Call is being recorded and will be available for replay beginning later this morning at lee.net. At the close of the planned remarks, there will be an opportunity for questions. Participants accessing this call by webcast may submit written questions throughout the website, and they will be answered during the call as time permits. Otherwise, you will receive a response later. A link to the live webcast can be found at www.lee.net. Now I will turn the call over to your host, Jamie Sarrett, Corporate Controller. Please go ahead.
Good morning. Thank you for joining us. Speaking on this morning's call will be Kevin Mowbray, President and Chief Executive Officer, and Tim Millage, Vice President and Chief Financial Officer. Also with us today and available for questions are Nathan Bekke, Vice President, Consumer Sales and Marketing, and James Green, Vice President, Digital. Earlier today, we issued a news release with preliminary results for our second fiscal quarter of 2020. It is available at lee.net as well as at major financial websites. One housekeeping item to start, we closed on the acquisition of BH Media Group and the Buffalo News on March 16th, 2020, and our second quarter results include approximately two weeks of operations from the acquisitions.
Certain results and trends are presented on a pro forma basis, which assumes ownership of these acquisitions as of October 1st, 2018, and include operating results from the acquisition for all periods presented. As a reminder, this morning's discussion will include forward-looking statements that are based on our current expectations. These statements are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially. Such factors are described in this morning's news release and also in our SEC filings. During the call, we make reference to certain non-GAAP financial measures which are defined in our news release. Reconciliations to the relevant GAAP measures are included in tables accompanying the release. Now to open the discussion is our President and Chief Executive Officer, Kevin Mowbray.
Thank you, Jamie. Good morning and thank you all for joining the call. It's truly remarkable to think about what's transpired since the last time we spoke to you all. In just a few short months, we've experienced a global pandemic, government restrictions in our local markets, an economic meltdown, and civil unrest. Truly, these are unprecedented times. Before we discuss our operating results, I want to take a moment to recognize our nearly 6,000 employees across Lee who are working tirelessly to ensure our long-term success, especially during these tumultuous times. The size and engagement of our audience during this time underscores the vital role we play in the communities where we operate. We're focusing on continuing to deliver outstanding local news coverage that our readers trust and maintaining strong partnerships with our advertisers, keeping our communities informed and engaged.
We are grateful to our dedicated employees for being there when it matters most and reacting with incredible resiliency and creativity to deliver their best work under difficult circumstances. The March quarter was a transitional quarter for Lee, as we closed on a transformative transaction with Berkshire Hathaway. The acquisition and financing really doubles the size of our operations and provided us with extended long-term financing at highly attractive terms. The significance of this transaction cannot be overstated, as the acquisition unlocks significant value through synergies, and the financing reduces our cost of capital and extends our runway for 25 years. Throughout the second quarter, until the last two weeks of March, we demonstrated continued improvement in revenue and adjusted EBITDA trends each month. Through the first two weeks of March, we saw favorable revenue trends at levels we haven't seen in more than a year.
In the last two weeks of March, the decline in demand for advertising due to COVID-19 was immediate and significant. Despite the impact from COVID-19, pro forma advertising revenue in the second quarter was on par with first quarter trends. We took swift business and operational actions in the face of the COVID-19 pandemic, and our focus on the advertising side was to solidify our relationships with our local advertisers. As an example, in April, we launched a Local Marketing Grant Program which offers matching marketing funds to local businesses adversely impacted by the outbreak of COVID-19. More than 4,400 advertisers have applied for this program, worth more than $26 million in grants. We expect to earn more than $7 million in revenue from this program by the end of July.
What is even more encouraging is that the majority of these advertisers are not currently active customers. This gives us a lot of optimism as our local markets begin and continue to ease restrictions. The customer feedback on this program has been overwhelmingly positive, and I'm super proud of the impressive effort of our sales teams. Subscription revenue on a pro forma basis was down 2.8% in the second quarter and represented 41.5% of total operating revenue. We expect this percentage to continue to grow as we continue to execute new strategies at Legacy BH Media Group and Buffalo.
