Newspaper publisher Lee Enterprises reported strong digital growth in the third quarter, according to its preliminary third quarter fiscal 2023 report released today, Aug. 3.
Some of the highlights of that report include:
- Total digital revenue was $70 million, up 15% year over year, representing 41% of revenue.
- Digital-only subscribers total 606,000, up 21% year over year with revenue up 43% year over year.
- Amplified Digital revenue totaled $24 million in the fiscal quarter, up 15% year over year.
The Davenport-based Lee Enterprises owns 77 daily newspapers in the U.S., including the Quad-City Times, The Dispatch-Argus and the Muscatine Journal.
“Our third quarter digital subscription results continue to lead the industry by a significant margin, continuing the streak for the last 14 quarters. This long-standing out-performance gives us even more confidence in achieving our long-term goal of $100 million of digital-only subscription revenue,” said Kevin Mowbray, Lee’s President and chief executive officer, in the company’s earnings release.
“Subscribers to our digital products totaled 606,000 in June, up 21% compared to last year and digital-only subscription revenue accelerated to 43% growth,” Mr. Mowbray added.
But the third quarter report also shows continued falling revenue in print advertising and subscriptions and overall print revenues.
In addition, Lee still is in the midst of cutting the number of days it prints many of its newspapers to three days as well as switching from home delivery by newspaper carriers to the U.S. Postal Service in many of its markets across the country.
One report states Lee has or will trim all of its daily papers down to three print days a week, with the exception of its 20 biggest publications. Lee’s three local daily publications have not announced any plans publicly to reduce the number of days they publish.
Lee officials on Thursday, though, stated they are encouraged by the growth in the digital side of the business.
“Amplified Digital revenue totaled $24 million in the quarter, a 15% increase over the prior year. Total Digital Revenue increased 15% in the third quarter, and represented 41% of our total operating revenue,” Mr. Mowbray added. “The rapid pace of digital growth is tied to strong execution of our Three Pillar Digital Growth Strategy.”
Some of Lee’s other third quarter highlights include:
- Total operating revenue was $171 million.
- Digital advertising and marketing services revenue represented 63% of Lee’s total advertising revenue and totaled $50 million, an 8% increase over the prior year. Digital marketing services revenue at Amplified Digital fueled the growth, with quarterly revenue of $24 million, a 15% increase compared to the prior year.
- Digital services revenue, which is predominantly BLOX Digital, totaled $5 million in the quarter. On a standalone basis, revenue at BLOX Digital totaled $9 million, a 12% increase over the prior year.
- Total advertising and marketing services revenue was impacted by the elimination of certain advertising products that did not meet the company’s profitability standards. These decisions had a $5 million adverse impact on advertising revenue but had a favorable impact on Adjusted EBITDA. Excluding these product eliminations, advertising revenue would have been down 8% compared to the prior year.
- Operating expenses totaled $160 million and cash costs totaled $150 million, a 15% and 14% decrease compared to the prior year, respectively. Third quarter results include a $1 million unfavorable variance related to its medical plan.
- Net income totaled $2 million and Adjusted EBITDA totaled $23 million, a 1% increase compared to the prior year and continuing significant improvement from the first half year-over-year trends.
Lee Enterprises has $460 million of debt outstanding under its credit agreement with BH Finance. The financing has terms including a 25-year maturity, a fixed annual interest rate of 9%, no fixed principal payments, and no financial performance covenants.
