 3 bedroom, 3.5 bath showplace, marble foyer, open living space, chef’s kitchen, high end appointments throughout. 3293 square feet. $2,900,000.

The Warwick: 3 bedrooms, 3 baths, 270 degree city views, open kitchen, lots of entertaining space, marble bathrooms. 2000 square feet. $1,050,000.

Parc Rittenhouse: Brand new 3 bedroom, 3 bathroom condominium with all rooms overlooking Rittenhouse Square, lavish finishes throughout. 1709 square feet. $1,475,000.

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50

18 OCTOBER 2012

REGIONSBUSINESS.COM

CHAMBER REPORT

DELAWARE COUNTY CHAMBER OF COMMERCE

CENTRAL BUCKS CHAMBER

CHESTER COUNTY CHAMBER

Chamber Moving, Will Retain Office Space

Leadership Program Connects Members, Community Leaders

CEO Redman, Sen. Pileggi Honored

The Delaware County Chamber of Commerce will move to a new office in Springfield later this month.

At its peak, the chamber had more than 5,000 members and owned the 8,000 square-foot building on Baltimore Pike that it has occupied since the 1960s.

The economic collapse caused the membership to dwindle and the chamber was forced to sell the building to Lance Services three years ago.

The 1,200-member chamber currently leases the top 4,071 square feet of the building, including a 600-square-foot conference room.

By the end of the month, the chamber will move 1.8 miles down the road to a

(DELAWARE COUNTY CHAMBER OF COMMERCE)

3,300 square foot office with a 1,300 square foot conference room that will reduce costs by 30 percent.

The DCCC will retain its satellite office in Chadds Ford and observe permanent hours from 9 a.m. to 5 p.m. to support its members in the outer regions.

The chamber will host an open house and re-opening October 30, featuring a morning coffee networking session, a ribbon cutting and a speed networking event throughout the day.

The Leadership Advancement Program of the Central Bucks Chamber of Commerce takes the region’s top and future business leaders behind the scenes of county government, our school system, prison system, healthcare and more.

This intensive, nine-month program provides a network of support among a cadre of fellow professionals interested in shaping the business community and region for years to come.

This 13-session program offers the opportunity to meet from once or twice a month and presents an expanded portrait of Bucks County — its legacy of arts, culture, land preservation and business.

Applications are now being accepted.

Visit www.centralbuckschamber.com or call 215-348-3913 for the application.

Program cost is $535.

The Chester County Chamber of Business and Industry honored Paul Redman and state Senator Dominic Pileggi at its annual dinner Wednesday night.

Mr. Redman, the director of Longwood Gardens — where the event was held — was named the 2012 CEO of the Year.

Republican Sen. Pileggi, of the 9th Redman District, was honored as the 2012 Citizen of the Year.

The annual “can’t miss” event celebrates the accomplishments of the chamber over the past year and looks ahead to the future.

The event included expanded networking, dinner stations and a fountain light show to end the night.

51

18 OCTOBER 2012

REGIONSBUSINESS.COM

OPINION

Pa. Needs to Pull Parent Trigger

Jay Ostrich is director of public affairs for the Commonwealth Foundation (www. commonwealthfoundation. org), Pennsylvania’s free market think tank.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Martin Luther King Jr. believed that, “unarmed truth and unconditional love will have the final word in reality.” If correct, then no stronger love or enduring truth can personify his dream than between a caring parent and their needful child.

But what happens when parents don’t get the final word, what then of their reality? Sadly, in the case of their children’s education, thousands of Pennsylvania parents have been held hostage by economic and political realities undergirded by poor, unimaginative policies yielding negative or negligible returns.

In essence, the majority of parents in Pennsylvania are stuck with public schools assigned to them by ZIP code as their only option. While many public schools are doing a fine job educating our children, we all know some are failing to reach even the most basic academic standards. For our kids, commonwealth and country, the results of this failure could not be more disastrous.

The Pennsylvania Department of Education recently released results of student test scores for 2011-12, which show declining student performance in our public schools on the Pennsylvania System of School Assessments, or PSSAs, the test most widely used to track student progress in Pennsylvania public schools.

Few would call the results anything but disheartening. Statewide, 25 percent of children failed to reach proficiency in math, while nearly 30 percent cannot read at grade level. As for the state’s 500 school districts, only 60 percent made “Adequate Yearly Progress,” compared to more than 90 percent last year.

