Future uncertain for struggling 132-year-old St. Louis newspaper. Hit by lawsuits and low on cash, paper must be sold to survive
The fate of the St. Louis Globe-Democrat, buffeted for two months by lawsuits, staff resignations, and bouncing paychecks, hangs on the ability of owners Jeffrey and Debra Gluck to sell the beleaguered newspaper. Daniel J. Sullivan, a St. Louis businessman, announced Sept. 11 that he and a group of investors have acquired an option to purchase a 90 percent interest in the newspaper leaving the Glucks with a 10 percent interest.Skip to next paragraph
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The move, which paid the Glucks $100,000, comes less than two years after they purchased the failing newspaper from the Newhouse Newspaper chain. The money was immediately used by the newspaper to meet a five-day late payroll.
``I'm buying the name and the goodwill, and the substantial circulation base, and a dedicated group of people,'' Mr. Sullivan said Tuesday.
The saga of the Globe has become a scenario familiar to the newspaper industry as competition from other news media and declining readership have forced metropolitan dailies to close. Today, St. Louis is one of only 30 US cities with competing daily newspapers, according the 1984 Editor and Publisher Yearbook.
Complicating the possible purchase of the Globe is a bankruptcy petition filed Aug. 19. Fourteen employees allege that the Globe owes them $38,000 in back pay and have asked that the company be reorganized.
According to Gluck, 50 employees have left the paper in the last two months. One reporter has kept a tally that includes 73 people who have left the Globe since Aug. 1.
Gluck says the newspaper's main problem has been ``underfinancing.'' He says that the lack of money was ``never voluntary. We were always what we appeared to be. We did not have substantial money.''
Nevertheless, Gluck was able to whisk the Globe away from the brink in late 1983. The Herald Company, owned by Newhouse, had announced the closing of the Globe in November 1983, but the US Justice Department required that the company first look for a buyer.
The morning Globe and the afternoon St. Louis Post Dispatch were jointly operated. In 1959, S. I. Newhouse, the owner of the Globe, sold the paper's building and presses to the Post. In 1961, the two papers joined in a profit-sharing arrangement. In 1979, the Globe eliminated its advertising and circulation departments. Those functions were taken over by the Post.
These steps were protected by the Newspaper Preservation Act passed by Congress in 1970. Forty-four newspapers across the nation enjoy protection under the act, but the Globe was the first case in which a jointly operated newspaper was slated to close.
The paper Gluck acquired had no presses, no business departments, and no building of its own. More than half of the guild employees of the newspaper accepted severance payments from Newhouse in early 1984 and left. The day Gluck took over, the Post switched to morning publication to compete head-to-head with the Globe.
The Globe's share of daily newspaper advertising since the Gluck purchase never grew to more than 15 percent, and circulation has continued to decline. Gluck estimates that the audit report for Sept. 30, 1985, will show the Daily Globe selling about 184,000 copies.
In contrast, the Post will report daily sales of 276,000, says General Manager Nicholas Penniman IV. This represents a substantial difference considering that two years ago the Globe was St. Louis's circulation leader selling 255,000 copies daily -- 20,000 more than the Post.
Though the Post has swelled in circulation, the paper has had its own problems. Penniman acknowledges that the Post lost money in 1984, in part because the company had to absorb the severance pay for 95 ex-Globe employees. The Post, with revenues of $132 million in 1984, is said to have lost $5 million that year, sources say.
Penniman conceded Gluck's criticism that the Post has too many unions (11 in all) and too many employees. When the Post's contracts are negotiated ``the company is going to be asking for flexibilities,'' Penniman says. ``We have to compete.''
Long a conservative voice in Missouri, the Globe has almost without exception endorsed Republicans for national office. However, St. Louis City is strongly Democratic and the Globe has become closely identified with the administration of Mayor Vincent C. Schoemehl.
Mr. Schoemehl filed an antitrust suit against Pulitzer and the Herald Company in early 1984 to prevent the closing of the Globe. The Globe endorsed his reelection in 1984 citing his pivotal role in saving the newspaper. Schoemehl has organized meetings of potential buyers, including Sullivan, in an effort to save the newspaper.