Slide 1: Building Long-Term Value
BUILDING LONG-TERM VALUE INVESTOR PRESENTATION | FEBRUARY 2022
Slide 2: What Is Alden's Withhold Campaign About?
2 WHAT IS ALDEN’S WITHHOLD CAMPAIGN ABOUT? In the wake of its grossly undervalued buyout proposal, we believe Alden Capital is attempting to destabilize the Company and diminish the Board’s resolve to maximize value for all shareholders
Slide 3: Table of Contents
3 TABLE OF CONTENTS I Executive Summary 4 II Overview of Lee Enterprises 8 III Lee’s Strategy for Digital Transformation 14 IV Lee Has the Right Board to Oversee the Execution of Our Digital Strategy 32 V Alden is Seeking to Acquire Lee at a Discount to Intrinsic Value Through Aggressive Means 39 VI
Slide 4: Executive Summary
4 Executive Summary
Slide 5: Warren Buffett Believes We Are Well-Positioned
5 WARREN BUFFETT BELIEVES THAT WE ARE WELL-POSITIONED TO EXECUTE ON OUR TRANSFORMATION My partner Charlie Munger and I have known and admired the Lee organization for over 40 years. They have delivered exceptional performance managing BH Media’s newspapers and continue to outpace the industry in dig
Slide 6: Executive Summary
6 EXECUTIVE SUMMARY Lee is pursuing the right strategy to create significant and lasting value for all shareholders Lee’s business has evolved from traditional newspapers to being increasingly digital. Our three pillar, digital-first strategy is showing measurable results We are already halfway to a
Slide 7: Executive Summary (Cont'd)
7 EXECUTIVE SUMMARY (CONT’D) We believe Alden’s unsolicited proposal is opportunistic Alden made its public, unsolicited $24.00 per share hostile offer without ever attempting to engage with the Company Before Lee even responded to Alden’s proposal, Alden hastily launched a proxy contest to replace
Slide 8: Overview of Lee Enterprises
8 OVERVIEW OF LEE ENTERPRISES (NASDAQ: LEE) Source: FactSet and Company filings. All years refer to fiscal year results 1 Data as of February 16, 2022. Subscription Advertising & Marketing Services TownNews & Other Digital Services $290 $369 2020 2021 $268 $358 2020 2021 $18 $19 2020 2021 LEE IS A L
Slide 9: Lee Is Undergoing a Critical Transformation
9 LEE IS UNDERGOING A CRITICAL TRANSFORMATION THAT WE BELIEVE WILL CREATE VALUE FOR SHAREHOLDERS Transformative Transaction with Berkshire Hathaway Introduction of Three-Pillar Strategy Continuing Transition to a Digital- First Organization % Digital Revenue .. Nearly doubled Lee’s audience size and
Slide 10: Overview of Alden Global Capital
10 “Alden’s critics have said that its approach is to buy newspapers and wring profits from them while making drastic cost cuts that are detrimental to local journalism.” —New York Times (December 2021) “Alden…has demonstrated no real interest in running quality publications. Its interest in gutting
Slide 11: Alden's Offer Was Opportunistically Timed and Inadequate
11 ALDEN’S OFFER WAS OPPORTUNISTICALLY TIMED AND INADEQUATE .. Alden did not approach the Company prior to making a public offer .. Alden’s offer came as Lee’s stock was under pressure from market volatility .. Alden’s offer grossly undervalues Lee’s business, which we expect will generate $310 mill
Slide 12: Shareholders and Others Agree with Lee's Board
12 Lee Shareholders Third-Party Commentators In our view, [Alden’s] offer is materially low…”4 Alden officials called its [offer to buy Lee] ‘a reaffirmation of [its] substantial commitment to the newspaper industry…’ This is like the Big Bad Wolf telling the first little pig that it wanted to stren
Slide 13: Lee's Commitment to Local Journalism
13 LEE’S COMMITMENT TO LOCAL JOURNALISM SERVES A CRITICAL SOCIAL FUNCTION THAT ALDEN IGNORES Lee’s Approach to Local News Alden’s Approach to Local News 1,000 150 Before Alden's Ownership After Alden's Ownership Newspaper Staff Layoffs at Northern California Newspapers Layoffs at Southern California
