Missing at the New York Times – a dividend?

December 22, 2011

By Agnes Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The New York Times Co has regrouped since flirting with oblivion three years ago. The company looks ready for a deeper digital dive. But before it can take that plunge, the firm may need to pay its dues to its controlling family.
 
The Ochs-Sulzberger clan has stood by the Gray Lady in her time of need. But it has been nearly three years since the company paid a dividend – a flow that in 2007 poured nearly $25 million into the various family members’ coffers. The Times’ fortunes, though still challenging, have taken a turn for the better. It paid off an onerous $250 million loan ahead of schedule, shed assets like a stake in the Boston Red Sox, and plans to unload 16 regional newspapers.

Free cash flow has also seen a turnaround from the red ink that bedeviled the newspaper group between 2006 and 2008, according to Moody’s Investors Service. This year it is on track to turn out $200 million. The sale of the regional papers could reduce that, but the Times will still be throwing off a fair bit of cash.

Meanwhile, the abrupt departure last week of Janet Robinson, the company’s chief executive for seven years, has tongues wagging that something big – perhaps an acquisition – could be in the works, potentially making the flagship New York Times title much stronger for the digital age.

It wouldn’t be surprising if some of the family members, who collectively control the company through special rights attached to their roughly 18 percent economic interest, were feeling the need for a bit of income. A regular dividend could help ensure the family’s support and avoid the kind of fracturing that led the Bancroft clan to sell Dow Jones, owner of the Wall Street Journal, to Rupert Murdoch’s News Corp four years ago.

The Times’ credit rating would probably suffer if it tried to return anywhere near the 23 cents a share quarterly payout that once kept the Ochs-Sulzbergers flush. But a modest 3 cent quarterly dividend might be a start. That would cost the company $18 million a year and net over $3 million annually for the family – hardly a king’s ransom, but better than nothing. For the next CEO, something like that could be the price of approval for corporate ambitions.

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