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From AJR,   October 1999  issue

Big Sky’s Big Player   

Lee Enterprises owns nearly half of Montana’s dailies (with 65 percent of the state’s circulation), not to mention weeklies, shoppers and a state magazine. Does domination make a difference?

By Alicia C. Shepard
Alicia C. Shepard is a former AJR senior writer and NPR ombudsman.     

The Ravalli Republic in Hamilton, Montana, is one of the state's smallest dailies, with a circulation of 5,200. Dorinda Troutman worked there for 18 years. Ruth Thorning was there for a similar stretch and had won a passel of awards for her reporting, including three Silver Gavel Awards from the Montana Bar Association, before becoming the paper's managing editor.

On the morning of May 10, Troutman, who headed the classified department, found a message from the publisher on her desk. "If you'd like to know about your future, come to a meeting in the mailroom at 8:30 a.m. tomorrow," it read.

The next morning, Troutman, Thorning and about 30 other employees gathered in a low-ceilinged room filled with binding and folding machines to learn they were losing their jobs.

The 110-year-old, Monday-through-Friday paper had a new owner. Lee Enterprises, the Davenport, Iowa-based company that already owned four of Montana's 11 dailies, was buying the Republic from Pulitzer Publishing.

When Pulitzer bought the Scripps League newspaper chain in 1996, it acquired the tiny Montana paper among 16 daily papers and 30 nondaily publications. By the time Pulitzer approached Lee, the once-profitable paper had been losing money for a year and a half, Troutman says.

But the Republic was attractive to Lee. For one thing, it's in Ravalli County, the state's fastest-growing area. And its historic Main Street office is only a little more than an hour from Missoula, where Lee owns the state's third-largest newspaper, the Missoulian, circulation 32,378. "This is a good market for Lee," says David Fuselier, the Missoulian's publisher, who was involved in the purchase.

Between the announcement and May 21, all Republic employees were invited to interview for jobs at the paper. Only eight out of 23 full-timers and 23 part-timers were hired.

Troutman and Thorning weren't among the lucky eight. Thorning, who had been the Republic's managing editor for $11.81 an hour, says she was told the chemistry wasn't right for her to remain. "I loved being a reporter and was willing to go back to being one," she says. "I feel like I've lost two decades of my life and was made to feel like I'm worthless."

Lee Enterprises has been on something of a buying spree in Montana and elsewhere in the West in the last few years.

In January, Lee bought two Montana weeklies, the 7,000-circulation Hungry Horse News (the only Montana newspaper ever to win a Pulitzer Prize) and the 4,000-circulation Whitefish Pilot, as well as a shopper about two hours north of Missoula near Flathead Lake. In April 1997, the company bought another weekly, the Big Fork Eagle, paid circulation 2,800. (That same year, Lee also bought eight newspapers in Oregon from the Walt Disney Co. for about $185 million. Included in the deal were shopper and specialty publications in eight markets in Oregon, Utah, Nevada and Washington.)

While Lee owns nearly half of the daily newspapers with 65 percent of the circulation in the vast, lightly populated Big Sky state, company officials say the goal is not dominating Montana's news coverage but maximizing moneymaking opportunities. For example, Lee publishes a western Montana visitor's guide. "Now we have the ability to do regionwide publications," Fuselier says. "There's no real cash flow from the little weekly papers. They're not big profit generators. What they offer us is the opportunity to do a lot of new stuff because of the assets--reporters, presses, ad sales. Now we have ad sales people in Flathead and Hamilton. That's the advantage of expanding your presence."

Since Lee also owns shoppers in Deer Lodge, Bozeman and Great Falls, he continues, "that gives us the ability to launch new products. Newspapers are no longer a growth business."

All told, in addition to the five Montana dailies, Lee owns three weeklies and 14 specialty publications (mostly shoppers) in the state, as well as a monthly called Montana Magazine.

There's no doubt Lee is Montana's premiere media player, and its footprint continues to grow. But what difference does that make for readers? Is something lost or gained when a chain owns such a big chunk of a state's media?

Lee executives say multiple ownership is good news for news consumers. For example, the company maintains a three-person capital bureau (four when the Legislature's in session), something that would be unlikely for a single newspaper on the scale of Montana's dailies. The arrangement also allows the papers to share stories of statewide interest on its Montana wire service.

