Then Along Came Mary

By: Mark Fitzgerald By the time Mary E. Junck arrived at Lee Enterprises in the summer of 1999 at the age of 50, she was no stranger to running newspapers. She'd been fast-tracked through Knight Ridder, served as publisher of The Sun in Baltimore, and had wound up her seven-year tenure at the old Times Mirror Co., running all of its East Coast papers.

Lee's chairman at the time, Richard D. "Dick" Gottlieb, felt so good about his new COO recruit that he elevated her to president in six months, and CEO a year after that. "After working with her for a couple of years," he says from his home in Arizona, "it became incredibly apparent that I could retire very easily, giving our folks, our community, and our shareholders just a wonderful leader. We didn't need two of us running the place."

Gottlieb stepped down, and in 2002, Junck became not just the first woman to head up Lee, but also the first chairman in the 119-year-old company who was not related by blood or marriage to the founding Lee and Adler families. So what could Junck ? schooled at two of the biggest and most sophisticated chains in the business ? learn at the top of Lee, a collection of mostly smaller papers that sold off all its television holdings just as she arrived?

On a chilly late-winter afternoon with the sun bouncing off the Mississippi River and into her corner office in Lee's new digs in downtown Davenport, Iowa, Mary E. Junck, 57, has a quick answer: "Acquisitions."

There are several reasons that Junck, chairman, president and CEO of Lee Enterprises Inc., is E&P's Publisher of the Year, but one achievement looms so large it threatens to obscure all the others: The unexpected $1.4 billion cash deal to acquire Pulitzer Inc.

In one fell swoop, the acquisition propels Lee to the rank of fourth largest U.S. publisher in terms of dailies owned (58 in 23 states), and seventh largest in terms of circulation (1.7 million weekdays and 2 million on Sundays). When the deal closes, probably in May, Lee will be a billion-dollar baby as Pulitzer adds $440 million to combined revenue that will total $1.14 billion.

Pulitzer represents the second big growth spurt under Junck's leadership. In 2002, the chain swallowed up the 16 dailies of Howard Publications in a $694 million deal that increased its revenues by 50% and its circulation by 75%. Last year, Lee swapped two former Howard dailies, The Leader in Corning, N.Y., and The Journal Standard in Freeport, Ill., for a pair of dailies and five weeklies owned by Liberty Group Publishing.

"At the Baltimore Sun," Junck says, "we did a couple of smaller acquisitions. They were important for the Sun, but combined they totaled maybe $25 million to $30 million. With [Pulitzer] and Howard, it's over $2 billion. So I've learned a lot about acquisitions."



Take it to the bank

But while the Pulitzer deal took many analysts by surprise ? their favorite in the bidding war was Gannett Co. ? it was just what Junck had been working for virtually since her arrival at Lee.

"She put together an acquisitions team that met literally every Friday," says Greg Veon, vice president of publishing. Lee executives looked at papers that came on the market, and knocked on the doors of those that weren't for sale. Veon says they had a consistent message to Wall Street: "What we said was, we're in the market for papers of 30,000-plus circulation in good to better markets ? and by golly, we were going to look for them."

Wall Street and the newspaper industry has learned to take what Mary Junck says very, very seriously. The CEO has reinforced a corporate culture that makes no empty promises, says Greg Schermer, the vice president for interactive media whose great-grandfather was Lee co-founder E.P. Adler. "When someone says they're going to do something around here, they're expected to do it," Schermer says.

There was a time when The Street was impatient with Junck. "They said, 'You've got a wonderful little pot at the end of the end of the rainbow'" from selling all the TV stations, Gottlieb recalls. "But she knew that we just don't go spending money. She waited very patiently and dealt with the Howard people fairly, and integrated them beautifully."

In both the Pulitzer and Howard deals, Lee sped to the front before virtually anyone else knew there was a race. Both companies invited Lee to bid, and the family-owned Howard appears barely to have shopped its papers anywhere else. Junck met with Pulitzer family members who control the largest voting stake in the publicly traded company, and clearly impressed them. "She is the leader of the 'A' team, and is often, though not always, the one who has taken the lead in making that kind of top- to-top contact," says Lee CFO Carl Schmidt.



Sunny side of the street

Wall Street likes Mary Junck now. In most big mergers and acquisitions, the buyer's stock price takes a hit right after the deal is announced. Lee's stock went up the day the Pulitzer acquisition became public.

Lee is the sort of newspaper company Wall Street cheers on. Its operating margin of 21.4% is among the highest in the newspaper industry. In its fiscal year 2004, earnings per share climbed a healthy 9.7%, and the stock price increased 20%. In an era when some of the best regarded newspaper companies turn up on the industry's police blotter, Lee is apparently squeaky clean ? a pioneer in transparent corporate governance with internal controls and small route sizes that make circulation scandals unlikely.

And while Lee is borrowing $1.55 billion to pull off the all-cash Pulitzer deal, its debt level of about 5.5 times operating cash flow at closing will fall rapidly because of Pulitzer's added cash flow, the company argues. "It's more leverage than there's been historically, but it's not over-leveraged by any stretch of the imagination," CFO Schmidt says.

The blockbuster deals overshadow the growth Junck and individual Lee publishers ? who are given considerable autonomy by corporate HQ ? have engineered through lower-profile acquisitions and the creation of a broad range of niche publications.