Slide 14: Lee's Strategy for Digital Transformation
14 Lee’s Strategy for Digital Transformation
Slide 15: The Three Pillars of Digital Transformation
15 LEE’S STRATEGY FOR DIGITAL TRANSFORMATION: THE THREE PILLARS LEE IS RAPIDLY TRANSFORMING FROM A PRINT-CENTRIC TO A DIGITAL-CENTRIC COMPANY PILLAR 1 Expand digital audiences by transforming the presentation of local news and information PILLAR 2 Expand digital subscription base and revenue PILLAR
Slide 16: Digital Transformation: Market Leading Growth
16 Digital Subscriber Growth Leads Industry Digital Agency Revenue Growth Leads Industry Total Digital Revenue Growing Significantly 450K Current Digital-only Subscribers $47M Amplified LTM Revenue $197M of LTM Total Digital Revenue 9 quarters of leading digital subscriber growth FY2021 YOY Growth 4
Slide 17: Expand Digital Audiences
17 DIGITAL TRANSFORMATION: EXPAND DIGITAL AUDIENCES ENHANCING DIGITAL PRESENTATIONS TO PROVIDE BEST-IN-CLASS USER EXPERIENCE OF LOCAL NEWS, WITH MULTIFORMAT, RICH CONTENT • Creating cohesive digital experience across all platforms by investing in user-experience design talent • Improving multimedia
Slide 18: Expand Digital Subscriber Base
18 DIGITAL TRANSFORMATION: EXPAND DIGITAL SUBSCRIBER BASE GROWING DIGITAL-ONLY SUBSCRIPTIONS AND REVENUE • Key initiatives… ‒ Optimize subscription model for digital-only growth ‒ Monetize content through new digital niche products ‒ Maximize subscription rates by leveraging first-party data ‒ Caref
Slide 19: Strategies to Drive Subscription Revenue
19 DIGITAL TRANSFORMATION: STRATEGIES TO DRIVE SUBSCRIPTION REVENUE ENHANCING CONVERSION WITHIN LEE’S ADDRESSABLE MARKET • Convert more of our addressable market to digital content subscribers ‒ Leverage embedded position in 77 attractive markets to grow audiences and share of total addressable mark
Slide 20: Lee Digital Subscription Growth Leads the Industry
20 DIGITAL TRANSFORMATION: LEE DIGITAL SUBSCRIPTION GROWTH LEADS THE INDUSTRY Digital subscriber growth has outpaced industry peers for 9 quarters 85% 92% 73% 67% 69% 58% 51% 65% 25% 29% 31% 31% 29% 37% 41% 46% 35% 48% 69% 50% 52% 40% 26% 25% 19% Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY
Slide 21: Five-Year Subscription Growth Outlook
21 DIGITAL TRANSFORMATION: FIVE-YEAR SUBSCRIPTION GROWTH OUTLOOK We expect significant growth in digital subscribers: • Convert more visitors to our core digital products • Launch new digital niche subscription products • Continued conversion of audiences to digital subscribers • Expect 900,000 digi
Slide 22: Expand Digital Advertising Services
22 DIGITAL TRANSFORMATION: EXPAND DIGITAL ADVERTISING SERVICES LEVERAGE “FIRST TO MARKET” POSITION WITH ARRAY OF DIGITAL PRODUCT OFFERINGS, SERVICES AND MARKETING SOLUTIONS Amplified: Lee’s Omnichannel Marketing Solution Amplified offers omnichannel digital marketing solutions for local advertisers
Slide 23: Amplified Is Growing Rapidly
23 DIGITAL TRANSFORMATION: AMPLIFIED IS GROWING RAPIDLY AMPLIFIED –LEE’S FULL-SERVICE DIGITAL AGENCY IS EXPECTED TO CONTINUE TO GROW SIGNIFICANTLY • Overview of Amplified: ‒ Provides full suite of digital services such as omnichannel marketing solutions, audience targeted display, SEM, social audien
Slide 24: Five-Year Digital Advertising Outlook
24 DIGITAL TRANSFORMATION: FIVE-YEAR DIGITAL ADVERTISING OUTLOOK DIGITAL ADVERTISING GROWTH IS FUELED BY AMPLIFIED • Amplified will drive digital marketing services revenue growth. ‒ Rapidly growing digital marketing services provider with $47M of revenue over the last twelve months, up 59% ‒ Levera
Slide 25: Digital Transformation: Key Takeaways
