The departure of advertisers from the traditional media -- including both newspapers and magazines -- shows no sign of abating. The latest evidence that this trend may be interminable was provided earlier this week by Lee Enterprises (NYSE:LEE), the publisher of 51 daily newspapers, along with 300 weeklies and specialty publications, and the holder of joint interests in five other dailies. Lee's February same property revenues decreased 1.6% overall, and its total property revenues were off 0.8%. As the company noted, however, its online advertising revenues jumped by 51.5%. As with other publishers, however, this last figure, while ballyhooed by the company, was achieved off a small base.
Lee's largest newspaper markets include St. Louis; Madison, Wis.; Tucson, Ariz.; and Napa, Calif. The company's unusually user-friendly website includes the information that past employees at the company's papers have included renowned writers Mark Twain, Willa Cather, and Thornton Wilder.
Unfortunately, Lee operates in an industry that is beginning to appear as doomed as Wilder's ill-fated bridge in his 1927 novel, The Bridge of San Luis Rey. In February alone, employment advertising was down 10.4% at the company's papers, automotive advertising dropped by 10%, and real estate advertising declined 8.7%. However, circulation revenues eked out a 0.2% increase during the month.
Unfortunately, Lee's circumstances are not materially different from those of Tribune (NYSE:TRB), New York Times (NYSE:NYT), McClatchy (NYSE:MNI), and Gannett (NYSE:GCI). Newspaper advertising in general is slipping as younger readers, many of their parents, and even a growing number of grannies continue to obtain more and more of their news from online sources. At the same time, certain industries -- real estate among them -- have generally reduced their advertising in concert with their softening economic circumstances.
So, like other newspaper publishers, Lee is attempting to ramp up its online activity as quickly as possible. The difficulty is that this area, while growing rapidly, remains but a tiny piece of the company's total business. As such, when all is said and done, I'd advise Foolish investors to leave Lee alone.
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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments.
