The New York Times Co. (NYSE: NYT) has finally announced that it will eliminate its quarterly dividend to conserve cash and decrease debt. In a press release, chairman Arthur Sulzberger Jr. said that "Today's decision provides the Company with additional financial flexibility given the current economic environment and the uncertain business outlook."The New York Times Co. has been struggling with declining profitability and a weak balance sheet, and recently secured a loan from Mexican billionaire Carlos Slim on extremely punishing terms: 14% interest and warrants to acquire 16 million of the company's A shares.
By continuing to pay significant dividends even as the company's balance sheet declined, the Times forced itself into a deal of desperation with very high costs to shareholders.
You have to wonder why the Times kept paying dividends even when it was so clear the company's cash position could get dire. One word: greed. The Sulzberger family has complete control over the company' fate and of the $132 million per year the company was paying in dividends, about $25 million flowed straight into the pockets of the controlling shareholders, even as the company was forced to lard itself down with debt and imperil the journalistic quality that is theoretically the reason the Sulzberger's maintain such tight control.
By contrast, the McMahon family that controls World Wrestling Entertainment (NYSE: WWE) has had the integrity to waive a large portion of the dividends on its shares to preserve cash while still providing income to minority shareholders.
By contrast, the McMahon family that controls World Wrestling Entertainment (NYSE: WWE) has had the integrity to waive a large portion of the dividends on its shares to preserve cash while still providing income to minority shareholders.
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