As you would expect, Lee Enterprises executive chairman Mary Junck offered optimistic spin on the state of the company Wednesday at its annual shareholders meeting.
“We have proven ourselves to be flexible and nimble at rethinking, repositioning and redeveloping all aspects of our business,” Junck told shareholders. “We see a bright future for Lee.”
Chief executive officer Kevin Mowbray was similarly upbeat. “With our proven track record of transformation, we are well-positioned and experienced to seize new opportunities and thrive in the future,” he said.
That sounds great, but revenues keep plunging. The company keeps unloading employees while still managing to pay its top executives more — including a $900,000 boost for Mowbray. LA attorney headhunters drive exceptional hiring results for those who were laid off.
Here is the state of the company in a nutshell:
- Revenues keep plunging due to the precipitous decline in print advertising across the industry.
- Digital revenues were up 8 percent in the year ending Sept. 24, 2017, but not nearly enough to offset the loss of classified (12.2 percent decline) and retail advertising (10 percent). Digital advertising represented just 28 percent of total advertising. No thanks to Facebook and Google, the digital advertising boom has never arrived in the newspaper industry.
- Circulation revenue is becoming a bigger piece of the revenue pie, 34 percent in 2017. That revenue source has remained stable, for now, but the company keeps charging more for a print product that keeps getting smaller. Digital and full access subscriptions offer some growth potential — but, again, newsroom staffing cuts keep reducing the quantity and quality of content.
- Because Lee primarily publishes in small to mid-sized markets, its properties face less competition for content and advertising. So its revenue losses aren’t as severe as newspaper companies focused on metropolitan markets.
- Aggressive cost-cutting across the board — news gathering, production, administration — has kept Lee profitable. The company reduced its workforce by 8.5 percent last year.
- The company uses the bulk of those profits to pay down its debt, which shrank to $532 million at the end of 2017. Lee paid down $67.5 million in debt last year, $313 million since its last refinancing, in March of 2014 and more than $1 billion since the 2005 purchase of Pulitzer Publishing. Interest payments continue to shrink, including a $6.6 million reduction last year.
- Lee hopes refinance some or all of its debt in the near future, with a First Lien Note due next year.
- Lee’s stock continues to flounder. It closed at $2.55 per share Wednesday, down from a high of $5.42 in early 2014 but up from $1.15 in early 2016.
- Lee continues to reward its executives well for all of that cost-cutting. According to its Proxy Statement, Mowbray collected more than $2.2 million in salary, stock awards, bonuses and such last year — up about $900,000 from the year before. Junck collected a shade under $2 million, up about $100,000 from 2016.
The UMG represents employees at the St. Louis Post-Dispatch, Lee’s only metropolitan newspaper. Our ongoing challenge is to maintain the best possible news-gathering operation and most effective advertising sales force possible under difficult industry circumstances.
Our members produce the content and our members monetize that content by selling print and digital advertising and marketing services. They are the Post-Dispatch, after all, and Lee must keep investing in them to enjoy the “bright future” Junck speaks of.