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Lee Enterprises (NYSE: LEE) may have achieved achieved consecutive quarterly profitability for the second time in row in Q4, but the turnaround in advertising revenue is still slow-going. In the case of online ads, the segment fell 8.4 percent to $10.6 million in Q4. Compared to Q3’s 24 percent drop in website ads for the Davenport, Iowa newspaper publisher, Q4’s results could mean that the bottom has been passed and there’s no place to go but up. However, Lee’s resurgence could be short-lived. Like other newspaper publishers who swung to profit in the second half of last year, the turnaround was based largely on deep cost-cutting. Since there are only so many employees that can be laid off and only so many printing plants that can be closed, sustaining those profits could be even tougher stemming the losses.
In all, the company posted a Q4 profit of $27.9 million ($0.62 EPS), swinging from last year’s $48.6 million (-$1.10 EPS) loss.
Looking at the specific revenue categories, Lee, which owns the St. Louis Post-Dispatch, still has a long way to go to reverse the fall off in advertising:
For example, combined print/online ads decreased 16.4 percent to $154.4 million, with retail ads down 15 percent, national down 16.1 percent and classified down 19.7 percent. Some things are clearly out of Lee’s hands, such as employment advertising, which won’t turn around until the larger economy does. Combined print/online help wanteds plummeted another 41.6 percent—though, on the bright side, that decline was 56 percent in Q3—while autos dropped 19.6 percent and real estate fell 21 percent.