Lee reports ‘tremendous’ digital growth, print revenue falls

Davenport-based newspaper publisher Lee Enterprises is reporting “tremendous digital revenue growth” in its second quarter while print revenues continue to fall.

Lee officials reported the company’s second quarter fiscal 2022 results on Thursday, May 5.

The second quarter report shows Lee’s digital revenue was just over $58 million, a 33% increase from this time last year. The company’s print revenue was about $131 million, about an 11% decline from the same period last year.

“Our second quarter results demonstrate the investments in our Three Pillar Digital Growth strategy are paying off with tremendous digital revenue growth. Execution of our strategy has put Lee in position to achieve our digital revenue targets for the fiscal year; advancing Lee as a vibrant, digital-centric company with a strong base of recurring, sustainable, digital revenue,” Kevin Mowbray, Lee’s president and CEO, said in a news release. 

Mr. Mombray added that the quarterly report also shows the company has the “right strategy” for digital growth.

“These early returns on our digital investments give us confidence we have the right strategy, the right team and we are executing with velocity,” he said.

The second quarter report caps an often stormy few months for the media company.

Last November, the hedge fund Alden Global Capital made a bid to take control of Lee for $24 per share in cash. After Lee rejected the offer, Alden tried to replace some members of the Lee Enterprises Board of Directors by nominating new directors. 

Lee rejected those Alden candidates, and the hedge fund filed a lawsuit against Lee in an attempt to get its candidates placed on the ballot. The lawsuit failed.

On March 10, at Lee’s annual meeting, shareholders overwhelmingly voted to re-elect the company’s three director nominees – Chairman Mary Junck, Lead Independent Director Herb Moloney and Mr. Mowbray.

Also, Cannell Capital officials said in early April it wanted Lee Enterprises to speed up its transition to digital publishing. Cannell recently disclosed the purchase of nearly 20,000 more shares of Lee’s stock, giving it a 9.1% stake in the publishing company, according to several media reports, including the Washington Post.

Here are some of Lee’s quarterly report highlights:

  • Total operating revenue of $190 million.
  • Total digital revenue was $58.1 million, a 33.% increase compared to the same period last year. 
  • Digital-only subscription revenue increased 44.7% in the second quarter compared to the same quarter last year and totaled $32.9 million over the last twelve months. Digital-only subscribers increased 59.2% and now total 492,000.
  • Digital advertising and marketing services revenue increased 36% in the quarter and totaled $43.4 million. Digital marketing services revenue at Amplified Digital fueled the growth, with revenue up 108% in the quarter totaling $18.6 million in the quarter and $57.3 million over the last 12 months.
  • Digital services revenue, which is predominantly TownNews, totaled $4.7 million in the quarter. On a standalone basis, revenue at TownNews increased 12.5% in the second quarter totaling $7.5 million. 
  • Total print revenue, which includes print advertising, print subscription revenue and other print related revenue, totaled $131.9 million in the second quarter, an 11.3% decline compared to the same quarter a year ago due to continued secular declines of print revenue, particularly print advertising revenue.
  • Monthly average page views totaled 376 million and monthly average unique visitors totaled 44 million.
  • Operating expenses totaled $194.6 million and cash costs were up 3%. Increases in cash costs were attributed to increased investments in digital talent and technology, increased cost of goods sold attributed to revenue growth at Amplified Digital, an increase in restructuring costs and other costs, and cycling one-time cost benefits received in the prior year. Partially offsetting the increases were declines in cash costs that support print revenue streams.

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

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