Paddock family selling 120-year stake in Daily Herald to newspaper employees
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."