Journal Communications, Inc.

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Journal Communications, Inc.

333 West State Street
Milwaukee, Wisconsin 53203
U.S.A.
Telephone: (414) 224-2616
Fax: (414) 224-2479
Web site: http://www.jc.com

Public Company
Incorporated: 1883 as The Journal Company
Employees: 5,500
Sales: $764.5 million (2005)
Stock Exchanges: New York
Ticker Symbol: JRN
NAIC: 511111 Newspaper Publishers

Journal Communications, Inc., is a diversified media company based in Milwaukee, Wisconsin. The flagship unit is the Milwaukee Journal Sentinel, Milwaukee’s only major daily newspaper, whose roots date to the 1880s. Journal Communications also pursues niche print opportunities through subsidiary Journal Community Publishing Group, which publishes 43 community newspapers in Wisconsin as well as in Connecticut, Vermont, and Florida; 41 “shoppers” in Wisconsin, Ohio, New York, Massachusetts, Vermont, and Louisiana; and a collection of nine automotive, boating, and other specialty publications in Wisconsin, Florida, New York, and Louisiana.

To serve the needs of these publications, Journal Communications operates five printing plants, which also take on outside commercial work. In addition, the company’s IPC Print Services unit provides printing, binding, finishing, assembly and packaging, and fulfillment and mailing services to publishers as well as manufacturers and distributors. Since the 1920s Journal Communications has also been involved in broadcasting. The portfolio of the Journal Broadcast Group includes nine television stations in Wisconsin, Michigan, Nevada, California, and Idaho; and 37 radio stations in Wisconsin, Nebraska, Oklahoma, Tennessee, Missouri, Kansas, Arizona, and Idaho. Finally, Journal Communications is involved in direct marketing thorough the PrimeNet division, which maintains operations in Wisconsin, Minnesota, and Florida.

A 19TH-CENTURY SELF-MADE NEWSMAN

The man who nurtured the newspaper that would serve as the foundation for Journal Communications was legendary newspaper editor Lucius William Nieman. Born in Bear Creek, Wisconsin, in 1857, he was raised by his grandmother who was a close friend to Theron Haight, the publisher of an influential weekly newspaper, the Waykesha Freeman. At the age of 12 he went to live with Haight to learn the newspaper business as a “printer’s devil.” A former teacher and well-regarded writer, Haight introduced Nieman to all manner of subjects at the dinner table each night. When he was 15, Nieman landed a job in the composing room at Milwaukee’s leading newspaper, the Sentinel. Soon the ambitious young man was clamoring to become a reporter, whereupon he was told to gain more education. He enrolled at Carroll College at Waukesha and began submitting area news stories to the Sentinel. Impressed by his work, the paper hired him as a reporter to cover the 1875 session of the state legislature; he was only 17 years old.

Before Nieman reached the age of 21 he became the Sentinel ’s city editor and was then promoted to managing editor. Displeased with some changes at the paper, he soon left to take a one-third interest in the struggling St. Paul, Minnesota, Dispatch, and in less than two years he was able to return it to profitability. Preferring life in Wisconsin, however, Nieman returned to the Sentinel as managing editor, but quickly grew disenchanted when it was bought by a group of prominent Republicans who merged it with their political newspaper and moved to make it into a party organ. When his editor refused to print the news that a Democrat had won office in a solid Republican district, because the editor simply did not like the result, Nieman knew it was time to move on.

Nieman wanted to start his own newspaper, but a deal fell through with newspaper magnate James E. Scripps when the Daily Journal, a new paper, hit the stands in Milwaukee in November 1882. It was launched by Peter V. Deuster, editor of a German-language newspaper, the Seebote, and also a Democratic congressman. To fend off the attacks of his Republican opponent, Deuster had published an English-language campaign sheet. Pleased with the results, that is, his reelection, he decided to launch an English-language newspaper. This new entry in a market that had but 130,000 people and was already served by two English-language and three German-language daily newspapers, was enough to scare off Scripps. Nieman decided instead to buy into the Daily Journal, and because the four-page newspaper was quickly turning into a money-losing proposition after less than a month, Deuster was more than happy to sell his half interest and allow Nieman to take over as co-owner along with cofounder Michael Kraus. Just two days shy of his 25th birthday, Nieman also became editor, reporter, and typesetter for the meager operation that worked out of a 10 by 10 foot office in the Seebote building and relied on the Seebote presses.

In his first editorial, Nieman declared the newspaper’s mission: “It will oppose every political ‘machine’ and cabal, venal politicians of every stripe, every form of oppression, and at the same time give all the news for two cents. It will be the people’s paper.” The newspaper was incorporated in January 1883 as The Journal Company, its $15,000 in capital stock owned mostly by Nieman and Kraus. Under Nieman’s direction, the publication grew steadily, and in 1885 the name was changed to the Milwaukee Journal. It was an independent newspaper until 1889, when Nieman decided to align the publication with the Democratic Party, which he hoped would give the paper more clout in achieving some of the reforms he espoused. It remained a Democratic paper for the next seven years.