Even competitors admit that because the state is so large, Lee's papers don't have the impact they might in a more highly populated area. "I don't think of Lee as a monopoly," says Dan Black, editor of the Daily Inter Lake in Kalispell. "Certainly Lee has a presence. But their newspapers are fairly competitive with each other. They are not an evil monopoly, but they are a con-venient target for people who like to complain about the media."

Lee's print concentration in Montana might sound like a media monolith, but keep in mind the scale of Montana journalism. Montana, the nation's fourth largest state in area, is 121 times the size of Rhode Island. But Rhode Island has about 100,000 more residents. Only 879,000 people live in Montana, not much more than the number of people who buy the Washington Post each day. The entire state has one area code.

"Lee Enterprises, by any standard, is a tiny company," Fuselier says. "But in Montana, it's seen as a huge media company. It's all a matter of scale. Things look bigger than they are in Montana."

Lee's five dailies--the Missoulian, the Republic, the Montana Standard in Butte, the Helena Independent Record and the Billings Gazette--are scattered around the state. "I don't think of the Montana papers as a group," says Randy Miller, Lee vice president for its Midwest/Rocky Mountain papers. "I've never been in a state where the cities are more unique from one another. Populationwise and personalitywise, they are totally different from one another."

Only Gannett's Great Falls Tribune (circulation 34,257) joins two Lee properties with circulation above 20,000, and its readership barely overlaps with any of the Lee dailies. As an example of the noncompetitive advertising environment, the Billings Gazette has a collaborative group that sells ads in the Tribune and the Lee papers. "We compete for ads, yes, but not in a great sense because the papers are so far apart," says Jim Filiaggi, publisher of the Montana Standard (circulation 15,150). "We try to make it easier on the ad clients." It's also not unusual to see a Great Falls Tribune story appear in a Lee paper, via the AP.

The growing ownership concentration does worry some. "In terms of people's perception of Lee, any time you have any company that owns that much of the media in a small state like Montana, it's a real concern," says Don Schwennesen, a 27-year Lee veteran who was editor and publisher of the Big Fork Eagle until June. He notes the three weeklies, each with different community needs, used to have their own editors. Now there's one editor for all three.

"Those small papers with small circulation have kept communities going and informed for a long time," says Richard Manning, a former Missoulian reporter. "There aren't that many dailies in the state. Lee owns almost all [the larger ones].... Then Lee gets the three weeklies, and it's no longer a question of a chain buying random newspapers. It's a monopoly game."

For nearly four decades, another monopoly dominated Montana journalism: Anaconda Copper Mining Co. The Butte-based behemoth controlled not only most of Montana's print media (it owned six dailies) but also timber and other business interests, not to mention politicians. It ran the state, earning the nickname "the copper collar." Whatever Anaconda head Marcus Daly wanted to happen in the state, happened. What he wanted covered got covered, and what he didn't want covered didn't.

In 1959, Anaconda tired of the newspaper business and sold its holdings to what was then called the Lee Group, which started in the 1890s with a few small Iowa dailies. At the time, cries of relief and euphoria echoed through the state's empty spaces. Montana was shedding the copper collar.

A.W. Lee began the company with the purchase of the Ottumwa Courier in Iowa in 1890. Today, the publicly traded Lee Enterprises Inc. owns 22 daily newspapers with a combined circulation of about 650,000; nine network-affiliated television stations; seven satellite stations and more than 75 weeklies and shoppers.

Lee clearly knows how to operate papers profitably. During 1998, the company's newspapers enjoyed a 25.9 percent operating profit; the average in the industry is 20.7, says newspaper analyst and AJR columnist John Morton.

Lee editors and executives alike say there is no cookie-cutter formula for the company's Montana papers. The papers have their own look, are run independently and exhibit their own flavor. No one from corporate tells them what to do, several editors and publishers told AJR.

"Editorially, each paper is absolutely independent," says Fuselier, a 20-year Lee veteran who had stints editing papers in Helena; Bismarck, North Dakota; and La Crosse, Wisconsin. "We meet some to talk about business issues on an informal basis."

Although Lee may have a statewide megaphone, it says it doesn't push an agenda. Executives say the company does not take stands on political issues and lobby for them on its editorial pages. While corporate Lee for years has favored instituting a state sales tax, the Montana Standard has taken a strong position against one, says former Editor Rick Foote. The Missoulian is considered more pro-environment than other Lee papers.

But the reality is that news coverage is subtly shaped by executives back at headquarters, no matter how much corporate promises a free hand. Influence can be exercised through the choice of a publisher or editor, by chainwide management conferences pushing uniformity, by corporate-dictated spending decisions.

