Earnings preview: Lee Enterprises

Lee Enterprises Inc. reports fiscal third-quarter earnings Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Lee is expected to report sharply lower profit and revenue in the quarter ended June 30. Its stable of papers in small and medium-sized markets is battling declines in ad spending as advertisers follow readers online. A marked increase in newsprint costs is also pressuring margins.

The company reported a deep second-quarter loss after taking a charge related to its purchase of the St. Louis Post-Dispatch and a decline in the value of its intangible assets like brands.

Lee is owner of 50 daily newspapers and more than 300 weekly publications in 23 states including daily newspapers in St. Louis, Mo.; Lincoln, Neb.; Madison, Wis.; Davenport, Iowa; Billings, Mont.; Bloomington, Ill.; and Tucson, Ariz.

BY THE NUMBERS: Analysts, on average, expect Lee to report profit of 30 cents per share on revenue of $264 million, according to Thomson Financial.

ANALYST TAKE: Deutsche Bank analyst David Clark recently downgraded Lee shares to "Hold" from "Buy" and cut his earnings targets for the company. He expects third-quarter profit of 30 cents per share.

Clark said Lee's focus on small and mid-sized markets gives it a "higher growth profile" than other newspaper publishers. Small markets have not seen advertising revenue erode as rapidly as large metropolitan markets.

WHAT'S AHEAD: Investors will keep an eye on Lee's ability to maintain its dividend payment and ability to keep up with debt servicing as the economic slump continues and ad revenue continues to contract.

STOCK PERFORMANCE: Lee shares fell 60 percent in the period to finish June at $3.99. The stock hit its lowest point in at least 27 years in mid-July at $2.99. It had traded as high as $20.60 in the past year.