December 17, 2008

Mary reassures Lee's troops

Mary Junck, Lee Enterprises' $3,791,280 per year CEO, is trying to reassure the company's employees, including those at Racine's Journal Times. "We fully expect to overcome the challenges," she wrote them on Monday, after the company announced it is trying -- once again -- to renegotiate debt covenants to avoid default.

She writes:
"Although the credit markets remain extremely volatile, our lenders stand to benefit by sticking with us through this tough time. Lee continues to generate significant cash flow and continues to pay down debt. We have good relationships with our lenders, and they have shown a willingness to seek mutually beneficial arrangements."
Translation: Any number of newspapers are up for sale these days -- the Miami News, Denver's Rocky Mountain News among them -- and there are no buyers, so what's a lender to do ... aside from renegotiate at a higher interest rate, and pray?
"Other media companies with much more serious difficulties than ours have worked out such agreements with lenders, and we will continue to work toward a solution here."
Translation: Tribune just filed for bankruptcy...
"These issues should have no meaningful effect on the way we operate our enterprises. In the meantime, unfortunately, you can expect to see negative speculation about Lee’s financial situation, much as we’ve been seeing about our industry for some time now."
Translation: By "no meaningful effect" we don't mean your job is secure. U.S. newspapers have eliminated more than 15,471 jobs in 2008. Gannett cut 3,000 employees last week; the Journal Sentinel cut another 39 today (while announcing a $400-an-hour! consulting gig for its ex-CFO). The two Detroit newspapers announced yesterday that they are eliminating home delivery on Mondays, Tuesdays, Wednesdays and Saturdays. By "speculation about Lee's financial situation," we mean 4th quarter earnings were down more than 70%, and fiscal year operating cash flow dropped 22.6%.

Meanwhile, Junck, who became CEO of Lee in June 1999 when Lee stock was selling for upwards of $29 a share, and who engineered the $1.4 billion Pulitzer purchase that has put the company into this mess, was smart enough to redeem 48,000 shares of Lee stock when it was selling for $28.71 a long time ago, netting $1,378,080. She still has options on 199,375 shares (according to Reuters), which at today's price of 35 cents per share are worth just $69,781.

You can read her entire letter HERE.

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