LEE ENTERPRISES, Inc

Lee Enterprises, Inc., a leading digital-first subscription business, has released its 2024 Annual Report. The company is dedicated to delivering high-quality, trusted, and intensely local news, information, advertising, and marketing services. With a mission to enrich communities, Lee Enterprise...

Lee Enterprises, Inc. 2024 Annual Report Review

Introduction

Lee Enterprises, Inc., a leading digital-first subscription business, has released its 2024 Annual Report. The company is dedicated to delivering high-quality, trusted, and intensely local news, information, advertising, and marketing services. With a mission to enrich communities, Lee Enterprises serves 73 mid-sized communities across 26 states, engaging over 771,000 digital subscribers through its rapidly growing digital platform. This review will delve into the key aspects of the company's 2024 Annual Report, focusing on its business operations, financial performance, strategic initiatives, and risk factors.

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Business Overview

Lee Enterprises operates in the media industry, primarily focusing on digital and print news and advertising services. The company offers a diverse portfolio of digital subscription platforms, daily, weekly, and monthly newspapers, and niche products. These products are accessible in both digital and print formats, with real-time updates available through websites and mobile apps. Lee Enterprises' primary revenue streams include advertising and marketing services, subscriptions to digital and print products, and digital services through its majority-owned subsidiary, BLOX Digital.

Advertising and Marketing Services

Lee Enterprises provides comprehensive advertising and marketing services tailored to local, regional, and national businesses. The company's advertising revenue streams are categorized into digital advertising, digital marketing services, print advertising, and preprinted inserts. Digital advertising and marketing services remain a cornerstone of Lee Enterprises' strategic priorities for 2025.

Subscription Business

The company offers a range of subscription options, including digital-only subscriptions, full-access subscriptions, and single-copy sales. Digital-only subscriptions are a rapidly growing segment, and expanding this subscriber base remains a top strategic priority for 2025.

Digital Services

In 2024, almost all of Lee Enterprises' digital services revenue came from BLOX Digital. BLOX Digital is one of the largest web-hosting and content management SaaS providers in North America, offering modern integrated digital publishing and content management solutions.

Financial Performance

Revenue

In 2024, Lee Enterprises reported total operating revenue of $611.4 million, a decrease of 11.5% compared to 2023. Advertising and marketing services revenue totaled $275.7 million, down 13.6% from the previous year. Subscription revenue was $281.9 million, a 10.0% decline from 2023. Digital services revenue increased by 5.9% to $20.5 million.

Expenses

Total operating expenses were $611.4 million, a 7.4% decrease compared to 2023. Compensation expenses decreased by 12.1%, while newsprint and ink costs decreased by 33.7%. Restructuring costs and other expenses increased by 51.9% to $19.3 million.

Net Income

Lee Enterprises reported a net loss of $23.6 million in 2024, compared to a net loss of $2.7 million in 2023. The loss per share was $4.35, compared to a loss per share of $0.90 in 2023.

Strategic Initiatives

Lee Enterprises' strategy emphasizes technology leadership through partnerships, products, and operational excellence. The company's strategic initiatives focus on expanding its audience with compelling local content, accelerating digital subscription growth, and diversifying and expanding offerings for local advertisers.

Expanding Audience

Lee Enterprises is committed to maintaining its leadership position as a trusted provider of local news and information by delivering best-in-class digital experiences. The company plans to make targeted investments to improve the user experience of its digital products, particularly on mobile platforms.

Accelerating Digital Subscription Growth

As the fastest-growing local media digital subscription business, Lee Enterprises continues to achieve significant growth in digital-only subscribers. The company aims to achieve substantial growth in digital-only subscribers, targeting over 1.2 million by 2028.

Diversifying Offerings

Lee Enterprises provides a robust platform for local advertisers to achieve scale both within and beyond its markets. The company's advertising and marketing solutions include Amplified Digital Solutions, an omni-channel sales approach, and advanced metrics and collaboration with Google and other ad tech providers.

Risk Factors

Lee Enterprises faces several risk factors that could materially and adversely affect its business, financial condition, and results of operations. These risks include declining advertising revenues due to weakness in the retail sector, competition from digital media, cybersecurity threats, and the impact of economic conditions on consumer spending.

Cybersecurity

The company is exposed to cybersecurity risks, including potential unauthorized access to data and significant data breaches. Lee Enterprises has established processes to assess, identify, and manage material risks arising from cybersecurity threats.

Competition

Lee Enterprises competes with a large number of companies in the local media industry, including digital media businesses. The company's ability to compete effectively is crucial to maintaining its advertising and subscription revenues.

Conclusion

Lee Enterprises, Inc. is navigating a challenging media landscape with a focus on digital transformation and strategic growth initiatives. While the company faces significant risks, its commitment to expanding its digital presence and diversifying its offerings positions it well for future growth. Investors should consider the company's financial performance, strategic initiatives, and risk factors when evaluating its investment potential.

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