Digital revenues and subscriptions are growing and a “digital transformation” is continuing, according to Lee Enterprises’ latest earnings report.
Those are some of the key messages from the Davenport-based newspaper publisher as it reported a “strong” fourth quarter and fiscal year in its preliminary quarterly report, released Thursday, Dec. 8. The report is for the quarter, ended Sept. 25.
“Lee delivered strong fourth quarter and fiscal year 2022 results accelerating our execution of the Three Pillar Digital Growth Strategy,” Kevin Mowbray, Lee’s president and CEO, said in a news release Thursday. “We exceeded all our revenue and digital subscription guidance.”
Some of the highlights of the report include: total digital revenue was $65 million, a 31% increase over the prior year; digital-only subscription revenue increased 46%; digital-only subscribers increased 32% and now total 532,000.
“Lee remains the fastest growing digital subscription platform in media with 32% digital subscriber growth, and Amplified Digital remains the fastest growing digital marketing agency solution with 82% revenue growth in the quarter. I am really encouraged at the pace of Lee’s digital transformation as our results and execution place us well on our way to achieving our long-term goals,” Mr. Mowbray added.
However, not all the news was positive in the quarterly report. Total operating revenue was $194 million, which is flat versus the prior year. Also, the print side of the company continues to face challenges. Print advertising is down about 24% in the three-month period, and down almost 19% in the 12-month period. Print subscriptions are down almost 5% in the 12-month period, also ending Sept. 25. Newsprint and ink expenses are up almost 4% in the quarter.
Lee’s stock price was up to $17.98 late Thursday morning on the New York Stock Exchange.
Here are some of the key fourth quarter highlights for Lee:
- Total operating revenue was $194 million, flat versus the prior year.
- Total digital revenue was $65 million, a 31% increase over the prior year, and represented one-third of our total operating revenue.
- Digital-only subscription revenue increased 46% in the fourth quarter compared to the same quarter last year and totaled $40 million in the fiscal year. Digital-only subscribers increased 32% and now total 532,000, exceeding Lee’s updated guidance of 515,000.
- Digital advertising and marketing services revenue represented 55% of our total advertising revenue and totaled $49 million, a 33% increase over the prior year. Digital marketing services revenue at Amplified Digital fueled the growth, with quarterly revenue of $22 million, an 82% increase compared to the prior year.
- The company recognized $20 million in non-cash impairments of intangible assets and leases.
- Net loss totaled $6 million and Adjusted EBITDA totaled $30 million.
Here are some of the key fiscal year highlights for Lee:
- Total operating revenue was $781 million, down 2% versus the prior year.
- Total digital revenue was $240 million, a 27% increase over the prior year, and represented 31% of its total operating revenue.
- Digital services revenue, which is predominantly TownNews, totaled $18 million in the year. On a standalone basis, revenue at TownNews totaled $31 million, a 14% increase over the prior year.
- Operating expenses totaled $762 million and cash costs were up 1%. Rapidly rising prices, incremental investments in digital talent and technology tied to our digital growth strategy, and an increase in cost of goods sold attributed to revenue growth at Amplified Digital were partially offset by reductions in costs tied to our legacy print revenue streams.
Lee Enterprises owns 77 daily newspapers in the U.S., including the Quad-City Times, The Dispatch-Argus and the Muscatine Journal.