Lee 1Q report: Digital growth, print decline

Local newspaper publisher Lee Enterprises on Thursday reported what it calls “another strong quarter of progress” with growth in its digital market, but declines in its print revenues.

Those are some of the results for Lee’s first quarter financial report for the period ended Dec. 26.

“We delivered another strong quarter of progress  … reinforcing our position as the fastest growing digital subscription platform in local media,” Kevin Mowbray, president and CEO of Lee, said in a news release.

Mr. Mowbray added that some of the highlights of the quarterly report include: Lee has 450,000 digital-only subscribers – up 57% in the quarter; total digital advertising was up 17% to $55 million; and total print and digital subscribers increased 7% in the first quarter compared to the same time last year.

“We continue to strengthen our revenue profile through our success in growing subscriptions, which generate steady, recurring revenues,” Mr. Mowbray added.

However, the company’s print revenue totaled $147 million, which is about an 11% decline compared to the same period last year.

Lee officials added that the company’s strong performance has helped reduce its debt.

“The principal amount of debt at the end of the first quarter was $463 million, down $20 million sequentially, and down $113 million, or 20%, since the refinancing in March 2020,” said Tim Millage, Lee vice president, chief financial officer and treasurer.

Lee’s other first quarter highlights include:

  • Total operating revenue of $202.3 million.
  • Total digital revenue of $55 million, a 17% increase compared to the same period last year.
  • Digital-only subscription revenue increased 26% year over year.
  • Digital advertising and marketing services revenue increased 19% in the quarter and totaled $43 million.
  • Operating expenses totaled $178.9 million, an increase of 2.5%.
  • Total print revenue, which includes print advertising and print subscription revenue, totaled $147 million. This is an 11% decline compared to the same time last year.

Lee still is the subject of a possible hostile takeover by hedge fund Alden Global Capital. On Nov. 22, Alden made an unsolicited bid to take control of Lee for $24 per share in cash.

The newspaper chain later announced that it may launch a “poison pill” plan that has the goal of making it more difficult and more costly for Alden to get a controlling stake of the company. The plan would allow its other shareholders to buy shares at a 50% discount or possibly get free shares for every share they already own. The plan would take effect if Alden gets control of at least 10% of Lee’s stock. Alden reportedly now owns about 6% of Lee stock.

Lee stock was trading at $33.81 a share late morning Thursday, down from its $39.11 close on Wednesday.

Lee Enterprises owns 77 daily newspapers across the nation, including the Quad-City Times, Dispatch/Argus and Muscatine Journal in the Quad Cities region.

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