Growing our digital-only subscriber base continues to be a significant priority for us, and at the end of the second quarter, we had nearly 200,000 digital-only subscribers across the organization. At Legacy Lee, digital-only subscribers increased 91.7% in the second quarter compared to the same quarter a year ago, a trend exceeding our expectations. Revenue at TownNews on a standalone basis increased 11.1% in the second quarter and continues to gain market share in print media as well as broadcast. While growth has slowed some due to COVID-19, we expect strong revenue growth at TownNews in our third fiscal quarter. Total operating revenue on a pro forma basis was $207.3 million, a 10% decline compared to prior year and 100 basis points improvement from the first quarter trend. The company does not generally provide an outlook for future operations.
Given the delay in our release of our second quarter results, we wanted to provide an outlook on our third quarter results, which ends in just two weeks at the end of June. We do not anticipate providing outlook of our earnings results in future quarters. We expect total operating revenue of $177 million-$180 million in the third quarter. The high end of our range is down 24.9% compared to the prior year on a pro forma basis. Advertising revenue was hit the hardest due to COVID-19 as the decline in demand for advertising was significant and immediate beginning the last two weeks of March. These negative trends continued throughout April and began a slow trend improvement throughout the balance of the third quarter. We expect trends to improve more than 15% throughout the quarter. Subscription revenue has been a strong and stable revenue stream for Lee.
We do expect a modest worsening trend in the third quarter due to decline in single copy sales due to the COVID-19 pandemic, as well as incremental revenue in the prior year in St. Louis due to the Blues winning the Stanley Cup last June. Adjusted EBITDA in the third quarter is expected to total between $21.5 million and $23.5 million. To combat the negative impacts of COVID-19 on our operating results, we took significant and immediate action by implementing various initiatives, including a reduction in force, reduced compensation for executives, furloughs, and reductions in capital expenditures. These actions will reduce our third quarter cash cost by more than $10 million and provide us with sufficient liquidity. As of today, we have more than $50 million of cash on our balance sheet.
Before I turn the call over to Tim to discuss the financial details, I wanted to reiterate that despite the significant negative impacts to our business from COVID-19, we remain very optimistic about the future of Lee Enterprises, and there are several reasons for this beyond having the right strategy and the best operating business. First, our mix of advertising revenue is favorable compared to others in our industry. 47% of our advertising revenue is from local retailers, and we have a strong relationship with these advertisers. Additionally, 12% of our advertising revenue is from national retailers and only 4% of our advertising revenue is from programmatic, two of the hardest hit areas during this pandemic.
Due to our strong local advertising base, we exited the pandemic with a pipeline of new customers built through our Support Local initiatives aimed at fortifying our local partners and helping them to survive and thrive during this challenging time. We're also optimistic because 44% of our total revenue is subscription or contract-based, including our subscription revenue and revenue at TownNews. Subscription revenue at Legacy Lee has consistently been atop the industry in financial performance, and we're now deploying those strategies across BH Media Group and the Buffalo News. Additionally, revenue at TownNews continues to grow at a double-digit clip, and we expect that trend to continue as well. We have a long successful track record of business transformation.
As we evaluate the new normal post-pandemic in the combination with the acquisition of BH Media Group and the Buffalo News, we expect to achieve more than $100 million in cash cost savings by the end of 2021. Tim will walk through these in more detail later in the discussion. Last, we just completed a comprehensive refinancing of our outstanding debt at favorable terms, including a low interest rate, no performance covenants, and a 25 maturity with a single lender who's committed to our long-term success. While no one knows how the pandemic, consumer behavior, and more broadly, the general economic environment will ultimately play out, we have a lot going on at Lee that we're very proud of, and that gives us confidence in our future. Now here's Tim to discuss additional financial highlights.
Thank you, Kevin, and good morning, everyone. Total operating revenue on a GAAP basis was $121.4 million in the quarter and included $14.6 million of acquired revenue. On a pro forma basis, total operating revenue was $207.3 million, or down 10% compared to the same quarter a year ago, largely consistent with historical trends and include the significant and immediate negative impacts from COVID-19. Operating expenses were down 2.6% in the quarter, and cash costs on a pro forma basis were down 9.8% in the current year quarter as a result of continued business transformation initiatives and acquisition integration already underway. On a pro forma basis, compensation decreased 10.7%, newsprint and ink decreased 35.2%, and other cash costs were down 4.7%. Kevin mentioned a number of points that give us optimism, and I'll take a few minutes to go into more detail on a couple of them.