25 DIGITAL TRANSFORMATION: KEY TAKEAWAYS Digital Subscriptions Digital Advertising .. Lee is the fastest growing digital subscription platform with a strong track record of accelerating digital subscription growth .. With 450,000 digital subscriptions, Lee is halfway to reaching its 2026 goal of 900
Slide 26: Strong Track Record of Sustainable Cost Management
26 STRONG TRACK RECORD OF SUSTAINABLE COST MANAGEMENT • Proficient in driving efficiencies ‒ Acquisition synergies and business transformation initiatives expected to drive $114M in cost reductions since 2019 (proforma for the acquisition), net of investments ‒ Current base of +$300M of direct costs
Slide 27: Investing in Digital and Agency Sales Talent
27 LEE HAS BEEN INVESTING IN DIGITAL AND AGENCY SALES TALENT TO SUPPORT GO-TO-MARKET STRATEGY AT THE LOCAL LEVEL • To further our digital transformation, we have been investing in elite, digital-first sales professionals who can serve our customers’ evolving needs • We have created an organization t
Slide 28: Digital Transformation: Required Investments
28 DIGITAL TRANSFORMATION: REQUIRED INVESTMENTS $15M of incremental investments expected in FY22 LEE IS MAKING VALUE-ADDED INVESTMENTS TO DRIVE ITS DIGITAL TRANSFORMATION TALENT AND TEAM • Data and technology team with AI expertise • Brand development and strategic marketing experts • User experienc
Slide 29: Five Year Outlook: Strengthened Balance Sheet
29 DIGITAL TRANSFORMATION FIVE YEAR OUTLOOK: STRENGTHENED BALANCE SHEET • $20M in debt reduction in Q1 2022 and $113M since refinancing in March 2020 • Favorable credit agreement with Berkshire Hathaway ‒ 25-year runway w/ no breakage costs or prepayment penalties ‒ Fixed annual interest rate, no fi
Slide 30: Acquisition of BH Media Group
30 TODAY’S LEE IS THE RESULT OF PRUDENT DEAL-MAKING: THE ACQUISITION OF BH MEDIA GROUP Increased scale • Added 31 media operations with print and digital platforms; nearly doubled audience size • Immediately accretive to Lee earnings pre-synergies Significant revenue opportunities and highly achieva
Slide 31: Digital Transformation Has Created Value for Shareholders
31 LEE’S DIGITAL TRANSFORMATION HAS CREATED VALUE FOR OUR SHAREHOLDERS One-Year TSR1 TSR Since Announcement of Lee’s Three-Pillar Strategy1,2 TSR During CEO’s Tenure1,3 Three-Year TSR1 1 Source: FactSet. Data as of February 16, 2022. 2 Note: Start date of April 4, 2021. 3 Note: Start date of Februar
Slide 32: Lee Has the Right Board to Oversee Our Digital Strategy
32 Lee Has the Right Board to Oversee the Execution of Our Digital Strategy
Slide 33: The Board Is Purpose-Built for Digital Growth Strategy
33 THE BOARD IS PURPOSE-BUILT AND ACCOUNTABLE FOR LEE’S DIGITAL GROWTH STRATEGY Directors with Deep, Relevant Skills & Experiences .. Our directors collectively have decades of senior executive experience at leading publishing, media and digital subscription companies .. Our directors are well-verse
Slide 34: Lee's Board Has Relevant Experience
34 LEE’S BOARD HAS RELEVANT EXPERIENCE Digital Media & Journalism Operations Finance, Accounting & Capital Markets Executive Leadership All 8 directors have experience in digital technologies and services, including digital subscription businesses. 7 of our 8 directors have media and journalism expe
Slide 35: Our Directors Have Complementary Skills
35 OUR DIRECTORS HAVE COMPLEMENTARY SKILLS Mary E. Junck Chairman Steven Fletcher Independent Director Megan R. Liberman Independent Director Brent Magid Independent Director Kevin D. Mowbray President & CEO Herbert W. Moloney III Lead Independent Director David Pearson Independent Director Gregory
Slide 36: Board Substantially Refreshed Over Last Three Years
