NYTCo Relents, Trims Dividend; Does It Go Far Enough?


imageFor the New York Times Company (NYSE: NYT), generous dividend payments are almost as sacred as sophisticated news coverage. Now, the paper has finally given in to the realities of the declining newspaper industry and the wider economic turmoil. Capping weeks of speculation, the NYTCo’s board announced that it was lowering its quarterly dividend to $.06 per share on the Company’s Class A and Class B common stock, down from $.23 per share in Q3. While some of the family members who were previously getting $25 million on the $.23 per share dividend will likely complain, many analysts will surely argue that the cut doesn’t go far enough. The company had been under increasing pressure to rein in costs. Alluding to a New York magazine profile of the Sulzberger family last month, we noted that a cut in the dividend — which was raised 31 percent last year — could cause the kind of revolt that spurred the members of the Bancroft family to sell their controlling interest in Dow Jones to News Corp (NYSE: NWS).

“Difficult, but necessary”: In a statement, NYTCo chairman Arthur Sulzberger, Jr., called it a “a difficult but necessary decision.” He added: “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.”

October revs drop: As if the company needed more evidence as to why they had to lower the dividend… Last month, revenues from continuing operations fell 9.4 percent as ad revenues took another battering, dropping 16.2 percent. On the plus side, circ dollars were up a slight 3.9 percent. Online was up 5.3 percent, a far cry from October ’07’s 19 percent rise. Release More after the jump

Photo Credit: Jazzzzzzzzzzzz

Internet businesses: Total web revs grew 4.3 percent, while money from internet ad sales rose 4.6 percent in October. The online businesses include NYTimes.com, About.com, Boston.com and other websites. In total, online accounted for 12.1 percent of total revs in October, a slight uptick from the 10.5 percent last year.

— Year-to-date, the company’s total online revs rose 9.6 percent, while web-related ad dollars jumped 13.4 percent. In 2008 so far, the NYTCo’s internet businesses comprised 11.9 percent of total revenues for year-to-date October 2008 compared with 10.1 percent for the same period in ’07.

News Media Group’s ad revs slid 17.2 percent due to continued weakness in print advertising. Within that division, The New York Times Media Group’s ad dollars fell 15.3 percent, dragged down by increased softness in the classifieds, particularly real estate and jobs.



It is amazing at a company that has sworn to move to digital focus, how much the print mentality still runs the company. There just does not seem to be the interest in learning how the web works among top management – everything since the merger between the print and online divisions has been absorbed by print and is run as an analog to print, wasting millions. If Arthur and Janet just got to know the digital line managers and talked to them daily rather than filtering everything through one or two digital liaisons, they might learn a whole lot. And maintaining any dividends when your rating is junk is a blatant betrayal of fiduciary responsibility. It's only being done to placate the Ochs-Sulzbergers who are minority common shareholders.

digital bear

NYTimes should cut their staff by 20% across the divisions from sales to editorial, from finance to maintenance via both forced early retirement and finding efficiencies by 1) giving editorial staff writing requirements; 2) upping the number of stories required/expected by journalist; 3) slash sellers who require massive amounts of sales support; 4) go for cloud computing & stop investing in technology that will be antiquated in a year; and 5) eliminate every other G&A person. The time is now, not for a bail out but for business decisions to be made.

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