• by Tony Silber , February 4, 2022

Lee Enterprises, the newspaper chain that’s under siege from a hostile takeover bid by the “vulture capitalist” hedge fund Alden Global Capital, on Thursday reported operating revenue of $202 million for its first fiscal quarter, the period that ended on Dec. 26, 2021.

Digital revenue, aggregated across advertising, subscriptions, and a category called “other,” totaled $55 million, a 17% increase compared to the same period last year, the company reported.

But except for the digital growth, the company’s overall revenue performance was mostly in decline. Overall revenue fell 4.5%, from $211 million during the same period a year ago. Print advertising revenue decreased by 16%, from $656.6 million to $55.9 million. Print subscription revenue declined by 6.4%, from $85.0 million to $79.6 million. And net income fell by nearly 20%, from $16.4 million to $13.1 million.

Overall, though, Lee was satisfied with the results, pegged mainly to the digital growth. “We delivered another strong quarter of progress on our Three Pillar Digital Growth Strategy, reinforcing our position as the fastest-growing digital-subscription platform in local media,” CEO Kevin Mowbray said in a press release. The number of digital-only subscribers increased 57% and now total 450,000, about halfway to the company's target of 900,000 digital subscriptions.

In addition, Mowbray said, the company posted 69% revenue growth from its in-house marketing-services agency and 26% growth in digital-only subscription revenue. Excluding political advertising, which generated high revenue during the prior-year quarter, digital revenue increased by 25% in the quarter. “We continue to strengthen our revenue profile through our success in growing subscriptions, which generate steady, recurring revenues,” he said.

Subscription-based revenue totaled 53% of Lee’s total operating revenue in the quarter.

Lee is the fourth-largest U.S. newspaper chain, with 77 daily papers and more than 300 weeklies and specialty brands. Its markets include St. Louis; Buffalo, New York; Omaha, Nebraska; Richmond, Virginia; Lincoln, Nebraska; Madison, Wisconsin; Tucson, Arizona; and Davenport, Iowa, where it’s based.

Alden, which made an unsolicited bid to acquire Lee in November, and is currently in litigation to place nominees on the Lee board of directors, called the results disappointing. “It continues to demonstrate the need for a new strategy and new leadership that prioritizes readers and local journalism,” Alden said.

Lee’s stock, which had been performing well above the Alden offer of $24 per share (or $141 million), declined by double digits after the earnings release from Wednesday’s close of $39.89. It was trading around $32.50 at midday on Friday — still well above the Alden offer.