Lee Enterprises(LEE) - 2024 Q4 - Annual Report

Digital Subscribers and Growth - Lee Enterprises serves 73 mid-sized communities across 26 states with over 771,000 digital subscribers[5] - Digital-only subscriptions increased by 7% in 2024, reaching over 771,000 subscribers[36] - Lee Enterprises aims to achieve over 1.2 million digital-only subscribers by 2028[37] - The St. Louis Post-Dispatch has 87,358 digital and print subscribers as of September 2024[42] Digital Revenue and Advertising - BLOX Digital revenue grew 10.4% in 2024, totaling $38.6 million[26] - The company’s digital advertising and marketing services remain a key strategic priority for 2025[14] - Amplified Digital Solutions uses AI-driven media planning for targeted advertising campaigns[39] - Advertising and marketing services account for 45% of the company's revenue, while subscription revenue accounts for 46%[79] Technology and Content Strategy - Lee Enterprises plans to invest in enhancing mobile platform user experience and personalizing content in 2025[34] - Lee Enterprises leverages generative AI to enhance content creation and subscriber engagement[8] - The company’s proprietary local content is designed to grow audiences and increase monetization opportunities[35] Financial and Operational Risks - The company faces risks from the shift in newspaper readership and advertising expenditures towards digital media, requiring significant capital investments[78] - The company's digital business growth depends on increasing digital audiences, attracting advertisers, and developing new technologies[80] - The company is exposed to risks from economic downturns, inflation, rising interest rates, and geopolitical events that could negatively impact its business[62] - The company's advertising revenues are highly sensitive to the strength of the economies in which it operates and the demographics of local communities[60] - The company faces risks from natural disasters, extreme weather conditions, and public health emergencies that could disrupt its operations[73] Debt and Financial Obligations - The company's Term Loan has an aggregate principal outstanding amount of$ 445.9 million, reduced from the initial $576.0 million[88] - The Term Loan carries a 9% annual interest rate and is collateralized by all company assets[88] - The company faces risks of default if it fails to meet debt service obligations, potentially leading to accelerated repayment of principal and interest[91] - The 2020 Refinancing imposes restrictions on incurring additional debt, issuing dividends, and repurchasing shares, limiting financial flexibility[90][92] Cybersecurity and Data Privacy - Cybersecurity risks could result in significant remediation costs, lost revenues, and legal claims if data breaches occur[96][98] - The company stores sensitive customer data, including payment card information, making network security critical[100][103] - The company relies on third-party service providers for network security, which could be compromised, leading to potential data breaches[100] - Payment card industry data security standards must be followed to avoid fines or loss of payment card acceptance capabilities[103] - The company may face legal and regulatory claims if it fails to comply with data breach notification or consumer privacy laws[104] Employee and Union Information - The company had 3,047 employees as of September 29, 2024, including 373 part-time employees, with 2,897 full-time equivalent employees and 366 represented by unions[46] Assets and Liabilities - The company's goodwill was valued at$ 328.0 million, mastheads at $10.9 million, and amortizable intangible assets at$ 59.2 million as of September 29, 2024[69] - Pension and postretirement plan liabilities could increase due to market volatility, higher discount rates, or changes in mortality estimates, reducing available cash[107] Internal Controls and Compliance - The company's internal controls over financial reporting are critical, and any material weaknesses could harm its stock price and investor confidence[66] - The integration of Generative AI presents risks related to security, intellectual property, ethical concerns, and competitive harm[76]