Tuesday, October 3, 2000

By: Lucia Moses MARY GETS READY TO LEAD LEE

Junck To Succeed Gottlieb In January





At a Lee Enterprises Inc. leadership conference this summer, President and Chief Operating Officer Mary E. Junck told publishers and other executives she wanted Lee to be No. 1 at increasing revenue. To drive the message home, she gave attendees laminated cards bearing Lee's new 10-point strategy - they call it "Mary's prayer card."



Junck wants to make true believers of all within the company and on Wall Street as she prepares to succeed retiring CEO Richard D. Gottlieb in January. Junck, 53, will become the eighth person to lead the 110-year-old, Davenport, Iowa-based company.



It's a time of transition in more ways than one. Lee is wrapping up the sale of most of its 16 TV stations to Emmis Communications Corp., having decided that its TV group was too small by today's standards.



Left will be 23 dailies stretching from the Midwest to the Pacific Northwest, most with daily circulation under 50,000; their related Web sites; and weeklies and shoppers. The company also owns 50% of Madison Newspapers Inc., parent of the Wisconsin State Journal in Madison and four smaller dailies.



Lee earned $67.9 million in the fiscal year that ended Sept. 30, 1999, on revenue of $536.3 million.



The group's newspapers' 30% operating margins are among the highest in the industry, thanks to expense controls and their position in small towns with limited print competition, stable economies, and high readership.



But Lee's market position makes it more dependent on retail advertising and hence more vulnerable to the recent weakness in that category because of flatness in national retail-chain-store advertising.



"They've missed out on a lot of the boomlet of national advertising," said Chicago-based Henry Berghoef, a fund manager for Harris Associates, one of Lee's large institutional shareholders.



Berghoef and other investors are looking for more growth. In Lee's third fiscal quarter, which ended June 30, ad revenue rose 5.6%, to $71.4 million, while the overall industry gained 6.8%. Speaking to a gathering of Wall Street analysts in June, Junck said, "It's going to be better than it has been, because we're really focusing on it."



That's not just talk. Lee has increased its corporate sales staff and plans to put 100 more salespeople on the street over the next several months, an increase of about 12.5%. It's upping training, using more market research to smarten sales calls, and fattening rewards for top sellers.



Junck shifted the duties of several vice presidents last week, a streamlining of the reporting structure that she said would help keep focus on her top priorities. Chief Financial Officer Larry Bloom resigned as part of the changes.



Known for her enthusiasm and direct style, Junck has a record of increasing revenue.



Before Lee, she spent six years at the former Times Mirror Co., where she led its East Coast newspapers on a path to strong revenue and profits. And, before that, she spent 20 years with the Knight Ridder group.



"I think one of the things Mary brings to the table is absolute customer focus, and in newspapers, that means: What do advertisers need, and what do readers need?" said former Baltimore Sun General Manager Hilary Schneider, who worked for Junck from 1993 to 1999.



Junck quit Times Mirror in March 1999 amid high turnover among top executives as CEO Mark H. Willes was trying to reinvent newspapering. At the time, Junck said she had no quarrel with Willes, but missed her operating role. In any case, four months later she landed at Lee as executive vice president and chief operating officer, becoming president in January. Part of the draw was returning to Iowa, where she grew up and still has family.



CEO Gottlieb was looking for a successor and said he found "total honesty" and an "impeccable value system" in Junck, a longtime acquaintance. "She cares about this industry. It's not only in her blood, it's in her heart."



Gottlieb, 58, who has worked for Lee since high school and became CEO in 1991, said he believes a chief executive shouldn't serve more than 10 years. He'll remain board chairman until January 2002, when his term expires.



On top of revenue growth, investors are looking for Junck to move the share price, which rose steadily under Gottlieb until leveling off the past two years. It now trades near its year-ago price, about $27.25. She'll also be judged on how she spends the $390 million after taxes from the TV sale to Emmis. Observers predict that one day, Lee may look for a buyer as a way to get its value recognized.



Lee insists it's not for sale, although as a publicly traded company, it lacks scale. Junck points out that the stock has improved over the past couple of months and that the broadcast group, which had performance problems, is being cut loose. She looks for growth from the Internet operations, which are managing a small operating profit, and the newspapers.



"I think the market in the final analysis rewards good performance," she says. "I think we're going to have some good performance to talk about."





Lucia Moses (lmoses@editorandpublisher.com) is an associate editor covering business for E&P.





Copyright 2000, Editor & Publisher.