Lee Enterprises reports significant cybersecurity breach

DAVENPORT, IA – Lee Enterprises, Inc. (NYSE: LEE), a major player in the newspaper publishing industry with annual revenue of $600 million, disclosed a substantial cybersecurity incident that has disrupted its operations, according to a recent SEC filing.

InvestingPro data shows the company was already facing operational challenges, with a weak financial health score and significant debt burden before this incident.

The event, which occurred on February 3, 2025, led to a systems outage following a cybersecurity attack that encrypted critical applications and potentially exfiltrated files from the company's network. For investors seeking deeper insights, InvestingPro subscribers have access to over 10 additional key insights and a comprehensive Pro Research Report analyzing the company's vulnerabilities and financial position.

The Davenport-based company, which is known for its portfolio of local newspapers and online products, activated its incident response team immediately after detecting the breach. The team, consisting of internal and external cybersecurity experts, is working to address the situation. A forensic investigation is underway to ascertain if sensitive data or personally identifiable information (PII) was compromised. Although no conclusive evidence has been found, the investigation continues.

Lee Enterprises has informed law enforcement and is in the process of notifying relevant federal and state regulatory bodies, along with consumer protection agencies as required. The cybersecurity attack affected the company's distribution of print publications, causing delays, and also partially limited online operations.

As of February 12, 2025, normal distribution of all core products has resumed, but weekly and ancillary products, which account for five percent of the company's operating revenue, are still affected. The company expects to recover these operations over the coming weeks.

The financial repercussions of the incident are yet to be fully determined, but it is anticipated to materially impact Lee Enterprises' financial condition or results of operations. With a total debt of $481 million and a concerning debt-to-capital ratio of 0.87, the company's financial flexibility may be limited.

The company has a comprehensive cybersecurity insurance policy in place, which is expected to cover costs associated with the incident, subject to policy limits and deductibles. InvestingPro analysis indicates the company was already experiencing negative free cash flow of $16 million in the last twelve months.

In other recent news, Lee Enterprises reported a substantial earnings miss for Q3 2024, with earnings per share (EPS) of -$1.69, significantly below the forecast of $0.65. Despite this shortfall, the company has seen robust growth in digital revenue, which now surpasses print revenue, marking a key milestone in its digital-first transformation. Lee Enterprises' debt has also decreased to $453 million, a reduction of $123 million since March 2020. However, print revenue continues to decline, falling by 22% year-over-year.

According to analysts from Sidoti and Company, the company's persistent print revenue declines have led to tightened costs primarily within the print business. Looking forward, Lee Enterprises aims to end the year with 771,000 digital subscribers and has updated its adjusted EBITDA guidance to $73-$78 million.

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