The publishing industry is struggling. Print is on the decline, eaten alive by the digital behemoth that now dominates the media landscape. It's a familiar narrative, a tale as old as the internet itself. But amidst this seemingly inevitable decline, a glimmer of hope shines through – and it's radiating from the unlikely source of Lee Enterprises.

Lee, a company steeped in print tradition with roots stretching back to 1890, is aggressively embracing the digital future. The recent Q2 2024 earnings call revealed a company in the throes of a remarkable transformation, painting a portrait not of decline, but of a phoenix rising from the ashes.

While most analysts are focused on the shrinking print revenue, a closer look reveals a hidden story – a story of digital growth that's potentially far more significant than the shrinking print side suggests. Lee's digital subscription revenue is growing at a staggering 48%, outpacing competitors for 17 consecutive quarters. This is not just growth; it's dominance in a crucial, high-margin segment.

Simultaneously, Lee's Amplified Digital, their digital marketing services agency, is experiencing steady growth, clocking in at 8% over the past 12 months. The combined power of these two digital engines is propelling Lee toward a monumental milestone – a digital inflection point where over 50% of their revenue comes from digital sources. They expect to hit this milestone *next quarter*.

This is where the intrigue deepens. While the print decline is real, it's also predictable, allowing Lee to strategically manage costs and mitigate the impact on their overall financial performance. Their Q2 adjusted EBITDA *grew* 5% despite the print downturn. This suggests a deliberate strategy: streamlining print operations while aggressively investing in a highly profitable digital future.

The numbers are compelling. Digital direct margin for Q2 was a healthy 70%, resulting in a $2.5 million increase over the previous year. This high-margin revenue stream is steadily pushing Lee toward a point where their digital operations alone will be sustainable, effectively decoupling them from print's volatility.

The Bombshell: Digital Growth Masked by Print Decline

Here's the potential bombshell analysts seem to be missing: Lee's print decline, while undeniable, is actually *masking* the true strength of their digital growth. The shrinking print revenue, while reported in absolute numbers, distorts the percentage growth of the digital side. Imagine a shrinking pie where one slice is growing rapidly. While the slice gets bigger, the pie itself continues to shrink, making the growth seem less dramatic.

**Hypothetical Scenario:** If Lee's print revenue had remained flat, their digital growth would be seen as *explosive* rather than simply impressive. This creates a unique opportunity for investors willing to look beyond the surface. The market is valuing Lee based on the print narrative, failing to grasp the full potential of their digital surge.

Lee's Ambitious Digital Future

Lee's ambition is nothing short of revolutionary. They're aiming for $150 million in recurring digital subscription revenue by 2028, fueled by 1.2 million subscribers. On the advertising side, they're targeting $300 million in digital ad revenue by the same year. These are bold targets, but their recent performance suggests they're not just pipe dreams.

Digital Revenue Growth

The following chart illustrates the growth of Lee's digital revenue over the past four quarters, according to their Q2 2024 earnings call and Q1 2024 earnings call.

Lee's future is digital. And while print may be fading, the company is demonstrating remarkable resilience and strategic vision. The market's current focus on print's demise may be obscuring a digital renaissance, creating a compelling opportunity for investors who can see beyond the surface and recognize the transformative power of Lee's digital Lazarus.

"Fun Fact: Lee Enterprises publishes newspapers in 77 markets across the United States, reaching over 10 million people each week. That's more than the population of New York City!"