Lee Enterprises Loses $26 Million Dollars and 7 Per Cent of Employees

I must admit that I am not a highly compensated member of a corporate board nor an expert in executive compensation, but I have to assume that Lee Enterprises CEO Mary Junck is due for another half million dollar bonus after these stellar results in the second fiscal quarter:

Operating revenue for the quarter totaled $172.3 million, a decrease of 3.6% compared with a year ago. Combined print and digital advertising revenue decreased 5.3% to $117.5 million, with retail advertising down 3.5%, classified down 7.1% and national down 9.7%. Combined print and digital classified employment revenue decreased 0.3%, while automotive decreased 3.9%, real estate decreased 12.2% and other classified decreased 11.5%. Digital advertising revenue on a stand-alone basis increased 9.9% to $15.7 million. Print revenue on a stand-alone basis decreased 7.3%. Circulation revenue increased 0.1%.

Overall, as the Washington Post reports, Lee lost 54 cents per share in the quarter for a total of 26.6 million dollars:

The company said it lost $26.6 million, or 54 cents per share, for the fiscal second quarter that ended March 25. That compares with a loss of $1.5 million, or 3 cents per share, for the same period a year ago.

Lest anyone forget, Lee’s CEO Mary Junck took a bonus of $500,000 during a quarter when the company she leads lost $26 million dollars.

Optimistic press releases about evolving “in the digital age” notwithstanding, the corporate raid on Lee’s profitable small newspapers continues, as readers and advertisers are fleeing a product that lacks the resources to produce consistent quality. Lee’s failed strategy and corporate piracy are stripping these local papers of their most valued commodity: local belief that the newspaper will offer complete and comprehensive coverage.

One has to love the dispassionate tone of corporate press releases, especially when it relates to actual human beings losing their jobs. From the press release:

Compensation decreased 5.2%, with the average number of full-time equivalent employees down 7.5%.

That’s 7 per cent fewer people collecting, editing, producing, and distributing the news that is vital to many communities only served by one newspaper.

I derive no pleasure from watching the decline of newspapers—it’s certainly a tough environment when a company with no revenue is worth more than the New York Times—but the mismanagement and theft from local newspapers by the Lee chain is especially galling. People who work for their papers and the communities those papers serve deserve better.

7 thoughts on “Lee Enterprises Loses $26 Million Dollars and 7 Per Cent of Employees

  1. Best kept secret of the day. Both the Montana Standard and the IR are making a profit for Lee! The recipe is simple: pare the staff to the bare bones and use cheap content (press release journalism, wire service filler, and yesterday’s news from elsewhere in the state) as a wrapper for advertising. As long as people keep buying this inflated crap it will continue. Next step will be to combine both papers under a single masthead. It’s already being discussed.

    • Absolutely. That’s what is so frustrating about this. It seems almost impossible for these small papers not to be making money in places like Helena and Butte. What we’re seeing is pared down coverage, poor treatment of workers and an inferior product–all of which can be blamed on corporate mismanagement and greed at the highest levels.

      That we have reached a point in our country where it is morally and legally defensible for a CEO to make a bonus of $500,000 after this kind of performance is sickening.

  2. Lee’s situation is a rough one. They bought Pulitzer back in early 2005 when newspapers were still growing revenues. At the time, it wasn’t obvious that it was a horrible idea. Even worse, they financed it with debt. In 2009 they almost went bankrupt, and much of their debt got bought buy a series of hedge funds and private equity groups also known as “vulture funds”. These funds sought to seize control of Lee via traditional bankruptcy. This was well documented in the Wall Street Journal.
    http://online.wsj.com/article/SB10001424052748704641604576255151698198750.html
    Instead, Lee did a special kind of bankruptcy that kept them out of control of the private equity groups. They did this, in part, by convincing local banks to keep supporting them. It was a feat, and almost unheard of in the history of bankruptcy law. Seriously- very very rare. It almost certainly saved the company from being chopped up and sold off in blocks. So, who do you want running your paper? A 100 year old newspaper company or a Mitt Romneyesque, NYC private-equity hedge fund? A 7% loss of employees is nothing compared to what private equite groups do to you. Junck should be fired for buying Pulitzer in 2005, that is for sure. But this recent bankruptcy? Hell, I think she did a good job.
    Of course, I would rather see our newspapers be run by mom and pop, pound-puppy adopting, composting folk, and not corporations, but that is just not what happens.
    Or I’d rather see internet journalism do something besides spew out the mostly-stolen content of the Huffington Post or the agenda of Pro-Publica’s master Herb Sandler, who was one of the masterminds of the housing bubble.

    • I’ll settle for journalism of any kind, anywhere. It’s not coming from Lee. In fact, it’s very rare here in the land of the free.

    • I think it’s hard to take a company seriously when it rewards the architect of their financial collapse for making the impact less bad, all while punishing low-paid employees and local readers.

      Ms. Junck may have handled this bankruptcy well, but she caused it, and her willingness to accept a $500,000 bonus while her company is collapsing around her shows not only an incredible lack of judgment, but a profoundly misplaced sense of entitlement.

  3. A journalist might follow this path to its source – who sits on the compensation committee, how many other CEO’s are directors and thus sympathetic to Junck out of self-interest. Corporate America’s CEO system is a gated community.

    Too bad that Lee doesn’t do journalism. Might be a story here.

Leave a Reply