LEE Lee Enterprises, Inc - 10-K

ITEM 1A. RISK FACTORS

The risks described below could materially and adversely affect our business, financial condition and results of operations. We could also be affected by additional risks that apply to all companies operating in the U.S., as well as other risks that are not presently known to us or that we currently consider to be immaterial. These Risk Factors should be carefully reviewed in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 and our Financial Statements and Supplementary Data in Item 8 of this Report. For ease of review, the risk factors generally have been grouped into categories, but many of the risks described in a given category relate to multiple categories.

Risks Related to our Business and Operations

Our advertising revenues may decline due to weakness in the retail sector.

A significant portion of our revenue is derived from advertising and a decline in the financial or economic conditions of our advertisers could alter discretionary spending by those advertisers. Our publications' and websites' advertisers are primarily retail businesses, which have been challenged in recent years by increased competition from online retailers. This trend has reduced and may continue to reduce advertising revenue from the brick-and-mortar retail sector. Specifically, advertising revenues may worsen if advertisers reduce their budgets, shift their spending priorities, are forced to consolidate, or cease operations.

Our ability to generate revenue is highly sensitive to the strength of the economies in which we operate and the demographics of the local communities we serve.

Our advertising and marketing services revenues and subscription revenues depend upon a number of factors, including the size and demographic characteristics of the local population; the general local economic conditions; and the economic condition of the retail segments in the communities that our publications serve. In the case of an economic downturn in a market, our publications, revenues, and profitability in that market could be adversely affected. Our advertising and marketing services revenues could also be affected by negative trends in the general economy that affect consumer spending. The advertisers in our newspapers, other publications, and related websites are primarily retail businesses that can be significantly affected by regional or national economic downturns and other developments. Declines in the U.S. economy could also significantly affect key advertising revenue categories, such as help wanted, real estate, and automotive.

Uncertainty and adverse changes in the general economic conditions of markets in which we participate and increases in costs of raw materials, energy, labor and other factors may negatively affect our business.

Our business and the companies with which we do business are subject to risks and uncertainties caused by factors beyond our control. Such factors include economic pressures related to high inflation, rising interest rates, economic weakness or recession, as well as geopolitical and public health events such as the wars in Ukraine and Israel, pandemics, and workforce expectations.

In the past, these and other similar conditions and events have resulted in, and could lead to, a tightening of credit and capital markets, lower levels of liquidity, lower consumer and business spending, unemployment, declines in real estate values, increases in employee-related costs, and other adverse economic conditions. These changes may negatively affect the sales of our products, increase exposure to losses from bad debts, increase the cost and decrease the availability of financing, or increase costs associated with publishing and distributing our publications. In addition, printing and distribution costs, including the costs of paper and ink, are a significant expense for us. We expect increases in these costs in the near-term from various factors, including increases in the cost of raw materials, energy, labor, transportation, and distribution, due to inflation and other adverse factors on the economy.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial results. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm the business and trading price of our common stock.

As a public company, we are required to maintain effective internal controls for financial reporting and disclosure controls and procedures. In the past, our testing has revealed and in the future may reveal deficiencies in our

Table of Contents

internal controls over financial reporting that are deemed to be material weaknesses. In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner, the market price of our stock could decline if investors and others lose confidence in the reliability of our financial statements and we could be subject to sanctions or investigations by the SEC, Nasdaq, or other applicable regulatory authorities.

The collectability of accounts receivable under adverse economic conditions could deteriorate to a greater extent than provided for in our financial statements and in our projections of future results.

Adverse economic conditions in the U.S. may increase our exposure to losses resulting from financial distress, insolvency, and the potential bankruptcy of our advertising and marketing services customers. Our accounts receivable is stated at net estimated realizable value, and our allowance for credit losses has been determined based on several factors, including receivable agings, significant individual credit risk accounts, and historical experience. If such collectability estimates prove inaccurate, adjustments to future operating results could occur.

The value of our intangible assets may become further impaired, depending upon future operating results.

At September 28, 2025, the carrying value of our goodwill was $323.9 million, the carrying value of mastheads was $3.9 million, and the carrying value of our amortizable intangible assets was $48.0 million. The indefinite-lived assets (goodwill and mastheads) are subject to annual impairment testing and more frequent testing upon the occurrence of certain events or significant changes in our circumstances that indicate all or a portion of their carrying values may no longer be recoverable, in which case a non-cash charge to earnings may be necessary in the relevant period. We may subsequently experience market pressures which could cause future cash flows to decline below our current expectations, or volatile equity markets could negatively impact market factors used in the impairment analysis, including earnings multiples, discount rates, and long-term growth rates. Any future evaluations requiring an asset impairment charge for goodwill or other intangible assets would adversely affect future reported results of operations and stockholders’ equity.

For further information on goodwill and intangible assets, see Note 4 — Goodwill and other intangible assets.

Attracting and retaining highly qualified personnel is difficult and costly, but the failure to do so could negatively affect our operations.

Our businesses depend on the efforts, abilities, and talents of our executive team and other highly qualified employees who possess substantial business, information technology, and operational knowledge. The market for such personnel, including technology-related, product and software development, data science, and digital marketing and sales roles is very competitive, and we cannot ensure success in retaining these employees or hiring and training replacement employees in a timely and cost-effective manner, particularly as we continue to focus on our digital products and services. These risks have been exacerbated by recent labor constraints, a trend of increasing employee turnover, and inflationary pressures on employee wages and benefits.

Natural disasters, extreme weather conditions, public health emergencies or other catastrophic events could negatively affect our business, financial condition, and results of operations.

