Lee Enterprises (NYSE:LEE)

NetscribeConsGds (95.87) Submitted: 1/25/2007 8:31:29 AM : Start Price: $28.91 LEE Score: +93.57

Lee Enterprises publishes local newspapers, information and advertising primarily in midsize markets, with 51 daily newspapers and a joint interest in five others, rapidly growing online sites and more than 300 weekly newspapers and specialty publications in 23 states. With the acquisition of Pulitzer in June 2005, Lee is the fourth largest newspaper company in the country in terms of dailies owned, and grew from 12th to seventh largest in terms of total daily circulation.

The company generates 77% of its revenue from advertising. However over the years, the newspaper advertising spending has been negatively impacted by state of the overall economy, including unemployment rates, inflation, energy prices and consumer interest rates. Growth in readership and circulation can drive the advertisement revenues, but according to national Editor and Publisher data, both daily newspaper and Sunday circulation has been on a declining trend since their peak in 1985.

Globally, amongst advertising spending category, the online advertisement will enjoy a faster growth compared to others. According to PricewaterhouseCoopers internet advertising will experience a compounded annual growth rate of 18% and is expected to reach $51.6 billion in 2010. Endorsing the same, the company saw a top-line growth of 2.8% for Q1’07, backed by increase in advertising revenue by 2.3% particularly with online advertising up by 53%.

Lee’s online advertising business has experienced rapid growth over the last several years. The company in order to increase its online advertising revenue has entered a strategic alliance with Yahoo, whereby the classified employment-advertising base will also post job listings on Yahoo’s HotJobs national platform. However the sad part is that the company’s online business contributes a mere 3% to the total revenue.

A declining trend towards newspaper circulation would negatively impact the advertising revenue and therefore it is best to avoid Lee.

elijah1952 (< 20) Submitted: 10/25/2006 1:15:48 PM : Start Price: $24.49 LEE Score: -97.10

Thanks to Income Investor I bought this at 25 with a good dividend. Lot of upside sicne it dominates local newspapers