NY Times Co Nixes Q1 Dividend Amid Media Turmoil

The company`s board of directors voted to suspend the first-quarter dividend on Class A and Class B common shares.

The New York Times Co said on Thursday it will suspend its first-quarter dividend to hoard cash and slash debt, the latest newspaper company to do so as the reeling industry's prospects worsen.

The company's board of directors voted to suspend the first-quarter dividend on Class A and Class B common shares. In November, the board decided to slash its fourth-quarter 2008 dividend to 6 cents a share from 23 cents in the previous quarter. ID:nN20395768

The 157-year-old company joined rivals, including McClatchy Co, E.W. Scripps, A.H. Belo Corp and CBS Corp, in cutting or suspending dividends.

"There was certainly political cover," Barry Lucas, senior vice president of research at Gabelli & Co, said, referring to ample justification for the Times' move in view of its peers.

"Given what's happening across the industry -- the lack of visibility and similar trends probably through the end of the year -- it would make sense to me.".

The Ochs-Sulzberger Family Trust, which owns almost a fifth of the company's Class A and B common shares, said the move was in the best interests of all shareholders in light of the dismal economic climate and challenges facing the media industry.

The trust owns about 19 percent of the publicly traded Class A shares and 89 percent of Class B voting shares, which confer control over the company and contribute about $25 million in annual trust income.

The deep cut to last quarter's dividend had fueled media speculation that the Ochs-Sulzbergers would mutiny and sell their inheritance, just as the Bancroft family delivered The Wall Street Journal to News Corp Chairman Rupert Murdoch last year.

CLAN RIFT

A Wall Street executive familiar with the trust's holdings valued them at $270 million to $300 million in an October New York magazine article.

The magazine added dividends had increased substantially over the years to support family members who live on the income.

Chairman Arthur Sulzberger Jr. said the Times expects suspension of the dividend, coupled with recent moves, to conserve capital and help decrease its $1.1 billion debt load while improving liquidity.

Last month, the Times reported a $625 million shortfall in pension obligations and said it would borrow $250 million from Mexican tycoon Carlos Slim.

Seeking other ways to enhance its cash position, the Times has put its New York headquarters building and its ownership stake in the Boston Red Sox baseball team on the block, and pledged to reduce capital spending to strengthen its balance sheet.

Lucas, who has a "hold" rating on New York Times shares, said suspending the dividend was "a reasonable thing to do" and should provide financial flexibility -- so long as other capital-building efforts are successful.

New York Times Co shares rose a mild 5 cents in light trade after-hours, after having closed down 5.4 percent at $3.51 on the New York Stock Exchange.