Natural disasters and extreme weather conditions, such as hurricanes, derecho windstorms, floods, earthquakes, wildfires; acts of terrorism or violence, including active-shooter situations; and public health issues, including pandemics and quarantines, could negatively affect our operations and financial performance. Such events could result in physical damage to our properties, disruptions to our IT systems, temporary or long-term disruption in the supply of products from our suppliers, and delays in the delivery of goods to our printing facilities. Public health issues, whether occurring in the U.S. or Canada, could disrupt our operations, the operations of suppliers, or have an adverse impact on consumer spending and confidence levels.

Table of Contents

Risks Related to our Common Stock

We have no current plans to pay cash dividends on our common stock; as a result, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We have no current plans to pay dividends on our common stock. Any future determination to pay dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, general business conditions and other factors that our board of directors may deem relevant. As a result, you may not receive any return on an investment in our common stock unless you sell your common stock for a price greater than that which you paid for it.

Provisions of our certificate of incorporation and by-laws may delay or prevent a takeover, which may not be in the best interest of our stockholders.

Provisions of Delaware law and our certificate of incorporation and our second amended and restated by-laws (the “by-laws”) could make the acquisition of our Company and the removal of incumbent officers and directors more difficult. Such provisions include restrictions as to when and by whom special meetings of our stockholders may be called. Further, our certificate of incorporation authorizes the issuance of up to 500,000 shares of serial convertible preferred stock and, if, as previously disclosed, certain proposed amendments to the Company’s amended and restated certificate of incorporation (the “Charter Amendments”) are approved by our stockholders at a special meeting of stockholders and effectuated by our board of directors, the Company would be authorized to issue up to an additional 20,000,000 shares of our common stock, 20,000,000 shares of convertible non-voting common stock, and 10,500,000 shares of “blank check” preferred stock with such rights, preferences, privileges and restrictions as may be determined from time to time by our board of directors in its sole discretion, and such preferred stock may be designated rights that could adversely affect the voting power or other rights of the holders of our common stock. Such Charter Amendments to the extent any shares of capital stock are ultimately issued by the Company may also have the effect of diluting equity ownership.

As a Delaware corporation, we are subject to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”). In general, the statute prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date that the person became an interested stockholder unless, subject to certain exceptions, the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. These provisions may have the effect of delaying, deferring or preventing a change in control of our Company without further action by the stockholders.

Equity ownership may become diluted if we conduct the proposed rights offering or another potential equity financing transaction.

On November 10, 2025, we filed a registration statement with respect to the proposed rights offering of up to $50.0 million for general corporate purposes, including capital expenditures and working capital, as well as other activities necessary for our operations, such as investments in technology with respect to advertising strategies, audience outreach, our internal operations, and digital products. If we consummate the proposed rights offering or any other potential equity financing transaction, and existing common stockholders as of the record date do not participate, such non-participating holders will experience dilution in equity ownership. The proposed rights offering will be commenced only following the effectiveness of the registration statement relating to the proposed rights offering and will be made only by means of a prospectus.

The stockholder rights plan, or “poison pill,” includes terms and conditions that could discourage a takeover or other transaction that stockholders may consider favorable.

On March 28, 2024, our board of directors adopted the stockholder rights plan, pursuant to which each holder of record of voting common stock received one preferred share purchase right (a “Right”) for each share of voting common stock outstanding as of April 8, 2024. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series C Participating Convertible Preferred Stock, without par value (the “Preferred Shares”), of the Company at a price of $90.00 per one one-thousandth of a Preferred Share represented by a Right, subject to adjustment. The stockholder rights plan was adopted in response to

Table of Contents

stockholder activism concerns and is intended to protect us and our stockholders from efforts by a single stockholder or group of stockholders to obtain control of the Company without paying a control premium through a number of recognized stockholder protections. Generally, the stockholder rights plan works by causing substantial dilution to any person or group (other than specified exempt persons) that acquires 10% or more of the shares of our voting common stock without the approval of our board of directors. As a result, the overall effect of the stockholder rights plan may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving us that is not approved by our board of directors even if the offer may be considered beneficial by some stockholders.

Risk Related to Competition from Digital Media and Artificial Intelligence

Our operating revenue may be materially adversely affected if we do not successfully respond to the shift in newspaper readership and advertising expenditures away from traditional print media and towards digital media. Significant capital investments may be needed to respond to this shift.

Currently, a primary source of revenue is from advertising and marketing services, which accounts for 45% of our 2025 revenue. Subscription revenue accounts for 46% of our 2025 revenue. The media publishing industry has experienced rapid evolution in consumer demands and expectations due to advances in technology, which have led to a proliferation of delivery methods for news and information. The number of consumers who access online services through devices other than personal computers, such as tablets and mobile devices, has increased dramatically in recent years and likely will continue to increase. The media publishing industry also continues to be affected by demographic shifts, with older generations preferring more traditional print newspaper delivery and younger generations consuming news through digital media. Also, the revenues generated by media publishing companies have been affected significantly by the shift in advertising expenditures towards digital media.

The future revenue performance of our digital business depends to a significant degree upon the growth, development, and management of our subscriber and advertising audiences. The growth of our digital business over the long term depends on various factors, including, among other things, the ability to:

• Continue to increase digital audiences;

• Attract advertisers to our digital platforms;

• Tailor our products to efficiently and effectively deliver content and advertising on mobile devices;

• Maintain or increase the advertising rates on our digital platforms;

• Exploit new and existing technologies to distinguish our products and services from those of competitors and develop new content, products and services;

• Invest funds and resources in digital opportunities;

• Partner with, or use services from, providers that can assist us in effectively growing our digital business; and

• Create digital content and platforms that attract and engage audiences in our markets.

If we are unable to grow our digital audience, distinguish our products and services from those of our competitors or develop compelling new products and services that engage users across multiple platforms, then our business, financial condition, and results of operations may be adversely affected. Responding to the changes described above may require us to make significant capital investments and incur significant research and development costs related to building, maintaining, and evolving our technology infrastructure, and our ability to make the level of investments required may be limited.

