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Taking stock of Lee Enterprises' ups and downs
Cap Times, WSJ co-owner is on 'deathbed,' making a comeback

It's hard to get a handle these days on the fortunes of Lee Enterprises, the Iowa-based half-owner of Capital Newspapers, whose products include The Wisconsin State Journal and The Capital Times.

Staffs, resources and compensation have been cut at both papers, as throughout the Lee chain and most of the newspaper industry. Morale has suffered, and the newsrooms are hard-pressed to keep up with print and online coverage demands.

Capital Newspapers' dirty little secret, though, is that it's still making a lot of money. In 2008, the worst year in newspaper history, profits from the Cap News empire apparently topped $13 million (see Watch Out! item, 3/5/09).

But the operation is hurting due to Lee's monumentally stupid decisions, like buying the Pulitzer papers for a premium price in 2005, just before the newspaper industry took a nosedive. Lee is turning every screw to hike profits from Cap News because it's hemorrhaging money elsewhere.

When executives screw up, everybody suffers - with the possible exception of the execs themselves.

This summer, the Cap Times suspended its quarterly dividend (Watchdog item, 6/25/09); stockholders are still awaiting word on the fall distribution. Meantime, Lee Enterprises' stock has taken one of the most precipitous tumbles in the history of capitalism, from $48 per share in 2004 to 24 cents last Feb. 18. And the company's long-term prognosis has been painted as grim.

On Oct. 1, listed Lee (along with The New York Times and Journal Communications, which publishes the Milwaukee Journal Sentinel) as being among the three worst newspaper stocks in America. Here's what it said: "With an amazingly bad ROE of -142.67% and mountains of debt, Lee is slowly drowning. It has a debt-to-equity ratio of 20.34. Yikes."

ROE stands for "return on equity," and the article's author, David MacDougall, gives Isthmus a clearer explanation of Lee's debt-to-equity predicament: "For every dollar of equity, they have $20.34 of debt." Yikes.

Another online stock analyst, The Motley Fool, last week included Lee in a story called "5 Deathbed Stocks?," which invoked the death rattle heard as life expires.

But these gloom-and-doom predictions are not the whole story. The day after listed Lee among the three worst newspaper stocks, it highlighted the company in a post on rebounding stock prices entitled "Restart the Presses: Newspapers Not Dead."

By Oct. 23, when The Motley Fool piece ran, Lee's stock stood at $3.67 a share, after hitting a momentary high of $4.24 on March 26.

A person who brought 10,000 shares at the stock's nadir and sold at its zenith would have realized a $40,000 gain on a $2,400 investment, in about seven months.

Of course, it's unlikely anyone so successfully navigated this peak and valley. But one person who has expressed confidence in Lee's future is its CEO, Mary Junck, who in early August bought 20,000 shares for about $2.22 each, according to the website Lee Watch, bringing her total to 346,457 shares. This week, the stock has been hovering around the $3 mark, which means Junck's investment has already made more than $15,000.

Happy days are here again.

Details, details

What did The Wisconsin State Journal not know and when didn't it know it?

On Oct. 23, the paper ran a story on the UW-Madison's push to create a new high-ranking post, vice chancellor for research, to address woes including aging facilities and a "major action" violation by an animal research lab on campus.

The article by Deborah Ziff, the State Journal's outstanding higher ed reporter, went on to say: "The university will not release details of that incident because of an ongoing investigation."

That's an odd assertion, given the UW's release of detailed information about this violation. This was recounted in a recent Isthmus opinion offering from local animal rights activist Rick Bogle ("Say No to New UW Germ Lab," 10/8/09).

Bogle's column reported that a UW graduate student and others had genetically modified unspecified "select agents" - a grab-bag term for infectious and dangerous diseases - without approval from the National Institutes of Health (NIH), as is required.

Documents obtained from the UW by Bogle in late September and posted with his column on Isthmus' website,, contained additional details. That between May and October of 2007, three individuals set out to "create a double deletion mutant." That select agents "were grown in broths and injected into mice." That proper approvals were not obtained, "nor would the experiments have been approved if submitted...."

The UW's letter cited another violation, in 2004, when a scientist created an unauthorized library of mutants. Both incidents, the UW admitted, "show a fundamental lack of understanding" of NIH rules.

The NIH, in an April 2008 letter to the UW, was even harsher: "Given the serious potential consequences to public health posed by such experiments, the Office of Biotechnology Activities (OBA) is extremely concerned that the research was initiated without the necessary local and federal approvals."

None of these arguably interesting and relevant details have been reported by the State Journal. (William S. Mellon, the UW's associate dean for research policy, confirms that the UW also "responded to an open records request of the State Journal" on this matter, but couldn't say prior to press time what records were provided.)

Perhaps this is what happens when a newspaper slashes resources to the bone. That the State Journal is having trouble keeping up with the news was evident in its failure to devote ink to the governor's appointment last month of Steve Ehlke as a Dane County judge, a significant news event.

But Ziff, responding to an email from Isthmus noting the availability of these details, suggests the decision wasn't an oversight but deliberate: "The documents you posted did shed a little more light on the incident, but still don't include the name of the researcher, what type of research he was conducting, or what exactly happened."

Bogle finds this perplexing, since the UW "provided me correspondence and records that included much detail, even though the names of the specific diseases and researchers were censored." Eric Sandgren, who oversees animal research at the UW, has this to say: "I agree that the documents provide a good sense of what happened."

Moreover, the UW, in a letter to Bogle, said naming researchers or specific agents would violate federal law.

In other words, if the State Journal is waiting for these details to be released before it writes about the many details that have been, this story will never get covered in its pages.

No biobull

Phil Lewis, UW emeritus professsor of landscape architecture and main force behind the Nine Springs Greenway, will be honored next week by budding bioneers.

That's right: bioneers. It's a two-decade-old movement that seeks to use nature and human ingenuity in the service of sustainability (see The group sponsors national conferences with regional offshoots, including the one in Fitchburg Nov. 13-14 (

Lewis, one of the keynote speakers, will receive the first annual Bringing Bioneers to Wisconsin award. A press release for the event says, "Working to help others understand how human patterns of settlement can be guided to help preserve the ecological and cultural diversity of Wisconsin, Prof. Lewis is a true Bioneer!"

And one who richly deserves to be recognized.

Teech you're childrin wel

An email query on Monday to Isthmus: "Hello, my name is [name withheld] and i am a sophmore and we are currently doing a journalism unit in english and i would like your veiw on some things. What are you veiws as a reporter about the war in Iraq?, how long does it normaly take you to write and publish an artical?, Why did you want to be a journalist?, what do you think the U.S government should be more conserned about?, where do you get your ideas?"

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