Sinking revenues force more Lee Enterprises cutbacks, draw shareholder scrutiny

Feb 7, 2019 by

The good news for Lee Enterprises: The company continues paying down its onerous debt at an accelerated rate.

The bad news for Lee: Revenues keep declining, prompting cost-cutting that diminishes journalism content, its core product. The company is also drawing the ire of at least one activist shareholder.

United Media Guild members have felt the brunt of this cost-cutting in several ways:

  • Another round of buyouts is underway at the St. Louis Post-Dispatch. The company is seeking to reduce payroll yet again and we could see more layoffs if the company doesn’t get enough volunteers.
  • The Post-Dispatch building has been sold and the new owner wants to clear the building for renovations. So P-D, which now rents from the new owner, will be moved to another building one block to the east.
  • Negotiations for a first contract for our new members at the Southern Illinoisan have gone slowly. The company has been unwilling to agree to some basic layoff protocols that have worked fine elsewhere.
  • Meanwhile the printing operation at the Southern Illinoisan in Carbondale is closing. The newspaper will be printed by the Post-Dispatch, change that will move up deadlines and knock key content (night meetings, Southern Illinois University sports, high school game coverage) out of the printed product.

Against this backdrop, Lee Enterprises is under attack from Carlo Cannell and his Wyoming-based Cannell Capital. He is urging shareholders to vote against incumbent board members, including chairman Mary Junck.

His complaints are familiar: Lee dramatically overpaid for the Post-Dispatch, Junck has earned more than $40 million of compensation since 2002 despite the company’s free fall, and the current board of directors has a friends-and-family vibe.

He also cited the unwillingness of Lee to go all-in on a digital transformation ala the New York Times. But in fairness to Lee, digital transformations have yielded disappointing results beyond a few major outlets with national audiences.

Most of Lee’s properties are in mid-sized and small markets, where the print product has staying power and the digital potential is somewhat limited. Lee has done a better job detaining print revenue than some rival chains.

Cannell’s complaint didn’t reveal much insight into this distressed industry. Still, he told CorpGov.com that his actions have drawn inquires from private-equity groups.

That is notable. Might this be the start of a hostile bid for the company?

The consolation of the newspaper industry is ongoing. Lee recently bought the Kenosha News and Lake Geneva Regional News, two Wisconsin properties that are a good fit for the company.

Gannett recently fended off a bid from the company that controls Digital First Media, a chain that shamelessly plunders newspapers for cash flow. GateHouse Media, which owns UMG-represented Illinois newspapers in Springfield, Pekin, Peoria and Rockford, has also remains in acquisition mode.

To combat Cannell’s attack, Lee is spending an additional $425,000 to solicit proxy votes. The UMG is monitoring the situation and we plan on attending next week’s shareholders meeting in Davenport, Iowa.

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Post-Dispatch unit meetings scheduled for Oct. 10

Oct 3, 2018 by

United Media Guild unit chair Joe Holleman and other local leaders will be available to meet with Post-Dispatch unit members twice on Oct. 10 to discuss contract bargaining.

The meetings will be held at noon and again after work at Missouri Bar and Grill on Tucker.

UMG leaders met with management of Lee Enterprises and the Post-Dispatch on Oct. 3 to discuss the potential for expedited bargaining to begin later this month. We shared our top negotiating priorities, as did the company.

Based those discussions we believe expedited bargaining is worth a try. This format keeps most of our protections in place and allows us to focus on a handful of issues.

Each side will only send a few negotiators to the table. But the UMG will form a larger bargaining committee to set goals, evaluate offers and generally guide the process. We are seeking volunteers from each work area to join this committee.

If the expedited process doesn’t yield an agreement that the larger membership ratifies, then the UMG will go to traditional long-form bargaining over the entire contract.

The most recent collective bargaining agreement at the Post-Dispatch expired at the end of September, but it remains in effect due to its evergreen clause. That keeps all of the protections in place while we continue to bargain.

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Lee Enterprises closes Missoula Independent after it unionizes

Sep 13, 2018 by

Journalists at the Missoula Independent organized with The NewsGuild hoping to save that alternative weekly.

But rather than negotiate a first contract with journalists at the Independent, Lee Enterprises decided to shut it down.

Last year Matt Gibson sold the Independent to Lee, which owns the daily Missoulian newspaper in that community as well as several other Montana newspapers. At the time, Gibson said he hoped the arrangement would allow the Independent to gain the efficiencies needed to continue on.

But did Lee buy the newspaper with the long-term plan of shutting it down to eliminate competition?

“It certainly seems like the direction things were headed almost from the time Lee Enterprises purchased the Indy, and certainly once the Indy staff unionized,” Lee Banvill, an associate professor of journalism at the University of Montana, told the Missoulian.

Did unionization doom the newspaper?

“It might have changed the timing,” Banvill told the Missoulian. “It took the debate about the future of the alt-weekly public and it also clearly rankled Lee Enterprises to have to deal with a union. It may have sped things up.”

The United Media Guild has developed a good working relationship with Lee Enterprises in recent years. We have worked with the company to maintain strong journalism at the Post-Dispatch in the face of declining industry revenues.

But we find its shutdown of the Independent most disconcerting. More newsrooms will be organizing in the months ahead. Journalists are coming together seeking to preserve their craft and fight for the survival of their newspapers.

