Crunching the New York Times numbers
The New York Times Co’s announcement on Thursday that it’s cutting its dividend by almost 75 percent is a pretty grim indicator of the fortunes of the storied newspaper publisher. It also is fraught with implications. It prompted us to put some of the numbers in perspective, but first, here’s a recap of the news:
NEW YORK (Reuters) – The New York Times Co slashed its dividend by almost three-quarters and plans to cut spending and reevaluate its assets to cope with an advertising decline that is gouging U.S. newspaper publishers.
The trustees of the Ochs-Sulzberger family’s shares in the Times said on Thursday they support the company’s actions.
“The trustees remain unanimous in their commitment to the editorial integrity and independence of the New York Times,” they wrote in a statement.
This is significant because industry watchers and media experts say the family is under more pressure than ever before to sell parts or all of the company.
Here are some ways of defining “pressure:”
- The company is worth $725 million. When it bought The Boston Globe in 1993 it paid about $1 billion.
- Its publicly traded shares were worth $49 two years ago.
- The ratio of the share price to the cover price of the Sunday edition of the Times is under 2:1.
- The ratio of the share price to the daily cover price is under 5:1.
How does cutting the dividend relate to all this? Here’s some speculation informed analysis:
- It means the company is aware that paying its $1.1 billion in debt trumps shareholder profits for now, and that includes members of the Ochs-Sulzberger family.
- It means the company knows that doing this will shore it up better in the long term, especially as ad revenue declines continue
- It means the company understands that paying debt and investing in its future could be worth some short-term shareholder pain. It’s a rough economy. Everybody has to deal with it.
- If we wanted to be really Machiavellian, could it mean that
a) The inevitable stock decline will make the company even more cheap for the Sulzbergers to take private?
b) That it will smoke out dissident shareholders with large stakes (Harbinger), especially as the financial crisis forces them to sell stakes in other companies?
c) That, as an unintended consequence, the younger Sulzbergers will freak out and demand action so they can keep making a fat paycheck?
Times employees: What are you hearing? We’re interested in your comments and we do protect our sources — just like you do. Write to robert dot macmillan at reuters dot com .
(Photo: Real New York TImes on the right, fake one on the left. Reuters)