NYT Suspends Dividend; Even 6 Cents Per Share Was Too Much
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Now The New York Times Company (NYSE: NYT) will see how much support it really has from its non-employee family shareholders: the board of directors voted today to suspend the quarterly dividend for Class A and Class B shares. (The family trustees say full support; see the statement below.) It’s all about keeping as much cash as possible in an increasingly tough ad market—and an even tougher credit market. The decision follows last quarter’s dividend cut to $0.06 from $0.23 in Q308.
SEE ALSO: NYTCo Earnings Call: Citing Weakness in Display, About.com Shifts Emphasis To CPC Rev Model
The explanation from NYTCo Chairman Arthur Sulzberger, Jr.: “Today’s decision provides the Company with additional financial flexibility given the current economic environment and the uncertain business outlook. We have taken decisive steps to reduce capital spending, lower operating costs and re-evaluate our assets. Last month we announced a private financing transaction for $250 million in senior unsecured notes and warrants. We also recently announced that we are exploring the possible sale of our ownership interest in New England Sports Ventures, LLC. We expect the suspension of the dividend, coupled with our other actions, will help us decrease debt and improve the liquidity of the Company, a difficult but prudent measure in this operating environment.”
More after the jump
The announcement came after the stock closed at $3.51, down some 5 percent from Wednesday. The company’s current market cap at that rate—$504 million—is a little more than twice the $225 million it’s trying to raise on part of its share in its mid-Manhattan headquarters and just over twice the $250 million Mexican billionaire Carlos Slim Helu invested last month.
Recent dividends: In 2007, the dividend was $0.175 in March, then raised to $0.23 per share for the remaining three quarters. 2006 followed a similar pattern, starting with $0.165 per share in March, then rising to $0.175 per share for the rest of the year. (The Sulzberger family was getting about $25 million at $0.23 per share.) But dividends play a lot better when the company is making money—and NYTCo swung to a loss for 2008. They also make more sense when you don’t have to use a credit line to pay.
Statement from Ochs-Sulzberger Family Trust: The family holds 19 percent of total shares outstanding, about 144 million shares. That made their last payout around $1.6 million. I just received this statement from the trustees of the Ochs-Sulzberger Family Trust: “In light of the economic climate and the challenges facing the media industry, the trustees believe that the Board’s suspension of the dividend is in the best interests of all shareholders. All of the trustees remain committed to the editorial integrity and independence of The New York Times.”
Photo Credit: ikkoskinen
@sdkstl
Feb 19, 2009 4:30 PM ET
Posted In: Media & Publishing, Newspapers, Money, Companies, New York Times
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