Earnings Call: NYTCo Exploring Dividend Cuts; Would Slashing Family Payout Cause Unrest?
The New York Times (NYSE: NYT) board of directors may cut the company’s dividend—and with it, payments of millions of dollars to members of the Ochs-Sulzberger families. The company has been criticized for paying substantial dividends but when asked what prompted the discussion, CFO Jim Follo played down possible catalysts: “This is a fairly dynamic discussion. This is a discussion that takes place every board meeting on how to allocate capital, what we see in the future as far as investment opportunities.” During his prepared remarks, Follo said the company is reviewing its uses for cash, exploring finance alternatives and considering other measures. Follo said the dividend decision would be made “before the end of this year to determine what is prudent in light of the overall market conditions.” Would the board cut the dividend in half or take it to zero? A non-answer answer. The current dividend is 23 cents a share with the family getting about $25 million.
SEE ALSO: Earnings: Severance Costs Push NYT To Q3 Loss; Exploring Writedown For New England Media Group
The better question: Would a cut cause the Bancroft-Pulitzer kind of family unrest Arthur Sulzberger has been able to avoid until now and produce some breaking in the ranks by those who would rather get money through a sale if they aren’t getting it through dividends?
Earnings | Webcast (11 AM ET) | Transcript
Highlights from the call after the jump...
Some color from the call when it comes to online:
—Online advertising: Martin Nisenholtz, SVP, digital operations: “It isn’t really a uniform story at all across the four segments.” Lower-end display is weaker, higher-end—nytimes.com site as opposed to About inventory—is holding.Classifieds continue to be dragged down by reduced help wanted ads. Nisenholtz said the company holds rates, rather than discount inventory just to sell it. CPMs at nytimes.com are up in single digits; ad networks also are up year to date. CEO Janet Robinson said it is too early to tell if clients are pulling back on contracts because of the way money is usually spent across a year but overall Scott Heekin-Caneday, president and GM of the New York Times, said advertisers are taking a wait-and-see attitude. Heekin-Canedy: “They’re trying to spend their ad dollars very judiciously ... and waiting as late in the year as possible to set ad budgets for 2009.”
—About.com: Nisenholtz said the growth rate has slowed at About.com this month as a result of the non-premium display side of the business but that growth in cost-per-click and lead gen is showing “very robust growth.” In an exchange illustrating how much NYTCo’s revenue mix has changed, analyst Scott Davis asked some questions about the cost side, then added: “It seems like a small issue but, sadly, About’s profitability is becoming a fairly big piece of the company.” Investments in About China will continue.
—Traffic report: The financial crisis may be causing concern on the ad side but it’s been very good to the traffic at nytimes.com, which also is benefiting from the high interest in the presidential election. Unique visitors from the U.S. to nytimes.com totaled 20.1 million, up 37 percent from September ‘07—with an audience 30 percent larger than the next newspaper web site. The expansion of online business coverage started in September with a revamp of the technology section and a new economy section, dovetailing with the escalation of interest in financial news. In coming months, Robinson said the site will expand small business, personal technology and Your Money, “introduce more journalists, deepen coverage in its DealBook franchise,” and add multimedia and tools. Page views for business were up 66 percent over last year; the new economy section had nearly 4 million page views last month. The site itself has three of its all-time record days the week of Oct. 5. The company’s sites overall drew 50.18 million uniques in September, up 15 percent year over year. It claims a reach of 31 percent of the U.S. online audience.
Posted In: Media & Publishing, Newspapers, Money, Earnings, Companies, New York Times
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