Pulitzer's Gain

Some say Pulitzer Inc.'s sale to Lee Enterprises blew in quicker than a shotgun wedding. Others saw it coming a mile away.

"As Woodworth analyzed that market, he realized the Post-Dispatch was never able to really exploit its market the way it should," explains Mark Fitzgerald, who covers media trends for the trade magazine Editor & Publisher. "They'd been losing whole [advertising] sectors to the Suburban Journals in the past. At one point they had hardly any grocery advertising -- it was all in the Journals."

To right the situation, Woodworth attacked on two crucial fronts. First, Pulitzer Inc. paid $306 million to buy the Newhouse family out of 95 percent of its stake in the Post. Second, Woodworth pounced when the Suburban Journals of Greater St. Louis, the Post's economic nemesis, was put up for sale. Within a month of buying out Newhouse, Pulitzer Inc. spent more than $165 million to purchase the group of 37 weeklies.

"For years the elephants in the room were the Suburban Journals' competition and the Newhouse interest," says Mark Contreras, who until recently headed up Pulitzer Newspapers Inc., a corporate subsidiary. "Woodworth was able to move those two icebergs and really set the stage for very strong growth in St. Louis."

Post-Dispatch publisher Terrance C.Z. Egger 
(left) and Pulitzer Inc. president and CEO Robert 
Woodworth announce the sale of the company to Lee 
Enterprises, Inc. SEC filings indicate that Egger holds 
roughly $9.3 million in Pulitzer stock, Woodworth an 
estimated $25 million.
Bill Greenblatt/UPI
Post-Dispatch publisher Terrance C.Z. Egger (left) and Pulitzer Inc. president and CEO Robert Woodworth announce the sale of the company to Lee Enterprises, Inc. SEC filings indicate that Egger holds roughly $9.3 million in Pulitzer stock, Woodworth an estimated $25 million.


This is part two of a two-part special report. Click to read part one, "Pulitzer's Pain."

In less than two months, Woodworth had spent more than $480 million. Factor in The Pantagraph purchase, and Pulitzer Inc.'s $550 million bankroll was gone. But with the addition of the Suburban Journals, the Post now had a veritable stranglehold on print advertising in greater St. Louis. The Newhouse deal was just as important. In its final four years, the 50-50 split cost Pulitzer more than $73 million in profit. In 1999 alone, according to filings with the U.S. Securities and Exchange Commission (SEC), Newhouse took a $25 million bite out of profits. With those two impediments gone, Pulitzer Inc. was poised to dig in to a mighty piece of the St. Louis pie.

"The purchase of the Newhouse interest, the Suburban Journals acquisitions and the purchase of The Pantagraph in Bloomington were major acquisitions," says Contreras, who now works for E.W. Scripps Co. as vice president for newspaper operations. "They signaled to the rest of the company that we were serious about making substantial acquisitions that would move the needle."

Woodworth's acquisitions didn't just move the needle, they made it dance. According to earnings reports filed with the SEC, between 1999 and 2000 Pulitzer Inc. saw a spike in total operating revenue of roughly $73 million. Most telling was the climb in St. Louis advertising revenue: In 1999 Pulitzer reported $190 million in St. Louis ad revenue. In 2000 that number jumped sixteen percentage points, to $225 million.

"Woodworth is one of the best newspaper operators in the country, if not the best," says the former Pulitzer exec who asked not to be identified. "He knows how to grow businesses. He knows what the benchmarks are and he goes after them. He's very aggressive."

Even as profits were climbing at Pulitzer Inc., circulation at the Post-Dispatch was trending downward. In 1994, the year after Joseph Pulitzer III died, Pulitzer Inc. pegged the Post's daily circulation just shy of 336,000. By 1999, one year into Robert Woodworth's tenure, that figure had dropped to about 307,000 -- a tumble of 8.6 percent. By 2003, the last year for which circulation numbers are available through the SEC, circulation had declined another 6.8 percent, to 286,000.

"The overall trend in the industry is a decline in circulation," notes Stephen Lacy, editor of the Journal of Media Economics. "It may very well be that the profits are going up and the circulation is going down in the short run. The issue becomes: What does that mean in the long run?"

Between 1999 and 2003, Pulitzer Inc. reported a $52 million increase in St. Louis advertising revenue, according to SEC filings. More telling, perhaps, are the SEC numbers that tally the paper's total advertising linage -- a number that reflects the total amount of advertising in terms of newsprint used. In 1999 the Post-Dispatch recorded a linage figure of 2,844,000. In 2003 that number dropped by more than 13 percent, to 2,464,000.

In other words, even though the Post-Dispatch was running fewer ads in terms of the space those ads took up, the addition of the Suburban Journals allowed the company to increase St. Louis advertising revenue by $52 million during that same period.

At the same time, the company was playing hardball with the union. During the arduous eighteen-month labor negotiations of 2003 and 2004, the St. Louis Newspaper Guild managed to secure salary increases for its 600-strong membership (which includes newsroom, advertising and circulation personnel, as well as other support staff) but was unable to prevent a hike in healthcare premiums.

Those were the marquee issues in the contract the guild approved in June 2004. But critics say the newsroom's makeup shifted as far back as 1994, a year after Joseph Pulitzer III died. That was the year management shifted the salary schedule for Post-Dispatch reporters. Previously, it took a junior reporter hired at the bottom of the totem pole five years to reach the top minimum pay. In 1994 management extended that period to eight years.

Some say the shift made the paper unattractive in the longer term to promising young reporters, who came increasingly to view the Post as no more than a career stepping stone. "It used to be that people wanted to spend their careers at the Post-Dispatch. The turnover is much higher now," says retired Post newsman Roy Malone.

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