Pulitzer Inc.

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Pulitzer Inc.

900 North Tucker Boulevard
St. Louis, Missouri 63101
U.S.A.
Telephone: (314) 340-8000
Fax: (314) 340-3125
Web site: http://www.pulitzerinc.com

Public Company
Incorporated: 1878
Employees: 3,900
Sales: $416 million (2002)
Stock Exchanges: New York
Ticker Symbol: PTZ
NAIC: 511110 Newspaper Publishers

With a history that dates back to the late 1800s, Pulitzer Inc. operates as one of the oldest media companies in the United States. The firm owns 14 daily newspapers in the U.S. including the St. Louis Post-Dispatch and the Arizona Daily Star. Its other papers can be found across the country in Illinois, Utah, California, Oregon, Hawaii, and Wisconsin. Pulitzer also operates St. Louis-based STLtoday.com, Arizona-based azstarnet.com, and Web sites for its other daily newspapers. In 1998, the company—formerly known as Pulitzer Publishing Company—sold its television and radio holdings to Hearst-Argyle Television Inc. Its newspaper business was spun off as Pulitzer Inc.

Pulitzer Gets His Start in Publishing

Joseph Pulitzer, born into an educated Hungarian family, left his home in Mako, near Budapest, in 1864. He was 17 and used a chance to serve in the Union Army as his ticket to immigrate to the United States. After serving in the Army for eight months, he moved to St. Louis.

Virtually destitute, he took odd jobs and sometimes slept in a park. Because he was fluent in German (though not yet in English), Pulitzer got a job at the German-language newspaper Westliche Post. He proved to be a remarkable reporter, frequently scooping rival English-language papers. By 1871, he was able to buy part of the Westliche Post, and in the next few years he bought and sold several area newspapers. In 1878, he bought the bankrupt St. Louis Evening Dispatch for $2,500 and merged it with John A. Dillon’s struggling St. Louis Evening Post. In 1879, Pulitzer bought out Dillon’s share for $40,000.

The St. Louis Post-Dispatch combined tales of crime and scandal with respect for the working class and advocacy of democracy and civil rights. The newspaper also exposed government corruption and other civic and social problems, becoming one of the first practitioners of crusading journalism. It investigated gambling, prostitution, and a railroad monopoly that some felt was hurting business in St. Louis. Few other newspapers were as aggressive in their reporting. This mixture proved to be a successful formula. As Pulitzer’s newspaper grew in popularity, he dreamed of becoming a press baron. In 1883, he bought the New York World for $346,000 from railroad magnate Jay Gould. It quickly became a success: in two years its circulation climbed from 15,000 to 150,000, making it the biggest newspaper in the United States, and in 1886 it earned over $500,000. In 1887, Pulitzer established the Evening World. He built a modern headquarters for his newspaper holdings in New York in 1889 and 1890, at a cost of $2.5 million.

In 1893, the World published the first color supplement in a newspaper, composed of reprints from humor magazines. It increased the newspaper’s circulation, partly because so many newspaper readers were immigrants trying to learn English. Two years later, the World published what became the first comic strip, “Hogan’s Alley,” featuring the Yellow Kid. In late 1896, Pulitzer’s rival William Randolph Hearst began using a color press. He lured away Richard F. Outcault, the strip’s creator, and a huge circulation war broke out in New York, punctuated by raids on newspaper staffs, promotion contests, and price reductions.

Pulitzer’s Sons Take Over: 1907

At the same time, Joseph Pulitzer’s health was declining. He suffered from asthma and diabetes and had to have newspapers read to him because his sight had grown so poor. He also suffered from intense mood swings that made him difficult to work with. The elder Pulitzer gradually turned over operations in St. Louis and New York to his sons and officially retired in 1907. He left his employees a directive that became famous within the industry: “Always fight for progress and reform, never tolerate injustice or corruption, always fight demagogues of all parties, never belong to any party, always oppose privileged classes and public plunderers, never lack sympathy with the poor, always remain devoted to the public welfare, never be satisfied with merely printing news, always be drastically independent, never be afraid to attack wrong, whether by predatory plutocracy or predatory poverty.”

Upon his death in 1911, Ralph and Herbert Pulitzer directed the New York World, while Joseph Pulitzer II, whom his father had thought less promising, took over the Post-Dispatch. The elder Pulitzer’s will stipulated that Pulitzer Publishing be set up as a trust with equal votes for each of his three sons. They elected Joseph the president of Pulitzer Publishing in 1912.

