At Annual Meeting, Lee Enterprises Claims Growing Print Readership In 'Toughest' Year

By: E&P Staff Though saying 2007 was "one of the toughest years ever for Lee Enterprises Inc. and the newspaper industry, CEO Mary Junck told Lee's annual stockholder meeting Wednesday that the Davenport, Iowa-based is growing print readership and outperforming industry peers.

Junck said the reach of Lee's print and online newspapers between October 2006 and October 2007 increased to 71% of all adults in its markets from 67%. And while the percentage of adults who read only the print newspaper remained steady at 50%, the percentage who read both print and online editions grew to 16% from 11%.

"This means the total reach of our printed newspapers has grown from 61% to 66%," Junck said, according to remarks posted on the company's Web site. "When we meet with analysts and investors, they find this table surprising. 'But we thought you were losing readers! Really?' Yes, really. More people are using our websites -- and, more people are reading our printed newspapers, too."

Vice President and CFO Carl Schmidt told shareholders that Lee advertising revenue declined 1.4% in the fourth quarter of fiscal 2007, compared with an industry average decline of 7.4%. In its most recent quarter, ended Dec. 31, ad revenue was down 6.5% on a tough comporable from the year-ago period, which included an extra publishing day that was a Sunday and increased business at its biggest paper, the St. Louis Post-Dispatch, because its hometown baseball team was in the World Series.

Q1 2008 revenue "has deteriorated," Schmidt said.

Schmidt said Lee's free cash "was strong in 2007 and remained strong in the first quarter of 2008."

Lee used its cash flow to reduce net debt by $135 million in 2007, he said, and decreased its leverage ratio to 4.4 times operating cash flow from 5.6 times in June 2005 when it bought Pulitzer Inc.

So far, Lee has spent $15 million of the $30 million its board authorized for a stock buyback program, resulting in the purchase of more than 1.3 million shares, or about 2.9% of the total outstanding.

"While this action will modestly slow down our debt repayment, we believe it is warranted in light of the valuation of our shares," Schmidt said.

Lee stock plunged 52.8% in calendar 2007, a year in which nearly every publicly traded newspaper company's share prices took double-digit drubbings.

"We've been challenged by an unfavorable economy, a sluggish advertising environment, relentless negativity from media pundits, and a profound misunderstanding on Wall Street about the strength and future of our business," Junck said. "The result is that our share price has dropped to levels far below the true value of our company."

In other annual meeting action, shareholder elected a new independent director to the board, Leonard J. Elmore, 55, a nationally known lawyer and former professional basketball player who appears on ESPN television regularly as a basketball analyst.

Others elected to terms at the meeting of were Richard R. Cole, dean emeritus and professor at the School of Journalism and Mass Communication, University of North Carolina at Chapel Hill, and a director since 2006; Nancy S. Donovan, founding partner of Circle Financial Group LLC, and founding partner of Oakmont Partners LLC, and a director since 2003; and Herbert W. Moloney III, president and chief operating officer of Western Colorprint Inc., and a director since 2001.

After the meeting, the board declared a quarterly cash dividend of 19 cents per share. The dividend is payable April 1 to shareholder of record as of March 3.

------
This story has been corrected. The original version incorrectly stated that the fall in advertising for the "year" was less than the industry average by 6 percentage point. CFO Schmidt was referring to ad revenue in the fourth quarter of Lee's fiscal year, which ends in September.