BILLINGS – More than 1.5 million subscribers, comprising many Montana residents, could be part of a class-action settlement by the state’s largest newspaper company, Lee Enterprises, for sending personally-identifying information to the parent company of Facebook in order to target content, including advertising.
According to a settlement reached in a federal court in Iowa, where Lee Enterprises is headquartered, the company will pay $9.5 million for releasing personal information to Meta without customers’ consent.
Lee owns five daily newspapers in Montana, including The Billings Gazette and Missoulian, among its 85 daily newspapers across the country.
In addition to the class-action lawsuit settlement, Lee has also reported that it will likely be financially impacted due to a recent cybersecurity ransomware attack, reports the Daily Montanan. Also, a private investor who has recently been critical of the management team after it projected profits, but instead saw a loss of $17 million,says he wants to purchase the company.
Facebook settlement
As part of the court filing, the company says it doesn’t agree with all the conclusions, but is settling the class-action lawsuit, which could reach more than 1.5 million current or past subscribers. According to its most recent 10-K filing with the Securities and Exchange Commission, as of Sept. 29, 2024, Lee reported that had a combined 1.1 million print and digital subscribers.
It also reported that 51% of its revenue comes from digital advertising in February 2025.
The court filings say that Lee voluntarily installed an invisible online tracker from Meta/Facebook that allowed the disclosure of a “Facebook Identification Number” to the social media giant. That, the group of plaintiffs said, violated federal law that guarantees privacy protection. The goal of the software, according to the lawsuit, was to build profiles of the Lee subscribers or content users “with the hope of improving the effectiveness of advertising targeting those users.”
If the deal is approved by the court, former and current subscribers who were affected would be sent a class-action settlement notice and be eligible for a portion of the amount, which will be estimated to be around $5.7 million for the approximately 1.5 million people — or around $3.80 per person. For subscribers or customers with an invalid email address, postcards may be sent.
In court documents, Lee and a group of plaintiffs agreed to settle the dispute, saying that a protracted lawsuit could take years and millions to resolve. Furthermore, Lee maintains that it did nothing wrong, although other companies who used such tracking tools have been found liable for using the same technology that discloses personal information.
Ransomware attack
It is not the only piece of bad financial news for the newspaper company based in Davenport, Iowa. In SEC filings earlier this month, it announced that a ransomware attack on the company that shut down some printing and electronic edition publications, as well as threatened to release sensitive financial information, was likely to have a material impact on the company’s bottom line.
On March 6, Lee confirmed the attack, which began on Feb. 3. Hackers encrypted many of the “critical applications” the company used while “exfiltrating” or taking financial data. Lee said that many of the company’s functions have been restored, but that the business processes of the company have been delayed.
“Additionally, certain back-office functions remain delayed including billing our clients, collections, and payments to vendors. We anticipate the business processes to be fully restored in the coming weeks,” the company said.
Lee confirmed it had cybersecurity insurance, and also that its sole lender, Berkshire-Hathaway Finance, had waived an interest payment as well as lease payments, which the newspaper company said added $3.7 million of additional capital.
As of Friday, many of the Lee publications still had notices on their websites that warned customers of problems, delays or interruptions.
New owner?
Even as courts and cyberattacks were occupying headlines about Lee, on Thursday, the chain of newspapers also reported that a billionaire investor who had recently purchased a chunk of the publicly traded stock had submitted a letter to the company’s board of directors wanting to purchase the company outright.
Hoffmann Companies, which owns a diverse number of companies including dairies, investment properties and manufacturing facilities, says it wants to buy Lee Enterprises. The same company has recently purchased an interest in the Dallas Morning News, as well as purchasing former Lee-owned newspapers in California, including the Napa Register. In a letter to Lee’s board, David Hoffmann said that other hedge-fund investors have not been concerned with the journalism of the company, rather just squeezing profits from the newspapers.
“We believe this commitment represents a sharp contrast to other potential acquirors such as non-local hedge funds and investment firms primarily concerned with increasing profits over jobs, local concerns, and the power of quality journalism,” the letter said. The letter and a news story about the offer was published on Lee newspaper websites on Thursday.
Hoffmann is already Lee’s second-largest shareholder. Lee currently has nearly $450 million in debt, largely from the acquisitions of other newspapers that has more than doubled the company’s reach. In its most recent earnings report, Lee’s profits were down year-over-year, but it did note that digital revenue has now eclipsed print revenue, a sign that the Hoffmann interest letter noted.
After news of the potential deal broke, Lee stock shot up nearly $1 per share and as of Friday, the value of Lee stock hovered around $10.66 a share, a 6% increase in value.
Editor’s note: The reporter of this story was formerly a Lee employee from 2004 to 2020.
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