A disease that often afflicts prominent, wealthy families has spread from Des Moines to Detroit to Louisville. Next stop: St. Louis and the Pulitzer family.
The disease is the public disintegration of families that inherit major newspapers. Its venom can turn sons against fathers, and sisters against brothers, in fiery public battles for control of newspaper empires.
Unable to resolve their dispute quietly, the descendants of legendary newspaperman Joseph Pulitzer will enter a courtroom here next month to fight about the future of the St. Louis Post-Dispatch and other Pulitzer-owned media properties. Some members of the Pulitzer family believe it is time to maximize the value of their inheritance by selling the Post-Dispatch, while others believe it is their duty to ensure that the Post-Dispatch and other Pulitzer properties are passed on to the next generation.
"It is a very sad thing. This is not a happy time, I don't think, for any of us," said David Moore, a Pulitzer family member who wants to keep the newspaper in the family, and one of the codefendants in a lawsuit brought by relatives who want to sell. "There are not winners in a situation like this," he said.
The Pulitzers are not alone in the arena of bitter family disputes over inherited newspapers. With the value of takeover bids for newspapers and other media properties soaring in the mid-1980s, similar disagreements have divided members of other famous newspaper publishing families.
This "Who's Who" of American newspaper publishers has included Kentucky's Bingham family, which has put the Lousville Courier-Journal up for sale; the Scripps family, which recently sold The Detroit News to Gannett Co. Inc., which is in Rosslyn; and the Cowles family, which last year sold The Des Moines Register to Gannett.
Joseph Pulitzer Jr., grandson of the Joseph Pulitzer and until recently editor and publisher of the Post-Dispatch, believes his family's dispute will not lead to the sale of the company. The reason is that he, his half-brother Michael, and his first cousin David Moore, control 54 percent of the stock of Pulitzer Publishing Co.
The three, who are among the codefendants in the lawsuit brought by other family members, have vowed not to sell, and they have a written agreement that prohibits them from selling their shares for at least a year. They have rejected overtures from real estate developer A. Alfred Taubman, who first offered to acquire Pulitzer Publishing Co. for $500 million and later indicated he would raise his bid to $625 million under certain conditions.
Taubman, who remains interested in acquiring the company, has an option to buy 20 percent of Pulitzer Publishing from a group of shareholders, including Joseph Pulitzer's sister, Kate Davis Pulitzer Quesada.
The Quesada family has strong Washington ties. Kate Davis Pulitzer Quesada's husband is Elwood R. Quesada, the former lieutenant general who headed the Federal Aviation Administration during the Eisenhower administration. He was part owner of the Washington Senators baseball team in the 1960s, and developed and ran L'Enfant Plaza. He and his wife live in Florida.
In addition to the Post-Dispatch, which has a daily circulation of 316,000 and a Sunday circulation of 524,000, Pulitzer Publishing owns the Arizona Daily Star in Tucson, 96 suburban newspapers and shoppers outside Chicago, seven television stations in medium and small markets, and two radio stations. The Chicago shoppers primarily carry retail advertising and are available to readers at no charge.
Pulitzer Publishing's financial performance has improved as the Post-Dispatch, the dominant newspaper in St. Louis, converted from afternoon to morning publication and regained much of the grocery advertising it had lost during the years to suburban newspapers. Joseph Pulitzer said the newspaper also has been increasing its share of St. Louis real estate advertising.
In 1985, Pulitzer Publishing had revenue of $272.1 million and net income of $20 million, versus revenue of $242.6 million and net income of $15.2 million in 1984.
Several Post-Dispatch reporters said they support Joseph Pulitzer in his battle to keep the newspaper in the family, even though they have never met their former editor-in-chief. They said that while he was editor, Joseph Pulitzer was an intensely private man who rarely entered the newsroom.
On May 13, Pulitzer will celebrate his 73rd birthday. On May 12, a trial involving the charges lodged against Pulitzer by his sister, Kate Quesada, her children and other family members, is expected to begin in St. Louis.
Those family members allege in a lawsuit that Pulitzer Publishing Chairman Joseph Pulitzer, and Michael Pulitzer, who recently became president, have operated the Post-Dispatch and other family held media properties for their own benefit, without sufficient regard for the interests of other family members.
"In our view, and I'm sure dear Uncle Joe has a different view, his treatment of his own family certainly is not in keeping with the great liberal tradition that the Post-Dispatch stands for," said 33-year-old Peter Quesada, a spokesman for the family members who have filed the lawsuit. "We hope they will finally be forced to run the company in the best interest of the shareholders, rather than in the best interest of themselves personally."
The response from Joseph Pulitzer: "I would not preside over the liquidation of the Post-Dispatch nor would I preside over the liquidation of the Pulitzer Publishing Co. We have here a 107-year-old institution under Pulitzer ownership and we hope to maintain it indefinitely."
Peter Quesada and other plaintiffs in the lawsuit are especially upset about a series of antitakeover measures they say are designed to solidify Joseph and Michael Pulitzer's control of the company. These antitakeover measures include a proposal to sell shares to the public. It would create two classes of Pulitzer stock with unequal voting rights.
While Joseph and Michael Pulitzer say two classes of stock would provide liquidity for shareholders who want cash for their shares, Peter Quesada and others say the brothers really are trying to give themselves permanent voting control over the company. In addition, Quesada said, the plan would not give selling shareholders a fair price for their stock, because their shares would lose most of their voting power when they were sold.
Even though Michael Pulitzer wants to keep the Post-Dispatch in the family, he says he can understand the Quesadas' arguments. They oppose the two-class stock plan and want the company to be sold.
"I can see where the younger shareholders are coming from, that they don't live in St. Louis and they don't have an interest in journalism," he said. "They see an opportunity to cash in."
Michael Pulitzer was paid $250,240 for serving as a director and vice chairman of Pulitzer Publishing, and for serving as publisher and editor of the Arizona Daily Star in 1985. Joseph Pulitzer received $800,000 for serving as chairman of Pulitzer Publishing, and editor and publisher of the Post-Dispatch.
In a joint interview, Michael and Joseph Pulitzer described the disagreement with other family members.
"It is very unfortunate in any family, but you see it every day, don't you," Joseph Pulitzer said.
"It has been exhilarating in a way," Michael Pulitzer said. "I've learned a lot about investment banking and the hot-shot merger and acquisition business. It is a distraction from the business at hand. Maybe we are old-fashioned these days, but we like to operate a business rather than buy and sell."
Newspaper analyst John Morton said the Pulitzer's flagship newspaper, the Post-Dispatch, only recently became financially attractive.
"That was primarily because of competition from suburban newspaper groups, Morton said. "They still face a competitive situation in the suburbs, but they are not being eaten alive the way they were before.
"The Pulitzers had always insisted on publishing a New York Times type of newspaper in a market that didn't want one," Morton said.
"The Post-Dispatch has always been a very serious newspaper that emphasized national and international news. It is one of the few newspapers that still sends reporters overseas, and basically, it did a more thorough job on national and international news than it did on local news. They were not aggressive in pursuing suburban readers and it cost them financially. Now they are changing and going after the suburbs," he said.
While the Post-Dispatch continues to go after suburban readers, it will report the details of next month's trial involving Pulitzer family members.
"It is up to the courts now," David Moore said.