36 THE BOARD HAS BEEN SUBSTANTIALLY REFRESHED OVER THE LAST THREE YEARS JANUARY 2019 Mary E. Junck Chairman Kevin Mowbray President & CEO Steven Fletcher Independent Director Added 2020 Megan R. Liberman Independent Director Added 2019 Brent Magid Independent Director Herbert W. Moloney III Lead Ind
Slide 37: New Directors Have Strong Digital Expertise
37 NEW DIRECTORS HAVE STRONG DIGITAL EXPERTISE Megan R. Liberman Director Since June 2019 DIRECTORS ADDED SINCE 2019 Steven Fletcher Director Since February 2020 David Pearson Director Since February 2020 Current and Past Experience .. SiriusXM, Senior Vice President, News, Talk & Entertainment resp
Slide 38: Lee Is Committed to Strong Corporate Governance
38 LEE IS COMMITTED TO STRONG CORPORATE GOVERNANCE Majority vote standard for uncontested director elections Separate Chairman and CEO roles Empowered Lead Independent Director with robust responsibilities Lee’s governance provides ample mechanisms for shareholders to hold the Board accountable Boar
Slide 39: Alden Is Seeking to Acquire Lee at a Discount
39 Alden is Seeking to Acquire Lee at a Discount to Intrinsic Value Through Aggressive Means
Slide 40: Alden Is Seeking to Acquire Lee at a Significant Discount
40 ALDEN IS SEEKING TO ACQUIRE LEE AT A SIGNIFICANT DISCOUNT TO INTRINSIC VALUE Did not seek to engage with the Lee Board privately before announcing its unsolicited, public takeover proposal Attempted to submit director nominations before it even heard our Board’s response to its offer, indicating
Slide 41: The Real Reason for Alden's Attempt to Nominate Directors
41 THE REAL REASON FOR ALDEN’S ATTEMPT TO NOMINATE DIRECTORS .. Despite claiming publicly that Alden’s nominees were intended to benefit Lee, the facts clearly highlight Alden’s reasons for nominating directors. The truth is, Alden’s proxy contest has nothing to do with Alden’s desire to improve Lee
Slide 42: Alden Made No Attempt to Constructively Engage
42 ALDEN MADE NO ATTEMPT TO CONSTRUCTIVELY ENGAGE PRIOR TO – OR AFTER – MAKING ITS PROPOSAL November 22 Lee Board confirms receipt and retains financial advisors to carefully review proposal December 3 Lee Board informs Alden that its director nominations are invalid December 9 Lee Board announces u
Slide 43: Alden's Initial Proposal Was Inadequate, Shown by Stock Price
43 ALDEN’S INITIAL PROPOSAL WAS INADEQUATE, AS DEMONSTRATED BY THE STOCK PRICE ITSELF .. Alden waited for the stock to reach a low of ~$18 in November 2021 to make its unsolicited proposal of $24 per share for the Company .. Lee’s stock rose above the offer price almost immediately, demonstrating sh
Slide 44: Lee's Board Thoroughly Reviewed Alden's Proposal
44 LEE’S BOARD THOROUGHLY REVIEWED ALDEN’S PROPOSAL .. Lee’s Board of Directors is actively engaged with designing and overseeing the execution of Lee’s long-term strategy .. In response to Alden’s unsolicited proposal, the Board engaged financial and legal advisors, J.P. Morgan and Kirkland & Ellis
Slide 45: Largest Shareholders Agree Alden's Proposal Undervalues Lee
45 LEE’S LARGEST SHAREHOLDERS AGREE THAT ALDEN’S $24/SHARE PROPOSAL SIGNIFICANTLY UNDERVALUES LEE We believe the gap between [LEE’s] economic and the accounting value is enormous… Digital media thrives as print newspapers wane as LEE grows digital. We expect the digital segment to eclipse print shor
Slide 46: Alden's Withhold Campaign Seeks to Further Its Interests
46 We Believe Alden’s Withhold Campaign Seeks to Further Its Interests, Not the Interests of Lee’s Public Shareholders
Slide 47: Alden's Interests Not Aligned with Other Shareholders
47 WE BELIEVE ALDEN’S INTERESTS ARE NOT ALIGNED WITH THOSE OF OTHER LEE SHAREHOLDERS Interests of Lee Shareholders Alden’s Misaligned Interest Continue to execute on the Company’s digital transformation strategy and position the business for sustainable growth .. Execute on the three-pillar growth s
