October 23, 2008

New York Times Company sinking faster

By Thomas Lifson

The death spiral accelerates, as NYTCo earnings fell by 51.4% in the third quarter. As AT predicted would happen after it was raised, the company now recognizes it is unable to sustain its dividend. That's critical because Sulzberger family members control the board of directors, and many of them depend heavily on dividend income for their lifestyles.

"Our board of directors plans to review our dividend policy before the end of this year to determine what is most prudent in light of the overall market conditions," the company's chief executive, Janet Robinson, said in a statement.

Pinch Sulzberger hiked the dividend from 17.5 cents to 23 cents a share to buy family support, whatever the cost to then company's ability to cope with the maelstrom of economic forces it must navigate. He clearly put his own tenure in office above the survivability of the company, in effect liquidating it in slow motion.

When the brighter among the staffers of the New York Times realize that Pinch has sacrificed the viability of the company in order to keep himself in office, they will turn on him. But that will probably be after the family tosses him out (it will be called voluntary retirement), now that (presumably) they have caught on themselves that Pinch has been scuttling the Good Ship New York Times through decades of disastrous business decisions. Those smaller checks are really going to pinch, now that the stock market and real estate are down.

Anticipating the dividend cut, investors are dumping the stock and it is below $10 for the first time in many years.