At its annual stockholder meeting Wednesday, executives with Lee Enterprises Inc. offered an improved cost outlook as they outlined new digital news, sales and audience strategies, including the launch later this year of full-access subscriptions in more than half of its 50 newspaper markets.
Lee, the parent company of the Quad-City Times, hosted nearly 100 shareholders at its downtown Davenport headquarters, including company officials, employees and retirees, for the annual meeting.
“As we recently reported, Lee is off to a solid start in 2014,” Lee chairman and CEO Mary Junck told those in attendance. “We grew digital revenue and audiences at a double-digit pace, continued to reduce expenses, again posted strong cash flow, reduced our debt further and announced a commitment for a favorable refinancing of our second lien debt. Those reasons reinforce our upbeat outlook.”
Kevin Mowbray, vice president and chief operating officer, said digital continues "on a strong upward path."
"As media use continues to evolve, it is clear that our audiences are moving from one platform to another throughout the day, accessing us in print, on desktops and laptops, on smartphones and tablets ..."
Beginning in April, Lee will begin to introduce full-access subscriptions in several of its larger markets, expanding to 28 markets by September. Currently, Lee's newspapers have separate subscriptions for different products.
The Quad-City Times will be one of the markets to offer the new subscription model.
According to Junck, other newspaper companies, including McClatchy, Gannett and CNHI, have moved to the full-access subscription model. "As people move between our different products — print, mobile and tablet — it will be a much easier process," she said.
Other strategies on the horizon, the company said, include:
• 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.
• Ongoing business transformation initiatives, including the expansion of regional design centers, now serving 25 newspapers.
In providing improved cost guidance, Carl Schmidt, Lee's vice president, chief financial officer and treasurer, said 2014 operating expenses are expected to decrease 1.5 to 2.5 percent, or a change of about $5 million from the prior estimate.
Schmidt also reviewed plans for refinancing Lee’s long-term debt. In addition to a previously announced agreement for refinancing Lee’s second lien debt to December 2022, the company is focused on refinancing its first lien debt, which matures in December 2015. He said Lee will seek to refinance its first lien debt over the next few months, using a combination of pre-payable and non-pre-payable facilities, with a goal of extending the company’s non-Pulitzer weighted average maturities beyond seven years.
"Throughout the economic turmoil and slow recovery, and in a time of unprecedented transition for our industry, Lee has posted remarkably strong and steady results, and our margins have improved nearly back to pre-recession levels,'' he told stockholders.
Junck added the environment for the newspaper industry continues to improve. “The industry has become more nimble in seizing digital opportunities, and paid digital content has gained momentum across the country.”
She also pointed to improvements in Lee’s stock price.
By the end of trading Wednesday, shares of Lee closed up 41 cents, or 9.67 percent, to a new 52-week high of $4.65. The stock had ranged from a 52-week low of $1.17 to a high of $4.50 before Wednesday.
During the meeting, Schmidt reviewed how Lee repaid $98.5 million of debt in 2013, reaching the debt levels projected in its reorganization plan for September 2015 — two years early. Through the end of January, the company had repaid another $20 million.