With Lee Enterprise’s purchase of Pulitzer Inc., much of Wisconsin’s newsprint is now controlled by two of the nation’s four largest newspaper conglomerates.
One big newspaper
By
Kristian Knutsen
Hey, Rhinelander! Welcome to the chain gang.
Your city has joined Madison, La Crosse, Racine, Beaver Dam, Shawano, Chippewa Falls, and Portage in the second largest newspaper conglomerate in Wisconsin. Rhinelander’s Daily News now joins Wisconsin State Journal, the La Crosse Tribune, the Journal Times, the Daily Citizen, the Shawano Leader, the Chippewa Herald, and the Daily Register in the Lee Gang.
On January 30, Lee Enterprises, Inc. announced its acquisition of Pulitzer Inc. (yes, that Pulitzer), making Lee one of the largest newspaper chains in the nation. Lee paid $64 per share in a $1.46 billion deal to purchase Pulitzer, consisting of 14 daily newspapers, including the St. Louis Post-Dispatch, founded by Joseph Pulitzer in 1878, and the Daily News of Rhinelander. The other papers in the old Pulitzer chain range across Arizona, Illinois, Utah, California, Oregon, Missouri, and Hawaii.
According to a press release Lee sent out at midnight on January 30, “Pulitzer also operates more than 100 weekly newspapers, shoppers, and niche publications, including the Suburban Journals of Greater St. Louis, a group of 38 weekly newspapers and niche publications with distribution of more than a million copies a week. Pulitzer also owns leading online sites in all of its markets, including STLtoday.com in St. Louis and azstarnet.com in Tucson.”
The impending sale of Pulitzer was rumored in the newspaper industry for some time, but according to the St. Louis Post-Dispatch, “It was the lesser-known Lee, a quiet company whose profit margin is the envy of the newspaper industry,” that was ultimately the buyer of its corporate parent. Final approval of the deal is expected to occur this spring.
Until a few years ago, the only major newspaper chain in Wisconsin was Gannett, which has a virtual lock on newspaper ownership north of Fond du Lac and east of Wausau. Gannett dwarfed Lee in terms of Wisconsin circulation, and its monopolistic business practices in Green Bay were the subject of a 1996 book by Richard McCord titled The Chain Gang: One Newspaper Versus the Gannett Empire.
Since 2000, however, Lee has been on quite a buying spree, transforming itself into a corporate media colossus.
In 2001, Lee, through its corporate surrogate Capital Newspapers (previously Madison Newspapers Inc.), purchased the dailies in Portage and Baraboo. According to a February 28, 2003 article in the Wisconsin State Journal, “[t]hese acquisitions form a network of products and publications that reach more than 1 million people in a 17-county market area surrounding the state capital.”
In the spring of 2002, Capital Newspapers purchased Citizen Newspapers (publisher of the Daily Citizen in Beaver Dam) from Conley Publishing, which still owns the Waukesha and West Bend dailies. At about the same time, Lee acquired Howard Publishing, Inc., with papers ranging from New York to California, giving the company a truly national presence. This purchase made Lee one of the 15 biggest newspaper chains in the United States.
Indeed, the acquisition of Pulitzer is comparable in proportion to the 2002 purchase of Howard. At that time, Lee grew by 50 percent in revenue and 75 percent in circulation. The Pulitzer acquisition will increase Lee's size by 60 percent in revenue and 50 percent in circulation.
Lee’s January 30 press release also stated, “Lee will become the fourth largest U.S. newspaper publisher in terms of dailies owned and seventh largest in circulation, growing from 44 to 58 daily newspapers in 23 states, with new total circulation of 1.7 million daily and 2.0 million Sunday. Combining calendar 2004 results, Lee's revenue will rise by more than $440 million, to $1.14 billion.”
Lee’s goal in its news markets is information monopoly, both on pulp and online. In Madison, Lee has recently overseen the purchase of a regional parenting magazine and the founding of a weekly faux-alternative tabloid, and is in the midst of launching a new business publication. All of these moves are geared toward crowding out existing, independent publications. Elsewhere, Lee started a newspaper for teenagers in Davenport (its corporate headquarters), acquired a farming publication in Iowa, and launched Spanish language weeklies in Lincoln and Columbus, Nebraska, and in Sioux City, Iowa. Watch out, La Voz Latina and La Communidad News!
In just five years Lee has gone from a small Midwestern chain to one of the largest newspaper conglomerates in the nation, with an eye toward dominating the Web as well.
Conference remarks Lee CEO Mary Junck made on December 7, 2004, make it apparent that a quest for Internet dominance is part of Lee’s long-term corporate strategy:
“According to our research, across Lee our sites deliver a larger audience than the largest radio stations do during drive time, making our websites the number three medium measured by audience size.
“In some markets, our local websites deliver a larger audience than the Number One television station's top newscast, making us the number two medium by audience size.
“Our goal is to have all of our websites become the second largest media buy in the market, right behind our local newspapers, which occupy the top spot by a huge margin. This goal is so important to us that we list it first in the online section of our Top Priorities card.”
A Lee corporate partisan might write all of this off as simply the company’s rational response to business pressures in an aging and ailing industry. That would not be incorrect, but the fact remains that Lee is pursuing a strategy of monopoly, in both old media and new. And it is also true that the vast majority of Wisconsin newspaper circulation is now published by three companies: Gannett, Lee/Pulitzer, and Journal Communications, an omnivorous creature that pursues its own specialized brand of multimedia supremacy in and around Milwaukee.
It would not be fair to cast Lee as the Snively Whiplash of newspaper chains; one takes the good with the bad, and Lee’s papers have plenty of both. It simply pays to know how our mass media environment is changing, becoming less diverse among communities and across mediums. The people of Rhinelander should know which gang they belong to.
Oh, and for you Brewers fans out there, here is a trivia tidbit you might find interesting: Through the purchase of Pulitzer, Lee now owns 4 percent of the St. Louis Cardinals, the Brewers’ National League Central Division rivals and last year’s league champs. This is not really a big deal, but it should be enticing enough for some sportswriter to take a swing at, maybe even somebody from Journal Communications or Gannett…
March 6, 2005
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Kristian Knutsen lives in Madison, is a FightingBob.com contributing editor, and is the publisher of the Web site Dane 101.