For their part, the Pennsylvania State Education Association, the largest teachers union in the state, quickly distanced itself from responsibility, fleeing with a fallacy of underfunding, laying blame squarely at the feet of the governor. This smokescreen clearly ignores commonsense and courtesy to the facts.

Alternative institutions like Pennsylvania Catholic schools operate at a fraction of the cost with 97 percent of graduates reaching post-secondary education. Meanwhile, in the last 15 years, Pennsylvania actually doubled spending on public schools only to produce stagnating SAT scores and some districts mired in single-digit proficiency rates.

STATE LEGISLATORS, PARENTS, TEACHERS AND TAXPAYERS CAN BAND TOGETHER TO PULL PENNSYLVANIA KIDS OUT OF THE MIRE OF MEDIOCRITY.’

STEVEN DEPOLO

Those still advancing the claim that more dollars make more scholars need look no further than Harrisburg School District. Despite a price tag of more than $18,000 yearly per student, the district failed to meet minimum standards for the 10th-straight year, with 7 out of 10 students unable to reach proficiency in reading and math.

Ultimately, children stuck at failing schools need not wait in vain. State legislators, parents, teachers and taxpayers can band together to pull Pennsylvania kids out of the mire of mediocrity by embracing and enacting Senate Bill 1115. The bill would improve oversight of charter schools and their ability to function. Charters have not only exploded in popularity since they opened 15 years ago, but outperformed traditional public schools on the PSSAs in many cities across Pennsylvania.

Despite widespread, bipartisan support among parents, the bill remains mired in political flux with the teachers’ unions fighting vigorously against parental empowerment because the bill would create something called the “parent trigger.”

Simply put, the parent trigger allows parents to take greater control over a public school that consistently fails to

educate their children. In most cases, at least half of all parents must sign a petition demanding reform at the school. The type of parent trigger reform varies, but among the options used nationwide, including in progressive states like California and Connecticut, parents may convert a school into a charter, change the board and top administrative leadership, or shut down the building entirely to allow students to learn at other schools.

In the best-known case in America – Desert Trails Elementary School in Adelanto, California – Doreen Diaz saw her fifth-grade daughter, Vanessa, struggle to read at a second-grade level. Diaz fought back, forming a “parent union” that successfully won enough support to pull the parent trigger. Although the case continues, the subject has even spawned a major film opening in theaters this week called “Won’t Back Down,” ironically based in Pittsburgh though no such law applies in Pennsylvania.

With seven states now adopting similar laws that put parental and student interests before those of government unions, it’s time Pennsylvania lawmakers pull the parent trigger lest the final word on Dr. King’s dream becomes unreachable.

52

18 OCTOBER 2012

REGIONSBUSINESS.COM

OPINION

Newspapers Must Adapt - Now

Dr. Edward Lordan is a professor of communication studies at West Chester University, where he teaches undergraduate and graduate courses in public relations, advertising and media history.

He is the author of three books on communication topics ranging from editorial cartooning to presidential rhetoric. Contact him at elordan@wcupa.edu.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

This year’s presidential election has featured a variety of stories that have impacted the tone and, possibly, outcome of the process. These stories have involved Republicans (Mitt Romney’s “47 percent” speech and Pennsylvania GOP leader Mike Turzai’s statement that the new voter ID law would “help deliver the state to Romney”) and Democrats (Barack Obama’s “redistribution” speech and Joe Biden’s statement to a group of African Americans that “they gonna put y’all back in chains.”)

All of these stories have one thing in common: They were first reported in digital media. Newspapers covered each of them, but mostly by providing context and analysis the day after the news broke, not by announcing breaking stories to their readers.

Newspapers have always existed in a competitive atmosphere, but in the past few years, that competition has increased dramatically, altering the goals and methods of the industry. First came round-the-clock radio news programs, then twenty-four-hour cable television, and, more recently, constantly-updated websites, all of which offer non-stop, relatively up-to-the-minute presentations of what is happening. In just the last few years, mainstream media have been joined by social media, including twitter and facebook, which not only allow news consumers to stay up to date, but also to comment on and distribute news stories to friends and acquaintances.

Where does all this leave newspapers?

