UPDATE 2-New York Times initiates dividend
Sept 19 (Reuters) - The New York Times Co board of directors has initiated a quarterly dividend, ending a nearly five-year dry spell for its investors and the family that controls one of the world's most prestigious newspapers.
The company announced on Thursday that it would pay 4 cents per share on Oct. 24 to Class A and Class B stockholders as of the close of business on Oct. 9.
"We are pleased to announce the initiation of this quarterly dividend, which will allow us to return capital to our shareholders while maintaining the financial flexibility necessary to continue to invest in the company's transformation and various growth initiatives," Arthur Sulzberger Jr, chairman of the New York Times Co, said in statement.
The Ochs-Sulzberger family controls the company through Class B shares.
The New York Times suspended the dividend in February 2009 during the financial crisis, which was particularly brutal for the newspaper industry.
The New York Times began selling assets and took out a $250 million loan from Mexican billionaire Carlos Slim, which it eventually paid back.
The company worked to shore up its cash position, bolstered by the sale of its regional U.S. newspapers including The Boston Globe and its roll out of a digital pay model at its flagship.
"The company has generated decent digital sales growth which has partially offset declines," said Liang Feng, an analyst with Morningstar.
"It's in a position where profits are consistent enough and its balance sheet is sound enough to issue a dividend. It's still relatively small but it's a good first step."
Analysts and investors have questioned over the past several quarters when the company would approve a dividend, since its cash stockpile had begun to improve.
The New York Times has almost $750 million in cash and short-term marketable securities, and about $700 million in long-term debt and capital lease obligations, according to its most recent quarterly filing. The debt does not include pension obligations.
While the company has some breathing room, New York Times Chief Executive Mark Thompson said in a statement it would remain prudent "given the expectation of continued volatility in advertising revenue and the fact that our growth strategy is at an early stage of development."
The New York Times last paid out a dividend of 6 cents in December 2008.
Shares of the New York Times Co closed up almost 1 percent at $11.54 on Thursday.
- Malaysia jet sent 'pings' after going missing, sources say |
- Russia holds war games near Ukraine; Merkel warns of catastrophe |
- New York City gas explosion subject of federal probe |
- White House tried to mediate dispute between Senate, CIA panel: source
- Missing jet may have strayed to west, Malaysia military says |