After 120 years of family ownership, Paddock Publications
is changing hands. The descendants of patriarch and founder Hosea C. Paddock
are in the process of selling their interest in the parent company of the Daily
Herald, which is expected to convert to full employee ownership before the end
of the year.
Executives
Robert Y. Paddock Jr. and Stuart R. Paddock III said they plan to continue to
work for the company.
Calling it
"one of the most important decisions we have ever made," Doug Ray,
chairman, publisher and CEO of the company, announced Thursday that Paddock
Publications would switch entirely to an Employee Stock Ownership Plan, a move
approved unanimously by the board of directors Tuesday. The Arlington
Heights-based publisher has been partially employee-owned since 1976 when the
ESOP was established.
Ray said
the action had been under consideration "for some time" and would
provide significant tax benefits for the company and allow employees to become
greater financial participants in its future success.
In addition
to the Daily Herald, Paddock Publications operates the monthly Daily Herald
Business Ledger, the weekly Reflejos Spanish-language publication, a group of
small downstate newspapers throughout Illinois ,
a commercial publishing business and a growing list of niche publications.
"We
all know the dynamics of a changing newspaper landscape, one newspaper sale
after another, in some cases to investment firms, and in others to large public
companies," Ray told employees. "All the while the Paddock board of
directors has fostered independent newspapering and has supported a culture of
community service best served by local control. This ESOP transaction is designed
to continue our family-oriented legacy and importantly to build upon a
successful and sustainable business model driven by employee owners."
It marks
the end of an era of Paddock family ownership of the company that began in 1898
when Hosea C. Paddock, an entrepreneurial editor, bought the Palatine
Enterprise and soon added weekly newspapers in Arlington Heights, Bensenville, Itasca and elsewhere. Through four generations, the
company has remained in the family -- until now.
"I am
nostalgic, proud of our company, and optimistic," said Robert Y. Paddock
Jr., executive vice president and vice chairman. "I am happy we have an
opportunity through the ESOP to continue Paddock Publications' commitment. We
value journalism, community, and our employees.
"Neither
my cousin Stu [Stuart R. Paddock III, senior vice president of information
technologies] nor I have family members working in the paper. In these days of
industry change and consolidation, we think employee ownership can in effect
become the fifth generation of Paddock Publications. We think we and management
will work to continue the good business and journalistic role we have in our
communities, with us being two among many employee stockholders," he said.
Stuart
Paddock said in a statement: "As the communities we serve have grown and
prospered, so has the family business. To Bob Paddock and myself, it is most
important that the culture of family ownership, the thriving standard of
excellence we reach for every day and our integrity is preserved through future
generations. There is no better owner we can think of to accomplish this than
the very employees responsible for our historic success. While we will still
come to work every day, we are proud and satisfied knowing our traditions will
continue well into the future."
Ray said no
changes were planned in the way the company operates -- including its board of
directors and management.
"This
is the plan for the future," he said in an interview. "Our readers
value what we do and tell us that every day. We'll keep doing the same kind of
work, and I'm confident we'll be one of the winners after this is all played
out."
Calling it
"one of those win-win situations in our business," Ray said of the
ownership change: "I suspect it will be the envy of the industry, and
certainly the employees in our industry. This is a way to continue on in the
same fashion that we've been operating the business for generations.
"We
are doing very well. We could not contemplate this kind of transaction if we
were not doing well. I think it's a good day for Paddock Publications."
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