It is time to recognize that the Wisconsin State Journal and its parent company, Lee Enterprises, are on the edge of disaster. The once flourishing Lee Enterprises, $48/share as recently as 2004, is now trading at less than 1 % of that amount, 36 cents a share.
The newspapers's editorial policies are starting to make sense.
Last Sunday, the Wisconsin State Journal (WSJ) unfairly called upon the city of Madison to solve the Overture problem by screwing the organized employees:
...Labor costs are by no means the only part of Overture that deserves an overhaul. But they compose the largest expense item in Overture's budget. The city's pay structure is out of line in several places...
...For example, a study found that an Overture ticket cashier earns $18.34 an hour, compared to a statewide benchmark of $10.30.
I suggested on Monday that the newspaper was asking Overture Employees Take a Holiday Hit For Failed Leadership:
While salaries do comprise the largest expenditure in Overture's budget, the greatest discrepancy is in the largest budget item, revenues from performances - that would be ticket revenues for the producers...
It seemed to me that the WSJ had an ulterior motive for a series of editorial calling upon lower wages for workers. Last weekend I was perusing Roger Ebert's movie reviews and came across a commentary of the film critic blaming the collapse of the Tribune Corporation on the enormous debt its owner, Sam Zell, had created to finance his takeover of the company.
He (Sam Zell) paid way too much money to overpay for the Tribune, Los Angeles Times and other big papers, the Chicago Cubs and a stable of TV and radio stations. Now he cannot pay the interest. There is no evidence he had other than a financial interest in his purchase.
Which lead me to connect the dots and observe:
There must be a reason that the State Journal repeatedly attacks reasonable workers' wages whenever there is a financial crisis.
They are preparing for the obvious at the newspaper. The day the layoffs and the cuts come.
As Roger Ebert noted in analyzing the crash of the troubled Chicago Tribune, the problem is not the staff but the enormous debt that paper faces because its current owner, Sam Zell, bought the company on credit.
It turned out I was more right than I knew. Now the truth is out. Lee suffers from the same disease as the Chicago Tribune family of newspapers. From Reflections of a Newsosaur, which unknown to me appeared last Sunday:
The stock of Lee Enterprises was worth about $1.5 billion when the company borrowed almost an identical amount of money to buy the Pulitzer newspaper group in the summer of 2005. Today, Lee’s shares are worth only $13.5 million...
...Lee is but one example of what happened to many publishers who borrowed too much money to fund ambitious acquisitions between 2005 and 2007, taking advantage of the then-juicy profitability of newspapers and the once-easy access to abundant, relatively cheap debt...
...Lee today is struggling to avoid default on $1.4 billion in debt...
...The company also is in danger of (being).. booted off the New York Stock Exchange because the price of its shares has fallen below the required minimum...
...The severity of the situation is underscored by a warning from Lee’s auditors that they may have to add a statement to the company’s annual report questioning its “ability to continue as a going concern.”
My distaste for the Wisconsin State Journal's editorial policy does not translate into a distaste for the newspaper. I am part of a growing number of people deeply concerned about the ability of newspapers to survive in this electronic world. Their judgment in editorials, news content, opinion pieces, and investigative journalism is critical to the survival of our democracy.
I hope the newspaper and the entire chain survive and become healthy again.
If they need to raise cash I have one modest suggestion. Lee sell its interest Capital Newspapers Inc. to The Capital Times which will then resume publication as Madison's morning and Sunday newspaper.
It will be a shame to lose the Wisconsin State Journal. It would be worse for Madison to have no daily newspaper and for Lee Enterprises to collapse.
In the 1950's the WSJ and The Capital Times agreed to share the same press. That meant one had to publish in the morning and one in the afternoon. The Capital Times 'won' the flip of the coin and choose to publish when more newspapers were sold, the afternoon. The State Journal as consolation for 'losing' published on Sundays.
Within a few years television took its toll and the WSJ passed and then doubled and tripled The Capital Times in circulation. Having the Sunday paper did not hurt either.
New advancements in electronic communications once again threaten the newspaper industry and it is evident that massive amounts of debt were not the answer to the Internet. Maybe news, sound editorial and opinoin content and investigative journalism along with a collection of important local and international news is the solution.