New York Times Co. Slashes Dividend -- And Family Trust Says, We Understand

Fitz: With credit rating agencies doubting its commitment to pay down debt aggressively -- and the global credit crunch threatening liquidity -- The New York Times Co. slashed its dividend for the fourth quarter Thursday to 6 cents a share, dramatically down from the 23 cents per share it paid out in the third quarter of this year.

The announcement included a perpared statement from Chairman Arthur Sulzberger Jr. about how everybody's going through this, we've got a great brand, we'll pay down debt, have access to liquidity, blah, blah, blah -- but the statement everyone was really waiting for came about a half hour later: The family trust is cool with the dividend cut.

"The trustees of the Ochs-Sulzberger Trust ... remain unanimous in their commitment to the editorial integrity and independence of the New York Times," the statement read in part. Big sigh of relief at the new HQ (pictured), but don't believe for a minute it won't set off speculation about unhappiness in the extended Ochs-Sulzberger family, for whom the dividend check is often the mainstay of a wealthy lifestyle.

Shares of Times Co. (NYSE:  NYT)  closed Thursday at all-time low of $5.72, off 63 cents, or 9.2%.

Full statements of Sulzberger and the trustees are below:

Statement from the Trustees of the Ochs-Sulzberger Trust:

The trustees of the Ochs-Sulzberger Trust believe that the decision of the
Board of Directors to reduce the dividend serves the best interests of The
New York Times Company and all of its shareholders. The Trustees recognize
that while this is very difficult for all shareholders, it is the
appropriate and prudent business response given the extraordinary
challenges of the current economic environment. The Trustees remain
unanimous in their commitment to the editorial integrity and independence
of the New York Times.

Chairman Sulzberger:

"This was a difficult but necessary decision that will provide us with       greater financial flexibility in these uncertain economic times. Most industries are       feeling the need to conserve cash and ours is as well, particularly       given the secular challenges we face. Throughout our history, we have       successfully weathered difficult periods by maintaining our brand       promise of providing high-quality journalism. In order to continue to do       so, we have taken decisive steps to reduce capital spending, lower       operating costs and re-evaluate our assets. We expect that this steep       cut in the dividend, coupled with our other actions, will help us       decrease debt and improve the liquidity of the Company, a prudent       measure in this operating environment."

The dividend, announced after markets closed, is payable Dec. 15 to shareholders of record Dec. 1.

 

Comments

[Corky Boyd]

The Sulzberger-Ochs trust has waited to long to save the Times. The paper has become less than worthless in the two years thay had their chance to restructure. The Globe is sucking money out of the company. So is the Times itself. So is the debt service, and this will grow worse as the Times has to refinance it.

Family members would have been better served to sell the paper and keep the profitable broadcast properties, but Pinch chose to do the opposite. Now the stock is under $6 and essentailly pays nothing.

Pinch has ruined the brand. Destroyed it. The reporting bias and failure to report stories that don't fit politically has lost them a significant audienc, including myself. I couldn't live without the Times. Subscribed for over 30 years, wherever I lived. But I dropped it 4 years ago over what I consider a major breach of jounalistic integrity.

With the brand in tatters, there aren't many ready to pick up the pieces and face the prospect of losing on the order of several hundreds of million a year, especially in these troubled times. Certainly no one with newspaper experience will. Perhaps there is another Sam Zell out there, but look at his situation now.

Pinch apparently wanted to hang on to the paper through the election. He is now paying the price.