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

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

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

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

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

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

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

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

Lee executives have defended the progress they are making in the company’s digital transition. Lee representatives declined to respond to Cannell’s questions Thursday, but the company will update investors again next month when it releases its next earnings report.

Lee said last quarter that it had 450,000 digital-only subscribers and it expects that number to grow to 900,000 by 2026. The Davenport, Iowa-based company said its digital ad and subscription revenue grew 17%, although its profit in the three-month period that ended Dec. 26 declined nearly 20% to $13.2 million.

Kupperman said he is making a long-term investment with his 7.3% stake in the business and he thinks Lee is “on the right path in terms of growing the digital subscribers.”

The pressure on Lee isn’t likely to let up anytime soon, said Tim Franklin, senior associate dean of Northwestern University’s Medill journalism school and the former president of the Poynter Institute, the media think tank and nonprofit owner of the Tampa Bay Times. He noted hedge funds aren’t known for their patience in waiting for companies to grow their stock prices or profit margins.

But he said Lee — like all print media companies — is in the middle of the difficult transition from relying on print publication revenue to digital. The newspaper industry has been contracting for years as more readers shift online and companies cut back on print ads.

“All news organizations, including Lee, are trying to walk this balancing act of preserving as much of their print revenue as they possibly can at the same time that they’re trying to grow digital revenue,” Franklin said. “And that needs to be done with great delicacy because the fate of news organizations may hang in the balance of getting this right.”

Lee fought strongly against Alden’s takeover bid because the New York-based hedge fund has a reputation for imposing extreme cost cuts and deep layoffs at the newspapers it owns, which includes all the Tribune papers it bought last year.

Alden hasn’t said what its plans are for its 6.3% Lee stake after its takeover bid failed, and an Alden spokeswoman didn’t respond to questions this week. The two other hedge funds with larger stakes in Lee have said they believed the company is worth significantly more than what Alden offered.

Rick Edmonds, Poynter’s media analyst, said it appears that investors expected Alden to raise its bid or a bidding war to break out because Lee’s share price soared to $44.43 early this year before falling back to $25.51 Thursday. That might open the door for another potential buyer.

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