Last week Lee Enterprises (NYSE: LEE) reported its preliminary financials for the fourth quarter and the fiscal year that ended on September 27, 2015. Lee Enterprises is a leading provider of local news, information and advertising in 50 markets in 22 states. Among its properties are daily newspapers, digital products and nearly 300 specialty publications.

Overall, revenue was down about $7 million, or 4.4%, an improvement over the previous quarter. Total advertising and marketing services revenue decreased 9.0%. In spite of these decreases, Lee experienced growth in a number of areas. Here are highlights from the earnings report:

• Subscription revenue increased 6.1%, excluding a subscription-related expense reclassification, or 5.4% adjusting for the reclassification.
• Total digital revenue, including subscription and TownNews, grew 23.9%.
• Digital ad revenue was up 5.1%, accounting for 21.6% of total advertising revenue for the quarter.
• Mobile advertising revenue, included in digital advertising, rose 10.6%.
• Digital services revenue, primarily TownNews, increased 11.3% to $3.3 million.
• Total cash costs, excluding the subscription-related expense reclassification and workforce adjustment costs, decreased 7.8%, an improvement over the 5.5% – 6.0% projected.
• Debt was reduced by $19.1 million in the fourth quarter and $78.9 million for the 2015 fiscal year.
• Average daily newspaper circulation, including TNI, MNI and digital subscribers, totaled 0.9 million for the period ended September 27, 2015. Sunday circulation was 1.3 million.

“We are very pleased with our fourth quarter results, especially our cash flow growth,” said Mary Junck, chairman and chief executive officer. “We continue to see revenue growth in digital advertising, digital services, and subscription revenue from our full access and premium day initiatives as compared to the same quarter of the prior year. These growing revenue categories made up almost 47% of our total revenue, for the quarter.”Junck said several key initiatives helped produce fourth quarter results and should continue to impact the company’s financials into 2016. Among the initiatives were accelerating digital revenue growth by expanding audience reach and advertising services and a redesign of all products including mobile, desktop and print through 2016 to improve reader engagement, drive revenue and provide cost efficiencies.According to Junck, Lee’s print and digital platforms reach 76% of the adults in the markets they serve, including more than 70% under the age of 40. The company will continue to fine-tune its products to adapt to the changing needs of its readers.Ron Mayo, chief financial officer and treasurer, reported that the company has $10 million in real estate assets for sale. The company will continue to reduce costs next year, projecting a reduction of 3.5% to 4.0% in 2016, Mayo says.Insider Take:Lee experienced a lot of positive movement in its fourth quarter, but it has a lot of debt, and its advertising and marketing services revenue dropped substantially – 9.0%, or $9.6 million, to $97.3 million. That’s a big chunk of change. To make up for that, Lee needs to continue to grow its digital, advertising revenue, including mobile.We’re guessing that the major redesign of Lee products is long overdue. Will it be too late to keep overall advertising revenue from decreasing? Will Lee be able to retain the subscribers it has and continue to grow subscription revenue at a rate of 5% to 6%? Can it jump on the digital bandwagon fast enough to keep advertisers and subscribers happy?~ Dana E. Neuts, Subscription Insider