Lee Enterprises freezes top executives' pay, but U.S. community papers still healthier than metros

Lee Enterprises, publisher of many rural and small-town newspapers as well as the St. Louis Post-Dispatch, "is learning the public- relations benefits of making its executives do without," Robert MacMillan of Reuters writes on the wire service's Media Files blog.

Lee said in its annual proxy filing yesterday that it was freezing the pay of its top five executives and would give them no performance bonuses, which could have been as much as two and a half times their salaries; or make any contributions to their long-term incentive plans, contributions that are usually made with company stock, which is currently trading at penny-stock prices.

"These decisions are unlikely to make anyone happy, but they do avoid building up a restive employee base," MacMillan writes. As reported Dec. 31, "Lee is in trouble if it can’t negotiate new terms with its lenders — debt could overwhelm the company and potentially break it up." (Read more) Lee has large debt from its acquistion four years ago of the Post-Dispatch and other Pulitzer Inc. newspapers. Lee's proxy statements and other filings with the Securities and Exchange Commission are on its investors' page.

David Kaplan of PaidContent.org looks at the proxy statement and Lee's plan for a reverse stock split: "The company argues that this move will 'help improve the perception of our Common Stock and Class B Common Stock' and will appeal to a 'broader range of investors.' As the company said last week, the hope is that the maneuver would raise the share price, since it would convert as many as 10 shares. If its board approves the split, the share price could rise between $1.85 and $3.70, depending on what ratio directors choose." (Read more)

Despite Lee's troubles, caused by the conjunction of big debt and a big downturn, community newspapers are generally healthier than their metropolitan cousins, Suburban Newspapers of America and the National Newspaper Association, dominated by weeklies, said in a report last week. Community papers' advertising revenue "fell only 1.7 percent to $394 million, compared to the same period a year ago," while ad revenue of larger papers monitored by the Newspaper Association of America "dropped 18 percent to $8.9 billion in the same quarter," notes Jennifer Saba of Editor & Publisher. "Moreover, the decline of ad revenue for this group has slowed," from a 2.7 percent drop in the first quarter and a decline of 2.4 percent in the second quarter. (Read more)