In serious trouble. Any way you measure it, from advertising revenue to subscribers to the number of pages per issue, the health of traditional newspapers has been plummeting. Even the value of the papers themselves have fallen off a cliff: Philadelphia Media Network, which includes The Philadelphia Inquirer, Philadelphia Daily News, and philly.com, was sold in 2006 for $515 million. Following a bankruptcy, it was sold again in 2010 for $139 million.

A good deal at fire sale prices? Apparently not – the network was sold yet again this past April, for less than half that amount.

Optimists blamed newspapers’ problems on the 2008 recession: the vast majority of newspaper revenues come from advertising, and when the economy sneezes, advertising catches a cold. But companies did not stop advertising in newspapers simply to cut costs – they

ANY WAY YOU MEASURE IT, FROM ADVERTISING REVENUE TO SUBSCRIBERS TO THE NUMBER OF PAGES PER ISSUE, THE HEALTH OF TRADITIONAL NEWSPAPERS HAS BEEN PLUMMETING.’

made a calculated decision that the attention of the average American was going elsewhere. The industry’s trajectory can not be blamed entirely on recent economic problems.

Is there a future for the newspaper business? Yes, but it will have to reinvent itself, and do it quickly. Papers are already scrambling to do so, most of them adding a web product and many of them abandoning the print version entirely to deliver news exclusively through their websites.

Others are training their reporters to think multi-media, tweeting from the events they cover, interacting with digital readers through email and Facebook, posting podcasts to deliver news the way consumers want it. Perhaps most important, some

industry leaders are rethinking content along with delivery, fundamentally altering the product to provide depth, context and analysis to stories that have already been presented to the public through other media.

For as long as America has held elections, newspapers have contributed to the process by fostering dialogue and helping to keep the country informed. But in rapidly changing times, industries adapt or die. In this and future elections, newspapers will not look or act like they have in the past, but they will continue to serve a vital function in a democratic system that depends on voters who not only know about, but understand the world around them.

18 OCTOBER 2012

REGIONSBUSINESS.COM

OPINION

53

If You Want the Story on Newspapers, Just Follow the Money

I

n journalisim school, aspiring investigative reporters are often told to follow the money.

That’s not such an easy task in regard to the newspaper industry in the Delaware Valley, but people are well-served to follow that mantra to find out what’s really going on.

Some of it seems obvious.

Plenty of money is flowing out of the newspaper industry. Just watching the numbers surrounding The Philadelphia Inquirer, The Philadelphia Daily News and philly.com gives a clear indication that the days of wine and roses are long gone.

A group led by Brian Tierney purchased the media group for $562 million back in May 2006. By February 2009, the company was in bankruptcy.

After much legal wrangling, the company went on the auction block in April 2010, commanding a winning bid of $139 million.

Two years later, the company changed owners again after a $55 million sale.

The math is rather stark - in six years, the company’s price tag dropped more than 90%.

In that time, suburban papers owned by Journal Register struggled through the company’s “Digital First” transformation and

the Calkins Media group slashed costs (and staff ) and brought in a new, digitally focused CEO. At the same time, AOL’s massive hyperlocal news experiment exploded across the Philadelphia suburbs, launching more than 40 Patch Web sites just on the Pennsylvania side of the river.

But all the money isn’t flowing out of local newspaper companies and on to the Web. Versa Capital recently announced the formation of a newspaper group. The massive investment by smart people like those at Alden Capital and Warren Buffett’s Berkshire Hathaway also grabbed some headlines; the investments have significant impact locally. These are companies run by people who have made a living - and a legacy - by investing in operations that produce huge profits and earnings.

In short, it is not wise to bet against them.

The game has changed forever and newspaper companies unable to adapt, refocus and execute are going disappear. But as it is in any industry, the companies that are able to anticipate opportunities and react nimbly to grab them are going to succeed.

How will you know those companies? Simple, just follow the money.

EDITORIAL BOARD CEO AND PUBLISHER | JAMES D. MCDONALD EDITORIAL DIRECTOR | KARL M. SMITH ASSOCIATE EDITOR | TERRENCE CASEY © COPYRIGHT 2012 INDEPENDENCE MEDIA 600 GERMANTOWN PIKE, SUITE 400 PLYMOUTH MEETING, PA 19462 610.940.1656 | WWW.REGIONSBUSINESS.COM

Who Built Road to Serfdom?

“The finest opportunity ever given the world was thrown away because the passion for equality made vain the hope for freedom,” Lord Acton (1834-1902).

