Watching the Wisconsin State Journal remake itself has become a daily ritual for many Madisonians. Each morning seems to bring a new people-oriented feature and a flashy new design element.
Such is the radical change afoot in the newspaper business, as dailies struggle to maintain their preeminent role in media delivery. Declining readership among young people and the shift to online advertising have wreaked havoc with the traditional rich profit margins the dailies enjoy. Many papers have adopted a "change or die" attitude.
Just why the State Journal has been in the forefront of this change may be explained, in part, by a commentary last week in the Bloomberg business-news service that savaged Lee Enterprises, the State Journal's parent company, for its alleged financial failings.
Columnist Jonathan Weil's piece is essential reading for anyone trying to understand the intense pressure facing State Journal editor Ellen Foley and other Lee managers to prop up the bottom line to meet Wall Street's expectations.
Club in hand, Weil labeled Lee's much-publicized purchase of the Pulitzer newspaper chain in June 2005 as "one of the worst deals in the [newspaper] industry's history."
While Lee paid $1.46 billion for the Pulitzer papers, he pointed out, the stock market value today of the entire chain (which includes 55 daily papers) is only $515 million. That half-billion bucks represents a stunning 63% decline in Lee's stock value over the course of a year.
The problem, Weil charges, is that Lee, like too many other publicly traded newspaper companies, has grossly inflated its book value (the statement of assets minus liabilities) by including $2.44 billion in "goodwill" and other intangibles as assets.
Still, I have to wonder how fair it is to bad-mouth Lee and other media chains as if they're carriers of the bubonic plague when they remain the dominant media purveyors in their advertising markets with increasingly successful websites to boot.
When I checked in with State Journal Publisher William Johnston to get his take on Weil column, he professed that he hadn't read it, even though it was featured on Romenesko, the widely read aggregator of newspaper industry news.
"It's out of my league," Johnston said of Weil's complaints about Lee. "I'm the publisher here and I worry about making business here at the Wisconsin State Journal. I don't really spend a whole lot of time on that issue."
Johnston may not have read it, but you can bet others in the newspaper and finance industries did. His paper, whether or not Johnston publicly acknowledges it, has a harder task before it because of Wall Street's hostility.