"At one time, Lee was very dispersed, and central control was minimal," says William N. Roesgen, who served as publisher of four Lee papers and editor of the Billings Gazette before he left the company after 23 years in 1997. "The change was very gradual. Over the years, more and more people began working in the Davenport office--more vice presidents and experts and all kinds of things. Even what you had to report to Davenport 20 years ago was minimal compared to the volumes you have to crank out now."

The shift toward more centralization, many say, began in the 1980s with the ascendancy of Richard D. Gottlieb, 57, now Lee's president and chief executive officer. During the summer, Mary E. Junck, formerly an executive vice president of Times Mirror, became Lee's executive vice president. In January, she will move up to president when Gottlieb succeeds the retiring Lloyd Schermer as chairman.

"The company's philosophy of how it should operate has changed over the years," says Jim Ludwick, a former business editor at the Missoulian who spent about 20 years with Lee and is now an assistant metro editor at the Albuquerque Journal. "The papers are not as independent as they once were. I'd say that Dick Gottlieb brought about the changes. Essentially, during the Gottlieb period, the philosophy seemed to change to more emphasis on doing things together. Throughout the chain they are much more homogeneous than they used to be."

Questions for Gottlieb were referred to Vice President Miller, who joined Lee two years ago. Miller says such things as the newspapers' financial reporting systems and the benefits programs do stem from corporate directives. "But we try not to centralize things where the customer is involved," he says. "We believe that people at the local enterprises are responsible to their community, their customers and the shareholders of Lee. But we are not going to tell them how to do their job. We don't dictate. I've worked for several newspaper companies, and there's no question that Lee is one of the most decentralized."

What is the same at all papers is the pressure to "make plan," or meet projected profit and budget expectations. Making plan, says Roesgen, "is a big deal. If you don't make plan, well, you lose a lot of your bonus." But Lee is not always unforgiving, he says, admitting he didn't make plan for seven out of the eight years he served as publisher at the Bismarck Tribune and still got promoted.

Roesgen says that out of 35 publishers during his tenure, the majority "left to pursue other interests, the Lee euphemism for getting fired. The irony is that every one of the terminated publishers was hailed as a hero when he/she was appointed, only to become a villain a few years later. Is this just the nature of the job? Or bad management? I don't know."

Says John Talbot, publisher of the Missoulian from 1970 to 1980, "no matter what management says, they keep their eye pretty close on the stock price."

Nathaniel Blumberg, a former dean of the University of Montana's journalism school and longtime Lee watcher and critic, asserts: "If there's a dominant quality to Lee's corporate policy, it's that they want team players. That's a euphemism for people who won't question corporate policies."

The strategy of making plan is widely accepted by many Lee executives as simply good business. "You will see that if publishers don't meet their strategic budget plans, they have to move on to something else," says Gerry O'Brien, editor of the Montana Standard.

Lee critics say while making plan is part of the culture at most companies, there is precious little flexibility in Lee's Montana empire. Blumberg, 77, a Rhodes scholar, has become rabidly critical of Lee over the course of his 43 years in Montana journalism.

"They fundamentally do not care in Davenport about news content," says Blumberg, who was dean of the journalism school from 1956 to 1968 and remained on the faculty until 1991. "They are interested only in the bottom line."

Blumberg points to Gottlieb's intense displeasure, voiced in an in-house Lee publication, over the company's performance in 1998: "How in the hell...how in the HELL...How in the H-E-L-L...did we let this happen?" Gottlieb wrote about the "deepest disappointment of my career."

What frustrates Blumberg is that Lee executives, in his view, don't love the news business the way he does. For their part, executives respond that they do focus on the bottom line, not because they don't care about news, but because they have a responsibility to stockholders. Lee publishers are always looking for new ways to make money, and sometimes that comes into conflict with newsroom values.

"The newsroom was not shielded from the business side," says Ludwick, who was at the Missoulian for 12 years until 1998. "We would have to listen to the publisher or some other individual give us an update on the financial side. Usually it was that they wished it was going better. The one thing they rarely talk about is how they can make the newspaper more provocative and an unpredictable news report."

One thing that's predictable about Lee's Montana papers: the lack of extensive locally oriented copy from Washington, D.C. Lee does not maintain a Montana reporting presence in the nation's capital. Money is better spent on the capital bureau in Helena, says Fuselier. But no staff coverage of Montana's congressional delegation means the papers aren't serving their readers, says former Democratic Rep. Pat Williams, who spent 18 years in Congress.

