Davenport-based newspaper publisher Lee Enterprises reports it is nearing a major milestone as its growing digital revenue earnings are close to exceeding its falling print revenues.
That’s one of the highlights of the company’s preliminary first quarter fiscal 2024 results released today, Feb. 1. Those results are for the period that ended Dec. 24, 2023.
Lee Enterprises owns 77 daily newspapers in the U.S., including the Quad-City Times, The Dispatch-Argus and the Muscatine Journal.
“Our Three Pillar Digital Growth Strategy is driving audience growth, improving consumer engagement, and increasing digital subscribers. We now have 735,000 subscribers to our digital-only products and digital-only subscription revenue grew 60%,” Kevin Mowbray, Lee’s president and chief executive officer, said in the earnings release.
Mr. Mowbray added: “Because of our impressive digital subscription revenue growth combined with solid gains at Amplified Digital, digital revenue reached 46% of total operating revenue in the quarter. We expect digital revenue will exceed print in the back half of the year. This is an important milestone in our digital transformation as it results in the majority of our revenue coming from sustainable and growing sources.”
Some of the highlights of the first quarter report include:
- Total operating revenue was $156 million.
- Total digital revenue was $71 million, an 11% increase over the prior year and represented 46% of Lee’ total operating revenue.
- Digital-only subscription revenue increased 60% in the first quarter compared to the same quarter last year due to a 30% increase in digital-only subscribers and a 20% increase in average rates. Digital-only subscribers totaled 735,000 at the end of the quarter.
- Digital advertising and marketing services revenue represented 66% of the company’s total advertising revenue and totaled $46 million.
- Digital services revenue, which is predominantly BLOX Digital, totaled $5 million in the quarter.
- Operating expenses totaled $149 million, an 18% decline over the prior year.
“Our first quarter results demonstrate our confidence in Lee’s digital transformation. We are on a clear path to becoming sustainable solely from the revenue and cash flow from our digital products. We expect strong digital revenue combined with cost management execution to keep us on track to achieve our overall Adjusted EBITDA guidance for the full year,” added Mr. Mowbray.
But in addition to higher digital revenues, the first quarter report also pointed out the company’s falling print revenues. Print advertising revenues decreased by almost 42% (going from about $41.8 million to $24.4 million) from Dec. 25, 2022, to Dec. 24, 2023, and print subscription revenues fell 23% over the same period from $67.3 million a year ago to $51.8 million. Also, although digital ad revenue was up 2.7% during the period, total ad revenues were down almost 21%.
Total print revenues dropped almost 30% – from about $120 million in December of 2022 to $87.4 million in December of 2023.
Lee stock was trading at $10.50 a share Thursday morning. That is up 30% in the past month, down 26% in the past six months and down 12% in the past year.
