Last I checked, Motley Fool Income Investor pick Lee Enterprises (NYSE:LEE) seemed like a pricey stock in a struggling industry, but today's earnings news took quite a chunk out of its price tag.

The newspaper company's first-quarter net income dropped 18% to $11.9 million, or $0.26 per share. Total operating revenues decreased 1.7% to $261.7 million. Operating cash flow fell 3.2% to $58.4 million.

Lee may have had some bright spots in that its online advertising revenues jumped 54%, but that wasn't enough to keep overall total advertising revenue from decreasing by 2.2%. In its press release, the company also waxed optimistic on its agreement with Yahoo!'s (NASDAQ:YHOO) HotJobs, which it said has had a "terrific reception," and said it's moving quickly to extend its online ad capabilities through initiatives with Yahoo! and other newspaper companies.

Of course, many investors are leery of the newspaper industry right now, and with good reason. So much advertising has migrated to the Internet -- look at Google's (NASDAQ:GOOG) success -- and of course, that shows so many readers have migrated to the Internet. There are opportunities for companies online, though. You can still read news from Lee, Washington Post (NYSE:WPO), Gannett's (NYSE:GCI) USA TODAY, or New York Times (NYSE:NYT) there -- but that's just it: There's a heck of a lot of competition, much more so than when your newspaper of choice landed on your doorstep in the morning.

Last time I wrote about Lee, I thought it looked awfully pricy in a slow-growth industry -- not that it was out of line with the multiples on rivals at the time. Today's 12% drop (on my last check) certainly does add up to a less lofty multiple than it was carrying several months ago; it's now got a trailing P/E of about 16. That still sounds a bit steep for my blood, considering this industry has so many challenges to growth. Although it does have a decent dividend yield -- which is one reason why it was recommended for Income Investor -- Lee's being a bit cheaper at the moment doesn't necessarily mean it's cheap enough.

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The New York Times is a former Income Investor pick.

Alyce Lomax does not own shares of any of the companies mentioned.