New York Times Co. cuts dividend by 74 percent

By: AP
By: AP

NEW YORK (AP) -- The New York Times Co. is slashing its quarterly dividend by 74 percent amid a worsening advertising slump, a move that will save the company money but also curtail the income of the Sulzberger family, the controlling shareholders of the storied newspaper publisher.

The company on Thursday cut its quarterly dividend to 6 cents per share, from 23 cents per share, which will result in annual savings of $98 million. The cut applies to both publicly held Class A shares as well as nonpublic Class B shares, which hold powerful voting rights and are largely controlled by the Sulzberger family.

The Sulzberger family, through a trust and various family members, together own about 19 percent of the company, meaning their annual dividend income would be reduced to about $6.6 million from about $25 million.

Like other newspaper publishers, The New York Times Co. has been struggling with declining advertising revenues as an economic slump worsens and advertisers shift more of their spending online. The company also announced Thursday that its total revenues decreased 9.4 percent in October compared with the same month a year ago.

In addition to its flagship newspaper, The New York Times Co. also owns The Boston Globe, the International Herald Tribune and several regional newspapers.

The savings from the dividend cut, while substantial, may not be enough for a company that has already lost more than half its stock value in the past month, said Ken Doctor, a news industry analyst for Outsell Inc. The stock fell another 9.9 percent Thursday amid a broader market decline, closing down 63 cents at $5.72, a new 52-week low.

The Sulzberger family, which exercises control of the business through the special supervoting shares of Class B stock, could still be forced to look for a cash infusion from elsewhere, Doctor said.

In a statement Thursday, the family trustees praised the dividend cut and appeared to play down the possibility that they could sell their interest in the company's flagship newspaper.

"It is the appropriate and prudent business response given the extraordinary challenges of the current economic environment," said the statement from the Trustees of the Ochs-Sulzberger Trust. "The Trustees remain unanimous in their commitment to the editorial integrity and independence of the New York Times."

Some outside analysts and investors have urged the Sulzbergers to sell their controlling stake, or at least loosen their grip on the company's management, but those efforts have so far been rebuffed out of hand by the family, which has long seen itself as a protective steward of the newspaper and its place in American journalism.

The legal structure of the family trust would make it exceedingly difficult for the Sulzbergers to sell without a strong family consensus - a provision that has been seen as protecting the newspaper from the type of split that led the Bancroft family to decide last year to sell Dow Jones & Co., parent company of The Wall Street Journal, to Rupert Murdoch's News Corp.

In a statement, The New York Times Co.'s chairman Arthur Sulzberger Jr. said: "This was a difficult but necessary decision that will provide us with greater financial flexibility in these uncertain economic times."

The move echoes recent steps by other media companies to cut dividends this year, including fellow newspaper publishers McClatchy Co., Media General Inc. and A.H. Belo Inc.

The new dividend is payable on Dec. 15 for shareholders on record as of Dec. 1.

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