Slide 48: Alden's Playbook Is Familiar: Tribune
48 ALDEN’S PLAYBOOK IS FAMILIAR: IT WORKED FOR ALDEN AT TRIBUNE After destabilizing Tribune, including by having the CEO leave and gaining three seats, Alden was able to acquire Tribune Alden Tactic Approach at Tribune Approach at Lee Stealthily accumulate a large ownership position Alden acquired ~
Slide 49: Alden's Campaign Risks Severe Disruption
49 ALDEN’S SELF-SERVING CAMPAIGN RISKS CAUSING SEVERE DISRUPTION TO LEE’S PROGRESS .. The directors up for election this year have important leadership roles on the Board and at the Company Mary Junckis the Chair of the Board, and her in-depth knowledge of the Company and the publishing industry giv
Slide 50: Lee's Board Nominees Are Essential
50 LEE’S BOARD NOMINEES ARE ESSENTIAL TO DRIVING THE EXECUTION OF ITS DIGITAL GROWTH STRATEGY Mary E. Junck Chairman 49 years industry experience Kevin D. Mowbray President & CEO 35 years industry experience Herbert W. Moloney III Lead Independent Director 30 years industry experience Deep publishin
Slide 51: Nominating Committee and Board Retirement Policy
51 THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE MET SPECIFICALLY TO DISCUSS THE BOARD RETIREMENT POLICY .. The Nominating and Corporate Governance Committee met specifically to discuss the re-nomination of Ms. Junckand Mr. Moloney and the Company’s age-based retirement guidelines .. As a member
Slide 52: Board Had Good Faith Basis to Reject Nomination Notice
52 LEE’S BOARD HAD A GOOD FAITH BASIS TO REJECT ALDEN’S INVALID NOMINATION NOTICE Delaware Chancery Court acknowledged Lee’s Board acted in good faith in rejecting Alden’s invalid nomination notice Lee Bylaw Requirement Common / Uncommon Why Is It Important? Alden Complied? Key Facts A nominating st
Slide 53: Alden's Claims Are Misleading
53 ALDEN’S CLAIMS ARE MISLEADING Alden’s Misleading Claim Lee’s Response “…[W]e question the circumstances under which Ms. Junck and Mr. Moloney have been re- nominated given that Lee’s Corporate Governance Guidelines include a director retirement policy that takes effect if a director would be age
Slide 54: Alden's Claims Are Misleading (Cont'd)
54 ALDEN’S CLAIMS ARE MISLEADING (CONT’D) Alden’s Misleading Claim1 Lee’s Response “[There is a] troubling pattern of exorbitant payments over the course of two decades to companies related to Mr. Moloney…” .. Mr. Moloney served as President and COO of Western Colorprint for five years from 2006 unt
Slide 55: Alden's Claims Are Misleading (Cont'd)
55 ALDEN’S CLAIMS ARE MISLEADING (CONT’D) Alden’s Misleading Claim1 Lee’s Response “This campaign is not about preparing the Company for sale” .. Alden’s own communications indicate that its attempt to nominate directors was integral to its attempted takeover of Lee .. In an email, Alden exclaimed t
Slide 56: Alden's Claims Are Misleading (Cont'd)
56 ALDEN’S CLAIMS ARE MISLEADING (CONT’D) Alden’s Misleading Claim1 Lee’s Response “[Mary Junck, Herb Moloney and Kevin Mowbray] unilaterally rejected [Alden’s] nominees and claimed that [its] nomination notice was invalid without involving any other member of the Board…” .. This is completely untru
Slide 57: Alden's Claims Are Misleading (Cont'd)
57 ALDEN’S CLAIMS ARE MISLEADING (CONT’D) Despite the challenges of the pandemic, Lee has executed on its Three Pillar Digital Growth strategy and delivered value for shareholders The Pandemic Severely Impacted the Media Business .. The decline in demand for advertising (especially print advertising
Slide 58: Conclusion
58 Conclusion
Slide 59: Board's Response Was Thorough and Deliberative
