| That giant sucking sound that Pinchie hears is the drain ... |
NEW YORK, Nov 20 (Reuters) - The New York Times Co slashed its dividend by almost three-quarters and said it would cut spending and reevaluate its assets to cope with a slump in advertising revenue that is gouging U.S. newspaper publishers. The Times cut its dividend to 6 cents a share from 23 cents a share, or 74 percent, and said in a statement that it would reduce capital spending and lower its operating costs.
The trustees of the Ochs-Sulzberger family's shares in the Times said they support the move, but called it difficult.
| Makes it tougher to keep the house in the Hamptons ... |
The family's statement amounts to a vote of confidence in the Times as buzz builds among industry watchers over whether the family would sell the company and The New York Times newspaper, ending more than a century of family ownership. The Ochs-Sulzberger family controls a special class of shares that give it more control over the company than non-family shareholders. The Times board also cut the dividend on the family's shares.
The company did not say whether it would cut jobs or whether it could sell newspapers or other properties. The company is under increasing pressure from declining advertising revenue and circulation as more people get their news online.
Cutting the dividend is important for the Times in a financial sense. It has about $1.1 billion of debt on its books as of its quarterly financial results in October, and a declining income stream to pay it off. It has $46 million in cash and cash equivalents.
"This was a difficult but necessary decision that will provide us with greater financial flexibility in these uncertain economic times," said Times Chairman and New York Times newspaper publisher Arthur Sulzberger Jr. Sulzberger said the company has weathered difficult periods by maintaining its promise to provide high-quality journalism, and would take these actions to keep doing that.
Speculation in the media world is rampant that the Times must sell off some of its properties. Two years ago, General Electric Co's former chief executive Jack Welch was part of a group that bid for The Boston Globe. The company has resisted efforts from several dissident shareholders to get rid of some of its properties.
| And now it's too late. Who'd want the Globe now? At any price? Who'd want the other newspapers? They're dying. The time to sell was five years ago. Now they're stuck trying to move the papers to the internet. It's not going to work because there is too much competition for them on the net, both in terms of news aggregation and in terms of advertising revenue. Why pony up for a Times electronic subscription when you can surf something like Google News and find the news for free? |
The Times, which also owns other U.S. daily papers around the country, also reported a 9.4 percent drop in revenue from continuing operations. Ad revenue fell 16.2 percent, while circulation revenue climbed 3.9 percent. |