Lee Enterprises outlines digital initiatives, may launch paywalls
With over $800 million in debt, newspaper chain has done little in the area of digital media. That may be changing.
It is hard to describe just how outdated the Lee Enterprises website is. For a newspaper like the St. Louis Post-Dispatch to be published by a company that does not look to have updated its own corporate website since the late nineties, must be a source of extreme embarrassment. (The site really needs to be seen to be believed.)
Today, however, Lee Enterprises issued a press release unveiling its digital strategies, which continuing to say it will concentrate on cost cutting.
The clock is ticking for Lee Enterprises. According to its latest earnings report, the company has over $800 million in long-term debt, almost a billion dollars in liabilities. The company is constantly refinancing its debt, extending the time needed to repay it.
Meanwhile, revenue and income continues to fall. In its latest quarterly report, the newspaper chain said ad revenue was $122.39 million, down from $128.9 the previous year. Paid subscription revenue also fell to $45.55 million from $46.06 in Q4 of 2012. Operating income inched higher thanks to decreasing costs, but net income fell 8.2 percent to just over $12 million.
With $833 million in debt, it is not surprising to see that debt and liquidity issues dominates the company’s latest earnings report. Few newspaper chains likely have executives more obsessed with loans and payments.
This may explain the newspaper company’s slow adjustment to digital media. The chain’s individual newspaper websites are not nearly as embarrassingly bad as the corporate site, though it would be hard to imagine that being possible.
As far as apps go, Lee Enterprises has often relied on third party vendors to produce news reader apps that look terribly outdated. The chain has no apps inside the Newsstand.
But the chain now says it will taking digital a little more seriously. In its press release it outlined its initiatives:
- Expanded local news and information tailored for each digital platform – desktop and tablet web, mobile web, mobile apps, tablet apps, e-editions and niche apps.
- Expanded mobile advertising capabilities, including geo-targeting, and expanded digital marketing services aimed at small and medium-size businesses.
- Introduction of full-access subscriptions in 28 markets by September, providing subscribers with a single sign-on to all digital platforms in addition to home delivery of the printed newspaper.
- Ongoing business transformation initiatives, including the expansion of regional design centers, now serving 25 newspapers.
The problem, of course, is that some of these efforts will require investments. Most likely, as Lee has done in the past, the company will rely on third party vendors eager to pick up new, well-known clients. They will likely also need help launching those paywalls, hinted at in its press release.
The problems at Lee Enterprises are a direct result of its expansion, picking up Howard Publications in 2002 at a cost of $694 million, then Pulitzer in 2005 at a cost of $1.5 billion.
In 2011 the company filed for Chapter 11 bankruptcy protection, and since then Berkshire Hathaway has been slowly growing its ownership of the company. It may input from Berkshire that is finally pushing Lee towards digital media initiatives.
Meanwhile, Lee’s stock, which traded at well over $40 a share in 2004, is at $4.62 a share today (which is actually an improvement with where it was in 2009 when it traded for less than a dollar).