Table of Contents

We compete with a large number of companies in the local media industry, including digital media businesses and, if we are unable to compete effectively, our advertising and subscription revenues may decline.

We compete for audiences and advertising revenue with newspapers; digital media such as web-based digital platforms (e.g., Alphabet, Amazon, Meta, X, TikTok etc.), streaming services, podcasts; and traditional media platforms including magazines, broadcast, cable and satellite television, radio, direct mail, and billboards. As use of the Internet and mobile devices increases, we lose revenue from classified advertising and subscribers to free Internet sites containing abbreviated versions of our publications. Some of our current and potential competitors have greater financial and other resources than we have. If we fail to compete effectively with competing newspapers and other media, our results of operations may be materially adversely affected.

We face significant competition from alternative providers of news, information, and entertainment services, some of which provide their products subscription-free. The rapid changes in technologies, platforms and business models and corresponding changes in consumer and customer behavior, may adversely affect our revenue streams if consumers or customers migrate to alternative mediums or providers. In addition, the number of choices available to consumers for content consumption has increased and may adversely impact demand for, and the price consumers are willing to pay for our products and services. As the availability of free content grows so does a consumer trend toward subscription fatigue, which in turn, may negatively affect our circulation, subscription, and advertising revenue and increase subscriber acquisition and retention costs. For example, consumer preferences change frequently and are difficult to predict, and when faced with a multitude of choices, consumers may place greater value on the convenience and price of products and services than they do on their source, quality, or reliability.

Generative AI technology's continued growth, development, and evolution is shifting the landscape among our competitors to adopt AI technology as a tool to create and deliver content to customers as well as act as a stand-alone competitor and such evolutions of AI technology may negatively impact our ability to attract, engage, and retain audience and subscribers, maintain and grow other revenue streams, and other risks.

Recent advances and continued rapid development in generative AI technology may significantly alter the market for our products and services and shift our competitor's focus to adopting AI more quickly. The use of AI both as a tool for our competitors and stand-alone competition, may also affect our ability to monetize our digital audiences. In order to compete effectively, we must differentiate and distinguish our brands and our products and services, respond to and develop new technologies, distribution channels and platforms, products and services, and anticipate and consistently respond to changes in consumer and customer needs, preferences and behaviors.

In addition, online traffic and product and service purchases are also driven by internet search results, referrals from social media and other platforms and visibility on digital marketplace platforms and in mobile app stores. Search engine results and digital marketplace and mobile app store rankings are based on algorithms that are changed frequently, and social media and other platforms may also vary their emphasis on what content to highlight for users. Use of AI in search engines could result in decreased viewership and engagement with our media content. Any failure to successfully manage and adapt to these changes across our businesses, including those affecting how our content, apps, products, and services are discovered, prioritized, displayed, and monetized, could impede our ability to compete effectively by significantly decreasing traffic to our offerings, lowering advertiser interest in those offerings, increasing costs if free traffic is replaced with paid traffic and lowering advertising revenue and subscriptions.

Generative Artificial Intelligence (AI), as a rapidly developing technology, subjects us to risks involving security, protection of intellectual property, ethical concerns, brand trust, reputational harm, legal liability, and the maintenance and growth of revenue streams.

The safe and responsible integration of AI functionality as it rapidly evolves presents emerging ethical and legal challenges, and the use of such technologies may result in diminished brand trust and reputational harm. Our competitors are integrating AI into their business practices which may result in competitive harm and the need to allocate significant resources to protect intellectual property. To responsibly remain competitive, we must develop and maintain our digital platform and ethically integrate new AI functionality in accordance with evolving compliance requirements. Developments in the AI field will simultaneously increase both competition and liability risks while also altering the market for our services. In addition, the use of AI by bad actors presents

Table of Contents

increasingly complex and sophisticated security threats to our confidential subscriber, employee, and Company data, and we must make additional efforts to maintain network security.

Risks Related to Our Indebtedness and Liquidity

Our indebtedness could materially and adversely affect our business or financial condition.

Our current indebtedness, and any future debt incurred, could have significant consequences on our future operations, including making it more difficult to satisfy our debt obligations and meet our operational goals. Our entire outstanding indebtedness is encompassed in a 25-year term loan ("Term Loan") with BH Finance LLC, a Nebraska limited liability company affiliated with Berkshire Hathaway, Inc. ("BH Finance"), which was part of a broader comprehensive refinancing of all of our then-outstanding debt, including a Credit Agreement, dated January 29, 2020 (collectively, the "2020 Refinancing").

At its inception, the aggregate principal amount and applicable interest rate of the Term Loan was $576.0 million and 9% annual rate, respectively, the proceeds of which were used to refinance our then-outstanding debt and fund the acquisition of BH Media and Buffalo News. The Term Loan is collateralized by all Company assets. As of September 28, 2025, the Term Note has an aggregate principal outstanding amount of $455.5 million. Our ability to make scheduled payments depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, competitive, legislative, regulatory, and other factors beyond our control. We may be unable to maintain a level of cash flow sufficient to permit us to pay the principal and interest on our debt.

If our cash flow and capital resources are insufficient to fund our debt obligations, we could face liquidity issues and be forced to reduce or delay investments, acquisitions, and capital expenditures or sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We cannot assure investors we would be able to take any of these alternative actions, such actions would be permitted under the terms of the Credit Agreement, and, even if successful, that such actions would permit us to meet our scheduled debt service obligations.

In addition, the 2020 Refinancing terms impose operating and financial restrictions, including restrictions on incurring additional indebtedness, creating certain liens, making certain investments or acquisitions, issuing dividends, repurchasing shares of Company stock, and engaging in other capital transactions. A failure to satisfy out debt service obligations on the Term Loan could give rise to default. Moreover, these restrictions limit our flexibility in planning for or reacting to changes in our business, the economy, in general, and the economies in which we operate, which, in turn increases our vulnerability to adverse financial consequences related to such changes.

