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.

"It's a business. People love to think of newspapers as not being businesses, but they are," says the former Pulitzer executive who spoke to the Riverfront Times. "You have to look at the bottom line; it's irresponsible not to: If you don't make money, then you can't afford editorial."

Pulitzer Inc.'s recent financial history has led many outside the company to suspect the family brought in Woodworth to ready the enterprise for sale. As evidence they point to small but significant stipulations recorded in SEC documents regarding Woodworth's terms of employment.

According to his contract, if Woodworth leaves the company within two years of a change in ownership, he is entitled to a severance package amounting to three times his salary plus bonus. Calculating on the basis of 2003 figures (the most recent available), Woodworth is in line for a severance package worth at least $4 million, plus an additional three years of medical benefits.

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.
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.

Details

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

"I was never made aware of any of those plans to sell. All I knew was that we were going to grow the company," says Contreras. "The family controls the fate of the company so [the possibility of a sale] was always out there, but there was never any explicit discussion about that topic."

Contreras says he only learned that a deal was in the works in late September of last year -- roughly two months before Post employees were informed that Goldman Sachs had been brought onboard and four months before the sale to Lee was announced publicly.

Just one month after Woodworth delivered his "strategic alternatives" proclamation, Pulitzer Inc. earmarked $10.2 million in transaction and retention bonuses for company executives and management. This time Post-Dispatch publisher Egger and Pulitzer chief financial officer Alan Silverglat were the big winners, with bonuses of more than $900,000 apiece. Woodworth wasn't far behind, netting a shade under $800,000.

"Nobody has said anything about whether he's going to stay, but clearly he's not going to," the unnamed newsroom source says of Woodworth. "He's going to get the biggest boodle, and he's going to leave. Terry [Egger] is going to get the second-biggest boodle, and he's going to stay. They're both going to be extraordinarily well-off, financially."

At a certain point, the question of whether Woodworth was hired to groom Pulitzer for the auction block becomes moot. While he was at the helm, the company prospered in ways the family had previously only dreamed of.

"In a certain respect, if you do a good job, you're always readying a company for sale," says Editor & Publisher's Mark Fitzgerald. In other words: By resolving the Newhouse issue and ensuring dominance in the city's print advertising market, Woodworth was bound to make Pulitzer attractive to buyers.

Of the bonus payouts, Fitzgerald says: "These are top guys in the industry. That's their form of security, as opposed to longevity and the gold watch."


"[Y]ou can't save your way to good performance," Lee Enterprises chairman and chief executive officer Mary Junck said during her recent victory lap around the Post's headquarters at 900 North Tucker Boulevard. "You have to drive revenue."

It's a strategy that has served Lee well, allowing the company to reap a net income of $86 million from its combined operations this past fiscal year.

Still, Pulitzer proved an expensive bride for the Davenport, Iowa-based chain. The company had to borrow $1.55 billion for the purchase, and will assume $306 million in Pulitzer debt.

Then again, Pulitzer was probably worth it. She brings with her a golden dowry, in the form of an annual operating revenue in excess of $400 million. The acquisition vaults Lee into the media big leagues, catapulting annual revenues to more than $1.1 billion. Once the deal closes sometime in the next few months, Lee will rank as the fourth-largest newspaper publisher in terms of dailies owned and seventh in combined daily circulation (1.7 million).

The Pulitzer purchase has the potential to deliver something else to Lee: Respect. The company may have a genius for turning a buck, but historically Lee's cupboard has been pretty bare when it comes to that other journalistic currency, the award.

"We don't know much about Lee Enterprises," understates newspaper analyst John Morton. "They don't stand out in any historical way."

So perhaps it is a marriage of equals: Lee brings the brawn, Pulitzer the brains. "Lee admires what the Pulitzer family has done for journalism in St. Louis and throughout the United States," Junck was quoted as saying in a February 1 Post article. The comment put a more genteel slant on her earlier, fresh-from-the-bargaining-table assessment: that Pulitzer was "another terrific acquisition for Lee...in both order of magnitude and revenue growth opportunities."

These days, of course, Post staffers don't have time to congratulate themselves for their paper's august past. More likely they're fretting at reports that while Junck was at the helm of the Baltimore Sun, she spiked a story critical of the relationship between a bank and a local official. The decision prompted a newsroom revolt, with the story's author threatening to quit and the home delivery of a 40-signature petition urging Junck to change her mind. The crisis was averted only after the paper's editor reportedly flew home from a Mexican vacation to resolve the dispute. In the end, the paper published a heavily edited version of the article.

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