As one reflects on the current state of the American culture Lord Acton’s words are worthy of a few moments of thought.

In F.A. Hayek’s classic book “The Road To Serfdom” (1944), Hayek makes the following distinctions: “The choice open to us is not between a system in which everybody will get what he deserves according to some absolute and universal standard of right, and one where the individual shares are determined partly by accident or good or ill chance. But between a system where it is the will of a few persons that decides who is to get what, and one where it depends, at least partly, on the ability and enterprise of the people concerned and partly on unforeseeable circumstances.”

Could this be the main reason why there is considerable opposition to The Affordable Care Act? Not only will there be ‘boards’ that decide who will get what treatments, but there will be government officials that promulgate rules that must be followed.

Could this be why the Catholic bishops have led a massive protest against mandatory insurance coverage that contradicts their basic religious beliefs?

Arthur Brooks in his book “The Road To Freedom” (2012) echoes Hayek’s sentiments with the following insight: “It’s going to take a lot more than one election to get us off what Nobel laureate Friedrich Hayek called ‘the road to serfdom.’ Americans today are experiencing a low-grade, virtual servitude to an everexpanding, unaccountable government that is

starved for tax revenues, has appropriated for itself funds that entrepreneurs could have used to grow the economy, has created a protected class of government workers and crony corporations that play by a different set of rules than the rest of America, and has consequently left the nation in hock for generations to come.”

This approach to government has resulted in a national debt (fall of 2011) that comes to $48,000 for every man, woman, and child.

Government spending at all levels has increased as follows: *2-) *. i^k \^gm h_ @=I *21) ,) i^k \^gm h_ @=I *22) ,+ i^k \^gm h_ @=I Mh]Zr ,/ I^k\^gm h_ @=I Zg] bg\k^Zlbg`' The quest for equality has resulted in government programs and regulations that cost far more than the revenue that could ever be gained from taxation. So we have resorted to a massive borrowing from both American citizens as well as foreign countries.

We have come to believe that we can spend and borrow our way to prosperity.

If we continue on this path we can expect to end up losing both our prosperity and freedom.

We are still free to choose and our children’s and their children’s future will depend on what we choose.

Don Koestler is President of DJ Koestler, LLC. Contact him at djkoestler@aol.com JOIN THE CONVERSATION Send comments, letters and essays to feedback@regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

54

18 OCTOBER 2012

REGIONSBUSINESS.COM

BY THE NUMBERS

RENNETT STOWE

31,200,000

COURTESY OF VISIT BUCKS COUNTY

40

Passengers carried by Amtrak in the fiscal year that ended September 30.

37,691,912

Bed & Breakfasts in Bucks County, including the Inn at Bowman’s Hill (above).

$856M

Estimated 2011 population of California, the most-heavily populated state in the U.S.

3.5%

Economic impact of tourism in Bucks County in 2011.

$116M

Increase in Amtrak ridership over the previous fiscal year.

1.7%

Local, state and federal tax revenue generated by tourism in Bucks County in 2011.

Real GDP growth for the United States in 2011.

4.7%

$1.2 billion

Increase in Bucks County hotel revenue from 2010 to 2011.

Federal subsidy for Amtrak’s 2012 operating costs and capital improvements.

-9.6%

$82,000 Salary for Pennsylvania lawmakers, second only to California.

$14,186

Salary for Rhode Island lawmakers, who receive no per diem allowance.

$160

Per diem allowance for Pennsylvania lawmakers while in session.

$1.3M

Total amount of per diem payments made to Pennsylvania legislators in 2011.

$102,00

Total amount of per diem payments made for weekends in 2011.

Change in the federal subsidy to Amtrak from 2010 to 2012.

-2.5%

Decrease in the overall federal budget from 2010 to 2011.

BOB JAGENDORF

705

Tattoo parlors in Pennsylvania.

84%

Percent of tattooed Americans who do NOT regret getting a tattoo.

4th

Ranking for US Airways for on-time domestic arrivals among the nation’s 15 biggest carriers.

83.5%

Percent of US Airways flights that arrived on time in August 2012.

-2.7%

Change in percent of US Airways on-time flights from June 2011 to August 2011.

80.5%

Overall domestic on-time performance for August 2012.

$6,570

Per diem collected in 2011 by Pennsylvania legislator Marc Cohen of Philadelphia for 43 weekend days, accounting for 6.4% of the total per diems related to weekends.

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