New Crisis for St. Louis Post-Dispatch, 53 Others

Every industry has its legendary companies. In the newspaper business, one of those is the St. Louis Post-Dispatch, which was long owned and operated by Joseph Pulitzer and family.

Today, however, the paper is owned by Lee Enterprises, a giant conglomerate that holds around 54 newspapers across 23 states with a combined daily circulation of 1,536,842 (1,856,147 on Sunday.) The crown jewel of this media empire remains the Post-Dispatch, which alone accounts for 240,796 in daily circ. and 423,588 on Sundays. It is arguably the most important regional daily in the country, which makes today's developments all the more disturbing.

In early trading Wednesday, Lee's stock plunged down to penny-stock zone, hitting bottom at 90 cents a share before rebounding slightly. Meanwhile, Morningstar lowered its "fair value estimate" for Lee stock from $2 a share to zero. "We think the combination of Lee's exposure to declining revenues, high fixed costs, and a substantial debt burden, place its equity shareholders at risk of a complete loss of the value of their investment," stated stock analyst Tom Corbett.

This comes even after the company announced late last month an easing of its bank credit arrangement. The company suspended its dividend to help pay down bank debt, and said it had made other concessions that loosened the allowable debt and interest ratio to cash flow for "near term" relief.
The problem, according to Morningstar and other analysts, is that even that move may not be enough to save Lee over the medium and long term. Thus, rumors of bankruptcy are circulating throughout the media industry, with the prospect that dozens of communities coast to coast and one vast region of the Midwest may soon lose their primary traditional sources of local news.

All of this most certainly has the man in whose name the newspaper industry's greatest prize is awarded turning over in his grave.