To increase circulation, in 1899 Nieman reduced the price of the Journal to one cent per copy. In a matter of months circulation increased from 12,500 to more than 22,000, allowing Nieman to increase advertising rates 25 percent. The three competing newspapers in town then joined forces and told merchants that they would have to pay them the same rate as well, despite no circulation increases on their part. However, if they boycotted the Journal, they could have the old, lower rates. Nieman sued the rival newspapers, alleging they violated Wisconsin’s anticonspiracy law. The matter received national attention as it made its way through the courts, ultimately reaching the U.S. Supreme Court in 1904, where the Journal achieved a final and complete victory, and the rights of business freedom and protection were codified in the law.

In 1907, after 25 years in operation, the Journal finally moved into its first building. It was, by this time, a well respected and innovative newspaper. For several years it made use of carrier pigeons to deliver exclusive dispatches to the office for quick publication. In 1912 Nieman began using airplanes to deliver newspapers. However the Journal ’s growth was mostly due to the long hours that Nieman put in as editor. The 100,000 mark in circulation was topped in 1915, but it came at a cost, as Nieman’s health began to suffer. His outspoken editorial approach in favor of the Allies in World War I also offended many of Milwaukee’s residents of German heritage and circulation declined.

COMPANY PERSPECTIVES

Our culture is built on a tradition of employee ownership that began in 1937 with the creation of an employee stock trust.

HARRY GRANT HIRED: 1916

The man who would step into the breach was Harry Johnston Grant, who Nieman brought in as advertising manager in 1916 to rebuild the paper’s circulation and relationship with advertisers. Grant immediately made it known that he intended to learn every aspect of the newspaper business. Just two years later he became publisher of the Journal and bought 20 percent of the company’s stock. When Nieman suffered a severe breakdown in his health in 1919, Grant began taking on increasing responsibilities. He introduced a popular four-page entertainment section, called the “Green Sheet,” which featured comics, puzzles, popular columnists, and other light fare. At the same time he maintained Nieman’s dedication to straightforward journalism.

In the 1920s a new medium was taking shape, radio, and in 1925 The Journal Company became involved when it took over the programming of WHAD, a station established by Marquette University. Because it was unable to sell commercial time, the company bought another area station, WKAF. A new broadcasting tower was erected outside of Milwaukee and new studio equipment purchased. In July 1927 the station, rechristened WTMJ, broadcast for the first time, becoming the city’s first fully equipped station. A few weeks later it became part of the NBC network and began to air national programming.

Nieman died in 1935 at the age of 78, leaving an estate of more than $8 million to his widow, including half of his 55 percent stake in The Journal Company. The other half went to a niece, Faye McBeath, who was a member of the newspaper’s staff. As soon as Nieman died, a number of parties expressed an interest in buying the company. Grant, who already owned 20 percent, was offered financial backing to gain control of the company, but instead he championed the idea of an employee purchase of the stock, which he believed was in keeping with the spirit of Nieman’s will. He won over Mrs. Nieman and Miss McBeath but before the trustees of the estate agreed, Mrs. Nieman died in February 1936. She left her 27.5 percent of her husband’s holding in The Journal Company to Harvard University. Grant was able to persuade the Harvard representative to support his employee-ownership plan, which initially gave the employees a 25 percent interest, and despite a number of delays the employee-ownership plan went into effect in 1937. Any employee with at least five years of standing was allowed to become a unit holder. Once it was implemented, Grant became chairman of the board, relinquishing his duties as editor and president. Over the next decade the plan evolved and more stock became available to the employees, and in 1947 the employees gained majority control, owning a 55 percent interest. That percentage continued to increase over the years so that by 1962 the employees owned 72.5 percent of the company. Ultimately they would own 90 percent.

In the 1930s The Journal Company began experimenting with frequency modulation broadcasting, or FM radio, which offered a stronger, static-free signal than the amplified modulation (AM) system. In February 1940 the company launched the first FM station west of the Allegheny Mountains. Initially known as W9XAO, it eventually became WTMJ-FM. After World War II the company bought an AM station in Wausau, Wisconsin, and added an FM sister station to it. The Journal Company also made plans to establish an FM station in Green Bay, but by this time television was beginning to dominate the media landscape and the company decided instead to focus on television. Not until 1960, when a demand arose for high fidelity broadcasting, did it resume its interest in FM radio.

The Journal Company’s involvement in television dated to the 1930s, when for several years it experimented with a closed circuit TV station, and then in September 1941 it began to build a broadcast station. World War II soon followed, delaying the start of WTMJ-TV until December 1947, when it became the United States’ 11th television station. As sales of television sets in the Milwaukee area soared, a taller broadcast tower was erected to increase the range of the station. In December 1953 WTMJ-TV broadcast the NBC network’s first color program, and seven months later the station produced Wisconsin’s first live color television program.

