Sources say ...
A lot of reductions have occurred at the St. Louis Post-Dispatch in the five years since the Lee Enterprises newspaper chain bought Pulitzer Inc. and its flagship newspaper, the Post, for $1.46 billion.
The debt is down, the size of the paper and its contents have been reduced, the ads and circulation dropped, a third of the staff has been jettisoned and pay and benefits for those who toil to put the paper out have been slashed. Some changes were expected, but the bad economy has taken its toll on Lee and newspapers everywhere.
Foremost for Lee is reducing the staggering debt as quickly as possible as the chain of about five dozen smaller papers has done with other purchases. Some in the industry say Lee, based in Davenport, Iowa, paid too much for Pulitzer. But that's history, just as the reputation of the Post as one of the top newspapers in the nation is history.
Filings with the Securities and Exchange Commission show the debt due to the Pulitzer purchase to be about $1.1 billion. Lee had to refinance the debt to banks last year. It has been paying off about 890 million a year on its debt say business sources, who keep a close watch on the finances. Lee said it paid down $66 million in the last nine months ending June 27. It pays down debt mainly with cash flow.
The guess is that the debt can be retired within ten years of the purchase, depending on revival of the economy and increased advertising income.
As the revenue decline continued to ease, Lee said, profit for the quarter ended June 27 were $10 million; the same quarter a year earlier showed a $24.5 million loss. For the past nine months, Lee's profit was $41 million. That's an improvement over Lee's fortunes last year when an audit report questioned whether it could continue as a going concern. It's stock had plummeted to less than 81 per share.
Lee still profitable
So while revenues and advertising continue to drop, Lee remains profitable, mainly because of cutting of costs. The company set a cost-reduction goal of $100 million for fiscal 2009 but actually cut costs by $147 million. For fiscal 2010 the cost-cutting was set at $54 million.
Lee CEO Mary Junck gave SJR a statement, saying St. Louis is a good marketplace, and: "We have a great team at the Post-Dispatch, with wonderfully talented people, who continually improve the way we serve readers and advertisers, through print, online and mobile. Although the economy has continued to challenge our customers and us over these last few years, we're very much upbeat about the future of St. louis, the Post-Dispatch and Lee Enterprises." Kevin Mowbray, the Post's publisher, said the paper remains "the dominate source for local news, information and advertising in our region.... the Post-Dispatch and STLtoday.com remain in front of all print, broadcast and online competitors. And, we are well positioned to take advantage of new distribution opportunities to drive content and advertising through mobile, iPad and social media channels."
While Lee turns a profit, so does the Post, according to the St. Louis Newspaper Guild. (Lee no longer breaks out figures for the Post). During more than three dozen bargaining sessions for a new contract, Lee stressed that the union employees must agree to give-backs or it would declare an impasse in negotiations and then impose its own contract terms.
The Guild, representing about 250 staffers (less than half what it had five years ago), made plans to conduct a $500,000-public-corporate campaign against the Post in order to get a better contract offer. The local's treasury has 83.6 million.
In the end, Guild members, mainly out of fear of more layoffs, voted 132-54 o accept a 51/2 year contract that called for a six-percent wage cut and three unpaid, one-week furloughs. No more layoffs for six months was agreed to. But the employees will no longer have a company pension and medical benefits will be ended for retirees.
Lee told shareholders that when it dropped health benefits last winter for many retirees it saved $30 million. The Guild has gone to court in an effort to get an arbitrator to rule on whether those retirees should get the health benefits restored because they were promised in previous Guild contracts.
"We gave in without a shot being fired," said one Guild member about accepting the new contract. Another said: "It wasn't just the younger employees, but some older ones too," who argued for accepting the pay cut. Given that Lee is an anti-union company, "At least we still have a union," one Guild officer said.
Lee has a website for employees that provides negative information about unions; in turn, union people contribute to their own Lee Watch website to share news items such as this one in June:
"On Thursday, each director was awarded a 10,000-share package worth $30,500 while furloughs and layoffs continue throughout the rest of the company." The eight directors include two from St. Louis, Andrew E. Newman and Mark Vittert. They were paid $93,470 and 878,470 respectively in 2009.
Morale has suffered at the Post because of the way many loyal employees were thrown overboard, most without even a thank you. There have been two buyouts and several layoffs. The staff is required to produce the paper with less manpower, and now with less pay. Hard-working reporters and editors take offense when the paper is criticized for becoming what some readers say is just a shadow of its former self.
The editorial cutbacks have included scrapping of the zone sections, reducing the Washington Bureau to just one person (from six), reduced coverage of the Illinois side of the metro area, cutbacks in business news and features in the Everyday section, and fewer editors. Still vibrant are the sports pages and the editorial section--still liberal-though there are fewer editorial writers.
The Post is no longer listed in the top 25 newspapers in the nation, based on circulation. Shannon Duffy, the Guild's business manager, said in a union bulletin's message to Lee, "... imagine our surprise when we discovered that your goal was to turn the Post-Dispatch into just another Lee newspaper."
The Lee-owned Suburban Journals, also acquired from Pulitzer, has fallen on hard times as well. Deep staff cuts were made and then the Journals went from free distribution to paid circulation. It has not gained the expected number of subscribers and some of the weekly newspapers are still thrown for free.
The Pulitzer family sold the Post and other newspaper properties in 2005 at top dollar. The family member with the most voting shares was Emily Rauh Pulitzer, widow of the late Joseph Pulitzer Jr. She got more than 8400 million in the sale. She now operates the Pulitzer Foundation, a museum in midtown St. Louis.
Quoted in the Jerry Berger online column earlier this year, "Emily" as she is called, said of the Post. "The quality has clearly deteriorated. Lee Enterprises has faced a really difficult economic situation. What Lee did with the Post-Dispatch is not different from what has happened in other cities. Nobody has figured out how to deal with the Internet."
Berger wrote: "The mention that a former P-D editor blamed Emily for the current situation of the Post by selling it, got a quick response. She said, 'How simplistic. My vote was one of three. We saw the handwriting on the wall.'"
Longtime Post readers say they expect Lee' s advertising and revenue will bounce back, and its profits will increase even more. But they doubt the cutbacks will be restored to make the paper as respected as it had been during the last century. But that's history.
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|Title Annotation:||Lee Enterprises, St. Louis Post-Dispatch, and Pulitzer Inc.|
|Publication:||St. Louis Journalism Review|
|Date:||Jul 1, 2010|
|Previous Article:||In memoriam.|