A failure to satisfy our debt service obligations on the Term Loan could give rise to default and, in turn, the right of our lender to accelerate our indebtedness, making all principal and interest becoming due and payable.

Certain actions, including our ability to incur additional indebtedness, require the consent of our lender which, if not provided, would limit our ability to take advantage of future opportunities.

The terms of the 2020 Refinancing limit our ability to take certain actions without requisite lender approval and modification of the loan agreements. These limitations include restrictions on incurring additional indebtedness, creating certain liens, making certain investments or acquisitions, issuing dividends, repurchasing shares of Company stock, and engaging in other capital transactions. While we have an established relationship with BH Finance, whose priorities and interests are familiar to us, there is no assurance BH Finance will approve or consent to our activities, even if the activities are in the best interests of our stockholders. If we are unable to secure the required consent of BH Finance (including with respect to the proposed rights offering and other strategic or financing transactions), our ability to take advantage of future opportunities, including acquisition or financing opportunities, could be restricted.

Table of Contents

Risks Related to Cybersecurity

Our business, operating results, and reputation may be negatively impacted, and we may be subject to legal and regulatory claims if there is a loss, destruction, disclosure, misappropriation, or alteration of or unauthorized access to data owned or maintained by us, or if we are the subject of a significant data breach or cyberattack.

We rely on our information technology and communications systems to manage our business data, including communications, news and advertising content, digital products, order entry, fulfillment and other business processes. These technologies and systems also help us manage many of our internal controls over financial reporting, disclosure controls and procedures and financial systems. Attempts to compromise information technology and communications systems occur regularly across many industries and sectors, and we may be vulnerable to security breaches resulting from accidental events (such as human error) or deliberate attacks. Moreover, the techniques used to attempt attacks and the perpetrators of such attacks are constantly expanding. We face threats both from use of malicious code (such as malware, viruses, and ransomware), employee theft or misuse, advanced persistent threats, and phishing and denial-of-service attacks. We have complied with all applicable legal requirements relating to this activity. As cyberattacks become increasingly sophisticated, and as tools and resources become more readily available to malicious third parties, we will incur increased costs to secure its technology environment and there can be no guarantee that our and our third-party vendors’ actions, security measures and controls designed to prevent, detect or respond to security breaches, to limit access to data, to prevent destruction, alteration, or exfiltration of data, or to limit the negative impact from such attacks, can provide absolute security against compromise. As a result, our business data, communications, news and advertising content, digital products, order entry, fulfillment and other business processes may be lost, destroyed, disclosed, misappropriated, altered or accessed without consent and various controls, automated procedures and financial systems could be compromised.

A significant security breach or other successful attack could result in significant remediation costs, including repairing system damage, engaging third-party experts, deploying additional personnel or vendor support, training employees, and compensation or incentives offered to third parties whose data has been compromised. These incidents may also lead to lost revenues resulting from a loss in competitive advantage due to the unauthorized disclosure, alteration, destruction or use of business data, the failure to retain or attract customers, the disruption of critical business processes or systems, and the diversion of management’s attention and resources. Moreover, such incidents may result in adverse media coverage, which may harm our reputation. These incidents may also lead to legal claims or proceedings, including regulatory investigations and actions and private lawsuits, and related legal fees, as well as potential settlements, judgments and fines. We maintain insurance, but the coverage and limits of our insurance policies may not be adequate to reimburse us for losses caused by security breaches.

On February 3, 2025, we experienced a cybersecurity incident that disrupted certain IT systems and resulted in unauthorized access to certain files (the “Cyber Incident”). The Cyber Incident had a significant negative impact on our 2025 operating results. Various revenue lines were impacted, certain operating expenses were higher than they were prior to the incident, and many projects underway were significantly delayed. For further discussion of how the Cyber Incident materially affected our business, see "Material Effects of Cybersecurity Threats under Item 1C — Cybersecurity" of this Annual Report.

Our possession and use of personal information and the use of payment cards by our customers present risks and expenses that could harm our business. Unauthorized access to or disclosure or manipulation of such data, whether through breach of our network security or otherwise, could expose us to liabilities and costly litigation and damage our reputation.

Our online systems store and process confidential subscriber and other sensitive data, such as names, email addresses, addresses, and other personal information. Therefore, maintaining our network security is critical. Additionally, we depend on the security of our third-party service providers. Unauthorized use of or inappropriate access to our, or our third-party service providers’ networks, computer systems and services could potentially jeopardize the security of confidential information, including payment card (credit or debit) information, of our customers. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, we or our third-party service providers may be unable to anticipate these techniques or to implement adequate preventative measures. A party that is able to circumvent our security measures could misappropriate our

Table of Contents

proprietary information or the information of our customers or users, cause interruption in our operations, or damage our computers or those of our customers or users. As a result of any such breaches, customers or users may assert claims of liability against us and these activities may subject us to legal claims, adversely impact our reputation, and interfere with our ability to provide our products and services, all of which may have an adverse effect on our business, financial condition and results of operations. The coverage and limits of our insurance policies may not be adequate to reimburse us for losses caused by security breaches.

A significant number of our customers authorize us to bill their payment card accounts directly for all amounts charged by us. These customers provide payment card information and other personally identifiable information which, depending on the particular payment plan, may be maintained to facilitate future payment card transactions. Under payment card rules and our contracts with our card processors, if there is a breach of payment card information that we store, we could be liable to the banks that issue the payment cards for their related expenses and penalties. In addition, if we fail to follow payment card industry data security standards, even if there is no compromise of customer information, we could incur significant fines or lose our ability to give our customers the option of using payment cards. If we were unable to accept payment cards, our business would be seriously harmed.