Joseph Pulitzer II focused on the editorial side of the Post-Dispatch, but he did make occasional business decisions. One of his first moves was to ban the advertising of dubious medical products, turning away millions of dollars of advertising. He had often fought with his father over this, but the elder Pulitzer had refused to give up the revenue brought by such ads.

Pulitzer became interested in radio earlier than most other newspapers, joining in a 1904 demonstration of what was then called “wireless telegraphy.” The firm’s serious involvement with broadcasting began in 1922 with radio station KSD. In 1926, the station joined with others to form the NBC Radio Network.

The Post-Dispatch continued to investigate and expose corruption, playing a leading role in reporting the events surrounding the Teapot Dome oil scandal in the 1920s, for example, and leading a crusade against the Ku Klux Klan.

In 1931, the New York World folded, done in by a combination of bad management and the Great Depression. It was bought by the New York Telegram. The Post-Dispatch, in contrast, remained financially and journalistically healthy. In 1936, it received a Pulitzer Prize for uncovering St. Louis voter registration fraud, and another for a 1941 crusade against air pollution.

Post-Dispatch managing editor Oliver K. Bovard, one of the most senior figures at the newspaper, left in 1938 over differences with Joseph Pulitzer II. Bovard wanted complete control over the editorial section and wanted the Post-Dispatch to advocate socialism, which he saw as a remedy for the social toll taken by the Great Depression. Pulitzer refused, and after Bovard’s departure he became a more dominating editor-in-chief. The editorial page was in flux for years after this as Joseph Pulitzer II had trouble finding editorialists who were neither too liberal nor too sedate for his taste.

During World War II, the Post-Dispatch had its own correspondents covering the war. The paper received another Pulitzer Prize in 1948 for an investigation of a mine disaster in nearby Centralia, Illinois, and in 1950 the newspaper won its fourth Pulitzer Prize under Joseph Pulitzer II for revelations that some Illinois journalists were on the State of Illinois payroll.

Pulitzer took an early interest in television. The firm bought television equipment from the RCA Company in the early 1940s. In 1947, KSD-TV became the first television station in St. Louis. Television dramatically changed the newspaper marketplace. With afternoon and evening newspapers being hurt by the emergence of television, the firm bought the afternoon St. Louis Star-Times in 1951 and folded it into the Post-Dispatch. Joseph Pulitzer II died in 1955 and was replaced by his son, Joseph Pulitzer III, who had already been working for the company for many years.

In St. Louis, the Globe-Democrat competed with the Post-Dispatch. Under a 1961 agency agreement, which allowed competing newspapers to share printing and other facilities so that both could stay in business, the Post-Dispatch was St. Louis’s afternoon and Sunday newspaper, while the Globe-Democrat was the morning paper and produced a weekend edition. Pulitzer managed the production and printing of both newspapers, while their news, editorial, advertising, circulation, accounting, and promotion departments remained separate. In the late 1960s, the Post-Dispatch became one of the first major U.S. newspapers to oppose the Vietnam War.

Expansion Begins in the Late 1960s

Joseph Pulitzer III wanted the company to expand. In 1968, the firm bought part of KVOA-TV in Tucson, Arizona. Under U.S. Department of Justice rules, it had to sell that interest in 1971 when it bought the Tucson Daily Star for $10 million. Michael Pulitzer, at that point assistant managing editor of the Post-Dispatch, moved to Tucson to take control of the Daily Star. In 1974, Pulitzer bought WOW-TV in Nebraska from the Meredith Corporation.

In 1979, the Pulitzer Company took over the advertising, circulation, accounting, and promotion of the St. Louis Globe-Democrat under their agency agreement. By the early 1980s, some industry observers felt that the Pulitzer editorial philosophy, as embodied in the Post-Dispatch, was out of touch with an increasingly conservative country. The newspaper also received criticism in some quarters for placing more emphasis on covering national news than St. Louis news. The newspaper’s daily circulation declined to 241,000 in 1982, down from 326,000 in 1972.

In 1979, the firm sold KSD-AM to Combined Communications. In 1981, it traded KSDK-TV St. Louis to Multimedia for stations in Greenville, South Carolina, and Winston-Salem, North Carolina.

Company Perspectives

Pulitzer is a company that is focused, from top to bottom, on execution. You can expect to see continued emphasis on the nuts-and-bolts of running our businesses. You can also expect to see additional strategic acquisitions that support our existing properties and bring us into attractive new markets.

