DAVENPORT, Iowa | At the company's annual stockholders meeting Wednesday, Lee Enterprises Inc. executives painted an optimistic outlook for 2015, in large part due to its digital growth, aggressive debt reduction and audience strength.
Speaking to about 70 shareholders and employees, Chairman, President and CEO Mary Junck said the company "is off to a strong start in 2015."
"Our audiences remain massive. We will continue to aggressively grow digital revenue, maintain our cash flow and reduce our debt," she told the crowd gathered at Lee's downtown Davenport headquarters.
Lee is the parent company of the Sioux City Journal and 49 other daily newspapers.
Junck said Lee's strong cash flow is enabling it to aggressively reduce its debt. In the 12 months ended in December, Lee had reduced its debt by $80 million, including $32 million borrowed to pay 2014 refinancing costs. It has repaid another $12 million since the end of the fiscal quarter.
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Kevin Mowbray, Lee's vice president and chief operating officer, said Lee continues to grow digital revenue at "an accelerated pace." Lee saw 17 percent growth in total digital revenue in fiscal 2014 and 26 percent growth in digital revenues for the first quarter of 2015. "We are keenly focused on driving digital advertising revenue and continuing to build on that expertise," he told shareholders.
In her remarks, Junck discussed recent activity in the publishing industry, including spinoffs of Tribune and Belo publishing assets into separate companies and upcoming similar transactions by Gannett and Scripps. "Against this backdrop, I have been asked about the changing publishing industry and consolidation," she said. "We believe future consolidation could be good for the industry by creating larger companies with potential economies of scale and greater geographic reach and clustering opportunities."
Interest in the industry by Berkshire Hathaway and others, she said, "seems to have led to a firming of valuations in the publishing industry. And there is the possibility of even more cooperation between companies, which would benefit all of us."
In a financial overview, Carl Schmidt, vice president, chief financial officer and treasurer, said the company believes it has "the strongest operating cash flow margin of any public company in the industry."
Behind the strong cash flow, Schmidt said, is effective cost management, which has cut costs by $295 million, or 37 percent, since 2007. But he also pointed to Lee's additional investments in the company, which have made its digital growth and the new Full Access subscription model possible.
According to Mowbray, Lee rolled out the new subscription initiative nine months ago and now has it in 30 markets, including the Journal. The program, he said, "provides subscribers with complete digital access, including desktop, tablet, mobile and replica editions with a singe sign-on for all digital platforms."
To date, more than 214,000 of Lee's subscribers have activated Full Access, he said, adding it is expected to reach all of Lee's markets by the end of the June quarter.