There can be no assurance that any security measures we, or our third-party service providers, take will be effective in preventing a data breach. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. If an actual or perceived breach of our security occurs, the perception of the effectiveness of our security measures could be harmed and we could lose customers or users. Failure to protect confidential customer data or to provide customers with adequate notice of our privacy policies could also subject us to liabilities imposed by United States federal and state regulatory agencies or courts. We could also be subject to evolving state laws that impose data breach notification requirements, specific data security obligations, or other consumer privacy-related requirements. Our failure to comply with any of these laws or regulations may have an adverse effect on our business, financial condition and results of operations.

On February 3, 2025, we experienced a Cyber Incident that disrupted certain IT systems and resulted in unauthorized access to certain files. The Cyber Incident had a significant negative impact on our 2025 operating results. Various revenue lines were impacted, certain operating expenses were higher than they were prior to the incident, and many projects underway were significantly delayed. For further discussion concerning ongoing litigation related to the Cyber Incident, see "Note 19, Commitments and Contingencies," to the consolidated financial statements included in Item 8 of Part II of this Annual Report.

Table of Contents

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion includes comments and analysis relating to our results of operations and financial condition as of and for the year ended September 28, 2025, and for fiscal years 2024 and 2023. This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes thereto, included herein.

EXECUTIVE OVERVIEW

Our 2025 total operating revenue was $562 million, while total Digital Revenue was $298 million, flat to the prior year. Total Print Revenue was $264 million, a 15% decrease to the prior year, representing a 10 percentage-point improvement over the prior year's decline. We continued to deliver positive performance in our digital-only subscription business, driving year-over-year revenue growth of 12%. Through yield management, expanded rates and disciplined subscriber acquisition, we are nearing $100 million in digital-only subscription revenue. Another key piece of our digital business, Amplified Digital® agency, surpassed $100 million in revenue during the year, with growth of 4%.

Operating expenses totaled $571 million and Cash Costs (a non-GAAP financial measure) totaled $524 million, a 7% and 5% decrease compared to the prior year, respectively. Operating expenses in FY25 included $3.7 million of cyber restoration expenses, which are included in the line "Restructuring costs and other". Net loss totaled $36 million and Adjusted EBITDA (a non-GAAP financial measure) totaled $45 million. Cash on the balance sheet totaled $10 million. Debt, net of cash on the balance sheet, totaled $445 million. Since May 2025, we have satisfied all principal and interest payments through organic free cash flow generation.

RECENT DEVELOPMENTS

Proposed Rights Offering

In addition to the Charter Amendments, we previously disclosed that our board of directors has been considering, among various other financing and capital markets transactions, consummating a proposed rights offering of our common stock to existing stockholders, and on November 10, 2025, we filed a registration statement with respect to a proposed rights offering (the “proposed rights offering”). As set forth in the registration statement, we intend to use the proceeds of the proposed rights offering, if the proposed rights offering is consummated, for general corporate purposes, including capital expenditures and working capital, as well as other activities necessary for our operations, such as investments in technology with respect to advertising strategies, audience outreach, our internal operations, and digital products.

Further, in connection with the proposed rights offering, we have an agreement in-principle with our term loan lender that, if we successfully raise the aggregate proposed rights offering amount of $50.0 million in gross proceeds, we will receive a reduction in our annual interest rate from 9% to 5% for five years, resulting in interest savings of approximately $18 million annually and up to $90 million over the five-year period. The consummation of the proposed rights offering, however, is not conditioned on receipt of this interest rate reduction. While our term lender has agreed in-principle to a reduction in our interest expense (and certain other related amendments to our term loan), subject to definitive documentation, there is no assurance that we may be able to enter into any amendments to our term loan on the terms described herein or at all. The proposed rights offering will be commenced only following effectiveness of the registration statement relating to the proposed rights offering and will be made only by means of a prospectus.

We reserve the right to modify, postpone or cancel the proposed rights offering at any time. There is no assurance that the proposed rights offering will be completed on the terms described in this Annual Report, or at all, including with respect to any reduction in our interest expense (or any other related amendments to our term loan), as the terms of which are subject to definitive documentation with our term loan lender.

Table of Contents

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates. We believe the following discussion addresses our most critical accounting estimates, which are those that are important to the presentation of our financial condition and results of operations and require management's most subjective and complex judgments.

Intangible Assets, Other Than Goodwill

Local mastheads (e.g., publishing periodical titles, web site domain names, and trade names) are not subject to amortization. Non-amortized intangible assets are tested for impairment annually during the fourth fiscal quarter or more frequently if events or changes in circumstances suggest the asset might be impaired.

The quantitative impairment test consists of comparing the fair value of each masthead with its carrying amount. We use a relief from royalty approach which utilizes a discounted cash flow model to determine the fair value of each masthead. Management's judgments and estimates of future operating results in determining the intangibles fair values are consistently applied to each underlying business in determining the fair value of each intangible asset. In 2025, 2024, and 2023, we recognized impairment charges of $7.0 million, $7.8 million, and $7.7 million, respectively. As of September 28, 2025 the masthead carrying value is $3.9 million.

Our amortizable intangible assets consist mainly of customer relationships including subscriber lists and advertiser relationships. These asset values are amortized systematically over their estimated useful lives. Intangible assets subject to amortization are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The carrying amount of each asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of such asset group. There were no indicators of impairment on intangible assets subject to amortization in 2025, 2024 or 2023.

Our quantitative impairment analysis includes several inputs that are considered estimates, these include royalty rates, discount rates, five-year revenue forecast, and long term growth rates. All of these estimates are subject to uncertainty as future results may not be achieved. In 2025, the royalty rates utilized a range from 0% to 1.0%; a 50-basis point decrease in royalty rates would result in an additional $1.5 million of impairment. Our discount rate utilized in the analysis has ranged from 12.5% in 2024 to 13.0% in 2025, depending on market conditions. Increasing the discount rate by 100 basis points would result in an additional $0.1 million of impairment. We have used various forecasts in the analysis over different years.