The Post-Dispatch became the first U.S. newspaper to switch to offset cold-type printing from the letterpress printing process. The switch allowed the newspaper to use high-quality color printing—a move pushed by Joseph Pulitzer III.

In 1983, Pulitzer bought UHF television stations in Louisville and Fort Wayne, Indiana, from Gannett. In 1984, the Globe-Democrat folded. The Post-Dispatch became a morning newspaper, and the Herald Company, which had owned the Globe-Democrat, received half the profits, while at the same time sharing half the losses, of the Post-Dispatch.

Seeking to expand, in 1985 Pulitzer bought the Lerner Newspapers chain of 52 small local Chicago weeklies for $9.1 million. The firm hoped to win readers and advertising dollars from the large metropolitan dailies, the Chicago Tribune and Chicago Sun-Times, in the same way that the Suburban Journal chain of suburban weeklies was weakening the Post-Dispatch. The Lerner papers had a combined circulation of about 300,000, and Pulitzer planned to increase that to compete in the Chicago newspaper market.

In April 1986, the firm bought the Southtown Economist, a small newspaper focusing on the south side of Chicago, for $40 million. The far larger Chicago Tribune and Chicago Sun-Times quickly counterattacked by beefing up their coverage and distribution. The Southtown also made money by printing the Midwest editions of national newspapers like the New York Times, USA Today, and Investor’s Business Daily.

Battling a Takeover Attack in 1986

In 1986, an ugly takeover battle erupted when Detroit real estate investor A. Alfred Taubman offered first $500 million and then $625 million to buy Pulitzer. Taubman was encouraged by a group of Joseph Pulitzer descendants who had large blocks of stock in the company but no control over it. Under the rules of the Pulitzer trust established in 1950, the firm’s stock could only be sold for the amount it was acquired, not the current market value. A group of ten relatives controlling about 43 percent of the firm’s stock wanted to sell out, and they were frustrated by these rules. Communications companies were valuable at the time, and the relatives wanted to sell while prices were high.

The group of ten sued, claiming that the Pulitzers who controlled the company were enriching themselves at the cost of other shareholders; the Pulitzers who controlled the company countersued. By mid-1986, Pulitzer Publishing agreed to buy the 22 percent stake held by four family members for $95 million. A later, similar agreement covered 21 percent owned by another family group. The move consolidated control of the company but left it with $180 million in debt. The firm subsequently made its first public stock offering to help pay for the buyout.

After the buyout, Joseph Pulitzer III gave up his positions with the Post-Dispatch to concentrate on the now-public Pulitzer Publishing Co. In 1988, Pulitzer invested millions in machinery to automatically handle rolls of paper and on computer layout and composition equipment. The firm made $19.6 million that year, on sales of $391 million.

In the fall of 1989, Pulitzer faced its first real challenge in years on its home turf in St. Louis. Ingersoll Publications launched the St. Louis Sun, a daily tabloid. Ingersoll already owned a chain of weeklies in the St. Louis area that had been cutting into the suburban circulation of the Post-Dispatch. Although the Post-Dispatch had an impressive lead, with a circulation of 375,000 daily and 550,000 on Sunday, it scrambled to improve its local coverage. In the end, the challenge from Ingersoll lasted only about seven months before the Sun folded. Sales for 1989 came to $402.2 million.

This did not mean all was well at Pulitzer, however. The firm’s plans for the Lerner chain ran into repeated problems. Lerner was hurt badly by the recession of the early 1990s, which severely eroded its narrow advertising base. Over half of the chain’s advertising revenue came from help-wanted classified ads, and with widespread layoffs this market shriveled. Lerner tried to win automotive ads away from the Chicago Sun-Times and real estate ads from the Tribune, but it failed in both areas. Pulitzer closed and combined many of its weekly Lerner newspapers, until only 15 were left of the original 52. Circulation had plummeted from 300,000 in 1985 to 100,000 in 1992. The moves were not enough, however, and in mid-1992, Pulitzer announced it would shut down Lerner if it did not find a buyer by October 1992. At the last minute, a group of investors bought Lerner. The Associated Press reported that the price was $4 million, though Pulitzer officials disputed that figure.

Pulitzer cut costs elsewhere by eliminating 113 production jobs at the Post-Dispatch and additional jobs elsewhere. The cuts were made easier by changes in union contracts and cost about $4.5 million in severance fees. Pulitzer also formed a company that delivered advertising, catalogs, and magazines in the St. Louis area.

