PUBLISHER LEE FACES RENEWED PRESSURE FROM HEDGE FUNDS

OMAHA, Neb. — Newspaper publisher Lee Enterprises is facing renewed pressure from a hedge fund to speed up its transition to digital publishing and consider adding new digital-savvy leaders to its board after successfully fighting off a hostile takeover from a different hedge fund.

Lee’s largest shareholder, Cannell Capital, this past week disclosed buying nearly 20,000 more of the company’s shares, giving it a 9.1% stake. The fund’s head, Carlo Cannell, said he thinks Lee needs new board members and executives with experience running a digital publishing business.

“I have some confidence in [Lee’s] management — not a lot,” Cannell said in an interview. “I have great or very little confidence in the board depending on which board member you are referring to.”

Cannell Capital has been prodding Lee to make changes for several years. That includes running a 2019 campaign encouraging shareholders to vote against three board members, including Lee Chairman Mary Junck, and announcing last September that it planned to vote against all incumbent Lee board members.

Cannell Capital and another hedge fund that owns a large stake in Lee, Praetorian Capital, also questioned the amount Lee spent on advisers as it was fending off a $24 per share takeover offer from another hedge fund, Alden Global Capital, which owns the Chicago Tribune and other newspapers. But the investor who leads Praetorian, Harris Kupperman, has indicated that he is more comfortable with the company’s current direction.

Cannell estimated that Lee spent somewhere between $3 million and $5 million on advice from investment bankers and lawyers during the proxy fight with Alden — an amount he suggested might have been better spent on the company’s journalists. Kupperman agreed.

“I think the shareholders would have voted for the current guys, and they could have saved a few million dollars,” Kupperman said.

Lee publishes dozens of newspapers including the St. Louis Post-Dispatch, Buffalo News, Omaha World-Herald and nearly every other daily newspaper in Nebraska. The chain expanded significantly in 2020 when it bought all of Berkshire Hathaway’s newspapers and Warren Buffett endorsed Lee as the best long-term steward for the publications.