Newspaper publisher Lee Enterprises has recovered from a cybersecurity incident that began in February and cost the company millions of dollars, the company’s chief executive said Thursday.
Kevin Mowbray, Lee’s president and CEO, said in a news release that the company incurred $2 million in “restoration costs” related to the incident during the second quarter, which for Lee runs from Jan. 1 through the end of March. It also suffered lower advertising and subscription revenue because products were limited or unavailable.
On Feb. 3, “threat actors” illegally accessed the company’s network, encrypted applications and took files, the company has said.
Afterward, newspapers were unable to deliver print editions on time; the papers’ digital replicas were missing key pages; customers’ access to accounts and subscription services was impaired; and office functions, including billing clients, collections and payments to vendors, were delayed.
“I’m proud of how our team navigated the challenges as we are now recovered from the cyber incident and focused on executing our strategy,” Mowbray said in Thursday’s news release.
In a conference call with investors on Thursday, Lee Vice President and Chief Financial Officer Tim Millage said much of the $2 million in restoration costs will be covered by insurance, for which the claims process is ongoing.
While the company’s “technical recovery” is complete, the incident’s impacts on the company’s ability to bill customers and pay vendors will continue to affect Lee’s balance sheet through the end of the fiscal year, Millage said.
Davenport, Iowa-based Lee Enterprises owns newspapers in Virginia and two dozen other states. In Virginia, its papers include those in Bristol, Culpeper, Charlottesville, Danville, Fredericksburg, Lynchburg, Martinsville, Roanoke, Richmond and Waynesboro.
Before Thursday, some Lee newspapers had published messages to readers indicating things were getting back to normal.
On March 30, Brian Kelley, editor of The Roanoke Times, wrote in an editor’s note that the paper was “back to full strength” after having reduced the amount of content it carried while Lee’s operations were hampered.
“This outage wasn’t something we anticipated, and the road to recovery has been long,” Kelley told readers. “But along the way, you’ve shown the patience and grace typically reserved for a friend. And for that, we thank you.”
Lee has a $453 million loan from the Omaha, Nebraska-based conglomerate Berkshire Hathaway, which is its sole lender. In January 2020, Berkshire sold Lee more than 75 daily and weekly newspapers, including those in Virginia, and refinanced Lee’s previous debt.
To provide Lee with more liquidity as the cybersecurity incident unfolded, Berkshire waived interest payments on that debt for March, April and May and rolled those amounts into the loan’s principal.
The latest update from Lee Enterprises (NASDAQ:LEE) came as it reported a second-quarter net loss of $12 million, or $2.07 per share, on total operating revenue of $137 million.