Lee CEO on Pulitzer Deal: St. Louis Is Our Kind of Town

By: Mark Fitzgerald To those who suggest Lee Enterprises might be biting off more than it can chew with its $1.46 billion acquisition of the St. Louis Post-Dispatch and the rest of Pulitzer Inc., Lee Chairman and CEO Mary Junck had this description of Pulitzer's headquarter city Monday: "St. Louis is a Midwestern market just downstream from our corporate headquarters in Davenport, Iowa."

In a conference call with analysts, Junck vowed to grow revenues at the Post-Dispatch using the strategy introduced five years ago by Pulitzer CEO Robert Woodworth --only more so. She noted that Pulitzer's strategy -- including buying up the 38 Suburban Journal community papers that ring the city and creating the Local Values direct mail program -- won the St. Louis group 30% of all advertising dollars spent in the market.

"Now, 30% is an OK number for a metropolitan newspaper area, but we in Lee and Pulitzer are convinced we can do better," Junck said.

Similarly, Junck suggested Lee could push faster revenue growth at the Pulitzer Newspaper Inc. (PNI) group of 13 dailies and 100 community papers located outside St. Louis. "First off, these PNI markets are terrific growth markets, and we think we can grow them even more rapidly using the Lee playbook of ad blitzes, niche publications and some of the other things we've been talking about," she said. She also mentioned frequency-ad sales, classified auto and employment templating, and circulation retention plans.

Junck was at pains to emphasize continuity at the St. Louis paper, especially in her remarks about Post-Dispatch President and Publisher Terrance C.Z. Eggar. "We have been very impressed with Pulitzer's management in general, but specifically we've been pleased with what we've seen in St. Louis, and particularly with Terry," she said. "I think he, and you'd have to ask him directly, he's very enthusiastic about Lee and is looking forward to the transition."

Eggar was quoted in Monday's editions of the Post-Dispatch as saying he hoped to remain at the paper. He could not be immediately reached.

Last month, according to a U.S. Securities and Exchange Commission filing, Pulitzer set aside $10.2 million in transaction and retention bonuses that would be paid out to top executives if the company changed hands. Any covered executive who remains with the company when it is acquired would get a transaction bonus. A retention bonus would be paid to covered executives who remain with the new owners at least three months.

Carl G. Schmidt, Lee's CFO, treasurer, and vice president, said he expects the chain's debt level to "fall quickly" after the acquisition closes, "as we've clearly shown in the Howard acquisition."

Don't look for Lee to be shedding any of its newly acquired papers, Junck told analysts Monday: "As far as the Pulitzer list [of properties] goes, we like 'em -- and we intend to keep 'em."


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