Post-Dispatch, other Pulitzer papers sold

ST. LOUIS -- Lee Enterprises Inc. is buying Pulitzer Inc. -- publisher of the storied St. Louis Post-Dispatch founded by famed newspaperman Joseph Pulitzer -- in a $1.46 billion deal that would create the nation's fourth-largest newspaper company.

The nation's biggest newspaper publisher, Gannett Co., said it also had been a bidder for Pulitzer, whose 14 daily newspapers also include the Arizona Daily Star.

Lee and Pulitzer said the deal, unanimously approved by both boards, would mesh two newspaper publishers with similar cultures and values, beginning with their long past. Lee is 114 years old and Pulitzer dates to 1878, when Joseph Pulitzer merged the St. Louis Dispatch and the Post.

"Today begins a new chapter in the long and storied history of Pulitzer," declared Robert Woodworth, Pulitzer's president and chief executive.

Davenport, Iowa-based Lee said the acquisition will make the company fourth in numbers of U.S. daily newspapers and seventh in circulation. It will operate 58 dailies in 23 states with combined circulation of 1.7 million daily and 2 million on Sundays.

Lee, which operates 44 daily newspapers in 19 states, will pay $64 per share in cash for Pulitzer, which also includes more than 100 weekly newspapers, shoppers, and niche publications, including the Suburban Journals of Greater St. Louis.

Both companies said they expect to complete the deal, which also includes Lee assuming $306 million of Pulitzer debt, this spring.

Lee executives called the deal a logical extension of its long-term growth plan, following Lee's $694 million acquisition of family-owned Howard Publications in 2002. With Pulitzer, Lee's revenue should rise by 60 percent and circulation by 50 percent, Lee chairwoman and chief executive Mary Junck said.

Pulitzer will become a subsidiary of Lee, which will have 10,700 employees after absorbing Pulitzer's roughly 4,000 workers. Lee also will gain a minority stake in the St. Louis Cardinals baseball team.

In November, Pulitzer said it was considering a possible sale or other options to increase shareholder value.

Tara Connell, a spokeswoman for Gannett, confirmed that the McLean, Va.-based company -- which publishes USA Today and 100 other U.S. newspapers -- did bid for Pulitzer. She declined additional comment.

Woodworth, during a news conference in his office, refused to discuss other suitors, saying only that Pulitzer's board "unanimously believed the combination with Lee was the best possible outcome."

Federal antitrust regulators are investigating the deal, Justice Department spokeswoman Gina Talamona said. Investigators also are examining Gannett's purchase of HomeTown Communications Network Inc., a Midwest community newspaper publisher based in Livonia, Mich., and the New York Times Co.'s plans to buy a share of a free Boston daily that competes with the Times-owned Boston Globe.

The deal effectively scuttles a bid by six Post-Dispatch employees who -- worried about prospects of an outside suitor -- had launched an admittedly longshot effort to buy the company through an Employee Stock Ownership Program, under which all workers could share ownership.

"On balance, this is about as good as it gets," said Jeff Gordon, a Post-Dispatch sports writer serving as president of the St. Louis Newspaper Guild. "I think there's a great sense of relief. This has been hanging over us for several months. At least the uncertainties are gone."