Local-market newspaper publisher Lee Enterprises said FQ3 profits fell 1% to $22.5 million from $22.7M last year on drooping advertising sales. EPS of $0.49 was $0.01 less than a year ago, and in line with analyst estimates. Same-property sales (revenues at papers owned at least a year) were down 4.1% in June. Total operating revenue including circulation was down 3.1% to $281.6M, falling short of analyst estimates of $287M. Online revenue jumped 61.2% to $16.2M. In a June 18 note, Wachovia Capital Markets said, "Lee has developed a reputation as an excellent operator, acquirer, and integrator of newspaper assets in small to midsize markets. Owing to its training and market exposure, LEE has historically and recently posted ad growth ahead of the industry," adding that earnings may experience pressure over the next few quarters as small markets begin to experience the pressures now impacting larger markets. "Real estate is in a down cycle, taking retail home improvement and furniture store advertising with it," CEO Mary Junck said. "National advertising is also in a trough. In addition, some of our bigger department store customers are working through competitive and branding issues, and the auto industry is undergoing structural changes." Shares have plummeted 40% YTD.
Sources: Press release, AP I, II
Commentary: Newspapers Confront The Digital Media Revolution • Lee Enterprises: Online Gains Fail to Offset Print Weakness
Stocks/ETFs to watch: Lee Enterprises Inc. (LEE). Competitors: Gannett Co. Inc. (GCI), Journal Communications Inc. (JRN)
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