Lee Enterprises CEO: we're in a really solid place forward to drive top line revenue growth'

Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman Lee Enterprises President & CEO Kevin Mowbray about the company’s news media efforts amid COVID-19.

Video transcript

JULIE HYMAN: Earlier this year, Warren Buffett decided to say farewell to his newspaper business. And he agreed to sell it to Lee Enterprises $140 million in cash. The President and CEO of Lee is joining us now. That is Kevin Mowbray.

And Kevin, one of the reasons that Buffett decided to sell is that it's a tough business, you know. This is sort of conventional wisdom at this point, that newspapers are in decline, sadly, for many folks around the country who depend upon them. How do you make this work as a business? And you guys own quite a few newspapers and publications at this point.

KEVIN MOWBRAY: Well, you know, as you know, local media and local news is more important than ever before. We're proud to have the fastest growing digital subscription platform in local media. And how we make it work is, you know, the content and news that we produce in the mid-sized markets we serve matters more than ever, from the civil unrest in Kenosha, Wisconsin to the forest fires in Montana to the flooding in the Midwest, and certainly, the impact of the coronavirus, our audiences flock to our platforms like never before. And in fact, our audiences are up about 1% to last year.

JULIE HYMAN: And so, you know, subscriptions, as you were talking about, is part of that equation. A lot of the private equity owners that have come into newspapers have also tried to make them profitable by cutting quite dramatically, and therefore, perhaps jeopardizing some of that valuable local coverage that you're talking about. What are you guys thinking in terms of that, on that front, in terms of the staffing?

KEVIN MOWBRAY: Well, one of the things that we announced recently was our three pillar strategy that were all tied to revenue growth. That was producing best-in-class digital platform with an emphasis on video and multimedia technology and data; and then secondly, to grow digital-only subscribers; and then thirdly, the growth strategies tied to developing new revenue streams tied to first-party data, e-commerce, and video advertising.

So we are solely focused on growth, which is a little bit different than what we're hearing from our industry peers. And specifically, how we think we're going to do that is to grow 900,000 digitally only subscribers, certainly continue the growth we've had and have communicated. We're actually up nearly 2% in audience revenue in Q1. Our digital-only subscribers had grown 69% in the last five consecutive quarters. And they've actually doubled in the last 16 months. So we think we're in a really solid place forward to drive topline revenue growth.

BRIAN SOZZI: Kevin, I perhaps don't have to tell you this. Google is forever making SEO changes. Facebook is Facebook, in terms of what news they surface and don't. Are those big tech giants, are they friends or foes to your turnaround plan?

KEVIN MOWBRAY: Well, what I would say is, you know, we support the safe harbor legislation that's in Congress right now. We think it gives us the ability, and other publishers, the right to collectively bargain. There's certainly a lot of interest at Congress to helping us drive a framework for compensation.

And so we think there's some hope that we can put something together that'll work for the industry. We're certainly beginning to see that across the world, with France, EU, Canada, and Australia beginning to get legislation that's working in those countries.

MYLES UDLAND: You know, Kevin, I think as I look at the media industry right now and some of the trends that get the most attention, newsletters is one that comes up a lot. And we've seen what Axios has done with acquiring a couple of local newsletters, trying to beef up their local presence.

Have you guys thought about that? I'm assuming you guys already have dozens of newsletters in circulation, and how you've thought about that as a way to drive this paid subscriber growth that is such a big part of your strategic plan here.

KEVIN MOWBRAY: Yeah, absolutely. That's a good point. And actually, newsletters are one of the biggest ways we actually convert someone to a digital subscription. In fact, when you think of our marketplace base, we have about 55 million unique visitors a month. About 12 million of those come to us with great frequency, and we serve them newsletters and other sorts of custom content that they are interested in.

And as a result of that, that's why we're pretty confident we can get to this 900,000 digital-only subscribers. We also recently talked about abilities to drive niche content areas and expand the areas where we have expertise and brand permission. Husker Sports in Nebraska comes to mind, or the Napa Valley wine newsletter that we'll be launching in the fourth quarter.

BRIAN SOZZI: Kevin, what is it like working or dealing with the Warren Buffett? How did that transaction come about, and what did you learn from talking to him?

KEVIN MOWBRAY: Well, you know, what I would say, he's a super nice guy to begin with. Secondly, I'd say he's a big fan of Lee. At the time of the acquisition, he was quoted as saying he wouldn't have sold these assets to anybody other than Lee. And he made a big investment in the industry and a big investment in Lee with a $578 million loan at super attractive rates and a 25-year runway that gives us a lot of flexibility to drive our digital future.

JULIE HYMAN: Kevin, thanks for being with us today. Really interesting stuff. Kevin Mowbray is Lee Enterprise's President and CEO. Appreciate your time.