Lee Enterprises, GateHouse, Tronc, Gannett and Digital First must realize the Guild is not going away regardless of what tactics the company uses to discourage unionization.

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Post-Dispatch unit sets priorities for bargaining

Sep 10, 2018 by

The United Media Guild’s Post-Dispatch unit held its first meeting to set objectives for our upcoming bargaining for a new contract. Wages, advertising commission/bonus plans, health care, layoff procedure and parking were among the key topics.

Our contract expires Sept. 30, but it remains in effect through its “evergreen clause” while we negotiate with the company.

Lee Enterprises has indicated it might be willing to engage in expedited bargaining on limited issues, as we did on the previous contract. As UMG unit chair Joe Holleman noted during our meeting, it’s possible we could go that route again.

But that would depend on what the company’s issues are. Before choosing expedited bargaining, UMG leaders would hold another unit meeting to discuss our options with members and allow them to guide our course.

Thus far the company has given little indication of what its issues are. The UMG is making its standard pre-bargaining information request to Lee Enterprises and we expect to learn more shortly.

It would be our preference to negotiate a contract sooner than later and without the acrimony that engulfed our bargaining with GateHouse Media — which has featured workplace actions, radio advertising campaigns, public protests, reader and advertiser outreach, a successful shareholder motion, a vote of no-confidence for the board of GateHouse’s parent company and a Strategic Industry Fund grant from CWA to conduct a coordinated campaign against that company.

Here are our top concerns, as defined by our members:

Wages: While the previous Post-Dispatch contract included three 2 percent raises to our pay scales, that only restored earlier cuts to the scale. So we are back to where we were in our 2004-2009 contract — minus inflation, of course. Because we have far fewer people working at the Post-Dispatch, surviving employees are more critical to the operation. In most cases individuals are doing more work with much less support.

Advertising sales: Our members are concerned about the goal-setting process and the punitive shifting of accounts and/territories. Additionally, there are concerns about supervisors and non-union salespersons selling into accounts managed by Guild salespersons.

Health insurance premiums/plan design: Members relying on insurance through Lee Enterprises keep paying more out of pocket for health care. We need to limit those increases and offset them with compensation increases.

Layoff procedure: UMG was willing to give the company a number of “skips” to exempt certain employees from seniority consideration during a layoff. As the newsroom got smaller, so did the company’s number of skips, as spelled out in our contract language. But given the small number of surviving employees, we believe that number should be smaller still.

Parking: With the sale of the Post-Dispatch building, we are becoming tenants. Members are concerned they will their lose free parking. Paid parking could amount to a pay cut, if it’s not accounted for in the next contract. Also, our members are concerned that shifting parking to more distant lots would create a safety hazard.

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UMG to hold Post-Dispatch unit meetings, discuss bargaining

Aug 20, 2018 by

The United Media Guild will hold two Post-Dispatch unit meetings to discuss upcoming contract negotiations.

The first meeting will be from 6 p.m. to 8 p.m. on Wednesday, Sept. 5, at Missouri Bar and Grill on Tucker Blvd. The second will be from 1 p.m. to 3 p.m. on Saturday, Sept. 8, at The Urban Chestnut Grove Brewery and Bierhall, 4465 Manchester Ave.

Thanks to everybody who filled out our questionnaire on bargaining priorities. P-D unit chair Joe Holleman and other UMG leaders are assessing that information.

Lee Enterprises has expressed an interest in holding expedited bargaining focused on a limited number of issues – as we did during our previous contract negotiations. But thus far we don’t know what the company’s issues are, so it is difficult to determine if that will be feasible.

We expect to hear a lot more from Lee Enterprises before we hold those unit meetings.

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Layoffs Hit Post-Dispatch Newsroom

Jun 19, 2018 by

With revenues at the St. Louis Post-Dispatch continuing to decline, Lee Enterprises laid off four reporters and one photographer at the newspaper Monday.

UMG’s contract with the Post-Dispatch allows our members to volunteer to take the layoff in place of an impacted employee.

Members hired before the 1994 contract can collect 26 weeks severance for volunteering to leave. Those hired after that can collect one week’s pay for every year worked.

Our members have two weeks to decide whether they want to take a voluntary departure. Anybody with questions should contact UMG business representative Shannon Duffy or P-D unit chair Joe Holleman.

The laid off journalists will be paid for the next two weeks while this process plays out.

One of the impacted reporters was already leaving the newspaper. And we know there is at least one journalist interested in retiring, so we’re hoping to bring at least one of the laid-off journalists back.

 

Unfortunately there is little UMG can do to prevent lay-offs, other than to seek voluntary departures and raise public awareness of the news operation’s downsizing. The Post-Dispatch remains profitable but its parent company Lee Enterprises, like GateHouse Media, is maximizing cash flow at its properties. While GateHouse uses that cash flow to pay big dividends to investors, fund acquisitions and pay massive management fees to the money guys behind it (Fortress Investment Group), Lee is using the cash flow to aggressively pay down its crippling debt.

With revenues declining 10 to 15 percent per year in the industry, Lee is slashing the corresponding percentage in costs to maintain debt repayment. As a result, papers like The Southern Illinoisan can barely operate and the Post-Dispatch operation just keeps shrinking.

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