Lee Enterprises may have successfully dodged Alden Global Capital’s hostile takeover attempt, but they are not out of the woods. The legacy media company is reportedly planning to cut hundreds of jobs this year. According to an exclusive report by Axios, Lee Enterprises could cut more than 400 jobs across corporate jobs and positions at least 19 of their 75 local papers.
Axios said that, in an email from Lee Enterprises in which Axios asked about the scale of cuts, a company spokesperson responded, “As Lee Enterprises continues to transition from a print-centric to a digital-first business, we need to make job reductions to better align staffing with our long-term strategy.”
“These reductions are specifically tied to our legacy print business and in areas where we can become more efficient through business transformation,” the spokesperson added.
Though it does look like reporters or photographers are being laid off, dozens of employees in other departments (publishing, human resources, IT, printing and advertising) have been laid off in the last two weeks.
Response by Unions of Lee Enterprises
A tweet by @LeeUnions, known as the Unions of Lee Enterprises, says that dozens of employees have already left the company this year. They also said that estimates posted by Axios are low and that far more jobs have been or will be lost. [Editor’s note: This Twitter account joined in December 2021, is following 64 Twitter users and has 97 followers. The account has only tweeted five times to date. It has not been verified as legitimate.]
Other news outlets are reporting on specific layoffs at various properties owned by Lee Enterprises. For example, KBTX reported that Darren Benson, a long-time employee of The Eagle, has been laid off. His job will be outsourced to sister newspaper Waco Tribune-Herald. The Eagle sent a statement to KBTX about the change last week.
“The Eagle Media Company’s newsroom and advertising teams will remain at The Eagle and not outsourced to the Waco Tribune-Herald. Both newsrooms will continue to provide in-depth coverage of their local communities under the leadership of Steve Boggs,” the statement read.
Second quarter results
While rumors and pink slips abound, Lee reported its second-quarter financials for fiscal year 2022 for the period ended March 27, 2022. The company reported total operating revenue of $190.0 million; total digital revenue of $58.1 million, a 33% increase year-over-year; 492,000 digital-only subscribers, a 59% increase year-over-year; and total digital advertising revenue of $43 million, a 36% increase year-over-year. The company claims to be the “fastest growing digital subscription platform in local media” now and for the last nine quarters. For the quarter, Lee reported a net loss of $6.7 million.
“Our second quarter results demonstrate the investments in our Three Pillar Digital Growth strategy are paying off with tremendous digital revenue growth. Execution of our strategy has put Lee in position to achieve our digital revenue targets for the fiscal year; advancing Lee as a vibrant, digital-centric company with a strong base of recurring, sustainable, digital revenue,” said Kevin Mowbray, president and CEO, in a May 5, 2022 news release.
On the earnings call, The Des Moines Register reported that Lee CFO Tim Millage acknowledged some layoffs and related expenses during the first quarter. Restructuring costs for the quarter were $10.6 million. A portion of that expense included severance packages paid from January to March.
After trying so hard to stave off a hostile takeover by hedge fund Alden Global Capital, Lee Enterprises is now adapting its strategy to be more profitable, presumably to keep investors happy. The big question is if layoffs are the answer. Lee is one of the few large newspaper chains reporting local news in over 75 markets. While cutting staff may decrease costs, it also has the potential to reduce the quality of their publications which could cause subscriber churn. In addition, if social media is any indication, the news organization has lost significant goodwill, drawing attention to their vulnerable position. Could this make them ripe for another takeover attempt?