"I can tell you from my viewpoint that spinning Montana's newspapers was as easy as spinning a top," Williams says. "There's precious little congressional news that is actually broken by a Montana newspaper. That works to the advantage of a politician. Absolutely. When you are free from a burrowing press, you pretty much have clear sailing."

It was Roll Call, a Capitol Hill newspaper, that first reported Republican Rep. Rick Hill's comment that, while he had been unfaithful to his wife, his Democratic opponent wasn't fit for the job because she didn't have children. And it is the Washington Post that has written extensively about Republican Sen. Conrad Burns' questionable ties to the telecommunications industry.

Montana's papers do receive reports on their delegation from students in the Medill School of Journalism's Washington program. Nevertheless, some feel the chain should have its own bureau. "Because so much public land is here, there are tons of national issues that have huge impacts on this state," says David Crisp, a former reporter for the Billings Gazette. "Timber, mining, environmental issues. To say that's not important to Montana readers is a little hard for me to swallow."

The papers, says Lee's Miller, tend to concentrate on local stories, as do many small papers around the country. They tend to lack in-depth stories and focus coverage on the environment, crime and business news. During one week in June, the Missoulian, whose circulation grew 6.2 percent in the last year, ran mostly local stories on its front page, with only a handful of national or international pieces out front. "By and large the paper is reasonably well-written, well-designed and the photography is very good," says Editor Mike McInally.

The common rap among Lee faultfinders is that the Montana papers are poorly edited and that employees are underpaid and overworked. Pay is based on circulation, so it differs at each paper in Montana. A reporter at the Butte paper is likely to earn an hourly wage between $11.15 and $13 (or $27,040 a year at the high end), says the Standard's O'Brien. At the Big Fork Eagle, reporters earn $9 to $10 an hour, says Publisher Jim Rickman. One reporter at the Missoulian says editors would sooner send you home than have you work overtime on a story.

"The thing is, in Montana, you have to take a pay hit to live here," says Missoulian business reporter John Stucke. "It's very frustrating. The company has the money to pay better, but they just don't do it because they don't have to."

Fuselier says Lee offers generous benefits and that its papers have low turnover rates. "The average newsroom employee has been here for 23 years," he says of the Missoulian staff. "We have virtually no turnover for this horrible place to work that underpays people. The fact is Lee pays very well, according to industry standards. It has a 401K plan that's the envy of many." Lee will put 6.5 percent of an employee's gross income into a 401K, and if the employee chooses to contribute, Lee will match it up to 5 percent.

As for being understaffed, there's not a newspaper in the United States that wouldn't say it could use more reporters and editors. A typical formula is one editorial person for each 1,000 in circulation. At the 32,000-circulation Missoulian, there are 48 editorial employees, which doesn't sound so terrible. But there are questions about coverage.

The paper, whose circulation area is about the size of West Virginia, has only one education reporter to cover everything from kindergarten to the 12,000-student University of Montana in Missoula, population 51,000. "They could get a lot of stories just out of the university if they wanted to," says former Missoulian Publisher Talbot. "All during the '70s, we had a full-time city and a full-time county reporter. Now they have just one reporter...covering both city and county government. It's damn near impossible to do the job well."

As for poor editing, Blumberg cites a June 20 announcement in the Helena paper for a June 16 meeting.

"I do think there's a certain truth to what Nathaniel says, and he does catch some things we do badly," says McInally, who became editor of the Missoulian in 1997, 18 years after he joined the paper. "But then his position is that corporate journalism automatically means bad journalism. I don't agree. Sure, we have some weaknesses. We don't do enough hard-hitting stories, and we are not always well-edited."

Top executives such as Fuselier say Lee's bad rap is unwarranted and hearkens back to the Anaconda days. "A lot of it is a myth and comes from the University of Montana journalism school," Fuselier says. "Lee has a terrific reputation everywhere else in the country except Montana. That comes from the Anaconda company legacy. For much of this state's modern history, the state was a company town. Anaconda employed an enormous number of people and owned all the daily newspapers. While providing economic underpinning, it was viewed as the bad guy who controlled the state. Well, Lee bought the Anaconda papers, so Lee by default became heir to the bad reputation."