KEY DATES

1883:: The Journal Company is formed to own Milwaukee Journal.
1927:: Company’s first radio station goes on air.
1937:: Employee ownership plan takes effect.
1947:: Company’s first television station begins broadcasting.
1962:: Milwaukee Sentinel is acquired.
1981:: Add, Inc., is acquired.
1995:: Milwaukee Sentinel and Journal are merged.
1999:: Great Empire radio group is acquired.
2003:: Company is taken public.

Although The Journal Company was becoming very much involved in radio and television, its main business remained newspapers. In 1962 The Journal Company acquired the Milwaukee Sentinel from the Hearst newspaper chain. (A short time later, in July 1963, The Journal Company’s beloved, longtime chairman, Harry Grant, died at the age of 81.) In 1964 the company acquired a stake in a commercial printer, Perry Printing, which focused on magazine and catalog printing, and ten years later bought the remaining interest of the business. The Journal Company became involved in the community newspaper and shopper business in 1981 when it took a majority position in Add, Inc., which began publishing in Waupaca, Wisconsin, in 1972. The Journal Company took complete control of Add, Inc., in 1986 and 20 years later renamed it Journal Community Publishing Group.

TAKEOVER BID REJECTED: 1986

In the meantime, The Journal Company used its broadcast experience in 1968 to establish Midwestern Relay, a cable transmission division. A pair of television stations were also added: KTNV-TV Las Vegas in 1979 and WSYM-TV of Lansing, Michigan, in 1984. The Journal Company was generating annual revenues of about $350 million. As a thriving media company it caught the attention of Affiliated Publications, the owners of the Boston Globe, which bid $600 million for it in 1986. The offer was rejected because the employee-owners were more than satisfied with their situation.

During the 1990s The Journal Company continued to build its assets. In 1991 Midwestern Relay acquired Minneapolis-based Norlight, a fiber-optic private carrier. A year later The Journal Company acquired Imperial Printing Company, another commercial printer. Perry Printing was sold in 1995, and in that same year the Journal and Sentinel were merged. In the second half of the 1990s, the parent company went on an acquisition binge as loosened regulations allowed for increased ownership of television and radio stations. In 1995 three radio stations were added in Omaha, Nebraska, followed a year later by three Tucson, Arizona, stations and three in Nebraska City in 1997. The Journal Broadcast Group acquired ten radio stations in 1998, in such cities as Omaha; Knoxville, Tennessee; and Boise, Idaho. KMIR-TV Palm Springs, California, was brought into the fold in 1998, and in 1999 the company completed its largest deal, acquiring the Great Empire radio group of 13 radio stations located in four states. The 1990s also brought another unsolicited buyout offer, this one for $1 billion made by investment banker Christopher Shaw on behalf of an unnamed client. Again, the offer was turned down.

In 1999 The Journal Company hired its first chief executive from the broadcast side of the business, Steven J. Smith, who had begun his career with the company in 1980 as a salesman at a Milwaukee radio station. He soon became station manager and learned the television business by becoming general manager of the company’s Las Vegas television station. In 1987 he became president of the Broadcast Group, and then in 1992 became president of The Journal Company.

Under Smith’s leadership, The Journal Company continued to add to its broadcast holdings, acquiring a pair of radio stations in 2000 and a pair of television stations in 2001. The newspaper side of the business was not neglected, however. Ground was broken on a $112 million newspaper production facility, which opened in 2003. By this time the company was generating revenues of more than $800 million and eager to expand further. Most of its acquisitions had been paid for in cash, but in 2002 the company began exploring the possibility of using outside funding to fuel growth. The outlines of taking the company public began to take shape, and in September 2003 an initial public offering of stock became a reality. The offering raised $267.7 million for the company, which on September 30, 2003, legally assumed the name, Journal Communications Inc. The stock also gained a listing on the New York Stock Exchange.

With cash and stock at its disposal, Journal Communications embarked on the next phase of its history by continuing to make acquisitions. Before the year was done, a pair of FM radio stations in Springfield, Missouri, were added. In 2004 a Green Bay television station was bought. A pair of television stations, located in Fort Myers, Florida, and Tucson, Arizona, were acquired in late 2005. Life as a public company was not without challenges, however. Some of the businesses struggled, resulting in falling revenues and profits and a declining stock price. As a result, steps were taken to rectify the situation. Norlight was sold in November 2006 to allow Journal Communications to concentrate on its broadcast and publishing assets. At the same time the publishing division was reorganized and a shuffling of executive ranks took place in an effort to revitalize one of the company’s core businesses.

Ed Dinger

PRINCIPAL SUBSIDIARIES

The Journal Company; Journal Sentinel Inc. Journal Broadcast Corporation; Journal Community Publishing Group; Add, Inc.; NorthStar Print Group, Inc.; IPC Print Services, Inc.