Future decreases in our market value, or significant differences in revenue, expenses or cash flows from estimates used to determine fair value, could result in additional intangible asset impairment charges in the future.

For information related to our Goodwill impairment analysis, refer to Note 4 to the Consolidated Financial Statements.

Pension, Postretirement and Postemployment Benefit Plans

We, along with our subsidiaries, have various defined benefit retirement plans, postretirement plans and postemployment plans, under which substantially all of the benefits have been frozen in previous years.

We account for our pension, postretirement and postemployment plans in accordance with the applicable accounting guidance, which requires us to include the funded status of our pension plans in our balance sheets and to recognize, as a component of other comprehensive (loss) income, the gains or losses that arise during the period but are not recognized in pension expense. The service cost component of net period benefit cost is reported on the Consolidated Statements of Income and Comprehensive (Loss) Income and included in Compensation while all other components are included in other non-operating income/expense.

The determination of pension and postretirement plan obligations and expense is based on a number of actuarial assumptions. Two critical assumptions are the discount rates applied to pension and postretirement plan obligations and the expected long-term rate of return on plan assets.

Table of Contents

The discount rate assumption is based on investment yields available at year-end on corporate bonds rated AA and above with a maturity to match the expected benefit payment stream. To determine the expected long-term rate of return of assets, we consider the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets, input from the actuaries and investment consultants and long- term inflation assumptions. In 2025, we used an expected return of assets assumption of 5.5% for our pension plan assets and 6.0% for our postretirement and postemployment benefit plan assets.

A 50-basis point decrease in discount rates would result in an increase of $8.4 million to pension and $0.1 million to postretirement and postemployment benefits liabilities. A 50-basis point decrease in expected rate of return of assets results would result in an increase of $0.9 million to pension and $0.1 million postretirement and postemployment benefits expense.

Income Taxes

We are subject to income taxes in the U.S. and record our tax provision based on the expected tax consequences of our operations. Tax laws are complex and open to interpretation, requiring significant judgment in determining our current and deferred income tax provisions, as well as any valuation allowance on deferred tax assets, if any.

Our current and deferred income tax provisions are calculated based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. We review these estimates throughout the year and record adjustments when actual results are known.

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using currently enacted tax rates. Deferred tax assets and liabilities are based on differences between the financial reporting and tax bases of assets and liabilities, using enacted tax rates. Deferred income tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred income tax assets will not be realized. These balances are adjusted for the effects of changes in tax laws and rates on the date of enactment.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are recorded in the period of change. Interest and penalties on unrecognized tax benefits are included in income tax expense.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 1 to the Consolidated Financial Statements for a description of new accounting standards issued and/or adopted in the year ended September 28, 2025.

Table of Contents

OPERATIONS

Operating results, as reported in the Consolidated Financial Statements, are summarized below:

(Thousands of Dollars, Except Per Common Share Data)

Percent Change

Percent Change

Operating revenue:

Print Advertising revenue

Digital Advertising and marketing services revenue

Advertising and marketing services revenue

Print Subscription revenue

Digital Subscription revenue

Subscription revenue

Print Other revenue

Digital Other revenue

Other revenue

Total operating revenue

Operating expenses:

Compensation

Newsprint and ink

Other operating expenses

Depreciation and amortization

Assets loss on sales, impairments and other, net

Restructuring costs and other

Total operating expenses

Equity in earnings of associated companies

Operating (loss) income

Non-operating (expense) income:

Interest expense

Pension withdrawal cost

Pension and OPEB related benefit and other, net

Curtailment/Settlement gain

Total non-operating expense, net

Loss before income taxes

Income tax benefit

Net loss

Loss per common share:

Basic

Diluted

We disposed of certain properties in each of 2025, 2024 and 2023.

Table of Contents

Discussions of the year ended September 29, 2024 and comparison of the years ended September 29, 2024 and September 24, 2023 can be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Annual Report on Form 10-K for the year ended September 29, 2024, filed on December 12, 2024 which section is incorporated by reference herein.

To facilitate a comparison of our results without the impact of the 53rd week of revenues and expenses, certain revenue and expense trends, as described below, are presented on a comparable basis which is calculated by removing the 53rd week of revenue or expense in 2024.

OPERATING REVENUE

Total operating revenue totaled $562.3 million in 2025, down $49.0 million, or 8.0%, compared to 2024. On a comparable basis, total operating revenue declined 6.5%.

Advertising and marketing services revenue totaled $253.0 million in 2025, down $22.7 million, or 8.2% compared to 2024. On a comparable basis, advertising and marketing services revenue declined 6.8%. Print advertising revenues were $69.2 million in 2025, down $12.3 million, or 15.1% compared to 2024. On a comparable basis, print advertising revenue was down 13.3%. The decline is due to continued secular declines in demand for print advertising and impacts from the Cyber Incident, which limited capacity for print advertising for certain publications for several months. Digital advertising revenue totaled $183.8 million in 2025, down $10.4 million, or 5.3% compared to 2024. On a comparable basis, revenue declined 4.0%. Digital advertising revenue represented 72.7% of 2025 total advertising and marketing services revenue compared to 70.4% in 2024. The decline in digital advertising revenue is mainly attributed to the traditional classified categories, programmatic, digital advertising tied to legacy print campaigns, and the cyber incident. Partially offsetting these declines, digital marketing services revenue increased 3.0% compared to the prior year.

Subscription revenue totaled $258.4 million in 2025, down $23.5 million , or 8.3%, compared to 2024. The decline in subscription revenue was driven by secular reductions in demand for print subscriptions. Print volumes declined during 2025, consistent with historical and industry trends. Digital-only subscription revenue is up nearly 12% over 2024 on a reported basis.