Blumberg argues that the reputation is based not on owners gone 40 years but on a philosophy of sending profits back to Davenport rather than plowing them back into the product. "During the 1980s into the mid-1990s, the [Montana] Standard was a money-making fool," says Foote, who was editor of the Butte paper between 1984 and 1993. "But the money we made went to Davenport. They weren't putting any money into the newsroom."

Miller says that's not a fair criticism, although he won't specify what percentage of revenues is put back into the papers. Typically, according to newspaper analyst Morton, newspapers put 10 to 12 percent of their revenues into editorial spending. O'Brien, editor of the Standard since November 1998, says it's bogus to say Lee doesn't invest in its papers or communities. "You hear Lee is a monopoly and takes its money out of the state and doesn't put it in," he says. "But we have a new high-altitude outdoor speed-skating rink. Lee put $100,000 into building and developing it.... The newspaper itself puts money into Little League and Big Brothers and Big Sisters and the YMCA." Yet, the miserly reputation persists.

One reason it does is Blumberg. In 1991, the retired journalism professor launched the Treasure State Review, a 1,200-circulation, sporadically published journalism publication that snaps at Lee at every chance. When several changes were made at the publisher level, Blumberg's headline screamed: "Davenport Rocks Its Montana Papers." When Lee bought the Hungry Horse News and the Whitefish Pilot this winter, his headline read: "Two More Montana Weeklies Bite Lee's Dust."

Blumberg gets much of his ammunition for his campaign against Lee from the small world of Montana journalism. Many Montana journalists graduated from the University of Montana's J-school, learned under Blumberg and loyally report back the company's alleged misdeeds, editing errors and other grist.

"I couldn't sneeze in Billings without the word going around to all the other people in the Lee network," says Roesgen, who was editor in Billings from 1975 to 1980 and publisher in Helena from 1980 to 1983. "Blumberg always seemed to be the spider in the background web keeping in touch with all the reporters and editors."

As Lee tightens its grip on Montana journalism, new players are emerging.

After five years as a reporter and editor at the Billings Gazette, David Crisp decided the city needed and could support another newspaper. In October 1997, he started the weekly Outpost. "There's room for some independent weeklies to make a go of it," Crisp says. "It's a small state, and maybe it's still a marginal idea, but it seemed worth a try. We haven't proved it works yet. People still really like us, but we are struggling."

Crisp is often accused of being out to get Lee, but he says that's just not true, despite the occasional jabs he launches in his media column. "I don't think they are the worst thing on the planet or doing the worst job in Montana," Crisp says. "But it's inherently dangerous when you have that much power concentrated in a few hands."

In Butte, three people started the Butte Weekly in July 1997, and Rick Foote, former editor of that city's Montana Standard, became editor about three months later. He'd put 23 years in at Lee, so he knows the company and the paper well. He's quite critical of his former paper, and often takes it to task in the paper's "Media Watch" column.

In a May piece, Foote reported that a reader called to say his Standard bill asked that he send payment to Helena--not to Butte, as had been the practice. "Now, another loyal reader brought us his Montana Standard bill that was mailed, not from Butte, but from Des Moines, Iowa. Just another example of your good neighborhood [sic] taking jobs and money out of the local and state economies," wrote Foote. "Will the Standard's business office be moved to either Helena or Des Moines? How many Standard readers in Des Moines patronize Butte advertisers? The Butte Weekly is a Butte-owned newspaper and does its business in Butte whenever possible."

The Missoula Independent, another relatively new upstart weekly, began in 1991. "There's an opportunity here to publish an insightful and community-oriented newspaper that stacks up well against the competition," says owner and publisher Matt Gibson, who bought the paper almost two years ago. "I bought it because it was worth saving, and [the decision] didn't really have much to do with Lee. But in the last year, as Lee has gotten more aggressive, I have a different feeling. All papers in western Montana are vulnerable now to Lee. They have the wherewithal and the resources to buy up the market."

But will they? That's unclear. Nevertheless, the recent purchases have spurred action at Kalispell's Daily Inter Lake (circulation 14,013), near the Flathead Lake area, where Lee owns three weeklies. During Editor Dan Black's 19 years at the Inter Lake, there's been talk of going from six days a week to seven and shifting the publication schedule from afternoon to morning. This year, the talk became reality. In April, the Daily Inter Lake added a Saturday edition, and, on July 5, the paper published its first morning edition.

"A whole bunch of things came together, including that we have our eye on protecting our turf," Black says. "This just seemed an appropriate time to do it. But it would be disingenuous to say we weren't aware of what Lee is doing."