Financial Performance Overview

Lee Enterprises, a digital-first subscription business, has reported its financial results for the three and six months ended March 30, 2025. The company provides local news, information, advertising and marketing services to 72 mid-sized communities across 25 states.

In the three-month period, Lee Enterprises generated $137.4 million in total operating revenue, down 6.3% from the same quarter a year earlier. The company reported a net loss of $12.0 million, compared to a net loss of $11.6 million in the prior year period.

For the six-month period, total operating revenue was $281.9 million, down 6.7% year-over-year. The company recorded a net loss of $28.2 million, compared to a net loss of $10.4 million in the prior year period.

Revenue and Profit Trends

Lee Enterprises’ revenue is generated primarily through three main sources: advertising and marketing services, subscriptions, and digital services.

Advertising and marketing services revenue, which includes both print and digital advertising, totaled $60.5 million in the three-month period, down 5.7% from the prior year. Print advertising revenue declined 11.8% due to ongoing secular declines and temporary impacts from a cyber incident that limited capacity. Digital advertising and marketing services revenue decreased 3.2%.

Subscription revenue, which includes both print and digital subscriptions, was $64.9 million in the three-month period, down 6.3% year-over-year. This decline was driven by lower full-access print subscription volumes, partially offset by growth in digital-only subscribers and price increases on digital subscriptions. Digital-only subscription revenue grew 17.4% in the quarter.

Other revenue, primarily from commercial printing and digital services, decreased 8.7% to $12.0 million in the three-month period.

Overall, the company’s total digital revenue, including digital advertising, digital subscriptions, and digital services, grew 2.5% year-over-year and represented 52.8% of total operating revenue in the quarter.

On the expense side, total operating expenses decreased 6.1% in the three-month period, driven by reductions in newsprint and ink costs, depreciation and amortization, and asset impairment charges. However, restructuring costs and other expenses increased 57.4% due to costs associated with the cyber incident, facility closures, and ongoing business transformation efforts.

The combination of lower revenues and higher restructuring costs resulted in an operating loss of $4.5 million in the three-month period, compared to an operating loss of $4.6 million a year earlier. After accounting for non-operating expenses and income tax benefits, the company reported a net loss of $12.0 million, compared to a net loss of $11.6 million in the prior year period.

For the six-month period, the company’s financial performance followed similar trends, with revenue declining 6.7% and a net loss of $28.2 million, compared to a net loss of $10.4 million in the prior year period.

Strengths and Weaknesses

One of Lee Enterprises’ key strengths is its digital transformation strategy, which has resulted in strong growth in digital subscription revenue and a growing digital audience. The company’s digital-only subscription base now totals 728,000 subscribers, up significantly from prior periods. Digital revenue, including advertising, subscriptions, and services, represented over 50% of total revenue in the quarter, demonstrating the company’s progress in shifting to a digital-first business model.

However, the company continues to face challenges in its legacy print business, with declines in print advertising and print subscription revenue. While the company has taken steps to reduce costs in these areas, the pace of the print revenue decline remains a weakness.

Another strength is the company’s diversified revenue streams, with advertising, subscriptions, and digital services all contributing meaningful portions of total revenue. This diversification helps to mitigate the impact of declines in any single revenue source.

The company’s Amplified Digital Agency and BLOX Digital (content management) businesses also represent strengths, providing additional digital revenue streams and growth opportunities beyond the core publishing business.

A key weakness is the company’s ongoing liquidity challenges, driven by declining cash flows from operations and the impact of the recent cyber incident. The company has implemented cost-cutting measures and is working to improve working capital, but liquidity remains a concern and could constrain the company’s ability to invest in future growth initiatives.

Outlook and Future Prospects

Looking ahead, Lee Enterprises’ strategy is focused on three key pillars: growing digital audiences, expanding the digital subscription base, and diversifying and expanding digital advertising and marketing services offerings.

The company’s investments in talent and technology to improve user experience, content, and marketing are expected to drive continued growth in digital audiences and subscriptions. The goal is to transform Lee Enterprises into a growing and sustainable local media organization, with digital as the primary driver of future success.

Amplified Digital Agency and BLOX Digital also represent significant opportunities for the company to expand its digital services and generate additional revenue streams. As the shift to digital continues, these businesses could become increasingly important contributors to the company’s overall performance.

However, the company will need to carefully manage the ongoing decline in its print business, balancing cost reductions with investments in digital initiatives. Maintaining sufficient liquidity to fund the digital transformation will also be a key priority.

Overall, Lee Enterprises faces both challenges and opportunities as it navigates the evolving media landscape. The company’s digital-first strategy appears to be the right approach, but execution will be critical to achieving sustainable growth and profitability in the years ahead.