Investors were met with sunny news at last month's shareholders' meeting for Lee Enterprises, the Davenport, Iowa-based owner of the St. Louis Post-Dispatch. Company brass announced that since buying Pulitzer Inc. last June, Lee's advertising revenue has ballooned by 30 percent, helping to boost total revenue to $1.2 billion.
While the Pulitzer deal has turned Lee into the nation's fourth-largest newspaper company (as ranked by revenue; the company ranks seventh in aggregate circulation), it has produced headaches on the front lines. Exhibit A: a phalanx of 25 St. Louis Newspaper Guild members who crashed the shareholders' meeting and distributed fliers complaining that the Post is "the Lee Family's Red-Headed Stepchild."
Led by the guild's business representative Shannon Duffy, union members traveled to Lee headquarters February 22 to protest what they called a "complete breakdown in transitioning benefits." Among the grievances: late paychecks; undelivered or nonfunctioning prescription-drug cards; and insurance benefits rendered inaccessible since the takeover. "If you work at the St. Louis Post-Dispatch, chances are your benefits got royally fouled up in January and February. We had retirees calling from pharmacy counters unable to get their meds. We have one woman whose last paycheck was January 10," says Duffy. "At one point we even called the Department of Labor, because so many people were missing their [insurance and drug prescription] cards. It was a complete breakdown. We needed to make corporate aware of just how fouled up everything had gotten down here."
Under Pulitzer Inc., the St. Louis Post-Dispatch's human-resources department was based in St. Louis. After Lee purchased the paper along with Pulitzer Inc.'s thirteen other daily papers and more than 100 nondailies it consolidated human resources in Davenport.
Dan Hayes, Lee's vice president for corporate communications, acknowledges that the company has stumbled transferring St. Louis employees into its system.
"When we transferred the St. Louis employees to Lee benefits and payroll, we also because we're a larger company now ended up transferring all 11,000 employees to a new 401(k) provider and half of them to different medical, dental and vision providers," Hayes explains.
"Even though there weren't very many snafus, the snafus in St. Louis did result in quite a few calls to our human resources center," he concedes. "There were some backlogs, and there was some concern among the folks from St. Louis as to whether this is something they can expect more of or not. We think that all the problems have been ironed out."
But the grumbling goes beyond snags. "I know that Lee was a small outfit, but they were totally unprepared for the Pulitzer group," says Beth Ford, who retired last January after a 40-year career in the Post's ad-processing department. Ford says she had to wait months to receive a functioning prescription card and still hasn't received her dental insurance card. What's more, she recounts, the money in her retirement account was inaccessible for nearly two months.
When she called Lee to complain, Ford says, she couldn't get through to the human-resources department. "One day I was on the phone for nearly three hours off and on. The last time I got this recording that said: 'We're sorry, we're not taking any more calls today.' It was 3:30 in the afternoon!"
"It wasn't the way we wanted it to be. There was just a heavy volume [of calls]," responds Lee spokesman Hayes. But Hayes says the average wait time to speak to an HR rep was "about five minutes."
Though Lee honored the contracts of all ten unions that are active in St. Louis, the newspaper guild's Shannon Duffy and other union members say the Post's work environment has become hostile to organized labor since the takeover.
Only 1,000 of Lee's 11,000-strong workforce belong to a collective-bargaining unit. Of those 1,000 union members, 886 are in St. Louis. (Additionally, Lee offered a buyout that led to the early retirement late last year of more than 120 Post employees, many of whom were guild members.)
"When Lee acquired the Post-Dispatch, they got more unions in this one sale then they had systemwide," says Duffy, adding, "They're really not very union friendly."
As evidence Duffy points to the so-called Lee Lodge, a resort the company owns in Montana. For a $100 reservation fee, eligible Lee employees can book a weeklong stay for their family. Additionally, each worker who participates in Lee's "wellness program" receives a $100 credit in his "flex" account. (Flex accounts allow employees to earmark a portion of their income for medical expenses, tax-free.)
Union members are ineligible for either benefit.
Responds Hayes: "Our approach has been, sure, we'll honor the contracts, and if there's a benefit that the guild would like to have for its membership, then that's something to discuss for future contracts. We think it's a fair approach."
The union members who trekked to Davenport last month met with Post-Dispatch publisher Terrence Egger, now a Lee vice president. "It was a great meeting. The whole transition of payroll benefits and other things was an absolutely massive project that people at Lee corporate and the Post-Dispatch really worked hard on," Egger says. "We tried to anticipate everything, but at the end of the day we knew there were some things that went wrong and we inconvenienced some folks. We just told them we're really sorry for that, but most of those problems are solved now."
As chair of the Post's guild unit, Richard Hughes made the trip and participated in the meeting but didn't come away as impressed as Egger. "It was OK. It seemed a little last-minute, or off the cuff," reports Hughes, who works in the advertising department of the Post's St. Charles bureau. "We suggested that Lee send someone down from corporate headquarters to work in human resources at the Post-Dispatch."
The guild's next contract negotiation is scheduled for 2009. For the time being, members have adopted a wait-and-see approach.
"Our union wants nothing more than to continue the good work that has made the Post-Dispatch the paper it is, and we look forward to helping Lee realize even greater profits," says Shannon Duffy. "But that's not going to happen if upper management isn't engaged. I really do believe that Lee's not used to dealing with employee groups. But we're the guild. What's fair is fair, and right is right. They don't have to like it, but they're going to have to deal with it."