Reference no: EM133212082

The Binghams and The Louisville Courier-Journal Companies

On January 9, 1986, Barry Bingham, Sr., chair of the Courier-Journal and Louisville Times, abruptly decided that the Bingham family, which had owned the newspapers for nearly 70 years, would sell the business. Barry Sr., about to turn 80, hoped that his decision would bring a measure of family peace. Instead, it brought further blaming, family discord, chaos, and agony.

In 1918, Judge Bingham, Barry Sr.'s father, had bought a majority interest in the Courier-Journal and the Louisville Times, Kentucky's preeminent newspapers, for $1 million. When Judge Bingham died in 1937, Barry Sr. was 32 and actively involved in the family business, which by then included a radio station and a printing company in addition to the newspapers.

The business grew as the Louisville postwar economy prospered. Barry Sr. married Mary Caperton and had five children: Worth, Barry Jr., Sallie, Eleanor, and Jonathan. Jonathan, the youngest, died at the age of 22, when he was electrocuted stringing wires for an outdoor party. Just two years later, Worth, the eldest, who had seemed destined by his charm, smarts, and primogeniture to be the successor, died in a bizarre car accident: A surfboard sticking out of his car's window hit a parked car; as it broke, it ricocheted and decapitated Worth.

Barry Jr., a year younger than Worth, had always been more interested in the radio business than in the print media, but he agreed to serve as president of the Louisville Courier-Journal Companies in the early 1970s. Sallie, who was five years younger than Barry, had set out on a career as a fiction writer in New York City. She had some success, getting some of her early works published. She returned to Louisville in 1977, after suffering several major setbacks in her writing career. Eleanor, eight years younger than Sallie, had worked professionally on a series of video documentaries, some financed by the dividends of her Courier-Journal stock. But her work never landed her the network job she had hoped for, so in 1978 she also returned home from California to work at WHAS, the company radio station. Barry Jr. and his sisters had never been close. In fact, they had barely seen each other in more than 20 years because the difference in their ages and early careers had taken them in separate directions.

Soon after Sallie and Eleanor returned, Barry Sr. named them to the company's board of directors. They would have both voice and vote in matters of the enterprise. Barry Jr.'s perspective on what happened then reads like a classic tale of sibling rivalry and backroom politics. According to Barry, his sisters knew little about the business. Barry, on the other hand, had been working in the family business for almost 20 years and running it for a decade. But the fact that they did not understand the business did not keep them from second-guessing his every move through memos, through letters to the editor and op-ed pieces published in the company newspapers, and through persistent questioning of Barry Jr. during board meetings. Even his mother, Mary, on more than one occasion expressed on the editorial page, without warning, opinions contrary to Barry Jr.'s. In a rather familiar pattern for the Bingham family, Barry Jr. would learn about these opinions by reading the paper or stopping by the employee bulletin board, where sometimes surprising memos from other members of the family would be posted.

To the outside world the family appeared rife with conflict. Seemingly, it was capable of communicating about what ailed it and its businesses only in print, never face to face. In the early 1980s, as broadcast news and other channels of information gained favor, the demand for newspapers slumped. Evening newspapers in particular-the Bingham's other newspaper, the Louisville Times was an evening daily-began to close their doors. Both the family and the business had problems to address and no way to address them.

The board became paralyzed by the sibling dynamics. Finally, Barry Jr. gave Barry Sr. an ultimatum: Either Sallie and Eleanor had to leave the board or he would resign as president of the enterprises. Eleanor resigned. Sallie, however, would not, and when she was not reelected by her own family, the war began. Sallie fired the first shot by announcing to the family that she wanted to sell all of her interests in the companies. Lehman Brothers valued Sallie's shares at between $22 million and $26.3 million, but her own appraiser valued her holdings at $80 million. Despite the huge gap, negotiations began. Sallie ultimately lowered her asking price to $32 million, but Barry Jr. would never agree to anything higher than $26.3 million, and the negotiations stalled. In the meantime, Eleanor decided that she, too, wanted to sell or swap her newspaper shares for WHAS (the radio station) shares. In a final attempt to pressure his children into a compromise, Barry Sr. issued an edict, nicknamed the 13th commandment, that if Barry Jr. and Eleanor could not come to an agreement, the companies would be sold.

Soon thereafter, Barry Sr. issued a memo announcing that the company would be sold. Barry Jr. saw the memo posted at the employees' bulletin board. At the age of 80, Barry Sr. still controlled 95 percent of the stock through a voting trust, so the decision to sell was clearly his to make.

Unable to communicate and resolve their differences, family members cashed out. All emerged cash-rich, but those who cared about the legacy were heartbroken. The newspapers had won eight Pulitzer prizes and were bastions of quality journalism in the South. Barry Jr. called a companywide meeting after the announcement to express his disagreement with his father's decision to sell the company and to tell employees how much their collective past meant to him. Employees wept as Barry Jr. spoke; they knew this speech marked the end of an era.

The Bingham papers were taken over by the Gannett Company, which proceeded to close down the evening newspaper, reduce personnel by a third, and cut news staff by 10 percent. Advertising and circulation for the morning paper increased, as did profits. The Louisville Courier-Journal had an impressive financial turnaround. But editorial standards changed, and Pulitzer prizes proved elusive.

Question 1: If you were Barry Bingham Sr., what would you have done differently over the prior 5-7 years that could have changed the outcomes of this case?

Question 2: If you were Mary Bingham, what would you have done differently over the prior 5-7 years that could have changed the outcomes of this case?

Question 3: If you were a next-generation member of the Bingham family, what would you have done differently over the prior 5-7 years that could have changed the outcomes of this case?