For instance, few in the newspaper industry paid much attention last year when Lee bought the agriculture publication Iowa Farmer Today. But with that acquisition, Lee now has eight "ag" papers with a controlled circulation of 500,000 ? and an extensive database it can slice any number of ways for advertisers, or to spin off new products.

Most Lee product extensions are local initiatives. The 41,182-circulation Sioux City (Iowa) Journal alone publishes at least nine free-standing publications ranging from The Siouxland Weekly Shopper to the slick-paper Siouxland Home and Living.

The Wisconsin State Journal last year launched coreweekly, a free-distribution alternative weekly aimed at Madison's big college-aged population. The Lincoln (Neb.) Journal Star has taken the chain into Spanish-language publishing with its purchase of the weekly Hispanos Unidos. Some Lee papers are also introducing a bit of Park Avenue into their Green Acres markets with slick magazine-style pubs targeting upscale readers. In Nebraska, for instance, the Journal Star has launched L in its hometown of Lincoln and One, for Omaha, Neb.

Lee's culture encourages publishers to share ideas. "If something works," Junck says, "we don't sort of hide it away ? we want to get it across the system to see if it'll work in other markets."



Mary's prayer card

While Lee publishers wield considerable decision-making authority, they are all, literally, on the same page ? the business card-sized listing of five corporate goals and related action plans that's formally called the Priority Card, but is more widely known around the company as "Mary's prayer card."

Every year, key executives gather to review Lee's priorities, and sometimes they'll even tweak the wording of the goals. The top priority, however, hasn't changed a letter in the five years since Junck introduced it: Grow revenue creatively and rapidly.

"We don't do strategies du jour at Lee," says Michael Phelps, publisher of Lee's flagship Quad-City Times in Davenport, Iowa.

Since the Pulitzer acquisition, Junck has been telling anyone who'll listen that Lee emphasizes growing top-line revenue over cost-cutting. Around the chain they believe it. That philosophy is a big reason publisher Dick High stayed on when the North County Times in Escondido, Calif., changed from a Howard to a Lee paper. "It has a clear growth strategy," he says. "They believe in the future of newspapers, and that's critical, because a lot of companies, I think, don't ? and they act like it. If I have a choice, give me a company, and a CEO in this case, that believes in newspapers."

Roseanne Cheeseman was at the paper at the same time. "I can tell you, as a sales manager, when Mary Junck came in and said we focus on top-line revenue growth, that really resonated with me," she says. Now Cheeseman is Lee's vice president for sales and marketing, in charge of the chain's famous "sales blitzes" that pair sales experts armed with research with salespeople at a local paper to attack specific problems, such as selling against Yellow Pages or reviving dead accounts.

Junck is critical to the success of the growth philosophy, which is not exactly unique to Lee, says Julie Bechtel, publisher of The Bismarck (N.D.) Tribune. "It seems very basic and common sense, but there's some magic to it," she says. "Somehow this magical little card has made it clear what our goals are, that we care about our financial goals and we care about the quality of our journalism."



Balancing work and life

Those who've worked with Junck say part of the magic is her own integrity. Walker Lundy was hired by Junck to be publisher of the St. Paul (Minn.) Pioneer Press, and retired in 2003 as editor of The Philadelphia Inquirer. He says as an editor he never felt much more than tolerated by any publisher ? except Junck. "She was one of the very few people in this business that it was really fun to work for," he says from his home in North Carolina. "She is truly a decent human being, not necessarily a common trait for publishers. She didn't drive you, you just wanted to do well for Mary."

Lundy notes that in coming to the then-much-smaller Lee from Times Mirror, Junck veered from the conventional career track. "There weren't many people who would go from the job she had to any job in Iowa, but she has a complete life, not just a work life," he says.

Moving to Iowa, Junck was going home again. She grew up on a farm in Ogden, just a few miles from the geographic center of the state. "To people who aren't Midwesterners, it might have seemed untraditional or, I don't know, strange," she says. "I think the fact that I grew up out here made it easier for me to figure out I could live in Iowa."

She quickly adopted an Iowa lifestyle, teaching Sunday School at her church and leading a Girl Scout troop when her daughter was young. Recently she was another nervous mom looking on as her daughter, now in high school, performed her first tuba solo in a judged recital. Her philosophy on balancing work and personal life, Junck says, is basically just do it: "Your family needs to be at the top or your list, and so you juggle things and if you have to make adjustments, you make adjustments."

In college and graduate school Junck studied to be a reporter, but her first job was market-research manager at The Charlotte (N.C.) Observer ? and a business-side newspaper executive was born. She moved to The Miami Herald and then the Pioneer Press, where she was promoted to publisher in 1990. Two years later she was named publisher of the Baltimore Sun and began her ascent at Times Mirror.

When Lee's chairman, Dick Gottlieb, was looking for someone to be his eventual successor, Junck was at the top of his private list of candidates. As it turned out, Junck had just decided to leave Times Mirror.

"Talk about wonderful, fabulous dumb luck," Gottlieb said. "I knew her reputation as a leader in the industry. Her value system is impeccable ? and her ego is way under control."

Junck recalls, "I liked Dick Gottlieb a lot, and it seemed like a terrific opportunity."

Neither Junck nor Lee is moving from Iowa, even after the deal closes on St. Louis-based Pulitzer. The flagship St. Louis Post-Dispatch is three times the size of Lee's biggest, the 93,051-circulation North County Times. "We like it here," Junck says, as she and a visitor look out toward the railroad trestle across the Mississippi where eagles frequently gather in winter. "I think this is a good place for us to be."