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.

"The management seems to like it," Malone adds. "That way they can keep paying lower wages to the people without many years of experience."

Which is not to say everyone on the news side is pining for the days when the Post was a "destination paper." To many, Woodworth's arrival was at the very least a mixed blessing. "The corporation as a whole became more focused on stockholders," says one former senior Post-Dispatch editor, declining to be identified in print. "Before Joseph Pulitzer [III] died, there was a sense that it was a private club in the newsroom. After he died there was some loss of that sense of specialness -- which is both good and bad. Bad because there is something sacred about what journalists do, but good because journalism is also a business and needs to recognize certain economic realities. For a while the newsroom was fairly tolerant of people who may not have contributed a whole lot to the enterprise."

There were other changes, as well. Before Pulitzer III died, he split his duties as editor and publisher of the Post and fashioned them into discrete positions. Under the new hierarchy, the editor and publisher were on equal footing: Both reported to the president.


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

"When I was hired, I reported directly to Michael [Pulitzer]," recalls Cole Campbell, editor of the Post from 1996 until 2000. "When Woodworth came, he put in place a different reporting structure: He decided that the editor would report to the publisher."

That aspect of Woodworth's modus operandi is more or less standard in the newspaper industry. But to many at the Post-Dispatch, the change in hierarchy signaled a profound shift in priorities. "It was a big change," asserts the former editor, who worked under both Pulitzer and Campbell. "I think that told people in the newsroom that while what you do is important, the most important thing is to make this a going concern."

After selling off the company's broadcast and radio divisions in 1998, Pulitzer executives cashed in millions of dollars' worth of stock options. According to statements filed with the SEC, then-executives Ken Elkins and Nicholas Penniman cashed out $8.7 million and $5 million, respectively. But the biggest winner that year was the company's financial vice president, Ronald Ridgway, who between salary, bonuses, stock option cash-outs and awards raked in more than $10.9 million, making him the second-highest-paid executive in St. Louis in 1999. (August Busch III topped that year's list at $15.6 million. Reached at home, Ridgway declined comment for this article.)

All told, the company reported more than $25 million in executive stock option cash-outs and bonuses in 1999. Add to that more than $7.7 million in transaction and retention bonuses -- ostensibly to ensure that the likes of Michael Pulitzer would stay on -- and the total income that year for top executives was roughly $32.7 million -- approximately 22 times greater than the company's recorded net income of $1.5 million.

"That's when it really started," says the unnamed newsroom source. "Historically they paid themselves good salaries, but 1999 was really the zenith of it. You can't have a year when you take out more in bonuses than you leave in profits."

But media analyst Frank Gristina of Avondale Partners cautions against drawing a direct line between the 1999 options cash-outs and the 2005 sale. "I don't pretend to understand if that was a harbinger of what was to come," says Gristina, who stopped covering Pulitzer Inc. in 2004. "People get compensated for all kinds of things, and many of those people did a tremendous amount in terms of restoring the company's profit margin."

Pulitzer Inc.'s director of shareholder relations, James Maloney, declines to comment on the 1999 options cash-outs.

The following year, net profits vaulted to $34.9 million. In 2001 and 2002, Pulitzer Inc. was in the black by net profits of $10.6 million and $34.7 million, respectively. The figure for 2003, the most recent reported to the SEC: a net profit of $42.2 million on operating revenue in excess of $422 million -- $300 million of which poured in from the company's St. Louis operations.

"One of the things you rarely hear about is just how deep of an impact Bob [Woodworth] had on the company in the last seven years," marvels former Pulitzer exec Mark Contreras. "It's extraordinary, if you stop and think about it."

Members of Pulitzer Inc.'s compensation committee (including Woodworth himself), appear to have been sufficiently grateful.

From 1999 to 2003, Woodworth earned more than $19 million in salary, stock awards, options and bonuses. According to Pulitzer's 2004 proxy statement filed with the SEC, he holds more than $25 million worth of stock in the company -- and that's to say nothing of stock awards, salary or bonuses he received last year and in relation to the company's sale. By comparison, Mary Junck, Woodworth's counterpart at Lee Enterprises, reported her total compensation for 2003 at roughly $4.4 million.

Woodworth did not respond to an interview request.

His fellow executives haven't fared poorly either. According to the most recent SEC filings, Post-Dispatch publisher Terrance C.Z. Egger owns $9.3 million in company stock. Former executive Mark Contreras owns more than $6 million, and company vice president Matthew Kraner holds just shy of $4 million in stock.

But the jackpot winners of Lee's $64-per-share buyout are members of the Pulitzer family -- minus, of course, the exiled Joe IV. According to the most recent SEC documents, Emily Pulitzer will reap more than $400 million from the sale, while Michael Pulitzer stands to collect more than $120 million. Pulitzer cousin David Moore will cash in more than $190 million. (Michael and Emily Pulitzer did not return phone calls seeking comment on the sale.)

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