November 1, 2008

Bye-bye, Journal Times 401(k)

Life for Lee Enterprises employees, like those at the Racine Journal Times, just got a little tougher. The parent company's economic woes -- brought on by the overall decline of newspaper advertising and exacerbated by the company's $1.4 billion purchase of the Pulitzer newspaper chain three years ago -- have now infected their retirement accounts.

On Thursday, the company suspended dividends paid to stockholders. That doesn't affect most employees substantially -- except for top executives.

But this latest cutback will: On Friday, a message went out to all employees: the company is chopping contributions to employee 401(k) accounts.

The relevant portion of the "Dear Lee employee" note from Mary Junck, Lee president and CEO, (who earned $3,791,280 this year, according to Reuters) said:
Until economic conditions improve, the company’s profit-sharing contribution to most employee 401(k) retirement accounts is being suspended beginning in December. Also, the company’s match to employee contributions is being reduced. For most employees, the reduction is half of the current levels.
Along with the dividend suspension, the company has cut staff, and frozen executive pay, suspended corporate executive bonuses and stock grant programs -- all part of a renegotiation of credit terms with lenders. The elimination of stock dividends is expected to save Lee $34 million annually, which it can apply to the $1.1 billion it still owes for the Pulitzer acquisition. Analysts already have predicted that it may take years for Lee to improve its debt leverage ratio enough to resume dividends. LEE stock dropped 79 cents Friday, down 24%, in response to the dividend suspension, to $2.50. Its 52-week high is $16.81, although four years ago it was trading near $50 a share.

9 comments:

  1. Taking pleasure in others pain. Grow up!

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  2. StopthemadnessNOW11/01/2008 5:12 PM

    No, it's not a case of taking pleasure in others' pain, it's just pointing out an unfortunate byproduct of a dramatic shift in the delivery of information and entertainment.

    What has happened in the newspaper industry has some similarities to what has occurred in the domestic auto industry (i.e. management failed to keep up with the public wanted).

    As a Lee alumnus, I am happy that I sold off the last of my stock a few years back and am no longer part of that organization. But, I feel sad for former colleagues who are seeing their futures dry up through no fault of their own.

    Someday, someone will write a terrific book about how the print media industry got its clock cleaned in the first decade of the 21st century. Who knows? Maybe Thomas Friedman (of The World is Flat fame) is working on it right now. In any event, I'll rush right out and buy it -- online!

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  3. Hey they didn't just pick on the lower eschelon. No bonuses for execs! Pretty honest I'd say.

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  4. Could it be that the public sick and tired of papers who do not share their views (As in Push KRM even if Joe Public does not want it) had a chance to get information else where jumped for it?

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  5. "...former colleagues who are seeing their futures dry up through no fault of their own..."
    And is it the fault of only those whose futures aren't drying up? If you don't favor the market system, what system do you favor??

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  6. Yeah, I favor a "market system" where the taxpayers foot a $700 billion bill incurred by investment bankers. Free enterprise, as in free money for enterprising crooks.

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  7. There was a time when the mere thought of suspending matching 401k contributions would have been heresy. But just about everyone knows someone who's been laid off or a job in jeopardy. People have not issue any more. They are grateful to have a job.

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  8. Personally, I love my morning newspaper. I read the internet all day long in my business. It's old and tiring on the eyes. But a newspaper is something that I can do at my kitchen table eating breakfast or even on my patio on a cool summer's evening. I know the internet is the here and now and the future. But I still like my paper.

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