We are thrilled with completing our comprehensive refinancing in the second quarter. We cannot overstate the benefits of this transaction. Let me take a minute to go through some of the details of our credit agreement. On March 16th, 2020, we closed on a comprehensive refinancing of our debt with a single lender in Berkshire Hathaway. Borrowing totaled $576 million and has a fixed interest rate of 9%, reducing our weighted average cost of capital by 100 basis points. The reduction in interest expense saves us nearly $5 million annually on our refinanced debt. Also, the refinancing repaid all of our outstanding debt, which had maturities in calendar year 2022, and replaced it with a term loan that matures in 25 years on March 16th, 2045.
The reduction in interest rate and the significant runway allows the company to deleverage more quickly and over a long period of time before we expect to need to refinance again. Completing the credit agreement required no lender fees, saving the company millions. As a comparison, in 2014, in conjunction with our prior financing, we paid more than $30 million in fees to complete the financing. The deal this year was also timed to avoid nearly $90 million in breakage costs associated with our previous credit agreements after the step down. The credit agreement has no fixed mandatory principal payments, as the required payments are predominantly from the excess cash flow the company generates. This is beneficial in economic downturns as we are experiencing now with the significant and immediate impacts from COVID-19, and allows us to help preserve liquidity.
The credit agreement has no financial performance covenants, meaning we do not have events of default tied to leverage or other financial maintenance ratios derived from financial performance of the company. To recap, the credit agreement was executed with virtually no fees. It lowered our cost of capital, extended debt maturities to 25 years, does not require fixed mandatory principal payments, has no events of default tied to financial performance metrics, and with a single lender who knows us well and is committed to our success. As Kevin mentioned earlier, we expect to achieve more than $100 million in cost synergies due to business transformation initiatives and acquisition integration. The baseline for this target is on a pre-acquisition basis or pro forma total cash costs as of the last 12 months ended December 2019.
We expect to achieve the $100 million reduction by the end of fiscal year 2021. We expect to achieve synergies in the following areas: Reorganization of our operating structure from a market-based operating structure to vertical operating lines, creating significant efficiencies across all of our departments. Evaluation and execution of our day-of-week print transformation initiative in certain of our markets. This project will reduce the number of days we print and deliver our print edition in certain markets by one, two, or three days, depending on the market. Acquisition integration of our back office functions, including HR, finance, and IT, centralization of technology systems, and business transformation initiatives in newspaper design and ad design. Of the $100 million in synergies, nearly 40% has been executed to date. We posted strong pro forma adjusted EBITDA in the second quarter, totaling $24 million.
For the last 12 months, pro forma adjusted EBITDA totaled $152.1 million. To supplement our strong adjusted EBITDA, we sold $17.7 million of assets in the second quarter, consisting of real estate and four of our small business operations. Our asset monetization program remains active, and we currently have $30 million of real estate listed for sale and an additional investment worth approximately $10 million. With strong adjusted EBITDA, good execution on our asset monetization program, and the completion of our comprehensive refinancing, we have maintained a strong liquidity position throughout the pandemic. As of today, we have more than $50 million of liquidity that consists of cash on the balance sheet, which provides us with sufficient liquidity in the near term.
Last, we expect to file our 10-Q with the SEC by June 22nd, and as always, it will include additional information on our results and expectations. This concludes our remarks. The team will remain on the line for any questions you may have. Operator, please open the line for questions.
Thank you. At this time, we will be conducting a question and answer session. I will now turn the call back over to your host, Jamie Sarrett, to discuss questions from the webcast.
Thank you. Our first question from the web, how much of the $17.7 million received from asset sales came from the sale of the Oregon and California newspaper publications?
I can take that question. We sold four business operations out west. The total for that was less than $4 million. The majority of the $17.7 million came from real estate sales. We did sell, like I mentioned, the four properties for less than $4 million.
We have no more questions from our web participants. I'll now turn the call back to Kevin for closing remarks.
Well, thank you for joining the call with us today. We appreciate your time and your interest in Lee. Thank you again. Have a great week.
Thank you. Ladies and gentlemen, at this time, we have reached the end of our question and answer session. This concludes our call.