DAVENPORT, Iowa — Lee Enterprises officials told stockholders Wednesday that the company is ahead of schedule in paying down its debt as its digital advertising revenue grows and cash costs continue to fall.
During a 25-minute annual shareholders meeting at the company’s Davenport corporate office, Carl Schmidt, Lee vice president, chief financial officer and treasurer, said the company debt balance is about $903.5 million, about $35.2 million ahead of its reorganization plan.
“Though we refinanced our debt little more than a year ago, we continually monitor the credit markets for opportunities to improve our capital structure and debt costs in advance of the December 2015 maturities,” Schmidt said.
Lee Enterprises owns 50 daily newspapers in 22 states, including the Muscatine Journal and Quad-City Times.
Efforts to expand the company’s digital presence have helped boost digital advertising revenue by 9.7 percent in 2012 and by 4.8 percent in the first quarter of 2013, said Mary Junck, chairman, president and CEO.
Junck said the company has several ongoing initiatives to increase digital ad revenue, which now represents 13 percent of total advertising revenue.
She said Lee newspapers have 114,000 digital subscribers. In the past year, the company introduced paid digital content at most of its newspapers, and now has about 26,000 paid website subscribers. About two-thirds of those are digital-only subscribers.
“Reception to paid digital content continues to be good in every market,” Junck said. “Web, mobile and tablet traffic continues to be strong.”
Junck said by offering a mix of print, website, mobile and tablet content, Lee papers are a primary source of local news.
“The sum of all these parts is that 80 percent of all adults in our markets interact with us in the course of a week,” she said.
In October, Lee divested itself from its newspaper in Escondido, Calif., and last month announced plans to sell its newspaper in Lihue, Hawaii.
“We like the remaining markets we’re in and are not seeking further changes in our portfolio,” Junck said.
Schmidt said Lee is working to “improve quality, speed and innovation, as well as reduce costs” by transforming its business model. This includes outsourcing ad production in 13 locations, including the Quad-City Times and Muscatine Journal. The company also operates a regional design center in northwest Indiana that handles page layout for seven newspapers, and plans to open two more regional design centers in Lincoln, Neb., and Madison, Wis.
He said the company’s cash costs have dropped 32 percent since 2007, and are expected to drop another 3.5 percent to 4.5 percent in 2013.
Only one shareholder asked a question during the meeting. Ed Reelfs of Davenport asked Junck when the company expected to pay off the $1 billion debt it incurred as part of its 2005 acquisition of the Pulitzer Inc. newspaper chain.
Junck said while she could not publicly disclose when the company expected that debt to be paid, the company is making progress.
“We’re working hard to reduce our debt,” she said.
In other business, the shareholders re-elected Junck, Herbert W. Moloney III and Andrew E. Newman to the board of directors. Their terms will expire in 2016.
Lee stock closed down 6 cents at $1.30 a share Wednesday on the New York Stock Exchange.