New York Times Company Suspends Dividend

The New York Times Company's Board of Directors voted Thursday to suspend the quarterly dividend on the company's Class A and Class B common stock, a significant blow to the Sulzberger family and a sign of the company's financial struggles. The company had previously slashed its dividend from $0.23 per share to $0.06 per share in November 2008.

"Today's decision provides the Company with additional financial flexibility given the current economic environment and the uncertain business outlook," chairman Arthur Sulzberger said in a statement. "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."

The company's stock declined five percent Thursday, closing at $3.51 — a price many have pointed out is now below the newsstand price of the Sunday paper.

A New York magazine profile of the Sulzberger-Ochs family from October explained that the dividend has been sustaining the heirs of the Ochs-Sulzberger fortune:

In order to keep the family--and shareholders--happier in these lean financial times, Sulzberger has quietly ramped up the amount of cash they receive in a quarterly cash dividend. This, more than the sale of stock, is the source of the Ochs-Sulzbergers' working wealth. Sulzberger and CEO Janet Robinson raised the dividend by an extraordinary 31 percent last year--even as the stock price declined. Of the $132 million a year the paper gives to shareholders, about $25 million of it now goes directly into the coffers of the Ochs-Sulzberger trusts....

The fifth generation, the sons and daughters of Arthur and his cousins born between 1965 and 1990, have largely remained in the shadows of the company's affairs, anonymously going about their lives as beneficiaries of its generous dividends, their names listed in the occasional SEC filing detailing the family trust. Like their parents, they've led the lives of a prestigious trust-fund family--attending private schools like Dalton and Fieldston and acquiring Ivy League educations at Brown and Columbia, then casting about for noble life pursuits or whatever pleases them....

One thing that would cause the fifth generation to take a sudden interest in the family business is a decrease in trust income. "Once that dividend is cut, then all hell will break loose," says a former Times executive. "Because that's what the family lives on. Then it's over. It's going to unravel. They're going to be forced to look for external professional management to run that company." In a brief phone call, Stephen Golden (cousin of Arthur Jr., brother of Michael, father of Dave) cautioned against assuming that the younger relatives' interests and careers away from the newspaper mean that they aren't engaged with its plight. "If you follow that through, what you end up with is an assumption, you say that everyone who is not engaged in the paper is unconcerned. That's a dangerous assumption."

Comments

[jeffp26]

Over the last five years or so, the NY Times company has spent almost $4 billion buying back its stock (obviously at much higher prices than it trades at now) and paying dividends (so the Sulzberger family could pretend they were truly wealthy). This financial mismanagement -- spending Billions of dollars on things that added no new products, no new web sites, no new content, no new reason for people to spend money reading or advertising in the Times -- hastened the decline which now seems unstoppable. Unless, that is, Carlos Slim wants to own it.

[Samalabear]

I know the NYT has lost credibility, although it does still have some brilliant columnists and that's really all I read from the TImes -- and I don't buy the paper because I can't afford it -- I read it online. But as people excoriate the NYT for being nothing but a rag, the same can be said -- and worse -- of the New York Post, the Daily News and Newsday. And all of these rags have some good people, too. So, does New York have any real viable papers anymore that are good, honest and trustworthy through and through?

[Gunga-Din]

Hard days for the mexican newspaper

[SailFree]

First suspend dividends, then suspend the newspaper. It's becoming worthless anyway.

[DuPageDem]

It's only fair that shareholders get gouged, considering it was on the investor class' behalf that the paper shamelessly shilled for the Iraq war.

[Rockintheboat51]

The New York Times is the last, best hope in fighting the repugthugs.... even if they have to lie, and totally fabricate news stories....its no matter....the ends justifies the means......

SAVE THE NYT !!!! Send bail out money !!!!!

[ntmessage]

Let us nationalize these people soon, before it gets worse. Pelosi can run a newspaper I think or perhaps Bill O Reilly since he has been pointing out that they have been in financial trouble for years. He must know how to run a paper if he predicted this.

[BambiKiller]

The NY Times lost credibility years ago. It will be a great day when they close their doors forever.

[ramper]

They threw away their journalistic integrity long ago. They have been nothing but biased cheerleaders and will continue to sink if they do not return to honest reporting.

[katooom]

Wow, Pinch's greed finally hits home. All those NYT employees laid off and worried, should look to their liberal pal Sulzberger. Bleeding the company dry to take 20% of the dividend personally. For shame Pinch, for shame.

[lmvd3]

Now, now, people. We had at one time of the best newspapers in the country in my city. It is so bad now that I cannot even call it a newspaper. And if anything, I am overestimating its quality. All US newspapers have lost quality for economic reasons, mostly. The New York Times is still a great paper compared to the rest, and I will continue to support them through my subscription during these lean times. We need to keep these good papers around, if only to balance Rush and Fox, et al.

[ocalasatpro]

Well, then the NYT needs to tighten up.

[Jacqueline3]

They have no credibility because of 1person ownerships. 1 person should not own 20 newspapers, 15 television stations, etc. Regulate the telecommunication industry and bring back fair and honest reporting. By the way, this is thanks to Bill Clinton who deregulated the industry on his way out.

[Pquilson]

"We need to keep these good papers around, if only to balance Rush and Fox, et al."
I assume that you intended to say that the NYT is a left leaning, biased fish wrap?

[JamesRiver]

Ahhhhhhhh, too bad.

Their stock now costs less than their Sunday paper.

Turn out the lights, the party is over.

[josephebacon]

It would be nice if the New York Times actually went back to publishing "All The News That's Fit To Print" because they haven't been doing it for years!

[rsprags]

I wonder what Rick and CNBC have to say about this turn of events. I hope there is some mortgage bailout money left if he needs to modify his home loan. Does it mak NYT Losers because they didn't see this happen.

[RJII]

more home foreclosures coming in NY.
I hope Pres Obama can stop the bleeding. Very few are immune.