Joseph Pulitzer III died in 1993, and Michael Pulitzer became chairman of Pulitzer Publishing. That same year Pulitzer bought two television stations from H&C Communications Inc. for $165 million. One station was WESH-TV, an NBC affiliate reaching Orlando, Daytona Beach, and Melbourne, Florida. The Orlando area was the 23rd largest television market in the United States, and its population was growing. The other station was KCCI-TV, a CBS affiliate in Des Moines, Iowa, the most popular station in the 70th largest television market in the United States. With these broadcast revenue nationwide growing faster than revenue from printed publications, the move seemed logical.

Key Dates

1878:: Joseph Pulitzer buys the St. Louis Evening Dispatch and merges it with the St. Louis Evening Post.
1922:: The company gets involved with radio station KSD.
1951:: The St. Louis Star-Times is acquired.
1971:: Pulitzer purchases the Tucson Daily Star.
1974:: Nebraska-based WOW-TV is added to Pulitzer’s arsenal.
1986:: Pulitzer becomes entangled in a takeover battle.
1994:: The Daily Southtown is sold; attempts to expand in the Chicago market end.
1999:: The company’s television and radio stations are merged into Hearst-Argyle Television Inc.; the newspaper business is spun off as Pulitzer Inc.

With these purchases, Pulitzer owned nine television stations. The others were WLKY in Louisville, Kentucky; WDSU in New Orleans; WYFF in Greenville, South Carolina; WGAL in Lancaster, Pennsylvania; WXII in Winston-Salem, North Carolina; KOAT in Albuquerque, New Mexico; and KETV in Omaha. The firm also owned two radio stations in Phoenix. Pulitzer announced that it would not pursue any further acquisitions in the near future and made a second stock offering to help offset the cost of the two television stations.

In 1993, Pulitzer changed the name of the Southtown Economist to the Daily Southtown, and switched it from an afternoon to a morning paper. Its daily circulation stood at 53,000, while it sold 61,000 copies on Sundays. Despite these changes, the firm sold the newspaper in December 1994 to American Publishing Co., owner of the Chicago Sun-Times, for $31.9 million. The sale ended Pulitzer’s attempts to expand into the Chicago market and left the firm with only two newspapers but nine television stations. The Daily Southtown contributed $46.5 million to Pulitzer’s total 1993 revenue of $427 million. Despite its apparent move away from print and into broadcast media, Pulitzer officials told the Post-Dispatch that the firm was interested in buying paid-circulation daily newspapers outside of suburbs and major metropolitan areas.

By the mid 1990s, broadcasting accounted for nearly 75 percent of company earnings. The Post-Dispatch, like most large metropolitan dailies, was suffering from declining circulation while battling rising costs. To bolster its newspaper holdings, Pulitzer acquired 16 daily newspapers and nearly 30 non-daily publications from Scripps League Newspapers for $214 million.

Refocusing on Publishing: Late 1990s and Beyond

It soon became apparent that Pulitzer needed to make a bold move in order to survive in a rapidly consolidating media industry where its competitors were growing at a rapid clip through merger and acquisition activity. As such, Pulitzer announced in 1998 that its radio and television holdings would be merged into Hearst-Argyle Television Inc. in a $1.85 billion deal. The company’s newspaper business would be spun off as Pulitzer Inc. to Pulitzer Publishing stockholders. As part of the merger agreement, the new company would have no debt and a stockpile of $450 million in cash.

The deal was completed in 1999 and left Pulitzer on the hunt for newspapers to add to its arsenal. Michael Pulitzer remained chairman while Robert C. Woodworth was named president and CEO of the new spin off. Under the direction of its management team, Pulitzer set out to expand its business. In 1999, it acquired the Bloomington Pantagraph and seven smaller newspapers in Illinois for $180 million. The following year the firm purchased the Suburban Newspapers of Greater St. Louis and paid The Herald Co. $306 million to increase its stake in the Post-Dispatch from 50 percent to 95 percent.

Pulitzer’s new business structure appeared to pay off during the early years of the new century. Operating revenues were rising steadily and operating income increased by 91 percent over the previous year in 2002. By that time, the company had added 12 new dailies to its holdings along with 37 weekly papers and other publications. While competition and rising costs continued to plague those in the newspaper industry, Pulitzer remained focused on growing its business. With years of success behind it, the company would no doubt continue to bring news and current events to its readers for years to come.