Accuracy in Media

new-york-times-headquartersFeeling rather optimistic, and caving in to pressure from the Sulzberger family, The New York Times announced last week that it was going to once again start issuing dividends to its shareholders.

Mark Thompson, president and CEO of The Times, said in a statement that the board had concluded “that the strength of the balance sheet justified the restoration of a dividend,” though he did caution analysts that that didn’t mean the paper was out of the financial woods just yet.

Given the expectation of continued volatility in advertising revenue and the fact that our growth strategy is at an early stage of development, we will maintain a prudent view of both the balance sheet and free cash flow.

“Volatility” suggests that advertising revenue is subject to wild swings up and down, when the fact is it has been all downhill in the last few years, and there is no end in sight to the prolonged slump.

The dividend is a rather modest 4-cents per share, but it will bring its largest shareholders, the Sulzberger family, about $4 million annually at the current rate. They have an 18% ownership stake in the company.

Somehow that fact was conveniently left out of Thompson’s statement.

The Sulzberger family had been raking in about $25 million per year in dividends in 2008 when the board slashed the rate by 73% in an effort to conserve cash. That cost the Sulzberger family about $18 million a year in income, and eventually the entire amount, when the dividend was eliminated.

With the stock price at less than half of its 2008 level, the dividend is the only way the family can realize any return on their holdings. The dividend restoration will cost the company $24 million, at a time when the future of the paper is anything but certain. It seems like the family wants to squeeze out what it can while there’s still cash left in the kitty.

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