The newspaper legacy the Paddocks leave: Fearing God, telling the truth, making money

On Dec. 15, 1898, Hosea C. Paddock bought the Palatine Enterprise for $175 and started his newspaper business in the rural hamlets that would grow to become the modern Northwest suburbs of Chicago.

A black-and-white photo of him sitting in front of his rolltop desk overflowing with papers hangs in the newsroom of the Daily Herald, which has grown to become the third-largest newspaper in Illinois.

Daily Herald founder Hosea C. Paddock was in his 40s when he bought the Palatine Enterprise weekly on Dec. 15, 1898, for $175. He began a legacy that has evolved into today's Daily Herald Media Group. Daily Herald File Photo

A week ago, after 120 years of leadership from four generations of the Paddock family, his descendants sold ownership of that news organization to the employees through an Employee Stock Ownership Plan or ESOP.

"In some ways, there won't be a change. It will still be the Daily Herald and Paddock Publications," said Robert Y. Paddock Jr., great-grandson of the founder.

The Daily Herald is an anomaly. Fewer than a third of family businesses survive the transition to a second generation, and half of those don't make it to a third generation, according to a 2013 article in Forbes. Many family newspapers changed hands during the 1990s, with some selling to large media chains and others to rich entrepreneurs who cut back sharply to raise profits.

"It is unique in today's environment for a company to move to ESOP ownership," said Sara April, a partner and vice president of Dirks, Van Essen, Murray & April, a leading merger and acquisition firm in the U.S. newspaper industry.

Hosea Paddock's sons, Stuart and Charles, grew up in the business and inherited it after he died in 1935.

As manager and editor, Stuart, the oldest son, expanded the newspaper to reflect and help shape the growing suburbs. He helped found Northwest Community Hospital in Arlington Heights and has a namesake school in Palatine.

After the pair's deaths in the late 1960s, Stuart's son Stuart R. Paddock Jr. gained control of Paddock Publications and worked alongside his siblings Robert Y. Paddock Sr. and Margie Flanders.

Stuart R. Paddock Sr., in front of the file cabinet, participates in an editorial board meeting with legendary U.S. Sen. Everett M. Dirksen, left. Daily Herald File Photo

From his perch as publisher and chairman, Stuart Jr. transformed the company from a series of triweekly community newspapers to a modern suburban daily built along a marketing slogan, "Big Picture, Local Focus." Shortly before his death in 2002, he told how the company had been in such financial straits in the 1960s that he once was barred from a Lions Club meeting because the paper didn't have the money to pay his dues.

Unfazed, he brought in outside investors, enabling him to buy the rival Day Publications, owned by Marshall Field, in 1970. Some of those investors urged the family to sell the paper to make a quick profit.

"The Paddocks never considered selling the paper, never," said Douglas K. Ray, who joined the company as a reporter in 1970 and is chairman, publisher and CEO. "It was never the wishes of the Paddock family to cash out. They lived their lives modestly and poured most of that family wealth back into the newspaper."

The Paddock family touch over the years included elaborate, formal parties for employees (nicknamed the Paddock Prom) in the 1960s, a "Taffy Apple Day" when employees would get free treats, company softball teams and bowling leagues, and instances of Paddock family members giving employees advances or even gifts in times of need. They also supported the community.

As executive vice president, Robert Y. Paddock Sr. carved out a role as a leader in local charities, serving on countless boards and spearheading fundraising efforts to help others before his death in 1999. Flanders was a strong woman in a newspaper world dominated by men. She was treasurer of the growing company and an executive in the advertising department for 63 years until her death in 1997.

During World War II, when Western Union needed extra hands, Flanders took over the difficult task of delivering "Missing In Action" telegrams to local families. Robert Y. Paddock Sr. helped raise funds for children with developmental disabilities, the Boy Scouts and other charities.

Third-generation Publisher Stuart R. Paddock Jr., right, and Editor Daniel E Baumann, looking over a mock-up of an evening commuter edition that the Daily Herald published briefly after the Chicago Daily News folded in 1978, teamed together to lead the news organization through a period of explosive growth in the latter third of the 1900s. Daily Herald File Photo

Jovial and gregarious, Stuart R. Paddock Jr. was a larger-than-life presence at the newspaper and was called Stu by everyone in the company. "This paper is my life. I wanted a daily suburban newspaper and I wanted to make it the best suburban newspaper, and I wanted nothing more out of life. It's joyful," Stuart Jr. said. "The paper always comes first."

Members of the family's fourth generation - Robert Y. Paddock Jr., who lives in Arlington Heights, and Stuart R Paddock III, who lives in Palatine - both remember hanging around the newspaper as youngsters, just as their parents had done before them.

Summer break meant turns in accounting, advertising, administration, circulation, human resources, job printing and production when Robert Jr. was a student at Arlington High School. As executive vice president and vice chairman of Paddock Publications, he also is known for having assumed his father's passion for volunteerism in the community.

Stuart III likewise started his newspaper career with turns in every department, from copy editor to press operator to his current job as senior vice president of digital technologies.

Robert Jr. admits to being "sad about the genealogical end to this four-generation family endeavor." But he said the change to employee ownership will "bode well for the newspaper."

Citing the newspaper motto, "To fear God, tell the truth and make money" coined by his great-grandfather Hosea, Robert Jr. translates the message to mean: "To try as a company and as owners to live a moral, compassionate life. To do good journalism based on the belief that truth is a service to our communities. And to find the financial means to do so."

"I think Hosea's words will continue to live long after him," he said. "We Paddocks have believed in them."

Selling the business to strangers or a corporation wouldn't have meshed with the family's vision.

"That would destroy 120 years of our legacy. I would have felt like I failed everyone," Stuart III said, adding that respecting the previous generations' hard work and desires was key to embracing the ESOP. "To us, it was not about the money. It's about the community and the lives we inspire. I never want to see a community without news."

Speaking at the company's annual Awards of Excellence program 10 days ago in the atrium of the company headquarters, the typically composed Robert Y. Paddock Jr. had to pause when he momentarily was overcome by emotion.

"I get teary-eyed, because when you are part of a multi-generation organization," he told the staff, "you really get committed to it."

With none of the fifth generation of Paddocks wanting a career in the family business, the fourth-generation Paddocks say they did the next best thing by selling it to the employees.

"It was the only option that would preserve the culture we have here," said Stuart III, who added he is buoyed by memories of his father guiding the newspaper through recessions and changing markets.

"I would hope our family legacy would be defined by our integrity, warmth and passion," Stuart III said. "With an energy to succeed, we move forward without fear."

Robert Jr. said the ESOP option mitigated the "disappointment" of selling the family business.

Throughout the history of the company, the Paddocks frequently spent as much time with their employees as they did with their families, often blending them into one group.

The employees "feel this is as much their home and family as Bob and I do," Stuart R. Paddock III said. "The staff will be the fifth generation of the family."

A decade later, Stu lives in what we do

Paddock family to sell stake in Daily Herald to newspaper’s employees

Paddock Publications makes it official: it’s employee owned

The Daily Herald’s 120 years of Paddock leadership

Doing right by you As the paper begins a generation of employee ownership, we pledge our continued resolve

The Paddock heritage A few kind words for a dozen decades of fearing God, telling the truth and making money

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