With their 2022 Annual Meeting of Shareholders looming, Lee Enterprises attempts to gird investors in board vote battle with Alden Capital. On Thursday, the newspaper company released a presentation for investors. To be clear, the company says the powerpoint outlines their “Three Pillar Digital Growth Strategy”. Furthermore, the company believes that strategy will drive more than $435 million recurring digital revenue by 2026.
Lee Enterprises is a major subscription and advertising platform and a leading provider of local news and information, with daily newspapers, rapidly growing digital products and over 350 weekly and specialty publications serving 77 markets in 26 states. Year to date, Lee’s newspapers have average circulation of 1.0 million, and their legacy websites including acquisitions, reach more than 47 million digital unique visitors. Lee’s markets include St. Louis, MO; Buffalo, NY; Omaha, NE; Richmond, VA; Lincoln, NE; Madison, WI; Davenport, IA; and Tucson, AZ.
Lee begins the presentation with January 2020 endorsement from Warren Buffett. The famed investor was commenting on his newspapers, which he sold to Lee, being in “the right hands going forward”.
Lee Growth Story
The publisher focuses on a growth story:
- 65% growth in digital-only subscribers in 2021, with a target of 900,000 digital-only subs by 2026. Lee says they are outpacing Gannett (46% increase) and The New York Times (25% increase) in digital sub growth.
- Recurring, sustainable digital advertising revenue, with 27% growth in 2021
In the effort to convert more of their identified 2.4 million “highly engaged readers” to digital subs, Lee will leverage their embedded position in 77 attractive markets. Highly engaged means those readers who visit 4+ times per month. Other tools to drive sub conversion include:
- Digital segmentation and targeted offers based on usage
- Maximizing conversions from email, search and social media referraks
- Leverage TownNews dynamic meter.
Critical of Alden’s “Self-Serving Campaign”
The presentation also takes shots at Alden. One slide headline reads “Alden is seeking to acquire Lee at a significant discount to intrinsic value.” Furthermore, Lee claims Alden is using the “familiar playbook” they utilized to acquire Tribune last year.
The Bid and The Aftermath
Alden made a $24 per share bid for Lee back in November 2021. While Alden hoped to work constructively with Lee’s Board, the newspaper company instead has thrown up roadblocks. Lee Enterprises responded to Alden Global Capital’s acquisition proposal with a poison pill, also known as a “shareholder rights plan”. This tactic is often used by corporate boards when they are trying to avoid being the target of a hostile takeover by a larger firm.
Lee Enterprises also announced in December that Alden’s nominations to their Board of Directors was “invalid”. The publisher claimed Alden had “failed to deliver a notice that complies with Lee’s bylaw requirements prior to the nomination deadline.”
The Candidates
Alden, who through an affiliate has a 6.3% ownership stake in Lee, has nominated three candidates. If elected, they will serve on the Lee Enterprises Board of Directors.
- Colleen B. Brown – served as President and Chief Executive Officer of Fisher Communications, Inc., a media company that owned a number of television, radio stations and technology facilities in the western United States. Ms. Brown also work in senior management at Belo Corp., Lee Enterprises and Gannett.
- Carlos P. Salas – Serves as President of The Change Company CDFI LLC (“The Change Company”), a financial services company focused on serving underbanked borrowers and communities across the U.S.
- John S. Zieser – Currently serves as Chief Development Officer and General Counsel of Meredith Corporation. Zieser played a key leadership role in transforming Meredith’s business. That included multiple expansion initiatives in the media, digital, consumer revenue and licensing sectors.
Meanwhile, Lee has three candidates for re-election: Chairman Mary Junck, President and CEO Kevin Mowbray and Lead Independent Director Herbert Moloney.
