Davenport-based newspaper publisher Lee Enterprises on Thursday, March 2, released its preliminary first quarter fiscal results which showed its digital revenue and subscriptions are growing while print subscriptions, advertising and revenues continue to decline.
“Lee delivered strong first quarter digital growth with consistent execution of our Three Pillar Digital Growth Strategy,” Lee President and CEO Kevin Mowbray said in the earnings release. “We are pleased with our impressive digital subscription growth and digital subscribers now total 564,000, a 25% increase over the prior year. We are also driving higher rates as revenue from digital subscriptions was up 56% in the quarter. Digital advertising revenue increased 12%, with Amplified Digital revenue growth of 45%,” he added.
Mr. Mowbray continued: “We are facing broader economic headwinds, and as a result, we took swift action and implemented significant reductions mainly focused on costs that support our print business.”
Just weeks ago, Lee officials reportedly told many of its employees to take unpaid furloughs. The online news website Axios reported on Tuesday, Feb. 14, that Lee officials recently sent an email to many of its employees stating that a mandatory furlough time must be scheduled by the end of February.
“We continue to invest in our digital business and key metrics demonstrate we are well on our way to driving our digital transformation,” Mr. Mowbray said.
Lee expects strong fiscal year digital revenue growth combined with the changes “we’ve made to the organization to keep us on track to achieve our overall … guidance for the fiscal year,” he said in the release.
Some of the Lee’s key first quarter highlights include:
- Total operating revenue was $185 million, which compared to $202 million for the same period a year ago.
- Total digital revenue was $65 million, a 17% increase over the prior year, and represented 35% of its total operating revenue.
- Digital-only subscription revenue increased 56% in the first quarter compared to the same quarter last year due to a 25% increase in digital-only subscribers and increases in average rates.
- Digital advertising and marketing services revenue represented 53% of total advertising revenue and totaled $48 million, a 12% increase over the prior year. Digital marketing services revenue at Amplified Digital fueled the growth, with quarterly revenue of $21 million – a 45% increase compared to the prior year.
- TownNews rebranded as BLOX Digital, reflecting rapid growth of the leading provider of digital solutions for media organizations and expansion into attractive new markets.
- Digital services revenue, which is predominantly BLOX Digital, totaled $5 million in the quarter. On a standalone basis, revenue at BLOX Digital totaled $8 million, an 18% increase over the prior year.
- Operating expenses totaled $176 million and cash costs were down 5%.
- Net income totaled $2 million and Adjusted EBITDA totaled $18 million.
- Print revenue was down 2% over the prior year. Also print subscription revenues were down 15%, and print advertising revenue was down 25%.
Lee Enterprises owns 77 daily newspapers in the U.S., including the Quad-City Times, The Dispatch-Argus and the Muscatine Journal.