Other revenue, which primarily consists of digital services from BLOX Digital and commercial printing revenue, totaled $50.9 million, a 5.3% decrease compared to 2024. On a comparable basis, other revenue decreased 4.2%. Digital services revenue totaled $20.1 million in 2025, a 2.1% decrease compared to 2024. On a comparable basis digital services revenue decreased 1.6%. Commercial printing revenue totaled $16.2 million in 2025, a 7.4% decline compared to 2024, primarily driven by reduction in print volumes from our partners. On a comparable basis, commercial printing revenue was down 5.8%.

Total digital revenue including digital advertising revenue, digital-only subscription revenue and digital services revenue totaled $298.1 million in 2025, flat to 2024, and represented 53.0% of our total operating revenue in 2025, compared to 48.9% in 2024.

OPERATING EXPENSES

Total operating expenses totaled $571.3 million, a 6.6% decrease compared to 2024. Cash Costs (a non-GAAP financial measure discussed below) were $523.6 million, a 5.4% decrease compared to 2024.

Compensation expense totaled $216.0 million in 2025, a 7.9% decrease compared to 2024. The decrease is attributable to reductions in full-time employees ("FTEs") due to continued business transformation efforts, partially offset by investments in digital talent.

Newsprint and ink costs totaled $13.0 million in 2025, a 22.9% decrease compared to 2024. This decrease was attributable to declines in newsprint volumes.

Other operating expenses totaled $294.6 million in 2025, down 2.4% compared to 2024. Other operating expenses include all operating costs not considered to be compensation, newsprint, depreciation and amortization, restructuring costs and assets loss on sales, impairments, and other, net. The largest components are costs associated with printing and distribution of our printed products, digital cost of goods sold and facility

Table of Contents

expenses. The decrease is primarily attributable to lower delivery and other print-related costs due to lower volumes of our print edition, partially offset by increases in digital cost of goods sold.

Depreciation expense decreased $2.8 million, or 26.6%, in 2025. Amortization expense decreased $6.0 million, or 34.9%, in 2025. The decrease in both is attributable to assets becoming fully depreciated or amortized.

Assets loss on sales, impairments and other totaled $3.0 million in 2025 compared to $11.2 million in 2024. Impairments within this category were $7.0 million in 2025 and $7.8 million in 2024, respectively, related to mastheads. Additionally, $4.2 million of goodwill was allocated to the sale of certain non-core operations in 2025 and $1.3 million in 2024.

Restructuring costs and other totaled $25.9 million and $19.3 million in 2025 and 2024, respectively. The increase is primarily driven from costs associated with recovering from the Cyber Incident, closing down outsourced production facilities, ongoing business transformation efforts, and severance. Restructuring costs and other include severance costs, litigation expenses, restructuring expenses, cyber restoration costs, and advisor expenses.

The factors noted above resulted in an operating loss of $4.7 million in 2025 compared to a gain of $4.5 million in 2024.

NON-OPERATING INCOME AND EXPENSES

Non-operating expense increased by $2.3 million , or 6.4%, primarily due to the absence of a $3.6 million pension curtailment gain recognized in 2024. Interest expense decreased $0.7 million, or 1.8%, to $40.5 million in 2025, compared to the same period last year. The decrease was due to a lower average outstanding balance on our debt. Our weighted average cost of debt was 9% at September 28, 2025 and September 29, 2024.

INCOME TAXES

We recorded income tax benefit of $6.9 million, or 16.2% of pretax loss in 2025 and $7.6 million, or 24.4% of pretax loss in 2024 . See Note 13 of the Notes to the Consolidated Financial Statements, included herein, for a discussion of the difference between the expected federal income tax rate and the actual tax rates.

NET LOSS AND EARNINGS PER SHARE

Net loss was $35.7 million in 2025 compared to net loss of $23.6 million in 2024. Loss per common share was $6.20 in 2025 compared to a loss of $4.35 per share in 2024. The change reflects the various items discussed above.

NON-GAAP FINANCIAL MEASURES

We use non-GAAP financial performance measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

In this report, we present Adjusted EBITDA and Cash Costs which are non-GAAP financial performance measures that exclude from our reported GAAP results the impact of certain items consisting primarily of restructuring charges and non-cash charges. We believe such expenses, charges and gains are not indicative of normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies. In the future, however, we are likely to incur expenses, charges and gains similar to the items for which the applicable GAAP financial measures have been adjusted and to report non-GAAP financial measures excluding such items. Accordingly, exclusion of those or similar items in our non-GAAP presentations should not be interpreted as implying the items are non-recurring, infrequent, or unusual.

We define our non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, as follows:

Adjusted EBITDA is a non-GAAP financial performance measure that enhances financial statement users' overall understanding of our operating performance. The measure isolates unusual, infrequent, or non-cash transactions from the operating performance of the business. This allows users to easily compare operating performance among various fiscal periods and how management measures the performance of the business.

Table of Contents

This measure also provides users with a benchmark that can be used when forecasting our future operating performance that excludes unusual, nonrecurring or one-time transactions. Adjusted EBITDA is also a component of the calculation used by stockholders and analysts to determine the value of our business when using the market approach, which applies a market multiple to financial metrics. It is also a measure used to calculate our leverage ratio, which is a key financial ratio monitored and used by us and our investors. Adjusted EBITDA is defined as net income (loss), plus non-operating expenses, net, income tax expense (benefit), depreciation and amortization, assets loss (gain) on sales, impairments and other, restructuring costs and other, stock compensation and our 50% share of EBITDA from TNI and MNI, minus equity in earnings of TNI and MNI.

Cash Costs 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 components of our cash-settled operating costs. Generally, we provide forward-looking guidance of Cash Costs, which can be used by financial statement users to assess our ability to manage and control its operating cost structure. Cash Costs are defined as compensation, newsprint and ink and other operating expenses and exclude restructuring costs and other, which are typically settled in cash.