59 OUR BOARD’S RESPONSE TO ALDEN’S INTEREST HAS BEEN THE RESULT OF A THOROUGH AND DELIBERATIVE PROCESS Our Board will continue to focus on serving the interests of all shareholders Independent, Thoughtful Evaluation of Alden’s Proposal .. Lee’s Board is comprised of directors with decades of collect
Slide 60: Alden Seeks to Further Its Own Interest
60 ALDEN IS SEEKING TO FURTHER ITS INTEREST, NOT THE INTERESTS OF OUR OTHER SHAREHOLDERS Alden’s Interest Is This in the Interest of Other Lee Shareholders? Buy Lee before the market recognizes the value of Lee’s progress and opportunity No. Unsettle local newsrooms, making it more difficult for Lee
Slide 61: Warren Buffett Continues to Believe We Are Well-Positioned
61 WARREN BUFFETT CONTINUES TO BELIEVE WE ARE WELL-POSITIONED TO EXECUTE ON OUR TRANSFORMATION As Lee’s sole lender, Berkshire Hathaway remains highly confident in Lee’s Board and management as they continue to navigate the ever-evolving newspaper industry.” Warren Buffett, February 14, 2022 Note: P
Slide 62: Your Vote Is Very Important
62 YOUR VOTE IS VERY IMPORTANT We believe Alden’s efforts to remove key leaders from our Board is an attempt to further its efforts to acquire the Company at a grossly inadequate price and to take value that rightly belongs to all of Lee’s shareholders Your Board strongly urges all Lee shareholders
Slide 63: Please Vote the WHITE Proxy Card
63 PLEASE VOTE THE WHITE PROXY CARD Shareholders Call Toll Free: 800-662-5200 All Others Call: 203-658-9400 Email: LEE@investor.MorrowSodali.com If you have any questions or require any assistance in voting your shares, please contact our proxy solicitor
Slide 64: Disclaimer
64 DISCLAIMER Forward-Looking Statements The information provided in this presentation may include forward-looking statements relating to future events or the future financial performance of the Company. Because such statements are subject to risks and uncertainties, actual results may differ materi
Slide 65: Appendix
65 Appendix
Slide 66: Reconciliation of Non-GAAP Financial Measures
66 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted EBITDA is a non-GAAP financial performance measure that enhances financial statement users overall understanding of the operating performance of the Company. The measure isolates unusual, infrequent or non-cash transactions from the operating
Slide 67: Reconciliation of Non-GAAP Financial Measures
67 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Cash Costs is a non-GAAP financial performance measure represent a non-GAAP financial performance measure of operating expenses which are measured on an accrual basis and settled in cash. This measure is useful to investors in understanding the compon
Slide 68: Board Adopted a Shareholder Rights Plan
68 LEE’S BOARD ADOPTED A SHAREHOLDER RIGHTS PLAN TO PROVIDE IT TIME TO SERVE SHAREHOLDERS’ INTERESTS Provides Board and shareholders with adequate time and opportunity to fully assess any potential action; important especially given seemingly inconsistent Alden SEC ownership disclosures Contains com
Slide 69: Alden's Reign of Terror in Newsrooms Across America
69 ALDEN’S REIGN OF TERROR IN NEWSROOMS ACROSS AMERICA The photo on the left shows 142 members of The Denver Post’s newsroom staff in the newspaper’s lobby as it existed on May 15, 2013. The photo illustration on the right shows the toll that layoffs and constant turnover have taken on the staff in
Slide 70: Alden's Reign of Terror in Newsrooms, Continued
70 ALDEN’S REIGN OF TERROR IN NEWSROOMS ACROSS AMERICA, CONTINUED A Secretive Hedge Fund Is Gutting Newsrooms Inside Alden Global Capital By McKay Coppins October 14, 2021 “The Tribune had been profitable when Alden took over. The paper had weathered a decade and a half of mismanagement and declinin
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