Lee Enterprises' Digital Pivot: Can Nathan Bekke's Leadership Steer the Company Toward Sustainable Growth?

The media industry's shift from print to digital has left many legacy publishers struggling to adapt. Lee Enterprises, a regional newspaper giant with operations in 72 markets across 25 states, faces its own crossroads. Now, the company is betting on its deep bench of internal talent to navigate this transition—starting with the promotion of longtime executive Nathan Bekke to Chief Operating Officer (COO), effective June 20, 2025.

Bekke's appointment marks a strategic move to accelerate Lee's digital transformation while addressing its financial challenges. With over three decades at the company, including roles overseeing audience strategy and digital operations, Bekke has already played a central part in Lee's cost-cutting efforts. CEO Kevin Mowbray highlighted Bekke's ability to consolidate legacy print costs—a critical step in freeing up capital to reinvest in digital initiatives.

Operational Efficiency: A Foundation for Survival

Lee's operational challenges are stark. A Q2 2025 loss of $2.07 per share and revenue of $137 million (missing analyst estimates by $5.5 million) underscore the uphill battle the company faces. Yet, Bekke's track record suggests he can help stabilize the business. Since 2020, he has overseen cost reductions totaling $40 million annually, enabling Lee to shift focus to high-margin digital products.

The COO's leadership will be critical in scaling these efficiencies. By continuing to phase out costly print operations while retaining local news dominance through digital platforms like BLOX and its newspapers' websites, Lee aims to reduce dependency on declining print ad revenue. Mowbray emphasized that Bekke's experience in streamlining IT infrastructure and audience engagement strategies positions Lee to “compete aggressively” in the digital space.

Growth Potential: Betting on Digital Subscriptions and AI

Lee's most promising metric is its 20% year-over-year rise in digital subscription revenue—a bright spot amid otherwise sluggish results. Bekke's role in expanding digital audiences, particularly through BLOX's local advertising and subscription-driven content, has already shown results. The company now counts over 1.2 million digital-only subscribers, a figure it aims to grow further through AI-powered personalized content and data analytics.

The stakes are high. While traditional media peers like Gannett and Tribune face similar struggles, Lee's regional focus—dominating markets like St. Louis and Buffalo—gives it a unique edge. Local advertisers still rely on its platforms, and digital subscriptions provide recurring revenue. However, competition from national digital giants like Google and Meta remains a threat. Bekke's ability to leverage AI tools to improve ad targeting and content curation could be the differentiator.

Financial Outlook: Navigating to Free Cash Flow Positivity

Lee's management has set a clear target: achieving free cash flow positivity by late 2025. To reach this, Bekke must sustain the cost discipline that has already reduced annual expenses by $40 million. The company's $38.6 million market cap, while small, suggests the stock is undervalued relative to its potential. If Lee can grow digital revenue at current rates while cutting further costs, its valuation could expand significantly.

Investors should monitor two key metrics: digital subscription growth beyond 20% and progress toward free cash flow. A sustained decline in print-related losses, paired with expanding margins in digital, would signal a turnaround.

Investment Considerations

Lee's stock (NASDAQ: LEE) has underperformed the broader market this year, down 12% as of June 2025. However, its valuation—trading at just 6x projected 2025 earnings (if achieved)—could make it a contrarian play. Risks remain: the company's Q2 loss and reliance on a fragile advertising market could pressure the stock further.

Backtest the performance of Lee Enterprises (LEE) when 'buy condition' is triggered on the announcement date of quarterly earnings releases, and 'hold for 20 trading days', from 2020 to 2025.

Yet, Bekke's deep institutional knowledge and the 20% digital subscription growth suggest Lee is better positioned than many peers. For investors willing to bet on a media company that's ahead of its curve in operational restructuring and digital innovation, LEE could offer asymmetric upside.

Conclusion

Lee Enterprises' future hinges on its ability to convert cost cuts into sustained growth. Bekke's promotion signals a commitment to this path. While the road to profitability is bumpy, his leadership and the company's digital momentum make Lee a compelling story in an industry desperate for winners. For investors patient enough to ride out the transition, LEE could prove a value gem in the digital media landscape.

Recommendation: Consider a cautious overweight position in LEE, with a focus on digital subscription growth and free cash flow milestones. Set a stop-loss at 15% below current prices to mitigate downside risk.