Adjusted EBITDA and Cash Costs are reconciled to net income (loss) and operating expenses, below, the closest comparable numbers under GAAP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

The table below reconciles the non-GAAP financial performance measure of Adjusted EBITDA to net income, the most directly comparable GAAP measure:

(Thousands of Dollars)

Net loss

Adjusted to exclude

Income tax benefit

Non-operating expenses, net

Equity in earnings of TNI and MNI

Assets loss on sales, impairments and other, net

Depreciation and amortization

Restructuring costs and other

Stock compensation

Add:

Ownership share of TNI and MNI EBITDA (50%)

Adjusted EBITDA

The table below reconciles the non-GAAP financial performance measure of Cash Costs to Operating expenses, the most directly comparable GAAP measure:

(Thousands of Dollars)

Operating expenses

Adjustments

Depreciation and amortization

Assets loss on sales, impairments and other, net

Restructuring costs and other

Cash Costs

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash requirements are related to working capital, debt service obligations, and capital expenditures. We expect to meet these needs through cash generated from operations, supplemented by our existing cash balances. Our ability to operate as a going concern is dependent on our ability to remain in compliance with debt covenants and to repay, refinance or amend our debt agreements as they become due. Our Credit Agreement has only limited affirmative covenants with which we are required to maintain compliance and there are no leverage or financial performance covenants. We are in compliance with our debt covenants at September 28, 2025.

We continue to take proactive steps to reduce our cost structure and preserve liquidity. Recent actions include targeted cost-reduction and cash-management initiatives such as lowering discretionary and capital spending, tightening control of print-related operating costs, and enhancing collection efforts to improve working capital. We also received temporary lease and interest payment waivers during the second quarter as part of our cyber-recovery plan. Management is actively evaluating additional strategic initiatives and financing and capital markets transactions designed to ensure adequate cash flow and capital resources to support ongoing operations and meet debt obligations. While there can be no assurance that all initiatives will be implemented as planned, delays or unforeseen challenges in executing these measures could adversely affect our financial position and results of operations.

Operating Activities

Cash used in operating activities totaled $5.5 million in 2025 and $3.2 million in 2023, while cash provided by operating activities totaled $1.1 million in 2024. Our primary sources of cash from operations are receipts from digital and print subscribers, advertising and marketing services customers, and commercial printing and delivery contracts. The primary uses of operating cash include compensation and benefits, newsprint and ink purchases, distribution costs, and payments for third-party services.

The year-over-year decrease in cash provided by operating activities was primarily driven by lower operating results, reflecting a $20.1 million decline in operating performance (net loss adjusted for non-working capital items). This was partially offset by $10.1 million of non-cash interest expense related to a waiver of three monthly interest payments owed to BH Finance LLC as a result of the February cyber incident (additional disclosure can be found in Note 6 - Debt). We saw a $3.3 million increase in working capital largely influenced by the February cyber incident, which temporarily elevated both accounts payable and accounts receivable balances.

We continue to focus on initiatives to enhance operating cash flows through improved working capital management, disciplined cost control, and targeted investment in digital growth areas.

Investing Activities

Cash provided by investing activities totaled $7.7 million in 2025, $3.7 million in 2024 and $8.6 million in 2023 and is driven by cash received from asset sales of $9.3 million in 2025 offset by purchases capital expenditures during the year of $1.5 million. Proceeds from asset sales totaled $9.3 million in 2025, compared to $13.5 million in 2024 and $12.0 million in 2023. We continue to pursue opportunities to monetize non-core assets, primarily excess real estate, as part of our broader capital optimization efforts.

Financing Activities

Cash used in financing activities totaled $1.8 million in 2025, compared to $9.8 million in 2024 and 7.1 million in 2023. Debt reduction accounted for the majority of cash used in financing activities. We continue to prioritize deleveraging and disciplined capital management to strengthen the balance sheet and maintain flexibility to invest in our digital transformation strategy.

Additional Information on Liquidity

At September 28, 2025, cash and cash equivalents totaled $10.0 million. Liquidity was negatively affected by lower cash generation during the year, transformation-related investments, and temporary disruption from the February 2025 cyber incident.

Table of Contents

We continue to take proactive steps to reduce our cost structure and preserve liquidity. Recent actions include targeted cost-reduction and cash-management initiatives such as lowering discretionary and capital spending, tightening control of print-related operating costs, and enhancing collection efforts to improve working capital. We also received temporary lease and interest payment waivers during the second quarter as part of our cyber-recovery plan. Management is actively evaluating additional strategic initiatives designed to ensure adequate cash flow and capital resources to support ongoing operations and meet debt obligations. While there can be no assurance that all initiatives will be implemented as planned, delays or unforeseen challenges in executing these measures could adversely affect our financial position and results of operations. To preserve liquidity, we implemented targeted cost-reduction and cash-management initiatives, including lower discretionary and capital spending, tighter control of print-related operating costs, and enhanced collection efforts to reduce outstanding accounts receivable. We also received temporary rent and interest payment waivers during the second quarter as part of our cyber-recovery plan.

These actions contributed to improved operating performance in the second half of fiscal 2025, enabling all mandatory and principal debt payments since May 2025 to be funded entirely from operating cash flows. Based on current projections, we believe our liquidity will be sufficient to fund operations and meet debt service requirements for at least the next twelve months.

SEASONALITY

Advertising and marketing services revenue is seasonal and generally correlates with retail spending patterns in the markets we serve. Historically, retail advertising activity peaks during the December and June quarters, driven by holiday and mid-year promotional periods, while the March quarter typically represents the lowest advertising volume of the year. Subscription and digital revenue streams are less seasonal but can experience modest fluctuations tied to promotional activity and consumer spending trends.

INFLATION

We evaluate the impact of inflation on our cost base and, when appropriate, implement price changes for our products and services. In parallel, we pursue productivity improvements, sourcing efficiencies, and targeted cost reductions to help offset inflationary pressure. Because pricing and cost actions do not always align in timing, inflation may affect margins in certain periods.