Days after a report that Lee Enterprises had laid off dozens of employees, the company issued its second-quarter financial results Thursday, highlighting growth in digital revenue and digital-only subscriptions.
In the quarter ending on March 27, Lee grew its digital-only subscriptions to 492,000 across its 77 markets, up from 450,000 at the end of 2021. The company had set a goal of 900,000 subscribers by 2026 and noted that it was six months ahead of its goal for the year.
Lee is also ahead in its goal for digital subscription revenue in 2022, which increased 45% to $10 million in the second quarter. Total digital revenue was up 33% compared to the same period last year, and digital now makes up 31% of total revenue.
“We are incredibly proud of our second-quarter results because our digital investments are paying off and driving recurring sustainable digital revenue growth,” said CEO Kevin Mowbray.
Print revenue, however, has declined, and Lee reported a $6.7 million net loss in the second quarter.
During its quarterly call, Lee announced it had taken measures to manage its costs. Vice president and chief financial officer Tim Millage explained that Lee had recently completed a 14-week “deep dive” into the print organization.
“This process evaluated our external spending as well as human capital and was done to better align our cost structure with our long-term strategy,” Millage said. “As a result of the actions identified, we expect a $45 million reduction in cash costs on an annualized basis.”
Those reductions likely include dozens of layoffs. Axios reported Tuesday that Lee would cut 400 roles across at least 19 of its local newspapers this year. A Lee spokesperson told Axios that job reductions were needed to “better align staffing with our long-term strategy” as the company prioritizes digital over print.
Unions at 12 of Lee’s 75 daily papers have been tracking layoffs in the unionized newsrooms, which include The Buffalo News and The St. Louis Post-Dispatch. They say that they have counted 61 lost positions across 10 newsrooms since Jan. 1. Many of those are layoffs, said Omaha World-Herald Guild president Todd Cooper, but some are buyouts and resignations. He said the majority of those lost positions are nonunion roles, including positions in management, advertising, circulation, printing and human resources.
The unions are also trying to track layoffs at Lee’s nonunion newsrooms, but that process has been more difficult, Cooper said. Reporting from Axios and local outlets have revealed layoffs at The Eagle in Bryan, Texas; The Bismarck (North Dakota) Tribune; The Bristol (Virginia) Herald Courier; The Free Lance-Star in Fredericksburg, Virginia; The Greensboro (North Carolina) News and Record and the Winston-Salem Journal.
Cooper compared Lee to Alden Global Capital, the hedge fund that owns roughly 200 newspapers through its MediaNews Group and is notorious for laying off its journalists to cut costs. Alden tried unsuccessfully to take over Lee last year, a move that prompted outrage among Lee shareholders and journalists.
“Now, it’s like Lee is acting like Alden, and it’s weird because the shareholders rejected that, and yet they’re using the same playbook. It’s just cut, cut, cut, cut, cut,” Cooper said. “It was a shame. They had a chance to capitalize on the community, the groundswell (of support) that they got.”
He also pointed out that Lee’s shareholders have questioned why Lee does not invest more money in its journalists. Last month, two shareholders told The Associated Press that Lee could have better spent its money on its journalists instead of seeking advice from bankers and lawyers for its fight with Alden.
As of midday Thursday, Lee shares were trading at $23, continuing a downward trend since January, when shares hit $43 apiece. Alden had bid $24 a share in November.
